LAN and TAM have pushed back the anticipated completion date of their merger transaction until the third quarter or early fourth quarter this year.
The two South American airline groups initially indicated when first announcing their tie-up last August that they anticipated completing the deal in the second quarter of 2011. In a press release today announcing the signing of a binding agreement LAN and TAM state they now expect the deal to be completed in six to nine months.
The signing of a binding agreement is the latest step in the process of moving forward with their merger. Initially LAN and TAM, which are publicly traded but are controlled by the Cueto and Amaro families respectively, only signed a non-binding memorandum of understanding.
LAN and TAM say their binding agreement still needs to be approved by government authorities including Brazil's ANAC. The carriers say the binding agreement was approved yesterday by the board of directors of LAN and TAM at separate meetings in Chile and Brazil, respectively. They also say the boards "agreed to recommend to their respective shareholders the approval of the transaction".
Under the transaction, TAM will be de-listed and LAN will be the surviving entity. LAN stock will be subsequently listed in Brazil while continuing to be listed in Chile and New York. LAN's name will then be changed to the LATAM Airlines Group.
While the transaction is now expected to be completed in six to nine months, LAN and TAM have said the merger will take two to three years to complete operationally.
"We are pleased to announce that LAN and TAM are taking a new and very important step towards building one of the leading airline groups in the world. Today's announcement confirms the commitment that we share with our friends at TAM, which is a strong passion and determination to provide millions of Latin American passengers with better service, always certain of the great potential of the Latin American market," LAN CEO Enrique Cueto says in today's statement.
Adds Marco Antonio Bologna, the CEO of TAM's holding company: "As regional leaders, TAM and LAN make a natural move in the global trend of consolidation in the airline sector. We believe this is the best way to guarantee our companies' growth, in a scenario of high competition and growing demand. We are confident that, after all the required approvals, we will be able to offer even more advantages to our costumers, employees and stockholders."
As originally announced, Enrique Cueto will become CEO of LATAM with TAM's Mauricio Rolim Amaro will be chairman of the new company.
LAN and TAM are already the two largest airline groups in Latin America. The say their merger is expected to create one of the world's largest 10 airline groups with a fleet of 280 aircraft and network of 115 destinations in 23 countries.