Latam Airlines Group S.a. (LTM)

Price$50.68Cached quoteAs of 2026-09-10 20:45 UTC

AI: Fair-priced

Price checkThe shares look fairly priced because solid cash returns are offset by fuel risk and debt.

Each New York American depositary share, or ADS, represents 2,000 common shares. FY2025 diluted earnings of $0.002477 per common share equal about $4.95 per ADS, or roughly 11 times FY2025 earnings. A market value near $15.4 billion plus June net debt of $6.4 billion gives enterprise value—what buyers effectively pay for the business—near $21.8 billion. That is about 5.1 times last-twelve-month adjusted EBITDA, profit before interest, taxes, depreciation and amortization, of $4.31 billion. Management guides adjusted levered free cash flow—cash after leases, investing and interest—of at least $1.3 billion, more than 8% of market value. Reasonable, not a deep bargain. SEC+4StockAnalysis.com+4latamairlinesgroup.net+4

Big pictureLATAM has rebuilt profits and cash generation, but the recovery has not faced a full downturn.

Revenue rose from $3.9 billion in 2020 to $14.3 billion in 2025, while operating income swung from a $4.5 billion loss to a $2.34 billion profit. Operating cash flow reached $3.74 billion in 2025; subtracting $1.78 billion of capital spending leaves roughly $1.96 billion of simple free cash flow, versus about $1.78 billion in 2024 and $1.47 billion in 2023. That three-year cash record is encouraging. Still, bankruptcy-era losses show the business is cyclical, and 2026’s fuel spike cut second-quarter profit 48% even as revenue grew 28%. SEC+2SEC+2

Business strengthLiquidity and a falling share count help owners, while debt still limits the margin of safety.

Cash and equivalents ended 2025 at $2.15 billion against $8.09 billion of total debt. By June 2026, liquidity including an undrawn credit line was $4.23 billion, while net debt was $6.37 billion and adjusted net debt equaled 1.5 times recent adjusted EBITDA. Capital allocation has turned owner-friendly: 2025 cash dividends were $605 million, and two repurchases cost about $585 million. Weighted diluted shares fell about 4% year over year by the second quarter of 2026. That reverses dilution, but the 2022 restructuring had multiplied the share base, making older per-share comparisons unreliable. SEC+3SEC+3SEC+3

What could change the storyCheaper fuel and sustained demand could unlock upside; another fuel shock would quickly compress profits.

Management’s 2026 outlook assumes adjusted EBITDA of $4.1 billion to $4.4 billion after reducing expected jet-fuel prices to about $150 per barrel in the third quarter and $130 in the fourth. The strongest bull case is that premium and international demand stay firm while fuel normalizes, letting free cash flow exceed guidance and the new 5% buyback shrink shares further. The bear case is concrete: the second quarter absorbed more than $800 million of extra fuel cost and profit nearly halved. A return toward May’s $170 fuel assumption would weaken cash returns and justify a lower multiple. Reuters+1

AI: News

Fuel shock forced guidance cutLATAM cut its 2026 profit outlook after jet fuel surged, exposing how quickly costs can overwhelm pricing.

On May 5, LATAM cut 2026 adjusted EBITDA guidance to $3.8 billion-$4.2 billion from $4.2 billion-$4.6 billion. The company expected more than $700 million of extra second-quarter fuel expense if jet fuel averaged $170 per barrel, versus a prior annual assumption near $90. First-quarter net income had still risen 62% to $576 million, so the change was mainly an external fuel-cost shock rather than collapsing demand. The event materially lowered expected cash generation and showed how exposed airline economics remain to energy prices. Reuters

Brazil capacity trimmedLATAM slowed Brazilian growth and raised fares, showing management actively protected margins during the fuel spike.

On June 8, LATAM’s Brazilian unit said July capacity would be cut by about 3%, following similar June reductions, because of fuel costs. Even after the trims, the unit still expected roughly 11% year-over-year growth. Brazilian ticket prices had risen about 20% to 30%, but higher fares take time to reach revenue because many tickets are sold in advance. The cuts reduce fuel use and support pricing, but they also slow growth. Any stock-price effect is uncertain; the operational response matters more than timing alone. Reuters

Guidance rebound and buybackEasing fuel assumptions lifted guidance, while a new buyback authorization strengthened the case for per-share value growth.

On August 4, LATAM reported second-quarter revenue of $4.18 billion, up 27.6%, while adjusted EBITDA fell 16.1% to $713 million and parent-company profit fell 48.2% to $125 million. It raised 2026 adjusted EBITDA guidance to $4.1 billion-$4.4 billion as expected jet-fuel prices eased. Shareholders had also approved a new repurchase program for up to 5% of shares on August 3. The U.S.-listed shares rose about 3.5% the next session; that timing is consistent with a positive response, but does not prove causation. Reuters+2SEC+2

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Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	$14.27B	$12.83B	$11.64B	$9.36B	$4.88B	$3.92B	$10.07B	$9.90B	$9.61B	$8.99B	$9.74B
Gross profit	$4.16B	$3.27B	$2.82B	$1.26B	−$79.5M	−$589.6M	$2.12B	$2.12B	$2.33B	$2.02B	$2.10B
Gross margin	29.16%	25.46%	24.26%	13.45%	−1.63%	−15.03%	21.04%	21.44%	24.28%	22.49%	21.59%
Operating expenses	$8.48B	$8.27B	$7.83B	$7.19B	$4.02B	$3.65B	$6.42B	$6.29B	$5.89B	$6.05B	$6.61B
Operating income	$2.34B	$1.54B	$1.08B	$1.21B	−$3.43B	−$4.53B	$753.1M	$940.5M	$861.7M	$493.3M	$448.5M
Operating margin	16.37%	12.01%	9.26%	12.94%	−70.14%	−115.46%	7.48%	9.50%	8.96%	5.49%	4.61%
EBITDA	$4.07B	$2.99B	$2.28B	$2.39B	−$2.26B	−$3.14B	$2.22B	$2.31B	$2.24B	$1.45B	$1.38B
EBITDA margin	28.54%	23.29%	19.62%	25.54%	−46.28%	−80.05%	22.08%	23.38%	23.29%	16.17%	14.20%
Net income	$1.46B	$977.4M	$581.5M	$1.34B	−$4.65B	−$4.56B	$195.6M	$341.8M	$154.4M	$110.7M	−$178.7M
Net profit margin	10.26%	7.62%	5.00%	14.28%	−95.27%	−116.10%	1.94%	3.45%	1.61%	1.23%	−1.84%
Basic EPSper basic share	$0.00	$0.00	$0.00	$0.01	-$7.66	-$7.50	$0.31	$0.51	$0.18	$0.13	-$0.40
Diluted EPSper diluted share	$0.00	$0.00	$0.00	$0.01	-$7.66	-$7.50	$0.31	$0.51	$0.18	$0.13	-$0.40