I N T E G R AT E D R E P O R T 2 02 0
INDEX
4
PRESENTATION
5
HIGHLIGHTS
12
LETTER FROM THE CEO
14
PROFILE
Timeline
Fleet
15 Who we are
17 Value generation model
18
21
23 Passenger operation
LATAM Cargo
25
27 Awards and recognition
28
CORPORATE GOVERNANCE
70
SECURITY
92
METHODOLOGY
320
SWORN STATEMENT
29 Policies and practices
31 Governance structure
35 Ownership structure
38 Policies
42
OUR BUSINESS
Industry context
43
Financial results
44
Stock information
47
48 Risk management
50
Investment plan
51
SUSTAINABILITY
Strategy and commitments
Solidary Plane program
52
57
62 Climate change
67
Environmental management
and eco-efficiency
71
Everyone’s commitment
74
LATAM GROUP EMPLOYEES
93 Construction of the report
96 GRI content index
102 Global Compact
103 External assurance
104 Glossary
321
CORPORATE STRUCTURE
Joint challenge
75
78 Who makes up LATAM group
81
Team safety
83
LATAM GROUP CUSTOMERS
84 Connecting people
86 More digital travel experience
88
LATAM GROUP SUPPLIERS
89 Partner network
105
APPENDICES
322
CREDITS
179
FINANCIAL INFORMATION
180 Financial statements 2020
270 Affiliates and subsidiaries
312 Rationale
INT020
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Presentation
The LATAM Integrated Report 2020 presents, transparently
and objectively, the main results and challenges faced by the
business on the economic, social, and environmental fronts.
The publication covers all the companies in the group in the
period between January 1 and December 31, 2020. It has
been prepared in accordance with two international reporting
benchmarks: the guidelines from the Global Reporting
Initiative (GRI) and the integrated reporting principles of the
International Integrated Reporting Council (IIRC).
The group’s financial statements are an integral part
of the report. LATAM Airlines Group S.A.and most of its
affiliates maintain their accounting records and prepare
their financial statements in US dollars; some use Chilean
pesos, Colombian pesos, or Brazilian reals. LATAM Airlines
Group S.A. consolidated financial statements include the
results of these affiliates translated into US dollars. The
International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB),
require assets and liabilities to be translated at period-end
exchange rates, while revenue and expense accounts are
• Unless the context otherwise requires, references to “TAM”
are to TAM S.A., and its consolidated affiliates, including
TAM Linhas Aereas S.A. (“TLA”), which operates under the
name “LATAM Airlines Brazil”, Fidelidade Viagens e Turismo
Limited (“TAM Viagens”), and Transportes Aéreos Del
Mercosur S.A. (“TAM Mercosur”).
• Throughout the text, the GRI indicators are mentioned
between brackets, ordered in the GRI contents index, in the
Methodology chapter.
Enjoy your reading!
Any suggestions, comments, or questions
regarding the report may be submitted via
e-mail to investorrelations@latam.com and
sostenibilidad@latam.com. 102-53
translated at the exchange rate of each transaction date,
although a monthly rate may also be used if exchange rates
do not vary widely.
Conventions adopted
* Unless the context otherwise requires, references to
“LATAM Airlines Group” are to LATAM Airlines Group S.A.,
the unconsolidated operating entity, and references to
“LATAM,” “the group”, “we,” “us”, or the “Company” are to
LATAM Airlines Group S.A. and its consolidated affiliates:
Transporte Aéreo S.A. (“LATAM Airlines Chile”), LAN Perú S.A.
(“LATAM Airlines Peru”), Aerolane, Líneas Aéreas Nacionales
del Ecuador S.A. (“LATAM Airlines Ecuador”), LAN Argentina
S.A.(“LATAM Airlines Argentina,” formerly Aero 2000 S.A.),
Aerovías de Integración Regional, Aires S.A. (“LATAM Airlines
Colombia”), TAM S.A. (“TAM” or “LATAM Airlines Brazil”),
LAN Cargo S.A. (“LATAM Cargo”) and the two regional cargo
affiliates: Linea Aerea Carguera de Colombia S.A. (“LANCO”)
in Colombia and Aerolinhas Brasileiras S.A. (“ABSA”) in Brazil.
• Other references to “LATAM”, as the context may require,
are to the LATAM brand, which was launched in 2016
and brings together, under one internationally recognized
name, all of the affiliate brands, such as LATAM Airlines
Chile, LATAM Airlines Peru, LATAM Airlines Argentina,
LATAM Airlines Colombia, LATAM Airlines Ecuador, and
LATAM Airlines Brazil.
• References to “LAN” are to LAN Airlines S.A., currently
known as LATAM Airlines Group S.A., in connection with
circumstances and facts occurring prior to the completion
date of the combination between LAN Airlines S.A.
and TAM S.A.
Presentation
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4
Integrated Report 2020 HIGHLIGHTS 2020
CONNECTING PEOPLE AND REGIONS
During the pandemic, LATAM’s role took
on even greater relevance in the logistics
of South America
SOLIDARY AIRPLANE PROGRAM
The group’s experience in passenger and
cargo transport brings support, care, and
hope to those in need
STRENGTH IN FACE OF ADVERSITY
LATAM responded quickly and responsibly to the
greatest crisis in the history of aviation
Over 160 thousand stranded
people were transported back
to their place of origin, 20% of
them on flights exclusively for
repatriation
86 flights from China to South
America with medical materials
and equipment, such as face
masks and respirators
Transport of 1,000 tons of
medical materials and Covid-19
detection tests to the countries
of South America
Supply to isolated
regions of Brazil, Chile,
Colombia, Ecuador,
and Peru
1.3 thousand tickets donated
to healthcare professionals
on the frontlines against the
pandemic and to patients under
treatment for other diseases
39.5 tons of medical materials
transported
129.2 tons of humanitarian
aid for the region of San
Andres (Colombia), affected by
hurricane Iota
Transport of stem cells, organs,
and tissue for transplants
Assistance against
the fires in
Pantanal (Brazil)
DIP (Debtor In Possession)
FINANCING
It gained access
up to US$2.45
billion to prepare
its restructure
NEW DIGITAL
EXPERIENCE
Services and information
for easy and fast access to
the customer’s preferred
platform (app, website,
or message)
EBITDA (US$ thousand)
EBITDA Margin
21.8%
21.2%
Revenues 2020
(US$ thousand)
9%
2,259,612
2,211,578
-6.4%
28%
63%
-275,902
2018
2019
2020
EBITDA: earnings before interest,
taxes, depreciation, amortization, and
aircraft leasing.
The values from 2018 were discloses
pursuant to IFRS 2016 accounting
standards.
Passengers: 2,713,774
Cargo: 1,209,892
Others: 411,002
Total: 4,334,668
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability
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Integrated Report 2020 None of
this would
be possible
without the
people who
make up
LATAM
Highlights
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Security Employees Customers Suppliers Methodology Appendices Financial information Credits
6
Integrated Report 2020 Seeing the airport empty, the
airplanes parked, stores and
restaurants closed, everyone
wearing a face mask, feeling people’s
fear of becoming infected and not being
able to get as close as before to one’s
coworkers and passengers was tough
and sad. Not flying for nearly 6 months
was even harder. The day when they
said that the Jorge Chavez [Lima, Peru]
airport was opening its doors again
was a day of joy. We were finally back!
Putting on my uniform after such a long
time was exciting. I was returning to
“my office”, I was returning to do what I
love so much.
María José Bravo-de-Rueda Alarcón
Cabin Crew Trainee –In-Flight Service
Lima, Peru
3 years at LATAM
I hope we will come out of this bigger
and stronger after the pandemic. Both
we and LATAM had plans that were
forced into pause, and I hope that they
can be restarted soon.
Esteban Tonini
Cabin Crewmember –In-Flight Service
Quito, Ecuador
2 years at LATAM
The hardest thing in the last year has
been seeing how the pandemic affected
LATAM in terms of operation, closing
and decreasing frequencies, and even closing
subsidiaries. The most beautiful thing is that it
generated acts of solidarity. In Ecuador, LATAM
was one of the airlines that provided support
for humanitarian flights and, with the Solidary
Airplane, allowed the transfer of essentials
and medical supplies throughout the region,
making it possible to help millions of people
when they needed it most.
The company also kept us abreast of the
situation. They were always transparent and
sincere. Communication was always open,
which showed respect for us, generating a job
motivation that influenced the commitment to
our work.
Highlights
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7
Integrated Report 2020 Itook this photo on a flight from New York
(United States) to Guayaquil (Ecuador).
When I operated several humanitarian
flights, I was filled with joy to see hundreds
of passengers whom we were able to
transport to their homes. The union of all of
us who make up LATAM, in those months,
was very valuable. We all did our best to
come through.
I have already had the opportunity to take
a group of children with cancer to the
Galapagos. Seeing their young faces with
such excitement at realizing their dream
of traveling is indescribable. Transporting a
stretcher on board from the Galapagos to
Guayaquil was another rewarding experience.
The beauty in these experiences is seeing
passengers’ gratitude and having the feeling
of adding something positive to the lives of
these people.
Maria Fernanda Castro
Senior In-flight Service Manager
Quito, Ecuador
20 years at LATAM
The hardest thing experienced
in 2020 was when the CEO
announced that staff reductions
would have to be made and many
families would be affected. Seeing that
we had to stop most of the passenger
fleet and that we would be entering
Chapter 11, something we never thought
could happen. This hit us hard because
of the uncertainty we were facing.
But it has been wonderful to see people
react in a very positive way giving
the best of each to come through,
hearing gratitude comments towards
the company in different areas and
teams for looking for ways to keep jobs,
seeing how, in a short time, passenger
operations resumed, which required a lot
of effort and teamwork.
Juan Carlos Szenkman
Head of Maintenance Department
(Miami – New York – Los
Angeles – Orlando Line)
Miami, United States
20 years at LATAM
Highlights
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8
Integrated Report 2020 Laura Gherardi Binaghi
Staff Services Manager
Santiago, Chile
23 years at LATAM
We have experienced mergers, natural
disasters such as earthquakes and
floods; but in all those situations
we relied rather on our actions to get through.
This time, we faced something unknown; we
lived through a situation of vulnerability that
we had never felt. But, as everything in life is
bittersweet, it left us a great lesson: humility
and the way of understanding that in the face
of great monsters like a pandemic, we are
this small and that all that's left is to come
together to face it, use our creativity, get out
of our comfort zone.
We are the people who build this organization.
Our diversity in age, culture, experiences, our
flexibility, have allowed us as a whole to seek
creative, efficient, and agile ways out.
Andrés Zagabria
Special Services Executive
Buenos Aires, Argentina
18 years at LATAM
In Argentina, the pandemic meant the
paralyzing of the entire economy for
several consecutive months. The cessation
of domestic operations in Argentina was a
very harsh blow that not only filled me with
uncertainty, but also marked the end of a
cycle, a great sense of loss. Despite this,
LATAM maintained communication with
all its officials virtually, providing us with
information and the opportunity to clarify all
our questions. Despite everything, I also set
out to get positive things out of the crisis. It
was very gratifying to have been considered
to continue in a new cycle, reunite with some
of my colleagues, have the chance to venture
into other areas, and see the company from a
different perspective.
Highlights
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9
Integrated Report 2020 Sebastián Antonio Millar Ulloa
Head of Ground Operations
South America South – LATAM Cargo
Santiago, Chile
12 years at LATAM
One day, in mid-April, I got a call from
my boss: "We need you to go to
China, do you dare to go?" My answer:
"When do we leave?" Five days later, we were
on our way to China for the first time, with a
LATAM aircraft and the urgent task of filling
it with everything necessary to distribute and
supply people in South American countries.
I spent practically two months touring the
world to transport medical supplies from
China to South America.
I was able to see in several countries the
joy in people's eyes when we landed and
unloaded the products that were needed.
Hearing the sincere "thank you," that's a
sign of how people see us as company.
More than a form of transportation, we
allow dreams to reach their destination and
transport a hope for life.
It was very hard to be apart from my family
and have a constant sense of uncertainty
about what would happen, as the pandemic
was something new for everyone. The best thing
about 2020 was learning to value every moment
when I flew and know that we are connecting
people with their loved ones. I feel enormous
joy every time I see passengers boarding our
planes, now that we are flying again.
LATAM is the airline that has seen me grow, it
was the first company where I worked, and I
feel proud to belong to this family. We have the
best talents working day after day, we support
each other, and never lose faith that we will
become stronger from this moment on. I want
us to continue to grow, gaining strength and
doing our best to be one of the top ten airlines
in the world.
María Camila Pérez
First Officer
Bogota, Colombia
3 years at LATAM
Highlights
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10
Integrated Report 2020 Otávio Meneguette
Director of Domestic Markets - LATAM Cargo
São Paulo, Brazil
5 years at LATAM
LATAM is much more to me than a job
or a source of income; it helps people
realize their dreams. In the last year,
the group had to make difficult decisions to
survive; it went into bankruptcy proceedings
(Chapter 11), carried out a major restructure,
and cut costs. Very competent and beloved
colleagues left the company. But in the
midst of this, it was very nice to see the
employees’ efforts to help the company
get through the crisis. We stayed close
to customers, listening to them, being
transparent and empathetic, and striving to
find the best solution for each one. When all
this is over and we fly again as before, I am
sure our customers will remember LATAM
for the good relationship we built.
Bruna Montolar Westphal
Sales executive
Lisbon, Portugal
5 years at LATAM
We essentially felt the team spirit in
2020 and 2021. Making the China
project feasible, reconfiguring
the Boeing 777 and 787 to carry more
cargo, adapting passenger flights to carry
only cargo, adjusting our network, was only
possible thanks to the individual effort for
the collective good, with a lot of empathy,
resilience, and care. Another gesture occurred
in January 2021, when we saw the collapse
of the health system in Manaus (Amazonas)
and were able to donate time, effort,
attention, and excitement to send cylinders,
respirators, and concentrators oxygen
through the Solidary Airplane.
The changes, reductions, and expansions,
at the rate at which they happened, make
me see how brave, strong, and capable we
are to meet the countless challenges of this
industry.
Highlights
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11
Integrated Report 2020 Letter from
the CEO 102-14
The Covid-19 pandemic represented the greatest challenge
in history for the airline industry and for LATAM in 2020. The
impact of this crisis brought entire economies to a standstill
for months and the restrictions on movement and social
distancing imposed by the vast majority of countries led
to the near-total cease of the group's operations. Between
mid-to-late March, in just 15 days, we were forced to halt
virtually all of our passenger operation and, during the
second quarter of the year, we flew at 6% of our original
capacity. In the second half of 2020, we experienced a slow
and erratic recovery, ending December with less than 40% of
our planned operation.
During most of the year, our efforts focused on
strengthening the group and creating the necessary
conditions to cope with the crisis, including painful decisions,
such as letting employees go, reducing operations, canceling
routes, adjusting our fleet, and asking our workers to
voluntarily reduce their compensation. One of the most
complex decisions that we faced, in May 2020, was to begin
the voluntary restructuring process under Chapter 11 of the
U.S. Bankruptcy Act. Today, an important part of our focus is
on preparing a new stage for LATAM through a reorganization
plan that we will submit to the New York Court.
facility)—a solid position to address the pandemic. At the
same time, we made significant efforts to reduce the group's
cost structure, resulting in an annual decrease of 38.1%
compared to 2019.
Beyond this unprecedented crisis, we did not neglect the
long-term view, and have worked to improve our service. We
recently launched a new digital experience for our customers
in Ecuador, Colombia, Chile, and Brazil, allowing passengers
themselves to have control over their itinerary for most of
their trip. At the same time, we have worked on listening
more to our customers to understand how we can improve
and offer a closer, more transparent, and simpler service.
Despite the impact of the pandemic, our effort to execute
our operations impeccably has paid off. In 2020, we achieved
the highest on-time performance indices in our history—
higher than those of previous years in which we had already
been acknowledged as the most punctual airline group
in the world. We also achieved the highest satisfaction
ratings from our customers, measured by the Net Promoter
Score (NPS) indicator, since its implementation in 2008.
Passengers rated the safety measures taken since the start
of the pandemic, the in-flight service, and flight punctuality.
While, given the extraordinary circumstances, our financial
results showed a sharp slowdown compared to previous
years, they also made it clear that we are on the right track,
with a strong and agile company, able to adapt to the new
scenarios. We closed the year with US$3 billion in liquidity
(US$1.7 billion in cash and US$1.3 billion in a DIP financing
The pandemic led us to play a role, with great dedication and
effort, in contributing to the countries where we operate.
During 2020, we repatriated more than 160,000 people, in
coordination with the authorities of various countries and,
through our Solidarity Plane program, managed to keep
South America connected to the world, even in the midst of
border closures. We transported over 440 tons of medical
supplies benefiting Argentina, Brazil, Chile, Colombia,
Ecuador, and Peru. We mobilized more than 1,100 organs
and tissues within South America, and completed the
transfer of stem cells for eight people with blood cancer,
who received a second chance at life. Finally, we supported
the transport of over 900 health professionals for different
needs related to Covid-19.
For the first time, we flew to China and made about 100
flights. We did this to bring ventilators, protective masks,
Covid-19 diagnostic tests, medications, vaccines, and other
supplies to the South American continent. We also ensured
the continuity of operations in various export industries and
prevented shortages in isolated regions. And at the end of
the year, our flights had become synonymous with hope
for the population as we transported Covid-19 vaccines to
South America and distributed them at no cost within the
countries where we operate.
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability
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12
Integrated Report 2020 with such a committed team, and I am proud of the group
we have, despite the difficulties.
Without a doubt, the best witnesses to what this year has
been, are our employees. That is why, at the beginning of
this Integrated Report, in the space traditionally dedicated
to the summary of the year, we have chosen to include
testimonies from some of these professionals, who relate
their experiences and their expectations for the future. In this
way, we show a small sample of this great group of people,
talent, and hope that make LATAM the group that it is.
The only thing left to say is that we are laying the
groundwork for a better LATAM and, at the same time,
we are prepared to do what we love again, to continue
connecting people and Latin America with the world.
Together, we are LATAM, and we will emerge strengthened
from this crisis.
Roberto Alvo Milosawlewitsch
LATAM Airlines Group CEO
I am proud of what we have achieved as a group and how
our people have been able to cope with this crisis. We never
stopped flying, keeping alive our purpose of ensuring that
our customers' dreams reach their destination.
Although faced with an adverse scenario, we took advantage
of this time as an opportunity to review our future outlook.
We have come from a process of deep reflection on what
kind of group we want to be when the pandemic ends and
demand is reactivated. We put all paradigms, emotions, and
beliefs as a group on the table and realized that our role
must go beyond the operations of an airline. We want to
be a social player in the societies where we participate. We
conducted 29 dialogues in Brazil, Colombia, Ecuador, and
Chile on topics as diverse as climate change management,
gender equality, and consumer relations, among others. We
listened to 145 experts on these issues and, of course, to
our customers and our own teams, as well.
And we have taken action on these conversations. We are
sowing the seeds of this transformation, which will make
us an even more connected group with the demands of our
customers, with the aspirations of society, and with the
socio-environmental challenges of today. We want to be a
better group of post-Chapter 11 airlines.
I want to take this opportunity to thank, once again, all the
team members that make up LATAM. We are almost 30
thousand people from 46 different nationalities, spread
across 21 countries. We were certainly heavily affected by
the pandemic, but we rolled up our sleeves so that LATAM
could keep flying. It has been a privilege to share this path
Constanza Toro and Carmen Pérez,
both coordinators of Ground
Operations, next to Roberto Alvo on
the airport tarmac.
Letter from the CEO
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13
Integrated Report 2020 P R O F I L E
14
Profile
Who we are 102-1, 102-2, 102-6, 102-7 and 102-10
LATAM group is the main airline group in Latin America,
present in the domestic markets of Brazil, Chile, Colombia,
Ecuador, and Peru, and with international passenger
and air cargo operations. The group is a benchmark for
connectivity, given its broad destination network (117,
considering passenger and cargo operations), flight
frequency, and connection possibilities, boosted in South
America through the hubs in São Paulo (Brazil), Santiago
(Chile), and Lima (Peru). LATAM Group stands out for
its commitment to punctuality, security, and operating
excellence, which is part of the ongoing effort to improve
the experience of all its passengers, whether they travel
for business or pleasure, companies in South America
exporting their products to other continents, and clients
coming from countries that transport their products.
In 2020, LATAM faced the greatest challenge in its history,
following the impact of Covid-19, which forced the
borders of countries worldwide to be shutdown, triggering
deep effects in the aviation sector. As a result of the
unprecedented effect of the pandemic on passenger
and cargo operations, LATAM Airlines Group S.A. and its
affiliates in Chile, Peru, Colombia, Ecuador, the US, and
Brazil filed for voluntary bankruptcy protection under
the financial reorganization statute of the US Chapter
11. This reorganization process provides LATAM with the
opportunity to work with the group’s creditors and other
stakeholders to reduce its debt, convert its costs, access
new sources of financing, and continue operating, even
as it enables the group to adapt its business to the new
reality. The group seeks to ensure financial sustainability
and continue to generate shared value for its
stakeholders: employees, suppliers, clients, shareholders,
investors, communities, and society. (Read more about
the process in Financial Results, on page 44).
Despite the adverse scenario, LATAM maintained
connectivity in the region. On the group’s flights, over 160
thousand citizens, stranded as a result of the restrictive
measures by the authorities, were able to return home.
Of this total, 20% were transported on flights exclusively
for repatriation. LATAM also enabled the transportation of
medical supplies and healthcare professionals to deal with
the pandemic, and it guaranteed the supply of essential
products to various regions, even as it supported the
export of perishable products from South America. As
the restrictions were removed, LATAM was able to resume
its passenger operations.
LATAM Pass 102-2
The group runs the LATAM Pass
frequent flyer program, the fourth
largest in the world, with 38 million
members. The points accrued can
be exchanged for airfare tickets or
other services, which vary between
categories, such as cabin upgrades
and checked baggage.
LATAM Airlines Group S.A.’s shares are currently traded on
the Santiago Stock Exchange (Chile). Due to the Chapter
11 financial restructuring proceedings, the group’s ADRs
(American Depositary Receipts) were delisted from the
New York Stock Exchange (NYSE), but they continue to
trade in the OTC (over the counter) market in the US.
Find out more:
• Legal incorporation and Group’s
purpose: page 106;
• Physical structure (property, units,
and equipment): pages 106 and 107;
• Company information: page 107.
15
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Main impacts in 2019:
• LATAM group’s activities represented nearly 1%
of the GDP in South America and supported 1.9
million indirect jobs.
• US$33.2 billion contributed to 13 economic
sectors.
• Indirect jobs: US$13.5 billion in compensation
to workers in those chains, and US$5.4 billion
in fiscal revenue.
Economic boost for the region 203-2
According to the Oxford Economics study “The economic
impact of LATAM Airlines in South America”, published in
May 2020, LATAM’s operation drives the economy of various
industries in the countries where it operates. The group’s
activities contributed US$33.2 billion in 2019 to the GDP
(Gross Domestic Product) of 13 sectors in those countries:
industry, mining, commerce, transportation and storage,
bonds and insurance, food and lodging services, health, and
entertainment, among others. The calculation considers
the direct and indirect impacts, and those derived from the
operations, as well as the benefit generated by the spending
of passengers transported in the six countries where LATAM
had affiliates in 2019.
Each job at LATAM group generates another 46 indirect
jobs, totaling 1.9 million jobs in 2019. The most benefited
sectors were tourism (with 502.7 thousand jobs), commerce
(321.7 thousand jobs), and personal services, including
entertainment (277.1 thousand jobs).
Sectoral dialogue
LATAM group fosters the development of South America through its
participation in various associations and representative entities in Brazil,
Chile, Colombia, Ecuador, and Peru (see the full list on page 108).
Profile
16
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits VALUE GENERATION MODEL
Social and
relational capital
Frequent flyer programs |
LATAM Brand | Relations
with authorities and
the industry
INPUTS
Human Capital
Employees
Industrial capital
Fleet |Maintenance
Base | Hangars
Intellectual capital
Knowledge of the region
and business | Operating
license and slot rights at
airports | Management
systems (environmental;
safety) | Analytics (customer
experience personalization)
1
To materialize its
business, LATAM uses
capitals of various
natures that serve as
an input for work.
2
Through its
activities, LATAM
transforms those
inputs into results
and impacts.
GOVERNANCE AND
MANAGEMENT
• Ethics
• Financial liability
• Safety and efficiency
• Developing employees
SUSTAINABILITY
• Solidary Airplane Program
• Climate change
• Environmental management
and eco-efficiency
RESULTS
• Broad destination
network
• Financial results
• Diversity in the client
• Operating excellence
• Organizational health
and development
opportunities
base
TIVITIE S
C
A
What we
do and how
we do it
Financial capital
Revenues | Capital |
Assets
Natural capital
Aircraft Fuel
CUSTOMER FOCUS
• Digital experience and
innovation
• Flexible sales model
• Commercial
agreements and
associations
• Loyalty program
3
The results are
the most visible
facet of the
operation; the
materialization
of the work
done.
4
However, the com-
pany’s main value deli-
very lies in its capacity
to generate positive
long-lasting impacts
for the business and
its stakeholders.
17
Customer-focused value propositionConnectivity Safety and Security Eco-efficiency Commitment to the region Strategic debateFor stakeholders• Different profiles and segments• Revenue diversification• Market share• Leadership in the region• Credibility• Competitive spread• Cost reduction • Being a relevant player in society• Identity and purpose• Knowledge exchange• Sector development• Compliance• Access• Autonomy• Freedom of choice• Mobility• Economic drive• Trust • Natural resource economy• Less environmental impact and noise• Economic development• Social strengthening• Care of the environment• Joint construction• Agenda of the various stakeholders’ interestsIMPACTSFor LATAMIntegrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Timeline
1929
Linea Aerea
Nacional de Chile
(LAN) founded by
Comandante Arturo
Merino Benítez.
1985
LAN becomes
a joint stock
company.
1986
TAM acquired Brasil
Central Linhas Aéreas
VOTEC, a regional
airline that served
the North and Central
West regions of Brazil.
1956
Start of LAN
services to
Lima (Peru).
1946
First LAN international
flight: Santiago
(Chile) – Buenos Aires
(Argentina).
1983
Constitution of
Linea Aerea Nacional
– Chile Limitada,
through CORFO.
1958
Start of LAN services to
Miami (United States).
1975
Foundation of TAM –
Transportes Aéreos
Regionais by capitan
Rolim Adolfo Amaro.
1990
Brasil Central
renamed TAM –
Transportes Aéreos
Meridonais.
1976
Launch of TAM services
in brazilian cities,
especially Mato Grosso
and São Paulo.
1989
Start of privatization
of LAN: the Chilean
government sells a 51%
stake to local investors
and Scandinavian
Airlines System (SAS).
1961
TAM – Taxi Aéreo
Marília created
by five charter
flight pilots.
1994
Privatization of LAN
completed with the
acquisition of a 98.7%
stake by its current
controllers and other
shareholders.
1970
LAN begins
flights to Europe.
1993
Launch by TAM of
TAM Fidelidade,
Brazil’s first frequent
flyer program.
18
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits 1997
LAN lists on
the New York
Stock Exchange,
becoming the first
Latin American
airline to trade
ADRs on this
important market.
2000
LAN joins the
oneworld® alliance.
1996
• Acquisition by TAM of
Lapsa Airline from the
Paraguayan government
and creation of TAM
Mercosur.
• Start of São Paulo
(Brazil) – Asuncion
(Argentina) flights.
2001
• LAN Alliance with
Iberia and inauguration
of Miami (United
States) cargo terminal.
• Creation of TAM
Technology Center and
Service Academy in São
Paulo (Brazil).
1998
Arrival of first A330;
first TAM international
flight from São Paulo
(Brazil) to Miami
(United States).
1999
LAN’s expansion
begins: start of
operations of
LAN Perú.
2003
LAN continues its
expansion plan:
start of operations
of LAN Ecuador.
2002
LAN Alliance
with Qantas and
Lufthansa Cargo.
2004
• Launch of the new
executive class for flights
to Paris (France) and
Miami (United States).
• Launch of new
corporate image as LAN
Airlines S.A.
• Start of TAM flights to
Santiago (Chile).
2005
• Further step in
LAN’s regional
expansion plan:
start of operations
of LAN Argentina.
• TAM S.A. lists on
the Bovespa Stock
Market.
• Start of flights
to New York and
Buenos Aires.
2006
2008
• Completion of
renewal of LAN’s short-
haul fleet with aircraft
from the Airbus A320
family.
• TAM receives its first
Boeing 777-300ER.
2007
• Start of TAM flights to
Milan (Italy) and Córdoba
(Spain).
• Authorization from Brazil’s
National Civil Aviation
Agency (ANAC) to start
flights to Madrid (Spain)
and Frankfurt (Germany).
• Start of flights
to London (United
Kingdom) and, through
agreement with Air
France, to Zurich and
Geneva (Switzerland).
• Launch of new LAN
Premium Business
Class.
• TAM S.A. lists on the
NYSE.
• Implementation of low-
cost model in domestic
markets.
• Capital increase of US$320 million.
Timeline
19
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits 2009
• Start of cargo
operations in Colombia
and domestic passenger
operations in Ecuador.
• Launch of Multiplus
Fidelidade.
2015
• LATAM is born: the
New Brand for LAN
Airlines, TAM Airlines
and Affiliates.
• EETC structured bond
issue for MMUS$1,020:
first in Latin Capital
increase for America.
2014
• TAM joins oneworld®
alliance, which becomes
LATAM Airlines Group
global alliance.
• LATAM launches its
2015–2018 Strategic Plan.
2010
• Acquisition of
Colombia’s Aires airline.
• TAM officially joins
Star Alliance.
2013
Capital increase
for America.
US$940.5 million
2016
Capital increase of
US$608 million with
which Qatar Airways
acquires 10%1 of the total
of paid and subscribed
shares of LATAM.
2020
2018
• Inauguration of the first
flight to Asia.
• New sales model
comes to international
flights.
2017
Implementation of
the new travel model
by the affiliates of the
domestic markets.
• Launch of the E-Business
unit, in order to improve
customers’ digital experience.
• Implements various
initiatives to support the
fight against Covid-19 in
South America.
• Solidary plane: 1,374 tickets
donated (health professionals,
patients, and others); 1,174
organs, tissues, and stem cells
transported for transplants;
over 524t of cargo to support
health and humanitarian
aid initiatives.
• LATAM Airlines Group S.A.
and its affiliates in Chile,
Peru, Colombia, Ecuador,
the US, and Brazil enter
the financial restructuring
process under Chapter 11
of the US Law, and gains
access to up to US$2.45
billion in DIP (Debtor In
Possession) financing.
2019
• Announcement of
strategic agreement
with Delta Air Lines
to provide more and
better options to
passengers through
a complementary
network of connections
between Latin and
North America.
• LATAM announces
its exit from the
oneworld alliance as of
May 1st, 2020.
2011
LAN and TAM sign
binding agreements
related to the
business combination
of the two airlines.
2012
• LATAM Airlines
Group is born as a
result of the business
combination between
LAN and TAM.
• Issuance of 2.9
million shares.
1 Qatar holds 9.999999918% of LATAM’s total subscribed and paid-in shares.
Timeline
20
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Fleet
LATAM closed 2020 with a total fleet of 300 aircraft, keeping
296 in the operational fleet. In its international operations,
LATAM has 59 aircraft, 10 of which are Airbus A350-900 and 22
are Boeing 787 Dreamliner (versions 8 and 9). The models are
world benchmarks of efficient fuel consumption and reduction
of greenhouse gas (GHG) emissions and noise. For the domestic
and regional operations in South America, LATAM mainly uses
narrow-body aircraft, of which it has 137 Airbus airplanes; most
are from the Airbus family, A320, A321, and A320-Neo. The
latter consumes 15% less fuel and generates 50% less noise
than the equivalent model of the previous generation. LATAM
Cargo and the cargo affiliates in Colombia and Brazil have 11
Boeing 767 available.
In 2021, LATAM announced a three-year growth plan for the
cargo fleet that includes the conversion by Boeing of up to eight
Boeing 767-300ER, following which the group would increase
its combined cargo capacity by nearly 80%. Through this plan, it
seeks to expand its service options and take advantage of the
synergies of operating a homogenous fleet of cargo planes.
The growth will take place in two gradual stages. The first stage
is based on four confirmed orders with Boeing for conversions
between 2021 and 2022. With these Boeing 767–300BCF
(Boeing Converted Freighter), LATAM group’s cargo operators
will go on to have a total of 15 cargo aircraft. The second, on
the other hand, comprises four conversion options with Boeing
between 2022 and 2023, with which the carriers would total a
fleet of 19 Boeing 767-300ER cargo planes.
Carlos, within São Paulo, and it can service up to eight aircraft
at the same time.
Both of LATAM’s MRO bases performed 315 maintenance
services throughout the year, which translates into 86% of the
maintenance of the total fleet. The remaining aircraft were
serviced by external suppliers. The services performed on the
company’s own units totaled 1,000,000 man-hours worked.
Maintenance
In Chile and Brazil, LATAM has Maintenance, Repair, and
Operation (MRO) bases, certified to service the Boeing and
Airbus fleet. The units give maintenance to the group’s aircraft,
plan and execute the airplane returns, in line with the group’s
fleet plan, and occasionally give maintenance services to
third parties.
The line maintenance network (smaller, preventive, and
corrective tasks) is distributed among the LATAM hangars in
Santiago (Chile); São Carlos, Congonhas/São Paulo, and Brasilia
(Brazil); Lima (Peru), Aeroparque/Buenos Aires (Argentina), and
Miami (USA), among others. The network offers a series of
automated and integrated services that ensure compliance with
all safety requirements and local and international regulations.
The Chilean base is located in Santiago and has the capacity
to simultaneously serve two narrow body aircraft and one wide
body aircraft. In Brazil, the maintenance base is located in São
21
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Operating Fleet
AT DECEMBER 31, 2020
OFF BALANCE
ON BALANCE
TOTAL
Alcance
Passenger fleet
Airbus A319-100
Airbus A320-200
Airbus A320-Neo
Airbus A321-200
Airbus A350-900
Boeing 767- 300
Boeing 777-300 ER
Boeing 787-8
Boeing 787-9
Total
Cargo fleet
Boeing 767-300F
Total
Total operating fleet
SUBLEASES
Airbus A320-200
Airbus A350-900
Boeing 767-300F
Total subleases
TOTAL FLEET
7
38
6
19
7
-
6
4
10
97
1
1
98
-
-
-
-
98
37
94
6
19
3
17
4
6
2
188
10
10
198
2
1
1
4
44
132
12
38
10
17
10
10
12
285
11
11
296
2
1
1
4
202
300
LENGTH (M) WINGSPAN (M)
SEATS
CRUISE SPEED
(KM/H)
MAXIMUM TAKE-
OFF WEIGHT (KG)
Short-haul fleet/ narrow-body aircraft
Airbus A319-100
Airbus A320-200
Airbus A320-200-Neo
Airbus A321-200
Long-haul fleet/ wide-body aircraft
Airbus A350-900
Boeing 767-300
Boeing 777-300 ER
Boeing 787-8
Boeing 787-9
Cargo fleet
33.8
37.6
37.6
44.5
66.8
54.9
73.9
56.7
62.8
34.1
34.1
34.1
34.1
64.8
47.6
64.8
60.2
60.2
144
156-168-174
174
220
348
221-238
379
247
313
830
830
830
830
903
851
894
903
903
70,000
77,000
77,000
89,000
280,000
186,880
346,500
227,900
252,650
LENGTH (M) WINGSPAN (M)
Boeing 767-300 F
54.9
47.6
SEATS
445.3
CRUISE SPEED
(KM/H)
MAXIMUM TAKE-
OFF WEIGHT (KG)
851
186,880
Fleet
22
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Passenger
operation 102-6
International market
The international passenger operation includes regional
flights and long-haul flights towards other continents,
covering 17 destinations through its own flights and 178
through code-sharing. Affected by the pandemic, the
operation was reduced to around 5% of the group’s capacity
(measured in available seat kilometers or ASK) in April,
and following a gradual recovery, LATAM ended the year at
38.3% of its operation, compared to the same period in the
previous year.
Greater connectivity
In November, LATAM Airlines Brazil and LATAM Airlines
Colombia announced a code-share agreement with
Aeromexico, and once they have the necessary
approvals, the offer of flights to Mexico and the
connectivity offered to customers will be increased.
Throughout the year, 28.3 million passengers traveled with
LATAM group to international destinations—61.8% fewer
than in 2019.
Passenger demand, measured in RPK (revenue passenger
kilometers), which is equivalent to the number of paying
passengers by the distance flown, decreased 53.6%
compared to 2019. Supply or capacity, measured in ASK,
which is equivalent to the number of seats available,
multiplied by the distance flown, decreased 70.6% compared
to the previous year. Load factor was 73.8%, 11.1 percentage
points lower than in 2019.
Domestic market
Domestic passenger transportation is done in five countries:
Brazil, Chile, Colombia, Ecuador, and Peru. The operations
of LATAM Airlines Argentina were suspended indefinitely
as of June, as a result of the challenging scenario for the
aviation sector in the country, which was worsened due to
the pandemic.
As was the case for international flights, domestic
operations decreased until April. Demand rose gradually
throughout the year, particularly in the second half of the
year, and LATAM Airlines Argentina ended the year operating
at 46.9% of its capacity compared to 2019.
Agreement with Azul
LATAM Brazil signed a code-share agreement with
Azul, boosting the connectivity of both airlines,
and the value proposition for passengers. The
alliance includes various routes and considers
the accumulation of points on both frequent
flyer programs.
LATAM group transported 24.3 million people on its domestic
flights in 2020, a 58.1% decrease compared to the previous
year. Passenger demand, measured in RPK, decreased by
62.2% in Spanish-speaking countries (SSC), while supply, as
measured in ASK, showed a decrease of 59.9%, and the load
factor corresponded to 76.1%, 4.7 percentage points less
than in 2019. In the Brazilian domestic market, demand fell
by 50.1%, and supply by 48.5%. Load factor was down 2.5
percentage points compared to 2019 settling at 80.0%.
In the consolidated figure for the year, LATAM remained the
market leader in Chile and Peru, with 61% and 66% market
share, respectively. In Brazil and Colombia, it had the second
largest operation.
23
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits LATAM IN SOUTH AMERICA AND IN THE WORLD 102-4, 102-6 and 102-7
DOMESTIC OPERATION
24.3 million
passengers
94 domestic destinations
LATAM Airlines Ecuador
Consolidated traffic (RPK)
25 million RPK
SSC: 8.3 million
Brazil: 16.7 million
Capacity (ASK)
31.8 million
SSC: 11.0 million
Brazil: 20.8 million
Occupancy rates-domestic
market
SSC: 76.1%
Brazil: 80.0%
7 domestic destinations
0.5 million passengers
transported
75%
TAME and Avianca
LATAM Airlines Peru
19 domestic destinations
3.1 million passengers
transported
66%
Sky Airlines Peru,
Viva Airlines Peru,
Star Peru and Avianca
LATAM Airlines Chile
12 domestic destinations
3.6 million passengers
transported
61%
Sky and JetSmart
LATAM Airlines Colombia
12 domestic destinations
2.2 million passengers
transported
25%
Avianca, Viva Colombia
EasyFly, Satena, and Copa
Airlines Colombia (“Wingo”)
LATAM Airlines Brasil
44 domestic destinations
14.4 million passengers
transported
30%
GOL and Azul
North America
5
12
Latin America and
the Caribbean
8
INTERNATIONAL
OPERATION
4 million passengers
17 destinations LATAM
178 code shares
Consolidated traffic (RPK)
17.6 million RPK
Capacity (ASK)
23.9 million ASK
Occupancy rates-international
market
73.8%
Europe
4
52
Asia and
Australasia
21 (Asia)
17 (Australasia)
Africa
8
Market share
Main competitors
Destinations (LATAM codes)
Code shares
Passenger operation
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability
Security Employees Customers Suppliers Methodology Appendices Financial information Credits
24
Integrated Report 2020
LATAM
Cargo
2020 Results
In the consolidated figures for 2020, 785 thousand
tons of cargo were transported—a 13.2% decrease,
compared to the previous year. Cargo revenues
increased by 13.7% compared to 2019 and accounted
for 27.9% of the group's total. In the period, revenues
per ATK (available ton-kilometers) increased by
53.5%, cargo capacity decreased by 26% and load
factor reached 65%—an increase of 9.9 percentage
points compared to 2019.
LATAM Cargo S.A. and the cargo affiliates in Colombia and
Brazil is the main cargo air carrier in Latin America, and
thanks to the synergies between the company’s cargo
and passenger operations, the group offers its clients
transportation in 117 destinations and 20 countries. During
the pandemic, it played an important role in guaranteeing
local supplies and exports gained greater relevance.
To meet the demand, cargo operators bolstered the fleet
of 11 cargo planes with the adaptation of passenger planes
for the operation. The group’s fast reaction was essential
for the region’s producers. To serve the demand from the
salmon industry, for instance, LATAM Cargo came to operate
more than 35 weekly flights from Santiago (Chile) to Miami
(US), being responsible for transporting over half of the
annual salmon exports. Meanwhile, for flower exports, flight
frequencies between Bogota (Colombia) and Miami (US)
increased from six to 18 per week. Fruit-producing industries
in Chile and asparagus producers in Peru are other examples
of productive sectors that benefited.
Additionally, the operation also helped to prevent shortages
of food and medication in difficult to reach regions, such as
the Colombian Amazonia and the Peruvian Amazonia, the
Galapagos Islands (Ecuador), the State of Arce (Brazil), and
the Chiloe archipelago in Chile.
Fight against the pandemic
LATAM Cargo S.A. and the cargo affiliates in Colombia and
Brazil played an active role in facing the pandemic, transporting
ventilators, facemasks, Covid-19 detection tests, medication,
and other materials from China to South America. LATAM
landed in China, for the first time, on April 15, completing 86
flights to that destination throughout 2020.
At yearend, the first lot of coronavirus vaccines to be used in
Chile was transported and, through the Solidary Plane Program,
vaccines were distributed for free throughout the country by air
in 2021. The program also transported vaccines free of charge
to 24 states in Brazil early in March 2021.
Broad portfolio
LATAM Cargo and the cargo affiliates in Colombia and Brazil
perform the personalized transportation of various types of
cargo: perishables—e.g., fruit, flowers, and fish—medication
and vaccines, large volume cargoes, high-value goods and
merchandise, dangerous merchandize (such as flammable
or corrosive substances), postal cargo, and live animals,
among others.
CEIV Pharma
LATAM Cargo and the cargo affiliates in Colombia
and Brazil were the first airlines in the American
continent to be certified in the Center of Excellence of
Independent Validators (CEIV Pharma) program, from the
International Air Transport Association (IATA). In 2020,
the year when the transport of pharmaceutical products
with temperature control took on a relevant role,
the company successfully renewed this certification.
CEIV Pharma guarantees international and national
compliance with safeguarding the product’s integrity all
the way to its final destination, and it also tackles the
specific needs of air cargo.
25
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits LATAM CARGO AND THE CARGO AFFILIATES IN COLOMBIA AND BRAZIL OFFER TRANSPORTATION
DESTINATIONS
EXCLUSIVELY
FOR CARGO
Chicago
United States
Guatemala City
Guatemala
Panama City
Panama
Cabo Frío
Brazil
Amsterdam
Netherlands
117 destinations
in 20 countries,
including 6
destinations
(4 countries)
exclusively
for cargo
785,000
tons
transported in
2020
Ciudad del Este
Paraguay
28%
of LATAM
group’s total
revenues
11
cargo freigh-
ter planes
1. According to the study “Economic
Impact of LATAM Airlines in South
America”, carried out by Oxford Econo-
mics and published in May 2020.
COVID-19 OPERATION
Chile
Transport of the first
doses of the vaccine
against coronavirus
to Chile.
Colombia
Ecuador
SUPPORT TO KEY
INDUSTRIES IN
SOUTH AMERICA
Colombia
297.3 mil
thousand tons/
year exported1
HIGHLIGHTED
PRODUCTS:
asparagus
flowers
salmon
Peru
Chile
207.2 mil
thousand tons/year
imported
HIGHLIGHTED
PRODUCTS:
Industrial machinery,
telecommunications
and technology
equipment,
auto parts1
Peru
Brazil
Transport of
1,000 tons
of medical
materials and
tests imported
by South
American
countries.
Chile
Argentina
Galapagos
Iquitos
Leticia
Acre
Guaranteeing
supply to
difficult to reach
regions during
the pandemic.
Chiloé
Punta Arenas
China
Shangai
86 flights to
transport medical
materials from
China to South
America.
New Zealand
Auckland
Chile
Santiago
Latam Cargo
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability
Security Employees Customers Suppliers Methodology Appendices Financial information Credits
26
26
Integrated Report 2020
Awards and
recognition
In 2020, LATAM was once again recognized for the service rendered
to its clients and for its commitment to sustainability.
• OAG (OFFICIAL AIRLINE GUIDE) 2020: recognized as the most
punctual among the 20 largest airlines in the world in number of
flights scheduled.
• CIRIUM ON-TIME PERFORMANCE REVIEW 2020: voted the
most punctual airline in the world (1st place in the Global Airlines—
Network category).
• WORLD TRAVEL AWARDS 2020 (WTA): winner of the awards
to Leading Airline in South America and Leading Airline Brand
in the region.
• APEX 2020 (AIRLINE PASSENGER EXPERIENCE ASSOCIATION):
Best Service on Board and Best Entertainment on Board in
South America.
• THE SUSTAINABILITY YEARBOOK 2021: selected in the Silver
category. The publication is prepared by S&P Global.
27
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits C O R P O R A T E
G O V E R N A N C E
28
Policies and
practices 102-5 and 102-16
LATAM Airlines Group S.A. is a Joint Stock Corporation,
registered before Chile’s Financial Market Council (CMF, for
its Spanish acronym) under registration number 306, and its
shares are traded on the Santiago Stock Exchange and the
Chilean Electronic Stock Exchange, and on the OTC (over the
counter) market in the US as ADRs. Its corporate governance
model is in line with Securities Market Act (nº 18.045) and
Corporations Act (nº 18.046), and with the rules of the CMF
in Chile, as well as with US regulation from the Securities and
Exchange Commission (SEC), and the specific regulation of
the countries where the group operates.
A series of corporate guidelines direct employees’ behavior,
based on standards of ethics, transparency, compliance
and integrity, accountability, and fight against illicit acts
(corruption, bribery, antitrust, and money-laundering). The
Compliance Program, managed by the Legal Affairs and
Compliance Vice-Presidency, guides the monitoring and
control processes and its ongoing evolution.
Ethics channel
the ethics channel receives reports on breaches of laws and internal rules,
such as breaches of the Code of Conduct, labor irregularities, discrimination,
moral and sexual harassment, fraud, corruption, and bribery, among
others. The channel is guaranteed to be confidential, and is managed by
an external specialized provider, that performs the initial assessment of all
records. When necessary, the cases are transferred to the Code of Conduct
Management Committee in each country (comprised of representatives
from various areas), which is responsible for ensuring that the cases are
channeled as required.
[+] For further information on the
guidelines for LATAM’s corporate
governance, visit this website.
29
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Related-party transactions
LATAM has a Policy to Control Transactions with Related Parties
applicable to LATAM and all its affiliates, which states that
all transactions with a related party must adhere to the law,
contribute to benefit society, and be carried out under market
conditions. It also establishes the cases in which, in accordance
with the law, it is appropriate to submit such operations for
evaluation by the Directors Committee and for the approval of
the Board or the Shareholders' Meeting, as appropriate.
Transactions carried out in 2020 between LATAM and its
subsidiaries are included in the consolidated financial
statements for the financial year ended on December 31,
2020.
[+] For further information, please refer to note 33 of the
Financial Statements.
Political contributions
The Policy on Political Contributions establishes the
guidelines regarding eventual financial aid to parties and
candidates during electoral campaigns in each of the
countries where the group operates. Contributions must
adhere to current local legislation and be in line with LATAM’s
Code of Conduct. Since the creation of the policy, in late
2016, the group has made no political contributions. 415-1
Relations with authorities 102-40
The aviation sector is regulated and supervised by the
National Civil Aviation Agency (ANAC) in Brazil, and by the
General Directorate of Civil Aviation (DGAC) and the Civil
Aviation Board (JAC) in Chile. Ethics and integrity are the
frame of LATAM’s interaction with those agencies and other
regulatory entities. All meetings held are recorded on a
platform monitored by the Compliance department.
[+] For further information on the Regulatory Framework,
please refer to the Appendices.
Training on ethics and compliance
Training sessions on topics regarding ethics, compliance,
prevention of corruption, and fair practices are part of
LATAM’s annual agenda; training on the Code of Conduct
is compulsory and must be renewed every two years. The
onboarding process for new employees also follows the
guidelines related to integrity and compliance.
In 2020, 88.3% of the total employees and 94.7% of
the executives and members of the Board successfully
completed the e-learning on the Code of Conduct, and the
test to assess the effectiveness of the course.
The contracts and purchase orders contain information
regarding anticorruption. Among suppliers, 75.9% were
informed of the anticorruption procedures by accepting the
Supplier Code of Conduct.
Training on the Code of Conduct1 205-2
42.2%
Argentina2
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
LATAM average
78.4%
93.5%
95.8%
96.8%
84.5%
97.6%
74.3%
88.3%
1 Annual percentage of employees trained in
the Code of Conduct in each country where
LATAM operates. The total includes all emplo-
yees on extended medical leave.
2 Considering trainings held between January
and June, when the domestic operations in the
country were suspended.
Policies and practices
30
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Governance
structure 102-18
The main governing body in LATAM Airlines Group S.A. is the
Board of Directors, which defines and monitors the group’s
strategic guidelines. It is comprised of nine directors, elected
individually for 2-year terms, through an accumulative voting
system. Each shareholder has one vote per share and may
cast all their votes in favor of a single candidate or distribute
them among several. This practice ensures that shareholders
of 10% of the shares on the market may choose at least one
representative.
The Board holds regular monthly meetings and, whenever
necessary, extraordinary meetings. In 2020, attendance
averaged 97.7% attendance to the 44 ordinary and
extraordinary sessions. Board members Carlos Heller,
Eduardo Novoa, and Patrick Horn attended 95.5% of the
meetings, Enrique Cueto and Sonia Villalobos attended
97.7%, and the other members of the Board attended 100%.
Directors’ Committee
The Directors’ Committee also acts as Audit Committee, and
it is comprised of Board members. This composition meets
the requirements of the Chilean Corporations Act (LSA, for
its Spanish acronym), the standards of the Sarbanes-Oxley
Act, and the guidelines of the US Securities and Exchange
Commission (SEC).
As of December 31, 2020, the members of the Directors’
Committee, Eduardo Novoa Castellón, Nicolás Eblen Hirmas,
and Patrick Horn García were considered independent, pursuant
to article 10A of the US Securities Exchange Act. For purposes
of Chile’s LSA, which requires that the Board include two
independent members, Mr. Nicolás Eblen Hirmas does not
qualify for independent board member status.
In Chile, the independence of directors is defined by the LSA. A
board member is considered independent when, among other
characteristics, he or she has no links, interests, economic,
professional, credit, or commercial dependence of any relevant
nature or volume on the company, the other subsidiaries of the
group, its controller, or the main executives, nor any family ties
with the latter.
The Directors’ Committee is charged mainly with reviewing and
assessing the reports by external auditors and other financial
statements and proposing to the Shareholders’ Meeting the
names of external auditors and risk rating agencies, among
other duties.
Board Committees
The Board is supported by four committees in its decision-
making processes: Strategy and Sustainability, Leadership,
Finance, and Clients. Moreover, the Directors Committee was
assigned the supervision of the implementation of the Risk
Pillar in LATAM’s strategic plan, and particularly, to monitor
the Group’s risk management and ensure the structuring of a
corporate risk matrix and its management.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Executive sphere
The executive sphere is divided into four large areas: Clients;
Operations; Commercial, and Finance, with clearly divided
responsibilities to execute and monitor the strategy. The
executives in those four areas and the vice-presidents of
Legal Affairs and Compliance and of Corporate Affairs form
an Executive Committee, which meets on a weekly basis
with the CEO. The Strategic Planning areas support the
Executive Committee and other vice-presidents participate
in the meetings to discuss specific topics.
The Security, Legal Affairs and Compliance, Corporate Affairs,
Audit, Technology, and Strategic Planning departments are
transversal.
Organizational chart
LATAM Airlines Argentina
LATAM Airlines Chile
Finance
vice-presidency
Commercial
vice-presidency
Each affiliate has a CEO who is in charge of the subsidiary’s
operation.
LATAM Airlines Colombia
Operations and Maintenance
vice-presidency
Clients
vice-presidency
LATAM Airlines Ecuador
LATAM Airlines Peru
LATAM Airlines Brazil
BOARD
Directors’ Committee
CEO LATAM
Internal Audit
Legal Affairs and
Compliance
Strategic
Planning
Digital and IT
Security
Corporate
Affairs
Human
Resources
[+] For further information:
- Board composition, résumés and experience: page 109;
- Annual Report on the Board’s Management: page 112;
- Composition of the senior management sphere and résumés of its members: page 119.
Governance structure
32
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Board Compensation
The value of figures reported below represents a monthly
stipend for the Board and the Directors’ Committee,
approved in the Ordinary Shareholders’ Meeting held on April
30, 2020. During 2020, the Board and Directors’ Committee
had no additional expenses from advisory services.
Compensation (US$) – 2020
NAME
Ignacio Cueto
Enrique Cueto Plaza
Henri Philippe Reichstul
Patrick Horn Garcia
Enrique Ostalé Cambiaso
Eduardo Novoa Castellón
Nicolás Eblen Hirmas
Sonia Villalobos
Alexander Wilcox
Juan José Cueto Plaza
Carlos Heller Solari
Giles Agutter
Compensation (US$) – 2019
NAME
Ignacio Cueto
Carlos Heller Solari
Eduardo Novoa Castellón
Giles Agutter
Henri Philippe Reichstul
Juan José Cueto Plaza
Nicolás Eblen Hirmas
Sonia Villalobos
Patrick Horn Garcia
POSITION
Chairman
Vice-chairman
Board member
Board member
Board member
Board member
Board member
Board member
Board member
Former board member
Former board member
Former board member
POSITION
Chairman
Vice-chairman
Board member
Board member
Board member
Board member
Board member
Board member
Board member
Georges Antoine de Bourguignon Arndt
Former board member
BOARD STIPEND
DIRECTORS’
COMMITTEE STIPEND
SUBCOMMITTEE
STIPEND
TOTAL
29,328.64
10,967.97
10,689.95
14,664.32
7,997.93
14,664.32
14,664.32
10,689.95
2,302.68
3,696.35
1,899.00
7,294.50
-
-
-
8,373.9
37,702.04
6,854.19
17,822.16
6,970.61
17,660.56
19,552.43
5,237.93
39,454.68
-
7,507.00
15,504.93
19,552.43
19,552.43
-
-
-
-
-
8,373.39
42,590.14
8,811.67
43,028.42
6,425.50
17,115.45
956.81
3,259.49
1,519.20
5,215.56
-
1,899.00
2,602.72
9,897.22
BOARD STIPEND
DIRECTORS’
COMMITTEE STIPEND
SUBCOMMITTEE
STIPEND
TOTAL
42,238.87
21,208.20
23,320.31
10,574.56
16,842.44
19,216.76
23,320.31
16,842.44
16,643.54
6,676.77
-
-
16,895.54
59,134.4 1
3,224.35
24,432.55
31,093.75
18,656.25
71,244.60
-
-
-
5,971.80
16,546.36
12,202.34
29,044.78
17,006.80
36,223.56
31,093.75
18,656.25
73,070.30
-
13,473.96
30,316.40
22,191.39
8,902.36
11,625.14
50,460.08
5,341.41
20,920.53
Governance structure
33
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Executives compensation
In 2020, LATAM's top executives received a total of
US$18,436,960, in addition to US$13,343,991, as a
share of results, in March. Gross compensation totaled
US$31,780,951. In 2019, US$26,498,537 were paid as
compensation and US$10,332,268 related to the share of
results, totaling US$36,830,805 as gross compensation.
Compensation plans
Compensation plans implemented through the awarding of
stock options to buy and pay for shares offered by LATAM
Airlines Group to the employees of the Company and its
affiliates are acknowledged in the Financial Statements
pursuant to IFRS 2 "Share-Based Payments”. These plans
report the effect of the fair value on the options awarded
as a linear charge to remunerations between the date
when said options are granted and the date when they
become irrevocable.
a) LP3 compensations plan (2020–2023)
The company implemented a program for a group of
executives, lasting until March 2023, with a vesting period
between October 2020- and March 2023, where the collection
percentage is annual accumulative.
The bonus is activated if the price target of the stock, defined
each year, is met. Should the bonus be accrued, until the last
year, the total shall be doubled (if the stock price is activated).
This compensation plan has not been provisioned yet, as the
callable stock price stands below the initial target.
Governance structure
34
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Ownership
structure
Ownership
The goal of LATAM Airlines Group is to maintain a suitable
level of capitalization that will enable it to ensure safe
access to financial markets to develop its medium- and
long-term objectives, optimizing returns to its shareholders
and maintaining a sound financial position.
The Company’s paid-in capital at December 31, 2020,
totaled ThUS$3,146,265 divided among 606,407,693
nominative, and ThUS$3.146.265 divided among
606,407,693 of these same shares at December 31, 2019.
There are no special series of shares, nor privileges. The
form of the stock certificates, their issuance, exchange,
disablement, loss, replacement, and any other circumstance
concerning them, as well as the transfer of shares, will be
ruled by the provisions included in the Chilean Corporations
Act and its Regulations.
At December 31, 2020, the Company had no
controlling shareholder.
SHAREHOLDER
STRUCTURE
(%) 102-10
20201
k
j
i
h
g
ef
c
d
Total: 606,407,693
subscribed and paid-in shares.
20191
a
g
a
b
b
c
d
f
e
Total: 606,407,693
subscribed and paid-in shares.
MAIN SHAREHOLDERS
a - Delta Air Lines
b - Cueto Group
c - Qatar Airways2
d - Amaro Group3
e - Eblen Group
f - Hirmas Group
g - Bethia Group
h - ADRs
i - AFPs
j - Foreign investors
k - Others
Total
TOTAL SHARES
121,281,538
99,381,777
60,640,768
38,792,870
27,644,702
1,488,971
1,000,000
53,057,983
10,803,877
9,939,708
%
20.00
16.39
10.00
6.40
4.56
0.25
0.16
8.75
1.78
1.64
182,375,499
606,407,693
30.07
100
1 The figures of the Cueto Group’s stake in this table no longer consider
the 21.88% stake held by the Amaro Group in Costa Verde Aeronáutica
S.A., after the transfer of these shares to a new company, owned by
Grupo Amaro, TEP Aeronáutica S.A.
2 Qatar owns 9.999999918% of total issued shares of LATAM.
3 The figures of the Amaro Group's stake in this table consider the
addition of TEP Aeronáutica S.A.
MAIN SHAREHOLDERS1
TOTAL SHARES
a - Cueto Group
b - Qatar Airways2
c - Hirmas Group
d - ADRs
e - AFPs
f - Foreign investors
g - Others
Total
86,012,057
60,640,768
1,488,971
25,266,673
141,957,014
65,507,452
225,534,758
606,407,693
%
14.18
10.00
0.25
4.17
23.41
10.80
37.19
100
1 At the end of 2019, the market was preparing to participate in Delta
Airlines' public offering of shares, so it is possible that several shareholders
had their shares in a broker to participate.
2 Qatar owns 9.999999918% of total issued shares of LATAM.
35
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Main shareholders as at December 31, 2020
Main shareholders as at December 31, 2019
NAME
Delta Airlines Inc.
Costa Verde Aeronáutica S.A.
Qatar Airways Investments (UK) Ltd.1
Banchile Corredores de Bolsa S.A.
JP Morgan Chase Bank
Santander Corredores de Bolsa Limitada
TEP Aeronáutica S.A.
BCI Corredores de Bolsa S.A.
Inversiones Andes SpA
Consorcio Corredores de Bolsa S.A.
TEP Chile S.A.
Costa Verde Aeronáutica SpA
All shares are part of the same series. LATAM has only one series of shares.
1 Qatar owns 9.999999918% of total issued shares of LATAM.
SUBSCRIBED AND PAID-IN
SHARES AT 12/30/2020
121,281,538
82,376,937
60,640,768
53,835,781
53,057,983
30,845,675
26,783,613
19,042,479
13,187,037
12,502,262
12,009,257
9,228,949
%
NAME
SUBSCRIBED AND PAID-IN
SHARES AT 12/30/2020
20.00%
13.58%
10.00%
8.88%
8.75%
5.09%
4,42%
3.14%
2.17%
2.06%
1.98%
1.52%
Santander Corredores de Bolsa Limitada
Costa Verde Aeronáutica S.A.
Qatar Airways Investments (UK) Ltd.1
BCI Corredores de Bolsa S.A.
JP Morgan Chase Bank
Consorcio Corredores de Bolsa S.A.
Itaú Corredores de Bolsa Limitada
Banco Itaú Corpbanca por cuenta de inversionistas extranjeros
Banco Santander por cuenta de inversionistas extranjeros
Banchile Corredores de Bolsa S.A.
Inversiones Nueva Costa Verde Aeronautica Ltda.
All shares are part of the same series. LATAM has only one series of shares.
1 Qatar owns 9.999999918% of total issued shares of LATAM.
97,716,892
67,878,651
60,640,768
26,194,579
25,266,673
24,966,247
23,162,008
21,316,631
21,033,689
18,812,790
18,133,406
%
16.1
11.2
10.0
4.3
4.2
4.1
3.8
3.5
3.5
3.1
3.0
[+] The Shareholder
Agreement is in the Appendices.
Ownership structure
36
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Dividends
LATAM Airlines Group S.A. determined that the dividends
should be equal to the minimum required by law; that is,
equivalent to 30% of the profits, pursuant to the current
regulation. This does not prevent dividends above said
mandatory minimum from eventually being paid, depending
on the particularities and circumstances that may arise
throughout the year.
Dividends for the 2019 profits were not paid during 2020, as
a result of the financial reorganization process.
Investor relations
LATAM maintains an ongoing dialogue with its
shareholders and other players of the capital market. On
the Investor Relations website, which contains updated
financial statements and quarterly reports, the group
offers details on the corporate governance structure, and
other relevant data to assist shareholders, investors,
and market analysts in their decision-making process.
All the stages of the restructuring plan under the US
law’s Chapter 11 proceeding are also published on the
site. The contents are available in English, Spanish,
and Portuguese.
[+] To learn more, please visit:
latamairlinesgroup.net y
latamreorganizacion.com.
Ownership structure
37
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Policies
Financing policy
The scope of LATAM’s Financing Policy is to cover the
Company’s financing needs, including the acquisition of fleet
assets, such as aircraft and engines, financing non-fleet
investments, and financing working capital.
During the year, within the context of the restructuring
proceedings under Chapter 11 of the US Bankruptcy law that
are ongoing, the Company obtained a Debtor In Possession
financing for US$2.45 billion maturing on April 8, 2022. Of
this sum, US$1.15 billion was drawn on October 8, 2020.
Thus, the Company was able to support and strengthen the
operation of LATAM and all its subsidiaries.
Moreover, the Company had, at the beginning of the period, a
syndicated loan with 12 banks for US$600 million (Revolving
Credit Facility – RCF). This line is guaranteed by a collateral
consisting of aircraft, spare engines, and spare parts. During
the year, as a result of the impact from the Covid pandemic,
LATAM drew 100% of this line.
This year, LATAM has reduced most of its recurring
investments, which usually pertain to the fleet acquisition
programs. Normally, LATAM finances between 70% and
85% of the value of the assets through bank loans,
covered bonds from export promotion agencies, or
commercial loans, capital investments, or through its
own funds. The payment schedules of the various aircraft
financing structures are mostly for 12 years. Moreover,
LATAM contracts a large percentage of its fleet purchase
commitments through operating leases as an additional
source of financing.
During 2020, LATAM did not acquire new airplanes, and it
has focused its resources on maintaining the operation and
adjusting the size of the fleet in accordance with the current
demand and the demand projected for the next few years,
considering the effects of the pandemic on the industry.
Therefore, and given the current restructuring process,
LATAM has devoted significant efforts to reviewing its fleet
contracts with the aim of restructuring them as well.
One of the main objectives of the Financing Policy is to
ensure a stable debt maturity and leasing commitment
profile, including debt servicing and the payments on fleet
leasing, which should be consistent with LATAM’s operating
cash flow generation, considering the effect of the
pandemic on the company.
Market risk policy
Given the nature of its operations, LATAM Airlines Group
is subject to market risks, such as: (i) fuel price risk, (ii)
interest rate risk, and (iii) exchange rate risk. In order to
hedge fully or partially against these risks, LATAM uses
financial derivatives to reduce the adverse effects that
these risks could cause. Market Risk is managed integrally
and considers the correlation with each market factor to
which the Company is exposed. In order to operate with
each counterpart, the Company must have an approved line
and a framework signed with it.
38
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Fuel price risk: Variations in fuel prices depend significantly
on oil supply and demand in the world, as well as on the
decisions made by the Organization of the Petroleum Exporting
Countries (OPEC), the refining capacity worldwide, inventory
levels, and the occurrence or absence of climatic phenomena
or geopolitical factors. LATAM purchases aircraft fuel, known as
Jet Fuel. In order to execute fuel hedges, there is a benchmark
index on the international market for this core asset, which
is Jet Fuel 54 US Gulf Coast. This index was mainly used by
LATAM Airlines Group for its hedges during 2020. LATAM also
undertook hedging through NYMEX Heating Oil, whose core
index is included in the Fuel Risk Hedging Policy, given the high
correlation between this core index and Jet Fuel 54.
The Fuel Hedging Policy sets a minimum and a maximum
hedging range for the Company’s fuel consumption, based on
the capacity to pass through fuel price variations to airfares,
anticipated sales, and the competition scenario. Moreover,
this Policy sets hedging zones, a premiums budget, and
other strategic restrictions that are assessed and presented
periodically before the LATAM Finance Committee.
With regard to fuel hedging instruments, the Policy makes it
possible to contract combined Swaps and Options only for
hedging purposes, and does not allow the net sale of options.
Interest rate risk on cash flows: Interest rate variations
depend largely on the state of the global economy. An
improvement in the long-term economic outlook pushes
long-term rates upwards, whereas a drop causes a decline
due to market effects.
However, considering government intervention, during periods
of economic contraction, reference rates are usually cut in
order to boost aggregate demand by making credit more
affordable and increasing production (just as there are hikes in
the reference rates during periods of economic expansion).
The uncertainty surrounding how the market and the
governments will behave, and thus, how the interest rate
will change, leads to a risk related to LATAM’s debt subject
to variable interest, its investments, and the new issuances
it may make. Interest rate risk on existing debt materializes
in the impact on future cash flows related to financial
instruments, given the interest rate fluctuations. Thus, a
higher interest rate could translate into a higher cash flow
from interest payments, and vice versa.
LATAM’s exposure to the risk from market interest rate
fluctuations is mainly related to long-term obligations with
variable rates.
In order to reduce the risk from an eventual hike in interest
rates, LATAM Airlines Group can use interest rate swap
contracts or other derivatives. These positions were closed
in advance by the corresponding counterparts, once the
company entered the Chapter 11 restructuring process.
Exchange rate risks: The functional currency used by the
parent Company is the US dollar. There are two types of
exchange risks: Cash flow and balance sheet risks.
Cash flow risk is a consequence of the net revenue position
and costs in currencies other than US dollars. LATAM sells
most of its services in US dollars, in local currencies, and in
prices indexed to the US dollar. In the international passenger
business, most of the fares are linked to the US dollar and, to
a lesser extent, the Euro. In the domestic businesses, most
fares are in local currency without any sort of indexation to
the US dollar, except for the domestic businesses of Peru and
Ecuador, where both fares and sales are recorded in US dollars.
On the other hand, a major part of the group’s expenses is
denominated in US dollars or equivalent to the USD, particularly
fuel costs, aviation taxes, aircraft leases, insurance, and
aircraft components and accessories. Other expenses, such as
compensation, are denominated in local currencies.
Thereby, LATAM is exposed to the fluctuations in various
currencies, but mainly the Brazilian Real. LATAM Airlines
Group has hedged against exchange rate risks involving
the Brazilian Real mainly through forwards contracts and
currency options during 2020. However, these positions were
closed in advance by the corresponding counterparts, once
the company entered the Chapter 11 restructuring process.
Therefore, at December 31, 2020, LATAM had no active
hedges for any currency.
On the other hand, balance sheet risks appear when
entries in the balance sheet are exposed to exchange
rate fluctuations, given that said entries are expressed in
a currency unit other than the functional currency. While
LATAM may sign hedging derivatives contracts to protect
against the impact of a potential currency appreciation or
depreciation vs. the functional currency used by the parent
Company, during 2020, LATAM made no hedges against
balance sheet risk.
The main mismatch factor is seen in TAM S.A., whose
functional currency is the Brazilian Real, and as most of its
liabilities are stated in US dollars; however, its assets are
stated in local currency. At December 31, 2020, TAM S.A.’s
liabilities surpassed its assets by US$150 million.
Policies
39
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Financial policy
The Corporate Finance Department is responsible for
managing the Company’s Financial Policy. This Policy makes
it possible to effectively face changes in conditions outside
the business’ normal operation and thus maintain and
anticipate a stable flow of funds to ensure the operation’s
continuity and fulfilment of the financial obligations.
Moreover, the Finance Committee, comprising the Vice-
Presidency and members of LATAM’s Board, meets
periodically to review and propose to the Board the approval
of issues that are not regulated by the Financial Policy.
LATAM Airlines Group’s Financial Policy aims to achieve the
following goals:
• To preserve and maintain suitable cash flow levels to
ensure the requirements of the operations, to support
growth, and to fulfill the group’s financial obligations.
• To maintain a suitable level of credit lines with local and
foreign banks to gain access to additional liquidity to face
contingencies.
• To maintain an optimal debt level, diversify financing
sources, manage the debt maturity profile, and minimize
the cost of financing.
Policies
40
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits • Capitalize excess cash flow through financial investments
that will guarantee a risk and liquidity level consistent with
the Financial Investment Policy.
• To reduce the effects of market risks, such as variations
in fuel prices, exchange rates, and interest rates on the
Company’s net margin and cash position.
• To manage counterparty risk through the diversification and
limits on investments and transactions with counterparties.
Liquidity and financial investment policy
LATAM seeks to maintain a suitable liquidity position to
safeguard from potential external shocks, and the volatility
and cycles inherent to the industry. In this sense, it ended
2019, as of December 31st, with suitable liquidity, and a
19.7% liquidity ratio over total revenues earned in the last 12
months. This liquidity considered cash at hand and short-
term liquid investments, in addition to a revolving credit
facility (the “RCF”) for a total of US$600 million with 12
financial institutions, both local and international.
hallmark is that it provides its creditors with priority of
payment over the company’s other unsecured obligations.
On October 8, 2020, LATAM closed the DIP, which has a
committed facility worth US$2.45 billion with different
investors. On that same day, it made its first draw of
US$1.15 billion, whereby this facility was left with US$1.30
billion committed and available to be withdrawn, based on
the company’s needs. Measured as cash plus DIP available as
a percentage of the total revenues for 2020, LATAM ended
the year with a liquidity index of 68%.
• To maintain, at all times, a long-term visibility of the
Company’s projected financial situation to anticipate
situations of low liquidity, deterioration of the financial
ratios agreed with rating agencies, etc.
• The Financial Policy delivers guidelines and restrictions to
manage Liquidity and Financial Investment transactions,
Financing Activities, and Market Risk Management.
During 2020, as a result of the pandemic caused by
Covid-19, the aviation industry in general was severely
affected. Specifically, revenues from passengers decreased
sharply, at the same time requests for refunds increased. To
deal with the situation initially, LATAM drew the "RCF" in full
between March and April.
Later, on May 26, LATAM Airlines Group and some of its
subsidiaries entered into the judicial proceeding under
Chapter 11 of the US Bankruptcy Law. On July 9, LATAM
Airlines Brazil and some of the group’s other affiliates joined
the process as well. Within this process, LATAM obtained
a financing known as Debtor In Possession, or DIP, whose
With regard to the Financial Investment Policy, the goal is
to centralize investment decisions to optimize profitability,
adjusted for currency risk, subject to maintaining suitable
security and liquidity levels. Moreover, the aim is to manage
risk through the diversification of counterparties, maturities,
currencies, and instruments. In terms of interest rates,
2020 was a year globally marked by very low interest
rates. Moreover, the Chapter 11 proceeding, paragraph
345(b), regulates the holding of cash from companies
under a restructuring process. In compliance with this norm,
at the end of the year, LATAM held most of its deposits
in depository banks authorized by the US Trustee of the
Southern District of the New York Bankruptcy Court.
Policies
41
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits O U R
B U S I N E S S
42
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Industry
context
In order to analyze the economic environment in which the
group operates, below we present a brief explanation of the
situation and evolution of the main economies that affect it
nationally, regionally, and worldwide.
growth in 2021 to reach 5.5%, 0.3 percentage points higher
than previously estimated, due to the same acceleration
seen in late 2020, and positive expectations related to the
vaccination process worldwide, together with additional fiscal
relief announced by various governments.
Even though the economy is starting to leave behind the
lower levels of activity that were seen in the first months
of 2020, during the year, the Covid-19 pandemic has had a
huge impact on the whole world. To protect people’s lives
and enable the healthcare systems to deal with the situation,
countries have resorted to isolation, confinement, and
generalized shutdowns to contain the spread of the virus.
This caused the growth of the global economy to slowdown
throughout 2020.
Although the world growth forecast is subject to great
uncertainty, for 2020, the International Monetary Fund
(IMF)1 expects the global economy to contract 3.5%, 0.9
percentage points higher than the previous estimate, given
an improvement that took place in the second half of the
year, before it was expected. The IMF is expecting global
For the US, the IMF estimated a 3.4% contraction for 2020
and 5.1% growth for 2021 (2.0 percentage points more
growth than previously expected for 2021). Likewise,
the IMF’s transversal estimates for the European Union’s
countries have dropped, with a 7.2% contraction in 2020 and
4.2% growth in 2021 (1.0 percentage point less of growth
than formerly expected for 2021).
On the other hand, it estimated a 7.4% contraction for the
Latin American economy in 2020, and 4.1% growth for
2021, 0.5 percentage points more growth compared to
the previous IMF estimates for 2021. Brazil’s economy is
expected to grow 3.6% in 2021, and as for Chile, the Central
Bank expects the economy to expand between 5.5% and
6.5% in 2021.
[+] Other relevant information is
available in the Appendices:
Regulatory framework; Material facts.
1 According to report published in January
2021: https://www.imf.org/en/Publications/
WEO/Issues/2021/01/26/2021-world-eco-
nomic-outlook-update.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Financial
results
At December 31, 2020, the controller reported a negative
result of ThUS$4,545,887, translating into a negative
variation of ThUS$4,736,317 compared to the ThUS$190,430
profit from the previous year. Net margin went from 1.8% in
2019 to -104.9% during 2020.
Operating result for 2020 totaled a loss of ThUS$1,665,288
which, compared to the ThUS$741,602 profit as at
December 31, 2019, shows a negative variation equivalent
to 324.6%, whereas operating margin reached -38.4%, 45.5
percentage points below the figures for 2019.
Operating revenues for the twelve months of 2020
decreased by 58.4% compared to 2019, settling at
ThUS$4,334,669. This decrease is largely due to a 69.9%
drop in Passenger revenues; on the other hand, Cargo
revenues and the Other revenues item increased by 13.7%
and 13.9%, respectively. The effect of the Brazilian real’s
depreciation represents lower ordinary revenues worth
around US$360 million.
In June 2020, LATAM Airlines Argentina S.A.’s operations were
indefinitely suspended, due to the conditions of the local
industry, worsened by the Covid-19 pandemic, whereby 12
destinations are no longer operated. By the end of 2019,
LATAM Airlines Argentina S.A. reported US$229 million in its
individual Operating revenue results.
Passenger revenues totaled ThUS$2,713,774 which,
compared to the ThUS$9,005,629 of the twelve months
of 2019, represents a 69.9% decrease. This variation is
mainly due to the 62.7% drop in capacity measured in ASK,
as well as an 18.8% decrease in RASK, as a result of a 7
percentage-point decrease in load factor, together with
a 12% drop in yields compared to the previous year. The
drop in load factor is explained by the implementation of
quarantines, travel restrictions, and lower demand as a
result of the Covid-19 outbreak.
At December 31, 2020, Cargo revenues totaled
ThUS$1,209,893, which translates into a 13.7% increase
from 2019, despite the 12.7% drop in traffic measured
in RTK and a 25.9% decline in capacity measured in ATK.
Yields increased 30.2%, mainly driven by the change in the
competitive scene, due to the Covid-19 crisis. Moreover,
passenger plane cabins were refurbished for cargo
transportation, and the frequencies and destinations of
cargo flights were increased.
of four A350 aircrafts and ThUS$9,240 from the
anticipated return of planes leased to Qatar Airways, both
in the second half of 2020.
At December 31, 2020, Operating costs totaled
ThUS$5,999,957 which, compared to 2019, translate into
ThUS$3,689,368 lower costs, equivalent to a 38.1% drop,
whereas unit cost per ASK increased by 65.8%. Furthermore,
the effect of the Brazilian Real’s depreciation on this line
item translates into lower costs by roughly US$440 million.
Item variations are explained as follows:
a) Compensations and benefits decreased by ThUS$832,702
due to the voluntary salary reduction, agreed upon in March,
for over 90% of the employees. This resulted in around
US$130 million in savings, together with the drop in the
average provision and the depreciation of local currencies,
particularly the Brazilian real and the Chilean peso.
b) Fuel decreased by 64.3% equivalent to ThUS$1,883,665.
This drop is mainly the result of a 22.8% reduction in
unhedged prices, and a 53.9% decrease in consumption
measured in gallons. During 2020, the company reported
a loss of ThUS$14,316 from fuel hedges, compared to the
ThUS$23,110 loss from the twelve months of 2019.
c) Commissions present a ThUS$129,974 decrease as a
result of the drop in passenger traffic.
The Other income line item shows an increase of
ThUS$50,138, mainly due to ThUS$62,000 received as
compensation from Delta Air Lines Inc. for the cancellation
d) Depreciation and Amortization declined by ThUS$80,590
at December 31, 2020. This variation is mainly explained
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits by the drop in maintenance depreciation, as a result of the
decrease in flight hours of the passenger fleet during the last
nine months of 2020.
e) Other Leases and Landing Fees decreased by
ThUS$555,854, mainly in airport and handling service fees,
impacted by the decreased operation.
f) Passenger Services decreased by ThUS$163,642,
translating into a 62.6% variation, mainly explained by a
61,9% reduction in the number of passengers.
g) Maintenance costs increased by ThUS$27,771, equivalent
to a 6.2% rise. Despite the decrease in operation, during
the last months of 2020, necessary costs were incurred for
the preservation of the grounded aircraft. In addition, in the
fourth quarter, the values of commitments from scheduled
returns of leased aircrafts were updated.
h) Other Operating Costs show a decrease of ThUS$70,712,
mainly due to lower crew costs and reservations systems as
a result of the decreased operations and demand.
Indirect economic
impact—economic
contribution generated
by passengers 203-1
19
20
5
13
33
10
In 2020, LATAM transported
nearly 855.3 thousand
passengers on international
flights to South America.
Based on the average spend
per tourist reported by
the tourism and statistics
agencies1 in Argentina, Brazil,
Chile, Colombia, Ecuador, and
Peru, travelers contributed
US$855.7 million to the
economies of the region.
Argentina: 20%
Brazil: 33%
Chile: 10%
Colombia: 13%
Ecuador: 5%
Peru: 19%
Total: US$855,649,857
1 Sources consulted:
yvera.tur.ar
dadosefatos.turismo.gov.br
subturismo.gob.cl
banrep.gov.co
turismo.gob.ec
promperu.gob.pe
Financial results
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits SNAPSHOT
MAIN INDICATORS 102-7
Financial (US$ thousand)
Operating income
Operating expenses
Operating result
Operating Margin
Net Profit
Net Margin
EBITDA
EBITDA Margin
Cash and cash equivalents2/revenues last 12 months
Leveraging3
Operations
Passenger Operations
Capacity (ASK)—million
Consolidated traffic (RPK)—million
Load factor (ASK)
Revenue/ASK (US$ cents)
20181
2019
2020
10,368,214
10,430,927
4,334,668
(9,663,095)
(9,689,325)
(5,999,957)
886,984
741,602
-1,665,289
8.8%
7.1%
-38.4%
181,935
190,430
-4,545,887
1.8%
1.8%
-104.9%
2,259,612
2,211,578
-275,903
21.8%
19.3%
3.9x
21.2%
19.7%
4.0x
143,265
149,116
119,077
124,521
83.1%
6.1
83.5%
6.5
-6.4%
39.0%
NM
55,718
42,624
76.5%
4.9
Total PAX transported (thousands)
68,806
74,189
28,299
Cargo Operations
Capacity (ATK)—million
Consolidated traffic (RPK)—million
Load factor (ATK)
Revenue/ATK (US$ cents)
Tons transported (thousands)
6,498
3,583
55.1%
18.3
921
6,357
3,526
55.5%
17.1
903.8
4,708
3,078
65.4%
25.7
785.0
1 2018 values have been restated in observance of the 2016 International Financial Reporting
Standards (IFRS).
2 Includes the revolving credit facility.
3 Adjusted net debt/EBITDAR (last 12 months).
NM: not meaningful.
Financial results
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Stock
information
LATAM Airlines Group S.A. is an open Joint Stock
Corporation registered before the Financial Market
Commission under no. 306, whose shares are traded on
the Chilean Electronic Exchange—Stock market, and the
Santiago Stock Exchange in Chile. As a result of filing
for Chapter 11 protection, LATAM was delisted from the
NYSE on June 10. Since then, LATAM’s ADRs are traded in
the United States of America on the OTC markets.
The ADR’s price series (and annual return) consider the
ADR prices on the NYSE and later, on the OTC market.
ANNUAL RETURN
-83.17%
16.26%
-83.22%
-10.55%
ADR
S&PX Index
Local stock
IPSA Index
VOLUMES TRADED BY QUARTER—LOCAL STOCK (SANTIAGO
STOCK EXCHANGE)
2020
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
N° OF SHARES
TRADED
AVERAGE
PRICE (CLP)
TOTAL VALUE
(MILLION CLP)
77,877,242
4,437.42
345,574.22
488,890,208
1,535.04
750,464.40
72,951,392
1,264.02
92,211.73
30,303,763
1,220.17
36,975.86
VOLUMES TRADED BY QUARTER—ADR
2020
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
N° OF SHARES
TRADED
AVERAGE
PRICE (CLP)
TOTAL VALUE
(MILLION CLP)
85,039,681
5.82
397,141.56
599,335,086
2.12
1,036,566.93
31,326,685
10,251,935
1.56
1.68
37,878.90
12,615.68
6.000
5.000
4.000
3.000
2.000
1.000
0
12.0
10.0
8.0
6.0
4.0
2.0
0
Local share – 2020
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
12/2019
01/2020
02/2020
03/2020
04/2020
05/2020
06/2020
07/2020
08/2020
09/2020
10/2020
11/2020
12/2020
Local share (CLP)
S&P IPSA (points)
ADR – 2020
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
12/2019
01/2020
02/2020
03/2020
04/2020
05/2020
06/2020
07/2020
08/2020
09/2020
10/2020
11/2020
12/2020
ADR (USD)
S&P 500 (points)
47
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Risk
management
LATAM’s risk management is based on the guidelines of the
Corporate Risk Policy, which defines the main aspects to be
monitored, the mitigation instruments, action plans, and the
roles and responsibilities of those involved in the process. By
late 2020, the Risks and Internal Audit areas came together
under the Audit and Internal Control Directorate, which reports
directly to the Directors’ Committee.
In the year, the risk matrix, which considers the likelihood of
incidence against the risk’s potential impact on the operation,
comprised 55 transversal and emerging risks, distributed
among 14 categories (financial, environmental, operational,
safety, and regulatory, among others). Specific areas, such as
Procurement and Safety, have their own matrixes.
Agility
To vest the decision-making process with greater speed and
assertiveness in this pandemic period and given the drafting of
LATAM’s reorganization plan, the group increased the frequency
of the meetings with leaders and vice-presidents of the various
areas. The Risk Board was temporarily suspended and will be
reactivated in 2021. It will contain the lessons learned under the
new format, including scenarios where various risks materialize
simultaneously and the analysis of the related impacts.
In 2020, the updating of the LATAM risk map began, with
the participation of all the vice-presidencies. The process
will be completed in 2021, and includes an analysis of the
effectiveness of the action plans set in motion in 2020.
Information security
Information security is a strategic issue for LATAM group: it
represents a reputational risk and it may cause significant
financial losses. The Information Security Management, linked
to the Information Technology Directorate, is responsible for
the processes, tools, and policies, in a coordinated task with
other teams. The topic is also discussed by a committee
dedicated to analyzing technological risks, comprised by
representatives from different areas: Internal Control, Legal
Affairs and Compliance, among others.
Among the emerging risks identified are cybersecurity and
the slow recovery of the aviation industry as a result of the
pandemic and possible resurgences of Covid-19.
The ongoing improvement of protection mechanisms was
fundamental in 2020 when, despite an increase recorded
in the number of attempted cyberattacks, there were no
significant breaches of customer data.
[+] The full list
of the main risk
factors is in the
Appendix section.
PCI DSS
Certification
LATAM received the
recertification pursuant to the
PCI DSS international standard,
a benchmark in the payment
channel industry, that certifies
that the group has all the controls
to protect the data of credit and
debit card holders and reduce/
prevent related frauds. The process
expanded the scope of the previous
certification, with the inclusion of
LATAM’s digital platform and of the
Brazilian operation of the frequent
flyer program.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits General Data
Protection Law
Since September 2020, the General Data Protection
Law (LGPD for its Spanish acronym) has been in place
in Brazil, with the guidelines that should guide the
companies and other agents regarding the handling of
personal data from clients, employees, suppliers, and
other stakeholders.
With the support of the Information Security area,
LATAM Airlines Brazil adapted its processes to guarantee
compliance with the law and its alignment with the
best practices.
Additional information
Aviation insurance:LATAM has Aviation, Hull, and Legal
Liability Insurance, which covers all risks inherent to
commercial aviation, such as the loss or damage of aircraft,
engines, spare parts, and third-party liability (passengers,
cargo, baggage, airports, etc.).
After the association between LAN and TAM, LATAM group’s
insurance is jointly managed with IAG (which comprises
British Airways, Iberia and its subsidiaries, and franchisees).
The increase in business volumes translated into better
coverage and lower operating costs.
General insurance: covering various risks that could affect
the company’s equity, which is protected by a multi-risk
insurance (including risk of fire, theft, information equipment,
security remittances, and others, based on the coverage of
all risks), car insurance, air and maritime transport insurance,
and civil liability insurance. Moreover, the company has life
and accident insurance contracts covering its staff.
Customers: none of LATAM’s clients individually represents
over 10% of its sales.
Suppliers: in 2020, eight suppliers individually represented
over 10% of their category: Orbital and Acciona Airports
Americas SpA (airport), Unilode Aviation Solutions (local
administration), Gate Gourmet (supply), Kuehne Nagel
(transportation), Google Inc. and Facebook (Marketing), Hotel
Miami BL Partners (hotels), CAE (employee services), and
Everfit S.A. (uniforms).
Trademarks and patents: the group uses various
trademarks, which are duly registered before the relevant
bodies in the various countries where they carry out their
operations or which are their origin and/or destination, in
order to distinguish and market their products and services
in said country. Among the main brands are: LATAM
Airlines, LATAM Airlines Brazil, LATAM Airlines Chile, LATAM
Airlines Colombia, LATAM Airlines Ecuador, LATAM Airlines
Peru, LATAM Cargo, LATAM PASS, and LATAM Travel, to
name a few. 102-2
Risk management
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Investment
plan
LATAM’s capital expenditures are related to the acquisition of
aircraft, aircraft-related equipment, IT equipment, support
infrastructure, and the funding of pre-delivery deposits.
LATAM’s capital expenditures totaled US$324.3 million in
2020, US$1.27 billion in 2019 and US$660.7 million in 2018,
and purchases of intangible assets totaled US$140.2 million
in 2019, US$96.2 million in 2018 and US$87.3 million in 2017.
The following chart sets forth the Company’s estimated
capital expenditures for 2021, which are subject to change
and may differ from the actual capital expenditures.
ESTIMATED CAPITAL EXPENDITURES (MMUS$)
Fleet commitments1
PDPs2
Other expenditures3
2021
773
259
822
1 The amount of Fleet Commitments presented includes all the com-
mitted deliveries with estimates regarding (i) changes in scheduled
delivery dates; (ii) conversion of certain aircraft types; and (iii) aircraft
for which we do not expect to take delivery, regardless of the financing
arrangement upon arrival, thus representing the sum of aircraft capex
and future sale and leasebacks.
2 Represents pre-delivery payments (PDPs) made by LATAM, or inflows
received by LATAM after the delivery of the aircraft is made. All unpaid
PDPs are assumed to be payable during 2021.
3 Other Expenditures include estimates of capital expenditures on
spare engines and parts, maintenance of on balance fleet, projects, and
others, plus purchases of intangible assets.
At this time, LATAM is not able to fully determine the
adjusted levels of estimated capital expenditures in light
of the lower demand for air travel. The actual amount and
timing of future capital expenditures may be materially
lower than the Company’s estimates as a result of the
impact of the Covid-19 pandemic on demand for air travel in
the regions where LATAM operates.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits S U S T A I N A B I L I T Y
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Strategy and
commitments 102-9 and 102-12
The LATAM Corporate Sustainability Policy is based on
the principles that should guide executives in defining and
executing the strategies and initiatives for sustainable
development, strengthening the risk management and
accountability processes. Its contents are aligned with
various external standards, commitments, and principles,
such as the United Nations’ Global Compact and the
Sustainable Development Goals (SDG), the Guiding
Principles on Companies and Human Rights, and the Global
Reporting Initiative (GRI).
The document is the basis for the Board and Executive
Committee to make decisions regarding the sustainability
issues. In 2020, sustainability became one of the five
priorities for LATAM, after a thorough analysis of its way of
generating value and relating with its stakeholders. Changes
in the industry and the growing social and environmental
challenges worldwide supported this analysis, together with
LATAM’s commitment for the future.
This ongoing process, seeks to strengthen the links with
clients, employees, suppliers, communities, sectoral
and civil society organizations, public organizations and
regulatory bodies. For this purpose, LATAM has encouraged
dialogues with external stakeholders, such as specialists
and representatives of non-government organizations in the
five countries where it has domestic operations, with the
participation of the group’s CEO and VPs.
Within this framework, LATAM reviewed its sustainability
strategy focused on growing sustainably in the long term
and generating and sharing value with all its stakeholders. In
addition to expanding the positive impacts on society, the
new guidelines have the potential to generate a competitive
advantage for the group and consolidate it as a relevant asset
in all the communities where it operates.
The strategy was approved by the Board at yearend and will
be launched in 2021, when the goals and concrete initiatives
to meet such goals will be disclosed.
Dow Jones Sustainability Index
LATAM uses the Dow Jones Sustainability Index (DJSI), one of
the main standards to evaluate organizations’ performance
in terms of sustainability, as an internal management,
measurement, and benchmark tool. Annually, the DJSI selects
publicly-traded companies with the best performance in
financial-economic, social, environmental, governance &
compliance, and customer relations topics, and lists them in
various indices.
For six consecutive years, the group was selected as one of
the most sustainable in the world, being included in the World
index. In 2020, despite having performed well (see graphs),
LATAM was not included in the list of selected companies
because the index excludes companies undergoing a financial
restructuring process. Nonetheless, the group will continue
to use the result of the analysis as a guideline to implement
improvements in its processes.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Environmental dimension
Economic dimension
Social dimension
Climate
strategy
Environmental
reporting
100
80
60
40
20
Operational
eco-efficiency
LATAM
Industry average
Reliability
Privacy
Protection
Fleet
management
Efficiency
Environmental
policy and
management
systems
Corporate
governance
100
80
60
40
20
Materiality
Risk and crisis
management
Codes of business
conduct
Customer relationship
management
Policy influence
Passenger
safety
Corporate
citizenship and
philanthropy
Social
reporting
100
80
60
40
20
Labor
practice
indicators
Human
rights
Talent
attraction
and retention
Human
capital
development
Information
Security/
Cybersecurity
& System
Availability
Brand
management
Supply chain
management
Financial Times Stock Exchange (FTSE)
For the second consecutive year, LATAM was included in the FTSE4Good, which comprises the series of indices of
the London stock market’s Financial Times Stock Exchange (FTSE). The FTSE4Good evaluates close to 300 indicators
related to environmental, social, and corporate governance topics. It was created in 2001, through the alliance formed
by the FTSE, the United Nations’ Children’s Fund (Unicef), and the Ethical Investment Research Service (EIRIS), and
it lends support to the decision-making of members of the financial markets interested in investing in organizations
committed to sustainability.
Strategy and commitments
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Alignment with the SDGs
The group maintains its commitment to the UN’s Sustainable
Development Goals (SDG), since the launch of the global
agenda in 2015, and in 2019, it selected the SDGs and goals
that are most related to its activities and the business’
strategic guidelines.
NO
POVERTY
ICONS
17 ICONS: COLOUR VERSION
Below, we present the main initiatives that LATAM advanced
in 2020, and that contribute to the achievement of 22 of the
169 goals in the covenant.
ICONS
17 ICONS: COLOUR VERSION
ICONS
48
NO
POVERTY
ZERO
HUNGER
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
GENDER
EQUALITY
CLEAN WATER
AND SANITATION
GOAL FOR 20301
ICONS
48
LATAM INITIATIVE
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
Affordable and
clean energy
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
REDUCED
INEQUALITIES
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
7.2 Increase the share of renewable
energy within the global energy grid
SUSTAINABLE CITIES
AND COMMUNITIES
• Support and monitor the agenda that seeks to foster
the production of fuels with a lower environmental im-
pact, such as biofuels or green hydrogen (page 65)
ZERO
HUNGER
CLIMATE
ACTION
GOOD HEALTH
AND WELL-BEING
LIFE
BELOW WATER
QUALITY
EDUCATION
LIFE
ON LAND
GENDER
EQUALITY
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
CLEAN WATER
AND SANITATION
PARTNERSHIPS
FOR THE GOALS
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
REDUCED
INEQUALITIES
INDUSTRY, INNOVATION
Decent work
AND INFRASTRUCTURE
and economic
growth
When an icon is on a square, that square must be proportional 1 x 1.
The white icon should be contained by its defined colour, or black
background.
ICONS
CLIMATE
ACTION
Do not alter the colours of the SDG icons.
LIFE
BELOW WATER
LIFE
ON LAND
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
17 ICONS: COLOUR VERSION
When an icon is on a square, that square must be proportional 1 x 1.
SUSTAINABLE CITIES
AND COMMUNITIES
RESPONSIBLE
8.4 Improve the efficiency of global re-
CONSUMPTION
AND PRODUCTION
sources and decouple economic growth
from environmental degradation
• Focus on value generation for all stakeholders
(page 52)
PARTNERSHIPS
FOR THE GOALS
ICONS
48
8.7 Eradicate bonded labor, contem-
porary slavery, human trafficking, and
eliminate child labor
• Decent work practices and commitment to salary
equality (page 77)
• Matrix of risks related to human rights, applied by
the operations and sponsoring action plans (page 56)
NO
POVERTY
The white icon should be contained by its defined colour, or black
background.
ZERO
HUNGER
Do not alter the colours of the SDG icons.
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
GENDER
EQUALITY
8.8 Protect labor rights and foster safe
work environmentss
CLEAN WATER
AND SANITATION
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
SUSTAINABLE CITIES
AND COMMUNITIES
REDUCED
Industry,
INEQUALITIES
innovation, and
infrastructure
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
9. Modernize infrastructure and make
industries sustainable (more efficient
and with clean technologies and indus-
trial processes)
• LATAM Fuel efficiency program, to optimize jet fuel
consumption, reducing the operation’s environmental
impacts (page 63)
CLIMATE
ACTION
LIFE
BELOW WATER
LIFE
ON LAND
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
PARTNERSHIPS
FOR THE GOALS
When an icon is on a square, that square must be proportional 1 x 1.
The white icon should be contained by its defined colour, or black
background.
Do not alter the colours of the SDG icons.
1 The wording of the goals has been edited; the full sentence
is available at: https://www.un.org/sustainabledevelopment/
sustainable-development-goals/
Strategy and commitments
54
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits ICONS
17 ICONS: COLOUR VERSION
ICONS
48
NO
POVERTY
ZERO
HUNGER
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
GENDER
EQUALITY
CLEAN WATER
AND SANITATION
ICONS
GOAL FOR 20301
LATAM INITIATIVE
ICONS
48
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
REDUCED
INEQUALITIES
SUSTAINABLE CITIES
AND COMMUNITIES
17 ICONS: COLOUR VERSION
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
NO
POVERTY
Responsible
production and
ZERO
consumption
HUNGER
GOOD HEALTH
AND WELL-BEING
12.2 Sustainable management and
efficient use of natural resources
QUALITY
EDUCATION
GENDER
EQUALITY
CLEAN WATER
AND SANITATION
CLIMATE
ACTION
LIFE
BELOW WATER
LIFE
ON LAND
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
PARTNERSHIPS
FOR THE GOALS
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
12.4 Chemical product and waste ma-
nagement throughout their lifecycle
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
12.5 Reduce waste generation
SUSTAINABLE CITIES
AND COMMUNITIES
REDUCED
INEQUALITIES
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
When an icon is on a square, that square must be proportional 1 x 1.
The white icon should be contained by its defined colour, or black
background.
Do not alter the colours of the SDG icons.
ICONS
CLIMATE
ACTION
LIFE
Climate action
ON LAND
LIFE
BELOW WATER
ICONS
48
PARTNERSHIPS
PEACE, JUSTICE
13.1 Resilience and ability to adapt to
FOR THE GOALS
AND STRONG
INSTITUTIONS
climate change
17 ICONS: COLOUR VERSION
NO
POVERTY
ZERO
HUNGER
When an icon is on a square, that square must be proportional 1 x 1.
The white icon should be contained by its defined colour, or black
background.
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
13.2 Incorporate measures related to
climate change into national policies,
strategies, and plans
CLEAN WATER
AND SANITATION
GENDER
EQUALITY
Do not alter the colours of the SDG icons.
AFFORDABLE AND
CLEAN ENERGY
DECENT WORK AND
ECONOMIC GROWTH
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
REDUCED
INEQUALITIES
SUSTAINABLE CITIES
AND COMMUNITIES
CLIMATE
ACTION
LIFE
BELOW WATER
LIFE
ON LAND
PEACE, JUSTICE
Life on land
AND STRONG
INSTITUTIONS
PARTNERSHIPS
FOR THE GOALS
13.3 Improve education, sensitization,
and human and institutional capacity
regarding climate change
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
15.5 Reduce the degradation of natu-
ral habitats, halt the loss of biodiversi-
ty; protect and prevent the extinction
of threatened species
When an icon is on a square, that square must be proportional 1 x 1.
The white icon should be contained by its defined colour, or black
background.
Do not alter the colours of the SDG icons.
• Reduction and offset of GHG emissions; proper waste
management and rational use of natural resources
(pages 62 to 69)
• Identification of related risks and opportunities
(page 65)
• Adhesion to sectoral initiatives (page 63)
• Efficient use of jet fuel (page 63)
• GHG emissions offset (page 66)
• Solidary Plane program – Environment (page 57)
1 The wording of the goals has been edited; the full sentence
is available at: https://www.un.org/sustainabledevelopment/
sustainable-development-goals/
Strategy and commitments
55
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Human rights
In its Human Rights Commitment Declaration, LATAM defines
the guidelines for action in its operations and relations, such
as rejection of child labor, bonded labor, and slave labor, and
situations of moral, physical, and sexual harassment; and
the commitment to union freedom, to health and safety, to
fair compensation and adequate work conditions, regardless
of gender, race, age, sexual orientation, or nationality.
The document, drafted in observance of the international
standards, such as the Universal Declaration of Human Rights,
the United Nations Charter, and the Fundamental Principles
and Rights at Work of the World Trade Organization (WTO),
also includes the consequences established in case of any
breach of these principles.
To manage this, LATAM is identifying and classifying, based on
impact and likelihood of occurrence, risks related to human
rights throughout the operation. This work began in Peru, with
the creation of a risk matrix, the definition of priorities, and the
establishment of plans of action.
One of the measures adopted by LATAM Airlines Peru was
the creation of a committee to deal specifically with the
issue of harassment. This is a committee of peers, and
has representatives appointed by management and by the
employees. They also held talks to generate awareness among
the leaders of the commercial area. This work was interrupted
due to the pandemic, and should be resumed in 2021, adding
other teams.
In 2020, the methodology allowed for the creation of a risk
matrix on Human Rights in LATAM Airlines Ecuador and LATAM
Airlines Colombia. The work will be extended to the operations
in Brazil and Chile in 2021.
The document is available at
https://www.latamairlinesgroup.net/
system/files-encrypted/nasdaq_
kms/assets/2019/07/18/16-31-44/
Declaration%20of%20Human%20
Rights.pdf.
Strategy and commitments
56
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Solidary Plane
program
Through the Solidary Plane program, LATAM offers its
services and the structure, connectivity, and capacity of both
its business lines (cargo and passengers) free of charge to
society. The program is enhanced through agreements with
various organizations, foundations, and government agencies,
and it represents one of the main contributions that the
company can make.
In order to add value to the South American
community through LATAM group’s expertise
the Solidary Plane offers its air transportation
services, free of charge, to benefit society
when it needs it most.
There are three lines of action:
• Health: the company has unique characteristics in the
• Natural disasters: transporting affected victims,
region that enable it to offer solutions to the communities
to address various health needs, by either transporting
passengers, health professionals, or medical materials, or
connecting a diseased person with a donor, transporting
organs, tissues, and stem cells, which allows others to get
a second chance at life.
• Environment: transporting scientists and members of
environmental NGOs, traveling for professional reasons,
such as research, or transporting animals in vital risk,
danger of extinction, or that need rehabilitation. Moreover,
the program transports waste materials from remote areas
to destinations where they can be recycled.
professionals in offering support after the catastrophe,
and humanitarian aid in case of floods, fires, earthquakes,
tsunamis, mudslides, or volcano eruptions.
The Solidary Plan has been in existence since 2012, and
in 2020, it was active in the five countries where LATAM’s
affiliates have domestic operations: Brazil, Chile, Colombia,
Ecuador, and Peru.
57
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits SOLIDARY PLANE 203-1
395.5 tons
of medical
materials
transported.
Transport of
humanitarian aid
(129.2 t) for the victims
of hurricane Iota.
In the year, there
were eight transfers,
covering routes
from Europe to
Chile, from Chile to
Europe, and from
Brazil to Argentina.
Europe
Germany
L
O
S
I D A R Y PLANE COVID
-
1
9
1,374
tickets donated
(health professionals
fighting Covid-19,
patients of other
diseases for treatments,
surgery, and others).
N M E N T
O
San Andres
Santa Catalina
Providencia
Transported 143.5 tons.
Including: recyclable
materials from Easter
Island (Chile) and the San
Andres Island (Colombia),
and 4 animals rescued in
Brazil and Chile.
Colombia
Equador
Peru
E E N VIR
N
A
L
P
Y
R
A
D
I
L
O
S
In 2021, LATAM
group placed itself at
the disposal of the
governments to distribute,
free of cost, the vaccines
in the countries where
it has regular domestic
flights.
Easter Island
Chile
Brazil
Argentina
Support for the
animal rescue
actions during the
fires in Pantanal,
Brazil.
For the first time, a
LATAM cargo plane
transported stem
cells from a donor
in Germany, saving
the life of a girl
in Chile.
Transport of 392kg of
fodder, 20kg of tilapia
skins for treating burns,
206 crates for animal
transportation.
Solidary Plane
58
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governanc Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Flights that cannot wait
In April, during the height of the Covid-19 infections in South
America and amid the shutdown of borders for passengers,
the LATAM Solidary Plane spread its wings to transport,
from Frankfurt (Germany) to Santiago (Chile), stem cells so
that a 9-year-old girl with leukemia could receive stem cells
to keep fighting her disease. This milestone is within the
framework of the LATAM alliance with Fundación DKMS, an
organization that has a bone marrow donors bank worldwide.
The flight was planned by a multidisciplinary team
comprising over 30 people. The whole crew was trained
following international protocols for the transport and
handling of stem cells. The pilot of the flight was responsible
for ensuring the preservation of the genetic material.
During the year, there were nine transfers of stem cells that
gave a second chance at life to patients with cancer in Chile,
Argentina, and Europe.
Dealing with health needs
In 2020, the Solidary Plane program transported doctors and other health
professionals to different locations in South America to serve the needs
related to Covid-19 and other diseases. In total, 1,374 tickets were donated
for doctors and patients.
