Saturday, May 14, 2016

Alas Uruguay - Summary of Developments - September 2015 - May 2016

Alas Uruguay 737-33R, CX-OAB (c/n 28869/2887) pushes back at Buenos Aires Aeroparque (AEP) on 17Mar16.  (Phil Perry Photo) 

The last posting on this blog regarding Alas Uruguay was in August 2015.

Since then the carrier has taken delivery of its third 737-300, completed the process of acquiring its Air Operator Certificate (AOC), and started scheduled service from Montevideo (MVD) to Asuncion (ASU) and Buenos Aires Aeroparque (AEP).     

Alas Uruguay was launched in recent years by former PLUNA employees and the Uruguayan government looking to find gainful employment for the workers and replace some of the air connectivity that was lost when the former national airline was abruptly shutdown by Uruguayan President Jose Mujica on 05Jul12 due to the carrier's continuing losses.

Alas, which was at one point to be organized as a worker's cooperative, was instead formed as a corporation with the former PLUNA workers owning most of the carrier.  The FONDES Uruguayan government business development fund granted Alas a US$ 15 million loan to be taken in installments to be paid back over a 10-year term to help the airline literally get off the ground. 

Alas contracted to lease three 737-300's with plans to deploy them on many of the same routes flown previously by PLUNA to Argentina, Brazil, Chile and Paraguay with the most important route by far being the highly-profitable "Air Bridge" between Buenos Aires Aeroparque (AEP) and Montevideo (MVD).  

First 737-300

The first 737-300, put on the Uruguayan register as CX-OAA (c/n 28569/2996), was delivered to Alas on 28Jan15, though it spent several months in Porto Alegre (POA) undergoing preparations for entry into service prior to flying to Alas' Montevideo (MVD) base.  It was originally delivered to Air France in 1998 but mostly flew for Ukraine International Airlines before going on to Alas.  

Second 737-300

Alas' second 737-300, CX-OAB (c/n 28869/2887), was delivered on 06Mar15 after having flown for Western Pacific Airlines, Olympic Airways/Airlines, and Ukraine International since its original delivery in June 1997.  

Third 737-300

Alas took delivery of its third 737-300, CX-OAC (c/n 28563/2921), on 14Nov15 having previously flown for Frontier Airlines (to which it was delivered in August 1997) followed by Virgin Nigeria, SAMA (Saudi Arabia) and VivaAeroBus (Mexico).    

Certification Process

The airline went through 5 phases to gain its Air Operator Certificate (AOC) from the DINACIA Uruguayan aviation regulatory authority.  The fourth and fifth phases took place in late 2015 consisting, respectively, of three route-proving flights designed to test Alas' readiness to carry out real-world scheduled airline operations and the preparation of extensive formal documentation for approval by the DINACIA.  Alas finally concluded the certification process that it began on 06Jun14 when it received its AOC from the DINACIA on 30Oct15.

Start of Scheduled Service

After going online in December 2015 with its own website and the Amadeus global distribution system used by travel agencies, the carrier was ready to initiate scheduled operations with the inaugural flight taking place from Montevideo (MVD) to Asuncion (ASU) on 21Jan16.   

Buenos Aires Service
A big breakthrough for Alas was the change of government in Argentina on December 10, 2015 with the new president being much more open to allowing airline competition to/from and within Argentina with the result that the Argentine ANAC aviation authority granted permission to Alas to operate up to five daily flights on the Buenos Aires - Montevideo "Air Bridge", although the carrier is flying this route with only two daily flights so far.  The first Alas Uruguay scheduled flight from Montevideo (MVD) to Buenos Aires Aeroparque (AEP) was operated on 27Jan16 by aircraft CX-OAA. 

Alas Uruguay has faced stiff competition from Austral (Aerolineas Argentinas' sister carrier) and its 100-seat E190 jets on this route with Alas' load factors reportedly being about 28%.

Financial Situation, Boliviana & Amaszonas

As of this writing, Alas has accessed nearly all of its credit line with the FONDES and has reportedly been looking for more funds from the Uruguayan government. It has also talked with the two main Bolivian airlines about possible alliances and investment; the state-owned Boliviana de Aviacion and the privately-held Amaszonas, which is starting its own Uruguayan unit called Amaszonas Uruguay with CRJ-200 regional jets. 

However, discussions with Amaszonas broke off when it indicated that it wanted Alas to keep only 30% of its 200-person workforce and return all of its 737-300's to the lessors as requirements for cooperation to take place. 

And talks with state-owned Boliviana also ended when the airline discovered that Alas was organized as a "Sociedad Anonima" (corporation) and not as a worker's cooperative, which would have meant a guarantee of ongoing Uruguayan government assistance to the carrier.    

A request by Alas for US$ 6 million in further assistance from the Uruguayan government has apparently also been not well received. 
In the meantime, the money received from the FONDES is supposed to run out by the end of May, leaving the carrier to fund operations from flight revenue. Alas recently postponed certification procedures for its third 737-300, CX-OAC, which might be interpreted as a cost-saving measure. 


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