LATAM Airlines Group S.A. (LTM) Q3 2026 Earnings Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the third quarter 26 LATAM Airlines Group Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Before I turn the call over to management, I would like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations. And as such, constitute forward-looking statements. Any matters discussed today that are not historical comments regarding the company's future plans, objectives, and expected performance or guidance are forward-looking statements. These statements are based on a range of assumptions that LATAM believes are reasonable but are subject to uncertainties discussed in detail in the published 20-F 2026 guidance earnings release. Financial statements, and related CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. And if there are any members of the press on the call, please note that for the media, this is a listen only call. I will now hand the conference over to Ricardo Bottas Dourado. CFO. Mr. Bottas, please go ahead.

Ricardo Bottas Dourado: Hello, and good morning. Welcome to our third quarter 26 conference call, and thank you all for joining us today. I am Ricardo Bottas, Group CFO, and here with me are Roberto Alvo, our CEO, and Andre Del Valle, corporate finance director. I will hand it over to Roberto to share his opening remarks.

Roberto Alvo Milosawlewitsch: Morning, and thank you, Ricardo. The third quarter 26 was another strong demonstration of LATAM's ability to deliver solid financial results even in such challenging operational environment. Total revenues increased by 18.4% year over year supported by this disciplined capacity management and a 9.4% increase in passenger unit revenues demonstrating LATAM's group's ability to retain high profitability on the back of good commercial growth, customer preference, and consistent cost control. During the quarter, LATAM Group continued to improve the customer experience with NPS reaching 55 points, 1 point above the same period last year. This focus on customers together with a robust network and the loyalty program allowed the premium revenue growth to outpace total revenue growth by 5 points. Costs remained under control, reflecting the group's continued focus on efficiency. CASK ex-fuel variations compared to last year are explained almost completely by rate variations, particularly the appreciation of the Brazilian real. During the quarter, jet fuel prices remained elevated, which represented an additional cost impact for the group of approximately $520 million. Despite this impact, LATAM continued delivering profitable results posting double digit adjusted operating margins again. On the financial side, LATAM's consistent progress was also recognized by S and P Global Ratings and Fitch Ratings, with both agencies upgrading LATAM's credit rating to BB+. which has allowed us to meet our financial policy aspiration. Both upgrades occurred in the middle of this volatile environment, providing further evidence of LATAM's group's robust business model and its ability to remain profitable across different market conditions. As we continue to navigate these volatile times, we remain focused on strengthening the business for the future. The month of October, LATAM received its first 2 Embraer e 25 e 900 e 195-E2 aircraft with operations expected to begin in the Brazilian domestic market on November 30. This represents an important milestone in our fleet's strategy providing greater flexibility to deploy the right aircraft across the network, and further improve operational efficiency. Now as the end of the year approaches, and the environment remains highly dynamic, LATAM continues to take a prudent approach. Although demand remains strong and fuel cost pass through remains high, jet fuel prices have continued to increase, and we do not expect a meaningful relief in the short term. Reflecting this reality, LATAM has updated its full year 2026 guidance on the back of our jet fuel price assumption, which adds over $900 million of cost in the fourth quarter alone, as compared to the same period in 2025 and will add over $2 billion for the full year. Despite the significant headwind, the group expects to generate at least $1.2 billion of adjusted levered free cash flow and maintain a double digit adjusted operating margin for the year. This represents a particularly meaningful outcome. It reflects not only LATAM's group's ability to navigate external challenges, but also the structural progress achieved over the past years reinforcing the group's confidence in its ability to continue executing its strategy, supported by its people, commercial capabilities, and financial strength. With that said, I will hand it over to Ricardo to walk us through the specifics of LATAM's third quarter performance.

