Q2 2025 LATAM Airlines Group SA Earnings Call

July 29, 2025

Operator: Hello, and welcome everyone to the 2Q 2025 LATAM Airlines Group Earnings Conference Call. My name is Becky, and I'll be your operator today. During the presentation, you can register a question by pressing star followed by one on your keypad. If you change your mind, please press star followed by two. 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.

Becky: My name is Becky and I'll be your operator today. During the presentation, you can register a question by pressing star followed by 1 on your keypad. If you change your mind, please press star followed by 2.

Hello and welcome everyone to the 2q 2025 latam Airlines group earnings conference call.

My name is Becky, and I'll be your operator today.

During the presentation, you can register a question by pressing star, followed by 1 on your keypad. If you change your mind, please press star followed by 2.

Operator: 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 20F 2025 updated guidance, earning release, financial statements and related CMF and SEC filings.

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,

Operator: 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 20F 2025 updated guidance, earning release, financial statements, and related CMF and SEC filings. 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. If there are any members of the press on this call, please note that for the media, this is a listen-only call. I will now hand over to your host, Ramiro Alfonsín, CFO, to begin. Please go ahead.

Any matters discussed today that are not historical facts. Particularly comments, regarding the company's future plans, objectives and expected performance or guidance. Our forward-looking statements.

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 aren't discussed in detail in our SEC filing.

These statements are based on a range of assumptions that latam believes are reasonable. But our subject, to uncertainties and risks that are discussed in detail, in the published 20f 2025 updated guidance, earning release financial statements and related, cmf and SEC filings.

The company's actual results may differ significantly from those projected or suggested in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings.

Operator: If there are any members of the press on this call please note that for the media this is a listen-only call.

Becky: I will now hand over to your host, Ricardo Butters, CFO to begin. Please go ahead. Thank you.

If there are any members of the press on this call, please note that for the media, this is a listen-only call.

Please go ahead.

Ramiro Alfonsín: Thank you. Hello, everyone, and good morning. Welcome to our Q2 2025 conference call, and thank you all for joining us today. My name is Ramiro Alfonsín, and I am the CFO of LATAM Airlines Group. Here with me is Roberto Alvo, our CEO, Andres del Valle, the Corporate Finance Director, and Tori Creighton, Head of Investor Relations. We will present our highlights and the results for the Q2. I'll hand it over to Roberto to share opening remarks about the quarter highlights. Once finished, I will present then in more detail alongside the financial results. Roberto.

Ricardo Botas: Hello, everyone, and good morning. Welcome to our second quarter 2025 conference call. And thank you all for joining us today. My name is Ricardo Botas and I am the CFO of Latam Airlines Group. Here with me is Roberto Alvo, our CEO, Andres Del Valle, the Corporate Finance Director and Tory Creighton, Head of Investors Relations.

Roberto Alvo: and we will present our highlights and the results for the second quarter. I've handed over to Roberto to share opening remarks about the corporate highlights. Once finished, I will present them in more detail alongside the financial results. Thank you, Ricardo. Good morning, everyone, and thank you for joining us today. I'm pleased to open our second quarter 2025 earnings call by saying that the TAM Group continues to sustain growth and profitability once again, leaving robust results, a clear indication of the strength of the Group's operating model, its commercial strategy and above all, the extraordinary commitment of its people and the relentless dedication to improve the customer experience every day.

Thank you. Hello everyone. And good morning. Welcome to our second quarter 2025 conference call and thank you all for joining us today. My name is Ricardo botos and I am the CFO of Latin Alliance Group here with me is Roberto our CEO and Dolly. The corporate finance director and to Creighton Head of investors relations.

And uh, we will present our highlights and results for the second quarter.

Roberto Alvo: Thank you, Ramiro. Good morning, everyone, thank you for joining us today. I'm pleased to open our Q2 2025 earnings call by saying that LATAM Group continues to sustain growth and profitability once again, delivering robust results, a clear indication of the strength of the Group's operating model, its commercial strategy, and, above all, the extraordinary commitment of its people and the relentless dedication to improve the customer experience every day. Let me start with a few headline numbers. During the Q2, LATAM Group transported over 20.5 million passengers, expanded capacity by 8.3% year-over-year, and reached consolidated load factor of 83.5%, all while maintaining operation stability and growing customer preference across all markets. In terms of the LATAM Group product and experience, the focus is on strengthening the value proposition in every flight, every interaction, and every decision that is made.

I've handed over to Robert to share opening remarks about the quality of highlights on finished. I represent them in more detail alongside the financial uh results or rental.

Thank you Ricardo. Good morning, everyone, and thank you for joining uh, all today.

I am pleased to open our second quarter 2025 earnings call by saying that the LATAM Airlines Group continues to sustain growth and profitability once again.

Leaving Robert's results, including indication of the strength of the group's operating model, its commercial strategy, and above all the extraordinary commitment of its people, and the Relentless dedication to improve the customer experience every day.

Roberto Alvo: Let me start with a few headline numbers. During the second quarter, Latam Group transported over 20.5 million passengers, expanded capacity by 8.3% year-over-year, and reached a consolidated load factor of 83.5%, all while maintaining operation stability and growing customer preference across all markets. In terms of the Latam Group product and experience, the focus is on strengthening the value proposition in every flight, every interaction, and every decision that is made. This quarter, we have a few updates in investments we're making in customer experience that Ricardo will comment on, which are supporting improved levels of customer satisfaction. During the quarter, Latam Group's net promoter score matched the record high achieved in the first quarter of 2025.

Let me start with a few headlines. During the second quarter, that I'm group transported. Over 20.5 million passengers. Expanded capacity, by 8.3% year-over-year and reach Consolidated, load factor of 83.5%,

all while maintaining operation stability and growing customer preference across all markets,

Roberto Alvo: This quarter, we have a few updates in investments we're making in customer experience that Ramiro Alfonsín will comment on, which are supporting improved levels of customer satisfaction. During the quarter, LATAM Group's Net Promoter Score matched the record high achieved in Q1 2025. Additionally, in June at the 2025 Skytrax World Airline Awards, LATAM was named the best airline in South America for the sixth year in a row and best airline staff in South America for the fourth consecutive year. These awards are based on over 22 million passenger votes from more than 100 nationalities, they reflect not just operational excellence, but trust, service, and consistency. From a financial standpoint, LATAM delivered another quarter of strong and balanced performance. Total revenues grew by 8.2% year-over-year, supported by healthy trends in both passenger and cargo segments.

In terms of the time group product and experience, the focus is on strengthening the value proposition in every flight, every interaction, and every decision that is made.

This quarter, we have a few updates in Investments, we're making in customer experience that Ricardo will comment on which are supporting improved levels of customer satisfaction.

During the quarter that the Time Group's net promoter score matched the record high achieved in the first quarter of 2025.

Roberto Alvo: Additionally, in June, at the 2025 SkyTrucks World Airline Awards, Latam was named the best airline in South America for the six year in a row, and best airline staff in South America for the fourth consecutive year. These awards are based on over 22 million passenger votes from more than 100 nationalities, and they reflect not just operational excellence, but trust, service, and consistency. From a financial standpoint, Latam delivered another quarter of strong and balanced performance. Total revenues grew by 8.2% year-over-year, supported by healthy trends in both passenger and cargo segments. This top-line expansion, combined with disciplined cost control and a favorable fuel environment growth, and adjusted a bid-dare of $850 million with a margin of 25.9%, reflecting a strong 5.5 percentage point improvement from the same period last year.

Additionally, in June, at the 2025 Sky tracks world are and Wards, latam was named the best friend in South America for the 6th.

Year in a row and best airline staff in South America for the fourth consecutive year.

These awards are based on over 22 million passenger votes from more than 100 nationalities, and they reflect not just operational excellence, but trust, service, and consistency.

Roberto Alvo: This top-line expansion, combined with disciplined cost control and a favorable fuel environment, drove an adjusted EBITDA of $850 million with a margin of 25.9%, reflecting a strong 5.5 percentage point improvement from the same period last year. LATAM also reached record Q2 adjusted operating margin with 12.9%, a 3.9 percentage point improvement from the Q2 2024, a clear sign of how strategy and execution are delivering results. Net income reached $242 million, marking a 66% increase year-over-year. That figure brings H1 net income to nearly $597 million. These results are particularly significant when considering the context of ongoing macroeconomic volatility across several of our key markets. They highlight the strength of the group's diversified and flexible business model, the ability to adapt to shifting external conditions, and the disciplined focus on both operational execution and financial strength.

From a financial standpoint that time deliver another quarter of strong and balanced performance. Total revenues grew by 8.2% year-over-year supported by health insurance, in both passenger, and calgo segments.

This Top Line expansion combined with discipline cost control and a favorable fuel environment growth and adjusted a bit dark of 850 million dollars with the margin of 245.9%, reflecting a strong 5.5 percentage. Point improvement from the same period last year.

Roberto Alvo: Latam also reached a record second quarter adjuster operating margin with 12.9 percent, a 3.9 percentage point improvement from the second quarter 2024, a clear sign of how strategy and execution are delivering results. Net income reached $242 million, marking a 66% increase year-over-year. That figure brings First Half Net Income to nearly $597 million. These results are particularly significant when considering the context of ongoing macroeconomic volatility across several of our key markets. They highlight the strength of the group's diversified and flexible business model, the ability to adapt to shifting external conditions, and the disciplined focus on both operational execution and financial strength.

I'm also reaching record second quarter. I just started operating margin with 12.9%.

a 3.9 percentage point improvement from the second quarter 2024 EQ is a sign of how strategy and execution are delivering results.

Net income reached to 242 million, marking a 66% increase year-over-year.

That figure brings first-half net income to nearly $597 million.

These results are particularly significant when considering the context of ongoing macroeconomic volatility across several of our key markets.

Roberto Alvo: This performance also supported a robust capital structure with $3.6 billion in liquidity and a 1.6 times adjusted net leverage, even after returning $445 million to shareholders through dividends and the repurchase of 1.6% of LATAM's capital on the Santiago Stock Exchange. Looking ahead, current booking trends remain solid across both domestic and international markets, providing additional confidence in the demand environment for the coming quarters and reinforcing the outlook for the H2 of the year. This is expressed in its improvements in most dimensions of LATAM's Group full year 2025 guidance, narrowing the ranges given improved visibility for the year. This revision reflects the strength of the group's commercial momentum, driving more high-quality traffic through its network, the flexibility of its operating model, and the disciplined approach to cost and investment that continues to guide the decision-making. Ramiro will later elaborate a little bit more on these changes.

They highlight the strength of the group's diversified and flexible business models, the ability to adapt to shifting external conditions, and the disciplined focus on both operational execution and financial strength.

This performance also supported a robust capital structure with 3.6 billion dollars in liquidity and a 1.6 times adjusted net leverage. Even after returning, 445 million, to shareholders, through dividends and the repurchase of 1.6% of latin's capital on the Santiago's office change.

Looking ahead.

Current booking Trends remained solid across both domestic and international markets, providing additional confidence in the demand environment for the coming quarters and reinforcing the outlook for the second half of the year.

Roberto Alvo: This revision reflects the strength of the group's commercial momentum, driving more high-quality traffic through its network, the flexibility of its operating model, and the disciplined approach to cost and investment that continues to guide the decision-making.

This is expressed in this improvements. In most dimensions of lat times group, full year, 2025 guidance, narrowing, the ranges given improved visibility for the year.

