TACA expects $50m 2009 profit despite 10% revenue drop

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Grupo TACA expects to remain in the black this year despite a roughly 10% drop in revenues.

TACA CEO Roberto Kriete says the privately-owned El Salvador-based airline group, which is now preparing to merge with Colombia's Avianca, is on pace to generate about $1 billion in revenues in 2009. This represents roughly a 10% drop compared to the $1.1 billion in revenues generated last year but Kriete says the company's profit margin, excluding the impact of fuel hedges, has remained steady at about 5%.

"Our revenues are down but are costs are down," Kriete tells ATI. "We've become more efficient."

He adds TACA has been able to stay profitable despite the global economic downturn by "downgauging" several routes from Airbus A320 family aircraft to Embraer E-190s. Kriete says the timing of the E-190 deliveries has worked out well as the aircraft arrived just as the recession hit.

TACA ordered 11 E-190s in 2007 and took its first four E-190s in the second half of last year. Kriete says the group now operates eight E-190s and is currently scheduled to take the final three aircraft from the order in 2010 and 2011. He previously indicated all 11 aircraft would be delivered by the end of 2009.

Kriete says Grupo TACA has been able to reduce capacity by 4% this year by electing to return some of its A320 family aircraft as their leases expired. Some of the A320s that were returned were replaced with E-190s while others were replaced with new A320s from the group's outstanding order.

According to Flightglobal's ACAS database, San Salvador-based TACA International Airlines now operates 28 A320 family aircraft with 18 more on order. This excludes the three A319s at Lima-based affiliate TACA Peru.

At this time last year TACA International operated 33 A320 family aircraft. Kriete last November told ATI the carrier was planning to return five or six A320s in 2009 and cut capacity on its North American routes.

The other six airlines in the group only operate regional aircraft. This includes Costa Rica-based Lacsa, which along with TACA International operates the group's eight E-190s. The other five carriers - Guatemala's Aviateca, Honduras' Isleña, Nicaragua's La Costeña, Costa Rica's Sansa and Panama's Aeroperlas - operate turboprops under the TACA Regional brand. Kriete says all the regional carriers will be included in the planned merger with Avianca.

Although it is trimming capacity overall Grupo TACA is launching several new routes during the current quarter. This includes services from its San Salvador hub to Orlando, Cancun and Roatan and from its Lima hub to Mexico City and Port Alegre.

Kriete says TACA has been able to continue expanding its network by reducing frequencies in existing markets that have seen a fall in demand due to the economic downturn.