* Exchange rate, cargo, Dreamliner halt hurt results
* LATAM is product of Chile's LAN takeover of Brazil's TAM
* Airline says maintains $600 mln- $700 mln synergy target
SANTIAGO, May 14 (Reuters) - LATAM Airlines Group SA's first-quarter net profit skidded to $42.7 million, or nearly half of a year earlier, on foreign exchange fluctuations, a drop in cargo revenue and the grounding of its three Dreamliners, the company said on Tuesday.
The carrier, which is the fruit of Chilean LAN's takeover of Brazil's TAM in June, said in a statement to Chile's securities regulator that its net profit fell 43.8 percent from $76.1 million in the year ago period.
But LATAM Airlines said that on a pro forma basis, which simulates a combined 2012 first quarter profit for both carriers, net income dropped 48.9 percent from $83.7 million.
TAM benefited from a foreign exchange gain in the first quarter of 2012, the LATAM Airlines said.
A Reuters poll had forecast Latin America's largest carrier would post a 54.6 percent tumble in net profit to $38.2 million.
Revenue in the January to March period increased 1.5 percent to $3.409 billion, compared to pro forma revenue of $3.360 billion in first quarter of 2012.
International passenger operations, which accounted for around half of the airline's passenger traffic, "continued to be impacted by increased capacity from international carriers flying to South America, especially from the United States, as well as by weak European markets," the airline said.
"We remain confident in our synergy target of between $600 million and $700 million, to be fully achieved by the fourth year after the merger (June 2016) ... We expect merger synergies to be between $250 million and $300 million during 2013," it added.
DREAMLINER HALT, CARGO DRAG
Additionally, results were impacted by the fixed costs related to the grounding since January of three Boeing 787 Dreamliners.
Regulators around the world in January joined the United States in grounding Boeing Co's 787 Dreamliner passenger jets after a series of battery-related problems.
The airline has said it expects to restart its Dreamliner flights in June.
Cargo revenues fell 3.2 percent during the first quarter, due to slightly lower cargo traffic and a 3.2 percent decline in yields.
The drop reflects "the challenging scenario in Latin American cargo markets due to a decline in demand on routes to Latin America, especially Brazil, as well as increased competitive pressures from regional and international cargo carriers," LATAM Airlines said.
Passenger operations account for just over 84 percent of total revenue, while cargo operations make up 13.5 percent.
The carrier has operations in Argentina, Brazil, Chile, Colombia, Ecuador and Peru.