LATAM Airlines Group SA Q4 FY2024 earnings call

• 2024 was a year of significant achievements, including meeting 2024 updated guidance, transporting a record 82 million passengers, and achieving strong financial results. - Customer satisfaction: Net Promoter Score reached 51 points, the highest ever, with lowest customer complaint rates in Chile, Brazil, and Peru. - Sustainability: Reincorporated in the Dow Jones Sustainability Index, recognized as the most sustainable airline group in the Americas and fifth worldwide, secured South America's first sustainability-linked loan, and made progress in sustainable aviation fuel initiatives and environmental efforts like recycling waste on domestic flights. - Cost management: Annual adjusted passenger cash ex fuel remained at $0.042, showcasing effective cost control.

In 2024, LATAM Airlines Group had strong segment performance. Passenger operations: Full year 2024 saw 82 million passengers transported, a record, with the fourth quarter 2024 transporting 21.5 million passengers. Capacity grew ~12% in the fourth quarter and 15% for the full year, with consolidated load factor near 86% in the fourth quarter. Cargo operations: Second half 2024 delivered robust results with improved load factors and better unit revenue. Loyalty program: LATAM Pass reached 49 million members, the largest in the region. Financials: Annual revenues were $13 billion, adjusted operating margin 12.7%, adjusted EBITDAR $3.1 billion, net income $977 million (nearly double 2023).

For 2025, LATAM Group anticipates capacity (measured in ASKs) to grow 7%-9%, revenues forecast to reach $14 billion to $14.5 billion, and adjusted EBITDAR projected at $3.25 billion to $3.6 billion. The company plans to evaluate an up to $150 million share buyback program while mitigating impact on share trading liquidity.

• Aircraft delivery delays: Potential delays in Boeing 787 deliveries and engine issues with Pratt & Whitney and Rolls-Royce. - Volatility: Currency and fuel price volatility could impact operations. - Competitive landscape: Overcapacity in domestic Colombia and potential competitive pressures in other markets.

Q: How does LATAM feel about reiterating guidance given currency depreciation and fuel price movements?

A: Roberto Alvo stated that guidance assumes $90 per barrel jet fuel and R$5.8, and with healthy booking curves and ability to diversify portfolio, they remain confident.

Q: What's the situation with the potential share repurchase program?

A: Roberto Alvo mentioned that share buybacks need shareholder approval, and the Board will evaluate up to $150 million while mitigating impact on share liquidity.

Q: Explain Brazilian market prices and international mix impact on prices?

A: Roberto Alvo said domestic Brazil had a high comparison base from Q4 2023, but traffic remains healthy. Internationally, regional within South America and long haul have strong flows with no concerning segments.

Q: Risk of fleet plan being hampered by Airbus deliveries?

A: Roberto Alvo said no big concern about Airbus deliveries, but monitoring Boeing 787 production and engine supply chain issues.

Q: View on Azul and Gol combination impact on LATAM?

A: Roberto Alvo said it's premature to opine, and need to see mitigations proposed and CADE review.

Q: Status of joint business agreement with Delta Airlines?

A: Roberto Alvo said the JV with Delta is over two years old, focus on customer satisfaction and seamless connectivity, with growth opportunities in various markets.

Q: Thoughts on capital allocation beyond dividends and buybacks?

A: Roberto Alvo said they consider strategic investments as an option but no specific details to report yet.

Q: Demand per segment in terms of corporate and leisure?

A: Roberto Alvo said no significant changes in mix, focusing on on-time performance, Wi-Fi, and frequent flyer program to support corporate demand.