Chile’s LAN Airlines has completed a takeover of its Brazilian rival TAM, creating the second-biggest airline by market value in the world. Executives say that the deal will yield up to $700 million in annual savings on costs within four years. The new carrier, LATAM Airlines Group, is based in Santiago, but the focus will be on improving performance in Brazil. Large-scale layoffs have been ruled out, for now.
The creation of LATAM Airlines comes as TAM's rival Gol is cutting back on capacity. Brazil is substantially bigger than any other airline market in Latin America and ticket prices there are low. LATAM is banking on gaining high investment ratings, allowing it to borrow at a cheaper cost while raising operations globally.
[Image courtesy Boeing]