WEBVTT 1 00:00:00.120 --> 00:00:02.400 - Today, Roberto Alvo, CEO 2 00:00:02.400 --> 00:00:04.960 of LATAM Airlines joins me on BCG's 3 00:00:04.960 --> 00:00:07.520 CEO Moments of Truth Series. 4 00:00:07.520 --> 00:00:11.640 Roberto's experience as CEO began rather inauspiciously: 5 00:00:11.640 --> 00:00:14.920 COVID had grounded fleets, halted revenues, 6 00:00:14.920 --> 00:00:17.720 and threatened the very existence of the airline. 7 00:00:17.720 --> 00:00:20.560 Within two months of assuming the leadership role, Roberto 8 00:00:20.560 --> 00:00:24.640 had to lead LATAM through Chapter 11. Roberto shares 9 00:00:24.640 --> 00:00:26.960 what it takes to lead through upheaval 10 00:00:26.960 --> 00:00:29.520 and how disruption can become an inflection point 11 00:00:29.520 --> 00:00:32.240 for transformation with people at the center. 12 00:00:37.440 --> 00:00:39.120 Roberto, welcome. - Thank you. 13 00:00:39.120 --> 00:00:43.640 - LATAM Airlines is the largest airline in South America. 14 00:00:43.640 --> 00:00:47.680 You had 82 million passengers in 15 00:00:47.680 --> 00:00:52.200 2024, 13 billion US dollars in revenue. 16 00:00:52.200 --> 00:00:54.600 What makes LATAM special? 17 00:00:54.600 --> 00:00:56.080 - I think that what makes us special, 18 00:00:56.080 --> 00:00:58.400 it's on the one side probably is the size 19 00:00:58.400 --> 00:00:59.520 and the breadth and the network 20 00:00:59.520 --> 00:01:01.680 we have. We are the only airline 21 00:01:01.680 --> 00:01:04.080 that can bring South America within itself 22 00:01:04.080 --> 00:01:05.240 and also to the world. 23 00:01:05.240 --> 00:01:06.840 But I think that what makes LATAM really special 24 00:01:06.840 --> 00:01:10.880 is its people, it's the interest of 25 00:01:10.880 --> 00:01:13.120 our teams in serving, 26 00:01:13.120 --> 00:01:16.040 and the passion I see in them in trying to make sure that every time, 27 00:01:16.040 --> 00:01:20.080 every customer, every flight, every cargo 28 00:01:20.080 --> 00:01:23.160 customer has a good interaction with us. 29 00:01:23.160 --> 00:01:26.200 - Roberto, you were going to be CEO 30 00:01:26.200 --> 00:01:29.800 of LATAM effective April 1, 2020. 31 00:01:29.800 --> 00:01:34.800 Yet in the months and weeks before that, COVID hit the 32 00:01:34.800 --> 00:01:37.560 world, and like so many other airlines, LATAM had 33 00:01:37.560 --> 00:01:39.680 to shut down a good part of your operations. 34 00:01:39.680 --> 00:01:44.600 I think 96% of your activity was shut down just two weeks 35 00:01:44.600 --> 00:01:47.720 before the big day when you were going to be CEO. 36 00:01:47.720 --> 00:01:48.840 How did that feel? 37 00:01:48.840 --> 00:01:53.680 - It was a very, a very different way to start 38 00:01:53.680 --> 00:01:57.600 the job as I had expected. In the beginning, honestly, 39 00:01:57.600 --> 00:01:59.800 it felt very mechanic. 40 00:01:59.800 --> 00:02:04.160 I mean, we had such a big tsunami coming over us 41 00:02:04.160 --> 00:02:06.960 that you didn't have time to really ponder 42 00:02:06.960 --> 00:02:08.560 what it meant for you. 43 00:02:08.560 --> 00:02:11.280 How do I manage the situation very quickly, knowing that 44 00:02:11.280 --> 00:02:14.400 many things are completely outside of my control? 45 00:02:14.400 --> 00:02:18.960 - And within a relatively short time, you were 46 00:02:18.960 --> 00:02:20.560 confronted with a Chapter 11 question. 