By Luciana Magalhaes and Gabriel Araujo
RIO DE JANEIRO, June 8 (Reuters) - LATAM Airlines' Brazilian unit is expected to trim capacity by about 3% in July compared with its initial plans for the period due to rising fuel costs, CEO Jerome Cadier told Reuters on Monday.
The move would repeat a reduction seen in June and is likely to persist into the third quarter, Cadier said in an interview on the sidelines of the International Air Transport Association's annual general meeting in Rio de Janeiro.
With
profit margins already razor-thin, the fuel price shock related to the war in Iran has forced carriers globally - including LATAM and peer Azul - to respond by reducing capacity on some routes and adjusting ticket prices upward.
LATAM Brasil's adjustment comes on top of initial expectations for 11% growth compared with 2025, meaning the carrier is still expanding capacity year over year but at a slower pace than originally planned, Cadier said.
Prices in the Brazilian market have meanwhile risen by 20% to 30%, the executive said, noting that price hikes take time to feed through as some tickets for flights being operated today were sold prior to the war.
"We adjust every variable we can," Cadier said, mentioning that airlines are also counting on the war's effects to begin to fade in coming quarters.
LATAM is set to take delivery later this year of 12 Embraer E195-E2 aircraft, with another 12 arriving in 2027, allowing it to add destinations and increase flight frequencies on some existing routes despite the challenging scenario.
The company expects to disclose destinations to be served by the E2 at the end of July, delaying an announcement initially expected for this month.
"It was not necessarily driven specifically by the war, but rather by a more volatile environment," Cadier said about the move. "We are obviously being more conservative in decisions on capacity increases and the allocation of these aircraft."
(Reporting by Luciana Magalhaes and Gabriel Arauj; Editing by Louise Heavens and Nick Zieminski)
