Delta Commits $1.2 Billion to Virgin Atlantic, Aeromexico, Latam

(Bloomberg) -- 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.

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 will provide fresh financing to Virgin Atlantic Airways Ltd. and maintain its 49% equity stake.

“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 Air France-KLM, Korean Air and China Eastern won’t change. Shares of the carrier fell as much as 4.3% in New York.

Virgin said Monday that it will receive 400 million pounds ($530 million) in new funding in part from Delta, confirming a Bloomberg News report last month that the U.K. carrier was in talks with Delta and Richard Branson, its billionaire founder, about a capital injection. Virgin said in an emailed statement that the investment includes 204 million pounds from Virgin Group and 196 million pounds from Delta, while the ownership structure remains unchanged.

The additional funding will 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.

Virgin 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.

The airline was weighing a London listing earlier in the year, but shelved that plan to focus on rebuilding its business. Virgin averted collapse last year with the support of a 1.2 billion-pound rescue package from owners and lenders.

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