Delta Airlines invests in Latam to keep 10% of the airline’s capital

The American Delta Airlines announced this Monday (13) the investment of US$ 1.2 billion (R$ 6.8 billion) in three airlines under restructuring, in which it is already a shareholder: the British Virgin Atlantic, the Mexican Aeromexico and Chilean Latam Airlines, owner of Latam Brasil.

With the contribution, the American will keep the 49% stake it holds in Virgin’s capital, will own 20% of Aeromexico and will have 10% of Latam’s capital.

In the case of the Chilean group, there was a dilution of Delta’s participation, which, until then, held 20% of the shares of Latam Airlines. That’s because, at the end of November, the group announced a restructuring plan that proposes an injection of US$ 8.19 billion (R$ 46.5 billion) in the company, through new capital, convertible bonds and debt.

As a result, Delta’s stake in Latam is diluted. The contribution (whose value was not revealed) comes to maintain the 10% stake in the Chilean group’s capital. Sought out by the report, the Latam group informed that it “does not comment on the initiatives of its shareholders”.

Delta said, through its press office, that the investments were calculated to allow the company “to have a good level of strategic influence”. “The values ​​are based on the expected evaluations of each partner at the time of its exit from bankruptcy”, he informed.

According to the American airline, the investments will support the three companies to “emerge stronger and more resilient from the global pandemic”.

“The work each of our partners has done to strengthen their businesses for the future makes these partnerships even more valuable and creates a new era of international travel to benefit our customers, employees and investors as global travel rebounds in 2022 and beyond,” Delta President Ed Bastian said in a statement.

According to the American, the joint venture (JV) agreement with Latam combines the airlines’ “highly complementary route networks” between North and South America. “Following the approval of the JV by the Chilean Court in October of this year, Delta and Latam expanded their existing codeshares to improve connectivity between North and South America,” he said.

On November 15, the companies announced the expansion of their codeshare (flight sharing agreement). The expansion allowed Latam to add eight new international routes operated by Delta between South America and the United States to its network, in addition to 11 destinations in the United States from Atlanta.

Delta added 12 international routes operated by Latam between South America and the United States to its network from Miami, Orlando, New York (John F. Kennedy International Airport) and Los Angeles (Los Angeles International Airport – LAX ), in addition to seven international routes within South America and four new destinations in Chile.

“Investing in our partners now — even as we continue to navigate the pandemic — is the right choice to support Delta’s long-term strategy,” said Dan Janki, executive vice president and chief financial officer of the US company, in a statement.

Global recovery of air travel is still in doubt

In a report released this Sunday (12), the bank Goldman Sachs says it expects to see a more robust recovery in international and corporate travel in 2022, after the strong recovery movement in domestic and leisure travel observed this year.

However, there are still doubts about the impact of the omicron variant on airline operations next year, they warn. “If our current outlook is correct, we are still cautious about the pricing environment in 2022,” says the report signed by analysts Catherine O’Brien, Jack Ewell and Kathryn Buda.

Experts say they expect capacity to return faster to balance with demand, with a gradual improvement in corporate travel, although it does not reach the same levels as 2019.