Q4 2024 LATAM Airlines Group SA Earnings Call

Operator: Hello, and welcome to the Q4 2024 LATAM Airlines Group Earnings Conference Call. My name is Alex, and I'll be coordinating the call today. If you'd like to ask a question once the presentation has finished, please press star followed by 1 on your telephone keypad. 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 2025, the guidance earnings release, financial statements, and related CMF and SEC filings.

Alex: Hello and welcome to the fourth quarter 2024 Latham Airlines Group earnings conference call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question once the presentation has finished please press star followed by one on your telephone keypad.

Alex: 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.

Alex: 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.

Alex: These statements are based on a range of assumptions that Latham believes are reasonable but are subject to uncertainties and risks that are discussed in detail in the published 20F 2025 guidance earnings release, financial statements and related CMF and SEC filings.

Operator: 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. I'd now like to turn it over to the management team to begin. Please go ahead.

Alex: 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. I'd now like to turn it over to the management team to begin. Please go ahead.

Andrés del Valle: Hello, everyone, and good morning. Welcome to the Q4 and full year 2024 conference call, and thank you all of you for joining us today. My name is Andrés del Valle, Vice President of Corporate Finance at LATAM Airlines Group. Here with me today is Roberto Alvo, our CEO, Mr. Ricardo Bottas Dourado, our CFO, who recently joined the team, and Tori Creighton, Head of Investor Relations, we will present our highlights and results for the Q4 and full year 2024. I will hand it over to Roberto to share opening remarks of the quarter's and year's highlights. Once he's finished, I'll present them in more detail alongside the financial results. Over to you, Roberto.

Bye.

Speaker Change: Hello everyone and good morning. Welcome to the fourth quarter and full year 2024 conference call and thank you all of you for joining us today.

Andres Elvalle: My name is Andres Elvalle, Vice President of Corporate Finance at L'OTAM Earnings Group. Here with me today is Roberto Alvo, our CEO, Mr. Ricardo Botas, our CFO, who recently joined the team, and Terry Creighton, Head of Investor Relations, and we will present the highlights and results for the fourth quarter and full year 2024.

Roberto Alvo: Thank you, Andrés. Good morning, everyone, and thank you for joining us to review LATAM Airlines Group performance for the Q4 and full year results. Before we begin, on behalf of LATAM Airlines, I'd like to express our deepest condolences about the recent accident in Washington. Our thoughts are with the loved ones of passengers and crew on board the aircraft and the helicopter, and the American Airlines team during this difficult time. Also, before I turn to the results, I'd like to invite Ricardo to introduce himself. He has a proven track record of over 2 decades and vast experience in corporate finance, financial planning, tax, accounting, and investor relations. Among other areas, working for multinational public companies in particular, he was also a CEO for a few years, and it's great to have him here. Ricardo, over to you.

Over to you, Roberto.

Roberto Alvo: Thank you Andres. Good morning everyone and thank you for joining us to review LATAM's group performance for the fourth quarter and full year results. Before we begin, on behalf of LATAM Airlines I'd like to express our deepest condolences about the recent accident in Washington. Our thoughts are with the loved ones of passengers and crew on board of the aircraft and the helicopter and the American Airlines team during this difficult time.

Thank you.

Speaker Change: Also, before I turn to the results, I'd like to invite Ricardo to introduce himself. He has a proven track record of over two decades and vast experience in corporate finance, financial planning, tax, accounting, and investor relations, among other areas working for multinational public companies in Brazil. He was also a CEO for a few years, and it's great to have him here. So Ricardo, over to you.

Ricardo Bottas Dourado: Thank you, Roberto. First of all, I'm thrilled to be joining LATAM Airlines. I've always admired it. It's an exciting time. It's the best moment in the history of the group. For sure, there's still a lot to be done. I'm looking forward to the challenge. As Roberto mentioned, I've worked in finance in many different roles in different industries related to healthcare, insurance, and energy. Now I'm joining the aviation industry. I couldn't be more excited to work together with LATAM's teams from now on. Thank you, Roberto, again. Back to you.

Ricardo Botas: Thank you, Roberto. First of all, I'm thrilled to be joining Lausanne and LearnLine. I've always admired it. It's an exciting time and it's the best moment in the history of the group. But for sure, there's still a lot to be done and I'm looking forward to the challenge.

Speaker Change: As Roberto mentioned, I've worked in finance in many different roles in different industries related to healthcare, insurance, and energy. And now I'm joining the aviation industry and I couldn't be more excited to work together with LATAM's team from now on. So thank you, Roberto, again, and back to you.

Roberto Alvo: Thank you, Ricardo. Overall, 2024 was a year of significant achievements for LATAM, not only in the financial sense, in which we successfully met our 2024 updated guidance, but also with respect to our customer satisfaction, our operations, and our capacity to profitably grow, not only on our passenger operations, but also in our cargo business and loyalty program. The results, in my view, are a testimony of the resilient model we have built over the years that allow us to achieve these results in the context of very dynamic macroeconomic and competitive environment. We're incredibly proud of this accomplishment, which wouldn't have been possible without the hard work and dedication of our more than 38,000 employees. Thank you very much to each one of you. You are the engine that is driving LATAM today.

Thank you, Ricardo.

Overall, 2024 was a year of significant achievements for Letapa.

Speaker Change: Not only in the financial sense, in which we successfully met our 2024 updated guidance, but also with respect to our customer satisfaction, our operations, and our capacity to profitably grow not only on our passenger operations, but also in our cargo business and loyalty program.

Speaker Change: The results, in my view, are a testimony of the resilient model we have built over the years that allow us to achieve these results in the context of very dynamic macroeconomic and competitive environments.

Speaker Change: We're incredibly proud of this accomplishment, which wouldn't have been possible without the hard work and dedication of our more than 38,000 employees. Thank you very much to each one of you. You are the engine that is driving LATAM today.

Roberto Alvo: In terms of operations during the quarter, LATAM Group grew approximately 12% compared to the previous year and grew 15% for the full year while maintaining healthy load factors, highlighting our ability to grow efficiently. For the full year, we transported a record-breaking 82 million passengers, further solidifying our role as a key player in connecting people across 151 destinations in 27 countries and allowing South America to be connected within itself and the world. These achievements reinforce LATAM Group position as the number one carrier by market share in five domestic markets and the leading airline group in South America. The group cargo operations also delivered robust results during H2 2024, ending the year with improved load factors, better unit revenue, and showcasing operational growth.

Speaker Change: In terms of operations, during the quarter LATAM group grew approximately 12% compared to the previous year and grew 15% for the full year while maintaining healthy load factors highlighting our ability to grow efficiently.

Speaker Change: For the full year, we transported a record-breaking 82 million passengers, further solidifying our role as a key player in connecting people across 151 destinations in 27 countries and allowing South America to be connected within itself and the world.

Speaker Change: These achievements reinforce the TAM group position as the number one carrier by market share in five domestic markets and the leading airline group in South America.

Bye.

Speaker Change: The group cargo operations also deliver robust results during the second half of 2024, ending the year with improved load factors.

better unit revenue and showcasing operational growth.

Roberto Alvo: Similarly, as of the end of the year, our frequent flyer program, LATAM Pass, reached 49 million members, reaffirming its position as the largest loyalty program in the region. LATAM financial results also reflected continuous cost efficiency. Adjusted passenger CASK ex-fuel for the year was $0.042, which is 1.5% lower than our 2023 figure. This led us to earn a double-digit adjusted operating margin of 12.7%, outperforming our guidance. Adjusted EBITDA reached $3.1 billion for the year, bringing full-year net income to $977 million, which nearly doubles our 2023 figure. These achievements are not just historical milestones for the company, but they are also a testament of the dedication, resilience, and collective effort of the entire team. We have consistently delivered strong improvements in our capital structure.

Speaker Change: Similarly, as of the end of the year, our frequent flyer program, the TAMPAS, reached 49 million members, reaffirming its position as the largest loyalty program in the region.

Speaker Change: LATAM's financial results also reflected continuous cost efficiency. Adjusted passenger cask fuel for the year was 4.2 cents, which is 1.5% lower than our 2023 figure. This led us to a double-digit adjusted operating margin of 12.7% outperforming our guidance.

Speaker Change: Adjusted EBITDA reached $3.1 billion for the year, bringing full-year net income to $977 million, which nearly doubles our 2023 figure.

Speaker Change: These achievements are not just historical milestones for the company, but they're also a testament of the dedication, resilience, and collective effort of the entire team.

