As expected, LATAM Airlines reported a net loss in quarter three, due to a fall in business travel during the World Cup in Brazil.

 

The airline company reported operating income of $118.4m for third quarter 2014, a 54% decrease compared to the $255.5m operating income in third quarter 2013. Its operating margin reached 3.8%, compared to 7.6% in 2013.

 

This contraction in margins was mainly driven by reduced corporate passenger and cargo demand during the FIFA World Cup soccer tournament held in Brazil in June and July 2014, as well as a generally weaker macroeconomic scenario in Latin America, including slower GDP growth trends and weaker currencies in most countries.

 

For the third quarter of 2014, LATAM reported a net loss of $107.8m, compared to a net gain of $52.1m for the same period 2013. This included a foreign exchange loss of $144.1m, mostly recognized at TAM as a result of the devaluation of the Brazilian real during the quarter.

 

 

TAM and LAN’s move to Guarulhos is expected to make the Sao Paulo airport the most important international hub in South America.

 

 

MUCH-REDUCED TAM LOSSES

The company says it was ‘able to mitigate this effect’ by consistently reducing the imbalance on TAM’s balance sheet from $2.1bn in September 2013 to $0.7bn in September 2014.

 

During the month of October, TAM and LAN transferred their international operations to the new Terminal 3 at Guarulhos International Airport in Sao Paulo. This move is expected to finally position Guarulhos Airport as the most important international hub in South America.

 

LATAM CEO Enrique Cueto said: “This change is strategic for the company, allowing us to offer a better travel experience for our customers and to improve connecting times. Moreover, in November we inaugurated LATAM’s first official unified VIP Lounge – the largest in Latin America – consolidating GRU as the main hub for LATAM operations.”