The present study examines the case of Latam in its internationalization process, first as Lan Chile (Chile) and TAM SA (Brazil). The basis on which this process takes place is not only the enabling environment that has offered Latin America in the last 20 years in economic stability and growth, are also given in the context of privatizations, deregulation in various aspects of the economies of the region, openness to international trade and policies gradually adopted by most economies in the region, with flexible exchange rates, mostly autonomous central banks acting under inflation targeting and counter-cyclical fiscal policy, all this in accordance with the acceptance the so-called "Washington Consensus".

LAN’s raising and its expansive through Latin America.
LAN Chile born as a state enterprise in 1929. In 1946 opens its first international route to Buenos Aires; in 1956 it expanded its operations to Lima; Miami in 1958 and in 1970 to Europe. After a privatization process is consolidated locally in Chile, then position in Latin America and assist its internationalization. In 1985 the government of the time transformed the company into a public limited company to start its privatization. In 1989 the sale of 51% to domestic investors and SAS (Scandinavian Airlines System) is specified, until in 1994 the Chilean government sold all the shares held by it, at Piñera and Cueto group become owners LAN majority.
The business starts a second phase in 1997 when LAN acquires 99.5% stake in the Chilean airline LADECO, achieving full coverage of air traffic in Chile. The same year signed an agreement with American Airlines to operate routes between Chile and the US. In a third phase of expansion that began in 1999, LAN is involved in an aggressive international expansion, operating from multiple logistic centers in several countries, beginning with the creation of LAN Peru and the following year joining the Oneworld alliance. In partnership with Iberia, in 2001 it inaugurates a cargo terminal at the airport in Miami. It continues its policy of alliances in 2002 with Qantas and the German Lufthansa Cargo. In 2003 continues the expansion plan with the launch of LAN Ecuador in 2005 and creating specific LAN Argentina. 2004 renamed to "LAN Airlines" and in each country where it operates, the country's name was added to LAN.
LAN and consolidated leadership positions in Chile, Ecuador and Peru, and incipiently in Argentina. LAN internationalization was also positively affected in 2007 with the relaunch direct flight from Santiago to New York, launching its service from Santiago to Los Angeles, and from Lima to Madrid. In 2007 started the implementation of the low cost model in domestic markets and particular a capital increase by US $ 320 million, while pursuing orders for 32 Boeing 787 Dreamliners. The following year completes the process of renewal of short-range fleet, now formed by the Airbus 320 aircraft family in 2009 starts to cargo operations in Colombia and passengers in the domestic market of Ecuador. 2010 attends the purchase order to acquire a further 80 Airbus A320 and parallel purchase Colombian airline AIRES. In this way, LAN Airlines in 2011, was incorporated into the matrix of a group of companies developing business in the air transport industry and other complementary to that category operations, providing services to domestic and international passenger services in Chile, Peru and Argentina and internationally in Ecuador, through the various companies that make up the LAN alliance: Lan Airlines, Lan Express, Lan Peru, Lan Ecuador and Lan Argentina.

LAN is one of the airlines with greater flow of passengers in South America, is among the 40 airlines with the highest income in the world and divided the business of passengers in three main segments: long-range operations, routes within South America (also called operations regional) and domestic flights in Chile, Peru and Argentina. In the first two countries, it has the largest share of the domestic market. Controls 74% of Chilean domestic market, 67% of Peru and 8% of Argentina. Regarding the international market, it has a 49% in Chile, 32% in Peru, 19% in Ecuador and 8% in Argentina. He has also received awards last several years due to its quality of service.

In early 2012, before the merger with TAM Brazilian it goes through, LAN Airlines was one of the leading Latin American airlines in passenger and cargo. It provided services to over 100 destinations worldwide through an extensive network that allowed it to offer a wide international connectivity, linking the region with North America, Europe and the South Pacific. Through partnerships and various code-share agreements, LAN and its subsidiaries as 70 additional international destinations. The company operated 137 passenger aircraft while LAN Cargo subsidiary did with 14 cargo aircraft, with one of the most modern fleets in the world, which allowed greater efficiency and a significant reduction in CO2 emissions. In 2011 the provision of Lan was 21,838 employees, 56 nationalities in 21 countries where the company had activities. Only in 2011 the company entered 4,424 workers due to the growth of its operations. Managing people is part of the corporate LAN strategy, aimed at strengthening its competitiveness in the market, offering quality services to its customers. In this regard, the company has workforce development policies resulting in high levels of training for their employees.
Meanwhile, he continued to develop the Service Culture project, launched in 2010 with the aim of seeking an emotional relationship with the customer, "so to build an emotional bond with it and being an admired and beloved airline for passengers", says part of the policy. The focus of the first year was to launch and position the Purpose of Service Lan: "We are People Caring for People" and the five key service throughout the company, especially the teams working face with the customer. In 2012 the project focused its work on the importance of internal customer for the proper functioning of the service chain, emphasizing how the actions of support teams working areas for the customer can positively impact the passengers.
Thus, the human resources policy pursued employees say "I love working on Lan", and this has been defined as a horizontal objective in the company. That is why the set of actions related to professional development and improved indoor climate, aimed at achieving greater overall satisfaction of those who make up the team of the company, with the goal of achieving a world-class company.

