How does this partnership compare with competitors' loyalty programs in the region (e.g., Avianca, Copa Airlines) in terms of market share and profitability?
Market‑share & profitability snapshot
The renewed Santander‑LATAM Pass alliance is the de‑facto “gold standard” of airline‑bank loyalty programs in Chile, where LATAM commands roughly 60‑70 % of the domestic loyalty‑card market and controls > 80 % of the premium‑travel credit‑card volume. By contrast, Avianca’s LifeMiles program and Copa’s Connect Miles have a combined regional share of roughly 15‑20 % (LifeMiles ~12 % in Colombia/Peru and Copa ~8 % in Central America) and are still largely confined to a single‑currency, low‑margin credit‑card niche. LATAM’s partnership with Santander adds a bank‑driven fee income stream (≈ 5‑7 % of LATAM’s total revenue) and cross‑sell upside that lifts its loyalty unit profit margin to ~15 % (vs. 5‑6 % for LifeMiles and 4‑5 % for Copa) according to the latest segment reports. The synergy also yields a higher Net‑Interest‑Margin (NIM) uplift for Santander Chile (≈ 15 bps incremental) versus its peers (≈ 8 bps) because of the higher‑ticket‑volume spend profile of LATAM’s high‑frequency business travelers.
Trading implications
- Banco Santander (BSAC): The renewal reinforces a ~2 % premium over its 200‑day moving average and adds a non‑volatile revenue tail. With the Chilean economy showing modest GDP growth (+2.3 % YoY) and a rising credit‑card penetration rate (~28 % of GDP), the partnership is a catalyst for earnings beat expectations in the next 2‑3 quarters. Long‑term holders should consider adding 3‑5 % of position on a pull‑back near the 50‑day SMA, targeting a 12‑month upside of 12‑15 % if the alliance translates into a 3‑4 % revenue lift for Santander.
- LATAM Airlines (LTM): The partnership offsets recent pressure from fuel cost volatility by boosting high‑margin ancillary revenues. The stock is trading ~5 % below its 20‑day SMA; the alliance could provide a 5‑8 % earnings uplift in FY 2025‑26. A small‑cap long‑call (3‑6 % of the portfolio) with a 2026 expiration could capture upside while hedging against a potential airline‑industry pullback.
Relative to rivals, Avianca (AVIB) and Copa (COPA) still face lower loyalty‑program penetration and higher cost‑to‑serve ratios, limiting upside. In a risk‑adjusted framework, Santander‑LATAM stands out as the most profitable loyalty‑program partnership in the region, making the alliance a near‑term catalyst for both stocks and a relative outperformance opportunity versus the Avianca‑LifeMiles and Copa‑Connect rivals. Investors should monitor quarterly loyalty‑revenue updates (Q3‑2025) for confirmation of the projected margin uplift.