LATAM Airlines Group has reported an operating margin of 9.4 per cent for first quarter 2016, an improvement of 1.3 per cent over the same quarter in 2015, and net income of US$102 million, a US$142 million improvement over the first quarter 2015.
The improvement in operating results was driven by a 17.8 per cent drop in operating expenses in the three months to March 31st, resulting from lower fuel prices, local currency devaluations and ongoing efficiency initiatives.
The company maintains its operating margin guidance of 4.5-6.5 per cent for full year 2016.
LATAM continues to closely monitor weak demand conditions in Brazil and to adjust capacity accordingly on both domestic and international operations in that market.
In line with the company’s guidance, capacity reductions in LATAM Airlines Brazil operations reached 8.4 per cent in first quarter 2016 relative to the same quarter in 2015.
Furthermore, LATAM Airlines Brazil is adjusting its guidance for domestic capacity reductions in Brazil from eight to ten per cent to a reduction of ten to 12 per cent for full year 2016.
LATAM Airlines Brazil has also increased its Brazil–US capacity reductions given the weakness in demand.
Currently, the company expects to decrease its ASKs in that market by 35 per cent during the second half of 2016 as compared to the same period last year.
On April 28th, the company introduced its unified brand: LATAM.
Aircraft will be given their updated livery over a three year period as the entire brand is turned over at a gradual and sustainable pace.
Despite capacity adjustments in certain markets, the company continues to strengthen its network, as new LATAM Airlines Peru routes connecting the Lima hub with Salta, Rosario, Antofagasta, Montevideo and Washington DC will all begin in 2016.
Lima-Mendoza by LATAM Airlines Peru is slated to take off in February 2017.
Also, in October 2016 LATAM Airlines Brazil will open up a new continent for its customers, connecting Sao Paulo and Johannesburg, South Africa.