LATAM Airlines Group S.A. Price & Performance (LTM)

My name is Alex, and I'll be coordinating the call today. I turn the call over to management, I'd like to remind you that certain statements in this presentation and during the Q and A may relate to future events and expectations. And as such constitute forward looking statements Any matters discussed today that are not historical facts particularly 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 and risks that are discussed in detail in the published 20 F-twenty 25 guidance earnings release, financial statements and related CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested and any forward looking statements due to a variety of factors which are discussed in detail in our SEC filings. I'd now like to turn over to the management team to begin Please go ahead. Hello, everyone, and good morning.

Welcome to the Q4 and full year 2024 conference call, and thank you all of you for joining us today. Name is Andres Elvaje, Vice President of Corporate Finance at LATAM Airlines Group. Here with me today is Roberto Advo, our CEO Mr. Ricardo Bottas, our CFO, who recently joined the team Terry Creighton, Head of Investor Relations we will present our highlights and results for the Q4 and full year 2024. Hand it over to Roberto to share all the remarks over the quarter's and year's highlights. Once he's finished, I'll present them in more detail alongside the financial results. Over to you, Roberto.

Thank you, Andres. Good morning, everyone, and thank you for joining us to review LATAM's group performance for the 4th quarter and full year results. Before we begin, behalf of LATAM Airlines, I'd like to express our deepest condolences about the recent accident in Washington. Our thoughts are with the loved ones of passengers and crew on board of the aircraft and the helicopter and the American Airlines team during this difficult time. Also, before I turn to the results, I'd like to invite Ricardo to introduce himself. He has a proven track record of over 2 decades in Vaca experience in corporate finance, financial planning, tax, accounting and Investor Relations, Among other areas, working for multinational public companies in Brazil was also CEO for a few years and it's it's great to have him here. So Ricardo, over to you.

Thank you, Roberto. First of all, I'm thrilled to be joining Los Tan and Larnain I've always admired it. It's an exciting time and it's the best moment in the history of the group. But for sure, there is still a lot to be done and I'm looking forward to the challenge. As Roberto mentioned, I've worked in finance in many different roles in different industries related to healthcare, insurance and energy. And now I'm joining the aviation industry and couldn't be more excited to work together with LATAM's team from now on. So thank you, Roberto, again, and back to you. Thank you, Ricard.

Overall, 2024 was a year of significant achievements for not only in the financial sense, which we successfully met our 2024 updated guidance, also with respect to our customer satisfaction, our operations, and our capacity to profitably grow not only on our passenger operations, but also in our cargo business and loyalty program. The results in my view are a testimony of the resilient model we have built over the years that allow us to achieve these results in the context of very dynamic macroeconomic and competitive environment. We're incredibly proud of this accomplishment which would not have been possible without the hard work and dedication of our more than 38,000 employees. Thank you very much to each one of you You are the engine that is driving LATAM today.

In terms of operations, during the quarter LATAM Group grew approximately 12% compared to the previous year, and grew 15% for the full year while maintaining healthy load factors highlighting our ability grow efficiently. For the full year, transported a record breaking 82,000,000 passengers, further solidifying our role as a key player in connecting people across 151 destinations in 20 7 countries and allowing South America to be connected within itself and the world. Achievement reinforced LATAM Group position as the number 1 carrier by market share in 5 domestic markets and the leading airline group in South America. Group cargo operations also delivered robust results during the second half of twenty twenty four. Ending the year with improved load factors. Better unit revenue and showcasing operational growth. Similarly, as of the end of the year, our frequent flyer program that impacts reached 49,000,000 members, preferring its position as the largest loyalty program in the region. LATAM's financial results also reflected continuous cost efficiency. Adjusted passenger CASK ex fuel for the year was $0.042 which is 1.5% lower than our 2023 figure. This led us to annual double digit adjusted operating margin of 12.7 percent outperforming our guidance. Adjusted EBITDA reached $3,100,000,000 for the year, bringing full year net income to 9 $77,000,000 which nearly doubles our 2023 figure.

These achievements are not just historical milestones for the company, but they're also a testament of the dedication, resilience and collective effort of the entire team.

