LATAM Cancels Joint Venture Plans With IAG

**Update: 07/12/19 @ 11:00 UTC – A LATAM spokesperson updated Simple Flying about their decision, details below**

The LATAM Airlines Group has given up on its plans to form an association with the International Airlines Group (IAG) after having decided to leave the Oneworld alliance.

The South American based Airline had decided on Wednesday, December 4th, 2019 to cancel the planned joint venture with the owners of British Airways and Iberia according to Aviation website FlightGlobal.

LATAM to leave Oneworld. Photo: LATAM

The idea to form a joint venture between LATAM and International Airlines Group was first announced in 2016 long before Delta Air Lines bought a stake in the Latin American carrier.

LATAM and IAG made the announcement earlier in the week

In a regulatory filing made on Wednesday the airline stated:

“IAG and LATAM Airlines have decided that they will not implement the announced joint business agreement or JBA [joint business agreement].”

In the filing, LATAM confirmed that any codeshare agreements, interline agreements, frequent flyer programs and access to VIP lounges would remain intact and valid.

Delta Air Lines now owns 20% of LATAM

LATAM’s decision to leave the Oneworld alliance was widely expected after Atlanta based Delta Air Lines announced in September that it was investing $1.9 billion in the South American airline.

This new investment came as a bit of a shock for Dallas based American Airlines who were relying on their Oneworld alliance partner to help make them the dominant airline south of the border.

With Delta Air Lines now effectively owning 20% of LATAM the two airlines finalized a new codeshare agreement earlier in the week. This will see LATAM drop their previous plans for a codeshare agreement with American Airlines, starting on the 31st of January 2020.

LATAM will work closely with Delta. Photo: Adam Moreira Wikimedia Commons

Both LATAM and American Airlines had been working on a codeshare agreement prior to this news, despite a challenge to it in the Chilean courts back in May.

The initial codeshare agreement that IAG proposed back in 2016 would have seen a commercial venture between LATAM, Iberia and British Airways on flights between the European Union and South America.

A statement at the time issued by the International Airlines Group read that the airlines would “cooperate commercially on flights by increasing the number of destinations that the airlines can offer customers”.

“By working together to provide enhanced links for connecting passengers the airlines would expand customer choice via integrated networks, new non-stop routes, additional frequencies on existing routes and combined fares.”

LATAM dropping its plan to work with IAG is no surprise

LATAM officially joined the Oneworld alliance back in 1999 when it was known as Chilean national flag carrier LAN Airlines. Over the preceding 20 years, other South American airlines from Brazil, Colombia, Peru, Argentina, and Ecuador also joined Oneworld.

LATAM’s plans to work with IAG are now over. Photo: LATAM

Fast forward to 2012 and you had the takeover of Brazil’s TAM Airlines, which grew larger in 2015 when other South American airlines were absorbed into what we now call the LATAM Airlines Group.

Dropping any prior plans to work with British Airways and Iberia will come as no surprise given the fact Delta now owns 20% of LATAM. What we will have to wait for now is to see who LATAM will work with on flights between Europe and South America and whether or not they will join the SkyTeam alliance or go it alone.

Soon after publishing LATAM got in touch with Simple Flying and sent us their statement about canceling the joint venture with IAG.

Santiago, Chile – December 6, 2019. “LATAM Airlines Group and International Airlines Group (IAG; the parent company of British Airways and Iberia) have decided that they will not implement their proposed joint business agreement (JBA). The decision was made for commercial reasons and in the context of changes in the aviation market since the JBA was first announced in January 2016.

“Both airline groups are committed to maintaining their longstanding relationship as well as serving customers on both sides of the Atlantic. All existing bilateral interline, codeshare, lounge access and frequent flyer agreements between the carriers will remain in place, with no impact on customers.

“LATAM has informed the relevant competition authorities about this decision.”