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American Airlines becomes a shareholder of the local low cost JetSmart

2021-07-29T16:26:49.090Z

It is a regional alliance, with a shared mileage system between the two airlines. In Argentina, JetSmart makes domestic flights and to Santiago de Chile. Company sources said that the amount of American's investment or its shareholding will not be reported.



Luis Ceriotto

07/29/2021 9:59 AM

  • Clarín.com

  • Economy

Updated 07/29/2021 11:49 AM

American Airlines

and

JetSmart

signed a letter of intent according to which the US airline will

become a shareholder

of the regional "low cost", with a codeshare system that generates accumulation of miles on international and domestic flights.

"American enters JetSmart with a

minority stake

. We are not going to disclose the percentage of participation or the amount of the investment," JetSmart sources said, minutes after having issued a press release with the announcement. Planned investments and codeshare agreements are subject to final documentation and

regulatory approvals

in the countries where the new alliance will operate. 

JetSmart, like American, is an airline of US capitals, but based only in Chile and Argentina.

It is owned by the investment fund Indigo Partners, headed by William Franke, a former executive in the aviation sector who through this fund now owns several low cost airlines around the world.

American Airlines planes at Boston airport, USA.

AP Photo.

"This investment proposal in JetSmart would give customers access to the largest network, lowest rates and the best travel loyalty program in America," said

Vasu Raja

, American's Chief Revenue Officer, in the press release.

Shortly before the pandemic, in September 2019, American

had been left without its strategic partner in Latin America

, the airline

Latam

. The latter partnered with the American

Delta

and also exited the One World shared mileage global alliance (later, at the beginning of 2020, Latam

would request its bankruptcy in the United States and close its subsidiary in Argentina

).

With this new alliance, American once again has a local leg within the commercial aviation market, with a shared code on the domestic flights that JetSmart carries out in both Argentina and Chile. However, JetSmart will not become the OneWorld alliance, but will instead be integrated into American's own mileage system, called

AAdvantage

Vaja, through the statement, said: "This would allow JetSmart and American to grow aggressively and profitably throughout Latin America as demand recovers, while preserving the best aspects of each company's business model. The partnership would also make AAdvantage the largest travel loyalty program in America, creating more ways for customers to earn travel rewards and use their miles to access new destinations and benefits globally, regardless of whether they travel in Latin America or North America".

JetSmart's current operation, with the "ultra low cost" model as they call it, is with Airbus A320 aircraft. Indigo was characterized, before the pandemic, as having made the largest purchase of Airbus aircraft in a single order (more than 400 aircraft). In the case of American, which has been flying from the United States to the region for almost 70 years, it is the most active foreign airline in Argentina, with more than 500 employees, mostly aeronautical technicians who perform maintenance tasks at the Ezeiza airport. . American currently flies to Ezeiza from Miami and New York. Before the current restrictions applied by the Argentine Government, it also did so from Dallas-Forth Worth.

"Through the codeshare of the two airlines, customers could travel without problems throughout the American continent," the statement added.

"We look forward to working with American to continue offering low rates and options to customers throughout South America," said

Bill Franke

, founder and managing partner of Indigo Partners.


The CEO of JetSmart is Estuardo Ortiz, who in the same statement said that "by

each

maintaining

its business model

, we see a strong value proposition for our future growth."


Source: clarin

All business articles on 2021-07-29

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