Latam Airlines Group SA (LFL:US), Latin America’s largest carrier by sales, fell the most in two years after the company reported a wider-than-forecast quarterly loss as a plunging Brazilian currency crimped revenue.
The airline’s shares retreated 5.2 percent to 6,265 pesos at 12:43 p.m. in Santiago. A close at that level would be the steepest one-day drop since September 2011. The stock was the biggest lower today on Chile’s benchmark IPSA index, which fell 1.5 percent.
The Santiago-based airline, formed by Lan Airlines SA’s 2012 takeover of Brazil’s TAM SA, lost $330 million in the second quarter, triple the average $95.6 million loss estimate of six analysts, based on data compiled by Bloomberg. Latam said in a regulatory filing that the loss was exacerbated by a plunging Brazilian real, which accounts for 34 percent of revenue. The currency sank 9.4 percent in the period, the most in emerging markets.
“We can’t rule out negative pressure on the shares as operating and net income results were below our own and market estimates,” Santiago-based brokerage BICE Inversiones wrote in an e-mailed note today.
Earnings before interest, tax, depreciation, amortization and rentals were $383 million, compared with BICE’s forecast for $418 million, according to the note.
Latam also said it’s restating 2012 earnings, reducing net income for the year by $30 million, after discovering accounting and tax errors in TAM’s results. The airline previously had reported net income of $11 million for last year, according to data (LFL:US) compiled by Bloomberg.
The airline said it will reduce fleet-expansion plans for the 2013 to 2015 period by $1.1 billion, or 22 aircraft, citing changes in regional macroeconomic conditions. Argentina ordered the return of a hangar Latam uses for maintenance and support at the Aeroparque airport in Buenos Aires.
“Latam will evaluate every measure to defend its rights,” Roberto Alvo, Latam’s vice president for strategic planning, said in a conference call today to discuss results. “This event is in line with an increasing level of actions against the company by the government.”
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