Airlines are one of the most sensitive businesses in times of recession. Brazilian airlines were severely damaged by the financial turmoil and currency devaluation, resulting in heavy losses for the four major carriers in the country. According to "Revista Veja", from August 99, here are the latest figures regarding VASP, TAM VARIG and TRANSBRASIL (I presume these are the consolidate figures for the first operating semester).
Current losses: around U$42 million
Total debt: around U$550 million
Number of aircraft: 50 jets
Destinations: 29 domestic and 10 international cities
Current losses: around U$55 million
Total debt: around U$265 million
Number of aircraft: 52 jets + 44 turboprops
Destinations: 73 domestic and 10 international cities
Current losses: around U$ 15 million
Total debt: U$ 1.4 BILLION (Those guys DO have a problem!)
Number of aircraft: 82 jets
Destinations: 36 domestic 25 international cities
Current losses: around U$15 million
Total debt: U$ 50 (yeah... 50! Not 50 million!)
Number of aircraft: 21 jets
Destinations: 21 domestic 5 international cities.
The bad results are mainly a result of the currency devaluation and not passenger decline, because most expenses are in US dollars and revenues are in weak Brazilian Reais (national currency). The figures are quite frustrating and the carriers must restructure themselves if they are willing to survive.
I personally feel very sorry for TAM. It used to be the most profitable airline in Latin America. TAM paid a high price for its aggressive expansionist strategy by agreeing to lease brand new aircraft this year. Historically, TAM has always offered its cash flow as collateral to lease planes. It doesn't quite work in times of recession.
Well... That's it from me! I will be glad to discuss these matters if you post any ideas!