Tame Airlines drops routes, plans to sell aircraft to cut deficit; liquidation is a possibility

Government-owned Tame Airlines is eliminating routes and selling aircraft in an effort to cut an operating deficit that totaled $58 million in 2014 and 2015. The government says the airline could cease operations altogether if it does not return to profitability.

Tame says it is eliminating flights to three in-country destinations, Tena, Macas, and Latacunga, and suspending its international service to Sao Paulo, Brazil and Fort Lauderdale, Florida. “We are suspending service on unprofitable routes and plan to sell assets to return the airline to financial stability,” says Paola Carvajal, Tame general manger. “If this cannot be achieved we face the possibility of liquidating all services,”  he said.

Carvaja says the airline is evaluating other unprofitable routes, including flights between Quito and Loja. It also plans to sell four jets and end leasing arrangements for other aircraft.

President Rafael Correa has said that the government will close Tame if the deficits cannot be eliminated. “We cannot subsidize this service when commercial companies are able to make a profit in Ecuador,” he said in November. “It would be a luxury we cannot afford during difficult economic times,” he said.

Carvajal says he feels confdent that Tame can continue flying on a reduced schedule, pointing out that the deficit was reduced from $48 million in 2014 to $10 million in 2015. “Our goal is to break even in 2016 and to be profitable in 2017.”

Caravajal said he is in talks with national aviation officials for permission to increase the number of profitable flight, especially between Quito and Guayaquil, and to the Galapogos Islands.

Currently, Tame operates 50% of flights between Quito and Cuenca and 38% between Quito and Guayaquil.