Andre Ferreira

Andre Ferreira asked for confirmation on the R$56 million tax credits in commercial aviation, inquiring if the entire amount was allocated to that segment and its EBIT margin impact. He also questioned the total U.S. tariff impact of $17 million (executive aviation and service), noting it seemed lower than initial expectations, and asked if a higher impact is anticipated in Q4.

Answer

Head of Investor Relations Gui Paiva clarified that the tax credits were a low single-digit value, less than BRL 56 million. CFO Antonio Carlos Garcia added that these are 'normal business as usual' credits from temporary importation changes. Regarding tariffs, Gui Paiva stated the Q3 impact was $17 million, with $27 million year-to-date against an original full-year guidance of $62-65 million. He noted the company is working to reduce exposure, and inventory cycles have helped, expecting the final full-year impact to be lower than initially guided.

Andre Ferreira, Head of Transportation Equity Research at Bradesco BBI, asked for clarification on the tax credits in commercial aviation, specifically if the BRL 56 million reported in the ITR was entirely within that segment and its EBIT positive impact. He also inquired about the U.S. import tariffs, noting the $17 million impact seemed lower than initial expectations, and whether inventory management played a role, anticipating a potentially higher impact in Q4.

Answer

Gui Paiva, Head of Investor Relations, clarified that the tax credits were a low single-digit value, less than BRL 56 million. Regarding tariffs, he confirmed Q3 impact was BRL 17 million, with BRL 27 million year-to-date against an original full-year guidance of BRL 62-65 million. He noted the company is working to reduce exposure and expects the final amount to be lower, with inventory cycles playing a role. CFO Antonio Carlos Garcia added that these tax credits are part of normal business operations related to temporary importations and supply chain changes.

Andre Ferreira of Banco Bradesco BBI asked about the higher credit provisions in the Services & Support segment, seeking to confirm if they were related to a specific charge in the income statement and to understand their impact on the segment's EBIT margin.

Answer

Guilherme Paiva, Head of IR & M&A, and Antonio Garcia, CFO, confirmed the provisions were related to a specific customer undergoing a restructuring process. They stated the full impact was booked in Q2, affecting the segment's margin for the quarter, with minimal further impact expected.

Andre Ferreira of Bradesco BBI sought clarification on the commercial EBIT margin impact and asked about the effect of past reversals on the Service & Support segment's margins.

Answer

CFO Antonio Carlos Garcia confirmed a 3% positive impact on the Commercial Aviation margin from supplier credits. For Service & Support, he noted the margin was temporarily 50 basis points below average due to product mix, an effect he expects will be compensated for during the year.

Inquired about the timeline for the $200 million equity raise, the specific cost impact from operational performance issues, and the possibility of being compensated by OEMs.

Answer

The company will find the right time for an additional equity raise as market conditions in April were not favorable. The increase in 'other' costs was driven by customer reaccommodations (hotels, meals, transport on other airlines) due to irregular operations, compounded by a 20% year-over-year increase in the US dollar. The company is in constant discussion with OEMs to seek compensation for these disruptions, similar to what other global airlines are doing.

Andre Ferreira asked about the risk of Airbus delivery delays hampering the 2025 fleet plan and sought LATAM's view on how a potential merger between competitors Azul and Gol would impact the local fare environment and LATAM's long-term strategy in Brazil.

Answer

CEO Roberto Alvo Milosawlewitsch stated there is no major concern with the Airbus delivery stream for 2025, noting that the engine supply chain is a more closely monitored risk. Regarding the potential competitor merger, he deemed it premature to comment on the non-binding MOU, emphasizing that LATAM is focused on its own strong performance and market share of nearly 40% in domestic Brazil.

Questioned the risk of aircraft delivery delays from Airbus impacting the 2025 fleet plan and asked for LATAM's perspective on the potential merger of competitors Azul and Gol in Brazil.

Answer

The company is not concerned about Airbus delivery delays for 2025 but is monitoring potential Boeing 787 delays and engine supply chain issues, which are already factored into guidance. Regarding the potential Azul/Gol merger, it is considered premature to comment as it is only a non-binding MOU, and LATAM will wait for more details while focusing on its own strong market position.