ANstar

http://www.virgin.com/richard-branson

And Branson says he is not giving up control.

So looks like it will be SQ's 49% that DL get and DL/VS have a JV.

Dieuwer

He does not say he is not giving up control. The only thing he says it that "This is wishful thinking and totally misguided."

ANstar

Ok so it is kind of nitpicking - but doesn't really seem to imply he is giving up control anytime soon however you interpret it.

"Rumours have been spread in the press that I am planning to give up control of Virgin Atlantic and, according to Willie Walsh - who runs BA - that our brand will soon disappear.

This is wishful thinking and totally misguided. Will BA never learn? Let's see how much they believe this. Let them put their money where their mouth is."

Dieuwer

Branson is very good at using "diplomatic speak".

Actually, I think he could have it both ways: DL buys the 49% from SQ and signs a JV with VS. Branson keeps his 51%, but the JV contract stipulates that both DL and VS have an equal say in the JV operation. Then who is in control of VS? Branson could argue to the press he is, while DL could argue that they are as well.

pbarnette

But the bet is only about Virgin Atlantic disappearing. It does not address change of control.

Of course, this is typical Branson - full of bombastic language, but what underlies it is a very mild claim - but I think Walsh's claims are a bit questionable. Walsh argued that DL only wants the slots, but also that they would not want to keep the Virgin brand and would want control. Certainly, I think DL is doing this to get access to the slots, but I'm not sure they are as eager to ditch the brand as Walsh would have us believe and they would face some hurdles in terms of actually controlling Virgin. At the end of the day, I think DL would be happy enough to simply roll VS into the TATL JV and Skyteam.

Dieuwer

This.
Why would you ditch a VALUABLE brand that has recognition as being of high quality? Makes no sense.

Dalat767

Exactly! It appears that DL is about to close the deal with SQ, http://www.bloomberg.com/news/2012-1...tml?cmpid=yhoo.

pbarnette

FWIW, Bloomberg is reporting that DL will pay between $300m and $500m for SQ's stake. IIRC, CO paid something like $200m for 4 slot pairs at LHR. DL is, in effect, likely paying around double that for what could turn into a JV interest for a fair chunk of the maybe 150 (?) slot pairs VS controls + an ownership share on the VS side. That could be an incredible bargain.

ANstar

I hope the deal goes through.

SQ hasn't really tried to do much co-operation with VS and the distance in markets has never really made much sense either.

On the otherhand - DL and VS have worked together in the past. I recall DL FA's used to work on some LHR VS flights many moons ago.

DL would be a far more active and beneficial shareholder for VS and I believe VS has a lot to offer Skyteam and the Trans Atlantic Joint Venture.

mtkeller

In today's money converted to USD, SQ paid ~$1.25 billion for their stake in VS. They must be eager to unload it if they're willing to let it go for under $500 million.

TrojanTraveler

Does anyone remember when DL code shared with VS in the 90s? As I recall, there were a lot of problems, and I got the general impression from Delta people I spoke with then that VS was hard to work with.

In my personal opinion, VS is more flash over substance from the standpoint of in-flight experience (as well as other service aspects). Coach is very tight, feels much tighter than Delta. I haven't been up front on VS in awhile, but with DL's flat beds, DL has a highly competitive hard product. I'll be sticking with DL metal for my JFK-LHR flights. Though to be fair, VS lounges are much better than Skyclubs.

It does plug a hole with West Coast - LHR service, which would greatly appeal to corporate accounts. And at a minimum, it does ensure that they can take advantage of the slots/denying them to someone else.

Cloudship

How will this affect VS's codeshares with US? A JV would definitely leave Delta wanting to limit access to those LHR slots.

adamj023

I agree. Apparently Aer Lingus is involved as well with Virgin, giving Virgin 4 A320's and their crew running connection flights from London Heathrow to a few cities.

The Virgin and Delta joint partnership and the additional Aer Lingus flights mean that Delta/Virgin partnership is going heavily for the London Heathrow market and there looks to be expansion on this very route.

Apparently AF/KLM which is also a SkyTeam member will be buying a stake as well so SkyTeam will be in control.

With these changes, the new Virgin will be able to compete directly against the British Airways/American Airlines alliance.

It is true that travelers to the UK think of British Airways as the premium brand with tighter seating on Virgin, but on the other hand, travelers get a much expanded route network and better access between the USA and UK. I would think that the airline would reconfigure their aircraft seating arrangements to be more competitive as well especially as carriers will be running much larger jets between the USA and UK.

Some are saying the Virgin Atlantic name will disappear. Unclear on this part.

Virgin Atlantic was losing money on some of the most traveled routes and customers I know of preferred British Airways over Virgin when they went to the UK.

In the future with SkyTeam taking control which has a heavier business traveler base, it will be directly competitive with AA/BA for the first time and should help the bottom line.

This deal essentially saves the firm and allows it to do much better.

The worlds airlines are in consolidation phase and will continue to consolidate.

From the consumer perspective, Virgin Atlantic will be open to a lot of flyers who would not have used Virgin in the past and it isn't so clear cut as to which would be better, OneWorld vs SkyTeam to the UK after the deal goes through.

Dieuwer

I don't see much difference in economy class seat pitch between VS and BA: http://www.seatguru.com/charts/longhaul_economy.php

In fact, business class on VS is more roomy than BA!
http://www.seatguru.com/charts/longh...ness_class.php

adamj023

Everyone I know who went on Virgin said the seats were narrower than those on British Airways in economy. If seat pitch is the same, then obviously the seats used on Virgin are worse. I know of so many people who have stated Virgin's seats in economy were narrower. Perhaps that website has wrong information or the seats on Virgin are worse.

I can't answer, just know the comments from customers. Delta and AA believe it or not have the greatest seat pitch in economy class though.

Competition between OneWorld and SkyTeam for JFK to LHR will be quite good. Both will be excellent choices and I wonder how consumers will choose between the two.