Delta is gambling on Latam. What does it mean for Brazil’s aviation sector?

Delta Airlines, the third-biggest in the U.S., has decided to flip its bets on Latin America. The company has let go of its stake in market leader Gol and made a huge investment in its main rival in Brazil, Latam. More than a business decision, the deal announced yesterday may have deep implications and reshape the Brazilian aviation sector, which is already undergoing transition.

Following its aggressive expansion plans for Latin America, Delta announced it would pay USD 1.9 billion to acquire a 20-percent stake in Latam—the group formed in 2012 after the merger between Chile’s Lan and Brazil’s Tam. Together, Delta and Latam “will serve 435 destinations worldwide and carry more passengers between North America and Latin America than any other partnership,” taking over the leadership in five of the top six Latin American markets from the U.S., according to Delta.

In what will be its largest investment in over a decade, Delta will inject USD 350 million to support the establishment of the strategic partnership. The American carrier will also acquire four A350 aircraft from Latam and has agreed to take on the company’s...