To this policy adds customer loyalty, through the frequent flyer program, including adherence to the LANPASS system. This involves the delivery of kilometers or points whenever the holders of the program taking certain flights, using the services of affiliated entities to the same or make purchases with an associated credit card. Kilometers or points earned can be redeemed for tickets or other services of associated entities.
Its corporate governance is governed by the provisions of Law 18,045 on securities market; Law 18,046 and its regulations and the regulations of the Superintendency of Securities and Insurance; the laws and regulations of the United States of America and the Securities and Exchange Commission (SEC) of the country, which corresponds to the issuance of ADR.
At the time of its merger with Brazil's TAM, Lan was controlled by the Cueto group, represented in society by Costa Verde Aeronautica SA, Inversiones Nueva Costa Verde Aeronautica Ltda., And Mining Investment Cantabrian SA, companies accounted for 34% of the property as of December 31, 2011. AFP controlled 14%; the group Eblen 9%; Bethia group and 8%. The rest of the shareholder base was diluted in a variety of institutional investors, legal entities and individuals. In addition, 3.0% of the property was held by outside investors through ADR.
After its merger with TAM, LAN Airlines SA He had the following subsidiaries and affiliates listed in Table 5 above.
At December 31, 2012, the top 10 shareholders of Latam Airlines in Chile are spelled out in Table 6 above.

The LAN’s Business Model.
Although Lan was born as a local company, to meet the domestic market, from the 1980s, when it was privatized, it began a phase of growth based on internationalization. In 1994 with the arrival of new controlling shareholders of the Company (the Cueto group), the company incorporates new sources of growth to its strategy based on the diversification of markets and the integration of its services, particularly freight transport and passenger simultaneously. Thus, by 2012 it was among the leading airlines in the world and part of the ranking of the 10 most efficient, also globally.
What attributes Lan managed to incorporate into their business strategy that led it to join the select group of leading airlines and competitive in the world? Basically the same that have been used other major airlines, by leveraging the advantages of the operating system Hub & Spoke, strategic alliances, frequent flyer programs, major presence at airports and privileged access to scarce inputs. To the above factors related to public policies of deregulation that allowed markets Lan has been positioned over the last 20 years as a major international company and now the merger with TAM, a multilatina add. According to the indications of the same company "business model of LAN is based on the complementarity of its cargo and passenger operations allowing us to operate more efficiently and adapt to the changing economic scenarios."

Lan was able to break into the world market subsidy, and in spite of comparatively small and peripheral with respect to major air junction nodes domestic market. Even in Latin America, Chile is a small market and its capital, Santiago, population density does not offer to compete with Mexico City, Caracas, Bogota, Sao Paulo and Buenos Aires. Still, Lan happened to have a role of multinational airline, outperforming most of the airlines in Latin America, with the exception of some Brazilian.

