Brazilian airline TAM plans to merge with Chile's LAN

An aircraft of the TAM airline
Image caption TAM is a member of the Star Alliance group of airlines

Two major South American airlines are planning to merge and create the biggest carrier in the region.

Brazil's largest airline TAM Linhas Aereas is looking to join with Chile's LAN as demand for air travel in Latin America continues to grow.

TAM said a combined airline would fly to 115 destinations in 23 countries, with a 40,000-strong workforce.

LAN confirmed the agreement, which it said was non-binding. The new carrier would be called Latam Airlines Group.

If the tie-up goes ahead it would be headed by LAN boss Enrique Cueto while TAM deputy chairman Mauricio Rolim would be company chairman.

However, as was the case with the Air France-KLM merger in Europe, the airlines' brands would remain separate.

The new company would be created from an all-share transaction.

At close of trade on Friday TAM shares had risen by 27.6% and those of LAN by 7.7%.

TAM is a member of the Star Alliance group of airlines, which includes BMI, Lufthansa, SAS and Air China.

Meanwhile LAN is a member of the Oneworld airline alliance, which includes Iberia, British Airways, Qantas and JAL.

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