With LATAM Airlines Group three years away from the full integration of LAN and TAM operations — officials estimate a target of June 2016 — the company is still attempting to harmonize programs between the two Latin American carriers, standardizing processes and renegotiating contracts.
The cargo business, however, is now fully integrated. Fourth-quarter 2012 cargo revenues for the LATAM Airlines Group finished at $37.89 million, a 3-percent, year-over-year decline. Overall, the carrier finished with revenues of $3.5 billion, a 0.3-percent decrease from the fourth quarter of 2011. Capacity increased by 3 percent.
Officials blamed the cargo revenue decline on a lack of demand on routes to Latin America coupled with regional and international pressures. Cargo traffic fell by 1.5 percent, year over year, during the quarter. Load factors dropped nearly three points and yields were down by 1.6 percent.
Total operating expenses for the airline reached $3.37 billion, a 6.3-percent increase year over year, leading to an operating margin that dropped 5.4 points to 3.4 percent. Income during the fourth quarter dropped from $114.9 million in 2011 to $8.5 million in 2012.
For the coming year, LATAM predicts cargo capacity growth of between 2 percent and 4 percent. This additional cargo space comes in the form of two recently delivered Boeing 777 freighters and additional belly space. There are no plans for any additional cargo aircraft, however, and the carrier’s current fleet of four B777-200 and 12 B767-300 freighters will remain pretty much unchanged through 2015.
On the passenger side, LATAM is undergoing a more drastic fleet change, taking delivery of 14 passenger planes in the fourth quarter, but returning four Airbus A320-200s and selling two Airbus A318s. - Jon Ross