Thank you for standing by. My name is Dee and I will be your conference operator today. At this time, I would like to welcome everyone to the Third Quarter 2024 LATAM Airlines Group Earnings Conference Call. [Operator Instructions] Before I turn the call over to the management, I'd like to remind you that certain statements in this presentation and during the Q&A may relate to the 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 recently published 20-F, updated full year 2024 guidance earnings release, financial statements related to CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. And if there are any members of the press on the call, please note that for the media, this is for the listen-only call. I would now like to turn the call over to Ramiro Alfonsín, CFO. Please go ahead. Ramiro Alfonsín Balza: Thank you, Dee. Hello, everyone, and good morning. Welcome to our third quarter 2024 conference call, and thank you all for joining us today. My name is Ramiro Alfonsín, and I am the CFO of LATAM Airlines Group. Here with me today is Mr. Roberto Alvo, our CEO; Mr. Andrés Del Valle, VP of Corporate Finance; and Ms. Tori Creighton, Head of Investor Relations, and we will be presenting our highlights and results for the third quarter of 2024. I will hand it over to Roberto to share the opening remarks about the quarter's highlights, and I will then present in more detail the financial results.

Thank you, Ramiro, and good morning, everyone, and thank you for joining us to review LATAM Airlines performance for the third quarter of 2024. This quarter reflects the continuous progress in the group's operation and financial performance. Recently, on October 22, we celebrated our return to the New York Stock Exchange by ringing the opening bell and then hosted our first Investor Day. It was great to have many of you in person and via webcast. For us, it was the opportunity to discuss LATAM going forward and how we have built a culture of operational excellence, network strength, customer and people focus, sustainability and financial discipline. All aspects in our view, are relevant drivers for sustained and profitable growth. In terms of the operations during the quarter, LATAM increased its capacity by 15.1% while maintaining a high load factor, demonstrating our ability to grow efficiently. We transported 21.1 million passengers, a 7.1% increase compared to the same period of last year. Over the past 12 months, passenger numbers reached 80.6 million. These operational results reinforce LATAM as the largest airline group in South America and among the top 10 globally by seats and by flights. Aligned with LATAM Group's sustained capacity growth, we remain focused on financial discipline and maintaining cost efficiency. For the quarter, adjusted passenger CASK ex-fuel was $0.04, while lower jet fuel prices also contributed to improved margins compared to prior periods. This focus on cost discipline ensures that LATAM Group remains competitive and agile in the dynamic market and competitive environment. Building on these results, LATAM Group reported adjusted EBITDAR was $828 million with a 25.2% margin. Net income for the quarter totaled $301 million, bringing year-to-date net income to $705 million, a 41.3% increase year-over-year. These are historical results. We're at the same time…

[Operator Instructions] Our first question comes from the line of Michael Linenberg from Deutsche Bank.

Congratulations, Ramiro on your new role moving up. Great to hear. I have just -- some of these are more sort of technical. I guess, I noticed when you report, you do not report on an earnings per ADS basis. I know in your financial -- the full financial documents you do look at what your earnings are on a per share basis and I wasn't sure if it was just a function of the fact that you have a lot of movement in your non-op area like, for example, we took a tax credit this quarter, sometimes it's a tax charge. So it makes sense to focus on maybe EBITDAR and EBIT margins as opposed to an earnings per ADS. And so maybe that's something that's going to feature in the financial results for 2025. So can you talk about that and just the thinking around that? And also just what's the appropriate tax rate to use just because this quarter was a credit. How should we think about it maybe going forward? Ramiro Alfonsín Balza: Thank you, Michael. Yes, those are very -- 2 very good questions. So on the tax rate, first, as you know, the LATAM Airlines has no operating losses that we can benefit from of approximately $12 billion on the third quarter. So we can take advantage of those tax rates, and we think that we're going to be able to continue to take advantage. However, in certain countries, as we -- as they are also profitable, you cannot benefit from 100% of the tax rate that we have in those countries. And depending on where we make the profit, we have to account for certain taxes or not. So I would say that it's difficult to forecast the tax rate. But I think that if you take these 9 months looking forward for the future years, I think it's a good proxy of where we should be seeing the tax rate exposure for the next coming years. Regarding EPS, it's an excellent question. I think that if you look only at multiples of EBITDAR in terms of valuation, we don't get the credit or the benefit of our strong capital structure. So I think it's important to start at EPS. And you probably are going to see us showing numbers regarding EPS going down the line. We think it's a very important metric in this industry, again, as it takes the benefit of the capital structure. You're right that the net income sometimes gets affected by volatility in FX, currency or tax credits or these sort of benefits, but we still think it's a very important measure to present to the market.

Okay. Great. And then just squeeze in one sort of last big picture. I'm sure, like everybody, we've all been watching the results of the U.S. election. Yesterday, we saw the weakness in emerging markets. We saw the peso sell off. We saw the Mexican peso, the real. Thoughts on whether things that we should be mindful of now that we have a new administration, sort of anything that you potentially see on the horizon as a company? And this is a question probably -- Ramiro, this is probably to Roberto or you can chime in as well, your thinking on the new change in administration in the U.S. and what that may mean for LATAM. I would just throw in the fact that you do -- you are a dollar-based reporter and you do have a lot of your operations in international markets and maybe less of an impact for you than, say, for somebody else in Latin America. But I'm just curious of how you're thinking about how things stack up going forward.

