LTM Q2 Earnings Beat on Strong Passenger and Cargo Revenues

LTM's Passenger Revenues Rise Sharply

Passenger revenues, accounting for 86.4% of operating revenues, grew 27.9% year over year to $3.61 billion. Premium demand remained strong and premium offerings contributed 29% of passenger revenues, up two percentage points from the first quarter.

Passenger revenue per available seat kilometer, or PRASK, increased to 8.1 cents from 6.9 cents a year earlier. The increase reflected LATAM’s ability to implement higher fares while maintaining traffic growth across its network.

LATAM's Cargo Business Supports Growth

Cargo revenues, representing 12.2% of the top line, increased 21.8% year over year to $510 million. Cargo yields rose 17.8% year over year, while cargo traffic improved 3.4%.

The group transported 261,000 tons, up 1.9% from the prior-year quarter. Other income surged 63.9% year over year to $59 million, aided by growth at LATAM Travel and higher revenues from non-airline LATAM Pass products.

LTM's Capacity Growth Outpaces Traffic

Consolidated capacity, measured in available seat kilometers, increased 8.9% year over year to 44.5 billion. Passenger traffic rose at a slower rate, resulting in a 1.7-percentage-point decline in load factor to 81.8%.

The company transported 21.1 million passengers, up 2.5% year over year. International capacity increased 11.8% year over year, while capacity in domestic Brazil and the domestic Spanish-speaking countries grew 5.7% and 5.3%, respectively.

LATAM's Fuel Costs Pressure Margins

Total adjusted operating expenses increased 38.5% year over year to $3.96 billion, primarily because of higher jet fuel costs and network expansion. Aircraft fuel expense surged 93.1% year over year to $1.71 billion.

The average all-in fuel price, including hedges, climbed 81.3% year over year to $194.50 per barrel, while consumption increased 6.8%. Consequently, adjusted operating income declined 46.3% year over year to $227 million and adjusted operating margin contracted 7.5 percentage points to 5.4%.

LTM's Loyalty Program Strengthens Revenue Quality

LATAM Pass reached 56 million members, representing growth of 9% year over year. Elite membership increased 26%, while sales to elite members through third parties rose 48% year over year.

LATAM Pass members generated 67% of passenger revenues during the quarter. The loyalty program, premium offerings and integrated cargo operations helped the company maintain profitability despite the sharp increase in fuel prices.

LATAM's Liquidity and Fleet Expand

LTM generated adjusted operating cash flow of $476 million during the quarter and ended June with cash and cash equivalents of $2.65 billion. Including $1.58 billion in undrawn revolving credit facilities, total liquidity was $4.23 billion.

Adjusted net leverage remained at 1.5 times. LATAM received nine aircraft during the quarter and ended the period with 383 aircraft, comprising 363 passenger aircraft and 20 cargo freighters.

LTM Updates Its 2026 Outlook

LATAM raised its 2026 adjusted EBITDA guidance to $4.10-$4.40 billion from the previous forecast of $3.80-$4.20 billion. The updated outlook assumes jet fuel prices of $147 per barrel in the third quarter and $130 in the fourth quarter.

The company expects 2026 revenues of $17.30-$17.70 billion (prior view: $15.5-$16.0 billion) and total capacity growth of 9%-10% (prior view: 8-10%). Adjusted operating margin is projected to be in the range of 12%-13% (prior view: 15%-17%), while adjusted levered free cash flow is expected to be at least $1.30 billion.

Currently, LATAM Airlines carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q2 Performances of Other Transportation Companies

Delta Air Lines (DAL) reported second-quarter 2026 earnings (excluding 88 cents from non-recurring items) of $1.56 per share, beating the Zacks Consensus Estimate of $1.51. Earnings declined in double digits (% wise) from a year ago as sharply higher fuel costs pressured profitability.

Revenues rose on a year-over-year basis to $17.67 billion but missed the consensus estimate of $17.76 billion. Broad demand strength lifted adjusted total revenue per available seat mile, or TRASM, 12.4%, while premium and diversified revenue streams continued to expand.

United Airlines Holdings, Inc. (UAL)reported second-quarter 2026 adjusted earnings of $1.99 per share, down 48.6% year over year but above the Zacks Consensus Estimate of $1.92 by 3.7%.

Operating revenues rose 16% to $17.67 billion and were essentially in line with the $17.68-billion consensus mark. A 12.1% increase in total revenue per available seat mile, or TRASM, and broad-based gains across premium, loyalty and cargo revenues supported the top line despite sharply higher fuel costs.

J.B. Hunt Transport Services, Inc. (JBHT) reported second-quarter 2026 earnings of $1.91 per share, up 45.8% from $1.31 a year ago. The figure beat the Zacks Consensus Estimate of $1.71 by 11.7%.

Operating revenues climbed 19.4% year over year to $3.50 billion and surpassed the consensus mark of $3.19 billion by 9.5%. Higher volumes and pricing across several businesses supported growth, led by a 10% increase in Intermodal loads.

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