Chile-based airline shows year-on-year progress

LATM’s latest Q2 2019 financial results reveal the Chile-based airline has posted a loss of $63 million in the second quarter.

The loss is an improvement of $144.9 million from its results experienced in the same period last year when the airline posted a $206 million loss.

During the second period, LATAM reported an operating income of $40.2 million and an operating margin of 1.7%.

Its total revenues rose 0.5% year-on-year in the second quarter of 2019 to US$2.37 billion. This increase was driven by a 3.2% increase in passenger revenues as a result of 4.8% capacity growth measured in available seat kilometer (ASK).

Total operating expenses increased 1.1% year-over-year in the second quarter to $2.329 billion, driven by a 5.2% increase in fuel costs due to a 6.7% increase in fuel consumption.

Currency devaluation and savings

Excluding fuel, total operating expenses declined 0.7% year-on-year in the second quarter. Cost per ASK fell 3.5% year-over- year, while costs per ASK excluding fuel decreased 5.2% year-over-year as a result of the positive effect of currency devaluation of the currencies on costs denominated in local currency, as well as theimplementation of the Company’s cost saving initiatives.

During the second quarter, LATAM and its affiliates transported more than 16.8 million passengers, an increase of 1.4 million passengers compared with the second quarter of 2018. In the group’s domestic markets alone, passengers carried rose by 1.3 million, representing an increase of 11% year-on-year and reflecting the healthy demand in those countries.

In July, LATAM issued an additional $200 million of its 7.000% senior notes, which are due in 2026 at a yield to maturity of 5.979%. The proceeds were used in a cash tender offer to prepay $238 million of the LATAM2020 bond, which matures in June 2020.

Fitch Ratings upgraded LATAM’s corporate credit rating to BB- (from B+), with a ‘stable’ outlook, as a result of the company’s debt reduction, financial flexibility and consistently high liquidity levels in recent years.