Latin America's largest airline to cancel 90% of its international flights

By Marcelo Rochabrun and Jake Spring

SAO PAULO/BRASILIA (Reuters) - LATAM Airlines Group, South America's largest carrier, on Monday cancelled 90% of its international flights as demand collapsed and countries shut down borders due to the coronavirus outbreak, leaving the region increasingly isolated.

LATAM is the region's main carrier to the United States, followed by American Airlines <AAL.O> which said last weekend it would cancel most flights to Latin America, including all those to Brazil.

Argentina, Peru and Ecuador have imposed tough isolation measures that led the vast majority of flights to those countries to be cancelled. Chile has said it will close borders on Wednesday.

Brazil's largest domestic carrier Gol Linhas Aereas Inteligentes <GOLL4.SA>, said it would cancel international flights by up to 95%, while cutting domestic flights by up to 60% through June.

Brazil's No. 3 airline, Azul SA <AZUL.N>, said it would cut all international flights out of its main hub in Sao Paulo state.

Mexican carrier Aeromexico <AEROMEX.MX> said it was reducing flights to Europe from March 17 to April 30.

Shares of LATAM and Gol closed more than 25% lower, while Azul was hardest hit, plunging more than 36%. Aeromexico shares rose 4.81%.

International cancellations have sped up since last week, when Latin American carriers including Azul and LATAM said they would cut no more than 30% of their flights.

Santiago, Chile-based LATAM also said it would cut 40% of its domestic flights, without specifying which routes. Passengers may reschedule trips through the end of the year "at no additional cost," it said.

Brazil's government is expected to announce an airline relief package later on Monday or early on Tuesday that would include tax deferrals, but no tax cuts, a spokesman for Brazil's Infrastructure Ministry said.

Private airport operators would also be able to defer government licensing fees required to operate airport concessions.

Details have not been finalised, the spokesman said.

The civil aviation industry has been seeking government aid through its main lobbying arm, Abear. The trade group had asked for a list of six items mostly focused on the removal of taxes, including on airline ticket sales and payroll.

Airline industry groups around the world have asked for significant government help, especially in the United States and Europe.

As Azul ratcheted up cancellations, it was unclear what international flights it would keep. Azul flies mainly to the United States and Portugal.

The airline said it would cut up to 50% of capacity by next month and cut costs, including executive salaries by 25%, significantly less than cuts taken by airline executives in the United States.

(Reporting by Marcelo Rochabrun in Sao Paulo and Jake Spring in Brasilia; Additional reporting by Ana Mano and Noe Torres; Editing by David Gregorio and Matthew Lewis)