Thank you, Michael. This is Roberto. Thanks for the question. Yes, so we have thought, I think, along the lines of your thoughts here with respect to the new administration. So a couple of things. First, of course, we already had a Trump administration between 2016 and 2020. If history says anything, which may or may not, we didn't see any relevant effect to our operations during that time that I can point out to. Having said that, as we think going forward, as you said, well, we have flows that are exposed to the U.S.. We see no significant telling things that I can point out today that is going to change the trajectory of what we've seen. Currency volatility that you have pointed out as well, I think that we have shown, particularly in the third quarter, that we know how to manage and contain the effects of those and even take advantage of those in certain cases. And yes, you're right, 60% of our revenues are dollar-denominated. So I think that we are, in general, pretty covered to what we see volatility and cyclicity of the business, in my mind, because of our position, starting to show that it affects us less than other carriers for sure. So we remain confident going forward on what we've done and I don't see anything relevant at this point in time that the potential policies of the new administration, at least what we've heard, we don't know what will be enacted at the end of the day, can affect our operation. Do remember that we have also our cargo headquarters in Miami and a lot of traffic flow between the U.S. and South America. So if nearshoring becomes something important, eventually in the upcoming years, I think that tends to benefit the cargo business more than anything else.

Our next question comes from the line of Guilherme Mendes with JPMorgan.

Congrats on another strong set of results. And Ramiro, good luck on the new role. Two questions as well. The first one is on yields, if you could give more color what is the main explanation on the year-over-year drop? I guess, FX could be part of it, but if there's anything else in terms of competition or demand? And second question is on capital allocation. Another quarter of strong free cash flow, leverage and liquidity clearly under control. So is it fair to assume that dividends could go up into 2025 or potentially a buyback program?

Thank you, Guilherme. I'll take the first question and then I'll pass it to Ramiro for the capital allocation question. So I mean, as you see our results, for me, this is a glass half full picture. Not many times you see an airline grow 15%, keep solid RASK results. There's 2 effects that you have to take into consideration. One is currency depreciation, particularly of the real, which was significant in the third quarter. And as you saw in the presentation, actually, our yields -- our RASK in domestic Brazil was higher on local currency despite the growth. And I think that's a good thing to point out to. And I don't think that you see many times airlines that happened to have the ability to grow double digits and keep the unit revenue at current good level. Second effect, as Ramiro pointed out, we're growing on international faster. You also can see our average stage length on the report is growing. So there's a little bit of a mix between our longer-route RASK vis-a-vis the shorter-route RASK because of that mix situation. So if you take all this into consideration, I have a very positive look, very positive view of the evolution of the unit revenue during this quarter. Ramiro Alfonsín Balza: Yes. Thank you for your good wishes. In terms of capital allocation, you're right, the company is generating consistent cash flow. And now that we have addressed our liability management exercise that was important to us, we focus mainly on 3 aspects and without any priority between all of them. We're still seeing pockets for profitable growth, and we're bringing new aircraft next year. We want to continue to maintain a strong balance sheet, and we have still the possibility of doing the last 1/3 of the exit financing now in 2025. And then the third aspect is exactly what you mentioned, shareholder return. There are many mechanisms for that. We think the company is performing well, it's generating the cash. We feel confident about 2025. So yes, that's something that certainly we're going to address. The mechanisms is still unclear.

Our next question comes from the line of Stephen Trent with Citi.

Ramiro, congrats to you. I know it's been great working with you over the years. Could you just give me a sense as to where you guys are now in terms of executive roles with you, Ramiro, transferring to the CCO role? And are there any kind of missing heads at the moment in case I missed the commentary?

Stephen, this is Roberto. So the Executive Committee has been very stable over the last years. This is, I guess, the change that you see today. I'm very happy, again, for Ramiro taking the role. I'm sure that he'll challenge the teams and come up with incremental value, for sure. We're in the process at this point in time of finding a replacement for him. There's both internal and external candidates. And as soon as we have a resolution and a definition on that, of course, we'll inform it to the market. Otherwise, the executive team has been very stable over the last years.

Okay, Roberto. Appreciate that. And just as my follow-up question, elements of the market compare you guys with the U.S. Big 3. Do you have any high-level thoughts as to whether you'll start reporting free cash flow on a basis that's more in line with them? Or just love to hear you're contemplating anything like that? Ramiro Alfonsín Balza: Stephen, that's very useful. I think that we do report very much in line with them. There are 2 versions of the cash flow statement in our earnings release. We try to make it as friendly as possible and try to detail all the different aspects of the cash flow generation first and then on the investments, both on the growth aspects and on the maintenance aspects. If there are any other suggestions that you or other analysts might have, we're happy to incorporate them and the feedback is always useful. We have received very positive feedback on the way that we are presenting the cash flow statement, but if there are improvements to be made, happy to do it. We want the market to understand very clearly our cash flow generation and cash flow spend and where we're investing in those resources. And we're very proud in seeing LATAM generating quarter-after-quarter positive cash flow and free cash flow at the end of the cash flow measure.

