SAO PAULO (Reuters) -LATAM Airlines said on Friday it was still too early to discuss potential impacts of a planned merger between its two largest rivals in top market Brazil, but voiced trust in antitrust watchdog CADE to put in place mitigation measures.
“What we do not want is a more concentrated market, with fewer options for passengers, higher prices and less growth,” LATAM’s head in Brazil, Jerome Cadier, told reporters in an earnings call.
Rival carrier Azul and Abra Group, the majority investor of fellow airline Gol, signed earlier this month a non-binding memorandum of understanding with the intent of combining their businesses in Brazil.
The Brazilian unit of Chile-based LATAM is the country’s largest airline by market share, holding about 40% of the domestic market, but would likely lose the position to a combined Gol-Azul firm if the merger goes through.
The tie-up would create a dominant carrier in Latin America’s No.1 economy as it would hold roughly 60% of the domestic market, even though a merged firm would continue operating two separate brands despite the combined ownership.
Azul and Abra have defended the potential deal as supporting growth and allowing for lower cost of capital in the local market, and obtained support from the Brazilian government.
Cadier said there was still a lack of detail about the deal as the memorandum was just an early indication of Azul and Abra’s plans, but noted that proposed airline tie-ups in other countries have been blocked in the past.
“We are certain that CADE will carry out an in-depth analysis and propose mitigation measures,” the executive said. “It is essential to understand that these measures must seek to preserve the competitiveness of the Brazilian market.”
LATAM earlier on Friday reported solid results for the fourth quarter, with the group’s net profit more than tripling on an annual basis to $272 million, while revenue rose 4.4% to $3.4 billion.
The company, which has maintained a strong note since it emerged from pandemic-related bankruptcy proceedings in 2022, said it was considering incremental dividends or a share buyback program of up to $150 million to return capital to shareholders.
(Reporting by Gabriel Araujo; Editing by Toby Chopra and David Evans)
