SCL767
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Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 10:11 pm

Pluna, the national airline of Uruguay, is facing a major crises as it was revealed that the carrier is bleeding cash and is seeking a bailout.

Quote:
In Uruguay, the government is negotiating a multimillion-dollar bailout of national airline Pluna, and the company’s CEO has written an unusually frank letter to his employees warning there is, in his words, “the threat that everything we built will collapse.”
Uruguay’s national airline Pluna in bailout talks, CEO blames competition, economic slowdown
 
faddypainter
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 10:26 pm

If there's one way of speeding up the collapse of a company, it's to publicly announce you are in financial trouble. Pluna's cash flow problems are going to get a whole lot worse if consumers and travel agents get wind of this and lose confidence in the airline.

I suppose Pluna's future now hinges on the governments willingness to back them and whether they can see Pluna ever getting to a state whereby they are self sufficient. I do hope they can come to an agreement for the sake of the employees.

We have lost too many airlines in recent times, I don't want to see another go under.  
 
757gb
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 10:34 pm

Pluna has been on the headlines for a couple of weeks now in MVD. It so happens that I just flew with them for the first time last Saturday. I wish I had never booked those flights. Workers were delaying service asking for salary improvement while the whole scope of Pluna's debt was coming into light. Those responsible are looking for holes on the ground where to hide, and customer service was just outrageous. They changed my flights to Santiago (I connected with Delta to the US) without any explanation, arriving 3 hours later on the outbound and leaving me with a 10 hour wait on the return, even though there were earlier flights with space available. They jeopardized my connection but absolutely refused to change me to earlier flights claiming that since it was a DL ticket they couldn't touch it (though they had changed it before without problems). I had to repeatedly chew them up via email (phone was useless) until they finally did what they said they couldn't do. Never an apology of any kind.

ANCAP (the local fuel provider, which is government owned) was going to cut services to the airline last Thursday night, but they asked for a 24 hour grace period and paid 600 thousand dollars by check (a week's worth of fuel). The whole drama repeats itself again this week when the weekly fuel payment due date comes up. In the mean time, they owe about 18 million dollars for fuel, about 260 million dollars to 2 Canadian banks, and the list goes on and on.

I have said for a long time in other forums that I thought they were lying about their numbers. But the party line always was that the airline was improving all the time, with new routes and new airplanes.

The way things stand, it is likely that it will get intervened by the government (they owe 25% of the airline). Surely they're looking for more investors but nobody wants to take that hot potato right now. I can say almost for certain that as it stands the airline will not fly for long, but I also believe that the government won't let it stop flying.

Personally I see BQB either taking over Pluna one way or another: either "buying" the whole mess on real good terms or letting it go down and taking over the routes. It's all a big shame. I worked there for a year in maintenance and have some good memories, but it was already a bad place to be. I wish the best for the employees.
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 11:03 pm

Pluna seeks to cut routes and reduce its fleet and headcount:
Reducirán flota, rutas y personal para asegurar viabilidad de Pluna

Pluna's President insists that the protectionist policies of Argentina are severely hampering the carrier's growth:

Quote:
El presidente de Pluna SA, Matías Campiani, envió una carta a los funcionarios de la aerolínea en la que les explica los motivos por los que la compañía aérea se encuentra con problemas económicos.“Estamos atravesando fuertes turbulencias”, señala en la misiva, en la que señala que el punto que “tal vez” más ha “perjudicado” a Pluna son “las políticas restrictivas aplicadas por la Argentina”.
“Estamos atravesando fuertes turbulencias”
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 11:11 pm

Well, its neighbour across the way just had the government raise domestic flight fees 30% from tomorrow...

(http://www.latamaviation.com/2012/06/04/argentine-domestic-flight-tickets-to-rise-30-3/)
 
G500
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 11:18 pm

what about their fleet? I take it they won't be taking the remaining CRJs on order?


Current fleet- 13 Bombardier CRJ900 Regional Jets

A/C Orders- 2 or 3 CRJ900 airframes per year up to 25 total aircraft.
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 11:42 pm

Quoting g500 (Reply 5):
what about their fleet? I take it they won't be taking the remaining CRJs on order?

The Canadian Government is monitoring this situation very closely since Pluna has over 260 million USD in debt owed to various Canadian financial institutions; as well as Bombardier.

Canadá realizó gestiones ante el gobierno por crisis de Pluna
 
G500
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RE: Pluna Warns Employees That It May "Collapse"

Mon Jun 04, 2012 11:58 pm

Quoting SCL767 (Reply 6):
The Canadian Government is monitoring this situation very closely since Pluna has over 260 million USD in debt owed to various Canadian financial institutions; as well as Bombardier.

Hum, that's not good.. $260 mil is a big chunk of money for a small airline Pluna. that's several years' worth of profit
 
Byrdluvs747
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 12:11 am

I have always wondered why PU doesn't serve cities like STY and PDU. Can those cities support air service or do people in Uruguay just prefer to take the bus or drive to MVD? PU seems to be "Montevideo Airways" instead of a national carrier of Uruguay.

I also wonder if LAN would venture in and form a LAN Uruguay. Although, I would hate to see that beautiful PU livery disappear.
The 747: The hands who designed it were guided by god.
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 12:36 am

Quoting Byrdluvs747 (Reply 8):
I also wonder if LAN would venture in and form a LAN Uruguay. Although, I would hate to see that beautiful PU livery disappear.

