Political Risk Latin America Blog @PolRiskLatam

Lan and Tam soon to become Latam

Posted in News and Articles, Political Risk by politicalrisklatam on March 4, 2011

by Samantha Pearson for Financial Times – Beyond Brics, March 4th, 2011.

There once was an airline called Lan,
Which decided to merge with Brazil’s Tam.
The two made a deal,
Which looked easy to seal,
To create a giant group called Latam.

And then everything got more complicated.

When Chile’s flagship carrier, Lan, signed the all-stock merger with Brazil’s biggest airline back in August last year, the deal looked nice and simple. The two companies would combine to create the biggest airline in Latin America, conveniently named Latam Airline Group, which would help generate synergies at a time when the sector as a whole was under pressure.

But it’s been anything but straightforward. Late in January, Chile’s Free Trade Tribunal said it would examine the merger following competition concerns raised by a consumer group. There were also doubts about whether Brazil, which has been fiercely protective of its air space, would effectively hand over control to its Andean friends. (The deal will give Lan 70 per cent of the new holding after the offer of 0.9 Lan shares for every Tam share). (continue reading… )


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