LTM

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 9:00 a.m. ET Chief Financial Officer - Ricardo Dourado Chief Executive Officer - Roberto Alvo Milosawlewitsch Corporate Finance Director - Andres Del Valle Head of Investor Relations - Tori Creighton Operator: Hello, everyone. Thank you for joining us, and welcome to the Second Quarter 2026 LATAM Airlines Group Earnings Conference Call. [Operator Instructions] Before I turn the call over to the management, I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations and as such, constitute forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives and expected performance or guidance are forward-looking statements. These statements are based on a range of assumptions that LATAM believes are reasonable, but are subject to uncertainties and risks that are discussed in detail in the published 20-F 2026 guidance earnings release, financial statements and related CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. And if there are any members of the press on the call, please note that for the media, this is a listen-only call. I will now hand the conference over to Ricardo Bottas, CFO. Mr. Bottas, please go ahead. Ricardo Dourado: Thank you. Hello, everyone, and good morning. Welcome to our second quarter 2026 conference, and thank you all for joining us today. Here with me is Roberto Alvo, our CEO; Andres Del Valle, Corporate Finance Director; and Tori Creighton, Head of Investor Relations, and we will present the highlights and results for the second quarter 2026. I will hand it over to Roberto to share his opening remarks. Roberto? Roberto Alvo Milosawlewitsch: Good morning, and thank you, Ricardo. The second quarter of 2026 was an important demonstration of the resilience of LATAM Group's business model. During this period, the industry faced one of the sharpest increases in jet fuel prices in recent years, creating a significant cost headwind across the sector. As we estimated back in May alongside our first quarter publication, the impact of higher jet fuel prices was in excess of $700 million in addition to -- in the second quarter alone. Yet despite this environment, LATAM delivered profitable results, reflecting an adjusted operating margin of 5.4%, which was also on the higher end of the estimate that we had made of mid- to low single digits back then. These results are not explained by a single initiative. They are the outcome of a business that has been consistently strengthened over the last several years to perform across different environments, which starts with a dedicated effort to care for our customers, constantly improving their experience and making them willing to experience LATAM. In addition to this, a diversified business structure integrating our passenger, cargo and LATAM Pass businesses, together with an effective commercial strategy, a competitive cost structure, a strong balance sheet and above all, the commitment of more than 43,000 employees across the group, enable LATAM's agile response while maintaining a focus on profitability. Throughout the quarter, this ecosystem delivered exactly what it was designed to deliver. Customer preference remains strong across the network, particularly in the Premium segment, which now accounts for 29% of the passenger revenues allowing the group to partially offset higher fuel costs through deferred adjustments while preserving healthy demand. At the same time, cargo, loyalty and other ancillary sources of revenue diversification reinforce the resilience of the model during a particularly challenging period. Diversification only becomes an asset when it's supported by effective execution and LATAM has consistently demonstrated that capability. During the period, the group rapidly activated multiple commercial and operational initiatives to mitigate the impact of higher fuel prices while continuing to invest in customer experience, operational reliability and the long-term competitiveness of the business. Financial strength also remained a key enabler, particularly in such a volatile environment. A strong balance sheet and healthy liquidity over 26% of last 12 months revenues provided LATAM with the flexibility to navigate a period of heightened uncertainty without losing focus on its long-term strategy and value-creating objectives. As we enter the second half of 2026, the environment remains highly dynamic. The significant swings in jet fuel prices we have seen over the last few weeks are a clear reminder of that volatility continues to be present. The second quarter provided us with one of the most severe fuel crises in the industry has experienced in recent years, and we believe we have navigated it well. We don't expect that price volatility to decrease during the remainder of the current quarter. In this sense, we remain cautious, although this quarter also reinforced our confidence in the group's ability to navigate this challenging environment. As we now enter what is seasonally a stronger half of the year for the business, we do so with the confidence that comes from having demonstrated the resilience of our business model. LATAM Group has commercial and financial tools, operational flexibility and most importantly, the people and the mindset to continue adapting effectively, navigating volatility and creating long-term value. Finally, regarding guidance, given the information we gathered in the past quarter and therefore, better visibility, we are reinstating our full list of parameters, and we have improved our outlook for the year. However, it is important to note that because of the highly -- high fuel price volatility, these numbers should not be only seen as our expectation given the stated assumptions, but also as an understanding of the resilience of the model in the current environment. With that said, I'll hand it over to Ricardo to go over specifics of LATAM's performance during the quarter. Thank you. Ricardo Dourado: Thank you, Roberto. Please join me on the Slide 4 to have a look at our overall results. As Roberto just explained, the second quarter was defined by an unprecedented increase in jet fuel prices. During the quarter, the all-in average fuel price, including hedge, increased by more than 80% year-over-year, resulting in a 93% increase in total fuel costs and creating one of the most significant cost headwinds the industry has faced in recent years. In response, LATAM rapidly implemented revenue management actions and target capacity adjustments. With these, total revenues increased almost 28% year-over-year, reaching nearly $4.2 billion. This was propelled by passenger revenues, which grew 28%, reflecting the consistent capacity growth together with the successful implementation of continued fare adjustments while preserving resilient demand across the network. Cargo revenues increased almost 22%, benefiting from both higher yields and continued growth in transport which demonstrates the flexibility of this business to adjust pricing given its significantly shorter booking cycle. On the cost side, adjusted costs, excluding fuel, increased by 14%, broadly in line with the continued growth of the operation. It's worth noting that part of this increase reflects costs that are directly linked to higher passenger fares, together with the depreciation of local currencies, particularly the Brazilian real, which pressures the dollar-denominated cost base. Just as a reference, the Brazilian reference in Q2 2025 was BRL 5.66 and now was BRL 5.05. That said, passenger CASK ex fuel remained sequentially in line at $0.045. Despite this unprecedented fuel environment and while growing capacity by 8.9% at a healthy 82% consolidated load factor level, LATAM remained profitable and delivered an adjusted operating margin, as Roberto mentioned, at 5.4% during what is seasonally the weakest quarter of the year. This translated all the way to the bottom line with the group generating a positive net income of $125 million. These results demonstrate that while the fuel shock had a significant impact on CASK and costs, the combination of effective execution, commercial flexibility and the resilience of LATAM's diversified business model allowed the group to increase unit revenues this quarter, successfully mitigating a substantial portion of that impact. Let's now take a closer look at the commercial execution behind these results on the next slide, Slide #5. During the quarter, LATAM Group continued executing its profitable growth strategy, increasing consolidated capacity by 8.9% year-over-year alongside some targeted capacity adjustments to mitigate the impact of higher fuel prices. These actions were selective, allowing LATAM to preserve profitability without compromising the strength, connectivity or integrity of its overall network. Importantly, demand for LATAM Group remained resilient across all markets, even under a high fare environment. Consolidated load factors declined modestly from 83.5% to 81.8%, remaining at healthy levels across all markets where the group's affiliates operate during the quarter. It's worth mentioning that particularly in June, there was a higher impact on demand, reflecting the temporary impact of the FIFA World Cup on travel patterns across South America. This combination of effective capacity management, a differentiated value proposition, revenue actions and resilient demand translated into a 17.5% increase in consolidated passenger RASK during the quarter, which allowed LATAM Group affiliates to successfully pass through a significant portion of the increase in fuel costs. Looking at the different markets, LATAM's affiliates in the Spanish-speaking countries, domestic markets delivered a particularly strong performance, increasing passenger RASK by 15% in local currency or 20% in U.S. dollars. For its part, LATAM Airlines Brazil and its domestic market also successfully increased its unit revenues with passenger RASK growing 12% in local currency and almost 24% in U.S. dollars, demonstrating its ability to implement fare adjustments while preserving healthy demand. Lastly, the International segment increased passenger RASK by almost 13%, even while expanding capacity by 12%. The quality of LATAM's revenues also play an important role. Premium demand continued to demonstrate greater resilience than the broader market, allowing the group to implement fare adjustments while preserving passenger preference across the network. Let's jump now to Slide 6 to take a better view at this. LATAM's resilient