Latam Airlines Full Year 2025 LATAM Airlines Group SA Earnings Call | AllMind AI Earnings | AllMind AI
Full Year 2025 LATAM Airlines Group SA Earnings Call
Speaker #1: Hello, and welcome, everyone, to the Q4 2025 LATAM Airlines Group earnings conference call. My name is Becky, and I will be your operator today.
Operator: Hello and welcome everyone to the Q4 2025 LATAM Airlines Group earnings conference call. My name is Becky, and I will be your operator today. Before I turn the call over to management, I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations, and as such constitute forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives, and expected performance or guidance, are forward-looking statements. These statements are based on a range of assumptions that LATAM believes are reasonable but are subject to uncertainties and risks that are discussed in detail in the published 20-F 2026 guidance earnings release financial statements and related CMF and SEC filings.
Speaker #1: 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.
Speaker #1: 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.
Speaker #1: 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 2026 guidance, earnings release, financial statements, and related CMF and SEC filings.
Speaker #1: 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.
Operator: The company's actual results may differ significantly from those projected or suggested, and any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. If there are any members of the press on the call, please note that this call for the media is listen-only. I will now hand over to your host, Ricardo Bottas, to begin. Please go ahead.
Speaker #1: If there are any members of the press on the call, please note that this call for the media is listen-only. I will now hand over to your host, Riccardo Bottas, to begin.
Speaker #1: Please go ahead.
Speaker #2: Hello, everyone, and good morning. Welcome to our fourth quarter 2025 conference call, and thank you all for joining us today. My name is Riccardo Bottas, and I am the CFO of LATAM Airlines Group.
Full Year 2025 LATAM Airlines Group SA Earnings Call
Ricardo Bottas: Hello everyone and good morning. Welcome to our Q4 2025 Conference Call, and thank you all for joining us today. My name is Ricardo Bottas, and I am the CFO of LATAM Airlines Group. Here with me is Roberto Alvo, our CEO, Andrea Del Valle, Corporate Finance Director, and Tori Creighton, Head of Investor Relations. We will present the highlights and results for the Q4 and full year 2025. I will hand it over to Roberto to share his opening remarks about the quarter and year's highlights.
Speaker #2: Here with me is Roberto Alvo, our CEO, Andrés del Valle, Corporate Finance Director, and Tori Creighton, Head of Investor Relations. And we will present the highlights and results for the fourth quarter and full year 2025.
Speaker #2: I will hand it over to Roberto to share his opening remarks about the quarter and year's highlights.
Speaker #3: Good morning, and thank you, Riccardo. 2025 marked a year of continuous consolidation and delivery. The strong results we're presenting today are the product of a model that LATAM GROUP has been building over the last six years, anchored first in the people and the customers, focused on impeccable execution and in design and the design of a superior experience.
[Analyst] (J.P. Morgan): Good morning and thank you, Ricardo. 2025 marked a year of continuous consolidation and delivery. The strong results we're presenting today are the product of a model that LATAM Group has been building over the last 6 years, anchored first in the people and the customers, focused on impeccable execution and in the design of a superior experience. All of this in the context of a never-stronger passenger cargo networks, frequent flyer program, a very strong balance sheet, and cash generation, a disciplined cost delivery, and a highly diversified business model, all of which make our results resilient and much less subject to external factors and industry cycles. At the heart of this performance, more than 41,000 employees working at the different affiliates of the group, their daily commitment, whether at customer touchpoints or behind the scenes, continues to be LATAM Group's most powerful asset.
Speaker #3: All of this in the context of a never-stronger passenger and cargo networks, frequent flyer program, a very strong balance sheet, and cash generation. A disciplined cost delivery and a highly diversified business model—all of which make our results resilient and less much subject to external factors and industry cycles.
Speaker #3: At the heart of this performance, and with more than 41,000 employees working across the different areas of the group, their daily commitment—whether at customer touchpoints or behind the scenes—continues to be LATAM Group's most powerful asset.
Speaker #3: The culture of passionate and engaged people translated directly into the customer experience. In 2025, the Group achieved a record Net Promoter Score of 54 points, which is a three-point increase versus 2024.
[Analyst] (J.P. Morgan): The culture of passionate, engaged people translated directly into the customer experience. In 2025, the group achieved a record Net Promoter Score of 54 points, which is a 3-point increase versus 2024, the highest full-year results in our history. When our people thrive, customers feel the difference. Internally, the Organizational Health Index reached 83 points, placing LATAM Group in the top D-cell of the global benchmark for the first time. In terms of the operations, the group transported more than 87 million passengers during the year, including 23 million passengers in the Q4 alone. This was boosted by a capacity increase of 8.2% for the full year and 7.7% in the quarter, demonstrating the group's ability to grow efficiently while maintaining a healthy Load Factor of 84.4%. This ability to connect passengers to, from, and within South America was enabled by the modern and efficient fleet that the group operates.
Speaker #3: The highest full-year results in our history, where our people thrive and customers feel the difference. Internally, the Organizational Health Index reached 83 points, placing LATAM Group in the top D cell of the global benchmark for the first time.
Speaker #3: In terms of the operations, the group transported more than 87 million passengers during the year, including 23 million passengers in the fourth quarter alone.
Speaker #3: This was boosted by a capacity increase of 8.2% for the full year, and 7.7% in the quarter, demonstrating the group's ability to grow efficiently while maintaining a healthy load factor of 84.4%.
Speaker #3: This ability to connect passengers to, from, and within South America was enabled by the modern and efficient fleet that the group operates. During 2025, LATAM received a total of 26 aircraft, seven of which were incorporated in the fourth quarter.
[Analyst] (J.P. Morgan): During 2025, LATAM received a total of 26 aircraft, 7 of which were incorporated in Q4. This includes the first Boeing Dreamliner with G engines and brought the total fleet to 371 aircraft as of the end of the year, a 7% increase versus 2024, enabling the group to launch 22 new routes, of which 15 were international. On the financial side, Adjusted Operating Margin reached 16.2% for a year, while Adjusted EBITDA came in almost $4.1 billion. Net Income totaled approximately $1.5 billion, resulting in earnings per ADS of $4.95, highlighting the group's ability to translate operational performance into bottom-line results. This bottom line grew by 50% versus the income generated in 2024. With this, in December, LATAM was able to distribute $400 million in interim dividends aligned with its capital allocation strategy determined by this financial policy. 2025 was just not a strong year.
Speaker #3: This includes the first Boeing Dreamliner with G engines, and brought the total fleet to 371 aircraft as of the end of the year—a 7% increase versus 2024. This enabled the group to launch 22 new routes, of which 15 were international.
Speaker #3: On the financial side, adjusted operating margin reached 16.2% for the year, while adjusted EBITDA came in at almost $4.1 billion. Net income totaled approximately $1.5 billion, resulting in earnings per ADS of $4.95, highlighting the group's ability to translate operational performance into bottom-line results.
Speaker #3: This bottom-line grew by 50% versus the income generated in 2024. With this, in December, LATAM was able to distribute 400 million dollars in interim dividends aligned with its capital allocation strategy, determined by the financial policy.
Speaker #3: 2025 was just not a strong year. It was a reaffirmation of LATAM's structural strengths, translated into consecutive years of margin expansion in a context of high-capacity growth and driven by a strategy that combines a focus on people, a differentiated customer experience, and a matchable footprint.
[Analyst] (J.P. Morgan): It was a reaffirmation of LATAM's structural strengths, translated into consecutive years of margin expansion in a context of high-capacity growth and driven by a strategy that combines a focus on people, a differentiated customer experience, an unmatchable footprint, disciplined cost control, and a resilient balance sheet. This is what defines this new LATAM. This performance and design set the base for an expected 2026 strong performance, highlighted in our yearly guidance, of which we feel very confident at the moment despite fuel and currency volatility. I'm very proud to be here leading a group of 41,000 souls and to highlight and discuss our performance. With that, I'll hand it over to Ricardo, who will walk us through the achievements of this Q4 and full year 2025.
Speaker #3: Disciplined cost control, and a resilient balance sheet. This is what defines this new LATAM. This performance and design set the base for an expected 2026 strong performance, highlighted in our yearly guidance, of which we feel very confident at the moment despite fuel and current volatility.
Speaker #3: I'm very proud to be souls and to highlight and discuss our performance. With that, I'll hand it over to Riccardo, who will walk us through the achievements of these four quarters and full year
Speaker #3: 2025. Thank you, Roberto.
