Delta Shares Lower After Plan to Invest in Virgin Atlantic, Aeromexico and LATAM
Dow Jones Newswires December 13, 2021 03:10:00 PM ET
Delta Air Lines shares were 3.2% lower, at $36.95, outpacing losses in the transportation and logistics sector, after the airline company said it would make investments in Virgin Atlantic, Aeromexico and LATAM of about $1.2 billion.
Delta said this comes as the partner airlines transform their businesses to emerge from the global pandemic stronger and more resilient.
The airline said it is investing in Virgin Atlantic, Aeromexico and LATAM as each carrier emerges from restructuring or recapitalization. Upon completion of their respective processes, Delta is targeting a 20% equity stake in Aeromexico and a 10% equity stake in LATAM. Delta said it would maintain its 49% equity stake in Virgin Atlantic.
Delta is currently anticipated to acquire one or both of reorganized LATAM common stock and unsecured convertible notes in a right offering, according to a U.S. Securities and Exchange Commission filing. The airline estimates its ownership interest in LATAM following the transaction would be substantially lower than the 20% it is today, according to the filing. LATAM in November said it filed a reorganization plan for a path forward to exiting Chapter 11.
Aeromexico in June 2020 filed for Chapter 11 in the U.S. amid the pandemic.
Virgin Atlantic said Monday it is getting a 400 million pound, or $530.8 million, new investment from shareholders Virgin Group and Delta.
"Throughout the pandemic, Delta has continued to invest in our future, including new aircraft orders, accelerating real estate projects and putting significant resources into health and safety measures to protect our employees and our customers," said Delta Chief Financial Officer Dan Janki. "Similarly, investing in our partners now--even as we continue to navigate the pandemic--is the right choice to support Delta's long-term strategy."
Write to Michael Dabaie at michael.dabaie@wsj.com
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