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TAM Airlines eyeing TRIP stakes, begin merger talks

by 31. March 2011 11:43
The Brazilian flagship carrier TAM announced that it has initiated the merger talks with its domestic competitor TRIP, Brazil’s sixth-largest airline in terms of fleet. TAM is planning to acquire a minority stake of TRIP, a smaller regional carrier that currently possesses a fleet of 42 jets operating in 82 destinations.

Both the airlines recently signed a strategic agreement that would complement the existing codeshare agreement between the two. The airline said that if the negotiation talks become successful then TAM will buy 31 percent of TRIP’s total of which 25 percent will be the voting shares and the remaining will be the non-voting stock.

The airline is currently facing a tough competition with the Brazil’s booming air travel market and TRIP is one of the budding carriers in Brazil that operate its air flights over uncovered routes by TAM. The merger is expected to boost profitability.

Sara Delfim, an analyst with Bank of America Merrill Lynch, said, "The potential stake sale opens room for further consolidation in the Brazilian market, and could be a long-term positive for TAM."

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