Air France, Delta team up on flights across Atlantic
CHICAGO - Air France and Delta Air Lines Inc. will jointly operate trans-Atlantic flights, sharing $8 billion in revenue and adding services at Heathrow Airport in London to challenge British Airways and American Airlines.
France's largest carrier and the US number three will combine revenue on 19 daily flights between their main hubs and on Heathrow-US services from April, before extending the deal to cover all routes between Europe and North America in 2010.
The SkyTeam alliance leaders are the first carriers to detail their strategy under a new US-European Union treaty.
SkyTeam members Northwest Airlines Corp. and Continental Airlines Inc. are also planning flights to Heathrow, Air France told analysts this week.
OneWorld alliance rival British Airways, which is based at the airport, will begin flights from the United State to cities in continental Europe.
"This is the first move in a chess game that starts March 30 next year, when the 'open skies' regime comes into effect," said Dan Solon, an independent airline analyst in Barcelona.
The first phase of cooperation will cover flights between Air France's hubs at Paris Charles de Gaulle and Orly and in Lyon and Delta's in Atlanta, Cincinnati, Salt Lake City, and New York-JFK, as well as Heathrow-US services. Combined revenue will amount to $1.5 billion, the carriers said.
When the venture is extended to all North Atlantic services, shared revenue will climb to $8 billion. That will contribute between $125 million and $200 million to Delta's annual pretax profit, chief executive Richard Anderson said.
"That's obviously a very early estimate but we are optimistic," he said. "One plus one equals five here."
Air France CEO Jean-Cyril Spinetta said the venture was expected to generate less profit for Air France, declining to give a precise estimate.
"The objectives we've set ourselves are a little less ambitious than Delta's," Spinetta said.
The pact will be a "major benefit to both carriers, almost a merger in our opinion," Calyon Securities analyst Ray Neidl said in a note to investors.
Delta will begin serving London Heathrow, Europe's busiest airport, for the first time once the agreement comes into effect. Under an earlier treaty, Heathrow-US flights were limited to four carriers: British Airways, Virgin Atlantic Airways Ltd., AMR Corp.'s American Airlines, and UAL Corp.'s United Airlines.
