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Delta Air Lines, Air France-KLM, Virgin Atlantic and China Eastern have all agreed to participate in partnership deals aimed at fending off competition from powerful Persian Gulf airlines and emerging long-haul, low-fare carriers plying the North Atlantic. The centerpiece of the activity, all announced on Thursday, involves the launch of a long-term joint venture between Delta, Air France-KLM and Virgin Atlantic supported by a 31-percent investment by Air France-KLM in Virgin Atlantic in 2018. As a result, Richard Branson will relinquish control of Virgin Atlantic, as his share falls from 51 percent to 20 percent.
The memorandum of understanding between Air France-KLM, Delta and Virgin Atlantic lays the foundation for a combination of two existing joint ventures, one between Air France-KLM, Delta and Alitalia and the other between Delta and Virgin Atlantic.
The MOU promises to establish, in the words of Air France-KLM, “one of the most advanced partnership models in the airline industry,” allowing for what the company calls an “unrivaled proposition on the transatlantic axis.”
According to Air France-KLM, the single joint venture will, in effect, drive capacity growth of the partners, create an associate partner status allowing for the inclusion of other players at a later stage and generate “significant synergies” thanks to a new code shares to and from London, sales coordination, cost savings and the extension of the partnership to 15 years.
Meanwhile, Delta and China Eastern have each agreed to take a 10-percent stake in Air France-KLM by subscribing new shares through capital increases totaling €751 million ($882 million). Air France-KLM said the China Eastern investment will “secure and reinforce” its presence in the Chinese market thanks to the associated long-term partnership as well as give it a European leadership position in Shanghai.
Delta Air Lines, Air France-KLM, Virgin Atlantic and China Eastern have all agreed to participate in partnership deals aimed at fending off competition from powerful Persian Gulf airlines and emerging long-haul, low-fare carriers plying the North Atlantic. The centerpiece of the activity, all announced in late July, involves the launch of a long-term joint venture among Delta, Air France-KLM and Virgin Atlantic supported by a 31-percent investment by Air France-KLM in Virgin Atlantic next year. As a result, Sir Richard Branson will relinquish control of Virgin Atlantic, as his share falls to 20 percent from 51 percent.
The memorandum of understanding among Air France-KLM, Delta and Virgin Atlantic lays the foundation for a combination of two existing joint ventures, one between Air France-KLM, Delta and Alitalia and the other between Delta and Virgin Atlantic. The MOU promises to establish, in the words of Air France-KLM, “one of the most advanced partnership models in the airline industry,” allowing for what the company calls an “unrivaled proposition on the transatlantic axis.”
According to Air France-KLM, the single joint venture will, in effect, drive capacity growth of the partners, create an associate partner status allowing for the inclusion of other players at a later stage and generate “significant synergies” thanks to new code shares to and from London, sales coordination, cost savings and the extension of the partnership to 15 years.
Meanwhile, Delta and China Eastern have each agreed to take a 10-percent stake in Air France-KLM by subscribing new shares through capital increases totaling €751 million ($882 million). Air France-KLM said the China Eastern investment will “secure and reinforce” its presence in the Chinese market thanks to the associated long-term partnership and give it a European leadership position in Shanghai.