War in Ukraine to deepen aviation crisis, Latam CEO says
The scenario of high airfare prices, which has left many consumers concerned and even led to a change in transportation, is not expected to be reversed in the short term, Latam CEO Jerome Cadier said during a live-streamed interview with Valor. The main reason for rising prices is the aviation fuel, which is sold at high levels because of the war in Ukraine. The rise in costs has made Latam cut its outlook for growth of passengers this year versus 2019 to about 7% from 15%."I don’t know what this is coming to," the executive said of the price hike. "The rise doesn’t just come with oil. It’s also gone up with the difference between oil and jet fuel because of the limitation of refining capacity worldwide," Mr. Cadier said. "We clearly don’t see in the coming months a quick solution to this conflict and that’s why I don’t see fuel prices falling - and, consequently, airfares falling either in the coming months."Even before the war, data from the National Civil Aviation Agency (ANAC) showed that the air ticket sold in the domestic market in 2021 reached R$494, up 19.28% compared to that seen in 2020, and 2% above 2019. According to ANAC, this was the highest surge for a year since 2008, when there was an increase of 37.82%. From January 1 to May 1, the increase in the aviation fuel in Brazil reached about 48%.The escalating prices of aviation fuel caused Latam Brasil to revise its flight growth projections. "I am flying less than I imagined at the beginning of the year," he said. Before, the company expected to expand the domestic supply of seats by 15% this year against 2019, a percentage that went to something between 5% and 7%.In the international segment, the recovery is slower. Today, the offer of seats is 60% of what was seen in 2019 at Latam. "We only foresee a 100% recovery at the end of next year."Mr. Cadier also pointed out that the creation of a holding company by the controlling shareholders of Avianca and Gol — which still depends on the approval of regulatory bodies — does not change Latam’s plans. The new group tends to have the strength to fight with the Chilean company both in the domestic and international markets.According to Mr. Cadier, the company is focused on getting out of the judicial recovery in the United States (Chapter 11). The executive highlighted, however, that consolidation moves in the country signal a...
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