Loading profile info

Continuing weakness in Brazil pressures 3Q earnings for the country’s major airlines

Analysis

Prolonged weakness in the Brazilian domestic market resulted in a depressed 3Q2012 financial performance for the country's major airlines Gol and TAM even as the carriers have continued to cut domestic capacity throughout 2012. Both airlines believe they are taking the necessary steps to combat the continued sluggish demand that prevails in Brazil, but challenging conditions continue to be a significant threat heading into 2013 as the country's stagnant economy struggles to regain momentum.

Both Gol and TAM's parent LATAM recorded losses during 3Q2012 that were in part fuelled by the Brazilian economic slowdown and a 24% depreciation of Brazil's currency against the US dollar. LATAM, the merged entity of Chile-based LAN and TAM, also recorded integration charges of USD20 million and a one-time USD70 million tax charge related to an increase in the Chilean income tax rate which resulted in a net loss of USD64 million. Excluding those items LATAM recorded a USD21 million net profit.

Read More

This CAPA Analysis Report is 1,484 words.

You must log in to read the rest of this article.

Got an account? Log In

Create a CAPA Account

Get a taste of our expert analysis and research publications by signing up to CAPA Content Lite for free, or unlock full access with CAPA Membership.

InclusionsContent Lite UserCAPA Member
News
Non-Premium Analysis
Premium Analysis
Data Centre
Selected Research Publications

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More