News / Latam Airlines reports record profits and cargo growth in Q3 as Brazil recovers

© Max Moore

A rebounding Brazilian economy and growing confidence in the continent has finally given Latam Airlines Cargo some better figures to report – although there is still room for improvement.

The airline group saw operating income rise 60% in the third quarter, to $244m, driven by improvements in its Brazilian market and progress in “efficiency initiatives”.

Cargo revenue grew 2.5%, the first year-on-year increase since Q2 13, to $272.2m. Cargo traffic, as measured in revenue tonne km (RTKs) grew 3.5% in the quarter.

However, cargo tonnes carried fell 3.6%, and yields dipped by 1%. Cargo accounted for just over 10% of the group’s revenues in the third quarter, while the carrier saw a 15.3% reduction in freighter operations.

LAC accounted for the growth by noting that “imports from North America and Europe to Brazil continue to show improvement year on year, driven by electronics and spare parts, as a result of more stable market conditions in the country, as well as the appreciation of the Brazilian real.

“Also, imports to Chile and Argentina started to recover during the quarter, as well as export markets from Peru, namely asparagus,” it added.

“As a result, cargo revenue per ATK improved by 8.2%, compared with the same quarter of the previous year, continuing with the recovery trend we had during the first quarter of this year, after 19 consecutive quarters of revenue per ATK decline, as we have managed to adjust our capacity.”

The carrier is taking two 777Fs out of its fleet next year – a postponement of the original plan to cut the aircraft this year. It is also adding two 767-300Fs to its existing fleet of eight – one returning from a sub-lease and the other to be converted from a passenger aircraft.

The figures were less positive over the nine-month period, but reflected a fall in capacity, part of the carrier’s “strategic capacity management”.

Cargo revenue fell 2.4% to $782m, while RTKs fell 1.3%, on available tonne km (ATKs) down 8.3%. Tonnes transported fell 5.7% to 650,000 – but revenue per ATK rose 6.4% to $0.17.

Most delegates at the recent Air & Sea Cargo Americas conference in Miami reported improvements in the Latin American market.

Boeing pointed out that growth had been negative in South America since 2014, but had now reached positive levels, and American Airlines Cargo’s Lorena Sandoval, managing director Florida, Caribbean and Latin America, agreed: “2017 has been very interesting for Latin American trade. It has been improving since 2016.

“The Brazilian economy is picking up and we think in 2018, slowly but surely, it will continue to grow.”

You can download the full results here.