LATAM Airlines Group S.A.

LATAM reported nearly $4.2 billion of revenue in Q2 2026, up almost 28% year over year. Passenger revenue grew 28%, cargo revenue grew almost 22%, adjusted costs excluding fuel increased 14%, and total fuel costs increased 93% as the all-in average fuel price including hedge rose more than 80% year over year. Adjusted operating margin was 5.4%, net income was $125 million, capacity grew 8.9%, and consolidated load factor was 81.8%. Adjusted operating cash flow was $476 million, ending net cash variation was positive $110 million, liquidity was more than $4.2 billion, and adjusted net leverage was 1.5x. For full-year 2026, LATAM reinstated the full set of guidance metrics and improved outlook versus prior guidance. Capacity is expected to grow 9% to 10%, revenue is expected between $17.3 billion and $17.7 billion, adjusted EBITDA is expected between $4.1 billion and $4.4 billion, passenger CASK ex fuel is expected to remain between $0.045 and $0.047, year-end liquidity is expected to be at least $4.7 billion, and adjusted net leverage is projected to be at or below 1.6x. Management also said Q3 and Q4 average fuel assumptions are now $147 per barrel and $130 per barrel, respectively, versus prior assumptions of $170 and $150.

Roberto Alvo said Q2 was a strong demonstration of LATAM’s resilience in one of the sharpest jet fuel cost spikes in recent years. He emphasized that the company’s outcome was not driven by a single initiative but by a more diversified model, customer preference, premium mix, LATAM Pass, commercial flexibility, and a strong balance sheet. His tone was cautious on fuel volatility, but confident that the group has the tools and discipline to navigate a dynamic second half.

Ricardo Dourado focused on the numbers behind the quarter: fuel costs were the main headwind, with the all-in fuel price up more than 80% year over year and total fuel costs up 93%. Even so, the company generated $476 million of adjusted operating cash flow, ended with more than $4.2 billion of liquidity, and kept adjusted net leverage at 1.5x. He also explained that the updated 2026 guidance reflects better fuel assumptions and that the change in passenger CASK ex fuel guidance is mainly driven by FX assumptions, especially the Brazilian real.

Analysts asked about international demand, tax credits, 2027 capacity and fare durability, Brazil’s credit line, domestic Brazil versus Spanish-speaking capacity guidance, fuel hedging losses, competitive conditions in Brazil, the Embraer E2 strategy, dividends versus buybacks, cost dilution from growth, and leverage timing. Management said international demand was solid overall, with Europe strong, some U.S. weakness improving, Argentina softer, and World Cup effects weighing on June. On hedging, Ricardo said the Q2 negative result came mainly from premiums paid for calls and that Q3 protection is lower than Q2; on capital allocation, management said growth comes first, then financial policy, then excess cash can go to dividends, buybacks, or debt actions.