No, LAN would not want Pluna for many reasons:
1. LAN would have to invest a significant amount of money to bailout PU from its debts.
2. PU operates CRJs; LAN would not want to incorporate another fleet type into LAN's fleet.
3. PU uses MVD as a hub to transfer pax between SCL, COR and BUE to certain destinations in Brazil via MVD. LAN already uses GRU and GIG to transfer pax to other destinations with-in Brazil via TAM. Even though PU carries a significant amount of O&D between BUE and MVD, Argentina would most likely block LAN from operating MVD-BUE. Also, PU has limited growth potential.
4. LAN already operates SCL-MVD 2x daily and TAM operates GRU-MVD 2x daily. Should PU collapse, LAN would simply increase frequency on the SCL-MVD route and resume LIM-MVD. TAM would launch GIG-MVD and increase frequency on the GRU-MVD route.
 
9252fly
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 12:43 am

Quoting SCL767 (Reply 6):
The Canadian Government is monitoring this situation very closely since Pluna has over 260 million USD in debt owed to various Canadian financial institutions; as well as Bombardier.

There seems to be a lot of losers from Canada including banks,government and Bombardier. What hasn't been mentioned it that PU has consortium of private equity partners for the other 75% of which 1/3 is held by QK or Jazz.
 
mogandoCI
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 1:08 am

so MVD spent all that money on a brand new terminal (which looks amazing) for nothing ? =(
 
laca773
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 1:58 am

Why did they choose to fly the CR9? Is there anything out there that's more fuel efficient for the routes they serve?
 
C010T3
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 2:35 am

Quoting SCL767 (Reply 9):
Argentina would most likely block LAN from operating MVD-BUE.

That's actually the only reason to takeover PU. If LAN were to takeover PU, they would still have their rights to operate at AEP, so it wouldn't be so simple to block them.
It would be very wise from the Uruguayan government to handover the majority of business to LAN, IMHO.

[Edited 2012-06-04 19:39:48]
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 3:03 am

Quoting laca773 (Reply 12):

Why did they choose to fly the CR9? Is there anything out there that's more fuel efficient for the routes they serve?

I've often wondered the same, they are the only airline down in this part of the world that flies the CRJ9, and Embraer are the natural choice...

Did they get a particularly good offer for them?
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 3:11 am

Quoting C010T3 (Reply 13):
That's actually the only reason to takeover PU. If LAN was to takeover PU, they would still have their rights to operate at AEP, so it wouldn't be so simple to block them.

It would depend on several factors. LAN wouldn't want any of the debts associated with PU and wouldn't want the CRJs as well. IMHO, if LAN acquired PU, LAN would only keep the routes to AEP, EZE, COR, GRU, GIG, POA, and maybe ASU. Currently, PU operates MVD-AEP 60x weekly, MVD-EZE 2x daily, MVD-COR 10x weekly, MVD-GRU 4x daily, MVD-GIG 2x daily, MVD-POA 2x daily, and MVD-ASU 2x daily. LA would take-over the SCL-MVD route. IMO, the A-319s would replace the CRJs.

LAN Uruguay could hypothetically operate:
MVD-AEP 5 or 6 daily flights
MVD-EZE 1 or 2 daily flights
MVD-COR daily
MVD-GRU 1 or 2 daily flights (transfer remaining slots at GRU to LATAM)
MVD-POA daily
MVD-GIG daily
MVD-ASU daily
 
SJOtoLIR
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 3:34 am

Quoting SCL767 (Reply 15):
Currently, PU operates MVD-AEP 60x weekly, MVD-EZE 2x daily, MVD-COR 10x weekly, MVD-GRU 4x daily, MVD-GIG 2x daily, MVD-POA 2x daily, and MVD-ASU 2x daily.

The website of the airline even reports other stations such as Concepcion, Campinas, Curitiba, Brasilia, Belo Horizonte, Punta del Este and so on.
I'm not sure about how reliable is flighstats.com, but that web-site is displaying flights out of Montevideo heading to some of these cities.
The tag-on PU SCL-CCP is still active as 6x weekly based on amadeus.net

Regards.
"Goin' up to the spirit in the sky"
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 3:54 am

Quoting SJOtoLIR (Reply 16):
The website of the airline even reports other stations such as Concepcion, Campinas, Curitiba, Brasilia, Belo Horizonte, Punta del Este and so on.

IMO, if LAN acquired PU, BSB, CWB and CNF would likely be cut or operate seasonally. PU operates flights out of PDP seasonally. Remember, LAN-TAM already route pax traveling between both SCL and EZE and BSB, CNF, CWB, etc. via GRU.
PU is closing the MVD-VCP and SCL-CCP routes, and it's rumored that more cuts will occur very soon.

Quoting SJOtoLIR (Reply 16):
The tag-on PU SCL-CCP is still active as 6x weekly based on amadeus.net

This route has been a disaster for PU!
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 4:23 am

Just to make the point that even if LAN acquired PU there would be no way, in this world or the next, that the govt. of Argentina would allow it to operate any route that would further detract from pax numbers on Aerolineas/Austral...This would mean anything out of AEP... It simply would not happen.

I mean, in one day they hiked the prices of Argentine Domestic flights by 30% to make up for the losses its incurring.

Imagine if that happened in Europe or the US...
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 4:48 am

Quoting sciurusmdg (Reply 18):
Just to make the point that even if LAN acquired PU there would be no way, in this world or the next, that the govt. of Argentina would allow it to operate any route that would further detract from pax numbers on Aerolineas/Austral...This would mean anything out of AEP... It simply would not happen.