Ricardo Bottas Dourado: Thank you, Roberto. Turning to Slide 4. LATAM third quarter performance provides clear evidence of LATAM Group's effective commercial execution in a high fuel price environment. Total revenues grew 18.4% year over year to $4.6 billion with strong demand across all segments in both the passenger and cargo businesses. Passenger revenues reached $4 billion in the quarter, up 17.8% year over year, driven by a 7.7% capacity expansion and supported by a 9.4% expansion in passenger RASK. Reaching $0.83. Yield expansion was 11.7%, and the group holds a healthy passenger load factor at 83.7%. On the cost side, despite facing an additional $594 million total fuel cost increase year over year, mainly due to a 52% surge in average jet fuel prices. Non-fuel unit costs remained contained. With passenger CASK ex-fuel increasing only 3.5%. Reflecting continued cost discipline. Against this backdrop, LATAM delivered an adjusted EBITDA of close to $1.1 billion with a margin of 24%. On its part, adjusted operating income stood at $573 million with a margin of 12.5%. With all that, LATAM achieved a net income of $441 million with a bottom line margin of 9.6%. Net income in this quarter was 16% higher than last year, and it is important to note that the interest expenses line was lower year over year as 3Q 25 included a $105 million in onetime costs related to the liability management exercise performed during that quarter. Let's now take a look at the commercial performance behind these results on the next slide. On Slide 5. During this quarter, LATAM Group demonstrated its ability to balance capacity growth, pricing and load factors supported by its revenue management and continued customer preference. The performance was broad based across the network. The international segment led capacity and unit revenue growth, with passenger RASK increasing 10.2% year over year. While both LATAM Airlines Brazil domestic market and Spanish speaking country domestic affiliate markets delivered a solid increase of close to 9%. At the same time, load factors remain healthy across all markets, Domestic load factors declined by 3 percentage points, but remained at around 83%. While the international load factor reached 84.3%, only 0.8 percentage points below last year. Moving to the next slide, Slide 6. Quality and diversification of LATAM's revenue base remains central to its business model. Highlighting customer preference for LATAM Group's differentiated product, premium cabin revenues grew 23% year over year. Outpacing main cabin revenues. This less elastic premium demand provides a structural buffer against broader consumer price sensitivity. LATAM cargo revenues grew 20% year over year, to $483 million benefiting from shorter sales cycles that allow the immediate fuel cost pass through. Meanwhile, LATAM Pass, the loyalty program, reached 57 million members, up 9% year over year, generating 2-thirds of total passenger revenues and anchoring customer loyalty across the region. Turning to Slide 7, This bridge shows how the commercial performance translated into financial results. Higher passenger and cargo unit revenues, together with depreciation of local currencies, offset nearly 80% of the quarter additional $520 million fuel price impact by generating $410 million in incremental revenues year over year. Capacity growth, cost containment initiatives and improvements also contribute to earnings. As a result, LATAM delivered nearly $1.1 billion in adjusted EBITDA. Broadly in line with the same quarter last year, even with this substantially higher fuel costs and continued expansions in our operations. Moving to the next slide, Slide 8, I have mentioned on the previous slide, 1 of LATAM Group's key priorities continue to be maintaining a competitive cost structure. Supported by disciplined capacity management, operational efficiencies and the continued digitalization of the business. During this quarter, passenger CASK ex-fuel increased only 3.5% year over year, despite inflation. Depreciation of local currency and higher revenue related costs. In fact, excluding the impact of local currency depreciation, the increase would have been virtually flat, showcasing LATAM's ability to effectively manage the cost components within its control. Next slide, Slide 9. LATAM continued generating solid cash flow while executing its investment plan. During this quarter, the group generated close to $900 million in operating cash flow and continued to execute its investment plan. With a combined focus on growth and maintenance. with a CapEx in Q3 of $432 million, which includes fleet renewal, net of financing, through new aircraft acquisitions, cabin retrofits and the installation of Wi Fi on wide body aircraft. It also includes the development and enhancements of VIP lounge in Guarulhos, Sao Paulo and also the expansion of the VIP lounge in Miami in the United States. As well as a robust agenda of investments in maintenance and technology. All in all, LATAM generated over $300 million in cash during this quarter, prior to capital allocation initiatives. During this period, the group has repurchased 0.65% of the company's share capital under the shareholder approved project. Turning to Slide 10, LATAM continues to maintain a strong balance sheet. Closing the quarter with liquidity and adjusted net leverage in solid positions, both absolutely and also relative to the financial policy framework. Which provides for the maintenance of liquidity levels between 21-25% of last 12 months revenues and the net leverage below 2.0x. This financial strength provides flexibility to continue investing in the business and pursuing growth opportunities while maintaining a disciplined approach to capital allocation. On Slide 11, both S and P, as Roberto mentioned, and Fitch Ratings upgraded LATAM to BB+, bringing the group just 1 notch below investment grade. Importantly, LATAM's bonds are now rated investment grade by both agencies, at BBB-. These upgrades represent an important milestone in LATAM's financial trajectory, particularly considering the challenging environment they experienced throughout 2026. Looking ahead, Slide 12 for an important update. Let me conclude with LATAM's updated guidance for the full year 2026. This revised outlook reflects a more challenging fuel price environment for the fourth quarter than previously anticipated. As Roberto highlighted earlier, LATAM expects to face over $2 billion in additional fuel costs this year compared to 2025, solely from higher jet fuel prices. Despite the significant impact, LATAM expects to deliver adjusted EBITDA between 3.9% and $4.1 billion to the same $4.1 billion achieved last year. Even more importantly, LATAM expect to generate at least $1.2 billion in leverage free cash flow during 2026, demonstrating its ability to sustain substantial cash generation, despite the current jet fuel price environment. On our last slide, Slide 13, I would like just to take a moment to remind you that LATAM will host its Investor Day in New York on December 14, 2026, and we invite you also to tune in the live webcast of that event. With that, we will now open the line for your questions. Thank you very much.