Roberto Alvo: Ricardo will later elaborate a little bit more on these changes. During the quarter, the group incorporated 12 aircraft, including 10 A320neos, one A321neo and one wide-body Airbus 330 operating under a short-term lease. With this, Latam Group is on track with its fleet plan and has received 14 of the 26 aircraft scheduled for delivery in 2024. At the same time, and consistent with the strategy, business development, and demand growth currently being experienced, medium-term opportunities for incremental growth have been identified in most markets where Latam Group affiliates operate. In this context, during the quarter, 11 additional A320neo family aircraft were secured for delivery in 2026, along with a decision to delay the progressive retirement of four of our 319 aircraft.

Roberto Alvo: During the quarter, the group incorporated 12 aircraft, including 10 A320neos, 1 A321neo, and 1 wide-body Airbus A330 operating under a short-term lease. With this, LATAM Group is on track with its fleet plan and has received 14 of the 26 aircraft scheduled for delivery in 2025. At the same time and consistent with the strategy, business development, and demand growth currently being experienced, medium-term opportunities for incremental growth have been identified in most markets where LATAM Group affiliates operate. In this context, during the quarter, 11 additional A320neo family aircraft were secured for delivery in 2026, along with a decision to delay the progressive retirement of 4 of our A319 aircraft. Moreover, there may be potential opportunities for further growth over the next 2 to 3 years. In this context, LATAM Group is analyzing the acquisition of additional aircraft from various manufacturers and the source.

Distribution reflects the strength of the group's commercial momentum, driving more high quality traffic through its Network. The flexibility of its operating model and the discipline approach to cost and investment that continues to guide the decision. Making rigardo will later elaborate a little bit more on these changes.

during the quarter, The Group Incorporated, 12 aircraft including 10 832 news, 1 832 211 year and 1 wide body, Airbus, 330 operating under a short-term lease

Schedule for delivery in 2025.

At the same time and consistent with the strategy Business Development and demand growth currently being experienced. Medium-term opportunities for incremental. Growth have been identified in most markets where the time group Affiliates operate.

In this context during the quarter 11 additional 80 to 20 new family, aircraft were secured for delivery in 2026.

Roberto Alvo: Moreover, there may be potential opportunities for further growth over the next two to three years. In this context, LATAM Group is analyzing the acquisition of additional aircraft from various manufacturers and the source. This includes additions to its widebody and narrowbody fleet, the latter including aircraft from the A320 family, as well as other similar jets from manufacturers such as Airbus and Embraer. The primary focus of these additions will be to serve and grow passenger transportation within the region and cargo traffic in regional markets. As might be expected, the materialization of these options depends, of course, on several factors, including aircraft availability and the evolution of the markets in which the group operates.

Along with a decision to delay the progressive retirement of 4 of our 319 aircraft, there may be potential opportunities for further growth over the next 2 to 3 years.

Roberto Alvo: This includes additions to its wide-body and narrow-body fleet, the latter including aircraft from the A320 family, as well as other similar jets from manufacturers such as Airbus and Embraer. The primary focus of these additions will be to serve and grow passenger transportation within the region and cargo traffic in regional markets. As might be expected, the materialization of these options depends, of course, on several factors, including aircraft availability and the evolution of the markets in which the group operates. The group continues, nonetheless, to maintain significant flexibility to adjust capacity if we need to. Building on LATAM's strong results, in June, shareholders approved a broader repurchase program of up to 3.4% of total shares.

In this context that time group is analyzing the acquisition of additional aircraft from various manufacturers and the source, this includes additions to its wide body and narrow body Fleet the latter, including aircraft from the A320 family, as well as other similar Jets from manufacturers, such as Airbus and hembra.

The primary focus of the additions will be to serve and grow passenger, Transportation within the region and cargo traffic in Regional markets.

Roberto Alvo: The group continues, nonetheless, to maintain significant flexibility to adjust capacity if we need to.

As might be expected the materialization of these options. Depends of course on several factors including aircraft availability. And the evolution of the markets in which the group operates, the group continues nonetheless to maintain significant flexibility to adjust capacity if we need

Roberto Alvo: Building on Latam's strong results, in June, shareholders approved a broader repurchase program of up to 3.4% of total shares. As part of that program, a second share repurchase for up to 2.4% of the company's outstanding shares is currently being executed through a 30-day pro rata mechanism on the Santiago Stock Exchange and is expected to conclude by the end of this month. We also carried out the final step in optimizing our non-fleet financial debt. In June, we fully eliminated our interest debt from 2022, high interest debt, I may recall, refinancing $700 million of high-cost notes with a new $800 million issuance at significantly low rates.

Roberto Alvo: As part of that program, a second share repurchase for up to 2.4% of the company's outstanding shares is currently being executed through a 30-day pro rata mechanism on the Santiago Stock Exchange and is expected to conclude by the end of this month. We also carried out the final step in optimizing our non-fleet financial debt. In June, we fully eliminated our interest debt from 2022, high-interest debt, I may recall, refinancing $700 million of high-cost notes with a new $800 million issuance at significantly lower rates. This is expected to generate $33 million in annual interest savings. In summary, we're very pleased to share with you the strong Q2, the results, and the confident and positive view on the remainder of 2025. Thank you again for being here today. I'll hand it over to Ramiro for the operational and financial review.

Building on, latam strong results in June shareholders approved, a broader repurchase program of up to 3.4% of total shares.

As part of that program, a second share repurchase for up to 2.4% of the company's outstanding shares is currently being executed through a 30-day prorata mechanism, on the Santiago Stock Exchange and the expected to conclude by the end of this month.

We also carried out the final step in optimizing. Our non-fleet financial debt in June, we fully eliminated. Our interest debt from 2022. High interest debt. I recall refinancing 700 million of high cost notes.

Roberto Alvo: This is expected to generate $33 million in annual interest savings.

Roberto Alvo: In summary... We're very pleased to share with you the strong second quarter. the results and the confident and positive view on the remainder of 2020. Thank you again for being here today.

With a new $800 million issuance at significantly low rates, this is expected to generate $33 million in annual interest savings.

In summary.

We're very pleased.

To share with you the strong second quarter.

The results and the confidence and positive view on the remainder of 2025.

Ricardo Botas: I'll hand it over to Ricardo for the operational and financial review.

Ramiro Alfonsín: Thank you, Roberto. I invite you to move to the next slide 4. In terms of operational performance, LATAM Group continues to deliver solid year-over-year growth. Consolidated capacity measure in the ASKs increased by 8.3%, driven primarily by a 10.9% expansion in LATAM Airlines Brasil domestic operations, a figure that partially reflects the impact of the temporary closure of Salgado Filho International Airport in Porto Alegre during 2024, now fully recovered, as well as 9.6% increase in the Group's international capacity, supported by positive momentum in both regional and long-haul travel. Commercially, domestic capacity across the Group's affiliates in Chile, Colombia, Ecuador, and Peru recorded a slight decline of 0.3%. This is explained by the strategic reallocation of part of LATAM Airlines Colombia's domestic fleet to support growth in international routes.

Thank you again for being here today. I'll hand it over to Ricardo for the operational and financial review.

Ricardo Botas: Thank you, Roberto. I invite you to move to the next slide, slide four. In terms of operational performance, LATAM Group continues to deliver solid year-over-year growth. Consolidated capacity measure in the AS case increased by 8.3%, driven primarily by a 10.9% expansion in LATAM Airlines Brazil domestic operations, a figure that partially reflects the impact of the temporary closure of Salgado Filho International Airport in Porto Alegre during 2024, now fully recovered, as well as 9.6% increase in the group's international capacity, supported by positive momentum in both regional and long-haul travel. Commercially, domestic capacity across the group's affiliates in Chile, Colombia, Ecuador and Peru recorded a slightly decline of 0.3%.

Thank you, Roberto.

I'd invite you to move to the next slide slide 4. Uh in terms of operational performance, let's say group continues to deliver solid year-over-year growth.

Uh consolidated capacity measuring the as case increased by 8.3% driven primarily by 10.9% extension in later lines Brazil, the mass corporations have figured that partially reflects the impact of the temporary closure of salio International Airport in Portal Agri during 2024. Now fully recovered, as well as 9.6% increase in the Groups International capacity.

Supported by positive momentum in both Regional and Long Haul travel.

Ricardo Botas: This is explained by the strategic reallocation of part of LATAM Airlines Colombia's domestic fleet to support growth in international routes. Both effects are aligned with the updated 2025 guidance and reflect the ability to dynamically adjust capacity strategically towards high demand markets. Load factors remained healthy across all segments, with the consolidated load factor reaching 83.5%, a 1.2 percentage point improvement compared to the same period last year, reflecting strong demand and discipline capacity growth. During the quarter, LATAM Group transported 20.6 million passengers, a 7.6% year-over-year increase. In terms of consolidated passenger revenue per ASK, it remained stable year over year, even as the group faced current depreciation in several key domestic markets and a reduced food price.

Ramiro Alfonsín: Both effects are aligned with the updated 2025 guidance and reflect the ability to dynamically adjust capacity strategically towards high-demand markets. Load factors are remaining healthy across all segments, with the consolidated load factor reaching 83.5%, a 1.2 percentage point improvement compared to the same period last year, reflecting strong demand and disciplined capacity growth. During the quarter, LATAM Group transported 20.6 million passengers, a 7.6% year-over-year increase. In terms of consolidated passenger revenue per ASK, it remained stable year-over-year, even as the Group faced currency depreciation in several key domestic markets and a jet fuel price. This, coupled with its continued growth expansion, speaks to the resilience of the commercial performance and the strength of LATAM Group's diversified network. In particular, LATAM Airlines Brasil's domestic passengers RASK in local currency grew a solid 7.8% year-over-year, reflecting strong underlying demand.

Conversely domestic capacity across the group's Affiliates in Chile, Colombia Ecuador, and Peru recorded is likely, decline of 0.3%. This is explained by the Strategic reallocation of part of lender lines Colombia's domestic Fleet to support growth in international Warehouse.

Both effects are aligned with the updated 2025 guidance and reflect the ability to dynamically adjust capacity strategically towards high-demand markets.

Load factors remain healthy across all segments, with the consolidated load factor reaching 83.5%, a 1.2 percentage point improvement compared to the same period last year, reflecting strong demand and disciplined capacity growth.

During the quarter Laten group transported, 20.6 million passengers, a 7.6% year-over-year, increase

Ricardo Botas: This coupled with its continued growth and expansion speaks to the resilience of the commercial performance and the strength of LATAM's group's diversified network. In particular, LATAM Airlines Brazil's domestic passengers RASC in local currents grew a solid 7.8% year over year, reflecting strong underlying demand. However, when we express in dollars, LATAM Airlines Brazil's domestic passengers RASC declined by 3.3% due to the year over year depreciation of the Brazilian layout. Meanwhile, passenger RASC in domestic markets of the affiliate phases in Spanish-speaking countries remained robust, supported by continued strength across geographics and the stabilization of capacity of LATAM Airlines Colombia's markets.

