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Ecuador News

Tame looks for a private investor to be majority shareholder in the airline

The Ecuadorian government announced Friday that it is willing to give up majority control of Tame Airlines if it can find the right private investor. In November, President Rafael Correa said that auditors were conducting an internal review of Tame and that the government might consider a partnership.

A Tame jet at the Cuenca airport.

According to the government’s statement, an investor would need at least $60 million to enter a partnership and that the amount of the investment would determine the percentage of ownership. “The partner must make a financial contribution that will represent a majority shareholding stake in the new company,” the announcement said. The government said it is open to renaming and “rebranding” the airline, which was originally established to serve as a training arm of the Ecuadorian air force.

Tame has suffered operating losses in each of the last four years and has been in the process of selling off assets, including aircraft, since mid-2016. The airline lost $40 million in 2015, the last year for which complete accounting is available.

New York airlines financial analyst Rodney Young says the government’s offer should be attractive to other airlines operating in Latin America. “There aren’t too many strings attached to the offer and it appears the government is open to a complete buy-out if the money is right,” he says. “Ecuador is a very attractive travel market with a lot of upside potential. Tame has been badly hurt by a slow economy since 2014 and as this improves so will the prospects for profitability.”

Young added: “There have also been issues of poor management, mostly associated with government control, so the right private partner could turn things around.”

In a recent statement, Tame said it made a profit on its Quito and Guayaquil routes, broke even in Cuenca, but lost money on other routes.