LATAM Airlines Group SA (NYSE: LTM) is flying in the market this morning (pun intended), trading on gains of well over 30%. The gains come after an announcement that the company has teamed up with Delta Air Lines, Inc. (NYSE: DAL).
Today, we’ll talk about three reasons why this deal is such a massive one for LTM. Before we do, let’s dive into the announcement:
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LTM Stock Runs On DAL Partnership
In a press release issued early this morning, LATAM Airlines and Delta announced that they have entered into a strategic partnership.
As part of this deal, DAL said that it would acquire a 20% in LTM at a strong premium. The company will also purchase four aircraft with plans to purchase 10 more down the line, invest hundreds of millions of dollars into the establishment of the partnership, and add to the company’s Board of Directors.
In a statement, Ed Bastian, CEO at DAL, had the following to offer:
This transformative partnership with LATAM will bring together our leading global brands, enabling us to provide the very best service and reliability for travelers to, from and throughout the Americas. Our people, customers, owners and communities will all benefit from this exciting platform for future growth.
The above statement was followed up by Cueto Plaza, CEO at LTM. Here’s what he had to offer:
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.
Three Reasons This News Is HUGE For LTM
While there are plenty of reasons to be excited here, there are three big reasons that this deal is such a massive one for LATAM and its shareholders. Here’s how I see it:
Reason #1: DAL Is A Great Partner To Have
Delta is no small player in the airline industry. In fact, according to Statista, the company is the third largest airline in the world, behind American Airlines (NASDAQ: AAL) and Southwest Airlines (NYSE: LUV).
Sure, LATAM is no small fish in the sea, but it can’t come close to the success of Delta. As one of the largest airlines in the world, Delta offers a significant level of strenght, stability, and knowhow as a partner to LTM.
For me, this simple fact is more important than the money, which there is plenty of to talk about below. It’s like being an up and coming basketball player and having Shaq take his time to teach you tips and tricks. The support that DAL will offer to LTM is priceless!
Click below to continue to the second reason this is such a big deal!