Latam warns aviation fuel to remain costly even if war ends

Aviation fuel prices are expected to stay elevated for the remainder of 2026, regardless of a swift resolution to the Middle East conflict, according to Roberto Alvo, CEO of Latam Airlines. Speaking at a press conference in Rio de Janeiro ahead of the International Air Transport Association (IATA) Annual General Meeting, Alvo cautioned that if these high costs persist into 2027, South American airlines might face the difficult decision of cutting flights or even discontinuing routes.

"Even if the conflict in the Middle East ended today, we would likely still see high prices for some time. Our scenario anticipates expensive fuels for the rest of the year," Alvo stated. He explained that the sustained high cost of jet fuel could necessitate a "capacity rebalancing" by 2027, where airlines adjust their offerings to match increased operational expenses. Latam has already begun this process, reducing its scheduled flights for June by approximately 3% due to fuel price hikes.

Despite these pressures, Alvo highlighted Latam's strong financial position, which he believes provides a competitive advantage over regional rivals. The company completed its financial reorganization in the United States in 2022, bolstering its resilience. Latam maintains an optimistic outlook for Brazil, identifying it as its key market for expansion. The airline executive noted that Brazil's domestic aviation market experienced the most significant growth last year among the world's top ten markets, according to IATA data, although overall flight volumes have not yet fully recovered to pre-pandemic levels.

Alvo further emphasized the potential for growth in Brazilian air travel, pointing out that the country averages about half a passenger per inhabitant annually, a figure lower than in developed economies. To capitalize on this potential, Latam plans to integrate the first of 50 regional aircraft ordered from Embraer starting late this year.