Avianca Aims To Delay Aircraft Deliveries

March 30, 2016

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Avianca will hold off on receiving new aircraft as it looks to weather the region's economic downturn with a conservative strategy.

By delaying the new plane deliveries, Avianca will ease its need for capital, company president German Efromovich said.

Avianca will also look to cut routes that are not "strategically important," and will not look to significantly increase capacity this year.

"The initial plan was to renew the entire fleet for 2024, starting in 2017," Efromovich said.

"What we're looking at now is shrinking this process to the maximum extent possible and stretching its start out to 2019-2020."

Avianca will wait until April to determine the extent to which the company will delay deliveries for 130 planes already under order. He said that the company's arrangement with Airbus allows for some flexibility in this regard, within a "given deadline".

On Tuesday, Airbus projected that the number of airliners in operation in Latin America will more than double over the next two decades, with 2,540 new planes needed by 2034, worth USD$330 billion.

Efromovich said Avianca Brasil has maintained profitability despite the nation's slow economy thanks to a conservative strategy, and other Latin American markets have compensated for sluggish growth there.

He added that the short-term opportunities to increase capacity in Brazil were significantly diminished.

"I can't say that Brazil is better, it's worse," he said.

"We were growing at 30 to 40 percent in previous years, and now we're going to grow capacity this year between 5 and 6 percent through plane renewal."

(Reuters)