Category Archives: TAM Linhas Aereas

LATAM Airlines Group reports 1Q net income of $42.7 million, down 48.9%

LATAM Airlines Group (LAN Airlines) (TAM Linhas Aereas) (Santiago and Sao Paulo) has reported its financial results through March 31, 2013 for the first quarter:

HIGHLIGHTS

LATAM Airlines Group reported operating income of $114.2 million (US) for first quarter 2013, a 149.8% increase compared to the $45.7 million pro forma operating income in first quarter 2012. Operating margin reached 3.4%, an increase of 2.0 points compared to 1.4% in 2012. This result reflects a steady recovery in business operations as we advance in the process of achieving the expected synergies from the merger between LAN and TAM.

Net income reached $42.7 million for first quarter 2013, compared to a pro forma consolidated net income of $83.7 million for the same period in 2012, which represents a decrease of 48.9% mainly due to a foreign exchange gain of $133.4 million recognized at TAM during the first quarter 2012.

TAM continues to make significant progress in the turnaround of the domestic Brazil passenger operations, maintaining capacity discipline with a 9.2% reduction in ASKs during the first quarter 2013 as compared to the first quarter 2012. Healthy traffic growth of 3.4%,as well as improved market segmentation and revenue management practices have resulted in strong load factor improvements of 9.5 percentage points as compared to the first quarter 2012,reaching 77.7%. This led to a significant increase in revenue per ASK,as measured in Brazilian reais. Results in U.S. dollars were affected by a 13% depreciation of the Brazilian currency during the quarter as compared to the first quarter 2012. We remain convinced that capacity discipline and an adequate segmentation of the market will provide the basis for continued healthy load factors and a significant improvement in operating results in 2013.

We remain confident in our synergy target of between $600 and $700 million, to be fully achieved by the fourth year after the merger (June 2016). Important progress was made in recent months with the code share agreement signed between TAM and American Airlines as well as with LATAM’s election of oneworld as its global alliance. We have begun to harmonize the airlines’ frequent flyer programs,as well as advanced on cost initiatives related to contract renegotiations and process standardization. Furthermore, important synergies have been achieved through the coordination of the LAN and TAM cargo operations. We expect merger synergies to be between $250 and $300 million during 2013. However,we expect to continue to incur certain costs related to the integration process.

Total revenues in the first quarter 2013 reached $3,409.0 million compared to pro forma revenues of $3,360.2 million in first quarter 2012. The increase of 1.5% is a result of a 1.5% increase in passenger revenues and a 38.6% increase in other revenues, partially offset by a 3.2% decrease in cargo revenues. The slight increase in revenues reflects capacity reductions in the domestic Brazil passenger operations and a more challenging environment for international passenger operations, as well as weak market demand in the cargo business. Passenger and cargo revenues accounted for 84.2% and 13.5% of total revenues, respectively, in first quarter 2013.

During the first quarter 2013, LATAM received a total of 5 Airbus A320 family aircraft and 1 Boeing 767-300 passenger aircraft. Furthermore, the Company returned 1 Airbus A320-200 and sold 2 Airbus A318 aircraft.

Top Copyright Photo: Alvaro Romero/ModoCharlie.com. LAN Airlines’ Airbus A318-121 CC-CVR (msn 3390) carries special Telethon 2011 logo at Santiago. The snow-capped Andes Mountains are in the background.

LAN Airlines:

TAM Linhas Aereas:

Bottom Copyright Photo: Bernardo Andrade. TAM’s Airbus A319-132 PT-TMD (msn 4192) in the retrojet color scheme climbs away from Santos Dumont Airport in downtown Rio de Janeiro. Please click on the photo for the full-size view.

LAN and TAM take delivery of the first Airbus A320s with Sharklets

LAN Airlines (Chile) (Santiago) and TAM Airlines (TAM Linhas Aereas) (Sao Paulo) (LATAM Airlines Group) each took delivery of their first Airbus A320s equipped with Sharklets. Powered by CFM, the LAN and TAM aircraft were delivered this week and will begin operating domestic routes within Chile and Brazil. The two airlines combined have ordered 380 aircraft and have more than 240 aircraft in operation. Their joint Airbus backlog totals nearly 180 aircraft.

