LATAM Airlines Group SA (LTM) 2023 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the third quarter 2023 LATAM Airlines Group earnings conference call. (Operator Instructions)

Before I turn the call over to management, I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations and as such, constitute forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives, expected performance or guidance are forward-looking statements.

These statements are based on a range of assumptions that LATAM believes are reasonable, but are subject to uncertainties and risks. They are discussed in detail in our CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested and any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings.

Also, if there are any members of the press on the call, please note that for the media, this is a listen-only call. Please be advised that today's conference is being recorded. It is my pleasure to hand the call over to LATAM's Chief Financial Officer, Mr. Ramiro Alfonsín.

Thank you, Carmen, and hello everyone, and good morning. Welcome to our third quarter 2023 conference call and thank you for joining us today. My name is Ramiro Alfonsín, and I am the CFO of LATAM Airlines Group. Here with me today is Mr. Roberto Alvo, CEO of LATAM Airlines Group; Andres del Valle, VP of Corporate Finance; and Tori Creighton, Head of Investor Relations.

And we will be presenting our highlights and results for the third quarter of 2023. I'd like to pass the presentation to Roberto to set the stage for our third quarter results.

Hello, everyone, and thank you, Ramiro. I'd like to begin by expressing how proud we are to present this quarter with the timing, the sponsor of the Pan-American and Para Pan-American Games Santiago 2023 that are currently going on and is also the official airline group for these great multi-sport event. And at the same time, we also sponsored the LATAM -- the Chile team for these sport events.

We're thrilled to be able to utilize our connectivity in the service of thousands of athletes from over 40 countries, reinforcing our commitment to connect Latin America with the rest of the world.

Please join me on slide 2. In terms of financial performance this quarter, LATAM has set new records with top-to-bottom positive results. We have achieved total revenues of record $3.1 billion, posting a consolidated double digit adjusted operating margin of 13.4%, and a net income of $232 million. This achievement is even more significant considering the volatility we have experienced in jet fuel prices over the quarter.

The group is approaching the one-year anniversary of the emergence from Chapter 11 on November 3, and reflecting on this part of the year that I must consistently delivered impressive results financially and operationally differentiating itself in the region and the global stage. I am proud of where we are, and I know that we look forward to building upon this strong foundation.

In the last quarter, LATAM group capacity has grown 15.2% compared to the same quarter last year. This uptick is underpinned by the group's unique network value proposition, competitive pricing due to its improved cost structure, and by a robust demand reflected on a consolidated load factor of 85.3%.

The group continues to observe healthy demand with a solid booking curve moving from the fourth quarter into the beginning of 2024, especially highlighting the strength of the international segment. The operation has also been boosted by the delivery of 11 aircraft, including 4 wide bodies and 7 narrow-body aircrafts.

Notably, one of these deliveries includes the group's first A321 Neo. These aircraft additions and also the current fleet were part of the fleet renegotiation carried out during the Chapter 11 and allow the Group to have one of the most efficient fleet costs globally. For a fleet of over 300 aircraft, the total fleet cost for this year will be approximately $800 million.

Turning our attention to LATAM Group's. balance sheet; strength, this is another aspect where LATAM stands out and continues to improve. We're pleased to report a record adjusted leverage of 2.1 times, the lowest level in LATAM history. Furthermore, thanks to our strong balance sheet and prudent financial management, we have maintained a robust liquidity position. And over the last 12 months, our liquidity stands at 24.2%. The strong balance sheet has garnered upgrades from rating agencies as well.

Finally, LATAM group has been recognized for the fourth consecutive year as the best airline in South America in the World Airline Awards by Skytrax, among other international recognitions, such as the coveted Five Star Global Airline award for the second consecutive year, awarded by Apex, and for the sixth consecutive month, the Most Punctual Airline according to the OAG Punctuality Index, which reflects LATAM Group's commitment to its well-rounded value proposition and customer experience.

As part of that deep commitment to continuous investment in the customer experience, LATAM in Colombia has initiated implementation of Wi-Fi services on board in its domestic operations, reaching around 54% of its fleet with this feature in the third quarter, and making it the second country where LATAM group has rolled out its connectivity initiatives.

If I could summarize the group situation, I would say that the LATAM Group is working. The strength and diversity of the business model has been critical factor that contributed to the positive published financial results, despite factors like currently weaker air cargo industry. The group's lower cost and network strengths have allowed growth and allowed the airline affiliates to maintain significant market shares in core market -- in the core markets where they operate, while at the same time, taking advantage of business opportunities that may arise like LATAM Airline's Colombian recent expansion in that country.

