Delta announced that they’re taking a 20% stake in LATAM, the largest airline conglomerate in South America comprised of LATAM Argentina, Brasil, Colombia, Ecuador, Paraguay, and Perú.
The 20% stake will cost Delta $1.9 Billion. They will also be “spending $350 Million to expand its partnership with the carrier” and “acquire four Airbus A350 planes and assume LATAM’s commitment to buy 10 more A350s between 2020 and 2025.”
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LATAM was formed by merger of LAN and TAM. Given the large presence in Brazil, Delta will give up its 9% stake in Brazilian carrier Gol.
American Airlines had worked towards a joint venture with LATAM but it was rejected by Chile’s Supreme Court this spring.
LATAM will exit the oneworld alliance, although no plans have been announced for their entrance to SkyTeam. Delta’s CEO says SkyTeam has failed and this is his next step towards creating his own partially owned-carrier alliance. It adds to Delta’s 49% stakes in Virgin Atlantic and Aeromexico, and stakes in Air France KLM, Korean, and China Eastern.
American Airlines says good riddance, their current LATAM partnership drove less than $20 million in revenue and a joint venture without the Chilean component “would have provided limited upside.” This is a huge move for Delta, and despite their statement a blow to American.