Important step begins to deliver benefits to customers with expanded connectivity to up to 51 destinations in South America.
Delta and LATAM will launch codesharing for flights operated by certain LATAM affiliates in Colombia, Ecuador and Peru beginning in the first quarter of 2020, pending receipt of applicable government approvals.
The codeshare will offer customers increased connectivity between up to 74 onward destinations in the United States and up to 51 onward destinations in South America.
Delta expects to expand codeshare opportunities to include more destinations in the near future. The airlines are also working toward introducing frequent flyer program reciprocity and reciprocal lounge access.
“This is an important milestone for customers as we begin to deliver on the transformative partnership between Delta and LATAM announced earlier this year,” said Steve Sear, Delta President – International and Executive Vice President – Global Sales. “Once fully realized, this partnership will give us the ability to offer our shared customers an industry-leading network and superior service across the Americas.”
In September, Delta and LATAM announced an agreement that would bring together the leading airlines in North and South America, which once fully implemented will offer significantly expanded travel options for customers with access to 435 destinations worldwide. The enhanced cooperation is subject to governmental and regulatory approvals.
Nov 4 (Reuters) – IAG, the parent of British Airways and Spain’s Iberia, announced a 1 billion euro ($1.12 billion) takeover of Spain’s Air Europa to boost its presence on routes to Latin America and the Caribbean.
The deal follows a setback in Latin America for IAG after Chile’s Supreme Court ruled against a plan that would have allowed it to bolster cooperation with partners in the oneworld airlines alliance.
BA parent IAG ups bet on Latin America with Air Europa takeover Ryanair Chief Executive Michael O’Leary attends a Reuters Newsmaker event in London
Chile’s LATAM Airlines in September then announced it planned to leave the alliance, opting instead for a tie-up with SkyTeam member Delta Air Lines.
IAG shares initially rose more than 2% following the Air Europa takeover announcement but some analysts said IAG may have to shed routes in order to win regulatory approval.
IAG shares were up 1.2% at 1315 GMT.
Ryanair CEO Michael O’Leary said his company will ask the UK’s market watchdog to force IAG to make divestments as part of its Air Europa takeover, a deal he said would be bad for competition.
“Potential remedies, perhaps in the form of slot release or behavioural restrictions, may be required and these could impact the potential synergies,” an analyst at Liberum wrote in a note.
IAG also owns carriers Iberia Express, Level, Ireland’s Aer Lingus and Vueling.
“We are not convinced that having just another brand platform is the optimal move, and could see it potentially combining with Level, Vueling or potentially Iberia Express after some time,” analysts at Bernstein said.
FILE PHOTO: An Air Europa-branded Boeing 737 MAX aircraft is seen grounded at a storage area in an aerial photo at Boeing Field in Seattle
Air Europa serves 69 destinations, including long-haul routes to the Americas and the Caribbean. It had a fleet of 66 aircraft at the end of 2018.
Air Europa’s Spanish parent company Globalia earlier this year received authorisation from the Brazilian government to explore the possibility of flying domestic routes within Latin America’s largest economy.
It is unclear if that authorisation will remain with Globalia or be transferred to IAG.
Air Europa will initially keep its brand and as it gets integrated into the existing hub at Madrid it will be a standalone operation run by Iberia boss Luis Gallego, IAG said.
It will also withdraw Air Europa from the SkyTeam alliance once the deal is completed. Air Europa has a joint venture with Air France-KLM.
“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs,” said Gallego, adding that Madrid had the potential to serve as a gateway between Asia and Latin America.
IAG said it expected the Air Europa deal, which will be funded through external debt, to close in the second half of next year and for it to add to its earnings in the first full year after the closure.
($1 = 0.8951 euros) (Reporting by Yadarisa Shabong in Bengaluru; additional reporting by Andres Gonzalez in Madrid and Marcelo Rochabrun in Sao Paulo, editing by Patrick Graham and Jason Neely)
An Air Europa Boeing 737 airplane takes off at the airport in Palma de Mallorca
SAO PAULO, May 9 (Reuters) – Brazilian airline Azul SA’s chief executive said on Thursday that its two larger competitors had barred the carrier from providing a competing air shuttle service on the highly profitable Sao Paulo to Rio de Janeiro route.
“Essentially what they did was they had a shutdown plan to keep us out,” CEO John Rodgerson told Reuters in an interview, referring to competitors Gol Linhas Aereas Inteligentes and LATAM Airlines Group.
