* 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 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
DREAMLINER HALT, CARGO DRAG
Additionally, results were impacted by the fixed costs
related to the grounding since January of three Boeing 787
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
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.