Monday 21 October 2019

Cawley-backed Flybondi to get lift from Argentina interest rate cuts

Michael Cawley, the former chief operations officer at Ryanair. Photo: Gareth Chaney Collins
Michael Cawley, the former chief operations officer at Ryanair. Photo: Gareth Chaney Collins
John Mulligan

John Mulligan

Lower interest rates in Argentina following its $57bn bailout last year by the International Monetary Fund would help low-cost airline Flybondi to trade "a lot better than it's been able to until now", according to its executive chairman, Mike Powell.

The airline - backed by investors including former Ryanair chief operating officer Michael Cawley - launched flights in the newly-deregulated Argentina market last year and currently has a fleet of five aircraft. Its backers also include former Air Canada CEO Montie Brewer, who was once a non-executive director at Aer Lingus.

"The prospect of a higher dollar interest rate has already made a pretty substantial impact in Argentina," Mr Powell told the 'Airfinance Journal' conference in Dublin yesterday.

"The local interest rates have been as high as 70pc. We're certainly looking forward to those interest rates coming down." He added that lower interest rates would signify an improving economy in Argentina.

"Obviously, that will help startup airlines like ourselves trade a lot better than we have been able to up until now," said Mr Powell.

He added that Flybondi was keeping a tight rein on costs.

"You need to be a very good cost manager and make sure you're burning as little fuel as possible and that your other non-fuel costs are as low as possible," Mr Powell said. "Fortunately, in the case of Flybondi, we already have unit costs, a cost per seat, that is lower than Ryanair."

Mr Powell said that Flybondi's plan is to follow a traditional model of utilising used aircraft at the beginning.

"The preference is entirely based on economics and cash. The cash-out with a used aircraft is obviously less than with a new aircraft," he said. "We'll probably take a few more used aircraft and then look to move into new aircraft, but that will be purely based on economics."

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