LATAM Airlines group reports a 16.6 per cent jump in cargo revenue in the first quarter 2018 ended March 2018, reaching USD 295.8 million on the back of a 7.1 per cent increase in cargo yields, due to a better demand environment, increased revenue management and a higher fuel surcharge, the cargo carrier said.
Cargo load factors also improved, reaching 54.8 per cent, an improvement of 1.9 percentage points compared to the first quarter 2017. Imports from North America and Europe to Brazil showed an improvement in terms of revenues per ATKs, driven by higher imports of electronics and capital goods. Export markets are showing a recovery year-over-year driven mainly by salmon exports from Chile, LATAM said.
As a result, cargo revenues per ATK improved by 11 per cent in comparison to the same quarter of the previous year, consolidating and further improving the positive trend shown since the beginning of last year. While cargo capacity, measured in ATKs, rose 5.0 per cent in the first quarter of 2018.
Operating income for the whole group amounted to USD 228.5 million in the first quarter of 2018, 50.1 per cent higher than the same period of 2017. Operating margin increased by 2.2 percentage points year-on-year in the quarter, reaching 8.4 per cent, boosted by unit revenue and capacity increases across all passenger business units (international, Brazil domestic, and Spanish Speaking Countries domestic) as well as cargo.
Net income totaled USD 93.9 million in the quarter, USD 28.3 million higher than the same period of last year. Total revenues in the first quarter 2018 totaled USD 2.73 billion, compared to USD 2.48 billion in the same period of 2017. This 10.2 per cent increase was driven by a 10.1 per cent and 16.6 per cent growth in passenger and cargo revenue, respectively.
Passenger and cargo revenues accounted for 84.9 per cent and 10.8 per cent of the total operating revenue of the quarter, respectively.
Cargo strong in April
Meanwhile, April was another good month cargo-wise for the carrier, with demand in RTKs up 9.9 per cent year-on-year (up 9.1 per cent for year-to-date over last year), and available tonne kilometres for April up 2.7 per cent for a cargo load factor of 57.6 per cent, up 3.8 percentage points (up 2.2 percentage points for year-to-date).
During the first quarter 2018 LATAM inaugurated 11 new routes, including new destinations such as Rome and San José (Costa Rica). For the balance of the year, LATAM already announced new routes and destinations from Sao Paulo, including Boston, Las Vegas (starting 3 June) and Tel Aviv.
In 2017 alone, LATAM inaugurated 13 new international routes, including the longest flight in its history, Santiago-Melbourne. In 2018, LATAM will launch a further 17 international flights, having already commenced services such as Lima-San Jose (Costa Rica) and São Paulo-Rome and with inaugural flights to new destinations including Boston, United States (July) and Tel Aviv, Israel (December) still to come.
And beginning 2 September 2018, LATAM Airlines Brazil will offer five flights per week between Lisbon and its São Paulo/Guarulhos hub. The route will be operated by B767 aircraft.
LATAM also recently announced plans to serve Munich in the first half of 2019, subject to regulatory approval. The Bavarian capital will become LATAM’s second destination in Germany after Frankfurt.
“We continue to offer new and unrivalled travel options, connecting Latin America with the world like never before,” said Enrique Cueto, CEO of LATAM Airlines Group. “Over the past two years, not only has LATAM launched an unprecedented 30 international services – including new destinations in Europe, North America and Oceania – we are also strengthening existing routes with more frequencies and connection options.”
Fleet and B787 problems
The carrier has also received one of the two A350s that were planned for this year, which will allow the carrier to keep expanding its international network.
In addition, since March 2018, LATAM is leasing five additional aircraft to support its international operations and sustain its growth plans, as seven B787 aircraft are currently on ground awaiting engine maintenance from Rolls Royce.
The carrier one of a handful including Air New Zealand, All Nippon Airways, Thai Airways and Virgin Atlantic that have had vibration problems with the Rolls-Royce Trent 1000 engines of their B787 aircraft. At the beginning of 2018, Air New Zealand decided to stop the operations of its four B787 for a special review.
In February, LATAM decided to take an even more drastic measure and has sent its B787 to the Victorville airport (California, United States) as a result of damage caused to the pylons on the wings by the ongoing vibration problem of the Trent 1000 engines. Since then the remaining six B787 in its fleet have all been grounded.
“We are working closely with Rolls Royce in order to reduce the impact for the Company and our passengers, taking all the necessary measures to normalise our operations as soon as possible,” LATAM said.