E-NEWS UPDATE VOLUME 19 NUMBER 0924

PLUNA IS OPTIMISTIC ABOUT ITS FUTURE DEVELOPMENT

Its new Argentine affiliate/subsidiary, Aerovip began operating one of Pluna's Bombardier regional jets with four daily domestic flights in Argentina. Leadgate, Pluna's major stockholder owns 60% of the Argentine re-startup, which it says will be transferred to the Uruguayan airline as a major shareholder in Argentina. On November 18, Pluna will launch its nonstop Montevideo-Foz de Iguazu service. It has recently launched daily flights between Asuncion and Santiago, Chile and is adding more capacity between Montevideo and Porto Alegre to provide daily service. At a luncheon this week, the Uruguayan "born again" airline's CEO, Matias Campiani, announced that the Uruguayan minority shareholder has agreed to invest US$3 million in the airline while Leadgate will invest US$9 million. He also stated that it is likely that Canada's JAZZ, along with a group of investors could invest US$15 million for which Pluna will issue new shares. Matias is very optimistic about the upcoming summer season where he sees the airline doing extremely well. Wow, way to go, Matias - it's all about optimism.

LATIN AMERICA: MORE INDIAN BUSINESS

Is the headline in this week's Latin Business Chronicle article which leads with the statement: "Indian and Latin American exporters are finding new markets to offset  weaker growth in developed countries". Last year, Indian trade with Latin America grew by 45.4% to $16 billion. Indian exports to Latin America grew by 50% to $7.5 billion. while imports from Latin America increased 42% to $8.5 billion. That compares with Latin America's 12.9% trade growth with the United States, its top trading partner. The 'must read' article goes into considerable detail about Indian investments in the region. Which include India's Tata Consultancy Services opening a new Global Delivery Center in Buenos Aires. As well as Mexican cinema chain, Cinepolis, plans to invest in south India for setting up multiplexes across the four states. And much, much more. Indian trade with Latin America, already growing significantly the past decade, is expected to double by 2012. To reach that goal, India is setting up trade centers in Sao Paulo, Buenos Aires, Santiago and Port of Spain. For the complete four page article go to: www.latinbusinesschronicle.com. So where's the crisis!

THE-E-FUEL MANAGER BY LARRY S. WEAVER

The weekly US DOE statistics released yesterday baffled the experts and showed where the market is really heading. The "experts" expected a drop of some 1.5 million bbls in crude while the DOE showed an increase of 2.8 million bbls. Even the API figures showed a crude increase albeit not as large as that from the DOE. Even though refinery runs were down - which explains part of the increase in crude stocks - inventory levels of gasoline, jet and heating oil all climbed as the total demand for these products slipped yet again. The demand for both gasoline and middle distillates is down over 9% from last year while jet fuel demand is down only 5.8% although jet demand was down over 12% through most of the summer. Stocks for jet since August have been higher than they have been since 2000.

The above, combined with a slight strengthening in the value of the US dollar, caused a drop of over $2.00 per bbl in crude prices from earlier this week. With new Indian export refineries coming on stream, even should we have a very cold winter, it is not believed that the surplus of stocks will be cut this winter. Even though speculators may drive the market up some, we do not think that we are going to see crude prices over the $75 per bbl level for the next several months - or, possibly, even longer.

Other news, briefly

TACA Peru adding flights to Mexico from Lima

The subsidiary of the TACA Group airline has announced it will be launching three weekly nonstops between Lima and Mexico City on November 1. It is also adding service between Lima-El Salvador-Cancun with three weekly flights. The airline group already serves Santiago from Mexico City. Stay tuned.

Aerosur is adding aircraft and expanding international routes

The privately owned Bolivian airline has acquired two Boeing aircraft, a B737-300 and B737-200 which are already operating domestic routes. It will launch a nonstop B737-300 flight to Sao Paulo in the next week. Both aircraft are scheduled to expand international service. One to watch.

GOL is launching shares offer for US$248 million

Brazil's LCC which now owns Varig is launching a shares offer to raise US$248 million to strengthen its balance sheet. The company has hired ItauBBA - the investment arm of the largest private bank in Brazil along with Merrill Lynch to coordinate the offer. Way to go!

Colombia reports traffic growth in July

The Association of Air Transport in Colombia (ATAC), reported that domestic traffic in July was up 16.7% year-over-year, with the seven month total up 4%. International traffic was up 2.1% with the period total up 3.1%. Domestic air cargo was down 22.6% to 57,278 tons. International air cargo was also down in July from 306,319 tons in July 2008 to 251,499 in July of this year. Stay tuned.

Air France and AeroRepublica sign marketing alliance

While it was not clear that it is a code sharing agreement, both airlines were very optimistic about the alliance which basically means a passenger can check in with either airline to its final destination without having to bother with baggage and other documentation. The service is called "thru Check" and means passengers to and from domestic points in Colombia flying to and from any point in the world through connecting services, only checks in once with the originating airline. Sounds positive, but why not code sharing?

TAP returns to Argentina through code sharing with Brazil's TAM

Portugal's leading national carrier has opened an office in Buenos Aires as part of its code sharing agreement with Brazil's TAM. TAM provides some 30 weekly flights between Argentina and Brazil to connect with its Portuguese partner that operates between Brazil and some 62 destinations in 30 countries and 60 weekly flights. Way to go!

LAN Peru to launch Lima-Cancun via Mexico City

On October 7 the Peruvian partner of the "model airline" based in Santiago, will launch twice weekly B767 service between Lima-Mexico-Cancun-Lima. The return flight is direct to Lima from Cancun. LAN Peru now serves 21 destinations from its hub in Lima. Manuel van Oordt, the Peruvian airline's General Sales & Marketing manager, stated: "This way we are increasing destinations for our clients - and feel sure we are taking a big step for the development of tourism and commerce for Peru."  Stay tuned.

Colombia's Aires to expand service to the US and Brazil

The airline, which currently serves 23 domestic and four international routes has been authorized by the Colombian Civil Aviation Authority (AEROCIVIL) to begin service to the US and Brazil. It plans to start 28 weekly flights from different points in Colombia to New York and Fort Lauderdale, as well as beginning four-weekly flights between Bogota and Sao Paulo this week. Another one to watch.

Delta TechOps contracts to install winglets on LAN 767s

Delta TechOps, Delta's maintenance division, announced the signing of a one-year agreement to install winglets and provide airframe services on LAN's B767 fleet. The winglets will reduce fuel usage by approximately 450,000 gallons per year and decrease CO2 emissions for each aircraft by 5%.