A LATAM Airlines Airbus 320 seen at Puerto Maldonado airport also know as Padre Aldamiz International Airport. (Photo by John Milner/SOPA Images/LightRocket via Getty Images)

Delta said expects to exit its stake in Brazilian carrier Gol, which competes with LATAM in Brazil. Delta's latest annual filing showed it had a 9% in Gol.

Foreign ownership rules prevent airlines from buying foreign carriers outright, so airlines have been increasingly turning to minority stakes and revenue-sharing joint ventures to gain exposure to other markets.

Delta's announcement is the latest example of how the Atlanta-based airline is aggressively expanding abroad through joint ventures or minority stakes with other carriers.

Delta Air Lines is expanding its presence in Latin America by spending $1.9 billion for a 20% stake in LATAM, Latin America's largest airline, a twist for Delta rival American Airlines that had pursued a joint-venture with the Chilean-based carrier to grow revenue in the region.

LATAM offers service between major cities in South America and the U.S., as well as domestic service within Chile, Brazil, Colombia, Peru, Argentina and Ecuador.

American Airlines has been pursuing a joint venture with LATAM, a carrier it's already connected to through the OneWorld alliance of airlines. Such code-sharing agreements allow carriers to sell seats on each other's flights and allow passengers to earn and burn miles on those airlines. LATAM will be leaving the OneWorld alliance, but it was not immediately clear whether it would join SkyTeam, the group that includes Delta and its partners.

Regulators in the U.S. and in Chile, where LATAM is headquartered would have to approve the Delta stake.

"Our people, customers, owners and communities will all benefit from this exciting platform for future growth." Ed Bastian, Delta's chief executive officer, said in a press release announcing the deal.

In recent years, Delta has steadily expanded its ownership and relationship with other international carriers. It raised its stake in the parent company of Korean Air to 9.2%, announced a trans-border joint venture with Canadian airline WestJet and increased its ownership of Aeromexico, the largest airline in Mexico to 49%.

Bastian and his team have leveraged a closer relationship with Aeromexico to grow Delta's presence in Los Angeles, a key market for both airlines.

American said it is no longer pursuing the joint venture and that LATAM's change in strategy won't have a significant financial impact to American.

The Fort Worth, Texas-based carrier said a decision by Chile's Supreme Court earlier this year blocking the joint venture would have "significantly reduced the benefits of our partnership," adding: "we understand LATAM's decision to partner with a U.S. carrier that isn't burdened by the ruling."

In addition to buying 20% of LATAM for $1.9 Billion, Delta will also be spending $350 million to expand its partnership with the carrier. As part of the deal, Delta will acquire four Airbus A350 planes and assume LATAM's commitment to buy 10 more A350s between 2020 and 2025.

Delta is paying for the deal with existing cash and newly issued debt. It expects the investment to be accretive to earnings over the next two years.

In announcing the deal, LATAM's CEO, Enrique Cueto Plaza, said, "this alliance with Delta strengthens our company and enhances our leadership in Latin America by providing the best connectivity through our highly complementary route networks."

— CNBC's Meghan Reeder contributed to this report.