LAN, TAM Merger To Be Completed Nine Months

The boards of directors at Chile’s LAN Airlines and Brazilian operator TAM have backed a binding agreement that, if approved by shareholders and regulators, will create one of the world’s largest carriers as early as August.

Under the plan unveiled Jan. 19, LAN Airlines eventually will assume a controlling role within the new holding company, as well as the new name Latam Airlines, while TAM eventually will be folded into the new company structure. Latam Airlines also will assume LAN’s current listings on stock exchanges in Chile and the U.S. as well as TAM’s on Brazil’s BM&F Bovespa exchange; TAM’s U.S. listing will disappear.

TAM, however, will remain a separate operating brand, as will LAN’s current branded operations.

“We are pleased to announce that LAN and TAM are taking a new and very important step towards building one of the leading airline groups in the world,” says Enrique Cueto, CEO of LAN Airlines and proposed CEO for Latam. “Today’s announcement confirms the commitment that we share with our friends at TAM, which is a strong passion and determination to provide millions of Latin American passengers with better service, always certain of the great potential of the Latin American market.”

Marco Antonio Bologna, who will retain his role as TAM’s CEO, adds, “As regional leaders, TAM and LAN make a natural move in the global trend of consolidation in the airline sector. We believe this is the best way to guarantee our companies’ growth, in a scenario of high competition and growing demand. We are confident that, after all the required approvals, we will be able to offer even more advantages to our customers, employees and stockholders.”

Apart from shareholder approval, LAN and TAM must also meet Brazilian ownership laws, but this is now expected to be a formality, as are regulatory endorsements from Chile and the U.S. According to the two airlines, the merger should now take between six to nine months, and will create one of the world’s 10 largest airlines.

“Latam will provide transport services for passengers and cargo to more than 115 destinations in 23 countries, operating a fleet of more than 280 aircrafts and will have over 40,000 employees,” the carriers note.