AirAsia Boss May Buy Virgin Atlantic - Report

December 26, 2010

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The chief executive of Malaysia's AirAsia is considering a possible takeover bid for British airline Virgin Atlantic, the Sunday Times newspaper reported.

Tony Fernandes, who runs Asia's largest budget carrier by fleet size, has renewed his interest in the UK airline after previously considering and deciding against a bid, the newspaper said in an unsourced report.

Any deal could be worth up to GBP£1 billion (USD$1.54 billion), it said.

British billionaire Richard Branson has a 51 percent stake in the airline he founded in 1984. Singapore Airlines paid GBP£600 million for a 49 percent stake in Virgin Atlantic in 2000.

The UK airline said earlier this month it had received several "lines of enquiry" about tie-ups with rivals after it hired Deutsche Bank to assess the aviation market.

It said the bank's review was expected to last for several months and did not name those interested in a possible tie-up.

Increased competition from low-cost airlines, weak demand and high fuel prices have combined to squeeze many carriers in recent years.

The low-margin industry has gone through a period of rapid consolidation and analysts believe larger carriers such as Virgin Atlantic need partners to stay ahead of the competition.