Pre-earnings brief
Reports
Tue, Aug 11, 2020
Est. EPS
—
Est. revenue
—
Implied move
±5.1%
EPS beat rate
63%
LATAM Airlines Group S.A. is a major airline in South America, providing passenger and cargo services across the continent and internationally. As a key player in the industrial sector, its performance is closely tied to consumer travel demand and economic conditions in the region.
Last quarter
In Q2 2026, LATAM Airlines reported a significant earnings surprise, with an EPS of $0.44 compared to the expected $0.14. The stock reacted positively, gaining 2.11% the following day.
Management promises and guidance
EPS beat streak
1Q
EPS beat rate
63%
Avg EPS surprise
+11.66%
Avg 1-day reaction
+0.06%
Overall, investors are cautiously optimistic ahead of LATAM's Q3 earnings report, especially after the strong performance last quarter. However, there are concerns about potential volatility in travel demand due to economic factors.
Bull case
If LATAM continues to outperform expectations, particularly in passenger revenue and load factor, it could signal a strong recovery in travel demand, leading to further stock gains.
Bear case
On the other hand, if the airline fails to meet expectations or shows signs of declining demand, it could lead to a negative reaction in the stock price.
The print will turn on these.
Q1
What will be the passenger revenue growth rate compared to last year?
This will be a key indicator of demand recovery and overall financial health for LATAM.
Q2
How has the load factor changed in the current quarter?
A higher load factor indicates better utilization of capacity, which is crucial for profitability.
Why consensus could be wrong
The Street may be underestimating the impact of pent-up travel demand, particularly in South America, which could lead to stronger-than-expected passenger revenue.
Supporting evidence
LATAM's recent operational improvements may not be fully reflected in current estimates.
The airline industry is seeing a rebound in travel, which could benefit LATAM more than anticipated.
Options pricing suggests a larger potential move than historical averages, indicating market uncertainty.
Key risk
If passenger revenue growth exceeds expectations, it could significantly alter the current bearish sentiment.
Pre-commit to what would confirm each case.
The market is debating whether LATAM can sustain its recent performance amidst fluctuating travel demand.
Bull confirmed if
Passenger revenue growth of +15% year-over-year or better, indicating strong demand recovery.
Bear confirmed if
A load factor below 70%, suggesting weak demand and potential revenue issues.
What the market is pricing for the move.
Implied Move
±5.1%
The options market is pricing in a potential move of about 5.1% in either direction following the earnings report.
ATM IV
0.4%
30d HV
36.0%
Likely market behavior by outcome. Not investment advice.
Beat & raise
If LATAM beats expectations, history suggests a potential stock increase of around +2.11%, confirming a strong recovery narrative.
In line / cautious
If results are in line but management provides cautious commentary, the stock may see muted movement as investors reassess growth prospects.
Miss
A miss could lead to a decline of about -1.64%, as seen in previous quarters, raising concerns about demand sustainability.
The lines on the call that would change the story.
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Est. EPS
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Est. Rev
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Impl. Move
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