Air France-KLM, Delta form Trans-Atlantic joint venture


PARIS – The new transatlantic joint venture between Franco-Dutch carrier Air France-KLM and Delta Air Lines Inc. will boost each partner’s profits by $150 million, executives from the two airlines said Wednesday, expanding an alliance that the two companies have had before changes in ownership.

Air France-KLM CEO Pierre-Henri Gourgeon told a press conference that the agreement to pool revenue and costs for flights between Europe and the U.S., and to cooperate closely on many other flights, will significantly lift both carriers’ revenues while cutting costs. The $300 million total should be achieved starting next year, but the pact, which is effective as of last month will also offer big synergies this year, Mr. Gourgeon said.

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The agreement, which will run for at least 13 years, builds on a longstanding joint venture between Northwest Airlines and KLM Royal Dutch Airlines and a more recent one between Delta and Air France. Air France bought KLM in 2004, and Delta last year bought Northwest.

The merged airlines, which are both in the SkyTeam marketing alliance, had said they planned to reorganize and expand their cooperation. The profit increase includes benefits from the earlier alliances. The companies declined to specify how much the new pact would increase profits

The pair said their venture now represents about 25% of the industry’s total transatlantic capacity and will sharpen their ability to compete against the other airline alliances, Star and oneworld. Based on 2008-2009 data, the annual joint-venture revenue is estimated at $12 billion, the companies said.

The new venture will include more than 200 transatlantic flights and about 50,000 seats daily, the companies said.

The airlines are able to cooperate by sharing sensitive pricing and marketing data — behavior normally forbidden as illegal collusion — because they have been granted antitrust immunity by U.S. regulators. The European Union has been reviewing antitrust implications of airline alliances for many years.

Delta Chief Executive Richard Anderson said the grouping has been “thoroughly reviewed by authorities on both sides of the Atlantic.”