LATAM cargo revenue falls 17.4% in 2023

LATAM Airlines Group reported $11.8 billion in 2023 operating revenue, an increase of 23.9% year over year. However, cargo revenue was down 17.4% YoY to $1.4 billion. [caption id="attachment_70651" align="alignright" width="300"] (Courtesy/LATAM Cargo)[/caption] THE BIG PICTURE: Though the carrier’s cargo revenue figures were down from 2022, they were up from 2019, according to the earnings report released Feb. 22. LATAM group attributed decreased YoY cargo revenue to “soft cargo yields due to increased industry capacity.” Many carriers have reported reduced cargo revenues for 2023, offset by soaring passenger revenues. LATAM’s cargo earnings fared better than many others, including: Delta Air Lines , whose cargo revenue fell 31% YoY to $723 million ; United Airlines , whose cargo revenue fell 31.1% YoY to $1.5 billion ; American Airlines , whose cargo revenue fell 34.1% YoY to $812 million ; and Air Canada , whose cargo revenue fell 27% YoY to $685.6 million . BY THE NUMBERS: The carrier reported $3.3 billion in fourth-quarter operating revenue, an increase of 18.5% YoY, but cargo revenue was down 13.4% YoY to $363.8 million. Also in Q4: Passenger and cargo revenue accounted for 87.6% and 11.2%, respectively, of total operating revenue; Cargo revenue rose 29.9% compared with Q4 2019; Adjusted EBITDA was $675.4 million, up 29.9% YoY; Cargo available tonne kilometers (ATK) were 1.9 billion, up 10.5% YoY; The carrier transported 236,775 tonnes of cargo, up 8.9% YoY; Cargo load factor was 53.2%, down 1.5 percentage points YoY; and Revenue per ATK was 18.9 cents, down 21.6% YoY. For full-year 2023: Adjusted EBITDA was $2.5 billion, up 92.7% YoY; Cargo ATKs were 7.2 billion, up 14.6% YoY; The carrier transported 858,196 tonnes of cargo, up 5% YoY; Cargo load factor was 51.7%, down 4.8 percentage points YoY; and Revenue per ATK was 19.9 cents, down 28% YoY. WHAT THEY’RE SAYING: The 2023 earnings are “a reflection of LATAM group’s dedication to demonstrating its financial strength, continued network expansion and operational flexibility,” according to the earnings report. Some of the carrier’s 2023 success can be attributed to Chapter 11 restructuring, LATAM Chief Executive Roberto Alvo said on today’s earnings call. LATAM filed for Chapter 11 bankruptcy in May 2020, struggling to stay afloat during the pandemic. The carrier has recovered significantly and emerged from bankruptcy in November 2022. STATE OF PLAY: Chief Financial Officer Ramiro Alfonsin attributed the carrier’s high cargo load factor to using the right-sized aircraft for operations. LATAM operates 20 Boeing 767-300F aircraft, which Alfonsin called “the backbone” of its fleet. LATAM does not need the largest freighters on the market because “our flows are not very big,” Alfonsin said on the earnings call. “And the combination we have between the belly and the freighter allows us to allocate our cargo capacity in a very different way than full cargo airlines.” FLASHBACK: LATAM launched 21 routes — 17 international and four domestic — in 2023 as part of its joint venture with Delta Air Lines , an agreement that went into effect in 2022, according to Alvo. LATAM ranked 25th on Air Cargo Next ’s Freight 50 list of top cargo carriers for 2022, having moved up five spaces from the previous year. NOTEWORTHY: LATAM Cargo won TIACA ’s Air Cargo Sustainability Award in November for its “A Necessary Destination” plan, which aims to offset 50% of its domestic emissions by 2030 and to be carbon neutral by 2050, according to the plan’s brochure. “At the end of the year, the group achieved 96% of single-use plastic elimination and [offset] more than 1.7 million tonnes of CO2 through CO2BIO, a project we developed together with Cataruben Foundation and that protects more than 550,000 acres in the wetlands of Northeast Colombia,” Alvo said. MARKET REACTION: Shares of LATAM Airlines Group ( OTCMKTS: LTMAY ) were down 1.84% from market open to 61 cents as of market close today. LATAM has a market capitalization of $7.4 billion. Register here for Air Cargo Next ’s free webinar, “The Role of Drones in the Future of Air Cargo,” on Tuesday, March 26, at 11 a.m. ET.

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