Delta Air Lines buys stake in Mexico's Aeromexico

A Delta Airlines jet lands at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia, April 15, 2008.

MEXICO CITY (Reuters) - Delta Air Lines Inc (DAL.N) said it is buying a 3.5 percent equity stake in Mexican airline Aeromexico (AEROMEX.MX) for about $65 million.

The agreement builds on an existing commercial alliance between the airlines and will more closely link Delta's network to Mexico, the company said in a statement.

Delta, No. 2 in the industry behind United Continental Holdings (UAL.N), is paying 31 pesos per share for the Aeromexico stake, said Andres Conesa, chief executive of the Mexican airline.

Aeromexico shares were down 1.5 percent at 23.23 pesos in local trading in Mexico. Delta shares were down 5.8 percent at $6.67 in New York.

As part of the deal, Delta will take a seat on the Aeromexico board, the companies said

Aeromexico, which went public in April, has been the only large Mexican airline since rival Mexicana ceased operations a year ago under heavy debt and labor conflicts.

Separately, Delta Chief Executive Richard Anderson said his company still plans to order 200 planes by year-end. Delta will make a decision on that order in the third or fourth quarter, he said.

The U.S. airline has no plans to replace its existing wide-body fleet, Anderson said.

Airplane maker Boeing Co (BA.N) recently decided to equip its 737 jets with new engines to save fuel, and Anderson said the new version "will be a very competitive product."

Before the re-engine plan, Boeing's sales were hit in the first half by uncertainty over its strategy for the 737 medium-haul jet, which competes with a similar plane made by European company Airbus.

(Reporting by Cyntia Barrera Diaz and Veronica Gomez Sparrowe; editing by John Wallace)