Delta Air Lines is investing $1.9 billion in LATAM Airlines Group, representing a 20% stake in the Chile-based airline, Delta says on 26 September. Delta and LATAM will serve 435 destinations worldwide through the partnership.
As part of the deal, Delta will buy four A350 aircraft from LATAM and will assume LATAM’s commitment to purchase 10 additional A350 aircraft to be delivered beginning in 2020.
“This transformative partnership with LATAM 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,” says Delta chief executive Ed Bastian.
Delta will get seats on LATAM’s board of directors and will invest an additional $350 million in the partnership.
Delta’s stock price rose by 0.81% on 26 September and closed at $58.78.
Shortly after the announcement from Delta, American Airlines released a statement saying it understands LATAM’s decision to partner with a US carrier that isn’t burdened by “a recent negative ruling by the Chilean Supreme Court, which would have significantly reduced the benefits of our partnership since Chile was not approved as a part of the potential joint business arrangement”.
American and LATAM had been applying for a joint venture and had run into snags in a Chilean court in May. American and LATAM dropped Chile from the application in August.
“This change in partnership is not expected to have a significant financial impact to American, as the current relationship provided less than $20 million of incremental revenue to American, and the proposed joint business without Chile would have provided limited upside,” American says in the statement.
Source: Cirium Dashboard