In Brazil, 1,165 organs and tissues were transported thanks to the alliance
between LATAM Airlines Brazil and the Health Ministry, formed in 2013. By
yearend 2020, LATAM Airlines Group signed a cooperation agreement with the
Health Ministry in Chile. In the future, the airline hopes to complete similar
alliances in the other countries where it operates.
Transport of recyclable materials
LATAM group transports recyclable materials from Easter Island, six hours
away by plane from Santiago (Chile), and from the San Andres archipelago,
in the Colombian Caribbean. This action is a contribution to the local waste
management in vulnerable habitats.
Due to the cancellation of passenger flights to Easter Island as a result of
the pandemic, the initiative was interrupted. Through LATAM Cargo, which
guaranteed supplies for isolated regions during the pandemic (read more on
page 25), it was possible to continue transporting the recycled materials.
The revenues generated through the commercialization of the recyclables are
reinvested in environmental preservation projects on the Island.
Overall, during 2020, the Solidary Plane focused on the environment
transported 143.5 tons, including recyclables and rescued animals.
Solidary Plane
59
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits SNAPSHOT
SOLIDARY PLANE
Health
Air tickets donated
Organs, tissues, and stem cells transported
Medical materials (t) –Covid-19
Natural disasters
Cargo transported as humanitarian aid (t)
Environment
Animals transported
Recyclable materials and animals transported (t)1
2018
2019
2020
4,606
598
NA
16
25
170
4,149
807
NA
1,374
1,174
395.5
87
524.7
93
204
143.5
NA: information not available.
1 Since 2020, both indicators are reported in a consolidated manner.
Hurricane Iota: humanitarian aid for San Andres
In mid-November, the Colombian archipelago of San Andres,
Providencia, and Santa Catalina was severely affected by category
5 Hurricane Iota. Thanks to the Solidary Plane and the commitment
of the LATAM teams, over 70 tons, including food, water, and
facemasks, were transported on three flights, made by a LATAM
Cargo Boeing 767 plane, and by two LATAM Airlines Colombia Airbus
A320 planes. The passenger cabins on the Airbus planes were
adapted for transporting cargo.
The materials were gathered by Fundación Pro-Archipiélago and by
the Colombian National Disaster Risk Management Unit. This was
the first time that a cargo plane landed on the island.
Fighting the fires in the Brazilian Pantanal
The Solidary Plane program was also activated to fight the forest
fires that affected the Brazilian Pantanal in mid-2020. Through the
alliance signed with NGO Ampara Animal/Ampara Silvestre, which
coordinated the Pantanal en Llamas campaign (Pantanal on Fire),
LATAM took to the region 392 kilos of animal feed and 20 kg of
tilapia skins, used to treat burns, and 206 animal transport crates.
This region is considered natural world heritage by Unesco (United
Nations Education, Science, and Culture Organization). Pantanal is
the largest marshland in the world, rich in plant and animal life, and
is the home to animals in danger of extinction, including the jaguar.
The transport of animals to sanctuaries—Animal Rescue
program—is a regular activity for the Solidary Plane, focused on the
environment. In 2020, four animals were transported.
Solidary Plane
60
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Even during the pandemic, the
Solidary Plane did not stop,
and it continued to sail across
the South American skies to
support health, environment, and
humanitarian aid initiatives.
Solidary Plane
61
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Climate
change 305-1, 305-2, 305-3, 305-4 and 305-5
Total carbon
footprint
(t CO2e)
756,602
84,933
625,956
68,285
134,489
2,564,406
According to the Intergovernmental Panel on Climate Change
(IPCC), aviation represents 3% of greenhouse gas emissions
(GHG). To reduce its impact on climate change, LATAM is
working on two priority topics: improving fuel use efficiency
and compensating its emissions through various initiatives.
1,420,879
Total carbon footprint
5,655,551 t CO2e
Total net carbon footprint
5,521,062 t CO2e
Intensity of air emissions
81 kg CO2e per 100 RTK
Intensity of total net emissions
79.7 kg CO2e per 100 RTK
Annually, the group performs its GHG emission inventory
based on the guidelines established in ISO 14.064. Given the
decrease in flights during the pandemic, LATAM’s total carbon
footprint was 5,655,551 tons of CO2e, a 54% reduction
compared to 2019. The net carbon footprint represented
5,521,062 tons of CO2e—a 55% decrease compared to the
previous year’s performance.
Total: 5,655,551 t CO2e
LATAM Airlines Argentina1
LATAM Airlines Brazil
LATAM Airlines Group
LATAM Airlines Colombia
LATAM Airlines Ecuador
LATAM Airlines Perú
LATAM Cargo
1. Regarding emissions up to June 2020, when the group
closed down its domestic operations in the country.
[+] Detailed information on the
greenhouse gas (GHG) inventory,
available starting on page 175, in the
Appendix section.
[+] For information regarding the
emission of gases that affect the
ozone layer, nitrogen oxide (NOx) and
sulfur oxide (SOx), view page 175.
62
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Scientific base
Early in 2020, LATAM was the first airline group in the
Americas to adhere to the Science Based Target initiative
(SBTi), a coalition formed by the Global Compact, Carbon
Disclosure Project (CDP), World Resources Institute
(WRI), and World Wide Fund for Nature (WWF).
The coalition advocates the use of scientific bases
in defining the goals that contribute towards the
achievement of the Paris Agreement: Limit the increase
of the planet’s temperature to 1.5°C above preindustrial
levels, as recommended in the fifth IPCC report
from 2013.
Throughout the year, the SBTi was devoted to
developing specific calculation tools for the aviation
industry. LATAM participated in public consultations
held. With the tools defined, the group will set its goals
and validate them with the coalition.
CORSIA: the aviation industry’s commitment
The aviation industry, coordinated by IATA and the
International Civil Aviation Organization (ICAO), has taken a
series of steps to tackle the increase in emissions, including
CORSIA (Carbon Offsetting and Reduction Scheme for
International Aviation), the only one of its kind worldwide.
CORSIA regulates the greenhouse gas emissions of
international civil aviation, and its purpose is to achieve
the carbon-neutral growth goal as of 2020, and reduce
emissions by 50% over 2005 levels by 2050. The agreement
is only applicable to international flights, which are
responsible for 60% of the total emissions from aviation; the
other 40% is due to domestic flights.
LATAM is guided by CORSIA to define its commitments.
The scheme was endorsed by the 191 member states of
ICAO and will be implemented in two stages. The domestic
operations of LATAM’s affiliates have not yet adhered to
the voluntary participation stage (phase 1), which begins in
2021. The mandatory phase (phase 2) will begin in 2027.
Jet fuel 302-4 and 305-5
LATAM Fuel Efficiency is the corporate program for the
efficient use of fuel, which has a positive impact on the
reduction of the carbon footprint and of costs, as fuel is the
most important operating cost for the whole aviation sector.
Since 20121, the program has increased the group’s efficiency
by 6.52%.
power units (APU) on activities on the ground, increase
in ground times for sanitization; use of air conditioning
throughout disembarking to ensure the renewal of the cabin
air. All the group’s airplanes have an air recirculation system
and HEPA (High-Efficiency Particulate Arrestor) filters, that
remove 99.97% of the particles, viruses, and bacteria.
Throughout the year, LATAM continued to invest in new
efficiency initiatives. It concluded the retrofitting project on
narrow-body planes. This adjustment allows the use of a
single engine when taxiing at airports, and prevents the use
of APUs.
The efforts to optimize the amount of fuel established for
each route also continued, reducing the total weight of the
aircraft. Barring LATAM Airlines Brazil, the fleet’s APUs were
also renewed. By yearend, an analytics tool was launched,
which will make it possible to crosscheck and analyze
data to support the decisions regarding the ideal amount
on each flight.
The gross savings achieved in 2020 totaled 32.1 million
gallons of fuel (4,207 TJ of energy), equivalent to US$63.8
million. The figures are smaller than in previous years, as a
result of the pandemic, but in percentage terms, the group’s
level of efficiency increased by 0.52 percentage points
compared to 2019.
The 20201 results were impacted by the new procedures
implemented during the pandemic: greater use of auxiliary
1 Although the program has been in existence since 2010, LATAM only
has externally verified information as of 2012
Climate change
63
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits LATAM Fuel Efficiency 302-3 y 302-4
Balance 2012–2020
• A 6.52% gain in fuel efficiency;
• Avoided consumption of 353,377,266 million gallons of fuel,
equivalent to 3,370,583 tons of greenhouse gases;
• US$853,267,247 saved.
IATA TARGET
Increase fuel efficiency by 1.5% an-
nually in the 2005-2020 period.
LATAM PERFORMANCE
15% in fuel use per 100 RTK in 20121, with
an annual average of 2%.
1 While the IATA target sets 2005 as the base year, LATAM compares against 2012 to monitor
its progress.
With responsibility, scientific
information, and a sense of urgency,
the group collaborates to face
climate change.
Climate change
64
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Risks and opportunities 201-2
LATAM assesses the risks and opportunities in a world
moving towards a low-carbon economy. One of the most
important risks is the adoption of restrictive laws and
regulations in the countries where the group operates, with
the implementation of taxes for organizations that cannot
compensate their greenhouse gas emissions (GHG), as is
already the case in Colombia.
In 2020, LATAM Airlines Colombia neutralized 100% of the
emissions of its domestic aviation operations, guaranteeing
exemption from the US$5 charge per ton of CO2 emitted.
In Europe, some countries are already taxing the emission
of gases that affect the ozone layer, such as NOx (nitrogen
oxide), whereas in Latin America, Brazil and Chile are making
progress in the discussions regarding the matter.
Another mapped risk is extreme weather phenomena,
such as cyclones and hurricanes, caused by the increase
in the Earth’s temperature. Those events can cause flight
cancellations, temporary interruptions of operations and, in
the medium term, a decrease in demand for flights to the
affected region.
On the outlook regarding opportunities, the group’s
performance in the face of climate change may represent
a competitive advantage impacting passengers’ preference,
new investments in the companies that manage the ESG
aspects, as well as fostering a sense of pride and belonging
in people.
Biofuels
Brazil is considered a benchmark worldwide in terms of
biofuel, given its geographic extension, its consolidated
agriculture sector, and its expertise in the production of
sugarcane-based ethanol.
LATAM Airlines Brazil participates actively in the discussions
on the large-scale production of biofuels for aviation,
both individually and through the Associação Brasileira de
Empresas Aéreas (ABEAR, the Brazilian Association of Airline
Companies). The goal is to foster that clean energy source.
The group also monitors the National Green Hydrogen
Strategy, launched by the Chilean Energy Ministry in
November 2020, with the aim to boost green hydrogen
production for the next few years.
Legal momentum
Brazil has a national policy (RenovaBio) to promote the production of
biofuels. Currently, fossil fuel distributors in the country follow the emission
reduction goals and are compelled to buy the so-called decarbonization
credits (CBIOs), operated by the Brazilian Stock Exchange (B3).
Climate change
65
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Emissions offsetting
In 2020, given the sector’s context amid the Covid-19
pandemic, the investment in offsetting projects was limited
to LATAM Airlines Colombia, with the neutralization of 143.1
thousand tons of CO2. The branch is carbon neutral in ground
and domestic aviation operations. The projects developed in
the year were:
• Reforestation of 2,234 hectares in the Mapiripán, Puerto
Gaitán, and Puerto López municipalities of the Meta
department, and
• Recovery of degraded soils through financial incentives in
the center and east of Colombia.
CLIMATE CHANGE 302-3 and 305-4
SNAPSHOT
Total emissions (t CO2e)
Net emissions (t CO2e)
Emissions intensity in air operations (kg CO2e/100 RTK)
Net emissions intensity in total operations (kg CO2e/100 RTK)
Energy intensity (MWh/100 RTK)1
Rational fuel use (reduction compared with IATA average)2
LATAM fuel efficiency (liters/100 RPK)
Passenger Operations
Cargo Operations
Energy consumption (TJ)3
2018
2019
2020
11,535,117
12,386,323
5,655,551
11,178,625
12,253,203
5,521,062
80.1
77.9
0.3
7.9%
31.8
3.0
19.8
82.1
82.8
0.4
5.7%
32.6
3.0
21.7
81.0
79.7
0.6
7.2%
32.0
3.2
20.7
340,440
383,583
218,521
1 Considering internal and external consumption.
2 Based on average consumption in 2019, according to IATA data, which represents 80% of the global air traffic.
3 Includes ground and air operations.
Climate change
66
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Environmental management
and eco-efficiency
LATAM Group has implemented an internal environmental
management system (SGA), and it has externally certified
systems in three units.
• LATAM Cargo in Miami (USA) is certified under standard ISO
14001/2015.
• LATAM Airlines Chile and LATAM Airlines Colombia have a
IEnvA (IATA Environmental Assessment) certificate, created
by IATA for the aviation sector. Adhesion is voluntary and
comprises two stages. The first one covers the scope
of the ESG, top management’s commitment, and the
mapping of relevant legal environmental requirements and
of the environmental aspects and impacts of the activities.
The second, and more advanced stage, includes defining
goals, audits, operational programs and controls, and
training of the teams.
• LATAM Airlines Chile has the IEnvA stage 2 certificate
for its international operations and LATAM Airlines
Colombia is certified under stage 1, considering
domestic and international operations, administrative
offices, and the Maintenance Base.
Eco-efficiency
The group seeks to reduce its environmental impacts,
focusing on the rational consumption of water and
energy, and on reducing and eliminating waste.
In 2020, water consumption decreased 62% compared to
2019, while energy consumption decreased by 35%. The
variation in both is due to a drop in operations, caused by
the pandemic.
67
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Water consumption (m3)1 303-1
Electric energy consumption (MWh)
and energy intensity (MWh/FTE)2
314,285
66,769
60,178
Electric energy
consumption
(%) – 2020
25%
220,833
216,626
82,480
1.5
50,641
1.2
39,329
75%
1.4
1.4
2017
2018
2019
2020
2017
2018
2019
2020
1 Supply comes through the municipal
networks of the various countries of operation,
without LATAM’s direct water harvesting. The
indicator covers 100% of the operation.
2 FTE: Full time employee.
Renewable sources
Non-renewable sources
Total: 39,329 MWh
The information
regarding total
energy consumption
is found in the
Appendix.
Environmental management and eco-efficiency
68
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Waste disposal
In 2020, LATAM registered an 84% decrease in the generation
of waste compared to 2019. The total settled 31% below
2015, the base year for the reduction target (10%) defined by
the group.
Waste (%) 306-3
2017 = 8,663 t
2018 = 33,351 t
2019 = 41,047 t
2020 = 6,583 t
68%
32%
94%
6%
92%
8%
73%
27%
Note: The indicator covers 100% of the
operations.
Hazardous
Non-hazardous
Destination of waste (t) 2020 306-3, 306-4 and 306-5
WASTE TO BE DIVERTED FROM DISPOSAL
Hazardous waste
Recycling
Non-hazardous waste
Recycling
Total waste to be diverted from disposal
WASTE DIRECTED TO DISPOSAL
Hazardous waste
Incineration (with energy recovery)
Incineration (without energy recovery)
Landfilling
Other disposal operations
Non-hazardous waste
Incineration (with energy recovery)
Landfilling
Other disposal operations
Total waste directed to disposal
120
120
642
642
742
4,699
177
76
38
4,408
1,122
4
1,016
103
6,583
Recycle Your Trip
Recycle Your Trip is the group’s global program that enables
it to sustainably manage the waste generated on flights.
Crew and passengers participate in the selective collection
of product wrappers from Mercado LATAM, in-flight sales
program, allowing for the recycling of plastics, aluminum, and
glass. The initiative began in 2019 on the domestic flights in
Chile, but was suspended in March 2020, in order to meet the
new safety protocols arising from the pandemic, and which
led to less interaction between the crew and passengers. The
program is expected to resume in Chile’s domestic operations
in 2021, and to be implemented on the domestic flights of
LATAM Airlines Brazil, LATAM Airlines Colombia, LATAM Airlines
Ecuador, and LATAM Airlines Peru in 2022.
SNAPSHOT
ENVIRONMENTAL
MANAGEMENT AND
ECO-EFFICIENCY
2018
2019
2020
Units with EMS implemented
Units with certified EMS
Water consumption (m3)
94%
3%
91%
3%
91%
3%
220,833
216,626
82,480
Waste disposal (t)
33,351
41,047
6,583
Environmental management and eco-efficiency
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Everyone’s commitment
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Everyone’s
commitment
The safety of passengers, employees, and communities is
one of LATAM's fundamental values, and it is guided by the
Safety, Quality, and Environment Policy, which follows the
parameters established by the International Civil Aviation
Organization (ICAO). The ongoing fine-tuning of procedures,
the constant monitoring of performance, and the teams’
commitment comprise the group’s safety culture.
Indicators of safety on flights, maintenance and cargo
activities, ground operations, and those regarding airport
infrastructure are monitored by the Safety vice-presidency,
reported monthly to the CEO, and are part of the
Board’s agenda.
Internal campaigns generate awareness in the teams
regarding the importance of safe behaviors and an online
platform receives notices of incidents and deviations. The
information is used for risk-mapping and improvement
plans. In 2020, the platform received an average of 5.6
reports per 100 flights.
Managing safety
The Safety Management System is comprised of a set of
tools, programs, and audit processes that enable the group
to monitor its safety performance on every front, identify
risk situations in advance, and make decisions to minimize
them in a fast and coordinated manner. The matrix of risk
factors and criticality levels is updated systematically,
considering both the data from internal analyses and the
information on episodes outside the company.
Opportunities for improvement are also sought by
monitoring monthly goals established based on the six best
results achieved in the last two years.
Tools
An informatics system captures 96% of the information from
each flight, automatically processes the data to identify
deviations from the operating procedures, and preventively
indicates maintenance actions. LATAM analyzes in detail the
causes of the deviations and adopts rectification plans.
Since its implementation in 2016, it has continued to
be improved: coverage increased from 1,280 to 3,000
parameters per second, measurements became more
precise, and the time between the plane’s landing and the
processing of the information decreased. On the planes that
have Wi-Fi/3G coverage (close to 40% of the fleet in 2020),
the processing is immediate. For the remainder, 80% of
the flight information is available in a period of up to three
days—less than half the time required four years ago.
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favor of safety
In 2020, LATAM started the Safety II project, which
uses advanced analytics tools to crosscheck and
process information regarding various aspects of
safety, such as: human factors, weather conditions,
and aircraft maintenance. This information will also
make it possible to improve the predictive model for
managing operational safety.
With a broad database and automated analysis of
the relations between the different variables, it will
be possible to identify more precisely the factors that
could have a positive effect on performance, as well
as those that raise risks or must be managed.
The data feeds the safety monitoring dashboard, where it
is possible to see performance per route, airport, fleet, type
of deviation, and other categories. The reports are sent on a
weekly basis to the people in charge of each fleet. There is
also information segmented by pilot, whose data is available
through the Pilot LATAM app. Through it, the pilot can view
the details on their performance, compare them with the
average of the fleet they are in, and have access to incidents
identified during the flights. Data per pilot is treated with
absolute confidentiality.
Programs 403-7
Focused on the psychological wellbeing of pilots and
copilots, LATAM has the SeguraMente program, which offers
support for cases of personal and family problems, through
medical consultation and psychological support. The program
exists for the passenger and cargo operations in the Brazil,
Colombia, and Chile affiliates, and it will be implemented in
the Ecuador, Peru, and Paraguay affiliates in 2021.
LATAM Airlines Brazil also has the ProAjuda program, which
offers support in case of addictions. In addition to pilots
and copilots, other crew members and employees that work
in maintenance, flight dispatch, and baggage loading and
unloading can also have access to it. We should note that
LATAM has an alcohol and drug check at all its affiliates
through sample testing done without prior notice. In 2020,
the guidelines of the process in LATAM Airlines Chile were
updated, in line with the changes defined by the country’s
legal authorities.
Audits
LATAM’s Safety Management System is also comprised of
audits divided in three groups.
1. Periodic internal audits, that evaluate the maturity of the
operational processes implemented.
2. Internal audits based on the guidelines of IOSA (IATA
Operational Safety Audit), whose goal is to guarantee that
all the affiliates meet the parameters for certification.
3. IOSA recertification audits, that can be performed every
two years, if on-site, or annually if done remotely. All
LATAM affiliates have been certified since 2007.
Fatigue control
LATAM uses a specific software to structure pilots’ and
copilots’ work shifts, preventing them from operating
when they have high levels of fatigue. This technology
crosschecks variables of the Circadian cycle (wake and
sleep states) with the team planning. Based on the
results, they arrive at an ideal composition of the shifts.
Everyone’s commitment
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits EMERGENCY RESPONSE
Members of the emergency team
SNAPSHOT
People trained
2018
2,954
991
2019
3,787
1,563
2020
2,814
746
Airport security
LATAM works in line with national and international
airport security standards. The group invests in ongoing
improvements of the processes so the cargo and passengers
transported reach their destinations safely, without being
affected by complications.
With the Covid-19 pandemic, LATAM adjusted some of its
procedures, as described below.
• The directives related to disruptive passengers now includ-
ed specific guidelines on how to address clients who refuse
to wear their individual protective gear.
• The safety procedures for remote check-in were created and
validated with the aviation authorities, and are available in
airports of Brazil and Chile.
• Temperature control and other biosecurity procedures were
adopted in various of the group’s facilities, such as hangars,
cargo warehouses, and offices.
Emergency response plan
The Emergency Response Plan defines the resources and
groups of people that are to be activated in case of an
aviation emergency, considered as an accident with deaths.
The goal of that plan is to support the affected people and
their families, assist the aviation authorities in their inquiries,
maintain communication with the various stakeholders, and
guarantee the continuation of the operation.
• In the cargo operations, in line with the new US directive,
LATAM started scanning 100% of the cargo shipped to the
United States.
• The remote monitoring system was adopted in the ware-
Emergency Committees, workgroups of ground teams, and
volunteers are activated to assist the affected people and
their families. There are local committees in eight of the
group’s affiliates: Chile, Brazil, Peru, Colombia, Ecuador,
United States, Paraguay, and Spain.
• To prevent passenger inadmissibility situations in the des-
houses, strengthening security for high-value cargo.
tination airports, the team’s guidelines regarding the health
requirements for boarding were strengthened.
Emergency drills and trainings are held annually in all the
affiliates under the framework of the Safety Weeks. As a
result of the pandemic, in 2020, LATAM was forced to reduce
this event to a single day and trained over 700 employees.
Everyone’s commitment
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E M P L O Y E E S
74
Joint
challenge
In its 91 years of history, 2020 stood out as the most
challenging for LATAM as a result of the global context.
At the height of the pandemic, the group decreased its
operations up to 5% of its capacity. Domestic routes were
reduced in all the countries of operation; international
ones were kept for flights originating in Brazil and
Chile, while at other affiliates, international operations
remained shut down due to health restrictions. This drastic
drop in demand required that the group take austerity
measures in management, where its employees’ support
was fundamental.
In negotiating with the local workers’ unions, and under the
legal framework of each country, flexibilization measures
were agreed, such as a reduction of the workday with a pay
cut and the granting of non-remunerated leave.
the group was gradually able to resume operations, it began
its restructuring process, and due to the external scenario. By
the end of 2020, the decrease was 15%.
Turnover
These initiatives were essential to reducing the group’s
operating expenses, but they were not enough to preserve
all the jobs. Given the expanse of the pandemic and the
significant decrease in demand—mainly in the international
operation—LATAM was forced to lay off close to 15,262
thousand employees throughout the year. The turnover rate
settled at 53.7% in 2020—in 2019, it stood at 13.7%. 401-1
In the process of shutting down the domestic operations of
LATAM Airlines Argentina in June, 1,522 employees accepted
the voluntary retirement plan, while 193 had to be dismissed.
Support for professional relocation
To support the job relocation of the dismissed professionals,
the group designed an initiative called Talent Market. The
people management teams introduced and referred former
employees to human resource consultancy firms and
other companies.
In addition, LATAM launched a web platform, with
information and the CVs of these people, that other
companies and consultancy firms can access. Tutorials and
other support tools for the professional reintegration of
former workers in Brazil, Chile, Colombia, Ecuador, Peru, and
Argentina were also included. By November 2020, there had
been over 125 thousand visits to the site.
In March, the companies in LATAM group proposed a
voluntary pay cut for employees for a period of three
months, which was accepted by 95% of the employees. The
strategy was adjusted over the following months, given that
The layoff process adhered to the labor law and was
accompanied by careful work to mitigate the impact
for the dismissed employees (see figure) and keep the
staff committed.
[+] View detailed information on staff
turnover in the Appendices.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits To address the great challenge of 2020, LATAM had the
commitment of its more than 28,000 employees. With
strength and determination, each one collaborated to pull
the group through and keep connecting people and regions.
Internal
movements
Throughout the year, of the
vacancies in middle management
(heads and analysts), 91% of the
executive positions were covered
through internal movements.
Organizational climate
Despite the challenges that the group faced, the
Organizational Health Index (OHI) rose one point to 75—
the best result for the group since it started using this
methodology, in 2014. The survey measures the teams’
perception on various dimensions, such as coordination and
control, and innovation and learning, and 75% employees
participated in it.
Dialogue and transparency
In this exceptional scenario, LATAM bet on an ongoing
dialogue with its employees. Leaders intensified internal
communications and meetings with their teams to keep
them informed, answer questions and concerns, and
strengthen the relationship of trust.
The tools for dialogue and engagement, already
systematized in the group, supported the process, with
virtual meetings, as home office was generally adopted by
the administrative teams when the first cases of the disease
began. Among the tools, we find:
• LATAM News: Weekly meeting between leaders and teams;
• Extended: Periodic meetings hosted by the
vice-presidents;
• 1 : 1 Accompaniment: specific conversations between
the employee and their leader, supporting the individual
development process; and
• Recognition Platform: leaders and colleagues can publicly
acknowledge employees with an outstanding performance.
Joint challenge
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits SALARY COMPARISON WOMEN/MEN1
Board Members2
Top management: CEO, vice-presidents, directors, and
senior management
Managers and assistant managers (considering financial
incentives as well as the base salary)
Managers and assistant managers (only base salary)
Middle management (heads and analysts) and other
employees
1.00
0.76
0.91
0.93
1.01
1 The calculation uses the average salary for women/average
salary for men.
2 The Board’s salary is determined by the Shareholders’ Meeting. It is
equal for all board members, except the chairman, and it is based solely
on their participation in the meetings.
Team development
Investments in training were decreased in the year, totaling
US$13.6 million. The average hours of training decreased
from 37.1 in 2019 to 30.9 in 2020. 404-1
In Brazil, with most of the teams working under the home
office model, LATAM Airlines Brazil signed alliances to offer
self-development courses online, such as English as a foreign
language and stress management.
To strengthen its commitment to salary
equality and non-discrimination for gender,
LATAM approved its Compensations Policy in
2019. In 2020, women’s average salary went
from 76% to 101% of men’s average salary.
TRAINING (h) PER PROFESSIONAL
2018
2019
20201
By professional category
Management
Maintenance
Operations
Command crew
Cabin crew
Sales
By gender
Men
Women
Total
0.7
25.2
178.4
11.1
50.7
5.0
30.3
42.5
35.0
11.2
41.2
32.4
66.4
52.7
18.0
36.5
38.2
37.1
20.3
31.7
36.0
10.1
43.2
11.2
30.2
32.0
30.9
1 The figures include the Argentina affiliate, whose operations were
closed down in June 2020.
SNAPSHOT
PEOPLE MANAGEMENT
Total employees 102-7
Turnover rate
Average hours of training
Internal movements
Middle management (heads and analysts)
Executives
OHI survey
Result
Quartile
2018
2019
2020
41,170
41,729 28,396
14.2%
13.7%
53.7%
35.5
37.1
30.9
71%
87%
64
3
74%
91%
74
1
84%
91%
75
1
Joint challenge
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LATAM group
LATAM group and its affiliates 102-8
Country of
operation
1.7
0.7
1.7
2.9
3.9
9.5
25.2
54.5
Function
20.8
10.8
15.8
52.6
Operations: 14,947 | 52.6%
Support: 4,475 | 15.8%
Pilots and co-pilots: 3,056 | 10.8%
Other crew members: 5,918 | 20.8%
Argentina: 2.9%
Brazil: 54.5%
Chile: 25.2%
Peru: 9.5%
Colombia: 3.9%
Ecuador: 1.7%
United States: 0.7%
Others: 1.7%
Total: 28,396 employees
Note: 98.9% of the contracts are permanent and 99.4% of
employees work full time.
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LATAM group and affiliates
TOTAL EMPLOYEES (2020)
TOTAL
%
MANAGEMENT LEVEL EMPLOYEES1 (2020)
TOTAL
%
BOARD (2020)
TOTAL
%
By gender
Men
Women
By age group
Up to 30 years
From 31 to 40 years old
From 41 to 50 years old
From 51 to 60 years old
Over 61 years old
By seniority
Up to 3 years
From 3 years and a day to 6 years
From 6 years and a day to 9 years
From 9 years and a day to 12 years
More than 12 years and a day
17,638
10,758
6,338
11,931
7,324
2,420
383
6,805
3,872
4,461
4,648
8,610
62.1
37.9
22.3
42.0
25.8
8.5
1.3
24.0
13.6
15.7
16.4
30.3
By gender
Men
Women
By age group
Up to 30 years
From 31 to 40 years old
From 41 to 50 years old
From 51 to 60 years old
Over 61 years old
By seniority
Up to 3 years
From 3 years and a day to 6 years
From 6 years and a day to 9 years
From 9 years and a day to 12 years
More than 12 years and a day
Total
28,396
100.0%
Total
By gender
Men
Women
By age group
Up to 30 years
From 31 to 40 years old
From 41 to 50 years old
From 51 to 60 years old
Over 61 years old
By seniority
Up to 3 years
From 3 years and a day to 6 years
From 6 years and a day to 9 years
From 9 years and a day to 12 years
More than 12 years and a day
69.6
30.4
4.0
50.0
32.8
11.6
1.6
9.7
13.8
25.2
14.2
37.1
100.0
Total
475
207
27
341
224
79
11
66
94
172
97
253
682
8
1
0
1
1
4
3
5
3
1
0
0
9
98.9
11.1
0
11.1
11.1
44.4
33.3
55.6
33.3
11.1
0
0
100
1 Management level: includes assistant manager, manager, senior manager, director,
and vice-president.
Who makes up LATAM group
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits LATAM group and affiliates
DISTRIBUTION BY GENDER IN THE COUNTRIES (2020) 102-8
WOMEN
MEN
Total employees
Argentina
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
Management level employees1
Argentina
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
Board Members
Chile
Brazil
UK
456
5,138
2,885
457
237
88
1,266
231
4
56
114
6
2
12
8
5
2
6
1
369
10,330
4,270
649
238
119
1,423
240
7
111
279
16
5
26
16
15
22,2
66,7
11,1
1 Management level: includes assistant manager, manager, senior manager, director,
and vice-president.
Gender – by country (%)
Gender (%)
44.7
Argentina
66.8
59.7
58.7
50.1
52.9
57.5
51.0
Brazil
Chile
Colombia
Ecuador
Peru
United States
Others
55.3
33.2
40.3
41.3
49.9
47.1
42.5
49.0
Total employees
Management level1
Board Members
62.1
69.5
37.9
30.5
98.9 11.1
1. Management level: includes assistant manager, mana-
ger, senior manager, director, and vice-president.
Men
Women
DIVERSITY IN THE WORKFORCE – 2020 (%)
Women (% of total employees)
Women in management positions (% of management positions)
Managers and assistant managers
Vice-presidents and CEO
Women in revenue generation positions (Sales managers and assistant managers)
37.9
34.0
28.7
5.3
32.5
Who makes up LATAM group
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safety 403-9
100% of the operations are in line with the
noise limits, defined in Chapter IV of the
International Civil Aviation Organization (ICAO).
Risks considered critical
Risks that can cause people's death or permanent
disability in the workplace are considered critical risks.
These are:
Employee safety is a priority for LATAM and its management
involves awareness programs, risk analysis, key indicator
monitoring, prevention and mitigation plans, and periodic
inspections and audits.
• Working at height;
• Work in confined spaces;
• Operation of mobile equipment;
• Exposure to noise;
• Handling aircraft engines; and
• Handling hydraulic systems.
To minimize teams’ exposure to these risks, inherent to
the operation and to more complex activities, LATAM
has defined “golden rules” that must be adopted and
observed by all.
The group identifies and creates control measures for
operating risks and harmful agents for employees’ health,
such as personal or collective protective systems. The safety
inspections, the risk management system report, and the peer
committees, which include representatives from the employee
base and from LATAM, collaborate to identify the dangers.
2020 Results
LATAM showed positive performance in safety indicators
in 2020. The rate of days lost, which measures work
interruptions due to accidents, dropped 52.1% compared to
2019. The rate of injuries remained on the same downtrend
seen in the last few years. The indicator stood at 0.42, with a
43.2% decrease compared to the previous year, and 70.4% in
the last five years.
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Injury rate1
1.42
1.12
1.03
0.93
0.74
0.42
2015
2016
2017
2018
2019
2020
1 Total accidents with lost time/average no. of employees x 100.
Preventive measures against the pandemic
In order to reduce the risk of infection by coronavirus
among workers, LATAM implemented a series of preventive
initiatives. Among them, we should note:
• Strengthening of the cleaning and sanitation measures;
• Identification of professionals in at-risk groups;
• Monitoring of the areas in the company and the regions
with increases in cases and performance of tests to
detect the disease: in Chile, the test was done on all the
Operations team;
• The supply of personal protective equipment (PPE);
• Taking temperature upon accessing the LATAM facilities; and
• Internal communication with information on the disease.
In addition, a team was appointed permanently to serve and
guide whoever was suspected of being infected. Employees
with a confirmed diagnosis were monitored until they were
given a medical release.
In the second half of the year, on-site work was resumed at
the administrative offices following specific protocols.
OCCUPATIONAL HEALTH AND SAFETY 403-9
Number of accidents1
SNAPSHOT
Injury rate2
Days lost3
Lost days rate4
Deaths (total | rate)
2018
390
0.93
2019
310
0.74
2020
148.5
0.42
6,164
5,232
1,943
14.7
12.5
0 | 0
0 | 0
5.47
0 | 0
Injuries due to work accidents with large consequences
(total | rate)5
Recordable injuries due to work accidents (total | rate)6
NA
NA
NA
3 | 0.01
NA 145.5 | 0.41
NA: information not available.
1 Accidents related to some critical risk and high-impact events (accidents resulting in over 100
days lost) represent 1.5 of the total calculation.
2 Total injuries with work interruptions/average no. of employees x 100.
3 The days lost are computed in accordance with the local legislation in each country. Argentina,
Colombia and the United States start to count from the day after the accident; the other countries
count from the day when the accident occurred. The indicators do not cover commuting accidents.
4 Total days lost / average no. of employees x 100. Includes work interruptions related to occu-
pational diseases, accidents, or deaths.
5 The calculation does not include deaths. The calculation of the rate uses the formula injuries/
average employees x 100. This GRI indicator started to be monitored in 2020.
6 The calculation does not include deaths. The calculation of the rate uses the formula injuries/
average employees x 100. This GRI indicator started to be monitored in 2020.
[+] Indicators by gender and country of
operation are available in the Appendices.
Team safety
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C U S T O M E R S
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits
Connecting
people
The aviation industry was one of the most affected sectors by
the Covid-19 pandemic, following the sharp drop in demand
and the restrictive measures on people’s movement worldwide.
Despite the adverse scenario, LATAM group remained faithful
to its purpose of connecting people and regions, enabling
essential transfers in the countries where it operates.
Following the start of the health contingency, the group
focused on guaranteeing the return of passengers to their
place of origin with the maximum safety and speed. Over
162 thousand people were repatriated, in a coordinated
effort with various governments.
In turn, LATAM provided its clients with greater commercial
flexibility, extending the validity of the tickets with trip start
dates in 2020 until December 2021, and enabling them to be
rescheduled, without fines or additional charges.
Safety
With regard to the safety and protection of its passengers
and crew, LATAM follows all the recommendations from
the World Health Organization (WHO), the regulations
established by the health authorities of the countries where
it operates, and the International Air Transport Association
(IATA). In addition, it has a comprehensive safety protocol
covering the check-in, boarding, in-flight, and disembarking.
Among the measures implemented by the LATAM teams to
guarantee customer security, we find:
• Since May 2020, mandatory use of facemasks by
passengers and crew on all flights; LATAM was the first
airline group in the region to announce this measure;
• Availability of sanitizing gel on all flights;
• Distancing measures on boarding and disembarking;
• Temporary suspension of on-board services on domestic
and short-haul flights;
Air quality
The whole LATAM fleet’s ventilation systems have
HEPA filters, that remove 99.97% of the viruses and
bacteria. In addition to cleansing the air, they renew
it every three minutes, mixing a portion of filtered
air in the cabin with air extracted directly from the
atmosphere.
• Decrease in the number of interactions between the crew
and passengers on long-haul flights and the premium
business class; and
• Segmentation of employee transportation to the airports.
In turn, LATAM launched an innovative sanitation process
developed by the team at the Maintenance Base in São
Carlos (São Paulo), in Brazil. This is an autonomously-
operating robot that applies ultraviolet light to sanitize
surfaces, such as folding chairs and tables, thus reducing the
use of chemical products. The efficacy of this technology
was proven by microbiology specialists from the São Paulo
University (USP).
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits LATAM group’s On-time performance
2020 was an extremely challenging year from an operational
viewpoint. Due to the pandemic, LATAM had to adjust various
operational processes, such as cleaning and disinfecting its
aircraft, boarding and disembarking passengers and checking
in, among others. Despite these adjustments, LATAM
maintained its commitment to flight punctuality by obtaining
90% DEP15 punctuality during 2020 (a standard that
measures industry punctuality). This result placed the group
3 percentage points above its 2019 results, when it was
recognized as the most punctual airline group in the world
by consultancy firms OAG and Cirium, global benchmarks in
information and analytics for the airline industry.
Satisfaction
Concerned for its passengers, LATAM constantly monitors its
levels of perception of the operation and service. Proactively,
the group carries out several surveys within the “Voice of
the Customer” program. These are activated at various
points of interaction with the client, and mainly measure
the Net Promoter Score (NPS) and satisfaction regarding
different processes.
Within the aspects considered are Digital Experience,
In-flight experience, and Contact Center, which makes it
posible to understand strengths, weaknesses, and generate
ongoing process improvements.
The results for 2020 were positive. Our NPS achieved a
7-point hike vs. 2019, reaching 40 points, and when only
looking at 2H20, it reached 45 points, settling 10 points
above the same period of the previous year.
In the context of the pandemic, a new question was
included in the post-flight survey, whose goal is to gauge
the level of protection that passengers feel when traveling
with LATAM. Since its implementation in May, up to
December 2020, it managed to improve by 11 pp, reaching
levels of 30 pp.
Among the attributes explaining the hikes in our customers’
satisfaction, based on their own comments, they highlighted
the service rendered, the kindness of our teams, on-time
performance on our flights, and the preventive measures
implemented due to the pandemic.
The survey was taken by 8% of the passengers traveling with
LATAM group in 2020.
LATAM Cargo and the cargo affiliates also use the NPS
methodology to gauge customer satisfaction. In 2020,
as a result of the pandemic, the operation was affected,
which was reflected in a 14-point decrease. Nonetheless,
this remains a positive result, with more promoters than
detractors. Moreover, the company’s customers in Latin
America valued the role that it played in transporting
products amid the health crisis.
Cabin transformation
As part of the ongoing improvements for the travel
experience, LATAM continued with the modernization of the
aircraft cabins to offer greater flexibility and customization
and better serve the various needs of its passengers. Until
December 2020, the cabins on 84 airplanes had been
refurbished, following an investment of US$105 million. Given
the extraordinary conditions due to the pandemic, the project
was temporarily interrupted, while the group remains focused
on its clients with other innovation and care initiatives.
Faced with the pandemic, it became necessary to shift
gears downward and maintain distancing, but LATAM
stayed close to its clients, offering safe transport for
those who needed to return home, perform essential
activities, or connect with faraway places.
Connecting people
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experience
With the new digital experience, 28% of the
check-ins were done automatically in 2020.
This share is expected to increase as the project
progresses throughout the operation.
The changes with passengers in mind gained momentum in
2020, with the launch of the new LATAM digital experience,
which seeks to simplify the processes so passengers can
access information or the service they need directly from
their phones or their preferred devices (app, website,
WhatsApp, or SMS).
An example of this was the elimination of the check-in
process for domestic flights. Passengers no longer need to
reconfirm their flight 48 hours before, but the ticket is now
automatically updated and the most recent information is
provided as the takeoff time approaches, such as boarding
gate, seat selection, and any schedule modifications.
The new LATAM digital experience was taken to some
airports, with the renovation of the facilities, prioritizing the
self-service kiosks.
This transformation began in the Chile and Ecuador
affiliates, and by late 2020, it reached Colombia and Brazil.
The launch in Peru is scheduled for 2021.
The efforts focused on improving passengers’ digital
experience gave rise to LATAM group’s E-Business unit.
Remote check-in at airports
LATAM was the first airline group in Latin America to offer
remote assistance in airports. Through this measure, already
operational in Brazil and Chile, passengers interact with an
agent via a digital screen. The initiative strengthened passenger
safety during the pandemic and increased the service level
offered. Without needing to be physically present at a service
point, agents can easily be relocated, based on the demand
variations at the various airports.
Ease in
checking in
28
13
59
28% automatic check-ins
13% check-ins done by an agent
at the airports
59% digital check-ins (via App, website,
or self-service kiosks)
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Analytics tools enable improvements in over 30
processes, such as more assertively directing
campaigns, based on passenger profile and identifying
potential fraud attempts on the LATAM Pass program.
They are also used to cross-check information from
aircrafts and maintenance centers to identify and
manage in advance the factors that could affect the
operation’s on-time performance.
Other solutions
CAR010
INT002
SIG156
FFP011
Self-bag drop: In December 2020, the service was available
at nine airports: São Paulo, Brasilia, Río de Janeiro,
and Salvador de Bahía (Brazil), Puerto Montt (Chile),
Bogotá (Colombia), Quito (Ecuador), London (England),
and Lima (Peru).
Facial recognition through biometrics during boarding: with
this technology, passengers present their documents only once
to the police authorities. LATAM is testing this technology at
the airports of Montevideo (Uruguay), Santiago (Chile), Orlando
and New York (USA), and Florianopolis (Brazil).
Augmented reality tool: available through the App, it
enables passengers to confirm whether their carry-on
baggage meets the dimensions allowed on board.
LATAM Play platform: App that gives access to series, films,
news, and other entertainment content in flight.
LATAM reinvents itself and bets on a digital experience to
make the whole process of customers’ interaction with
the company even more simple and accessible, from
choosing a flight to disembarking.
CUSTOMERS
SNAPSHOT
LATAM Pass1 (registered)
2018
2019
2020
30 million
30 million
38 million
Technology
LATAM app users
Easy check-in
Automatic check-in2
5,468,600
8,052,136
78.5%
79.4%
-
-
Digital self-service check-in (app, website, or kiosk)
78.5%
79.4%
NA
87%
28%
59%
On-time performance
OTP 15
Satisfaction3
NPS – Passenger
NPS – Cargo
82%
88%
90%
23
23
33
32
40
18
1 2018 considers the sum of both programs run at the time by the group: LATAM Fidelidade
(in Brazil), LATAM Pass (in the other countries).
2 The function was implemented in 2020.
3 The NPS methodology uses a scale from -100 to +100.
NA: information not available.
More digital travel experience
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S U P P L I E R S
Partner network
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network
LATAM group does business with 9 thousand suppliers, with
a total acquisition volume of around US$3.82 billion in 2020.
These companies are mainly in South America (see image),
where the supply chain linked to the operation involved over
28 thousand workers1 in 2019. Supplier relations are based on
transparency, commitment, and the search for joint evolution.
With the start of the voluntary restructuring process (see
page 44), all payments pending were temporarily suspended,
remaining subject to the US court’s approval. To prevent
supply interruptions, the LATAM teams reached agreements
with suppliers, and thus, the relationship of trust made it
possible to continue operating.
With the approval of the DIP financing and the reception of
the funds, LATAM was able to finalize some negotiations.
The US court also authorized payment to the micro, small, and
medium sized companies.
Geographic
distribution2
2
8
26
64
Purchase
volumes
4
2 2 1
3
5
10
11
21
41
64% Brazil, Chile, Colombia and Peru
41% Fuel
26% Other countries in America
8% Europe and Africa
2% Asia and Oceania
9,013 suppliers
21% Engines, fleet, financiers
and LATAM Travel
11% Other non-technical purchases
10% Technical purchases
5% Ground handling3
3% Technology and systems
2% Infrastructure
2% Supply and catering
1% Management
4% Others
US$3.82 billion
1 Source: Economic Impact of
LATAM Airlines in South America, a
study done by Oxford Economics in
May 2020.
2 Based on the location of the
company’s headquarters.
3 Ground handling services for
aircrafts, passengers, and cargo.
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The business’ allies were fundamental in the logistics to
supply isolated regions and transport medical materials (see
page 25). The work implied the coordination with suppliers
in various areas, and was supported by their relationship of
trust in LATAM.
It is also worth noting the work done by companies that
target customers, such as catering, for instance. Together
with LATAM, those suppliers developed new safety protocols
for in-flight service, to prevent the risks of the disease and
communicate an even greater feeling of safety to passengers.
Chain profile 102-9
Product and service suppliers are divided into 21 categories,
between technical and non-technical purchases.
Purchases related to operations are considered technical,
such as suppliers of fuel; fleet and engines; engineering
services; consumables and spare parts; PMA (Part
Manufacturer Approval); wheels, brakes, tires and avionics;
in-flight entertainment; seats, materials and trim; sales;
larger components, such as landing gear; repair, exchange,
and rental of certain components made available via a pool
system by the suppliers; and non-pool purchases (tools and
other types of components).
Main suppliers
LATAM’s main suppliers are aircraft manufacturers:
Airbus and Boeing. Suppliers of aircraft accessories,
spare parts, and aircraft components are also
relevant partners, including: Pratt & Whitney, MTU
Maintenance, Rolls-Royce, Pratt and Whitney Canada,
CFM International, General Electric Commercial Aviation
Services Ltd., General Electric Celma, General Electric
Engines Service, Honeywell, Israel Aerospace Industries
(engines and auxiliary power units– APU); Zodiac
Seats US, Recaro, Thompson Aero Seating (seats);
Honeywell and Rockwell Collins (avionics and APU);
Air France / KLM, Lufthansa Technik (maintenance,
repair, and operations components- MRO); Zodiac
Inflight Innovations, Panasonic and Thales (in-
flight entertainment); Safran Landing Systems, AAR
Corporation (landing trains and brakes); UTC Aerospace
and Nordam (engine mount).
Among fuel suppliers, the main ones are: Raízen,
Petrobras, Air BP-Copec, World Fuel Services, AirBP PBF,
YPF, Terpel, Repsol, CEPSA, and Vitol.
Good practices
Supplier management follows the guidelines of quality and
regularity in supply, competitive prices, legal compliance,
and good social and environmental practices.
The non-technical purchases category includes: airport
suppliers; administration; supply and catering; infrastructure;
hotels and uniforms; marketing; professional services;
technology and systems; and transportation.
Fuel suppliers, ground handling, supply and catering
undergo periodic audits and the group encourages the
alignment of the whole chain to its principles and values.
Audits
In 2020, LATAM audited 122
suppliers, which resulted in
717 improvement plans, to be
monitored over the next year.
Participants in bidding processes must adhere formally to
the Supplier Code of Conduct, which discusses anticorruption
and antitrust practices, access to privileged information,
privacy, security of confidential and client data, digital and
cybernetic crime, financial and money-laundering crimes, and
socioenvironmental, labor, and human rights issues.
Engagements are ruled by the Corporate Procurement
Policy, which is aligned to the group’s Anticorruption Policy
and establishes the financial, social, and environmental
requirements for the partners. Moreover, all contracts
have a specific clause demanding the communication of
environmental incidents or damages.
Partner network
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intermediaries
For third-party intermediaries (TPIs), suppliers
that interact on behalf of LATAM with national and
international public officials, there is a due diligence
process before engaging them. The contract also
includes anticorruption and antibribery clauses and,
during the life of the contract, these suppliers are asked
to prove their adherence to the Code of Conduct and
Anticorruption Policy.
Risk management 308-2 and 414-2
The chain’s risk matrix includes economic, social, and
environmental criteria for all the product and service
categories. To identify risks of unfair competition,
corruption, child or slave labor, financing to terrorism and
drug trafficking, and environmental nonconformities, LATAM
uses an international database lookup system. All suppliers
undergo a preventive analysis in the engagement stage and
active suppliers are monitored on a monthly basis.
LATAM verifies in detail all cases of alert in the system,
and if the risk or legal breach is confirmed, it defines the
measures to be taken, including suspension of the contract.
In 2020, nearly 6.7 thousand suppliers were subjected to
evaluation; in 3% of them, risks were found and mitigation
plans were designed. No contracts were interrupted.
SNAPSHOT
SUPPLY CHAIN
Total LATAM suppliers
Most representative suppliers1
Share of the supplier base
Share in the acquisitions volume
2019
15,341
13%
69%
2020
9,013
11%
89%
Identification of potential risks 308-2 and 414-2
% of categories subjected to sustainability risk analysis
100%
100%
Preventive analyses carried out in the international
database systems (% of the total base)
Suppliers considered as high risk in sustainability aspects
(% of those analyzed)
Detailed evaluations based on the system alerts
(% of the high-risk group)
9,427 (61%)
6,680 (74%)
110 (1.1%)
178 (3%)
110 (100%)
178 (100%)
Monitoring and management
Audits performed
Suppliers with agreed mitigation plans
(% of the audited group)
Action plans
Contracts terminated due to noncompliance
249
122
192 (77%)
112 (92%)
1,616
0
717
0
1 Includes companies with contracts worth over US$1 million, interacting with government agen-
cies on behalf of LATAM or supplying the operation with essential or difficult to replace elements.
The information released in the 2019 Report was adjusted to that definition.
Note: as an exception, it is not possible to present the historical 3-year series, given that the
calculation formula for the total supplier base was corrected in 2019, which makes it impossible
to compare to 2018.
Partner network
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of the report
102-40, 102-42, 102-43, 102-46, 102-47, 102-50, and 102-54
The LATAM 2020 Integrated Report covers all the companies
in the LATAM Airlines Group and the period from January 1
to December 31, 2020. The publication has been prepared
in accordance with the Global Reporting Initiative (GRI)
standards, Core option and the integrated reporting
principles of the International Integrated Reporting Council
(IIRC), as well as with the legal and accounting standards for
annual financial result reports.
The contents and indicators linked to the GRI standards have
been subjected to external verification by Deloitte (see page
103). PwC (see page 181) was responsible for auditing the
Consolidated Financial Statements of LATAM Airlines Group
and its affiliates, which include the consolidated financial
statements as at December 31, 2019 and 2020, available
starting on page 180. 102-56
The content selection considered the coverage of the
10 topics deemed as the most relevant for the group
and its stakeholders.
LATAM Materiality matrix 102-47
s
p
u
o
r
g
r
e
d
l
o
h
e
k
a
t
s
r
o
f
e
c
n
a
v
e
l
e
R
100
90
80
70
60
50
40
30
20
10
00
Relevance for LATAM and the sector
00
10
20
30
40
50
60
70
80
90
100
2
4
9
78
56
1
1 Health and safety in the air and on
3
the ground
2 Ethics and anti-corruption
3 On-time performance
10
4 Economic and financial sustainability
5 Developing employees
6 Mitigating climate change
7 Customer focus
8 Developing the destination network
to offer greater connectivity
9 Relations with authorities
10 Sustainable tourism
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Definition of materiality
The process of defining the material topics for LATAM,
which concluded in early 2018, analyzed the main economic,
environmental, and social impacts of the business, as well as
the expectations of LATAM’s main shareholders. Nearly 2,400
responses from individuals, employees, clients, and suppliers
were considered.
Below, we have prioritized the most relevant (material)
topics, obtained from the evaluation of the degree of
relevance and impact. The consolidated view of the external
publics and the group’s leaders comprises the materiality
matrix, validated by the CEO.
STAKEHOLDER GROUP1 102-40 and 102-42 CONSULTATION METHODOLOGY
Employees
Customers
Suppliers
Online survey
Online survey
Online survey
Investors and shareholders
Research into the sustainability topics incorporated into the investment policies
of the group’s seven main investors and shareholders2
Society (civil society organizations and the
press)
Research into the sustainability topics in the publications of 14 organizations3
with whom LATAM maintains relations and sustainability topics involving LATAM
published in the press in the course of 2017
Authorities
Aviation industry
Research into the sustainability topics raised in the publications of ten
regulatory authorities4
Research into the sustainability topics raised in the publications of six
competitors5, ten industry associations6, and three specialists7
1The selection of the stakeholders consulted was conducted in accordance with LATAM’s Sustainability Policy. The groups with which
LATAM interacts directly or indirectly and that are impacted positively or negatively by its activities were taken into consideration.
2 Banco de Chile (Citi in the US); JP Morgan; Deutsche Bank; Santander; Larraín Vial; Raymond James; and BTG Pactual.
3 América Solidaria; TECHO; Chilenter; Fundacion la Nacion; Fundación Sí; Cimientos; SAFUG (Sustainable Aviation Fuel Users
Group); Junior Achievement; Amigos do Bem; Make a wish; Instituto Rodrigo Mendes; Operación Sonrisa Colombia; Operación
Sonrisa Peru; and Fundación Pachacutec.
4 AC Chile (Civil Aeronautics Board); Nuevo Pudahuel – Chile; Easter Island Municipality – Chile; ANAC Argentina (Adminis-
tración Nacional de Aviación Civil); ANAC Brasil (Agência Nacional de Aviação Civil); SAC Brasil (Secretaria Nacional de Aviação
Civil); INFRAERO Brasil; Aerocivil Colômbia (Aeronautica Civil – Unidad Administrativa Especial); CNAC Ecuador (Consejo Nacio-
nal de Aviación Civil); and DGAC Peru (Dirección General de Aeronáutica Civil).
5 China Airlines; Gol; Lufthansa; ANA (All Nippon Airways); Delta Airlines; and Airfrance/KLM.
6 IATA (International Air Transport Association); ALTA (Latin American and Caribbean Air Transport Association); Amcham Chile
(American Chamber of Commerce); Idea (Instituto para el Desarrollo Empresarial de la Argentina); JURCA (Cámara de las Com-
pañías Aéreas em Argentina); ABEAR (Associação Brasileira das Empresas Aéreas); ABRABA (Aliança Brasileira Para Biocom-
bustíveis de Aviação); ATAC (Asociación del Transporte Aéreo en Colombia); ARLAE (Asociación de Representantes de Líneas
Aéreas en el Ecuador); and AETAI Peru (Asociación de Empresas de Trasporte Aéreo Internacional).
7 SASB (Sustainability Accounting Standards Board) – Airlines Materiality Map; GRI (Global Reporting Initiative) — Sustainabili-
ty Topics for Sectors: What do stakeholders want to know? – Air Transportation – Airlines; and DJSI Company Benchmark Report.
Construction of the report
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Material topic
102-44 and 103-1
Stakeholder group indicating
relevance of topic
Where does The impact occur?
Organization’s involvement
BOUNDARIES
CHAPTER OF
THE INTEGRATED
REPORT
Health and safety in the air
and on the ground
Government, customers, employees and
suppliers
The impact is seen inside the organization, mainly affecting the
aircraft, airports, and other operational facilities.
LATAM determines different levels of management according to the type
of event. There is a dedicated team that prepares the organization to
manage emergencies on an ongoing basis.
Employees
Security
Ethics and anti-corruption
Press, customers, employees, suppliers
and investors
The impact is seen inside the organization, affecting all employees
and third parties, as well as the overall society.
LATAM has implemented a wide-ranging compliance program to manage
impacts and minimize risks.
Corporate governance
On-time performance
Customers, employees and suppliers
The impact is on LATAM’s main activity; that is, the flights it oper-
ates, affecting passenger perceptions and the business as a whole.
LATAM can manage a significant portion of the impacts, such as delays due
to maintenance, managing air crews, and others. Some impacts are external
to the organization, such as weather conditions, air traffic limitations, and
congestion at airports.
Clients
Economic and financial
sustainability
Press, customers, employees, suppliers
and investors
The main impact is seen inside LATAM, and it can affect the
brand, the loyalty program, the implementation of the business
strategy, commercial relations, and others.
LATAM can adjust or restructure its strategy, even if most of the fac-
tors are beyond its control. The Group has a policy to manage and
mitigate financial risks
Employee development
Customers, employees and suppliers
The impact is throughout LATAM’s operations. Human resources
management is directly linked with corporate performance.
LATAM manages employee talent and fosters commitment to
corporate strategy.
Mitigating climate change
Customers, employees and suppliers
The main impact is on the environment and comes mainly from
the use of fuel, which contributes to overall greenhouse gas emis-
sions and, to a lesser extent, to the worsening of local air quality.
The impact is the result of the Group’s operations, which is the reason why
LATAM has a strategy for monitoring and managing climate change. More-
over, the Group is attentive to opportunities to incorporate new technolo-
gies and best practices that influence this issue.
Our business
Employees
Sustainability
Customer focus
Press, customers, employees and suppliers
The impact occurs inside LATAM and with its customers, affect-
ing market share and customer spending on the Group.
LATAM plays a key role in managing this impact, mainly with regard to its
capacity to anticipate existing risks.
Clients
Destination network and
connectivity
Press, customers, employees and suppliers
The development and growth of the destination network bene-
fits the cities served, generating economicdevelopment through
the reduced cost of doing business and transporting cargo, as
well as increasing tourism.
LATAM plays a key role in managing and monitoring the factors that may
influence this issue.
Profile
Relations with authorities
Civil society organizations, industry asso-
ciations, customers, employees, suppliers
and investors
The impact from a change in the regulatory environment is seen
inside the organization, affecting all the operations, and outside
the organization, affecting the sector as a whole.
LATAM’s role is to identify and monitor how decisions by public authorities
may affect the Group’s development and the airline industry, as well as
connectivity in a country or region, and consumers.
Profile
Corporate governance
Sustainable tourism
Customers and employees
The impact is on the destinations served by LATAM.
The capacity to manage this question varies in accordance with LATAM’s
share in the totalpassenger traffic to a determined location. The Group
strives to play an active role in promot- ing a balance between tourism and
the preser- vation of the local culture and environment.
Sustainability
Construction of the report
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content index 102-55
GRI 101: FOUNDATION 2016
GRI 102: GENERAL DISCLOSURES 2016
DISCLOSURE
102-1 Name of the organization
102-2 Activities, brands, products, and services
102-3 Location of headquarters
102-4 Location of operations
102-5 Ownership and legal form
102-6 Markets served
102-7 Scale of the organization
102-8 Information on employees and other workers
102-9 Supply chain
102-10 Significant changes to the organization and its supply chain
102-11 Precautionary Principle or approach
PAGE/ANSWER
15 and 106
The main services offered are the transportation of passengers and cargoes, and the frequent flier program; there are
no cases of banned services in any of the markets operated. A full description is included on pages 15, 49 and 106.
Chile, page 106.
24 and 106
106
15, 23 and 24
15, 24, 46 and 47
78 and 80
90
15 and 35
LATAM does not formally adopt the precautionary principle, but it does incorporate potential operational impacts
and risks to consumers and society into its planning. All Group services–routes, itineraries, maintenance activities,
and loyalty programs–comply with current legislation.
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GRI 102: GENERAL DISCLOSURES 2016
DISCLOSURE
102-12 External initiatives
102-13 Membership of associations
102-14 Statement from senior decision-maker
102-16 Values, principles, standards, and norms of behavior
102-18 Governance structure
102-40 List of stakeholder groups
PAGE/ANSWER
52
108
12
29
31
30 and 94
102-41 Collective bargaining agreements
64% of employees are unionized and 86% are covered by collective bargaining agreements.
102-42 Identifying and selecting stakeholders
93 and 94
102-43 Approach to stakeholder engagement
In addition to the approach described in Construction of the Report, LATAM's management of its relations with its
stakeholders is presented in the Sustainability, Employees, Customers, and Suppliers chapters.
102-44 Key topics and concerns raised
95
102-45 Entities included in the consolidated financial statements
All the subsidiaries were covered by the report.
102-46 Defining report content and topic boundaries
102-47 List of material topics
102-48 Restatements of information
102-49 Changes in reporting
102-50 Reporting period
102-51 Date of most recent report
102-52 Reporting cycle
93
93
Cases of restatement are clearly indicated.
None.
From January 1 to December 31, 2020.
April 2020.
Annual.
102-53 Contact point for questions regarding the report
investorrelations@latam.com and sostenibilidad@latam.com.
102-54 Claims of reporting in accordance with the GRI Standards
This report has been prepared in accordance with the GRI Standards: Core option.
102-55 GRI content index
102-56 External assurance
96
103
GRI content index
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DISCLOSURE
Material topic: Health and safety in the air and on the ground
PAGE/ANSWER
103-1 Explanation of the material topic and its boundaries
95
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
GRI 403: Occupational health and safety 2018
Material topic: Ethics and anti-corruption
403-7 Prevention and mitigation of occupational health and safety
impacts directly linked by business relationships
403-9 Work-related injuries
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-1 Explanation of the material topic and its boundaries
103-3 Evaluation of the management approach
205-2 Communication and training about anti-corruption policies
and procedures
71 and 81
71 and 81
72
82
95
29 and 30
29 and 30
30
GRI 205: Anti-corruption 2016
205-3 Confirmed incidents of corruption and actions taken
No relevant cases on the matter. We should note that LATAM uses the definition
of corruption from the Foreign Corrupt Practices Act (FCPA), according to which
an act of corruption is incurred when there is an offer, promise, or authorization of
payment, or a payment in fact, made to a public official, with the aim to induce the
receiver to abuse their position, regardless of whether the corrupt act succeeds in
its purpose.
GRI 206: Anti-competitive behavior 2016
206-1 Legal actions for anti-competitive behavior, anti-trust, and
monopoly practices
There were no significant fines; that is, worth over US$50 million, or that could
paralyze the operation or affect the group’s image.
GRI 417: Marketing and labeling
417-3 Incidents of non-compliance concerning marketing
communications
There were no significant fines; that is, worth over US$50 million, or that could
paralyze the operation or affect the group’s image.
GRI 419: Socioeconomic compliance 2016
419-1 Non-compliance with laws and regulations in the social and
economic area
There were no significant fines; that is, worth over US$50 million, or that could
paralyze the operation or affect the group’s image.
GRI content index
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DISCLOSURE
PAGE/ANSWER
Material topic: On-time performance
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
103-1 Explanation of the material topic and its boundaries
Not applicable
On-time performance (OTP)
Material topic: Economic and financial sustainability
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
103-1 Explanation of the material topic and its boundaries
GRI 203: Indirect economic impacts 2016
203-2 Significant indirect economic impacts
Material topic: Developing employees
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
103-1 Explanation of the material topic and its boundaries
GRI 401: Employment 2016
401-1 New employee hires and employee turnover
GRI 404: Training and education 2016
404-1 Average hours of training per year per employee
Material topic: Mitigating climate change
103-1 Explanation of the material topic and its boundaries
95
85
85
87
95
44 and 45
44 and 45
16
95
75
75
177
77
95
GRI 103: Management Approach 2016
103-2 The management approach and its components
62, 63, 65, 66, 67 and 69
103-3 Evaluation of the management approach
62, 63, 65, 66, 67 and 69
GRI 201: Economic performance 2016
201-2 Financial implications and other risks and opportunities due
to climate change
65
GRI content index
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Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits GRI STANDARD
DISCLOSURE
PAGE/ANSWER
Material topic: Mitigating climate change
GRI 302: Energy 2016
302-3 Energy intensity
302-1 Energy consumption within the organization
GRI 305: Emissions 2016
302-4 Reduction of energy consumption
305-1 Direct (Scope 1) GHG emissions
305-2 Energy indirect (Scope 2) GHG emissions
305-3 Other indirect (Scope 3) GHG emissions
305-4 GHG emissions intensity
305-5 Reduction of GHG emissions
305-6 Emissions of ozone-depleting substances (ODS)
305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other signifi-
cant air emissions
GRI 306: Waste 2020
306-4 Waste diverted from disposal
306-5 Waste directed to disposal
Material topic: Customer focus
306-3 Waste generated
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
103-1 Explanation of the material topic and its boundaries
Not applicable
Net Promoter Score (NPS)
176
64 and 68
63 and 64
62 and 175
62 and 175
62 and 175
62 and 175
62 and 175
175
175
69
69
69
95
85, 86 and 87
85, 86 and 87
87
GRI content index
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DISCLOSURE
PAGE/ANSWER
Material topic: Destination network
103-1 Explanation of the material topic and its boundaries
95
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
Not applicable
Connectivity
Material topic: Relations with authorities
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
103-1 Explanation of the material topic and its boundaries
GRI 415: Public policy 2016
415-1 Political contributions
Material topic: Sustainable tourism
GRI 103: Management Approach 2016
103-2 The management approach and its components
103-3 Evaluation of the management approach
103-1 Explanation of the material topic and its boundaries
23 and 25
23 and 25
24 and 26
95
30
30
30
95
16 and 45
16 and 45
GRI 203: Indirect economic impacts 2016
203-1 Infrastructure investments and services supported
45 and 58
Other GRI standards monitored
GRI 303: Water and effluents 2018
303-3 Water withdrawal
GRI 308: Supplier environmental assessments
308-2 Negative environmental impacts in the supply chain and
2016
actions taken
GRI 414: Supplier social assessment 2016
414-2 Negative social impacts in the supply chain and actions
taken
68
91
91
GRI content index
101
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits Human rights
Environment
1 Support and respect the protection of internationally
proclaimed human rights.
(page 56)
7 Support a precautionary approach to environmental
challenges (from the page 62 to 69)
Global
Compact
LATAM is a signatory to the Global Compact, a United
Nations Organization (UN) initiative aimed at mobilizing
the international business community to adopt, in
their business practices, a series of fundamental
and internationally accepted values in the areas
of human rights, labor relations, the environment,
and anticorruption.
2 Ensure non-complicity in human rights abuses
(page 56)
Labor
3 Uphold the freedom of association and the effective
recognition of the right to collective bargaining
(page 96)
The table shows the location, within this document, of
the main actions developed.
4 Support the elimination of all forms of forced and
compulsory labor (pages 56, 90 and 91)
5 Support the effective abolition of child labor (pages
56, 90 and 91)
6 Eliminate discrimination in respect of employment
and occupation (pages 29 and 77)
8 Undertake initiatives to promote greater
environmental responsibility (pages 62 to 69)
9 Encourage the development and diffusion of
environmentally friendly technologies (pages 63,
64 and 65)
Anti-corruption
10 Work against corruption in all its forms, including
extortion and bribery (pages 29 and 30)
102
Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits 102-56
Deloitte Advisory SpA – Rosario Norte 407 – Las Condes, Santiago
– Chile – Fono: (56) 227 297 000 – Fax: (56) 223 749 177
deloittechile@deloitte.com – www.deloitte.cl
INDEPENDENT REVISION OF LATAM
INTEGRATED REPORT 2020
Mr.
Juan José Tohá
Director of Corporate Affairs and Sustainability
Present
Dear Mr. Tohá,
Please find herein the outcomes of the revision of LATAM´s
Integrated Report 2020 according to the following aspects:
Scope
Limited assurance engagement of the adherence of the contents
and indicators included in the 2020 Integrated Report to the Global
Reporting Initiative (GRI) Standards, regarding the organization’s
profile and material indicators arising from the materiality process
that the Company carried out following said Standards related to
the economic, social, and environmental dimensions.
Standards and Assurance Process
We have carried out our task in accordance with the guidelines of
the International Standard on Assurance Engagements Other than
Audits or Reviews of Historical Financial Information (ISAE 3000)
issued by the International Auditing and Assurance Standard Board
(IAASB) of the International Federation of Accountants (IFAC).
Our review has consisted in an inquiry process involving
different LATAM units and management areas, involved in the
process of developing the Report, as well as in the application
of analytic procedures and verification tests, which are
described in the following items:
• Meeting with Sustainability management.
• Requirements and review of evidence with the areas
participating in the preparation of the 2020 Integrated Report.
• Analysis of the adherence of the contents of the 2020
Integrated Report to the GRI Standards: Core option, and
review of the indicators included in the report in order to verify
that they are aligned with the protocols established in the
Standards, and whether the fact that some indicators are not
applicable or not material is justified.
• Verification, through tests of quantitative and qualitative
information corresponding to the GRI Standards indicators
included in the 2020 Report, and its adequate gathering from
the data provided by LATAM information sources.
Conclusions
• The assurance process was based on the indicators
established in the materiality process carried out by LATAM.
Once those indicators were identified, prioritized, and
validated, they were included in the report. The reported and
verified indicators appear in the following table:
102-1, 102-2, 102-3, 102-4, 102-5, 102-6, 102-7, 102-8, 102-9, 102-10,
102-11, 102-12, 102-13, 102-14, 102-16, 102-17, 102-18, 102-40, 102-41,
102-42, 102-43, 102-44, 102-45, 102-46, 102-47, 102-48, 102-49, 102-50,
102-51, 102-52, 102-53, 102-54, 102-55, 102-56, 103-1, 103-2, 103-3,
201-2, 203-1, 203-2, 205-2, 205-3, 206-1, 302-1, 302-3, 302-4, 303-1,
305-1, 305-2, 305-3, 305-4, 305-5, 305-6, 305-7, 306-3, 306-4, 306-5,
308-2, 401-1, 403-7, 403-9, 414-2, 415-1, 417-3, 419-1
• Regarding the verified indicators, we can say that no aspect
has arisen to lead us to believe that the Integrated Report
2020 LATAM has not been prepared in accordance with the
GRI Standards in those areas identified in the scope.
LATAM Management and Deloitte Responsibilities
• The drafting of the 2020 Integrated Report, as well as its
contents are under LATAM responsibility, which is in charge
of the definition, adaptation, and maintenance of the
management and internal control systems from who the
information is obtained.
• Our responsibility is to issue an independent report based on
the procedures applied in our review.
• This report has been prepared exclusively by LATAM's
request, in accordance with the terms established in the
Engagement Letter.
• We have developed our work according to the standards of
Independence established in the Code of Ethics of the IFAC.
• The conclusions of the verification made by Deloitte apply to
the latest version of the LATAM Integrated Report received
on March 23, 2021.
• The scope of a limited assurance engagement is essentially
inferior to a reasonable assurance engagement, thus, we
are not hereby providing opinion about the 2020 LATAM
Integrated Report.
Fernando Gaziano
Partner
March 24, 2021
103
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GLOSSARY
ABEAR: Brazilian Airlines Association
ADR: American Depositary Receipt
AENOR: Spanish Standards and Certification Association
AFP: Chilean Pension Fund Managers
ALTA: Latin American and Caribbean Air Transport Association
ANAC: National Civil Aviation Agency — Brazil
API: Action Plan Index
APU: Auxiliary Power Unit (engines and auxiliary power units)
ASK: available seat-kilometers — equivalent to the number of
seats available multiplied by the distance flown
ATAC: Colombian Air Transportation Association
ATAG: Air Transport Action Group
ATK: available ton-kilometers — equivalent to the capacity
available in tons multiplied by the distance flown
B3: Brazilian Stock Exchange
CEIV Pharma: Center of Excellence of Independent Validators
Pharma
CEO: Chief Executive Officer
CMF: Financial Market Commission (Chile)
CORSIA: Carbon Offsetting Reduction Scheme for International
Aviation
CVM: Brazilian Securities Commission
DIP: Debtor In Possession, financing mechanism provided in
Chapter 11 of the US Bankruptcy law, where creditors of the
loan take precedence to receive the securities.
EBITDA: Earnings before interest, taxes, depreciation and
amortization
EBITDAR: Earnings before interest, tax, depreciation, amortiza-
tion, and aircraft rentals
EMS: Environmental Management
GEI: Greenhouse gases
GLP: Liquefied petroleum gas
GRI: Global Reporting Initiative
HEPA: High-Efficiency-Particulate Arrestors, high-efficiency
filters that retain particles. They are used in air circulation sys-
tems on aircraft and remove over 99.9% of impurities, such as
virus and bacteria, from the air.
IAG: International Airlines Group
IASB: International Accounting Standards Board
IATA: International Air Transport Association
ICAO: International Civil Aviation Organization
IEnvA: IATA Environmental Assessment
IFRS: International Financial Reporting Standard
IIRC: International Integrated Reporting Council
ILO: International Labour Organization
IOSA: IATA Operational Safety Audit
IPCC: Intergovernmental Panel on Climate Change
JBA: Joint Business Agreement
LSA: Chilean Corporations Act
MRO: Maintenance, Repair, and Operation
NPS: Net Promoter Score
NYSE: New York Stock Exchange
OCDE: Organization for Economic Co-operation and
Development
OHI: Organizational Health Index
OPA: Public tender offer
OPEC: Organization of Petroleum Exporting Countries
OTC: Over-the-counter market, where financial instruments are
traded directly between the parties concerned, outside the or-
ganized markets.
OTP: on-time performance
PMA: Parts Manufacturer Approval
RASK: revenue per available seat-kilometer – gauges the ef-
ficiency of the airline; it is obtained by dividing the operating in-
come by the ASK
RPK: revenue passenger-kilometers – total paying passengers
and cargo multiplied by distance traveled
RTK: revenue ton-km— ton transported multiplied by the dis-
tance traveled
SDG: Sustainable Development Goals
SEC: Securities and Exchange Commission
SSC: Spanish-speaking countries
TDLC: Chilean Antitrust Court
TPI: third-party intermediary
UN: United Nations
104
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106
Legal incorporation, Company purpose and Property,
plant and equipment
Annual Report Of The Board Committee’s Administration
107 Corporate information
108 Membership of associations
109 Board: composition and résumés
112
119 Main Executives
121 Shareholders’ Agreements
126 Regulatory Framework
135 Material Facts
151 Risk factors
175 Climate change
176 Environmental management and eco-efficiency
177 Joint challenge
178 Team safety
105
Integrated Report 2020 Who we are 102-1, 102-2, 102-3, 102-4 and 102-5
LATAM Airlines Group S.A.
RUT: 89.862.200-2
Address: Santiago
Trade names: “LATAM Airlines”, “LATAM Airlines Group”,
“LATAM Group”, “LAN Airlines”, “LAN Group” and/or LAN”.
LATAM Airlines Group S.A. is ruled by the standards
applicable to open stock companies, and registered to
this effect under Nº 0306, dated January 22, 1987, in the
Securities Register of the Financial Market Commission
(Comisión para el Mercado Financiero or CMF), formerly
the Superintendence of Securities and Insurance (SVS).
Legal incorporation
It was established as a limited liability company via a pu-
blic deed dated December 30, 1983 before Notary Eduar-
do Avello Arellano; an excerpt of this deed is recorded in the
Santiago Commerce Registry on page 20,341 number 11,248
of the year 1983, and published in the Official Gazette on
December 31, 1983.
Pursuant to the public deed dated August 20, 1985, granted
by Notary Miguel Garay Figueroa’s Office, the company be-
came a joint-stock corporation known as Línea Aérea Na-
cional Chile S.A. (now, LATAM Airlines Group S.A.) which, by
express provision of Law N° 18,400, has the quality of legal
follower of the state-owned company created in the year
1929 under the name Línea Aérea Nacional de Chile, pur-
suant to the aeronautical and radio communications conces-
sions, traffic rights, and other administrative concessions.
Company purpose
a) To market air and/or ground transportation in any of its for-
ms, be it for passengers, cargo, mail, and anything direct-
ly or indirectly related to that activity within or outside the
country, on its own behalf or for third parties;
b) To render services related to the maintenance and repair of
its own or third parties’ aircraft;
c) To develop and operate other activities derived from and/or
related, connected, contributing, or complementary to the
company’s corporate purpose;
d) Trade and development of activities related to travel, tou-
rism, and lodging; and
e) To participate in partnerships of any kind that will enable
the company to fulfill its goals.
Property, plant and equipment
Chile
• Headquarters: LATAM’s main facilities in Chile are located
near the Comodoro Arturo Merino Benítez International
Airport in Santiago. The compound has offices, meeting
rooms, training areas, dining rooms, and simulation
cockpits used in the processes to instruct the crew. In turn,
the corporate offices are located in the central region of
the capital, Santiago.
• Maintenance Base: part of the International Airport in
Santiago. It includes a hangar for airplanes, warehouses,
and offices, as well as parking space for airplanes with
capacity for 30 short-haul and 10 long-haul aircrafts.
• For more information regarding the activities carried out,
see page 15.
• Other Facilities: LATAM also has a flight training center and
a recreational area for employees, created with the aid of
Airbus. Both are located near the Santiago airport.
Brazil
• Headquarters: The main facilities of LATAM Airlines Bra-
zil are located in the city of São Paulo, in hangars located
in the Congonhas Airport and its surroundings, which are
leased from Infraero, the local airport administrator. The
Service Academy is also near the airport; this is where the
selection, training, and simulation processes, as well as
medical care, are carried out.
Appendices
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Who we are
• Maintenance Base: The MRO base is in São Carlos, within
São Paulo. Its activities and capacity are described on page
21. In addition to that unit, LATAM Brazil also has spaces
for aircraft maintenance, acquisition, and logistics of ae-
ronautical materials within the hangars of the Congonhas
airport.
Corporate information
Headquarters
5711 Presidente Riesco Ave., 19th floor
Las Condes, Santiago, Chile
Phone: (56) (2) 2565 2525
• Other Facilities: commercial branch, uniforms building,
Morumbi Office Tower building, Contact Center building,
and offices of the LATAM Travel subsidiary, all located wi-
thin the city of São Paulo.
Maintenance base
Arturo Merino Benitez Airport
Santiago, Chile
Phone: (56) (2) 2565 2525
Other localities
LATAM also has facilities in the Miami International Airport
(US), leased by the airport through a concession agreement.
These include a corporate building, cargo warehouses, a refri-
gerated area, an aircraft parking platform, and a maintenance
hangar with workshops, warehouses, and its own offices.
In Argentina, Colombia, Ecuador, and Peru, LATAM’s affilia-
tes have leasing contracts for administrative and commer-
cial offices, hangars, and maintenance areas through airport
concessions.
Ticker symbol
LTM CI – Santiago Stock Exchange
LTM US – New York Stock Exchange
Investor relations
Investor Relations | LATAM Airlines Group S.A.
5711 Presidente Riesco Ave., 20th floor
Las Condes, Santiago, Chile
Phone: (56) (2) 2565 2525
E-mail: investorRelations@LATAM.com
Shareholder queries
Central Securities Depository
1730 Los Conquistadores Ave., 24th floor, Providencia
Santiago, Chile
Phone: (56) (2) 2393 9003
E-mail: atencionaccionistas@dcv.cl
ADR depositary bank
JPMorgan Chase Bank, N.A.
P.O. Box 64504
St. Paul, MN 55164-0504
General phone: (800) 990-1135
Phone: Outside the US (651) 453-2128
Phone: Global Invest Direct (800) 428-4237
E-mail: jpmorgan.adr@wellsfargo.com
ADR custodian bank
Banco Santander Chile
Bandera 140, Santiago
Custody Department
Phone: (56) (2) 2320 3320
Independent auditors
PwC
2711 Andrés Bello Ave., 5th floor
Santiago, Chile
Phone: (56) (2) 2940 0000
Further information about LATAM Airlines Group
www.latamairlinesgroup.net
www.latam.com
Appendices
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Membership of associations 102-13
Brazil
• Asociación Internacional de Transporte Aéreo (IATA)
• Associação Brasileira de Agências de Viagens (Abav)
• Associação Brasileira de Anunciantes (ABA)
• Associação Brasileira de Comunicação Empresarial (Aberje)
• Associação Brasileira dos Consolidadores de Passagens
• Aéreas e Serviços de Viagens (AirTKT)
• Associação Brasileira das Empresas Aéreas (Abear)
• Associação Brasileira de Agências de Viagens Corporativas
(Abracorp)
• Associação Brasileira das Empresas do Mercado de
Fidelização (Abemf)
• American Chamber of Commerce (Amcham Brasil)
• Flight Safety Foundation (FSF)
• G100 Brasil
• Junta de Representantes das Companhias Aéreas
Internacionais do Brasil (Jurcaib)
Chile
• Acción Empresas
• Asociación Chilena de Aerolíneas (ACHILA)
• Asociación Internacional de Transporte Aéreo (IATA)
• Asociación Latinoamericana y del Caribe de Transporte
• Aéreo (ALTA)
• Cámara Chileno Norteamericana de Comercio
(Amcham – Chile)
• Cámara de Comercio Chileno-Argentina
• Cámara de Comercio Chileno-Peruana
• Cámara de Comercio de Santiago
• Cámara Oficial Española de Comercio de Chile
• Centro de Estudios Públicos
• Corporación de Estudios para Latinoamérica (Cieplan)
• Federación de las Empresas de Turismo de Chile (Fedetur)
• Fundación Chilena del Pacífico
• I nstituto Chileno de Administración Racional
• Oficina de Convenciones de Sao Paulo – Fundação 25 de
de Empresas (ICARE)
Janeiro
• Sindicato Nacional das Empresas Aéreas (SNEA)
• Pacto Global
• Sociedad de Fomento Fabril (SOFOFA)
Ecuador
• Asociación de Representantes de Líneas Aéreas del
Ecuador (ARLAE)
• Cámara de Industrias de Guayaquil
• Cámara de Industrias y Producción de Quito
Peru
• Asociación de Empresas de Transporte Aéreo Internacional
(AETAI)
• Asociación Peruana de Empresas Aéreas (APEA)
• Cámara de Comercio Americana del Perú (AmCham)
• Cámara Nacional de Turismo (CANATUR)
• Confederación Nacional de Instituciones Empresariales
Privadas (CONFIEP)
• Sociedad de Comercio Exterior del Perú (COMEX PERÚ)
• Perú 2021
Colombia
• Asociación de Transporte Aéreo de Colombia (ATAC)
• Asociación de Aerolínea Internacionales en Colombia (ALAICO)
Appendices
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BOARD: composition and résumés
Ignacio Cueto Plaza
Chairman of the Board
RUT: 7.040.324-2
Enrique Cueto Plaza
Vice-Chairman of the Board
RUT: 6.694.239-2
Enrique Ostalé Cambiaso
Director
RUT: 8.681.278-9
Mr. Ignacio Cueto has served as a member of LATAM Airlines
Group’s board of directors and as Chairman since April 2017 and
was re-elected to the board of directors of LATAM in April 2019 and
April 2020. Mr. Cueto’s career in the airline industry extends over 30
years. In 1985, Mr. Cueto assumed the position of Vice president of
Sales at Fast Air Carrier, a national cargo company of that time. In
1985, Mr. Cueto became Service Manager and Commercial Mana-
ger for the Miami sales office. Mr. Cueto later served on the board
of directors of Ladeco (from 1994 to 1997) and LAN (from 1995 to
1997). Mr. Cueto served as President of LAN Cargo from 1995 to
1998, as Chief Executive Officer-Passenger Business from 1999 to
2005, and as President and Chief Operating Officer of LAN since
2005 until the combination with TAM in 2012. Mr. Cueto later served
as LAN’s CEO until April 2017. Mr. Cueto also led the establishment
of the different affiliates that the Company has in South America,
as well as the implementation of key aliances with other airlines. Mr.
Cueto is a member of the Cueto Group. As of February 28, 2021, Mr.
Cueto shared in the beneficial ownership of 99,381,777 common
shares of LATAM Airlines Group (16.39% of LATAM Airlines Group’s
outstanding shares) held by the Cueto Group.
Mr. Enrique Cueto has served as a member of LATAM Airlines
Group’s board of directors since April 2020. Formerly, he held
the position of LATAM Airlines Group’s Chief Executive Offi-
cer (“CEO”), since the combination between LAN and TAM in
June 2012. From 1983 to 1993, Mr. Cueto was Chief Execu-
tive Officer of Fast Air, a Chilean Cargo airline. From 1993 to
1994, Mr Cueto was a member of the board of LAN Airlines.
Thereafter, Mr. Cueto held the position of CEO of LAN un-
til June 2012. Mr. Cueto is member of the International Air
Transport Association (“IATA”) Board of Governors. He is also
member of the Board of the Endeavor foundation, an orga-
nization dedicated to the promotion of entrepreneurship in
Chile, and Executive Member of the Latin American and Cari-
bbean Air Transport Association (“ALTA”). Mr. Cueto is the bro-
ther of Mr. Ignacio Cueto, Chairman of the board. Mr. Cueto is
also a member of the Cueto Group. As of February 28, 2021,
Mr. Cueto shared in the beneficial ownership of 99,381,777
common shares of LATAM Airlines Group (16.39% of LATAM
Airlines Group’s outstanding shares) held by the Cueto Group.
Mr. Enrique Ostalé joined LATAM Airlines Group’s Board of
Directors in April 2020. He is also Chairman of the Board
of Walmart Mexico and Central America SBA, and Walmart
Chile S.A. Prior to this role, he was Executive Vice president
and Regional Chief Executive Officer – U.K, Latin America
and Africa, at Walmart International. Mr. Ostalé assumed this
expanded regional role in April 2017 after serving previous-
ly as CEO of Walmart Latin America, India and Africa (2016-
17), as CEO of Walmart Mexico, Central America and Latin
America (2013-16) and President and CEO of Walmart Chile
(2006-13), when he led the successful transition of D&S S.A
into what is today Walmart Chile, following its acquisition by
Walmart Inc. in 2009. Mr. Ostalé holds an undergraduate de-
gree in economics and business administration from Adolfo
Ibáñez University and a Master of Science in Accounting and
Finance from the London School of Economics.
Appendices
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BOARD: composition and résumés
Nicolás Eblen Hirmas
Director
RUT: 15.336.049-9
Henri Philippe Reichstul
Director
RUT: 48.175.668-5
Patrick Horn
Director
RUT: 6.728.323-6
Mr. Nicolás Eblen has served on LATAM's board of directors
since April 2017 and was re-elected to the board of direc-
tors of LATAM in April 2019 and April 2020. Mr. Eblen current-
ly serves as CEO of Inversiones Andes SpA, a position he has
held since 2010. In addition, he serves on the board of directors
of Granja Marina Tornagaleones S.A., Río Dulce S.A., Patago-
nia SeaFarms Inc., SalmonChile A.G., and Sociedad Agrícola La
Cascada Ltda. Mr. Eblen holds a Bachelor's degree in Industrial
Engineering, major in Computer Science from Pontificia Univer-
sidad Católica de Chile and a Master in Business Administra-
tion from Harvard Business School. As of February 28, 2021,
the Eblen Group had the beneficial ownership of 27,644,702
common shares of LATAM Airlines Group (4.56% of LATAM Air-
lines Group's outstanding shares).
Mr. Henri Philippe Reichstul joined LATAM's board of directors
in April 2014 and was reelected to the board of directors of
LATAM in April 2019 and April 2020. Mr. Reichstul is a Brazilian
citizen and has served as President of Petrobras and the IPEA
(Institute for Economic and Social Planning) and Executive Vice
president of Banco Inter American Express S.A. Currently, in
addition to his roles as Administrative Board member of TAM
and LATAM Group, he is also a member of the board of direc-
tors of Repsol and chairman of the board of Fives, among oth-
ers. Mr. Reichstul is an economist with an undergraduate degree
from the Faculty of Economics and Administration, Universi-
ty of São Paulo, and postgraduate work degrees in the same
discipline–Hertford College–Oxford University.
Mr. Patrick Horn has served on LATAM Airlines Group's board
of directors since April 2019 and was reelected in April 2020.
He is currently a Member of the Economic Council of the
Universidad de los Andes and director of non-profits such as
Aportes Chile. He has more than 35 years' experience as an
executive, both in Chile and abroad, in companies including
British American Tobacco Co., Unilever, Compañía Sudamer-
icana de Vapores and Grupo Ultramar, where he was also di-
rector of subsidiaries. Mr. Horn graduated as an Industrial Civil
Engineer from the Pontificia Universidad Católica de Valparai-
so and holds a Master of Science in Industrial Engineering
from the Georgia Institute of Technology, U.S. He has partici-
pated in executive programs at the training centers of British
American Tobacco Co. and Unilever in London, and at Kellogg
Business School. He also completed a business management
program (PADE) at the Universidad de los Andes business
school (ESE).
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BOARD: composition and résumés
Alexander Wilcox
Director
RUT: foreigner
Eduardo Novoa
Director
RUT: 7.836.212-K
Sonia Villalobos
Director
RUT: 21.743.859-4
Mr. Alexander Wilcox has served on LATAM Airlines Group’s
board of directors since October 2020. Mr. Wilcox resides in
the United States and has broad experience in the aviation in-
dustry where he held executive positions in several airlines be-
tween 1996 and 2005. Mr. Wilcox is a cofounder and the CEO
of JSX, a public charter commuter air carrier in the U.S. Mr.
Wilcox attended the University of Vermont and earned a BA in
Political Science and English.
Mr. Eduardo Novoa has served on LATAM’s board of directors
since April 2017 and was reelected to the board of directors
of LATAM in April 2019 and April 2020. In addition, Mr. Novoa
serves on the board of directors of Cementos Bio-Bio, Grupo
Ecomac, ESSAL and is a member of the advisory board of
STARS and Endeavor. He was also a member of the board of
directors of Esval, Soquimich, Grupo Drillco, Techpack, Ende-
sa-Americas, Grupo Saesa, Grupo Chilquinta, and several com-
panies in the region that were subsidiaries of Enersis and AFP
Provida. He has also been a member of the board of Am-
cham-Chile, the Association of Electric Companies, YPO-Chile,
Chile Global Angels and several Start-Ups. Between 1990 and
2007 he was an executive of several companies such as Corp-
Group, Enersis, Endesa, Blue Circle, PSEG and Grupo Saesa. Mr.
Novoa has a Bachelor of Business and Administration from the
Universidad de Chile and a Master in Business Administration
from the University of Chicago. He has participated in executive
programs at Harvard, Stanford and Kellogg and was professor
of finance and economics at several universities in Chile.
Mrs. Sonia J.S. Villalobos joined the Board of LATAM Airlines
in August 2018 and was reelected to the board of directors of
LATAM in April 2019 and April 2020. Mrs. Villalobos is a Brazil-
ian citizen and a regular member of the board of directors of
Petrobras and Telefónica Vivo. She is a founding partner of the
company Villalobos Consultoria since 2009 and a professor of
post-graduate courses in finance at Insper since 2016. Between
2005 and 2009, she was the Manager of Funds in Latin America,
in Chile, managing mutual and institutional funds of Larrain Vial
AGF. From 1996 to 2002, she was responsible for Private Equi-
ty investments in Brazil, Argentina and Chile for Bassini, Play-
fair & Associates, LLC. As of 1989 she was Head of Research
of Banco Garantia. She graduated in Public Administration from
EAESP/FGV in 1984 and obtained a Master in Finance from the
same institution in 2004. She was the first person to receive the
CFA certification in Latin America, in 1994. As a volunteer, she
participates in the Board of the CFA Society Brazil, a non-profit
association that brings together nearly 1,000 professionals who
hold the CFA (Chartered Financial Analyst) certification in Brazil.
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ANNUAL REPORT OF THE BOARD
COMMITTEE’S ADMINISTRATION
Pursuant to item number 5 of section 8 of article 50 bis
of Law N° 18046 Regarding Stock Corporations, the Board
Committee of LATAM Airlines Group S.A. (the “Company” or
“LATAM”) proceeds to issue the following annual report of its
administration for 2020.
I. Composition of the directors’ committee
The Company’s Directors’ Committee comprises Messrs.
Eduardo Novoa Castellón, Patrick Horn García, and Nicolás
Eblen Hirmas, who are deemed independent members under
US legislation. Under Chilean legislation, the former two are
deemed independent members. The Directors’ Committee is
chaired by Mr. Eduardo Novoa Castellón.
The members were chosen in the Ordinary Shareholders’
Meeting held on April 30, 2020, for a two-year term, pursu-
ant to provisions in the Company’s bylaws.
II. Committee’s activity report
During 2020, the Directors’ Committee met 41 times, in
order to exercise their powers and fulfill their duties, pur-
suant to article 50 Bis of Law no. 18046 on Stock Corpo-
rations, as well as to review or evaluate any other affairs
that the Directors’ Committee deemed necessary which, in
a year marked mainly by the Covid-19 pandemic, focused
mostly on issues regarding the Company’s entering Chap-
ter 11 proceedings in the US, and securing financing to deal
with the drop in revenues as a result of the decrease in
operations.
ment warranting the need for the Company to conduct ad-
ditional tests at such dates, or carry out an asset accounting
adjustment in addition to the one made in March 2020.
Below, is a report of the main issues discussed.
Examination and Review of Balance
Sheet and Financial Statements
The Directors’ Committee examined and reviewed the Com-
pany’s financial statements as at December 31, 2019, as well
as at the end of the quarters ended on March 31, June 30,
and September 30, 2020, in extraordinary Committee meet-
ings on March 3, May 29, August 18, and November 6, 2020,
respectively, including the examination of the corresponding
reports from the Company’s external auditors, as explained
below. In the 4 sessions, PriceWaterhouseCoopers Consultores,
Auditores y Cía. Limitada (“PWC”) participated to issue their
opinion as the Company’s External Auditors.
Review of Reports on Impairment
of Cash Generating Units
In the meetings held on March 3, April 6, May 28, October 15,
and December 21, 2020, the Directors’ Committee discussed
topics related to the impairment test and analysis of signs of
impairment of certain assets included in the financial state-
ments in the Air Transportation cash generating unit.
In detail, they discussed the results of the impairment test
as at December 2019, the analysis of evidence of impair-
ment as at March 31, 2020, the impairment test as at March
31, analysis of evidence as at September 30, 2020, and pre-
liminary calculations of the test as at December 31, 2020,
respectively, concluding that there is no evidence of impair-
Executive and Workers’ Compensation Systems
In the session held on January 20, 2020, the Committee
reviewed existing remuneration systems and policies and
compensation plans for the Company's chief executives
and the workers.
Internal Audit
At the regular Directors’ Committee sessions held on Janu-
ary 20 , March 9, May 4, June 8, July 13, August 10, Septem-
ber 7, and December 21, 2020, issues relating to the Internal
Audit were reviewed. The status of the Internal Audit Plan
carried out during 2019 was revised, highlighting the num-
ber of projects that were addressed, the relevant aspects in
the work carried out, and the presentation of audit reports
analyzing the highest risks, as well as the presentation and
approval of the 2020 work plan and the progress of the work
on that plan.
Audits under SOX regulations
The Directors’ Committee sessions on March 3 and June 8,
2020, set forth the planning to be followed with regard to
SOX regulations for the 2020 certification. They also dis-
cussed the results obtained in the SOX certification during
2019, the most relevant issues to be considered during 2020,
the Company's projects that, because of their relevance, can
generate an impact regarding SOX regulations, the main im-
pacts on the control environment of the Covid-19 and Chap-
ter 11 contingencies, and a schedule to be followed in con-
nection with this certification during 2020.
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ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION
External Audit Services
External Audits Work Plan
• In the session held on July 13, 2020, External Auditors
PWC presented the work plan to be followed in the
field of External Auditing throughout 2020, addressing
issues related to the regulatory requirements in terms
of communication and deliverables of the work, the
composition of the PWC team that renders services to the
Company, the consolidated audit approach, the progress
made during the year in the internal control review, and the
schedule of activities and communications to be followed
with the members of the Committee.
• In the regular session held on November 9, 2020, the
External Auditors Ernst & Young ("EY"), in charge of the
external audit of LATAM Brazil, presented on the team,
scope, and schedule of work of said audit, the results of
the limited review up to September 30, 2020, the main
issues to be addressed during 2020, the internal control
issues–SOX and the next steps to be taken.
Corporate Risk Management
In the session held on September 7, 2020, the Company's
risk map in the new environment of low activity, Covid-19
pandemic, and Chapter 11 was reviewed.
tember 7, and October 5, 2020, a number of information
security issues were discussed, including the PCI Compliance
certification process, which validates the protection that the
company gives to its customers’ credit and debit card infor-
mation, and a presentation on cybersecurity. The session
held on July 13, 2020, covered issues relating to on-board
medical safety and Covid-19 protocols.
Compliance
In the regular sessions held on January 20 and September 7,
2020, The Directors’ Committee received the reports of the
current Compliance program and its main contents, including
the commitment of senior management, the rules and laws
most relevant to the Organization, the development of poli-
cies and standards, training and communications, the coun-
try controls of the status of the Third Party Intermediaries
("TPIs"), the identification and management of Compliance
risks, and the Compliance report at the corporate level.
In the session held on November 9, 2020, the MC Compli-
ance team made a presentation to the Committee regarding
the criminal liability of legal entities and reported and issued
certification on the new crimes established by law.
LATAM policies
In the session held on January 20, 2020, the proposal for a
new policy to select external audit services was discussed. In
that session, the Committee was tasked with assessing the
proposed policy in detail. Subsequently, in the session held
on March 9, 2020, this new policy was approved.
Safety and Security
In the Directors’ Committee sessions held on 6 April, Sep-
Examination of reports pertaining to the Related-
Party Transactions Policy (RPT)
In the committee session held on June 8, 2020, the report-
ing obligation set forth in the RPT Policy was fulfilled; the
administration informed the Directors’ Committee on: (i) the
usual transactions held by the LATAM group with those sub-
sidiaries where its stake is less than 95%, (ii) the main trans-
actions held among the LATAM group companies in general,
and (iii) those transactions disclosed in the note in the finan-
cial statements on related-party transactions.
Specifically, in the Committee session held on on April 6,
2020, Qatar's request to defer payment on the subletting
of five Airbus A350 aircraft that LATAM had subleased to it
was discussed. After analyzing the matter, it was decided
to recommend to the Board to make a counterproposal to
Qatar consisting of transferring to it the conditions that the
aircraft lessee had proposed to LATAM, the details of which
were deemed convenient for the Company and adjusted to
reasonable market terms and conditions, given the circum-
stances at the time.
In the session held on May 11, the Committee was informed
that Qatar had replaced the request for deferral in the lease
payment indicated above with a proposal for early return
of the five Airbus A350 aircraft that LATAM had sublet to it,
plus a compensatory payment as a result of the early re-
turn. After analyzing the proposal, the Committee decided to
propose its approval to the Board, as it was convenient for
LATAM and the prices, terms, and conditions were reasonable
and in line with the market, given the prevailing conditions.
In the May 4 session, the JBA with Delta was discussed in
the context of Article 147 of Law No. 18046 on Joint Stock
Corporations as Delta joined as a shareholder of the Compa-
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ny. After a detailed analysis, it was concluded that the JBA
with Delta Airlines is convenient for the Company, among
other reasons, for the following considerations: (i) Delta's
very good connectivity in the United States of America; (ii)
the elimination of "double marginalization" to improve fares;
(iii) the implementation of a "profit sharing" plan to incentivize
and share all the efficiencies achieved in a more competitive
environment; (iv) the low overlap in the route network of both
companies; and (v) the possibility of improving the offer to
customers with competitive prices, a better network of flights
with lower delays in connections, better customer service,
and a more robust FFP program. Considering that the trans-
action contributes to the company’s interest and conforms to
reasonable and market terms and conditions, it was agreed to
submit to the Board the recommendation to approve the JBA
with Delta under the terms and conditions described.
Subsequently, in the November 9, 2020 session, and because
the Company was in the midst of the Chapter 11 proceeding,
the Committee was informed that a motion of acceptance of
the JBA with Delta was submitted to the court that knows of
the Chapter 11, including certain easing clauses related to the
implementation and termination of said Agreement, consid-
ering the circumstances that LATAM was in; all of the above,
in the context of Article 147 of Law No. 18046 on Joint Stock
Corporations. The members of the Committee again agreed
to submit to the Board the recommendation to approve the
motion regarding the JBA with Delta.
In addition, in the May 24, 2020, session, the Committee
discussed the proposal to cancel in advance the contract for
the sale of Airbus A350 airplanes to Delta, with a cancella-
tion penalty that Delta would pay to LATAM. In the adminis-
tration's view, said fine represented a fair value with regard
to the market prices of the planes. It was further noted that,
although low risk, not accepting the transaction would call
jeopardize the reception of outstanding balances from Del-
ta. It was concluded that the transaction contributed to the
company’s interest and provided for reasonable and market
price, terms, and conditions, in view of the special circum-
stances at the time. As a result of the above, the Commit-
tee agreed to submit to the Board the recommendation to
approve the early cancellation of the contract for the sale of
the Airbus A 350 airplanes to Delta on the terms indicated.
Background Review concerning the
DIP (Debtor In Possession) Financing
under the Chapter 11 Proceeding.
In the Directors’ Committee sessions held on on May 25, 24
June, 4 July, 7 July, 8 July, 15 July, 24 July, 27 July, 28 July,
29 July, 2 August, 10 August, 11 September, 13 September,
September 14, September 15, September 16, September 16 ,
October 8, and November 9, 2020, the Directors’ Committee
reviewed and analyzed the background presented with regard
to the DIP (Debtor In Possession) Financing under the Chapter
11 Proceeding, complying with the regulations on related-party
transactions, in the relevant cases.
In the session held on May 25, 2020, it is noted that it is nec-
essary to comply fully with the RPT regulations to move for-
ward with the DIP Financing. The Committee concludes that
the signing of the term sheet Tranche B (current Tranche C) is
in the company’s interest and is under conditions comparable
to market conditions.
In the session held on May 29, 2020, the committee analyz-
ed the background received from the Costa Verde and Qatar
shareholders regarding the DIP financing structure. It is tak-
en into account that The Tranche C financing: (a) is open to all
shareholders, (b) provides that better options/alternatives can
arise, and (c) that everything must be approved by the judge
involved in the Chapter 11 proceeding, who can directly receive
alternative proposals until the time of making the ruling. It is
set forth that, the DIP Financing under analysis considers rea-
sonable and market price, terms, and conditions for this very
particular type of transaction.
In the July 4, 2020 session, they discussed the Support Agree-
ment with Delta, and since it is believed to contribute to the
company’s interest and consider market prices, terms, and
conditions for such transactions, they agreed to recommend its
approval to the Board.
In the session held on July 8, 2020, the Committee discussed
the proposal for the DIP Funding for Tranche A. In this regard,
the Committee concluded that the signing of the Tranche A of
the DIP Financing agreement with Oaktree is in the company’s
interest, since it allows LATAM access to the financing that it
requires to overcome the crisis caused by the Covid-19 pan-
demic, and is in conditions comparable to current market con-
ditions, as it has been the best option after a detailed selection
process among several bidders.
In the session held on July 28, 2020, the Committee reviewed
an alternative financing proposal for Tranche C, which contains
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ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION
improvements on the first offer, and concludes that this trans-
action (Tranche C of the DIP financing by Costa Verde share-
holders, which also considers the Amaro Group and the Eblen
Group, and Qatar) contributes to the company’s interest, and is
key to the continuity of the business. In addition, it provides for
reasonable and market price, terms, and conditions for this very
particular type of transaction since, on this occasion, it has also
been possible to compare it to another competitive alternative
and has proven to be, the most beneficial for the Company.
In the sessions held on July 29 and August 2, 2020, the Com-
mittee analyzed certain changes and improvements to the
alternative offer and decided to maintain the recommendation
made in the session held on July 28, 2020.
In the September 11, 2020 session, the Committee was in-
formed of the New York Bankruptcy Court's ruling, as it decided
not to approve the DIP Financing proposal. However, the same
ruling also notes that the terms of the DIP Financing are fair
and reasonable, session the standard of being entirely fair (en-
tire fairness), and reflect LATAM's exercise of prudent business
judgment, consistent with its fiduciary duties.
In the September 16, 2020 session, after reviewing a new DIP
Financing proposal involving the shareholders headed by Cos-
ta Verde and Qatar and other investors, headed by Jefferies/
Knighthead Capital, the Committee commented on the new
DIP Financing proposal regarding the requirements of the Joint
Stock Corporations Act, concluding that this DIP Financing
transaction contributes to the company’s interest, as it is key
to the continuity of the business. In addition, it provides for
a reasonable and market price, terms, and conditions for this
very particular type of transaction.
Corporate governance practices
In the sessions held on January 20 and November 9, 2020,
the Directors’ Committee reviewed the work plan and the
necessary adjustments to the questionnaire provided for in
Appendix I to CMF General Standard (NCG, for its Spanish
acronym) No. 385, under which LATAM's corporate govern-
ance practices for the period are analyzed, for the subse-
quent remittance of this document to the CMF with a view
to complying with those regulations.
• Analysis of new policy for the selection of external audit
services.
• Corporate Topics (proposal of external auditors and private
risk rating agencies for 2020, and approval of Appendix No.
1 to comply with the CMF’s NCG No. 385).
• Compliance matters.
• Status of the Internal Audit Plan 2019.
2) Extraordinary session N°79 03/03/2020
• Impairment test of the Air Transportation cash generating
unit (at 12.31.19).
• SOX certification.
Directors’ Committee Recommendations
On the other hand, the Board Committee issued the recommen-
dations stated further ahead in this annual report regarding the
appointment of the Company’s external auditors and private risk
rating agencies for 2020.
