A decade ago, Delta came within a whisker of tearing Japan Airlines away from American. In 2018 it suc- cessfully convinced WestJet to abandon American. And last Thursday, it dealt American a shattering blow: Delta — stunningly and unexpectedly — will forge a deep alliance with longtime American partner Latam.
To appreciate the gravity of Delta’s move, consider Latam’s size. The Latin American airline carried 69m passengers last year, making it the 14th largest carrier in the world by this measure. Outside of the U.S., Europe, and China, only one airline is bigger: Turkish Airlines. Roughly 40% of all travelers flying within South America are flying on Latam. It serves more than 140 cities in 25 countries. It flies more than 300 aircraft. Latam’s loyalty plans have more than 30m members.
What exactly is Delta doing? It’s buying 20% of Latam for $1.9b, more than it has ever spent for equity in a foreign airline. It’s Delta’s largest airline investment, in fact, since buying Northwest in 2008. By contrast, Delta spent just $360m in 2013 to buy 49% in Virgin Atlantic. Chile’s Cueto family will
remain Latam’s leading shareholder. Qatar Airways will continue to hold a 10% stake.
On top of the $1.9b, Delta is committing another $350m to cover Latam’s transition costs as it exits the Oneworld alliance and breaks cooperation with American. The $350m also covers costs related to building …
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