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Thread: LAN to merge with TAM

  1. #1
    Senior Member RomNYC's Avatar
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    Jan 2011
    Away from home

    LAN to merge with TAM

    Was studying this article for my International Business class. Don't know if you heard of it.


    LAN, a Chile-based airline, thinks big. As Latin America booms, it is aiming to grab a larger slice of the world aviation market through a merger with Tam, a Brazilian carrier.

    It says the tie-up, which is awaiting the green light from Chilean antitrust authorities, will create a clear leader in the region, with more than 40 per cent of the Latin American market, as well as being the second-biggest operator on North American routes and the fourth-biggest to Europe.

    The family-controlled airline already has a strong image and solid reputation for safety and service that helped it boost passenger traffic between Chile, Argentina, Peru, Ecuador and Colombia by 40 per cent in March, while international passenger traffic rose 35 per cent and cargo by nearly 20 per cent.

    In addition, it achieved an enviable 13.8 per cent operating margin last year, no mean feat in the increasingly tough airline business. It boosted 2010 revenues by 24 per cent to $4.5bn, but has recently suspended some routes, as soaring oil prices have pushed up jet fuel costs.

    LAN began life in 1929 as a state airline created to offer passenger, transport and mail services, but was privatised in 1989. Sebastián Piñera, Chile’s president, last year sold his 26 per cent stake to head off conflict-of-interest concerns after he took office.

    LAN’s reach is impressive – it already serves 115 destinations in 23 countries with 280 aircraft and 40,000 staff – and prides itself on being one of the only investment-grade airlines in the world, with a BBB rating.

    The planned merger, to create an airline named Latam, already has its sights set on opening European, US and Mexican routes, as well as extra hubs.

    Industry analysts say the all-stock deal, valued at about $2.7bn, which LAN hopes to wrap up this year, would create the world’s second-biggest airline group in terms of market value, the 11th in terms of passenger numbers, and 15th in revenue terms.

    It is expected to have about the same number of passengers as the International Airlines Group (IAG), which operates British Airways and Iberia. There has even been speculation that LAN would be top of IAG’s shopping wishlist for new partners.

    After the merger, which is widely expected to be approved in Chile this year after it was cleared in Brazil, LAN and Tam will continue flying under their individual brands. “Two leaders, one global champion,” is its merger slogan.

    LAN says it expects to achieve synergies of $400m a year and to cash in on a boom, as Brazil hosts the 2014 soccer World Cup and Olympic Games in 2016.

  2. #2
    Senior Member
    Join Date
    Jul 2005
    If approved, it still remains to be seen if the LAN brand stays in oneworld or joins the Star Alliance or if TAM stays in Star or joins oneworld.
    Cessna 6MA Kennedy tower, Rwy 31L, CLEAERD TO LAND!


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