Delta Air Lines Inc. and LATAM Airlines received approval in Brazil this week for their joint venture agreement spanning the Americas, a major step on the road to creating a consolidated partnership serving the region.
Delta last September announced it would take a 20 percent stake in the Chile-based carrier for $1.9 billion and inject $350 million more to set up the partnership.
Since then, Delta and LATAM, South America’s largest airline, have taken steps to better integrate their systems, in spite of the coronavirus pandemic, achieving mutual redemption of frequent flyer miles, codeshare agreements, lounge access and better connections at hub airports.
Brazil is one of LATAM’s largest markets, and executives said the approval of the deal just over two months after it was presented to country’s competition body, the Administrative Council for Economic Defense, or CADE, shows a vote of confidence in the benefits it will bring to Brazilian passengers.
“This marks an important step in the approval process for our joint venture with LATAM, which will provide customers with the best experience and partner network in the Americas,” said Delta CEO Ed Bastian in a news release. “Just as Delta is committing significant resources to ensure customers feel confident when they travel, we remain equally committed to bringing customers all of the benefits our partnership with LATAM will offer.”
CADE’s approval is subject to a 15-day appeal period, and the deal also requires approvals in other countries where LATAM operates.
Delta has said that the deal will deepen its reach in the Americas, which has ample room for growth in per capita flight miles. Delta will vacate its stake in Brazil’s Gol Airlines as a part of the deal, and LATAM will leave the American-led OneWorld Alliance.
With LATAM, Delta gets better access to flights around the hemisphere from Miami, an American stronghold. It also will offer a more competitive schedule between the U.S. and many Latin American capitals and commercial hubs, where it already has some access but where LATAM is more deeply entrenched.