Copa Airlines to spend USD600 million on increasing its fleet
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Argentina Aviation Part 1: Avianca, Copa & LATAM promote international traffic at secondary cities
Argentina’s secondary cities are poised to see a spike in international traffic as the new government liberalises Argentina’s aviation market after years of restrictions. The three largest cities outside Buenos Aires – Cordoba, Rosario and Mendoza – should all benefit as restrictions on foreign airlines are lifted.
Panama-based network airline group Copa is launching services from Panama City to Rosario, a market it has sought to access for several years, at the beginning of Jul-2016 and is now looking at also serving Mendoza. Colombia-based airline group Avianca is aiming to launch services from Lima to Cordoba with potential feed in Cordoba from a planned new Argentina-based regional airline.
Latin America’s largest airline group LATAM already launched services from Lima to Salta, a smaller secondary Argentinean city, in Jun-2016. LATAM is planning to add services from Lima to Rosario at the beginning of Jul-2016 and from Lima to Mendoza in early 2017. LATAM is the only group with an affiliate in Argentina but all the new Argentina routes so far are being operated by its Peruvian entity.
Avianca works to attain its leverage goals by slashing its capex commitments through 2019
Latin American airline group Avianca Holdings is joining its counterparts based in the region by taking steps to de-lever in order to equip itself properly to withstand continuing economic weakness in the region. One of the most important changes Avianca has undertaken in 2016 is re-engineering its order book with Airbus to cut deliveries from 2017 to 2019, which is pivotal in order for Avianca to reach its leverage targets.
Nearly every Latin American airline group during the past year has taken several steps to slow its fleet growth as the region’s economy is forecast to contract for a second consecutive year in 2016. Although Avianca’s yield declines improved (reduced) sequentially from 4Q2016 to 1Q2016, the second quarter is typically the weakest period for the airline, which could mean that its yield performance will slide before possibly showing some slight improvement in 2H016.
Despite the tough conditions, Avianca has a relatively optimistic outlook as it works to rework its fleet commitments and cut costs. Avianca still plans to expand capacity in 2016, but its growth is falling well below the 8% increase that the company posted in 2015.