revenue quality was particularly evident in 2 areas that continue to deliver exceptional results for the group, Premium traffic and the LATAM Pass ecosystem. In a quarter as challenged as this one, these 2 elements once again proved to be especially valuable because they make up a part of the LATAM customer base that is structurally less elastic and more resilient. On the Premium side, demand remained strong and continue to enhance the quality of the group's revenue mix with Premium revenues now representing 29% of the passenger revenues and growing at a rate faster than main cabin revenues. More importantly, this segment continued to respond positively to the differentiated value proposition LATAM has built over time and reflected in Net Promoter Score that remained 3 points above the overall passenger average in line with historically high levels. This confirms that the investments made in product and services continue to strengthen customer preference. LATAM Pass also remained a key lever during the quarter. The program continued to deepen customer engagement and strengthen loyalty across the network while supporting a more resilient and higher-quality revenue base. Over time, LATAM Pass has evolved well beyond the traditional frequent flyer program into a broader engagement ecosystem, allowing the group affiliates to strengthen their customers' relationship both in and beyond the travel experience. Today, more than 67% of passenger revenues are generated by LATAM Pass members, up from 60% previously, reinforcing the group -- reinforcing the growing importance of the program within the commercial ecosystem. The engagement of Elite members also continues to deepen. While the numbers of Elite members increased by 26% year-over-year, third-party sales generated by this segment grew 48% compared to the same period of 2025, highlighting the increasing relevance of these customers across the board, the broader LATAM Pass ecosystem and their growing engagement with the partner network. Altogether, the trust in the LATAM brand by customers, the alignment with the Premium customers and the LATAM Pass ecosystem help explain why LATAM affiliates were able to preserve revenue quality and successfully pass through a significant portion of higher fuel costs during the quarter. More importantly, they represent the strategic pillars that create value across the cycle, not only strengthening the group's resilience during the periods of heightened volatility, but also structural growth, drives that, will continue to support LATAM's Group commercial performance as the operating environment improves over time. Let's move to the Slide 7. The differentiated value proposition we just discussed is not only reflected in Premium and LATAM Pass, it is the result of several complementary elements working together with the network playing a central role. The incorporation of the Embraer E2 split is a key enabler of this strategy, allowing LATAM Group to further strengthen its Premium offer, expanding connectivity and open new sources of profitable growth. The entry into service initiatives are advancing positively and are on track. The first aircraft have already been manufactured, cabin certification is currently underway, and the seventh aircraft is already in production. LATAM Airlines Brazil expects to receive the first 12 aircraft between October and December on this year with commercial operations confirmed to begin on November 3, 2026. The network will increase capillarity while further strengthening LATAM Airlines Brazil connectivity. The initial deployment will cover a total of 42 domestic routes within the Brazilian market, which includes 8 new routes, 4 connecting Guarulhos with the new destinations of Cabo Frio, Ji-Parana, Rondonopolis and Macae, enabling LATAM Airlines Brazil to expand into markets that were previously not part of its network and 4 additional routes linking existing bases. These aircraft provide the flexibility to expand the group's connectivity across Brazil, increasing capillarity and broadening access to regions with attractive corporate and leisure demand profiles while creating new opportunities. Altogether, LATAM Airlines Brazil will reach a total of 67 domestic destinations, the largest network in its history compared to 44 in 2019. Looking ahead, the airline is also evaluating up to 18 potential new bases for the next phase of its Embraer E2 expansion as an additional aircraft are delivered beginning early 2027. Beyond the domestic market, while this network expansion significantly enhanced connectivity within Brazil, the strategic value goes well beyond domestic travel. By connecting smaller regional markets into the main focus cities, the Embraer E2 will provide customers with access to LATAM's Group extensive network across South America and the 4 continents served by the group. That increases the connectivity of overall network, broaden LATAM Group's addressable market and further enhance the group's value proposition. From a product perspective, the Embraer E2 will feature both the economy and premium economy cabin, reinforcing consistency across the fleet and preserving the differentiated experience that LATAM Group customers expect. Even with a differentiated aircraft configuration, the group will continue delivering a consistent product standard so that a new aircraft type does not mean a different customer experience. Overall, the incorporation of the Embraer E2 is not only about adding aircraft, it's about reinforcing the network, improving connectivity through a more efficient and versatile aircraft and continue to build on the differentiated value proposition that LATAM Group has developed across the region. Moving on to Slide 8. Let's get back into the quarter's performance and take a look on the cash generation. The group's strong operating performance continued to translate into solid cash generation during this quarter. LATAM generated $476 million in adjusted operating cash flow, even considering the impact of high jet fuel prices, once again, demonstrating the business ability to consistently convert earnings into cash. As a result, the group generated a positive cash -- change in cash, close to $150 million before dividend payments and ended the quarter with a positive net cash variation of $110 million. It's worth noting that the dividend payments correspond only with the remaining balance required to complete the mandatory 30% dividend distributed based on 2025 net income. As you may recall, LATAM had already distributed $400 million in interim dividends during the fourth quarter of 2025 with this payment simply reflecting the final remain. This consistent cash generation remains one of the LATAM's key pillars, providing the financial flexibility to continue investing in the business, strengthening the balance sheet and executing the group's long-term strategy. Moving on to Slide 9, see how this translates into continuing strengthening the balance sheet and level of liquidity. The group closed the quarter with liquidity of more than $4.2 billion, equivalent to 26.2% of last 12 months revenues. On the leverage side, adjusted net leverage remained at 1.5x, comfortably below the company's financial policy target and consistent with the planned capital management that has characterized LATAM over the last several years. This liquidity and net leverage position, together with management's perception that the stock is undervalued at the current prices, supported the Board's decisions to propose a new share repurchase program, which was approved by shareholders early this week. The new program contemplates a duration of no more than 5 years and allows for the repurchase of up to 5% of the company's total subscribed and paid shares. With these, shareholders have delegated to the Board of Directors the authority to determine the terms of the program's execution, including its time, mechanisms, pricing and other relevant conditions. With this, we remain confident that the strength and fundamentals of LATAM business model, the commercial strategy and execution capacity, both commercially and operationally, combined with the strength of the capital structure, maintain the solid foundations of the aspiration contained in the financial policy. The policy which considers the preservation of liquidity ratios between 21% and 25% and a net leverage below 2x, allow us to continue on the path of improving LATAM's credit ratings. Now let's move to the Slide #10. Following the second quarter and as also -- as Roberto mentioned, we see a more constructive outlook for jet fuel prices over the remainder of the year. LATAM is updating its full year guidance for 2026, reincorporating the full set of metrics, including capacity with year-over-year growth between 9% and 10% and revenue projections between $17.3 billion and $17.7 billion, among others. The updated guidance reflects a more constructive backdrop for the remainder of the year than the one anticipated when the prior guidance was issued, particularly with respect to fuel prices. Based on the assumptions incorporated today, LATAM expected the second quarter to have represented the most challenged operating environment of the year. As the group enters a seasonally stronger second half of the year under more favorable fuel assumptions, the updated outlook also incorporates what LATAM demonstrated during the quarter, its ability to execute with discipline and deliver solid results even under challenging conditions. Turning first to the assumptions behind the updated guidance. In the prior guidance, LATAM assumed an average fuel price of $170 per barrel for the third quarter and $150 for the fourth quarter. Today, reflecting the evolution of the market, the company now expects average fuel prices of $147 per barrel in the third quarter and $130 per barrel in the fourth quarter. Based on these updated assumptions, LATAM now expect adjusted EBITDA between $4.1 billion and $4.4 billion, improving the midpoint of the prior guidance by $250 million. Passenger CASK ex fuel is expected to remain in line with the prior guidance between $0.045 and $0.047 as the assumption of BRL exchange rate stayed at the same level of BRL 5.15 per dollar. In terms of the balance sheet, liquidity is expected to end the year of at least $4.7 billion, while adjusted net leverage is projected to be equal to or below 1.6x. Overall, the updated guidance reflects a business that has multiple levers to deliver results, and that's now