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COVID-19 Crisis Impacts LATAM Airlines Results 2020

March 11, 2021 Financial No Comments Email Email

LATAM Airlines Group closed the 2020 fiscal year with US$3 billion of available liquidity (US$1.7 billion in available cash added to US$1.3 billion in a committed DIP financing line), in a year marked by travel restrictions and a sharp decrease in passenger demand due to COVID-19. In the face of the pandemic, the group implemented a critical cost reduction policy, reducing costs by 38.1% during the year compared to 2019.

During the last quarter of the year, total revenue was US$897.5 million, representing a reduction of 68.7% compared to the same period of the previous year. This decline was partially offset by a 26.7% increase in cargo revenue, in response to the strong demand for these services during the pandemic. On the other hand, operating costs decreased 44.5% in the fourth quarter of the year, due to lower passenger operations and the group’s efforts to reduce its fixed costs. The group ended the quarter with losses of US$962.5 million in relation to the same quarter of 2019.

“2020 was the most challenging year in history for the aviation industry and for LATAM. Although the COVID-19 crisis had profound effects on the group and its operations and will continue to do so for a while, this context has allowed us to make decisions for change. We will emerge as a closer, simpler, more agile, and more efficient company. We have no doubt that when the crisis passes, LATAM will operate as a strengthened group”, said Roberto Alvo, CEO of LATAM Airlines Group.

Milestones

2020 was also marked by several relevant milestones. LATAM Airlines Group and its subsidiaries in Chile, Peru, Colombia, Ecuador, the United States, and Brazil filed for voluntary reorganisation processes under the US Chapter 11 financial reorganisation statute. Currently, LATAM is working on its reorganisation plan, within the framework of said process.

Towards the end of the year, LATAM launched its new e-business unit, a simpler, more user-friendly digital experience for customers in Ecuador, Colombia, Chile, and more recently Brazil, allowing passengers to have control of their itinerary at all times.

Last year, LATAM also achieved its highest customer satisfaction results, as measured by the Net Promoter Score (NPS). It is the highest score LATAM has received since the measurement’s implementation in 2008. Passengers valued the on-board service, the additional security and sanitation measures adopted since the start of the pandemic, and the excellent punctuality of LATAM flights.

Through the Avión Solidario program, the group managed to keep South America connected to the world during the pandemic. More than a thousand tons of medical supplies were transported, benefiting Argentina, Brazil, Chile, Colombia, Ecuador, and Peru. More than 1,100 tissue and organ donations were mobilised within South America and the transfer of stem cells was carried out for eight people with blood cancer, who were able to receive a second chance at life, in addition to the transport of more than 900 health professionals. At the end of the year, LATAM also began the transportation of thousands of COVID-19 vaccines to South America, as well as the free distribution of more than 13 million doses in Brazil, Chile, Ecuador and Peru.

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