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LATAM Air Turns Profit As Margins Improve
Almasalla Arab Trave Portal News – By Ashraf El gedawy -LATAM Airlines swung to a net profit for the third quarter and improved its operating margin in a sign the region s biggest airline, battered by weakness in its Brazilian market, has started to turn the corner.
The company – which formed in mid-2012 when Chile’s LAN took over Brazil’s TAM – reported a net profit of USD$52 million for the three months to September.
For the same period a year ago, LATAM posted a USD$49 million loss, according to the company’s revised figures.
The airline’s operating margin for the quarter was 7.6 percent, compared with 3.2 percent a year ago, as it saved money on wages, fuel and other costs.
LAN, LATAM’s Chilean arm, is keen to get back to the days of double digit margins it enjoyed before the merger, when it was considered a model of efficiency by the market.
LATAM as a whole has targeted an operating margin of between 4 and 6 percent for the full year 2013, and in the statement with Monday’s results said it now expected about 5 percent.
Revenues for the quarter were USD$3.36 billion, up slightly from USD$3.34 billion a year ago.
"We are very happy with the process of integration, synergy and efficiency initiatives (and) the significant improvement in our Brazilian operations," it said As Reuters published
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The airline’s Brazilian unit, TAM, has been slicing jobs and flights trying to make operations in the country more efficient as it struggles with a weakening economy and real currency.
Load facto rose 3.6 percentage points in the quarter to 81.6 percent at its Brazilian domestic business, which makes up over one-third of the group’s total passenger operations.
The company also said TAM’s exposure to the real had been cut nearly in half from a year ago to USD$2.1 billion and that it expected to eliminate it entirely by June 2014, as it increased its US dollar income and covered itself through forward contracts.
About half of the value of the company was wiped out between the merger and its last quarterly results in August, when it announced a wider than expected loss.
However, since then, there has been a shift in sentiment and its Santiago-listed shares have risen around 30 percent.
