LATAM Airlines' LTM Stock Climbs 28.8% in Three Months—Can Momentum Continue Into 2026?

LATAM Airlines Group LTM has delivered impressive returns to shareholders in recent months, with its stock advancing 28.8% over the past quarter. This performance has notably outpaced the broader Zacks Transportation sector, which registered a 19.3% gain during the same timeframe. The company, headquartered in Santiago, Chile and operating as a leading regional carrier, now holds a Zacks Rank #2 (Buy) rating, suggesting analysts believe further upside remains achievable.

Financial Metrics Point to Durable Growth Potential

At the core of LTM’s bullish outlook lies a carefully calibrated financial strategy designed to deliver resilience through 2026 and beyond. Management has guided for 8-10% expansion in passenger capacity while maintaining operational discipline—a balancing act reflected in targeted operating margins of 15-17%.

The airline’s balance sheet improvements underscore management’s commitment to financial strength. Adjusted EBITDA projections range from $4.2 to $4.6 billion, while the company expects to generate in excess of $1.7 billion in levered free cash flow. Net leverage targets remain conservative at 1.4x or lower, positioning LTM to weather economic headwinds while investing in growth opportunities.

Liquidity remains robust, with cash reserves exceeding $5 billion. This financial cushion grants management flexibility to deploy capital across fleet modernization, technology upgrades, and customer experience enhancements—each critical to sustaining competitive advantage in an increasingly crowded marketplace.

Fleet Modernization Drives Long-Term Efficiency Gains

LTM’s capacity expansion follows a measured blueprint, with total aircraft growing from 363 units at 2025 year-end to 371 in 2026, 410 by 2027, and 422 thereafter. The strategy prioritizes narrow-body aircraft, reflecting both fuel efficiency imperatives and demand patterns favoring regional connectivity.

Specifically, the narrow-body fleet expands from 284 to 291 aircraft in 2026, accelerating to 329 in 2027 and 343 in subsequent years. Airbus Neo-series aircraft form the backbone of this expansion, increasing from 61 units to 68 in 2026, 94 by 2027, and 109 longer-term. These next-generation aircraft deliver superior fuel economics, directly supporting LATAM’s unit cost control objectives.

Wide-body capacity—essential for long-haul international routes—grows more conservatively, rising from 59 to 60 aircraft in 2026, then to 62, before stabilizing at 60. The cargo fleet maintains relative stability at approximately 20 aircraft, reflecting management’s view that pure cargo operations require minimal near-term additions.

Wall Street Increasingly Bullish on Execution

The positive momentum has translated into upward estimate revisions across multiple timeframes. Over the past 60 days, consensus estimates for Q4 2025 have climbed 3.05%, while full-year 2025 expectations advanced 4.23%. Most significantly, 2026 guidance increased 4.5%—suggesting analysts have growing confidence in management’s ability to execute on its growth and margin objectives.

Peer Comparison Warrants Investor Attention

For those evaluating LTM alongside alternative transportation investments, two names merit consideration:

Expeditors International of Washington EXPD currently ranks among the Zacks #1 (Strong Buy) tier. The logistics specialist projects 3.50% earnings growth for the current year. Notably, EXPD has demonstrated a track record of surprising to the upside—its earnings have beaten consensus estimates in each of the past four quarters by an average margin of 13.9%.

Global Ship Lease GSL carries a Zacks Rank #2 designation. The shipping company anticipates 2.60% earnings growth this year. GSL has similarly impressed investors with consistent beats, topping consensus expectations in four consecutive quarters with an average beat of 16.8%.

Looking Ahead: Sustainability of the Rally

The case for LTM’s continued appreciation rests on three pillars: disciplined execution of the fleet modernization roadmap, maintenance of operating margins despite inflationary pressures, and successful navigation of international market expansion opportunities. Management’s emphasis on technology investment and customer-centric improvements suggests the company recognizes that capacity gains alone prove insufficient—operational excellence remains paramount.

For investors considering entry or addition, the combination of improving estimates, fortress-like balance sheet metrics, and a multi-year growth trajectory supported by specific aircraft deployment targets creates a compelling investment narrative. Whether the 28.8% three-month surge proves sustainable will ultimately depend on management’s ability to convert strategic plans into reality throughout 2026 and beyond.