Air France-KLM Buying Stake in Virgin Atlantic in Major Airline Shake-up

Air France-KLM is buying a 31 percent stake in Virgin Atlantic as part of a series of deals that look set to shake up the airline world.

With the flurry of moves, Delta Air Lines becomes the largest shareholder at 49 percent in Virgin Atlantic and founder Richard Branson cedes control. He will retain a 20 percent stake through his Virgin Group and the airline will continue to fly under the Virgin brand.

At the same time, Delta Air Lines will take a 10 percent stake in Air France-KLM with the three airline companies coming together to create a single global joint-venture. Meanwhile, China Eastern Airlines will also take a 10 percent stake in Air France-KLM.

Air France-KLM's investment in Virgin Atlantic will cost around $287 million (£220 million), while the two 10 percent stake sales are being valued at $981 million (€751 million) each for Delta and China Eastern.

Alitalia, which is currently in bankruptcy proceedings, is also mentioned as being part of the new joint venture, although there were no details about any possible new ownership.

The long term aim of the deals is to bring the two pre-existing joint ventures—Air France-KLM, Delta and Alitalia, and secondly Delta and Virgin Atlantic—within a single joint-venture.

The combination, which has yet to be fully agreed and would be subject to regulatory approval, will put the airlines involved in a stronger position in the transatlantic and European markets.

Jean-Marc Janaillac, chief executive of Air France-KLM, said: “With our partners Delta and Virgin Atlantic, we are pleased to reinforce our transatlantic partnership, offering our customers even more choice between Europe, UK and the United States via 12 hubs on both sides of the Atlantic.”

Richard Branson, Virgin Group founder, said: “Virgin Atlantic has made a big difference to people’s flying experience over the past 33 years and transformed the airline industry for the better. This is a fantastic opportunity to extend our network and create a stronger customer champion, as well as being extremely beneficial to our people and the Virgin Atlantic brand that our customers love dearly.”