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LATAM Airlines' (LTM) Load Factor Decreases in February

Zacks Equity Research

LATAM Airlines Group S.A. LTM reported mixed traffic figures for February. Although traffic increased substantially on strong travel demand, load factor declined as capacity expansion surpassed traffic growth.

Consolidated traffic (measured in revenue passenger kilometers or RPKs) came in at 10.12 billion, up 4.9% from the year-ago figure. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 6.5% to 12.03 billion.

However, consolidated load factor (percentage of seats filled by passengers) contracted 120 basis points (bps) to 84.1%. Meanwhile, passenger count climbed 5% to 5.71 million.

In the first two months of 2019, LATAM Airlines generated RPKs of 21.64 billion (up 5% year over year) and ASMs of 25.51 billion (up 6.3% year over year). Load factor registered a fall of 100 bps year over year to 84.8%.

Price Performance

Shares of the company have outperformed its industry so far this year. While the stock has rallied 13.3%, the industry has increased 6.5%.


 

Strong passenger and cargo revenues have been boosting the company’s top line. Also, clearance of the Joint Business Agreements among LATAM Airlines, American Airlines and IAG bodes well for the company. Association with these airline players is likely to help the company attract additional traffic on the key routes.

Zacks Rank & Other Key Picks

LATAM Airlines carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space are Azul AZUL, Air China Ltd. AIRYY and SkyWest, Inc. SKYW, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Azul, Air China and SkyWest have gained more than 16%, 21% and 15%, respectively, on a year-to-date basis.

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