Chilean group interested in Alas to meet with Uruguayan government

Chilean airline LAW (Latin American Wings) had submitted a letter of intent on Friday and now it intends to go ahead with the talks. Company representatives are expectd to arrive in Montevideo on Thursday to hold meetings with Alas Uruguay authorities and with the Transport and Public Works Minister Victor Rossi.

LAW started business in January this year with a Boeing 737-300 and has flights to Lima and Punta Cana. Months later it kept two of the three aircraft originally leased by Alas Uruguay. One of the possibilities expected to be on the table is that the Chilean airline acquires the shares of the Uruguayan company, which operates as a corporation (Dyrus S.A.) including its liabilities.

The Chilean firm is particularly attracted by the growing potential of the air shuttle between Montevideo and Buenos Aires throughout the year as well as the routes from Argentina to Punta del Este in the summer months.

In addition to their many problems, the Alas Uruguay executives are struggling to maintain their last plane airworthy. That Boeing 737-300 can play a key role in the business plan, since the new investors have expressed hopes that it be operational for the summer season since it is already a certified piece of equipment that can save up to two months’ paperwork, which could be crucial for the survival of the airline.

The owner of the aircraft is an American company that aims to take the aircraft and it argues for economic breaches in the lease. There is a delay in payment, but it is within the set deadlines. However, the airline filed a legal action and got an extension which expires November 24.

Alas Uruguay, dragging financial problems, suspended its flights on Monday 24 October for at least 60 days to wager an agreement with an investment partner or company in the industry to enable it to resume its activities. Within that period, the company holds rights on routes and its air operator certificate (AOC) to be able to resume regular services, provided the fleet consists of at least one plane. If the resumption of flights is to go beyond that deadline, a new inspection of the aviation authority is required.

Alas Uruguay emerged after the closure of Pluna -in July 2012-, as a self-managed enterprise by former employees of the defunct company. After several comings and goings, the airline started flying on 21 January this year.

A key factor for this to happen was the money contributed by Development Fund (Fondes): a credit line of US $ 15 million approved during the government of Jose Mujica. The company is in the red, owing suppliers some US$ 4.9 million and employeed around US$ 200,000.

Any new investor would have to take care of all those liabilities plus the repayment to the Uruguayan government of the original loan, when the time comes.