Delta Air Lines and Korean Air plan to acquire 25% of Canadian discount carrier WestJet in a move they describe as intended to strengthen existing partnerships.
As part of the deal, disclosed by the three airlines on 9 May, Delta also intends to sell part of its stake in WestJet to Air France-KLM.
The plan requires regulatory approval.
Delta, Korean Air, Air France and KLM, all members of the SkyTeam alliance, already have codeshare deals with WestJet, which is not a SkyTeam partner.
The acquisition plan calls for Atlanta-based Delta and Seoul-based Korean to purchase a combined 25% stake of WestJet from Onex Partners, a Canadian private equity firm, the three airline companies said on 9 May.
Delta intends to acquire 15% of WestJet for $330 million from Onex, while Korean plans to pay $220 million for a 10% stake.
After the deal closes, Delta says it “has the right and intent” to sell a 2.3% stake in WestJet to Air France-KLM for $50 million. That move remains subject to approval by Air France-KLM.
“The Onex Group will continue to own and control Calgary, Alberta-based WestJet,” the carriers say.
The “agreement will further align [the] airlines’ interests, expand customer benefits and strengthen connectivity between Canada and North America, Europe and Asia and beyond”, the airlines say. “The broader partnerships will support future benefits for travellers, including an elevated, more-seamless travel experience for customers worldwide.”
The plan marks the latest development in a long-running effort by Air France-KLM, Delta, Korean and WestJet to tighten ties.
For years, the carriers had sought to form joint ventures; under such deals, airlines typically coordinate schedules, sell seats on the other’s flights and share revenue. WestJet had talked of forming transpacific and North American ventures with Delta, a transpacific venture with Korean and a transatlantic one with Air France-KLM.
Delta and WestJet had even applied with US regulators to established such a deal. The US Department of Transportation approved such an alliance in 2020 on conditions that included requiring the airlines to divest operating slots at New York LaGuardia airport.
Owing to those conditions, Delta and WestJet withdrew their application in November 2020.
Delta and Air France-KLM, together with Virgin Atlantic Airways, already have a joint venture covering transatlantic flights, while Delta and Korean operate a transpacific venture.
