LATAM Airlines Group S.A. American Depositary Shares (each representing two thousand (2,000) shares of Common Stock)

Hello and welcome to the fourth quarter 2024 Latham Airlines Group earnings conference call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question once the presentation has finished, please press star followed by one on your telephone keypad. Before I turn the call over to management, I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations and as such constitute forward-looking statements. Any matters discussed today that are not historical facts Particularly comments regarding the company's future plans, objectives and expected performance or guidance are forward-looking statements. These statements are based on a range of assumptions that LATAM believes are reasonable, but are subject to uncertainties and risks that are discussed in detail in the published 20F 2025 Guidance Earnings Release, financial statements and related CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested, and any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. I'd now like to turn it over to the management team to begin. Please go ahead.

Hello, everyone, and good morning. Welcome to the fourth quarter and full year 2024 conference call, and thank you all of you for joining us today. My name is Andres El Valle, Vice President of Corporate Finance at LATAM Earnings Group. Here with me today is Roberto Alvo, our CEO, Mr. Ricardo Bottas, our CFO, who recently joined the team, and Terry Creighton, Head of Investor Relations. And we will present our highlights and results for the fourth quarter and full year 2024. I will hand it over to Roberto to share opening remarks about the quarter's and year's highlights. Once he's finished, I'll present them in more detail alongside the financial results.

Over to you, Roberto. Thank you, Andres. Good morning, everyone, and thank you for joining us to review LATAM's group performance for the fourth quarter and full year results. Before we begin, on behalf of LATAM Airlines, I'd like to express our deepest condolences about the recent accident in Washington. Our thoughts are with the loved ones of passengers and crew on board of the aircraft and the helicopter and the American Airlines team during this difficult time. Also, before I turn to the results, I'd like to invite Ricardo to introduce himself. He has a proven track record of over two decades and vast experience in corporate finance, financial planning, tax, accounting, and investor relations. Among other areas, working for multinational public companies in Brazil, he was also a CEO for a few years. And it's great to have him here. So Ricardo, over to you.

Thank you, Roberto. First of all, I'm thrilled to be joining Lausanne. I've always admired it. It's an exciting time. And it's the best moment in the history of the group. But for sure, there's still a lot to be done. And I'm looking forward to the challenge. As Roberto mentioned, I've worked in finance in many different roles in different industries related to health care, insurance, and energy. And now I'm joining the aviation industry and couldn't be more excited to work together with LATAM's teams from now on. So thank you, Roberto, again, and back to you. Thank you, Ricardo.

Overall, 2024 was a year of significant achievements for LATAP. Not only in the financial sense, in which we successfully met our 2024 updated guidance, but also with respect to our customer satisfaction, our operations, and our capacity to profitably grow, not only on our passenger operations, but also in our cargo business and loyalty program. The results, in my view, are a testimony of the resilient model we have built over the years that allow us to achieve these results in the context of very dynamic macroeconomic and competitive environment. We're incredibly proud of this accomplishment, which wouldn't have been possible without the hard work and dedication of our more than 38,000 employees. Thank you very much to each one of you. You are the engine that is driving LATAM today. In terms of operations during the quarter, LATAM grew approximately 12% compared to the previous year. and grew 15% for the full year while maintaining healthy load factors, highlighting our ability to grow efficiently. For the full year, we transported a record-breaking 82 million passengers, further solidifying our role as a key player in connecting people across 151 destinations in 27 countries and allowing South America to be connected within itself and the world. These achievements reinforce LATAM group position as the number one carrier by market share in five domestic markets and the leading airline group in South America. The group cargo operations also deliver robust results during the second half of 2024, ending the year with improved load factors, better unit revenue, and showcasing operational growth. Similarly, at the end of the year, our frequent flyer program, LATAM PASS, reached 49 million members, reaffirming its position as the largest loyalty program in the region. LADAM's financial results also reflected continuous cost efficiency. Adjusted passenger cask fuel for the year was 4.2 cents, which is 1.5% lower than our 2023 figure. This led us to an double-digit adjusted operating margin of 12.7%, outperforming our guidance. Adjusted EBITDA reached 3.1 billion for the year, bringing full year net income to $977 million, which nearly doubles our 2023 figure. These achievements are not just historical milestones for the company, but they're also a testament of the dedication, resilience, and collective effort of the entire team. We have consistently delivered strong improvements in our capital structure. As you have followed our progress, you've seen how we've actively reduced our leverage, which now stands at 1.7 times with liquidity currently at 27%, ensuring LATAM has a strong balance sheet. It is worth mentioning our successful refinancing exercise conducted in the fourth quarter, which significantly reduced the cost of the majority of our non-flip debt. The focus and efforts we have devoted to placing our customers at the center of our decision making, devoting ourselves to continuously improving the travel experience also bore fruit. Customer satisfaction reached unprecedented levels, achieving the highest ever total net promoter score of 51 points and 56 points for our premium passengers and also the lowest rate of customer complaints in chile brazil and peru where we have public figures to be compared additionally for the sixth consecutive year latin rank among the top five global airline groups in punctuality underscoring its operational performance and commitment to ensuring passengers arrive on time and comfortably Furthermore, LATAM Airlines Group was incorporated into the Dow Jones Sustainability Index and was recognized as the fifth most sustainable airline group worldwide and the most sustainable group in the Americas and the Western Hemisphere. Once again, these achievements underline our commitment to combining operational excellence with environmental and social responsibility. As we close 2024 and we embark in a new year, I believe it's important to summarize again our achievements. In 2024, we delivered our best financial results so far, including very strong balance sheet, keeping at the same time our extremely efficient cost base. Our network presence is strong in every segment we operate. We transported more passengers than ever before, and we did so with our historically best customer satisfaction score. All of this in the context of being one of the most functional and more environmentally conscious airlines in the world. Looking ahead, in the short term, we expect demand to remain healthy with steady booking curve for the first quarter of 2025. In particular, the international segment continues to demonstrate strong levels of bookings for the current high season. Thank you again for your time. I'd like to turn the call over to Andres to further discuss our financial and operating results. Thank you, Roberto.

