LTM

Hello, and welcome everyone to the 1Q 2026 LATAM Airlines Group earnings conference call. My name is Becky and I will be your operator today. Before I turn the call over to 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, 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, and any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. If there are any members of the press on this call, please note that for the media, this is a listen-only call. I will now hand over to your host, Ricardo Bottas, CFO, to begin. Please go ahead.

Hello, everyone, and good morning. Welcome to our first quarter 2026 conference call, and thank you all for joining us today. My name is Ricardo, and I'm CFO of the LATAM Airlines Group. Here with me is Roberto Alvo, our CEO, Andres del Valle, Corporate Finance Director, and Tori Creighton, Head of Investor Relations. We will present the highlights and results for the first quarter of 2026. I'll hand it over to Roberto to share his opening remarks.

Good morning, everyone, and thank you, Ricardo. Let me begin. LATAM began delivering a very strong set of results, which reflect the consistency of the execution and the structural strengths of the model built over the past years. During the first quarter, LATAM Group grew capacity by 10.4% and transported close to 23 million passengers while maintaining a solid load factor of 85.3%, demonstrating once again its ability to grow efficiently and capture demand across the network. The strong operational performance translated into record financial results. Revenue reached $4.1 billion, adjusted EBITDA was $1.3 billion, and the adjusted operating margin was close to 20%. The highest quarterly figure in the company's history, resulting in a net income of $576 million, reflecting both revenue strength and disciplined cost execution.

These results were supported by continued progress in revenue quality, driven also by solid execution, well-tailored product differentiation, strong customer preference, and a continuous increase in the contribution of premium revenues. This reflects a trend that has been building consistency over the recent quarters as LATAM's business model is delivering on the expected results. Even though the conflict in the Middle East pushed up jet fuel prices sharply starting in March, given the timing of fuel consumption, price lagging mechanisms and partial hedges, this increase did not materially impact the first quarter financial results. LATAM expects, however, these higher fuel prices to be reflected in the second quarter of this year. As fuel prices increased, LATAM Group began implementing fare adjustments in most of its network, as well as executing targeted capacity reductions.

To date, the demand environment remains strong and stable, and these commercial actions are partially mitigating the higher fuel expenses. Looking forward, we face the upcoming months with a combination of optimism and caution. Optimism because over the last years, LATAM has built a very resilient model. Its passengers and cargo business integration, together with the presence of LATAM's group has in most market it operates, the strength of the loyalty program, the design and delivery of the passenger experience, both on board and throughout the journey, the focus on premium traffic and less elastic segments of demand, its competitive cost, the strength of its balance sheet and liquidity, and most importantly, the quality and commitment of its people, are all features that are unique to LATAM in the region, and provide a true advantage and a potential source of future opportunity.

Caution, on the other side, because the environment remains extremely uncertain and variables that significantly affect the business are outside of LATAM's control. LATAM's track record in navigating complex environments is well proven at this time, and the group really trusts its abilities. In this volatile context, LATAM has taken a prudent approach to its guidance, as we'll be discussing more detail later in the presentation. Extraordinarily, given the circumstances, the company has decided to replace its full-year 2026 guidance with a more focused set of metrics. With that said, I'll hand over to Ricardo, who will walk us through the performance of the first quarter together with a look into LATAM's Group relative and absolute strengths. Thank you.

Thank you, Roberto. Roberto, with his opening remarks, just covered the slide three, so we can jump to the slide four. LATAM started the year with a strong financial performance, successfully translating a healthy demand environment into tangible financial results. Total revenues reached $4.1 billion, representing a 21.7% increase compared to the same period last year, mainly driven by the passenger business, which grew 24.4%, supported by strong customer preference for the LATAM Group product during the higher summer season in the Southern Hemisphere.

At the same time, cargo revenues increased at 3.4%, highlighting once again the importance of LATAM's Group business diversification, which in the current context continued to be a key lever for the group. As a result of this top-line performance, LATAM achieved an adjusted operating margin of 19.8%, expanding 3 percentage points year-over-year, marking the highest quarterly operating margin in the company history. This reflects not only the strength of LATAM's brand, but also the disciplined execution of this strategy across the network. On the cost side, total adjusted expenses increased in 17.3% alongside operational activity and capacity growth. Importantly, fuel cost pressures during the quarter did not have an immediate or material impact on the results, given the delay of the approximately 20-30 days in price adjustments supported by regional supply structures.

Given LATAM's hedging position in this dynamic, there was a reduction of 3.3% in fuel pricing during the quarter on a year-over-year basis. That said, there was an estimated impact close to $40 million during the period, which is expected to become more visible in the following quarter as elevated fuel prices are progressively incorporated. At the unit cost level, passenger CASK ex-fuel came in at $0.045. This is an increase versus the same period of 2025, mainly explained by the appreciation of the local currency, particularly the Brazilian real. Together with this, unit revenues increased at a stronger pace, rising 12.7%, reflecting a solid performance across all markets.

All of this translated into a net income of almost $600 million for the quarter, an increase over 62% year-over-year, and a net margin of almost 14%, enabling the consistent delivery of exceptional results from the top line down to the bottom line. Please join me on the next slide to take a deeper dive into revenue performance across different affiliates and business units. Now on the slide five. The first quarter was characterized by strong demand environment across the region. In this context, LATAM Group was able to very effectively capture this demand and translate into revenue performance supported by its greater proposition and network. During the quarter, the group began navigating a context of increasing fuel prices, and as a result, implemented target revenue management actions.

These are partly reflected in the first quarter given the percentage of tickets already sold for March at that time. In the quarter, the group increased capacity by 10.4% and transported 22.9 million passengers, a 9.1% increase compared to the same period of 2025, mainly driven by the international segment in LATAM Airlines Brasil domestic market. This was accompanied by a consolidated load factor of 85.3%, a 2 percentage point increase. At the market level, LATAM Brazil, LATAM Airlines Brasil domestic market show a strong dynamics, with demand growing above capacity, leading to higher load factors and a solid passenger RASK performance, increasing 17% in U.S. dollar and 8% in local currency, supported by a more favorable exchange rate than last year.

In the domestic Spanish-speaking affiliate markets, capacity remained stable, while improved traffic translated to a meaningful increase in load factors and a very strong unit revenue performance, with passenger RASK increasing close to 25% in U.S. dollar and nearly 19% in local currency. In the international segment, capacity and traffic grew at a similar pace, maintaining very high load factors close to 87%, while passenger RASK increased 6.3%, supported by strong performance across both regional and long-haul operations. Overall, these results reflect LATAM's Group discipline, execution, and capacity deployment in revenue management, which, supported by a favorable demand backdrop, allowed the Group to deliver strong unit revenues, all underpinned by a differentiated value proposition, both in terms of product and its ability to connect the region like no other player.

