Delta To Acquire 20% of LATAM Airlines

Delta is to acquire a 20% stake in LATAM Airlines, which is to leave the Oneworld alliance.

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LATAM New Business Class 2019
LATAM Business Class Cabin (Image Credit: PriestmanGoode for LATAM)

Delta Air Lines has just caused a major upset in the order of the three major global airline alliances.

Delta is to acquire a 20% stake in LATAM Airlines Group and form a new strategic partnership with the airline. LATAM is currently a member of the Oneworld alliance and LATAM is expected to leave Oneworld. However, there are no plans for LATAM to join Skyteam.

LATAM, which was formed from the merger of LAN and former Star Alliance member TAM Airlines, had been seeking to secure two immunised joint-ventures with American Airlines and British Airways and Iberia. However, these have stalled due to objections from regulators in Chile. These joint-ventures are now off the table.

Delta of course owns a 49% stake in Virgin Atlantic, which is to launch Heathrow – Sao Paulo next year. LATAM currently flies from London Heathrow to Sao Paulo, which is also codeshared with BA. It seems inevitable that this will be replaced with a new codeshare with Virgin Atlantic. It may also help Virgin launch more routes to Latin America.

As part of the transaction Delta will acquire four Airbus A350 aircraft from LATAM. Delta has also agreed to take on LATAM’s commitment to purchase 10 additional A350 aircraft to be delivered from 2020 to 2025. Full details of the transaction are available from Delta.

It is no exaggeration to say this is a significant blow for Oneworld, particularly American Airlines, Iberia and, to a lesser extent, BA. It was a coup for Oneworld to beat Star Alliance to secure membership of the combined airline five years ago, and this is a signifiant loss.

Update: The Oneworld alliance has issued the following statement:

LATAM advised oneworld earlier today of their decision to partner with an airline outside of the oneworld alliance. LATAM further advised oneworld that they intend to leave the alliance in due course and in accordance with formal contractual requirements. We are disappointed, but we respect their decision. They have been a valued long-term member of the alliance, and we wish them well. 

Our priority at this time is to our customers and while LATAM remains a member of oneworld, the full customer benefits will continue to be delivered. As the transition continues, we will work to ensure a seamless experience for our customers.

oneworld remains a strong coalition of high-quality airlines. There has been significant progress in member airlines deepening their bilateral relationships, as evidenced by the recent regulatory approval of the American Airlines and Qantas joint business.

Update Saturday 28 September 2019:

American Airlines has issued the following statement confirming that whilst existing codeshare bookings will be honoured by both airlines, it has suspended sales of new codeshare bookings:

American Airlines continues to accept customers and baggage of ticketed LATAM customers who are scheduled to fly on American in accordance with our current interline and oneworld agreements. Additionally, LATAM continues to accept American Airlines customers as well. There is no change for American or LATAM customers, and American is not aware of any customers who are being denied travel.

There is currently no change to our frequent flyer agreement or reciprocal club access for eligible customers of American or LATAM. AAdvantage® members will continue to earn miles on flights marketed by LATAM.

Over the next few months, as we wind down our agreements with LATAM that are still intact today, American will work with LATAM to ensure all of our customers are taken care of. American has suspended new codeshare bookings only. American remains the largest U.S. carrier to both Latin and South America and we look forward to competing and growing in this region of the world.

Q: Is American or LATAM refusing to accept customers and baggage for either American or LATAM customers who are currently scheduled to fly?

A: American is not aware of any customers of American or LATAM who are being denied travel. We are accepting customers and baggage of ticketed LATAM customers who are scheduled to fly on American, and LATAM continues to accept our customers per our current agreements that are still intact.

Q: Is the codeshare cancelled? What does this mean for customers?

A: There is no impact to customers who are currently booked on American or LATAM. We have suspended new codeshare bookings only. If a customer needs to make changes to an existing itinerary involving an American codeshare flight operated by LATAM to a market that American serves, we will rebook the customer on an American flight.

Q: Will American rebook customers on LATAM during irregular operations?

A: Yes. In the event of irregular operations, customer service and reservation agents will use the existing process for rebooking our customers, which includes the ability to book on LATAM as a oneworld carrier.

Q: Can customers still access the lounges?

A: Yes. The oneworld lounge access policy has not changed.

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