Delta snaps up China Eastern stake for US$450 mln

July 28, 2015 08:54
Delta will invest in China Eastern’s Hong Kong-traded H shares and receive observer status on the Chinese carrier’s board. Photo: AFP

Delta Air Lines Inc. is paying US$450 million for 3.55 percent of China Eastern Airlines Corp.

The deal expands the US carrier's international presence by taking minority stakes in overseas carriers, according to the Wall Street Journal.

Delta previously had invested in three foreign airlines since 2011 to build or enhance its partnerships with them.

It already partners with Shanghai-based China Eastern and its Shanghai Airlines unit, code-sharing and trading passengers on US and Chinese domestic routes and on seven trans-Pacific routes between the two nations.

China Eastern is a member of the SkyTeam global marketing alliance which includes other Delta partners Air France-KLM S.A. and Aerovias de México S.A., or AeroMéxico.

Under the deal announced Monday, which requires approval by both company’s boards, Delta will invest in China Eastern’s Hong Kong-traded H shares and receive a so-called "observer seat" on the Chinese carrier’s board.

China is the second largest long-haul travel market from the US and is projected to grow at more than twice the global average rate.

China Eastern operates 35 weekly flights from Shanghai to Los Angeles, New York, San Francisco and Honolulu, and three flights a week from Nanjing to Los Angeles.

This summer, Delta summer will operate 28 weekly flights to Shanghai.

The US carrier also flies to Beijing and Hong Kong. Delta recently relocated to Terminal 1, home of China Eastern and Shanghai Airlines, at Shanghai’s Pudong Airport, which will allow more convenient connections for the two carriers’ passengers.

Delta and other carriers pursue international partnerships because a web of bilateral air treaties limits their ability to fly on their own within foreign countries.

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