LATAM Airlines Group: From the End of the Earth to No. 10 in the World

Abstract

This chapter describes the consolidation of LATAM into the leading airline company in Latin America, along its internationalization process through growth in different foreign markets, which has required new structure designs, respect of diversity, and cross-cultural management.

LATAM is the continuation of LAN, a Chilean state-owned air transport company created in 1929 and privatized, after 60 years of existence, in 1989. Only 20 years later, it became the 11th company in the world in terms of the number of passengers carried. Its recent business history illustrates both the importance of a global economy and the contribution of a company to the progress of Latin America as a result of this new scenario.

In May 2017, Enrique Cueto and Ignacio Cueto, the company’s senior managers and controlling shareholders, explained that companies in a globalized world must differentiate themselves through their ability to adapt to a changing environment.

“We have faced four major change processes and we have given a name to each one of them. The first period was called ‘Transformation Phase’ and ran from 1994, when we purchased the company, to 2000. We merged two Chilean passenger air transport companies, LAN and LADECO, and one freight air transport company, FASTAIR”.

“In 2001, we decided to export our project, which gave rise to the second phase that we called ‘Regional Expansion’. We created LAN Peru, LAN Argentina, LAN Ecuador, and LAN Colombia.”

“In 2005, our company was poorly valued on the New York Stock Exchange, despite the growth attained. Therefore, we launched the third phase, called ‘Efficiency’, as a result of which we moved from a Stock Exchange value of US$2.2 billion (“Billion” refers to one thousand million) to a position as the most highly valued company trading on the NYSE in the world, at US$14 billion.”

“In 2011, we launched our fourth phase, called ‘Consolidation’, during which we merged with the Brazilian company TAM and formed LATAM.”

From 1994 to date, the company’s DNA has been based on three pillars: safety, efficiency, and service. These pillars have always been delivered with a flexible vision in order to take advantage of existing opportunities in an ever-changing world.