supported by a more constructive macroeconomic backdrop despite the level of uncertainty and the fuel price volatility. Lastly, let's move on to Slide 11 for a few closing remarks. First, the second quarter did not change our strategy. It validated. In one of the most challenging operating environments in recent years, LATAM once again demonstrated that the business has built and planned to perform across different macro and market conditions with now even more solid and tested foundations. Second, the group showed that it has multiple levers to deliver results. Effective execution, commercial flexibility and the group diversified ecosystem allowed LATAM to preserve profitability, increase unit revenues and mitigate a substantial portion of the fuel shock. Third, the high level of trust from customers and the quality of the group's revenues base continued to be among LATAM's key elements. Premium customers in LATAM Pass ecosystem once again supported by a more resilient demand profile, allowing the group to preserve revenue quality even at significantly higher fare environment, holding a profitable growth strategy, combining capacity increase with healthy load factor levels. And finally, LATAM is updating its full year guidance for 2026 to reflect a more constructive outlook for the remainder of the year, having demonstrated the ability to deliver solid results during what we expect to have been the most challenging quarter of the year, the group now enters a more favorable operating backdrop while remaining focused on disciplined execution, risk and revenue management. Thank you, and let's open the line for the questions. Operator: [Operator Instructions] Your first call comes from Michael Linenberg from Deutsche Bank. Michael Linenberg: Well done, the fact that we're now back to an EBITDA guide for the year that is within spitting distance of where you were prior to the war even beginning. So well done on the revenue recapture, revenue recovery. I have 2 questions here. Just more specifically on the International, where the PRASK was up just under 13%. Can you just give me a better feel for how that looked via geography? And I don't care about Oceania or Africa. I care more about Europe, North America and just regional, how those may have differed the trends in those various key markets? Roberto Alvo Milosawlewitsch: Mike, thanks for the comments. Yes, across the board, International was solid. In the previous quarters, I mentioned that we saw a little bit of weakness from South America to the U.S. linked at some point in time with potential visa restrictions also with the announcements and policies of the U.S. government in general. We have seen, I would say, a little bit of an improvement in those lines vis-a-vis what we had seen in previous quarters. Europe remains very solid. We had a little bit of a slowdown in demand generally for the World Cup, actually a little bit more than what we expected. We know that these events always have a little bit of an impact. And this, I think, also had some impact on the second quarter results, otherwise probably would have been a little bit better. But regardless of that, the demand remains very solid. In the regional, I would divide it into, I would say, that Argentina is a little bit slower, and this is probably a function of the economic situation of Argentina at this point in time. It was very, very strong in the beginning of the year. So a little bit weaker in that sense. The northern part of South America is in a good place. But I wouldn't mark any specific large concerns with respect to how we're seeing international demand. And Oceania, even though you don't want to hear, it's also in a good place. Michael Linenberg: Okay. Good. Okay. And then just my second question to Ricardo, I did see that you took a tax credit in the quarter. What drove that? And what's a good tax rate that we should use for the back half of 2026? Ricardo Dourado: Michael, that mentioned in the tax credit, it's -- I call a regular business as usual situation because remember that we have a different tax environment in each country. So in some country, we could have, in some moment, some additional provisions or some tax credits that could take in some local administrative or even the judicial decision. So that was the reason that we have that situation today in one affiliate. And I think the best way to see, Michael, because I mentioned, there is not a one-off itself, I think it's to have last 12 or 24 months' average tax rate, and I think it could be a good driver for you. [Audio Gap] Guilherme Mendes: Can you hear me? Roberto Alvo Milosawlewitsch: Now we can hear you, yes.. Guilherme Mendes: Okay. Yes, sorry, it was mute for me. My question is if you think about 2027, now that the visibility is gradually improving. And looking at your fleet plan, the average number suggests that fleet should be increasing by mid- to high single digits into next year. Just wondering if that's a fair assumption for capacity growth into 2027. And think about this yield environment that we are seeing given the fuel spike, is it fair to assume that once fuel comes down, LATAM and the rest of the industry should be able to keep most of that price increases that we saw throughout 2026 for 2027? Roberto Alvo Milosawlewitsch: Thank you, Guilherme. Let me see if I understood your fleet question correctly. So yes, we have on the fleet plan, that increase in fleet that you see in 2027. Do remember that we're receiving a significant number of Embraers in the last 2 months of the year. So even though the count for the end of the year of 410 accounts for a dozen Embraers, they basically will not fly almost anything in 2026. So we'll see the impact of the Embraer fleet most significantly in 2027. We haven't finalized our capacity plans for 2027, so we don't have a figure for you. But we have the potential of growing significantly with this part of the fleet. And also remember that we have a number of old aircraft that we have decided to keep these 319s that are the flexibility that we have downwards in case of need. Regarding your fare question for 2027, I mean, I would love to know -- I'd love to have a crystal ball here. I think that the comment here is demand is strong and stable. Premium revenues are growing. We see a lot of premium leisure. We see a lot of corporate. Ultimately, I think that the fare environment in 2027, let's assume that fuel goes down to something that looks a little bit more like '24 or 2025, it will end up being, I guess, a function of industry capacity probably. But what we have seen in the past is that normally, you see fares sticking a little bit longer when they're high before coming down and going the other way around. But let's see how the environment behaves for the time being and for the rest of the year, we have a good outlook in terms of demand and the capacity we are deploying matches well what we believe is what we can serve and what the passengers want to fly for the remainder of the year. Operator: Your next call comes from the line of Andre Ferreira with Bradesco BBI. Andre Ferreira: Andre from Bradesco. I have 2 here. So one is recently the Brazil Development Bank approved the credit for airlines using the civil aviation fund at attractive rates. My question is if you plan on using it? And what's the latest on when the credit will actually be disbursed? And my second question, in the guidance, we kind of raised domestic Brazil ASK guidance to 8% to 9%. I'm saying raised compared to the December guidance, right? While cutting domestic Spanish-speaking countries to 4% to 5%. Looking at RASK in the 2 regions year-over-year, they are somewhat similar. So my question is if it's better relative demand trend, capacity discipline by competitors, fuel-driven economics. So what was the driving force in that decision? Roberto Alvo Milosawlewitsch: Sorry, the audio was quite bad. So I think we understood your questions. So the first one regarding FNAC, I'll pass it to Ricardo, and I'll take the capacity question on the domestic Brazil for the guidance. Ricardo Dourado: Okay. Regarding FNAC, I think it was public that was a line of credit provided to the Brazilian airlines. So we are taking part of the access of that line of credit. And yes, we are still having some ongoing conversations with the BNDES in terms of the ways that we should execute that line. But so far, it's the information we have in terms of the line available for the entire market in Brazil until the end of this year, okay? Roberto Alvo Milosawlewitsch: Regarding capacity for domestic Brazil, and I think I understood you were comparing it to the guidance for domestic Spanish-speaking countries. Remember again that we have the Embraer fleet coming into domestic Brazil specifically. So we're accounting for that in the guidance. We see very healthy demand in Brazil in general. We see a number of opportunities to continue growing our network, as it was explained before. Domestic Brazil capacity is a little bit higher in this guidance than what we published in the beginning of the year when we gave the first outlook of 2026. This is basically a function of the robustness that we see in demand and the solidity of our network and our presence in Brazil. Also remember that our fleet has a lot of flexibility. So we can move capacity around within the network and the current spread of capacity that you see between Spanish-speaking and Brazil is basically a function on where we see the opportunities. I think it's fair to say, finally, on domestic Spanish-speaking that we are seeing a little bit of a weak domestic Chile environment. Actually, the economy hasn't grown for the last 6 or 7 months, if you see the reports on the economy altogether. And that has a little bit of an impact on the average that we see in Spanish-speaking. The position we have in domestic Chile is very healthy, still 65% market share. But the outlook still is positive for the remainder of the year. I hope we answered your questions because we [indiscernible], okay? Andre Ferreira: Yes. Sorry for the audio, but you answered it perfectly. Operator: [Operator Instructions] Your next question comes from Jens Spiess from Morgan Stanley. Jens Spiess: Congrats on the results considering the challenging environment, quite impressive. So I just -- I have 2 questions basically. One, on your hedging and the hedging results for the quarter. You had a negative fuel-hedging results. So just trying to understand like how to forecast it