Delta Airlines (NYSE:DAL) has acquired a small but politically significant 3.55% stake in China Eastern Airlines for US$450 million, which strengthens the bonds between the United States and China.
Delta has become global in interests as well as destinations. It has stakes in the British based Virgin Atlantic, Mexico’s Aeromexico and the low cost GOL in Brazil. The agreement with China Eastern provides for an ‘observer’ seat at of the latter company’s Board of Directors as well as a stronger partnership "to better connect the global network of Delta Air Lines with that of China Eastern, one of the largest Chinese companies."
Delta’s Asia Pacific division VP, Vinay Dube, sees the relationship with China Eastern, which has a dominant position in China’s business, as giving the US based airline better access to Shanghai’s Pudong airport, where Delta operates direct flights to Los Angeles, and links to subsidiary Shanghai Airlines.
Delta serving the three largest cities in China six times a day and while China Eastern has access to US markets three times a day, which puts them behind United Airlines and its partner Air China.
This summer, Delta Air Lines offers 4 daily flights to Shanghai, and a daily flight to Beijing from Detroit and Seattle, and another between Seattle and Hong Kong; it has increased its presence in China threefold over the past five years.
China Eastern Airlines connects Shanghai to Los Angeles twice a day, and New York, San Francisco and Hawaii once daily. It also runs three weekly flights between Nanjing and Los Angeles; new routes to North America are expected, as well as higher flight frequency.
Delta Air Lines has also announced plans to invest in Japans failing low-cost carrier Skymark Airlines with one of its major creditors, leasing company Intrepid Aviation.