Ramiro Alfonsín: When we express in USD, LATAM Airlines Brasil domestic passengers RASK declined by 3.3% due to the year-over-year depreciation of the Brazilian real. Passenger RASK in domestic markets of the affiliates based in Spanish-speaking countries remained robust, supported by continued strength across geographics and the stabilization of capacity of LATAM Airlines Colombia's markets. International passenger RASK held nearly flat despite a 9.6% increase in capacity, underscoring healthy demand dynamic and network optimization efforts across the long-haul markets. Moving to the next slide 5. Beyond operational performance, LATAM Group continued to make progress on elevating the customer journey through investments in product, technology, and service design. Enhancements in the premium segment have elevated the overall experience and customer satisfaction, while also driven a stronger revenue contribution.

Ricardo Botas: Lastly, International Passenger RASC held nearly flat despite a 9.6% increase in capacity, underscoring healthy demand, dynamic and network optimization efforts across the long-haul market.

Why are passenger RAS in the mask? Markets of the affiliate based in Spanish-speaking countries remain robust, supported by continued strength across geographics and destabilization of capacity of Latin American markets, including Colombia.

Lastly, International passenger, Ras held, nearly flat despite a 9.6% increase. Uh, in capacity, underscoring, healthy demands Dynamic and network optimization efforts,

Ricardo Botas: Moving to the next slide, slide now five, Beyond Operational Performance, Latam Group continues to make progress on elevating the customer journey through investments in product, technology, and services design. In particular, enhancements in the premium segment have elevated the overall experience and customer satisfaction, while also driving a stronger revenue contribution. Regarding LATAM's group fleet retrofit, significant progress has already been made on the narrow-body fleet, and the current focus is now on retrofitting the wide-body aircraft. In May, a new premium business cabin was introduced and is already operating in select aircraft. This redesigned cabin features suite doors for full privacy, full flat seats, 18-inch high-definition screens and a layout inspired by South American landscapes.

Across the Long Haul markets.

Ramiro Alfonsín: Regarding LATAM Group fleet retrofit, significant progress has already been made on the narrow-body fleet, and the current focus is now on retrofitting the wide-body aircraft. In May, a new premium business cabin was introduced and is already operational in select aircraft. This redesigned cabin features suite doors for full privacy, full flat seats, 18-inch high-definition screens, and a layout inspired by South America landscapes and textures. The new retrofitted aircrafts are resonating with passengers, delivering an improvement in customer satisfaction levels of NPS versus the previous generation of retrofitted aircraft. In terms of connectivity, Wi-Fi is now available across the entire narrow-body fleet of LATAM Airlines Brasil and continue to scale rapidly across the region, reaching nearly 90% of all affiliate carriers narrow-body aircraft operating domestic international intra-South America flights.

Um, moving to the next slide, slide, slide now, 5, Beyond, operational performance, but 10 group continued to make progress on elevating. The customer journey through investments, in product, technology, and serves the design in particular enhancements. In the premium segment have elevated, the overall experience and customer satisfaction while. Also Drive driven, uh, long, a stronger Revenue, uh, contribution

Regarding latent group fit retrofit significant progress. Has already been made on the narrow butt Fleet and the current focus is now our retrofit in the white body. Aircraft in May, a new premium, uh, business cabin was introduced and is a read operation in select aircraft.

Ricardo Botas: The new retrofitted aircrafts are a red reasoning with passengers, delivering an improvement in customer satisfaction levels of NPS versus the previous generation of retrofitted aircrafts. In terms of connectivity, Wi-Fi is now available across the entire narrowbody fleet of Latin Airlines Brazil and continues to scale rapidly across the region, reaching nearly 90% of all affiliate carriers' narrowbody aircrafts operating domestic and international intra-South America flights. The implementation remains on track to complete the rollout across the entire Latin group narrowbody fleet network by the end of 2025. Looking ahead, LATAM Group is preparing to expand connectivity with its wide-body fleet beginning in 2026 through a commercial agreement with Viasat.

These uh redesigned cabin features sweet doors for full privacy, full flat seats. Uh, 8 18 in uh high definition screens. In a layout inspired by South America Landscapes and testers the new retrofitted. Aircraft are red reasoning with passengers, delivering the Improvement in customers. Satisfaction levels of NPS versus the previous generation of retrofitted. Aircraft

Ramiro Alfonsín: The implementation remains on track to complete the rollout across the entire LATAM Group narrow-body fleet network by the end of 2025. Looking ahead, LATAM Group is preparing to expand connectivity to its wide-body fleet beginning in 2026 through a commercial agreement with Viasat. This next-generation system will be implemented across long-haul aircraft operating intercontinental routes, further strengthening LATAM Group's commitment to offering a modern and connected onboard experience. LATAM Group is also elevating the premium on-ground experience. On 1 June, the new terminal at Lima International Airport opened its doors, and LATAM launched its signature check-in services for Black and Black Signature members, a feature that previously did not exist in that hub. With this addition, LATAM Group now offers signature check-in services at the three major hubs, Santiago, São Paulo, and now in Lima. Moving to the next slide 6.

In terms of connectivity, Wi-Fi is now available across the entire narrowbody fleet of LATAM Airlines in Brazil and continues to scale rapidly across the region, reaching nearly 90% of all affiliate carriers' narrowbody aircraft operating domestic and international intra-South America flights. The implementation remains on track to complete the rollout across the entire LATAM Group narrowbody fleet network by the end of 2025.

Ricardo Botas: This next generation system will be implemented across long-haul aircraft operating intercontinental routes, further strengthening LATAM Group's commitment to offering a modern and connected onboard experience.

looking ahead Latin group is preparing to expand connectivity to its uh wide by slip widebody Fleet beginning in 2026 through a commercial agreement, with a via sat this next Generation system, will be implemented across Long Haul, aircraft operating InterContinental routes

Ricardo Botas: LATAM Group is also elevating the premium on-ground experience. On June 1st, the new terminal at Lima International Airport opened its doors and LATAM launched its signature check-in services for black and black signature members, a feature that previously did not exist in that hub. With this addition, LATAM Group now offers signature check-in services at the three major hubs, Santiago, Sao Paulo and now in Lima.

For the strengthened uh latent groups commitment to offering a modern, a modern and connected on board experience.

Ricardo Botas: Moving to the next slide, slide six, the results from these ongoing investments in the passenger experience are clearly reflected in LATAM Group's customer satisfaction metrics. During the second quarter, LATAM Group maintained an operational net promoter score of 56 points, matching the record high reached in the first quarter of 2025. Among premium passengers, NPS rose to 60 points, confirming the continuous positive response to enhancements across our product and service touchpoints. This progress was reinforced by a global recognition, as Roberto mentioned at the beginning. In June, at the 2025 Skytrax World Airlines Awards, Tatan received nine distinctions, marking the first time the group won every award available in the South America category.

Letang group is also elevating the premium on ground uh experience on June 1st the new terminal at Lima International Airport. Opening its doors in Latin launched its signature checking services for black and black signature members a feature that previously does exist in that Hub with this addition, Latin group. Now offers signature checking services at the 3 major hubs Santiago s Paulo and now in Lima

Ramiro Alfonsín: The results of these ongoing investments in the passenger experience are clearly reflected in LATAM Group's customer satisfaction metrics. During the Q2, LATAM Group maintained an operational Net Promoter Score of 56 points, matching the record high reached in the Q1 2025. Among premium passengers, NPS rose to 60 points, confirming the continued positive response to enhancements across our product and service touchpoints. This progress was reinforced by a global recognition, as Roberto mentioned at the beginning. In June, at the 2025 Skytrax Airlines Awards, LATAM received nine distinctions, marking the first time the group won every award available in the South America category. This included recognitions for best business and economy class, onboarding catering, cabin cleanliness, and crew and lounge.

Moving to the next slides. Like 6, the results from these, uh, ongoing investments in the passenger experience are clearly reflected in the last 10 groups, customers satisfaction metrics during the second quarter. Uh, Latin group maintaining an operational. Net promoter score of 56 points matching their record, high reaches in the first quarter of 2025 among premium, passengers, NPS rows to 60 points. Confirming the continued positive response to enhancements across our product and service touch points.

Ricardo Botas: These included recognitions for best business and economy class, onboarding, catering, cabin cleanliness, and crew and lounge. This broad recognition is a testament to the dedication of Tatan Group's teams and the strength of the travel experience the affiliated air carriers of the group offer across the region. It also confirms its position as the airline group of choice in South America, not only because of the scale of its network, but because of the quality and consistency of the journey the group delivers.

This progress was reinforced by a global recognition, as Roberto mentioned at the beginning, in June at the 2025 Skytrax World Airline Awards, where we received nine distinct awards, marking the first time the group won every award available in the South America category. This included recognitions for Best Business Class and Best Economy Class onboarding.

Ramiro Alfonsín: This broad recognition is a testament to the dedication of LATAM Group's teams and the strength of the travel experience the affiliate carriers of the group offer across the region. It also confirms its position as the airline group of choice in South America, not only because of the scale of its network, but because of the quality and consistency of the journey the group delivers. Turning to the next slide 7, about the LATAM financial results. The Q2 reflects a strong and disciplined execution across all fronts. Total revenues reached $3.3 billion, an increase of 8.2% year over year, supported by healthy demand across both passengers and cargo segments. Passenger revenues rose by 8.5%, while revenues from premium travelers performed even better, increasing by 12% year over year.

Catering cabin cleaners and creole and Lounge. This broad recognition is a testament to the dedication of Latin groups teams and the strength of the travel experience. The affiliate Heirs of the group after offer across the region. It also confirms its position as their line group of choice in South America. Not only because of the scale of its network, but because of the quality and consistency of the journey, the group delivers,

Ricardo Botas: Turning to the next slide, slide seven, about the LATAM financial results, the second quarter reflected strong and disciplined execution across all fronts. Total revenues reached $3.3 billion and increased of 8.2% year over year, supported by healthy demand across both passengers and cargo segments. Passenger revenues rose by 8.5%, while revenues from premium travelers performed even better, increasing by 12% year over year. Cargo revenues also grew by 10.2%, with notable performance during seasonal peaks, such as Mother's Day, particularly in Colombia and Ecuador. On the cost side, LATAM Group benefited from a fire-allowed fuel environment with jet fuel costs decreasing by 10.6% year-over-year.

Turning to the next slide, Lite 7, about the LATAM financial results, the second quarter reflects the strong and disciplined execution across.

Ramiro Alfonsín: Cargo revenues also grew by 10.2%, with notable performance during seasonal peaks such as Mother's Day, particularly in Colombia and Ecuador. On the cost side, LATAM Group benefited from a favorable fuel environment, with jet fuel costs decreasing by 10.6% year-over-year. At the same time, it maintained a disciplined approach to controllable costs, supporting margins expansions. As a result, LATAM delivered an adjusted EBITA of $850 million with a 25.9% margin, improving 5.5 percentage points year-over-year and reaching an adjusted operating margin of 12.9%, the highest ever for a Q2, a clear demonstration of improved operating leverage. Ultimately, net income for the quarter totaled $242 million, up 66% year-over-year, bringing H1 net income close to $600 million. Moving to the next slide 8.

% year-over-year.

Revenue is also grew by 10.2% with notable uh performance during seasonal Peaks such as Mother Days particular in Colombia and Ecuador.

Ricardo Botas: At the same time, it maintained a disciplined approach to controllable costs supporting margins expenses. As a result, LATAM delivered an adjusted EBITDA of $850 million, with a 25.9% margin, improving 5.5 percentage points year-over-year, and reaching an adjusted operating margin of 12.9%, the highest ever for a second quarter, a clear demonstration of improved operating leverage. Ultimately, net income for the quarter totaled $242 million, up 66% year-over-year, bringing first-half net income close to $600 million. Moving to the next slide, slide 8, the strength of the second quarter performance is not... only the result of revenue growth of favorable food dynamics, but it's also a reflection of Latam's long-standing discipline on cost containment.

