Tuesday, July 21, 2015

TAM cutting domestic capacity in response to Brazil’s struggles

Citing Brazil’s “difficult economic scenario,” TAM said it will gradually reduce its domestic operations 8%-10% and cut about 500 employees.

The reduction in services will see TAM’s domestic capacity fall 2%-4% for the full year 2015 compared to 2014. TAM said the staff cuts “will not impact flight crew personnel.”

Though the number of domestic flights will be reduced, TAM does not plan to drop any domestic destinations to which it currently operates.

TAM said its capacity reduction move was driven by data released July 10 by the Brazilian Central Bank estimating the country’s GDP will contract 1.5% year-over-year in 2015. “They also estimate that inflation should end the year at over 9%, while the US dollar is expected to continue to strengthen against the Brazilian real,” TAM said.

TAM parent LATAM Airlines Group reported a 2014 net loss of $109.8 million, attributed in part to foreign exchange losses of $130.2 million related to the devaluation of the Brazilian real.

“TAM is taking this measure to face the difficult economic scenario of the country,” CEO Claudia Sender said in a statement. “It is necessary to make adjustments to our network … We continue to believe in the country’s recovery and this adjustment in no way affects the company’s long-term strategy, which includes the renewal of the fleet … and the continuous strengthening of our hubs in Brasília and São Paulo Guarulhos.”

(Aaron Karp - ATWOnline News)

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