Delta Air Lines on Thursday announced a deal to buy a 20% stake in LATAM Airlines Group for $1.9 billion. The proposed partnership with LATAM Airlines represents Delta Air Lines’s largest investment in a foreign carrier and is a competitive strike against American Airlines in Latin America.
The Delta deal
In recent years, Delta has expanded its ownership and relationship with other international carriers. It raised its stake in the parent company of Korean Air to 9.2%, announced a trans-border joint venture with Canadian airline WestJet and increased its ownership of Aeromexico, the largest airline in Mexico to 49%.
In addition to buying 20% of LATAM for $1.9 Billion, Delta will also be spending $350 million to expand its partnership with the carrier.
“This alliance with Delta strengthens our company and enhances our leadership in Latin America by providing the best connectivity through our highly complementary route networks.” LATAM’s CEO, Enrique Cueto Plaza, said when announcing the deal
The deal will allow Delta Air Lines to expand onto an $8 billion market for U.S. travel in which it has limited access now, resulting in much greater travel choices for customers and $1 billion in revenue over the next five years, Delta CEO Ed Bastian said Friday.
“That’s a revenue pull that we’ve not had meaningful access to.” Bastian said
American Airlines has been pursuing a partnership with LATAM, they were already connected through the OneWorld alliance of airlines. Such agreements allow carriers to sell seats on each other’s flights. They also allow passengers to earn and use miles on those airlines. LATAM will be leaving the OneWorld alliance.
The Airbus A350
An addition to the deal is the acquisition of the Airbus A350. Delta will acquire 14 Airbus A350 jets. Four of them will be planes currently operated by LATAM. The other 10 will come from taking LATAM’s future order with Airbus. Delta will receive two aircraft in late 2020 and the remaining 12 by 2025. Delta has publicly indicated its wish to operate more of the Airbus A350.
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About the author: Mila Kostic is a native of Belgrade, Serbia. After majoring in sociology at the Belgrade University she has been working as tutor and coach. Prior to taking on her role at Mighty Travels, she wrote for a video games, fitness, and health lifestyle website. After starting her work with the Mighty Travels team she discovered her passion for travel and travel writing. Now, she is focused on bringing you the newest travel news. In her portfolio here at Mighty Travels, you can find articles on Airline news, hottest credit card deals, tips and tricks on earning miles and much more. You can reach her at [email protected]
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