• Review of financial statements as at 12.31.2019.
3) Ordinary session N°207 03/09/2020
• HR presentation regarding the exit of the CEO.
Report of Activities by Board Committee Session
The Directors’ Committee met and discussed the opportuni-
ties described below, with a brief example of the topics ex-
amined at each of these sessions:
• Annual report of the Directors’ Committee’s administration.
• Approval of the new policy for the selection of external
audit services. Proposal of external auditors and private risk
rating agencies for 2020.
1) Ordinary session N°206 01/20/2020
• Remuneration Systems and Compensation Plans for
Executives and Workers of the Company.
• Internal Audit reports.
• Accounting analysis associated with transaction with Delta
4) Ordinary session N°208 04/06/2020
• Signs of impairment with regard to the Financial Statements
Airlines.
as at 03.31.2020.
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• Deferral of aircraft lease with Qatar Airways Q.E.S.C.
("Qatar").
• Treatment of purchases that are not made through the
9) Extraordinary session N°83 05/29/2020
• Impairment test of the Air Transportation cash generating
• Protocols for on-board medical safety and Covid-19
requirements.
unit (at 03.31.20).
• Review of Financial Statements up to March 31, 2020.
10) Ordinary session N°210 06/08/2020
• Internal audit plan 2020.
• External auditor PWC plan for 2020.
• Monitoring of a tax issue.
16) Extraordinary session N°88 07/15/2020
• Analysis of a new proposal received for Tranche C of the
Procurement area.
• SOX plan 2020.
DIP financing.
• PCI Compliance 2020 Project.
5) Ordinary session N°209 05/04/2020
• Installing and election of the Committee Chairman.
• Presentation of tax issues and reporting obligations for
compliance with the Related-Party Transactions Policy.
17) Extraordinary session N°89 07/24/2020
• Analysis of a new proposal received for Tranche C of the
11) Extraordinary session N°84 06/24/2020
• Analysis of the DIP Financing proposal by shareholders Costa
DIP financing.
18) Extraordinary session N°90 07/27/2020
• Analysis of progress on Tranche C of the DIP Financing.
• Trans-American Joint Business Agreement (“JBA”) with
Verde Aeronáutica S.A. ("Costa Verde") and Qatar.
Delta Air Lines (“Delta”).
• Internal Audit reports.
6) Extraordinary session N°80 05/11/2020
• Early return of aircraft leased by Qatar.
7) Extraordinary session N°81 05/24/2020
• Early cancellation of the contract for the sale of A350
aircraft to Delta.
8) Extraordinary session N°82 05/25/2020
Recommendation concerning the approval and signing of the
Term Sheet for the so-called Tranche B) of the DIP Financing
(Debtor In Possession) in the framework of the Chapter 11
Proceeding.
12) Extraordinary session N°85 07/04/2020
• Analysis of progress on the DIP Financing of Tranche A and
19) Extraordinary session N°91 07/28/2020
• Analysis of progress on Tranche C of the DIP Financing and
the Support Agreement with Delta.
recommendation to the Board.
13) Extraordinary session N°86 07/07/2020
• Analysis of progress on the DIP Financing of Tranche A.
20) Extraordinary session N°92 07/29/2020
• Analysis of news on Tranche C of the DIP Financing.
14) Extraordinary session N°87 07/08/2020
• Analysis of the DIP Financing of Tranche A and
recommendation to the Board.
15) Ordinary session N°211 7/12/2020
• Internal Audit reports.
21) Extraordinary session N°93 07/29/2020
• Analysis of news on Tranche C of the DIP Financing.
22) Extraordinary session N°94 08/02/2020
• Analysis of news on Tranche C of the DIP Financing and
recommendation to the Board.
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23) Ordinary session N°212 08/10/2020
• Analysis of news on Tranches A and C of the DIP Financing.
• Relevant accounting topics related to the Financial
Statements as at June 30, 2020.
• Internal Audit reports and work plan.
24) Extraordinary session N°95 08/18/2020
• Review of Financial Statements up to June 30, 2020.
27) Extraordinary session N°97 09/11/2020
• Analysis of news on the DIP Financing.
28) Extraordinary session N°98 09/13/2020
• Analysis of news on the DIP Financing.
29) Extraordinary session N°99 09/14/2020
• Analysis of news on the DIP Financing.
30) Extraordinary session N°100 09/15/2020
• Analysis of news on the DIP Financing.
31) Extraordinary session N°101 09/16/2020
• Analysis of news on the DIP Financing and
recommendation to the Board.
36) Extraordinary session N°105 10/30/2020
• Review of the MOR for September 2020 in the framework
of compliance with obligations under the Chapter 11
Proceeding.
37) Extraordinary session N°106 11/06/2020
• Review of Financial Statements up to September 30, 2020.
38) Ordinary session N°215 11/09/2020
• Analysis of news on the DIP Financing and fleet negotiation.
• Presentation by firm EY.
• Motion for acceptance of the JBA with Delta Airlines and
recommendation to the Board.
• Review of the Monthly Operating Report (MOR) for June
2020 in the framework of compliance with obligations
under the Chapter 11 Proceeding.
32) Extraordinary session N°102 09/29/2020
• Review of the MOR for August 2020 in the framework of
compliance with obligations under the Chapter 11 Proceeding.
• Revision of Appendix No. 1 to the CMF’s NCG No. 385 and
recommendation to the Board.
• Presentation by MC Compliance concerning criminal liability
25) Extraordinary session N°96 08/28/2020
• Review of the MOR for July 2020 in the framework
of compliance with obligations under the Chapter 11
Proceeding.
33) Ordinary session N°214 10/05/2020
• Review status of internal audit carried out on the
of legal entities.
commercial area of LATAM Airlines Brazil Presentation on
Cybersecurity.
39) Extraordinary session N°107 11/30/2020
• Review of the MOR for October 2020 in the framework of
26) Ordinary session N°213 09/07/2020
• Compliance matters.
• Presentation on Digital XP.
34) Extraordinary session N°103 10/08/2020
• Analysis of news on the DIP Financing.
• PCI Compliance certification.
• Corporate Risk Management.
35) Extraordinary session N°104 10/15/2020
• Analysis of signs of Impairment of air transport cash
• Update of fleet negotiations.
• Internal Audit work plan.
generating unit (as at 09.30.20).
• Impairment test as at December 31, 2020.
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compliance with obligations under the Chapter 11 Proceeding.
40) Ordinary session N°216 12/21/2020
• Review conclusions on the internal audit report carried out
on the commercial area of LATAM Airlines Brazil.
APPENDICES: CORPORATE GOVERNANCE Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits appointment of the following local Risk Rating firms: Fitch
Chile Clasificadora de Riesgo Limitada, Feller-Rate Clasifi-
cadora de Riesgo Limitada, and International Credit Rating
(ICR) Compañía Clasificadora de Riesgo Limitada. With re-
gard to the international risk rating agencies, the Directors’
Committee agreed to propose to the Board the appoint-
ment of the following firms: Fitch Ratings, Inc., Moody's In-
vestors Service, and Standard & Poor's Ratings Services.
Governance structure
ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION
As a result, the Directors’ Committee’s spending is related to
the monthly stipend for attending the sessions, and for fees
for any counseling that the Directors’ Committee determine.
• Provisions for Financial Statements as at December 31,
IV. Directors’ committee recommendations
2020.
• Update on internal audit topics.
41) Extraordinary session N°108 12/29/2020
• Review of the MOR for November 2020 in the framework
of compliance with obligations under the Chapter 11
Proceeding.
III. Directors’ committee
compensation and expenditures
The Company’s Ordinary Shareholders’ meeting held on April
30, 2020, agreed that each member of the Directors’ Com-
mittee should receive the equivalent to 80 Unidades de Fo-
mento (development units, or UF for its Spanish acronym) as
a monthly stipend for attending the Directors’ Committee’s
sessions, regardless of the number of sessions. This pro-
posal meant maintaining the compensation approved for the
previous financial year.
IV.1 Proposal for Appointment of External Auditors
In the session of the Directors’ Committee held on March 9,
2020, and in accordance with the provisions of item (2) of
article 50 Bis of Law No. 18046 on Joint Stock Corporations,
it is agreed to propose to the company’s Board of Direc-
tors, based on an analysis of the work of the external au-
ditors and the performance assessment 2019 of the audit
firms submitted by the Administration, to continue with the
external auditors already elected and ratified at the Compa-
ny's Ordinary Shareholders' Meeting held on April 25, 2019,
which is PWC for the parent company, EY for Brazil, and
PWC for SSCs (in English, other Spanish-speaking countries
where LATAM operates), further considering that the contract
signed with PWC is currently in force as a result of the ten-
dering of External Audit services carried out in 2018 by the
Company, and which includes the rendering of those services
for the years 2019, 2020, and 2021.
IV.2 Proposal for Private Risk Rating Agencies
For the operation of the Directors’ Committee and their
advisers, Law No. 18046 on Joint Stock Corporations pro-
vides that its expenditure budget shall be at least equal to
the sum of the annual compensation of the members of the
Committee. In this regard, the Ordinary Shareholders' Meet-
ing approved a budget of 2,880 UF. During 2020 this ex-
penditure budget was not used.
In the Board Committee’s session held on April 9, 2020, and
pursuant to the provisions of item 2), section eight of Arti-
cle 50 Bis of Law N° 18.046 on Joint Stock Corporations, the
Directors’ Committee agreed to propose to the Board the
Risk Rating Agencies for the Company’s Ordinary Sharehold-
ers’ Meeting, to be held on April 30, 2020. In this regard, the
Committee decided to propose to the Company’s Board the
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MAIN EXECUTIVES
Roberto Alvo
CEO LATAM Airlines Group
RUT: 8.823.367-0
Ramiro Alfonsín
Chief Financial Officer
RUT: 22.357.225-1
Martin St. George
Chief Commercial Officer
RUT: foreigner
Paulo Miranda
Customers Vice president
RUT: foreigner
Mr. Roberto Alvo is LATAM’s Chief Executive Officer
(“CEO”), a position he holds since March 31, 2020, prior
to which he worked as LATAM’s Chief Commercial Offi-
cer (“CCO”), since May 2017, and was responsible of the
Group’s passenger and cargo revenue management, with
all the commercial units reporting to him. Previously,
he was Vice president of International and Alliances at
LATAM Airlines since 2015, and Vice president of Strate-
gic Planning and Development since 2008. Mr Alvo joi-
ned LAN Airlines in November 2001, where he served as
Chief Financial Officer of LAN Argentina, as Manager of
Development and Financial Planning at LAN Airlines, and
as Deputy Chief Financial Officer of LAN Airlines. Before
2001, Mr. Alvo held various positions at Sociedad Quími-
ca y Minera de Chile S.A., a leading Chilean non-metallic
mining company. He is a civil engineer, and holds an MBA
from IMD in Lausanne, Switzerland.
Mr. Ramiro Alfonsín is LATAM’s Chief Financial
Officer (“CFO”), a position he holds since July
2016. Over the past 16 years, before joining
LATAM, he worked for Endesa, a leading uti-
lity company in Spain, Italy and Chile, having
served as Deputy Chief Executive Officer and
Chief Financial Officer for their Latin American
operations. Before joining the utility sector, he
worked for five years in Corporate and Invest-
ment Banking for several European banks. Mr.
Alfonsín holds a degree in business adminis-
tration from Pontificia Universidad Católica.
Mr. Martin St. George joined LATAM Airlines
Group in 2020 as Chief Commercial Officer
after a 30+ year career in the airline industry
in both North America and Europe. Prior to
joining LATAM, he operated an airline strategy
consulting practice, where he served airline
and travel-industry clients in the United
States, the Caribbean and Europe, including
a role as interim Chief Commercial Officer at
Norwegian Air Shuttle ASA. From 2006 to 2019,
he worked for JetBlue Airways, filling roles in
marketing, network and ultimately serving as
Chief Commercial Officer at JetBlue. Mr. St.
George holds a degree in Civil Engineering from
the Massachusetts Institute of Technology.
Mr. Paulo Miranda is LATAM’s Customers Vice
president, a position he holds since May 2019.
Mr. Miranda has over 20 years of experience in
the aviation industry with different positions
first at Delta Air Lines in the United States and
then at Gol Linhas Aereas in Brazil. In his last
role, Mr. Miranda was responsible for customer
experience, having previously worked in finan-
ce, alliances as well as on the negotiation and
implementation of joint ventures. Mr. Miranda
holds a Business Administration degree from
the Carlson School of Management at the Uni-
versity of Minnesota, USA.
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MAIN EXECUTIVES
Hernán Pasman
Chief Operating Officer
RUT: 21.828.810-3
Mr. Hernán Pasman has been the Vice president
of Operations, Maintenance and Fleet of LATAM
airlines group since October, 2015. He joined LAN
Airlines in 2005 as a head of strategic planning
and financial analysis of the technical areas.
Between 2007 and 2010, Mr. Pasman was the
Chief operating officer of LAN Argentina, then, in
2011 he served as Chief Executive Officer for LAN
Colombia. Prior to joining the company, between
2001 and 2005, Mr. Pasman was a consultant at
McKinsey & Company in Chicago. Between 1995
and 2001, Hernan held positions at Citicorp Equity
Investments, Telefonica de Argentina and Argentina
Motorola. Mr. Pasman holds a Civil Engineering
degree from ITBA (1995) and an MBA from
Kellogg Graduate School of Management (2001).
Emilio Del Real
Human Resources Vice president
RUT: 9.908.112-00
Mr. Emilio del Real is LATAM’s Vice president
of Human Resources, a position he assumed
in August 2005. Between 2003 and 2005, Mr.
del Real was the Human Resources Manager
of D&S, a Chilean retail company. Between
1997 and 2003 Mr. del Real served in various
positions at Unilever, including Human Re-
sources Manager of Unilever Chile, and Ma-
nager of Training and Recruitment and Mana-
gement Development for Latin America. Mr.
del Real has a degree in Psychology from the
Universidad Gabriela Mistral.
Juan Carlos Menció
Vice president of Legal
Affairs and Compliance
RUT: 24.725.433-1
Mr. Juan Carlos Menció is Vice president of Le-
gal Affairs and Compliance for LATAM Airlines
Group a position he holds since September
1, 2014. Mr. Menció previously held the posi-
tion of General Counsel for North America for
LATAM Airlines Group and its related compa-
nies, as well as General Counsel for its world-
wide Cargo Operations, both since 1998. Prior
to joining LAN, he was in private practice in
New York and Florida representing various in-
ternational airlines. Mr. Menció obtained his
Bachelor’s Degree in International Finance and
Marketing from the School of Business at the
University of Miami and his Juris Doctor De-
gree from Loyola University.
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SHAREHOLDERS’ AGREEMENTS
Following the combination of LAN and TAM in June 2012,
TAM S.A. continues to exist as a subsidiary of Holdco I and a
subsidiary of LATAM, and LAN Airlines S.A. has been redesig-
nated as “LATAM Airlines Group S.A.”
Prior to the consummation of the business combination, LATAM
Airlines Group, the Cueto Group, today a major shareholder,
entered into several shareholders’ agreements with TAM, the
Amaro Group (acting through TEP Chile) and Holdco I, establi-
shing agreements and restrictions relating to corporate gover-
nance in an attempt to balance LATAM Airlines Group’s inte-
rests, as the owner of substantially all of the economic rights
in TAM, and those of the Amaro Group by prohibiting the taking
of certain specified material corporate actions and decisions
without prior supermajority approval of the shareholders and/or
the board of directors of Holdco I or TAM. These shareholders’
agreements also set forth the parties’ agreement regarding the
governance and management of the LATAM Airlines Group fo-
llowing the consummation of the combination of LAN and TAM.
Governance and Management
of LATAM Airlines Group
We refer to the shareholders’ agreement among the Cueto
Group and the Amaro Group (acting through TEP Chile), which
sets forth the parties’ agreement concerning the governance,
management and operation of the LATAM Airlines Group, and
voting and transfer of their respective LATAM Airlines Group
common shares and TEP Chile’s voting shares of Holdco I, as
the “Cueto Amaro shareholders’ agreement.” We refer to the
shareholders’ agreement between LATAM Airlines Group S.A.
and TEP Chile, which sets forth agreements concerning the
governance, management and operation of the LATAM Airlines
Group, as the “LATAM Airlines Group-TEP shareholders’ agree-
ment.” The Cueto Amaro shareholders’ agreement and the
LATAM Airlines Group-TEP shareholders’ agreement set forth
the parties’ agreement on the governance and management of
the LATAM Airlines Group following the effective time.
This section describes the key provisions of the Cueto Amaro
shareholders’ agreement and the LATAM Airlines Group-TEP
shareholders’ agreement. The description of the LATAM Airli-
nes Group-TEP shareholders’ agreement summarized below
and elsewhere in this annual report on Form 20-F is qualified
in its entirety by reference to the full text of such sharehol-
ders’ agreements, which has been filed as exhibit to this an-
nual report on Form 20-F.
Composition of the LATAM Airlines Group Board
Since April 2017, there are no restrictions in the Cueto Amaro
shareholders’ agreement nor in the LATAM Airlines Group-TEP
shareholders’ agreement regarding the composition of LATAM
Airlines Group’s board of directors. Therefore, once elected in
accordance with Chilean regulation, members of the LATAM
Airlines Group’s board of directors have the right to appoint
any member as the chairman of LATAM Airlines Group’s board
of directors, from time to time, in accordance with the LATAM
Airlines Group’s by-laws. Accordingly, on May, 2017, on May
14, 2019 and on April, 30, 2020, Mr. Ignacio Cueto Plaza was
elected as President of the Board.
On April 1, 2020 and on April 17, 2020 respectively Mr. Juan
José Cueto Plaza and Mr. Carlos Heller Solari resigned from the
LATAM Airlines Group’s board of directors, and as their repla-
cements, the board of directors appointed Mr. Enrique Cueto
Plaza and Mr. Enrique Ostalé Cambiaso respectively. Both of
them were elected by the shareholders on the Ordinary Mee-
ting of April, 30th 2020.
Recently, on September 7, 2020 Mr. Giles Agutter resigned
from the LATAM Airline’s Group’s board of directors, and as his
replacement, the board of directors appointed Mr. Alexander
D. Wilcox on October 6, 2020 until the next Ordinary Share-
holders’ Meeting of LATAM which should take place during the
first quarter of 2021, instance in which the election and re-
newal of the whole Board of Directors will take place.
Management of the LATAM Airlines Group
On September 10, 2019, LATAM announced that Enrique Cueto
Plaza, Chief Executive Officer of LATAM (“CEO LATAM”) since
June 2012, who left this position as of March 31, 2020, was be-
ing replaced as of such date by Mr. Roberto Alvo, current Chief
Commercial Officer of LATAM. The CEO LATAM is the highest
ranked officer of LATAM Airlines Group and reports directly to
the LATAM board of directors. The CEO LATAM is charged with
the general supervision, direction and control of the business
of the LATAM Airlines Group and certain other responsibilities
set forth in the LATAM Airlines Group-TEP shareholders’ agree-
ment. After any departure of the current CEO LATAM, our board
of directors will select his or her successor after receiving the
recommendation of the Leadership Committee.
The head office of the LATAM Airlines Group continues to be
located in Santiago, Chile.
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agreement generally provide for identical boards of directors
and the same chief executive officer at Holdco I and TAM, with
LATAM appointing two directors and TEP Chile appointing four
directors (including the chairman of the board of directors).
Governance and Management
of Holdco I and TAM
We refer to the shareholders’ agreement between us, Holdco I
and TEP Chile, which sets forth our agreement concerning the
governance, management and operation of Holdco I, and vo-
ting and transfer of voting shares of Holdco I, as the “Holdco I
shareholders’ agreement” and to the shareholders’ agreement
between us, Holdco I, TAM and TEP Chile, which sets forth our
agreement concerning the governance, management and ope-
ration of TAM and its subsidiaries following the effective time,
as the “TAM shareholders’ agreement.” The Holdco I sharehol-
ders’ agreement and the TAM shareholders’ agreement set forth
the parties’ agreement on the governance and management of
Holdco I, TAM and its subsidiaries (collectively, the “TAM Group”)
following the combination of LAN and TAM.
This section describes the key provisions of the Holdco I share-
holders’ agreement and the TAM shareholders’ agreement. The
description of the Holdco I shareholders’ agreement and the
TAM shareholders’ agreement summarized below and elsewhere
in this annual report on Form 20-F are qualified in their enti-
rety by reference to the full text of the aforementioned share-
holders’ agreements, which have been filed as exhibits to this
annual report on Form 20-F.
Composition of the Holdco I and TAM Boards
The Holdco I shareholders’ agreement and TAM shareholders’
The Cueto Amaro shareholders’ agreement provides that the
persons elected by or on behalf of the Cueto Group or the
Amaro Group to our board of directors must also serve on the
boards of directors of both Holdco I and TAM.
Management of Holdco I and TAM
The day-to-day business and affairs of Holdco I will be mana-
ged by the TAM Group CEO under the oversight of the board of
directors of Holdco I. The day-to-day business and affairs of
TAM will be managed by the TAM Diretoria under the oversight
of the board of directors of TAM. The TAM Diretoria will be com-
prised of the TAM Group CEO, the TAM CFO, the TAM COO and
the TAM CCO, currently the CEO of TAM, will be the initial CEO
of Holdco I and TAM, or the “TAM Group CEO” and any successor
CEO will be selected by LATAM from three candidates proposed
by TEP Chile. The TAM Group CEO will have general supervision,
direction and control of the business and operations of the TAM
Group (other than the international passenger business of the
LATAM Airlines Group) and will carry out all orders and resolu-
tions of the board of directors of TAM. The initial chief financial
officer of TAM, or the “TAM CFO,” has been jointly selected by
LATAM and TEP Chile and any successor CFO will be selected by
TEP Chile from three candidates proposed by LATAM. The chief
operating officer of TAM, or the “TAM COO,” and chief commer-
cial officer of TAM, or the “TAM CCO,” will be jointly selected and
recommended to the TAM board of directors by the TAM Group
CEO and TAM CFO and approved by the TAM board of directors.
These shareholders’ agreements also regulate the composition
of the boards of directors of subsidiaries of TAM.
Following the combination, TAM continues to be headquarte-
red in São Paulo, Brazil.
Supermajority Actions
Certain actions by Holdco I or TAM require supermajority appro-
val by the board of directors or the shareholders of Holdco I or
TAM which effectively require the approval of both LATAM and
TEP Chile before the specified actions can be taken. Actions
that require supermajority approval of the Holdco I board of di-
rectors or the TAM board of directors include, as applicable:
• to approve the annual budget and business plan and the
multi-year business (which we refer to collectively as the
“approved plans”), as well as any amendments to these plans;
• to take or agree to take any action which causes, or will
reasonably cause, individually, or in the aggregate, any capital,
operating or other expense of any TAM Company and its
subsidiaries to be greater than (i) the lesser of 1% of revenue
or 10% of profit under the approved plans, with respect to
actions affecting the profit and loss statement, or (ii) the
lesser of 2% of assets or 10% of cash and cash equivalents
(as defined by IFRS) as set forth in the approved plan then
in effect, with respect to actions affecting the cash flow
statement;
• to create, dispose of or admit new shareholders to any
subsidiary of the relevant company, except to the extent
expressly contemplated in the approved plans;
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SHAREHOLDERS’ AGREEMENTS
material action with respect to any litigation or proceeding in
an amount greater than $15 million, relating to the relevant
company, except to the extent expressly permitted in the
approved plans;
of management of any relevant company and (ix) dividends
and other distributions;
• to approve the dissolution, liquidation, or winding up of a
relevant company;
• to approve the acquisition, disposal, modification or
• to approve the execution, amendment, termination or
encumbrance by any TAM company of any asset greater
than $15 million or of any equity securities or securities
convertible into equity securities of any TAM Company
or other company, except to the extent expressly
contemplated in the approved plans;
• to approve any investment in assets not related to the
corporate purpose of any TAM company, except to the
extent expressly contemplated in the approved plans;
• to enter into any agreement in an amount greater than $15
million, except to the extent expressly contemplated in the
approved plans;
• to enter into any agreement related to profit sharing, joint
ventures, business collaborations, alliance memberships,
code sharing arrangements, except as approved by the
business plans and budget then in effect, except to the
extent expressly contemplated in the approved plans;
• to terminate, modify or waive any rights or claims of a
relevant company or its subsidiaries under any arrangement
in any amount greater than $15 million, except to the extent
expressly contemplated in the approved plans;
• to commence, participate in, compromise or settle any
ratification of agreements with related parties, except to the
extent expressly contemplated in the approved plans;
• to approve the transformation, merger, spin-up or any kind
of corporate re-organization of a relevant company;
• to approve any financial statements, amendments, or any
accounting, dividend or tax policy of the relevant company;
• to pay or distribute dividends or any other kind of
distribution to the shareholders;
• to approve the grant of any security interest or guarantee to
secure obligations of third parties;
• to approve the issuance, redemption or amortization of any
debt securities, equity securities or convertible securities;
• to appoint executives other than the Holdco I CEO or the
TAM Director or to re-elect the then current TAM CEO
or TAM CFO; and to approve any vote to be cast by the
relevant company or its subsidiaries in its capacity as a
shareholder.
Actions requiring supermajority shareholder approval include:
• to approve any amendments to the by-laws of any relevant
company or its subsidiaries in respect to the following
matters: (i) corporate purpose; (ii) corporate capital; (iii) the
rights inherent to each class of shares and its shareholders;
(iv) the attributions of shareholder regular meetings or
limitations to attributions of the board of directors; (v)
changes in the number of directors or officers; (vi) the term;
(vii) the change in the corporate headquarters of a relevant
company; (viii) the composition, attributions and liabilities
• to approve a plan or the disposal by sale, encumbrance or
otherwise of 50% or more of the assets, as determined by
the balance sheet of the previous year, of Holdco I;
• to approve the disposal by sale, encumbrance of otherwise
of 50% or more of the assets of a subsidiary of Holdco I
representing at least 20% of Holdco I or to approve the sale,
encumbrance or disposition of equity securities such that
Holdco I loses control;
• to approve the grant of any security interest or guarantee
to secure obligations in excess of 50% of the assets of the
relevant company; and
• to approve the execution, amendment, termination or
ratification of acts or agreement with related parties but
only if applicable law requires approval of such matters.
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Voting Agreements, Transfers and Other
Arrangements
Voting Agreements
The Cueto Group and TEP Chile have agreed in the Cue-
to Amaro shareholder’s agreement to vote their respective
LATAM Airlines Group common shares as follows:
• the parties agree to vote their LATAM Airlines Group
common shares to assist the other parties in removing and
replacing the directors such other parties elected to the
LATAM Airlines Group board of directors;
• the parties agree to consult with one another and use their
good faith efforts to reach an agreement on all actions
(other than actions requiring supermajority approval under
Chilean law) to be taken by the LATAM board of directors
or the LATAM shareholders, and if unable to reach such
agreement, to follow the proposal made by our board of
directors;
• the parties agree to maintain the size of the LATAM Airlines
Group board of directors at a total of nine directors and
to maintain the quorum required for action by the LATAM
Airlines Group board of directors at a majority of the total
number of directors of the LATAM Airlines Group board of
directors; and
• if, after good faith efforts to reach an agreement with
respect to any action that requires supermajority approval
under Chilean law and a mediation period, the parties do
not reach such an agreement, then TEP Chile has agreed to
vote its shares on such supermajority matter as directed
by the Cueto Group, which we refer to as a “directed vote.”
The parties to the Holdco I shareholder’s agreement and TAM
shareholders agreement have agreed to vote their voting
shares of Holdco I and shares of TAM so as to give effect to
the agreements with respect to representation on the TAM
board of directors discussed above.
Transfer Restrictions
Pursuant to the Cueto Amaro shareholders’ agreement, the
Cueto Group and TEP Chile are subject to certain restrictions
on sales, transfers and pledges of the LATAM Airlines Group
common shares and (in the case of TEP Chile only) the vo-
ting shares of Holdco I beneficially owned by them. Except
for a limited amount of LATAM Airlines Group common sha-
res, neither the Cueto Group nor TEP Chile were permitted
to sell any of their LATAM Airlines Group common shares,
and TEP Chile was not permitted to sell its voting shares of
Holdco I, until June 2015. Since then, sales of LATAM Air-
lines Group common shares by either party are permitted,
subject to (i) certain limitations on the volume and frequen-
cy of such sales and (ii) in the case of TEP Chile only, TEP
Chile satisfying certain minimum ownership requirements.
On or after December 31, 2021, TEP Chile may sell all of its
LATAM Airlines Group common shares and voting shares of
Holdco I as a block, subject to (x) approval of the transferee
by the LATAM board of directors, (y) the condition that the
sale not have an adverse effect, and (z) a right of first offer
in favor of the Cueto Group, which we refer to collectively
as “block sale provisions.” An “adverse effect” is defined in
the Cueto Amaro shareholder’s agreement to mean a ma-
terial adverse effect on our and Holdco I’s ability to own or
receive the full benefits of ownership of TAM and its sub-
sidiaries or the ability of TAM and its subsidiaries to opera-
te their airline businesses worldwide. The Cueto Group has
agreed to transfer any voting shares of Holdco I acquired
pursuant to such right of first offer to LATAM for the same
consideration paid for such shares.
In addition, TEP Chile may sell all LATAM Airlines Group com-
mon shares and voting shares of Holdco I beneficially ow-
ned by it as a block, subject to satisfaction of the block sale
provisions, if a release event (as described below) occurs or
if TEP Chile is required to make two or more directed votes
during any 24-month period at two meetings (consecutive or
not) of the shareholders of LATAM Airlines Group held at least
12 months apart and LATAM Airlines Group has not yet fully
exercised its conversion option described below. A “relea-
se event” will occur if (i) a capital increase of LATAM Airlines
Group occurs, (ii) TEP Chile does not fully exercise the pre-
emptive rights granted to it under applicable law in Chile with
respect to such capital increase in respect of all of its res-
tricted LATAM Airlines Group common shares, and (iii) after
such capital increase is completed, the individual designated
by TEP Chile for election to the board of directors of LATAM
Airlines Group with the assistance of the Cueto Group is not
elected to the board of directors of LATAM Airlines Group.
In addition, after December 31, 2021 and after the occu-
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rrence of the full ownership trigger date TEP Chile may sell
all or any portion of its LATAM Airlines Group common sha-
res, subject to (x) a right of first offer in favor of the LATAM
Controlling Shareholders and (y) the restrictions on sales of
LATAM Airlines Group common shares more than once in a
12-month period.
In addition, after December 31, 2021 and after the occurren-
ce of the full ownership trigger date, TEP Chile may sell all
or any portion of its LATAM Airlines Group common shares,
subject to (x) a right of first offer in favor of the Cueto Group
and (y) the restrictions on sales of LATAM Airlines Group
common shares more than once in a 12-month period.
The Cueto Amaro shareholders agreement provides certain
exceptions to these restrictions on transfer for certain ple-
dges of LATAM Airlines Group common shares made by the
parties and for transfers to affiliates, in each case under cer-
tain limited circumstances.
res of Holdco I beneficially owned by TEP Chile for an amount
equal to TEP Chile’s then current tax basis in such shares and
any costs TEP Chile is required to incur to effect such sale or
transfer. TEP Chile has irrevocably granted us the assignable ri-
ght to purchase all of the voting shares of Holdco I beneficially
owned by TEP Chile in connection with any such sale.
Conversion Option
Pursuant to the Cueto Amaro shareholders’ agreement
and the Holdco I shareholders’ agreement, we have the
unilateral right to convert our shares of non-voting stock
of Holdco I into shares of voting stock of Holdco I to the
maximum extent allowed under law and to increase our
representation on the TAM and Holdco I boards of directors
if and when permitted in accordance with foreign ownership
control laws in Brazil and other applicable laws if the
conversion would not have an adverse effect. In February
2019, we completed the procedures for the exchange
of shares of Holdco I S.A., through which LATAM Airlines
Group SA increased its indirect participation in TAM S.A.,
from 48.99% to 51.04%. This transaction was undertaken
pursuant to the Provisional Measure 863/2018 of December
13, 2018, through which the participation of up to 100%
of foreign capital in airlines in Brazil is permitted.
incurred by them to effect such sale, which amount we
refer to as the “sale consideration.” If we do not timely
exercise our right to purchase these shares or if, after
December 31, 2021, we have the right under applicable
law in Brazil and other applicable law to fully convert all
the shares of non-voting stock of Holdco I beneficially
owned by us into shares of voting stock of Holdco I and
such conversion would not have an adverse effect but
we have not fully exercised such right within a specified
period, then the controlling shareholders of TAM will have
the right to put their shares of voting stock of Holdco I
to us for an amount equal to the sale consideration.
Acquisitions of TAM Stock
The parties have agreed that all acquisitions of TAM com-
mon shares by LATAM Airlines Group, Holdco I, TAM or any
of their respective subsidiaries from and after the effective
time of the combination will be made by Holdco I.
Restriction on transfer of TAM shares
LATAM agreed in the Holdco I shareholders’ agreement not to
sell or transfer any shares of TAM stock to any person (other
than our affiliates) at any time when TEP Chile owns any vo-
ting shares of Holdco I. However, LATAM will have the right to
effect such a sale or transfer if, at the same time as such sale
or transfer, LATAM (or its assignee) acquires all the voting sha-
On or after December 31, 2021, and after we have fully
converted all of our shares of non-voting stock of Holdco
I into shares of voting stock of Holdco I as permitted by
Brazilian law and other applicable laws, we will have the
right to purchase all of the voting shares of Holdco I held
by the controlling shareholders of TAM for an amount equal
to their then current tax basis in such shares and any costs
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REGULATORY FRAMEWORK
Below is a brief reference to the material effects of aeronau-
tical and other regulations in force in the relevant jurisdictions
in which LATAM group operates. LATAM group is subject to the
jurisdiction of various regulatory and enforcement agencies in
each of the countries where we operate. We believe we have
obtained and maintain the necessary authority, including au-
thorizations and operative certificates where required, which
are subject to ongoing compliance with statutes, rules and
regulations pertaining to the airline industry, including any
rules and regulations that may be adopted in the future.
The countries where the group does most of its operations
are contracting states and permanent members of the ICAO,
an agency of the United Nations established in 1947 to assist
in the planning and development of international air trans-
portation. The ICAO establishes technical standards for the
international aviation industry. In the absence of an appli-
cable local regulation concerning safety or maintenance, the
countries where LATAM group operates have incorporated
by reference the majority of the ICAO’s technical standards.
LATAM group deems that it is in material compliance with all
such relevant technical standards.
Environmental and Noise Regulation
There are no material environmental regulations or controls
imposed upon airlines, applicable to aircraft, or that other-
wise affect us, except for environmental laws and regulations
of general applicability.
Safety and Security
Our operations are subject to the jurisdiction of various
agencies in each of the countries where we operate, which
set standards and requirements for the operation of aircraft
and its maintenance.
In Argentina, Brazil, Colombia, Ecuador, Peru and the United
States, aircraft must comply with certain noise restrictions.
LATAM’s aircraft substantially comply with all such restric-
tions. Chilean authorities are planning to pass a noise-relat-
ed regulation governing aircraft that fly to and within Chile,
observing a standard known as “Stage 3 requirements.” Our
fleet already complies with such standards, so we do not
believe that enactment of the proposed standards would im-
pose a material burden on us.
In 2016, the ICAO adopted a resolution creating the Carbon
Offsetting and Reduction Scheme for International Aviation
(CORSIA), providing a framework for a global market-based
measure to stabilize CO2 emissions in international civil avi-
ation (i.e., civil aviation flights that depart in one country
and arrive in a different country). With the adoption of this
framework, the aviation industry became the first industry to
achieve an agreement with respect to its CO2 emissions. The
scheme, which defines a unified standard to regulate CO2
emissions in international flights, will be implemented in var-
ious phases by ICAO member states starting in 2020.
In the United States, the Aviation and Transportation Secu-
rity Act requires, among other things, the implementation
of certain security measures by airlines and airports, such
as the requirement that all passenger bags be screened for
explosives. Funding for airline and airport security required
under the Aviation Security Act is provided in part by a
US$5.60 per segment passenger security fee, subject to a
US$11.20 per roundtrip cap; however, airlines are respon-
sible for costs in excess of this fee. Implementation of the
requirements of the Aviation Security Act has resulted in
increased costs for airlines and their passengers. Since the
events of September 11, 2001, the United States Congress
has mandated, and the TSA has implemented, numerous
security procedures and requirements that have imposed
and will continue to impose burdens on airlines, passen-
gers and shippers.
Below are some specific aeronautical regulations related
to route rights and pricing policy in the countries where we
operate.
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Chile
Aeronautical Regulation
Both the DGAC and the Junta de Aeronáutica Civil (“JAC”)
oversee and regulate the Chilean aviation industry. The DGAC
reports directly to the Chilean Air Force and is responsible
for supervising compliance with Chilean laws and regulations
relating to air navigation. The JAC is the Chilean civil aviation
authority. Primarily on the basis of Decree Law No. 2,564,
which regulates commercial aviation, the JAC establishes the
main commercial policies for the aviation industry in Chile
and regulates the assignment of international routes and
the compliance with certain insurance requirements, while
the DGAC regulates flight operations, including personnel,
aircraft and security standards, air traffic control and airport
management. We have obtained and maintain the neces-
sary authority from the Chilean government to conduct flight
operations, including authorization certificates from the JAC
and technical operative certificates from the DGAC, the con-
tinuation of which is subject to the ongoing compliance with
applicable statutes, rules and regulations pertaining to the
airline industry, including any rules and regulations that may
be adopted in the future.
into Chilean laws and regulations. In the absence of an appli-
cable Chilean regulation concerning safety or maintenance,
the DGAC has incorporated by reference the majority of the
ICAO’s technical standards. We believe that we are in material
compliance with all such relevant technical standards.
Route Rights
Domestic Routes: Chilean airlines are not required to obtain
permits in order to carry passengers or cargo on any domes-
tic routes, but only to comply with the technical and insur-
ance requirements established respectively by the DGAC and
the JAC. There are no regulatory barriers that would prevent
a foreign airline from creating a Chilean subsidiary and en-
tering the Chilean domestic market using that subsidiary.
On January 18, 2012 the Secretary of Transportation and
the Secretary of Economics of Chile announced a unilateral
opening of the Chilean domestic skies. This was confirmed
on November 2013, and has been in force since that date.
International Routes: As an airline providing services on in-
ternational routes, LATAM is also subject to a variety of bi-
lateral civil air transportation agreements that provide for
the exchange of air traffic rights between Chile and various
other countries. There can be no assurance that existing bi-
lateral agreements between Chile and foreign governments
will continue, and a modification, suspension or revocation of
one or more bilateral treaties could have a material adverse
effect on our operations and financial results.
Chile is a contracting state, as well as a permanent mem-
ber, of the ICAO. Chilean authorities have incorporated ICAO’s
technical standards for the international aviation industry
International route rights, as well as the corresponding land-
ing rights, are derived from a variety of air transportation
agreements negotiated between Chile and foreign govern-
ments. Under such agreements, the government of one
country grants the government of another country the right
to designate one or more of its domestic airlines to oper-
ate scheduled services to certain destinations of the former
and, in certain cases, to further connect to third-country
destinations. In Chile, when additional route frequencies to
and from foreign cities become available, any eligible airline
may apply to obtain them. If there is more than one appli-
cant for a route frequency, the JAC awards it through a pub-
lic auction for a period of five years. The JAC grants route
frequencies subject to the condition that the recipient airline
operate them on a permanent basis. If an airline fails to
operate a route for a period of six months or more, the JAC
may terminate its rights to that route. International route
frequencies are freely transferable. In the past, we have
generally paid only nominal amounts for international route
frequencies obtained in uncontested auctions.
Airfare Pricing Policy
Chilean airlines are permitted to establish their own domes-
tic and international fares without government regulation.
For more information, see “—Antitrust Regulation” below.
In 1997, the Antitrust Commission approved and imposed
a specific self-regulatory fare plan for our domestic opera-
tions in Chile consistent with the Antitrust Commission’s di-
rective to maintain a competitive environment. According to
this plan, we must file notice with the JAC of any increase or
decrease in standard fares on routes deemed “non-compet-
itive” by the JAC and any decrease in fares on “competitive”
routes at least 20 days in advance. We must file notice with
the JAC of any increase in fares on “competitive” routes at
least 10 days in advance. In addition, the Chilean authorities
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now require that we justify any modification that we make
to our fares on non-competitive routes. We must also ensure
that our average yields on a non-competitive route are not
higher than those on competitive routes of similar distance.
Argentina
Aeronautical Regulation
Both the (ANAC Argentina and the Ministry of Transport over-
see and regulate the Argentinean aviation industry. ANAC
regulates flight operations, including personnel, aircraft and
security standards, air traffic control and airport manage-
ment, and reports directly to the Ministry of Transport. ANAC
also is responsible for supervising compliance with Argentine-
an laws and regulations relating to air navigation. The Ministry
of Transport regulates the assignment of international routes
and matters related to tariff regulation policies. We have ob-
tained and maintain the necessary authorizations from the
Argentinean government to conduct flight operations, includ-
ing authorization certificates and technical operative certifi-
cates from ANAC, the continuation of which is subject to the
ongoing compliance with applicable statutes, rules and reg-
ulations pertaining to the airline industry, including any rules
and regulations that may be adopted in the future.
Argentina is a contracting state and a permanent member
of the ICAO, an agency of the United Nations established in
1947 to assist in the planning and development of interna-
tional air transport. The ICAO establishes technical stand-
ards for the international aviation industry, which Argen-
tinean authorities have incorporated into Argentinean laws
and regulations. In the absence of applicable Argentinean
regulation concerning safety or maintenance, the ANAC has
incorporated by reference the majority of the ICAO’s tech-
nical standards. We believe that we are in material compli-
ance with all such relevant technical standards.
Route Rights
International Routes: As an airline providing services on in-
ternational routes, LATAM Argentina is also subject to a va-
riety of bilateral civil air transport agreements that provide
for the exchange of air traffic rights between Argentina and
various other countries. There can be no assurance that ex-
isting bilateral agreements between Argentina and foreign
governments will continue. Furthermore, a modification,
suspension or revocation of one or more bilateral treaties
could have a material adverse effect on our operations and
financial results.
International route rights, as well as the corresponding land-
ing rights, are derived from a variety of air transport agree-
ments negotiated between Argentina and foreign govern-
ments. Under such agreements, the government of one
country grants the government of another country the right
to designate one or more of its domestic airlines to oper-
ate scheduled services to certain destinations of the former
and, in certain cases, to further connect to third-country
destinations. In Argentina, when additional route frequen-
cies to and from foreign cities become available, any eligible
airline may apply to obtain them. ANAC grants route fre-
quencies subject to the condition that the recipient air-
line operate them on a permanent basis. If an airline fails
to operate a route for a period of six months or more, the
ANAC may terminate its rights to that route.
Airfare Pricing Policy
Argentine airlines are permitted to establish their own
international fares without government regulation, as
long as they do not abuse any dominant market position
they may enjoy. In the case of domestic flights, govern-
ment-fixed maximum prices were in place until February
3, 2016, when the government eliminated the controls
that limited maximum prices. However, there remain gov-
ernment-fixed minimum prices for one-way tickets, and
also for tickets sold within 30 days before the flight. Pric-
es for roundtrip tickets sold 30 days or more before the
flight were de-regulated on July 31, 2018.
Peru
Aeronautical Regulation
The Peruvian Dirección General de Aeronáutica Civil (the
“PDGAC”) oversees and regulates the Peruvian aviation
industry. The PDGAC reports directly to the Ministry of
Transportation and Communications and is responsible for
supervising compliance with Peruvian laws and regulations
relating to air navigation. In addition, the PDGAC regulates
the assignment of national and international routes, and
the compliance with certain insurance requirements, and it
regulates flight operations, including personnel, aircraft and
security standards, air traffic control and airport manage-
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ment. We have obtained and maintain the necessary au-
thorizations from the Peruvian government to conduct flight
operations, including authorization and technical operative
certificates, the continuation of which is subject to the on-
going compliance with applicable statutes, rules and regu-
lations pertaining to the airline industry, including any rules
and regulations that may be adopted in the future.
of bilateral civil air transport agreements that provide for
the exchange of air traffic rights between Peru and various
other countries. There can be no assurance that existing bi-
lateral agreements between Peru and foreign governments
will continue, and a modification, suspension or revocation
of one or more bilateral treaties could have a material ad-
verse effect on our operations and financial results.
Peru is a contracting state and a permanent member of the
ICAO. The ICAO establishes technical standards for the interna-
tional aviation industry, which Peruvian authorities have incor-
porated into Peruvian laws and regulations. In the absence of
an applicable Peruvian regulation concerning safety or mainte-
nance, the PDGAC has incorporated by reference the majori-
ty of the ICAO’s technical standards. We believe that we are in
material compliance with all relevant technical standards.
Route Rights
Domestic Routes: Peruvian airlines are required to obtain
permits in connection with carrying passengers or cargo on
any domestic routes and to comply with the technical re-
quirements established by the PDGAC. Non-Peruvian airlines
are not permitted to provide domestic air service between
destinations in Peru.
International Routes: As an airline providing services on in-
ternational routes, LATAM Peru is also subject to a variety
International route rights, as well as the corresponding
landing rights, are derived from a variety of air transport
agreements negotiated between Peru and foreign govern-
ments. Under such agreements, the government of one
country grants the government of another country the right
to designate one or more of its domestic airlines to oper-
ate scheduled services to certain destinations of the former
and, in certain cases, to further connect to third-country
destinations. In Peru, when additional route frequencies to
and from foreign cities become available, any eligible airline
may apply to obtain them. If there is more than one appli-
cant for a route frequency, the PDGAC awards it through a
public auction for a period of four years. The PDGAC grants
route frequencies subject to the condition that the recipient
airline operate them on a permanent basis. If an airline fails
to operate a route for a period of 90 days or more, the PD-
GAC may terminate its rights to that route. In the last two
years the PDGAC has revoked the unused route frequencies
of a couple Peruvian operators.
Ecuador
Aeronautical Regulation
There are two institutions that control commercial aviation
on behalf of the State: (i) The Consejo Nacional de Aviación
Civil (the “CNAC”), which directs aviation policy; and (ii) ( the
“DGAC”), which is a technical regulatory and control agen-
cy. The CNAC issues operating permits and grants operat-
ing concessions to national and international airlines. It also
issues opinions on bilateral and multilateral air transportation
treaties, allocates routes and traffic rights, and approves joint
operating agreements such as wet leases and shared codes.
Fundamentally, the DGAC is responsible for:
• ensuring that the national standards and technical
regulations and international ICAO standards and
regulations are observed;
• keeping records on insurance, airworthiness and licenses
of Ecuadorian civil aircraft;
• maintaining the National Aircraft Registry;
• issuing licenses to crews;
• controlling air traffic control inside domestic air space;
• approving shared codes; and
• modifying operations permits.
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The EDGAC also must comply with the standards and rec-
ommended methods of ICAO since Ecuador is a signatory of
the 1944 Chicago Convention.
Route Rights
Domestic Routes: Airlines must obtain authorization from
CNAC (an operating permit or concession) to provide air
transportation. For domestic operations, only companies in-
corporated in Ecuador can operate locally, and only Ecuado-
rian-licensed aircraft and dry leases are authorized to oper-
ate domestically.
International Routes: Permits for international operations
are based on air transportation treaties signed by Ecuador
or, otherwise, the principle of reciprocity is applied. All air-
lines doing business in Latin America that are incorporated in
countries that are members of the Comunidad Andina de Na-
ciones (the Andean Community, or “CAN”) obtain their traffic
rights on the basis of decisions currently in force under that
regime, in particular decision N°582 of 2004, which guaran-
tee free access to markets, with no type of restriction except
technical considerations.
Airfare Pricing Policy
On October 13, 2011, The Statutory Law of Regulation and
Control of the Market Power was passed with a purpose to
avoid, prevent, correct, eliminate and sanction the abuse of
economic operators with market power, as well as to sanction
restrictive, disloyal and agreements involving collusive practices.
This Law creates a new public entity as the maximum authority
of application and establishes the procedures of investigation
and the applicable sanctions, which are severe. Rates are not
regulated and are subject only to registration. In general, bilat-
eral treaties regarding air transportation provide for airfares to
be regulated by the regulation of the country of origin.
We have obtained and maintain the necessary authori-
ty from the Brazilian government to conduct flight opera-
tions, including authorization and technical operative cer-
tificates from ANAC, the continuation of which is subject
to ongoing compliance with applicable statutes, rules and
regulations pertaining to the airline industry, including any
rules and regulations that may be adopted in the future.
Brazil
Aeronautical Regulation
The Brazilian aviation industry is regulated and overseen
by the ANAC. The ANAC reports directly to the Civil Avia-
tion Secretary, which is subordinated by the Federal Exec-
utive Power of this country. Primarily on the basis of Law
No. 11.182/2005, the ANAC was created to regulate com-
mercial aviation, air navigation, the assignment of domestic
and international routes, compliance with certain insurance
requirements, flight operations, including personnel, air-
craft and security standards, air traffic control, in this case
sharing its activities and responsibilities with the Depar-
tamento de Controle do Espaço Aéreo (Department of Air-
space Control or “DECEA”), which is a public secretary also
subordinated to the Brazilian Defense Ministry, and airport
management, in this last case sharing responsibilities with
the Empresa Brasileira de Infra-Estrutura Aeroportuária (the
Brazilian Airport Infrastructure Company, or “INFRAERO”),
a public company that was created by Law No. 5862/72,
and is responsible for administrating, operating and explor-
ing Brazilian airports industrially and commercially (with the
exception of airports granted to private initiative).
ANAC is the Brazilian civil aviation authority and it is re-
sponsible for supervising compliance with Brazilian laws
and regulations relating to air navigation. Brazil is a con-
tracting state and a permanent member of the ICAO. The
ICAO establishes technical standards for the international
aviation industry, which Brazilian authorities, represented
by the Brazilian Defense Ministry, have incorporated into
Brazilian laws and regulations. In the absence of an ap-
plicable Brazilian regulation concerning safety or mainte-
nance, ANAC has incorporated by reference the majority of
the ICAO’s technical standards.
Route Rights
Domestic Routes: Brazilian airlines operate under a public
services concession, and for that reason Brazilian airlines are
required to obtain a concession to provide passenger and
cargo air transportation services from the Brazilian author-
ities. In addition, an Air Operator Certificate (“AOC”) is also
required for Brazilian Airlines to provide regular domestic
passenger or cargo transportation services. Brazilian Airlines
also need to comply with all technical requirements estab-
lished by the Brazilian Aviation Authority (ANAC). Based on
the Brazilian Aeronautical Code (“CBA”) established by Bra-
zilian Federal Law No. 7,565/86, there are no limitations to
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ownership of Brazilian airlines by foreign investors. The CBA
also states that non-Brazilian airlines are not authorized to
provide domestic air transportation services in Brazil.
International Routes: Brazilian and non-Brazilian airlines
providing services on international routes are also subject to
a variety of bilateral civil air transport agreements that pro-
vide for the exchange of air traffic rights between Brazil and
various other countries. International route rights, as well as
the corresponding landing rights, are derived from a varie-
ty of air transport agreements negotiated between Brazil
and foreign governments. Under such agreements, the gov-
ernment of one country grants the government of another
country the right to designate one or more of its domestic
airlines to operate scheduled services to certain destinations
of the former and, in certain cases, to further connect to
third-country destinations. In Brazil, when additional route
frequencies to and from foreign cities become available, any
eligible airline may apply to obtain them. If there is more
than one applicant for a route frequency ANAC must car-
ry out a public bid and award it to the elected airline. ANAC
grants route frequencies subject to the condition that the
recipient airline operate them on a permanent basis. ANAC’s
resolution 491/18 indicates the requirements to establish
the underuse of a frequency, and how it could be revoked
and reassigned. This provision of the resolution came into
force on September 2019.
Airfare Pricing Policy
Brazilian and non-Brazilian airlines are permitted to establish
their own international and domestic fares, in this last case
only for Brazilian airlines, without government regulation,
as long as they do not abuse any dominant market posi-
tion they may enjoy. Airlines may file complaints before the
Antitrust Court with respect to monopolistic or other pricing
practices by other airlines that violate Brazil’s antitrust laws.
Colombia
Aeronautical Regulation
The governmental entity in charge of regulating, directing
and supervising civil aviation in Colombia is the Aeronáutica
Civil (the “AC”), a technical agency ascribed to the Ministry of
Transportation. The AC is the aeronautical authority for the
entire domestic territory, in charge of regulating and super-
vising the Colombian air space. The AC may interpret, apply
and complement all civil aviation and air transportation regu-
lation to ensure compliance with the Colombian Aeronautical
Regulations (“RAC”). The AC also grants the necessary per-
mits for air transportation.
Route Rights
The AC grants operation permits to domestic and foreign
carriers that intend to operate in, from and to Colombia. In
the case of Colombian airlines, in order to obtain the op-
erational permit, the company must comply with the RAC
and fulfill legal, economic and technical requirements, to
later be subject to public hearings where the public con-
venience and necessity of the service is considered. The
same process must be followed to add national or interna-
tional routes; whose concession is subject to the bilateral
instruments entered into by Colombia. The only excep-
tion for not complying with the public hearing procedure is
that the application comes from a country member of the
CAN, or that the route or permit being applied for is part
of a deregulated regime. Even if it does not go through
the public hearing process, the airline must submit a com-
plete study to the AC and the request is made public on
the website of the authority. Routes cannot be transferred
under any circumstance and there is no limit to foreign in-
vestment in domestic airlines.
Airfare Pricing Policy
Since July 2007, as stated in resolution 3299 of the Aero-
nautical Civil entity, bottom level airfares for both interna-
tional and domestic transportation were eliminated. Under
resolution 904 issued in February 2012, the Aeronautical
Civil authority ceased to impose the obligation of charging
a fuel surcharge for both domestic and international trans-
portation of passengers and cargo. As of April 1, 2012, air
carriers may now freely decide whether or not to charge a
fuel surcharge. In the case that a fuel surcharge is charged,
it must be part of the fare, but shall be informed separate-
ly on the tickets, advertising or other methods of marketing
used by the company.
In the same line, as of April 1, 2012, there is no longer any
restriction on maximum fares published by the airlines or
with respect to the obligations for air carriers to report to
the Aeronautical civil authority the fares and conditions the
day after being published.
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Administrative fares are not subject to any changes, and its
charge is mandatory for the transport of passengers under
Aeronautical Civil Regulations. Differential administrative
fares apply to ticket sales made through Internet channels.
Antitrust Regulation
The Chilean antitrust authority, which we refer to as the
National Economic Prosecutor Office (“FNE” by its Spanish
name), oversees and investigates antitrust matters, which are
governed by Decree Law No. 211 of 1973, as amended, or the
“Antitrust Law.” The Antitrust Law states as anticompetitive,
any conduct that prevents, restricts or hinders competition,
or sets out to produce said effects.
The Antitrust Law continues by giving examples of the fol-
lowing anticompetitive conducts: (i) cartels; (ii) abuse of
dominance; and (iii) interlocking. The Antitrust Law defines
abusive practices as “The abusive exploitation on the part of
an economic agent, or a group thereof, of a dominant position in
the market, fixing sale or purchase prices, imposing on a sale the
acquisition of another product, allocating territories or market
quotas or imposing similar abuses on others; as well as predato-
ry practices, or unfair competition, carried out with the purpose
of reaching, maintaining or increasing a dominant position.”
An aggrieved person may sue for damages arising from a
breach of Antitrust Law by suing in the Chilean Competition
Court (the “TDLC” by its Spanish name). The TDLC has the
authority to impose a variety of sanctions for violations of
the Antitrust Law, including: (i) the amendment or termina-
tion of acts and contracts; (ii) the amendment or dissolu-
tion of legal entities involved in the punished conducts; and/
or (iii) the imposition a fine up to 30% of the sales of the
infringing entity corresponding to the line of products and/
or services associated to the infraction, during the entire
term for which the infringement lasted; alternatively, a fine
equal to the double of the economic benefit obtained by
the infringing company; and when none of these alternatives
can be applied, a fine up to USD 50,000,000 approximately
(60,000 UTA).
In the Resolution N°445 of August 1995, within the context
of a merger control transaction, the TDLC approved the right
to require (OR THE REQUIREMENT FOR) the merged airline to
be held to a specific self-regulatory fare plan for the domes-
tic air passenger market, consistent with the TDLC’s directive
to maintain a competitive environment within the domestic
market. This Airfare Pricing Policy Plan was updated by the
TDLC particularly to maintain it objective which consists of
a tariff regulation, through which maximum rates are estab-
lished on non-competitive routes under a monthly compli-
ance scheme.
Since October 1997, LATAM and LATAM Chile follow a
self-regulatory plan, which was modified and approved by the
TDLC in July 2005, and further in September 2011. In Febru-
ary 2010, the FNE closed the investigation initiated in 2007
regarding our compliance with this self-regulatory plan and
no further observations were made.
As a condition to the combination between LAN and TAM in
June 2012, the antitrust authorities in Chile and Brazil each
imposed certain mitigation measures as part of their ap-
proval of the merger transaction. Furthermore, the asso-
ciation was also submitted to the antitrust authorities in
Germany, Italy and Spain. All these jurisdictions granted un-
conditional clearances for this transaction. The merger was
filed with the Argentinean antitrust authorities; which ap-
proval is still pending. For more information regarding these
mitigation measures please see below:
Chile
On September 21, 2011, the TDLC issued a decision (the
“Decision”) with respect to the consultation procedure ini-
tiated on January 28, 2011 in connection with the combi-
nation between LAN and TAM. The TDLC, in the Decision,
approved the proposed combination between LAN and TAM,
subject to 14 conditions, as generally described below:
1. exchange of certain slots in the Guarulhos Airport at São
Paulo, Brazil;
2. extension of the frequent flyer program to airlines oper-
ating or willing to operate the Santiago-São Paulo, San-
tiago-Río de Janeiro, Santiago-Montevideo and Santia-
go-Asunción routes during the five-year period from the
effective time of the combination;
3. execution of interline agreements with airlines operat-
ing the Santiago-São Paulo, Santiago-Río de Janeiro and
Santiago-Asunción routes;
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9. issuance of a statement by LATAM supporting the uni-
lateral opening of the Chilean domestic skies (cabotage)
and abstention from any actions that would prevent such
opening;
4. certain capacity and other transitory restrictions applica-
10. promotion by LATAM of the growth and normal opera-
ble to the Santiago-São Paulo route;
5. certain amendments to LAN’s self-regulatory fare plan ap-
proved by the TDLC with respect to LAN’s domestic pas-
senger business;
6. the obligation of LATAM to renounce to one global airline
alliance within 24 months from the date in which the com-
bination becomes effective, except in the case that the
TDLC approves otherwise, or to elect not to participate in
any global airline alliance;
7. certain restrictions on code-sharing agreements outside
the global airline alliance to which LATAM belongs for routes
with origin or destination in Chile or that connect to North
America and Europe, or with Avianca/TACA or Gol for inter-
national routes in South America, including the obligation
to consult with, and obtain approval from, the TDLC prior to
its execution of certain of those codeshare agreements;
8. the abandonment of four air traffic frequencies with fifth
freedom rights between Chile and Peru and limitations on
acquiring in excess of 75%, as applicable, of the air traf-
fic frequencies in that route and the period that certain
air traffic frequencies may be granted by the Chilean air
transport authorities to LATAM;
tion of the Guarulhos (Brazil) and Arturo Merino Benítez
(Chile) airports, to facilitate access thereto to other
airlines;
11. certain restrictions regarding incentives to travel
agencies;
12. to maintain temporarily 12 round trip flights per week
between Chile and the United States and at least seven
round trip non-stop flights per week between Chile and
Europe;
13. certain transitory restrictions on increasing fares in the
Santiago-São Paulo and Santiago-Río de Janeiro routes
for the passenger business and for the Chile-Brazil routes
for the cargo business; and
14. engaging an independent consultant, expert in airline op-
erations, which for 36 months, and in coordination with
the FNE, will monitor and audit compliance with the con-
ditions imposed by the Decision.
On or about June 2015, the FNE initiated a legal claim
against LATAM before the TDLC alleging that LATAM was
not complying with certain mitigation conditions related to
the code share agreements with airlines outside LATAM’s
global alliance as referenced above. Although LATAM op-
posed this allegation and responded the claim according-
ly, a settlement agreement was reached between the FNE
and LATAM (the “Settlement Agreement”). The Settlement
Agreement approved by the TDLC on December 22, 2015
terminated the legal proceeding initiated by the FNE and
did not establish any violation of the TDLC resolutions or
any applicable antitrust regulations by LATAM. The Set-
tlement Agreement did establish the obligation of LATAM
to amend/terminate certain code share agreements and
contract an independent third party consultant, which
would act as an advisor to the FNE to monitor the compli-
ance by LATAM of the Seventh Condition and the Settle-
ment Agreement.
On October 31, 2018, the TDLC approved the joint busi-
ness agreements between LATAM and American Airlines,
and between LATAM and IAG, subject to nine mitigation
measures. On May 23, 2019 the Supreme Court of Chile
revoked the TDLC decision, and both agreements were
rejected. On September 26, 2019, LATAM announced that
the JBA with American Airlines would be terminated and,
on December 6, 2019, LATAM announced that the JBA with
IAG would not be implemented.
On October 15, 2019, LATAM Airlines Group S.A. received
the resolution issued by the FNE advising of the start of a
review investigation to analyze the implementation of the
agreement between LATAM Airlines Group S.A. and Delta
Air Lines, Inc. (Case number 2585-19). The Company is co-
operating in this investigation, which is ongoing.
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REGULATORY FRAMEWORK
Brasil
The CADE approved the LAN/TAM merger by unanimous
decision during its hearing on December 14, 2011, subject
to the following conditions: (1) the new combined group
(LATAM) should leave one of the two global alliances to
which it was part (Star Alliance or oneworld); and (2) the new
combined group (LATAM) should offer to swap two pairs of
slots in Guarulhos International Airport, to be used by an
occasional third party interested in offering direct non-stop
flights between São Paulo and Santiago, Chile. These impo-
sitions are in line with the mitigation measures adopted by
the TDLC, in Chile.
On February 24, 2021 the CADE approved without remedies
the joint venture between Delta Air Lines and LATAM Airline
Group. Previously, in a separate case, the CADE approved
without remedies the acquisition by Delta of up to 20% of
LATAM common shares on March 18, 2020.
Uruguay
On December 14, 2020 the antitrust authority of Uru-
guay (Comisión de Promoción y Defensa de la Competencia)
approved the joint venture between LATAM and Delta Air
Lines. The same agreement was filed before the aeronau-
tical authority of Uruguay (the Dirección Nacional de Aviación
Civil e Infraestructura Aeronáutica) on September 21, 2020
and approved by default on December 20, 2020, as the
timeframe provided by the Aeronautical Code Law to the
authority in order to resolve on the matter expired (90 days
after filing).
United States
On July 8, 2020 LATAM and Delta Air Lines filed their joint
venture before the DOT applying for approval of and antitrust
clearance for all the alliance agreements.
Colombia
On September 4th, 2020 LATAM and Delta filed their joint
venture agreement before Aerocivil applying for an approval
of the agreement.
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January 31, 2020
Material Fact report
In accordance with the provisions of Article 9 and 10 of
the Securities Market Law and in General Rule No. 30, duly
authorized, I inform as a Material Fact of LATAM Airlines
Group S.A. (“LATAM Airlines”), Securities Registration No.
306, the following:
By means of a material fact dated September 26, 2019,
LATAM Airlines informed that it would terminate its member-
ship in the oneworld alliance. With this date, LATAM Airlines
informs that it has reached an agreement with oneworld,
in which the effective departure of LATAM Airlines from the
oneworld alliance will be on May 1, 2020, keeping its pas-
sengers all the benefits of this alliance until April 30, 2020.
2020 in light of the uncertainty due to the Covid-19 (corona-
virus) outbreak that is affecting the demand for air traffic. As
of this date, it is not possible to quantify the exact impact
on demand or how long it may take to recover, making it im-
possible to estimate results for the full year.
LATAM is taking immediate measures to minimize possible
effects of the current scenario, including cost reduction and
capacity adjustments. Along these lines, and in addition to
the significant efforts being made by LATAM to protect the
health and safety of its passengers and workers, the LATAM
group announces a decrease in capacity of approximately
30% of international operations.
The situation will continue to be monitored day by day and
LATAM will maintain the flexibility to make the necessary ca-
pacity adjustments or other additional measures depending
on the development of the situation generated by Covid-19.
March 12, 2020
Material Fact report
In accordance with the provisions of Article 9 and 10 of the Se-
curities Market Law and in General Rule No. 30, duly authorized,
I inform as a Material Fact of LATAM Airlines Group S.A. (“LATAM
Airlines”), Securities Registration No. 306, the following:
March 16, 2020
Material Fact report
In accordance with the provisions of Article 9 and 10 of the Se-
curities Market Law and in General Rule No. 30, duly authorized,
I inform as a Material Fact of LATAM Airlines Group S.A. (“LATAM
Airlines”), Securities Registration No. 306, the following:
LATAM Airlines announces the suspension of its guidance
LATAM Airlines and its affiliates continue to take immediate
measures to minimize possible effects of the current sce-
nario and the uncertainty caused by the Covid-19 (coro-
navirus) outbreak.
Along these lines, and in addition to the significant ef-
forts it is making to protect the health and safety of its
passengers and workers, the LATAM group announces an
update of the reduction in capacity of 70% of the total
operations, corresponding 90% to international opera-
tions and 40% to domestic operations.
The situation will continue to be monitored day by day
and the LATAM group will maintain the flexibility to make
the necessary capacity adjustments or other additional
measures depending on the development of the situation
generated by Covid-19.
April 2, 2020
Material Fact report
In accordance with the provisions of Article 9 and 10 of
the Securities Market Law and in General Rule No. 30,
duly authorized, I inform as a Material Fact of LATAM
Airlines Group S.A. (“LATAM Airlines”), Securities Regis-
tration No. 306, the following:
LATAM Airlines and its affiliates continue to take im-
mediate measures to minimize possible effects of the
current scenario, and to protect the health and safety
of its passengers and workers.
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As a consequence of the situation caused by the Covid-19
(coronavirus) outbreak and the governmental restriction for
air operations, the LATAM group announces an update of
the reduction in capacity of approximately 95% of the total
operations.
The situation will continue to be monitored day by day and
the LATAM group will maintain the flexibility to make the
necessary capacity adjustments or take other additional
measures depending on the development of the situation
generated by Covid-19.
April 2, 2020
Material Fact report
In accordance with the provisions of Article 9 and 10 of the
Securities Market Law and in General Rule No. 30, duly au-
thorized, I inform as a Material Fact of LATAM Airlines Group
S.A. (“LATAM Airlines”), Securities Registration No. 306, the
following:
The Board of LATAM acknowledged the resignation present-
ed by Mr. Juan Jose Cueto Plaza to the position of board
member of the Company, effective as of April 1, 2020. In
his replacement, and in use of the faculty contained in the
Article 32 of Law N°18,046, on Corporations Law, the Board
of Directors agreed in an extraordinary meeting held yes-
terday, April 1, 2020, to appoint Mr. Enrique Cueto Plaza as
board member of LATAM. Consequently, at the next Ordinary
Shareholders’ Meeting of LATAM, it will be necessary to pro-
ceed to elect and renew its board of directors.
April 14th, 2020
Material fact report - Proposition regarding
Definitive Dividend Distribution
In accordance with the provisions of Circular No. 660, dated Oc-
tober 22, 1986, of the Commission, , I inform this Commission
as a Material Fact, that in the Board Meeting held today and in
relation with the definitive dividend distribution from profits for
the year 2019, which correspond to the second point of the no-
tice, for the consideration of the Ordinary Shareholders Meet-
ing (the “Shareholder´s Meeting”) of LATAM Airlines Group S.A.
(“LATAM”) to be held on April 30, 2020, the Board agreed to:
of USD 57,129,119.64 which means to distribute a dividend
of USD 0,094209094475 per share, which, if approved, will
be payable on Thursday, May 28, 2020, in its equivalent in
Chilean pesos according to the exchange rate "observed"
published in the Official Journal on the fifth business day
prior to the distribution day, that is, on May 22, 2020. In
case the dividend is approved, the shareholders registered at
the Shareholders' Register at midnight of May 22, 2020 will
be entitled to receive the dividends; and,
3. Lastly, the Board set forth that considering the crisis af-
fecting the entire world and especially the airline industry, as
well as the uncertainty level of the crisis and its consequenc-
es, it is of the opinion that payment of any dividends from
profits for the year 2019 should be deferred to when circum-
stances make it more advisable.
April 17, 2020
Material Fact report
1. Differ, that related to the distribution of the profit and
specially to the payment of the minimum mandatory div-
idend, corresponding to the 30% of the profit for the year
2019, to what the Shareholders Meeting may decide, accord-
ing to its sovereign authority.
In accordance with the provisions of Article 9 and 10 of the
Securities Market Law and in General Rule No. 30, duly au-
thorized, I inform as a Material Fact of LATAM Airlines Group
S.A. (“LATAM Airlines”), Securities Registration No. 306, the
following:
2. State that the minimum mandatory dividend on the first
paragraph above, if approved, corresponds to the Definitive
Dividend No. 51, equivalent to the amount in Chilean pesos
The Board of LATAM acknowledged the resignation presented
by Mr. Carlos Heller Solari to the position of board member
of the Company, effective as of today. The Board of LATAM
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did not appoint a replacement at this moment, which could
occur in a next session, in use of the faculty contained in
the Article 32 of Law N°18,046 on Corporations Law. Conse-
quently, and as planned, at the next Ordinary Shareholders’
Meeting of LATAM, it will be necessary to proceed to elect
and renew its board of directors.
April 21, 2020
Material Fact report
In accordance with the provisions of Article 9 and 10 of the
Securities Market Law and General Rule No. 30, duly author-
ized, I inform as a Material Fact of LATAM Airlines Group S.A.
(“LATAM” or the “Society”), Securities Registration No. 306,
the following:
LATAM informs that on this date the Board appointed Mr En-
rique Ostale Cambiaso as board member in the position left
vacant by the resignation of Mr Carlos Heller Solari on April
16, 2020, position that remained vacant until today.
Notwithstanding the above, and as was previously informed
on the date of Mr Heller’s resignation, at the next Ordinary
Shareholders Meeting of LATAM, it will be necessary to pro-
ceed to elect and renew its Board of Directors.
April 30th, 2020
Material fact report – Definitive Dividend Distribution
In accordance with the provisions of Circular No. 660 of your
Commission, dated October 22, 1986, and duly authorized, I
hereby inform you that at the Ordinary Shareholders Meeting
of LATAM Airlines Group S.A. (“LATAM”) held today, April 30,
2020, it was approved the distribution of Definitive Dividend
No. 51, Minimum Mandatory, up to complete the 30% of net
income for the year 2019, that is, the equivalent amount in
Chilean pesos of US$57,129,119.64 which means to distrib-
ute a dividend of US$0,094209094475 per share, payable
on Thursday, May 28, 2020, in its equivalent in Chilean pesos
according to the exchange rate "observed", published in the
Official Journal on the fifth business day prior to the distri-
bution day, that is, on May 22, 2020.
The shareholders of the Company shall be entitled to receive
the dividend in proportion to their respective shareholding
in the share capital, according to the number of shares they
have registered in the Shareholders' Register at midnight of
the fifth business day prior to the distribution date, that is, at
midnight on May 22, 2020.
The notice referred to in Section II of the aforementioned Cir-
cular 660 will be published on May 19, 2020, in the newspa-
per "La Tercera" of Santiago.
Form No. 1 is attached, which establishes the same Circular
No. 660, duly completed and signed by the undersigned.
Form no. 1 Dividend distribution
1. Identification of the Company and of the Movement:
1.01 R.U.T. N°: 89.862.200-2
1.02 Original submitted on: 04.30.2020
1.03 Name of the company: LATAM Airlines Group S.A.
1.04 N° in Securities Register: 0306
1.05 Series affected: Sole
1.06 Ticker: LTM
1.07 Movement individualization 51
2. Agreement and sum of the dividend:
2.01 Date of agreement: 04.30.2020
2.02 Agreement version: 1
2.03 Sum of the dividend: 57,129,119.64
2.04 Currency: USD
3. Shares and shareholders with rights:
3.01 Number of shares: 606,407,693
3.02 Deadline: 05.22.2020
4. Dividend character:
4.01 Dividend type: 2
4.02 Yearend close: 31.12.2019
4.03 Form of payment: 1
5. Dividend payment in cash:
5.01 Payment in cash: 0.094209094475
5.02 Currency: USD
5.03 Payment date: 05.28.2020
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6. Optional dividend distribution in shares:
This section is not applicable.
7. Observations:
7.01 The exchange rate to be used shall be the "Observed
Dollar", published in the Official Journal on May 22, 2020.
7.02 The payment of the dividend will be made through the
Credit and Investment Bank, in any of its branches through-
out the country, from Monday to Friday, from 9:00 to 14:00
hours, for a period of 90 days counted from May 28, 2020,
by promissory note payable to order. Shareholders who so
request in writing will receive a deposit into the current or
bank savings account of the shareholder. The respective
bank deposit receipt or notice will be sent to these share-
holders. Any request or change that a shareholder should
wish to make with regard to the method of payment as in-
dicated, must be communicated by May 21, 2020. Follow-
ing said period of 90 days counted from May 28, 2020, the
funds will be placed into the custody of DCV Records S.A.
until they are withdrawn by the shareholders, by check or
promissory note payable to order.
Shareholders may be represented by proxy, by granting a
power of attorney signed before a Notary. For any inquiries,
shareholders may call +562 2393-9003; or write to
atencionaccionistas@dcv.cl.
7.03 The notice referred to in Section II of Circular 660, dat-
ed October 22, 1986 from the Commission for the Financial
Market, shall be published on May 19, 2020 in the newspa-
per "La Tercera" in Santiago.
7.04 The reporting company is public.
7.05 The dividend is paid against the profits for the year
2019.
7.06 At the ordinary shareholders' meeting of the reporting
company, the distribution of a dividend was approved for
30% of the profits for financial year 2019, which is equivalent
to an amount of US$57,129,119.64.
7.07 The tax effects of the dividend payment shall be re-
ported in a timely manner to the shareholders.
The information contained in this form is the faithful ex-
pression of the truth, so I assume the corresponding legal
responsibility.
April 30th, 2020
Material fact report - Appointment of Chairman
And Vice President and Board Committee
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and on the General Rule
No. 30, duly authorized, I inform you the following as materi-
al facts of LATAM Airlines Group S.A.:
I. Chairman and Vice President. At a Board Session held
today, Mr. Ignacio Cueto Plaza and Mr. Enrique Cue-
to Plaza were appointed as Chairman and Vice President,
respectively.
II. Board Committee. In the same session, and as disposed
in the Article 50 bis of Corporations Law N°18,046, it was
registered that the Board Committee will be composed by
the Board Members Mr. Eduardo Novoa Castellon (inde-
pendent), Mr. Patrick Horn Garcia (independent) and Mr.
Nicolas Eblen Hirmas.
April 30th, 2020
Material fact report - New Board
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and on the General Rule
No. 30, duly authorized, I inform you as a material fact that in
the Ordinary Shareholders' Meeting of LATAM Airlines Group
S.A. held today, the shareholders of LATAM elected the new
Board of Directors of the company, which will last for two
years. The following persons were elected as board members:
i) Enrique Cueto Plaza;
ii) Nicolás Eblen Hirmas;
iii) Ignacio Javier Cueto Plaza;
iv) Henri Philippe Reichstul;
v) Giles Edward Agutter;
vi) Sonia J.S. Villalobos;
vii) Enrique Ostalé Cambiaso;
viii) Eduardo Novoa Castellón (independent); and
ix) Patrick Horn García (independent)
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May 7, 2020
Material fact report - Subscription of Joint Venture for
the implementation of the Strategic Alliance with Delta
In accordance with the provisions of Article 9 and 10 of the
Securities Market Law and General Rule No. 30, duly author-
ized, I inform the as a Material Fact of LATAM Airlines Group
S.A. (“LATAM” or the “Company"), Securities Registration No.
306, the following:
In accordance with the announcement of a Material Fact
made on September 26, 2019, LATAM informs that on this
date it has signed a contract entitled “Trans-American Joint
Venture Agreement” with Delta Air Lines Inc. (“Delta”), for the
purpose of implementing a strategic alliance in the routes
between the United States of America and Canada, and the
countries of South America with open skies agreements, and
the connections of such routes (“Strategic Alliance”).
Likewise, as informed on the abovementioned Materi-
al Fact, it is reiterated that is the intention of LATAM and
Delta to implement the Strategic Alliance simultaneous-
ly in every country of South America, United States and
Canada in which regulatory authorizations are not required
and/or where regulatory authorizations have already been
obtained. In Chile, the regulatory authorizations will be re-
quested within the coming weeks.
May 26, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market Law, and on the General
Rule No. 30, duly authorized by the Board on May 25, 2020,
I inform you the following as material facts of LATAM Airlines
Group S.A. (“LATAM Airlines” or the “Company”):
• To this date it is not possible to determine the moment
or source of the mentioned dividend to the Company’s
shareholders.
May 26, 2020
MATERIAL FACT report
• As informed, LATAM Airlines started today a reorganization
process in the United States of America according to the
rules established in Chapter 11 of Title 11 of the Code
of the United States of America, presenting a voluntary
petition for relief in accordance with the same (the “Chapter
11 Procedure”).
In accordance with the provisions of Article 9 and Article 10
item 2 of Law No. 18045, and pursuant to the provisions
of General Rule No. 30, duly authorized by the Board in the
meeting held on May 25, 2020, I hereby inform the Commis-
sion for the Financial Market, as a Material Fact of LATAM
Airlines Group S.A. (“LATAM Airlines” or the “Company”, terms
including, when appropriate, its affiliates), the following:
• The Chapter 11 Procedure grants an automatic stay at the
beginning of the process. Said automatic stay protects
LATAM Airlines’ cash position while restructures its balance
sheet and right-size its operations.
• The cash outflow involved in the dividend payment and
agreed in the last Shareholders Meeting of LATAM Airlines is
within the cash flows affected by the automatic stay.
• Since the beginning of the crisis affecting the airline industry
as a result of the Covid-19 pandemic, which for LATAM
Airlines has meant the paralyzing of more than 95% of its
operations, the Board has analyzed the alternatives that may
exist to strengthen the Company's liquidity and thus mitigate
the impact on the continuity of its ongoing business.
• In fact, the rules of the Chapter 11 Procedure prohibit the
Company to distribute dividends to its shareholders during
the time it is renegotiating its debt to ensure the continuity
of its operations and future viability.
• Under this scenario, LATAM Airlines has considered and
attempted to implement a conventional one-on-one
renegotiation with its creditors and other stakeholders.
On parallel, the Company has studied the options for a
restructure under insolvency proceedings.
• Considering the above, LATAM Airlines will not pay the
• In the Board's view, the times of the conventional bilateral
dividend planned for May 28, 2020.
process, the possibility that during it, creditors could decide
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• The Chapter 11 Proceeding, which grants an automatic
• At this time, it is not possible to determine the financial
to exercise actions of forced collection, the impossibility
of redressing breaches, and the need to implement a
comprehensive restructuring of LATAM Airlines to which
all its creditors and other stakeholders must adhere, lead
to the consideration as a better alternative of a formal
restructuring.
• Given the situation in which the Company stands today,
suspension of execution for at least 180 days, represents
the Company's best opportunity to ensure its stability
and fulfill its obligations to its counterparties. LATAM
Airlines intends to use the substantive and procedural tools
available in under Chapter 11 to maximize the efficiency
of its ongoing operations and renegotiate certain key
contractual relationships, adjusting them to current market
conditions. Under The Chapter 11 Proceeding, LATAM
Airlines will have the opportunity to restructure its financial
balance sheet and adjust the size of its operations to the
new reality.
it is necessary to obtain a temporary suspension of
execution that will protect it from the demands of its
creditors and other stakeholders; and, at the same
time, allow it to continue operating with its main assets,
suppliers, financial parties, regulators and workers, while it
structures a binding reorganization to be financially viable
in a post-pandemic scenario.
• This restructuring under Chapter 11 involves the parent
company in Chile and the subsidiaries in Chile, Colombia,
Peru, Ecuador, the United States of America, the
Cayman Islands, and the Netherlands. The subsidiaries
of Argentina, Brazil—including its intermediate parent
company in Chile, Holdco I S.A.—and Paraguay are not
included in the Chapter 11 Proceeding.
• Because of the foregoing, and having consulted the
Company's administration and legal and financial advisors,
the Board’s members have unanimously determined that
LATAM Airlines should begin a reorganization process in the
United States of America in accordance with the rules set
forth in Chapter 11 of Title 11 of the US Code, submitting
a voluntary application for protection under it (the "Chapter
11 Proceeding").
• On parallel, LATAM Airlines has negotiated and obtained
financing commitments from shareholders linked to
the Cueto and Amaro families, and Qatar Airways for
US$900 million, the availability of which is subject to the
negotiation of final agreements and their being approved
as Debtor In Possession under the Chapter 11 Proceeding.
effects that the reported subject matter will have for LATAM
Airlines.
May 27, 2020
Supplementing MATERIAL FACT – Response to
Resolution No. 22.012 dated May 26, 2020
In accordance with the provisions of Article 9 and Article 10
item 2 of Law No. 18.045, and pursuant to the provisions of
General Rule No. 30, and in compliance with the provisions
of the Commission for the Financial Market (“CMF”) in Res-
olution No. 22.012, 26 dated May 26, 2020, I hereby com-
plement the MATERIAL FACT with the same date of LATAM
Airlines Group S.A. (“LATAM Airlines” or the “Company”, terms
including, when appropriate, its affiliates):
• The voluntary application for protection (the "Application")
under Chapter 11 (“Chapter 11”) of Title 11 of the US Code
was filed by LATAM Airlines on May 26, 2020.
• The laws of the United States of America do not establish
the requirement or a procedure for acceptance of
such Application by the applicable court. Thereby, the
mere submission of the Application (i) commences the
proceedings under Chapter 11 (the "Chapter 11 Proceeding"),
and (ii) grants the requested protection without the need for
a resolution from the corresponding court.
• More details are available on the website
• Unlike reorganization procedures in other jurisdictions,
www.LATAMreorganization.com
Chapter 11 does not lay down specific time limits in which
a reorganization plan must be confirmed or in which LATAM
Airlines is to exit the Chapter 11 Proceeding. Nonetheless,
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Chapter 11 does set limitations on the timeframe within
which debtors have the exclusive right to propose and
request acceptances of a reorganization plan. Under
these provisions, LATAM Airlines has the exclusive right
to propose a reorganization plan within 120 days of
submission of the Application, a period that may be
extended for a term of up to 18 months.
• In Chapter 11 Proceedings, all creditors will be treated fairly,
regardless of whether they are foreign or local. In this regard,
all creditors will be provided with the same information
and the same opportunity to file petitions, claims, and
objections; and ultimately, to make an informed judgment on
any proposed reorganization plan.
• After the Application is filed, most charges against LATAM
Airlines prior to filing, as well as enforcement actions, are
automatically suspended for at least 180 days.
• The Company will request acknowledgment of the Chapter
11 Proceeding, as the main foreign proceeding, before the
Civil Courts of Santiago, in accordance with Article 316 of
Law No. 20.720.
• The Subsidiaries in Argentina and Paraguay do not
participate in the Chapter 11 Proceeding because of their
specific financial situation.
• The Subsidiaries in Brazil (including the intermediate parent
company in Chile, HoldCo I S.A.) do not participate in the
Chapter 11 Proceeding because of their specific financial
situation and the ongoing negotiations that TAM S.A. has
with financial institutions in that country.
• Chapter 11 provides for the possibility that entities subject
to a Chapter 11 Proceeding may obtain funding under
the debtor-in-possession modality in order to continue
their operations. Debt incurred under this financing takes
precedence over most of the obligations that debtors subject
to Chapter 11 maintained prior to the Application.
• The terms and conditions of debtor-in-possession funding
shall be established in the contracts awarded for this
purpose, which shall be negotiated during the following
weeks, as the Chapter 11 Proceeding progresses and which,
prior to being enforced, shall be approved by the judge
before whom the Application is processed in accordance
with Chapter 11 Proceedings. As soon as accurate
information is available, it will be promptly disclosed.
• The background to the case is public and can be found and
monitored in https://cases.primeclerk.com/LATAM/.
July 9, 2020
Material fact report
In accordance with the provisions of Article 9 and 10 of the
Law 18,045 and General Rule No. 30, duly authorized by the
Board in the session held on June 30, 2020, I inform as a
Material Fact of LATAM Airlines Group S.A. (“LATAM” or the
“Company", terms that include its subsidiaries, when applica-
ble), the following:
1. Formalizing of the second tranche of DIP
financing (Debtor In Possession financing):
Today, LATAM formalized the second tranche called Tranche
A of the DIP financing proposal (Debtor In Possession financ-
ing) before the Court of the Southern District of New York in
the framework of the Procedure of Chapter 11. The Tranche A
amounts to US$1,300 million, which has been committed by
the investment group Oaktree Capital Management L.P. and its
subsidiaries.
This proposal must be reviewed and approved by the Court of
New York in the coming days, as well as the first tranche pre-
viously announced to the market, called Tranche C, which con-
sists of US$900 million committed by the shareholders Qatar
Airways and the Cueto and Amaro families, and that includes
an upsize of US$250 million so that other shareholders can
subscribe in Chile, once it is approved by the Court.
2. Incorporation of LATAM Airlines Brazil
to Chapter 11 in the United States:
LATAM Airlines Brazil, a Company's subsidiary, announced to-
day that it will join the Company's financial reorganization in
the United States, including its intermediate parent company
in Chile, Holdco I S.A., its parent company in Brazil, TAM S.A.,
and its subsidiaries Multiplus Corretora de Seguros Ltda.,
ABSA - Aerolinhas Brasileiras S.A., Prismah Fidelidade Ltda.,
Fidelidade Viagens e Turismo S.A. and TP Franchising Ltda.
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As informed on May 26, 2020, LATAM began a reorganization
process in the United States of America in accordance with
the regulations established in Chapter 11 of Title 11 of the
Code of the United States of America, presenting a voluntary
request for protection (the “Chapter 11 Procedure”), which
did not include the Brazilian subsidiary at that time.
Due to the prolongation of the Coronavirus pandemic, LATAM
Airlines Brazil announced its integration to the Chapter 11
Procedure of the Company, to restructure its financial liabil-
ities and efficiently manage its fleet, maintaining its opera-
tional continuity, in addition to facilitating its access to DIP
financing (Debtor In Possession financing).
August 18, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market Law, and on the Gen-
eral Rule No. 30, duly authorized by the Board as of today, I
inform you the following as material facts of LATAM Airlines
Group S.A. (“LATAM Airlines” or the “Company”):
• As informed, LATAM Airlines started a reorganization process
in the United States of America according to the rules
established in Chapter 11 of Title 11 of the Code of the
United States of America, presenting a voluntary petition
for relief in accordance with the same (the “Chapter 11
Procedure”).
• As part of the reporting obligations that LATAM has to comply
under the Chapter 11 Procedure, there is a Monthly Operating
Report (MOR).
August 28, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market Law, and on the General
Rule No. 30, duly authorized by the Board as of today, I inform
you the following as material facts of LATAM Airlines Group
S.A. (“LATAM Airlines” or the “Company”):
• As informed, LATAM Airlines started a reorganization process
• In virtue of the abovementioned, we made available for
you and for the market the MOR corresponding for the
month of June and submitted as of today, included in
the following link: https://www.latamreorganizacion.com/
en/publications/.
in the United States of America according to the rules
established in Chapter 11 of Title 11 of the Code of the
United States of America, presenting a voluntary petition
for relief in accordance with the same (the “Chapter 11
Procedure”).
• This MOR does not replace in any way the financial
• As part of the reporting obligations that LATAM has to
information that the Company provides regularly according
the securities law or the applicable regulation and has
been prepared for the sole purpose to comply with the
obligations under the Chapter 11 Procedure.
In consequence and without prejudice of the limitations de-
tailed in the MOR, we state that the information contained
in this report, solely prepared for complying with obliga-
tions under the Chapter 11 Procedure, has not been audit-
ed, has a limited scope and covers a limited period of time
for it is subject to material changes as the quarter advances
along with the regulatory processes of the quarterly financial
statement’s preparation, included the limited revision by the
external auditors.
comply under the Chapter 11 Procedure, there is a Monthly
Operating Report (MOR).
• In virtue of the abovementioned, we made available for
you and for the market the MOR corresponding for the
month of July and submitted as of today, included in the
following link https://www.latamreorganizacion.com/en/
publications/.
• This MOR does not replace in any way the financial
information that the Company provides regularly according
the securities law or the applicable regulation and has
been prepared for the sole purpose to comply with the
obligations under the Chapter 11 Procedure.
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• In consequence and without prejudice of the limitations
detailed in the MOR, we state that the information
contained in this report, solely prepared for complying with
obligations under the Chapter 11 Procedure, has not been
audited, has a limited scope and covers a limited period
of time for it is subject to material changes as the quarter
advances along with the regulatory processes of the
quarterly financial statement’s preparation, included the
limited revision by the external auditors.
September 7, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and as established in
the Commissions’ General Rule No. 30 of 1989, I inform you
as a material fact of LATAM Airlines Group S.A. (“LATAM Air-
lines” or the “Company”) the following MATERIAL FACT:
As of today, LATAM Airlines’ Board acknowledged the resig-
nation presented by Mr Giles Agutter for the position of
board member of the Company, effective as of the end of
today’s business day. The Board has not yet agreed on the
designated replacement, which may take place on a next
session pursuant to Article 32 of the Law No. 18,046, rel-
ative to corporations. In accordance, in the next Ordinary
Shareholder Meeting the company should proceed to renew
the totality of the Board.
September 10, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and as established in
the Commissions’ General Rule No. 30, I inform you as a ma-
terial fact of LATAM Airlines Group S.A. (“LATAM Airlines” or
the “Company”) the following MATERIAL FACT:
• On this date, the Honorable Judge James L. Garrity ruled
on the DIP (Debtor In Possesion) financing proposals filed
in the Southern District Court of New York (the “Court”)
within the framework of the LATAM reorganization process
in the United States of America (Chapter 11 procedure).
• The Court ruled that the price and terms of the DIP
financing proposed by LATAM, both in Tranche A (Oaktree)
and in Tranche C (Costa Verde and Qatar), meet the
standard of being completely fair (entire fairness), and
that DIP creditors have the right to have their good faith
recognized, requirements to be able to approve the
operation under the Bankruptcy Code of the United States
of America.
• However, the Court also determined that LATAM's option
to cause Tranche C creditors to subscribe shares of the
Company with the proceeds of the loan payment, included
in the DIP financing, could not be approved at this time
without affecting the possibility for the Court to review
and rule in the future on the reorganization plan to be
presented by LATAM.
• Since the request for approval of DIP funding had to be
approved or rejected as a whole, the Court concluded that,
for the reason indicated in the previous paragraph, it would
not approve the request.
• The Company, together with its legal and financial advisers,
is analyzing the Court's decision and its scope to define a
course of action.
September 17, 2020
Material fact report
In accordance with the provisions set forth in Article 9 and
the second paragraph of Article 10 of the Securities Market
Law, and in General Rule No. 30, duly authorized, I hereby re-
port the following MATERIAL FACT of LATAM Airlines Group
S.A. (“LATAM” or the “Company”), registration in the Securi-
ties Registry No. 306:
• As reported by Material Fact on September 10, 2020, on
that date, the Honorable Judge James L. Garrity Jr. ruled not
to approve the DIP Financing (the “DIP Financing”) proposal
originally filed by LATAM (the “Original DIP Financing
Proposal”) before the Court of the Southern District of New
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York (the “Court”) in the LATAM reorganization proceeding in
the United States of America (the “Chapter 11 Proceeding”).
• The foregoing because the Court considered that LATAM’s
option to cause Tranche C creditors to subscribe shares
of the Company with the proceeds of the payment of the
credits contemplated in the Original DIP Financing Proposal
could not be approved at this time without affecting the
Court’s ability to review and rule on the reorganization plan
to be submitted by LATAM in the future.
• The Company analyzed the Court’s decision with its legal
and financial advisors and prepared a revised DIP Financing
proposal (the “Revised DIP Financing Proposal”), which was
negotiated and agreed upon with various parties of the
Chapter 11 Proceeding who have indicated an interest in
such financing. In particular, such parties are (i) those entities
that were listed as financiers for Tranches A and C of the
DIP Financing (i.e., Oaktree Capital Management, L.P, or
certain related entities; and a group of LATAM shareholders
comprised of the Cueto Group, the Eblen Group and Qatar
Airways); and (ii) some of the parties that filed alternative
proposals and/or objections to the Original DIP Financing
Proposal (i.e., the group of investors led by Knighthead
Capital Management LLC (from now on Knighthead) and
Jefferies Finance LLC (from now on Jefferies); and the Official
Committee of Unsecured Creditors, also known as “UCC”).
• After being reviewed by the LATAM Directors’ Committee
at meetings held on September 12, 13, and 16, 2020, and
being approved by the Board of Directors at a meeting
held on September 16, 2020 - by the unanimous vote of
the non-interested Directors -, the Revised DIP Financing
Proposal was submitted to the Court for approval on the
date hereof.
• The terms of the Revised DIP Financing Proposal maintain,
in essence, the structure of the Original DIP Financing
Proposal. The main changes relate to the following:
> The financing commitment of up to US$ 2,450 million
through a delayed draw credit facility consists of two
tranches in which the following creditors will participate:
» A Tranche A for a principal amount of up to US$ 1,300
million, of which (i) US$ 1,125 million will be provided
by Oaktree Capital Management, L.P. or certain
related entities thereof; and (ii) US$ 175 million will be
provided by Knighthead, Jefferies and/or other entities
that are part of a creditors’ syndicate organized by
Jefferies.
» A Tranche C for a principal amount of up to US$
1,150 million, of which (i) US$ 750 million will be
provided by LATAM’s shareholder group composed by
the Cueto Group, the Eblen Group and Qatar Airways,
or certain related entities of the latter; (ii) US$ 250
million will be provided by Knighthead, Jefferies and/
or other entities that are part of a creditors’ syndicate
organized by Jefferies; and (iii) US$ 150 million to be
provided by LATAM’s shareholders or creditors, or new
investors in LATAM (in each case to the satisfaction
of the Company). If no commitments are obtained for
such US$ 150 million, the difference will be provided,
on a pro rata basis, by the Tranche C creditors
indicated in numbers (i) and (ii) above.
> The Revised DIP Financing Proposal does not
contemplate LATAM’s option to cause Tranche C lenders
to subscribe Company shares with the proceeds of the
credit payment. Therefore, unless the terms of the
DIP Financing are subsequently modified pursuant to
a reorganization plan that is approved in accordance
with the rules governing the Chapter 11 Proceeding,
the amounts owed under Tranche A and Tranche C shall
be paid in cash. If such modification is made, however,
the group formed by Knighthead, Jefferies and/or other
entities that are part of a creditors’ syndicate organized
by Jefferies may not be forced to receive payments
other than in cash and the other lenders of the Tranche
C will have the right to buy their credit at par value.
• As with the Original DIP Financing Proposal, the Revised
DIP Financing Proposal:
> Contemplates a potential Tranche B for up to an
additional amount of US$ 750 million, subject to
the authorization of the Court and other conditions
customary for this type of transactions.
> Has a scheduled maturity date of 18 months as from
the closing date, subject to a potential extension for an
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additional 60 days. The foregoing, unless terminated
earlier in accordance with its terms, including without
limitation, in the case of an event of default (the
“Maturity Date”).
• As to the economic terms and conditions, those of the
Revised DIP Financing Proposal are substantially the same
as those of the Original DIP Financing Proposal, and are
summarized below:
INTEREST AND FEES FOR TRANCHE A:
> Interest: Both the rate and the interest payment dates
will depend on the choice made by LATAM at the time
of requesting a disbursement under this tranche, being
able to choose between (i) paying interest in cash
at the maturity of each quarterly interest period, or
(ii) capitalizing such interest to pay it in cash on the
Maturity Date. In either case, LATAM may also choose
the applicable interest rate, choosing between the
eurodollar rate or the alternate base rate (“ABR”).
» Loans whose interest is capitalized on a quarterly
basis and is therefore payable on the Maturity Date,
will accrue interest at LIBOR plus 11%, in the case of
eurodollar loans, and at 10% plus the base rate in the
case of ABR loans.
> Fees and other charges:
» An Undrawn Commitment Fee equivalent to 0.50%
per year, which will be calculated daily, and payable
on the last business day of each quarter until the
Maturity Date.
» A cash “yield-enhancement payment” in an amount
equal to 2.0% of the Tranche A financing commitment,
payable on the closing date of the DIP Financing.
» If the scheduled maturity date is extended, a
fee equivalent to 0.50% of the credits and credit
commitments of Tranche A (called “Extension Fee”)
payable on the date on which the extension is made.
» Loans on which interest is payable in cash at the end
of each interest period will accrue interest at LIBOR
plus 9.75% in the case of eurodollar loans, and 8.75%
plus the base rate in the case of ABR loans.
» Additionally, a Back-end Fee equivalent to 0.75% of the
financing commitment under Tranche A is contemplated,
payable on the Maturity Date and calculated as if it had
accrued daily and capitalized quarterly.
INTEREST AND FEES FOR TRANCHE C:
> Interest: Interest will be accrued at LIBOR plus 15%,
which will be payable on the Maturity Date, and will
be calculated as if it had accrued daily and capitalized
quarterly.
> Fees and other charges:
» An Undrawn Commitment Fee equivalent to 0.5%
per annum, which will be payable on the Maturity
Date and calculated as if it had accrued daily and
capitalized monthly.
» A Closing Fee payable on the Maturity Date, equal to
2.0% of the committed amount of financing under
Tranche C, calculated as if it had accrued on the date
of the date of the first disbursement of the Tranche C
loans.
» An exit fee (the “Exit Fee”) payable on the Maturity
Date, equivalent to 3.0% on the amount of principal
due (including any interest, fees, or other amounts
that have been or will be capitalized), as well as
accrued and uncapitalized interest.
» An additional fee of 6.0%, payable on the Maturity
Date, on the sum of (i) the amount of principal due
(including any interest, fees, or other amounts that
have been or will be capitalized), as well as accrued
and non-capitalized interest); and (ii) the amount
resulting from applying the Exit Fee.
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> Use of Proceeds: Proceeds from both Tranches may be
used to working capital and to other purposes approved
by the Court.
> Liquidity Requirement: The DIP Financing requires that
LATAM maintains liquidity of at least US$ 400 million at
a consolidated level.
> Securities and preferences:
» In favor of all tranches of the DIP Financing with
respect to other claims of LATAM and the entities of
its business group that are subject to the Chapter 11
Proceeding (the “Subject Subsidiaries”).
» The credits under Tranche A will be senior to the
credits under Tranche B (should the latter comes into
effect). The credits under Tranche B will in turn be
senior over the credits under Tranche C.
» The loans under the DIP Financing will be secured
by (i) the joint and several liability of the Subject
Subsidiaries, (ii) security interests to be created over
certain assets under the laws of the jurisdictions in
which they are located, and (iii) a general security
interest to be created under the laws of the State
of New York, United States of America, over assets
of LATAM and the Subject Subsidiaries other than
certain “Excluded Assets” and the “Carve-Out”.
Excluded Assets include, among other things,
aircraft owned or leased by LATAM and the Subject
Subsidiaries, and the Carve-Out includes, among
other things, certain funds to cover the expenses pf
the Chapter 11 Proceeding.
» In addition, LATAM’s obligations to the creditors of
the DIP Financing will have a super administrative
preference recognized under Chapter 11 of the
United States Bankruptcy Code with respect to the
other liabilities of the Company and the Subject
Subsidiaries prior to the commencement of the
Chapter 11 Proceeding.
September 18, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and as established in the
Commissions’ General Rule No. 30, I inform you as a materi-
al fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the
“Company”) the following MATERIAL FACT:
• As reported by Material Fact on September 17, 2020, the
Company submitted a revised financing proposal (“New
DIP Financing Proposal”) for the approval of the Southern
District Court of New York (the “Court”) as part of the
process reorganization of LATAM in the United States of
America (the “Chapter Eleven Procedure”).
• On this date, the Honorable Judge James L. Garrity Jr.
resolved to approve the New DIP Financing Proposal
submitted by LATAM.
> Other terms: DIP Financing contemplates other terms
that are customary for financing operations of this
nature, such as conditions for requesting disbursements,
representations and warranties, covenants, mandatory
prepayment events, other acceleration events and
creditor coordination rules.
• LATAM is awaiting the Court’s decision in response to the
Revised DIP Financing Proposal.
September 29, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market Law, and on the General
Rule No. 30, duly authorized by the Board as of today, I inform
you the following as material facts of LATAM Airlines Group
S.A. (“LATAM Airlines” or the “Company”):
• As informed, LATAM Airlines started a reorganization
process in the United States of America according to the
rules established in Chapter 11 of Title 11 of the Code
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ment’s preparation, included the limited revision by the exter-
nal auditors, if applicable.
Mr. Eduardo Diez Morello, and is available at the
following link: https://latamairlines.gcs-web.com/
static-files/643941ad-bb49-4072-ad54-f8a1a36bb769.
of the United States of America, presenting a voluntary
petition for relief in accordance with the same (the
“Chapter 11 Procedure”).
• LATAM has to prepare and deliver a Monthly Operating
Report (“MOR”), as part of the reporting obligations it has
to comply under the Chapter 11 Procedure.
September 29, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and as established in the
Commissions’ General Rule No. 30, I inform you as a materi-
al fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the
“Company”) the following MATERIAL FACT:
• Considering the abovementioned, we hereby make
• As reported by Material Fact dated September 18, 2020,
available for your Commission and for the market the on
this date and included in the following link https://www.
latamreorganizacion.com/en/publications/
• This MOR does not replace in any way the financial
information that the Company provides regularly according
the securities law or the applicable regulation and has
been prepared for the sole purpose to comply with the
obligations under the Chapter 11 Procedure.
In consequence and without prejudice of the limitations de-
tailed in the MOR, we state that the information contained
in this report, solely prepared for complying with obligations
under the Chapter 11 Procedure, has not been audited, has
a limited scope and covers a limited period of time for it is
subject to material changes as the quarter advances along
with the regulatory processes of the quarterly financial state-
the Honorable Judge James L. Garrity Jr. of the Bankruptcy
Court of the Southern District of New York (the “Court”),
resolved to approve the DIP financing proposal presented
by LATAM on September 17, 2020 (the “DIP Financing”),
which main terms and conditions were described in the
Material Fact files on such date.
• In accordance with the terms of said approval and for
the purposes of its implementation, the different parties
involved in the DIP Financing have signed on this date,
a credit agreement subject to the laws of the State of
New York, United States of America denominated Super-
Priority Debtor-In-Possession Term Loan Agreement (the
“DIP Credit Agreement”).
October 6, 2020
Material fact report
In accordance with the provisions of Article 9 and 10 of the Se-
curities Market Law and General Rule No. 30, duly authorized,
I hereby inform as a Material Fact of LATAM Airlin Group S.A.
(“LATAM” or the “Society”), Securities Registration No. 306, the
following:
LATAM informs that on this date the Board, in use of the pow-
er contained in article 32 of Law No. 18,046 on Public Limited
Companies, appointed Mr Alexander Wilcox as board member in
the position left vacant by the resignation of Mr Giles Agutter on
September 7, 2020, position that remained vacant until today.
Notwithstanding the above, and as previously informed on the
date of Mr. Agutter’s resignation, at the next Ordinary Share-
holders' Meeting of LATAM, the whole Board of Directors will
have to be elected and renewed.
October 8, 2020
Material fact report
• A copy of the DIP Credit Agreement was notarized
on this date at the 34th Santiago Notary Office of
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market, and as established in the
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Commissions’ General Rule No. 30, duly authorized, I inform
you as a material fact of LATAM Airlines Group S.A. (“LATAM
Airlines” or the “Company”) the following MATERIAL FACT:
• As reported by Material Fact, on September 29, 2020
LATAM, certain entities of its business group which are
part of the reorganization process of LATAM in the United
States and the other parties interested in the financing
proposal approved by the Court of Bankruptcies of
the Southern District of New York, executed a contract
denominated the Super-Priority Debtor-In-Possession
Term Loan Agreement (the “DIP Credit Agreement”) for an
amount of up to US$ 2.45 billion.
• On this date, the first disbursement has taken place under
the DIP Credit Agreement for the total amount of US$
1,150 million.
• As stated in the Material Fact dated September 17, 2020, US
$ 150 million of Tranche C of the DIP Credit Agreement (the
“Increase in Tranche C”) was reserved for shareholders or
creditors of LATAM or new investors of the same other than
the Cueto group, the Eblen group, Qatar Airways and the
investor group led by Knighthead and Jefferies. Additionally,
according to the DIP Credit Agreement, shareholders
of LATAM as of the date on which LATAM filed for the
reorganization process (i.e. May 26, 2020) have priority
for the purposes of investing in the Increase of Tranche
C (hereinafter this preference, the "LATAM Shareholders
Preference").