47 00:02:21.600 --> 00:02:25.200 That's obviously a nightmare moment for a new CEO. 48 00:02:25.200 --> 00:02:27.320 It's a nightmare moment for any CEO. 49 00:02:27.320 --> 00:02:28.880 - We had no revenues at all, 50 00:02:29.720 --> 00:02:31.800 and we started burning cash like crazy. In the beginning, 51 00:02:31.800 --> 00:02:34.920 you don't think about filing for Chapter 11 as an option, 52 00:02:34.920 --> 00:02:37.760 but as the days and the weeks went through, it became 53 00:02:37.760 --> 00:02:39.080 really the only option. 54 00:02:39.080 --> 00:02:41.520 It was a very hard decision for our shareholders. 55 00:02:41.520 --> 00:02:44.000 - So then within 60 days 56 00:02:44.000 --> 00:02:48.480 after your official start as CEO, you declared Chapter 11, 57 00:02:48.480 --> 00:02:50.320 and you went into that process. 58 00:02:50.320 --> 00:02:54.960 At what point in time did you have any mind space 59 00:02:54.960 --> 00:02:56.960 to think about the future? 60 00:02:56.960 --> 00:02:59.760 - I mean, yes, on the one side, the Chapter 11 process, 61 00:02:59.760 --> 00:03:01.840 which is a very different thing than what we used 62 00:03:01.840 --> 00:03:04.320 to do when we do day to day, 63 00:03:04.320 --> 00:03:06.120 took a ton of time. But 64 00:03:06.120 --> 00:03:09.280 you know, at the end of the day, this was an opportunity 65 00:03:09.280 --> 00:03:12.160 because when, when you are there, 66 00:03:12.160 --> 00:03:15.840 you give yourself the opportunity to ask, 'If we're 67 00:03:16.040 --> 00:03:19.680 going to survive, if we're going to get out of this, to do 68 00:03:19.680 --> 00:03:25.080 what? What for? What should LATAM look like after this? 69 00:03:25.080 --> 00:03:27.760 Do we want to emerge the same way we were? 70 00:03:27.760 --> 00:03:29.560 Should our priorities be different?' 71 00:03:29.560 --> 00:03:32.080 And that was, I guess, a very enlightening moment 72 00:03:32.080 --> 00:03:37.040 because it gave us the freedom to, to use the 73 00:03:37.040 --> 00:03:38.320 'hibernation' if you want-- 74 00:03:38.320 --> 00:03:41.560 that's how we used to call it internally--to rethink about 75 00:03:41.560 --> 00:03:43.120 what were the important things. 76 00:03:43.120 --> 00:03:44.160 But one of the things 77 00:03:44.160 --> 00:03:46.960 that we did not do is stop our digitalization. 78 00:03:46.960 --> 00:03:48.280 Actually, we doubled down on it. 79 00:03:48.280 --> 00:03:51.120 We said now we have more time, more focus, 80 00:03:51.120 --> 00:03:53.920 the limited resources we have, we're going to put them here 81 00:03:53.920 --> 00:03:57.480 because when we emerge, for sure, this is going 82 00:03:57.480 --> 00:04:00.920 to be an important development that we can undertake. 83 00:04:00.920 --> 00:04:04.760 So we said we need to emerge from here with 20% lower cost. 84 00:04:04.760 --> 00:04:06.040 And that number didn't come from a 85 00:04:06.040 --> 00:04:07.840 spreadsheet or an analysis. 86 00:04:07.840 --> 00:04:10.080 We just put a stick on the ground there 87 00:04:10.080 --> 00:04:13.600 and said, 'Let's use this moment to come 88 00:04:13.600 --> 00:04:17.480 out in a very different way then we came in.' 89 00:04:17.480 --> 00:04:21.320 - Now, in that very intense period, you need to keep 90 00:04:21.320 --> 00:04:23.320 energy and balance for yourself as a CEO, 91 00:04:23.320 --> 00:04:26.200 but you also need to project energy into your organization. 