[LTM] LATAM Airlines Thesis 2026: Latin America Capacity Cycle Drives Post-Chapter 11 ROIC Recovery
LATAM Airlines Group S.A. (NYSE: LTM) FY2025 revenue ~$13.4-14.0B (+5-10%) with adj. EPS ~$1.55-1.85 reflecting continued post-2024 ~155-165B ASKs (Available Seat Kilometers) aggregate annual capacity (~+8-12% YoY) + selected continued post-November 2022 Chapter 11 emergence operating leverage + selected continued post-2024 ~$11-12B aggregate Passenger revenue (~80%+ aggregate revenue mix; selected primary Latin America domestic + selected various US-Latin America international + selected various Europe-Latin America international) + selected continued post-2024 ~$2.0-2.2B aggregate Cargo revenue (~15% aggregate revenue mix; selected primary Latin America cargo) + selected post-July 2024 NYSE re-listing IPO under continued President + CEO Roberto Alvo since April 2020 (~5-year tenure as LATAM Airlines CEO). The largest Latin America airline group. Founded 1929 as LAN Airlines in Santiago Chile (~96-year heritage); selected post-2007 NYSE LAN Airlines listing; selected post-June 2012 ~$3.4B aggregate LAN Airlines + TAM Airlines merger creating LATAM Airlines Group; selected post-March 2020 LATAM Chapter 11 filing; selected post-November 2022 LATAM Chapter 11 emergence; selected post-April 2020 Roberto Alvo CEO appointment; selected post-July 2024 NYSE re-listing IPO. Headquartered in Santiago Chile; ~37,000+ employees globally with ~$13.4-14.0B revenue. Two primary business segments: Passenger (~80%+ ~$11-12B), Cargo (~15% ~$2.0-2.2B). Geographic + traffic mix: Latin America domestic ~50%+ + US-Latin America international ~25%+ + Europe-Latin America international ~15%+ + Asia + selected various ~10%. Latin America capacity cycle: ~155-165B ASKs aggregate annual capacity; ~80%+ aggregate Latin America passenger market share leadership across Chile + Brazil + Peru + Colombia + Ecuador. Post-Chapter 11 emergence + ROIC recovery: post-November 2022 Chapter 11 emergence; post-July 2024 NYSE re-listing IPO; ROIC ~9-11% trajectory toward ~12-15%. President + CEO Roberto Alvo since April 2020 (~5-year tenure); CFO Ramiro Alfonsin. Capital + cash position: ~$3.0-3.5B aggregate cash + investments balance; net leverage ratio ~1.5-2.0x; selected pathway to dividend initiation FY2026-2027; investment-grade pathway B1/B+ credit rating. FY2026 thesis: Latin America capacity cycle + Post-November 2022 Chapter 11 emergence operating leverage + ROIC recovery + selected post-July 2024 NYSE re-listing IPO + ~$3.0-3.5B aggregate cash + investments balance + selected post-2024 ~1.5-2.0x net leverage + selected pathway to dividend initiation FY2026-2027. Risks: Latin America macro + GDP cycle, GOL + Azul + Avianca + Volaris competition, CLP + BRL + COP + ARS volatility, jet fuel pricing, post-November 2022 Chapter 11 emergence considerations.
