Wings Magazine

Delta and Aeromexico enhance commercial alliance

Aug. 11, 2011, Atlanta, Ga. - Delta Air Lines and Grupo Aeromexico today announced a tentative agreement for a long-term, exclusive commercial alliance.

August 11, 2011  By Carey Fredericks

Under the agreement, Delta and Aeromexico will expand cooperation to leverage each other’s strengths and link Delta’s expansive network with Mexico’s largest passenger network. As part of the agreement, Delta also will invest $65 million in Aeromexico.

“Aeromexico has been a strong partner for Delta in Mexico and Latin America, and this reinforces our relationship,” said Delta Chief Executive Officer Richard Anderson. “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.”

Following a successful restructuring in 2009 and subsequent public stock offering, Aeromexico has reported strong financial results, including its highest operating margin in 15 years at 10.4 percent for the June quarter 2011.

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,” said Aeromexico Chief Executive Officer Andrés Conesa. “We will work with Delta to offer more options for our customers, including greater access to Delta’s global network.”
The new agreement between two of its founding members strengthens SkyTeam’s 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.


Exclusive U.S.-Mexico Alliance
Along with the current agreement that offers customers reciprocal access to airport lounges as well as the ability to accrue and redeem flight awards, customers will enjoy soon-to-be-available benefits from the deepened alliance between Delta and Aeromexico, including:

·       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 and Platinum customers through a new, integrated process; and
·       The ability for Elite and Platinum customers to reserve preferred seating via the carriers’ reservations centers.
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 will leverage the 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,” said José Luis Barraza, chairman of Aeromexico’s board of directors. “The alliance with Delta that we’ve announced today will make history, and Grupo Aeroméxico is proud to be a part of it”.
Equity Investment
Under terms of the Memorandum of Understanding (MOU), Delta will invest $65 million in exchange for ordinary shares in Grupo Aeromexico, made up of treasury stock set aside as part of Aeromexico’s primary public offering April, 14, 2011. Delta also will gain a seat on the Aeromexico board of directors. The transaction is subject to approval from certain Mexican regulators.
Maintenance, Repair and Overhaul Joint Venture
As part of a separate agreement, Delta and Aeromexico will expand their Maintenance, Repair and Overhaul (MRO) agreement with a new facility 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 repair work 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,” said Delta President Ed Bastian. “The facility is a natural next step for the two airlines as we leverage the full benefits of our alliance.”


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