Air France-KLM, Delta, Virgin Atlantic, China Eastern strengthen partnership

Jul 28, 2017: Air France-KLM, Delta Air Lines, Virgin Atlantic and China Eastern Airlines have announced new alliances that will be strengthened by equity investments.

Delta, Air France-KLM and Virgin Atlantic will launch a combined long-term joint venture, supported by a 31 percent investment by Air France-KLM in Virgin Atlantic, to offer customers the most comprehensive trans-Atlantic route network. This transaction amounting to £220 million should take place in 2018, after approval by the relevant regulatory authorities.

Air France-KLM will become the second largest shareholder in Virgin Atlantic after Delta which holds 49 percent, and will have the same level of representation as Delta within the Board of Directors.

Jean-Marc Janaillac, chairman and chief executive officer of Air France-KLM, said, “This partnership which is unprecedented in scale gives Air France-KLM a leadership position in the worldwide airline industry. With Delta and Virgin Atlantic we are reinforcing our trans-Atlantic alliance, making us the number one alliance between Europe and the United States in terms of traffic. With China Eastern, we are consolidating our position on a high-growth market.

“The commitment and efforts of Air France-KLM staff have enabled an improvement in our performance and the securing of these strategic partnerships. These agreements accelerate the value-creation initiatives deployed through the Trust Together project.”

In parallel, Air France-KLM and China Eastern will step up their commercial cooperation and reinforce their partnership within the framework of the existing joint-venture, to secure and reinforce Air France-KLM’s presence in the Chinese market thanks to a long-term partnership.

Delta and China Eastern will each acquire a 10 percent stake in Air France-KLM by subscribing new shares through capital increases totalling €751 million.

The expanded joint venture, including Alitalia, will offer nearly 300 daily nonstop trans-Atlantic flights and convenient flight schedules. Customers also will benefit from the ability to earn and redeem miles across all carriers, co-location of facilities at key airports to improve connectivity and access to each carrier’s airport lounges for premium customers.

The investment aligns with others Delta has made in recent years as it grows its international footprint through partnerships with key airlines in regions around the world. The demand created by Delta and Air France-KLM’s combined customer base and hub airports has enabled new trans-Atlantic routes to give Delta customers expanded choice in destinations and flight frequencies.

“A dynamic global landscape means it’s more important than ever for Delta to deepen ties with our global partners to provide opportunities for mutual growth,” said Ed Bastian, CEO, Delta.

“During the past decade, Delta’s global partnerships have fueled significant international growth,” said Steve Sear, president – International & EVP – Global Sales. “As we further develop these partnerships, our ability to align network, sales and other commercial and operational initiatives will provide even greater benefits for our customers and employees.”

All transactions are subject to execution of definitive agreements and receipt of final shareholder, board and regulatory approvals.

The Atlanta-based airline’s existing joint venture with Air France-KLM dates to 2009, with the addition of Alitalia in 2010. In 2012, Delta launched a joint venture with Virgin Australia followed in 2013 by both a 49 percent investment in, and joint venture with, Virgin Atlantic. In 2015, Delta entered into an enhanced marketing arrangement with, and acquired a 3.5 percent stake in, its SkyTeam partner China Eastern. In 2017, Delta launched its joint cooperation agreement with Aeromexico and increased its equity stake in the carrier to 49 percent. Also in 2017, Delta announced a joint venture with Korean Air Lines. Delta also holds a 9.5 percent equity interest in Brazil-based airline GOL.