92 00:04:26.200 --> 00:04:29.240 At that point, I think you had more than 30,000 staff 93 00:04:29.240 --> 00:04:33.240 already. How did you convey energy 94 00:04:33.240 --> 00:04:36.080 and passion into your team? 95 00:04:36.080 --> 00:04:40.720 - So we had to lay down one-third. 96 00:04:40.720 --> 00:04:42.480 At the time, we had 42,000 people. 97 00:04:43.720 --> 00:04:47.560 How do you talk to people that, you know, 98 00:04:47.560 --> 00:04:51.080 they put on masks, went to the airport, cared 99 00:04:51.080 --> 00:04:54.120 for the few customers we had. They put 100 00:04:54.120 --> 00:04:56.000 their health at risk. 101 00:04:57.000 --> 00:04:59.440 And at the same time, you have to tell them, 102 00:04:59.440 --> 00:05:01.000 'I'm sorry, I have to let you go.' 103 00:05:02.320 --> 00:05:04.920 How do you manage that? What do you do with it? 104 00:05:04.920 --> 00:05:07.880 And, and there's only one way in my mind: talk to them, 105 00:05:07.880 --> 00:05:11.800 look them into the eyes and 106 00:05:11.800 --> 00:05:14.640 tell them, 'Listen, I mean, I'm going to do as much 107 00:05:14.640 --> 00:05:17.720 as I can to preserve as much as I can from the operation, 108 00:05:17.720 --> 00:05:20.400 and I can't promise you anything. But 109 00:05:20.400 --> 00:05:23.280 you'll hear from me exactly what's going to happen, 110 00:05:23.280 --> 00:05:26.080 whether it's good news or bad news. 111 00:05:26.080 --> 00:05:30.040 What we did as well is that we asked the staff to 112 00:05:30.040 --> 00:05:33.440 decrease their salary by 50% voluntarily. 113 00:05:33.440 --> 00:05:37.120 The only way of asking that question is doing it yourself. 114 00:05:37.120 --> 00:05:39.120 So what I did is that I stopped 100% 115 00:05:39.120 --> 00:05:43.000 of my salary and I said, 'I'm not going to earn any cents. 116 00:05:43.000 --> 00:05:44.840 I'm just going to work for you. 117 00:05:44.840 --> 00:05:48.640 And because it's important that you understand that 118 00:05:48.640 --> 00:05:50.560 I'm in front of you. 119 00:05:50.560 --> 00:05:53.560 I'm not going to get paid until 120 00:05:53.560 --> 00:05:58.480 I manage a way of getting you back to a normal status.' 121 00:05:58.480 --> 00:06:01.880 - So at that moment, you had already been with LATAM 122 00:06:01.880 --> 00:06:03.240 for decades. 123 00:06:03.240 --> 00:06:06.920 What changed for you as a leader 124 00:06:06.920 --> 00:06:11.280 when you became CEO as compared to your prior roles? 125 00:06:11.280 --> 00:06:14.440 - Well, you know, I used to be a numbers person. 126 00:06:14.440 --> 00:06:15.440 But let me tell you a story. 127 00:06:17.240 --> 00:06:21.960 One day, one person, this was 2021. This was in Peru. 128 00:06:21.960 --> 00:06:23.000 This was a woman. 129 00:06:23.000 --> 00:06:25.760 She told me, 'Listen, I have, I have mental problems. 130 00:06:26.760 --> 00:06:30.560 And many times I thought about killing myself. 131 00:06:31.440 --> 00:06:33.040 But seeing you on those videos 132 00:06:33.040 --> 00:06:35.040 and the way you talk to me-- 133 00:06:35.040 --> 00:06:37.680 and I'm sorry I get emotional today-- 134 00:06:37.680 --> 00:06:39.360 you saved my life. 135 00:06:39.360 --> 00:06:43.400 Because I decided that I was, that there was a reason 136 00:06:43.400 --> 00:06:47.640 for being here because you put yourself in 137 00:06:47.640 --> 00:06:48.760 the front line for us. 138 00:06:48.760 --> 00:06:50.640 And I'm never going to forget that.' 139 00:06:50.640 --> 00:06:53.240 When you hear that, and when you understand 140 00:06:53.240 --> 00:06:56.600 and process what this means, in my case, 141 00:06:56.600 --> 00:06:59.640 it completely changed the way I understood my job. 142 00:06:59.640 --> 00:07:02.840 So I became a people person--from a numbers 143 00:07:02.840 --> 00:07:04.960 person to a people person. 