Let's move to the following slide, please. Diving deeper into fourth quarter operating figures, LATAM groups continues to show robust operational growth year over year, with more passengers choosing us across all markets. In this sense, during the quarter, the group transported 21.5 million passengers. This is a 7% increase compared to fourth quarter of 2023, and achieved a record-breaking 82 million passengers for the full year, reinforcing LATAM as the largest airline group in South America and among the top 10 globally in terms of seats. Also, during this period, capacity grew by approximately 12% while maintaining healthy load factors across all tech lands with a notable consolidated load factor of almost 86% for the quarter. In terms of consolidated revenues per ASK, we see a decrease of 10% year-over-year, though stable compared to the third quarter of 2024. This decrease was influenced by the decline in jet fuel prices year-over-year and by currency depreciation in some of our main markets, especially in Brazil, since RASC are presented in USD. However, when analyzing RASC in local currency, you observe an average increase of 3% among Spanish-speaking countries where LATAM Group's affiliates operate. In Brazil, however, the comparison base is exceptionally high from the fourth quarter of 2023. LATAM Group's diversified network and strong value proposition has enabled us to deliver solid results this quarter with improved margins that we can see now on slide five. In this fourth quarter, LATAM continued to consolidate the trend of strong financial performance, achieving an adjusted operating margin of 13.6%, supported by revenue growth and cost discipline. Total revenues increased by 4% year-over-year, driven by a remarkable 29% growth in current revenues, marking the third considerable quarter of improvement. Total adjusted operating expenses increased by only 1% in the quarter, primarily driven by a 12% increase in capacity offset by a decline of 23% in jet fuel prices, including hedges, which helped mitigate cost pressures and further contributed to operational efficiency. Adjusted EBITDA grew by 28% to $866 million, while net income for the quarter reached $272 million, marking a 228% increase compared to the same period of 2023. These results emphasize the effectiveness of our operational strategy and our focus on consistent financial performance. Turning to the next slide, the financial results achieved reflect our commitment to enhancing the customer experience as a pipeline element of our strategic vision. This year, we made progress on elevating the quality and satisfaction of our services. A key metric of our success is the improvement in our net promoter score, which climbed to 51 points marking a three-point increase from the previous year, while our net promoter score for premium travelers reached 56 points during 2024. While there is always room for improvement, LATAM Group's affiliate has the lowest of customer complaints across Chile, Brazil, and Peru. Punctuality is another cornerstone of our service excellence, and we are proud to be recognized as one of the most punctual group of airlines in the industry. This commitment to reliability ensures that our flights consistently depart and arrive on schedule enhancing the travel experience for all our passengers. To further enhance the passenger experience, we have successfully implemented Wi-Fi connectivity across 100% of the Narabadi fleet operated by LATAM Airlines Brazil and 75% of the Narabadi fleet operated by affiliates based in Spanish-speaking countries. We have also completed the comprehensive modernization of our Narabadi fleet, incorporated the latest technology and comfort rated science to provide a superior travel experience. Additionally, as of December 2024, 54% of LATAM's group wide-body fleet feature a retrofitted interior. These achievements reflect our relentless focus on customer satisfaction and loyalty. Let's move to slide seven, please. As I just mentioned, we have made significant progress in the travel experience, but at the same time, we have demonstrated remarkable financial discipline by keeping our unit's cost stable. Our annual adjusted passenger cash ex-fuel remains at that competitive 4.2 cents, highlighting our effective cost management strategies amidst industry challenges and a focus on continually investing in improving our product and customer experience. The next slide, please. Turning to the next slide, in 2024, sustainability continued to be a cornerstone of LATAM's group strategy, guiding our investments and innovations across the region. In this