Lan Airlines SA (LAN), Latin America’s largest carrier by market value, reported a 22 percent drop in first-quarter profit as fuel costs rose and growth in cargo operations slowed.
Net income fell to $76.1 million from $97.2 million a year earlier, the Santiago-based company said in an e-mailed statement after the close of trading. The average estimate of four analysts surveyed by Bloomberg News was $73.9 million.
“Results this quarter were impacted by a 14.7 percent increase in fuel prices and a more challenging environment in the cargo business, as well as by the ongoing development of LAN Colombia’s operations,” the company said.
Earnings before interest, taxes, depreciation and amortization slumped 13 percent to $218 million. Sales rose 13 percent and operating expenses jumped 18 percent. Results include a one-time cost of $14.3 million related to a collective bargaining process with some unions, Lan said.
Passenger capacity probably will expand 12 percent to 14 percent this year, mainly driven by the net delivery of 13 aircraft, Lan said in the statement. Cargo capacity growth is forecast at 3 percent to 5 percent, it said.
“The reduction in cargo capacity expansion reflects a more challenging demand and competitive environment in the global cargo markets,” Lan said.
Lan expects to complete its $3.7 billion acquisition of Brazilian carrier Tam SA (TAMM4) on June 15 following a public purchase offer that began yesterday, Lan said in a separate statement today.
Lan shares closed little changed at 13,238 pesos in Santiago trading today.
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