LATAM Group's focus on constantly improving the customer overall experience has been met with a number of important awards and recognitions and the group financial strength ensures that we can navigate the uncertainties. It may lie ahead in the external environment with confidence while allowing Latin American Group and its affiliates to embrace any future opportunities.

Thank you. And with that, I will turn it over to Ramiro to continue with the presentation.

Thank you, Roberto. Let's turn to slide 3 to dig deeper into the various points that I to mention that contributed to our very strong results. This marks another solid quarter for LATAM, and is the best quarter of this year so far with top-to-bottom line positive results.

Our record revenues of $3.1 billion, 14% more than the last quarter and 18% more than the third quarter of 2022, coupled with a 13.4% operating margin are a testament to our commitment to executing on our business plan. Notably, our adjusted EBITDA stands at $726 million, 30% more than the last quarter and 82% more than the third quarter of 2022. Our adjusted EBITDA margin reached almost 24%.

Additionally, our net income margin is at 7.6% for the for the third quarter and this past nine months, LATAM has accumulated a total of almost $500 million in net income, which differentiates LATAM from its regional peers.

It is important to highlight that following the company's capitalization of accumulated losses in April, the company would, subject to the required shareholders' approval, evaluate the payment of the minimum dividend as per Chilean law of 30% of 2023 distributable profit. These results underscore LATAM's dedication to profitability and ability to position itself at the better part of the ranges of its updated guidance for 2023 for various indicators.

Let's please turn to slide 4. Despite adverse market conditions such as fuel price volatility during the third quarter, LATAM group capacity continued to grow on a year-over-year basis for comparison, the group improved its capacity, load factors, revenue per ASK across all business segments. If we compare to the same quarter of last year, LATAM group noted a relevant 15% consolidated growth in capacity. It has been mainly driven by the increase of international operations, which have increased 29% year over year.

This important growth in year-over-year capacity was accompanied by a total load factor greater than 85%. And notably, the international load factor on average during this last three months was 87%. These figures reinforce the strong passenger demand and the value of the group's extensive international network.

Consolidated revenue per ASK increased 9% in a context marked by a resilient passenger demand for air travel. All these factors have driven LATAM's strong passenger revenues that increased 25% year over year. In the three month period. LATAM Group transported 20 million passengers, 16% more than the third quarter of 2022, and by far more than any other airline in the region. This is a result of the competitive market shares, accompanied by an efficient cost structure and healthy levels of liquidity, allowing for continued organic growth.

Let's take a look at the results of the quarter on slide 5. In the third quarter, adjusted EBIT margin was 13.4% and adjusted EBITDA amounted to $726 million, reaching 23.8% margin. Total operating revenues increased 18% compared to 2022 levels. As operations continue to recover, passenger revenues increased approximately 25% over the same period of 2022, mainly driven by international growth.

Cargo revenues, on the other hand, registered a 20% decrease in Q3 of 2023, mainly explained by the softening of the cargo yields, but are still are 23% over 2019 levels. In the first nine months of the year, revenues increased 26%, driven by a 37% increase in passenger revenues, while operating expenses increased 10%. LATAM registered a net income of $232 million in the third quarter and $499 million for the first nine months of the year.

Finally, LATAM reported a passenger CASK ex-fuel of $0.043 and total fleet cash cost of $208 million. This includes all amortization and interest on financial and operational leases and the PBH payment, and clearly reflects the group's important cost savings implemented during the Chapter 11.

Please join me on slide 6. LATAM has had eight consecutive quarters of positive adjusted EBITDA growth, reflected its resilience and continued growth. Year to date, adjusted EBITDA amounted to $1.8 billion for 2023, clearly on track with LATAM's updated guidance, and $2.4 billion for the last 12 months. This figure is already better than the full year of 2019, surpassing it by 7.5%. Finally, last 12 months adjusted EBITDA in the third quarter almost doubled compared to the same period of 2022.

Turning to slide 7, LATAM group has had a consistent and solid cash generation each quarter during this year, mainly explained by the result of all the cost saving initiatives fully implemented during the reorganization process and our strong focus on profitability. This is a differentiating factor within the region. LATAM is generating cash. After investment, CapEx, and interest, we are premium once again a solid position, not only regionally, but also globally.

