Delta, Air France-KLM, Virgin Atlantic will launch combined joint venture

Delta, Air France-KLM, Virgin Atlantic will launch combined joint venture

Air France-KLM plans to acquire a 31% stake in Virgin Atlantic for around £220 million ($287 million), which would make it the United Kingdom carrier's second largest shareholder behind 49% stakeholder Delta. Delta also has a minority stake in a Brazilian carrier and already owns 3.5% of China Eastern.

In addition, Delta and Air France-KLM are partnering with Virgin Atlantic, part of Sir Richard Branson's Virgin Group, to create a global joint venture.

China Eastern, Delta and Air France-KLM are members of SkyTeam, a global alliance of airlines that provides passengers access to more destinations, flight frequencies and connectivity. When Branson sold 49% of Virgin Atlantic to Delta in 2012, the then-head of Virgin's arch-rival British Airways Willie Walsh said he would accept "a knee in the groin" from Branson if Virgin lasted another five years. The new venture will also engage the ailing Alitalia carrier, which now has 18 companies bidding for its takeover including British Airways, Lufthansa, EasyJet, and Ryanair.

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.

It's no different this time, with Delta gaining one Air France-KLM board seat if the measure is approved by shareholders, boards and governments.

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Craig Kreeger, CEO, Virgin Atlantic, said: "We built the Virgin Atlantic brand by providing customers with the choice they deserve and a travel experience they love".

But do equity partnerships truly work?

A key part of Air France-KLM's turnaround strategy is upcoming low-priced airline Joon. The correct version of this piece can be read at https://www.chaffeybreeze.com/2017/07/28/air-france-klm-sa-otcmktsaflyy-given-average-recommendation-of-hold-by-analysts.html.

The deals likely will require regulatory approval and anti-trust immunity to allow coordination on pricing and other business matters, and probably won't be finalized for another year, the carriers said.

Virgin Atlantic's chief commercial officer, Shai Weiss, said Mr. Branson will retain a 20% stake and remain involved in the airline he founded.

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