There’s a lot in the air for South America’s airlines, and that doesn’t just mean planes. After a period of consolidation before the pandemic and a wave of bankruptcies since, new alliances and possibly some mega-mergers are likely.
LATAM, once the largest airline in Latin America after it was created by the merger of Chile-based LAN and its subsidiaries with Brazil’s TAM, is now the likely target of a take-over plan led by Brazil’s Azul, one of the airlines founded by David Neeleman. LATAM has been in bankruptcy court since May 2020.
Azul, originally a discounter modeled on Neeleman’s JetBlue, is now the third-largest carrier on the continent. It was originally expected to make a bid for LATAM’s Brazilian assets, but its CEO John Rodgerson told a Chilean business newspaper that it has put together a plan to buy the whole operation, with the support of some of LATAM’s creditors.
But that’s not the only possible big merger on the docket. Avianca, which was second to LATAM before it, too, went bankrupt, is reported to be in discussions with outside financiers who want to merge Avianca with Chilean low-cost operator Sky under one brand that would create the largest low-cost airline in Latin America, with a strong feeder network to support international operations under the Avianca name.
Avianca itself was the product of several cross-national mergers; its Brazil unit, which ceased operations altogether in late 2019, was a rumored takeover target for Azul at one point last year.
Any one of the merger possibilities could create some strange bedfellows and alliance-shifting. LATAM, which had been a OneWorld member along with American Airlines, abruptly left the alliance in 2020 when Delta became a major investor and code-share partner, but did not join Delta’s SkyTeam.
Azul, while not a Star Alliance member, has close ties with Star Alliance leader United airlines and with Star member TAP, in which Neeleman formerly had a major investment. That might, if Azul is successful, shift LATAM once again.
And, various of the moving parts have cross-alliance code-share and other agreements that might undergo considerable shifting. Hold on to your hat, and watch the action at the gate!
