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Delta/LATAM deal shakes up alliances

 

In a surprise move, Delta Airlines announced Friday that it is buying a 20% stake in LATAM, South America's largest airline, and that LATAM will drop its membership in the OneWorld alliance.

LATAM has been a key OneWorld player, and also has a number of bilateral partnerships with OneWorld members including British Air. It also has a proposed large-scale joint venture with American Airlines, but that collapsed after Chile's courts refused to approve it, although other countries had.

LATAM was formed in 2012 in a merger of LAN Chile and Brazil's TAM airlines. The Delta move follows a recent pattern of equity investments to tie its partners closer; it also owns 49% of Virgin Atlantic, a piece of Air France/KLM and is set to be a partners with Italy's railroads in a new Alitalia. That's a plan that was also embraced, unsuccessfully, by Etihad—but Etihad spread its money on airlines that were bleeding already.

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