Let's move to the slide six, talking about the LATAM's Group value proposition, particular, continued development of its premium offering and the results is delivering the next slide. This is slide six. Product differentiation, customer preference, and the growing relevance of premium revenues were key drivers of LATAM's performance during the quarter, underscoring the strength of the group's value proposition. These factors are all reflected in LATAM's recently awarded 4-star in the Skytrax World Airline Star Rating, making LATAM the only airline in Latin America history to reach this level. The premium segment continues to gain importance with LATAM's revenue mix and therefore enhance the revenue quality. During the quarter, premium revenues increased 28% year-over-year, and actually, premium revenues are increasing at a rate 14% higher than non-premium passenger revenues.

With this premium passenger revenue share, which 27% of passenger revenues, a significant increase compared to the pre-pandemic levels, which becomes particularly relevant in the current context of heightened volatility and macroeconomic pressures, as premium travelers tend to exhibit lower price elasticity and more stable demand patterns. Complementing this, LATAM Pass remain a key enabler of loyalty and customer engagement, with 55 million members, including 2.6 million elite members, making it the largest airline loyalty program in the region.

Beyond its scale, it also serves as a relevant revenue channel, with close to 60% of LATAM Pass passenger revenues generated by LATAM Pass members, reinforces the strength of the ecosystem and the group's ability to deepen customer relationships. As LATAM continues to elevate the customer journey, the group has announced a series of initiatives aiming at further enhancing its premium offer going forward. These include the rollout of the Wi-Fi connectivity in the wide-body fleet, which has already begun with the first long-haul flight operated in last March, and we'll continue expanding in the coming years, the expansion of lounge infrastructure in the strategic hubs such as São Paulo and Miami, and the introduction of the new premium comfort cabin expected from 2027.

Building on these developments, one of the most recent highlights is the incorporation of the Airbus A321XLR expected from 2027 onward, which will feature the premium business cabin with full flat seats, suite doors, direct aisle access, and onboard connectivity, reinforcing the Group premium value proposition and ensuring consistency across the LATAM Group product experience. The continued development of LATAM's premium offering, together with its loyalty program and the network strength, allow the Group to capture more resilient and higher-value demand, further supporting the sustainability of the financial performance, even in the face of a complex macroeconomic scenario. Please join me on the next slide seven. LATAM's strong performance was effectively translated into solid cash generation during the quarter.

At the start of the year, the company generated $858 million in adjusted operating cash flow, reflecting the operational strength already discussed. After accounting for CapEx net of financing of $291 million, as well as financial expenses and other items, LATAM generated close to $480 million in cash. During this period, paid amount to $90 million related with the inter-dividends distributed in December 2025, which given the operational payments timings, were partially executed in January, this $89 million you see in the column. As a result, LATAM closed the quarter with a net cash generation of $391 million.

This cash performance remain consistent with what we've seen in the previous quarters, where strong operating results are effectively converted into liquidity, which in the current context becomes a key source of strength, allowing LATAM to maintain a position of confidence in its financial standing while navigating in an environment with higher uncertainty. Let's move to the next slide eight. In the current context of elevated fuel prices and ongoing macro volatility, having a strong and lean balance sheet drives competitiveness, this continues to be a key differentiator for LATAM. The group closed the quarter with liquidity of $4.1 billion and an adjusted net leverage of 1.3 times, supported by consistent cash flow generation, which remains at the core of the financial strategy.

Additionally, in a scenario of prolonged and heightened volatility, the group maintains significant financial optionality through its asset base, with more than $1.5 billion in unencumbered assets, providing further flexibility to navigate the cycle and act on opportunities. Matched with this, LATAM has proactively managed its maturity profile, resulting in no relevant short- and mid-term maturities and a well-structured debt schedule. Importantly, all debt is now under market conditions with no remaining legacy from Chapter 11 process, further streamlining the balance sheet. This provides both visibility and financial flexibility going forward, which is also reflected in the group's credit profile, with all major ratings agencies now assigning ratings in the BB category, with a positive outlook following Moody's outlook upgrade in March and Fitch reaffirmation of its rating and outlook in April.

On to slide nine. Given the recent increase in volatility, particularly in fuel prices and the more limited visibility in the current environment, the company has decided to replace its previous full-year 2026 guidance with a more focused set of metrics. While the previous 2026 guidance assumed an average jet fuel of $90 per bbl in a context that remains highly dynamic, LATAM's new guidance is based on a very specific set of assumptions. Regarding fuel prices, the expected price for each of the remaining quarters on the year is provided in a stable demand environment consistent with what we observed so far is assumed, and both are incorporated into new guidance. The assumptions for the next quarter is going to be $107 for the Q2 and Q3, and $150 for Q4.

Regarding passenger unit cost ex-fuel, this has been updated to a higher range of $0.045 and $0.047 compared to the previous guidance, which is explained by the appreciation of local currency, in particular the Brazilian real, now expected to be BRL 5.15 per U.S. dollar, compared to the previous assumptions of BRL 5.5. On the adjusted EBITDA side, LATAM expected a range between $3.8 billion and $4.2 billion, which incorporates the estimated impact of higher fuel prices. Supported by the levers already discussed, including the strength of the network, the ability to capture premium demand through LATAM's differentiated value proposition, and its fuel price management strategy.

LATAM's balance sheet strength is also reflected in the updated net leverage metric, which is expected to be somewhat higher than previous guidance, but still a very healthy levels and well below the company's financial policy target limits, estimating the net leverage below or equal to 1.8 times. Nevertheless, liquidity is expected to remain at or above $4.5 billion, once again demonstrating the company's strength in terms of financial flexibility and balance sheet resilience. In the near term, and given the current level of visibility, LATAM expected additional fuel expenses of more than $700 million for the second quarter of 2026, assuming a jet fuel price, as I have mentioned before, of $107 per bbl.

Despite the significant fuel impact, LATAM expected to deliver a mid to low single-digit adjusted operating margin in the second quarter. While the environment remains dynamic, LATAM is navigating this context with a discipline and measured approach, leveraging the strength of its business model. Let me conclude with a few key takeaways and messages on the last slide 10. The first quarter results reflect a very strong performance for LATAM, achieved in the context of a healthy and resilient demand environment, particularly during the high season, which provides a solid starting point for the rest of the year. All of these finds LATAM the strongest financial position in its history, allowing the group to face the current macroeconomic environment from a position of financial strength, even as fuel price pressures begin to materialize in the coming quarters.

In this context, LATAM benefits from both relative and structural advantages. At the core of this is a differentiated increasing premium offering, combining with a strong network, which allows the group to access a demand base that is structurally less elastic and therefore enabling the group to pass through costs more effectively. At the same time, LATAM operates today with a lean and strengthened balance sheet with high liquidity, low leverage, no short and mid-term maturities, with assets and significant flexibility and optionality to navigate in a more volatile environment. LATAM approach the coming months with discipline and confidence, supported by its experience in navigating volatility and the robustness of its business model, while maintaining a prudent stance in light of a structural challenge and dynamic macroeconomic environment. Thank you, let's open the line for questions. Thank you.

