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Colombia's Avianca plans Central America link
BOGOTA (Reuters) - Colombian airline Avianca plans to soon open a new route from Bogota to San Salvador to improve connections to Central America and access new routes to North America and Canada, Avianca President Fabio Villegas said on Monday.
Colombia's largest airline is looking to boost its cargo business to 30 percent of overall revenue, up from 10 percent now, Villegas said at the Reuters Latin American Investment Summit in Bogota.
Avianca merged with El Salvador-based TACA this year in a deal the airlines hope will cut costs and bring revenue of more than $3 billion in 2011. The merger created one of the biggest airline holdings in Latin America.
"We are introducing a direct flight between Bogota and San Salvador, which will allow us not only to enter that market but also use the hub that TACA operates in El Salvador to get to destinations that Avianca does not fly to directly."
Villegas said those destinations could include San Francisco, Houston, Orlando, Toronto and Cancun in Mexico.
Avianca's owner, German Efromovich, has a 67 percent stake in the holding, while TACA's Kriete family has the remaining 33 percent.
Villegas said he expects the airline industry to consolidate its growth as the U.S. and Latin American economies recover from a volatile 2009. More than 100 aircraft from Avianca and TACA cover 90 routes in Europe and the Americas.
Villegas said the company would look to Asian markets in the future, but at present those connections were though alliances with U.S. and Asian airlines.
"Unfortunately, we don't have a way to get directly to Asia at the moment because of the technical limitations," he said. "But in the future, if the market is there, we will certainly make the move to incorporate the equipment needed to get there directly."
He estimated that in 2010 the merger with TACA would generate net earnings of $100 million and EBITDA of $300 million.
"The level of joint sales for 2010 will be close to $3 billion," he said.
Villegas said the company had carried out 50 percent of the $7 billion program to renew fleet, focused on Airbus (EAD.PA) aircraft.
But he said he was concerned about the impact of Venezuela's currency control measures on the airline business. International flights to Venezuela have declined.
(Writing by Patrick Markey in Bogota; editing by John Wallace)
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