Air Alliances Confident After LAN-TAM Merger Move
August 16 2010 - 1:07PM
Dow Jones News
Two of the alliance groups that dominate the global airline
industry on Monday shrugged off speculation that they may lose
their presence in Latin America if the region's two largest
carriers consummate a merger plan.
Chile's LAN Airlines (LFL, LAN.SN) is a key member of the
Oneworld alliance while Brazil's TAM SA (TAM, TAMM4.BR) only joined
the Star grouping in May.
The two carriers said Friday that they had yet to formulate an
alliance strategy. Earlier that day, they announced a framework
deal to merge by mid-2011.
Latin America is one of the fastest-growing regions for global
airline traffic, and though LAN and TAM would continue to operate
as standalone brands, similar mergers have seen airlines regroup
around a single alliance.
The proposed deal is expected to trigger another contest between
the three global alliances, with SkyTeam keen to boost its
relatively weak position in the region, where it lacks a
partner.
"The alliance issue is an important issue in the future but now
we don't have an answer to that question," Enrique Cueto, LAN's
chief executive, said on a conference call Friday.
The Oneworld grouping led by AMR Corp.'s (AMR) American
Airlines, British Airways PLC (BA.LN) and its Spanish merger
partner Iberia may have the most to lose.
Latin America was a region of relative strength for Oneworld
through LAN's membership, but it has been weakened by the recent
bankruptcy filing from the main unit of Mexicana. Mexico's largest
airline joined the alliance late last year.
"LAN and TAM have stressed that both airlines will continue to
operate independently once they combine under a single holding
company," said Oneworld in a statement.
"So Oneworld and its other member airlines look forward to
building further our successful working relationships with LAN into
the future," Oneworld said.
Star was more circumspect, but said it expected TAM to remain a
member even if consolidation led to "future effects" on alliance
membership.
"Both TAM and the Star Alliance remain committed to
delivering...benefits across the Latin American and global
network," it said in a statement. Star is led by Deutsche Lufthansa
AG (DLAKY, DLA.XE) and the United Airlines unit of UAL Corp.
(UAUA).
SkyTeam members declined comment on whether they would pursue a
merged LAN-TAM as a member, though has said it wants to recruit in
Latin America. The grouping is led by Delta Air Lines Inc. (DAL)
and Air France-KLM SA. Delta is the second-largest U.S. airline on
routes to and from South America, trailing only American
Airlines.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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