Speaker Change: We have consistently delivered strong improvements in our capital structure. As you have followed our progress, you have seen how we have actively reduced our leverage, which now stands at 1.7 times, with liquidity currently at 27%, ensuring Latam has a strong balance sheet.

Roberto Alvo: As you have followed our progress, you've seen how we have actively reduced our leverage, which now stands at 1.7 times, with liquidity currently at 27%, ensuring that LATAM has a strong balance sheet. It is worth mentioning our successful refinancing exercise conducted in the Q4, which significantly reduced the cost of the majority of our non-fleet debt. The focus and efforts we have devoted to placing our customers at the center of our decision-making, devoting ourselves to continuously improving the travel experience, also bore fruit. Customer satisfaction reached unprecedented levels, achieving the highest ever total Net Promoter Score of 51 points and 56 points for our premium passengers, and also the lowest rate of customer complaints in Chile, Brazil, and Peru, where we have public figures to be compared.

Speaker Change: It is worth mentioning our successful refinancing exercise conducted in the fourth quarter, which significantly reduced the cost of the majority of our non-FLIP debt.

Speaker Change: The focus and efforts we have devoted to placing our customers at the center of our decision making, devoting ourselves to continuously improving the travel experience, also bore fruit.

Speaker Change: Customer satisfaction reached unprecedented levels, achieving the highest ever total net promoter score of 51 points.

Speaker Change: and 56 points for our premium passengers, and also the lowest rate of customer complaints in Chile, Brazil, and Peru, where we have public figures to be compared.

Roberto Alvo: Additionally, for the sixth consecutive year, LATAM ranked among the top five global airline groups in punctuality, underscoring its operational performance and commitment to ensuring passengers arrive on time and comfortably. Furthermore, LATAM Airlines Group was incorporated into the Dow Jones Sustainability Index and was recognized as the fifth most sustainable airline group worldwide and the most sustainable group in the Americas and the Western Hemisphere. Once again, these achievements underline our commitment to combining operational excellence with environmental and social responsibility. As we close 2024 and we embark in a new year, I believe it is important to summarize again our achievements. In 2024, we delivered our best financial results so far, including very strong balance sheet, keeping at the same time our extremely efficient cost base. Our network presence is strong in every segment we operate.

Speaker Change: Additionally, for the sixth consecutive year, LATAM ranked among the top five global airline groups in punctuality, underscoring its operational performance and commitment to ensuring passengers arrive on time and comfortably.

Speaker Change: Furthermore, Latam Airlines Group was incorporated into the Dow Jones Sustainability Index and was recognized as the fifth most sustainable airline group worldwide and the most sustainable group in the Americas and the Western Hemisphere.

Speaker Change: Once again, these achievements underline our commitment to combining operational excellence with environmental and social responsibility.

Speaker Change: As we close 2024 and we embark in a new year, I believe it's important to summarize again our achievements.

Speaker Change: In 2024, we delivered our best financial results so far, including very strong balance sheet, keeping at the same time our extremely efficient cost base.

Our network presence is strong in every segment we operate.

Roberto Alvo: We transported more passengers than ever before, and we did so with our historically best customer satisfaction score. All of this in the context of being one of the most functional and more environmentally conscious airlines in the world. Looking ahead, in the short term, we expect demand to remain healthy with steady booking curve for Q1 2025. In particular, the international segment continues to demonstrate strong levels of bookings for the current high season. Thank you again for your time. I'd like to turn the call over to Andrés to further discuss our financial and operating results.

Speaker Change: We transported more passengers than ever before, and we did so with our historically best customer satisfaction score.

Speaker Change: All of this in the context of being one of the most functional and more environmentally conscious airlines in the world.

Speaker Change: Looking ahead, in the short term, we expect demand to remain healthy with steady booking curve for the first quarter of 2025. In particular, the international segment continues to demonstrate strong levels of bookings for the current high season.

Speaker Change: Thank you again for your time. I'd like to turn the call over to Andres to further discuss our financial and operating results.

Andrés del Valle: Thank you, Roberto. Let's move to the following slide, please. Diving deeper into Q4 operating figures, LATAM Group continues to show robust operational growth year over year, with more passengers choosing us across all markets. In this sense, during the quarter, the group transported 21.5 million passengers. This is a 7% increase compared to Q4 2023, and achieved a record-breaking 82 million passengers for the full year, reinforcing LATAM as the largest airline group in South America and within the top 10 globally in terms of seats. During this period, capacity grew by approximately 12% while maintaining healthy load factors across all segments, with a notable consolidated load factor of almost 86% for the quarter. In terms of consolidated revenues per ASK, we see a decrease of 10% year over year, though stable compared to Q3 2024.

Andres Elvalle: Thank you, Roberto. Let's move to the following slide, please. Diving deeper into fourth-quarter operating figures, Batangas continues to show robust operational growth year-over-year with more customers choosing us across all markets.

Andres Elvalle: In this sense, during the quarter, the group transported 21.5 million passengers. This is a 7% increase compared to the fourth quarter of 2023, and achieved a record-breaking 82 million passengers for the full year, reinforcing LATAM as the largest LN group in South America and with the top 10 globally in terms of seats.

Andres Elvalle: Also, during this period, capacity grew by approximately 12 percent while maintaining healthy load factors across all tech plants with a notable consolidated load factor of almost 86 percent for the quarter.

Andres Elvalle: In terms of consolidated revenues for ASK, we see a decrease of 10% year-over-year, so stable compared to third quarter of 2024.

Andrés del Valle: This decrease was influenced by the decline in jet fuel prices year over year and by currency depreciation in some of our main markets, especially in Brazil, since our ASKs are presented in USD. However, when analyzed through our single currency, we observe an average increase of 3% among Spanish-speaking countries where LATAM Airlines Group's affiliates operate. In Brazil, however, the comparison base is exceptionally high from the Q4 2023. LATAM Airlines Group's diversified network and strong volume position has enabled us to deliver solid results this quarter with improved margins that we can see now on slide 5. In this Q4, LATAM continued to consolidate a trend of strong financial performance, achieving an adjusted operating margin of 13.6%, supported by revenue growth and cost discipline.

Andres Elvalle: This decrease was influenced by the decline in jet fuel prices year-over-year and by currency depreciation in some of our main markets, especially in Brazil, since rasks are presented in USD. However, when analyzing rasks in local currency, we observe an average increase of 3% among Spanish-speaking countries where the time group's affiliates operate. In Brazil, however, the comparison base is exceptionally high from the fourth quarter of 2023.

Andres Elvalle: But that group's diversified network and strong value proposition has enabled us to deliver solid results this quarter with improved margins that we can see now on slide 5.

Bye.

Andres Elvalle: In this fourth quarter, LATAM continued to consolidate the trend of strong financial performance, achieving an adjusted operating margin of 13.6 percent, supported by revenue growth and cost discipline.

Andrés del Valle: Total revenues increased by 4% year-over-year, driven by a remarkable 29% growth in travel revenues, marking the third consecutive quarter of improvement. Total adjusted operating expenses increased by only 1% in the quarter, primarily driven by a 12% increase in capacity, offset by a decline of 23% in jet fuel prices, including hedges, which helped mitigate cost pressures and further contributed to the operational efficiency. Adjusted EBITDA grew by 28% to $866 million, while net income for the quarter reached $272 million, marking a 228% increase compared to the same period of 2023. These results emphasize the effectiveness of our operational strategy and our focus on consistent financial performance. Turning to the next slide, the financial results achieved reflect our commitment to enhancing the customer experience as a pivotal element of our strategic vision. This year, we made progress on elevating the quality and satisfaction of our services.

Andres Elvalle: Total revenues increased by 4% year-over-year, driven by a remarkable 29% growth in care revenues, marking the third consecutive quarter of improvement.

Andres Elvalle: Total adjusted operating expenses increased by only 1% in the quarter, primarily driven by a 12% increase in capacity offset by a decline of 23% in jet fuel prices, including hedges, which helped mitigate cost pressures and further contributed to operational efficiency.

Andres Elvalle: Adjusted EBITDA grew by 28% to $866 million, while net income for the quarter reached $272 million, marking a 228% increase compared to the same period of 2023.

Andres Elvalle: These results emphasize the effectiveness of our operational strategy and a focus on consistent financial performance.

Andres Elvalle: Turning to the next slide, the financial results achieved reflect a commitment to enhancing the customer experience as a pivotal element of our strategic vision.

