Delta and Air France Forming Alliance

Delta Air Lines Inc. and Air France said they will join forces to create the world’s fourth major airline alliance, prompting the U.S. carrier’s European partners to join forces with AMR Corp.’s American Airlines. The 10-year partnership between Delta and Air France, the No. 3 carriers in the U.S. and Europe, will link passenger and cargo services and add about $160 million a year to profits of both carriers, they said. The accord was followed by American Airlines, the world’s second-largest carrier, announcing a transatlantic cooperation with SAirGroup’s Swissair and Belgium’s Sabena, Delta’s other European partners. More reshuffling is expected as carriers race to cut costs and expand into other markets. Air France said it’s hoping the Delta link will help it to expand its 5% share of traffic across the North Atlantic, where it lags rivals, such as British Airways, which has 15%. The French and U.S. carriers, which will have 20% of transatlantic traffic and $25 billion in combined sales, said it was too early to give their targets for market share. On the NYSE, Delta shares fell $1.94 to close at $56.81; AMR slipped 25 cents to close at $66.88.