Delta to Acquire Stake in China Eastern, “Solidify Partnership”

Delta and China Eastern announced this morning an expansion of their partnership which includes a $450 million investment by Delta to acquire a 3.55% stake in China Eastern. The airlines will work to better connect their networks and drive increased collaboration on US-China routes.  Delta Shanghai base coming soon? From the PR:

China Eastern and Delta continue to strengthen cooperation and support each other in the China-U.S. market through greater access to each other’s networks and an improved customer experience. Among recent improvements:

• China Eastern and Delta have expanded their joint China-U.S. offering – further cementing their position in the largest market to/from Shanghai – with Delta’s recent addition of new Los Angeles to Shanghai service.
• Delta’s recent move to Terminal 1 at Shanghai’s Pudong Airport to co-locate with China Eastern and Shanghai Airlines has resulted in more convenient connections and a seamless airport and baggage experience for customers.
• Newly developed joint corporate sales provide more competitive products to customers in China and the U.S.

Equity investment
As part of the enhanced strategic partnership, China Eastern and Delta entered into a conditional subscription agreement where Delta will invest $450 million in China Eastern’s H-shares, which trade on the Hong Kong Stock Exchange. The investment equals approximately 10 percent of China Eastern H shares and [3.55] percent of the total shares of China Eastern. Delta also will be entitled to an observer seat on the China Eastern board of directors. The agreement is conditioned upon achievement of a final marketing agreement and approval by each carrier’s board of directors.

“Delta’s equity investment in China Eastern is an investment in the future success of the partnership,” Delta CEO Richard Anderson said. China is the second largest travel market from the US and is projected to grow more than twice the global average, becoming the largest market from the U.S. in the next few years. Delta’s relationship with China Eastern is long-standing. We share a vision that will create the most profitable, enduring franchise between the U.S. and China, with world-class customer service. “For the past three years, Delta has welcomed members of the China Eastern team at our headquarters for sharing best practices and work study opportunities. We have learned much from one another already and look forward to deepening our already effective partnership.”