Oneworld has confirmed that LATAM will quit as a member carrier “in due course”, following Delta’s announcement that it will take a major stake in the Latin American carrier.
The Skyteam carrier said it would invest $1.9 billion for a 20 per cent stake in LATAM, as well as a further $350 million “to support the establishment of the strategic partnership”.
Delta will also acquire four of LATAM’s A350 aircraft, and take on the carrier’s commitment for 10 additional A350s scheduled to be delivered between 2020 and 2025.
In a statement Oneworld said:
“LATAM advised Oneworld earlier today of their decision to partner with an airline outside of the Oneworld alliance. LATAM further advised Oneworld that they intend to leave the alliance in due course and in accordance with formal contractual requirements. We are disappointed, but we respect their decision. They have been a valued long-term member of the alliance, and we wish them well.
“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.
“Oneworld remains a strong coalition of high-quality airlines. There has been significant progress in member airlines deepening their bilateral relationships, as evidenced by the recent regulatory approval of the American Airlines and Qantas joint business.”
The news will be seen as a major blow to the alliance, which was founded in 1999 by American Airlines, British Airways, Cathay Pacific and Qantas.
Lan Chile (part of what is now known at the LATAM Airlines Group) became a Oneworld member in 2000, and the merged LATAM group confirmed it would join the alliance in 2014.
LATAM’s decision to quit Oneworld will leave a considerable gap in the alliance’s Latin American network.
It is also a blow to Delta’s rival US carrier and Oneworld member American Airlines, which had been pursuing a joint venture partnership with LATAM. In a statement AA said:
“LATAM and the Cueto family have been terrific partners of American Airlines for decades. Given the recent negative ruling by the Chilean Supreme Court, which would have significantly reduced the benefits of our partnership since Chile was not approved as a part of the potential joint business arrangement, we understand LATAM’s decision to partner with a US carrier that isn’t burdened by the ruling.
“Further, this change in partnership is not expected to have a significant financial impact to American, as the current relationship provided less than $20 million of incremental revenue to American, and the proposed joint business without Chile would have provided limited upside.
“During the transition period, American will work with LATAM to ensure a seamless experience for customers. American Airlines remains the largest US carrier to both Latin and South America and we look forward to competing and growing in this region of the world.”
Delta said that the agreement with LATAM – which is subject to governmental and regulatory approvals, including anti-trust immunity – will “unlock new growth opportunities, building upon Delta’s and LATAM’s global footprint and joint ventures worldwide, including Delta’s existing partnership with Aeroméxico”.
The carrier said that the two airline groups “will hold the leading position in five of the top six Latin American markets from the US”, serving 435 destinations worldwide.
It’s not clear at this stage whether LATAM will now join the Skyteam alliance, which was founded in 2000 by Delta, Aeroméxico, Air France, and Korean Air.
Commenting on the new partnership, Ed Bastian, Delta’s CEO, 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.”
Meanwhile Enrique Cueto Plaza, CEO of LATAM said:
“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 our passengers.”