LAN and TAM have not yet resolved alliance issue

Washington DC
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Oneworld member LAN and Star Alliance partner TAM have not yet decided on an alliance strategy once they merge and create a new holding company.

LAN CEO Enrique Cueto told analysts during a 13 August conference call to discuss their proposed merger that alliances "will be an issue we will decide in the future".

Cueto, who will become CEO of the new parent company LATAM Airlines Group, added: "The alliance issue is an important issue in the future but now we don't have an answer to that question."

LAN has been a member of Oneworld since 1999 while TAM only joined Star earlier this year. Cueto says having one global alliance for the new group was not assumed when calculating the carriers' estimate for $400 million in annual synergies.

While LAN and TAM are currently in separate global alliances, they have had a long-standing partnership which includes codesharing, maintenance cooperation and joint purchases of aircraft.

Earlier this year TAM spun off its frequent flier unit, Multiplus, which is now traded separately from the Brazilian airline group on the Sao Paulo stock exchange. TAM president Libano Barroso says after LATAM is established Multiplus will continue to be operated as an "individual separate entity" with its own stock listing. He explains Mutiplus will continue to be controlled by TAM's holding company, which in turn will be controlled by LATAM once the proposed merger transaction is completed.

Libano says at some point Multiplus should have the opportunity to be extended to include LAN's frequent flier programme, LANPASS.

The vice-chairman of TAM's holding company and future chairman of LATAM, Mauricio Rolim Amaro, told analysts that TAM and LAN hope at some point to combine their frequent flier programmes as this would benefit all their passengers. He explained this would likely take the form of Multiplus expanding to include LANPASS but "it's much too early to ensure" this will happen.