March 16, 2017 / 12:02 AM / a year ago

UPDATE 1-Chile's LATAM Airlines posts first yearly profit in history

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SANTIAGO, March 15 (Reuters) - Regional carrier LATAM Airlines posted a net profit of $69 million for all of 2016 on Wednesday, its first yearly profit since the company formed four years ago, helped by improving conditions in key market Brazil.

The Chile-based airline, Latin America’s largest, posted a $54 million profit for the fourth quarter. Both figures beat forecasts by analysts surveyed by Reuters, who saw on average a 2016 profit of $23.5 million and a fourth-quarter profit of $8.5 million.

“The good results can be explained principally by Brazil, given the appreciation of the real currency and the reduction of capacity, as well as fleet readjustments,” said Gisela Escobar, direct of investor relations, during a presentation of the results on Wednesday evening.

LATAM said it was reducing its 2016-2018 fleet commitment by $2.2 billion. It maintained its guidance for a 2017 operating margin of between 6 and 8 percent. Fleet commitments for 2018 will amount to $555 million, a reduction of $1 billion compared with Sept. 16, the airline said.

The company forecast that available seat miles, a measure of capacity, would grow 1 to 2 percent in 2017, a boost over its 2016 guidance of between -1 and 1 percent.

Economic difficulties in Brazil, LATAM’s key market, had caused problems for the carrier in recent years. In 2015, the company posted a net loss of $219 million, largely thanks to depreciation in that nation’s currency.

LATAM was founded in 2012 through a tie-up between Chile’s LAN and Brazil’s TAM. In December, Qatar Airways completed an acquisition of 10 percent of the company, in a transaction worth $608 million.

Reporting by Gram Slattery; Editing by Sandra Maler and Leslie Adler

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