BRAZILIAN CARRIER TAM Linhas Aereas is set to merge with LAN Chile to create the largest airline in Latin America.
The consolidated company would be called LATAM Airlines Group, but both carriers would retain their own brands and liveries.
The all-stock transaction, scheduled to take place early next year, would be worth US$3.7 billion. LAN's chief executive, Enrique Cueto, has been slated to lead the new company, while TAM's deputy chairman, Mauricio Rolim, would be installed as chairman.
The news will be viewed with immense interest on this side of the Atlantic given that TAM is a member of the Lufthansa-lead Star Alliance while LAN is part of the British Airways-American Airlines dominated Oneworld alliance.
With BA having recently announced a merger with Iberia, and thereby expanding its network into Latin America, a struggle by the alliances to retain their Latin American members is likely.