On the cost side, Letang Group benefited from a favorable fuel environment with jet fuel costs decreasing by 10.6% year-over-year. At the same time, it maintains a disciplined approach to controllable costs, supporting margin expansion.

Ramiro Alfonsín: The strength of Q2 performance is not only the result of revenue growth of favorable fuel dynamics, but it's also a reflection of LATAM's long-standing discipline on cost containment. In Q2, adjusted CASK ex-fuel remained at $0.048, and adjusted passenger CASK ex-fuel held at $0.043, both aligned with the updated full-year guidance. LATAM Group's cost strategy continues to be one of the defining pillars of its business model. It is what allows the group to invest in the customer, expand the network, and consistently deliver healthy margins. Turning to slide 9, looking at LATAM's trailing 12-month performance, the company reached an adjusted EBITA of $3.5 billion from the last 12 months with a margin of 26.2%, continued the upward trend we have seen over the past several quarters.

As a result Laten delivery and adjusted eidar of 850 million dollars, with a 25.9% margin, improving 5.5 percentage points, year-over-year and reaching an adjusted operating margin of 12.9% the highest ever for a second quarter, a clear demonstration of improved operating leverage. Ultimately, my income for the quarter. Total of 242 million up to 66% year-over-year, bringing first half net income, uh, close to 600 million dollars, moving to the next Slide. The slide 8, the strength of the second quarter performance is not, uh,

Ricardo Botas: In the second quarter, adjusted cask exfuel remained at $0.048. An Adjusted Passenger Cask Expo held at $0.043, both aligned with the updated full-year guidance. LATAM Group's cost strategy continues to be one of the defining pillars of its business model. It is what allows the Group to invest in the customer, expand the network, and consistently deliver healthy markets.

Only the result of Revenue, growth of favorable food Dynamics, but it's also reflection of latent longstanding discipline and Cost Containment in the second quarter adjusted. Cask XP will remain at 4.8 cents.

And adjust the passenger, Cask X through held at 4.3 cents both aligned with the updated full year guidance, latan groups cost strategy continues to be 1 of defining pillars of its business model.

It is what allows the group to invest in the customer. Expand the network and consistently deliver healthy margins.

Ricardo Botas: Turning to the slide 9, looking at Latam's trailing 12-month performance, the company reached an adjusted EBITDA of $3.5 billion from the last 12 months, with a margin of 26.2%, continuing the upward trend we have seen over the past several quarters. This sustained growth reflects the strength of this operating model, combining solid demand, strategic capacity deployment, and strict cost discipline, and also reinforce LATAM's ability to invest in the business, improve the customer journey, and preserve financial flexibility, all while maintaining healthy leverage and delivering returns to shareholders.

Ramiro Alfonsín: This sustained growth reflects the strength of this operating model, combining solid demand in strategic capacity deployment and strict cost discipline, and also reinforces LATAM's ability to invest in the business, improve the customer journey, and preserve financial flexibility, all while maintaining healthy leverage and delivering returns to shareholders. Turning to the next slide 10, the cash generation. As we show in this slide, Q2, LATAM delivered another solid performance, driven by a strong adjusted operating cash flow of $753 million in this quarter, continued discipline in capital allocation. Throughout the quarter, the company maintained investment plans to support fleet growth and maintenance, resulting in adjusted unlevered free cash flow of $522 million. After accounting for interest expenses, adjusted levered free cash flow amounted to $395 million. Overall, LATAM generated $367 million in net cash before implementing shareholders' return initiatives.

Turning to the slide 9 uh looking at latan trailing uh 12 months performance. The company reached the and not just at Evar of 3.5 billion uh dollars from the last 12 months with a margin of 26.2% continued, the upward Trend we have seen over the past several quarters.

Ricardo Botas: Turn to the next slide, slide 10, the cash generation, as we show in these slides, the second quarter, LATAM delivered another solid performance driven by a strong, adjusted and operating cash flow of $753 million in this quarter, continued discipline in capital allocation. Throughout the quarter, the company maintained an investment plan to support fleet growth and maintenance, resulting in an unleveraged free cash flow of $522 million. After accounting for interest expenses, adjusted leveraged free cash flow amounted to $395 million. Overall, LATAM generated $367 million in net cash before implementing shareholders return initiatives. In total, $445 million was returned to shareholders during the quarter.

This sustained growth reflects the strength of this operating model, combining solid demand, strategic capacity deployment, and strict cost discipline. It also reinforces LATAM's ability to invest in the business, improve the customer journey, and preserve financial flexibility, all while maintaining healthy leverage and delivering returns to shareholders.

Turn to next slide, July 10th. Uh, the cash generation, uh, as we show when these slides, the second quarter left hand delivered, another solid performance driven by strong adjusting operating cash flow of 753 billion dollars in this quarter continued discipline in capital allocation throughout the quarter. The company maintained, an investment plans to support Fleet growth and maintenance result in not just unlevered free cash flow of 522 million. After accounting for interest expenses, adjusted adjusted levered free, cash flow amounted to 395 million.

Ramiro Alfonsín: In total, $445 million was returned to shareholders during the quarter, comprising $293 million in dividends, equivalent to the 30% of the fiscal year 2024 net income, and $152 million through the first share repurchase program, as Roberto Alvo mentioned at the beginning. After accounting for these returns, LATAM's cash balance was largely unchanged, with a slight decrease of $78 million quarter over quarter, supported by healthy underlying profitability and solid liquidity management. Considering H1, LATAM has generated $1.3 billion in net adjusted operating cash flow, $743 million in net adjusted unlevered free cash flow, and $592 million in net adjusted leverage free cash flow. Also, net cash variation of $111 million in H1.

Ricardo Botas: Comprising $293 million in dividends, equivalent to 30% of the fiscal year 2024 net income, and $152 million through the first share repurchase program, as Roberto mentioned at the beginning. After accounting for these returns, Latam's cash balance was largely unchanged with a slightly decrease of $78 million quarter over quarter, supported by healthy underlying profitability and solid illiquidity metrics. Considering the first half of the year, LATAM has generated $1.3 billion in adjusted and operating cash flow, $743 million in adjusted and leveraged free cash flow, and $592 million in adjusted leveraged free cash flow. and also a net cash variation of 111 million dollars in the first semester.

Overall, the 10 generes 367 million in net cash before implementing shareholders return initiatives in total. Uh, 445 million was returned to shareholders during the quarters.

Comprising, 293 million in dividends equivalent to the 30% of the fiscal year, 2024 net income and uh 152 million dollars through the first share repurchase program as Roberto mentioned, at the beginning.

After accounting for these returns, LATAM's cash balance was largely unchanged, with a slight decrease of $78 million quarter over quarter, supported by healthy underlying profitability and solid liquidity management.

Considering the first half of the year latan has generated 1.3 billion dollars in not just in operating cash flow. 743 million in, not just an unlevered free, cash flow and 592 million in not just at leverage free, cash flow.

Ramiro Alfonsín: Looking ahead, LATAM remains confident that the operation will continue to generate cash throughout H2 of the year, in line with the updated 2025 guidance, giving the company the flexibility to support strategic initiatives, reinvest in the business, and return value to shareholders in a sustainable and disciplined way. Moving to the next slide, now slide 11, about the capital structure. At the end of Q2, LATAM reported liquidity of $3.6 billion, equivalent to 27.2% of last 12 months revenues. This strong financial position was maintained and supported by continued access to committed revolving credit lines, even after deploying cash during the quarter to return capital to shareholders. In terms of leverage, LATAM closed the quarter with an adjusted net leverage ratio of 1.6%, which reflects the company consistent financial discipline and well below the financial policy target.

Ricardo Botas: Looking ahead, Latam remains confident that the operation will continue to generate cash throughout the second half of the year in line with the updated 2025 guidance, giving the company the flexibility to support strategic initiatives, reinvest in the business, and return value to shareholders in a sustainable and disciplined way.

Ricardo Botas: Moving to the next slide, now slide 11. about the capital structure. At the end of the second quarter, LATAM reported liquidity of $3.6 billion, equivalent to 27.2% of last 12 months revenues. This strong financial position was maintained, supported by continued access to committed revolving credit lines, even after deploying cash during the quarter to return capital to shareholders. In terms of leverage, LATAM closed the quarter with an adjusted net leverage ratio of 1.6%, which reflects the company consistent financial discipline and well below the financial policy target. LATAM capital structure continues to be one of its key strengths, both in absolute terms and relative to the industry.

And also, net cash, variation of a lender, and $111 million in the first semester. Looking ahead, LATAM remains confident that the operation will continue to generate cash throughout the second half of the year, in line with the updated 2025 guidance. This gives the company the flexibility to support its strategic initiatives, reinvest in the business, and return value to shareholders in a sustainable and disciplined way.

Moving to the next slide now. We design, slide 11.

Reported liquidity to have 3.6 billion dollars equivalent to 27.2% of last 12 months. Uh revenues these strong financial position was maintained supported by continued, access to committed revolving credit lines.

Even after deploying, uh, cash during the quarter to return Capital to shareholders. In terms of Leverage, latan closed, the quarter with an adjusted net, leverage ratio of 1.6% which he reflects the company consistent.

Ramiro Alfonsín: LATAM capital structure continues to be one of its key strengths, both in absolute terms and relative to the industry. As we move forward, we will remain focused on protecting the solid financial position, staying within the parameters of our financial policy while continuing to explore opportunities to enhance efficiency and create long-term value. Moving to slide 12, an important update and milestone for the group in the continued strength of LATAM's capital structure. In last June, the second and the final stage of our post-restructuring refinancing plans was completed with the issuance of $800 million in senior secured notes due in 2031 and a 7.58 coupon. This transaction allowed us to fully prepay the remaining high interest rate debt from 2022, with a strong reduction above 570 basis points in the cost of the refinanced debt. This represents an additional annual savings sorry, in interest, about $33 million savings.

Ricardo Botas: As we move forward, we will remain focused on protecting the solid financial position, staying within the parameters of our financial policy while continuing to explore opportunities to enhance efficiency and create long-term revenue.

Financial discipline and well below the financial policy targets, Latin capital structure continues to be one of its key strengths, both in absolute terms and relative to the industry. As we move forward, we will remain focused on protecting the solid financial position, staying within the parameters of our financial policy, while continuing to explore opportunities to enhance efficiency and create long-term revenue.

Ricardo Botas: Moving to the slide 12, an important update and milestone for the group in the continued strength of LATAM's capital structures. In June, last June, the second and the final stage of our post-restructuring pre-financing plan was completed with the issuance of $800 million in senior security notes during 2031 and a 758 coupon. This transaction allowed us to fully repay the remaining high interest rate debt from 2022 with a strong reduction above 570 basis points in the cost of the refinanced debt. This represents an additional annual savings, sorry, in interest, about $33 million savings. Together with the savings from last year of negotiation, we are counting now combined savings close to $151 billion.

