LATAM Airlines Group: Fares take flight, bonds already at cruising altitude

研报英文原文证据摘录

J P M O R G A N

Latin America Credit Research

07 August 2026

LATAM Airlines Group

Neutral

LTMCI

Fares take flight, bonds already at cruising altitude

LATAM delivered better-than-expected 2Q26 results, with fare pass-throughs

proving more effective than anticipated as the group successfully pushed through

substantial fare increases while executing targeted capacity reductions. That said,

the substantial spike in jet fuel prices meant costs grew far faster than revenues,

driving sharp sequential EBITDA and margin compression despite the strong topline performance. Notably, LATAM still generated positive free cash flow even

with the combination of seasonal weakness and one of the most severe fuel cost

environments in recent industry history. Leverage also remains at historically

conservative levels despite ticking up modestly to 1.5x.

While management's guidance revision — which improved on a number of fronts

including EBITDA, liquidity, and leverage — reflects a more constructive view on

jet fuel, we caution that uncertainty remains given continued oil price volatility and

no definitive resolution to the Middle East conflict. Even so, LATAM appears well

positioned to navigate this environment relative to peers — the group's stronger

capital structure, larger scale, greater geographic diversification, structured

hedging program unique among Latin American airline peers, high liquidity

levels, and higher reliance on less price-elastic premium travelers all provide

buffers against further fuel volatility that regional competitors lack. That relative

strength is, however, already evident in trading levels, with LATAM bonds down

only ~2 points from pre-conflict highs and trading ~150bp inside the next closest

Latin American airline — and with bonds already trading close to BBB levels, we

see limited room for further spread compression even as the ratings trajectory

remains constructive. We therefore maintain our Neutral recommendation on both

the 2030 and 2031 bonds.

Strong fare-driven revenue growth was no match for the fuel surge, with

EBITDA margins compressing sharply. Total revenues reached $4.183bn

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