Delta, Virgin Approach DoT for ATI - Analyst Blog

An image of a globe with financial data surrounding it Credit: Shutterstock photo

Delta Air Lines ( DAL ) and Virgin Atlantic Airways Ltd. submitted an antitrust immunity (ATI) application with the U.S. Department of Transportation (DoT) for their proposed joint venture. The companies are seeking antitrust immunity for their flight routes between North America and the United Kingdom.

In Dec last year, Delta confirmed its plans to acquire a 49% stake in British carrier Virgin Atlantic that is currently with Singapore Airlines. Delta Air Lines will shell out £224 million or $360 million for the purchase and substantially gain more control over New York to London network - one of the hottest air itineraries across the globe.

Interestingly, the air travel network between the U.S. and United Kingdom, including the one between the two foresaid cities, is dominated by a joint venture of AMR Corp.'s American Airlines and British Airways with 60% of the slots at London Heathrow Airport under their control.

With this filing, Delta and Virgin Atlantic target to pose as strong competitors for the American Airlines-British Airways partnership by offering additional frequent quality travel options for 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.

Per the joint venture agreement between Delta and Virgin Atlantic, both carriers will share the expenses and revenues of the flights. The two companies aim to operate 31 total daily flights both ways between the United Kingdom and North America during the peak season, with 23 flights to and from the Heathrow airport. This will hugely benefit customers with expanded and enhanced flight connectivity to key markets, better pricing and suitable booking options.

Both the companies have also applied for antitrust immunity for a five-way coordination between the United Kingdom and North America air network involving Delta, Virgin Atlantic, Air France, KLM, and Alitalia.

Further, with the approval of the antitrust immunity, Delta - the second-biggest U.S. airline by operating revenue following United Continental Holdings ( UAL ) - intends to commence a new non-stop service from Seattle to London, which is a significant business market. This move will not only strengthen Delta's foothold on one of the busiest commercial routes but will also broaden the international presence in Seattle.

Delta competes with the likes of Southwest Airlines Co. ( LUV ) and JetBlue Airways Corp. ( JBLU ) within the U.S. airline industry and carries a Zacks Rank #3, implying a Hold rating.

DELTA AIR LINES (DAL): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

SOUTHWEST AIR (LUV): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.