SANTIAGO, Chile — Officials have suspended a merger between Chile’s LAN Airlines and Brazil’s TAM Airlines while they investigate whether it complies with the South American country’s antitrust laws, Brazilian news media reported Saturday.
The five-member Court for the Defence of Free Competition issued the decision Friday in response to a request from the private National Consumer Corporation, the daily Tercera newspaper reported.
No one answered the telephone Saturday at the court or at LAN’s offices.
Corporation president Hernan Calderon told radio Cooperativa on Saturday that “we value the court’s ruling.”
Calderon said that the tribunal’s review will involve consultations with numerous organizations involved in the merger, “and that means several months.”
Earlier this month, LAN Airlines announced that it planned to finalize the merger in six to nine months.
A report LAN sent to Chile’s markets regulator said the new company would be one of the world’s 10 largest airlines, providing both passenger and cargo services to more than 115 destinations in 23 countries. It would be known as Latam Airlines Group SA, or LATAM, but LAN and TAM would both continue operating under their own brand names.
Together, the airlines have 40,000 employees and more than 280 planes. The merger, announced last August, also depends on approval by Brazil’s civil aviation agency; markets regulators in Brazil, Chile, and the U.S.; antitrust authorities in Brazil, Spain, Germany, Italy and Argentina; and shareholders for both companies.
LAN is one of the world’s few investment-grade airlines, with $737 million in cash, no short-term debt and low interest rates on long-term debt needed to maintain its fleet of 131 jets, including 13 more added in the fourth quarter.
On Wednesday, the company reported a 50 per cent jump in fourth-quarter profits to $165 million, reflecting growth in passenger and cargo businesses despite a drop in traffic in Argentina due to labour unrest and the temporary closure of the Buenos Aires airport during the quarter.
LAN is controlled by the Chilean Cueto family, and until last year Chilean President Sebastian Pinera was a principal shareholder. He sold his 26 per cent interest for $1.5 billion amid criticism over conflicts of interest between the presidency and the airline.