Delta Air Lines and Korean Air will strengthen their respective partnerships with WestJet through the purchase of minority equity stakes in the Canadian airline from Onex Partners, the upper middle market private equity platform of Onex, a Canadian investor and alternative asset manager.
Under the agreements, Delta and Korean will acquire independent equity stakes totaling 25% in WestJet. Delta will be investing US$330 million and acquiring a 15% stake, and Korean will invest US$220 million in exchange for a 10% stake.
Affiliated funds and co-investors of the Onex Group intend to participate in the sale alongside Onex Partners. These investments build on each airline’s existing relationship with WestJet to provide further benefits to customers in North America, Europe, Asia and beyond.
Upon closing, Delta has the right and intent to sell and transfer a 2.3% stake in WestJet to its Joint Venture partner Air France-KLM, also an existing WestJet partner, in exchange for US$50 million. This separate transaction would remain subject to certain Air France-KLM approvals. The Onex Group will continue to own and control Calgary, Alberta-based WestJet.
Codeshare partners
Delta and Korean have each been codeshare partners with WestJet for years. Their first joint flight was in May 2018. The partnership between Delta and Korean Air helps them to connect 290 destinations in the Americas and 80 destinations in Asia on 18 peak day flights between Incheon and the U.S.
Amongst their best initiatives are an increased JV network, integrated SkyTeam-powered check-in allowing customers to digitally check in using Delta or Korean Air’s platforms, introduced reciprocal benefits for Delta SkyMiles and Korean Air SKYPASS, reduced connection times and aligned baggage allowances and priority boarding for corporate customers.
Delta and WestJet have been partners since February 2011, providing an expanded global network and seamless travel options for customers on both sides of the U.S.-Canada border.
Delta, which is celebrating its 100th anniversary, has been serving Canada for more than 90 years. In recent years, Delta has made equity investments with several international partners, including Air France-KLM, LATAM, Aeromexico, Virgin Atlantic, China Eastern and Korean Air’s parent company, Hanjin KAL.
Korean Air and WestJet have partnered since June 2012, steadily expanding their transpacific connectivity. Through their codeshare agreement, travelers on both sides of the Pacific can access flights between Seoul Incheon and Vancouver, Toronto, and Calgary, with onward connections to WestJet’s domestic Canadian and U.S. routes, as well as Korean Air’s extensive Asian network.
Industry consolidation
Airlines have engaged in industry consolidation since the pandemic, buying small rivals outright and also taking part stakes in each other. There’s growing concern that the dominance of a few large airlines is stifling competition, potentially leading to higher fares and reduced service options, and limiting market access for smaller carriers.
This move by Delta, which already partners on routes across the Pacific with Korean Air, deepens the Atlanta-based carrier’s grip across the Americas.
Lufthansa recently took control of Italian carrier ITA, Alaska Airlines also snapped up Hawaiian Airlines while Korean Air itself finalised approval for its merger with Asiana Airlines. Europe’s largest carriers meanwhile are circling TAP Portugal.
