Latin American Airlines Industry Is Consolidated Enough - Executives
03/29/2012| 05:41pm US/Eastern
The Latin American airline industry doesn't have room for more consolidation, as the regional market is very well covered by the four largest local carriers, executives from those airlines operators said Thursday.
Chile's LAN Airlines SA (LFL, LAN.SN), Panamanian Copa Holdings (CPA), Colombia's AviancaTaca Holding (PFAVTBA.BO) and Grupo Aeromexico SAB (AEROMEX.MX) make up the bulk of the Latin American airline sector, while most of other carriers are focused on niche routes or are low-cost carriers, executives said during an International Air Transport Association conference at Santiago's FIDAE 17th biannual Air and Space Show.
"Latin America is one of the regions with the fastest growth in terms of aviation and economy. I see that there are only a few integration moves left. There have been enough mergers and acquisitions as to operate today with healthy companies," said Pedro Heilbron, Copa Airlines's chief executive.
The largest mergers in the region include the one between Avianca and Taca, as well as LAN and Brazil's TAM SA (TAM), which is in the final stages of consolidation.
In relation to AviancaTaca, the company's controller, German Efromovich, said that merger has gone smoothly and the biggest snags have been related to the integration of the information technology systems.
For his part, Enrique Cueto, LAN's CEO, said the merger with TAM will likely be completed in six weeks, in mid-May, and that the main issue to solve is related to choosing an alliance.
LAN belongs to the Oneworld alliance while TAM is part of Star Alliance.
"We'll make that decision shortly after the merger," Cueto said.
In relation to low-cost carriers, Andres Conesa, Aeromexico's CEO, said these will not leave largest airline operators out of business, despite the fact that they are expanding beyond domestic routes.
According to Cueto, LAN has already been able to offer low-cost domestic tickets, and believes this type of operator wouldn't be profitable in the highly competitive Chilean market, unlike the positive results they have found in other markets such as the U.S. or Europe.
"Our future in Latin America is simple: we have more possibilities of succeeding in the long term with a better use of resources and systems," Cueto said.
-By Cristina Molina, Dow Jones Newswires; +56-2-715-8939; firstname.lastname@example.org