6 de agosto de 2015 / 18:38 / en 2 años

UPDATE 1-LATAM Airlines says earnings recovery dependent on Brazil

(Recasts with comments from LAN Executive)

SAO PAULO/SANTIAGO, Aug 6 (Reuters) - LATAM Airlines Group SA, Latin America’s largest carrier, said on Thursday a recovery in its results would depend on a turnaround in the slumping Brazilian economy.

The Santiago-based company formerly known as LAN Airlines SA merged three years ago with Brazil’s TAM.

However, it has struggled to live up to the promise of its 2012 tie-up, and has repeatedly disappointed the market on its earnings. In its last quarter in May, it reported a net loss.

With regional giant Brazil facing a protracted downturn and a strong depreciation of its currency, the outlook is unlikely to improve in the short-term, acknowledged LAN President Ignacio Cueto.

“We would like to have much better results. For now, that won’t happen. We are very linked to the Brazilian economy and as that economy recovers, we will recover too,” he said to journalists at an event in Santiago to launch a new unified ‘LATAM’ brand.

Foreign exchange weakness had been partly compensated for by a strong fall in the oil price, he said.

“The effect (of the fall) would have been much greater if there hadn’t been such strong devaluations in Colombia, Brazil and Chile,” he said.

The move to create a unified, global brand instead of two strong domestic brands underscores a growing industry focus on international tourism to offset more meager domestic demand in the region.

LATAM’s Brazilian division TAM announced last month that it would reduce domestic capacity by 8-10 percent and rival carrier Gol Linhas Aereas SA said it would reduce frequencies by 1.6 percent in the second half of the year.

The unified brand will begin to be physically visible on planes and other areas from next year and the whole process will take around three years to complete, LATAM said.

The company also has LAN subsidiaries in Peru, Argentina, Colombia and Ecuador, which will be folded into the LATAM brand. The group is due to report first half results next week.

Reporting by Asher Levine in Sao Paulo and Antonio de la Jara and Rosalba O'Brien in Santiago; Editing by Chizu Nomiyama, Bernard Orr

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