We have consistently delivered strong improvements in our capital structure. As you have followed our progress, you've seen how we've actively reduced our leverage, which now stands at 1.7 times. With liquidity currently at 27% ensuring LATAM has a strong balance sheet, It is worth mentioning our successful refinancing exercise conducted in the 4th quarter which significantly reduced the cost of the majority of our non fleet debt. [indiscernible] focus and efforts we have devoted to placing our customers at the center of our decision making devoting ourselves to continuously improving the travel experience also bore fruit. Customer satisfaction reached an unprecedented levels, achieving the highest ever total Net Promoter Score of 51 points and 56 points for our premium passengers, and also the lowest rate of customer complaints in Chile Brazil and Peru we have public figures be compared.

Additionally, for the 6th consecutive year LATAM ranked among the top 5 global airline groups in [indiscernible] underscoring its operational performance and commitment to ensuring passengers arrive on time and comfort Furthermore, LATAM Airlines Group was incorporated into the Dow Jones Sustainability Index and was recognized as the 5th most sustainable airline group worldwide and the most sustainable group in the Americas and the Western Hemisphere. [indiscernible] these achievements underline our commitment to combining operational excellence with environmental and social responsibility. [indiscernible] As we close 2024, and embarking a new year, I believe it's important to summarize again our achievements. In 2024, we delivered our best financial results so far. Including very strong balance sheet, keeping at the same time our extremely efficient cost base. Our network presence is strong in every segment we operate. We transported more passengers than ever before and we did so with our historically best customer satisfaction score.

All of this in the context of being 1 of the most punctual and more environmentally conscious airlines the world. Looking ahead, in the short term, we expect demand to remain healthy with steady booking curve for the first quarter of 2025. In particular, the international segment continues to demonstrate strong levels of bookings for the current high season.

Thank you again for your time. I'd like to turn the call over to Andres to further Thank you, Roberto. Let's move to the following slide please. Devin Deeper is in 4th quarter operating figures. LATAM Group continues to show robust operational growth year over year with more passengers choosing us across all markets. In this sense, during the quarter, the group transported 21,500,000 passengers, is a 7% increase compared to Q4 of 2023, NetIB by record breaking €82,000,000 for the full year reinforcing LATAM as the largest airline group in South America and was the top 10 globally in terms of Also, during this period, capacity grew by approximately 12% while maintaining healthy load factors across all segments a notable consolidated load factor of almost 86% for the quarter. In terms of consolidated revenues per ASK, we see a decrease of 10% year over year both stable compared to Q3 of 2024. Decrease was influenced by the decline in jet fuel prices year over year and by currency depreciation in some of our main markets, especially in Brazil since the RASK are presented in USD.

However, when analyzing RASK in local currency, observed an average increase of 30% among Spanish speaking countries [indiscernible] Brazil, however, the comparison base is exceptionally high from Q4 of 2023. LATAM Group's diverse WAP network and strong value proposition has an with improved margins that we can see now on Slide 5. In this 4th quarter, LATAM continued to consolidate a trend of strong financial performance achieving an adjusted operating margin of 13.6%, supported by revenue growth and cost discipline. Total revenues increased by 4% year over year driven by a remarkable 29% growth in car revenues marking the 3rd consecutive quarter of improvement. Total adjusted operating expenses increased by only 1% in the quarter, primarily driven by a 12% increase in capacity offset by a decline of 23% in jet fuel prices including hedges, which helped mitigate cost pressures and further contributed to operational efficiency. Adjusted EBITDA grew by 28% to 8.6 while net income for the quarter reached $272,000,000 marking a 2 28% increase compared to the same period of 2023. [indiscernible] These results emphasize the effectiveness of our operational strategy and our focus on consistent financial performance. Turning to next slide, The financial results achieved reflect our commitment to enhancing the customer experience as a pipe builder element of our strategic vision.

This year, we made progress on elevated the quality and satisfaction of our services. A key metric of our success the improvement in our Net Promoter Score, which climbed to 51 points marking a 3 point increase from the previous year while our net promoter score for premium travelers reached 56 points during 2024. There is always room for improvement, LATAMGRESS affiliate has the lowest of customer complaints across Chile, Brazil and Peru. Functionality is another cornerstone of our service excellence. We are proud to be recognized as one of the most punctured group of airlines in the industry. This commitment to reliability ensures that our flights consistently depart and arrive on schedule has the travel experience for all our passengers. To further enhance the passenger experience, we have successfully implemented Wi Fi connectivity across 100% of the innovative fleet operated by LATAM Airlines Brazil and 75% of the Narrative fleet operated by affiliates based in Spanish speaking countries. We have also completed the comprehensive modernization of our Nargadie fleet incorporated the latest technology and conflivated science with a superior travel experience.

