Delta and China Eastern have each purchased 10% of Air France-KLM. While Air France-KLM has purchased Virgin Group’s 31% stake in Virgin Atlantic.
Developing Story – On Thursday, Delta Air Lines and China Eastern Airlines announced that they have each purchased 10% of Air France-KLM.
Delta and China Eastern’s stake in Air France-KLM comes in the form of new shares from capital increases valued at $875 million.
In addition, Air France-KLM has agreed to purchase a 31% stake in Virgin Atlantic Airways from Sir Richard Branson’s Virgin Group valued at $287 million.
Following the deal’s announcement, Branson confirmed he will remain Virgin Atlantic’s largest individual investor.
In a statement, Delta CEO Ed Bastian said:
“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.”
Air France-KLM came to be following a 2004 merger that saw the national airlines of France and the Netherlands come together to form one of the largest carriers in Europe.
“Delta is the first major US carrier to understand that the international airline market is not about today, but about the strategic investments in the future,” Airways senior business analyst Vinay Bhaskara told Business Insider.
Overall, Bhaskara believes the deal is a win-win for all parties involved. The deal creates a metal-mutual joint venture with the greatest collection of trans-Atlantic mega hubs in the business — New York, Atlanta, London, Amsterdam, and Paris.
In 2012, Delta acquired a 49% stake in Virgin Atlantic Airways from Singapore Airlines in a deal worth $360 million.
In 2015, Delta acquired 3.2% of China Eastern Airlines for $450 million.
Last week, Air France announced the launch of Joon, a boutique, millennial-focused airline that’s it hopes will put the company in a better position to compete globally.
With reports from Business Insider
