SANTIAGO, Aug 13 (Reuters) - Latin America’s largest carrier, LATAM Airlines Group SA, expects passenger demand and margins to improve as bookings recover after the soccer World Cup, a company executive said on Wednesday.
LATAM Airlines , which formed in 2012 from the tie-up of Chilean flagship LAN and Brazil’s TAM, reported on Tuesday a loss of $59 million in the second quarter as Brazilians chose to stay home and business travellers avoided the country during the World Cup.
But bookings and yields were now returning to pre-World Cup levels, TAM’s chief executive, Claudia Sender, told investors during a conference call on Wednesday.
“We have seen bookings coming back at very healthy levels, very similar to what we were seeing before the World Cup,” she said. “We do expect a much healthier operation for the rest of the third quarter.”
The carrier had warned that the negative impact on its margin from the World Cup would be between $140 million and $160 million, mostly affecting July, usually one of its strongest months.
“We should see margin expansion improve even in August but obviously the impact of the third quarter and the month of July which is seasonally very high is significant,” said Sender.
“So definitely there will be a healthier margin in the fourth quarter,” she added.
LATAM has been cutting capacity on Brazilian routes and deleveraging to try to shore up its margins and recover the investment grade LAN enjoyed prior to the merger.
The airline is aiming to recover the coveted investment grade, but that is more likely from 2016 rather than next year, said Sender.
Another drag on performance has been the weaker economic environment throughout South America. In particular, operations in Argentina have been affected by the country’s peso devaluation and economic crisis.
However, LATAM said on Wednesday that the fall in demand from Argentina had been less than the airline had expected and was already beginning to recover. (Reporting by Felipe Iturrieta; Writing by Anthony Esposito, Editing by Rosalba O‘Brien, Bernard Orr)