* Virgin-Delta plan revenue, code sharing JV - source
* Branson plans to keep control of Virgin Atlantic
* JV reliant on Delta buying Singapore's Virgin stake
By Rhys Jones
LONDON, Dec 10 Delta Air Lines Inc is
nearing an agreement to buy Singapore Airlines' 49
percent stake in Virgin Atlantic, and is expected to
agree to a transatlantic joint venture with the British carrier,
a source said.
Meanwhile, Richard Branson said he planned to keep control
of the carrier he set up and said International Airlines Group
boss Willie Walsh was misguided for saying the brand
would be ditched by Delta.
"Rumors have been spread in the press that I am planning to
give up control of Virgin Atlantic and, according to Willie
Walsh ... that our brand will soon disappear. This is wishful
thinking and totally misguided," Branson said on Monday.
A source familiar with Branson's thinking told Reuters that
Virgin Atlantic would form a joint venture on transatlantic
flights with Delta if the U.S. carrier bought Singapore
Airlines' stake in the British carrier, which Branson set up in
Delta and Virgin Atlantic's plan to set up a revenue-sharing
deal on flights between Britain and the United States would
involve code-sharing, allowing both to sell flights on the other
airline and share revenues from ticket sales, the source said.
The joint venture could lead to the pair sharing costs and
bringing prices and schedules into line, the source said.
The partnership would be similar to that operated by
American Airlines and IAG's British Airways (BA)
since 2010 on transatlantic flights between Canada, Mexico, the
United States and many European cities.
Delta has acquired stakes in Grupo Aeromexico
and Brazil's Gol Linhas Aereas over the past year,
and has long hoped to break into capacity-constrained Heathrow.
Virgin Atlantic is the second-largest carrier at the airport
Delta could pay $300 million to $500 million for the 49
percent stake in Virgin, Bloomberg reported on Monday citing
people familiar with the matter. Singapore Airlines bought 49
percent of Virgin Atlantic for 600 million pounds ($962 million)
in 1999, but has been open to selling its stake since at least
mid-2011 when a price of $500-$600 million was mooted in
markets, a banking source familiar with the talks said at the
Walsh, chief executive of IAG, told the Daily Telegraph
newspaper that Delta's main interest in Virgin Atlantic was in
its lucrative slots at London's Heathrow airport and the U.S.
carrier would not want to keep the Virgin brand.
A combination with Delta, the second-largest U.S. airline by
revenue after United Continental, would be a shot in the
arm for Virgin Atlantic, which has been battered by rising fuel
prices and the euro zone crisis. It posted an 80 million pound
($128 million) loss in its last full year.
Earlier this month, sources said Delta was keen to see Air
France-KLM - a member of its SkyTeam alliance - buy a
stake in Virgin Atlantic to give the pair control of the
Delta declined to comment.
The European Union requires EU carriers to be under European
control, meaning Delta would need an EU airline as a partner if
it wanted majority control of Virgin Atlantic. If Air France-KLM
were to buy a small part of Branson's stake, then Virgin
Atlantic could continue to be European controlled.