Thank you. Our first question comes from Guilherme Mendes from JPMorgan. Your line is now open. Please go ahead.

Yes. Thank you all. Good morning, Roberto, Ricardo, Andres, and Tori. Thanks for taking my questions. The first one's on the guidance. Whatever you can share in terms of top-line assumptions in terms of emission capacity adjustments, yield increases. If you can provide a reference of how much, even if it's a ballpark, you are anticipating for the year. The second point it's on, I think about the price increases. If you can share how each of the different segments, think about leisure, corporate, or different regions are performing following this increase on prices? Thank you.

Hi, Guilherme. Good morning, this is Roberto. First question, we're not providing top-line and capacity guidance because we see those figures are slightly more volatile than EBITDA. At the end of the day, I think that the industry will adjust capacity to try to balance results going further. That's why we are focusing on a set of metrics that we believe give a good picture of the resilience of the model without trying to forecast variables that are going to be difficult to forecast. Having said that, I think it's fair to expect that if high-level fuel prices continue, we will see bigger capacity adjustments throughout the industry and particularly in the region.

I think that you can fairly estimate a potential revenue profile with that assumption, having the other measures that we provided. In terms of the segments, first and foremost, solid demand and stable demand environment throughout the network. We haven't seen particular places where the macro environment has affected demand. We see a strong and stable corporate corporate segment in almost every country. International and domestic Brazil probably stand out as slightly stronger than the rest. On average, everything looks very healthy. We have seen, of course, a little bit of a slowdown in the more elastic segments of demand.

The good thing is that today, this is comprising less and less of the number of passengers of LATAM, and they're easily compensated with different point of sale, points of sale origins that we have in the network. I think that large networks in this particular environment are, in general, much more, what is the word in English? Sustainable than smaller networks. As the long AP in the beginning of the quarter, when fare increases, you could see an impact on long AP. As the quarter has progressed You see the filling up of the aircraft nicely, even though from those initial lower levels. This is, in my mind, a function of the diversification of the points of origin and the O&Ds that the LATAM's network can provide. In general, the picture looks stable. The forward bookings for the remainder of the quarter have not been affected by anything that we've seen outside of the industry. In that context, we remain positive. Thank you.

That's very clear. Thank you, Roberto. Have a nice day.

Thank you. Our next question comes from Michael Linenberg from Deutsche Bank. Your line is now open. Please go ahead.

Hi, good morning. This is Shannon Doherty on for Mike. Congrats on the record results. Maybe just a follow-up on your last response. You just mentioned, you know, potential slowdown in the more demand elastic segments. Can you dig in deeper there? You know, with premium revenue now at 27% of total, what is your long-term target? Thanks.

Yes, I mean, I think it's absolutely normal to see slowdown in more elastic segments. On the other hand, I think that airlines that tailor to more elastic segments in general are decreasing capacity faster than airlines that don't have that exposure. That balances out in a way this slowdown in demand. At the end of the day, I think benefits companies at LATAM that can fill their planes with higher quality passengers in the other moments of the curve and in the other segments. It's a total manageable situation given what we have. I think that what we're seeing here is very clear, no. Airlines that are more exposed to more elastic segments, airlines that have weaker balance sheets are going to probably be more exposed to the current situation.

LATAM's absolute and relative advantages clearly stand out in this particular scenario. Second question was long-term premium revenues target. We don't provide a public target of long-term premium revenues. I think that the expectation we have is to continue to grow premium revenues faster than total revenues. Ricardo pointed out to that stat for the first quarter. We haven't seen at this point in time any slowdown in this trend, and it's been already over several quarters that we have seen that outpacing of premium travelers vis-a-vis the rest. I think that the delivery of our product, the way we're managing the network, the quality of the experience today, the FSP, all these features point out that we can continue seeing that different balance vis-a-vis the past going forward. Thank you.

Great, thank you. How much on the higher fuel costs are you capturing during the June quarter? Do you expect to fully capture higher fuel by the end of this year like we've heard from some of the U.S. airlines? Thanks for taking the question.

Again, we don't provide that specific information, but I think that with the mid to low single-digit operating margin figure together with the fuel spent that we are telling you guys that we're going to have in the second quarter. You can estimate relatively well the impact of fuel and pass-through that we are seeing for the quarter. Thank you.

Thank you. Our next question comes from André Ferreira from Bradesco BBI. Your line is now open. Please go ahead.

Hi, good morning. One quick question here. If you could comment on the forward booking curve. I guess in a previous question you commented on more specifically for the second quarter. In general, how are you seeing it? Is it shorter? If so, do you believe it's more due to a, like, a permanent price sensitivity, or is it more due to passengers kind of wishing or waiting for fares to go down closer to the trip? Thank you.

Hi, André. Again, I mean, you know, significant amount of the passengers we fly are domestic passengers, which have relatively low APs. The visibility we have on the booking curve doesn't go too much further away than a couple of months, maybe international a little bit more. In the visibility we have, which is the rest of the second quarter and probably the first peak on the high season in the July winter holidays for us in this part of the world, it looks healthy in general. July is an important month, just as January are, because it's holiday time in the Southern Hemisphere. The first indications we have on bookings for July look healthy as well. Beyond that, it's still very early to get a sense on how the planes will fill. We'll see that in the upcoming weeks.

Perfect, thank you.

Thank you.

Could just squeeze in another one. Can you hear me?

Yes, we can.

Yeah, if you could just comment on the competitive landscape across the region. I guess in Brazil, we have Azul leaving Chapter 11, but with lower growth as per the plan, call out for a while now. Just, you know, how are, you know, the rest of the competition in Brazil behaving and on the other markets as well? Thank you.

Thanks, André. We normally don't comment on competition. I guess the two things that I can tell you, one is, you know, airlines publish their capacity, and therefore you can see capacity changes week or week after week as this crisis has progressed. I think that what we are seeing in general is a trend in downward capacity on most of the airlines in the region, including LATAM, by the way, in the second quarter, vis-a-vis what was published before February 27th. I think that airlines, or more than I think, what we see because this is actually public information, what we see is ULCCs decreasing capacity faster than players that have a better revenue quality average, if I can put it like that.

I personally think that, with an environment like the one we are using for the guidance, capacity decreases may accelerate to balance out the longer-term impact of demand. In LATAM, the way we have looked at this particular guidance, we call it guidance, but, you know, this is, nobody knows where this is going to go. We'd rather put ourselves in a scenario that looks a little bit more conservative than the forward curves and prepare for that.

We will see how execute as the information goes through and the changes in the environment. We're taking this crisis seriously in the sense that there's a chance that it can last longer. In that case, the whole organization needs to be prepared. If it gets better, and we have, I guess, positive news flows during the night yesterday, then we will adjust accordingly. For the time being, I guess that's the assessment I can, I can give you, on how we see the dynamics of the market here. Thank you.

Very clear, thank you.