Ricardo Bottas: Thank you, Roberto. Let's move to slide four. LATAM delivered a solid financial performance during the Q4 with improvements across all key metrics. Total revenues reached almost $4 billion, increasing 16.3% year-over-year. This growth was driven by the passenger segment, which rose 20.3%, supported by the strong demand and capacity growth. Cargo revenues declined 9.6% in the period, explained by a particular high comparison base as the Q4 of 2024 had delivered an exceptionally strong performance. Despite this, full-year cargo revenues increased year-over-year. As a result, the group delivered an adjusted EBITDA of $1.1 billion, representing a 30.4% increase versus Q4 2024. Adjusted operating income came in $661 million, up 42.7% year-over-year, and net income totaled $484 million, increasing 78.1% compared to the Q4 of last year. Margins also improved, with adjusted operating margins standing out at 16.7%.
Speaker #2: Let's move to slide four. LATAM delivered solid financial performance during the fourth quarter. We’ve seen improvements across all key metrics. Total revenues reached almost $4 billion, increasing 16.3% year over year.
Speaker #2: This growth was driven by the passenger segment, which rose 20.3%, supported by the strong demand and capacity growth. Cargo revenues declined 9.6% in the period, explained by a particular high comparison base at the fourth quarter of 2024, had delivered an exceptionally strong performance.
Speaker #2: Despite this, full-year cargo revenues increased year over year. As a result, the group delivered an adjusted EBITDA of $1.1 billion, representing a 30.4% increase versus Q4 2024.
Speaker #2: Adjusted operating income came in 661 million dollars, up 42.7% year over year, and net income totalled 484 million dollars, increasing 78.1% compared to the fourth quarter of last year.
Speaker #2: improved, with adjusted operating Margins also margins standing out at 16.7%. This quarter, we saw an increase in unit cost ex-fuel with passenger cash ex-fuel reaching 4.7 cents.
Ricardo Bottas: This quarter, we saw an increase in unit cost ex-fuel with passenger CASC ex-fuel reaching $0.047. About $0.002 of this can be explained by the appreciation of the local currencies during this period, along with another $0.002 related to the other non-recurring costs in wages and benefits, which include a special one-time bonus approved on this last quarter. While quarterly unit costs were elevated, it's worth highlighting that full-year passenger CASC ex-fuel came in at $0.044, fully within the updated guidance range for 2025 provided on last November. Importantly, this 7.9% increase in unit costs was more than offset by an even stronger improvement in unit revenue. Passenger RASC increased by 11.7%, reflecting LATAM's ability to sustain its value proposition and capture customer preference in an environment of healthy demand.
Speaker #2: About 0.2 cents of this can be explained by the appreciation of the local currencies during this period, along with another 0.2 cents related to the other non-recurring costs in wages and benefits, which include a special one-time bonus approved on this last quarter.
Speaker #2: While quarterly unit costs were elevated, it's worth highlighting that full-year passenger cash ex-fuel came in at 4.4 cents. Fully within the updated guidance range, for 2025, provided less on last November.
Speaker #2: Importantly, these 7.9% increase in unit costs was more than offset by an even stronger improvement in unit revenue. Passenger RASC increased by 11.7%, reflecting LATAM's ability to sustain its value proposition and capture customer preference in an environment of healthy demand.
Speaker #2: Please join me on this next slide, slide five, to take a deeper dive on the drivers for revenue performance across the different affiliates and business units.
Ricardo Bottas: Please join me on this next slide 5 to take a deeper dive on the drivers for revenue performance across the different affiliates and business units. Overall, the Q4 showcased a well-balanced dynamic between capacity deployment and demand across our network, supported by healthy load factors and target commercial actions. On a consolidated level, capacity grew by nearly 8% while maintaining a solid load factor of 85%, showcasing our ability to grow efficiently. Looking at the LATAM Airlines Brazil, domestic capacity expanded by 12%, and demand kept pace with load factors increasing by 0.7 percentage points. This balance, supported by a solid passenger RASC performance with growth of 14% in US dollars and 10% in local currency, highlighted the strength of LATAM's value proposition in this market together with their resilience of demand.
Speaker #2: Overall, the fourth quarter showcased a well-balanced dynamic between capacity deployment and demand across our network, supported by healthy load factors and targeted commercial actions.
Speaker #2: On a consolidated level, capacity grew by nearly 8%, while maintaining a solid load factor of 85%, showcasing our ability to grow efficiently. Looking at LATAM Airlines Brazil, domestic capacity expanded by 12%, and demand kept pace, with load factors increasing by 0.7 percentage points.
Speaker #2: This balance, supported by a solid passenger RASC performance, with growth of 14% in US dollars and 10% in local currency, highlights the strength of LATAM's value proposition in this market, together with the resilience of demand.
Speaker #2: In domestic passenger, RASC grew by 23% in Spanish-speaking affiliate markets, in dollars, and nearly 20% in local currency. This was driven by a disciplined capacity allocation that resulted in an increase in the load factor to 1.7 percentage points higher than before.
Ricardo Bottas: In domestic Spanish-speaking affiliate markets, passenger RASC grew by 23% in dollars and nearly 20% in local currency, driven by a disciplined capacity allocation that resulted in an increase in the load factor to 1.7 percentage points higher than before. Turning to the international segment, capacity and passenger volumes both grew at a high single-digit pace. While load factor decline is likely year-over-year, it remained at a very healthy 85% level. In parallel, unit revenues increased by 6%, supported by a well-diversified network, both in the regional and long-haul international operations, and a strong execution. Altogether, these results reflect the robustness of LATAM Group's commercial model and its ability to grow profitable. The Q4 confirms that the network strategy and the disciplined capacity deployment continue to deliver strong outcomes across the board.
Speaker #2: Turn to the international segment. Capacity and passenger volumes both grew at a high single-digit pace. While load factor decline is slightly year over year, it remained at a very healthy 85% levels.
Speaker #2: In parallel, unit revenues increased by 6%, supported by a well-diversified network, both in the regional and long-haul international operations, and a strong execution. Altogether, these results reflect the robustness of LATAM Group's commercial model and its ability to grow profitable.
Speaker #2: The fourth quarter confirms that the network strategy and the disciplined capacity deployment continue to deliver strong outcomes across the board. Turning now to our value proposition and customer experience.
Ricardo Bottas: Turning now to our value proposition and customer experience on slide 6, during 2025, LATAM Group continued advancing initiatives focused on enhancing services across key touchpoints, with a particular emphasis on consistency, reliability, and design. At the center of these improvements is our continued focus on the premium segment, where LATAM has made significant upgrades to its value proposition. During the year, we introduced a renewed business-class experience, launched the Signature Check-in in our new Signature Lounge in Lima, and announced the future enhancements like the investments in Wi-Fi on the wide-body fleet beginning in 2026 and the new Premium Comfort cabin coming in 2027, as well as the investments on the new and the brand-new lounge in Guarulhos. As part of this ongoing focus, LATAM was once again recognized internationally.
Speaker #2: On slide six, during 2025, LATAM Group continued advancing initiatives focused on enhancing services across key touchpoints, with a particular emphasis on consistency, reliability, and design.
Speaker #2: At the center of these improvements is our continued focus on the premium segment, where LATAM has made significant upgrades to its value proposition. During the year, we introduced a renewed business class experience, launched the signature check-in, and our new signature launch in Lima.
Speaker #2: And announced that the future enhancements, like the investments in Wi-Fi on wide-body fleet beginning in 2026 and the new premium comfort cabin coming in 2027, as well as the investments on the new and the brand new launch in Guarulhos.
Speaker #2: As part of this ongoing focus, LATAM was once again recognized internationally. In the fourth quarter, the group received the most improved brand award, globally by the design air, a recognition that adds to early achievements such as SkyTrax best airline in South America, the APAC five-star global airline award, and the Air Cargo Airline of the Year award by Air Cargo News, all serving as third-party endorsements that we earned the right path.
Ricardo Bottas: In Q4, the group received the most improved brand award globally by TheDesignAir, a recognition that adds to earlier achievements such as Skytrax Best Airline in South America, the APAC Five-Star Global Airline Award, and the Air Cargo Airline of the Year Award by Air Cargo News, all serving as third-party endorsements that we are on the right path. The customer experience enhancements initiatives demonstrate the group's commitment to delivering a consistent and differentiated travel experience across the region and further strengthen the customer preference for LATAM. The results are validating these investment decisions. For the full year, premium revenues accounted for 23% of passenger revenues and continue to grow faster than the passenger revenues overall.
