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Indiaexportnews.com

Brazil approves LAN-TAM merger

  19.12.2011    

Brazil's regulator and antitrust agency Cade has approved the takeover of national air carrier TAM by Chile's LAN Airlines, thus creating Latin America's biggest airline, second only to Air China in market capitalisation.
Brazilian authorities have removed the last hurdle, requiring little beyond conditions laid out by Chilean regulators, who have restricted shared routes and forced the airlines to withdraw from one of two global alliances.
With shareholders' approval the airlines can now form LATAM Airlines Group in a share swap slated for the first quarter of next year. LAN's and TAM's revenue exceeded US$10 billion in 2010, reports Reuters.
Higher fuel costs and a glut of new capacity have challenged Brazilian carriers this year, driving consolidation as congested airports and cooling customer slow growth.
LAN vice-president Enrique Cueto will become CEO of LATAM, which will offer destinations from Frankfurt to Sydney and yield and estimated $400 million a year in cost savings in the next four years.
But the new company will face heightened competition in Brazil from Gol Linhas Aereas, which emerged as the No 1 carrier in the domestic market in 2011. Gol also announced an alliance with Delta, offering a three per cent stake and a seat on its board to the US carrier for a $100 million investment.


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