Last week, TAM S.A. (TAM) decided to expand its codeshare agreement with TRIP Linhas Aereas. Initially, the agreement was signed on January 11, 2009. With it, Sao Paulo-based TAM is able to sell flights operated by TRIP, under the code JJ*, to the cities of Bonito, via Campo Grande and Lencois and Petrolina, via Salvador. TAM and TRIP currently maintain a codeshare agreement for the operation of flights to 39 destinations within Brazil. The partnership enlarges TAM’s domestic network from 79 to 82 destinations.
 
Recently, TAM and Argentina subsidiary of LAN Airlines S.A. (LFL) signed the flight codeshare agreement in order to offer more convenience and comfort to passengers wishing to travel between Brazil and Argentina.
 
The partnership enable passengers to benefit from simplified flight reservations, convenient connections with a single airline ticket and one baggage check until the final destination.
 
There is a growing concern that the liberalization of international flight tariffs in Brazil would lead to a 50% drop in passenger 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 are affecting airlines’ business to a larger extent.
 
However, Latin American and Chinese airline stocks have performed well in 2009. The New Year may be another profitable year for the airlines industry in emerging markets if the overall economy continues to grow. Current estimates for 2010 suggest that the economic growth in emerging markets will be higher than developed markets. Thus, we reiterate a Neutral recommendation on TAM.
Read the full analyst report on “TAM”
Read the full analyst report on “LFL”
Zacks Investment Research