CARACAS (Reuters) - German airline Lufthansa (LHAG.DE) will take advantage of strong economic performance in Latin America at a time when its businesses elsewhere are under pressure, a senior executive said on Wednesday.
The airline industry as a whole has been hit by a fragile global economy and the soaring cost of jet fuel. Lufthansa said on Tuesday that it no longer expected to improve on last year’s operating profit.
But the carrier is expanding in Latin America, opening what it sees as key routes in recent months, including to Bogota and Rio de Janeiro. It has also launched an alliance with Colombian and Salvadoran tie-up AviancaTaca AVTp.CN for other routes.
“We want to develop our business in Latin America because we see that the area has been quite stable during the crisis,” Lufthansa’s vice president for the Americas, Jurgen Siebenrock, told Reuters during a visit to Venezuela.
“There’s a lot of growth, especially in Brazil ... we want to be part of that,” he said, citing the potential offered by Brazil hosting the 2014 soccer World Cup and 2016 Olympics.
Lufthansa flirted with Spanish carrier Iberia a few years ago hoping to boost its access to the growing aviation market in Latin America, where it generates only about 2 percent of its traffic revenue. Iberia later merged with British Airways to form International Airlines Group IAG.L (ICAG.L).
Lufthansa has said it aims to focus on organic growth as it tries to turn around Austrian Airlines and bmi, two of the carriers it acquired in 2009. To expand business in Latin America without making acquisitions, it says it is boosting its capacity on routes to Brazil by 60 percent this year.
Most foreign companies operating in Venezuela have difficulties working with strict currency controls put in place in 2003 by President Hugo Chavez’s government. But Siebenrock said Lufthansa had no problems repatriating its earnings.
“We work according to the rules and have a good dialogue with the authorities. We are OK. We don’t have problems.” (Writing by Daniel Wallis; Editing by Phil Berlowitz)