Uh, moving to the slide 12, uh, an important update in milestone for, for the group, in the continuous strength of latent Capital structures in June. Uh, last June, the 2nd and the final stage of our post restructuring bra financing plans was completed with the issuance of uh 800 million dollars in senior secured notes due in 20131 and 758 coupon these transaction allowed us to fully prepare. The remaining

Ramiro Alfonsín: Together with the savings from last year of negotiation, we are accounting now a combined savings close to $151 million. Let's turn to slide 13. As LATAM Group moves into the H2 of the year, the business fundamentals remain strong and there is less uncertainty in the macroeconomic environment. In this sense, we are pleased to report that we have been closely monitoring demand trends in both passengers bookings and cargo have remained stable in the recent weeks. In the light of this, we have narrowed the range of LATAM Group's guidance for the full year and made certain revisions and upwards adjustments, including capacity and some key financial indicators. In terms of capacity, the company has narrowed its consolidated growth range, while now expecting larger growth in the Brazilian domestic market, with the updated guidance reflecting an increase between 7% to 9% to 9.5% and 10.5%.

Interest rate that from 2022, uh, with a strong reduction, uh, above 570 basis points in the cost of the refinance. At that. Uh, this represents an annual, say additional way in will say is sorry in interest about 33 million, uh, savings.

Ricardo Botas: Let's turn to the slide 13. As LATAM Group moves into the second half of the year, the business fundamental remains strong, and there is less uncertainty in the macroeconomic environment. In this sense, we are pleased to report that we have been closely monitoring demand trends and both passengers, bookings and cargo have remained stable in the recent weeks. And in light of this, we have narrowed the range of LATAM Group's guidance for the full year and made certain revisions and upwards adjustments, including capacity and some key financial indicators. In terms of capacity, the company has narrowed its consolidated growth range, while now expecting larger growth in the Brazilian domestic market, with the updated guidance reflecting an increase from between 7% to 9% to 9.5% and 10.5%.

So together with the savings from last year, negotiation uh we are counting now. Uh combined savings close to 151 uh million uh dollars. Let's turn to the slide 13.

Uh, as Letang group moves into the second half of the year, the business fundamental remains strong and there is less uncertainty in the, in the macroeconomic environment. In in this sense, uh we are pleased to report that we have been closely monitoring demand, Trends, and both passengers, uh, bookings. And cargo have remained as stable in the recent weeks. And the light of this, we have narrowed, the range of latan groups guidance for the full year and made uh certain revisions and upwards, uh, adjustments, including capacity, and some key, uh, Financial indicators. In terms of capacity, the company has narrowed its Consolidated growth range while now expecting large larger, uh, growth in the Brazilian domestic market with the updated guidance, reflecting an increase from 7 between 7 to 9% to 9.5%,

Ramiro Alfonsín: This is supported by stable demand trends and the Group's ability to deploy capacity in markets with a strong performance and better opportunities. The company also expects an adjusted operating margin between 14% and 15%, up from previous range between 13% to 15%. Additionally, adjusted EBITDA is now forecasted between $3.65 billion and $3.85 billion, revised upward from $3.4 billion to $3.75 billion. In terms of capital structure, the expectations for adjusted leverage free cash flow have been increased to above $1.3 billion, up from above $1.2 billion. The company is also reaffirming the targets of maintaining adjusted net leverage ratio at or below 1.5 times. These updates reflect LATAM Group's consistent execution and confidence in its ability to generate sustainable value going forward. Moving to the last slide before we move to the Q&A, let me quickly recap the main takeaways from this strong Q2.

Ricardo Botas: This is supported by stable demand trends and the Group's ability to deploy capacity in markets with strong performance and better opportunities. The company also expects an adjusted operating margin between 14% and 15%, up from a previous range between 13% to 15%. Additionally, adjusted EBITDA is now forecasted between $3.65 billion and $3.85 billion, revised upward from $3.4 billion to $3.75 billion. In terms of capital structure, the expectations for adjusted leverage free cash flow have been increased to above $1.3 billion, up from above $1.2 billion. The company is also reaffirming the target of maintaining an adjusted net leverage ratio at or below 1.5 times.

Percent and 10.5%. This is supported by stable demand Trends and the group's ability to deploy capacity in markets with a strong performance and better opportunities.

Ricardo Botas: These updates reflect LATAM's group's consistent execution and confidence in its ability to generate sustainable value going forward.

The company also expected expects. An adjusted operating margin between 14% And 15% up from a previous range uh, between 13% to 15%. Additionally, adjusted Evar is now forecasted between 3.65 billion dollars and 3.85 billion dollars revised upward from 3.4 billion to 3.75 billion in terms of capital structure, the expectations for adjusted leverage, free cash flow have been increased to above 1.3 billion dollars up from above 1.2 billion dollars. The company is also reaffirming the targets of maintaining, I just net, leverage ratio at or below 1.1 1.5 times.

This update reflects, uh, latent groups, consistent execution, and confidence in its ability to generate sustainable value going forward.

Ricardo Botas: Moving to the last slide, before we move to the Q&A, let me quickly recap the main takeaways from this strong second quarter. First, we saw solid operational performance with continued growth and efficiency. LATAM Group transported over 20 million passengers in this last quarter and ended this quarter with a consolidated load factor of 83.5%, supported by strong demand across all business sectors. Second, financial results were robust. LATAM delivered a solid adjusted EBITDA and a double GST adjusted operating margin of 12.9%, supported by stable unit revenue, lower pool prices, and continued cost discipline. Third, we continue to deliver value to shareholders.

uh,

Ramiro Alfonsín: First, we saw solid operational performance with continued growth and efficiency. LATAM Group transported over 20 million passengers in this last quarter, and ended this quarter with a consolidated load factor of 83.5%, supported by strong demand across all business segments. Second, financial results were robust. LATAM delivered a solid adjusted EBITDA and a double-digit adjusted operating margin of 12.9%, supported by stable unit revenue, lower fuel prices, and continued cost discipline. Third, we continue to deliver value to shareholders. LATAM reported net income of $242 million for the quarter, and close to $600 million for H1 of the year, demonstrating consistent execution and profitability. Additionally, the company returned $445 million to shareholders through dividends and the repurchase of 1.6% of its outstanding shares in the Santiago Stock Exchange. Fourth, customer satisfaction remained at record levels, driven by the continued investments in premium cabins, enhanced onboard connectivity.

Moving to the last slide before we move to the Q&A, let me quickly recap the main takeaways from this strong second quarter. First, we saw solid operational performance with continued growth and efficiency. Last time, the group transported over 20 million passengers in this last quarter.

Ricardo Botas: LATAM reported net income of $242 million for the quarter and close to $600 million for the first half of the year, demonstrating consistent execution and profitability. Additionally, the company returned $445 million to shareholders through dividends, and they repurchased off 1.6% of its outstanding shares in the Santiago Stock Exchange. Fourth, customer satisfaction remained at record levels, driven by the continued investments in premium cabins and enhanced onboard connectivity. This is also reflected in the recognition that we have mentioned regarding the LATAM is recognized as the best airline in South America in the 2025 Skytrax Awards. We reached a major milestone in capital structure optimization through the recent $800 million refinancing, significantly reducing our interest costs and unlocking over $30 million in annual savings.

We continue to deliver available to shareholders, latan reporting net, income of 242 million for the quarter, and close to 600 million. Uh for the first half of the Year demonstrating, consistent, execution, and profitability.

Ramiro Alfonsín: This is also reflected in the recognition that we have mentioned regarding LATAM recognized as the best airline in South America in 2025 Skytrax awards. Fifth, we reached a major milestone in capital structure optimization through the recent $800 million refinancing, significantly reducing our interest costs and unlocking over $30 million in annual savings.

Additionally, the company returned 445 million to shareholders through dividends and the purchase of 1.6% of its outstanding shares in the Santiago Stock Exchange. Fourth, customers satisfaction remain at record levels driven by the continued investments in premium cabins and enhance the onboard connectivity. This also reflected in the recognition that we have mentioned regarding the, uh, last 10 recognized as the best, our line in South America in 2025 Sky tracks Awards, fifth.

Roberto Alvo: Finally, LATAM Group's fleet plans remain firmly on track. The group has already incorporated 14 new aircraft during H1 and expects to receive 12 more in H2, reinforcing its growth strategy and operational efficiency. With that, now we can open the line for the questions. Thank you.

Ricardo Botas: And finally, LATAM Group's fleet plans remain firmly on track. The Group has already incorporated 14 new aircraft during the first half. of the year and expect to receive 12 more in the second half, reinforcing its growth strategy and operational efforts.

We reached a major milestone in capital structure. Optimization through the recent 800 million. Uh refinancing significantly reducing reducing our interest costs and unlocking over 3. 30 billion dollars in animal savings and finally Letang groups Fleet plans, uh, remain firmly on track. The group has already Incorporated 14 new aircraft during the first half.

Ricardo Botas: With that, now we can open the line for the questions. Thank you.

Of the year, we expect to receive 12 more in the second half, reinforcing our growth strategy and operational efficiency.

With that. Now we can uh, open the line for uh the questions. Thank you.

Operator: Our first question comes from Guilherme Mendes from JPMorgan. Your line is now open. Please go ahead.

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Guillerme Mendez: Our first question comes from Gilliam Mendez from JP Morgan. Your line is now open, please go ahead. Yes, thank you and good morning Roberto, Ricardo, Andres and Tori. I have two questions. The first one is on the growth outlook you mentioned on the release, you know, on the on the intro. You see growth opportunities for the next two or three years, but what does it mean in terms of ASK growth? I know there's no formal guidance beyond 2025, but any color on how each of the markets could grow would be appreciated. And second point is the capital allocation and leverage.

Our first question comes from Gilliam Mendes from JP Morgan. Your line is now open. Please go ahead.

Guilherme Mendes: Yes. Thank you, and good morning, Roberto, Ramiro, Andres, and Tori. 2 questions. The first one is on the growth outlook. You mentioned the release on the intro that you see growth opportunities for the next 2 or 3 years. What does it mean in terms of ASK growth? I know there's no formal guidance beyond 2025, but any color on how each of the markets could grow would be appreciated. Second point is on the capital allocation and leverage. It's clear that the company continues to generate free cash flow, reduce leverage, and although we saw dividend payments and the ongoing buyback program, should we think that any gap between the current leverage and what you set as the 2 times financial target could be distributed as dividends going forward? Thank you.

Yes, thank you. Good morning. Roberto and to, uh, 2 questions. The first 1 is on the growth. How to look, uh, you mentioned on the release, you know, on the, on the intro that you see growth fraternities for the next 2 or 3 years, uh, but what does it mean in terms of ask growth? I know there's no formal guidance Beyond 2025, but any caller on how each of the markets could grow, uh, would be appreciated.

Guillerme Mendez: It's clear that the company continues to generate free cash flow, reduce leverage. And although we saw dividend payments and the ongoing buyback program, should we think that any gap between the current leverage and what you said as the two times financial target could be distributed as dividends going forward? Thank you. Thanks.

And second point is on the capital location uh and leverage. Uh it's clear that the company continues to generate free cash flow uh reduced leverage. And although we saw dividend payments and the ongoing uh buyback program,

Should we think that any, uh, gap between the current leverage and what you said as the 2 times financial target could be distributed as dividends going forward? Thank you.

Roberto Alvo: Thanks. Hi, Guilherme. How are you? Nice talking to you again. This is Roberto on this side. In terms of your first question, what we're seeing is, in general, solid demand in most of the markets, without many impact from all the geopolitical things that we are seeing. We have been able to improve the connectivity, the quality of our network. Our premium revenue is growing faster than our capacity is growing. The fact that we have remained at pretty much the same cost per ASK since before the pandemic, I think, talks well about our discipline in cost. All of that provides us with a good set of opportunities for growth in the upcoming years.

