Airline JetSmart negotiating help with Argentine, Chilean governments

Low-cost airline JetSmart Airlines SpA is in talks with the governments of Chile and Argentina about helping the sector in the midst of the coronavirus pandemic, said its CEO, Estuardo Ortiz, in a radio interview with Bloomberg.

Possible solutions include deferring tax payments and access to preferential loans, similar to what development lender BNDES is offering in Brazil, Ortíz said.

The talks began in mid-March, even before the impact of the coronavirus was fully felt. He did not specify what progress had been made, and the governments of Chile and Argentina did not respond immediately when consulted about the issue.

The Santiago-based airline, owned by US-based investment fund Indigo Partners LLC, is currently operating at 12 percent of its capacity in Chile and plans to increase that to 15 percent in May.

After starting operations in Chile in 2017, it bought Norwegian Air's operations in Argentina in December last year, just as the first cases of coronavirus were detected in China. The Argentine government has suspended all flights and ticket sales until September 1. In Chile, the contraction in the local market has been dramatic.

"We are talking about a market that as a whole is operating at 6 percent or 7 percent of its normal flights," Ortiz said. Still, occupancy rates on the routes they fly are good, he said.

The Chilean domestic market is controlled 58 percent by Latam Airlines SA, 26 percent by Sky Airline SA and 15 percent by Jetsmart. Latam has said it can survive "for a few months" without any help from the government.

Frontier Airlines, another Indigo-owned company, is mandating as of this week that its travelers cover their faces on their flights in the US and plans to charge from US$39 to US$89, depending on the route, to any passenger who wants to guarantee a seat next to an unoccupied center seat.

Jetsmart is trying to "slash costs" and has suspended employees who have taken advantage of the employment protection law, under which the government pays them part of their wages.

The airline also offers international flights to Brazil, Argentina, Colombia and Peru. Despite current restrictions, it remains optimistic, Ortíz said.