Andres Elvalle: This year, we made progress on elevated equality and satisfaction of our services.

Andrés del Valle: A key metric of our success is the improvement in our net promoter score, which climbed to 51 points, marking a 3-point increase from the previous year, while our net promoter score for premium travelers reached 56 points during 2024. While there is always room for improvement, LATAM Group's affiliate has the lowest of customer complaints across Chile, Brazil, and Peru. Punctuality is another cornerstone of our service excellence, and we're proud to be recognized as one of the most punctual group of airlines in the industry. This commitment to reliability ensures that our flights consistently depart and arrive on schedule, enhancing the travel experience for all our passengers. To further enhance the passenger experience, we have successfully implemented Wi-Fi connectivity across 100% of the narrow-body fleet operated by LATAM Airlines Brazil and 75% of the narrow-body fleet operated by affiliates based in Spanish-speaking countries.

Andres Elvalle: A key metric of our success is the improvement in our Net Promoter Score, which climbed to 51 points, marking a 3-point increase from the previous year, while our Net Promoter Score for Premium Travelers reached 56 points during 2024. While there is always room for improvement, Batam Cruise Affiliate has the lowest of customer complaints across Chile, Brazil, and Peru.

Andres Elvalle: Punctuality is another cornerstone of our service excellence and we are proud to be recognized as one of the most punctual group of airlines in the industry.

Andres Elvalle: This commitment to reliability ensures that our flights consistently depart and arrive on schedule, enhancing the travel experience for all our passengers.

Andres Elvalle: To further enhance the passenger experience, we have successfully implemented Wi-Fi connectivity across 100% of the inarbitrary fleet operated by LATAM Airlines Brazil and 75% of the inarbitrary fleet operated by Affiliates based in Spanish-speaking countries.

Andrés del Valle: We have also completed the comprehensive modernization of our narrow-body fleet, incorporating the latest technology and comfort-rated designs to provide a superior travel experience. Additionally, as of December 2024, 54% of LATAM Airlines Group's wide-body fleet feature a retrofitted interior. These achievements reflect our relentless focus on customer satisfaction and loyalty. Let's move to slide 7, please. As I just mentioned, we have made significant progress in the travel experience, but at the same time, we have demonstrated remarkable financial discipline by keeping our unit cost stable. Our annual adjusted CASK ex-fuel remains at a competitive $0.042, highlighting our effective cost management strategies amidst industry challenges and focus on continually investing in improving our product and customer experience. The next slide, please. Turning to the next slide, in 2024, sustainability continued to be a cornerstone of LATAM Airlines Group's strategy, guiding our investments and innovations across the region.

Andres Elvalle: We have also completed the comprehensive modernization of our Narbari fleet, incorporated the latest technology and compromised designs to provide a superior travel experience.

Andres Elvalle: Additionally, as of December 2024, 54% of Latham's white-body fleet feature a retrofitted interior.

Andres Elvalle: These achievements reflect our relentless focus on customer satisfaction and loyalty.

Let's move to slide seven, please.

Andres Elvalle: As I just mentioned, we have made significant progress in the travel experience, but at the same time, we have demonstrated remarkable financial discipline by keeping our units costs stable.

Andrés del Valle: In this sense, we have been re-incorporated in the Dow Jones Sustainability Index and recognized as the most sustainable airline group in the Americas and ranked fifth worldwide. On the other hand, we proudly secured South America's first sustainability-linked loan, underscoring our leadership and commitment to sustainable finance. Additionally, in December, the results from the joint study with the MIT and Airbus were published, which focus on advancing the production of sustainable aviation fuel in our region. This initiative represents a step forward in reducing carbon emissions and promoting cleaner air travel. Beyond these advancements, LATAM Group has made tangible environmental progress. In 2024 alone, we recycled 280 tons of waste on domestic flights, contributing to circular economy initiatives, and since 2010, our efforts in fuel efficiency have helped about 4.5 million tons of CO2 emissions.

Andrés del Valle: Our Solidarity Plane program has transported over 16,000 passengers and 3,500 tons of cargo free of charge since 2021, reaffirming our commitment to social impact. By investing in sustainable technologies and partnerships, LATAM Airlines Group is not only reducing its environmental footprint, but also setting new standards for the aviation industry. We're committed to leading the way in sustainability, ensuring a greener future for generations to come. Let's move to slide 9. Our performance results reflect our commitment to enhancing the customer experience, which contributed to both our quarterly and full year figures. For the full year 2024, LATAM delivered on its updated guidance, achieving notable financial results that continue to improve year over year. In this sense, annual revenues reached $13 billion, representing an approximately 11% growth year over year. Annual adjusted operating margin was 12.7%.

Andres Elvalle: Our solidarity plan program has transported over 60000 passengers and 3500 tonnes of cargo <unk> chart since 2021, reaffirming our commitment to social impact.

Andres Elvalle: By investing in sustainable technologies and partnerships, but I can give is not only reducing its environmental footprint, but also setting new standards for the aviation industry, we're committed to leading the way in sustainability and shrink cleaner future for generations to come.

Andres Elvalle: Let's move to slide nine.

Andres Elvalle: Our performance results reflect our commitment to enhancing the customer experience, which contributed to both our quarterly and full year figures.

Andres Elvalle: For the full year 2024 lots and delivered on its updated guidance achieving notable financial results that continued to improve year over year. In this sense annual revenues reached 13 billion, representing an approximately 11% growth year over year.

Andres Elvalle: Annual adjusted operating margin was 12, 7%. This is an increase of a one five percentage points compared to 2023, while adjusted EBITDA increased by 22% to $3 1 billion.

Andrés del Valle: This is an increase of a 1.5 percentage points compared to 2023, while adjusted EBITDA increased by 23% to $3.1 billion. LATAM has a solid foundation for sustained growth in 2025, as you can see in our 2025 guidance figures, which support continued financial improvement. All of these positive results are reflected in the net income generation for the year, which amounted to $977 million, nearly double the 2023 figure. Moving to slide 10. As you know, we consider cash generation to be the true measure of performance. In this sense, adjusted operating cash flow generation through the year totals $2.8 billion, while investments in maintenance and growth amounted to $1.5 billion. Throughout 2024, LATAM generated $243 million in positive cash. Notably, this includes the allocation of $175 million for the mandatory minimum dividend payment and $207 million for the refinancing exercise conducted in October of last year.

Andres Elvalle: Latam has a solid foundation for sustained growth in 2025 as you can see in our 25 guidance figures, which support continued financial improvement.

Andres Elvalle: All of these positive results are reflected in the net income generation for the year, which amounted to 977 million nearly double the 20% figure.

Andres Elvalle: Moving to slide 10, as you know, we consider cash reasons needed to measure of performance in this sense adjusted operating cash flow generation for the year totaled $2 $8 billion, while investments in maintenance and growth amounted to one 5 billion.

Andres Elvalle: Throughout 2000 and for Latam generated $243 million in positive cash, notably this includes the allocation of $175 billion for the mandatory minimum dividend payments and $207 million for the refinancing exercise to come back to that in October of last year.

Andrés del Valle: In both cases, we reinforce a commitment to sustainable capital allocation and delivering value to shareholders. Please join me on slide 11. LATAM continued to strengthen its capital structure in 2024 and also deliver on this front with regard to its updated guidance. Liquidity at the end of the year reached $3.5 billion, equivalent to 27% of last 12 months revenues, while adjusted net leverage decreased to 1.7 times. These results highlight the continued delivery efforts and commitment to financial discipline. This robust capital structure provides LATAM with the flexibility to fund growth initiatives while ensuring long-term stability. Given the strong cash generation in 2024 and LATAM's consistent financial performance over the past two years, the company has updated its financial policy along with its best interest and strategic objectives.

Andres Elvalle: In both cases, we reinforced our commitment to sustainable capital allocation and delivering value to shareholders.

Andres Elvalle: Please join me on slide 11.

Andres Elvalle: Latam continued to strengthen its capital structure in the 'twenty 'twenty four and also deliver on this front, but with regard to its updated guidance liquidity at the end of year reached $3 5 billion Butters.

Andres Elvalle: Equivalent to 27% of muscle mass revenues, while adjusted net leverage decreased to one seven times.

Andres Elvalle: These results highlight the continued deleveraging efforts and commitment to financial discipline.

Andres Elvalle: <unk> capital structure provides <unk> with the flexibility to fund growth initiatives, while ensuring long term stability.