Operator: We will now begin the question-and-answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Michael Linenberg with Deutsche Bank. Your line is now open. Please go ahead.

Michael Linenberg: Oh, yeah. Hey. Good morning. Roberto, Ricardo, Andre. Congratulations on the rating upgrade or upgrades, I should say, by the 2 agencies. 2 questions here. 1, is as we think about 2027, how should we think about your capacity growth? I realize it is early. But we were almost double digit this year. And how should we also think about CapEx? Can you just remind us of your aircraft deliveries for 2027?

Roberto Alvo Milosawlewitsch: Sure, Michael. Good morning, and thanks for the congrats. I will. Let me handle the capacity comments, and then Ricardo will take on the fleet side. As you know, we normally post guidance on the late part of the year for 2027. We have not done so. But if I can give you a sense LATAM has the capacity to grow on. In terms of fleet up to high single digits if we wanted to. Okay? The capacity we will eventually end up flying will very much depend on fuel prices and what happens throughout the next few months. We are going to be prudent in terms of deploying capacity and we have done in the past, we will only grow if we believe that there is profitable growth ahead of us. So I do not have a number for you at this point in time. We will release it towards the end of the year. But we can grow up to high single digits if we use all of our fleet. And we will probably grow a little bit less if fuel prices remain high. Ricardo, you want to take the fleet question?

Ricardo Bottas Dourado: Sure, Roberto and hi, Michael. We disclosed in the. I will provide you some figures in terms of the fleet plan and the position that we are expecting to have. By the end of this year, we are expecting to end with 409 aircraft Next year, we expect to receive an additional 30 aircraft and end the 27 year 27 year with a fleet of 426 aircraft, including remaining 12 Embraer. So we have these 24 Embraers that we will arrive half this Q4 and the remaining 12 during 2027. Okay.

Michael Linenberg: Great. Thanks for that. And just 1 quick follow-up. You are in a position where you financially can grow and take share and do it profitably Are there any markets where over the last 12 months or so you have seen a greater share shift you know, you vis a vis your competition. Any color on just kind of the market and competitive backdrop would be great. Thanks. Thanks for taking my questions.

