LTM — LATAM Airlines Group S.A.

Summary of LATAM Airlines Group Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Revenues: Nearly $4 billion, up 16.3% year-over-year.
• Passenger Revenue: Increased by 20.3%, driven by strong demand and capacity growth.
• Cargo Revenue: Declined by 9.6% in Q4 due to a high comparison base from Q4 2024, but full-year cargo revenues increased.
• Adjusted EBITDAR: $1.1 billion, a 30.4% increase year-over-year.
• Adjusted Operating Income: $661 million, up 42.7% year-over-year.
• Net Income: Approximately $484 million, a 78.1% increase compared to Q4 2024.
• Adjusted Operating Margin: 16.7% for Q4 and 16.2% for the full year, reflecting consecutive years of margin expansion.
• Earnings per ADS: $4.95, a 50% increase from 2024.
• Cash Generation: Adjusted operating cash flow reached $3.3 billion.

2. Strategic Updates and Business Highlights

• Operational Performance: Transported over 87 million passengers in 2025, with a capacity increase of 8.2% for the year.
• Fleet Expansion: Received 26 new aircraft in 2025, including 7 in Q4, bringing the total fleet to 371.
• Customer Experience: Achieved a record Net Promoter Score of 54, indicating strong customer satisfaction.
• Premium Revenue Growth: Premium revenues accounted for 23% of passenger revenues, growing faster than overall passenger revenues.
• Recognition: Received multiple awards for service improvements and brand enhancements.

3. Forward Guidance and Outlook

• 2026 Expectations: Capacity growth projected between 8% and 10%, with adjusted operating margins expected between 15% and 17%.
• Cash Flow: Anticipated adjusted levered free cash flow exceeding $1.7 billion, with liquidity expected to surpass $5 billion by year-end.
• Capital Expenditures: Planned CapEx of approximately $1.7 billion for 2026, including the delivery of 41 new aircraft.

4. Bad News, Challenges, or Points of Concern

• Cargo Revenue Decline: Notable decrease in cargo revenue in Q4 due to high comparison base from the previous year.
• Cost Increases: Unit costs (CASK) increased by 7.9% in Q4, attributed to currency appreciation and nonrecurring costs, raising concerns about cost management.
• Net Debt Guidance: Net debt was approximately $5.9 billion, slightly above guidance due to the $400 million dividend distribution, which may affect future financial flexibility.

5. Notable Q&A Insights

• Yields and Demand: Management indicated stable demand across regions, with international segments performing well. Domestic Chile showed slower growth but is recovering.
• Currency Impact: A stronger local currency is generally viewed positively, enhancing purchasing power for travelers and benefiting domestic revenue streams.
• CapEx and Aircraft Deployment: Plans to deploy new Embraer E2 aircraft primarily in Brazil, focusing on new routes and increased frequencies.
• Corporate Demand: Corporate travel demand has stabilized, with LATAM gaining market share in this segment.
• Competitive Landscape: LATAM believes it has a strong position in the premium segment, with ongoing enhancements to customer experience and service.

Overall, LATAM Airlines Group reported a strong financial performance in Q4 2025, with significant revenue growth and operational improvements. However, challenges remain in cargo revenue and cost management, which the company aims to address as it looks forward to continued growth in 2026.