US airline operator Delta has signed a strategic partnership agreement with Chilean company LATAM Airlines Group.

Under the partnership, Delta will invest $1.9bn to acquire a 20% stake in LATAM. The investment will be carried out through a public tender offer, with each share priced at $16.

The transaction will be financed using newly issued debt and available cash.

Delta will invest $350m to establish the strategic partnership, while LATAM will leave the Oneworld alliance.

Delta will acquire LATAM’s four A350 aircrafts and support the latter’s commitment to purchasing ten additional A350’s. The aircraft deliveries will start next year and continue through to 2025.

Delta chief executive officer 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.”

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LATAM Board of Directors will see representation from Delta. The investment and partnership are dependent on the receipt of governmental and regulatory approvals and anti-trust immunity, as well as the fulfillment of customary closing conditions.

LATAM chief executive officer Enrique Cueto Plaza 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.”

The transaction will be accretive to EPS in the coming two years. It will improve cash flow and, by 2025, is expected to reduce LATAM’s forecasted debt by over $2bn.

Delta already owns 49% stakes in Grupo Aeromexico and Virgin Atlantic.