LATAM Airlines Group has said that it has formally dropped plans to establish a joint business agreement with IAG International Airlines Group as of December 2, 2019.

"In consideration of ... various commercial factors in the context of changes in the aviation market since the announcement in January 2016, IAG and LATAM Airlines have decided that they will not implement the announced joint business agreement or JBA, terminating the contracts associated with said transaction dated December 2, 2019," the South American group said in a stock market filing.

The airline conglomerate added that other commercial agreements, including interline and codeshare partnerships, will remain in place.

The JBA was originally announced in 2016, simultaneously with a separate JBA between LATAM and American Airlines (AA, Dallas/Fort Worth). While the partnerships were approved by all other South American countries in which LATAM has local subsidiaries, Chilean authorities imposed strict conditions on competitive grounds. As a result, LATAM and IAG intended to exclude Chile from the JBA on the grounds they wanted to continue working on a partnership in other countries.

However, in September this year, Delta Air Lines (DL, Atlanta Hartsfield Jackson) announced it would buy a 20% stake in LATAM. Subsequently, the South American group announced it would leave Oneworld by October 2020 or earlier as it shifted commercial allegiance. On December 2, LATAM Airlines Group announced its subsidiaries LATAM Airlines Perú, LATAM Airlines Colombia, and LATAM Airlines Ecuador signed code-share agreements with Delta, effective as of the first quarter of 2020, as the first step of the strategic partnership between LATAM and Delta.

As of December 2019, LATAM has not announced plans to join Skyteam as yet.