Regarding the specific figures, the group generated cash amounting to $104 million this quarter and $413 million so far this year, a figure that enhance LATAM's liquidity position.

In the next slide, once again, we are pleased to report improvements in our capital structure, noting quarter-over-quarter progress in liquidity and leverage, leaving the group in an excellent competitive position. LATAM Group presented $2.7 billion of liquidity this quarter, representing 24% of liquidity as a percentage of the last 12 months' revenue. In terms of leverage, the Group reached 2.1 times, the lowest in its history.

As a result of the continuous improvement, Standard & Poor's upgraded LATAM to corporate rating to B and with a positive outlook, while Moody's upgraded it to B1 with a stable outlook.

When we look at our debt maturity profile, it is important to highlight that LATAM has no significant non-fleet debt maturities in the next four years. As of today, LATAM only has maturities coming from our exit financing during 2027.

LATAM is confident in its ability to execute its capacity plan going forward. Well, most of the capacity growth will come by fleet upgrading. In this respect, part of the plan is to renew and expand the fleet, prioritizing the next generation of Neo aircraft. LATAM group is very committed to having the next generation fleet that allows it to improve its efficiency and experience to its customers. In fact, the Neo fleet will nearly double by the end of 2025.

LATAM Group's fleet cost will remain extremely competitive in the coming years, as contracts during the Chapter 11 were extended on average for seven to eight years.

Lastly, we would like to mention that the Pratt & Whitney Neo family engine issue is concerning for the aviation industry, since it has a global impact. However, it is important to mention that LATAM Airlines Group and its affiliates are expecting to be able to manage this without disrupting our capacity plans. Potential impacts may be mitigated by extending the use of several seal aircraft of the 319 and 320 family.

Please join me on slide 10. We are thrilled to mark the first anniversary of our transformative joint venture with Delta Airlines. After one year of the joint venture agreement, Delta and LATAM had implemented six new routes and increased their frequencies, improving connectivity between South America and North America. During this year, we have collectively operated 15,000 flights and transported more than 3 million passengers.

Compared to the third quarter of 2022, LATAM Group and Delta have reached 24 billion ASKs between both region and reached 35% of capacity share. As LATAM looks to the future, it is committed to building on the successful first year, providing an exceptional customer experience and strengthening the bond with customers traveling between the two continents. LATAM group is truly excited to continue this JV journey with Delta.

Please join me on slide 11. As you all know, LATAM group is extremely committed to its customers' experience in all the markets in which the group operates, making sure its passenger dreams reach their destination. With that in mind, LATAM has been recognized with the highest rating in the global airlines category for the second consecutive year, obtaining the Five Star Global Airline Award in the APEX 2024 ranking, and also chosen the best airline in South America for the fourth consecutive year at the World Airline Awards by Skytrax.

Regarding LATAM's performance, it has been recognized as the most punctual airline according to the OAG punctuality index. These recognitions are taken with responsibility, and LATAM reaffirms its commitment to the experience of each customer.

On the other hand, following LATAM Airlines Brazil enhancement of the customer experience through the successful implementation of onboard Wi-Fi connectivity, recently, LATAM Airlines Colombia also launched this feature reaching 50% of its domestic fleet with connectivity during the quarter.

Finally, I would like to highlight again how proud LATAM is about being named the sponsor of the Pan-American and Para Pan-American Games, Santiago 2023, and also sponsoring Team Chile.

Let me conclude on slide 12. This week marks one year from LATAM Group emergence from Chapter 11. LATAM stands out of its best-in-class value proposition, financial solidity, and consistency. Thanks to its extremely competitive cost and capital structure, LATAM reported a record third quarter double digit adjusted operating margin of 13.4%. Net income amounted to $232 million, making the fourth consecutive positive quarter, reaching $499 million of net income year to date.

The company generated $104 million in cash and improved its liquidity to $2.7 billion and continues to reduce its leverage reporting at 2.1 times, the lowest figure in LATAM's history. The Group continue to grow, with consolidated capacity increasing by 15% year over year, mainly driven by our international operators, along with healthy load factors, which reinforce the group's unique network, value proposition, and commitment to connect South America with the world.

That said LATAM Group is very confident in achieving its 2023 guidance. It's already in this quarter. It is positioned at the better segments of several indicators. Finally, one year after starting the JV, Delta Airlines and LATAM have grown connectivity in their key hubs, launched several new routes, and look forward to much more from this partnership.

