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Planemakers shrug off Brazil gloom, forecast growth in Latin America

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The world's two largest plane manufacturers forecast on Tuesday that Latin America's commercial fleet will at least double over the next two decades, shrugging off worries about economic woes in regional giant Brazil and elsewhere.

[SANTIAGO] The world's two largest plane manufacturers forecast on Tuesday that Latin America's commercial fleet will at least double over the next two decades, shrugging off worries about economic woes in regional giant Brazil and elsewhere.

As Brazil faces its worst economic crisis in a generation, demand for air travel has fallen sharply, hitting the profits and stock prices of carriers like Gol and LATAM Airlines.

US planemaker Boeing Co and French rival Airbus said they were accommodating local airline customers by allowing delays and shifting stock toward stronger economies, while eyeing a more positive longer term view.

"A certain growth hasn't happened and therefore now there is kind of a surplus of equipment, so we are trying now to accommodate and delay," Airbus' Latin American head, Rafael Alonso, told Reuters in an interview at the FIDAE regional airshow in Santiago. "We are placing them somewhere else. Some economies are in turmoil, but on the other hand we have others like Mexico."

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Both Airbus and Boeing were sanguine on the long-term prospects for recovery in the region. "The new middle class really enjoys air travel, they prefer that to buses," Boeing Latin America's head, Donna Hrinak, said."So, yes, air traffic has fallen consistently since (last year), but as soon as the economy begins to pick up they're going (to) be back on those planes."

Airbus projects that the number of aircraft in operation in the region will more than double over the next two decades, with 2,540 new planes needed by 2034, worth some US$330 billion. Boeing forecasts airlines will need 3,050 new planes worth US$350 billion over the next 20 years.

About 40 per cent of those new planes will go to Brazil, with Mexico the second-biggest market, Hrinak said.

Airlines have responded to Latin America's newly affluent tourists and more connected economies with increased routes and capacity. Airbus has been one of the main beneficiaries, with its regional market share rising to 53 per cent today from just 12 per cent in 2000.

Mr Alonso said Airbus was confident it could remain ahead, noting that Airbus accounts for 65 per cent of new planes scheduled to be delivered over the next few years. "There might be a little accommodation ... but I don't see any problems with by 2020 having 57 to 58 per cent of the market," he said.

Air traffic over the next two decades will likely grow 4.7 per cent annually in the region, the company predicted, compared with 4.6 per cent worldwide.

REUTERS

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