Following the approvals from the U.S. Department of Justice and
European Commission last week, Delta Air Lines (
DAL ) completed the
acquisition of a 49% stake in British carrier Virgin Atlantic from
Singapore Airlines. The remaining 51% stake is retained by Richard
Branson's Virgin Group.AMR CORP (AAMRQ): Get Free ReportDELTA AIR LINES (DAL): Free Stock Analysis
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Delta and Virgin Atlantic agreed on a code-sharing deal across 108
routes connecting 66 destinations across North America and the UK
from Jul 3. Virgin Atlantic will put up its code on 91 Delta
itineraries that cover both trans-Atlantic and domestic U.S.
networks. On the other hand, Delta will have its code on 17 Virgin
Atlantic routes, including the ones connecting London to
Manchester, Edinburgh and Aberdeen.
Following this agreement, customers of both Delta and Virgin
Atlantic will enjoy each other's expanded network as well as earn
and redeem points for loyalty programs on each carrier.
However, the airlines are yet to receive the antitrust immunity
permit of the U.S Department of Transportation for the proposed
joint venture to operate nonstop flights between the U.S. and the
UK. With the final consent expected to come in the third quarter of
2013, the Delta- Virgin Atlantic joint venture will be completed in
In December last year, Delta confirmed its plans to buy the stake
in Virgin Atlantic and gain substantial control over the New York
to London network - one of the busiest air itineraries across the
This partnership will entitle Delta and Virgin Atlantic to gain
36% access to the New York-London travel route, second to the 51%
control exercised by a partnership of AMR Corp. 's
( AAMRQ ) American
Airlines and British Airways. United Continental
Holdings ( UAL ) will have the
third position with 13% of the market share.
Delta management stated that all jets flying between the U.S. and
London-Heathrow will offer fully flat-bed seating arrangement,
extra legroom and more reclining standard seats. There will be
additional facilities like on-board on demand audio and video
entertainment options. The airline aims to launch in-flight Wi-Fi
connectivity on international flights next year.
We believe that Delta-Virgin Atlantic alliance will render
additional frequent quality travel options for the trans-Atlantic
flyers. The amalgamation of Virgin Atlantic's hefty slots at the
Heathrow airport and Delta's commanding position over the U.S.
airline network are expected to work in favor of passengers with
extensive travel plans. This will hugely benefit customers with
expanded and enhanced flight connectivity to key markets, better
pricing and suitable booking options.
Delta operates with the likes of Southwest Airlines
Co. ( LUV )
and carries a Zacks Rank #3 (Hold).