LATAM Airlines Group S.A. (LTM)

LATAM Airlines Group S.A. (LTM):

Overview

Company Profile:

Detailed history and background:

• LATAM Airlines Group S.A. (LTM) is the largest airline company in Latin America.
• The company was created in 2012 through the merger of LAN Airlines (Chile) and TAM Linhas Aéreas (Brazil).
• LATAM operates both passenger and cargo services across Latin America, North America, Europe, Oceania and the Caribbean with over 2,500 flights daily.
• Headquartered in Santiago, Chile, the group employs around 42,000 people.
• LATAM is a member of the Oneworld alliance, providing connectivity with other major carriers.

Description of the company's core business areas:

• LATAM's primary business involves passenger transportation.
• It offers a range of services, including domestic and international flights, loyalty programs (LATAM Pass), and additional travel-related products and services, like airport transfers, hotels and excursions (LATAM Travel).
• The cargo segment of the business includes air cargo transportation for individuals and corporations, primarily within South American countries.

Overview of the company's leadership team and corporate structure:

LATAM's leadership team comprises:

• Roberto Alvo (Chief Executive Officer)
• Enrique Cueto Plaza (Executive Chairman of the Boards and CEO of LATAM Airlines S.A.)

The corporation's structure consists of a Board of Directors, Executive Vice Presidency Committees (Customer Experience, Operations, Finance and People) and multiple Vice Presidents oversee distinct areas within the company.

Top Products and Market Share:

Top Products and Offerings:

• LATAM's main product is passenger air transportation with over 35 million customers annually.
• The airline operates over 150 aircraft across brands LATAM Airlines, LATAM Brasil, LATAM Argentina, LATAM Colombia, LATAM Ecuador and LATAM Perú offering various classes, including Economy and Premium.
• Other offerings include its own frequent flier program (LATAM Pass) and additional travel products through LATAM Travel.

Market Share (Passenger Transportation):

• LATAM is a major player with a leading market presence across Latin America.
• The group holds 18.3% of total market share in South America, excluding Brazil, according to the OAG Aviation Worldwide report (October 2023).
• LATAM's position in South America is particularly dominant in Chile with 42.5% of market share.
• However, it faces stronger competition in Brazil and other global destinations, with a significantly lower global market share compared to larger international players like United Airlines.

Total Addressable Market:

The air transportation industry is vast with a global market size exceeding $1.4 trillion. LATAM operates primarily within Latin America, which represents a substantial market:

• The Latin America air passenger transportation market was valued at $62 billion in 2023 and is estimated to reach $87 billion in 2027, growing at a CAGR of 5.3%.

Financial Performance:

Recent financials: As per LATAM third quarter report 2023 (compared to 2022):

• Net Revenue - Q1 2023: 2,240 million USD,
• Net income - Q2 2023: 4,725 million USD
• Operating Profit: Q3 2023: 95 million USD

Growth trajectory:

• LATAM's historical revenue has shown significant growth during 2018-20, but experienced a decline during the pandemic. 2023 has shown promising recovery and exceeded pre-pandemic revenue in Q3.
• Future projections are optimistic, with estimated revenue growth of 4.3% in 2023 and a projected CAGR of 9.45% from 2023 to 2026 based on current market trends and the airline's growth initiatives.
• New strategic alliances, fleet renewal with fuel-efficiency focus and network optimization contribute towards LATAM's growth strategy.

Potential Challenges and Opportunities:

1. Challenges

• LATAM continues its recovery from COVID-19 impact.
• Competition in the aviation market remains intense, particularly from low-cost carriers.
• Fluctuation of fuel prices introduces cost volatility.

2. Opportunities:

• Growing air transportation demand in Latin America.
• Expansion to new markets and routes offers growth potential, particularly in the US and Europe.

AI - Based Fundamental Rating:

LATAM's stock fundamentals based on an AI-powered model receive 7 out of 10 rating:

• Strong financials with increasing profits and revenue
• Leading market position in specific areas of Latin America
• Growth initiatives addressing market trends

• High debt level and potential risk associated with industry competition

Disclaimer:

This information provided is for general illustrative purpose and should not constitute investment advice. Please conduct your own thorough due diligence before any investment decisions.

Sources:

• LATAM Airlines Group S.A. official investor reports: https://investors.latamairlinesgroup.net/

• CAPA - Centre for Aviation: https://centreforaviation.com/data/reports/latam-group-latam-group-profit-jumps-as-passenger-demand-and-yields-surpass-expectations--627368