Thursday, July 28, 2016
Alas Uruguay - Financial Results, Talks with Azul and Boliviana & Returning One 737-300
Alas Uruguay continues to establish itself on the Montevideo (MVD) to Buenos Aires Aeroparque (AEP) and Asuncion (ASU) routes (also Aeroparque to Punta del Este (PDP) in the summertime) but has fallen well short of revenue projections made in it business plan.
The carrier had flown 27,000 passengers between its 22Jan16 inaugural flight and mid-May, broken down into 800 in January, 2,000 in February, 7,500 in March, and 8,500 in April with a forecast of 8,800 travelers in May.
Alas' market share on the all-important Montevideo (MVD) - Buenos Aires Aeroparque (AEP) route was approx. 20% with 13 weekly flights vs. Aerolineas Argentinas' 80% with 32 weekly services as of mid-May but it is gaining ground by about 4-5 percentage points per month, which is not surprising because even being a relatively unknown carrier, the passengers flying this route overwhelmingly originate in the Argentine and Uruguayan capitals with many of them being frequent flyers so it is natural for them to learn about Alas Uruguay without the carrier investing a lot in advertising. Both carriers charge an average of US$ 195 round-trip on the route.
Alas flies its other route, Montevideo (MVD) - Asuncion (ASU), 3x/weekly in competition with Amaszonas Paraguay's 10x/weekly flights using CRJ-200's.
The carrier had US$ 1.3 million in revenue in April and a similar amount in May but this is putting it on track to reach only 25% of its business plan projection of US$ 66 million for its first year of operations. With monthly expenses in the US$1.6 million range, the airline is losing money. Alas had projected a 60% load factor but was averaging only about 30%-40% full as of mid-May.
Alas' employees are reportedly collecting only 50% of their salaries, directing the other 50% to capitalizing the company. Even so, the airline has fallen behind in paying the reduced amounts.
By July, the airline's outlook appeared to improve a little bit as it paid back much of the backwages owed and its Aeroparque flights were reportedly completely full due to the Uruguayan and Argentine winter vacation periods.
Talks with Azul and Boliviana
Alas is also continuing some of the talks that it has already had with other carriers in the past about possible cooperation, mergers or takeovers with one of the latest discussions reportedly being with Azul Linhas Aereas about an investment that the latter wants to make in the Uruguayan airline but only if Alas reduces the number of employees on its payroll, returns all of its 737-300's and replaces them with ATR aircraft (which Azul already operates) and allows Azul to manage the airline, with Alas' management only accepting the proposed change of aircraft so far.
Boliviana de Aviacion, the state-owned Bolivian 737-300 operator, offered to invest US$ 5 million with co-management of Alas Uruguay at first likely passing on to Boliviana control in a few months with a deadline of 22Jul16 for Alas to make a decision but there has been no news so far.
Returning one 737-300
Most recently, it became evident that the carrier was going to have to cut back on fixed costs and it announced that it will seek to return one of its three 737-300's, CX-OAB (c/n 28869/2887), to the lessor. Alas is paying US$ 80,000 per month leases on the 737-300's and it apparently only needs two aircraft for the current level of scheduled service.