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EU regulators to clear Delta, Virgin deal unconditionally

EU regulators to clear Delta, Virgin deal unconditionally

(Reuters) – Delta Air Lines is expected to secure unconditional European regulatory approval to buy a 49 percent 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 said on Monday.

Delta, the second-biggest U.S. airline by revenue, and Virgin Atlantic announced the deal in December last year, outlining a joint venture that would allow both carriers to offer more flights at Heathrow, Europe’s busiest airport.

The agreement is intended 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 United States and London.

“The European Commission is likely to approve the deal without conditions,” said one of the sources, who declined to be identified because of the sensitivity of the matter.

A Commission spokeswoman declined to comment. The EU competition authority is scheduled issue a decision by June 20.

Delta Air Lines and Virgin said they were awaiting approval from the Commission and had no further comment during the regulatory process.

Analysts said the Delta-Virgin joint venture would have about 25 percent of the market between the United States and Britain, against the 60 percent share held by British Airways and AmericanAirlines.

“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,” said Serge Durande at Brussels-based law firm Bird & Bird.

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

U.S. regulators are also examining the deal. Delta is buying the Virgin stake from Singapore Airlines. Virgin’s flamboyant chief executive, Richard Branson, will keep his 51 percent stake.

(Editing by Rex Merrifield and David Goodman)

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