Richard Branson keeps control of Virgin Atlantic in new Air France-KLM pact
Virgin Group founder Richard Branson will keep control of his flagship airline Virgin Atlantic Airways under a revised deal with Air France-KLM.
Virgin and Air France-KLM have agreed to drop plans for Virgin to sell a 31% stake in the London-based carrier for £220 million ($279 million), Branson said in a letter to employees posted on his blog on Monday. The deal was part of a 2017 pact to form an expanded transatlantic partnership between Air France, Delta Air Lines, KLM and Virgin Atlantic.
"We have agreed (subject to contract) with our new joint venture partners, that our family will continue to hold the 51 percent of Virgin Atlantic shares we own," said Branson. "We’ll also continue to work extremely closely with our partners investing together in a thriving airline and holiday company."
The stake sale was described by airline executives in 2017 as necessary to allow the airline management teams to more closely align and work together.
"Air France-KLM's acquisition of a stake in Virgin Atlantic is no longer necessary and are negotiating an agreement whereby Air France-KLM will not acquire a stake in Virgin Atlantic," the Paris-based carrier said Wednesday. Air France-KLM added that the partners can achieve the commercial benefits of their partnership without the investment.
In November, U.S. authorities approved the expanded joint venture, which allows the four carriers to operate as essentially a single airline between Europe and the U.S. The deal will also allow Virgin to more closely coordinate connecting itineraries between the U.S. and Continental Europe over its London hub with Air France and KLM.
The four airlines have yet to say when the new partnership will be implemented. It replaces two separate agreements, one between Delta and Virgin Atlantic that covers just the U.S.-U.K. market, and a second between Air France, Alitalia, Delta and KLM that covers routes between the U.S. and continental Europe.
Alitalia has been dropped from the new deal due to its financial difficulties. However, executives of both Air France and Alitalia have said that the Italian carrier will rejoin the partnership as a so-called "associate member" in the future.
Together, Air France, Delta, KLM and Virgin Atlantic are scheduled to fly just over a quarter of all seats between Europe and the U.S. in 2019, according to Cirium data.
Updated with Air France-KLM statement on Wednesday.