Thank you. As a reminder, if you did want to ask a question, please press star followed by one on your telephone keypad now. Our next question comes from Gabriel Rezende from Itaú BBA. Your line is now open. Please go ahead.

Hi, good morning. Just following up on the impact into the second quarter, talking about fuel prices. We're trying to understand here what has LATAM actually seen in terms of fuel price increases, just because we have seen some of the regions, particularly Brazil, on which Petrobras is very relevant, kind of is smoothing out the international price trend for fuel prices into jet fuel. Just trying to understand whether the $700 million+ that you're estimating for impact into the second quarter is already incorporating the fact that Petrobras and policies for price pass-through here for jet fuel in Brazil were kind of smoothed out as the crisis took place in late February.

Also, if you could comment, how is the company at this point? I understand there's a lot of uncertainty, and their visibility is limited. Just trying to assess how you're weighing market share versus profitability when assessing the price increases that you'll need to implement to offset the higher costs that you're facing with fuel.

Okay, Gabriel, it's Ricardo, and thank you for your question. Actually, regarding the Petrobras issue, I'm not talking about the specific provider in Brazil. It's relevant in Brazil, for sure. It's not a question of a price policy. It's just a mechanism in terms of the way that they capture the international price in terms of lagging. We mentioned a range on the average of all providers to have between 20 and 30 days lag in terms of the way that the average price from our suppliers are getting the impact from international prices, I mean, in terms of price commodities, right? It's just the way that when we see these assumptions for the second quarter of $107, for instance, we are capturing everything on it. Like, we have mentioned also, the most relevant impact from March, for instance, it's capturing the Q2 assumptions for price.

To be clear, we're not assuming nor forecasting any changes to the price that are not market changes to the price. No subsidies or anything like that in any of the markets where we operate. Regarding the second question, thanks for the question on market share. Let me be extremely clear here. In LATAM, market share is not a goal. Market share is the result of what we do. For us, we don't manage the business in terms of the market share we can achieve. We manage the business looking at the flows, understanding where we can win, executing upon where we see strength, and then the outcome of that equation is the market share. LATAM has improved almost in every market where it operates its market shares over the last two or three years.

This is not a function of seeking them, it's a function of the results of our strategy. I don't focus, we don't focus in profitability vis-a-vis market share. We focus in long-term developing of the network, delivering on the strengths that we have built in the model, and then we will see what the market share outcome of that equation is. Having said that, we are a rational player in terms of how we want to develop the business going forward. We find ourselves in a place where we can grow profitably. You see this very clearly throughout 2025, and in the first quarter of 2026. I think that the way we conduct ourselves and the business is pretty clear at this point in time. No market share goals for LATAM. Thank you.

Okay. Thank you very much, that's very clear.

Thank you. Our next question comes from Jens Spiess from Morgan Stanley. Your line is now open. Please go ahead.

Two questions from me. One, to clarify your jet fuel price assumption. Just to make sure that that's market prices, not considering any hedges, right? If those market prices materialize, what would be the effective hedged price that you would be realizing, considering that you now have also incorporated additional hedging instruments for your hedging, within your hedging policy? My second question's on the XLRs that you will be adding to your fleet in 2027. Where do you plan to deploy those mainly? Will it be intra South America, or also to the U.S. and other markets? Just to get a bit more clarity on that. Thank you.

Thank you, Jens. Regarding the hedging policy and the assumptions we used for the guidance, yes, the reference in terms of the price of the commodity is not including any reference in terms of the impact that could come from the hedge. Yes, the guidance that we are providing, the guidance is capturing the contracts that we have disclosed that we have in our, under the hedge policy that we are seeing. We also made some reference in terms of the way that we see the collars and also the recent call options that are partially in the money right now. As a reference, and not giving any additional information regarding the conditions from these instruments, the guidance is capturing the contracts that we have until the end of April. Okay?

On the XLRs, we are receiving in total 13 XLRs starting in 2027. There are several applications of the A321XLR in our network. Lima, Brasília, Fortaleza are three good examples. We were initially going to deploy the XLRs in Lima. Given the fact that there's a connection fee now imposed in Peru, which we believe it's a terrible and pretty bad public policy, we are evaluating where those XLRs will go. As a general probably guide here, we bought these planes to fly long segments, particularly to the U.S. if it were from Lima or Brasília. It would be probably Europe and the rest of South America if they were to be placed in Fortaleza. We'll keep you posted on the deployment of them. We still are over one year away from the first delivery, so no decision made in terms of where they're going to finally go.

Perfect. Okay, thank you.

Thank you.

Thank you. As a final reminder, if you did want to ask a question, please press star followed by one on your telephone keypad now. Our next question comes from Ewald Stark from BICE Inversiones. Your line is now open. Please go ahead.

Good morning, thanks for taking my question. I have a question on jet fuel. And your jet fuel guidance, coming for the forward quarters looks somewhat high relative to the evolution of the jet fuel curve, future curve. I was wondering if you can provide any details on how the strategy was used to reach to those expectations? Thanks.

Hi, Ewald, and thanks for the question. I mean, you know, forecasting future prices of fuel today, not even the pros knows. I mean, we have seen just the second half of the forward curve moving something like $15 on average in the last 15 or 20 days. The way I think that you need to read the assumption here is in two ways. One is we are wanting to be slightly more conservative in terms of this because we'd rather prepare for a worse scenario. In the case it gets better, fine by us. It'll be great. It'll be an upside to what we're seeing. On the other side, I think that rather than just simply thinking that we're assuming something special with the market, we have absolutely no clue, just as anybody does.

I think that you need to read a set of metrics that we gave you as the proof of the resilience of the LATAM world. You have the EBITDA, you have the liquidity, you have the leverage, and you have the price assumption of fuel. Make up your idea on how LATAM today is being built to withstand a moment like the one we're living now.

Okay.

Thank you.

Perfect, thanks.

Thank you. We currently have no further questions, I'll hand back over to Ricardo for closing remarks.

Thank you all for joining us today. If you have any further questions, please, let us know and, reach out the investment relations team. Thank you, and have a good day.

This concludes today's call. Thank you all for joining. You may now disconnect your lines.

Hello, and welcome, everyone, to the 4Q 2025 LATAM Airlines Group Earnings Conference Call. My name is Becky, and I will be your operator today. Before I turn the call over to 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 and any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. If there are any members of the press on the call, please note that this call for the media is listen only. I will now hand over to your host, Ricardo Bottas, to begin. Please go ahead.

Hello, everyone, and good morning. Welcome to our fourth quarter 2025 conference call, and thank you all for joining us today. My name is Ricardo Bottas, and I am the CFO of LATAM Airlines Group. Here with me is Roberto Alvo, our CEO; Andres Valle, Corporate Finance Director; and Tori Creighton, Head of Investor Relations, and we will present the highlights and results for the fourth quarter and full year 2025. I will hand it over to Roberto to share his opening remarks about the quarter and year's highlights.

