The Latin American carrier reports a 50 percent growth of its operating income and a net profit of US$94 million from 1 January until 31 March, 2018. Its cargo business contributed substantially to the positive Q1 figures.
According to the LATAM Group, freight revenues increased 16.6 percent in the first quarter of 2018 compared to the same period last year. In total, they accounted for US$295.8 million flowing
into the LATAM coffers, mainly driven by a 7.1 percent increase in cargo yields.
Brazil’s tentative economic recovery helps LATAM Cargo
The financial upswing was based on increased market demand, improved revenue management and higher fuel surcharges. Imports from North America and Europe to Brazil, LATAM Cargo’s key market, showed an improvement in terms of revenues per ATKs, driven by higher imports of electronics and capital goods. Exports also recovered fostered particularly by salmon consignments from Chile, stemming from numerous fish farms in the southern coastal parts of the Latin American country.
Although the average cargo load factor reached 54.8 percent – an improvement of 1.9 percentage points compared to Q1 in 2017 – there is still plenty of room for an upward adjustment when measured on figures presented by competing carriers such as Emirates SkyCargo, Lufthansa Cargo or Cargolux, to name just three.
Passenger figures went up as well
All in all, cargo revenues per ATK improved by 11 percent in comparison to the same quarter of the previous year, consolidating and further improving the positive trend shown since the beginning of last year, states the LATAM Group in their release.
LATAM’s passenger business recovered as well, shown by a 10 percent revenue increase year-over-year in the first quarter, while seat capacity rose 2.3 percent. Yields saw a 6.2 percent growth, while the load factor increased marginally by 0.6 percent, reaching a remarkable 85.3 percent on average.
The carrier’s yield growth was mainly driven by a strong pricing environment on the international long-haul routes in particular from the Spanish speaking South American countries to the U.S. and Europe, as well as a healthier demand in the Brazilian domestic market.
Route expansion should bear positive results
It can be expected that the upswing continues, driven mainly by the carrier’s network expansion in Europe and the Middle East, where Brussels and Rome have been added to the route map as will Lisbon and Tel Aviv later this year. As of mid-2018 Boston will also be served. However, this positive forecast is dependent on international political and economic stability and last but not least, free trade. Key factors that are increasingly threatened by U.S. President Trump’s policy to impose tariffs on steel imports to the U.S. and some other goods as well as his deal-breaking isolationist “America First” course.
Regarding the cargo fleet, the remaining two Boeing 777Fs have been sold to Atlas Air (CargoForwarder Global reported), leading to a uniform freighter fleet of currently nine Boeing 767-300Fs. In 2019, LATAM will convert one B767-300 from passenger aircraft into a freighter, thus upping its cargo fleet to ten units.