Delta Air Lines and Grupo Aeromexico have reached tentative agreement on a long-term, exclusive commercial alliance to expand cooperation and link Delta’s network with Mexico’s largest passenger network.
As part of the agreement, Delta Air Lines will also invest $65 million in Aeromexico.
“Aeromexico has been a strong partner for Delta in Mexico and Latin America, and this reinforces our relationship,” says Richard Anderson, Delta Air Lines’ chief executive officer. “By forming an exclusive long-term commercial partnership, we will leverage the strengths of our two networks to provide expanded customer benefits and build the foundation for a joint venture to better serve the U.S. and Mexico marketplace.”
According to Delta, following a successful restructuring in 2009 and a subsequent public stock offering, Aeromexico has reported strong financial results. These have included its highest quarterly operating margin in 15 years, 10.4 per cent, for the three months ending June 30, 2011.
Delta notes that, according to the US Department of Commerce, goods traded between the U.S. and Mexico in 2010 totaled nearly $400 billion, making Mexico the third-largest trading partner for the U.S.
“The expanded agreement with Delta will undoubtedly allow us to solidify the commercial alliance we have been building together for several years now,” says Andres Conesa, Aeromexico’s chief executive officer. “We will work with Delta to offer more options for our customers, including greater access to Delta’s global network.”
SkyTeam says the new agreement between two of the alliance’s founding members strengthens its position as the only global alliance with a full-service, Mexico-based international carrier and expands SkyTeam’s presence in fast-growing Mexican and Latin American markets.
According to Delta, along with the current Delta-Aeromexico agreement offering customers reciprocal access to airport lounges as well as the ability to accrue and redeem flight awards, customers of each airline will see additional benefits from the deepened alliance between Delta and Aeromexico. These will include:
● Network-wide codesharing to include all Delta and Aeromexico flights between the U.S. and Mexico, as well as flights within the carriers’ domestic networks and to other key international destinations;
● A coordinated sales team that offers joint contracting to corporate customers allowing enhanced access to the combined networks;
● Expedited call handling for Elite customers through a new, integrated process; and
● The ability for Elite customers to reserve preferred seating via the carriers’ reservations centers.
Additionally, says Delta, future benefits of the enhanced alliance will include:
● Co-located airport facilities for easier connections and check-in; and
● The ability to select preferred seat assignments, process upgrades and redeem Award Tickets online.
The carriers say they will leverage their extended, long-term commercial agreement to exchange, within legal limits, best practices across operations, marketing and sales.
“The expanded relationship between Delta and Aeromexico comes at a key time in the history of Mexico’s domestic aviation. Our company now boasts the most modern fleet and the largest network in the country, serving over 60 destinations,” says Jose Luis Barraza, chairman of Aeromexico’s board of directors. “The alliance with Delta that we’ve announced today will make history, and Grupo Aeromexico is proud to be a part of it.”
Under the terms of the memorandum of understanding between Grupo Aeromexico and Delta Air Lines, Delta will invest $65 million in exchange for ordinary shares in Grupo Aeromexico. The shares will comprise treasury stock set aside as part of Aeromexico’s primary public offering on April, 14, 2011. Delta also will gain a seat on Aeromexico’s board of directors. The transaction is subject to approval from Mexican regulatory bodies.
As part of a separate agreement, Delta and Aeromexico will expand their maintenance, repair and overhaul (MRO) agreement with a new facility, which is scheduled to open in the third quarter of 2013. The airlines will invest equal shares to establish a facility in Mexico that builds on existing MRO business between the carriers, as well as third-party airlines.
“The MRO agreement will represent significant savings for our maintenance group while continuing the extremely high quality work we receive from Aeromexico,” says Ed Bastian, president of Delta Air Lines. “The facility is a natural next step for the two airlines as we leverage the full benefits of our alliance.”
Aeromexico operates a fleet of Boeing 777-200ERs, 767-300ERs and 737NGs, as well as Embraer 145 and Embraer 190 regional jets.
Grupo Aeromexico operates its main hub out of Terminal 2 in Mexico City’s Benito Juarez International Airport. The group’s airlines operate more than 550 daily flights to cities in Mexico, the United States, Canada, Central and South America, Europe and Asia.
Aeromexico is a founding member of SkyTeam, which has 14 member airlines: Aeroflot, Aeromexico, Air Europa, Air France, Alitalia, China Eastern, China Southern, CSA Czech Airlines, Delta Air Lines, KLM Royal Dutch Airlines, Kenya Airways, Korean Air, TAROM Romanian Air Transport, and Vietnam Airlines. SkyTeam offers 465 airport lounges worldwide. Togetehr, SkyTeam members carry 474 million passengers annually on more than 14,000 daily flights to 921 destinations in 168 countries.