sense, we have been reincorporated in the Dow Jones Sustainability Index and recognized as the most sustainable airline group in the Americas and ranked fifth worldwide. On the other hand, we proudly secured South America's first sustainability-linked loan, underscoring our leadership and commitment to sustainable finance. Additionally, in December, the results from the joint study with the MIT and Airbus were published, which focused on advancing the production of sustainable aviation fuel in our region. This initiative represents a step forward in reducing carbon emissions and promoting cleaner air travel. Beyond these advancements, LATAM Group has made tangible environmental progress. In 2024 alone, we recycled 280 tons of waste on domestic flights, contributing to circular economy initiatives, and since 2010, our efforts in fuel efficiency have helped avoid 4.5 million tons of CO2 emissions. Our Solidarity Plan program has transported over 16,000 passengers and 3,500 tons of cargo free of charge since 2021, reaffirming our commitment to social impact. By investing in sustainable technologies and partnerships, LATAM Group is not only reducing its environmental footprint, but also setting new standards for the aviation industry. We're committed to leading the way in sustainability, ensuring a greener future for generations to come. Let's move to slide nine. Our performance results reflect our commitment to enhancing the customer experience, which contributed to both our quarterly and full-year figures. For the full year 2024, LATAM delivered on its updated guidance, achieving notable financial results that continue to improve year over year. In this sense, annual revenues reached $13 billion, representing an approximately 11% growth year over year. Annual adjusted operating margin was 12.7%, This is an increase of 1.5 percent points compared to 2023, while adjusted EBITDA increased by 23 percent to 3.1 billion. LATAM has a solid foundation for sustained growth in 2025, as you can see in our 2025 guidance figures, which support continued financial improvement. All of these positive results are reflected in the net income generation for the year, which amounted to $977 million, nearly double the 2023 figure. Moving to slide 10, as you know, we consider cash variations to be the true measure of performance. In this sense, adjusted operating cash flow generations in a year total $2.8 billion, while investments in maintenance and growth amounted to $1.5 billion. Throughout 2024, LATAM generated $243 million in positive cash. Notably, this includes the allocation of $165 billion for the mandatory minimum dividend payment and $207 million for the refinancing exercise conducted in October of last year. In both cases, we reinforced commitment to sustainable capital allocation, and then we invited two shareholders. Please join me on slide 11. LATAM continued to strengthen its capital structure in 2024, and also delivered on this front with regard to its updated guidance. Liquidity at the end of the year reached $3.5 billion according to 27% of last month's revenues, while adjusted net leverage decreased to 1.7 times. These results highlight the continued deliberating efforts and commitment to financial discipline. This robust capital structure provides LATAM with the flexibility to fund growth initiatives while ensuring long-term stability. Given the strong cash duration in 2024 and LATAM's consistent financial performance over the past two years, the company has updated its financial policy aligned with its best interest and strategic objectives. This policy establishes a capital allocation framework. Shareholder returns beyond the mandatory 3% dividend distribution. The strategy focuses on maintaining financial discipline by optimization because of debt, having adjusted net leverage below two times, and aspiring to reach a BB plus rating. The policy also outlines a range of optimal liquidity between 21 and 25% of last month's revenues. In line with this policy, LATAM's management and board regularly analyze alternatives for further capital return program to shareholders, including but not limited to incremental dividends, share buybacks, and or growth capital and strategic investments for most effective allocation of capital in 2025 and beyond. Considering that the current share ADR price may be undervalued compared to historic multiples, and while share buybacks are not common practice in Chile, the Board of Directors will evaluate whether an up to $150 million share buyback program can be implemented while mitigating the impact to the shares' current trading liquidity.