Roberto Alvo: Hi, Guillerme. How are you? Nice talking to you again. This is Roberto on this side. So, in terms of your first question, What we're seeing is, in general, solid demand in most of the markets. without many impact from all the geopolitical things that we are seeing. We have been able to improve the connectivity, the quality of our network. Our premium revenue is growing faster than our capacity is growing. The fact that we have remained at pretty much the same cost per ASK since before the pandemic, I think talks well about our disciplining cost. So all of that provides us with a good set of opportunities for growth in the upcoming years.

Thanks. Hi. How are you nice? Uh, talking to you. Again, this is Roberto on this side. So in terms of your first question, um,

What we're seeing is, in general, solid demand in most of the markets.

Roberto Alvo: As you well mentioned, we are still not providing any guidance on 2026 and onwards, but if you just take the fleet plan and think about how much operation comes from that, I think it's fair to say that that would give you a high single-digits growth prospect for 2026. That includes already the 11 aircraft that we have secured that I mentioned in my introduction. I think that you can use that as a broad level indicator coming out of fleet plan, and of course, we'll provide more detailed guidance towards the end of the year. 2027 onwards, I think it's still early to say, but again, if what we see in the market today, in the upcoming months or quarters remains, I think that we have interesting opportunities to keep a momentum on our growth for a little bit longer.

Roberto Alvo: And as you well mentioned, we are still not providing any guidance on 2026 and onwards. But if you just take the fleet plan and think about how much operation comes from that, I think it's fair to say that that would give you a high single digits growth prospect for 2026. and that includes already the 11 aircraft that we have secured that I mentioned in my introduction. So I think that you can use that as a broad level indicator coming out of Fleet Plan and of course we'll provide more detailed guidance towards the end of the year.

Without, without many impact from all. The geopolitical things that we are seeing, we have been able to improve the connectivity. The quality of our Network, our premium revenue is growing faster than our capacity is growing. Uh, the fact that we have remained at pretty much the same cost per as K since before the pandemic. I think talks well about our discipline in cost. So, all of that provides us with a good set of opportunities for growth in the upcoming years. And as you will mentioned, we are still not providing any guidance on 2026 and onwards. But um, if you just take the fleet plan uh and think about how much operation comes from that. I think it's fair to say that that would give you a high single digit growth Prospect for 2026.

Roberto Alvo: And 2027 onwards, I think it's still early to say, but again, if what we see in the market today in the upcoming months and quarters remains, I think that we have interesting opportunities to keep a momentum on our growth for a little bit longer. And if I can give you just a little bit of market color again. So the over capacity situation that we saw in Colombia in the first quarters of the year and late last year has been kind of balanced today. Domestic Brazil is in a good place as well as domestic Spanish speaking countries.

Roberto Alvo: If I can give you just a little bit of market color again. With the overcapacity situation that we saw in Colombia in the first quarters of the year and late last year has been kind of balanced today. Domestic Brazil is in a good place as well as domestic Spanish-speaking countries. International is in a very solid stance as well. I would say that the only small concern is Chile to US point of sale Chile, as people are trying to understand US policies regarding traffic between both countries. Cargo has not been affected by the Liberation Day announcement in early April. If you remember, that's within the quarter. It's marginally, and we haven't seen any significant impacts, and again, our network, our position in cargo has allowed us to continue improving our revenues and our capacity there.

And that includes already the 11 aircraft that we have secured that I mentioned in the, in my introduction. So I I I think that you can use that as a broad level indicator coming out of Fleet plan and of course, will provide more more detailed guidance towards the end of the year and 2027 hours. I think it's still early to say. But again, if if what we see in the market today in the upcoming months and quarters remains, I think that we have, uh, interesting opportunities to keep a momentum on our growth for for a little bit longer.

Um, and if I can give you just a little bit of Market color again, um,

Roberto Alvo: International is in a very solid stance. As well, I would say that the only small concern is Chile to US point of sale. Chile, people are trying to understand US policies regarding traffic between both countries. Cargo has not been affected by the liberation day announcements in early April. If you remember that's within the quarter, just marginally and we haven't seen any significant impacts. And again, our network, our position in cargo has allowed us to continue improving our revenues and our capacity there. So in general, I would say that we see a good market situation for the time being.

Ramiro Alfonsín: In general, I would say that we see a good market situation for the time being. On the second question, I'll pass it to Ramiro Alfonsín. Okay. Thank you for your question, Gui. I think it's important to mention that the financial policy is part of the framework that we have to deploy capital to shareholders. It's not only the leverage itself, like you mentioned, but a combination of the performance of the liquidity. Remember that we should target to have, under the financial policy, the liquidity between 21% and 25%. Also to be below two times under the financial policy, the leverage level. We have the target for this year, as I have mentioned during the presentation, to be at the end of this year at or below 1.5 times. Also we have an ambitious to target a BB+ rating.

Ricardo Botas: And on the second question, I'll pass it to Ricardo. Okay, thank you. Thank you for... Your question, Gui. I think it's important to mention that the financial policy is part of the framework that we have to deploy capital to shareholders. So it's not only the leverage itself, like you mentioned, but a combination of the performance of the liquidity. Remember that we should target to have under the financial policy the liquidity between 21% and 25%, also to be below two times.

In a good place as well as domestics. Spanish speaking countries, International is in a very solid stance as well. I would say that. The only small concern is Chile to us point of sale. Chile as people are trying to understand US policies regarding um traffic between both countries cargo has not been affected by The Liberation day announcements in early April, if you remember that's within the quarter just marginally and we haven't seen um, any any significant impacts and uh again our Network, our position in car, has allowed us to continue improving our revenues and our capacity there. So in general, I would say that we see a good Market situation for for the time being

and on the second question, I'll pass it to to

Okay. Uh, thank you, thank you for your time. Uh,

your question, the

Ricardo Botas: under the financial policy, the leverage level but we have the target for this year as I have mentioned during the presentation to be at the end of this year on the at or below 1.5 times and also we have an ambitious to target a double B plus rating so we have to combine everything before discuss the alternatives we have to discuss to deploy capital to shareholders but remember that we also together with the board of directors we always evaluate all possibilities we have to deploy capital like incremental dividends buybacks and other alternatives that we could suggest to shareholders and also to the board of directors so under the financial policy looking for the framework we have nothing preventing us to study and evaluate and to propose any alternative.

Uh, I think it's important to mention that the financial policy is part of the framework that we have to deploy capital to shareholders. So, uh, it's not only the leverage itself, like you mentioned, but a combination of the performance of the liquidity. They remember that. We should target to have under the financial policy, the liquidity between 21% and 25%. Also, to be below 2 times.

Roberto Alvo: We have to combine everything before discuss the alternatives we have to deploy capital to shareholders. Remember that we also, together with the board of directors, we always evaluate all possibilities we have to deploy capital, like incremental dividends, buybacks, and other alternatives that we could suggest to shareholders and also to the board of directors. Under the financial policy, looking for the framework we have, nothing prevents us to study and evaluate and to propose any alternative. Just as a complement of Ramiro's question, I think it's important to point out two things. One is that we are able to do this distribution back to shareholders at the same time while we grow close to very high single digits. I think that's very important because we have the ability to do at this moment in time, both things.

Roberto Alvo: Just as a compliment of Ricardo's question, I think it's important to point out two things. One is that we are able to do this distribution back to shareholders at the same time while we grow close to to Thank you. That's very clear. Thank you both for the answer. Thank you.

Under the financial policy, The Leverage level. Uh, but we have the target for this year as I have mentioned. During the presentation to be at the end of this year, uh, on the app or below 1.5 times. And also, we have, uh, an ambitious to, uh, Target Double B plus, uh, rating. Uh, so we have to combine everything before discuss the Alternatives, we have to disc to deploy Capital to shareholders. Uh, but remember that, we also together with the board of directors, we always evaluate all possibilities. We have to deploy Capital, like incremental, dividends BuyBacks and other Alternatives that we could uh suggest to shareholders and also to the board of directors. So uh under the financial policy, looking for the framework, we have nothing preventing us to study and evaluate and to propose any alternative. Just as a complement of Ricardo's question, I think it's important to point out 2 things 1 is that we are able

To do this. Um, distribution back to shareholders.

Roberto Alvo: When you think looking forward, just keep in mind that, of course, the development of the business and seeking market opportunities, commercial opportunities will come, of course, first. Within the guidelines of the financial policy, and after we review our growth prospects, is when we will make decisions regarding further distribution to shareholders. Thanks.

At the same time, while we grow close to very high single digits. And I think that's very important because we have the ability to do at this moment in time both things. And when you think looking forward, just keep in mind that, of course, the development of the business and seeking market opportunities, commercial opportunities will come, of course, first. Uh, so within the guidelines of the financial policy and after we.

With you our growth prospects is when we will uh, make decisions regarding further distribution to shareholders.

Guilherme Mendes: That's very clear. Thank you both for the answers.

Thanks.

That's very clear. Thank you both for the answers.

Operator: Thank you. Our next question comes from Michael Linenberg from Deutsche Bank. Your line is now open. Please go ahead.

Michael Linenberg: Our next question comes from Michael Linenberg from Deutsche Bank. Your line is now open, please go ahead. Oh, hey, good morning. Roberto Ricardo, Torrey. Very, very good results. I guess two questions here in revenue. You could see how well your cargo revenues held up. by the Liberation Day.

Thank you. Our next question. Comes from Michael linenberg, from Deutsche Bank. Your line is now open. Please go ahead.

Michael Linenberg: Oh, hey. Good morning, Roberto Alvo, Ramiro Alfonsín, Tori Creighton. Very good results. I guess two questions here in revenue. You could see how well your cargo revenues held up despite the Liberation Day announcements, and obviously we've heard other carriers talk about some cargo softness, but your other revenue was down pretty meaningfully. I know it's not a big number, but what was driving that other piece? What's in there?

Tory Creighton: heard other carriers talk about some cargo softness but your other revenue was down pretty meaningfully I know it's not a big number but what what was driving that other piece what what's in there So Tori, do you want to answer that? Sure. Hi, Mike. This is Tori speaking. Sure. With regard to the other revenues that we had in the period, nice to hear from you. Other income, so in this period, amounted to $36 million. It's not something that really moves the needle significantly or materially for us. Usually what's considered in other income is a combination of our Latam travel business, so all of our other businesses that are not the passenger business or cargo, so we have some revenues there that are considered from Latam travel.

Oh, hey, um, good morning, Roberto Ricardo Tori. Um, very, very good result. Um, I guess two questions here in revenue. Um, you could see how well your cargo revenues held up, um, despite the Liberation Day announcements. And obviously, we've heard other carriers talk about some cargo softness, but your other revenue was down pretty meaningfully. I know it's not a big number, but what was driving that other piece? What’s in there?

Roberto Alvo: Tori, you want to answer that?

Tori Creighton: Sure. Hi, Mike. This is Tori speaking. With regard to the other revenues-

Michael Linenberg: Hi, Tori.

Tori Creighton: that we had in the period Nice to hear from you. Other income, in this period, amounted to $36 million. It's not something that really moves the needle significantly or materially for us. Usually what's considered in other income is a combination of our LATAM Travel business. All of our other businesses that are not the passenger business or cargo. We have some revenues there that are considered.

