Chile's LATAM Airlines posts US$63m loss, dragged by Argentina recession

[SAO PAULO] Chile's LATAM Airlines Group, South America's largest airline, posted a narrower loss of US$63 million in the second quarter, boosted by growing revenue in Brazil but dragged down by a recession in Argentina.

The loss was a significant reduction compared to the same period last year, when it posted a US$206 million loss, at the time dragged down by a weak currency in Brazil and a truck drivers strike.

The domestic air travel market in Brazil became more concentrated in the quarter after Avianca Brasil ceased operations in late May following a bankruptcy filing. This has left Brazil with just three major airlines competing for domestic flights.

LATAM, which ranks as the No. 2 airline in Brazil, was widely expected to benefit from Avianca Brasil's demise. Its revenue in Brazil grew almost 20 per cent to US$878 million between April and June, compared to a year earlier.

Still, LATAM's results were negatively affected by a financial crisis in Argentina that keeps dragging on. Revenues there almost halved to US$135 million in the quarter, compared to US$260 million a year ago.

LATAM and its regional rivals have also been affected by weak currencies in both Brazil and Argentina, which increase the cost for fuel and aircraft rental payments that are usually denominated in US dollars.

REUTERS