by Donald Wood
Last updated: 10:27 AM ET, Fri September 27, 2019
Delta Air Lines announced it has agreed to purchase a 20-percent stake in Latin America's largest airline, LATAM, for $1.9 billion.
According to Reuters.com, the decision to purchase a stake in the Chilean-based carrier is part of Delta's aggressive expansion internationally through joint ventures and minority stakes. As a result, Delta plans to sell its stake in Brazilian carrier Gol, which competes with LATAM.
The Latin American airline already offers international service between South America and the United States, as well as domestic service in key destinations such as Argentina, Brazil, Chile, Colombia, Ecuador and Peru.
Delta's purchase of LATAM stake still needs approval from U.S. and Chilean regulators.
"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," Delta CEO Ed Bastian said in a statement. "Our people, customers, owners and communities will all benefit from this exciting platform for future growth."
The deal is a marquee win for Delta over American Airlines, which was heavily pursuing a joint venture with LATAM. American and LATAM are both part of the OneWorld alliance of airlines, but the Latin American carrier recently announced it would be leaving the group.
American Airlines released an official statement on the Delta-LATAM deal:
LATAM and the Cueto family have been terrific partners of American Airlines for decades. Given the 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, we understand LATAM's decision to partner with a U.S. carrier that isn't burdened by the ruling.
Further, 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. During the transition period, American will work with LATAM to ensure a seamless experience for customers.
American Airlines remains the largest U.S. carrier to both Latin and South America and we look forward to competing and growing in this region of the world.
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