LATAM Airlines Group NYSE: LTM reported record first-quarter 2026 financial results, driven by strong passenger demand, higher unit revenues and disciplined cost execution, while management warned that a sharp rise in jet fuel prices is expected to weigh on results beginning in the second quarter.
Chief Executive Officer Roberto Alvo said LATAM grew capacity by 10.4% during the quarter and transported nearly 23 million passengers, while maintaining a consolidated load factor of 85.3%. He said the results reflected “the consistency of the execution and the structural strengths of the model built over the past years.”
Revenue reached $4.1 billion in the quarter, up 21.7% from the same period last year. Adjusted EBITDA was $1.3 billion, and adjusted operating margin reached 19.8%, which management described as the highest quarterly operating margin in the company’s history. Net income was $576 million, up more than 62% year over year, with a net margin of nearly 14%.
Passenger Revenue Leads Growth
Chief Financial Officer Ricardo Bottas said the increase in total revenue was mainly driven by the passenger business, which grew 24.4% year over year. Cargo revenue rose 3.4%, which Bottas said underscored the value of LATAM’s diversified business model.
The company transported 22.9 million passengers in the quarter, a 9.1% increase from the first quarter of 2025. Bottas said growth was led primarily by the international segment and LATAM Airlines Brasil’s domestic market.
Unit revenue performance was strong across the network. In Brazil’s domestic market, demand grew faster than capacity, supporting higher load factors and a 17% increase in passenger RASK in U.S. dollars, or 8% in local currency. In domestic Spanish-speaking affiliate markets, capacity remained stable while traffic improved, lifting load factors and producing passenger RASK growth of nearly 25% in U.S. dollars and almost 19% in local currency. International passenger RASK rose 6.3%, with load factors near 87%.
Bottas said LATAM benefited from a strong demand backdrop and revenue management actions as fuel prices began to climb during the quarter. Some of those actions were only partially reflected in first-quarter results because many March tickets had already been sold before fare adjustments took effect.
Premium Offering and Loyalty Program Support Revenue Quality
Management highlighted the company’s premium revenue mix as a key factor behind the quarter’s performance. Bottas said premium revenue increased 28% year over year and grew at a rate 14% higher than non-premium passenger revenue.
Premium passenger revenue represented 27% of passenger revenue in the quarter, which Bottas said was a significant increase from pre-pandemic levels. Management said this trend is especially relevant during periods of volatility because premium travelers tend to show lower price elasticity and more stable demand patterns.
LATAM also pointed to its LATAM Pass loyalty program as a key revenue and engagement channel. Bottas said the program has 55 million members, including 2.6 million elite members, making it the largest airline loyalty program in the region. Close to 60% of LATAM Pass passenger revenue is generated by LATAM Pass members, he said.
The company also cited several premium-focused initiatives, including Wi-Fi connectivity rollout across the wide-body fleet, expanded lounge infrastructure in hubs such as São Paulo and Miami, and the planned introduction of a new premium comfort cabin beginning in 2027. LATAM also expects to incorporate Airbus A321XLR aircraft starting in 2027, featuring premium business cabins with full-flat seats, suite doors, direct aisle access and onboard connectivity.
Fuel Prices Prompt Revised Guidance
While higher jet fuel prices did not materially affect first-quarter results, management said the impact is expected to become more visible in the second quarter. Alvo said the conflict in the Middle East pushed jet fuel prices sharply higher beginning in March, but the timing of fuel consumption, price lag mechanisms and partial hedges limited the impact in the first quarter.
Bottas said fuel prices were down 3.3% year over year during the quarter, but the company estimated a roughly $40 million impact during the period. He said LATAM expects more than $700 million of additional fuel expense in the second quarter, assuming a jet fuel price of $107 per barrel.
In response to increased volatility and reduced visibility, LATAM replaced its prior full-year 2026 guidance with a narrower set of metrics. The company’s previous guidance had assumed average jet fuel of $90 per barrel. The new assumptions include jet fuel prices of $107 per barrel in the second and third quarters and $150 per barrel in the fourth quarter.
LATAM now expects adjusted EBITDA of $3.8 billion to $4.2 billion for 2026. Passenger CASK excluding fuel is projected at $0.045 to $0.047, higher than the previous guidance, primarily due to appreciation of local currencies, especially the Brazilian real. Management said it now assumes an exchange rate of BRL 5.15 per U.S. dollar, compared with the earlier assumption of BRL 5.5.
The company expects net leverage to remain at or below 1.8 times and liquidity to be at or above $4.5 billion. For the second quarter, despite the significant fuel impact, LATAM expects a mid- to low-single-digit adjusted operating margin.
Balance Sheet and Cash Generation Remain Key Focus Areas
LATAM generated $858 million in adjusted operating cash flow during the first quarter. After accounting for $291 million in capital expenditures net of financing, financial expenses and other items, the company generated close to $480 million in cash. After payments related to dividends distributed in December 2025, LATAM ended the quarter with net cash generation of $391 million.
The company closed the quarter with $4.1 billion in liquidity and adjusted net leverage of 1.3 times. Bottas said LATAM has more than $1.5 billion in unencumbered assets and no relevant short- or mid-term debt maturities. He also said all debt is now under market conditions, with no remaining legacy from the company’s Chapter 11 process.
Bottas noted that all major ratings agencies now assign LATAM ratings in the BB category, with a positive outlook following Moody’s outlook upgrade in March and Fitch’s reaffirmation in April.
Management Says Demand Remains Stable
During the question-and-answer session, Alvo said demand remains “solid and stable” across the network, with corporate demand strong in almost every country. He said international markets and domestic Brazil were “slightly stronger than the rest,” while LATAM has seen some slowdown in more price-sensitive segments.
Alvo said the company is not providing top-line or capacity guidance because those figures are more volatile than EBITDA in the current environment. He said if high fuel prices persist, the industry may make larger capacity adjustments, including in Latin America.
Asked about market share, Alvo said LATAM does not manage the business around market share targets. “Market share is not a goal. Market share is the result of what we do,” he said. He added that LATAM focuses on network development, profitable growth and execution in markets where it sees strength.
Alvo also said the company is taking a cautious stance on fuel assumptions because of the uncertainty in commodity prices. He said LATAM would rather prepare for a more conservative scenario and adjust if conditions improve.
About LATAM Airlines Group NYSE: LTM
LATAM Airlines Group SA is a Chilean-based airline holding company formed in 2012 through the merger of LAN Airlines of Chile and TAM Linhas Aéreas of Brazil. The Group offers passenger and cargo air transportation services across South America and beyond, operating under a multi‐brand strategy that encompasses several nationally recognized carriers. Headquartered in Santiago, Chile, LATAM is structured to serve diverse market segments with full-service, premium and low‐cost offerings.
The core business activities of LATAM Airlines Group include scheduled domestic and international passenger flights, air cargo services and maintenance, repair and overhaul (MRO) capabilities through its technical divisions.
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