Future of Aerolineas Argentinas

Old Oct 22, 19, 7:16 am
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Future of Aerolineas Argentinas

Assuming Delta will control 20% of LATAM will Aerolineas continue as a partner? Does any carrier want Aerolineas as a partner?
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Old Oct 22, 19, 8:32 am
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Currently AR is a SkyTeam member; there's no bilateral partnership with DL AFAIK. AR could leave SkyTeam under the usual notification rules just as CZ has done, but if both AR and DL remain members, they're alliance partners by default.
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Old Oct 22, 19, 8:37 am
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Originally Posted by MSPeconomist View Post
Currently AR is a SkyTeam member; there's no bilateral partnership with DL AFAIK. AR could leave SkyTeam under the usual notification rules just as CZ has done, but if both AR and DL remain members, they're alliance partners by default.
It's a bit more than just fellow ST members, they do at least have reciprocal codeshares

https://news.delta.com/delta-aerol-n...rship-launches
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Old Oct 22, 19, 8:44 am
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Originally Posted by ajeleonard View Post
It's a bit more than just fellow ST members, they do at least have reciprocal codeshares

https://news.delta.com/delta-aerol-n...rship-launches
Sorry, I hadn't realized that as whenever I search for flights to EZE, the connections using AR either aren't offered as a connection choice or they're much cheaper than DL metal, so I had assumed (I know) that there's no coordination.

It could be interesting to know how much of AR's USA-EZE and vv traffic is O&D versus being delivered on connections, with the lion's share of the connections being DL (although I would guess that AR interlines with most other major legacy carriers and not just SkyTeam).
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Old Oct 22, 19, 9:19 am
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Will be curious to see the future. We just returned from a trip to EZE/SCL and despite my best efforts to fly AR and leverage my DL PM/STE+ benefits, they came in much more expensive than LATAM on both EZE/AEP - BRC and BRC - MDZ (via AEP).

On MDZ - SCL everyone was expensive (since it was OW international even though just a 1 hour flight) but thankfully Avios for the LATAM flight was available.
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Old Oct 22, 19, 10:02 am
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Until Chile approves the LA/DL deal, everyone should just hold their respective horses. Oh, this is FT. Or shall I call it "Rampant Spekulashen Ville."
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Old Oct 22, 19, 4:24 pm
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Originally Posted by Eastbay1K View Post
Until Chile approves the LA/DL deal, everyone should just hold their respective horses. Oh, this is FT. Or shall I call it "Rampant Spekulashen Ville."
DL spent about $0.7B over fare value to conditionally buy the stock. Much of that will end up in the hands of the Chilean upper class.

In GAAP accounting the price paid over asset value is "good will". In this case, the good will buys good will :-)
manacit and hhdl like this.
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Old Oct 23, 19, 5:50 am
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Originally Posted by exwannabe View Post
DL spent about $0.7B over fare value to conditionally buy the stock. Much of that will end up in the hands of the Chilean upper class.

In GAAP accounting the price paid over asset value is "good will". In this case, the good will buys good will :-)
Are you sure 0.7B? I have a hard time seeing DL paying that. Removing 0.7B means the value DL should be paying is 1.2B. I dont see them paying 160%.
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Old Oct 23, 19, 12:29 pm
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Originally Posted by flyerCO View Post
Are you sure 0.7B? I have a hard time seeing DL paying that. Removing 0.7B means the value DL should be paying is 1.2B. I dont see them paying 160%.
"... even as it supports Latam’s stock price by buying at almost an 80% premium.”

https://www.bloomberg.com/news/artic...ion-latam-deal
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Old Oct 23, 19, 12:37 pm
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OT, but I wonder what DL's next step will be in this international strategy? It might be possible to buy CX for cheap.
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Old Oct 23, 19, 1:01 pm
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Originally Posted by mayhem View Post
"... even as it supports Latam’s stock price by buying at almost an 80% premium.”

https://www.bloomberg.com/news/artic...ion-latam-deal
I know DL knows what it's doing, but that just seems way out of line. Curious if that premium includes the costs DL is covering of current/future LATAM debts.
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Old Oct 23, 19, 1:14 pm
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Originally Posted by flyerCO View Post
I know DL knows what it's doing, but that just seems way out of line. Curious if that premium includes the costs DL is covering of current/future LATAM debts.
It probably also includes the 14 A350s DL acquired.

For LATAM, the transaction will improve free cash flow generation, reduce forecasted debt by over $2 billion by 2025 and improve LATAM's capital structure, enhancing its ability to execute its long-term strategy.
This is from the Delta press release about the deal. Debt consolidation must've been part of it.
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Old Oct 23, 19, 1:17 pm
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Originally Posted by eneq View Post
It probably also includes the 14 A350s DL acquired.
Most of them are just delivery slots, not actual airplanes.
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Old Oct 23, 19, 1:29 pm
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Originally Posted by flyerCO View Post
I know DL knows what it's doing, but that just seems way out of line. Curious if that premium includes the costs DL is covering of current/future LATAM debts.
Not a banker here but the stock premium they offered was ~40%, which is what mattered here. I'm guessing they need to offer that premium in order to get the block stake of 20% confirmed. They'll have an army of bankers advising them on what the fine print includes and who they're buying the shares from. They also need to make it a sweet deal so the other shareholders (and board members) don't revolt, and they got a board seat right away with this, so they did get quite a bit in return.
Another reason is that you don't want to start a bidding war with another airline (not necessarily AA).

I hope someone with a better finance background can enlighten us...

Remember when we all thought DL was crazy for buying a refinery?
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Old Oct 25, 19, 10:49 am
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Originally Posted by mayhem View Post
Not a banker here but the stock premium they offered was ~40%, which is what mattered here. I'm guessing they need to offer that premium in order to get the block stake of 20% confirmed. They'll have an army of bankers advising them on what the fine print includes and who they're buying the shares from. They also need to make it a sweet deal so the other shareholders (and board members) don't revolt, and they got a board seat right away with this, so they did get quite a bit in return.
Another reason is that you don't want to start a bidding war with another airline (not necessarily AA).

I hope someone with a better finance background can enlighten us...

Remember when we all thought DL was crazy for buying a refinery?
No real finance background, but do note that the current depression in LTM stock is because of the unusually low value of the CLP and BRL. All it will take is the price of copper to go up a bit and 1/4 to 1/2 of the "premium" will be recouped.
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