LATAM Airlines Group Q2 2026 Earnings Call: Complete Transcript

On Wednesday, LATAM Airlines Group (NYSE: LTM ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

The full earnings call is available at Summary Full Transcript OPERATOR Hello everyone. Thank you for joining us and welcome to the second quarter 2026 LATAM Airlines Group Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand.

To withdraw your question, press star one again. 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 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 Bottas — Group CFO 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, Andreas Del Valle, Corporate Finance Director, and Tori Craig, Head of Investor Relations, and we will present the highlights and results for the second quarter 2026. I'll hand it over to Roberto to share his opening remarks. Roberto, good morning.

Roberto Alvo (CEO) Thank you, Ricardo. The second quarter of 2026 was an important demonstration of the resilience of LATAM Airlines 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 $3,700 million in the second quarter alone.

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 operation 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 that volatility continues to be present. The second quarter provided us with one of the most severe fuel price environments 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 these challenging environments.

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 Airlines 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 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. Ricardo Bottas — Group CFO Thank you, thank you, Roberto. Please join me on 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 hedges, 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 Airlines Group rapidly implemented revenue management actions and targeted capacity adjustments. 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 tons transported, which demonstrates the flexibility of this business to adjust pricing given its significantly shorter booking cycle. On the cost side, adjusted cost 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 depreciation of local currencies, particularly the Brazilian real, which pressures the dollar-denominated cost base. 05. 5 cents. 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 costs, the combination of effective execution, commercial flexibility, and the resilience of LATAM Airlines Group'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 number 5. 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 Airlines Group remained resilient across all markets, even under a high-fare environment. 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.

5% increase in consolidated passenger RASK during the quarter, which allowed LATAM Airlines Group affiliates to successfully pass through a significant portion of the increase in fuel costs. S. dollars. 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 plays 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 of this. LATAM's resilient revenue quality was particularly evident in two 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 two 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 continued to enhance the quality of the group's revenue mix, with premium revenues now representing 29% of 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, reflected in a Net Promoter Score that remained three 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's 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 growing importance of the program within the commercial ecosystem. The engagement of elite members also continues to deepen.

While the number 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 broader LATAM Pass ecosystem and their growing engagement with the partner network. Altogether, the trust in the LATAM brand by customers, the alignment with 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 periods of heightened volatility, but also structural growth drivers that will continue to support LATAM Airlines Group's commercial performance as the operating environment improves over time. Let's move to 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 fleet is a key enabler of this strategy, allowing LATAM Airlines Group to further strengthen its premium offer, expand 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 of this year, with commercial operations confirmed to begin on November 3, 2026.

The network will increase capillarity while further strengthening LATAM Airlines Brazil's connectivity. The initial deployment will cover a total of 42 domestic routes within the Brazilian market, which includes eight new routes: four connecting Guarulhos with the new destinations of Cabo Frio, Ji-Paraná, Rondonópolis, and Macaé, enabling LATAM Airlines Brazil to expand into markets that previously were not part of its network, and four 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 additional aircraft are delivered beginning early 2027.

Beyond the domestic market, while this network expansion significantly enhances 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 Airlines Group's extensive network across South America and the four continents served by the group. The increased connectivity of the overall network broadens LATAM Airlines Group's addressable market and further enhances 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 Airlines Group customers expect. Even with a differentiated aircraft configuration, the group will continue delivering a consistent product standard so that the 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 continuing to build on the differentiated value proposition that LATAM Airlines Group has developed across the region. Moving on to slide 8, let's get back into the quarter's performance and take a look at 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's ability to consistently convert earnings into cash. As a result, the group generated a positive change in cash close to $150 million before dividend payments and ended the quarter with a positive net cash balance of $110 million. It's worth noting that these 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 remainder.