SkyTeam is considering adding Gol and Virgin Atlantic following Delta Air Lines’ acquisition of stakes in both carriers (Bloomberg, 03-Jun-2013). SkyTeam MD Michael Wisbrun said “Brazil is on the wish list,” but that Gol would need to expand its network in order to apply for membership. Mr Wisbrun added that a Virgin Atlantic bid for membership could be possible from 2015, once Delta’s acquisition of 49% of the carrier had been completed. Mr Wisbrun added SkyTeam members are “comfortable with the footprint we have today.”
SkyTeam considering addition of Gol and Virgin Atlantic
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LATAM and Avianca continue balance sheet clean up as shareholder strife clouds Avianca-United tie up
A two year economic downturn in Latin America has forced the region’s airlines to put even more emphasis on improving their balance sheets through improved leverage, debt reduction and decreasing capital commitments. Two of the region’s largest airline groups – LATAM Airlines Group and Avianca Holdings – have worked to strengthen their balance sheets employing a variety of methods, including renegotiating aircraft delivery schedules to defray capital costs.
Avianca Holdings is taking delivery of six aircraft in 2017, whereas LATAM’s total fleet is shrinking 5.5% year-on-year during 2017 as it slashes its capex commitments by USD2 billion during a two year period.
LATAM is enjoying a boost in its liquidity after receiving an equity infusion by Qatar Airlines in late 2016, and the investment by Qatar helped boost LATAM’s liquidity to trailing 12M revenues by 5.5ppt year-on-year at the end of 2016. Avianca has been searching for an equity provider and strategic partner since mid 2016; but its selection of United has stirred controversy between its two largest shareholders, with lawsuits and counter lawsuits overshadowing the potential commercial benefits of the tie up.
Copa Holdings believes a recovery in demand will support marked rise in 2017 capacity growth
Panama’s Copa Airlines is planning markedly increased capacity year-on-year in 2017 as demand patterns in Latin America continue to build on strength that began to emerge in 2H2016. That followed two years of economic contraction in the region. Most of Copa’s growth in 2017 stems from higher utilisation, given that its fleet is expanding by just a single aircraft during the year. The airline also plans to add back, in the lower season, the capacity that it cut in 2016 to adjust to Latin America’s weakened supply demand scenario.
Copa’s outlook is based on its determination that demand is holding steady in Latin America, and it is joining other airlines in the region in expanding capacity as a slow economic recovery begins to take effect. Its approach, that there is strengthening demand, stretches broadly across its network, even in Brazil, whose deep economic recession drove Latin America’s overall two year long economic contraction.
Copa has no concerns about its fellow Star Alliance partners Avianca and United potentially deepening their partnership through a proposed equity stake by United in Avianca. Although Copa has not publicly confirmed that it courted Avianca during its evaluation process for a strategic partner, the airline now believes United is the best partner for Avianca.