Slim, Televisa to Invest in Airline

Billionaire Carlos Slim and leading broadcaster Televisa are joining forces in a new low-cost airline as the government sells off Mexico’s largest carriers and opens the industry to competition.

Slim’s investment unit, Sinca Inbursa, and Televisa said Monday they would each take a 25% stake in Vuela, the new airline.

The other partners are El Salvador-based airline Grupo Taca and investment fund Discovery Americas I, in which former Mexican Finance Minister Pedro Aspe plays a leading role. Each also would have a 25% stake.

The partners will invest a total of $100 million in Vuela, which already has a concession to operate and expects to begin flights in the first half of next year from the airport at Toluca, west of Mexico City. Mexico’s government is privatizing top carriers Mexicana and Aeromexico, and has recently handed out concessions to low-cost airlines.

The changes could throw open Mexico’s airline industry to competition after years of inefficiency and virtual monopoly. Mexicana and Aeromexico turned slight profits in 2004 after several years of losses.

“Low-cost carriers have become a global phenomenon and have revolutionized the airline industry in recent years,” Televisa said. “Mexico presents an attractive opportunity for Vuela because it is a large market with good growth potential.”

Slim, who owns Latin America’s leading telecommunications companies Telmex and America Movil as well as Inbursa bank, is known for snapping up poorly run companies and turning them around. He and Televisa’s majority owner, Emilio Azcarraga, are two of Mexico’s most well-known business moguls.

Earlier this month, Brazilian airline Gol said it planned to launch a low-cost carrier in Mexico. Another new airline, ABC Aerolineas, also plans to begin service in the low-cost market, which has quickly grown in the United States and Europe.