LATAM waits in the wings

Tie-up between LAN and TAM will see the formation of the world’s most valuable airline

Brazil cargo business Chile competition European carriers LAN Airlines LATAM Latin American market TAM

Tie-up between Chile’s LAN Airlines and Brazil’s TAM will be completed on June 22, nearly two years after it was announced. The new entity, LATAM, is already attracting attention since the tie-up is supposed to bring in $700 million in synergies.

Achieving that could be a problem. While LAN will get an entry into Brazil, the region’s largest airline market, TAM will benefit from its Chilean partner’s cargo business. According to industry sources, though LAN is on an upward growth with passenger traffic all set to grow by 14 per cent this year, its cargo business has been facing competition from European carriers concentrating on the Latin American market.