LATAM Calls a Buyback Vote. The 5% Is Chile’s Legal Cap.

Companies

Key Facts

—The vote. LATAM’s board called an extraordinary shareholders meeting for August 3.

—The ceiling. Chilean company law caps any buyback at 5% of paid shares and five years.

—The precedent. The March 2025 meeting authorised 1.6%, not the maximum.

—The spend. Two programmes last year absorbed $585 million across roughly 5% of the shares.

—The count. Bankruptcy left LATAM with about 606 billion ordinary shares outstanding.

—The pause. LATAM had not repurchased a single share in 2026 before this announcement.

Reports of the LATAM Airlines buyback describe a plan to repurchase five percent of the company. Read the filing and that five percent is doing something different from what it appears to be doing.

The board of Latin America’s largest airline group told Chile’s market regulator on Wednesday that it will convene shareholders on the third of August. What they will actually authorise remains open.

What the LATAM Airlines buyback filing really says

The company’s material-event notice states that any programme, under Chilean legislation, may not exceed five percent of subscribed and paid shares, nor run beyond five years. That is a statutory ceiling written into the corporations act.

It applies to every Chilean listed company equally. It is not a number LATAM chose, and the meeting exists precisely to define the conditions.

Chilean rules also let the board buy on the exchange floor without a pro-rata offer, within annual volume limits. The meeting must delegate that power explicitly.

History suggests restraint. When shareholders last approved a repurchase, in March 2025, they authorised one point six percent of the capital over eighteen months.

That programme covered a shade over nine and a half billion shares. Across two rounds last year the airline spent five hundred and eighty-five million dollars retiring roughly five percent of itself.

Why the share count is so strange

Divide those nine and a half billion shares by one point six percent and you get about six hundred and four billion shares. The company’s own bylaws, filed with American regulators, put the figure at just over six hundred and six billion.

The arithmetic holds, and the number explains everything. LATAM entered Chapter 11 in May 2020 and its existing shareholders were diluted to a tenth of one percent.

A July 2022 meeting then issued nearly seventy-four billion new ordinary shares, alongside convertible notes that, according to the shareholders agreement filed with the SEC, convert into a further five hundred and thirty-two billion.

Those bylaws value the whole capital stock at about thirteen and a half billion dollars. Spread across six hundred billion shares, each carries barely two American cents of book capital.

This is what a buyback is for at LATAM. Not financial engineering so much as slowly reversing the arithmetic of a bankruptcy.

The recovery behind the repurchase

The airline was worth about one billion dollars in early 2021. When it returned to the New York Stock Exchange in July 2024 its anticipated value was around eight and a half billion.

That is roughly seven and a half times, and comfortably above its pre-pandemic valuation. By last year LATAM had overtaken the lithium producer SQM to become the most traded stock on the Santiago exchange.

Working backwards from last year’s spending gives you the airline’s implied worth as it bought. Five hundred and eighty-five million for about five percent points to an equity value near twelve billion dollars at the average execution price.

The airline had bought back nothing at all this year before Wednesday. A company that returns to the market after a pause is usually saying something about where it thinks the price sits.

Analysts at BTG Pactual described the earlier repurchase as executed near four times projected earnings before interest, tax, depreciation and amortisation. That is cheap for a recovering flag carrier.

A date nobody has connected

Here is the detail worth carrying away. The shareholders agreement signed in November 2022, which parcels out board seats among creditors, Delta, Qatar Airways and the Chilean Cueto family vehicle, terminates on its fifth anniversary.

That falls in November 2027. A buyback authorised next month at the legal maximum term would still be running when the pact governing the board expires.

Under that pact the creditor bloc names five of nine directors and the airline partners name four, with a Chilean national as chairman. Once it lapses, ordinary Chilean company law decides the board.

Buying back shares concentrates whoever stays. Watch what the third of August authorises, because the size is the message and the term is the tell.

How big is the LATAM Airlines buyback?

Not yet decided. Chilean law caps repurchases at five percent of paid shares, and shareholders will set the actual size and terms on the third of August.

Why does LATAM have so many shares?

Its 2020 bankruptcy wiped out prior holders and its restructuring issued tens of billions of new shares plus convertible notes worth hundreds of billions more.

Who controls the airline now?

A creditor group holds the largest bloc, alongside Delta Air Lines, Qatar Airways and Chile’s Costa Verde, under a pact that expires in November 2027.