LATAM Airlines Group reported operating income of $227 million and operating margin reaches 8.1% in the first quarter 2015.
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LATAM reported strong operating results for first quarter 2015, with operating income reaching $227 million, 102% higher than the $113 million reported in first quarter 2014. Operating margin reached 8.1%, compared to 3.5% in the same period 2014.
The significant margin expansion during the first quarter 2015 was mainly driven by a 16% reduction in the Company’s operating costs. Cost per ASK equivalent decreased by 17%, including the effect of lower fuel prices.
Furthermore, excluding fuel, cost per ASK equivalent decreased by 10%, reflecting efficiencies achieved as a result of our ongoing cost reduction programs, as well as the effect of local currency depreciations on our costs denominated in those currencies.
LATAM reported a net loss of $40 million in first quarter 2015, similar to a net loss of $41 million in first quarter 2014. Non-operating losses were driven by a non-cash foreign exchange loss of $205 million mostly recognized at TAM as a result of the 20% devaluation of the Brazilian real during the quarter.
The Company has mitigated foreign exchange losses by consistently reducing the exposure to the Brazilian real on TAM’s balance sheet.
On May 14, 2015, LATAM Airlines Group successfully priced its first EETC issuance, becoming the first EETC issuer in Latin America and the largest outside the United States. The total amount of $1,021 million will finance 17 new aircrafts (11 Airbus A321s, 2 Airbus A350-900 and 4 Boeing 787-9s), which are currently scheduled for delivery between July 2015 and March 2016.
The company ended the quarter with 85.8% of its flights on time, increasing 3.9 p.p. as compared to the same quarter of last year. The increase of our on-time performance is a result of a 6.6 p.p. increase in the domestic Brazil operations and a 5.2 p.p. increase in the international operations. ■