Monday, 21 August, 2017

Air France-KLM Buying Stake in Virgin Atlantic in Major Airline Shake-up

Virgin Group founder Sir Richard Branson.   Chris Jackson  Getty Virgin Group founder Sir Richard Branson. Chris Jackson Getty
Juana Turner | 29 July, 2017, 00:33

The investments, together with Air France-KLM's own planned acquisition of a 31% stake in Virgin Atlantic, underpin two major new partnerships for the airline.

The realignment coincides with a deal for Air France-KLM to deepen its commercial ties with China Eastern to build what it described as the European leg of a global network.

The airline will become Virgin Atlantic's second biggest shareholder after the USA carrier Delta Airlines, which holds 49 percent. He will retain a 20 percent stake through his Virgin Group and the airline will continue to fly under the Virgin brand.

Jean-Marc Janaillac, Air France-KLM's CEO, said the deal offers "more choice between Europe, UK and the USA via twelve hubs on both sides of the Atlantic".

Three of the world's biggest carriers, Delta Air Lines Inc., Air France-KLM SA and China Eastern Airlines Corp., strengthened their partnership through a series of share transactions, amid mounting competition on lucrative worldwide routes. Zacks Investment Research downgraded Air France-KLM SA from a buy rating to a strong sell rating in a research report on Tuesday, March 28th.

Atlanta-based Delta will buy the stake, worth about $437 million, in Air France-KLM, and it will gain a seat on the board.

Separately, Delta has snapped up equity stakes in a number of other foreign airlines to forge stronger relationships; it bought 49% of AeroMexico as well as 9.5% of the Brazilian carrier Gol. Each transaction is subject to shareholder, board and regulatory approvals. 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.

Air France-KLM, said customers would get "even more choice between Europe, UK and the United States via twelve hubs on both sides of the Atlantic" following the deal. Delta also has a transatlantic tie-up with Virgin Atlantic.

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.

The three airline groups said the deal would allow them to create "the most comprehensive transatlantic route network" by enabling tailored flight schedules between them.

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