By Rosalba O'Brien
SANTIAGO Nov 11 LATAM Airlines
swung to a net profit for the third quarter and improved its
operating margin in a sign the region's biggest airline,
battered by weakness in its Brazilian market, has started to
turn the corner.
The company - which formed in mid-2012 when Chile's flagship
LAN took over Brazil's TAM - reported a net profit of $52
million for the three months to September, in line with
forecasts in a Reuters poll for a $47 million profit.
For the same period a year ago, LATAM posted a $49 million
loss, according to the company's revised figures.
The airline's operating margin for the quarter was 7.6
percent, compared with 3.2 percent a year ago, as it saved money
on wages, fuel and other costs.
LAN, LATAM's Chilean arm, is keen to get back to the days of
double digit margins it enjoyed before the merger, when it was a
considered a model of efficiency by the market.
LATAM as a whole has targeted an operating margin of between
4 and 6 percent for the full year 2013, and in the statement
with Monday's results said it now expected about 5 percent.
Revenues for the quarter were $3.36 billion, up slightly
from $3.34 billion a year ago.
"We are very happy with the process of integration, synergy
and efficency initiatives (and) the significant improvement in
our Brazilian operations," it said.
The airline's Brazilian unit, TAM, has been slicing jobs and
flights trying to make operations in the country more efficient
as it struggles with a weakening economy and real currency.
Load factor - a measure of how full planes are - rose 3.6
percentage points in the quarter to 81.6 percent at its
Brazilian domestic business, which makes up over one-third of
the group's total passenger operations.
The company also said TAM's exposure to the real had been
cut nearly in half from a year ago to $2.1 billion and that it
expected to eliminate it entirely by June 2014, as it increased
its U.S. dollar income and covered itself through forward
About half of the value of the company was wiped out between
the merger and its last quarterly results in August, when it
announced a wider than expected loss.
However, since then, there has been a shift in sentiment and
its Santiago-listed shares have risen around 30 percent.
Of 15 analysts who cover the U.S-listed ADR stock, two have
a 'sell' stance, according to Reuters estimates.
The stock is richly valued compared to peers, though, with a
12-month price earnings forward ratio of 21.0, compared to 13.2
for Panama's Copa and 12.1 for Mexico's AeroMex
LATAM is due to hold a conference call with analysts on