LATAM Airlines Group
Annual Report 2021

Plain-text annual report

Integrated Report 2021 Index 3 Presentation 12 Profile 13 Who we are 14 Outlook on sustainability 16 Timeline 4 Highlights 20 Awards and acknowledgements 10 Letter from the CEO 22 Operations 23 Passenger operations 25 LATAM cargo 28 Fleet 30 Corporate governance 31 Ownership structure 33 Decision-making bodies 36 Corporate guidelines 38 Financing Policy 39 Market Risk Policy 41 Financial Policy 51 Safety 52 Number 1 priority 56 Commitment to the future 57 Strategic focus 58 Solidary Plane program 60 Climate change and ecosystem protection 42 Liquidity and Financial Investment Policy 66 Circular economy 70 Environmental management and eco-efficiency 43 Our business 44 Industry context 45 Financial results 72 Employees 73 Cultural transformation 48 Financial reorganization 77 Clients 49 Stock information 50 Investment plan 78 Close, digital, and flexible Integrated Report 2021 This is a navigable PDF. Click on the buttons. All photos used in this Integrated Report comply with the health rules applicable at the time and in the country where they were taken. 82 Suppliers 83 Supply chain 86 About the Report 87 Methodology and materiality 89 GRI content index 95 Glossary 96 External assurance 97 Appendices 167 Financial information 168 Financial statements 266 Affiliates and subsdiaries 296 Rationale 304 Sworn statement 305 Corporate Structure 306 Credits and Corporate information Index 2 Integrated Report 2021Presentation In this integrated report, LATAM Airlines Group S.A. presents the year’s information, progress, and challenges from January 1 to December 31, 2021. The publication is based on the principles of integrated reporting from the International Integrated Reporting Council (IIRC) and the Global Reporting Initiative (GRI) guidelines to connect financial and non-financial information in the different economic, environmental, and social dimensions of LATAM's business and its relationships with stakeholders. The group's financial statements are an integral part of the Report. Currency and exchange conventions LATAM Airlines Group S.A. and most of its affiliates maintain their accounting records and prepare their financial statements in US dollars (USD); some use Chilean pesos, Colombian pesos, or Brazilian reals. The group's audited consolidated financial statements include the results of these affiliates translated into US dollars. In accordance with the International Accounting Standards (IASB), assets and liabilities consider the exchange rate at the end of the period. The income and expense accounts take into account the exchange rate at the date of the transaction; however, a monthly exchange rate may be adopted if the rates do not vary widely. Names • LATAM: Except where the context requires it, mentions of LATAM Airlines Group refer to LATAM Airlines Group S.A., a non-consolidated operating entity. The mentions of LATAM, the Group, and Society refer to LATAM Airlines Group S.A. and its consolidated subsidiaries: Transporte Aéreo S.A. (LATAM Airlines Chile), LATAM Airlines 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), Transporte Aéreos del Mercosur S.A. (LATAM Paraguay), LAN Cargo S.A. (LATAM Cargo) and the two regional cargo subsidiaries: Línea Aérea Carguera de Colombia S.A. (LANCO or LATAM Cargo Colombia) in Colombia and Aerolinhas Brasileiras S.A. (ABSA or LATAM Cargo Brasil) 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. • LAN: Mentions of 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. • TAM: Unless the context requires another form, mentions of TAM refer to TAM S.A. and its consolidated subsidiaries, including TAM Linhas Aéreas 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). GRI disclosures Throughout the text, the GRI disclosures, which are grouped in the corresponding index in the chapter About the Report, are indicated. More information: Any suggestions, criticisms, or concerns about the report can be sent to e-mails investorrelations @latam.com and sostenibilidad @latam.com. 102-53 Presentation 3 Integrated Report 2021Highlights Sustainability 30-year strategy Global vision, local solutions Networking Climate change management LATAM FUEL EFFICIENCY Reduced fossil fuel consumption OUR COMMITMENT: Carbon Neutral group by 2050 Main results: Alliance with Project CO2Bio, which protects 200 thousand hectares of floodable savannas in the Colombian Orinoco region CIRCULAR ECONOMY OUR COMMITMENT: to be a zero waste to landfill group by 2027 Main results: - Waste diagnosis (base year 2019): LATAM was found to generate about 11 thousand tons of solid waste - Plan for the elimination of single-use plastics - Uniform recycling program SHARED VALUE – AVIÓN SOLIDARIO (SOLIDARITY AIRPLANE) OUR COMMITMENT: to provide the connectivity, capacity, and speed of our passenger and cargo operations for the benefit of communities in South America Main results: Free transport of 59 tons of medical supplies 207.7 million doses of COVID vaccines in Brazil, Chile, Ecuador, and Peru 8.3 million gallons of fuel saved (2012-2021) = 155 flights to and from Santiago (SCL) – New York (JFK)1 1 Considers direct flights and average aircrafts. JFK 79,533 t CO2e of emissions avoided SCL Focus on people ORGANIZATIONAL HEALTH INDEX (OHI) 77 75 74 64 62 2017 2018 2019 2020 2021 DIVERSITY % 1 3 % 9 6 % 9 3 % 1 6 s e e y o p m e l l a t o T 1 l e v e l t n e m e g a n a M Men Women 1 Assistant manager and above positions. 44nationalities 29thousand people 18countries 137airports SEVERITY RATE 12.5 2019 2020 5.47 2021 5.32 Days lost (total) X 1,000,000 / Average payroll. ACCIDENT FREQUENCY RATE 2019 2020 2021 0.48 0.74 0.72 Injuries with job interruption (total) X 1,000,000 / verage payroll. Highlights 4 Integrated Report 2021 Connectivity Financial and operating results LOGISTICAL SUPPORT TO SOUTH AMERICA CUSTOMER DIGITAL JOURNEY Exports Local supply COVID vaccines (domestic and international) CEIV Pharma Certification Expertise in the transport of medicines and vaccines DOMESTIC AND INTERNATIONAL OPERATIONS 801.5 million tons of cargo transported 40.2 million passengers 137 destinations Check in (Automatic, App, Kiosk) Self-service for payments (seat, extra baggage) Self bag drop Customs (Pre-Document Review) Biometrics shipping REVENUE 2021 (US$ THOUSAND) 5% 30% 65% Passengers: 3,342,381 Cargo: 1,541,634 Others: 227,331 Total 5,111,346 EBITDA1 (US$ THOUSAND) 21.2% 0.9% -6.4% 8 7 5 , 1 2 2 , 2 2 0 9 , 5 7 2 - 7 1 1 , 6 4 2019 2020 2021 EBITDA margin 1 Earnings before interest, tax, depreciation, and amortization. CONTINUOUS RECOVERY OF DOMESTIC OPERATION 89.1%of the capacity in Spanish speaking countries 92.9%in Brazil (December/2021 x Dec/2019) Highlights 5 Integrated Report 2021LATAM 2021 Summary of the year through the eyes of those who comprise LATAM Highlights 6 Integrated Report 2021MAZZONI COELHO, Cabin crew, Brazil Personally, it was a very dynamic year, in which I began to act as promoter of the Organizational Health Index (OHI), and it was also very challenging with the homogenization of the Boeing 787 aircraft. I think it was a much better year than 2020, but still full of challenges because there are still health barriers preventing the normal return of the international network. In 2021, we saw projects such as “One Device per Crewmember,” which allows us to simplify and greatly streamline our cabin activities and thus improve the level of passenger satisfaction. There was also a program of frequent meetings with the most diverse levels of internal leadership which, in my opinion, raised the level of transparency within the company, making communication more direct and effective. EDUARDO PATTA, Head of Sales in Asia, England 2021 was a year of many challenges. New COVID-19 variants and border closures have greatly impacted the business. But it was also a year when we resumed some of the operations, in which we were able to again operate important routes and recover the "closeness" with clients. I am very proud to work in a group of companies that are concerned about such important and essential issues as diversity, inclusion, and the impact of their business on the environment. I believe that this fairer, more empathic, transparent, and sustainable culture that we are trying to implement daily and in dealing with clients has been very welcome. There is still a long way to go, but we are on the right track. ANTONELA PIPERNO, People Analyst, Argentina I was on maternity leave and I went back to work in midyear, which was a time of great mobilization and uncertainty. I feel that I left in 2020 from a very oscillating LATAM, at the height of change and restructuring, and that I returned in 2021 to a completely changed LATAM: more dynamic, more flexible, and in the process of being overhauled and organized from scratch. From my position, I feel that there were many changes throughout 2021 and that, as a team, we faced many new challenges and situations that led us to shift and change the way we work. Today, I can say that we grew a lot as a team, we changed and changed for the better. We got stronger and became more united. Highlights 7 Integrated Report 2021 MARÍA CAMILA DUQUE, Co-pilot A320, Colombia 2021 was for us a year of great growth; we had not seen so much movement in many years. New routes were opened, frequencies increased, and it is exciting for us to see more LATAM aircraft flying in Colombia. There was also much motivation due to the promotion of first officers to captain and the incorporation of new first officers into the group. It is very important for us as command crew to be part of a team committed to tolerance for diversity and inclusion not only of its employees, but also of passengers. We see the effort on the part of the administration to turn this practice into a culture, and we see how we have moved toward to become a group that is more connected with the needs of society regarding the care of the environment. VERÓNICA ORTIZ, Passenger Service Supervisor, Ecuador 2021 was a year full of changes. The operation began to grow despite being within a pandemic context, which made it a more challenging year. In this desire to fly again, we have seen very important progress, all thanks to the fact that the company has worked to improve operational processes, both for the internal and external client, which have been developed in a more agile way. We are in a LATAM that is nowadays committed to pillars that are very important to me, such as sustainability, diversity, inclusion, and care for the environment, and I am very pleased to work in a company that declares them important in its daily work. That fills me with pride. LUIS CASTRO, Account Executive of LATAM Cargo, United States 2021 was a difficult year in which we began implementing CROAMIS, the end-to-end world-class system of LATAM Cargo. This is the most important technological transformation in the history of LATAM Cargo and having brought this project forward in the midst of the pandemic, and remotely, is not easy at all, but having been able to participate in it brings me enormous satisfaction. It was also a year in which we made great progress regarding the company that we want to be, and it is not easy to do this during a pandemic. It is becoming increasingly apparent that we are coming to where we want to be as LATAM and as individuals, and how we want to relate to our customers. I think we are on the right track. Highlights 8 Integrated Report 2021 ASTRICK ELERA, Aeronautical Technician, Peru As an aeronautical technician in the Maintenance Area, I can say that 2021 was a year of resurgence where, to achieve our goals again, we had to rethink changes in both the workplace and at home, and thus return to being among the best airlines in the world. The Maintenance Area was enthusiastic about the project to be a fair, empathic, transparent, and sustainable group, and this is something we value very much, because it means that the company we are part of is one that thinks not only about itself, but also about the environment around us. With regard to the commitment to diversity and inclusion, which LATAM announced in 2021, we are very pleased to know that LATAM declares itself to be an open-minded company and is always open to change and no discrimination will be found or accepted in it. CÉSAR FABIÁN LUGO Cabin crew leader, Paraguay 2021 was for all of us like learning to walk, or rather fly, again. At LATAM, we have started a new way of flying that we can see on a daily basis, being more just with the internal and external clients, being empathic with my colleague beside me, being transparent in the decisions we make, and simplifying the processes and procedures we roll out. This new way of flying LATAM also includes a focus on taking more care of our environment and we can see that in our commitment to sustainability. But that is where each of us can contribute something because this commitment is based on great actions, such as reducing the carbon dioxide emissions from aircraft, and even small details from each of us, such as recycling a bottle cap. All efforts add up. At the end of the day, we are all LATAM. HUGO ORTIZ BARRERA Sales Executive Contact Center, Chile 2021 was a very complex year for all of us, bar none. Uncertainty was present every day and so were moments of opportunity, change, and new challenges where selling became more difficult every day: not only did we have to go out and look for that opportunity, but there was also a double effort to charm and re-charm our passengers and to make them regain the confidence in us to fly safe and in peace. Opportunities are born from adversity, and LATAM was able to take advantage of them by implementing, at the right time, new platforms of simpler and more efficient systems that are with us to become better for the future, for our passengers and, why not, for ourselves. Highlights 9 Integrated Report 2021Letter from the CEO 102-14 W e have reached the end of 2021, living through our second year of the pandemic. The uncertainty that started in March 2020 has spread far more than we all expected. The recovery in demand for air travel has been slow and erratic. The arrival of the delta variant first, and omicron toward the end of the year, together with the constant changes to flight restrictions and entry into countries, forced us to remain extremely agile and attentive and to take measures to adjust. The aggregate impact of the pandemic on operations and clients has been dramatic. In these 21 months, we have tried to handle each of the individual situations with attention and care. All of this, moreover, is happening in parallel with the continuation of the financial reorganization process under Chapter 11, initiated in May 2020. Nevertheless, the group managed to make progress on a gradual recovery of its operations thanks to its versatility and adaptability and interest in restoring its network and profitability in the shortest time possible. LATAM increased its operations (measured in ASK – available seat-kilometer), compared to the corresponding month of 2019) from 38.9% in January 2021 LATAM group CEO with captain Erich Oppliger, from the A320 fleet. to 70.1% in December of that year. This recovery was sharper in the domestic markets of its subsidiaries, especially Brazil and Colombia, as well as cargo subsidiaries. For the first time since the pandemic began, we had good financial news. The fourth quarter’s operating results were positive and came within the framework of major restructuring initiatives in fleet, employees, digitization, and process simplification, which totaled over US$900 million in cost savings. Despite the above, the group’s financial results are still very affected compared to 2019. Total revenues reached US$5.11 billion, a decrease of 51.0% from pre-pandemic levels. In this difficult scenario, the LATAM group continued to develop and implement projects to enhance customer experience. In 2021, we continued with the digital transformation and looked for new opportunities that bring agility, facilitate access, and provide more satisfaction to those who prefer our services. In addition to the above, we continued to transform our passengers’ flight experience through cabin retrofits, reaching a total of 115 aircraft with renewed interiors. Furthermore, the subsidiary in Brazil continued to equip its aircraft with Wi-Fi connectivity, totaling 50 aircraft with this service by the end of the year. Beyond our progress, we are aware that the experience we deliver to our passengers is not always what we want, sometimes as a result of the difficulties created by the pandemic, and others, simply because of us. We know there is a gap, and we are working to fill that space with effective solutions. As for our fleet modernization plan, we have concluded an agreement with Airbus for the purchase of 28 new aircraft in addition to the 42 narrow- body aircraft already agreed for the next few years. In total, 70 aircraft of the A320neo family with lower CO2 emissions, a 50% reduction in nitrogen oxide emissions, and a 50% reduction in the acoustic footprint. On the other hand, the LATAM group announced the expansion of the cargo fleet with 10 Boeing 767-300 Boeing Converted Freighters to total 21 freighters by 2023. With a long-term view, we lay the foundations for the future of the business through the launch of our new Sustainability Strategy with a focus on climate change, circular economy, and shared value. We set challenging but well-defined goals for ourselves: Integrated Report 2021 Letter from the CEO 10 Integrated Report 2021we hope to end one of the most painful chapters in our history, emerging much better than we started and where, together, we will continue to learn so that we can become a better LATAM. Roberto Alvo Milosawlewitsch CEO LATAM Airlines Group eliminating single-use plastics in all operations (2023); zero waste to landfill (2027); achieving carbon-neutral growth with 2019 as the baseline, and offsetting 50% of domestic emissions (2030), all as part of the path to carbon neutrality by 2050. We are committed to reducing emissions and managing our carbon footprint through programs such as LATAM Fuel Efficiency which, over 10 years, has enabled us to have a 5.3% fuel efficiency increase. As a result of this program, in 2021, we reduced fuel consumption by 8.3 million gallons, thereby avoiding the emission of 79,533 tons of greenhouse gases. In addition, we are focused on contributing to the preservation of the biodiversity of South America, and thus, in 2021, we initiated an alliance with Fundación Cataruben and Project CO2Bio for the conservation and restoration of a strategic ecosystem of the region: 200 thousand hectares of floodable savanna in Colombia’s Orinoco region. As a result of the partnership with CO2Bio and the support for projects in other iconic ecosystems in the region, in 2021, LATAM offset 335,183 tons of CO2, while in 2022, the group is planning to reach 723 thousand tons. At the same time, under a collaborative approach, we are promoting the “Fly Neutral” program, which offers our corporate and cargo clients the option of offsetting CO2 emissions associated with their travel and supporting the conservation of iconic South American ecosystems. As part of the value proposition and core of the program, we match the amount of tons our clients offset to double the impact. Last year, and following the S&P Corporate Sustainability Assessment, LATAM Airlines Group S.A. was recognized as the most sustainable airline in the region and the fourth in the world, as well as being included in the Sustainability Yearbook 2022 in the Bronze category, maintaining its position as one of the best- performing companies in sustainability in the industry. Yet, not only do we want to be a player that promotes the environmental and economic development of the region, but we also want to be increasingly connected with the needs of the communities where we operate. For that reason, we have continued with our Avion Solidario program which, particularly in the face of the pandemic, has provided free support to health, environmental, and natural disaster needs within the region. The LATAM group has joined in the effort that society as a whole has made to deal with the pandemic. Thus, at the end of 2021 and for free, almost 208 million vaccines were distributed in Brazil, Chile, Ecuador, and Peru, in addition to health professionals mobilized, among others, allowing us to support the region from what we know how to do: connect and transport. In 2021, we made very significant progress in our Chapter 11 process. As announced on September 9 in the Five-Year Business Plan, LATAM expects to achieve a complete recovery in domestic and international demand in 2022 and 2024, respectively. In addition, 2024 financial results are expected to be in line with pre-pandemic figures, accompanied by an ex-fuel, ex- inflation estimated CASK (cost per ASK) of US¢3.9 cents, an improvement of US¢0.6 cents compared to 2019. This would lead LATAM to be one of the most competitive “full service” airline groups. On November 26, 2021, with broad support from the main stakeholders, we presented our Reorganization Plan. During the second half of 2022, we finally hope to exit Chapter 11 of the U.S. Bankruptcy Law, thus closing an important stage of transformation, which has enabled the raising of a renewed organization, with a solid balance sheet, a more competitive cost structure, and a good level of liquidity. Last year was tough for LATAM and the results achieved are the best we could get in the face of the adverse context. In that task, the workers of the group’s companies were key because, in spite of all the difficulties, they put their effort and willingness into pulling the operations through. I would like to take this opportunity to thank you, because despite the frustration and permanent uncertainty that you have experienced during these years, you have always chosen LATAM, you have stood firm, and you have accompanied us. It is precisely that attitude, together with all the initiatives and achievements and the challenges we have set for ourselves, that motivates me to look with optimism on the future of the group. We face contingency by empowering the future. Today, the LATAM group comprises more than 29 thousand people of 44 nationalities, who have resisted a pandemic and who have learned a lot of lessons. This year, Letter from the CEO 11 Integrated Report 2021Profile In this chapter 13 Who we are 14 Outlook on sustainability 16 Timeline 20 Awards and acknowledgements Profile 12 Integrated Report 2021Who we are LATAM Airlines Group S.A. and its subsidiaries operate air passenger and cargo transportation in the domestic markets of Brazil, Colombia, Chile, Ecuador, and Peru, and in the international market. The group has a wide network of destinations (137 considering passenger and cargo operations), flight frequencies and connection possibilities, enhanced in South America through the hubs (connection centers) of São Paulo/ Guarulhos (Brazil), Lima (Peru), and Santiago (Chile), facilitating access to the most diverse destinations. 102- 1, 102-2, 102-4 In 2020, the group faced the greatest challenge in its 91-year history with the coronavirus pandemic. As a result of the unprecedented impact on passenger and cargo operations, LATAM Airlines Group S.A. and its subsidiaries in Chile, Colombia, Ecuador, Peru, and the United States filed for voluntary protection under the financial reorganization statute of the US Chapter 11 on May 26, 2020, and the subsidiary in Brazil joined the process on July 9 of the same year. The reorganization gives LATAM the opportunity to work with its creditors and other stakeholders to reduce its debt, access new sources of financing and continue to operate, and it gives it the opportunity to adapt its business to the new reality. The reorganization thus seeks to ensure financial sustainability and continue to generate shared value for its stakeholders. Despite the adverse global scenario, throughout 2021, LATAM remained committed to providing connectivity and being an asset to the region, while restructuring its finances. The group managed to resume operations in several destinations, reached 70.1% of its capacity (measured in ASK, available seat-kilometer) in December compared to 2019, and continued to support the fight against the virus with the Avion Solidario (Solidary Plane) program. LATAM maintains a strong commitment to safety, sustainability, and support to the communities where it operates, always striving to provide the best experience to its passengers through its operating excellence. Indirect economic impacts The connectivity that drives tourism and business is a major impact of aviation. Despite reduced travel during the pandemic, international passengers transported by LATAM to South America contributed nearly US$608 million to the economies of the region. The figure considers the number of passengers transported (633.1 thousand) and the average expenses per traveler reported by tourism and statistics agencies in Argentina, Brazil, Chile, Colombia, Ecuador, and Peru. 203-2 More information: Financial results (page 45) Legal incorporation (page 98) Company purpose (page 98) Properties, plants, and equipment (page 98) Trademarks and patents (page 99) Additional information (page 99) Profile 13 Integrated Report 2021Outlook on sustainability LATAM promotes sustainable development in South America and works to preserve the culture and biodiversity of the destinations it reaches, which are known for their natural wealth. To this end, it assumes challenging commitments to the social, environmental and economic growth challenges facing society, which include the holistic management of its carbon footprint, migration to a circular economy model, and tangible contribution to communities. From its sustainability strategy and in order to achieve collective and real solutions, LATAM engages its internal and external stakeholders under a collaborative system and implements programs to achieve the fulfillment of its commitments and goals. The Board, the group's highest governing body, monitors progress on the achievement of the goals and the degree of fulfillment of the commitments. To measure its performance, LATAM applies the S&P Corporate Sustainability Assessment and the Dow Jones Sustainability Index (DJSI), which selects publicly traded companies with the best performance in economic, financial, social, environmental, governance and compliance, and customer relations issues. In 2021, following the S&P Corporate Sustainability Assessment, LATAM was recognized as the most sustainable airline in the region and the fourth in the world, as well as being included in the Sustainability Yearbook 2022 in the Bronze category, maintaining its position as one of the best-performing companies in sustainability in the industry. The group was also part of the Dow Jones Sustainability Index for six consecutive years, being ranked as one of the most sustainable in the world. Today, LATAM is not within this selection because it is undergoing a process of financial reorganization, but it continues to use the results as a benchmark and guide to implement improvements in its processes. ENVIRONMENTAL DIMENSION PACKAGING ENVIRONMENTAL REPORTS 100 80 60 40 20 ENVIRONMENTAL POLICY AND MANAGEMENT SYSTEMS FOOD LOSS OR WASTE OPERATIONAL ECOEFFICIENCY CLIMATE STRATEGY ECONOMIC DIMENSION CORPORATE GOVERNANCE PRIVACY PROTECTION FLEET MANAGEMENT EFFICIENCY AND RELIABILITY INFORMATION SECURITY, CYBERSECURITY AND SYSTEM AVAILABILITY MATERIALITY RISK AND CRISIS MANAGEMENT 100 80 60 40 20 CODE OF CONDUCT CUSTOMER RELATIONSHIP MANAGEMENT BRAND MANAGEMENT POLICY INFLUENCE SUPPLY CHAIN MANAGEMENT More information: Commitment to the Future (page 56) SOCIAL DIMENSION SOCIAL REPORTS PASSENGER SAFETY CORPORATE CITIZENSHIP AND PHILANTHROPY 100 80 60 40 20 LABOR PRACTICE INDICATORS HUMAN RIGHTS LATAM Industry average TALENT ATTRACTION AND RETENTION HUMAN CAPITAL DEVELOPMENT Profile 14 Integrated Report 2021Sustainable Development Goals The group is committed to the Sustainable Development Goals (SDGs), a global UN agenda that proposes 17 goals objectives and 169 goals that governments, companies, and institutions must achieve by 2030. LATAM seeks to contribute actively to the achievement of these goals and focuses its efforts on eight priority SDGs, selected from the correlation with its strategic guidelines. 102-12 Global Compact LATAM adheres to the Global Compact, a UN initiative aimed at mobilizing the international business community to adopt, in their business practices, fundamental and internationally accepted values in the fields of human rights, labor relations, environment, and anticorruption. 102-12 Human rights Throughout the year, LATAM evaluated human rights-related risks throughout its operation and classified them into a matrix that considers potential impact and probability of occurrence. Amazon (Brazil) More information: LATAM’s Human Rights Commitment Declaration Mitigation of risks related to human rights Profile 15 Integrated Report 2021Timeline The history of LATAM begins in 1929 with LAN (Chile's national airline), which in 1946, made its first international flight on Santiago-Buenos Aires to later extend its coverage, first to Lima, Peru; then to Miami, United States; and later on, to Europe. In 1983, and through CORFO, Linea Aérea Nacional Chile Limitada was established, and the following year, it went on to become a limited company known as LAN Chile. Years later, in 1997, the company listed its shares on the New York Stock Exchange and was the first Latin American airline group to trade its ADRs (American Depositary Receipt) in this stock market. In 2012, LAN Airlines S.A. changes its name to LATAM Airlines Group S.A. after the association of LAN and Brazil's TAM, created in 1975 as Transportes Aéreos Regionais. The group consolidates the leadership initiated by LAN, TAM, and their corresponding subsidiaries, with a better service throughout its network and strengthening its regional position. These and other more recent milestones in the group's trajectory are presented below. 1929 Creation of LAN (Línea Aérea Nacional de Chile) by Commander Arturo Merino Benitez. First international flight: Santiago (Chile) – Buenos Aires (Argentina). 1946 1956 Opening of operations in Lima (Peru). Caminito, tourist point in Buenos Aires, Argentina. Start of operations to Miami (United States). 1958 1961 Creation of TAM (Taxi Aéreo Marília), by five charter flight pilots. Profile 16 Integrated Report 2021 LAN begins to offer flights to Europe. 1970 1975 Snefellsnes Peninsula (Iceland) Founding of Tam Transportes Aereos Regionais by Captain Rolim Adolfo Amaro. Start of TAM services in Brazilian cities, especially in Mato Grosso and São Paulo. 1976 1983 LAN becomes a corporation. 1985 Incorporation of Línea Aérea Nacional – Chile Limitada, through CORFO (Production Development Corporation). 1986 1989 TAM acquires VOTEC (Brasil Central Linhas Aéreas), another regional airline operating in the northern and central sectors of Brazil. 1990 Brasil Central is renamed TAM – Transportes Aéreos Meridionais. The privatization process begins: Chile's government sells 51% of its equity to domestic investors and to Scandinavian Airlines System (SAS). TAM establishes TAM Fidelidade, the first frequent flyer program in Brazil. 1993 TAM buys airline Lapsa from the Paraguayan government and creates TAM Mercosur. Start of São Paulo (Brazil) – Asuncion (Paraguay) flights. The first Airbus A330 arrives and the airline performs its first international flight from São Paulo (Brazil) – Miami (United States). 1996 1997 1998 LAN lists its shares on the New York Stock Exchange, becoming the first Latin American airline to trade ADRs in this important stock market. 1999 The company’s expansion process begins: start of operations of LAN Peru. 1994 The privatization process of LATAM ends with the acquisition by the current controllers and other shareholders of 98.7% of the company’s stock. LAN joins oneworld®. 2000 Integrated Report 2021 Profile 17 2001 LAN alliance with Qantas and Lufthansa Cargo. 2002 LAN alliance with Iberia, and inauguration of the cargo terminal in Miami (United States). Establishment of the Technology Center and Service Academy in São Paulo (Brazil). 2006 Start of flights to London (United Kingdom) and flights to Zurich and Geneva (Switzerland) through its agreement with Air France. Launch of the new Premium Business Class. 2007 2003 The company's expansion plan continues: start of LAN Ecuador operations. Launch of the new Business Class for flights to Paris (France) and Miami (United States). Corporate Image Change: LAN Airlines S.A. TAM begins to fly to Santiago (Chile). 2004 2005 TAM publicly listed on the New York Stock Exchange in the United States. The short-haul fleet renewal process is completed, now consisting of A320-family aircraft. LATAM receives its first Boieng 777-300ER. 2008 2010 Purchase of Colombian airline Aires. TAM officially joins Star Alliance. 2011 LAN and TAM sign binding agreements for the partnership between the two airlines. 2012 2013 Capital increase by US$940.5 million. LATAM Airlines Group is born, through the LAN and TAM association. Placement of 2.9 million shares. Launch of the Milan (Italy) and Cordoba (Spain) route. Authorization from Brazil’s ANAC to start flights to Madrid (Spain) and Frankfurt (Germany). Implementation of the Low Cost model in domestic markets. Capital increase by US$320 million. View of Milan Cathedral (Italy). Another step in LAN’s regional expansion plan: start of LAN Argentina operations. TAM S.A. is publicly listed in Bovespa, Brazil. Launch of flights to New York (United States) and Buenos Aires (Argentina). 2009 Start of cargo operations in Colombia and passenger operations in the domestic market in Ecuador. Launch of Multiplus. 2014 TAM joins oneworld®, making oneworld® the global alliance for LATAM Airlines Group. LATAM launches its Strategic Plan 2015-2018, focused on becoming one of the most important airline groups in the world. Profile 18 Integrated Report 20212015 2016 LATAM, the new brand to be adopted by LAN, TAM, and its subsidiaries, is born. Issuance of EETC structured note for US$1.02 billion: first in Latin America. 2017 Implementation of the new business model in domestic markets by subsidiaries. Capital increase of US$608 million, with which Qatar Airways acquires 9.999999918% of LATAM's total subscribed and paid shares. Inauguration of the first flight to Asia. 2018 New sales model comes to international flights. 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 theoneworld® alliance as of May 1st, 2020. 2020 2021 Launch of the new Sustainability Strategy LATAM makes public its five-year business plan. Approval of joint venture with Delta Air Lines in Chile, which was added to previous approvals in Brazil, Colombia, and Uruguay. Presentation of the reorganization plan, within the framework of Chapter 11 of the US Bankruptcy Law. LATAM Airlines Group S.A. and its subsidiaries in Chile, Peru, Colombia, Ecuador, the United States, and Brazil enter the financial reorganization process under Chapter 11 of the US law and gain access to up to US$2.45 billion in DIP (debtor in possession) financing. E-Business unit launched, with the aim of improving the digital customer experience. Initiatives to support the fight against COVID-19 in South America. Profile 19 Integrated Report 2021Awards and acknowledgements Throughout 2021, LATAM group received acknowledgments in various fields, listed as follows: Service • APEX (Airline Passenger Experience Association) and SimpliFlying: grant LATAM group the “Diamond” category of its Simplifying-powered APEX Health Safety standard, making it the first airline group in the region to receive this category, the highest in the measurement. • APEX Passenger Choice: rated LATAM with four out of five stars in its global airline ranking, based on customer votes from more than 600 airlines worldwide. • World Line Airline Awards– Skytrax, the most important award in the airline industry: LATAM received 4 out of 5 stars and became the only airline in South America to obtain this recognition, which qualifies LATAM's health and safety standard. In addition, it was recognized for the second consecutive year as the “Best South American Airline,” a recognition based on the opinion of more than 13.4 million travelers around the world. Moreover, it was awarded the “COVID-19 Aeronautical Excellence Award” for the health and safety measures adopted during the pandemic. • OAG 2020 (Official Airline Guide) and Cirium On-Time Performance Review 2021: Both consultants recognized LATAM as the first global and Latin American group, respectively, based on its punctuality. • World Travel Awards 2021: LATAM was awarded “Leading Airline in South America” and “Leading Airline Brand in South America” due to its operational and service attributes. • Global Traveler Awards: Voted “Best Airline in South America” in the 18th edition of the Global Traveler GT Test Reader Survey Awards, based on an online survey of readers of Global Traveler magazine. • Respeito Award 2021 by magazine Consumidor Moderno (Brazil), which recognizes the companies that stand out for respecting the final consumer. LATAM was the winner in the “Airline Companies” category. Profile 20 Integrated Report 2021 Sustainability • The Sustainability Yearbook 2021: LATAM was the region's best performing airline and the second worldwide in sustainability, in the 2021 edition of the Dow Jones Global Index (DJSI) “The Sustainability Yearbook”. • Standard & Poor's Global Corporate Sustainability (CSA): LATAM ranked fourth in the world in this assessment and has positioned itself as the best performing airline in sustainability on the American and European continents. • Sustainable Peru: The network of companies that promotes sustainable development in Peru recognized LATAM as a socially responsible company. • National Carbon Neutrality Program of the Ministry of Environment and Sustainable Development of Colombia: LATAM Airlines Colombia was recognized for its commitment to establish voluntary targets and commitments to reduce greenhouse gas emissions. Others • Prestige: The renowned Paraguayan award recognized LATAM as the most prestigious airline in the Air Transport category. • Negocios da Comunicação: The Brazilian magazine awarded LATAM the recognition as "Company that best communicates with journalists" in the category "Logistics and Transportation". • Design Air: Chosen as the airline with the best Design in South America in 2021. • Associação Brasileira de Comunicação Empresarial (Aberje): It awarded first place in the Multipublic category of the Aberje Awards 2021 for the "Far, But Together – LATAM 360° Communication in the COVID-19 Pandemic" campaign. • Santos Dumont Merit Medal (Brazil): Recognizing its outstanding services to Brazilian aeronautics, Commander Harley and Diogo Elias, Director of Operations and Director of Sales and Marketing of LATAM Airlines Brazil, respectively, and Commander Vitor Araujo, pilot of LATAM Cargo Brazil, were decorated. • Análise Executivos Jurídicos e Financeiros: recognizes Rogéria Gieremek as the most admired Compliance Professional in Brazil. • Greater and Better Modern Transport and Technibus (Brazil): LATAM ranked first in the “Air Passenger Transportation” category, based on net operating income from the 2020 balance sheet. • Merco Rankings (Brazil): LATAM was the group with the best reputation in the “Transport and Logistics” category and was a leader in the industry among the 100 companies with the best Corporate Governance and Responsibility. Profile 21 Integrated Report 2021Operations In this chapter 23 Passenger operations 25 LATAM cargo 28 Fleet Operations 22 Integrated Report 2021Passenger operations In 2021, the group was able to gradually resume operations after a 2020 strongly impacted by the pandemic, operating, on average during the year, 45.4% of the passenger capacity (measured in ASK - available seat-kilometer) compared to the pre-COVID level and a load factor of 74.4%. The international operation was 25.2% of that recorded in 2019, and the domestic operation was 69.6%. During much of 2021, subsidiaries in Colombia and Ecuador achieved domestic performance equal to or greater than that achieved before the pandemic. Throughout the year, LATAM also made progress in opening new routes in the context of a dynamic and changing environment, opening a total of 79 routes during the year. The revenues from the passenger operation represented 65.4% of the group's total. LATAM operates 30 international destinations in 18 countries, in addition to domestic destinations and international flights and connections between domestic destinations. In the international passenger market, the supply, measured in ASK, which equals the number of seats available multiplied by the distance flown, decreased by 14.3% compared to 2020, and passenger demand, measured in RPKs, which equals the total number of passengers transported by the distance flown, declined by 23.4% compared to 2020. A total of 2.9 million passengers flew with LATAM to international destinations during 2021 and the load factor was 66.0%, 7.8 percentage points below 2020. Domestic operations correspond to the domestic flights made by the LATAM Airlines Brazil, LATAM Airlines Chile, LATAM Airlines Colombia, LATAM Airlines Ecuador, and LATAM Airlines Peru subsidiaries, which averaged 790 flights per day, connecting a total of 107 destinations. In addition, during 2021, LATAM inaugurated 17 new domestic destinations and transported 37.3 million people on its domestic flights, an increase of 53.8% compared to the previous year. Passenger demand, measured in RPK, increased 60.1% in Spanish-speaking countries (SSC), while supply, measured in ASK, increased 62.6%, while the load factor was 74.9%, 1.2 percentage points lower than in 2020. In the Brazilian domestic market, demand increased by 40.8%, and supply by 40.8%. The load factor remained constant compared to 2020 and was 80.0%. In Colombia, operations toward yearend exceeded 2019 levels, reaching an In 2021, LATAM opened 33 new domestic destinations, totaling 107. Load factor was 80.0%. operation of 123% compared to 2019, measured in ASK, most of which is explained by the opening of four LATAM Airlines Ecuador closed the year with a 116% operation versus 2019 levels, given LATAM's interest in continuing to connect Ecuador and offer the best product to its passengers. On the other hand, LATAM Airlines Brazil ended 2021 with a capacity of 92.9% (measured in ASK) compared to 2019, with an average of 578 daily flights and 49 destinations, a record figure that had not been recorded since the association of LAN and TAM in 2012. The subsidiary opened 33 new routes and opened flights to the cities of Juazeiro do Norte, Jericoacoara, Petrolina, Vitoria da Conquista and Una, among others. During December 2021, LATAM's subsidiaries in Chile, Brazil, Peru, and Ecuador were leaders in market share1 in their respective markets, while the subsidiary in Colombia had the second largest operation in that country. new domestic routes (Cali-Monteria, Medellin-Pereira, Cali-Pasto, Medellin- Leticia), whereby the subsidiary ended the year with 16 domestic destinations and 180 daily flights on average. 