Roberto Alvo Milosawlewitsch: Yeah. Sure, Michael. I think it is. If you look at market share performance over the last 12 months and probably the last 24 months, we have grown more significantly in domestic Brazil today. Our capacity in domestic Brazil is around 40-41% in total. Our corporate market share sits close to 50% in total. And with what we see in the competition published capacity, we believe that we can sustain eventually slightly improve that percentage. That I would say is the market where we have seen a little bit more of a shift The Pacific side has remained relatively constant. We have very high levels in all of the countries, mid-60s in Peru and Chile. Close to 50% in Ecuador, and slightly above 25% in domestic Colombia. On international front, we have also gained some share both in regional and in some long haul markets, specifically South America to Brazil. And together with Delta, hold, as we have in the last few years, the leadership position between South America and The US. Thank you.

Ricardo Bottas Dourado: Thank you. Hi, Michael.

Roberto Alvo Milosawlewitsch: I do not know if you are still online. Probably, you have to mute your connection.

Ricardo Bottas Dourado: Yes. No, I am. Thank you. Okay. You are holding the connection. Thank you. Thank you, Mike.

Operator: Your next question comes from the line of Guilherme Mendes with JPMorgan. Your line is now open. Please go ahead.

Guilherme Mendes: Good morning. Roberto Ricardo Andre. Thanks for taking my question and congrats on the results. My question is trying to reconcile the load factors with the yields and RASK numbers that we saw in the quarter. So, basically, lower load factors on a year over year basis, but increasing yields and RASK across the 3 regions. Just wondering if you are starting to see any signs of price strategy reaching some kind of saturation in specific regions. Or if the price increase strategy remains solid across the 3 regions? Thank you.

Roberto Alvo Milosawlewitsch: Thanks, Guilherme, and thanks for the congrats as well. So, I mean, as you have seen RASK is growing close to 10%. Yields are growing a little bit beyond that. that is why load factor is a little bit lower. This we see as just a normal consequence of some of the elastic portion of the demand being not there for. Given the higher yields, but this is completely within our revenue management strategy. And we have no concerns with respect to that. So holding a slightly lower load factor on the back of optimizing the RASK is what we are seeking for in these particular circumstances and that is fine. And I think that the load factors decreases have been discrete, and this is, again, a testament of the fact that we are increasing our revenue share on the premium segment is much more inelastic. So companies like LATAM companies that focus on premium customer will see a smaller a smaller loss of load factor vis a vis companies that cater for the more elastic segment or eventually, you will see slower RASK increases vis a vis what we have. So we are very comfortable with the mix of yields and load factors that we are seeing today. Thank you. Thanks, Roberto.

Guilherme Mendes: If I may, I will follow-up looking to 2027, understand there is no guidance yet, but thinking about the pricing strategy, and assuming lower fuel costs, is it fair to assume the prices could remain pretty much where they are, meaning at a deliberate level, even with lower jet fuel cost into 2027?

Roberto Alvo Milosawlewitsch: I wish I had the answer for that question, Guilherme. I do not know exactly what is going to happen 2027. But what I can tell you, I think it is fair to say that capacity on an industrial level will remain somewhat constrained. We are seeing the issues of the airframers and engine manufacturers still affecting that. We are starting to hear people pushing aircraft to the right, whether we are delivering aircraft or delaying orders, that will continue to keep the capacity side in my mind a little bit more constrained from an industry wide perspective, and surely in the region, we will see some of those effects as well. If the picture like that holds there and the economies are in good shape, demand does not does not vary significantly. I think it is it is relatively safe to say that prices will be able to remain at a higher level at least than what it was before this fuel crisis. Before this fuel crisis started. But I have no crystal ball. I just think that the balance of capacity and demand will allow for the pricing to stay above if prices were to go back to 25 levels, but we will see what happens in due time. Thank you. Mhmm. that is helpful. Thank you, Roberto.

Operator: Your next question comes from the line of Gabriel Rezende with Itau. Your line is now open. Please go ahead.

