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LATAM Brasil reduces fuel cost plans and capacity plans, with cuts expected into the third quarter

CEO Jerome Cadier said on Monday that 'LATAM Airlines Brazil's Brazilian unit will reduce?capacity in July by 3% compared to its initial plans for the period because of a?rise in fuel costs.

Cadier, in an interview at the International Air Transport Association annual general meeting held in Rio de Janeiro, said that the move would be a repeat of a reduction made in June.

Fuel price shocks related to the Iran war have forced airlines worldwide, including LATAM, to reduce capacity on certain routes and adjust ticket prices upward.

LATAM Brasil has adjusted its expectations to 11% growth by 2025. This means that the carrier continues to expand capacity, but at a slower rate than originally planned.

The executive noted that prices in Brazil have increased between 20% and 30%. He also said it takes time for price increases to be felt, as some tickets sold before the war were still valid today.

"We adjust everything we can," said Cadier, adding that airlines also expect the effects of war to start to fade over time.

LATAM will?take delivery of 12 Embraer 195-E2 aircraft later this year, with another 12 arriving in 2027. This will allow it to increase flight frequency on existing routes and add new destinations despite the difficult scenario.

The 'company' expects to announce destinations that will be served by the E2 at the end July, delaying the announcement originally expected for this month.

"It wasn't necessarily a war-related decision, but rather one that was influenced by a more volatile climate," said Cadier. "We're obviously more conservative with our decisions about capacity increases and allocation of these planes." Reporting by Luciana Arauj and Gabriel Arauj, Editing by Louise Heavens, Nick Zieminski

(source: Reuters)