In an unexpected turn of events and just weeks after the U.S. Department of Transportation granted final approval of antitrust immunity to the joint venture involving Delta Air Lines, Air France-KLM, and Virgin Atlantic, the Franco-Dutch group said Wednesday it will not move forward with plans to purchase a 31percent stake in Virgin Atlantic. The equity investment arranged in July 2017 was intended to cement a new transatlantic joint venture; however, the companies now consider the acquisition “no longer necessary,” the Paris-based group stated. Earlier in the week, Virgin founder Richard Branson had already confirmed reports in French daily La Tribune the shareholding deal was off.

“We have agreed, subject to contract, with our new joint venture partners, that our family will continue to hold the 51 percent of Virgin Atlantic shares we own,” Branson wrote in a letter to employees posted on the Virgin Group website. He said in 2017 he had “reluctantly” agreed to reduce his shareholding in Virgin Atlantic because he thought reaching an agreement on the new joint venture would require it. The expanded three-way joint business—which will generate yearly revenue of $13 billion and cover some 300 daily flights on more than 100 nonstop routes between Europe and North America—will combine two existing joint ventures on transatlantic routes, those between Delta and Virgin and between Air France-KLM and Delta. The need to secure more feed for the Virgin Atlantic network considering British Airways’ growing “clout in Europe” proved another reason to forge a deal with Air France-KLM, Branson noted.

Branson stressed the expanded joint venture with Delta and Air France-KLM remains “an essential part of our future and long-term success,” while Air France-KLM highlighted that, in parallel with the agreement to abandon the stake purchase, the partners finalized the expanded joint venture's governance installing “simplified decision-making processes that will enable the joint venture to deliver its full synergy potential.” A spokeswoman for the group told AIN she could not provide details on the new governance.

The scrapping of the equity transaction delivers benefits for both sides. Air France-KLM will not have to spend around £220 million ($282 million) for the 31 percent minority stake in Virgin Atlantic, which posted a pre-tax loss of £26.1 million last year and a £49 million loss in 2017. For Virgin Atlantic, it clarifies its status as a UK airline after Brexit. Virgin Group will retain its 51 percent shareholding, whereas the deal with Air France-KLM would have led to a confused ownership arrangement, with EU interests owning 31 percent, UK interests owning 20 percent, and Delta, a U.S. carrier, owning 49 percent.