SANTIAGO – The man picked to steer the
airline that will result from a merger between LAN and TAM,
Enrique Cueto, helped save Chile’s flagship carrier from the
brink of bankruptcy in the 1990s by cutting costs.
Starting as head of a tiny cargo carrier, Cueto, LAN’s
chief executive since 1994, is renowned for running a tight
operation that made LAN one of Latin America’s most profitable
He was a pivotal figure in the proposed merger with TAM, fulfilling his family’s years-long goal of
breaking into the massive Brazilian market and becoming a
global player in the airline industry.
If approved, the new LATAM Airlines Group announced on
Friday would be the region’s leading carrier and No. 11 in the
world in terms of passengers carried.
The Cuetos are seen as the key stakeholders in the $2.7
billion all-stock transaction, and they are expected to exert
great influence over the new company’s decisions.
“If we wanted to play in the big leagues we had to become
the undisputed leader in Latin America,” Cueto, 51, said in
interview with Chile-based daily newspaper El Mercurio.
“If you want to survive in this business … you have to
gain in size.
” His father Juan, a Spaniard who migrated to Chile as a
child during his country’s civil war, started his business
empire with a tiny cafeteria in the capital Santiago.
The family’s meteoric rise in the air business came after
he bought a small Miami-based cargo carrier that set the stage
for a stake purchase in LAN LAN.SN, which was in
financial crisis in the early 1990s.
The family controlled the airline in partnership with
Chilean President Sebastian Pinera, who sold his 26 percent
stake in the airline shortly after taking office this year. The
conservative leader keeps close ties with the Cuetos, who
increased their stake to 31.8 percent, now worth around $3
billion, when Pinera sold his stake.
The Cuetos, who expect to hold between 24 and 25 percent in
the new airline group, agreed to partnership terms that comply
with Brazil’s regulation that forbids foreigners from owning
more than 20 percent of a domestic carrier.
They have a friendship with TAM’s controlling shareholder,
the Amaro family.
Using his savings and loans, pilot Rolim Amaro bought TAM,
a small cargo carrier founded in 1961, and turned it into a
major airline in his native Brazil.