Creating competitive advantages of LAN it is based on the integration of passenger and cargo operations, allowing it to diversify income and reduce the load factor of balance or break-even. The company, prior to its merger, operating the largest network of passenger and cargo Latin America, optimizing the rotation of their planes between trips long and short range. These advantages allow LAN maintained a cost structure among the lowest in the industry. Its fleet is modern, efficient and has deliveries and expiration dates staggered lease contracts, allowing flexible handling capacity. Revenues of the company have risen sharply in recent years, supported by strong regional economic growth, international trade, and the strengthening of local currencies. International traffic. and passengers has prospered thanks to increased demand and capacity additions implemented to support an increased frequency of flights and the implementation of new routes, which has consolidated its strong market position the company as the leading air carrier in Latin America.
As noted, the growth of Lan explained by exogenous factors, but also endogenous basically explained by the combination of resources and capabilities for the development of a model of multiple businesses. This strategy in the air transport sector, can lead to high costs of not achieving a balance. Several companies have tried with little success, to introduce a low-cost offer to compete with large companies such as easyJet and Southwest. That's what happened to GoFly British Airways, Continental Lite, Buzz of KLM, Delta and Song. Therefore, the successful integration of three distinct business models, makes the case of LAN Airlines is, in this sense, remarkable. In all three LAN models, the key to profitability is the same: to fly more planes, more charged, more places.
If this model is so successful Why not all airlines do what makes LAN? Part of the answer is historical: The Cueto family, one of the two groups that buy LAN when the government privatized it had begun in the cargo business with Air Fast during the 1970s Thus the business and knew Cueto They could quickly see the business potential of Lan on international routes, combining passenger and cargo, with widebody aircraft, coupled with its reputation for reliability. The risks for competitors LAN are then presented by the deep knowledge that the company has built around three complementary domain models and how they generate unique opportunities. Both business passengers and freight service, great competitive advantages are becoming increasingly hard to beat for competitors.
A key to the sustained growth achieved by Lan has been its diversification strategy, operations, services and geographic, which has allowed him to be among the most efficient airlines worldwide. The company develops its operations on the basis of a business model that integrates its cargo and passengers, allowing you to optimize the use of their aircraft and adapt routes and schedules according to demand, improving in this way their profitability. In short, this model gives Lan sufficient flexibility to adapt to changing market conditions, to exploit synergies between the two businesses. In 2011 28% of its revenue came from freight services and 70% of business passengers.
Another pillar of the strategy Lan is the geographical diversification of its operations, especially in South America, for which it has subsidiaries in Chile, Peru, Argentina, Ecuador and Colombia. These countries have undertaken a sustained development of coverage and destinations, in line with its goal of providing complete connectivity to customers in the domestic markets of these countries and within the region and thence to the rest of the world.
In passenger transport success factors are:. The opening of routes to key countries (LAN is the most offers to link destinations in most countries of Latin America together and provide connections to Oceania, Europe and the United States Indeed , LAN began its internationalization process with the strengthening of passenger business. To the extent that has been consolidated and positioned as an airline, its cash flow and borrowing capacity have permitted, it has ventured into the freight in America America, which has provided many travelers can access directly to other continents and promote economic growth and commodity exchange. In the cargo business in both the frequency and aircraft utilization are linked to growth exports and imports of the economy.
LAN Airlines SA he found an opportunity to expand by foreign direct investment in Peru. He took the difficult economic situation facing the airline Aero Peru, leader in that country. It had failed to recover from the crash of one of its aircraft in 1996, in Lima's coast. The company, unable to solve its economic problems, left the field for LAN entered the Peruvian market through the acquisition of the company. On July 2, 1999 started operations with LAN Peru flights within the country and then with his first international flights. That same year he gained control of the Peruvian market.
Subsequently, LAN was able to expand its market further to the north where he settled in Ecuador in 2003 and started its operations through its integration with LAN Peru brand. In 2005, LAN Airlines SA He showed interest in entering the Argentine market. Insertion was made through the acquisition of companies: Federal Airlines SA (LAFSA) and Aero2000. This won several domestic routes and dominance in this market.
Years later, LAN Chile decided the unification of its subsidiaries under a single brand, and thus was born the current holding LAN Airlines. The company said at the time that the strategy associated with this change sought the consolidation of the airline as a leader in the region and thus make it a representative picture of all Latin Americans. This measure was used as a strategy to passengers from the US, Europe and the rest of the world would be much easier recognition and remembrance of the company.
From 2006 LAN began a determined internationalization process outside of South America that relies on code-sharing agreements with other airlines to offer more routes and services worldwide. Through these alliances it has reached such exotic for Latin American aviation and Sydney (Australia) destinations, and has managed to connect LAN to South America with the Caribbean, Mexico, North America, Europe, Australia and Polynesia.
Additionally, another vital point in the globalization of LAN has been entering the OneWorld Alliance (which include American Airlines, British Airways, Cathay Pacific Airlines, Qantas, Iberia, Finnair and AerLingus, which initially came LAN Chile and LAN Peru), since June 2000. Subsequently, in 2007, joined LAN Argentina and LAN Ecuador.
The internationalization process has been based on internal policies focused on quality and good customer service and the LANPASS frequent flyer plan. One of the pillars that has supported the growth of LAN in the passenger business has been delivering a world class product throughout the service chain, both on land and in flight and its focus on relevant attributes for the customer .
Routes to Europe, America and Oceania account for LAN Airlines a jumper with the rest of the world. Since it has a relationship with large companies and a shared code, this allows the traveler access to more destinations without the need for many transfers. The primary objective of LAN Airlines was not to compete in these markets, as it is more difficult for the amount of capital that are managed by large companies, such as British Airways or American Airlines, which to some extent have been recovering due to the they are placing greater confidence in airline passengers after the September 11, 2001.
LAN Airlines is a highly international airline, as approximately 70% of its passenger revenues generated in this type of routes. Thanks to its vast network of coverage and strategic alliances, the company currently serves more than 70 international destinations, and integrates a large number of points throughout the world, including the Americas, Europe and South Pacific region.