Let's move to slide 12.

Looking ahead to 2025, Batam Group anticipates continued growth and financial strength. Capacity measure in this case is expected to grow by 7% to 9% as a whole, supported by the addition of 22 new aircraft throughout the year, with revenues forecast to reach $14 to $14.5 billion. Adjusted EBITDA is projected at $3.25 to $3.6 billion, supported by a healthy demand environment, a diversified value proposition, disciplined cost management, and strong liquidity. LATAM remains focused on delivering operational excellence and creating value for all stakeholders this year. Let me conclude with slide 13. 2024 was a strong year for LATAM Group. We witnessed a record-breaking number of passengers transported while achieving significant operational milestones that underscore our strategic progress. Throughout the year, we consistently delivered strong financial results with an annual net income of $977 million, deeply doubling the 2023 figure. We also achieved an adjusted EBITDA of $3.1 billion, representing a 23% increase year-over-year. Our commitment to cost containment is reflected in our unadjusted passionate cash ex-fuel of 4.2 cents. For 2025, we expect to sustain this growth momentum. Cash and satisfaction increased as evidenced by net promoter score of 51 points, a three-point improvement over 2023. That time was ranked as the fourth most punctual global airline during the year, further enhancing customer satisfaction and our reputation for reliability. Our leadership in sustainability distinguishes us within the industry, having secured South America's first sustainability-linked loan and recognition as the most sustainable airline group in the Americas and the fifth worldwide. These accomplishments illustrate LATAM's forward-looking focus, well prepared for future opportunities, and to navigate the evolving aviation landscape. Thank you. We now welcome any questions that you may have.

Thank you. As a reminder, if you'd like to ask a question, please press star followed by 1 on your telephone keypad. Our first question for today comes from Michael Linenberg of Deutsche Bank. Your line is now open. Please go ahead.

Oh, yeah. Hey, good morning, Roberto, Andreas, Ricardo, Tori. And by the way, a warm welcome to Ricardo. Not only are you joining an airline that is a leader in Latin America, but I think many view it as the gold standard on a global basis. So welcome aboard. I have two questions here, and maybe... The first one to Andreas and or the team. You reiterated your December 3rd guidance, and yet, you know, over the past, you know, two months, we've seen the currency depreciate, you know, pretty meaningfully against the dollar as well as fuel prices move up. And so my question is, What are you seeing with respect to the pass-through of basically the higher cost of doing business that gives you confidence that you feel good about reiterating these numbers, the margins and revenue growth?

Thanks, Mike. This is Roberto. The question, and thanks for the compliments as well. Well, our guidance has $90 per barrel of jet fuel and 5.8 of real. At the current levels on both commodities are not very far from that, even though we've seen, of course, volatility. At this point in time, I think that we still feel very confident about our guidance. The booking curve in the first few months of the year is healthy and solid in almost every line of business where we have. Carol has bounced it back nicely as well since the second semester of last year through the beginning of this year as well. And I think the debility we have to diversify our portfolio, move our assets around, make sure that this is an opportunity for that time remains. One of the things I told you in past calls is that, you know, one of the things that we build is something I call relative strength. And actually, in these moments of volatility is when I think that our position allows us to take advantage of that relative strength and eventually induce opportunities of us solidifying our network and our presence. So we remain confident. We have the tools, we believe, to overcome this volatility. I mean, be mindful that the real depreciated 20% in 2024. It was below 5% at the beginning of the year and ended in 6%. And despite of that, we were able to deliver the results we had in 2024. So, we remain optimistic and confident that we have the abilities to do that in 2025.

Great. And then, just my second question on, you know... Oh, go ahead. Go ahead. No, go ahead. Go ahead. Oh, just my second question, you know, hearing... your sort of potential opportunity with respect to capital deployment, shareholder returns, considering a share of purchase, are there any restrictions or mitigating factors that, you know, you mentioned $150 million, you know, on size? I realize that a good portion of your float is held by insiders. Yes. Is that one of the gating issues in sizing a potential share of purchase? If you could talk about that. And again, thanks for taking my questions.

