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Air France-KLM, Virgin Atlantic and Delta do deal

May 17, 2018 Headline News No Comments Email Email

Air France-KLM, UK Virgin Atlantic and Delta Air Lines have signed “definitive agreements” for a transatlantic joint venture which includes share acquisitions.

In July 2017, the three airlines unveiled plans for Air France-KLM to acquire 31% of Virgin and for Delta to take a 10% stake in Air France-KLM.

The three airlines issued an update yesterday confirming they had finalised the terms of the deal, which will now be put forward for regulatory approval.

The statement read:

Air France-KLM, Delta Air Lines and Virgin Atlantic Limited have today signed definitive agreements paving the way forward for their expanded trans-Atlantic joint venture:         

  • The Joint Venture Agreement signed between Air France-KLM, Delta and Virgin Atlantic sets out the governance as well as the commercial and operational terms of the expanded trans-Atlantic Joint Venture.
  • Upon completion, Air France-KLM will acquire a 31 per cent stake in Virgin Atlantic currently held by Virgin Group for £220 million [about AUD 395 million].
  • Virgin Group will retain a 20 per cent stake and Chairmanship of Virgin Atlantic.
  • Delta will retain its 49 per cent stake.

Air France-KLM, Delta and Virgin Atlantic will now coordinate efforts to secure the appropriate regulatory approvals.

The airlines’ expanded joint venture will become the preferred choice for customers travelling across the Atlantic offering the most comprehensive route network, convenient flight schedules, competitive fares and reciprocal frequent flyer benefits, including the ability to earn and redeem miles across all carriers. Customers will also benefit from the co-location of facilities at key hub airports to improve connectivity and access to each carrier’s airport lounges for premium passengers.

The signed agreements are all subject to regulatory approvals. 

Analysts say the acquisition will draw Virgin Atlantic towards the SkyTeam alliance. Air France-KLM is close to fellow SkyTeam member Delta. In turn, Delta holds a 49% stake in Virgin Atlantic, the maximum allowed.

On the sidelines, meanwhile, Delta and China Eastern are each reportedly buying 10% of Air France-KLM.

Written by Peter Needham

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