No Turbulence Expected for Delta, Virgin Deal

Mergers and AcquisitionsReuters

Delta Air Lines is expected to secure unconditional European regulatory approval to buy a 49% stake in Virgin Atlantic, allowing it to compete better with rivals in the lucrative transatlantic market.

The European Commission, which is examining the deal as the pan-European regulator, does not see competition problems, three people with knowledge of the matter said on Monday.

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Delta and Virgin Atlantic announced the deal in December last year. It involves setting up a joint venture allowing both carriers to offer more flights at Heathrow, Europe's busiest airport.

The agreement is intended to boost Delta's ability to better compete with industry leader United Continental and with American Airlines, whose partnership with British Airways dominates travel between the United States and London.

"The European Commission is likely to approve the deal without conditions," said one of the sources, who declined to be identified because of the sensitivity of the matter.

A Commission spokeswoman declined to comment and there was no immediate response from Virgin Atlantic. The Commission is scheduled to decide on the deal by June 20.

U.S. regulators are also examining the deal. Antitrust lawyers had said the authorities may be concerned about the reduced incentive for the two airlines to compete with each other once they set up the joint venture.

Delta is buying the Virgin stake from Singapore Airlines . (Reporting by Foo Yun Chee; editing by Rex Merrifield and Tom Pfeiffer)