LACSA

Avianca Holdings 2014 net profit falls 52% to $120.5 million

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The airline operates four Boeing 787-8.
The airline operates four Boeing 787-8.

BOGOTA, Colombia–Avianca Holdings posted a full-year net profit of $120.5 million in 2014, down 51.6% from a net profit of $248.8 million in 2013. The Panama City-registered carrier reported full-year operating revenues of $4.7 billion, up 2% year-over-year (YOY), as expenses came to $4.42 billion, up 4.6% YOY. The company’s full-year operating profit was $284.6 million, down 26.1% YOY from 2013’s $384.9 million operating income.Avianca’s cargo revenue performance was strong in 2014, totaling $834.2 million, up 11.6% YOY. During the year, Avianca acquired a stake in Mexican airfreight carrier AeroUnion and entered into a commercial agreement with Etihad, “creating a stronger cargo operation and more connectivity from Los Angeles via Mexico, while also improving cargo connectivity to Europe, from Milan and Amsterdam to Bogota,” Avianca said. Avianca’s passenger traffic grew 4.5% YOY to 32.6 billion RPKs on a 5.9% rise in capacity to 41.1 billion ASKs, finishing 2014 with a full-year load factor of 79.4%, down 1.1 points from 2013. The company carried 26.2 million passengers in 2014, up 6.6% YOY. CASK for the full-year decreased 1.5% YOY to 10.7 cents, partly attributable to the drop in fuel prices during the 2014 fourth quarter, Avianca said. Excluding special items, Avianca reported an adjusted net income of $129.1 million for the year. The company said its 2014 EBITDAR (earnings before interest, taxes, depreciation, amortization and rents) totaled $786.7 million, down 5% YOY; Avianca’s full-year EBITDAR margin was 16.7%, down 1.3 points from 2013. In 2014, Avianca took delivery of 32 new aircraft, including 14 Airbus A-320 family aircraft, 10 ATR 72-600 aircraft for regional flight deployments, four Boeing 787-8 Dreamliners, two A-330s and two A-330 freighters. All 10 of the company’s Fokker 50s were phased out and sold; the company’s entire ATR 42 fleet was retired as well. As of Dec. 31, 2014, the company’s consolidated operating fleet comprised 181 aircraft. Avianca Holdings, created in 2009, operates Latin American airlines Avianca (based in Colombia), TACA (based in El Salvador), Costa Rica’s LACSA, Guatemala’s Aviateca, Ecuador’s Aerogal, plus Avianca Brasil, TACA de Honduras and TACAPeru.

Massive Layoffs in Avianca

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BOGOTA, Colombia–On November 14th up to 1800 employees systemwide were laid off at Avianca Holdings. The airline consortium owner of Avianca, TACA, LACSA, TACAPeru, Aerolineas Galapagos and TAMPA Cargo is suffering as more competition enters Colombia, Central America and the airline has not been able to recover up to 200 million dollars from Venezuela. Avianca is the second oldest airline in the world, created in 1919 in Colombia and an icon in Latin America. The merger with the TACA Group in 2009 created for a while the biggest airline in the region. Central America and the north of South America are now excellent revenue producers for U.S. carriers and Latin American airlines. For 2015 Southwest Airlines will open its first Latin American city: San Jose in Costa Rica and Spirit Airlines CEO Ben Baldanza will develop by May a new Central American hub in Houston International Airport to compete against United Airlines. Salvadorian start-up VECA Airlines is expected to start flights in February 2015 with two Airbus A-319s to Central America and most likely Fort Lauderdale, Los Angeles and Baltimore. Also the Colombian LCC Viva Colombia has announced its interest to operate to three cities in Florida. Pressure on Avianca has build up and layoffs were needed to lower the operational costs. Rumors are that the airline will have a second wave of layoffs in February 2015.

Turbulent air ahead for Avianca Airlines.
Turbulent air ahead for Avianca Airlines.

