Air France/KLM and Delta do transatlantic deal

A new transatlantic joint venture between Air France-KLM and Delta Air Lines will boost each partner’s profits by up to US$150 million, the two airlines said recently.

Air France-KLM CEO Pierre-Henri Gourgeon said the 13-year agreement to pool revenue and costs for flights between Europe and the US, 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 the two said, but the pact, which came into effect in April will offer a number of key synergies this year, Gourgeon said without elaborating.

The joint venture significantly expands an alliance the two companies had before changes in ownership, specifically between Northwest Airlines and KLM Royal Dutch Airlines and a more recent one between Delta and Air France.

The deal will also mean that Delta is back in the cargo business only weeks after it announced it was grounding the ex-Northwest freighter fleet following the merger of the two US carriers in April of 2008. It will now have access to dedicated freighters – B747-400F, B777F and MD11F – belonging to Air France, KLM and Martinair.

The two carriers said their venture now represents about 25 per cent 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 based on more than 200 transatlantic flights daily, the companies said.D elta chief executive Richard Anderson said the grouping has been “thoroughly reviewed by authorities on both sides of the Atlantic.”