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Delta Seeks Stake In Transbrasil Or TAM

Fri May 26, 2000 1:16 am

Delta Air seeks stake in Transbrasil or TAM -paper

SAO PAULO, May 25 (Reuters) - U.S.-based Delta Air Lines Inc. is seeking to buy a 20-percent stake in Brazil's air companies TAM or Transbrasil, but may have to await results of a deal between the two, a local newspaper said Thursday.

Folha de S.Paulo daily newspaper quoted Jorge Fernandez, head of Delta's Latin American operations, as saying the company sought part of the promising Brazilian air market.

``The Brazilian market is a great opportunity for Delta and is our No.1 priority. If we have a sale proposal, we will sit down to negotiate,'' he said. Delta already has a code-sharing agreement with Transbrasil.

But Folha, which said Delta made an offer to buy part of Transbrasil earlier this month, also quoted a senior Transbrasil official as saying that the U.S. company would have to wait now until TAM and Transbrasil decide on the future of their partnership after April's operational accord.

Company officials were not immediately available for comment.

Although denied by TAM and Transbrasil, analysts view the operational agreement as a first step toward a merger between the third- and fourth-ranking air companies in Brazil. Folha quoted air sector sources as saying the merger could be announced in July.

Many analysts expect consolidation in the sector, which is still suffering from the January 1999 currency devaluation that raised dollar-linked fuel and leasing costs, while slashing passenger numbers.

Earlier this month, local media said SwissAir parent SAirGroup wanted to buy a big stake in at least one of Brazil's top airlines, sector leader Varig , Transbrasil or the TAM-Transbrasil alliance.

Transbrasil officials have said they hoped teaming up with Tam would give the two airlines 46 percent of domestic market against Varig's 45 percent. Varig has a fleet of 82 aircraft operating on local and international routes. TAM has 60 aircraft and Transbrasil has 22.

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RE: Delta Seeks Stake In Transbrasil Or TAM

Fri May 26, 2000 3:27 am

TAM and Trans Brazil seem like they would be better off by merging. The thing here is that if VASP goes under which is a possibility at this time then VARIG, TAM and Trans Brazil would have a better chance of growing and a better change of operating.

Now that the SAir Group is interested in a Brazilian carrier, then I bet that they will make things harder for Delta as they will probably be looking at TAM most likely. Trans Brazil would fit nicely into Delta's network, but a combination of TAM-Trans Brazil would really be a great asset to Delta. It would significantly boost Delta's Latin america precence.

Whatever the out come is it seems that Delta has recovered from the AeroPeru disaster in which Delta had an interest for only one year before the peruvian flag carrier shut down. I think that they have learned from their mistakes with that ordeal and now they are ready and more capable of commiting to another latin american airline.

By the way, it seems like Delta is eager not only to expand it's precense in the lucrative latin American market, but also expand its new global alliance. A Brazilian carrier would a great asset to the new alliance.

Pan Am - The World's Most Experienced Airline.
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RE: Delta Seeks Stake In Transbrasil Or TAM

Fri May 26, 2000 4:50 am

AA and Swissair already cooperate with TAM, so Delta going in there would just screw everything up for both of them because it may start a buying war. They should go for Transbrasil, I think.

Aaron G.
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Joined: Tue Oct 19, 1999 3:18 am

RE: Delta Seeks Stake In Transbrasil Or TAM

Fri May 26, 2000 5:36 am


TAM has been cooperating with Air France for more than one year, and an Air France executive that I met last month told me that this partnership was satifying both TAM and Air France.
TAM and Air France code share on every flights between CDG and Brazil wich are operated by 777-200s with Air France and by A330-200s for TAM.

The 2 companies also code share on their domestic networks.



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