1 Source: Agência Nacional de Aviação Civil (ANAC Brazil) – RPKs, Junta de Aeronáutica Civil (JAC Chile) – RPKs, Dirección General de Aeronáutica Civil (DGAC Peru) – Number of passengers carried, Diio.net – ASKs (Colombia and Ecuador). Operations 23 Integrated Report 2021Connectivity 102-4, 102-6 Domestic operation million passengers 37.3 107 destinations CONSOLIDATED TRAFFIC (RPK): 36.81 billion Spanish-speaking countries (SSC): 13.36 billion Brazil: 23.45 billion CAPACITY (ASK): 47.17 billion SSC: 17.84 billion Brazil: 29.32 billion LOAD FACTOR: 78.0% SSC: 74.9% Brazil: 80.0% 1 LATAM Airlines Chile 16 destinations 5.4 million passengers MARKET SHARE 60% MAIN COMPETITORS Sky Airlines, JetSmart 4 3 2 5 North America 81 8 Latin America and the Caribbean 14 23 1 International operation 2 LATAM Airlines Peru 19 destinations 5.5 million passengers 3 LATAM Airlines Colombia 16 destinations 5.9 million passengers MARKET SHARE MARKET SHARE 68% 28% MAIN COMPETITORS Sky Airlines Peru, Viva Airlines Peru, Star Peru, Avianca MAIN COMPETITORS Avianca, Viva Colombia, EasyFly, Satena, Copa Airlines Colombia (“Wingo”) 4 LATAM Airlines Ecuador 7 destinations 0.8 million passengers 5 LATAM Airlines Brazil 49 destinations 19.8 million passengers MARKET SHARE MARKET SHARE 53% 36% MAIN COMPETITORS Avianca MAIN COMPETITORS Gol, Azul Obs.: Market shares are as at December 2021. 2.9 30 225 Code sharing million passengers LATAM destinations CONSOLIDATED TRAFFIC (RPK): 13.50 billion CAPACITY (ASK): 20.46 billion LOAD FACTOR: 66.0% Europe 8 59 Asia and Australasia 27 (Asia) 16 (Australasia) Africa 9 African savannah Operations 24 Integrated Report 2021LATAM cargo LATAM Cargo S.A. and the cargo subsidiaries in Colombia and Brazil stand out in Latin America as one of the main air cargo operators. During 2021, its contribution to the region became even more visible in the global context of the COVID-19 pandemic. The drop in cargo carrying capacity, due to the decrease in passenger flights as a result of health restrictions, was more intense than the drop in demand, thus increasing the load factor at the industry level. In 2021, 801.5 thousand tons of cargo were transported, an increase of 2.2% from 2020. Revenues increased 27.4% compared to the previous year and represented 30.2% of the group's total. Load factor reached 63.4%, which translates into a 2.0 percentage-point decrease compared to 2020 (+7.9 versus 2019) and the yield based on ATKs (available ton-kilometer) increased by 29.2% compared to 2020 (+68.3% vs. 2019). The restrictions forced the suspension of several passenger routes, which was reflected in a reduction in the capacity of the belly cargo service (using passenger aircraft). However, LATAM's effort to operate routes that originally only considered passenger aircraft as net cargo flights represents the group's commitment to its customers in businesses such as the salmon, fruit, flower, pharmaceutical, or mining industries, among others, which needed to ensure their operational continuity. Cargo operations in 2021 102-6 22 4 countries exclusive cargo destinations: Costa Rica, Guatemala, Netherlands, Panama 137 destinations 8 exclusive cargo destinations: Amsterdam (Netherlands) Cabo Frio and Campinas (Brazil) Chicago (United States) Ciudad del Este (Paraguay) Guatemala City (Guatemala) Panama City (Panama) San Jose (Costa Rica) 801.5 thousand tons transported Operations 25 Integrated Report 2021Logistical support to the region LOCAL SUPPLY Y R T S U D SALMON Strengthened connection between Chile and consumer markets in the United States and Mexico, including direct flights and full air-to-air connection from Punta Arenas to Santiago FLOWERS Increase in flights and offer of additional flights in Bogota, Colombia and Quito, Ecuador T I N R O P X E New flights dedicated to cargo after passenger operations were interrupted as a result of the effects of the pandemic Moais in Easter Island, Chile. Operations 26 CHILE To ensure connectivity to Easter Island, the group conducted special operations using two weekly passenger flights to transport cargo (highlights: perishable goods and staple goods)Incorporation of 787-8 on the Santiago-Punta Arenas-Santiago route (products: salmon, spare parts, electronics, and perishables) and availability of direct route Punta Arenas-Miami based on the client's needs, on 787-8BRAZIL Flights that were normally passenger flights became operated as cargo transport to meet the logistical needs of the local industryPERU AND COLOMBIA Air transport was essential for the transport of medicines, perishable goods, and other cargo in these markets, impacted by restrictions on land mobility due to strikes and social demandsIntegrated Report 2021 Building the future The year 2021 also meant the launch of a new technology systems platform on which the group had been working for three years. Thanks to this project, today LATAM cargo has a world-class system that not only allows it to make its operations more efficient, but also gives customers the ease of doing their business with LATAM cargo and its cargo subsidiaries, improving their user experience. The end-to-end platform, which covers all processes from pricing to payment, is hosted on the cloud, reducing system downtime and information loss or errors by holding all dispatch data in one place. The new system is already in place for all international operations and is expected that all of its capabilities will be taken advantage of and implemented for domestic operations during 2022. During the fourth quarter, LATAM cargo announced two major international marketplace agreements to expand the channels where it offers its capacity. Committed against COVID In 2021, LATAM cargo strengthened its operations to support the mass transportation of vaccines to and within South America and domestic markets. This was made possible by a multidisciplinary effort involving different areas of the business, enabling the creation of new procedures and optimizing logistics and coping with the pandemic. The initiative positioned LATAM group, and LATAM cargo specifically, as a strategic ally of governments to meet the logistical challenge of mass vaccination campaigns. In total, LATAM was responsible for transporting one in five doses of vaccines administered by Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, and Uruguay. In countries such as Chile and Paraguay, coverage was even higher: two out of three. 351.8 million doses of COVID vaccines transported. The Center of Excellence of Independent Validators (CEIV Pharma) certification from the International Air Transport Association (IATA) was key for this, as it proved to each of the Latin American governments the robustness of LATAM's Pharma services and the experience and knowledge of the group to transport vaccines with all kinds of requirements. The first vaccines were transported on December 24, 2020, and until the end of 2021, 351,853,590 doses of COVID vaccines were transported to South America, including the countries of the continent and at the domestic level. Of these, 207,750,400 were transported free of charge at the domestic level on the Avion Solidario (Solidary Plane) in Brazil, Chile, Ecuador, and Peru, within the framework of the program's alliances with local governments to facilitate distribution at the national level. More information: Close, digital, and flexible (page 78) Solidary Plane program (page 58) Operations 27 Integrated Report 2021Fleet In 2021, as part of the reorganization process, the group achieved a full restructuring of its fleet, which included renegotiating contracts, reducing total aircraft, eliminating Airbus A350 models, and homologating wide-body aircraft. These initiatives will enable estimated savings of more than 40 per cent of fleet cash costs compared to 2019 levels. The results of the negotiations were favorable, and the extension of pay periods and variable pay and the reduction of lease payments were agreed. As at 31 December 2021, 3101 aircraft made up LATAM's total fleet, with an average age of 10.9 years. The international operations have 591 Boeing wide-body aircraft, including 22 Boeing 767-300ER, 10 Boeing 777- 300EF and 27 Boeing 787 Dreamliners (versions 8 and 9), worldwide benchmarks for fuel efficiency and reduction of greenhouse gas (GHG) emissions and noise. The fleet for domestic and regional operations in South America consists of Airbus aircraft, mainly of the narrow-body type, including 44 Airbus A319, 133 Airbus A320, 49 Airbus A321, and 12 Airbus A320neo, which is 15% more fuel efficient and generates half the noise than the previous equivalent model. LATAM Cargo's operating fleet totals 12 Boeing 767 aircraft. In 2021, the group launched a three-year plan, which will expand the fleet to 21 aircraft, increasing its capacity by 85%. By the end of the year, the first of the 10 new cargo planes converted from Boeing 767 passenger aircraft was fulfilled, and the fleet is expected to Fleet (12/31/2021) At December 31, 2021 Off balance On balance TOTAL Passenger fleet Airbus A319-100 Airbus A320-200 Airbus A320neo Airbus A321-200 Boeing 767-300ER BOEING 777-300ER Boeing 787-8 Boeing 787-9 Total Cargo fleet Boeing 767-300F Total Subleases Boeing 767-300F Total subleases TOTAL FLEET 7 7 7 7 7 7 7 7 116 1 1 - - 117 37 94 - 18 22 4 4 2 181 11 11 1 1 193 44 133 12 49 22 10 10 17 2971 12 12 1 1 310 1 Includes six Boeing 767-300ER aircraft classified as non-current assets held for sale. Operations 28 Integrated Report 2021be completed with three more units in 2022 and six in 2023. Brazil, the base is located in São Carlos and has capacity for eight aircraft. In 2021, the two bases were responsible for 446 maintenance services, representing 83 per cent of total fleet maintenance and a total of 1.3 million man-hours worked. The rest of the aircraft were serviced by external suppliers. Line maintenance (minor, preventive, and corrective tasks) is distributed across different LATAM hangars, such as those located in Santiago (Chile); São Carlos, Congonhas/São Paulo, and Brasilia (Brazil); Lima (Peru), and Miami (United States). This network includes a series of automated and integrated services that ensure compliance with all safety requirements and in accordance with local and international regulations. In addition, within the framework of the reorganization process, fleet commitment agreements have been reached with Boeing for two 787 Dreamliner aircraft and with Airbus for a total of 70 more fuel-efficient LATAM has planned to modernize its fleet until 2028 with the incorporation of 70 aircraft of the Airbus A320neo family and two Boeing 787-9 aircraft from the A320neo family, strengthening LATAM's commitment to its long-term sustainability strategy. Delivery dates are planned until 2028. However, they could vary as a result of ongoing discussions with manufacturers in the context of the current global situation. Maintenance Aircraft maintenance, planning, and return activities in compliance with the fleet plan are carried out at LATAM's Maintenance, Repair, and Operation (MRO) bases in Chile and Brazil. The units also perform temporary maintenance services to third parties. The Chilean base is located in Santiago and can serve two narrow-body and one wide-body aircraft simultaneously. In Snapshot 2019 2020 2021 Passenger Operations Capacity (ASK) - billion 149,11 Consolidated traffic (RPK) billion 124,521 Load factor (ASK) Revenue/ASK (US$ cents) 83.5% 6.5 55,718 42,624 76.5% 4.9 67,636 50,317 74.4% 4.9 Total PAX transported (thousands) 74.189 28.299 40.195 Cargo Operations Capacity (ATK) - billion Consolidated traffic (RTK)billion Load factor (ATK) Revenue/ATK (US$ cents) Tons transported (thousands) 6,357 3,526 55.5% 17.1 903.8 4,708 3,078 65.4% 25.7 785.0 4,788 3,035 63.4% 32.2 801.5 Operations 29 Integrated Report 2021Corporate governance In this chapter 31 Ownership structure 33 Decision-making bodies 36 Corporate guidelines 38 Financing Policy 39 Market Risk Policy 41 Financial Policy 42 Liquidity and Financial Investment Policy Corporate governance 30 Integrated Report 2021Ownership structure The goal of LATAM Airlines Group S.A. 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 goals, optimizing returns to its shareholders and maintaining a sound financial position. The group’a paid-in capital at December 31, 2021, totaled ThUS$3,146,265 divided among 606,407,693 shares, and ThUS$3,146,265 divided among 606,407,693 shares at December 31, 2020, from the same and only nominative, ordinary series, without par value. There are no special series of shares, nor preferences. The form of the stock certificates, their issuance, exchange, disablement, loss, replacement, and any other circumstance, 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, 2021, the group does not have a controlling shareholder. STOCKHOLDING 102-5, 102-10 20211 h g f d e Total: 606,407,693 shares subscribed and paid. 20201 j i k h g f e d Total: 606,407,693 shares subscribed and paid. a c a c b b At December 31, 2021 Main shareholders a - Delta Air Lines b - Cueto Group c - Qatar Airways2 d - Eblen Group e - Hirmas Group f - Other g - American Depositary Receipt (ADR) h - Foreign investors Total Total shares % 121,281,538 99,381,777 60,640,768 27,644,702 1,488,971 203,275,557 79,240,114 13,454,266 20.00 16.39 10.00 4.56 0.25 33.52 13.07 2.22 13,454,266 100.00 1 As of 12/31/2021, the shareholders' register of the Central Securities Deposit (DCV, for its Spanish acronym) did not register shares under either of the two companies of the Amaro Group - TEP Aeronautica S.A. and TEP Chile S.A. - with which it participated in the ownership of LATAM. 2 Qatar owns 9.999999918% of total issued shares of LATAM. At December 31, 2020 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 - ADR i - Chilean Pension Fund Managers(AFP) j - Foreign investors k - Other 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 30.07 606,407,693 100.00 1 The holding figures of the Cueto Group rin this table no longer consider the 21.88% stake of the Amaro Group in Costa Verde Aeronautica S.A., after the transfer of these shares to a new company owned by the Amaro Group, TEP Aeronautica S.A. 2 Qatar owns 9.999999918% of total issued shares of LATAM. 3 The holding figures of the Amaro Group in this table consider the addition of TEP Aeronautica S.A. Corporate governance 31 Integrated Report 2021Main shareholders At December 31, 2021 Name Delta Airlines Inc. At December 31, 2020 Shares subscribed and paid % Name 121,281,538 20.00% Delta Airlines Inc. Costa Verde Aeronáutica S.A. 91,605,886 15.11% Costa Verde Aeronáutica S.A. JP Morgan Chase Bank 79,240,114 13.07% Qatar Airways Investments (UK) Ltd.1 Banchile Corredores de Bolsa S.A. 61,271,228 10.10% Banchile Corredores de Bolsa S.A. Qatar Airways Investments (UK) Ltd.1 60,640,768 10.00% JP Morgan Chase Bank Santander Corredores de Bolsa Limitada 25,667,681 4.23% BCI Corredores de Bolsa S.A. Andes Aérea SpA Consorcio Corredores de Bolsa S.A. Banco de Chile on behalf of non-resident third parties BTG Pactual Chile S.A. Corredores de Bolsa Larrain Vial S.A. Corredora de Bolsa Valores Security S.A. Corredores de Bolsa Itaú Corredores de Bolsa Limitada Inversiones Costa Verde Ltda. y Compañía en Comandita por Acciones 19,433,331 3.20% 19,339,670 16,902,522 3.19% 2.79% 13,112,092 2.16% 11,469,576 1.89% 10,823,190 8,872,048 1.78% 1.46% 8,171,069 1.35% 7,775,891 1.28% 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. Investor Relations Shares subscribed and paid % 121,281,538 20.00% 82,376,937 13.58% 60,640,768 10.00% 53,835,781 53,057,983 8.88% 8.75% 30,845,675 5.09% 26,783,613 19,042,479 13,187,037 12,502,262 12,009,257 9,228,949 4.42% 3.14% 2.17% 2.06% 1.98% 1.52% Santander Corredores de Bolsa Limi- tada 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. LATAM establishes an ongoing dialogue with its shareholders and others players in the capitals markets. On the Investor Relations site, where updated financial statements and quarterly results reports are published, the group details the corporate governance structure, other relevant data to support shareholders, investors, and market analysts in decision-making and information on the stages of the reorganization plan under the protection of the Chapter 11 bankruptcy proceeding of United States law. The contents are available in English, Spanish, and Portuguese. Dividends LATAM Airlines Group S.A. has defined that the distribution of dividends should correspond to at least the figure equivalent to 30% of the liquid profits of the previous year, in accordance with the regulations in force, which does not prevent any distribution of dividends in excess of this mandatory minimum, taking into account the particularities and circumstances that may arise during the year. In 2021, since the Company incurred losses in the financial year 2021, there was no dividend payment, in accordance with the legislation in force. More information: Shareholders' Agreement (page 100) More information: LATAM reorganization Investor Relations Corporate governance 32 Integrated Report 2021Decision-making bodies The main governing body of LATAM Airlines Group S.A. is the Board, which defines and monitors the group’s strategic guidelines. It consists of nine permanent members, individually elected for two-year periods, by the cumulative 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. 102-18 The Board holds regular monthly meetings and, whenever necessary, extraordinary meetings. In 2021, the average attendance at the 35 ordinary and extraordinary sessions held throughout the year was 96.8%. Directors Ignacio Cueto, Enrique Cueto, Patrick Horn and Nicolas Eblen attended 100% of the meetings, while directors Enrique Ostale, Sonia Villalobos, Henri Philippe Reichstul, Eduardo Novoa, and Alexander Wilcox attended 94.3% of the meetings. In addition to the Directors’ or Audit Committees, four sub-committees support the Board in decision-making: Strategy & Sustainability, Leadership, Finance, and Clients. As part of a self-assessment process, the Board members routinely fill out a form on best practices, required by Chile's Financial Market Commission (CMF, for its Spanish acronym). 96.8%it was the average attendance at the regular meetings of the Board in 2021. Directors Committee The Directors’ Committee is composed of members of the Board and its functions consist mainly of reviewing and evaluating the reports from external auditors, balance sheets, and other financial statements, and proposing to the Shareholders' Meeting the names of external auditors and risk- rating agencies. The Committee also serves as the Audit Committee. 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). At December 31, 2021, the Committee included Eduardo Novoa Castellon, Patrick Horn Garcia, and Nicolas Eblen Hirmas. All three are considered independent under section 10A of the SecuritiesExchange Act. According to the Chilean LSA, only the first two have independent board member status. Said law requires two independent board members; that is, who have 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, among other characteristics. Corporate governance 33 Integrated Report 2021Organizational chart LATAM Airlines Chile LATAM Airlines Colombia LATAM Airlines Ecuador CEO BOARD Digital and IT VP Finance VP Operations and Maintenance VP Legal Affairs and Compliance VP Directors Committee Commercial VP Human Resources VP Internal Audit LATAM Airlines Peru Clients VP LATAM Airlines Brazil Strategic Planning Safety Corporate Affairs 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 these areas and four vice-presidencies Legal Affairs and Compliance, Corporate Affairs, Digital and IT, and People- form an Executive Committee that meets weekly with the CEO. The Strategic Planning area supports the Executive Committee and other Vice-presidencies participate in meetings to address more specific issues. The areas of Security, Audit, Strategic Planning, Legal Affairs and Compliance, Corporate Affairs, Digital and IT, and People are cross-cutting. Each subsidiary has a CEO and a group of executives, who are responsible for the operations. More information: Board: composition and résumés (page 105) Annual Report of the Board Committee’s Administration (page 108) Main executives (page 114) Corporate governance 34 Integrated Report 2021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 bonus 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. Board compensation The compensations reported represent a monthly allowance for the Board and the Directors’ Committee, approved in the Ordinary Shareholders’ Meeting held on April 20, 2021. During 2021, the Board and the Directors’ Committee had no additional expenses for counseling services. Remuneration– allowance 2021 (US$) Name Position Ignacio Cueto Plaza Sonia J. S. Villalobos Chairman Board member Eduardo Novoa Castellon Board member Nicolas Eblen Hirmas Patrick Horn García Henri Philippe Reichstul Board member Board member Board member Enrique Miguel Cueto Plaza Board member Enrique Ostale Cambiaso Board member Alexander D. Wilcox Board member Remuneration– allowance 2020 (US$) Name Position Ignacio Cueto Plaza Chairman Sonia J. S. Villalobos Board member Eduardo Novoa Castellon Board member Nicolas Eblen Hirmas Patrick Horn García Board member Board member Henri Philippe Reichstul Board member Enrique Miguel Cueto Plaza Board member Enrique Ostale Cambiaso Board member Alexander D. Wilcox Board member Juan Jose Cueto Plaza Former board member Carlos Heller Solari Giles Agutter Former board member Former board member Board Directors’ Committee Subcommittee Total 125,287.1 43,797.3 62,643.6 62,643.6 62,643.6 42,212.3 62,643.6 43,643.2 39,271.1 - - 109,287.2 41,964.7 109,287.2 - - - - 30,199.8 20,672.8 26,759.9 28,623.9 25,141.4 21,811.0 26,75.9 14,520.7 15,867.0 155,486.9 64,470.1 198,690.6 133,232.2 197,072.1 64,023.3 89,403.4 58,163.9 55,138.0 Board Directors’ Committee Subcommittee Total 29,328.64 10,689.95 14,664.32 14,664.32 14,664.32 10,689.95 10,967.97 7,997.93 2,302.68 3,696.35 1,899.00 7,294.50 - - 19,552.43 19,552.43 19,552.43 - - - - - - - 8,373.39 6,425.50 8,373.39 8,811.67 5,237.93 6,970.61 6,854.19 7,507.00 956.81 1,519.20 - 2,602.72 37,702.04 17,115.45 42,590.14 43,028.42 39,454.68 17,660.56 17,822.16 15,504.93 3,259.49 5,215.56 1,899.00 9,897.22 Executives compensation In 2021, executive remuneration totaled US$19,895,749 (US$19,895,749 from remuneration and US$0 from profit-sharing in March). In 2020, US$18,436,960 were paid as remuneration and US$13,343,991 were paid out as profit-sharing, amounting to US$31,780,951 as total gross remuneration. Compensation plans Compensation plans implemented through the awarding of stock options to buy and pay for shares offered by the group to its employees are recognized 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. • LP3 Compensation plan (2020-2023): LATAM 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 and cumulative. The methodology is an allocation of a number of units, where a target value is set for the stock. Corporate governance 35 Integrated Report 2021Corporate guidelines LATAM Airlines Group S.A. is an open-ended corporation, registered with Chile’s CMF under registration number 306, with shares traded on the Santiago Stock Exchange, the Chilean Electronic Stock Exchange and the OTC (over-the-counter) market in the United States in the form of ADRs (American Depositary Receipt). 102-5 Its corporate governance model is in line with the stock market (No. 18,045) and limited corporation (No. 18,046) laws and the CMF rules in Chile, in addition to the US SEC and the specific regulations of the countries where it operates. A series of corporate guidelines direct employee behavior, in accordance with standards of ethics, transparency, compliance and integrity, accountability, and combating illegal acts (corruption, bribery, antitrust, and money laundering). The Compliance Program, managed by the Legal and Compliance Vice-President , directs monitoring and control processes and their ongoing evolution. 102-16 Ethics and compliance training All employees, upon entering the group, undergo training on the guidelines for integrity and compliance in the onboarding process. The teams’ annual training agenda includes topics such as ethics, corruption prevention, and free competition. There is also specific training on the content of the Code of Conduct, which is mandatory and must be revalidated every two years. In 2021, 84% of all employees and 85% of executives successfully completed the Code of Conduct e-learning course and the knowledge test that assesses the effectiveness of the training. Contracts and purchase orders incorporate anti-corruption clauses and suppliers are informed of related procedures by accepting the Supplier Code of Conduct. TRAINING ON THE CODE OF CONDUCT1 (%) 205-2 ARGENTINA 29 BRAZIL CHILE COLOMBIA ECUADOR 92 74 72 87 UNITED STATES PERU OTHERS 82 75 67 LATAM AVERAGE: 84 1 Annual percentage of employees who take training on the Code of Conduct in each country where LATAM operates. The calculation is made on the total number of employees including those who could not participate in this type of training, such as those who are absent from work due to prolonged medical disability. More information: Corporate Governance Guidelines Corporate governance 36 Integrated Report 2021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, labor and sexual harassment, fraud, corruption, and bribery, among others. The channel guarantees confidentiality and is managed by a specialized third- party provider, who performs the initial evaluation of all records. When necessary, the cases are transferred to the Code of Conduct Management Committee in each country (which is comprised of representatives from various areas) and is responsible for ensuring that the cases are channeled as required. 102-17 Related-party transactions LATAM has a Related-Party Transactions Control Policy applicable to the parent, all subsidiaries, all members of the LATAM group, as well as their directors, employees, and partners. The policy states that such transactions must be conducted in accordance with the law, under market conditions, and focused on contributing to the social interest. The document also establishes the cases in which it is appropriate to submit such transactions for evaluation by the Directors’ Committee and for the approval of the Board of Directors or the Shareholders' Meeting, per legal definition. The consolidated financial statements for the financial year ended December 31, 2021, report the transactions carried out in 2021 between LATAM and its subsidiaries. For more information, see note 33 of the Financial Statements. Political Contributions The Policy on Political Contributions sets out guidelines for possible financial support to parties and candidates during election campaigns in all the countries where the group operates. Contributions must adhere to current local legislation and be in line with the LATAM Code of Conduct. Since the creation of the policy in late 2016, the group has not made any political contributions. 415-1 Relations with authorities The aviation industry is regulated and supervised by the various regulatory authorities of the countries where the group operates. Ethics and integrity outline LATAM's relationships with those agencies and other regulatory entities, and all meetings with their representatives are recorded on a platform monitored by the Compliance area. 102-40 Membership of associations LATAM is in constant talks with sector organizations and public and regulatory agencies, seeking to define strategies and paths that can benefit not only the organization, but the whole aviation industry and, more generally, society. More information: Regulation (page 117) Membership of associations (page 116) Corporate governance 37 Integrated Report 2021Financing Policy The scope of LATAM’s Financing Policy is to meet the group’s financing needs, including the acquisition of fleet assets, such as aircraft and engines, financing other investments, and financing working capital. Moreover, at the beginning of the period, the group had a committed credit line with a 12-bank consortium for US$600 million that is fully available (Revolving Credit Facility – RCF). This line is subject to the availability of the collateral consisting of aircrafts, spare engines, and overall spare parts. During the period, LATAM held 100% of this line. This year, as in the previous one, LATAM has reduced most of its recurrent investments, which usually correspond to fleet acquisition programs. Normally, LATAM finances between 70% and 85% of the value of the assets through bank loans, bonds covered by the export promotion agencies, or through commercial loans, capital investments, or the Company’s own funds. The payment schedules of the various aircraft financing structures are mostly for 12 years. Moreover, LATAM contracts a large part of its fleet purchase commitments through operating leases as an additional source of financing. During 2021, LATAM has focused its resources on maintaining the operation and adjusting fleet size in line with current and projected demand in the coming years, considering the pandemic that exists worldwide. In this sense, During 2021, as part of the reorganization process under Chapter 11 of the United States Bankruptcy Law which it is undergoing, LATAM obtained Tranche B of the debtor in possession financing, or DIP, for US$750 million, due April 8, 2022. Together with the US$2.45 billion that the group already had since 2020, it totals US$3.20 billion. Of these, US$1.95 billion are drawn at 31 December 2020, leaving US$1.25 billion available to draft. In this way, the group succeeded in strengthening its operation. Recently, on March 14, 2022, LATAM presented a new DIP financing proposal consisting of a group of financiers who are considering an extension of the maturity date for the three tranches of the DIP contract until August 8, 2022, with the possibility of a further extension. This proposal was subsequently approved by the court on March 15, 2022. as part of the reorganization process which it is undergoing, LATAM has devoted its efforts to the restructuring of fleet contracts, achieving a decrease in payment obligations during the current year and extending our maturing The group restructured its fleet contracts for 2021 and the future obligations for several more years. Another of the main goals of the Financing Policy is to ensure a stable debt maturity and leasing commitment profile, including debt servicing and the payments on fleet leases, consistent with the generation of LATAM’s projected operating cash flow, considering the effect of the pandemic on the latter. Corporate governance 38 Integrated Report 2021Market Risk Policy Given the nature of its operations, LATAM Airlines Group S.A. 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 group is exposed. In order to operate with each counterpart, the Company must have an approved line and a framework signed with it. 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. For the execution of fuel hedges, there is a benchmark index on the international market for this underlying asset, which is the Jet Fuel 54 US Gulf Coast, used mostly by LATAM Airlines Group S.A. to make hedges during 2021. LATAM also carries out hedges on NYMEX Heating Oil, whose underlying asset is included in the Fuel Risk Hedging Policy, given its high correlation with Jet Fuel 54. The Fuel Hedging Policy sets a minimum and a maximum hedging range for the group's fuel consumption, based on the capacity to pass through fuel price variations to airfares, anticipated sales, and the competitive 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. Corporate governance 39 Integrated Report 2021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 decrease 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 can use interest rate swap or other derivatives contracts. At December 31, 2021, LATAM has no active interest rates derivatives contracts. These positions were closed in advance by the respective counterparties once the group entered the Chapter 11 reorganization process. Exchange rate risks: The functional currency used by the parent Company is the US dollar. There are two types of exchange rate risks: Flow risk and balance sheet risk. Cash flow risk is a consequence of the net revenue position and costs in currencies other than US dollars. LATAM makes sales of its services in US dollars, local currencies, and US dollar-indexed prices. In the international passenger business, most fares depend on the US dollar and, to a lesser extent, the euro. In domestic businesses, most rates are in local currency without any dollar indexing, except for domestic businesses in Peru and Ecuador, for which both rates and sales are in dollars. On the other hand, some of the group’s expenses are 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 expenses, are denominated in local currencies. Thereby, LATAM is exposed to the fluctuations in various currencies, mainly the Brazilian Real. LATAM Airlines Group S.A. has not hedged against exchange rate risks involving the Brazilian Real during 2021. 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 The functional currency used by the parent Company is the US dollar 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 2021, 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 U.S. dollars, even though its assets are stated in local currency. At December 31, 2021, the liability position of TAM S.A. exceeded the asset position by US$535 million. Corporate governance 40 Integrated Report 2021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 the fulfillment of financial obligations. Moreover, the Finance Committee, comprising the Executive 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.A. 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. • 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 group's net margin and cash position. • To manage counterparty risk through the diversification and limits on investments and transactions with counterparties. • To maintain, at all times, a long- term visibility of the group's projected financial situation to anticipate situations of low liquidity, deterioration of the financial ratios agreed with ratingagencies, etc. • The Financial Policy delivers guidelines and restrictions to manage Liquidity and Financial Investment transactions, Financing Activities, and Market Risk Management. Corporate governance 41 Integrated Report 2021Liquidity and Financial Investment Policy This liquidity considered the cash available and short-term liquid investments in addition to a revolving credit line committed for a total of US$600 million with 12 financial institutions, both local and international (the RCF or revolving credit facility). During 2020, as a result of the COVID-19 pandemic, the airline business in general was seriously affected. Specifically, revenues from passenger sales declined sharply while requests for refunds increased. To address this situation, LATAM initially drew the RCF completely between March and April. Subsequently, on May 26, 2020, LATAM Airlines Group S.A. and some of its subsidiaries filed for the judicial reorganization process established in Chapter 11 of the U.S. Bankruptcy Law. On July 9, LATAM Airlines Brazil and other subsidiaries of the group joined the same process. Within this process, LATAM obtained financing known as debtor LATAM seeks to maintain an adequate liquidity position for the purpose of safeguarding against potential external shocks and the volatility and cycles inherent in the industry. In this sense, it had closed the financial year 2019 with adequate liquidity, with a liquidity ratio at December 2019 of 19.7% on the total income of the last 12 months. With regard to the Financial Investment Policy, its 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, the years 2020 and 2021 were globally characterized by very low rates. In addition, the Chapter 11 process, in paragraph 345(b), regulates the holding of cash for companies under reorganization. In compliance with this regulation, at the end of the year, LATAM held most of its deposits in depositor banks authorized by the US Trustee of the Southern District of New York of the U.S. Bankruptcy Court (authorized depository banks). in possession, or “DIP,” which has the feature of giving its creditors priority to payment over the group's other unsecured obligations. On October 8, 2020, LATAM closed the DIP, which has a US$2.45 billion committed line with different investors. On the same day, it received a first draft worth US$1.15 billion, thus ending the year with US$1.30 billion of this line committed and available to be drafted depending on the group's needs. Measured as cash plus available DIPs as a percentage of total revenues for 2020, LATAM closed the year with a liquidity indicator of 68%. During 2021, LATAM Airlines Group S.A. and its subsidiaries continued to pursue the reorganization process under Chapter 11, and therefore continued to draft DIP funds totaling US$800 million during the year. Also, on October 18, 2021, the South District Court of New York approved the motion to finance Tranche B of LATAM's DIP funding worth US$750 million. The main objective of financing this tranche was to lower the average cost of the full DIP, while also helping to further strengthen the group's liquidity. Apart from the sums drawn and adding the other US$750 million, at the end of the year, LATAM closed available DIP amounts of US$1.25 billion. Adding the group's cash, LATAM closed with a total liquidity of US$2.29 billion and a liquidity index of 45%. Corporate governance 42 Integrated Report 2021Our business In this chapter 44 Industry context 45 Financial results 48 Financial reorganization 49 Stock information 50 Investment plan Our business 43 Integrated Report 2021Industry context 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. during 2022 have also been revised downwards from the previous estimate, expecting growth of 3.9% in 2022 (0.4 p.p. lower versus the previous estimate), and an expansion of 2.5% in 2023, 0.5 p.p. above the last estimate. On the other hand, the IMF estimated growth of 2.4% for the Latin American and Caribbean region during 2022, 0.6 percentage points below the previous October 2021 forecast, and an expansion of 2.6% for 2023. Brazil's economy is expected to grow by 0.3% in 2022, which is 1.2 percentage points below the previous estimate, while for Chile, the Central Bank estimated in its last Monetary Policy Report (IPoM, for its Spanish acronym) in December 2021 an economic expansion in the range of 1.5 to 2.5% by 2022. More information: Regulation (page 117) Material facts (page 125) the oil supply, there has been a sharp rise in fuel prices, a factor that could continue to significantly impact global inflationary pressures. In line with this challenging environment for the global economy, the IMF’s latest projections consider a cross- cutting downward adjustment between economies for new factors not foreseen in the previous projection related to the early withdrawal of fiscal stimuli mainly in the US, disruptions in the logistics chain, the spread of the omicron variant, and the instability of the real estate sector in China. However, in its last projection in January 2022, the IMF estimated growth for the global economy of 5.9% for 2021, while it projected growth of 4.4% in 2022 (0.5 percentage points (p.p.) below the previous estimate), and more moderate growth of 3.8% in 2023. For the United States, the IMF has estimated a 4.0% expansion for 2022 in its last projection in January (0.6 percentage points below the last October 2021 estimate), in response to the early withdrawal of monetary policies and the continuity of disruptions in the logistics chain; and growth of 2.6% for 2023, 0.4 p.p. above the previous estimate. On the other hand, the IMF’s estimates for Europe In the midst of the spread of the new omicron variant of COVID-19 and the emergence of significant inflationary pressures, the global economy has begun 2022 in a weaker position than previously expected. On the one hand, the omicron variant has led some countries to reimpose certain mobility restrictions, while disruptions in the logistics chain and rising oil and energy prices have generated high levels of inflation, which have mainly affected the United States and emerging and developing economies. The International Monetary Fund (IMF) expects inflationary pressures to last longer than previously estimated, as a result of the continuity of disruptions in 2022 in the logistics chain and high energy prices, and they should gradually decrease during the year as the supply-demand imbalances recover, and with the implementation of monetary policies in major economies. In addition, in the context of the conflict between Russia and Ukraine and the effects of this on Our business 44 Integrated Report 2021Financial results At December 31, 2021, the controller reported a loss of ThUS$4,647,491, representing a negative variance of ThUS$101,604 compared to a loss of ThUS$4,545,887 in the same period last year. Net margin for the financial year settled at -90.9% in 2021 and -104.9% during 2020. The operating result for the twelve months of 2021 amounts to a loss of ThUS$1,119,277, which compared to the loss of ThUS$1,665,288 as at December 31, 2020, shows a variation equivalent to -32.8%, while operating margin settles at -21.9%, 16.5 percentage points higher than the -38.4% reported on December 31, 2020. Operating income for the financial year increased 17.9% vs. the same period of 2020, totaling ThUS$5,111,346. This increase is largely due to a 23.2% rise in passenger revenues and 27.4% in cargo revenues, while other revenues decreased by 44.7%. The effect of the Brazilian real’s depreciation represents lower ordinary revenues by around US$40 million. During June 2020, the indefinite cease of operations of LATAM Airlines Argentina S.A. was announced due to local industry conditions aggravated by the COVID-19 pandemic, whereby the airline stopped operating 12 domestic destinations. At the end of 2020, LATAM Airlines Argentina S.A. reported operating revenues of US$50 million in its individual income statement. PAX revenues totaled ThUS$3,342,381 which, compared to the ThUS$2,713,774 from the twelve months of 2020, translates into a 23.2% increase. This variation is due to the 18.0% increase in demand measured in RPK (revenue passenger-kilometer) and 4.3% in the yields compared to the previous year, while load factor shows a negative variation of 2.1 percentage points from the financial year 2020; on the other hand, RASK (revenue per ASK – Available Seat-Kilometer) reported a 1.4% increase, explained by the recovery of demand thanks to the lifting of quarantines and travel restrictions since the second half of the current year. As at 31 December 2021, cargo revenues reached ThUS$1,541,634, a 27.4% increase from 2020. Despite the 1.4% drop in RTK traffic, yields increased 29.2%, driven mainly by a strong import and export scenario. The Other Income line item shows a decrease of ThUS$183,671 mainly due to a fall in Tour Services and plane subleasing worth ThUS$55,990, in