(Adds details on EBITDAR margin, operating revenue, and guidance; adds context; modifies title)
SANTIAGO, May 15 (Reuters) - LATAM Airlines, Latin America’s largest airline, reported a slightly smaller profit than expected in the first quarter as local currency appreciation and inflation raised costs, the company reported on Monday.
The airline, which was formed via a 2012 tie-up of Chile’s LAN and Brazil’s TAM, said net income was $66 million in the three months to end-March, lower than a Reuters forecast for $71.9 million. That represented a fall in net income from the first quarter of 2016, when the company reported a profit of $102 million.
The company’s EBITDAR margin, which is used to measure airlines’ profitability and cash flow, also fell slightly in yearly terms to 22.4 percent from 25.4 percent in the first quarter of 2016.
LATAM’s operating revenues, however, increased 6.4 percent in yearly terms to $2.477 billion. The company said currency appreciation that raised costs also helped raise income.
The airline said it was maintaining its previous guidance for a 2017 operating margin of between 6 and 8 percent, as well as a previously announced reduction in its 2016-2018 fleet commitment by $2.2 billion.
In March, the airline posted its first yearly net profit since the company formed four years ago, helped by improving conditions in key market Brazil. (Reporting by Gram Slattery; Editing by Andrew Hay)