LATAM Boosts Earnings Amid Surge in International and Domestic Passenger Demand

LATAM Airlines Group, headquartered in Santiago, celebrated a record-breaking year in 2023, with its earnings soaring due to increased international capacity and robust domestic demand. On 23 February, the airline reported a landmark profit of $582 million for the year, marking the highest in the company's history. When adjusted for special items like aircraft rental income and employee compensation tied to a corporate incentive plan, the profit rose to $741 million.

This performance is a significant turnaround from 2022 when the airline recorded an adjusted profit of $1.6 billion, bolstered by "positive non-operational impacts" linked to its recovery from Chapter 11 bankruptcy protection and subsequent restructuring.

In 2023, LATAM, Latin America’s leading airline, witnessed its revenue climb to $11.8 billion, a 23.9% increase from the $9.52 billion reported in 2022. This surge was driven by a 33.8% increase in passenger revenue, which compensated for a 17.4% decline in cargo revenue due to softening yields.

Throughout the year, LATAM capitalized on profitable growth opportunities, further cementing its status by offering the most comprehensive regional and global network. Roberto Alvo, LATAM’s CEO, highlighted the strategic positioning of the group's affiliates, which lead in three of the five domestic markets they operate in. Notably, LATAM Airlines Chile, Peru, and Brazil secured substantial market shares in their respective countries, underscoring the group's operational agility and financial resilience.

The year 2023 saw LATAM’s operating expenses increase by 11.5% year-on-year, mainly due to expanded international capacity as the global impact of the Covid-19 pandemic diminished. The fourth quarter alone brought in $3.25 billion in revenue, an 18.5% increase from the corresponding period in 2022, with a profit of $83 million.

LATAM's strategic fleet expansion was evident in 2023, with the addition of five widebody and 25 narrowbody aircraft, bringing the total fleet count to 333. The airline group anticipates growing its fleet to 339 aircraft by the end of 2024 and reaching 353 by the end of 2025. Furthermore, the airline placed an order for five Boeing 787 Dreamliners last year, which are slated to join the fleet starting in 2027.

Reflecting on the successful passenger traffic, LATAM transported nearly 74 million passengers in 2023, a significant increase from 62.5 million in 2022, effectively returning to pre-pandemic levels. Both domestic and international passenger volumes saw considerable increases, with the airline continuing to expand its footprint in key markets.

Following this upward trajectory, LATAM has revised its 2024 financial outlook, now expecting full-year revenue to range between $12.4 and $12.8 billion. This adjustment underscores LATAM's confidence in its ongoing growth and operational strategy, positioning the airline for continued success in the competitive aviation market.