SAN SALVADOR (Reuters) - El Salvador-based airline TACA sees 2008 revenues up 15 percent to $1.1 billion as solid passenger growth in Central and South America offsets flat or lower traffic from the United States.
TACA President Roberto Kriete told the Reuters Latin America Investment Summit that passenger growth next year will come down to between 10 and 15 percent from the 20 percent the airline has seen in past years.
“We are growing because we do not depend on the North American market,” Kriete said on Wednesday.
TACA serves more than 35 cities, including daily flights to nine major cities in the United States, whose economy has been slowing rapidly and hurting most business and trade.
Despite the U.S. slump, Kriete said Latin America’s commodity-based economies would continue to expand as they did in 2007 and are expected to grow this year. Expanding economies go hand-in-hand with airline use.
“We believe that Chile, Peru, Argentina, Colombia, Ecuador and Brazil all are going to have economic growth above the levels of the United States and Canada,” Kriete said.
Kriete said passenger traffic between North America and Central America has been flat so far in 2008. “It could be at the end of the year we are going to see a fall in passenger numbers from Central America to North America and vice versa.”
Kriete also said the global aviation industry was suffering from skyrocketing jet fuel prices, a consequence of high crude costs.
Fuel for TACA represents 35 percent of costs, and Kriete said the company was hedging jet fuel to lower costs but saw tough times ahead.
“We have 60 percent covered for the first half of this year and we are going to have only 30 or 40 percent covered for the second half. That means for around 70 percent we are going to be “naked” so fuel prices are going to hurt us hard,” he said.
(For summit blog: summitnotebook.reuters.com/)
Reporting by Alberto Barrera and Chris Aspin and Veronica Gomez Sparrowe in Mexico City; editing by Jeffrey Benkoe, Richard Chang