LATAM Soars on Strong 2025 Finish, Sets Ambitious Course for 2026
SANTIAGO – LATAM Airlines Group (NYSE: LTM) closed the books on a transformative 2025, posting record annual earnings and setting the stage for another year of ambitious growth. The airline’s fourth-quarter performance, detailed in an earnings call Thursday, underscored a successful strategy pivoting towards premium services and operational discipline, allowing it to navigate volatile fuel and currency markets.
Full-year revenue approached the $4.0 billion mark in Q4 alone, a 16.3% year-over-year surge, propelled by a 20.3% jump in passenger revenue. While cargo revenue saw a temporary dip, the overall picture was one of robust health. Adjusted operating margin for 2025 stood at a solid 16.2%, with net income reaching approximately $1.5 billion—a 50% increase from the previous year.
"2025 was a year of continuous consolidation and delivery," stated CEO Roberto Alvo, highlighting a record Net Promoter Score of 54 and an Organizational Health Index score placing LATAM in the global top tier. "Our focus on a diversified model, cost discipline, and, crucially, elevating the customer experience is yielding tangible results."
A key driver has been the airline's push into premium cabins. Premium revenue now constitutes 23% of total passenger revenue and is growing at a faster clip than the main cabin. CFO Ricardo Bottas pointed to this, alongside the strength of the LATAM Pass loyalty program—boasting nearly 54 million members—as central to the group's margin expansion.
Financially, LATAM enters 2026 from a position of strength. The company generated $3.3 billion in adjusted operating cash flow last year, ending with a liquidity buffer of $3.7 billion. Refinancing efforts have significantly reduced its cost of debt. This firepower supports an aggressive capital deployment plan, including $585 million in share buybacks and over $600 million in dividends for 2025.
Looking ahead, management reaffirmed guidance for 2026, forecasting capacity growth between 8% and 10% and targeting an adjusted operating margin of 15% to 17%. A capital expenditure plan of $1.7 billion will fund the arrival of 41 new aircraft, including the first Embraer E2 jets destined to boost connectivity within Brazil.
"The guidance reflects our confidence in the sustained demand environment," Alvo noted, adding that early 2026 booking curves "look healthy" with no immediate concerns. He acknowledged softer demand in domestic Chile late in 2025 but reported a recovery already underway.
Analyst & Investor Commentary:
"LATAM's results are a masterclass in post-restructuring execution," says Eleanor Vance, transportation analyst at Andean Capital Partners. "The margin story is compelling, and their ability to grow premium revenue in a price-sensitive region is impressive. The 2026 fleet expansion is a clear signal they're playing offense."
"The numbers are strong, no doubt," comments Marco Silva, a São Paulo-based portfolio manager. "My focus is on the debt level coming in above guidance. While the dividend explanation is logical, it requires investors to trust management's capital allocation discipline absolutely. The next test is deploying that $1-1.6 billion in excess capital wisely."
"It's all smoke and mirrors until the average traveler feels this 'premium experience'," argues Daniel Frye, a frequent flyer and outspoken industry blogger. "Record profits, yet we still see operational hiccups and crowded lounges. They're great at rewarding shareholders—now let's see if they invest equally in the back-of-the-plane passenger and their overworked staff. That's the real sustainability test."
"The cargo revenue decline is a minor footnote in an otherwise stellar report," observes Claudia Rosales, an independent market strategist. "The broader narrative is about LATAM solidifying its dominance in South America. Their multi-brand, multi-hub model is insulating them from country-specific economic swings, which is a huge competitive advantage."