Speaker #2: The customer experience enhancements initiative demonstrates the group's commitment to delivering a consistent and differentiated travel experience across the region. And further strengthens the customer preference for LATAM.
Speaker #2: And the results are validating these investment decisions. For the full year, premium revenues accounted for 23% of passenger revenues and continue to grow faster than the passenger revenues overall.
Speaker #2: While passengers' revenues grew 12% year over year, premium revenues increased by 14%. Highlighting the continued momentum of this segment, which provides LATAM with access to a customer base that is structurally more stable throughout the year, less exposed to seasonality, and more resilient to potential macroeconomic headwinds.
Ricardo Bottas: While passenger revenues grew 12% year-over-year, premium revenues increased by 14%, highlighting the continued momentum of this segment, which provides LATAM with access to a customer base that is structurally more stable throughout the year, less exposed to seasonality, and more resilient to potential macroeconomic headwinds. Coupled with this, the LATAM Pass program plays a critical role in accessing this segment, fostering loyalty among customers who travel more frequently and generating higher expense through the wide range of benefits the program offers. LATAM Pass is by far the largest airline loyalty program in the region, with almost 54 million members accounting for nearly 60% of LATAM's passengers' revenues. This combination of a resilient customer segment and a highly effective loyalty program reinforces the sustainability of LATAM's revenue base and equips the group with the tools to continue driving profitable growth. Jump to slide 7.
Speaker #2: Coupled with this, the LATAM Pass program plays a critical role in accessing these segments, fostering loyalty among customers who travel more frequently and generate higher expense through the wide range of benefits the program offers.
Speaker #2: LATAM Pass is by far the largest airline loyalty program in the region, with almost 54 million members accounting for nearly 60% of LATAM's passenger revenues.
Speaker #2: This combination of resilient customer segment and a highly effective loyalty program reinforces their sustainability of LATAM's revenue base and equips the group with the tools to continue driving profitable growth.
Speaker #2: Jump to the slide seven. You'll see on this slide that the way that we are translating these into tangible results. Customers' satisfaction reached record levels.
Ricardo Bottas: You'll see on this slide the way that we are translating this into tangible results. Customer satisfaction reached record levels. Net Promoter Score rose to 54 points, as Roberto mentioned, for passenger operations, while among premium travelers, it reached 58 points, the highest ever recorded by the group. This is a clear indication that our customers are recognizing and valuing the improvements. At the same time, premium revenues continue to show an upward trend, supported by growth, customer preference, and a more differentiated onboard experience. And importantly, we have managed to achieve these results while maintaining costs stable since 2019, confirming that LATAM can deliver a differentiated experience all while keeping its cost base stable. Let's move to slide 8.
Speaker #2: Net promoter score rose to 54 points as Roberto mentioned for passenger operations, while among premium travelers, each reached 58 points. The highest ever recorded by the group.
Speaker #2: This is a clear indication that our customers are recognized and valuing the improvements. At the same time, premium revenues continue to show an upward trend, supported by growth customers' preference and a more differentiated onboard experience.
Speaker #2: And importantly, we have managed to achieve these results while maintaining costs stable since 2019, confirming that LATAM can deliver a differentiated experience all while keeping its cost base stable.
Speaker #2: Let's move to slide eight. We have spoken a lot about structural improvements and the sustainability of the profitability streaming from the unique ecosystem of LATAM Group.
Ricardo Bottas: We have spoken a lot about structural improvements and the sustainability of the profitability stemming from the unique ecosystem of LATAM Group: passionate people, a financial foundation, an exceptional product, premium revenues, and a focus on cost containment. All of that supports a virtuous cycle that results in these numbers year after year. This year, LATAM expanded its revenues in 11.2% and its adjusted operating margin to 16.2%, reflecting the profitable growth strategy and the continued disciplined capacity execution. Over the course of the year, the group received 26 aircraft, launched 22 new routes, and grew capacity by 8.2%, making the 3.5 percentage point margin expansion a clear reflection of LATAM's ability to grow strategically, not just in volume but in the profitability targets. It's also a testament to the group's deep knowledge of its markets and disciplined execution over time.
Speaker #2: Passionate people, a financial foundation, an exceptional product, premium revenues, and a focus on cost containment. All of that supports a virtual cycle that results in these numbers year after year.
Speaker #2: This year, LATAM expanded its revenues by 11.2% and its adjusted operating margin to 16.2%, reflecting the profitable growth strategy and the continued disciplined capacity execution.
Speaker #2: Over the course of the year, the group received 26 aircraft, launched 22 new routes, and grew capacity by 8.2%, making the 3.5% margin expansion a clear reflection of LATAM's ability to grow strategically.
Speaker #2: Not just in volume, but in the profitability targets. It's also a testament to the group's deep knowledge of its markets and discipline execution over time.
Speaker #2: Adjusted EBITDA grew by over 30% year over year to $4.1 billion, supported by revenue growth and efficiency across the operation, all within the guidance range.
Ricardo Bottas: Adjusted EBITDA grew by over 30% year-over-year to $4.1 billion, supported by revenue growth and efficiency across the operation, all within the guidance range. At the bottom line, net income increased significantly by 50% versus last year, further reinforcing the group's ability to deliver sustainable financial results. These results are part of a broader trend, one of continuous improvements and reliable execution. LATAM enters 2026 on solid footing with a strong foundation to continue creating long-term value. Please join me on slide 9. As you can see on this slide, LATAM's strong performance is not only reflected in earnings generation but also in its ability to consistently translate those results into cash generation. During 2025, adjusted operating cash flow reached $3.3 billion, supported by strong operational and financial performance.
Speaker #2: At the bottom line, net income increased significantly by 50% versus last year, further reinforcing the group's ability to deliver sustainability financial results. These results are part of a broader trend, one of continuous improvements and reliable execution.
Speaker #2: LATAM enters 2026 on solid footing, with a strong foundation to continue creating long-term value. Please join me on slide nine. As you can see on this slide, LATAM's strong performance is not only reflected in earnings generation, but also in its ability to consistently translate those results into cash generation.
Speaker #2: During 2025, adjusted operating cash flow reached 3.3 billion dollars, supported by strong operation and financial performance. This cash generation enabled the group to fully fund its core business needs, including maintenance and growth investments, with 1.5 billion invested in CapEx, net of financing, while also covering interest payments.
Ricardo Bottas: This cash generation enabled the group to fully fund its core business needs, including maintenance and growth investments, with $1.5 billion invested in CapEx net of financing while also covering interest payments. As we highlighted earlier, our CapEx investments have been directed towards enhancing the customer experience, but they have also been focused on accelerating LATAM's digital transformation across the business. With that, LATAM generated closer to $1.4 billion in cash after covering all business-related commitments. Over the course of the year, the group executed two-share repurchase programs totaling $585 million. Also, LATAM Group distributed $400 million in interim dividends in the Q4, bringing total dividends for the year close to $605 million.
Speaker #2: As we highlighted earlier, our CapEx investments have been directed towards enhancing the customer experience, but they have also been focused on accelerating LATAM's digital transformation across the business.
Speaker #2: With that, LATAM generated closer to 1.4 billion dollars in business-related commitments. Over the course of the year, the group executed two share repurchase programs totaling 585 million dollars.
Speaker #2: Also, LATAM Group distributed 400 million dollars in interim dividends in the fourth quarter, bringing total dividends for the year close to 605 million dollars.
Speaker #2: Even after all of these, LATAM is still delivering almost 200 million dollars in positive cash generation in 2025. Demonstrating its ability to invest in the business, meet its key obligation, key obligations, and also allocate capital towards additional initiatives, all while considering definite financial policy range.
Ricardo Bottas: Even after all of these, LATAM still delivered almost $200 million in positive cash generation in 2025, demonstrating its ability to invest in the business, meet its key obligations, and also allocate capital towards additional initiatives, all while considering defined financial policy ranges. Let's move to slide 10 and see how this is reflected in our balance sheet metrics. Balance sheet strength has been one of LATAM's key priorities over the past few years, and liquidity is one of the clearest expressions of that focus. The group has consistently grown its nominal liquidity, reaching $3.7 billion by the end of 2025.