When the ANAC revoked LAN Argentina's flights to both SCL and GRU out of AEP; LAN Argentina transfered the AEP-GRU route back to EZE. LAN Airlines simply took over the SCL-AEP route; which operates 3x daily. If the ANAC revoked the operational permits on a hypothetical LAN/PU MVD-AEP route; Uruguay may choose to revoke the operational permits of AR/AU operated flights on the AEP-MVD route, (or demand reciprocity).

Quoting sciurusmdg (Reply 18):
I mean, in one day they hiked the prices of Argentine Domestic flights by 30% to make up for the losses its incurring.

I know many will disagree with these fare hikes; but the Argentine population voted for this type of intervention during the last election. It also bodes well for LAN Argentina's domestic operations.
 
757gb
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 4:48 am

Quoting Byrdluvs747 (Reply 8):
I have always wondered why PU doesn't serve cities like STY and PDU.

Domestic flights in Uruguay are a money losing proposition. BQB is flying some of them with ATRs, but they even had to invest in some of the airports to get them in proper shape.

Quoting mogandoCI (Reply 11):
so MVD spent all that money on a brand new terminal (which looks amazing) for nothing ? =(

MVD needed the new terminal desperately, regardless of Pluna's plan. The old terminal was a disgrace.

Quoting sciurusmdg (Reply 14):
Did they get a particularly good offer for them?

The word out there (I got no proof) is that the "good offer" was more related to certain people's pockets...
E-Jets would have been the obvious choice IMO.

Quoting SCL767 (Reply 3):
Pluna's President insists that the protectionist policies of Argentina are severely hampering the carrier's growth:

The effect of Argentina's policies are undeniable, but that is not the only factor. He is always blaming external factors and not taking any responsibility of the chaos they're in. This didn't start just now, and through the years he kept talking big, yet things just didn't compute to anyone who simply took the time to analyze them.
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 5:24 am

Quoting SCL767 (Reply 19):
I know many will disagree with these fare hikes; but the Argentine population voted for this type of intervention during the last election.

Not the part of the Argentine population that flies, invests, pays taxes, owns farms, works on farms, works in cities or does anything else for that matter... Please don't group us all in with those who made a particularly acute error in voting.

Quoting SCL767 (Reply 19):
It also bodes well for LAN Argentina's domestic operations.

LAN Argentina basically price match their fares to Aerolineas anyway... I recently flew to Barriloche which was $600 AR, $625 LAN...
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 5:27 am

Sorry, to add...

Quoting 757gb (Reply 20):
The word out there (I got no proof) is that the "good offer" was more related to certain people's pockets...
E-Jets would have been the obvious choice IMO.

That would make quite a bit of sense! It doesn't all seem to add up!
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 5:43 am

Quoting sciurusmdg (Reply 21):

Quoting SCL767 (Reply 19):
I know many will disagree with these fare hikes; but the Argentine population voted for this type of intervention during the last election.

Not the part of the Argentine population that flies, invests, pays taxes, owns farms, works on farms, works in cities or does anything else for that matter... Please don't group us all in with those who made a particularly acute error in voting.

I did not mean to imply that the entire Argentine population agrees with the current government policies. The vast majority of international travelers that visit Chile originate in BUE, and many share the same sentiments as you do.

Quoting sciurusmdg (Reply 21):
LAN Argentina basically price match their fares to Aerolineas anyway... I recently flew to Barriloche which was $600 AR, $625 LAN...

Yes, their domestic fares are more or less the same; but due to the new increase in domestic fares, the prices just went up.
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 5:57 am

Quoting SCL767 (Reply 23):
Yes, their domestic fares are more or less the same; but due to the new increase in domestic fares, the prices just went up.

Time will tell, but I would imagine LANs prices will increase too... however, as they will operate from EZE not AEP, I know many people who will choose AR for convenience... After all, EZE can take and hour and a bit to get to in rush hour, and AEP is just downtown.

But this diverges from the topic...

My view is that if PU are taken over by LAN etc, the Argentine govt will revoke the slots at the airports... so as a worthwhile investment, at least into Arg, it doesn't seem realistic.
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 6:17 am

Quoting sciurusmdg (Reply 24):
Time will tell, but I would imagine LANs prices will increase too... however, as they will operate from EZE not AEP

LAN Argentina operates AEP-BRC 21x weekly and will operate AEP-BRC 22x weekly next month. EZE-BRC will operate 2x daily on Saturdays and Sundays only starting in July alongside the AEP-BRC flights.

Quoting sciurusmdg (Reply 24):
My view is that if PU are taken over by LAN etc, the Argentine govt will revoke the slots at the airports... so as a worthwhile investment, at least into Arg, it doesn't seem realistic.

It's very sad that the ANAC has this attitude towards LAN and if a hypothetical LAN-Pluna combination is not permitted to operate MVD-AEP; hopefully the Government of Uruguay would step in and demand reciprocity. If AR/AU does not comply, the Government of Uruguay should revoke AR/AU operating permits on the route.
 
sciurusmdg
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 6:25 am

Quoting SCL767 (Reply 25):
LAN Argentina operates AEP-BRC 21x weekly

Sorry, I stand corrected actually, my mistake.

(as a side point, it is ridiculous that I can fly TAM for U$180 to Sao Paulo, but U$600+ to BRC)

Quoting SCL767 (Reply 25):
It's very sad that the ANAC has this attitude towards LAN and if a hypothetical LAN-Pluna combination is not permitted to operate MVD-AEP;

I think its very sad that the government as a whole as this attitude to all external business. I predict that AR will completely collapse within 2, if not 1 year. It cannot go on as it is... it is pricing Argentines out of the flights, when they still pay tax for it.