Our next question comes from the line of Jens Spiess from Morgan Stanley.

Congrats on the strong results. I also have a few questions. In the international segment, you've done extremely well. Load factors are at very high levels. So I was just wondering more or less what's your split there of wide-body versus narrow-body aircraft in terms of number of flights? Because I was wondering if you have similar load factors across like short to medium range international routes and long-haul routes. And secondly, if you could give any indication of your fuel hedges at -- I mean, you do provide the percentage amount of what's hedged going forward. But if you could give any indication of the average price level that you closed those hedges, it would be very useful.

Thank you, Jens. I'll take the first question, I'll pass it to Ramiro for the hedges. So international, how do we define it? First for everybody's understanding, it's what we call regional, which is international within South America. And then long haul and those are the flights to the U.S., Europe, South Pacific and Africa. More than half of the ASKs, more than half of the capacity of international is wide-body capacity. So around 60% of all of it is widebody capacity. And the narrow-body capacity is almost everything flying within South America or from the northern bit of South America, so let's say, Colombia to the U.S. Because of the range constraints and the size of the region, I wouldn't say that we have narrow-body aircraft flying on something that we can call long-haul routes, right? I think in our case, very separate. We have an order, as you know, XLRs coming in at couple of years' time. So that picture may eventually change, but that's still ahead of us. So I hope that I was able to give you some light with those figures. And yes, we have performed very well, international is very solid. And we see no, today, no concerns with respect to the demand levels even with the currency volatility that we have seen. And the wide-body market, as we all know, is extremely tight going forward. And I think that's a good standing point together with the strength of our hubs and our JV with Delta to continue being optimistic on our international segment. Ramiro Alfonsín Balza: Regarding fuel hedges, as you know, we use asymmetrical collars on our hedges. And this is because we want to benefit when we see fuel price reductions. But of course, there is a limit to the gain on the upside also. We do not provide or disclose specific numbers on how the hedges are taken, but we can serve a very consistent policy throughout the months. We always look at the next 12 months and we look at the booking curve in order to assess the right amount of hedges for each quarter, and it's quite consistent. So you can think of average fuel prices, most of all, when thinking about our hedges.

Our next question comes Our next question comes from the line of Pablo Monsivais with Barclays.

A little bit in line to Mike's question on the FX depreciation. In the case of Brazil, if we expect sustained depreciation, what's your sense of the market's ability to hold a higher yield in case you look to protect your yield in U.S. dollar terms?

Roberto here. So we have seen strong demand in domestic Brazil throughout the year most of the time. As you saw also in our report, our RASK for the third quarter increased on local currency despite the substantial capacity increment that we have put during the year on that business. I feel good and positive with respect to our development there. Our network has clearly improved vis-a-vis of pre-pandemic levels. Today, we have over 2x relative frequency share in Guarulhos, which is the most important airport in South America, 70% of international traffic to Brazil goes through that airport. Compared to our Brasilia hub, they create a very solid set of alternatives for the passengers flying within Brazil. We see a disciplined context of capacity in Brazil at this point in time. And do remember as well that when you think about LATAM as a whole, the majority of our revenues are dollar based. So even though, of course, we see with the currency volatility, it tends to be a lower effect than some of the other airlines that operate in this segment. But all in all, we're encouraged by the results that we have seen throughout the year and in this particular quarter.

Our next question comes from the line of João Frizo with Goldman Sachs. João Francisco Frizo: Just a quick question from my side related to the guidance. You guys updated and added further color yesterday. So I'm just trying to understand what are the assumptions behind pricing for the fourth quarter because when I look at fourth quarter trends, normally EBIT margin is higher than the third quarter, right? So in order for you guys to meet the guidance for the full year of 12% to 12.5% in EBIT margin, this would imply a deceleration in margins quarter-over-quarter, which seems to be a bit conservative assumption to make, right? So I just wanted to get your sense on what's the view driving this expected deceleration in margins? Ramiro Alfonsín Balza: This is Ramiro. You're right. Third quarter is always a very -- it's high season for us. It's a very strong quarter. It has been in 2023 an exceptional quarter. And even now in 2024, it's an exceptional quarter and we're surpassing what has been a very significant quarter back in 2023. There's always a small deceleration in terms of margin in Q4. Let me just say that we are extremely confident. Despite all the fluctuation on the currencies, despite everything that we're seeing, we're extremely confident on our guidance for 2024.

[Operator Instructions] There are no more questions. I will now turn the call back over to Ramiro Alfonsín for closing remarks. Ramiro Alfonsín Balza: Thank you, again, all for joining. Always our IR team is available for any further questions. And thank you, Roberto, for all the trust during these past years, and thank you for the possibility on my new responsibilities. Bye-bye, everyone. Great seeing you all.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.