Brazilian charter company grows with nation’s economy

 - October 16, 2006, 6:43 AM

Brazil’s largest executive charter company and maintenance provider has seen significant benefits from improvements in the Brazilian economy. Líder Aviação, which recently changed its name from Líder Taxi Aéreo, saw a significant improvement in its charter operations last year and has been enjoying a boom in aircraft sales in the early part of this year.

In the past year, the company’s executive charter operations have increased steadily, an improvement from 2003, when the company operated with significant levels of unused capacity. Líder has a fleet of 16 airplanes–three Hawker 800s, four Beechjet 400As, six Learjet 35/36s and three King Air C/F90s.

General manager Júnia Hermont said that despite the growing demand for charter, Líder does not expect to expand its fleet for another two to three years. The company is flying 2,400 hours per month on average (including offshore work). Operations for Líder and for other executive charter companies are expected to continue to expand this year and next, an election year in Brazil, which usually prompts a significant boost in demand for charter.

While aircraft sales last year were down slightly from 2003 levels, there has been a steady increase in demand for new aircraft this year. Last year the company sold 16 aircraft–seven new jets, four pre-owned jets, two new helicopters and three pre-owned helicopters. In the first quarter of this year it sold seven aircraft, including five King Airs. “Sales in early 2005 have surpassed all of our expectations,” said sales director Marcelo Araújo.

According to Araújo, the demand for new aircraft is coming from the export sector, particularly agriculture, which explains the demand for turboprops. “Outside the main cities, the quality of Brazilian runways declines significantly and people want to be sure that they can land anywhere,” he added. “You can’t sell a Rolls-Royce to someone who needs to drive on dirt roads.”

Maintenance Operations

Líder is also experiencing rapid growth in its maintenance operations. Since signing with BBA in 2001, the company’s FBO subsidiary, Líder Signature, has grown at around 100 percent per year. In 2001, Líder Signature reported revenues of roughly $7.4 million; last year’s revenues totaled nearly $55.5 million.

Líder has roughly 60 percent of the market for aircraft and helicopter maintenance, according to company data. Earlier this year, the maintenance provider earned Raytheon’s “Gold Bar” status for service, the manufacturer’s highest standard for quality.

The company expects its maintenance operations to continue to increase this year, particularly with growing demand for the installation of reduced vertical separation minimums (RVSM) equipment. “RVSM has generated a good amount of business and is expected to continue to do so this year,” Hermont added.

The company’s partnership with Dallas Airmotive has also boosted maintenance operations. In the past two years Líder has sent more than 70 engines to Dallas for maintenance, adding $12 million to the company’s revenue.

In an effort to consolidate its FBO operations, Líder is investing in an expansion project at its Manaus FBO facility, located in the Amazon Basin. “Manaus is a perfect stop-off point for international passengers from North America who need to refuel and clear customs,” Hermont said. She added that the demand for FBO services in Manaus has been rising steadily. “The Manaus airport is international, which means that aircraft arriving from abroad can clear customs and fly to any destination in Brazil.” Improvements will include a new VIP lounge and an expansion of ground-handling facilities.

In addition, the company recently concluded investments in its Belém operation. Like Manaus, Belém is considered an ideal stop-off point for international travelers looking to refuel and clear customs.

Líder is also expanding its offshore operations. In addition to extensive investments in the airport in Macaé, the oil capital of Brazil, the company has also begun construction on installations in Vitória, Espirito Santo, which has a growing oil industry. Líder now has a fleet of 37 helicopters, including 10 new S-76C+s.

To acquire the new helicopters, Líder received $60 million in financing from the Export-Import Bank of the U.S. The company will use the new aircraft to fulfill a five-year service contract with Brazilian oil giant Petrobras and other customers to support offshore oil and gas exploration and operations.

Líder has also changed its management structure. Eduardo Vaz, formerly the company’s general manager, is now company president. Hermont, formerly responsible for the company’s airport services department, has taken over as general manager. The owner of Líder, José Afonso Assumpção, will be the president of the company’s newly created board of directors.