addition to the compensation received for the cancellation of the purchase of four A350 aircraft from Delta Air Lines Inc. for ThUS$62,000 and ThUS$9,240 from the advance return of leased aircraft to Qatar Airways, both during the second quarter of 2020, added to the negative change in compensation income received from Delta Air Lines Inc., associated with the implementation of the JBA (joint business agreement) signed in 2019 for ThUS$14,279. At December 31, 2021, operating costs totaled THUS$6,230,623 which, compared to 2020, translate into higher costs by THUS$230,666, equivalent to a 3.8% increase, whereas unit cost per ASK decreased by 14.5%. Furthermore, the effect of the Brazilian Real’s depreciation on this line item translates into lower costs by roughly US$38 million. Item variations are explained as follows: Our business 45 Integrated Report 2021a) Remunerations and benefits increased ThUS$79,839 due to higher recognized expenditures for performance bonuses, which were suspended during financial year 2020, partly offset by an 18% decline in the average payroll compared to the previous year. b) Fuel increased 42.3%, equivalent to ThUS$442,433. This increase corresponds mainly to 25.4% higher average unhedged prices and 15.5% growth in consumption measured in gallons. LATAM recognized a ThUS$10,100 fuel hedge profit in 2021, compared to a ThUS$14,316 loss in the twelve months of 2020. c) Commissions show a decrease of ThUS$2,701, as a result of the increase in direct sales in own agencies and digital media during 2021. d) Depreciation and Amortization decreased by ThUS$223,992, mainly explained by a smaller average fleet during 2021 and the penalties levied in the previous year due to the accelerated term of IT projects resulting from the implementation of the LATAM XP digital platform. e) Other Leases and Landing Fees increased ThUS$35,183, mainly in handling costs, impacted by the recovery of the operation during the second half of 2021 and offset by lower airport fees. f) Passenger Service decreased by ThUS$20,325, representing a variation of 20.8%, mainly due to restrictions on in-flight catering services, imposed as a result of the COVID-19 pandemic, and lower costs of passenger assistance due to contingencies. g) Aircraft Lease costs for ThUS$120,630. Since the second quarter of 2021, operational aircraft leases under variable mode were reported, as a result of the various agreements reached by the group. Aircraft Leasing includes the costs associated with leasing payments by the hour (PBH) for contracts that have been modified by incorporating that structure. For these contracts that include variable payments by the hour (PBH) at the beginning of the period and after that, have fixed fees, an asset by right of use and lease liability were recognized for these amounts at the date of contract modification. These sums continue to be amortized on a linear basis during the term of the lease from the date of contract modification, even if at the beginning they have a variable payment period. Therefore, and as a result of the application of the lease accounting policy, the result of the period includes both the leasing expense for variable payments (Aircraft leasing) as well as the expense resulting from the amortization of the right of use included in the depreciation line and the interest on the lease liability. h) Maintenance has higher costs by ThUS$61,356, equivalent to 13.0%, mainly due to a higher operation since the second half of the current year. i) The Other Operating Costs show a decrease of ThUS$261,757, mainly due to adjustments in the estimates of write-offs and tax, labor, and civil proceedings. Financial revenues totaled ThUS$21,107 which, compared to ThUS$50,397 in 2020, represent lower revenues by ThUS$29,290. Despite higher cash levels during the six-month period compared to the same period in 2020, this reduction is due to the limitations of Chapter 11 on the group’s cash management, requiring 70% of the cash to be maintained in authorized banks. Our business 46 Integrated Report 2021financial leasing for fleet acquisitions; net accounts receivable and payable to related companies, totaling a gain of THUS$17,970, and net accounts receivable and payable to third parties, totaling a loss of THUS$27,187. The other items of net assets and liabilities generated a profit of MUS$11,023. Direct Economic Value Generated and Distributed (thousands of US$)– 2021 201-1 Revenues Goods acquired from third-parties Gross economic value Retentions Net economic value Economic value received in transfer Economic value generated Economic value distributed Distribution of economic value Wages and Benefits Taxes and contributions Capital suppliers Interest on own capital and dividends Minority interest Community investments Retained economic value 5,111,346 (4,023,307) 1,088,039 (1,165,394) (77,355) 21,107 (56,248) (4,591,243) (1,041,899) (568,935) (2,986,037) 0 5,651 (23) (4,647,491) Financial Costs increased 37.2% totaling ThUS$805,544 by December 31, 2021. The draft of DIP (debtor in possession) financing during the fourth quarter of 2020, in addition to the three drafts in June, November, and December 2021, increased debt by US$1.95 billion, with a higher interest rate, leading to an increase of approximately US$330 million in interest earned. The other income/costs as at December 31, 2021 showed a positive change of ThUS$723,360. The contingency generated by the COVID-19 pandemic affected the group’s operations, showing signs of impairment that required the carrying out of impairment tests resulting in the penalization of the total goodwill by US$1.72 billion, US$37 million from the penalization of airport slots and US$81 million from fuel hedge contracts, all of which generated a loss during the first quarter of 2020, partly offset by higher reorganization costs during 2021, equivalent to US$1.34 billion. The main line items in the Consolidated Financial Statement of TAM S.A. and Affiliates, which caused a currency exchange loss of ThUS$3,973 at December 31, 2021, were: Other financial liabilities; THUS$75 loss from USD-denominated loans and 2019 2020 2021 More information: Snapshot Financial indicators (US$ thousand) 102-7 Operating income 10,430,927 4,334,668 5,111,346 Operating expenses (9,689,325) (5,999,957) (6,230,623) Operating Results Operating Margin Net profit Net Margin EBITDA 741,602 -1,665,289 (1,119,277) 7.1% -38.4% -21.9% 190,430 -4,545,887 -4,647,142 1.8% -104.9% 2,211,578 -275,903 -90.9% 46,117 0.9% EBITDA Margin 21.2% -6.4% Cash and cash equiva- lents1/revenues last 12 months Leverage2 19.7% 39.0% 20.5% 4.0x NS NS NS: Not significant. 1 Includes the revolving credit line. 2 Adjusted net debt/EBITDAR (last 12 months). Risk factors (page 142) Our business 47 Integrated Report 2021LATAM’s financial reorganization CONTEXT AND MAIN STAGES 2020 Measures to adapt capacity to demand Reduction of cost structure 2021 Intermediate stages of defining the Reorganization Plan 2022 Pandemic, challenging scenario Border shutdown Rapid drop in global air traffic Economic slowdown SEPTEMBER 19 The US Bankruptcy Court approves DIP (debtor- in-possession) financing, with two tranches: A (US$1.30 billion) and C (US$1.15 billion) DIP Financing Financing mechanism – fundraising outside the company – that gives its creditors pri- ority over the compa- ny's other unsecured obligations OCTOBER 8 LATAM announces the first tranche of DIP funding totaling US$1.15 billion, corresponding to half of the funds available at that date NOVEMBER 6 The Fondo Toesca Deuda Privada DIP LATAM, which includes certain minority shareholders, commits US$150 million to the DIP financing MAY 26 LATAM Airlines Group S.A. and its subsidiaries in Chile, Peru, Colombia, Ecuador and the United States welcome Chapter 11 of the U.S. Bankruptcy Law, and on July 9 LATAM Airlines Brazil and its affiliates join the process Chapter 11 A section of U.S. law that allows a com- pany facing financial difficulties to con- tinue operating and organize itself without immediate pressure from creditors while negotiating a debt repayment plan SEPTEMBER 9 LATAM publishes its 5-year business plan, which includes the main operational and financial figures up to 2026 and is a relevant element for the Reorganization Plan and the definition of the path to the future OCTOBER 18 The US Court approves Tranche B of the DIP financing for US$750 million and under better market conditions compared to previous tranches, expanding the group's liquidity JANUARY 12 LATAM announces the signing of Support Agreements for the Reorganization Plan with its creditors and main shareholders NOVEMBER 26 LATAM submits its Reorganization Plan to the U.S. Court within the legal term of exclusive right Plan Features: • It provides a platform to exit Chapter 11 through a broad agree- ment with creditors and major shareholders • It proposes the injec- tion of up to approxi- mately US$8.19 billion in new funds, through a combination of capital increase, convertible notes, and debt, thus complying with the laws of the United States and Chile MARCH 14 LATAM presents an edited version of its Amended and Restated DIP financing proposal, which extends the stipulated maturity date of the three existing DIP tranches until August 8, 2022, with the possibility of further extension. This proposal was subsequently approved by the court on March 15, 2022 MARCH 15 The U.S. Court approves LATAM's backstop agreement with a group of creditors and shareholders in support of LATAM's proposed reorganization and financing plan MARCH 21 The Court approves the Disclosure Statement, authorizing the group to seek approval of the Reorganization Plan by creditors Our business 48 Integrated Report 2021Stock information Due to the introduction of Chapter 11, the American Depositary Receipt (ADR) program is no longer listed on the New York Stock Exchange (NYSE). Since then, LATAM ADRs are traded in the United States of America on the over-the-counter (OTC) market. The ADR price series (and annual return) considers ADR prices in the NYSE and then in the OTC market after being delisted on June 10, 2020. LOCAL STOCK – 2021 2,500 2,000 1,500 1,000 500 0 12/30/20 01/30/21 02/28/21 03/31/21 04/30/21 05/31/21 06/30/21 07/31/21 08/31/21 09/30/21 10/31/21 11/30/21 12/31/21 Local stock (CLP) IPSA (points) ADR – 2021 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0 12/30/20 01/30/21 02/28/21 03/31/21 04/30/21 05/31/21 06/30/21 07/31/21 08/31/21 09/30/21 10/31/21 11/30/21 12/31/21 ADR (USD) S&P 500 (points) 6,000 5,000 4,000 3,000 2,000 1,000 0 6,000 5,000 4,000 3,000 2,000 1,000 0 Annual Return -76.02% 26.89% -74.23% ADR S&P 500 Local stocks 3.14% IPSA Volumes traded by quarter – Local stock (Santiago Stock Exchange) 2021 N° of shares traded Average price (CLP) Total value (million CLP) First quarter 7,867,477 Second quarter 4,325,175 Third quarter 4,458,633 1,267 1,630 1,755 9,967 7,050 7,824 Fourth quarter 14,297,175 894 12,789 Volumes traded by quarter – ADR 2021 N° of shares traded Average price (USD) Total value (million CLP) First quarter 22,999,400 Second quarter 53,479,200 Third quarter 26,231,700 Fourth quarter 69,533,200 1.74 2.32 2.24 1.17 40.1 123.9 58.8 81.0 Our business 49 LATAM Airlines Group S.A. is a limited corporation registered before the Financial Market Commission (CMF) under N° 306, whose stocks are traded on the Santiago Stock Exchange, the Chilean Electronic Exchange, and the Valparaiso Stock Exchange. Integrated Report 2021Investment plan 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$587.2 million in 2021, US$324.3 million in 2020 and US$1,276.6 million in 2019, and purchases of intangible assets totaled US$ 88.5 million in 2021, US$75.4 million in 2020 and US$140.2 million in 2019. The following chart sets forth the Company’s estimated capital expenditures for the 2022 calendar year, which are subject to change and may differ from the actual capital expenditures. Estimated capital expenditures by year, as of December 31, 2022 (US$ millions) Fleet commitments1 Pre-delivery payments (PDP)2 Other expenditures3 534 (27) 1,067 1 The amount of Fleet commitments presented includes all the committed deliveries with esti- mates regarding (i) changes in scheduled delivery dates; (ii) conversion of certain aircraft types and (iii) aircraft of which we do not expect to take delivery, regardless of the financing that the aircraft will have upon arrival, thus representing the sum of aircraft capex and future sale and leasebacks. 2 Represents pre-delivery payments made by LATAM, or inflows received by LATAM after the delivery of the aircraft is made. 3 Other expenditures include estimates of capital expenditures on spare engines and parts, main- tenance of on balance fleet, projects and others, plus purchases of intangible assets. Our business 50 Integrated Report 2021Safety In this chapter 52 Number 1 priority Safety 51 Integrated Report 2021Number 1 priority The safety of passengers, employees, and communities is a key value for LATAM. Their management adheres to the Safety, Quality, and Environment Policy, which establishes the guidelines applicable to the group, and follows the parameters established by the International Civil Aviation Organization (ICAO). 6.17reports for every 100 flights on the incident and deviation notification platform. Security Management System Several actions make up the Security Management System, whose interaction allows you to track your performance in all areas, identify risk situations in advance, and make decisions to mitigate them in a coordinated and rapid manner, thus allowing you to achieve concrete results. The information that feeds the system is acquired primarily from employee- delivered safety reports, automated data collection systems, and audits. In this sense, audits are divided into three groups: Periodic internal audits, which assess the maturity of the operational processes implemented; Internal audits based on IOSA (IATA Operational Safety Audit) guidelines, which aim to ensure that all subsidiaries comply with certification parameters; and IOSA recertification audits, which can be performed every two years, if in-person, or annually, if performed remotely. All of LATAM's subsidiaries have been certified since 2007. The matrix of risk factors and criticality is systematically updated, considering an analysis of the group's internal data, as well as the historical analysis of the global behavior of the airline industry. Ongoing improvement of procedures, constant monitoring of performance, and team engagement strengthen the safety culture. Safety indicators on flights, maintenance and cargo activities, land operations and those related to airport infrastructure are monitored by the Vice President of Security, reported monthly to the CEO, and are part of the Board's agenda. The constant presence of this value in its in-house campaigns raises awareness of the importance of safe behavior and an online platform receives notifications of incidents and detours. The information is used for the construction of a risk map and for improvement plans. In 2021, the platform received an average of 6.17 reports per 100 flights. Safety 52 Integrated Report 2021accesses and correlates the different databases, allowing it to analyze the variables with potential to affect operating performance. Thanks to this approach to data, the group has been able to extract valuable information from its operations, considering more than six data sources, which are now correlated for an analysis that has never been achieved before, with more than 65 terabytes of information per year generated on flights. In addition, the speed of data processing and analysis has improved dramatically, reducing periods that took weeks or even months to just minutes. In 2022, LATAM will seek to further strengthen the data collection and inputting process in the different databases, as well as to strengthen the development of its tools to improve its analysis capacity within the large volume of information. Flight Data A computer system collects 96.5% of the information of each flight; it processes the data automatically to identify deviations in operational procedures and to guide preventive maintenance actions. LATAM analyzes deviations causes in detail and adopts corrective measures. The time to receive and process flight data has been significantly reduced with improved processes and constant fleet monitoring. This is proven by data comparison: In 2019, this measurement began, with 75% of the flight data processed within the first three days, and in 2021, it was possible, in the same period, to process 93.1% of the information. For 3G-equipped aircraft, data download and processing is immediate at the end of the flight. The coverage of the system has been increasing since its commissioning in 2016, collecting a greater number of parameters and with greater accuracy. It went from covering 1,280 measurements per second to a total of 4,000 in 2021. of deviation, etc. The reports are sent weekly to the managers of each fleet. There is also pilot segmented information, whose data is available in the Pilot LATAM application. Through it, pilots can view the details of their performance, access incidents identified during flights, deviations from planning, and compare it to the average of the fleet to which they belong. Pilot data is treated with absolute confidentiality. Safety II In 2021, progress was made on the implementation of the Safety II or Data Learning for Safety (DLS) concept. LATAM has been a pioneer in the sector in the use of routine operation data in the development, analysis, and action plans to improve operational safety. The group has matured its capacity to collect and analyze data between different areas and factors that interact in the operation, such as: scheduling, maintenance, meteorology, training, planning, and fatigue, among others, by permanently adding new data sources that may affect operating performance. The data feed the Operational Safety monitoring panel, where it is possible to see the differentiated execution: by route, by airport, by fleet, by type At the end of 2021, the first module of the project became operational, consisting of an information panel focused on approaches. With this instrument, LATAM Aircraft maintenance in LATAM hangar. Safety 53 Integrated Report 2021COVID-19 HEALTH MEASURES • Mandatory use of masks for passengers and crew on all flights • Hand sanitizer available on all flights • Social distancing measures on boarding and landings • Temperature control • Temporary suspension of service on board domestic and short-haul flights • Less interaction between crew and passengers on long-haul flights • Segmentation of employee transportation to airports By 2018 and 2019, the rate of disruptive passengers was 0.4 per 100,000 passengers in the industry. In 2021, this number rose to 0.8%, 26% of which are passengers who do not respect the rules related to restrictions implemented due to the COVID-19 pandemic, followed by 18% of people who cause trouble due to alcohol abuse. Throughout the year, LATAM held talks in support of the cabin operation through which it provided tools to handle cases of disruptive passengers from a psychological perspective, along with strengthening procedures for operational areas, through meetings and communiqués. Emergency Response Plan Airport Security LATAM follows national and international standards and invests in the continuous improvement of its processes so that passengers and transported cargo arrive safely at their destinations. The focus of work during 2021 was on three axes: • Adaptation to the pandemic: Attention to governments’ restrictions, which impacted the closure of borders, and implementation of new protocols targeting inadmissible passengers (the result of non-compliance with health requirements) and disruptive passengers (those who do not comply with the required indications); • Technology: updating and strengthening of remote monitoring systems, which complement physical safety measures, to support operations according to current regulations; and • Profiling: These are pilot tests that allow a profile of the passengers, at certain points of origin, to be made in order to avoid inadmissible passengers in recurring destinations. Disruptive passengers Safety 54 Integrated Report 2021This plan determines which resources and people should be activated in the event of an air emergency, considered as an accident with deceased persons. Its objective is to support the affected people and their families, to play a role as facilitator with the aeronautical authorities in the investigations, to maintain communication with the different stakeholders, and to ensure the continuity of the operation. were also adapted to this format. In addition, the company operates with the online platform for training humanitarian aid volunteers. During 2021, online training of volunteers has reached more than 3,000 employees and the exercises brought together more than 270 executives. Snapshot Emergency Response Members of the emergency team People trained 2019 2020 2021 3,787 1,563 2,814 746 2,240 3,400 Emergency Committees, ground team workgroups, and volunteers are activated to support affected people and their families. There are local committees in eight subsidiaries of the group: Chile, Brazil, Peru, Colombia, Ecuador, United States, Paraguay, and Spain. Emergency drills and training are conducted annually in all subsidiaries within the framework of the Safety Weeks. Given the remote-working scenario, training and exercise activities More than 3,000 employees in Emergency Response online training plan. Safety 55 Integrated Report 2021Commitment to the future In this chapter 57 Strategic focus 58 Solidary Plane program 60 Climate change and ecosystem protection 66 Circular economy 70 Environmental management and eco-efficiency Commitment to the future 56 Integrated Report 2021Strategic focus LATAM seeks to be an asset that promotes the social, environmental, and economic development of the region. To achieve this, it maintains the connection with the demands and desires of the people, and works collaboratively in the search for collective solutions. This is the basis of its new sustainability strategy, which brings together commitments and serves as a compass for the group's progress over the next 30 years. The strategy, launched in 2021, represents the evolution of the work that LATAM has developed for years to respond to the climate, social, and health needs of the region. The strategy is the result of a broad process of reflection and rethinking carried out throughout 2020 and involving LATAM's main strategic stakeholders. Through more than 30 meetings held in Brazil, Colombia, Ecuador, Peru and Chile, LATAM held talks with clients, employees, students, academia, researchers, experts, representatives of non- governmental organizations, and entities from different productive sectors to know their expectations, priorities, and vision for the future. The exchange of ideas enabled LATAM to define how to contribute actively to building a fairer society for today and for future generations. The new strategy strengthens the group's role as an asset to the countries where it operates. The main initiatives undertaken in 2021, in the passenger and cargo business units, to reach the commitments are explained in the next pages. COMMITMENT AND TARGETS • To be carbon neutral in ground and air operations by 2050 • To offset 50% of domestic air emissions by 2030 • To be a zero waste to landfill group by 2027 • To eliminate single-use plastics throughout the operation by 2023 • To promote the Avion Solidario (Solidary Plane) program, which contributes through its expertise and connectivity to the benefit of society in South America More information: Outlook on Sustainability (page 14) Everyone’s Commitment To drive these commitments in the organization, LATAM implemented the Sustainability Ambassadors program, made up of employees who promote and communicate new sustainability initiatives, generate awareness, and encourage a sustainable culture and lifestyle. The 350 ambassadors in 15 countries have the opportunity to participate in training workshops, knowledge-sharing spaces, and challenges associated with the implementation of sustainability programs. In addition, LATAM has a recognition plan for training courses and participation in high-value activities associated with the strategy. Commitment to the future 57 Integrated Report 2021Solidary Plane program Through the Avión Solidario program, created in 2011, LATAM Airlines Group S.A. makes available to the company its structure, connectivity and capacity for passenger and cargo transportation free of charge in South America. The program operates in three fields of action: it supports health needs, promotes the preservations of natural resources, and provides assistance in the face of natural disasters. It is enhanced through agreements and alliances with different organizations, foundations, and government agencies. During 2021, with the aim of generating a stronger support structure, focused on deep and long-term changes, new strategic alliances were formed. In the case of Brazil, in addition to the new alliances established in 2021 within the Avion Solidario program, LATAM supports the work of other non-governmental organizations: Amigos do Bem, Ampara Animal, Alto Arapiuns, Associação Caatinga, Embaixadores da Educação, FAS, Gastromotiva, Gerando Falcões, Instituto Mara Gabrilli, Instituto Tênis, Junior Achievement, Make a Wish, Marcos Rossi, Rodrigo Mendes, and SOS Bosque Atlántico. In addition, since 2018, through an agreement with the Brazilian Civil House, LATAM has provided courtesy tickets for the transportation of Venezuelan refugees within the country. Also, since 2000, it provides support for the transport of organs for transplants; in 2013, an agreement was signed with the Ministry of Health for the free transfer of organs, tissues, and bone marrow in national territory. Network of agreements and alliances Health Environment Disaster Chile Corporación de Ayuda al Niño Quemado (COANIQUEM) Fundación América Solidaria Fundación DKMS Fundación Fútbol Más Ministry of Health Telethon Colombia América Solidaria Peru Brazil Regular Transplant Center (CRT) of the National Institute of Health Fundación Cardio Infantil Operación Sonrisa: Alianza al Apoyo al Instituto Nacional de Enfermedades Neoplásicas (Alinen) Asociación de Ayuda al Niño Quemado (Aniquem) Food Bank Operación Sonrisa: National Organ Transplant Organization Brazilian Association for the Defense of Women, Children and Youth (ASBRAD) Instituto de Apoyo al Quemado (AIQ) Ministry of Environment Municipality of Easter Island Fire brigade from Chile TECHO Panthera Colombia Schooner Bight Ethnic Association Asociación de Bancos de Alimentos de Colombia Turismo Cuida Apeco Hombro a hombro Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA) National Civil Defense Ecuador Red Cross Silversea Red Cross National Institute for Organ Donation and Transplants Operación Sonrisa: Sociedad de Lucha Contra el Cáncer (Solca)-Hope Commitment to the future 58 Integrated Report 2021SHARED VALUE: THREE FRONTS OF ACTION Health At the end of 2020, LATAM made itself available to the governments of the countries where it has domestic operations, for the free distribution of COVID-19 vaccines nationwide. The group's experience in the pharmaceutical transport business through its cargo subsidiaries, and the corresponding certifications in the field, were key for regional governments to entrust to LATAM the efforts of transporting vaccines. In 2021, nearly 208 million vaccines were transported in Brazil, Chile, Ecuador, and Peru. LATAM Airlines Brazil transported nearly 180 million vaccines free of charge, representing 61% of the total airborne doses in the country; in Peru, they totaled more than 26 million doses, representing 9 out of every 10 vaccines distributed internally in the country. Beyond its contribution to combating the pandemic, Avion Solidario's work on health had other outstanding milestones. Examples are given below. • In Chile and Brazil, the subsidiaries transported 911 organs and tissues and carried out 65 stem cell transfers. • Galapagos Oncology Unit: LATAM Airlines Ecuador collaborated in the transfer of Solca's cargo and medical personnel for the inauguration of this hospital that offers gynecological health care focused on the prevention and detection of cervical and breast cancers in Ecuador. • Support for the “Rodamos por una Sonrisa” (We roll for a smile) campaign in Colombia, which recorded the crossing of six cyclists from Bogota to Riohacha (more than 1,000 kilometers) in order to raise funds for the medical organization Operación Sonrisa. LATAM Airlines Colombia is a historical ally of that foundation, which offers specialized care to children with cleft palate. Since the beginning of this alliance in 2009 in Peru and in 2012 in Colombia, LATAM transports the team of doctors and volunteers for the days of assessment, surgery, and rehabilitation that have enabled surgical intervention in more than 6 thousand children in both countries. Environment In terms of the environment, LATAM transported 195 tons of recyclable materials from island territories, as a way of collaborating with the challenge of reverse logistics and the proper management of waste. In 2021, the Galapagos Islands in Ecuador joined Easter Island in Chile and San Andrés in Colombia, pioneers in the matter. In addition, LATAM has established alliances with organizations related to the care of endangered species and together they achieved 192 transfers. Disasters The Avion Solidario was activated to support more than 165 flood-affected municipalities in southern Bahia in Brazil and transported basic food, drinking water, and toiletries and sanitation for 3,800 people and 2,000 animals, in conjunction with the Brazilian Red Cross and other civil society organizations. The program also supported care to those affected by the earthquake in Peru. 2.3 tons of staple items were transferred to Piura in alliance with Hombro a Hombro (shoulder- to-shoulder), an organization that coordinates private business efforts for natural disaster prevention and care. Snapshot Solidarity Plane 203-1 Health Air tickets donated 2019 2020 2021 4,149 1,374 3,210 Organs, tissues, and stem cells transported 807 1,174 Medical supplies (t) – COVID-19 Vaccine doses – COVID-19 (million) NA NA Disaster 976 59 395 NA 207.7 Cargo transported as humanitarian aid (t) 87 525 2.7 Environment Animals rescued Recyclable materials transported (t) NA: Not applicable. 93 204 143 192 195 Commitment to the future 59 Integrated Report 2021Climate change and ecosystem protection These commitments are the result of a cross-sectional assessment process that seeks to meet the target of the Paris Agreement of limiting the temperature increase to 1.5 degrees Celsius. INDUSTRY STRATEGY TO ACHIEVE ZERO NET CO2 EMISSIONS BY 2050 (%) They are aligned with the air industry's strategy and commitment to climate change. Likewise, as a sign of the commitment to a carbon neutral LATAM in 2050, 70 A320neo-family aircraft were integrated, which incorporate the latest technologies providing 20% more fuel efficiency, and thus, lower emissions of CO2, combined with a 50% reduction in nitrogen oxide emissions and a 50% reduction in the acoustic footprint. 19 3 13 65 Sustainable Aviation Fuel (SAF) New technologies, electric and hydrogen Infrastructure and operating efficiencies Carbon capture and offset In climate change management, LATAM has set challenging targets for itself. As part of the launch of its sustainability strategy in May 2021, it announced its commitment to achieve carbon neutral growth taking 2019 as its base year, offset the equivalent of 50% of its domestic emissions by 2030, and be carbon neutral by 2050. LATAM ACTION FRONTS: • Emissions offsetting: Investment and support for conservation and reforestation projects in the region's strategic ecosystems and initiatives that involve clients in this effort. • Efficiency and emissions reduction: Identify and implement measures for fuel economy and efficient use. Added to the development of its agenda to make the use of Sustainable Aviation Fuel (SAF) viable. Sectoral agreements In October 2021, Roberto Alvo, CEO of LATAM Airlines Group S.A., participated in the 77th Annual General Meeting of the International Air Transport Association (IATA), in which a resolution was adopted whereby the air industry commits to achieve zero net CO2 emissions by 2050, meaning that a total of 21.2 tons of carbon will be reduced by that year. To fulfill this commitment, and aligned with the objective of the Paris Agreement, the industry is working on solutions, such as sustainable aviation fuels, technology and innovation, more efficient operations and infrastructure, and will rely on measures such as carbon capture and storage, and compensation schemes such as CORSIA. CORSIA is the Compensation and Carbon Reduction Scheme in International Aviation through which the aviation industry regulates the greenhouse gas emissions of international civil aviation. CORSIA will contribute to stabilizing net emissions from international aviation at 2019 levels in the short and medium term. Commitment to the future 60 Integrated Report 2021OFFSETTING EMISSIONS Latin America is home to six of the 10 most biodiversity-rich countries in the world, with one-third of the planet's freshwater, more than one-quarter of its forests and arable land, and 40% of the species on the whole of the Earth1. Beyond buying carbon credits to offset its emissions, LATAM has made a comprehensive commitment to the environment and has established a number of alliances that will allow it not only to purchase carbon credits for compensation, but also actively participate in the conservation strategies of projects that generate these credits. To ensure that projects meet the highest standards and, in addition to carbon dioxide capture, have social, environmental, and economic co- benefits for communities, LATAM evaluates each initiative under a set of sustainability criteria prior to selection. This evaluation prioritizes those projects that contribute to the conservation and protection of biodiversity. In the materialization of this strategy, it is worth noting the alliance of LATAM Group with CO2BIO, a project located in the Colombian Orinoco region spanning over 200 thousand hectares and seeking to protect the flooded savanna, one of the most threatened and underrepresented ecosystems in the country. This project has been promoted by Fundación Cataruben, with the support of the Natural Wealth Program of the United States Agency for International Development (USAID) and Panthera Colombia. Through conservation and rehabilitation actions, this initiative will capture 1 million tons of CO2 during the 2021–2023 period, and has the potential to capture up to 2.8 million additional tons by 2025. These projections are updated according to the progress on the certification of new phases. As part of the joint work on climate change management, during 2021, LATAM also developed the first phase of a collaboration with The Nature Conservancy (TNC) to plan conservation and reforestation actions in iconic ecosystems in the region. 1 TNC in Latin Amer- ica - Annual Report 2019. Available at: https://www.nature. org/es-us/sobre-tnc/ donde-trabajamos/ tnc-en-latinoamerica/ informe-anual-2019/ Colombian Orinoco region Commitment to the future 61 Integrated Report 2021How does LATAM offset its carbon footprint? What is the process? 1. By burning 2. The community is organized to protect an ecosystem from deforestation or to reforest degraded areas. fossil fuels, carbon dioxide is released into the atmosphere, which contributes to climate change. At present, there are no alternative fuels in aviation that can replace JET A1 massively. Working on collaborative conservation and offsetting projects in strategic ecosystems in South America. In the region, there are ecosystems with high environmental value, capacity to absorb large amounts of CO2, and which are the habitat of different species. These ecosystems are seriously threatened and collaborative work between communities, NGOs, and the private sector promotes their protection to prevent the release of CO2 into the atmosphere. IN 2021, THE WORK BEGAN WITH THE COLOMBIAN ORINOCO BASIN (CASANARE, VICHADA, ARAUCA, AND META) IN AN ALLIANCE WITH CO2BIO 1 million tons of carbon captured (initial range – 2021-2023) 4. Project-holder communities receive income for preservation and reforestation activities through the sale of carbon credits to companies seeking to offset their emissions and, as in the case of LATAM, also support the preservation of ecosystems in the region. 5. LATAM joins initiatives that meet its sustainability criteria and enable it to contribute with actions that promote environmental, social, and economic joint benefits for communities and help to make the importance of the ecosystems they protect visible. 3. An audit firm verifies the tons of CO2 that are no longer issued or are captured, and the project is certified under a carbon standard; for each ton of CO2 managed by the project, a carbon credit/ bond is issued. The mechanism was proposed by the Kyoto Protocol as a global way to fight climate change and had its expanded implementation in the Paris Agreement, which supported the operation of a voluntary carbon market. CO2BIO’S EXPERTISE IN THE REGION (2012-2020 RESULTS) Natural resource management in 209,500 ha Preservation of 30,064 ha of native forest and 63,328 ha of wetlands. 1,440,180 t CO2e that have been prevented from being emitted into the atmosphere 141 local owners benefited from economic contribution by the preservation of forests and wetlands WHY THE FLOODABLE SAVANNAS? They have high carbon capture capacity They help control erosion They regulate the nutrient cycle and are key to maintaining soil productivity Orinoquía Colombiana Commitment to the future 62 Integrated Report 2021 Fly Neutral 201-2 In addition to the alliance with major NGOs, associations, and authorities, LATAM developed the Fly Neutral program, which gives its corporate clients the opportunity to choose from a portfolio of high environmental value projects to offset the emissions generated in their air travel. As part of the proposal and commitment to conservation, LATAM Airlines matches the amount of tons offset by its corporate clients, through the 1+1 mechanism. In the first phase of the Fly Neutral program, the passengers of the corporate segment (LATAM Corporate) can find out the carbon footprint of their itinerary and compensate through a portfolio of projects that seek to stop deforestation in strategic areas, conserve biodiversity, and strengthen capacities in communities. In turn, LATAM cargo developed its carbon emissions calculator and established the structure that will enable it to collaborate with cargo clients in offsetting their shipments. EMISSIONS REDUCTION Collaborative approach LATAM joined as one of the pioneering airline groups of the Clean Flight program in Chile, promoted by the Civil Aeronautics Board and the Energy Sustainability Agency seeking, under a collaborative public-private approach, to improve the energy and environmental management of the air industry, identifying and implementing opportunities to reduce fuel consumption. Together with this, it will foster the use of cleaner technologies, such as sustainable aviation fuels. Selected projects In 2021, LATAM Airlines Colombia offset 334,144 tons of carbon dioxide by purchasing carbon credits through the CO2Bio conservation initiative in the Colombian Orinoco region and the Carmen del Darien REDD+, Mutata REDD+, ACAPA BMF REDD+, Bajo Calima, and Bahia Malaga projects, located in the departments of Choco, Antioquia, Narino, and Valle del Cauca. All projects selected by LATAM for emissions compensation ensure environmental, social and economic co-benefits for communities, such as in the case of Carmen del Darien REDD+, Mutata REDD+, which seek to protect forests in the Choco-Darien bioregion, considered of national and international importance due to the biodiversity they hold and for their ecosystem services. Commitment to the future 63 Integrated Report 2021generated is equivalent to a reduction in consumption of approximately one million gallons per year. In addition, in 2021, it proposed to upgrade its A320-family fleet with the Airbus Descent Profile Optimization (DPO) feature, a fuel- saving enhancement to the aircraft's flight management system (FMS) performance database. The group remained focused on improving ground and air operating procedures and fleet optimization and rejuvenation with the addition of new Airbus A320neo aircraft. These aircraft use more efficient engines, with 15% lower consumption, 8% lower operating cost, 50% lower emissions of nitrogen oxides (NOx), and lower acoustic impact than the previous version, A320, according to manufacturer data. LATAM Fuel Efficiency 201-2 LATAM has developed a number of actions that seek responsible fuel use. Initiatives focused on reducing consumption and operating efficiency to optimize its savings. In addition to fleet modernization, it has a fuel-efficient program, with more than 10 years of history, called LATAM Fuel Efficiency. From 2012 to 2021, the group increased aviation fuel efficiency by 5.3% through the program. In 2020, the results were impacted by some pandemic procedures, such as increased use of the auxiliary engine (APU) on land and use of air conditioning throughout the landing to renew the cabin air. In 2021, gross savings totaled 8,314,052 gallons (1,090 TJ of energy), equivalent to US$24.5 million. The work has a positive impact on reducing the carbon footprint and also on reducing costs. 302-4 In search of a more efficient technology and operation, in 2018, LATAM implemented a pilot application that allows continuous monitoring of their flight performance according to the initiatives. At the beginning of 2021, it was clear that the impact LATAM FUEL EFFICIENCY – RESULTS 2021 302- 4, 305-5 Avoided consumption of gallons of fuel, which is equivalent to 8,314,052 79,553 tons of GHG emissions million savedUS$24.5 SUSTAINABLE FUEL The use of sustainable aircraft fuels (SAF) and innovative new propulsion technologies are the main pillars for achieving a carbon neutral air industry by 2050. Along this line, LATAM's SAF strategy is focused on Brazil, Chile and Colombia, which have the greatest experience and potential for the development of biofuels and synthetic fuels, such as green hydrogen. Commitment to the future 64 Integrated Report 2021Carbon footprint Annually, the group carries out its GHG (greenhouse gases) inventory according to ISO 14,064 guidelines. In 2021, LATAM’s total carbon footprint reached slightly over 6,514,570 tons of CO2e, a 15% increase compared to 2020. The net carbon footprint increased 11%, translating into 6,138,957 tons of CO2e. The differences from the previous year are explained mainly by the restart of operations and the increase in coverage for the calculation of scope 3 in Brazil. 