Delta Air Lines and LATAM Airlines Group are entering into a strategic partnership that capitalises on their existing networks in North and Latin America, aimed at unlocking new growth opportunities.
The new venture between Delta and LATAM will provide the carriers “to offer access to a greatly expanded array of worldwide destinations,” the new partners said in a statement. Together, they will serve 435 destinations around the globe.
Delta will invest US$1.9 billion for a 20% stake in LATAM through a public tender, also injecting US$350 million to support the new strategic partnership. The pact will see the US carrier buy four of LATAM’s Airbus A350s and assume LATAM’s commitment to purchase 10 extra A350 aircraft that will come online between 2020-2025.
For LATAM, the deal will improve free cash flow generation, reduce forecasted debt by over $2 billion by 2025 and improve LATAM’s capital structure, enhancing its ability to execute its long-term strategy.
“This transformative partnership with LATAM will bring together our leading global brands, enabling us to provide the very best service and reliability for travellers to, from and throughout the Americas,” said Ed Bastian, Delta’s Chief Executive Officer. “Our people, customers, owners and communities will all benefit from this exciting platform for future growth.”
“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,” said Enrique Cueto Plaza, Chief Executive Officer of LATAM.
The new partnership is in addition to Delta’s exiting arrangement with Aeromexico.