LTM Shares Rally 28.8% in Three Months: Can Growth Momentum Sustain Into 2026?

LATAM Airlines Group’s stock has demonstrated impressive market strength in recent months. Shares of the Santiago, Chile-based carrier have climbed 28.8% over a three-month period, significantly outpacing the broader Transportation sector’s 19.3% gain. This outperformance reflects investor confidence in the company’s strategic positioning, operational discipline, and financial trajectory. LTM currently maintains a Zacks Rank #2 (Buy) rating, signaling analyst approval of the company’s growth prospects moving forward.

Strategic Capacity Growth and Margin Protection

The foundation of LTM’s 2026 outlook rests on a carefully calibrated expansion strategy designed to balance growth with financial prudence. The carrier targets 8-10% passenger capacity growth while simultaneously maintaining operating margins in the 15-17% range through disciplined cost management. This dual focus distinguishes LATAM from competitors who often sacrifice profitability for top-line expansion.

The company pursues growth through two primary channels: accelerating international operations in faster-growing markets while pursuing selective domestic capacity additions. By concentrating international investment and moderating domestic expansion, LTM positions itself to capture higher-margin opportunities without saturating regional markets. Concurrently, the airline reinforces its financial foundation by projecting adjusted EBITDA between $4.2 and $4.6 billion for 2026, with levered free cash flow exceeding $1.7 billion. Net leverage is expected to remain at or below 1.4x, reflecting a conservative approach to capital structure.

Operational resilience is further underpinned by ample liquidity above $5 billion and continued investment in technology infrastructure and customer experience enhancements. This multifaceted strategy demonstrates management’s commitment to sustainable value creation rather than pursuing short-term growth at the expense of financial stability.

Fleet Expansion Prioritizes Efficiency and Demand Alignment

LATAM’s capital deployment strategy reveals a sophisticated approach to capacity management. The fleet is projected to grow from 363 aircraft at end-2025 to 371 in 2026, expanding to 410 by 2027 and 422 thereafter. However, the composition of this growth reflects strategic intent rather than indiscriminate capacity addition.

Narrow-body aircraft will form the core of expansion, increasing from 284 to 291, 329, and 343 aircraft across the same timeframe. Notably, Airbus Neo aircraft—recognized for superior fuel efficiency and lower operating costs—will expand from 61 to 68, 94, and 109 aircraft, representing the largest contributor to capacity gains. This prioritization underscores management’s focus on cost competitiveness and environmental efficiency.

Wide-body capacity expands more judiciously, growing from 59 to 60 and 62 aircraft before stabilizing at 60, reflecting measured appetite for long-haul expansion. The cargo fleet remains essentially flat at 20 aircraft, confirming that growth ambitions focus on core passenger operations rather than auxiliary revenue streams. This disciplined fleet strategy signals that LTM views efficiency and demand alignment as superior to unconstrained capacity expansion.

Analyst Consensus Revising Higher Amid Momentum

The positive trajectory in operations and strategic execution has prompted upward revisions in analyst forecasts. Over the past 60 days, Zacks Consensus Estimates for Q4 2025, full-year 2025, and full-year 2026 have been raised 3.05%, 4.23%, and 4.5%, respectively. These successive upgrades suggest that sell-side analysts view LTM’s execution as tracking ahead of initial expectations, a favorable signal for continued investor interest.

Comparable Analysis in the Transportation Sector

For investors evaluating LTM’s competitive positioning, two comparable companies merit consideration. Expeditors International of Washington (EXPD) carries a Zacks Rank #1 (Strong Buy) with an expected earnings growth rate of 3.50% for the current year. Notably, EXPD has delivered an average earnings beat of 13.9% against consensus estimates over the trailing four quarters, demonstrating consistent operational execution.

Global Ship Lease (GSL), which carries a Zacks Rank #2 like LTM, offers another point of comparison. GSL projects earnings growth of 2.60% for the current year and has exceeded consensus estimates in four consecutive quarters, posting an average beat of 16.8%. While GSL operates in maritime transport rather than aviation, the company’s earnings consistency and margin management approach parallels aspects of LTM’s strategy.

Looking Ahead: Sustainability of the Rally

The question facing investors is whether LTM’s recent rally can sustain momentum into 2026 and beyond. Several factors support continued gains: disciplined fleet optimization, protected margins amid capacity growth, robust cash generation, and strong balance sheet management. The upward revision cycle in analyst estimates suggests that these factors are translating into improved financial performance.

However, external variables—including fuel price volatility, macroeconomic headwinds, and competitive capacity additions in key markets—remain potential headwinds. LTM’s commitment to international expansion over domestic saturation and its emphasis on fuel-efficient aircraft appear well-calibrated to navigate these challenges. With execution discipline, substantial liquidity, and technology investments firmly in place, LATAM Airlines positions itself to extend the current growth cycle throughout 2026 and into 2027.