Delta To Acquire 20% of LATAM Airlines

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

London Air Travel » LATAM Airlines

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.

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BA & Iberia announce joint-business with LAN and TAM Airlines

London Air Travel » LATAM Airlines

International Airlines Group - Aer Lingus, BA, Iberia, Vueling
International Airlines Group – Aer Lingus, BA, Iberia, Vueling

The parent company of British Airways and Iberia, International Airlines Group, has today announced that British Airways and Iberia are to launch a joint-business with LAN and TAM Airlines on flights between Europe and South America.

LAN and TAM Airlines, which have hubs in Chile and São Paulo are owned by LATAM Airlines Group and are due to merge their operations under a single brand, LATAM.

The launch of the joint business will be subject to regulatory approval which, if granted, will allow the four airlines to co-ordinate routes, schedules, pricing and marketing of flights between Europe and South America.

Passengers will also benefit from reciprocal recognition of airline frequent flyer benefits (though that already happens to an extent as all airlines are members of the Oneworld alliance) and easier access to codeshare flights on the airlines’ respective local & regional networks.

The joint business is likely to operate on a similar basis as the current joint-venture between British Airways, Iberia and American Airlines on flights between Europe & North America.

Currently, the four airlines operate up to 45 flights a day between Europe and South America.

LAN & TAM currently have a small presence on London which TAM operating a flight to São Paulo.  

However, the launch of the joint-business could prompt British Airways to extend its presence in South America beyond São Paulo, Rio de Janeiro, Buenos Aires and Lima.

We would speculate that the launch of a direct route from London Heathrow to Santiago is a good possibility after the launch of the joint-business.

LAN and TAM have a much larger presence in Europe at Madrid airport and more new routes from Madrid to secondary cities in South America are also a possibility.

Regulatory approval for the joint business is expected to take 12-18 months and the joint business should launch in stages shortly after regulatory approval is granted.

Cutrently, it is not proposed that fellow members of International Airlines Group, Aer Lingus and Vueling, will join the joint-venture.