The comments come weeks after Azul engineered a plan to break into the Sao Paulo-Rio de Janeiro route, by far the most transited in South America, but it fell apart after Gol and LATAM intervened.
The three airlines have been disputing the airport rights set to be left behind by their struggling competitor Avianca Brasil, which was scheduled to auction the routes this week as part of a bankruptcy process.
Azul, Brazil’s No. 3 airline, initially reached a deal with Avianca Brasil, but a few weeks later Gol and LATAM reached a different deal with Avianca Brasil’s key creditors, which was ultimately approved and sidelined Azul.
Both plans hinged on a successful Avianca Brasil bankruptcy auction, but the event was recently suspended indefinitely, meaning that even Gol and LATAM may not be able to get the airport rights they had agreed to buy.
“I don’t think they ever had the intention of closing on the deal,” Rodgerson said of Gol and LATAM’s agreement with Avianca Brasil.
Gol and LATAM have previously denied any anti-competitive stance.
Brazil’s antitrust regulator CADE said in April that it was concerned about a potential takeover by Brazil’s two major airlines, and that it preferred to see Azul or a new airline take over Avianca Brasil’s airport rights.
The rift also led Azul to leave Brazil’s airline industry group, known as ABEAR, late last month.
“I think the way they acted was inappropriate and not in the best interest of the industry,” Rodgerson said. “I don’t think we share the same values.”
Rodgerson gave the interview as part of Azul’s first quarter results announcement, in which higher operational costs weighed significantly, sending profits down 20% to 137.7 million reais ($35.06 million), despite significantly higher revenue compared to the same period last year.
While revenue grew 16% to 2.5 billion reais, personnel costs surged 37% amid continued expansion at the company, as well as the expiration of a payroll tax incentive.
“It’s kind of the new norm,” Rodgerson said.
Fuel costs also increased significantly, while other undisclosed costs jumped 34% to 224 million reais in the period.
Azul and its Brazilian competitors have faced higher costs in recent quarters due to the continued depreciation of the local currency, the real. While passengers buy their tickets in reais, many of the airline’s expenses, such as fuel, are denominated in the stronger U.S. dollar.
($1 = 3.9393 reais)
(Reporting by Marcelo Rochabrun; editing by Bernadette Baum and Bill Trott)
SAO PAULO, May 9 (Reuters) – Higher operational costs weighed on Brazil’s No. 3 airline, Azul SA, sending profits in the first quarter down 20% to 137.7 million reais ($35.06 million), despite significantly higher revenue compared to the same period last year.
While revenue grew 16% to 2.5 billion reais, personnel costs surged 37% amid continued expansion at the company.
Fuel costs also increased significantly, while other undisclosed costs jumped 34% to 224 million reais in the period.
Azul and its Brazilian competitors have faced higher costs in recent quarters due to the continued depreciation of the local currency, the real. While passengers buy their tickets in reais, many of the airline’s expenses, such as fuel, are denominated in the stronger U.S. dollar.
Earlier this year, Azul signed a tentative deal that ultimately fell through to take over a set of coveted domestic routes that were to be auctioned off by its rival Avianca Brasil, which is going through a bankruptcy protection process.
The routes were then set to go to its two larger competitors, Gol Linhas Aereas Inteligentes and LATAM Airlines Group, dealing a blow to Azul as it had hoped to break into the lucrative Sao Paulo-Rio de Janeiro route.
That route is currently dominated by Gol and LATAM and is considered to be among the most profitable in the country.
At the last minute, a judge indefinitely suspended Avianca’s auction which was due earlier this week.
($1 = 3.9273 reais) (Reporting by Marcelo Rochabrun; Editing by Bernadette Baum)
DUBAI/BEIJING, Jan 2 (Reuters) – Qatar Airways has acquired a 5 percent stake in China Southern Airlines, the state-owned Gulf carrier said on Wednesday, in a move to gain access to the fast-growing mainland Chinese market.
Qatar Airways also owns a 20 percent stake in British Airways-parent International Consolidated Airlines Group, 10 percent of South America’s LATAM Airlines Group SA , 49 percent of Italy’s Meridiana and 9.99 percent stake in Hong Kong’s Cathay Pacific.
Qatar’s flagship airline has sought new partners and routes after it was blocked last year from flying to the lucrative markets of Saudi Arabia and the United Arab Emirates because of restrictions imposed by those countries.
Saudi Arabia, UAE, Bahrain and Egypt, imposed a political and economic boycott on Qatar since June 2017, accusing it of supporting terrorism, which Doha denies.
