Key Takeaways
- S&P Global Ratings upgraded Latam Airlines Group S.A.’s outlook to positive from stable on December 19, 2025, while affirming its ’BB’ credit rating.
- The revision follows stronger-than-expected 2025 operating and financial results, with EBITDA projected to rise to about $4.1 billion.
- Fleet expansion plans will raise debt to nearly $10 billion by 2027, but strong cash flow and cost discipline underpin credit quality.
S&P Revises Latam Airlines Outlook to Positive on Strengthening Financials
On December 19, 2025, S&P Global Ratings upgraded its outlook on Latam Airlines Group S.A. to positive from stable, affirming the company’s ’BB’ credit rating. The rating agency cited Latam’s stronger-than-anticipated operating and financial performance throughout 2025 as the primary driver behind the change. S&P revised its EBITDA forecast upward, now expecting the airline’s 2025 EBITDA to reach about $4.1 billion, up notably from the prior estimate of $3.6 billion, supported by declining fuel prices and improved yield across markets.
Fleet Growth and Strategic Partnerships Bolster Growth Prospects
S&P projects a 9% increase in Latam’s total available seat kilometers (ASK) for 2026, reflecting robust regional demand. The airline is expected to maintain stable load factors near 84%, benefiting from its strong position at key Latin American airports and the expansion of its joint venture with Delta Air Lines Inc. Latam’s growth strategy includes an orderbook securing 140 aircraft from 2026 onward, with 68 deliveries anticipated over the next two years. This fleet augmentation corresponds to a 13.7% increase between 2025 and 2027 and incorporates a recent partnership with Embraer S.A. involving 24 firm E2 aircraft orders and options for up to 50 additional units.
While this ambitious fleet expansion will increase Latam’s debt from roughly $7.7 billion at the end of 2025 to nearly $10 billion by 2027, S&P remains confident the airline’s cash flow will adequately support the higher leverage. The agency forecasts that Latam will sustain funds from operations (FFO) to debt ratios exceeding 45% through 2027, bolstered by capacity growth, consistent yields, and disciplined cost controls.
Analyst Scenarios and Potential Rating Upgrade
S&P indicated the potential for a future rating upgrade within 12 to 18 months if Latam maintains its financial momentum. Key metrics include sustaining FFO to debt above 45% and EBITDA margins comfortably exceeding 20%. Achieving these benchmarks would confirm an improving credit profile despite increased debt levels linked to fleet investments.
Trump’s Tariffs May Spark an AI Gold Rush
One tiny tech stock could ride this $1.5 trillion wave — before the tariff pause ends.
Airlines: Market Outlook
With 2025 EBITDA now forecasted at approximately $4.1 billion and a projected 9% growth in operational capacity for 2026, Latam Airlines is poised for continued recovery and expansion across Latin America. The company’s strategic joint venture with Delta and significant fleet renewal plans form the foundation for this positive outlook. Although debt is set to increase to near $10 billion by 2027, S&P’s confidence in Latam’s robust cash generation and cost discipline supports an optimistic credit trajectory. This positive rating outlook reinforces investor confidence in Latin America’s airlines sector amid a strengthening travel market.