into the future? Because at the end of the day, I do understand that your hedging strategy protects up to a certain range, but we're still a bit surprised to see like a negative result on that line specifically. And just want to have a better understanding on how we can do a better job in forecasting that line going forward. And also considering that you're now incorporating more like downside protection without limits. And my second question goes to, in general, like the Brazilian market environment, how are you seeing the competitive environment evolving, not just in terms of capacity, but prices? I mean you've been very successful in raising prices. So just wondering what's your like sense of how things are heading? Ricardo Dourado: Thank you, Jens. It's Ricardo speaking. Remember that the last quarter, we have disclosed that we have hired some additional calls together with the collars, the traditional collars that regular LATAM used to protect against the fuel price volatility. And after all the negative impact on this quarter came from the premiums that we pay for those calls. And because of the positive evolution in terms of prices, we have a relevant concentration about the negative impact from the premiums, much more than the positive impact that will come from the settlement of the hedge. And also, if you see the disclosure that we have for the next quarter, we have close to 8% of the protection in terms of volumes for Q3 in terms of calls. That was also higher at the beginning of the crisis. So everything that you should project is connected with this, the level of calls that we used to have in the Q2 was higher than the level of calls that we have for Q3. And because of that, the level of premium should be lower. That's the way that you should forecast. And yes, we do see and continue to use the collars. In some ways, we could widen the ranks in terms of protection to capture more protection in terms of that four-way structures under the same hedge policy. So we just now need to wait and see the market conditions to understand the way that we should move forward. Roberto Alvo Milosawlewitsch: Okay. Regarding your question on the competitive environment in domestic Brazil, 2025, domestic Brazil out of the 10 largest domestic market in the world was the one that grew the most. And this year, the trend despite of the fuel situation continues. So in general, we see a good development of the market. We have taken a leading position on the most important market in Brazil, which is Guarulhos Airport. Today, our relative frequency share in that airport is around 2.5x versus the second. And also remember that Guarulhos is basically the entry point for international travel to Brazil, 65% of international capacity to Brazil flies into the airport. So today, the combination of the hub we have in Guarulhos together with Brasilia and our hub in the Northeast in Fortaleza and the presence we have in Congonhas are a very solid footprint with respect to how we can serve the Corporate business and the Leisure business in Brazil. And of course, this is going to be reinforced with the addition of the routes that Ricardo talked about on the E2s. Capacity in the market is in the high single digits if you account for everybody here. But what we see in terms of capacity is, I would say, a level consistent with the dynamism of the domestic market in Brazil. So in general, we have a good and positive outlook for the remainder of the year for the Brazilian market. Operator: Your next question comes from the line of Filipe Nielsen with Citi. Filipe Ferreira Nielsen: I do just have one question regarding the E2 strategy. I think it was quite clear about this first phase on how you're deploying the aircraft, what are routes and et cetera. I just wanted to understand a little bit better the strategy behind choosing the markets and choosing the routes here. Is it a strategy more focused on opening new markets? Or are you targeting any specific gaps or regions that should enable more feed for your main cabin or international? How is the strategy behind choosing the markets? And a follow-up to this one. Just wondering how are you seeing the profitability and -- regarding CASK and the margin profile compared to the other aircraft and the other routes that you're already serving in the country? Roberto Alvo Milosawlewitsch: Thanks. So on the Embraer, let me separate for a second existing routes with new routes. So on existing routes, the E2 allows us to do 2 things. One is to rightsize the aircraft to the demand on specific times of the day where probably the A320 is a little bit big for that particular time of the day. So we're, in some cases, replacing frequencies of A320s with frequencies of E2s. The second thing we can do on those existing routes is add new times on parts of the day where the demand is a little bit lower. So we -- what you're seeing in some routes is more frequencies than the ones that we would have with only A320 specific fleet. So this improves the product on those routes. And then on new routes, you have kind of 2 possibilities. One is operate airports where the E2 from an operational perspective can fly and the 320 or the 319 cannot fly just because of airport infrastructure runway, whatever. And two, airports where we do operate today with the A320 fleet and A319s in particular, because -- but because these are less efficient, they're older aircraft and heavier aircraft, the economics of operating E2s is much better than the economics of operating 319. So those are the drivers on how we deploy E2s across the network, whether it's for current routes or for new routes. We haven't yet flown the E2, so I can't give you a sense of the reality of the operation, but we're very confident on it. It looks like a great airplane. We have seen the experience of other operators, all of them very happy. So we are actually very excited, anxious for November to arrive and have our first flight with the Embraer planes in Brazil. That was the first question. What was the second question? Filipe Ferreira Nielsen: No, the second one was regarding the economics, but I think it was already answered. Operator: Your next question comes from the line of Gabriel Rezende with Itau Bank. Gabriel Rezende: Two questions here on our side. So just if you could remind us a little bit more about the company's dividend policy. And also how you're thinking about shareholders' remuneration when you're deciding between share buybacks versus dividend announcements. Just trying to understand what's the possibility here for the coming quarters on top of the share buyback you have already announced. And also on a second point here, it's a little bit tricky for us to calculate what's your actual CASK growth because of all the different FX components into the equation. So just trying to understand how are you seeing operational leverage improving and potentially diluting CASK as we look into this capacity expansion you're planning for the coming quarters under cost and FX? Roberto Alvo Milosawlewitsch: Okay. Do you want to take the CASK and I take the -- So we have a shareholders meeting on the 3rd approving a buyback for up to 5% of our shares. Remember that in Chile, buybacks need to be first approved by the shareholders, and they have certain limits. You can only buy up to 5% and you have up to 5 years eventually to buy the shares. So what we actually approved was the program. Now the Board has the ability to take the decision on how to execute on this program. And I think that the important line here is we first prioritize the growth of the business. And if we see profitable growth that makes sense for what we're doing, that's the first priority. On top of that, we look at the financial policy. And that we meet the guidance of the policy that you know well. And any excess cash after these 2 points is for consideration in terms of capital allocation. And now with the buyback, we have another 2. So we have dividends, and we have now this, we also look at re-profiling eventually or changing the debt. So as the weeks and months progress and we have a better outlook of the next quarters and years, the Board will have the ability to eventually execute on the buyback -- share buyback program. Maybe an important just addition to this is the Chilean stock exchanges, they revamped and what is the word probably make more current, the procedures in terms of how to buy shares. It was a little bit cumbersome. We had to wait at least 20 days. I mean the whole process was a little bit more complicated. Now it's much more streamlined. It looks a little bit more like what the U.S. does. So that, I think, increases the ability of companies in general in Chile to execute on those programs because the procedure is simpler than what it was in the past. Ricardo Dourado: Gabriel, it's Ricardo. Regarding your question about CASK and because we are not providing any guidance for next years, I will try to answer your question regarding 2 different considerations. Yes, we do have an impact from the inflation and escalation over the cost that we have, but we also have the operational leverage that we could dilute part of this increase in terms of cost with the capacity and the way that we manage our business through an efficient agenda. But remember, if you see the way that we updated the -- actually, the guidance for this year for CASK ex fuel passengers, it's almost the same that we updated last time in Q1, but was higher than the original guidance that we disclosed to the market late on December, but mainly because the change in the FX assumption. So it's also important to bear in mind that you have to also have your forecast for the FX assumption that could have an impact. And still not answer your question for the future, but the way that you could take some driver, not as a guidance. If you see the level of CASK from the group since 2019, we are having a very intense agenda in efficient way and also through digitalization and all leverage that we could take to hold and that capacity to hold the same level of CASK for years and years mean more than 6 years. So having said that, I think it's fair to think that we are working hard to hold the cost as a real advantage for the group. Roberto Alvo Milosawlewitsch: And just one additional clarification because you asked about the mix of currencies. We have, of course, cost in Chilean pesos, in soles in Peru, in Colombian pesos and so on. But the real one that matters is the Real. And