Delta buys $1.9bn LATAM stake, snatching partner away from American Airlines

Delta buys $1.9bn LATAM stake, snatching partner away from American Airlines
The LATAM deal is Delta’s largest since it merged with Northwest Airlines a decade ago. (AFP)
Updated 27 September 2019

Delta buys $1.9bn LATAM stake, snatching partner away from American Airlines

Delta buys $1.9bn LATAM stake, snatching partner away from American Airlines
  • The surprise deal with Latin America’s largest carrier will give Delta a much bigger footprint in the region
  • The LATAM deal is Delta’s largest since it merged with Northwest Airlines a decade ago

CHICAGO: Delta Air Lines said on Thursday it would buy a 20 percent stake in LATAM Airlines Group for $1.9 billion, creating a major new airline partnership and ending the Chilean carrier’s ties with American Airlines.
The surprise deal with Latin America’s largest carrier will give Delta a much bigger footprint in the region, a key growth market in which LATAM flies to dozens of destinations including cities in Argentina, Peru and Brazil.
The LATAM deal is Delta’s largest since it merged with Northwest Airlines a decade ago.
American Airlines Group Inc, which has long been the leading US carrier in the region and was pursuing a deeper route alliance with LATAM, said the loss of its Chilean partner would not have a significant impact on its financial results.
American added that its LATAM partnership had limited upside after the Chilean Supreme Court struck down the two carriers’ plans for further route cooperation that would have also involved oneworld alliance members British Airways and Iberia.
“This is a body blow for American, but not a lethal body blow. It means that Delta will have more access to Latin America than it did before, but American already has much of that in its back pocket,” independent aviation analyst Mike Boyd said.
Following its tie-up with Delta, LATAM will exit oneworld and pursue route options with Delta and its partner Grupo Aeromexico, which belong to the rival SkyTeam alliance. It has not, however, decided whether to officially join SkyTeam.
Oneworld said LATAM had advised it would leave the alliance in “due course” in line with contractual requirements, without naming a specific date.
Airlines increasingly have bilateral codeshare arrangements outside major alliances. Qantas Airways Ltd, a oneworld member, said it would retain its codeshare partnership with LATAM despite the Chilean carrier’s departure from the alliance.
As a result of the deal, Delta will sell its stake in Brazil’s largest airline Gol, a LATAM rival.
Delta does not expect regulatory obstacles for its tie-up with LATAM, where it will gain representation on the board of directors. The plan envisions growth for both carriers, which currently overlap on only one route, Chief Executive Ed Bastian told Reuters.
“I think it’s a great fit,” he said.
Atlanta-based Delta expects the LATAM deal to be accretive to earnings per share over the next two years and add $1 billion in revenue growth over five years, Bastian said.
Delta is using newly issued debt and available cash for the deal. It will also provide LATAM with an additional $350 million to help it transition out of oneworld and plug into Delta’s network.
The two can start code-sharing before they receive government, regulatory and anti-trust approval for the larger tie-up, a process Bastian said he expects to take between 12 and 24 months.
Delta will also acquire four A350 aircraft from LATAM and assume LATAM’s commitment to purchase another 10 A350s to be delivered between 2020 and 2025 for an undisclosed sum.
Apart from its stake in Grupo Aeromexico, Delta also has holdings in Air France KLM, China Eastern, Virgin Atlantic and Korean Air Lines Co’s parent company.
It has also been negotiating a 10 percent stake in Alitalia as part of its strategy to boost its international presence through equity investments. That plan has not changed with the LATAM deal, which Delta started studying about three months ago after an approach by a third party, Bastian said.


Bahrain’s Batelco could be first stock to be dual listed on Tadawul

Bahrain’s Batelco could be first stock to be dual listed on Tadawul
Updated 19 min 2 sec ago

Bahrain’s Batelco could be first stock to be dual listed on Tadawul

Bahrain’s Batelco could be first stock to be dual listed on Tadawul
  • Samba has been hired as an adviser on the deal

RIYADH: Bahrain Telecommunications Co. (Batelco) is planning to become the first company to have a dual listing of shares on Saudi Arabia’s stock exchange (Tadawul), Bloomberg reported citing people familiar with the matter.

The investment arm of Samba Financial Group has been hired as an adviser on the deal, the people said, asking not to be identified for information privacy.

No decision has been made and the company may decide against the dual listing, they said.

A spokesperson at Batelco declined to comment, while Samba Capital didn’t respond to messages seeking comment, Bloomberg said.

Tadawul has been trying to encourage Middle Eastern firms to dual list for years, without success. Aluminium Bahrain had considered a dual listing in 2014, but it never occurred.


Saudi Arabia’s National Debt Management Center wins global awards for second year

Saudi Arabia’s National Debt Management Center wins global awards for second year
Updated 18 June 2021

Saudi Arabia’s National Debt Management Center wins global awards for second year

Saudi Arabia’s National Debt Management Center wins global awards for second year
  • Saudi office won Middle East and emerging market awards

RIYADH: Saudi Arabia won the Best Sovereign Public Debt Office in the Middle East and the Most Impressive Emerging Market Issuer Award at the 2021 Global Capital Bond Awards, for the year 2021, for the second year in a row, SPA reported.

