LATAM Airlines Group SA Q3 FY2024 earnings call

• Operational results: Increased capacity by 15.1% while maintaining high load factors, transported 21.1 million passengers (+7.1% y-o-y), and is the largest airline group in South America. - Financial discipline: Adjusted EBITDAR was $828 million with a 25.2% margin, net income for the quarter was $301 million, year-to-date net income $705 million (+41.3% y-o-y). - Cost containment: Adjusted passenger CASK ex-fuel decreased by 8.5% y-o-y to $0.04, and benefited from lower jet fuel prices. - Capital structure: Completed refinancing of debt, extending and increasing revolving credit facilities to $1.55 billion, with $3.6 billion liquidity, and net leverage ratio 1.7x. - Investor events: Returned to NYSE and hosted Investor Day, discussing operational excellence, network strength, etc.

In the third quarter, LATAM Airlines Group saw strong operational results. Passenger operations: capacity increased by 15.1%, transported 21.1 million passengers (+7.1% y-o-y), with 80.6 million passengers over the past 12 months. Adjusted passenger CASK ex-fuel was $0.04, and passenger revenues increased over 6% mainly driven by international business. Cargo operations: revenues increased over 15% y-o-y to $381 million, marking the second consecutive quarter of improvement. Revenue contribution: Passenger operations are the primary segment, with cargo contributing a smaller but growing portion.

• Revised full-year 2024 adjusted EBITDAR to exceed $3 billion. - Maintaining strong liquidity and leverage, with plans for capital allocation including potential dividends, buybacks, or profitable growth investments. - Anticipating continued focus on growth, cost control, and margin improvement.

• Exchange rate volatility: Impact on revenues and costs, particularly in markets with currency depreciation. - U.S. election outcomes: Potential effects on emerging markets and currency fluctuations, though no immediate significant impact seen on operations so far. - Wide-body aircraft market tightness: Potential challenges in the international wide-body segment.

Q: Michael Linenberg asked about not reporting earnings per ADS and tax rate projection.

A: Ramiro Alfonsín Balza stated tax rate is difficult to forecast due to varying country tax rules, and EPS is an important metric to present as it reflects capital structure benefits.

Q: Guilherme Mendes asked about year-over-year yield drop and capital allocation.

A: Roberto Alvo Milosawlewitsch said yield drop was due to currency depreciation and mix change; Ramiro Alfonsín Balza mentioned capital allocation focuses on profitable growth, strong balance sheet, and shareholder return.

Q: Stephen Trent asked about executive roles and free cash flow reporting.

A: Roberto Alvo Milosawlewitsch said Ramiro is transitioning to CCO, and they're finding a replacement; Ramiro Alfonsín Balza said they report cash flow in line with U.S. Big 3 and welcome feedback.

Q: Jens Spiess asked about international aircraft split and fuel hedges.

A: Roberto Alvo Milosawlewitsch said over half of international capacity is wide-body; Ramiro Alfonsín Balza mentioned using asymmetrical collars on fuel hedges with consistent policy.

Q: Pablo Monsivais asked about FX depreciation in Brazil.

A: Roberto Alvo Milosawlewitsch said strong demand in domestic Brazil, disciplined capacity, and majority of revenues are dollar-based.

Q: João Frizo asked about fourth quarter margin guidance.

A: Ramiro Alfonsín Balza said third quarter is strong, but there's a small expected deceleration in Q4, and they're confident in full-year guidance.