Lan Airlines

Aerolineas Argentinas continues to struggle as government protection from competition increases

Argentina’s aviation market has taken another step backwards as the country’s Government continues to come up with new measures aimed at protecting struggling flag carrier Aerolineas Argentinas. Aerolineas, which has not yet completed the restructuring it started three years ago after the carrier was renationalised, faces another challenging year while Latin America’s other leading carriers prosper without any government subsidies or protection.

In the latest example of protectionism, Argentinean civil aviation authorities last month decided to revoke LAN Argentina’s permits to operate international flights from Buenos Aires’ downtown airport, Aeroparque Jorge Newbery. LAN is vehemently protesting the decision on the grounds the Chile-based airline group, which has had an affiliate in Argentina since 2005, is being unfairly discriminated against. LAN currently operates two important international business routes from Aeroparque, Santiago and Sao Paulo Guarulhos.

TAM plans US expansion in 2012 with B777-300ERs while Brazil domestic growth slows

Brazil’s TAM is planning further capacity expansion on US routes in 2012 as growth in the Brazilian domestic market shows signs of cooling down. The US expansion will be driven by the doubling of TAM’s B777-300ER fleet next year from four to eight aircraft. The B777-300ER, which is by far the largest aircraft type in TAM’s fleet, is now only used on European routes but will start to be deployed in the US during 2012.

Latin America, a bright spot for aviation, with continued growth and robust aircraft requirements

IATA, Boeing and Airbus have again noted the potential of the Latin American market, with IATA describing the region as a “bright spot in the aviation world” and Airbus commenting that Latin America’s aviation sector “has never been stronger”, following a boom in the sector over the past five years. Boeing has similarly noted the large potential in the Latin America market in its market forecast.

Latin America is “the only region generating aggregate profits for three consecutive years," IATA CEO and director general Tony Tyler noted at ALTA this month. On the outlook for the region, he commented: “Taking a long-term view of Latin American aviation, one can only be optimistic. The economic potential of this vast and varied geography can only be realised with a successful aviation industry”.

LAN outlook brightens as strong 3Q2011 earnings are recorded and as merger with TAM nears

Latin American airline group LAN has reported a significant improvement in its third quarter earnings following a surprisingly weak second quarter. Latin America’s buoyant economy drove the strong showing and has LAN confident it can remain highly profitable in 4Q2011 and 2012 despite the challenging global market conditions. LAN’s planned merger with Brazil’s TAM, which will now almost certainly be completed in Mar-2012, further improves the group’s medium to long-term outlook as LAN gains access to Brazil, the region’s largest economy by a wide margin and one of the world’s largest emerging markets.

UPDATE: oneworld favoured with more at stake than Star in LAN-TAM alliance decision

(this article, which was initially published on 24-Sep-2011, has been updated to include initial LAN response, further discussion of TDLC measures and implications for Gol and SkyTeam)

The stage is set for the biggest global alliance selection of the decade as new airline group LATAM is being forced by Chile's anti-trust court to choose a single grouping. The decision by LATAM, the new parent company for oneworld’s LAN and Star’s TAM, will have huge ramifications as the winning alliance will be guaranteed a leading position in the fast-growing and increasingly important Latin American market. The more likely outcome is a oneworld victory, which would result in its share of capacity in the region increasing to 30% compared to approximately 15% for Star and 11% for SkyTeam.

Avianca benefits in Colombia from restructuring at new LAN subsidiary Aires

Avianca has been the main beneficiary of the restructuring at Colombian-low cost carrier Aires, growing its share of the domestic market and improving its profitability since LAN acquired Aires late last year. Avianca also has benefitted from capacity reductions by the other two main players in Colombia’s domestic market, Copa Colombia and Satena.