Air France and Delta to merge

AIR FRANCE-KLM, Europe’s biggest airline, yesterday announced it had finalised a deal with US airline Delta to operate as one airline over the Atlantic, boosting its share of the world’s busiest route to 25 per cent.

The news came as the French carrier reported full-year losses of &1119;578m (£507m) yesterday, down from a profit of &1119;790m last year, in the latest blow to the ailing industry.

But the losses beat expectations. Analysts had forecast losses of around &1119;902m.

The profit-sharing venture between the two largest airlines on each side of the ocean had been long expected and pushed shares in Air France up, closing at &1119;11.30, an 11.44 per cent lift.

The tie-up between Delta – the world’s biggest airline by passenger traffic – and Air France-KLM has won anti-trust clearance from the US Department of Transport (DoT).

It means the companies will share revenues and costs on 200 transatlantic flights.

Air France and KLM merged in 2004 and Delta bought Northwest – an airline which KLM had a tie-up with – last year, paving the way for a four-way partnership.

“Our employees will benefit because being part of a strong vibrant airline is ultimately good for them,” Delta chief executive Richard Anderson said, seeking to reassure his 80,000 staff over the Air France-KLM/Delta tie-up.

The news follows a furore over British Airways’  proposed tie-up with American Airlines, which also needs antitrust immunity clearance. BA also wants a partnership with Spanish flag carrier Iberia. Earlier this week, Virgin Atlantic boss Richard Branson hit out at BA’s plans.