LATAM’s cargo revenues up 16.8% in Q2

LATAM Airlines’ cargo revenues increased 16.8 per cent in the second quarter (Q2) ending 30 June reaching $299.7 million (2017: $256.5 million) driven by a 6.7 per cent rise in cargo yields – mainly due to a better demand environment in the region.

In addition, cargo load factor reached 54.9 per cent, an improvement of one percentage point compared to Q2 in 2017. Tonnage in Q2 reached 231,000 tonnes, a 7.6 per cent rise on Q2 last year.

LATAM said imports from North America and Europe to Brazil and Chile showed an improvement in terms of revenues per ATKs, driven by higher imports of electronics and capital goods. Export markets are also showing a recovery year-over-year driven mainly by salmon exports from Chile.

As a result, cargo revenues per ATK improved by 8.7 per cent in comparison to the same quarter of the previous year, consolidating and further improving the positive trend shown since the beginning of last year. Cargo capacity, measured in ATKs, rose 7.5 per cent in Q2 of 2018.

In the first half of the year, cargo revenues reached $595.5 million, an increase of 17.6 per cent on the $510.2 million in the same six months in 2017. Tonnage in the first half of the year reached 455,000 tonnes, a 6.6 per cent rise on Q2 last year.

Overall in Q2 of 2018, LATAM Airlines Group reported a $6.5 million operating income and a 0.3 per cent operating margin, 1.8 percentage points lower than the same period of 2017.

During the quarter, the company faced a cabin crew strike in Chile and was also impacted by a general trucking strike in Brazil, resulting in a total operational margin impact of $38 million.

Furthermore, due to an industry-wide issue affecting Rolls Royce engines, LATAM had a lower availability of its Boeing 787 fleet, part of which is still on ground awaiting engine maintenance by Rolls Royce. In the first half of 2018, operating income rose 17.2 per cent to $235 million.

LATAM’s bottom line totaled a $114 million loss in Q2, a 17.7 per cent reduction compared to Q2 2017, despite the negative impact of a $79 million foreign exchange loss during Q2 mainly due to the depreciation of the Brazilian real. For the first half of 2018, the net loss amounted to $19.7 million, 73 per cent lower than the first half of 2017.

During Q2 of 2018, LATAM took delivery of one Airbus A350 and returned one Airbus A320. The company added three leased Airbus A330 and one Boeing 747 to its fleet under a short-term rental agreement with the Spanish airline Wamos Air.

LATAM extended its sublease contracts with Qatar for two Airbus A350, initially returning in 2018, for two more years. LATAM also expects to receive one more Airbus A350 during 2018 and to convert one Boeing 767-300 from a passenger aircraft into a freighter. Finally, LATAM will return five aircraft during 2018, therefore ending the year 2018 with an operating fleet of 312 aircraft.

For 2019, the company expects the delivery of 16 new aircraft, including three aircraft postponed from 2018 to 2019, and to return eight. Additionally, it expects to convert two Boeing 767-300 from passenger aircraft into freighters (one of which arriving in 2020), thus ending the year 2019 with an operating fleet of 320 aircraft.