(Bloomberg) -- Latam Airlines Group SA, the largest carrier in South America, still sees plenty of room for growth in the region even after raising this year’s financial forecasts.
“We now have the financial strength to define how we want to take the opportunity of growth in a region that is under-penetrated,” Chief Executive Officer Roberto Alvo said in an interview in New York. “Distances between main cities are measured in hundreds and thousands of kilometers. There is no alternative in many cases to air travel and, therefore, the region is ripe for growth and we have the fleet and the financial situation to take advantage of that growth.”
Latam Airlines hosted an investor day at the New York Stock Exchange Tuesday where the company said it hopes to increase capacity, measured by available seat kilometers, by as much as 16% in 2024 compared to last year. That growth is expected to slow to high-single digits in 2025 and mid-to-high single digits in 2026. The company also outlined that current liquidity represents 27% of revenue, and that adjusted Ebitdar is expected to reach $3.4 billion next year.
Other airlines in the region, specifically in Brazil, are struggling. Azul SA is in the midst of creditor talks and is struggling to raise debt, while Gol Linhas Aereas Inteligentes SA is going through Chapter 11 restructuring and preparing to raise exit capital.
However, Latam is back with full force and recently returned to the New York Stock Exchange with an offering of American depositary shares. A group of shareholders raised $456 million in an initial public offering in July, and they have risen 15% since then.
Alvo said doesn’t see a need to raise more capital for the time being as the company has a solid balance sheet and an adequate leverage level.
The South-American airline also tapped global debt markets earlier this month, selling $1.4 billion in dollar notes. Alvo said the company currently isn’t looking to come back to the market, however, there is an opportunity to refinance $700 million of debt at the end of 2025 which it is looking into.
Still, Latam isn’t immune to the issues dogging the aviation industry. The company took steps earlier this year amid problems with engine manufacturers and aircraft suppliers. Alvo explained the company decided not to phase out a significant amount of aircraft in order to maintain growth and have a fleet plan that has visibility for the next 12 months.
“We feel quite comfortable with our capacity to deliver on that growth despite the issues that our most important suppliers are facing, which I think are gonna have a relatively lasting impact on the industry, at least for the next few years,” he said.
--With assistance from Vinícius Andrade.
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