Chile’s Latam Airlines swings to profit as passenger traffic grows

SANTIAGO (Reuters) -LATAM Airlines on Monday posted a third-quarter net profit of $232 million, boosted by higher passenger revenues and a turnaround from a loss in the same period last year when the carrier was still in bankruptcy proceedings.

The profit reverses a year-ago net loss of $296 million, with passenger revenues jumping 26%.

Available seat kilometers (ASK), a measure of an airline’s seats multiplied by kilometres flown, rose 15%, with recovery seen especially in international flights, Latam said.

The passenger boost and lower jet fuel prices offset a 20% drop in cargo revenues to bring the carrier’s adjusted operational margin to 13.4%.

Third-quarter revenue rose by 18% to a record $3.06 billion.

The airline exited late last year pandemic-related bankruptcy with a $8 billion reorganization plan.

The company’s adjusted EBITDAR, or 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 upwardly revised its forecasts for 2023. The company now anticipates adjusted EBITDAR of $2.35 billion to $2.50 billion, up from 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 added LATAM expected to be in “the high end” of guidance for other metrics beyond EBITDAR, but did not specify further.

The executive also said that the effect of GTF engine inspections, required after RTX Corp-controlled Pratt & Whitney discovered a rare powder metal defect, would be “marginal” due to the number of aircraft that may be affected.