Friday, November 13, 2015
Currency Depreciation Drives Losses for LATAM Airlines Group
|Latham airlines group. Photo: Sabre|
[Avionics Today 11-13-2015] LATAM Airlines Group reported a steep decline in profits for the third quarter 2015. As a result of a weaker macroeconomic environment in South America and the significant devaluations of Latin American currencies during the period, especially the 55.5 percent depreciation of the Brazilian real, total revenues for the group during the third quarter 2015 declined by 19.9 percent as compared to third quarter 2014.
LATAM reported a net loss of $113.3 million in third quarter 2015, similar to the net loss of $107.8 million in third quarter 2014. The company has been able to mitigate this foreign exchange loss over time by reducing its balance sheet exposure to the Brazilian real, according to LATAM.
The company also reported operating income of $120.6 million for the third quarter 2015, with operating margin reaching 4.8 percent, an increase of 1 percent when compared to the third quarter of 2014. Profitability improvements in the quarter were driven by cost efficiencies as a result of lower fuel prices, as well as by the company’s ongoing cost savings initiatives.