RPT-WRAPUP 1-Delta among suitors for stake in Virgin Atlantic - sources

NEW YORK/SINGAPORE, Dec 3 (Reuters) - Singapore Airlines

said on Monday it was in talks with interested parties

to sell its 49 percent stake in British carrier Virgin Atlantic,

with sources revealing that Delta Air Lines Inc was

among the potential suitors.

Delta, the second-largest U.S. airline by operating revenue

after United Continental Holdings, wants to gain access

to Virgin Atlantic's landing rights at London's Heathrow

airport, according to two people familiar with the matter.

Delta has been looking to acquire a Virgin Atlantic stake

for more than two years but previous talks broke down over price

and other issues, and there is no guarantee that its recent

discussions would result in a pact, the people said.

Singapore Airlines said in a brief statement it was in talks

with interested parties but did not name them. It also cautioned

that the discussions might not result in a deal.

The European Union requires that EU carriers be under

European control, meaning Delta would need to involve an EU

airline as a partner if it wanted majority control of Virgin.

Delta has been considering ways to partner with Air

France-KLM, which could also take a stake in Virgin

and allow the two carriers to acquire majority ownership, one of

the people said. Virgin founder Richard Branson owns 51 percent

of the airline.

Delta has made clear that it would like to expand at

Heathrow, a lucrative airport for prized corporate passengers

where landing slots are generally hard to acquire. Virgin is the

second-largest carrier at Heathrow after IAG's British

Airways.

Delta's SkyTeam global alliance, which includes Air France

and 18 other airlines, trails its oneworld and Star Alliance

counterparts in slot access at Heathrow.

"Delta now finds itself going up against the combination of

American Airlines and British Airways," said George Hamlin, an

aviation consultant in Fairfax, Virginia, referring to the two

anchor members of the oneworld global alliance.

"British Airways brings along a feed from other destinations

- both Europe and intercontinental - at Heathrow. Delta is

basically a dead end at this point."

Branson, who set up Virgin Atlantic in 1984, has been

weighing the airline's future for years and two years ago

appointed Deutsche Bank to examine offers.

"We are always talking to many airlines on a number of

different matters but we never comment on the details of these

discussions," a Virgin Atlantic spokeswoman said on Sunday. News

of Delta's renewed interest in Virgin was first reported by the

Sunday Times of London.

Delta declined to comment. Air France were not immediately

available for comment outside regular business hours.

Heathrow, Europe's busiest airport, is operating at close to

full capacity after Britain's coalition government blocked its

expansion in 2010.

Virgin lost out in the battle to take over smaller UK

carrier bmi last year to IAG, giving the owner of British

Airways and Iberia more than 50 percent of the takeoff and

landing slots at Heathrow.

However in November, Virgin won all of the Heathrow takeoff

and landing slots that British Airways was forced to give up

after the acquisition of bmi.

Like other European carriers such as Air France and

Lufthansa, Virgin has been battered by rising fuel

prices and the euro zone crisis. It posted a loss of around 80

million pounds ($128 million) in its last full year.

Virgin, which is hunting for a new chief executive after

Steve Ridgway announced he would retire early next year, is not

a member of a global airline alliance.

Aviation consultant Hamlin said a tie-up with Delta could

give Virgin access to hundreds of markets on a one-stop

connecting basis in the United States. For Delta, such a deal

would help plug a weakness in its global network versus key

competitors and make it a strong player at Heathrow.

"London obviously is the premier market and Heathrow is by

and large the market leader. It's the lynchpin transatlantic

market in terms of size and revenue, particularly premium

traffic revenue," Hamlin said.

Source: http://news.yahoo.com/3-delta-talks-49-pct-virgin-atlantic-stake-001342799--sector.html

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