Airlines ready to pounce on Avianca in Latin American slump
By Jeffrey Dastin and Brad Haynes
NEW YORK/SAO PAULO, June 6 (Reuters) - The airlines circling Panama-based Avianca Holdings SA and its Brazilian cousin show that Latin America retains an attraction for foreign carriers, even in the midst of a regional economic slump, as local currencies nosedive.
For foreign buyers flush with U.S. dollars, Avianca offers a solid foothold on a continent with just a handful of major players and plenty of untapped potential for leisure and business travelers in a region where many still travel long distances by car and bus.
United Continental Holdings Inc and Delta Air Lines Inc are vying with China's HNA Group for a chance to buy into Bolivian-born entrepreneur German Efromovich's operations spanning from Havana to Rio de Janeiro, sources told Reuters on Friday.
A string of quarterly losses from the region's carriers, including three in the past year from Avianca, have not deterred U.S. airlines, which are cashing in on low fuel costs, strong demand and rising revenue from checked bags and other services, but are running out of room to grow domestically.
The strong dollar squeezing the profitability of South American airlines makes them relatively cheap targets for foreign rivals playing catch-up on the continent, and looking to position themselves for an upturn.
"The market will come back up," said Joel Chusid, U.S. executive director for China's Hainan Airlines Co Ltd , speaking as an aviation industry veteran without any knowledge of parent company HNA's plans. "The people are still there."
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