Sharklets are made from light-weight composites and are 2.4 meters tall. They are an option on new-build A320 Family aircraft and allow Airbus’ airline customers to reduce fuel burn up to four percent over longer sectors and reduce approximately 1,000 tons of CO2 emissions per aircraft per year. Sharklets offer operators the flexibility of either adding an additional 100 nautical miles range or increased payload capability of up to 450 kilograms.

Top Copyright Photo: Airbus. A320-214 D-AXAW became CC-BFK (msn 5548) and was handed over to LAN on April 18 followed by CC-BFL (msn 5554) on the following day.

Meanwhile TAM received Airbus A320-214 PR-MYY (msn 5591) on April 23.

LAN Airlines:

TAM to join the Oneworld Alliance

LATAM Airlines Group (LAN Airlines and TAM Linhas Aereas) (Santiago) today confirmed its selection of oneworld® as the global alliance for all its passenger airlines.

The decision, announced at a meeting of the oneworld Governing Board held in Hong Kong today, means:

Brazil’s TAM Airlines will leave the Star Alliance to join oneworld, along with its Paraguay subsidiary. Their transition is expected to be completed during 2014’s second quarter.
LAN Colombia, the latest part of LAN, will join oneworld as an affiliate member, in the fourth quarter of 2013.

With Chile’s LAN Airlines flying as a full member of oneworld since June 2000 and LAN Argentina, LAN Ecuador and LAN Peru added since as affiliate members, today’s announcement will bring all of Latin America’s top airline group into the same global airline alliance, alongside 11 of the other leading carriers from around the world and 30 of their affiliates.

An exact date for TAM’s departure from the Star Alliance will be announced in due course. The intention is for it to become part of oneworld immediately after it exits Star.

Copyright Photo: Keith Burton. TAM Brasil’s (TAM Linhas Aereas) Boeing 777-32W ER PT-MUE (msn 38886) arrives at London (Heathrow).

LAN:

TAM:

American Airlines expands its partnership with the LATAM Airlines Group with new codeshare agreements with TAM and LAN Colombia

American Airlines (Dallas/Fort Worth), which offers more flights to more destinations in Latin America than any other U.S. airline, has signed agreements to codeshare with both TAM Airlines (TAM Linhas Aereas) (Sao Paulo) and LAN Colombia (Bogota), representing a solid stepping stone in building a stronger bilateral relationship between American and LATAM Airlines Group. Once approved, these new codeshare relationships will provide expanded opportunities for American to serve new markets in Brazil and Colombia and for TAM Airlines and LAN Colombia in the United States.

In addition, American plans to operate a new Dallas/Fort Worth (DFW) – Bogota (BOG) route beginning in late 2013. American will also add service to Curitiba (CWB) and Porto Alegre (POA), Brazil from Miami beginning in late 2013, demonstrating its mission to provide customers with expanded options through a growing network footprint in Latin America. With the addition of Curitiba and Porto Alegre, American will serve nine destinations in Brazil.

Once the codeshare agreements are approved, these new relationships will provide American’s customers seamless connecting service within Colombia and Brazil. At the same time, this partnership will allow TAM and LAN Colombia’s customers access to new destinations in the U.S. such as Boston, Chicago, Dallas/Fort Worth, Las Vegas and Seattle.

TAM operates nearly 5,600 weekly flights to 42 destinations throughout Brazil as well as 18 international destinations in the United States, Latin America and Europe. LAN Colombia operates more than 930 weekly flights to cities throughout Colombia as well as destinations in Brazil and the United States. From its Bogota hub, LAN Colombia offers 134 daily flights, including service to 20 Colombian cities.

American offers codeshare service, with fellow oneworld^® alliance member LAN Airlines, to cities throughout South America from LAN’s hubs in Chile, Argentina, Ecuador and Peru.

