The merger in June between Chile's LAN Airlines and TAM Airlines of Brazil, forming LATAM Airlines Group, has created the largest airline in Latin America and one of the biggest in the world in terms of network connections. The new firm is based in Santiago, Chile, with secondary offices in São Paulo, Brazil.
The merger of these two behemoths of Latin American air travel has been in the works since August 2010. LATAM Airlines Group now includes LAN Airlines and affiliates in Peru, Argentina, Colombia and Ecuador.
Brazil and Chile have enjoyed years of economic growth, which has brought about a massive increase in air travel but also tougher competition.
TAM, once Brazil's leading airline, has seen its profits drop as rivals began to offer cheaper tickets and better deals.
LAN - a much bigger company flying to more than 20 countries - has the financial resources to make LATAM Airlines Group a serious competitor in Brazil's huge internal market as well as overseas. LATAM Airlines says it will provide the most comprehensive network of connections and destinations in South America, initially reaching about 150 cities in 22 countries, including the United States, with a fleet of 310 aircraft and more than 51,000 employees. LATAM's cargo business will be even bigger, starting with 169 destinations in 27 countries.
"The creation of this group of airlines is an opportunity to take South America to the world and to allow us to position ourselves to operate in an increasingly competitive environment due to the continuing consolidation of the global airline industry," said Enrique Cueto, the new CEO of LATAM Airlines Group, in a press release.
For the short term, flights on LAN and TAM will continue to operate under their respective brands. According to a statement issued by the company, "passengers of LAN and TAM will benefit over time from greater connectivity, improved routes and frequencies, and reduced connection times."
Founded in 1976 and headquartered in São Paulo, Brazil, TAM is the largest airline in Brazil and Latin America while the Chile-based LAN, founded in Santiago in 1929 as Línea Aeropostal Santiago-Arica, is the most established.
"The growth LATAM Airlines Group is expected to generate will allow us to offer flights to new destinations for our customers," said Mauricio Rolim Amaro, chairman of LATAM Airlines Group, in an official statement. "In addition, we can support the economic, social and cultural development of our region, improving the connectivity of passengers and cargo in South America and the rest of the world."
All of these expectations remain to be seen, of course. "This is the start of a long journey," Enrique Cueto said. "The benefits to our customers will be added gradually as the integration of our companies progresses."