SAO PAULO, Sept 22 Brazilian airlines remain
cautious over the outlook for year-end air travel in the
country, as fallout from a recession, the weak job market and
still-high inflation are offsetting signs that demand might have
bottomed out, industry leaders said on Thursday.
In a statement, LATAM Airlines Group SA, the
country's largest carrier by capacity, has noted early signs
that air travel demand may have stopped slumping. Still, at this
point it is uncertain when purchases of tickets will start
According to Abear, the group that represents airlines in
Brazil, domestic flight demand dropped 6.6 percent while the
number of seats available dropped 6.2 percent in the year
through July. While those falls are a fraction of the declines
since earlier in the year, it might be too early to talk about a
recovery, Abear president Eduardo Sanovicz said.
"It has been a complicated year, but we prefer to see how
demand will behave in September before doing any predictions for
the end of the year," said Frederico Pedreira, Avianca Holdings
SA's top executive in Brazil.
Tourism agencies say eroding household income is taking a
toll on demand. Clients at CVC Brasil SA, Brazil's
No. 1 tourism operator, are inquiring about prices but have been
slow to buy tickets - a sign they are waiting until the last
minute to purchase them, said Chief Executive Officer Luiz
The situation underscores how local carriers, once bitten
twice shy, are coping with the impact of Brazil's longest
recession in eight decades. The crisis, which has led some of
them to return plane leases and refinance debt, could spark some
to sell stakes to larger rivals.
Earlier this year Gol Linhas Aéreas Inteligentes SA
failed to convince investors to swap costlier bonds
for new ones that are cheaper to service.
A stronger Brazilian currency has provided LATAM, Gol and
Avianca some relief, by reducing dollar-denominated operational
and financing costs, and bringing down fuel expenses.
The bright side is Brazilians were traveling abroad more as
the real currency strengthened. Latam Travel Brasil, a unit of
LATAM, reported a 15 percent rise in international package sales
in the year through August.
(Reporting by Paula Arend Laier; Writing by Ana Mano; Editing
by Guillermo Parra-Bernal and Phil Berlowitz)