New Airlines and Flights to Costa Rica

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SAN JOSE, Costa Rica–On July 12th a complete article in LA NACION, Costa Rica’s main newspaper informed of the new flights and airlines that will start operations to Costa Rica.  On August 16th Avianca Airlines Costa Rican division under the name of LACSA will start flights from San Jose to Santiago, Chile via Bogota and from San Jose to Rio de Janeiro, Brazil always via ElDorado International Airport at the Colombian capital.  Also in August Cubana Airlines (the flag carrier of Cuba) will reinstate flights between Havana and San Jose. The airline used to operate the routes some years ago until it code shared it with TACA. Last year TACA suspended the route linking Cuba with Costa Rica. By November 1st the American carrier JetBlue Airways will open Boston-Liberia flights. For the end of the year the Civil Aviation of Costa Rica (DGAC) will have the final permits of the certification process of Air Costa Rica (Tica Air International) a new Costa Rican airline. The airline plans to start flights to Miami, Managua, Panama and San Andres Island. A second phase would include Quito, Guayaquil and Havana and a third phase would include New York and Los Angeles, routes once operated by LACSA. A second Costa Rican carrier, TICOS AIR has not been able to move forward in their certification process explained Alvaro Vargas, the director of the aviation department. Also Salvadorian start-up VECA Airlines is expected to obtain final permits to operate San Salvad0r-San Jose run. Vargas also mentioned Brazilian airline AZUL Linhas Aereas has been interested in learning about permit processes. Other airlines that have been metioned as interested in Costa Rica include Southwest Airlines, Alaska Airlines, Allegiant, Eastern Airlines, TAME of Ecuador and CONVIASA of Venezuela.

Cubana Airlines will start Havana-San Jose flights in August.
Cubana Airlines will start Havana-San Jose flights in August.

Adios Caracas…

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SAN JOSE, Costa Rica–Avianca informed on March 12th, it will suspend its San Jose-Caracas-San Jose route effective April 7th. The route has been operated by LACSA since the seventies when the service connected San Jose with the Venezuelan capital with stops in Panama City, Barranquilla and Maracaibo. When LACSA was purchased by Salvadorian TACA International Airlines, the route was changed to a non-stop flight between the two capitals. Last May Avianca (the Colombian flag carrier that purchased 70% of Grupo TACA) decided to shut down the former LACSA’s hub at Juan Santamaria International Airport in San Jose, cancelling the non-stop flights to New York-JFK, Los Angeles, Monterrey, Havana, Quito and Guayaquil. The next route to be cancelled was San Jose-Miami and now “adios Caracas”.  Costa Ricans will be forced now to fly via Bogota using the Avianca services or Panama City with COPA Airlines. It is now expected the Costa Rican government and AERIS (the private company that manages the Juan Santamaria International Airport) will request Venezuelan flag carrier CONVIASA to take the route.

April 7th will be Avianca's last flight bewteen San Jose and Caracas.
April 7th will be Avianca’s last flight bewteen San Jose and Caracas.

Delayed taking off?

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SAN JOSE, Costa Rica–Last September the Costa Rican team that runs the airline Ticos Air presented the required documentation to the Civil Aviation General Directorate in order to be certified to operate international flights in Costa Rica. It was expected the airline to start services by December, but still the new Costa Rican carrier has not been able to take off. The director of the Directorate (DGAC) informed the airline has not been able to move forward to the third phase of its certification, since it has not presented yet any of the five Airbus A-319s it stated will use for its international services to Miami, New York, Los Angeles, Caracas and Mexico City. Rumors in Costa Rica are Ticos Air’s CEO Gino Renzi has not been able to secure any investors for the airline to take off and that its loosing momentum. The airline has its headquarters in Forum, a high end business center in Escazu, but no one from the airline has been able to clarify when the airline will launch its flights. In the past several ill-fated projects for a Costa Rican carrier never took off, like West Caribbean Costa Rica and Aeropostal Alas de Centro America.

Ticos Air has not been able to move forward to its third phase of certification.
Ticos Air has not been able to move forward to its third phase of certification.