305-1 TOTAL CARBON XX FOOTPRINT (tCO2e) 772,847 2,863,991 954,973 69,576 363,735 1,477,570 LATAM Airlines Brazil Total: Snapshot Climate change 2019 2020 20212 Total emissions (tCO2e) Net emissions (tCO2e) Emissions intensity in air operations (kg Co2e and/100 RTK) 305-4 Emissions intensity in total operations (kg Co2e and/100 RTK) 305-4 Rational fuel use (reduction compared to IATA average)1 LATAM fuel efficiency (li- ters/100 RPK) Passenger operations Cargo operations 12,386,323 5,655,551 6,514,570 12,253,203 5,521,062 6,138,957 82.1 81.0 85.8 82.8 79.7 81.1 5.7% 32.6 3.0 21.7 7.2% 32.0 3.2 20.7 4.6% 33.8 3.4 20.1 More information: Greenhouse gases (page 164) Significant atmospheric emissions (page 164) LATAM Airlines Group LATAM Airlines Colombia LATAM Airlines Ecuador LATAM Airlines Peru LATAM cargo and its affiliates 6,514,570 tCO2e 1 Based on average consumption in 2020, according to IATA data, representing 80% of world air traffic. 2 Due to the effects of the pandemic, domestic operations increased significantly in 2021 compared to international operations, resulting in a higher intensity of emissions. With the stabilization across the operation, this indicator will gradually decrease. Commitment to the future 65 Integrated Report 2021Circular economy LATAM has determined to eliminate single-use plastics by 2023 and to be a zero-landfill waste group by 2027. To achieve these goals, and in order to boost the circular economy within its processes, in 2021, it developed a detailed evaluation of its waste management, including analysis from the materiality of the inputs it employs in its operation. Instead of a linear system (extraction >> production >> consumption) that ends with end-of-life discarding, it is working to ensure that the materials used in the operation are sustainable and that, after their use, rather than becoming waste, they are reintegrated into another production cycle as raw material for new products. LATAM carried out an evaluation of its waste management whose goal was, among others, to identify the materials that generate significant impacts on the environment in order to define actions focused on their disposal, such as single-use plastics, which are widely used in the aviation industry. This diagnostic process began in 2021 and focused on the areas with the highest generation of waste such as Airport, Maintenance, In-flight Service, and Cargo. The results of this evaluation will support the definition of strategies to achieve the goals that LATAM has set out in circular economics. Waste diagnosis A diagnosis of LATAM’s waste generation was developed in 2021 from an assessment of representative samples. The main waste-generating processes and main bases of the operation were taken and, extrapolating to the conditions of the pre-COVID operation (base year 2019), it was identified that LATAM generated about 11 thousand tons of solid waste. According to the results of the diagnosis, plastic generation is one of the critical elements in In-flight Service, and since this macroprocess has the greatest weight in the group's waste matrix, in line with the goals defined by LATAM, the single-use plastic disposal will be prioritized by 2022, which will allow us to reach 2023 with its full elimination. The life cycle assessment that began in 2021 will be essential to feed the group's circular economy strategy, and in 2022, LATAM will continue to strengthen this process with the implementation of a waste follow-up and monitoring system. WASTE BY MACROPROCESS (%) 5.6 18.7 24.8 50.9 In-flight service Cargo Maintenance Airport IN-FLIGHT SERVICE – WASTE TYPOLOGY (t) Plastic Wood Common waste Glass Paper and cardboard Textiles Scrap (unrecoverable and unserviceable materials or components) Hazardous waste Bio-contaminated Electronics Organic matter 0 0 0 0 1 , 0 0 0 2 , 0 0 0 3 , 0 0 0 4 , 0 0 0 5 , Commitment to the future 66 Integrated Report 2021WASTE MANAGEMENT Rethinking processes In 2021, LATAM defined a structure focused on migrating to the circular economy model in which, in addition to moving forward with process evaluation, it considers a line of action to rethink and redesign processes and products that guarantee a more sustainable experience for passengers. In this development, one of the most significant results was the redesign of LATAM's amenity kits and the gradual change of materials. The amenity kits, which are initially available on the Santiago de Chile - Madrid and Sao Paulo - Miami routes, contain local items that generate less impact on the planet: bamboo toothbrushes with caps made of sugar cane, reusable eye masks and socks, and vegan and cruelty-free products made by Brazilian craftswomen. In addition, with the aim of showcasing the artistic and cultural wealth of our region, the kits are delivered in a reusable and collectable bag designed by South American artists. Gradually, they will be implemented on other routes. Paperless LATAM continues to advance in the implementation of digital processes that allow it to be more efficient, provide better service, and reduce the impact on the environment. This is the case with the elimination of magazines on its aircraft where, through digitization, in addition to avoiding the consumption of paper as a resource and the generation of waste, it further significantly contributes to reduce emissions as a result of lower fuel consumption. In-flight service In order to optimize the amount of food that is loaded on each flight and reduce waste linked to the In-flight Service, LATAM has an automated food ordering system that allows catering service providers to load only the amount of food required, based on confirmed booking passengers. This service is implemented on international flights. In addition, in coordination with catering providers, measures are implemented to take advantage of some elements on board. Based on their characteristics, those that are not opened or delivered may be loaded on another flight. Aeronautical material In the reconfiguration and modernization of LATAM's fleet, aeronautical materials and elements are removed: seats, galleys, floor mats, among others. To ensure their proper management and in accordance with current regulations, LATAM takes advantage of them so that they can be reused in the operation or in other companies. For example, in the case of seats, a campaign was triggered to enable employees to purchase and use them in their homes. Last, for materials that cannot be reused, agreements were made with recycling providers to ensure that waste from these materials does not reach landfills. Waste and the air industry Information on the volumes of waste generated in the air industry is limited. According to an IATA study, conducted at Heathrow Airport in London, England, in 2012 and 2013 a typical passenger generated 1.43 kilos of cabin garbage per flight. This is an average that includes short- and long-haul international flights from different airlines. In the industry, they recognize the importance of reducing, recycling, and reusing cabin waste from their aircraft. However, actions to control pollution are subject to each country, which in turn have sanitary measures that inhibit them with the aim to protect local agriculture, in many cases requiring waste to be incinerated or buried instead of reused or recycled. According to information published by IATA, cabin waste could double in the next 10 years, should the industry continue without intelligent regulation. That is why it is important to simplify and harmonize cabin waste management and to promote technical solutions that reduce industry costs and contribute to the circular economy. IATA is sharing best practices with its airlines, catering companies, airports, and regulators, and commissioned a study proposing the adoption of regulation that allows waste to be reused and recycled while maintaining animal health controls. Commitment to the future 67 Integrated Report 2021Ground Operations • Pallet Reutilization: In LATAM Cargo, initiatives are gradually being incorporated to reuse pallets in good condition, repair those that are damaged, and reuse those in poor condition, turning them into furniture for the operations lounge or signage for cargo warehouses. • Composting: At Chile's maintenance base, almost 40 tons of organic material were composted in a project started in 2021. • In-Facility Recycling: In the hangars, cargo warehouses, and LATAM offices, recycling initiatives are implemented to reduce the amount of waste being carried to landfills and from which 862.9 tons of waste have been recycled in 2021. Uniform recycling An initiative that was born in Peru in 2018 and allows LATAM to take over and give a second life to the discarded uniforms. This program not only minimizes the impact on the environment with the conversion of textile waste, but also creates the possibility of building a more sustainable community through partnerships, employment generation, and the encouragement of responsible consumption. LATAM Airlines Peru is allied to SISAN craftswomen, enterprising women who use textiles as an input to produce handcrafts that highlight the iconographies of the Pachacamac sanctuary. Its products are sold at the Pachacamac Museum, as well as through the LATAM Pass miles redemption catalog. The proven success of this initiative enabled Ayacucho to expand in the Peruvian sierra in 2021, and work is being done on the implementation and development of pilot projects in Brazil, Chile, Ecuador, and Colombia. To achieve efficient and sustainable development that impacts the economy and empowerment of women, revaluing local culture, this program includes training in soft skills such as leadership and teamwork; self-esteem and economic independence and family planning; and in business management with the following topics: exploration of business ideas, the foundations of a business and basic finances, introduction to marketing, and/or virtuality and marketing. In Peru, there are already more than 30 skilled craftswomen. Between 2018 and 2019, LATAM donated 8,013 garments, equivalent to 1.3 tons of fabric, achieving a reduction of 26 tons of CO2 emissions to the environment. For 2020 and 2021, the donation of approximately 3,000 garments (0.5 tons of fabric) involved a reduction of 9 tons of CO2 emissions to the environment. The SISAN craftswomen at the Pachacamac Museum. Commitment to the future 68 Integrated Report 2021Pilot in Colombia In partnership with the World Women's Corporation, the “Colombia, an Ancestral Journey” collection was launched, using the textile waste of the uniforms of the crew and agents to manufacture new products required by different areas across the group. The pieces have artisan participations from communities representing the country: Emberas, Kunas, Wayuu and Zenus. Recycle Your Trip Through the Recycle Your Trip program, LATAM mobilizes passengers and catering providers toward recycling waste generated on board by passengers on domestic flights. The process begins when the crew collect the waste in the LATAM trolley and segregate it between aluminum (cans), glass (spirits and juices), and plastics (bottles and cups). Once the aircraft has landed, the material is separated and delivered to the catering provider, who sees that it is transferred to different recycling centers. LATAM performance Total waste generated in 2021, according to on-site generation including hazardous liquid waste, was 28.8 thousand tons, an increase of 338 per cent over the previous year. About 3.9% of that total was sent for recycling. This increase is mainly due to the reactivation of operations. Launched in Chile in 2019, the program was suspended in 2020 because of the pandemic and resumed in May 2021. Since then, it has progressively spread to other subsidiaries, reaching Ecuador in September. Implementation in Peru, Colombia, and Brazil is planned for the first half of 2022 because in-flight services are not yet permitted as a result of the pandemic. Destination of waste (t) 2021 306-3, 306-4 and 306-5 Waste not intended for disposal Preparation for reuse Recycling Other recovery operations Hazardous Non-hazardous 298.78 0.15 88.54 210.09 823.24 0 774.43 48.81 Waste intended for disposal 26,539.63 1,141.74 Incineration (with energy recovery) Incineration (no energy recovery) Transfer to landfill Other disposal operations 37.66 46.29 515.50 25,940.17 0 0 1,141.74 0 WASTE 94% 92% 93% 72% 27% 6% 8% 7% t 7 4 0 , 1 4 t 1 5 3 , 3 3 t 3 0 8 , 8 2 t 3 8 5 , 6 2018 2019 2020 2021 Hazardous Non-hazardous Commitment to the future 69 Integrated Report 2021 Environmental management and eco-efficiency To fulfill the commitments made as part of its sustainability strategy, and within the framework of environmental management, LATAM Airlines Group S.A. implemented a transparent and auditable system that allows it to keep environmental variables in mind in all the processes of the group, and that has environmental certification (IEnvA) across the operation. IEnvA is IATA's environmental assessment program for the aviation sector and is designed to independently assess and improve the environmental management of an airline. Membership is voluntary and involves two stages: the first one includes the environmental management system, the commitment of senior management, and the mapping of relevant legal- environmental requirements and of environmental aspects and impacts of activities; the second, more advanced stage includes the definition of goals, audits, operating programs and controls, and the training of teams. Since 2020, three operations had already been certified: LATAM cargo in Miami, United States under ISO 14001/2015, LATAM Airlines Colombia, and Chile, under IEnvA stage 1 and 2, respectively. During 2021, certification was achieved for the group’s 9 carriers, both in cargo and in passengers, under stage 1, and IEnvA stage 2 certification is expected to be achieved across the company during 2022. As part of the evolution of its environmental management system, LATAM renewed its Safety, Quality, and Environment Policy to more specifically include the guidelines linked to environmental management and the control of the organization's environmental impacts. More information: Sustainability policy Commitment to the future 70 Integrated Report 2021Eco-Efficiency LATAM seeks to reduce the environmental impacts of its operation through eco-efficiency measures in water and energy consumption. WATER WITHDRAWAL (m3)1 303-3 20212 98,846 2020 82,480 2019 2018 216,626 220,833 1 Supply is obtained from the munici- pal networks of the various countries of operation, without LATAM’s direct col- lection of water. The indicator covers 100% of the operation. 2 100% corresponds to fresh water and 97% comes from regions that may become water-stressed. ELECTRICAL ENERGY CONSUMPTION (MWh) AND ENERGY INTENSITY (MWh/FTE) 2.2 1.4 1.4 1.2 8 7 1 , 0 6 1 4 6 , 0 5 9 2 4 , 3 6 9 2 3 , 9 3 2018 2019 2020 2021 Energy intensity FTE: full-time employee. ELECTRIC ENERGY CONSUMPTION (%)– 2021 22 78 Renewable sources Non-renewable sources Total: 63,429 MWh Snapshot Eco-Efficiency Energy 302-1, 302-3 2019 2020 2021 Energy consumption – ground and air operations (TJ) 167,316 77,076 89,112 Energy intensity (MWh/100 RTK)1 0.4 0.6 Water consumption (m3) Waste disposal (t) 216,626 82,480 41,047 6,583 0.8 98,846 28,803 Environmental Management System (EMS) Units with EMS/Total units Units with certified EMS/total units 91% 3% 91% 3% 95% 90% 1 Considering internal and external consumption. Internal energy consumption (TJ) 302-1 Non-renewable energy 2018 2019 2020 2021 Jet Fuel Gasoline Diesel Liquefied petro- leum gas Natural gas Electricity1 Total non-re- newable energy Renewable energy Ethanol Electricity1 Total renewable energy 157,940.61 166,786.63 76,826.10 88,734.84 6.90 178.10 7.60 0.41 106.12 9.64 118.63 8.35 0.42 55.19 3.97 97.74 6.28 0.29 35.96 24.32 118.5 5.41 0.11 50.47 158,239.74 166,978.86 76,970.35 88,933.7 0.25 76.18 76.44 20.65 161.44 0.20 105.62 0.56 177.87 182.09 105.83 178.43 TOTAL 158,316.17 167,316.18 77,076.18 89,112.08 1 The energy consumed comes from different sources. The share per- centage of each source varies year over year, based on the power grid of each country. The values reported (years 2018, 2019, and 2020) differ from the information in the Integrated Report 2020 due to a correction in the conversion factor. Commitment to the future 71 Integrated Report 2021Employees In this chapter 73 Cultural transformation Employees 72 Integrated Report 2021Cultural transformation Discussions on topics such as leadership, sustainability, diversity and inclusion, among others, were added to the regular agenda of dialogs. The meetings, led by the Vice President of Human Resources and leaders from different areas of the group, were open to all stakeholders, leading to a more complete view of how these subjects are perceived and how LATAM is expected to address them. On parallel, the internal leadership index was adjusted with the inclusion of variables to measure group progress toward its objectives of simplicity and transparency, as well as compliance with expected timely feedback practices, team meetings, 1 to 1 meetings, and a culture of recognition of good actions, among others. In addition, there is a measurement from the team itself toward their superiors, which makes it possible to extract a 360° view of the leader's performance, which has the fundamental role of driving overall development. ONGOING DIALOG LATAM News: Weekly meeting between leaders and teams Expanded: Periodic meetings conducted by the Vice Presidents 1:1 Accompaniment: specific conversations between the employee and their leader to support the individual development process Growth and development Throughout the year, more than 665 thousand hours of training were carried out, divided into more than one thousand updated and 500 new courses, representing a total investment of US$11.6 million. Average training hours per employee reached 36.3 hours, an increase of 21% compared to 2020. This type of initiative opens up spaces for teams’ professional growth. In 2021, more than 2 thousand individuals were promoted, 3.2 thousand changed responsibilities, and more than 50% of the positions generated in the year were occupied by internal personnel. The turnover rate was 22.5%, down from 53.7% in 2020, when the largest adjustments in the operation occurred in response to the global crisis resulting from the pandemic. Employees 73 Faced with the 2021 change scenario, the group sought to strengthen employee ties with the aim of ensuring that everyone shares the same outlook towards an increasingly better, simpler, and more transparent LATAM. As part of this process, internal dialog forums were expanded and work on cultural transformation intensified. Integrated Report 20212021 13.1 35.0 47.4 12.6 52.8 9.4 33.8 40.3 36.3 Training (hr/employee) 404-1 By professional category Management Maintenance Operations Command crew Cabin crew Sales By gender Men Women Total More than 85% of the employees participated in one or more training opportunities in 2021. 230.1 LATAM GROUP AND AFFILIATES TURNOVER RATE (%) 401-1 Argentina Brazil Chile 20.4 23.9 Colombia 7.4 Ecuador Peru 12.4 United States 31.9 Other countries 19.1 LATAM group 22.5 58.3 Care for employees LATAM has developed more than 7 thousand specific actions that ensure the well-being of employees and even with special benefits, such as loans, guidance in cases of serious illness, family problems, disasters, and accidents of a child, among others. ORGANIZATIONAL HEALTH In 2021, LATAM had its best Organizational Health Index (OHI) since 2014, when it began using that tool. The result of the year rose by two points to 77. The accrued growth over the last five years was 14 points. In addition to being among the 25% best results of all the companies that conduct the survey (first quartile), as in other years, the group stood out particularly in topics such as Health and Commitment, External Orientation, and Leadership & Management. A total of 25,321 people voluntarily participated in the survey, which corresponds to 77% of the total allocation in September, when the survey was conducted. Internal perception of the employees believe that LATAM is doing things better than before. 60% 70% Around identify that progress is being made towards being a fairer, more empathic, transparent, and simple company with employees and clients in mind. More information: Hirings and turnover (page 165) Organizational Health Index (page 165) Employees 74 Integrated Report 2021Team profile More than 29,000 employees of 44 nationalities make up the staff of LATAM Airlines Group, operating in more than 18 countries, over 137 airports, and communicating in three languages (Spanish, Portuguese, and English). This diversity generates an environment where different views stimulate initiative and innovation. 102-7 In more than 44 18 nationalities countries Languages: Spanish, Portuguese, English LATAM group Diversity Commitments • For LATAM, no gender is predominant over another, so the company will work actively to ensure that the gender distribution of the group’s employees is 60% - 40% by 2030 (excluding those areas where applicants have been mostly of one gender). • Work will be done to get persons with disabilities (PWD) to represent at least 5% of workers in the group by 2030 (excluding populations that by regulation do not allow PWD and where there have been no PWD applicants). • The group is committed to enhancing • Active efforts will be made for diversity among professionals. gender distribution (such as through agreements with study centers). GENDER DIVERSITY (%) Total employees 39 61 Management level1 31 69 Board 11 Women Men 89 1 Management level: Positions of assistant manager, manager, se- nior manager, director, and vice president. LATAM EMPLOYEES 11 23 51 15 Operations Support Pilots and co-pilots Other crew members Total: 29,114 Female presence In all management positions (% of total management positions) Managers and assistant managers Vice presidents and CEO In revenue-generating positions (Sales managers and assistant managers) Salary comparison women/men1 Board members2 Top management: CEO, vice presi- dents, directors, and senior mana- gement Managers and assistant managers (considering financial incentives as well as the base salary) Managers and assistant managers (only base salary) Middle management (bosses and analysis) and other employees 31% 30% 1% 3% 1.0 0.90 0.98 0.95 0.91 1 The calculation uses average salaries for women/average salaries 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. Employees 75 Integrated Report 2021Occupational health and safety 403-7 For LATAM Airlines Group, occupational health and safety management is a process of ongoing improvement, which considers stages of identification, prevention and mitigation of risks in the various environments and operations, internal performance monitoring, and identification of good practices. Actions taken in 2021 to ensure a safe work environment include: • Occupational safety work plan: focused on inspections of critical hazards, such as work at height, confined spaces, or mobile equipment; • Inspection Plan: implemented in Brazil for personal protective equipment and lifelines for maintenance activities; • Work safety plan in the cargo network: more than 20 actions focused on four pillars: infrastructure, procedures, culture, and risk management; • Safety Practice Index (SPI): implemented for cargo operations at the Santiago and Miami airports; and • Management Dashboards: an accident-free day dashboard and a proactive occupational safety indicator panel is implemented in Cargo. Performance on the monitored indicators was positive, maintaining good results in 2020. The API (Action Plan Index), which manages the effectiveness of potential risk mitigation plans (all identified and different severity levels) remained stable at 94%, and the injury rate was 0.48. Snapshot People management Total employees Turnover rate1 Average hours of training Internal movements Middle management (heads and analysts) Executives OHI survey Result Quartile 2019 41,729 13.7% 37.1 74% 91% 74 1 2020 28.396 53.7% 30.9 84% 91% 75 1 2021 29.114 2.5% 36.3% NA NA 77 1 Occupational health and safety 403-9 Work-related injuries (total | rate)2 Lost days (total | rate)3 Deaths (total | rate)4 High-consequence related injuries (total | rate)5 Recordable work-related injuries (total | rate)6 310| 0.74 148.5| 0.42 134.5| 0.48 5,232| 12.5 1,943| 5.47 1,505| 5.32 0| 0 NA NA 0| 0 3| 0.01 0| 0 0| 0 145.5| 0.41 134.5| 0.48 NA: information not available. 1 Employees who left the group (voluntarily, by dismissal, retirement, or death in service) during the year/Total employees by December 31. 2 Work injuries with interruption of work. Note: Accidents related to some critical risk and high-im- pact events (accidents resulting in over 100 days lost) represent 1.5 in the calculation. Rate calcu- lation formula: total injuries with work interruptions/average no. of employees x 100. 3 Includes work interruptions related to occupational diseases, accidents, or deaths. The days lost are computed in accordance with the local legislation in each country. 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. Rate calculation formula: total lost days/average no. of employees x 100. 4 Includes road accidents in cases where transportation is carried out by LATAM. 5 Injury resulting in death or injury such that the worker cannot fully recover the state of health from before the accident within 6 months. The rate calculation uses the formula: Injuries/Average no. of employees X 100. This indicator began to be monitored in that way in 2020. 6 Injury, illness, or work-related sickness with some of the following results: days of work leave, labor restriction or transfer to other positions, medical treatment beyond first aid; or serious injury or illness diagnosed by a doctor or other health care professional to those same results. The rate calculation uses the formula: Injuries/Average no. of employees X 100. More information: Team Profile (page 165) Diversity (page 166) Occupational Safety (page 166) Employees 76 Integrated Report 2021Clients In this chapter 78 Close, digital, and flexible Clients 77 Integrated Report 2021Close, digital, and flexible The client is at the center of LATAM's work, and the group works to provide the most options to suit their needs, such as different kinds of fares and services that can be purchased as a complement. The commitment to deliver the best experience at all stages of interaction – purchase, airport, after-sales, and on board – also involves the use of technology. As a result of a digital transformation initiated by LATAM three years ago, clients can manage the main services with just one click. In 2021, the group reviewed all instances related to the customer experience searching for opportunities to apply new technologies that provide agility, facilitate access, and lead to greater satisfaction, which was achieved through collaborative work between different areas of the business. For LATAM, technology is part of the way of working, the business, and its constant transformations. SOME DIGITAL SOLUTIONS • LATAM App: Flight information, date change, seat selection, use of augmented reality to verify that the carry-on baggage meets the boarding requirements • Automatic check-in (for domestic flights) and digital self- check-in at kiosks or via the App • Self bag drop (available at 20 airports in eight countries) and digital payment in case of excess baggage • Wi-Fi connectivity: Available on domestic flights in Brazil (narrow body fleet) • LATAM Play: LATAM's in-flight entertainment platform was expanded in 2021 through an exclusive agreement with HBO Max to offer films and series to passengers Digital tools halved the rate of contact center calls per passenger. The early check-in process (automatic or kiosk) reduced assisted check-in by 36% throughout the year. In the last quarter of 2021, only 10% of clients checked in at the physical counter, as 90% managed to receive their boarding pass automatically. Clients 78 Integrated Report 2021 LATAM Wallet LATAM Wallet is an electronic wallet that provides more proximity and transparency to the processing of refunds or ticket exchanges because it allows clients to maintain balances of money to be used with the airline; in addition, it provides the ability to serve clients who do not have electronic means of payment through digital platforms. Data Intelligence LATAM applies advanced analytics and machine learning tools to gain insight into its operation and clients to generate benefits and improvements in both the user experience and daily operational processes. Fraud prevention, aircraft fueling optimization and flight experience customization are some of the improvements that can be achieved. As part of its data management policy, LATAM adheres to the strictest regulations such as the European or Brazilian one, complying with the various regulations known as the General Data Protection Regulation (GDPR). Custom campaigns LATAM also applies technologies in digital marketing to generate customized campaigns using machine learning models with important results, such as: The main technological risks, security incidents, and the progress of the strategic cybersecurity plan are periodically presented to the Board and the Directors’ Committee by the Group's Chief Information Officer (CIO), Chief Technology Officer (CTO), and Chief Information Security Officer (CISO). Senior management continuously supports the cybersecurity program by facilitating funding and the appropriate organizational structure for its compliance and implementation. As in previous years, there were no cases of consumer data violations in 2021. • Reduced digital advertising costs by USD$2.5 million • USD$1.5 million increase in revenue per campaign • Reduced campaign creation time from 1 week to a matter of hours From the data center to the cloud Throughout the year, the group moved forward with the transfer of applications to the cloud, a project that began in 2017 and is expected to be completed in 2023. The goal is to simplify the ecosystem of technology platforms and consolidate applications for a much simpler and more robust infrastructure. LATAM Airlines is the region's first Google Cloud partner, enabling it to work with service startups, support local economies differently, and better respond to services that operate from those platforms. In addition, migration to the cloud reduces greenhouse gas emissions. REAL TIME INFORMATION Each crew has a smartphone that allows them to perform from technical handling to understanding who the passenger is in-flight, trying to move toward customizing the travel experience. New alliances LATAM cargo has experienced the same reality, which implemented in the international business an online portal that allows clients to self-manage their cargo in a simple and agile way and have full visibility of the entire logistic process of their shipment. It is estimated that, in 2022, it will be enabled for domestic markets. In this context, the group also formed alliances with two marketplaces: Webcargo and cargo.one, becoming the region's first air cargo carrier to decentralize its distribution channels. Thus, starting in the second quarter of 2022, it will be possible to book on LATAM cargo to and within South America from Europe and North America instantly with a few clicks on cargo.one. It is all about offering clients more alternatives so they can schedule their shipments through LATAM cargo in the way they feel most comfortable, diversifying distribution channels and offering the best direct booking options. Clients 79 Integrated Report 2021Customer service Pandemic constraints resulted in an extra challenge in providing information to clients. To meet the growing demand for customer services, LATAM quickly implemented a new support tool that simplifies access to information when answering calls. With clients in mind, new channels were also launched: • WhatsApp: Provides up-to-date flight information and even when to board. • Website: A Restrictions Information section was created, which gathers the updated rules for flying in each country where the group operates. LATAM Pass The group operates the LATAM Pass Frequent Flyer program, with 39 million members. Accrued points can be exchanged for airplane tickets or other services, which vary by category, such as cabin upgrades and baggage allowance. 102-2 LATAM Corporate Partner At the end of 2021, LATAM launched the LATAM Corporate Partner program, focused on corporate customers. Each company enrolled in the program is assigned one of four categories – Classic, Superior, Plus, and Elite – each of which considers different benefit packages ranging from the economic ones, such as discounts or the accumulation of miles on business trips. To facilities like prioritization at the airport. One cabin, different sections By moving forward with the cabin transformation project, which will reach the entire narrow body fleet by 2023 and the wide body fleet by 2025, LATAM responds to the needs and expectations of different customer segments. The retrofits aim to improve the experience of passengers who require greater comfort, particularly on long-haul flights, and to offer a product with competitive fares. In 2021, the project allowed the launch of the premium economy domestic fare: the front row seats have more room between them, and passengers have exclusive areas to store carry-on baggage, larger individual screens, and preferential boarding. The back of the plane is destined to optimize the cost-benefit ratio for passengers seeking lower prices. By the end of 2021, the new cabins were available on 117 aircraft and an additional 50 aircraft are expected by 2022. Clients 80 Integrated Report 2021years and improvements in service, with the implementation of the new cabin configurations, the new Premium Economy cabin on domestic flights and, in 2021, the return of the in-flight service on flights in Chile and Ecuador. Clients also evaluated LATAM on issues of safety and the teams’ friendliness. The NPS of the digital experience reached 46 points. The NPS indicator for LATAM Cargo and its cargo subsidiaries was 30 points, up 12 points from 2020. This is mainly explained by clients' assessment of LATAM's role in fulfilling and maintaining operational continuity despite the difficulties of the health crisis. On-time performance LATAM maintained its commitment to flight punctuality and in 2021 it obtained 92% DEP15 punctuality (industry benchmark that analyzes flights departing up to 15 minutes after the scheduled time). With this result, 2 percentage points above its 2020 results, LATAM was recognized as the world's most punctual airline group by OAG, a global benchmark in information and analytics for the airline industry. Satisfaction Systematically, LATAM measures clients’ levels of perception about the operation and service through the Net Promoter Score (NPS), which enables it to understand strengths, weaknesses, and generate improvements in its processes with clients in mind. Passenger operation has specific measurements related to Digital Experience, Flight Experience and Contact Center. The 2021 results maintained the upward trend of recent years and reached 49 points, 9 more than in 2020 and a cumulative increase of 16 points since 2019. 3% of the passengers answered the survey. The growth in NPS is due to the increase in punctuality rates in recent Snapshot Clients 2019 2020 2021 LATAM PASS (Enrolled - Millions) 30 38 39 Technology Self bag drop Easy check-in (automatic or digital self-check-in) On Time performance1 OTP DEP0 OTP DEP15 OTP ARR15 OTP ARR15 – domestic flights OTP ARR15 – international flights NA 79.4% NA 88% 87% 88% 85% Net Promoter Score (NPS) – -100 to +100 scale Passenger Cargo 33 32 35% 87% NA 90% 90% 90% 85% 40 18 80% 90% 79% 92% 91% 92% 86% 49 30 NA: information not available. 1 Percentage of flights departing exactly at the scheduled time (DEP0) ou with a delay of up to 15 minutes (DEP15); and percentage of flights arriving with a delay up to 15 minutes (ARR15). Clients 81 Integrated Report 2021Suppliers In this chapter 83 Supply chain Suppliers 82 Integrated Report 2021Supply chain 8,052Suppliers make up the LATAM supply chain. It is important to note that the main suppliers are partners in LATAM's strategy to be more sustainable and implement measures for recycling and purchasing compostable products. Supplier management follows guidelines on quality and regularity of supply, competitive prices, legal compliance, and good social and environmental practices. Contracting is governed by the Corporate Procurement Policy, which is aligned with the group's Anti-Corruption Policy and establishes financial, social, and environmental requirements for partners. In addition, all contracts have a specific clause requiring the reporting of environmental incidents or damage. More than 8 thousand suppliers make up the network of partners of the LATAM group, with a total volume of acquisitions of around US$4.60 billion in 2021. Most of them are concentrated in Brazil (44%) and Chile (15%). The group maintains a close relationship with its suppliers, with transparency, commitment, and the search for joint evolution as the essential pillars. Active communication with them was essential to be able to circumvent the onslaught of the pandemic. The year 2021 was marked by the operational recovery of the markets, where the collaboration that has been carried out with suppliers to anticipate demand and deliver to passengers took the spotlight. Communication with suppliers has also been very important to maintain pre-pandemic service levels and ensure the good business relationship while LATAM develops its financial reorganization plan. Suppliers 83 Integrated Report 2021Chain Profile 102-9 GEOGRAPHIC DISTRIBUTION1 (%) PURCHASE VOLUMES (%) 9 15 22 10 44 28 20 16 1 2 4 15 5 9 Brazil Chile United States Other countries in America Other continents Total: 8,052 suppliers 1 Based on the location of the company*s headquarters. Fuel Engines, fleet, financiers and LATAM Travel Technical purchases Other non-technical purchases Technology and systems Ground handling2 Infrastructure Supply and catering Others Total: US$ 4.61 billion 2 Ground handling services for aircrafts, passengers, and cargo. TECHNICAL CATEGORIES (DIRECTLY RELATED TO THE OPERATION) • Fuels • Fleet and engines • Engineering services, consumables and rotables • PMA (part manufacturer approval): wheels, brakes, tires, and avionics • In-flight entertainment • Seats, materials, and finishes • Sales • Major components, e.g. landing trains; repair, exchange, and rental of some components offered in the pool system by suppliers; and non-pool purchases (tools and other types of components) NON-TECHNICAL CATEGORIES • Airport suppliers • Management • Supply and catering • Infrastructure; hotels and uniforms • Marketing • Professional Services • Technology and systems • Transportation 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, CFM International, General Electric Commercial Aviation Services Ltd., General Electric Celma, General Electric Engines Service and Honeywell (engines and auxiliary power units, APU); Recaro, Thompson Aero Seating (seats); Honeywell and Rockwell Collins (avionics and APU); Air France/ KLM, Lufthansa Technik, and Etihad (maintenance, repair, and operations components- MRO); Panasonic, Intelsat, and Safran Innovation (in- flight entertainment); Safran Landing Systems and AAR Corporation (landing trains and brakes); UTC Aerospace and Nordam (engine mount). Fuel suppliers are Air BP Copec, Axion, Petrobras, Petroperu, Repsol, Terpel, World Fuel Services and YPF, among others. Integrated Report 2021 Suppliers 84 At the same time, the group is exploring new recycling initiatives that contribute to meeting the target of zero landfill waste by 2027. This is the case of a project that seeks to reuse materials and/or items that are no longer used after the cabin renovation. As an example, we should mention the reutilization of seats in the fleet to build LATAM furniture, their donation for educational projects and/or for the benefit of communities, or their reintegration into the production chain, turning them into resources instead of waste. And, in order to continuously improve management with suppliers, the group is developing a strategy to learn firsthand what shortcomings they may have, considering as a first step the implementation of a survey in the first quarter of 2022. Joint development Thanks to the joint work with suppliers, the group has been able to make progress in sustainability, as happened with the Recycle Your Trip in Chile and Ecuador. In the case of Chile, the elements segregated on board finish their recycling process in the units of the catering provider, who removes the waste and deposits it at the clean points available in their facilities. Likewise, in Ecuador, it is the cleaning staff who collect the already segregated waste and transfer it to the airport recycling point. This is how the joint work between the group and the partners has allowed not only the fulfillment of this program, but has also taught them how to segregate the elements so that they can indeed be recycled–achievements that, without doubt, are the result of a shared commitment to sustainability. Moreover, in 2021, progress was made on the design and development of the new materials to be used on board – in order to meet the goal of eliminating single-use plastics by the end of 2023 – by projecting their implementation during 2022. The measures worked on aim for the removal of bags from rest elements, glasses, cutlery, and lids, among other materials. Snapshot Supply chain Total LATAM suppliers 102-10 Most representative suppliers1 Share of the supplier base Share in acquisitions volume Identification of potential risks 2019 15,341 13% 69% 2020 9,013 11% 89% 2021 8,052 11% 91% % of categories subjected to sustainability risk analysis Preventive analyses carried out in the international database systems (% of the total base) Suppliers considered high risk in sustainability as- pects (% of those analyzed) Detailed evaluations based on the system alerts (% of the high-risk group) Monitoring and management Audits performed Suppliers with agreed mitigation plans (% of the audited group) Action plans Contracts terminated due to noncompliance 100% 100% 100% 9,427 (61%) 6,680 (74%) 5,370 (67%) 110 (1.1%) 178 (3%) 148 (3%) 110 (100%) 178 (100%) 148 (100%) 249 122 270 192 (77%) 112 (92%) 280 (100%) 1,616 0 717 0 1,056 0 1 Contracts worth over US$1 million, suppliers interacting with government agencies on behalf of LATAM or supplying the operation with essential or difficult to replace elements. Suppliers 85 Integrated Report 2021About the Report In this chapter 87 Methodology and materiality 89 GRI content index 95 Glossary 96 External assurance About the Report 86 Integrated Report 2021Methodology and materiality The LATAM Integrated Report 2021 covers all LATAM companies, and concerns the period from January 1 to December 31, 2021. The document has been prepared in accordance with the Global Reporting Initiative (GRI) Standards Essential Option, following the Integrated Reporting Principles of the International Integrated Reporting Council (IIRC) and the legal and accounting standards applicable to annual financial performance reporting. The contents and indicators linked to the GRI standards were subjected to external verification by Deloitte (see page 96). PwC audited the Consolidated Financial Statements of LATAM and its affiliates (see page 169), which include the consolidated financial statements as at December 31, 2020 and 2021, available starting on page 168. 