AF_KLM/Delta et Virgin

Air France and Delta to target Virgin Atlantic

Air France-KLM has teamed up with Delta, one of America's biggest airlines, to examine a possible bid for Sir Richard Branson's 51pc stake in Virgin Atlantic.
The airlines, which are both members of the powerful SkyTeam alliance, have appointed Goldman Sachs to advise them on a potential approach.

Sir Richard, whose stake in Virgin Atlantic is valued by analysts anywhere between £500m and £1bn, has hired Deutsche Bank to examine its strategic options, as The Daily Telegraph disclosed in November. Singapore Airlines owns the remaining 49pc, after buying it for £600m in 1999.

The founder of Virgin was forced to review the airline's position in the wake of British Airways' £5.2bn merger with Iberia and their transatlantic pact with American Airlines. The deal, which created the International Airlines Group, was one that Sir Richard bitterly opposed.

Global airlines have been moving to consolidate and forge partnerships to ride out the turbulence of the financial downturn and other factors such as soaring oil prices.

But Virgin has failed to become a member of any of the big airline alliances. The review of Virgin Atlantic has several potential outcomes. They include a codeshare deal, joining an alliance, the sale of all or part of Singapore's stake to a third party, and for Sir Richard to relinquish majority control as part of a bigger airline transaction.