The new route between DFW and Bogota complements American’s existing service to Colombia through Miami (MIA), where it offers up to 35 nonstop flights per week to Bogota, Cali and Medellin. American’s MIA and DFW hubs allow it to serve 90 percent of U.S. – Latin America traffic more efficiently than any other airline’s combination of hubs. American offers more service to South America than any other U.S. airline.

American also offers the most service between North America and Brazil, American currently serves Brazil from Miami to Belo Horizonte, Brasilia, Manaus, Recife, Rio de Janeiro, Salvador and Sao Paulo; from New York JFK to Rio de Janeiro and Sao Paulo; and from Dallas/Fort Worth to Rio de Janeiro and Sao Paulo. In addition, early next year the Dallas/Fort Worth – Sao Paulo flight will be the first to feature the newest addition to American’s fleet, the Boeing 777-300 ER.

Top Copyright Photo: Bernardo Andrade. Boeing 767-323 ER N354AA (msn 24035) arrives at Rio de Janeiro ‘s Galeao Antonio Carlos Jobim International Airport.

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TAM Linhas Aereas:

Bottom Copyright Photo: Keith Burton. Airbus A330-223 PT-MVC (msn 247) of TAM Linhas Aereas arrives at London (Heathrow).

TAM Airlines to retire the Boeing 767-300 on December 17

TAM Linhas Aereas (TAM Airlines) (Sao Paulo) is planning to retire its last Boeing 767-300 on December 17 according to Airline Route. The venerable wide body is being replaced by newer Airbus A330-200s.

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LATAM reports its first quarterly statement, a net profit of $49.7 million in the second quarter

LATAM Airlines Group S.A. (LAN Airlines and TAM Linhas Aereas) (Santiago) has announced a second quarter net profit of $49.7 million. This is the first financial report for the group. Here is the full statement.

“LATAM Airlines Group has announced its consolidated financial results for the second quarter and for the six months ended June 30, 2012. “LATAM” or “the Company” makes reference to the consolidated entity, which includes passenger and cargo airlines in Latin America. All figures were prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in U.S Dollars, except for TAM S.A. (“TAM”) second quarter 2012 Income Statement figures, which are expressed in Brazilian reais.

HIGHLIGHTS

 LATAM Airlines Group S.A. today reported its first consolidated financial results for the second quarter and first half of 2012, following the successful completion of the exchange offer and mergers that combined the businesses of LAN Airlines S.A. and TAM S.A. (“TAM”). Because the transaction was completed on June 22, 2012, results for the period ended June 30, 2012 include the last eight days of TAM results, from June 23 to June 30, 2012.
 Net income of LATAM Airlines Group reached US$49.7 million in the second quarter 2012. Operating income reached US$23.2 million, resulting in a 1.5% operating margin for the second quarter 2012. Consolidated LATAM results include net income of US$46.3 million and an operating loss of US$13.9 million corresponding to the eight days of consolidation of TAM between June 23 and June 30, 2012. Non-operating results for this eight day period reflect a foreign exchange gain of US$57,4 million and a positive mark-to-market of fuel hedging derivatives in the amount of US$ 26,7 million, as a result of the appreciation of the Brazilian real and an increase in the price of fuel, respectively, during the last eight days of the quarter.
 The second quarter 2012 presented a challenging environment due to reduced cargo demand and the depreciation of local currencies, especially the Brazilian real. However, passenger demand in most of Latin America remains solid and the successful completion of the business combination between LAN and TAM provides the Company with a more diversified revenue base and significant growth and synergy opportunities. Furthermore, the domestic Brazil market has shown sustained capacity discipline, providing the basis for improved profitability.
 LATAM Airlines Group is advancing in the process of achieving the expected synergies from the business combination with TAM. Regarding its international passenger operations, the Company has established fare combinability between LAN and TAM, cross selling of LAN and TAM flights, and code shares on various international routes, such as Santiago – Orlando, Santiago – Madrid, and Santiago – London. Cross selling will assist the Company in capturing connectivity synergies by offering our customers a single network in a one- stop shop.
 In July 2012, the cargo divisions of LAN and TAM were integrated, taking advantage of the highly complementary nature of their operations.
 On September 4, 2012, LATAM Airlines Group will hold an Extraordinary Shareholders’ Meeting in order to reelect the Board of Directors of the Company, as well as to approve the placement, through a preemptive rights offering to LATAM shareholders, of the remaining 7,436,816 shares of the Company that were authorized for the TAM exchange offer, and that were not exchanged.