Gabriel Rezende: Hi. Good morning. Just a few follow ups here over the pricing strategy. It is very clear that the company is managing to pass through the higher fuel cost, and then we might see even under a scenario that we see improvement in fuel cost, the company might maintain these yields higher for longer. But I am just trying to understand how the company is managing the pricing, also taking into consideration the recent 10% depreciation in the 40% to perhaps 50% of our revenues are coming from the Brazilian market. So just trying to understand whether the company is seeing the necessity to further increase prices to incorporate the FX of this perhaps new level of the BRL versus the USD as well. Thank you.

Roberto Alvo Milosawlewitsch: Hi, Gabriel, and thanks for the question. So early days after the elections in Brazil and the somewhat higher level of the real to give a complete picture on the situation there. What I can tell you is the few days after the election, we have seen demand stable and sales stable in local currency. So no impact that we have seen that concern us at this point in time. Of course, higher real poses lower yields in dollars if you express in dollars, but also we have the advantage of lower express costs in dollars because of our significant expense in Brazilian reals. And at the end of the day, pricing is 1 tool, but what we try to optimize here is RASK. So more than the yield itself. Okay? So and this is done through pricing strategies and capacity management. And what we are seeking here is to optimize that equation all the time. So if demand remains strong as we have seen it, I think that the trends that we have seen will continue and the pricing points will be elevated, and the pass through will be still strong, probably at 180, of course, hard to catch up to those higher fuel prices. But if the environment changes, then we will be prudent in terms of adjusting in capacity to try and to continue optimizing the RASK position. that we have achieved. Thanks.

Ricardo Bottas Dourado: Roberto and Gabriel, if I may, jump in, just to also take the opportunity from this question to clarify and also emphasize the assumptions that we are having from our guidance is to have the BRL for Q4 at 5.30 which represents an average for the full year of BRL 5.20. Right? Yes.

Gabriel Rezende: That is very clear. Thanks. The addition, Ricardo. And thanks, Roberto. So if I may just a second question here. Are you seeing competitors in the Brazilian market behaving anything differently versus what we have seen in the first half of the year? Just trying to understand whether perhaps LATAM has seen a larger room to increase tariffs versus its competitors. Perhaps because of their exposure to more premium revenue or perhaps a round for-- versus your peers as well? Thank you.

Roberto Alvo Milosawlewitsch: I mean, I think that what I can say is, yeah, we have continued to improve our premium revenue vis a vis the whole of the revenue. That gives us more resilience on the revenue side not necessarily the strategy of our competitors is the same or in our minds have achieved the same results. We will see what the results are when they post them. But in our minds, what we have built over the years, trying to have a consistent product creating loyalty out of the execution of that product and the FFP has yielded its benefits. We see them. it is they are in front of us, and we will continue to do exactly the same because we believe it is the right strategy. So at this point in time, we feel very comfortable with the position that we have achieved in most of the markets where we operate. And this is the outcome of a strategy that seeks to make sure that customers want to fly with us because they experience the best product there is in South America. Thank you. Thank you. Very clear.

Operator: Your next question comes from the line of Lucas Marquiori with BTG Pactual. Your line is now open. Please go ahead.

Analyst: Thanks. Hey, guys. Good morning. Yeah. 2 questions on my side. First 1 on just wanted to hear your early thoughts on what is the current calculations you guys are having in terms of passing through the tax reform changes that we are having in Brazil early 2027, especially after the early, release of the 11% CDS rate starting in January.