this is why when we provide guidance, we basically focus there. So I think that you can simplify the model by assuming that the Real is what matters in terms of FX changes in the cost. The others are relatively small. They're not very significant. So as Ricardo said, a significant amount -- a significant -- most significant portion, almost all of the difference between the guidance we gave in December and the guidance we have today, the change in the cost ex fuel is related to the appreciation of the Real. So that gives you, I think, one data point in terms of how to model this. Ricardo Dourado: And sorry, just another side comment. Don't forget to also look the impact from this FX situation over the RASK because we also have an impact from this variation in terms of FX over the RASK. And after all, it's important to see the evolution of RASK and the CASK. Roberto Alvo Milosawlewitsch: And that's why we provide the 2 figures in terms of RASK in domestic markets. Operator: [Operator Instructions] Your next question comes from Joao Frizo with Goldman Sachs. João Francisco Frizo: I have a quick follow-up on the guidance for leverage. You guys mentioned you're expecting leverage to be below 1.6x for the year-end. Just wanted to hear your thoughts on what's the leverage, excluding the planes that are expected to come in towards the end of this year. Leverage comes first, right? And then EBITDA comes afterwards. So I just wanted to hear about what's leverage without the planes that are only going to generate EBITDA towards the end of this year, beginning of 2027. Ricardo Dourado: Okay. Thank you. I think we're not providing any guidance in terms of the breakdown that you are asking, but I think it's important to mention that all -- and it doesn't matter in the way that we decide to finance the fleet, if it's going to be through finance lease or operating lease. After all, it's everything accounted as debt. And I think it's also important to notion that -- to note that this updated guidance to be below or equal to 1.6x, it's also including our decisions to finance the fleet and when we will finance the fleet. And also in the earnings release, you can see that we have added some additional facilities in this quarter. And also, it's included in the net leverage and the way that we are forecasting the leverage. But I think it's complicated to split that level of leverage, not including, but it's quite easy to make the calculation having a list of debt that we have in the attachment of the earnings release. I don't know if I help you, but that's the way that I should answer your question. Operator: There are no further questions at this time. I will now turn the call back to Ricardo Bottas for closing remarks. Ricardo Dourado: Thank you all again for participating in today's call. And if you have any further questions, please reach out to our Investor Relations team. Thank you again, and have a nice day. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. LATAM Airlines (LTM) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in LATAM Airlines Group S.A.? Here are five stocks we like better. LATAM remained profitable despite a severe fuel-cost shock: Fuel prices rose more than 80% year over year and fuel expense increased 93%, but revenue grew nearly 28% to about $4.2 billion and the adjusted operating margin reached 5.4%. The airline is expanding its Brazilian network and regional capacity: LATAM Brasil will receive its first 12 Embraer E-Jet E2 aircraft in late 2026, supporting 42 domestic routes and potentially up to 18 new bases from 2027. LATAM raised its 2026 outlook and authorized a buyback: The company now expects $4.1 billion-$4.4 billion in adjusted EBITDA, $17.3 billion-$17.7 billion in revenue and 9%-10% capacity growth, while its board approved repurchases of up to 5% of shares. Viasat: Why a Wall of Cash Has Shorts Running for Cover LATAM Airlines Group (NYSE:LTM) reported second-quarter 2026 results that remained profitable despite what management described as one of the airline industry’s sharpest recent increases in jet fuel prices. Chief Executive Officer Roberto Alvo said the all-in impact of higher fuel prices exceeded $700 million during the quarter. Even so, the company posted an adjusted operating margin of 5.4%, at the higher end of management’s prior expectation for a mid- to low-single-digit margin in the period. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling “The second quarter of 2026 was an important demonstration of the resilience of LATAM Airlines Group’s business model,” Alvo said, citing the company’s passenger, cargo and loyalty businesses, commercial initiatives, cost structure and balance sheet. Chief Financial Officer Ricardo Bottas said LATAM’s average fuel price, including hedges, rose more than 80% year over year in the second quarter. Total fuel expense increased 93%, creating a substantial cost headwind. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High LATAM responded with revenue-management actions and targeted capacity adjustments. Total revenue rose nearly 28% from a year earlier to almost $4.2 billion, led by a 28% increase in passenger revenue. Cargo revenue increased nearly 22%, supported by higher yields and growth in transported tons. The company increased consolidated capacity 8.9% year over year while maintaining an 81.8% load factor, down from 83.5% in the prior-year period. Consolidated passenger revenue per available seat kilometer, or RASK, increased 17.5%. → No Hangover: Revisiting Microsoft One Week After Earnings Adjusted costs excluding fuel increased 14%, which Bottas said was broadly consistent with the expansion of the operation. Passenger cost per available seat kilometer excluding fuel remained sequentially stable at $0.045. LATAM generated net income of $125 million and adjusted operating cash flow of $476 million. The company said it produced a positive cash change of nearly $150 million before dividend payments and ended the quarter with a positive net cash variation of $110 million. Management said premium traffic and the LATAM Pass loyalty ecosystem helped preserve revenue quality during the period of higher fares. Premium revenue represented 29% of passenger revenue and grew faster than main-cabin revenue, according to the company. More than 67% of passenger revenue was generated by LATAM Pass members, up from 60% previously. The number of elite members increased 26% year over year, while third-party sales generated by those members rose 48%. During the question-and-answer session, Alvo said international demand was solid broadly, with some improvement on South America-to-U.S. routes after prior weakness tied to potential visa restrictions and U.S. government policy announcements. He said Europe remained “very solid,” while Argentina was slower amid its economic environment. Demand in northern South America was in a good position, he added. Alvo also noted a temporary impact on travel patterns from the FIFA World Cup, particularly in June, which management said weighed on demand more than expected. LATAM Airlines Brasil expects to receive its first 12 Embraer E-Jet E2 aircraft between October and December, with commercial operations scheduled to begin Nov. 3. The initial deployment is planned to cover 42 domestic Brazilian routes, including eight new routes. The new routes include four connections from Guarulhos to Cabo Frio, Ji-Paraná, Rondonópolis and Macaé, as well as four additional routes between existing bases. LATAM said the expansion will bring its Brazilian domestic network to 67 destinations, compared with 44 in 2019. Alvo said the aircraft will enable the company to right-size capacity on existing routes, add frequencies at times with lower demand and serve airports where Airbus A320-family aircraft may be less suitable because of infrastructure limitations. The airline is evaluating as many as 18 potential new bases for the next stage of E-Jet expansion beginning in early 2027. In Brazil, management said it sees healthy domestic demand and a favorable competitive environment. Alvo pointed to LATAM’s position at Guarulhos, where he said the company’s relative frequency share is about 2.5 times that of the second-largest operator. LATAM ended the quarter with more than $4.2 billion in liquidity, equal to 26.2% of last-12-month revenue, and adjusted net leverage of 1.5 times. Management said the balance-sheet position supported a newly approved share-repurchase program authorizing purchases of up to 5% of the company’s subscribed and paid shares over no more than five years. Alvo said the board will determine the timing, price and other terms of any repurchases. He said capital allocation priorities remain profitable growth and adherence to the company’s financial policy before any excess cash is considered for dividends, buybacks or debt-related actions. The company reinstated its full-year 2026 guidance and improved its outlook. LATAM now expects capacity growth of 9% to 10% and revenue of $17.3 billion to $17.7 billion. It forecast adjusted EBITDA of $4.1 billion to $4.4 billion, raising the midpoint of its prior guidance by $250 million. Third-quarter average fuel price assumption: $147 per barrel. Fourth-quarter average fuel price assumption: $130 per barrel. Passenger CASK excluding fuel: $0.045 to $0.047. Year-end liquidity: at least $4.7 billion. Year-end adjusted net leverage: at or below 1.6 times. Management said the outlook assumes a more constructive fuel-price backdrop in the second half, while emphasizing that fuel-price volatility remains elevated. Alvo said the company expects the second quarter to have been the year’s most challenging operating environment and is entering the seasonally stronger second half with continued focus on execution, capacity discipline and revenue management. LATAM Airlines Group SA is a Chilean-based airline holding company formed in 2012 through the merger of LAN Airlines of Chile and TAM Linhas Aéreas of Brazil. The Group offers passenger and cargo air transportation services across South America and beyond, operating under a multi‐brand strategy that encompasses several nationally recognized carriers. Headquartered in Santiago, Chile, LATAM is structured to serve diverse market segments with full-service, premium and low‐cost offerings. The core business activities of LATAM Airlines Group include scheduled domestic and international passenger flights, air cargo services and maintenance, repair and overhaul (MRO) capabilities through its technical divisions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "LATAM Airlines Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

