Korean Air, Delta to buy 25% stake in Canada’s WestJet for $550 million

Korean Air Lines Co., South Korea’s largest full-service carrier, and its joint venture partner Delta Air Lines Inc. will acquire a 25% stake in Canada’s second-largest airline WestJet Airlines for $550 million, Delta announced on Friday.

Under the agreement signed with the Canadian flag carrier’s parent Onex Corp., the Korean airline will inject $220 million to buy a 10% stake, and the US air carrier will pay $330 million for the remaining 15% stake.

Korean Air’s board of directors approved the deal on Friday, the airline said.

Delta and Korean Air, long-time codeshare and joint venture partners, said they expect their stake purchases in WestJet will expand their operations between Canada and North America, Europe and Asia.  

In particular, the Korean flag carrier, which has recently become the world’s No. 11 full-service carrier with its crosstown rival Asiana Airlines Inc. under its wings, sees the deal as a strategic move to enhance its competitiveness in the North American aviation market.

Boasting a land area of 9.98 million square kilometers, the world’s second-largest land size after Russia’s, Canada is the world’s seventh-largest airline market, estimated at $33 billion.

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Founded in 1996, WestJet is credited for pioneering low-cost air travel in Canada.

Following integration with Sunwing Vacations and Sunwing Airlines in 2025, WestJet now flies passengers in nearly 200 aircraft to more than 100 destinations across North America, Central America, the Caribbean, Europe and Asia.

Under the new stake deal, Korean Air is expected to add more flights between Korea and North America and plans to discover new routes in Latin America by leveraging WestJet’s extensive network in the region.

To win approval for its merger with Asiana Airlines, Korean Air had to relinquish some of its lucrative international routes and sold off Asiana Airlines’ cargo business.

Previously, with reinforced partnership with foreign airlines through stake acquisitions, Korean Air has succeeded in creating synergy.

In April 2013, Korea Air purchased a 44% stake in Czech Airlines, marking its first stake acquisition in a foreign airline operator. Two years after the deal, Korean Air turned around its Incheon-Prague route into a profit-generating operation.

In 2018, it launched a joint venture partnership with Delta Air on trans-Pacific routes to offer an enhanced and expanded network.

A joint venture partnership in the airline industry is considered the highest level of business partnership, beyond codeshare agreements, which allow partnering airlines to share the same flight only. JV partners can share both costs and revenues.   

Since the launch of the Delta-Korean Air JV partnership, the two partners have created synergy in flight operations, especially with a significant traffic increase between the US and Asia.

Delta and Korean Air have also been cooperating with WestJet under codeshare deals since 2011 and 2012, respectively.

Airlines around the world actively pursue consolidation through mergers, acquisitions and strategic alliances, which allow them to control high-volume routes, to stay ahead of rivals.

Korean Air plans to further elevate its position as one of the leading global airline companies through active partnership programs with major foreign air carriers, which can enable it to expand customers’ choices and improve their travel convenience, said Korea’s No. 1 full-service carrier after the WestJet stake deal announcement.

Even after the latest stake sale, Canada-based private equity firm Onex will remain the parent of WestJet with the largest stake.

Write to Bo-Hyung Kim and Jung-Eun Shin at kph21c@hankyung.com
Sookyung Seo edited this article.