A proposed tie-up between Delta Air Lines and Virgin Blue Holdings Ltd (ASX:VBA) has hit a stumbling block with news that the US Transportation Department plans to deny the alliance.
The two airlines are hoping to co-ordinate on operations between Australia and the US which would see them co-operate on pricing, revenue management and marketing on trans-Pacific routes.
The pair had sought permission from US authorities to bypass antitrust laws, which block this kind of collaboration.
Australian authorities approved the joint venture back in December last year.
According to a report in The Australian this morning, the US Transportation Department says the two airlines have not demonstrated that the alliance will provide enough benefits to travellers for it to grant antitrust immunity for the joint venture.
The paper reports that Virgin Blue and Delta strongly believe their merger will be good for consumers and have two weeks to object to the ruling.
Virgin Blue Holdings earned $21.3 million for the year to June 30, 2010.
VBA Price at posting:
44.5¢ Sentiment: None Disclosure: Held
