IATA: LAN's Cueto optimistic over TAM deal

This story is sourced from Pro
See more Pro news »

LAN chief executive Enrique Cueto is "optimistic" on the Chilean anti-trust proceedings which are stalling its plans to merge with Brazilian carrier TAM, he said at the IATA Annual General Meeting.

Chilean anti-trust court Tribunal de Defensa de la Libre Competencia in March opened a full review into the deal. "We believe we will have a resolution at the end of

July," says Cueto, but adds precise timing of completing its merger if approval is given is complicated by the possibility of any appeals.

"If not, we hope [to complete] at the end of this year," he says. Cueto says the focus for regulators in such cases should be on the affected routes - in this case the Sao Paulo-Santiago pairing on which the partners would have a 90% market share.

"I understand you need to do something about this," he says, but points to the mitigations the partners have offered to counter competition concerns including cutting fares and offerings slots to new entrants.

"After mitigations, there will be more competition, more capacity and cheaper fares," he says. "We need to do this with TAM," Cueto adds, when asked about possible alternatives should a merger with TAM ultimately be blocked or come with too high a price in concessions.

"We feel that is the main opportunity here. TAM has an international hub in Sao Paulo. We feel it will really create a big opportunity [for connections]."

And he believes regulators need to appreciate the merger with TAM can firm Chile's existing airlinks to Brazil, as TAM's attractiveness makes it a highly sought partner for rival carriers. "The beautiful lady is TAM," he says. "Everybody wants to fly to Brazil. There are three [global] alliances and [only] two main airlines in Brazil."

LAN is a long-standing Oneworld member and TAM is in Star Alliance.