LAM and TAM merger will create Latin American super airline

IN a surprise announcement, Brazil’s TAM Airlines and Chile’s LAN Airlines have announced the two will merge. Should they receive final approval from shareholders and regulatory agencies the combined company – to be known as LATAM Airlines Group – will become the largest in Latin America.

“The group would be among the leading airline groups in the world in terms of size, profitability and market reach,” the companies said in a joint statement.

Both airlines would continue to operate under their own brands with TAM continuing to be headquartered in São Paulo (Brazil) and LAN in Santiago (Chile). The LATAM group would operate to 115 destinations in 23 countries, with a fleet of over 220 aircraft and more than 40,000 staff. Last year, both had combined revenues of US$8.5 billion and transported 832,000 tons of cargo. The merger is expected to generate savings and additional savings of $400 million a year.

Mauricio Rolim Amaro, currently TAM’s vice-chairman will become LATAM’s chairman while Enrique Cueto, currently LAN’s chief executive officer will become LATAM’s.

“Together, LAN and TAM will be able to offer new destinations that neither company could have supported on its own,” said Marco Bologna, TAM’s chief executive officer. “This will position us to compete with the foreign carriers that continue to increase service to our region, while creating new jobs in our home countries.”

With LAN being a member of Oneworld and TAM Star Alliance, both companies say it is too early to say how alliance membership will be managed.