Big numbers, big trouble
Founded out of the Brazilian LAN and the Chilean TAM merger in 2012, the LATAM Airlines Group constitutes the leading aviation company in Latin America. With a revenue of over 10 billion U.S. dollars in 2019, LATAM Airlines overlays Colombian born Avianca, the world’s second oldest airline still in operation. However, in the face of the coronavirus crisis, big numbers can also mean big losses. In the second quarter of 2020, LATAM transported roughly 16.2 million air passengers less than they did in the same period of the previous year, which represents a year-over-year drop of more than 95 percent. In the case of Avianca, the COVID-19 pandemic meant an air traffic loss of more than 7.5 million passengers or -99.7 percent, between April and June of 2020, alone. In the midst of that situation, both airlines filed for bankruptcy protection in the United States, listed under U.S. Chapter 11 financial reorganization process.Meanwhile in Mexico, Latin America’s most important aviation market, airlines were also trying to sort out the COVID-19 crisis. Aeroméxico, the country’s flag carrier, followed the previous mentioned path, filing for bankruptcy in July of 2020. That year, the company’s revenue declined by approximately 40 billion Mexican pesos in relation to 2019 — around two billion U.S. dollars at the exchange rate of December 31st of that year. For its part, Volaris, the leading passenger airline in Mexico’s domestic segment, reported a year-over-year revenue decline of 36 percent and net losses amounting to more than four billion Mexican pesos.
Latin America’s role in the global aviation market
Being the third most populated region worldwide, Latin America was projected to account for 5.3 percent of the global aerospace service market between 2020 and 2039. This includes aircraft and spacecraft manufacturing as well military defense, research, and development. In the commercial helicopter service, Latin America ranks fourth, only above Africa and the Middle East, while also occupying the same place in regard to the global operating aircraft fleet size. Based on those numbers, the Latin American region has plenty of growth potential in this market, despite the coronavirus situation making it hard to hold positive expectations.
