LATAM Airlines’ cargo traffic reported a decline of 2.5% y-o-y during the third quarter to 853 freight tonne kilometers (FTKs), leading to a 9.8% decline in cargo revenue to US$251.7 million. LATAM said these figures are partially explained by the sale of its former subsidiary MasAir in the second half of 2018, which reduced LATAM’s cargo revenues by approximately $10 million.
Excluding MasAir, cargo yield declined by 7.0% while load factors increased 0.4 percentage points to 53.6%, according to the carrier. As a result, cargo revenues per FTK declined by 6.2% in comparison to the same quarter the year prior.
For the nine-month period ended September 30, cargo revenue for the carrier declined 10.3% compared to the same period last year, to $784.4 million.
The carrier also said import markets continue to decline y-o-y, especially to Brazil and Argentina due to weaker currencies and economic uncertainty in the region. However, LATAM also reported that improving domestic and export markets partially offset these declines.
Over the third quarter, LATAM Cargo increased its operations from Columbia into the United States, launched a freighter service from Peru to the U.S., and expanded its airfreight capacity to the Falkland Islands.
Despite 2019’s weak air cargo market LATAM Cargo is also optimistic about the long-term prospects for airfreight in Latin America, LATAM Cargo CEO Andres Bianchi told Air Cargo World during Cargo Facts Symposium 2019, hosted by our sister publication, Cargo Facts, last month. The carrier anticipates domestic and cross-border e-commerce will be a major driver for trade requiring expedited transportation.
Overall, the carrier reported $2.6 billion in revenue for 3Q, with a net loss of $72.3 million. Passenger and cargo revenues accounted for 87.8% and 9.4% of the total operating revenue for the quarter, respectively.
“During the third quarter, LATAM reached an operating margin of 10.1%, an improvement of 1.2 percentage points compared to third quarter last year,” said LATAM CFO Ramiro Alfonisin. “This operating margin improvement reflects the adjustments made by the Company in order to improve profitability as we focus on actively managing capacity and achieving healthy load factors across all markets.”
“Even though currencies across the region remain devalued, capacity adjustments in international routes are improving the pricing environment of our operations, especially from Brazil to the U.S.,” he said, and added that the company remains committed to its goals set for the year.