Revenue up but losses continue at LATM Airlines

Revenue up but losses continue at LATM Airlines

LATAM Airlines Group has reported strong operating results for first quarter 2015, with operating income reaching US$227 million, 102 per cent higher than the US$113 million reported in first quarter 2014.

Operating margin reached 8.1 per cent at the South American group, compared to 3.5 per cent in the same period 2014.

The significant margin expansion during the first quarter 2015 was mainly driven by a 16 per cent reduction in the company’s operating costs.

Cost per ASK equivalent decreased by 17 per cent, including the effect of lower fuel prices.

Furthermore, excluding fuel, cost per ASK equivalent decreased by ten per cent, reflecting efficiencies achieved as a result of our ongoing cost reduction programs, as well as the effect of local currency depreciations on our costs denominated in those currencies.

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LATAM reported a net loss of US$40 million in first quarter 2015, similar to a net loss of US$41 million in first quarter 2014.

Non-operating losses were driven by a non-cash foreign exchange loss of US$205 million mostly recognised at TAM as a result of the 20 per cent devaluation of the Brazilian real during the quarter.

The Company has mitigated foreign exchange losses by consistently reducing the exposure to the Brazilian real on TAM’s balance sheet.

The company ended the quarter with 85.8 per cent of its flights on time, increasing 3.9 per cent as compared to the same quarter of last year. 

In line with LATAM’s focus on creating the best connectivity within, to and from South America, the company announced in April that it started feasibility studies to develop a new hub in the Northeast region of Brazil.

“The project will expand the capillarity of the Group in Brazil, South America, and internationally, particularly by increasing the number of destinations in Europe.

“It will also reaffirm the group’s leadership in Latin America, increase connectivity options for customers and optimize coverage of passenger and cargo flows between Brazil and other markets,” said Claudia Sender, chief executive of TAM.