• After the occurrence of the first disbursement charged to
the DIP Credit Agreement, in accordance with the provisions
of the DIP Credit Agreement, today a period of 30 days
has begun in order to commit the Increase of Tranche C. In
order to facilitate the referred shareholders, creditors or new
investors of LATAM to access said Increase in Tranche C,
LATAM has hired LarrainVial.
• In compliance with such engagement, LarrainVial has
structured a public investment fund called Toesca Deuda
Privada DIP LATAM Fondo de Inversión (the “Fund”) which
will be managed by Toesca S.A. Administradora General de
Fondos and which purpose will be precisely to facilitate the
aforementioned shareholders, creditors or new investors of
LATAM, the investment in the Increase of Tranche C.
• As established by the internal regulations of the Fund, only
those shareholders, creditors or new investors of LATAM
who permanently comply with certain requirements, which
in essence consist of (i) not being “U.S. Person ”(with the
exception of certain “Qualified Purchasers”) in accordance
with the relevant regulations of the United States of
America; (ii) not be domiciled in a territory with a preferential
tax regime in accordance with the Chilean Income Tax Law;
and (iii) not having committed or committing the assignment
of their shares in the Fund to an investor who does not
comply with the above requirements (hereinafter, those who
meet these requirements will be referred to as the “Eligible
Investors”).
• The placement of the Fund shares will be made by
LarrainVial. In order to do this, an Order Book Auction (the
"Auction") will be held at the Santiago Stock Exchange,
Stock Exchange, by simultaneously opening two order
books under the following terms:
> Book A: Eligible Investors who have been shareholders
of LATAM at midnight on May 25, 2020, and who
maintain said status at midnight of the day prior to the
opening of the Book, may participate. Each shareholder
that places an order in Book A will have the right to
request Fund shares up to a maximum amount of US $
3.433266410578562 for each LATAM share owned as of
midnight of the day prior to the opening of the Book and
at midnight of May 25, 2020. This amount is equivalent
to the proportional amount per share that will be invested
in Tranche C of the DIP Credit Agreement jointly by
the Cueto group, the Eblen group, and Qatar Airways.
Additional investmens to be made by any of the referred
shareholders must be requested through orders in Book B.
> Book B: The following may participate: (a) Eligible
Investors who have participated in Book A, for the excess
of what they may invest in Book A in accordance with the
terms indicated above; and (b) other Eligible Investors who
(i) are shareholders of LATAM as of this date and maintain
such status at midnight of the day prior to the opening
of the Book, or (ii) are holders of LATAM local bonds at
midnight of the day prior to the opening of the Book.
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> Up to 7,600 million shares of the Fund will be auctioned
at the Auction, at a value of US $ 0.01.
> Both Book A and Book B will be for up to 7,600 million
shares, but the result of the sum of the allocation of the
two Books will be less than or equal to said amount. For
the purposes of implementing the LATAM Shareholders'
Preference, in the final allocation of the Fund shares
those who participate in Book A will have priority.
> In order to participate in the Auction, each interested
party must grant a promise to subscribe to shares for an
additional number of shares identical to the one actually
allocated in the Auction. In this way, whoever participates
in the Auction: (i) will subscribe and pay in cash those
Fund shares which are allocated; and (ii) will have the
right and the obligation to subscribe in the future, at the
request of the Fund manager and in accordance with
the capital requirements of LATAM under the DIP Credit
Agreement, a number of additional Fund shares up to the
amount of Fund shares indicated in literal (i) above.
> LATAM states that it is the responsibility of each
• This MOR does not replace in any way the financial
interested party to fully inform themselves about the
characteristics of DIP Financing and request the advice
it deems necessary for a proper understanding of its
characteristics and risks.
information that the Company provides regularly according
the securities law or the applicable regulation and has
been prepared for the sole purpose to comply with the
obligations under the Chapter 11 Procedure.
October 30, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 on the Securities Market Law, and on the General
Rule No. 30, duly authorized by the Board as of today, I inform
you the following as material facts of LATAM Airlines Group
S.A. (“LATAM Airlines” or the “Company”):
• As informed, LATAM Airlines started a reorganization process
in the United States of America according to the rules
established in Chapter 11 of Title 11 of the Code of the
United States of America, presenting a voluntary petition
for relief in accordance with the same (the “Chapter 11
Procedure”).
• LATAM has to prepare and deliver a Monthly Operating
Report (“MOR”), as part of the reporting obligations it has
to comply under the Chapter 11 Procedure.
In consequence and without prejudice of the limitations de-
tailed in the MOR, we state that the information contained
in this report, solely prepared for complying with obligations
under the Chapter 11 Procedure, has not been audited, has
a limited scope and covers a limited period of time for it is
subject to material changes as the quarter advances along
with the regulatory processes of the quarterly financial state-
ment’s preparation, included the limited revision by the exter-
nal auditors, if applicable.
November 30, 2020
Material fact report
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 of the Securities Market Law, and in the Gener-
al Rule No. 30, duly authorized by the Board as of today, I
inform you the following as material facts of LATAM Airlines
Group S.A. (“LATAM Airlines” or the “Company”):
• As informed, LATAM Airlines started a reorganization process
> As a general rule, Eligible Investors interested in
• Considering the abovementioned, we hereby make available
participating in the Increase in Tranche C may do so
through any stock broker in the country. However, those
who are institutional investors can only do so through
LarrainVial.
for your Commission and for the market, corresponding to the
month of September 2020, dated as of today included in the
following link https://www.latamreorganizacion.com/en/
publications/.
in the United States of America according to the rules
established in Chapter 11 of Title 11 of the Code of the
United States of America, presenting a voluntary petition
for relief in accordance with the same (the “Chapter 11
Procedure”).
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MATERIAL FACTS
December 29, 2020
Material fact report
been prepared for the sole purpose to comply with the
obligations under the Chapter 11 Procedure.
• LATAM has to prepare and deliver a Monthly Operating
Report (“MOR”), as part of the reporting obligations it
has to comply with under the Chapter 11 Procedure.
• Considering the abovementioned, we hereby make
available for your Commission and for the market the
MOR corresponding to the month of October 2020, dated
as of today, included in the following link https://www.
latamreorganizacion.com/en/publications/.
In accordance with the provisions of articles 9 and 10 of Law
No. 18,045 of the Securities Market Law, and in the General
Rule No. 30, duly authorized by the Board as of today, I inform
you the following as material facts of LATAM Airlines Group
S.A. (“LATAM Airlines” or the “Company”):
• As informed, LATAM Airlines started a reorganization
process in the United States of America according to the
rules established in Chapter 11 of Title 11 of the Code
of the United States of America, presenting a voluntary
petition for relief in accordance with the same (the
“Chapter 11 Procedure”).
In consequence and without prejudice of the limitations de-
tailed in the MOR, we state that the information contained
in this report, solely prepared for complying with obligations
under the Chapter 11 Procedure, has not been audited, has
a limited scope and covers a limited period of time for it is
subject to material changes as the quarter advances along
with the regulatory processes of the quarterly financial
statement’s preparation, included the limited revision by the
external auditors, if applicable.
• This MOR does not replace in any way the financial
information that the Company provides regularly
according the securities law or the applicable regulation
and has been prepared for the sole purpose to comply
with the obligations under the Chapter 11 Procedure.
• LATAM has to prepare and deliver a Monthly Operating
Report (“MOR”), as part of the
• Reporting obligations it has to comply with under the
Chapter 11 Procedure.
In consequence and without prejudice of the limitations
detailed in the MOR, we state that the information
contained in this report, solely prepared for complying
with obligations under the Chapter 11 Procedure, has not
been audited, has a limited scope and covers a limited
period of time for it is subject to material changes as the
quarter advances along with the regulatory processes of
the quarterly financial statement’s preparation, included
the limited revision by the external auditors, if applicable.
• Considering the abovementioned, we hereby make
available for your Commission and for the market the MOR
corresponding to the month of November 2020, dated
as of today, included in the following link https://www.
latamreorganizacion.com/en/publications/.
• This MOR does not replace in any way the financial
information that the Company provides regularly according
the securities law or the applicable regulation and has
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Risk factors
The following important factors, and those important fac-
tors described in other reports we submit to or file with the
Securities and Exchange Commission (“SEC”), could affect
our actual results and could cause our actual results to dif-
fer materially from those expressed in any forward-look-
ing statements made by us or on our behalf. In particular,
as we are a non-U.S. company, there are risks associated
with investing in our ADSs that are not typical for invest-
ments in the shares of U.S. companies. Prior to making an
investment decision, you should carefully consider all of
the information contained in this document, including the
following risk factors.
RISKS RELATING TO OUR CHAPTER 11
PROCEEDINGS
We and a substantial number of our consolidated
subsidiaries filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code, and
we are subject to the risks and uncertainties
associated with our Chapter 11 proceedings.
As a consequence of our Chapter 11 filings, the operations
and our ability to develop and execute our business plan,
as well as our continuation as a going concern, will be sub-
ject to the risks and uncertainties associated with bank-
ruptcy. These risks include our ability to:
• confirm and consummate a plan of reorganization with
respect to our Chapter 11 proceedings;
• obtain sufficient financing, including for working capital
whether from additional Debtor In Possession financing,
exit financing or otherwise, and emerge from bankruptcy
and execute our business plan post-emergence, as
well as comply with the terms and conditions of that
financing;
• maintain our relationships with our creditors, suppliers,
service providers, customers, directors, officers and
employees; and
• maintain contracts that are critical to our operations on
reasonably acceptable terms and conditions.
We will also be subject to risks relating to, among others:
• the high costs of bankruptcy proceedings and related
fees;
• the ability of third parties to seek and obtain court
approval to (i) terminate contracts and other agreements
with us, (ii) shorten the exclusivity period for us to
propose and confirm a Chapter 11 plan or to appoint
a Chapter 11 trustee or (iii) convert the Chapter 11
proceedings to Chapter 7 liquidation proceedings; and
• the actions and decisions of our creditors and other third
parties who have interests in our Chapter 11 proceedings
that may be inconsistent with our plans.
Any delays in our Chapter 11 proceedings increase the
risks of our inability to reorganize our business and emerge
from bankruptcy and may increase our costs associated
with the reorganization process.
Because of the many risks and uncertainties associated
with a voluntary filing for relief under Chapter 11 and the
related proceedings, we cannot accurately predict or quan-
tify the ultimate impact that events that occur during our
Chapter 11 proceedings may have on us and there is no
certainty as to our ability to continue as a going concern.
It is impossible to predict with certainty the amount of
time that we could spend in our Chapter 11 proceedings or
to assure parties in interest that a plan of reorganization
will be confirmed. Our Chapter 11 proceedings may involve
additional expense and our management will be required to
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spend a significant amount of time and effort focusing on
the Chapter 11 proceedings.
On September 19, 2020, the Bankruptcy Court approved
the Debtors’ motion to approve certain Debtor In Posses-
sion financing for US$ 2.45 billion. Our Chapter 11 pro-
ceedings may require us to seek additional Debtor In Pos-
session financing to fund operations, particularly if there
are significant delays in our Chapter 11 proceedings. If we
are unable to obtain such financing on favorable terms or
at all, our chances of successfully reorganizing our busi-
ness may be seriously jeopardized and the likelihood that
we instead will be required to liquidate our assets may be
increased, and, as a result, our common shares and debt
instruments could become further devalued or become
worthless. Furthermore, we cannot predict the ultimate
amount of all settlement terms for the liabilities that will
be subject to our plan of reorganization. Even once a plan
of reorganization is approved and implemented, we may
be adversely affected by the possible reluctance of pro-
spective lenders and other counterparties to do business
with a company that has recently emerged from Chapter
11 proceedings.
We have substantial liquidity needs and may
not be able to obtain sufficient liquidity to
confirm a plan of reorganization and exit our
Chapter 11 proceedings successfully.
Although we have taken multiple measures to reduce our
expenses and have reduced the scale of our operations sig-
nificantly, mainly as a result of developments relating to
the spread of Covid-19, our business remains capital inten-
sive. In addition to the cash requirements necessary to fund
our ongoing operations, we have incurred significant profes-
sional fees and other costs in connection with our reorgan-
ization, and we expect that we will continue to incur signif-
icant professional fees and costs throughout our Chapter
11 proceedings. There are no assurances that our liquidity
is sufficient to allow us to satisfy our obligations related to
our Chapter 11 proceedings, to proceed with the confirma-
tion of a Chapter 11 plan of reorganization and to emerge
successfully from our Chapter 11 proceedings. Notably, as
discussed below, to confirm a Chapter 11 plan of reorgani-
zation, we will have to demonstrate feasibility which will in
part rely on our ability to demonstrate sufficient liquidity
upon emergence.
We can provide no assurance that we will be able to secure
additional interim financing or exit financing sufficient to
meet our liquidity needs. Our liquidity, including our ability
to meet our ongoing operational obligations and the cov-
enants, milestones and other conditions in our debt in-
struments, is dependent upon, among other things: (i) our
ability to comply with the terms and conditions of the cash
management order entered by the Bankruptcy Court in
connection with our Chapter 11 proceedings, (ii) our ability
to maintain adequate cash on hand, (iii) our ability to gen-
erate cash flow from operations, which depends largely on
factors beyond our control relating to developments de-
riving from the spread of Covid-19, (iv) our ability to con-
firm and consummate a Chapter 11 plan of reorganization
and (v) the cost, duration and outcome of the Chapter 11
proceedings.
We may not be able to obtain confirmation of
a Chapter 11 plan of reorganization or such
confirmation may be protracted and delayed.
To emerge successfully from Bankruptcy Court protection
as a viable entity, we must meet certain statutory require-
ments. Specifically, the Bankruptcy Court will have to find
that the disclosure regarding our proposed plan of reorgan-
ization is adequate and that our procedures for solicitation
are proper. In addition, we will have to obtain the requisite
acceptances of our plan and demonstrate the feasibility of
our plan to the Bankruptcy Court by a preponderance of the
evidence in order to fulfill other statutory conditions for con-
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FACTORES DE RIESGO
firmation of our plan. To date, we have not filed a proposed
plan of reorganization and there can be no assurance as to
when or whether any or all of the conditions will be satisfied.
Similarly, just as we cannot assure that a plan of reorgan-
ization will be approved by the Bankruptcy Court, we can-
not guarantee that such plan will be recognized or approved
by the courts in the other jurisdictions in which we operated
and/or where we are subject to the parallel and ancillary re-
organization proceedings, or whether or when we will be able
to emerge from such parallel or ancillary proceedings.
In particular, the confirmation process can be subject to
numerous unanticipated potential delays. The risks include
the possibility that:
• We may receive objections to confirmation of any plan of
reorganization from various stakeholders in our Chapter 11
proceedings, including the effectiveness and effect of the
steps required for the implementation of the Plan, which
could delay and disrupt confirmation of the Plan and the
Debtors’ emergence from bankruptcy. Any litigation may
be expensive, lengthy and disruptive to the company’s
normal business operations and the plan confirmation
process. We cannot predict the impact that any objection
or third party motion during our Chapter 11 proceedings
may have on the Bankruptcy Court’s decision to confirm a
plan of reorganization or our ability to complete a plan of
reorganization. A resolution of any such litigation that is
unfavorable to the Debtors could have a material adverse
effect on the plan confirmation process, emergence
from bankruptcy or on LATAM’s businesses, results of
operations, financial condition, liquidity and cash flow.
• Adverse publicity in connection with the Chapter
11 proceedings or otherwise could negatively affect
LATAM’s business both during the proceedings, the plan
confirmation process and post-emergence.
• Counterparties to assumed and assigned contracts may
object to the assignment of such contracts pursuant to
section 365 of the Bankruptcy Code. Section 365(c)(1)
of the Bankruptcy Code provides that a contract may
not be assumed or assigned if applicable—other than
bankruptcy—law so provides. While the Debtors do not
believe that thse laws, other than bankruptcy law, void
any of the Debtors’ assignments, a counterparty may
nevertheless object to an assignment on such grounds.
The success of any reorganization will depend on approv-
al by the Bankruptcy Court and the willingness of our credi-
tors to agree to the exchange or modification of their claims
as will be outlined in a plan of reorganization, and there
can be no guarantee of success with respect to any plan of
reorganization.
If a plan of reorganization is not confirmed by the Bank-
ruptcy Court or the courts in the other jurisdictions in which
we are subject to reorganization proceedings, or if we are
unable to emerge from any of our reorganization proceed-
ings, it is unclear whether or when we would be able to re-
organize our business and what, if any, distributions holders
of claims against us, including holders of our secured and
unsecured debt and equity, would ultimately receive with
respect to their claims. There can be no assurance as to
whether or when we will successfully reorganize and emerge
from our Chapter 11 proceedings or, if we do successfully
reorganize, as to when we would emerge from Chapter 11
proceedings. If no plan of reorganization can be confirmed,
or the Bankruptcy Court finds that it would be in the best
interest of creditors, the Bankruptcy Court may convert or
dismiss our Chapter 11 proceedings to cases under Chap-
ter 7 of the Bankruptcy Code. In the event of conversion, a
Chapter 7 trustee would be appointed or elected to liqui-
date our assets for distribution in accordance with the pri-
orities established by the Bankruptcy Code.
Any Chapter 11 plan of reorganization that we
may implement will be based in large part upon
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assumptions and analyses developed by us. If these
assumptions and analyses prove to be incorrect,
our plan may be unsuccessful in its execution.
Any plan of reorganization we may implement could af-
fect our capital structure and the ownership, structure and
operation of the business and will reflect assumptions
and analyses based on our experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors that we consider
appropriate under the circumstances. Whether actual fu-
ture results and developments will be consistent with our
expectations and assumptions depends on a number of
factors, including but not limited to: (i) our ability to change
substantially our capital structure, (ii) our ability to obtain
adequate liquidity and access financing sources, (iii) our
ability to maintain customers’ confidence in our viability
as a going concern, (iv) our ability to retain key employees
and (v) the overall strength and stability of general macro-
economic conditions. In light of the many uncertainties and
risks deriving from developments relating to the spread of
Covid-19, these factors and their effect on us are highly
unpredictable.
In addition, any Chapter 11 plan of reorganization will rely
upon financial projections that are necessarily speculative,
and it is likely that one or more of the assumptions and
estimates that are the basis of these financial forecasts will
not be accurate. In our case, the forecasts may be even more
speculative than normal because of the many uncertainties
we face relating to, among others, macroeconomic condi-
tions in the countries in which the group operates, depressed
demand for air travel and severe travel restrictions imposed
by governments as a result of the Covid-19 pandemic, and
the time and manner in which Covid-19 vaccines are distrib-
uted in the countries in which the group operates. According-
ly, we expect that our actual financial condition and results
of operations will differ, perhaps materially, from what we
have anticipated. Consequently, there can be no assurance
that the results or developments contemplated by any plan
of reorganization we may implement will occur or, even if
they do occur, that they will have the anticipated effects on
us or our business or operations. The failure of any such re-
sults or developments to materialize as anticipated could
materially and adversely affect the successful execution of
any plan of reorganization.
Upon emergence from a filing of voluntary relief
under Chapter 11 of the Bankruptcy Code,
our historical financial information may not be
indicative of our future financial performance.
Our capital structure may be significantly altered under a
plan of reorganization. Further, a plan of reorganization could
materially change the amounts and classifications re-
ported in our consolidated historical financial statements,
which do not give effect to any adjustments to the carry-
ing value of assets or amounts of liabilities that might be
necessary as a consequence of confirmation of a plan of
reorganization.
Even if a Chapter 11 plan of reorganization
is confirmed, we may not be able to
achieve the effective date.
It is common for plans of reorganization to contain condi-
tions precedent to effectiveness, such as obtaining govern-
ment approvals, satisfying any conditions precedent in the
exit facility and entry of an order approving the plan. Even
upon confirmation of a plan, there can be no assurance as
to when such conditions will be satisfied, if at all.
Even if a Chapter 11 plan of reorganization is
consummated, we may not be able to achieve our
stated goals and continue as a going concern.
Even if a Chapter 11 plan of reorganization is consummated,
we will continue to face a number of risks, including further
depressed demand for air travel and challenging econom-
ic conditions as a result of developments relating to the
spread of Covid-19 or otherwise. Accordingly, we can-
not guarantee that a Chapter 11 plan of reorganization will
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achieve our stated goals and permit us to effectively imple-
ment our strategy.
Furthermore, even if our debts are reduced or discharged
through a plan of reorganization, we may need to raise addi-
tional funds through public or private debt or equity financing
or other various means to fund the group’s business after the
completion of our Chapter 11 proceedings. Our access to ad-
ditional financing is, and for the foreseeable future will likely
continue to be, limited, if it is available at all. Therefore, ad-
equate funds may not be available when needed or may not
be available on favorable terms.
We may be subject to claims that will not be
discharged in our Chapter 11 proceedings, which
could have a material adverse effect on our
financial condition and results of operations.
The Bankruptcy Code provides that the confirmation of a
Chapter 11 plan of reorganization discharges a debtor from
substantially all debts arising prior to confirmation. With few
exceptions, all claims that arose prior to confirmation of the
plan of reorganization: (i) would be subject to compromise
and/or treatment under the plan of reorganization and (ii)
would be discharged in accordance with the Bankruptcy Code
and the terms of the plan of reorganization. Any claims not
ultimately discharged through a Chapter 11 plan of reorgan-
ization could be asserted against the reorganized entities
and may have an adverse effect on the business and finan-
cial condition and results of operations of the group on a
post-reorganization basis.
Our Chapter 11 proceedings may adversely affect
our ability to maintain important relationships with
creditors, customers, suppliers, employees, financing
sources and other personnel and counterparties,
which could materially and adversely affect us.
Our Chapter 11 proceedings may adversely affect our com-
mercial relationships and our ability to negotiate favorable
terms with important stakeholders and counterparties, in-
cluding potential sources of financing. Further, public percep-
tion of our continued viability may also adversely affect our
relationships with customers and their loyalty to us. Strains
in any of these relationships could materially and adverse-
ly affect us. In particular, critical suppliers, credit and debit
card processors and acquirers, banks, export credit agen-
cies, providers of letters of credit, surety bonds or similar
instruments, vendors, lessors and customers may determine
not to do business with us due to our Chapter 11 proceed-
ings. Also, during the pendency of the Chapter 11 proceed-
ings, the court has stayed the enforcement of any payment
toward debt obligations and we will need the prior approval
of the Bankruptcy Court for transactions outside the ordi-
nary course of business, which may limit our ability to re-
spond timely to certain events or take advantage of certain
opportunities.
There is uncertainty regarding our ability
to continue as a going concern.
Our audited consolidated financial statements have been
prepared on the basis of accounting principles applicable to
a going concern. As discussed above, our ability to continue
as a going concern is contingent upon, among other things,
our ability to: (i) develop and successfully implement a re-
structuring plan within the timeframe required, (ii) reduce
debt and other liabilities through the restructuring process,
(iii) generate sufficient cash flow from operations and (iv)
obtain financing sources to meet our future obligations. The
accompanying consolidated financial statements also do not
include any adjustments that might be necessary should we
be unable to continue as a going concern.
RISKS RELATING TO OUR COMPANY
A pandemic or the widespread outbreak of
contagious illnesses has had, and may continue
to have, a material adverse effect on the
group’s business and results of operations.
The widespread outbreak of a contagious illness such as the
Covid-19 pandemic, or fear of such an event, has material-
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ly reduced, and may continue to further reduce, demand
for, and availability of, worldwide air travel and therefore
is having a material adverse effect on the group’s business
and results of operations.
In 2003, an outbreak of a coronavirus known as severe
acute respiratory syndrome (SARS) originating in China be-
came an epidemic and resulted in a slowdown of passen-
ger air traffic due contagion fears. At the time, RPK growth
was reduced due to oversupply in the market as airlines
tried to cut capacity.
The Covid-19 pandemic has negatively affected global
economic conditions, disrupted supply chains and other-
wise negatively impacted aircraft manufacturing operations
and may reduce the availability of aircraft spare parts. The
ultimate severity of the Covid-19 pandemic is uncertain
at this time and therefore we cannot predict the impact
it may have on the availability of aircraft or aircraft spare
parts. However, the effect on our results may be material
and adverse if supply chain disruptions persist and pre-
clude our ability to adequately maintain our fleet.
The potential for a period of significantly reduced demand
for travel has and will likely continue to result in signifi-
cant lost revenue. As a result of these or other conditions
beyond our control, our results of operations could continue
to be volatile and subject to rapid and unexpected change.
In addition, if the spread of Covid-19 were to continue un-
abated, our operations could also be negatively affected
if employees are quarantined as the result of exposure to
the contagious illness. We cannot fully predict the impact
that the Covid-19 pandemic will continue to have on glob-
al air travel, corporate travel, and the extent to which it may
impact the demand for air travel in the regions in which
the group operates. Continued government-imposed trav-
el restrictions, border closures or operational issues result-
ing from the rapid spread of Covid-19 or other contagious
illnesses, all of which may be unpredictable, may materially
reduce demand for air travel in parts of the world in which
we have significant operations and could have lasting im-
pacts on how people do business and the need or demand
for business travel. In addition, the pace of the Covid-19
vaccine rollout globally may materially impact our opera-
tions. These measures and issues have had and could con-
tinue to have a material adverse effect on the group’s busi-
ness and results of operations.
It is possible that in spite of mitigation measures in place,
Covid-19 or other diseases could be transmitted to
passengers or employees on our aircraft or at an airport,
which could lead to reputational and/or financial impacts.
The health safety and sanitation measures we have im-
plemented as a group may not be sufficient to prevent the
spread or contagion of Covid-19 or other infectious diseas-
es to our passengers or employees on our aircraft or the
airports in which we operate, which could result in adverse
reputational and financial impacts for the group. However, it
is possible that these measures could prove insufficient and
Covid-19 or other diseases could be transmitted to passen-
gers or employees in an airport or on an aircraft.
As a result of the Covid-19 pandemic, the airline
industry may experience consumer behavior
changes, including with regard to corporate
travel, long-haul travel, and travel demand.
The potential for mid- to long-term changes to consumer be-
havior resulting from the Covid-19 pandemic exists and could
lead to adverse financial impacts for the Company. Corpo-
rate travel has been hindered, and in many cases, prohibited
by companies due to risks during the pandemic. At this time,
it is not possible to predict the potential consequences of
the increased use of technology as a substitute for travel and
whether or when corporate travel, long-haul travel and travel
demand could return to the levels existing prior to the Cov-
id-19 pandemic. Furthermore, travelers may be less prone to
travel or be more price conscious and may choose low-cost
alternatives as a result of the Covid-19 pandemic.
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A failure to successfully implement the group’s strategy
or a failure to adjust such strategy to the current
economic situation would harm the group’s business and
the market value of our ADSs and common shares.
We have developed a strategic plan with the goal of becom-
ing one of the most admired airlines in the world and renew-
ing our commitment to sustained profitability and superior
returns to shareholders. Our strategy requires us to identify
value propositions that are attractive to our clients, to find
efficiencies in our daily operations, and to transform our-
selves into a stronger and more risk-resilient company. A
tenet of our strategic plan is the continuing adoption of a
new travel model for domestic and international services to
address the changing dynamics of customers and the in-
dustry, and to increase our competitiveness. The new trav-
el model is based on a continued reduction in air fares that
makes air travel accessible to a wider audience, and in par-
ticular to those who wish to fly more frequently. This mod-
el requires continued cost reduction efforts and increasing
revenues from ancillary activities. In connection with these
efforts, the Company continues to implement a series of ini-
tiatives to reduce cost per ASK in all its operations as well as
developing new ancillary revenue initiatives.
Difficulties in implementing our strategy may adversely af-
fect the group’s business, results of operation and the mar-
ket value of our ADSs and common shares.
Our financial results are exposed to foreign currency
fluctuations.
We prepare and present our consolidated financial state-
ments in U.S. dollars. LATAM and its affiliates operate in
numerous countries and face the risk of variation in foreign
currency exchange rates against the U.S. dollar or between
the currencies of these various countries. Changes in the ex-
change rate between the U.S. dollar and the currencies in the
countries in which the group operates could adversely affect
the business, financial condition and results of operations.
If the value of the Brazilian real, Chilean peso or other cur-
rencies in which revenues are denominated declines against
the U.S. dollar, our results of operations and financial condi-
tion will be affected. The exchange rate of the Chilean peso,
Brazilian real and other currencies against the U.S. dollar may
fluctuate significantly in the future.
Changes in Chilean, Brazilian and other governmental eco-
nomic policies affecting foreign exchange rates could also
adversely affect the business, financial condition, results of
operations and the return to our shareholders on their com-
mon shares or ADSs.
The group depends on strategic alliances or commercial
relationships in many different countries, and the busi-
ness may suffer if any of our strategic alliances or com-
mercial relationships terminates.
We maintain a number of alliances and other commercial re-
lationships in many of the jurisdictions in which LATAM and
its affiliates operate. These alliances or commercial relation-
ships allow us to enhance our network and, in some cases, to
offer our customers services that we could not otherwise offer.
If any of our strategic alliances or commercial relationships
deteriorates, or any of these agreements are terminated, the
group’s business, financial condition and results of operations
could be adversely affected.
The group’s business and results of operations may
suffer if we fail to obtain and maintain routes, suitable
airport access, slots and other operating permits.
Also, technical and operational problems with the
airport infrastructure of cities in which we have a
focus may have a material adverse effect on us.
LATAM’s business depends upon our access to key routes and
airports. Bilateral aviation agreements between countries, open
skies laws and local aviation approvals frequently involve polit-
ical and other considerations outside of our control. The group’s
operations could be constrained by any delay or inability to gain
access to key routes or airports, including:
• limitations on our ability to transport more passengers;
• the imposition of flight capacity restrictions;
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• the inability to secure or maintain route rights in local
markets or under bilateral agreements; or
• the inability to maintain our existing slots and obtain
additional slots.
The group operates numerous international routes subject
to bilateral agreements, as well as domestic flights within
Chile, Peru, Brazil, Ecuador and Colombia, subject to local
route and airport access approvals.
There can be no assurance that existing bilateral agree-
ments with the countries in which the group’s companies
are based and permits from foreign governments will con-
tinue to be in effect. A modification, suspension or revo-
cation of one or more bilateral agreements could have a
material adverse effect on our business, financial condition
and results of operations. The suspension of our permis-
sion to operate at certain airports, destinations or slots, or
the imposition of other sanctions could also have a mate-
rial adverse effect. A change in the administration of cur-
rent laws and regulations or the adoption of new laws and
regulations in any of the countries in which the group op-
erates that restrict our route, airport or other access may
have a material adverse effect on our business, financial
condition and results of operations.
Moreover, our operations and growth strategy are dependent
on the facilities and infrastructure of key airports, including
Santiago’s International Airport, São Paulo’s Guarulhos Interna-
tional and Congonhas Airports, Brasilia’s International Airport
and Lima’s Jorge Chavez International Airport. Airports may
face challenges to meet their capex programs, after suffering
significant financial deterioration stemming from the Covid-19
pandemic. Delays or cancelations of capex programs could im-
pact our operations or ability to grow in the future.
Santiago’s Comodoro Arturo Merino Benítez International Air-
port is undergoing an important expansion, which is expect-
ed to be completed by 2021. There is a currently a dispute
between the airport operator and the government arising
from the impact of the Covid-19 pandemic and deceleration
of airport operations on revenues, which placed additional
stress on the operator’s liquidity in light of ongoing invest-
ments required for the expansion project. In order to miti-
gate the impact of the financial loss, the current operator
is requesting an extension of the concession period, which
expires in 2035. This dispute implies a risk to future opex
and capex investments and adverse effects to the airport’s
operations.
One of the major operational risks we face on a daily basis at
Lima’s Jorge Chavez International Airport is the limited number
of parking positions. Additionally, the indoor infrastructure of
the airport limits our ability to manage connections and launch
new flights due to the lack of gates and increasing security and
immigration controls. Lima’s Jorge Chavez International Airport
is currently undergoing an expansion, which is expected to be
completed by 2024. Any delays could negatively impact our
operations limit our ability to grow and affect our competitive-
ness in the country and in the region.
Brazilian airports, such as the Brasilia and São Paulo (Gua-
rulhos) International Airports, have limited the number of
takeoff and landing slots per day due to infrastructural lim-
itations. Any condition that would prevent or delay our ac-
cess to airports or routes that are vital to our strategy, or our
inability to maintain our existing slots and obtain additional
slots, could materially adversely affect our operations.
One of the largest operational risks that the El Dorado Inter-
national Airport in Bogotá faces is the limited capacity that
it has during certain time periods due to the adverse weath-
er conditions, the operation of non-regular flights and the
lack of availability of slots. As a result, measures have been
implemented to mitigate and regulate the operation, such
as Ground Stop and Ground Delay Program (GDP Program),
which generate delays controlled by the control tower. An-
other issue faced at the El Dorado International Airport is
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delays by ATC of the control tower in connection with the
GDP Program. These delays occur particularly in certain time
periods with high traffic and are associated with non-reg-
ular flight operation, emergency flights, lower performance
planes, all of which lower the airport’s capacity. However,
the El Dorado Airport, its concessionaire, Opain S.A., and the
relevant authorities are working on the ACDM (Airport Col-
laborative Decision Making) project which seeks to optimize
the airport’s resources, involving all the industry’s players by
understanding their needs, in order to achieve a more con-
trolled operation with less schedule delays.
A significant portion of our cargo revenue comes from
relatively few product types and may be impacted by
events affecting their production, trade or demand.
The group’s cargo demand, especially from Latin American
exporters, is concentrated in a small number of product cat-
egories, such as exports of fish, sea products and fruits from
Chile, asparagus from Peru and fresh flowers from Ecua-
dor and Colombia. Events that adversely affect the produc-
tion, trade or demand for these goods may adversely affect
the volume of goods that are transported and may have a
significant impact on the results of operations. Future trade
protection measures by or against the countries for which we
provide cargo services may have an impact in cargo traffic
volumes and adversely affect our financial results. Some of
the cargo products are sensitive to foreign exchange rates
and, therefore, traffic volumes could be impacted by the ap-
preciation or depreciation of local currencies.
Our operations are subject to fluctuations
in the supply and cost of jet fuel, which
could adversely impact our business.
Higher jet fuel prices could have a materially adverse effect
on our business, financial condition and results of opera-
tions. Jet fuel costs have historically accounted for a sig-
nificant amount of our operating expenses, and account-
ed for 17.4% of our operating expenses in 2020. Both the
cost and availability of fuel are subject to many economic
and political factors and events that we can neither control
nor predict, including international political and econom-
ic circumstances such as the political instability in major
oil-exporting countries. Any future fuel supply shortage (for
example, as a result of production curtailments by the Or-
ganization of the Petroleum Exporting Countries, or “OPEC”),
a disruption of oil imports, supply disruptions resulting from
severe weather or natural disasters, labor actions such as
the 2018 trucking strike in Brazil, the continued unrest in the
Middle East or other events could result in higher fuel prices
or reductions in scheduled airline services. We cannot ensure
that we would be able to offset any increases in the price
of fuel by increasing our fares. In addition, lower fuel prices
may result in lower fares through the reduction or elimina-
tion of fuel surcharges. We have entered into fuel hedging
arrangements, but there can be no assurance that such ar-
rangements will be adequate to protect us from an increase
in fuel prices in the near future or in the long term. Also,
while these hedging arrangements are designed to limit the
effect of an increase in fuel prices, our hedging methods
may also limit our ability to take advantage of any decrease
in fuel prices, as was the case in 2015 and, to a lesser ex-
tent, in 2016. Hedging arrangements are limited after our
Chapter 11 filings, as our ISDA contracts went stale. The
Company is in the process of signing new contracts.
We rely on maintaining a high aircraft utilization rate
to increase our revenues and absorb our fixed costs,
which makes us especially vulnerable to delays.
Generally, a key element of our strategy is to maintain a
high daily aircraft utilization rate, which measures the num-
ber of hours we use our aircraft per day. High daily aircraft
utilization allows us to maximize the amount of revenue
we generate from our aircraft and absorb the fixed costs
associated with our fleet and is achieved, in part, by reduc-
ing turnaround times at airports and developing schedules
that enable us to increase the average hours flown per day.
Our rate of aircraft utilization could be adversely affect-
ed by a number of different factors that are beyond our
control, including air traffic and airport congestion, adverse
weather conditions, unanticipated maintenance and delays
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by third-party service providers relating to matters such as
fueling, catering and ground handling. If an aircraft falls be-
hind schedule, the resulting delays could cause a disruption
in our operating performance and have a financial impact
on our results.
As a result of the Covid-19 pandemic our turnaround times
between flights have increased to allow for the incorporation
of numerous changes to the operation, such as increased
aircraft sanitization and adjusted embarking and disembark-
ing procedures. This increase in turnaround times has a di-
rect impact on our utilization rate. Further, as a result of our
Chapter 11 proceedings, the majority of LATAM’s fleet is op-
erating on a payment by use (or Power By Hour, “PBH”) plan,
thus turning the once fixed costs into variable costs that are
not easily absorbed through higher utilization.
LATAM group flies and depends upon Airbus and
Boeing aircraft, and our business could suffer if
we do not receive timely deliveries of aircraft, if
aircraft from these companies become unavailable
or if the public negatively perceives our aircraft.
As of December 31, 2020, LATAM group has a total fleet of
239 Airbus and 61 Boeing aircraft. Risks relating to Airbus
and Boeing include:
• our failure or inability to obtain Airbus or Boeing aircraft,
parts or related support services on a timely basis because
of high demand, aircraft delivery backlog or other factors;
• the interruption of fleet service as a result of unscheduled or
unanticipated maintenance requirements for these aircraft;
• the issuance by the Chilean or other aviation authorities of
directives restricting or prohibiting the use of our Airbus or
Boeing aircraft, or requiring time-consuming inspections
and maintenance;
• adverse public perception of a manufacturer as a result
of safety concerns, negative publicity or other problems,
whether real or perceived, in the event of an accident; or
• delays between the time we realize the need for new
aircraft and the time it takes us to arrange for Airbus and
Boeing or for a third-party provider to deliver this aircraft.
The occurrence of any one or more of these factors could re-
strict our ability to use aircraft to generate profits, respond to
increased demands, or could otherwise limit our operations
and adversely affect our business. In the context of our Chap-
ter 11 proceedings, certain of our agreements with suppliers
may be rejected.
If we are unable to incorporate leased aircraft
into the fleet at acceptable rates and terms in the
future, our business could be adversely affected.
A large portion of the aircraft fleet is subject to long-term
leases. The leases typically run from three to 12 years from
the date of execution. We may face more competition for,
or a limited supply of, leased aircraft, making it difficult to
negotiate on competitive terms upon expiration of the cur-
rent leases or to lease additional capacity required for the
targeted level of operations. If we are forced to pay high-
er lease rates in the future to maintain our capacity and the
number of aircraft in the fleet, our profitability could be ad-
versely affected.
Furthermore, we will need Bankruptcy Court approval for cer-
tain lease transactions, which may delay or further compli-
cate negotiations ultimately limiting our ability to take ad-
vantage of favorable market conditions.
Our business may be adversely affected if
we are unable to service our debt or meet
our future financing requirements.
We have a high degree of debt and payment obligations un-
der our aircraft leases and financial debt arrangements. We
require significant amounts of financing to meet our aircraft
capital requirements and may require additional financing to
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fund our other business needs. We cannot guarantee that we
will have access to or be able to arrange for financing in the
future on favorable terms. Higher financing costs could affect
our ability to expand or renew our fleet, which in turn could
adversely affect our business.
In addition, a substantial portion of our property and equip-
ment is subject to liens securing our indebtedness, including
our Debtor In Possession financing. In the event that we fail
to make payments on our Debtor In Possession financing or
other secured indebtedness, creditors’ enforcement of liens
could limit or end our ability to use the affected property and
equipment to fulfill our operational needs and thus generate
revenue.
Moreover, external conditions in the financial and credit mar-
kets may limit the availability of funding at particular times
or increase its costs, which could adversely affect our prof-
itability, our competitive position and result in lower net
interest margins, earnings and cash flows, as well as lower
returns on shareholders’ equity and invested capital. Fac-
tors that may affect the availability of funding or cause an
increase in our funding costs include global macro-economic
crises, reductions in our credit rating or in that of our issu-
ances, and other potential market disruptions.
We have significant exposure to LIBOR and other floating
interest rates; increases in interest rates will increase
our financing cost and may have adverse effects on
our financial condition and results of operations.
We are exposed to the risk of interest rate variations,
principally in relation to the U.S. dollar London Interbank
Offer Rate (“LIBOR”). Many of our financial leases are
denominated in U.S. dollars and bear interest at a floating
rate. 55% of our outstanding consolidated debt as of
December 31, 2020 bears interest at a floating rate
(and 58% if you consider US$375 million in DIP financing
provided by Related Parties), after giving effect to interest
rate hedging agreements. Volatility in LIBOR or other
reference rates could increase our periodic interest and
lease payments and have an adverse effect on our total
financing costs. We may be unable to adequately adjust
our prices to offset any increased financing costs, which
would have an adverse effect on our results of operations.
On July 27, 2017, the Financial Conduct Authority (the
authority that regulates LIBOR) announced that it
intends to stop compelling banks to submit rates for the
calculation of LIBOR after 2021. The Federal Reserve
Board and the Federal Reserve Bank of New York convened
the Alternative Reference Rates Committee (ARRC), a
group of private-market participants, to help ensure a
successful transition from U.S. dollar (USD) LIBOR to a
more robust reference rate, its recommended alternative,
the Secured Overnight Financing Rate (SOFR). Although
the adoption of SOFR is voluntary, the impending
discontinuation of LIBOR makes it essential that market
participants consider moving to alternative rates such as
SOFR and that they have appropriate fallback language
in existing contracts referencing LIBOR. The impact of
such a transition away from LIBOR could be significant
for us because of our substantial indebtedness.
Increases in insurance costs and/or significant
reductions in coverage could harm our financial
condition and results of operations.
Significant events affecting the aviation insurance indus-
try (such as terrorist attacks, airline crashes or accidents
and health epidemics and the related widespread govern-
ment-imposed travel restrictions) may result in significant
increases of airlines’ insurance premiums and/or relevant de-
creases of insurance coverage. Further increases in insurance
costs and/or reductions in available insurance coverage could
have a material impact on our financial results, change the
insurance strategy, and increase the risk of uncovered losses.
Problems with air traffic control systems or other
technical failures could interrupt our operations and
have a material adverse effect on our business.
The operations, including the ability to deliver customer ser-
vice, are dependent on the effective operation of the equip-
ment, including aircraft, maintenance systems and reservation
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systems. The operations are also dependent on the effec-
tive operation of domestic and international air traffic control
systems and the air traffic control infrastructure by the corre-
sponding authorities in the markets in which the group oper-
ates. Equipment failures, personnel shortages, air traffic con-
trol problems and other factors that could interrupt operations
could adversely affect the operations and financial results as
well as our reputation.
We depend on a limited number of suppliers
for certain aircraft and engine parts.
We depend on a limited number of suppliers for aircraft, air-
craft engines and many aircraft and engine parts. As a result,
we are vulnerable to problems associated with the supply of
those aircraft, parts and engines, including design defects,
mechanical problems, contractual performance by the sup-
pliers, or adverse perception by the public that would re-
sult in unscheduled maintenance requirements, in customer
avoidance or in actions by the aviation authorities resulting
in an inability to operate our aircraft. During the year 2020,
LATAM Airline’s main suppliers were aircraft manufacturers
Airbus and Boeing.
In addition to Airbus and Boeing, LATAM Airlines has a num-
ber of other suppliers, primarily related to aircraft accesso-
ries, spare parts, and components, including Pratt & Whit-
ney, MTU Maintenance, Rolls-Royce, General Electric and
Pratt & Whitney Canada.
Rolls-Royce continues to face delays with its Trent 1000 en-
gine program, used to power LATAM’s Boeing 787 fleet, with
increased demand for inspections and maintenance. This has
affected the availability and the operational flexibility of this
aircraft for operators worldwide, with the impact for LATAM
reaching its peak in July 2018. While the situation has im-
proved considerably, there is no guarantee that this will not
continue and therefore reduce the availability of Boeing 787
aircraft, thus negatively affecting operations and financial
results.
In the context of our Chapter 11 proceedings, certain of our
agreements with suppliers may be rejected.
Our business relies extensively on third-party service
providers. Failure of these parties to perform as
expected, or interruptions in our relationships with these
providers or in their provision of services to us, could
have an adverse effect on our financial position and
results of operations.
We have engaged a significant number of third-party service
providers to perform a large number of functions that are
integral to our business, including regional operations,
operation of customer service call centers, distribution
and sale of airline seat inventory, provision of technology
infrastructure and services, performance of business
processes, including purchasing and cash management,
provision of aircraft maintenance and repairs, catering,
ground services, and provision of various utilities and
performance of aircraft fueling operations, among other
vital functions and services. We do not directly control
these third-party service providers, although we do enter
into agreements with many of them that define expected
service performance. Any of these third-party service
providers, however, may materially fail to meet their
service performance commitments, may suffer disruptions
to their systems that could impact their services, or the
agreements with such providers may be terminated. For
example, flight reservations booked by customers and/
or travel agencies via third-party GDSs (Global Distribution
Systems) may be adversely affected by disruptions in our
business relationships with GDS operators or by issues in
the GDS’s operations. Such disruptions, including a failure to
agree upon acceptable contract terms when contracts expire
or otherwise become subject to renegotiation, may cause
the carriers’ flight information to be limited or unavailable
for display, significantly increase fees for both us and GDS
users, and impair our relationships with customers and
travel agencies. The failure of any of our third-party service
providers to adequately perform their service obligations,
or other interruptions of services, may reduce our revenues
and increase our expenses or prevent us from operating
our flights and providing other services to our customers. In
addition, our business, financial performance and reputation
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could be materially harmed if our customers believe that
our services are unreliable or unsatisfactory. In the context
of our Chapter 11 proceedings, certain of our agreements
with suppliers and third-party contractors may be rejected.
Disruptions or security breaches of our information
technology infrastructure or systems could interfere
with the operations, compromise passenger or
employee information, and expose us to liability,
possibly causing our business and reputation to suffer.
A serious internal technology error, failure, or cybersecuri-
ty incident impacting systems hosted internally at our data
centers, externally at third-party locations or cloud providers,
or large-scale interruption in technology infrastructure we de-
pend on, such as power, telecommunications or the internet,
may disrupt our technology network with potential impact
on our operations. Our technology systems and related data
may also be vulnerable to a variety of sources of interruption,
including natural disasters, terrorist attacks, telecommunica-
tions failures, computer viruses, cyber-attacks and other se-
curity issues. These systems include our computerized airline
reservation system, flight operations system, telecommuni-
cations systems, website, customer, self-service applications
(“apps”), maintenance systems, check-in kiosks, in-flight en-
tertainment systems and data centers.
In addition, as a part of our ordinary business operations,
we collect and store sensitive data, including personal in-
formation of our passengers and employees and informa-
tion of our business partners. The secure operation of the
networks and systems on which this type of information is
stored, processed, and maintained is critical to our business
operations and strategy. Unauthorized parties may attempt
to gain access to our systems or information through fraud,
deception, or cybersecurity incident. Hardware or software
we develop or acquire may contain defects that could unex-
pectedly compromise information security. The compromise
of our technology systems resulting in the loss, disclosure,
misappropriation of, or access to, customers’, employees’ or
business partners’ information could result in legal claims or
proceedings, liability or regulatory penalties under laws pro-
tecting the privacy of personal information, disruption to our
operations and damage to our reputation, any or all of which
could adversely affect our business.
Increases in our labor costs, which constitute
a substantial portion of our total operating
expenses, could directly impact our earnings.
Labor costs constitute a significant percentage of our to-
tal operating expenses (16.0% in 2020) and at times in our
operating history we have experienced pressure to increase
wages and benefits for our employees. A significant in-
crease in our labor costs could result in a material reduction
in our earnings.
Collective action by employees could cause operating
disruptions and adversely impact our business.
Certain employee groups such as pilots, flight attendants,
mechanics and our airport personnel have highly special-
ized skills. As a consequence, actions by these groups, such
as strikes, walk-outs or stoppages, could severely disrupt
operations and adversely impact our operating and financial
performance, as well as our image.
A strike, work interruption or stoppage or any prolonged dis-
pute with employees who are represented by any of these
unions could have an adverse impact on operations. These
risks are typically exacerbated during periods of renegoti-
ation with the unions, which typically occurs every two to
four years depending on the jurisdiction and the union. Any
renegotiated collective bargaining agreement could feature
significant wage increases and a consequent increase in our
operating expenses. Any failure to reach an agreement dur-
ing negotiations with unions may require us to enter into
arbitration proceedings, use financial and management re-
sources, and potentially agree to terms that are less favora-
ble to us than our existing agreements. Employees who are
not currently members of unions may also form new unions
that may seek further wage increases or benefits.
Our business may experience adverse consequences
if we are unable to reach satisfactory collective
bargaining agreements with unionized employees.
As of December 31, 2020, approximately 64% of the
group’s employees, including administrative personnel, cab-
in crew, flight attendants, pilots and maintenance tech-
nicians are members of unions and have contracts and
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collective bargaining agreements which expire on a regular
basis. The business, financial condition and results of oper-
ations could be materially adversely affected by a failure to
reach agreement with any labor union representing such em-
ployees or by an agreement with a labor union that contains
terms that are not in line with expectations or that prevent
the group from competing effectively with other airlines.
LATAM group may experience difficulty
finding, training and retaining employees.
The business is labor intensive. The group employs a large
number of pilots, flight attendants, maintenance technicians
and other operating and administrative personnel. The air-
line industry has, from time to time, experienced a shortage
of qualified personnel, especially pilots and maintenance
technicians. Such shortage of qualified personnel is further
exacerbated as a result of our Chapter 11 proceedings, and
extends to non-flight personnel. In addition, as is common
with most of our competitors, the group may, from time to
time, face considerable turnover of our employees. Should
the turnover of employees, particularly pilots and mainte-
nance technicians, sharply increase, our training costs will be
significantly higher. LATAM cannot assure you that it will be
able to recruit, train and retain the managers, pilots, tech-
nicians and other qualified employees that are needed to
continue the current operations or replace departing em-
ployees. An increase in turnover or failure to recruit, train
and retain qualified employees at a reasonable cost could
materially adversely affect the business, financial condi-
tion, and results of operations. As a result of the Chapter 11
proceedings, the group may experience increased levels of
employee attrition. A loss of key personnel or material ero-
sion of employee morale could impair the ability to execute
strategy and implement operational initiatives, thereby ad-
versely affecting the group.
RISKS RELATING TO THE AIRLINE INDUSTRY AND
THE COUNTRIES IN WHICH THE GROUP OPERATES
Our performance is heavily dependent on economic
conditions in the countries in which the group does
business. Negative economic conditions in those
countries could adversely impact the group’s business
and results of operations and cause the market price
of our common shares and ADSs to decrease.
Passenger and cargo demand is heavily cyclical and highly
dependent on global and local economic growth, economic
expectations and foreign exchange rate variations, among
other things. In the past, our business has been adversely
affected by global economic recessionary conditions, weak
economic growth in Chile, recessions in Brazil and Argen-
tina, and poor economic performance in certain emerging
market countries in which the group operates. The occur-
rence of similar events in the future could adversely affect
our business. The group plans to continue to expand op-
erations based in Latin America, which means that perfor-
mance will continue to depend heavily on economic condi-
tions in the region.
Any of the following factors could adversely affect the
business, financial condition and results of operations in
the countries in which the group operates:
• changes in economic or other governmental policies;
• changes in regulatory, legal or administrative practices;
• weak economic performance, including, but not limited
to, a slowdown in the Brazilian economy, political
instability, low economic growth, low consumption and/
or investment rates, and increased inflation rates; or
• other political or economic developments over which we
have no control.
No assurance can be given that capacity reductions or
other steps the group may take in response to weakened
demand will be adequate to offset any future reduction
in cargo and/or air travel demand in markets in which the
group operates. Sustained weak demand may adverse-
ly impact our revenues, results of operations or financial
condition.
An adverse economic environment, whether global, re-
gional or in a particular country, could result in a reduction
in passenger traffic, as well as a reduction in the cargo
business, and could also impact the ability to set fares,
which in turn would materially and negatively affect our
financial condition and results of operations.
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We are exposed to increases in landing fees and
other airport service charges that could adversely
affect our margin and competitive position. Also, it
cannot be assured that in the future we will have
access to adequate facilities and landing rights
necessary to achieve our expansion plans.
The group must pay fees to airport operators for the
use of their facilities. Any substantial increase in airport
charges, including at Guarulhos International Airport in
São Paulo, Jorge Chavez International Airport in Lima or
Comodoro Arturo Merino Benitez International Airport
in Santiago, could have a material adverse impact on
our results of operations. Passenger taxes and airport
charges have increased substantially in recent years.
We cannot assure you that the airports in which the
group operates will not increase or maintain high
passenger taxes and service charges in the future.
Any such increases could have an adverse effect on
our financial condition and results of operations.
Certain airports that we serve (or that we plan to serve in
the future) are subject to capacity constraints and impose
various restrictions, including takeoff and landing slot
restrictions during certain periods of the day and limits
on aircraft noise levels. We cannot be certain that the
group will be able to obtain a sufficient number of slots,
gates and other facilities at airports to expand services in
line with our growth strategy. It is also possible that airports
not currently subject to capacity constraints may become
so in the future. In addition, an airline must use its slots
on a regular and timely basis or risk having those slots re-
allocated to others. Where slots or other airport resources
are not available or their availability is restricted in some
way, the group may have to amend schedules, change
routes or reduce aircraft utilization. It is also possible that
aviation authorities in the countries in which the group
operates, change the rules for the assignment of takeoff and
landing slots, as it was the case with the São Paulo airport
(Congonhas) in 2019 where the slots previously operated by
Avianca Brazil were reassigned. Any of these alternatives
could have an adverse financial impact on operations. We
cannot ensure that airports at which there are no such
restrictions may not implement restrictions in the future or
that, where such restrictions exist, they may not become
more onerous. Such restrictions may limit our ability to
continue to provide or to increase services at such airports.
The business is highly regulated and changes in the
regulatory environment in the different countries may
adversely affect our business and results of operations.
Our business is highly regulated and depends substantial-
ly upon the regulatory environment in the countries in which
the group operates or intend to operate. For example, price
controls on fares may limit our ability to effectively ap-
ply customer segmentation profit maximization techniques
(“passenger revenue management”) and adjust prices to
reflect cost pressures. High levels of government regula-
tion may limit the scope of our operations and our growth
plans. The possible failure of aviation authorities to main-
tain the required governmental authorizations, or our fail-
ure to comply with applicable regulations, may adversely
affect our business and results of operations.
Our business, financial condition, results of operations and
the price of common shares and ADSs may be adversely
affected by changes in policy or regulations at the federal,
state or municipal level in the countries in which the group
operates, involving or affecting factors such as:
• interest rates;
• currency fluctuations;
• monetary policies;
• inflation;
• liquidity of capital and lending markets;
• tax and social security policies;
• labor regulations;
• energy and water shortages and rationing; and
• other political, social and economic developments in or
affecting Brazil, Chile, Peru, and the United States, among
others.
For example, the Brazilian federal government has fre-
quently intervened in the domestic economy and made
drastic changes in policy and regulations to control infla-
tion and affect other policies and regulations. This required
the federal government to increase interest rates, change
taxes and social security policies, implement price controls,
currency exchange and remittance controls, devaluations,
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capital controls and limits on imports.
Uncertainty over whether the Brazilian federal government
will implement changes in policy or regulation affecting these
or other factors may contribute to economic uncertainty in
Brazil and to heightened volatility in the Brazilian securities
markets and securities issued abroad by Brazilian companies.
These and other developments in the Brazilian economy and
governmental policies may adversely affect us and our busi-
ness and results of operations and may adversely affect the
trading price of our common shares and ADSs.
We are also subject to international bilateral air transport
agreements that provide for the exchange of air traffic rights
between the countries where the group operates, and we
must obtain permission from the applicable foreign govern-
ments to provide service to foreign destinations. There can
be no assurance that such existing bilateral agreements will
continue, or that we will be able to obtain more route rights
under those agreements to accommodate our future expan-
sion plans. Certain bilateral agreements also include provi-
sions that require substantial ownership or effective control.
Any modification, suspension or revocation of one or more
bilateral agreements could have a material adverse effect on
our business, financial condition and results of operations.
The suspension of our permits to operate to certain air-
ports or destinations, the inability for us to obtain favorable
take-off and landing authorizations at certain high-density
airports or the imposition of other sanctions could also have
a negative impact on our business. We cannot be certain
that a change in ownership or effective control or in a foreign
government’s administration of current laws and regulations
or the adoption of new laws and regulations will not have a
material adverse effect on our business, financial condition
and results of operations.
Losses and liabilities in the event of an
accident involving one or more of our aircraft
could materially affect our business.
We are exposed to potential catastrophic losses in the
event of an aircraft accident, terrorist incident or any other
similar event. There can be no assurance that, as a result of
an aircraft accident or significant incident:
• we will not need to increase our insurance coverage;
• our insurance premiums will not increase significantly;
• our insurance coverage will fully cover all of our liability; or
• we will not be forced to bear substantial losses.
Substantial claims resulting from an accident or significant
incident in excess of our related insurance coverage could
have a material adverse effect on our business, financial
condition and results of operations. Moreover, any aircraft
accident, even if fully insured, could cause the negative pub-
lic perception that our operations or aircraft are less safe or
reliable than those operated by other airlines, or by other flight
operators, which could have a material adverse effect on our
business, financial condition and results of operations.
Insurance premiums may also increase due to an accident or
incident affecting one of our alliance partners or other air-
lines, or due to a perception of increased risk in the industry
related to concerns about war or terrorist attacks, the gener-
al industry, or general industry safety.
High levels of competition in the airline industry,
such as the presence of low-cost carriers in
the markets in which the group operates, may
adversely affect the level of operations.
Our business, financial condition and results of the group’s op-
erations could be adversely affected by high levels of com-
petition within the industry, particularly the entrance of new
competitors into the markets in which the group operates.
Airlines compete primarily over fare levels, frequency and de-
pendability of service, brand recognition, passenger amenities
(such as frequent flyer programs) and the availability and con-
venience of other passenger or cargo services. New and exist-
ing airlines (and companies providing ground cargo or passen-
ger transportation) could enter our markets and compete with
us on any of these bases, including by offering lower prices,
more attractive services or increasing their route offerings in
an effort to gain greater market share.
Low-cost carriers have an important impact in the industry’s
revenues given their low unit costs. Lower costs allow low-
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cost carriers to offer inexpensive fares which, in turn, al-
low price sensitive customers to fly or to shift from large to
low-cost carriers. In past years we have seen more interest
in the development of the low-cost model throughout Latin
America. For example, in the Chilean market, Sky Airline, our
main competitor, has been migrating to a low-cost mod-
el since 2015, while in July 2017, JetSmart, a new low-cost
airline, started operations. In the Peruvian domestic mar-
ket, VivaAir Peru, a new low-cost airline, started operations
in May 2017, and in April 2019, another low-cost airline, Sky
Airline Peru, started operations. In Colombia, low-cost com-
petitor VivaColombia has been operating in the domestic
market since May 2012. A number of low-cost carriers have
announced growth strategies including commitments to ac-
quire significant numbers of aircraft for delivery in the next
few years. The entry of low-cost carriers into local mar-
kets in which we compete, including those described above,
could have a material adverse effect on our operations and
financial performance. Additionally, certain of our competi-
tors have also filed voluntary petitions under Chapter 11 of
the Bankruptcy Code. The ability of competitors to signif-
icantly adjust their cost structure and become more com-
petitive, resulting from a bankruptcy reorganization process
or other financial restructuring may also adversely affect our
ability to compete.
International strategic growth plans rely, in part, upon re-
ceipt of regulatory approvals of the countries in which we
plan to expand our operations with joint business agree-
ments (JBA). The group may not be able to obtain those
approvals, while other competitors might be approved. Ac-
cordingly, we might not be able to compete for the same
routes as our competitors, which could diminish our market
share and adversely impact our financial results. No assur-
ances can be given as to any benefits, if any, that we may
derive from such agreements.
Some of our competitors may receive external support,
which could adversely impact our competitive position.
Some of our competitors may receive support from exter-
nal sources, such as their national governments, which may
be unavailable to us. Support may include, among others,
subsidies, financial aid or tax waivers. This support could
place the group at a competitive disadvantage and ad-
versely affect operations and financial performance. For
example, Aerolineas Argentinas has historically been gov-
ernment subsidized. Additionally, during the Covid-19 pan-
demic, some of our competitors on long-haul routes have
received, or will receive, government support.
Moreover, as a result of the competitive environment, there
may be further consolidation in the Latin American and glob-
al airline industry, whether by means of acquisitions, joint
ventures, partnerships or strategic alliances. We cannot pre-
dict the effects of further consolidation on the industry. Fur-
thermore, consolidation in the airline industry and changes in
international alliances will continue to affect the competitive
landscape in the industry and may result in the development
of airlines and alliances with increased financial resources,
more extensive global networks and reduced cost structures.
Some of the countries where the group operates may
not comply with international agreements previously
established, which could increase the risk perception
of doing business in that specific market and as a
consequence impact the business and financial results.
Rulings by a bankruptcy court in Brazil and by higher judicial
authorities related to the bankruptcy proceedings of Avian-
ca Brazil may appear to be inconsistent with the Cape Town
Convention (CTC) treaty that Brazil has signed, thus raising
concerns about the rights of creditors in respect of financ-
ings secured by aircraft. Accordingly, if creditors perceive
that an increase business risk is created by these rulings for
leasing or other financing transactions involving aircraft in
Brazil, there is a possibility that rating agencies may issue
lower credit ratings in respect of financings that are secured
by aircraft in Brazil. As a result, business and financial results
may be adversely affected if our financing activities in Brazil
are impacted by such events.
The group’s operations are subject to local, national
and international environmental regulations; costs
of compliance with applicable regulations, or the
consequences of noncompliance, could adversely
affect our results, our business or our reputation.
The group’s operations are affected by environmental reg-
ulations at local, national and international levels. These
regulations cover, among other things, emissions to the at-
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mosphere, disposal of solid waste and aqueous effluents,
aircraft noise and other activities incident to the business.
Future operations and financial results may vary as a re-
sult of such regulations. Compliance with these regulations
and new or existing regulations that may be applicable to
us in the future could increase our cost base and adversely
affect operations and financial results. In addition, failure
to comply with these regulations could adversely affect
us in a variety of ways, including adverse effects on the
group’s reputation.
In 2016, the International Civil Aviation Organization
(“ICAO”) adopted a resolution creating the Carbon Off-
setting and Reduction Scheme for International Avia-
tion (CORSIA), providing a framework for a global mar-
ket-based measure to stabilize carbon dioxide (“CO2”)
emissions in international civil aviation (i.e., civil aviation
flights that depart in one country and arrive in a different
country). CORSIA will be implemented in phases, starting
with the participation of ICAO member states on a volun-
tary basis during a pilot phase (from 2021 through 2023),
followed by a first phase (from 2024 through 2026) and a
second phase (from 2027). Currently, CORSIA focuses on
defining standards for monitoring, reporting and verifica-
tion of emissions from air operators, as well as on de-
fining steps to offset CO2 emissions after 2020. To the
extent most of the countries in which the group operates
continue to be ICAO member states, in the future we may
be affected by regulations adopted pursuant to the COR-
SIA framework.
The proliferation of national regulations and taxes on CO2
emissions in the countries that we have domestic opera-
tions, including environmental regulations that the airline
industry is facing in Colombia, may also affect the cost of
operations and the margins.
its flights to the United States. In connection with the re-
duction in service, the Company reduced its workforce re-
sulting in additional expenses due to severance payments
to terminated employees during 2001. Any future terrorist
attacks or threat of attacks, whether or not involving com-
mercial aircraft, any increase in hostilities relating to re-
prisals against terrorist organizations or otherwise and any
related economic impact could result in decreased passen-
ger traffic and materially and negatively affect the busi-
ness, financial condition and results of operations.
The business may be adversely affected by a
downturn in the airline industry caused by exogenous
events that affect travel behavior or increase costs,
such as outbreak of disease, weather conditions
and natural disasters, war or terrorist attacks.
Demand for air transportation may be adversely impacted
by exogenous events, such as adverse weather conditions
and natural disasters, epidemics (such as Ebola and Zika)
and pandemics (such as the Covid-19 pandemic), terror-
ist attacks, war or political and social instability. Situations
such as these in one or more of the markets in which the
group operates could have a material impact on the busi-
ness, financial condition and results of operations. Fur-
thermore, the Covid-19 pandemic and other adverse public
health developments could have a prolonged effect on air
transportation demand and any prolonged or widespread
effects could significantly impact operations.
After the terrorist attacks in the United States on Septem-
ber 11, 2001, the Company made the decision to reduce
After the 2001 terrorist attacks, airlines have experienced
increased costs resulting from additional security meas-
ures that may be made even more rigorous in the future. In
addition to measures imposed by the U.S. Department of
Homeland Security and the TSA, IATA and certain foreign
governments have also begun to institute additional secu-
rity measures at foreign airports we serve.
Revenues for airlines depend on the number of passengers
carried, the fare paid by each passenger and service fac-
tors, such as the timeliness of flight departures and arriv-
als. During periods of fog, ice, low temperatures, storms or
other adverse weather conditions, some or all of our flights
may be cancelled or significantly delayed, reducing profit-
ability. In addition, fuel prices and supplies, which consti-
tute a significant cost for us, may increase as a result of
any future terrorist attacks, a general increase in hostili-
ties or a reduction in output of fuel, voluntary or otherwise,
by oil-producing countries. Such increases may result in
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both higher airline ticket prices and decreased demand for
air travel generally, which could have an adverse effect on
revenues and results of operations.
An accumulation of ticket refunds could have
an adverse effect on our financial results.
The Covid-19 pandemic and the corresponding widespread
government-imposed travel restrictions that are outside of
LATAM’s control have resulted in an unprecedented num-
ber of requests for ticket refunds from customers due to
changed or cancelled flights. Although at the time this
issue has been managed, we cannot assure you that the
Covid-19 pandemic or other outbreak of contagious illness
will not result in additional changed or cancelled flights,
and we cannot predict the total amount of refunds that
customers might request as a result thereof. If the group is
required to pay out a substantial amount of ticket refunds
in cash, this could have an adverse effect on our financial
results or liquidity position. Furthermore, the group has
agreements with financial institutions that process cus-
tomer credit card transactions for the sale of air travel and
other services. Under certain of the Company’s credit card
processing agreements, the financial institutions in cer-
tain circumstances have the right to require that the group
maintain a reserve equal to a portion of advance ticket
sales that have been processed by that financial institution,
but for which it has not yet provided the air transportation.
Such financial institutions may require cash or other collateral
reserves to be established or withholding of payments relat-
ed to receivables to be collected, including if the group does
not maintain certain minimum levels of unrestricted cash,
cash equivalents and short-term investments. Refunds low-
er our liquidity and put us at risk of triggering liquidity cove-
nants in these processing agreements and, in doing so, could
force us to post cash collateral with the credit card compa-
nies for advance ticket sales.
LATAM group is subject to risks relating to
litigation and administrative proceedings that
could adversely affect the business and financial
performance in the event of an unfavorable ruling.
The nature of the business exposes us to litigation relating
to labor, insurance and safety matters, regulatory, tax and
administrative proceedings, governmental investigations, tort
claims and contract disputes. Litigation is inherently costly
and unpredictable, making it difficult to accurately estimate
the outcome among other matters. Currently, as in the past,
we are subject to proceedings or investigations of actual or
potential litigation. Although we establish accounting provi-
sions as we deem necessary, the amounts that we reserve
could vary significantly from any amounts we actually have
to pay due to the inherent uncertainties in the estimation
process. We cannot assure you that these or other legal pro-
ceedings will not materially affect the business.
The group is subject to anti-corruption, anti-
bribery, anti-money laundering and antitrust
laws and regulations in Chile, the United States
and in the various countries in which it operates.
Violations of any such laws or regulations could
have a material adverse impact on our reputation
and results of operations and financial condition.
We are subject to anti-corruption, anti-bribery, anti-mon-
ey laundering, antitrust and other international laws and
regulations and are required to comply with the applica-
ble laws and regulations of all jurisdictions where the group
operates. In addition, we are subject to economic sanctions
regulations that restrict dealings with certain sanctioned
countries, individuals and entities. There can be no assur-
ance that internal policies and procedures will be sufficient
to prevent or detect all inappropriate practices, fraud or
violations of law by affiliates, employees, directors, of-
ficers, partners, agents and service providers or that any
such persons will not take actions in violation of our policies
and procedures. Any violations by us of laws or regulations
could have a material adverse effect on the business, repu-
tation, results of operations and financial condition.
Latin American governments have exercised and continue
to exercise significant influence over their economies.
Governments in Latin America frequently intervene in the
economies of their respective countries and occasionally
make significant changes in policy and regulations. Govern-
mental actions have often involved, among other measures,
nationalizations and expropriations, price controls, curren-
cy devaluations, mandatory increases on wages and em-
ployee benefits, capital controls and limits on imports. Our
business, financial condition and results of operations may
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be adversely affected by changes in government policies
or regulations, including such factors as exchange rates
and exchange control policies, inflation control policies,
price control policies, consumer protection policies, import
duties and restrictions, liquidity of domestic capital and
lending markets, electricity rationing, tax policies, includ-
ing tax increases and retroactive tax claims, and other po-
litical, diplomatic, social and economic developments in or
affecting the countries where the group operates.
For example, the Brazilian government’s actions to control
inflation and implement other policies have involved wage
and price controls, depreciation of the real, controls over
remittance of funds abroad, intervention by the Central
Bank to affect base interest rates and other measures.
In the future, the level of intervention by Latin American
governments may continue or increase. We cannot assure
you that these or other measures will not have a material
adverse effect on the economy of each respective country
and, consequently, will not adversely affect our business,
financial condition and results of operations.
Political instability and social unrest in Latin
America may adversely affect the business.
LATAM group operates primarily within Latin America and
is thus subject to a full range of risks associated with our
operations in this region. These risks may include unstable
political or social conditions, lack of well-established or reli-
able legal systems, exchange controls and other limits on our
ability to repatriate earnings and changeable legal and regu-
latory requirements.
Although political and social conditions in one country may
differ significantly from another country, events in any of our
key markets could adversely affect the business, financial
conditions or results of operations.
For example, in Brazil, in the last couple of years, as a re-
sult of the ongoing Lava Jato investigation (“Operation Car
Wash”), a number of senior politicians have resigned or been
arrested and other senior elected officials and public officials
are being investigated for allegations of corruption. One of
the most significant events that elapsed from this operation
was the impeachment of the former President Rousseff by
the Brazilian Senate on August, 2016, for violations of fiscal
responsibility laws and the governing of its Vice-President,
Michel Temer, during the last two years of the presidential
mandate, which, due to the development of the investiga-
tions conducted by the Federal Police Department and the
General Federal Prosecutor’s Office, indicted President Temer
on corruption charges. Along with the political and economic
uncertainty period the country was facing, in July 2017, for-
mer President Luiz Inácio Lula da Silva was convicted of cor-
ruption and money laundering by a lower federal court in the
State of Paraná in connection with Operation Car Wash.
In Peru, on September 30, 2019, President Martin Vizcarra
took the executive action to dissolve the Peruvian Congress
and called for a new election of congressional members. In
response to the dissolution of the Congress, former mem-
bers of the legislative body voted to suspend President
Vizcarra for twelve months and appointed Vice President
Mercedes Araoz as interim president to temporarily re-
place Mr. Vizcarra. Vice President Araoz resigned from her
position as interim president the following day. On January
14, 2020, the Peruvian Constitutional Court declared the
executive action taken by President Vizcarra to be consti-
tutionally and legally valid. On January 26, 2020, congres-
sional elections were held to elect the new Congress. The
new Congress is fragmented and will likely be replaced in
the next general election in April 2021.
On October 20, 2020, a group of 27 congressmen intro-
duced a motion to hold new impeachment proceedings
against President Vizcarra as a result of allegations that
President Vizcarra received illicit payments from con-
struction companies when he was the governor of Moque-
gua (between 2011 and 2014). On November 2, 2020, the
Peruvian Congress voted to hold new impeachment pro-
ceedings. On November 9, 2020, with the affirmative vote
of the required qualified members of Congress, the im-
peachment of President Vizcarra was approved. Because,
at the time, Peru did not have designated vice presidents,
the then-president of the Congress, Manuel Arturo Merino
de Lama, assumed the role of acting President. Since that
day, Peru has been undergoing political and social unrest,
followed by multiple protests within the country. On No-
vember 15, 2020, Manuel Arturo Merino de Lama resigned
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from his role of acting President. On November 16, 2020,
the Congress elected congressman Francisco Rafael Sagasti
Hochhausler as president of Congress, and he assumed the
role of acting President on November 17, 2020 until July 28,
2021.
Notwithstanding the foregoing, Peru is currently scheduled to
hold a general election in April 2021 to elect a new President
and Congress, which increases the uncertainty surrounding
the Peruvian economy. In the past, governments have im-
posed controls on prices, exchange rates, local and foreign
investment and international trade, restricted the ability of
companies to dismiss employees, expropriated private sec-
tor assets and prohibited the remittance of profits to foreign
investors. We cannot be certain whether the new Peruvian
government (appointed by Congress) or the Peruvian gov-
ernment to be elected in 2021 will continue to pursue busi-
ness-friendly and open-market economic policies that stim-
ulate economic growth and stability.
In October 2019, Chile saw significant protests associat-
ed with economic conditions resulting in the declaration of
a state of emergency in several major cities. The protests in
Chile began over criticisms about social inequality, lack of
quality education, weak pensions, increasing prices and low
minimum wage. If social unrest in Chile were to continue or
intensify, it could lead to operational delays or adversely im-
pact our ability to operate in Chile.
Furthermore, current initiatives to address the concerns of
the protesters are under discussion in the Chilean Congress.
These initiatives include labor reforms, tax reforms and pen-
sion reforms, among others. It is not possible to predict the
effect of these changes as they are still under discussion, but
they could potentially result in higher payments of wages
and salaries and an increase in taxes. On October 25, 2020
(postponed from April 26, 2020 due to the impact of the
Covid-19 pandemic), Chile widely approved a referendum to
redraft the constitution via constitutional convention. The
election for selecting the 155-member constitutional con-
vention is set to be held on April 11, 2021. Thereafter, the
convention will have 9 months, with the possibility of a one-
time, three-month extension, to present a new constitution,
which will be approved or rejected in a referendum during
2022. In addition, Chile will hold presidential and congres-
sional elections in November 2021.
Although conditions throughout Latin America vary from
country to country, our customers’ reactions to develop-
ments in Latin America generally may result in a reduction in
passenger traffic, which could materially and negatively af-
fect our financial condition and results of operations.
Latin American countries have experienced
periods of adverse macroeconomic conditions.
The business is dependent upon economic conditions prev-
alent in Latin America. Latin American countries have his-
torically experienced economic instability, including uneven
periods of economic growth as well as significant downturns.
High interest, inflation (in some cases substantial and pro-
longed), and unemployment rates generally characterize each
economy. Because commodities such as agricultural prod-
ucts, minerals, and metals represent a significant percentage
of exports of many Latin American countries, the economies
of those countries are particularly sensitive to fluctuations
in commodity prices. Investments in the region may also be
subject to currency risks, such as restrictions on the flow of
money in and out of the country, extreme volatility relative
to the U.S. dollar, and devaluation.
For example, in the past, Peru has experienced periods of
severe economic recession, currency devaluation, high infla-
tion, and political instability, which have led to adverse eco-
nomic consequences. We cannot assure you that Peru will
not experience similar adverse developments in the future
even though for some years now, several democratic proce-
dures have been completed without any violence. We can-
not assure you that the current or any future administration
will maintain business-friendly and open-market economic
policies or policies that stimulate economic growth and so-
cial stability. In Brazil, the Brazil Real GDP decreased 3.5% in
2015, decreased 3.3% in 2016, increased 1.3% in 2017 and
2018 and increased 1.1% in 2019, according to the Brazilian
Institute for Geography and Statistics (Instituto Brasileiro de
Geografia e Estadística, or “IGBE”). In addition, the credit rat-
ing of the Brazilian federal government was downgraded in
2015 and 2016 by all major credit rating agencies and is no
longer investment grade. We can offer no assurances as to
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the policies that may be implemented by the recently elect-
ed Argentine administration, or that political developments
in Argentina will not adversely affect the Argentine economy.
Accordingly, any changes in the economies of the Latin
American countries in which LATAM and its affiliates operate
or the governments’ economic policies may have a nega-
tive effect on the business, financial condition and results of
operations.
RISKS RELATING TO OUR COMMON SHARES AND
ADSS
Because our post-bankruptcy capital structure is yet to
be determined, and any changes to our capital structure
may have a material adverse effect on holders of the
ADSs or our shares, trading in the ADSs or our shares
during the pendency of our Chapter 11 proceedings
is highly speculative and poses substantial risks.
Our post-bankruptcy capital structure will be set pursuant
to a reorganization plan that requires approval by the bank-
ruptcy court. The reorganization of our capital structure may
include exchanges of new equity securities for existing equi-
ty securities or of debt securities for equity securities, which
would dilute any value of our existing equity securities, or
may provide for all existing equity interests in us to be ex-
tinguished. In this case, amounts invested by holders of the
ADSs or our shares will not be recoverable and these secu-
rities will have no value.
As a result of our Chapter 11 proceedings, on June 10,
2020, the NYSE notified the SEC of its intention to remove
the ADSs from listing and registration on the NYSE, effec-
tive at the opening of business on June 22, 2020. As of the
date of this annual report, the ADSs are traded in the over-
the-counter market, which is a less liquid market. There
can be no assurance that the ADSs will continue to trade in
the over-the-counter market or that any public market for
the ADSs will exist in the future, whether broker-dealers
will continue to provide public quotes of the ADSs, whether
the trading volume of the ADSs will be sufficient to pro-
vide for an efficient trading market, whether quotes for the
ADSs may be blocked in the future or that we will be able
to relist the ADSs on a securities exchange.
Trading prices of the ADSs or our shares bear no relation-
ship to the actual recovery, if any, by their holders in the
context of our Chapter 11 proceedings. Additionally, trad-
ing prices of ADSs or our shares may experience signifi-
cant fluctuation and volatility. Due to these and other risks
described in this annual report, trading in the ADSs or our
shares during the pendency of our Chapter 11 proceed-
ings poses substantial risks and we urge extreme caution
with respect to existing and future investments in these
securities.
Our major shareholders may have interests that differ
from those of our other shareholders.
One of the major shareholder groups, the Cueto Group (the
“Cueto Group”), beneficially owned 16.39% of our common
shares as of February 28, 2021. The Amaro Group (the
“Amaro Group”), as of February 28, 2021, held 6.40 % of
LATAM shares through TEP Chile and TEP Aeronáutica S.A.
Previously, the Amaro Group held a 21.88% stake in Costa
Verde Aeronáutica S.A., the main legal vehicle through which
the Cueto Group holds its LATAM shares, which included
4.42% of the 6.40% LATAM shares held by the Amaro Group.
On December 28, 2020, however, TEP Aeronáutica S.A. was
created through a demerger of Costa Verde Aeronáutica
S.A., and the Amaro Group’s interest in Costa Verde
Aeronáutica S.A. transferred to the new company, wholly-
owned by the Amaro Group, and which as of February 28,
2021, held 4.42% of the LATAM Shares. Pursuant to an
existing shareholders’ agreement, the Cueto Group and the
Amaro Group have agreed to use their good faith efforts
to reach an agreement and act jointly on all actions to be
taken by our board of directors or shareholders’ meeting,
and if unable to reach to such agreement, to follow the
proposals made by our board of directors. Decisions by the
Company that require supermajority votes under Chilean
law are subject to voting arrangements by the Cueto Group
and the Amaro Group. In addition, other shareholders
including, Delta Air Lines, Inc, which, as of February 28, 2021,
held 20.00% of our common shares, and Qatar Airways
Investments (UK) Ltd., which as of February 28, 2021, held
9.999999918% of our common shares, could have interests
that may differ from those of our other shareholders.
Under the terms of the deposit agreement governing the
ADSs, if holders of ADSs do not provide JP Morgan Chase
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RISK FACTORS
Bank, N.A., in its capacity as depositary for the ADSs,
with timely instructions on the voting of the common
shares underlying their ADRs, the depositary will be
deemed to have been instructed to give a person desig-
nated by the board of directors the discretionary right to
vote those common shares. The person designated by
the board of directors to exercise this discretionary voting
right may have interests that are aligned with our ma-
jority shareholders, which may differ from those of our
other shareholders. Historically, our board of directors
has designated its chairman to exercise this right; for ex-
ample, the members of the board of directors elected by
the shareholders in 2020 designated Mr. Ignacio Cueto, to
serve in this role.
Trading of our ADSs and common shares in the
securities markets is limited and could experience
further illiquidity and price volatility.
Our common shares are listed on the two Chilean stock
exchanges. Chilean securities markets are substantially
smaller, less liquid and more volatile than major securities
markets in the United States. In addition, Chilean securities
markets may be materially affected by developments in
other emerging markets, particularly other countries in Latin
America. Accordingly, although you are entitled to withdraw
the common shares underlying the ADSs from the depos-
itary at any time, your ability to sell the common shares
underlying ADSs in the amount and at the price and time of
your choice may be substantially limited. This limited trading
market may also increase the price volatility of the ADSs or
the common shares underlying the ADSs.
Holders of ADRs may be adversely affected by currency
devaluations and foreign exchange fluctuations.
If the Chilean peso exchange rate falls relative to the U.S.
dollar, the value of the ADSs and any distributions made
thereon from the depositary could be adversely affected.
Cash distributions made in respect of the ADSs are re-
ceived by the depositary (represented by the custodian
bank in Chile) in pesos, converted by the custodian bank
into U.S. dollars at the then-prevailing exchange rate and
distributed by the depositary to the holders of the ADRs
evidencing those ADSs. In addition, the depositary will in-
cur foreign currency conversion costs (to be borne by the
holders of the ADRs) in connection with the foreign curren-
cy conversion and subsequent distribution of dividends or
other payments with respect to the ADSs.
Future changes in Chilean foreign investment controls
and withholding taxes could negatively affect non-
Chilean residents that invest in our shares.
Equity investments in Chile by non-Chilean residents have
been subject in the past to various exchange control reg-
ulations that govern investment repatriation and earnings
thereon. Although not currently in effect, regulations of the
Central Bank of Chile have in the past imposed such ex-
change controls. Nevertheless, foreign investors still have
to provide the Central Bank with information related to equi-
ty investments and must conduct such operations within the
formal exchange market. Furthermore, any changes in with-
holding taxes could negatively affect non-Chilean residents
that invest in our shares.
We cannot assure you that additional Chilean restrictions
applicable to the holders of ADRs, the disposition of the
common shares underlying ADSs or the repatriation of the
proceeds from an acquisition, a disposition or a dividend
payment, will not be imposed or required in the future, nor
could we make an assessment as to the duration or impact,
were any such restrictions to be imposed or required.
Our ADS holders may not be able to exercise
preemptive rights in certain circumstances.
To the extent that a holder of our ADSs is unable to exercise
its preemptive rights because a registration statement has
not been filed, the depositary will attempt to sell the hold-
er’s preemptive rights and distribute the net proceeds of the
sale, net of the depositary’s fees and expenses, to the holder,
provided that a secondary market for those rights exists and a
premium can be recognized over the cost of the sale. A sec-
ondary market for the sale of preemptive rights can be ex-
pected to develop if the subscription price of the shares of our
common stock upon exercise of the rights is below the prevail-
ing market price of the shares of our common stock. Howev-
er, we cannot assure you that a secondary market in preemp-
tive rights will develop in connection with any future issuance
of shares of our common stock or that if a market develops, a
Appendices
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APPENDICES: OUR BUSINESS Integrated Report 2020Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information Credits ers. Publicly available information about issuers of securities
listed on Chilean stock exchanges also provides less detail
in certain respects than the information regularly published
by listed companies in the United States or in certain other
countries. Furthermore, there is a lower level of regulation of
the Chilean securities market and of the activities of inves-
tors in such markets as compared with the level of regulation
of the securities markets in the United States and in certain
other developed countries.
Risk management
RISK FACTORS
premium can be recognized on their sale. Amounts received in
exchange for the sale or assignment of preemptive rights relat-
ing to shares of our common stock will be taxable in Chile and
in the United States. The inability of holders of ADSs to exer-
cise preemptive rights in respect of common shares underlying
their ADSs could result in a change in their percentage owner-
ship of common shares following a preemptive rights offering.
If a secondary market for the sale of preemptive rights does
not develop and such rights cannot be sold, they will expire and
a holder of our ADSs will not realize any value from the grant
of the preemptive rights. In either case, the equity interest of a
holder of our ADSs in us will be diluted proportionately.
We are not required to disclose as much information to
investors as a U.S. issuer is required to disclose and, as
a result, you may receive less information about us than
you would receive from a comparable U.S. company.
The corporate disclosure requirements that apply to us may
not be equivalent to the disclosure requirements that ap-
ply to a U.S. company and, as a result, you may receive less
information about us than you would receive from a compa-
rable U.S. company. We are subject to the reporting require-
ments of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). The disclosure requirements applicable
to foreign issuers under the Exchange Act are more limited
than the disclosure requirements applicable to U.S. issu-
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Climate change
305-1, 305-2, 305-3, 305-4 and 305-5
GREENHOUSE GASES (t co2e)
2017
2018
2019
2020 ∆ 2020/2019
SCOPE OF THE INFORMATION (%)
Jet fuel—air operation
Fuel—stationary sources
Direct emissions1
Indirect emissions2
Other indirect emissions3
Total
Emissions intensity in total operations
(kg CO2e/100 RTK)
Emissions intensity in air operations
(kg CO2e/100 RTK)
Emissions intensity (net value) in the total
operation (kg CO2e/100 RTK)4
11,051,171
11,513,608
12,149,725
5,614,368
24,498
11,382
16,759
4,750
18,423
218,174
16,355
24,827
11,087,051
11,535,117
12,386,323
5,655,551
79.89
80.34
83.69
79.45
80.06
82.02
81.62
80.69
-53.79%
-11.23%
-88.62%
-54.34%
-2.48%
-1.62%
Diesel
Natural gas
Gasoline
LPG
Fuel—mobile sources
Diesel
Gasoline
LGP
77.50
77.86
82.79
79.68
-3.76%
Refrigerating gases (various)
2017
100
2018
100
2019
100
2020
100
96
100
100
100
96
96
100
100
100
100
96
100
100
100
96
96
100
100
100
100
96
100
100
100
96
96
100
100
100
100
96
100
100
100
96
96
100
100
100
100
1 Direct emissions (Scope 1): fuel consumption in air operations, fixed sources, and LATAM fleet vehicles, as well as
fugitive refrigerant gas emissions.
2 Indirect emissions (Scope 2): electric energy purchases. The emissions calculation considers the different energy grids of
the countries where LATAM operates.
3 Other indirect emissions (Scope 3): ground transportation related to operations (employees, suppliers, and waste) and air
travel (through other airlines) of employees for work reasons.
4 Considers offset emissions.
SOURCE
Jet Fuel
Gasoline
Diesel
Natural gas
Liquefied petroleum gas (LPG)
EMISSION FACTOR
3.15 kg CO2/kg fuel
69,300 kg CO2/TJ
74,100 kg CO2/TJ
56,100 kg CO2/TJ
63,100 kg CO2/TJ
Electricity
Transportation using other airlines (jet fuel)
305-6 and 305-7
SIGNIFICANT ATMOSPHERIC EMISSIONS
2017
2018
2019
2020 ∆ 2020/2019 (%)
Nitrogen oxides (NOx) – (t)
37,876
39,485
41,697
19,207
Intensity in passenger operation (g/RPK)
Intensity in cargo operations (g/RTK)
Sulfur oxides (SOx) – (t)
Intensity in passenger operation (g/RPK)
Intensity in cargo operations (g/RTK)
Gases that affect the ozone layer1
0.253
1.822
1,678
0.011
0.081
23.84
0.256
1.718
1,749
0.011
0.076
46.7
0.261
1.880
1,847
0.012
0.083
21.2
0.273
1.792
851
0.012
0.079
7.8
-53.9%
4.6%
-4.7%
-53.9%
4.6%
-4.7%
-63.3%
1 Incluye (2018): Halon-1301; HCFC-141b; HCFC-22; HFC-125; HFC-134a; HFC143a; HFC-32; R410A; and R507A.
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Environmental management and eco-efficiency
302-1
INTERNAL ENERGY CONSUMPTION (TJ)
2017
2018
2019
2020
Non-renewable energy
Jet Fuel
Gasoline
Diesel
LGP
Natural gas
Electricidad2
151,502.79
157,940.61
166,786.63
76,826.10
7.81
271.81
7.10
0.59
6.90
178.101
7.60
0.41
9.64
118.63
8.35
0.42
3.97
97.74
6.28
0.29
136,755.77
106,125.12
55,194.86
35,961.65
Total non-renewable energy
288,545.87
264,258.74
222,118.53
112,896.04
Renewable energy
Ethanol
Electricity2
0.09
0.25
20.65
0.20
103,612.59
76,181.32
161,444.19
105,624.34
Total renewable energy3
103,612.68
76,181.57
161,464.84
105,624.55
Total
152,030.56
158,316.18
383,583.38
218,520.59
1 There was a decrease in Chile’s consumption due to the outsourcing of ground handling services.
2 The energy consumed comes from different sources. The share percentage of each source varies year after year, based on
the electric grid of each country.
3 Differs from the information in past reports because the consideration of renewable and non-renewable electric energy was
corrected.
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Joint challenge
LATAM GROUP AND AFFILIATES –TURNOVER RATE (%) 401-1
LATAM GROUP AND AFFILIATES – NEW HIRES 401-1
TOTAL
RATE
By gender
Men
Women
By age group
Up to 30 years
From 31 to 40 years old
From 41 to 50 years old
From 51 to 60 years old
Over 61 years old
By country
Argentina1
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
Total
2018
9.9
20.8
30.6
11.9
3.7
1.7
1.9
8.3
15.9
13.4
10.9
13.1
16.0
8.0
34.4
14.2
2019
12.3
15.9
23.0
11.9
7.9
7.8
15.2
7.8
11.2
18.8
18.0
17.8
22.2
13.0
17.8
13.7
2020
60.6
49.6
82.2
50.6
35.5
42.2
Argentina1
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
104.2
Total
181.3
45.3
56.3
40.8
65.1
37.2
57.0
77.33
53.7
1 The affiliate’s domestic operations were suspended in June 2020.
40
927
530
81
32
9
254
23
1,896
4.8%
6.0%
7.4%
7.3%
6.7%
4.3%
9.4%
4.9%
6.7%
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Team safety
LATAM GROUP AND ITS AFFILIATES—JOB SECURITY 403-9
TOTAL
RATE
Injuries from work-related incidents with major consequences11
Peru
Other affiliates
Total
Recordable injuries from work-related incidents2
Argentina
Brazil
Chile
Colombia
Ecuador
Peru
Others (including the United States)
Total
Deaths resulting from injuries from work-related incidents3
3
0
3
4
60.5
45.0
3.0
8.0
20.0
5.0
145.5
0
0.09
0.00
0.01
0.24
0.32
0.54
0.25
1.39
0.61
0.29
0.41
0.00
Notes:
Rates are calculated following the formula Total incidents/Average staff X 100.
1 Does not include deaths. Note: Peru was the only affiliate with work-related incidents with major consequences in 2020.
2 Including deaths.
3 Including travel incidents in the cases where LATAM provides the transportation service. Note: there were no deaths.
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I N F O R M A T I O N
179
Financial
statements
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
CONTENTS
Consolidated Statement of Financial Position
Consolidated Statement of Income by Function
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows - Direct Method
Notes to the Consolidated Financial Statements
-
CHILEAN PESO
- ARGENTINE PESO
- UNITED STATES DOLLAR
CLP
ARS
US$
THUS$ -
- MILLIONS OF UNITED STATES DOLLARS
MUS$
COP
-
BRL/R$ -
THR$
COLOMBIAN PESO
BRAZILIAN REAL
- THOUSANDS OF BRAZILIAN REAL
THOUSANDS OF UNITED STATES DOLLARS
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REPORT OF INDEPENDENT AUDITORS
(Free translation from the original in Spanish)
Santiago, March 9, 2021
To the Board of Directors and Shareholders
Latam Airlines Group S.A.
We have audited the accompanying consolidated financial statements of Latam Airlines Group S.A.
and subsidiaries, which comprise the consolidated statements of financial position as at December 31,
2020 and 2019 and the consolidated statements of income by function, consolidated comprehensive
income, consolidated changes in equity and consolidated cash flows – direct method for the years
then ended, and the corresponding notes to the consolidated financial statements.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with the International Financial Reporting Standards (IFRS). This
responsibility includes the design, implementation and maintenance of a relevant internal control for
the preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Chilean Generally Accepted Auditing Standards.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. As a
consequence we do not express that kind of opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Santiago, March 9, 2021
Latam Airlines Group S.A.
2
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects the
financial position of Latam Airlines Group S.A. and subsidiaries as at December 31, 2020 and 2019,
and the results of operations and cash flows for the years ended December 31, 2020 and 2019 in
accordance with the International Financial Reporting Standards (IFRS).
Emphasis of matter – Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company
will continue as a going concern. As indicated in Note 2 to the consolidated financial statements,
the Company’s operations have been impacted by the COVID-19 pandemic and has stated that
substantial doubt exists about the Company's ability to continue as a going concern. Management's
assessment of the conditions, including its plans regarding this matter are also described in
Note 2. The consolidated financial statements do not include any adjustments that could
result from the resolution of this uncertainty. Our opinion is not modified as a result of this
matter.
Emphasis of matter – Voluntary reorganization and restructuring of their debt
As indicated in Notes 2 to the consolidated financial statements, on May 26, 2020 and July
9,2020, the Parent Company and some of its subsidiaries availed themselves of voluntary
protection under the financial reorganization process under Chapter 11 of the U.S. Bankruptcy
Code. Our opinion is not modified as a result of this matter.
Digitally signed by Renzo Piero Corona Spedaliere RUT: 6.373.028-9. The digital certificate is embedded in the
electronic version of this document.
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18 - Current and deferred tax ............................................................................................................ 72
19 - Other financial liabilities ............................................................................................................ 76
20 - Trade and other accounts payables ............................................................................................ 86
21 - Other provisions ......................................................................................................................... 88
22 - Other non financial liabilities ..................................................................................................... 90
23 - Employee benefits ...................................................................................................................... 91
24 - Accounts payable, non-current .................................................................................................. 93
25 - Equity ......................................................................................................................................... 93
26 - Revenue ..................................................................................................................................... 97
27 - Costs and expenses by nature .................................................................................................... 98
28 - Other income, by function ....................................................................................................... 100
29 - Foreign currency and exchange rate differences ...................................................................... 100
30 - Earnings/(loss) per share .......................................................................................................... 108
31 - Contingencies ........................................................................................................................... 109
32 - Commitments ........................................................................................................................... 123
33 - Transactions with related parties ............................................................................................. 126
34 - Share based payments .............................................................................................................. 127
35 - Statement of cash flows ........................................................................................................... 128
36 - The environment ...................................................................................................................... 130
37 - Events subsequent to the date of the financial statements ....................................................... 131
Contents of the Notes to the consolidated financial statements of LATAM Airlines Group S.A. and
Subsidiaries.
Notes
Page
1 - General information ....................................................................................................................... 1
2 - Summary of significant accounting policies .................................................................................. 5
2.1. Basis of Preparation ................................................................................................................. 5
2.2. Basis of Consolidation ........................................................................................................... 14
2.3. Foreign currency transactions ................................................................................................ 15
2.4. Property, plant and equipment ............................................................................................... 17
2.5. Intangible assets other than goodwill ..................................................................................... 18
2.6. Goodwill ................................................................................................................................. 18
2.7. Borrowing costs ..................................................................................................................... 18
2.8. Losses for impairment of non-financial assets ....................................................................... 19
2.9. Financial assets ....................................................................................................................... 19
2.10. Derivative financial instruments and hedging activities ...................................................... 20
2.11. Inventories ............................................................................................................................ 21
2.12. Trade and other accounts receivable .................................................................................... 21
2.13. Cash and cash equivalents .................................................................................................... 22
2.14. Capital .................................................................................................................................. 22
2.15. Trade and other accounts payables ....................................................................................... 22
2.16. Interest-bearing loans ........................................................................................................... 22
2.17. Current and deferred taxes ................................................................................................... 22
2.18. Employee benefits ................................................................................................................ 23
2.19. Provisions ............................................................................................................................. 23
2.20. Revenue recognition ............................................................................................................. 24
2.21. Leases ................................................................................................................................... 25
2.22. Non-current assets (or disposal groups) classified as held for sale ...................................... 27
2.23. Maintenance ......................................................................................................................... 27
2.24. Environmental costs ............................................................................................................. 27
3 - Financial risk management .......................................................................................................... 27
3.1. Financial risk factors .............................................................................................................. 27
3.2. Capital risk management ........................................................................................................ 43
3.3. Estimates of fair value ............................................................................................................ 43
4 - Accounting estimates and judgments ........................................................................................... 45
5 - Segmental information ................................................................................................................. 49
6 - Cash and cash equivalents ........................................................................................................... 50
7 - Financial instruments ................................................................................................................... 51
8 - Trade and other accounts receivable current, and non-current accounts receivable .................... 52
9 - Accounts receivable from/payable to related entities .................................................................. 55
10 - Inventories ................................................................................................................................. 56
11 - Other financial assets ................................................................................................................. 57
12 - Other non-financial assets .......................................................................................................... 58
13 - Non-current assets and disposal group classified as held for sale ............................................. 59
14 - Investments in subsidiaries ........................................................................................................ 60
15 - Intangible assets other than goodwill ......................................................................................... 63
16 - Goodwill and intangible assets of indefinite useful life ............................................................. 64
17 - Property, plant and equipment ................................................................................................... 67
Financial statements
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LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Cash and cash equivalents
Cash and cash equivalents
Other financial assets
Other non-financial assets
Trade and other accounts receivable
Accounts receivable from related entities
Inventories
Current tax assets
Total current assets other than non-current assets
(or disposal groups) classified as held for sale or as held
for distribution to owners
Non-current assets (or disposal groups) classified as
held for sale or as held for distribution to owners
Total current assets
Non-current assets
Other financial assets
Other non-financial assets
Accounts receivable
Intangible assets other than goodwill
Goodwill
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
1,695,841
50,250
155,892
599,381
158
323,574
42,320
1,072,579
499,504
313,449
1,244,348
19,645
354,232
29,321
Note
6 - 7
7 - 11
12
7 - 8
7 - 9
10
18
2,867,416
3,533,078
13
276,122
485,150
3,143,538
4,018,228
7 - 11
12
7 - 8
15 - 16
16
17
18
33,140
126,782
4,986
1,046,559
-
10,730,269
564,816
46,907
204,928
4,725
1,448,241
2,209,576
12,919,618
235,583
12,506,552
17,069,578
15,650,090
21,087,806
The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Other financial liabilities
Trade and other accounts payables
Accounts payable to related entities
Other provisions
Current tax liabilities
Other non-financial liabilities
Total current liabilities other than
(or disposal groups) classified as held for sale
Total current liabilities
Non-current liabilities
Other financial liabilities
Accounts payable
Accounts payable to related entities
Other provisions
Deferred tax liabilities
Employee benefits
Other non-financial liabilities
Total non-current liabilities
Total liabilities
EQUITY
Share capital
Retained earnings/(losses)
Treasury Shares
Other reserves
Parent's ownership interest
Non-controlling interest
Total equity
Total liabilities and equity
Note
7 - 19
7 - 20
7 - 9
21
18
22
7 - 19
7 - 24
7 - 9
21
18
23
22
25
25
25
14
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
3,055,730
2,322,125
812
23,774
656
2,088,791
1,885,660
2,222,874
56
5,206
11,925
2,835,221
7,491,888
6,960,942
7,491,888
6,960,942
7,803,801
651,600
396,423
588,359
384,280
74,116
702,008
10,600,587
18,092,475
3,146,265
(4,193,615)
(178)
(1,388,185)
(2,435,713)
(6,672)
(2,442,385)
15,650,090
8,530,418
619,110
-
286,403
616,803
93,570
851,383
10,997,687
17,958,629
3,146,265
352,272
(178)
(367,577)
3,130,782
(1,605)
3,129,177
21,087,806
The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements.
Financial statements
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LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME BY FUNCTION
Revenue
Cost of sales
Gross margin
Other income
Distribution costs
Administrative expenses
Other expenses
Restructuring activities expenses
Other gains/(losses)
Income from operation activities
Financial income
Financial costs
Foreign exchange gains/(losses)
Result of indexation units
Income (loss) before taxes
Income tax expense / benefit
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners
of the parent
Income (loss) attributable to
non-controlling interest
Net income (loss) for the year
EARNINGS PER SHARE
Basic earnings (losses) per share (US$)
Diluted earnings (losses) per share (US$)
Note
26
27
28
27
27
27
27
27
27
29
18
14
30
30
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
3,923,667
(4,513,228)
10,070,063
(7,951,269)
(589,561)
2,118,794
411,002
(294,278)
(499,512)
(692,939)
(990,009)
(1,874,789)
(4,530,086)
50,397
(586,979)
(48,403)
9,348
(5,105,723)
550,188
(4,555,535)
360,864
(580,046)
(735,218)
(422,792)
-
11,525
753,127
26,283
(589,934)
(32,571)
(14,989)
141,916
53,697
195,613
(4,545,887)
190,430
(9,648)
5,183
(4,555,535)
195,613
(7.49642)
(7.49642)
0.31403
0.31403
The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended
December 31,
NET INCOM E
Components of other comprehensive income
that will not be reclassified to income before taxes
Other comprehensive income, before taxes,
gains by new measurements
on defined benefit plans
Total other comprehensive (loss)
that will not be reclassified to income before taxes
Components of other comprehensive income
that will be reclassified to income before taxes
Currency translation differences
Note
2020
ThUS$
2019
ThUS$
(4,555,535)
195,613
25
(3,968)
(10,636)
(3,968)
(10,636)
Gains (losses) on currency translation, before tax
29
(894,394)
(243,271)
Other comprehensive loss, before taxes,
currency translation differences
Cash flow hedges
(894,394)
(243,271)
Gains (losses) on cash flow hedges before taxes
19
(119,970)
66,856
Other comprehensive income (losses),
before taxes, cash flow hedges
Total other comprehensive (loss)
(119,970)
66,856
that will be reclassified to income before taxes
(1,014,364)
(176,415)
Other components of other comprehensive
income (loss), before taxes
Income tax relating to other comprehensive income
that will not be reclassified to income
Income tax relating to new measurements
on defined benefit plans
Accumulate income tax relating
to other comprehensive income (loss)
that will not be reclassified to income
Income tax relating to other comprehensive income (loss)
that will be reclassified to income
Income tax related to cash flow hedges in other
comprehensive income (loss)
Income taxes related to components of other
comprehensive loss will be reclassified to income
Total Other comprehensive (loss)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to
owners of the parent
Comprehensive income (loss) attributable to
non-controlling interests
TOTAL COM PREHENSIVE INCOM E (LOSS)
(1,018,332)
(187,051)
18
924
2,873
924
2,873
959
959
414
414
(1,016,449)
(5,571,984)
(183,764)
11,849
(5,566,991)
15,250
(4,993)
(5,571,984)
(3,401)
11,849
The accompanying Notes 1 to 37 form an integral part of these interim consolidated financial statements.
Financial statements
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the parent
Change in other reserves
Note
Share
capital
T hUS$
T reasury
shares
T hUS$
Currency
translation
reserve
T hUS$
Cash flow
hedging
reserve
T hUS$
Actuarial gains
or losses on
defined benefit
plans
reserve
T hUS$
Shares based
payments
reserve
T hUS$
Other
sundry
reserve
T hUS$
T otal
other
reserve
T hUS$
Retained
earnings/(losses)
T hUS$
Parent's
ownership
interest
T hUS$
Non-
controlling
interest
T hUS$
T otal
equity
T hUS$
3,146,265
(178)
(2,890,287)
56,892
(22,940)
36,289
2,452,469
(367,577)
352,272
3,130,782
(1,605)
3,129,177
-
-
-
-
-
-
-
-
-
-
-
-
-
(900,226)
(900,226)
-
(117,833)
(117,833)
-
(3,045)
(3,045)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
946
946
(450)
(450)
-
(1,021,104)
(1,021,104)
(4,545,887)
-
(4,545,887)
(4,545,887)
(1,021,104)
(5,566,991)
(9,648)
(4,555,535)
4,655 (1,016,449)
(5,571,984)
(4,993)
-
496
496
-
-
-
-
496
496
-
(74)
(74)
-
422
422
Equity as of January 1, 2020
T otal increase (decrease) in equity
Net income/(loss) for the period
Other comprehensive income
T otal comprehensive income
T ransactions with shareholders
Dividends
Increase (decrease) through
transfers and other changes, equity
T otal transactions with shareholders
25-34
25
25
Closing balance as of
December 31, 2020
3,146,265
(178)
(3,790,513)
(60,941)
(25,985)
37,235
2,452,019
(1,388,185)
(4,193,615)
(2,435,713)
(6,672)
(2,442,385)
The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements.