Additionally, as of December 2024, 54% of LatAm is covered by the fleet feature a retrofitted interior. Visa Tea Pens reflect our relentless focus on customer satisfaction and loyalty. Let's move to Slide 7, please. As it has mentioned, we have made significant progress in the travel experience At the same time, we have demonstrated remarkable financial discipline by keeping our units costs stable. Our annual adjusted passenger cash ex fuel remains at the competitive $0.042 highlighting our effective cost management strategies amidst industry challenges and focus on continuing investing in improving our product and customer experience. The next slide please. Turning to the next slide. In 2024, Sustavili continued to be a cornerstone of LATAM's group strategy guiding our investments and innovations across the region. In this sense, we have been reincorporated in the Dow Jones Sustainability Index and recognized as the most sustainable airline group in the Americas ranked 5th worldwide. On the other hand, we proudly secured South America's 1st [indiscernible] underscoring our leadership and commitment to sustainable finance. Additionally, in December, Peter Shaws from the JUN study with the MIT and EERABAS were published This initiative represents a step forward introducing carbon emissions and promoting cleaner air travel.

Beyond these advancements, LATAM Group has made tangible environmental progress. In 2024 alone, we recycled 280 tons of waste on domestic flights, contributing to circular economy initiatives And since 2010, our airports and fuel efficiencies have helped about 4.5 1,000,000 tons of CO2 emissions. Our solid operating plane program has transported over 16,000 passengers and 3,500 tons of cargo free of charge since 2021 reaffirming our commitment to social impact. By investing in sustainable technologies and partnerships, Latin Group is not only reducing its environmental footprint, but also setting new standards for the aviation industry. Are committed to leading the way in sustainability and to a cleaner future for durations Let's move to Slide 9. Our performance results reflect our commitment to enhancing the customer experience which contributed to both our quarterly and full year figures. For the full year 2024, Vatin delivered on its updated guidance achieving notable financial results that continued to improve year over year. In this sense, annubrevenues reached $13,000,000,000 representing an approximately 11% growth year over year. Annual adjusted operating margin was 12.7% This is an increase of 1.5 percentage points compared to 23.3 dollars while adjusted EBITDAR increased by 23 percent to 3,100,000,000 LATAM has a solid foundation for sustained growth in 2025 as you can see in our 2025 guidance figures.

Support continued financial improvement. Of these positive results are reflected in the net income generation for the year, which amounted to $977,000,000 nearly double the 23.3 figure. [indiscernible] Moving to Slide 10, As you know, we consider cash generation to be the 2 measure of performance. In this sense, adjusted operating cash flow generation through the year totaled $2,800,000,000 while investments in maintenance and growth amounted to 1,500,000,000 Throughout 2024, LATAM generated $243,000,000 in positive cash. Notably, this includes the allocation of $175,000,000 for the mandatory minimum dividend payments $207,000,000 for the refinancing exercise conducted in October of last year. In both cases, we've reinforced commitment to [indiscernible] Please join me on Slide 11. LATAM continued to strengthen its capital structure in 2024, and also delivered on this front with regard to its updated guidance. Liquidity at the end of the year reached $3,500,000 equivalent to 27% of last year's revenues while adjusted net leverage decreased to 1.7 times. These results highlight the continued deleveraging efforts commitment to financial discipline. This robust capital structure provides LATAM with the flexibility to fund growth initiatives while ensuring long term stability. Financial performance over the past few years, the company has updated its financial policy aligned with its bets entered and strategic objectives.

This policy establishes a capital allocation framework for some balance sheet strength profit growth investments and shareholder returns beyond the mandatory 3rd percent dividend distribution. The strategy focused on maintaining financial discipline, by optimization because of debt having adjusted debt leverage below 2x and aspiring to reach a BB plus rating. Policy also outlines a range of optimal liquidity between 21% 25%, of Lazard Ban's revenues. Along with this policy, LATAM's management and Board regularly analyzed alternatives for further capital return program to shareholders Including but not limited to incremental dividends, share buybacks and or growth capital and strategic investments for most effective allocation of capital in 2025 [indiscernible] Considering that the current share ADR price may be undervalued compared to historic multiples, And while share buybacks are not common practice in Chile, the Board of Directors was evaluated whether an up to $150,000,000 share buyback program can be implemented while mitigating the impact to the shares current trading liquidity Let's move to Slide 12. Looking ahead to 2025, LATAM Group anticipates continued growth and financial strength. Capacity measured in ASKs is expected to grow by 7% to 9% as a whole supported by the addition of 22 new aircraft throughout the year revenues forecast reached $14,000,000,000 to $14,500,000,000 Adjusted EBITDA is projected at 3.25 [indiscernible] supported by a healthy demand environment a diversified value proposition, disciplined cost management and strong liquidity.