Good morning, and thank you, Ricardo. 2025 marked a year of continuous consolidation and delivery. The strong results we're presenting today are the product of a model that LATAM Group has been building over the last 6 years, anchored first in the people and the customers, focused on impeccable execution and in the design of a superior experience. All of this in the context of an ever stronger passenger cargo networks, frequent flyer program, a very strong balance sheet and cash generation, a disciplined cost delivery and a highly diversified business model, all of which make our results resilient and less much subject to external factors and industry cycles. At the heart of this performance and more than 41,000 employees working at the different affilities of the group, their daily commitment, whether at customer touch points or behind the scenes, continues to be LATAM's Group most powerful asset. The culture of passionate, engaged people translated directly into the customer experience. In 2025, the group achieved a record Net Promoter Score of 54 points, which is a 3-point increase versus 2024, the highest full year results in our history. When our people thrive, customers feel the difference. Internally, the Organizational Health Index reached 83 points, placing LATAM Group in the top decile of the global benchmark for the first time. In terms of the operations, the group transported more than 87 million passengers during the year, including 23 million passengers in the fourth quarter alone. This was boosted by a capacity increase of 8.2% for the full year and 7.7% in the quarter, demonstrating the group's ability to grow efficiently while maintaining a healthy load factor of 84.4%. This ability to connect passengers to, from and within South America was enabled by the modern and efficient fleet that the group operates. In 2025, LATAM received a total of 26 aircrafts, 7 of which were incorporated in the fourth quarter. This includes the first Boeing Dreamliner with GE engines and brought the total fleet to 371 aircraft as of the end of the year, a 7% increase versus 2024, enabling the group to launch 22 new routes, of which 15 were international. On the financial side, adjusted operating margin reached 16.2% for the year, while adjusted EBITDAR came at almost $4.1 billion. Net income totaled approximately $1.5 billion, resulting in earnings per ADS of $4.95, highlighting the group's ability to translate operational performance into bottom line results. This bottom line grew by 50% versus the income generated in 2024. With this, in December, LATAM was able to distribute $400 million in interim dividends aligned with its capital allocation strategy determined by the financial policy. 2025 was just not a strong year. It was a reaffirmation of LATAM's structural strengths translated into consecutive years of margin expansion in the context of high capacity growth and driven by a strategy that combines a focus on people, a differentiated customer experience, an unmatchable footprint, disciplined cost control and a resilient balance sheet. This is what defines this new LATAM. This performance and design set the base for expected 2026 strong performance highlighted in our yearly guidance, of which we feel very confident at the moment despite fuel and currency volatility. I'm very proud to be here leading a group of 41,000 souls and to highlight and discuss our performance. With that, I'll hand it over to Ricardo, who will walk us through the achievements of this fourth quarter and full year 2025.