Thank you, Michael. So first, just to remind particularly people in the U.S. that are not necessarily very close to Chilean loss, either dividend distributions at the end of the day, policy over 30% or buybacks need to be approved by shareholders. So this is not a board decision. Board can recommend Ultimately, shareholders make that decision. So we will do that in case we decide to move in this direction. Yes, we are mindful of the liquidity of the share. These operations are not very typical in Chile either. I mean, there's very few cases and none of relatively important sites. So we want to analyze. The law provides for this, so it can be done. But of course, we want to analyze very well the feasibility of doing that. But the size is limited today basically to our understanding that we don't want to impact the liquidity of the shares, particularly in the U.S. market. So that's a constraint we have very much in mind today.

Great. Thanks and great quarter, everyone.

Thank you.

Thank you. Our next question comes from Jens Spice of Morgan Stanley. Your line is now open. Please go ahead.

Yes, hello. Congrats on the strong results to finish and wrap up the year. I just had a question on prices mainly. I mean, looking at the Brazilian market in local currencies, your prices are down. So if you could just explain a bit more what's going on there and if you see further pressure going forward. And also on the international side, understand what's mainly driving the decrease in prices is it more inter-regional international flights or is it long haul in terms of mix how should we think about it thank you yes so so traffic in domestic Brazil remains healthy and last

Quarter of 2023 was, in particular, very strong. So there's a very high basis of comparison vis-a-vis 2023. In absolute terms, nonetheless, during 2024, we saw a healthy movement of yields in domestic Brazil. And at this point in time, we have no indication that demand will not continue to be healthy going forward. With respect to international, it's been relatively across the board. I would say that Brazil to Europe, Latin America to Europe in general, has been very healthy. A little bit less so to the US, but still in good, healthy figures. And regional, which is international within South America, had a very nice rebound as well. Do we remember that international was the last segment to recover from the pre-pandemic level? So what we saw in 2024 was still probably the last bit of the recovery, and that's why also we grew around 20% in international. But there are no segments in international that are particularly concerning us, whether it's the regional, again, international within South America, or the non-home.

And I would compliment that, of course, whatever currencies depreciate, we see, I think, a pickup in inbound traffic from coming to South America, I think, which becomes more attractive. And we definitely see that across all markets, inbound traffic.

Okay, understood. Yeah, on that last point, that's what I was trying to dissect. Because international, obviously, you're probably seeing some weakness on the interregional flights due to the volatility in the local currencies. But also, it could end up being positive for long haul, right?

But yes, I don't think we have seen weakness. Probably I mis-explained myself. I think that regional, so international, has been solid. And what Andres says is very important. So let me just give you an example. There's a currency depreciation in Brazil, we do know, but there's actually in real terms a currency appreciation in Argentina. And Argentines love to travel. So you see significant increase in outbound traffic from Argentina through our hubs to long haul within the region. So at the end of the day, the volatility we've seen in the currency this year has been in a way counterbalanced by other markets. We see in general strong volatility flows in almost every one of our international segments, whether it's within South America or long-haul.

Perfect, very clear. Thank you.

Thank you. Thank you. Our next question comes from Andrea Ferreira of Bodesco. Your line's now open. Please go ahead.

Good morning. Thanks for taking my question. Congrats on the results. Two topics here. So first, about the fleet plan, it looks like it relies on a significant increase of the number of meals being delivered and also significantly more than what was delivered in 2024. So my question is, if you see risks of this being hampered by further delays in deliveries by Airbus, And my second question, it looks like the combination of Azul and ABRA or goal is advancing. And I just wanted to get your view on, I mean, how would this impact LATAM? How would this impact the local fair environment? And if it changes anything in LATAM's longer term strategy for Brazil, if it goes ahead. Thank you.

Yes. Thank you, Guilherme. So we do have 22 Airbus 320 arrivals, 320 family arrivals in 2025. We are not concerned today with the delivery stream for Airbus. Actually, I believe that this relatively high fleet incoming this year is an advantage for a time because I think it will allow us to take advantage of our relative strength going forward. We have Two 787s arriving in 2025, probably there's risk of delays there. But we're monitoring very closely Boeing's increase in production. They're trying to recover the 787 production. So we remain very, very attentive to that. But I would say that there is no big concern that we have internally with respect to our fleet plan in 2025. I would say probably that more than the deliveries, it's the engine situation, the one that we're monitoring more closely, as Brad and Whitney and Rolls-Royce have had issues with their supply chains. We've had very productive interactions with them. We have a few 787s, three at this moment on ground, and seven 320 family aircraft on ground. It's a relatively low number, and we have very constructive conversations with them, and this is what we're monitoring more closely. That risk is, of course, included in our guidance so far. With respect to your second question, I mean, what we have today seen, as everybody, is a non-binding MOU that has very little detail on this transaction. I think it's still premature to opine on what this exactly will mean for LATAM. This is a big potential combination that will have, no doubt, mitigations if approved and we are expecting to see what are the mitigations that Aura and Azul will propose. And then we'll have a better understanding of what these will mean. So in the meantime, we have improved our presence in domestic procedure in 2024. We are almost 40% of the market. And I think we're very happy with the performance of our domestic operation in that market. So we'll see what happens in the next weeks and months. Thank you.

