Virgin 'circled by rival airlines'

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Virgin Atlantic is being circled by a number of airlines as consolidation in the beleaguered sector looks set to continue

Virgin Atlantic is being circled by a number of airlines as consolidation in the beleaguered sector looks set to continue, it has been reported.

Air France-KLM and America’s Delta are understood to be trying to tempt Sir Richard Branson’s airline to join their transatlantic SkyTeam alliance, according to the Sunday Times.

The joint venture, which was set up in May 2009, allows partners to share revenues and costs and to co-ordinate their flight schedules.

But the consortium, which is being advised by Goldman Sachs, faces competition from airline Etihad, which is owned by the ruling family of Abu Dhabi.

The group has previously expressed an interest in Virgin Atlantic and it has drafted in Bank of America Merrill Lynch to advise it on a possible deal.

A Virgin spokeswoman said: “Virgin Atlantic is a strong, independent business with a good growth position at both London Heathrow and Gatwick, so we are not surprised that there is interest in us.”

Sir Richard hired Deutsche Bank in November last year to look at the options for his 51% stake in the airline he founded.

He was forced to review the airline’s future after British Airways formed its own transatlantic alliance with American Airlines and merged with Iberia, making it harder for Virgin to compete at Heathrow.

Analysts speculated at the time that the tie-up would mean Virgin either had to bring in wealthy investors or Sir Richard may have to sell his stake altogether.

Singapore Airlines owns the remaining 49% of shares in Virgin and it has previously indicated that it would be prepared to sell its holding at the right price.

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