Andres Elvalle: Given the strong cash generation in 2004 and at times consistent financial performance over the past three years. The company has updated its financial policy, along with expense interest and strategic objectives.

Andrés del Valle: This policy establishes a capital allocation framework focused on balancing strength, profitable growth investments, and shareholder returns beyond the mandatory 30% dividend distribution. The strategy focus on maintaining financial discipline by optimizing the cost of debt, having adjusted debt leverage below two times, and aspiring to reach a BB+ rating. The policy also outlines a range of optimal liquidity between 21% and 25% of last 12 months revenues. In line with this policy, LATAM’s management and board regularly analyze alternatives for further capital return program to shareholders, including, but not limited to, incremental dividends, share buybacks, and/or growth capital and strategic investments for most effective allocation of capital in 2025 and beyond.

Andres Elvalle: This policy establishes our capital allocation framework folks and balance sheet strength.

Andres Elvalle: Growth investments and shareholder returns beyond demand or two 7% dividend distribution the.

Andres Elvalle: The strategic focus of maintaining financial discipline by optimizing the cost of debt.

Andres Elvalle: Adjusted net leverage below two times and aspiring to reach a BBB plus rating.

Andres Elvalle: The policy also our clients a range of optimal liquidity between 21% and 25% of lateral pumps revenues.

Andres Elvalle: Along with this policy attempts management and board bright currently analyzed our tenancy for further capital return program to shareholders, including but not limited to incremental dividends share buybacks and our growth capital and strategic investments for most effective allocation of capital in 2025.

Andres Elvalle: And beyond.

Andrés del Valle: Considering that the current share ADR price may be undervalued compared to historic multiples, and while share buybacks are not common practice in Chile, the board of directors will evaluate whether an up to $150 million share buyback program can be implemented while mitigating the impact to the shares' current trading liquidity. Let's move to slide 12. Looking ahead to 2025, LATAM Group anticipates continued growth and financial strength. Capacity measured in ASKs is expected to grow by 7% to 9% as a whole, supported by the addition of 22 new aircraft throughout the year, with revenues forecast to reach $14 to $14.5 billion. Adjusted EBITDA is projected at $3.25 to $3.6 billion, supported by a healthy demand environment, a diversified value proposition, disciplined cost management, and strong liquidity. LATAM remains focused on delivering operational excellence and creating value for all stakeholders this year.

Andres Elvalle: Considering that the current share price may be undervalued compared to historic multiples and while share buybacks are not common practice in Chile.

Andres Elvalle: Out of directors will evaluate whether on up to $150 million share buy back program can be implemented while mitigated the impact to the <unk> current trading liquidity.

Andres Elvalle: Let's move to slide 12.

Andres Elvalle: Looking ahead to 2025.

Andres Elvalle: <unk> anticipates continued growth and financial strength.

Andres Elvalle: Capacity measure in Ace case is expected to grow by 7% to 9% as a whole supported by the addition of 22 new aircraft throughout the year.

Andres Elvalle: Revenues forecast reached $14 to $14 5 billion.

Andres Elvalle: Adjusted EBITDA is projected at $3 25 to $3 $6 billion supported by a healthy demand environment, a diversified value proposition disciplined cost management and strong liquidity.

Andres Elvalle: Latam remains focused on delivering operational excellence and creating value for all stakeholders. This year.

Andres Elvalle: Let me conclude on slide 13.

Andrés del Valle: Let me conclude to slide 13. 2024 was a strong year for LATAM Group. We witnessed a record-breaking number of passengers transported while achieving significant operational milestones that underscore our strategic progress. Throughout the year, we consistently delivered strong financial results with an annual net income of $977 million, nearly doubling the 2023 figure. We also achieved an adjusted EBITDA of $3.1 billion, representing a 23% increase year over year. Our commitment to cost containment is reflected in our unadjusted passenger cash ex-fuel of $0.042. For 2025, we expect to sustain this growth momentum. Passenger satisfaction increased, as evidenced by a net promoter score of 51 points, a 3-point improvement over 2023. LATAM was ranked as the fourth most punctual global airline during the year, further enhancing customer satisfaction and our reputation for reliability.

Andres Elvalle: 224 was a strong year from a subgroup, we witness a record breaking number of passengers transported while achieving significant operational milestones that underscore our strategic progress.

Andres Elvalle: Throughout the year, we consistently delivered strong financial results with an annual net income of $977 million due to doubling the 2023 figure. We also achieved an adjusted EBITDA of $2 $1 billion, representing a 22% increase year over year.

Andres Elvalle: Our commitment to cost containment is reflected in our unadjusted passionate cask ex fuel of four <unk>.

For 2025, we expect to sustain this growth momentum.

Andres Elvalle: Cash and satisfaction increased as evidenced by net promoter score of 51 points, a three point improvement over 2023.

Andres Elvalle: <unk> was ranked as the fourth most punctual global earn in during the year.

Andres Elvalle: To enhancing customer satisfaction and our reputation for reliability.

Andrés del Valle: Our leadership in sustainability distinguishes us within the industry, having secured South America's first sustainability-linked loan and recognition as the most sustainable airline group in the Americas and the fifth worldwide. These accomplishments illustrate LATAM's forward-looking focus, well prepared for future opportunities and to navigate the evolving aviation landscape. Thank you. We now welcome any questions that you may have.

Andres Elvalle: Our leadership and sustainability distinguishes us within the industry, having secured south America's first sustainability linked loan and recognition as the most sustainable earnings growth in the Americas and the fifth worldwide.

Andres Elvalle: These accomplishments illustrate let times forward looking focus was prepared for future opportunities and to navigate the evolving aviation landscape.

Andres Elvalle: Thank you we now welcome any questions that you may have.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star followed by 1 on your telephone keypad. Our first question for today comes from Michael Linenberg of Deutsche Bank. Your line is now open. Please go ahead.

Speaker Change: As a reminder, lighthouse question. Please press star followed by one on your telephone keypad.

Speaker Change: Our first question for today comes from Michael Lindenberg of Deutsche Bank. Your line is now open. Please go ahead.

Michael Lindenberg: Oh, Yeah, Hey, good morning.

Michael Linenberg: Hey, good morning. Roberto, Andrés, Ricardo, Tori. By the way, a warm welcome to Ricardo. Not only are you joining an airline that is a leader in Latin America, but I think many view it as the gold standard on a global basis, so welcome aboard. I have two questions here, and maybe the first one to Andrés and/or the team. You reiterated your December guidance, and yet, over the past two months, we've seen the currency depreciate pretty meaningfully against the dollar, as well as fuel prices move up. My question is, what are you seeing with respect to the pass-through of basically the higher cost of doing business that gives you confidence that you feel good about reiterating these numbers, the margins, and revenue growth?

Michael Lindenberg: Roberto Andreas Ricardo Tori.

Michael Lindenberg: By the way.

Michael Lindenberg: Warm welcome to the cargo.

Speaker Change: Not only are you joining an airline is that it.

Michael Lindenberg: As a leader in Latin America, but.

Michael Lindenberg: I think many viewed as the gold standard on a global basis. So.

Michael Lindenberg: Welcome aboard.

Michael Lindenberg: Hi.

Michael Lindenberg: I have two questions here.

Michael Lindenberg: And maybe.

Michael Lindenberg: The first one Q and draft.

Michael Lindenberg: <unk>.

Michael Lindenberg: Team.

Michael Lindenberg: You reiterated your December 3rd again.

Michael Lindenberg: And yet over the past.

Michael Lindenberg: Two months.

<unk> seen the currency depreciate.

Michael Lindenberg: Meaningfully against the dollar as well as fuel prices move up.

Michael Lindenberg: And so my question is what are you seeing with respect to the pass through.

Michael Lindenberg: Basically the higher cost of doing business that gives you confidence that.

Michael Lindenberg: You feel good about reiterating these numbers the margins and revenue growth.

Speaker Change: Thanks, Mike This is Robert.

Roberto Alvo: Thanks, Mike. This is Roberto, the question, and thanks for the compliments as well. Well, our guidance has $90 per barrel of jet fuel and 5.8 of Real. At the current levels, on both commodities are not very far from that, even though we've seen, of course, volatility. At this point in time, I think that we still feel very confident about our guidance. The booking curve in the first few months of the year is healthy and solid in almost every line of business where we have. Cargo has bounced back nicely as well since the second semester of last year to the beginning of this year as well. I think the ability we have to diversify our portfolio, move our assets around, make sure that this is an opportunity for LATAM remains.