102-56 The content selection took into account the coverage of the topics considered to be the most relevant to the group and its stakeholders, based on the definition of materiality process concluded in 2018. This process analyzed the main economic, environmental, and social impacts of the business and the expectations of the main LATAM stakeholders. About 2,400 responses from employees, clients, and suppliers to an online survey, and the sustainability issues that are part of the investor and shareholder policies and publications of the group1, various regulatory authorities2, air industry representatives3, civil society organizations4, and sustainability benchmarks5 were taken into account. Press news on LATAM in 2017 was also analyzed. 102-40, 102-42, 102-43, 102-46 Next, top management prioritized the most relevant issues considering the degree of relevance and impact. The consolidated vision of external audiences and group leaders was validated by the CEO. The list of topics is revalidated annually as part of the management and planning processes. A new materiality definition process is planned for 2022 and will involve further consultations with stakeholders. Material topics Groups that prioritized topic 102-44 Health and safety in the air and on the ground Government, customers, employees and suppliers Ethics and anti-corruption Press, customers, employees, suppliers and investors On-time performance Customers, employees and suppliers Economic and financial sustainability Press, customers, employees, suppliers and investors Developing employees Customers, employees and suppliers Mitigating climate change Customers, employees and suppliers Customer focus Destination network Relations with authorities Press, customers, employees and suppliers Press, customers, employees and suppliers Civil society organizations, industry associations, clients, employees, suppliers, and investors Sustainable tourism Customers and employees 1 Main investors and shareholders of the group when the process was carried out: Banco de Chile (Citi in the United States); JP Morgan; Deutsche Bank; Santander; Larraín Vial; Raymond James; and BTG Pactual. 2 JAC Chile (Civil Aeronautics Board); Nuevo Pudahuel - Chile; Easter Island Municipality- Chile; ANAC Argentina (Administración Nacional de Aviación Civil); ANAC Brasil (Agência Nacional de Aviação Civil); SAC Brasil (Secretaria Nacional de Aviação Civil); Infraero Brasil; Aerocivil Colombia (Aeronautica Civil - Administrative Unit). 3 Six competitors and ten industry associations. 4 Organizations with which LATAM maintains relations: 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. 5 SASB (Sustainability Accounting Standards Board) – Airlines Materiality Map; GRI (Global Reporting Initiative) – Sustainability Topics for Sectors: What do stakeholders want to know? – Air Transport – Airlines; and DJSI Company Benchmark Report. About the Report 87 Integrated Report 2021Material topic 102-47 Limits 103-1 Where does the impact occur? Health and safety in the air and on the ground The impact is seen inside the organization, mainly affecting the aircraft, airports, and other operational facilities. Organization involvement 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. Ethics and anti-corruption On-time performance Economic and financial sustainability Developing employees Mitigating climate change Customer focus Destination network Relations with authorities 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. The impact is on LATAM’s main activity; that is, the flights it operates, affecting passenger perceptions and the business as a whole. LATAM can manage a significant portion of the impacts, such as delays due to maintenance, air crew management, and others. Some impacts are external to the organization, such as weather conditions, air traffic limitations and congestion at airports. 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. The impact is throughout LATAM’’s operations. Human resources management is directly linked with corporate performance. LATAM can adjust or restructure its strategy, even if most of the factors are beyond its control. The group has a policy to manage and mitigate financial risks. LATAM manages employee talent and fosters commitment to corporate strategy. The main impact is on the environment and comes mainly from the use of fuel, which contributes to overall greenhouse gas emissions 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. Moreover, the group is attentive to opportunities to incorporate new technologies and best practices that influence this issue. The impact occurs inside LATAM and with its clients, affecting 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. The development and growth of the destination network benefits the cities served, generating economic development 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. 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 development of the group and the airline industry, as well as connectivity in a country or region, and clients. Sustainable tourism The impact is on the destinations served by LATAM. The capacity to manage this issue varies in accordance with LATAM’s share in the total passenger traffic to a given location. The group strives to play an active role in promoting a balance between tourism and the preservation of the local culture and environment. About the Report 88 Integrated Report 2021GRI 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 in the organization and its supply chain 102-11 Precautionary Principle or approach 102-12 External initiatives 102-13 Membership of associations 102-14 Statement from senior decision makers 102-16 Values, principles, standards and norms of behavior PAGE/RESPONSE LATAM Airlines Group S.A. The main services offered are the transportation of passengers and cargo, and the frequent flyer program; there are no cases of banned services in any of the markets operated. A full description is provided on pages 13, 80, and 99. Santiago, Chile 24 and 25 31 and 36 24 and 25 47 and 75 165 84 31 and 85 LATAM does not formally adopt the principle of precaution, but it does incorporate potential operational impacts and risks to consumers and the company into its planning. All the group’s services–routes, schedules, maintenance activities, and loyalty programs–are in compliance with the applicable legislation. 15 116 10 36 Global Compact: 1 and 2 About the Report 89 Integrated Report 2021GRI 102: General disclosures 2016 DISCLOSURE 102-17 Mechanisms for advice and concerns about ethics 102-18 Governance structure 102-40 List of stakeholder groups 102-41 Collective bargaining agreements PAGE/RESPONSE 37 33 37 and 87 44% of employees are unionized and 83% are covered by collective bargaining agreements. This coverage reaches 100% among the command crew and 98% among the cabin crew. Global Compact: 3 102-42 Identifying and selecting stakeholders 87 102-43 Approach to stakeholder engagement In addition to the approach described in Methodology and materiality (page 87), management of LATAM’s routine relations with stakeholders is presented in the chapters on Commitment to the future/Solidary Plane program, Employees, Clients, and Suppliers. 102-44 Key topics and concerns raised 87 102-45 Entities included in the consolidated financial reports 102-46 Defining report content and topic coverage 102-47 List of material topics 102-48 Restatements of information 102-49 Changes in reporting 102-50 Reporting period 102-51 Date of latest report 102-52 Reporting cycle The report includes all affiliates. The full list of entities included in the Financial Statements is available on page 168. 87 88 It was necessary to restate several previously published environmental indicators to correct errors or update the calculation methodology. Each case is clearly indicated. None. From January 1 to December 31, 2021 April 2021 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 89 96 About the Report 90 Integrated Report 2021GRI Standard Material topic: Health and safety in the air and on the ground Disclosure Page/Response Global Compact GRI 103: Management approach 2016 GRI 403: Occupational health and safety 2018 Material topic: Ethics and anti-corruption GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundaries 88 103-2 The management approach and its components 103-3 Evaluation of the management approach 403-7 Prevention and mitigation of impacts on the health and safety of workers directly linked to business relations 403-9 Work-related injuries 103-1 Explanation of the material topic and its boundaries 103-2 The management approach and its components 103-3 Evaluation of the management approach 205-2 Communication and training about anti-corruption policies and procedures 52 and 76 53, 55 and 76 76 76 and 166 88 36 and 37 37 36 GRI 205: Anti-corruption 2016 205-3 Confirmed incidents of corruption and actions taken GRI 206: Anti-competitive behavior 206-1 Legal actions related to anti-competitive behavior, anti-trust, and monopoly practices GRI 417: Marketing and labeling 417-3 Incidents of non-compliance concerning marketing communications GRI 419: Socioeconomic compliance 2016 419-1 Non-compliance with laws and regulations in the social and economic area There were 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. There were no significant fines; that is, worth over US$50 million, or that could paralyze the operation or affect the group's image. – – – – – 10 – – 10 About the Report 91 Integrated Report 2021Page/Response Global Compact GRI Standard Material topic: On-time performance Disclosure GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundaries 103-2 The management approach and its components 103-3 Evaluation of the management approach Not applicable OTP (on-time performance) Material topic: Economic and financial sustainability 103-1 Explanation of the material topic and its boundaries GRI 103: Management approach 2016 GRI 203: Indirect economic impacts 2016 Material topic: Developing employees GRI 103: Management approach 2016 103-3 Evaluation of the management approach 203-2 Significant indirect economic impacts 103-1 Explanation of the material topic and its boundaries 103-2 The management approach and its components 103-3 Evaluation of the management approach GRI 401: Employment 2016 401-1 New employee hires and employee turnover 88 81 81 81 88 47 13 88 73 and 74 74 and 165 74 and 165 103-2 The management approach and its components 45 and 48 – – – – – – – – 3, 4 and 5 GRI 404: Training and education 2016 404-1 Average hours of training per year per employee 74 Not applicable Organization Health Index (OHI) 74 and 165 1, 2 and 6 About the Report 92 Integrated Report 2021GRI Standard Disclosure Material topic: Mitigating climate change Page/Response Global Compact 103-1 Explanation of the material topic and its boundaries 88 GRI 103: Management approach 2016 103-2 The management approach and its components 103-3 Evaluation of the management approach GRI 201: Economic performance 2016 201-2 Financial implications and other risks and opportunities due to climate change 302-1 Energy consumption within the organization GRI 302: Energy 2016 302-3 Energy intensity 302-4 Reduction of energy consumption 305-1 Direct GHG emissions (Scope 1) 305-2 Indirect GHG emissions from energy generation (Scope 2) GRI 305: Emissions 2016 305-3 Direct GHG emissions (Scope 3) 305-4 GHG emissions intensity 305-5 GHG emissions reduction 306-3 Waste generated GRI 306: Waste 2020 306-4 Waste diverted from disposal 306-5 Waste directed to disposal Material topic: Customer focus GRI 103: Management approach 2016 103-1 Explanation of the material topic and its boundaries 103-2 The management approach and its components 103-3 Evaluation of the management approach Not applicable Net Promoter Score (NPS) 57 and 60 65 63 and 64 71 71 64 65 and 164 164 164 65 and 164 64 69 69 69 88 25, 78 and 81 10, 21 and 81 81 7, 8 and 9 7 and 9 8 and 9 7 and 8 – – – – About the Report 93 Integrated Report 2021GRI Standard Disclosure Material topic: Destination network Page/Response Global Compact 103-1 Explanation of the material topic and its boundaries 88 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 13, 23 and 25 23, 24 and 25 24 and 25 103-1 Explanation of the material topic and its boundaries 88 GRI 103: Management approach 2016 103-2 The management approach and its components 103-3 Evaluation of the management approach GRI 415: Public policy 2016 415-1 Political contributions Material topic: Sustainable tourism 103-1 Explanation of the material topic and its boundaries 37 and 117 37 and 91 37 88 GRI 103: Management approach 2016 103-2 The management approach and its components 14, 58 and 59 GRI 203: Indirect economic impacts 2016 203-1 Infrastructure investments and services supported 103-3 Evaluation of the management approach Other monitored GRI standards GRI 303: Water and effluents 2018 303-3 Water withdrawal GRI 305: Emissions 2016 305-6 Emissions of ozone-depleting substances (ODS) 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions 59 59 71 164 164 – – – – 10 – – – – – – – About the Report 94 Integrated Report 2021Glossary ABEAR: Brazilian Airlines Association ADR: American Depositary Receipts 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 ASK: available seat-kilometer – 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: executive director CMF: Financial Market Commission (Chile) CORSIA: Carbon Compensation and Reduction Scheme for International Aviation CVM: Brazilian Securities Commission DIP: debtor in possession, a financing mechanism provided for in Chapter 11 of the U.S. law in which loan creditors have priority in receiving securities DJSI: Dow Jones Sustainability Index EBITDA: Earnings before interest, tax, depreciation, and amortization EBITDAR: Earnings before interest, tax, depreciation, amortization, and aircraft rentals EMS: Evironmental Management System GEI: greenhouse gases LPG: liquefied petroleum gas GRI: Global Reporting Initiative HEPA: High-Efficiency-Partition Arrestors, filters with high efficiency in particle retention. They are used in air circulation systems in aircraft and remove more than 99.9% of the impurities, such as viruses and bacteria, from the air IAG: Internacional 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: Integrated International Reporting Council ILO: International Labor 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 OECD: Organization for Economic Cooperation and Development OHI: Organizational Health Index OPEC: Organization of Petroleum Exporting Countries OTC: Over-the-counter, where financial instruments are traded directly between the parties, outside the scope of organized markets OTP: on-time performance (punctuality indicator) PMA: Part Manufacturing Approval – Suppliers of parts certified by aeronautical agencies PTO: Public tender offer RASK: revenue per available seat- kilometer– gauges the efficiency of the airline; it is obtained by dividing the operating income by the ASK RPK: revenue passenger-kilometers – total passengers transported, multiplied by the distance traveled RTK: revenue ton-kilometers – ton transported multiplied by the distance traveled SDG: Sustainable Development Goals SEC: United States Securities and Exchange Commission SSC: Spanish-speaking countries TDLC: Chilean Antitrust Court TPI: third-party intermediary UN: United Nations Organization About the Report 95 Integrated Report 2021External assurance 102-56 INDEPENDENT REVISION REPORT OF LATAM INTEGRATED REPORT 2021 Mr. Juan José Toha Director de Asuntos Corporativos y Sostenibilidad Latam Airlines Group 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 2021 Integrated Report. Analysis of the adherence of the contents of the 2021 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 2021 Report, and its adequate gathering from the data provided by LATAM information sources. Of our consideration: 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: Improvement Opportunities Report In addition to this letter, Deloitte is presenting to LATAM a special report including improvement opportunities to reinforce management aspects, and the Company's ability to draft future Integrated Reports. LATAM Management and Deloitte Responsibilities The drafting of the 2021 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 28, 2022. We have reviewed the following aspects of the LATAM Integrated Report 2021: Scope Limited assurance engagement of the adherence of the contents and indicators included in the 2021 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 102-1 102-2 102-3 102-4 102-5 102-6 102-7 102-8 102-9 102-10 102-11 102-12 102-13 102-14 102-15 102-16 102-17 102-18 102-40 102-41 102-42 102-43 102-44 102-45 102-46 102-47 102-48 102-49 102-50 102-51 102-52 102-53 102-54 102-55 102-56 103-1 103-2 103-3 201-2 203-1 The scope of a limited assurance engagement is essentially inferior to a reasonable assurance engagement, thus, we are not hereby providing opinion about the 2021 LATAM Integrated Report. 203-2 205-2 205-3 206-1 302-1 302-3 302-4 303-3 305-1 305-2 305-3 305-4 305-5 305-6 305-7 306-3 306-4 306-5 401-1 404-1 403-7 403-9 415-1 417-3 419-1 √ Regarding the verified indicators, we can say that no aspect has arisen to lead us to believe that the Integrated Report 2021 LATAM has not been prepared in accordance with the GRI Standards in those areas identified in the scope. Christian Durán Partner March 31, 2022 About the Report 96 Integrated Report 2021 Appendices In this chapter 98 PROFILE 98 Legal incorporation 98 Company purpose 117 OUR BUSINESS 117 Regulation 125 Material facts 98 Properties, plants and equipment 142 Risk factors 99 Trademarks and patents 99 Additional information 99 OPERATIONS 99 Fleet 164 COMMITMENT TO THE FUTURE 164 Environmental indicators 165 EMPLOYEES 165 People indicators 100 CORPORATE GOVERNANCE 100 Shareholders’ agreements 105 Board: composition and résumés 108 Annual Report of the Board Committee’s Administration 114 Main executives 116 Membership of associations Appendices 97 Integrated Report 2021Profile WHO WE ARE 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 airport through a concession agreement. These include a corporate building, cargo warehouses, a refrigerated area, an aircraft parking platform, and a maintenance hangar with workshops, warehouses, and its own offices. In Argentina, Colombia, Ecuador, and Peru, LATAM's affiliates have leasing contracts for administrative and commercial offices, hangars, and maintenance areas through airport concessions. LEGAL INCORPORATION It was established as a Limited Liability Company 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 item 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 became a Limited Corporation known as Línea Aérea Nacional 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, pursuant to the aeronautical and radio communications concessions, traffic rights, and other administrative concessions. COMPANY PURPOSE a) To market air and/or ground transportation in any of its forms, be it for passengers, cargo, mail, and anything directly 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; 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. d) Trade and development of activities related to travel, tourism, and lodging; and E) To participate in partnerships of any kind that will enable the company to fulfill its goals. PROPERTIES, PLANTS, 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. Brazil Headquarters: The main facilities of LATAM Airlines Brazil 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. Maintenance Base: it is located in São Carlos, within São Paulo. In addition to that unit, LATAM Brazil also has spaces for aircraft maintenance, acquisition, and logistics of aeronautical materials within the hangars of the Congonhas airport. Other Facilities: commercial branch, uniforms building, Morumbi Office Tower building, Contact Center building, and offices of the LATAM Travel subsidiary, all located within the city of São Paulo. Other localities LATAM also has facilities in the Miami International Airport (US), leased by the Appendices 98 Integrated Report 2021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 the group’s staff. Customers: none of LATAM's clients individually represents over 10% of its sales. Suppliers: in 2021, 15 suppliers individually represented over 10% of their category: Orbital, Acciona and Talma (airport), Unilode Aviation Solutions (local administration), Gate Gourmet and LSG Sky Chefs (sourcing), Expeditors and Transportation Redvan (transportation), Facebook, Google Inc. and Graphene (marketing), CAE and Amil (employee services), Hotel Miami BL Partners (hotels), and Everfit S.A. (uniforms). Profile WHO WE ARE 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 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.). Since the LAN-TAM partnership, LATAM group insurance is jointly managed by Grupo IAG (consisting of British Airways, Iberia, and its subsidiaries, and franchisees). The increase in business volumes translated into better coverage and lower operating costs. Operations FLEET Length (m) Wingspan (m) Seats Cruise speed (km/h) Maximum takeoff weight (kg) Short-haul fleet/ narrow-body aircraft Airbus A319-100 Airbus A319-200 Airbus A320-200neo Airbus A321-200 33.8 37.6 37.6 44.5 Long-haul fleet/ wide-body aircraft Airbus A350-900 Boeing 767-300ER Boeing 777-300ER Boeing 787-8 Boeing 787-9 Cargo fleet 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 60.2 144 156-168-174 174 174 348 221-238 379 247 313 830 830 830 830 903 851 894 903 903 70,000 77,000 77,000 89,000 280,000 186,880 346,500 227,900 252,650 Length (m) Wingspan (m) Cargo volume (m3) Cruise speed (km/h) Maximum takeoff weight (kg) Boeing 767-300F 54.9 47.6 445.3 851 186,880 Appendices 99 Integrated Report 2021Corporate governance OWNERSHIP STRUCTURE SHAREHOLDERS’ AGREEMENTS1 1 On December 1, 2021 and January 5, 2022, the companies TEP Chile S.A. and TEP Aeronautica S.A., part of the Amaro Group, sold off the last shares they held in the Company, respectively, relinquishing their stake in LATAM. 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’ agreement.” 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 Airlines 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 shareholders’ agreements, which has been filed as exhibit to this annual 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 replacements, 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 Meeting 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 Shareholders’ Meeting of LATAM which should take place during the first quarter of 2021, instance in which the election and renewal 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 being 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’ agreement. 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. 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 redesignated 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, establishing agreements and restrictions relating to corporate governance in an attempt to balance LATAM Airlines Group’s interests, 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 following the consummation of the combination of LAN and TAM. Appendices 100 Integrated Report 2021Corporate governance OWNERSHIP STRUCTURE SHAREHOLDERS’ AGREEMENTS 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 entirety by reference to the full text of the aforementioned shareholders’ 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’ 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). 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 managed 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 comprised 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 resolutions 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 commercial 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. Supermajority Actions Certain actions by Holdco I or TAM require supermajority approval 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 directors 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; Following the combination, TAM continues to be headquartered in São Paulo, Brazil. • to create, dispose of or admit new shareholders to any subsidiary of The head office of the LATAM Airlines Group continues to be located in Santiago, Chile. 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 voting 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 operation of TAM and its subsidiaries following the effective time, as the “TAM shareholders’ agreement.” The Holdco I shareholders’ 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 shareholders’ agreement and the TAM shareholders’ Appendices 101 Integrated Report 2021Corporate governance OWNERSHIP STRUCTURE SHAREHOLDERS’ AGREEMENTS 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 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; the relevant company, except to the extent expressly contemplated in the approved plans; • to approve the acquisition, disposal, modification 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 approve the execution, amendment, termination or ratification of agreements with related parties, 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 approve any financial statements, amendments, or any accounting, dividend or tax policy of the relevant company; • 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 • to approve the grant of any security interest or guarantee to secure obligations of third parties; • 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 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 transformation, merger, spin-up or any kind of corporate re- organization of a relevant company; • to pay or distribute dividends or any other kind of distribution to the shareholders; • to approve the issuance, redemption or amortization of any debt securities, equity securities or convertible securities; • 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. Appendices 102 Integrated Report 2021Corporate governance OWNERSHIP STRUCTURE SHAREHOLDERS’ AGREEMENTS • 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 voting shares of Holdco I beneficially owned by them. Except for a limited amount of LATAM Airlines Group common shares, 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 Airlines Group common shares by either party are permitted, subject to (i) certain limitations on the volume and frequency 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 material adverse effect on our and Holdco I’s ability to own or receive the full benefits of ownership of TAM and its subsidiaries or the ability of TAM and its subsidiaries to operate 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 common shares and voting shares of Holdco I beneficially owned 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 “release event” will occur if (i) a capital increase of LATAM Airlines Group occurs, (ii) TEP Chile does not fully exercise the preemptive rights granted to it under applicable law in Chile with respect to such capital increase in respect of all of its restricted 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. Voting Agreements, Transfers and Other Arrangements Voting Agreements The Cueto Group and TEP Chile have agreed in the Cueto 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; Appendices 103 Integrated Report 2021Corporate governance OWNERSHIP STRUCTURE SHAREHOLDERS’ AGREEMENTS 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 common 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. parties and for transfers to affiliates, in each case under certain limited circumstances. 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 voting 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 shares 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 right 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. 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 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 In addition, after December 31, 2021 and after the occurrence 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 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 occurrence 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 pledges of LATAM Airlines Group common shares made by the Appendices 104 Integrated Report 2021Corporate governance DECISION-MAKING BODIES 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 BOARD: COMPOSITION AND RÉSUMÉS 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 Manager 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 LATAM 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 Officer (“CEO”), since the combination between LAN and TAM in June 2012. From 1983 to 1993, Mr. Cueto was Chief Executive 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 until 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 organization dedicated to the promotion of entrepreneurship in Chile, and Executive Member of the Latin American and Caribbean Air Transport Association (“ALTA”). Mr. Cueto is the brother 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. ENRIQUE OSTALÉ CAMBIASO Director Rut: 8.681.278-9 Mr. Enrique Ostalé joined LATAM Airlines Group’s Board of Directors in April 2020. He was Chairman of the Board of Walmart Chile S.A up to March, 2021 and he is currently the Chairman of the Board of Walmart Mexico and Central America SBA, until April 2022, as publicly announced. 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 previously 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 degree 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 105 Integrated Report 2021Corporate governance DECISION-MAKING BODIES BOARD: COMPOSITION AND RÉSUMÉS NICOLÁS EBLEN HIRMAS Director Rut: 15.336.049-9 Mr. Nicolás Eblen has served on LATAM's board of directors since April 2017 and was re-elected to the board of directors of LATAM in April 2019 and April 2020. Mr. Eblen currently 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., Patagonia 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 Universidad Católica de Chile and a Master in Business Administration 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 Airlines Group's outstanding shares). HENRI PHILIPPE REICHSTUL Director Rut: 48.175.668-5 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 directors of Repsol and chairman of the board of Fives, among others. Mr. Reichstul is an economist with an undergraduate degree from the Faculty of Economics and Administration, University of São Paulo, and postgraduate work degrees in the same discipline–Hertford College–Oxford University. PATRICK HORN Director Rut: 6.728.323-6 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 Sudamericana de Vapores and Grupo Ultramar, where he was also director of subsidiaries. Mr. Horn graduated as an Industrial Civil Engineer from the Pontificia Universidad Católica de Valparaiso and holds a Master of Science in Industrial Engineering from the Georgia Institute of Technology, U.S. He has participated 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). Appendices 106 Integrated Report 2021Corporate governance DECISION-MAKING BODIES BOARD: COMPOSITION AND RÉSUMÉS ALEXANDER WILCOX Director Rut: foreigner 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 industry where he held executive positions in several airlines between 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. EDUARDO NOVOA Director Rut: 7.836.212-K SONIA VILLALOBOS Director Rut: 21.743.859-4 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, Endesa- Americas, Grupo Saesa, Grupo Chilquinta, and several companies in the region that were subsidiaries of Enersis and AFP Provida. He has also been a member of the board of Amcham-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 CorpGroup, 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 Brazilian 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 Equity investments in Brazil, Argentina and Chile for Bassini, Playfair & 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. Appendices 107 Integrated Report 2021Corporate governance DECISION-MAKING BODIES ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION II. COMMITTEE’S ACTIVITY REPORT During financial year 2021, the Directors’ Committee met on 57 occasions to exercise its powers and fulfill its duties under article 50 bis of Law No. 18,046 on Limited Corporations, as well as reviewing or evaluating those other issues that the Board of Directors deemed necessary, which in a year that continues to be marked mainly by the COVID-19 pandemic and the Chapter 11 proceeding in the United States (hereinafter “Chapter 11”), they focused mostly on issues related to the Company’s restructuring plan with a view to exiting Chapter 11. Below, is a report of the main issues discussed. Examination and review of balance sheet and financial statements The Board Committee examined and reviewed the Company’s financial statements as at December 31, 2020, as well as at the end of the quarters ended on March 31, June 30, and September 30, 2021, in extraordinary Board meetings held on March 9, May 6, August 9, and November 09, 2021, respectively, including the examination of the corresponding reports from the Company’s external auditors, PriceWaterhouseCoopers Consultores, Auditores y Cía. Limitada (“PwC”), who participated in the four sessions to deliver their opinion on the quality of the Company’s external auditors. Review of reports on impairment of the cash generating unit At the meetings of February 9, April 12, April 30, July 12, and October 18, 2021, The Directors’ Committee addressed issues related to the impairment test and analysis of evidence of impairment regarding certain assets included in the financial statements of the Air Transportation cash generating unit. The results of the impairment test at December 2020, analysis of evidence of impairment at March 31, 2021, impairment test at March 31, evidence analysis at June 30, and September 30, 2021, respectively, were discussed in detail, concluding that there are no signs of impairment that merit the need for the Company to perform additional tests on such dates, nor to carry out an accounting adjustment of assets on the date of the test. Executive and workers’ compensation systems In the meeting held on March 08, 2021, the Committee examined the existing wage systems and compensation plans for the Company’s main executives and workers. Internal Audit In ordinary meetings held on January 20, March 17, May 10, July 30, September 3, October 18, and December 10, 2021, topics regarding the Internal Audit were reviewed. The status of the Internal Audit Plan carried out during 2020 was reviewed, highlighting the number of projects that were addressed, the relevant aspects of the work carried out, and the presentation of audit reports analyzing the most important risks, the presentation and agreement of the 2021 workplan and the progress of the work on that plan, as well as the progress of the Internal Audit and Risk Transformation Plan. Audits under SOX standards The Directors’ Committee meetings held on January 18, May 10, and November 8, 2021, discussed the plan to be followed regarding SOX standards for certification during 2021. Also, a report was issued including the SOX certification results obtained during 2020, related relevant issues to be considered during 2021, Company projects that, due to their relevance, could have an impact regarding SOX standards, the main environmental impacts of the COVID-19 and Chapter 11 contingency controls, and a timeline to be followed regarding this certification during 2021. Appendices 108 Pursuant to article 50 bis, paragraph 8, item 5, of Law No. 18,046 On Limited Corporations, the Board of Directors of LATAM Airlines Group S.A. (the “Company” or “LATAM”), proceeds to issue the following annual report of its management regarding financial year 2021. I COMPOSITION OF THE DIRECTOR’S COMMITTEE The Company’s Board 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 Board Committee is chaired by Mr. Eduardo Novoa Castellón. The members were chosen in the Ordinary Shareholders’ Meeting held on April 20, 2021, and they will hold office for a two-year term, pursuant to the provisions of the Company’s bylaws. Integrated Report 2021Corporate governance DECISION-MAKING BODIES ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION External Audit Services – External Audits Workplan • In the meeting held on June 7, 2021, External Auditor PWC presented the workplan to be followed regarding the External Audit during 2021, addressing topics related to the regulatory requirements in terms of communication and project deliverables, the composition of the PWC team rendering these services to the Company, the consolidated audit approach, the progress achieved throughout the year in the internal control review, and the timeline of activities and communications that they will hold with Committee members. The economic proposal is also reported on the basis of management’s request regarding the possibility of postponing the tender of the external audit services for one year. • In the ordinary meeting held on June 7, 2021, External Auditors Ernst & Young (“EY”), in charge of the external audit of LATAM Airlines Brazil, discussed the team, scope, and work timeline of the review, the main issues to be addressed during 2021, the internal control-SOX issues, and the next steps to be followed. The economic proposal is also reported on the basis of management’s request regarding the possibility of postponing the tender of the external audit services for one year. Corporate Risk Management In the sessions held on January 20 and December 10, 2021, risk-related matters were reviewed, including, in the last session, the Company’s risk map in the new low-activity environment, due to the COVID-19 pandemic and Chapter 11. Safety In the sessions of the Directors’ Committee on January 18, April 12, and July 12, 2021, various security issues were discussed, including physical and air security, cybersecurity, and the anti- fraud model in E-business, among others. Compliance In the ordinary meetings held on March 8 and September 13, 2021, the Directors’ Committee received reports and training on the Compliance Program currently in force, and on its main contents, including top management’s commitment, the most relevant standards and laws for the Organization, the development of policies and rules, training and communications, controls by country of the status of Third Party Intermediaries (“TPIs”), identification and management of Compliance risks, and a report on Compliance at the corporate level, among others. LATAM Policies The sessions held on August 9, November 8, and December 20, 2021 analyzed both modifications to existing policies and some new policies, including the Information Security Policy, Information Classification Policy, Credit and Credit Risk Policy, Safety, Health and Environment Policy, Social Networking Policy, Social Media Policy, and Diversity and Inclusion Policy. Examination of reports pertaining to the Related-Party Transactions Policy (“RPT”, for its Spanish acronym) In the Committee meetings held on July 12, 2021, the reporting obligation established in the RPT Policy was fulfilled, management informing the Directors’ Committee on: (i) routine operations between LATAM Group and the affiliates where its stake is below 95%, (ii) the main transactions held between LATAM Group companies in general, and (iii) the transactions disclosed in the note included in the financial statements regarding related- party transactions. Review of background on DIP (debtor in possession) financing under Chapter 11 proceeding In the meetings of the Directors’ Committee held on March 4, March 26, September 2, September 7, September 21, September 23, October 7, October 14, and October 21, 2021, the Directors’ Committee reviewed and analyzed the background presented with regard to the tranche B DIP (debtor in possession) Financing under the Chapter 11 proceeding, complying with the regulations concerning related-party transactions, in the corresponding cases. Likewise, the drafts associated with said DIP financing were discussed in the sessions held on June 7, November 8, and December 20, 2021. Review of background related to the Reorganization Plan under the Chapter 11 proceeding In the Directors’ Committee meetings held on March 4, June 10 and 30, July 28, August 26, September 2, 7, 16, 21, and 30, October 7, 14, 21, and 28, November 4, 5, 10, 12, 18, 23 and 26, and December 9, 16, 23, and 30, 2021, the Directors’ Committee reviewed and analyzed the background they were presenting regarding the reorganization and financing plan (the “Reorganization Plan”) in the context of the Chapter 11 proceeding in the United States. The Plan was submitted to the Court on November 26, 2021. Corporate Governance Practices In the Directors Committee meeting held on September 13, 2021, the work Appendices 109 Integrated Report 2021Corporate governance DECISION-MAKING BODIES ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION plan and the necessary adjustments to the questionnaire provided for in Annex I to General Standard (“NCG”, for its Spanish acronym) No. 385 of the Chilean Financial Markets Commission (CMF, for its Spanish acronym) were revised, whereby LATAM’s corporate governance practices for the period were analyzed and examined. At the session held on December 20, 2020, Directors were then informed of the issuance of the CMF’s NCG No. 461, which repeals NCG No. 385 and modifies NCG No. 30 to include information regarding corporate governance practices in the Annual Report as of December 31, 2022, establishing a new plan to comply with the changes to this regulation, which considers the inclusion in the 2021 Report of the main body of the Company’s corporate governance practices, including the Company’s Corporate Practices Manual and the Manual for Manual for Handling Relevant Information for the Markets. Board Committee Recommendations On the other hand, the Directors’ Committee issued the recommendations stated further ahead in this annual management report regarding the appointment of the Company’s External Auditors and private risk rating agencies for 2021. Report of Activities by Board Committee Meeting The Board Committee met at the times mentioned below, with a brief list of the topics examined at each of these meetings: 1) Ordinary meeting n° 217 – 01/18/2021 • Update on Fleet Negotiation and DIP Topics. • Risks-Sustainability Management. • Safety Management. • Status of SOX Certification. 5) Extraordinary meeting n°112 – 3/04/2021 • Update of topics requested from 9) Extraordinary meeting n°115 – 3/26/2021 • Matters relating to Chapter 11. advisors on reorganization plan to exit from Chapter 11. • Analysis of the possibility of Tranche B DIP financing (debtor in possession). 