LATAM Airlines' November Traffic Rises, Load Factor Falls

LATAM Airlines Group S.A. (NYSE:LTM) posted mixed traffic numbers for November 2018. In spite of traffic increasing substantially on strong demand for air travel, load factor declined as traffic growth was outweighed by capacity expansion.

Consolidated traffic (measured in revenue passenger miles or RPMs) came in at 10.1 billion, up 5.1% from the year-ago figure. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 6.4% to 12.1 billion.

However, consolidated load factor (percentage of seats filled by passengers) contracted 1.1 percentage points (pp) to 83.2%. Also, passenger count rose 4.9% to 5,997,000.

At the end of the first 11 months of 2018, LATAM Airlines generated RPMs of 108.5 billion (up 2.7% year over year) and ASMs of 130.6 billion (up 4.9% year over year). Load factor registered a fall of 1.8 pp year over year to 83.1%.

In spite of increase in traffic, the carrier continues to struggle against challenges. Depreciation of the Brazilian Real and Argentinian Peso are a major headwind for the company and expected to dent results in the final quarter of 2018. Despite the current downtrend in oil prices, fuel costs are expected to dampen bottom-line growth in the fourth quarter.

In fact, the stock has declined almost 22% in a year’s time due to these headwinds.

The decline in November load factor has dampened the stock further.

Zacks Rank & Stocks to Consider

LATAM Airlines carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Zacks Transportation sector are Air France-KLM SA (OTC:AFLYY) , Spirit Airlines, Inc. (NYSE:SAVE) and Seaspan Corporation (NYSE:SSW) . While Seaspan Corporation carries a Zacks Rank #2 (Buy), Air France and Spirit Airlines sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Seaspan, Air France and Spirit Airlines have gained 4.3%, 26.4% and 60.5% in the past six months, respectively.

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