Delta to buy stake in China Eastern Airlines for US$450m

[NEW YORK] Delta Air Lines will buy a stake in China Eastern Airlines as the two carriers strengthen their partnership serving the United States and China, the companies announced Monday.

Under a preliminary agreement, Delta will invest US$450 million to acquire a 3.55 per cent stake in China Eastern and will be given an observer seat on the Shanghai-based airline's board of directors.

The agreement depends on reaching a final marketing deal and approval by each carrier's board.

"Delta's relationship with China Eastern is long-standing. We share a vision that will create the most profitable, enduring franchise between the US and China, with world-class customer service," said Richard Anderson, Delta chief executive, in a statement.

The Atlanta, Georgia-based Delta serves the three largest cities in China with six daily non-stop flights from the US. China Eastern serves the three largest US markets, with four nonstop flights from Shanghai.

Under a codesharing agreement, the two also operate flights on 30 domestic routes in the US, 43 domestic routes in China and seven trans-Pacific routes between China and the US.

"The cooperation between China Eastern and Delta is a strategic cooperation between two excellent airlines which connect the world's two top economies as well as two top air transportation markets. We're fully confident in the prospect of the cooperation," said Shaoyong Liu, chairman of China Eastern, in the statement.

Delta shares were down 0.8 per cent at US$43.74 in early trade on the New York Stock Exchange.

AFP