LATAM’s reinvention at 35,000 feet

With roots dating back to 1929, LATAM Airlines has grown into a large, complex operation spanning continents—a choreography of systems, teams, and decisions that keeps about 1,600 daily flights moving and helps more than 80 million passengers arrive on time each year.

Behind it all, more than 40,000 employees operate across regions, part of an interconnected system in which even small disconnects can ripple at scale.

Following an efficiency program, LATAM’s leaders began to reimagine what kind of organization they could be in their next era. LATAM had emerged from the transformation with renewed financial discipline, a solid customer satisfaction score, and industry-leading operational performance, including the world’s highest on-time performance.

One idea kept resurfacing: How could LATAM build on that strong foundation to transform from a legacy carrier into “an airline in your pocket” for its increasingly digital-first customers—and turn that shift into a new engine for growth?

LATAM’s executive leadership, including CEO Roberto Alvo and Chief Information and Digital Officer Juliana Rios, had seen the shift in consumer expectations firsthand. Travelers were growing accustomed to seamless digital experiences in every part of their lives, and they increasingly expected the same from their airline.

For LATAM, that created a clear opportunity to use digital not simply as a customer-facing channel, but to give customers the autonomy to manage their own travel, directly connecting the commercial, operations, and service systems that shaped the entire journey.

The need became especially visible in moments of disruption. A missed connection did not just delay a passenger’s trip; it triggered long queues, repeated explanations, manual workarounds, and mounting frustration across the organization. These pain points revealed a broader challenge: Many of the systems behind the customer experience were not yet integrated enough to respond with the speed, personalization, and simplicity travelers now expected.

Inside the organization, a similar opportunity emerged. Core technology systems were monolithic and aging, tightly coupling processes that needed to move independently. Launching something as simple as a new pricing offer meant navigating a maze of dependencies across systems and teams—often taking months. The way systems were designed dictated how teams worked: sequentially and in an interdependent manner, making speed and flexibility nearly impossible.

At the same time, external pressures were mounting. Supply chain disruptions and labor constraints were driving up operation and maintenance costs, making aircraft uptime more critical than ever. The impact didn’t stay behind the scenes—maintenance issues increasingly translated into delays and cancellations, directly affecting passengers.

“We realized the problem wasn’t any single system or function. It was how everything worked together—or didn’t,” says Alvo. “That was the impetus for embarking on a holistic transformation, instead of iterative improvement of the path we were on. We chose to go big—to reinvent our business.”

We realized the problem wasn’t any single system or function. It was how everything worked together—or didn’t

Roberto Alvo

CEO, LATAM Airlines Group

LATAM started where the stakes were highest: the passenger experience. It assembled cross-functional teams across the business and worked with McKinsey, including experts from QuantumBlack, AI by McKinsey, to rebuild its passenger experience end to end. This meant a complete redesign of booking and servicing, alongside new capabilities such as a digital wallet, improved ancillary offerings, and proactive disruption management.

Crucially, the transformation began not with cutting-edge features but with the basics. “Transformation isn’t about fancy tools,” says McKinsey Partner Juan Vasquez. “It’s about making sure a customer can change a flight, select a seat, or request a refund—simply and independently.”

Today, passengers can book, change flights, and resolve disruptions on their own, and in real time, without the stress or waiting that once came with it. That same shift—from reactive to predictive—extended beyond the cabin.

In its maintenance function, LATAM shifted from manual planning to data-driven, predictive optimization by using products such as AI models for long-term maintenance planning and smarter inventory systems. These changes improved planning speed, reduced inefficiencies, and increased operational reliability.

In cargo, the transformation went further. LATAM is rebuilding the function as an AI-native domain, embedding lean, cross-functional product teams across commercial, operations, and planning. Instead of long development cycles, teams began shipping solutions in rapid sprints—rolling out tools like pallet optimization and digital receiving in days, not months. The result: faster decisions, lower costs, and a more dynamic cargo business.

Across each domain, two transformations moved in lockstep: technology and operations.

LATAM redesigned its technology architecture into a modular, microservices-based system: Capabilities could be built, tested, and deployed independently, without disrupting the broader system while enabling reuse across domains. An abstraction layer simplifies integration and protects core systems, and platform-based channels support multiple products seamlessly. The result is a scalable, flexible foundation that accelerates innovation, embeds AI into decision-making, and powers consistent performance across passenger, maintenance, and cargo operations.

Equally important was the operating model transformation. Cross-functional “squads” embedded business, product, and technology talent together in functional domains, replacing traditional silos. LATAM leaders and teams drove the redesign of how work happened across the organization, with McKinsey supporting capability building and execution acceleration where needed.

“The shift wasn’t agile for its own sake,” says Rios. “Crucially, we knew the transformation had to be built to stick. That’s why we invested deeply in our people—introducing new roles, upskilling teams, and ensuring tech talent was embedded across domains, working side by side with their functional peers. For us, the transformation had to deliver for our customers and our teams.”

Crucially, we knew the transformation had to be built to stick. That’s why we invested deeply in our people—introducing new roles, upskilling teams, and ensuring tech talent was embedded across domains, working side by side with their functional peers. For us, the transformation had to deliver for our customers and our teams.

Juliana Rios

Chief information and digital officer, LATAM Airlines Group

That leadership support made all the difference.

“Transformation at this scale only works when leadership is all in,” says McKinsey Partner Jaimie Szigethi. “Alvo backed the vision from the start—even without certainty—and Rios made the bold call to embed technology into the business, not deploy it from a central function. That changed how decisions got made.”

Today, the results of LATAM’s transformation are measurable: More than 90 percent of changes, refunds, and check-ins happen automatically, eliminating friction for travelers at the moments that matter most. In addition, its customer satisfaction score rose to 65, placing LATAM among industry leaders.

More importantly, the impact is also felt: For passengers, disruptions are anticipated and resolved early, often before they ever become disruptions. Call centers, once a primary channel for customer communication, have declined in importance. Contact rates dropped by 60 percent as customers shifted to digital self-service.

“Our customers don’t see the transformation; they experience it in the absence of friction,” says Alvo. “We’ve fundamentally rewired how our organization operates, so that every improvement builds on the last and every customer journey gets better and better.”

Ancillary revenues increased by over 70 percent, driven by personalized, well-timed offers integrated seamlessly into the customer journey.

In cargo, product cycles have shortened from months to days, and over 50 reusable AI capabilities have been deployed and scaled across the business. That means new products reach the market faster.

Behind the scenes, the shift has been just as significant for the organization and its operating model. In maintenance, advanced planning and predictive models unlocked more than 1,400 additional aircraft days—the equivalent of adding three new aircraft without adding a single one—while improving reliability and lowering costs.

Perhaps most importantly, LATAM built the internal capabilities to keep evolving long after the initial transformation. “The transformation didn’t just deliver business value—it delivered a vastly better work environment for our people,” says Rios. Engagement among LATAM’s digital squads reached historical highs, driving talent acquisition and retention rates to benchmarking levels across the region.

“What’s been inspiring is going back to the client and seeing how much the function continues to change,” Szigethi says. “That’s when you know the transformation really stuck.”

At LATAM, digital transformation didn’t just improve the journey—it redefined how the airline moves, learns, and grows.