LAN Says TAM Takeover Ruling Flawed
LAN Airlines said on Tuesday a Chilean anti-trust ruling that imposes a host of conditions on its planned multi-billion dollar takeover of Brazil's TAM was flawed, and continues to study it.
LAN said it had asked anti-trust regulator TDLC, which last week conditionally approved a deal to pave the way for the creation of one of the world's biggest airlines, to rectify "numerical errors" in calculations of its national and international tariffs, or yields.
It said it would continue to study the ruling this week, and some analysts believe that LAN could decide to appeal sections of the ruling to the Supreme Court.
"The company will continue to analyse the measures, their impact and effect during this week," LAN said, reiterating it was confident the deal would be complete by the first quarter.
"The company has presented a request to the TDLC today which rectifies numeric calculations in the ruling... regarding yields (fares per km on each route)," it added.
LAN's chief operating officer, Ignacio Cueto, told a conference in Santiago last week that Chile's antitrust tribunal's approval was a step forward, but said administrative issues arising from the ruling will take four to five months to iron out.
The takeover will create an airline giant with joint revenue of USD$10.4 billion, based on 2010 figures. When the planned merger was announced last August, the all-stock transaction was worth an estimated USD$2.7 billion.
TDLC says the merged airline must comply with a host of conditions, including ceding slots on the key Santiago to Sao Paulo route and renouncing participation in one of two global alliances.
The measures also require LAN to modify its self-regulation and cancel and revise code-sharing agreements with airlines that do not belong to the same alliance as the newly merged LATAM on some routes.
Industry experts say the ruling of the antitrust tribunal will act as a blueprint for future mergers in Chile. However, they say the deal could face delays in Chile if a third party, such as a rival airline, appeals the decision to the Supreme Court.
In Brazil, the deal to create the new LATAM Airlines Group has already cleared two of three anti-monopoly hurdles and is now awaiting approval from antitrust council Cade.