Etihad expresses interest in Virgin Atlantic: reports

Air France-KLM and Delta Air Lines have reportedly hired Goldman Sachs Group to assist them in a possible joint bid for Virgin Atlantic Airways Ltd (The Telegraph, 21-Feb-2011). Sir Richard Branson, who owns a 51% stake in Virgin Atlantic, has reportedly appointed Deutsche Bank AG to study future business options. There have also been reports that Etihad Airways may have written to Deutsche Bank expressing interest in a bid, and have hired Bank of America-Merrill Lynch as advisers.

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  Air France-KLM has reported an operating loss of EUR353 million for 2011, a significant turnaround from its 2010 profit of EUR28 million - and follows Lufthansa's 18% year-on-year decline in operating profit to EUR820 million last year. This has been a difficult year for the Franco-Dutch airline group, as it battled rising fuel prices and uncertainty across many of its markets. The start of 2012 saw the Group launch ‘Transform 15’, its turnaround programme aimed at restoring profitability. The 2011 loss emphasises the need for this programme to deliver results, given a continuing uncertain outlook as Europe's economic troubles persist amid high fuel prices.

  The Group’s revenue was unable to absorb rising fuel expenses; although total revenues increased by 4.5% year-on-year to EUR24.36 billion, operating costs rose 6.2% to EUR24.72 billion. Fuel expenses alone surged 16.3% year-on-year.

• Changes in Northern Europe: Finnair outsources European routes to Flybe; Skyways & City Airline fold
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