Air France-KLM and Delta Air Lines Inc announced plans on Wednesday to team up on routes linking major U.S. cities and London's Heathrow airport in a challenge to rival British Airways Plc.
The joint venture aims to take advantage of the Open Skies pact set to liberalize transatlantic rules next year, and will be implemented in April 2008.
It will first cover all transatlantic flights between the Air France and Delta hubs, as well as all flights operated by either carrier between London-Heathrow and the U.S., they said. These flights will be sold by the non-operating carrier on a code-share basis.
Starting in 2010, numerous flights to all destinations between Europe, the Mediterranean and North America will be part of the joint venture, the airlines said in a statement.
The revenue encompassed by the first phase of this joint venture is estimated at approximately $1.5 billion per year, and more than $8 billion per year for the second phase, they said.
Air France and Delta plan a news conference later on Wednesday.
Air France told investors on Monday it planned a new direct route from Heathrow to Los Angeles and would use Heathrow slots to serve nine U.S. destinations under the Delta deal, according to analysts who attended the event, which was closed to media.
For decades, U.S. access to Heathrow has been limited to two U.S. and two UK airlines -- currently American and United, along with BA and Virgin Atlantic.
Analysts said Air France KLM Chief Executive Jean-Cyril Spinetta told investors that the deal with Delta would add several dozens of million euros in profits in 2008.
The Delta venture is modeled in part on a 10-year-old agreement between Northwest and KLM, the Dutch airline which is part of the Air France group.
Air France and Delta hope to extend cooperation to include Northwest Airlines and Continental Airlines once they win multi-party antitrust immunity, analysts said.
The aim is to tap into sprawling U.S. domestic networks held by the U.S. carriers, and link these with Europe's busiest airport at Heathrow.
Business travelers crossing the North Atlantic are BA's biggest source of profits.