Thank you, Roberto. Let's move to Slide 4. LATAM delivered a solid financial performance during the fourth quarter with improvements across all key metrics. Total revenues reached almost $4 billion, increasing 16.3% year-over-year. This growth was driven by the passenger segment, which rose 20.3%, supported by the strong demand and capacity growth. Cargo revenues declined 9.6% in the period, explained by a particular high comparison base as the fourth quarter of 2024 had delivered an exceptionally strong performance. Despite the full year cargo revenues increased year-over-year. As a result, the group delivered an adjusted EBITDAR of $1.1 billion, representing a 30.4% increase versus 4Q 2024. Adjusted operating income came in $661 million, up 42.7% year-over-year, and net income totaled $484 million, increasing 78.1% compared to the fourth quarter of last year. Margins also improved with adjusted operating margin standing out at 16.7%. This quarter, we saw an increase in unit cost ex fuel with passenger CASK ex-fuel reaching $0.047. About $0.02 of this can be explained by the appreciation of the local currencies during this period, along with another $0.02 related to the other nonrecurring costs in wages and benefits, which include a special onetime bonus approved on this last quarter. While quarterly unit costs were elevated, it's worth highlighting that full year passenger CASK ex-fuel came in at $0.044, fully within the updated guidance range for 2025 provided on last November. Importantly, this 7.9% increase in unit cost was more than offset by an even stronger improvement in unit revenue. Passenger RASK increased by 11.7%, reflecting LATAM's ability to sustain its value proposition and capture customer preference in an environment of healthy demand. Please join me on this next Slide 5 to take a deeper dive on the drivers for revenue performance across the different affiliates and business units. Overall, the fourth quarter showcased a well-balanced dynamic between capacity deployment and demand across our network, supported by healthy load factors and target commercial actions. On a consolidated level, capacity grew by nearly 8%, while maintaining a solid load factor of 85%, showcasing our ability to grow efficiently. Looking at the LATAM Airlines Brazil's domestic capacity expanded by 12% and demand kept pace with load factors increasing by 0.7 percentage points. This balance supported by a solid passenger RASK performance with growth of 14% in U.S. dollars and 10% in local currency, highlighting the strength of LATAM's value proposition in this market together with the resilience of demand. In domestic Spanish-speaking affiliate markets, passenger RASK grew by 23% in dollars and nearly 20% in local currency, driven by a disciplined capacity allocation that resulted in an increase in the load factor to 1.7 percentage point higher than before. Turning to the International segment. Capacity and passenger volumes both grew at a high single-digit pace. While load factor declined slightly year-over-year, it remained at a very healthy 85% levels. In parallel, unit revenues increased by 6%, supported by a well-diversified network, both in the regional and long-haul international operations and a strong execution. Altogether, these results reflect the robustness of LATAM Group's commercial model and its ability to grow profitable. The fourth quarter confirms that the network strategies and the disciplined capacity deployment continue to deliver strong outcomes across the board. Turning now to our value proposition and customer experience on Slide 6. During 2025, LATAM Group continued advancing initiatives focused on enhancing services across key touch points with a particular emphasis on consistency, reliability and design. At the center of this improvement is our continued focus on the premium segment, where LATAM has made significant upgrades to its value proposition. During the year, we introduced a renewed business class experience, launched the signature check-in and our new signature launch in Lima and announced the future enhancements like the investments in Wi-Fi on wide-body fleet beginning in 2026 and the new premium comfort cabin coming in 2027 as well as the investments on the new and the brand-new launch in Guarulhos. As part of this ongoing focus, LATAM was once again recognized internationally. In the fourth quarter, the group received the most improved brand award globally by the Design Air, a recognition that adds to early achievements such as Skytrax' Best Airline in South America, the APAC 5-star Global Airline Award and the Air Cargo Airline of the Year award by Air Cargo News, all serving as third-party endorsements that we are on the right path. The customer experience enhancement initiatives demonstrate the group's commitment to delivering a consistent and differentiated travel experience across the region and further strengthen the customer preference for LATAM, and the results are validating these investment decisions. For the full year, premium revenues accounted for 23% of passenger revenues and continue to grow faster than the passenger revenues overall. While passenger revenues grew 12% year-over-year, premium revenues increased by 14%, highlighting the continued momentum of this segment, which provides LATAM with access to a customer base that is structurally more stable throughout the year, less exposed to seasonality and more resilient to potential macroeconomic headwinds. Coupled with this, the LATAM PASS program plays a critical role in accessing this segment, fostering loyalty among customers who travel more frequently and generate higher expense through the wide range of benefits the program offers. LATAM PASS is by far the largest airline loyalty program in the region with almost 54 million members, accounting for nearly 60% of LATAM's passengers revenues. This combination of a resilient customer segment and a highly effective loyalty program reinforces the sustainability of LATAM's revenue base and equips the group with the tools to continue driving profitable growth. Jump to Slide 7. You see on this slide that the way that we are translating this into tangible results. Customer satisfaction reached record levels. Net Promoter Score rose to 54 points, as Roberto mentioned, for passenger operations, while among premium travelers each reached 58 points, the highest ever recorded by the group. This is a clear indication that our customers are recognizing and valuing the improvements. At the same time, premium revenues continue to show an upward trend, supporting by growth, customers' preference and a more differentiated onboard experience. And importantly, we have managed to achieve these results while maintaining costs stable since 2019, confirming that LATAM can deliver a differentiated experience, all while keeping its cost base stable. Let's move to Slide 8. We have spoken a lot about structural improvements and the sustainability of the profitability stemming from the unique ecosystem of LATAM Group. Passionate people, a financial foundation, an exceptional product, premium revenues and a focus on cost containment, all of that supports a virtual cycle that results in these numbers year after year. This year, LATAM expanded its revenues in 11.2% and its adjusted operating margin to 16.2%, reflecting the profitable growth strategy and the continued disciplined capacity execution. Over the course of the year, the group received 26 aircraft, launched 22 new routes and grew capacity by 8.2%, making the 3.5% margin expansion, a clear reflection of LATAM's ability to grow strategically, not just in volume but in the profitability targets. It's also a testament to the group's deep knowledge of its markets and disciplined execution over time. Adjusted EBITDAR grew by over 30% year-over-year to $4.1 billion, supported by revenue growth and efficiency across the operation, all within the guidance range. At the bottom line, net income increased significantly by 50% versus last year, further reinforcing the group ability to deliver sustainability financial results. These results are part of a broader trend, one of continuous improvements and reliable execution. LATAM enters 2026 on solid footing with a strong foundation to continue creating long-term value. Please join me on Slide 9. As you can see on this slide, LATAM's strong performance is not only reflected in earnings generation, but also in its ability to consistently translate those results into cash generation. During 2025, adjusted operating cash flow reached $3.3 billion, supported by strong operational and financial performance. This cash generation enabled the group to fully fund its core business needs, including maintenance and growth investments with $1.5 billion invested in CapEx net of financing while also covering interest payments. As we highlighted earlier, our CapEx investments have been directed towards enhancing the customer experience, but they have also been focused on accelerating LATAM's digital transformation across the business. With that, LATAM generated close to $1.4 billion in cash after covering all business-related commitments. Over the course of the year, the group executed 2 share repurchase programs totaling $585 million. Also, LATAM Group distributed $400 million in interim dividends in the fourth quarter, bringing total dividends for the year close to $605 million. Even after all of these, LATAM still delivered almost $200 million in positive cash generation in 2025, demonstrating its ability to invest in the business, meet its key obligations and also allocate capital towards additional initiatives, all while considering defined financial policy range. Let's move to Slide 10 and see how this is reflected in our balance sheet metrics. Balance sheet strength has been one of LATAM's key priorities over the past few years, and liquidity is one of the clearest expression of that focus. The group has consistently grown its nominal liquidity, reaching $3.7 billion by the end of 2025. As we just reviewed on the previous slide, it was through the additional capital allocation initiatives carried out in 2025 that LATAM was able to bring liquidity as a percentage of last 12 months revenues closer to the top of the policy range at 25.7%, demonstrating the flexibility the group has to allocate capital across multiple fronts while aiming at the final financial framework. At the same time, on the debt side, adjusted net leverage reached 1.5x below the last year and the maximum policy level of 2x, placing LATAM in a strong position heading into 2026 with the flexibility to continue investing while also preserving financial strength. Moving to the next slide. Let's take a look on the continuous optimization of the cost of capital and debt tenure. LATAM has taken important steps over the past 2 years to improve its cost of debt. Through refinancing exercises carried out in '24 and '25, the group successfully reduced the weighted average cost of debt from 10.7% in 2023 to 6.6% as of the end of 2025. In parallel, LATAM debt amortization profile is well balanced with no short and midterm relevant maturities. And furthermore, LATAM holds call options in '26 and '27 that offer potential opportunities to reprofile these maturities and also reevaluate the potential tender split to improve even more this debt profile. Let's move now to the Slide 12. As reflected in 2026 guidance published back in December, we expect it to be another year of continued profitable growth. Capacity is projected to grow between 8% and 10% and to deliver an adjusted operating margin between 15% and 17%, reflecting LATAM's focus on efficiency and disciplined execution. In terms of cash, adjusted levered free cash flow is expected to exceed $1.7 billion from $1.5 billion this last year, reinforcing the group's ability to consistently translate earnings into liquidity. We also expected liquidity above $5 billion for the end of 2026. And as we have mentioned in Investor Day held in December, given our financial policy range, we would have between $1 billion and $1.6 billion after CapEx investments and minimum dividend payments available for additional capital allocation initiatives in 2026. This year, LATAM will continue investing in key strategic areas, including the customer experience, the renewal of the fleet, efficient focused innovations and the continued reinforcement of balance sheet discipline. Again, to remind you of the main figures that were disclosed in the Investor Day, the CapEx plan for this year, net of finance -- the fleet of financing is about $1.7 billion. For the year, the group is expecting to receive 41 aircraft, of which 3 are wide-bodies and 12 correspond to the first Embraer E2s. The last slide, Slide 13. And before we move to the Q&A, let me briefly highlight the key message from 2025 performance. 2025 was another year of strong and consistent performance for LATAM, both operationally and financially. Operational excellence was matched by record levels of customer and employee satisfaction with NPS and Organizational health index reaching all-time highs. The group transported a record number of passengers, expanded the network with discipline and delivered a significant improvement in profitability with adjusted operating margin increasing 3.5 percentage points year-over-year to 16.2%. This profitability was translated all the way to the bottom line with annual net income closing at $1.5 billion. These results reflect the group's ability to grow efficiently while maintaining a focus on margins and operational excellence. During 2025, we fully funded investments in the business and met all financial commitments while generating cash. LATAM generated $1.4 billion in cash before executing 2 share repurchases and separately distributing dividends while still holding a strong liquidity level and low leverage. At the same time, we strengthened our balance sheet, aiming at the financial policy targets and focus on reducing the cost of debt, which now stands below 7%. Looking ahead, we are entering 2026 with solid momentum. Our guidance reflects continued profitable growth, supported by healthy demand, commercial discipline and a clear focus on the strategic priorities. With that, we will now open the line for your questions.

