CONFIRMED: Virgin Group to retain control of Virgin Atlantic, share sale to Air France-KLM abandoned

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On Sunday we were the first English-language source to publish the rumours that Virgin Group was attempting to cancel its agreed share share to Air France-KLM.

You can read that article here.

Sir Richard Branson has just confirmed the story on his personal blog.  To quote:

“I have always viewed Virgin Atlantic as one of my children, born 35 years ago around the same time as Holly and Sam, with one second-hand 747 taking on established airlines such as British Airways, American Airlines, Pan AM, and TWA to name a few.

Back in 2008, when BA tried effectively to merge with American Airlines, we fought the merger on behalf of our airline and our customers’ interests, with the ‘No Way BA/AA’ campaign on the side of our planes. 

[ ….. ]

Richard Branson to retain 51% of VIrgin Atlantic

When competition authorities did somehow wave through the BA/AA partnership, we looked for a strong alliance of our own, to protect our wonderful ‘child’ for years to come. We needed to rely on sibling power!

Remarkably, the most impressive of the large airlines, Delta, was there to form an alliance with us. And they have been the best partners we could have wished for. That still left our family in control and owning the airline. But with BA’s clout in Europe we needed further partners to provide feed for the Virgin Atlantic network, and discussions started with Air France-KLM. Agreement in principle was reached in May 2017.

To get the deal done, we initially thought our family would need to reduce its shareholding in Virgin Atlantic. I was willing to do so, reluctantly, to guarantee the long-term success of Virgin Atlantic.

Richard Branson to retain 51% of VIrgin Atlantic

I’m delighted to say the tie-up was approved by various competition authorities, the last of these being the US Department of Transport, who gave antitrust immunity to the new joint venture on November 21st, 2019. Importantly following this news, we have agreed (subject to contract) with our new joint venture partners, that our family will continue to hold the 51 per cent of Virgin Atlantic shares we own. We’ll also continue to work extremely closely with our partners investing together in a thriving airline and holiday company.

This will benefit you all, the wonderful people of Virgin Atlantic and Virgin Holidays, and contribute to a winning partnership. The expanded joint venture with Delta and Air France-KLM remains an essential part of our future and long-term success.”

As I wrote on Sunday, I think this is a sensible move for Virgin Group.  Virgin Atlantic has a lot of tailwind at the moment, with the Thomas Cook collapse removing pressure at Manchester and the acquisition of Flybe offering good opportunities to grow connecting traffic.

There is one other factor I didn’t mention, however.  Virgin Atlantic has started a very public campaign to get a disproportionate share of the new Heathrow landing slots created by the third runway.  The tagline is ‘creating a second national flag carrier’.  Realistically, how could that claim be justified when the airline was 80% owned by US, French and Dutch interests?  With Virgin Group remaining the majority shareholder, Virgin Atlantic will believe that it has a better chance of a fair hearing.

You can read the full story on Sir Richard Branson’s blog here.

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Comments

  1. ”Virgin Atlantic has a lot of headwind at the moment, with the Thomas Cook collapse removing pressure at Manchester and the acquisition of Flybe offering good opportunities to grow connecting traffic.“

    Tailwinds, surely?

  2. Love it. Flag carriers, I know what the Spanish flag looks like, what is the flag of Necker Island?

    If the third runway ever happens it would be great to see the additional slots used initially to reduce stacking to as low as possible, and leave proper operational slack. Then and only then allow expansion, with absolute priority to new airlines and destinations, not just allow the likes of Virgin to try and become a second BA which will offer little in the way of real competition. But we all know that HAL will flog every slot possible, and the airport will grow ever more congested.

  3. Should have shoved the kid out the nest years ago then, it has been mollycoddled forever and never been provided with the opportunity to realise its potential.

  4. I only call an airline my flag carrier when it serves all of the UK airports….BA used to

  5. Peter K says:

    “With Virgin Group remaining the majority shareholder, Virgin Atlantic will believe that it has a better chance of a fair hearing.”

    I think they hope for a better chance of a biased hearing…in their favour.

    • insider says:

      Indeed. Not sure how biasing the rules to give slots to Delta (sorry I mean Virgin) is a good thing? I mean, I guess it will fast track them to bankruptcy. I think the real reason AF/KLM aren’t investing is because firstly they don’t have the cash, and secondly, Virgin are not a good investment.

  6. Mikeact says:

    I guess it remains to be seen if I can get 2 x Upper Class redemptions via KLM FB…..not holding my breath.

  7. Tangential to this, I laugh when I hear BA bang on about the need for a third runway in order to expand the route network into high-growth emerging markets….when it uses the scarce slots it does have to launch new services to third tier places such as Charleston, Pittsburgh, Nashville, etc. The UK will always massively trail the continental hubs in this respect, regardless of how many new runways are built

  8. Perhaps Virgin Atlantic would have a better chance of a fair hearing as to whether it becomes our second national flag carrier, if Branson still had residency status and paid UK taxes…

    • Taxes are just for little people. The great SRB couldn’t possibly dirty his hands with such trifling matters.

  9. OT How long does it take for the IHG reward status to update to Plat Elite from being approved for the Reward Premium Card?

  10. Martin Lewis says:

    I think this is a best of both worlds deal. I’m delighted that VA will stay within the Branson family whilst being able to earn and burn on a far more extensive airline network. Whats not to like?

    • Oh! Matron! says:

      Came here to say this. There’s obviously a fair bit of BA bias on here, and I’ve no idea what Branson’s non dom status has on the airline, if any.

      This only strengthens VS, and, as Rob has mentiuoned, there’s some rich pickings in Manchester, which both VS and KLM can take advantage of.

  11. Shoestring says:

    Despite what they may say, Branson & his family must be feeling pretty sore about missing out on the £220m – Branson’s not getting any younger and they’ll need a fair wind for Virgin Atlantic to start performing – performance in the last few years has been dire. Good job world population & wealth keep increasing at such a rate as this keeps many underperforming international businesses in growth.

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