Air France drops Virgin stake in exchange for tighter governance

Air France-KLM said Wednesday it had dropped plans to buy a stake in Virgin Atlantic as the two airline groups combine their transatlantic partnerships with Delta into an expanded joint venture. Under the three-way deal struck in 2017 and approved by U.S. regulators last month, Virgin had agreed to sell a 31% holding to Air France-KLM for GBP220m - effectively ceding joint control to Delta, which already owns a 49% Virgin stake, and its Franco-Dutch partner. But the companies now agree that “Air France-KLM’s acquisition of a stake in Virgin Atlantic is no longer necessary”, Air France said, confirming a Monday announcement by Virgin founder Richard Branson. The understanding was reached after Virgin agreed to provisions bolstering Air France-KLM and Delta’s effective control of the venture without the need for an additional Virgin stake. Branson had previously voiced reluctance to sell. The governance deal reached “in parallel” will bring “simplified decision-making processes that will enable the joint-venture to deliver its full synergy potential”, Air France said.<br/>