[Edited 2012-06-04 23:34:13]
 
Gonzalo
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 12:35 pm

PU is paying the price of being totally dependant on the Argentinian market. Having Argentina as a neighbour should be a blessing, but with the "luxury" governments that Argentina has had in the last decades, it turned a real nightmare for Uruguay ( unless you are selling high priced properties in the rich areas of Montevideo or Punta del Este, where the Argentinian people with money tries to keep the money away from the sniffing dogs of Argentinian government ).

The only way I can see PU surviving is being totally "acquired" by the government of Uruguay, and keep it under a really professional, creative, smart and bold management, who can design a new business model... and they will need LUCK too....a lot of factors that honestly ( and sadly ) are not easy to combine.

Rgds.
G.

Edited for grammar

[Edited 2012-06-05 05:39:18]
Gear Up!!: DC-3 / EMB-110 / Fairchild-227 / Ab318-19-20-21 / B732 / B763 / B789
 
SCL767
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 12:49 pm

PU will end the MVD-VCP route on 10JUNE. PU also plans to discontinue the SCL-CCP route soon.
 
PDPsol
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 1:45 pm

Quoting sciurusmdg (Reply 24):
My view is that if PU are taken over by LAN etc, the Argentine govt will revoke the slots at the airports... so as a worthwhile investment, at least into Arg, it doesn't seem realistic.

The ANAC authorities cannot simply revoke carriers' route authorizations due to a mere change in ownership. Should LA or TAM or LH or whoever acquire PU, it remains PU, a Uruguayan flag carrier. PU will not 'convert' into LA or whatever corporate entity that acquires its equity, or its assets, whatever the structure the transaction is executed with.

Of course, ANAC has been used for political purposes in the recent past and no one should be shocked by decisions made in Buenos Aires today. Nonetheless, PU, as IATA carrier and legal entity, should remain independent of its shareholders and corporate owners.

There are ample international legal precedent cases supporting this treatment. Then again, the current Argentine government appears to specialize in illogical, irrational decisions...
 
connies4ever
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 2:06 pm

Quoting laca773 (Reply 12):
Why did they choose to fly the CR9? Is there anything out there that's more fuel efficient for the routes they serve?
Quoting sciurusmdg (Reply 14):
I've often wondered the same, they are the only airline down in this part of the world that flies the CRJ9, and Embraer are the natural choice...

Did they get a particularly good offer for them?

I'm not sure why Embraer would be the "natural" choice, most often these issues are decided on the basis of CASM, mx costs, and financing. It's possible the Canadian government, through the Export Development Corporation, was able to put together a better package than Embraer and the Brazilian government. But another big factor would be availability: Embraer have sold a lot of E-jets recently and mere availability of spots on the production line would be a big factor. BBD's CRJ900 has not had such a backlog, therefore delivery time from order would (or should) have been shorter. That can be a significant factor.
Nostalgia isn't what it used to be.
 
incitatus
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 2:16 pm

Quoting SCL767 (Reply 19):
I know many will disagree with these fare hikes; but the Argentine population voted for this type of intervention during the last election

Not only with air travel but whole economies, it does seem like South America is making good progress moving ahead - but for Argentina. Voters voted for Argentina staying behind. It is not unthinkable that Brazil's income per capita will surpass Argentina's anymore.

Quoting 757gb (Reply 20):
The effect of Argentina's policies are undeniable, but that is not the only factor. He is always blaming external factors and not taking any responsibility of the chaos they're in. This didn't start just now, and through the years he kept talking big, yet things just didn't compute to anyone who simply took the time to analyze them.

If Emirates set up a hub in Bangor, Maine to connect Canada to the Middle East, and Canadian protectionism became an issue, I wouldn't blame Canada. You are right about Pluna.
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757gb
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 3:17 pm

Quoting Gonzalo (Reply 27):
The only way I can see PU surviving is being totally "acquired" by the government of Uruguay, and keep it under a really professional, creative, smart and bold management, who can design a new business model...

I'm sorry Gonzalo, but that is a contradiction in terms. I do agree however that it might come down to the government taking over the airline if they can't find buyers (all of a sudden there are rumors of them being willing to sell their share). However they will never run an operation under the terms you described.

Regards,
Gerardo
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
CamiloA380
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RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 9:14 pm

Sad moments for Pluna, hope for the best for the employees!

Quoting SCL767 (Thread starter):

Of course this is good news for you and LAN.

Quoting 757gb (Reply 2):
They changed my flights to Santiago (I connected with Delta to the US) without any explanation, arriving 3 hours later on the outbound and leaving me with a 10 hour wait on the return, even though there were earlier flights with space available. They jeopardized my connection but absolutely refused to change me to earlier flights claiming that since it was a DL ticket they couldn't touch it (though they had changed it before without problems). I had to repeatedly chew them up via email (phone was useless) until they finally did what they said they couldn't do. Never an apology of any kind.

These kind of things happen sometimes, as it has for a friend of mine with LAN, go figure. I think service was improved (Sure you had free meals before, but meh) and that was reflected on the numbers of passengers transported.

But I agree with you completely - That was terribly handled by Pluna.

Quoting 757gb (Reply 2):
The way things stand, it is likely that it will get intervened by the government (they owe 25% of the airline). Surely they're looking for more investors but nobody wants to take that hot potato right now. I can say almost for certain that as it stands the airline will not fly for long, but I also believe that the government won't let it stop flying.

I agree, at least with the current government, Pluna wont stop flying, nor will the brand name change.

