CEO Interview LATAM Airlines, Group CEO Roberto Alvo

Transcript

Dave Appleby:Today, as Marco was just saying, we have the great privilege of speaking with Mr. Roberto Alvo, Chief Executive Officer of LATAM Airlines Group, Latin America's largest airline corporation. Mr. Alvo has been leading LATAM since March 2020. after previously serving as the company's Chief Commercial Officer. And under his leadership, LATAM has navigated through significant challenges while continuing to expand its operations across the region and beyond. Good morning, Roberto.

Roberto Alvo:Thank you, Dave. Good morning. How are you?

Dave Appleby:Very well, thank you. So LATAM Airlines Group stands as a dominant force in Latin American aviation and commanding a leading market share across the region. The airline connects the world through an extensive network Expansive network of 160 destinations spanning 28 countries across the Americas, Europe, Africa, and Oceania. And the group's remarkable fleet has expanded to 360 aircraft, including Airbus narrow-body planes, Boeing wide-body aircraft, and a dedicated cargo fleet of 20 Boeing aircraft. This strategic fleet expansion continues with 12 new aircraft delivered in Q2 2025 alone, LATAM's operational excellence is evident in their recent performance, with consolidated capacity increasing by 9.4% compared to last year while serving nearly 8 million passengers per month. The airline is experiencing a significant turnaround, achieving a record of 12.9% adjusted operating margin in Q2 2025, with revenues rising 8%. And so this session, we're going to explore how LATAM has continued to deliver on its strategic objectives to strengthen its position as the premier airline in South America while navigating complex challenges of the global aviation landscape. So, Roberto, you've been at the helm now, as I mentioned there, LATAM for over 5 years now. How would you characterize the evolution of the airline during your tenure, and especially considering the transformation the aviation industry has undergone since the pandemic?

Roberto Alvo:Well, it's been interesting. Interesting 5 years. We had a little bit of a rough time in the beginning, all of us, with the pandemic. I guess the biggest learning on those difficult years is that as we faced really an existential challenge, because nobody knew actually if airlines were going to survive, particularly the airlines in this part of the world that were not helped by their governments, we decided to think about what if we come out of this, what should we be? So we We gave, I think, ourselves permission to put all of our paradigms in front of us, all of our understanding of how to run our business and just question it. I guess at the end of the day, we came up with 2 important conclusions. One is that we wanted and needed to humanize LATAM. We're a service airline. We are a service business and before anything, our people, our customers need to be in front of us. And I don't think that LAN LAN and LATAM wasn't focused in that in the beginning prior to the pandemic. Then the second one is we, I guess, seized the opportunity to improve the efficiency and restructure financially LATAM.

Dave Appleby:Yeah, absolutely.

Roberto Alvo:Today LATAM is financially restructured. It's trying to serve its people and its customers every day more and better, and taking the opportunity of a wonderful region that has a ton of growth potential, making Great, thank you.

Dave Appleby:And just recently, you know, there's been reported, I think, a 66% year-over-year increase in net income, reaching $242 million. What factors have contributed to this performance, despite obviously all the macroeconomic volatility that there is at the moment?

Roberto Alvo:I think it's a combination of external and internal factors. I think we've seen solid demand in the region across most of the markets, regardless of the political uncertainties that we live in, and I would say a relatively slow growth pace for the continent. But you probably saw also in the public figures that Latin America has been able to bounce back relatively well from that perspective. I think that also—

Dave Appleby:Okay.

Roberto Alvo:Okay, hello, hello. Also, stable fuel prices and lower than last year have helped. On the internal front, so that's probably internal factors that have helped. On the internal front, I think that this focus on serving better and improving the way we treat our customers and we care about them has been extremely important. We have increased our NPS, for example, from the low 30s that we had in 2019 to the upper 50s. And, you know, there's always a discussion about how much a point of NPS is worth. And I don't know, but I know how much 20 points of NPS are worth. So LATAM today stands for its customers and the fact that we're devoting ourselves to them, I think, has meant that people are choosing us every day a little bit more.

Dave Appleby:Okay, that's interesting. And LATAM has been recognized also in the S&P 500 the Global Sustainability Yearbook 2025 as the most sustainable airline in its category. Can you elaborate a little bit on the necessary destination strategy that you have and how that is influencing your business decisions?

