Moody's Ratings Affirms LATAM Airlines Group S.A. (LATAM)'s Ba2 Ratings; Outlook Revised to Positive

  • On March 2, 2026, Moody's Ratings affirmed LATAM Airlines Group S.A. (LATAM’s) Ba2 corporate family rating and the Ba2 ratings on its senior secured notes. It also revised the outlook to positive from stable, reflecting expectations of further improvement in credit metrics and liquidity over the next 12–18 months.
  • The Ba2 rating reflects the company’s scale, strong network connectivity, and leading positions across key domestic and international markets in Latin America, supported by a diversified business portfolio of air transportation services, strategic alliances, improved capital and cost structures, and very good liquidity that positions the company to manage industry volatility.
  • Operating performance remained robust in 2025, further strengthening LATAM's credit metrics. This provides the company with a reasonable cushion to withstand potentially weaker market conditions. Driven by sustained improvements in cost discipline and a disciplined approach towards capacity and airfares, Moody’s-adjusted EBIT margin grew to 14.8% (from 14.1% in 2024). Adjusted leverage improved to 2.1x, while free cash flow of $324Mn was generated. Leverage is expected to remain between 1.5x–2.0x over the next 12–18 months, alongside a projected cash balance of $2.0–$2.5Bn, well above the company's minimum cash requirements.
  • LATAM has a very good liquidity profile, supported by $2.2Bn in cash at the end of 2025, a manageable debt maturity profile (with $1.5Bn due before the end of 2027), and $1.85Bn in revolving committed credit facilities, of which $1.58Bn remained available. Operating cash flow to be around $3.0–$3.5Bn over the next 12–18 months, which is sufficient to cover annual capex needs by approximately 1.3x and support positive free cash flow generation.
  • LATAM’s credit rating could be upgrade if adjusted leverage remains below 3.0x and interest coverage above 5.5x on a sustained basis, alongside strong liquidity and positive free cash flow even during fleet expansion. Conversely, downward pressure on its rating could arise if leverage exceeds 4.0x, interest coverage falls below 4.0x, liquidity weakens, or demand and profitability shocks result in sustained cash burn.

(Source: Moody’s Ratings)