Bill Carey

Delta Air Lines and China Eastern Airlines announced an agreement to expand their current relationship, with Delta paying $450 million to acquire a 3.55 percent stake in Shanghai-based China Eastern. The carriers said the new “commercial cooperation plan” will help them compete more effectively on routes between the U.S. and China.

 


The two carriers are members of the 20-airline SkyTeam alliance. China Eastern currently operates four nonstop flights from Shanghai to Honolulu, Los Angeles, New York and San Francisco. Delta serves three major cities in China with six daily non-stop flights from the U.S. China Eastern, with its wholly owned subsidiary, Shanghai Airlines, operates codeshare flights with Delta on 30 domestic routes in the U.S., 43 domestic routes in China and seven trans-Pacific routes between China and the U.S.

 


The “enhanced strategic partnership” announced on July 27 includes a subscription agreement by which Delta will invest $450 million in China Eastern’s H-shares, which trade on the Hong Kong Stock Exchange. Delta recently moved its operations at Shanghai’s Pudong Airport to Terminal 1, joining China Eastern and Shanghai Airlines. The carriers are also cooperating through joint sales. &nbsp;

 


“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,” said Delta CEO Richard Anderson. “We have learned much from one another already and look forward to deepening our already effective partnership.” Delta’s equity investment “is an investment in the future success of the partnership,” he added.

 


According to the announcement, China Eastern will operate 35 weekly departures from Shanghai to Los Angeles, New York, San Francisco and Honolulu, and three flights a week from NanJing to Los Angeles. Operating Boeing 777-300ERs, the carrier plans to open new routes to North America and increase frequencies on existing routes. Delta will operate 28 weekly departures to&nbsp;Shanghai&nbsp;this summer. The Atlanta-based carrier also flies daily to Beijing and Hong Kong from U.S. departure cities, and said it has nearly tripled the size of its China network in the past five years.

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