 

Political Promise: Limon International Airport

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SAN JOSE, Costa Rica–Johnny Araya Monge, the presidential candidate of the National Liberation Party (PLN) promised if he wins the elections in Costa Rica next February 2nd, to construct a new airport for the caribbean port city of Limon.  In 1974 the Costa Rican Government opened the Limon Airport close to the Caribbean Sea. Domestic airlines in Costa Rica (LACSA, Aerovias Cariari, AVE, SANSA and later Nature Air) operated flights from San Jose to Limon, but no international flights have ever used the terminal that uses the IATA code LIO. The other provincial airport in Guanacaste (Liberia International Airport) which was also opened in 1974 became an international airport in 2001 when Delta Airlines started its non-stop Atlanta-Liberia non-stop run. The Daniel Oduber Quiros International Airport in Liberia has helped the development of tourism in the region and it is exactly what  the politicians and the tourism industry requires for the Limon Province, the poorest of Costa Rica but one with rich Afro-Caribbean culture and folklore, white sandy beaches and the beginning of a coral reef that goes all the way north to the Yucatan Peninsula. A new international airport for Limon is the newest political promise, but one that is a real need for the province.

Limon International Airport has no scheduled domestic or international services.
Limon International Airport has no scheduled domestic or international services.

Cayman Airways expansion

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GEORGE TOWN, Grand Cayman–National flag carrier Cayman Airways Ltd. could enter a new phase of expansion during 2014 that could include new routes to Costa Rica, Panama and Colombia. The airline was established and started operations on August 7th, 1968. It was formed following the Cayman Government’s purchase of 51% of Cayman Brac Airways from LACSA (the now defunct Costa Rican flag carrier) and became wholly government owned in December 1977. A few months after it was formed, Cayman Airways flew its first international route to Kingston, Jamaica leasing a LACSA BAC-111-500. The airline acquired its first jet aircraft in 1978 and began services to Houston. In 1982 the airline acquired a Boeing 727-200 aircraft to strengthen the airline’s regional and international capability, also allowing for the introduction of first class service. These jets were eventually replaced with Boeing 737-300 series, and during the 1980s Cayman Airways offered scheduled or charter service to Atlanta, Baltimore, Boston, Chicago, Detroit, Minneapolis, Newark, New York, Philadelphia, & St. Louis. As the national flag carrier for the Cayman Islands, Cayman Airways now operates non-stop Boeing 737 jet service between Grand Cayman and the following major US cities: Miami and Tampa, Florida; Washington DC; New York, New York; and Chicago, Illinois. Nonstop jet service is also provided between Grand Cayman and regional destinations, including: Kingston and Montego Bay, Jamaica; Havana, Cuba; and La Ceiba, Honduras.The airline’s Cayman Airways Express service also operates Twin Otter aircrafts between Grand Cayman and the Sister Islands of Little Cayman and Cayman Brac. 

 

Cayman Airways is expected to open new routes in 2014 to Central America and Colombia.
Cayman Airways is expected to open new routes in 2014 to Central America and Colombia.

 
 
 
 

Finally. LACSA is no More

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MIAMI, Florida–When the Avianca Airbus landed last January 13th in Miami International Airport, more than half a century (64 years to be exact) of air history came to an end. Finally LACSA Airlines in no more. When in 2009 Avianca and TACA Airlines decided to merge, the latter’s Costa Rican hub (once developed by LACSA Airlines since the 1980s) run the chance of being shut versus TACA’s El Salvador and Lima hubs and of course Avianca’s at El Dorado in Bogota. LACSA’s San Jose hub was developed since 1979 when the then Costa Rican flag carrier expanded its service to New Orleans, New York, Los Angeles, San Francisco, Orlando  and Toronto in North America and Bogota, Lima, Quito, Guayaquil, Rio, Sao Paulo in South America. At that time LACSA’s slogan was: “Uniendo las Tres Americas” (Uniting the three Americas). Now Costa Ricans travelling to South America should use Avianca’s Bogota hub and for North America, the hub at El Salvador International Airport. Everybody hopes the vaccum left by Avianca would be filled up by the new Costa Rican airline Ticos Air that is expected to start flights on the first semester of 2014 with Airbus A-319s to cities like Miami, Los Angeles and New York.

