Regulators clear Air France-KLM move for Virgin stake

Aviation

European Commission regulators have cleared Air France-KLM’s acquisition of a 31% joint-controlling interesting in UK carrier Virgin Atlantic.

The move was first announced in the summer of 2017 alongside a wider partnership agreement under which existing Virgin shareholder Delta Air Lines planned to bring separate transatlantic agreements with both the UK carrier and SkyTeam partner Air France-KLM into a single deal.

In a ruling today the EC concluded the transaction would raise no competition concerns in the European Economic Area.

Specifically its says none of the overlapping routes between Virgin, Delta and Air France-KLM would raise competition concerns, despite a small number of routes with high combined market shares, because the carriers face “significant competition” from other operators on the routes.

It also says the combined slot portfolio at London Heathrow and Manchester airports was unlikely to have a negative effect on passengers.

US carrier Delta has held a 49% stake in Virgin since 2013. Air France-KLM is acquiring its stake from UK owner Virgin Group, which will retain a 20% stake.

Under an agreement struck between the UK and the USA in December, UK-based airlines will be able to remain owned by UK, EU and European Economic Area shareholders rather than by UK nationals alone after Brexit. The USA is Virgin’s biggest market, operating to 11 destinations.

As part of the wider co-operation, Delta also agreed to acquire a 10% stake in Air France-KLM.