Avianca-TACA expects $100m net profit in 2010

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The new parent company for Latin American airline groups Avianca and TACA is forecasting a net profit of $100 million in 2010 and revenues of $3 billion.

An Avianca spokeswoman confirms these figures were provided by Avianca-TACA CEO Fabio Villegas during a press conference last week to discuss Avianca's 2009 financial performance. Colombia-based Avianca and El Salvador-based Grupo TACA completed in early February a transaction which involves 13 carriers from 10 countries being placed under a new Bahamas-based parent company, Avianca-TACA Limited.

Last year the two airline groups combined to generate about $3 billion in revenues including roughly $1 billion at Grupo TACA and $2 billion at Avianca parent Synergy Aerospace, which also owns Brazil's Ocean Air. Both groups saw their revenues dip slightly in 2009 but were able to remain in the black.

Traffic at Avianca-TACA will likely increase in 2010 but revenues are expected to be flat due to lower yields, especially in the intensely competitive Colombian domestic market.

Villegas, who remains CEO of Avianca as he takes on the position of CEO for the new parent company, expects traffic in the total Colombian domestic market to increase by 25% in 2010. New low-cost competition has driven rapid expansion in the domestic Colombian market, including a 13% spike in traffic last year, but also has resulted in lower yields for all players.

In January, traffic in the Colombian domestic market was up 36% compared to January 2009, according to Colombian CAA data. Avianca's domestic traffic was up 21% as the carrier's domestic market share slipped from 57% to 49%.

Last year Villegas told ATI the Colombian domestic market accounts for 55-60% of Avianca's revenues. As a result the market now accounts for over one third of revenues at Avianca-TACA.

While combined revenues will likely remain flat in 2010, revenue growth is expected to resume in 2011 as the global economy improves and as the two carriers are able to start exploiting synergies created by the merger.