Quoting 757gb (Reply 2):
Personally I see BQB either taking over Pluna one way or another: either "buying" the whole mess on real good terms or letting it go down and taking over the routes. It's all a big shame.

Again, agree. It will be really interesting if BQB went for it, JCL have ambitious plans for BQB, so if he took over Pluna, will it be another Campiani making 17k a month? 
Quoting SCL767 (Reply 3):
Pluna's President insists that the protectionist policies of Argentina are severely hampering the carrier's growth

That's one part of the equation.

Quoting Byrdluvs747 (Reply 8):
I have always wondered why PU doesn't serve cities like STY and PDU. Can those cities support air service or do people in Uruguay just prefer to take the bus or drive to MVD? PU seems to be "Montevideo Airways" instead of a national carrier of Uruguay.

Two simple rules:

1. Pluna will not go where BQB already is established.
2. You can't operate CR9s in airports other than PDP and MVD in Uruguay without having to invest in the airport.

So, "Montevideo Airways"....yes our country is so MVD-centric, it's disgusting. But that's for another thread.

Quoting Byrdluvs747 (Reply 8):
I also wonder if LAN would venture in and form a LAN Uruguay. Although, I would hate to see that beautiful PU livery disappear.

Yeah, let LAN take over all the airlines in South America, no one else knows better than LAN anyways.

Quoting SCL767 (Reply 9):
No, LAN would not want Pluna for many reasons

Then, I'm sorry to inform you. One of the airlines/group interested is LAN, amongst Eurnekian and BQB apparently.

Quoting SCL767 (Reply 9):
1. LAN would have to invest a significant amount of money to bailout PU from its debts.

*cough*Aires*cough*

Quoting SCL767 (Reply 9):
2. PU operates CRJs; LAN would not want to incorporate another fleet type into LAN's fleet.

ehm, *cough*Aires*cough*

But you made a valid point:

Quoting SCL767 (Reply 9):
3. PU uses MVD as a hub to transfer pax between SCL, COR and BUE to certain destinations in Brazil via MVD.

Exactly, therefore going against LAN's business model.

Quoting 9252fly (Reply 10):
What hasn't been mentioned it that PU has consortium of private equity partners for the other 75% of which 1/3 is held by QK or Jazz.

Nothing new.

Quoting mogandoCI (Reply 11):
so MVD spent all that money on a brand new terminal (which looks amazing) for nothing ? =(

The new terminal was needed, with or without Pluna. Last time I was in the old one, the PA system didn't even work. And when it did, they kept it on, so you could sometimes hear the conversation they were having in - wherever it now were - it was a huge mess.

Quoting laca773 (Reply 12):
Why did they choose to fly the CR9? Is there anything out there that's more fuel efficient for the routes they serve?

You want more fuel efficient in general or better CASM? As much as I'd like to see Pluna with E-Jets, and also believe E-jets would've been better. CR9s should work.

Quoting SCL767 (Reply 15):

I'm sorry, but you're dreaming high here. I see you even changed from "Pluna" to "LAN Uruguay". Again, with the current government, its very, I tell you, very unlikely the brand name changes, so...you should've done a better research to support your "hypothesis"

Quoting SCL767 (Reply 17):
This route has been a disaster for PU!

With a LF of about 54% at the start, its not very bad, its just that, a start. Pluna transported 1448 passengers in March in that route.

But these plans are most likely going to be scrapped.

Quoting sciurusmdg (Reply 26):
I predict that AR will completely collapse within 2, if not 1 year.

AR will not collapse with the current government. When will people understand that.

Quoting Gonzalo (Reply 27):
The only way I can see PU surviving is being totally "acquired" by the government of Uruguay, and keep it under a really professional, creative, smart and bold management, who can design a new business model... and they will need LUCK too....a lot of factors that honestly ( and sadly ) are not easy to combine.

Professional, creative, smart and bold management? By the government of Uruguay? Haha, you gotta be kidding, we are speaking about Uruguay.

Besides that, I do believe our president is smart in some things (While I myself don't support Frente Amplio). However some things he does and say, makes me think he is sick or something, he is old after all.

Quoting PDPsol (Reply 29):
Should LA or TAM or LH or whoever acquire PU, it remains PU, a Uruguayan flag carrier. PU will not 'convert' into LA or whatever corporate entity that acquires its equity, or its assets, whatever the structure the transaction is executed with.

Thank you for your reply PDPsol!

Quoting connies4ever (Reply 30):
I'm not sure why Embraer would be the "natural" choice, most often these issues are decided on the basis of CASM, mx costs, and financing

Because E-Jets carry more cargo, so we wouldn't have a Pluna Ente whining about a separate cargo airline.
Flying4Ever!
 
sciurusmdg
Posts: 59
Joined: Sun Apr 15, 2012 3:47 am

RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 9:23 pm

Quoting CamiloA380 (Reply 33):
AR will not collapse with the current government. When will people understand that.

Let me rephrase then.

I predict that AR will collapse within 1-2 years, when the current government falls. of course this is all speculation but cracks are already appearing. Unless Vaca Muerta gets struck by lightening and starts gushing shale of it own accord, then there will simply be no more money...

