China Eastern buying 10 percent Air France KLM stake as part of airline JVs’ rejig

China Eastern Airlines Corp Ltd said on Friday it is buying a 10 percent stake in Europe’s Air France KLM SA, in what will be the first investment by one of China’s three largest state-owned airlines in a Western carrier. The deal is part of a broader plan between Delta Air Lines Inc, Virgin Atlantic and Air France-KLM that was announced on Thursday to combine two overlapping transatlantic joint-ventures, supported by equity deals worth $1 billion. Delta, which holds a 3.2 percent stake in China Eastern, is also buying a 10 percent stake in Air France KLM. China Eastern said its 375 million euro ($438 million) investment in Air France KLM was compatible with the government’s “Belt and Road” initiative which seeks to improve trade and transport links between Asia and Europe. “The parties will work together to build the China-Europe main routes market,” China Eastern said. China Eastern, along with rivals China Southern Airlines Co and Air China Ltd have been expanding their global route networks as Chinese outbound tourism and trade investment increases. While HNA, the parent company of China’s largest private operator Hainan Airlines, has taken stakes in a number of Western airlines, none of China’s three largest state carriers have done so. Air China has a cross-shareholding with Hong Kong’s Cathay Pacific Airways Ltd. “There has been interest from state-owned airlines to buy foreign airlines but those deals were never completed. So yes, this is the first,” said Will Horton, senior analyst at Australian aviation consultancy CAPA.

Source: Civil Aviation Authority, Qatar