Weak South American market undermines LATAM

0
6

LATAM Airlines has made a third quarter loss of $107.8 million, which it is blaming on the weakness of South American economies and currencies, particularly the Brazilian real.

The third quarter loss follows a profit of $80.7 million in the first quarter of 2014 and a loss of $58.9 million in the second quarter of the year. The second quarter loss had been put down to a reduction in seed exports and Brazil hosting the football world cup, reducing demand. 

The reduced demand continued into the third quarter, as well as a wider weakness in the Latin American economies. Losses for the first nine months of 2014 were $208 million, an improvement on 2013 when it lost $234.9 million. Cargo revenue in the third quarter was $410.4 million, a year-on-year decline of 5.9 per cent. Year-to-date (YTD) cargo revenue was down 9.2 per cent to $1.2 billion.

LATAM Airlines Group chief executive officer, Enrique Cueto (see picture), says: “Results have not met our expectations, mainly because we are facing a context with increased competition, a weaker macroeconomic scenario in South America, especially in Venezuela and Argentina and depreciated local currencies.”

In the first nine months of 2014 LATAM transported 811,000 tonnes of cargo, a year-on-year decline of 3.8 per cent. In the third quarter it transported 268,000 tonnes, a year-on-year drop of 2.8 per cent. Capacity was reduced by 4.8 per cent during the same period of 2014, which the airline says is because of redelivering a Boeing 767 Freighter in the first quarter, and increasing its use of bellyhold capacity. The YTD load factor increased by 1.7 percentage points to 58.9 per cent.

In October, cargo revenue tonne kilometres (RTK) rose by 1.5 per cent to 393 million tonnes compared with the same month of 2013. Year-to-date (YTD) RTK declined by three per cent to 3.5 billion. Available tonne kilometres (ATK) declined by 2.3 per cent in the third quarter to 625 million, while YTD ATK fell by 5.9 per cent to 5.9 billion.

In September, LATAM had reported a 3.2 per cent drop in cargo traffic and a capacity fall of  3.6 per cent. That month saw the load factor increase by 0.2 percentage points to 59.4 per cent. 

LEAVE A REPLY

Please enter your comment!
Please enter your name here