Delta spending $437M for piece of Air France

Executives: Ties should help partners offer better joint services.

Delta Air Lines is acquiring a 10 percent stake in Air France, part of a round of cross-border investments among the airline’s international partners.

Atlanta-based Delta will buy the stake, worth about $437 million, in Air France-KLM, and it will gain a seat on the board.

Air France will buy a 31 percent stake in Virgin Atlantic from Virgin Group, while another Delta partner, China Eastern, is also acquiring a 10 percent stake in Air France-KLM.

Executives said the financial ties should help the partners offer better joint services. Customers will be able to earn and redeem miles across all carriers and be able to make easier connections, according to Delta, and premium customers will get access to airline partner lounges.

”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,” Delta CEO Ed Bastian said in a written statement.

The airlines said the deals are aimed at creating “a single global joint-venture” between Air France-KLM, Delta and Virgin Atlantic, and to strengthen the partnership with China Eastern.

The deals are subject to shareholder approval and U.S. and European regulatory approval, including antitrust immunity clearance to allow the airlines to share costs and revenues and coordinate schedules on flights covered by the joint venture. Delta’s president of international, Steve Sear, said plans are to submit documents for approval to authorities this year.

Delta already has a trans-Atlantic joint venture with Air FranceKLM and Alitalia, which are also part of the SkyTeam airline alliance. Delta also separately has a joint venture with Virgin Atlantic, in which it owns a 49 percent stake, and it owns 3.5 percent of China Eastern.

Airlines are limited on cross-border acquisitions, but Delta and other carriers are gaining some of the benefits of mergers through joint ventures with foreign carriers and equity stakes in partner carriers.

The mish-mash of evolving partnerships can at times be confusing for passengers. Airlines are targeting closer collaboration that makes it easier for passengers to connect between carriers around the world — while gaining an edge in the competition for global travelers.