Brazil slump sees Latam annual losses double

Brazil slump sees Latam annual losses double

Annual losses at South American-based Latam Airlines doubled last year as the group was dragged down by operations in Brazil.

A net loss of $219.2 million was reported for 2015 against a loss of $109.8 million the previous year.

Non-operating results for 2015 include non-cash foreign exchange losses of $467.9 million, mainly resulting from a 49% devaluation of the Brazilian real during the year.

The airline cut domestic capacity by 9.4% during the fourth quarter of last year and 2.5% for the full year due to the “challenging scenario in Brazil and the resulting slowdown in the airline industry”.

Further capacity cuts of between 8% and 10% are planned in Brazil this year and has revised downward its capacity growth guidance for international routes from 4% and 6% to between 3% and 5% for 2016.

This adjustment is driven by a reduction of about 25% on international routes between Brazil and North America for the second half of 2016.

“We expect 2016 will be a challenging year for Latin American markets in general,” the airline admitted.

“In this context, we are permanently evaluating opportunities to rationalise capacity throughout our network, especially in Brazil.

“We are convinced that cost efficiencies are critical and, as we aggressively pursue cost savings initiatives, we seek to maintain the passenger experience at the centre of our strategic decision making.

“Furthermore, we continue to pursue opportunities to reduce capital expenditures, while maintaining at all times adequate liquidity levels.”

Latam hopes two joint business agreements with Oneworld alliance members American Airlines and British Airways/Iberia parent International Airlines Group will improve international connectivity.

Both deals are subject to regulatory approval in different countries which could take between 12 to 18 months, so will not be in place in time for this summer’s Olympic Games in Rio de Janeiro.


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