Singapore Airlines in talks to sell Virgin stake

  @CRrileyCNN December 3, 2012: 4:21 AM ET
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HONG KONG (CNNMoney)

Singapore Airlines said Monday it is in talks to sell its stake in Virgin Atlantic, a move that could shake up air travel in Asia and Europe.

The airline said it was "in discussions with interested parties" about a sale, but cautioned that the negotiations may not result in a deal. Singapore Airlines has held 49% of Virgin Atlantic since 1999, while British entrepreneur Richard Branson has retained a controlling share.

Singapore Airlines did not list potential suitors, but multiple media reports suggest Delta Airlines is participating in talks. A spokeswoman for the U.S. carrier declined to comment Monday, and a representative from Virgin Atlantic referred reporters to Singapore Airlines.

Shares of Singapore Airlines were down 0.5% in morning trading.

Should Singapore Airlines divest, the sale would be the latest round of shuffling in the merger-happy airline industry. Carriers have turned to consolidation in recent years as rising fuel costs and weak demand have affected profitability.

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Delta's last major expansion, in 2008, took the form of a merger with Northwest Airlines. The consolidation proved difficult, with computer systems, cultural differences and passenger expectations all serving as major stumbling blocks.

But a tie-up with Virgin would provide strategic benefits for the second-largest U.S. carrier, including coveted space at London's Heathrow International, as well as increased access to European and Asian markets.

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The deal might also make sense for Virgin, which has been squeezed by discount competitors. The British airline also lacks a partnership with one of the major air alliances -- something Delta could help provide.

Virgin announced in September that Steve Ridgway, the company's CEO since 2001, would step down in spring 2013. The company reported an operating loss of $129 million for the year ended in February. To top of page



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