Thank you. Thank you. Our next question comes from Steven Trent of Citigroup. The line is now open. Please go ahead.

Good morning, everybody, and thanks very much for taking my question. First of all, I definitely appreciate the thoughts for the tragedy that happened in DC. Along those lines, I would love to hear your guys view sort of the adequacy of infrastructure and air traffic control capability in your key markets. Do you see sort of room for improvement there or you're pretty happy with how the infrastructure is set up? Thank you.

Hi, Steven. this industry in South America in the last 20 years has grown incredibly. I mean, it was a very immature industry in the beginning of the century, now still immature in the sense that we can still carry much more passengers as our figures are relatively low as compared to developed markets. And I think that in every area of the chain of aircraft, transportation, cargo, and passengers, we've seen improvement in the last few years. I mean, airports have grown. ATC systems have improved. Today, we have GPS-guided landings and takeoffs in almost every significant airport. It works relatively well. We have much less congestion, particularly in ATC, than what you have in the US. We don't have the complexity of the system of so many regional airports, small aircraft, jets, private jets, Air Force bases that you have in the US. So it's clearly less complex in our view than what you have there. Having said that, yes, of course, infrastructure has challenges. We're expecting to see the new Lima airport, which hopefully will open in the next two or three months. That's very needed. The concession program in Brazil about new airports, I think, has helped in infrastructure as well. We have a new terminal in Santiago that is only three years old. I would say probably the airport where there's more constraint today is El Dorado. in bogota where really slots are taking at every single hour of of the day um and it's it's it's a little bit of a constraint in certain places um but i think that i think that the programs of infrastructure sometimes a little bit slower than what would love have accompanied the growth of of the industry in the last 15 or or 20 or 20 years we actually are doing something very interesting we are looking at our data, but not the data where we have, you know, our parameters probably out of our ranges, much the country where we have our parameters within our ranges. And that is helping us understand if there's things that can be done to improve safety for operations and the regional together. And actually, that's been very helpful because we have identified opportunities that we have passed to airports and operators in terms of how to improve the way they manage the infrastructure and the operations at this point in time. We're, I think, leading that in the region and being happy to not only help our own operation, but share this with the authorities so that the whole operation in the region is safer. So I wouldn't say that this is... I mean, it's important, of course, but it's not in the level of complexity that you have in the U.S. or that Eurocontrol, for example, has in Europe as well.

That's very helpful, Kala. Really appreciate that. And as a very quick follow-up, when we think about the joint business agreement with Delta Airlines, where would you guys say you are in terms of the extent to which that opportunity continues to spool up are we still kind of early stages are we sort of you know mid-cycle in terms of uh uh the revenue contribution uh you expect from that thank you thank you so i mean in the so the jv with delta is just over two years old now um the increase in in capacity that borderlands

put in the first 18 months was significant. We grew around 30%. Our seed count between South America and the US Delta also upgaged in several markets. It launched now Rio as a seasonal route as well. I think that there's a ton of opportunity for growth and development there, but it's also a moment of maturing, I think, of the investments we have made in the last 18 to 12 to 24 months. I would say where our focus today is in customer satisfaction. We are working very hard in making sure that the connectivity between both metals works seamlessly. We still have, I think, things to improve in that sense, as the systems, of course, are different. And that's where our short-term focus is. We just started Ecuador in the scope of the JV late last year, so we see opportunity growing there, also opportunity in Colombia, and clearly the combination of both networks has a ton of potential going forward. Very happy with the deal.

Thanks very much.

Thank you.

Thank you. Our next question comes from William Mendez of JP Morgan. Your line is now open. Please go ahead.

