Aeroméxico planes at the Mexico City International Airport.
John Gress | Corbis | fake pictures
Delta Air Lines spent years accumulating equity stakes in foreign airlines from the UK to Chile to grow internationally and dominate those airlines. The coronavirus pandemic has disrupted those plans and is proving costly as the financial crisis hits airlines around the world.
Foreign-owned rules prevent direct purchases by airlines abroad, but equity investments and other partnerships have proven popular for operators eager to gain access to international markets.
But global travel has been particularly challenging in the pandemic, as carriers face not only concerns about the virus but also direct travel bans. Delta’s national passenger revenue, which accounts for more than three-quarters of ticket sales, fell 93% in the second quarter from a year ago, but revenue fell 98% in Latin America and 97% in transatlantic routes.
Delta posted a net loss of $ 5.7 billion for the second quarter on Tuesday, its largest quarterly loss in 12 years. The Atlanta-based airline took $ 2.1 billion in charges linked to some of those investments in foreign airlines. He scored $ 1.1 billion on his investment in LATAM Airlines, the largest airline in Latin America, which filed for Chapter 11 bankruptcy protection in May, less than a year after Delta announced it was buying a 20% stake, taking away the airline to its previous partner. , American
It also received a $ 770 million amortization on its investment in Aeroméxico after suffering financial losses and the Mexican airline filed for Chapter 11 bankruptcy protection. And Delta took a $ 200 million charge for its investment in Virgin Atlantic.
Delta still has an established framework for strategic alliances with those airlines, giving it greater reach in those markets and vice versa.
Delta noted that governments in these airlines’ home countries did not provide financial support such as the $ 50 billion in loans and direct federal aid reserved for US airlines.
“While each of these is disappointing, none of our partners’ home countries was prepared to provide government financial support similar to what the United States Treasury did with the CARES Act that required its decisions to be restructured,” Delta CEO Ed Bastian said in a profit call. Tuesday. “We have the highest confidence, the highest confidence in all of our partners and remain firmly committed to our partnerships, which will be important when we rebuild a much stronger international network in recovery.”
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