Air France-KLM, Delta Team Up to Challenge British Airways

In a challenge to British Airways, Air France-KLM and Delta Air Lines announced Wednesday a joint venture that will take advantage of the upcoming Open Skies pact allowing them to partner on routes linking major U.S. cities to London's Heathrow airport. Air France told investors Monday it would use Heathrow slots to serve nine U.S. destinations under the deal; the conference was closed to media. Air France KLM CEO Jean-Cyril Spinetta says the deal with Delta will add "several dozens of million euros" in profits in 2008, and $1.5 billion in revenue, jumping to an $8 billion/year revenue boost in 2010, when "numerous flights" to all Europe/North America destinations will become part of the JV. Until now, U.S. access to Heathrow has been limited to two UK and two U.S. airlines, currently American and United, with British and Virgin Atlantic. Air France and Delta hope to eventually extend the venture to include Continental and Northwest, analysts say, by using the "sprawling U.S. networks" held by the carriers to link up to Heathrow. "This is a win for Delta, Air France, and for the loyal base of customers who fly our airlines..." said Delta CEO Richard Anderson. "As part of this new joint venture and the antitrust immunity we have enjoyed since 2002, we will have plenty of scope to coordinate our sales policies on our respective transatlantic networks, thanks to more comprehensive and integrated services and procedures. Together, we will be able to offer passengers more flight options and frequencies, better schedules, new opportunities to earn more miles to take advantage of an enlarged network with seamless booking."

Sources: Press release, Reuters
Commentary: The Business Air Travel Tipping Point
Stocks to watch: AKH, DAL, BAIRY.PK, CAL, NWA

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