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SANTIAGO, May 14 (Reuters) - LATAM Airlines, Latin America’s largest airline, posted a surprise net loss in the first quarter due to a weaker Brazilian real, but said operational results and margins had strongly improved.
The net loss of just under $40 million in the three months to end-March 2015, which was similar to the $41 million it lost in the same period a year ago, compared to forecasts for a $42 million profit, according to a Reuters poll.
Hurt by a weak regional economy, LATAM has struggled to match up to expectations since it was created in a tie-up between Chile’s former investor darling LAN and Brazil’s TAM in 2012.
It has been particularly affected by a slowdown in regional giant Brazil, which is headed towards recession this year.
“The company has mitigated its exchange rate losses through a continual reduction of its exposure to the Brazilian real on TAM’s balance sheet,” said LATAM, alongside its results on Thursday evening.
Operational results were more positive, however.
On an operational basis, the airline reported a profit of $227 million, around double for the same period a year ago, with the recent fall in the price of oil and cost cuts boosting margins to 8.1 percent from 3.5 percent in 2014.
The airline has been cutting flights to improve capacity and shore up margins. (Reporting by Rosalba O‘Brien; Editing by Grant McCool, Bernard Orr)