LATAM Airlines Group reports improvement in operating income
LATAM Airlines Group S.A. (NYSE: LTM; IPSA: LTM), the leading airline group in Latin America, announced today its consolidated financial results for the quarter ending September 30, 2019. LATAM makes reference to the consolidated entity, which includes passenger and cargo airlines in Latin America. All figures were prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in U.S. dollars. The Brazilian real / US dollar average exchange rate for the quarter was BRL 3.97 per USD.
LATAM Airlines Group reported an operating income of US$268.9 million in the third quarter of 2019, representing a 21.8% increase compared to the same period in 2018. LATAM’s operating margin reached 10.1% in the quarter, an increase of 1.2 percentage points year-on-year. Net income totalled US$86.3 million for the third quarter, an improvement of US$51.1 million year-over-year.
Total revenues increased 6.9% year-over-year to US$2,665.1 million in the third quarter of 2019 driven by an 11.1% growth in passenger revenues. Passenger revenues per available seat kilometre (RASK) grew by 9.1% year-over-year, reflecting RASK improvements on international routes to the US and continuous RASK improvements for LATAM Airlines Brazil’s domestic operations. In addition, the group carried 7.6% more passengers year-on-year during the quarter – representing 1.4 million additional passengers – driven by domestic operations in Brazil and Spanish-speaking markets affiliates.
Total operating expenses increased 5.5% year-over-year in the third quarter to US$2,396.2 million, while costs per ASK (CASK) grew by 3.6% year-over-year and CASK excluding fuel (CASK ex-fuel) by 8.2% year-over-year. Cost increases were mainly driven by the accounting effect of IAS21 & IAS29 (hyperinflation) in Argentina and the performance bonus reversal in third quarter 2018. Excluding both effects, CASK would have declined by 0.7% year-over-year and CASK ex-fuel would have increased by 2.6%.
LATAM Airlines Group narrowed its guidance for operating margin for full year 2019 to approximately 7%.
On September 26, 2019, LATAM and Delta announced a strategic agreement to bring together the leading group of airlines in Latin America and North America. Passengers will benefit from greater travel choices across the Americas and an industry leading customer experience, while providing LATAM new growth opportunities, building upon Delta’s and LATAM’s global footprint and their highly complementary route networks. In addition, LATAM will improve its capital structure through increased cash flow generation and the consequent reduction of forecasted debt. Since the announcement of the strategic agreement, Delta has filed its HSR notification with the US authorities which is a prerequisite to launching its tender offer for 20% of LATAM’s shares.
During September, LATAM announced that Mr. Enrique Cueto will step down from his role as CEO on March 31, 2020, after 25 years leading the company. Mr. Cueto will be succeeded by Mr. Roberto Alvo, the group’s current Chief Commercial Officer, who has been part of the group for 18 years with successful roles in finance, fleet, planning and in recent years, has led its commercial area.
During September, LATAM also announced the consolidation of its frequent flyer programs under the single brand LATAM Pass, bringing together the existing clients of LATAM Pass and the clients from LATAM Fidelidade and Multiplus. With this rebranding, LATAM completed the consolidation of a single frequent flyer program, with 38 million members.
Finally, LATAM Airlines Group was listed in the ‘World’ category of the Dow Jones Sustainability Index (DJSI) for the sixth consecutive year; recognition of the company’s ongoing commitment to incorporating sustainable practices into every aspect of its operations. Today, LATAM Airlines Group is the only airline group in the Americas with a presence in this category and one of the only three airline groups in the world in the category.
To access the entire Q3 report and for more information visit www.latamairlinesgroup.net
Source = LATAM Airlines Group