LCC US Airways Grp. New US Airways Grp., Inc.

Delta Airlines Inc. (DAL) and Virgin Atlantic Airways is set to launch their proposed joint venture (JV) in summer 2014 by combining their service offerings, thus adding flight options for trans-Atlantic customers.

Looking back, in Dec 2012, Delta proposed to acquire a 49% stake in British carrier Virgin Atlantic from Singapore Airlines. The acquisition closed in Jun 2013, and in Sep 2013, Delta cleared the final hurdle by winning the U.S. Department of Transportation’s (DOT) approval to the deal.

Both carriers are prioritizing customer convenience by aligning their slots at London’s Heathrow airport. Delta will move its London-based flights from New York, Boston and Seattle to Virgin’s Heathrow terminal. The co-location of terminal will be accretive to both sets of customers as it will reduce the time for connecting flights, thus paving the way for a rich flying experience.

Delta in accordance with Virgin Atlantic will also launch a second daily service between Heathrow and Detroit Metropolitan airport beginning Jun 2014, targeting corporate flyers preferring an early morning arrival at London.  

Meanwhile, Virgin Atlantic is also rescheduling its service between Heathrow to New York’s Newark from late afternoon to early morning to tap business customers between two of the most lucrative business markets. This flight is part of the promised nine daily roundtrip flights in the London-New York route.

Sussex, UK-based Virgin has also pushed back its afternoon and evening flights between Heathrow and Boston by two hours to complement Delta’s morning service in the same route. The realignment of service will offer more flexibility to customers within the same route.

We believe that apart from benefiting the flyers, the co-location and rescheduling of flights will allow both carriers to target a separate set of customers and at the same time leverage from each other’s commanding position in either side of the Atlantic.  

Delta operates with the likes of United Continental Holdings Inc. (UAL) and carries a Zacks Rank #2 (Buy). However, sector stocks U.S. Airways Group Inc. (LCC) and Spirit Airlines Inc. (SAVE) look better with a Zacks Rank #1 (Strong Buy).

 
DELTA AIR LINES (DAL): Free Stock Analysis Report
 
US AIRWAYS GRP (LCC): Free Stock Analysis Report
 
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UNITED CONT HLD (UAL): Free Stock Analysis Report
 
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