Regulator set to approve Delta-Virgin Atlantic deal

Regulator set to approve Delta-Virgin Atlantic deal

Delta Air Lines is expected to secure unconditional European regulatory approval to buy a 49% stake in Virgin Atlantic, allowing it to compete better with rivals in the lucrative transatlantic market.

The European Commission, which is examining the deal as the pan-European regulator, does not see competition problems, three people with knowledge of the matter told Reuters yesterday.

Delta, the second-biggest US airline by revenue, and Virgin Atlantic announced the deal in December, outlining a joint venture to allow both carriers to offer more flights at Heathrow.

The agreement aims to boost Delta's ability to compete with industry leader United Continental and with American Airlines, whose partnership with British Airways dominates travel between the US and London.

"The European Commission is likely to approve the deal without conditions," said one of the sources ahead of a formal decision which is due to be issued next week (June 20).

An analyst said the Delta-Virgin joint venture would have about 25% of the market between the US and UK, against the 60% share held by BA and AA joint venture on North Atlantic routes.

Serge Durande at Brussels-based law firm Bird & Bird told Reuters: "The 60:25 (split) must be a major factor in the Commission's assessment, though it must have also examined competition on the various transatlantic routes affected by the joint venture.

"Clearly the dominance is not on the side of Delta and Virgin and the new entity is bound to inject competition into the market.”

A Commission spokeswoman declined to comment.


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