LAN and TAM complete their transaction and create LATAM Airlines Group

LAN and TAM announced (22-Jun-2012) the completion of their transaction to create LATAM Airlines Group. Details include:

• Shares: At the closing of the exchange offer, 99.9% of TAM shares that participated in the exchange offer agreed with the deregistration of TAM as a public company in Brazil, thus meeting the delisting condition. The tendered shares together with the TAM shares committed by the TAM controlling shareholders represent 95.9% of the total shareholding of TAM;
• Scope of LATAM Airlines Group: Will offer a network to more destinations than any other airline group in South America, initially reaching about 150 destinations in 22 countries and transporting cargo to 169 destinations in 27 countries;
• Operations: LAN and TAM will continue to operate under their existing brands although from 27-Jun-2012, frequent flyer reciprocity will commence;
• Corporate structure: Mauricio Rolim Amaro, currently vice chairman of TAM, will become chairman of LATAM Airlines Group S.A. Maria Claudia Amaro will remain as chairwoman of the board of TAM and will also become a member of the board of directors of LATAM Airlines Group. Enrique Cueto, currently executive vice president-CEO of LAN Airlines, will become executive vice president-CEO of LATAM Airlines Group. Ignacio Cueto, currently president and COO of LAN Airlines, will become CEO of LAN Airlines. Marco Antonio Bologna will remain as CEO of TAM and TAM Linhas Aéreas S.A;
• Headquarters: LATAM Airlines Group will maintain its present headquarters: LAN in Santiago and TAM in Sao Paulo;
• Cargo Business: LAN CARGO and its affiliates - ABSA in Brazil, MAS AIR in Mexico and Línea Aérea Carguera in Colombia - are the largest group of air cargo operators in Latin America. By adding TAM CARGO in the Brazilian domestic market, LATAM Airlines Group will offer services to 169 destinations in 27 countries around the world;
• Synergies from the integration: Both companies project pre-tax synergies of approximately USD170 million to USD200 million for the first 12 months after combination, gradually increasing to annual pre-tax synergies of between USD600 million and USD700 million, beginning four years after the completion of the combination. LATAM Airlines Group also estimates one-time costs associated with the closing of the transaction and the realisation of synergies of approximately USD170 million to USD200 million, most of which are expected to be incurred in the first 12 months after the completion of the combination. Approximately 60% of the total estimated potential synergies will derive from revenue increases in the passenger and cargo businesses and, therefore, the cost savings are expected to generate the remaining 40%. [more - original PR]