Latin American Airlines Initiation | Let's Fly Away - LTM, CPA, AERO & VLRS

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Latin American Airlines Initiation | Let's Fly Away - LTM, CPA, AERO & VLRS

& VLRS. Our preference is for carriers with a larger proportion of high- 2.0x

margin long-haul, and ability to grow them. On LTM (Buy), we like its oil hedges, regional leadership, 1.0x

and premium growth opportunities. On CPA (Buy), to us the market underestimates the strength & 0.0x Copa LTM AeroMex Volaris

cost advantages of its business model. We are more cautious on Mexican carriers AERO & VLRS, . 2026E 2027E

both Hold-rated, as we believe that a potential positive outcome in USMCA discussions could be Source: Jefferies ests, FactSet

offset by our expected passenger traffic deceleration in Mexico due to weak economic growth. For a more detailed discussion on each

company, please refer to the company pagesAttractive passenger traffic growth prospects, medium term. LatAm accounts for only c5% of

global air passengers (0.6 trips per capita pa, vs 1.5-2.5 seen in other markets). Our Global airlines

team's traffic forecast calls for c6% CAGR passenger growth in LatAm in 2026-30, outpacing other

regions, and underpinned by LT growth in regional economies and sizeable airport expansions.

Supportive competitive environment. We expect LatAm-listed carriers to focus on higher-margin

regional and long-haul flows over domestic traffic. The industry's competitive environment looks

more rational than in prior cycles as post-Covid restructurings have refocused carriers on

profitability over volume. This has allowed players to swiftly raise fares to protect margins in the

wake of recent oil price spikes while keeping manageable costs (CASM ex-fuel) under control.

But some near-term question marks... 1H26 air passenger growth has been sustained, despite Alejandro Anibal Demichelis * | Equity Analyst