By Georgia Grimond, Contributing Reporter
RIO DE JANERIO, BRAZIL – TAM, the Brazilian brand of LATAM airline group, announced on Monday, July 20th, that it will be reducing its domestic activity by up to twenty percent by the end of the year and that staff layoffs can be expected. The company said that the routes affected were still under discussion but that coverage of the country would not be affected as no destination currently served would lose its flights.
Citing rising inflation and a high dollar for its restructuring plans, the airline estimated that it would layoff around two percent of its 28,000 employees. Crew members, however, would not be affected.
“TAM is taking this measure to face Brazil’s difficult economic situation,” Claudia Sender, the company’s CEO, said in a statement. “It is therefore necessary to seek network adjustments, further boosting our competitiveness in the country, and preventing any harm to our passengers’ connectivity.”
In May, the Brazilian Association of Air Companies (ABEAR) reported stagnation in the sector’s domestic demand, showing growth to be no higher than one percent compared to the same month in the previous year.
“We continue to believe in the return to growth of our country and this adjustment does not affect the long-term strategy,” Ms Sender added.
TAM Linhas Aereas (TAM Airlines) and TAM Viagens (TAM Travel), LATAM’s two Brazilian companies, were recently chosen to be official sponsors of the 2016 Olympic and Paralympic Games.
TAM Viagens will be responsible for the National Hospitality and Travel Programme for Rio 2016, allowing it to sell travel packages, including transport, accommodation and tickets to the Games, in Brazil.
TAM Linhas Aereas will take responsibility for transporting the Olympic Torch when it leaves Greece and as it passes through a number of Brazilian cities en route to Rio de Janeiro.
Though not a flag carrier, TAM is the largest Brazilian airline by marketshare and fleetsize, and the LATAM group is one of the biggest airline groups in the world. It was the result of the merger between the Chilean LAN Airlines and Brazilian TAM Airlines which took place in 2012 with headquarters in Santiago, Chile.
The LATAM group operates over 300 planes providing passenger transport services to around 135 destinations in 24 countries. It also runs cargo services to 144 cities in 26 countries.
In April, TAM announced that it was choosing where to locate a new hub in the North East of the country. By the end of the year a decision would have been made between Recife, Fortaleza and Natal.
The new base would extend the number of connections and destinations the airline runs, particularly to Europe in the North East. The recent restructuring plans are said not to affect that decision.