So, do you want to answer that? Uh, sure. Hi, Mike. This is Tori speaking with regard to the other revenues that we had in the period.

Michael Linenberg: Okay

Tori Creighton: from LATAM Travel. Sometimes we see relative to the other joint venture agreements, et cetera. It's a little bit of everything.

Tory Creighton: Sometimes we see relative to the other joint venture agreements, et cetera, so it's a little bit of everything. Another revenue, like sale of assets and stuff like that, so it's a combination of very small things. Okay, no, no, that's good. I didn't know if there's a loyalty piece in there or some sort of reclassification. That's all.

Roberto Alvo: Another revenue like sale of assets and stuff like that.

Michael Linenberg: Okay.

Roberto Alvo: It's a combination of very small things, Michael.

Michael Linenberg: Okay. No, that's good. I didn't know if there was a loyalty piece in there or some sort of reclassification. That's all I was getting to.

Nice, nice to hear from you. Um, other income. So in, in this period amounted to 36 million, it's not something that really moves moves the needle significantly or materially for us. Usually, what's what's considered in other income is a combination of our leam travel business. Um, so all of our main, our other businesses that are not the passenger business or cargo. So we have some revenues there that are considered from vadum travel. Sometimes we see relative to, you know, the the other joint venture agreements Etc. So it's it's a little bit of of everything, another Revenue, like sale of assets and stuff like that so it's it's a combination of very small things. Michael.

Roberto Alvo: No FSP revenues, loyalty revenues are within the passenger dimension.

Tory Creighton: No, FFP revenues, loyalty revenues are within the passenger dimension. Okay, great.

Okay, no, no, that’s good. I didn’t know if there was a loyalty piece in there or some sort of reclassification. That’s all I was getting to.

Michael Linenberg: Okay. Great. Just my second question, this is more sort of big picture. The Q2 historically was always the tough quarter when you think about LATAM from a seasonal perspective. The margin that you just put up in that Q2, that's eye-opening. I have to go back many years. That may be one of your best Q2s ever, from a profitability standpoint.

I mention.

Michael Linenberg: And then just my second question, and this is more sort of big picture, I mean, the June quarter, historically, was always the tough quarter when you think about Latam from a seasonal perspective. And the margin that you just put up in that June quarter, that's that's eye opening. And I have to go back many years, that may be one of your best June quarters ever, from a profitability standpoint. And I just as it speaks to seasonality, and it may be just as your network. has just grown and expanded, and also the strength that you have within your domestic market.

Michael Linenberg: I just, as it speaks to seasonality, and it may be just as your network has just grown and expanded and also the strength that you have within your domestic markets, are we at a point where the Q2, I guess, will still always be maybe a seasonally more challenging quarter for LATAM, but when we think about the balance of your network today, is it going to be less of an impact that we would have seen in the past? It feels like you've kind of moved into this sort of next level. It's like the next chapter of LATAM, where you've now found enough markets, and you have such a diversified revenue stream that you've basically mitigated this seasonal impact that we used to see. There was a time where you would actually lose money in the Q2.

Okay. Okay, great then. And then just my second question. And this is more sort of big picture. I mean, the June quarter. Historically was always the tough quarter, when you think about flat cam from a seasonal perspective, and the margin that you just put up in that June quarter, that's that's I opening. And I I have to go back many years. That may be 1 of your best June quarters ever, um, from a profitability standpoint. And I just as it speaks to seasonality and it may be just as your network.

Roberto Alvo: Are we at a point where, you know, the June quarter, I guess, will still always be. more challenging quarter for LATAM, but when we think about the balance of your network today, is it going to be less of an impact that we would have seen in the past? I mean, it feels like you've kind of moved into this sort of next level. It's like the next chapter of LATAM, where you've now found enough markets and you have such a diversified revenue stream that you've basically mitigated this seasonal impact that we used to see. I mean, there was a time where you would actually lose money.

Has just grown and expanded and also the strength that you have within your domestic markets.

Michael Linenberg: This margin, this is going to be among some of the best margins for carriers that the Q2 seasonally one of their strongest quarters. If you can speak to that, because it does feel like there's some structural changes underway that may be permanent, that are helping your overall full-year profitability. Thanks for taking my question.

Roberto Alvo: quarter and this margin. to be one of the, you know, among some of the best margins for carriers that the June quarter sees only one of their strongest quarters. So I'm just, if you can speak to that, because it does feel like there's some structural changes underway that may be permanent that are helping your overall full year profitability. Thanks for taking Thanks, Michael. Yes, I mean, second quarter is going to be I mean, there we have holidays in January, February and in July in this part of the world. So I know holidays are not important holidays in the second quarter to take them into consideration.

Are we at a point where, you know the June quarter, I guess will still always be maybe a seasonally more challenging quarter for a lat cam. But when we think about the balance of your network today, is it just is it, is it going to be less of an impact that we would have seen in the past? I mean, it feels like you've kind of moved into this sort of Next Level. It's like the next chapter of latam where you've now found enough markets and you have such a diversified Revenue stream that you've basically mitigate mitigated this seasonal impact that we used to see. I mean, there was a time where you would actually lose money in the June quarter and and this margin this is this is going to be 1 of the you know among some of the best margins of for carriers that the June quarter seasonally 1 of their strongest quarters. So I'm just if you can speak to that because it does feel like there's some structural changes underway that may be permanent um that are helping your overall full year profitability. Thanks for

Taking my question.

Roberto Alvo: Thanks, Michael. Yes. We have holidays in January, February, and in July in this part of the world, and no holidays or no important holidays in Q2. Take that into consideration. People come back from the large summer holidays as well. I think that trend will be there. It's not linked to demand. Having said that, yes, I think that we have seen a little bit less from the demand-side seasonality than in the past. I'm not sure I can point out to changes in passenger behavior yet. Probably we will need a little bit more time to do that. What is true is what you mentioned in terms of the diversification of our network. Not all the countries have the same seasonality.

Roberto Alvo: People come back from the large. summer holidays as well. So I think that that trend will be there. It's not linked to demand. Having said that, yes, I think that we have seen a little bit less from the demand side seasonality than in the past. I'm not sure I can point out to passenger changes in passenger behavior yet. Probably we will need a little bit more time to do that. What is true is what you mentioned in terms of the diversification of our network. Not all the countries have the same seasonality. We have been able to drive significant growth on premium traffic revenue that is less seasonal than the leisure revenue.

Thanks, Michael. Um, yes. I mean, the second quarter is going to be, I mean, there we have holidays in January, February, and in July in this part of the world. So, and no holidays are not important holidays in the second quarter to take that into consideration. People come back from the large.

Summer holidays as well. So I think um that that that Trend will be there, it's not linked to demand having said that. Yes I think that we have seen a little bit less.

From the demand side seasonality than in the past.

Roberto Alvo: We have been able to drive significant growth on premium traffic revenue that is less seasonal than the leisure revenue, and that is certainly helping to change a little bit the seasonality curve as well. That's important. For me, the bottom line here, if you ask me, is we're in this position where we have the financial strength to take opportunities in the market. We have cost discipline. We are investing a ton of time and effort in increasing our customer experience. What we have seen is, I think, an untapped avenue of premium revenue that we hadn't identified in the past. Shame on me. In the past, I was the commercial guy, and I didn't see it, but now we're seeing it, and that helps as well. Together with that, I think that we have a good demand profile.

Roberto Alvo: And that is certainly helping to change a little bit the seasonality curve as well. And that's important. So for me, the bottom line here, if you ask me, is we're in this position where we have the financial strength to take opportunities in the market. We have cost discipline. We are investing a ton of time and effort in increasing our customer experience. And what we have seen is I think an untapped, an untapped avenue of a premium revenue that we hadn't identified in the past and shame on me in the past I was the commercial guy and I didn't see it but now we're seeing it and that helps as well and together with that I think that we have a good demand profile so so Can't speak for second quarter 2026 yet, but I think that some of the things that you point out sound, they make sense.

I'm not sure I can point out to passenger. Uh, change changes in passenger Behavior yet. Probably, we will need a little bit more time to do that. What is true is what you mentioned in terms of the diversification of our network, not all the countries, have the same seasonality, we have been able to drive significant growth on on uh, premium traffic Revenue. That is less seasonal than the Leisure revenue, and that is certainly helping to is to change a little bit, the the seasonality curve, as well. Um, and that's important. So, for me, the bottom line here, if you ask me, is we're in this position where we have the financial strength to take opportunities in the market, we have cost discipline. We are investing a ton of time and effort in increasing

Our customer experience. And what we have seen is I think an untapped

An untapped Avenue of?

Roberto Alvo: Can't speak for Q2 2026 yet, but I think that.

Premium revenue that we hadn't identified in the past. And the shame on me in the past, that I was the commercial guy and I didn't see it, but now we're seeing it and that helps as well. And together with that, I think that we have a good demand profile. So, so.

Roberto Alvo: things that you point out sound that they make sense. If you want to leave with one message from all this conversation is, again, premium traffic is less seasonal and our mix is changing, and that will help the Q2.

Can't speak for the second quarter of 2026 yet. But I think that some of the...

Roberto Alvo: But if you want to leave with one message from all this conversation is, again, premium traffic is less seasonal and our mix is changing and that will help the second quarter. great. Thank you.

things that you point out, uh, sound, uh, sound sound that they make sense, but if you want to leave with 1,

Uh message from from all these conversation is again premium. Traffic is less seasonal and and our mix is changing and that will help the second question.

Michael Linenberg: Great. Thank you.

Roberto Alvo: Thank you.

Great. Thank you.

Thank you.

Operator: Thank you. As a reminder, if you wish to ask a question, please press star followed by 1 on your telephone keypads. Our next question is from Gabriel Rezende from Itaú BBA. Your line is now open. Please go ahead.

Gabriel Rezende: As a reminder, if you wish to ask a question, please press star followed by one on your telephone keypad. Our next question is from Gabriel Rezende from Itao BBA. Your line is now open, please go ahead. Hi, Alberto. Hi, Ricardo. Thanks for taking my question. I just wanted to do a follow-up over your guidance update.

Thank you. As a reminder, if you wish to ask a question, please press star, followed by 1 on your telephone keypad.

Our next question is from Gabrielle Rosende from Ital BBA. Your line is now open. Please go ahead.

Gabriel Rezende: Hi, Roberto. Hi, Ramiro. Thanks for taking my questions. I just wanted to do a follow-up over your guidance update. Just trying to understand what is underpinning your higher than anticipated capacity for the full year. Just trying to break this down on LATAM's ability to receive the aircraft maybe at a faster pace than anticipated, or whether this is solely related to a better than anticipated demand across the board for your geography. Again, trying to understand how strong is demand at this point, and that it might also have benefited from aircraft being delivered earlier than you thought. Just trying to follow up again on the profitability discussions for the coming quarters. If you could help us to understand where you're seeing more upside for cost reductions.

Gabriel Rezende: So just trying to understand what is intervening your higher-than-anticipated capacity for the full year. Just trying to break this down on LATAM's ability to receive the aircraft maybe at a faster pace than anticipated, or whether this is solely related to a better-than-anticipated demand across the board for your geography. Again, trying to understand how strong is demand at this point, and that it might also have benefited from aircraft being delivered earlier than you thought.

