LATAM Airlines Group has reported operating income of US$114.2 million for first quarter 2013, a 149.8% increase compared to the US$45.7 million pro forma operating income in first quarter 2012. Operating margin reached 3.4%, an increase of 2.0 points compared to 1.4% in 2012. This result reflects a steady recovery in business operations as we advance in the process of achieving the expected synergies from the merger between LAN and TAM.
Net income reached US$42.7 million for first quarter 2013, compared to a pro forma consolidated net income of US$83.7 million for the same period 2012, which represents a decrease of 48.9% mainly due to a foreign exchange gain of US$133.4 million recognised at TAM during the first quarter 2012.
TAM maintained capacity discipline with a 9.2% reduction in ASKs during the first quarter 2013 as compared to the first quarter 2012. Healthy traffic growth of 3.4%, as well as improved market segmentation and revenue management practices have resulted in strong load factor improvements of 9.5 percentage points as compared to the first quarter 2012, reaching 77.7%. This led to a significant increase in revenue per ASK, as measured in Brazilian reais. Results in U.S. dollars were affected by a 13% depreciation of the Brazilian currency during the quarter as compared to the first quarter 2012.
“We remain confident in our synergy target of between US$600 and US$700 million, to be fully achieved by the fourth year after the merger (June 2016),” says the airline.
Total revenues in the first quarter 2013 reached US$3,409.0 million compared to pro forma revenues of US$3,360.2 million in first quarter 2012. The increase of 1.5% is a result of a 1.5% increase in passenger revenues and a 38.6% increase in other revenues, partially offset by a 3.2% decrease in cargo revenues. The slight increase in revenues reflects capacity reductions in the domestic Brazil passenger operations and a more challenging environment for international passenger operations, as well as weak market demand in the cargo business. Passenger and cargo revenues accounted for 84.2% and 13.5% of total revenues, respectively, in first quarter 2013.