Roberto Alvo Milosawlewitsch: I. I am assuming this is a higher bar than what you guys were kind of forecasting before. So what is the early calculations you guys have internally for, price pass-through in early 27 to try to compensate for that 1. Or at least if you guys have any color on the sector negotiations under ABEAR to kind of help at least have some relief on that 1. And number 2, if you guys could provide at least some updates on the network planning for this peak season. I am assuming that under this, BRL level, under these oil pricing level, some routes become uneconomical. So if you guys could provide at least what are the frequencies, what are the routes you guys have been adjusting for now at least, and if that is if today is the scenario for you guys to start speeding up the retirement of some of your older aircraft, like the A319s or something like that, just to kind of give us an update on the network planning for next year that is helpful, guys. Thanks. Hi, Lucas. Let me try to unpack all of the questions that you posted in more or less orderly fashion. So first, VAT. So I think it is important to point out that VAT will affect differently different types of customers. You know, corporate customers actually will have the benefit of having tax credits from the IT system now that they do not have today. So for corporations, actually, the cost can eventually decrease vis-a-vis what they pay today where not necessarily all the costs in Brazil are recoverable. In the case of individuals, yeah, VAT will be added to the ticket. It would not be the 11% as you mentioned because some of the other taxes will be taken out, but it is a net increase. And this will eventually look a little bit like what we have seen in terms of the higher fuel prices, and we will see how this goes into past through during next year. Having said that, still conversations between ABEAR. ABEAR is the Brazilian Airline Association, the domestic carriers, and the government related to the to the tariff levels to the tax levels for 2027 and onwards. And as you know, this has not been settled not only for this industry, but for many industries. So we are having these conversations actively with the government explaining to them potential impact that this can have with particularly individual passengers, and we will see the outcome of these conversations is. So that is probably that question. The other 1 you talked about, fleet planning and routes. I mean, you can see in the guidance that we were guiding a little bit higher capacity after our second quarter results. We lowered that about half a percentage point for the year. This is the reaction basically to the higher fuel prices. Now LATAM has an advantage, which is when you when you have a large network, you can decrease frequencies without necessarily canceling flights. So just to give you an example, we have 22 flights between Lima and Cusco. A day. So you know, when you take out 1, the product is still great, 21, and that is 5% capacity reduction. So what we are doing is managing our network in the best way that we can still provide excellent product to our customers while at the same time trying to optimize the economic equation. So I would say that is probably the 2-thirds of the question. The last 1 was unprofitable fleet and so on. I think that Ricardo already gave you the figures. 409 aircraft at the end of the year plus 30, it is 439, but we will end the year with 426. This implies the retirement of 13 aircraft. And those are older aircraft, basically, A319ceos. Thank you.

Operator: And there is Your next question comes from the line of Filipe Ferreira Nielsen with Citi. Your line is now open. Please go ahead.

Filipe Ferreira Nielsen: Hey. Hello, everyone. So thanks taking my questions. I have 1 question regarding the hedging strategy. We saw that this quarter, you kind of followed-- a you locked fewer hedges than regularly. This is kind of-- we understood then this from the high volatility of fuel. I understand that this could be because hedges are expensive nowadays, but just wanted to get a sense from you. How this changes the strategy and the expectations you have on, earnings volatility related to fuel and related to, your pricing strategy in the fourth quarter and ahead? And if we should see you guys getting back to the regular, hedging level that you normally do, if fuel goes down and volatility improves going forward? This is my first question. And then be back for a follow-up.

Ricardo Bottas Dourado: Okay, Filipe. Thank you for your question. Actually, as you. You have answered part of the question. So we are not planning, to change our hedge policy, and we are using the same strategy, but considering the market conditions, we will keep continue assess market to understand the opportunities that we have under the same policy understand when we should understand the price makes sense in terms of premiums. And as you know, we use this strategy to reduce the volatility. So we hold the positions as you could see also on the Q3 the calls that we have bought since the beginning of the conflict were in the money in the Q3. But makes no sense at this current level of price to have this kind of alternative protection. So we are looking on a day by day basis the market conditions, the premiums, but also the fuel price to understand when it makes sense to come back to the normal. And yes, we are willing to because that is the assumption from the policy that we have. To have inside the range, to have relevant protection combined with pass-through capability. So it is not the hedge strategy itself. it is the combination of the hedge and our pass through perspective.

