LATAM Airlines said engine delays remain a greater concern than aircraft OEM supply chain constraints in its fourth quarter 2024 results, published on January 31, 2025. The airline said it remains focussed on potential disruptions for the year ahead.
“We are more closely monitoring the engine situation over aircraft delivery schedules, particularly with Pratt & Whitney and Rolls-Royce," said LATAM Airlines Group CEO Roberto Alvo. "While only a small number of our 787 and A320 family aircraft are currently grounded, we have accounted for this risk in our guidance.”
Alvo said discussions with both engine manufacturers have been “constructive”.
In addition to potential engine delays, Alvo said that the airline expects to take delivery of 22 A320 aircraft during 2025 and is “not concerned” that these aircraft will be delayed. He further stated that this delivery of Airbus aircraft will allow the company to take advantage of “relative strength” going forward. Along with Airbus deliveries, LATAM expects to take delivery of two 787 aircraft from Boeing, Alvo noted that these aircraft are “at risk” of being delayed.
During the company’s earnings call, the airline said it is too “premature” to assess the potential impact of a planned merger between its biggest competitors in Brazil. The airline did however express confidence that antitrust regulator CADE will implement measures to mitigate any negative effects.
"We do not want a more concentrated market with fewer choices for passengers, higher fares, and slower growth," said LATAM’s Brazil head, Jerome Cadier, during the call.
Earlier this month, rival airline Azul and Abra Group, the majority owner of Gol, signed a non-binding memorandum of understanding to explore merging their operations in Brazil. If approved, the deal could see LATAM lose its position as the country’s largest airline by market share, with the combined Gol-Azul entity surpassing its roughly 40% hold on the domestic market.
LATAM Airlines Group recorded a net income of $977 million during 2024, up significantly from 2023's $582 million. During the year, LATAM's total operating revenues reached $13bn, increasing 10.6% on 2023. The airline’s adjusted operating income was $1.66bn during the 12-month period, recording an adjusted operating margin of 12.7%, 1.5 percentage points more than 2023, a record annual figure for the group. The group achieved an adjusted EBITDAR of $3.1bn, representing an increase of 22.7% in comparison to 2023.
During the year’s fourth quarter, the company saw net profit more than triple on an annual basis to $272 million, while revenue rose 4.4% to $3.4bn. LATAM cited a strong increase in cargo revenues, which grew by 29.1% compared to the same quarter of the previous year.
"2024 was a year of great progress for LATAM group, highlighted by strong cash flow generation, and showcasing LATAM's efficiency and remarkable growth in size, network, and operations,” said Alvo.
Commenting on the results, JP Morgan analysts Guilherme Mendes, Julia Orsi, Jamie Baker and James Kirby said: “LATAM reported solid fourth-quarter 2024 results, slightly missing JPM estimates but aligning closely with Bloomberg consensus.”
The airline transported 82 million passengers and increased its consolidated capacity by 15.1% during 2024 compared to 2023, in line with updated guidance published last October.
Domestic traffic in Brazil remained strong, despite a high comparison base from 2023, with stable yields and no signs of weakening demand. The airlines Brazil-Europe market continued to perform well, while regional travel within South America has rebounded significantly, nearing full recovery from the pandemic. No segments currently raise concerns, the airline said.
LATAM has also seen significant capacity growth during the first 18 months of its partnership with Delta, recording an increase in seat count between South America and the US. “There’s a lot of potential for further growth and development in this area. Currently, our focus is on improving customer satisfaction, and while we’re making progress, there’s still room for improvement. Overall, we are very pleased with the deal,” Alvo stated.
The company closed 2024 with $3.53bn in liquidity and achieved an adjusted net leverage of 1.7 times. During the year, the group generated more than $243 million in cash, including $207 million used in its refinancing and the payment of dividends of $175 million.