Avianca cuts Airbus A320 NEO delivery schedule. The airlines parent, Avianca Holdings, released the following press statement on May 3, 2016:
“In an effort to improve its profitability, achieve a more efficient capital structure and reducing the current levels of indebtedness, Avianca Holdings S.A. reached an agreement with Airbus S.A.S. to reduce the number of aircraft deliveries scheduled for 2016, 2017, 2018 and 2019.
The agreement with the European aircraft manufacturer represents a CapEx reduction of approximately USD1.4 billion for the next 30 months. During this same period, Avianca Holdings S.A. will continue to pursue its cost reduction initiatives, seeking to strengthen its balance sheet and generate greater cash flow.
Avianca Holdings S.A. reaffirms its leverage goal, measured as the net adjusted debt over EBITDAR, of no more than 5 times for 2019”.
It was just one year ago that an order for 100 A320-NEO aircraft was firmed up by the airline for the Airbus jets. The order for the 100 Airbus jets was the single largest order ever placed by an air carrier in Latin America, and brought the total number of A320-NEO jets the airline had on order to 133.
Avianca struggles with Latin American woes
The change in fortunes shows just how quickly the Latin American economy has declined. While it seams that falling global oil prices should be good for airline economics, the fact that that drop in prices leads to layoffs and cost cutting in the oil industry negatively impacts business travel expenditures. Brazil and Mexico rank ninth and tenth in global production of petroleum and other liquid Production, respectively. Venezuela (twelfth) and Colombia (nineteenth) follow on that list. In addition to its name sake airline and cargo operations, the airlines parent holding company also controls Aerogal in Ecuador, Avianca de Brazil, Aviateca de Guatemala, LACSA de Costa Rica, TACA de Honduras, TACA de Peru, and TACA de San Salvador. LACSA is an abbreviation for the latin “Lineas Aéreas Centroamericanas Sociedad Anónima”. TACA is an abbreviation for the latin “Transportes Aereos del Continente Americano”.
Image from www.avianca.com