OREANDA-NEWS.   LATAM Airlines Group reported operating income of USD 146.7 million for first quarter 2014 excluding non-recurring costs related to fleet restructuring. The increase of 28.5% as compared to the first quarter 2013 was driven by strong improvements in the results of LATAM’s passenger operations in most markets, especially in the Brazilian domestic operations, offset by the 18.5% depreciation of the Brazilian real over this period as well as by weaker results in the cargo business. Operating margin excluding fleet restructuring costs reached 4.6%, an increase of 1.2 points compared to 3.4% in 2013.
 
LATAM Airlines Group’s net income reached USD 80.7 million for first quarter 2014, excluding non-recurring costs related to fleet restructuring, compared to net income of USD 42.7 million for the same period 2013.
 
Having concluded a thorough review of its post-merger fleet plan and fleet requirements, and the changes in the competitive environment, the Company is undertaking a broad fleet restructuring plan with the aim of reducing the number of models operated, phasing out less efficient models and allocating aircraft best suited to each one of its markets.  As a result, the Company expects to redeliver a significant number of aircraft between 2013 and 2016, and to fully phase out its Airbus A330s, A340s, Boeing 737s and Q400s.  During the first quarter of 2014, LATAM has provided for estimated penalties related to anticipated redeliveries and other redelivery expenses expected to be incurred as a result of this process, recognizing non-recurring costs of USD 147 million. Of this total amount, USD 34 million are recorded as aircraft maintenance operating expenses and USD 112 million are recognized as Other Non-Operating Costs.

During the first quarter of 2014, LATAM continues to rationalize capacity in both passenger and cargo operations. As a result, passenger ASKs declined by 4.3% and cargo ATKs declined by 6.6% as compared to the first quarter of 2013. In the passenger markets, capacity cuts were mainly driven by reductions on international routes, which decreased by 7.5% as compared to the same period in 2013, and the continued rationalization of our domestic Brazil operations. Load factors continue to increase in all markets, reaching record levels at 82.7%.
 
On March 31, 2014, TAM celebrated its official entrance into the oneworld alliance. This allows TAM to offer customers an improved network in regions that are most important to them, and represents a significant milestone for LATAM Airlines Group as it continues to develop its international connectivity.

On April 29, 2014, LATAM Airlines Group held its Annual General Shareholders’ Meeting in Santiago during which elections were held to renew the Board of Directors. Mr. Ricardo Caballero, renowned economist and professor of Economics at Massachusetts Institute of Technology, was elected as a new Board member of LATAM Airlines Group, replacing Mr. Jose Marнa Eyzaguirre, who held this position for almost two years. The other eight Board members were reelected.