Delta will purchase 10% of its joint venture partner Air France-KLM, and Air France-KLM will purchase 31% of Virgin Atlantic as part of a plan to form a broader transatlantic joint venture between the carriers.
“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,” Delta CEO Ed Bastian said in a prepared statement Thursday. “Bringing together the strengths of Delta, Air France-KLM and Virgin Atlantic into a combined joint venture will create the trans-Atlantic partnership of choice for customers.”
Delta’s 375 million euro ($437 million) investment in Air France-KLM will also give it a seat on the carrier’s board of directors. Meanwhile, the 220 million British pound ($287 million) investment that Air France-KLM is making in Virgin Atlantic will leave Richard Branson’s Virgin Group with just 20% ownership in the carrier. Delta has owned 49% of Virgin Atlantic since 2013.
Delta has existing antitrust-immune joint ventures with Air France-KLM and Virgin Atlantic. Under those arrangements, Delta is able to coordinate with its partners in marketing, scheduling and operating flights.
Under a memorandum of understanding signed by Delta, Air France-KLM and Virgin Atlantic, the carriers are to apply for approval to combine the existing Delta-Virgin Atlantic joint venture and the joint venture between Delta, Air France-KLM and Alitalia into a unified joint venture.
The proposal must be approved by each company’s board and by regulators within the EU, U.S. and U.K.
The long-term partnership, which would last at least 15 years, would offer reciprocal frequent-flyer benefits, including the ability to earn and redeem miles across all carriers. The benefits would also include co-location of facilities at key airport hubs, as well as access to each carriers’ airport lounges for premium customers.
The partnership would encompass more than 300 daily transatlantic flights. The carriers said it would be centered around hubs in Amsterdam, Atlanta, Boston, Cincinnati, Detroit, Los Angeles, London Heathrow, Minneapolis-St Paul, New York Kennedy, Paris Charles De Gaulle, Salt Lake City and Seattle.
Also, Thursday, Air France-KLM announced that China Eastern would acquire a 10% share of its stock, just like Delta.
Delta has owned 3.5% of China Eastern since 2015.
Delta, Air France-KLM, China Eastern and Alitalia are members of the SkyTeam alliance.
By Robert Silk
Source: Travel Weekly