Chile court approves merger of LAN, TAM airlines

SANTIAGO: A Chilean anti-trust court on Wednesday approved the merger of the country's LAN airlines and Brazil's TAM under certain conditions, in a step toward the creation of Latin America's largest air carrier.

The merger was unveiled last year but challenged by Chilean consumer organization Conadecus, which warned that the deal could undermine competition, affect ticket prices and availability of services.

The anti-trust court, "in a split decision, approved the announced merger between LAN Airlines S.A. and TAM Linhas Aereas S.A.," the court said in a statement.

But it only gave the green light to the deal provided the new mega-company conforms to 11 conditions to ensure "effective competition in Chile's aviation market."

The conditions include guarantees to ensure the presence of other carriers on specific routes currently dominated by the two airlines, particularly between Santiago and Sao Paulo.

The two companies were carefully studying the implications of the "complex" court decision, Chile's main airline LAN said in a statement.

"TAM and LAN will make their position known once it (the decision) has been analyzed," added the Brazilian company, which welcomed the announcement as "another step forward."

LAN and TAM, already two of the largest airlines in South America, announced in August 2010 their plans to form a regional giant, LATAM airlines, which would become one of the 10 largest in the world.

The new airline would have combined revenues of more than $8.0 billion and fly passengers to 115 destinations in 23 countries.

It would have a combined workforce of 40,000 employees and a fleet of more than 240 aircraft.

The merger was initially planned for mid-2011 but its approval has been delayed, including with the Chilean court appeal.

Brazil's National Agency for Civil Aviation approved the merger in March, while the Brazilian competition regulator has yet to issue a ruling.

Copyright AFP (Agence France-Presse), 2011