Thank you so much for your attention, and we would like to open the floor to any questions.

Thank you. (Operator Instructions)

Guilherme Mendes, JPMorgan.

Good morning, Roberto, Ramiro, Andres, Tori. Thanks for taking my question. I have two. The first one, it's on the yield performance and congrats on the pretty strong yields reported this quarter. Just wondering if you could share some details on the yield performance per region. So think of Brazil, Spanish-speaking countries and international. And if it's fair to assume the sustainability of current yields going forward, think of fourth quarter in early 2024.

And the second question is regarding to the GTF engine situation. I understand the actual impact should be limited to your overall capacity in 2024. But can you share what percentage of your new fleet do you expect to be grounded in 2024? And if there's any kind of evolution already on the potential financial negotiation with Bret Whitney on the compensation of the matter. Thank you so much.

Thank you, Guilherme. I'll take -- Roberto here. The first question I'll hand it to Ramiro for the GTF issue. I would say that during the quarter, we saw good healthy demand in almost all of our business segments led by international, which has posted for sure, the strongest of recoveries during 2023 vis a vis 2022. Domestic Brazil is also shown healthy and positive results in terms of demand. And where we have seen demand coming down, but just because of probably the market organization is in domestic Colombia, as now we have consolidated our position with more or less a third of the market share.

The only country that has been slowly recovering from the early of the year political situation is Peru. It looks better in the last few weeks, but it's been a slow recovery from a demand perspective. But in general, if I can give you a sense, I think that most of the market segments have behaved healthily on the passenger side. On the cargo side, we continue to see weak demand inbound and strong demand outbound from the Pacific northbound. So the market is relatively imbalanced today as it has been most of the year.

We see better trends in cargo for the next few months. Just to remind you that this still -- even though has decreased from 2022 -- are better figures than 2019. So the cycle in cargo, it is slowing down. And I think that we'll see a slightly better performance of the cargo business or the demand going forward.

Thank you, Guilherme for your question on the on the GTF. We currently have approximately 20 Neos operating. This is still an evolving situation and discussions are still ongoing to assess correctly the potential impact that we will have. But the important thing that we want to highlight is that because of the scale, the number of aircraft that we had and because we were expecting to retire, certain seals, 320, some certain seals 319 that we can continue to extend and continue to operate. We think that we will be able to mitigate and not disrupt the capacity plan that we have in 2024. But as I mentioned, the situation is still evolving and discussions are still ongoing.

Perfect clear, guys. Thanks so much. And if I may, a quick follow-up on the lease extensions. Had already agreed to the leasing rates of those extensions or this also was still under negotiation? If you can share any kind of details, thinking that the potential lease rate that you might get today might be more expensive than the previous one you got during the Chapter 11 negotiation. Thank you.

Yeah, for sure. So let me first clarify that the Chapter 11 negotiations, when we renegotiated the terms, we also extended the leases. The leases that I mentioned between seven to eight years, depending on the different leases. So all of these negotiations were extended. Regarding the extension of the usage of this aircraft, most of the 319s and the 320s that we were planning to retire were our owned aircraft. So we don't need to renegotiate terms of the leases.

We launch an RFP to sell those aircraft mid this year. And then as I mentioned, we can upsell them and continue to operate them since they have a remaining flight hours available. So it doesn't require lease extension, but to your point, we are seeing a market where people need to extend leases. The prices are normally higher than what they were one year ago. But it's not our case. (multiple speakers)

Perfect. Thank you so much. Have a great day.

Thank you.

[Andrea Ferraz], Bradesco BBI.

Hi, good morning. Thank you for taking my question. I had two. So first, if you could provide a little color on each of the markets. So that goes above 2019 levels, domestic Spanish-speaking countries, they're 9% below, and international is recovering in automation, how do you expect the margins to behave in the fourth quarter and 2024?

And the second question is, if you can give an update on the plans for the ideal leverage level, thanks.

I'm sorry, Andrea. We weren't able to -- the connection is not that good. Can you repeat, how do we expect -- ?

Sure. Is it better?

Yes, it is better now.

Thanks. So my first question is, if you can provide a little more color on each of the markets. So Brazil is running above 2019, domestic Spanish-speaking countries a little bit below, and international as well, if you can. But how do you expect demand in each to behave in the fourth quarter? And then if you can in 2024?

