LAN expects to close its acquisition of Colombia's Aires within the next month and close its merger with Brazil's TAM by mid 2011.
Enrique Cueto, the chief executive of LAN and the new LATAM Airlines Group, tells ATI at the ALTA 2010 Leadership Forum that the merger with TAM is on pace to close in the second quarter of next year. The deal is currently being reviewed by various regulatory agencies.
LAN last month also announced the acquisition of Aires, Colombia's second largest domestic carrier. Aires will be folded into LATAM, giving the new group passenger carriers in seven South American countries. Cueto says LAN aims to complete due diligence and close the Aires deal within one month, saying "we have to go quickly" because Aires is "running out of cash" and will disappear without new investment from LAN.
ALTA president and Avianca-TACA chairman Roberto Kriete was one of several Latin airline industry leaders during the forum to congratulate Enrique Cueto and his brother, Ignacio Cueto, on their historic tie-up with the TAM's Amaro family. Kriete joked that LATAM "could just write a couple of cheques and buy us all out".
But Kriete points out the LAN-TAM combination is still "much smaller than the monsters we compete against in the open skies environment," referring to US carriers.
He says all the traffic of all ALTA members combined is still smaller than the traffic at Delta, United, "and maybe American". Kriete adds that "in this industry economies of scale are a must to be able to have a competitive position".
Volaris chief executive Enrique Beltranena also congratulated LAN and TAM, pointing out the deal brings together two companies which were already highly successful. "It's not LAN taking over; it's LAN and TAN combining two well performing models to make something that is absolutely great," Beltranena says.
Deutsche Bank managing director and senior analyst Michael Linenberg similarly applauded the LAN-TAM deal and the overall consolidation trend in Latin America, including last year's Avianca-TACA deal. "In Latin America I see an industry that is consolidating at a much faster rate than the US," Linenberg says.
Source: Air Transport Intelligence news
