From the Cockpit with LATAM Cargo CEO Andres Bianchi

LATAM Cargo has initiated a plan for 2024 that enables it to modernize its fleet while supporting existing customers with its dedicated freighters and passenger belly space. The airline took redelivery of its eighth 767-300BCF in October as part of an order with Boeing for ten conversions, and expects to convert the remaining two 767-300BCFs with the planemaker next year. [caption id="attachment_56865630" align="alignright" width="350"] Andres Bianchi, CEO of LATAM Cargo. (Courtesy/LATAM Cargo)[/caption] Cargo Facts recently talked to LATAM Cargo Chief Executive Andres Bianchi to discuss the carrier’s fleet strategy for its dedicated freighters and balancing main-deck and belly growth. What follows is an edited version of the conversation. Cargo Facts : Aside from your planned 767-300BCF conversions, what else could lead to more aircraft in 2024? Andres Bianchi: We’re looking at the market and we’re seeing some opportunities potentially popping up to do some extra flying. That may force us to adjust our plan, and the way in which we do that depends on aircraft and pilot availability, etc. There are certain niches in the market we may want to address — and not only geographically. Some people are asking us if we’re willing to fly certain routes with our 767Fs. Even in this slower market, if you have the right cost structure, you can get access to opportunities that otherwise wouldn’t be there. CF : Could those opportunities involve any new or different aircraft types? AB: For the time being we’re committed to the 767 freighter. I'm not going to say that we may not look at a different type of aircraft down the line, but one of the key lessons that we learned when we had the 777Fs is that four aircraft were just too few. It’s difficult, especially when you are flying long legs, because when you have to cover for an aircraft on the ground or recover from anything, it messes up the whole network dynamic. That’s why, even though on certain routes it’s a challenge, we’d much rather have a larger fleet of nineteen 767 freighters than a blended fleet of twelve 767Fs and four 777Fs. If you do the math, that is roughly the same total capacity. When you’re trying to manage aircraft on a daily basis, it gets tricky, especially when one goes down for a C check and you’re left with three 777Fs. So, if we go into a different type of aircraft for long haul, I think it will take us time to define that, and we would look for a fleet size that actually makes sense or performance guarantees that allow us to have comfort that we will be able to run the network in the proper way. CF : Is it feasible to expand into Asia with the 767s, even with multiple stops? Is the market attractive enough that you would consider this? AB: When we look at the 767, why we like it so much is because it is the best option for the network that we operate. If we were to modify our network and have some Asian flying, the 767 starts getting challenged. Could it be done? We have Anchorage plus one to get to China, but it’s not the perfect product and a much more complex economic proposition. At this point, when we look at our fleet, the nineteen aircraft are fully utilized doing what they do and with reasonable economics. So it would have to be a very, very strong business case for us to change our network and it would be hard. We didn’t do it during the pandemic — when it made much more sense — because we have a commitment to our customers. We supply a lot of the capacity out of South America, for example. Moving a plane to Asia means you have to cut a lot of your current operation because that’s a very long leg. I don’t know if it strategically makes sense at this point, given the opportunity cost. One of the things we were very cognizant of during the pandemic was to be very focused on what we were doing, and how we were doing it. We were a lot more optimistic that belly capacity was going to come back faster than what a lot of people thought. That puts a lot of pressure on freighters because the rates go down dramatically once the bellies are in there. So, we’re very focused on keeping the economics of the freighter operation very competitive. And after coming out of the pandemic and Chapter 11, our cost base is very competitive. [caption id="attachment_415467" align="aligncenter" width="2560"] LATAM Cargo plans to operate a fleet of nineteen 767-300 freighters. (Courtesy/LATAM Cargo)[/caption] CF : How are you thinking about expanding with new freighter routes? AB: Some of the routes we’ve recently opened are to secondary cities where the 767 is able to get the right economics that are not available to larger aircraft. On some long-haul routes especially, we are catering to certain sets of origins and destinations that are relevant to the shippers and the forwarders, which wouldn’t be available if we were flying larger aircraft. That’s happening both out of the U.S. and now out of Europe. We’ve also opened a bunch of short-haul destinations, which is an opportunity that’s driven by the way our new network is designed: We have a lot of flights out of Colombia northbound, so we can rotate the aircraft differently. CF : How are you balancing that growth with LATAM’s passenger bellies? AB: On some markets, we've deployed the freighters first to build up the customer base for the cargo business so when the passenger flight comes in, transitioning from the freighter to the belly is easier. That’s a more conservative approach because committing to a passenger operation is much more expensive since the lead times are longer. On some markets it may be different and we may take the bet together with the passenger team. But the way LATAM works is that any route expansion is done together by the passenger and cargo teams. We provide the input and collectively make a decision based on risk and reward. It’s a very cohesive approach which enables the passenger route to be stable from the get go and I think the approach LATAM has taken for a very long time is to look at the business as a combination. CF : What are your focus areas for 2024? AB: Next year will be basically consolidating our growth. You’ve seen that we’ve been growing quite fast; we will still grow 10% to 12% next year in terms of overall capacity, but at some point we need to stabilize the network and consolidate, and those opportunities are the ones that are probably going to drive some extra flying. If something different comes up, it's going to be different, obviously. But at this point, it’s basically consolidating the business as it is and starting to build on these secondary markets that we can serve very well with the 767. Cargo Facts EMEA 2024, the essential event for stakeholders in Europe, the Middle East and Africa, will take place Feb. 5-7 in Amsterdam. Learn more and register now .

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