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European air giant joins Delta

AIR France-KLM and Delta Air Lines yesterday signed a deal to set up a joint venture on trans-Atlantic routes with estimated annual sales of US$12 billion.

The tie-up joins Europe's largest airline and Delta, the world's biggest airline operator.

In a statement, the companies said that together they will operate more than 200 trans-Atlantic flights and offer about 50,000 seats a day.

The joint venture covers all the airlines' flights between North America and Europe, between Amsterdam and India, and between North America and Tahiti, the companies said.

"On these routes, strategies and economies are to be equally shared among the Air France KLM Group and Delta," the companies said.

The joint venture has no predefined termination date, but can be canceled with a three-year notice after an initial 10-year term, the companies said.

Air France-KLM shares rose as high as 13 percent in early trading on the Paris stock exchange yesterday. That followed the release late on Tuesday of the airline's annual results.

The figures showed that lower staff costs and marketing expenses helped it achieve a smaller-than-expected operating loss of 129 million euros (US$175 million) compared with a net profit of 1.4 billion euros a year earlier.

"The cost performance was better than they expected, and plainly better than the market expected," said ABN Amro analyst Andrew Lobbenberg, noting, though, that revenue performance was worse than experts anticipated. The airline also announced plans to cut its work force and reduce its investment plans.


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