LATAM Airlines will add two Boeing 787 and 70 Airbus A320neo jets over the next six years

Latam Airlines released its consolidated financial results on Mar. 9 for the fourth quarter ending December 31, 2021, LATAM said deliveries could be modified pending ongoing discussions with the aircraft manufacturers.

Filed on November 26, 2021, LATAM’s Chapter 11 exit plan is currently pending the approval of procedures to solicit votes on the plan and the approval of the backstop agreements by the US Bankruptcy Court for the Southern District of New York.

Given the voluntary reorganization filing and restructuring of its debt under Chapter 11 protection in the U.S., LATAM is currently evaluating the appropriate fleet needs for the coming years.

For the first time since the start of the pandemic, the group posted a positive operating result of USD73.4 million in the Q4 of 2021.

Total operating revenues amounted to USD1.9 billion, 30.5% below 2019 levels, though these continued improving, based on the recovery trend in passenger traffic, with total operating revenues posting a 51.9% increase from the previous third quarter of 2021.

Passenger revenues were down 40.5% and other revenues decreased 50.5% compared to 2019, while cargo revenues improved by 66% over 2019 levels. For the full year of 2021, LATAM’s revenues reached USD5.1 billion, a decline of 51% compared to 2019, resulting from the impact of the COVID-19 pandemic, the company said.

Total operating expenses were USD1.9 billion in the fourth quarter of 2021, representing a decrease of 23.7% compared to the same period of 2019, following the group’s cost restructuring efforts.

“At the operational level, LATAM simplified processes and redesigned fleet strategies, while on the financial side was focused on contract renegotiations and cost restructuring,” airline management commented. “In parallel, the group kept an important focus on maintaining regular operations and recovering pre-pandemic capacity as soon as possible. Despite the volatility and changing scenarios related to COVID-19 and the affected passenger demand, the group worked diligently to restore its network and profitability, ramping up operations (measured in ASKs, compared to 2019) from 39.8% in January 2021 to 70.1% at the end of the year in December 2021.”

LATAM expects to reach a full domestic and international demand recovery by 2022 and 2024, respectively. This was the result of significant restructuring of the fleet, workforce, digitalisation, and process simplification that amounted to USD900 million in cost savings, the group said.

It is worth recalling that Latam’s total fleet, considering its operations in several countries, has been reduced from 342 aircraft at the end of 2019 to 304 aircraft as of Dec. 31, 2021, mainly due to the pandemic and travel restrictions, as reported by our partner media in Brazil, Aeroin.

Currently present in five regional markets – Brazil, Chile, Colombia, Ecuador and Peru – Latam can allocate the aircraft to any operation, depending on the recovery of each market.

Incoming aircraft
LATAM said negotiations with lessors resulted in extended payment periods and lower leases which would generate annual fleet cash flow savings of 40% as presented in LATAM’s five-year business plan. It said in total 42 aircraft leases were cancelled since the start of Chapter 11 proceedings; eighteen aircraft were incorporated; and eleven Boeing 767s were put up for sale (five of which have already been sold and delivered to Jetran).

Agreements have been reached on its fleet commitments with Boeing for two 787 Dreamliner aircraft and with Airbus for a total of 70 A320-Neo family aircraft, which are 20% more fuel-efficient.

According to LATAM, the group already has twelve leased A320-200Ns; forty-nine A321-200Ns (18 inhouse and 31 leased); as well as seventeen 787-9s (two owned and fifteen leased).

Delivery dates are scheduled for 2028, although they may change as a result of ongoing discussions with aircraft manufacturers in the context of the current situation.

It also has on order: thirty-eight A321-200Ns; thirty A320-200Ns; two A321-200NXs; and six B787-9s, according to the ch-aviation fleets advanced module.

Its operating fleet of 304 aircraft (on December 31, 2021) also included 133 A320-200s (94 in-house and 39 leased); forty-four A319-100s (27 owned and seven leased); with ten each Boeing 787-8s and 777-300(ER)s (four owned and six leased of each); plus sixteen in-house 767-300(ER)s.