Delta Air Lines and American Airlines have formed a new and independent partnership to own and market a global computer reservations system (CRS).
Under the agreement, Delta and American initially will own 50 percent of the new company each and each will contribute its existing CRS to the new joint venture.Delta, whose CRS is smaller, will pay American $650 million.
The new partners said they will offer domestic and international airlines and other entities an opportunity to become equity partners. As other partners join, the percentage ownership of Delta and American will be reduced equally and could eventually fall to a minimum 25 percent each, the two airlines said.
An agreement providing for the establishment of the independent company has been approved by both boards of directors and signed by the two chief executives. The new company will be independently managed and headquartered in the Dallas/Fort Worth area.
The new company will contract with American's data processing and communications division, known as SABRE Computer Services, for computing and communication services.
Delta and American said the new company will stimulate competition in the United States and overseas and will eliminate government criticism of CRSs owned by single-owner CRS systems. American's SABRE and Delta's DATAS II are the only major single-owner CRSs in existence.
"We have always maintained that the criticism is unjustified," said American Airlines Chairman Robert L. Crandall
"On the other hand, we would prefer to run our business rather than run a debating contest, and we think this is a good solution for . . . our customers, our employees, and our critics."
He said the partnership will make SABRE more competitive in its struggle against competing systems now owned by multiowner groups. Allen said that multiowner systems are more effective as international competitors.
"Delta's investment in the new partnership will allow it to become a major player in the global marketplace for travel information," said Delta Chairman Ronald W. Allen.
CRSs are utilized throughout the world for airline seat, rental car and lodging reservations and other travel services. Many subscribers also use CRSs for management information services. There are presently 11 systems in use worldwide, five in the United States and the remainder in Canada, Europe and Asia.