...and then they will not be able to fund the basic needs of the country, let alone the 2 million USD per day AR are losing,
 
757gb
Posts: 374
Joined: Wed Feb 04, 2009 4:11 pm

RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 9:53 pm

Quoting sciurusmdg (Reply 34):
...and then they will not be able to fund the basic needs of the country, let alone the 2 million USD per day AR are losing

No matter how many times I've seen it, every time I read that number it gets more and more incredible. What a sad state of affairs for an airline that could be absolutely world class.
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
rafabullara
Posts: 38
Joined: Tue Dec 21, 2010 11:32 pm

RE: Pluna Warns Employees That It May "Collapse"

Tue Jun 05, 2012 11:17 pm

With PU going out of business and AR probably collapsing in 1-2 years, LATAM will be the only major airline operating routes from/to BRAZIL-URUGUAY-ARGENTINA-CHILE direct way.

And more LATAM will have domestic flights on 3 of this countries and at 2 of them, they will be the only one!

Have anyone predicted this scenario?
 
757gb
Posts: 374
Joined: Wed Feb 04, 2009 4:11 pm

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 5:25 am

Quoting rafabullara (Reply 36):
Have anyone predicted this scenario?

I don't know if anyone has... I know that at least from my perspective the whole LATAM deal blew me away. I sure wasn't anticipating that!
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
PlunaCRJ
Posts: 301
Joined: Thu Nov 29, 2007 8:05 pm

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 11:39 am

Quoting rafabullara (Reply 36):
With PU going out of business and AR probably collapsing in 1-2 years, LATAM will be the only major airline operating routes from/to BRAZIL-URUGUAY-ARGENTINA-CHILE direct way.

And more LATAM will have domestic flights on 3 of this countries and at 2 of them, they will be the only one!

Have anyone predicted this scenario?

Exactly. We need more independent airlines in the southern cone, no less.

I never liked the whole LATAM deal for this very reason, but now with doubts about both AR´s and PU´s future, along with talks of a LATAM takeover (may or they mat not materialize) of PU this thing is terrifying.


I believe Pluna is doing things right. THIS is the best model for them. If it´s not working.... well, it´s worrying....

Quoting 757gb (Reply 2):
It so happens that I just flew with them for the first time last Saturday. I wish I had never booked those flights.

I am sorry for that 757GB. You know, I also flew to SCL recently, in May. Mi first experience in Pluna in a long, long time. I chose them (reluctantly) because they offered the best timings, and with up to 4 daily flights, the flexibility I needed.

I was bracing for the worst, but it wasn´t that bad. Yes, I purchased a coke for $3. And I crammed everything into a bursting backpack to avoid checked luggage fees. But it all went surprisingly well.

By the way, on the return flight, the plane was full of Brazilians. I think only twenty of us in total stayed in MVD, everyone else was continuing to Brazil: the hub is working.



About Argentina, yes, the restrictions are hurting. Pluna flies in Argentina only to AEP/EZE and COR. And to seven (or something like that) destinations in Brazil.The hub is unbalanced,and that is obviously hurting the company a lot.


I believe eventually we´ll see BQB get Pluna. Probably that would be best outcome out of all of this: jobs will be preserved and an alternative to the LATAM juggernaut will continue to exist. I hope they get their act together, because at least from the outside, BQB, unlike Pluna, seems to be a real mess.

Quoting laca773 (Reply 12):
Why did they choose to fly the CR9? Is there anything out there that's more fuel efficient for the routes they serve?
Quoting sciurusmdg (Reply 14):
I've often wondered the same, they are the only airline down in this part of the world that flies the CRJ9, and Embraer are the natural choice...

Did they get a particularly good offer for them?

Pluna could get its hands on new CRJs much faster than new E-Jets. And I wouldn´t call the CRJ such a bad plane: yeah, the E-Jet has much bigger passenger appeal, but it is my understanding that the CRJ is actually slightly lighter. So I don´t see any economic disadvantage there.

And if we are talking about the economics of the CR9 compared to bigger planes; well, regional jets was what PU needed for it new regional business model (one that I consider to be the best one they could have chosen)

I don´t think the CRJ was a bad choice for Pluna. What, in hindsight, might have been a bad choice was overexpanding, but, who knows.

Quoting 757gb (Reply 20):
Quoting mogandoCI (Reply 11):
so MVD spent all that money on a brand new terminal (which looks amazing) for nothing ? =(

MVD needed the new terminal desperately, regardless of Pluna's plan. The old terminal was a disgrace.

Yes it was...but still... if Pluna collapses that would be a disaster for MVD... the passenger numbers would be cut.... by half? I dont know, but it would be drastic.

Regards,
 
757gb
Posts: 374
Joined: Wed Feb 04, 2009 4:11 pm

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 1:20 pm

Quoting PlunaCRJ (Reply 38):
I am sorry for that 757GB. You know, I also flew to SCL recently, in May. Mi first experience in Pluna in a long, long time. I chose them (reluctantly) because they offered the best timings, and with up to 4 daily flights, the flexibility I needed.

I was bracing for the worst, but it wasn´t that bad. Yes, I purchased a coke for $3. And I crammed everything into a bursting backpack to avoid checked luggage fees. But it all went surprisingly well.

Thanks! I'm glad it went OK for you, and to be honest when I finally flew last Saturday the flight was on time and there were no issues. The bad part was a whole lot of really unnecessary stress with my itinerary in shambles. The lady that I dealt with was so arrogant and after doing what I had been begging them to do for days (and she claimed they couldn't, which I knew to be a lie) she didn't even apologize. That's just the thing about customer service: the one person you deal with represents a whole company, and maybe in my case I was very unlucky (though I asked for things to be escalated and copied everyone in my emails). Anyway, crossing my fingers for the return on July 14. I expect to find differences one way or another.

Regards,
GB
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
PDPsol
Posts: 1109
Joined: Fri Feb 20, 2004 5:09 am

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 1:36 pm

Quoting PlunaCRJ (Reply 38):
Exactly. We need more independent airlines in the southern cone, no less.

