The case discusses the emergence of LATAM Airlines as a leading airline in Latin America after a historic cross-border merger between Chile’s LAN and Brazil’s TAM airlines. The merger of LAN and TAM was one of the most significant developments in the history of Latin American aviation as the association created one of the largest airline groups in the world in terms of network connections, providing passenger transport services to about 135 destinations in 24 countries and cargo services to about 144 destinations in 26 countries and serving 68 million passengers annually as of May 2016. The principal objective for LATAM was to maintain a leadership position in Latin America and to achieve its goal of becoming one of the top airlines in the world. The merger was expected to propel LATAM to the list of the top fifteen air carriers in the world, a first for a Latin American airline. The case goes on to discuss the problems faced by LATAM post-merger due to tough economic conditions and currency devaluations in many of its domestic markets, particularly Brazil.
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The case is structured to achieve the following teaching objectives:
Understand the issues and challenges for a Latin American airline in emerging as a top global player.
Understand the rationale behind the LAN and TAM merger and its potential synergies.
Understand the importance of post-merger integration and the inherent challenges.
Understand the importance of brand image and brand dilution in the aviation sector.
Identify the issues and challenges faced by Cueto following the merger, and explore strategies he may adopt to overcome these challenges.
Growth strategy; Joint developments; Mergers and acquisitions; Rationale for M&As; Post-merger integration; Philippe Haspeslagh and David Jemisonand’s acquisition integration approach model/framework; Post merger branding; Competition; Latin America; Emerging markets