Alliance in air: Virgin, Delta weigh transatlantic venture

Virgin Atlantic will form a joint venture on transatlantic flights with Delta Air Lines if the US carrier buys Singapore Airlines' 49% stake in the UK airline, a source close to Virgin said.

The source said Virgin founder Richard Branson was not immediately looking to sell any of his 51% stake in the UK airline and was "concentrating on working with Delta", which is closing in on agreeing a deal to buy Singapore's stake.

Delta and Virgin plan to set up a revenue-sharing deal on flights between Britain and the US, which would involve a code-share agreement, allowing both to sell flights on the other airline and share revenues from ticket sales, the source said.

The joint venture could eventually lead to the pair sharing costs and bringing their prices and schedules into line, the source added.

The partnership would be similar to that operated by IAG's British Airways and American Airlines since 2010 on all transatlantic flights on routes between the US, Canada and Mexico and many European routes.

Airlines like Delta have long hoped to break into London's capacity-constrained Heath-row airport, a lucrative hub for corporate passengers where landing slots are generally hard to acquire. Virgin Atlantic is the second-largest carrier at Heathrow after BA.

A combination with Delta, the second-largest US airline by revenue after United Continental, would be a shot in the arm for Virgin. The British carrier has been battered by rising fuel prices and the euro zone crisis, and posted a loss of around 80 million pounds ($128.16 million) in its last full year.

Singapore and Delta are still in talks over the sale of the stake, which the Asian carrier bought for 600 million pounds in 1999, but now wants to sell to refocus on its key markets.

Weekend reports in the British press said Air France-KLM, which also has a partnership with Delta on some transatlantic routes, was in talks to buy part of Branson's stake ó a deal which would effectively give Delta and Air France-KLM control over Virgin Atlantic.

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