China Southern in a separate statement said Qatar Airways may consider increasing its stake in the airline in the next 12 months. Qatar had no previous investment in the Chinese airline.
Qatar Airways is the second foreign carrier that has a stake in China Southern, after American Airlines. The Chinese carrier left the Skyteam airline alliance at the start of the year.
There are opportunities for “us to work together and build a long term relationship in ways that would bring benefits to customers of both airlines,” said Qatar Airways’ Chief Executive Akbar al-Baker.
Ajith K, director of Asia transport at UOB Kay Hian, said given that China Southern is the biggest competitor of Cathay Pacific in Greater China, this deal could strengthen the China Southern’s position at the Hong-Kong carrier’s expense. “Why Qatar is doing this, seems to me, one of course is to gain access to the Chinese market. Secondly it’s probably that they are hedging against their bet given they own almost 10 percent in Cathay Pacific.”
(Reporting by Asma Alsharif and Saeed Azhar in Dubai and Stella Qiu in Beijing; editing by Louise Heavens)
SAO PAULO, Dec 3 (Reuters) – Two Brazilian airlines, Azul SA and Avianca Brasil, are targets for expansion in the wide-ranging alliance between United Continental Holdings Inc , Colombia’s Avianca Holdings and Panama’s Copa Airlines on U.S.-Latin America routes, Avianca Holdings’ Chief Financial Officer, Gerardo Grajales, told Reuters on Monday.
There was little reference to Brazil, by far the region’s largest market, when the alliance was announced on Friday, but Grajales said the parties to the agreement already had in mind Azul and Avianca Brasil, which operates independently of Colombia-based Avianca Holdings.
“The two airlines complement each other in the Brazilian market,” Grajales said. “From the beginning we thought that Brazil should be covered by our agreement, however, no partnership would be authorized if it did not have an Open Skies agreement.”
The Open Skies agreement between Brazil and the United States was signed into law in May, when discussions among the three airlines were already advanced, he explained.
The airline agreement mimics a partnership between American Airlines and Chile’s Latam Airlines which has been mired in regulatory scrutiny.
The announcement between the United Airlines parent, Avianca and Copa capped off almost two years of negotiations. United will loan Avianca’s majority shareholder almost $500 million to be spent on ventures outside of the airline.
Depending on how it is repaid, United could end up owning a large chunk of the Colombian carrier. United is making no monetary investment in Copa or its affiliates.
United already owns an 8 percent stake in Azul, and has a codesharing agreement with Avianca Brasil, formerly known as Ocean Air.
Shares in Azul were down almost 5 percent on Monday afternoon in Sao Paulo. The world’s largest asset manager BlackRock disclosed late on Friday that it had sold an almost 10 percent stake in Azul’s preferred shares. Hours earlier, the carrier disclosed in another securities filing that it sought to double in size in the next five years.
Azul did not immediately respond to a request for comment. (Reporting by Marcelo Rochabrun; Editing by David Gregorio)
SANTIAGO (Reuters) – LATAM Airlines (LTM.SN), the biggest airline group in Latin America, reported a steep fall in third-quarter profit due to lower passenger demand in Argentina and Brazil as well as higher fuel prices and competition from low-cost airlines.
LATAM reported a net profit of $53 million for the quarter, down from $160 million a year earlier, according to a securities filing.
But it said it was maintaining its guidance for the year, expecting an overall operating margin for 2018 of between 6.5 and 8 percent. It is focused on cost-cutting to offset higher expenses.
“We are transporting more passengers with a leaner organization,” a company executive told analysts on a conference call.
Morgan Stanley raised its target price for LATAM shares traded in the New York stock exchange to $9 following the earnings release, from a previous target price of $8.80.
Shares were up 3.4 percent at $9.26 on Wednesday morning.
Demand in the quarter slowed in Brazil due to a weaker local currency, and demand fell significantly in Argentina, where the local currency faced an abrupt devaluation during the quarter, reducing passengers’ purchasing power.
“We carried more passengers in all our markets except Argentina, where we cut capacity this year,” an executive said.
Lower demand and increased fuel expenses due to higher oil prices has slashed profits across regional airlines. One of LATAM’s biggest competitors, Brazil’s Gol Linhas Aereas Inteligentes SA (GOLL4.SA), reported a loss of $110 million during the quarter.
Market conditions prompted LATAM to renegotiate commitments for future aircraft purchases, achieving a reduction of $2.3 billion in fleet expenses through 2021, the company said.
