Air France-KLM has formed new joint ventures with Delta and Virgin Atlantic and is strengthening its ties to China Eastern in moves seen as a bid to cement its position as the European leg in a global network. All are members of the SkyTeam airline alliance.
Under terms of the deals, both Delta and China Eastern will buy 10% stakes in the Franco-Dutch combine for a total of €751mn in newly issued shares, the Financieele Dagblad said on Friday. Air France-KLM is also taking a 31% stake in Virgin Atlantic for about €256m.
The transactions are part of the long-awaited consolidation in the global aviation industry. In recent years, the fast-growing air carriers around the Persian golf have been building up significant stakes in airlines they work with.
‘There are a lot of cross-participations in the industry. It’s important that Air France-KLM takes part and secures its position as a leading player on the global stage,’ said KLM CEO Pieter Elbers.
Virgin Atlantic has a strong position in the lucrative trans-Atlantic market from London. ‘KLM has a relatively weak position in London. But through Virgin Atlantic, we can now offer flights from London to New York,’ Elbers said.
Higher ticket prices combined with growth in passenger numbers helped push Air France-KLM’s second-quarter operating profit to €496m, this is €179m more than in in the year-earlier period. The company booked turnover of €6.6bn in the period.
KLM made the largest contribution to the earnings growth: its second-quarter turnover was 9.4% higher at €2.7bn. The Dutch flag carrier booked operating profit of €301m in the period, compared to only €61m for Air France.
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