Delta Air Lines has a different approach to its partnership than some of its competitors. Delta has taken stakes in foreign airlines instead of just forming partnerships and focusing on the global alliances. Delta is going to invest more money in three airlines.
Delta invests more in airlines.
Delta is increasing its investments in Virgin Atlantic, Aeromexico, and LATAM as they transform their businesses to emerge from the pandemic.
US airlines have had a better time than other airlines because of the Pandemic. The US aviation market is big and we are close to pre-pandemic passenger numbers. It is a different story at other airlines.
Delta will be investing over a billion dollars in the three airlines, but it is not known how that money will be distributed. We don't know what we know.
Delta wants to take a 20% stake in Aeromexico.
Delta wants to take a 10% stake in LATAM.
Delta has a stake in Virgin Atlantic.
Delta has a stake in Virgin Atlantic.
Delta has stakes in Air France-KLM, Korean Air, and China Eastern.
Ed Bastian describes these investments.
These strategic investments in our partners will transform our ability to improve travel for our customers, enabling us to deliver a seamless travel experience alongside offering our customers an unparalleled network between North American and premier markets worldwide. The work each of our partners has done to strengthen their businesses for the future makes these partnerships even more valuable and creates a new era of international travel to benefit our customers, our employees and our investors.
Delta believes that these investments will help the airline lead the industry through an ongoing recovery. For some context on these partnerships.
Delta and Aeromexico offer the most capacity between the United States and Mexico.
The timing wasn't great for Delta, since LATAM's value plummeted during the Pandemic, and they invested in the airline just before it.
Delta and Virgin Atlantic formed a joint venture in 2013; this greatly improved Delta's access to London.
Delta wants a 20% stake in Aeromexico.
My take on Delta's investment in foreign airlines.
I am not sure I can fully understand this, as the laws surrounding Chapter 11 bankruptcy are not in my area of expertise. Delta had a stake in Virgin Atlantic, Aeromexico, and LATAM.
The airline is investing over $1 billion in these airlines, and will keep a 49% stake in Virgin Atlantic, 20% in Aeromexico, and 10% in LATAM. I am not sure if this investment just comes in the form of Delta forgiving some debt and helping these airlines remain in business, since Delta doesn't want the carriers to liquidate.
Delta is investing more money and ending with smaller stakes in these airlines, which doesn't reflect well on their investment strategy.
With the billions of dollars in taxpayer support that Delta received over the course of the pandemic, we know who is really on the hook for this investment. For an airline that spent years bashing Gulf carriers, that is not looking good.
Delta wants a 10% stake in LATAM.
The bottom line.
Delta is investing over $1 billion in airlines. Delta will have a smaller stake in Aeromexico and LATAM than it did before the crisis.
Delta's strategy of investing in foreign airlines is not looking good at this point, especially when we are far from seeing a full global recovery.
What do you think about Delta's investment in foreign carriers?
