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Delta, Air France KLM to Operate as Single Business

May 21, 2009 By: George Dooley


In a major move that will change the competitive balance between airlines, the Air France KLM Group and Delta Air Lines announced a new long-term joint venture with the partners jointly operating their transatlantic business. The airlines will coordinate operations and share revenues and costs of their transatlantic route network. The airlines will cooperate on routes between North America and Africa, the Middle East and India, as well as on flights between Europe and several countries in Latin America.

For customers, this joint venture will result in more choices, frequencies, convenient flight schedules, competitive fares and harmonized services on all transatlantic flights operated by the partners, Delta said. The joint venture represents approximately 25 percent of total transatlantic capacity with annual revenues estimated at more than $12 billion (approximately 9.3 billion euros).

"This strategic partnership puts us in a good position compared with other major alliances, which are extremely active on the world's leading long-haul market," said Pierre-Henri Gourgeon, president and CEO of Air France KLM. "By integrating our trans-Atlantic operations, we will give our passengers what they desire: more choice, more frequencies, more convenient flight schedules and superior customer service. By optimizing the use of our pooled resources, this joint venture will help us weather the current economic situation and protect our product offering."

Global passengers will benefit from access to a vast network offering over 200 flights and approximately 50,000 seats daily. That network is structured around six main hubs: Amsterdam, Atlanta, Detroit, Minneapolis, New York-JFK and Paris-CDG, together with Cincinnati, Lyon, Memphis and Salt Lake City.

The airline partners will provide their corporate clients with a broad, global offering that best meets their expectations for the most convenient airline system, while providing efficient account management as well as ease of travel for their clients. Going forward, this structure will represent a major strength for the SkyTeam alliance, of which all three airlines are members.

"The structure of this joint venture, in which we operate as a single business where we consensually develop our strategies and share revenues and costs, provides the incentives for us to collaborate in a way that generates benefits for customers, shareholders and employees of our three airlines," said Richard Anderson, CEO of Delta Air Lines. "Customers will benefit from the unique scope and choices we will offer, while shareholders and employees will benefit from the stronger competitive and financial position of our respective airlines."

Peter Hartman, president and CEO of KLM, emphasized: "We know from experience that the success of a joint venture calls for shared vision and long-term commitment, the simplest of operating rules and fair sharing of revenues and costs. At KLM, we are proud to be starting to write a new page in our history alongside partners who fully share our exacting standards of quality and service. Today, we are building a team that will give its very best for transatlantic passengers."

Air France and KLM have been working with their respective American partners for many years. KLM signed a joint venture agreement with Northwest in 1997, while Air France and Delta signed a joint venture agreement in 2007. Following the merger of Delta and Northwest, the next logical business strategy was to establish a single transatlantic joint venture. The agreement is the result of that collaboration, the partners said.

Visit www.delta.com.


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