E-NEWS UPDATE VOLUME 19 NUMBER 1023

ENRIQUE BELTRANENA RECEIVES THE FEDERICO BLOCH AWARD

The award was presented to Enrique Beltranena, CEO of Mexico's leading LCC, Volaris, at a ceremony last week during the 6^th Annual ALTA Airline Leaders Forum in Cartagena. The prestigious award which is bestowed upon a leader in Latin America and the Caribbean who best exemplifies the leadership, courage, character and vision of TACA's visionary, the late Federico Bloch.  The Award is managed by Michael Bell of the leading executive search firm, Spencer Stuart, and is voted on by an independent panel of five judges. Under Enrique's strong and unwavering leadership Volaris has literally "come out of nowhere" to become close to the largest airline in Mexico. This feat has been accomplished through a well conceived and most importantly, superbly executed program across all facets of the business - route network, pricing, in flight offering, marketing, fleet, stringent cost management, great reliability and sound capital financing.

Moreover, the airline is now starting to post profits despite the highly challenging, and consolidating marketplace in Mexico and Latin America. And it has signed its "first in the business code sharing agreement" with Southwest Airlines. Enrique joins prior award recipients that include Pedro Heilbron, Mauricio Botelho. Constantino de Oliveira, Jr, Enrique Cueto and one other (who shall remain nameless for this purpose). Enrique then made a lovely acceptance speech in which he thanked family, friends, and his workforce and ALTA for the honor. He also had some great comments about his one time mentor and boss, Federico Bloch as well as Roberto Kriete. Congratulations, Enrique - now lets go public with an IPO on the NYSE.

LATIN AMERICAN ADVERTISING: BETTER THAN EVER

According to a report in Latin Business Chronicle: "Latin America's ad market will fare better than expected this year, according to new estimates from UK-based ad agency ZenithOptimedia". While the agency predicts a global decline of 9.9% this year, it estimates the region will see total advertising expenditures of $30.6 billion in 2009. Which means that Latin America remains the fastest growing ad market in the world. And in 2010 it will grow even more than all other regions except Middle East and Africa. Among the top seven ad markets, Argentina will see the strongest growth in the next two years, while Chile will see the lowest two-year average. Brazil's ad market is expected to reach $12 billion this year, a 3.4% increase from 2008, which means that Brazil will account for almost 40% of Latin America's total ad expenditures. Next year ZenithOptimedia forecasts Brazil will see an 8.1% increase to $12.9 billion. Other important ad markets including Mexico (second largest) will reach $5.1 billion while next year the market should grow 9.3%. Colombia, the region's third largest ad market will likely reach $3.9 billion a 1.3% increase. Argentina, the region's fourth largest, will likely reach $2.4 billion, for an 11.5% increase and next year it should grow 10.9% to $2.7 billion. Advertising drives the economy!

THE E-FUEL MANAGER BY LARRY S. WEAVER

Crude prices took a breather for a day in their drive upwards but resumed the climb when Wednesday's report from the US DOE showed a larger than expected drop in gasoline stocks - remember that it is gasoline that drives the US market. Crude stocks were up with refining at a low 81.1 % capacity (down over the last month from 84.6%) but Heating Oil and jet stocks slid slightly. The "slightly" slides for jet have amounted to almost a million bbls over the last month and Heating Oil stocks - which are three and half times the size of Jet fuel stocks - have slid just over a million bbls in the month. Crude, in its upward march closed over $81 per bbl on Wednesday - up $2.25 per bbl from Tuesday and topped $83 per bbl on Thursday before settling back just over $81 per bbl. With crude on the march upwards, jet prices have been pulled up and are now over $2.10 per gallon in all markets except the Gulf Coast and that price was barely under the $2.10 per gallon. Demand for jet, however, has continued to slide dropping over 100,000 bpd in the last four weeks. Refining production of jet is down even more, however, which has caused the drop in stocks as imports have not made up the difference. 

With airlines such as United hedging over 50% and JetBlue (one of the few airlines showing a profit) hedging about 61% of their fuel cost, some of the increasing jet fuel cost is being covered. For those not hedged, these increases can cause severe damage to the financial bottom line. Per Air BP, a forward swap for 1Qtr 2010 is currently about $2.13 per gallon. With prices currently very close to that level today and climbing, it appears as though it may not be too late to consider entering into a hedge. We will be pleased to assist you in this if you wish to contact us.

Other news, briefly

ALTA appoints new Executive Committee at its successful 6^th Leaders Forum

As the Leaders Forum moves on with its resolutions for Safety, Cost Efficiencies and Environment it also announced the appointment of a new six-member Executive Committee for 2009-2010 as follows: Roberto Kriete, president; Manuel Borja, vice president; Fabio Villegas; Pedro Heilbron; Enrique Cueto and Libano Barroso. The conference has been recognized as the most successful to date, with optimism about the future of Latin American and Caribbean airline business. Congratulations Alex de Gunten and staff!

Pedro Heilbron talks about the need for consolidation in Latin America

Panama's "model airline" CEO, Pedro Heilbron, stated after the ALTA Leaders Forum in Cartagena that the industry is looking for further consolidation in the region, whether it is through joint ventures (ala Avianca/TACA) or more codesharing and marketing agreements. He is quoted in a press report saying that: "We have to decide whether we join another alliance since we are leaving a global alliance which we shared with Continental Airlines, or if we continue independently, which we are in the process of analyzing." According to an unnamed source, Copa and LAN would be a logical alliance partner of some kind. But Pedro would not comment since he prefers to remain silent on the issue until some kind of decision is made. Way to go, Pedro!

Low Cost airline in Mexico to resume flights

As the country recovers from the Swine Flu epidemic and overall economic downturn, Juan Carlos Zuazua, marketing director of Viva-Aerobus, has announced that the airline is increasing service in Mexico as well as expanding its alliance with ground transportation services. The airline will add flights between Guadalajara and La Paz, Los Mochis and Los Cabos. It has a relationship with IAMSA, a leading ground transportation consortium, which offers low fares in conjunction with the airline. One to watch.

Latin Trade has acquired Latin Business Chronicle

Miami Media LLC, the owner of Latin Trade magazine, has acquired our favorite source of Latin American business news, Latin Business Chronicle. Our good friend Joachim Bamrud will continue in his capacity as editor in chief of LBC. He stated in a press conference: "Thanks to our new home, we expect to achieve even greater editorial quality and commercial success." Congratulations Joachim and Latin Trade magazine - another great example of a major alliance.

LAN strengthens its presence in Ecuador

The Ecuadorean partner of Chile's "model airline", LAN Ecuador, will launch four weekly A318 flights between Quito and Cuenca on October 27. This could be just the beginning of a planned expansion in the Ecuador market. In just six months since it started service domestically and internationally, the airline has 14% and 27% market share respectively. More to come.

Iberia and GOL sign code sharing agreement

While the agreement is subject to government approval, Iberia is confident that it will be able to offer its code on Brazil's LCC, GOL on domestic flights to 13 destinations, including Porto Alegre, Salvador de Bahia and Brasilia. The Spanish airline carried close to 500,000 passengers on its nonstop flights between Spain and Sao Paulo and Rio de Janeiro. No mention was made, but it is likely, that GOL would place its code on Iberia flights to Europe. More consolidation.

BOA to fly to Buenos Aires, Sao Paulo and Lima

The state owned BoA - Boliviana de Aviacion - airline has announced plans to begin service to Argentina, Brazil and Peru as soon as government approvals are obtained. The airline currently operates two B737-300 aircraft and is taking delivery of a third similar aircraft to be used in the international operation. Another one to watch.