Two of South America’s biggest airlines, Chile’s LAN and Brazil’s TAM, on Friday announced they planned to merge to create Latin America’s largest carrier.
The news sent shares in TAM soaring 30 percent on the Sao Paulo stock market. LAN shares leaped nearly 8 percent in Santiago.
The new parent group would be called LATAM Airlines, but the separate TAM and LAN logos would be maintained on aircraft in each country, the airlines said in a joint statement.
PHOTO: REUTERS
AWAITING APPROVAL
Regulatory authorities and shareholders would have to give their approval to the deal, which was outlined in a memorandum of understanding.
If the marriage goes ahead, the new airline would have combined revenues of more than US$8 billion, and fly passengers to 115 destinations in 23 countries.
It would have a combined workforce of 40,000 employees and a total fleet of 241 aircraft.
POTENTIAL SAVINGS
The companies said they believed the merger could save the new LATAM airline US$400 millions.
Sao Paulo-based TAM is Brazil’s biggest airline, controlling 43 percent of the domestic market in Latin America’s biggest economy.
LAN, which also has operations in Peru and Argentina, is one of the biggest airlines in Latin America, with a strong network of international routes which generate more revenue per passenger than domestic flights.
Trade review Air Transport World said, TAM carried 29 million passengers last year, most of them inside Brazil, whose population of 190 million is Latin America’s biggest. LAN Airlines carried 15 million passengers.
TAM’s revenue passenger kilometers, an industry measure, was 42.4 million to LAN’s 30 million.
However, LAN had an operating profit of US$435 million on US$3.7 billion of revenue last year, compared with TAM’s US$98 million on US$4.9 billion.
DISPUTE
Separately, Spain’s air traffic controllers’ union on Friday signed a deal with management to end a dispute over working conditions that had threatened to spark a strike at the height of the tourist season.
The agreement, signed by the Union of Air Traffic Controllers and the state-run airport management authority AENA, ends months of negotiations.
It is “satisfactory to both parties” and “guarantees the service of the controllers and industrial peace,” the head of AENA, Juan Lema, told a news conference.
The deal is expected to lead to the signing of a new collective agreement by the end of the year.
The negotiations between the two sides began in February after a government decree to slash what it said were the “millionaire salaries” and “incomprehensible privileges” enjoyed by the controllers at a time when the country is undergoing belt-tightening amid an economic crisis.
The government last month also introduced a decree on working conditions which would reduce rest periods and cut generous overtime benefits.
The controllers had threatened to go on strike this month, but backed down on Tuesday in the face of concerns voiced by the air transport and tourist sectors over the effect such a move would have on a key industry at the height of the tourist season.
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