Belgian-based airline Virgin Express said yesterday it had entered into exclusive merger talks with investors in Sabena's former short-haul subsidiary Delta Air Transport (DAT).

Virgin's stock - flat before the news - nosedived almost 10 per cent, closing at €6.56 in light volume on Euronext Brussels. Virgin, controlled by British entrepreneur Mr Richard Branson's Virgin Travel Ltd, said the talks on the new airline were expected to finish in the first quarter 2002. The airline, which would operate under a new brand name, would be Brussels-based, serve the main European destinations and be aimed at both business and low-fare passengers.