In 2019, Delta Air Lines was a rare exception amongst the United States’ big three airlines: it was the only one that did not have to watch the 737 MAX rusting on the sidelines, collecting dust. It helped the airline propel into new heights. But moves made throughout the recent history of the Atlanta-based company made its recent losses go from bad to worse, as several of its investment recipients came tumbling down during the COVID-19 pandemic.

“2019 was a truly outstanding year on all fronts – the best in Delta’s history operationally, financially and for our customers,” remarked the chief executive of Delta Ed Bastian. The tone, however, shifted as the carrier’s Q2 2020 losses illustrated “the truly staggering impact of the COVID-19 pandemic on our business,” said Bastian on July 14, 2020.

The airline finished Q2 2020 with a net loss of $5.7 billion, compared to a $1.4 billion profit the same period. Amidst the losses, it had to write off $2.1 billion worth of charges related to the Chapter 11 bankruptcies of LATAM Airlines and Aeroméxico in addition to Virgin Atlantic’s financial struggles, related to Delta’s share in the United Kingdom-based airline’s losses.

Furthermore, a smaller loss of $67 million related to its shareholdings in Air France-KLM, China Eastern Airlines, GOL, and the parent company of Korean Air, was also included in the airline’s financial report for the quarter.

At first glance, these losses might look something out of Etihad’s books, which has a troubling history of investments in airlines around the world. Air Berlin, Alitalia, Jet Airways, and Virgin Australia were amongst the carriers in which Etihad had decided to pump money into.

Over the course of its short history, Etihad Airways made a series of investments in various airlines around the world. However, some were less successful than others: but was it a case of a series of unfortunate events or was it a trend?

But there might be something more than meets the eye when it comes to Delta’s investments.

Expansion down south

Delta’s relationship with Aeroméxico started in 1994 when the two airlines signed a commercial cooperation agreement. Six years later, the two became co-founders of SkyTeam, an airline alliance now comprising 19 airlines all over the world.

In August 2011, Delta went further: it acquired its initial stake of 4.1% in Aeroméxico and gained a seat on the board of directors for $65 million. In March 2017, the company completed a two-year process of gaining even more shares in Aeroméxico, when it invested an additional $620 million in exchange for a bigger stake. In total, it had 36.2% of the Mexican carrier’s shares, with the option to purchase 12.8% more in order to own 49%.

In September 2019, a $2 billion investment was announced into LATAM Airlines, a Chile-based airline group that spanned throughout South America. Delta now had a 20% stake and a seat on the executive board, in addition to overtaking some aircraft from LATAM’s Airbus A350 order.

Delta is further increasing its international presence. This time, the carrier will invest more than $2 billion into LATAM, the biggest airline group in South America:

Delta Air Lines is not the only one that has expanded southwards. United Airlines attempted to establish a joint venture with Avianca and Copa Airlines, based in Colombia and Panama, respectively. The joint venture was delayed as problems arose at Avianca, which had its leadership revamped, and the three companies sought for a fourth partner.