E-NEWS UPDATE VOLUME 19 NUMBER 1013

LATIN TRADE'S LIST OF THE TOP 500 COMPANIES IN LATIN AMERICA

The July/August issue of Latin Trade lists the largest Latin American privately held, publicly traded and state run companies in 2008. We looked for airlines primarily in publicly and privately traded. To be expected, our four "model airlines" - which are all publicly traded made the list as follows:

Publicly traded

Rank             Airline           2008 Revenue           % chg y/y           2008 Net income

58                    LAN                 $4,590 billion                    30.15                 $339.7 million

59                    TAM                 $4,532 billion                   -15%                  -$582 million

89                    GOL                 $2,742 billion                 - 2.2%                  -$592 million

158                 COPA              $1,288 billion                  25.5%                 $118.7 million

It is worth noting that all four "model airlines" are profitable in the first half of 2009

Privately traded

While there are only three privately traded airlines listed, we believe there are several others that would have made the list but just don't publish results. The three listed by revenue only are:

Rank   Airline                               2008 revenue

144                 Aeromexico                                      $1,945 billion

155                 Mexicana                                           $1,829 billion

278                 Aerolineas Argentinas                      $984 million

We believe Avianca and TACA (in the process of merging) would be ranked somewhere in the top 50. But we will have to wait for the final 2009 figures some time in mid 2010.  Stay tuned.

UPDATE ON THE AVIANCA-TACA JOINT VENTURE

Since the announcement last week, we have some updates from a variety of sources including MercoPress South Atlantic News Agency as follows:

• The joint venture will have 130 aircraft and 13,000 employees. The combined routes cover about 100 destinations in the Americas and Europe where they operate both passenger and cargo services.
• Avianca's shareholders will have 67% of the stock in the new holding company while TACA's will have the balance. The holding company,

Holdco, will be established in the Bahamas in preparation for an IPO on the New York Stock Exchange some time in the future. The board of directors is as follows: CEO Fabio Villegas (Avianca); Chairman Roberto Kriete (TACA).

• Combined revenue of the airlines involved will reach $3 billion in the first year. It is the fourth largest Latin American airline in terms of capacity as reported in a November 2009 ASM report in Airline Weekly, following TAM, GOL and LAN.
• Both TACA and Avianca have announced plans for expansion in Peru and Brazil as well as regional and long haul international routes.

No question that it will be a major player, if not the major player in Latin America. One to watch.

INVESTORS FLOCK TO URUGUAY LOOKING FOR OPPORTUNITIES

According to MercoPress South Atlantic News Agency on October 8, investors from Brazil, Argentina, Spain's Basque province and China are looking for opportunities in Uruguayan assets given the excellent political stability record of the country and proven reliability of its Judicial branch. The trend has been steadily increasing for several years and is proving impervious to the general election at the end of the month. Analysts anticipate that not much will change whoever wins the election, since the three main political forces have rotated in office, and have been very careful in their support of orthodox economics and fostering foreign investment. Where's the crisis?

Other news, briefly

Copa Holdings September 2009 traffic; RPMs up 11.2%, ASMs up 7.4%

Copa Holdings, parent of Copa Airlines and Aero Republica, reported that consolidated traffic (RPMs) increased 11.2% while capacity (ASMs) increased 7.4%, moving load factor up 2.6 p.p. to 75.4%. Copa Airlines passenger traffic for September increased 10.2% on an 8.4% increase in capacity, moving the load factor up 1.2 p.p. to 77.0%. Aero Republica passenger traffic for September increased 18.9% on a capacity increase of 2.0%, moving the load factor up 9.4 p.p. to 66.5%

GOL September 2009 traffic; RPKs up 26.6%, ASKs up 8.7%

GOL Linhas Aereas Inteligentes, parent of GOL and VRG, reported that system-wide passenger traffic in September increased 26.6% and capacity increased 8.7%. System-wide load factor was 66.4%. Domestic passenger traffic for September increased 36.4% and capacity increased 14.7%. Domestic load factor was 67.2%. International passenger traffic for September decreased 22.4% and capacity decreased 23.4%. International load factor was 60.4%. 

LAN Airlines September 2009 system traffic; RPKs up 11.9%, ASKs up 9.3%

System passenger traffic for September increased 11.9% as capacity increased 9.3% resulting in a 1.8 point increase in load factor to 78.8%. Domestic passenger traffic in Chile, Argentina, Peru and Ecuador increased 17.5% as capacity increased 15.0% moving the domestic load factor down 1.6 points to 77.0%. International passenger traffic for September increased 9.8% as capacity increased 7.1% moving the load factor up 1.9 points to 79.6%. International passenger traffic accounted for approximately 70% of total passenger traffic. Cargo traffic in the same period decreased 8.0% as capacity decreased 7.0%. As a consequence, cargo load factor decreased 0.8 points to 69.8%. Cargo traffic decreased mainly as a result of a slowdown in import and export markets in Latin America as well as the reduction of salmon exports from Chile.

Peru estimates the US will invest $2 billion in 2010

According to the Peruvian ambassador to the US, and former minister of economy, Juan Valdivieso, the US private sector will invest $2 billion in the country's infrastructure, energy and other sectors in 2010. He recently participated with more than 100 US investors at the Investment Forum 2009 in New York. Stay tuned.

Thirteen bidders for Peru's Regional Airports Package

ProInversion, the Peruvian private investment promotion agency, has announced that there are 13 qualified bidders for the concession second package for regional airports in Peru and have all purchased the basic package for the proposals. Investors include Peru, Europe, South America and North America. Airport investment is essential.

Mexico's Volaris has applied for Los Angeles service from Morelia and Zacatecas

The successful Mexican LCC has applied for new routes between Morelia and Zacatecas to Los Angeles, starting later this month. The airline already serves Los Angeles and Oakland from its hub in Toluca and Guadalajara. Enrique Beltranena also denied that it was considering a merger with Aeromexico. Way to go, Enrique.

David Barioni Neto stepping down as CEO of TAM

The announcement has yet to be confirmed, but sources tell us he is stepping down after a successful tour of duty in Brazil's largest airline. He is being replaced temporarily by the airline's CFO, Libano Barroso. Sorry to hear the news, David - but good luck!

Aeromexico and GOL sign a code sharing agreement

While the agreement for Aeromexico to place its code on flights operated by GOL within Brazil, the agreement calls for code sharing on flights between Sao Paulo-Rio, Belo Horizonte, Porto Alegre, Curitiba, Brasilia and Salvador. There was no word on whether GOL might place its code on flights to and from Mexico. Stay tuned.