Financial statements
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LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the parent
Change in other reserves
Note
Share
capital
T hUS$
T reasury
shares
T hUS$
Currency
translation
reserve
T hUS$
Cash flow
hedging
reserve
T hUS$
Actuarial gains
or losses on
defined benefit
plans
reserve
T hUS$
Shares based
payments
reserve
T hUS$
Other
sundry
reserve
T hUS$
T otal
other
reserve
T hUS$
Retained
earnings
T hUS$
Parent's
ownership
interest
T hUS$
Non-
controlling
interest
T hUS$
T otal
equity
T hUS$
Equity as of January 1, 2019
T otal increase (decrease) in equity
Net income for the year
Other comprehensive income
T otal comprehensive income
T ransactions with shareholders
Dividends
Increase (decrease) through
25
25
transfers and other changes, equity
T otal transactions with shareholders
25-34
Closing balance as of
December 31, 2019
3,146,265
(178)
(2,656,644)
(9,333)
(15,178)
37,874
2,638,916
(4,365)
218,971
3,360,693
79,908
3,440,601
-
-
-
-
-
-
-
-
-
-
-
-
-
(233,643)
(233,643)
-
66,225
66,225
-
(7,762)
(7,762)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(175,180)
(175,180)
190,430
-
190,430
190,430
(175,180)
15,250
5,183
(8,584)
(3,401)
195,613
(183,764)
11,849
-
(57,129)
(57,129)
-
(57,129)
(1,585)
(1,585)
(186,447)
(186,447)
(188,032)
(188,032)
-
(57,129)
(188,032)
(245,161)
(78,112)
(78,112)
(266,144)
(323,273)
3,146,265
(178)
(2,890,287)
56,892
(22,940)
36,289
2,452,469
,
(367,577)
352,272
3,130,782
(1,605)
3,129,177
The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements.
Financial statements
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LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - DIRECT METHOD
Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services
Other cash receipts from operating activities
Payments for operating activities
Payments to suppliers for goods and services
Payments to and on behalf of employees
Other payments for operating activities
Income taxes (paid)
Other cash inflows (outflows)
Net cash (outflow) inflow from operating activities
Cash flows from investing activities
Other cash receipts from sales of equity or debt
instruments of other entities
Other payments to acquire equity
or debt instruments of other entities
Amounts raised from sale of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Interest received
Other cash inflows (outflows)
Net cash inflow (outflow) from investing activities
Cash flows from financing activities
Payments for changes in ownership interests in
subsidiaries that do not result in loss of control
Amounts raised from long-term loans
Amounts raised from short-term loans
Loans from Related Entities
Loans repayments
Payments of lease liabilities
Dividends paid
Interest paid
Other cash inflows (outflows)
Net cash inflow (outflow) from financing activities
Net increase in cash and cash equivalents
before effect of exchanges rate change
Effects of variation in the exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT THE END OF YEAR
For the year ended
December 31,
Note
2020
ThUS$
2019
ThUS$
4,620,409
51,900
(3,817,339)
(1,227,010)
(70,558)
(65,692)
13,593
(494,697)
11,079,333
127,683
(6,663,875)
(1,644,806)
(267,643)
(45,311)
241,286
2,826,667
1,464,012
4,063,582
(1,140,940)
75,566
(324,264)
(75,433)
36,859
(2,192)
33,608
(3,225)
1,425,184
560,296
373,125
(793,712)
(122,062)
(571)
(210,418)
(107,788)
(4,131,890)
50,322
(1,276,621)
(140,173)
17,822
(2,249)
(1,419,207)
(294,105)
1,781,728
93,000
-
(1,860,455)
(398,992)
(55,116)
(550,877)
(58,704)
1,120,829
(1,343,521)
659,740
(36,478)
623,262
1,072,579
1,695,841
63,939
(73,002)
(9,063)
1,081,642
1,072,579
35
35
35
35
6
6
The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements.
Financial statements
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LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
2
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The main subsidiaries included in these consolidated financial statements are as follows:
AS OF DECEMBER 31, 2020 AND 2019
NOTE 1 - GENERAL INFORMATION
LATAM Airlines Group S.A. (the "Company") is an open stock company registered with the
Commission for the Financial Market under No. 306, whose shares are listed in Chile on the
Electronic Stock Exchange of Chile - Stock Exchange and the Santiago Stock Exchange. After
Chapter 11 filing, the ADR program is no longer trading on NYSE. Since then Latam’s ADR are
trading in the United States of America on the OTC (Over-The-Counter) markets.
Its main business is the air transport of passengers and cargo, both in the domestic markets of Chile,
Peru, Colombia, Ecuador and Brazil, as well as in a series of regional and international routes in
America, Europe and Oceania. These businesses are developed directly or by its subsidiaries in
Ecuador, Peru, Brazil, Colombia, Argentina and Paraguay. In addition, the Company has
subsidiaries that operate in the cargo business in Chile, Brazil and Colombia.
The Company is located in Chile, in the city of Santiago, on Avenida Américo Vespucio Sur No.
901, Renca commune.
As of December 31, 2020, the Company's statutory capital is represented by 604,407,693 ordinary
shares without nominal value. All shares are subscribed and paid considering the capital reduction
that occurred in full, after the legal period of three years to subscribe the balance of 466.382
outstanding shares, of the last capital increase approved in August of the year 2016.
The major shareholders of the Company are Delta Air Lines who owns 20% of the shares and the
Cueto Group, which through the companies Costa Verde Aeronáutica S.A., Costa Verde
Aeronáutica SpA, and Inv. Costa Verde Ltda y Cia at CPA., owns 16.39% of the shares issued by
the Company.
As of December 31, 2020, the Company had a total of 4,131 shareholders in its registry. At that
date, approximately 8.75% of the Company's property was in the form of ADRs.
For the year ended December 31, 2020, the Company had an average of 35,717 employees, ending
this year with a total number of 29,115 people, distributed in 4,477 Administration employees,
15,664 in Operations, 5,918 Cabin Crew and 3,056 Command crew.
a)
Participation rate
Tax No.
Company
96.518.860-6
Latam Travel Chile S.A. and Subsidiary
96.969.680-0
Lan Pax Group S.A. and Subsidiaries
Foreign
Latam Airlines Perú S.A.
93.383.000-4
Lan Cargo S.A.
Foreign
Foreign
Connecta Corporation
Prime Airport Services Inc. and Subsidiary
96.951.280-7
Transporte Aéreo S.A.
96.631.520-2
Fast Air Almacenes de Carga S.A.
Foreign
Foreign
Laser Cargo S.R.L.
Lan Cargo Overseas Limited and Subsidiaries
96.969.690-8
Lan Cargo Inversiones S.A. and Subsidiary
96.575.810-0
Inversiones Lan S.A. and Subsidiaries
96.847.880-K
Technical Trainning LATAM S.A.
Foreign
Foreign
Foreign
Foreign
Foreign
Latam Finance Limited
Peuco Finance Limited
Profesional Airline Services INC.
Jarletul S.A.
TAM S.A. and Subsidiaries (*)
Country
of origin
Chile
Chile
Peru
Chile
U.S.A.
U.S.A.
Chile
Chile
Argentina
Bahamas
Chile
Chile
Chile
Cayman Island
Cayman Island
U.S.A.
Uruguay
Brazil
As December 31, 2020
As December 31, 2019
Functional
Currency
Direct
Indirect
Total
Direct
Indirect
Total
%
%
%
%
%
%
-
-
-
-
-
-
99,8361
0,1639
100,0000
99,8361
0,1639
100,0000
23,6200
76,1900
99,8940
0,0041
99,8100
99,8981
49,0000
21,0000
70,0000
99,8940
0,0041
99,8981
100,0000
0,0000
100,0000
100,0000
0,0000
100,0000
99,9714
0,0286
100,0000
0,0000
100,0000
100,0000
99,8900
96,2208
99,9800
99,0000
99,7100
99,8300
0,1100
100,0000
3,7792
100,0000
0,0200
100,0000
1,0000
100,0000
0,2900
100,0000
0,1700
100,0000
99,9714
99,9999
99,8900
96,2208
99,9800
99,0000
99,7100
99,8300
0,0286
100,0000
0,0001
100,0000
0,1100
100,0000
3,7792
100,0000
0,0200
100,0000
1,0000
100,0000
0,2900
100,0000
0,1700
100,0000
100,0000
0,0000
100,0000
100,0000
0,0000
100,0000
100,0000
0,0000
100,0000
100,0000
0,0000
100,0000
100,0000
0,0000
100,0000
100,0000
0,0000
100,0000
99,0000
1,0000
100,0000
99,0000
1,0000
100,0000
63,0901
36,9099
100,0000
63,0901
36,9099
100,0000
US$
US$
US$
US$
US$
US$
US$
CLP
ARS
US$
US$
US$
CLP
US$
US$
US$
US$
BRL
(*) As of December 31, 2020, the indirect participation percentage on TAM S.A. and
Subsidiaries is from Holdco I S.A., a company over which LATAM Airlines Group S.A. it has a
99.9983% share on economic rights and 51.04% of political rights. Its percentage arise as a result of
the provisional measure No. 863 of the Brazilian government implemented in December 2018 that
allows foreign capital to have up to 100% of the property.
Financial statements
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3
4
(3,550)
(4,157)
1,677
802
14,610
796
-
(6,579)
(2,497)
(54)
(282)
b)
Financial Information
S ta te m e nt o f fina nc ia l po s itio n
As o f De c e m be r 31, 2020
As o f De c e m be r 31, 2019
Ne t Inc o m e
F o r the ye a r e nde d
De c e m be r 31,
2020
2019
Ta x No .
C o m pa ny
As s e ts
Lia bilitie s
Equity
As s e ts
Lia bilitie s
Equity
Ga in /(lo s s )
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
96.518.860-6
La ta m Tra ve l C hile S .A. a nd S ubs idia ry
96.969.680-0 La n P a x Gro up S .A. a nd S ubs idia rie s (*)
-
-
-
-
-
-
-
-
404,944
1,624,944
(1,219,539)
632,673
1,487,248 (853,624)
(290,980)
(26,551)
F o re ign
La ta m Airline s P e rú S .A.
661,721
486,098
175,623
519,363
510,672
8,691
(175,485)
93.383.000-4 La n C a rgo S .A.
749,789
567,128
182,661
634,852
462,666
F o re ign
F o re ign
C o nne c ta C o rpo ra tio n
57,922
P rim e Airpo rt S e rvic e s Inc . a nd S ubs idia ry (*) 25,050
17,335
26,265
40,587
(1,215)
64,110
22,068
24,023
23,102
172,186
40,087
(1,034)
10,936
500
(181)
96.951.280-7 Tra ns po rte Aé re o S .A.
546,216
347,714
198,502
359,335
142,423
216,912
(39,032)
96.631.520-2 F a s t Air Alm a c e ne s de C a rga S .A.
20,132
11,576
F o re ign
F o re ign
La s e r C a rgo S .R .L.
La n C a rgo Ove rs e a s Lim ite d
(6)
-
8,556
(6)
20,182
12,601
(10)
-
7,581
(10)
500
-
a nd S ubs idia rie s (*)
218,435
96.969.690-8 La n C a rgo Inve rs io ne s S .A. a nd S ubs idia ry (*)250,027
14,355
86,691
203,829
130,823
96.575.810-0 Inve rs io ne s La n S .A. a nd S ubs idia rie s (*)
96.847.880-K Te c hnic a l Tra inning LATAM S .A.
F o re ign
La ta m F ina nc e Lim ite d
1,394
2,181
65
625
1,329
1,556
48,929
65,422
1,329
2,378
15,228
78,890
50
1,075
33,450
(12,111)
1,279
1,303
(92,623)
1,452
50
60
1,310,735
1,584,311
(273,576)
1,362,762
1,531,238 (168,476)
(105,100)
(90,736)
F o re ign
F o re ign
F o re ign
F o re ign
P e uc o F ina nc e Lim ite d
1,307,721
1,307,721
-
664,458
664,458
P ro fe s io na l Airline S e rvic e s INC .
J a rle tul S .A.
17,345
34
14,772
1,076
2,573
(1,042)
3,509
150
1,950
860
-
1,559
(710)
-
1,014
(332)
-
1,096
(603)
TAM S .A. a nd S ubs idia rie s (*)
3,110,055 3,004,935
105,120
5,090,180 3,550,875 1,539,305
(1,025,814)
186,140
(*) The Equity reported corresponds to Equity attributable to owners of the parent, it does not
include Non-controlling interest.
In addition, special purpose entities have been consolidated: 1. Chercán Leasing Limited, intended
to finance advance payments of aircraft; 2. Guanay Finance Limited, intended for the issue of a
securitized bond with future credit card payments; 3. Private investment funds; 4. Dia Patagonia
Limited, Alma Leasing C.O. Limited, FC Initial Leasing Limited, Vari Leasing Limited, Dia
Iguazu Limited, Condor Leasing C.O. Limited, FI Timothy Leasing Limited, Yamasa Sangyo
Aircraft LA1 Kumiai, Yamasa Sangyo Aircraft LA2 Kumiai, LS-Aviation No.17 Co. Limited, LS-
Aviation No.18 Co. Limited, LS-Aviation No.19 C.O. Limited, LS-Aviation No.20 C.O. Limited,
LS-Aviation No.21 C.O. Limited, LS-Aviation No.22 C.O. Limited, LS-Aviation No.23 Co.
Limited, and LS-Aviation No.24 Co. Limited, requirements for financing aircraft. These companies
have been consolidated as required by IFRS 10.
All entities over which Latam has control have been included in the consolidation. The Company
has analyzed the control criteria in accordance with the requirements of IFRS 10. For those
subsidiaries that filed for bankruptcy under Chapter 11 (See note 2 to the consolidated financial
statements), although in this reorganization process in certain cases decisions are subject to
authorization by the Court, considering that the Company and various subsidiaries filed for
bankruptcy before the same Court, and before the same judge, the Court generally views the
consolidated entity as a single group and management considers that the Company continues to
maintain control over its subsidiaries and therefore have considered appropriate to continue to
consolidate these subsidiaries.
Changes occurred in the consolidation perimeter between January 1, 2019 and December 31, 2020,
are detailed below:
(1)
Incorporation or acquisition of companies
-
-
-
-
-
-
-
On December 22, 2020, Línea Aérea Carguera de Colombia S.A. carries out a capital
increase for 1,861,785 shares, consequently, its shareholding composition is as follows:
LATAM Airlines Group S.A. with 4.57%, Fast Air S.A. with 1.53%, Inversiones Lan S.A.
with 1.53%, Lan Pax Group S.A. with 1.53% and Lan Cargo Inversiones S.A. 81.31%.
On December 22, 2020, Inversiones Aéreas S.A. carries out a capital increase for 9,504,335
shares, consequently its shareholding composition as follows: LATAM Airlines Group S.A.
with 33.41%, Línea Aérea Carguera de Colombia S.A. with 66.43% and Mas Investment
Limited with 0.16%.
On December 22, 2020, Latam Airlines Perú S.A. carries out a capital increase for
12,312,020 shares, consequently its shareholding composition as follows: LATAM Airlines
Group S.A. with 23.62% and Inversiones Aéreas S.A. with 76.19%.
On December 16, 2020, Lan Pax Group S.A. carries out capital increase for 23,678 shares.
However, the shareholding composition has not changed.
On December 18, 2020, Latam Ecuador S.A. carries out a capital increase for 30,000,000
shares. However, the shareholding composition is not modified.
On March 23, 2020, Transporte Aéreo S.A. carries out a capital increase for 109,662 shares
which were acquired by Mas Investment Limited, consequently, the shareholding of
Transporte Aéreo S.A. is as follows: Lan Cargo S.A. with 87.12567%, Inversiones Lan S.A.
with 0.00012% and Mas Investment Limited with 12.87421%.
In April 2019, TAM Linhas Aereas S.A, through a public offering of shares, acquired 27.26%
of the shares of Multiplus S.A., owned by minority shareholders. Subsequently, the Company
TAM S.A assigned 72,74% of its stake in Multiplus S.A., through a capital increase, to TAM
Linhas Aerea S.A.; Because of 100% of the shares remain under the control of TAM Linhas
Aereas S.A. a merge with Multiplus S.A. was materialized, leaving Multiplus S.A. from
being an independent company on May 31, 2019. As result of the merger by incorporation,
the Coalition and Loyalty Program of Multiplus S.A. which was identified as an independent
Cash Generating Unit (CGU), and which also represented an operating segment, becomes
part, as well as, the other loyalty programs of the group (LATAM Pass and LATAM
Fidelidade), of the CGU Air Transport. Additionally, from that moment LATAM has a single
operating segment within the Group.
The value of the acquisition of this transaction was ThUS $ 294,105.
-
By public deed dated November 20, 2019 LATAM Airlines Group S.A. acquires 100% of the
shares of LATAM Travel Chile S.A.
Under the provisions of No. 2 of Art. 103 of Law No. 18,046 on Corporations, for having
collected all the shares held by a single shareholder and for having elapsed the period of 10
Financial statements
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5
6
days without having amended said situation, the company LATAM Travel Chile S.A. It has
been fully dissolved on December 1, 2019.
As a result of the dissolution of the company LATAM Travel Chile S.A., the company
LATAM Airlines Group S.A. assumes from that date all obligations and rights corresponding
to the first.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following describes the principal accounting policies adopted in the preparation of these
consolidated financial statements.
2.1.
Basis of Preparation
These consolidated financial statements of LATAM Airlines Group S.A. have been prepared in
accordance with the International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board ("IASB") and with the interpretations issued by the interpretations
committee of the International Financial Reporting Standards (IFRIC).
(b) Accounting pronouncements not in force for the financial years beginning on January 1, 2020:
(b.1.) Not early adopted:
(i) Standards and amendments
Amendment to IFRS 9: Financial instruments; IAS 39:
Financial Instruments: Recognition and Measurement;
IFRS 7: Financial Instruments: Disclosure; IFRS 4:
Insurance contracts; and IFRS 16: Leases.
Date of issue
Effective Date:
August 2020
01/01/2021
Amendment to IFRS 4: Insurance contracts
Amendment to IFRS 17: Insurance contracts.
Amendment to IFRS 3: Business combinations.
Amendment to IAS 37: Provisions, contingent liabilities and
contingent assets.
June 2020
June 2020
May 2020
May 2020
Amendment to IAS 16: Property, plant and equipment.
May 2020
Amendment to IAS 1: Presentation of financial statements.
January 2020
IFRS 17: Insurance contracts
May 2017
01/01/2023
01/01/2023
01/01/2022
01/01/2022
01/01/2022
01/01/2023
01/01/2023
The consolidated financial statements have been prepared under the historic-cost criterion, although
modified by the valuation at fair value of certain financial instruments.
Amendment to IFRS 10: Consolidated financial statements
and IAS 28: Investments in associates and joint ventures.
September 2014
Not determined
The preparation of the consolidated financial statements in accordance with IFRS requires the use
of certain critical accounting estimates. It also requires management to use its judgment in applying
the Company’s accounting policies. Note 4 shows the areas that imply a greater degree of judgment
or complexity or the areas where the assumptions and estimates are significant to the consolidated
financial statements.
(ii) Improvements
Improvements to International Information Standards
Financial (2018-2020 cycle) IFRS 1: First-time adoption of
IFRS 9:
international
reporting
Financial Instruments, illustrative examples accompanying
IFRS 16: Leases, IAS 41: Agriculture
standards,
financial
May 2020
01/01/2022
The consolidated financial statements have been prepared in accordance with the accounting
policies used by the Company for the consolidated financial statements 2019, except for the
standards and interpretations adopted as of January 1, 2020.
The Company's management estimates that the adoption of the standards, amendments and
interpretations described above will not have a significant impact on the Company's consolidated
financial statements in the exercise of their first application.
(a)
Accounting pronouncements with implementation effective from January 1, 2020:
(i) Standards and amendments
Date of issue
Effective Date:
Amendment to IFRS 3: Business combinations.
October 2018
01/01/2020
Amendment to IAS 1: Presentation of Financial Statements
and IAS 8 Accounting policies, changes in accounting
estimates and errors.
Amendment to IFRS 9: Financial instruments; IAS 39:
Financial Instruments: Recognition and Measurement; and
IFRS 7: Financial Instruments: Disclosure
October 2018
01/01/2020
September 2019
01/01/2020
The application of these accounting pronouncements as of January 1, 2020, had no significant effect
on the Company's consolidated financial statements.
(b.2.) Early adopted standard:
(i) Standards and amendments
Date of issue
Effective Date:
Amendment to IFRS 16: Leases.
May 2020
06/01/2020
(b.3.) Adoption of IFRS 9 Financial Instruments for hedge accounting:
On January 1, 2018, the effective adoption date of IFRS 9 Financial Instruments, the Company
established the accounting policy to continue applying IAS 39 Financial Instruments: Recognition
and Measurement for hedge accounting. On January 1, 2021, the Company will modify this
accounting policy and adopt IFRS 9 in relation to hedge accounting, aligning the requirements for
hedge accounting with the Company's risk management policies.
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The Company has evaluated the hedge relationships in force as of December 31, 2020, and has
determined that they meet the criteria for hedge accounting under IFRS 9 Financial Instruments as
of January 1, 2021 and, consequently, they will be considered relationships continuous coverage.
The time value of the options used as hedging instruments, effective at the closing of these
Consolidated Financial Statements, will not continue to be designated as part of the hedging
relationship but their recognition will continue in Other Comprehensive Income until the forecast
transaction occurs at which time will be recognized in the income statement. As of December 31,
2020, the amount recognized in Equity corresponding to the temporal value of the options is
ThUS $ (380).
The hedge accounting requirements of IFRS 9 will be applied prospectively. The Company
estimates that the application of this part of the standard will not have significant impact on
consolidated financial statements.
The Company is modifying the documentation of the existing hedging relationships as of December
31, 2020 in accordance with the provisions of IFRS 9 Financial Instruments.
(c)
Chapter 11 Filing and Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business. As disclosed in the accompanying consolidated financial statements, the Company
incurred a net loss attributable to owners of the parent of US$ 4,546 million for the year ended
December 31, 2020. As of that date, the Company has a negative working capital of US$ 4,348
million and will require additional working capital during 2021 to support a sustainable business
operation. As of December 31, 2020, the company has negative equity of US$ 2,436 million, which
corresponds to the attributable equity to the owners of the parent.
On May 26, 2020 (the “Initial Petition Date”), LATAM Airlines Group S.A. and certain of its direct
and indirect subsidiaries (collectively, the “Initial Debtors”) filed voluntary petitions for
reorganization (the “Initial Bankruptcy Filing”) under chapter 11 of title 11 of the United States
Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of
New York (the “Bankruptcy Court”). On July 7, 2020 (the “Piquero Petition Date”), Piquero
Leasing Limited (“Piquero”) also filed a petition for reorganization with the Bankruptcy Court (the
“Piquero Bankruptcy Filing”). On July 9, 2020 (together with the Initial Petition Date and Piquero
Petition Date, as applicable, the “Petition Date”), TAM S.A. and certain of its subsidiaries in Brazil
(together with the Initial Debtors and Piquero, the “Debtors”) also filed petitions for reorganization
(together with the Initial Bankruptcy Filing and the Piquero Bankruptcy Filing, the “Bankruptcy
Filing”), as a consequence of the prolonged effects of the COVID-19 Pandemic. The Bankruptcy
Filing for each of the Debtors is being jointly administered under the caption “In re LATAM
Airlines Group S.A.” Case Number 20-11254. The Debtors will continue to operate their
businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in
accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy
Court.
The Bankruptcy Filing is intended to permit the Company to reorganize and improve liquidity, wind
down unprofitable contracts and amend its capacity purchase agreements to enable sustainable
profitability. The Company’s goal is to develop and implement a plan of reorganization that meets
the standards for confirmation under the Bankruptcy Code.
As part of their overall reorganization process, the Debtors also have sought and received relief in
certain non-U.S. jurisdictions. On May 27, 2020, the Grand Court of the Cayman Islands granted
the applications of certain of the Debtors for the appointment of provisional liquidators (“JPLs”)
pursuant to section 104(3) of the Companies Law (2020 Revision). On June 4, 2020, the 2nd Civil
Court of Santiago, Chile issued an order recognizing the Chapter 11 proceeding with respect to the
LATAM Airlines Group S.A., Lan Cargo S.A., Fast Air Almacenes de Carga S.A., Latam Travel
Chile II S.A., Lan Cargo Inversiones S.A., Transporte Aéreo S.A., Inversiones Lan S.A., Lan Pax
Group S.A. and Technical Training LATAM S.A. All remedies filed against the order have been
rejected and the decision is, then, final. Finally, on June 12, 2020, the Superintendence of
Companies of Colombia granted recognition to the Chapter 11 proceedings. On July 10, 2020, the
Grand Court of the Cayman Islands granted the Debtors’ application for the appointment of JPLs to
Piquero Leasing Limited.
Operation and Implication of the Bankruptcy Filing:
The Debtors continue to operate their businesses and manage their properties as debtors-in-
possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As debtors-in-
possession, the Debtors are authorized to engage in transactions within the ordinary course of
business without prior authorization of the Bankruptcy Court. The protections afforded by the
Bankruptcy Code allows the Debtors to operate their business without interruption, and the
Bankruptcy Court has granted additional relief including, inter alia, the authority, but not the
obligation, to (i) pay amounts owed under certain critical airline agreements; (ii) pay certain third-
parties who hold liens or other possessory interests in the Debtors’ property; (iii) pay employee
wages and continue employee benefit programs; (iv) pay prepetition taxes and related fees; (v)
continue insurance and surety bond programs; (vi) pay certain de minimis litigation judgements or
settlements without prior approval of the Bankruptcy Court; (vii) pay fuel supplies; and (viii) pay
certain foreign vendors and certain vendors deemed critical to the Debtors’ operations.
As debtors-in-possession, the Debtors may use, sell, or lease property of their estates, subject to the
Bankruptcy Court’s approval if not otherwise in the ordinary course of business. The Debtors have
not yet prepared or filed with the Bankruptcy Court a plan of reorganization, and, pursuant to
section 1121 of the Bankruptcy Code, have the exclusive right to propose such a plan on or before
June 30, 2021, or such later date as may be further ordered by the Bankruptcy Court. The ultimate
plan of reorganization, which can only be adopted after meeting all requirements set forth in
sections 1126 and 1129 of the Bankruptcy Code and subject to approval by the Bankruptcy Court,
could materially change the amounts and classifications in the consolidated financial statements,
including the value, if any, of the Debtors’ prepetition liabilities and securities.
Events Leading to the Chapter 11 Cases:
Since the first quarter of 2020, the passenger air transportation business has been affected
worldwide by a significant decrease in international air traffic, due to the closure of international
borders with the aim of protecting the population from the effects of COVID-19, an infectious
disease caused by a new virus, declared a pandemic by the World Health Organization.
LATAM’s preliminary assessment in the beginning of March 2020 indicated previous disease
outbreaks have peaked after few months and recovered pre-outbreak levels in no more than 6 to 7
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months, and the effect with scenery impacting mainly on Asia Pacific Airlines, indicating impact on
Latin America of a marginal decrease of Revenue Per Kilometers forecast.
For the Company, the reduction in its operation began in the middle of March 2020 with the
announcement of a 30% decrease in its operations and the suspension of the guidance for 2020 in
line with protection measures and boarding restrictions implemented by local governments (March
16, 2020 for Peru, Colombia and Argentina, March 18, 2020 for Chile and March 27, 2020 for
Brazil). On March 16, 2020, the Company announced an update of its projection to a progressive
decrease in its operation up to 70%.
By March 29, 2020, COVID 19 had already generated an unprecedented shock on Airlines Industry,
specifically on airlines passenger revenue. The situation has both broadened and deepened beyond
the initial assessment.
In response to COVID 19, governments have been imposing much more severe border restrictions
and airlines have been subsequently announcing sharp capacity cuts in response to a dramatic drop
in travel demand. On April 2, 2020, the Company announced a decrease in its operation by 95%.
The Company’s passenger traffic for the year ended December 31, 2020, decreased by 65,8%
compared to the year 2019.
In order to protect liquidity, the Company has carried out financial transactions, such as the use of
funds from the Revolving Credit Facility (Revolving Credit Facility) for US $ 600 million, which
have affected its financial assets and liabilities, especially the items of Cash and cash equivalents
and other financial liabilities.
In the second quarter of 2020, the Company estimated that reactivation of its operations would
occur during the third and fourth quarters of 2020. At this time there is an approximately 30%
increase in the Company’s operations, however, the exact moment and pace of the full recovery are
uncertain, given the significant impact of the pandemic on the countries in which it operates.
Among the initiatives that the Company studied and committed to protect liquidity were the
following:
(i)
(ii)
(iii)
(iv)
(v)
Reduction and postponement of the investment plan for different projects;
Implementation of control measurements for payments to suppliers and purchases of new
goods and services;
Negotiation of the payment conditions with suppliers;
Ticket refunds via travel vouchers and Frequent Flyer Program points and miles; all in all,
the LATAM Group will continue to honor all current and future tickets, as well as travel
vouchers, frequent flyer miles and benefits, and flexibility policies;
Temporary reduction of salaries, considering the legal framework of each country: as of the
second quarter, the Company implemented a voluntary process to reduce salaries in force
until December 31, 2020. Associated with the restructuring plan and in order to adapt to the
new demand scenario, the company has designed a staff reduction plan in the different
countries where it operates. The costs associated with the execution of this plan were
recorded in income as Restructuring activities expenses. (See note 27d);
Short-term debt and debt maturities renewal;
(vi)
(vii) Governmental loan request in different countries in which the company operates; and
(viii) Reduction of non-essential fleet and non-fleet investments.
The Company, in consultation with its advisors, also evaluated a variety of potential restructuring
options. In the opinion of the Board, the timings for a conventional bilateral process, the possibility
that creditors may have decided to engage in collection actions, the impossibility of curing defaults
and the need to implement a comprehensive restructuring of LATAM Airlines to which all its
creditors and other interested parties must join, lead the Board to consider an in-court bankruptcy
proceedings the best alternative.
In addition, the Board noted that other benefits of an in-court bankruptcy proceeding, including the
imposition of the Bankruptcy Code’s “automatic stay,” which protects the Company from efforts by
creditors and other interested parties to take action in respect of pre-bankruptcy debt, but which, at
the same time, allows it to continue operating with its main assets, suppliers, financial parties,
regulators and employees, while structuring a binding reorganization to be financially viable in a
post-pandemic scenario.
Due to the foregoing, and after consulting the administration and the legal and financial advisors of
the Company, on May 26, 2020 the Board has resolved unanimously that LATAM Airlines should
initiate a reorganization process in the United States of America according to the rules established
in the Bankruptcy Code by filing a voluntary petition for relief in accordance with the same.
Since the Chapter 11 filing, the Company secured up to US$ 2.45 billion in a debtor-in-possession
financing facility (the “DIP Facility”) (See Note 3.1 c)).
Plan of Reorganization:
In order for the Company to emerge successfully from Chapter 11, the Company must obtain the
Bankruptcy Court’s approval of a plan of reorganization, which will enable the Company to
transition from Chapter 11 into ordinary course operations outside of bankruptcy. In connection
with a plan of reorganization, the Company also may require a new credit facility, or “exit
financing.” The Company’s ability to obtain such approval and financing will depend on, among
other things, the timing and outcome of various ongoing matters related to the Bankruptcy Filing.
A plan of reorganization determines the rights and satisfaction of claims of various creditors and
parties-in-interest, and is subject to the ultimate outcome of negotiations and Bankruptcy Court
decisions ongoing through the date on which the plan of reorganization is confirmed. On October
1, 2020, the Court entered an order extending the period by which the Debtors have the exclusive
right to submit a plan of reorganization through and including January 29, 2021; on January 12,
2021, the Company requested a further extension until June 30, 2021. The Bankruptcy Court
granted a further extension until June 30, 2021.
The Company presently expects that any proposed plan of reorganization will provide, among other
things, mechanisms for settlement of claims against the Debtors’ estates, treatment of the
Company’s existing equity and debt holders, and certain corporate governance and administrative
matters pertaining to the reorganized Company. Any proposed plan of reorganization will be
subject to revision prior to submission to the Bankruptcy Court based upon discussions with the
Company’s creditors and other interested parties, and thereafter in response to interested parties’
objections and the requirements of the Bankruptcy Code and Bankruptcy Court. There can be no
assurance that the Company will be able to secure approval for the Company’s proposed plan of
reorganization from the Bankruptcy Court.
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Going Concern:
These Consolidated Financial Statements have also been prepared on a going concern basis, which
contemplates continuity of operations, realization of assets and satisfaction of liabilities in the
ordinary course of business. Accordingly, the Consolidated Financial Statements do not include any
adjustments relating to the recoverability of assets and classification of liabilities that might be
necessary should the Debtors be unable to continue as a going concern.
As a result of the Chapter 11 proceedings, the satisfaction of the Company’s liabilities and funding
of ongoing operations are subject to uncertainty as a product of the COVID-19 pandemic and the
impossibility of knowing its duration at this date and, accordingly, there is a substantial doubt
regarding the Company’s ability to continue as a going concern. There is no assurance that the
Company will be able to emerge successfully from Chapter 11. Additionally, there is no assurance
that long-term funding would be available at rates and on terms and conditions that would be
financially acceptable and viable to the Company in the long term. If the Company is unable to
generate additional working capital or raise additional financing when needed, it may not able to
reinitiate currently suspended operations as a result of the COVID-19 pandemic, sell assets or enter
into a merger or other combination with a third party, any of which could adversely affect the value
of the Company’s common stock, or render it worthless. If the Company issues additional debt or
equity securities, such securities may enjoy rights, privileges and priorities superior to those
enjoyed by holders of the Company’s common stock, thereby diluting the value of the Company’s
common stock. Additionally, in connection with the Chapter 11 Filing, material modifications
could be made to the Company’s fleet and capacity purchase agreements. These modifications
could materially affect the Company’s financial results going forward, and could result in future
impairment charges.
Chapter 11 Milestones
Notice to Creditors - Effect of the Automatic Stay:
The Debtors have notified all known current or potential creditors that the Chapter 11 Cases were
filed. Pursuant to the Bankruptcy Code and subject to certain limited exceptions, the filing of the
Chapter 11 Cases gave rise to an automatic, worldwide injunction that precludes, among other
things, any act to (i) obtain possession of property of or from the Debtors’ estates, (ii) create,
perfect, or enforce any lien against property of the Debtors’ estates; (iii) exercise control over
property of the Debtors’ estate, wherever in the world that property may be located; and further
enjoined or stayed (iv) and also ordered or suspended the commencement or continuation of any
judicial, administrative, or other action or proceeding against the debtor that could have been
commenced before the Petition Date or efforts to recover a claim against the Debtors that arose
before the Petition Date. Vendors are being paid for goods furnished and services provided
postpetition in the ordinary course of business.
On August 31, 2020 (the “First Stay Motion”), and December 30, 2020 (the “Second Stay
Motion”), Corporación Nacional de Consumidores y Usuarios de Chile (“CONADECUS”) filed
two motions in the Bankruptcy Court seeking relief from the automatic stay in order prosecute
certain actions against LATAM that are currently pending before the courts of Chile. LATAM filed
a brief in opposition to the First Stay Motion, and on December 16, 2020, the Bankruptcy Court
heard oral arguments on the First Stay Motion. At that hearing, the Bankruptcy Court granted the
First Stay Motion for the limited purpose of allowing CONADECUS to further prosecute its
pending appeal before the courts of Chile. On February 9, 2021, the Bankruptcy Court granted the
Second Stay Motion on the same narrow grounds as the First Stay Motion. The Bankruptcy Court’s
decisions on the First Stay Motion and Second Stay Motion did not affect the underlying
proceedings in Chile beyond allowing CONADECUS to continue its pending appeals.
Appointment of the Creditors’ Committee:
On June 5, 2020, the United States Trustee for Region 2 appointed an official committee of
unsecured creditors (the “Creditors’ Committee”) in the Initial Chapter 11 Cases. The United States
Trustee has not solicited additional members for the Creditors’ Committee as a result of TAM S.A.
or any of its applicable subsidiaries joining the Bankruptcy Filing. On June 12, 2020, one of the
Creditors’ Committee’s members, Compañía de Seguros de Vida Consorcio Nactional de Seguros
S.A. resigned from the Creditors’ Committee. No trustee or examiner has been appointed in any of
these Chapter 11 Cases. No other official committee have been solicited or appointed.
Assumption & Rejection of Executory Contracts:
Pursuant to the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
Rules”), the Debtors are authorized to assume, assign or reject certain executory contracts and
unexpired leases. Absent certain exceptions, the Debtors’ rejection of an executory contract or an
unexpired lease is generally treated as prepetition breach, which entitles the contract counterparty to
file a general unsecured claim against the Debtors and simultaneously relives the Debtors from their
future obligations under the contract or lease. Further, the Debtors’ assumption of an executory
contract or unexpired lease would generally require the Debtors to satisfy certain prepetition
amounts due and owning under such contract or lease.
On June 28, 2020, the Bankruptcy Court authorized the Debtors to establish procedures for the
rejection of certain executory contracts and unexpired leases. In accordance with these rejection
procedures, the Bankruptcy Code and the Bankruptcy Rules the Debtors have or will reject certain
contracts and leases (see note 17, 19 and 27). Relatedly, the Bankruptcy Court approved the
Debtors’ request to extend the date by which the Debtors may assume or reject unexpired non-
residential, real property leases until December 22, 2020. Following consent of certain lessors to
further extend the deadline in order to finalize productive negotiations, the Debtors have moved to
assume multiple airport leases at Miami-Dade, LAX and JFK related to the Debtors’ passenger and
cargo businesses.
Further, the Debtors have or will file motions to reject certain aircraft and engine leases:
Bankruptcy Court approval date:
June 8, 2020
June 24, 2020
June 28, 2020
July 29, 2020
August 19, 2020
October 26, 2020
October 28, 2020
November 5, 2020
Asset rejected:
(i) 1 Boeing 767
(i) 16 Airbus A320-family aircraft; (ii) 2
Airbus A350 aircraft; and (iii) 4 Boeing 787-9
(i) 2 Engine model V2527-A5; and (ii) 2
Engine model CFM56-5B4/3
(i) 1 Engine model CFM56-5B3/3
(i) 1 Boeing 767
(i) 3 Airbus A320-family aircraft
(i) 1 Airbus A319
(i) 1 A320-family aircraft
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As of December 31, 2020, and as a result of these contract rejections, obligations with the lenders
and lessors were extinguish and also the Company lost control over the related assets, which led to
the derecognition of the assets and the liabilities associated with these aircraft. See note 17, 19 and
27. All accounting effects were recorded on the year 2020 as Restructuring activities expenses.
On November 23, 2020, the Bankruptcy Court also entered order authorizing the Debtors to assume
key commercial agreements with Delta Air Lines, Inc. Relatedly, the Debtors have or will file
motions to enter into certain aircraft lease amendment agreements which have the effect of, among
other things, reducing the Debtors’ rental payment obligations. On December 31, 2020, the
Bankruptcy Court entered an order authorizing the Debtors to enter into a lease amendment
agreement with Vermillion Aviation (Two) Limited. The agreement requires the Debtors to assume
the amended lease through a plan of reorganization, with certain limited exceptions.
Statements and Schedules:
On September 8, 2020, the Debtors filed with the Bankruptcy Court schedules and statements of
financial affairs setting forth, among other things, the assets and liabilities of the Debtors (the
“Statements and Schedules”). The Statements and Schedules are prepared according to the
requirements of applicable bankruptcy law and are subject to further amendment or modification by
the Debtors, for example: “Monthly Operating Report” (MOR). The Company on a monthly basis
makes the presentation of these schedules and statements.
Although the Debtors believe that these materials provide the information required under the
Bankruptcy Code or orders of the Bankruptcy Court, they are nonetheless unaudited and prepared in
a format different from the consolidated financial reports historically prepared by LATAM in
accordance with IFRS (International Financial Reporting Standards). Certain of the information
contained in the Statements and Schedules may be prepared on an unconsolidated basis.
Accordingly, the Debtors believe that the substance and format of these materials do not allow
meaningful comparison with their regularly publicly-disclosed consolidated financial statements.
Moreover, the materials filed with the Bankruptcy Court are not prepared for the purpose of
providing a basis for an investment decision relating to the Debtors’ securities, or claims against the
Debtors, or for comparison with other financial information required to be reported under applicable
securities law.
Intercompany and Affiliate Transactions:
The Debtors are authorized to continue performing certain postpetition intercompany and affiliate
transactions in the ordinary course of business, including transactions with non-debtor affiliates, and
to honor obligations in connection with such transactions; provided, however, the Debtors shall not
make any cash payments on account of prepetition transactions with affiliates absent permission
from the Bankruptcy Court, including any repayments on any prepetition loans to non-debtor
affiliates pursuant to any such transactions. Out of an abundance of caution, the Debtors have also
sought and received Bankruptcy Court approval to contribute capital, capitalize intercompany debt
and issue shares between certain debtor affiliates.
Debtor in Possession Financing
On September 19, 2020, the Bankruptcy Court entered an order authorizing the Debtors to obtain
postpetition “debtor-in-possession financing” in the form of a multi-draw term loan facility in an
aggregate principal amount of up to US$2.45 billion (See note 3.1 c)).
Establishment of Bar Dates.
On September 24, 2020, the Bankruptcy Court entered an order (the “Bar Date Order”) establishing
December 18, 2020, as the general deadline (the “General Bar Date”) by which persons or entities
who believe they hold any claims against any Debtor that arose prior to the Petition Date, as
applicable to each Debtor, must have submitted written documentation of such claims (a “Proof of
Claim”). The General Bar Date was not applicable to governmental units, which must have
submitted Proofs of Claims by January 5, 2021 (the “Governmental Bar Date”). Finally, as more
fully described in the Bar Date Order, claims with respect to rejected contracts or unexpired leases
may be subject to a deadline later than the General Bar Date (the “Rejection Bar Date” and, together
with the General Bar Date and the Governmental Bar Date, the “Bar Dates’). Any person or entity
that fails to timely file its Proof of Claim by the applicable Bar Date will be forever barred from
asserting their claim and will not receive any distributions made as part of the ultimate plan of
reorganization. Notice of the Bar Dates, as well as instructions on how to file Proof of Claims,
were sent to all known creditors and published in various newspapers in the United States and South
America.
On December 17, 2020, the Court entered an order establishing a supplemental bar date of February
5, 2021 (the “Supplemental Bar Date”), for certain non-U.S. claimants not otherwise subject to the
General Bar Date. The Supplemental Bar Date applies only to those entities and individuals
specifically identified in the court order. Any person or entity that fails to timely file its Proof of
Claim by the Supplemental Bar Date will be forever barred from asserting their claim and will not
receive any distributions made as part of the ultimate plan of reorganization.
Following the close of the General Bar Date and the Supplemental Bar Date, the Debtors have
continued the process of reconciling approximately 6,000 submitted claims and have developed
procedures to streamline the claims process. The Company has already filed objections to a number
of claims and anticipates continuing to do so in the coming months. Although many objections
have been entered on an omnibus basis, some claims disputes will likely require individualized
adjudication by the Bankruptcy Court. Further, the Company has also filed a motion requesting
approval of alternative dispute resolution procedures to resolves certain claims disputes outside of
the Bankruptcy Court. Given the need to reconcile claims against the Company’s books and
records and to resolve claims disputes both in and outside of the Bankruptcy Court, the Company is
not yet able to make a reliable estimate of the final claims pool, both in terms of the final number of
claims and the value of such claims.
2.2.
Basis of Consolidation
(a)
Subsidiaries
Subsidiaries are all the entities (including special-purpose entities) over which the Company has the
power to control the financial and operating policies, which are generally accompanied by a holding
of more than half of the voting rights. In evaluating whether the Company controls another entity,
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the existence and effect of potential voting rights that are currently exercisable or convertible at the
date of the consolidated financial statements are considered. The subsidiaries are consolidated from
the date on which control is passed to the Company and they are excluded from the consolidation
on the date they cease to be so controlled. The results and flows are incorporated from the date of
acquisition.
Balances, transactions and unrealized gains on transactions between the Company’s entities are
eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an
impairment loss of the asset transferred. When necessary in order to ensure uniformity with the
policies adopted by the Company, the accounting policies of the subsidiaries are modified.
To account for and identify the financial information revealed when carrying out a business
combination, such as the acquisition of an entity by the Company, is apply the acquisition method
provided for in IFRS 3: Business combination.
(b)
Transactions with non-controlling interests
The Group applies the policy of considering transactions with non-controlling interests, when not
related to loss of control, as equity transactions without an effect on income.
(c)
Sales of subsidiaries
When a subsidiary is sold and a percentage of participation is not retained, the Company
derecognizes assets and liabilities of the subsidiary, the non-controlling and other components of
equity related to the subsidiary. Any gain or loss resulting from the loss of control is recognized in
the consolidated income statement in Other gains (losses).
If LATAM Airlines Group S.A. and Subsidiaries retain an ownership of participation in the sold
subsidiary, and does not represent control, this is recognized at fair value on the date that control is
lost, the amounts previously recognized in Other comprehensive income are accounted as if the
Company had disposed directly from the assets and related liabilities, which can cause these
amounts are reclassified to profit or loss. The percentage retained valued at fair value is
subsequently accounted using the equity method.
(d)
Investees or associates
Investees or associates are all entities over which LATAM Airlines Group S.A. and Subsidiaries
have significant influence but have no control. This usually arises from holding between 20% and
50% of the voting rights. Investments in associates are booked using the equity method and are
initially recognized at their cost.
2.3.
Foreign currency transactions
(a)
Presentation and functional currencies
The items included in the financial statements of each of the entities of LATAM Airlines Group
S.A. and Subsidiaries are valued using the currency of the main economic environment in which the
entity operates (the functional currency). The functional currency of LATAM Airlines Group S.A.
is the United States dollar which is also the presentation currency of the consolidated financial
statements of LATAM Airlines Group S.A. and Subsidiaries.
(b)
Transactions and balances
Foreign currency transactions are translated to the functional currency using the exchange rates on
the transaction dates. Foreign currency gains and losses resulting from the liquidation of these
transactions and from the translation at the closing exchange rates of the monetary assets and
liabilities denominated in foreign currency are shown in the consolidated statement of income by
function except when deferred in Other comprehensive income as qualifying cash flow hedges.
(c)
Adjustment due to hyperinflation
After July 1, 2018, the Argentine economy was considered, for purposes of IFRS, hyperinflationary.
The financial statements of the subsidiaries whose functional currency is the Argentine Peso have
been restated.
The non-monetary items of the statement of financial position as well as the income statement,
comprehensive incomes and cash flows of the group's entities, whose functional currency
corresponds to a hyperinflationary economy, are adjusted for inflation and re-expressed in
accordance with the variation of the consumer price index ("CPI"), at each presentation date of its
financial statements. The re-expression of non-monetary items is made from the date of initial
recognition in the statements of financial position and considering that the financial statements are
prepared under the historical cost criterion.
Net losses or gains arising from the re-expression of non-monetary items and income and costs are
recognized in the consolidated income statement under "Result of indexation units".
Net gains and losses on the re-expression of opening balances due to the initial application of IAS
29 are recognized in the consolidated retained earnings.
Re-expression due to hyperinflation will be recorded until the period or exercise in which the
economy of the entity ceases to be considered as a hyperinflationary economy, at that time, the
adjustments made by hyperinflation will be part of the cost of non-monetary assets and liabilities.
The comparative amounts in the Consolidated financial statements of the Company are presented in
a stable currency and are not adjusted for subsequent changes in the price level or exchange rates.
(d)
Group entities
The results and the financial situation of the Group's entities, whose functional currency is different
from the presentation currency of the consolidated financial statements, of LATAM Airlines Group
S.A., which does not correspond to the currency of a hyperinflationary economy, are converted into
the currency of presentation as follows:
Assets and liabilities of each consolidated statement of financial position presented are
(i)
translated at the closing exchange rate on the consolidated statement of financial position date;
The revenues and expenses of each income statement account are translated at the exchange
(ii)
rates prevailing on the transaction dates, and
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All the resultant exchange differences by conversion are shown as a separate component in
(iii)
other comprehensive income, within "Gain (losses) from exchange rate difference, before tax".
For those subsidiaries of the group whose functional currency is different from the presentation
currency and, moreover, corresponds to the currency of a hyperinflationary economy; its restated
results, cash flow and financial situation are converted to the presentation currency at the closing
exchange rate on the date of the consolidated financial statements.
The exchange rates used correspond to those fixed in the country where the subsidiary is located,
whose functional currency is different to the U.S. dollar.
Adjustments to the Goodwill and fair value arising from the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate or
period informed, restated when the currency came from the functional entity of the foreign entity
corresponds to that of a hyperinflationary economy, the adjustments for the restatement of goodwill
are recognized in the consolidated equity.
2.4.
Property, plant and equipment
The land of LATAM Airlines Group S.A. and Subsidiaries, are recognized at cost less any
accumulated impairment loss. The rest of the Properties, plants and equipment are recorded, both in
their initial recognition and in their subsequent measurement, at their historical cost, restated for
inflation when appropriate, less the corresponding depreciation and any loss due to deterioration.
The amounts of advances paid to the aircraft manufacturers are activated by the Company under
Construction in progress until they are received.
Subsequent costs (replacement of components, improvements, extensions, etc.) are included in the
value of the initial asset or are recognized as a separate asset, only when it is probable that the
future economic benefits associated with the elements of property, plant and equipment, they will
flow to the Company and the cost of the item can be determined reliably. The value of the replaced
component is written off. The rest of the repairs and maintenance are charged to the result of the
year in which they are incurred.
The depreciation of the properties, plants and equipment is calculated using the linear method over
their estimated technical useful lives; except in the case of certain technical components which are
depreciated on the basis of cycles and hours flown. This charge is recognized in the captions "Cost
of sale" and "Administrative expenses".
The residual value and the useful life of the assets are reviewed and adjusted, if necessary, once a
year.
2.5.
Intangible assets other than goodwill
(a)
Airport slots and Loyalty program
Airport slots and the Loyalty program correspond to intangible assets with indefinite useful lives
and are annually tested for impairment as an integral part of the CGU Air Transport.
Airport Slots correspond to an administrative authorization to carry out operations of arrival and
departure of aircraft, at a specific airport, within a certain period of time.
The Loyalty program corresponds to the system of accumulation and exchange of points that is part
of TAM Linhas Aereas S.A.
The airport slots and Loyalty program were recognized at fair value under IFRS 3, as a consequence
of the business combination with TAM S.A. and Subsidiaries.
(b)
Computer software
Licenses for computer software acquired are capitalized on the basis of the costs incurred in
acquiring them and preparing them for using the specific software. These costs are amortized over
their estimated useful lives, for which the Company has been defined useful lives between 3 and 10
years.
Expenses related to the development or maintenance of computer software which do not qualify for
capitalization, are shown as an expense when incurred. The personnel costs and others cost directly
related to the production of unique and identifiable computer software controlled by the Company,
are shown as intangible Assets others than Goodwill when they have met all the criteria for
capitalization.
(c)
Brands
The Brands were acquired in the business combination with TAM S.A. and Subsidiaries and,
recognized at fair value under IFRS 3. The Company has defined a useful life of five years, period
in which the value of the brands will be amortized.
2.6.
Goodwill
Goodwill represents the excess of acquisition cost over the fair value of the Company’s
participation in the net identifiable assets of the subsidiary or associate on the acquisition date.
Goodwill related to acquisition of subsidiaries is not amortized but tested for impairment annually
or each time that there is evidence of impairment. Gains and losses on the sale of an entity include
the book amount of the goodwill related to the entity sold.
When the value of an asset exceeds its estimated recoverable amount, its value is immediately
reduced to its recoverable amount.
2.7.
Borrowing costs
Losses and gains from the sale of property, plant and equipment are calculated by comparing the
consideration with the book value and are included in the consolidated statement of income.
Interest costs incurred for the construction of any qualified asset are capitalized over the time
necessary for completing and preparing the asset for its intended use. Other interest costs are
recognized in the consolidated statement of income when accrued.
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2.8.
Losses for impairment of non-financial assets
(b) Equity instruments
Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and
are tested annually for impairment, or more frequently if events or changes in circumstances
indicate that they might be impaired. Assets subject to amortization are tested for impairment losses
whenever any event or change in circumstances indicates that the carrying amount may not be
recoverable. An impairment loss is recognized for the excess of the carrying amount of the asset
over its recoverable amount. The recoverable amount is the fair value of an asset less the costs for
sale or the value in use, whichever is greater. For the purpose of evaluating impairment losses,
assets are grouped at the lowest level for which there are largely independent cash inflows (cash
generating unit. Non-financial assets, other than goodwill, that would have suffered an impairment
loss are reviewed if there are indicators of reversal of losses. Impairment losses are recognized in
the consolidated statement of income under "Other gains (losses)".
2.9.
Financial assets
The Company classifies its financial assets in the following categories: at fair value (either through
other comprehensive income, or through gains or losses), and at amortized cost. The classification
depends on the business model of the entity to manage the financial assets and the contractual terms
of the cash flows.
The group reclassifies debt investments when, and only when, it changes its business model to
manage those assets.
In the initial recognition, the Company measures a financial asset at its fair value plus, in the case of
a financial asset classified at amortized cost, the transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets accounted for at fair value
through profit or loss are recorded as expenses in the income statement.
(a) Debt instruments
The subsequent measurement of debt instruments depends on the group's business model to manage
the asset and cash flow characteristics of the asset. The Company has two measurement categories
in which the group classifies its debt instruments:
Amortized cost: the assets held for the collection of contractual cash flows where those cash flows
represent only payments of principal and interest are measured at amortized cost. A gain or loss on
a debt investment that is subsequently measured at amortized cost and is not part of a hedging
relationship is recognized in income when the asset is derecognized or impaired. Interest income
from these financial assets is included in financial income using the effective interest rate method.
Fair value through profit or loss: assets that do not meet the criteria of amortized cost or FVOCI are
measured at fair value through profit or loss. A gain or loss on a debt investment that is
subsequently measured at fair value through profit or loss and is not part of a hedging relationship is
recognized in profit or loss and is presented net in the income statement within other gains / (losses)
in the period or exercise in which it arises.
Changes in the fair value of financial assets at fair value through profit or loss are recognized in
other gains / (losses) in the statement of income as appropriate.
The Company evaluates in advance the expected credit losses associated with its debt instruments
recorded at amortized cost. The applied impairment methodology depends on whether there has
been a significant increase in credit risk.
2.10. Derivative financial instruments and hedging activities
Derivatives are recognized, in accordance with IAS 39 for hedge accounting and IFRS 9 for
derivatives not qualify as hedge accounting, initially at fair value on the date on which the
derivative contract was made and are subsequently valued at their fair value. The method to
recognize the resulting loss or gain depends on whether the derivative has been designated as a
hedging instrument and, if so, the nature of the item being hedged. The Company designates certain
derivatives as:
(a)
(b)
(c)
Hedge of the fair value of recognized assets (fair value hedge);
Hedge of an identified risk associated with a recognized liability or an expected
highly- Probable transaction (cash-flow hedge), or
Derivatives that do not qualify for hedge accounting.
The Company documents, at the inception of each transaction, the relationship between the hedging
instrument and the hedged item, as well as its objectives for managing risk and the strategy for
carrying out various hedging transactions. The Company also documents its assessment, both at the
beginning and on an ongoing basis, as to whether the derivatives used in the hedging transactions
are highly effective in offsetting the changes in the fair value or cash flows of the items being
hedged.
The total fair value of the hedging derivatives is booked as Other non-current financial asset or
liability if the remaining maturity of the item hedged is over 12 months, and as an other current
financial asset or liability if the remaining term of the item hedged is less than 12 months.
Derivatives not booked as hedges are classified as Other financial assets or liabilities.
(a)
Fair value hedges
Changes in the fair value of designated derivatives that qualify as fair value hedges are shown in the
consolidated statement of income, together with any change in the fair value of the asset or liability
hedged that is attributable to the risk being hedged.
(b)
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges is shown in the statement of other comprehensive income. The loss or gain
relating to the ineffective portion is recognized immediately in the consolidated statement of
income under other gains (losses). Amounts accumulated in equity are reclassified to profit or loss
in the periods or exercise when the hedged item affects profit or loss.
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In case of variable interest-rate hedges, the amounts recognized in the statement of other
comprehensive income are reclassified to results within financial costs at the same time the
associated debts accrue interest.
The carrying amount of the asset is reduced as the provision account is used and the loss is
recognized in the consolidated income statement under "Cost of sales". When an account receivable
is written off, it is regularized against the provision account for the account receivable.
For fuel price hedges, the amounts shown in the statement of other comprehensive income are
reclassified to results under the line item Cost of sales to the extent that the fuel subject to the hedge
is used.
For foreign currency hedges, the amounts recognized in the statement of other comprehensive
income are reclassified to income as deferred revenue resulting from the use of points, are
recognized as Income.
When hedging instrument mature, is sold or fails to meet the requirements to be accounted for as
hedges, any gain or loss accumulated in the statement of Other comprehensive income until that
moment, remains in the statement of other comprehensive income and is reclassified to the
consolidated statement of income when the hedged transaction is finally recognized. When it is
expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in the
statement of other comprehensive income is taken immediately to the consolidated statement of
income as “Other gains (losses)”.
(c)
Derivatives not booked as a hedge
The changes in fair value of any derivative instrument that is not booked as a hedge are shown
immediately in the consolidated statement of income in “Other gains (losses)”.
2.11.
Inventories
Inventories, are shown at the lower of cost and their net realizable value. The cost is determined on
the basis of the weighted average cost method (WAC). The net realizable value is the estimated
selling price in the normal course of business, less estimated costs necessary to make the sale.
2.12. Trade and other accounts receivable
Commercial accounts receivable are initially recognized at their fair value and subsequently at their
amortized cost in accordance with the effective rate method, less the provision for impairment
according to the model of the expected credit losses. The Company applies the simplified approach
permitted by IFRS 9, which requires that expected lifetime losses be recognized upon initial
recognition of accounts receivable.
In the event that the Company transfers its rights to any financial asset (generally accounts
receivable) to a third party in exchange for a cash payment, the Company evaluates whether all
risks and rewards have been transferred, in which case the account receivable is derecognized.
The existence of significant financial difficulties on the part of the debtor, the probability that the
debtor goes bankrupt or financial reorganization are considered indicators of a significant increase
in credit risk.
2.13. Cash and cash equivalents
Cash and cash equivalents include cash and bank balances, time deposits in financial institutions,
and other short-term and highly liquid investments.
2.14. Capital
The common shares are classified as net equity.
Incremental costs directly attributable to the issuance of new shares or options are shown in net
equity as a deduction from the proceeds received from the placement of shares.
2.15. Trade and other accounts payables
Trade payables and other accounts payable are initially recognized at fair value and subsequently at
amortized cost.
2.16.
Interest-bearing loans
Financial liabilities are shown initially at their fair value, net of the costs incurred in the transaction.
Later, these financial liabilities are valued at their amortized cost; any difference between the
proceeds obtained (net of the necessary arrangement| costs) and the repayment value, is shown in
the consolidated statement of income during the term of the debt, according to the effective interest
rate method.
Financial liabilities are classified in current and non-current liabilities according to the contractual
payment dates of the nominal principal.
2.17. Current and deferred taxes
The tax expense for the period comprises income and deferred taxes.
The current income tax expense is calculated based on tax laws in enacted the date of statement of
financial position, in the countries in which the subsidiaries and associates operate and generate
taxable income.
Deferred taxes are recognized, on the temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred income tax is not accounted for if it arises from the initial recognition of an assets or a
liability in transaction other than a business combination that at the time of the transaction does not
affect the accounting or the taxable profit or loss. Deferred tax is determined using the tax rates (and
laws) that have been enacted or substantially enacted at the date of the consolidated statements of
financial position, and are expected to apply when the related deferred tax asset is realized or the
deferred tax liability discharged.
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Deferred tax assets are recognized only to the extent it is probable that the future taxable profit will
be available against which the temporary differences can be utilized.
The tax (current and deferred) is recognized in statement of income by function, unless it relates to
an item recognized in other comprehensive income, directly in equity. In this case the tax is also
recognized in other comprehensive income or, directly in the statement of income by function,
respectively.
2.18. Employee benefits
(a)
Personnel vacations
The Company recognizes the expense for personnel vacations on an accrual basis.
(b)
Share-based compensation
The compensation plans implemented based on the shares of the Company are recognized in the
consolidated financial statements in accordance with IFRS 2: Share-based payments, for plans
based on the granting of options, the effect of fair value is recorded in equity with a charge to
remuneration in a linear manner between the date of grant of said options and the date on which
they become irrevocable, for the plans considered as cash settled award the fair value, updated as of
the closing date of each reporting period or exercise, is recorded as a liability with charge to
remuneration.
(c) Post-employment and other long-term benefits
Provisions are made for these obligations by applying the method of the projected unit credit
method, and considering estimates of future permanence, mortality rates and future wage increases
determined on the basis of actuarial calculations. The discount rates are determined by reference to
market interest-rate curves. Actuarial gains or losses are shown in other comprehensive income.
(d)
Incentives
The Company has an annual incentives plan for its personnel for compliance with objectives and
individual contribution to the results. The incentives eventually granted consist of a given number
or portion of monthly remuneration and the provision is made on the basis of the amount estimated
for distribution.
(e)
Termination benefits
The group recognizes termination benefits at the earlier of the following dates: (a) when the group
terminates laboral relation; and (b) when the entity recognizes costs for a restructuring that is within
the scope of IAS 37 and involves the payment of terminations benefits.
2.19. Provisions
Provisions are recognized when:
(i)
The Company has a present legal or implicit obligation as a result of past events;
(ii)
It is probable that payment is going to be necessary to settle an obligation; and
(iii)
The amount has been reliably estimated.
2.20. Revenue from contracts with customers
(a) Transportation of passengers and cargo
The Company recognizes the sale for the transportation service as a deferred income liability,
which is recognized as income when the transportation service has been lent or expired. In the case
of air transport services sold by the Company and that will be made by other airlines, the liability is
reduced when they are remitted to said airlines. The Company periodically reviews whether it is
necessary to make an adjustment to deferred income liabilities, mainly related to returns, changes,
among others.
Compensations granted to clients for changes in the levels of services or billing of additional
services such as additional baggage, change of seat, among others, are considered modifications of
the initial contract, therefore, they are deferred until the corresponding service is provided.
(b) Expiration of air tickets
The Company estimates in a monthly basis the probability of expiration of air tickets, with refund
clauses, based on the history of use of the same. Air tickets without refund clause are expired on the
date of the flight in case the passenger does not show up.
(c) Costs associated with the contract
The costs related to the sale of air tickets are activated and deferred until the moment of providing
the corresponding service. These assets are included under the heading "Other current non-financial
assets" in the Consolidated Classified Statement of Financial Position.
(d) Frequent passenger program
The Company maintains the following loyalty programs: LATAM Pass and LATAM Pass Brasil,
whose objective is building customer loyalty through the delivery of miles or points.
These programs give their frequent passengers the possibility of earning LATAMPASS’s miles or
points, which grant the right to a selection of both air and non-air awards. Additionally, the
Company sells the LATAMPASS miles or points to financial and non-financial partners through
commercial alliances to award miles or points to their customers.
To reflect the miles and points earned, the loyalty program mainly includes two types of
transactions that are considered revenue arrangements with multiple performance obligations: (1)
Passenger Ticket Sales Earning miles or points (2) miles or points sold to financial and non-
financial partner
(1) Passenger Ticket Sales Earning Miles or Points.
In this case, the miles or points are awarded to customers at the time that the company performs the
flight.
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To value the miles or points earned with travel, we consider the quantitative value a passenger
receives by redeeming miles for a ticket rather than paying cash, which is referred to as Equivalent
Ticket Value ("ETV"). Our estimate of ETV is adjusted for miles and point that are not likely to be
redeemed ("breakage").
The balance of miles and point that are pending to redeem are include on deferred revenue.
(2) Miles sold to financial and non-financial partner
To value the miles or points earns through financial and non-financial partners,the performance
obligations with the client are estimated separately. To calculate these performance obligations,
different components that add value in the commercial contract must be considered, such as
marketing, advertising and other benefits, and finally the value of the points awarded to customers
based on our ETV. The value of each of these components is finally allocated in proportion to their
relative prices. The performance obligations associated with the valuation of the points or miles
earned become part of the Deferred Revenue, and the remaining performance obligations, are
recorded as revenue when the miles or points are delivered to the client.
When the miles and points are exchanged for products and services other than the services provided
by the Company, the income is recognized immediately, when the exchange is made for air tickets
of any airline of LATAM Airlines Group S.A. and subsidiaries, the income is deferred until the air
transport service is provided.
The miles and points that the Company estimates will not be exchanged are recognized in the
results based on the consumption pattern of the miles or points effectively exchanged by customers.
The Company uses statistical models to estimate the probability of exchange, which is based on
historical patterns and projections.
(e) Dividend income
Dividend income is recognized when the right to receive payment is established.
2.21. Leases
The Company recognizes contracts that meet the definition of a lease, as a right of use asset and a
lease liability on the date when the underlying asset is available for use.
Assets for right of use are measured at cost including the following:
- The amount of the initial measurement of the lease liability;
- Lease payment made at or before commencement date;
-
- Restoration costs.
Initial direct costs, and
The assets by right of use are recognized in the statement of financial position in Properties, plants
and equipment.
Lease liabilities include the net present value of the following payments:
- Fixed payments including in substance fixed payment.
- Variable lease payments that depend on an index or a rate;
- The exercise price of a purchase options, if is reasonably certain to exercise that option.
The Company determines the present value of the lease payments using the implicit rates for the
aircraft leasing contracts and for the rest of the underlying assets, uses the incremental borrowing
rate.
Lease liabilities are recognized in the statement of financial position under Other financial
liabilities, current or non-current.
Interest accrued on financial liabilities is recognized in the consolidated statement of income in
"Financial costs".
Payments associated with short-term leases without purchase options and leases of low-value assets
are recognized on a straight-line basis in profit or loss at the time of accrual. Those payments are
presented in cash flows use in operation activities.
The Company analyzes the financing agreements of aircrafts, mainly considering characteristics
such as:
(a) that the Company initially acquired the aircraft or took an important part in the process of direct
acquisition with the manufacturers.
(b) Due to the contractual conditions, it is virtually certain that the Company will execute the
purchase option of the aircraft at the end of the lease term.
Since these financing agreements are “substantially purchases” and not leases, the related liability
is considered as a financial debt classified under to IFRS 9 and continue to be presented within the
“Other financial liabilities” described in Note 19. On the other hand, the aircraft are presented in
Property, Plants and Equipment, as described in Note 17, as “own aircraft”.
The Group qualifies as sale and lease transactions, operations that lead to a sale according to IFRS
15. More specifically, a sale is considered as such if there is no option to purchase the goods at the
end of the lease term.
If the sale by the seller-lessee is classified as a sale in accordance with IFRS 15, the underlying
asset is derecognized, and a right-of-use asset equal to the portion retained proportionally of the
amount of the asset is recognized.
If the sale by the seller-lessee is not classified as a sale in accordance with IFRS 15, the transferred
assets are kept in the financial statements and a financial liability equal to the sale price is
recognized (received from the buyer-lessor).
The Company has applied the practical solution allowed by IFRS 16 for those contracts that meet
the established requirements and that allows a lessee to choose not to evaluate if the concessions
that it obtains derived from COVID-19 are a modification of the lease.
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2.22. Non-current assets or disposal groups classified as held for sale
Non-current assets (or disposal groups) classified as assets held for sale are shown at the lesser of
their book value and the fair value less costs to sell.
2.23. Maintenance
The costs incurred for scheduled heavy maintenance of the aircraft’s fuselage and engines are
capitalized and depreciated until the next maintenance. The depreciation rate is determined on
technical grounds, according to the use of the aircraft expressed in terms of cycles and flight hours.
In case of aircraft include in property, plant and equipment, these maintenance cost are capitalized
as Property, plant and equipment, while in the case of aircraft on right of use, a liability is accrued
based on the use of the main components is recognized, since a contractual obligation with the
lessor to return the aircraft on agreed terms of maintenance levels exists. These are recognized as
Cost of sales.
Additionally, some contracts that comply with the definition of lease establish the obligation of the
lessee to make deposits to the lessor as a guarantee of compliance with maintenance and return
conditions. These deposits, often called maintenance reserves, accumulate until a major
maintenance is performed, once made, the recovery is requested to the lessor. At the end of the
contract period, there is comparison between the reserves that have been paid and required return
conditions, and compensation between the parties are made if applicable.
The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to
results as incurred.
2.24. Environmental costs
Disbursements related to environmental protection are charged to results when incurred.
NOTE 3 - FINANCIAL RISK MANAGEMENT
3.1.
Financial risk factors
The Company is exposed to different financial risks: (a) market risk, (b) credit risk, and (c)
liquidity risk. The program overall risk management of the Company aims to minimize the adverse
effects of financial risks affecting the company.
(a) Market risk
Due to the nature of its operations, the Company is exposed to market factors such as: (i) fuel-price
risk, (ii) exchange -rate risk (FX), and (iii) interest -rate risk.
The Company has developed policies and procedures for managing market risk, which aim to
identify, quantify, monitor and mitigate the adverse effects of changes in market factors mentioned
above.
For the foregoing, Management monitors the evolution of price levels, exchange rates and interest
rates, quantifies exposures and their risk, and develops and executes hedging strategies.
(i)
Fuel-price risk:
Exposure:
For the execution of its operations the Company purchases a fuel called Jet Fuel grade 54 USGC,
which is subject to the fluctuations of international fuel prices.
Mitigation:
To hedge the risk exposure fuel, the Company operates with derivative instruments (swaps and
options) whose underlying assets may be different from Jet Fuel, being possible use West Texas
Intermediate (“WTI”) crude, Brent (“BRENT”) crude and distillate Heating Oil (“HO”), which have
a high correlation with Jet Fuel and greater liquidity.
Fuel Hedging Results:
During the year ended December 31, 2020, the Company recognized losses of US$ 14.3 million
(negative) for fuel hedge net of premiums in the costs of sale for the year. During the same year of
2019, the Company recognized losses of US$ 23.1 million for the same concept.
As of the end of March 31, the Company has determined that the highly probable expected
transactions, which made up the hedged item, will no longer occur in the formally established
magnitudes, therefore it has stopped recognizing these contracts under the accounting of hedge
recognizing for the year ended December 31,2020 a loss of US$ 50.8 million in the line in Other
gains (losses) of the income statement, as a reclassification effect from other reserves from the
statement of comprehensive income and a loss of US$ 30.8 million corresponding to the premiums
associated with these contracts. On November 2020, the new fuel derivatives taken by the Company
were classified as hedge accounting.
As of December 31, 2020 the market value of the fuel positions was US$ 1.3 million (positive). At
the end of December 2019, this market value was US$ 48.5 million (positive).
The following tables show the level of hedge for different periods:
Positions as of December 31, 2020 (*)
Maturities
Percentage of coverage over the expected volume of consumption
3.0%
2.8%
2.6%
2.6%
2.7%
Q121
Q221
Q321
Q421
Total
(*) The percentage shown in the table considers all the hedging instruments (swaps and options).
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Positions as of December 31, 2019 (*)
Maturities
Q120
Q220
Q320
Q420
Total
Percentage of coverage over the expected volume of consumption
65%
61%
20%
19%
41%
(*) The volume shown in the table considers all the hedging instruments (swaps and options).
The largest operational exposure to LATAM's exchange risk comes from the concentration of
businesses in Brazil, which are mostly denominated in Brazilian Real (BRL), and are actively
managed by the company.
At a lower concentration, the Company is also exposed to the fluctuation of other currencies, such
as: Euro, Pound sterling, Australian dollar, Colombian peso, Chilean peso, Argentine peso,
Paraguayan Guarani, Mexican peso, Peruvian Sol and New Zealand dollar.
Sensitivity analysis
Mitigation:
A drop in fuel price positively affects the Company through a reduction in costs. However, also
negatively affects contracted positions as these are acquired to protect the Company against the risk
of a rise in price. The policy therefore is to maintain a hedge-free percentage in order to be
competitive in the event of a drop in price.
The current hedge positions they are booked as cash flow hedge contracts, so a variation in the fuel
price has an impact on the Company’s net equity.
The following tables show the sensitization of financial instruments according to reasonable
changes in the price of fuel and their effect on equity.
The calculations were made considering a parallel movement of US$ 5 per barrel in the underlying
reference price curve at the end of December 2019 and 2020. The projection period was defined
until the end of the last fuel hedging contract in force, being the last business day of the fourth
quarter of the year 2021.
Benchmark price
(US$ per barrel)
Positions as of December 31, 2020
effect on Statement of Income
(MUS$)
Positions as of December 31, 2019
effect on Equity
(MUS$)
+5
-5
+0.6
-0.6
+15.4
- 34.5
Given the fuel hedging structure during 2020, which considers a portion free of hedges, a vertical
drop of 5 dollars in the JET reference price (considered as the monthly daily average), would have
meant an impact of approximately US$ 160.5 million lower fuel cost. For the same period, a
vertical rise of 5 dollars in the JET reference price (considered as the monthly daily average), would
have meant an approximate impact of US$ 135.0 million in higher fuel costs.
(ii)
Foreign exchange rate risk:
Exposure:
The functional and presentation currency of the financial statements of the Parent Company is the
US dollar, so that the risk of the Transactional and Conversion exchange rate arises mainly from the
Company's business, strategic and accounting operating activities that are expressed in a monetary
unit other than the functional currency.
The subsidiaries of LATAM are also exposed to foreign exchange risk whose impact affects the
Company's Consolidated Income.
The Company mitigates currency risk exposures by contracting derivative instruments or through
natural hedges or execution of internal operations.
Exchange Rate Hedging Results (FX):
With the objective of reducing exposure to the exchange rate risk in the operational cash flows of
2020, and securing the operating margin, LATAM makes hedges using FX derivatives.
As of December 31, 2020, the Company did not maintain FX derivatives. At the end of December
2019, this market value was MUS$ 0.01 (negative).
During the year ended December 31, 2020, the Company recognized gains of US$ 3.2 million for
FX coverage net of premiums. During the same period of 2019, the Company recognized gains of
US$ 1.9 million for FX hedging net of premiums.
As of December 31, 2020, the Company had no current FX derivatives for BRL. At the end of
December 2019, the Company maintain current FX derivatives for BRL for MUS$ 15.
During 2019 the company contracted FX derivatives recognized in results amounts to USS$ 6.2
million (negative) net of premiums. As of December 31, 2020, the Company does not hold FX
derivatives that are not under hedge accounting.
Sensitivity analysis:
A depreciation of the R$/US$ exchange rate, negatively affects the Company's operating cash
flows, however, also positively affects the value of the positions of derivatives contracted.
FX derivatives are recorded as cash flow hedge contracts; therefore, a variation in the exchange rate
has an impact on the market value of the derivatives, the changes of which affect the Company's net
equity.
The following table shows the sensitization of FX derivative instruments according to reasonable
changes in the exchange rate and its effect on equity. The Company did not maintain FX derivatives
in force for BRL as of December 31, 2020:
Appreciation (depreciation)(*)
of R$
Effect at December 31, 2020
MUS$
Effect at December 31, 2019
MUS$
-10%
+10%
-
-
-0.6
+1.1
(*) Appreciation (depreciation) of US$ regard to the covered currencies.
Financial statements
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During 2017 and 2019, the Company contracted swap currency derivatives for debt coverage issued
the same years by notionals UF 8.7 million and UF 5.0 million, respectively. As of December 31,
2020 Company does not has currency hedge swap. At the end of December 2019, this market value
was MUS$ 22.7 (negative).
In the case of TAM S.A, whose functional currency is the Brazilian real, a large part of its liabilities
is expressed in US dollars. Therefore, when converting financial assets and liabilities, from dollar to
real, they have an impact on the result of TAM S.A., which is consolidated in the Company's
Income Statement.
In order to reduce the impact on the Company's result caused by appreciations or depreciations of
R $ / US $, the Company has executed internal operations to reduce the net exposure in US $ for
TAM S.A.
The following table shows the variation of financial performance to appreciate or depreciate 10%
exchange rate R$/US$:
Appreciation
(depreciation)(*)
of R$/US$(*)
Effect at December 31, 2020
MUS$
Effect at December, 2019
MUS$
-10%
+10%
+10.9
- 10.9
+9.5
-9.5
(*) Appreciation (depreciation) of US$ regard to the covered currencies.
Effects of exchange rate derivatives in the Financial Statements
The profit or losses caused by changes in the fair value of hedging instruments are segregated
between intrinsic value and temporary value. The intrinsic value is the actual percentage of cash
flow covered, initially shown in equity and later transferred to income, while the hedge transaction
is recorded in income. The temporary value corresponds to the ineffective portion of cash flow
hedge which is recognized in the financial results of the Company (Note 19).
Due to the functional currency of TAM S.A. and Subsidiaries is the Brazilian real, the Company
presents the effects of the exchange rate fluctuations in Other comprehensive income by converting
the Statement of financial position and Income statement of TAM S.A. and Subsidiaries from their
functional currency to the U.S. dollar, which is the presentation currency of the consolidated
financial statement of LATAM Airlines Group S.A. and Subsidiaries. The Goodwill generated in
the Business combination is recognized as an asset of TAM S.A. and Subsidiaries in Brazilian real
whose conversion to U.S. dollar also produces effects in other comprehensive income.
The following table shows the change in Other comprehensive income recognized in Total equity in
the case of appreciate or depreciate 10% the exchange rate R$/US$:
Appreciation (depreciation)
of R$/US$
Effect at December 31, 2020
MUS$
Effect at December 31, 2019
MUS$
(iii)
Interest -rate risk:
Exposure:
The Company is exposed to fluctuations in interest rates affecting the markets future cash flows of
the assets, and current and future financial liabilities.
The Company is exposed in one portion to the variations of London Inter-Bank Offer Rate
(“LIBOR”) and other interest rates of less relevance are Brazilian Interbank Deposit Certificate
("IDC").
Mitigation:
At the end of December 2020, the Company did not have current interest rate derivative positions.
Currently a 42% (62% at December 31, 2019) of the debt is fixed to fluctuations in interest rate.
Rate Hedging Results:
As of December 31, 2020, the Company did not hold current interest rate derivative positions. At
the end of December 2019, this market value was US$ 2.6 million (positive).
Sensitivity analysis:
The following table shows the sensitivity of changes in financial obligations that are not hedged
against interest-rate variations. These changes are considered reasonably possible, based on current
market conditions each date.
Increase (decrease)
futures curve
in libor 3 months
Positions as of December 31, 2020
effect on profit or loss before tax
(MUS$)
Positions as of December 31, 2019
effect on profit or loss before tax
(MUS$)
+100 basis points
-100 basis points
-42.11
+42.11
-27.60
+27.60
Much of the current rate derivatives are registered for as hedges of cash flow, therefore, a variation
in the exchange rate has an impact on the market value of derivatives, whose changes impact on the
Company’s net equity.
At December 31, 2020 Company does not has interest rate hedge. The calculations were made
increasing (decreasing) vertically 100 basis points of the three-month Libor futures curve, being
both reasonably possible scenarios according to historical market conditions.
Increase (decrease)
futures curve
in libor 3 months
Positions as of December 31, 2020
effect on equity
(MUS$)
Positions as of December 31, 2019
effect on equity
(MUS$)
-10%
+10%
+191.53
-156.71
+402.48
-329.29
+100 basis points
-100 basis points
-
-
+13.62
-14.71
Financial statements
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The assumptions of sensitivity calculation must assume that forward curves of interest rates do not
necessarily reflect the real value of the compensation flows. Moreover, the structure of interest rates
is dynamic over time.
During the periods presented, the Company has no registered amounts by ineffectiveness in
consolidated statement of income for this kind of hedging.
On July 27, 2017, the Financial Conduct Authority (LIBOR regulating authority) announced its
intention to stop asking banks to submit rates for the calculation of LIBOR after 2021. The Federal
Reserve Board and the Fed of New York then convened the Alternative Reference Rates Committee
(ARRC), a group of private market participants, to help ensure a successful transition from LIBOR
in US dollars (USD) to a more robust reference rate, their recommended alternative, the Overnight
Guaranteed Financing Rate (SOFR). Although the adoption of SOFR is voluntary, the impending
discontinuation of LIBOR makes it essential that market participants consider moving to alternative
rates such as SOFR and that they have appropriate alternative language in existing contracts that
reference LIBOR.
(b)
Credit risk
Credit risk occurs when the counterparty does not meet its obligations to the Company under a
specific contract or financial instrument, resulting in a loss in the market value of a financial
instrument (only financial assets, not liabilities). Given the impact of COVID-19 on the operation,
the client portfolio as of December 31, 2020 decreased when compared to the balance as of
December 31, 2019 by 51%, due to a reduction in company-wide operations, mainly in passenger
transport (travel agencies and corporate) and in the case of clients who were left with debt and that
management considered risky, the corresponding measures were taken to consider their expected
credit loss. For this reason, the provision at the end of December 2020 had an increase of 21.7%
compared to the previous period.
The Company is exposed to credit risk due to its operational activities and its financial activities,
including deposits with banks and financial institutions, investments in other types of instruments,
exchange rate transactions and contracting derivative instruments or options.
To reduce the credit risk related to operational activities, the Company has implemented credit
limits to limit the exposure of its debtors, which are permanently monitored for the LATAM
network, when deemed necessary, agencies have been blocked for cargo and passenger businesses.
(i)
Financial activities
Cash surpluses that remain after the financing of assets necessary for the operation are invested
according to credit limits approved by the Company’s Board, mainly in time deposits with different
financial institutions, private investment funds, short-term mutual funds, and easily-liquidated
corporate and sovereign bonds with short remaining maturities. These investments are booked as
Cash and cash equivalents and other current financial assets.
In order to reduce counterparty risk and to ensure that the risk assumed is known and managed by
the Company, investments are diversified among different banking institutions (both local and
international). The Company evaluates the credit standing of each counterparty and the levels of
investment, based on (i) their credit rating, (ii) the equity size of the counterparty, and
(iii) investment limits according to the Company’s level of liquidity. According to these three
parameters, the Company chooses the most restrictive parameter of the previous three and based on
this, establishes limits for operations with each counterparty.
The Company has no guarantees to mitigate this exposure.
Additionally, section 345(b) of the Chapter 11 of the US Bankruptcy Code imposes restrictions on,
among other things, the institutions where the Debtors can hold their cash. In particular, it
establishes that cash should be held in what are called Authorized Bank Depositories, which are US
Banking Institutions that are accepted by the US Trustee Program of the US Department of Justice.
Such Authorized Bank Depositories have generally agreed with the US Trustee Program to
maintain collateral of no less than 115% of the aggregate funds on deposit (in excess of FDIC
insurance limit) by (i) surety bond or (ii) US Treasury securities. Consequently, pursuant to Section
345(b), as implemented through an agreement with the Office of the United States Trustee, as of
the year end the Company held the majority of its cash and equivalents in Banks in the US that are
depositories authorized by Office of the United States Trustee for the Southern District of New
York. Otherwise, the DIP Facility contains certain restrictions on new investments made by the
Debtors during the term of the facility.
(ii) Operational activities
The Company has four large sales “clusters”: travel agencies, cargo agents, airlines and credit-card
administrators. The first three are governed by International Air Transport Association,
international (“IATA”) organization comprising most of the airlines that represent over 90% of
scheduled commercial traffic and one of its main objectives is to regulate the financial transactions
between airlines and travel agents and cargo. When an agency or airline does not pay their debt,
they are excluded from operating with IATA’s member airlines. In the case of credit-card
administrators, they are fully guaranteed by 100% by the issuing institutions.
Under certain of the Company’s credit card processing agreements, the financial institutions have
the right to require that the Company maintain a reserve equal to a portion of advance ticket sales
that have been processed by that financial institution, but for which the Company has not yet
provided the air transportation. Additionally, the financial institutions have the ability to require
additional collateral reserves or withhold payments related to receivables to be collected if
increased risk is perceived related to liquidity covenants in these agreements or negative balances
occur.
The exposure consists of the term granted, which fluctuates between 1 and 45 days.
One of the tools the Company uses for reducing credit risk is to participate in global entities related
to the industry, such as IATA, Business Sales Processing (“BSP”), Cargo Account Settlement
Systems (“CASS”), IATA Clearing House (“ICH”) and banks (credit cards). These institutions
fulfill the role of collectors and distributors between airlines and travel and cargo agencies. In the
case of the Clearing House, it acts as an offsetting entity between airlines for the services provided
between them. A reduction in term and implementation of guarantees has been achieved through
these entities. Currently the sales invoicing of TAM Linhas Aéreas S.A. related with travel agents
and cargo agents for domestic transportation in Brazil is done directly by TAM Linhas Aéreas S.A.
Financial statements
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LATAM did not receive aircrafts that were previously committed to be delivered during 2020,
which at the beginning of the year amounted to US$ 408 million.
After filing Chapter 11 protection, the company received authorization from the Bankruptcy Court
for the “debtors in possession” (DIP) financing, in the form of a multi-draw term loan facility in an
aggregate principal amount of up to US$ 2,450 million. This facility consists of two tranches in
which the following creditors participate:
1) A Tranche A, which is committed for up to US$ 1,300 million, out of which (i) US$ 1,125
million were be provided by Oaktree Capital Management, L.P. or certain entities related to it; and
(ii) US$ 175 million were be provided by Knighthead, Jefferies and / or other entities that are part
of the syndicate of creditors organized by Jefferies; and
2) A Tranche C, which is committed for up to US$ 1,150 million, out of which (i) US$ 750 million
were be provided by LATAM's group of shareholders composed by Grupo Cueto, Grupo Eblen and
Qatar Airways, or certain related entities; (ii) US$ 250 million were be provided by Knighthead,
Jefferies and / or other entities that are part of the syndicate of creditors organized by Jefferies; and
(iii) US$ 150 million which were an upsize in commitments provided by certain additional
shareholder investors through a public investment fund managed by Toesca S.A. on November 6,
2020, through a joinder to the DIP Agreement.
In addition, this proposal contemplates a possible Tranche B for up to an additional US$ 750
million, subject to the authorization of the Court and other customary conditions for this type of
operations.
On October 8, 2020, the first disbursement took place under the DIP Credit Agreement for a 50% of
the total funds committed to that date, US$ 1,150 million. Pursuant to the terms of the DIP
Agreement, the Debtors will be required to maintain consolidated liquidity of at least US$ 400
million, taking into consideration the undrawn portion of the DIP financing, and meet certain
milestones with respect to the bankruptcy process).
Credit quality of financial assets
The external credit evaluation system used by the Company is provided by IATA. Internal systems
are also used for particular evaluations or specific markets based on trade reports available on the
local market. The internal classification system is complementary to the external one, i.e. for
agencies or airlines not members of IATA, the internal demands are greater.
To reduce the credit risk associated with operational activities, the Company has established credit
limits to abridge the exposure of their debtors which are monitored permanently (mainly in case of
operational activities of TAM Linhas Aéreas S.A. with travel agents). The bad-debt rate in the
principal countries where the Company has a presence is insignificant.
(c)
Liquidity risk
Liquidity risk represents the risk that the Company does not have sufficient funds to pay its
obligations.
Due to the cyclical nature of its business, the operation and investment needs, along with the need
for financing, the Company requires liquid funds, defined as Cash and cash equivalents plus other
short-term financial assets, to meet its payment obligations. On May 26, 2020, the Company and its
subsidiaries in Chile, Peru, Colombia, Ecuador and the United States began a voluntary process of
reorganization and restructuring of their debt under the protection of the Chapter 11 of the United
States, to which on July 9, the Brazilian subsidiary and certain of its subsidiaries were included, in
order to preserve the group's liquidity. In light of the unprecedented impact COVID-19 has had on
the global aviation industry, this reorganization process provides LATAM with the opportunity to
work with the group's creditors, and main stakeholders, to reduce its debt and obtain new sources of
financing, providing the company with the tools to adapt the group to this new reality.
The balance of liquid funds, future cash generation and the ability to obtain financing, provides the
Company with alternatives to meet future investment and financing commitments.
As of December 31, 2020, the balance of liquid funds is US$ 1,696 million (US $ 1,073 million as
of December 31, 2019), which are invested in short-term instruments through financial entities with
a high-risk classification.
As of December 31, 2020, LATAM maintains a committed revolving credit facility (Revolving
Credit Facility) for a total amount of US$ 600 million, which is fully drawn. This line is secured by
and subject to the availability of collateral (i.e. aircraft, engines and spare parts).
In order to preserve liquidity, the Company has implemented a series of measures. Among them, the
Company proposed 50% salary reduction to the entire organization for the second quarter, which
was accepted by more than 90% of the employees. For the third quarter, the salary reduction to the
entire organization was between 20% and 25%, which also had an adhesion of more than 90% of
the group's employees, and for the fourth quarter a reduction of 15% was proposed, which also
achieved high levels of adherence.
Finally, during the year 2020, the company has reduced its planned investments for 2020 by
approximately US$ 698 million, mainly related to maintenance, given the lower operation, purchase
of engines, investments in cabins and other projects, given the reduced operation. In addition,
Financial statements
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Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2020
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.
Tax No.
Creditor
Creditor
country
Currency
Up to
90
days
ThUS$
More than
90 days
to one
year
ThUS$
More than
one to
three
years
ThUS$
More than
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Loans to exporters
97.018.000-1
97.030.000-7
76.645.030-K
97.951.000-4
SCOTIABANK
BANCO ESTADO
ITAU
HSBC
Bank loans
97.023.000-9
0-E
76.362.099-9
CORPBANCA
SANTANDER
BTG
Obligations with the public
97.030.000-7
0-E
Guaranteed obligations
BANCO ESTADO
BANK OF NEW YORK
0-E
0-E
0-E
0-E
0-E
BNP PARIBAS
NATIXIS
INVESTEC
MUFG
SMBC
Other guaranteed obligation
0-E
0-E
0-E
0-E
CREDIT AGRICOLE
MUFG
CITIBANK
BANK OF UTAH
Financial lease
0-E
0-E
0-E
0-E
0-E
0-E
97.036.000-K
0-E
0-E
0-E
0-E
0-E
ING
CREDIT AGRICOLE
CITIBANK
PEFCO
BNP PARIBAS
WELLS FARGO
SANTANDER
RRPF ENGINE LEASING
APPLE BANK
BTMU
US BANK
PK AIRFINANCE
Chile
Chile
Chile
Chile
Chile
Spain
Chile
Chile
U.S.A.
U.S.A.
France
England
U.S.A.
U.S.A.
France
U.S.A.
U.S.A.
U.S.A.
U.S.A.
France
U.S.A.
U.S.A.
U.S.A.
U.S.A.
Chile
England
U.S.A.
U.S.A.
U.S.A.
U.S.A.
US$
US$
US$
US$
UF
US$
UF
UF
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
76,929
41,543
20,685
12,545
11,631
3,323
2,104
23,210
80,063
50,500
47,918
11,502
37,114
131,345
1,347
87,611
3,405
-
5,965
13,889
79,117
1,926
14,851
114,952
21,551
4,093
4,589
11,620
60,527
4,624
-
-
-
-
-
-
-
-
-
2,678
68,920
-
139,459
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76,929
41,543
20,685
12,545
11,631
145,460
71,024
74,000
40,000
20,000
12,000
11,255
139,459
67,868
Amortization
At Expiration
At Expiration
At Expiration
At Expiration
Quarterly
Quarterly
At Expiration
Annual
Effective Nominal
rate
%
rate
%
3.08
3.49
4.20
4.15
3.35
2.80
3.10
3.08
3.49
4.20
4.15
3.35
2.80
3.10
26,857
76,125
217,555
208,250
35,041
836,063
429,101
828,000
731,764
2,028,501
560,113
1,500,000
At Expiration
At Expiration
4.81
7.16
4.81
6.94
40,889
37,509
9,425
28,497
-
275,773
74,852
10,404
-
-
2,057
61,983
-
2,343
104,946
17,851
3,382
4,763
9,647
54,611
12,202
104,166
84,048
21,042
77,881
-
-
119,460
603,443
952,990
-
2,062
118,372
-
793
237,945
26,308
8,826
12,977
26,261
144,670
3,153
107,342
84,487
-
80,678
-
19,950
-
-
-
-
46,115
-
-
99,232
-
4,870
755
770
86,076
-
219,666
35,712
-
194,901
-
-
-
-
-
-
-
19,118
-
-
-
-
-
-
-
-
522,563
289,674
41,969
419,071
131,345
277,120
301,873
617,252
952,990
5,965
18,008
324,705
1,926
17,987
557,075
65,710
21,171
23,084
48,298
345,884
19,979
474,273
271,129
37,870
382,413
130,000
273,199
291,519
600,000
793,003
5,965
17,961
312,792
1,926
17,951
541,406
65,247
18,489
22,730
47,609
327,419
19,522
Quarterly / Semiannual
Quarterly
Semiannual
Quarterly
At Expiration
At Expiration
Quarterly
At Expiration
At Expiration
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Monthly
Quarterly
Quarterly
Quarterly
Monthly
2.95
3.11
6.21
2.88
1.73
2.95
3.11
6.21
2.88
1.73
1.92
2.67
2.27
22.19
1.92
2.67
2.27
13,19
5.71
1.99
2.58
5.65
1.81
2.43
1.30
4.01
1.61
1.63
4.00
1.98
5.01
1.54
1.77
5.03
1.41
1.74
0.76
4.01
1.01
1.03
2.82
1.98
TOTAL
980,479
925,714
3,109,661
1,401,379
1,726,498
8,143,731
7,077,118
citibank
(*) Oblligation are presented according original contractual condition and do not considered any Chapter 11 resolution. See detail on Note 19.
Financial statements
206
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Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2020
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.
38
Creditor
country
Currency
Up to
90
days
ThUS$
More than
90 days
to one
year
ThUS$
More than
one to
three
years
ThUS$
More than
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective Nominal
rate
%
rate
%
Tax No.
Creditor
Bank loans
0-E
0-E
0-E
Financial leases
NCM
BANCO BRADESCO
BANCO DO BRASIL
0-E
0-E
0-E
0-E
NATIXIS
WACAPOU LEASING S.A.
SOCIÉTÉ GÉNÉRALE MILAN BRANCH
GA TELESIS LLC
France
Luxembourg
Italy
U.S.A.
TOTAL
470,730
13,968
Netherlands
Brazil
Brazil
US$
BRL
BRL
US$
US$
US$
US$
452
91,672
208,987
31,482
2,460
134,919
758
497
-
-
9,276
2,442
-
1,753
61
-
-
42,383
25
-
4,675
47,144
-
-
-
-
-
-
4,675
4,675
-
-
-
-
-
-
7,969
7,969
1,010
91,672
208,987
83,141
4,927
134,919
19,830
544,486
943
80,175
199,557
Monthly
Monthly
Monthly
81,260 Quarterly / Semiannual
4,759
144,120
12,261
Quarterly
Quarterly
Monthly
523,075
6.01
4.34
3.95
4.09
2.00
3.07
14.72
6.01
4.34
3.95
4.09
2.00
3.01
14.72
(*) Oblligation are presented according original contractual condition and do not considered any Chapter 11 resolution. See detail on Note 19.
Financial statements
207
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Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2020
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.
39
Tax No.
Creditor
Lease Liability
-
-
AIRCRAFT
OTHER ASSETS
Trade and other accounts payables
-
OTHERS
Creditor
country
Currency
Up to
90
days
ThUS$
More than
90 days
to one
year
ThUS$
More than
one to
three
years
ThUS$
More than
three to
five
years
ThUS$
More than
five
years
ThUS$
OTHERS
OTHERS
OTHERS
US$
US$
UF
COP
EUR
PEN
BRL
US$
CLP
BRL
Other currency
226,510
3,403
2,103
22
156
29
1,002
330,172
230,997
359,350
598,619
805
7
-
-
-
-
679,529
9,953
5,836
7
443
15
3,891
47,781
119,337
5,859
65,684
-
-
-
-
-
-
877,438
6,706
1,072
14
188
49
14,414
-
-
-
-
-
-
105,713
132,141
132,141
26,428
812,821
18,271
1,973
-
-
-
-
889,072
6,349
2,485
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
ThUS$
3,485,370
44,682
13,469
43
787
93
19,307
377,953
350,334
365,209
664,303
805
7
105,713
132,141
132,141
26,428
Nominal
value
ThUS$
3,026,573
46,520
11,401
48
772
137
35,555
377,953
350,334
365,209
664,303
805
7
105,713
132,141
132,141
26,428
Amortization
Annual
Effective Nominal
rate
%
rate
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Accounts payable to related parties currents
Delta Airlines
Foreign
Patagonia Seafarms INC
Foreign
Inversiones Costa Verde Ltda. y CPA.
97.810.370-9
QA Investments Ltd
Foreign
QA Investments 2 Ltd
Foreign
Lozuy S.A.
Foreign
U.S.A
ChileU.S.A
Chile
Jersey Channel Islands
Jersey Channel Islands
Uruguay
USD
CLP
CLP
USD
USD
USD
Total
Total consolidated
1,753,175
938,335
1,296,304
833,065
897,906
5,718,785
5,276,040
3,204,384
1,878,017
4,453,109
2,239,119
2,632,373
14,407,002
12,876,233
Financial statements
208
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C la s s o f lia bility fo r the a na lys is o f liquidity ris k o rde re d by da te o f m a turity a s o f De c e m be r 31, 2019
De bto r: LATAM Airline s Gro up S .A. a nd S ubs idia rie s , Ta x No . 89.862.200-2 C hile .
40
C re dito r
c o untry
C urre nc y
Ta x No .
C re dito r
Lo a ns to e xpo rte rs
97.032.000-8 B B VA
97.003.000-K B ANC O DO B R AS IL
76.100.458-1 HS B C
76.100.458-1
B LADEX
B a nk lo a ns
97.023.000-9 C OR P B ANC A
76.362.099-9 B TG P AC TUAL C HILE
0-E
S ANTANDER
Obliga tio ns with the public
97.030.000-7 B ANC O ES TADO
0-E
B ANK OF NEW YOR K
Gua ra nte e d o bliga tio ns
C hile
C hile
C hile
C hile
C hile
C hile
S pa in
C hile
U.S .A.
0-E
0-E
0-E
0-E
0-E
0-E
B NP P AR IB AS
U.S .A.
WILM INGTON TR US T C OM P ANY U.S .A.
U.S .A.
C ITIB ANK
F ra nc e
NATIXIS
U.S .A.
M UF G
Engla nd
INVES TEC
Othe r gua ra nte e d o bliga tio n
0-E
0-E
C R EDIT AGR IC OLE
M UF G
ING
C R EDIT AGR IC OLE
C ITIB ANK
P EF C O
B NP P AR IB AS
WELLS F AR GO
F ina nc ia l le a s e
0-E
0-E
0-E
0-E
0-E
0-E
97.036.000-K S ANTANDER
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
R R P F ENGINE
AP P LE B ANK
B TM U
NATIXIS
KF W IP EX-B ANK
AIR B US F INANC IAL
US B ANK
P K AIR F INANC E
Othe r lo a ns
0-E
He dge de riva tive
C ITIB ANK (*)
-
OTHER S
To ta l
F ra nc e
U.S .A.
U.S .A.
F ra nc e
U.S .A.
U.S .A.
U.S .A.
U.S .A.
C hile
Engla nd
U.S .A.
U.S .A.
F ra nc e
Ge rm a ny
U.S .A.
U.S .A.
U.S .A.
U.S .A.
-
US $
US $
US $
US $
UF
UF
US $
UF
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
Up to
90
da ys
ThUS $
24,387
151,489
12,098
-
5,336
484
1,514
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $
five
ye a rs
ThUS $
thre e to M o re tha n
five
ye a rs
ThUS $
To ta l
ThUS $
No m ina l
va lue
ThUS $
Am o rtiza tio n
76,256
50,758
-
29,277
10,544
1,451
4,809
-
-
-
-
-
63,872
141,719
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,643
202,247
12,098
29,277
15,880
65,807
148,042
99,000
200,000
12,000
29,000
At Expira tio n
At Expira tio n
At Expira tio n
At Expira tio n
15,615
62,769
137,860
Qua rte rly
At Expira tio n
Qua rte rly
-
28,000
24,702
76,125
208,681
208,250
32,228
884,188
410,774
884,000
676,385
2,080,563
518,032
1,500,000
At Expira tio n
At Expira tio n
11,657
31,733
5,765
13,365
5,552
1,980
50,428
94,096
17,296
40,159
27,068
11,164
124,106
244,836
46,120
99,556
73,726
26,153
124,167
237,815
46,117
86,984
73,914
11,071
302,092
438,659
42,175
79,724
209,621
-
612,450
1,047,139
157,473
319,788
389,881
50,368
513,941Qua rte rly / S e m ia nnua l
866,223
143,475
282,906
322,660
44,087
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
S e m ia nnua l
2,326
26,607
6,740
78,955
260,259
198,783
-
46,131
-
-
269,325
350,476
253,692
328,023
At Expira tio n
Qua rte rly
4,025
4,994
19,412
1,950
9,353
35,251
6,145
1,152
1,661
3,367
759
1,804
2,038
18,328
2,652
8,108
15,026
56,148
1,950
25,211
105,691
18,394
3,432
4,977
10,081
2,299
3,607
5,746
54,864
8,136
-
6,671
117,881
-
28,663
261,181
47,911
8,967
13,259
26,827
2,330
-
-
145,364
18,194
-
-
16,653
-
22,502
203,232
3,158
8,679
7,380
14,153
-
-
-
140,555
-
26,111
78,742
-
-
-
11,582
18,641
13,530
-
-
-
-
10,354
14,382
-
568
-
-
-
-
-
17,681
-
-
-
12,133
26,691
210,094
3,900
96,083
619,737
75,608
22,798
27,277
54,428
5,388
5,411
7,784
376,792
28,982
11,806
26,091
200,907
3,827
87,729
591,684
72,551
19,643
25,708
51,340
5,154
5,328
7,664
349,127
28,087
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
M o nthly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
M o nthly
Qua rte rly
M o nthly
461,295
1,013,822
2,391,950
1,972,457
2,410,030
8,249,554
6,933,927
104,853
101,026
Qua rte rly
6.00
6.00
43,753
16,972
-
-
-
Annua l
Effe c tive No m ina l
ra te
%
ra te
%
3.29
2.93
3.25
2.82
3.35
3.10
3.62
4.81
7.16
3.81
4.45
3.76
3.82
3.43
6.35
3.74
3.54
5.71
3.15
3.39
5.65
3.85
2.67
3.00
4.01
3.33
3.33
4.41
3.55
3.31
4.01
3.45
3.29
2.93
3.25
2.82
3.35
3.10
4.61
4.81
6.94
3.81
4.45
2.68
3.82
3.43
6.35
3.74
3.54
5.01
2.52
2.80
5.03
3.72
1.98
2.46
4.01
2.73
2.73
4.41
3.55
3.31
2.82
3.45
(*) B o nus s e c uritize d with the future flo ws o f c re dit c a rd s a le s in the Unite d S ta te s a nd C a na da , thro ugh the Gua na y F ina nc e Lim ite d c o m pa ny.
Financial statements
209
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C la s s o f lia bility fo r the a na lys is o f liquidity ris k o rde re d by da te o f m a turity a s o f De c e m be r 31, 2019
De bto r: TAM S .A. a nd S ubs idia rie s , Ta x No . 02.012.862/0001-60, B ra zil.
41
Ta x No .
C re dito r
B a nk lo a ns
0-E
NC M
F ina nc ia l le a s e s
C re dito r
c o untry
C urre nc y
Up to
90
da ys
ThUS $
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $
five
ye a rs
ThUS $
thre e to M o re tha n
five
ye a rs
ThUS $
To ta l
ThUS $
No m ina l
va lue
ThUS $
Am o rtiza tio n
Annua l
Effe c tive No m ina l
ra te
%
ra te
%
Ne the rla nds
US $
173
499
722
-
-
1,394
1,289
M o nthly
6.01
6.01
0-E
0-E
0-E
0-E
NATIXIS
WAC AP OU LEAS ING S .A.
S OC IÉTÉ GÉNÉR ALE M ILAN B R ANC H
GA Te le s is LLC
F ra nc e
Luxe m bo urg
Ita ly
U.S .A.
US $
US $
US $
US $
To ta l
4,140
835
11,286
677
17,111
7,965
2,450
151,047
1,753
163,714
77,028
3,277
-
4,675
85,702
-
-
-
4,675
4,675
-
-
-
10,480
10,480
89,133
6,562
162,333
22,260
281,682
86,256 Qua rte rly / S e m ia nnua l 6.29
4.32
Qua rte rly
5.39
Qua rte rly
14.72
M o nthly
6,280
169,931
13,495
6.29
4.32
5.39
14.72
277,251
Financial statements
210
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C la s s o f lia bility fo r the a na lys is o f liquidity ris k o rde re d by da te o f m a turity a s o f De c e m be r 31, 2019
De bto r: LATAM Airline s Gro up S .A. a nd S ubs idia rie s , Ta x No . 89.862.200-2, C hile .