6) Ordinary meeting n° 218 – 3/08/2021 • Legal issue in Brazil. • Company executive and worker salary systems and compensation plans. • Update on Fleet Negotiation and DIP 10) Extraordinary meeting n°116 – 3/30/2021 • Review of the MOR for February 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 11) Ordinary meeting n° 219 – 4/12/2021 • Update on Fleet Negotiation and DIP Topics. Topics. 2) Extraordinary meeting n°109 – 01/20/2021 • Results of the Work Plan 2020 Internal Audit. • Update Risk and Internal Control Pillar. • Compliance issues. • Corporate Topics (Proposal of external auditors and private risk rating agencies for 2021). • Annual report of the Directors’ Committee’s management. • Indications of impairment related to the financial statements as at 3/31/2021. • Cybersecurity Update. • Internal Audit topics. 3) Extraordinary meeting n°110 – 2/09/2021 • Review of the MOR for December 7) Extraordinary meeting n°113 – 3/09/2021 • Review of Financial Statements up to 2020 in the framework of compliance with obligations under the Chapter 11 proceeding. • Update impairment test and going concert. 4) Extraordinary meeting n°111 – 26/02/2021 • Review of the MOR for January 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 12/31/2020. 8) Extraordinary meeting n°114 – 3/17/2021 • Deloitte Presentation-- Internal Audit Transformation Plan. • Progress of Internal Audit Transformation Plan. 12) Extraordinary meeting n°117 – 4/30/2021 • Impairment test related to the Financial Statement as at 3/31/2021. 13) Extraordinary meeting n°118 – 5/06/2021 • Review of the MOR for March 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. • Review of Financial Statements up to • Proposal of Internal Audit Plan 2021. 12/03/2021. Appendices 110 Integrated Report 2021Corporate governance DECISION-MAKING BODIES 14) Ordinary meeting n° 220 – 5/10/2021 • Project ONE OPS. • Update on Fleet Negotiation and DIP 19) Extraordinary meeting n°122 – 6/30/2021 • Update on LATAM Reorganization Plan. Proceeding. • LATAM policy updates. • Legal issues. 29) Extraordinary meeting n°130 – 9/07/2021 • Update on LATAM Reorganization Plan. ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION Topics. • Planning of SOX 2021. • Internal Audit topics. 15) Extraordinary meeting n°119 – 5/31/2021 • Review of the MOR for April 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 16) Ordinary meeting n° 221 – 6/07/2021 • Evaluation of the Internal Audit and Control Integration Process by the CEO. • Update on Fleet Negotiation and DIP Topics. • 2021 Plan External Auditors EY. • 2021 Plan External Auditors PwC. 17) Extraordinary meeting n°120 – 6/10/2021 • Information on the LATAM Reorganization Plan. 20) Ordinary meeting n° 222 – 7/12/2021 • Update on Fleet Negotiation and DIP Topics. • Tax issues. • Indications of impairment related to the financial statements as at 6/30/2021. • E-Business LATAM Anti-Fraud Model. • Out-of-court agreement with the National Economic Prosecutor’s Office (“FNE”, for its Spanish acronym) in Chile. 24) Extraordinary meeting n° 125 – 8/09/2021 • Review of the MOR for June 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. • Review of Financial Statements up to 06/30/2021. 25) Extraordinary meeting n° 126 – 8/26/2021 • Update on LATAM Reorganization Plan. 21) Extraordinary meeting n°123 – 7/28/2021 • Update on LATAM Reorganization Plan. 22) Extraordinary meeting n°124 – 7/30/2021 • Deloitte consulting Kick off – Support to the Audit and Risk Transformation Plan. • Progress of Internal Audit Transformation Plan. 26) Extraordinary meeting n° 127 – 8/31/2021 • Review of the MOR for July2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 27) Extraordinary meeting n° 128 – 9/02/2021 • Update on LATAM Reorganization Plan. 28) Extraordinary meeting n° 129 – 9/03/2021 • Deloitte Consulting progress – Support to the Internal Audit and Risk Transformation Plan. 30) Ordinary meeting n° 224 – 9/13/2021 • Update on Fleet Negotiation and DIP Topics. • Update on Compliance Matters. • Project Restart – Unified cargo business system. • Analysis of information required by General Rule N° 385 of the Financial Market Commission (CMF). 31) Extraordinary meeting n° 131 – 9/16/2021 • Update on LATAM Reorganization Plan. 32) Extraordinary meeting n° 132 – 09/21/2021 • Update on LATAM Reorganization Plan. 33) Extraordinary meeting n° 133 – 09/23/2021 • Update on LATAM Reorganization Plan. 34) Extraordinary meeting n° 134 – 09/30/2021 • Update on LATAM Reorganization Plan. 35) Extraordinary meeting n°135 – 10/01/2021 • Review of the MOR for August 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. Appendices 111 18) Extraordinary meeting n°121 – 6/29/2020 • Review of the MOR for May 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 23) Ordinary meeting n° 223 – 8/09/2021 • Update on Fleet Negotiation and DIP Topics. • Derivatives • Company Processes and Controls for Risks Derived from the Chapter 11 Integrated Report 2021Corporate governance DECISION-MAKING BODIES ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION 36) Extraordinary meeting n° 136 – 10/07/2021 • Update on LATAM Reorganization Plan. 37) Extraordinary meeting n° 137 – 10/14/2021 • Update on LATAM Reorganization Plan. 38) Ordinary meeting n° 225 – 10/18/2021 • Update on Fleet Negotiation and DIP Topics. • Update of Manual for Handling Relevant Information for Markets • Indications of impairment related to the financial statements as at 9/30/2021. • SAP/Hana Project (Brownfield). • Deloitte Consulting progress – • Update on LATAM Reorganization Plan. 43) Ordinary meeting n° 226 – 11/08/2021 • Update on Fleet Negotiation and DIP Topics. • Credit and Credit Risk Policy. • Accounting provisions. • SOX status. • LATAM policy updates. 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. • Review of Financial Statements up to 44) Extraordinary meeting n°142 – 11/09/2021 • Review of the MOR for September 51) Extraordinary meeting n° 149 – 12/09/2021 • Update on LATAM Reorganization Plan. Support to the Internal Audit and Risk Transformation Plan. 09/30/2021. 39) Extraordinary meeting n° 138 – 10/21/2021 • Update on LATAM Reorganization Plan. 40) Extraordinary meeting n° 139 – 10/28/2021 • Update on LATAM Reorganization Plan. 41) Extraordinary meeting n° 140 – 11/04/2021 • Update on LATAM Reorganization Plan. 42) Extraordinary meeting n° 141 – 11/05/2021 45) Extraordinary meeting n° 143 – 11/10/2021 • Update on LATAM Reorganization Plan. 46) Extraordinary meeting n° 144 – 11/12/2021 • Update on LATAM Reorganization Plan. 47) Extraordinary meeting n° 145 – 11/18/2021 • Update on LATAM Reorganization Plan. 48) Extraordinary meeting n° 146 – 11/23/2021 • Update on LATAM Reorganization Plan. 49) Extraordinary meeting n° 147 – 11/26/2021 • Update on LATAM Reorganization Plan. 54) Ordinary meeting n° 227 – 12/20/2021 • Update on Fleet Negotiation and 50) Extraordinary meeting n° 148 – 11/30/2021 • Review of the MOR for October 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 52) Extraordinary meeting n° 150 – 12/10/2021 • Deloitte Consulting progress – Support to the Internal Audit and Risk Transformation Plan. • Progress of Internal Audit Transformation Plan. • Status of the Audit Plan 2021. • Risk Pillar Status. 53) Extraordinary meeting n° 151 – 12/16/2021 • Update on LATAM Reorganization Plan. DIP Topics. • Possible revision of cargo contract with related party. • Topic Environment, Health, and Safety Management (EHS) • General STANDARD n° 385. • LATAM policy updates. • Topic Remuneration – Corporate Incentive Plan. 55) Extraordinary meeting n° 152 – 12/23/2021 • Update on LATAM Reorganization Plan. 56) Extraordinary meeting n° 153 – 12/30/2021 • Review of the MOR for November 2021 in the framework of compliance with obligations under the Chapter 11 proceeding. 57) Extraordinary meeting n° 154 – 12/30/2021 • Update on LATAM Reorganization Plan. Appendices 112 Integrated Report 2021Corporate governance DECISION-MAKING BODIES ANNUAL REPORT OF THE BOARD COMMITTEE’S ADMINISTRATION III. DIRECTORS COMMITTEE COMPENSATION AND SPENDING The Company’s Ordinary Shareholders’ Meeting held on April 20, 2021, agreed that each member of the Directors’ Committee should receive the equivalent to 80 Unidades de Fomento (UF) as a monthly allowance for attending the Directors’ Committee meetings, regardless the number of meetings. This proposal meant changing the remuneration that was approved for the previous year, whereby the Directors who are members of the Directors’ Committee will be paid per session they attend. For purposes of the operation of the Directors’ Committee and its advisors, Law number 18,046 on Limited Corporations states that their spending budget must at least be equal to the annual sum of compensation of the Committee members. In this sense, said Ordinary Shareholders’ Meeting approved maintaining the same budget approved in past years of 2,880 UF. During 2021, this spending budget was not used. IV. RECOMMENDATIONS FOR THE DIRECTORS’ COMMITTEE IV.1 Proposal for Appointment of External Auditors. In the meeting of the Directors’ Committee held on March 8, 2021 and in accordance with Article 50 bis, section eight, paragraph two, of Law No. 18,046 on Limited Corporations, they agreed to propose to the Company’s Board of Directors, based on an analysis of the work of the external auditors and the 2020 performance evaluation of the audit firms presented by Management, to continue with the external auditors already elected and ratified at the Company’s Ordinary Shareholders’ Meeting held on April 30, 2020, namely PWC for the parent company, EY for Brazil, and PWC for the SSC (other Spanish-speaking countries where LATAM operates), considering, moreover, that the contract signed with PWC as a result of the tender for the External Audit services, held in 2018 by the Company, is currently in force and that it includes the rendering of these services for the periods 2019, 2020, and 2021. The above proposal was approved by the Company’s Shareholders’ Meeting held on April 20, 2021. IV.2 Proposal of Private Risk-Rating Agencies In its meeting held on March 8, 2021, and in accordance with Article 50 bis, section 8, paragraph two, of Law No. 18,046 on Limited Corporations, the Directors’ Committee agreed to propose to the Board the risk-rating agencies for the Company’s Ordinary Shareholders’ Meeting on April 20, 2021. In this regard, the Committee decided to propose to the Company’s Board of Directors the appointment of the following local risk-rating firms: Fitch Chile Clasificadora de Riesgo Limitada, Feller-Rate Clasificadora de Riesgo Limitada and International Credit Rating (ICR) Compañía Clasificadora de Riesgo Limitada. Regarding international risk-rating agencies, the Directors’ Committee agreed to propose to the Board the appointment of the following firms: Fitch Ratings, Inc., Moody’s Investors Service and Standard & Poor’s Ratings Services. Appendices 113 Integrated Report 2021Corporate governance DECISION-MAKING BODIES MAIN EXECUTIVES ROBERTO ALVO CEO LATAM Airlines Group RUT: 8.823.367-0 HERNÁN PASMAN Chief Operating Officer and Maintenance RUT: 21.828.810-3 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 Officer (“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 Strategic Planning and Development since 2008. Mr Alvo joined 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 Química 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. 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). 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 utility 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 Investment Banking for several European banks. Mr. Alfonsín holds a degree in business administration from Pontificia Universidad Católica. MARTIN ST. GEORGE Chief Commercial Officer RUT: foreigner 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. RAMIRO ALFONSÍN Chief Financial Officer RUT: 22.357.225-1 Appendices 114 Integrated Report 2021Corporate governance DECISION-MAKING BODIES MAIN EXECUTIVES JUAN JOSÉ TOHÁ Director of Corporate Affairs and Sustainability RUT: 16.655.612-0 EMILIO DEL REAL Human Resources Vice president RUT: 9.908.112-0 JULIANA RIOS Chief Digital and IT Officer RUT: foreigner Juan José Tohá is a journalist with a specialty in Sustainability from Oxford University, as well as a master's degree and PhD in Communication from the Autonomous University of Barcelona. He has vast experience in the design and implementation of communication strategies and the interaction of organizations with their environment. He has served in FAO's Latin America and Caribbean regional office in Santiago, Chile, and as Communications 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 Resources Manager of Unilever Chile, and Manager of Training and Recruitment and Management Development for Latin America. Mr. del Real has a degree in Psychology from the Universidad Gabriela Mistral. Juliana Rios brings over 20 years of expertise in services and technology in finance and airline industries. Her experience covers business transformation, M&A, digitization, IT, and management of large-scale projects such as PSS migration. In her current role as Chief Digital and IT Officer she leads LATAM Airlines Digital transformation efforts whilst maintaining the applications and infrastructure of the company operating successfully. Manager for Codelco and BHP South America, among others. In 2019, he joined the LATAM group as Director of Corporate Affairs and Sustainability, reporting directly to the CEO of LATAM group, and where he coordinates the corporate strategy of Public Affairs, External Communications, and Sustainability. JUAN CARLOS MENCIÓ Vice president of Legal Affairs and Compliance RUT: 24.725.433-1 Before joining LATAM Airlines in 2015, Juliana was a senior executive at Banco Santander in Brazil heading the retail business strategy and customer experience. She led integration programs in Brazil, Italy and the Netherlands. Juliana holds a university diploma in business administration and a MBA in corporate management from IBMEC, Brazil. PAULO MIRANDA Customers Vice president RUT: foreigner Mr. Juan Carlos Menció is Vice president of Legal Affairs and Compliance for LATAM Airlines Group a position he holds since September 1, 2014. Mr. Menció previously held the position of General Counsel for North America for LATAM Airlines Group and its related companies, as well as General Counsel for its worldwide Cargo Operations, both since 1998. Prior to joining LAN, he was in private practice in New York and Florida 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 finance, 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 University of Minnesota, USA. representing various international 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 Degree from Loyola University. Appendices 115 Integrated Report 2021Corporate governance DECISION-MAKING BODIES MEMBERSHIP OF ASSOCIATIONS LATAM participates through memberships in representative entities that foster initiatives for strategic debate and joint creation of solutions, and it collaborates in the discussion of public policies and regulations affecting the sector. In 2021, financial contributions to the different entities totaled US$1.3 billion. The entities that received the largest contributions were: Associação Brasileira das Empresas Aéreas (Abear), International Air Transport Association (IATA), and Sindicato Nacional das Empresas Aeroviárias (SNEA). Argentina • Cámara de Compañías Aéreas en Chile • American Chamber of Commerce – Peru • American Chamber of Commerce – Argentina (JURCA) Chile (AMCHAM Chile) Peru (AMCHAM Peru) • Asociación Chilena de Aerolíneas • Asociación de Empresas de Transporte Brazil • American Chamber of Commerce – Brasil (Amcham Brazil) • Associação Brasileira de Agências de Viagens (Abav) • Associação Brasileira de Agências de Viagens Corporativas (Abracorp) • Associação Brasileira das Empresas Aéreas (Abear) • Associação Brasileira de Anunciantes (ABA) (ACHILA) • Asociación Latinoamericana y del Caribe de Transporte Aéreo (ALTA) • Centro de Estudios Públicos • Federación de las Empresas de Turismo de Chile (Fedetur) • Fundación Chilena del Pacífico • Global Compact • Instituto Chileno de Administración Racional de Empresas (ICARE) • International Air Transport • Associação Brasileira de Comunicação Association (IATA) Aéreo Internacional (AETAI) • Asociación Peruana de Empresas Aéreas (APEA) • Cámara Nacional de Turismo (CANATUR) • Cámara Regional de Turismo de Cusco (CARTUC) • Instituto Peruano de Economía (IPE) • Perú Sostenible • Sociedad de Comercio Exterior del Perú (COMEX PERÚ) Empresarial (Aberje) • Flight Safety Foundation (FSF) • G100 Brasil (G100 Brasil) • International Air Transport Association (IATA) • Junta dos Representantes das Companhias Aéreas Internacionais do Brasil (Jurcaib) • Sindicato Nacional das Empresas Aeroviárias (Snea) • Sociedad de Fomento Fabril (SOFOFA) Colombia • Asociación de Líneas Aéreas Internacionales en Colombia (ALAICO) – Carga • Asociación de Transporte Aéreo de Colombia (ATAC) Ecuador • Asociación de Representantes de Líneas Aéreas (ARLAE) • Cámara de Industrias de Guayaquil • Cámara de Industrias de Pichincha • Club 30% • Global Compact Appendices 116 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION 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 round-trip cap; however, airlines are responsible 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, passengers and shippers. the international aviation industry. In the absence of an applicable local regulation concerning safety or maintenance, the countries where we operate have 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. ENVIRONMENTAL AND NOISE REGULATION There are no material environmental regulations or controls in the jurisdictions in which we operate imposed upon airlines, applicable to aircraft, or that otherwise affect us, except for environmental laws and regulations of general applicability. 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 restrictions. Chilean authorities are planning to pass a noise-related 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 impose 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 aviation (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 various phases by ICAO member states starting in 2021 (with the voluntary member states). 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 the United States, the Aviation and Transportation Security 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 Below is a brief reference to the material effects of aeronautical and other regulations in force in the relevant jurisdictions in which we operate. We are subject to the jurisdiction of various regulatory and enforcement agencies in each of the countries where we operate. We believe we have obtained and maintained the necessary authority, including authorizations 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 we carry out most of our 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 transportation. The ICAO establishes technical standards for Appendices 117 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION Below are some specific aeronautical regulations related to route rights and pricing policy in the countries where we operate. 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 necessary authority from the Chilean government to conduct flight operations, including authorization certificates from the JAC and technical operative certificates from the DGAC, the continuation 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. of Economics of Chile announced a unilateral opening of the Chilean domestic skies. This was confirmed in November 2013, and has been in force since that date. Chile is a contracting state, as well as a permanent member, of the ICAO. Chilean authorities have incorporated ICAO’s technical standards for the international aviation industry into Chilean laws and regulations. In the absence of an applicable 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. International Routes: As an airline providing services on international routes, LATAM is also subject to a variety of bilateral 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 bilateral 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. Route Rights Domestic Routes: Chilean airlines are not required to obtain permits in order to carry passengers or cargo on any domestic routes, but only to comply with the technical and insurance 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 entering the Chilean domestic market using that subsidiary. On January 18, 2012 the Secretary of Transportation and the Secretary International route rights, as well as the corresponding landing rights, are derived from a variety of air transportation agreements negotiated between Chile and foreign governments. 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 operate 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 applicant for a route frequency, the JAC awards it through a public auction for a period of five years. The JAC grants route frequencies subject to the condition that the recipient airline operates 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 domestic 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 operations in Chile consistent with the Antitrust Commission’s directive 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-competitive” by the JAC and any decrease in fares on “competitive” Appendices 118 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION 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 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. 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 management. We have obtained and maintain the necessary authorizations from the Peruvian government to conduct flight operations, including authorization and technical operative certificates, the continuation 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. Peru is a contracting state and a permanent member of the ICAO. The ICAO establishes technical standards for the international aviation industry, which Peruvian authorities have incorporated into Peruvian laws and regulations. In the absence of an applicable Peruvian regulation concerning safety or maintenance, the PDGAC has incorporated by reference the majority 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 requirements 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 international routes, LATAM Airlines Peru is also subject to a variety 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 bilateral agreements between Peru 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. International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements negotiated between Peru and foreign governments. 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 operate 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 applicant 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 operates them on a permanent basis. If an airline fails to operate a route for a period of 90 days or more, the PDGAC may terminate its rights to that route. In recent years the PDGAC has revoked the unused route frequencies of several 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 agency. The CNAC issues operating permits and grants operating 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; Appendices 119 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION • maintaining the National Aircraft Registry; • issuing licenses to crews; • controlling air traffic control inside domestic air space; • approving shared codes; and • modifying operations permits. The DGAC also must comply with the standards and recommended 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 incorporated in Ecuador can operate locally, and only Ecuadorian- licensed aircraft and dry leases are authorized to operate 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 airlines doing business in Latin America that are incorporated in countries that are members of the Comunidad Andina de Naciones (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 guarantee 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, bilateral treaties regarding air transportation provide for airfares to be regulated by the regulation of the country of origin. BRAZIL Aeronautical Regulation The Brazilian aviation industry is regulated and overseen by the ANAC. The ANAC reports directly to the Civil Aviation Secretary, which is subordinated by the Federal Executive Power of this country. Primarily on the basis of Law nº 11.182/2005, the ANAC was created to regulate commercial aviation, air navigation, the assignment of domestic and international routes, compliance with certain insurance requirements, flight operations, including personnel, aircraft and security standards, air traffic control, in this case sharing its activities and responsibilities with the Departamento de Controle do Espaço Aéreo (Department of Airspace 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 exploring Brazilian airports industrially and commercially (with the exception of airports granted to private initiative). We have obtained and maintain the necessary authority from the Brazilian government to conduct flight operations, including authorization and technical operative certificates 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. ANAC is the Brazilian civil aviation authority and it is responsible for supervising compliance with Brazilian laws and regulations relating to air navigation. Brazil is a contracting 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 applicable Brazilian regulation concerning safety or maintenance, 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 authorities. 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 established by Appendices 120 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION the Brazilian Aviation Authority (ANAC). Based on the Brazilian Aeronautical Code (“CBA”) established by Brazilian Federal Law nº. 7.565/86, there are no limitations to 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 provide 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 variety of air transport agreements negotiated between Brazil and foreign governments. 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 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 carry out a public bid and award it to the elected airline. ANAC grants route frequencies subject to the condition that the recipient airline operates 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 in 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 position 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 supervising the Colombian air space. The AC may interpret, apply and complement all civil aviation and air transportation regulation to ensure compliance with the Colombian Aeronautical Regulations (“RAC”). The AC also grants the necessary permits 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 operational 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 convenience and necessity of the service is considered. The same process must be followed to add national or international routes; whose concession is subject to the bilateral instruments entered into by Colombia. The only exception 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 complete 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 investment in domestic airlines. Airfare Pricing Policy Since July 2007, as stated in resolution 3299 of the Aeronautical Civil entity, bottom level airfares for both international 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 transportation of passengers and cargo. As of April 1, 2012, air carriers may now freely decide whether to add a fuel charge. In the case that a fuel surcharge is charged, it must be part of the fare, but shall be informed separately 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. 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. Appendices 121 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION ANTITRUST REGULATION Chile 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 following 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 predatory 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 termination of acts and contracts; (ii) the amendment or dissolution of legal entities involved in the punished conducts; and/or (iii) the imposition of 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). As described above under “Route Rights — Airfare Pricing Policy,” in the Resolution n°445 of August 1995, the TDLC approved a merger control transaction between LAN Chile and LANDECO but imposed a specific self-regulatory fare plan for domestic 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 its objective which consists of a tariff regulation, through which maximum rates are established on non-competitive routes under a monthly compliance 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 February 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 approval of the merger transaction. Furthermore, the association was also submitted to the antitrust authorities in Germany, Italy and Spain. All these jurisdictions granted unconditional clearances for this transaction. The merger was filed with the Argentinean antitrust authorities; approval is still pending. For more information regarding these mitigation measures please see below: proposed combination between LAN and TAM, subject to 14 conditions, as generally described below: • exchange of certain slots in the Guarulhos Airport at São Paulo, Brazil; • extension of the frequent flyer program to airlines operating or willing to operate the Santiago- São Paulo, Santiago-Río de Janeiro, Santiago-Montevideo and Santiago- Asunción routes during the five-year period from the effective time of the combination; • execution of interline agreements with airlines operating the Santiago- São Paulo, Santiago-Río de Janeiro and Santiago-Asunción routes; • certain capacity and other transitory restrictions applicable to the Santiago-São Paulo route; • certain amendments to LAN’s self- regulatory fare plan approved by the TDLC with respect to LAN’s domestic passenger business; On September 21, 2011, the TDLC issued a decision (the “Decision”) with respect to the consultation procedure initiated on January 28, 2011 in connection with the combination between LAN and TAM. The TDLC, in the Decision, approved the • the obligation of LATAM to renounce to one global airline alliance within 24 months from the date in which the combination becomes effective, except in the case that the TDLC approves Appendices 122 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION otherwise, or to elect not to participate in any global airline alliance; Benítez (Chile) airports, to facilitate access thereto to other airlines; • 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 international 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; • 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 traffic frequencies in that route and the period that certain air traffic frequencies may be granted by the Chilean air transport authorities to LATAM; • issuance of a statement by LATAM supporting the unilateral opening of the Chilean domestic skies (cabotage) and abstention from any actions that would prevent such opening; • promotion by LATAM of the growth and normal operation of the Guarulhos (Brazil) and Arturo Merino • certain restrictions regarding incentives to travel agencies; • 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; • 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 • engaging an independent consultant, expert in airline operations, which for 36 months, and in coordination with the FNE, will monitor and audit compliance with the conditions imposed by the Decision. Around 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 opposed this allegation and responded to the claim accordingly, 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 Settlement 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 compliance by LATAM of the Seventh Condition and the Settlement Agreement. On October 31, 2018, the TDLC approved the joint business 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. As of October 15, 2019, LATAM Airlines Group S.A. was notified that Fiscalía Nacional Económica (“FNE”) begun the investigation Rol N° 2585-19, regarding the Agreement between LATAM Airlines Group S.A. and Delta Airlines Inc. On August 13, 2021, FNE, Delta and LATAM reached an out-of-court-agreement by which the investigation was closed. On January 31, 2022, LATAM Airlines Group S.A. received a resolution issued by TDLC regarding a LATAM request for clarification about the Seventh Condition of the Decision. This resolution says that paragraphs VII.1 and VII.3 of the mentioned Condition apply to LATAM even if it doesn’t belong to a global airline alliance. LATAM Airlines Group S.A. and Delta Air Lines successfully reached an agreement on the implementation, along with certain mitigation measures for their TransAmerican Joint Venture Agreement (JVA) with FNE and on October 28, 2021 received approval of the agreement from Chile’s Tribunal de la Libre Competencia (“TDLC”). Brazil The CADE approved the LAN/TAM association 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 Appendices 123 Integrated Report 2021Our business INDUSTRY CONTEXT REGULATION 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 4, 2020 LATAM and Delta filed the joint venture before Aerocivil, applying for an approval of the agreement, which was finally received on May 10, 2021. 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 impositions 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 Uruguay (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 aeronautical 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 Appendices 124 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS Santiago, February 26, 2021 MATERIAL FACT 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”). • 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 January 2021, 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 been prepared for the sole purpose to comply with the obligations under the Chapter 11 Procedure. • 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 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. • 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 February 2021, dated as of today, included in the following link https:// www.latamreorganizacion.com/en/ publications/. Santiago, March 30, 2021 MATERIAL FACT 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 the Financial Market Commission of the following as material facts of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • 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 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, when applicable. Santiago, March 31, 2021 MATERIAL FACT 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 the Financial Market Commission of the following as a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): The Company’s Board of Directors met on March 30, 2021, and agreed to schedule the Company’s Annual Shareholders’ Meeting (the “Meeting”) for April 20, 2021, at 3pm, in Camino a Lampa 9978, Santiago, which will be carried out remotely, exclusively in digital format as detailed below, with the objective of deciding upon the following resolutions: Appendices 125 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS 1. Annual Report, Balance Sheet and Financial Statements for the year 2020; situation of the Company; and respective External Audit Firm’s report 2. Election of the Board of Directors 3. Board Compensation for the 2021 Fiscal Year 4. Compensation and budget of the Audit Committee for the 2021 Fiscal Year 5. Appointment of the External Auditing Firm 6. Appointment of the Risk Rating Agencies 7. Determination of the newspaper for publications to be made by the Company 8. Account of transactions with related parties 9. Other matters of corporate interest within the purview of the General Shareholder´s Meeting Those shareholders inscribed in the Shareholder Registry as of midnight on the fifth business day prior to the Meeting, midnight of April 14, 2021, will have the right to participate in the Meeting and to exercise their right to speech and vote. The Annual Shareholders’ Meeting will be remote, carried out exclusively in digital format, implementing the use of technology as the only mechanism for participating in and voting at the Meeting, in order to avoid exposure to COVID-19 for those in attendance. Any shareholder, or their representative, interested in participating, should pre- register by 6pm the day before the Meeting at https://autenticacion.dcv.cl/ or send an email to juntaslatam@latam. com expressing interest in participating in the Shareholders’ Meeting, attaching a scanned copy of their identity card on both sides, the power of attorney form (if necessary), and the participation form. The rest of the required documentation and detailed information on how to register, participate and vote in the remote Annual Shareholders’ Meeting, along with other relevant information will be published on the Company’s website, www.latamairlinesgroup.net. The official invitation notices will be published in La Tercera, a Santiago newspaper, on April 5, 13 and 15, 2021. Shareholders can obtain a copy of the resolutions and agenda items to be decided upon in the Annual Shareholders’ Meeting at the Company’s website, www.latamairlinesgroup.net, as of April 5, 2021. Furthermore, all shareholders who wish to obtain a copy of the aforementioned documents can contact the Company’s Investor Relations department via email at InvestorRelations@latam.com or via telephone at +56225658785 as of April 5, 2021, in order to do so. Information related to the designation of the external auditing firm for the fiscal year 2021 to be proposed at the Annual Shareholders’ Meeting will also be available alongside these documents. Santiago, April 20, 2021 MATERIAL FACT 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 of 1989, duly authorized, I inform you as a material fact that in the Ordinary Shareholders’ Meeting of LATAM Airlines Group S.A. held today, April 20, 2021, 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: 1. Sonia J.S. Villalobos; 2. Enrique Ostalé Cambiaso; 3. Nicolás Eblen Hirmas; 4. Alexander D. Wilcox; 5. Henri Philippe Reichstul; 6. Ignacio Cueto Plaza; 7. Enrique Cueto Plaza; 8. Patrick Horn García; and 9. Eduardo Novoa Castellón The board members indicated as numbers 8 and 9 were elected as Independent Board Members, in accordance with article 50 bis of Law No. 18,046 of the Corporations Law. Santiago, April 27, 2021 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 of the Securities Market, and of the General Rule No. 30, I inform you the following as material 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 Cueto 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 of the following Board Members: Mr. Eduardo Novoa Castellón (independent), Mr. Patrick Horn García (independent) and Mr. Nicolás Eblen Hirmas. Appendices 126 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS Santiago, May 06, 2021 MATERIAL FACT 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”). • 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 March 2021, dated as of today, included in the following link https:// www.latamreorganizacion.com/en/ publications/. • This MOR does not replace in any • As informed, LATAM Airlines 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 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. Santiago, May 31, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of April 2021, 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 been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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. Santiago, June 9, 2020 MATERIAL FACT 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, duly authorized, I inform you as a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”) the following: • As reported via 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 (“Chapter 11 Proceedings”), and the other parties interested in the financing proposal approved by the United States Bankruptcy Court for Appendices 127 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS the Southern District of New York, executed a contract titled Super- Priority Debtor-In-Possession Term Loan Agreement (the “DIP Credit Agreement”) for an amount of up to US$ 2.45 billion. • In addition, on October 8, 2020, as reported in a Material Fact, LATAM informed as part of the Chapter 11 Proceedings, that the first draw under the DIP Credit Agreement took place for an amount of US$ 1.15 billion. • Given the extension of the health and travel restrictions imposed by the authorities in the different countries where the Company operates, as well as the analysis of the Company’s liquidity position, LATAM’s Board of Directors has agreed to inform, as part of the Chapter 11 Proceedings, that in an ordinary session held yesterday, June 8, 2021, a second draw request under the DIP Credit Agreement was agreed upon for an amount of US$ 500 million. These funds would be available 10 business days after the draw request is made. Santiago, June 29, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of May 2021, dated as of today, included in the following link https:// www.latamreorganizacion.com/en/ publications/. regulation and has been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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. Santiago, August 9, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • This MOR does not replace in any way the financial information that the Company provides regularly according the securities law or the applicable • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of June 2021, 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 been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part Appendices 128 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS of the Chapter 11 Proceedings, 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. Santiago, August 31, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of July 2021, 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 been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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. Santiago, September 9, 2021 MATERIAL FACT 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), registration in the Securities Registry No. 306: Cleansing Materials, as Exhibits 99.1, 99.2, 99.3 and 99.4 hereto. Finally, it is reported that while discussions are ongoing, as of September 9, 2021, the Company had not yet reached an agreement with respect to the material terms of a potential restructuring transaction. As previously reported, the Company and certain of its direct and indirect subsidiaries (collectively with LATAM, the “Debtors”) are currently subject to a reorganization proceeding in the United States of America under Chapter 11 of Title 11 of the United States Code, before the United States Bankruptcy Court for the Southern District of New York (the “Chapter 11 Proceeding”). As part of the Chapter 11 Proceeding and potential restructuring transactions thereunder of the Debtors and/or certain of their indebtedness, the Company entered into confidentiality agreements (collectively, the “NDAs”) with certain counterparties, pursuant to which the Company agreed to publicly disclose certain information, including material non-public information (the “Cleansing Materials”), upon the occurrence of certain events set forth in the NDAs. In satisfaction of its obligations under such NDAs, the Company is furnishing the Santiago, September 9, 2021 MATERIAL FACT 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), registration in the Securities Registry No. 306: 1. Update on the LATAM’s Chapter 11 Proceeding: • As previously reported, LATAM and certain of its direct and indirect subsidiaries (collectively, such subsidiaries with LATAM, the “Debtors”) have commenced a reorganization proceeding in the United States of America (the “Chapter 11 Proceeding”) pursuant to the rules set forth in Chapter 11 (the “Chapter 11”) of Title 11 of Appendices 129 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS the United States Code (the “U.S. Bankruptcy Code”). As part of this reorganization process, LATAM is currently negotiating with various stakeholders in order to agree on the terms of a plan of reorganization and exit financing to successfully emerge from the Chapter 11 Proceeding in compliance with all applicable laws. • In this context, over the past few months, LATAM has entered into non- disclosure agreements with various stakeholders, and has developed and made available to them certain material non-public information. • Also in connection with the negotiations with these stakeholders, LATAM provided an indicative proposed structure for its reorganization which sought approximately US$5,000 millions of equity financing, and contemplated a consensual plan among stakeholders which required among other things, the compromise by stakeholders regarding their rights and compliance with both the U.S. Bankruptcy Code and Chilean law. • As informed by a material fact dated as of the date hereof, in accordance with the terms of the aforementioned non-disclosure agreements and in furtherance of the process, on this date, LATAM has publicly disclosed certain materials that had been delivered to the counterparties (the “Cleansing Materials”). The Cleansing Materials include (i) the LATAM Exit Capital Raise Process Letter, (ii) the LATAM Illustrative Plan Term Sheet, (iii) the blowout Business Plan Presentation and (iv) Updated Blowout Materials – Draft Claim Estimates, all of which is currently publicly available at https://www.latamreorganizacion. com/en/publications/. • In response to its requests for proposals, as of this date, LATAM has received certain non-binding exit capital and financing proposals (each such proposal, an “Exit Proposal”) from its most significant claimholders and its majority shareholders. Each Exit Proposal contemplates raising new funds in excess of US$5,000 millions through the issuance of new debt and equity in LATAM, which would be backstopped by the parties making the proposal. In addition, in each Exit Proposal, the proponents contemplate that if such proposal is approved and implemented, it would result in the substantial dilution of LATAM’s currently existing shares. proponents, and will continue to engage in discussions regarding its reorganization plan with such proponents and other stakeholders, some of whom have agreed to remain under non-disclosure agreements. • LATAM is focused on ensuring that any exit strategy allows it to emerge from the Chapter 11 Proceeding with a robust capital structure, adequate liquidity, and the ability to execute its business plan in a sustainable manner over time. Any plan will be implemented in accordance with the relevant requirements of the U.S. Bankruptcy Code and Chilean law. • The Company will keep its shareholders and the market informed of the progress of the Chapter 11 Proceeding. In addition, and without limiting the generality of the foregoing, LATAM contemplates to summon its shareholders to an extraordinary shareholders meeting when appropriate, subject to the progress of the negotiations with the various stakeholders that are currently pending. 