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LATAM Airlines Group SA Sponsored ADR (LTM) Risk Analysis
Risk Overview Q4, 2025
Source: the company's latest filing for the period ended Dec 31, 2025, filed Mar 04, 2026
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1Shareholders may have fewer and less well-defined shareholders' rights than if they owned shares of a company in the United States.
Our corporate affairs are governed by our by-laws and the laws of Chile. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction. Holders of ADSs are not entitled to directly attend shareholders' meetings, and, if given the right to vote, they may only vote through the ADS depositary. Under Chilean law, a shareholder is required to be registered in our shareholders' registry at midnight on the fifth business day prior to a shareholders' meeting in order to vote at such meeting. A holder of ADSs will not be able to meet this requirement and accordingly is not entitled to vote at shareholders' meetings because the shares underlying the ADSs will be registered in the name of the ADS depositary. While a holder of ADSs is entitled to instruct the ADS depositary as to how to vote the shares represented by ADSs in accordance with the procedures provided for in the Deposit Agreement, a holder of ADSs will not be able to vote its shares directly at a shareholders' meeting or to appoint a proxy to do so. In certain instances, a discretionary proxy may vote our shares underlying the ADSs if a holder of ADSs does not instruct the ADS depositary with respect to voting.
- Share Price & Shareholder Rights - Risk 2The market price of ADSs may be volatile, which could cause the value of your investment to decline.
Numerous factors, including many over which we have no control, may have a significant impact on the market price of the ADSs or the common shares underlying the ADSs. These risks include those described or referred to in this "Risk Factors" section, as well as, among other things: - our operating and financial performance and prospects;- our ability to repay our debt;- our access to financial and capital markets to refinance our debt or replace the existing credit facilities;- investor perceptions of us and the industry and markets in which we operate;- our dividend policy and capital allocation;- future sales of equity or equity-related securities;- announcements by third parties of significant claims or proceedings against us;- changes in, or results that vary from, earnings estimates or buy/sell recommendations by analysts; and\- general financial, domestic, economic and other market conditions. All of these factors could materially adversely affect the price of the ADSs or the common shares underlying the ADSs. The market price of the ADSs may decline below your initial acquisition price, and you may not be able to sell your ADSs at or above the price you paid for, or at all. In addition, our common shares are listed on the Santiago Stock Exchange (SSE) and the Electronic Stock Exchange (ESE), both in Chile. Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. Chilean securities markets may be materially affected by developments in other emerging markets, particularly other countries in Latin America. Accordingly, although you are entitled to withdraw the common shares underlying the ADSs from the depositary at any time, your ability to sell the common shares underlying ADSs in the amount and at the price and time of your choice may be substantially limited. This limited trading market could increase the price volatility of the ADSs or the common shares underlying the ADSs, which could also result in price disparity between the trading prices of the two.
Risk Highlights Q4, 2025
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 51
- Manufacturing - Risk 1Prolonged technical and operational issues with the airport infrastructure in cities where we have a significant presence may have a material adverse effect on our operations.
Our operations and growth strategy are dependent on the facilities and infrastructure of key airports, including Santiago's International Airport, São Paulo's Guarulhos International and Congonhas Airports, Brasilia's International Airport, Bogota's El Dorado International Airport, and Lima's Jorge Chavez International Airport. At Santiago's Arturo Merino Benítez International Airport, the concessionaire completed the remodeling and expansion of the domestic terminal in September 2025, increasing capacity and improving facilities. While this modernization is expected to enhance airport capacity and passenger experience, large-scale infrastructure projects can involve shifts in operations and reconfiguration of facilities that may result in operational challenges. In addition, infrastructure improvement works planned for 2026 will require alternating the use of the airport's two runways, resulting in only one runway being available for an extended period between April and August 2026; operating with limited runway capacity could constrain runway throughput, potentially leading to delays, schedule adjustments or other operational limitations. The renovation and expansion of Diego Aracena International Airport in Iquique, Chile, including significant enlargement of the passenger terminal, has been completed, and Chacalluta International Airport in Arica concluded its renovation and expansion in December 2024. As part of Chile's broader Plan Aeropuertos 2025-2030, the government plans to invest in the improvement and expansion of airport infrastructure across the country, including terminal and runway upgrades, equipment modernization and capacity enhancements at multiple regional airports, with total investments in the billions of dollars over the coming years. Projects under this plan include a major terminal expansion and other works at Balmaceda Airport, which is under construction and expected to begin operations in the first half of 2027, and improvements to other regional infrastructure to strengthen connectivity and capacity. In Peru, several regional airports have faced infrastructure challenges related to runway conditions that have resulted in temporary suspensions of operations or limited service, affecting connectivity. Rehabilitation and maintenance works, including runway resurfacing and technical interventions, have been implemented or are planned, and broader modernization projects are subject to ongoing planning and contracting processes that could extend into 2026 or beyond. Brazilian airports, including Brasília and São Paulo (Guarulhos) International Airports, are also subject to infrastructure capacity constraints and modernization requirements. Significant investments in airport infrastructure are projected through at least 2029, including expansion of taxiways, additional piers and apron enhancements, and other works that may involve simultaneous construction activity and could result in temporary restrictions or operational limitations, which, in turn, may affect our access to slots or our ability to maintain or increase capacity at certain airports. While LATAM group is closely coordinating with and supporting the airport concessionaires, any delays in the completion of the ongoing remodeling or expansion works of any of the airports indicated above would materially adversely affect our operations.
- Manufacturing - Risk 2Losses and liabilities in the event of an accident involving one or more of our aircraft could materially affect our business.
