Delta, Air France-KLM & Virgin Atlantic to Form Single Joint Venture

Air France-KLM buys 31 percent stake in Virgin Atlantic

Sir Richard Branson's Virgin Group today relinquished control of Virgin Atlantic, selling a 31 per cent stake in the airline to Air France-KLM for £220m.

Virgin Group will retain a 20 per cent stake and the chairmanship of the carrier, while Delta will retain its 49 per cent stake in Virgin Atlantic.

Delta, which also owns a 3.2% stake in China Eastern, will pay €375m (£335m) for its stake in the Franco-Dutch giant.

While Virgin Atlantic's joint venture with Delta helped them to compete with the British Airways-American Airlines alliance in recent years, Branson explained, the network and flight connections have remained limited.

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.

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).


But do equity partnerships truly work?

Air France and KLM could flow their passengers more easily on to Virgin and passengers would be able access the others' lounges and earn and redeem miles on the airlines' various flights.

Delta Chief Executive Ed Bastian said airlines need stronger partnerships to compete in an increasingly "dynamic global landscape".

Delta shares traded down just under 1 percent, weighed by disappointing third-quarter outlooks by rival USA carriers. The legal version of this piece can be read at https://www.themarketsdaily.com/2017/07/29/air-france-klm-sas-aflyy-sell-rating-reiterated-at-j-p-morgan-chase-co.html. The three are asking for regulatory approval for the joint-venture.

Virgin Atlantic says it will remain a United Kingdom airline and continue to fly under the Virgin brand.

The role of Alitalia, now facing bankruptcy proceedings, was not clear, though it remains a part of the joint venture with Delta and Air France-KLM. Mr. Weiss said a tentative agreement will be reached by the end of the year.

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