Brazilian recession drags down results at LATAM Airlines Group

Brazilian recession drags down results at LATAM Airlines Group

LATAM Airlines Group reported operating income of US$1.3 million for second quarter 2016 and US$220.4 for the first half of 2016.

Operating margin reached 0.1 per cent for the quarter, representing a slight decrease of 0.7 percentage points as compared to the second quarter 2015.

Operating margin for the first half of 2016 reached five per cent, in line with our guidance and 0.3 percentage points above the same period of 2015.

Total revenues during the second quarter 2016 declined by 12.5 per cent due to a 13.7 per cent decline in passenger revenues and a 22.3 per cent decline in cargo revenues.

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This revenue decrease continues to reflect a weak macroeconomic environment in South America – especially in Brazil – and the devaluations of Latin American currencies during the period.

Part of this decline was offset by the continued positive trend in costs, with total operating expenses declining by 12 per cent, resulting in a 10.5 per cent decline in costs per ASK equivalent.

As of August 2016, LATAM Airlines Group has reduced fleet assets for 2017-2018 by US$1.1 billion, in line with the company’s previously announced plans to achieve a decrease of US$2.0 to US$3.0 billion in our expected fleet assets for 2018.

This reduction was achieved through the deferral of twelve Airbus A320neos and two Airbus A350s, which represent a total reduction of US$829 million in fleet commitments for 2017 and 2018.

The company will also redeliver five more Airbus A320s, three Airbus A319s, and one Boeing 777-200F in 2017 as compared to our previous quart’s fleet plan, representing a total reduction of approximately US$260 million in fleet assets.