LATAM Airlines Group S.A. (LTM) reported second-quarter 2026 earnings of 58 cents per share, which beat the Zacks Consensus Estimate of 14 cents by 314.3%. The bottom line declined 28.4% year over year. Revenues increased 27.6% year over year to $4.18 billion and surpassed the consensus mark of $3.85 billion by 8.6%. Passenger unit revenues climbed 17.5%, reflecting higher fares and strong yields despite an 8.9% capacity expansion. LATAM Airlines Group S.A. price-consensus-eps-surprise-chart | LATAM Airlines Group S.A. Quote Passenger revenues, accounting for 86.4% of operating revenues, grew 27.9% year over year to $3.61 billion. Premium demand remained strong and premium offerings contributed 29% of passenger revenues, up two percentage points from the first quarter. Passenger revenue per available seat kilometer, or PRASK, increased to 8.1 cents from 6.9 cents a year earlier. The increase reflected LATAM’s ability to implement higher fares while maintaining traffic growth across its network. Cargo revenues, representing 12.2% of the top line, increased 21.8% year over year to $510 million. Cargo yields rose 17.8% year over year, while cargo traffic improved 3.4%. The group transported 261,000 tons, up 1.9% from the prior-year quarter. Other income surged 63.9% year over year to $59 million, aided by growth at LATAM Travel and higher revenues from non-airline LATAM Pass products. Consolidated capacity, measured in available seat kilometers, increased 8.9% year over year to 44.5 billion. Passenger traffic rose at a slower rate, resulting in a 1.7-percentage-point decline in load factor to 81.8%. The company transported 21.1 million passengers, up 2.5% year over year. International capacity increased 11.8% year over year, while capacity in domestic Brazil and the domestic Spanish-speaking countries grew 5.7% and 5.3%, respectively. Total adjusted operating expenses increased 38.5% year over year to $3.96 billion, primarily because of higher jet fuel costs and network expansion. Aircraft fuel expense surged 93.1% year over year to $1.71 billion. The average all-in fuel price, including hedges, climbed 81.3% year over year to $194.50 per barrel, while consumption increased 6.8%. Consequently, adjusted operating income declined 46.3% year over year to $227 million and adjusted operating margin contracted 7.5 percentage points to 5.4%. LATAM Pass reached 56 million members, representing growth of 9% year over year. Elite membership increased 26%, while sales to elite members through third parties rose 48% year over year. LATAM Pass members generated 67% of passenger revenues during the quarter. The loyalty program, premium offerings and integrated cargo operations helped the company maintain profitability despite the sharp increase in fuel prices. LTM generated adjusted operating cash flow of $476 million during the quarter and ended June with cash and cash equivalents of $2.65 billion. Including $1.58 billion in undrawn revolving credit facilities, total liquidity was $4.23 billion. Adjusted net leverage remained at 1.5 times. LATAM received nine aircraft during the quarter and ended the period with 383 aircraft, comprising 363 passenger aircraft and 20 cargo freighters. LATAM raised its 2026 adjusted EBITDA guidance to $4.10-$4.40 billion from the previous forecast of $3.80-$4.20 billion. The updated outlook assumes jet fuel prices of $147 per barrel in the third quarter and $130 in the fourth quarter. The company expects 2026 revenues of $17.30-$17.70 billion (prior view: $15.5-$16.0 billion) and total capacity growth of 9%-10% (prior view: 8-10%). Adjusted operating margin is projected to be in the range of 12%-13% (prior view: 15%-17%), while adjusted levered free cash flow is expected to be at least $1.30 billion. Currently, LATAM Airlines carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Delta Air Lines (DAL) reported second-quarter 2026 earnings (excluding 88 cents from non-recurring items) of $1.56 per share, beating the Zacks Consensus Estimate of $1.51. Earnings declined in double digits (% wise) from a year ago as sharply higher fuel costs pressured profitability. Revenues rose on a year-over-year basis to $17.67 billion but missed the consensus estimate of $17.76 billion. Broad demand strength lifted adjusted total revenue per available seat mile, or TRASM, 12.4%, while premium and diversified revenue streams continued to expand. United Airlines Holdings, Inc. (UAL)reported second-quarter 2026 adjusted earnings of $1.99 per share, down 48.6% year over year but above the Zacks Consensus Estimate of $1.92 by 3.7%. Operating revenues rose 16% to $17.67 billion and were essentially in line with the $17.68-billion consensus mark. A 12.1% increase in total revenue per available seat mile, or TRASM, and broad-based gains across premium, loyalty and cargo revenues supported the top line despite sharply higher fuel costs. J.B. Hunt Transport Services, Inc. (JBHT) reported second-quarter 2026 earnings of $1.91 per share, up 45.8% from $1.31 a year ago. The figure beat the Zacks Consensus Estimate of $1.71 by 11.7%. Operating revenues climbed 19.4% year over year to $3.50 billion and surpassed the consensus mark of $3.19 billion by 9.5%. Higher volumes and pricing across several businesses supported growth, led by a 10% increase in Intermodal loads. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, LATAM (LTM) reported revenue of $4.18 billion, up 27.6% over the same period last year. EPS came in at $0.58, compared to $0.81 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $3.85 billion, representing a surprise of +8.57%. The company delivered an EPS surprise of +314.29%, with the consensus EPS estimate being $0.14. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how LATAM performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Passenger - ASKs: 44.49 billion versus 44.51 billion estimated by two analysts on average. Passenger - RPKs: 36.39 billion versus 36.81 billion estimated by two analysts on average. Passenger Load Factor (based on ASKs): 81.8% versus 82.7% estimated by two analysts on average. Cargo Yield based on RTKs: 44.50 Cents compared to the 37.88 Cents average estimate based on two analysts. Passenger Revenues per ASK: 8.10 Cents compared to the 7.48 Cents average estimate based on two analysts. Cargo - ATKs: 2.16 billion compared to the 2.17 billion average estimate based on two analysts. Cargo Load Factor (based on ATKs): 53.1% compared to the 53% average estimate based on two analysts. Passenger Yield based on RPKs: 9.90 Cents versus the two-analyst average estimate of 9.04 Cents. Revenue- Passenger: $3.61 billion versus $3.33 billion estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +27.9% change. Revenue- Other income: $59.14 million compared to the $65.23 million average estimate based on two analysts. The reported number represents a change of +63.9% year over year. Revenue- Cargo: $510.01 million versus the two-analyst average estimate of $434.55 million. The reported number represents a year-over-year change of +21.8%. View all Key Company Metrics for LATAM here>>> Shares of LATAM have returned -5.1% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. LATAM Airlines Group SA (NYSE:LTM) delivered a profitable quarter with an adjusted operating margin of 5.4% and a positive net income of $125 million, despite facing one of the sharpest increases in jet fuel prices in recent years. The company successfully mitigated the impact of a 93% increase in total fuel costs by increasing total revenues by almost 28% year-over-year, driven by strong passenger and cargo revenue growth. Premium segment demand remained resilient, with premium revenues now representing 29% of passenger revenues and growing faster than main cabin revenues, allowing for fare adjustments without losing customer preference. The LATAM Pass ecosystem continued to strengthen, with more than 67% of passenger revenues now generated by members (up from 60%), and third-party sales from elite members growing 48% year-over-year. The company reinstated and improved its full-year 2026 guidance, raising the adjusted EBITDA midpoint by $250 million to between $4.1 billion and $4.4 billion, reflecting a more constructive fuel price outlook for the second half of the year. LATAM Airlines Group SA (NYSE:LTM) maintained a strong balance sheet with liquidity of over $4.2 billion (26.2% of last twelve months' revenues) and adjusted net leverage at 1.5 times, comfortably below its financial policy target. The company generated $476 million in adjusted operating cash flow during the quarter, demonstrating its ability to consistently convert earnings into cash even in a challenging environment. The incorporation of the Embraer E2 aircraft is on track, with commercial operations in Brazil set to begin on November 3rd, 2026, which will expand the network to 67 domestic destinations, the largest in its history. The Board approved a new share repurchase program, allowing for the repurchase of up to 5% of the company's shares, reflecting management's confidence in the business and its view that the stock is undervalued. The company faced an unprecedented increase in jet fuel prices, with the average fuel price rising over 80% year-over-year, resulting in a 93% increase in total fuel costs and creating a significant cost headwind. Consolidated load factors declined modestly from 83.5% to 81.8% year-over-year, and the company noted a temporary negative impact on demand in June due to the FIFA World Cup affecting travel patterns across South America. The company incurred a negative fuel hedging result in the quarter, primarily due to premiums paid for call options, which negatively impacted financial results. The domestic Chile market is experiencing weakness, as the economy has not grown for the last six to seven months, which has had an impact on the average performance in Spanish-speaking domestic markets. The company's cost ex-fuel increased by 14% year-over-year, partly due to costs linked to higher passenger fares and the appreciation of local currencies, particularly the Brazilian real, which pressures the dollar-denominated cost base. Management remains cautious about fuel price volatility, noting that significant swings in jet fuel prices have continued and they do not expect price volatility to decrease during the remainder of