Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LATAM Airlines Group SA (LTM, Financial) increased its capacity by 51% while maintaining a high load factor, demonstrating operational efficiency.
- The company transported 21.1 million passengers in the third quarter, a 7.1% increase compared to the same period last year.
- LATAM Airlines Group SA (LTM) reported an adjusted EBITDA of $828 million with a 25.2% margin, marking historical results.
- The company achieved a net income of $301 million for the quarter, bringing year-to-date net income to $705 million, a 41.3% increase year over year.
- LATAM Airlines Group SA (LTM) successfully refinanced $1.4 billion of debt at a lower interest rate, contributing to significant interest savings for 2025.
Negative Points
- Consolidated revenues decreased by 7.7%, influenced by lower jet fuel prices and currency depreciation in some markets.
- The company faces challenges with overcapacity in the Colombian market, although signs of moderation are emerging.
- LATAM Airlines Group SA (LTM) anticipates a slight decrease in liquidity by year-end due to a $200 million cash prepayment of debt.
- The recent refinancing will have a one-time negative impact of approximately $134 million on the fourth quarter's income statement.
- Currency volatility, particularly the depreciation of the Brazilian real, impacted the company's financial performance.
Q & A Highlights
Q: Why doesn't LATAM Airlines report earnings per ADS, and what is the appropriate tax rate to use?
A: Ramiro AlfonsĂn, CFO, explained that LATAM Airlines has significant net operating losses that can be utilized, making it difficult to forecast a consistent tax rate. He acknowledged the importance of EPS as a metric and indicated that the company might start presenting EPS figures in the future to reflect their strong capital structure.
Q: What impact might the new US administration have on LATAM Airlines?
A: Roberto Alvo, CEO, noted that during the previous Trump administration, there were no significant impacts on LATAM's operations. He expressed confidence in managing currency volatility and highlighted that 60% of LATAM's revenues are dollar-denominated, which provides some insulation against potential policy changes.
Q: Can you explain the drop in RASK and discuss capital allocation plans?
A: Roberto Alvo, CEO, attributed the RASK drop to currency depreciation, particularly the Brazilian real, and a shift in the mix towards international operations. Despite this, he emphasized the positive performance in local currency terms. Ramiro AlfonsĂn, CFO, mentioned that the company is considering shareholder returns, including dividends or buybacks, given their strong cash flow and balance sheet.
Q: What is the current status of LATAM's executive roles following Ramiro's transition to CCO?
A: Roberto Alvo, CEO, stated that the executive committee has been stable, and they are in the process of finding a replacement for Ramiro's previous role as CFO, considering both internal and external candidates.
Q: Could you provide details on LATAM's international segment and fuel hedging strategy?
A: Roberto Alvo, CEO, explained that more than half of LATAM's international capacity uses wide-body aircraft, with narrow-body aircraft primarily serving regional routes within South America. Ramiro AlfonsĂn, CFO, noted that LATAM uses asymmetrical collars for fuel hedging to benefit from price reductions while limiting upside gains, maintaining a consistent hedging policy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