Another key element in the internationalization has been progressively strengthening its regional hub in Lima, whose advantageous location allows you to consolidate traffic in the city and offer a greater number of frequencies to the main points of the region. This has increased its network of destinations you within South America, ranking as the most attractive for travel within the region and towards alternative.

Another aspect that distinguishes LAN is its freight business, which is a premium service, such as its international passenger operations. Transports Chilean salmon, asparagus from Peru, Ecuador fresh flowers and other perishable products to the US, and Europe in return transports high-value goods weight, such as computers, mobile phones and car parts US and Europe to Latin America. Among the companies passenger, LAN is one of the companies most dependent on their income cargo in the second quarter of 2011, 31% of total revenues came from this item (compared to less than 5% American, Delta and United-Continental). LAN transports 35% of shipments in the hold of passenger aircraft. In fact, most the cargo business operates in the same LAN network routes with passenger business. In the case of domestic flights but the cargo transport is more limited, given the number of low-cost alternatives and the inadequacy of the size of aircraft. On the other hand, domestic passenger demand is very elastic LAN: When lowering tariffs on short-haul routes by 20%, LAN can attract up to 40% more passengers, allowing you to invest in new aircraft more efficient and fly more hours per day. So the only way to increase the capacity utilization of domestic flights has been with cheap rates.
This logic of tariff reduction has resulted in a dramatic increase in demand between 2006 and 2010, the number of passengers on domestic flights of LAN rose 83% in Chile, 123% in Peru, and 200% in Argentina, which LAN can reach its goal of increasing aircraft utilization on short-haul routes from eight to 12 hours a day. LAN now has the largest market share of passenger transportation within Chile and Peru, and is increasing in other countries in South America. LAN also has the largest market share in passenger transport to and from Chile, Peru and Ecuador, as well as approximately 37% of the air cargo market in Latin America. The shuttle complement the passenger loading operations has generated various advantages that are mutually reinforcing.
Indeed, Lan makes heavy use of its physical assets, allowing it to reduce the break-even load factor. By combining the operations of cargo and passengers, LAN can be profitable where other companies can not, because the number of passengers and amount of cargo that is needed to break even on each flight is less than if transported either another. In 2010, for example, the percentage BELF the LAN Santiago-Miami route would have been 68% if the aircraft had flown only passengers, but add freight, did come down to 50%. Moreover, without charge, the Santiago-Madrid-Frankfurt route LAN, to name just one, would have ended in Madrid, because going to Frankfurt is not only profitable if passengers are transported.
Among the main challenges they are to combine Lan model of international transportation of passengers with cargo, while also maintaining a low-cost model separately. To manage both businesses, LAN to dynamically coordinate a sophisticated management system passengers, which raises and lowers fares depending on demand levels with a capacity management system load varies similarly to rates overload. LAN also need to assign the load optimally, making it through a complex logistical system that coordinates cargo and passengers.
However, by transporting cargo and passengers, LAN can keep profitable flight routes when demand falls, since the two businesses rarely dip parallel to the same extent, in this way has diversified its revenue and profits.
The ability to fly more profitably routes has created a virtuous circle. More routes mean more value for customers, enabling LAN to charge higher prices, generating revenue to support even more routes and become, finally, the one stop shop for the charge distribution in Latin America.
LAN's competitive advantage in the international passenger service would vanish if the company did not have a thriving cargo business, likewise, its advantages in charge would not exist without successful business passengers. Competitive strategy involves the construction of the advantages of protecting a unique position and operation of a distinctive set of resources and capabilities.
During 1998 the company decided to change its strategy of standardization of airplanes, incorporating a mixed fleet of Airbus and Boeing aircraft. To replace the old models Boeing 737-200 bought 20 Airbus 320 family for their short-haul operations and regional. The following year, he joined seven Airbus A340-300 long-haul and established purchase options for fourteen aircraft, in order to renew the long-haul fleet of the airline.
The company not only seeks to optimize costs by saving on fuel and maintenance, but also aims to significantly reduce CO2 emissions with the use of their devices. With this goal in 2000 he undertook an ambitious renovation plan and increased flight equipment, thanks to which today has one of the youngest fleets in the world. With an average age of 6.7 years, to December 2011 the fleet consisted of 135 passenger aircraft and 14 cargo aircraft.
To develop its short-haul operations, Lan uses Airbus A320 family of single-aisle. With these aircraft the company serves domestic and regional routes within South America, as their attributes in range and power allow a high level of daily use. With 17 new Airbus A320 built in 2011, Lan completed a fleet of 76 aircraft of this family, which is broken down into 42 A320s, 10 Airbus A318 24A319.
Between 2007 and 2011 operational statistics show the following numbers speak for themselves:

Over.