Michael Lindenberg: Question.

Michael Lindenberg: And thanks for the for the compliment as well.

Michael Lindenberg: Well, our guidance has a $90 per barrel of jet fuel and five eight of Galleria at the current levels on both commodities are not very far from that even though we've seen of course volatility at this point in time I think that we still very feel feel very confident about our guidance the booking curve in the first few months of the year is healthy and solid.

Michael Lindenberg: In almost every line of business, where we have Karl Haas bounces back nicely as well.

Michael Lindenberg: The second semester of last year through the beginning of this year as well and I think that the ability we have to diversify our portfolio move our assets around make sure that the Dcs.

Michael Lindenberg: An opportunity for Latam remains one of the things I told you in past in past calls is that one of the things that we build is something I call relative strength and actually in these moments of Volatilities were and I think that our position allows us to take advantage of that relative strength and eventually induce opportunities.

Roberto Alvo: One of the things I told you in past calls is that one of the things that we've built is something I call relative strength. Actually, in these moments of volatility is when I think that our position allows us to take advantage of that relative strength and eventually induce opportunities of us solidifying our network and our presence. We remain confident. We have the tools, we believe, to overcome this volatility. Be mindful that the Real depreciated 20% in 2024. It was below 5 at the beginning of the year, it ended in 6. Despite that, we were able to deliver the results we had in 2024. We remain optimistic and confident that we have the abilities to do that in 2025.

Michael Lindenberg: So first solidifying our.

Michael Lindenberg: Our network on our breath. So we remain confident we have the tools, we believe to overcome these volatility I mean be mindful that the real depreciated, 20% in 2024, it was before below five <unk>.

Michael Lindenberg: Year over year, and six and despite of that we were able to deliver the results. We had in 2024. So we remain optimistic and I am confident that we have the ability to do that in 2025.

Michael Linenberg: Right. Just my second question on, go ahead.

Speaker Change: Great and then just my second question on.

Speaker Change: Oh go.

Speaker Change: Go ahead.

Michael Lindenberg: Right now Brian go ahead.

Roberto Alvo: No, go ahead.

Michael Linenberg: Just my second question, hearing your potential opportunity with respect to capital deployment, shareholder returns, considering a share of purchase, are there any restrictions or mitigating factors that, you mentioned $150 million, on size? I realize that a good portion of your float is held by insiders. Is that one of the gating issues in sizing a potential share of purchase? If you could talk about that. Again, thanks for taking my questions.

Michael Lindenberg: Just my second question hearing.

Michael Lindenberg: Youre sort of potential opportunity with respect to capital deployment shareholder return considering.

Michael Lindenberg: Share repurchase are there any restrictions or mitigating factors that you mentioned $150 million.

Michael Lindenberg: On size I realize that a good portion of your float is held.

Speaker Change: By insiders.

Speaker Change: Is that one of the gating issues in sizing our potential share repurchase if you could talk about that and then again thanks for taking my question.

Speaker Change: Thank you Michael.

Roberto Alvo: Thank you, Michael Linenberg. First, just to remind particularly people in the US that are not necessarily very close to Chilean laws, that either dividend distributions at the end of the policy over 30% or buybacks need to be approved by shareholders. Okay, this is not a board decision. Board can recommend. Ultimately, shareholders make that decision.

Speaker Change: So first just to remind particularly people in the U S that are not necessarily very close to Chilean loss.

Speaker Change: Either.

Speaker Change: Dividend distributions at the end of the policy over 30% or buybacks need to be approved by shareholders. Okay. So this is not our board decision board can recommend ultimately shareholders make that decision.

Roberto Alvo: We will do that in case we decide to move in this direction. Yes, we are mindful of the liquidity of the share. These operations are not very typical in Chile either. There is very few cases and none of a relatively important size. We want to analyze. The law provides for this, so it can be done.

Speaker Change: So we will do that in case, we decided to move in this direction.

Speaker Change: Yes, we are mindful of the liquidity of the share.

Speaker Change: These operations are not very typical in Chile, either I mean, there's very few cases of non of a relatively important sites. So we want to analyze the law provides for this so it can be done but of course, we won't get annualized very well the feasibility of doing that but the size is limited today basically to our understanding.

Roberto Alvo: Yeah

Roberto Alvo: analyze very well the feasibility of doing that. The size is limited today, basically to our understanding that we don't want to impact the liquidity of the shares

Speaker Change: We don't want to impact the liquidity of the shares.

Speaker Change: Particularly in the U S market. So thats a constraint we have very much in mind today.

Andrés del Valle: particularly in the US market. That's a constraint we have very much in mind today.

Michael Linenberg: Great. Thanks, and great quarter, everyone.

Speaker Change: Great, Thanks, and great quarter everyone.

Speaker Change: Thank you.

Roberto Alvo: Thank you.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from Jens Spiess of Morgan Stanley. Your line's now open. Please go ahead.

Speaker Change: Our next question comes from Matt <unk> of Spice of Morgan Stanley. Your line is now open. Please go ahead.

Speaker Change: Okay.

Jens Spiess: Yes, hello. Congrats on the strong results to finish and wrap up the year. I just had a question on prices, mainly. Looking at the Brazilian market, in local currencies, your prices are down. If you could just explain a bit more what's going on there, and if you see further pressure going forward. On the international side, understand what's mainly driving the decrease in prices. Is it more inter-regional international flights, or is it long haul? In terms of mix, how should we think about it? Thank you.

Matt: Yes, Hello, congrats on the strong results to finish.

Speaker Change: This drove up the year.

Speaker Change: I just had a question on prices, mainly I mean looking at.

Speaker Change: The Brazilian market.

Speaker Change: In local currencies your prices are down so if you could just.

Speaker Change: Explain a bit more what's going on there and if you see further pressure going forward.

Speaker Change: And also on the international side.

Speaker Change: I understand what is mainly driving the decrease in prices is it more inter regional international flights or is it long haul.

Speaker Change: In terms of mix, how should we think about it. Thank you.

Speaker Change: Yes.

Roberto Alvo: Yes. Traffic in domestic Brazil remains healthy. Last quarter of 2023 was, in particular, very strong. There's a very high basis of comparison vis-à-vis 2023. At this point in time, we have no indication that demand will not continue to be healthy going forward. With respect to international, it's been relatively across the board. I would say that Brazil to Europe, Latin America to Europe in general, has been very healthy. A little bit less so to the US, but still in good, healthy figures. Regional, which is international within South America, had a very nice rebound as well.

Speaker Change: So traffic in domestic Brazil remains healthy.

Speaker Change: And.

Speaker Change: Last quarter of 2023 worse in particularly very strong so there's a very high basis of comparison vis vis 2023 in absolute terms Nonetheless.

Speaker Change: During 2024, we saw a healthy movement of yields in domestic Brazil and at this point in time, we have.

Speaker Change: No indication that demand will not continue to be healthy going going forward.

Speaker Change: With respect to international.

Speaker Change: Been relatively across the board I would say that Brazil to Europe, and Latin America to Europe in general has been very healthy a little bit less so to the U S, but still in good healthy figures.

Speaker Change: And regional we choose internationally, we do South America had a very nice rebound as well due to be do remember that international was the last segment to recover from the pre pandemic level. So what we saw in 2024 was still probably the the last bit of the recovery and that's why also we grew around 20% in international but there are no segments and international.

Roberto Alvo: Do remember that international was the last segment to recover from the pre-pandemic level, so what we saw in 2024 was still probably the last bit of the recovery, and that's why also we grew around 20% in international. There are no segments in international that are particularly concerning us, whether it's the regional, again, international within South America or the long haul.

Speaker Change: Are particularly concerning us.

Speaker Change: Whether it's the regional again international wins in South America, or the normal and I would complement that of course, whatever currencies depreciate, we see I think in an abnormal pickup in inbound traffic from coming to South America, I think which becomes more archival.

Andrés del Valle: I would complement that, of course, whenever currencies depreciate, we see, I think, a pickup in inbound traffic from coming to South America, I think, which becomes more traffic. We have definitely seen that across all markets, inbound traffic.

Speaker Change: <unk> definitely seen that across all markets.

Speaker Change: Right.

Speaker Change: Okay understood yet on.

Jens Spiess: Okay. Understood. Yeah. On that last point, that's what I was trying to dissect. Because international, obviously, you are probably seeing some weakness on the inter-regional flights due to the volatility on the local currencies. Also it could end up being positive for long haul, right? In terms of price.

