Air France-KLM strengthens its strategic partnerships
Air France-KLM today announces a further major step in the reinforcement of its strategic partnerships with, firstly, the creation of a single global joint-venture between Air France-KLM, Delta Air Lines and Virgin Atlantic and, secondly, the strengthening of its partnership with China Eastern Airlines These two commercial alliances will be strengthened by capital links:
- Air France-KLM will acquire Virgin Group’s 31% stake in Virgin Atlantic for £220 million.
- Delta and China Eastern will each acquire a 10% stake in Air France-KLM within the framework of reserved capital increases totalling €751 million.
The strategic, commercial and equity investment of these partnerships will position Air France-KLM as the European pillar of the leading global airline network.
All of these agreements will enable Air France-KLM to offer its customers an expanded network and to capitalise on the pooling of extensive distribution networks. As an integral part of the Trust Together strategic project, these partnerships will support the Group’s profitable growth and enable Air France-KLM to offer its customers an unparalleled proposition.
At the heart of the most global partnership in the airline industry
The combination of the existing joint ventures between firstly Air France-KLM, Delta and Alitalia, and secondly between Delta and Virgin Atlantic, within a single joint-venture, marks the expansion and reinforcement of one of the most advanced partnership models in the airline industry. This joint venture will enable the Group* to:
- Offer customers an unrivalled proposition on transatlantic routes.
- Drive the capacity growth of the partners.
- Create an associate partner status enabling the inclusion of other players.
- Extend a partnership over a 15-year period.
- Generate significant annual synergies thanks to a new code share to/from London, sales coordination, the extended partnership and cost savings.
The creation of this joint-venture will thus consolidate Air France-KLM’s leadership position in the North-American and European markets with the largest airline network articulated around twelve powerful hubs on both sides of the Atlantic: Amsterdam, Atlanta, Boston, Cincinnati, Detroit, Los Angeles, London Heathrow, Minneapolis-St Paul, New York-JFK, Paris-CDG, Salt Lake City and Seattle.
A strengthened partnership with China Eastern
In parallel, Air France-KLM and China Eastern will step up their commercial cooperation and reinforce their partnership within the framework of the existing joint venture, to:
- Secure and reinforce Air France-KLM’s presence in the Chinese market thanks to a long-term partnership.
- Give Air France-KLM a European leadership position on Shanghai, the main business market in China.
- Improve the services for our customers.
- Enable increased cooperation in terms of the network, pricing and operational synergies.
These capital increases will enable an improvement in Air France-KLM’s financial structure, accelerate the reduction in its net debt and finance the purchase of the stake in Virgin Atlantic.
*Subject to the signing of the final agreements and the approval of the relevant regulatory authorities.
Planned calendar for the transaction:
- 4th September 2017: Extraordinary Shareholders’ Meeting to approve the capital increases and the appointment of the new members of the Board of Directors (to take place on closure of the reserved capital increases)
- Once the regulatory approvals are obtained: Realisation of the reserved capital increases.
Air-France-KLM 27 July 2017
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Air France-KLM, Delta Air Lines and Virgin Atlantic to Strengthen Transatlantic Partnerships
The Air France-KLM Group, Delta Air Lines and Virgin Atlantic Limited today announced their intention to expand their strategic partnership and offer customers access to the most comprehensive transatlantic route network via an extensive joint venture. The long-term joint venture would offer convenient flight schedules with competitive fares and 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 to improve connectivity times for customers, as well as access to each carriers’ airport lounges for premium customers.
The enhanced joint venture, including Alitalia, would become the airline partnership of choice for customers, offering more than 300 daily nonstop transatlantic flights and increasing competitive routings with offerings across key business markets including Amsterdam, Atlanta, Boston, Cincinnati, Detroit, Los Angeles, London Heathrow, Minneapolis-St Paul, New York-JFK, Paris-CDG, Salt Lake City and Seattle.
