LATAM Suffers Heavily Under Cargo Decline

Despite a pick-up in June of this year for air cargo demand in South America, the first half-year results in the region are not convincing. South American countries still only contribute around 3 percent of the total Freight Tonne Kilometers (FTKs) on offer worldwide. Ironically, the region had almost 10% more FTKs on offer from January to June compared to the previous year, but demand for space has dropped again. This has forced carriers, among them LATAM Cargo to rethink their fleet policy.

LATAM gets rid of their Boeing 777 freighters (pictured here) but continues operating B767Fs  - company courtesy
LATAM gets rid of their Boeing 777 freighters (pictured here) but continues operating B767Fs - company courtesy

Boeing 777 freighters to be dropped altogether
The LATAM Airlines Group, which has its South America operations spread throughout Chile, Brazil, Colombia and Mexico, has taken the painful decision to cease operating with the last of their Boeing 777 freighters. Two of these aircraft were returned to lessor GECAS earlier this year and have ended up in Leipzig-based AeroLogic’s fleet.
The last B777F to leave is still registered under LATAM Cargo Chile and it is not yet sure who will take up the freighter once it leaves LATAM’s fleet by the end of this year. LATAM’s management sees itself forced to take this decision due to the continued decline in cargo revenues during the first six months of this year. Results for the cargo operation have not been good during the past twelve months and revenues dropped by a further 4.6% from January to June, down to US$510 million from US$536 million in the same period of 2016.

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B767 freighters to be the only workhorses
As of 2018, LATAM Cargo’s freighter fleet will consist only of B767 freighters which have far less payload than their B777F sisters. A total of eight B767Fs will be available to the cargo department. Two of these aircraft will remain on lease to FedEx Express. This leaves two for LATAM Brazil Cargo and one each for LATAM Colombia, Chile and Mexico cargo operations. The company plans to gain a better utilization of belly space in the LATAM passenger fleet.

South America first half-year cargo figures not good
Despite the above mentioned increase in FTKs in the region, South America still hangs way behind other regions in cargo growth demand. This is seen in the IATA January to June figures, which were published more than a month ago. June was the strongest month but in general, volumes are around 10% lower than during the famous 2014 peak period. The problem lies with the continued uncertain political and economic situation on the continent, especially in Brazil.
We can only hope, for LATAM Cargo’s sake, that the economic and political scenario will change for the better and that the carrier may look at bringing larger, more modern freighters back on the scene.

John Mc Donagh

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