And my second question is, if you can give an update on the plans for the ADR listing. Thank you.

Yeah, right. So Andrea again, in -- so first for fourth quarter bookings look healthy in every segment or almost every segment. International, I would say, still leads in strength vis a vis the other segments. But all in positive scenario. International long haul, it's relatively slightly better than international regional; regional is floods within South America. But that segment looks very strong, and we have seen a very good recovery during the year.

We are still operating less than 100% of our 2019 international capacity as the segment has recovered more slowly, but the load factors, as you have seen, are on the highest part of the 80s, and we expect to see the same trend during the fourth quarter.

In the domestics, I would say that more or less the same story with a slightly lower degree of intensity in demand. But domestic Brazil looks solid. Domestic Chile has been wavering a little bit, but it's also in a solid place. And for me, the one that if you compared relatively to the beginning of the year, has a lower number of passengers, is domestic Colombia. But this is a function of an over-simulated market in the beginning of the year when you have two other operators that were sitting at very cheap fares.

So if I can summarize, I think that the booking curve for fourth quarter and -- as we enter the first couple of months of 2024 look in a strong position. Having said that, of course, we are mindful of the global situation and particularly what's going on in the Middle East. So we're keeping an eye on that. And we have not seen any impact in our bookings with respect to that situation. But it's something that we're looking closely.

Regarding the ADR, Andrea, there is no certain time at this moment of a potential relisting. We continue to evaluate different factors, including market conditions and others in order to assess the right timing for the future relisting on the New York Stock Exchange.

Perfect. Thank you.

(Operator Instructions) Stephen Trent, Citi.

Good morning, everybody, and thanks very much for taking my questions. One or two for me here. First, I saw that in your presentation you mentioned a bunch of stuff on Delta, which looks great. I didn't hear you say much at all about Qatar. Would just love a high-level view as to where you see that strategically going on a long-term basis? And given the turmoil in the Middle East, have you seen any adjustment in the feed you're getting from Qatar? Thank you.

All right, Hi, Steve. So first, let's remind ourselves that the Qatar relationship is much older than the Delta relationship. They entered the ownership of LATAM at the end of 2016. We have established a good, solid, commercial relationship where we put our calls on their flights from Sao Paulo to Doha, and we provide feeding both within Brazil and within South America to their flights. On the back of that, they have increased capacity and they are flying double daily to Sao Paolo in their airline from the Middle East that -- is flying double daily.

And this is, I would say, a mature, well-run commercial relationship we have with them. I haven't -- I don't have specifics for your final question in terms of booking to the Middle East, because it represents a relatively small portion of our business. But I have not heard anything that looks concerning at this point in time.

Really appreciate that. Thank you. And just one quick follow-up, if I may. You guys have done -- you've had some very good movement on the balance sheet. From a high-level perspective, how are you thinking about an efficient long-term capital structure?

Thank you, Steve. Hi, how are you? This is Ramiro. I think the business plan we've made public in August '22 sets a good scene of what we expect, and we think it's a constructive capital structure for the company going forward, so the ratios between liquidity over 20% last 12 months revenues and the continued deleveraging of the company further from the 2.1 times as expected in the business plan it's what we consider an accurate capital structure.

Of course, things are very volatile in the region, and having a strong capital structure is fundamental to be able to grow and to cover destinations with a good cost structure and with a good capital structure.

If I can expand on Ramiro just for a second, Stephen. I think that LATAM's position today is really unique. Not only we have on an absolute basis a very good capital structure, but also on a relative basis, vis a vis the most important players that we compete with, we are in a privileged position. And this, in my view, allows us to take advantage of upside, but also to be very close to opportunities that may arise in a downside scenario.

So in that sense, I think that LATAM is, if I can say, well-hedged to the aspect that may happen beyond our control. And that basically means that LATAM is the owner of its own destiny, and that I think is very remarkable view.

On top of that as the diversification of our model and our revenues. It's a very solid position to be in. And despite all the international and worldwide uncertainty that we all face, the good thing is that I think that we are in a good place to either take advantage of a positive scenario or eventually a positive scenario.

Okay. Very helpful. Appreciate that, guys. Have a good one.

Thank you.

Neil Glynn, AIR Control Tower.

Good morning, everybody. If I could also ask two questions, please. Following on from the last question in part.

