Fine Air's purchase of Arrow Air could make it the largest of Miami's all-cargo international airlines, and will certainly extend its reach into South America.

Fine Air has been seeking growth through acquisitions for some time. Last year it completed a $120 million bond offering that insiders predicted it would use to fund such growth. Fine promptly tried to buy Southern Air, but the deal went sour and Southern flew into receivership. When Arrow Air recently changed owners, Fine Air grabbed the chance to buy its smaller rival for $115 million.

Fine Air Corporation, the cargo carrier's holding company, will continue to operate Arrow as a separate subsidiary. Fine has no plans to repaint any of Arrow's 17 freighters in its own livery. Over time, however, the two carriers will seek ways to integrate duplicate operations and take advantage of scale economies.

Instant access to four new South American markets may be the sweetest part of this deal for Fine Air. Fine has an extensive route network in Central America and the Caribbean, but in South America it only flies to Venezuela, Colombia, and Ecuador. It has rights to Peru, but has been blocked for several years from using them because Lima claims it supplied arms to Ecuador during a border war between those two countries. Fine denies those charges. Arrow, however, has a strong presence in Peru, and also adds Argentina, Bolivia and Brazil to the network. Ecuador is the only place in South America where the two carriers overlap.

Source: Airline Business