Delta, Korean Air Team Up for $550M WestJet Stake Purchase

Major SkyTeam carriers seek 25% ownership in Canadian discount airline to strengthen North American partnerships

Delta Air Lines and Korean Air announced plans Thursday to acquire a combined 25% stake in Canadian discount carrier WestJet for $550 million, marking a significant expansion of Asian and U.S. airline investments in the North American aviation market.

The deal, disclosed by the three airlines on May 9, would see Atlanta-based Delta purchase 15% of WestJet from Canadian private equity firm Onex Partners for $330 million, while Seoul-based Korean Air would acquire a 10% stake for $220 million. The transaction requires regulatory approval.

Delta also revealed plans to resell a portion of its stake, stating it “has the right and intent” to sell 2.3% of WestJet to European partner Air France-KLM for $50 million after the deal closes. That secondary sale remains subject to Air France-KLM approval.

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“The agreement will further align [the] airlines’ interests, expand customer benefits and strengthen connectivity between Canada and North America, Europe and Asia and beyond,” the airlines said in a joint statement. “The broader partnerships will support future benefits for travellers, including an elevated, more-seamless travel experience for customers worldwide.”

Despite the equity purchases, Onex Group will retain majority ownership and control of Calgary, Alberta-based WestJet, the carriers confirmed.

The acquisition represents a strategic shift for the airlines following years of failed attempts to establish joint ventures. All four carriers — Delta, Korean Air, Air France and KLM — are members of the SkyTeam alliance and already maintain codeshare agreements with WestJet, which is not a SkyTeam partner.

Previous efforts to form deeper partnerships have faced regulatory hurdles. Delta and WestJet had applied to U.S. regulators to establish a joint venture that would have allowed them to coordinate schedules, sell seats on each other’s flights and share revenue. While the U.S. Department of Transportation approved the alliance in 2020, it came with conditions requiring the airlines to divest operating slots at New York’s LaGuardia Airport.

Those restrictions proved too burdensome, leading Delta and WestJet to withdraw their application in November 2020.

The carriers had explored multiple joint venture configurations over the years, including transpacific and North American partnerships between WestJet and Delta, a transpacific agreement with Korean Air, and a transatlantic arrangement with Air France-KLM.

Currently, Delta operates existing joint ventures with Air France-KLM and Virgin Atlantic Airways covering transatlantic flights, while maintaining a separate transpacific venture with Korean Air.

The equity investment model appears to offer a path forward for strengthening commercial ties without triggering the regulatory scrutiny that derailed previous joint venture attempts.