42
Ta x No .
C re dito r
Le a s e Lia bility
-
-
AIR C R AF T
OTHER AS S ETS
C re dito r
c o untry
C urre nc y
OTHER S
OTHER S
US $
US $
C LP
UF
C OP
EUR
GB P
M XN
P EN
Othe r c urre nc ie s
Up to
90
da ys
ThUS $
146,036
3,017
160
2,713
71
163
16
37
95
2,770
Tra de a nd o the r a c c o unts pa ya ble s
-
OTHER S
OTHER S
US $
C LP
B R L
Othe r c urre nc ie s
371,527
220,383
486,082
576,378
Ac c o unts pa ya ble to re la te d pa rtie s c urre nts
78.591.370-1 B e thia S .A. y F ilia le s
F o re ign
P a ta go nia S e a fa rm s INC
C hile
U.S .A.
C LP
C LP
53
3
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $
five
ye a rs
ThUS $
thre e to M o re tha n
five
ye a rs
ThUS $
1,357,910
16,314
-
2,956
-
-
-
-
-
-
-
-
-
-
-
-
To ta l
ThUS $
3,801,792
69,176
1,169
17,567
271
1,264
26
385
323
62,752
385,520
221,288
486,402
578,094
53
3
No m ina l
va lue
ThUS $
3,042,231
53,931
1,195
17,145
259
1,175
24
359
306
55,532
385,520
221,288
486,402
578,094
53
3
Am o rtiza tio n
Annua l
Effe c tive No m ina l
ra te
%
ra te
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
417,929
8,649
478
4,736
161
387
10
93
129
8,370
13,993
905
320
1,716
-
-
1,002,564
21,381
531
5,789
37
592
-
245
83
8,508
877,353
19,815
-
1,373
2
122
-
10
16
43,104
-
-
-
-
-
-
-
-
-
-
-
-
To ta l
1,809,504
457,876
1,039,730
941,795
1,377,180
5,626,085
4,843,517
To ta l c o ns o lida te d
2,287,910
1,635,412
3,517,382
2,918,927
3,797,690
14,157,321
12,054,695
Financial statements
211
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43
The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives
contracts with different financial institutions.
At the end of 2019, the Company had delivered US$ 2.37 million in guarantees for derivative
margins, corresponding to cash and standby letters of credit. As of December 31, 2020, the
Company maintains guarantees for US $ 0.6 million corresponding to derivative transactions. The
decrease was due to: i) the expiration of hedge contracts, ii) acquisition of new hedge contracts, and
iii) changes in fuel prices, changes in exchange rates and interest rates.
3.2.
Capital risk management
The objectives of the Company, in relation to capital management are: (i) to meet the minimum
equity requirements and (ii) to maintain an optimal capital structure.
The Company monitors contractual obligations and regulatory requirements in the different
countries where the group's companies are domiciled to ensure faithful compliance with the
minimum equity requirement, the most restrictive limit of which is to maintain positive liquid
equity.
Additionally, the Company periodically monitors the short and long term cash flow projections to
ensure that it has sufficient cash generation alternatives to meet future investment and financing
commitments.
The international credit rating of the Company is the result of the ability to meet long-term financial
commitments. As of December 31, 2020, and as a consequence of the expected decline in demand
due to the COVID-19 pandemic and the Company's filing for voluntary protection under the U.S.
Chapter 11 reorganization statute, Standard & Poor’s, Moody’s y Fitch Ratings withdrew their
credit ratings for LATAM
3.3. Estimates of fair value.
At December 31, 2020, the Company maintained financial instruments that should be recorded at
fair value. These are grouped into two categories:
1.
Hedge Instruments:
This category includes the following instruments:
-
-
Interest rate derivative contracts,
Fuel derivative contracts,
- Currency derivative contracts.
2.
Financial Investments:
This category includes the following instruments:
-
-
Investments in short-term Mutual Funds (cash equivalent)
Private investment funds.
The Company has classified the fair value measurement using a hierarchy that reflects the level of
information used in the assessment. This hierarchy consists of 3 levels (I) fair value based on
Financial statements
212
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44
quoted prices in active markets for identical assets or liabilities, (II) fair value calculated through
valuation methods based on inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived
from prices) and (III) fair value based on inputs for the asset or liability that are not based on
observable market data.
The fair value of financial instruments traded in active markets, such as investments acquired for
trading, is based on quoted market prices at the close of the period using the current price of the
buyer. The fair value of financial assets not traded in active markets (derivative contracts) is
determined using valuation techniques that maximize use of available market information.
Valuation techniques generally used by the Company are quoted market prices of similar
instruments and / or estimating the present value of future cash flows using forward price curves of
the market at period end.
The following table shows the classification of financial instruments at fair value, depending on the
level of information used in the assessment:
As of December 31, 2020
As of December 31, 2019
Fair value measurement s using values
considered as
Fair value measurement s using values
considered as
Fair value
Level I
T hUS$
Level II
T hUS$
Level III
T hUS$
Fair value Level I
T hUS$
T hUS$
Level II
T hUS$
Level III
T hUS$
T hUS$
Asset s
Cash and cash equivalent s
Short -t erm mut ual funds
Invest ment funds
Ot her financial asset s, current
Fair value int erest rat e derivat ives
Fair value of fuel derivat ives
Fair value of foreign currency derivat ive
Accrued int erest since t he last payment
dat e Swap of currencies
Privat e invest ment funds
Cert ificat e of Deposit (CBD)
Domest ic and foreign bonds
Liabilit ies
Ot her financial liabilit ies, current
Fair value of int erest rat e derivat ives
Fair value of foreign currency derivat ives
Int erest accrued since t he last payment
dat e of Currency Swap
Currency derivat ive not regist ered as hedge account ing
32,782
32,782
32,782
32,782
4,097
-
1,296
-
-
348
2,435
18
5,671
2,734
-
-
2,937
366
-
-
-
-
348
-
18
-
-
-
-
-
-
-
3,731
-
1,296
-
-
-
2,435
-
5,671
2,734
-
-
2,937
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
222,094
222,094
-
471,797
27,044
48,542
586
3
386,669
8,934
19
50,372
302
48,347
1,723
-
222,094
222,094
-
386,688
-
-
-
-
386,669
-
19
-
-
-
-
-
-
-
-
85,109
27,044
48,044
586
3
-
8,934
-
50,372
302
48,347
1,723
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial statements
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Additionally, at December 31, 2020, the Company has financial instruments which are not recorded
at fair value. In order to meet the disclosure requirements of fair values, the Company has valued
these instruments as shown in the table below:
Cash and cash equivalents
Cash on hand
Bank balance
Overnight
Time deposits
Other financial assets, current
Other financial assets
Trade debtors, other accounts receivable and
Current accounts receivable
Accounts receivable from entities
related, current
Other financial assets, not current
Accounts receivable, non-current
Other current financial liabilities
Accounts payable for trade and other accounts
payable, current
Accounts payable to entities
related, current
Other financial liabilities, not current
Accounts payable, not current
Accounts payable to related entities, non-current
As of December 31, 2020
As of December 31, 2019
Book
value
ThUS$
Fair
value
ThUS$
Book
value
ThUS$
Fair
value
ThUS$
1,663,059
4,277
732,578
802,220
123,984
46,153
46,153
1,663,059
4,277
732,578
802,220
123,894
46,153
46,153
850,486
4,982
329,633
350,080
165,791
27,707
27,707
850,486
4,982
329,633
350,080
165,791
27,707
27,707
599,180
599,180
1,244,348
1,244,348
158
33,140
4,986
158
33,140
4,986
19,645
46,907
4,725
19,645
46,907
4,725
3,050,059
2,995,768
1,835,288
2,019,068
2,322,961
2,322,961
2,222,874
2,222,874
812
7,803,801
651,600
396,423
812
6,509,081
651,600
410,706
56
8,530,418
619,110
-
56
8,846,418
619,110
-
The book values of accounts receivable and payable are assumed to approximate their fair values,
due to their short-term nature. In the case of cash on hand, bank balances, overnight, time deposits
and accounts payable, non-current, fair value approximates their carrying values.
The fair value of other financial liabilities is estimated by discounting the future contractual cash
flows at the current market interest rate for similar financial instruments (Level II). In the case of
Other financial assets, the valuation was performed according to market prices at period end. The
book value of Other financial liabilities, current or non-current, do not include lease liabilities.
NOTE 4 - ACCOUNTING ESTIMATES AND JUDGMENTS
The Company has used estimates to value and record some of the assets, liabilities, income,
expenses and commitments. Basically, these estimates refer to:
(a) Evaluation of possible losses due to impairment of goodwill and intangible assets with
indefinite useful life
Management conducts an impairment test annually or more frequently if events or changes in
circumstances indicate potential impairment. An impairment loss is recognized for the amount by
which the carrying amount of the cash generating unit (CGU) exceeds its recoverable amount.
Management’s value-in-use calculations included significant judgments and assumptions relating to
revenue growth rates, exchange rate, discount rate, inflation rates, fuel price. The estimation of
these assumptions requires significant judgment by the management, as these variables feature
inherent uncertainty; however, the assumptions used are consistent with Company’s forecasts
approved by management. Therefore, management evaluates and updates the estimates as
necessary, in light of conditions that affect these variables. The main assumptions used as well as
the corresponding sensitivity analyses are showed in Note 16.
(b) Useful life, residual value, and impairment of property, plant, and equipment
The depreciation of assets is calculated based on the linear model, except for certain technical
components depreciated on cycles and hours flown. These useful lives are reviewed on an annual
basis according with the Company’s future economic benefits associated with them.
Changes in circumstances such as: technological advances, business model, planned use of assets or
capital strategy may render the useful life different to the lifespan estimated. When it is determined
that the useful life of property, plant, and equipment must be reduced, as may occur in line with
changes in planned usage of assets, the difference between the net book value and estimated
recoverable value is depreciated, in accordance with the revised remaining useful life.
The residual values are estimated according to the market value that said assets will have at the end
of their life. The residual value and useful life of the assets are reviewed, and adjusted if necessary,
once a year. When the value of an asset is greater than its estimated recoverable amount, its value is
immediately reduced to its recoverable amount.
The Company has concluded that the Properties, Plant and Equipment cannot generate cash inflows
to a large extent independent of other assets, therefore the impairment assessment is made as an
integral part of the only Cash Generating Unit maintained by the Company, Air Transport. The
Company checks when there are signs of impairment, whether the assets have suffered any
impairment losses at the Cash Generated Unit level.
(c) Recoverability of deferred tax assets
Management records deferred taxes on the temporary differences that arise between the tax bases of
assets and liabilities and their amounts in the financial statements. Deferred tax assets on tax losses
are recognized to the extent that it is probable that future tax benefits will be available to offset
temporary differences.
The Company applies significant judgment in evaluating the recoverability of deferred tax assets.
In determining the amounts of the deferred tax asset to be accounted for, management considers
historical profitability, projected future taxable income (considering assumptions such as: growth
rate, exchange rate, discount rate, fuel price online with those used in the impairment analysis of
the group's cash-generating unit) and the expected timing of reversals of existing temporary
differences.
Financial statements
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(d) Air tickets sold that will not be finally used.
The Company records the sale of air tickets as deferred income. Ordinary income from the sale of
tickets is recognized in the income statement when the passenger transport service is provided or
expired for non-use. The Company evaluates monthly the probability of expiration of air tickets,
with return clauses, based on the history of use of air tickets. A change in this probability could
generate an impact on revenue in the year in which the change occurs and in future years.
In effect and due to the worldwide contingency of the COVID 19 pandemic, the company has
established new commercial policies with clients regarding the validity of air tickets, making it
easier to use in flight, reissue and return.
Under this new scenario, in the year 2020 no income for expiration ticket’s revenue were recorded,
which in a normal scenario would have amounted to approximately ThUS $ 70,000.
As of December 31, 2020, deferred income associated with air tickets sold amounted to
ThUS $ 904,558 (ThUS $ 1,511,179 as of December 31, 2019).
(e) Valuation of miles and points awarded to holders of loyalty programs, pending use.
As of December 31, 2020, the deferred income associated with the LATAM Pass loyalty program
amounts to ThUS $ 1,365,534 (ThUS $ 1,332,173 as of December 31, 2019). A hypothetical
change of one percentage point in the probability of swaps would translate into an impact of ThUS
$ 24,425 in the results as of 2020 (ThUS $ 30,506 in the results as of 2019). The deferred income
associated with the LATAM Pass Brasil loyalty program (See Note 22) amounts to ThUS $
187,493 as of December 31, 2020 (ThUS $ 354,847 as of December 31, 2019). A hypothetical
change of two percentage points in exchange probability would translate into an impact of ThUS $
2,950 in the results as of 2020 (ThUS $ 3,150 in the results as of 2019).
Management used statistical models to estimate the miles and point awarded that will not be
redeemed, by the programs members (breakage) which involved significant judgments and
assumptions relating the historical redemption and expiration activity and forecasted redemption
and expiration patterns.
For the LATAM Pass Brasil loyalty program, expiration occurs after a fixed period of time from
accumulation, the model is built by the administration considering historical expiration rates,
exchange behaviors and relevant segmentations.
For LATAM Pass there are rules that allow members to renew their miles, so the management in
conjunction with an external specialist develop a predictive model of non-use miles, which allows
to generate non-use rates on the basis of historical information, based on behavior of the
accumulation, use and expiration of the miles.
(f) Provisions needs, and their valuation when required
In the case of known contingencies, the Company records a provision when it has a present
obligation, whether legal or implicit, as a result of past events, it is likely that an outflow of
resources will be necessary to settle the obligation and the amount is has reliably estimated. Based
on available information, the Company uses the knowledge, experience and professional judgment,
to the specific characteristics of the known risks. This process facilitates the early assessment and
quantification of potential risks in individual cases or in the development of contingent matters.
Company recognized as the present obligation under an onerous contract as a provision when a
contract under which the unavoidable costs of meeting the obligations under the contract exceed the
economic benefits expected to be received under it.
(g) Leases
(i) Discount rate
The discount rate used to calculate the lease debt corresponds, for each aircraft, to the implicit
interest rate calculated by the contractual elements and residual market values. The implicit rate of
the contract is the discount rate that gives the aggregate present value of the minimum lease
payments and the unguaranteed residual value.
For assets other than aircraft, the estimated lessee's incremental loan rate was used, which is
derived from the information available on the lease commencement date, to determine the present
value of the lease payments. We consider our recent debt issues, as well as publicly available data
for instruments with similar characteristics when calculating our incremental borrowing rates.
A decrease of one percentage point in our estimate of the rates used as of January 1, 2019 (the date
of adoption of the standard) would increase the lease liability by approximately ThUS $ 105
million.
(ii) Lease term
In determining the term of the lease, all the facts and circumstances that create an economic
incentive to exercise an extension option are considered. Extension options (or periods after
termination options) are only included in the term of the lease if you are reasonably certain that the
lease will be extended (or not terminated). This is reviewed if a significant event or significant
change in circumstances occurs that affects this assessment and is within the control of the lessee.
(h)
Investment in subsidiary (TAM)
The management has applied its judgment in determining that LATAM Airlines Group S.A.
controls TAM S.A. and Subsidiaries, for accounting purposes, and has therefore consolidated the
financial statements.
The grounds for this decision are that LATAM issued ordinary shares in exchange for the majority
of circulating ordinary and preferential shares in TAM, except for those TAM shareholders who did
not accept the exchange, which were subject to a squeeze out, entitling LATAM to substantially all
economic benefits generated by the LATAM Group, and thus exposing it to substantially all risks
relating to the operations of TAM. This exchange aligns the economic interests of LATAM and all
of its shareholders, including the controlling shareholders of TAM, thus ensuring that the
shareholders and directors of TAM shall have no incentive to exercise their rights in a manner that
would be beneficial to TAM but detrimental to LATAM. Furthermore, all significant actions
necessary of the operation of the airlines require votes in favor by the controlling shareholders of
both LATAM and TAM.
Since the integration of LAN and TAM operations, the most critical airline operations in Brazil
have been managed by the CEO of TAM while global activities have been managed by the CEO of
Financial statements
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LATAM, who is in charge of the operation of the LATAM Group as a whole and reports to the
LATAM Board.
NOTE 6 - CASH AND CASH EQUIVALENTS
The CEO of LATAM also evaluates the performance of LATAM Group executives and, together
with the LATAM Board, determines compensation. Although Brazilian law currently imposes
restrictions on the percentages of voting rights that may be held by foreign investors, LATAM
believes that the economic basis of these agreements meets the requirements of accounting
standards in force, and that the consolidation of the operations of LAN and LATAM is appropriate.
These estimates were made based on the best information available relating to the matters analyzed.
In any case, it is possible that events that may take place in the future could lead to their
modification in future reporting periods, which would be made in a prospective manner.
NOTE 5 - SEGMENTAL INFORMATION
As of December 31, 2020, the Company considers that it has a single operating segment, Air
Transport. This segment corresponds to the route network for air transport and is based on the way
in which the business is managed, according to the centralized nature of its operations, the ability to
open and close routes, as well as reassignment (airplanes, crew, personnel, etc.) within the network,
which implies a functional interrelation between all of them, making them inseparable. This
segment definition is one of the most common in the worldwide airline industry.
The Company’s revenues by geographic area are as follows:
Peru
Argentina
U.S.A.
Europe
Colombia
Brazil
Ecuador
Chile
Asia Pacific and rest of Latin America
For the year ended
At December 31,
2020
ThUS$
297,549
172,229
505,145
338,565
177,007
1,304,006
112,581
638,225
378,360
2019
ThUS$
801,965
584,959
1,004,238
726,165
380,449
3,949,797
203,334
1,546,960
872,196
Income from ordinary activities
3,923,667
10,070,063
Other operating income
411,002
360,864
The Company allocates revenues by geographic area based on the point of sale of the passenger
ticket or cargo. Assets are composed primarily of aircraft and aeronautical equipment, which are
used throughout the different countries, so it is not possible to assign a geographic area.
The Company has no customers that individually represent more than 10% of sales.
Cash on hand
Bank balances
Overnight
T otal Cash
Cash equivalents
T ime deposits
Mutual funds
T otal cash equivalents
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
4,277
732,578
802,220
1,539,075
123,984
32,782
156,766
4,982
329,632
350,080
684,694
165,791
222,094
387,885
T otal cash and cash equivalents
1,695,841
1,072,579
Balance include Cash and Cash equivalent from the Group’s Companies that file for Chapter 11.
Due to a motion approved by the US bankruptcy court these balance can only be used on normal
course of business activities and invested on specific banks also approved on the motion.
Cash and cash equivalents are denominated in the following currencies:
Currency
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
US Dollar
Other currencies
T otal
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
20,107
136,938
32,649
17,185
10,361
1,438,846
39,755
16,579
197,354
50,521
48,191
21,927
667,785
70,222
1,695,841
1,072,579
Financial statements
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NOTE 7 - FINANCIAL INSTRUMENTS
Financial instruments by category
As of December 31, 2020
Assets
Cash and cash equivalents
Other financial assets, current (*)
Trade and others accounts receivable, current
Accounts receivable from related entities, current
Other financial assets, non current
Accounts receivable, non current
Total
Liabilities
M easured at At fair value
with changes
in results
amortized
cost
Hedge
derivatives
ThUS$
1,663,059
48,605
599,381
158
33,140
4,986
2,349,329
ThUS$
ThUS$
32,782
348
-
-
-
-
-
33,130
-
1,297
-
-
-
-
-
1,297
M easured at
amortized
cost
ThUS$
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
Other financial liabilities, current
Trade and others accounts payable, current
Accounts payable to related entities, current
Other financial liabilities, non-current
Accounts payable, non-current
Accounts payable to related entities, non-current
Total
3,050,059
2,322,125
812
7,803,801
651,600
396,423
14,224,820
2,937
-
-
-
-
-
2,937
2,734
-
-
-
-
-
2,734
Total
ThUS$
1,695,841
50,250
599,381
158
33,140
4,986
-
2,383,756
Total
ThUS$
3,055,730
2,322,125
812
7,803,801
651,600
396,423
14,230,491
(*) The value presented as fair value with changes in the result, corresponds mainly to private
investment funds; and as measured at amortized cost correspond to guarantees delivered.
As of December 31, 2019
Assets
Cash and cash equivalents
Other financial assets, current (*)
Trade and others accounts receivable, current
Accounts receivable from related entities, current
Other financial assets, non current
Accounts receivable, non current
Total
Liabilities
Other financial liabilities, current
Trade and others accounts payable, current
accounts payables, current
Accounts payable to related entities, current
Other financial liabilities, non current
Accounts payable, non-current
Total
M easured at
amortized
cost
ThUS$
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
850,485
36,660
1,244,348
19,645
46,907
4,725
2,202,770
222,094
386,669
-
-
-
-
608,763
-
76,175
-
-
-
-
76,175
Total
ThUS$
1,072,579
499,504
1,244,348
19,645
46,907
4,725
2,887,708
M easured at
amortized
cost
ThUS$
Hedge
derivatives
ThUS$
Total
ThUS$
1,835,288
50,372
1,885,660
2,222,874
56
8,530,396
619,110
13,207,724
-
-
22
-
50,394
2,222,874
56
8,530,418
619,110
13,258,118
(*) The value presented as initial designation as fair value through profit and loss, corresponds
mainly to private investment funds; and as measured at amortized cost they correspond to the
guarantees granted
NOTE 8 - TRADE AND OTHER ACCOUNTS RECEIVABLE CURRENT, AND NON-
CURRENT ACCOUNTS RECEIVABLE
Trade accounts receivable
Other accounts receivable
Total trade and other accounts receivable
Less: Expected credit loss
Total net trade and accounts receivable
Less: non-current portion – accounts receivable
Trade and other accounts receivable, current
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
532,106
194,454
726,560
(122,193)
604,367
(4,986)
599,381
1,073,599
275,876
1,349,475
(100,402)
1,249,073
(4,725)
1,244,348
Financial statements
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The fair value of trade and other accounts receivable does not differ significantly from the book
value.
To determine the expected credit losses, the Company groups accounts receivable for passenger and
cargo transportation; depending on the characteristics of shared credit risk and maturity.
Expected
loss rate (1)
As of December 31, 2020
Gross book
value (2)
Impairment loss
Provision
Expected
loss rate (1)
As December 31, 2019
Gross book
value (2)
Impairment loss
Provision
Periods
Portfolio maturity
Up to date
From 1 to 90 days
From 91 to 180 days
From 181 to 360 days
more of 360 days
Total
%
4%
4%
66%
80%
92%
23%
ThUS$
302,079
103,615
15,989
40,621
69,802
532,106
ThUS$
(11,112)
(4,049)
(10,501)
(32,627)
(63,904)
(122,193)
%
2%
8%
28%
39%
74%
9%
ThUS$
875,889
56,537
16,922
47,865
76,386
ThUS$
(16,433)
(4,253)
(4,747)
(18,459)
(56,510)
1,073,599
(100,402)
(1) Corresponds to the consolidated expected rate of accounts receivable.
(2) The gross book value represents the maximum credit risk value of trade accounts receivables.
Currency balances composition of the Trade and other accounts receivable and non-current
accounts receivable are as follow:
Currency
Argentine Peso
Brazilian Real
Chilean Peso
Colombian Peso
Euro
US Dollar
Korean Won
Mexican Peso
Australian Dollar
Pound Sterling
South African Rand
Uruguayan Peso (New)
Thai Bht
Swiss Franc
Russian Ruble
Japanese Yen
Swedish crown
New Zealand Dollar
Costa Rican Colon
Other Currencies
Total
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
6,517
221,952
44,737
1,292
24,370
292,125
79
4,624
49
5,647
-
792
-
754
-
77
129
-
-
1,223
604,367
47,079
537,224
131,543
2,288
32,711
436,774
8,172
6,093
20,964
7,428
2,982
1,375
1,559
535
896
1,222
2,012
1,148
1,390
5,678
1,249,073
The movements of the provision for impairment losses of the Trade Debtors and other accounts
receivable are as follows:
Opening
balance
T hUS$
Adoption
adjustment
IFRS 9 (*)
T hUS$
Write-offs
T hUS$
(Increase)
Decrease
T hUS$
(14,980)
(52,545)
Closing
balance
T hUS$
(100,402)
(122,193)
From January 1 to December 31, 2019
From January 1 to December 31, 2020
(97,991)
(100,402)
-
-
12,569
30,754
Once pre-judicial and judicial collection efforts are exhausted, the assets are written off against the
allowance. The Company only uses the allowance method rather than direct write-off, to ensure
control.
The historical and current renegotiations are not very relevant, and the policy is to analyze case by
case to classify them according to the existence of risk, determining if their reclassification
corresponds to pre-judicial collection accounts.
The maximum credit-risk exposure at the date of presentation of the information is the fair value of
each one of the categories of accounts receivable indicated above.
As of December 31, 2020
As of December 31, 2019
Gross exposure
according to
balance
T hUS$
Gross
impaired
exposure
T hUS$
Exposure net
of risk
concentrations
Gross exposure
according to
balance
T hUS$
T hUS$
Gross
Impaired
exposure
T hUS$
Exposure net
of risk
concentrations
T hUS$
532,106
(122,193)
409,913
1,073,599
(100,402)
973,197
194,454
-
194,454
275,876
-
275,876
T rade accounts receivable
Other accounts
receivable
There are no relevant guarantees covering credit risk and these are valued when they are settled; no
materially significant direct guarantees exist. Existing guarantees, if appropriate, are made through
IATA.
Financial statements
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NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES
(a) Accounts Receivable
Tax No.
Related party
Relationship
of origin
Currency
Country
As of
December 31,
As of
December 31,
2020
ThUS$
2019
ThUS$
Foreign
Foreign
Qatar Airways
TAM Aviação Executiva e
Taxi Aéreo S.A.
Foreign
Delta Air Lines Inc.
87.752.000-5
96.782.530-1
76.335.600-0
96.989.370-3
96.810.370-9
Granja Marina Tornagaleones S.A.
Inmobiliaria e Inversiones Asturias S.A.
Parque de Chile S.A.
Rio Dulce S.A.
Inversiones Costa Verde
Ltda. y CPA.
Total current assets
Indirect shareholder
Qatar
US$
148
19,400
Common shareholder
Shareholder
Common shareholder
Related director
Related director
Related director
Related director
Brazil
U.S.A.
Chile
Chile
Chile
Chile
Chile
BRL
US$
CLP
CLP
CLP
CLP
CLP
1
-
6
-
2
1
-
-
205
36
1
2
-
1
158
19,645
*
(b)
Current and non current accounts payable
Tax No.
Related party
Relationship
Country
of origin
Currency
78.591.370-1
Foreign
Foreign
96.810.370-9
Foreign
Foreign
Foreign
Bethia S.A. and Subsidiaries
Delta Airlines, Inc.
Patagonia Seafarms INC
Inversiones Costa Verde
Ltda. y CPA. (*)
QA Investments Ltd (*)
QA Investments 2 Ltd (*)
Lozuy S.A. (*)
Related director
Shareholder
Related director
Chile
U.S.A.
U.S.A.
Related director
Common shareholder
Common shareholder
Common shareholder
Chile
Jersey Channel Islands
Jersey Channel Islands
Uruguay
CLP
US$
US$
CLP
US$
US$
US$
Total current and non current liabilities
(*)The balance correspond to DIP loan which is explained on Note 3.1 c).
Current liabilities
As of
December 31,
2020
As of
December 31,
2019
Non current liabilities
As of
As of
December 31,
December 31,
2019
2020
ThUS$
ThUS$
ThUS$
ThUS$
-
805
7
-
-
-
-
812
53
-
3
-
-
-
-
56
-
-
-
105,713
132,141
132,141
26,428
396,423
-
-
-
-
-
-
-
-
Transactions between related parties have been carried out on arm´s lenght conditions between
interested and duly-informed parties. The transaction times for Current and Non-Current Liabilities,
they correspond to between 30 to 45 days and 1 to 2 years respectively, and the nature of settlement
of the transactions is monetary.
NOTE 10 - INVENTORIES
The composition of Inventories is as follows:
Technical stock
Non-technical stock
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS$
284,409
39,165
323,574
ThUS$
315,286
38,946
354,232
The items included in this item correspond to spare parts and materials which will be used, mainly,
in consumptions of on-board services and in own and third-party maintenance services; These are
valued at their average acquisition cost net of their obsolescence provision according to the
following detail:
Provision for obsolescence Technical stock
Provision for obsolescence Non-technical stock
Total
As of
December 31,
2020
ThUS$
42,979
4,651
47,630
As of
December 31,
2019
ThUS$
21,193
11,610
32,803
The resulting amounts do not exceed the respective net realization values.
As of December 31, 2020, the Company registered ThUS$ 55,507 (ThUS$ 133,286 as of December
31, 2019) in results, mainly related to on-board consumption and maintenance, which is part of the
Cost of sales.
Financial statements
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NOTE 11 - OTHER FINANCIAL ASSETS
(a)
The composition of other financial assets is as follows:
NOTE 12 - OTHER NON-FINANCIAL ASSETS
The composition of other non-financial assets is as follows:
Current Assets
As of
December 31,
2020
As of
December 31,
2019
Non-current assets
As of
December 31,
2020
As of
December 31,
2019
Total Assets
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
348
2,435
3,047
-
18
43,106
48,954
-
-
-
1,296
1,296
386,669
8,934
21,200
-
19
6,507
423,329
3
27,044
586
48,542
76,175
-
21,498
-
493
-
11,149
33,140
-
-
-
-
-
-
28,599
-
494
-
15,138
44,231
-
2,676
-
-
2,676
348
23,933
3,047
493
18
54,255
82,094
-
-
-
1,296
1,296
386,669
37,533
21,200
494
19
21,645
467,560
3
29,720
586
48,542
78,851
(a) Other financial assets
Private investment funds
Deposits in guarantee (aircraft)
Guarantees for margins of derivatives
Other investments
Domestic and foreign bonds
Other guarantees given
Subtotal of other financial assets
(b) Hedging derivate asset
Accrued Interest since the last payment date
Cross currency swap of currencies
Fair value of interest rate derivatives
Fair value of foreign currency derivatives
Fair value of fuel price derivatives
Subtotal of derivate assets
Total Other Financial Assets
50,250
499,504
33,140
46,907
83,390
546,411
The different derivative hedging contracts maintained by the Company at the end of each fiscal year
are described in Note 19.
(b) The balances composition by currencies of the Other financial assets are as follows:
Type of currency
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S.A dollar
Other currencies
Total
As of
December 31,
2020
As of
December 31,
2019
ThUS $
ThUS $
460
8,475
4,056
500
3,236
63,922
2,741
83,390
94
417,477
26,073
522
1,525
97,988
2,732
546,411
Current assets
As of
December
2020
T hUS$
As of
December
2019
T hUS$
10,137
15,375
-
25,512
4,491
6,021
4,964
-
11,179
15,167
26,346
16,593
23,437
16,546
(a) Advance payments
Aircraft insurance and other
Others
Subtotal advance payments
(b) Contract assets (1)
GDS costs
Credit card commissions
T ravel agencies commissions
Subtotal advance payments
15,476
56,576
(c) Other assets
Non-current assets
As of
December
2020
T hUS$
2019
T hUS$
As of
December
T otal Assets
As of
December
2020
T hUS$
As of
December
2019
T hUS$
-
2,998
2,998
523
1,832
2,355
10,137
18,373
11,702
16,999
28,510
28,701
-
-
-
-
-
-
-
-
4,491
6,021
4,964
16,593
23,437
16,546
15,476
56,576
Aircraft maintenance reserve (2)
Sales tax
Other taxes
Contributions to the International Aeronautical
T elecommunications Society ("SIT A")
8,613
102,010
4,023
Judicial deposits
258
-
27,987
167,987
34,295
258
-
-
46,210
-
739
76,835
17,844
34,680
-
739
149,310
8,613
148,220
4,023
997
76,835
45,831
202,667
34,295
997
149,310
Subtotal other assets
114,904
230,527
123,784
202,573
238,688
433,100
T otal Other Non - Financial Assets
155,892
313,449
126,782
204,928
282,674
518,377
(1) Movement of Contracts assets:
Initial balance
Activation
Cummulative
translation
adjustment
Amortization
Final balance
T hUS$
T hUS$
T hUS$
T hUS$
T hUS$
48,957
166,300
(4,950)
(153,731)
56,576
56,576
146,778
(14,672)
(173,206)
15,476
From January 1 to
December 31, 2019
From January 1 to
December 31, 2020
(2) Aircraft maintenance reserves reflect prepayment deposits made by the group to lessors of
certain aircraft under operating lease agreements in order to ensure that funds are available to
support the scheduled heavy maintenance of the aircraft.
These deposits are calculated based on the operation, measured in cycles or flight hours, are paid
periodically, and it is contractually stipulated that they be returned to the Company each time major
maintenance is carried out. At the end of the lease, the unused maintenance reserves are returned to
the Company or used to compensate the lessor for any debt related to the maintenance conditions of
the aircraft.
Financial statements
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In some cases, (2 lease agreements), if the maintenance cost incurred by LATAM is less than the
corresponding maintenance reserves, the lessor is entitled to retain those excess amounts at the time
the heavy maintenance is performed. The Company periodically reviews its maintenance reserves
for each of its leased aircraft to ensure that they will be recovered and recognizes an expense if any
such amounts are less than probable of being returned. The cost of aircraft maintenance in the last
years has been higher than the related maintenance reserves for all aircraft.
As of December 31, 2020, maintenance reserves amount to ThUS$ 8,613 (ThUS$ 45,831 as of
December 31, 2019), corresponding to 2 aircraft that maintain remaining balances, which will be
settled in the next maintenance or return.
Aircraft maintenance reserves are classified as current or non-current depending on the dates when
the related maintenance is expected to be performed (Note 2.23).
NOTE 13 - NON-CURRENT ASSETS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR
SALE
Non-current assets and disposal group classified as held for sale at December 31, 2020 and
December 31, 2019, are detailed below:
Current assets
Aircraft
Engines and rotables
Other assets
T otal
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
275,000
740
382
-
276,122
482,806
1,943
401
-
485,150
The balances are presented at the lower of book value and fair value less cost to sell. The fair value
of these assets was determined based on quoted prices in active markets for similar assets or
liabilities. This is a level II measurement as per the fair value hierarchy set out in Note 3.3 (2).
There were no transfers between levels for recurring fair value measurements during the year.
Assets reclassified from Property, plant and equipment to Non-current assets or groups of assets for
disposal classified as held for sale.
During 2019, four Airbus A350, aircraft two Boeing 767, were reclassified from Property, plants
and equipment to Non-current assets or groups of assets for disposal classified as held for sale.
Additionally, during the same year 2019, the sale of one motor spare Boeing 767 and one Boeing
767 aircraft were materialized. As a result of the above, during 2019, adjustments for US $ 2
million of expense were recognized to record these assets at their net realizable value.
During the year 2020, the sale of a Boeing 767 aircraft took place and therefore US $ 5.5 million
was recognized as profit from the transaction.
Additionally, during the year 2020, Delta Air Lines, Inc. canceled the purchase of four Airbus A350
aircraft, given this, LATAM was compensated with the payment of ThUS $ 62,000, which was
recorded in the income statement as other income. These four aircraft were reclassified to Property,
plant and equipment.
During 2020, eleven Boeing 767 aircraft were transferred from the Property, plant and equipment
item, to the Non-current assets item or groups of assets for disposal classified as held for sale.
Additionally, during the year 2020, adjustments for US $ 332 million of were recognized in income
statement to adjust the assets to its fair value less the cost of sales, which were recorded the income
statements as part of the expenses of restructuring activities.
The detail of the fleet classified as non-current assets and disposal group classified as held for sale
is as follows:
Aircraft
Boeing 767
Airbus A350
T otal
As of
December 31,
2020
11
As of
December 31,
2019
1
-
11
4
5
NOTE 14 - INVESTMENTS IN SUBSIDIARIES
(a)
Investments in subsidiaries
The Company has investments in companies recognized as investments in subsidiaries. All the
companies defined as subsidiaries have been consolidated within the financial statements of
LATAM Airlines Group S.A. and Subsidiaries. The consolidation also includes special-purpose
entities.
Detail of significant subsidiaries:
Na me o f s ig n ific a n t s u b s id ia ry
La ta m Airlin e s P e rú S .A.
La n Ca rg o S .A.
La n Arg e n tin a S .A.
Tra n s p o rte Aé re o S .A.
La ta m Airlin e s Ec u a d o r S .A.
Ae ro vía s d e In te g ra c ió n Re g io n a l, AIRES S .A.
TAM S .A.
Co u n try o f
Fu n c tio n a l
in c o rp o ra tio n
c u rre n c y
P e ru
Ch ile
Arg e n tin a
Ch ile
Ec u a d o r
Co lo mb ia
Bra zil
US $
US $
ARS
US $
US $
COP
BRL
Own e rs h ip
As o f
De c e mb e r 3 1,
As o f
De c e mb e r 3 1,
2 0 2 0
%
9 9 .8 10 0 0
9 9 .8 9 3 9 5
9 9 .9 8 3 7 0
10 0 .0 0 0 0 0
10 0 .0 0 0 0 0
9 9 .19 4 14
9 9 .9 9 9 3 8
2 0 19
%
7 0 .0 0 0 0 0
9 9 .8 9 3 9 5
9 9 .9 8 3 7 0
10 0 .0 0 0 0 0
10 0 .0 0 0 0 0
9 9 .19 4 14
9 9 .9 9 9 3 8
The consolidated subsidiaries do not have significant restrictions for transferring funds to the
controling entity in the normal course of operations, except for those imposed by Chapter 11 of the
United States Bankruptcy Law, on dividend payments prior to the application for protection.
Financial statements
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Summary financial information of significant subsidiaries
Statement of financial position as of December 31, 2020
Name of significant subsidiary
Latam Airlines Perú S.A.
Lan Cargo S.A.
Lan Argentina S.A.
T ransporte Aéreo S.A.
Latam Airlines Ecuador S.A.
Aerovías de Integración Regional, AIRES S.A.
T AM S.A. (*)
T otal
Assets
T hUS$
661,721
749,789
176,790
546,216
108,086
76,770
3,110,055
Current
Assets
T hUS$
629,910
472,869
171,613
264,690
104,534
73,446
1,492,792
Non-current
Assets
T otal
Liabilities
T hUS$
T hUS$
31,811
276,920
5,177
281,526
3,552
3,324
1,617,263
486,098
567,128
148,824
347,714
99,538
77,471
3,004,935
Current
Liabilities
T hUS$
484,450
516,985
146,555
278,319
87,437
68,433
2,206,089
Non-current
Liabilities
T hUS$
1,648
50,143
2,269
69,395
12,101
9,038
798,846
Name of significant subsidiary
Latam Airlines Perú S.A.
Lan Cargo S.A.
Lan Argentina S.A.
T ransporte Aéreo S.A.
Latam Airlines Ecuador S.A.
Aerovías de Integración Regional, AIRES S.A.
T AM S.A. (*)
Statement of financial position as of December 31, 2019
T otal
Assets
T hUS$
519,363
634,852
262,049
359,335
99,019
187,001
Current
Assets
T hUS$
481,592
334,725
255,641
101,128
95,187
135,344
Non-current
Assets
T otal
Liabilities
Current
Liabilities
Non-current
Liabilities
T hUS$
37,771
300,127
6,408
258,207
3,832
51,657
T hUS$
510,672
462,666
89,070
142,423
97,198
78,990
T hUS$
508,541
398,872
86,912
46,383
86,810
70,643
T hUS$
2,131
63,794
2,158
96,040
10,388
8,347
5,036,864
2,580,665
2,456,199
3,497,559
2,556,280
941,279
Income for the year
ended December 31, 2020
Revenue
T hUS$
372,255
207,854
49,101
142,096
51,205
90,668
1,808,314
Net
Income/(loss)
T hUS$
(96,066)
10,936
(220,667)
(39,032)
(22,655)
(89,707)
(1,025,618)
Income for the year
ended December 31, 2019
Revenue
T hUS$
1,186,668
274,774
218,989
315,105
229,797
291,235
5,013,293
Net
Income/(loss)
T hUS$
(1,739)
(4,157)
(133,408)
14,610
(3,411)
(3,099)
185,720
(*) Corresponds to consolidated information of TAM S.A. and subsidiaries
Financial statements
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(b)
Non-controlling interest
Eq u ity
Ta x No .
Co u n try
o f o rig in
As o f
De c e mb e r 3 1,
2 0 2 0
As o f
De c e mb e r 3 1,
2 0 19
As o f
De c e mb e r 3 1,
2 0 2 0
As o f
De c e mb e r 3 1,
2 0 19
%
%
Th US $
Th US $
La ta m Airlin e s P e rú S .A
La n Ca rg o S .A. a n d S u b s id ia rie s
In ve rs o ra Co rd ille ra S .A. a n d S u b s id ia rie s
La n Arg e n tin a S .A.
Ame ric o n s u lt d e Gu a te ma la S .A.
Ame ric o n s u lt S .A. a n d S u b s id ia rie s
Ame ric o n s u lt Co s ta Ric a S .A.
Lin e a Aé re a Ca rg u e ra d e Co lo mb ia n a S .A.
Ae ro lín e a s Re g io n a le s d e In te g ra c ió n Aire s S .A.
Tra n s p o rte s Ae re o s d e l Me rc o s u r S .A.
0 - E
9 3 .3 8 3 .0 0 0 - 4
0 - E
0 - E
0 - E
0 - E
0 - E
0 - E
0 - E
0 - E
P e ru
Ch ile
Arg e n tin a
Arg e n tin a
Gu a te ma la
Me xic o
Co s ta Ric a
Co lo mb ia
Co lo mb ia
P a ra g u a y
0 .19 0 0 0
0 .10 19 6
0 .0 16 3 0
0 .0 0 3 4 4
0 .8 7 0 0 0
0 .2 0 0 0 0
0 .2 0 0 0 0
9 .5 4 0 0 0
0 .7 9 8 8 0
5 .0 2 0 0 0
3 0 .0 0 0 0 0
0 .10 19 6
0 .0 16 3 0
0 .0 0 3 4 4
0 .8 7 0 0 0
0 .2 0 0 0 0
0 .2 0 0 0 0
10 .0 0 0 0 0
0 .7 9 8 8 0
5 .0 2 0 0 0
To ta l
In c o me s
La ta m Airlin e s P e rú S .A
La n Ca rg o S .A. a n d S u b s id ia rie s
In ve rs o ra Co rd ille ra S .A. a n d S u b s id ia rie s
La n Arg e n tin a S .A.
Ame ric o n s u lt S .A. a n d S u b s id ia rie s
Lin e a Aé re a Ca rg u e ra d e Co lo mb ia n a S .A.
Ae ro lín e a s Re g io n a le s d e In te g ra c ió n Aire s S .A.
Tra n s p o rte s Ae re o s d e l Me rc o s u r S .A.
Mu ltip lu s S .A.(*)
To ta l
(*) See Note 1 letter (b)
Ta x No .
Co u n try
o f o rig in
Fo r th e ye a r e n d e d
De c e mb e r 3 1,
2 0 2 0
%
De c e mb e r 3 1,
2 0 19
%
0 - E
9 3 .3 8 3 .0 0 0 - 4
0 - E
0 - E
0 - E
0 - E
0 - E
0 - E
0 - E
P e ru
Ch ile
Arg e n tin a
Arg e n tin a
Me xic o
Co lo mb ia
Co lo mb ia
P a ra g u a y
Bra zil
0 .19 0 0 0
0 .10 19 6
0 .0 16 3 0
0 .0 0 3 4 4
0 .2 0 0 0 0
9 .5 4 0 0 0
0 .7 9 8 8 0
5 .0 2 0 0 0
-
3 0 .0 0 0 0 0
0 .10 19 6
4 .2 2 0 0 0
0 .0 0 3 4 4
0 .2 0 0 0 0
10 .0 0 0 0 0
0 .7 9 8 8 0
5 .0 2 0 0 0
-
(7 ,2 3 8 )
6 6 6
(2 7 6 )
1
1
(6 )
2
(5 2 2 )
(13 )
7 13
(6 ,6 7 2 )
2 ,6 0 9
3 6 9
(6 ,2 7 6 )
5 0
1
(7 )
2
(7 5 5 )
8 9 9
1,5 0 3
(1,6 0 5 )
Fo r th e ye a r e n d e d
De c e mb e r 3 1,
2 0 2 0
Th US $
(8 ,10 2 )
(12 1)
3 6 0
7 0
1
(9 4 3 )
(7 2 4 )
(18 9 )
-
(9 ,6 4 8 )
2 0 19
Th US $
(1,0 6 5 )
19
3 5 9
4 8
(7 )
(2 9 3 )
(2 4 )
4 2 0
5 ,7 2 6
5 ,18 3
Financial statements
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NOTE 15 - INTANGIBLE ASSETS OTHER THAN GOODWILL
The details of intangible assets are as follows:
Cla s s e s o f in ta n g ib le a s s e ts
(n e t)
Cla s s e s o f in ta n g ib le a s s e ts
(g ro s s )
As o f
De c e mb e r 3 1,
2 0 2 0
Th US $
As o f
De c e mb e r 3 1,
2 0 19
Th US $
As o f
De c e mb e r 3 1,
2 0 2 0
Th US $
As o f
De c e mb e r 3 1,
2 0 19
Th US $
6 2 7 ,7 4 2
2 0 4 ,6 15
13 9 ,113
6 8 ,5 2 1
6 ,3 4 0
2 2 8
8 4 5 ,9 5 9
2 6 3 ,8 0 6
2 2 0 ,9 9 3
9 9 ,19 3
17 ,9 5 9
3 3 1
6 2 7 ,7 4 2
2 0 4 ,6 15
5 2 8 ,0 9 7
6 9 ,3 7 9
3 9 ,8 0 3
1,3 15
8 4 5 ,9 5 9
2 6 3 ,8 0 6
6 5 6 ,6 9 9
9 9 ,19 3
5 1,3 2 6
1,3 15
1,0 4 6 ,5 5 9
1,4 4 8 ,2 4 1
1,4 7 0 ,9 5 1
1,9 18 ,2 9 8
Airp o rt s lo ts
Lo ya lty p ro g ra m
Co mp u te r s o ftwa re
De ve lo p in g s o ftwa re
Tra d e ma rks (1)
Oth e r a s s e ts
To ta l
Movement in Intangible assets other than goodwill:
C o m pute r
s o ftwa re
a nd o the rs Ne t
De ve lo ping
s o ftwa re
Airpo rt
s lo ts (2)
Tra de m a rks
a nd lo ya lty
pro gra m (1) ( 2)
To ta l
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
Ope ning ba la nc e a s o f J a nua ry 1, 2019
Additio ns
Withdra wa ls
Tra ns fe r s o ftwa re
F o re ign e xc ha nge
Am o rtiza tio n
156,469
278
(270)
136,935
(1,981)
(70,107)
151,853
91,371
(1,123)
(140,102)
(2,806)
-
828,969
47,587
-
-
(30,597)
-
303,781
-
-
-
(11,612)
(10,404)
1,441,072
139,236
(1,393)
(3,167)
(46,996)
(80,511)
C lo s ing ba la nc e a s o f De c e m be r 31, 2019
221,324
99,193
845,959
281,765
1,448,241
Ope ning ba la nc e a s o f J a nua ry 1, 2020
Additio ns
Withdra wa ls
Tra ns fe r s o ftwa re
F o re ign e xc ha nge
Am o rtiza tio n
221,324
45
(333)
101,015
(20,242)
(162,468)
99,193
76,331
(454)
(99,890)
(6,659)
-
845,959
-
(36,896)
-
(181,321)
-
281,765
-
-
-
(63,478)
(7,332)
1,448,241
76,376
(37,683)
1,125
(271,700)
(169,800)
C lo s ing ba la nc e a s o f De c e m be r 31, 2020
139,341
68,521
627,742
210,955
1,046,559
(1) In 2016, the Company resolved to adopt a unique name and identity, and announced that the
group's brand will be LATAM, which united all the companies under a single image.
The estimate of the new useful life is 5 years, equivalent to the period necessary to complete the
change of image.
(2) See Note 2.5
(3) In 2020, a digital transformation was implemented (LATAM XP), as a result some projects
became obsolete and were fully amortized.
For further detail on impairment test see Note 16.
The amortization of each period is recognized in the consolidated income statement in the
administrative expenses. The cumulative amortization of computer programs, brands and other
assets as of December 31, 2020, amounts to ThUS $ 424,932 (ThUS $ 470,057 as of December 31,
2019).
NOTE 16 - GOODWILL AND INTANGIBLE ASSETS OF INDEFINITE USEFUL LIFE
During the year 2020, the Company, as a result of what is described below, has recognized an
impairment for the total Goodwill. As of December 31, 2019, its value was ThUS $ 2,209,576.
Movement of Goodwill, separated by CGU:
Opening balance as of January 1, 2019
Increase (decrease) due to exchange rate differences
T ransfer from Multiplus S.A. (see nota 1)
Closing balance as of December 31, 2019
Opening balance as of January 1, 2020
Increase (decrease) due to exchange rate differences
Impairment loss
Closing balance as of December 31, 2020
Coalition
and loyalty
program
Multiplus
T hUS$
448,936
(17,363)
(431,573)
-
-
-
-
-
Air
T ransport
T hUS$
1,845,136
(67,133)
431,573
2,209,576
2,209,576
(480,601)
(1,728,975)
-
T otal
T hUS$
2,294,072
(84,496)
-
2,209,576
2,209,576
(480,601)
(1,728,975)
-
As of December 31, 2020, the Company maintains only the CGU “Air Transport”, due to the
merger of Multiplus S.A. in TAM Linhas Aereas in the year 2019 (see Note 1), and changes in the
management structure.
The CGU “Air Transport” considers the transport of passengers and cargo, both in the domestic
markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil, as well as in a series of regional
and international routes in America, Europe, Africa and Oceania.
As of March 31, 2020 LATAM Airlines Group S.A. maintained a suspension of a large part of the
operation and as a result of the impacts mentioned in Note 2 associated with COVID 19,
impairment indicator were identified that led the Company to carry out an impairment test.
Impairment indicator identified were: Increase in uncertainty about pandemic (on the economic and
health situation, the lengths of the crisis, the extent of the closure of operations, among others),
increase in market interest rates, fall in share price and decrease in operations.
The recoverable amount of the CGU was determined based on calculations of the value in use.
These calculations use projections of 5 years cash flows after taxes from the financial budgets
approved by the Administration. Cash flows beyond the budgeted period are extrapolated using
growth rates and estimated average volumes, which do not exceed long-term average growth rates.
Management’s cash flow projections included significant judgements and assumptions related to
annual revenue growth rates, discount rate, inflation rates, the exchange rate and price of fuel. The
annual revenue growth rate is based on past performance and management’s expectations of market
development in each of the countries in which it operates. The discount rates used, for the CGU
"Air Transport", are in determined in US dollars, after taxes, and reflect specific risks related to the
relevant countries of each of the operations. Inflation rates and exchange rates are based on the data
Financial statements
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available from the countries and the information provided by the Central Banks of the various
countries where it operates, and the price of fuel is determined based on estimated levels of
production, the competitive environment of the market in which they operate and their commercial
strategy.
As of March 31, 2020 the recoverable values were determined using the following assumptions
presented below:
Annual growth rate (T erminal)
Exchange rate (1)
Discount rate based on the weighted average
cost of capital (WACC) (2)
Fuel Price from futures price curves
Air transportation
CGU
%
R$/US$
1.1
4.8 - 5.2
%
8.0 - 19.4
commodities markets
US$/barrel
52-75
(1) In line with the expectations of the Central Bank of Brazil
(2) As a result of the distortion generated by the current contingency in market rates, a
multi-period WACC was used for each of the years of the projection, starting at 19.4%
for the first year and reaching 8.0% from the T hird year onward.
WACC sensitivity
At using a single rate the possible impairment scenario will be as follow:
WACC
Excess
(Impairment)
Actual
MUS$
(1,716)
7.5%
MUS$
381
8.0%
MUS$
(564)
9.0%
MUS$
(2,095)
10.0%
MUS$
(3,280)
The estimated recoverable amount as of March 31, 2020 of ThUS $ 9,398 was compared to the net
book values of the cash-generating unit on the same date, resulting in an impairment loss of
MUS $ 1,729. The total amount was recognized in the consolidated statement of income under
Other gains (losses). There were no additional amounts of impairment that needed to be adjusted to
other non-financial assets.
As of December 31, 2020, in accordance with its accounting policy, the Company performed the
annual impairment test. Compared to the test carried out as of March 31, 2020, the only
methodological difference is that a single discount rate (WACC) was used again for all periods, and
the uncertainty that exists in the current market was incorporated into multiple probability-weighted
scenarios.
As of December 31, 2020, the recoverable values were determined using the following
assumptions:
Annual growth rate (terminal)
Exchange rate (1)
Discount rate based on weighted average cost
Air Transportation
CGU
%
R$/US$
0.6-1.6
5.4 – 5.6
of capital (WACC - Weighted Average Cost of Capital)
%
8.65-9.65
Fuel price from future price
curves of the commodity markets.
US$/barril
60 - 78
(1) In line with the expectations of the Central Bank of Brazil.
(2) The ranges incorporate the variables of the multiple
probability-weighted scenarios.
The result of the impairment test, which includes a sensitivity analysis of its principal assumptions,
conclude that the calculated value in use exceed the book value of the assets net of the cash-
generating unit, and therefore no impairment was detected.
The CGU is sensitive to annual growth, discount and exchange rates. The analysis of sensitivity
included the individual impact of variations in critical assumptions when determine the value in use,
as follow:
Increase
WACC
Maximum
%
9.65
Decrease rate
terminal growth
minimal
%
0.6
Air Transportation CGU
In none of the above scenarios an impairment of the cash-generating unit was identified.
Financial statements
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NOTE 17 - PROPERTY, PLANT AND EQUIPMENT
The composition by category of Property, plant and equipment is as follows:
Gross Book Value
Accumulated depreciation
Net Book Value
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
377,961
42,979
123,836
12,983,173
12,375,500
607,673
27,402
147,754
154,414
49,345
201,828
14,108,692
5,369,519
244,847
5,614,366
372,589
48,406
133,488
13,993,044
13,268,562
724,482
33,658
161,992
171,469
67,060
234,249
15,215,955
5,438,404
255,149
5,693,553
-
-
(58,629)
(5,292,429)
(5,088,297)
(204,132)
(23,986)
(132,923)
(105,215)
(44,140)
(127,420)
(5,784,742)
(3,031,477)
(176,570)
(3,208,047)
-
-
(58,626)
(4,630,001)
(4,421,211)
(208,790)
(28,441)
(141,216)
(111,635)
(60,327)
(135,789)
(5,166,035)
(2,669,864)
(153,991)
(2,823,855)
377,961
42,979
65,207
7,690,744
7,287,203
403,541
3,416
14,831
49,199
5,205
74,408
8,323,950
2,338,042
68,277
2,406,319
372,589
48,406
74,862
9,363,043
8,847,351
515,692
5,217
20,776
59,834
6,733
98,460
10,049,920
2,768,540
101,158
2,869,698
a) Property, plant and equipment
Construction in progress (1)
Land
Buildings
Plant and equipment
Own aircraft (3) (4)
Other (2)
M achinery
Information technology equipment
Fixed installations and accessories
M otor vehicles
Leasehold improvements
Subtotal Properties, plant and equipment
b) Right of use
Aircraft (3)
Other assets
Subtotal Right of use
Total
19,723,058
20,909,508
(8,992,789)
(7,989,890)
10,730,269
12,919,618
(1) As of December 31, 2020, includes advances paid to aircraft manufacturers for ThUS$ 360,387 (ThUS$ 348,148 as of December
31, 2019)
(2) Consider mainly rotables and tools.
(3) As of December 31, 2020, due to the process of Chapter 11, 29 aircraft lease contract were rejected, 19 were presented as to Property,
plant and equipment, (2 A350, 11 A321, 1 A320, 1 A320N and 4 B787) and 10 were presented as to right of use assets, (1 A319, 7 A320
and 2 B767).
(4) As of December 31, 2020, eleven B767 aircraft were classified as non-current assets or groups of assets for disposal as held for sale.
Financial statements
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(a) Movement in the different categories of Property, plant and equipment:
Ope ning ba la nc e a s o f J a nua ry 1, 2019
Additio ns
Dis po s a ls
R e tire m e nts
De pre c ia tio n e xpe ns e s
F o re ign e xc ha nge
Othe r inc re a s e s (de c re a s e s )
C ha nge s , to ta l
C lo s ing ba la nc e a s o f De c e m be r 31, 2019
Ope ning ba la nc e a s o f J a nua ry 1, 2020
Additio ns
Dis po s a ls
R e je c tio n fle e t (*)
R e tire m e nts
De pre c ia tio n e xpe ns e s
F o re ign e xc ha nge
Othe r inc re a s e s (de c re a s e s ) (**)
C ha nge s , to ta l
C o ns truc tio n
in pro gre s s
ThUS $
630,320
21,884
-
(20)
-
(1,340)
(278,255)
(257,731)
372,589
372,589
6,535
-
-
(39)
-
(2,601)
1,477
5,372
B uildings
ne t
P la nt a nd
e quipm e nt
ne t
Info rm a tio n
te c hno lo gy
e quipm e nt
ne t
F ixe d
ins ta lla tio ns
& a c c e s s o rie s
ne t
ThUS $
ThUS $
ThUS $
ThUS $
La nd
ThUS $
M o to r
ve hic le s
ne t
ThUS $
Le a s e ho ld
im pro ve m e nts
ne t
ThUS $
P ro pe rty,
P la nt a nd
e quipm e nt
ne t
ThUS $
45,424
7,950
(28)
-
-
(1,103)
(3,837)
2,982
48,406
48,406
-
-
-
-
-
(5,428)
1
(5,427)
112,565
8,987,582
-
(47)
-
(5,768)
(914)
(30,974)
(37,703)
74,862
1,694,640
(23,945)
(64,838)
(776,225)
(24,615)
(418,083)
386,934
9,374,516
74,862
9,374,516
-
-
-
-
(4,819)
(4,836)
-
485,800
(1,439)
(1,081,496)
(107,912)
(682,102)
(146,219)
(142,179)
22,564
6,580
(13)
(85)
(8,574)
(234)
538
(1,788)
20,776
20,776
1,295
(112)
-
(55)
(6,186)
(1,543)
656
(9,655)
(1,675,547)
(5,945)
71,009
26
(75)
(77)
(11,945)
(2,007)
2,903
(11,175)
59,834
59,834
9
(31)
-
(3,250)
(9,037)
(7,195)
8,869
(10,635)
49,199
634
73
(11)
-
(94)
(125)
-
(157)
477
477
-
(4)
-
(81)
4
-
(81)
396
-
83,267
34,988
-
(362)
(19,001)
(432)
-
15,193
98,460
98,460
-
-
(82)
(16,542)
(2,587)
(4,841)
(24,052)
74,408
9,953,365
1,766,141
(24,119)
(65,382)
(821,607)
(30,770)
(727,708)
96,555
10,049,920
10,049,920
493,639
(1,586)
(1,081,578)
(111,256)
(718,767)
(170,405)
(136,017)
(1,725,970)
8,323,950
C lo s ing ba la nc e a s o f De c e m be r 31, 2020
377,961
42,979
65,207
7,698,969
14,831
(*) Include aircraft lease rejection due to Chapter 11 process.
(**) Include the reclassification of 4 A350 aircraft that were incorporated on property plant and equipment from available for sale for
TH$464,812 and the reclassification of 11 B767 aircraft that were moved to available for sales for Th$606,522 (see note 13).
Financial statements
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(b) Right of use assets:
69
Aircraft
T hUS $
Others
T hUS $
Net right
of use
assets
T hUS $
Opening balances as of January 1, 2019
2,456,333
92,111
2,548,444
Additions
Depreciation expense
Cummulative translate adjustment
Other increases (decreases)
T otal changes
732,489
20,675
753,164
(377,911)
(22,473)
(400,384)
(2,046)
(40,325)
312,207
(2,515)
13,360
(4,561)
(26,965)
9,047
321,254
Final balances as of December 31, 2019
2,768,540
101,158
2,869,698
Opening balances as of January 1, 2020
2,768,540
101,158
2,869,698
Additions
Fleet rejection (*)
Write off
Depreciation expense
Cummulative translate adjustment
Other increases (decreases)
-
(9,090)
-
(395,936)
(6,578)
(18,894)
399
-
-
(22,492)
(11,173)
385
399
(9,090)
-
(418,428)
(17,751)
(18,509)
T otal changes
(430,498)
(32,881)
(463,379)
Final balances as of December 31, 2020
2,338,042
68,277
2,406,319
(*) Include aircraft lease rejection due to Chapter 11 process.
(c)
Composition of the fleet
Aircraft included
in Property,
plant and equipment
Aircraft included
as Rights
of use assets
T otal
fleet
Aircraft
Model
December 31, December 31,
December 31, December 31,
December 31, December 31,
As of
As of
As of
As of
As of
As of
2020
2019
2020
2019
2020
2019
Boeing 767
Boeing 767
Boeing 777
Boeing 787
Boeing 787
Airbus A319
Airbus A320
Airbus A320
Airbus A321
Airbus A350
T otal
300ER
300F
300ER
800
900
100
200
NEO
200
900
(1)
(2)
17
11
4
6
2
37
96
6
19
4
(1)
(2)
28
11
4
6
6
37
96
7
30
2
202
227
-
1
6
4
10
7
38
6
19
7
98
2
1
6
4
10
9
46
6
19
7
110
(1) One aircraft leased to Aerotransportes Mas de Carga S.A. de C.V.
(2) T wo aircraft leased to Sundair.
(1)
(2)
17
12
10
10
12
44
134
12
38
11
300
(1)
(2)
30
12
10
10
16
46
142
13
49
9
337
Financial statements
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(d)
Method used for the depreciation of Property, plant and equipment:
Method
Useful life (years)
minimum maximum
Buildings
Plant and equipment
Information technology
equipment
Fixed installations and accessories
Motor vehicle
Leasehold improvements
Assets for rights of use
Straight line without residual value
Straight line with residual value of 20% in the
short-haul fleet and 36% in the long-haul fleet. (*)
Straight line without residual value
Straight line without residual value
Straight line without residual value
Straight line without residual value
Straight line without residual value
20
5
5
10
10
5
1
50
30
10
10
10
8
25
(*) Except in the case of the Boeing 767 300ER and Boeing 767 300F fleets that consider a lower
residual value, due to the extension of their useful life to 22 and 30 years respectively. Additionally,
certain technical components are depreciated based on cycles and hours flown.
(e) Additional information regarding Property, plant and equipment:
(i) Property, plant and equipment pledged as guarantee:
Description of Property, plant and equipment pledged as guarantee:
Gua ra nte e
a ge nt (1)
C re dito r
c o m pa ny
C o m m itte d
As s e ts
F le e t
Wilm ingto n
M UF G
Airc ra ft a nd e ngine s
Trus t C o m pa ny
Wilm ingto n
Trus t C o m pa ny
Airc ra ft a nd e ngine s
C itiba nk N.A.
Airc ra ft a nd e ngine s
C re dit Agric o le
C re dit Agric o le
Airc ra ft a nd e ngine s
B a nk Of Uta h
B NP P a riba s
Airc ra ft a nd e ngine s
Airbus A319
Airbus A320
B o e ing 767
B o e ing 787
Airbus A321
B o e ing 787
Airbus A350
B o e ing 787
Airbus A319
Airbus A320
Airbus A321 / A350
B o e ing 767
B o e ing 787
Airbus A320 / A350
B o e ing 787
Airbus A320 / A350
Airbus A350
Na tixis
Inve s te c
S M B C
Na tixis
Airc ra ft a nd e ngine s
Airc ra ft a nd e ngine s
Airc ra ft a nd e ngine s
Airbus A321
C itiba nk N.A.
C itiba nk N.A.
Airc ra ft a nd e ngine s
Airbus A319
Airbus A320
Airbus A321
Airbus A350
Airbus B 767
Airbus B 787
R o ta ble s
UM B B a nk
M UF G
Airc ra ft a nd e ngine s
Airbus A320
M UF G B a nk
M UF G B a nk
Airc ra ft a nd e ngine s
Airbus A320
As o f
De c e m be r 31,
2020
As o f
De c e m be r 31,
2019
Exis ting
De bt
ThUS $
B o o k
Va lue
ThUS $
Exis ting
De bt
ThUS $
B o o k
Va lue
ThUS $
69,375
63,581
43,628
114,936
-
-
-
-
1,073
139,192
30,733
10,404
91,797
262,420
211,849
37,870
130,000
271,129
27,936
128,030
41,599
15,960
90,846
23,156
162,477
167,371
215,043
-
268,746
257,613
180,591
119,229
-
-
-
-
6,936
122,251
28,127
32,802
43,020
289,946
246,349
-
134,780
375,645
38,836
214,597
81,706
26,823
197,797
19,047
145,708
246,293
295,036
74,713
70,644
61,728
120,938
353,774
332,131
180,320
143,475
-
85,986
83,281
10,404
74,023
296,441
217,500
44,088
-
282,927
-
-
-
-
-
-
-
256,937
256,651
196,244
127,283
452,107
374,998
192,620
191,804
-
95,148
67,882
35,226
36,594
378,462
259,934
-
-
384,224
-
-
-
-
-
-
-
106,250
216,411
149,607
310,311
(2) As of December 31, 2020, four A350 aircraft were reincorporated to Property, plant and
equipment due to cancellation of the sale contract, wich were classified previously as Non-current
assets or groups of assets for disposal as held for sale.
The amounts of the current debt are presented at their nominal value. The net book value
corresponds to the assets granted as collateral.
Additionally, there are indirect guarantees associated with assets registered in properties, plants and
equipment whose total debt as of December 31, 2020, amounts to ThUS$ 1,642,779 (ThUS$
1,762,611 as of December 31, 2019). The book value of the assets with indirect guarantees as of
December 31, 2020, amounts to ThUS$ 3,496,397 (ThUS$ 3,866,237 as of December 31, 2019).
As of December 31, 2020, given the Chapter 11 process, nineteen aircraft corresponding to
Property, plant and equipment were rejected, of which eighteen had direct guarantees and one
indirect guarantee.
As of December 31, 2020, the Company keeps valid letters of credit related to assets by right of use
according to the following detail:
Creditor Guarantee
Debtor
T ype
Avolon Aerospace AOE 62 Limited
Bank of Utah
GE Capital Aviation Services Ltd.
ORIX Aviation Systems Limited
Wells Fargo Bank
BBAM
Merlin Aviation Leasing (Ireland) 18 Limited T am Linhas Aéreas S.A.
RB Comercial Properties 49
Empreendimentos Imobiliarios LT DA
Latam Airlines Group S.A.
Latam Airlines Group S.A.
Latam Airlines Group S.A.
Latam Airlines Group S.A.
Latam Airlines Group S.A.
Latam Airlines Group S.A.
T am Linhas Aéreas S.A.
Seven letters of credit
One letter of credit
T hree letters of credit
T hree letters of credit
Six letters of credit
T wo letters of credit
T wo letters of credit
One letter of credit
Value
T hUS$
Release
date
3,554
2,000
12,198
8,445
11,870
1,695
3,852
27,193
70,807
Feb 05, 2021
Mar 24, 2021
Jan 20, 2021
Nov 26, 2021
Feb 04, 2021
Jan 14, 2021
Mar 15, 2021
Apr 29, 2021
(ii)
Commitments and others
Fully depreciated assets and commitments for future purchases are as follows:
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
Gross book value of fully depreciated property,
206,497
261,792
plant and equipment still in use
Commitments for the acquisition of aircraft (*)
7,500,000
7,390,000
To ta l dire c t gua ra nte e
2,350,405
3,371,878
2,755,034
3,766,032
(1) For the syndicated loans, is the Guarantee Agent that, represent different creditors.
(*) According to the manufacturer’s price list.
Financial statements
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73
Purchase commitment of aircraft
Manufacturer
Airbus S.A.S.
A320-NEO Family
A350 Family
T he Boeing Company
Boeing 787-9
T otal
Year of delivery
2021-2026
T otal
44
42
2
6
6
50
44
42
2
6
6
50
As of December 31, 2020, as a result of the different aircraft purchase contracts signed with Airbus
SAS, 42 Airbus A320 family aircraft remain to be received with deliveries between 2020 and 2024
and 2 Airbus aircraft of the A350 family with delivery dates. by 2026. The approximate amount,
according to the manufacturer's list prices, is ThUS $ 5,700,000.
As of December 31, 2020, as a result of the different aircraft purchase contracts signed with The
Boeing Company, 6 Boeing 787 Dreamliner aircraft remain to be received with delivery dates
between 2021 and 2023. The approximate amount, according to list prices from the manufacturer, is
ThUS $ 1,800,000.
The delivery dates of some aircraft could be modified as a result of the continuous discussions held
with aircraft manufacturer in the context of the current situation of the company.
(iii)
Capitalized interest costs with respect to Property, plant and equipment.
For the year ended
December 31,
2020
2019
NOTE 18 - CURRENT AND DEFERRED TAXES
In the year ended December 31, 2020, the income tax provision was calculated for such period,
applying the partially semi-integrated taxation system and a rate of 27%, in accordance with the
Law No. 21,210, which modernizes the Tax Legislation, published in the Journal of the Republic of
Chile, dated February 24, 2020.
The net result for deferred tax corresponds to the variation of the year, of the assets and liabilities
for deferred taxes generated by temporary differences and tax losses.
For the permanent differences that give rise to a book value of assets and liabilities other than their
tax value, no deferred tax has been recorded since they are caused by transactions that are recorded
in the financial statements and that will have no effect on spending tax for income tax.
Average rate of capitalization of
capitalized interest costs
Costs of capitalized interest
%
ThUS$
3.52
11,627
4.72
1,444
Concept
(a)
Current taxes
(a.1) The composition of the current tax assets is the following:
Curre nt a s s e ts
Non- c urre nt a s s e ts
Tota l a s s e ts
As of
De c e mbe r 31,
2020
As of
De c e mbe r 31,
2019
As of
De c e mbe r 31,
2020
As of
De c e mbe r 31,
2019
As of
De c e mbe r 31,
2020
As of
De c e mbe r 31,
2019
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
P rovis iona l monthly
pa yme nts (a dva nc e s )
Othe r re c ove ra ble c re dits
Tota l a s s e ts by c urre nt ta x
36,788
5,532
42,320
10,968
18,353
29,321
-
-
-
-
-
-
36,788
5,532
42,320
10,968
18,353
29,321
(a.2) The composition of the current tax liabilities are as follows:
Curre nt lia bilitie s
As of
De c e mbe r 31,
2020
As of
De c e mbe r 31,
2019
Non- c urre nt lia bilitie s
As of
De c e mbe r 31,
2020
As of
De c e mbe r 31,
2019
Tota l lia bilitie s
As of
De c e mbe r 31,
2020
As of
De c e mbe r 31,
2019
Inc ome ta x provis ion
Tota l lia bilitie s by c urre nt ta x
ThUS $
656
656
ThUS $
11,925
11,925
ThUS $
-
-
ThUS $
-
-
ThUS $
656
656
ThUS $
11,925
11,925
(b) Deferred taxes
The balances of deferred tax are the following:
Assets
Liabilities
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
T hUS$
T hUS$
(1,314,456)
229,119
(65,139)
212,492
(18,133)
1,496,952
-
23,981
186,311
42,011
(903)
(139,346)
422
155,539
-
(8,451)
81,881
(136)
9
68,462
-
(60,785)
270,681
24,168
1,700,215
(91,470)
52,233
(182,913)
(9,857)
(1,200,729)
349,082
242
Properties, Plants and equipment
Assets by right of use
Amortization
Provisions
Revaluation of financial instruments
T ax losses
Intangibles
Other
T otal
564,816
235,583
384,280
616,803
The balance of deferred tax assets and liabilities are composed primarily of temporary differences to
be reversed in the long term.
Financial statements
230
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Movements of Deferred tax assets and liabilities
Deferred tax expense and current income taxes:
75
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
(3,602)
(199)
(3,801)
72,999
(352)
72,647
Current tax expense
Current tax expense
Adjustment to previous period’s current tax
Total current tax expense, net
Deferred tax expense
Deferred expense for taxes related to the
creation and reversal of temporary differences
(546,387)
(126,344)
Total deferred tax expense, net
Income/(loss) tax expense
(546,387)
(550,188)
(126,344)
(53,697)
Composition of income/(loss) tax expense:
Current tax expense, net, foreign
Current tax expense, net, Chile
Total current tax expense, net
Deferred tax expense, net, foreign
Deferred tax expense, net, Chile
Deferred tax expense, net, total
Income/(loss) tax expense
For the year ended
December 31,
2020
ThUS$
4,232
(8,033)
(3,801)
235,963
(782,350)
(546,387)
(550,188)
2019
ThUS$
76,806
(4,159)
72,647
37,294
(163,638)
(126,344)
(53,697)
(a)
From January 1 to December 31, 2019
Ope ning
R e c o gnize d in
R e c o gnize d in
Exc ha nge
ba la nc e
c o ns o lida te d
c o m pre he ns ive
ra te
Ending
ba la nc e
As s e ts /(lia bilitie s )
inc o m e
ThUS $
ThUS $
inc o m e
ThUS $
P ro pe rty, pla nt a nd e quipm e nt
As s e ts fo r right o f us e
Am o rtiza tio n
P ro vis io ns
R e va lua tio n o f fina nc ia l ins trum e nts
Ta x lo s s e s
Inta ngible s
Othe rs
(1,582,496)
85,752
(56,863)
37,328
(13)
1,369,150
(351,238)
(14,662)
67,237
47,729
3,345
13,881
10,142
(10,116)
(11,718)
5,844
To ta l
(513,042)
126,344
-
-
-
2,873
414
-
-
-
3,287
va ria tio n
As s e t (lia bility)
ThUS $
1,355
-
382
(10,515)
(264)
(2,766)
13,874
125
ThUS $
(1,513,904)
133,481
(53,136)
43,567
10,279
1,356,268
(349,082)
(8,693)
2,191
(381,220)
(b)
From January 1 to December 31, 2020
Ope ning
R e c o gnize d in
R e c o gnize d in
Exc ha nge
ba la nc e
c o ns o lida te d
c o m pre he ns ive
ra te
Ending
ba la nc e
As s e ts /(lia bilitie s )
inc o m e
ThUS $
ThUS $
inc o m e
ThUS $
va ria tio n
As s e t (lia bility)
ThUS $
ThUS $
(1,513,904)
133,481
(53,136)
43,567
10,279
1,356,268
(349,082)
(8,693)
110,010
95,774
(14,142)
158,178
(27,901)
216,897
1,030
6,541
-
-
-
924
959
-
-
-
7,557
-
2,130
(58,639)
(1,470)
(15,428)
77,371
1,965
(1,396,337)
229,255
(65,148)
144,030
(18,133)
1,557,737
(270,681)
(187)
P ro pe rty, pla nt a nd e quipm e nt
As s e ts fo r right o f us e
Am o rtiza tio n
P ro vis io ns
R e va lua tio n o f fina nc ia l ins trum e nts
Ta x lo s s e s
Inta ngible s
Othe rs
To ta l
(381,220)
546,387
1,883
13,486
180,536
Unrecognized deferred tax assets:
Deferred tax assets are recognized to the extent that it is probable that the corresponding tax benefit
will be realized in the future. Therefore, as of December 31, 2020, the Company has recognized
provision with an impact on income, for the deferred tax assets that it estimates will not be
recoverable in the foreseeable future for ThUS $ 237,637, in total the company has not recognized
deferred tax assets for ThUS$ 749,100 (ThUS$ 110,933 as of December 31, 2019) which include
deferred tax assets related to negative tax results of ThUS$ 1,433,474 (ThUS$ 338,679 at December
31, 2019).
Financial statements
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77
Income before tax from the Chilean legal tax rate (27% as of December 31, 2020 and
2019)
(a)
Interest bearing loans
For the year ended
December 31,
For the year ended
December 31,
Obligations with credit institutions and debt instruments:
Tax expense using the legal rate
Tax effect by change in tax rate
Tax effect of rates in other jurisdictions
Tax effect of non-taxable operating revenues
Tax effect of disallowable expenses
Other increases (decreases):
Derecognition of deferred tax liabilities for early termination of aircraft
financing
Tax effect for goodwill impairment losses
Derecognition of deferred tax assets not recoverable
Deferred tax asset not recognized
Other increases (decreases):
Total adjustments to tax expense using the legal rate
Tax expense using the effective rate
Deferred taxes related to items charged to equity:
2020
ThUS$
(1,378,547)
-
(58,268)
(19,529)
40,528
(294,969)
453,681
237,637
414,741
54,538
828,359
(550,188)
2019
ThUS$
38,318
-
20,082
(13,125)
66,257
(145,930)
-
-
-
(19,299)
(92,015)
(53,697)
2020
%
27.00
-
1.14
0.38
(0.79)
5.78
(8.89)
(4.65)
(8.12)
(1.07)
(16.22)
10.78
2019
%
27.00
-
14.15
(9.25)
46.69
(102.83)
-
-
-
(13.60)
(64.84)
(37.84)
Aggregate deferred taxation of components
of other comprehensive income
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
1,883
3,287
NOTE 19 - OTHER FINANCIAL LIABILITIES
The composition of other financial liabilities is as follows:
Current
(a) Interest bearing loans
(b) Lease Liability
(c) Hedge derivatives
(d) Derivative non classified as hedge accounting
T otal current
Non-current
(a) Interest bearing loans
(b) Lease Liability
(c) Hedge derivatives
T otal non-current
As of
December 31,
2020
T hUS$
As of
December 31,
2019
T hUS$
2,243,776
806,283
2,734
2,937
3,055,730
5,489,078
2,314,723
-
7,803,801
1,421,261
414,027
50,372
-
1,885,660
5,772,266
2,758,130
22
8,530,418
Current
Loans to exporters
Bank loans
Guaranteed obligations (7)(8)(10)
Other guaranteed obligations
Subtotal bank loans
Obligation with the public
Financial leases (7)(8)(10)
Other loans (4)
T otal current
Non-current
Bank loans
Guaranteed obligations (7)(8)(10)
Other guaranteed obligations (5)(9)
Subtotal bank loans
Obligation with the public (1)(2)(3)
Financial leases (7)(8)(10)
T otal non-current
T otal obligations with financial institutions
As of
December 31,
2020
T hUS$
As of
December 31,
2019
T hUS$
151,701
385,490
388,492
435,413
1,361,096
108,301
774,379
-
341,475
16,534
237,951
97,730
693,690
32,061
594,249
101,261
2,243,776
1,421,261
139,783
930,364
1,503,703
2,573,850
2,075,106
840,122
5,489,078
7,732,854
200,721
1,919,376
482,702
2,602,799
2,032,873
1,136,594
5,772,266
7,193,527
(1)
On February 11, 2019, LATAM Finance Limited, a company incorporated in the Cayman
Islands with limited liability and exclusively owned by LATAM Airlines Group S.A., has issued
on the international market, pursuant to Rule 144-A and Regulation S of the securities laws of the
United States of America, unsecured long-term bonds for a nominal amount of US $ 600,000,000
at an annual interest rate of 7.00%. The bonds were placed at an issue price of 99.309% with
respect to its even value. The bonds have semiannual interest payments and amortization of all
capital at maturity and maturity date on March 1, 2026, unless they will be redeemed early
according to their terms. As reported to the market, the issuance and placement was intended to
finance general corporate purposes.
(2)
On June 6, 2019, LATAM Airlines Group S.A. has issued in the local market (Santiago
Stock Exchange) long-term unsecured bonds called Series E (BLATM-E), which correspond to the
first series of bonds charged to the line registered in the Registro de Comisión para el Mercado
Financiero (“CMF”) under the number Nº 921 dated November 26, 2018 for a total of
UF 9,000,000.
The total amount issued was UF 5,000,000 with an expiration date on April 15, 2029 and a 3.60%
annual coupon rate with semiannual interest payments. The placement rate was 2.73%, equivalent
to an amount of ThUS$ 215,093.
The funds from the issuance were allocated 50% to the refinancing of liabilities, 30% for the
financing of investments and 20% for general corporate purposes.
Financial statements
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79
On July 11, 2019, LATAM Finance Limited, a company incorporated in the Cayman
(3)
Islands with limited liability and exclusive property of LATAM Airlines Group SA, issued a re-
opening of the LATAM 2026 bond, issued on February 11 of 2019, for US $ 200,000,000. This re-
opening had a placement rate of 5.979%.
Simultaneously, dated July 11, 2019, LATAM Airlines Group S.A. announced an offer for the
repurchase of up to US $ 300 million of the unsecured LATAM 2020 bond, which was issued on
June 9, 2015 for an amount of US $ 500 million at a coupon rate of 7.25% and due in June 2020.
Offer repurchase price was 103.8 cents per dollar of nominal amount for the bonds offered until
July 24, 2019, after this date and until August 7, 2019, the offered repurchase price was reduced to
100.8 cents for dollar at the expiration of the offer, a total of US $ 238,412,000 of the bonds were
redeemed, of which US $ 238,162,000 arrived on or before July 24, 2019 and US $ 250,000 after
that date. The net proceeds obtained from the re-opening of the LATAM 2026 bond was used to pay
a portion of the public offer of the LATAM 2020 bond. The remainder of the public offer was paid
in cash.
On December 17, 2019, LATAM Airlines Group S.A. The repurchase of the remainder
(US $ 262 million) of the unsecured bond LATAM2020 ended, which, added to the repurchase of
July 11, 2019, ends the entire balance of the bond. The repurchase was carried out through the buy-
back mechanism called “Make-Whole,” which is a right of the bond issuer to repurchase the entire
outstanding balance of debt based on a price that is calculated using government treasury bonds. of
the United States with maturity close to that of the bond and adding a spread. The repurchase price
was 102.45 cents per dollar of nominal bond amount.
(4)
On March 16, 2020, the obligations contained in the contract called "Indenture" signed
between Guanay Finance Limited (see Note 1), LATAM Airlines Group S.A. expired. and Citibank,
N.A. dated November 7, 2013. The bonds securitized with the future flows of credit card sales in
the United States and Canada were issued in 2013 for a total of US $ 450 million.
During March and April 2020, LATAM Airlines Group S.A. it drew down the entire (US $
(5)
600 million) of the committed credit line “Revolving Credit Facility (RCF)”. The financing expires
on March 29, 2022. The line is guaranteed with collateral consisting of airplanes, engines and spare
parts. The first withdrawal was on March 27, 2020 with an amount of US $ 504.7 million, the
second withdrawal was on April 7, 2020 for US $ 72 million, the third withdrawal was on April 14,
2020 for US $ 11.2 million and the fourth and last withdrawal was on April 21, 2020 of US $ 12.1
million.
(6)
On May 26, 2020, LATAM Airlines Group S.A. and its subsidiaries in Chile, Peru,
Colombia and Ecuador availed themselves, in court for the southern district of New York, to the
protection of Chapter 11 of the bankruptcy law of the United States. Under Section 362 of the
Bankruptcy Code. The same happened for TAM LINHAS AÉREAS S.A and certain subsidiaries
(all LATAM subsidiary in Brazil), on July 8, 2020. Having filed for Chapter 11 automatically
suspends most actions against LATAM and its subsidiaries, including most actions to collect
financial obligations incurred before the date of receipt of Chapter 11 or to exercise control over the
property of LATAM and its subsidiaries. Consequently, although the bankruptcy filing may have
led to breaches of some of the obligations of LATAM and its subsidiaries, the counterparties cannot
take any action as a result of said breaches.
At the end of the year, Chapter 11 retains most of the actions on the debtors so the repayment of the
debt is not accelerated. The Group continues to present its financial information as of December 31,
2020, including its interest bearing loan and leases, in accordance with the originally agreed
conditions, pending future agreements that it may reach with its creditors under Chapter 11.
On June 24, 2020, the United States Court for the Southern District of New York approved
(7)
the motion filed by the Company to reject certain aircraft lease contracts. Rejected contracts
include, 17 aircraft financed under the EETC structure with an amount of MUS $ 844.1 and an
aircraft financed with a financial lease with an amount of MUS $ 4.5.
On October 20, 2020, the United States Court for the Southern District of New York
(8)
approved the motion presented by the Company to reject an aircraft lease contract financed as
financial lease in the amount of MUS $ 34.3.
(9) On October 10, 2020, LATAM Airlines Group S.A. partially drew down (MUS $ 1,150) of
the committed credit line of the “DIP” financing. The financing expires on April 10, 2022. The line
is guaranteed with collateral consisting of routes, slots, engines and spare parts. After this, transfer,
the company still has MUS $ 1,300 available. This line is committed for a total of US $ 2,450
million, of which US $ 750 million are committed by related parties.
(10) In the year ended December 31, 2020, the Company transferred its interest in 7 special
purpose entities. As a result of the above, the classification of financial liabilities associated with 3
aircraft within guaranteed obligations was modified, and classified as financial leases.
Balances by currency of interest bearing loans are as follows:
Currency
Brazilian real
Chilean peso (U.F.)
US Dollar
Total
As of
December 31,
2020
ThUS$
300,659
679,983
6,752,212
7,732,854
As of
December 31,
2019
ThUS$
-
611,542
6,581,985
7,193,527
Financial statements
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Interest-bearing loans due in installments to December 31, 2020
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.
Nominal values
Accounting values
Tax No.
Creditor
Creditor
country
Currency
More than
More than
More than
More than
More than
More than
Up to
90
days
ThUS$
90 days
to one
year
ThUS$
one to
three
years
ThUS$
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
ThUS$
90 days
to one
year
ThUS$
one to
three
years
ThUS$
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
accounting
value
ThUS$
Loans to exporters
97.032.000-8
97.030.000-7
76.645.030-K
97.951.000-4
Bank loans
97.023.000-9
0-E
76.362.099-9
BBVA
ESTADO
ITAU
HSBC
CORPBANCA
SANTANDER
BTG PACTUAL CHILE
Obligations with the public
97.030.000-7
0-E
Guaranteed obligations
ESTADO
BANK OF NEW YORK
0-E
0-E
0-E
0-E
0-E
-
BNP PARIBAS
NATIXIS
INVESTEC
MUFG
SMBC
SWAP Received aircraft
Other guaranteed obligations
0-E
0-E
0-E
0-E
Financial leases
0-E
0-E
0-E
0-E
0-E
0-E
97.036.000-K
0-E
0-E
0-E
0-E
0-E
CREDIT AGRICOLE
MUFG
CITIBANK
BANK OF UTAH
ING
CREDIT AGRICOLE
CITIBANK
PEFCO
BNP PARIBAS
WELLS FARGO
SANTANDER
RRPF ENGINE
APPLE BANK
BTMU
US BANK
PK AIRFINANCE
Total
Chile
Chile
Chile
Chile
Chile
Spain
Chile
Chile
U.S.A.
U.S.A.
France
England
U.S.A.
U.S.A.
-
France
U.S.A.
U.S.A.
U.S.A.
U.S.A.
France
U.S.A.
U.S.A.
U.S.A.
U.S.A.
Chile
England
U.S.A.
U.S.A.
U.S.A.
U.S.A.
US$
US$
US$
US$
UF
US$
UF
UF
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
74,000
40,000
20,000
12,000
11,255
-
-
-
-
31,039
42,740
6,329
30,590
130,000
10
-
82,498
-
-
5,965
13,875
77,994
1,926
14,934
112,987
21,456
2,058
4,538
11,519
58,512
8,996
-
-
-
-
-
-
67,868
-
-
43,655
34,150
11,606
24,080
-
-
273,199
72,206
-
-
-
2,034
58,993
-
2,326
99,975
17,626
3,644
4,631
9,385
49,240
9,062
-
-
-
-
-
139,459
-
177,846
-
91,002
77,693
19,935
67,730
-
-
-
117,084
600,000
793,003
-
2,052
113,186
-
791
230,416
26,165
7,752
12,808
25,937
135,489
1,464
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,000
40,000
20,000
12,000
11,255
139,459
67,868
-
700,000
382,267
800,000
560,113
1,500,000
97,621
81,244
-
72,881
-
-
-
19,731
-
-
-
-
43,778
-
-
98,028
-
5,035
753
768
84,178
-
210,956
35,302
-
187,132
-
-
-
-
-
-
-
-
18,841
-
-
-
-
-
-
-
-
-
474,273
271,129
37,870
382,413
130,000
10
273,199
291,519
600,000
793,003
5,965
17,961
312,792
1,926
17,951
541,406
65,247
18,489
22,730
47,609
327,419
19,522
76,929
41,542
20,685
12,545
11,665
3,300
1,985
25,729
82,572
40,931
50,001
7,952
39,516
131,662
10
1,395
88,880
138
-
6,017
13,922
78,860
1,938
14,909
114,994
21,550
2,602
4,599
11,595
60,094
9,319
-
-
-
-
-
-
-
-
-
-
67,237
-
139,459
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76,929
41,542
20,685
12,545
11,665
142,759
69,222
Amortization
At Expiration
At Expiration
At Expiration
At Expiration
Quarterly
Quarterly
At Expiration
-
-
177,715
-
-
698,450
395,652
803,289
599,096
1,584,311
At Expiration
At Expiration
47,668
34,150
12,522
24,080
-
-
272,794
72,206
-
-
-
2,034
58,993
-
2,326
99,975
17,626
3,644
4,632
9,386
49,240
9,009
87,767
75,808
19,588
67,014
-
-
-
114,589
600,000
769,615
-
2,052
109,086
-
788
219,624
25,840
7,752
12,608
25,563
125,274
1,435
96,513
80,316
-
72,494
-
-
-
19,499
-
-
-
-
42,558
-
-
96,556
-
5,035
752
767
82,149
-
209,612
34,969
-
186,283
-
-
-
-
-
-
-
-
18,619
-
-
-
-
-
-
-
-
-
482,491
275,244
40,062
389,387
131,662
10
274,189
295,174
600,138
769,615
6,017
18,008
308,116
1,938
18,023
531,149
65,016
19,033
22,591
47,311
316,757
19,763
Quarterly / Semiannual
Quarterly
Semiannual
Quarterly
At Expiration
Quarterly
At Expiration
Quarterly
At Expiration
At Expiration
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Monthly
Quarterly
Quarterly
Quarterly
Monthly
Annual
Effective
rate
%
Nominal
rate
%
3.08
3.49
4.20
4.15
3.35
2.80
3.10
4.81
7.16
2.95
3.11
6.21
2.88
1.73
-
1.92
2.67
2.27
18.95
5.71
1.99
2.58
5.65
1.81
2.43
1.30
4.01
1.61
1.63
4.00
1.98
3.08
3.49
4.20
4.15
3.35
2.80
3.10
4.81
6.94
2.95
3.11
6.21
2.88
1.73
-
1.92
2.67
2.27
12.26
5.01
1.54
1.77
5.03
1.41
1.74
0.76
4.01
1.01
1.03
2.82
1.98
815,221
783,680
2,639,812
1,204,017
1,634,498
7,077,128
977,836
787,522
2,581,577
1,195,089
1,648,424
7,190,448
Financial statements
234
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81
Interes t-b earing lo ans d ue in ins tallments to Decemb er 3 1, 2 0 2 0
Deb to r: LATAM Airlines Gro up S.A. and Sub s id iaries , Tax No . 8 9 .8 6 2 .2 0 0 -2 , Chile.
Tax No .
Cred ito r
Co untry
Cred ito r
Currency
Bank lo ans
0 -E
0 -E
0 -E
NEDERLANDSCHE
CREDIETVERZEKERING M AATSCHAPPIJ
BANCO BRADESCO
BANCO DO BRASIL
Netherland s
Brazil
Brazil
US$
BRL
BRL
Financial leas e
0 -E
0 -E
0 -E
0 -E
NATIXIS
WACAPOU LEASING S.A.
SOCIÉTÉ GÉNÉRALE M ILAN BRANCH
GA Teles s is LLC
France
Luxemb o urg
Italy
U.S.A.
US$
US$
US$
US$
No minal values
Acco unting values
M o re than M o re than M o re than
M o re than M o re than M o re than
Up to
9 0
d ays
ThUS$
9 0 d ays
to o ne
year
ThUS$
o ne to
three
years
ThUS$
three to
five
years
ThUS$
M o re than
five
years
ThUS$
To tal
no minal
value
ThUS$
Up to
9 0
d ays
ThUS$
9 0 d ays
to o ne
year
ThUS$
o ne to
three
years
ThUS$
three to
five
years
ThUS$
M o re than
five
years
ThUS$
To tal
acco unting
value
ThUS$
Amo rtizatio n
Annual
Effective No minal
rate
%
rate
%
4 0 9
8 0 ,175
19 9 ,557
3 0 ,2 53
2 ,3 4 2
14 4 ,12 0
4 8 6
3 18
-
-
-
79 7
-
9 50
2 16
-
-
51,0 0 7
1,6 2 0
-
2 ,6 2 3
-
-
-
-
-
-
9 4 3
8 0 ,175
19 9 ,557
3 3 3
9 1,6 72
2 0 8 ,9 8 7
-
-
-
2 ,772
-
-
-
5,4 3 0
8 1,2 6 0
4 ,759
14 4 ,12 0
12 ,2 6 1
3 1,3 0 8
2 ,4 3 9
14 1,0 9 4
4 8 6
3 11
-
-
-
79 7
-
9 9 1
3 2 4
-
-
51,0 0 7
1,6 2 0
-
2 ,6 2 3
-
-
-
-
-
-
9 6 8
9 1,6 72
2 0 8 ,9 8 7
M o nthly
M o nthly
M o nthly
6 .0 1
4 .3 4
3 .9 5
6 .0 1
4 .3 4
3 .9 5
-
-
-
2 ,772
-
-
-
5,6 4 2
8 2 ,3 15 Quarterly / Semiannual 4 .0 9
2 .0 0
Quarterly
4 ,8 56
3 .0 7
Quarterly
14 1,0 9 4
14 .72
M o nthly
12 ,514
4 .0 9
2 .0 0
3 .0 1
14 .72
To tal
To tal co ns o lid ated
4 57,3 4 2
2 ,0 6 5
55,4 6 6
2 ,772
5,4 3 0
52 3 ,0 75
4 76 ,3 19
2 ,0 9 9
55,574
2 ,772
5,6 4 2
54 2 ,4 0 6
1,2 72 ,56 3
78 5,74 5
2 ,6 9 5,2 78
1,2 0 6 ,78 9
1,6 3 9 ,9 2 8
7,6 0 0 ,2 0 3
1,4 54 ,155
78 9 ,6 2 1
2 ,6 3 7,151
1,19 7,8 6 1
1,6 54 ,0 6 6
7,73 2 ,8 54
Financial statements
235
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020
97.032.000-8 B B VA
97.003.000-K B ANC O DO B R AS IL
97.951.000-4 HS B C
76.100.458-1 B LADEX
C hile
C hile
C hile
C hile
B a nk lo a ns
C hile
97.023.000-9 C OR P B ANC A
0-E
S pa in
S ANTANDER
76.362.099-9 B TG P AC TUAL C HILE C hile
Obliga tio ns with the public
0-E
97.030.000-7 B ANK OF NEW YOR K U.S .A.
ES TADO
C hile
B NP P AR IB AS
U.S .A.
WILM INGTON TR US T U.S .A.
U.S .A.
C ITIB ANK
F ra nc e
NATIXIS
Engla nd
INVES TEC
M UF G
U.S .A.
S WAP R e c e ive d Airc ra ft-
Gua ra nte e d o bliga tio ns
0-E
0-E
0-E
0-E
0-E
0-E
-
Othe r gua ra nte e d o bliga tio ns
0-E
0-E
C R EDIT AGR IC OLE
M UF G
F ra nc e
U.S .A.
US $
UF
US $
US $
UF
US $
UF
UF
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
Inte re s t-be a ring lo a ns due in ins ta llm e nts to De c e m be r 31, 2019
De bto r: LATAM Airline s Gro up S .A. a nd S ubs idia rie s , Ta x No . 89.862.200-2, C hile .
No m ina l va lue s
Ac c o unting va lue s
82
Ta x No .
C re dito r
Lo a ns to e xpo rte rs
C re dito r
c o untry C urre nc y
Up to
90
da ys
ThUS $
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $
five
ye a rs
ThUS $
thre e to M o re tha n
To ta l
no m ina l
va lue
ThUS $
99,000
200,000
12,000
29,000
15,615
137,860
62,769
Up to
90
da ys
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
five
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $ ThUS $
thre e to M o re tha n
five
ye a rs
ThUS $
To ta l
a c c o unting
va lue
ThUS $
Am o rtiza tio n
24,910
150,257
12,016
-
75,000
50,283
-
29,009
-
-
-
-
5,192
255
113
10,369
-
-
-
137,860
62,172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
99,910 At Expira tio n
200,540 At Expira tio n
12,016 At Expira tio n
29,009 At Expira tio n
15,561
138,115
62,285 At Expira tio n
Qua rte rly
Qua rte rly
five
ye a rs
ThUS $
-
-
-
-
-
-
-
ra te
%
3.29
2.93
3.25
2.82
3.35
3.62
3.10
Annua l
Effe c tive No m ina l
24,000
150,000
12,000
-
75,000
50,000
-
29,000
-
-
-
-
5,205
-
-
10,410
-
-
-
137,860
62,769
-
-
-
-
-
-
-
-
-
-
-
164,485
-
-
700,000
353,547
800,000
518,032
1,500,000
-
18,640
2,642
10,779
164,398
-
-
698,256
366,656
803,563
533,696 At Expira tio n
1,531,238 At Expira tio n
4.81
7.16
8,115
22,090
4,805
10,675
1,538
2,973
80
36,282
66,710
14,608
32,708
8,976
18,593
78
93,788
183,332
40,414
84,674
22,977
53,816
-
100,622
196,452
42,626
78,123
10,596
57,993
-
275,134
397,639
41,022
76,726
-
189,285
-
513,941
866,223
143,475
282,906
44,087
322,660
158
10,058
27,229
5,461
11,410
1,867
3,182
80
36,855
66,710
14,608
32,708
9,112
18,593
78
91,224
178,784
36,178
83,072
22,597
53,367
-
99,297
273,038
194,741 395,983
40,310
40,932
75,928
77,195
10,565
-
188,471
57,694
-
-
510,472
863,447
137,489
280,313
44,141
321,307
158
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
S e m ia nnua l
Qua rte rly
Qua rte rly
3.81
4.45
3.76
3.82
6.35
3.43
-
-
23,669
-
71,432
253,692
188,440
-
44,482
-
-
253,692
328,023
2,370
23,929
-
71,431
252,747
185,938
-
44,017
-
-
255,117 At Expira tio n
325,315
Qua rte rly
3.74
3.54
F ina nc ia l le a s e s
ING
C R EDIT AGR IC OLE
C ITIB ANK
P EF C O
B NP P AR IB AS
WELLS F AR GO
0-E
0-E
0-E
0-E
0-E
0-E
97.036.000-K S ANTANDER
0-E
0-E
0-E
0-E
0-E
0-E
0-E
0-E
R R P F ENGINE
AP P LE B ANK
B TM U
NATIXIS
KF W IP EX-B ANK
AIR B US F INANC IAL
US B ANK
P K AIR F INANC E
US $
U.S .A.
US $
F ra nc e
US $
U.S .A.
US $
U.S .A.
US $
U.S .A.
US $
U.S .A.
US $
C hile
US $
Engla nd
US $
U.S .A.
US $
U.S .A.
F ra nc e
US $
Ge rm a ny US $
US $
U.S .A.
US $
U.S .A.
US $
U.S .A.
3,875
4,831
17,972
1,901
8,523
32,321
5,690
864
1,483
3,010
702
1,760
1,977
15,862
2,487
7,931
14,723
52,790
1,926
23,197
97,956
17,255
2,348
4,509
9,148
2,173
3,568
5,687
48,132
7,729
-
6,537
113,746
-
25,182
248,086
46,472
7,441
12,474
25,278
2,279
-
-
132,441
17,871
-
-
16,399
-
20,717
199,037
3,134
8,075
7,242
13,904
-
-
-
135,200
-
-
-
-
-
10,110
14,284
-
915
-
-
-
-
-
17,492
-
11,806
26,091
200,907
3,827
87,729
591,684
72,551
19,643
25,708
51,340
5,154
5,328
7,664
349,127
28,087
3,952
4,943
18,633
1,918
9,042
34,868
5,959
908
1,632
3,191
723
1,769
1,992
17,610
2,530
7,931
14,723
52,790
1,926
23,197
97,956
17,255
2,348
4,509
9,148
2,173
3,568
5,687
48,132
7,729
-
6,537
112,712
-
24,675
233,822
45,805
7,441
12,162
24,661
2,279
-
-
119,881
17,871
-
-
16,368
-
20,424
195,209
3,128
8,075
7,212
13,849
-
-
-
130,865
-
-
-
-
-
9,975
14,138
-
915
-
-
-
-
-
17,188
-
11,883
26,203
200,503
3,844
87,313
575,993
72,147
19,687
25,515
50,849
5,175
5,337
7,679
333,676
28,130
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
M o nthly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
M o nthly
Qua rte rly
M o nthly
5.71
3.15
3.39
5.65
3.85
2.67
3.00
4.01
3.33
3.33
4.41
3.55
3.31
4.01
3.45
ra te
%
3.29
2.93
3.25
2.82
3.35
4.61
3.10
4.81
6.94
3.81
4.45
2.68
3.82
6.35
3.43
-
3.74
3.54
5.01
2.52
2.80
5.03
3.72
1.98
2.46
4.01
2.73
2.73
4.41
3.55
3.31
2.82
3.45
Othe r lo a ns
0-E
C ITIB ANK (*)
U.S .A.
US $
24,595
76,431
-
-
-
101,026
24,830
76,431
-
-
-
101,261
Qua rte rly
6.00
6.00
To ta l
393,003 789,300
1,924,054
1,634,602 2,176,154
6,917,113
431,469 803,680
1,876,183
1,617,827 2,186,165
6,915,324
(*) S e c uritize d bo nd with the future flo ws fro m the s a le s with c re dit c a rd in Unite d S ta te s a nd C a na da , thro ugh the c o m pa ny Gua na y F ina nc e Lim ite d.
Financial statements
236
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83
Interest-bearing loans due in installments to December 31, 2019
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.
Tax No.
Creditor
Bank loans
0-E
NEDERLANDSCHE
CREDIETVERZEKERING MAATSCHAPPIJ
Financial leases
Nominal values
Accounting values
Creditor
country
Currency
Up to
90
days
ThUS$
More than More than More than
three to
one to
90 days
five
three
to one
years
year
years
ThUS$
ThUS$
ThUS$
More than
five
years
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
ThUS$
More than More than More than
three to
one to
90 days
five
three
to one
years
years
year
ThUS$
ThUS$
ThUS$
More than
five
years
ThUS$
Total
accounting
value
ThUS$
Amortization
Annual
Effective Nominal
rate
%
rate
%
Netherland US$
148
452
689
-
-
1,289
153
452
689
-
-
1,294
Monthly
6.01
6.01
0-E
0-E
0-E
0-E
NATIXIS
WACAPOU LEASING S.A.
SOCIÉTÉ GÉNÉRALE MILAN BRANCH
GA Telessis LLC
France
US$
Luxemburg US$
US$
Italy
US$
U.S.A
3,243
757
9,855
306
6,906
2,317
160,076
1,100
76,107
3,206
-
2,385
-
-
-
2,694
-
-
-
7,010
86,256
6,280
169,931
13,495
3,723
777
10,409
399
6,906
2,317
159,876
1,100
76,107
3,206
-
2,385
-
-
-
2,694
-
-
-
7,010
86,736
6,300
170,285
13,588
Quarterly/Semiannual
Quarterly
Quarterly
Monthly
6.29
4.32
5.39
14.72
6.29
4.32
5.39
14.72
Total
Total consolidated
14,309
170,851
82,387
2,694
7,010
277,251
15,461
170,651
82,387
2,694
7,010
278,203
407,312
960,151
2,006,441
1,637,296
2,183,164
7,194,364
446,930
974,331
1,958,570
1,620,521
2,193,175
7,193,527
Financial statements
237
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020
(b) Lease Liability:
(d) Derivatives that do not qualify for hedge accounting
84
85
The movement of the lease liabilities corresponding to the years reported are as follow:
Airc ra ft
ThUS $
Othe rs
ThUS $
Le a s e
Lia bility
to ta l
ThUS $
Ope ning ba la nc e a s J a nua ry 1, 2019
2,737,809
120,240
2,858,049
Ne w c o ntra c ts
R e ne go tia tio ns
P a ym e nts
Ac c rue d inte re s t
Exc ha nge diffe re nc e s
C um ula tive tra ns la tio n a djus tm e nt
Othe r inc re a s e s (de c re a s e s )
719,525
(41,535)
(539,549)
165,981
-
-
-
23,878
12,208
(37,391)
11,968
1,614
(467)
(2,124)
743,403
(29,327)
(576,940)
177,949
1,614
(467)
(2,124)
C ha nge s
304,422
9,686
314,108
C lo s ing ba la nc e a s o f De c e m be r 31,2019
3,042,231
129,926
3,172,157
Ope ning ba la nc e a s J a nua ry 1, 2020
3,042,231
129,926
3,172,157
Ne w c o ntra c ts
Write o ff
R e ne go tia tio ns
P a ym e nts
Ac c rue d inte re s t
Exc ha nge diffe re nc e s
C um ula tive tra ns la tio n a djus tm e nt
Othe r inc re a s e s (de c re a s e s )
C ha nge s
-
(7,435)
(35,049)
(131,427)
158,253
-
-
-
(15,658)
543
(285)
4,919
(36,689)
9,348
(7,967)
(38)
(5,324)
(35,493)
543
(7,720)
(30,130)
(168,116)
167,601
(7,967)
(38)
(5,324)
(51,151)
C lo s ing ba la nc e a s o f De c e m be r 31,2020
3,026,573
94,433
3,121,006
The company recognizes the interest payments related to the lease liabilities in the consolidated
result under Financial expenses (See Note 27 (d)).
