The biggest airline in the United States has the money but not the synergies for a tie-up

 
Marion Dakers
DELTA Air Lines is one of the strongest carriers operating in the US at the moment.

Having gone through Chapter 11 bankruptcy protection in 2005 – a trial most American airlines have endured in the past decade – it now boasts quarterly profit that regularly tops $1bn, plus more than $5bn in accessible cash.

It even owns its own oil refinery, shielding it from some of the fuel cost pain that hammers rivals.

There is no doubt that it could afford to buy Singapore Airlines’ slice of Virgin Atlantic, which was valued at up to £1bn when Delta was last linked with the stake (though this will have changed since last year: Virgin has grown revenues three per cent to £2.74bn, and swung from a profit to an operating loss of £80.2m).

But Delta’s sheer size could impede a worthwhile investment in Virgin. The firm already has a transatlantic partner in Air France-KLM, making the synergies Virgin and Singapore had trumpeted (but not quite delivered over the years) less of an asset for the US giant.

Its Heathrow slots mean it is actually in competition with Virgin on some routes. Virgin Atlantic, which Sir Richard Branson once described as his baby, is unlikely to give up hard-won territory at Heathrow happily.

Whatever happens to Singapore’s stake, Virgin is aware that a heavy-hitting partner is needed: it is pinning its hopes for now on joining one of the three air alliances. The range of possible investors is only slightly wider, and much trickier.