Delta to acquire stake in China Eastern Airlines

After making a huge fuss over the alleged unfairness of sovereign “subsidies” in Middle East carriers, US behemoth Delta is buying a symbolic stake in China Eastern, widely regarded as the most subsidised state owned airline in current times.

The Shanghai-based carrier also said it raised $450 million by selling a stake to Atlanta-based Delta Air Lines Inc, expanding a partnership that will allow the two airlines to better compete on routes across the Pacific.

For now, Delta and China Eastern say they will invest in services so travelers have a seamless experience on the airlines, which share flight codes on 80 routes including subsidiary Shanghai Airlines. “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. Pairing up with China Eastern increases our reach and further cements our commitment to the market and to our customers who travel between China and the US. “We have learned much from one another already and look forward to deepening our already effective partnership”.

Under the new investment, Delta will purchase approximately 10% of China Eastern’s H-shares, which trade on the Hong Kong Stock Exchange.

The subscription price of HK$7.49 apiece is 8.6 per cent higher than China Eastern’s previous closing price. The benchmark Shanghai Composite Index has dropped more than 14 percent during Air China’s suspension. 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. Qantas also said the Chinese carrier planned to operate seasonal flights between Shanghai and Cairns from January 15.

The two Skyteam members announced the deal as part of an agreement to expand their relationship.

There are Chinese-speaking flight attendants on every China flight and local language options on its website, airport self-service kiosks and for in-flight entertainment.