Virgin Atlantic Airways Ltd. will go on the offensive under new Chief Executive Officer Craig Kreeger as an equity deal with Delta Air Lines Inc. gives it the backing to take on bigger rivals, outgoing CEO Steve Ridgway said.
Kreeger, a 53-year-old American, was appointed to the top position on Jan. 8, four weeks after Delta agreed to pay Singapore Airlines Ltd. $360 million for a 49 percent stake in Virgin, which is majority owned by billionaire Richard Branson.
“There’s now a shareholder with a significant strategic interest in what Virgin Atlantic brings them,” Ridgway said in an interview. “We’ve been in fighting mode for the last four to five years. This should put us back on a growth trajectory.”
The first task for Kreeger, who took over on Feb. 1, will be to expedite the two-month old joint venture agreement with Delta, Ridgway said. The new CEO’s 27 years at AMR Corp., where he helped coordinate a joint venture between American Airlines and BA, should help him deliver on the new tie-up, he said.
“He brings a wealth of experience at American in dealing and working with British Airways,” Ridgway said yesterday in London. “That’s what we need because we’ve got to put together this North Atlantic joint venture now and there is a set of skills there that Virgin needs to have.”
Delta and Virgin are seeking antitrust immunity that would let them coordinate schedules and pricing and share costs and sales from 31 joint-venture flights over the Atlantic regardless of whose plane operates the route. They also will offer reciprocal frequent-flier benefits and use of airport lounges.
The deal gives Delta a platform at London Heathrow airport, Europe’s busiest and the home base for British Airways, Virgin’s biggest rival and the top carrier in the world-leading North Atlantic corporate travel market.
The Atlanta-based-carrier “didn’t have the right presence in London, which you need to have if you’re going to be a corporate player, and we bring that,” Ridgway said.
Kreeger will also need to reinvigorate a business battered by the global economic downturn, rising fuel prices and fast-consolidating, better-connected rivals.
Virgin Atlantic had an 80.2 million-pound ($125.9 million) loss in the year through February and has delayed adding bigger planes while cutting unprofitable routes to destinations including Nairobi in Kenya, and Kingston, Jamaica.
“Let’s face it, it’s been brutal,” Ridgway said, adding that the global economy appears to be stabilizing. There’s “that bit of blue sky down the road,” he said.