A 22.3% decline in cargo revenues, along with a 13.7% decline in passenger income, helped push Latam Airlines Group’s total revenue down by 12.5% in the second quarter of 2016, the South American carrier reported in its latest financial results.
Total revenues in the second quarter 2016 were $2.1bn, compared with $2.4bn in second quarter 2015. Cargo accounted for and 12.3% of total operating revenues and passenger 80.9% during the quarter.
Latam said that the fall in revenue reflected a weak economy in the region, especially in Brazil, and the effect of currency devaluation.
However, this was partly offset by cost reductions, including returning a leased Boeing 777-200F freighter along with eight passenger aircraft and deferred deliveries of new aircraft including 12 Airbus A320neos and two Airbus A350s, which would cut fleet commitments in 2018 and 2019 by US$829.
The airline’s Brazil arm reduced domestic capacity by 13.7%, and slashed international routes between Brazil and the US by about 35% compared with the same period of 2015 but it did strengthen its network in South American Spanish-speaking markets including Chile, Peru, Argentina, Colombia and Ecuador.
Latam Airlines Chile began flying directly between Santiago and La Paz and will fly direct between Santiago and Los Angeles in the fourth quarter while Latam Airlines Peru will connect its Lima hub with Barcelona by the end of the year and with Cartagena, Colombia in January 2017.
The airline’s board is due to submit for approval on 18 August a plan for Qatar Airways to take a stake of up to 10% in the carrier.
