Business

/

ArcaMax

Delta to spend $1.9 billion on stake in South American airline

Kelly Yamanouchi, The Atlanta Journal-Constitution on

Published in Business News

ATLANTA -- Delta Air Lines plans to spend $1.9 billion to buy a 20% stake in South American airline group LATAM, in its largest acquisition since the Delta-Northwest merger in 2008.

If approved, Atlanta-based Delta expects the deal to make it stronger in South America, a crucial region of the world where it trails behind competitors.

With the partnership, Delta said travelers would have access to more destinations around the world.

"South America is one part of the world where we're not well represented," Delta CEO Ed Bastian said during an interview with The Atlanta Journal-Constitution. "The hubs that LATAM has in Sao Paulo and Santiago, Chile and Buenos Aires and Lima and Bogota -- those are all growing that are not well served by Delta today. ... Those will be the main areas we'll be growing."

Airlines are limited in cross-border acquisitions, and are also limited in flying within foreign countries and between foreign countries, which is why they turn to partnerships with foreign airlines to allow travelers to move around the world with a single booking.

With plans for an expansion in service to South America, Delta plans to expand in Miami.

 

For years, Delta has used its Atlanta as a gateway to Latin America. The LATAM partnership means "it's going to be a balance" between Miami and Atlanta, Bastian said.

As part of the deal, Delta and LATAM Airlines Group plan to form a joint venture for flights between the United States and Latin America that would become the largest player in the U.S.-South America airline market.

That would put Delta and LATAM ahead of the current No. 1 American Airlines and No. 2 United Airlines, Bastian said.

The deal is subject to regulatory approvals for the acquisition of a stake in LATAM and for antitrust immunity for the joint venture. The full regulatory review is expected to take one to two years.

...continued

swipe to next page

Comments

blog comments powered by Disqus