LATAM Reports Strong 1st Quarter With “Healthy” Demand

LATAM Airlines, the Latin American airline group based in Chile with subsidiaries in multiple South American countries, has reported record-breaking adjusted earnings before interest and taxes (EBIT) margin while also upgrading its outlook for 2024.

Cautious about its short-term future

The group’s management commented that Q1 2024 sustained LATAM’s trend of strong operating and financial performance, resulting in a record-breaking adjusted EBIT margin of 13.9% and an upgraded outlook for 2024.

The group’s revenues during the quarter were $3.3 billion. With expenses of $2.8 billion, its operating income was $440.7 million, and LATAM’s net income was $259.9 million in Q1. While unrelated to the quarter’s results, the shareholders of the company also approved a $175 million (30% of the net income in 2023) dividend, paid on May 16.

Further commenting on the results, LATAM’s management said that while the quarter was strong, it was still cautious as its business is subject to seasonality, especially as the Southern Hemisphere moves forward into the lower demand season in Q2. Still, the strong results during the first quarter of the year showcased that the group is more competitive in the markets where it operates while also being more efficient during a sustained high-demand period.

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Updated outlook for 2024

At the same time, the company’s management expressed positivity about the remainder of the year, with Ramiro Alfonsín, the chief financial officer (CFO) of LATAM Airlines Group, noting that the results of Q1 led to the group revising its 2024 guidance upwards. This includes an expected increase of earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of 10% to 22% Year-on-Year (YoY).

The airline group carried 20.2 million passengers, with an average load factor of 84.4% during the quarter. Its capacity, measured in available seat kilometers (ASK), grew 17.5% to 38.4 billion, while cost per ASK was 3.6% lower, $0.075. LATAM’s fleet had 316 passenger aircraft and 20 Boeing 767Fs. By the end of the year, it plans to have 321 aircraft, having taken delivery of one Boeing 787-9 and two Airbus A321neo aircraft in Q1 2024.

Photo: Markus Mainka | Shutterstock.

As such, LATAM’s outlook for the full year was now revised to revenues between $12.8 billion and $13.1 billion (previously: $12.4 billion to $12.8 billion), with ASKs growing by 14% to 16% YoY. Previously, the group expected its capacity to increase by between 12% and 14% during the year.

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Relisting on the New York Stock Exchange

The Q1 2024 report pointed out that LATAM has begun the process of being relisted on the New York Stock Exchange (NYSE). The airline group’s Board of Directors approved the initiation of the process on April 3, with the company adding that once certain conditions are met, it will review and consider making a final decision.

Photo: Markus Mainka | Shutterstock.

The NYSE began proceedings to delist LATAM’s American Depository Shares (ADS) in May 2020, completing the process on June 9, 2020, when the shares, under the ticker LTM, became unavailable for trading. At the time, LATAM was in the middle of its Chapter 11 bankruptcy proceedings, with the bankruptcy case being closed on June 13, 2023, after the US Supreme Court declined to review any appeals. LATAM exited Chapter 11 bankruptcy in November 2022.

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