Delta and LATAM Airlines to Form Partnership

Delta and LATAM Airlines have entered into a partnership aimed at unlocking new growth opportunities. Building on Delta’s and LATAM’s global footprint and joint ventures worldwide, including Delta’s existing partnership with Aeroméxico, Delta, LATAM and their partners will be able to offer access to a greatly expanded array of worldwide destinations. Delta says the partnership will provide greater customer convenience, a more seamless travel experience and better connect customers with the rest of the world.

“This transformative partnership with LATAM will bring together our leading global brands, enabling us to provide the very best service and reliability for travelers to, from and throughout the Americas,” said Ed Bastian, Delta’s CEO. “Our people, customers, owners and communities will all benefit from this exciting platform for future growth.”

“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,” said Enrique Cueto Plaza, CEO of LATAM. “We look forward to working alongside one of the world’s best airlines to enhance the travel experience for our passengers.”

Additional details of the partnership include:

  • Delta will invest $1.9 billion for a 20 percent stake in LATAM through a public tender offer at $16 per share, to be funded principally with newly issued debt and available cash.
  • Delta will also invest $350 million to support the establishment of the strategic partnership.
  • Delta will acquire four A350 aircraft from LATAM and has agreed to assume LATAM’s commitment to purchase 10 additional A350 aircraft to be delivered beginning in 2020 through 2025, supporting Delta’s ongoing fleet transformation.
  • Delta will be represented on LATAM’s Board of Directors, further strengthening the relationship.
  • The tender offer and the strategic partnership are subject to customary closing conditions and all required governmental and regulatory approvals, including anti-trust immunity.

Delta expects that the transaction will be accretive to EPS over the next two years. In addition, the transaction will not impact the company’s existing financial commitments to shareholders, including free cash flow and shareholder returns. Delta also expects to remain within targeted leverage ratios.

For LATAM, the transaction will improve free cash flow generation, reduce forecasted debt by over $2 billion by 2025 and improve LATAM’s capital structure, enhancing its ability to execute its long-term strategy.