The enhanced joint venture would establish a combined partnership with a duration of at least 15 years. In order to support the success of that cooperation:
- Air France-KLM will acquire a 31 percent stake in Virgin Atlantic currently held by Virgin Group for £220 million
- Virgin Group will retain a 20 percent stake and Chairmanship
- Delta will retain its 49 percent stake in Virgin Atlantic
All transactions are subject to execution of definitive agreements and receipt of final shareholder, board, and regulatory approvals. Virgin Atlantic would retain its independence as a UK airline with a UK operating certificate, and will continue to fly under the Virgin brand.
Jean-Marc Janaillac, CEO, Air France KLM, said:
With our partners Delta and Virgin Atlantic, we are pleased to reinforce our transatlantic partnership, offering our customers even more choice between Europe, UK and the United States via twelve hubs on both sides of the Atlantic.
Sir Richard Branson, Virgin Group Founder, said:
Virgin Atlantic has made a big difference to people’s flying experience over the past 33 years and transformed the airline industry for the better. 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.
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. We couldn’t be more excited that the next stage of our growth will be at the heart of the strongest partnership for customers travelling between Europe and North America. Together with our friends at Air France-KLM and Delta we will build on this vision of our teams creating irresistible experiences for customers flying on our network.
Ed Bastian, Delta’s CEO, comments
By working even more closely with our great partners at Air France-KLM and Virgin Atlantic, together we will develop a path to increase competition across the Atlantic that will spur additional benefits for customers, employees and shareholders.
Virgin Atlantic – Posted 17:00 Thursday 27 July 2017, PARIS, ATLANTA and LONDON
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Delta, Air France-KLM, Virgin Atlantic will launch combined joint venture
Delta Air Lines is deepening its longstanding and industry-leading partnership with Air France-KLM Group with a €375 million investment to acquire 10 percent equity in the joint venture partner and a seat on the Air France-KLM Group Board of Directors. Additionally, Delta, Air France-KLM and Virgin Atlantic will launch a combined long-term joint venture, supported by a 31 percent investment by Air France-KLM in Virgin Atlantic, to offer customers the most comprehensive trans-Atlantic route network.
“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,” said Delta CEO Ed Bastian. “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.”
The expanded joint venture, including Alitalia, will offer nearly 300 daily nonstop trans-Atlantic flights and convenient flight schedules. Customers also will benefit from the ability to earn and redeem miles across all carriers, co-location of facilities at key airports to improve connectivity and access to each carrier’s airport lounges for premium customers.
The investment aligns with others Delta has made in recent years as it grows its international footprint through partnerships with key airlines in regions around the world. The demand created by Delta and Air France-KLM’s combined customer base and hub airports has enabled new trans-Atlantic routes to give Delta customers expanded choice in destinations and flight frequencies.
“During the past decade, Delta’s global partnerships have fueled significant international growth,” said Steve Sear, President – International & EVP – Global Sales. “As we further develop these partnerships, our ability to align network, sales and other commercial and operational initiatives will provide even greater benefits for our customers and employees.”
All transactions are subject to execution of definitive agreements and receipt of final shareholder, board and regulatory approvals.
The Atlanta-based airline’s existing joint venture with Air France-KLM dates to 2009, with the addition of Alitalia in 2010. In 2012 Delta launched a joint venture with Virgin Australia followed in 2013 by both a 49 percent investment in, and joint venture with, Virgin Atlantic. In 2015, Delta entered into an enhanced marketing arrangement with, and acquired a 3.5 percent stake in, its SkyTeam partner China Eastern. In 2017, Delta launched its joint cooperation agreement with Aeromexico and increased its equity stake in the carrier to 49 percent. Also in 2017, Delta announced a joint venture with Korean Air Lines. Delta also holds a 9.5 percent equity interest in Brazil-based airline GOL.
Delta Air Lines • posted July 27, 2017 12:00 pm