Speaker #2: Let's move to slide 10 and see how this is reflected in our balance sheet metrics. Balance sheet strength has been one of LATAM's key priorities over the past few years, and liquidity is one of the clearest expressions of that focus.
Speaker #2: The group has consistently growth its nominal liquidity, reaching 3.7 billion dollars by the end of 2025. As we just revealed on the previous slide, it was through the additional capital allocation initiatives carried out in 2025 that LATAM was able to bring liquidity as a percentage of last 12 months' revenues closer to the top of the policy range, at 25.7%.
Ricardo Bottas: As we just revealed on the previous slide, it was through the additional capital allocation initiatives carried out in 2025 that LATAM was able to bring liquidity as a percentage of last 12 months' revenues closer to the top of the policy range at 25.7%, demonstrating the flexibility the group has to allocate capital across multiple fronts while aiming at the defined financial framework. At the same time, on the debt side, adjusted net leverage reached 1.5 times, below the last year and the maximum policy level of two times, placing LATAM in a strong position heading to 2026 with the flexibility to continue investing while also preserving financial strength. Moving to the next slide, let's take a look on the continuous optimization of the cost of capital and debt tenure. LATAM has taken important steps over the past two years to improve its cost of debt.
Speaker #2: Demonstrating the flexibility, the group has to allocate capital across multiple fronts, while aiming at the defining financial framework. At the same time, on the debt side, adjusted net leverage reached 1.5 times, below the last year, and the maximum policy level of two times, placing LATAM in a strong position heading to 2026.
Speaker #2: With the flexibility to continue investing, while also preserving financial strength. Moving to the next slide, let's take a look on the continuous optimization of the cost of capital and debt tenure.
Speaker #2: LATAM has taken important steps over the past two years to improve its cost of debt. Through refinancing exercises carried out in 24 and 25, the group successfully reduced the weighted average cost of debt from 10.7% in 2023 to 6.6% as of the end of 2025.
Ricardo Bottas: Through refinancing exercises carried out in 2024 and 2025, the group successfully reduced the weighted average cost of debt from 10.7% in 2023 to 6.6% as of the end of 2025. In parallel, LATAM's debt amortization profile is well-balanced, with no short- and mid-term relevant maturities. Furthermore, LATAM holds co-options in 2026 and 2027 that offer potential opportunities to reprofile these maturities and also reevaluate the potential tenure split to improve even more this debt profile. Let's move now to slide 12. As reflected in 2026 guidance published back in December, we expect it to be another year of continued profitable growth. Capacity is projected to grow between 8% and 10% and to deliver an adjusted operating margin between 15% and 17%, reflecting LATAM's focus on efficiency and disciplined execution.
Speaker #2: In parallel, LATAM's debt amortization profile is well-balanced, with no short and mid-term relevant maturities, and furthermore, LATAM holds call options in 26 and 27 that offer potential opportunities to re-profile these maturities and also re-evaluate the potential tenure split to improve even more this debt profile.
Speaker #2: Let's move now to the slide 12. As reflected in 2026 guidance published back in December, we expect it to be another year of continued profitable growth.
Speaker #2: Capacity is projected to grow between 8% and 10%, and to deliver an adjusted operating margin between 15% and 17%, reflecting LATAM's focus on efficiency and disciplined execution.
Speaker #2: In terms of cash, adjusted leverage free cash flows is expected to exceed $1.7 billion, from $1.5 billion this last year, reinforcing the group's ability to consistently translate earnings into liquidity.
Ricardo Bottas: In terms of cash, adjusted leveraged free cash flows are expected to exceed $1.7 billion from $1.5 billion this last year, reinforcing the group's ability to consistently translate earnings into liquidity. We also expect liquidity to be above $5 billion at the end of 2026. As we have mentioned in Investor Day held in December, given our financial policy range, we would have between $1 billion and $1.6 billion after CapEx investments and minimum dividend payments available for additional capital allocation initiatives in 2026. This year, LATAM will continue investing in key strategic areas, including the customer experience, the renewal of the fleet, efficiency-focused innovations, and the continued reinforcement of balance sheet discipline. Again, to remind you of the main figures that were disclosed in Investor Day, the CapEx plan for this year, net of financing, the fleet financing, is about $1.7 billion.
Speaker #2: We also expected liquidity above 5 billion 2026, and as we have dollars for the end of mentioned, investor day held in December, given our financial policy range, we would have between 1 billion and 1.6 billion after CapEx investments and minimum dividend payments available for additional capital allocation initiatives in 2026.
Speaker #2: This year, LATAM will continue investing in key strategic areas, including the customer experience, the renewal of the fleet, efficient focus innovations, and the continued reinforcement of balance sheet discipline.
Speaker #2: Again, to remind you of the main figures that were disclosed in Investor Day, the CapEx plan for this year, net of finance—the fleet of financing—is about $1.7 billion.
Speaker #2: For the year, the group is expecting to receive 41 aircraft, of which three are wide bodies and 12 correspond to the first Embraer E2s.
Ricardo Bottas: For the year, the group is expecting to receive 41 aircraft, of which 3 are wide bodies and 12 correspond to the first Embraer E2s. The last slide is slide 13. Before we move to the Q&A, let me briefly highlight the key messages from 2025 performance. 2025 was another year of strong and consistent performance for LATAM, both operationally and financially. Operational excellence was matched by record levels of customer and employee satisfaction, with NPS and organizational health index reaching all-time highs. The group transported a record number of passengers, expanded the network with discipline, and delivered a significant improvement in profitability, with adjusted operating margin increasing 3.5 percentage points year-over-year to 16.2%. This profitability was translated all the way to the bottom line, with annual net income closing at $1.5 billion.
Speaker #2: The last slide is slide 13, and before we move to the Q&A, let metrics from 2025 me briefly highlight the key performance. 2025 was another year of strong and consistent performance for LATAM, both operationally and financially.
Speaker #2: Operational excellence was operational excellence was matched by record levels of customer and employee satisfaction, with NPS and organizational health index reaching all-time highs. The group transported a record number of passengers, expanded the network with discipline, and delivered a significant improvement in profitability.
Speaker #2: With adjusted operating margin increasing 3.5 percentage points year over year, to 16.2%. This profitability was translated all the way to the bottom line, with annual net income closing at $1.5 billion.
Speaker #2: These results reflect the group's ability to grow efficiently while maintaining a focus on margins and operational excellence. During 2025, we fully funded investments in the business and met all financial commitments while generating cash.
Ricardo Bottas: These results reflect the group's ability to grow efficiently while maintaining a focus on margins and operational excellence. During 2025, we fully funded investments in the business and met all financial commitments while generating cash. LATAM generated $1.4 billion in cash before executing two share repurchases and separately distributing dividends while still holding a strong liquidity level and low leverage. At the same time, we strengthened our balance sheet, aiming at financial policy targets and focus on reducing the cost of debt, which now stands below 7%. Looking ahead, we are entering 2026 with solid momentum. Our guidance reflects continued profitable growth, supported by healthy demand, commercial discipline, and a clear focus on the strategic priorities. With that, we are now opening the line for your questions. Thank you very much.
Speaker #2: LATAM generated 1.4 billion dollars in cash before executing two share repurchases and separately distributing dividends while still holding a strong liquidity level and low leverage.
Speaker #2: At the same time, at the same time, we strengthened our balance sheet, aiming to aiming at a financial policy targets and focus on reducing the cost of debt, which now stands below 7%.
Speaker #2: Looking ahead, we are entering 2026 with solid momentum. Our guidance reflects continued profitable growth, supported by health demand, commercial discipline, and a clear focus on the strategic priorities.
Speaker #2: With that, we are now opening the line for your questions. Thank you very much. Thank you. If you wish to ask a question, please press star, followed by one, on your telephone keypad now.
Operator: Thank you. If you wish to ask a question, please press Start followed by One on your telephone keypad now. If you feel your question has been answered or for any reason you would like to remove yourself from the queue, please press Start followed by Two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Julia Orsi from J.P. Morgan. Your line is now open. Please go ahead.
Speaker #2: If you feel your question has been answered or for any reason you would like to remove yourself from the queue, please press start, followed by two.
Speaker #2: When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Julia Orsi from JP Morgan. Your line is now open.
Speaker #2: Please go ahead.
Speaker #3: Yeah, hi, Roberto Ricardo. Thanks for taking the time. So we have two questions on our side. The first one is unmuted, so we saw a strong pricing performance this quarter.
