Lan Airlines SA (LAN)’s planned purchaseof Brazil’s Tam SA (TAMM4) to form the world’s second-biggest carrier bymarket value was approved by Chile’s antitrust tribunal withseveral conditions.
Tribunal de Defensa de la Libre Competencia, or TDLC as thecourt is known, gave final Chilean clearance for the transactionin a split vote, according to a statement sent by e-mail today.Conditions include Lan and Tam opening up their frequent flyerprogram to other airlines, exiting one of their global alliancesand capping Santiago-Sao Paulo fares until they exchange fourdaily slots in Sao Paulo’s Guarulhos airport with othercarriers. The tie-up still requires Brazilian approval.
“The measures seek to promote effective competition in theChilean airline market, and while that doesn’t occur, protectconsumers from the effects of concentration,” the TDLC said inits statement.
Lan was little changed at 13,020 pesos in Santiago tradingat 1:33 p.m. New York time after gaining as much as 4.1 percent.Tam advanced 4.1 percent to 38.15 reais and earlier jumped 12percent, the most since August 2010 when the deal was announced.
“At a first glance the conditions don’t seem toorestrictive,” Jorge Sepulveda, an analyst at Santiago-basedEuroamerica Corredores de Bolsa SA, said by telephone. “Theconditions are mostly related to defending competition in thelocal market and are in line with what we expected.”

Biggest Market

A Lan-Tam combination would have a market value of $12billion, overtaking China Southern Airlines Co. and SingaporeAirlines Ltd. as the world’s largest airline after Air ChinaLtd., according to data compiled by Bloomberg. The deal wouldgive Santiago-based Lan 41 percent of the domestic airlinemarket in Latin America’s largest economy and $6.5 billion inannual sales.
Lan is reviewing the condition set by the TDLC, theSantiago-based carrier said in an e-mailed statement.
Under terms of the transaction announced in August lastyear, investors would receive 0.9 Lan share for each share ofTam they own. Lan would have about 70 percent of a holdingcompany called LATAM Airlines Group while Tam’s controllingshareholders would retain 80 percent of the Brazilian carrier’svoting stock to comply with a law that caps foreign capital at20 percent. Lan’s Enrique Cueto would be chief executive of thenew company while Tam’s Mauricio Rolim Amaro would be chairman.Both airlines would continue operating separately with their ownbrands.

Legal Review 

Chile’s consumer defense association Conadecus filed inJanuary a petition to the TDLC to block the deal on grounds thatit would reduce competition. Separately, Lan and Tam had reachedan out-of-court agreement on mitigation measures with Chile’sNational Economic Prosecutor to speed up approval of the deal.The TDLC agreed to review the case and put the deal on standby.
“Our lawyers are reviewing the conditions and we should bein a position to make a statement hopefully within the next 24hours,” Conadecus Chairman Hernan Calderon said today by phone.
Calderon said Sept. 16 that Conadecus could appeal afavorable ruling for the deal if it didn’t appropriately protectconsumers, according to an interview with Diario Financiero.Calderon declined to comment today on whether he planned toappeal the ruling until reviewing the TDLC’s conditions.
Brazil’s competition defense authority Cade probably willrule on the transaction by the end of October or early November,Olavo Chinaglia, the commissioner responsible for the case, toldreporters Aug. 31. Brazil’s civil aviation agency, known asAnac, approved the deal in March.

Source: Bloomberg

01 September 2011

Astros AV-TM, a high precision cruise missiles with a range of 300 kilometers (photo : Defense Industry Daily)

Brazil releases funds to develop surface to surface missile system for the Army

The Brazilian government gave a clear signal Monday that is intends to advance in the consolidation of a defense industry in the country. A decree signed by President Dilma Rousseff releases 45 million Real in funds for the launching of the Astros Project 2020 to equip the Brazilian army.

The project with a total value of almost 1.1 billion Real provides for the acquisition of the most advanced surface to surface missile launch system developed in Brazil. The Astros 2020 is an evolved version of the Astros II, the best selling product manufactured by Avibras Aerospace.

Exported to many countries the Astros (Artillery SaTuration ROcket System) is considered a market-leader among the small and highly competitive group of manufacturers of such systems.

Altogether the project includes the purchase of 49 vehicles by the Brazilian army divided into three batteries: 18 launch vehicles, 18 ammo re-supply vehicles, three fire control units, three weather stations, three recovery vehicles and three armoured command and control vehicles for each battery and another final vehicle for integrated command and control.

The main advantage of the new concept is the incorporation of the AV-TM, a high precision cruise missiles with a range of 300 kilometers. Unlike the rockets, which have a ballistic trajectory, defined from the impulse they receive at launch, this missile is guided and its trajectory can be controlled. Another important advance is the in the electronics system which is entirely digital.

Astros II MLRS (photo : Militaryphotos)

The Astros II are normally grouped in artillery batteries consisting on average of about 13 vehicles: 6 of them are Astros II launchers, 6 are rocket resupply trucks and one a special radar-equipped vehicle controlling the fire control system. The launcher is capable of firing rockets of different calibers armed with a range of warheads.

The Astros II artillery system entered service with the Brazilian Army in 1983. The system is battle proven, having been used in action by the Iraqi Army in the Gulf Wars. In the 1980s, Avibrás sold an estimated sixty-six Astros II artillery systems to Iraq. Iraq also built the Sajil-60 which is a license-built version of the Brazilian SS-60. Sixty Astros II were sold to Saudi Arabia and an unspecified number sold to Bahrain and Qatar. Total sales of the Astros II between 1982 and 1987 reached one billion dollars.

This fact made the Astros II multiple rocket launcher the most profitable weapon produced by Avibrás.

In the 1980s and early 1990s, Avibrás worked almost exclusively with the manufacturing of rockets and multiple-launch rocket systems (MLRS), such as the Astros II, in addition to developing antitank and anti-ship missiles. At its peak, Avibrás employed 6,000 people; later it would be reduced to 900 people in the early 1990s as the arms industry demand fell. Even so, in the first Gulf War in 1991, the Astros II was successfully used by Saudi Arabia against Iraq. Years later, the Astros II system helped Angola to defeat the UNITA rebels.

(MercoPress)