2. LATAM’s Request to Extend the Exclusivity Periods: • LATAM will continue to discuss the Exit Proposals with their respective • On this date, LATAM and its subsidiaries subject to the Chapter 11 Proceeding filed a motion with the Bankruptcy Court for the Southern District of New York (the “Court”) seeking to extend the periods during which the Debtors will have the exclusive right to file a plan of reorganization from September 15, 2021 to October 15, 2021, and the exclusive right to solicit acceptances of a plan from November 8, 2021, to December 15, 2021 (collectively, the “Exclusivity Periods”). The Court is scheduled to consider the motion at a hearing to be held on September 23, 2021. • This request will support the development of a plan of reorganization that satisfies the equity and debt needs, and will assist in the negotiation with the various stakeholders in the Chapter 11 Proceeding. 3. LATAM’s Solicitation of Interest for Potential Tranche B Funding: • As previously reported, the English- language financing agreement entered into in the context of the Chapter 11 Proceeding, denominated Super-Priority DebtorIn-Possession Term Loan Agreement (the “DIP Credit Agreement”) provides for a possible Tranche B for up to US$750 million, Appendices 130 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS subject to the Court’s authorization and other customary conditions for this type of transactions. This is in addition to the existing US$1,300 million Tranche A facility and the US$1,150 million Tranche C facility. • It is worth mentioning that LATAM continues to have availability under the Tranche A facility and the Tranche C facility, for US$424.5 millions and US$375.5 millions, respectively. • Notwithstanding the foregoing, and in order to take advantage of favorable market conditions, LATAM is requesting proposals from parties interested in providing financing under Tranche B of the DIP Credit Agreement. Once such proposals are received, LATAM will consider such proposals with its advisors in due course. • The Tranche B, if any, will be secured by the same assets that currently secure Tranche A and Tranche C; provided, however, that the Tranche A liens will be senior to the Tranche B liens, and the Tranche B liens will be senior to the Tranche C liens. As indicated above, the Company will keep shareholders and the market informed on the progress of the Chapter 11 Proceeding. Santiago, September 29, 2021 MATERIAL FACT Pursuant to 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), registration in the Securities Registry No. 306: • As previously reported, the Super- Priority Debtor-In-Possession Term Loan Agreement (the “DIP Credit Agreement”) entered into in the context of the reorganization process of LATAM and certain of its direct and indirect subsidiaries in the United States of America (the “Chapter 11 Proceeding”) contemplates a possible Tranche B for up to US$750 million, subject to the authorization of the Bankruptcy Court of the Southern District of New York hearing the Chapter 11 Proceeding (the “Court”) and other customary conditions for this type of transaction. This is in addition to the $1.3 billion Tranche A facility and the $1.15 billion Tranche C facility currently existing thereunder. • As informed by means of a material fact dated September 9, 2021, in order to take advantage of favorable market conditions, this is, lower financing costs under the DIP Credit Agreement, LATAM had requested proposals from parties interested in providing financing under the Tranche B facility of the DIP Credit Agreement in an amount up to US$750 million. This is notwithstanding that LATAM continues to maintain availability under the Tranche A and Tranche C facilities for US$424.5 million and US$375.5 million, respectively. • In response to the above, LATAM has received various financing proposals which have been evaluated and negotiated in a timely manner by the Company together with its advisors. In this regard, the LATAM’s Directors Committee, at meetings held on September 21 and 23, 2021, reviewed such financing proposals and recommended the Board of Directors to approve the proposal submitted by a group of financiers comprised of Oaktree Capital Management, L.P. (“OCM”) and Apollo Management Holdings, L.P. (“Apollo”) and certain funds, accounts and entities advised by OCM and Apollo (hereinafter, the “Tranche B DIP Financing Proposal”). At a meeting held on September 24, 2021, the Board of Directors -by unanimous vote of the independent directors-, resolved to approve the Tranche B DIP Financing Proposal, subject to the Court’s approval. Notwithstanding, the aforementioned, LATAM could receive other financing proposals for Tranche B of the DIP Credit Agreement, which would be timely evaluated by the Company and its advisors. • An amendment to the DIP Credit Agreement (the “Tranche B Amendment”) to effectuate the Tranche B DIP Financing Proposal was submitted to the Court for approval on this same date. The Tranche B DIP Financing Proposal shall be subject to the terms and conditions set forth in the DIP Credit Agreement, except for the particularities of the Tranche B Amendment, which are indicated below: – Lenders: Group of lenders consisting of OCM and Apollo and certain funds, accounts and entities advised by OCM and Apollo. – Committed Amount: US$750 million, for principal amount. – Maturity Date: As well as the Tranche A facility and the Tranche C facility, the scheduled maturity date of the Tranche B Financing Proposal is April 8, 2022, subject to the possibility that LATAM may extend such maturity date Appendices 131 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS for an additional 60-day period in the event that LATAM’s reorganization plan has been confirmed by an order of the Court but substantial consummation thereof is still pending under the rules of the Chapter 11 Proceeding. In addition, the Tranche B Amendment provides that the Tranche A and the Tranche B lenders have consented to an extension of the maturity date by LATAM in its sole discretion up to June 30, 2022. All of the foregoing, unless the maturity date is accelerated in accordance with its terms, including, without limitation, in the event of an event of default under the DIP Credit Agreement (hereinafter, the “Maturity Date”). • It should be added that the possibility of extending the maturity date until June 30, 2022 under the terms indicated in the preceding paragraph does not apply to the Tranche C facility. Consequently, should LATAM desire to extend the maturity date of Tranche C facility until the aforementioned date, it will require the consent of the Tranche C creditors. the choice made by LATAM at the time of requesting a disbursement under the Tranche B facility, and LATAM may choose between (i) paying interest in cash at the maturity of each quarterly interest period, or (ii) capitalizing such interest on a quarterly basis to be paid in 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 payable in cash at the end of each interest period will bear interest at LIBO plus 7% per annum for Eurodollar loans and 6% per annum plus the base rate for ABR loans. • Loans whose interest is capitalized on a quarterly basis for payment on the Maturity Date will bear interest at LIBO plus 7.5% per annum in the case of Eurodollar loans and at 6.5% per annum plus the base rate in the case of ABR loans. – Interest and Fees: – Fees and Other Charges: Tranche B commitment per annum, which will be calculated daily, and will be payable on the last business day of each quarter until the Maturity Date. • A Yield-enhancement Payment payable in cash in an amount equal to 0.60% of the total Tranche B commitment, payable on the Tranche B closing date. • If the scheduled maturity date is extended beyond June 30, 2022, a fee equal to 1% of the total Tranche B commitments (Extension Fee) payable in cash on the date on which the extension is made. – It is worth mentioning that, as indicated above, given that the Tranche B DIP Amendment extends to Tranche A the possibility of extending the maturity date until June 30, 2022, the information provided in the material fact dated September 17, 2020 is hereby supplemented in the sense that the Extension Fee of the Tranche A facility would only accrue in the event that the scheduled maturity date is extended beyond June 30, 2022. on the Maturity Date, calculated on the total Tranche B commitment at a percentage that varies depending on the Maturity Date. Such percentage shall be (i) 0.5% if it occurs after April 8, 2022 but on or before April 30, 2022; (ii) 0.8% if it occurs after April 30, 2022 but on or before June 30, 2022; and (iii) 1% if it occurs after June 30, 2022. – Collateral and Preferences: Tranche B will be secured by the same assets that currently secure Tranche A and Tranche C under the DIP Credit Agreement; provided, however, that the collateral of Tranche A will be senior to the collateral of Tranche B, and the collateral of Tranche B will be senior to the collateral of Tranche C. LATAM is awaiting the Court’s decision in response to the Tranche B DIP Financing Proposal. With this date, the reserve of the communication which was sent as Reserved Material Fact, on September, 25, 2021, is raised, which content is incorporated in this communication. • Interest: Both the applicable interest rate and the interest payment dates will depend on • An availability fee (Undrawn Commitment Fee) payable in cash equal to 0.50% on the daily unused • In addition, the Tranche B Amendment contemplates a Backend Fee payable Appendices 132 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS Santiago, October 1, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of August 2021, 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 been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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. Santiago, October 11, 2021 MATERIAL FACT 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), registration in the Securities Registry No. 306: As previously reported, the Company and certain of its direct and indirect subsidiaries (collectively with LATAM, the “Debtors”) are currently subject to a reorganization proceeding in the United States of America under Chapter 11 of Title 11 of the United States Code, before the United States Bankruptcy Court for the Southern District of New York (the “Chapter 11 Proceeding”). Santiago, October,11, 2021 MATERIAL FACT Pursuant to 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), Securities Registration No. 306: As part of the Chapter 11 Proceeding and potential restructuring transactions thereunder of the Debtors and/or certain of their indebtedness, the Company entered into confidentiality agreements (collectively, the “NDAs”) with certain counterparties, pursuant to which the Company agreed to publicly disclose certain information, including material non-public information (the “Cleansing Materials”), upon the occurrence of certain events set forth in the NDAs. In satisfaction of its obligations under certain of such NDAs, the Company is furnishing the Cleansing Materials, as Exhibits 99.1 and 99.2 hereto. Finally, it is reported that while discussions are ongoing, as of October 11, 2021, the Company had not yet reached an agreement with respect to the material terms of a potential restructuring transaction. 1. Update on LATAM’s Chapter 11 Proceeding: • As previously disclosed, in the context of the reorganization proceedings of LATAM and certain of its direct and indirect subsidiaries (collectively with LATAM, the “Debtors”) in the United States of America (the “Chapter 11 Proceeding”) pursuant to the rules set forth in Chapter 11 (the “Chapter 11”) of Title 11 of the United States Code (the “U.S. Bankruptcy Code”), LATAM is currently negotiating with various interested parties to agree upon the terms of a plan of reorganization and financing to successfully emerge from the Chapter 11 Proceeding in compliance with all applicable laws. • In the context of these negotiations, and as informed by a material fact dated September 9, 2021, LATAM (i) has entered into non- Appendices 133 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS disclosure agreements with various stakeholders, and has developed and made available to them certain material non-public information; and (ii) has requested proposals from its most significant creditors and majority shareholders. • In response to requests for proposals, as of this date, LATAM has received certain non-binding equity and debt financing proposals (each such proposal, an “Exit Proposal”) from its most significant creditors and majority shareholders. • As informed by a material fact dated as of the date hereof, pursuant to the terms of certain non-disclosure agreements and in furtherance of the process, on this date, LATAM has publicly disclosed the Exit Proposal submitted by a group of ad-hoc creditors (the “Ad-Hoc Creditor Group”) represented by Moelis & Company and White & Case LLP (the “Disclosed Proposal”), as well as LATAM’s Preliminary Issues List (the “Preliminary Issues List”) in which the Company expressed certain concerns to the Ad-Hoc Creditor Group (hereinafter, the Disclosed Proposal together with LATAM’s Preliminary Issues List , the “Disclosed Information”). The Disclosed Information is currently publicly available at https://www. latamreorganizacion.com/en/ publications/. • The Disclosed Proposal contemplates structure, adequate liquidity, the ability to successfully execute its business plan in a sustainable manner over time and in compliance with all applicable laws. the raising of new funds of over US$5 billion through the issuance of new equity and debt, which would be partially backstopped by the proposing parties. If the Disclosed Proposal were to be approved and implemented according to its terms, it would result in a substantial dilution of LATAM’s currently issued shares. • In addition, and without limiting the generality of the foregoing, LATAM contemplates summoning its shareholders to an extraordinary shareholders’ meeting when appropriate subject to the progress of the ongoing negotiations with the various stakeholders that are currently pending. • The commercial concerns raised 2. LATAM Exclusivity Periods: by LATAM in its Preliminary Issues List reflect the Company’s focus on ensuring an appropriate amount of leverage and liquidity upon exit of the Chapter 11 Proceeding and throughout the business plan period, as well as compliance with all applicable laws including Chilean law, in the implementation of the plan. LATAM also identified concerns related the lack of detail on most of the key financing and backstop terms. • The Bankruptcy Court for the Southern District of New York (the “Court”) hearing the Chapter 11 Proceeding has authorized the extension of the period during which the Debtors have the exclusive right to file the plan of reorganization until October 15, 2021, and the exclusive right to seek acceptance thereof until December 15, 2021 (collectively, the “Exclusivity Periods”). • LATAM continues to engage with • In case it is necessary to request significant claimholders and its majority shareholders with respect to Exit Proposals, and continues to focus on ensuring that any exit strategy allows it to emerge with a robust capital a new extension of the Exclusivity Periods, this will be duly requested to the Court and informed to your Commission and to the market. Santiago, October 14, 2021 MATERIAL FACT Pursuant to 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), Securities Registration No. 306: • As previously disclosed, in the context of the reorganization proceedings of LATAM and certain of its direct and indirect subsidiaries (collectively with LATAM, the “Debtors”) in the United States of America (the “Chapter 11 Proceeding”) pursuant to the rules set forth in Chapter 11 (the “Chapter 11”) of Title 11 of the United States Code (the “U.S. Bankruptcy Code”), LATAM is currently negotiating with various interested parties to agree upon the terms of a plan of reorganization and financing to successfully emerge from the Chapter 11 Proceeding in compliance with all applicable laws; and continues to focus on ensuring that any exit strategy allows the group to emerge from Chapter 11 with a robust capital structure, with the ability to successfully execute its business plan in a sustainable manner over time and in compliance with all the applicable laws. Appendices 134 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS • On this date, the Debtors filed a motion with the Bankruptcy Court for the Southern District of New York to extend the period during which they will have the exclusive right to file the plan of reorganization from October 15, 2021 to November 26, 2021, and the exclusive right to seek acceptance thereof from December 15, 2021 to January 26, 2022. • This request supports the development of a plan of reorganization and will help in the negotiation with the various interested parties in the Chapter 11 Proceeding. • The Group will keep its shareholders and the market informed about the progress of the Chapter 11 Proceeding. In addition, and without limiting the generality of the foregoing, LATAM contemplates summoning its shareholders to an extraordinary shareholders’ meeting when appropriate subject to the progress of the ongoing negotiations with the various stakeholders that are currently pending. Santiago, November 9, 2021 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 General Rule No. 30, duly authorized by the Board as of today, I inform you the following as a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of September 2021, dated as of today, included in the following link https:// www.latamreorganizacion.com/en/ publications/. the securities law or the applicable regulation and has been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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. Santiago, November 10, 2021 MATERIAL FACT 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, duly authorized, I inform you as a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”) the following: • This MOR does not replace in any way the financial information that the Company provides regularly according • As previously reported, the Super- Priority Debtor-In-Possession Term Loan Agreement (the “DIP Credit Agreement”) subscribed in the context of the reorganization process of LATAM and certain of its direct and indirect affiliates in the United States (“Chapter 11 Proceedings”) contemplates an eventual Tranche B for up to US$750 million, subject to the approval of the United States Bankruptcy Court of the Southern District of New York that is familiar with the Chapter 11 Proceedings (the “Court”) and other customary conditions for this type of transaction. This is in addition to the Tranche A financing for US$1.3 billion and the Tranche C financing for US$1.15 billion currently existent thereunder. • As reported via Material Fact, on September 29, 2021, LATAM’s Board – by unanimous vote of the independent directors- approved on September 24, 2021, an amendment to the DIP Credit Agreement (the “Tranche B Amendment”) in order to implement a financing proposal for Tranche B submitted by a group of financiers comprised of Oaktree Capital Management, L.P. (“OCM”) and Apollo Management Holdings, L.P. (“Apollo”) and certain funds, accounts and entities advised by OCM and Apollo. Appendices 135 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS • Such Tranche B Amendment was approved by the Court on October 18, 2021. • Finally, on November 10, 2021, it is expected that (i) the Tranche B Amendment will be subscribed, thereby incorporating Tranche B to the DIP Credit Agreement; and (ii) a new draw will be made under the DIP Credit Agreement for an amount of US$200 million. Such disbursement would be made in full by the Tranche B financiers in accordance to what was established in the DIP Credit Agreement. Santiago, November 26, 2021 MATERIAL FACT 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), registration in the Securities Registry No. 306: As previously reported, the Company and certain of its direct and indirect subsidiaries (collectively with LATAM, the “Debtors”) are currently subject to a reorganization proceeding in the United States of America under Chapter 11 of Title 11 of the United States Code, before the United States Bankruptcy Court for the Southern District of New York (the “Chapter 11 Proceeding”). As part of the Chapter 11 Proceeding and potential restructuring transactions thereunder of the Debtors and/or certain of their indebtedness, the Company entered into confidentiality agreements (collectively, the “NDAs”) with certain counterparties, pursuant to which the Company agreed to publicly disclose certain information, including material non-public information (the “Cleansing Materials”), upon the occurrence of certain events set forth in the NDAs. In satisfaction of its obligations under certain of such NDAs, the Company is furnishing the Cleansing Materials, as Exhibits 99.1, 99.2 and 99.3 hereto. Finally, it is reported that the Company and the other Debtors have executed a Restructuring Support Agreement with the ad hoc Group of the Company’s claimholders, Costa Verde Aeronáutica S.A. and Inversiones Costa Verda Ltda. y Cía en Comandita Por Acciones, Delta Air Lines, Inc., Qatar Airways Investment (UK) Ltd, Andes Aerea SpA, Inversiones Pia SpA and Comercial Las Vertientes SpA, which is attached as exhibit 99.1. Santiago, November 26, 2021 MATERIAL FACT Pursuant to 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 report the following MATERIAL FACT of LATAM Airlines Group S.A. (“LATAM” or the “Company”), Securities Registration No. 306: 1. In the context of the reorganization proceeding of LATAM and certain of its direct and indirect subsidiaries (collectively with LATAM, the “Debtors”) in the United States of America (the “Chapter 11 Proceeding”) pursuant to the rules set forth in Chapter 11 (the “Chapter 11”) of the U.S. Bankruptcy Code, on this date, the Debtors have filed with the Bankruptcy Court for the Southern District of New York where the Chapter 11 Proceeding is pending (the “Court”), a plan of reorganization and financing (the “Plan of Reorganization”) which contemplates a series of transactions in order to successfully emerge from the Chapter 11 Proceeding in compliance with all applicable laws. Such plan, in order to be implemented, must first be approved by the requisite creditors classes and confirmed by the Court in accordance with the U.S. Bankruptcy Code. 2. The restructuring contemplated in the Plan of Reorganization is supported by a group of unsecured creditors of LATAM represented by Evercore (the “Evercore Represented Creditors”). Additionally, and subject to the confirmation by their respective boards, such restructuring is also supported by (i) Delta Air Lines, Inc.; (ii) Qatar Airways Investment (UK) Ltd.; (iii) the Cueto group (i.e., Costa Verde Aeronáutica S.A. and Inversiones Costa Verde Ltda. y Cía. en Comandita Por Acciones); and (iv) the Eblen group (i.e., Andes Aérea SpA, Inversiones Pia SpA and Comercial Las Vertientes SpA). Hereinafter, the parties indicated in (i), (ii) and (iii), the “Backstop Shareholders”. 3. The Plan of Reorganization contemplates, among other things: A. A capital increase from the current approximate amount of US$3,146 million divided into 606,407,693 common shares to approximately the amount of US$13,602 million divided into approximately 606,407,693,000 common shares. This capital increase in the approximate amount of US$10,456 million will be carried out through (i) the issuance of new common stock (the “New Common Stock”), representing approximately US$800 million, and (ii) the issuance of shares intended Appendices 136 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS to support the issuance of three classes of new convertible notes (the “New Convertible Notes”) and the potential conversion thereof into common shares of the Company, representing in the aggregate approximately US$9,656 million. As a consequence of the foregoing, and notwithstanding the preemptive rights of LATAM’s shareholders pursuant to applicable law, according to the terms and conditions of the Plan of Reorganization, the shares currently issued by the Company would represent approximately 0.1% of the total shares of LATAM after the reorganization. The New Common Stock will be preemptively offered to all of the Company’s shareholders, as required by current legislation. In addition, it should be noted that the placement of all of the New Common Stock is assured because, subject to the execution of commitment letters and definitive documentation, (i) the Backstop Shareholders have agreed to backstop up to US$400 million of New Common Stock without being entitled to any payment as a result of such commitment; and (ii) the remaining US$400 million, to the extent not subscribed by the remaining shareholders’ of LATAM, will be subscribed by the Evercore Represented Creditors, who have agreed to backstop the placement of the New Common Stock for up such amount in exchange for a payment of 20% calculated on such amount. B. The New Convertible Notes issuance, in accordance with the details indicated below: i. New Convertible Notes denominated “New Convertible Notes Class A” and “New Convertible Notes Class C” to be allocated in settlement of certain claims against LATAM existing as of the date of filing of the voluntary petition of relief under Chapter 11, to restructure such claims. The difference between the two is that while the recipients of the New Convertible Notes Class A are unsecured creditors of LATAM who elect not to contribute new money to the Company (thereby receiving New Convertible Notes Class A in lieu of payment of their claims), the recipients of the New Class C Convertible Notes are unsecured creditors who elect to contribute new money, thereby receiving New Convertible Notes Class C in exchange for a combination of a settlement of their claims and a contribution of new money, at a rate of approximately US$0.921692 of new money for each US$1 of claims (the “Subscription Ratio”). As explained further below, the aggregate amount of the New Convertible Notes Class C is approximately US$6,816 million. As a result of the Subscription Ratio, should this New Convertible Notes Class C were subscribed in their entirety by unsecured creditors, such subscription would require (i) a new money contribution of approximately US$3,269 million; and (ii) a settlement of unsecured claims for approximately US$3,547 million. It should be added that the Evercore Represented Creditors, subject to the execution of commitment letters and definitive documentation, have agreed to backstop the placement of the integrity of the New Convertible Notes Class C in exchange of a payment of 20% calculated over the aforementioned new money contribution amount of approximately US$3,269 million. subscribed by such shareholders, the unsecured creditors that are otherwise beneficiaries thereof may receive in lieu of such New Convertible Bonds, distributions of the cash obtained from such subscription. ii. “New Convertible Notes Class B” intended to raise new money, which will also be preemptively offered to all of the Company’s shareholders. The placement of these bonds is fully backstopped by the Backstopping Shareholders, without the right to receive any payment in exchange for such commitment, subject to the execution of commitment letters and definitive documentation. It is worth noting that the new money that will be obtained by the Company due to the placement of the New Convertible Notes Class B, the New Convertible Notes Class C and the New Common Stock will amount approximately to US$5,442 million. Finally, although the New Convertible Notes Class A and the New Convertible Notes Class C are structured to be delivered in settlement of existing claims, they will be preemptively offered to LATAM’s shareholders as required by applicable law. In the event they are C. The incurrence of new debt for approximately US$2,250 million and a new revolving credit facility for approximately US$500 million, which will be structured after a competitive process in the market in order to obtain the best financial conditions available at the time of contracting. Appendices 137 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS 4. With respect to the New Common Stock: A. Subscription Price: The price at which the New Common Stock will be offered will reflect a 13.73% discount with respect to the equity value of LATAM at the consolidated level (“LATAM’s Equity Value”). However, to the extent LATAM’s Equity Value set forth in the Plan of Reorganization is amended, the subscription price shall also be amended. B. Placement Mechanics: As indicated, these shares will be preemptively offered to all of the Company’s shareholders during the respective preemptive rights offering period (the “First POP”). The Backstop Shareholders have agreed to subscribe their respective pro-rata in the First POP without being entitled to any payment resulting from such commitment. In the event that after the expiration of the First POP, New Common Stock is still available, such stock will be preemptively offered to all shareholders of the Company who have participated in the First POP (including, without limitation, the Backstop Shareholders and other LATAM shareholders). As mentioned above, subject to the execution of binding commitment letters and definitive documentation, the Backstop Shareholders have agreed to backstop up to US$400 million of the New Common Stock without being entitled to any payment as a result of such commitment; provided, however, that the aggregate amount of shares that the Backstop Shareholders will have in LATAM as a result of the subscription of New Common Stock and the exercise of the conversion option of the New Convertible Notes Class B, shall not exceed 27% of the capital of the reorganized Company. Finally, in the event that after the foregoing, New Common Stock is still available, the remainder will be subscribed by the Evercore Represented Creditors up to the amount of US$400 million, who have assumed such commitment in exchange for a payment of 20% calculated on such amount, subject to the execution of binding commitment letters and definitive documentation. 5. With respect to the New Convertible Notes Class A: A. Amount of the Issue: Approximate amount of US$1,467 million. B. Maturity Date: Payable in a single installment on December 31, 2121. C. Interest: No interest will accrue. 6. With respect to the New Convertible Notes Class C: D. Conversion Ratio: Conversion ratio of New Convertible Bonds Class A into shares of the Company at a ratio of 0.193333x; provided, however, that to the extent LATAM’s Equity Value set forth in the Plan of Reorganization is amended, such conversion ratio shall also be amended. However, the conversion ratio shall decrease by 50% in the event that the conversion option is exercised after the 60th day after the date on which the Plan of Reorganization becomes effective (the “Effective Date”). E. Distribution of New Convertible Notes Class A:To the extent that the New Convertible Notes Class A are not subscribed by the Company’s shareholders during the respective preemptive rights offering period, the Plan of Reorganization contemplates that they will be allocated to unsecured creditors who do not opt to participate in the New Convertible Notes Class C, in settlement of their claims. It should be added that the Backstop Shareholders have agreed to waive their respective preemptive rights to subscribe for these instruments. A. Amount of the Issue: Approximate amount of US$6,816 million, which to the extent fully subscribed by unsecured creditors would require (i) a new money contribution of approximately US$3,269 million; and (ii) acceptance of a settlement of their claims for approximately US$3,547 million. B. Maturity Date: Payable in a single installment on December 31, 2121. C. Interest: No interest will accrue. D. Conversion Ratio: Conversion ratio of New Convertible Bonds Class C into shares of the Company at a ratio of 0.705506x; provided, however, that to the extent LATAM’s Equity Value set forth in the Plan of Reorganization is amended, such conversion ratio shall also be amended. However, the conversion ratio will decrease by 50% in case the conversion option is exercised after the 60th day from the Effective Date. E. Distribution of New Convertible Notes Class C: To the extent that the New Convertible Notes Class C are not subscribed by the Company’s Appendices 138 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS shareholders during the respective preemptive rights offering period, the Plan of Reorganization contemplates that they will be subscribed by unsecured creditors who opt to participate in the New Convertible Notes Class C in exchange of (i) a settlement of their claims; and (ii) a new money contribution pursuant to the Subscription Ratio. It should be added that the Backstop Shareholders have agreed to waive their respective preemptive rights to subscribe for these instruments. 7. With respect to the New Convertible Notes Class B: A. Amount of the Issue: Approximate amount of US$1,373 million in new money. B. Maturity Date: Payable in a single installment on December 31, 2121. C. Interest: Interest shall accrue payable in cash at a rate of 1% per annum; provided, however, that no interest shall accrue during the first 60 days from the Effective Date. D. Conversion Ratio: Conversion ratio of New Convertible Bonds Class B into shares of the Company at a ratio of 1.159152x; provided, however, that to the extent LATAM’s Equity Value set forth in the Plan of Reorganization is amended, such conversion ratio shall also be amended. This conversion ratio implies an implicit price per share equal to that of the New Common Stock. However, the conversion ratio will decrease by 50% in the event that the conversion option is exercised after the fourth anniversary date plus 60 days from the Effective Date. E. Lock-up Period: In the event that the conversion option is exercised within 60 days after the Effective Date, the shares received as a result of the conversion may not be transferred until the fourth anniversary from the Effective Date; provided, however, that such shares could be subjected to encumbrances during such period. F. Subscription of New Convertible Notes Class B: To the extent that the New Convertible Notes Class B are not subscribed by the Company’s minority shareholders during the respective preemptive rights period, they will be subscribed in their entirety by the Backstop Shareholders in their capacity as strategic shareholders, who have agreed to fully backstop the placement of the New Convertible Notes Class B that are not subscribed by the remaining shareholders of the Company, not demanding any backstop payment in exchange for such commitment. 8. The Plan of Reorganization also contemplates that LATAM’s bylaws will be amended so that, during the two years following the Effective Date, the approval of any of the matters contemplated in Article 67 of Law No. 18,046 will require the affirmative vote of 73% of the voting shares, instead of two-thirds of the voting shares as provided therein. 9. In addition, the Plan of Reorganization also contemplates a number of customary elements for these type of transactions, including (i) the establishment of an incentive plan for the management of LATAM, the terms and conditions of which are to be determined; and (ii) the payment in full of the debtor-in-possession financing granted to the Company in the context of the Chapter 11 Proceeding with the new funds raised in connection with the transactions contemplated under the Plan of Reorganization. 10. As is customary in this type of restructuring, the various creditors and interest holders in the Chapter 11 Proceeding have been divided in the Plan of Reorganization into different classes. Some of these creditors or interest holders have been grouped into classes that are not impaired by the Plan of Reorganization because it is contemplated that their claims will be refinanced, paid, or otherwise treated in an unimpaired manner. Under the rules of Chapter 11, these interested parties are presumed to accept the Plan of Reorganization. On the other hand, there are other creditors and stakeholders that are grouped into classes that will be impaired by the Plan of Reorganization because their claims are restructured under the Plan of Reorganization. Under the rules of Chapter 11, these classes of interested parties will be entitled to vote, accepting or rejecting the Plan of Reorganization. 11. If the Plan of Reorganization is approved by the requisite creditor vote, confirmed by the Court and implemented, it will enable the Debtors to emerge from the Chapter 11 Proceeding with a robust capital structure, with adequate liquidity and will allow the Company to successfully execute its business plan in a sustainable manner over time. Appendices 139 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS 12. The Company will keep its shareholders, creditors and the market informed on the progress of the Chapter 11 Proceeding. In addition, the Board of Directors of the Company has agreed to call an Extraordinary Shareholders’ Meeting for December 23, 2021 in order to summon its shareholders on the Reorganization Plan and the next steps in the Chapter 11 Proceeding. The details of such shareholders’ meeting will be informed to the shareholders through the applicable broadcast media as provided in applicable law. Santiago, November 30, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. 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 October 2021, 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 been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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 Santiago, December 23, 2021 MATERIAL FACT 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, duly authorized, I inform you as a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”), registration in the Securities Registry No. 306, the following: • As previously reported, LATAM and certain entities of its business group, which are part of the reorganization process of LATAM in the United States (“Chapter 11 Proceedings”), executed a contract titled Super-Priority Debtor-In- Possession Term Loan Agreement (the “DIP Credit Agreement”) for an amount of up to US$ 3.2 billion, structured in different tranches, denominated Tranche A (up to US$ 1,300 million); Tranche B (up to US$ 750 million); and Tranche C (up to US$ 1,150 million). • As reported via Material Fact, on October 8, 2020, June 9, 2021 and November 10, 2021, LATAM informed that the first, second and third draws under the DIP Credit Agreement took place for an amount of US$ 1,150 million, US$ 500 million and US$ 200 million, respectively. • Given the extension of the health and travel restrictions imposed by the authorities, as well as the analysis of the liquidity projection, as of today’s date, it is reported that a new disbursement has been requested under the DIP Credit Agreement in the amount of US$ 100 million. This disbursement would be made in full by the Tranche B financiers in accordance with the provisions of the DIP Credit Agreement. Appendices 140 Integrated Report 2021Our business INDUSTRY CONTEXT MATERIAL FACTS Santiago, December 30, 2021 MATERIAL FACT 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 a material fact of LATAM Airlines Group S.A. (“LATAM Airlines” or the “Company”): • As informed, LATAM Airlines began 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 Proceedings”). • LATAM has to prepare and deliver a Monthly Operating Report (“MOR”), as part of the reporting obligations it has to comply with as part of the Chapter 11 Proceedings. • Considering the abovementioned, we hereby make available for your Commission and for the market the MOR corresponding to the month of November 2021, 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 been prepared for the sole purpose to comply with the obligations of the Chapter 11 Proceedings. 