LAN and TAM merging

25.08.2010 By: TRANSFER based on AmericaEconomia

On Friday the 13th of August Brazil's TAM Airlines and LAN of Chile announced their plans for a merger that will create Latin America's largest airline company. But also worldwide the new airline company will achieve a third place, right after Air France-KLM and Lufthansa. The merged company will be named LATAM Airlines Group, the new company group name for all LAN’s and TAM’s company holdings together (including affiliates and cargo operations), but each airline within the group will maintain its current headquarters and governance structure. TAM will continue to operate as a Brazilian company with its own structure. The current holdings of LAN Airlines S.A. will operate as an independent business unit within the group (and be referred to as LAN Airlines).

Both airlines confirm that this aggregation offers new possibilities and market opportunities. Together the two airlines will be able to offer new destinations that would not been achieved if they would have been operating separately. A combined airline group will provide passenger services to more than 115 destinations in 23 countries, will be able to operate a fleet of more than 220 aircrafts and have more than 40.000 employees. For the future full occupancy of the aircrafts on a regular base is expected, driving growth and increased employment across the region. This combining of strengths and complementary networks will bring immense benefits to customers, employees, shareholders and to Latin America.

The statistics of last year show a combined revenue of USD 8,5 billion. Besides that in 2009 TAM and LAN carried more than 45 million passengers and transported 832.000 tons of cargo. The Latin American airline group combination is expected to generate annual synergies of approximately USD 400 million. These synergies are expected to come broadly in equal proportion from alignment of the passenger networks, from growth in the cargo network (both internationally and in Brazil), and from reduced costs.