The Global Capital Bond Awards honors the achievements of governments and companies of all sizes in the field of sovereign and regional finance, banking services, hedge funds, and many other areas within the financial services sector.

It also highlights the most prominent innovations and achievements within the financial services sector, globally.

Saudi Arabia sold SR8.27 billion ($2.20 billion) of riyal-denominated sukuk in June, up from $941 million in May, bunt down from $3.1 billion April, National Debt Management Center data show.

“Driving growth of the Kingdom’s capital markets will be an increase in bond issuance to help fund the SR12 trillion Vision 2030," said Khalid Al-Bihlal, head of S&P Global Ratings KSA. "We project a gradual rise in the use of Saudi Arabian riyal-denominated bond issuance as the local capital markets develop. The US dollar is currently the currency of choice for such bonds."


Saudi MoF electronically linked to SAMA

Saudi MoF electronically linked to SAMA
Updated 18 June 2021

Saudi MoF electronically linked to SAMA

Saudi MoF electronically linked to SAMA

RIYADH: The Saudi Central Bank (SAMA) announced the completion of an electronic link with the Ministry of Finance to process requests relating to the bank accounts of government agencies held at Saudi commercial banks through the online portal Hesaab.

SAMA is seeking to improve and accelerate the procedures related to requests of government agencies’ bank accounts received from the Ministry of Finance, by implementing technical solutions with minimal human intervention, it said in a statement on Thursday.

The Hesaab portal is one of the National Transformation Program 2020 initiatives that improves the level of financial services, in line with Vision 2030.


Oil falls amid dollar strength; demand picture still bullish

Oil falls amid dollar strength; demand picture still bullish
Updated 18 June 2021

Oil falls amid dollar strength; demand picture still bullish

Oil falls amid dollar strength; demand picture still bullish
  • Prices remain close to multi-year highs
  • Dollar jumped since Fed moved rate-hike forecast forward

LONDON: Oil prices fell for a second straight session on Friday as the US dollar soared on the prospect of interest rate hikes in the United States, but they were on track to finish the week little changed and only slightly off multi-year highs.
Brent crude futures were down 64 cents, or 0.9 percent, at $72.44 a barrel as of 9:00 a.m. GMT, extending a 1.8 percent decline on Thursday. The contract is set to be largely steady for the week.
US West Texas Intermediate (WTI) crude futures were down 53 cents, or 0.8 percent, at $70.51 a barrel, after retreating 1.5 percent on Thursday and is also set to be flat on the week.
On Wednesday, Brent settled at its highest price since April 2019 while WTI settled at its highest since October 2018.
“Oil markets retreated sharply overnight as a stronger US dollar and falling commodity prices elsewhere saw the overbought technical correction continue,” said Jeffrey Halley, senior market analyst at OANDA.
The dollar has rocketed in the two sessions since the US Federal Reserve projected possible rate hikes in 2023, earlier than market watchers previously expected. A rising dollar makes oil more expensive in other currencies, curbing demand.
The prospect of rate hikes also weighed on the longer-term growth outlook, which would eventually hurt oil demand, in contrast to the near-term outlook for growth in demand as COVID-19 related curbs on movement and business activity ease and road and air travel pick up, said Westpac senior economist Justin Smirk.
“The near term’s all very positive. The question is how much further can it rise, how much scope is there if you’re looking at an environment where interest rates are going to rise,” Smirk said.
Oil prices also fell after Britain on Thursday reported its biggest daily rise in new cases of COVID-19 since Feb. 19, with government figures showing 11,007 new infections versus 9,055 a day earlier.
Adding to negative sentiment were remarks from Iran’s top negotiator on Thursday saying talks between Tehran and Washington on reviving the 2015 Iran nuclear deal have come closer than ever to an agreement.


Saudi listed company debt jumped by half in 2020

Saudi listed company debt jumped by half in 2020
Updated 18 June 2021

Saudi listed company debt jumped by half in 2020

Saudi listed company debt jumped by half in 2020
  • Debt-to-asset ratio of Saudi companies ended 2020 at 20.1 percent

RIYADH: The debts of companies listed on Saudi Arabia’s Tadawul stock exchange, excluding real estate funds, increased by 45 percent last year as they borrowed to face down the pandemic and took advantage of low interest rates.

Debt reached SR1.3 trillion ($346 billion) at the end of the fourth quarter of 2020, up from SR899.2 billion a year earlier, Al Eqtisadiah reported, citing data from the Tadawul and Saudi Capital Market Authority. On a quarterly basis, debt rose 8.1 percent.

The debt-to-assets ratio of the companies climbed to a record 21.4 percent from 15.8 at the end of 2019, the data showed.

Saudi companies have stepped up bond sales in recent months as the Federal Reserve kept interest rates near record lows.

Saudi Aramco yesterday said it completed a $6 billion dollar sukuk offering, which takes its bond issuance since 2019 to $26 billion.