Indeed, while LA and JJ are fine carriers in their own right and the LATAM transaction will, no doubt, create a massive regional player with a plus USD 10 billion market capitalization, competition in the region is a MUST.

Quoting PlunaCRJ (Reply 38):
By the way, on the return flight, the plane was full of Brazilians. I think only twenty of us in total stayed in MVD, everyone else was continuing to Brazil: the hub is working.
Quoting incitatus (Reply 31):
If Emirates set up a hub in Bangor, Maine to connect Canada to the Middle East, and Canadian protectionism became an issue, I wouldn't blame Canada. You are right about Pluna.

The PU business model is designed around MVD as a regional hub, providing connectivity between Argentina, Chile and Brasil. The Uruguayan market is tiny and cannot justify a carrier at MVD. Everyone knows the republic's population would easily fit in a "Sao Paulo neighborhood", as the President has stated.

Unless PU can easily access its target markets in Argentina, as it already does in Brasil and Chile, the business model does not work, it is not sustainable. Unfortunately, this commercial variable is out of PU's hands. Argentine policy makers control this and PU's influence is nominal, at best.

PU wishes to develop itself as a "mini tiny regional EK". However there are 'idiosyncratic' problems that are under corporate control that are hampering its development:

- PU has a poor history with its human resources, which are heavily unionized and combative
- Unfavorable access to investment capital, PU has relied on UY government guarantees and EDC funding for CR9s
- Failure to generate operational cash flows, leading to the current liquidity crunch

As Keynes rightly pointed out, "in the long-run, we are all dead". PU has run out of time to develop its network and generate operational cash flows to further fund growth.

An option would be to run a "pre-packaged bankruptcy" in the hands of the current creditors, EDC and ScotiaBank, and have them decide the best outcome for the carrier, in order to maximize the value of their holdings.

The creditors have the greatest stake in PU today. Of course, the UY government is also a 'contingent creditor', as it guarantees approximately USD 280 million of obligations used to finance the CR9s.

A rational, objective, non-political restructuring is required.
 
757gb
Posts: 374
Joined: Wed Feb 04, 2009 4:11 pm

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 3:10 pm

Quoting PDPsol (Reply 40):
Unless PU can easily access its target markets in Argentina, as it already does in Brasil and Chile, the business model does not work, it is not sustainable. Unfortunately, this commercial variable is out of PU's hands. Argentine policy makers control this and PU's influence is nominal, at best.

I agree with that. PU might not be able to recover given present conditions. Having said that: was the business model realistic to begin with? Even if we take the Argentine restrictions out of the picture, was there really a market for 25 aircraft? (I know this sounds like nothing for other airlines, but it is a lot for this market).

Many people (included myself) doubted the model as it was being implemented. I wanted to believe in it, but what really gave me a bad feeling was all the lying as far as how much money was being spent by the government. The information given was muddy and hard to verify, but once you analyzed it things got very ugly, very quickly. If someone from the outside with a calculator could figure it out, it stands to reason that there were people who had much better information and were not talking (including government officials).

The restrictions from Argentina were not there at the beginning, but it has been an uphill battle for years now. Considering that, I can't reconcile the relatively recent announcements of more routes and more airplanes. Now the government acts shocked, but this situation is not new: it has been getting worse for a long time. So my reason and my gut tells me that we (tax payers) have been lied to all along.
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
PDPsol
Posts: 1109
Joined: Fri Feb 20, 2004 5:09 am

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 3:47 pm

Quoting 757gb (Reply 41):
Many people (included myself) doubted the model as it was being implemented. I wanted to believe in it, but what really gave me a bad feeling was all the lying as far as how much money was being spent by the government. The information given was muddy and hard to verify, but once you analyzed it things got very ugly, very quickly. If someone from the outside with a calculator could figure it out, it stands to reason that there were people who had much better information and were not talking (including government officials).

Think of the equity holders, LeadGate in this case, as owners of a 'call option'. The value of the call option, and hence their equity value, increases with 'volatility'. If the business model works and sustainable growth materializes, followed by material operational cash flows, they pay off obligations and cash in via an IPO or a 'strategic sale'. This is basic investment model for any private equity firm or 'financial sponsor', such as LeadGate.

If the business model fails, as apparently is the case here with PU, the creditors are left 'holding the bag'. In the PU case, of course, the Chorus Aviation/JAZZ equity investors from Canada are also big losers.

The fault lies not with PU and its controlling equity investor and corporate governance operator, LeadGate/Campiani, etc., but with the creditors! The UY government is the key creditor as guarantor of the carrier's obligations. The EDC and ScotiaBank went along with the government's decision to fund the PU investment plan.

This is a case where creditors assumed equity risk, without any potential for equity returns. We have seen this occur time and time again whenever the state assumes a commercial role.

The Republic UY made a decision to fund a strategic expansion in the hope it would lead to the development of MVD as a regional transportation hub. This strategy may work in the future, just not with PU in its current position.

The lesson of the story is: never, ever, ever assume equity risk without equity returns!
 
eastern023
Posts: 631
Joined: Wed Jul 19, 2006 2:54 am

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 4:21 pm

There goes another classic. If they sucumb they will join the fate of some other SouthAm classics...Ecuatoriana, VARIG, Viasa, LAP, LLoyd, Ladeco (although merged into LAN) etc.
AA will Rise Again!
 
incitatus
Posts: 2691
Joined: Wed Feb 09, 2005 1:49 am

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 5:14 pm

Quoting 757gb (Reply 41):
Even if we take the Argentine restrictions out of the picture, was there really a market for 25 aircraft?