LATAM remains focused on delivering operational excellence and create value for all stakeholders this year. Let me conclude to Slide 13. 2024 was a strong year for LATAM Group. We witnessed a record breaking number of passengers transported while achieving Throughout the year, consistently delivered strong financial results with an annual net income of 9 point $77,000,000 doubling the 23.3 figure. [indiscernible] We also an adjusted EBITDA of $3,100,000,000 representing a 23% increase year over year. Our commitment to cost containment is reflected in our unadjusted cash ex fuel of $0.042 [indiscernible] we expect to sustain this growth momentum.

Cash and satisfaction increased as evidenced by net promoter score of 51 points a 3 point improvement over 2023. LATAM was ranked as the 4th most punctual global airline during the year further enhancing customer satisfaction and our reputation for reliability. Leadership in sustainability distinguishes us within the industry having secured South America's 1st subordinated linked loan and recognition as the most sustainable earning group in the Americas and the 5th worldwide. These accomplishments illustrate LATAM's forward looking focus well prepared for future opportunities and to navigate the evolving aviation landscape. Thank you. We now welcome any questions that you may have.

Our first question for today comes from Michael Linenberg of Deutsche Bank. Your line is now open. Please go ahead.

Yes. Hey, good morning. Roberto, Andreas, Ricardo, Torrey. And by the way, a warm welcome to Ricardo. Not only are you joining an airline that is a leader in Latin America, but I think many viewed as the gold standard on a global basis. So welcome aboard. I have 2 questions here and maybe the first one to Andreas and or the team. You reiterated your December 3rd guidance and yet over the past 2 months, we've seen the currency depreciate pretty meaningfully against the dollar as well as fuel prices move up. And so my question is, what are you seeing with respect to the pass through of basically the higher cost of doing business? That gives you confidence that feel good about reiterating these numbers, the margins and revenue growth.

Thanks, Mike. This is Roberto Tej, the question. And thanks for the for the compliments as well. Well, our guidance has $90 per barrel of jet fuel and 5.8 [indiscernible] on both commodities are not very far from that even though we've seen of course volatility.

At this point in time, I think that we still very feel very confident about our guidance. The booking curve in the 1st few months of the year is healthy and solid. In almost every line of business where we have. Cairo has bounced back nicely as well since the 2nd semester of last year through the beginning of this year as well. I think that the ability we have to diversify our portfolio, move our assets around, make sure that this is an opportunity for LATAM remains. One of the things I told you in past in past calls is that one of the things that we've built something I call relative [indiscernible] And actually in these moments of volatility is when I think that our position allows us to take advantage of that relative strength and eventually induce opportunities of us solidifying our our network and our presence. So we remain confident we have the tools we believe to overcome this volatility. I mean, be mindful that the real depreciated 20% in 2024. It was before below 5 at the beginning of the year ended in 6 And despite of that, we were able to deliver the results we had in 2024.

So we remain optimistic and confident that we have the abilities to do that in 20 20 5.

Great. And then just my second question on go ahead. [indiscernible] No, go ahead.

Just my second question, hearing your sort of potential opportunity with respect to capital deployment, shareholder returns, considering a share repurchase, Are there any restrictions or mitigating factors [indiscernible] you mentioned $150,000,000 on size, I realize that a good portion of your float is held by insiders. Is that one of the gating issues in sizing of potential share repurchase if you could talk about that? And again, thanks for taking my questions.

