TAM and LAN signs new agreement

Towards the end of 2009, TAM S.A. (TAM – Analyst Report) and Argentina subsidiary of LAN Airlines S.A. (LFL – Analyst Report) signed the flight codeshare agreement in order to offer more convenience and comfort to passengers wishing to travel between Brazil and Argentina. The agreement goes into effect for flights beginning on January 4, 2010, but passengers can already buy tickets issued through both companies’ reservation systems.

The agreement will allow TAM to use its own code to sell flights operated by LAN Argentina to the cities of Bariloche, Comodoro Rivadavia, Cordoba, Mendoza, Rio Gallegos, Salta and Ushuaia. For its part, LAN Argentina will also have the rights to sell TAM flights departing from Sao Paulo and Rio de Janeiro to different Brazilian destinations.

In addition, TAM and LAN Argentina hold a codeshare agreement for flights between Sao Paulo (Guarulhos) and Buenos Aires (Ezeiza). The agreement enables passengers to benefit from a simplification of flight reservations, convenient connections and a single airline ticket and baggage check until the final destination.

A stronger Brazilian real will make international travel more affordable for passengers. However, there is a growing concern that the liberalization of international flight tariffs in Brazil may lead to a 50% drop in passengers’ airfare in the following quarters.

Airlines all over the world are facing difficulties, primarily due to the collapse of the global economy. Declining business and leisure travel of the passengers are affecting airlines’ business to a larger extent.

Moreover, the growing competition in the Latin American airline industry is a source of concern. Furthermore, we do not expect a significant recovery in the global airline industry even in 2010. Thus, we reiterate a Neutral recommendation on TAM shares.

About TAM: (Portuguese: TAM Linhas Aéreas) (NYSE: TAM) is Brazil’s flag carrier. The Southern Hemisphere’s busiest airline (in terms of passengers enplaned and flights operated), Headquartered in the Jardim Aeroporto area of Campo Belo, São Paulo City, TAM operates scheduled services from São Paulo to destinations within Brazil, as well as international flights to Argentina, Chile, Bolivia, Uruguay, Paraguay, Peru, Venezuela, the United States, Portugal, the United Kingdom, France, Spain, Italy and Germany. The company is traded on the São Paulo Exchange (BM&F Bovespa) and New York Stock Exchange as “TAM S.A.” As of May 2009 TAM is the leading airline in the domestic market in terms of market share, with a 49.2% participation, followed by GOL with a 38.7% market share.

About LAN:  is an airline based in Santiago, Chile. As the principal Chilean airline, it is also Chile’s flag carrier. LAN is one of the largest airlines in Latin America, with flights to Latin America, United States, Canada, the Caribbean, Oceania, and Europe. It is a member of the Oneworld airline alliance. Its main hub is Comodoro Arturo Merino Benítez International Airport, Santiago, with hubs/focus cities at Ministro Pistarini International Airport in Buenos Aires, Mariscal Sucre International Airport in Quito, Jose Joaquin de Olmedo International Airport in Guayaquil, Jorge Chávez International Airport in Lima, and at Miami International Airport in Miami.
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“TAM Signs Agreement with LAN”
By: Zacks Equity Research
January 05, 2010
ZACKS
http://www.zacks.com
http://www.zacks.com/stock/news/28966/TAM+Signs+Agreement+with+LAN

“TAM Airlines”
From Wikipedia, the free encyclopedia
http://en.wikipedia.org
http://en.wikipedia.org/wiki/TAM_Airlines

“LAN Airlines”
From Wikipedia, the free encyclopedia
http://en.wikipedia.org
http://en.wikipedia.org/wiki/LAN_Airlines