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(Adds comments on Brazil domestic, Argentina, context)
By Rosalba O'Brien
SANTIAGO, Aug 12 (Reuters) - LATAM Airlines , Latin America's largest carrier, said on Friday it had seen "timid" signs of a recovery in its key Brazilian market in recent weeks, although it underlined that it retained a cautious outlook.
"With respect to international (routes), we are still seeing weakness in Brazil, though in recent weeks the trend is starting to change," said Roberto Alvo, the airline's vice president of planning and network, on a conference call with investors on Friday following the release of the company's first-half results.
"But it is still a long way to go to get back to pre-crisis levels," he added.
LATAM Airlines was formed in the merger of Chile's LAN and Brazil's TAM in 2012, but has so far failed to live up to its promise, posting repeated losses as South America's commodities-dependent economies have floundered. In particular, it has said that any recovery is dependent on a rebound in recession-hit Brazil.
LATAM's hard-hit domestic Brazil market was seeing "more or less the same" signs of recovery as international, said TAM President Claudia Sender. She cautioned that it was "a very timid reaction" and too early to call a trend.
On Thursday, LATAM posted a $92 million second-quarter net loss, wider than the market had expected, and said macroeconomic conditions remained challenging.
Most economists expect the Brazilian economy to begin recovering in the second half of 2016, and recent indicators point to the worst of the recession as being over.
Yields should improve in coming quarters, though at levels still likely below last year, the company said on Friday's call. Significant opportunities for growth were seen in Chile and the relatively buoyant Peru, and to a lesser extent in Argentina, it said.
"Today the market (in Argentina) is relatively healthy, but the economic situation there makes us cautious on the outcome," Alvo said. (Reporting by Rosalba O'Brien, editing by G Crosse)