Air France-KLM to acquire 31% stake in Virgin Atlantic for £220m
Air France-KLM has agreed to buy a 31% stake in Virgin Atlantic for £220m, as part of a new joint venture (JV) between the company, Delta Air Lines and Virgin Atlantic.
Following the completion of the deal, Virgin Group’s share in Virgin Atlantic will drop to 20%, while Delta will continue to retain its 49% stake in Virgin Atlantic.
The proposed JV, which will also include Italian airline Alitalia, will operate 300 transatlantic flights a day.
The new 15-year partnership will combine two existing JVs, firstly between Air France-KLM, Delta and Alitalia; and secondly between Delta and Virgin Atlantic.
The establishment of the new JV is subject to the signing of the final agreements and the approval of the relevant regulatory authorities.
Air France KLM CEO Jean-Marc Janaillac 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 US via 12 hubs on both sides of the Atlantic.”
Air France-KLM has also revealed its plan to boost its existing commercial partnership with China Eastern.
With the arrangement, Air France-KLM seeks to secure and reinforce its presence in the Chinese market, as well as offer improved customer services.
Both Delta and China Eastern will also each purchase a 10% stake in Air France-KLM within the framework of reserved capital increases totalling €751m.
The capital increase is expected to improve Air France-KLM’s financial structure, accelerate a reduction in its net debt, and finance the purchase of the stake in Virgin Atlantic.