S&P Upgrades LATAM’s Credit Rating Due to Improved Profitability Metrics

Amalia Bulacios and Luciano Gremone, analysts at S&P Global Ratings, have recently uplifted the credit rating of LATAM Airlines from “B+” to “BB-.”

This upgrade reflects a sustained positive outlook based on the airline’s solid operational efficiency and cost-effective structure. It predicts an upward trajectory in profitability for the coming years.

The resilient demand for air travel across South America, coupled with LATAM‘s streamlined cost structure, forms the cornerstone of this optimistic forecast.

These factors are expected to drive the airline’s profitability, enhancing its financial stability and operational viability.

In terms of financial metrics, LATAM is poised to achieve an EBITDA of $2.9 billion this year, with projections rising to $3.1 billion by 2025.

This marks a significant improvement from the $2.4 billion recorded last year. Additionally, cash generation is anticipated to be robust, ranging between $600 million and $700 million.

The positive outlook stems from the risk assessment agency’s expectation that LATAM will maintain relatively stable profitability. This stability is indicated by profit margins exceeding 20% and a cash-to-debt ratio well over 30%.

These figures underscore the airline’s strong financial foundation and its ability to manage liabilities effectively while generating substantial cash flow.

This credit rating enhancement highlights LATAM’s financial health. It also reassures stakeholders of its capacity to sustain growth and profitability in a volatile market.

It signals a promising future for the airline, reinforcing its position in the competitive aviation industry of South America.

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