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The BBC's Rory Cellan-Jones
"For a small airline Virgin has punched above its weight"
 real 28k

Monday, 20 December, 1999, 13:49 GMT
Branson sells 49% of Virgin Atlantic

Virgin Atlantic will keep its livery and distinct identity

Richard Branson is to sell a 49% stake in his airline, Virgin Atlantic, to Singapore Airlines.

The deal is worth 600m ($960m), and will establish a global partnership between the two carriers.

The sale will provide Virgin with a welcome capital boost for further expansion, while Mr Branson will invest separately in Singapore Airlines.

The airline is not for sale and will never be for sale. It is my baby and it is something I am enormously proud of.
Richard Branson, Virgin Atlantic

The airlines say customers will find it easier to book long-distance flights through either airline, and also benefit from sharing flight departure lounges and frequent flyer programmes.

Mr Branson said: "This is a great day for all of us at Virgin Atlantic and for the travelling public.

"As our route networks do not overlap, we can come together in offering a much wider choice of destinations with the best service on the ground, in the air, and at very competitive prices."

Virgin is promising a capital injection of 49m, and says it will reinvest a further 51m into Virgin Atlantic.

The airlines had signed a memorandum of understanding on Sunday in London.

The two companies will retain their independent management teams but Singapore Airlines will have some representation on the board of Virgin Atlantic.

Mr Branson says he will use the remaining 500m he has raised to invest in his other companies, like Virgin Mobile Phones and Virgin's internet services.

Strategic alliance

Until now, Virgin Atlantic had been left out of global alliances, competing with the likes of British Airways and Lufthansa, who can rely on their global carrier networks Oneworld and Star Alliance.

Similar to those alliances, Singapore Airlines and Virgin will maintain their own identities and develop their own products.

The memorandum states that both carriers routes and networks will not overlap.

But they will co-operate through code-sharing, where both airlines sell tickets for the same flights on certain routes. Targeting the all-important segment of business travellers, Virgin and Singapore Airlines will combine their frequent flyer programmes and share airport lounges.

Singapore Airlines' deputy chairman Cheong Choong Kong said: "We are delighted to be entering this unique arrangement with Virgin Atlantic.

"Singapore Airlines has always prided itself on being the best and we have watched Virgin Atlantic grow into a formidable airline with similar values of customer service, quality, and vision of the future."

Virgin already has a limited code-sharing alliance with the US carrier Contental which allows it to share trans-Atlantic flights.

Common enemy

Both carriers have a history of scraps with rival British Airways.

Virgin fought a long court battle with its domestic rival over what the firm described as BA's dirty tricks to poach Virgin's customers.

On a much smaller scale, Singapore Airlines recently tussled with BA over patents concerning a newly designed sleeper seat for first-class cabins.

Humble beginnings

Virgin has been in the airline business since 1984, when the company began to fly between London and New York.

It quickly expanded, developing two distinct brands. Virgin Atlantic is serving the long-haul market, while Virgin Express offers cheap flights within Europe.

Recently, Richard Branson announced that he would set up a low-fare airline in Australia, which prompted his future rivals to slash prices.

Virgin Atlantic operates 29 aircraft to 18 destinations in Europe, Africa, Asia and the United States.

Total sales were over 1bn ($1.6bn) in the year to 30 April 1999.

Singapore Airlines began trading in 1972, emerging when the assets of Malaysia-Singapore Airlines were split between the two countries. The airline now flies to 97 cities in more than 40 countries.

It claims to fly the most modern fleet in the industry and is the world's second largest operator of Boeing 747-400s, the largest commercial passenger jet.

Singapore Airlines had total sales of $4.6bn for the year to end 31 March 1999.

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See also:
20 Dec 99 |  Business
Airlines flying in formation
20 Dec 99 |  Business
Branson: Still flying high
28 Nov 99 |  Business
Australia to get Virgin treatment
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Virgin's battle of Britain with BA
29 Sep 99 |  The Company File
Branson may consider BA stake
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BA fights over sleeper seats
23 Oct 98 |  The Company File
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