Delta Air Lines and Korean Air announced this morning that they will purchase minority equity stakes in the Canadian Airline WestJet. The purchase will total $550 million, sold by Onex Partners, and give both airlines a stake totaling 25% in the Canadian airline.
Delta will invest $330 million for a 15% stake, while Korean Air will invest $220 million for a 10% stake. Delta also has the right and intent to sell and transfer a 2.3% stake in WestJet to its Joint Venture partner Air France-KLM for $50 million.
Delta CEO Ed Bastian said, “Investing in a world-class partner like WestJet aligns our interests and ensures that we remain focused on providing a world-class global network and customer experience for travelers in the United States and Canada. Together, Delta and our airline partners are connecting the world and transforming the future of travel.”
Korean Air and Hanjin Group CEO Walter Cho had a similar statement, saying that “This strategic partnership will enhance our global network and create long-term value for customers through greater choice and convenience.”
I think this is an interesting deal on both sides.
For Delta and Korean Air, and eventually, Air France-KLM, this seems to be a global connectivity strategy, considering all of them are involved. Maybe we’ll see WestJet join SkyTeam in the near future, too.
From WestJet’s perspective, meanwhile, I think this is an opportunity for them to expand their airline globally and increase competition with Air Canada. WestJet’s current footprint is fairly localized in Calgary, with not a lot of international stuff going on. However, this is a chance for them to expand to other parts of Canada and better serve the U.S. that way, while potentially focusing more on East Asia and Europe in addition to their current Seoul and Paris routes.
Although we likely won’t see any immediate differences from a passenger perspective, I do like the idea of WestJet becoming a more prominent airline in North America. Travelers having an additional, reliable network outside of Air Canada can change how Canadians travel, while pushing for new ideas and innovations from Air Canada itself, too.
Featured image by WestJet.