[Analyst] (J.P. Morgan): Yeah. Hi, Roberto. Ricardo, thanks for taking the time. So we have two questions on our side. The first one is on yields. So we saw a strong operating performance this quarter. Congratulations on that. Can you provide additional details on how yields are tracking across the regions? And the second one, based on recent trends, how is the booking curve and the demand environment evolving? Is there any particular region that has been outperforming or underperforming? Thank you.
Speaker #3: Congratulations on that. Can you provide additional details on how you are tracking across the regions? And the second one: Based on recent trends, how is the booking curve and demand environment evolving?
Speaker #3: Is there any particular region that has been outperforming or underperforming? Thank
Speaker #1: Hi, Julia. This is Roberto. you. for the questions. We saw in general strong and stable demand over all of the business areas where we operate.
Roberto Alvo: Hi, Julia. This is Roberto. Thanks for the questions. We saw, in general, strong and stable demand over all of the business areas where we operate. In the last couple of months of the year, domestic Chile was a little bit slower as compared to particularly 2024. But at an industrial level, and you can see that on the public figures, we have seen already a recovery in the first months of the year. So I would say that all the business performed on a relatively good basis in 2025 last quarter in the passenger segment. Cargo, it was also good. Again, as Ricardo said, a very strong basis of comparison the last quarter in 2024. It still was robust. And the current appreciation of the currencies would probably increase import demand into the region in the upcoming months. Booking curve for early 2026 looks healthy.
Speaker #1: Domestic Chile was a little bit, in the last couple of months of the year, slower as compared to particularly 2025, 2024. But as an industrial level—and you can see that on the public figures—we have seen already a recovery in the first months of the year.
Speaker #1: So I would say that all the business performed on a relatively good basis in 2025 last quarter in the passenger segment. Cargo, it was also good.
Speaker #1: Again, as Ricardo said, a very strong basis of comparison the last quarter in 2024. It still was robust. And the current appreciation of the currencies would probably increase import demand into the region in the upcoming months.
Speaker #1: Booking curve for early 2026 looks healthy. We see no issues that concern us today. And in general, all the segments are performing well. As it has happened in the past two or three years, the segment that has been growing the most is international, and this also reflected in our capacity during 2025 and also the guidance that we provided for 2026.
Roberto Alvo: We see no issues that concern us today. In general, all the segments are performing. As it has happened in the past two or three years, the segment that has been growing the most is international. This is also reflected in our capacity during 2025 and also the guidance that we provided for 2026. In general, we see no concerns from the demand side going forward, at least for Q1. Thank you.
Speaker #1: But in general, we see no concerns from the demand side going forward, at least for the first quarter. Thank
Speaker #1: you. Thank you.
Operator: Thank you. Our next question, it comes from Michael Linenberg from Deutsche Bank. Your line is now open. Please go ahead.
Speaker #3: Our next question comes from Michael Lindenberg from Deutsche Bank. Your line is now open. Please go
Speaker #3: ahead. Yeah,
[Analyst] (Deutsche Bank): Yeah. Hey. Good morning. Couple of questions here. Great way to end 2025. These are fantastic results. When you talked about the CASC impact of 0.2% from the impact of the weak dollar, as we think about LATAM and how you have evolved your structure and the seasonality and the geography of your network, where do you come out with respect to the dollar? Is a weaker dollar overall better? Even though I realize there's a cost headwind, is it just better overall for the performance of the company? And I'm just sort of in the context of the last 12 months, we've seen about a 10% depreciation of the dollar. How should we think about that on your business?
Speaker #4: hey, good morning. Couple of questions here. Great way to end 2025. These are fantastic results. The when you talked about the CASC impact of two-tenths of a percent from the impact of the weak dollar, as we think about LACTAM and how you have evolved your structure and the seasonality and the geography of your network, where do you come out with respect to the dollar?
Speaker #4: Is a weaker dollar overall better? Even though I realize there's a cost headwind, is it just better overall for the performance of the company?
Speaker #4: And I'm just sort of in the context of the last 12 months, we've seen about a 10% depreciation of the dollar. How should we think about that on your business?
Speaker #1: Hi, Michael. Thanks for the question. A great question. So let me give you at the end of the day, for us, a stronger local currency is more positive than a weaker local currency.
Roberto Alvo: Hi, Michael. Thanks for the question. A great question. So let me give you, at the end of the day, for us, a stronger local currency is more positive than a weaker local currency. And this derives from, a, on the domestic markets, basically most of our revenue is expressed in local currency or happens in local currency. And a significant portion of the cost is in dollar. So domestic markets work like import industries, if you want. And in the case of international, for us, it's also beneficial because even though the countries become more expensive for traveling into the region, if you want, purchasing power for traveling abroad is higher. And our point of sale balance is higher on our South American side than our non-home side.
Speaker #1: And this derives from A. On the domestic markets, basically most of our revenue is expressed in local currency or happens in local currency, and a significant portion of the cost is in dollars.
Speaker #1: So, domestic markets work like import industries, if you want. And in the case of international, for us, it's also beneficial, because even though the countries become more expensive for traveling into the region, if you want, purchasing power for traveling abroad is higher.
Speaker #1: And our point of sale balance is higher on our South American side than our unknown home side. So the balance that we see is that a stronger currency vis-à-vis the dollar net of higher cost because of the same effect are net positive.
Roberto Alvo: The balance that we see is that a stronger currency vis-à-vis the dollar, net of higher cost because of the same effect, are net positive.
Speaker #4: Great, that's super helpful. And then I just—I want to talk about CAPEX for 2026. Last year, you took 26 airplanes. I believe this year is going to be a heavy delivery year.
[Analyst] (Deutsche Bank): Great. That's super helpful. And then I want to talk about CapEx for 2026. Last year, you took 26 airplanes. I believe this year is going to be a heavy delivery year. I know that the Embraer is coming in or a big component of that. I think you're taking delivery of over 40 airplanes, 40, 41 airplanes. Can you just refresh us on how we should think about CapEx in 2026? Thanks for taking my questions.
Speaker #4: I know that the Embraer is coming in or a big component of that. I think you're taking delivery of over 40 airplanes, 40, 41 airplanes.
Speaker #4: Can you just refresh us on and how we should think about CAPEX in 2026? Thanks for taking my
Speaker #4: question. Hi, Michael.
Andrea Del Valle: Hi, Michael. It's Ricardo. Yeah. And you are right. We are expecting to receive 41 aircraft. And the CapEx is $1.7 billion net of financing. Remember that a relevant part of the CapEx delivers; it's going to be financed through ops lease and also finance lease. And we are holding the increase in the investments that we have. And remember, we have a lot of investments in the retrofit of the cabins, still the renovation, and the starting of the process to implement the new Premium Comfort and so on and so forth. So that's the overall picture that we have. And remember, from these 41 deliveries that we are expecting, we expect to receive 3 additional 787s and also the first 12 Embraers in the last quarter, the last quarter.
Speaker #5: It's Ricardo, yeah, and you are right. We are expecting to receive 41 aircraft, and the CAPEX is $1.7 billion net of financing. Remember that a relevant part of the CAPEX deliveries is going to be financed through ops leases and also finance leases.
Speaker #5: And we are holding the increase in the investments that we have. And remember, we have a lot of investments in the retrofit of the cabins.
Speaker #5: Still, the renovation and the starting of the process to implement the new premium comfort and so on so far. So that's the overall picture that we have.
Speaker #5: 41 deliveries that we are expecting, we expect to receive three additional 787s and also the And remember, from these first 12 Embraers on the last quarter.
Speaker #5: The last quarter.
Speaker #1: So the balance is 328.
Roberto Alvo: The balance is 320.
Speaker #4: Great. Okay, great. And the balance of the
[Analyst] (Deutsche Bank): Great. Okay. Great. And the balance are the okay.
Speaker #4: okay. 26. 26.
Andrea Del Valle: 26. Sorry. 26 from the A320 family.
Speaker #5: A320s 26. Sorry, 26 from the family.
[Analyst] (Deutsche Bank): Great. All right. Thanks for taking my question.
Speaker #4: question. Great. All right. Thanks for taking my
Operator: Thank you. Our next question, it comes from Jens Spiess from Morgan Stanley. Your line is now open. Please go ahead.
Speaker #3: Our next question comes from Jens Spies from Morgan Stanley. Your line is now open. Please go ahead.
Speaker #3: ahead. Yes.