144 00:07:04.960 --> 00:07:09.840 And my biggest responsibility as I see it today, is making 145 00:07:09.840 --> 00:07:11.600 sure that the people that work in LATAM, 146 00:07:11.600 --> 00:07:13.200 they wake up every morning 147 00:07:13.200 --> 00:07:15.600 and they say, 'I want to work here not 148 00:07:15.600 --> 00:07:18.440 because only professionally it makes sense to me. 149 00:07:18.440 --> 00:07:19.800 I want to be in this company 150 00:07:19.800 --> 00:07:24.240 because what LATAM is trying to do makes sense for me.' 151 00:07:24.240 --> 00:07:27.920 And that is magical. That emotional engagement allows 152 00:07:27.920 --> 00:07:32.280 you to transform, create, grow, take 153 00:07:32.280 --> 00:07:33.960 opportunities, take risks in a 154 00:07:33.960 --> 00:07:35.600 completely different way. 155 00:07:35.600 --> 00:07:37.560 So today, my priorities are very simple. 156 00:07:37.560 --> 00:07:42.120 It's my people, my customers, my environment, 157 00:07:43.200 --> 00:07:46.600 my numbers. In that order. 158 00:07:46.600 --> 00:07:49.000 And that doesn't mean that the numbers are not important. 159 00:07:49.000 --> 00:07:52.120 What it means is that the numbers will happen 160 00:07:52.120 --> 00:07:54.400 if I do the other three things right. 161 00:07:55.280 --> 00:07:58.320 - Well, that's certainly a massive transformation 162 00:07:58.320 --> 00:07:59.760 of yourself as a leader. 163 00:07:59.760 --> 00:08:02.360 I mean, from a numbers guy to a people guy, I think, 164 00:08:02.360 --> 00:08:03.920 you know, very few people achieve that. 165 00:08:03.920 --> 00:08:05.800 And I think it has paid great dividends 166 00:08:05.800 --> 00:08:07.720 for LATAM. What has happened since? 167 00:08:08.640 --> 00:08:12.240 - Well, I mean, we emerged from restructuring at the end 168 00:08:12.240 --> 00:08:13.560 of 2022. 169 00:08:13.560 --> 00:08:17.640 Today we have a company that is 20% bigger than 170 00:08:17.640 --> 00:08:19.960 what we were in 2019. 171 00:08:21.080 --> 00:08:23.560 It is much more profitable. 172 00:08:23.560 --> 00:08:27.920 What changed is that, that we repurposed the company into 173 00:08:27.920 --> 00:08:30.480 thinking about developing our business 174 00:08:30.480 --> 00:08:33.880 and at the same time doing good. 175 00:08:33.880 --> 00:08:38.040 You see, so even though of course we are for profit 176 00:08:39.600 --> 00:08:44.400 as any corporation is, what we are trying to do is to say, 177 00:08:44.400 --> 00:08:45.720 'How do we help? 178 00:08:45.720 --> 00:08:50.720 How do we also contribute to the 179 00:08:50.800 --> 00:08:55.800 societies where we operate, to the people we serve, 180 00:08:55.960 --> 00:08:59.320 to the employees that we have.' 181 00:08:59.320 --> 00:09:01.360 - Roberto, thank you so much for your time. 182 00:09:01.360 --> 00:09:04.560 It's wonderful and so impressive to hear the story, 183 00:09:04.560 --> 00:09:07.360 your journey from becoming CEO in the moment 184 00:09:07.360 --> 00:09:08.920 of very deep crisis 185 00:09:08.920 --> 00:09:12.240 to now leading an incredibly successful airline. 186 00:09:12.240 --> 00:09:14.040 Thank you, Christoph. It was a pleasure being here.