We are exposed to potential catastrophic losses in the event of an aircraft accident, terrorist incident or any other similar event. There can be no assurance that, as a result of an aircraft accident or significant incident: - we will not need to increase our insurance coverage;- our insurance premiums will not increase significantly;- our insurance coverage will fully cover all of our liabilities; and - we will not be forced to bear substantial losses. Substantial claims resulting from an accident or significant incident in excess of our related insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Moreover, any aircraft accident, even when comprehensively insured, could cause the negative public perception that our operations or aircraft are less safe or reliable than those operated by other airlines or by other flight operators, which could have a material adverse effect on our business, financial condition and results of operations. On November 18, 2022, LATAM Airlines Peru reported that during the take-off of flight LA 2213 at Lima's Jorge Chávez International Airport a fire truck entered the runway while performing an emergency drill and collided with its aircraft. Authorities subsequently confirmed fatalities of three firefighters who were in the fire truck that struck the aircraft. There were no fatalities among the 102 passengers and six crew members of the aircraft. According to the final report of the Aviation Accidents Investigation Commission (Comisión de Investigación de Accidentes de Aviación, "CIAA") issued in September 2023, this chain of events was originated by the airport operator's inadequate planning and coordination, as well as the failure to use the communication and International Civil Aviation Organization ("ICAO") standardized phraseology. The aircraft damage from this event was covered by LATAM's insurance policies. Similarly, on March 11, 2024, LATAM experienced an incident involving flight LA800, which operated from Sydney to Auckland. The Boeing 787-9 aircraft encountered a severe technical difficulty approximately an hour before landing, resulting in an abrupt drop in altitude. This unexpected movement led to injuries among 10 passengers and three crew members. There were no fatalities among the 263 passengers and nine crew members of the aircraft. The incident was caused by a technical issue within the aircraft, which a later investigation suggested was caused by a flight attendant who might have inadvertently activated a switch on a cockpit seat. The Company has since been working closely with aviation safety authorities to prevent future occurrences. LATAM's insurance policies covered the medical treatment of the injured passengers and crew, and the repair costs associated with the incident.
- Manufacturing - Risk 3It cannot be assured that in the future we will have access to adequate facilities and landing rights necessary to achieve our expansion plans.
Certain airports that we currently serve or plan to serve in the future may have capacity constraints and impose various restrictions. These restrictions include limitations on takeoff and landing slots during specific periods of the day and restrictions on aircraft noise levels. We cannot guarantee that our group will be able to secure an adequate number of slots, gates, and other facilities at airports to expand our services in line with our growth strategy. Additionally, airports that are currently not subject to capacity constraints may face such constraints in the future. Furthermore, airlines must use their slots regularly and promptly, or they risk losing them to other carriers. If slots or other airport resources are unavailable or restricted in any way, we may need to modify schedules, alter routes, or reduce aircraft utilization. It is also possible that aviation authorities in the countries where our group operates may change the rules for assigning takeoff and landing slots. An example of this is the São Paulo airport (Congonhas), where slots previously operated by Avianca Brazil were reassigned primarily to Azul in 2019, after the Brazilian National Civil Aviation Agency (Agência Nacional de Aviação Civil , or the "Brazilian ANAC") approved new rules for slot distribution. Likewise, on June 7, 2022, Brazilian ANAC passed Resolution No. 682, by which the Brazilian ANAC approved new regulation for airport coordination and defined the rules for allocating and monitoring the use of airport infrastructure through the use of slots (e.g., coordination of arrival and departure times) at coordinated airports. It also updated the parameters applicable to the airports of Congonhas, Guarulhos (Governador André Franco Montoro International Airport), Rio de Janeiro (Santos Dumont Airport), Recife (Gilberto Freyre International Airport) and Pampulha (Carlos Drummond de Andrade Airport). The occurrence of any of these scenarios involving LATAM group operations could have a negative financial impact on our business. In October 2023, LATAM and JetSmart disputed the allocation of frequencies on the Santiago to Lima route. During a public bidding process conducted by the Chilean Civil Aviation Administration (Junta de Aeronáutica Civil, or "JAC"), LATAM secured 10 out of 13 available frequencies, while Sky Airline obtained the remaining three. JetSmart, which previously operated 14 frequencies on this route, lost nine of them in the bidding. JetSmart criticized the process, arguing that the allocation favored airlines with dominant market positions and raised concerns about potential frequency hoarding. In response, LATAM contended that JetSmart's failure to secure frequencies was due to its own strategic choices and not the bidding mechanism. The dispute was brought by JetSmart to the Chilean Antitrust Court (Tribunal de Defensa de la Libre Competencia, or "TDLC"), which, in January 2025, concluded that the bidding process did not violate antitrust laws and adhered to existing regulations. Moreover, we cannot guarantee that airports without current restrictions will not implement restrictions in the future, or that existing restrictions will not become more burdensome. These restrictions may limit our ability to continue providing services or expanding our operations at these airports.
- Manufacturing - Risk 4We rely on maintaining a high aircraft utilization rate to increase our revenues and absorb our fixed costs, which makes us especially vulnerable to delays.
Generally, a key element of our strategy is to maintain a high daily aircraft utilization rate. High daily aircraft utilization allows us to maximize the amount of revenue we generate from our aircraft and absorb the fixed costs associated with our fleet and is achieved, in part, by reducing turnaround times at airports and developing schedules that enable us to increase the average hours flown per day. Our rate of aircraft utilization could be adversely affected by a number of different factors that are beyond our control, including air traffic and airport congestion, adverse weather conditions, unanticipated maintenance and delays by third-party service providers relating to matters such as fueling, catering and ground handling. If aircraft fall behind schedule, the resulting delays could cause a disruption in our operating performance and have a financial impact on our results.
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