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.

  • Olivier

    Worst airline ever. Exactly what happens when a government gets into business and tries to compete with private enterprise.

    “Slow economy since 2014”??? Hogwash!

    • Jason Faulkner

      They didn’t try to compete. They tried to provide a service to the citizenry. Private enterprise will never service more than Cuenca, Quito and Guayaquil. Tame went to Manta, Tena, Puyo, Macas, San Vicente, Esmeraldas, Ibarra . . . on and on. It wasn’t about making a profit. It was about connecting the country.

      I spent 14 hours traveling overland from Canoa to Cuenca yesterday. It would have been nice to take a flight instead but recent troubles in TAME have meant all the little airports nearby no longer had daily flights and yesterday was my only travel day. No private company is going to step into the breach to fix that. TAME isn’t a business, it’s a public service meant to keep the country connected. If you want to see the worst airline ever, I can point you to several privately-owned lines I’ve traveled on in East Africa, Southeast Asia and the Caribbean that would leave you pining for a trip on TAME.

      • dan p

        Lookup a PRIVATE airline serving Philippines. The name is Cebu Pacific. They are able to make money and service many small localities in the Philippines. They were able to overtake flagship carrier in terms of income and traffic. Could it be a case of strangling regulations in Ecuador that doesn’t allow new players an easy entry into the market? The new government needs to improve business climate in Ecuador so you don’t have to travel 14 hours next time you travel. Ecuador doesn’t have income to sustain this as public service. Most financed now by bond issue and loans from China.

        • Jason Faulkner

          I lived in the PI for many years. Flew on Cebu more times than you’ve Googled it back when they were called Cebu Air. They’re the Ryan Air/Southwest Airlines of the PI. They don’t service anywhere as small as Manta, Tena, Taisha, Chimborazo, whatever. Look it up yourself and make your case if you think you have one. I don’t have time to do research for every baby boomer with a web browser who thinks he’s an expert. Even remote destinations in PI have a much higher population density than anywhere in Ecuador. Your single example on a planet of 7 billion isn’t analogous.

          Ecuador’s foreign debt is 29% of GDP, one of the lowest in the Americas. A small portion of that is to China. We can afford to provide services that private industry is too uncreative to figure out how to make a profit from. Corporations aren’t people and nobody cries when they die.

          This late-stage capitalism is getting boring. It’s like you people think this 200-year-old system is some kind of natural law. Capitalism is a social technology invented by us to serve us. It cannot fill every need and is quickly losing its usefulness. It has never been proven to provide quality accessible healthcare, education or infrastructure . . . you know, three of the most important elements of any civilization. When a technology stops being useful, it is abandoned. Putting capital above humans has become a strangely acceptable sociopathy to some people. You sound like religious fanatics arguing over how many angels can dance on the head of a pin. Go look that to keep yourself busy up and leave the future to those of use who will still be here to deal with it.

      • StillWatching

        This is true: “They didn’t try to compete. They tried to provide a service to the citizenry. Private enterprise will never service more than Cuenca, Quito and Guayaquil. Tame went to Manta, Tena, Puyo, Macas, San Vicente, Esmeraldas, Ibarra . . . on and on. It wasn’t about making a profit. It was about connecting the country.”

        The trouble is, you accept that as being the way it should be. Anything that the free market won’t support voluntarily is something government can only deliver through coercion. In a just society, government has no right to take from you to provide a service to me, just because doing so might be popular.

        When two wolves and a lamb get to vote what’s for dinner, that lamb has a big problem. So does anyone that doesn’t buy into your statists beliefs. Morally, I’d say the problem is yours, Julius Talbot’s (now appearing as Globetrotter) ececuador’s and the usual cast of statist apologists that believe their morality trumps other people’s sovereignty.

  • jeff long

    Please get rid of Tame let someone like Copa fly right to CUenca. We might stop coming one day because a pain to get here. That’s not good for the economy when we come we only leave foot prints and money.

    • Jason Faulkner

      You really think a private airline is going to keep flying here when they only have 30 people on each flight?

  • Dogoslave

    EC should just continue selling off Tame, stop the bleeding and be done with it. Would partnering with EC also mean you get stuck with all their government employees? Doesn’t seem too attractive an offer.

  • baba free

    I wouldn’t be so hard on TAME unless you guys like walking or taking the bus. Lots of places they go to that are not serviced by any other airline…

  • StillWatching

    What? You mean socialism can’t do a better job of running a business than private industry with competition? How unusual. Better Call Julius Talbot and jason faulkner and ask them to rationalize this for us.

  • Dan Kennedy

    Just curious. Last time I flew Tame, about 2/3rd’s of the ticket price were taxes. How much of that government tax goes to help keep Tame solvent?