China Eastern to acquire 10pc of Air France-KLM

BEIJING: China Eastern Airlines said yesterday it is set to acquire a 10 per cent stake in Air FranceKLM, as it moves to expand its network in Europe.

The company will pay about €375 million (RM1.87 billion) for its share in the French-Dutch airline, it said in a filing with the Hong Kong stock exchange.

American carrier Delta will also acquire a 10 per cent stake in Air France-KLM, said the statement.

The “three companies will build a global network of airlines and will provide more convenient, efficient and high-quality travel services for passengers around the world”, said the airline.

The deal will also allow China Eastern “to extend and expand its route network”, develop new markets and improve its brand image.

China’s Civil Aviation Administration has encouraged Chinese airlines to build up their presence abroad and become internationally recognised brands.

Beijing has traditionally encouraged companies to invest overseas to find new markets, access technology and increase China Inc’s influence, although authorities have recently taken a tougher stance as concerns grow over capital flight and unsound acquisitions.

The deal will “give Air FranceKLM a European leadership position on Shanghai, the main business market in China”, said the European carrier said.

On Thursday, Air France-KLM said it would also acquire a 31 per cent stake in Virgin Atlantic for around , €246 million.

“The operation is expected to take place next year after approval by the appropriate regulatory authorities,” said the airline in a statement.

The deal will make the airline Virgin Atlantic’s second biggest shareholder after Delta Airlines, with a 49 per cent stake. AFP