Richard Branson will retain control of Virgin Atlantic (VS, London Heathrow) after agreeing with Air France-KLM to scrap a deal that would have seen the Franco-Dutch group acquire most of his own 51% stake.

The plan for Air France-KLM to buy 31% of Virgin Atlantic for GBP220 million pounds (USD286 million), agreed in 2017, is now cancelled. Branson will keep control of the group, with Delta Air Lines (DL, Atlanta Hartsfield Jackson) holding the remaining 49%.

“We have agreed, subject to contract, with our new joint venture partners, that our family will continue to hold the 51% of Virgin Atlantic shares we own,” he said in a statement posted on the Virgin Atlantic website.

Branson stressed that an expanded transatlantic joint venture with Delta and Air France-KLM, which the US Department of Transportation approved on November 21 following a two-and-a-half-year investigation, remained intact. The revenue and cost-sharing pact was unaffected by the decision to stop the sale and will be implemented “in the near future,” Virgin said in a separate statement.

“The expanded joint venture with Delta and Air France-KLM remains an essential part of our future and long-term success,” Branson underlined.

Virgin has resumed growth under CEO Shai Weiss, who took over on January 1, 2019, with a new route opening to Tel Aviv Ben Gurion, a return to Mumbai Int'l, and more seats being added out of Manchester Int'l. A new London Heathrow to São Paulo Guarulhos service begins in March 2020.

Air France-KLM confirmed on December 4 that it had dropped plans to buy a stake in Virgin Atlantic.

“Air France-KLM’s acquisition of a stake in Virgin Atlantic is no longer necessary”, Air France (AF, Paris CDG) said in a statement, as conditions already exist that will bring “simplified decision-making processes that will enable the joint-venture to deliver its full synergy potential”.

The fact that the stake purchase is now dropped is also a welcome source of extra cash for Air France-KLM, Reuters speculated, as the group pursues an expensive fleet overhaul and expands low-cost operator Transavia France (TO, Paris Orly).

Editorial Comment: Added comments from Air France statement. - 05.12.2019 - 08:07 UTC