OREANDA-NEWS. LATAM Airlines Group reported operating income of USD 118.4 million for third quarter 2014, a 54% decrease compared to the USD 255.5 million operating income in third quarter 2013. Operating margin reached 3.8%, compared to 7.6% in 2013. This contraction in margins was mainly driven by reduced corporate passenger and cargo demand during the FIFA World Cup soccer tournament held in Brazil in June and July 2014, as well as a generally weaker macroeconomic scenario in Latin America, including slower GDP growth trends and weaker currencies in most countries.

For third quarter 2014, LATAM reported a net loss of USD 107.8 million, compared to a net gain of USD 52.1 million for the same period 2013. This includes a foreign exchange loss of USD 144.1 million mostly recognized at TAM as a result of the devaluation of the Brazilian real during the quarter. We were able to mitigate this effect by consistently reducing the imbalance on TAM's balance sheet from USD 2.1 billion in September 2013 to USD 0.7 billion in September 2014.

The Company continues to rationalize capacity in both passenger and cargo operations, with reductions of 0.5% and 4.8%, respectively, during the third quarter of 2014 as compared to the same period of the previous year. While passenger traffic increased 2.1% and cargo traffic decreased only 1.9%, pressure on yields resulted in lower revenues per ASK (RASK) and revenues per ATK (RATK).

n accordance with the modifications to the Chilean Tax System, the Company has adjusted its deferred taxes to reflect the gradual increase of the corporate income tax from 20% to 27% in 2018, recognizing an increase of approximately USD 150 million in its deferred tax liabilities. For local purposes, the difference between the adjustment in deferred tax assets and liabilities resulting from the change in the tax law will be recognized as a decrease in equity. For international purposes, and according to IFRS, the Company will recognize an accounting charge of approximately USD 150 million in its 2014 income tax expenses.

During the month of October, TAM and LAN transferred their international operations to the new Terminal 3 at Guarulhos International Airport in Sao Paulo. This move will finally position Guarulhos Airport as the most important international hub in South America. "This change is strategic for the Company, allowing us to offer a better travel experience for our customers and to improve connecting times" says the CEO of LATAM, Enrique Cueto. Moreover, in November we inaugurated LATAM's first official unified VIP Lounge -the largest in Latin America-, consolidating GRU as the main hub for LATAM operations.

In September 2014, LATAM Airlines Group became the first airline group in the Americas to join the Dow Jones Sustainability World Index - the most important sustainability indicator worldwide- after being chosen from a group of companies who are leaders in sustainability as a result of their effective management of economic performance, social responsibility and environmental impact.