LATAM Airlines Group S.A. - ADR

Strong Q3 profitability despite heavy jet fuel costs (good) - Total revenues +18.4% YoY to ~$4.6bn; passenger revenues +17.8% YoY driven by +7.7% capacity and +9.4% passenger RASK (+~0.83). - Yields up +11.7%; passenger load factor 83.7% (premium/overall demand still healthy). - Costs: passenger CASK ex-fuel +3.5% YoY (non-fuel control intact). - Earnings: Adj. EBITDA ~$1.1bn (24% margin); Adj. operating income ~$573m (12.5%); net income ~$441m (9.6% margin) (notably +16% YoY; prior-year had ~$105m one-off finance costs).

Fuel remains the dominant headwind; guidance reflects further deterioration in Q4 (bad) - Fuel costs: jet fuel price surge materially hit results; during Q3 the group cited an ~$594m YoY total fuel cost increase (and in the CEO remarks: ~$520m of additional fuel price impact captured in the bridge). - For FY2026 outlook, LATAM updated guidance due to a worse jet fuel assumption: - +>$900m additional cost in Q4 vs 2025, and +>$2bn full-year (purely from higher jet fuel prices). - Despite this, management expects double-digit adjusted operating margin for the year (i.e., they are still forecasting resilience, not a margin collapse).

Updated FY2026 financial forecast: cash generation still expected (opportunity/positive) - Adj. EBITDA guidance: $3.9bn to $4.1bn (essentially in line with $4.1bn achieved in 2025 per the call). - Adj. levered free cash flow: at least ~$1.2bn (key investor takeaway: they expect substantial cash generation even with the fuel shock). - Cash flow discipline continues: ~$900m operating cash flow in Q3; overall >$300m cash generated in the quarter before capital allocation.