Brazilian airline company, TAM S.A.(TAM), recently reported passenger traffic for the month of February 2011 in comparison with the year-ago quarter and the previous quarter.
The company experienced a 1.5% year-over-year increase in domestic demand and 11.6% rise in the international demand. Compared with this, supply rose by 11.6% and 12.1%, respectively. Supply exceeding demand led to a 6.2% year-over-year decrease in load factor in the domestic market and roughly 0.3% decline in the international market.
Month-ending February 2011, the company holds approximately 39.6% market share in the domestic market and approximately 85.9% share in the international market. The company continues with its fleet development and renovation strategy, and in the fourth quarter of 2010 received 3 new Airbus A320. Exiting the quarter, the company had a total of 151 aircraft, with an average age of 6.4 years.
The company invested roughly US$3.2 billion by placing an order for 34 new aircraft (32 Airbus A320 Family and two Boeing 777-300ER) in 2010. The company anticipates exiting 2015 with 182 aircraft in operation.
During the fiscal year 2010, TAM and LAN Airlines S.A. (LFL) signed a MoU to merge operations and form a new company called LATAM Airlines Group S.A. (LATAM). LAN will become the parent company with a 73% stake in TAM and the shareholders of TAM will receive 0.9 shares of LATAM for each TAM share. It will be an all-stock transaction of approximately US$2.7 billion. The merger is expected to be completed in the middle of fiscal year 2011.
The transaction got approval from the Brazilian authority; however, a Chilean regulator said that it would be investigating a consumer complaint against the proposed merger. The probe is expected to take about 6-9 months.
LAN CHILE-ADR (LFL): Free Stock Analysis Report
TAM SA-ADR (TAM): Free Stock Analysis Report
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