The fourth quarter of 2011 was rather profitable for LAN Airlines’ cargo business, with freight revenue surging 15.8 percent, year-over-year, on a capacity increase of 9.8 percent. Revenue-tonne kilometer also grew for the Latin American carrier in the fourth quarter, improving 10 percent, year-over-year.
Strong import flows to Latin America led LAN Airlines to increase capacity to its core markets, although “weaker global cargo markets drove additional competition to South America, especially Brazil,” according to a press release. Still, export volumes rebounded, thanks in part to the steady increase of salmon exports.
Fortunately, LAN contained the capacity to address this growth, according to the press release. The Latin American carrier relied heavily on the three additional Boeing 767-300F freighters it integrated into its fleet between November 2010 and January 2011 on cargo routes from Latin America to North America and Europe.
Belly-hold freight capacity also played a large part in LAN’s fourth-quarter cargo surge, according to the press release. It enabled the carrier to “maximize synergies associated with its integrated passenger/cargo business model.”
LAN’s passenger volumes also surged during the fourth quarter, improving 10.8 percent, year-over-year, on a 13.3-percent capacity increase. Regional routes within Latin America, domestic routes within Chile, and international routes to the U.S. saw the most capacity growth, according to the press release; however, such increases were partially offset by reduced capacity to European routes.
From a company-wide perspective, the fourth quarter of 2011 brought mixed results for LAN Airlines. Net income for the Latin American carrier plummeted 31.6 percent, year-over-year, partly due to the volcanic ash cloud that disrupted flights in Chile and Argentina last fall and the costs related to the institution of LAN services to Colombia. Fuel prices, which surged 28.8 percent, year-over-year, in the fourth quarter, also affected profitability.
Nevertheless, LAN continues to be in a solid place financially, according to the press release. “LAN’s operating results during the quarter evidenced [its] ability to leverage continued growth opportunities in both cargo and passenger markets, enhancing the company’s leadership position in Latin America and reflecting its ability to face and mitigate impacts of adverse scenarios, such as fuel-price volatility and natural disasters,” it stated.