Delta Air Lines Makes $450 Million Investment In China Eastern

Open Jaw

China Eastern Airlines and Delta Air Lines today signed an agreement to expand their partnership and better connect DL’s global network with MU. The centrepiece of the agreement is a $450 million investment by DL, giving it a 3.55% stake in the Chinese carrier.

"Delta's relationship with China Eastern is long-standing. 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. "For the past 3 years, Delta has welcomed members of the China Eastern team at our headquarters for sharing best practices and work study opportunities. We have learned much from one another already and look forward to deepening our already effective partnership."

Shaoyong Liu, China Eastern CEO, also sees strong benefits from the enhanced relationship. "The cooperation of the parties is based on a global vision and joint strategic blueprint. The parties will take advantage of their respective route networks, flight services, relevant businesses and advantageous resources to fully connect the world's 2 top economies as well as 2 top air transportation markets.”

MU, along with its wholly owned subsidiary Shanghai Airlines, and Delta currently operate codeshare flights on 30 domestic routes in the U.S., 43 domestic routes in China and 7 trans-Pacific routes between China and the U.S. 

MU serves the 3 largest U.S. markets, with 4 nonstop flights from Shanghai and DL serves the 3 largest cities in China with 6 daily non-stop flights from the U.S. 

As part of the enhanced strategic partnership, China Eastern and Delta entered into a conditional subscription agreement where Delta will invest $450 million in China Eastern's H-shares, which trade on the Hong Kong Stock Exchange. The investment equals approximately 10% of China Eastern H shares and 3.55% of the total shares of MU.

DL will also be entitled to an observer seat on the China Eastern board of directors. The agreement is conditional upon achievement of a final marketing agreement and approval by each carrier's board of directors.

DL says it is making significant investments to build the most Chinese-friendly U.S. airline. The airline has Chinese-speaking flight attendants on every flight to and from China and offers Chinese cuisine among its in-flight meal options.

The airline launched its official WeChat account to provide Chinese customers with in-language flight information, marketing promotions and tips for popular DL destinations through China’s most popular SNS service.

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