Brazil's largest airline TAM is cutting back its fleet and focusing on the profitability of existing routes as it sees 2012 air traffic growth slowing to half of last year's pace.
TAM TAMM4.SA plans to end the year with 157 planes, according to a securities filing on Tuesday, as it trims its domestic fleet. The prior fleet plan called for 159 aircraft at the end of 2012.
The airline sees demand for domestic flights up 8 percent to 11 percent in 2012, after growing near 16 percent last year. TAM said its own supply of flights, measured by an industry gauge known as ASK, would not increase more than 2 percent for domestic routes and would rise 1 percent to 3 percent internationally.
More modest growth in Brazil is still on pace to beat the expansion of civil aviation globally. But the sharp slowdown reflects a harsh new reality of congested airports, high fuel prices and a glut of new capacity in a Brazilian industry that was flying high for years.
The head of TAM Airlines, Libano Barroso, said the company would focus this year on controlling costs and boosting a gauge of pricing known as passenger yield.
"We're going to aim our efforts at increasing the company's profitability, continuing a trend of recovering yields started in the second half of last year," Barroso said in a statement.
In 2011, the airline expanded its seats available by 9.5 percent, while the industry in Brazil as a whole expanded by 12.9 percent.
TAM said its occupancy rates on domestic flights should rise to between 72 percent and 74 percent from 68.8 percent in 2011.
Shares of the company lost 0.2 percent in Sao Paulo trading on Tuesday to 37.38 reais, while the benchmark Bovespa index .BVSP closed up 0.5 percent.
TAM reports fourth-quarter financial results on February 15.
(Reporting by Brad Haynes and Carolina Marcondes; Editing by Reese Ewing, Phil Berlowitz)