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Brazilian airline TAM successfully completed a share swap, clearing the way for its merger with Chile carrier LAN Airlines, reported Dow Jones Newswires.
Nearly 96 percent of TAM shareholders agreed to exchange each
share they hold for nine-tenths of a share in the merged company, Latam Airlines Group.
With the share swap auction, LAN and TAM concluded nearly two years of merger plans. The new Latam airline becomes the largest in Latin America and one of the 10 biggest in the world in terms of revenue.
"The merger of LAN and TAM is the joining of a perfect jigsaw puzzle," said Enrique Cueto, who is set to become Latam's chief executive, referring to the negligible overlap of routes between the two carriers.
Just three percent of LAN and TAM's current routes overlap, and so the company sees limited need for cuts in personnel or aircraft, Cueto said. Expected synergy from the merger, which the company estimates will reach US$600 million to $700 million starting in the fourth year of integration, should come in part from lower costs derived from joint purchases and other economies of scale, Cueto said.
Latam will initially reach 150 destinations in 22 countries in passenger travel and will transport cargo to 169 destinations in 27 countries, LAN said in a statement.
To take advantage of the newly formed company's widespread network, LAN is seeking an international alliance that will open up opportunities to bring more passengers from the US and Europe, Cueto said. Those international carriers would channel passengers to a Latam hub, allowing them to take advantage of other Latam flights.
Noting that Latam will debut as the second-biggest operator of flights between the US and Latin America, and the third-biggest operator of flights between Europe and Latin America, Cueto said that "we are going to compete with bigger companies, but we are also going to be needed by the bigger companies."
Rival carrier AviancaTaca said earlier this week that it would take part in Star Alliance, and because Chilean antitrust courts ruling on the LAN-TAM merger said that the combined company couldn't belong to the same alliance as AviancaTaca, Latam will likely have to opt for the Oneworld alliance. But Cueto said that a final decision hasn't been made. The company has 22 months to choose an alliance, and Cueto said that there is still the possibility of Latam joining Star if AviancaTaca leaves.
Latam will fly Airbus, Boeing, Bombardier and ATR airplanes, and Cueto said that it is unlikely that the new company will eliminate one maker of airplane from its fleet. However, the company is seeking to reduce the different models of plane it will fly from each manufacturer, Cueto said.
The Chilean Cueto and Brazilian Amaro families will control Latam.
Mauricio Rolim Amaro, currently vice-chairman of TAM, will become chairman of Latam Airlines, while his sister Maria Claudia Amaro will remain as chairwoman of TAM's board and will also become a board member in Latam.
Enrique Cueto, currently executive vice-president and chief executive of LAN will become executive vice-president and CEO of Latam while his brother Ignacio Cueto, currently LAN's president and chief operating officer will become LAN's CEO. Marco Antonio Bologna will remain as TAM's CEO.
Cargonews Asia
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