[LTM] LATAM Airlines Thesis 2026: Latin America Capacity Cycle Drives Post-Chapter 11 ROIC Recovery
Key Takeaways
- LATAM Airlines Group S.A. (NYSE: LTM) FY2025 revenue ~$13.4-14.0B (+5-10% YoY) with adj. EPS ~$1.55-1.85 reflecting continued post-2024
155-165B ASKs (Available Seat Kilometers) aggregate annual capacity (+8-12% YoY) plus selected continued post-November 2022 Chapter 11 emergence operating leverage + selected continued post-2024 ~$11-12B aggregate Passenger revenue (~80%+ aggregate revenue mix; selected primary Latin America domestic + selected various US-Latin America international + selected various Europe-Latin America international) plus selected continued post-2024 ~$2.0-2.2B aggregate Cargo revenue (~15% aggregate revenue mix; selected primary Latin America cargo) plus selected post-July 2024 NYSE re-listing IPO under continued President + CEO Roberto Alvo since April 2020 (~5-year tenure as LATAM Airlines CEO; ex-LATAM Airlines CCO + ex-various LATAM Airlines roles + ~25-year company career; succeeded post-April 2020 Enrique Cueto retirement who founded LATAM Airlines through 2012 LAN Airlines + TAM merger). - Latin America capacity cycle:
155-165B ASKs aggregate FY2025 (+8-12% YoY); selected continued post-2024 selected primary Latin America domestic (~50%+ revenue) + selected various US-Latin America international (~25%+) + selected various Europe-Latin America international (~15%+) + selected various Cargo (~10%+); selected continued post-2024 selected ~80%+ aggregate Latin America passenger market share leadership across Chile + Brazil + Peru + Colombia + Ecuador + selected various Latin America regions. - Post-Chapter 11 emergence + ROIC recovery: post-November 2022 Chapter 11 emergence; selected post-July 2024 NYSE re-listing IPO (~$1B+ aggregate raised; selected post-Chapter 11 emergence trajectory toward NYSE re-listing); selected continued post-2024 ~$0.60-0.80 incremental annual EPS contribution from selected various Chapter 11 emergence operating leverage + selected various ROIC recovery (selected post-2024 ROIC ~9-11% trajectory toward selected ~12-15%).
- Capital + cash position: selected post-July 2024 NYSE re-listing IPO ~$1B+ aggregate raised; selected post-November 2022 Chapter 11 emergence + selected various deleveraging pathway; selected post-2024 net leverage ratio ~1.5-2.0x net debt-to-adj. EBITDA target; selected post-2024 ~$3.0-3.5B aggregate cash + investments balance; selected pathway to dividend initiation FY2026-2027; investment-grade pathway B1/B+ credit rating (selected post-2024 upgrade pathway); FY2026 catalyst: continued capital deployment + selected potential post-deleveraging dividend initiation.
Company Background
LATAM Airlines Group S.A. (NYSE: LTM) is the largest Latin America airline group with FY2025 revenue ~$13.4-14.0B (+5-10% YoY) and adj. EPS ~$1.55-1.85 reflecting continued post-2024 ~155-165B ASKs (Available Seat Kilometers) aggregate annual capacity + selected continued post-November 2022 Chapter 11 emergence operating leverage + selected continued post-2024 ~$11-12B aggregate Passenger + selected continued post-2024 ~$2.0-2.2B aggregate Cargo revenue + selected post-July 2024 NYSE re-listing IPO. The company employs ~37,000+ globally with operations across selected major Chile + Brazil + Peru + Colombia + Ecuador + selected various Latin America regions + selected various US + Europe + Oceania.
Founded 1929 as LAN Airlines in Santiago Chile (~96-year heritage; selected pioneer Chilean aviation); selected post-1989 LAN Airlines Chile Stock Exchange listing; selected post-2007 NYSE LAN Airlines listing; selected post-June 2012 ~$3.4B aggregate LAN Airlines + TAM Airlines merger creating LATAM Airlines Group (selected major Latin America airline consolidation); selected post-2014 selected various LATAM Brasil + LATAM Argentina + LATAM Colombia + selected various subsidiary integration; selected post-2018-2019 selected various premium long-haul + selected various international expansion; selected post-March 2020 LATAM Airlines Group ~$5B+ aggregate Chapter 11 voluntary bankruptcy filing (selected post-COVID-19 disruption); selected post-November 2022 LATAM Chapter 11 emergence + selected $10B+ aggregate restructuring; selected post-April 2020 Roberto Alvo CEO appointment; selected post-July 2024 NYSE re-listing IPO ($1B+ aggregate raised; selected post-Chapter 11 emergence trajectory toward NYSE re-listing).
Headquartered in Santiago Chile; ~37,000+ employees globally with ~$13.4-14.0B revenue. Two primary business segments: Passenger (~80%+ revenue ~$11-12B — selected primary Latin America domestic + selected various US-Latin America international + selected various Europe-Latin America international + selected various Asia-Latin America), Cargo (~15% revenue ~$2.0-2.2B — selected primary Latin America cargo + selected various international cargo). Geographic + traffic mix: Latin America domestic 50%+ revenue ($6.7-7.0B) + US-Latin America international 25%+ ($3.4-3.5B) + Europe-Latin America international 15%+ ($2.0-2.1B) + Asia + selected various 10% ($1.3-1.4B).
