Brazil’s TAM Posts First Loss In Two Years

Brazilian airline TAM posted its first quarterly loss in almost two years as costs surged and passenger load factor declined. TAM reported a second-quarter loss of $14.69 million, compared with a revised profit of $133.69 million a year earlier.

It was the first loss for TAM after seven straight profitable quarters and followed months of chaos in Brazil’s aviation system, which has forced airlines to repeatedly delay and cancel flights.

The earnings report was the first since a TAM flight crashed on July 17 at Sao Paulo’s Congonhas Airport, killing all 187 people on board and 12 on the ground. It was the worst air crash in Brazilian history.

A sharp increase in operating costs weighed on TAM’s bottom line in the second quarter, offsetting a 13.7 percent jump in net revenue. Overall costs rose 28.5 percent to $1.94 billion, driven up by a 26.2 percent jump in fuel prices and a 50.7 percent increase in spending on personnel.

Load factor slipped to 72.3 percent on domestic flights from 75 percent a year earlier, even as demand rose sharply. Load factor on international flights also fell, dropping to 69 percent from 74.6 percent.