Aviation

Delta to pay $2.8 billion for 20 per cent stake in LATAM

LATAM Airlines and Delta Air Lines have entered into a strategic partnership that for the first time as they look to take a dominant position in the Americas.

Under the new partnership, Delta will invest US$1.9 billion ($2.8 billion) for a 20 per cent stake in LATAM through a public tender offer, which will be funded principally with newly issued debt and available cash.

Delta will also invest US$350 million ($517.6 million) to support the establishment of its partnership with LATAM, and will be represented on the Latin American carrier’s board of directors.

Furthermore, Delta will acquire four A350 aircraft from LATAM and has agreed to assume the airline’s commitment to purchase 10 additional A350 aircraft to be delivered between 2020 and 2025.

The tender offer and strategic alliance are subject to customary closing conditions and all required governmental and regulatory approvals, including anti-trust immunity.

Together, the partners will serve 435 destinations worldwide and carry more passengers between North America and Latin America than any other partnership.

Delta CEO Ed Bastian said: “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.

“Our people, customers, owners and communities will all benefit from this exciting platform for future growth.”

Enrique Cueto Plaza, chief executive of LATAM, said: “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.

“We look forward to working alongside one of the world’s best airlines to enhance the travel experience for our passengers.”

A Qantas spokesperson said there will be no changes to the airline’s codeshare agreement with LATAM as a result of its partnership with Delta.

“Qantas and LATAM have agreed that the bilateral agreement we have works well for customers and we will look for opportunities to enhance it in future,” the spokesperson said.

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