LAN Airlines of Chile and TAM of Brazil plan to merge to create the largest carrier in Latin America and the 11th biggest in the world.
The merger to form the combined LATAM Airlines should go through in 2011, subject to regulatory approval, and promises an extension of services between Europe and South America.
It will combine LAN’s extensive network across South America – it has affiliate airlines in Argentina, Peru and Ecudaor – with TAM’s operations based in the continent’s biggest economy.
The two privately owned carriers are members of rival alliances – LAN a partner of British Airways in the Oneworld group and TAM a member of the Star Alliance alongside Lufthansa.
The pair will operate as separate brands in the manner of Air France and KLM, which also form a single airline, but pool resources and revenue and coordinate schedules and fares.
LAN will take a 70% stake in TAM, with the new carrier know as LATAM Airlines Group.
The airlines together carried 45 million passengers last year, with a fleet of 22 aircraft and revenue of $8.5 billion. The pair have another 200 aircraft on order over five years and pledge to add to the 115 destinations they currently serve.