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Delta buys stake in Korean Air



Wow, this is a significant development.

Delta Acquires Shares in Korean Air

It has just been announced that Delta has acquired a 4.3% stake in Hanjin-KAL, the largest shareholder of Korean Air . Delta plans to increase its share of Korean Air to 10% over time, pending regulatory approval.

Delta and Korean Air have been operating a joint venture since May 2018. This joint venture gives passengers access to over 80 destinations in Asia and over 290 destinations in the United States. This investment is an extension of it.

Delta CEO Ed Bastian had the following to say about this investment:

"Together with the Korean Air team, we have the vision to deliver the world's leading trans-Pacific joint venture for our mutual customers, the strongest network, To offer the best service and experience to connect the USA with Asia. This is already one of our fastest integrating and successful partnerships, and experience shows that this investment will further solidify our relationship as we continue to build on the value of the joint venture.

Korean Air A380 [19659002] What is Deltas motivation to invest in Korean Air?

American, Delta and United all have joint ventures. This essentially allows them to coordinate prices and schedules with another airline to create a strong presence in a market (it is questionable whether or not passengers will benefit from it).

What distinguishes Delta from the competition is the amount of control they like to have in these joint ventures. Not only does Delta focus on building joint ventures, it also enjoys investing in airlines with which they work closely.

In many ways, Delta is trying to build a global network through investment. Delta owns (or is in the process of acquiring) Aeromexico, Air France-KLM, China Eastern, Gol, Korean Air and Virgin Atlantic.

Equity is not essential to a close partnership I imagine they have more power in these relationships.

Delta A330

Conclusion

I have to give Delta recognition for their consistent strategy with stock investments in global airlines. They have some of the strongest partnerships in the world and I suspect that this is due to a combination of their joint ventures and their investments.

While Northwest was strong in Asia at the time, Delta was definitely a weaker player there. The Korean Air joint venture has enabled them to become a stronger player in Asia again.

However, it was not just good news for the passengers – Delta is heavily focused on guiding everyone through Incheon, and we've seen some point-to-point links, such as Seattle to Hong Kong have been canceled.

I am curious to see if this investment leads to an even stronger cooperation in the short term.

What are you doing? from Delta's investment in Korean Air?


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