After three years of bankruptcy, the largest Latin American airline is looking ahead with plans to order more aircraft. Mike Miller reports
LATAM Airlines had the healthiest balance sheet of any carrier in Latin America in 2023. It’s a remarkable statement considering the carrier only emerged from three years of bankruptcy in November 2023. Now it is back on track to lead Latin America in size and breadth.
LATAM saw fourth-quarter revenue jump 38% to US$2.75 billion and it posted a surprising $2.5 billion net profit for the quarter, mainly due to bankruptcy restructuring moves.
With this painful experience behind it, the airline is moving quickly to resume markets it had to exit and explore all the possibilities with its relatively new partner, Delta Air Lines.
“For 2023, it was a year of fast recovery,” said LATAM Chief Executive Officer Roberto Alvo. “We found out the importance of air travel to everyone and we welcomed everyone back.
“South America has great potential to show itself to the world and I don’t think we do this as well as we should,” Alvo said, speaking at the Routes Americas event in Bogotá in March.
“Chile has 82 Open Skies agreements and every one of them was supported by LATAM,” he said. “Opening the skies is a trend that needs to keep developing.”
The promise of travel is great in Latin America, but it has much untapped potential. Every airline CEO can cite the dearth of travel compared to other regions in the world. Alvo is one. “We have less than one trip per passenger [annually] in the region compared to three to four trips for other developed regions,” he said.
“What concerns me the most is infrastructure in the region,” Alvo said, echoing other airlines and associations at Routes Americas. “We have constraints in operating that really shouldn’t be there. For example, we can’t fly to some airports because of basic things like [lack of] lighting. That’s unacceptable.”
Airlines also need to “move out of the past”, he noted. “We still talk about arrival [within] 15 [minutes] or departure 15. We want all our flights to depart on time. Period. Sometimes airports don’t understand this.”
Pandemic impact
The pandemic decimated the airline group, and forced massive layoffs and exits from many markets. “We had 43,000 souls working for LATAM [in 2020] and we had to downsize to 26,000,” Alvo recalled.
Now, LATAM is carrying 74 million passengers and is the 15th-largest airline in the world, despite a local market of just 6% of the world’s population.
Its new link with Delta Air Lines promises to be mutually beneficial. The initial connection between the two began just before the pandemic in 2020 and took two years to fully start. Now, the two airlines have flown more than 3 million passengers on 15,000 flights.
“We have a great partner with Delta. Our networks are very complementary,” said Alvo. This includes new Bogotá–Miami and Bogotá–Orlando routes recently launched because of the Delta partnership, building on the first Brazil–US West Coast flight when LATAM began Sao Paulo–Los Angeles and Lima–Atlanta last year.
Delta, meanwhile, added Atlanta flights to Cartagena and Rio de Janeiro, and increased capacity on Atlanta–Santiago, Atlanta–Sao Paulo, New York–Sao Paulo and Atlanta–Lima.
LATAM will expand its waistline by bringing in new aircraft that fly longer distances and open new routes. Its fleet of 150 aircraft is a mix of Airbus A320 family jets plus 34 Boeing 787s and nine Boeing 767 cargo aircraft.
An additional 32 A321neo aircraft are arriving into the fleet currently, with five -321XLR long-range aircraft coming in 2025 and 2026.
The A321XLR “initially will fly out of Lima on operations to the US”, Alvo said, adding: “We have four more Boeing 787s coming next year.”
Plus: “We are seeking more narrowbodies from Airbus or Boeing. Our fleet is extra flexible. When two airlines ceased in Colombia last year, we moved five aircraft from Peru to Colombia within two weeks.”
Taxation barrier
High taxes in Brazil likely will prevent LATAM from expanding too quickly in some South American markets. As IATA Regional Vice President Peter Cerda noted, Brazil’s main jet fuel supplier Petrobras “is almost a monopoly”.
“That’s why we don’t have ULCCs [Ultra Low-Cost Carriers] in Brazil,” he said, adding that Brazil is aviation’s “most litigated country in the world by far.”
Estuardo Ortiz, CEO of JetSMART, also speaking at Routes Americas, said: “90% of customer claims in the world occur in Brazil. That must change.”
Latin American airports are expected to experience 4.8% traffic growth this year, and regional airport capacity “is the biggest airline concern at the moment”, Cerda said.
“We think of LATAM as an accordion – flexibility and optionality are critical to our business,” Alvo noted.
He believes technology will be the next disruption to the airline business. “Technology will eliminate the commoditisation of the airline industry,” he predicted. “The customer doesn’t care about how you’re organisationally built. You must work across functions. Technology will make the way we work and the way we sell different.”
LATAM is using new approaches to improve maintenance approaches, moving beyond old structures. “There is an aircraft Check A and a Check C in maintenance and those were developed decades ago. Put all those tasks together and look for trends and specific aircraft issues,” Alvo recommended.
Because of antiquated local regulations, LATAM is still forced to operate separate passenger operating certificates in South America: in Brazil, Chile, Colombia, Ecuador, Paraguay and Peru. It has three cargo branches as well, in Brazil, Chile and Colombia.
However: “We are five airlines and one brand,” Alvo said. “The only thing that’s different is the accent on board.”
