COVID-19: Latin America market update (w/e May 10)

David Casey May 15, 2020

Welcome to Routes’ look at how the Latin America aviation market is responding to the COVID-19 coronavirus pandemic, helping you understand the schedule changes and manage the impact so we can navigate through this crisis together.

The data is supplied by OAG using its OAG Schedules Analyser tool unless stated. Please note: the COVID-19 crisis remains fluid as airlines around the world continue to make dramatic capacity cuts. OAG has taken several steps to ensure the data is as accurate as possible.

LatAm capacity

Latin America’s market shrank by 26.5% last week (w/c May 4) compared with the previous seven days to 1.16 million available departure seats. The reduction means that overall capacity across the continent is now 86% lower than the same week a year ago when there were 8.2 million seats in the market. Central America accounted for the lion’s share of the seat decline last week, with capacity tumbling by 53% to 322,417 seats.

https://infogram.com/covid-latam-capacity-withc-4-may-1hdw2jw1l37j4l0?l…

LatAm countries

The steepest capacity fall last week in numerical terms was in Mexico, where in excess of 280,000 departure seats were lost from the market. Capacity from and within the country totaled 256,588 seats, compared with 1.8 million this time a year ago.

According to the latest figures (May 14), there have been 40,186 confirmed cases of COVID-19 in Mexico and 4,220 deaths. However, Mexico’s government this week said that 269 coronavirus-free towns—out of a total of more than 2,450—will reopen next week as part of a gradual easing of lockdown restrictions.

The below infographic shows the weekly capacity of the top 10 Latin America countries a year ago (w/c May 6,2019) compared with last week, highlighting the dramatic falls across the region’s largest markets. The figures show that Brazil’s market is just 7.8% of what it was a year ago.

https://infogram.com/covid-latam-countries-withc-4-may-1hdw2jw10ndj4l0?…

LatAm airlines

https://infogram.com/covid-latin-america-airlines-withc-4-may-1ho16veqx…

The major story in Latin America in recent days has been Avianca’s decision to file for Chapter 11 bankruptcy in the US, blaming the coronavirus pandemic for the “most challenging crisis” in its 100-year history. The Colombian carrier sought bankruptcy protection in a New York court having so far failed to secure a government bailout.

Avianca is directly responsible for more than 21,000 jobs throughout Latin America, including 14,000 in Colombia. The Bogota-based airline carried in excess of 30 million passengers last year to 76 destinations in 27 countries across the Americas and Europe.

It hopes the restructuring of its balance sheet and obligations will allow the carrier to protect jobs and “comprehensively address liabilities, leases, aircraft orders and other commitments.”

In parallel to its Chapter 11 filing in the US, the airline intends to close its operations in Peru, saying the decision “supports essential right-sizing efforts and will allow Avianca to renew its focus on core markets upon emergence from its court-supervised reorganization.”

Despite the ongoing uncertainty caused by COVID-19, LATAM Airlines Group this week signed its long-planned joint venture agreement between North and South America.

Atlanta-based Delta completed its acquisition of a 20% stake in Chile’s LATAM in late December through a tender offer that valued the Chilean group at roughly $1.94 billion. Full implementation of the JV still requires regulatory approval on both continents.

“While we remain focused on navigating the COVID-19 crisis and protecting the safety and well-being of our passengers and employees, we also have to look to the future to ensure the best possible customer experience and support the long-term sustainability of the group,” LATAM Airlines Group CEO Roberto Alvo said.

“Our bilateral strategic alliance with Delta remains a priority and we firmly believe that it still promises to offer customers the leading travel experience and connectivity in the Americas.”

GOL Linhas Aéreas is to reopen bases in Brazil at Foz de Iguacu (IGU), Navegantes (NVT) and Maringa (MGF) later this month and gradually increase its flying program. A total of 120 aircraft—about 92% of the airline’s fleet—have been grounded since late March as part of efforts to control the spread of the coronavirus.

The carrier now intends to reopen the bases at IGU, NVT and MGF and restore a “limited number” of flights from São Paulo Congonhas (CGH) and Rio de Janeiro’s Santos Dumont (SDU) and Galeão (GIG).

In total, the Brazilian airline expects to fly about 12% of its May 2019 schedule this month. According to OAG Schedules Analyser, GOL operated an average of 4,491 weekly flights during May 2019 with 781,050 weekly seats.

The airline is also assessing a fleet reduction focused on its 23 737-700s and has restructured its order book, reducing 737 Max deliveries by 14 in 2020, 20 in 2021 and 13 in 2022.

Fellow Brazilian carrier Azul is also re-evaluating its fleet requirements and has opted to defer 59 Embraer E2s that were originally scheduled for delivery in 2020-23. The aircraft, valued at R$24.5 billion at list prices, will now be delivered in 2024 and beyond.