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Delta & Latam Announce Strategic Partnership Plans

By Michael B. Baker / September 26, 2019 / Contact Reporter
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BTN updated this story on Sept. 27, 2019, at 1:20 p.m. Eastern with details of Latam's partnerships with other carriers, as well as details on Latam and Delta codesharing.


Delta and Latam have agreed to form a strategic partnership. As part of the deal, Delta will take a 20 percent stake in Latam and Latam will exit the Oneworld alliance. The partnership will build upon Delta's joint venture with Aeromexico and "will bring together our leading global brands, enabling us to provide the very best service and reliability for travelers to, from and throughout the Americas," Delta CEO Ed Bastian said. Latam CEO Enrique Cueto Plaza said the partnership "strengthens our company and enhances our leadership in Latin America by providing the best connectivity through our highly complementary route networks."

Delta plans to invest a significant sum, including $1.9 billion to acquire the Latam stake through a public tender offer of $16 per share and an additional $350 million to help establish the partnership. In addition, Delta plans to acquire four Airbus A350 aircraft from Latam and to assume Latam's commitment to buy 10 additional A350s through 2025.

The investment also will get Delta a seat on Latam's board of directors.

Latam had been establishing a joint venture with longtime Oneworld partner American Airlines. A recent ruling by Chile's Supreme Court blocked the JV in Chile even after Chile's antitrust tribunal had approved it. American stated: "We understand Latam's decision to partner with a U.S. carrier that isn't burdened by the ruling. American Airlines remains the largest U.S. carrier to both Latin and South America, and we look forward to competing and growing in this region of the world." American added that the change will not have a large financial impact on American, as the joint business "without Chile would have provided limited upside."

A Delta spokesperson confirmed that Latam would exit Oneworld as part of the agreement, and Latam executives said the company plans to operate as an independent group rather than join the SkyTeam alliance alongside Delta and Aeromexico. The agreement with Delta does not have exclusivity requirements, and Latam can keep its bilateral agreements with other carriers in Oneworld, said Latam chief commercial officer Roberto Alvo Milosawlewitsch, who will take over as CEO next year.

The partnership between Delta and Latam and Delta's investment require regulatory approvals, including antitrust approvals, which Delta estimates will take one to two years to obtain. Delta does not anticipate the challenges there that American faced. "Our networks are complementary and together are going to generate consumer benefits," Delta EVP and chief legal officer Peter Carter said. "American and Latam had a number of overlaps that created issues with the Chilean regulators, and we just don't have that here." Delta and Latam have only one overlapping route, between New York and Sao Paolo, Latam CFO Ramiro Diego Alfonsin Balza said.

Codesharing between Delta and Latam, meanwhile, could begin by the end of this year, Bastian said. Latam executives said codeshare agreements with American would continue for a few more months to smooth the transition to codesharing with Delta.

Delta has made several investments in carriers in the past several years, including Aeromexico, Air France-KLM, Virgin Atlantic and China Eastern. Brazilian carrier Gol also had been a part of that investment strategy, but with the planned Latam investment, a Delta spokesperson said, Delta will "exit our stake in Gol in an orderly fashion in the coming months."

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