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LATAM Airlines Group has announced it will leave the Oneworld alliance after Delta Air Lines revealed it would buy a 20 per cent stake in the Chile-based carrier.
LATAM had made an application for a joint venture with American Airlines, but ran into trouble in the Chilean Supreme Court. The carriers dropped Chile from the application in August, but the bid has now been dropped altogether.
American Airlines said the loss of the joint venture opportunity “is not expected to have a significant financial impact”. It claimed “the current relationship provided less than US$20 million of incremental revenue to American, and the proposed joint business without Chile would have provided limited upside”.
Delta, which is part of the Skyteam alliance, is planning to invest US$1.9 billion in LATAM through a public tender offer, as well as US$350 million to establish a strategic partnership. As part of the deal, Delta will buy four A350 aircraft from LATAM and will take over its commitment to purchase ten additional A350s due to be delivered between 2020 and 2025.
Delta CEO Ed Bastian said: “This transformative partnership with LATAM will bring together our leading global brands, enabling us to provide the very best service and reliability for travellers to, from and throughout the Americas. Our people, customers, owners and communities will all benefit from this exciting platform for future growth.”
Enrique Cueto Plaza, CEO of LATAM, added: “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. We look forward to working alongside one of the world’s best airlines to enhance the travel experience for passengers.”
Following Delta’s announcement, the Oneworld alliance issued a statement saying it is “disappointed” but “respects their decision”. LATAM will leave the alliance “in accordance with formal contractual requirements”.
It continued: “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.”
LATAM became a member of the Oneworld alliance following the merger of the LAN and TAM carriers.