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LATAM adjusts fleet commitments in line with demand

LATAM Airlines Group has grown its fleet commitments for 2018 and 2019, responding to an improving demand environment.

The Santiago-based airline group now expects fleet commitments of $716 million in 2018 and $1.19 billion in 2019, up from $701 million and $1.14 billion previously.

LATAM plans to add 14 aircraft and remove 10 in 2018, ending that year with a fleet of 312 aircraft.

The airline says it has postponed the re-delivery of one Airbus A319 in 2018, and will take delivery of two additional leased A321s that year "to meet demand requirements". However, it will delay the delivery of an A320neo to 2019 from 2018.

In 2019, LATAM now expects an additional A320 re-delivery and a Boeing 767-300 Freighter to return from a sublease. The airline plans to convert a 767-300ER passenger aircraft into a freighter. In addition, two 777-300Fs will leave the airline's fleet in 2018 instead of 2017 as previously planned.

The airline says it has seen improvement in certain Latin American regions, particularly Brazil which is emerging from a recession. International demand from Brazil has been recovering at a healthy pace, although domestic demand continues to fluctuate, say LATAM executives.

LATAM expects to reduce domestic Brazil capacity by about 3% this year, while the group's international capacity will rise 4% to 5%. Domestic capacity in Spanish-speaking countries is expected to grow only 1% to 2%, down from the 2% to 4% guidance LATAM had issued previously.

"We are seeing good demand levels on international flights out of Argentina," says LATAM senior commercial vice-president Roberto Alvo. Demand from Spanish-speaking countries to Europe was weak in the first half of the year but has been recovering, he adds.

While domestic demand in Spanish-speaking countries was relatively flat, LATAM saw some benefit from a pilot strike at Avianca Colombia, says Alvo.

The airline group expects domestic capacity in Brazil to grow next year, after years of declines. Any capacity growth will likely be conservative, says LATAM Airlines Brazil chief executive Jerome Cadier.

LATAM expects to provide detailed 2018 capacity guidance in January, says Alvo. He points out, however, that international capacity in 2018 will rise following the airline's announcement of plans to add new international service to Boston, Lisbon, Rome, San Jose (Costa Rica) and Tel Aviv.

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