Delta Airlines (NYSE:DAL) received approval from the antitrust authorities from the European Commission and the United States Department of Justice (DOJ) to purchase a 49 percent stake in Virgin Atlantic Airways, according to a report from Reuters.
Both the European and U.S. antitrust regulators concluded that the transaction between Delta Airlines (NYSE:DAL) and Virgin Atlantic Airways did not raise competition concerns.
The Department of Justice wrote, “After a thorough investigation of the competitive effects of the proposed equity investment and joint venture, the Antitrust Division concluded that the facts and circumstances did not warrant further investigation or action.”
Plenty of Competitive Muscle
On the other hand, the European Commission stated, “The Commission’s investigation confirmed that in all markets, the combined entity would continue to face competition from several strong competitors, notably British Airways and American Airlines.”
According to the Commission, British Airways and American Airlines are sufficiently strong players and capable of exercising a significant competitive constraint on the combined entity. The European regulators cited that they co-operated with the U.S. Department of Justice and the Department of Transportation in their investigation for a more efficient review process.
Delta Airlines (NYSE:DAL) announced its decision to acquire 49 percent stake for $360 million in Virgin Atlantic Airways last December to gain more access to the Heathrow Airport. Delta will replace Singapore Airlines as the minority shareholder in Virgin Atlantic Airways. The two airlines agreed to cooperate in frequent flier programs and share travel lounge amenities.
Delta Hoping to Strengthen Transcontinental Routes
In a previous statement, Delta CEO Richard Anderson said, “Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the U.K., particularly on the New York-London route, which is the largest airline route between the US and Europe.”
Virgin Atlantic Airways CEO Richard Branson said he would retain his 51 percent stake in the British carrier.
Meanwhile, Delta Airlines (NYSE:DAL) recently announced a new non-stop service from Seattle to Shanghai. According to Anderson, the new service is part of the company’s initiative in making Seattle a world-class gateway to Asia. He said, "Seattle's strong business and cultural ties to Asia as well as geographic location make it a natural departing point for flights across the Pacific."