BRAZIL: LATAM Airlines Group Merger

The merger of South American powerhouses LAN Airlines and TAM Airlines was set in motion. With an initial agreement signed on August 13, 2010, Chile-based LAN joined forces with Brazil’s TAM. Though that merger closed in 2012, both airlines have continued to operate under their own respective brands.
Similar to other airline mergers, a new parent company was formed, under which both TAM and LAN operated. LATAM Airlines Group has consolidated several administrative functions for its subsidiaries. However, the day to day operations have remained separate.

LATAM Airlines Group has made it no secret that eventually all the airlines would operate under a single brand. However what that brand would be was left wide open. They could have picked one of the existing brands. In addition to the original Chilean LAN, the airline also has subsidiaries throughout much of Spanish-speaking South America. There is LAN Ecuador, LAN Peru, and LAN Argentina, as well as LAN Cargo, just to name a few. Meanwhile, TAM is a powerhouse in Portugese-speaking Brazil. To pick one brand or the other risked alienating half of the combined airline’s customers.

There were other branding options however. An entirely new name and branding were one possibility. Alternatively, the combined name adopted by the parent company could become the name for the combined airline.

At a press conference in São Paulo earlier this morning, that is exactly what was announced. Beginning in early 2016, the LAN and TAM brands will combine into LATAM airlines. Not only does the new name combine the names of its predecessors, it evokes the company’s Latin American roots.

The whole integration process is expected to take approximately 3 years to complete and cost the airline $30-40 million USD. Much of that expense is the cost of repainting the combined fleet of aircraft.
While the combined airline’s name may be rooted in the names of its predecessors, the logo is completely different. LATAM has chosen a color palette of indigo and coral for the new branding. For a logo, the airline picked a stylized map of South America with lines that reach towards their global destinations.

While the new branding was announced this morning, it is not yet entirely complete. New crew uniforms are coming as part of this rebranding. A new livery for the airline’s aircraft is coming too. The new livery will be unveiled later, with the first aircraft in the new scheme being painted early in 2016.

Between LAN and TAM, LATAM Airlines Group has well over 100 aircraft on order. Notably, they will receive the first A350-900 in December of this year. Due to the complexities involved with painting newly manufactured aircraft, livery decisions must be finalized 12 to 18 months before delivery. As a result, the initial A350 deliveries will be in the current TAM livery.

With the announcement of a new name and logo, one of the final steps in the merger process is now in motion. The coming months should prove interesting as additional elements of the rebranding are put in place.