A cargo challenge for LATAM

With the ink barely dry on the agreement to merge Chile-based LAN Airlines and Brazil’s TAM Linhas Aéreas into the new LATAM Airlines, LAN’s cargo boss Cristian Ureta is quoted as saying the group plans to boost cargo revenues to 25% of total revenues within four years.

In 2011, cargo revenue accounted for 27.6% of LAN’s total (US$ 1.58 billion of $5.72 billion), but just 8.7% of TAM’s (US$582 million of $6.70 billion), or 17.4% overall. So in order to achieve Mr. Ureta’s goal, a way will have to be found to incerease TAM’s cargo business almost three-fold in just four years.

Unlike LAN, TAM does not operate freighters, but this has already begun to change. LAN has transferred a 767-300F from its Mexican subsidiary MAS Air to Brazil-based subsidiary ABSA Cargo, and ABSA is now operating it for TAM. Cargo Facts expects that more freighters will have to follow – either operated by ABSA or by TAM itself – but the question is: Where will they come from?

Through its LAN Cargo arm and various subsidiary carriers, LAN currently operates two 777Fs and twelve 767-300Fs (including the unit recently put into operation for TAM), and has two more 777Fs scheduled for delivery this year. While no announcement has been made on the subject, it seems inevitable that some of these (perhaps including the 777Fs about to be delivered), will end up being operated by or for TAM, in order to take advantage of that carrier’s strong network connecting Brazil to Europe. In addition, Cargo Facts believes that the marketing of TAM’s cargo capacity will be taken over by LAN, with ABSA marketing export capacity from Brazil and LAN Cargo managing import capacity.

And we point out that while TAM does not operate freighters, it does have significant long-haul belly capacity in its current fleet (twenty A330-200s and four 777-300ERs), and has twenty-seven A350-900s and eight more 777-300ERs on firm order with Airbus and Boeing.

Today’s blog is expanded from this week’s issue of Cargo Facts Update. Those of you who do not already subscribe to the the monthly printed Cargo Facts newsletter, and its companion the weekly emailed Cargo Facts Update,  can click here for more information.

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