Just a few months ago, LATAM Airlines (NYSE: LTM) and American Airlines (NASDAQ: AAL) seemed to be on track to finalize a joint venture agreement covering travel between the U.S. and South America by the end of 2019. But in late May, Chile's Supreme Court blocked the two carriers from cooperating in Chile, citing the dominant market position they would have.
Initially, LATAM and American said they would proceed with their joint venture plans for the rest of South America, leaving Chile out. (LATAM is also the biggest airline in Brazil and has smaller subsidiaries in several other countries.)
However, Delta Air Lines (NYSE: DAL) saw this setback for the American Airlines-LATAM joint venture as a can't-miss opportunity. Last Thursday, Delta announced that it would buy a 20% stake in LATAM for $1.9 billion as a prelude to forming a full joint venture with South America's largest airline. This move will further entrench Delta's position as the most profitable of the three U.S. legacy carriers.