Thank you, Michael. So first, just to remind particularly people in the U. S. That are not necessarily very close to Chilean loss. Either dividend distributions at the end of the day policy over 30% or by backs need to be approved by shareholders. So this is not a board decision. Board can recommend ultimately shareholders make that decision. So we will do that in case we decide to move in this direction. Yes, we are mindful of the liquidity of the share. These operations are not very typical in Chile either. I mean, there's very few cases and none of relatively important sites. So we want to analyze the law, provide for this, so it can be done. But of course, we want to analyze very well the feasibility of doing that. But the size is limited today basically to our understanding that we don't want to impact the liquidity of the shares particularly in the U. S. Market. So that's a constraint we have very much in mind today.

Great. Thanks and great quarter everyone.

Thank you.

Thank you.

Our next question comes from Jens Spies of Morgan Stanley. Your line is now open. Please go ahead. Yes, hello. Congrats on the strong results to finish and wrap up the year. I just had a question on prices mainly I mean, [indiscernible] at the Brazilian market, local currencies your prices are down. So if you could just explain a bit more what's going on there? And if you see further pressure going forward? And also on the international side, understand what's mainly driving the decrease in prices? Is it more interregional international flights or is it long haul in terms of mix? How should we think about it? Thank you.

Yes.

So So traffic in domestic Brazil remains healthy.

Last quarter of 2023 was in particularly very strong. So there's a very high basis of comparison vis a vis 2023. In absolute terms, nonetheless, during 2024, we saw a healthy movement of yields in domestic Brazil. And at this point in time, we have no indication that demand will not continue to be healthy going forward. With respect to international, it's been relatively across the board. I would say that Brazil to Europe, Latin America to Europe in general has been very healthy. A little bit less so to the U. S, but still in good healthy figures. And regional, which is international within South America had a very nice rebound as well due. [indiscernible] we saw in 2024 was still probably the last bit of the recovery and that's why also we grew around 20% in international. But there are no segments in international that are particularly concerning us. Whether it's the regional again, international within South America or the North And I would complement that, of course, whenever currencies depreciate, we see, I think, an pickup in inbound traffic from coming to South America. I think, which becomes more traffic. And we definitely see that across all markets.

Inbound traffic. [indiscernible] on that last point, That's what I was trying to dissect. So with international obviously, you probably seeing some weakness on the interregional flights. Due to the volatility in the local currencies. But also it could end up being positive for long haul, right? In terms of price? Yes, I don't think we have seen weakness, probably I miss explain myself. I think that regional international, industrial, and also Mexico has been solid. And what Andres says is very important. So let me just give you an example. There's a currency depreciation in Brazil, we do know. There's actually in real terms a currency appreciation in Argentina. And Argentine love to travel. So you see significant increase in outbound traffic from Argentina through our hubs to long haul within the region. So at the end of the day, the volatility we've seen in the currency this year has been in a way counterbalanced by other markets. We see in general strong flows in almost every one of our international segments, whether it's within South America, or Longjo.

Perfect.

Very clear. Thank you.

Thank you.

Next question comes from Andre Ferreira of Bradesco. Your line is now open. Please go ahead.

Good morning. Thanks for taking my question. Congrats on the results.

Two topics here. So first, about the fleet plan, it looks like it belies on a significant increase of the number of meters being delivered. And also significantly more than what was delivered in 2024. So my question is, if you see risk of this being hampered by further delays in deliveries by Airbus.

And my second question, it looks like the the combination of Azul and Abra or GOL is advancing.

I just wanted to get your view on I mean how would this impact LATAM? How would this impact the local fare environment? And if it changes anything in LATAM's longer term strategy [indiscernible] If it goes ahead.

Thank you.

Yes. Thank you, Guilherme. So we do have 2012 Airbus 320 arrivals 320 family arrivals in 2025. We are not concerned today with the delivery stream from Airbus. Actually, I believe that this relatively high fleet in coming this year is an advantage for the time because I think it will allow us to take advantage of our relative strength going forward. We have 2 787s arriving in 2025. Probably there's risk of delays there, but we're monitoring very closely volumes increase in production. They're trying to recover the 787 production. So we remain very attentive to that. I would say that There's no big concern that we have internally with respect to to our fleet plan in 2025, would say probably that more than the deliveries, it's the engine situation, the one that monitoring more closely as President Whitney and Rolls Royce have had issues with their supply chains We've had very productive interactions with them We have a few 787s 3 at this moment on ground and 7 320 family aircraft on ground. It's a relatively low number and we have very constructive conversations with them and this is what we're monitoring more closely. But that risk is of course included in our guidance so far.