(c) Hedge derivatives
Curre nt lia bilitie s
Non- c urre nt lia bilitie s
Tota l he dge
de riva tive s
As of
As of
As of
As of
As of
As of
De c e mbe r 31, De c e mbe r 31,
De c e mbe r 31, De c e mbe r 31,
De c e mbe r 31, De c e mbe r 31,
2020
ThUS $
2019
ThUS $
2020
ThUS $
2019
ThUS $
2020
ThUS $
2019
ThUS $
Ac c rue d inte re s t from the la s t da te
of inte re s t ra te s wa p
Fa ir va lue of inte re s t ra te de riva tive s
Fa ir va lue of fue l de riva tive s
Fa ir va lue of fore ign c urre nc y de riva tive s
Tota l he dge de riva tive s
-
2,734
-
-
2,734
1,723
302
-
48,347
50,372
-
-
-
-
-
-
22
-
-
22
-
2,734
-
-
2,734
1,723
324
-
48,347
50,394
Current liabilities
As of
December
2020
As of
December
2019
Non-current liabilities
As of
As of
December
December
2019
2020
T otal derivatives of
no coverage
As of
December
2020
As of
December
2019
T hUS$
T hUS$
T hUS$
T hUS$
T hUS$
T hUS$
2,937
2,937
-
-
-
-
-
-
2,937
2,937
-
-
Derivative of foreign currency
not registered as hedge
T otal derived not qualify
as hedge accounting
The foreign currency derivatives correspond to options, forwards and swaps.
Hedging operation
The fair values of net assets/ (liabilities), by type of derivative, of the contracts held as hedging
instruments are presented below:
Cross currency swaps (CCS) (1)
Interest rate swaps (2)
Fuel options (3)
Currency options R$/US$ (4)
As of
December 31,
2020
T hUS$
-
(2,734)
1,296
-
As of
December 31,
2019
T hUS$
(22,662)
2,618
48,542
(41)
(1) Covers the significant variations in cash flows associated with market risk implicit in the
changes in the 3-month LIBOR interest rate and the exchange rate US$/UF of bank loans.
These contracts are recorded as cash flow hedges and fair value.
(2) Covers the significant variations in cash flows associated with market risk implicit in the
increases in the 3 months LIBOR interest rates for long-term loans incurred in the acquisition
of aircraft and bank loans. These contracts are recorded as cash flow hedges.
(3) Covers significant variations in cash flows associated with market risk implicit in the changes
in the price of future fuel purchases. These contracts are recorded as cash flow hedges.
(4) They cover the exposure to foreign exchange risk of operating cash flows, mainly caused by
the fluctuation of the CLP/US$, R$/US$, US$/EUR and US$/GBP exchange rate. These
contracts are registered as cash flow hedge contracts.
The Company only has cash flow and fair value hedges (in the case of CCS). In the case of fuel
hedges, the cash flows subject to such hedges will occur and will impact results in the next 12
months from the date of the consolidated statement of financial position, while in the case of
hedges of interest rates, these they will occur and will impact results throughout the life of the
associated loans, up to their maturity. In the case of currency hedges through a CCS, there is a
group of hedging relationships, in which two types of hedge accounting are generated, one of cash
flow for the US $ / UF component; and another of fair value, for the floating rate component US $.
The other group of hedging relationships only generates cash flow hedge accounting for the US $ /
UF component.
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All hedging operations have been performed for highly probable transactions, except for fuel hedge.
See Note 3.
The details of Trade and other accounts payables are as follows:
Since none of the hedges resulted in the recognition of a non-financial asset, no portion of the result
of derivatives recognized in equity was transferred to the initial value of that type of asset.
The amounts recognized in comprehensive income during the period and transferred from net
equity to income are as follows:
Debit (credit) recognized in comprehensive
income during the period
Debit (credit) transferred from net equity to
income during the period
For the year ended
December 31,
2020
T hUS$
2019
T hUS$
(119,970)
66,856
(13,016)
(30,074)
See note 3.1 a) for reclassification to profit or loss for each hedging operation and Note 18 b) for
deferred taxes related.
NOTE 20 - TRADE AND OTHER ACCOUNTS PAYABLES
The composition of Trade and other accounts payables is as follows:
Current
(a) Trade and other accounts payables
(b) Accrued liabilities at the reporting date
Total trade and other accounts payables
(a)
Trade and other accounts payable:
Trade creditors
Other accounts payable
Total
As of
December 31,
2020
ThUS$
1,757,799
564,326
2,322,125
As of
December 31,
2019
ThUS$
1,671,304
551,570
2,222,874
As of
December 31,
2020
ThUS$
1,281,432
476,367
1,757,799
As of
December 31,
2019
ThUS$
1,408,690
262,614
1,671,304
Suppliers technical purchases
Boarding Fees
Professional services and advisory
Aircraft Fuel
Handling and ground handling
Airport charges and overflight
Leases, maintenance and IT services
Other personnel expenses
Maintenance
Services on board
Marketing
Air companies
Crew
Land services
Achievement of goals
Jol Fleet
Others
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
281,452
181,049
146,753
143,119
137,626
142,709
110,472
105,696
116,103
58,099
53,419
27,668
16,541
10,466
7,840
6,622
212,165
145,973
234,070
87,825
476,320
114,163
81,459
59,011
93,490
42,202
59,647
60,850
79,958
22,921
18,166
30,635
3,997
60,617
Total trade and other accounts payables
1,757,799
1,671,304
(b) Liabilities accrued:
Aircraft and engine maintenance
Accrued personnel expenses
Accounts payable to personnel (*)
Others accrued liabilities (**)
Total accrued liabilities
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
460,082
72,696
2,186
29,362
564,326
292,793
118,199
91,153
49,425
551,570
(*) Profits and bonus participation (Note 23 letter b).
(**) See Note 22.
The balances include the amounts that will be part of the reorganization agreement, product of the
entry into the Chapter 11 process on May 26, 2020 for LATAM, and July 08 for certain subsidiaries
in Brazil.
Financial statements
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NOTE 21 - OTHER PROVISIONS
Movement of provisions:
88
89
Current liabilities
Non-current liabilities
T otal Liabilities
As of
As of
As of
As of
December 31, December 31,
December 31, December 31,
2020
T hUS$
2019
T hUS$
2020
T hUS$
2019
T hUS$
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
Provision for contingencies (1)
T ax contingencies
Civil contingencies
Labor contingencies
Other
Provision for European
Commission investigation (2)
Provisions for onerous contracts (3)
21,188
2,266
320
-
-
-
2,033
2,202
971
-
-
-
364,342
103,984
48,115
17,821
164,190
66,605
26,505
19,886
385,530
106,250
48,435
17,821
166,223
68,807
27,476
19,886
10,097
9,217
10,097
9,217
44,000
-
44,000
-
T otal other provisions (4)
23,774
5,206
588,359
286,403
612,133
291,609
(1) Provisions for contingencies:
The tax contingencies correspond to litigation and tax criteria related to the tax treatment
applicable to direct and indirect taxes, which are found in both administrative and judicial
stage.
The civil contingencies correspond to different demands of civil order filed against the
Company.
The labor contingencies correspond to different demands of labor order filed against the
Company.
The Provisions are recognized in the consolidated income statement in administrative expenses
or tax expenses, as appropriate.
(2) Provision made for proceedings brought by the European Commission for possible breaches of
free competition in the freight market.
(3) Based on market information on the drop in the price of some assets, a provision was made for
onerous contracts associated with the purchase commitments of aircraft.
(4) Total other provision as of December 31, 2020, and December 31, 2019, include the fair value
correspond to those contingencies from the business combination with TAM S.A and
subsidiaries, with a probability of loss under 50%, which are not provided for the normal
application of IFRS enforcement and that only must be recognized in the context of a business
combination in accordance with IFRS 3.
European
Legal
Commission
Onerous
claims (1)
Investigation (2)
Contracts
T hUS$
T hUS$
T hUS$
Opening balance as of January 1, 2019
Increase in provisions
Provision used
Difference by subsidiaries conversion
Reversal of provision
Exchange difference
Closing balance as of December 31, 2019
Opening balance as of January 1, 2020
Increase in provisions
Provision used
Difference by subsidiaries conversion
Reversal of provision
Exchange difference
298,886
134,847
(82,212)
(10,764)
(58,063)
(302)
282,392
282,392
408,078
(47,238)
(58,654)
(25,563)
(979)
9,403
-
-
-
-
(186)
9,217
9,217
-
-
-
-
880
Closing balance as of December 31, 2020
558,036
10,097
-
-
-
-
-
-
-
-
44,000
-
-
-
-
44,000
T otal
T hUS$
308,289
134,847
(82,212)
(10,764)
(58,063)
(488)
291,609
291,609
452,078
(47,238)
(58,654)
(25,563)
(99)
612,133
(1) Accumulated balances include a judicial deposit delivered in guarantee, with respect to the
“Fundo Aeroviario” (FA), for ThUS$ 69, made in order to suspend the collection and the
application of a fine. The Company is discussing in Court the constitutionality of the
requirement made by FA calculated at the ratio of 2.5% on the payroll in a legal claim.
Initially the payment of said contribution was suspended by a preliminary judicial decision and
about 10 years later, this same decision was reversed. As the decision is not final, the
Company has deposited the securities open until that date, in order to avoid collection
processing and the application of the fine.
Finally, if the final decision is favorable to the Company, the deposit made and payments
made later will return to TAM. On the other hand, if the court confirms the first decision, said
deposit will become a final payment in favor of the Government of Brazil. The procedural
stage as of December 31, 2020 is described in Note 31 in the Role of the case
2001.51.01.012530-0.
(2) European Commission Provision
Provision constituted on the occasion of the process initiated in December 2007 by the General
Competition Directorate of the European Commission against more than 25 cargo airlines,
among which is Lan Cargo SA, which forms part of the global investigation initiated in 2006
for possible infractions of free competition in the air cargo market, which was carried out
jointly by the European and United States authorities.
With respect to Europe, the General Directorate of Competition imposed fines totaling
€ 799,445,000 (seven hundred and ninety-nine million four hundred and forty-five thousand
Euros) for infractions of European Union regulations on free competition against eleven (11)
airlines, among which are LATAM Airlines Group SA and its subsidiary Lan Cargo S.A .,For
its part, LATAM Airlines Group S.A. and Lan Cargo S.A., jointly and severally, have been
fined for the amount of € 8,220,000 (eight million two hundred twenty thousand Euros), for
Financial statements
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these infractions, an amount that was provisioned in the financial statements of LATAM. On
January 24, 2011, LATAM Airlines Group S.A. and Lan Cargo S.A. They appealed the
decision before the Court of Justice of the European Union. On December 16, 2015, the
European Court resolved the appeal and annulled the Commission's Decision. The European
Commission did not appeal the judgment, but on March 17, 2017, the European Commission
again adopted its original decision to impose on the eleven lines original areas, the same fine
previously imposed, amounting to a total of 776,465,000 Euros. In the case of LAN Cargo and
its parent, LATAM Airlines Group S.A. imposed the same fine mentioned above. The
procedural stage as of December 31, 2020 is described in Note 31 in section 2 judgments
received by LATAM Airlines Group S.A. and Subsidiaries.
NOTE 22 - OTHER NON-FINANCIAL LIABILITIES
Current liabilities
Non-current liabilities
T otal Liabilities
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
Deferred revenues (1)(2)
Sales tax
Retentions
Others taxes
Dividends payable
Other sundry liabilities
T hUS$
2,036,880
7,609
27,853
3,931
-
12,518
T otal other non-financial liabilities
2,088,791
T hUS$
2,689,083
2,556
43,916
7,555
57,129
34,982
2,835,221
T hUS$
702,008
-
-
-
-
-
702,008
T hUS$
851,383
-
-
-
-
-
851,383
T hUS$
2,738,888
7,609
27,853
3,931
-
12,518
2,790,799
T hUS$
3,540,466
2,556
43,916
7,555
57,129
34,982
3,686,604
Deferred Income Movement
De fe rre d inc o m e
Lo ya lty
Initia l ba la nc e
(1)
R e c o gnitio n
(a c c re dita tio n Expira tio n o f
a nd e xc ha nge )
tic ke ts
Us e
Adjus tm e nt
a pplic a tio n
IAS 29,
Arge ntina
hype rinfla tio n
Othe rs
pro vis io ns
F ina l ba la nc e
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
F ro m J a nua ry 1 to
De c e m be r 31, 2019
F ro m J a nua ry 1 to
De c e m be r 31, 2020
2,974,760
8,264,970
(7,703,011)
124,548
(156,435)
2,232
33,402
3,540,466
3,540,466
1,970,203
(2,554,476)
(137,176)
(72,670)
(3,485)
(3,974)
2,738,888
(1) The balance includes mainly, deferred income for services not provided as of December 31,
2020 and December 31, 2019; and for the frequent flyer program LATAM Pass.
LATAM Pass is LATAM's frequent flyer program that allows rewarding the preference and
loyalty of its customers with multiple benefits and privileges, through the accumulation of
miles or points that can be exchanged for tickets or for a varied range of products and
services. Clients accumulate miles or LATAM Pass points every time they fly in LATAM
and other connections associated with the program, as well as buy in stores or use the
services of a vast network of companies that have agreements with the program around the
world.
On September 26, 2019, the Company signed a framework agreement with Delta Air Lines,
Inc, in which the latter agreed to pay ThUS $ 350,000 for compensation of costs and income
that the Company must incur or stop receiving, respectively, during the transition period until
the implementation of the strategic alliance.
During December 2019, the Company sold its rights to receive future payments of the
committed transition. The payments consisted of ThUS $ 200,000 payable in 8 quarterly
installments of ThUS $ 25,000 as of January 2, 2020. On December 13, 2019, the Company
received ThUS $ 194,068 for said sale.
The account receivable was derecognized and the interest of ThUS $ 5,932 was recognized in
the item Financial Costs of the Consolidated Statement of Income.
(2) As of December 31, 2020, Deferred Income includes ThUS $ 179,612 corresponding to the
balance to be accrued from the committed compensation from Delta Air Lines, Inc., which is
recognized in Income Statement, based on the estimation of differentials of income, until the
implementation of the strategic alliance. During the period, the Company has recognized
ThUS $ 132,467 for this concept.
Additionally, the Company maintains a balance of ThUS $ 29,507 in the Trade accounts
payable item of the Statement of Financial Position, corresponding to the compensation of
costs to be incurred.
NOTE 23 - EMPLOYEE BENEFITS
Retirements payments
Resignation payments
Other obligations
T otal liability for employee benefits
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
51,007
8,230
14,879
74,116
64,824
9,722
19,024
93,570
(a) The movement in retirements and resignation payments and other obligations:
Opening
balance
T hUS$
Increase (decrease)
current service
provision
Benefits
paid
Actuarial
(gains)
losses
Currency
translation
T hUS$
T hUS$
T hUS$
T hUS$
Closing
balance
T hUS$
82,365
11,242
(4,390)
10,636
(6,283)
93,570
93,570
(18,759)
(8,634)
3,968
3,971
74,116
From January 1 to
December 31, 2019
From January 1 to
December 31, 2020
Financial statements
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The principal assumptions used in the calculation to the provision in Chile, are presented below:
(c)
Employment expenses are detailed below:
92
93
Assumptions
Discount rate
Expected rate of salary increase
Rate of turnover
M ortality rate
Inflation rate
Retirement age of women
Retirement age of men
For the period ended
December 31,
2020
2019
2.67%
2.80%
5.56%
RV-2014
2.8%
60
65
3.13%
4.50%
6.04%
RV-2014
2.8%
60
65
The discount rate corresponds to the 20 years Central Bank of Chile Bonds (BCP). The RV-2014
mortality tables correspond to those established by the Commission for the Financial Market of
Chile and; for the determination of the inflation rates, the market performance curves of BCU
Central Bank of Chile have been used and BCP long term at the scope date.
The calculation of the present value of the defined benefit obligation is sensitive to the variation of
some actuarial assumptions such as discount rate, salary increase, rotation and inflation.
The sensitivity analysis for these variables is presented below:
Effect on the liability
As of
December 31,
2020
As of
December 31,
2019
T hUS$
T hUS$
Discount rate
Change in the accrued liability an closing for increase in 100 p.b.
Change in the accrued liability an closing for decrease of 100 p.b.
(4,576)
5,244
Rate of wage growth
Change in the accrued liability an closing for increase in 100 p.b.
Change in the accrued liability an closing for decrease of 100 p.b.
4,946
(4,678)
(7,257)
5,365
4,989
(7,159)
(b) The liability for short-term:
As of
December 31,
2020
T hUS$
As of
December 31,
2019
T hUS$
Profit-sharing and bonuses (*)
2,186
91,153
(*) Accounts payables to employees (Note 20 letter b)
The participation in profits and bonuses related to an annual incentive plan for achievement of
certain objectives.
Salaries and wages
Short-term employee benefits
T ermination benefits (*)
Other personnel expenses
T otal
For the year ended
December 31,
2020
T hUS$
2019
T hUS$
850,557
1,478,804
41,259
147,576
-
54,256
70,244
114,126
962,060
1,794,762
(*) The termination benefits related to the reorganization under Chapter 11 are classified in Note 27,
Restructuring activities expense.
NOTE 24 - ACCOUNTS PAYABLE, NON-CURRENT
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
392,347
208,037
15,036
36,180
651,600
412,710
190,225
15,868
307
619,110
Aircraft and engine maintenance
Fleet (JOL)
Provision for vacations and bonuses
Other sundry liabilities
Total accounts payable, non-current
NOTE 25 - EQUITY
(a)
Capital
The Company’s objective is to maintain an appropriate level of capitalization that enables it to
ensure access to the financial markets for carrying out its medium and long-term objectives,
optimizing the return for its shareholders and maintaining a solid financial position.
The paid capital of the Company at December 31, 2020 amounts to ThUS$ 3,146,265 divided into
606,407,693 common stock of a same series (ThUS$ 3,146,265 divided into 606,407,693 shares as
of December 31, 2019), a single series nominative, ordinary character with no par value. There are
no special series of shares and no privileges. The form of its stock certificates and their issuance,
exchange, disablement, loss, replacement and other similar circumstances, as well as the transfer of
the shares, is governed by the provisions of Corporations Law and its regulations.
(b)
Subscribed and paid shares
During the year 2019, the Company fully reduced 466,832 shares pending placement and payment,
corresponding to the authorized capital increase in the extraordinary shareholders meeting of
August 18, 2016. Consequently, as of December 31, 2020, the statutory capital of the Company is
demonstrated by 606,407,693 shares fully subscribed and paid.
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The following table shows the movement of authorized and fully paid shares previously described
above:
Movement of authorized shares
Nro. Of shares
Opening
balance
Expired shares
intended for
compensation plans
and others
Closing
balance
From January 1 to December 31, 2019
From January 1 to December 31, 2020
606,874,525
606,407,693
(466,832)
-
606,407,693
606,407,693
Movement fully paid shares
Paid shares as of January 1, 2019
T here are no movements of shares paid
during the 2019 period
Paid shares as of December 31, 2019
Paid shares as of January 1, 2020
T here are no movements of shares paid
during the 2020 period
Movement
value
of shares
(1)
T hUS$
Cost of issuance
and placement
of shares (2)
T hUS$
Paid- in
Capital
T hUS$
N° of
shares
606,407,693
3,160,718
(14,453)
3,146,265
-
606,407,693
606,407,693
-
3,160,718
3,160,718
-
-
(14,453)
3,146,265
(14,453)
3,146,265
-
-
-
-
Paid shares as of December 31, 2020
606,407,693
3,160,718
(14,453)
3,146,265
(1)
Amounts reported represent only those arising from the payment of the shares subscribed.
(2)
Decrease of capital by capitalization of reserves for cost of issuance and placement of
shares established according to Extraordinary Shareholder´s Meetings, where such decreases were
authorized.
(c)
Treasury stock
At December 31, 2020, the Company held no treasury stock, the remaining of ThUS$ (178)
corresponds to the difference between the amount paid for the shares and their book value, at the
time of the full right decrease of the shares which held in its portfolio.
(d)
Reserve of share- based payments
Movement of Reserves of share- based payments:
Periods
From January 1 to December 31, 2019
From January 1 to December 31, 2020
Opening
balance
T hUS$
37,874
36,289
Stock
option
plan
T hUS$
(1,585)
946
Closing
balance
T hUS$
36,289
37,235
These reserves are related to the “Share-based payments” explained in Note 34.
(e)
Other sundry reserves
Movement of Other sundry reserves:
Periods
From January 1 to December 31, 2019
From January 1 to December 31, 2020
Opening
balance
T hUS$
2,638,916
2,452,469
T ransactions
with minorities
T hUS$
(184,135)
(3,125)
Legal
reserves
T hUS$
(2,312)
2,675
Closing
balance
T hUS$
2,452,469
2,452,019
Balance of Other sundry reserves comprise the following:
Higher value for TAM S.A. share exchange (1)
Reserve for the adjustment to the value of fixed assets (2)
Transactions with non-controlling interest (3)
Others
Total
As of
As of
December 31,
2020
December 31,
2019
ThUS$
ThUS$
2,665,692
2,620
(213,273)
(3,020)
2,452,019
2,665,692
2,620
(210,048)
(5,795)
2,452,469
(1)
Corresponds to the difference between the value of the shares of TAM S.A., acquired by
Sister Holdco S.A. (under the Subscriptions) and by Holdco II S.A. (by virtue of the Exchange
Offer), which is recorded in the declaration of completion of the merger by absorption, and the fair
value of the shares exchanged by LATAM Airlines Group S.A. as of June 22, 2012.
(2)
Corresponds to the technical revaluation of the fixed assets authorized by the Commission
for the Financial Market in the year 1979, in Circular No. 1529. The revaluation was optional and
could be made only once; the originated reserve is not distributable and can only be capitalized.
(3)
The balance as of December 31, 2020 corresponds to the loss generated by: Lan Pax Group
S.A. e Inversiones Lan S.A. in the acquisition of shares of Aerovías de Integración Regional Aires
S.A. for ThUS $ (3,480) and ThUS $ (20), respectively; the acquisition of TAM S.A. of the
minority interest in Aerolinhas Brasileiras S.A. for ThUS $ (885), the acquisition of Inversiones
Lan S.A. of the minority participation in Aires Integra Regional Airlines S.A. for an amount of
ThUS $ (2) and the acquisition of a minority stake in Aerolane S.A. by Lan Pax Group S.A. for an
amount of ThUS $ (21,526) through Holdco Ecuador S.A. (3) The loss due to the acquisition of the
minority interest of Multiplus S.A. for ThUS $ (184,135) (see Note 1), (4) and the acquisition of a
minority interest in Latam Airlines Perú S.A through Latam Airlines Group S.A for an amount of
ThUS $ (3,225).
Financial statements
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(f)
Reserves with effect in other comprehensive income.
Movement of Reserves with effect in other comprehensive income:
96
(g)
Retained earnings/(losses)
Movement of Retained earnings/(losses):
97
Opening balance as of January 1, 2019
Change in fair value of hedging instrument recognised in OCI
Reclassified from OCI to profit or loss
Deferred tax
Actuarial reserves
by employee benefit plans
Deferred tax actuarial IAS
by employee benefit plans
T ranslation difference subsidiaries
Currency
translation
reserve
T hUS$
(2,656,644)
-
-
-
-
-
(233,643)
Cash flow
hedging
reserve
T hUS$
(9,333)
95,954
(30,074)
345
-
-
-
Actuarial gain
or loss on defined
benefit plans
reserve
T hUS$
(15,178)
-
-
-
T otal
T hUS$
(2,681,155)
95,954
(30,074)
345
(10,635)
(10,635)
2,873
-
2,873
(233,643)
Closing balance as of December 31, 2019
(2,890,287)
56,892
(22,940)
(2,856,335)
Opening balance as of January 1, 2020
Change in fair value of hedging instrument recognised in OCI
Reclassified from OCI to profit or loss
Deferred tax
Actuarial reserves
by employee benefit plans
Deferred tax actuarial IAS
by employee benefit plans
T ranslation difference subsidiaries
(2,890,287)
-
-
-
-
-
(900,226)
56,892
(105,776)
(13,016)
959
-
-
-
(22,940)
-
-
-
(2,856,335)
(105,776)
(13,016)
959
(3,968)
(3,968)
923
-
923
(900,226)
Closing balance as of December 31, 2020
(3,790,513)
(60,941)
(25,985)
(3,877,439)
(f.1) Cumulative translate difference
These are originate from exchange differences arising from the translation of any investment in
foreign entities (or Chilean investment with a functional currency different to that of the parent),
and from loans and other instruments in foreign currency designated as hedges for such
investments. When the investment (all or part) is sold or disposed and a loss of control occurs, these
reserves are shown in the consolidated statement of income as part of the loss or gain on the sale or
disposal. If the sale does not involve loss of control, these reserves are transferred to non-
controlling interests.
(f.2) Cash flow hedging reserve
These are originate from the fair value valuation at the end of each period of the outstanding
derivative contracts that have been defined as cash flow hedges. When these contracts expire, these
reserves should be adjusted, and the corresponding results recognized.
(f.3) Reserves of actuarial gains or losses on defined benefit plans
Correspond to the increase or decrease in the obligation present value for defined benefit plan due
to changes in actuarial assumptions, and experience adjustments, which are the effects of
differences between the previous actuarial assumptions and the actual events.
Periods
From January 1 to December 31, 2019
From January 1 to December 31, 2020
(h)
Dividends per share
Opening
balance
ThUS$
218,971
352,272
Increase
(decrease) by
new standards
ThUS$
Result
for the
period
ThUS$
Other
increase
(decreases)
Dividends
ThUS$
ThUS$
Closing
balance
ThUS$
-
-
190,430
(4,545,887)
(57,129)
-
-
-
352,272
(4,193,615)
Description of dividend
Minimum mandatory
dividend
2020
Minimum mandatory
dividend
2019
Date of dividend
Amount of the dividend (ThUS$)
Number of shares among which the
dividend is distributed
Dividend per share (US$)
12-31-2020
-
606,407,693
-
12-31-2019
57,129
606,407,693
0.0942
NOTE 26 - REVENUE
The detail of revenues is as follows:
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
2,713,774
1,209,893
9,005,629
1,064,434
3,923,667
10,070,063
Passengers
Cargo
Total
Financial statements
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NOTE 27 - COSTS AND EXPENSES BY NATURE
(a) Costs and operating expenses
98
The main operating costs and administrative expenses are detailed below:
Aircraft fuel
Other rentals and landing fees (*)
Aircraft maintenance
Comisions
Passenger services
Other operating expenses
Total
For the year ended
December 31,
2020
ThUS$
1,045,343
720,005
472,382
91,910
97,688
2019
ThUS$
2,929,008
1,275,859
444,611
221,884
261,330
1,221,183
1,291,895
3,648,511
6,424,587
(*) Lease expenses are included within this amount (See Note 2.21)
For the period ended
December 31,
2020
ThUS$
2019
ThUS$
21,178
(110)
31,982
-
21,068
31,982
Payments for leases of low-value assets
Rent concessions recognized directly in profit or loss
Total
(b) Depreciation and amortization
Depreciation and amortization are detailed below:
Depreciation (*)
Amortization
Total
For the year ended
December 31,
2020
ThUS$
1,219,586
169,800
1,389,386
2019
ThUS$
1,389,465
80,511
1,469,976
(*) Included within this amount is the depreciation of the Properties, plants and equipment (See
Note 17 (a)) and the maintenance of the aircraft recognized as assets by right of use. The
maintenance cost amount included in the depreciation line for the year ended December 31, 2020 is
ThUS $ 276,908 and ThUS $ 445,680 for the same year 2019.
(c) Financial costs
The detail of financial costs is as follows:
Bank loan interest
Financial leases
Lease liabilities
Other financial instruments
Total
99
For the year ended
December 31,
2020
ThUS$
314,468
45,245
170,918
56,348
586,979
2019
ThUS$
325,650
61,980
181,814
20,490
589,934
Costs and expenses by nature presented in this Note plus the Employee expenses disclosed in
Note 23, are equivalent to the sum of cost of sales, distribution costs, administrative expenses, other
expenses and financing costs presented in the consolidated statement of income by function.
(d) Restructuring activities expenses
The Restructuring activities expenses are detailed below:
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
Fair value adjustment of fleet available for sale
Rejection of aircraft lease contract
Employee restructuring plan (*)
Legal and financial advice
Others
Total
331,522
269,467
290,831
76,541
21,648
990,009
-
-
-
-
-
-
(*) See note 2.1, letter c.
(e) Other (gains) losses
Other (gains) losses are detailed below:
Fuel hedging
Slot Write Off
Provision for onerous contract related to purchase commitment
Goodwill Impairment
Other
Total
For the year ended
December 31,
2020
ThUS$
82,487
36,896
44,000
1,728,975
(17,569)
1,874,789
2019
ThUS$
-
-
-
-
(11,525)
(11,525)
Financial statements
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NOTE 28 - OTHER INCOME, BY FUNCTION
Other income, by function is as follows:
100
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
-
22,499
46,045
25,138
-
18,579
42,913
255,828
411,002
36,172
96,997
102,704
29,353
543
10,471
42,791
41,833
360,864
Coalition and loyalty program M ultiplus
Tours
Aircraft leasing
Customs and warehousing
Duty free
M aintenance
Income from non-airlines products Latam Pass
Other miscellaneous income (*)
Total
(*) For 2020 included in this amount is ThUS$ 62,000 from compensation of the cancellation of the
purchase of 4 A350 aircraft from Delta Air Lines Inc and ThUS$ 9,240 to the early return of leased
aircraft from Qatar Airways and ThUS$ 132,467 corresponding to compensation of Delta Air Lines
Inc from JBA signed in 2019.
NOTE 29 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES
The functional currency of LATAM Airlines Group S.A. is the US dollar, also it has subsidiaries
whose functional currency is different to the US dollar, such as the chilean peso, argentine peso,
colombian peso, brazilian real and guaraní.
The functional currency is defined as the currency of the primary economic environment in which
an entity operates and in each entity and all other currencies are defined as foreign currency.
Considering the above, the balances by currency mentioned in this Note correspond to the sum of
foreign currency of each of the entities that make LATAM Airlines Group S.A. and Subsidiaries.
Following are the current exchange rates for the US dollar, on the dates indicated:
101
As of December 31,
2020
2019
84,14
5,18
710,95
3.421,00
0,81
1,30
6,86
19,93
1,39
3,62
42,14
59,83
4,01
748,74
3.271,55
0,89
1,43
6,86
18,89
1,49
3,31
37,24
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
Australian dollar
Boliviano
Mexican peso
New Zealand dollar
Peruvian Sol
Uruguayan peso
Foreign currency
The foreign currency detail of balances of monetary items in current and non-current assets is as
follows:
Current assets
Cash and cash equivalents
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Other financial assets, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
483,303
16,885
13,157
32,368
2,168
10,361
369,455
38,909
12,981
311
4
3,987
132
1,867
5,639
1,041
242,624
10,974
9,407
50,421
5,971
21,927
77,933
65,991
47,328
7
17,395
26,008
138
-
2,795
985
Financial statements
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Current assets
As of
As of
December 31,
December 31,
Non-current assets
102
103
Other non - financial assets, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Trade and other accounts receivable, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Accounts receivable from related entities, current
Chilean peso
U.S. dollar
Tax current assets
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Peruvian sun
Other currency
Total current assets
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. Dollar
Other currency
Other financial assets, non-current
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Other non - financial assets, non-current
Argentine peso
Brazilian real
U.S. dollar
Other currency
Accounts receivable, non-current
Chilean peso
Deferred tax assets
Colombian peso
U.S. dollar
Other currency
Total non-current assets
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
2020
ThUS$
42,973
11,058
2,985
15,913
175
2,667
2,351
7,824
177,491
1,881
841
38,340
209
24,370
98,385
13,465
430
9
421
11,050
389
887
1,003
675
235
354
5,220
2,287
728,228
30,524
17,874
91,620
3,359
39,500
476,605
68,746
2019
ThUS$
81,521
11,263
20,553
24,451
61
2,878
5,140
17,175
501,006
22,809
1,457
125,342
545
32,711
257,421
60,721
537
42
495
19,506
1,560
1,006
1,111
54
264
-
13,707
1,804
892,522
46,613
49,818
227,375
6,769
57,780
343,784
160,383
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
9,486
3,574
69
284
1,369
2,490
1,700
36,251
39
12,974
3,732
19,506
4,984
4,984
2,228
221
13
1,994
52,949
39
16,548
5,053
505
1,369
6,235
23,200
10,243
4,441
65
296
1,525
2,169
1,747
29,166
54
7,891
3
21,218
4,722
4,722
3,339
487
856
1,996
47,470
54
12,332
4,787
783
1,525
3,028
24,961
Financial statements
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The foreign currency detail of balances of monetary items in current liabilities and non-current is as
follows:
104
Current liabilities
Other financial liabilities, current
Argentine peso
Brazilian real
Chilean peso
Euro
U.S. dollar
Other currency
Trade and other accounts
payables, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Peruvian sol
Mexican peso
Pound sterling
Uruguayan peso
Other currency
Accounts payable to related entities, current
Chilean peso
U.S. dollar
Other provisions, current
Chilean peso
Other currency
Up to 90 days
91 days to 1 year
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
239,712
2
59
40,552
87
198,996
16
1,285,233
228,069
71,446
312,921
12,300
143,780
392,914
11,759
16,546
35,269
441
59,788
(229)
-
(229)
14
-
14
69,623
1
128
42,625
145
26,676
48
1,338,123
252,799
59,837
322,996
2,558
113,733
480,129
24,197
5,233
20,289
1,018
55,334
53
53
-
2,079
27
2,052
86,573
-
163
70,639
258
15,504
9
20,908
7,315
37
10,991
1,165
41
912
222
60
45
-
120
-
-
-
1,628
29
1,599
210,627
2
118
15,229
339
194,896
43
10,091
1,096
320
1,295
868
484
4,263
1,447
33
119
29
137
-
-
-
-
-
-
Current liabilities
Other non-financial
liabilities, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Total current liabilities
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
105
Up to 90 days
91 days to 1 year
As of
December 31,
2020
As of
December 31,
2019
As of
December 31,
2020
As of
December 31,
2019
ThUS$
ThUS$
ThUS$
ThUS$
42,467
961
976
5,836
622
3,206
19,707
11,159
1,567,596
229,032
72,481
359,309
12,922
147,073
611,787
134,992
19,335
348
1,537
705
3,059
3,133
4,531
6,022
1,429,213
253,148
61,502
366,406
5,617
117,011
511,336
114,193
50
-
3
1
38
-
-
8
109,159
7,315
203
81,660
1,203
299
16,416
2,063
-
-
-
-
-
-
-
-
220,718
1,098
438
16,524
868
823
199,159
1,808
Financial statements
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106
More than 1 to 3 years
More than 3 to 5 years
More than 5 years
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
As of
December 31,
2020
ThUS$
As of
December 31,
2019
ThUS$
268,320
180,150
351
427
87,280
112
70,145
47,752
21,051
1,342
45,834
696
26,872
278
11,736
6,252
64,152
64,152
-
448,451
696
27,223
292,054
278
12,163
114,583
1,454
366,889
236,346
700
550
128,820
473
151,254
14,367
135,541
1,346
36,615
485
20,538
281
9,217
6,094
80,628
80,628
-
635,386
485
21,238
331,341
281
9,767
270,455
1,819
4,250
1,320
-
-
2,930
-
1,390
1,390
-
-
-
-
-
-
-
-
-
-
-
5,640
-
-
2,710
-
-
2,930
-
12,915
2,291
40
141
10,308
135
-
-
-
-
-
-
-
-
-
-
-
-
-
12,915
-
40
2,291
-
141
10,308
135
403,841
398,199
-
-
5,642
-
241
241
-
-
-
-
-
-
-
-
-
-
-
404,082
-
-
398,440
-
-
5,642
-
376,535
369,525
-
-
7,010
-
-
-
-
-
-
-
-
-
-
-
-
-
-
376,535
-
-
369,525
-
-
7,010
-
Non-current liabilities
Other financial liabilities, non-current
Chilean peso
Brazillian real
Euro
U.S. dollar
Other currency
Accounts payable, non-current
Chilean peso
U.S. dollar
Other currency
Other provisions, non-current
Argentine peso
Brazillian real
Colombian peso
Euro
U.S. dollar
Provisions for
employees benefits, non-current
Chilean peso
U.S. dollar
Total non-current liabilities
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Financial statements
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107
108
General summary of foreign currency:
As of
As of
December 31,
December 31,
Total assets
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Total liabilities
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Net position
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
2020
ThUS$
781,177
30,563
34,422
96,673
3,864
40,869
482,840
91,946
2,534,928
237,043
99,907
1,134,173
14,403
159,535
751,358
138,509
(206,480)
(65,485)
(1,037,500)
(10,539)
(118,666)
(268,518)
(46,563)
2019
ThUS$
939,992
46,667
62,150
232,162
7,552
59,305
346,812
185,344
2,674,767
254,731
83,218
1,086,087
6,766
127,742
998,268
117,955
(208,064)
(21,068)
(853,925)
786
(68,437)
(651,456)
67,389
NOTE 30 - EARNINGS / (LOSS) PER SHARE
For the year ended
December 31,
Basic earnings / (loss) per share
2020
2019
Earnings / (loss) attributable to
owners of the parent (ThUS$)
(4,545,887)
190,430
Weighted average number
of shares, basic
606,407,693
606,407,693
Basic earnings / (loss) per share (US$)
(7.49642)
0.31403
For the year ended
December 31,
Diluted earnings / (loss) per share
2020
2019
Earnings / (loss) attributable to
owners of the parent (ThUS$)
(4,545,887)
190,430
Weighted average number
of shares, basic
Weighted average number
of shares, diluted
606,407,693
606,407,693
606,407,693
606,407,693
Diluted earnings / (loss) per share (US$)
(7.49642)
0.31403
Financial statements
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NOTE 31 – CONTINGENCIES
I. Lawsuits
109
1) Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries
Company
Court
Case Number
Origin
Stage of trial
Fidelidade
Viagens e
Turismo
Fazenda Pública do
Município de São
Paulo.
1004194-
37.2018.8.26.0053
1526893-
48.2018.8.26.0090)
(EF
fines
This is a voidance action appealing the charges for
violations and
/
67.168.884 / 67.168.906 / 67.168.914 / 67.168.965). We
are arguing that numbers are missing from the ISS
calculation base since the company supposedly made
improper deductions.
/ 67.168.833
(67.168.795
United States
Bankruptcy Court for
the Southern District
of New York
Case No. 20-11254
LATAM Airlines initiated a reorganization proceeding in
the United States of America in accordance with the
regulations established in Chapter 11 of Title 11 of the
Code of the United States of America, filing a voluntary
request for relief pursuant thereto (the “Chapter 11
Proceeding”), which grants an automatic stay of
enforcement for at least 180 days.
LATAM Airlines
Group S.A.,
Aerovías de
Integración
Regional S.A.,
LATAM Airlines
Perú S.A., Latam-
Airlines Ecuador
S.A., LAN Cargo
S.A., TAM Linhas
Aereas S.A. and
32 affiliates
The lawsuit was assigned on January 31, 2018. That same day, a
decision was rendered suspending the charges without any bond.
The municipality filed an appeal against this decision on April 30,
2018. On November 11, 2019 there was a totally favorable
decision for Tam Viagens S.A. The Municipio filed an appeal that
is pending.
On May 26, 2020, LATAM Airlines Group S.A. and 28 affiliates
individually filed a voluntary bankruptcy petition with the United
States Bankruptcy Court for the Southern District of New York
pursuant to Chapter 11 of the United States Bankruptcy Code.
Subsequently, on July 7 and 9, 2020, 9 additional affiliated
debtors (the “Subsequent Debtors”), including TAM Linhas
Aereas S.A., filed voluntary bankruptcy applications with the
Court pursuant to Chapter 11 of the United States Bankruptcy
Code. The cases are pending ruling before the Honorable Judge
James L. Garrity Jr. and are jointly administered under case
number 20-11254. On September 18, 2020, LATAM Airlines
Group S.A. received approval of the amended proposal on Debtor
in Possession (DIP) financing submitted September 17, 2020 to
the United States District Court for the Southern District of New
York. The Court issued an order setting December 18, 2020 as the
general deadline by which LATAM’s creditors can present proof
of claim, except for certain litigants in Brazil, who can present
proof of claim through February 5, 2021. The judge also extended
the period during which LATAM has the exclusive right to present
a reorganization plan to January 29, 2021 On January 27, 2021,
the Court approved the extension for the period for exclusively
filing the reorganization plan until June 30, 2021. Currently,
various hearings have been held, the process is in force.
Amounts
Committed (*)
ThUS$
84,652
-0-
Financial statements
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Company
Court
Case Number
Origin
Stage of trial
110
LATAM Airlines
Group S.A.
2° Juzgado Civil de
Santiago
C-8553-2020
Request for recognition of the foreign reorganization
proceeding.
On June 1, 2020, LATAM Airlines Group SA, in its capacity as
foreign representative of the reorganization procedure under the
rules of Chapter 11 of Title 11 of the United States Code, filed the
request for recognition of the foreign reorganization proceeding as
the main proceeding, pursuant to Law 20,720. On June 4, 2020,
the Court issued the ruling recognizing in Chile the bankruptcy
proceeding for the foreign reorganization of the company LATAM
Airlines Group S.A. All remedies filed against the decision have
been dismissed, so the decision is final. Currently the proceeding
remains open.
Amounts
Committed (*)
ThUS$
-0-
Aerovías de
Integración
Regional S.A.
Superintendencia de
Sociedades
-
Request for recognition of the foreign reorganization
proceeding.
-0-
On June 12, 2020, the Superintendency of Companies recognized
in Colombia the reorganization proceeding filed before the
Bankruptcy Court of the United States of America for the
Southern District of New York as a main process, under the terms
of Title III of Law 1116 of 2006. On October 2, 2020, the
Companies Commission of Colombia acknowledged the decision
adopted September 18, 2020, by the United States District Court
for the Southern District of New York that approved the Debtor in
Possession financing proposal submitted by LATAM Airlines
Group S.A. and the companies that voluntarily petitioned for
Chapter 11, including the Colombian companies.
Financial statements
252
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Company
Court
Case Number
Origin
Stage of trial
111
LATAM Airlines
Perú S.A
INDECOPI
LATAM Finance
Limited
Grand Court of the
Cayman Islands
Peuco Finance
Limited
Grand Court of the
Cayman Islands
Piquero Leasing
Limited
Grand Court of the
Cayman Islands
Peuco Finance
Limited
Grand Court of the
Cayman Islands
LATAM Finance
Limited
Grand Court of the
Cayman Islands
-
-
-
-
-
-
Amounts
Committed (*)
ThUS$
-0-
Request for a preventive bankruptcy process.
On May 27, 2020, LATAM Airlines Peru submitted a request for
a preventive bankruptcy process before the Indecopi of Peru and is
awaiting admission.
Request for a provisional bankruptcy process.
Request for a provisional bankruptcy process.
Request for a provisional bankruptcy process.
A petition for a provisional liquidation.
A petition for a provisional liquidation.
On May 26, 2020, LATAM Finance Limited submitted a request
for a provisional liquidation, covered in the reorganization
proceeding filed before the Bankruptcy Court of the United States
of America, which was accepted on May 27, 2020 by the Grand
Court of the Cayman Islands. Currently the proceeding remains
open.
On May 26, 2020, Peuco Finance Limited submitted a request for
a provisional liquidation, covered in the reorganization proceeding
filed before the Bankruptcy Court of the United States of America,
which was accepted on May 27, 2020 by the Grand Court of the
Cayman Islands. Currently the proceeding remains open.
On July 07, 2020, Piquero Leasing Limited submitted a request for
a provisional liquidation, covered in the reorganization proceeding
filed before the Bankruptcy Court of the United States of America,
which was accepted on July 10, 2020, by the Grand Court of the
Cayman Islands. Currently the proceeding remains open.
On September 28, 2020, Peuco Finance Limited filed a petition to
suspend the liquidation. On October 9, 2020, the Grand Court of
Cayman Islands accepted the petition and extended the status of
temporary liquidation for a period of 6 months. The lawsuit
continues to be active.
On September 28, 2020, LATAM Finance Limited filed a petition
to suspend the liquidation. On October 9, 2020, the Grand Court
of Cayman Islands accepted the petition and extended the status of
temporary liquidation for a period of 6 months. The lawsuit
continues to be active.
-0-
-0-
-0-
-0-
-0-
Financial statements
253
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Amounts
Committed (*)
ThUS$
10,072
2) Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries.
112
Company
Court
Case Number
Origin
Stage of trial
LATAM Airlines
Group S.A. y Lan
Cargo S.A.
European Commission.
Investigation of alleged infringements to free
competition of cargo airlines, especially fuel
surcharge. On December 26th, 2007, the General
Directorate for Competition of the European
Commission notified Lan Cargo S.A. and
LATAM Airlines Group S.A. the instruction
five cargo airlines,
process against
including Lan Cargo S.A., for alleged breaches of
competition in the air cargo market in Europe,
especially the alleged fixed fuel surcharge and
freight.
twenty
On April 14th, 2008, the notification of the European Commission
was replied. The appeal was filed on January
24, 2011.
On May 11, 2015, we attended a hearing at which we petitioned for
the vacation of the Decision based on discrepancies in the Decision
between the operating section, which mentions four infringements
(depending on the routes involved) but refers to Lan in only one of
those four routes; and the ruling section (which mentions one single
conjoint infraction).
On November 9th, 2010, the General Directorate for Competition
of the European Commission notified Lan Cargo S.A. and LATAM
Airlines Group S.A. the imposition of a fine in the amount of
THUS$10,072 (8.220.000 Euros)
This fine is being appealed by Lan Cargo S.A. and LATAM
Airlines Group S.A. On December 16, 2015, the European Court
of Justice revoked
the Commission’s decision because of
discrepancies. The European Commission did not appeal the
decision, but presented a new one on March 17, 2017 reiterating the
imposition of the same fine on the eleven original airlines. The fine
totals 776,465,000 Euros. It imposed the same fine as before on
Lan Cargo and its parent, LATAM Airlines Group S.A., totaling
8.2 million Euros. On May 31, 2017 Lan Cargo S.A. and LATAM
Airlines Group S.A. filed a petition with the General Court of the
European Union seeking vacation of this decision. We presented
our defense in December 2017. On July 12, 2019, we attended a
hearing before the European Court of Justice to confirm our
petition for vacation of judgment or otherwise, a reduction in the
amount of the fine. LATAM AIRLINES GROUP, S.A. expects
that the ruling by the General Court of the European Union may
reduce the amount of this fine. On December 17, 2020, the
European Commission submitted proof of claim for the total
amount of the fine (KUS$10,072 or €8,220,000) to the New York
Court hearing the Chapter 11 procedure petitioned by LATAM
Airlines Group, S.A. and LAN Cargo, S.A. in May 2020.
Financial statements
254
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Company
Court
Case Number
Origin
Stage of trial
113
Lan Cargo S.A. y
LATAM Airlines
Group S.A.
In
the High Court of
Justice Chancery División
(England) Ovre Romerike
District Court (Norway) y
Directie Juridische Zaken
Afdeling Ceveil Recht
Cologne
(Netherlands),
Court
Regional
(Landgerich
Köln
Germany).
Lawsuits filed against European airlines by users of
freight services in private lawsuits as a result of the
investigation into alleged breaches of competition of
cargo airlines, especially fuel surcharge. Lan Cargo
S.A. and LATAM Airlines Group S.A., have been
sued in court proceedings directly and/or in third
party, based in England, Norway, the Netherlands
and Germany.
Aerolinhas
Brasileiras S.A.
Federal Justice.
0008285-
53.2015.403.6105
An action seeking to quash a decision and petioning
for early protection in order to obgain a revocation of
the penalty imposed by the Brazilian Competition
Authority (CADE) in the investigation of cargo
airlines alleged fair trade violations, in particular the
fuel surcharge.
Aerolinhas
Brasileiras S.A.
Federal Justice.
0001872-
58.2014.4.03.6105
An annulment action with a motion for preliminary
injunction, was filed on 28/02/2014, in order to
cancel tax debts of PIS, CONFINS, IPI and II,
connected with
process
the
10831.005704/2006.43.
administrative
Cases are in the uncovering evidence stage. In the case in England,
mediation was held with nearly all the airlines involved in the aim of
attempting to reach an agreement. It began in September, and LATAM
Airlines Group S.A. reached an agreement for approximately GBP
636,000. A settlement was signed in December 2018 and payment was
made in January 2019. This lawsuit ended for all plaintiffs in the class
action, except for one who signed a settlement for approximately GBP
222,469.63 in December 2019. The payment was made in January
2020 and concluded the entire lawsuit in England. The amount remains
undetermined for the lawsuits in the remaining countries (Norway, the
Netherlands and Germany). In the case of Germany, the suspension of
the case has been requested, relying on the financial reorganization
procedure requested by LATAM Airlines Group, S.A. and LAN
CARGO, S.A. in the United States (Chapter 11) in May 2020. The
German Court has not yet ruled on this request. DB Barnsdale AG;
British Airways; KLM; Martinair; Air France; Lufthansa; Lufthansa
Cargo and Swiss Air filed a claim with the U.S. Bankruptcy Court
before the deadline that creditors had to present their Chapter 11 claims,
which must be processed accordingly.
This action was filed by presenting a guaranty – policy – in order to
suspend the effects of the CADE’s decision regarding the payment of
the following fines: (i) ABSA: ThUS$10,438; (ii) Norberto Jochmann:
ThUS$201; (iii) Hernan Merino: ThUS$ 102; (iv) Felipe Meyer:ThUS$
102. The action also deals with the affirmative obligation required by
the CADE consisting of the duty to publish the condemnation in a
widely circulating newspaper. This obligation had also been stayed by
the court of federal justice in this process. Awaiting CADE’s statement.
ABSA began a judicial review in search of an additional reduction in
the fine amount. The Judge’s decision was published on March 12,
2019, and we filed an appeal against it on March 13, 2019
We have been waiting since August 21, 2015 for a statement by Serasa
on TAM’s letter of indemnity and a statement by the Union. The
statement was authenticated on January 29, 2016. A new insurance
policy was submitted on March 30, 2016 with the change to the
guarantee requested by PGFN. On 05/20/2016 the process was sent to
PGFN, which was manifested on 06/03/2016. The Decision denied the
company's request in the lawsuit. The court (TRF3) made a decision to
eliminate part of the debt and keep the other part (already owed by the
Company, but which it has to pay only at the end of the process:
KUS$3,283– R$17,063,902.35). We must await a decision on the
Treasury appeal.
Amounts
Committed
(*)
ThUS$
-0-
8,353
8,875
Financial statements
255
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Company
Court
Case Number
Origin
Stage of trial
114
Tam Linhas
Aéreas S.A.
Court of the Second
Region.
2001.51.01.012530-0
Ordinary judicial action brought for the purpose of
declaring the nonexistence of legal relationship
obligating the company to collect the Air Fund.
Tam Linhas
Aéreas S.A.
Internal Revenue Service
of Brazil.
10880.725950/2011-05
Compensation credits of the Social Integration
Program (PIS) and Contribution for Social
Security Financing (COFINS) Declared on
DCOMPs.
Unfavorable court decision in first instance. Currently expecting
the ruling on the appeal filed by the company.
In order to suspend chargeability of Tax Credit a Guaranty Deposit
to the Court was delivered for R$ 260.223.373,10-original amount
in 2012/2013, which currently equals THUS$63,256. The court
decision requesting that the Expert make all clarifications requested
by the parties in a period of 30 days was published on March 29,
2016. The plaintiffs’ submitted a petition on June 21, 2016
requesting acceptance of the opinion of their consultant and an
urgent ruling on the dispute. No amount additional to the deposit
that has already been made is required if this case is lost.
The objection (manifestação de inconformidade) filed by the
company was rejected, which is why the voluntary appeal was
filed. The case was assigned to the 1st Ordinary Group of Brazil’s
Administrative Council of Tax Appeals (CARF) on June 8, 2015.
TAM’s appeal was included in the CARF session held August 25,
2016. An agreement that converted the proceedings into a formal
case was published on October 7, 2016. The amount has been
reduced after some set-offs were approved by the Department of
Federal Revenue of Brazil.
Amounts
Committed (*)
ThUS$
68,821
20,732
Financial statements
256
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Company
Court
Aerovías de
Integración
Regional,
AIRES S.A.
United States Court of
Appeals for the Eleventh
Circuit, Florida, U.S.A.
45th Civil Court of the
Bogota Circuit in
Colombia.
Case
Number
2013-20319
CA 01
Amounts
Committed (*)
ThUS$
12,443
115
Origin
Stage of trial
S.A.
The July 30th, 2012 Aerovías de Integración
Recional, Aires
(LATAM AIRLINES
COLOMBIA) initiated a legal process in Colombia
against Regional One INC and Volvo Aero Services
LLC, to declare that these companies are civilly liable
for moral and material damages caused to LATAM
AIRLINES COLOMBIA arising from breach of
contractual obligations of the aircraft HK-4107.
The June 20th, 2013 AIRES SA And / Or LATAM
AIRLINES COLOMBIA was notified of the lawsuit
filed in U.S. for Regional One INC and Dash 224
LLC for damages caused by the aircraft HK-4107
arguing failure of LATAM AIRLINES GROUP S.A.
customs duty to obtain import declaration when the
aircraft
for
maintenance required by Regional One.
in April 2010 entered Colombia
Colombia. This case is being heard by the 45th Civil Court of the Bogota Circuit in
Colombia. Statements were taken from witnesses presented by REGIONAL ONE and
VAS on February 12, 2018. The court received the expert opinions requested by
REGIONAL ONE and VAS and given their petition, it asked the experts to expand
upon their opinions. It also changed the experts requested by LATAM AIRLINES
COLOMBIA. The case was brought before the Court on September 10, 2018 and these
rulings are pending processing so that a new hearing can be scheduled. On October 31,
2018, the judge postponed the deadline for the parties to answer the objection because
of a serious error brought to light by VAS regarding the translation submitted by the
expert. The process has been in the judge’s chambers since March 11, 2019 to decide
on replacing the damage estimation expert as requested by LATAM AIRLINES
COLOMBIA. The one previously appointed did not take office. A petition has also
been made by VAS objecting to the translation of the documents in English into
Spanish due to serious mistakes, which was served to the parties in October 2018. The
45th Civil Circuit Court issued an order on August 13, 2019 that did not decide on the
pending matters but rather voided all actions since September 14, 2018 and ordered the
case to be referred to the 46th Civil Circuit Court according to article 121 of the
General Code of Procedure. Said article says that court decisions must be rendered in
no more than one (1) year as from the service of the court order admitting the claim. If
that period expires without any ruling being issued, the Judge will automatically forfeit
competence over the proceedings and must give the Administrative Room of the
Superior Council of the Judiciary notice of that fact the next day, in addition to
referring the case file to the next sitting judge in line, who will have competence and
will issue a ruling in no more than 6 months. The case was sent to the 46th Civil
Circuit Court on September 4, 2019, which claims that there was a competence conflict
and then sent the case to the Superior Court of Bogotá to decide which court, the 45th
or 46th, had to continue with the case. The Court decided that 45th Civil Circuit Court
should continue with the case, so this Court on 01/15/2020 has reactivated the
procedural process ordering the transfer to the parties of the objection presented by
VAS for serious error of the translation to Spanish of documents provided in English.
On 02/24/2020 it declares that the parties did not rule on the objection presented by
VAS and requires the plaintiff to submit an expert opinion of damages corresponding
to the claims of the lawsuit through its channel. Since 03/16/20 a suspension of terms
is filed in Courts due to the pandemic. Judicial terms were reactivated on July 1, 2020.
On September 18, 2020, an expert opinion on damages was submitted that had been
requested by the Court. The Court ordered service of the ruling to the parties on
December 12, 2020.
Florida. On June 4, 2019, the State Court of Florida allowed REGIONAL ONE to add
a new claim against LATAM AIRLINES COLOMBIA for default on a verbal contract.
Given the new claim, LATAM AIRLINES COLOMBIA petitioned that the Court
postpone the trial to August 2019 to have the time to investigate the facts alleged by
REGIONAL ONE to prove a verbal contract. The facts discovery phase continued,
including the verbal statements of the experts of both sides, which have been taking
place since March 2020. Given the Covid-19 pandemic and the suspension of trials in
the County of Miami-Dade, the Court canceled the trial scheduled for June 2020. In
addition, the claims against Aires have been suspended given the request for
reorganization filed by LATAM AIRLINES GROUP SA and some of its subsidiaries,
including Aires, on May 26, 2020, under Chapter 11 of the United States Bankruptcy
Code. Dash and Regional One filed a claim with the U.S. Bankruptcy Court in
December 2020 before the deadline that creditors had to present their Chapter 11
claims, which must be processed accordingly.
Financial statements
257
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116
Company
Court
Case Number
Origin
Stage of trial
Tam
Aéreas S.A.
Linhas
Internal
Service of Brazil
Revenue
10880.722.355/20
14-52
On August 19th, 2014 the Federal Tax Service
issued a notice of violation stating
that
compensation credits Program (PIS) and the
Contribution for the Financing of Social Security
COFINS by TAM are not directly related to the
activity of air transport.
TAM Linhas
Aéreas S.A.
Sao Paulo Labor
Court, Sao Paulo
1001531-
73.2016.5.02.0710
The Ministry of Labor filed an action seeking
that the company adapt the ergonomics and
comfort of seats.
TAM Linhas
Aéreas S.A.
Ministerio de Trabajo
0001734-
78.2014.5.02.0045
This action was filed by the Ministry of Labor
seeking compliance with the laws on rest time,
overtime and similar issues. It is before the São
Paulo Labor Court.
An administrative objection was filed on September 17th, 2014. A first-instance
ruling was rendered on June 1, 2016 that was partially favorable. The separate fine
was revoked. A voluntary appeal was filed on June 30, 2016, which is pending a
decision by CARF. On September 9, 2016, the case was referred to the Second
Division, Fourth Chamber, of the Third Section of the Administrative Council of
Tax Appeals (CARF). In September 2019, the Court rejected the appeal of the
Hacienda Nacional. Hacienda Nacional filed a complaint that was denied by the
Court.
In August 2016, the Ministry of Labor filed a new lawsuit before the competent
Labor Court in Sao Paulo, in the same terms as case 0000009-45.2016.5.02.090, as
previously reported, the hearing date is set for October 22, 2018. We were served
the decision completely dismissing the claim in March 2019, against which the
plaintiff has filed an appeal. We are now awaiting the hearing by the Court of
Appeals.
Initial stage. It could potentially impact operations and control of employees’
working hours. The case was won at the trial court level, but the Public Prosecutor
appealed that decision, which failed at the appellate court level. The Prosecutor then
filed a motion requesting clarification that he later withdrew. He proposed taking it
as far as the supreme court, but he did not go through with it. The Prosecutor has
filed a remedy internally that is pending a decision by the Labor Supreme Court
(TST).
LATAM Airlines
Group S.A.
22° Civil Court of
Santiago
C-29.945-2016
The Company received notice of a civil liability
claim by Inversiones Ranco Tres S.A. on January
18, 2017. It is represented by Mr. Jorge Enrique
Said Yarur. It was filed against LATAM
Airlines Group S.A. for an alleged contractual
default by the Company and against Ramon
Eblen Kadiz, Jorge Awad Mehech, Juan Jose
Cueto Plaza, Enrique Cueto Plaza and Ignacio
Cueto Plaza, directors and officers, for alleged
breaches of their duties. In the case of Juan Jose
Cueto Plaza, Enrique Cueto Plaza and Ignacio
Cueto Plaza, it alleges a breach, as controllers of
the Company, of
the
incorporation agreement. LATAM has retained
legal counsel specializing in this area to defend
it.
their duties under
The claim was answered on March 22, 2017 and the plaintiff filed its replication on
April 4, 2017. LATAM filed its rejoinder on April 13, 2017, which concluded the
argument stage of the lawsuit. A reconciliation hearing was held on May 2, 2017,
but the parties did not reach an agreement. The Court issued the evidentiary decree
on May 12, 2017. We filed a petition for reconsideration because we disagreed with
certain points of evidence. That petition was partially sustained by the Court on
June 27, 2017. The evidentiary stage commenced and then concluded on July 20,
2017. Observations to the evidence must now be presented. That period expires
August 1, 2017. We filed our observations to the evidence on August 1, 2017. We
were served the decision on December 13, 2017 that dismissed the claim since
LATAM was in no way liable. The plaintiff filed an appeal on December 26, 2017.
Arguments were pled before the Santiago Court of Appeals on April 23, 2019, and
on April 30, 2019, this Court confirmed the ruling of the trial court absolving
LATAM. The losing party was ordered to pay costs in both cases. On May 18,
2019, Inversiones Ranco Tres S.A. filed a remedy of vacation of judgment based on
technicalities and on substance against the Appellate Court decision. The Appellate
Court admitted both appeals on May 29, 2019 and the appeals are pending a hearing
by the Supreme Court.
Amounts
Committed (*)
ThUS$
52,024
15,260
18,243
18,646
Financial statements
258
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117
Company
Court
Case Number
Origin
Stage of trial
TAM Linhas
Aéreas S.A.
10th Jurisdiction of Federal
Tax
Enforcement of Sao Paulo
0061196-
68.2016.4.03.6182
Tax Enforcement Lien No. 0020869-47.2017.4.03.6182
on Profit-Based Social Contributions from 2004 to 2007.
This tax enforcement was referred to the 10th Federal Jurisdiction on
February 16, 2017. A petition reporting our request to submit collateral
was recorded on April 18, 2017. At this time, the period is pending for
the plaintiff to respond to our petition. The bond was replaced. We are
waiting for the evidentiary period to begin.
Amounts
Committed (*)
ThUS$
31,392
TAM Linhas
Aéreas S.A.
Department of Federal
Revenue of Brazil
5002912.29.2019.
4.03.6100
A lawsuit disputing the debit in the administrative
proceeding 16643.000085/2009-47, reported in previous
notes, consisting of a notice demanding recovery of the
Income and Social Assessment Tax on the net profit
(SCL) resulting from the itemization of royalties and use
of the TAM trademark
The lawsuit was assigned on February 28, 2019. A decision was
rendered on March 1, 2019 stating that no guarantee was required.
Actualmente, debemos esperar la decisión final. On 04/06/2020 TAM
Linhas Aéreas S.A. had a favorable decision (sentence). The National
Treasury can appeal. Today, we await the final decision.
8,862
TAM Linhas
Aéreas S.A
Delegacía de Receita
Federal
10611.720630/201
7-16
This is an administrative claim about a fine for the
incorrectness of an import declaration.
The administrative defensive arguments were presented September 28,
2017. The Court dismissed the Company’s appeal in August 2019.
Then on September 17, 2019, Company filed a special appeal (CRSF
(Higher Tax Appeals Chamber)) that is pending a decision.
16,204
TAM Linhas
Aéreas S.A
Delegacía de Receita
Federal
10611.720852/201
6-58
An improper charge of the Contribution for the Financing
of Social Security (COFINS) on an import
We are currently awaiting a decision. There is no predictable decision
date because it depends on the court of the government agency.
11,598
TAM
Aéreas S.A
Linhas
Delegacía de Receita
Federal
16692.721.933/20
17-80
The Internal Revenue Service of Brazil issued a notice of
violation because TAM applied for credits offsetting the
contributions for the Social Integration Program (PIS) and
the Social Security Funding Contribution (COFINS) that
do not bear a direct relationship to air transport (Referring
to 2012).
An administrative defense was presented on May 29, 2018.
24,926
União Federal
SNEA (Sindicato
Nacional das
empresas
aeroviárias)
0012177-
54.2016.4.01.3400
A claim against the 72% increase in airport control fees
(TAT-ADR) and approach control fees (TAT-APP)
charged by the Airspace Control Department (“DECEA”).
A decision is now pending on the appeal presented by SNEA.
58,919
TAM Linhas
Aéreas S/A
União Federal
2001.51.01.02042
0-0
TAM and other airlines filed a recourse claim seeking a
finding that there is no legal or tax basis to be released
from collecting the Additional Airport Fee (“ATAERO”).
A decision by the superior court is pending. The amount is
indeterminate because even though TAM is the plaintiff, if the ruling is
against it, it could be ordered to pay a fee.
-0-
TAM Linhas
Aéreas S/A
Delegacia da Receita
Federal
10880-
900.424/2018-07
This is a claim for a negative Legal Entity Income Tax
(IRPJ) balance for the 2014 calendar year (2015 fiscal
year) because set-offs were not allowed.
The administrative defensive arguments were presented March 19,
2018. An administrative decision is now pending.
13,667
TAM Linhas
Aéreas S/A
Department of Federal
Revenue of Brazil
19515-
720.823/2018-11
An administrative claim to collect alleged differences in
SAT payments for the periods 11/2013 to 12/2017.
A defense was presented on November 28, 2018. The Court dismissed
the Company’s appeal in August 2019. Then on September 17, 2019,
Company filed a voluntary appeal (CRSF (Administrative Tax Appeals
Board)) that is pending a decision.
95,878
Financial statements
259
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118
Company
Court
Case Number
Origin
Stage of trial
TAM
Aéreas S/A
Linhas
Department
of
Federal Revenue
of Brazil
10880.938832/20
13-19
The decision denied the reallocation petition and did not equate
the Social Security Tax (COFINS) credit declarations for the
second quarter of 2011, which were determined to be in the non-
cumulative system
An administrative defense was argued on March 19, 2019. The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S/A
Department of
Federal Revenue
of Brazil
10880.938834/20
13-16
The decision denied the reallocation petition and did not equate the
Social Security Tax (COFINS) credit declarations for the third
quarter of 2011, which were determined to be in the non-
cumulative system.
An administrative defense was argued on March 19, 2019. The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S/A
Department of
Federal Revenue
of Brazil
10880.938837/20
13-41
The decision denied the reallocation petition and did not equate the
Social Security Tax (COFINS) credit declarations for the fourth
quarter of 2011, which were determined to be in the non-
cumulative system.
An administrative defense was argued on March 19, 2019. The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S/A
Department of
Federal Revenue
of Brazil
10880.938838/20
13-96
The decision denied the reallocation petition and did not equate the
Social Security Tax (COFINS) credit declarations for the first
quarter of 2012, which were determined to be in the non-
cumulative system.
We presented our administrative defense. The Court dismissed the
Company’s defense in December 2020. The Company filed a
voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
0012541-
56.2016.5.03.0144
A class action in which the Union is petitioning that TAM be
ordered to make payment of the correct calculation of Sundays and
holidays.
A hearing was set for December 17, 2019. On 04/30/2020, we were
notified of the unfavorable court ruling in the first instance, filing an
appeal. The Court of Appeals confirmed the trial court’s decision.
TAM Linhas
Aéreas S/A
LATAM Airlines
Argentina
Department of
Federal Revenue
of Brazil
Commercial Trial
Court No. 15 of
Buenos Aires.
11479/2012
Proconsumer and Rafaella Cabrera
filed a claim citing
discriminating fees charged to foreign users as compared to
domestic users for services retained in Argentina.
The trial court judge dismissed Mrs. Cabrera’s claim on March 7, 2019
and sustained the motion of lack of standing entered by Proconsumer.
The ruling was appealed by the plaintiff on April 8, 2019 and will be
decided by Room D.
Federal Commercial and Civil Trial Court No. 11 in the city of Buenos
Aires. After two years of arguments on jurisdiction and competence,
the claim was assigned to this court and an answer was filed on March
19, 2019
LATAM Airlines
Group Argentina,
Brasil, Perú,
Ecuador, y TAM
Mercosur.
Commercial and
Civil Trial Court
No. 11 of Buenos
Aires.
1408/2017
Consumidores Libres Coop. Ltda. filed this claim on March 14,
2017 regarding a provision of services. It petitioned for the
reimbursement of certain fees or the difference in fees charged for
passengers who purchased a ticket in the last 10 years but did not
use it.
TAM Linhas
Aéreas S.A
Department of
Federal Revenue
of Brazil
10.880.938842/20
13-54
The decision denied the petition for reassignment and did not
equate the CONFINS credit statements for the third quarter of
2012 that had been determined to be in the non-accumulative
system.
We presented our administrative defense. The Court dismissed the
Company’s defense in December 2020. The Company filed a
voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S.A
Department of
Federal Revenue
of Brazil
10.880.93844/201
3-43
The decision denied the petition for reassignment and did not
equate the CONFINS credit statements for the third quarter of
2012 that had been determined to be in the non-accumulative
system.
We presented our administrative defense. The Court dismissed the
Company’s defense in December 2020. The Company filed a
voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S.A
Department of
Federal Revenue
of Brazil
10880.938841/20
13-18
The decision denied the petition for reassignment and did not
equate the CONFINS credit statements for the second quarter of
2012 that had been determined to be in the non-accumulative
system.
We presented our administrative defense. The Court dismissed the
Company’s defense in December 2020. The Company filed a
voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
Amounts
Committed (*)
ThUS$
12,815
9,370
12,556
8,665
12,272
-0-
-0-
9,169
8,655
8,189
Financial statements
260
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Company
Court
Case Number
Origin
Stage of trial
119
TAM Linhas
Aéreas S.A
Receita Federal de Brasil
10840.727719/201
9-71
Collection of PIS / COFINS tax for the period of 2014.
Latam-Airlines
Ecuador S.A.
Tribunal Distrital de lo
Fiscal
17509-2014-0088
An audit of the 2006 Income Tax Return that disallowed
fuel expenses, fees and other items because the necessary
support was not provided, according to Management.
Latam Airlines
Group S.A.
Southern District of
Florida. United States
District Court
19cv23965
A lawsuit filed by Jose Ramon Lopez Regueiro against
American Airlines Inc. and Latam Airlines Group S.A.
the
seeking an
commercial use of the Jose Marti International Airport in
Cuba that he says were repaired and reconditioned by his
family before the change in government in 1959.
indemnity for damages caused by
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910559/201
7-91
Compensation non equate by Cofins
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910547/201
7-67
Compensation non equate by Cofins
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910553/201
7-14
Compensation non equate by Cofins
We presented our administrative defense on January 11, 2020. The
Court dismissed the Company’s defense in December 2020. The
Company filed a voluntary appeal to the Brazilian Administrative
Council of Tax Appeals (CARF) that is pending a decision.
On August 6, 2018, the District Tax Claims Court rendered a decision
denying the request for a refund of a mistaken payment. An appeal
seeking vacation of this judgment by the Court was filed on September
5th and we are awaiting a decision by the Appellate judges. As of
December 31, 2018, the lawyers believe that the probability of
recovering this amount has fallen by 30% to 40%, so the provision was
increased to $8.7 million. We have applied IFRIC 23 as of 12/31/19
because of the percentage loss (more than 50%), and we have recorded
the entire provision in the income tax item.
Latam Airlines Group S.A. was served this claim on September 27,
2019. LATAM Airlines Group filed a motion to dismiss on November
26, 2019. In response, a motion to suspend discovery was filed on
December 23, 2019 while the Court was deciding on the motion to
dismiss. On April 6, 2020 the Court issued a Temporary Suspension
Order given the inability to proceed with the case on a regular basis as
a result of the indefinite duration and restrictions of the global
pandemic. The parties must notify the Court monthly of the possibility
of moving forward. The provision is undetermined.
It is about the non-approved compensation of Cofins. Administrative
defense submitted (Manifestação de Inconformidade). The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
We presented our administrative defense
(Manifestação de
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
We presented our administrative defense
(Manifestação de
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
Amounts
Committed (*)
ThUS$
33,551
12,505
-0-
10,185
11,839
11,324
Financial statements
261
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Company
Court
Case Number
Origin
Stage of trial
120
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910555/201
7-11
Compensation non equate by Cofins
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910560/201
7-16
Compensation non equate by Cofins
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910550/201
7-81
Compensation non equate by Cofins
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910549/201
7-56
Compensation non equate by Cofins
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910557/201
7-01
Compensation non equate by Cofins
We presented our administrative defense
(Manifestação de
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
We presented our administrative defense
(Manifestação de
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
We presented our administrative defense
(Manifestação de
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
(Manifestação de
We presented our administrative defense
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
We presented our administrative defense
(Manifestação de
Inconformidade). The Court dismissed the Company’s defense in
December 2020. The Company filed a voluntary appeal to the
Brazilian Administrative Council of Tax Appeals (CARF) that is
pending a decision.
Amounts
Committed (*)
ThUS$
11,976
10,354
12,117
10,153
9,604
TAM Linhas
Aéreas S.A.
TAM Linhas
Aéreas S.A.
TAM Linhas
Aéreas S.A.
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10840.722712/202
0-05
Administrative trial that deals with the collection of
PIS/Cofins proportionality (fiscal year 2015).
We presented our administrative defense
Inconformidade). A decision is pending.
(Manifestação de
26,454
Receita Federal de Brasil
10880.978948/201
9-86
It is about the non-approved compensation/reimbursement
of Cofins for the 4th Quarter of 2015.
TAM filed its administrative defense on July 14, 2020. A decision is
pending.
15,114
Receita Federal de Brasil
10880.978946/201
9-97
It is about the non-approved compensation/reimbursement
of Cofins for the 3th Quarter of 2015
TAM filed its administrative defense on July 14, 2020. A decision is
pending.
Receita Federal de Brasil
10880.978944/201
9-06
It is about the non-approved compensation/reimbursement
of Cofins for the 2th Quarter of 2015
TAM filed its administrative defense on July 14, 2020. A decision is
pending.
9,159
9,723
Financial statements
262
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Company
Court
Case Number
Origin
Stage of trial
121
Latam
Group S.A
Airlines
23° Juzgado Civil de
Santiago
C-8498-2020
Class Action Lawsuit filed by the National Corporation of
Consumers and Users (CONADECUS) against LATAM
Airlines Group S.A. for alleged breaches of the Law on
Protection of Consumer Rights due to flight cancellations
caused by the COVID-19 Pandemic, requesting the nullity
of possible abusive clauses, the imposition of fines and
compensation for damages in defense of the collective
interest of consumers. LATAM has hired specialist
lawyers to undertake its defense.
On 06/25/2020 we were notified of the lawsuit. On 04/07/2020 we filed
a motion for reversal against the ruling that declared the action filed by
CONADECUS admissible, the decision is pending to date. On
07/11/2020 we requested the Court to comply with the suspension of
this case, ruled by the 2nd Civil Court of Santiago, in recognition of the
foreign reorganization procedure pursuant to Law No. 20,720, for the
entire period that said proceeding lasts, a request that was accepted by
the Court. CONADECUS filed a remedy of reconsideration and an
appeal against this resolution should the remedy of reconsideration be
dismissed. The Court dismissed the reconsideration on August 3, 2020,
but admitted the appeal. The appeal is currently pending before the
Santiago Court of Appeals. The amount at
is
undetermined.
the moment
New York Case. Parallel to the lawsuit in Chile, on August 31, 2020,
CONADECUS filed on appeal with U.S. Bankruptcy Court for the
Southern District of New York (the “Bankruptcy Court”) because of
the automatic suspension imposed by Section 362 of the U.S.
Bankruptcy Code that, among other things, prohibits the parties from
filing or continuing with claims that involve a preliminary petition
against the Borrowers. CONADECUS petitioned (i) for a stay of the
automatic suspension to the extent necessary to continue with the class
action against LATAM in Chile and (ii) for a joint hearing by the
Bankruptcy Court and the Second Civil Court of Santiago in Chile (the
“Chile Insolvency Court”) to hear the matters relating to the claims of
CONADECUS in Chile. On December 18, 2020, the Bankruptcy Court
sustained part of CONADECUS’s petition, but only to allow it to
continue its appeal against the decision by the 23rd Civil Court of
Santiago and solely so that the Court of Appeals can decide whether or
not a stay is admissible under Chilean insolvency law. On December
31, 2020, CONADECUS petitioned to continue with its appeal against
the decision by the 25th Civil Court that approved the reconciliation
between AGRECU and LATAM.
Latam
Group S.A
Airlines
23° Juzgado Civil de
Santiago
C-8903-2020
Class Action Lawsuit filed by AGRECU against LATAM
Airlines Group S.A. for alleged breaches of the Law on
Protection of Consumer Rights due to flight cancellations
caused by the COVID-19 Pandemic, requesting the nullity
of possible abusive clauses, the imposition of fines and
compensation for damages in defense of the collective
interest of consumers. LATAM has hired specialist
lawyers to undertake its defense.
the
settlement was
On July 7, 2020 we were notified of the lawsuit. We filed our answer to
the claim on August 21, 2020. A settlement was reached with
AGRECU at that hearing that was approved by the Court on October 5,
2020. On October 7, 2020, the 25th Civil Court confirmed that the
decision approving
final and binding.
CONADECUS filed a brief on October 4, 2020 to become a party and
oppose the agreement, which was dismissed on October 5, 2020. It
petitioned for an official correction on October 8, 2020 and the
annulment of all proceedings on October 22, 2020, which were
dismissed, costs payable by CONADECUS, on November 16, 2020
and November 20, 2020, respectively. CONADECUS still has appeals
pending against these decisions. The amount at the moment is
undetermined.
Amounts
Committed (*)
ThUS$
-0-
-0-
Financial statements
263
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122
123
-
In order to deal with any financial obligations arising from legal proceedings in effect at
December 31, 2020, whether civil, tax, or labor, LATAM Airlines Group S.A. and
Subsidiaries, has made provisions, which are included in Other non-current provisions that are
disclosed in Note 21.
- The Company has not disclosed the individual probability of success for each contingency in
order to not negatively affect its outcome.
- Considering the returns of aircrafts and engines made through the reorganization process, in
accordance with the regulations established in Chapter 11 of Title 11 of the Code of the United
States of America, which allows the rejection of some contracts, the counterparties could file
claims that, in the case of being admitted by the Court, could result in contingent obligations
for the Company, which as of this date are not quantifiable.
(*) The Company has reported the amounts involved only for the lawsuits for which a reliable
estimation can be made of the financial impacts and of the possibility of any recovery, pursuant
to Paragraph 86 of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
II. Governmental Investigations.
1) On April 6, 2019, LATAM Airlines Group S.A. received notification of the resolution issued by
the National Economic Prosecutor's Office (FNE), which begins an investigation into the LATAM
Pass frequent passenger program. The last update in the case Role No. 2530-19 leading this
investigation corresponds to the response to a trade in May 2019.
2) On July 9, 2019, LATAM Airlines Group S.A. received the resolution issued by the National
Economic Prosecutor's Office (FNE), which begins an investigation into the Alliance Agreement
between LATAM Airlines Group S.A. and American Airlines INC. The last update in the case Role
No. 2565-19 leading this investigation corresponds to a statement on September 11, 2019
3) On July 26, 2019, the National Consumer Service of Chile (SERNAC) issued the Ordinary
Resolution No. 12,711 which proposed to initiate a collective voluntary mediation procedure on
effectively informing passengers of their rights in cases of cancellation of flights or no show to
boarding, as well as the obligation to return the respective boarding fees as provided by art. 133 C
of the Aeronautical Code. The Company has voluntarily decided to participate in this proceeding,
in which an agreement was reached on March 18, 2020, which implies the return of shipping fees
from September 1, 2021, with an initial amount of ThUS$ 5,165, plus ThUS$ 565, as well as
information to each passenger who has not flown since March 18, 2020, that their boarding fees are
available.
4) On October 15, 2019, LATAM Airlines Group S.A. received the resolution issued by the
National Economic Prosecuting Authority (FNE) advising of the start of an investigation into the
agreement between LATAM Airlines Group S.A. and Delta Airlines, Inc. The last move in the Case
N° 2585-19 leading this investigation corresponds to the response to a trade in February 2021.
5) On February 23, 2021 In the framework of the investigation Rol N ° 2484-18, LATAM Airlines
Group SA received Ordinary Official Letter N ° 243 of 2021 issued by the National Economic
Prosecutor's Office (FNE), which requests information regarding tariffs of cargo and passengers. In
2018 and 2019, requests for information have been received for complaints associated with the
transport of air cargo, the last activity of which occurred in December 2019. In this new
notification, the request for information to the passenger business is extended due to new
complaints received by the FNE.
NOTE 32 - COMMITMENTS
(a)
Commitments for loans obtained
The Company and its subsidiaries do not have credit agreements that indicate limits to some
financial indicators of the Company or the subsidiaries, with the exception of those detailed below:
Regarding the revolving committed credit line (“Revolving Credit Facility”) established with a
consortium of twelve banks led by Citibank, with a guarantee of aircraft, engines, spare parts and
supplies for a total committed amount of US $ 600 million, it includes restrictions of minimum
liquidity, measured at the Consolidated Company level (with a minimum level of US $ 750 million)
and individually measured for LATAM Airlines Group S.A. companies and TAM Linhas Aéreas
S.A. (with a minimum level of US $ 400 million). Compliance with these restrictions is a
prerequisite for using the line; if the line is used, said restrictions must be reported quarterly, and
non-compliance with these restrictions will accelerate credit. As of December 31, 2020, this line of
credit is fully used.
As of December 31, 2020, the Company is in compliance with all the financial indicators detailed
above.
On the other hand, the financing agreements of the Company generally establish clauses regarding
changes in the ownership structure and in the controller and disposition of assets (which mainly
refers to significant transfers of assets).
Under Section 362 of the Bankruptcy Code, the filing of voluntary bankruptcy petitions by the
Debtors automatically stayed most actions against the Debtors, including most actions to collect
indebtedness incurred prior to the Petition Date or to exercise control over the Debtors’ property.
Accordingly, counterparties are stayed from taking any actions as a result of such purported
defaults. Specifically, the financing agreements of the Company generally establish that the filing of
bankruptcy or similar proceedings constitute an event of default, which are unenforceable under the
Bankruptcy Code. At the date of the issuance of these financial statements, the Company has not
received notices of termination of financing arrangements, based on such an event of default.
On September 29, 2020 the company signed the so-called "DIP Financing", which contemplates
minimum liquidity restrictions of at least US $ 400 million at a consolidated level.
LATAM's obligations to the lenders of the DIP Financing have a super administrative preference
recognized under Chapter 11 of the U.S. Bankruptcy Code with respect to the other liabilities of the
company and entities of its corporate group that have filed for Chapter 11 proceedings ("Related
Subsidiaries") prior to the commencement of the Chapter 11 proceeding.
In addition, in order to secure the debt under the DIP Financing, LATAM and the Related
Subsidiaries granted certain guarantees, including, but not limited to, (i) in-rem guarantees to be
Financial statements
264
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124
125
granted over certain specified assets, such as spare engines, spare inventory, shares in certain
subsidiaries (including, but not limited to, (a) a pledge over the shares owned by LATAM in LAN
Cargo S.A., Inversiones Lan S.A., Lan Pax Group S.A., LATAM Travel II S.A., Technical Training
Latam S.A. and Holdco I S.A., (b) pledge over the shares owned by LAN Cargo S.A. in Transporte
Aéreo S.A., Inversiones Lan S.A., Fast Air Almacenes de Carga S.A. and Lan Cargo Inversiones
S.A. and (c) pledge over the shares owned by Inversiones LAN S.A. in LAN Cargo S.A.,
Transporte Aéreo S.A., Lan Pax Group S.A., Fast Air Almacenes de Carga S.A., LATAM Travel
Chile II S.A., Technical Training LATAM S.A. and Lan Cargo Inversiones S.A.), among others,
under the laws of the jurisdictions in which they are located, (ii) personal guarantees of the Related
Subsidiaries and (iii) a in-rem guarentee of general nature over the assets of LATAM and the
Related Subsidiaries other than certain "Excluded Assets" comprising, among other things, the
aircraft and the "Carve-Out" including, among other things, certain funds assigned for expenses of
the Chapter 11 proceedings.
(b) Other commitments
At December 31, 2020 the Company has existing letters of credit, certificates of deposits and
warranty insurance policies as follows:
Cre ditor Gua ra nte e
De btor
Type
Va lue
ThUS $
Re le a s e
da te
S upe rinte nde nc ia Na c iona l de Adua na s
y de Adminis tra c ión Tributa ria
Ae na Ae ropue rtos S .A.
Ame ric a n Alte rna tive Ins ura nc e
La ta m Airline s P e rú S .A.
La ta m Airline s Group S .A.
Twe nty s ix le tte rs of c re dit
Four le tte rs of c re dit
188,524
2,871
J a n- 20- 21
De c - 04- 21
La ta m Airline s Group S .A.
La ta m Airline s Group S .A.
Eight le tte rs of c re dit
One le tte r of c re dit
Corpora tion
Comis ión Europe a
Empre s a P úblic a de Hidroc a rburos
de l Ec ua dor EP P e troe c ua dor
La ta m Airline s Group S .A.
La ta m Airline s Group S .A.
Me tropolita n Da de County
La ta m Airline s Group S .A.
BBVA
J FK Inte rna tiona l Air Te rmina l LLC.
La ta m Airline s Group S .A.
S oc ie da d Conc e s iona ria P uda hue l S .A. La ta m Airline s Group S .A.
La ta m Airline s Group S .A.
S e rvic io Na c iona l de Adua na s
La ta m Airline s Group S .A.
Te s ore ría Na c iona l de la Re públic a
Ta m Linha s Aé re a s S .A.
P roc on
Ta m Linha s Aé re a s S .A.
Uniã o Fe de ra l
Ta m Linha s Aé re a s S .A.
P roc ura doria da Fa ze nda Na c iona l
Tribuna l de J us tiç ã o de S ã o P a ulo.
Ta m Linha s Aé re a s S .A.
17a Va ra Cíve l da Coma rc a da Ca pita l
de J oã o P e s s oa /P B.
14ª Va ra Fe de ra l da S e ç ã o J udic iá ria
de Dis trito Fe de ra l
Va ra da s Exe c uç õe s Fis c a is Es ta dua is
Va ra Cive l Ca mpina s S P
J FK Inte rna tiona l Air Te rmina l LLC.
7ª Turma do Tribuna l Re giona l
Fe de ra l da 1ª Re giã o
Va ra de Exe c uç õe s Fis c a is Es ta dua is
da Coma rc a de S ã o P a ulo
Bond S a fe gua rd Ins ura nc e Compa ny
Uniã o Fe de ra l Fa ze nda Na c iona l
Unia o Fe de ra l
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
Ta m Linha s Aé re a s S .A.
ABS A Linha s Ae re a s
Bra s ile ira S .A.
ABS A Linha s Ae re a s
Bra s ile ira S .A.
ABS A Linha s Ae re a s
Bra s ile ira S .A.
ABS A Linha s Ae re a s
Bra s ile ira S .A.
Va ra Fe de ra l da S ubs e ç ã o
de Ca mpina s S P
Tribuna l de J us tiç ã o
de S ã o P a ulo.
7ª Turma do Tribuna l Re giona l
Fe de ra l da 1ª Re giã o
One le tte r of c re dit
S e ve n le tte rs of c re dit
One le tte r of c re dit
One le tte r of c re dit
S ixte e n le tte rs of c re dit
Five le tte rs of c re dit
Five le tte rs of c re dit
Ele ve n ins ura nc e polic y gua ra nte e
S ix ins ura nc e polic y gua ra nte e
One le tte r of c re dit
Two ins ura nc e polic y gua ra nte e
4,240
9,682
1,500
2,463
4,476
2,300
1,953
2,574
1,416
14,972
53,718
6,060
1,047
Apr- 05- 21
Ma r- 29- 21
J un- 18- 21
Apr- 09- 21
J a n- 16- 22
J a n- 27- 21
Apr- 01- 21
Apr- 01- 21
Apr- 30- 21
Apr- 01- 21
Nov- 09- 21
Aug- 10- 21
S e p- 23- 24
An ins ura nc e polic y gua ra nte e
2,300
J un- 25- 23
An ins ura nc e polic y gua ra nte e
Two ins ura nc e polic y gua ra nte e
An ins ura nc e polic y gua ra nte e
An le tte r of c re dit
1,373
2,722
1,487
1,300
Ma y- 29- 25
J ul- 05- 23
J un- 14- 24
J a n- 10- 21
An ins ura nc e polic y gua ra nte e
41,993
Apr- 20- 23
Thre e ins ura nc e polic y gua ra nte e
Four ins ura nc e polic y gua ra nte e
Four ins ura nc e polic y gua ra nte e
10,775
2,700
2,304
J ul- 05- 23
J ul- 14- 21
Nov- 16- 25
Four ins ura nc e polic y gua ra nte e
31,247
Fe b- 22- 21
An ins ura nc e polic y gua ra nte e
1,560
Fe b- 20- 23
Two ins ura nc e polic y gua ra nte e
5,084
S e p- 23- 24
An ins ura nc e polic y gua ra nte e
1,638
Ma y- 07- 23
404,279
Letters of credit related to assets for right of use are included in Note 17 Properties, plants and
equipment letter (d) Additional information Properties, plants and equipment, in numeral (i)
Properties, plants and equipment delivered in guarantee.
Financial statements
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NOTE 33 - TRANSACTIONS WITH RELATED PARTIES
(a) Details of transactions with related parties as follows:
Ta x No .
R e la te d pa rty
Na ture o f
re la tio ns hip with
re la te d pa rtie s
96.810.370-9
Inve rs io ne s C o s ta Ve rde Ltda . y C P A.
R e la te d dire c to r
78.591.370-1
B e thia S .A a nd s ubs idia rie s
R e la te d dire c to r
87.752.000-5
Gra nja M a rina To rna ga le o ne s S .A.
C o m m o n s ha re ho lde r
76.335.600-0
96.989.370-3
F o re ign
F o re ign
P a rque de C hile S .A.
R io Dulc e S .A.
P a ta go nia S e a fa rm s INC
TAM Avia ç ã o Exe c utiva e Ta xi Aé re o S .A.
R e la te d dire c to r
R e la te d dire c to r
R e la te d dire c to r
C o m m o n s ha re ho lde r
126
C o untry
o f o rigin
C hile
C hile
C hile
C hile
C hile
U.S .A
B ra zil
F o re ign
Qa ta r Airwa ys
Indire c t s ha re ho lde r
Qa ta r
F o re ign
De lta Air Line s , Inc .
S ha re ho lde r
U.S .A
F o re ign
QA Inve s tm e nts Ltd
C o m m o n s ha re ho lde r
J e rs e y C ha nne l Is la nds
F o re ign
QA Inve s tm e nts 2 Ltd
C o m m o n s ha re ho lde r
J e rs e y C ha nne l Is la nds
F o re ign
Lo zuy S .A.
C o m m o n s ha re ho lde r
Urugua y
Na ture o f
re la te d pa rtie s
tra ns a c tio ns
Tic ke ts s a le s
Lo a ns re c e ive d (*)
Inte re s t a c c rue d (*)
S e rvic e s pro vide d o f c a rgo tra ns po rt
S e rvic e s re c e ive d fro m Na tio na l a nd Inte rna tio na l
C o urie r
S a le s c o m m is s io ns
S e rvic e s re c e ive d a dve rtis ing
S e rvic e s pro vide d
Tic ke ts s a le s
Tic ke ts s a le s
S e rvic e s pro vide d o f c a rgo tra ns po rt
S e rvic e s pro vide d
S e rvic e s pro vide d o f c a rgo tra ns po rt
S e rvic e s re c e ive d
S e rvic e s pro vide d by a irc ra ft le a s e
Inte rline a l re c e ive d s e rvic e
Inte rline a l pro vide d s e rvic e
S e rvic e s pro vide d o f ha ndling
C o m pe ns a tio n fo r e a rly re turn o f a irc ra ft
S e rvic e s pro vide d / re c e ive d o the rs
Inte rline a l re c e ive d s e rvic e
Inte rline a l pro vide d s e rvic e
C o m pe ns a tio n fo r c a nc e lla tio n o f a irc ra ft purc ha s e
C o m pe ns a tio n fo r c a nc e lla tio n o f a irc ra ft purc ha s e
C o m pe ns a tio n fo r c a nc e lla tio n o f a irc ra ft purc ha s e
(*) Lo a ns re c e ive d
(*) Inte re s t a c c rue d
(*) Lo a ns re c e ive d
(*) Inte re s t a c c rue d
(*) Lo a ns re c e ive d
(*) Inte re s t a c c rue d
Tra ns a c tio n a m o unt
with re la te d pa rtie s
As o f De c e m be r 31,
C urre nc y
2020
ThUS $
28
(100,013)
(5,700)
-
-
-
-
-
13
-
5
40
13
-
22,215
(4,736)
3,141
1,246
9,240
1,160
(4,160)
4,357
62,000
3,310
30
(125,016)
(7,125)
(125,016)
(7,125)
(25,003)
(1,425)
C LP
C LP
C LP
C LP
C LP
C LP
C LP
C LP
C LP
B R L
B R L
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
2019
ThUS $
16
-
-
556
(3)
(218)
(726)
-
61
9
-
-
58
2
39,528
(2,050)
3,739
1,106
-
996
-
-
-
-
-
-
-
-
-
-
-
(*) Corresponding to DIP tranche C.
The balances of Accounts receivable and accounts payable to related parties are disclosed in Note 9.
Transactions between related parties have been carried out under market conditions between interested and duly informed parties.
Financial statements
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128
(b) Compensation of key management
NOTE 35 - STATEMENT OF CASH FLOWS
The Company has defined for these purposes that key management personnel are the executives
who define the Company’s policies and macro guidelines and who directly affect the results of the
business, considering the levels of Vice-Presidents, Chief Executives and Senior Directors.
(a) The Company has carried out non-monetary transactions mainly related to financial lease and
lease liabilities, which are described in Note 19 Other financial liabilities.
For the year ended
December 31,
2020
ThUS$
2019
ThUS$
8,395
257
1,719
13,624
-
-
4,539
28,534
13,701
411
1,815
31,124
8,577
3,296
1,428
60,352
Remuneration
M anagement fees
Non-monetary benefits
Short-term benefits
Long-term benefits
Share-based payments
Termination benefits (*)
Total
(*) Includes termination benefits ThUS $ 489, related to the reorganization within the framework of
Chapter 11 are classified in Note 27, under expenses from restructuring activities.
NOTE 34 - SHARE-BASED PAYMENTS
LP3 compensation plans (2020-2023)
The Company implemented a program for a group of executives, which lasts until March 2023,
with a period of enforceability between October 2020 and March 2023, where the collection
percentage is annual and cumulative. The methodology is an allocation, of quantity of units, where
a goal of the value of the action is set.
The bonus is activated, if the target of the share price defined in each year is met. In case the bonus
accumulates, up to the last year, the total bonus is doubled (in case the share price is activated).
This Compensation Plan has not yet been provisioned due to the fact that the action price required
for collection is below the initial target.
(b) Other inflows (outflows) of cash:
Delta Air Lines Inc. compensation (1)
Fuel hedge
Hedging margin guarantees
Currency hedge
Tax paid on bank transaction
Fuel derivatives premiums
Bank commissions, taxes paid and other
Guarantees
Court deposits
Total Other inflows (outflows) Operation flow
Tax paid on bank transaction
Total Other inflows (outflows) Investment flow
Settlement of derivative contracts
Aircraft Financing advances
Total Other inflows (outflows) Financing flow
(c) Dividends:
For theyear ended
December 31,
2020
ThUS$
62,000
(46,579)
14,962
-
(1,261)
(3,949)
(5,828)
(44,279)
38,527
13,593
(2,192)
(2,192)
(107,788)
-
(107,788)
2019
ThUS$
350,000
(9,966)
(21,200)
-
(11,369)
(17,102)
(20,627)
(5,474)
(22,976)
241,286
(2,249)
(2,249)
(2,976)
(55,728)
(58,704)
For the period ended
December 31,
2020
2019
ThUS$
ThUS$
-
-
(571)
(571)
(54,580)
-
(536)
(55,116)
Latam Airlines Group S.A.
M ultiplus S.A. (*)
Latam Airlines Perú S.A. (*)
Total dividends paid
(*) Dividends paid to minority shareholders
Financial statements
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130
(d)
Reconciliation of liabilities arising from financing activities:
(f)
Additions of property, plant and equipment and Intangibles
Obliga tio ns with
De c e m be r 31,
Obta inm e nt
P a ym e nt
Inte re s t a c c rue d
De c e m be r 31,
As o f
C a s h flo ws
No n c a s h-F lo w M o ve m e nts
As o f
fina nc ia l ins titutio ns
Lo a ns to e xpo rte rs
B a nk lo a ns
Gua ra nte e d o bliga tio ns
Othe r gua ra nte e d o bliga tio ns
Obliga tio n with the public
F ina nc ia l le a s e s
Othe r lo a ns
Le a s e lia bility
To ta l Obliga tio ns with
2019
ThUS $
341,475
217,255
2,157,327
580,432
2,064,934
1,730,843
101,261
3,172,157
C a pita l
ThUS $
165,000
265,627
192,972
1,361,881
-
-
-
-
C a pita l
ThUS $
Inte re s t
ThUS $
a nd o the rs (*)
ThUS $
R e c la s s ific a tio ns
ThUS $
2020
ThUS $
(359,000)
(4,870)
(48,576)
(42,721)
(774)
(236,744)
(101,026)
(122,063)
(4,140)
(2,397)
(21,163)
(27,744)
(55,613)
(52,155)
(1,151)
(46,055)
8,366
49,658
(823,984)
67,268
174,860
34,837
916
116,967
-
-
(137,720)
-
-
137,720
-
-
151,701
525,273
1,318,856
1,939,116
2,183,407
1,614,501
-
3,121,006
fina nc ia l ins titutio ns
10,365,684
1,985,480
(915,774)
(210,418)
(371,112)
-
10,853,860
As o f
C a s h flo ws
No n c a s h-F lo w M o ve m e nts
As o f
Obliga tio ns with
De c e m be r 31, Obta inm e nt
P a ym e nt
Inte re s t a c c rue d
De c e m be r 31,
fina nc ia l ins titutio ns
2018
ThUS $
C a pita l
ThUS $
C a pita l
ThUS $
Inte re s t
ThUS $
a nd o the rs
ThUS $
R e c la s s ific a tio ns
ThUS $
2019
ThUS $
Lo a ns to e xpo rte rs
B a nk lo a ns
Gua ra nte e d o bliga tio ns
Othe r gua ra nte e d o bliga tio ns
Obliga tio n with the public
F ina nc ia l le a s e s
Othe r lo a ns
Le a s e lia bility
To ta l Obliga tio ns with
400,721
222,741
2,534,021
673,452
1,553,079
1,624,854
252,858
2,858,049
93,000
164,095
607,797
-
1,009,836
-
27,864
-
(145,505)
(165,549)
(282,721)
(92,549)
(487,086)
(591,861)
(178,777)
(398,992)
(12,934)
(11,352)
(93,335)
(28,417)
(144,932)
(72,311)
(9,648)
(177,948)
6,193
7,320
93,286
27,946
134,037
68,440
8,964
891,048
-
-
(701,721)
-
-
701,721
-
-
341,475
217,255
2,157,327
580,432
2,064,934
1,730,843
101,261
3,172,157
fina nc ia l ins titutio ns
10,119,775
1,902,592
(2,343,040)
(550,877)
1,237,234
-
10,365,684
(*) Accrued interest and others, includes ThUS$ (891,407), associated with the rejection of fleet
contracts. This amount
ThUS$ (4,512) of financial leases.
(886,895) of Other secured obligations and
includes ThUS$
(e)
Advances of aircraft
Below are the cash flows associated with aircraft purchases, which are included in the statement of
consolidated cash flow, in the item Purchases of properties, plants and equipment:
Increases (payments)
Recoveries
T otal cash flows
For the year ended
December 31,
2020
T hUS$
(31,803)
8,157
(23,646)
2019
T hUS$
(86,288)
349,702
263,414
Financial statements
F o r the year ended
At Decem ber 31,
2020
ThUS $
2019
ThUS $
Net cas h flo ws fro m
P urchas es o f pro perty, plant and equipm ent
Additio ns as s o ciated with m aintenance
Other additio ns
P urchas es o f intangible as s ets
Other additio ns
324,264
173,740
150,524
75,433
75,433
1,276,621
453,827
822,794
140,173
140,173
The net effect of the application of hyperinflation in the consolidated cash flow statement
(g)
for the periods ended December 31 corresponds to:
Net cash flows from (used in) operating activities
Net cash flows from (used in) investment activities
Net cash flows from (used in) financing activities
For the year ended
December 31,
2020
ThUS$
18,347
(13,872)
-
2019
ThUS$
118,797
64,516
(56,866)
Effects of variation in the exchange rate on cash and cash equivalents
(4,475)
(126,447)
Net increase (decrease) in cash and cash equivalents
-
-
NOTE 36 - THE ENVIRONMENT
LATAM Airlines Group S.A is committed to sustainable development seeking to generate social,
economic and environmental value for the countries where it operates and for all its stakeholders.
The company manages environmental issues at the corporate level, centralized in the Corporate
Affairs and Sustainability Management. The company is committed to monitoring and mitigating its
impact on the environment in all of its ground and air operations, being a key actor in the solution
and search for alternatives to face the challenge of climate change.
Some of the functions of the Corporate Affairs and Sustainability Management in environmental
issues, together with the various areas of the company, is to ensure that environmental legal
compliance is maintained in all the countries where it is present and in 100% of its operations, to
implement and to maintain a corporate environmental management system, to use non-renewable
resources such as jet fuel efficiently, to dispose of its waste responsibly, and to develop programs
and actions that allow it to reduce its greenhouse gas emissions, seeking to generate environmental,
social and economic benefits for the company and its environment.
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(2) On January 29, 2021, in accordance with the applicable Chapter 11 procedures, the Debtors
were authorized to reject 2 A320 family aircraft registered under IFRS 16 as right-of-use assets.
(3) On February 3, 2021, authorities of the state of Sao Paulo at the petition of the federal district
authorities requested at the offices of the subsidiary Latam Airlines Brasil, financial and accounting
information relative to two suppliers referring to the period 2012-2014, which was provided by that
company, collaborating with the procedure.
(4) On February 24, 2021 LATAM and Delta Air Lines received from the Administrative Council
for Economic Defense (CADE) in Brazil the unrestricted approval of their commercial agreement
(“Trans-American Joint Venture Agreement” or “JVA”), then of initial approval in September
2020.
After December 31, 2020 and until the date of issuance of these financial statements, there is no
knowledge of other events of a financial or other nature, which significantly affect the balances or
interpretation thereof.
The consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries as of
December 31, 2020, have been approved in the Ordinary Board Session of March 9, 2021.
Within the current sustainability strategy, the environment dimension is called Climate Change, and
its objective is for the company to assume a leadership role in the region in this area, for which it
works on the following aspects:
i. Implementation of management systems and environmental certifications
ii. Promotion of a circular economy
iii. Measurement and management of the corporate carbon footprint
iv. Emissions Offset Program
v. Development of sustainable alternative fuels and energy
vi. Creation of Shared Value
During 2020, the company worked on updating its sustainability strategy, co-building it with its
stakeholders and experts in different topics, which allows it to respond to the new challenges it is
facing by being part of the solution, with the objective of to be an asset in the countries where it
operates and to generate value for them. This update was made in the midst of the health crisis, with
the company convinced that its recovery comes hand in hand with being a leader in the region in
sustainability. This strategy will be made public during 2021, once it has been validated by all the
actors who participated. At the same time, during 2020, the company worked on the following
initiatives:
- Maintenance of the certification of the international standard ISO 14001 in the cargo operation in
Miami.
- Maintenance of the stage 2 certifications of the IEnvA environmental management system (IATA
Environmental Assessment) whose scope is international flights operated from Chile, the most
advanced level of this certification; being the first in the continent and one of six airlines in the
world that have this certification
- Maintenance of stage 1 certification of the IEnvA environmental management system (IATA
Environmental Assessment) whose scope is the domestic and international operations of Colombia
- Response to the DJSI (Dow Jones Sustainability Index) questionnaire
- Neutralization of domestic air operations in Colombian operations
- Incorporation of 100% electrical energy from renewable sources in the facilities of the
maintenance base and the corporate building of operations in Chile
- Implementation of the Recycle Your Trip program, which seeks to manage the waste generated on
board domestic flights in Chile.
- Verification of company emissions under the EU-ETS and CORSIA schemes.
