Air France-KLM, Delta expect $300m in venture synergies

Paris
Source:
This story is sourced from Pro
See more Pro news »

Air France-KLM and Delta Air Lines are each expecting to yield around $150 million in synergies from their new transatlantic joint venture.

The carriers today signed a new cost- and revenue-sharing agreement, which brings together the former Air France-Delta and KLM-Northwest Airlines ventures. On a financial basis, the deal will be retroactive from 1 April.

Speaking during a briefing in Paris today, Air France chief executive Pierre-Henri Gourgeon said: "Today we are bringing together our two joint ventures, to make one single joint venture - a more significant joint venture."

While the original partnerships represented a total of about $6 billion in revenues, the new accord will generate turnover of around $12 billion. This makes the new venture a "very big step" in SkyTeam's competitiveness against the other alliances, says Gourgeon: "We have something far more visible and more integrated for the customer."

He adds: "At Air France-KLM we value the synergies, on a full-year basis, at around $150 million and I think it's the equivalent of that for Delta." This level of synergies should be achieved by the second year, but Gourgeon notes: "In the first year we will deliver a significant part of that."

Delta chief Richard Anderson describes the deal as a "landmark" and "unprecedented" joint venture. He adds that the agreement will be "metal neutral", with all of the partners selling fares interchangeably.

"Our shareholders will ultimately benefit because KLM-Northwest and Air France-Delta were among the most profitable joint ventures in the world. By combining the two joint ventures with such strong, recognised success, our shareholders will benefit," says Anderson.