AVIC International signed agreements with Venezuelan companies, Sireca and Fundagrial, on 23-Apr-2010 to establish a new domestic airline in Venezuela (Xinhua, 26-Apr-2010). AVIC International will invest USD300 million in the new airline, which is expected to commence operations by the end of the year and will focus on services on between the central and western regions of Venezuela.
China to help establish domestic airline in Venezuela
You may also be interested in the following articles...
Air Europa Part 2: a record of labour productivity gains, CASK near LCC levels but RASK falling
After a period of unit revenue growth following the global financial crisis, Air Europa came under heavy pricing pressure in 2015. Renewed growth by Iberia has intensified competition to Latin America, while LCCs are putting strain on short haul yields.
Air Europa does not report profits, but it is its parent company Globalia's largest business by revenue. The privately owned Globalia group has been profitable since 2013 but suffered a fall in profits in 2015, when its Air Division's revenue declined by 3% in spite of traffic growth. The group balance sheet has low liquidity and Globalia is reportedly considering an IPO.
Widebodies now represent more than half of Air Europa's seats and 20 out of 27 outstanding orders. This reflects the importance of its Latin American network and its ambitions to continue long haul growth, as detailed in part 1 of this report. Moreover, the widebody orders are for Boeing 787s – to replace A330s, generating cost efficiency gains. CAPA estimates that Air Europa's unit cost is above that of LCCs, but closer to them than to FSCs. It has a good track record of labour productivity growth, which will be useful in its quest for further CASK reduction.
Air Europa Part 1: Latin America drives growth. Iberia and new entrants provide challenges
Air Europa's 28-Jun-2016 launch of a new daily Madrid-Bogota service returns the spotlight to its Latin American network. This is the airline's most important route region both by capacity and by revenue, and it remains at the heart of its future plans. Air Europa has 13 Latin American destinations – compared with Iberia's 19 – and has been linked with plans for several more.
By seat capacity on Spain-Latin America Air Europa is half as big as Iberia but its share has increased by 10ppts over the past decade, while Iberia's has fallen. Iberia was four times Air Europa's size in this market in 2006. Nevertheless, a re-energised Iberia remains a formidable competitor and there is a small, but growing, band of new entrants.
Air Europa's parent company Globalia is reportedly considering an IPO, having previously been in talks with HNA Group about a possible investment by the Chinese conglomerate. Air Europa is likely to defer plans for the launch of routes to China while it concentrates on Latin America.
Part 2 of this analysis will look at Globalia's financial track record. It will also examine Air Europa's unit revenues, fleet and unit cost positioning.