Delta to invest $65m in Aeromexico; form alliance and MRO JV

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Delta Air Lines is to invest $65 million in Aeromexico, as the two SkyTeam airlines reached a tentative agreement for a long-term exclusive commercial alliance and a new maintenance, repair and overhaul joint venture.

Delta will make the investment through the purchase of ordinary shares in Grupo Aeromexico, made up of treasury stock that was set aside as part of Aeromexico's initial public offering in April. Delta will also get a seat on Aeromexico's board of directors.

The tentative deal, which was signed as a memorandum of understanding, is subject to approval from Mexican regulators.

The two airlines, which already co-operate together on MRO work, will establish a new MRO joint venture facility in Mexico. Scheduled to open in the third quarter of 2013, the facility will build on existing repair work for the two airlines and will also offer services to third-party carriers.

Prior to this, Aeromexico was already doing MRO work for Delta, and has been the exclusive provider for Delta's entire Boeing MD-80 fleet.

As part of the commercial alliance, the two airlines will codeshare across both of their networks, including all Delta and Aeromexico flights between the USA and Mexico as well as on both carriers' domestic flights and to other key international destinations.

The two airlines will also have a coordinated sales team to offer joint contracting to corporate customers, they said.

Delta and Aeromexico, which are already codesharing, have an existing agreement that gives each other's customers reciprocal access to airport lounges and frequent flyer miles.

The carriers said future outcomes of the alliance could include co-locating airport facilities for easier connections and check-in.

"Aeromexico has been a strong partner for Delta in Mexico and Latin America, and this reinforces our relationship," said Delta CEO Richard Anderson. "By forming an exclusive long-term commercial partnership, we will leverage the strengths of our two networks to provide expanded customer benefits and build the foundation for a joint venture to better serve the US and Mexico marketplace."