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Delta Finalizes LATAM Stake Acquisition
Back in September, Delta surprised the aviation world with its unexpected announcement involving purchasing 20 percent of LATAM Airlines. The deal was completed on Tuesday, as Delta formally took ownership of shares in the South American carrier.
In a statement, Steve Sear, Delta’s president of international and executive vice president of global sales said “We look forward to working with LATAM to create a truly world-class partnership that will give our customers unparalleled access throughout the Americas. Equity investments like this help create alignment within our partnerships as we bring together our brands, enabling us to provide the very best service and reliability for our shared customers.”
The deal worth $1.9 billion, is part of Delta’s strategic outlook that sees the U.S carrier diversifying its geographical portfolio and taking stakes in select international carriers, such as Virgin Atlantic, Aeromexico and Air France-KLM.
Acquiring a stake in LATAM enables Delta to provide greater connectivity to South America by jointly offering the greatest number of destinations across North and South America than any other player.
South America has traditionally been a complicated market for Delta to proliferate, as American Airlines has been a longstanding leader. The oneworld alliance member has successfully capitalized on the geographical and cultural advantage of its Miami hub to effectively serve the region. Furthermore, as a fellow oneworld alliance member, LATAM has been a fruitful partner for American, offering onward connections to a dozen of secondary cities throughout Chile, Peru, Argentina, and Brazil, among others.
Delta’s involvement in LATAM ends the carrier’s relationship with American Airlines. The South American carrier will also leave the oneworld alliance by October and persue individual agreements with airlines that add value to LATAM’s structure.
Both carriers will begin to codeshare during the first quarter of the year on Delta flights and LATAM flights in Colombia, Ecuador and Peru, offering increased connectivity to 74 onward destinations in the U.S and 51 in South America.
With LATAM leaving oneworld, there are lots of doubts on what will replace the passenger benefits brought by alliance membership, such as milage earnings in partner carriers and the extension of frequent flyer status benefits such as lounge access and preferred seating.
This article was updated on Thursday, Jan. 2, 2019 at 2:12 p.m. ET to correct two grammatical errors.
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