Speaker Change: On that last point.

Speaker Change: That's what I was trying to dissect because international.

Speaker Change: Obviously.

Probably seeing some weakness on the intra regional flights with each of the volatility in the local currencies.

Speaker Change: But also it could end up being positive for long haul right.

Speaker Change: But yes, I don't I don't think we have seen.

Roberto Alvo: Yes, I don't think we have seen weakness. Probably I misexplained myself. I think that regional, so international within South America, has been solid. What Andrés says is very important. Let me just give you an example. There's a currency depreciation in Brazil, we do know, but there's actually in real terms, a currency appreciation in Argentina. Argentines love to travel. You see significant increase in outbound traffic from Argentina through our hubs to long haul within the region. At the end of the day, the volatility we've seen in the currencies this year has been, in a way, counterbalanced by other markets. We see, in general, strong flows in almost every one of our international segments, whether it's within South America or long haul.

Speaker Change: Weakness broadly I mean explain myself I think that regional international and North America has been solid.

Speaker Change: And what address space is very important so let me just give you. An example, there is a currency depreciation in Brazil, we do know, but theres actually in real terms of currency depreciation in Argentina.

Speaker Change: Argentine slope to travel so you see significant increase in outbound traffic from Argentina through our hubs to long haul within the region.

Speaker Change: So at the end of the day the volatility we've seen in the currency. This year has been a way counter balanced by other markets. We see in general strong flows in almost every one of our international segments, whether it's within South America for long haul.

Speaker Change: Perfect very clear thank you.

Jens Spiess: Perfect. Very clear. Thank you.

Speaker Change: Thank you.

Speaker Change: Okay.

Roberto Alvo: Thank you.

Thank you. Our next question comes from Andre <unk> of Bradesco <unk> your.

Operator: Thank you. Our next question comes from Andre Ferreira of Bradesco. Your line's now open. Please go ahead.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Hi, Good morning, Thanks for taking my question Congrats on the results.

Andre Ferreira: Hi. Good morning. Thanks for taking my question. Congrats on the results. Two topics here. First, about the fleet plan, it looks like it relies on a significant increase of the number of new units being delivered, and also significantly more than what was delivered in 2024. My question is, if you see risks of this being hampered by further delays in deliveries by Airbus. My second question, it looks like the combination of Azul and Abra or Gol is advancing. I just wanted to get your view on it. How would this impact LATAM? How would this impact the local fare environment? If it changes anything in LATAM's longer-term strategy for Brazil, if it goes ahead. Thank you.

Speaker Change: Two topics here so first.

Speaker Change: About the fleet plan it looks like if the lives on a significant increase of the <unk>.

Speaker Change: There are meetings being delivered and also significantly more than what was delivered in 2024.

Speaker Change: My question is if you see risk of this being hampered by further delays in deliveries by by Airbus.

Speaker Change: And my second question.

Speaker Change: It looks like the.

Speaker Change: The combination of <unk> and opera goal is advancing.

Speaker Change: Just wanted to get your.

Speaker Change: Or your view on I mean, how would this impact the Tam how would this impact the local fare environment and if it changes anything in terms of longer term strategy for Brazil. If it goes ahead. Thank you.

Speaker Change: Yes. Thank you.

Roberto Alvo: Yes. Thank you, Guilherme. We do have 22 Airbus A320 arrivals, A320 family arrivals in 2025. We are not concerned today with the delivery stream from Airbus. Actually, I believe that this relatively high fleet incoming this year is an advantage for LATAM because I think it will allow us to take advantage of our relative strength going forward. We have 2 787s arriving in 2025. Probably there's risk of delays there, but we're monitoring very closely Boeing's increase in production. They're trying to recover the 787 production. We remain very attentive to that. I would say that there's no big concern that we have internally with respect to our fleet plan in 2025.

Speaker Change: So we do have 22 Airbus 320 arrivals.

Speaker Change: 320 family arrivals in 2025.

Speaker Change: We are not concerned.

Speaker Change: Concern today with the delivery stream for an Airbus actually I believe that this relatively high fleet incoming does use an advantage for them because I think it will allow us to take advantage of our relative strength going forward.

Speaker Change: 207%, 7%, arriving in 2025, probably there is risk of delays there, but we're monitoring very closely boeing's increasing production, they're trying to recover to the 77 production. So we remain very very attentive to that but I would say that.

Speaker Change: There is no big concern that we have internally with respect to.

Speaker Change: Two our fleet planning 2025.

Roberto Alvo: I would say probably that more than the deliveries, it's the engine situation, the one that we're monitoring more closely, as Pratt & Whitney and Rolls-Royce have had issues with their supply chains. We've had very productive interactions with them. We have a few 787s, 3 at this moment on ground, and 7 A320 family aircraft on ground. It's a relatively low number, and we have very constructive conversations with them, and this is what we're monitoring more closely. That risk is, of course, included in our guidance so far. With respect to your second question, what we have today seen, as everybody, is a non-binding MOU that has very little detail on this transaction. I think it's still premature to opine on what this exactly will mean for LATAM.

Speaker Change: I would say probably more than the deliveries. It's the engine situation. The one that we're monitoring more closely.

Speaker Change: Present with me on Rolls Royce have had issues with their supply chains, we've had a very productive interactions with them. We have a few 700 sevens three at this moment on ground in seven 320 family of aircraft on ground, it's relatively low number and we have very constructive conversations with them on this.

Speaker Change: What we're monitoring more closely but.

Speaker Change: That risk is of course included in our guidance so far.

Speaker Change: With respect to your second question.

Speaker Change: I mean, what we have today seen as everybody is a nonbinding Mou that has very little detail on this transaction.

Speaker Change: I think it's still premature to opine on what this exactly will mean for Latam.

Roberto Alvo: This is a big potential combination that will have, no doubt, mitigations if approved. We are expecting to see what are the mitigations that Abra and Azul will propose. Then we'll have a better understanding of what this will mean. In the meantime, we have improved our presence in domestic Brazil in 2024. We are almost 40% of the market. I think we're very happy with the performance of our domestic operation in that market. We'll see what happens in the next weeks and months. Thank you.

Speaker Change: This is a big potential combination that will have no doubt.

Speaker Change: <unk> if approved and we are expecting to see what are the mitigation.

Speaker Change: Sure.

Speaker Change: As a whole will propose and then we'll have a better understanding of what this will mean so in the meantime.

Speaker Change: We have we have improved our presence as domestic Brazil. During 2024, we are almost 40% of the market.

Speaker Change: And I think we're very happy with the performance of our domestic operation in that market. So we will see what happens in the next weeks and months. Thank you.

Speaker Change: Thank you.

Operator: Thank you. Thank you. Our next question comes from Stephen Trent of Citigroup. Your lines are open. Please go ahead.

Speaker Change: Thank you. Our next question comes from Stephen Trent Citigroup.

Speaker Change: Please go ahead.

Speaker Change: Okay.

Stephen Trent: Good morning, everybody. Thanks very much for taking my question. First of all, definitely appreciate the thoughts for the tragedy that happened in DC. Along those lines, I would love to hear your guys' view on the adequacy of infrastructure and air traffic control capability in your key markets. Do you see room for improvements there, or you're pretty happy with how the infrastructure is set up? Thank you.

Speaker Change: Hey, good morning, everybody and thanks very much for taking my question first of all definitely appreciate the thoughts for.

Speaker Change: The tragedy that happened in D C.

Speaker Change: Along those lines I would love to hear your guys' view.

So to be adequacy.

Speaker Change: Our infrastructure and air traffic control.

Speaker Change: Capability.

Speaker Change: Our key markets.

Speaker Change: You see sort of room for improvement there or you're pretty.

Speaker Change: You're happy with.

Speaker Change: Restructure setup. Thank you.

Speaker Change: Hi, Steven.

Roberto Alvo: Hi, Stephen. This industry in South America in the last 20 years has grown incredibly. It was a very immature industry in the beginning of the century. Now, still immature in the sense that we can still carry much more passengers, as our figures are relatively low as compared to developed markets. I think that in every area of the chain of aircraft transportation, cargo, and passengers, we've seen improvement in the last few years. Airports have grown. ATC systems have improved. Today, we have GPS-guided landings and takeoffs in almost every significant airport. It works relatively well. We have much less congestion, particularly in ATC, than what you have in the US. We don't have the complexity of the system of so many regional airports, small aircraft, jets, private jets, and air force bases that you have in the US.

