Delta Air Lines has announced it will pay USD 450 million to buy a stake in China Eastern Airlines. The Atlanta-based, major US carrier is seeking a foothold in China’s fast-growing travel industry.
News of the deal, reported yesterday by Gulf News Aviation and other outlets, coincided ironically with a continued plunge in the value of China’s stock market. Despite that, the Chinese economy remains strong.
Delta will gain a 3.55% stake in Shanghai-based China Eastern as well as an observer seat on China Eastern’s board, the airlines stated. The deal requires approval from the boards of both airlines.
Earlier this year, Delta, which works closely with Virgin Australia on the Pacific, was looking at creating an international hub in Shanghai to build on its growing relationship with China Eastern. Delta chief executive Richard Anderson spoke of building an international hub in Shanghai along the lines of the one Delta operates in Amsterdam.
“As we plan for our long-term future, it becomes more clear every day that China will be a major part of our business,” Anderson said.
Delta flies to Shanghai from Detroit and a daily Los Angeles-to-Shanghai route is looming.
In April, Delta moved its operations in Shanghai’s Pudong Airport to the same terminal as China Eastern and Shanghai Airlines (a subsidiary of China Eastern). That makes connections easier between the three airlines.
Written by Peter Needham