Fitch upgrades LATAM Airlines to BB+ with stable outlook

Fitch Ratings upgraded the default ratings of LATAM Airlines Group S.A. to 'BB+' from 'BB' on October 2, 2026, maintaining a stable rating outlook. The agency highlighted the carrier's solid business and competitive position across the Latin American airline market.

As of June 30, 2026, LATAM Airlines held total debt of $9.0 billion, of which lease liabilities accounted for 44% and aircraft financing represented 22%. Non-fleet debt stood at $3.1 billion, with only $275 million in amortizations due through 2028. The company's average US dollar financing cost was 6.4%, while its liquidity stood at 26% of last-twelve-months revenue. Premium cabin operations generated 29% of passenger revenue.

For fuel exposure, the airline hedged 45% of estimated fuel consumption in the third quarter of 2026 and 27% in the fourth quarter. In 2025, LATAM generated $4.1 billion in reported EBITDAR with an EBITDAR margin of 28%.

Under its base-case projections, Fitch expects EBITDAR of $4.2 billion and a 24% margin in 2026, assuming an average jet fuel price of $3.82 per gallon and a 12% rise in passenger yield, before rising to $4.3 billion in 2027. Free cash flow is forecast at $450 million in 2026, $87 million in 2027, and $282 million in 2028, after $2.1 billion in gross capital expenditures and $127 million in dividend payments in 2026. Fitch also projects total debt will reach $9.7 billion in 2026, with total adjusted leverage to EBITDAR of 2.3 times and net adjusted leverage of 1.6 times across 2026 and 2027, alongside 24 planned Embraer deliveries.