30 January 2010

Consolidation In LATAM

Slowly but surely cross border consolidation is occuring in LATAM

With LAN extending its reach with named subsidiaries across several markets (Argentina, Peru etc) it was only a matter of time before cross border merger or alliance activity was to occur. Initially the "national" interest didn't deem it quite the right thing to do. But rampant commercialism has broken out across the Continent. With liberalized air agreements with 4th and 5th freedom rights in effect a reality across many markets some form of alliance relationship was inevitable.

Last year TACA and Avianca announced a merger. TACA and even GOL participated in the start up of Volaris in 2007.

Speculation has been rampant for months since the Administration in Chile announced that it was considering putting its shares in LAN up for sale.

Well now there is a buyer. News reports are coming in that TAM will purchase 18% of LAN thus creating the most powerful airline combination across LATAM. This is likely to spur other alliances/mergers across the region with a strong possibility that the two Mexican carriers will be seeking to be a part of this.


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