The South American giant LATAM Airlines Group has recently announced its 2023 first quarter results. The company had a 43.25 increase in revenues which amounted to $2.80 billion. LATAM Airlines had a strong start in 2023. Let’s take a look at it.
Strong revenue following a Chapter 11 process
LATAM Airlines had a strong start this year. The company’s management remarked that all the affiliated carriers (it operates in Brazil, Chile, Colombia, Ecuador, and Peru) have already recovered their entire network. This led to LATAM Airlines having revenues worth $2.80 billion, a passenger CASK of 4.0 cents, which is below 2019 levels despite inflationary pressures, and a first-quarter net income of $121.8 million.
“In the first quarter of the year, we posted a double-digit adjusted operating margin and returned to bottom-line profitability, accompanied by a significant increase in liquidity, reflecting LATAM’s strong business and financial profile.”
Between 2020 and 2022, LATAM Airlines went through a Chapter 11 bankruptcy process. This quarter, LATAM closed with a liquidity of $2.5 billion, represented by $1.4 billion in cash plus $1.1 billion in available and fully undrawn revolving credit facilities as of March 31.
Passenger revenues amounted to $2.39 billion, a 61.1% increase versus last year’s first quarter. This is explained by an increase in operations. Moreover, LATAM will continue to inaugurate and reopen new routes this year, including Santiago-Melbourne, São Paulo-Johannesburg, and Bogota-Orlando. Cargo revenues in the quarter decreased 12.4% compared to 2022 levels, to $377 million, mainly explained by the softening in cargo yields in recent months.
During the quarter, LATAM Airlines had total adjusted operating expenses of $2.5 billion. This was a 23.8% increase versus the previous year, mainly explained by the rise in passenger operations.
Aircraft fuel costs increased by 41.2% compared to the first quarter of 2022. Rental expenses, which correspond to LATAM group’s fleet power-by-the-hour contracts, amounted to $23.7 million, which was a 65.9% decrease versus last year, following the expiry of all contracts for the narrowbody fleet.
Looking at the fleet
LATAM’s fleet was composed of 307 aircraft. It was comprised of 235 Airbus narrowbody aircraft, 55 Boeing widebodies, and 17 Boeing cargo freighters. The airline expects to close the year with a fleet of 323 aircraft.
Nonetheless, LATAM’s total fleet will reduce in the next couple of years, first down to 297 in 2024 and then going up again to 315 in 2025. By 2025, LATAM’s fleet will be composed of 173 Airbus A320ceo (down from 214 in 2023), 63 Airbus A320neo (up from 31 in 2023), 41 Boeing 787s (up from 37 in 2023), 19 other Boeing-family-related aircraft (down from 21), and 19 Boeing 767-300Fs (down from 20).
With regards to its cargo fleet, LATAM Group is carrying out an expansion plan by converting 767 passenger aircraft into cargo freighters. As of March 31, LATAM had already converted nine freighters, with the remaining four conversions to take place in 2023 and 2024.
Daniel Martínez Garbuno is a Mexican journalist. He has specialized in the air industry working mainly for A21, a Mexican media outlet focused entirely on the aviation world. He has also published on other sites like Simple Flying, Roads & Kingdoms, Proceso, El Economista, Buzos de la Noticia, Contenido, and Notimex.