Thank you, and good morning to all, and welcome, Ricardo. Good luck on the new role. I have two questions. The first one is a follow-up on the capital allocation. So besides the dividends and the buybacks that we already discussed, on the release, you also mentioned about strategic investments as a potential use of capital. What exactly are you guys think about this one? And the second one is, Roberto, you mentioned about the strong demands across different regions, but in terms of competition, do you see any excessive capacity in other regions that could pressure prices in the near term? Thank you.

Thank you, Guilherme, and congratulations on your new position, by the way. So capital allocation, so dividends and buyback are the the two ways that we consider today, among others, but the most important and which we're considering eventually returning capital to shareholders. One of the things that we are being very mindful of is to have the flexibility of growing eventually our portfolio or growing within the scope that it's important to us. And in that sense, I think that the financial strength we have allows us for the opportunity to take potential opportunities. Nothing to report at this point in time. If there's something, of course, we will let you know in due time. But we consider today the position we have built as one that provides options to Latam. Options in terms of growing, bringing fleet options in looking at deals, options in returning capital to shareholders. And we will ponder all these options and make use of the capital in the way that it's more efficient for both the company and the shareholders of the group. Sorry. Second question, competition. So clearly, I would say that still domestic Colombia is a market that is with overcapacity. There's been very aggressive growth in the last 18 months by other players there. And it will come, in my opinion, to some kind of equilibrium. It hasn't arrived yet. So we're looking at domestic Colombia. There's a little bit of... Also intensity and capacity between the US and Brazil, mostly driven by a very big growth in capacity from American in the high season into Brazil, but it's seasonal. The rest, I would say that the capacity is relatively balanced in most of the markets. So no big concerns in terms of that equilibrium at this point in time. Also, we don't see today significant evidence of new entrants potentially in the markets where we operate.

Very clear. Thank you so much. Thank you.

Thank you. As a reminder, if you'd like to ask a question, that's star one on your telephone keypad. Our next question comes from Pablo Montevide of Barclays. Your line is now open. Please go ahead.

Hi, thank you for taking my question. Good morning, everyone.

Just a quick question on the demand per segment in terms of corporate and leisure. I remember that you have said probably from the last year and a half that leisure has been very, very strong and corporate is also recuperated fastly. But what are you seeing right now and what should we expect in terms of your capacity allocation going forward? of interest. Thank you.

Thank you, Pablo. So I think that probably two calls ago or something like that, I gave a little bit of a flavor there. We talked about that leisure demand was above 100% as compared to 2019 levels, and that corporate demand at that time was around 100% against 2019 levels. I think that we're seeing today is evolution of demand by segment relatively similar in all segments. So we're not seeing any changes significant in the mix. We see good support on corporate demand across most of the traffics and also leisure. So no real changes in the mix, at least over the last six months. What we have done, though, and we believe it's important for our corporate travels, is that today we're focusing on three important things. One is on-time performance. We do understand that time is the most important commodity that our customers have and the most premium customers value it the most. We have brought Wi-Fi also to almost all of our narrow-body fleet. In the Pacific side of South America, we're the only airline that provides Wi-Fi. And of course, we have the largest FFP in the region with almost 50 million members. What we have seen actually growing faster in the last year is the number of members in our frequent flyer program. So we believe that's an important addition to that. in particular in Brazil, I would say, because in Chile and Peru, our corporate traffic figures have always been healthy, have improved significantly as well in 2024. AbraCorp, which is the travel agents, the corporate travel agents in Brazil produce a report with respect to that and reach 40.8% revenue share in the corporate segment in Brazil in 2024. That's the highest level we've had since 2013.

If I may ask a follow-up on that, and probably I know it's too early to reach to this conclusion, but after the Golan Azul merge, would you expect that share on the corporate partners in Brazil for you to be higher than what you already have? Do you see that perhaps indirect impact of the competitive landscape?

Pablo, I think it's, as I said before, I think it's very early to speculate about that. What we have seen today is a non-binding MOU that has, again, very little detail. And I think that we need to see their filing, their public filing, what mitigations they will propose. CADE needs to review. And this is a big transaction eventually, which will have a lot of details seen by CADE. So I'd rather see how this develops. I don't think it's time to speculate what will happen. And we'll see how this evolves in the next few weeks and months. Absolutely. Thank you very much.

Thank you. At this time, we currently have no further questions, so I'll hand back to Andreas for any further remarks.

Thank you very much all for joining us today. As always, our best releases team is available for any further questions, and have a good day, everyone.

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