LAN Airlines and TAM Airlines celebrated (21-Jun-2013) the first anniversary of the creation of LATAM Airlines Group and reiterated plans to join oneworld in 2Q2014. LATAM highlighted its combined fleet of 318 aircraft will be supplemented with the addition of 32 Boeing 787s, 12 A350s, 42 A320neos and the introduction of "more than" 100 sharklet-equipment aircraft to reduce emissions and improve fuel efficiency. LATAM said its cargo business is "on target to achieve the expected synergies and offer a greater network", and noted domestic cargo operates in Brazil increased due to larger cargo-capacity aircraft and dedicated freighters. LATAM CEO Enrique Cueto said, "This [LAN-TAM] partnership offers unmatchable route connectivity and is the most important achievement in the history of regional air transportation.There is no other airline group in South America that offers more flights or destinations." [more - original PR - Spanish]
LAN and TAM celebrate first anniversary of LATAM Airlines Group
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Enter Qatar Airways. As Etihad Airways looks to bed down its investments in other airlines, Qatar is gradually expanding its airline investment portfolio. Qatar's 15% stake in IAG is now being followed with a 10% stake in LATAM for USD613 million – nearly 1.5 times Qatar's net profit of USD446 million, disclosed (for the first time) on the day prior to the LATAM equity announcement. It is a safe investment; LATAM group has a strong market position and its share price has remained strong even in the face of a brutal downturn in Latin American economies.
Qatar gives LATAM needed cash and a distant shareholder. Latin America is the smallest market by far for Gulf airlines, but while currently in the economic doldrums, has a longer term potential for growth. It is also a key future market for US airlines, albeit very small on the Gulf airlines' networks. Qatar is spending nearly EUR2.5 billion on equity investments, still smaller than Etihad's but illustrating a willingness to acquire airline assets, for investment and strategic reasons. In this case the immediate strategic purpose for Qatar is less apparent.
Star Alliance's privately owned Avianca is also considering a strategic shareholder; that would mean five of Latin America's eight largest airline groups could have an airline investor from outside the region.
United Airlines Part 2: Sustaining balance sheet strength while declaring ambitious margin targets
One area where United Airlines has made important strides during the last few years is in overhauling its balance sheet. Its efforts have gained some recognition from credit agencies for its progress in paring down debt and improving leverage ratios; but similarly to its rival American Airlines – attaining an investment-grade credit rating is not a huge priority for United. The airline believes it can achieve some benefits that investment-grade companies enjoy with the current state of its balance sheet.
In order to sustain the progress it has made in balance sheet repair United plans to amend its aircraft order book to slash capex commitments during the next couple of years, including the deferral of 61 Boeing narrowbodies. United is hinting that other fleet changes could be under consideration, including deals similar to the agreement it forged during 2015 to lease used Airbus A319s.
This is Part 2 in a two-part series reviewing United’s financial and revenue-generating opportunities.