Delta Air Lines this week announced that it will pay $1.9 billion for a 20 percent stake in Latam Airlines, the largest carrier in Latin America.
The move will result in “significantly expanded” travel choices across the Americas, Delta stated in a release. Together, the partners serve 435 global destinations throughout the Americas and beyond.
The deal marks the end of American Airlines’ partnership with Latam through the Oneworld alliance. In a statement this week, American Airlines said that it understood Latam’s decision to partner with another U.S. carrier and that the 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.”
American Airlines had wanted a deal with Latam but was blocked by a court ruling in Chile, where Latam is based.
The Delta-Latam deal includes the promise from Delta to invest an additional $350 million for the establishment of the partnership, and Delta said that it will also acquire four A350 aircraft from Latam and assume Latam’s commitment to purchase 10 additional A350 planes for delivery between 2020 and 2025.
Following the announcement, Delta CEO Ed Bastian told analysts that the deal will boost the company’s earnings within the next two years and raise revenue by $1 billion over the next five years.
Latam serves destinations in Chile, Brazil, Argentina, Colombia, Peru, Ecuador, and Paraguay. The deal still needs regulatory approval.
Associated Press contributed reporting.
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