(Reuters) -Delta Air Lines and Korean Air Lines will acquire an aggregate 25% stake in Canada’s WestJet Airlines for $550 million from private equity firm Onex Corp, the U.S. carrier said on Friday.
The deal, where Delta will invest $330 million for a 15% stake in WestJet and Korean Air will invest $220 million for a 10% interest, deepens the airlines’ presence in the North American market.
Airlines have engaged in consolidation through mergers, acquisitions and partnerships focused on frequent-flyer programs and rewards to dominate high-volume routes and strengthen their position against rivals.
This has led to higher fares, reduced competition and consumer concerns about anti-competitive practices, prompting antitrust regulators to scrutinise industry impacts.
Delta also plans to sell and transfer a 2.3% stake in the Canadian airline to its joint venture partner, Air France-KLM, for $50 million.
WestJet, which has had various partnerships with Delta and Korean Air since 2011, will continue to be owned and controlled by Onex, Delta said.
“Delta, Korean and Air France-KLM are among the world’s most prominent and best-managed airlines. Onex is delighted to welcome them as shareholders in WestJet,” Onex Partners Co-Head Tawfiq Popatia said.
Delta and Korean Air’s agreements with WestJet come at a time when Canadian airlines are seeing a decline in U.S.-bound bookings following President Donald Trump’s tariffs on Canada.
Air Canada, the country’s largest airline and a WestJet rival, lowered its annual adjusted core profit forecast on Thursday due to the waning trans-border travel, weakening local currency and trade tensions with the U.S.
Delta’s shares were trading about 1% higher before the bell.
(Reporting by Sameer Manekar in Bengaluru; Editing by Shreya Biswas)
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