LATAM Airlines Group SA
SGO:LTM
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LATAM Airlines Group SA
Earnings Call Analysis
Q3-2023 Analysis
LATAM Airlines Group SA
In the recent earnings call, LATAM Airlines Group provided an upbeat account of their third-quarter performance in 2023, underscoring a period of strong financial and operational results. The company reported record revenues of $3.1 billion, a significant jump of 18% compared to the previous year. This growth translated into an impressive 13.4% adjusted operating margin and a net income totalling $232 million, despite the challenges posed by volatile jet fuel prices.
Executives highlighted the airline's growth in capacity by 15.2%, with international operations surging by 29% year-over-year. This increase was part of a strategic plan that utilized their optimized cost structure and strong demand, reflected in a high consolidated load factor of 85.3%. LATAM Group's commitment to efficiency was also evident in their fleet enhancement strategy, capitalizing on the renegotiations during their Chapter 11 proceedings to add 11 new aircraft to their already sizable fleet of over 300. This move helped the Group achieve one of the most competitive global fleet costs at $800 million for the year. In tandem with fleet expansion, LATAM boasted a record-low adjusted leverage ratio at a historic 2.1x and a robust liquidity position at 24.2%, demonstrating solid financial management and an improved balance sheet that has received positive acknowledgments from rating agencies.
LATAM Airlines prioritized customer experience, leading to the implementation of Wi-Fi services on half of LATAM Airlines Colombia's fleet and earning several prestigious awards, including being named the Best Airline in South America for the fourth consecutive year by Skytrax. These accolades reflect the airline's commitment to a comprehensive value proposition and outstanding service delivery.
Looking forward, LATAM outlined its strong profit generation with a net income margin of 7.6% for the quarter and almost $500 million accumulated over the past nine months. The Group's profitability potential led to discussions of distributing minimum dividends in accordance with Chilean law, subject to shareholder approval. LATAM's leadership expressed confidence in the airline's sustained success, highlighting a focus on customer satisfaction and leveraging financial strengths to navigate future uncertainties and embrace growth opportunities.
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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 that are discussed in detail in our CMF and SEC filings. The company's actual results may differ significantly from those projected or suggested in 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 Alfonsin.
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 Alfonsin, 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 cover. LATAM is the sponsor of the Pan American and Parapan American Games, Santiago 2023 that are currently going on, and is also the official airline group for this great multisport event. And at the same time, we also sponsored the LATAM -- the Chile team for these sports 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, boosting 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 1-year anniversary of the emergence from Chapter 11, on November 3. And reflecting on this part of the year, LATAM has 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-body and 7 narrow-body aircraft. Notably, one of these deliveries includes the Group's first A321neo. These aircraft additions and also the current fleet were part of the fleet renegotiation carried out during the Chapter 11 and allowed 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's Group 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 2.1x, 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%. This 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 5-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 Airlines Colombia has initiated implementation of Wi-Fi services on board in its domestic operations, reaching around 50% of its fleet with this feature in the third quarter, and making it the second country where LATAM Group has rolled out its connectivity initiative.
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 markets -- in the core markets where they operate, while at the same time taking advantage of business opportunities that may arise like LATAM Airlines' 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 LATAM Airlines' 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 Roberto mentioned 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 EBITDAR stands at $726 million, 30% more than the last quarter and 82% more than the third quarter of 2022. Our adjusted EBITDAR margin reached almost 24%. Additionally, our net income margin is at 7.6% for the third quarter. And this past 9 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 shareholder's approval, evaluate the payment of the minimum dividends as per Chilean law of 30% of 2023 distributable profit.
These results underscore LATAM's dedication to profitability and the 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. This 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 the last 3 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 3-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 EBITDAR amounted to $726 million, reaching 23.8% margin. Total operating revenues increased 18% compared to 2022 levels. As operations continued to recover, passenger revenues increased approximately 25% over the same period of 2022, mainly driven by international growth. Capital revenues, on the other hand, registered a 20% decrease in Q3 of 2023, mainly explained by the softening of the cargo yields, but they still are 23% over 2019 levels.
In the first 9 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 9 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 8 consecutive quarters of positive adjusted EBITDAR growth, reflected its resilience and continued growth. Year-to-date, adjusted EBITDAR 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 EBITDAR 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 differentiated factor within the region. LATAM is generating cash. After investments, CapEx and interest, we are [ framing ] once again a solid position not only regionally but also globally.
Regarding the specific figures, the Group generated cash amounted to $104 million this quarter and $413 million so far this year, a figure that enhanced 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' revenues. In terms of leverage, the Group reached 2.1x, 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 4 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, where 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 newer 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 costs will remain extremely competitive in the coming years as contracts during the Chapter 11 were extended on average for 7 to 8 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 CEO 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 1 year of the joint venture agreement, Delta and LATAM have implemented 6 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 regions and reached 35% of capacity share.
As LATAM looks to the future, it is committed to building on this successful first year, providing an exceptional customer experience and strengthening the bond with customers traveling between the 2 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 5-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's Airlines Brazil enhancement of the customer experience through the successful implementation of onboard with 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 Parapan American Games, Santiago 2023, and also sponsoring Team Chile.
Let me conclude on Slide 12. This week marks 1 year from LATAM's 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 2.1x, the lowest figure in LATAM's history.
