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Monday, 10 July, 2000, 16:47 GMT 17:47 UK
Virgin and BA eye Air India
BA and Virgin Atlantic
BA and Virgin are bitter rivals on Atlantic routes
British Airways and Virgin Atlantic are flying into a fresh battle, this time over buying a stake in Air India.

Virgin's Sir Richard Branson said on Monday he would bid for a stake in the airline which is due to be partially privatised by the Indian government.

British Airways is also reported to be close to agreeing a joint bid for a chunk of Air India.

The Indian regulatory regime has been fairly protective and therefore restrictive but now it is looking very attractive

Jean-Louis Morisot, analyst

BA's move threatens Virgin's own recent code-sharing link-up with Air India, which has enabled it to start flights to Delhi this summer.

"We are working closely with Air India. We have said we will have talks with Air India about the shareholding they want to put onto the market," Sir Richard said at a press briefing.

"We will be meeting their bankers. We will see if Air India will deal with us or British Airways," he added.

British Airways has declined to comment on the reports that it might bid for a stake in Air India, whose 60% sell-off was announced in May.

Middle classes

The reports suggest that BA will be joining forces with Indian carrier Jet Airways to mount the bid for a stake in Air India.

Other potential bidders include Air France, which recently said revenue from Indian operations had jumped 89% in the past four years.

Jean-Louis Morisot, Singapore-based airline analyst at investment bank Goldman Sachs & Co said Virgin Atlantic wanted a foothold in India's burgeoning middle class market.

"The Indian regulatory regime has been fairly protective and therefore restrictive but now it is looking very attractive," he added.

Virgin Atlantic has just begun to fly twice a week between Delhi and London, a route on which it competes with BA.

Atlantic skirmishes

Analysts have said that of the total 60% stake in Air India which is going up for sale, strategic partners can buy up to 40% equity, with the rest going to employees, domestic financial institutions and retail investors.

Virgin Atlantic is 49% owned by Singapore Airlines.

The share sale is expected to take place before the end of the year.

Virgin and British Airways have had numerous high profile skirmishes - some of which ended in court - during their competition on the Atlantic routes.

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