Vasp's $47.5 million purchase of 49 per cent of LAB effectively gives it control over the Bolivian flag carrier, which will use the proceeds for internal development as well as to form an alliance with Vasp and its other recent acquisition, Ecuatoriana.
Part of the Bolivian government's 51 per cent shareholding is earmarked for employees, and the rest will be placed in trust until a mechanism is in place for distributing the holding among Bolivia's population, Edgar Saravia of Bolivia's Ministry of Capitalisation told the Airline Business/SH&E Latin American airline conference in early November.
At $42.24 per share, the Vasp bid represents a premium of $21.71 per share over the book value of the Bolivian carrier, said Saravia. However Vasp is only paying $5 million in cash up front. The rest of its tender is made up of a new Boeing 737-300 valued at $31.9 million; a five-year $8.6 million agreement to pay 30 per cent of the operating lease costs of a second B737-300; and $2 million worth of technical assistance.
The deal is similar to Vasp's purchase of 50.1 per cent of grounded carrier Ecuatoriana, in which the Brazilian carrier only paid $10.5 million of the $32.9 million purchase price in cash up front.
LAB is the last Latin American carrier to be privatised. Vasp's tender was accepted on 19 October and the deal was due to close on 30 November. Other aviation firms which acquired the bidding papers included LanChile, Ladeco, National Airlines, Varig, Korean Air, British Aerospace and Gecas.
An early consequence is that Vasp and Ecuatoriana plan to join LAB as members of LatinPass, the frequent flyer programme consortium's manager, Bob Booth, told the conference. Along with other new members Transbrasil, BWIA and APA, this will bring membership to 19 airlines. However Varig, Aerolineas, Viasa and Aeromexico remain outside the programme.
The LatinPass airlines now have 1 million frequent flyer members, plus a link to USAir's 14 million member programme. In the first nine months of the programme, these flyers have built up 40 million credit miles, bringing $6 million of new airline revenues, said Booth. However, British Airways' intended link with LatinPass has been put on hold due to bid speculation surrounding USAir.
Richard Whitaker
Source: Airline Business
