Aeromexico. Source: Delta Air Lines

Delta, Aeromexico to finalize alliance, accept federal terms for deal

Delta Air Lines plans to finalize an alliance with Aeromexico, gaining antitrust immunity for the trans-border partnership by accepting terms outlined by the U.S. Department of Transportation.

Aeromexico is the largest airline in Mexico, and Delta has proposed a $1.5 billion joint venture with the carrier.

Delta CEO Ed Bastian said in a written statement that the partnership would allow Delta to offer more flights to more destinations. “Together, Delta and Aeromexico are stronger in the U.S.-Mexico market than either airline can be on its own,” Bastian said in the statement.

The DOT granted approval of antitrust immunity for the deal — which will allow the carriers to coordinate pricing, planning and sales — if they divest slots for 24 international flights at Mexico City’s airport and four international slots at New York’s John F. Kennedy International Airport. The immunity will also be limited to five years. The two airlines applied last year for approval of the agreement.

“The Department found these conditions necessary to prevent harm to consumers that would result from the carriers’ dominant positions at MEX and JFK and the inability of new entrant carriers to access slots at the airports,” the DOT said in a written statement last week. The airlines will have to divest the slots next year.

Delta also has joint venture agreements with Air France-KLM and Alitalia, Virgin Atlantic and Virgin Australia.

The two airlines had already agreed to the Mexican government’s terms for the deal, including a requirement that the carriers hand over some slots to competitors at Mexico City’s airport. The terms were aimed at avoiding price increases on flights between Mexico and the United States, according to the Mexican government.

Delta and Aeromexico have had a code-share marketing deal since 1994 and in recent years have expanded the partnership. Delta bought a $65 million stake in Aeromexico’s parent company in 2012, and last year announced a deal to boost its stake with options to buy more shares for a total of 49 percent of the company.

The two carriers have also jointly operated a maintenance center in Mexico since 2014.

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