American Delta Air Lines Inc. and South Korea's Korean Air Lines Co., Ltd. have entered into an agreement to acquire a 25% stake in the Canadian airline WestJet from Onex Partners Group and co-investors as part of a broad consolidation of airlines in the market. This is reported in a Delta press release.
The total value of the transaction is $550 million (25% higher than the current net asset value of WestJet). At the same time, Delta will buy out a 15% minority stake for $330 million, and Korean Air — 10% for $220 million. After the deal closes, Delta will have the right to sell 2.3% of shares to Air France-KLM joint venture partner for $50 million, and Onex, which acquired WestJet in 2019, will retain control of the company.
After the end of the pandemic, airlines began consolidating the industry by directly buying small competitors, as well as acquiring shares in other airlines, which could eventually lead to the dominance of several large airlines and limit market access for smaller carriers.
Delta and Korean have been codeshare partners of WestJet for a long time and expect to expand the global network as part of a strategic partnership. In particular, Delta and WestJet have been cooperating since 2011. Delta has invested in several international partners, including Air France-KLM, LATAM, Aeromexico, Virgin Atlantic, China Eastern, and Korean Air's parent company, Hanjin KAL.
Korean Air and WestJet have been cooperating since June 2012 under a code-sharing agreement that allows passengers to fly between Seoul, Incheon and Vancouver, Toronto and Calgary, etc.
Barclays acts as a financial advisor to WestJet and Onex. The agreement is subject to regulatory approval.
Korean Air Lines Co. — South Korea's largest national airline. The airline serves 117 cities in 40 countries on five continents, with a modern fleet of 163 aircraft and more than 20,000 professional staff. The company's base airports are in Seoul and Incheon (South Korea).
Delta Air Lines is the world's largest airline in terms of fleet size, passenger traffic, and number of destinations. The route network covers the countries of North America, South America, Europe, Asia, Africa, the Middle East and the Caribbean. The headquarters is located in Atlanta, Georgia, with nine hub airports. Delta is one of the four founding companies of the SkyTeam passenger aviation alliance.
WestJet is Canada's Canadian budget airline and the country's second largest airline. The company operates in the scheduled and charter passenger transportation market, operating more than 380 daily flights to airports in Canada, the United States, Mexico and the Caribbean. The headquarters are located in Calgary and Toronto (Canada).
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