Roberto Alvo:Well, for us, this is extremely important and it's in a way very simple. We are here, we participate in the societies where we operate, and we need to contribute to the societies where we are. And that means many things. It means, of course, taking care of the environment. It means also helping the communities where we stand. And we understand our sustainability strategy as doing good to the communities and the societies where we operate at the same time that we develop our business. So this is not after you distribute dividends and then you give a little bit of money for making some, you know, playgrounds for the kids. This is using what we know what to do, which is transporting and connecting. How do we contribute? Most of you probably have had the opportunity to see just outside, we call it Segundo Vuelo, second flight, and that's recycled uniforms, plastic from our operation, and we work with communities in all of the countries where we are and we produce those wonderful things that you see there, and with that we help tens of families, hundreds of families in the region today to have a sustainable way of living and at the same time we're taking care of the environment. So for us this is key. We cannot see LATAM developing itself without being conscious that we live in a society that needs to see LATAM as an asset and not simply a transactional organization that carries people from A to B. That's a signal, that's a commitment. And that's the drive. And one of the things I think we've learned, and I was surprised to this in the beginning, is how empowering is sustainability to your people because many of them have the opportunity actually to contribute, to do something with it. When you have somebody coming with a plan, an idea of how to take some plastic out of the operation and you adopt it, that person can believe no matter where he is ranked at the company, that he or she can contribute. So this is the center of a very important part of our strategy, sustainability.

Dave Appleby:Okay, thank you very much. Obviously, myself being focused on route development day to day, so this question specifically interests me. So you have some A321XLRs coming into the fleet soon. How's that going to affect the network and obviously enable new long-range routes? So which markets specifically? What specifically would you be targeting with that aircraft?

Roberto Alvo:Well, we're still seeing that. I think that there's a few places where XLRs can be developed and deployed within our network. We see opportunity out of Lima, for example, which is a good geography for that. We see a lot of opportunity out of Fortaleza in the northeast of Brazil, which is a hub we launched about 10 years ago. The XLR would provide us with the opportunity to connect that 55 million people northeast of Brazil, which is very poorly connected to Europe and to the US. We see opportunity also to deploy, for example, in Brasília, which can also connect the capital of Brazil to places in the Caribbean, places in Central America and Mexico, and— sorry. To the US. To the US. So we're looking at that. Our first delivery is going to be around '27, so we have a little bit of time, but I think it's an exciting tool, or if you want, arrow in our quiver to expand our network, which is already very comprehensive.

Dave Appleby:Okay, and then conversely, you have also— you've been evaluating the potential maybe of incorporating— can you hear me? Of incorporating the Airbus A220 and Embraer E2 jets for potential fleet expansion. Whilst also retrofitting the A319s as well. So what's driving this multi-pronged approach to fleet management and how does it support your long-term vision for LATAM?

Roberto Alvo:I mean, Latin America, South America in particular, is still a very underdeveloped industry. You have— Chile has the highest growth of passengers per capita, which is around 1.2%, and that is less than half what you have in the developed industry in the developed countries, but it's more than double what you see in the rest of South America. So there's a ton of white space still in the region. And, and how you think about how you can complement the current network we— you have with incremental aircraft that can give you the opportunity to tackle that white space? Well, regional jets are one way, not the only way of doing it, but they're one way. So as we think through the complementation of our network with another potential fleet. This is, this is something we're looking at. We can do this as well with a 319. We have a relatively large fleet of 319s, and they're pretty much fully depreciated, which gives us the flexibility to deploy them pretty much wherever we want. And there's other ways as well. So this is something we're looking at. No decisions made, and we'll see if it makes sense in the next few months.

Dave Appleby:Thank you. So you've also recently increased your operating margin guidance from 13% Given the ongoing macroeconomic uncertainty and unpredictability of US trade policies affecting global aviation, what gives you confidence in this outlook?

Roberto Alvo:Well, I mean, our network is so diversified today that allows us to tackle specific demand changes if they come. Actually, it's happening today. We see point of sale Chile to the US as being much lower than it was a few months ago. This is borne out of the uncertainty of if we are going to keep as a country a visa waiver, which Chile has. LATAM can very easily compensate that. We can deploy aircraft to other routes. We can look at other points of sale to complement our flights. The way our hubs have seen The places where we fly, the size of our network allows us to adapt very quickly, and this is one of the beauties of LATAM. LATAM is very diversified in terms of the countries where it operates, the markets where it serves, cargo to passenger, the FFP. All of these things are important, of course, to our operation, but there are things that we can manage relatively well with our network.

Dave Appleby:Okay, thank you. July 2025 data showed a 10% year-over-year increase also in capacity, with particularly strong growth in international operations. How are you balancing this expansion with a risk maybe of overcapacity in certain markets?

Roberto Alvo:Well, not many airlines, I think, in the world have the ability to grow aggressively and grow profitably. And I think that we've demonstrated this year that we can do that. And this is why we're confident that we can continue this growth pace for the remainder of the year. And we're seeing— and you could see it in the June numbers— growing close to 10% and keeping our RASK relatively stable. It's a feat that you don't see often in this industry. And I think that the capabilities we have, the cost position we have, which is extremely good. The way the network works allows us to think that we can still grow, take advantage of the size, of the efficiency of LATAM, and increase our position in markets or in places where we believe it's key to do.