LATAM Airlines Group S.A. 2Q12

 During the remainder of 2012, LATAM expects to receive 12 Airbus A320 family aircraft to operate domestic and regional routes, as well as 8 Boeing 767-300, 4 Boeing 777-300 and the first 3 Boeing 787-8 Dreamliners for long- haul routes. The Company will also take delivery of 2 Boeing 777 freighter aircraft.
 LAN Airlines S.A. (renamed LATAM Airlines Group S.A.) – excluding the consolidation of TAM – reported net income of US$5.2 million for the second quarter of 2012, a decrease of 67.5% compared to the US$15.9 million reported in second quarter 2011. Operating income reached US$37.1 million, a 33.5% decrease compared to the US$55.8 million in second quarter 2011. Operating margin reached 2.6%, a decrease of 1.6 points compared to 4.2% in 2011. The Company continued to show strong passenger revenue growth, despite a seasonally low quarter, partially offsetting the impact of a more challenging environment in the cargo business, as well as the ongoing development of LAN Colombia’s operations. In addition, operating results include a one-time cost of US$7.1 million related to the successful completion of the collective bargaining process with certain unions, as well as US$9.2 million in transaction costs related to the business combination with TAM.
 TAM reported a net loss of R$928.1 million, compared to net income of R$60.3 million reported in second quarter 2011. For the second quarter 2012, TAM reported an operating loss of R$284.2 million, compared to the R$8.8 million gain in second quarter 2011. Operating results were mainly impacted by a 23.0% depreciation of the Brazilian real and decreased revenues from Multiplus, resulting from accounting changes in the recognition of such revenues implemented in the first quarter 2012. Non-operating results reflect a foreign exchange loss of R$845.9 million, and the negative mark-to-market of fuel hedging derivatives in the amount of R$93.6 million, resulting from the depreciation of the Brazilian real and the decrease in fuel prices, respectively, as compared to March 31, 2012.”
Copyright Photo: Michael B. Ing. Boeing 767-316 ER CC-CEB (msn 26327) climbs away from Los Angeles International Airport on a very clear day.

LAN Airlines (Chile):

TAM Linhas Aereas:

TAM to start daily nonstop Rio de Janeiro-Orlando service on October 29

TAM Linhas Aereas (TAM Airlines) (LANTAM Airlines Group) (Sao Paulo) will now launch the daily nonstop Rio de Janeiro (Galeao)-Orlando route with Airbus A330-200s on October 29 according to Airline Route.

In addition, the airline will upgrade the daily Sao Paulo (Guarulhos)-Miami route to the pictured Boeing 777-300 ER starting on September 19.

Copyright Photo: Nick Dean. Climbing beautifully, brand new Boeing 777-32W ER PT-MUD departs from the runway at Paine Field near Everett.

TAM:

ABSA Cargo is now operating as TAM Cargo

ABSA Cargo Airline (Sao Paulo) is now operating this new Boeing 767-316F ER as TAM Cargo (TAM Linhas Aereas) (Sao Paulo). PR-ADY (msn 32573) is pictured arriving at Rio de Janeiro (Galeao) today (July 15) on a ferry flight after receiving this new livery at Mexico City.

ABSA:

TAM:

LAN acquires TAM, becomes the LATAM Airlines Group

LAN Airlines S.A. (Santiago) (which has been renamed LATAM Airlines Group S.A.) and TAM S.A. (Sao Paulo) on June 22 completed their exchange offer. The acquisition has created the LATAM Airlines Group S.A. LATAM Airlines Group S.A. will offer passengers more flights to more destinations than any other affiliated group of airlines in South America, initially reaching about 150 destinations in 22 countries and transporting cargo to 169 destinations in 27 countries.

