What company did Delta buy?

Delta Air Lines: What Company did it acquire?

The deal was signed in December of 2021 when Delta Airlines decided to acquire 20% of the shares of Latam Airlines Group for $1. 9 billion. This transaction, which is still pending regulatory approval, will add significantly more destinations in South America to Delta’s network and is the latest in a series of consolidations that have been observed in the airline industry in some key regions of the world.

The Background

Originally founded in 2012 with the merger of Brazil-based TAM Airlines—now the biggest airline in Latin America—and Chile-based LAN Airlines, Latam Airlines Group S. A. With a fleet of more than 300 aircraft, it travels to approximately 140 sites all over.

However, after the COVID-19 epidemic and how it affected the aviation sector, Latam had to shut down most of its activities and pursue Chapter 11 bankruptcy protection in the United States in 2020. This puts the airline in a financially precarious situation and thereby calls for a reputable strategic partner.

Delta has been expanding the scope of its alliances and joint ventures worldwide; it has especially been developing rapidly in Europe, Asia, and Canada. The airline was not highly active in South America before and has minimal expertise there as well. Delta is closer to the Latam pact as it entitles Delta to a large portion of the territory.

Other memberships in worldwide alliance organizations, like SkyTeam, provide travelers with chances to book anywhere using partner airlines. More connecting possibilities for Delta travelers across Europe, Australia, and India will also come from the larger networks.

The Details

Delta Airlines has committed to providing $1. 9 billion in new money for a 20 percent stake in the reorganized Latam. This is contingent upon the requisite regulatory approval and the emergence of Latam from Chapter 11, expected in the coming months of 2022.

Concurrently, Delta will also receive a board of directors seat at Latam. Local investors in Latam also are expected to control the remaining 80% of the airline company’s shares.

Both companies have come out publicly to confirm that they have intentions of creating a codeshare alliance that will greatly enhance travel opportunities between North and South America.

The Partnership

There are still no details of this, but Delta and Latam are already planning to expand their connection even as partners in the passenger and cargo business, just like Delta has with other airlines such as Virgin Atlantic and Korea’s Korean Air Lines, as well as France-KLM in other parts of the world.

This cooperation will likely include: This cooperation will likely include the following:

• Codesharing: Delta and Latam can book an entire flight and passengers using either the Delta or Latam brand, with both airlines gaining credit for the passengers. This also increases the number of flights that can be taken by a particular passenger.
• Frequent flyer reciprocity: This was an option that would enable the passengers to accrue and redeem points in either Delta’s SkyMiles or Latam’s Pass networks. This incentive can help encourage passengers to choose a partnership among the various available ones.
• Aligned fares and pricing: anyone who wants to transit between Delta and Latam flights can easily price it if it is required. Pricing model more smoothly, especially in bookings involving multiple airlines.
• Shared airport lounges: offering international premium passengers of both Delta and Latam lounge access and other privileges.

Expanding Options for Travelers

When both networks are connected, passengers can get much better travel convenience, options, cost, and experience between North and South America with a joint Delta-Latam trip.

Unlike other potential mergers where two companies fight for market share in one area, this deal means that Delta gets to use the strong US network, while Latam has a commanding presence in South America.

Latam’s shareholders also benefit by strengthening the financial position of their airline and partnering with a powerful and well-funded organization like Delta. On the other hand, the latter receives more desirable routes and slots for flying over rapidly developing areas.

Delta holds only 20% of the minority share in Latam operations, meaning it does not have significant authority in the airline but has a considerable say. This structure of the deal makes very little financial risk for Delta as Latam rebuilds from bankruptcy while still getting a significantly larger footprint in South America in the future.

It is a move with a clear worldview emanating from the disruption caused by COVID-19 that positions Delta as a key player in transporting passengers within the Americas. The merger of Delta on the financial front and Latam on the local front has good stability and growth factors that would not have been fully available for each if they were alone.

Book your Delta Airlines ticket now! Call +1 833-902-2090