Chile's LAN to merge with Brazil's TAM, quarterly profit up 25pc

CHILE's flag carrier LAN (Lineas Aereas Nacionale) has announced a near doubling of third quarter net profit year on year to US$106 million, drawing on revenues of $1.15 billion, an increase of 25 per cent.

This follows the announcement of LAN's merger with Brazil's TAM (once Transportes Aereos Regionais), to be renamed Latam Airlines, which when combined, ranks with the world's top 15 passenger airlines in revenue and one of the top 10 in passenger carriers volume.

Estimated cargo volume for the combined companies stands at 832,000 tons, reported the UK's Transport Intelligence. As Brazil has the biggest air cargo market on the continent, Latam is expected to exploit TAM's more developed European network, as well as its domestic widebody network and existing cargo operations in Brazil.

The merger is expected to be completed in April and create a company that will have 47 per cent of Latin America's air cargo business, according to the Bank of America.

For the nine-month period ending September, cargo tonnage (RTKs) increased 28.2 per cent. From January to September, LAN experienced cargo revenue growth of 48.4 per cent. In the first three quarters, revenue increased 24.6 per cent to $3.2 billion with cargo tonnage (RTKs) increasing 20.4 per cent while passenger traffic rose 14.4 per cent.

The improved cargo revenue results was helped by partner Brazilian partner ABSA while passenger gains were attributed to new regional and long-distance routes, including flights from Santiago to Paris and Lima to Brasilia, according to the UK's Transport Intelligence.

LAN Cargo anticipates a 20 per cent capacity increase this year because of higher utilisation of its fleet and the use of two Boeing 777-200 freighters since first half of 2009. For 2011, LAN Cargo will take possession of three Boeing 767F freighters between December 2010 and February 2011 and expects a 13 - 15 per cent growth in capacity next year.

LAN anticipates continued, but slower growth, with passenger traffic increasing 10 per cent in 2010 and by 15 - 17 per cent in 2011 when 18 passenger aircraft joins the fleet.

The new Latam airline will serve 31 countries and 133 destinations and have an annual revenue of close to $9 billion. LAN operates in 17 countries through affiliates LAN Peru, LAN Argentina, LAN Ecuador and LAN Cargo. LAN also has partners such as ABSA who operate in Brazil and Aeroasis in Colombia.

LAN has also announced the acquisition of Colombian airline Aires, the second biggest carrier in Colombia with a 22 per cent market share. Aires provides scheduled flights to 27 Colombian destinations and three outside the country, operating nine B737-700s, eleven Q200s and four Q400s. The acquisition is expected to have little if any impact on LAN's current Colombian airline partner, Aeroasis.

Source: SchedNet