The majority owners of Uruguayan flagship airline Pluna have
started looking for a potential airline partner to invest in a
second round of financing, company president Matias Campiani said
Wednesday.
"We have until June next year to complete this process,"
Campiani told Dow Jones Newswires in an interview.
Campiani also heads investment group Leadgate, which bought a
75% stake in Pluna in April 2007 from the Uruguayan government,
which retains 25% of the airline. The two parties agreed to invest
at least $12 million by June 2010, and the government has said it
will invest at least $3 million to maintain its current
position.
Leadgate can contribute its share itself, but is seeking out an
airline partner which would contribute know-how and experience,
Campiani said. Leadgate is imitating the model used successfully by
Panamanian airline COPA Holdings SA (CPA), which partnered with
Continental Airlines (CAL), he said.
"An airline can provide much more than just money," including
advice on fuel management and security, Campiani said.
Campiani said he's talking to a number of airlines from around
the world but declined to name them, saying "it's really very
early." They're focused on regional operators, rather than the
major international carriers, as there'd be more of a fit with
Pluna's model, he said.
One airline mentioned by local press in Uruguay as a possible
candidate was Canada's Jazz Air LP. Manon Stuart, Jazz's corporate
communications manager, said Jazz conducted exploratory discussions
last year but nothing was ever negotiated, and "nothing is
scheduled in the foreseeable future."
Under any circumstances, Leadgate would retain control of Pluna,
he said.
Leadgate has been running the company for two "traumatic" years,
in which significant changes have been introduced after almost 25
years of the same operating model, Campiani said.
The firm has done away with the hodgepodge of aircraft Pluna
used, which was costly in terms of equipment, replacement and
training, and replaced them with seven brand new CRJ-900 aircraft
of Canada's Bombardier (BBD.B.T), with 90 seats in a single
configuration.
Pluna, which has an option on eight more CRJ-900s, is the first
airline in South America to sign up with Bombardier, and hopes that
its head start could allow it to provide maintenance and training
for any other airlines that may eventually buy that type of
aircraft, he said.
Leadgate also set about revising Pluna's business model.
Uruguay, with just over 3 million inhabitants, isn't a large enough
market to support an airline, so Pluna has turned its home base,
capital city Montevideo, into a hub, encouraging passengers to
connect through there to reach other regional destinations.
Pluna flies to Buenos Aires and Cordoba in Argentina, Rio de
Janeiro, Sao Paulo and Curitiba in Brazil, Santiago in Chile, and
Asuncion in Paraguay, Campiani said. It has agreements with
American Airlines, a unit of AMR Corp. (AMR), to fly passengers to
the U.S. and with Spain's Iberia (IBLA.MC) to target Europe,
Campiani said.
The airline has sought to extend operations within Argentina but
has met some resistance, and recently failed to secure a license to
operate out of Trelew, in the southern province of Chubut, Campiani
said.
Given those hurdles, it's looking instead to open up routes
through Paraguay, which doesn't have its own airline and could
become another hub for Pluna, Campiani said. The company is about
to start a direct flight between Asuncion and Santiago, the
airline's first route which won't go through Montevideo.
Pluna turned profitable in November 2008 and had the most
lucrative summer season in its history between December and
February, he said. Pluna's crown jewel during the summer is the
Uruguayan seaside resort of Punta del Este, a regional
destination.
The company ended the first half of the year in the black,
although the economic slowdown and a major swine flu outbreak in
Argentina have raised the risks for the second year.
The traditional pickup in passenger activity in June and July,
ahead of southern-hemisphere winter holidays, didn't materialize
this year, Campiani said. Travel to Argentina has been especially
weak, exacerbated by the Brazilian government's warning against
travel to its neighbor to the southwest.
"We hope this passes quickly. Hopefully from September the
situation will start to normalize," he said.
-By Matthew Cowley, Dow Jones Newswires; +54 11 4103 6740;
matthew.cowley@dowjones.com