Delta Air Lines stands by new partner LATAM, despite bankruptcy
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Atlanta-based Delta has bet the future of its business in South America on LATAM. This includes a $2 billion investment in the Chile-based carrier, and a new partnership designed to improve connections for travelers between the U.S. and South America and give its frequent flyers more options in Latin America.
“We have the utmost confidence in the LATAM team, and remain firmly committed to our partnership, which will be important when we rebuild our international network in the recovery,” said Delta CEO Ed Bastian in a memo to staff on May 27.
LATAM filed for Chapter 11 bankruptcy restructuring in New York on May 26. The filing covers its businesses in Chile, Colombia, Ecuador and Peru, but not its operations in Argentina, Brazil and Paraguay. The bankruptcy is also not expected to effect the LATAM Pass mileage program.
Delta, which owns a nearly 20% stake in LATAM, figures highly in the carrier’s restructuring plan. LATAM’s initial filings outlined plans to accelerate approvals of the carriers’ proposed joint venture. The pact will allow the airlines to coordinate schedules and fares, and jointly market and sell flights between South America and the U.S.
The tie up also includes closer frequent-flyer ties. In February, the airlines unveiled plans to allow reciprocal earnings and redemptions on each others flights for members of both Delta’s SkyMiles and the LATAM Pass programs.
View this post on Instagram
It’s farewell for now, #Chile. Thank you to our friends @latamairlines, especially to Ignacio, Enrique and the rest of the Cueto family, for showing us such warm hospitality this week. Here’s to a prosperous future for both our teams and customers!
A post shared by Ed Bastian (@edbastian) on
The Delta-LATAM pact came as a surprise to many when it was unveiled last September. LATAM, formerly LAN Airlines, was a long standing partner of American Airlines and an early member of the Oneworld alliance. It plans to leave Oneworld on Oct. 1.
Delta also has a close partnership with Aeromexico.
While it is too early to know how LATAM’s restructuring will progress, Delta has already made moves to support its partner. The U.S. airline paid LATAM $62 million to cancel a deal to purchase four already-built Airbus A350-900s from LATAM. The payment will help LATAM with its with short-term cash needs, Bastian told staff during a virtual town hall on May 27 viewed by TPG.
“It is [also] going to save us about $500 million from not having to redo those planes,” he added. The savings will come from not having to reconfigure the four A350s to Delta’s specs from LATAM’s layout.
Delta still has 10 A350-900 orders that it assumed from LATAM as part of their September agreement. The U.S. airline has 22 A350 orders, in addition to 13 aircraft in its fleet, that will replace its now-retiring Boeing 777s.
LATAM is the latest — and largest — airline to reorganize because of the pandemic. Avianca and Virgin Australia have both begun restructuring efforts and others, including South African Airways and Thai Airways, are reportedly near entering the local equivalents of bankruptcy. Several regional airlines, including Flybe and Trans States Airlines, have already shut down during the crisis.
Featured image by MARTIN BERNETTI/AFP via Getty Images.
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,650
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.