LATAM- Qatar Airways JV gets go ahead, but LATAM- IAG JV stalls

Brazil’s competition authority, CADE, has given the go ahead for Qatar Airways to take a 10% stake in Latin America’s largest airline, LATAM, at an estimated value of US$600 million. However, CADE has certain misgivings about an investment from International Airlines Group (IAG) who owns LATAM oneworld partners British Airways and Iberia, which has caused some concern for Enrique, Cueto, CEO, LATEM.
Cueto has been keen to point out that where joint ventures (JVs) are concerned, North American, European and Asian carriers are years ahead of Latin American airlines where antitrust immunization is concerned, going so far as to say that: “Either we get into this [JV] model or we’ll be bought by others and we’ll disappear.” He has made it clear that he believes JVs can and will allow Latin American airlines to offer job security and guarantee services over a long period of time.
Where the IAG JV is concerned, CADE issued a statement in which it stated that a LATAM-IAG JV “has the potential to cause harmful effects on competition,” in particular on the São Paulo-London and São Paulo-Madrid routes. LATAM’s application relating to commencement of the JV with IAG has been handed to CADE’s Tribunal, which has the ultimate say on mergers and acquisitions in Brazil.
CADE holds such an authoritative position over the proposed JV because LATAM Brasil (formerly TAM) is based in Brazil and is one of LATAM’s primary subsidies. In addition, LATAM is also seeking approval for a JV with American Airlines, thoughCADE has yet to review this application.
The investment in LATAM comes at an extremely appropriate time as Latin American economies have been faltering for several years. At a recent conference, Deutsche Bank analyst Michael Linenberg revealed that LATAM’s market capitalization today stands at US$5 billion, under half that of LATAM’s implied equity value of US$12 billion when Chile’s LAN Airlines announced that it was acquiring TAM to form LATAM back in 2011.