Fitch Ratings has affirmed LATAM Airlines Group (LATAM) Long-Term Foreign Currency Issuer Default Rating (IDR) at 'B+'. In addition, Fitch has affirmed TAM S.A.'s (TAM) Foreign and Local Currency IDRs at 'B+'. Fitch has also affirmed LATAM's unsecured notes at 'B+'/'RR4'.
The Rating Outlook for the corporate ratings has been revised to Positive from Stable.
The rating action encompasses LATAM's 2017 financial performance -- in line with expectations previously incorporated in the ratings -- including improved operational margin at 7%, USD732 million in positive free cash flow generation, debt reductions, lower financial leverage and consistently high liquidity.
The Positive Outlook is supported by Fitch's expectations that the improvement in the company's credit metrics will continue during 2018, reaching an EBIT margin of around 8%, adjusted gross leverage trending to 4.5x and liquidity, measured as cash and unused committed credit lines/latest 12 months (LTM) revenues ratio, remaining around 20%.