AT&T plans venture with Delta Airlines

AT&T, the US telecommunications group, is to form a joint venture with Delta Airlines to provide dollars 2.8bn ( pounds 1.8bn) of technology products and services to Delta over the next 10 years. Delta said the partnership would help it to reduce operating costs and improve performance, writes Mary Fagan.

The joint venture will be based in Atlanta and employ 1,200 people. A chief executive is expected to be appointed later this year when the deal is finalised.

The venture will also supply computer and communications services to other companies in the travel and transport sectors. However, it will not sell airline and travel agency reservation services. Responsibility for Delta's reservation system will be transferred to Worldspan, a venture between Delta and a group of other airlines.

Ronald Allen, president and chief executive of Delta, said: 'The joint venture gives Delta immediate access to world class, state-of-the-art technology, and longer-term potential for new sources of revenue. It is a strategic initiative designed to improve our competitiveness, and it will play a key role in Delta's drive to return to sustained profitability.'

The company suffered a blow recently when it failed to gain approval for a code-sharing deal with Richard Branson's Virgin Atlantic. The agreement would have given Delta access to Heathrow where the main US operators are its rivals, United Airlines and American Airlines.