[Analyst] (Morgan Stanley): Yes. Thank you. Congrats on the results. I have a question on the Net Debt coming in at $5.9 billion, which was around 8% above your guidance. So if you could just elaborate on what turned out to be different versus your initial expectations, I would appreciate that. Thank you.
Speaker #6: Thank you. Congrats on the results. I have a question on the net debt coming in at 5.9 billion. Which was around 8% above your guidance.
Speaker #6: if you could just elaborate on So what turned out to be different versus your initial expectations, I would appreciate that. Thank you.
Speaker #5: Sure. Actually, when we provide that guidance was before the announcement and the decision to distribute the 400 million dollars dividends. So that's what was the main difference from the guidance that we disclosed before,
Andrea Del Valle: Sure. Actually, when we provide that guidance was before the announcement and the decision to distribute the $400 million dividends. So that was the main difference from the guidance that we disclosed it before, Jen.
Speaker #5: Jens.
Speaker #6: Oh, makes sense. Makes sense. will be updating your net debt So going forward, you guidance, right, for the potential dividends you will be paying?
[Analyst] (Morgan Stanley): Oh, makes sense. Makes sense. So going forward, you will be updating your net debt guidance, right, for the potential dividends you will be paying. Is that correct? And just a follow-up question, if I may. On the E2s, when do you expect to deploy them? And what is your thought process on allocating that capacity? Will it be mostly targeting new routes and destinations, or what's the plan there? Thank you.
Speaker #6: Is that correct? And just a follow-up question. If I may, on the E2s, when do you expect to deploy them? And what is your thought process on allocating that capacity?
Speaker #6: it be mostly targeting new Will routes and destinations, or what's the plan there? Thank
Speaker #6: you. Okay.
Andrea Del Valle: Okay. So only for that reason, in terms of the data update, we don't need to update the guidance for that because we disclose all information related with that. If and when we need to update the other specific situation from the guidance, we will update everything.
Speaker #5: the data update, we don't need to So only for that reason, in terms of update the guidance for that because we disclose all we need to update other specific situations from the information related with that.
Speaker #5: everything.
Speaker #1: Jens, this is Robert. Just complementing and clarifying one thing on what Ricardo said.
Roberto Alvo: Jens, this is Roberto just complementing and clarifying one thing on what Ricardo said. So our guidance doesn't provide any distributions on top of the minimum statutory dividends that we have to pay by law here in Chile, which is 30%. Okay? So that's why you see $5 billion of liquidity going forward. But as Ricardo explained as well, over and above our finance policy, we have around $1 to 1.6 billion. And the board will further decide on opportunities for capital allocation if we end up doing something. And we will inform the market at the right time. And we will update the figures related to that with those potential things happening. Okay? With respect to the E2s, so these will be deployed in Brazil domestic, the first 12 that we'll receive this year. The strategy is that they will be based out of our hubs.
Speaker #1: So our guidance doesn't provide any distributions on top of the Perfect. minimum statutory dividends that we have to pay by law here in Chile, which is 30%.
Speaker #1: Okay? So that's why you see a $5 billion of
Speaker #1: Our finance policy, we have around $1 to $1.6 billion. And the Board will further decide on opportunities for capital allocation if we end up doing something, and we will inform the market at the right time and we will update the figures related to that.
Speaker #1: With those potential things happening, okay? With respect to the A2s, these will be deployed in Brazil, domestically—the first 12 that we'll receive this year.
Speaker #1: The strategy is that they will be based out of our hubs. So we expect to see them flying out of Guarulhos, out of Brasília, out of Fortaleza.
Roberto Alvo: So we expect to see them flying out of Guarulhos, out of Brasília, out of Fortaleza. And you can think about this in two ways. They allow us to fly new cities where the 319s, even though at the same time, their economics don't allow us to operate those cities. So you will see new destinations. You will also see probably increased frequency on certain routes where we currently operate A320-related fleet and some combinations of these that we have never flown when you combine these two things. So you will see domestic Brazil routes both in opening new routes and increasing frequency in certain routes.
Speaker #1: And you can think about And if and when this in two ways. They allow us to fly new cities where the 319s, even though they're the same times, they're economically allow us to operate those cities.
Speaker #1: So you will see new destinations. You will also see probably increased we currently operate A320-related fleet. And some combinations of all these that we have these two things.
Speaker #1: So you will see domestic Brazil routes both in opening new frequency on certain routes where routes and increasing frequency in never flown when you combine routes.
Speaker #6: Okay. Very clear. Just one
[Analyst] (Morgan Stanley): Okay. Very clear. Just one quick follow-up, sorry, on the dividend distribution and the net debt guidance. So looking at 2026, everything that will be forward-looking is only the regulatory or mandated dividends that you're factoring in there. Anything in excess, basically, would only be updated on looking backwards, basically, on what you already paid or what you already announced, right, just to make sure we'll be modeling this correctly.
Speaker #6: quick follow-up, sorry. On the dividend distribution and the net debt guidance. So looking at certain 2026, everything that will be forward-looking is only the regulatory or mandated dividends that you're factoring in there.
Speaker #6: Anything in excess, basically, would only be updated on looking backwards, basically, on what you already paid or what you already announced, right? Just to make sure we'll be modeling this
Speaker #6: correctly. Yes.
Andrea Del Valle: Yes. You are correct. So as Roberto mentioned, the range that we disclose as a calculation under the financial policy to have between $1 billion and $1.6 billion available, it's the consideration regarding the 21% and 25% range of the guidance in terms of liquidity. And that amount, it's not considering the guidance that we provide. So we only consider the CapEx that it's expected and also the minimum dividends.
Speaker #1: You're correct. So as Roberto mentioned, the range that we disclose as a calculation under the financial policy to have between 1 billion and 1.6 billion dollars available, it's the consideration regarding the 21 and 25 percent range of the guidance in terms of liquidity.
Speaker #1: And that amount, it's not considering the guidance that we provide. So we only consider the CAPEX that it's expected and also the minimum
Speaker #6: Nice. All right.
[Analyst] (Morgan Stanley): Nice. All right. Perfect. Very clear. Thank you.
Speaker #6: Perfect. Very clear. Thank dividends.
Speaker #6: you. Thank you.
Operator: Thank you. Just as a reminder, if you did want to ask a question, please press Start followed by One on your telephone keypads. Our next question comes from Felipe Nielsen from Citigroup. Your line is now open. Please go ahead.
Speaker #3: Just as a reminder, if you did want to ask a question, please press start, followed by one on your telephone keypads. Our next question comes from Felipe Nelson from Citigroup.
Speaker #3: Your line is now open. Please go ahead.
Speaker #7: Hey. Hi, everyone. Good morning. Thanks for taking my question. So I have two on my side. One is related to the costs that we saw this quarter.
[Analyst] (Citigroup): Hey. Hi, everyone. Good morning. Thanks for taking my question. So I have two on my side. One is related to the costs that we saw this quarter. Just trying to break it between potential one-offs and costs that you think it could be something more structural during 2026. We know that there are in effect from a weaker dollar, stronger local currency. So if you could clarify which impacts were more one-offs in the quarter and which ones could remain for longer during 2026. And my second question is regarding the cargo operations. I just wanted to check your sense on how cargo yields should evolve in 2026. We have the guidance for volumes, but just wanted to make sure how the top line on cargo should evolve. Thank you.
Speaker #7: Just trying to break it between potential one-offs that you think it or costs could be something more structural during 2026. We know that there are effects from a weaker dollar, stronger local currency.
Speaker #7: So if you could clarify which impacts were more one-offs in the quarter and which ones were could remain for longer during 2026. And my second question is operations.
Speaker #7: regarding the cargo I just wanted to check your sense on how cargo yields We have the guidance for should evolve in 2026. volumes, but just wanted to the top line on cargo should evolve.
Speaker #7: Thank
Speaker #7: you. Okay,
Andrea Del Valle: Okay, Felipe. Just to give you, I think, more color in terms of the impact that we have in Q4, we disclosed that from these $0.047, we have two different impacts. 0.2 are coming from the weaknesses of the US dollar in Q4, 0.2, and the other 0.2 as what we call one-offs from this quarter. But remember, I would like just to emphasize the guidance that we provided for 2026. There is nothing structural. So we are confident that the level of investments that we have in all initiatives; remember, from the Investor Day, we disclosed that we have more than 700 initiatives internally in the company to provide more efficiency. We have this cost containment structural behavior in the company. And the guidance that we provide for this year is well aligned with the same trend between $0.043 and $0.045.
