The proposed $3.7 billion merger between LAN of Chile and TAM of Brazil would create a dominant Latin American carrier and set off a scramble among global alliances. "This will position us to compete with the many foreign carriers that continue to increase service to our region," says TAM's chief executive of the proposed LATAM Airlines Group, which would boast $8.5 billion in annual revenue. In May, TAM joined the Star Alliance, while LAN has long been a member of Oneworld. Executives did not speculate on alliance membership in making the merger announcement.

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