Chile’s LAN Airlines and Brazil-based TAM have completed a merger to create Latin America’s largest airline group.
The newly-formed LATAM Airlines Group was officially created last week following the completion of a share exchange. It will now offer more flights than any other airline group in Latin America, initially reaching approximately 150 destinations in 22 countries. The two airlines currently operate a combined fleet of more than 300 aircraft, with outstanding orders for a further 270.
“The creation of this group of airlines is an opportunity to take South America to the world and to allow us to position ourselves to operate in an increasingly competitive environment due to the continuing consolidation of the global airline industry,” said Enrique Cueto, Executive Vice President & CEO of LATAM Airlines Group.
The group will maintain its existing headquarters in both Santiago and Sao Paulo, and will continue to operate under separate brands. All other aspects of the airlines’ operations however, will be integrated. LAN and TAM have pledged to boost routes and frequencies and reduce connection times between their services. Also, commencing on Wednesday (27 June 2012), members of the LANPASS and TAM Fidelidade frequent flyer programmes will be able to earn and redeem points on flights of both airlines. Lounge access will also be shared.
“This is the beginning of a long journey and the benefits to our customers will be added gradually as the integration of our companies’ progresses,” Cueto added.
The two companies have estimated that the merger will boost the combined business by up to US$200 million in the first 12 months and US$700 million in the following four years. According to LATAM, approximately 60% of this total will derive from increased passenger and cargo revenues, while the remaining 40% will be achieved through cost savings.
The merger will also provide a boost for the oneworld alliance, of which LAN is a member.