Statement from AA:
"Further, this change in partnership is not expected to have a significant financial impact to American, as the current relationship provided less than $20 million of incremental revenue to American, and the proposed joint business without Chile would have provided limited upside.
For $20 million in incremental revenue, it made no sense for AA to outbid Delta.
The Brazilian economy is highly volatile. LATAM is struggling financially. It's a desperate move to trade Miami POS (with AA) for $1.9 B and planes they can no longer afford.
If LATAM were as strategically important as JAL, AA might have raised the money. But without the possibility of a full JV there was no upside to the relationship. AA is better off spending $2.3B (with the transition costs) on facilities, planes, or even a strategic acquisition of their own.
Indeed, it's a perfect opportunity for AA and UA to make moves of their own. One or the other might have already decided that it is wiser to spend $2.3B+ on buying JetBlue or Alaska than buying a stake in LATAM. Only AA is in the best regulatory position to purchase JetBlue. Come on AA. The next move is yours.
I have to second this.
Name me a carrier that is making consistent profits in Latin America. None.
LATAM hasn't been doing too bad but I hope that DL did their due diligence thoroughly. Accounting can get creative in this part of the world.
1.9 billion plus aircraft orders is not a small investment.
The good thing for DL is that Avianca seems to be falling apart, so there are market opportunities that will offer short-term relief.
The upside is also that having an omni-present partner in South America opens a lot of doors for themselves and their partners.
However, LATAM is a big airline, when things start going down the drain, it's not easy to try to turn things around.
For LATAM the deal is great. They can rid themselves of excess aircraft and get a probably needed capital increase.
I wonder if several of the A350's will be for VS. A lot of space opening up in LGW and DL/VS don' t have the aircraft to take advantage of it.