the current quarter. The company noted a slowdown in demand from Argentina, which is likely a function of the country's current economic situation, following a strong start to the year. Warning! GuruFocus has detected 3 Warning Sign with LTM. Is LTM fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide a breakdown of the international passenger RASK performance by geography, specifically comparing Europe, North America, and regional markets? A: Roberto Alvo, CEO: International demand was solid across the board. We saw improvement in South America to the U.S. routes compared to previous quarters, which had been impacted by visa restrictions and U.S. government policies. Europe remains very solid. The FIFA World Cup had a temporary slowdown in demand, slightly more than expected, impacting Q2 results. Regionally, Argentina is a bit slower due to its economic situation, while the northern part of South America is in a good place. Oceania is also performing well. Q: What drove the tax credit taken in the quarter, and what is a good tax rate to use for the back half of 2026? A: Ricardo Bottas, CFO: The tax credit is a business-as-usual situation due to the different tax environments in each country where we operate. In some countries, we may have additional provisions or tax credits from local administrative or judicial decisions. It's not a one-off. The best way to model it is to use a 12 to 24-month average tax rate as a driver. Q: Given the improving fuel price visibility, is it fair to assume mid-to-high single-digit capacity growth for 2027, and can LATAM retain the fare increases once fuel prices decline? A: Roberto Alvo, CEO: We haven't finalized 2027 capacity plans, but we have significant growth potential from the Embraer E2 fleet, which will mostly impact 2027 since the first 12 aircraft arrive in late 2026. We also retain older A319s for downward flexibility. Regarding fares, demand is strong and stable, with premium revenues growing. Historically, fares tend to stick longer when they are high before coming down. The 2027 fare environment will likely be a function of industry capacity, but we have a good demand outlook for the remainder of the year. Q: Does LATAM plan to use the Brazil Development Bank (BNDES) credit line from the Civil Aviation Fund, and what drove the decision to raise domestic Brazil capacity guidance while cutting Spanish-speaking domestic capacity? A: Ricardo Bottas, CFO (on BNDES): We are taking part in accessing that line of credit and are in ongoing conversations with BNDES on execution. It's available for the entire Brazilian market until the end of this year. Roberto Alvo, CEO (on capacity): The higher Brazil capacity reflects the incoming Embraer E2 fleet and very healthy demand. We see opportunities to grow the network in Brazil. For Spanish-speaking domestic markets, we are seeing a weaker domestic Chile environment, as the economy hasn't grown in the last six to seven months, impacting the average. Our position in Chile remains healthy with a 65% market share. Q: Can you explain the negative fuel hedging results for the quarter and how to forecast this line going forward? Also, how is the competitive environment evolving in Brazil? A: Ricardo Bottas, CFO (on hedging): The negative impact came from premiums paid for additional call options we purchased alongside traditional collars. Due to the positive evolution in fuel prices, the premium costs outweighed the settlement gains. For Q3, we have lower call protection volumes (around 8%), so premiums should be lower. We continue to use collars and may widen the range for more protection. Roberto Alvo, CEO (on Brazil): The competitive environment is healthy. Brazil was the fastest-growing domestic market among the top 10 globally in 2025, and the trend continues. We have a leading position at Guarulhos, the main entry point for international travel to Brazil, with a relative frequency share 2.5 times the second player. Market capacity is in the high single digits, consistent with the market's dynamism, and we have a positive outlook. Q: What is the strategy behind choosing the routes for the Embraer E2 deployment, and how does its profitability compare to other aircraft? A: Roberto Alvo, CEO: For existing routes, the E2 allows us to rightsize aircraft to demand at specific times of day where the A320 is too large, and to add frequencies at lower-demand times. For new routes, we can operate at airports where the A320/A319 cannot fly due to infrastructure, and we can replace older, less efficient A319s with better economics. We haven't flown the E2 yet, but we are confident based on other operators' experiences. We are excited for the first flight in November. Q: Can you remind us of the dividend policy and how you decide between share buybacks and dividends for shareholder remuneration? A: Roberto Alvo, CEO: We prioritize profitable growth first. After that, we look at meeting our financial policy targets (liquidity between 21%-25% and net leverage below 2x). Any excess cash is considered for capital allocation. We now have a new tool with the share buyback program (up to 5% of shares over five years), in addition to dividends and debt reprofiling. The Chilean stock exchange has streamlined buyback procedures, making execution easier. The board will decide on execution as visibility improves. Q: How are you seeing operational leverage improving and potentially diluting CASK under constant currency as capacity expands? A: Ricardo Bottas, CFO: We have an impact from inflation and escalation on costs, but we also have operational leverage to dilute part of this increase through capacity growth and an efficient agenda. The guidance for CASK ex-fuel is nearly the same as Q1, but higher than the original December guidance, mainly due to FX assumption changes. Since 2019, we have held CASK at the same level for over six years through efficiency and digitalization. Roberto Alvo, CEO: The Brazilian Real is the main currency that matters for cost changes. Almost all of the difference between the December and current guidance is related to the Real's appreciation. You can simplify the model by assuming the Real is the primary FX driver. Q: What is the expected leverage excluding the new aircraft deliveries expected at the end of the year that will only generate EBITDA in 2027? A: Ricardo Bottas, CFO: We are not providing a breakdown of that nature. However, it's important to note that the updated guidance of leverage at or below 1.6 times includes our decisions on financing the fleet, whether through finance or operating leases. We have also added additional facilities this quarter, which are included in the net leverage forecast. It's complicated to split out, but you can calculate it For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Shares of LATAM Airlines Group (LTM have gained 8.1% since its first-quarter 2026 earnings release on May 5, 2026. LATAM Airlines reported solid first-quarter 2026 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Quarterly earnings of $2.01 per share beat the Zacks Consensus Estimate of $1.35 and improved 70.7% year over year. Total revenues of $4.15 billion beat the Zacks Consensus Estimate of $3.87 billion and grew 21.7% year over year, owing to a 24.4% increase in passenger revenues and a 3.4% increase in cargo revenues. For the first quarter of 2026, passenger and cargo revenues accounted for 88.2% and 10.1% of total operating revenues, respectively. LATAM Airlines Group S.A. price-consensus-eps-surprise-chart | LATAM Airlines Group S.A. Quote Total adjusted operating expenses grew 17.3% year over year, owing to the 10.4% capacity expansion and the appreciation of local currencies, mainly the Brazilian real (BRL), which strengthened by almost 10%, and the Chilean peso (CLP), which rose by 8%, versus the U.S. dollar. LATAM Airlines’ consolidated capacity (measured in available seat-kilometers or ASKs) grew 10.4% year over year, with a 13% year-over-year increase in revenue passenger-kilometers (RPK: a measure of air traffic). Since traffic growth outpaced capacity expansion, the load factor (percentage of seats filled by passengers) rose 2 percentage points to 85.3% in the reported quarter. The carrier transported 22.9 million passengers during the reported quarter, up 9.1% year over year, owing to the performance of the international segment and LATAM Airlines Brazil's domestic market. As of March 31, 2026, LATAM’s fleet had 375 aircraft, which includes 295 Airbus narrow-body aircraft, three Airbus wide-body aircraft under short-term leases, 57 Boeing wide-body aircraft and 20 Boeing cargo freighters. During the first quarter, LTM received three A321Neo and one A320 CEO, and anticipates the delivery of 37 aircraft through the remainder of the year. LTM exited the first quarter of 2026 with cash and cash equivalents of $2.54 billion compared with $2.15 billion at the end of the prior quarter. Given the ongoing conflict in the Middle East and its impact on the macroeconomic and geopolitical global scenario, the current situation remains uncertain/volatile and difficult to estimate. The aforesaid condition has led to higher jet fuel prices, which are likely to impact passenger and cargo demand. Although the prior 2026 guidance assumed an average jet fuel price of $90 per barrel, the current scenario suggests a higher value. LATAM Airlines anticipates the fuel price per barrel to be $170 for the second quarter, $170 for the third quarter and $150 for the fourth quarter of 2026. For 2026, adjusted EBITDA is now anticipated to be in the range of $3.80-$4.20 billion (prior view: $4.20-$4.60 billion). Liquidity is now expected to be above $4.5 billion (prior view: $5 billion) in the current year. LTM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Delta Air Lines (DAL) reported first-quarter 2026 earnings (excluding $1.08 from non-recurring items) of 64 cents per share, which beat the Zacks Consensus Estimate of 61 cents. Earnings increased 39.1% on a year-over-year basis due to high labor costs. Adjusted revenues in the March-end quarter were $14.2 billion, beating the Zacks Consensus Estimate of $14 billion and increasing on a year-over-year basis. United Airlines Holdings, Inc. (UAL) reported solid first-quarter 2026 results wherein the company’s earnings and revenues beat the Zacks Consensus Estimate as well as improved on a year-over-year basis. UAL's first-quarter 2026 adjusted earnings per share (EPS) (excluding 95 cents from non-recurring items) of $1.19 surpassed the Zacks Consensus Estimate of $1.08 and increased 30.8% on a year-over-year basis. The reported figure lies within the guided range of $1.00-$1.50. Operating revenues of $14.6 billion outpaced the Zacks Consensus Estimate of $14.3 billion and increased 10.5% year over year. Passenger revenues (which accounted for 90.1% of the top line) increased 11% year over year to $13.1 billion. UAL flights transported 42,486 passengers in the first quarter, up 4.1% year over year. Cargo revenues fell 1.6% year over year to $422 million. Revenues from other sources rose 10.5% year over year to $1.02 billion. J.B. Hunt Transport Services JBHT posted first-quarter 2026 earnings per share of $1.49, up 27% from $1.17 a year ago. The results topped the Zacks Consensus Estimate by $0.04, a 2.8% surprise. Operating revenues totaled $3.06 billion, rising 4.6% year over year. Revenues beat the consensus mark of $2.94 billion, resulting in a 3.9% surprise, as demand proved resilient across several service offerings, led by Intermodal volume growth and higher revenue per load in select highway-related businesses. