Santiago, Chile-based LATAM Airlines Group reported a 2016 net profit of $69.2 million, reversed from a net loss of $219.3 million in 2015.

LATAM Airlines Group is parent company to Brazil’s TAM and Chile’s LAN Airlines, and their affiliates.

Full-year revenue for the group fell 6% year-over-year (YOY) to $9.5 billion, while operating expenses dropped 6.8% to $9 billion, producing an operating profit of $5.7 million, up 10.5% YOY.

LATAM turned in a fourth-quarter 2016 net profit of $54.3 million, reversed from a $16.3 million net loss for the year-ago quarter. Operating revenue for the quarter was up 6.7% YOY to $2.6 billion, while expenses increased 5.2% YOY to $2.4 billion, producing an operating income of $195 million, up 31% YOY.

During the fourth quarter, LATAM said it made “significant progress in its plan to reduce total fleet assets and fleet commitments, reaching the lowest fleet commitment levels in the recent history of the carrier for 2017 and 2018.” LATAM reduced fleet commitments for 2018 by $1.1 million and said it will also reduce existing fleet assets by returning additional aircraft as compared to the previous quarter fleet plan. “With this, the company will have reached $2.2 billion reduction in fleet assets for 2016–2018, in line with our previously announced plans to achieve a decrease of $2 to $3 billion in our expected fleet assets by 2018,” the company said.

LATAM described 2016 as “challenging, with weakening regional economies and recession in Brazil, devalued local currencies and high inflation rates in certain countries … Furthermore, Qatar’s investment recognizes LATAM’s achievements and supports our project for the future, strengthening our conviction that we are on the right path to reach our goals.”

In November 2016, Brazil’s competition authority approved Qatar Airways’ investment in LATAM. On March 8, the company said the joint business agreement with American Airlines and International Airlines Group was approved.

In April 2016, the group unveiled a new unified livery, which is the culmination of the 2012 merger of Santiago, Chile-based LAN and Brazil’s TAM Airlines under LATAM. The repainting of the entire fleet is scheduled to be completed in 2018.

During 2016, LATAM took delivery of 24 aircraft and returned 23, ending the year with an operating fleet of 329 aircraft. By the end of 2017, the company said it will operate a total fleet of 311 aircraft, and will have seven aircraft under subleasing contracts.

In August 2016, LATAM became the first airline in the Americas to take delivery of an Airbus A320neo. LATAM’s A320neo is powered by Pratt & Whitney PW1100G geared turbofan (GTF) engines. LATAM has 67 A320neo family aircraft on order.

Looking forward, LATAM said it will continue to implement its new travel model for domestic services gradually over the coming months. “During the second quarter, LATAM will start to implement a branded fare model with clear attributes differentiation and payable ancillaries to provide to our customers more accessible prices and more alignment to their needs.” The company said it maintains its guidance for an operating margin of between 6% and 8% for full-year 2017.

Linda Blachly