Delta to take 20% stake in LATAM Airlines

Delta Air Lines has announced it will make a USD 1.9 billion investment in Chile´s LATAM Airlines, the company said.

The new partnership would provide passengers greater global connectivity and convenience through a highly complementary route network, which should also benefit cargo. Delta also has a joint venture with Aeroméxico.

Together, Delta and LATAM will hold five of the top six Latin American markets from the US. Delta, which does not operate all-cargo planes, would also get access to LATAM´s freighter fleet.

LATAM Airlines, formerly known as LAN Airlines and LAN Chile, is the largest airline group in Latin America, offering service to 143 destinations in 25 countries, including Argentina, Brazil, Chile, Colombia, Ecuador and Peru.

Delta will pay USD 16 per share in LATAM stock with cash and newly issued debt. It will also invest USD 350 million to support the establishment of the strategic partnership, acquire four Airbus A350 aircraft from LATAM and have gain representation on LATAM´s board.

For LATAM, the transaction will improve free cash flow generation, reduce forecasted debt by over USD 2 billion by 2025 and improve LATAM´s capital structure. Delta said the deal will increase earnings within two years.