American Airlines Really Wanted a Joint Venture With LATAM – Even Without Chile

When Delta stole the LATAM partnership out from under them, American put out a statement claiming the partnership wasn’t very valuable anyway and that they didn’t see much upside without being able to partner in Chile – something the Chilean Supreme Court had foreclosed back in May.

The idea that the joint venture wasn’t important to American without Chile was always silly but it was American’s position – a position that CEO Doug Parker just undermined.

American of course only flies to one city in Chile – Santiago – and doesn’t have nearly the operations there as in Brazil. LATAM is strong across South America, and of course American Airlines talks with Brazilian carrier Gol about a joint venture underscore how important a deal would have been without Chile.

At a question and answer session with employees last week Doug Parker

We worked hard to try to convince LATAM that we should figure out a way to carve out Chile because in the grand scheme of LATAM’s network, particularly the United States, not a huge piece. If you’re LATAM it’s a lot easier said than done that’s their entire operation and trying to have a piece of it that has to be run differently and Chinese walls around the people that are running that organization versus the ones that can talk to us isn’t easy by any means, seems sub-optimal to them, and also complicates our ability to get it done with the United States.


Copyright: artzzz / 123RF Stock Photo

American viewed the Chilean portion of a LATAM joint venture as ‘not a huge piece’ and they wanted to get the agreement done with the carrier across the rest of South America – not matter what story they’re telling now, with Delta poaching the LATAM partnership.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. So, when will LATAM officially leave One World? Our family flies to Peru often using either LATAM or AA from Florida. We were thinking of taking advantage of flying to Brazil using AA Award and then onto Peru from Brazil on LATAM. It might not make sense to do the Brazil/Peru leg on LATAM if there are no One World benefits.

  2. I agree on this Gary. This was and will be a massive blow to American, especially in Brazil. People have no idea how big this news was. I am sure the higher ups at AA are steaming about it.

    Brazil is the prize here. As someone who lives half the year down there the American/LATAM partnership was the aviation bread and butter of the second biggest economy in the Americas (9th biggest in the world). With an upside in the coming years that is truly breathtaking. To lose this will have reverberations for decades at American.

    GOL is about the only option American has now. Azul will either grow closer to Star Alliance or continue its quirky but niche network (It’s really the best airline in Brazil). Unfortunately GOL is the weakest of the three in terms of brand and international network.

    If I was Doug Parker (thank god I am not) I would pour a massive investment into GOL to bring it closer to LATAM in terms of size, international operations and service. If I am not mistaken the new laws enacted in Brazil would even allow American to purchase a majority ownership. They could then funnel a few widebody aircraft to them that were destined for AA to have GOL add a few flights to the U.S. and Europe from GRU and also attack the booming NE Brazil markets like Fortaleza with more U.S. service.

    LATAM could be vulnerable to this. While certainly the biggest airline in Brazil it is not overly loved. It’s more about its network to the U.S. and Europe that keeps them going. Azul is actually the most loved brand in Brazil as an airline. But their insistence on focusing intl. operations out of VCO leave the door pretty wide open.

  3. American has been horrible to its customers & employees since Doug Parker wrecked the airline,it’s once excellent program and customer satisfaction
    They deserve their owns failures and own them one way or the other

  4. @stuart – If AA execs are steaming then it must be because they failed to even think to get an equity stake in LATAM. And that failure was probably due to the fact that they put AA in a position that they probably couldn’t afford a 20% stake in them.

    AA’s Board needs to recognize the multiple failures of the C-Suite in leading the airline. The board is now years behind when changes should have been made.

  5. Right now, if you try to search GRU-JFK at the Latam Pass page, you will get GRU-MIA with Latam and MIA-JFK with Delta. 🙂 Signs of time.
    But you can still find some American flights as well

  6. @Stuart. Im sure Doug Parker us glad youre not him too. Hes worth $50 million and youre worth…? Not trying to be funny but the higher net worth wins out.

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