LAN will eye other deals if TAM merger fails-report

SANTIAGO Mon May 30, 2011 6:35am EDT

TAM Linhas Aereas and LAN airlines aircraft are parked at Santiago's international airport August 14, 2010. REUTERS/Ivan Alvarado

TAM Linhas Aereas and LAN airlines aircraft are parked at Santiago's international airport August 14, 2010.

Credit: Reuters/Ivan Alvarado

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SANTIAGO (Reuters) - Chile's LAN Airlines LAN.SN will seek another partner or explore other options to expand internationally if a local antitrust tribunal rules against a planned merger with Brazil's TAM TAMM4.SA, according to an interview published by leading daily El Mercurio on Saturday.

The proposed merger would create Latin America's biggest carrier, and LAN promised the tribunal last week that it would guarantee lower fares and more competition on key routes shared with TAM to win approval for the plan.

Ignacio Cueto, LAN's chief operating officer, told El Mercurio that he believed the companies had presented substantive arguments to override a consumer group's challenge to the merger.

But if the antitrust body rules against it, "We will look for a 'second best' (partner). We could start conversations with Gol, although that company may not be available and its international reach is not comparable to TAM's," Cueto said, referring to Brazil's No. 2 airline Gol Linhas Aereas (GOLL4.SA)(GOL.N).

He added that LAN would also explore other options besides mergers.

A lawyer for TAM made a similar statement during Thursday's antitrust hearing, saying the Brazilian airline could seek another partner if the merger were blocked.

The Chilean antitrust review has pushed back the effective date of any merger from the third quarter to early next year, but most analysts agree the tribunal is likely to approve the deal with some competitive guarantees before the end of July. (Reporting by Fabian Cambero; Writing by Hilary Burke; editing by Philip Barbara)

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