Roberto Alvo: And just trying to follow up again on the profitability discussions for the coming quarters. If you could help us to understand where you're seeing more upside for cost projections, I understand that you're benefiting from a good mix on your top line, but just trying to understand what are the other opportunities for you to continue to increase efficiency from a cost perspective, line by line, on your income statement. Thank you. Yeah, thanks for the question. So, on the capacity growth, I think that this is a factor of several things. One is, yes, we have been able to receive the aircraft that we were expecting in time, and we don't see many risks with respect to that.

Gabriel Rezende: I understand that you're benefiting from a good mix on your top line, but just trying to understand what are the other opportunities for you to continue to increase efficiency from a cost perspective, line by line on your income statement. Thank you.

I'm just trying to follow up again on the, the profitability discussions for the coming quarters. If you could uh, help us to understand where you're seeing more upside for a cost projections, I understand that you're benefiting from a a good mix on your Topline. But just trying to understand what are the the other opportunities for you to continue to increase efficiency from a cost perspective. Uh, line by line on your income income statement. Thank you.

Roberto Alvo: Yeah, thanks for the question. On the capacity growth, I think that this is a factor of several things. One is, yes, we have been able to receive the aircraft that we were expecting in time, and we don't see many risks with respect to that. We're monitoring very closely the Pratt & Whitney AOG situation, which has remained relatively stable during the last months. We expect that to be stable for the remainder of the year. We have improved our expectation on 787 AOGs. In the first part of the year, I think we were a little bit more cautious with that. We've done great work, and we've also been extremely supportive, and hopefully we will be cleared out of 787 AOGs next month. In the last call, if I recall, we had 3 or 4 787s. That helps as well.

Roberto Alvo: We're monitoring very closely the Brad Whitney AOG situation, which has remained relatively stable during the last months, and we expect that to be stable for the remainder of the year. We have improved our expectation on 787 AOGs. In the first part of the year, I think we were a little bit more cautious with that. We've done great work, and we've also been extremely supportive, and hopefully we will be cleared out of 787 AOGs next month. In the last call, if I recall, we had three or four 787 AOGs, so that helped as well. We have three wet-lease aircraft that we secured last year to support these that we will operate during the second half of the year nonetheless.

Yeah, thanks. Thanks for the question. So on, on the, on the capacity growth, I I think that this is a factor of things, 1 is yes, we have been able to receive the aircraft that we were expecting in time. And, um, and we don't see many risks with respect to that we're monitoring very closely. The brand with me aod situation, which has remained relatively stable. Uh, this is doing during during the last months. Um, and, uh, and we expect that to be stable for the render of the year, we have improved our expectation on 787 aod.

Roberto Alvo: We have 3 wet lease aircraft that we secured last year to support this, that we will operate during the H2 of the year nonetheless. Finally, the benefit of the large network, which allows us to mix and match our aircraft and increase our utilization. Our utilization numbers are slightly better than 2024. We see a little bit of further opportunity going forward as well. I think that all those factors add up to us putting ourselves in the high end of the old capacity guidance. The rest is just balancing capacity between the markets as we see how the opportunities evolve. One of the beauties of LATAM is that even though we operate in several different markets, we can move assets around relatively quickly and adjust to market opportunities.

In the first part of the year, I think we were a little bit more cautious with that. We've done great work. And we've also been extremely supportive and hopefully, we will be cleared out of 7878, which is next month in the last call. If I recall, we have 3 or 4, uh, 787. So you so that helps as well. Uh, we, we have 3 Wesley aircraft that we secured last year to support this.

Roberto Alvo: And then, finally, the benefit of the large network, which allows us to mix and match our aircraft and increase our utilization. Our utilization numbers are slightly better than 2024, and we see a little bit of further opportunity going forward as well. So I think that all those factors add up to us putting ourselves in the high end of the old capacity guidance, and then the rest is just balancing capacity between the markets as we see how the opportunities evolve. One of the beauties of LATAM is that even though we operate in several different markets, we can move assets around relatively quickly and adjust to market opportunities.

Roberto Alvo: This is not only a factor of diversification that we have, but also the fact that we have built an operational machine, if I can put it like that allows us to do that very quickly. In general, we feel confident with respect to the capacity outlook, and the reasons are the ones I just mentioned.

Roberto Alvo: And this is not only a factor of diversification that we have, but also the fact that we have... We have built an operational machine, if I can put it like that, that allows us to do that very quickly. So, in general, we feel confident with respect to the capacity outlook, and the reasons are the ones I just mentioned.

That we will operate during the second half of the Year. Nonetheless. And, and then, finally, the benefit of the, of the large Network, which allows us to mix and match our aircraft and increase our utilization. Our authorization numbers are slightly better than 2024, uh, as and I, and we see a little bit of further opportunity going forward as well. So, so I think that all those factors, add up to us, putting ourselves in the high end of the old capacity guidance. And then the rest is just balancing capacity between the markets. As we see how the opportunities evolve 1, 1 of the beauties of latam is that even though we operate in several different markets, uh we can move assets around relatively quickly and adjust to Market opportunities. And this is not only a factor of diversification that we have, but also the fact that we have

Gabriel Rezende: Secondly, the efficiency from costs in terms of advantage.

Roberto Alvo: The efficiency from cost serves us an advantage. Second question, cost efficiency. I mean, so let me tell you two important things. We don't do, you know, these cost-cutting programs that we launch one day where we intend to save millions or hundreds of millions of dollars. We do that every day. And this is very much embedded in the cost. We have... Can you hear me? Sorry we had a little bit of IT. Can you hear me? Yes, I can hear you. Yeah, the line was broken. So... All right, so take that into consideration. We all every day, all day, we're looking at opportunities.

Roberto Alvo: Second question, cost efficiency. Let me tell you 2 important things here. We don't do these cost-cutting programs that we launch 1 day that we intend to save $ millions or $ hundreds of millions. We do that every day, and this is very much embedded in the cost. Can you hear me? Sorry, we had a little bit of a IT. Can you hear me?

We have built an operational machine, if I can put it like that, that allows us to do that very quickly. So in general, we feel confident with respect to this capacity outlook, and the reasons are the ones I just mentioned. Second, the efficiency from costs in terms of advantage. Second question goes— I mean, let me tell you two important things here. We don't do.

You know these uh cost cutting programs that we launched 1 day that were we intend to save millions or hundreds of millions of dollars. We do that every day.

And this is very much embedded in the course we have.

Um,

Can you hear me? Sorry, we had a little bit of a...

Gabriel Rezende: Yes, I can hear you.

It, can you hear me?

Operator: Yeah, the line was breaking a little bit, but now I can hear you. Yeah.

Yes, I can hear you.

Roberto Alvo: All right. Take that into consideration. Every day, all day, we're looking at opportunities, and at the end of the day, there's always a little bit of drops that you can extract to the lemon as you squeeze it. If you ask me going forward, I think that a big change is the inception of technology. Everybody talks about AI and technology and all of this regarding the customer and personalization and offering and so on, which I think is true, and we're working hard on that. I think that technology has the opportunity of streamlining, changing the way we operate. I don't think that we will see in the next 20 years any new, or 15 years, any new significant technology changes in the hardware. The aircraft we're operating today are probably going to be the aircraft we will operate in the next decade or so.

Yeah, the line was broken. I can't hear you, yeah.

Roberto Alvo: And at the end of the day, there's always a little bit of. drops that you can extract to the lemon as you squeeze it.

All right, so take that into consideration. We all every day all day. We're looking at opportunities and

At the end of the day, there's always a little bit of.

Roberto Alvo: If you ask me going forward, I think that a big change is the inception of technology. Everybody talks about AI and technology and all of these regarding the customer and personalization and offering and so on, which I think is true and we're working hard on that. But I think that technology has the opportunity of streamlining changing the way we operate. I don't think that we will see in the next 20 years, any new or 15 years, any new significant technology changes in the hardware. So the aircraft we're operating today are probably going to be the aircraft we will operate in the next decade or so.

Roberto Alvo: The change in this industry in the next 10 or 15 years in terms of efficiency is going to come from the, let me call it software side rather than the hardware side, which is how do we use technology in a way of changing the way we operate. There's, in my mind, significant opportunity for that. We are very focused today in that. We have the whole maintenance organization, for example, is moving into a digital organization internally. We're transforming all of the cargo operation as well as we speak at the same time. We have, I think, a good runway to continue looking at efficiency improvements as we understand how to use technology more broadly in our operation.

Roberto Alvo: So the change in this industry in the next 10 or 15 years in terms of efficiency is going to come from the, let me call it software side rather than the hardware side, which is how do we use technology in a way of changing the way we operate. And there's. in my mind significant opportunity for that and we are very focused today in that we have the whole maintenance organization for example is moving into a digital organization internally we're transforming all of the cargo operation as well as we speak at the same time and and we have I think a good runway to continue looking at efficiency improvements as we understand how to technology more broadly in our operation.

drops that you can extract to the lemon as you squeeze it. Uh, if you, if you ask me going forward, I think that a big change is the Inception of Technology. Everybody talks about Ai and technology and, um, you know, all of these regarding the customer and personalization and, and offering, and so on, which I think is true, and we're working hard on that. But I think that technology has the opportunity of streamlining changing the way we operate. I don't think that we will see in the next 20 years, any new, or 15 years, any new significant technology changes in the hardware. So the aircraft we're operating today are probably going to be the aircraft. We will operate in the next decade or so. So the change in this industry in the next 10 or 15 years in terms of efficiency is going to come.

From the, let me call it software side, rather than the hardware side. Which is, how do we use technology in a way of changing the way we operate? And there's.

Uh, more broadly in our operation.

Gabriel Rezende: Thank you.

Roberto Alvo: I hope that I answered your question.

Gabriel Rezende: Thank you. I hope that I answered your question. And, Gabriel, just to make sure, were you able to understand the first answer? Yes, yes, he was breaking a little bit, but I could hear you. Okay, perfect. Thank you.

Gabriel Rezende: Tori as well.

Tori Creighton: Gabriel, just to make sure, were you able to understand and hear the first answer?

Thank you. Uh, I hope that I have your question. I'm sorry as well.

Roberto Alvo: Okay, Gabriel?

Just to make sure, were you able to understand that you're the first, the first answer?

Gabriel Rezende: Yes. It was breaking a little bit, but I could hear you. Yeah.

Operator: Okay, perfect. Thank you.

Okay Gabrielle. Yes, yes. It was breaking a little bit but I could hear you. Yeah.

Okay, perfect. Thank you.

Roberto Alvo: Thank you.

Operator: Thank you. We currently have no further questions. I'll hand back to the management team for closing remarks.

Operator: We currently have no further questions so I'll hand back to the management team for closing remarks. So, thank you all for joining us today, and if you have any further questions, please make contact and we are fully available for you all. Have a nice day. Thank you. This concludes today's call. Thank you for joining. You may now disconnect your line.

Roberto Alvo: Thank you all for joining us today, and if you have any further or other questions, please make a contact and we are fully available for you all. Have a nice day. Thank you.

Thank you. We currently have no further questions, so I'll hand back to the management team for closing remarks.

Thank you for your order, question, please. Uh, uh, make a contact and, uh, we, uh, are fully available for, for you all. Have a nice day. Thank you.

Operator: This concludes today's call. Thank you for joining. You may now disconnect your line.

This concludes today's call. Thank you for joining. You may now disconnect your line.

Q2 2025 LATAM Airlines Group SA Earnings Call

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