$450 million investment connects two complementary airline networks
China Eastern Airlines and Delta Air Lines today signed an agreement to expand their partnership and better connect Delta’s global network with China Eastern, one of the leading airlines in China. The agreement will include a $450 million investment by Delta to acquire a 3.55 percent stake in China Eastern.
This move marks a significant step in the airlines’ collaboration and partnership that will allow Delta and China Eastern to compete more effectively on routes between the U.S. and China, provide more travel options for customers in both countries and make joint investments in the customer experience.
“The execution of the Subscription Agreement and the launching of commercial cooperation plan by China Eastern and Delta indicate significant strategic moves of China Eastern to comprehensively reform further, actively explore and develop mixed ownership economy, and actively promote globalized development,” said Shaoyong Liu, China Eastern CEO. “The cooperation of the parties is based on a global vision and joint strategic blueprint. The parties will take advantage of their respective route networks, flight services, relevant businesses and advantageous resources to fully connect the world’s two top economies as well as two top air transportation markets. The parties wish, through excellent operation and international cooperation, to optimize customer experience, enhance the parties’ global competitiveness and promotes the development and revenue growth of both parties.”
“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,” said Richard Anderson, Delta CEO. “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.”
China Eastern, with its wholly owned subsidiary Shanghai Airlines, and Delta currently operate codeshare flights on 30 domestic routes in the U.S., 43 domestic routes in China and seven trans-Pacific routes between China and the U.S. China Eastern serves the three largest U.S. markets, with four nonstop flights from Shanghai and Delta serves the three largest cities in China with six daily non-stop flights from the U.S.
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.
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.
“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, the Chairman of China Eastern.
“Delta’s equity investment in China Eastern is an investment in the future success of the partnership,” 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.
China Eastern in the U.S.
China Eastern will operate 35 weekly departures to 4 destinations in US from Shanghai, 2 flights a day to Los Angeles, daily to New York, San Francisco and Hawaii, also 3 flights a week from NanJing to Los Angeles. China Eastern operates Luxurious new 777-300ERs on routes between China and North America, which will be a major market for China Eastern over the future years. China Eastern plans to open new routes to North America and also boost frequencies on existing routes.
Delta in China
Delta will operate 28 weekly departures to Shanghai this summer. Delta also offers daily service to China’s capital, Beijing, from Seattle and Detroit and to Hong Kong from Seattle. Delta has grown its China network by nearly three times in the past five years.
The partnership with China Eastern is part of Delta’s broader strategy to collaborate and expand services to China and offer the most robust global airline network to become a more prominent U.S. carrier while continuing to offer the most robust network choices of a U.S. global carrier.
Delta is making significant investments to build the most Chinese-friendly U.S. airline. Chinese travelers are well served with local language options on delta.com, at airport self-service kiosks and among in-flight entertainment selections. The airline has Chinese-speaking flight attendants on every flight to and from China and offers Chinese cuisine among its in-flight meal options. Delta launched its official WeChat account to provide Chinese customers with in-language flight information, marketing promotions and tips for popular Delta destinations through China’s most popular SNS service.
SHANGHAI and ATLANTA, July 27, 2015