Executive Vice President

By | January 23, 2014

Even though December was originally the date that inside of LAN and TAM managed to make the aviation authority of Brazil approved the joint operation between the two airlines, this deadline not be met before the end of 2010. Sources knowledgeable of the process confirmed that March is the new alternative that handle both signatures to have settled antitrust processes in Chile and Brazil. At the local level, the economic national prosecutor’s Office investigates the operation, against which Enrique Cueto, Executive Vice President of LAN com, said last week at Diario Financiero that are open to taking all appropriate measures of mitigation that will give green light to the process, as lower rates on the route Santiago Sao Paulo. Close to the operation added that the analysis of the Brazilian authority relies on that model proposed by the merger, where the shareholders of LAN have 70% of the shares of the final company, but only 20% with voting rights from TAM Airlines of Brazil, not violates Brazilian law, which establishes that the foreigners may only have as butt 20% of a company in that country. In any case, despite the fact that the current regulatory framework, that is law which will increase that limit foreign participation to 49 per cent would have prompt discussion. The sponsor of this, parliamentarian Rodrigo Rocha Lourdes, noted last week to Wall Street Journal that the draft law will be voted in Congress in the coming months.

This could change the current scenario of ownership of Latam, taking into account that LAN drivers have pointed out that once that happens they would increase their ability to vote in TAM. Market analysts explained, moreover, that this opening would allow that other Brazilian Airlines assess mergers or joint operations. In that context, the biggest competitor of the future Latam domestically in Brazil, GOL, has pointed out that it does not intend to follow the footsteps of LAN and TAM, while the industry indicate that this does not guarantee that equally investors may be approaching the Brazilian controlled by the Oliveira family. That Yes, expected that airlines of smaller size but with shares interesting, as it is the case of Blue Airlines or Webjet – following its restructuring this last could find capital – define how to compete with the new Latam. Growing the aviation market in Brazil market undergoing a period of boom. In fact, only during the first half of this year air traffic in that country grew about 25%, considering that according to figures from the IATA global movement not soared more than 8 percent. According to estimates, in the financial year 2011 this pace of growth would be maintained in flights between the cities of Brazil and exchange of passengers between Sao Paulo and destinations in Europe.


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