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LATAM Airlines raises its earnings forecast for 2026 as fuel prices ease

LATAM Airlines increased its full-year 'core earnings' forecast on Tuesday, after improving fuel prices expectations.

The 'carrier' said that it expects adjusted earnings before interest taxes, depreciation, and amortization (EBITDA), in?2026, to be between $4.1 billion and $4.4 billion. This is up from $3.8 billion to $4 billion it predicted in May.

Latin America's biggest airline estimated a capacity increase of between 9% and 10% for this year.

Chief Financial Officer Ricardo Bottas stated that LATAM is benefiting from an improved fuel price outlook compared to the one assumed three month ago after conflict in Middle East disrupted crude oil flows, causing jet fuel prices to soar.

Bottas stated that "we are updating our (price scenario) to around $150 per barrel for the third quarter, instead of $170 and $130 for fourth quarter instead $150."

He said that although fuel prices are still well above the pre-conflict assumption of $90 per barrel, the improvements in the outlook justified an upgrade.

Bottas stated that the second half of the year would be a challenge due to the uncertainty around the geopolitical environment. However, he added that LATAM is increasingly confident about a gradual improvement in the operating environment as well as its business model.

He said, "There was a testing and we passed it."

LATAM forecasted an adjusted EBITDA range of $4.2 to $4.6 billion in December before the conflict.

Q2 RESULTS

LATAM announced a second-quarter net loss of $125.2 million. This is down from the $241.6 million reported a year ago.

Revenue increased by 27%, to $4.12 billion. Passenger traffic was the primary driver of growth but cargo also contributed to the increase.

Fuel costs almost doubled compared to a year ago, with the airline facing what Bottas described as more than $800 million additional fuel expenses within a single quarter.

He said, "That's the magnitude of challenge we faced in this period."

EMBRAER - E2 EXPANSION IN BRAZIL

LATAM also announced that it will begin operating Embraer E195-E2 aircraft in Brazil between 2026 and 2027, on 42 routes.

LATAM Brazil's Jerome Cadier said the aircraft will support expansion into markets with strong corporate demand. This includes agribusiness, oil-producing areas, and strengthening connectivity via the carrier hubs.

Cadier stated that the company had already evaluated 18 possible destinations for future expansion by April 2027. (Reporting and editing by Gabriel Araujo, Kylie Madry)

(source: Reuters)