Latam Airlines aims to capitalise on the expectation that Latin America’s aviation sector will be one of the fastest growing worldwide for air travel.
Latam Airlines, one of the biggest players in the Latin American aviation industry, is targeting massive growth in the following decades. It hopes to capitalise on the expectation that the region’s aviation sector will be one of the fastest growing worldwide for air travel.
The aviation sector is severely underdeveloped and underutilised across Latin America and the Caribbean, with just 0.6 passengers per inhabitant, according to Latam Airlines’ Chief Executive, Robert Alvo. In an interview with the Financial Times, he said that the airline has targeted a raise of two-and-a-half to three times a year per inhabitant.
The pandemic was a major blow to Latam Airlines, resulting in the company declaring bankruptcy in May 2020. Having focused on restructuring in the past couple of years, the airline is now more optimistic about its future, particularly in Brazil, which is the group’s biggest market, owning 40% of the market shares.
In 2024, Latam Airlines achieved record-breaking passenger numbers of 82 million, a 15% capacity growth, and the airline’s loyalty program, Latam Pass, reached 49 million members, reflecting its position as the largest airline in the Latin American region. It has consistently prioritised customer satisfaction and was ranked among the top five global airlines for punctuality for six years in a row.
Latam’s net income of $977 million in 2024 is twice as high as its 2023 figure. Total revenue surged by 4% as a result of the cargo revenue expanding by 29%. Despite allocating $175 million for mandatory dividends and $207 million for refinancing purposes, $243 million in positive cash flow was spawned in 2024.
With these achievements in its bank, the airline expects a 7-9% capacity growth this year, having added 22 additional aircraft and the projected revenues fall between $14 billion and $14.5 billion. Alvo has said that for the first couple of months, demand for the airline is on an upward trend.
Boeing has predicted that in Latin America, passenger air traffic will grow by 5% a year over the next twenty years. This is because the cities are far apart, separated by mountains and forests. The growth in the aviation sector in this region will be faster than that in the Middle East, Europe or North America. According to the same forecast, in the next two decades, the commercial flight fleet is expected to double, jumping to 3,000.
Four out of ten passengers use Latam Airlines in South America, and in the following years, the airline will expand its international operations by adding new routes, renew a portion of its fleet, and it will launch a premium economy class for long-haul flights. Latam uses Boeing aircraft for long-haul flights and Airbus aircraft for short-haul flights. An order for more aircraft has been placed with both companies and will be delivered over a six-year period.
Despite the setbacks, Latam has returned with better prospects for growth. Analysts have identified the group’s restructuring process for this success, which pushed the company’s market position and is expected to offer much better results in the next few years. The airline’s superior performance, when compared to other industry peers, can be attributed to its leaner cost structure and efficient operations.
However, industry experts have pointed out that when compared to Panama’s Copa Airlines, which is Latam’s smaller regional rival, the company’s debt is higher, and its profitability is lower. Additionally, with other regional airlines building higher capacity in the post-Covid era, there is increasing competition in the aviation industry. With Gol Airline declaring bankruptcy last year and Azul Brazilian Airline spending almost six months deliberating a restructuring process to reduce its debt, both groups have managed to negotiate deals with creditors to bring down debt and better manage their financial obligations.
Despite this increased competition, Alvo and the Latam Airline group are confident of their impending successes and are hopeful that the aviation industry across Latin America will soon undergo a major transformation.