LATAM Cargo weathers 1Q headwinds with mild traffic gains

On the surface, it appeared to be a tough quarter for the cargo unit of Chile-headquartered LATAM Airlines Group. LATAM Cargo reported a steep 10.9% year-over-year drop in revenue, to US$263.5 million, in the first quarter of 2019, despite a 1.9% increase in cargo traffic to 899 million RTKs. After accounting for a $10 million hit from the company’s mid-2018 divestiture from Mexico-based MasAir, however, the revenue drop moderates. Headwinds from sluggish import markets resulting from currency depreciation in Argentina and Brazil were partially to blame for lower revenue. Exports, notably of Chilean Salmon, remained buoyant and led to the higher traffic figure. Reductions to excess capacity lowered ATKs by 0.4%, and boosted load factors 1.3 pp higher, but did not drive yield improvement. Dollar-denominated cargo yields were down 12.6%, to $0.293 per RTK. Despite the weaker performance, LATAM remains on track to add two 767-300BCFs over the next two years. Although previously the Group operated a mixed fleet of 767Fs and 777Fs, last year LATAM phased-out its final remaining 777Fs and ordered three 767-300 conversions from Boeing, all of which will use feedstock from its passenger affiliate. Boeing redelivered LATAM’s first freighter-converted 767-300BCF last December (34628, ex-LATAM Airlines) [ FAT 004726 ]. The remaining -300BCFs on order are expected in 2019 and 2020. LATAM Cargo’s quarterly performance tracked its smaller rival, Colombia-based Avianca Group, which reported revenue for its “cargo and other” unit down 8.5% to $180.3 million. The lower figure was blamed on the termination of a previously existing partnership with Etihad Cargo, under which the carriers codeshared on trans-Atlantic flights. Traffic, meanwhile, was still up 2.4% higher year-over-year. So far, there is no sign that the Group’s beleaguered Brazilian subsidiary, Avianca Brazil, which started the bankruptcy process late last year and has faced fleet repossessions, has cut into the Group’s cargo performance. This is likely to change as Avianca reduces capacity in Brazil and as other carriers encroach on its landing slots. In addition, at least one of the carrier’s six A330-200Fs appears to be inactive.

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LATAM Cargo weathers 1Q headwinds with mild traffic gains

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Qatar Airways updates 777F delivery timeline, again hints at A330F disposal

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Related Posts

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