Yesterday, LATAM Group revealed its consolidated financial results for the second quarter of this year. According to the company, they reflect a gradual and sustained recovery of its capacity, mainly explained by the strength of the domestic markets in Brazil, Colombia and Ecuador. The recovery in international markets was also consolidated.
On June 18th, the company obtained the approval of its Plan of Reorganisation from the United States Bankruptcy Court and secured the necessary financing to complete its exit from Chapter 11.
Seven days earlier, the company had announced the signing of debt commitments with various financial institutions to obtain the financing. The agreements secured the full amount required to implement the plan, consisting of 2.25 billion dollars in new debt and a 500 million revolving credit facility (RCF).
The plan received the support of a majority of shareholders, equivalent to 99.8% of the shares present or represented at the meeting (77.5% of the total voting shares). This will allow LATAM to begin executing the final phase of the regulatory requirements in Chile for the future implementation of the Plan of Reorganisation.
“We have closed the second quarter with significant progress in our Chapter 11 reorganisation process and expect to exit this during the last quarter of the year”, said Roberto Alvo, CEO of LATAM Group. On the other hand, he said they will continue to maintain “cautious optimism” in the coming months, due to the current situation of rising fuel prices and changes in some key macroeconomic variables for aviation. “The industry is still in a very dynamic environment”, he added.
Key financial and operating results (in USD)
- Total operating revenues amounted to 2.226 million, 6.1% below the levels of the same quarter of 2019. However, the figure represents an increase of 150.5% compared to the same period in 2021.
- Passenger transport revenues fell by 15.2% compared to the second quarter of 2019. They accounted for 77.0% of the company’s total revenue between April and June 2022.
- LATAM Group’s total capacity, measured in available seat kilometres (ASK), was 72.6% of that recorded during the same period in 2019. In the first quarter of this year, the figure was 68.2%, so capacity continued to recover.
- Revenue per ASK increased by 59.9% compared to the second quarter of 2021.
- Average occupancy factor reached 80.2%, a year-on-year improvement of 11.6 percentage points.
- Adjusted operating costs were 3.5% higher than those reported in the second quarter of 2019. They totalled 2.412 million. The increase in fuel prices (31.5% higher than in the same period of 2019) was the most influential factor.
- During the quarter, the average fuel price (excluding hedging) was 4.14 dollars per gallon. The figure represents an increase of 97.4% year-on-year and 73.1% compared to the second quarter of 2019.
- The net loss decreased compared to the second quarter of 2021. The company reported a loss of 523.2 million between April and June. Last year, the net loss had reached 769.6 million.
- Air cargo revenues increased by 71.9% compared to the same period in 2019 and profitability increased by 72.4%. As expressed by the company, these figures should be seen against a backdrop of industry capacity recovery, which has not yet reached 2019 levels. They accounted for 20.8% of total operating revenues between April and June.
- Total maintenance expenses reached 144.7 million, 34.1% higher than during the second quarter of 2019. According to the company, the increase was due to the context of higher unit costs in response to global inflationary pressures and the increase in projected future operations.
LATAM Group fleet
- At the end of the quarter, it had a total of 301 aircraft in operation, 39 fewer than at the beginning of the Chapter 11 process.
- The company highlighted commitments with Boeing to acquire two new 787 Dreamliners and agreements with Airbus to add a total of 87 A320neo family aircraft.
- The commitments with the European manufacturer included an amendment to the initial agreement for 70 A320neo family aircraft. On July 20th, an additional 17 aircraft were added to the order and the A321XLR model was included. Besides, the planned delivery dates were extended to 2029. The company holds purchase options for a further thirteen airplanes.
- In addition, LATAM Group signed leases to take delivery of a new Boeing 787 in 2022 and eight Airbus A320neo in 2023.
- Finally, the company is expanding its fleet of freighter aircraft. It will convert a total of ten Boeing 767 to freighters by the end of 2023. To date, four aircraft have already been converted.