Speaker Change: I mean.

Speaker Change: This this industry in South America in the last 20 years has grown incredibly I mean, it was a very mature industry in the beginning of the century now steering mature in the sense that we can still carry much more passengers as our figures are relatively low compared to developed markets.

Speaker Change: So and I think that in every in every area of the chain of aircraft transportation cargo and passengers. We've seen improvement in the last few years I mean airports have grown ATC systems have improved today, we have.

Speaker Change: GPS guided landings and takeoffs and almost every significant airport.

Speaker Change: It worked relatively well we have much less congestion, particularly in ATC than what you have in the U S. We don't have the complexity of the system of so many regional airports.

Speaker Change: All aircraft Jets private jets airforce basis that you have in the U S.

Roberto Alvo: It's clearly less complex, in our view, than what you have there. Having said that, yes, of course, infrastructure has challenges. We're expecting to see the new Lima airport, which hopefully will open in the next 2 or 3 months. That's very needed. The concession program in Brazil about new airports, I think, has helped infrastructure as well. We have a new terminal in Santiago that is only 3 years old. I would say probably the airport where there's more constraint today is El Dorado in Bogotá, where really slots are taken at every single hour of the day. It's a little bit of a constraint in certain places. I think that the progress of infrastructure, sometimes a little bit slower than one would love, have accompanied the growth of the industry in the last 15 or 20 years. We actually are doing something very interesting.

Speaker Change: So it's clearly less complex in our view than what you have there having said that yes of course infrastructure challenges, we're expecting to see the newly Maryport, which hopefully will open in the next two or three months that's very needed.

Speaker Change: The concession program in Brazil about new airports I think has helped me in infrastructure as well we have a new terminal in San Diego, but it's only three years old I would say probably the problem there.

Speaker Change: Port where there is more constrained today's el Dorado in Bogota, where really slots are taking at every single hour of the day.

Speaker Change: And.

Speaker Change: It's a little bit of a constraint in certain places.

Speaker Change: But I think that I think that the programs are infrastructure, sometimes a little bit slower than what would love have a campaign to grow though of the industry in the last 15 or 20 or 20 years.

Speaker Change: We actually are doing something very interesting we are.

Roberto Alvo: We are looking at our data, but not the data where we have our parameters probably out of our ranges. Much to the contrary, where we have our parameters within our ranges, and that is helping us understand if there's things that can be done to improve safety for our operations in the region altogether. Actually, that's been very helpful because we have identified opportunities that we have passed to airports and operators in terms of how to improve the way they manage the infrastructure and the operations at this point in time. We're, I think, leading that in the region and being happy to not only help our own operation but share this with the authorities so that the whole operation in the region is safer.

Speaker Change: Looking at our data, but not the data where we have our parameters.

Speaker Change: Parameters, probably out of our ranges once the country, where we have our parameters within our ranges and that is helping us understand if there's things that can be done to improve safety for our operations in the original together and actually that's been very helpful. Because we have identified opportunities that we have passed to airports and our operators in terms of how to improve.

Speaker Change: The way they manage the infrastructure and the operations at this point is that we are I think leading that in the region and I'd be happy to not only help our own operation, but share. These with the authority so that the whole operation in the region is safer. So I wouldn't say that this is.

Roberto Alvo: It's important, of course, but it's not in the level of complexity that you have in the US or that Eurocontrol, for example, has in Europe as well.

Speaker Change: And important I mean, it's important of course, but it's not in the level of complexity that you have in the U S or that it would open drawer for example has in Europe as well.

That's that's very helpful color really appreciate that and as a very quick follow up when we think about that.

Stephen Trent: That's very helpful, Carlo. Really appreciate that. As a very quick follow-up, when we think about the joint business agreement with Delta Air Lines, where would you guys say you are in terms of the extent to which that opportunity continues to spool up? Are we still early stages? Are we mid-cycle in terms of the revenue contribution you expect from that? Thank you.

The agreement with Delta Airlines.

Speaker Change: Would you guys say you are in terms of.

Speaker Change: The extent to which.

Speaker Change: That opportunity continues to spool up are we still kind of early stages or at least sort of mid cycle in terms of Ah.

Speaker Change: Revenue contribution you would.

Speaker Change: Expect for that thank you.

Roberto Alvo: Okay. The JV with Delta is just over 2 years old now. The increasing in capacity that both airlines put in the first 18 months was significant. We grew around 30%. Our seat count between South America and the US, Delta, also upgauge in several markets. It launched now Rio as a seasonal route as well. There's a ton of opportunity for growth and development there, but it's also a moment of maturing, I think, of the investments we have made in the last 18 to 24 months. I would say where our focus today is in customer satisfaction. We are working very hard in making sure that the connectivity between both metals works seamlessly. We still have, I think, things to improve in that sense, as the systems, of course, are different, and that's where our short-term focus is.

Speaker Change: Thanks, Dave.

Speaker Change: So I mean in the survey.

Speaker Change: So the JV with Delta is just over two years old now.

Speaker Change: The increase in op in capacity that borderlands boot in the first 18 months was significant we grew around 30% our seat count between South America and the U S. Delta also obligation in several in several markets launched now realize huh.

Speaker Change: As a seasonal route as well.

Speaker Change: I think that.

Speaker Change: There's a ton of opportunity for growth and development there but.

Speaker Change: But it's also a moment of maturing I think of the investments we have made in the last 18 to 12 to 24 months I would say we're our focus today is in is in customer satisfaction. We are working very hard in making sure that the connectivity between both metals work seamlessly we still have I think things do improve in that sense as the systems of course.

Speaker Change: There are different and that's where our short term focus is but.

Roberto Alvo: We just started Ecuador in the scope of the JV late last year, so we see opportunity growing there. Also opportunity in Colombia. Clearly, the combination of both networks has a ton of potential going forward. Very happy with the deal.

Speaker Change: We just started Ecuador, even the scope of the JV later this year. So we see opportunity growing there also opportunity in Colombia and.

Speaker Change: And.

Speaker Change: Clearly the combination of both networks has a ton of potential going forward very happy with the deal.

Stephen Trent: Thanks very much.

Speaker Change: Thanks, Thanks very much.

Roberto Alvo: Thank you.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from Guilherme Mendes of JP Morgan. Your line is now open. Please go ahead.

Speaker Change: Thank you. Our next question comes from Greg Mendez of Jpmorgan. Your line is now open. Please go ahead.

Speaker Change: Thank you and good morning to all and welcome Ricardo with luck on the new role I have two questions. The first one is a follow up on the capital allocation.

Guilherme Mendes: Thank you, good morning to all, and welcome, Ricardo. Good luck on the new role. I have two questions. The first one is a follow-up on the capital allocation. Besides the dividends and the buybacks that we already discussed, Andre, you also mentioned about strategic investments as a potential use of capital. What exactly are you guys thinking about this one? The second one is, Roberto, you mentioned about the strong demand across different regions, but in terms of competition, do you see any excessive capacity in other regions that could pressure prices in the near term? Thank you.

Speaker Change: Besides consistent in the buybacks that we've already discussed.

Speaker Change: <unk> you also mentioned <unk> strategic investments as a potential use of capital.

Speaker Change: What exactly are you guys think about this one.

Speaker Change: And the second one is a competitor you mentioned about the strong demands.

Speaker Change: Across the regions, but in terms of competition do you see any excessive capacity in other regions that could pressure prices in the near term. Thank you.

Speaker Change: Thank you Guillermo and congratulations on your new position by the way.

Roberto Alvo: Thank you, Guilherme, and congratulations on your new position, by the way. Capital allocation. Dividends and buyback are the two ways that we consider today, among others, but the most important in which we're considering eventually returning capital to shareholders. One of the things that we are being very mindful of is to have the flexibility of growing eventually our portfolio or growing within the scope that is important to us. In that sense, I think that the financial strength we have allows us for the opportunity to take potential opportunities. Nothing to report at this point in time. If there's something, of course, we will let you know in due time. We consider today the position we have built as one that provides options to LATAM. Options in terms of growing, bringing fleet, options in looking at deals, options in returning capital to shareholders.

Speaker Change: So capital allocation.

Speaker Change: Sure.

Speaker Change: So dividends and buyback or are the.

Speaker Change: Two ways that we consider today among others, but the most important and which we're considering eventually returning capital to shareholders. One of the things that we are being very mindful of is to have the flexibility of growing eventually.

