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Lan-Tam clears Brazil antitrust regulator, becomes world’ second largest carrier

Thursday, December 15th 2011 - 15:32 UTC
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The Chilean carrier will have full access to Latam’s fastest growing market The Chilean carrier will have full access to Latam’s fastest growing market

Chile Lan Airlines planned 3.2 billion dollars acquisition of Tam SA was approved by Brazil’s antitrust regulator, clearing the final regulatory hurdle for the formation of the world’s second-largest carrier.

The regulator, known as Cade, approved the transaction in a unanimous vote in Brasilia Wednesday. Approval is contingent on some limits for flights between Santiago and Sao Paulo. The regulator saw no need to restrict the Sao Paulo-to-Lima and Sao Paulo-to- Buenos Aires routes, said Cade member Olavo Chinaglia, who was in charge of preparing the final report on the deal.

Chile’s antitrust tribunal approved the tie-up on Sept. 21, imposing conditions including capping Santiago-Sao Paulo fares until they exchange four daily slots in Sao Paulo’s Guarulhos airport with other carriers. Cade’s conditions included giving up two pairs of slots in the Sao Paulo-Santiago route, Tam said in an e-mailed statement.

“Given the restriction was less pronounced than Chile’s, this give some comfort to the companies,” Rene Medrado, Lan’s attorney, told reporters in Brasilia.

Santiago-based Lan agreed to buy Tam in an all-stock transaction announced in August last year. The combination follows similar tie-ups among US and European carriers trying to reduce operating costs and increase revenue by offering a broader global market to passengers.

Lan is appealing the Chilean antitrust conditions in the country’s Supreme Court and expects to close the deal in the first quarter of 2012.

A Lan-Tam combination would have a market value of 11 billion dollars, overtaking Singapore Airlines Ltd. as the world’s second-largest airline after Beijing-based Air China Ltd.

The deal would give Lan, already Latin America’s biggest airline by value, almost half of routes in Brazil, the region’s largest economy, and a network of more than 115 destinations in 23 countries.

Lan will decide on whether to remain a member of the Oneworld group or join Star Alliance by the end of the first half of next year, Lan President and Chief Operating Officer Ignacio Cueto said on Nov. 17 in Rio de Janeiro.

Lan’s Enrique Cueto will become chief executive officer of the new company, while Tam’s Mauricio Rolim Amaro will be chairman. Both airlines would continue operating separately with their own brands.

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