The Ecuadorian market represents between 7% and 8% of Avianca’s total capacity in terms of seats and sales and has so far been the only one – including Colombia and El Salvador in Central America – to recover to pre-pandemic levels. a growth of 40%. Frederico Pedreira, Director of Operations and Executive Vice President of Aviance, was at the Aviation Day held in Guayaquil and spoke about the airline’s plans for Ecuador and how they are preparing for the impending global recession.

Avianca filed for bankruptcy during the pandemic and underwent restructuring. What results have you had so far?

Airlines in the US and Europe received 1000 million dollars to survive the pandemic, in Latin America there was no airline that received direct government aid to survive and then there is the option of restructuring, which is a well-tested process that works well. We managed to negotiate our debt, we came out of the pandemic with less debt than we entered and we managed to negotiate our main contracts, we are talking about the financing of aircraft, engines, maintenance of aircraft parts with much better terms than we had before.

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What do these better conditions turn into?

They translate into higher cash provisions than we had before the pandemic, we have approximately a trillion dollars in cash, which is important because the same way we do business, we’re saying that a recession is coming and airlines are super dependent on part of the economic growth.

How is Avianca preparing for this recession?

It is important to be prepared and have cash to deal with these moments because they will come, and on the other hand we are reducing the level of debt, it is significantly lower than what we had. This mix with better contracts and a new business model that has allowed us to significantly reduce costs – for reference, our unit cost before the pandemic without fuel was 6.2, today it is 3.8 – has put us in a much more competitive position and we are ready to face with the ups and downs of our industry.

Are there already symptoms of this recession?

We are already seeing it, in recent months. We always have to think about the future and what we will do to face the recession that may come next year or in 5 years, but we are sure it will come. In a recession, one of the first things to fall is travel, tourism. In the United States we have already seen a drop in the average value of airline tickets and that is an important sign, in our main markets we have not seen it yet, we are still seeing very high demand, but we are watching Europe and the United States where some of the first symptoms have already appeared.

Do these cash forecasts allow Avianca to continue with its growth plans, or is it suppressed?

We continue to make plans and are already thinking about 2024 and more aggressive and conservative scenarios. Today, our annual plan implies significant growth in the next six to nine months, but if necessary we will have a plan B if the economy does not grow as much.

What is plan b?

The fact that we have markets that behave differently and the ability to move capacity between different markets is our main weapon. We have some aircraft leases that are more flexible and that allow us, which is not what we want, to temporarily stop operating an aircraft.

What is a conservative scenario?

It would be a reduction of capacity in some markets, which we already did last year. 2022 was a good example because we started the year very strong, but with the war in Ukraine we saw fuel spike… Between moving capacity between markets and delaying plans to enter aircraft, we have flexibility there, but today our weapons Main the way to deal with recession is to be more efficient.

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Has the emergence of more and more airlines affected you? low price?

It affected us and it forced us to change our business models. For flights of 4 to 5 hours within Latin America, we have to be able to compete with the same prices of low-cost airlines, and the whole transformation of Aviance has said that we want to negotiate and prepare to be an airline that flies between the Americas, we can have a cost structure that allows us to compete with low price region of.

From a point of legal certainty, how do you see the next change of government in Ecuador due to the crucifixion?

Separating civil aviation from politics is the best scenario for the growth of the sector and there are countries that, despite complicated political scenarios, have managed to separate the two. We believe that aviation is something that is essential and important for the Government, we have seen that some measures that have been taken, regardless of political beliefs, have done good for aviation, for example the reduction of taxes, that of the Tourism Force, which had very good effects on demand because more people can fly and we hope that whatever government comes will see how important the vision of the sector is for Ecuador.

Any company doing business in Ecuador will be alert to a change in government, but obviously we will be happy to work with a government elected by the people of Ecuador.