LATAM Airlines pilots in Chile began a strike at midnight local time on November 12 after mediated talks with the company reportedly failed. The action prompted the cancellation of at least 173 flights scheduled between November 12 and 17, which is expected to impact around 20,000 passengers.
The airline’s union says that its 464 members are seeking the restoration of pre-pandemic employment conditions and benefits. The organization’s demands represent under 1% of LATAM’s recent profits. The company claims that it is taking appropriate steps to mitigate disruptions and offer options to passengers impacted by the strike. Early airline messaging had suggested that the carrier is going to be taking a limited operational hit, but that cancellations have widened across the week’s schedule, focusing instead on services to and from Chile. Negotiations remained stalled, and the airline’s near-term outlook is thus uncertain as a result.
What Are The Key Developments In This Story?
Talks between LATAM and the Sindicato de Pilotos de LATAM (SPL) broke down despite extensive mediation by the Labor Directorate of Chile. On November 3, 97% of participating pilots rejected the company’s latest series of contracts. The strike began at midnight today, and it includes approximately 464 Chile-based pilots, more than half of LATAM’s entire workforce in the South American country.
This kind of strike is clearly a challenge for LATAM, as it has to address the operational impact that losing such a large chunk of its workforce will have on the carrier, even if it’s for a relatively short period of time. LATAM initially noted that fewer than 10% of passengers traveling to or from Chile would be impacted by the strike, and the carrier began pre-emptive rescheduling, according to Air Data News. By Wednesday afternoon, the carrier confirmed at least 173 cancellations, saying that most affected customers had been accommodated already. The union frames its demands within the context of overall airline profitability in order to help justify the requested pay increases.
What Does All Of This Mean For LATAM?
From an operational perspective, this disruption is overwhelmingly concentrated in Chile-related flying. This includes a handful of domestic and international services operated by the carrier. As a result, the impact should be more contained than a system-wide issue. That being said, 173 flight cancellations are already planned over the next several days, denting the short-term revenue growth path for LATAM while pushing up overall disruption costs, including crew repositioning and customer care, as well as putting pressure on on-time performance metrics.
LATAM’s initial claim that fewer than 10% of Chile’s origin-and-destination passengers would be affected signals a mitigation playbook that can help cap the operational hit if the dispute remains relatively brief in nature. Risks for the airline begin to compound if the strike continues or if the stoppage spreads to other unions.
The management team will certainly take a reputation hit as a result, especially with its employees. It is not quite clear how this could impact overall demand. Investors can expect elevated near-term unit cost noise and potential guidance caveats if cancellations persist beyond the current strike-related planning window.
What Does All Of This Mean For Passengers?
There are undoubtedly implications of this strike for passengers traveling to and from Chile, as LATAM is the largest airline in the country. For those flying to, from, or through the country over the next few days, it is important to check flight status frequently and not head to the airport until a flight has been fully confirmed by the carrier.
LATAM is offering several rebooking options for passengers, including free flight date changes, voluntary itinerary modifications without penalties, and even full refunds for tickets and some other associated services. Passengers can monitor their trips through the LATAM app or on the airline’s website. The carrier is also contacting customers by email as schedules continue to evolve over time.
Passengers can expect longer app and customer service queue times, as well as limited same-day rebooking inventory on peak city pairs, as well as potential misconnects for itineraries that transit through Santiago Airport (SCL). If your trip is time-sensitive, passengers may want to consider advancing or delaying travel by a day or two in order to fully widen rebooking options.