Clearly a lot of share prices around the world in the airline sector are very, very heavily impacted by macro concerns. And Roberto, you talked about being ready to take advantage, whether it's on the upside or the downside. But could you provide a little bit more color in terms of the increased level of flexibility from an operational perspective or a cost control perspective? There is -- LATAM post-Chapter 11 should 2024 prove as challenging as some share prices around the world suggests.

And then the second question. Obviously, your cash flow generation has been strong. And your -- the path you set out to deleveraging. But I'm conscious your fleet and your fleet plan in 2025 is 341 relative to 334 at the end of 2023, which doesn't give you a lot of growth at this point in time. So how tempted will you be, notwithstanding the GPS issue, to try to add capacity, particularly on the wide-body side, opportunistically over the 12 months or so?

Great. Hi, Neil. Thanks for the question. So when you undergo a situation like the pandemic and what is required from the company in terms of adapting itself to a very changing scenario, I think that we took one or two very important lessons.

One of the things that we have done is that we have improved our variable cost to fixed cost ratio during the chapter. And we did this understanding that we were going to have a very rocky return as we still saw waves of the pandemic pushing in '21 and '22. We have strived and be very focused in keeping that operational leverage flexibility. And that allows us, I think, to reposition ourselves pretty well in case of a change in demand, whether it's up or down.

The fact that we have, as Ramiro pointed out, a segment of our fleet that is also eventually phased out, but eventually kept, also allows for the opportunity to define our capacity in the short term with a lot of flexibility without necessarily going into the market, knowing that the market conditions on our airplanes are extremely tight today.

And probably the last thing to add here is that over the years over 20 years, LATAM has worked making sure that it can have good financial flexibility, operational flexibility, and we can move our assets around in a pretty seamless manner. I think that a good example is that when Viva ceased operations in the first quarter of 2023, we were able to add five aircraft to our domestic Colombian operation in the span of two weeks. And that meant increasing our capacity in domestic Colombia operation by 20% in just over two weeks.

So we have the -- I think that the structure, the team, the focus, both the financial and also the operational flexibility to move relatively seamlessly within the network and if you add to that, our focus in making sure that we do the best thing for our passengers and improve our product, I think it's a good position to be in.

Yeah. Complementing on capacity and the deliveries for '24 and '25, the numbers that we have submitted are updated, Neil. So we recognize that there are supply chain issues that are still in very -- very active in the market and are evolving as we speak. But we have reconfirmed the deliveries for '24, particularly with our suppliers and the schedule that we had agreed with them is confirmed. So we feel confident on that side.

On the widebody lift, we have received certain former external regions that we'll retrofitting during this month and beginning of 2024. So we have the aircraft available and the retrofits are according to plan. So we're confident that we're going to have the lift both on the narrow-body front and on the widebody front.

Does that answer the question, Neil?

It does. Many thanks.

Thank you so much. Joao Frizo, Goldman Sachs.

Yes, hey, good morning, guys. Can you hear me?

Yes, Joao, how are you?

Doing well. You guys? Okay, guys. So thank you very much for taking my question. I have one related to your guidance. So when I look at the guided EBIT margin for the year, you guys are guiding for 10% to 11%, which is pretty much in line with the ninth month of the year. But when we look at the third quarter, it was already 13%. So I'm just trying to reconcile your guidance with the last quarter results and trying to understand a bit more as to what do you expect -- to what do you attribute the deceleration in margins going to the fourth quarter?

Yeah. Thank you, Joao. This is Ramiro. We haven't updated guidance, but we were clear on our earnings release and we hope we have been clear on this call also that we expect to be on the upper side of the guidance on many of the factors of the guidance, particularly probably on EBITDA and on margin EBIT.

So it's not a deceleration. Third quarter for us is high season. We have been incredibly active on the international. But if you take into account how the fourth quarter looks and with the current context, we think we're going to be, as I mentioned, on the upper side of the guidance that we presented in August, which was already updated if you remember, increased by 20% on many of the metrics, particularly EBIT margin that originally was targeted for short of 7%. Now we increased it to 11%.

Okay. It's very clear. Thank you guys.

Thank you. And that ends our Q&A session for today. I will turn the call over to Ramiro Alfonsín for final remarks.

Well, thank you. Thank you Carmen. Thank you again for your question and your interest. Always, the IR team is available for further questions. And then thank you so much for attending this conference. Bye, everyone.

Thank you all for participating in today's conference. You may now disconnect.