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Source: Bloomberg
By: Mary Jane Credeur, Rodrigo Orihuela and Steve Rothwell

Sept. 21 (Bloomberg) -- Aerolineas Argentinas SA, South America’s fifth-biggest airline, will join the SkyTeam alliance led by Delta Air Lines Inc. and Air France-KLM Group, according to two people with knowledge of the agreement.

The state-owned company will sign an accord to join SkyTeam as soon as the final week of October, said one of the people, who declined to be identified because the decision hasn’t been made public.

Aerolineas President Mariano Recalde said discussions had been held, though he wouldn’t say whether an agreement was reached. “I can only confirm” there have been talks with SkyTeam, he said in a phone interview from Buenos Aires, where the airline is based.

Adding Aerolineas would help SkyTeam vie with the Oneworld group, whose Lan Airlines SA of Chile is buying Brazil’s Tam SA, a member of the Star alliance. Before Tam, the Star alliance hadn’t had a local member since Brazil’s bankruptcy-threatened Varig was expelled in 2007.

Lan and Tam, which would be called Latam Airlines Group upon completion of their merger, haven’t decided to join Oneworld, which is led by AMR Corp.’s American Airlines, or Star, which is anchored by UAL Corp.’s United Airlines. The new carrier would dominate long-haul travel in South America.

Delta declined to comment on any moves related to possible alliance changes, spokesman Trebor Banstetter said. SkyTeam’s Amsterdam-based spokeswoman, Marisca Kensenhuis, said the group doesn’t discuss new members until an agreement is signed.

Government Takeover

The Argentine government took over Aerolineas Argentinas from Spain’s Grupo Marsans in 2009. The company and sister carrier Austral operate domestic routes and international flights to cities including Sao Paulo, Miami, Paris, Madrid and Sydney.

Aerolineas Argentinas operates a mix of Airbus SAS and Boeing Co. jetliners, while the Austral unit has begun taking delivery of the first of 20 Empresa Brasileira de Aeronautica SA E-190 planes to replace Boeing MD-80s.

The company adopted a new livery this year and switched more flights to Aeroparque Jorge Newberry, an airport that’s closest to the center of Buenos Aires.

Tam is South America’s biggest carrier by passengers, according to International Air Transport Association data, moving 29 million in 2009. Gol Linhas Aereas Inteligentes SA, also based in Brazil, ranks second with almost 28 million passengers, Lan is third with 15 million and Colombia’s Aerovias del Continente Americano SA, or Avianca, is fourth at 9 million.

British Airways Plc, a leading carrier in Oneworld, said today that it’s starting a daily direct service to Buenos Aires from London in March, shortening travel times on a route that now includes a change of planes in Sao Paulo.

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