Air France-KLM agrees option for Virgin Atlantic ownership in event of hard Brexit

BERLIN - 28 July 2017: Air France-KLM, Delta Air Lines and Virgin Atlantic have agreed a so-called 'put' option with Virgin Group that allows Virgin Atlantic to remain in majority UK ownership in the event of a hard Brexit.

Richard Branson's Virgin Group on Thursday said it would sell a 31 percent stake in Virgin Atlantic to Air France-KLM, reducing its stake to 20 percent. U.S. carrier Delta remains the largest shareholder with a 49 percent stake.

At present, Virgin Atlantic must be majority owned by EU investors to retain its operating rights as a European carrier, but it is not clear what ownership rules will look like after Britain's exit from the European Union.

"The put option means we can easily, immediately restore UK citizenship into the stake of Virgin Atlantic if it was necessary or mandatory after Brexit," Frederic Gagey, CFO of Air France-KLM said on Friday.

He added he was confident there would be a liberal air traffic rights deal between Britain and the United States after Brexit. Currently, Virgin Atlantic has unlimited flying rights to the United States thanks to the EU-US Open Skies deal.

Air France-KLM will also remain EU majority-owned even if UK shareholdings become non-EU after Brexit, despite Delta and China Eastern planning to take 10 percent stakes, executives added. Gagey said he estimates around 6-7 percent of the group is currently owned by UK investors.