JetSMART eyes quicker Latin American expansion amid pandemic By Reuters

World economic prospects darken, rebound delayed: Reuters poll By Reuters



By Marcelo Rochabrun

SAO PAULO (Reuters) – Low-cost carrier JetSMART is fast-tracking its expansion plans to Peru and potentially Colombia and Brazil, its chief executive told Reuters, even as airlines, in Latin American in particular, are scaling down their fleets and ambitions.

Chile-based JetSMART is in the enviable position of having well-funded private equity backers such as Indigo Partners, which also owns stakes in Denver-based Frontier Airlines and Hungarian carrier Wizz Air (L:), during the pandemic.

In expanding to other South American domestic markets, JetSMART will directly challenge the region’s leaders, LATAM Airlines Group (SN:) and Avianca Holdings (CN:), both of which filed for bankruptcy restructuring in May due to the crisis.

JetSMART CEO Estuardo Ortiz said the pandemic has given the upstart airline an incentive to accelerate aspects of its expansion to deploy its narrowbody Airbus planes to markets with more demand.

“We had already thought about flying domestically in Peru, originally maybe in 2022, but we brought that plan forward,” Ortiz said. “We are now working to begin operating JetSmart Peru at the beginning of 2021, because clearly we need to bring planes to where there is demand.”

JetSMART, which has a fleet of 17 jets, had planned to fly 100 planes by 2026, but it may have to push back that goal by about two years, Ortiz said.

Avianca pulled out of Peru in May, leaving its coveted Lima-Cuzco slots up for grabs. It also fired almost 1,000 employees including pilots.

Like most industry executives, Ortiz believes domestic flights will bounce back faster than international travel. In Latin America, that means flying domestically in more countries.

“If the recovery is very slow for international travel, that means we have to accelerate our plans for new domestic operations,” Ortiz said. “We have watched Colombia and Brazil closely for some time.”

Reuters first reported in June that JetSMART had presented the Brazilian government with a plan for domestic flights.

Indigo Partners has been making bullish bets despite the coronavirus crisis. It tried unsuccessfully to buy Virgin Australia out of bankruptcy and has maintained firm orders with Airbus (PA:) to buy more than 400 planes for its carriers.

“At the beginning of next year, we will evaluate trends and decide if we enter another country,” Ortiz said.

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