LATAM Airlines Group S.A. [SSE: LTM] announced today its consolidated financial results for the third quarter ending September 30, 2023.
During the quarter, LATAM’s total revenues reached US$3.1 billion for the first time in its history increasing 18.1% compared to the same period of last year, mainly explained by the recovery of the group’s passenger operations.
Record Revenues
The third quarter of 2023 saw LATAM Airlines Group reaching new heights, with total revenues soaring to an unprecedented US$3.1 billion.
This remarkable achievement marked an 18.1% increase compared to the same period in the previous year. The primary driving force behind this substantial growth was the recovery of the group’s passenger operations.
A Closer Look at the Numbers
LATAM reported total operating revenues of US$3,056 million during this period, mirroring the 18.1% increase witnessed in 2022.
This surge can be attributed to a substantial 25.6% boost in passenger revenues.
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Additionally, the group’s operations, measured in Available Seat Kilometers (ASK), saw a noteworthy increase of 15.2%, while passenger yields showed a healthy growth of 6.0%. Cargo revenues also played a significant role, amounting to US$329 million for the quarter.
The Revenue Mix
Delving deeper into the numbers, we find that passenger and cargo revenues made up 88% and 11% of the total operating revenues, respectively, during the third quarter of 2023. This diversification in revenue sources ensures the group’s financial stability.
Year-to-Date Success
The success story of LATAM Airlines Group is not limited to a single quarter. During the first nine months of the year, total revenues reached an impressive US$8,538 million, representing a remarkable 26.1% increase.
The bulk of this growth was fueled by a substantial 37.8% surge in passenger revenues. Cargo revenues also made their mark, totaling US$1,062 million year-to-date.
Passenger Revenues
In the third quarter of 2023, passenger revenues took flight, increasing by 25.6% when compared to the same period in 2022. This remarkable growth can be attributed to a 15.2% increase in operations.
A significant contributor to this surge was the continued recovery of international operations, which saw a staggering 29.2% increase compared to 3Q22.
A Closer Look at RASK
During the third quarter, the group’s Revenue per Available Seat Kilometer (RASK) reached US$7.6 cents, showcasing a commendable increase of 9.1% compared to the previous year.
This increase was driven by strong demand and favorable yields in the aviation market. Notably, passenger demand, measured in Revenue Passenger Kilometers (RPKs), saw an 18.5% increase, while passenger yields grew by 6.0% when compared to 2022.
Moreover, LATAM Group achieved a solid consolidated load factor of 85.3%, marking a 2.4 percentage point increase compared to the previous year.
Cargo Revenues
While passenger revenues took off, cargo revenues experienced a different trajectory. They decreased by 20.2% compared to the third quarter of 2022, amounting to US$329 million.
This drop can be attributed to the softening of cargo yields due to increased capacity and reduced demand south-bound to South America.
Nevertheless, it’s worth noting that cargo revenues, when compared to the same period in 2019, outperformed it by a remarkable 30.7%.
Year-to-date, cargo revenues totaled US$1,062 million, with cargo yields at US$37.0 cents per Revenue Ton-Kilometer (RTK), representing a 25.5% increase over 2019 levels.
Diverse Sources of Income
In addition to its core operations, LATAM Airlines Group generated US$32 million in other income during this period, reflecting an 8.0% increase compared to the previous year.
This growth can be partially explained by rising revenues from LATAM Pass and LATAM Travel.
Managing Expenses
To support their impressive financial performance, LATAM Airlines Group kept a close eye on expenses. Total adjusted operating expenses reached US$2,647 million, marking a 6.3% increase compared to the previous year.
This growth was primarily driven by the increase in passenger operations, especially on the international front.
Furthermore, the average fuel price (excluding hedges) decreased by 23.7% during the quarter. The group reported a passenger Cost per Available Seat Kilometer (CASK) ex-fuel of US$4.3 cents, showcasing their commitment to efficient cost management.
LATAM CFO Comments
In the words of Ramiro Alfonsín, CFO of LATAM, “We are very proud of the financial performance that the group has shown during this third quarter and throughout the year, which has been progressively improving thanks to systematic work toward a long-term vision.”
“At the end of this quarter, the group reported a record result in revenues following the consistent recovery in passenger air transportation.”
“In turn, the capital structure of LATAM Airlines Group S.A continues to be incomparable in the region, in terms of liquidity and leverage, which, added to the unmatched connectivity that LATAM group offers at a regional level, demonstrates that it is on the right path.”
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