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TAM and LAN airlines preparing to tie the knot

The Americas Post - Will they call it LAN AM?

Chilean airline LAN has avoided a lawsuit from local competitor PAL and reached an agreement that will allow LAN to proceed in their planned marriage with Brazilian airline TAM.   The merger would create one of the largest airline groups in the world.

LAN, one of the leading carriers of Latin America, announced Tuesday that PAL agreed to drop objections to the merger raised some weeks ago in the Chilean Supreme Court, in return for compensation of US$5,000,000.

Based in Santiago and owned by the local Cueto family, LAN operates in Argentina, Colombia, Chile, Ecuador and Peru, with additional cargo service in Brazil and Mexico.  Over a year ago the company announced their intention to acquire TAM, thus creating the largest airline in Latin America with over 10.5 billion in revenue.

Based in Sao Paulo and controlled by the Amaro family, TAM is the largest airline in the largest economy of Latin America.  The company has announced it will not renew four aircraft leases next year as originally planned, saving $50 million a year and reducing their fleet to 159 planes instead of 163 at the end of 2012.  TAM reported profits of 38 million dollars in the second trimester, leaving behind their losses for the same period last year.

LAN plans to invest heavily in their fleet as part of an aggressive expansion plan for 2011-2014.  The Chilean carrier reported a year-over-year revenue decline of 11% for the third trimester, due to restructuring of their Colombian operation and foreign exchange losses.  From January to September the company reported profits of US$207,700,000.

Expected to be complete by mid 2012, the merger is expected to save almost 400 million dollars per year by combining operations.  Both companies plan to ask the Chilean Supreme Court to approve the deal by waiving three remaining legal obstacles imposed by the local anti-monopoly tribunal.