LTM · LATAM Airlines Group S.A.

LATAM Airlines Group's 1Q 2026 results represent its best quarterly performance in history, with total revenues surging 21.7% to US$4,151 million, primarily driven by a 24.4% increase in passenger revenues to US$3,661 million amid 10.4% capacity growth and 85.3% load factor. Passenger RASK rose 12.7% to 8.0 US cents, boosted by premium revenues which grew 28% YoY and comprised 27% of passenger revenues, underscoring successful product differentiation and demand capture in international and LATAM Brazil domestic markets. Cargo revenues increased 3.4% to US$419 million on 3.1% volume growth to 251 thousand tons. Adjusted operating expenses grew 17.3% to US$3,328 million, moderated by cost discipline despite capacity expansion, local currency appreciations (BRL +10%, CLP +8%), and a 10.1% rise in fuel consumption; adjusted passenger CASK ex-fuel increased 12.0% to 4.5 US cents. This yielded a record 19.8% adjusted operating margin (up 3.0pp) and 31.7% adjusted EBITDA margin (up 3.5pp), with net income at US$576 million. Management highlights the resilience of its business model, diversified network, and premium focus amid rising jet fuel prices, which spiked in March due to Middle East tensions but impacted 1Q by only ~US$40 million due to lags and hedges. For 2Q26, LATAM anticipates mid-to-low single-digit adjusted operating margin despite >US$700 million extra fuel costs at US$170/bbl, offset by revenue actions, capacity tweaks, and cost controls. Full-year 2026 guidance was updated for higher fuel and BRL assumptions. Balance sheet strength is evident with liquidity at US$4,116 million (up 10.5% QoQ) and Adj. Net Leverage at 1.3x (improved from 1.5x). Shareholders approved a US$438 million dividend, signaling confidence, while credit outlooks turned positive from Moody's and Fitch.