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Turism&Travel : Cost-cutting Enrique Cueto to run new LATAM Airlines Group

Wednesday 18 August 2010

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 airlines.

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.

Source: reuters.com
Autor: eTurboNews
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