The airline will also boost the number of available seats in some of its aircraft by 3 percent as improving utilization and seat count may allow it to grow with fewer aircraft.
Revenue declined by 5 percent to $2.5 billion in the quarter compared with the same period in 2017.
In the quarter, LATAM spent the equivalent of 30 percent of its revenue on fuel, compared with 21 percent a year earlier.
In comparison, Gol spent 37 percent of its revenue on fuel in the same quarter, up from 26 percent a year earlier.
(Reporting by Antonio de la Jara in Santiago and Marcelo Rochabrun in Sao Paulo; Writing by Marcelo Rochabrun; Editing by Bernadette Baum)
NEW YORK, Nov 14 (Reuters) – Decades-old regulations barring foreigners from owning Brazil’s airlines are outdated and “might make no sense anymore,” the top executive of Brazil’s largest airline, Gol Linhas Aereas Inteligentes SA, said on Wednesday.
Foreigners are limited by law to a 20 percent stake in any Brazilian airline’s voting stock. But while Brazil may be entering an economic liberalization phase – far-right President-elect Jair Bolsonaro has vowed to cut spending and privatize state companies – Gol Chief Executive Officer Paulo Kakinoff said it is unclear whether the new administration will seek to loosen the existing regulations.
“Our company has always been in favor of bringing to our country all the conditions to have access to foreign capital without any kind of restriction,” Kakinoff told Reuters in an interview. “This should be one of the positive effects of having some change in the current legislation.”
Outgoing President Michel Temer has said he is in favor of allowing full foreign ownership. In 2017, he said he would enact this change through executive action, only to change his mind and submit a bill to Congress, where the plan has stalled.
Kakinoff added that Gol is not currently in talks with Delta Air Lines Inc, which owns a 9.5 percent stake in Gol preferred shares, or any other entity, about taking a bigger stake in the Brazilian carrier.
In October, Gol said it planned to acquire full control of its listed loyalty program, a subsidiary called Smiles Fidelidade SA.
Gol’s stock surged in response, while Smiles’ plummeted almost 40 percent in one day.
Gol Chief Financial Officer Richard Lark said the airline needed to incorporate Smiles to avoid “competitive disadvantages,” especially with its largest local rival, Latam Airlines Group SA, which earlier this year decided to gobble up its loyalty program company, called Multiplus SA.
A key difference in the transactions, however, is that Latam offered cash to investors, while Gol is offering only its own preferred stock, with the exchange ratio yet to be defined.
Some minority shareholders have criticized the transaction, saying they will lose voter rights if their Smiles shares are exchanged for Gol shares, a charge the airline disputes.
“Although the company owns preferred shares in the operational company, decisions about the airline and the loyalty program will continue to be taken at the board of Gol. It won’t be a shell company,” Lark said.
Reporting by Marcelo Rochabrun; Editing by Dan Grebler
Qatar Airways has agreed to buy a 9.6% stake in Hong Kong based Cathay Pacific Airways for $660 million. The investment comes as Qatar Airways has been searching for ways to expand globally for the last few years. The air carrier, based in the State of Qatar in the Persian Gulf region, recently dropped an unsolicited bid for a 10% stake in U.S. based American Airlines Group. Qatar Airways and Cathay Pacific are both members of the oneworld frequent flier alliance, which allows each carrier’s customers to earn and redeem miles on the other’s flights.
The investment is the first by a Middle East air carrier in an Asian airline. The deal also comes on the heels of Qatar Airways purchasing a 20% stake in British Airways parent International Consolidated Airlines Group, a 10% stake in South America’s LATAM Airlines Group, and a 49% stake in Meridiana Airlines of Italy. The leading air carriers in the world have been investing in other regional airlines to try and expand their global footprint, but the strategy has been hit and miss. The collapse of both Alitalia and Air Berlin followed the cutoff of funding by their partner Etihad Airways. American Airlines last March committed to investing $200 million in China Southern Airlines in a bid to access a bigger share of China’s growing travel market. That deal represented around 2.8% of China Southern’s shares.
Management at American Airlines showed no interest in any involvement Qatar Airways. The U.S. carrier opposed the unsolicited offer, which came as American, Delta and United are all publicly accusing Qatar Airways, Etihad Airways, and Emirates of receiving unfair subsidies from their governments. The North American carriers have been lobbying the U.S. government to restrict the Middle East carriers rights to fly to the United States. Since 2004, proven subsidies to the 3 Gulf carriers have totaled almost $50 billion. This has allowed them to expand without the normal financial realities by which privately held airlines must abide.
