LATAM Airlines stays a Buy despite fuel price shocks, backed by strong demand and hedging strategies.

LATAM Airlines remains a Buy recommendation despite recent shocks in fuel prices due to strong demand, pricing power, and favorable currency exchange dynamics. The airline's premium revenue mix, controlled competition, and significant exposure in Brazil help cushion margin pressures from high jet fuel costs. With 40% of its 2026 fuel costs hedged and a strong Brazilian real, LATAM can partially offset fuel cost increases, limiting EBITDA margin compression to the mid-20% range. Market valuations already factor in much of the fuel risk, and analysts expect margin recovery by fiscal year 2027, supporting a bullish outlook for the stock.