What happened

Shares of LATAM Airlines Group (NYSE:LTM) are on fire this morning, up 30.8% as of 10:10 a.m. EDT on news that Delta (NYSE:DAL) will enter into a partnership with the Chilean company and buy 20% of it.

Delta's own stock is up only a fraction of a percentage point, while a third company -- Brazil's Gol Linhas Aereas Inteligentes (NYSE:GOL) -- is taking a much bigger hit, down 6.4%.

LATAM Airlines 2018 annual report header

Image source: LATAM Airlines.

So what

As CNBC explained today, Delta plans to cash in its stake in Gol, shares of which have nearly tripled over the past year. (Gol competes with LATAM.) Switching horses, Delta will join with LATAM "to form the leading airline partnership throughout the Americas," offering what it says are the most flights to five of the top six Latin American markets from the U.S.  

Now for the dollars and cents: Delta will buy 20% of LATAM's shares for $16 per share -- $1.9 billion in total -- and invest a further $350 million to deepen its partnership with the Chilean carrier. Delta will also flex its financial muscle to acquire four A350 aircraft from LATAM, and take over the latter's commitment to buy 10 more A350s from Airbus from 2020 through 2025.

LATAM believes the new alliance will enable it to boost free cash flow and pay down more than $2 billion in debt through 2025.

Now what

Today's 31% jump in LATAM's stock probably caught a lot of eyeballs -- and its run probably isn't done just yet. Delta's plan to pay $16 a share for its LATAM stock, when compared with its current share price of less than $12, suggests there could still be another 33% or more of upside left in this stock.