Dave Appleby:Thank you. So focusing a little bit more on Lima in Peru, what's the How's the experience been right now with the new airport of Lima? How's it been for the airline?

Roberto Alvo:Well, we're happy that finally we have a new airport. I mean, the plan was to have this airport being inaugurated in 2005. So it took 20 years and we have, I guess, this brand new terminal. I think everybody who experienced the old Lima terminal saw that it was completely Surpassed. And I think that this infrastructure is helpful and it was badly needed. So we applaud LATAM that finally we can have this in one of the important hubs of LATAM. However, at the same time, we're extremely concerned about the cost of operating this airport. The cost has increased and there's an intent to charge a connection fee for passengers that aren't connecting, and this is something— That's not fair. that LATAM is against. I think this has the potential of hindering the growth of Peru as an important center for tourism, which is a very important industry for this country. Very happy about the new airport, and it's working well. I mean, it's still things to solve, but in general, the infrastructure I think works well. The costs are going to hurt Peru if they are not solved. Quickly.

Dave Appleby:Going back a little bit on the question of sustainability, so I think there's an objective to achieve carbon neutrality by 2050 and zero waste to landfills by 2027. What technological innovations partnerships are you exploring to accelerate these timelines, and what cultural changes are you making within the organization to meet them?

Roberto Alvo:Well, you know, I mean, I think it's— I think everybody understands the whole industry committed to carbon neutrality in 2050 and not knowing how to do it. That's the truth. And I think it's an extremely challenging endeavor. I think if we fast forward to 2050 and we stand there and we look back and we ask what was the biggest challenge of the industry in the first half of the 21st century, century, it will not be COVID. It will be the decarbonization of the industry. And nobody knows exactly how to do it, but that doesn't mean that we shouldn't put ourselves very demanding targets and try. LATAM, a couple years ago, decided to go and seek for 5% of SAF consumption by the end of the decade. And we didn't commit because there was no production. There is still not a single drop of SAF produced in South America, but we said we're going to go and seek it. And we did it because we wanted to put that conversation in front of everyone, particularly the governments, because this will not be achieved if there is no good positive public policy to tackle the issue. We all understand that we need to decarbonize this industry despite the challenges. But we need the set of incentives that will allow producers and consumers to do this in a good way. Here we're balancing, if you want, 2 good things and the balancing act is going to be key. On the one side, the benefits of connectivity, which for our region are key. We still have cities in this part of the world that are large, 100,000 people that are not connected by air. And that's in 2025. So you can't simply say, all right, let's decarbonize the industry and double or triple the price of the tickets, because then you will be hurting societies in a big way. But at the same time, we have to decarbonize. So, and what we need is intelligent, well-crafted public policies to allow us to navigate the movement between where we are and how to get to carbon neutrality in 2050. LATAM's commitment here is to lead, and as we are the biggest airline in the region, to put these things in front of us so that governments have a serious conversation about how to tackle these well. Will we get to full decarbonization in 2050? Nobody knows. I don't think that even in most developed European mindsets today, people know, and there's of course a ton of that, but that doesn't mean that we shouldn't in a responsible way try. So that's how we see it. And in the meantime, we have a beautiful project in Colombia which is capturing around 1 million tons of CO2 per year, protects around 0.5% of the surface land of Colombia. It's developed with the communities. LATAM developed it with 700 families. And it's our way to contribute to the environment while we find other solutions that are still not there. Okay, thanks very much.

Dave Appleby:So you've also mentioned that LATAM now connects South America with all the different continents. So what are the next frontiers for LATAM's expansion? Both geographically and in terms of business diversification?

Roberto Alvo:Well, as I said, I think that there's still a lot of growth potential in Latin America, not only within itself but also connecting to the world. Even though the economic outlook for the region is not great, and I think that in the next 3 or 4 years, people— our consensus talks about 2% to 3% growth— this industry can still grow to something like 1.5 to 2 times the GDP growth. That's not incredible. I think that there's more potential, but at least I think it gives a sane mark of how this industry can still grow in the next few years. On top of that, I think that there's places where today demand has not been expressed because there is no service. As we try to expand the network and find places that we can connect, I am very confident that LATAM has, and the region and the industry as a whole, has good opportunity to find how to grow in this 500 million subcontinent we have, which is Latin America.

Dave Appleby:That's great. I think it's also good to speak a little bit about the Delta Air Lines partnership as well. Delta acquired 20% stake in LATAM in 2020, as we know. How's this strategic partnership evolved over these past 5 years? What new opportunities are you exploring together?

