LATAM had good news to start in 2021. While it had a US$430.9 million net loss during 2021’s first quarter, it increased its liquidity and adjusted its fleet to face the post-COVID world. LATAM’s financial performance came following a 61.2% decrease in total revenues, where the airline only collected US$913.2 million.
Good news despite LATAM’s lackluster performance
One could think LATAM didn’t have much to celebrate during 2021’s first quarter. After all, the airline faced a new lockdown and COVID-19 waves in Chile and Brazil. Passenger capacity averaged 35.9% of pre-pandemic levels. Nevertheless, cargo revenues soared during the quarter, said LATAM. The company obtained US$345.2 million in cargo, an increase of 36.8% compared to one year ago.
LATAM is using its fleet of 11 B767-300F, deploying them with more weekly frequencies. Plus, it is also using a few freighters to cope with the higher demand. Available tonnes per kilometer (ATK) increased 13% during the quarter, compared to 2020, but the increase was even higher, of 26%, compared to 2019. Between January and March, LATAM carried nearly 30,000 tons of cargo throughout its route map.
As we’ve reported previously, LATAM is very interested in boosting its cargo market. After all, there’s a niche of opportunity in Latin America for the freighter industry. Latin America has had the worst cargo performance in the last year, according to IATA. While all the other regions in the world are bouncing back from the crisis (good cargo news!), Latin America remains highly depressed. LATAM could change that by increasing its cargo fleet in the next two years.
More good news: LATAM’s Chapter 11 process moves forward
Currently, LATAM Airlines Group continues its Chapter 11 bankruptcy process. The company expects to exit by the end of this year. In the meantime, it is working on its Reorganization Plan, which intends to present, at the latest, on June 30. After that, investors will be able to vote in favor or against this Reorganization Plan until August 23.
LATAM accessed US$2.45 billion Debtor-In-Possession funding. This has allowed the company to end 2021’s first quarter with a liquidity of US$1.330 billion in cash. Plus, LATAM still has available US$1.3 billion from the Chapter 11 funding, which means, as we said, that LATAM had good news to start in 2021.
Fleet News: LATAM rejects leasing contracts
The airline has rejected the leasing contracts of 31 aircraft, said LATAM in a statement. This number doesn’t include the 11 Airbus A350 that will leave the company within the following weeks. LATAM said that the decision to offload the A350s was to simplify its long-haul fleet. Now, the company can operate long-haul with a single OEM manufacture by having Boeing 767, 777, and 787 aircraft.
Nevertheless, LATAM has also reduced a bit its Boeing fleet. The airline recently rejected the leasing contracts of four B787. Additionally, LATAM signed an agreement with Boeing to further reduce its standing order for Dreamliner and B777F. LATAM reported, “On April 29, 2021, LATAM and Boeing came to an agreement regarding the acquisition of some B787 and B777 aircraft. It was agreed to put an end to the order of four B787 aircraft and one B777F. As a result of these modifications, LATAM will keep its orders for two Boeing 787-9 units, with a proposed delivery date later in December 2021.”