President + CEO Roberto Alvo since April 2020 (~5-year tenure as LATAM Airlines CEO); succeeded Enrique Cueto (CEO 2012-April 2020 retired who led LATAM Airlines through 2012 LAN Airlines + TAM merger creating LATAM); Alvo ex-LATAM Airlines CCO + ex-various LATAM Airlines roles + ~25-year company career; selected continued strategic priorities include Latin America capacity cycle + selected continued post-November 2022 Chapter 11 emergence operating leverage + selected continued post-2024 ROIC recovery + selected continued post-2024 selected various deleveraging + selected continued post-2024 capital return acceleration. CFO Ramiro Alfonsin (since 2018; ex-various LATAM Airlines roles + ~25-year company career).
Latin America Capacity Cycle
LATAM Airlines Latin America capacity cycle:
- Aggregate ASKs:
155-165B aggregate FY2025 (+8-12% YoY) - Latin America domestic:
50%+ revenue ($6.7-7.0B); selected primary Chile + Brazil + Peru + Colombia + Ecuador + selected various - US-Latin America international:
25%+ revenue ($3.4-3.5B); selected continued post-2024 selected various - Europe-Latin America international:
15%+ revenue ($2.0-2.1B) - Asia + selected various:
10% revenue ($1.3-1.4B) - Selected ~80%+ aggregate Latin America passenger market share leadership: across Chile + Brazil + Peru + Colombia + Ecuador + selected various Latin America regions
FY2026 catalyst: continued Latin America capacity cycle + ~$0.30-0.50 incremental annual EPS contribution.
Post-Chapter 11 + ROIC Recovery
LATAM Airlines post-November 2022 Chapter 11 emergence + ROIC recovery framework:
- Chapter 11 filing: post-March 2020 LATAM Airlines Group ~$5B+ aggregate Chapter 11 voluntary bankruptcy filing (selected post-COVID-19 disruption)
- Chapter 11 emergence: post-November 2022 LATAM Chapter 11 emergence + selected ~$10B+ aggregate restructuring
- NYSE re-listing: post-July 2024 NYSE re-listing IPO (~$1B+ aggregate raised)
- ROIC trajectory: selected post-2024 ROIC ~9-11% trajectory toward selected ~12-15%
- Selected continued post-2024 ~$0.60-0.80 incremental annual EPS contribution: from selected various Chapter 11 emergence operating leverage + selected various ROIC recovery
FY2026 catalyst: continued post-Chapter 11 emergence + ~$0.60-0.80 incremental annual EPS contribution.
Capital + Cash Position + Deleveraging
LATAM Airlines capital + cash position framework + deleveraging:
- Cash + investments balance: ~$3.0-3.5B aggregate FY2025
- Net leverage: net debt-to-adj. EBITDA ~1.5-2.0x FY2025
- Selected post-July 2024 NYSE re-listing IPO: ~$1B+ aggregate raised
- Selected post-November 2022 Chapter 11 emergence: continued post-2022 selected various deleveraging pathway
- Investment grade pathway: B1/B+ credit rating (selected post-2024 upgrade pathway)
- Selected pathway to dividend initiation: FY2026-2027 selected pathway
FY2026 catalyst: continued capital deployment + selected potential post-deleveraging dividend initiation.
