Canada's Jazz is "not a typical airline." Neither is Uruguay's Pluna, so this deal makes sense.
Canadian airline Jazz is spreading its investment wings to the Southern Hemisphere by acquiring a stake in Uruguay’s flagship carrier, Pluna.
And while the union of Nova Scotia-based Jazz with Montevideo-based Pluna might seem an odd pairing at first glance, a closer inspection reveals two very unique, quality-focused, Bombardier-rich regional carriers meeting niche passenger demands.
Jazz serves as a contract carrier for Air Canada linking smaller markets with major Canadian and U.S. cities, while Pluna is the regional carrier with the most modern fleet and some of the most competitive fares in the Southern Cone. (e.g., round-trip from Buenos Aires to Sao Paulo can be bought on Pluna for US$250 compared to $400 on Aerolineas and $800 on TAM)
The Jazz Air Income Fund (TSX: JAZ.UN) will invest US$15 million in Pluna in exchange for a 33% voting interest in Latin American Regional Aviation Holding Co. Jazz CEO Joseph Randell cited geographic diversification and double-digit growth in Latin American passenger demand as two of the motivating factors for the purchase, “This is a great opportunity to participate in one of the world’s fastest growing air travel markets and it positions Jazz on the international stage.” Jazz sees good upside in the deal, especially considering Pluna’s modern fleet, a brand new Montevideo hub and a potential IPO in 2013. (Full story)
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