LATAM Airlines Group SA Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Linenberg - Deutsche Bank - Analyst : Oh yeah, hey, good morning. Thanks. Two questions. Congrats on the really solid results. Roberto, I want to pose the first question to you. Just a few weeks ago we had the IMF lower global GDP growth by 0.5%, and I've, in my professional career, I've never seen a revision of that magnitude. It's usually 1 to 2 [tents]. We've seen airlines all around the world withdraw guidance, many guide to a much more challenging outlook, and yet you took your numbers up. You took margins up, you took guidance up, and I'm curious how much of that is just a function of your primary market and your competition and the fact that, the pressure that we're going to see on the global economy will be much more impactful to some of the weaker carriers. And I'm curious if you know that may be your thinking here that if things do slow down, it will impact everybody, but it will impact the weaker carriers disproportionately more so creating more opportunities for someone like yourselves, the thinking that the rich get richer. Is that underlying as you think about your forecast that even if things slow, that LATAM will be able to do even better than the competition? Because right now you're the only carrier out there, who at least seems to be pointing to a better outlook versus most other carriers. Thanks.

Question: Michael Linenberg - Deutsche Bank - Analyst : Yeah, that's what I'll do. I'll do a quick second.

Question: Michael Linenberg - Deutsche Bank - Analyst : Great. Thanks for that thorough response. And then just my second question, this is just a little bit more nuanced. Across the region, I know in the past, Colombia, domestic had been one of the weaker markets, Maybe things are stabilizing there as you look across your region, where are the strong points? Where are the weak points? I know we've sort of heard that, Argentina now is maybe becoming one of the better, if not the best performing markets in the region. Just any color on that, how things have, sort of evolved over, since the last quarter.

Question: Michael Linenberg - Deutsche Bank - Analyst : Great. Thanks for that comprehensive rundown. Thank you.

Question: Gabriel Rezende - Itau BBA - Analyst : Okay. Hi, good morning, everyone. Thanks for the call. Regarding the guidance, it's actually a follow up to the previous question. I was just wondering how much have you guys been positively surprised by the first few numbers as we have been just trying to understand whether the better guidance for the year reflects a better first quarter. And the next nine months would be pretty much the same as you guys were expecting or if you guys are seeing a better demonstrated figures in the coming quarters as well. Just trying to understand what you have put into the guidance in that. And also regarding the guidance, you are posting a [gas ex] that is already below what you are getting for the full year. So the overall feeling that your guidance might have some room to be upset. Am I correct? Those are my two questions. Thank you.

Question: Gabriel Rezende - Itau BBA - Analyst : Okay, that's clear Thank you very much.

Question: Jen Spiece - Morgan Stanley - Analyst : Yes, hello, thank you for taking my questions and congrats on the strong results. I just want to follow up on the previous question. Basically, on the cost print you had this quarter and the guidance you're providing for the full year. I was looking that you had some benefit from like lower maintenance costs. You explained in your release that part of it is driven by a reversal of pre-delivery -- redelivery provisions due to acquisition of aircraft. I think it was like USD32 million. That obviously is probably not sustainable, right? So are there any other items we need to adjust for and also you had in other expenses some apparently some FX benefits. If you could maybe elaborate on how what percentage of those expenses are denominated in local currency, it would be quite useful.

Question: Jen Spiece - Morgan Stanley - Analyst : Okay, perfect, and the 0.2, you mentioned on your caskets you benefit from the FX, that's year by year, right?

Question: Jen Spiece - Morgan Stanley - Analyst : Okay perfect. Thank you. I appreciate it.

Question: Joel Brizo - Goldman Sachs - Analyst : Yes, hey, good morning, everyone. Thanks for taking my questions. Congrats on the results. I have two quick questions, and one follow up. So, on the guidance itself, you guys are not expecting even better than expected level ratio by the end of this year. So, I just wanted to wanted to understand what would make you guys consider announcing an extraordinary dividend. I know this is a fluid situation right in the macro globally, but you, the leveraging the leverage path seems to be on track, right, and you guys guided for below two times the average in your investor day so this opens room for maybe an extraordinary dividends. I just wanted to get a sense on that. My second question is around the selling shareholders, right? If you guys could provide an update on their willingness and timing of those guys potentially selling more shares into the market. And finally, just a quick follow up on the guidance, your just your expectations remain change it. I just wanted to double check if that accounts for the hedges you guys undertook in the period or that is excluding hedges and then if you could provide what would be the adjusted jet fuel accounting for hedges, that would be nice as well. Thank you very much, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, LTM.SN - Q1 2025 LATAM Airlines Group SA Earnings Call

Question: Joel Brizo - Goldman Sachs - Analyst : Yeah. Well, just to double check whether the jet fuel price you guys provided in the guidance account for the hedges you guys took or if there might be some upside to that price as you guys maybe did hedges in the following, in the following jet fuel environments.

