Brazil’s Largest Airline Delays Growth Plans Due to Aviation Chaos

Brazilian airline TAM Brazil's biggest airline, TAM Linhas Aéreas, said on Tuesday, September 4, it postponed plans to increase its fleet of Airbus jets from 2008 to 2011 because of a drop in demand for domestic air travel.

TAM said it will cut demand for narrow-body Airbus jets by five planes a year during the period. The airline previously planned to have 103 narrow-body jets in 2008, 106 in 2009, 112 in 2010 and 115 in 2011. However no mention was made of international flights.

Brazil's civil aviation industry has been in crisis for the past year due to overcrowding, air traffic controller strikes and massive delays.

A TAM airliner crashed at São Paulo's Congonhas airport in July, killing 199 people. The crash at Brazil's busiest domestic airport has led the government to review use of the airport, potentially limiting expansion of the domestic aviation market.

TAM's main rival, GOL Linhas Aereas Inteligentes, has already warned of a reduced fleet plan this year.

TAM said plans for international flights remain unchanged. It currently flies to Paris, London and Milan in Europe and New York and Miami in the United States. It plans to start flights to Frankfurt from November 30 and it also intends to start daily flights to Madrid by December.

Despite the changes to the fleet plan, TAM said it is sticking to its forecast of a 10% to 15% rise in domestic demand in 2007, a market share above 50% and domestic occupation rates above 70%.

TAM has firm orders for 51 narrow-bodied Airbus jets, which include the A319, A320 and A321, and orders for 10 A330 planes through 2011.

In late August TAM announced it had ordered four additional Boeing 777-300ER planes worth US$ 1 billion. Boeing said TAM was the first Latin American airline to add the long-range jetliner to its fleet when it placed an order for four planes earlier this year.

TAM Linhas Aereas SA said the new planes will help the company save fuel and increase its presence in the international market. It is set to receive its first of the planes in June 2008.



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