Qatar Airways looks to South America with Latam stake purchase

The Arabian Gulf airline has bought a piece of the Chile-based carrier as it looks to open up services into South America while Latam gets a much-needed funding boost.

An aircraft of the Brazilian airline TAM prepares to take off at the Santos Dumont Airport in Rio de Janeiro. Qatar Airways has bought a stake in the plane's operator, Latam. Pilar Olivares / Reuters

Qatar Airways has bought a 10-per cent stake in Latam, the largest airline in Latin America, the Chilean-Brazilian company said.

The investment, first announced last July, amounts to 60.8 million shares at a price of US$10 each, Latam said.

The Chile-based airline – the product of a 2012 merger between Chile’s Lan and Brazil’s Tam – said Qatar’s arrival as a stakeholder “represents a unique opportunity to develop a long-term relationship and explore new opportunities to connect with Asia and the Middle East”. In August 2015, it was announced that Lan and Tam would fully rebrand as Latam, with one livery to be applied on all aircraft by 2018. It still operates some aircaft sporting the individual liveries from before the merger.

The cash from Qatar’s flagship airline comes just in time for struggling Latam, which lost $219 million in 2015 as Brazil, its main market, struggled through a deep recession.

Qatar’s move comes a day after Argentina’s transportation minister Guillermo Dietrich said he expects $1.7 billion in investment from low-cost airlines over the next four years.

The government is on a cost-cutting push as it tries to end a recession and lower its fiscal deficit while battling inflation set to end this year at a dizzying 40 percent.

Several airlines are in the running for the new contracts.

“In the next four years these companies will invest about $1.7bn, bringing new aircraft that will be registered in our country,” Mr Dietrich said.

Outside the hall where he made his presentation, unionised workers currently employed at Argentina’s airports protested.

“We do not want to trade flight security for lower costs,” said Víctor Matarrese, a union official representing employees of state run Aerolineas Argentinas.

The low-cost airline Norwegian Air Shuttle will begin operating flights in Argentina beginning in late 2017, a spokesman said this month, as more air travel operators seek a foothold in Latin America’s third-largest economy.

* Agencies

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