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). 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Interested in LATAM Airlines Group S.A.? Here are five stocks we like better. LATAM posted record Q1 2026 results, with revenue up 21.7% to $4.1 billion, adjusted EBITDA of $1.3 billion, and net income rising more than 62% year over year. Management said strong passenger demand, higher unit revenues, and disciplined cost control drove the performance. Fuel costs are becoming the main headwind after a sharp rise in jet fuel prices tied to Middle East conflict. LATAM cut its full-year guidance, now expecting 2026 adjusted EBITDA of $3.8 billion to $4.2 billion and warning that second-quarter margins will be pressured. Balance sheet strength and premium demand remain bright spots, with liquidity at $4.1 billion, net leverage at 1.3 times, and strong cash generation in the quarter. The company also highlighted growth in premium revenue and its 55 million-member LATAM Pass loyalty program as key supports for revenue quality. Viasat: Why a Wall of Cash Has Shorts Running for Cover LATAM Airlines Group (NYSE:LTM) reported record first-quarter 2026 financial results, driven by strong passenger demand, higher unit revenues and disciplined cost execution, while management warned that a sharp rise in jet fuel prices is expected to weigh on results beginning in the second quarter. Chief Executive Officer Roberto Alvo said LATAM grew capacity by 10.4% during the quarter and transported nearly 23 million passengers, while maintaining a consolidated load factor of 85.3%. He said the results reflected “the consistency of the execution and the structural strengths of the model built over the past years.” → Beyond NVIDIA: Picks-and-Shovels AI Plays with Strong Momentum Revenue reached $4.1 billion in the quarter, up 21.7% from the same period last year. Adjusted EBITDA was $1.3 billion, and adjusted operating margin reached 19.8%, which management described as the highest quarterly operating margin in the company’s history. Net income was $576 million, up more than 62% year over year, with a net margin of nearly 14%. Chief Financial Officer Ricardo Bottas said the increase in total revenue was mainly driven by the passenger business, which grew 24.4% year over year. Cargo revenue rose 3.4%, which Bottas said underscored the value of LATAM’s diversified business model. → 3 Ways to Target the Resources Powering AI and Data Centers The company transported 22.9 million passengers in the quarter, a 9.1% increase from the first quarter of 2025. Bottas said growth was led primarily by the international segment and LATAM Airlines Brasil’s domestic market. Unit revenue performance was strong across the network. In Brazil’s domestic market, demand grew faster than capacity, supporting higher load factors and a 17% increase in passenger RASK in U.S. dollars, or 8% in local currency. In domestic Spanish-speaking affiliate markets, capacity remained stable while traffic improved, lifting load factors and producing passenger RASK growth of nearly 25% in U.S. dollars and almost 19% in local currency. International passenger RASK rose 6.3%, with load factors near 87%. → Quantum Earnings Season Is Ramping Up—What to Watch From 2 Major Players Bottas said LATAM benefited from a strong demand backdrop and revenue management actions as fuel prices began to climb during the quarter. Some of those actions were only partially reflected in first-quarter results because many March tickets had already been sold before fare adjustments took effect. Management highlighted the company’s premium revenue mix as a key factor behind the quarter’s performance. Bottas said premium revenue increased 28% year over year and grew at a rate 14% higher than non-premium passenger revenue. Premium passenger revenue represented 27% of passenger revenue in the quarter, which Bottas said was a significant increase from pre-pandemic levels. Management said this trend is especially relevant during periods of volatility because premium travelers tend to show lower price elasticity and more stable demand patterns. LATAM also pointed to its LATAM Pass loyalty program as a key revenue and engagement channel. Bottas said the program has 55 million members, including 2.6 million elite members, making it the largest airline loyalty program in the region. Close to 60% of LATAM Pass passenger revenue is generated by LATAM Pass members, he said. The company also cited several premium-focused initiatives, including Wi-Fi connectivity rollout across the wide-body fleet, expanded lounge infrastructure in hubs such as São Paulo and Miami, and the planned introduction of a new premium comfort cabin beginning in 2027. LATAM also expects to incorporate Airbus A321XLR aircraft starting in 2027, featuring premium business cabins with full-flat seats, suite doors, direct aisle access and onboard connectivity. While higher jet fuel prices did not materially affect first-quarter results, management said the impact is expected to become more visible in the second quarter. Alvo said the conflict in the Middle East pushed jet fuel prices sharply higher beginning in March, but the timing of fuel consumption, price lag mechanisms and partial hedges limited the impact in the first quarter. Bottas said fuel prices were down 3.3% year over year during the quarter, but the company estimated a roughly $40 million impact during the period. He said LATAM expects more than $700 million of additional fuel expense in the second quarter, assuming a jet fuel price of $107 per barrel. In response to increased volatility and reduced visibility, LATAM replaced its prior full-year 2026 guidance with a narrower set of metrics. The company’s previous guidance had assumed average jet fuel of $90 per barrel. The new assumptions include jet fuel prices of $107 per barrel in the second and third quarters and $150 per barrel in the fourth quarter. LATAM now expects adjusted EBITDA of $3.8 billion to $4.2 billion for 2026. Passenger CASK excluding fuel is projected at $0.045 to $0.047, higher than the previous guidance, primarily due to appreciation of local currencies, especially the Brazilian real. Management said it now assumes an exchange rate of BRL 5.15 per U.S. dollar, compared with the earlier assumption of BRL 5.5. The company expects net leverage to remain at or below 1.8 times and liquidity to be at or above $4.5 billion. For the second quarter, despite the significant fuel impact, LATAM expects a mid- to low-single-digit adjusted operating margin. LATAM generated $858 million in adjusted operating cash flow during the first quarter. After accounting for $291 million in capital expenditures net of financing, financial expenses and other items, the company generated close to $480 million in cash. After payments related to dividends distributed in December 2025, LATAM ended the quarter with net cash generation of $391 million. The company closed the quarter with $4.1 billion in liquidity and adjusted net leverage of 1.3 times. Bottas said LATAM has more than $1.5 billion in unencumbered assets and no relevant short- or mid-term debt maturities. He also said all debt is now under market conditions, with no remaining legacy from the company’s Chapter 11 process. Bottas noted that all major ratings agencies now assign LATAM ratings in the BB category, with a positive outlook following Moody’s outlook upgrade in March and Fitch’s reaffirmation in April. During the question-and-answer session, Alvo said demand remains “solid and stable” across the network, with corporate demand strong in almost every country. He said international markets and domestic Brazil were “slightly stronger than the rest,” while LATAM has seen some slowdown in more price-sensitive segments. Alvo said the company is not providing top-line or capacity guidance because those figures are more volatile than EBITDA in the current environment. He said if high fuel prices persist, the industry may make larger capacity adjustments, including in Latin America. Asked about market share, Alvo said LATAM does not manage the business around market share targets. “Market share is not a goal. Market share is the result of what we do,” he said. He added that LATAM focuses on network development, profitable growth and execution in markets where it sees strength. Alvo also said the company is taking a cautious stance on fuel assumptions because of the uncertainty in commodity prices. He said LATAM would rather prepare for a more conservative scenario and adjust if conditions improve. LATAM Airlines Group SA is a Chilean-based airline holding company formed in 2012 through the merger of LAN Airlines of Chile and TAM Linhas Aéreas of Brazil. The Group offers passenger and cargo air transportation services across South America and beyond, operating under a multi‐brand strategy that encompasses several nationally recognized carriers. Headquartered in Santiago, Chile, LATAM is structured to serve diverse market segments with full-service, premium and low‐cost offerings. The core business activities of LATAM Airlines Group include scheduled domestic and international passenger flights, air cargo services and maintenance, repair and overhaul (MRO) capabilities through its technical divisions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "LATAM Airlines Group Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.