With respect to your second question, I mean, what we have today seen as everybody is a non binding MOU that has very little detail on this transaction. I think it's still premature [indiscernible] what this exactly will mean for LATAM. This is a big potential combination that will have no doubt mitigations [indiscernible] approved and we are expecting to see what are the mitigations that our and Azul will propose and then we'll have a better understanding of what these will mean. So in the meantime, we have We have improved our presence in domestic Brazil during 2024. We are almost 40 percent of the market And I think we're very happy with the performance of our domestic operation in that market. So we'll see what happens in the next weeks months. Thank you.

Thank you.

Thank you. Our next question comes from Stephen Trent of Citigroup. Your line is now open. Please go ahead. [indiscernible] Good morning, everybody, and thanks very much for taking my question. First of all, I definitely appreciate the thoughts for the tragedy that happened in DC Along those lines, I would love to hear your guys view sort of the adequacy of infrastructure and the traffic control capability in your key markets, do you see sort of room for improvements there or you're pretty happy with how the infrastructure is set up? Thank you.

Hi, Stephen.

I mean, this industry in South America in the last 20 years has grown incredibly. Mean, it was a very immature industry in the beginning of the century. Now still immature in the sense that we can [indiscernible] carry much more passengers as our figures are relatively low as compared to developed markets. So and I think that in every in every area of the chain of aircraft transportation cargo and passengers, we've seen improvement in the last few years. I mean airports have grown ATC systems have improved. Today, we have GPS guided landings and takeoffs in almost every significant airport It works relatively well. We have much less congestion, particularly in than what you have in the U. S. We don't have the complexity of LATAM of so many regional airports. Small aircraft, jets, private jets, Air Force bases that you have in the U. S. So it's clearly less complex. In our view. What you have there. Having said that, yes, of course, infrastructure has challenges. Expecting to see the new Lima Airport, which hopefully will open in the next 2 or 3 months. That's very needed. Concession program in Brazil about new airports, I think has helped infrastructure as well.

Have a new terminal in Santiago that is only 3 years old. I would say probably the the airport where there's more constraint today is El Dorado in Bogota where really slots are taking at every single hour of the day. And it's a little bit of a constraint in certain places. But I think that that the programs of infrastructure sometimes a little bit slower than we'd love have accompanied the growth of the industry in the last 15 or or 20 years.

We actually are doing something very interesting. We are looking at our data, but not the data where we have our parameters probably out of our ranges. Much of the country where we have our parameters within our ranges and that is helping us understand if there's things that can be done to improve safety for our operations and the region altogether. Actually, that's been very helpful because we have identified opportunities that we have passed to airports and operators in terms of how to improve the way they manage the infrastructure and the operations. At this point in time. We're I think leading that in the region and be happy to not only help our own operation, but share this with the authorities so that the whole operation in in the region is safer. So I wouldn't say that this is an important I mean, it's important, of course, but it's not in the level of complexity that you have in the U. S. Or that Eurow controller example, has in Europe as well.

That's very helpful color. Really appreciate that.

And as a very quick follow-up, when we think about the joint business agreement with Delta Airlines, where would you guys say you are in terms of the extent to which that opportunity continues to spool up. Are we still kind of early stages? Are we sort of mid cycle in terms of the revenue contribution you expect from that? Thank you.

Thanks, Tim. So I mean, in the so the JV with Delta is just over 2 years old now. The increase in capacity that borderlands put in the 1st 18 months was significant. We grew around 30%. Our seat count between South America and the U. S. Delta also upgates in several markets. It launched now Rio as a seasonal route as well. I think that we I mean, there's a ton of opportunity for growth and development there. But it's also a moment of maturing, I think of the investments we have made [indiscernible] to 24 months. I would say where our focus today is in customer satisfaction we are working very hard in making sure that the connectivity between both metals works seamlessly. Still have I think things to improve in that sense, as the systems, of course, are different, That's where our short term focus is. We just started Ecuador in the scope of the JV late last year. So we see opportunity growing there. Also opportunity in Colombia and And clearly, the combination of both networks has a ton of potential going forward. Very happy with the deal.

Thanks very much. Thank you.

Thank you. Our next question comes from Guillaume Mendez of JPMorgan. Your line is now open. Please go ahead.

Thank you and good morning to all and welcome, Ricardo. Good luck on the new role. I have 2 questions. The first one is a follow-up on the capital allocation. So besides the dividend and the buybacks that we already discussed, Andre Elise, you also mentioned about strategic investments as a potential use of capital.