Speaker #5: Felipe. Just to give you I think the more caller in terms of the impact that we have in the fourth quarter, we disclosed we have two different that from this 4.7, impacts: 0.2 coming from the weaknesses of the US dollar in the fourth quarter, 0.2, and the other 0.2 as what we call one-offs from these quarters.
Speaker #5: But remember, I would like just to emphasize the guidance that we provided in the 4/2026. There is nothing structural. So we are confident that the level of investments that we have and all initiatives remember from the investor day, we disclosed that we have more than 700 initiatives internally in the company to provide more containment structural behavior in the company.
Speaker #5: And the guidance that we efficiency. provide for this year is well aligned We have these cost with the same trend between 4.3 and 4.5 cents.
Speaker #5: So there is nothing material, nothing structural to be considered that could represent any risks from our perspective. But yes, we also have remember in our guidance, the assumption to have for instance, the BRL at at 5.2.
Andrea Del Valle: So there is nothing material, nothing structural to be considered that could represent any risks from our perspective. But yes, we also have, remember, in our guidance, the assumption to have, for instance, the BRL at 5.5. The BRL is now at 5.2. And then we have to reflect. But on the other hand, as Roberto explained in another question, we also have another positive impact in terms of RASC. So I also emphasize on the slide in terms of the results from the fourth quarter. The CASC have increased 7.9%, but the RASC have increased it even more to 11.7%.
Speaker #5: And then we have 5.5; the BRL is now to reflect. But on the other hand, as Roberto explained in another question, we also have another positive impact in terms of RASC.
Speaker #5: So I also emphasize on the slide, in terms of the results from the fourth quarter, the CASC have increased to 7.9%, but the RASC have increased even more to 11.7%.
Speaker #1: And the cargo question, Felipe, we don't disclose our unit revenues on cargo, but let me give you a couple of ideas data points that are important.
Roberto Alvo: And the cargo question, Felipe. We don't disclose our unit revenues on cargo. But let me give you a couple of, I guess, data points that are important. Northbound traffic is export traffic. Southbound traffic is import traffic. Import traffic normally has higher yields than export traffic just because of the nature of what is exported. It's basically raw materials going north. And it's, if you want, technological perishables coming south. So there may be a potential change in the mix just because of the currency appreciation that we will see if it happens during the year. But we don't see today significant issues in the demand side to believe that the unit revenues in cargo are going to be materially different. The start of the year is always low because people send inventories to close the prior year.
Speaker #1: Northbound traffic is export traffic. Southbound traffic is import traffic. Import traffic normally has higher yields than export traffic just because of the nature of what is exported.
Speaker #1: It's basically raw materials going north, and it's if you want perishables, technological perishables coming south. So there may be a potential change in the mix just because of the currency appreciation.
Speaker #1: That we will see if it happens during the year. But we don't see today significant issues in the— that the unit revenues in cargo demand side to believe that our RASC are going to be materially different.
Speaker #1: The start of the year is always low because people send inventories to close the prior year, and now we have the Chinese New Year, which is very relevant on the cargo side because basically China shuts off for a week.
Roberto Alvo: And now we have the Chinese New Year, which is very relevant on the cargo side because, basically, China shuts off for a week. But the basis of growth and the stability of the market is noted. We have nothing to concern us at this point in time.
Speaker #1: But the basis of growth and the stability of the market is noted. We have no nothing to concern us at this point in
Speaker #1: time. Great.
[Analyst] (Citigroup): Great. Those were super clear.
Speaker #7: Those were super clear.
Speaker #3: Thank you. Our next question comes from Gabriel Resende from ITAL BBA. Your line is now open. Please go
Operator: Thank you. Our next question comes from Gabriel Rezende from Itaú BBA. Your line is now open. Please go ahead.
Speaker #3: ahead. Thank you.
[Analyst] (Itaú BBA): Thank you. Congratulations on their setup of very strong results. Two questions here on our side. Correct me if I'm wrong, but imagine that around 23% out of your passenger revenue came from those more premium-related revenue. Just trying to understand where the company is targeting to land this number along 2026. So how much can these 23% increase along the year? What is the company's target at this point? And also, we talked a lot during the call about these positive effects in the environment, especially here in Brazil. And also, we are seeing a favorable oil price environment as well. Just trying to understand whether you see this sector at some point in time, perhaps this year, accommodating yields into a slightly lower base versus where we are at this point. Thank you.
Speaker #5: Congratulations on the setup of very strong results. Two questions here on our side. Correct me if I'm wrong, but imagine that around 23% out of your passenger revenue came from those marked premium-related revenue.
Speaker #5: Just trying to understand where the company is targeting to land this number along 2026. So how much can this 23% increase along the year?
Speaker #5: What is the company's target at this point? And also, we talked a lot during the call about these positive effects environment, especially here in Brazil.
Speaker #5: And also we are seeing a favorable oil price environment as well. Just trying to understand whether you see the sector at some point in time perhaps this year accommodating yields into a slightly lower base versus where we are at this point.
Speaker #5: Thank
Speaker #5: you. Thank
Speaker #1: You. So the second question first, we see—I mean, Brazil was, out of the 10 largest domestic markets in the world, the one that grew the most in 2025.
Roberto Alvo: Thank you. So second question first. I mean, Brazil was, out of the 10 largest domestic markets in the world, the one that grew the most in 2025, which is quite impressive, I think. And we see momentum from that perspective. And at this point in time, I think that the capacity outlook for the industry in Brazil, together with the demand perception, leads us to believe that it's going to be a stable year as compared to what it was in 2025. So we see potential for development of our strategy and our network over there as we have done it in the last two or three years. So I don't think at this point in time that we will see a significant change in the dynamic of the market, at least for 2026. We don't see the elements of that.
Speaker #1: Which is quite impressive, I think. And we see momentum from that perspective. And at this point in time, I think that the capacity outlook for the industry in Brazil together with the demand perception leads us to believe that it's going to be a stable year, as compared to what it was in 2025.
Speaker #1: So we see potential for development of our strategy and our network over there, as we have done in the last two or three years.
Speaker #1: So I don't think at this point in time that we will see a significant change in the dynamic of the market, at least for 2026.
Speaker #1: We don't see the elements of that. And more generally, I think that the capacity situation in the industry as a whole, with the energy situation and the manufacturers still trying to catch up to replace older aircraft and to meet their commitments in deliveries, is going to mean that 2026 is going to be similar to 2025 in terms of global capacity.
Roberto Alvo: And more generally, I think that the capacity situation in the industry as a whole, with the engine situation and the manufacturers still trying to catch up to replace older aircraft and to meet their commitments in deliveries, is going to mean that 2026 is going to be similar to 2025 in terms of global capacity. I forgot the first question. Can you remind me, Tori, please?
Speaker #1: I forgot the first question. Can you remind me, Tori,
Speaker #1: I forgot the first question. Can you remind me, Tori, please? What
Tori Creighton: What percentage with regard to our premium revenues, how we see that target going forward, given the fact that we have reached 23% of premium revenue?
Speaker #2: percentage of with regard to our premium revenues, how we see that target going forward given the fact that we reached 23%
Speaker #2: of premium revenues? We don't
Roberto Alvo: We don't disclose a target for premium revenue. But we believe that the premium revenue will still grow faster than our total revenue and our capacity during 2026 as it has happened in the last few years.
Speaker #1: disclose the target for premium revenue, but we believe that the premium revenue will still grow faster than our total revenue and our capacity during 2026, as it has happened in the last few years.
Speaker #5: Okay, that's very clear. Thanks, Tori, for—
[Analyst] (Itaú BBA): Okay. That's very clear.
Speaker #1: Thank you.
Roberto Alvo: Thank you.
[Analyst] (Itaú BBA): Thanks, Tori, for reminding me of the question.
Speaker #5: reminding the
Speaker #5: question. Thank you.
Operator: Thank you. Our next question comes from Savanthi Syth from Raymond James. Your line is now open. Please go ahead.
Speaker #3: Our next question comes from Savanthi Sith from Roman James. Your line is now open. Please go
Speaker #3: ahead. Hey, good
[Analyst] (Raymond James): Hey. Good morning. Just a couple of questions for me. First one, just on the corporate side. I know you mentioned demand strong widely across the regions. But I was curious what you're seeing on the corporate side, if there's any acceleration there or any trends to call out. And then just secondly, I'm wondering; there's one of your competitors that have kind of refocused on premium offering. And just wondering what you're seeing in the region and if there's still kind of maybe premium growth in offering is still outstripping or actually, maybe demand is outstripping the supply.
