LATAM Airlines Group SA (STU:LFL0)

Q2 2026 LATAM Airlines Group SA Earnings Call Transcript

Aug 5, 2026 / 01:00 PM GMT

Release Date Price: €49.8 (+3.32%)

Transcript

Key Points

Positve

LATAM Airlines Group SA (LTM) delivered a profitable quarter with an adjusted operating margin of 5.4% and a positive net income of $125 million, despite facing one of the sharpest increases in jet fuel prices in recent years.
The company successfully mitigated the impact of a 93% increase in total fuel costs by increasing total revenues by almost 28% year-over-year, driven by strong passenger and cargo revenue growth.
Premium segment demand remained resilient, with premium revenues now representing 29% of passenger revenues and growing faster than main cabin revenues, allowing for fare adjustments without losing customer preference.
The LATAM Pass ecosystem continued to strengthen, with more than 67% of passenger revenues now generated by members (up from 60%), and third-party sales from elite members growing 48% year-over-year.
The company reinstated and improved its full-year 2026 guidance, raising the adjusted EBITDA midpoint by $250 million to between $4.1 billion and $4.4 billion, reflecting a more constructive fuel price outlook for the second half of the year.
LATAM Airlines Group SA (LTM) maintained a strong balance sheet with liquidity of over $4.2 billion (26.2% of last twelve months' revenues) and adjusted net leverage at 1.5 times, comfortably below its financial policy target.
The company generated $476 million in adjusted operating cash flow during the quarter, demonstrating its ability to consistently convert earnings into cash even in a challenging environment.
The incorporation of the Embraer E2 aircraft is on track, with commercial operations in Brazil set to begin on November 3rd, 2026, which will expand the network to 67 domestic destinations, the largest in its history.
The Board approved a new share repurchase program, allowing for the repurchase of up to 5% of the company's shares, reflecting management's confidence in the business and its view that the stock is undervalued.

Negative

The company faced an unprecedented increase in jet fuel prices, with the average fuel price rising over 80% year-over-year, resulting in a 93% increase in total fuel costs and creating a significant cost headwind.
Consolidated load factors declined modestly from 83.5% to 81.8% year-over-year, and the company noted a temporary negative impact on demand in June due to the FIFA World Cup affecting travel patterns across South America.
The company incurred a negative fuel hedging result in the quarter, primarily due to premiums paid for call options, which negatively impacted financial results.
The domestic Chile market is experiencing weakness, as the economy has not grown for the last six to seven months, which has had an impact on the average performance in Spanish-speaking domestic markets.
The company's cost ex-fuel increased by 14% year-over-year, partly due to costs linked to higher passenger fares and the appreciation of local currencies, particularly the Brazilian real, which pressures the dollar-denominated cost base.
Management remains cautious about fuel price volatility, noting that significant swings in jet fuel prices have continued and they do not expect price volatility to decrease during the remainder of the current quarter.
The company noted a slowdown in demand from Argentina, which is likely a function of the country's current economic situation, following a strong start to the year.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

LTM.SN - LATAM Airlines Group SA
Q2 2026 LATAM Airlines Group SA Earnings Call
Aug 05, 2026 / 01:00PM GMT

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Presentation
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Operator [1]
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Hello, everyone.

Thank you for joining us and welcome to the second quarter 2026 Latham 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 *1 to raise your hand.

To withdraw your question, press *1 again.

Before I turn the call over to the management. I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations, and as such, constitute forward-looking statements.

Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives

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