What. The. HECK.
Absolutely did NOT see this coming.
- Delta will invest $1.9 billion for a 20 percent stake in LATAM through a public tender offer at $16 per share, to be funded principally with newly issued debt and available cash.
- Delta will also invest $350 million to support the establishment of the strategic partnership.
- Delta will acquire four A350 aircraft from LATAM and has agreed to assume LATAM’s commitment to purchase 10 additional A350 aircraft to be delivered beginning in 2020 through 2025, supporting Delta’s ongoing fleet transformation.
- Delta will be represented on LATAM’s Board of Directors, further strengthening the relationship.
- The tender offer and the strategic partnership are subject to customary closing conditions and all required governmental and regulatory approvals, including anti-trust immunity.
- Partnership brings together the leading airlines in North America and Latin America, connecting the Americas to the world as never before.
- Together, Delta and LATAM will hold the leading position in five of the top six Latin American markets from the U.S.
- Together, the partners will serve 435 destinations worldwide and carry more passengers between North America and Latin America than any other partnership.
- Customers will benefit from significantly expanded travel choices across the Americas and an industry leading customer experience.
Additionally, per CNBC, LATAM will be leaving the OneWorld alliance, but it was not immediately clear whether it would join SkyTeam, the group that includes Delta and its partners.
Delta will also provide LATAM an additional $350 million to help it transition out of Oneworld and plug into Delta’s network.
American Airlines and LATAM filed for a joint venture in April… I’m assuming this is the end of that application.
American Airlines’ Statement Regarding The New DL/LATAM Partnership:
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.
A bit of self-promo, but here’s my video summation of the news: