LATAM cargo limps through November

LATAM’s cargo traffic remained weak in November, in particular due to the continued poor performance of Brazil’s domestic and international markets. Brazil’s GDP barely grew in 2014, and it shrank by 4.5 percent in the third quarter of this year, compared to the same period 2014, per The Economist. It is expected to shrink by 3 percent overall for this year.

Consequently, weaker seasonal exports from Latin America contributed to the soft demand. Cargo traffic for the LATAM Group decreased 13.7 percent in November, with the load factor decreasing by 7 points to 56.9 percent. The group said it continues to adjust cargo capacity by reducing freighter operations, which resulted in a 3.1 percent decline in available tonne kilometers (ATKs) for the month.

For the third quarter, cargo revenue for the LATAM Group decreased 24.5 percent, again due to weakness in the Brazilian market, but also due to a strike by customs personnel at São Paulo Guarulhos Airport. The depreciation of the Brazilian real and the euro, plus a lower cargo fuel surcharge related to the drop in fuel prices, contributed to cargo revenues per ATK declining 24.2 percent in the quarter, year-over-year.

In 2016, LATAM expects cargo ATKs to decline between 0 to 2 percent compared to this year, driven by what they believe will be an increase in belly freight. In the meantime, LAN Cargo, part of the LATAM Group, will inaugurate the group’s first maintenance hangar facility in the U.S. this week at MIA. More than US$15 million was invested in the 98,000-square-foot facility.