Question: Joel Brizo - Goldman Sachs - Analyst : Thank you very much, super clear guys, have a good one.

Question: Ewald Stark - BICE - Analyst : Thanks for taking my question and congratulations for the results. My first question is with regard to fields in international segment which were pretty strong. I would want to ask him what do you expect going forward. And the second question is about growth expectations for Brazil which were listed against the previous guidance, but up to this point, industry figures provided by [AAC] and LATAM figures show modest growth in the first quarter. So when you could expect that as a growth will convert to the guidance of LATAM airlines. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, LTM.SN - Q1 2025 LATAM Airlines Group SA Earnings Call

Question: Ewald Stark - BICE - Analyst : Yeah, okay, perfect. Just following up on that last question on that last answer, I want to know, how do you see competition in Brazil as other competitors such as GOL or Azul are expecting higher growth rates in capacity for the passenger segments. I know that GOL and Azul don't disclose, don't break down domestic and international air travel, but it seems like they're expecting to grow at higher rates than Americans.

Question: Ewald Stark - BICE - Analyst : Okay, thanks. Have a nice day.

Question: Stephen Trent - Citi - Analyst : Good morning, gentlemen, and thanks very much for taking my question. Actually, the first question I have is maybe a follow up to the gentleman that was just speaking. When we think about Brazil's domestic market and you look at your guidance, asking another way, are you basically assuming that sort of the competitive environment stays steady state for the rest of the year vis a vis where it is today? And no blowback from this ticket fraud stuff from Despegar or you know anything like that was just love to hear what you're thinking about that high level? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 1:00PM, LTM.SN - Q1 2025 LATAM Airlines Group SA Earnings Call

Question: Stephen Trent - Citi - Analyst : Great, appreciate that. And just a quick follow up, I definitely appreciate the color you gave on FX, assuming it's going to be a bit weaker. Any view on, why there was you didn't adjust fuel guide? I know you've got hedges there about, USD214 a gallon for the air. You did USD2.80 and one Q. And the hedge versus unhedged difference was just a penny a gallon with sort of. Just love to hear, high level sort of the that USD90 per barrel boggy that's included in the guide. Thank you.

Question: Stephen Trent - Citi - Analyst : Okay, I appreciated that. Thank you.

Question: Pablo Benavides - Barclays - Analyst : Hi, thanks for taking my question. I just wanted to pick your brain on. It seems that US carriers are full on capacity.

Question: Pablo Benavides - Barclays - Analyst : Hello, can you hear me now? Okay.

Question: Pablo Benavides - Barclays - Analyst : Perfect. Okay, my question is regarding the, you read through from US airlines pulling out capacity in general. Have you seen any material impact on the international routes you operate? Is this an opportunity for you to increase capacity or how you plan to navigate on this condition? That's my first question. And my second question is if you can provide some color in terms of the demand from transatlantic routes and within each point of sale. Thank you.

Question: Pablo Benavides - Barclays - Analyst : Perfect, thank you.

Question: Guilherme Mendes - JP Morgan - Analyst : Hey, good morning, Roberto Ricardo and Andres. Thanks for taking my question. Two quick ones. The first one you mentioned that demand remains good. So the outlook overall remains pretty solid, but assuming some kind of demand deterioration, what kind of capacity and fleet flexibility would you have in terms of the delivery schedule from Airbus and Boeing? And the second one, a follow up on Brazil domestic, a lot of talks on the potential M&A between the zoo and go, and if I have any preliminary views on how LATAM could be impacted? Thank you.

Question: Guilherme Mendes - JP Morgan - Analyst : That's perfect, Roberto. Thank you very much.