LATAM Airlines Cuts 2026 Forecast on High Fuel Costs

LATAM Revises 2026 Earnings Amid Fuel Price Surge

LATAM Airlines has cut its 2026 core earnings forecast to a range of $3.8 billion to $4.2 billion, down from a previous estimate of $4.2 billion to $4.6 billion. The airline attributes the downgrade to soaring jet fuel costs.

Situational Overview

The revised outlook is driven by surging fuel prices linked to geopolitical tensions. The carrier projects over $700 million in additional fuel expenses for the second quarter, assuming an average jet fuel price of $170 per barrel, nearly double its prior full-year assumption of $90.

Economic Impact and Response

Despite the downgrade, LATAM reported a strong first-quarter net income of $576 million, a 62.1% year-on-year increase. The airline is implementing cost controls and revenue measures to offset the impact and still expects a positive operating margin in the second quarter.

Summary

LATAM's forecast adjustment underscores the aviation industry's exposure to fuel price volatility. While the outlook is cautious, its strong first-quarter performance and mitigation strategies provide a buffer against escalating cost pressures.

FAQ

Q: Why did LATAM cut its forecast?
A: Due to a sharp and significant increase in jet fuel prices.

Q: What is the new 2026 earnings forecast?
A: The new adjusted EBITDA is projected to be between $3.8 billion and $4.2 billion.

Source: Reuters via Investing.com