LAN Cargo hit by Latin America fall

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The South American airfreight market has been struggling with cargo revenues and tonnage affected by woes of the continent’s economic powerhouse Brazil and poor performing currencies.

Among those facing challenging times is LATAM Airlines Group, and speculation was rife it was in discussions with International Airlines Group (IAG) about joining the group, which was denied by LATAM earlier this month.

The Chilean-based carrier saw declines in October and in the third quarter (Q3) with cargo revenues and volumes continuing to be hit by slow South American economic performance.

LATAM said in October cargo traffic was weak in the Brazil domestic and international markets and adds: “As a result, cargo traffic for LATAM Airlines Group decreased 15.1 per cent in October, and the cargo load factor decreased 7.9 points to 54.9 per cent.

“We continue to adjust cargo capacity through a reduced freighter operation, which resulted in a decline of 2.9 per cent of cargo ATKs (capacity) in October.”

In Q3, cargo revenue fell 24.5 per cent year-on-year (YOY) to $310 million driven by a 12.2 per cent year-on-year fall in cargo traffic to 908 million cargo revenue tonne kilometres.

LATAM says: “During the quarter, cargo demand remained weak, especially in the Brazilian domestic and international market. In addition, connecting cargo traffic in Sao Paulo Guarulhos Airport was affected by an ongoing strike in customs personnel.”

In Q3 the overall financial performance of LATAM also fell and it saw a net loss of $113.3 million in Q3, similar to the net loss of $107.8 million in Q3 2014.

LATAM says: “As a result of a weaker macroeconomic environment in South America and the significant devaluations of Latin American currencies during the period, especially the 55.5 per cent depreciation of the Brazilian real, total revenues for the Group during the third quarter 2015 declined by 19.9 per cent as compared to third quarter 2014.”

LATAM explains it is revising its fleet capital expenditures for the next three years and aiming to reduce fleet commitments for the 2016-18 period by approximately 40 per cent. The company is planning the redelivery of 20 aircraft for 2016, including “rationalising” its freighter capacity, having finalised the sub-lease of one of its four Boeing 777-200 Freighters to a third party.