* Brazil's TAM, Chile's LAN unveil plans to merge
* Deal would create biggest airline in Latin America (Adds details of transaction, updates share prices)
SAO PAULO Aug 13 Brazil's largest airline TAM Linhas Aereas TAMM4.SATAM.N plans to merge with Chilean rival LAN LAN.SN(LFL.N), a deal that would create the biggest carrier in Latin America.
The merger would create a new regional powerhouse to help meet booming demand for air travel in Latin America. The combined company would fly to 115 destinations in 23 countries and employ some 40,000 workers, TAM said.
TAM said in a regulatory filing on Friday the new entity, to be named Latam Airlines Group, would be created via an all-stock transaction that may include a share swap. The financial terms were not disclosed.
LAN also confirmed the agreement, which it said was non-binding.
LAN's Chief Executive Enrique Cueto will be the CEO of Latam Airlines, while TAM's deputy chairman Mauricio Rolim will be the chairman of the combined company. The airlines' brands will be kept separate, the statement said.
As part of the agreement, TAM said its shareholders will receive 0.9 shares of LAN for every TAM share in the form of Brazilian depositary receipts. TAM said it would then delist its shares in Sao Paulo and in New York.
TAM's controlling shareholders, Tam Empreendimentos e Participacoes, will retain control of the Brazilian company with an 80 percent voting stake and will also own an undisclosed stake in LAN, the filing said.
LAN's controlling shareholders, Costa Verde Aeronautica SA and Inversiones Mineras del Cantabrico will also retain control of the Chilean airline, TAM said.
TAM shares rose 27.6 percent to close at 36.20 reais in Sao Paulo. LAN rose 7.7 percent to 13,900 Chilean pesos in Santiago.
LAN is a member of the Oneworld alliance of airlines, which also has American Airlines AMR.N, Mexicana and British Airways among its members. TAM is a member of Star Alliance. (Reporting by Guillermo Parra-Bernal and Elzio Barreto, Writing by Brian Winter. Editing by Robert MacMillan)