Chile's LATAM Airlines swings to profit, beating estimates as passenger traffic grows
Reuters
Published Oct 30, 2023 06:10PM ET
Updated Oct 30, 2023 08:41PM ET
By Kylie Madry
SANTIAGO (Reuters) -LATAM Airlines on Monday posted a third-quarter net profit of $232 million, boosted by higher passenger revenue and a turnaround from a loss in the same period last year when the carrier was still in bankruptcy proceedings.
The profit, which topped an analyst consensus, reverses a year-earlier net loss of $296 million, with passenger revenue jumping 26%.
Available seat kilometers (ASK), a measure of an airline's seats multiplied by kilometers flown, rose 15%, with recovery seen especially in international flights, LATAM said.
The passenger boost plus lower jet fuel prices offset a 20% drop in cargo revenue to bring the carrier's adjusted operational margin to 13.4%.
Third-quarter revenue, also beating consensus, rose 18% to a record $3.06 billion.
The results were "better than expected," analysts at J.P. Morgan wrote in a client note, adding the news would likely be welcomed by the market.
The airline late last year exited pandemic-related bankruptcy with an $8 billion reorganization plan.
The airline's adjusted EBITDAR - earnings before interest, taxes, depreciation, amortization and restructuring or rent costs - increased in the quarter by 82% year-on-year to $726 million.
Last quarter, LATAM raised its forecasts for 2023. The airline now anticipates adjusted EBITDAR of $2.35 billion to $2.50 billion, versus the previous estimate of $2 billion to $2.2 billion.
"We now think we're going to be in the upper end of that range," said Chief Financial Officer Ramiro Alfonsin in a call with journalists on Monday.
The carrier slightly raised its projected fleet size to 341 aircraft by 2025.
LATAM increased its revenue projection in August to $11.3 billion to $11.6 billion, from $11 billion to $11.5 billion.
Alfonsin also said LATAM expected to be in "the high end" of guidance for other metrics beyond EBITDAR, without specifying.
"We believe there is room for the company to surpass (guidance) following strong third-quarter figures," J.P. Morgan analysts said.
The executive also said the effect of engine inspections required after RTX-controlled engine maker Pratt & Whitney discovered a rare powder metal defect would be "marginal" due to the number of aircraft that may be affected.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.