China Eastern to spend $439m for stake in Air France-KLM
This is the Shanghai-based carrier's largest strategic investment and is expected to speed up its global expansion.
A wholly owned overseas arm of China Eastern has inked a share purchase agreement with the Paris-based airline for the purpose.
China Eastern Airlines, the listed arm of China Eastern Air Holding Co, and Air France-KLM signed another agreement for market cooperation.
Atlanta-based Delta Air Lines also announced it will acquire a 10 percent stake in Air France-KLM.
Delta Air is China Eastern's US partner. Delta Air holds a 3.55 percent stake in China Eastern.
After the agreement, both China Eastern and Delta can nominate one representative each as director on the board of Air France-KLM.
China Eastern, Delta and Air France-KLM are members of SkyTeam, a global alliance of airlines that provides passengers access to more destinations, flight frequencies and connectivity.
The three carriers based in three continents hope to build closer commercial ties through equity deals and market cooperation agreements.
"The three of us are all renowned international airlines with a history of cooperation, which lays a solid foundation for this strategic investment," said Liu Shaoyong, chairman of China Eastern.
According to their market cooperation agreement, China Eastern and Air France-KLM will join forces to explore the markets in China and Europe, simplify transit processes and improve passenger and luggage services.
"We will also start cooperation in resource-sharing and e-commerce. The goal is to enhance our internationalization in terms of competitiveness and brand," said Dong Bo, chief marketing officer of China Eastern Airlines.
Thierry Beragnes, Thierry Beragnes, Alliances Air France-KLM's vice-president for Asia-Pacific region, called the cooperation agreement the beginning of a new journey. He believes the three airlines will grow stronger in the three markets.
Analysts said cooperation among China Eastern, Air France-KLM and Delta will broaden their growth potential in the fast-growing travel markets in China, Europe and the US.
China Eastern owns a fleet of more than 650 aircraft and serves more than 100 million passengers every year. It operates 67 flights per week to Europe.
