SAO PAULO – Brazilian airline TAM, partner with Chile’s LAN in Latam Airlines, announced Monday that it is reducing domestic operations by up to 10 percent and laying off 2 percent of staff as a result of the country’s economic crisis.
Brazil’s second-leading carrier in terms of market share said in a statement sent to securities regulators that the decision to trim operations responds to “the challenging economic scenario.”
“TAM takes these steps to deal with a difficult economic environment in Brazil, which imposes adjustments that will not be to the detriment of passengers and will further strengthen competitiveness,” airline president Claudia Sender said.
The company, she said, “continues believing” that Brazil will return to economic growth and the cuts will not have an impact on TAM’s “long-term strategies, which include renovation of its fleet.”
Brazil’s economy is struggling and private economists expect gross domestic product to shrink 1.7 percent this year, according to a survey released Monday by the Central Bank.
The government of President Dilma Rousseff has implemented a severe austerity plan that included drastic cuts in public spending and measures to increase tax collection.
The Brazilian unemployment rate climbed from 4.8 percent in December to 6.7 percent at the end of May, while a recent Central Bank report shows a 2.64 percent reduction of economic activity during the first five months of the year.