Air France-KLM in $1-billion equity deals to expand alliances

Airline group said it would buy 31% of Virgin Atlantic from Virgin Group for around £220 mn

Air France-KLM on Thursday announced plans for over $1 billion of equity transactions with other airlines in what it described as a move to become the European pillar of an enhanced global network.

The Franco-Dutch airline group said it would buy 31 per cent of Virgin Atlantic from Virgin Group for around £220 million.

That move came as Air France-KLM, Delta Air Lines and Virgin Atlantic signed a provisional agreement to create a single global joint venture between the three carriers, combining two existing transatlantic tie-ups. Air France-KLM also announced plans to deepen a partnership with China Eastern. 
 

Delta and China Eastern will each acquire a 10 per cent stake in Air France-KLM by subscribing to new shares through capital increases totaling  €751 million, Air France-KLM said in a statement.

The shake-up aims to strengthen partnership between carriers on the North Atlantic, where new low-cost entrants have shaken up the market in the last year. It makes Air France-KLM the second largest shareholder in Virgin Atlantic after Delta, which owns a 49 per cent stake.