- Strengthening of the Solidarity Plane program.
It is highlighted that LATAM Airlines Group, during 2020, had an excellent performance in the
sustainability evaluation of the Dow Jones Sustainability Index, the best in its history. However, the
company was delisted from the different indices (World, MILA and Chile), for being in Chapter 11.
NOTE 37 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS
(1) On January 28, 2021, the United States Southern District Court of New York issued an order
extending the exclusive period of the debtors’, to present a reorganization plan within Chapter 11
until June 30, 2021 and extending until August 23, 2021, the period to obtain acceptances of said
plan.
Financial statements
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Affiliates and
subsidiaries
LATAM AIRLINES GROUP S.A
Name: LATAM Airlines Group S.A., R.U.T. 89.862.200-2
Professional Airline Services Inc.
Incorporation: It was established as a limited liability com-
pany via a public deed dated December 30, 1983 before
Notary Eduardo Avello Arellano; an excerpt of this deed is
recorded in the Santiago Commerce Registry on page 20,341
number 11,248 of the year 1983, and published in the Offi-
cial Gazette on December 31, 1983.
Pursuant to the public deed dated August 20, 1985, grant-
ed by Notary Miguel Garay Figueroa’s Office, the company
became a joint-stock corporation known as Línea Aérea
Nacional Chile S.A. (nowadays, LATAM Airlines Group
S.A.) which, by express rendering of Law N° 18,400, has
the quality of legal follower of the state-owned compa-
ny created in the year 1929 under the name Línea Aérea
Nacional de Chile, pursuant to the aeronautical and radio
communications concessions, traffic rights, and other ad-
ministrative concessions.
LAN Chile S.A.’s Extraoridnary Shareholders’ Meeting agreed
on July 23, 2004 to change the company’s name to “LAN
Airlines S.A.” An excerpt of the deed to which the Minutes of
said Meeting referred was recorded in the Real Estate Reg-
istry of the Registry of Commerce on page 25,128 number
18,764 of the year 2004 and published in the Official Ga-
zette on August 21, 2004. The effective date for the name
change was September 8, 2004.
LAN Airlines S.A.’s Extraordinary Shareholders’ meeting held
on December 21, 2011 agreed to change the company’s
name to “LATAM Airlines Group S.A.” An excerpt of the deed
to which the Minutes of said Meeting referred was recorded
in the Real Estate Registry of the Registry of Commerce on
page 4,238 number 2,921 of the year 2012 and published in
the Official Gazette on January 14, 2012. The effective date
for the name change was June 22, 2012.
LATAM Airlines Group S.A. is ruled by the regulation applicable
to open stock companies, and registered to this effect under
Nº 0306, dated January 22, 1987, in the Securities Register of
the Superintendency of Securities and Insurance (SVS).
Note: A summary of the subsidiaries’ Financial Statements
is presented herein. The full information is available to the
public in our offices and at the CMF.
TAM S.A. AND AFFILIATES
Incorporation: Joint Stock Corporation established in Brazil in
May, 1997.
Purpose: To participate as shareholder in other companies,
particularly those operating scheduled air transport servic-
es on a national and international level, as well as activi-
ties connected, related, and complementary to scheduled air
transport.
Paid-in Capital: THUS$907,532
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.61318%
Chairperson:
Jerome Paul Jacques Cadier
Management team:
Jerome Paul Jacques Cadier – CEO
Felipe Ignacio Pumarino Mendoza– CFO
Euzébio Angelotti Neto – Director without specific designation
Jefferson Cestari – Director without specific designation
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TAM Linhas Aéreas S.A.
Individualization: Joint Stock Corporation established in Bra-
zil in February, 1998.
Purpose: (a) The operation of regular air transport services
for passengers, cargo or suitcases, in accordance with current
legislation; (b) Operation of complementary activities of air
transport services for the transport of passengers, cargo, and
suitcases; (c) Rendering of maintenance and repair of own or
third-party aircraft, engines, and spare parts; (d) The render-
ing of aircraft hangar services; (e) rendering of yard and runway
services, rendering of the person in charge of aircraft on-board
cleaning; (f) Rendering of engineering services, technical assis-
tance and other activities related to the aeronautical industry;
(g) conducting instruction and training, related to aeronautical
activities; (h) analysis and development of programs and sys-
tems; (i) purchase and sale of aeronautical parts, accessories
and equipment; (j) development and implementation of other
connected activities, related or complementary to air trans-
port, in addition to those expressly listed above; (k) import and
export of finished lubricating oil; and (l) provision of banking
correspondent services; (e) storage and deposit of all types of
products, solids, liquids and gases on behalf of third parties.
Paid-in Capital: THUS$907,532
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.61318%
Chairperson:
Jerome Paul Jacques Cadier
Management team:
Jerome Paul Jacques Cadier – CEO
Felipe Ignacio Pumarino Mendoza – Financial Director
Euzébio Angelotti Neto – Director without specific designation
Jefferson Cestari – Board member without specific designation
Management team:
Jerome Paul Jacques Cadier – CEO
Diogo Abadio – Director without specific designation
Felipe Ignacio Pumarino Mendoza – Financial Director
Jefferson Cestari – Director without specific designation
ABSA: Aerolinhas Brasileiras S.A.
Transportes Aereos del Mercosur S.A.
Individualization: Joint Stock Corporation established in
Brazil in August 1995.
Individualization: Joint Stock Corporation established in
Paraguay.
Purpose: (a) The operation of regular domestic and interna-
tional air transport services for passengers, cargo and post-
al services, in accordance with current legislation; (b) opera-
tion of ancillary air transport activities, such as aircraft care,
cleaning, and towing, cargo monitoring, operational flight
clearance, check-in and check-out, and other services pro-
vided for in its own legislation; (c) commercial and opera-
tional leasing, as well as aircraft transportation; (d) opera-
tion of maintenance and marketing services for aircraft parts
and equipment; and (e) development and implementation of
other connected activities, related or complementary to air
transport, in addition to those expressly listed above.
Paid-in Capital: THUS$9,755
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.0%
Chairperson:
Jerome Paul Jacques Cadier
Purpose: It has a broad corporate purpose that includes aero-
nautical, commercial, tourist, service, financial, representation,
and investment activities, with a focus on scheduled and char-
ter, domestic and international, aeronautical transportation
activities for people, objects, and/or correspondence, among
others, as well as commercial and maintenance and technical
assistance services for all types of aircraft, equipment, acces-
sories, and material for airworthiness, among others.
Paid-in Capital: THUS$7,867
Stake in 2020: 94.98%
YOY variation: 0.00%
% of Holding assets: 0.08621%
Chairperson:
Enrique Alcaide Hidalgo
Board members:
Chief Executive: Enrique Alcaide Hidalgo
Permanent Member: Esteban Burt
Permanent Member: Diego Martínez
Alternate member: Augusto Sanabria Benítez
Affiliates and subsidiaries
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Managers:
Enrique Alcaide Hidalgo
Esteban Burt Artaza
Diego Martinez
Enzo Pangrazio Martinez Luis Galeano
Fidelidade Viagens e Turismo S.A.
Individualization: Joint Stock Corporation established in Bra-
zil in December 2013.
Purpose: (i) dedication to the activities of private and
non-private travel and tourism agencies, provided for in cur-
rent tourist legislation; and (ii) administration and operation
of tourist activities for events and leisure.
Paid-in Capital: THUS$29,379
Participación 2019: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.10315%
Management team:
Jerome Paul Jacques Cadier – CEO
Felipe Ignacio Pumarino Mendoza – Financial Director
Jefferson Cestari – Director without specific designation
Euzébio Angelotti Neto – Director without specific designation
Corsair Participações S.A.
TP Franchising Ltda.
Individualization: Joint Stock Corporation established in Bra-
zil in January 2011.
Individualization: Limited Liability Company established in
Brazil in August 2004.
Purpose: (i) Participation in other civil or commercial compa-
nies, as a shareholder or creditor; and (ii) The administration
of own assets.
Paid-in Capital: THUS$37
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.00240%
Chairperson:
Carlos Eduardo Prado
Management team:
Carlos Eduardo Prado – CEO
Euzébio Angelotti Neto – Director
Purpose: (a) to award franchises; (b) to temporarily award
its franchisees, free of charge or for a fee, the right to use its
brands, systems, knowledge, methods, patents, actuation
technology, and any other rights, stakes, or assets, movable
or immovable, tangible or intangible, owned by the Company,
as present or future owner or licensee, for the development,
implementation, operation, or management of the franchises
that it may grant; (c) to develop any and all necessary activ-
ities to ensure, insofar as possible, the ongoing maintenance
and perfecting of the actuation patterns of its franchise net-
work; (d) to develop implementation, operation, and manage-
ment models for its franchise network and their transfer to the
franchisees; and (e) the distribution, sale, and marketing of air-
fares and related products, as well as any related or accessory
business to its main objective, while also able to participate in
other companies as partner or shareholder, either in Brazil or
abroad, or in consortiums, as well as to carry out its own pro-
jects, or form partnerships with third parties in their projects,
even to obtain tax benefits, pursuant to current legislation.
Paid-in Capital: THUS$6
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.00543%
Managers:
Jerome Paul Jacques Cadier
Jefferson Cestari
Euzébio Angelotti Neto
Affiliates and subsidiaries
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Incorporation: Established as a private limited company via
the public deed dated May 22, 1970, before Notary Sergio
Rodriguez Garces, its incorporation was materialized through
the contribution of assets and liabilities from company
Linea Aerea del Cobre Limitada (Ladeco Limitada), estab-
lished on September 3, 1958, before Notary Jaime Garcia
Palazuelos.
The company has undergone various reforms, the latest of
which is recorded in the public deed dated March 20, 2018
before Santiago Notary Patricio Raby Benavente, and re-
corded on page 28810, N° 15276 of the Santiago Trade Reg-
ister for the year 2018, and published in the Official Gazette
on September 2, 2018, by virtue of which the number of
board members was reduced.
By public deed dated November 20, 1998, and whose extract
was registered on page 30,091 number 24,117 of the Santia-
go Trade Register and published in the Official Journal dated
December 3, 1998, Ladeco S.A. was merged by incorporation
into the subsidiary of LAN Chile S.A. called Fast Air Carrier S.A.
In the public deed dated October 22, 2001, wherein the
Minutes from the Extraordinary Shareholders’ Meeting of
Ladeco S.A. held on the same date were recorded, the com-
pany’s name was changed to “LAN Chile Cargo S.A.” An ex-
cerpt of said deed was recorded in the Real Estate Registry
of the Santiago Registry of Commerce on page 27,746 num-
ber 22,624 of the year 2001, and published in the Official
Gazette on November 5, 2001. The name change became
effective as of December 10, 2001.
In the public deed dated August 23, 2004, wherein the Min-
utes from the Extraordinary Shareholders’ Meeting of LAN
Chile Cargo S.A. held on August 17, 2004 were recorded, the
company’s name was changed to “LAN Cargo S.A. An ex-
cerpt of said deed was recorded in the Real Estate Regis-
try of the Santiago Registry of Commerce on page 26,994
number 20,082 of the year 2004 and published in the Offi-
cial Gazette on August 30, 2004.
Purpose: To perform and develop, either on its own behalf
or for third parties, the following: general transportation
in any form and, specifically, air transport of passengers,
cargo, and correspondence, within the country and abroad;
tourism, lodging, and other related activities, in any form,
within the country and abroad; purchase, sale, manufacture
and/or integration, maintenance, leasing, or any other form
of use, be it on its own behalf or for third parties, of air-
planes, spare parts, and aeronautical equipment, and their
operation for any given purpose; provide all sorts of servic-
es and counseling related to transportation in general and,
specifically, to air transportation in any of its forms, be it
ground support, maintenance, technical assistance, or any
other type, within the country and abroad, and all sorts of
services and activities related to tourism, lodging, and oth-
er abovementioned activities and goods, within the country
and abroad. In order to meet the abovementioned goals, the
Company may perform investments or participate as part-
ner in other companies, either by purchasing stocks or rights
or stakes in any other type of corporation, be it an already
established one or one created in the future, and overall,
perform all acts and enter all contracts necessary and rele-
vant to the purposes described.
Paid-in Capital: THUS$346,140
Profit for the period: THUS$(268,450)
Stake in 2020: 99.898%
YOY variation: 0.00%
% of Holding assets: 3.69330%
Chairperson:
Andrés Bianchi Urdinola
Management team:
Andrés Bianchi Urdinola (LATAM executive)
Ramiro Alfonsin Balza (LATAM executive)
Andres Del Valle Eitel (LATAM executive)
General Manager:
Andrés Bianchi Urdinola (LATAM executive)
LAN CARGO S.A. AFFILIATE COMPANIES
Fast Air Almacenes de Carga S.A.
Individualization: Joint Stock Corporation established in Chile.
Purpose: To operate or manage the warehouses or storage
facilities of customs deposits, where any type of good or
merchandise can be stored until its withdrawal, for imports,
exports, or other customs destination, pursuant to the
terms stated within the Customs Ordinance, its rules, and
other corresponding regulation.
Affiliates and subsidiaries
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Stake in 2020: 99.89%
YOY variation: 0.00%
% of Holding assets: 0.05467%
Board members:
Ramiro Alfonsín Balza (LATAM executive)
Andrés Bianchi Urdinola (LATAM executive)
Roberto Alvo Milosawiewitsch (LATAM executive)
General Manager:
Javier Andrés Durán Fernández (LATAM executive)
Prime Airport Services Inc. and affiliate
Individualization: Corporation established in the United
States.
Purpose: To operate or manage the warehouses or storage
facilities of customs deposits, where any type of good or
merchandise can be stored until its withdrawal, for imports,
exports, or other customs destination, pursuant to the
terms stated within the Customs Ordinance, its rules, and
other corresponding regulation.
Paid-in Capital: THUS$2
Stake in 2020: 99.971%
YOY variation: 0.00%
% of Holding assets: 0.0%
Board members:
Andrés Bianchi Urdinola (LATAM Executive)
LAN Cargo Overseas Limited and affiliates
Individualization: Limited Liability Company established in
Bahamas.
General Manager:
José Tomás Covarrubias Cervero (LATAM executive)
Purpose: To participate in any act or activity that is not
expressly forbidden by any existing law in Bahamas.
Individualization: Joint Stock Corporation established in Chile.
LAN Cargo Inversiones S.A. and affiliate
Paid-in Capital: THUS$263,057
Stake in 2020: 99.98%
YOY variation: 0.00%
% of Holding assets: 1.30396%
Board members:
Joaquin Arias
Jorge Marin
Transporte Aéreo S.A.
Individualization: Joint Stock Corporation established in Chile.
Purpose: To participate in any act or activity that is not ex-
pressly forbidden by any existing law in Bahamas.
Paid-in Capital: THUS$32,469
Stake in 2020: 87.126%
YOY variation: 0.00%
% of Holding assets: 1.26838%
Board Members:
Andrés Del Valle Eitel (LATAM Executive)
Ramiro Alfonsín Balza (LATAM Executive)
Roberto Alvo Milosawlewitsch (LATAM Executive)
Purpose: a) to trade in air transportation, in any of its forms,
be it of passengers, correspondence, and/or cargo, and any-
thing related directly or indirectly to said activity within the
country or abroad, on its own behalf or for third parties; b) to
provide services releated to the maintenance and repair of own
and third-party aircraft; c) to market and perform activities re-
lated to travel, tourism, and lodging; d) to make and/or partic-
ipate in all types of investments, both in Chile and abroad, in
matters directly or indirectly related to aeronautical issues and/
or to any of the other corporate purposes; and e) to carry out
and operate all other activities derived from the corporate pur-
pose and/or related, connected, contributory, or complementa-
ry activities thereof.
Paid-in Capital: THUS$147
Stake in 2020: 99.00%
YOY variation: 0.00%
% of Holding assets: 0.94033%
Board Members:
Andrés Bianchi Urdinola Plaza (LATAM executive)
Ramiro Alfonsín Balza (LATAM executive)
Roberto Alvo Milosawlewitsch (LATAM executive)
Affiliates and subsidiaries
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Andrés del Valle Eitel (LATAM executive)
Connecta Corporation
modes and specialties; import spare parts and replacements
related to aeronautical activities, for itself and for third parties;
provide airport services to third parties; represent or broker
national and foreign air transport companies for passengers or
cargo, and in general, companies that provide services to the
aeronautical sector.
Individualization: Corporation established in the United
States.
Purpose: Ownership, operating leasing, and subleasing of
aircraft.
Paid-in Capital: THUS$796
Stake in 2020: 81.31%
YOY variation: 0.00%
% of Holding assets: 1.07710%
Board members:
Jorge Nicolas Cortazar Cardoso (permanent member)
Jose Mauricio Rodríguez Munera (permanent member)
Jaime Antonio Gongora Esguerra (permanent member)
Andrés Bianchi Urdinola (alternate Member)
Santiago Alvarez Matamoros (permanent member)
Helen Victoria Warner Sanchez (alternate member)
Management:
Jaime Antonio Gongora Esguerra
(permanent legal representative)
Erika Zarante Bahamon
(alternate legal representative)
Paid-in Capital: THUS$1
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.25934%
General Manager:
Andrés Bianchi Urdinola
Línea Aérea Carguera de Colombia S.A.
(a subsidiary of LAN Cargo Inversiones)
Individualization: Joint Stock Corporation established in
Colombia.
Purpose: To provide public, commercial cargo, and corre-
spondence air transportation within the Republic of Colombia
and from and to Colombia. As a secondary corporate purpose,
the company can offer maintenance services to itself and to
third parties; run its operations school and provide theoreti-
cal and practical instruction services, as well as tranining for
its own and third-party aeronautical personnel in the various
Mas Investment Limited (a subsidiary
of LAN Overseas Limited)
Individualization: Limited Liability Company established in
Bahamas.
Purpose: To perform all activities that are not expressily for-
bidden by Bahaman law, and specifically, to hold stakes in
other LATAM affiliates.
Paid-in Capital: THUS$1,446
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.14633%
Board members:
Andres Del Valle
Inversiones Aéreas S.A. (a subsidiary
of Mas Investmet Limited)
Individualization: Joint Stock Corporation established in Peru.
Purpose: To devote itself to all types of investments,
mainly to those related to air transport and related activi-
ties and to any other activity that the Shareholders' Meet-
ing so defines.
Paid-in Capital: THUS$263.430
Stake in 2020: 66.43%
YOY variation: 0.00%
% of Holding assets: 1.17001%
Affiliates and subsidiaries
275
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Antonio Olortegui Marky
Board Members:
Antonio Olortegui Marky
Andrés Enrique del Valle Eitel
Ramiro Diego Alfonsín Balza
General Manager:
Antonio Olortegui Marky
Americonsult S.A de C.V.
Individualization: Variable Capital Corporation established in
Mexico.
Purpose: To provide and receive all manner of technical,
administrative, or counseling services for industrial, com-
mercial, and service companies; Promote, organize, manage,
supervise, provide, and direct personnel training courses;
Perform all types of studies, plans, projects, and research;
Engage the necessary professional and technical personnel.
Paid-in Capital: THUS$5
Stake in 2020: 99.80%
YOY variation: 0.00%
% of Holding assets: 0.00000%
Management:
Diana Olivares
Eduardo Opazo
Francisco José Sánchez González
Raúl Moreno González
Americonsult de Guatemala S.A.
(a subsidiary of Americonsul S.A de C.V)
Individualization: Joint Stock Corporation established in
Guatemala.
Paid-in Capital: THUS$20
Stake in 2020: 99.80%
YOY variation: 0.00%
% of Holding assets: 0.00744%
Purpose: Powers to represent, broker, negotiate, and market;
Carry out all types of commercial and industrial activities; All
manner of trade in general. Broad purpose that allows for all
manner of operations within the country.
Paid-in Capital: THUS$76
Stake in 2020: 99.13%
YOY variation: 0.00%
% of Holding assets: 0.00056%
Chairperson:
Luis Ignacio Sierra Arriola
Board members:
Carlos Fernando Pellecer Valenzuela
Management:
Carlos Fernando Pellecer Valenzuela
Americonsult de Costa Rica S.A.
(a subsidiary of Americonsul S.A de C.V)
Management:
Luis Ignacio Sierra Arriola
Luis Miguel Renguel López
Tomás Nassar Pérez
Marjorie Hernández Valverde.
Alejandro Fernández Espinoza (treasurer)
LATAM AIRLINES PERÚ S.A.
Constitución: Joint Stock Corporation established in Peru on
February 20, 1997.
Purpose: Provide air transportation services for passengers,
cargo, and correspondence, both nationally and internation-
ally, pursuant to current civil aeronautical legislation.
Paid-in Capital: THUS$349,341
Resultado del ejercicio: THUS$(175,485)
Stake in 2020: 99.81%
YOY variation: 0.00%
% of Holding assets: 0.0%
Incorporation: Joint Stock Corporation established in Costa
Rica.
Chairperson:
Cesar Emilio Rodríguez Larraín Salinas
Purpose: General trade; industry, agriculture, and livestock.
Affiliates and subsidiaries
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César Emilio Rodríguez Larraín Salinas
Ignacio Cueto Plaza (LATAM executive)
Enrique Cueto Plaza (LATAM executive)
Jorge Harten Costa
Andrés Rodríguez Larraín Miró Quesada
Emilio Rodríguez Larraín Miró Quesada
Roberto Alejandro Alvo Milosawlewitsch (LATAM executive)
General Manager:
Manuel Van Oordt
LAN INVERSIONES S.A.
Incorporation: Established as a private limited company
through the Public Deed dated January 23, 1990 before No-
tary Humberto Quezada M., recorded in the Santiago Com-
merce Registry on page 3,462 N° 1,833 of the year 1990, and
published in the Official Gazette on February 2, 1990.
Purpose: Perform investments in all manner of goods, be
they movable or immovable, tangible or intangible. Moreo-
ver, the Company may establish other types of companies
of any sort; acquire rights in already existing corporations,
manage, modify, and settle them.
Paid-in Capital: THUS$458
Resultado del ejercicio: THUS$50
Stake in 2020: 100.00%
YOY variation: 0.0%
% of Holding assets: 0.00849%
Chairperson:
Enrique Cueto Plaza (LATAM executive)
Ramiro Alfonsín Balza (LATAM executive)
Roberto Alvo Milosawlewitsch (LATAM executive)
Paid-in Capital: THUS$10
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.0%
General Manager:
Gregorio Bekes (LATAM executive)
LATAM TRAVEL CHILE II S.A.
Board Members:
Andrés del Valle Eitel (LATAM executive)
Roberto Alvo Milosawlewitsch (LATAM executive)
Ramiro Alfonsin Balza (LATAM executive)
Individualization: Joint Stock Corporation established in Chile.
General Manager:
Federico Helman (LATAM executive)
Purpose: Operation, management, and representation of
national or foreign companies or businesses in the lodging,
shipping, air, and tourism activities in general; brokerage of
tourist services, such as: (a) booking seats and selling tickets
for all types of national transportation, (b) booking, acquisi-
tion, and sale of lodging and tourism services, and tickets to
all types of entertainment, museums, monuments, and pro-
tected areas in the country, (c) organization, promotion, and
sale of tourist packages, understood as the group of tourist
services (food, transportation, lodging, etc.), adjusted or pro-
jected at the client’s behest, at a preset price, to be operated
in national territory, (d) air, land, sea, and river tourist trans-
portation within the national territory; (e) leasing and char-
ter of planes, ships, buses, trains, and other forms of trans-
portation for the provision of tourist services; (f) any other
activity directly or indirectly related to the provision of the
abovementioned services; (g) everything related directly or
indirectly to the rendering of the services mentioned above.
LATAM TRAVEL S.R.L.
Incorporation: Limited Liability Company established in
Bolivia.
Purpose: Operation, management, and representation of
national or foreign companies or businesses in the lodging,
shipping, air, and tourism activities in general.
Paid-in Capital: THUS$0
Participación 2019: 99.00%
YOY variation: 0.00%
% of Holding assets: (0.00011%)
Management team:
Julio Quintanilla Quiroga
Sergio Antelmo
Affiliates and subsidiaries
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Incorporation: Established as a private limited company
through the Public Deed dated September 27, 2001 before
Santiago Notary Patricio Zaldivar Mackenna, recorded in the
Santiago Commerce Registry on page 25,636 N° 20,794 on
October 4, 2001, and published in the Official Gazette on
October 6, 2001.
Purpose: Perform investments in all manner of goods, be
they movable or immovable, tangible or intangible. Within
its line of business, the Company may create other types of
companies of any sort; acquire rights in already existing cor-
porations, manage, modify, and settle them. Overall, it may
acquire and sell all manner of goods and operate them, on its
own behalf or for third parties, as well as perform all manner
of acts and enter into all manner of contracts conducive to
its goals. Exercise the development and operation of all other
activities derived from and/or related, connected, contributo-
ry, or complementary to the company’s corporate purpose.
Paid-in Capital: THUS$4,550
Resultado del ejercicio: THUS$(302,794)
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.00%
Board Members:
Andrés del Valle Eitel (LATAM executive)
Roberto Alvo Milosawlewitsch (LATAM executive)
Ramiro Alfonsin Balza (LATAM executive)
General Manager:
Andrés del Valle Eitel (LATAM executive)
AFFILIATE COMPANIES OF LAN PAX
GROUP S.A. AND STAKES
Inversora Cordillera S.A. and affiliates
Individualization: Joint Stock Corporation established in
Argentina.
Purpose: To perform investments on its own behalf or for
third parties, or related to third parties, in other stock compa-
nies, regardless of corporate purpose, established or to be es-
tablished, within the Argentine Republic or abroad, via acqui-
sition, incorporation, or sale of stakes, shares, quotas, bonds,
options, commercial paper, convertible or otherwise, other
transferrable securities, or other forms of investment allowed
by the applicable regulation at any given moment, either to
hold them in its own portfolio, or to sell them partially or in
full, as may be the case. For this purpose, the company may
carry out all transactions that are not expressly forbidden by
law in compliance with its corporate purpose, and it has full
legal capacity to acquire rights, contract obligations, and exer-
cise all acts that are not expressly forbidden by law or statute.
Paid-in Capital: THUS$432,827
Stake in 2020: 99.984%
YOY variation: 0.00%
% of Holding assets: 0.19894%
Chairman of the Board: Jorge L. Perez Alati
Board Members:
Jorge L. Perez Alati (Chairman)
Manuel M. Benites (Chairman)
Rosario Altgelt (permanent member)
LATAM Travel S.A.
Individualization: Joint Stock Corporation established in
Argentina.
Purpose: To perform on its own behalf or for third parties
and/or in partnership with third parties, within the coun-
try and/or abroad, the following activities and transactions:
A) COMMERCIAL: Carry out, intervene, develop, or design all
manner of operations and activities involving the sale of air-
fare, land, river, and sea tickets, both nationally and abroad,
or any other service related to the tourism industry in gen-
eral. The aforementioned services may be carried out on its
own behalf or upon request from third parties, via mandate,
commission, the use of systems or methods deemed con-
venient for said purpose, be they manual, mechanical, elec-
tronic, telephone, or internet methods, or any other type or
technology that may suit said purpose. The Company may
perform ad hoc or related activities to the purpose described,
such as purchase and sales, imports, exports, reexport, li-
censing, and representation of all manner of goods, servic-
es, know-how, and technology directly or indirectly related
to the purpose described; market, by any means the tech-
nology created or whose license or patent it has acquired
or manages; develop, distribute, promote, and market all
types of content for mass media of any sort. B) TOURIST:
Via the performance of all activities related to the tourist
and lodging industry, as responsible operator or third-party
service operator, or as travel agent. Via the creation of ex-
change, tourism, excursion, and tour programs; the broker-
age and booking and rendering of services through any form
of transportation within the country or abroad, and ticket
sales; brokerage for hiring lodging services in the country or
abroad; booking of hotels, motels, tourist apartments, and
Affiliates and subsidiaries
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individuals or groups, excursions, or similar activities within
the country or abroad; reception and assistance for tourists
during their trip and stay in the country, provision of tour
guide services, and forwarding of these services. C) CON-
TRACTOR: Via the acceptance, performance, and granting of
representations, concessions, commissions, agencies, and
mandates in general. D) CONSULTING: Provide consulting,
support, and management services on all matters related to
the organization, installation, service, development, support,
and promotion of companies related to air transportation
activities, but not exclusive to said activity, in the manage-
ment, industrial, commercial, technical, and advertising are-
as, to be provided, when the nature of the issue so requires,
by certified professionals per the corresponding regulation,
and the provision of organization and management, care,
maintenance, and surveillance services, and of the suita-
ble personnel, especially prepared to carry out said tasks. E)
FINANCIAL: Via its participation in other companies already
created or to be created, either through the acquisition of
shares in established companies, or through the establish-
ment of new companies, via the awarding or securing of
credits, loans, cash advances secured or unsecured by col-
lateral o personal guarantee; the awarding of guarantees and
sureties in favor of third parties for a fee or free of charge;
placement of funds in foreign currency, gold or currencies, or
bank deposits of any type. To achieve these purposes, the
company has full legal capacity to exercise all acts not ex-
pressly forbidden by law or statue, including making borrow-
ings publicly or privately via the issuance of debentures and
tradable securities, and performing all manner of financial
transactions except those comprised under Law 21,526 and
any others requiring a public tender process.
Paid-in Capital: THUS$3,884
Stake in 2020: 95.00%
YOY variation: 0.00%
% of Holding assets: 0.00%
Board members:
Jerónimo F. Cortes
LATAM Airlines Ecuador S.A.
Individualization: Joint Stock Corporation established in Ecuador.
Purpose: Combined air transport of passengers, cargo, and
correspondence.
Atlantic Aviation Investments LLC
Individualization: Limited Liability Company established in
the United States.
Purpose: Any and all lawful business that the company may
undertake.
Paid-in Capital: THUS$1
Stake in 2020: 99.00%
YOY variation: 0.00%
% of Holding assets: 0.07317%
Board Members:
Andrés del Valle Eitel
Management:
Andrés del Valle (LATAM executive)
Paid-in Capital: THUS$18,625
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.05462%
Board members:
Xavier Rivera
Maximiliano Naranjo
Daniel Leng
Professional Counsellor C.l.
CEO:
Maximiliano Naranjo
Holdco Ecuador S.A.
Individualization: Joint Stock Corporation established in Chile.
Purpose: Carry out all manner of investments for profitable
purposes pertaining to tangible or intangible, movable or im-
movable assets, either in Chile or abroad.
Paid-in Capital: THUS$491
Stake in 2020: 54.791%
YOY variation: 0.0%
% of Holding assets: 0.00621%
Affiliates and subsidiaries
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Antonio Stagg (LATAM executive)
Manuel Van Oordt (LATAM executive)
Mariana Villagómez (LATAM executive)
Board Members:
Ramiro Alfonsin Balza (LATAM executive)
Aerovias de Integración Regional S.A., Aires S.A.
Individualization: Joint Stock Corporation established in
Colombia.
Purpose: The company’s purpose shall be the operation of
commercial, national or international air transport services, in
any of their modalities, and therefore, the entering into and
execution of contracts for transporting passengers, objects
and baggage, mail and cargo in general, in accordance with the
operating permits issued by the Special Administrative Unit of
Civil Aeronautics, or of the entity that in the future should re-
place it, adhering fully to the provisions of the Code of Com-
merce, the Colombian Aeronautical Regulations, and any other
regulations governing the matter. Likewise, to provide main-
tenance and adaptation services for the equipment related to
the operation of air transportation services within the country
and abroad. In order to fulfill said purpose, the company will
be authorized to invest in other national or foreign companies
with purposes that are the same, similar, or complementary to
the company’s. To fulfill its corporate purpose, the company
may, among other things: (a) review, inspect, or provide main-
tenance and/or repairs to its own or third-party aircraft, as well
as spare parts and accessories, through the Company’s Aero-
nautical Repair Stations, providing the necessary trainings for
said purpose; (b) organize, establish, and invest in commercial
transportation companies in Colombia or abroad to perform,
industrially or commercially, the economic activity that is its
purpose, so the company can acquire, for any purpose, air-
planes, spare parts, replacements, and accessories of any kind,
necessary for public air transportation, as well as sell them,
and to set up and operate stations to repair and give mainte-
nance to the aircraft; (c) enter leasing, charter, code-sharing,
service rendering, or any other contracts pertaining to aircraft
to exercise its purpose; (d) to operate scheduled air transport
lines for passengers, cargo, correspondence, and securities, as
well as the vehicle that will make it possible to coordinate the
social management; (e) merge with equal, similar, or comple-
mentary companies to perform its activity; (f) accept nation-
al or foreign representations of services in the same sector or
in complementary sectors; (g) acquire movable or immova-
ble assets to develop its corporate purposes, build said facil-
ities or constructions, such as warehouses, deposits, offices,
etc., sell, or encumber them; (h) carry out imports and ex-
ports, as well as all foreign trade operations required; (i) take
money on interest and provide personal, real, and bank guar-
antees, either on its own behalf or for third parties; (j) partici-
pate in all manner of securities transactions, such as purchase
or sale of debentures acquired by third parties when resulting
in an economic or equity benefit for the company, and ob-
tain loans through bonds or other liability instruments; (l) form
partnerships and acquire shares and stakes in already estab-
lished companies, both national and foreign; make contribu-
tions to one and all; (m) merge with other companies and form
partnerships with similar companies to ensure provision of air
transportation or for other purposes pertaining to the industry;
(n) promote, provide technical assistance, finance, or man-
age companies or associations related to the corporate pur-
pose; (o) carry out all manner of civil or commercial, industrial
or financial contracts necessary or convenient to achieve its own
purposes; (p) do business and fulfill activities that will ensure
the flow of clients, and obtain the necessary authorizations and
licenses from the corresponding authorities to provide its servic-
es; (q) develop and carry out any other activities resulting from
and/or related, connected, contributory, or complementary to the
corporate purpose, including the provision of tourist services un-
der any and all forms allowed by law, such as travel agencies; (r)
practice any business or legal activity, whether or not related to
trade, as long as it is related to its corporate purpose, or that it
enables a more rational operation of the public service that it will
provide; and (s) make any manner of investments to employ the
funds and reserves created pursuant to law or the current bylaws.
Paid-in Capital: THUS$3,389
Stake in 2020: 98.94%
YOY variation: 0.00%
% of Holding assets: 0.00%
Board Members:
Jorge Nicolas Cortazar Cardoso (permanent member)
Jaime Antonio Gongora Esguerra (permanent member)
José Mauricio Rodríguez Munera (permanent member)
Gabriel Vallejo López (alternate member)
Helen Victoria Warner Sanchez (alternate member)
Santiago Alvarez Matamoros (permanent member)
Management:
Erika Zarante Bahamon (permanent legal representative)
Jaime Antonio Gongora Esguerra (alternate legal representative)
Affiliates and subsidiaries
280
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LAN Argentina S.A
(a subsidiary of Inversora Cordillera S.A.)
Individualization: Joint Stock Corporation established in
Argentina.
Purpose: Carry out on its own behalf or for others, inde-
pendently or associated with third parties in the country or
abroad, the following activities: I) AERONAUTICAL: In all its
manifestations, scheduled and/or unscheduled (chartered
and air taxi) domestic and international air transportation,
of persons or objects, post, clearing, works and air services
in general, as a public or private concession; operate public
services, piloting school and personnel training related to air
navigation, design, engineering, research, assembly, manu-
facturing, import and/or export of all types of aircraft and
their parts, equipment, accessories and materials for air nav-
igation, as well as provide maintenance and technical assis-
tance services thereof. II) COMMERCIAL: Thorough purchas-
es, sales, swaps, location, in all its forms, leasing, renting,
importing and exporting all types of goods, supplying and
transferring aircraft, their parts, components, accessories,
materials and inputs, brokerage services in the formalization
of insurance covering the risks of contracted services and
the performance of all kinds of commercial operations that
normally take place at airports. III) TOURISM: Through the
creation, development and operation of resorts and proper-
ties intended for the accommodation of people, as well as
tourist activity in all its forms, including the rental of mo-
tor vehicles and tourist reservation systems. IV) SERVICES:
Rendering maintenance and technical assistance services on
all types of aircraft, equipment, accessories and materials
for air navigation, computer reservation services, transport
of persons and/or cargo and/or post, by land or water, as an
accessory to aeronautical transportation and/or integrat-
ing a combined transportation with it, as well as any assis-
tance to aircraft activities, such as the provision of food and/
or elements to be used on board. V) MANDATES: Comply
with mandates and commissions. VI) FINANCIAL: Carry out
any type of financial transactions, in general, excluding those
provided for in the Law on Financial Institutions and any oth-
ers that require public tendering. VII) REPRESENTATIONS: Of
national and foreign persons related to activities linked to its
corporate purpose. VIII) INVESTOR: Establish and participate
in companies through shares, promote their creation, invest
in them the necessary capital for such purposes, and render
services to them within the limits established. For this pur-
pose, the Company has full legal capacity to acquire rights,
obligations, and exercise acts that are not prohibited by law
or by these Bylaws.
Paid-in Capital: THUS$446,474
Stake in 2020: 95.00%
YOY variation: 0.00%
% of Holding assets: 0.17691%
TECHNICAL TRAINING LATAM S.A.
Incorporation: Established as a Joint Stock Corporation per
the public deed dated December 23, 1997 in Santiago de
Chile, and then recorded in the Santiago Commerce Registry
on page 878 number 675 of the year 1998.
Purpose: Its corporate purpose is to provide technical training
and other types of related services.
Paid-in Capital: THUS$752
Resultado del ejercicio: THUS$60
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0.00994%
Board members:
Sebastián Acuto (LATAM executive)
Ramiro Alfonsín Balza (LATAM executive)
Hernán Pasman (LATAM executive)
General Manager:
Guido Opazo Aneotz (LATAM executive)
JARLETUL S.A.
Gregorio Francisco Bekes
Andres del Valle Eitel
Julieta Susana Ventura
Incorporation: Joint Stock Corporation established in Uru-
guay in November 2017.
Purpose: Its corporate purpose is the operation, manage-
ment, and representation of national or foreign companies or
businesses in the lodging, shipping, air, and tourism activities
in general.
Board members:
Manuel Maria Benites
Jorge Luis Perez Alati
Rosario Altgelt
Management:
Manuel María Benites
Jorge Luis Perez Alati
Jerónimo Federico Cortes
Diego Alejandro Potenza
Christian Martin Bevacqua
Javier Norberto Macias
Affiliates and subsidiaries
281
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Paid-in Capital: THUS$0
Resultado del ejercicio: THUS$(332)
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: (0.00%)
Chairperson:
Javier Norberto Macías Raschía
Board members:
Patricia Cáceres Araya
LATAM FINANCE LIMITED
Constitución: Company established in the Caiman Islands in
September 2016.
Purpose: Its purpose is the issuance of secured bonds.
Paid-in Capital: THUS$0
Resultado del ejercicio: THUS$0
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: 0%
Paid-in Capital: THUS$0
Resultado del ejercicio: THUS$(105,100)
Stake in 2020: 100.00%
YOY variation: 0.00%
% of Holding assets: (0.00)%
Chairperson:
Not applicable.
Board Members:
Andrés del Valle Eitel
Joaquín Arias Acuña
PROFESIONAL AIRLINE SERVICES INC.
Incorporation: Company established in the U.S. on February
1994.
Purpose: Its corporate purpose is airport staffing services.
Chairperson:
Not applicable.
Board Members:
Andrés del Valle Eitel
Ramiro Alfonsín Balza
Joaquín Arias Acuña
Paid-in Capital: THUS$63
Resultado del ejercicio: THUS$ 1,156
Stake in 2020: 100.00%
YOY variation: 0.00%
% Sobre activos Matriz: 0.017%
Board members:
Francisco Arana
PEUCO FINANCE LIMITED
Constitución: Joint Stock Corporation established in the Cai-
man Islands in November 2015.
Purpose: Its purpose is the participation in financing aircraft.
Affiliates and subsidiaries
282
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AFFILIATES AND SUBSIDIARIES
TAM S.A. AND AFFILIATES
STATEMENT OF FINANCIAL SITUATION
TAM S.A. AND AFFILIATES
CONSOLIDATED INCOME STATEMENT BY FUNCTION
ASSETS
Total current assets
Total non-current assets
Total activos
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Participations no parent companys
Total Equity
As at December
2020
MUS$
As at December
2019
MUS$
1.492.792
1.617.263
2.583.040
2.456.199
Income from ordinary activities
Cost of sales
3.110.055
5.039.239
Gross gain (loss)
As at December
2020
MUS$
As at December
2019
MUS$
1.809.314
5.013.294
(2.109.529)
(4.093.465)
(300.215)
(847.429)
(831.918)
(193.894)
(1.025.812)
(1.025.624)
(188)
919.829
348.149
270.031
(83.892)
186.139
185.720
419
Gain (loss) from operating activities
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) attributable to non-controlling stakes
Gain (loss) for the fiscal year
(1.025.812)
186.139
As at December
2020
MUS$
As at December
2019
MUS$
2.206.089
2.558.655
798.846
941.279
3.004.935
3.499.934
104.407
1.537.799
713
1.506
105.120
1.539.305
Total Equity and liabilities
3.110.055
5.039.239
Affiliates and subsidiaries
283
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
TAM S.A. AND AFFILIATES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at December
2020
MUS$
As at December
2019
MUS$
Equity attributable
to the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
GAIN (LOSS) FOR THE FISCAL YEAR
(1.025.812)
186.139
Other components of other comprehensive income, before tax
(570.327)
46.522
Taxes on earnings accrued related to components of other comprehen-
sive income that will not be classified under income for the fiscal year
1.047
(1.390)
Equity
January 1, 2020
Total comprehensive income
1.537.799
(1.594.481)
Total transactions with shareholders
161.089
Final balance current year
December 31, 2020
104.407
713
105.120
1.506
(611)
(182)
1.539.305
(1.595.092)
160.907
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
(569.280)
(1.595.092)
Comprehensive income attributable to the owners of the parent company
(1.594.481)
Comprehensive income attributable to non-controlling stakes
TOTAL COMPREHENSIVE INCOME
(611)
(1.595.092)
45.132
231.271
102.515
128.756
231.271
Affiliates and subsidiaries
284
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CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
LAN CARGO S.A. AND AFFILIATES
STATEMENT OF FINANCIAL SITUATION
ASSETS
As at December
2020
MUS$
As at December
2019
MUS$
Net cash flows from operating activities
(367.638)
795.468
Net cash flows used in investment activities
227.469
(328.102)
Net cash flows from (used in) financing activities
134.607
(393.503)
Net increase (decrease) in cash and cash equivalents, before F/X changes
(5.562)
73.863
Effects of F/X variation on cash and cash equivalents
(76.154)
19.517
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
(81.716)
237.468
93.380
319.184
EQUITY
Equity attributable to the owners of the parent company
non-controlling stakes
Total Equity
Total Equity and liabilities
As at
December
2020
MUS$
As at
December
2019
MUS$
788.956
673.874
501.870
477.133
1.462.830
979.003
As at
December
2020
MUS$
As at
December
2019
MUS$
811.274
133.172
447.569
182.829
944.446
630.398
578.004
(59.620)
349.351
(746)
518.384
348.605
1.462.830
979.003
Affiliates and subsidiaries
285
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CONSOLIDATED INCOME STATEMENT BY FUNCTION
LAN CARGO S.A. AND AFFILIATES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income from ordinary activities
Cost of sales
Gross gain (loss)
As at
December
2020
MUS$
532.547
(741.113)
As at
December
2019
MUS$
679.204
(738.243)
(208.566)
(59.039)
Gain (loss) from operating activities
238.021
14.069
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) attributable to non-controlling stakes
Gain (loss) for the fiscal year
(268.048)
14.120
(402)
(9.910)
(268.450)
(192.820)
(75.630)
(268.450)
4.210
4.674
(464)
4.210
GAIN (LOSS) FOR THE FISCAL YEAR
As at
December
2020
MUS$
As at
December
2019
MUS$
(268.450)
4.210
Total Other comprehensive income not to be reclassified as income for the fiscal
year before tax
(594)
(369)
Total Other comprehensive income to be classified as income for the
fiscal year before tax
Other components of other comprehensive income, before tax
Taxes on earnings accrued related to components of other com-
prehensive income that will not be classified under income for the
fiscal year
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to the owners of the
parent company
Comprehensive income attributable to non-controlling stakes
TOTAL COMPREHENSIVE INCOME
(347)
(941)
265
(104)
-
100
(941)
(269.391)
(193.601)
(75.630)
(269.231)
(4)
4.206
4.670
(464)
4.206
Affiliates and subsidiaries
286
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
LAN CARGO S.A. AND AFFILIATES
CONSOLIDATED CASH FLOW STATEMENT – DIRECT METHOD
Equity attributable
to the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
Equity
MUS$
Net cash flows from operating activities
As at
December
2020
MUS$
As at
December
2019
MUS$
27.416
(11.294)
Equity
January 1, 2020
Total comprehensive income
Increase (decrease)
349.351
(193.601)
(746)
(75.630)
348.605
(269.231)
Net cash flows used in investment activities
(20.960)
(3.885)
Net cash flows from (used in) financing activities
(10.166)
(9.232)
from transfers and other changes
422.254
16.756
439.010
Final balance current year
December 31, 2020
578.004
(59.620)
518.384
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
Net increase (decrease) cash and cash equivalents, before F/X changes
(3.710)
54.607
(24.411)
58.317
Affiliates and subsidiaries
287
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STATEMENT OF FINANCIAL SITUATION
LATAM AIRLINES PERÚ S.A.
CONSOLIDATED INCOME STATEMENT BY FUNCTION
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
December
2020
MUS$
As at
December
2019
MUS$
629.910
31.811
481.592
37.771
661.721
519.363
As at
December
2020
MUS$
As at
December
2019
MUS$
484.450
1.648
508.541
2.131
486.098
510.672
175.623
175.623
661.721
8.691
8.691
519.363
Income from ordinary activities
Cost of sales
Gross gain (loss)
Gain (loss) from operating activities
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) for the fiscal year
As at December
2019
MUS$
As at December
2019
MUS$
372.255
1.186.668
(467.622)
(1.054.610)
(95.367)
132.058
(165.263)
(171.522)
(3.964)
(175.486)
(175.486)
(175.486)
(2.816)
5.065
(8.615)
(3.550)
(3.550)
(3.550)
Affiliates and subsidiaries
288
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LATAM AIRLINES PERÚ S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
GAIN (LOSS) FOR THE FISCAL YEAR
As at
December
2019
MUS$
As at
December
2019
MUS$
(175.486)
(3.550)
Net cash flows from operating activities
As at
December
2019
MUS$
As at
December
2019
MUS$
(263.744)
(30.385)
Total comprehensive income
(175.486)
(3.550)
Net cash flows used in investment activities
(260)
(3.630)
Comprehensive income attributable to:
Comprehensive income attributable to the owners of the parent company
(175.486)
TOTAL COMPREHENSIVE INCOME
(175.486)
(3.550)
(3.550)
Net cash flows from (used in) financing activities
270.391
34.913
Net increase (decrease) in cash and cash equivalents, before F/X changes
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
6.387
6.387
45.628
898
898
39.241
Affiliates and subsidiaries
289
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
LATAM AIRLINES PERÚ S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable
to the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
Equity
January 1, 2018
Total comprehensive income
Total transactions with shareholders
Final balance current year
December 31, 2018
8.691
(175.486)
342.418
175.623
-
-
-
-
8.691
(175.486)
342.418
Equity
January 1, 2019
Total comprehensive income
Total transactions with shareholders
175.623
Final balance current year
December 31, 2019
Equity attributable
to the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
10.103
(3.550)
2.138
8.691
-
-
-
10.103
(3.550)
2.138
8.691
Affiliates and subsidiaries
290
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INVERSIONES LAN S.A.
STATEMENT OF FINANCIAL SITUATION
INVERSIONES LAN S.A.
CONSOLIDATED INCOME STATEMENT BY FUNCTION
ASSETS
Total current assets
Total non-current assets
As at
December
2020
MUS$
1.336
58
As at
December
2019
MUS$
1.271
58
Total assets
1.394
1.329
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
December
2020
MUS$
As at
December
2019
MUS$
21
44
65
5
45
50
1.329
1.329
1.279
1.279
1.394
1.329
Income from ordinary activities
Cost of sales
Gross gain (loss)
Gain (loss) from operating activities
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) for the fiscal year
As at
As at
December
December
2020
MUS$
2019
MUS$
-
-
-
(7)
23
27
50
50
50
-
-
-
(8)
(54)
-
(54)
(54)
(54)
Affiliates and subsidiaries
291
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 INVERSIONES LAN S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
INVERSIONES LAN S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
GAIN (LOSS) FOR THE FISCAL YEAR
50
(54)
Equity
As at
December
2020
MUS$
As at
December
2019
MUS$
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2020
Total other comprehensive income not to be reclassified as
income for the fiscal year before tax
Total Other comprehensive income to be classified as
income for the fiscal year before tax
Other components of other comprehensive income,
before tax
Taxes on earnings accrued related to components of other
comprehensive income that will not be classified under
income for the fiscal year
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to the owners of the parent company
TOTAL COMPREHENSIVE INCOME
-
-
-
-
-
50
50
50
-
-
-
-
-
(54)
(54)
(54)
Equity attributable
to the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
1.279
50
1.329
-
-
-
Total
equity
MUS$
1.279
50
1.329
Affiliates and subsidiaries
292
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 INVERSIONES LAN S.A.
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
LATAM TRAVEL S.R.L.
STATEMENT OF FINANCIAL SITUATION
Net cash flows from operating activities
Net cash flows used in investment activities
Net increase (decrease) cash and cash equivalents, before F/X changes
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
As at
As at
December
December
2020
MUS$
2019
MUS$
24
-
24
483
(10)
-
(10)
459
ASSETS
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
1.128
1.128
2019
MUS$
161
161
As at
As at
December
December
2020
MUS$
2019
MUS$
1.173
1.173
(45)
(45)
1.128
138
138
23
23
161
Affiliates and subsidiaries
293
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CONSOLIDATED INCOME STATEMENT BY FUNCTION
LATAM TRAVEL S.R.L.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income from ordinary activities
Gross gain (loss)
Gain (loss) from operating activities
Gain (loss) before tax
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) for the fiscal year
As at
As at
December
December
2020
MUS$
2019
MUS$
11
11
(68)
(68)
(68)
(68)
(68)
166
166
44
44
44
44
44
GAIN (LOSS) FOR THE FISCAL YEAR
Total comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to the owners of the parent company
TOTAL COMPREHENSIVE INCOME
As at
As at
December
December
2020
MUS$
2019
MUS$
(68)
(68)
(68)
(68)
44
44
44
44
Affiliates and subsidiaries
294
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 LATAM TRAVEL S.R.L.
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
LATAM TRAVEL S.R.L.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Net cash flows from operating activities
Net cash flows used in investment activities
Net increase (decrease) in cash and cash equivalents, before F/X changes
Net increase (decrease) in cash and cash equivalents,
before F/X changes
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
As at
As at
December
December
2019
MUS$
2019
MUS$
(59)
(28)
(87)
(87)
(67)
20
-
20
20
20
Equity
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2020
Equity attributable
to the owners
of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
23
(68)
(45)
-
-
-
23
(68)
(45)
Affiliates and subsidiaries
295
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020
LATAM TRAVEL CHILE II S.A.
STATEMENT OF FINANCIAL SITUATION
LATAM TRAVEL CHILE II S.A.
CONSOLIDATED INCOME STATEMENT BY FUNCTION
ASSETS
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
2019
MUS$
293
650
943
539
-
539
Income from ordinary activities
Cost of sales
Gross gain (loss)
Gain (loss) from operating activities
Gain (loss) before tax
Al 31 de
Al 31 de
diciembre de
diciembre de
Income tax expense
Gain (loss) for the fiscal year
As at
December
2020
MUS$
As at
December
2019
MUS$
407
(19)
388
(599)
(599)
383
(216)
(216)
(216)
-
-
-
-
(78)
-
(78)
(78)
(78)
2020
MUS$
1.625
216
1.841
(898)
(898)
943
2019
MUS$
1.122
99
1.221
(682)
(682)
539
Gain (loss) attributable to the owners of the parent company
Gain (loss) for the fiscal year
LATAM TRAVEL CHILE II S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Gain (loss) for the fiscal year
Total comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to the owners of the parent company
TOTAL COMPREHENSIVE INCOME
As at
December
2020
MUS$
As at
December
2019
MUS$
(216)
(216)
(216)
(216)
(78)
(78)
(78)
(78)
Affiliates and subsidiaries
296
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 LATAM TRAVEL CHILE II S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
LATAM TRAVEL CHILE II S.A.
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
Equity
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2020
Equity attributable
to the owners
of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
(682)
(216)
(898)
-
-
-
(682)
(216)
(898)
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents,
before F/X changes
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
As at
December
2020
MUS$
195
(4)
(465)
(274)
(274)
260
As at
December
2019
MUS$
316
-
-
316
316
534
Affiliates and subsidiaries
297
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 LAN PAX GROUP AND AFFILIATES
STATEMENT OF FINANCIAL SITUATION
LAN PAX GROUP AND AFFILIATES
CONSOLIDATED INCOME STATEMENT BY FUNCTION
As at
As at
December
December
2020
MUS$
2019
MUS$
204.062
200.875
312.596
320.091
404.937
632.687
As at
As at
December
December
2020
MUS$
2019
MUS$
1.415.327
1.280.202
209.610
207.060
1.624.937
1.487.262
Income from ordinary activities
Cost of sales
Gross gain (loss)
Gain (loss) from operating activities
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) attributable to non-controlling stakes
As at
As at
December
December
2020
MUS$
2019
MUS$
187.176
741.308
(266.110)
(680.034)
(78.934)
(336.276)
(260.367)
(42.427)
(302.794)
(291.257)
(11.537)
61.274
(81.751)
(10.284)
(16.267)
(26.551)
(26.927)
376
Gain (loss) for the fiscal year
(302.794)
(26.551)
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
(1.220.319)
(856.611)
Non-controlling stakes
Total Equity
Total Equity and liabilities
319
2.036
(1.220.000)
(854.575)
404.937
632.687
Affiliates and subsidiaries
298
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 LAN PAX GROUP AND AFFILIATES
LAN PAX GROUP AND AFFILIATES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED CASH FLOW STATEMENT – DIRECT METHOD
GAIN (LOSS) FOR THE FISCAL YEAR
Other components of other comprehensive income, before tax
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
As at
As at
December
December
2020
MUS$
(302.794)
(66.845)
(66.845)
(369.639)
2019
MUS$
(26.551)
(64.586)
(64.586)
(91.137)
Comprehensive income attributable to the owners of the parent company
(367.922)
(91.551)
Comprehensive income attributable to non-controlling stakes
(1.717)
414
TOTAL COMPREHENSIVE INCOME
(369.639)
(91.137)
LAN PAX GROUP AND AFFILIATES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
January 1, 2020
Total comprehensive income
Increase (decrease)
Equity attributable to
the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
(856.611)
(367.922)
2.036
(1.717)
(854.575)
(369.639)
from transfers and other changes
4.214
-
4.214
Final balance current year
December 31, 2020
(1.220.319)
319
(1.220.000)
As at
As at
December
December
2020
MUS$
2019
MUS$
Net cash flows from operating activities
(61.606)
310.838
Net cash flows used in investment activities
(5.607)
(598.000)
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents, before F/X
changes
Effects of F/X variation on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
(2.224)
341.767
(69.437)
54.604
12.010
(313)
(57.427)
61.307
54.291
118.734
Affiliates and subsidiaries
299
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 HOLDCO I S.A.
STATEMENT OF FINANCIAL SITUATION
HOLDCO I S.A.
CONSOLIDATED INCOME STATEMENT BY FUNCTION
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
6
351.593
351.599
2019
MUS$
6
351.586
351.592
As at
As at
December
December
2020
MUS$
2.152
2.152
349.441
349.441
351.593
2019
MUS$
2.040
2.040
349.552
349.552
351.592
Gain (loss) from operating activities
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) for the fiscal year
As at
As at
December
December
2020
MUS$
2019
MUS$
-
(111)
-
(111)
(111)
(111)
(4)
159
-
159
159
159
Affiliates and subsidiaries
300
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
HOLDCO I S.A.
HOLDCO I S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at
As at
December
December
GAIN (LOSS) FOR THE FISCAL YEAR
Total comprehensive income
Comprehensive income attributable to:
2020
MUS$
(111)
(111)
Comprehensive income attributable to the owners of the parent company
(111)
TOTAL COMPREHENSIVE INCOME
(111)
2019
MUS$
159
159
159
159
Equity
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2018
Equity attributable to
the owners of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
349.552
(111)
349.441
-
-
-
349.552
(111)
349.441
Affiliates and subsidiaries
301
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
HOLDCO I S.A.
TECHNICAL TRAINING LATAM S.A.
STATEMENT OF FINANCIAL SITUATION
Net cash flows from operating activities
Net increase (decrease) in cash and cash equivalents,
before F/X changes
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
ASSETS
As at
As at
December
December
2020
MUS$
2019
MUS$
-
-
-
6
-
-
-
6
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
As at
As at
December
December
2020
MUS$
2019
MUS$
1.345.034
1.610.212
202.075
170.347
1.547.109
1.780.559
As at
As at
December
December
2020
MUS$
118.243
325.370
443.613
2019
MUS$
358.436
445.791
804.227
Equity attributable to the owners of the parent company
1.103.496
976.332
Non-controlling stakes
Total Equity
-
-
1.103.496
976.332
Total Equity and liabilities
1.547.109
1.780.559
Affiliates and subsidiaries
302
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 TECHNICAL TRAINING LATAM S.A.
CONSOLIDATED INCOME STATEMENT BY FUNCTION
TECHNICAL TRAINING LATAM S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income from ordinary activities
Cost of sales
As at
As at
December
December
2020
MUS$
2019
MUS$
698.676
853.443
(584.594)
(1.005.473)
Gross gain (loss)
114.082
(152.030)
GAIN (LOSS) FOR THE FISCAL YEAR
Other components of other comprehensive income, before tax
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
As at
December
2020
MUS$
40.403
86.761
86.761
127.164
As at
December
2019
MUS$
(206.340)
(102.111)
(102.111)
(308.451)
Gain (loss) from operating activities
(128.632)
(150.965)
Comprehensive income attributable to the owners of the parent company
TOTAL COMPREHENSIVE INCOME
127.164
127.164
(308.451)
(308.451)
Gain (loss) before tax
(128.632)
(150.965)
Income tax expense
Gain (loss) for the fiscal year
Gain (loss) attributable to the owners of the parent company
Gain (loss) for the fiscal year
169.035
(55.375)
40.403
40.403
40.403
(206.340)
(206.340)
(206.340)
TECHNICAL TRAINING LATAM S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2020
Equity attributable
to the owners
of the
parent company
M$
Non-controlling
stakes
M$
Total
equity
M$
976.332
127.164
1.103.496
-
-
-
976.332
127.164
1.103.496
Affiliates and subsidiaries
303
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 TECHNICAL TRAINING LATAM S.A.
CONSOLIDATED CASH FLOW STATEMENT – DIRECT METHOD
JARLETUL S.A.
STATEMENT OF FINANCIAL SITUATION
Net cash flows from operating activities
Net increase (decrease) in cash and cash equivalents,
before F/X changes
As at
As at
December
December
2020
M$
2019
M$
(321.544)
422.825
(321.544)
422.825
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
Effects of F/X variation on cash and cash equivalents
-
-
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
(321.544)
593.254
422.825
914.798
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
2019
MUS$
32
2
34
124
26
150
As at
As at
December
December
2020
MUS$
2019
MUS$
1.076
1.076
(1.042)
(1.042)
34
860
860
(710)
(710)
150
Affiliates and subsidiaries
304
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 JARLETUL S.A.
CONSOLIDATED INCOME STATEMENT BY FUNCTION
JARLETUL S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Income from ordinary activities
Cost of sales
Gross gain (loss)
Gain (loss) from operating activities
Gain (loss) before tax
Gain (loss) for the fiscal year
As at
As at
December
December
2020
MUS$
2019
MUS$
-
-
-
(328)
(327)
(332)
162
1
163
(603)
(603)
(603)
Equity
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2020
Equity
attributable to
the owners
of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
(710)
(332)
(1.042)
-
-
-
(710)
(332)
(1.042)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
JARLETUL S.A.
GAIN (LOSS) FOR THE FISCAL YEAR
Total comprehensive income
As at
As at
December
December
2020
MUS$
(332)
(332)
2019
MUS$
(603)
(603)
Affiliates and subsidiaries
305
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
JARLETUL S.A.
PROFESSIONAL AIRLINE SERVICES INC
STATEMENT OF FINANCIAL SITUATION
Net cash flows from operating activities
Net cash flows used in investment activities
Net increase (decrease) in cash and cash equivalents,
before F/X changes
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
As at
As at
December
December
2020
MUS$
2019
MUS$
(92)
-
(92)
(92)
31
133
(26)
107
107
123
ASSETS
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
45.512
45.512
2019
MUS$
22.404
22.404
As at
As at
December
December
2020
MUS$
2019
MUS$
42.797
42.797
20.845
20.845
2.715
2.715
45.512
1.559
1.559
22.404
Affiliates and subsidiaries
306
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 PROFESSIONAL AIRLINE SERVICES INC
CONSOLIDATED INCOME STATEMENT BY FUNCTION
PROFESSIONAL AIRLINE SERVICES INC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income from ordinary activities
Cost of sales
Gross gain (loss)
As at
As at
December
December
2020
MUS$
2019
MUS$
-
-
(26.980)
(27.177)
(26.980)
(27.177)
GAIN (LOSS) FOR THE FISCAL YEAR
Total comprehensive income
As at
As at
December
December
2020
MUS$
1.156
1.156
2019
MUS$
1.096
1.096
Gain (loss) from operating activities
1.321
1.198
Gain (loss) before tax
Income tax expense
Gain (loss) for the fiscal year
1.321
1.198
(165)
(102)
1.156
1.096
PROFESSIONAL AIRLINE SERVICES INC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
attributable to
the owners
of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
1.559
1.156
2.715
-
-
-
1.559
1.156
2.715
Equity
January 1, 2020
Total comprehensive income
Final balance current year
December 31, 2020
Affiliates and subsidiaries
307
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 PROFESSIONAL AIRLINE SERVICES INC
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
LATAM FINANCE LIMITED
STATEMENT OF FINANCIAL SITUATION
Net cash flows from operating activities
Net increase (decrease) in cash and cash equivalents, before F/X changes
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
As at
As at
December
December
ASSETS
2020
MUS$
(1.555)
(1.555)
(1.555)
90
2019
MUS$
4
4
4
1.645
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Equity attributable to the owners of the parent company
Total Equity
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
2019
MUS$
1.310.735
1.362.762
-
-
1.310.735
1.362.762
As at
As at
December
December
2020
MUS$
2019
MUS$
82.572
29.419
1.501.739
1.501.819
1.584.311
1.531.238
(273.576)
(168.476)
(273.576)
(168.476)
1.310.735
1.362.762
Affiliates and subsidiaries
308
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 LATAM FINANCE LIMITED
CONSOLIDATED INCOME STATEMENT BY FUNCTION
LATAM FINANCE LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Income from ordinary activities
Cost of sales
As at
As at
December
December
2020
MUS$
2019
MUS$
5
509
(105.103)
(91.930)
GAIN (LOSS) FOR THE FISCAL YEAR
Total comprehensive income
As at
As at
December
December
2020
MUS$
(105.100)
(105.100)
2019
MUS$
(90.736)
(90.736)
Gross gain (loss)
(105.098)
(91.421)
Gain (loss) from operating activities
(105.100)
(90.736)
Gain (loss) before tax
Gain (loss) for the fiscal year
(105.100)
(105.100)
(90.736)
(90.736)
LATAM FINANCE LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
January 1, 2020
Equity attributable to
the owners
of the
parent company
MUS$
Non-controlling
stakes
MUS$
Total
equity
MUS$
(168.476)
-
(168.476)
Total comprehensive income
(105.100)
-
(105.100)
Final balance current year
December 31, 2020
(273.576)
-
(273.576)
Affiliates and subsidiaries
309
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 LATAM FINANCE LIMITED
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
PEUCO FINANCE LIMITED
STATEMENT OF FINANCIAL SITUATION
Net cash flows from operating activities
As at
As at
December
December
2020
MUS$
2019
MUS$
996
(2.093)
ASSETS
Total current assets
Total assets
Net cash flows used in investment activities
51.184
(786.262)
LIABILITIES AND EQUITY
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
(52.063)
117
117
775.612
(12.743)
1.083
LIABILITIES
Total current liabilities
Total liabilities
Total Equity and liabilities
As at
As at
December
December
2020
MUS$
1.307.721
1.307.721
2019
MUS$
664.458
664.458
As at
As at
December
December
2020
MUS$
1.307.721
1.307.721
1.307.721
2019
MUS$
664.458
664.458
664.458
Affiliates and subsidiaries
310
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 PEUCO FINANCE LIMITED
CONSOLIDATED CASH FLOW STATEMENT - DIRECT METHOD
Net cash flows from operating activities
Net cash flows used in investment activities
Net increase (decrease) in cash and cash equivalents, before F/X
changes
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FISCAL YEAR
As at
As at
December
December
2020
MUS$
2019
MUS$
(643.263)
(104.392)
643.263
104.392
-
-
-
-
-
-
Affiliates and subsidiaries
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Comparative analysis and explanation of main trends:
Consolidated financial statement
At December 31, 2020, the Company’s assets totaled
ThUS$15,650,090 which, compared to the value at Decem-
ber 31, 2019, represents a ThUS$5,437,716 decrease (25.8%).
The Company’s current assets decreased by ThUS$874,690
(21.87%) compared to yearend 2019. The main decreases
were seen in the following line items: Commercial debtors
and other accounts receivable, current, worth ThUS$644,967
(51.8%), linked to decreased sales during the period;
Non-current assets or groups of assets for disposal, classi-
fied as held for sale or held for distribution to owners, worth
ThUS$209,028 (43.1%), mainly resulting from the net ef-
fect of the movements to and from the line item Property,
Plant, and Equipment during 2020, corresponding, respec-
tively, to: The ThUS$464,812 decrease due to the cancel-
lation of the purchase by Delta Air Lines Inc. of four Airbus
A350 aircraft, and the ThUS$275,000 increase corresponding
to the fair value of 11 B767 airplanes. These negative varia-
tions are compensated by the net effect between Cash and
cash equivalents and Other financial assets, current, worth
ThUS$174,008.
The Company’s liquidity index shows a decrease from 0.58
times by the end of 2019 to 0.42 times at December 2020,
mainly due to a 21.8% decrease in Current assets. Moreover,
the quick ratio increased from 0.15 times at yearend 2019 to
0.23 times at the end of 2020.
The Company’s Non-current assets decreased by
ThUS$4,563,026 (26.7%) compared to 2019. The main de-
crease comes from the negative variation in Capital gains
totaling ThUS$2,209,576, mainly due to the recognition of
an impairment loss worth ThUS$1,728,975 resulting from
the impairment tests made in the first quarter of 2020,
by identifying said impairment resulting from the suspen-
sion of most of the passenger air transport operations,
due to the protection measures for the population, relat-
ed to Covid 19, and to the loss from translation adjustment
worth ThUS$480,601. Other items of the Non-current as-
set that show decreases: Property, plant, and equipment
for ThUS$2,189,349 (16.9%), whose variation is explained,
net, mainly due to the rejection of the fleet by the Chap-
ter 11 process, worth ThUS$1,090,668, the depreciation of
the period totaling ThUS$1,137,195, a translation difference
of ThUS$188,156, a decrease of ThUS$141,710, linked to
the reincorporation of Non-current assets or groups of as-
sets for disposal classified as assets held for sale or held
for distribution to owners, due to the cancellation by Delta
Air Lines Inc. of the purchase of four Airbus A350 airplanes
for ThUS$464,812, and the reclassification of Non-current
assets or groups of assets for disposal classified as held for
sale or held for distribution to owners of 11 B767 airplanes
for ThUS$606,522; Intangible assets other than goodwill
worth ThUS$401,682 (27.7%), mainly originated by a con-
version adjustment of ThUS$271,700 and ThUS$169,800,
corresponding to the amortization of the period, including
US$103 million from the new IT programs that will no longer
be used, as a result of the implementation of the new dig-
ital platform developed to offer simple, agile, and multi-
platform interactions to improve customers’ digital experi-
ence and the internal processes of the Company known as
LATAM XP, among other movements in the period; and in-
crease in Assets from deferred taxes totaling ThUS$329,233
(139.8%), mainly generated from the operating losses of
LATAM Chile S.A.
At December 31, 2020, the Company’s liabilities totaled
ThUS$18,092,475 which, compared to the value as at De-
cember 31, 2019, represents a ThUS$133,846 increase,
equivalent to 0.7%.
The Company’s Current liabilities increased by
ThUS$530,946 (7.6%) compared to yearend 2019. The main
increase is seen in Other financial liabilities, current, total-
ing ThUS$1,170,070 (62.1%), which are mainly explained
by the net effect of the de las capital gains and interest
payments made in the year, totaling ThUS$(273,591), the
ThUS$472,273 increase in accrued interest, reclassifications
from the non-current line item worth ThUS$995,966, and
derivatives movement in the year, totaling ThUS$(45,000),
which is mainly compensated by the decrease in Oth-
er non-financial liabilities, current, worth ThUS$746,430
312
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 (26.3%), related to the decrease in sales due to the health
contingency.
The indebtedness indicator of the Company’s Current lia-
bilities for the period is (3.08). The impact of current Lia-
bilities on total debt increased by 2.65 percentage points,
from 38.76% at yearend 2019 to 41.41% at the end of the
current period.
The Company’s non-current Liabilities decreased by
ThUS$397,100 (3.6%), compared to the sum reached by De-
cember 31, 2019. The main negative variations are seen in
the Other non-current financial liabilities line item totaling
ThUS$726,617 (8.5%). This variation is mainly explained by
the approval of the motion filed by the Company before the
Bankruptcy Court to reject certain aircraft leasing contracts.
The rejected contracts included 17 aircrafts financed under
the EETC structure totaling US$844.1 million; two aircrafts
financed with a financial lease for US$38.8 million, due to
the net effect of the capital gains and payments made in
the year totaling ThUS$1,132,879, reclassifications from the
line item to current position, totaling ThUS$(995,796), and
an appraisal effect and other movements in the period for
ThUS$(38,027).
The other negative variations are seen in the Liabilities from
deferred taxes line item, totaling ThUS$232,523 (37.7%) also
linked to the rejection of the fleet and Other non-current
non-financial liabilities for ThUS$149,375 (17.5%) explained
mainly by the reclassification of balances to current posi-
tion. This is slightly compensated by the positive variation in
Other provisions, non-current, for ThUS$301,956 (105.4%),
explained by the net effect between the ThUS$452,078 in-
crease in provisions and the ThUS$47,238 reduction from
payments made, conversion adjustments for ThUS$58,654,
and a provision reversal of ThUS$25,563; and Accounts pay-
able to related companies, non-current, for ThUS$396,423
due to capital gains.
The indebtedness indicator of the Company’s Non-current
liabilities for the period is (4.35). The impact of non-current
Liabilities on total debt decreased by 2.65 percentage points,
from 61.24% at yearend 2019 to 58.59% at December 2020.
The total indebtedness indicator on the Company’s Equity at
December 2020 is (7.43).
At December 31, 2020, roughly 42% of the debt has a fixed
rate or is linked to one of the financial hedging instruments
arranged. The average rate on the debt is 5.44%.
The Equity attributable to the owners of the parent company
decreased by ThUS$5,566,495 from ThUS$3,130,782 at De-
cember 31, 2019 to ThUS$2,435,713 by December 31, 2020.
The decreases are seen in the results for the year, attributa-
ble to the owners of the parent company, translating into a
loss of ThUS$4,545,887, mainly affected by the recognition
of a Goodwill impairment and Expenses from restructuring
activities, totaling ThUS$1,728975 and ThUS$990,009, re-
spectively; and the Other reserves totaling ThUS$1,020,608,
mainly due to the negative effect from a ThUS$900,226 vari-
ation in exchange rate conversion reserves, mainly due to the
variation in the Brazilian real.
Consolidated income statement
At December 31, 2020, the controller reported a negative re-
sult of ThUS$4,545,887, translating into a negative variation
of ThUS$4,736,317 compared to the ThUS$190,430 profit
from the previous year. Net margin went from 1.8% in 2019
to -104.9% during 2020.
Operating result for 2020 totaled a loss of ThUS$1,665,288
which, compared to the ThUS$741,602 profit as at December
31, 2019, shows a negative variation equivalent to 324.6%,
whereas operating margin reached -38.45%,45.5 percentage
points below the figures for 2019.
Operating revenues for the twelve months of 2020 decreased
by 58.4% compared to 2019, settling at ThUS$4.334.669.This
decrease is largely due to a 69.9% drop in Passenger reve-
nues; on the other hand, Cargo revenues and the Other rev-
enues item increased by 13.7% and 13.9%, respectively. The
effect of the Brazilian real’s depreciation represents lower or-
dinary revenues worth around US$360 million.
In June 2020, LATAM Airlines Argentina S.A.’s operations were
indefinitely suspended, due to the conditions of the lo-
cal industry, worsened by the Covid-19 pandemic, whereby
12 destinations are no longer operated. By the end of 2019,
LATAM Airlines Argentina S.A. reported US$229 million in its
individual Operating revenue results.
Passenger revenues totaled ThUS$2,713,774 which, com-
pared to the ThUS$9,005,629 of the twelve months of 2019,
represents a 69.9% decrease. This variation is mainly due to
the 62.7% drop in capacity measured in ASK, as well as an
18.8% decrease in RASK, as a result of a 7 percentage-point
decrease in load factor, together with a 12% drop in yields
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Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 compared to the previous year. The drop in load factor is
explained by the implementation of quarantines, travel re-
strictions, and lower demand as a result of the Covid-19
outbreak.
At December 31, 2020, Cargo revenues totaled
ThUS$1,209,893, which translates into a 13.7% increase
from 2019, despite the 12.7% drop in traffic measured in
RTK and a 25.9% decline in capacity measured in ATK. Yields
increased 30.2%, mainly driven by the change in the com-
petitive scene, due to the Covid-19 crisis. Moreover, passen-
ger plane cabins were refurbished for cargo transportation,
and the frequencies and destinations of cargo flights were
increased.
The Other income line item shows an increase of
ThUS$50,138, mainly due to ThUS$62,000 received as com-
pensation from Delta Air Lines Inc. for the cancellation of
four A350 aircrafts and ThUS$9,240 from the anticipated
return of planes leased to Qatar Airways, both in the second
half of 2020.
At December 31, 2020, Operating costs totaled
ThUS$5,999,957 which, compared to 2019, translate into
ThUS$3,689,368 lower costs, equivalent to a 38.1% drop,
whereas unit cost per ASK increased by 65.8%. Furthermore,
the effect of the Brazilian Real’s depreciation on this line
item translates into lower costs by roughly US$440 million.
Item variations are explained as follows:
a) Compensations and benefits decreased by ThUS$832,702
due to the voluntary salary reduction, agreed upon in March,
for over 90% of the employees. This resulted in around
US$130 million in savings, together with the drop in the av-
erage provision and the depreciation of local currencies, par-
ticularly the Brazilian real and the Chilean peso.
h) Other Operating Costs show a decrease of ThUS$70,712,
mainly due to lower crew costs and reservations systems as
a result of the decreased operations and demand.
b) Fuel decreased by 64.3% equivalent to ThUS$1,883,665.
This drop is mainly the result of a 22.8% reduction in unhe-
dged prices, and a 53.9% decrease in consumption meas-
ured in gallons. During 2020, the company reported a
loss of ThUS$14,316 from fuel hedges, compared to the
ThUS$23,110 loss from the twelve months of 2019.
c) Commissions report a ThUS$129,974 decrease as a result
of the drop in passenger traffic.
d) Depreciation and Amortization declined by ThUS$80,590
at December 31, 2020. This variation is mainly explained by
the drop in maintenance depreciation, as a result of the de-
crease in flight hours of the passenger fleet during the last
nine months of 2020.
e) Other Leases and Landing Fees decreased by
ThUS$555,854, mainly in airport and handling service fees,
impacted by the decreased operation.
f) Passenger Services decreased by ThUS$163,642, translat-
ing into a 62.6% variation, mainly explained by a 61,9% re-
duction in the number of passengers.
g) Maintenance costs increased by ThUS$27,771, equiva-
lent to a 6.2% rise. Despite the decrease in operation, during
the last months of 2020, necessary costs were incurred for
the preservation of the grounded aircraft. In addition, in the
fourth quarter, the values of commitments from scheduled
returns of leased aircrafts were updated.
Financial revenues totaled ThUS$50,397 which, compared to
the ThUS$26,283 from 2019, translates into higher revenues
by ThUS$24,114, mainly due to an increase in interest-earn-
ing assets as part of the portfolio that the company uses to
manage its cash.
Financial cost decreased by 0.5%, totaling ThUS$586,979 by
December 31, 2020. The variation is a result of lower inter-
est rates and a decrease in financial debt compared to the
same period of 2019, compensated by the interest rec-
ognized during the fourth quarter 2020, linked to the DIP
financing.
The Other income/expenses as at December 31, 2020 show
a negative result of US$2,903,853. The contingency gener-
ated by the Covid-19 outbreak affected the company’s im-
pairment tests, hampering the total goodwill, corresponding
to a US$1.72 billion loss. Moreover, during the second half
of 2020 the costs related to the reorganization were recog-
nized, involving the impact on results from the rejected fleet
contracts worth US$269 million, US$291 million in com-
pensation related to the company’s restructure, and US$332
million in adjusted value net of the fleet available for sale.
The main line items in the Consolidated Financial Statement
of TAM S.A. and Affiliates, which caused a ThUS$480 curren-
cy exchange loss at December 31, 2020, are as follows: Oth-
er financial liabilities; ThUS$82,634 loss from USD-denom-
inated loans and financial leasing for fleet acquisitions; net
accounts receivable and payable to related companies, to-
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Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 taling a profit of THUS$105,037, and net accounts receivable
and payable to third parties, totaling a loss of ThUS$18,049.
The other net assets and liabilities line items generated a
loss of ThUS$4,833.
Analysis and explanation of consolidated net
cash flow generated by operation, investment,
and financing activities
The Company’s cash flow, after the first quarter of 2020,
has been affected mainly by the decreased operations of
passenger transportation due to the closing of borders and
quarantine periods designed to control the Covid-19 pan-
demic in the countries where the company operates, and due
to the filing for voluntary reorganization under Chapter 11 of
the US Bankruptcy Code, which has made it possible to pro-
tect the Company’s liquidity.
Cash Flow from Operating Activities up to December 31,
2020 shows a negative variation of ThUS$3,321,364 com-
pared to the previous year, mainly because of the nega-
tive variation nfrom Collections from the sale of goods and
services rendered totaling ThUS$6,458,924, Other cash
receipts from operation activities totaling ThUS$75,783;
taxes on gains refunded (paid) ThUS$20,381, and Other
cash income and expenses totaling ThUS$227,693.This is
compensated by positive variations on Supplier payments
for the supply of goods and Payments to and on behalf of
employees, whose positive variations arise from lower pay-
ments made totaling ThUS$2,846,536 and ThUS$417,796,
respectively, as well as Other payments for operating activ-
ities totaling ThUS$197,085.
The negative variation of ThUS$227,693 in Other cash in-
come and expenses, from the Operating Activities Flow,
is mainly the result of the net effect between the low-
er compensation received from Delta Air Lines Inc.
worth ThUS$288,000 and the collateral increase worth
ThUS$38,805, compensated by the positive variation in le-
gal deposits for ThUS$61,503 linked to recoveries received
in Brazil during the second and third quarters of 2020 (legal
deposit from TAM Linheas Aéreas S.A for ThUS$38,476);
lower payments of interest on financial transactions and
others for ThUS$24,907 and the positive variation from
transactions with fuel derivatives for ThUS$12,702.
The flow from Investment Activities shows a positive vari-
ation of ThUS$1,452,815 over the previous year. The main
positive variations are related to the following concepts:
The net effect between Other collections from the sale and
Other payments to acquire equity or debt instruments from
other entities for ThUS$391,380, lower Property, plant,
and equipment purchases, and purchases of intangible as-
sets worth ThUS$952,357, and ThUS$64,740, respectively;
greater additions of Sums from the sale of property, plant,
and equipment for ThUS$25,244 and Interest received for
ThUS$19,037.
The Flow from financing Activities shows a positive variation
of ThUS$2,464,350 compared to the previous year, which is
mainly explained by the positive variations of the following
concepts: Payments from changes in the stakes in subsidi-
aries that do not lead to a loss of control for ThUS$290,880;
Sums from loans for ThUS$110,752; Loans from relat-
ed companies ThUS$373,125 corresponding to a part of
Tranche C of the DIP financing, provided by the LATAM
shareholders group comprised by the Cueto Group, the Eblen
Group, and Qatar Airways, and certain companies related to
the latter; Loan payments for ThUS$1,066,743; Interest paid
for ThUS$340,459; Payment of liabilities from leases for
ThUS$276,930; and Dividends paid for ThUS$54,545 as the
minimum dividends corresponding to the shareholders of
LATAM Airlines S.A on the profits of 2019 are still outstand-
ing, in compliance with the restrictions imposed by Chapter
11 of the US Bankruptcy code.. The positive variations pre-
sented are compensate by the negative variation in Other
cash income and expenses for ThUS$49,084.
The positive variations in the Flow of Financing Activities in
the line items of Loan payments, Interest paid, and Pay-
ment of liabilities from leasing are mainly originated by the
suspension of payments on the debts contracted prior to
the date of the petition for voluntary reorganization and ac-
ceptance of the rejection of leasing or financing contracts
of a total of 29 airplanes throughout 2020 by the Bank-
ruptcy Court.
The flows from loans described above include the following
events:
a) On February 11, 2019, LATAM Finance Limited, a lim-
ited liability company established in the Caiman Islands
and exclusively owned by LATAM Airlines Group S.A., is-
sued on the international market, under Standard 144-A
and Regulation S of the US Securities Act, unsecured long-
term bonds called LATAM 2026 for a notional amount of
US$600,000,000 at an annual interest rate of 7.00%. The
bonds were placed at an issuance price of 99.309% of their
par value. The bonds have biannual interest payments and
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Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 full capital amortization at maturity, the maturity date being
March 1, 2026. As was announced to the market, the goal of
the issuance and placement was for general corporate financ-
ing purposes.
b) On June 6, 2019, LATAM Airlines Group S.A. issued on the
local market (Santiago Stock Exchange) unsecured long-
term bonds called Series E (BLATM-E), corresponding to the
first series of bonds charged to the facility registered in the
Registry of the Financial Market Commission (“CMF”, for its
Spanish acronym), under N° 921 dated November 26, 2018,
for a total of UF9,000,000.
The total sum issued was UF5,000,000 at an annual coupon
rate of 3.60% with biannual interest payments and maturing
on April 15, 2029. The placement rate was 2.73%, equivalent
to ThUS$215,093.
Of the funds raised through the placement, 50% were des-
tined to refinancing liabilities, 30% to financing investments,
and 20% for general corporate purposes.
c) On July 11, 2019, LATAM Finance Limited, a limited li-
ability company established in the Caiman Islands and
exclusively owned by LATAM Airlines Group S.A., issued a
re-opening of the LATAM 2026 bond, issued on February 11,
2019, for US$200,000.000.This reopening had a placement
rate of 5.979%.
Simultaneously, on July 11, 2019, LATAM Airlines Group S.A.
announced the repurchase of up to US$300 million of the
unsecured bond LATAM 2020, issued on June 9, 2015 for
US$500 million at a coupon rate of 7.25% and maturing in
June 2020. The buyback price of the offer was 103.8 cents
per dollar of the face value of the bonds offered up to July
24, 2019; after that date and up to August 7, 2019, the
buyback price offered decreased to 100.8 cents per dollar.
At maturity of the offer, a total of US$238,412,000 of the
bonds were repurchased, US$238,162,000 of which were
received on or prior to July 24, 2019, and US$250,000 af-
ter that date. The income from the reopening of the LATAM
2026 bond was used to pay for part of the public tender of
the LATAM 2020 bond. The remainder of the public tender
was paid in cash.
On December 17, 2019, LATAM Airlines Group S.A. complet-
ed the repurchase of the balance (US$262 million) of the
LATAM 2020 unsecured bond which, added to the buy-
back from July 11, 2019, totaled the balance of the bond.
The buyback was performed through the so-called “Make-
Whole” call mechanism, which is a right that the issuer of
the bond has to buy back the outstanding debt balance,
based on a price calculated using the US Treasury bonds
with a similar maturity to the callable bond and adding a
spread. The buyback price was 102.45 cents per dollar of
the nominal sum of the bonds.
2022. The facility is backed by collateral comprising air-
craft, engines, and spare parts. The first withdrawal was
done on March 27, 2020, totaling US$504.7 million, the
second was on April 7, 2020, for US$72 million, and the
third was on April 14, 2020, for US$11.2 million; the fourth
and last was on April 21, 2020, totaling US$12.1 million."
f) On June 24, 2020, the US District Court for the South-
ern District of New York approved the motion filed by the
Company to reject certain aircraft leasing contracts. The
rejected contracts included 17 aircrafts financed under the
EETC structure, totaling US$844.1 million and an aircraft
financed through a financial lease totaling US$4.5 million.
g) On October 20, 2020, the US District Court of the
Southern District of New York approved the motion filed
by the Company to reject the aircraft leasing contract fi-
nanced under a financial lease for US$34.3 million.
In addition to the aircraft contracts presented in items
(f) and (g), 10 aircrafts are recognized as Liabilities from
leasing.
d) March 16, 2020 was the maturity date of the obligations
contained in the contract called “Indenture” signed by Gua-
nay Finance Limited (see Note 1 of the Consolidated Finan-
cial Statement), LATAM Airlines Group S.A., and Citibank,
N.A. on November 7, 2013. The bonds secured with the fu-
ture flows from credit card sales in the US and Canada were
issued in 2013 totaling US$450 million.
h) On October 10, 2020, LATAM Airlines Group S.A. with-
drew part (US$1.15 billion) of the credit facility from the
“DIP” financing. This financing matures on April 10, 2022.
The facility is backed by collateral comprising routes, slots,
engines, and spare parts. With this sole withdrawal, the
company still has available US$1.30 billion for withdraw-
al. This facility is committed for a total of US$2.45 billion,
US$750 million of which are committed by related parties.
e) During March and April, LATAM Airlines Group S.A. with-
drew the whole sum (US$600 million) from the Revolving
Credit Facility (RCF). This financing matures on March 29,
Last, the Company’s net cash flow as at December 31,
2020, prior to the effects of exchange rate differences,
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Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 shows a negative variation of ThUS$595,801, compared to
the same period of a year earlier.
4. Financial risk analysis
The goal of the Company’s global risk management program
is to minimize the adverse effects of the financial risks that
affect the company.
(a) Market risk
Given the nature of its business, the Company is exposed
to market factors, such as: (i) fuel price risk, (ii) interest rate
risk, and (iii) local exchange rate risk.
(i) Fuel price risk
To carry out its operations, the Company purchases fuel known as
USGC 54 grade Jet Fuel, which is subject to variations in interna-
tional fuel prices.
To hedge against fuel risk exposure, the Company trades in
derivatives instruments (Swaps and Options) whose underly-
ing assets may be different from Jet Fuel, whereby it is pos-
sible to hedge in West Texas Intermediate crude oil (“WTI”),
Brent crude oil (“BRENT”), and distilled Heating Oil (“HO”),
which are closely related to Jet Fuel and have greater liquidity.
At December 31, 2020, the Company recognized ThUS$14,316
(negative) in losses on fuel hedges, net of premiums, on the
period’s cost of sales. Part of the spreads resulting between
the lower and higher market value of these contracts is rec-
ognized as a hedge reserves component in the Company’s net
equity. At December 31, 2020, the market value of existing
contracts stood at ThUS$1,296.
As of March 31, the Company has decided that the transac-
tions expected to be highly probable, which comprised the
hedged entry, will not be happening at the formerly estab-
lished magnitude, so they have ceased to recognize these
contracts under hedging accounting, recognizing at Decem-
ber 31 a loss of ThUS$50,766 in the Other gains (losses) in
the income statement, as an effect of the reclassification of
other reserves from the integrated income statement and a
loss of ThUS$$30,847 corresponding to the premiums linked
to these contracts. As of the end of November 2020, fuel
derivatives taken by the Company are classified as hedging
accounting.
(ii) Exchange rate risk
The functional currency, also used in presenting the Parent
Company’s Financial Statements, is the US dollar; therefore,
Transactional and Conversion exchange rate risks are main-
ly a result of the operating activities of the business, as well
as the Company’s strategic and accounting activities, which
are presented in monetary units other than the functional
currency.
LATAM’s Affiliates are also exposed to exchange rate risk,
whose impact affects the Company's Consolidated Result.
The greatest exposure to exchange rate risk for LATAM
comes from the concentration of businesses in Brazil, as
they are mainly denominated in Brazilian Reals (BRL), and it
is managed actively by the Company.
The Company minimizes exchange risk exposure by con-
tracting derivative instruments or through natural hedges or
the execution of internal transactions.
As at December 31, 2020, the Company held no current FX
derivatives.
During the period ended on December 31, 2020, the Compa-
ny recognized a gain of THUS$3,248 from F/X hedges net of
premiums. Part of the spreads resulting between the lower
and higher market value of these contracts is recognized as a
hedge reserves component in the Company’s net equity.
The Company has signed cross-currency swaps (CCS) to dol-
larize the cash flows of existing obligations, both contracted
in Chile’s inflation-linked units (Unidades de Fomento, UF),
with a fixed interest rate. Through this financial instrument,
it is possible to pay an interest rate in dollars, both fixed and
floating (LIBOR plus a fixed spread). At December 31, 2020,
the Company held no current positions in CCS.
(iii) Interest rate risk
The Company is exposed to variations in interest rates on
the markets, affecting the future cash flows of its current
and future financial assets and liabilities.
The Company is mainly exposed to the London Inter Bank
Offer Rate (“LIBOR”) and other less relevant interest rates,
such as Brazilian Interbank Deposit Certificates (“CDI”).
In order to reduce the risk from an eventual hike in interest
rates, the Company has entered interest rate swap con-
tracts. With regard to said contracts, the Company pays and
receives, or only receives, as may be the case, the spread
between the agreed fixed rate and the floating rate calcu-
lated on the capital outstanding in each contract. For these
contracts, the Company recognized in the results of this
period a ThUS$174 loss. Losses and gains on interest rate
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Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020
swaps are recognized as a component of the financial ex-
pense over the amortization of the hedged loan. As at De-
cember 31, 2020, the Company held no current interest rate
swap contracts.
As at December 31, 2020, roughly 42% of the debt has a
fixed rate. Considering these hedges, the average rate on
debt is 5.44%.
(b) Concentration of credit risk
A high percentage of the Company’s accounts receivables
comes from passengers, cargo services for individuals, and
various trade companies that are spread out both economi-
cally and geographically; thus, they are generally short term.
Thereby, the Company is not exposed to a significant concen-
tration of credit risk.
5. Economic environment
In order to analyze the economic environment in which the
Company exists, below we present a brief explanation of the
situation and evolution of the main economies that affect it
nationally, regionally, and worldwide.
Even though the economy is starting to leave behind the
lower levels of activity that were seen in the first months
of 2020, during the year, the Covid-19 pandemic has had a
huge impact on the whole world. To protect people’s lives
and enable the healthcare systems to deal with the situa-
tion, countries have resorted to isolation, confinement, and
generalized shutdowns to contain the spread of the virus.
This caused the growth of the global economy to slowdown
throughout 2020.
Although the world growth forecast is subject to great un-
certainty, for 2020. the International Monetary Fund (IMF)1
expects the global economy to contract 3.5%, 0,9 percent-
age points higher than the previous estimate, given an im-
provement that took place in the second half of the year,
before it was expected. The IMF is expecting global growth
in 2021 to reach 5.5%, 0.3 percentage points higher than
previously estimated, due to the same acceleration seen in
late 2020, and positive expectations related to the vaccina-
tion process worldwide, together with additional fiscal relief
announced by various governments.
For the US, the IMF estimated a 3.4% contraction for 2020
and 5.1% growth for 2021 (2.0 percentage points more
growth than previously expected for 2021). Likewise, the
IMF’s transversal estimates for the European Union’s coun-
tries have dropped, with a 7.2% contraction in 2020 and 4.2%
growth in 2021 (1.0 percentage points less growth than for-
merly expected for 2021).
On the other hand, it estimated a 7.4% contraction for the Lat-
in American economy in 2020, and 4.1% growth for 2021, 0.5
percentage points more growth compared to the previous IMF
estimates for 2021. Brazil’s economy is expected to grow 3.6%
in 2021, and as for Chile, the Central Bank expects the econo-
my to expand between 5.5% and 6.5% in 2021.
a) Below, we are presenting the main financial indicators in
the Consolidated Financial Statement:
1 According to report published in January 2021: https://www.imf.
org/en/Publications/WEO/Issues/2021/01/26/2021-world-econo-
mic-outlook-update.
LIQUIDITY INDICATORS
12-31-2020
12-31-2019
Current liquidity (times)
(Current assets in operation/
Current liabilities)
0.42
0.58
Quick ratio (times)
(Funds available/ current liabilities)
0.23
0.15
INDEBTEDNESS INDICATORS
Debt ratio (times)
(Current liabilities+non-current liabilities/
Net equity)
Current debt/ Total debt (%)
Non-current debt/ Total debt (%)
Hedging of financial expenses
(EBIT / financial expenses)
ACTIVITY INDICATORS
Total Assets
Investments
Disposal of property
(7.43)
5.74
41.41
58.59
38.76
61.24
0.00
1.25
15,650,090
21,087,806
1,465,204
5,408,511
1,537,386
4,111,655
Rationale
318
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 Profitability indicators
Profitability indicators are calculated on equity and income
attributable to Majority Shareholders.
Return on Equity1
(Net income / average net equity)
Return on assets
(Net income/ average assets)
Yield of operating assets
(Net income/ operating assets2
Average)
12-31-2020
12-31-2019
-
0.06
(0.29)
0.01
(0.31)
0.01
1 As at December 31, 2020, LATAM Airlines Group S.A. and its Affiliates
report negative Equity.
2 Total assets less deferred taxes, personnel current accounts, perma-
nent and temporary investments, and goodwill.
FOR THE YEARS ENDED ON DECEMBER 31,
Operating income
Passengers
Cargo
Others
Operating Costs
Compensation
Fuel
Fees
Depreciation and Amortization
Other Leasing and Landing Fees
Passenger Services
Maintenance
Other Operating Costs
Operating result
Operating Margin
Financial Revenues
Financial costs
2020
THUS$
2019
THUS$
4,334,669
10,430,927
2,713,774
9,005,629
1,209,893
1,064,434
411,002
360,864
(5,999,957)
(9,689,325)
(962,060)
(1,794,762)
(1,045,343)
(2,929,008)
(91,910)
(221,884)
(1,389,386)
(1,469,976)
(720,005)
(1,275,859)
(97,688)
(261,330)
(472,382)
(444,611)
(1,221,183)
(1,291,895)
(1,665,288)
741,602
-38.4%
50,397
7.1%
26,283
(586,979)
(589,934)
Other income/expenses considers the line items Other gains
(losses), Exchange differences, and Results from readjust-
ment units presented in the consolidated financial statement
by function.
Dividend returns
(Dividends paid/ market price)
Other Revenues / Costs
Earnings before interest and taxes
12-31-2020
12-31-2019
Taxes
0.00
0.00
0.00
0.00
Profit/loss before minority interest
Attributable to:
(2,903,853)
(5,105,723)
550,188
(4,555,535)
Gain/(Loss) attributable to the parent company’s owners
(4,545,887)
b) Below, we are presenting the main financial indicators in
the Consolidated Financial Statement:
Gain/(Loss) attributable to non-controlling interests
Gain/(Loss) for the period
Net Margin
Effective Tax Rate
Total shares
Gain/(Loss) per share (US$)
EBITDA
Rationale
(36,035)
141,916
53,697
195,613
190,430
5,183
190,430
1.8%
37.8%
(9,648)
(4,545,887)
-104.9%
10.8%
606,407,693
606,407,693
(7.50)
0.31
(3,170,107)
2,170,360
319
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 DocuSign Envelope ID: 201EF249-D50E-49E5-8D2B-42AFD074DA0C
Sworn
Declaración
statement
jurada
As directors, chief executive officer (CEO), and chief fi-
En nuestra calidad de directores, gerente general y vicepresi-
nancial officer (CFO) of LATAM Airlines Group, we ack-
dente de Finanzas de LATAM Airlines Group, declaramos bajo
nowledge our responsibility regarding the veracity of the
juramento nuestra responsabilidad respecto de la veracidad
information contained in the LATAM Integrated Report
de toda la información contenida en la Memoria Integrada
2020.
LATAM 2020.
Ignacio Cueto Plaza
Ignacio Cueto Plaza
President
Presidente
Henri Philippe Reichstul
Henri Philippe Reichstul
Director
Director
Sonia J. S. Villalobos
Sonia J. S. Villalobos
Director
Directora
Enrique Cueto Plaza
Enrique Cueto Plaza
Vice-president
Vicepresidente
Patrick Horn García
Patrick Horn García
Director
Director
Roberto Alvo Milosawlewitsch
Roberto Alvo Milosawlewitsch
Chief Executive Officer
Gerente General
Enrique Ostalé Cambiaso
Enrique Ostalé Cambiaso
Director
Director
Alexander D. Wilcox
Alexander D. Wilcox
Director
Director
Ramiro Alfonsín Balza
Ramiro Alfonsín Balza
Chief Financial Officer
Vicepresidente de Finanzas
Nicolás Eblen Hirmas
Nicolás Eblen Hirmas
Director
Director
Eduardo Novoa Castellón
Eduardo Novoa Castellón
Director
Director
Memoria integrada 2020
Presentación Destacados Carta del CEO Perfil Gobierno Corporativo Nuestro Negocio Sostenibilidad
Seguridad Empleados Clientes Proveedores Metodología Anexos Informes Financieros Créditos
320
323
Presentation Highlights Letter from the CEO Profile Corporate governance Our business Sustainability Security Employees Customers Suppliers Methodology Appendices Financial information CreditsIntegrated Report 2020 CORPORATE STRUCTURE
LATAM AIRLINES GROUP S.A. [CHILE] - [LACL]
99.00%
LATAMTRAVEL
S.R.L. [BOLIVIA] -
[LTBO]
99.00%
0.10196%
JARLETUL S.A.
[URUGUAY] - [W9UY]
99.89395%
LAN CARGO
S.A. [CHILE] -
[UCCL]
99.9%
99.99%
99.83%
99.8361%
100%
100%
100%
0.1%
INVERSIONES LAN
S.A.
[CHILE] - [W0CL]
0.01%
LATAM TRAVEL CHILE
II S.A.
[CHILE] - [B2CL]
TECHNICAL TRAINING
LATAM S.A.
[CHILE] - [A3CL]
0.10%
LAN PAX GROUP S.A.
[CHILE] - [W1CL]
PEUCO
FINANCE LTD.
PROFESSIONAL AIRLINE
SERVICES INC
[FLORIDA-USA] - [PAUS]
LATAM FINANCE LTD.
[CAYMAN] - [TFKY]
1.00%
0.00409%
0.17%
0.1639%
1.00%
23.62%
LATAM AIRLINES
PERÚ S.A.
[PERÚ] - [LPPE]
0.19%
76.19%
33.41%
INVERSIONES
AÉREAS S.A.
[PERÚ] - [W6PE]
0.16%
66.43000%
99.98%
LAN CARGO
OVERSEAS LIMITED
[HOLANDA] - [X0BS]
100%
0.02857%
0.02%
12.87421%
87.12567%
TRANSPORTE
AÉREO S.A.
[CHILE] -
[LUCL]
0.00012%
MAS
INVESTMENT
LIMITED
[HOLANDA] -
[X3BS]
PRIME AIRPOT
SERVICES INC
[FLORIDA-USA] -
[D5US]
99.97143%
99.00%
LAN CARGO
INVERSIONES S.A.
[CHILE] - [LA01]
1.00%
1.00%
LATAM TOUR DE
MÉXICO S.A. DE C.V.
[MÉXICO] - [LTMX]
99.00%
99.0%
99.8%
100%
CONSULTORÍA
ADMINISTRATIVA
PROFESIONAL S.A.
DE C.V. [MEXICO]
[CAMX]
1%
AMERICONSULT
SA DE CV [MÉXICO]
- [R3MX]
0.20%
LAN CARGO REPAIR
STATION
[FLORIDA-USA] -
[D9US]
99.13%
AMERICONSULT
DE GUATEMALA
SA [GUATEMALA] -
[Q3GT]
0.87%
100%
MAINTENANCE
SERVICE
EXPERTS, LLC
[USA] - [F1US]
100%
PROFESSIONAL
AIRLINE
MAINTENANCE
SERVICES, LLC
[USA] - [F2US]
99.80%
AMERICONSULT
DE COSTA RICA SA
[COSTA RICA] - [P3CR]
0.20%
MINORITY
9.54%
99.89%
1.53%
81.31%
LÍNEA AÉREA
CARGUERA DE
COLOMBIA
[C1CO]
FAST AIR
ALMACENES
DE CARGA S.A.
[CHILE] - [D2CL]
0.11%
1.53%
1.53%
50.00%
CONSORCIO FAST
AIR LASER CARGO
UTE [ARGENTINA]
- [D7AR]
0.10204%
96.22078%
LASER
CARGO S.R.L.
[ARGENTINA] -
[D6AR]
50.00%
3.77922%
100%
CONNECTA
CORPORATION [USA]
- [CCUS]
49.47057%
HOLDCO
COLOMBIA I SPA
[CHILE] - [E4CL]
100%
AEROVÍAS DE
INTEGRACIÓN
REGIONAL S.A.
(AIRES S.A.)
[COLOMBIA] -
[4CCO]
0.15802%
0.79880%
49.47057%
0.00344%
100%
LATAM TRAVEL
S.A. [ARGENTINA]
- [Z6AR]
95.00%
4.9966%
99.9837%
5.00%
INVERSORA
CORDILLERA S.A.
[ARGENTINA] -
[W7AR]
0.01630%
HOLDCO
COLOMBIA
II SPA
[CHILE] - [E5CL]
LAN
ARGENTINA
S.A.
[ARGENTINA] -
[4MAR]
95.00%
99.00%
54.79076%
55.00%
1.00%
45.20924%
ATLANTIC
AVIATION
INVESTMENTS
LIMITED LLC
[DELAWARE] -
[X5US]
HOLDCO
ECUADOR S.A.
[CHILE] - [E2CL]
45.00%
LATAM-AIRLINES
ECUADOR S.A.
[ECUADOR] -
[XLEC]
100%
CARGO
HANDLING
AIRPORT
SERVICES, LLC
[USA] - [F6US]
100%
PROFESSIONAL
AIRLINE CARGO
SERVICES, LLC
[USA] - [F7US]
0.00169%
99.99831%
HOLDCO I S.A.
[CHILE] - [E3CL]
63.09013%
TAM S.A.
[BRASIL] - [N2BR]
36.90987%
100%
99.99%
TAM LINHAS
AEREAS S.A.
[BRASIL] - [JJBR]
0.01%
TP FRANCHISING
LTDA. [BRASIL] -
[N3BR]
CORSAIR
PARTICIPACOES
S.A. [BRASIL] -
[N6BR]
100%
100%
FIDELIDADE
VIAGENS E
TURISMO S.A.
[BRASIL] -
[N1BR]
ABSA -
AEROLINHAS
BRASILEIRAS S.A.
[BRASIL] - [M3BR]
5.02%
TRANSPORTES
AÉREOS DEL
MERCOSUR S.A.
[PARAGUAY] -
[PZPY]
94.98%
MULTIPLUS
CORREDORA DE
SEGUROS LTDA.
[BRASIL] - [N7BR]
100%
99.99%
0.01%
99,99%
PRISMAH
FIDELIDADE
LTDA.
[BRASIL] -
[N8BR]
0.01%
Guabiroba Leasing Limited
100%
Jacana Leasing Limited
100%
Pilar I Leasing Limited
100%
Pilar II Leasing Limited
100%
Piquero Leasing Limited
100%
Picaflor Leasing Limited
100%
Yeco Leasing Limited
100%
Gallo Finance Limited
100%
Platero Leasing LLC
100%
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Integrated Report 2020 CREDITS
Coordination
LATAM – Investor Relations
LATAM – Sustainability
LATAM – External Communications
Text and design
Conecta Conteúdo e Sustentabilidade
Conecta Comunicação e Sustentabilidade
Text: Judith Mota and Talita Fusco
GRI consulting: Vinícius Cataldi
Graphic project and illustration: Naná de Freitas and Luciana Mafra
Layout: Flavia Ocaranza, Gisele Fujiura, Gustavo Inafuku, and Naná de Freitas
English version
Minx Translation – Nuriyah Costa-Laurent
Photography
LATAM archive
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Security Employees Customers Suppliers Methodology Appendices Financial information Credits
322
Integrated Report 2020