ALTA: Boeing eyes bigger slice of Latin American market

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Losing a recent order to Airbus was “painful” but has not altered Boeing’s ambitious goals to increase its presence in Latin America.

The existing split between Airbus and Boeing aircraft in airline fleets in the region is “too close” to even, says Van Rex Gallard, Boeing’s vice-president of sales for Africa, Latin America and the Caribbean.

Gallard says Boeing’s objective is to keep a 50% share of the narrowbody market, while riding the 787 family and the future 777X family to a 60-70% share of the widebody fleet.

“Our goal is to capture a greater market share than we have right now,” he says.

This objective never seemed more threatened, however, than on 21 October. On that day Mexican low-cost carrier VivaAerobus announced an order for 52 Airbus A320s, including 40 re-engined A320neos.

“That’s a loss that personally hurts me,” Gallard says.

As Boeing’s top salesman in the region, it’s not hard to see why. VivaAerobus ordered the A320s to replace a fleet of 18 737 Classics, so Boeing lost a deal and an existing customer at the same time.

“We shouldn’t have lost that one,” he says. “It’s just the wrong airplane for those guys. We didn’t win, so something happened.”

Though clearly stung by the loss, Gallard says he thinks Boeing will be better off in the long run after recently securing another order from a long-time customer in the region: Aerolineas Argentinas.

On the same day VivaAerobus ordered its 52 A320s, Aerolineas Argentinas signed a deal to buy 20 737-800s. Though smaller and representing only current-generation aircraft, Gallard says he prefers the Aerolineas Argentinas order to the VivaAerobus deal.

“If you had asked me a year ago which one I would rather have in my portfolio, it’s Aerolineas Argentinas,” Gallard says. “Viva? I mean, they ordered 42 airplanes, but what they have right now is 18 Classics and they’re in a very competitive environment.

“Aerolineas Argentinas is a flag carrier for Argentina,” he continues, “which, as you know, is a large, growing economy – with its issues, of course.”

Not surprisingly, perhaps, Gallard also prefers the growth prospects of a 737 customer such as Copa Airlines over that of VivaAerobus.

“The beauty is going to be, to me, seeing Copa continue to grow as a regional operator, bringing all that traffic to the so-called ‘Hub of the Americas’,” he says. “Once they decide on the Max, that’s going to be a huge machine for these guys to go deeper into South America.”

Copa is a major operator of the Boeing narrowbody but is yet to announce an order for the 737 Max. Asked whether Copa will announce an order soon, Gallard suggests asking the chief executive, Pedro Heilbron, during the ALTA Leaders Forum. “It will be a great to celebrate the day that Copa decides on the Max," he adds.

In the widebody market, Gallard likes the potential of the 777X family in the region, particularly with existing 787 customers LATAM and Aeromexico. The higher-volume 777-9X will make a good fit for LATAM’s routes from Sao Paulo, he says. The longer-range 777-8X, meanwhile, could help Aeromexico open routes to China, he adds.

A complicating factor, of course, is the competition. LATAM also has ordered the A350-900, and Airbus is likely to propose the A350-1000 as an alternative to the 777X.

“It’s always an issue,” Gallard says. “More than likely, [Airbus is] going to try to convert the customers like they’ve done in other places, from the -900 to the -1000.”

This time, however, Gallard doesn’t expect another disappointment.

“If the airline runs the numbers and it’s a head-to-head competition, and they don’t have any what I call existing currency, like existing orders, we should be able to introduce the 777X as the replacement airplane,” he says.