March 15, 2018 / 1:24 AM / 2 years ago

LATAM Airlines doubles net profit in 2017 but misses expectations

SANTIAGO, March 14 (Reuters) - Regional carrier LATAM Airlines posted a 2017 net profit of $155.3 million on Wednesday, missing market expectations amid higher fuel costs even as it more than doubled what it earned a year earlier.

In the fourth quarter, the Chile-based airline made $67.2 million in net profit, up 23.6 percent from the same period in 2016, it said.

A Reuters poll had forecast the company’s 2017 profit at $165 million and fourth-quarter profit at $77 million.

Sales rose 6.7 percent last year, tracking a similar rise in passengers, the company said, while operating income surged 38.4 percent in the fourth quarter and 25.8 percent in 2017.

But operational costs rose 5.5 percent and fuel costs spiked 12.7 percent.

“Despite the spike in fuel prices, LATAM achieved its best operating income in its recent history,” the company said in its earnings report.

The appreciation of the Brazilian real against the dollar added $236 million in revenue in all of last year, even as the currency’s depreciation in the fourth quarter cost the company $67 million, according to the report.

LATAM maintained its guidance for a 2018 operating margin of between 7.5 and 9.5 percent, and said it would spend $714 million on its fleet this year and $1.2 billion for 2019, compared to $326 million last year.

Economic difficulties in Brazil, LATAM’s key market, had dogged the carrier after it formed five years ago. But in 2016 it posted its first net profit, bolstered by improving conditions in South America’s largest economy.

LATAM was founded in 2012 through a tie-up between Chile’s LAN and Brazil’s TAM. In December, Qatar Airways completed an acquisition of 10 percent of the company, in a transaction worth $608 million.

LATAM operates in Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay and Peru. (Reporting By Antonio de la Jara and Mitra Taj; editing by Grant McCool)

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