E-NEWS UPDATE VOLUME 19 NUMBER 0827

US-TRADE: CAFTA BEST, VENEZUELA WORST

Is the headline in this week's Latin Business Chronicle which starts out with the statement: "CAFTA sees the lowest decline among top US partners in Latin America, Venezuela sees the worst fall." The article goes on to show that the first half of 2009 saw a significant decline in US trade with Latin America as a result of the global economic crisis. Total trade with the region fell by 27.2% to $228.9 billion. Of the total, US exports were $103.9 billion, 21.4% lower than in the same period last year; while US imports from the region fell by 31.4% to $125 billion. CAFTA's trade declined by 21.2% to $17.7 billion. By comparison US trade with Mexico fell by 24.7%, with Brazil by 27.9%, with Colombia by 24.3%, with Chile by 29.2% and with Venezuela by a whopping 45.3%. While CAFTA countries individually are not among the top five US trade partners in Latin America, their combined trade would rank them just behind the two top partners, Mexico and Brazil. Five CAFTA countries were among the seven best performing in trade growth - Costa Rica, Guatemala, Nicaragua, El Salvador and the Dominican Republic. For the full article and detailed list of US exports and imports by country in Latin America, go to www.latinbusinesschronicle.com It isn't all bad news.

BRAZIL IS COMING OUT OF THE RECESSION

According to Brazil's Finance Minister, Guido Mantega, the country has come out of the crisis and is on the beginning of a new development situation. He stated: "Brazil was one of the last countries to feel the effect of the global crisis and one of the first to come out. We are already leaving negative growth indexes behind; we are at the beginning of the development of a growing economy." He also said that inflation is below the estimates of the Central Bank, with a margin of 4.5% for 2009, and he expects to end the year with two percentage points below that estimate. The country entered the recession with $205 billion in reserves and this month reached $213.7 billion. He also pointed out that the state-owned banks played a major role in providing credit which has definitely helped, while private banks  "were very conservative in extending credit; in fact if it were not for the public banks the recovery would have been more difficult." Viva Brasil, with an "S."

AVIANCA AND GOL TO RAISE MILLIONS IN THEIR STOCK MARKETS

By coincidence, both carriers have announced offers to raise $247 million and $354 million respectively through the issuing of bonds and shares. Avianca successfully placed a $247 million bond offering earlier this week. The initial offer has already been sold, and a second offering is to be launched for an additional $100 million. The airline announced it will be using the proceeds to acquire 34 additional aircraft. GOL presented its plan to raise $354 million which is designed to improve the airline's financial structure. It has retained ItauBBB, the Bazilian banks investment arm as well as Merrill Lynch to help with the offer. Way to go guys!

THE E-FUEL MANAGER BY LARRY S. WEAVER

For this year: Employment is up. Stock Markets are up. Consumer confidence is up. In the US housing starts and housing sales are up. Prices are up. The only thing that seems to not be up is jet fuel demand. Yes, there was a slight bump in demand this last week per the US DOE, but overall, jet demand is still down about 13% from last year.

Prices also took a slight downturn this week but so far, for the year, the price of jet fuel (US Gulf Coast) is up 33% which isn't as much as crude (WTI) which is up over 47% since January. With the September OPEC meeting getting closer and the latest "target price" of OPEC ($75/bbl) getting closer, the only comments made recently are that OPEC does not need to increase production. With petroleum demand still not showing any significant recovery, we do not expect OPEC to change their production "quotas" and also do not expect that crude pricing will get to that $75/bbl mark within the next couple of months but it might reach it by year end

Other news, briefly

JetBlue adding service to Montego Bay from Boston and Orlando

JetBlue has applied to the Jamaican government for two new routes linking Boston and Orlando to Montego Bay. Service from Orlando will be non stop daily beginning February 8, 2010. Service from Boston will be Saturday only service beginning February 10, 2010.

Tourism in Mexico City grows 8% during the summer holiday season

Alejandro Rojas Diaz Duran, Mexico's Secretary of tourism for the federal district, announced that the capital had received 8% more tourists during the recent summer season over the same period in 2008. A total of 1,049,000 visitors were received during the season. This in spite of the problems the country has suffered as a result of the AH1N1 epidemic which seriously affected tourism in Mexico during May and June. Tourism is the driver!

Copa Airlines reports excellent load factor on flights to Mexico

The "model airline' announced that its load factors on flights to and from Mexico reached 85%. Ricardo Pedraza, the airline's Country Manager in Mexico announced that while load factors had fallen due to the flu epidemic during earlier months, he stated: "In spite of the fall off in demand, we didn't cancel a single flight between Panama and Mexico during that period." He also announced the airline will be adding capacity between the two countries shortly. Stay tuned.

Brazil's Azul launches cargo operation

The LCC is launching Azul Cargo this week which will handle lower deck cargo on its fleet of ERJs. According to the airline, the regional jets can carry up to 1,760 pounds of cargo in the lower deck and it plans to expand within Brazil and offer air cargo services in a number of markets that don't presently have the service. The airline currently has 40 ERJs on order from Embraer and options for 36. Wow!

Argentina decriminalizes personal use of Marijuana

The Supreme Court of Argentina has ruled that it is unconstitutional to punish for private use of marijuana as long as it doesn't harm anyone else. This makes it the second country, following Mexico, to allow personal use of the illegal drug. Mexico enacted a law earlier last week that decriminalizes possession of low quantities of most drugs including marijuana, heroin, cocaine and LSD. The beginning of legalization. Stay tuned.

"This is Chile" website launched by President Bachelet

The website is in three languages and is designed to promote the country as a tourism and business destination. It is organized in five sections: "About Chile"; "Business"; "Tourism"; "Study" and "Living". The website combines text with videos, articles, music, outside links and maps. One to watch.

AeroSur celebrates its 17^th anniversary

The Bolivian privately-owned airline celebrated its 17^th anniversary on August 25^th. Humberto Roca, the airline's CEO, announced that it plans to launch service to Colombia and Mexico later this year, and will be adding new aircraft to its current fleet of 12. The airline currently serves seven domestic and eight international destinations. Happy birthday, Humberto!