The oneworld airline alliance, of which British Airways is a key member, took a major blow last night. LATAM, the airline which dominates flights in Latin America, announced its resignation.
The reason is that Delta Air Lines is spending $1.9 billion to acquire a 20% stake in LATAM. It has also agreed to take 14 A350 aircraft, ten of which are yet to be delivered, off LATAM, and to pay $350m towards covering the exit costs from oneworld.
The roots of the resignation lie in the refusal by the Chilean Government to allow American Airlines, currently the US airline with the biggest operation in Latin America, and LATAM to form a revenue sharing joint venture.
As well acquiring 20% of the airline, Delta will form a revenue-sharing joint venture with LATAM to operate flights between North America and Latin America. This will require full regulatory approval, which is expected to take 1-2 years, although the airlines are expected to agree a codeshare deal in the short term. Delta will sell its minority stake in Brazil’s GOL as part of the deal.
Delta / LATAM will become the largest airline on five of the six largest routes between North and Latin America.
Interestingly, there is no word on LATAM joining the SkyTeam alliance. Delta Air Lines has publicly stated that it sees little benefit in SkyTeam these days, although this does not fit with the strong rumours that Virgin Atlantic (49% shareholder Delta Air Lines) will soon announce that it is joining.
(Another interesting question is whether Virgin’s new Heathrow to Sao Paulo route will last long, given that LATAM flies the same route. The two airlines could also codeshare, effectively making it a ‘two daily’ service. The new Virgin Atlantic codeshare with GOL for connections inside Brazil, which we covered here, could be at risk, replaced with a LATAM deal.)
The official Delta press release is here. Note that it does not explicitly mention leaving oneworld, but it is happening according to US media reports.
oneworld has not made an announcement yet (EDIT – it has now, see here, it seems they didn’t get any advance notice!) but this will clearly be a substantial blow. We may now see Iberia extending its already impressive coverage in Latin America.
LATAM cannot leave oneworld overnight, however, so you can continue to spend Avios, and earn Avios and British Airways tier points, for some time yet.
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