Avianca suspended the last non-stop flight between San Jose and Miami last January 13th.
Avianca suspended the last non-stop flight between San Jose and Miami last January 13th.

The End of an Era

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SAN JOSE, Costa Rica–December 30th. At the age of 92 years, Captain Otto Escalante Wiepking died, closing a golden chapter of the Costa Rican Civil Aviation. He was only seven years old when Charles Lindbergh visited Costa Rica in the “Spirit of St. Louis” and since then he knew deep inside his life would be connected with aviation. In 1939 a young Otto Escalante graduates from highschool and a year later starts working for TACA Costa Rica in the cargo department. Once the United States joins the Allies in the Second World War, the American pilots flying in Latin America were all requested to join the armed forces, opening the possibilities for young latin men to become commercial pilots. Otto Escalante travels to the U.S. and in a year becomes a commercial pilot.  Escalante showed such professionalism, the United States Government gave him a scholarship at the Sky Harbour School of Aeronautics in Phoenix, Arizona. He returned to Costa Rica and works in several airlines like TACA Costa Rica and AVO. On March 12th 1948 he travels to Guatemala with Captain Guillermo Nuñez, flying two Douglas DC-3s. A day after Escalante and Nuñez returned to Costa Rica, the DC-3s heavy full of weapons and ammunition for Jose Figueres Ferrer’s National Liberation Army. In 1949 Otto Escalante returned to flag carrier LACSA and in 1960 he is appointed General Manager for the airline. Captain Escalante flew LACSA’s first jet in April 1967, a BAC-111-400 named “El Tico” and he kept working as a pilot until 1972 when he became CEO and President of the Board of Directors. Otto Escalante also founded Cayman Brac Airways (later Cayman Airways Ltd.) as a subsidiary of LACSA and was also SANSA’s President until he retired in 1989. Captain Escalante also served as a consultant for Aero Costa Rica S.A. (the other national airline that operated from 1992 to 1997). Today a great chapter of the civil aviation in this small nation is closed with a golden seal, that of a pioneer indeed.

Otto Escalante was LACSA's CEO and President until 1989.
Otto Escalante was LACSA’s CEO and President until 1989.

The Salvadorian Start-up

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SAN SALVADOR, El Salvador–For decades the airfares between the Central American capitals and most important cities have been as expensive or even more than a ticket to Miami, New York or Los Angeles. The Central American airlines of the 1970s like Aviateca, TACA International Airlines, SAHSA, TAN, LANICA, Aeronica, LACSA and COPA had almost an understanding of charging the same fares. In the 1990s when TACA International Airlines purchased the ill-managed Aviateca, SAHSA and LACSA, its merged consortium knowned as GRUPO TACA practically monopolized the intra-Central American market. Fares from San Salvador to Panama City could be as high as $500.00 and fares from San Jose to Guatemala City could be as high as $400.00. In 2009 when TACA Airlines and Avianca announced the merger between the two carriers, it was clear that the monopolistic practices of  the Central American market were going to be extended way beyond Colombia. In 2013 a group of entrepeneurs in El Salvador announced the creation of the first Low Cost Carrier (LCC) in the region under the name of VECA (Vuelos Economicos Centro Americanos). The airline is expected to operate from Comalapa International Airport (45 minutes away from San Salvador) to the capitals of Central America and important cities like San Pedro-Sula in Honduras and Liberia in Costa Rica. The airline will operate modern Airbus A-319s and will break the supreme monopolistic hold of both Avianca (the former TACA Airlines) and COPA Airlines, both carriers members of Star Alliance. In cities of the United States with high density Salvadorian population such as Los Angeles, Washington, New York and Houston the news of the Salvadorian start-up has been welcomed with enthusiasm. What is not clear yet is if VECA Airlines will ever spread its wings from El Salvador to the U.S. The airline is expected to start services in the first quarter of 2014.

VECA Airlines modern logo uses the colours of the Salvadoran flag.
VECA Airlines modern logo uses the colours of the Salvadorian flag.