LATAM Airlines Group (NYSE:LTM) reported strong fourth-quarter and full-year 2025 results, with management emphasizing continued margin expansion, network growth, and a focus on customer experience and premium offerings. Executives also provided 2026 guidance calling for additional capacity growth and sustained profitability despite fuel and currency volatility.
Fourth-quarter results: revenue growth led by passenger demand
CFO Ricardo Bottas said LATAM delivered “solid financial performance” in 4Q 2025, with improvements across key metrics. Total revenue reached nearly $4.0 billion, up 16.3% year-over-year. Passenger revenue increased 20.3%, driven by strong demand and capacity growth, while cargo revenue declined 9.6% due to what management described as an unusually strong comparison base in 4Q 2024.
- Adjusted EBITDA: $1.1 billion, up 30.4% year-over-year
- Adjusted operating income: $661 million, up 42.7%
- Net income: $484 million, up 78.1%
- Adjusted operating margin: 16.7%
On costs, Bottas noted unit costs excluding fuel increased, with passenger CASC ex-fuel at $0.0004 in the quarter. He attributed about $0.0002 of that to local currency appreciation and another $0.0002 to “non-recurring costs in wages and benefits,” including a one-time bonus approved in the fourth quarter. For the full year, he said passenger CASC ex-fuel was also $0.0004, “fully within” the updated 2025 guidance range provided in November.
Management highlighted that unit revenue growth outpaced unit cost increases. Passenger RASC rose 11.7% while passenger unit costs ex-fuel increased 7.9%, which Bottas said reflected LATAM’s ability to sustain its value proposition.
Network trends: disciplined capacity deployment across markets
Management described a balanced supply-demand environment across LATAM’s network in 4Q, with consolidated capacity up nearly 8% and load factor around 85%. Bottas provided detail across key segments:
- Brazil domestic: capacity increased 12%, with load factor up 0.7 percentage points and passenger RASC up 14% in U.S. dollars (10% in local currency).
- Spanish-speaking domestic affiliates: passenger RASC grew 23% in dollars (nearly 20% in local currency), supported by disciplined capacity allocation and a 1.7 percentage point increase in load factor.
- International: capacity and passenger volumes grew at a high single-digit pace. While load factor declined year-over-year, it remained at 85%. Unit revenues increased 6%, supported by network diversification and execution.
In the Q&A, CEO Roberto Alvo said demand was “strong and stable” across most business areas in the quarter, while noting domestic Chile was “a little bit slower” late in the year compared with 2024, but had already shown recovery in the first months of 2026. Alvo also said LATAM’s booking curve for early 2026 “looks healthy,” with no demand concerns “at least for the first quarter.”
Customer experience, premium mix, and loyalty program
Alvo framed 2025 as “a year of continuous consolidation and delivery,” crediting execution, customer experience initiatives, a disciplined cost approach, and a diversified business model. He said LATAM reached a record full-year Net Promoter Score (NPS) of 54 points, up three points versus 2024, and that the Organizational Health Index reached 83 points, placing the company in the top decile of a global benchmark for the first time.
Executives emphasized premium initiatives and associated revenue growth. Bottas said premium revenue represented 23% of passenger revenue in 2025 and was growing faster than passenger revenue overall: passenger revenue rose 12% year-over-year while premium revenue increased 14%.
Management highlighted product upgrades and planned enhancements, including:
- A renewed business-class experience
- Signature Check-in and a new Signature Lounge in Lima
- Wi-Fi investments on the widebody fleet beginning in 2026
- A new Premium Comfort cabin planned for 2027
- Planned investment in a new lounge in Guarulhos
LATAM also cited external recognition, including TheDesignAir’s “most improved brand” award, along with prior awards such as Skytrax Best Airline in South America, the APEX Five Star Global Airline Award, and Air Cargo News’ Air Cargo Airline of the Year.
On loyalty, Bottas said LATAM Pass had nearly 54 million members and accounted for nearly 60% of passenger revenue, calling it the largest airline loyalty program in the region. For premium travelers specifically, management said NPS reached 58 points, the highest the group has recorded.
Full-year 2025: higher margins, cash generation, and capital returns
For 2025, LATAM reported adjusted operating margin of 16.2% and adjusted EBITDA of almost $4.1 billion. Net income totaled approximately $1.5 billion, translating to earnings per ADS of $4.95, which management said represented 50% growth versus 2024.
Operationally, Alvo said the group carried more than 87 million passengers in 2025, including 23 million in the fourth quarter. Capacity increased 8.2% for the year (7.7% in 4Q), with a full-year load factor of 84.4%. LATAM received 26 aircraft during 2025, including seven in the fourth quarter, and ended the year with a fleet of 371 aircraft, up 7% versus 2024. The company launched 22 new routes during the year, including 15 international routes.
Cash generation was another focal point. Bottas said adjusted operating cash flow reached $3.3 billion in 2025. LATAM invested $1.5 billion in CapEx net of financing, covered interest payments, and generated about $1.4 billion in cash after business commitments. The company executed two share repurchase programs totaling $585 million and paid $400 million in interim dividends in 4Q, bringing total dividends for 2025 to close to $605 million. After these items, Bottas said LATAM still produced almost $200 million of positive cash generation for the year.
Liquidity reached $3.7 billion at year-end 2025, which management said was 25.7% of last 12 months’ revenue and near the top of its policy range. Adjusted net leverage was 1.5x, below the company’s maximum policy level of 2.0x. Bottas also said refinancing activities in 2024 and 2025 reduced LATAM’s weighted average cost of debt from 10.7% in 2023 to 6.6% by the end of 2025.
In Q&A, management addressed net debt coming in at $5.9 billion, about 8% above prior guidance. Bottas said the difference was primarily due to the decision to distribute $400 million in dividends, which occurred after the guidance was provided. Alvo clarified that the company advanced a significant portion of the minimum statutory dividend in December (rather than paying it after the shareholder meeting, typically in April), affecting net debt as of Dec. 31. He also said guidance incorporates minimum statutory dividends only, with any additional distributions considered separately under the company’s financial policy framework.
Management said nearly all debt is denominated in U.S. dollars, with one local Chilean bond of about $160 million in local currency.
2026 outlook: continued growth, heavy aircraft deliveries, and financial targets
LATAM reiterated guidance published in December for 2026, calling for capacity growth of 8% to 10% and an adjusted operating margin of 15% to 17%. The company also expects adjusted leveraged free cash flow to exceed $1.7 billion, up from $1.5 billion in 2025, and expects liquidity above $5 billion by the end of 2026.
On capital deployment, Bottas said that under the company’s financial policy ranges, LATAM expects to have between $1.0 billion and $1.6 billion available in 2026 after CapEx and minimum dividend payments for additional capital allocation initiatives, subject to board decisions.
For CapEx, Bottas said the 2026 plan is about $1.7 billion net of financing. LATAM expects to receive 41 aircraft in 2026, including three widebodies and the first 12 Embraer E2 aircraft. In Q&A, Alvo said the E2s will be deployed in Brazil’s domestic market, based out of hubs including Guarulhos, Brasília, and Fortaleza, enabling new destinations and additional frequency on certain routes.
Management also discussed currency dynamics, with Alvo stating that, on balance, stronger local currencies versus the U.S. dollar are net positive for LATAM, even though they can create cost headwinds. On cargo, executives said they were not seeing demand issues that would suggest materially different unit revenues, while noting that currency appreciation could influence import demand and mix over time.
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.
