Delta Air Lines
) announced Wednesday an agreement to buy a $100 million minority position in Brazil’s Gol Linhas Aereas Inteligentes
The agreement would give Gol, Brazil’s second-biggest airline, a counter to the hookup of larger rival Tam
) with Lan Airlines
), Latin America’s largest airline. And it would give Delta a way to win market share in Latin America, a market where it trails American Airlines and United Continental Holdings
Gol’s U.S.-traded ADRs (American depositary receipts) were up 5.5% at market close Wednesday. (Gol is a member of my Jubak Picks 50 long-term portfolio.)
The agreement, which gives Delta 3% of Gol, will also give Delta a seat on the Brazilian airline’s board of directors. (Delta has agreed not to sell the stake for at least 12 months and not to buy additional shares without Gol’s permission.) The two airlines will shares booking codes on flights so that they can take reservations for travel on either airline. They will also honor each other’s frequent flier programs.
This is Delta’s second investment in a foreign airline this year. In August Delta paid $65 million for a piece of Grupo Aero Mexico.
At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. The fund did own shares in Gol and Lan as of the end of September. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here.