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BBT March/April 2019 cover
March/April 2019

EU approves controlling stake in Virgin Atlantic

Virgin Atlantic B787-9 taking off

The European Commission has granted permission for Air France KLM and Delta to go ahead with the acquisition of a 31 per cent joint-controlling stake in Virgin Atlantic.

The Commission found no concerns with the purchase under the EU Merger Regulation after considering whether the deal would limit competition in the market.

Although the Commission agreed the tie-up would “give rise to overlaps” on both direct and indirect flights – especially on routes from the UK to North America, Africa, Asia and the Caribbean and from continental Europe and Ireland to North America – it decided this would not raise competition concerns because “Virgin Atlantic, Delta and Air France KLM are not close competitors and they continue to face significant competition from other carriers” on these routes.

It also believes the “combined slot portfolio is unlikely to have a negative effect on passengers at London Heathrow and Manchester airports”.

The deal puts the 31 per cent stake in the hands of Air France KLM, while Delta maintains its existing 49 per cent share. Virgin Group controls the remaining 20 per cent.

According to the Commission, Air France KLM, Delta and Virgin Group “intend to enhance the scope of their existing cooperation in the provision of air transport services for passengers and cargo by combining and expanding two pre-existing ‘metal neutral’ joint venture arrangements between Delta and Air France KLM, and between Delta and Virgin Atlantic.

“These are cooperative arrangements in which they jointly plan and manage capacity, pricing and inter-airline financial settlements, with all participating airlines sharing profits equally”.

Meanwhile, Virgin Atlantic is part of a consortium with Stobart Group that is trying to purchase regional carrier Flybe. This deal is awaiting shareholder approval.

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