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June 24, 2024
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Among the world’s big airlines, LATAM stands out.  By far the biggest airline in Latin America it is the product of a merger between Brazil’s TAM and Chile-based LAN.  Besides these two airlines coming together, there are numerous subsidiaries from other nations in the region.  The combination is a jumble of airlines mashed together.   The fleet evolution reflects this. Combining two biggish airlines as we have seen in the US leads to tremendous complexity.  Imagine how this complexity increases when the two companies are from different countries and languages?  The merger also came with some other issues, like a bribery case in Argentina and a switch in shareholders.  It does not help that a new competitor with a track record is emerging.

In a document filed with the SEC in 2016, they describe the fleet as “The average age of our fleet is approximately seven years, making our fleet one of the most modern in Latin America and in the world. A younger fleet makes us more cost competitive because it reduces fuel consumption and maintenance costs, and enables us to enjoy a high degree of performance reliability. In addition, a modern and fuel-efficient fleet reflects our strong commitment to the environment as new aircraft incorporate the industry’s latest technology, allowing for a substantial reduction in emissions, while also decreasing noise levels.

We optimize our fleet structure through the careful selection of modern aircraft models and staggered lease maturities. We select our aircraft based on their ability to effectively and efficiently serve our short- and long-haul flight needs, while still striving to minimize the number of different aircraft types we operate. The Company’s current fleet plans envisage a short-haul fleet formed exclusively by aircraft from the A320 family, with a focus on A321s and A320neos, whose use represents a saving per ASK of around 6% in comparison to A320s. In 2015, LATAM incorporated 15 Airbus A321s, the largest model in this family, for use on the busiest regional routes and for some domestic routes in Chile as well as in Brazil, ending the year with 36 aircraft of this type.

For long-haul passenger flights, we operate the Boeing 767-300, Airbus A330 and Boeing 777 aircraft, and the modern and efficient Boeing 787 Dreamliner and Airbus 350-900. Both the 787 and Airbus A350 allow us to achieve important savings on fuel consumption, while incorporating modern technology to deliver the best travel experience for our passengers. In 2015, we incorporated seven Boeing 787-9 into our fleet. We also received our first Airbus 350-900 in December 2015.

In 2015, we took out of service our Airbus A340s and Dash 8-200s as well as three A330s. We expect to complete the withdrawal of these older models by 2016. Furthermore, in 2015, as well as in previous years, we have been able to adjust our fleet commitments to face current market conditions as necessary.”

The following chart shows how the fleets of the merger were put together and evolved over the period.  There has been impressive growth and we can see over the most recent three-year period some of the fleet has been parked.  The 13 parked aircraft at year end 2016 consisted of 1 767-300ER, three A330-200s (we believe one or more are going to Iran), one A340-300 and one BAe 146.

Of course, the fleet chart needs some more detail to comprehend what LATAM has been through.  The following chart illustrates the geopolitical complexity.  Chile and Brazil dominate.  But the other markets cannot be ignored.  Nation states are proud and will not appreciate domination that comes with any abuse.

The difficulty with the merger has been patching together a fleet that consisted of many parts.  Latin America has long been the place where old aircraft go to start a second life.  LATAM has changed that.  The following chart shows how the OEMs were represented and how this has evolved.  Notice the patchwork at the top of the columns.  It may be small, but with it comes outsized MRO and operating costs.

As we dig deeper into the data we see the following breakdown by model.  As with all the model charts, this one is busy.  The takeaway here is the short-haul fleet has moved from Boeing to Airbus. LATAM is quite a significant user of the A319.  For the longer trips going north to the USA or the EU, the airline deploys 36 767-300ERs, 22 787s, and seven A350s.  The latter two are examples of how the airline is deploying state of the art equipment on flagship routes.  The airline also has two A320neos.

But there may be some odd events going on.  The A320neo fleet has low utilization.  We tracked the two A320neos by tail number on Flightradar24.  The number of flights reported as completed are out of line with the number of days these aircraft have been in service. With an average of just over one hour of flight time per day, this fleet is not performing as one would expect.

author avatar
Addison Schonland
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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