Richard Branson and Virgin Atlantic continue to examine their options when it comes to the sparky British airline that could.   Deutsch Bank was hired to find Virgin some opportunities and there has been a great deal of speculation as to what will happen.

Some see Branson’s 51% shareholding a problem for potential partners.  Others see Singapore Airlines’ 49% share a problem.   I agree that there is a problem.

However, I don’t think the problem is with Branson.  Singapore Airlines made an investment and they clearly want to find a return on this investment before considering letting it go.  Despite rumours that Singapore wants out, I’ll point out that Singapore’s shareholding has allowed it to control what the Virgin airlines have done in its corner of the world. 

Control that has had the Virgin airlines dancing to find a way around the constraints.  Singapore is only going to let its investment go if it receives a healthy return on its investment and it doesn’t see another airline gaining the upper hand against it.

Virgin Atlantic needs some partnerships.  There is no question of that.  It’s unlikely that any one large airline will engage in such a partnership because it may well go against the interests of another partner airline.

A better strategy would be for Virgin to start exploring partnerships with relatively non-aligned airlines that fit strategically into Virgin’s network(s).   What’s more, Virgin needs to align itself more with the daughter airlines that exist around the world (Virgin Australia and Virgin America, for instance.)

The brand is strong and Branson is a good leader for that brand.  Moreover, he is not naive to the airline world.  You don’t own a major airline for 20+ years and succeed by being stupid.  Other airlines need to look past Branson’s theatrics and embrace the experienced aviation leader behind them.

Filed under: Airline News by ajax
No Comments »