SANTIAGO, March 18 (Reuters) - LATAM Airlines, Latin America’s largest carrier, expects to save over $1 billion in 2015 due to lower fuel costs, resulting in improved margins, a company executive said on Wednesday.
The airline, formed in a 2012 tie-up between Chile’s LAN and Brazil’s TAM, swung to a profit in the fourth quarter, posting net income of $98.3 million in the period, compared with a net loss of $46.1 million in the fourth quarter of 2013.
“We consume approximately 30 million barrels of fuel per year, so if we look at current prices of $65 for jet fuel, that’s basically versus last year a savings of $48 per barrel,” Gisela Escobar, the head of LATAM Airlines’ investor relations, said on a conference call.
LATAM Airlines’ fleet efficiency program and foreign exchange effects will also help improve margins due to a “a more efficient cost structure,” Escobar added.
The company expects a loss from its current hedge position of approximately of $215 million.
“Even with the $215 million (loss), we’re still expecting over a $1 billion in terms of fuel savings for the full year,” Escobar said.
LATAM Airlines expects to improve profitability and has forecast operating margins for full-year 2015 to be in the range of 6 percent to 8 percent.
Total passenger ASK growth, or available seat kilometer, is expected to be between 2 percent and 4 percent in 2015. (Reporting by Anthony Esposito; Editing by Alan Crosby)