Yes there is.

Argentina is both the blessing and the curse. The airport set up in Buenos Aires with traffic split between Aeroparque and Ezeiza matters greatly to Pluna. A liberalized Argentina with the airports split and Pluna with effective cost controls would make it viable. A good chunk of Argentina traffic outside of Buenos Aires would prefer to connect in MVD. The small size of MVD coupled with the small size of the CR9s in a reliable operation would make the connect times very short. PU would be able to conquer significant market share in many markets but for the larger ones like GRU-BUE.
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rafabullara
Posts: 38
Joined: Tue Dec 21, 2010 11:32 pm

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 6:20 pm

Quoting incitatus (Reply 44):
A good chunk of Argentina traffic outside of Buenos Aires would prefer to connect in MVD. The small size of MVD coupled with the small size of the CR9s in a reliable operation would make the connect times very short. PU would be able to conquer significant market share in many markets but for the larger ones like GRU-BUE.


Just for example, is G3 which is making such a good money with flights from its mini hub at POA to ROS and COR. Even with horrible schedules. I do make GRU-POA-ROS once a year and the both of the flights were always 95%-100% load.

There are a great market between Brazil and cities like COR/MDZ/ROS but Argentina's ANAC would never allow more frequencies to those cities because it will take all traffic from AR.
 
757gb
Posts: 374
Joined: Wed Feb 04, 2009 4:11 pm

RE: Pluna Warns Employees That It May "Collapse"

Wed Jun 06, 2012 7:16 pm

Quoting incitatus (Reply 44):

Thanks for the excellent explanation PDPsol. I agree with your statement on states assuming a commercial role. I believe better controls should have taken place.

Quoting incitatus (Reply 44):


I see your point, and I've read about this type of set up before and it all looked neat and doable in writing. They also kept talking about how the MVD hub would feed intercontinental flights leaving from MVD. There was something that didn't make sense on that though: the CR9s themselves and their limited ability to carry luggage. It didn't make sense to get those instead of E-Jets. I honestly doubt that the market was really there for that size of operation. And what really bugs me is that they kept making those announcements way after things were headed south and those at the top knew the reality of it. At most, it looked like an attempt to make it look pretty to be able to sell it, take the money and run.

As a Uruguayan tax payer it absolutely infuriates me how the loss of nearly a hundred million dollars was kept under wraps during the first few injections of capital to the airline by the government-owned share. That stack of lies was created to be difficult to unravel, but the truth was there nonetheless. Their "shock" today is nothing more than a sham, and also infuriating. Many of them are looking for ways to cover themselves for getting into the mess in the first place. Surely the private investors will get blamed, but there is plenty of blame to go around.
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
SJOtoLIR
Posts: 2396
Joined: Thu Jul 19, 2007 12:41 pm

RE: Pluna Warns Employees That It May "Collapse"

Thu Jun 07, 2012 2:51 am

Before the era of their 100-seater CRJ-900s, PU operated a couple of obsolete 732s, in conjunction with one single 763 flying the MVD-GIG-MAD segment and the dedicated MVD-MAD sector later; these flights heading to Spain were almost always delayed.
From 2008, PU initially took delivery of six brand new CRJ-900s and we observed how the airline rapidly increased their weekly frequencies and level of service towards focus cities out of Uruguay such as Santiago de Chile, Sao Paulo and Buenos Aires, among others. Everything seemed to go very well in those days.
The fleet was increased up to 13 regional jets nowadays and I'm now questioning about the opening of new stations later characterized for the relative low O&D demand from Uruguay as well as the relative long distance out of MVD such as CCP, CNF and BSB. We couldn't forget that these airports are being served by means of regional planes. For illustrative purposes, G3 experienced troubles in the past utilizing its commercial model in selected "long-hauls" such as GRU-LIM.


Regards.
"Goin' up to the spirit in the sky"
 
757gb
Posts: 374
Joined: Wed Feb 04, 2009 4:11 pm

RE: Pluna Warns Employees That It May "Collapse"

Thu Jun 07, 2012 3:57 am

Quoting SJOtoLIR (Reply 47):

Fleet management was chaos at the end of the Pluna/Varig period. 7 airplanes, 5 models: 3 732s, 1 733, 1 752, 1 763 and 1 ATR42. When Varig left the old planes were given back to lessors, sold in the case of 1 732 and retired in the case of the other 2 732s (you can still see them at the airport). The choice of CR9s was very peculiar as it didn't seem to be the right airplane for what they claimed their business model to be, and made PU the only operator of the type in the region.
God is The Alpha and The Omega. We come from God. We go towards God. What an Amazing Journey...
 
CRJ900
Posts: 1937
Joined: Wed Jun 02, 2004 2:48 am

RE: Pluna Warns Employees That It May "Collapse"

Thu Jun 07, 2012 9:54 am

Quoting 757gb (Reply 48):
The choice of CR9s was very peculiar as it didn't seem to be the right airplane for what they claimed their business model to be

Isn't Pluna an all-economy class low-fare carrier? I would argue that a two-abreast 17,2 inch wide seat with 31 inch pitch on a CR9 is a lot better on a three-hour flight than a middle seat in a three-abreast 17 inch wide seat with 29-30 inch pitch on a B737 for up to seven hours (which is what my company offers our guests every day).

Hope Pluna will make it. If not, creditors should give Delta a call, they are looking for 70 76-seaters, and 13 brand new CR9s should come in handy.
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