Speaker Change: Our portfolio are growing within the scope that it is important to us and in that sense I think that the financial strength. We have allows us for the opportunity to take potential opportunity. There is nothing to report at this point in time. If there is something of course, we will let you know in due time, but we consider today the position we have built.

Speaker Change: One that provides options to let them options in terms of growing bringing fleet options in looking at deals options in returning capital to shareholders.

Roberto Alvo: We will ponder all these options and make use of the capital in the way that it's more efficient for both the company and the shareholders of the group. Sorry. Second question, competition. Clearly, I would say that still domestic Colombia is a market that is with overcapacity. There's been very aggressive growth in the last 18 months by other players there. It will come, in my opinion, to some kind of equilibrium. It hasn't arrived yet, so we're looking at domestic Colombia. There's a little bit of also intensity in capacity between the US and Brazil, mostly driven by a very big growth in capacity from American in the high season into Brazil, but it's seasonal. The rest, I would say that the capacity is relatively balanced in most of the markets. No big concerns in terms of that equilibrium at this point in time.

Speaker Change: And we will ponder all these options.

Speaker Change: And make use of the capital and the way that it's more more more efficient for both the company and the shareholders.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Sorry second question competition.

Speaker Change: So clearly I would say thats still domestic Colombia is a market that is with overcapacity. There has been a very aggressive growth in the last 18 months.

Speaker Change: By other players there and.

Speaker Change: It will come in my opinion to some kind of equilibrium. It hasn't arrived yet so we're looking at domestic Colombia, there is a little bit of.

Speaker Change: Also intensity and capacity between the U S and Brazil, mostly driven by a very big growth in capacity from American in the high season into Brazil.

Speaker Change: But it is seasonal.

Speaker Change: The rest I would say that the capacity is relatively balanced in most of the markets.

Speaker Change: So no no big concerns in terms of that equilibrium at this point in time.

Roberto Alvo: Also, we don't see today significant evidence of new entrants potentially in the markets where we operate.

Speaker Change: Also we don't we don't see today.

Speaker Change: Significant evidence of new entrants potentially in the markets, where we operate.

Speaker Change: Very clear thank you so much.

Guilherme Mendes: Very clear. Thank you so much.

Speaker Change: Thank you.

Roberto Alvo: Thank you.

Operator: Thank you. As a reminder, if you'd like to ask a question, that's star one on your telephone keypad. Our next question comes from Pablo Monsivais of Barclays. Your line is now open. Please go ahead.

Speaker Change: Thank you.

Speaker Change: I Wonder if you want to ask a question Thats star one on your telephone keypad.

Speaker Change: Our next question comes from popular amongst the bodies of Barclays.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Hi.

Pablo Monsivais: Hi. Thank you for taking my question. Good morning, everyone. Just a quick question on the demand per segment in terms of corporate and leisure. I remember that you have said, probably from the last year and a half, that leisure has been very, very strong, and corporate is also recuperating faster. What are you seeing right now, and what should we expect in terms of your capacity allocation going forward for this trend? Thank you.

Speaker Change: Thank you for taking my question and good morning, everyone.

Speaker Change: A quick question.

Speaker Change: On the demand per segment in terms of corporate and leisure.

Speaker Change: I remember that you have to say.

Speaker Change: Probably from the last.

Speaker Change: Year on a carve that leisure.

Speaker Change: Very very strong in corporate is also recuperate.

Speaker Change: But what are you seeing right now and what should we expect in terms of your capacity allocation going forward.

Speaker Change: Yeah.

Pablo: Thank you Pablo.

Roberto Alvo: Thank you, Pablo. I think that probably two calls ago or something like that, I gave a little bit of a flavor there. We talked about that leisure demand was above 100% as compared to 2019 levels, and that corporate demand at that time was around 100% against 2019 levels. I think that we're seeing today is evolution of demand by segment, relatively similar in all segments. We're not seeing any changes significant in the mix. We see good support on corporate demand across most of the traffics and also leisure. No real changes in the mix, at least over the last 6 months. What we have done, though, and we believe it's important for our corporate travels, is that today we're focusing on 3 important things. One is on-time performance.

I think that probably two calls ago or something to that I gave a little bit of a flavor. There we talked about that leisure demand was above 100% compared to 2019 levels and at corporate demand at that time was around 100% against putting 19 levels I think that we're seeing today is.

Pablo: Is.

Pablo: Evolution of demand by segment relatively similar in all segments. So we're not seeing any any change is significant in the mix. We see good support on corporate demand across most of the traffic and.

Pablo: I'd also Alicia so no no real changes in the mix at least over the last six months.

Pablo: What we have done, though and we believe it's important for our corporate travel is that they were focusing in three important things. One is <unk> for on time performance. We do understand that time is the most important commodity that our customers have on the most premium customers value. The most we have broad Wi Fi also to almost all of our narrow.

Roberto Alvo: We do understand that time is the most important commodity that our customers have, and the most premium customers value it the most. We have brought Wi-Fi also to almost all of our narrow-body fleet. In the Pacific side of South America, we are the only airline that provides Wi-Fi. Of course, we have the largest FFP in the region with almost 50 million members. What we have seen actually growing faster in the last year is the number of members in our frequent flyer program. We believe that is an important addition to that. In particular in Brazil, I would say because in Chile and Peru our corporate traffic figures have always been healthy, have improved significantly as well in 2024.

Pablo: <unk> fleet in the Pacific side of South America, where the only airline that provides wildfire and of course, we have the largest FSP in the region with almost 50 million members, what we have seen actually growing faster in the last in the last year is the number of members in our frequent Flyer program. So we believe that is an important addition to that.

Pablo: <unk>.

Pablo: And particularly in Brazil, I would say because in Chile, and Peru are our corporate.

Pablo: Corporate traffic figures have always been healthy have improved significantly as well in 2024 hour Corp, which is the travel agents the corporate travel agents in Brazil producer report.

Roberto Alvo: ABRACORP, which is the corporate travel agents in Brazil producer report, with respect to that, and we reached 40.8% revenue share in the corporate segment in Brazil in 2024. That's the highest level we've had since 2013.

Pablo: With respect to that and we reached 48, 8% revenue share in the corporate segment in Brazil in 2024, that's the highest level we've had since 2013.

Pablo: Yeah.

Pablo: If I may ask a follow up on that.

Pablo Monsivais: If I may ask a follow-up on that, and probably I know it's too early to reach to this conclusion, but after the GOL and Azul merge, would you expect that share on the corporate partners in Brazil for you to be higher than what you already have? Do you see that perhaps direct impact of the competitive landscape?

Speaker Change: Probably I know, it's too early to too rich to this conclusion, but after that Golar will emerge would you expect that share on the corporate partnership with you.

Speaker Change: For you to be higher than what you already taught you see that perhaps.

Speaker Change: The impact of the competitive landscape.

Speaker Change: But I think it's as I said before I think it was very early to speculate about that what we have seen today is a nonbinding Mou that has again very little detail.

Roberto Alvo: Pablo, as I said before, I think it's very early to speculate about that. What we have seen today is a non-binding MOU that has, again, very little detail. I think that we need to see their public filing, what mitigations they will propose. CADE needs to review, and this is a big transaction eventually, which will have a lot of details seen by CADE. I'd rather see how this develops. I don't think it's time to speculate what will happen, and we'll see how this evolves in the next few weeks and months.

Speaker Change: And I think that we need to see their filing their public filing what mitigation. They will propose a carrier needs to review on this is this is this is a big this is a big transaction eventually, which we will have a lot of details seen by kind of so I'd, rather I'd rather see how this develops I don't think it's time to speculate what.

Speaker Change: It will happen.

Speaker Change: And we'll see how this evolves in the next few weeks and months.

Speaker Change: Absolutely. Thank you very much.

Pablo Monsivais: Absolutely. Thank you very much.

Speaker Change: Thank you.

Operator: Thank you. At this time, we currently have no further questions, I'll hand back to Andreas for any further remarks.

Speaker Change: We currently have a nice other questions. So how about contrast for any further remarks.

Speaker Change: Thank you very much all for joining us today as always our Investor Relations team is available for any further questions and have a good day everyone.

Roberto Alvo: Thank you very much all for joining us today. As always, our investor relations team is available for any further questions. Have a good day, everyone.

Speaker Change: Yeah.

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

Speaker Change: Thank you all for joining US today's call you may now disconnect your lines.

Speaker Change: [music].