Delta purchases 10% stake in Air France-KLM

Delta purchases 10% stake in Air France-KLM

It will sell a 31 percent stake in its company to Air France-KLM in order to provide expanded service to customers, according to Richard Branson, founder of the Virgin Group.

Air France-KLM did not give a profit outlook for the year, but analysts now expect a 2017 operating result of 1.27 billion. Delta Air holds a 3.55 percent stake in China Eastern. Plus deals for Delta and China Eastern to enter its share capital.

Delta said in the statement its expanded joint venture includes the Italian airline Alitalia, allowing it altogether to offer nearly 300 daily nonstop trans-Atlantic flights.

Delta stock traded down about 1%, Air France stock traded up over 2% and China Eastern stock traded up almost 1% midday.

Airlines have been moving away from traditional alliances that gave fliers the ability to book a single ticket across multiple airlines, earn frequent flier miles and gain access to shared lounges around the globe. As a result, Richard Branson will relinquish control of Virgin Atlantic, as his share falls from 51 percent to 20 percent.

Meanwhile, China Eastern Airlines will also take a 10 percent stake in Air France-KLM.

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"A dynamic global landscape means it's more important than ever for Delta to deepen ties with our global partners to provide opportunities for mutual growth", said Delta CEO Ed Bastian in a statement.

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"Together with our friends at Air France-KLM and Delta we will build on this vision of our teams creating irresistible experiences for customers flying on our network".

Air France-KLM previous year saw demand fall in light of a wave of attacks by Islamist militants in France.

The carriers have signed a memorandum of understanding for the joint venture.

Virgin Atlantic is selling stake to Air France-KLM.

Air France-KLM SA (OTCMKTS:AFLYY) has been given an average rating of "Hold" by the fifteen brokerages that are covering the firm, MarketBeat reports.

The deals likely will require regulatory approval and anti-trust immunity to allow coordination on pricing and other business matters, and probably won't be finalized for another year, the carriers said.

The latter bought its stake in Virgin Atlantic in 2013, a year after Branson announced a tie-up between the two airlines in response to British Airways' dominance in the market of US-bound flights from London Heathrow Airport.

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