Delta Air to invest $1.2 billion in three international carriers

Delta Air Lines Inc. will invest $1.2 billion in partner carriers Virgin Atlantic, Aeromexico and Latam Airlines as the U.S. airline positions itself to capitalize on a rebound in international travel.

Following the transactions, Delta aims to build a 20% equity stake in Grupo Aeromexico SAB and a 10% position in Latam Airlines Group SA, according to a statement Monday. The U.S. company said it will maintain its 49% equity stake in Virgin Atlantic Airways Ltd.

“As international travel demand returns, the connectivity, relevance and breadth of Delta’s global network with its partners remains critical,” the carrier said in the statement. “With new widebody aircraft on the way, record hiring, and significant investments in international readiness, Delta is positioned to lead the industry through the ongoing recovery.”

The investment underscores the importance of international travel after the industry struggled through a sharp slowdown during the pandemic. Delta recently expanded its marketing partnership with Latam and has supported the bankruptcy reorganization of Aeromexico following a cooperation agreement signed in 2017.

Atlanta-based Delta said its investments in AFKL, Korean Air and China Eastern won’t change. The carrier’s shares fell 1.9% at 9:32 a.m. in New York.

New Financing

The move by Delta suggests that it will fully participate in a new round of financing at Virgin. Bloomberg News reported last month that the U.K. carrier was in discussions with Delta and Richard Branson, its billionaire founder, about a 400 million-pound ($530 million) capital injection.

The additional funding would bolster Crawley, England-based Virgin’s balance sheet as it looks to ride out further disruption to travel from the omicron outbreak of Covid-19, while positioning it to tap pent-up demand once restrictions ease.

Chief Executive Officer Shai Weiss told Bloomberg on Dec. 1 he was confident the carrier would have strong reserves for the aviation recovery, with all options for financing on the table. Virgin Atlantic was weighing a London listing earlier in the year, but shelved that plan to focus on rebuilding its business. The carrier averted collapse last year with the support of a 1.2 billion-pound rescue package from owners and lenders.