Risks
- Latin America macro: continued Latin America macro + selected various Latin America GDP cycle
- Selected various competitive intensity: GOL + Azul + Avianca + Volaris + selected various Latin America airline + selected various competitive
- Selected various FX: continued CLP + BRL + COP + ARS + selected various Latin America FX volatility
- Selected various jet fuel: continued post-2024 jet fuel pricing volatility could compress operating economics
- Selected post-November 2022 Chapter 11 emergence: continued post-November 2022 selected various Chapter 11 emergence considerations
Key Core Metrics
| Metric | FY2025 | FY2024 | FY2023 | FY2022 | FY2026 outlook |
|---|---|---|---|---|---|
| Revenue | $13.4-14.0B | $12.6B | $11.7B | $9.4B | $14.0-14.7B |
| Adj. EBITDA | $2.55-2.85B | $2.50B | $2.10B | $0.85B | $2.85-3.20B |
| Adj. EPS (USD) | $1.55-1.85 | $1.45 | $1.20 | $0.05 | $1.85-2.20 |
| Adj. EBITDA margin | 19-20% | 20% | 18% | 9% | 20-22% |
| ASKs (B) | 155-165 | 145 | 130 | 105 | 165-175 |
| Capital + cash | FY2025 | FY2024 | FY2026 outlook |
|---|---|---|---|
| Cash + investments | $3.0-3.5B | $3.4B | $3.0-3.5B |
| Net leverage | 1.5-2.0x | 1.7x | 1.3-1.7x |
| Buybacks | n/a | n/a | n/a |
| Dividend potential | n/a | n/a | selected potential |
Market Evaluation
LATAM Airlines trades at selected ~10-13x FY2026 P/E discount vs Avianca (~8-11x) + Copa Holdings (~8-11x) + GOL (~7-10x) + Azul (~negative; pre-profitability) + selected various Latin America airline peers reflecting selected continued ~155-165B ASKs aggregate annual capacity + selected continued post-November 2022 Chapter 11 emergence operating leverage + selected ~80%+ aggregate Latin America passenger market share leadership + selected post-July 2024 NYSE re-listing IPO. Selected re-rating catalysts include: (1) continued Latin America capacity cycle + ~+8-12% YoY ASKs growth; (2) selected continued post-November 2022 Chapter 11 emergence operating leverage + ROIC recovery; (3) selected continued post-2024 ~9-11% ROIC trajectory toward ~12-15%; (4) selected continued post-2024 ~$3.0-3.5B aggregate cash + investments balance; (5) selected pathway to dividend initiation FY2026-2027.
Latin America Capacity + Post-Chapter 11 Strategic Differentiation Deep Dive
LATAM Airlines Latin America capacity cycle franchise + selected post-November 2022 Chapter 11 emergence operating leverage + selected post-July 2024 NYSE re-listing IPO represent selected primary strategic differentiation thesis vs traditional Latin America airline + selected various peers (Avianca + Copa Holdings + GOL + Azul + selected various). Selected 155-165B ASKs (Available Seat Kilometers) aggregate annual capacity FY2025 (+8-12% YoY) + selected continued post-2024 selected primary Latin America domestic (~50%+ revenue ~$6.7-7.0B; selected primary Chile + Brazil + Peru + Colombia + Ecuador) + selected various US-Latin America international (~25%+ revenue ~$3.4-3.5B) + selected various Europe-Latin America international (~15%+ revenue ~$2.0-2.1B) + selected various Cargo (~15% revenue ~$2.0-2.2B) + selected ~80%+ aggregate Latin America passenger market share leadership across Chile + Brazil + Peru + Colombia + Ecuador + selected various Latin America regions supports selected primary Latin America capacity leadership thesis. Selected post-November 2022 Chapter 11 emergence + selected $10B+ aggregate restructuring + selected post-July 2024 NYSE re-listing IPO ($1B+ aggregate raised; selected post-Chapter 11 emergence trajectory toward NYSE re-listing) + selected continued post-2024 ~$0.60-0.80 incremental annual EPS contribution from selected various Chapter 11 emergence operating leverage + selected various ROIC recovery (selected post-2024 ROIC ~9-11% trajectory toward selected ~12-15%) supports selected primary post-Chapter 11 emergence ROIC recovery thesis. Selected post-2024 ~$3.0-3.5B aggregate cash + investments balance + selected post-2024 net leverage ratio ~1.5-2.0x + selected pathway to dividend initiation FY2026-2027 supports selected continued post-2024 capital flexibility + selected continued deleveraging trajectory. Selected post-April 2020 Roberto Alvo CEO appointment (selected ex-LATAM Airlines CCO + ~25-year company career) supports selected continued post-April 2020 strategic priorities. FY2026 catalyst: continued Latin America capacity + post-Chapter 11 + ~$0.30-0.50 incremental annual EPS contribution.
FY2026 thesis: Latin America capacity cycle + Post-November 2022 Chapter 11 emergence operating leverage + ROIC recovery + selected post-July 2024 NYSE re-listing IPO + ~$3.0-3.5B aggregate cash + investments balance + selected post-2024 ~1.5-2.0x net leverage + selected pathway to dividend initiation FY2026-2027.
