LATAM Airlines Group Q4 2025 Earnings Summary

Financial Performance:
LATAM delivered record Q4 results with total revenues of $4 billion (up 16.3% YoY). Passenger segment revenues surged 20.3% while cargo declined 9.6% against exceptionally strong Q4 2024 comparisons (full-year cargo revenues still increased YoY). Adjusted EBITDAR reached $1.1 billion (up 30.4%), adjusted operating income $661 million (up 42.7%), and net income $484 million (up 78.1%). Adjusted operating margin stood at 16.7% for quarter, 16.2% for full year—a 3.5 percentage point expansion.

Full-year net income totaled $1.5 billion ($4.95 per ADS), representing 50% growth versus 2024. The group transported 87 million passengers in 2025 (23 million in Q4 alone) with record Net Promoter Score of 54 points (58 for premium travelers).

Capacity & Load Factor:
Q4 capacity grew 7.7%, full-year 8.2%, maintaining healthy 84.4% load factor. Passenger RASK increased 11.7%, outpacing 7.9% passenger CASK ex-fuel increase. Regional performance: Brazil domestic capacity 12% with RASK +14% (USD)/10% (local currency); Spanish-speaking domestic RASK +23% (USD)/~20% (local currency); International load factor 85% with +6% unit revenue.

Cost Performance:
Q4 passenger CASK ex-fuel reached $0.047, with $0.02 attributable to local currency appreciation and another $0.02 from one-time wage bonuses. Full-year passenger CASK ex-fuel: $0.044, within November guidance range. Management emphasized no structural cost pressures—over 700 internal efficiency initiatives underway.

Premium & Loyalty Strategy:
Premium revenues accounted for 23% of passenger revenues, growing 14% versus 12% overall passenger revenue growth. LATAM PASS remains region’s largest airline loyalty program with 54 million members, generating ~60% of passenger revenues. Premium segment provides structural stability, less seasonality, and greater resilience to macroeconomic headwinds.

Fleet & Network:
Received 26 aircraft in 2025 (7 in Q4), including first Boeing 787 Dreamliner with GE engines. Total fleet reached 371 aircraft (up 7% YoY). Launched 22 new routes (15 international). Received multiple awards: Skytrax Best Airline in South America, APAC 5-star Global Airline, Air Cargo Airline of the Year, Design Air Most Improved Brand.

2026 Fleet Plans:
Expecting 41 aircraft deliveries:
- 3 Boeing 787 wide-bodies
- 12 Embraer E2s (first deliveries, Q4 2026, deploying in Brazil domestic from Guarulhos, Brasilia, Fortaleza hubs)
- 26 A320 family aircraft
CapEx: $1.7 billion net of financing

Balance Sheet & Capital Allocation:
Generated $3.3 billion adjusted operating cash flow, $1.4 billion cash after CapEx/interest. Executed $585 million in share repurchases and distributed $400 million interim dividends (December 2025), totaling ~$605 million dividends for year. Still generated $200 million positive net cash.

Liquidity reached $3.7 billion (25.7% of trailing revenue). Adjusted net leverage: 1.5x (below 2x policy maximum). Weighted average cost of debt reduced from 10.7% (2023) to 6.6% (2025) through refinancing. Well-balanced debt amortization profile with no significant short/medium-term maturities.

2026 Guidance:
Capacity growth: 8-10%. Adjusted operating margin: 15-17%. Adjusted levered free cash flow: >$1.7 billion (vs. $1.5B in 2025). Year-end liquidity: >$5 billion. Available for additional capital allocation: $1.0-1.6 billion (after CapEx and minimum dividends). Passenger CASK ex-fuel: $0.043-0.045.

Strategic Investments:
Continuing premium product enhancements: Wi-Fi installation on wide-body fleet (starting 2026), new premium comfort cabin (2027), new lounge in Guarulhos. Recently inaugurated signature lounge in Lima.

Market Outlook:
CEO Roberto Alvo noted strong, stable demand across all business areas. Brazil domestic market grew fastest among world’s 10 largest in 2025. Booking curve for early 2026 “healthy” with no concerns. Corporate demand recovered to pre-2020 levels 1.5 years ago, with LATAM gaining consistent market share. Stronger local currencies net positive for business despite some cost headwinds.