Randy's Journal: Archives
In the commercial airplanes business, there's been so much talk lately about burgeoning markets in places such as China and India, that sometimes another rapidly growing region gets left out of the discussion.
That's probably what led Carlos V. to send along this comment recently from San Antonio, Texas:
What is the strategy to compete in Latin America? Have we written Latin America off? In my view L[atin] A[merica] has a growing customer base that we should be taking advantage of.
It's a great comment. And it bears emphasizing that no, far from writing off this vital region, Boeing is very much involved in engaging Latin America, including Mexico.
As a matter of fact, we just delivered the very first 777-200ER to Aeromexico today. It will replace 767s on routes to Madrid and Paris and to Brazil. Aeromexico is now the first airline in the Americas to take delivery of an airplane with a Class 3 Electronic Flight Bag, and the first Mexican airline to operate a 777.
With today's delivery in Seattle, Aeromexico is the first Mexican airline to operate the 777.
And last week we delivered the second of 12 767's ordered by Chile's LAN.
Take Argentina, where four airline startups recently received operating licenses, and Air Madrid plans to launch a subsidiary airline there.
Or Colombia, where the country's heritage airline, Avianca, recently emerged from bankruptcy. Avianca now operates in financial health under new ownership from the Synergy Group, owners of Brazil's expanding Ocean Air.
And in Mexico, investors are backing five new low-cost startups, two of which began operations in 2005.
Our market outlook for South America predicts air travel growth in the neighborhood of 7% a year over the next 20 years - second only to domestic China. As we saw elsewhere, longer-range single-aisle airplanes such as the Next-Generation 737s have made more frequent nonstop travel possible. In the past 10 years, nonstop markets between the U.S. and Latin America nearly tripled to 984 airport "pairs."
As for market potential, we think airlines in Latin America will need more than 1,700 airplanes - worth nearly $98 billion - in the next 20 years. Mexico, at $19 billion, and Brazil, at $40 billion will be the two largest markets.
And we're seeing growth across the airplane spectrum. Last year, as I mentioned earlier, Chile's LAN Airlines ordered six new 767 freighters and passenger airplanes, adding to the six 767s ordered the previous year.
In Colombia, Tampa Cargo continues modernizing its fleet with 767 cargo conversions.
Brazil's GOL will take delivery of 11 more Next-Generation 737s in 2006.
Elsewhere, Brazil's low-cost sensation, GOL, which started just five years ago, has more than 100 Next-Generation 737s on order and will receive its first 737-800 with enhanced short field performance capability this summer. GOL currently has 57 Boeing 737s in its fleet.
Aeromexico has taken delivery of 17 Next-Generation 737s in the last several years. The airline also booked the first order of 2006 on the Boeing ledger with six 737s.
And Panama's Copa, securing its position as the "hub of the Americas," continued a profitable relationship with the 737 family with five new orders last year.
In all, Latin America accounted for 67 new airplane orders in 2005.
And let's not forget the 787. Aeromexico assisted us with establishing some of the high altitude, hot weather specifications for the 787. And we're talking right now with several Latin American airlines about bringing the Dreamliner to their fleets.
Simple answer, then: we think we have the right airplanes and the right strategies to help our Latin American customers compete in the world marketplace. So yes, Latin America and Boeing are very much "in the swing" and working together for the future.