[Operator Instructions] Our first question comes from Julia Orsi from JPMorgan.

So we have 2 questions on our side. The first one is on yields. So we saw a strong pricing performance this quarter. Congratulations on that. Can you provide additional details on how yields are tracking across the regions? And the second one, based on recent trends, how is the booking curve and demand environment evolving? Is there any particular region that has been outperforming or underperforming?

Julia, this is Roberto. Thanks for the questions. We saw, in general, strong and stable demand over all of the business areas where we operate. In the last couple of months of the year, domestic Chile was a little bit slower as compared to particularly 2024, but at an industrial level, and you can see that on the public figures. But we have seen already a recovery in the first months of the year. So I would say that all the business performed on a relatively good basis in 2025 last quarter in the passenger segment. Cargo, it was also good. Again, as Ricardo said, a very strong basis of comparison the last quarter in 2024. It still was robust and the current appreciation of the currencies will probably increase import demand into the region in the upcoming months. Booking curve for early 2026 looks healthy. We see no issues that concern us today. And in general, all the segments are performing well. As it has happened in the past 2 or 3 years, the segment that has been growing the most is international, and this is also reflected in our capacity during 2025 and also the guidance that we provided for [indiscernible]. But in general, we see no concerns on the demand side going forward, at least for the first quarter.

Our next question comes from Michael Linenberg from Deutsche Bank.

A couple of questions here. Great way to end 2025. These are fantastic results. The when you talked about the CASK impact of 0.2% from the impact of the weak dollar. As we think about LATAM and how you have evolved your structure and the seasonality and the geography of your network, where do you come out with respect to the dollar? Is a weaker dollar overall better, even though I realize there's a cost headwind, is it just better overall for the performance of the company? And I'm just sort of in the context of the last 12 months, we've seen about a 10% depreciation of the dollar. How should we think about that on your business?

Michael, thanks for the question. A great question. So let me give you -- at the end of the day, for us, a stronger local currency is more positive than a weaker local currency. And this derives from, a, on the domestic markets, basically, most of our revenue is expressed in local currency or happens in local currency and a significant portion of the cost is in dollar. So domestic markets work like import industries, if you want. And in the case of international, for us, it's also beneficial because even though the countries become more expensive for traveling into the region, if you want, purchasing power for traveling abroad is higher and our point-of-sale balance is higher on our South American side than our long-haul side. So the balance that we see is that a stronger currency vis-a-vis the dollar, net of higher cost because of the same effect are net positive.

Great. That's super helpful. And then I just -- I want to talk about CapEx for 2026. Last year, you took 26 airplanes. I believe this year is going to be a heavy delivery year. I know that the Embraers coming in are a big component of that. I think you're taking delivery of over 40 airplanes, 40, 41 airplanes. Can you just refresh us and how we should think about CapEx in 2026?

Michael, it's Ricardo. And you are right. We are expecting to receive 41 aircraft and the CapEx is $1.7 billion net of financing. Remember that a relevant part of the CapEx delivers is going to be financed through [indiscernible] and also finance lease. And we are holding the increase in the investments that we have. And remember, we have a lot of investments in the retrofit of the cabins, still the renovation and the starting of the process to implement the new premium content and so on and so far. So that's the overall picture that we have. And remember, from these 41 deliveries that we are expecting, we expect to receive 3 additional 787s and also the first 12 Embraers on the last quarter, the last quarter.

So the balance is [indiscernible], Michael.

Okay. Great. And the balance is...

26 from the A320 family.

Our next question comes from Jens Spiess from Morgan Stanley.

Congrats on the results. I have a question on the net debt coming in at $5.9 billion, which was around 8% above your guidance. So if you could just elaborate on what turned out to be different versus your initial expectations. I would appreciate that.

Sure. Actually, when we provide that guidance was before the announcement and the decision to distribute the $400 million dividend. So that was the main difference from the guidance that we disclosed before, Jens.

Makes sense. Makes sense. So going forward, you will be updating your net debt guidance, right, for the potential dividends you will be paying. Is that correct? And just a follow-up question, if I may. On the E2s, when do you expect to deploy them? And what is your thought process on allocating that capacity? Will it be mostly targeting new routes and destinations? Or what's the plan there?

Okay. So only for that reason in terms of the debt update, we don't need to update the guidance for that because we disclose all information related with that. And if and when we need to update other specific situation from the guidance, we will update everything.

Jens, this is Roberto. Just complementing and clarify one thing on what Ricardo said. So our guidance doesn't provide any distributions on top of the minimum statutory dividends that we have to pay by law here in Chile, which is 30%, okay? So that's why you see $5 billion of liquidity going forward. But as Ricardo explained as well, over and above our finance policy, we have around $1 billion to $1.6 billion, and the Board will further decide on opportunities for capital allocation. If we end up doing something and if we will inform the market at the right time, and we will update the figures related to that with those potential things happening, okay? With respect to the A2s, so this will be deployed in Brazil domestic, the first 12 that we will receive this year. The strategy is that they will based out of our hubs. So we expect to see them flying out of Guarulhos, out of Brasilia, out of Fortaleza. And you can think about this in 2 ways. They allow us to fly new cities where the 319s, even though at the same time, their economics don't allow us to operate those cities. So you will see new destinations. You will also see probably increased frequencies on certain routes where we currently operate A320 related fleet and some combinations of these that we have never flown when you combine these 2 things. So you will see domestic Brasilia routes, both in opening new routes and increasing frequency in certain routes.

Okay. Very clear. And just one quick follow-up, sorry, on the dividend distribution and the net debt guidance. So looking at 2026, everything that will be forward-looking is only the regulatory or mandated dividends that you're factoring in there. Anything in excess basically would only be updated on like looking backwards basically on what you already paid or what you already announced, right? Just to make sure we'll be modeling this correctly.

Yes, you are correct. So as Roberto mentioned, the range that we disclosed as a calculation under the financial policy to have between $1 billion and $1.6 billion available, it's the consideration regarding the 21% and 25% range of the guidance in terms of liquidity. And that amount is not considering the guidance that we provide. So we only consider the CapEx that is expected and also the minimum dividends.

[Operator Instructions] Our next question comes from Filipe Nielsen from Citigroup.

So I have 2 on my side. One is related to the costs that we saw this quarter. Just trying to break it between potential one-offs or costs that you think it could be something more structural during 2026. We know that there are effects from a weaker dollar, stronger local currency. So if you could like clarify which impacts were more like one-offs in the quarter and which ones were -- could remain for longer during 2026? And my second question is regarding the cargo operations. Just wanted to check your sense on how cargo yields should evolve in 2026. We have the guidance for volumes, but I just wanted to make sure how the top line on cargo should evolve.