Speaker #4: morning. Just a couple of questions for me. First one, just on the corporate side, I know you mentioned demand strong, widely across the regions, but I was curious what you're seeing on the corporate side, if there's any acceleration there or any trends to call out.
Speaker #4: And then just secondly, I'm wondering there's one of your competitors that have kind of refocused on premium offering, and just wondering what you're seeing in the region and if there's still kind of maybe premium growth in offering is still outstripping or actually maybe demand is outstripping the supply.
Speaker #4: And then just secondly, I'm wondering there's one of your competitors that have kind of refocused on premium offering, and just wondering what you're seeing in the region and if there's still kind of maybe premium growth in offering is still outstripping or actually maybe demand is outstripping the
Speaker #1: Thanks, Abby. How are you? So corporate recovered probably a year and a half ago from before 2020 already. Growth in corporate demand looks stable.
Roberto Alvo: Thanks, Abby. How are you? So corporate recovered probably a year and a half ago from before 2020 already. Growth in corporate demand looks stable. I think what's most relevant is that we have been gaining consistently market share in corporate sectors. And that you can see very clearly on public information provided by travel agencies in Brazil, for example, where you can see that public information figure. And the setup what we have created, the network, the execution, the frequent flyer, leads us to believe that this position we have is going to be maintained or even be increased in the upcoming future. So no concerns with respect to corporate demand at this point in time. And I think that LATAM has put itself in a very strong position to serve corporate customers, whether it's because of our network, because of our FSP, because of our delivery.
Speaker #1: I think what most relevant is that we have been gaining consistently market share in corporate segments. And that you can see very clearly on public information provided by travel agency in Brazil, for example, where you can see that public information figure.
Speaker #1: And the setup we have created—the network, the execution, the frequent flyer—leads us to believe that this position we have is going to be maintained or even be increased in the upcoming future.
Speaker #1: So, no concerns with respect to corporate demand at this point in time. And I think that LATAM has put itself in a very strong position to serve corporate customers, whether it's because of our network, because of our FFP, or because of our delivery.
Speaker #1: And the second question, it's interesting you mentioned premium offer. I think I said it in my speech, and it all starts with people. You are not going to be able to attract customers that want to fly again with you and particularly demanding customers as customers as premium customers only with hardware.
Roberto Alvo: The second question, it's interesting you mentioned premium offer. I think I said it in my speech. And it all starts with people. You are not going to be able to attract customers that want to fly again with you, and particularly demanding customers as premium customers, only with hardware. You need software. And in that sense, I think that LATAM stands out completely with respect to not only its direct competition in the region, but also in many regions across. And this is one, I think, of the learnings of the last few years and what has started the cycle where now you see profitable growth that we have. At the same time, we believe that we can improve on execution. And I believe that we can still improve significantly on hardware, on the physical delivery of our product.
Speaker #1: You need software. And in that sense, I think respect to not only its direct competition in the region, but also in many regions across.
Speaker #1: And this is one I think of the learnings of the last few years and what has started the cycle where now you see profitable growth that we have.
Speaker #1: At the same time, we believe that we can improve on execution, and I believe that we can still improve significantly on hardware, on the physical delivery of our product.
Speaker #1: As Ricardo mentioned, we are just inaugurated a large Lima. We're going to reinaugurate a bigger lounge in Guarulhos next year. We'll have premium economy on wide bodies.
Roberto Alvo: As Ricardo mentioned, we just inaugurated a lounge in Lima. We're going to reinaugurate a bigger lounge in Guarulhos next year. We'll have premium economy on wide bodies. We'll install Wi-Fi on wide bodies, which I think is an important lack. And at the end of the day, even though maybe our competitors are trying to catch up to us, we continue improving. But the DNA of this organization and the people, I think it's unmatchable at this point in time. Thank you.
Speaker #1: We'll install Wi-Fi in wide bodies, which I think is an important lag. And at the end of the day, even though maybe our competitors are trying to catch up to us, we continue improving.
Speaker #1: But the DNA of this organization and the people I think is unmatchable at this point in time. Thank you.
Speaker #4: Awesome. Thank you.
[Analyst] (Raymond James): Awesome. Thank you.
Speaker #3: Thank you. As a reminder, if you do want to ask a question, please press start followed by one on your telephone keypad. Our next question comes from Felipe Ballavona from Santander.
Operator: Thank you. As a reminder, if you did want to ask a question, please press star followed by 1 on your telephone keypad. Our next question comes from Felipe Ballevona from Santander. Your line is now open. Please go ahead.
Speaker #3: Your line is now open. Please go ahead.
Speaker #5: Hi, everyone. Thank you for taking my question. I have a follow-up on Jen's question about net debt. You stated that you ended up missing the guidance due to the $400 million dividend announcement.
[Analyst] (Santander): Hi, everyone. Thank you for taking my question. I have a follow-up on Jen's question about net debt. You stated that you ended up missing the guidance due to the $400 million dividend announcement. However, then you said that the minimum dividend is considered in the guidance. And if I'm not mistaken, those $400 million wouldn't be extraordinary dividends but minimum ones. So how can I put these two together? And also, on a separate note, what's the QC breakdown of your debt? Thank you.
Speaker #5: However, then you said that the minimum dividend is considered in the guidance. And if I'm not mistaken, those $400 million wouldn't be extraordinary dividends, but minimum ones.
Speaker #5: So, how can I put these two together? And also, on a separate note, what's the Q2 breakdown of your debt? Thank you.
Speaker #5: you. Yeah, I'll pass Ricardo on the
Roberto Alvo: Yeah. I'll ask Ricardo the second one. But I mean, maybe it's good to clarify. Minimum dividends, 30%, but they are paid the following year, normally after the shareholders' meeting. And that happens in Chile normally in April, okay? What we did is that we advanced a significant portion of minimum dividends in December. And we paid $400 million in December. So as what you are seeing is net debt as of 31 December, and that was not in the previous guidance, you have to adjust for those 400 million, okay? Which means that in April, the company would have already counted those 400 millions for the calculation of the final dividend that it would pay. So that's probably the clarification on this, okay? With respect to currency and debt, that's where I want to take that.
Speaker #1: Second one, but I mean, just maybe it's good to clarify. Minimum dividends are 30%, but they are paid the following year—normally after the shareholders' meeting, and that happens in Chile, normally in April.
Speaker #1: Okay? What we did is that we advanced a significant portion of minimum dividends in December, and we paid $400 million in December. So what you are seeing is net debt as of 31 December, and that was not in the previous guidance—you have to adjust for those $400 million.
Speaker #1: Which means that in April, the company would have already counted those $400 millions for the calculation of the final dividend that it would pay.
Speaker #1: So that's probably the clarification on this. Okay? With respect
Speaker #1: to current. That's very
Speaker #5: clear. Is that actually a no? The question regarding, okay. And in terms of currency, I think almost 100% of our debt are in US dollar.
[Analyst] (Itaú BBA): Is that actually a no? The question regarding okay. In terms of currency, I think almost 100% of our debt are in US dollar. We only have one local bond that closed to $160 million in local currency. So it's almost everything in US dollars.
Speaker #5: We only have one local bond, close to $160 million in local currency. So it's almost everything in US.
Speaker #5: dollars.
Speaker #1: And that
Roberto Alvo: That local currency is Chile, basically.
Speaker #5: Thank you both. local currency is GBP.
[Analyst] (Itaú BBA): Thank you, both.
Speaker #1: Okay.
Speaker #5: Gotcha. Thank you again. Congrats on the
[Analyst] (Santander): Perfect. Thank you again. Congrats on the results.
Speaker #5: results. Thank you.
Operator: Thank you. We currently have no further questions. I'll hand back to Ricardo for closing remarks.
Speaker #3: We currently have no further questions, so I'll hand back to Ricardo for closing remarks.
Speaker #5: Again, thank you all for connecting this morning. Please note that our investor relations team is available for any further questions. Have a great day, and thank you again.
[Analyst] (Itaú BBA): Again, thank you all for connecting this morning. Please note that our investor relations team is available for any further questions. Have a great day. And thank you again.
Operator: This concludes today's call. Thank you for joining. You may now disconnect your line.
