Air France-KLM, Virgin, Delta and China Eastern expand strategic partnerships


Air France-KLM, Delta Air Lines, Virgin Atlantic and China Eastern have announced plans to grow their strategic partnerships through various equity investments.

As part of the agreement penned, Air France-KLM will acquire Virgin Group’s 31 per cent stake in Virgin Atlantic for around £220 million ($287 million) with the transaction set to take place in 2018.

Air France-KLM will become the second largest shareholder in Virgin Atlantic after Delta, which holds 49 per cent. Virgin Atlantic will hold the remaining 20 per cent and remain as a UK carrier with a British operating certificate.

The Air France-KLM stake in Virgin Atlantic supports creation of a combined long-term joint venture (JV) between Air France-KLM, Delta and Virgin Atlantic, which is subject to the signature of agreements and the approval of the relevant regulatory authorities and is set to be established for a 15-year period.

Delta and China Eastern are to also each acquire a 10 per cent stake in Air France-KLM by subscribing new shares through capital increases worth about €751 million. Air France-KLM has also strengthened its partnership with China Eastern Airlines (China Eastern) and will up their commercial ties.

Air France KLM chief executive officer (CEO), Jean-Marc Janaillac says: “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.”

Virgin Group founder, Sir Richard Branson says: “This is a fantastic opportunity to extend our network and create a stronger customer champion, as well as being extremely beneficial to our people and the Virgin Atlantic brand that our customers love dearly.”

Delta’s CEO, Ed Bastian explains: “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.

“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 Air Lines Boeing 777-200

Delta’s JV with Air France-KLM dates to 2009, with the addition of Alitalia in 2010. In 2012 Delta launched a JV with Virgin Australia followed in 2013 by both a 49 per cent investment in, and JV with, Virgin Atlantic.

In 2015, Delta acquired a 3.5 percent stake in China Eastern. In 2017, Delta launched its joint cooperation agreement with Aeromexico and increased its equity stake to 49 per cent. Also in 2017, Delta announced a JV with Korean Air Lines. Delta also holds a 9.5 per cent equity interest in Brazil-based airline GOL.