Okay, Filipe. Just to give you, I think, the more color in terms of the impact that we have in the fourth quarter, we disclosed that from this 4.7, we have 2 different impacts. 0.2 coming from the weaknesses of the U.S. dollar in the fourth quarter, 0.2, and the other 0.2 as what we call one-offs from this quarter. But remember, I would like just to emphasize the guidance that we provided for 2026. There is nothing structural. So we are confident that the level of investments that we have in all initiatives. Remember from the Investor Day, we disclosed that we have more than 700 initiatives internally in the company to provide more efficiency. We have this cost containment structural behavior in the company. And the guidance that we provide for this year is well aligned with the same trend between $0.043 and $0.045. So there is nothing material, nothing structural to be considered that could represent any risks from our perspective. But yes, we also have -- remember, in our guidance, the assumption to have, for instance, the BRL at 5.5. The BRL is now at 5.2, and then we have to reflect. But on the other hand, as Roberto explained in another question, we also have another positive impact in terms of RASK. So I also emphasize on the slide in terms of the results from the fourth quarter. The CASK have increased to 7.9%, but the RASK have increased even more to 11.7%.

And the cargo question, Filipe, we don't disclose our unit revenues on cargo, but let me give you a couple of data points that are important. Northbound traffic is export traffic. Southbound traffic is import traffic. Import traffic normally has higher yields than export traffic just because of the nature of what is exported. It's basically raw materials going north and it's, if you want, perishables -- technological perishables coming south. So there may be a potential change in the mix just because of the currency appreciation that we will see if it happens during the year. But we don't see today significant issues in the demand side to believe that our -- that the unit revenues in cargo are going to be materially different. The start of the year is always low because people send inventories to close the prior year, and now we have the Chinese New Year, which is very relevant on the cargo side because basically China shuts off for a week. But the basis of growth and the stability of the market is [indiscernible]. We have no -- nothing to concern us at this point in time.

Our next question comes from Gabriel Rezende from Itau BBA.

Congratulations on the set of very strong results. Two questions here on our side. Correct me if I'm wrong, but you mentioned that around 23% out of your passenger revenue came from those more premium-related revenue. Just trying to understand where the company is targeting to land this number along 2026. So how much can this 23% increase along the year, what is the company's target at this point? And also, we talked a lot during the call about this positive FX environment, especially here in Brazil. And also, we are seeing a favorable oil price environment as well. Just trying to understand whether you see the sector at some point in time, perhaps this year, accommodating yields into a slightly lower base versus where we are at this point.

Thank you. So second question first. We see -- I mean, Brazil was out of the 10 largest domestic markets in the world, the one that grew the most in 2025 which is quite impressive, I think. And we see momentum from that perspective. And at this point in time, I think that the capacity outlook for the industry in Brazil, together with the demand perception leads us to believe that it's going to be a stable year as compared to what it was in 2025. So we see potential for development of our strategy and our network over there as we have done it in the last 2 or 3 years. So I don't think at this point in time that we will see a significant change in dynamic of the market, at least for 2026. We don't see the elements of that. And more generally, I think that the capacity situation in the industry as a whole with the engine situation and the manufacturers still trying to catch up to replace older aircraft and to meet their commitments in deliveries is going to mean that 2026 is going to be similar to 2025 in terms of global capacity. I forgot the first question. Can you remind me, sorry, please?

What percentage -- with regard to our premium revenues, how we see that target going forward given the fact that we reached 23% of premium revenues.

We don't disclose the target for premium revenue, but we believe that premium revenue will still grow faster than our total revenue and our capacity during 2026 as it has happened in the last few years.

Our next question comes from Savanthi Syth from Raymond James.

Just a couple of questions from me. First one, just on the corporate side. I know you mentioned demand strong widely across the regions. But I was curious what you're seeing on the corporate side, if there's any acceleration there or any trends to call out? And then just secondly, I'm wondering there's one of your competitors that have kind of refocused on premium offering. And just wondering what you're seeing in the region and if there's still kind of maybe premium growth in offering is still outstripping or actually maybe demand is outstripping the supply.

So corporate recovered probably 1.5 years ago from before 2020 already. Growth in corporate demand looks stable. I think what's most relevant is that we have been gaining consistently market share in corporate segments. And that you can see very clearly on public information provided by travel agency in Brazil, for example, where you can see that public information figure. And the set of what we have created, the network, the execution, the frequent flyer leads us to believe that this position we have is going to be maintained or even be increased in the upcoming future. So no concerns with respect to corporate demand at this point in time. And I think that LATAM has put itself in a very strong position to serve corporate customers, whether it's because of our network, because of our FFP, because of our delivery. And the second question, it's interesting. You mentioned premium offer. I think I said it in my speech, and it all starts with people. you are not going to be able to attract customers that want to fly again with you and particularly demanding customers as customers -- as premium customers only with hardware. You need software. And in that sense, I think that LATAM stands out completely with respect to not only its direct competition in the region, but also in many regions across. And this is one, I think, of the learnings of the last few years and what has started the cycle where now you see profitable growth that we have. At the same time, we believe that we can improve on execution, and I believe that we can still improve significantly on hardware, on the physical delivery of our product. As Ricardo mentioned, we just inaugurated a launch in Lima. We're going to reinaugurate a bigger launch in Guarulhos next year. We'll have premium economy on wide-bodies, we'll install WiFi and wide-bodies, which I think is an important lag. And at the end of the day, even though maybe our competitors are trying to catch up to us, we continue improving. But the DNA of this organization and the people, I think, is unmatchable at this point in time.

[Operator Instructions] Our next question comes from Felipe Ballevona from Santander.

I have a follow-up on Jens question about net debt. You stated that you ended up missing the guidance due to the $400 million dividend announcement. However, you said that the minimum dividend is considered in the guidance. And if I'm not mistaken, those $400 million wouldn't be extraordinary dividends, but minimum ones. So how can I put this 2 together? And also on a separate note, what's the currency breakdown of your debt?

Yes. I'll pass to Ricardo on the second one. But I mean, just maybe it's good to clarify, minimum dividends 30%, but they are paid the following year, normally after the shareholders' meeting, and that happens in Chile normally in April, okay? What we did is that we advanced a significant portion of minimum dividend in December, and we paid $400 million in December. So as what you are seeing is net debt as of 31 of December, and that was not in the previous guidance, you have to adjust for those $400 million, okay, which means that in April, the company would have already counted those $400 million for the calculation of the final dividend that it would. So that's probably the clarification on this, okay? With respect to currency...

Is that clear, no, the question regarding -- okay. And in terms of currency, I think almost 100% of our debt are in U.S. dollar. We only have one local bond that close to $160 million in local currency. So it's almost everything in U.S. dollars.

And that's local currency...

We currently have no further questions. So I'll hand back to Ricardo for closing remarks.

Again, thank you all for connecting this morning. Please note that our Investor Relations team is available for any further questions. Have a great day, and thank you again.

This concludes today's call. Thank you for joining. You may now disconnect your lines.