Roberto Alvo:Well, we've— we're very proud of our joint venture and our relationship with Delta. This is the largest airline in the world, one of the most renowned, and it's a pleasure to work with them. It's not easy to find, you know, a partner who says— who's, you know, they could very well say, listen, I'm a big guy here, I'm the best one, look at my evaluation. So basically, going to teach you how to run an airline, and this is exactly not the case. You have a group of people in front of you which are really willing to sit down and partner with you and find ways on how to jointly improve, deploy the business, and serve the region. It's been in that sense an incredibly positive and fruitful relationship. We have grown on seats close to 50% since we started the JV. Today, LATAM and Delta are close to a third of the capacity between South America and the US, and we have grown close to 10% of our market share in those years. And I think that the fact that the networks are so complementary provides us with the opportunity to serve both people that want to fly to the 140 destinations we have in South America or the plus 150 destinations they have in the US in very diverse ways and in a way that nobody else can mimic in the region. Having said that, I think that we still have things to do. I don't think that our customer delivery is great. Of course, we run into different systems and sometimes information flow is complicated, so I think that we can still improve. The way we treat our passengers, particularly on mixed metal experience. At the same time, I think that the way we have grown the partnership, we just included last year Ecuador to the scope of the AGB. This year we included Argentina, allows us for further opportunity of flying between both countries. We launched not long ago the first flight long-haul from Buenos Aires to Miami. Even though we don't have LAN Argentina or LATAM Argentina, LATAM Argentina anymore. We're going to be back in the long-haul business from Argentina together with them.

Dave Appleby:Great, thank you. And just also, I think it'd be good to speak a little bit on the cargo side as well before we go to questions from the floor. How do you see the air freight market at the moment evolving in Latin America, and what investments are you making in that segment specifically?

Roberto Alvo:Airframe?

Dave Appleby:Air freight.

Roberto Alvo:Air freight. Cargo had a great couple of years during the pandemic, then it slowed down. I think it's in a good place today. You see relatively stable and growing capacity for exports from the Pacific side of South America to the US and to Europe. This is mostly salmon and flowers and asparagus, so relatively basic goods. Imports to the region, which have naturally been strong, are today a little bit less strong just because of the situation of the economies, but still good. Today, cargo sits in a better place than what it sat in 2019. The beauty of LATAM, again, is that we can connect with the operation we have in Chile, in Ecuador, in Colombia, and in the US pretty much most of the customer needs that our clients have. Very content with that. I guess there's a big challenge in terms of fleet going forward as there is no clarity on the replacement of the 767. There is no clarity on the 787 STC, and both Airbus and Boeing have delayed their cargo projects. So if you ask me, fast forward 5 years, one of the challenges industry will have is what is the fleet that's going to serve cargo customers. It's not very clear to me.

Dave Appleby:Thank you very much. We've had a question come in here on the Slido. And it says, is there any plan to resume the Lima to London route?

Roberto Alvo:Oh, that's, that's an Englishman living in Peru, I guess. Well, I mean, maybe. I think that we have, we have a number of projects that we can do out of, out of the places where we have our hubs. One of the things that I think the whole industry is challenged with is lack of widebodies. So for us, the growth perspectives are relatively limited because we only have delivery of a few in the next couple years. But I don't think at this point in time we have made a decision. We see a lot of potential of growth on our 3 hubs. We'll see. We'll see if it comes or if it doesn't come. But sorry, you can still go via São Paulo. It's a great connection.

Dave Appleby:And another question we have here, which is on a similar theme: what should be the next destination from Peru?

Roberto Alvo:Well, we'll keep that. You will know when we announce it.

Dave Appleby:Thank you. And just opening it up to the floor, I don't know if anybody has any questions for Roberto you'd like to ask, take advantage of him being here. No? Okay. Well, just finally then, I think the last question then would be, as we approach the end of 2025, what would you consider to be LATAM's biggest achievement this year, and what's the top priority for LATAM in 2026?

Roberto Alvo:To be honest, our biggest achievement is that I think that we're being true to our priorities, and that is working. Our priorities are very simple. Our priorities are our people, Our customers, our environment, our numbers. People, customers, environment, numbers, in that order. And by that, what do I mean? I don't mean that the numbers are important. What I mean is that the numbers are the consequence of doing these 3 things right. Taking care of our people, taking care of our customers, taking care of the environment. If we do these 3 things right, the numbers will come. And this is what we decided to do 3 years ago after we emerged from Chapter 11. This is what we're executing upon, and I'm very pleased to see that the results are coming. So for us, those are the priorities. It's very simple. And if we have an energized group of people that love what they do, they will take care of your customers. And if they take care of your customers, your customers will want to return. So it's as simple as that.

Dave Appleby:Brilliant. Well, if we can give Roberto a round of applause, please.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.