American Airlines has signed a letter of intent with South American budget airline JetSMART to expand its routes in North and South America.
The proposed partnership will add ultra low-cost carrier JetSmart's existing network of 33 destinations in South America to the routes already served by American Airlines, the U.S.-based carrier said in a news release Thursday.
"This proposed investment in JetSMART would give customers access to the largest network, lowest fares and best travel loyalty program in the Americas," Vasu Raja, American’s chief revenue officer, said in the release. "This would enable JetSMART and American to grow aggressively and profitably across Latin America as demand recovers, while preserving the best aspects of each carrier’s business model."
The investment would give American Airlines a minority stake in JetSMART, the press release said.
"This partnership would also make AAdvantage the largest travel loyalty program in the Americas," Raja said, "creating more ways for customers to earn travel rewards and use their miles to access new destinations and elite benefits globally, no matter whether they earn in Latin or North America."
Founded in 2016 and operating primarily out of Chile and Argentina, JetSMART is owned by Indigo Partners, a private equity firm which specializes in ultra low-cost airlines.
"We look forward to working with American to continue delivering low fares and customer choice throughout South America," Bill Franke, founder and managing partner of Indigo Partners, said in the release.
American has offered flights to South America since 1942, and currently flies to 17 South American destinations from its U.S. hubs in Dallas-Fort Worth, Miami and New York, the company said.
JetSMART's CEO sees the partnership as a win for both companies.
"By connecting and growing our respective networks, and maintaining our distinct business models, we see a compelling value proposition. When completed, this proposed partnership would accelerate JetSMART’s path to becoming the leading South American low-cost carrier while expanding service for American’s customers," Estuardo Ortiz, CEO of JetSMART, said in the release.