What exactly are you guys thinking about this one? And the second one is, Roberto, you mentioned about the strong demand.

Across different regions.

In terms of competition, do you see any excess capacity in any other regions that could pressure prices in the near term? Thank you.

Thank you, Guillermo, and congratulations on your new position by the way. So capital allocation, So dividends and buyback are the the two ways that we consider today among others, but the most important in which we're considering eventually returning capital to shareholders. One of the things that we are being very mindful of is to have the flexibility of growing eventually Our portfolio are growing within the scope that it's important to us. And in that sense, I think that the financial strength we have allows us for the opportunity to take potential opportunities. Nothing to report at this point in time. If there's something of course, we will let you know in due time. We consider today the position we have built as one that provides options to LATAM, options in terms of growing, bringing fleet, options in looking at deals, options in returning capital to shareholders. And we will ponder all these options and make use of the capital in the that it's more more efficient for both the company and the shareholders of the group. Sorry. 2nd question, competition. So clearly, I would say that still domestic Colombia is a market that is with overcapacity There's been very aggressive growth in the last 18 months.

By other players there. And it will come in my opinion to some kind of equilibrium. It hasn't arrived yet. So we're looking at domestic Colombia. Is a little bit of also intensity in capacity between the U. S. And Brazil, mostly driven by a very big growth in capacity from American in the high season into Brazil, but it's seasonal. The rest, I would say that the capacity is relatively balanced in most of the markets. So no no big concerns in terms of that equilibrium at this point in time. Also, we don't see today significant evidence of new entrants potentially in the markets where we operate.

Very clear. Thank you so much.

Thank you.

Thank you.

Next question comes from Pablo Montervais of Barclays. Your line is now open. Please go ahead. [indiscernible] Thank you for taking my question. Good morning, everyone.

Just a quick question. On the demand per segment in terms of corporate and leisure, I remember that you have said probably from the last year and a half that leachures has been very, very strong and corporate is also recuperated fast. But what are you seeing right now? And what should we expect in terms of your capacity allocation going forward?

Thank you, Pablo. So I think that probably 2 calls ago or something like that, I gave a little bit of a flavor there. We talked about that leisure demand was above 100% as compared to 2019 levels. And that corporate demand at that time was around 100%. Against 2019 levels. Think that we're seeing today is evolution of demand by segment relatively similar in all segments. So we're not seeing any changes significant in the mix We see good support on corporate demand across most of the traffics and and also leisure. So no real changes in the mix at least over the last 6 months What we have done though, and we believe it's important for our corporate travels, is that today we're focusing in 3 important things. 1 is on time performance. We do understand that time is the most important commodity that our customers have and The most premium customers value is the most have brought Wi Fi also to almost all of our narrow body fleet in the Pacific side of South America, we're the only airline that provides Wi Fi. And of course, we have the largest FFP the region with almost 50,000,000 members.

What we have seen actually growing faster in the last the last year is the number of members in our frequent flyer program. So we believe that's an important addition to that. And in particular, in Brazil, would say because in Chile and Peru, corporate traffic figures have always been healthy. Have improved significantly as well in 20 24 Abracorp, which is the travel agents the corporate travel agents in Brazil producer report With respect to that and we reached 40.8% revenue share in the corporate segment in Brazil in 2024, that's the highest level we've had since 2013. If I may ask a follow-up on that.

And probably I know it's too early to reach to this conclusion. But after the Golar and Asolo merge, would you expect that share on the corporate partners in Brazil for you to be higher than what you already have? You see that perhaps indirect impact of the competitive landscape.

Pablo, I think it's as I said before, think it's very early to speculate about that. What we have seen today is a non binding MOU that has, again, very little detail And I think that we need to see their filing, their public filing, what mitigations they will propose CADE needs to review and this is this is a big a big transaction eventually, which will have a lot of [indiscernible] I'd rather see how this develops. I don't think it's time to speculate what will happen and we'll see how this this evolves in the next few weeks months.

Absolutely. Thank you very much.

Thank you. And at this time, we currently have no further questions. So I'll hand back to Andreas for any further remarks.

Thank you very much all for joining us today. As always, our best releases team is available for any further questions and have a good day.

Thank you all for joining today's call. You may now disconnect your lines.