Filipe Ferreira Nielsen: Great. And thank you. And just 1 follow-up regarding the Brazilian economic condition. So just wanted to get a sense from you, how are you reconciling the path of economic deceleration in Brazil, impacting, your pricing pass through? And if you see considering all the fleet discussions that we had, here during the call, If you see further space for reducing growth and continuing profitable in an economic slowdown. Thank you.

Roberto Alvo Milosawlewitsch: Thank you, Filipe. I think you pointed out in the last part of your question part of the answer. At the end of the day, capacity management, will do the work for adjusting to very diverse demand conditions. And as I said earlier in the call, we have seen in the very few days after the election the good sales levels in local currency in domestic Brazil. We will see how it plays out in the following week, but we have seen no impact that we can that we can talk of in this 8 days or so that have passed. And the second part of your question also, think it is important to remind you that when we think about capacity management, 1 of the things that we have done in the last few years is focused on having probably around 7% of our capacity on a high variable cost basis. We do not look at fixed to variable cost on average as much as we look at the marginal capacity and we want to have as highest possible variable cost mix for that. Because this is the way we can quickly adjust in the short term. This is why we keep fully depreciated or close to fully depreciated aircraft And this is why we have the structure we have in terms of making sure that we can that we can decrease our size if necessary without a significant impact on overall economics. Due to the structure. And this is what we have designed since the pandemic times, and this what we will apply or are applying when we slow down capacity a little bit. But you know, at this point in time, I just want to end this with what I would say is, a positive note in the sense that, you know, LATAM has done a good job so far. The product is great. The delivery is good. Demand is there. So despite the headwinds that we see in the environment, we like the position we are in. And on a relative basis, clearly, this is the strongest position in the region. Whatsoever. And that is that is relevant for these volatile times we have today. Thank you.

Operator: Your next question comes from the line of Jens Spiess with Morgan Stanley. Your line is now open. Please go ahead.

Jens Spiess: Yes. Hello. Thank you for taking my question, and also congrats on the results and navigating the challenging time. So I just want to ask basically a hypothetical question meaning that if oil were to remain at the, I do not know, like 4.40, 4.30 jet fuel. I mean, should we expect into next year? Obviously, you will probably try to raise fares a bit, reduce a bit capacity to protect load factors. I do not know. I just want to understand what could be the, like, the margin progression assuming that fuel remains close to current levels? Should we get back to like, double digit operating margin relatively quickly at beginning of next year or how are you thinking about it? Thank you.

Roberto Alvo Milosawlewitsch: Hi, Jens. Hypothetical. Hypothetically answering, Yeah. I mean, it is., I think that the key at the end of the day is capacity. I think that the industry as a whole worldwide you will see many, many players significantly struggling if the prices that we are seeing today remain for, let's say, the totality of 2027. I think that we are already starting to see on a worldwide basis some of those things happening. So the good thing about our position is that you know, we have built you know, a very strong balance sheet position and a good cost situation that allows us in a way to manage this better and observe and see if, opportunities can be created and look at those opportunities in the light of our relative strength. it is very hard for me to give you a sense of what would happen for the industry as a whole or for LATAM or for the region at 180, but I think that what is very likely is that we will see significant disruption in a number of competitors and that will probably change the capacity picture but it is very, very, very hard to forecast that scenario. I just want to end saying that we are on the strong side of that situation if this happens because of what we have built and this is what we have done over the years, make sure that LATAM's model is resilient to crisis, which we see from time to time in the industry happening. I do not wanna call this fuel situation a crisis for a second. I wanna be pessimistic about it, but clearly gives us the sense that we can navigate as we have done in 2025. In 2026, I am sorry, in a good way, that we have shown so far. Thank you. Alright. Perfect. Thank you.

Operator: There are no further questions at this time. I will now turn the call back to Ricardo Bottas for closing remarks.

Ricardo Bottas Dourado: Thank you all for joining us today and for your continued interest in LATAM. We look forward to seeing you, or many of you of you at our Investor Day in New York on December 14. And thank you again, and have a great day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.