As previously announced, the transaction was carried out through an exchange offer in which TAM’s shareholders could elect to exchange their TAM shares for LAN shares at a ratio of 0.9 LAN shares for each TAM share. The offered LAN shares will be delivered in the form of BDRs (Brazilian Depositary Receipts) in Brazil and ADRs (American Depositary Receipts) in the United States. The exchange offer, which was materialized with the auction on June 22, 2012, was subject to the condition that more than 2/3 of the TAM shares that participate in the offer agree with the deregistration of TAM as a public company in Brazil. This delisting condition was satisfied when 99.9% of the participant shares agreed with TAM’s deregistration. The tendered shares together with the TAM shares committed by the TAM Controlling Shareholders represented 95.9% of the total outstanding shares of TAM.

According to this report by Reuters, LATAM Airlines will decide within the next six months which airline alliance it will stay with. Currently LAN is a member of the OneWorld alliance, while TAM belongs to Star Alliance.

Read the full report: CLICK HERE

Top Copyright Photo: Alvaro Romero.

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TAM Linhas Aereas:

Bottom Copyright Photo: Marcelo F. De Biasi.

LAN and TAM announce new synergy estimate for LATAM Airlines Group

TAM Airlines (TAM Linhas Aereas) Airbus A330-223 PT-MVP (msn 961) (Selecao Brasileira) MIA (Arnd Wolf), originally uploaded by Airliners Gallery.

LAN Airlines S.A. (Santiago) and TAM S.A. (Sao Paulo) have announced a revised estimate of the synergies expected to be achieved through the merger of the two airlines to create LATAM Airlines Group S.A.

LAN and TAM estimate that the combined synergies arising from the proposed combination could increase LATAM Group’s annual operating income over time by between $600 million and $700 million, before depreciation and taxes, beginning four years after completion of the transaction. This represents a 50% to 75% increase over the initial synergy estimate of $400 million per year, which the companies announced in August 2010.

The new estimate, which is based on work performed by the companies together with consultants McKinsey & Company and Bain & Company over the past ten weeks, reflects further revisions and updates of the expected combined cost savings and revenue generating opportunities arising from the proposed combination and includes best practice sharing benefits that have been identified in certain areas. Of the total expected annual pre-tax synergies, between $170 million and $200 million may be achieved within the first year after completion of the transaction.

According to both airlines, approximately 40% of the total potential synergies will be generated from increased revenues from the passenger business, 20% will be generated from increased revenues from the cargo business and the remaining 40% of the potential synergies will be generated by cost savings. Beginning four years after the completion of the proposed combination, the breakdown of expected annual pre-tax synergies is estimated to be as follows:

Between $225 million and $260 million is expected to derive from increased revenues resulting from the combination of LAN’s and TAM’s passenger networks and the addition of new flights;

Between $120 million and $125 million is expected to derive from increased revenues attributable to new services and best practice sharing in the cargo business;

Between $15 million and $25 million is expected to derive from the consolidation of, and best practice sharing in, the frequent flyer programs of both companies;

Between $100 million and $135 million is expected to derive from cost savings relating to the coordination of airport and procurement activities which should allow LATAM Group to leverage economies of scope and scale;

Between $20 million and $25 million is expected to derive from cost savings resulting from the coordination and improved efficiency of maintenance operations which should allow LATAM Group to leverage economies of scale; and

Between $120 million and $130 million is expected to derive from cost savings resulting from the convergence of LAN’s and TAM’s information technology systems, the increased efficiency of combined sales and distribution processes, and the increased efficiency in corporate overhead costs.

The estimated revenues and cost savings expected to result from the synergies and best practice sharing described above do not include any implementation costs. LAN and TAM expect that the one-time merger costs, including banking, consulting and legal advisory fees, to be incurred during 2012 and the investments required over the term of the synergy capture period to achieve the above-mentioned synergies will be between US$170 million and US$200 million in the aggregate. Finally, LAN and TAM expect reduced investments from avoided engine and spare part purchases of approximately US$150 million, which are expected to occur over the synergy capture period.

For a full version of this release, please visit www.lan.com.

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