The Group continued to grow with consolidated capacity increasing by 15% year-over-year, mainly driven by our international operators along with healthy load factors, which reinforms 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 since already in this quarter, it is positioned at the better segments of several indicators.
Finally, 1 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.
[Operator Instructions] Our first question comes from Guilherme Mendes with JPMorgan.
Thanks for taking my question. I have 2. The first one is 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 and 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 Pratt & Whitney on the compensation of the matter.
Thank you, Guilherme. I'll take -- Roberto here, the first question, I'll hand it to Ramiro for the GTF issue. So 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 has 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 reorganization, it's is in domestic Colombia as now we have consolidated our position with more or less 1/3 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 2 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 on balance 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 is slowing down, and I think that we will see a slightly better performance of the cargo business or the demand going forward.
Thank you, Guilherme, for your question 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 numbers of aircraft that we have and because we were expecting to retire certain CEO 320s and certain CEO 319s 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.
Super clear, guys. And if I may, a quick follow-up on the lease extensions. Have you already agreed to the leasing rates of those extensions? Or there's also 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.
Yes, for sure. So let me first clarify that the Chapter 11 negotiations, when we renegotiated the terms, we also extended the leases, as I mentioned, between 7 to 8 years, depending on the different -- 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 launched an RFP to sell those aircraft mid this year. And as I mentioned, we cannot sell them and continue to operate them since they have remaining flight hours available. So it doesn't require a lease extension.
But to your point, we are seeing a market where, if people need to extend leases, the prices are normally higher than what they were 1 year ago. But it's not our case. We don't need to extend them.
And our next question comes from the line of Andre Silveira with Bradesco BBI.
Thank you for taking my question. I had 2. So first, if you could provide a little bit of color on each of the markets. So Brazil is about 2019 levels, domestic Spanish-speaking countries are 9% below. And international is [indiscernible] in recognition. How do you expect demand on each to behave in the fourth quarter and 2024.
And my second question is if you can give an update on the plans for the Level 2 Listing.
I'm sorry, Andres, we weren't able to -- the connection is -- it's not that good. Can you repeat? How do we expect?
Sure. Is it better?
Yes, it is better now.
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 on 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.
All right. So Andre, again, in -- so first, 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 flights 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 this segment has recovered more slowly. But 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 the bank. 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 in domestic Colombia, but this is a function of an overstimulated market in the beginning of the year when you have 2 other operators that were selling 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 close.
Regarding the ADR, Andres, 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 future relisting on the New York Stock Exchange.
[Operator Instructions] Our next question is from Stephen Trent with Citi.
Good morning, everybody, and thanks very much for taking my question. One or 2 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?
All right. So first, let's remind ourselves that the Qatar relationship is much older than the Delta relationship. We -- they entered the ownership of LATAM at the end of 2016. We have established a good, solid commercial relationship where we put our codes on their [indiscernible] 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 under flying double daily to Sao Paulo [indiscernible] 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. 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 efficient long-term capital structure?
Thank you, Steve. This is Ramiro. I think the business plan we 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 deleverage of the company further from the 2.1x as expected in the business plan is 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, Steve. 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 aspects 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. You, on top of that, add the diversification of our model and our revenues, it's a very solid position to be in. And despite of 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 less positive scenario.
It comes from the line of Neil Glynn with Air Control Tower.
If I could also ask 2 questions, please. Following on from the last question in part. And 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 at LATAM post Chapter 11 should 2024 prove as challenging as some share prices around the world suggest?
And then the second question, obviously, your cash flow generation has been strong and you're on 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 GTF issues, to try to add capacity, particularly on the wide-body side opportunistically over the next 12 months or so?
Great. Neil, thanks for the question. So I mean 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 1 or 2 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 we're 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 that 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 in making sure that it can add to its 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 we last ceased operations in the first quarter of 2023, we were able to add 5 aircraft to our domestic Colombian operation in the span of 2 weeks. And that meant increasing our capacity in domestic Colombia operation by 20% in just over 2 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 for our passengers and improve our product, I think it's a good position to be in.
Yes, 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 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 wide-body lift, we have received certain former ex-Norwegians that we're retrofitting during this month and beginning of 2024. So we have the aircraft available, and the retrofits are according to plan. So we are something that we're going to have the lift, both on the narrow-body front and on the wide-body front.
Does that answer the question, Neil?
It does. Many thanks.
And the question is from [ Joel Friso ] from Goldman Sachs.
Can you hear me?
Yes. How are you?
Doing well. Thank you very much for taking my question. I have one related to your guidance, right? So when we 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 9 first months of the year. But when we look at the third quarter, was already 13%. So I'm just trying to reconcile your guidance with the last quarter results, and to understand a bit more to what you expect -- to what you attribute the deceleration in margins going into the fourth quarter?
Yes. Thank you, Joel. 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 EBITDAR and margin EBIT.
So it's not a deceleration. Third quarter for us is high season. It has 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%.
Thank you. And that ends our Q&A session for today. I will turn the call over to Ramiro Alfonsin for final remarks.
Well, thank you, Carmen. Thank you again for your question and your interest. Always the IR team is available for further questions. And thank you so much for attending this conference. Bye-bye, everyone.
Thank you all for participating in today's conference, and you may now disconnect.