The South American regional carrier Latam Airlines has posted a net profit of US$69 million for all of 2016, its first yearly profit since the company formed four years ago, helped by improving conditions in key market Brazil.
The Chile-based airline, Latin America’s largest, posted a $54m profit for the fourth quarter. Both figures beat forecasts by analysts surveyed by Reuters, who saw on average a 2016 profit of $23.5m and a fourth-quarter profit of $8.5m.
“The good results can be explained principally by Brazil, given the appreciation of the real currency and the reduction of capacity, as well as fleet readjustments,” said Gisela Escobar, the director of investor relations.
Latam said it was reducing its 2016-2018 fleet commitment by $2.2 billion. It maintained its guidance for a 2017 operating margin of between 6 and 8 percent. Fleet commitments for 2018 will amount to $555m, a reduction of $1bn compared with September 16, the airline said.
The company forecast that available seat miles, a measure of capacity, would grow 1 to 2 per cent in 2017, a boost over its 2016 guidance of between minus 1 and 1 per cent.
Economic difficulties in Brazil, Latam’s key market, had caused problems for the carrier in recent years. In 2015, the company posted a net loss of $219m, largely thanks to depreciation in that nation’s currency.
Latam was founded in 2012 through a tie-up between Chile’s Lan and Brazil’s Tam. In December, Qatar Airways completed an acquisition of 10 per cent of the company, in a transaction worth $608m.
* Reuters
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