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 as part of the Chapter 11 Proceedings, 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. Appendices 141 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS The following important factors, and those important factors 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 differ materially from those expressed in any forward-looking 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 investments 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. 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: 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 subject to the risks and uncertainties associated with bankruptcy. These risks include our ability to: • confirm and consummate a plan of reorganization with respect to our Chapter 11 proceedings; • 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 • obtain sufficient financing, • the actions and decisions of our 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, 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. Appendices 142 Integrated Report 2021to US$750 million. Among other things, the Tranche B facility provided certain improved pricing terms and conditions as compared to the pricing conditions of the existing Tranche A and C facilities. 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. Our business FINANCIAL RESULTS RISK FACTORS 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 quantify 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 spend a significant amount of time and effort focusing on the Chapter 11 proceedings. On September 19, 2020, the Bankruptcy Court entered an order approving the Debtors’ motion to approve certain debtor-in-possession financing consisting of a Tranche A facility in an amount of up to US$1.3 billion, and an initial Tranche C facility in an amount of up to US$1.15 billion. On October 18, 2021, the Bankruptcy Court entered an order approving the Debtor’s motion for additional debtor- in-possession financing consisting of a Tranche B facility in an amount of up On November 26, 2021, the Debtors filed the Plan of Reorganization and entered into the RSA and, on January 12, 2022 entered into the Backstop Agreements. We cannot predict whether the Plan will be confirmed. If the Plan is not confirmed and we have to renegotiate a new plan of reorganization, our Chapter 11 proceedings may take longer to conclude, which may adversely impact our ability to reorganize our business and emerge from bankruptcy. Our Plan of Reorganization provides that we may refinance certain of our existing obligations and that we may also seek additional exit financing to repay certain other existing obligations and to fund our operations. Our Chapter 11 proceedings may also make it necessary for us to seek additional debtor-in- possession 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 business may be seriously jeopardized and and other costs in connection with our reorganization, and we expect that we will continue to incur significant 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 confirmation 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 reorganization, we will have to demonstrate feasibility which will in part rely on our ability to demonstrate sufficient liquidity upon emergence. 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 prospective 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 significantly, mainly as a result of developments relating to the spread of COVID-19, our business remains capital intensive. In addition to the cash requirements necessary to fund our ongoing operations, we have incurred significant professional fees 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 covenants, milestones and other conditions in our debt instruments, 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 generate positive cash flow from Appendices 143 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 1 NTD: This is all we can say at this stage, until the BCA order is issued. operations, which in part depends on factors beyond our control relating to developments deriving from the spread of COVID-19, (iv) our ability to confirm 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.1 To emerge successfully from Bankruptcy Court protection as a viable entity, we must meet certain statutory requirements. On March 21, 2022, the Bankruptcy Court entered an order approving the disclosure statement regarding the proposed Plan of Reorganization, and corresponding solicitation materials, finding that the disclosure statement contained adequate information and permitting solicitation to commence (the “Disclosure Statement Order”). Pursuant to the Disclosure Statement Order, the Debtors are obligated to commence solicitation of its Plan of Reorganization within five business days after entry of the Disclosure Statement Order. Notwithstanding the approval of the disclosure statement, we will still 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 confirmation of our plan. To date, and as described herein, although we have filed a proposed plan of reorganization, there can be no assurance as to whether parties in interest will seek to challenge confirmation of the plan, and as to when or whether the Bankruptcy Court will approve the Plan of Reorganization. Moreover, certain parties in interest have sought relief from the Bankruptcy Court which, if granted, could materially affect the Plan and the transactions contemplated therein. Similarly, just as we cannot assure that a plan of reorganization will be approved by the Bankruptcy Court, we cannot 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 reorganization 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 nonbankruptcy law so provides. While the Debtors do not believe that applicable nonbankruptcy law voids any of the Debtors’ assignments, a counterparty may nevertheless object to an assignment on such grounds. The success of any reorganization will depend on approval by the Bankruptcy Court and the willingness of our creditors 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 Bankruptcy 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 proceedings, it is unclear whether or when we would be able to reorganize our business and what, if any, distributions holders of claims against us, including holders of our secured and unsecured Appendices 144 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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 Chapter 7 of the Bankruptcy Code. In the event of conversion, a Chapter 7 trustee would be appointed or elected to liquidate our assets for distribution in accordance with the priorities established by the Bankruptcy Code. Any Chapter 11 plan of reorganization that we may implement will be based in large part upon 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 affect 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 future 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 macroeconomic conditions. In light of the many uncertainties and risks deriving from developments relating to the spread of COVID-19 and new variants, 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 possible that one or more of the assumptions and estimates that are the basis of these financial forecasts will not result as expected. In our case, the forecasts may be even more speculative than normal because of the many uncertainties we face relating to, among others, macroeconomic conditions in the countries in which the group operates, depressed demand for air travel and travel restrictions imposed by governments as a result of the COVID-19 pandemic, and the time and manner in which COVID-19 vaccines are distributed in the countries in which the group operates. Accordingly, our actual financial condition and results of operations could 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 results 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 reported in our consolidated historical financial statements, which do not give effect to any adjustments to the carrying value of assets or amounts of liabilities that might be necessary as a consequence of confirmation of the reorganization plan. 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 conditions precedent to effectiveness, such as obtaining government 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. Operating in bankruptcy imposes significant risks on the Debtors’ operations. Although the Debtors believe that the effective date of the Plan will occur in the second half of 2022, there can be no assurance as to such timing or that the conditions to the effective date will ever be satisfied, including without limitation: (i) entry of the confirmation order confirming the Plan by the Bankruptcy Court in form Appendices 145 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS and substance reasonably satisfactory to the Debtors, and not having been stayed or reversed or vacated on appeal and (ii) the satisfaction (or waiver in accordance with the terms therein) of the conditions precedent for the closing of the exit financing. Chapter 11 proceedings. Our access to additional financing for the foreseeable future will likely continue to be limited, if it is available at all. Therefore, adequate funds may not be available when needed or may not be available on favorable terms. 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. 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. 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. 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 economic conditions as a result of developments relating to the spread of COVID-19 or otherwise. Accordingly, we cannot guarantee that a Chapter 11 plan of reorganization will achieve our stated goals and permit us to effectively implement our strategy. Furthermore, even if our debts are reduced or discharged through a plan of reorganization, we may need to raise additional funds through public or private debt or equity financing or other various means to fund the group’s business after the completion of our 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 reorganization could be asserted against the reorganized entities and may have an adverse effect on the business and financial condition and results of operations of the group on a post-reorganization basis. Our Chapter 11 proceedings may adversely affect our commercial relationships and our ability to negotiate favorable terms with important stakeholders and counterparties, including potential sources of financing. Further, public perception 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 adversely affect us. In particular, critical suppliers, credit and debit card processors and acquirers, banks, export credit agencies, 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 proceedings. Also, during the pendency of the Chapter 11 proceedings, 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 ordinary course of business, which may limit our ability to respond 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 restructuring 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 Appendices 146 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS pandemic, or fear of such an event, has materially 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. The COVID-19 pandemic has negatively affected global economic conditions, disrupted supply chains and otherwise 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 preclude 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 significant 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 unabated, 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 global 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 travel restrictions, border closures or operational issues resulting 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 impacts 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 operations. These measures and issues have had and could continue to have a material adverse effect on the group’s business 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 implemented as a group may not be sufficient to prevent the spread or contagion of COVID-19 or other infectious diseases 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. For further information on the health safety and sanitation measures implemented by the group, see section Safety. However, it is possible that these measures could prove insufficient and COVID-19 or other diseases could be transmitted to passengers 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 with regard to corporate travel, long-haul travel, and travel demand. The potential for mid- to long-term changes to consumer behavior resulting from the COVID-19 pandemic exists and could lead to adverse financial impacts for the Company. Corporate 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 COVID-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. 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 becoming one of the most admired airlines in the world and renewing 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 ourselves 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 industry, and to increase our competitiveness. The new travel model is based on a continued reduction in air fares that makes air travel accessible to a wider audience, and in particular to Appendices 147 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS those who wish to fly more frequently. This model requires continued cost reduction efforts and increasing revenues from ancillary activities. In connection with these efforts, the Company continues to implement a series of initiatives to reduce cost per ASK in all its operations as well as developing new ancillary revenue initiatives. Difficulties in implementing our strategy may adversely affect the group’s business, results of operation and the market value of our ADSs and common shares. Our financial results are exposed to foreign currency fluctuations. We prepare and present our consolidated financial statements 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 exchange 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 currencies in which revenues are denominated declines against the U.S. dollar, our results of operations and financial condition 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 economic policies affecting foreign exchange rates could also adversely affect the business, financial condition, results of operations and the return to our shareholders on their common shares or ADSs. The group depends on strategic alliances or commercial relationships in many different countries, and the business may suffer if any of our strategic alliances or commercial relationships terminates. We maintain a number of alliances and other commercial relationships in many of the jurisdictions in which LATAM and its affiliates operate. These alliances or commercial relationships 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 deteriorate, 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 political 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; • 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 agreements with the countries in which the group’s companies are based and permits from foreign governments will continue to be in effect. A 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 permission to operate at certain airports, destinations or slots, or the imposition of other sanctions could also have a material adverse effect. A change in the administration of current laws and regulations or the adoption of new laws and regulations in any of the countries in which the group operates that restrict our routes, airports 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 International and Congonhas Airports, Brasilia’s Appendices 148 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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 cancellations of capex programs could impact our operations or ability to grow in the future. Santiago’s Comodoro Arturo Merino Benítez International Airport is undergoing an important expansion, which was expected to be completed by 2021, but opened in February 2022. There is 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 investments required for the expansion project. In order to mitigate 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. Santiago’s Comodoro Arturo Merino Benítez International Airport opened its expansion at the end of February 2022. One of the most challenging issues with the new terminal is that the check-in process considers a 50% reduction in assisted check-in counters, which obligates airlines to implement self-service models, where the success depends on the companies but is also associated with the government restrictions of the destination country. One of the major operational risks we have faced 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 or limitations due to the ongoing works could negatively impact our operations, limit our ability to grow and affect our competitiveness in the country and in the region. Brazilian airports, such as the Brasilia and São Paulo (Guarulhos) International Airports, have limited the number of takeoff and landing slots per day due to infrastructural limitations.] Any condition that would prevent or delay our access to airports or routes that are vital to our strategy, or our ability 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 International Airport in Bogotá faces is the limited capacity that it has during certain time periods due to the adverse weather 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 generates delays controlled by the control tower. Another issue faced at the El Dorado International Airport is 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-regular 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 Collaborative 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 controlled 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 categories, such as exports of fish, sea products and fruits from Chile, asparagus from Peru and fresh flowers from Ecuador and Colombia. Events that adversely affect the production, 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 on 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 appreciation 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 Appendices 149 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS business, financial condition and results of operations. Jet fuel costs have historically accounted for a significant amount of our operating expenses, and accounted for 30.0% of our total costs of sales in 2021. 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 economic 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 Organization 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 conflict in Ukraine 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. In addition, lower fuel prices may result in lower fares through the reduction or elimination of fuel surcharges. We have entered into fuel hedging arrangements, but there can be no assurance that such arrangements 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 extent, in 2016. 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 number 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 reducing 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 affected by a number of different factors that are beyond our control, including air traffic and airport congestion, adverse weather conditions, unanticipated maintenance and delays by third-party service providers relating to matters such as fueling, catering and ground handling. If aircrafts fall behind 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 and the decrease in operations, the 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 disembarking procedures. This increase in turnaround times has a direct impact on our utilization rate. As LATAM recovers its operations, both domestic and international, the turnaround times between flights is expected to decrease and the aircraft utilization is expected to increase. Further, as a result of our Chapter 11 proceedings, the majority of LATAM’s fleet is operating 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 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, 2021, LATAM Airlines Group has a total fleet of 238 Airbus and 72 Boeing aircraft (six of these B767 aircraft were classified as non-current assets available for sale). 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; • 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; or • the delay, for any reason, to conclude cabin upgrade projects that could result in aircraft unavailability for a certain period of time. Appendices 150 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS The occurrence of any one or more of these factors could restrict 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 Chapter 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 current leases or to lease additional capacity required for the targeted level of operations. If we are forced to pay higher lease rates in the future to maintain our capacity and the number of aircraft in the fleet, our profitability could be adversely affected. Furthermore, through LATAM’s emergence from Chapter 11 proceedings, we will need Bankruptcy Court approval for certain lease transactions, which may delay or further complicate negotiations ultimately limiting our ability to take advantage 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 under 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 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 equipment 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 markets may limit the availability of funding or increase its costs, which could adversely affect our profitability, 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. Factors 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 issuances, 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. As of December 31, 2021, 57% of our outstanding consolidated debt bears interest at a floating rate (and 61% taking into account the US$662.3 million in DIP financing provided by Related Parties). 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 head of the United Kingdom Financial Conduct Authority (“FCA”) (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. On March 5, 2021 the FCA announced in a public statement that LIBOR for certain tenors would cease to be published on June 30, 2023. 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 Appendices 151 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS language in existing contracts referencing LIBOR. In this regard, our derivative and debt contracts may be affected by the change in the relevant rate. Because the publication of LIBOR will cease for June 2023, we have begun to migrate to the adoption of SOFR as an alternative rate, which will materialize with the termination of 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 industry (such as terrorist attacks, airline crashes or accidents and health epidemics and the related widespread government-imposed travel restrictions) may result in significant increases of airlines’ insurance premiums and/or relevant decreases 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 also 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 service, are dependent on the effective operation of the equipment, including aircraft, maintenance systems and reservation systems. The operations are also dependent on the effective operation of domestic and international air traffic control systems and the air traffic control infrastructure by the corresponding authorities in the markets in which the group operates. Equipment failures, personnel shortages, air traffic control problems and other factors that could interrupt operations could affect our 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, aircraft 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 suppliers, or adverse perception by the public that would result 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 2021, LATAM Airline Group’s main suppliers were aircraft manufacturers Airbus and Boeing. In addition to Airbus and Boeing, LATAM Airlines has a number of other suppliers, primarily related to aircraft accessories, spare parts, and components, including Pratt & Whitney, MTU Maintenance, Rolls-Royce, General Electric, Pratt & Whitney Canada, CMF International and Honeywell, among others. 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 Appendices 152 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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 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 cybersecurity 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 depend 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, telecommunications failures, computer viruses, cyber-attacks, security breaches in the supply chain (suppliers) and other security issues. These systems include our computerized airline reservation system, flight operations system, telecommunications systems, website, customer, self-service applications (“apps”), maintenance systems, check-in kiosks, in-flight entertainment systems and data centers. In addition, as a part of our ordinary business operations, we collect and store sensitive data, including personal information of our customers and employees and information 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 incidents. Hardware or software we develop or acquire may contain defects that could unexpectedly 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 protecting the privacy of personal information, disruption to our operations and damage to our reputation, any or all of which could adversely affect our business. Rapid technological advancements and digitalization could generate risks in implementation and regulatory control. Globally, there have been large advances in processes of digitization and technological innovation, some of them as a result of the COVID-19 pandemic. These new technologies could generate new risks in their implementation that could impact us directly or indirectly. As an example, the implementation of 5G in the United States had a temporary impact on operations at certain airports and generated a review by the FAA on the specific requirements for its implementation. This risk is involved in all processes of digitization and technological innovation. Similarly, other technologies or the environment of rapidly increasing technological transformation may advance faster than the review and control capacity of the authorities or the knowledge or effects of their possible impacts, which could affect us directly or indirectly in ways we cannot foresee. 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 total cost of sales (15.4% in 2021) and at times in our operating history we have experienced pressure to increase wages and benefits for our employees. A significant increase 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 specialized 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. Appendices 153 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS A strike, work interruption or stoppage or any prolonged dispute 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 renegotiation 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 during negotiations with unions may require us to enter into arbitration proceedings, use financial and management resources, and potentially agree to terms that are less favorable 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, 2021, approximately 44% of the group’s employees, including administrative personnel, cabin crew, flight attendants, pilots and maintenance technicians are members of unions and have contracts and collective bargaining agreements which expire on a regular basis. The business, financial condition and results of operations could be materially adversely affected by a failure to reach agreement with any labor union representing such employees 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 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 airline industry has, from time to time, experienced a shortage of qualified personnel, especially pilots and maintenance technicians, which has somewhat intensified during the recovery phase of air traffic following the peak of the pandemic. 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 turnover of employees, particularly pilots and maintenance technicians, sharply increase, our training costs will be significantly higher. LATAM cannot assure that it will be able to recruit, train and retain the managers, pilots, technicians and other qualified employees that are needed to continue the current operations or replace departing employees. An increase in turnover or failure to recruit, train and retain qualified employees at a reasonable cost could materially adversely affect the business, financial condition, 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 erosion of employee morale could impair the ability to execute strategy and implement operational initiatives, thereby adversely 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 Argentina, and poor economic performance in certain emerging market countries in which the group operates. The occurrence of similar events in the future could adversely affect our business. The group plans to continue to expand operations based in Latin America, which means that performance will continue to depend heavily on economic conditions 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; Appendices 154 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS • 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 adversely impact our revenues, results of operations or financial condition. An adverse economic environment, whether global, regional 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. 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 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 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 substantially upon the regulatory environment in the countries in which the group operates or intends to operate. For example, price controls on fares may limit our ability to effectively apply customer segmentation profit maximization techniques (“passenger revenue management”) and adjust prices to reflect cost pressures. High levels of government regulation may limit the scope of our operations and our growth plans. The possible failure of aviation authorities to maintain the required governmental authorizations, or our failure 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: Appendices 155 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS • 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 frequently intervened in the domestic economy and made drastic changes in policy and regulations to control inflation and affect other policies and regulations. This has required the federal government to increase interest rates, change taxes and social security policies, implement price controls, currency exchange and remittance controls, devaluations, 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 business 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 governments 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 expansion plans. Certain bilateral agreements also include provisions 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 airports 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; • 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 public 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 airlines, or due to a perception of increased risk in the industry related to concerns about war or terrorist attacks, the general 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 insurance coverage will fully cover all of our liabilities; or Our business, financial condition and results of operations could be adversely affected by high levels of competition Appendices 156 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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 dependability of service, brand recognition, passenger amenities (such as frequent flyer programs) and the availability and convenience of other passenger or cargo services. New and existing airlines (and companies providing ground cargo or passenger 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 on the industry’s revenues given their low unit costs. Lower costs allow low-cost carriers to offer inexpensive fares which, in turn, allow 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 model since 2015, while in July 2017, JetSmart, a new low-cost airline, started operations. In the Peruvian domestic market, 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 competitor VivaColombia has been operating in the domestic market since May 2012. A number of low- cost carriers have announced growth strategies including commitments to acquire significant numbers of aircraft for delivery in the next few years. The entry of low-cost carriers into local markets in which we compete, including those described above, could have a material adverse effect on our operations and financial performance. Additionally, certain of our competitors have also filed voluntary petitions under Chapter 11 of the Bankruptcy Code. The ability of competitors to significantly adjust their cost structure and become more competitive, 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 receipt of regulatory approvals of the countries in which we plan to expand our operations with joint business agreements (JBA). The group may not be able to obtain those approvals, while other competitors might be approved. Accordingly, 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 assurances 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 external 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 adversely affect operations and financial performance. For example, Aerolineas Argentinas has historically been government subsidized. Additionally, during the COVID-19 pandemic, some of our competitors on long-haul routes have received government support. Moreover, as a result of the competitive environment, there may be further consolidation in the Latin American and global airline industry, whether by means of acquisitions, joint ventures, partnerships or strategic alliances. We cannot predict the effects of further consolidation on the industry. Furthermore, 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 a Chapter 15 ruling by the Bankruptcy Court related to the bankruptcy proceedings of Avianca Brazil may appear to be inconsistent with the timeline set out for a debtor to cure a default or to return an aircraft in the Cape Town Convention (CTC) treaty that Brazil has signed, thus raising concerns about timings for remedies by creditors in respect of financings secured by aircraft. Accordingly, creditors may perceive that an increased business risk is created by these rulings for leasing or other financing transactions involving aircraft in Brazil and there is a possibility that rating agencies may issue lower credit ratings in respect of financings that are secured Appendices 157 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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. LATAM’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. LATAM’s operations are affected by environmental regulations at local, national and international levels. These regulations cover, among other things, emissions to the atmosphere, 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 result 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 Offsetting and Reduction Scheme for International Aviation (CORSIA), providing a framework for a global market-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 voluntary 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 verification of emissions from air operators, as well as on defining 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 CORSIA framework. The proliferation of national regulations and taxes on CO2 emissions in the countries that we have domestic operations, including environmental regulations that the airline industry is facing in Colombia, may also affect the cost of operations and the margins. Our 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), terrorist attacks, war or political and social instability. Increasing geopolitical tensions and hostilities in connection with the conflict in Ukraine, and the trade and monetary sanctions that have been imposed in connection with those developments, have affected, and could significantly affect, worldwide oil prices and demand, cause turmoil in the global financial system and negatively impact air travel. Situations such as these could have a material impact on the business, financial condition and results of operations. Furthermore, 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 September 11, 2001, the Company made the decision to reduce its flights to the United States. In connection with the reduction in service, the Company reduced its workforce resulting in additional expenses due to severance payments to terminated employees during 2001. Any future terrorist attacks or threat of attacks, whether or not involving commercial aircraft, any increase in hostilities relating to reprisals against terrorist organizations or otherwise and any related economic impact could result in decreased passenger traffic and materially and negatively affect the business, financial condition and results of operations. After the 2001 terrorist attacks, airlines have experienced increased costs resulting from additional security measures 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 security measures at foreign airports we serve. Revenues for airlines depend on the number of passengers carried, the fare paid by each passenger and service Appendices 158 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS factors, such as the timeliness of flight departures and arrivals. During periods of fog, ice, low temperatures, storms or other adverse weather conditions, some or all of our flights may be canceled or significantly delayed, reducing profitability. In addition, fuel prices and supplies, which constitute a significant cost for us, may increase as a result of any future terrorist attacks, a general increase in hostilities or a reduction in output of fuel, voluntary or otherwise, by oil-producing countries. Such increases may result in 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 number of requests for ticket refunds from customers due to changed or canceled 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 canceled 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 Company has agreements with financial institutions that process customer 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 certain circumstances 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. Such financial institutions may require cash or other collateral reserves to be established or withholding of payments related to receivables to be collected, including if the Company does not maintain certain minimum levels of unrestricted cash, cash equivalents and short-term investments. Refunds lower our liquidity and put us at risk of triggering liquidity covenants in these processing agreements and, in doing so, could force us to post cash collateral with the credit card companies for advance ticket sales. LATAM 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 provisions 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 proceedings will not materially affect the business. a material adverse impact on our reputation and results of operations and financial condition. We are subject to anti-corruption, anti- bribery, anti-money laundering, antitrust and other international laws and regulations and are required to comply with the applicable 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 assurance that internal policies and procedures will be sufficient to prevent or detect all inappropriate practices, fraud or violations of law by affiliates, employees, directors, officers, 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, reputation, results of operations and financial condition. The group is subject to anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations in Chile, Brazil, Peru, the United States and in the various other countries in which it operates. Violations of any such laws or regulations could have Latin American governments have exercised and continue to exercise significant influence over their economies. Governments in Latin America frequently intervene in the economies Appendices 159 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS of their respective countries and occasionally make significant changes in policy and regulations. Governmental actions have often involved, among other measures, nationalizations and expropriations, price controls, currency devaluations, mandatory increases on wages and employee benefits, capital controls and limits on imports. Our business, financial condition and results of operations may 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, including tax increases and retroactive tax claims, and other political, 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 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 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 reliable legal systems, exchange controls and other limits on our ability to repatriate earnings and changeable legal and regulatory 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 result 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 investigations 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, former President Luiz Inácio Lula da Silva was convicted of corruption 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 members of the legislative body voted to suspend President Vizcarra for twelve months and appointed Vice President Mercedes Araoz as interim president to temporarily replace 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 constitutionally and legally valid. On October 20, 2020, a group of 27 congressmen introduced a motion to hold new impeachment proceedings against President Vizcarra as a result of allegations that President Vizcarra received illicit payments from construction companies when he was the governor of Moquegua (between 2011 and 2014). On November 2, 2020, the Peruvian Congress voted to hold new impeachment proceedings. On November 9, 2020, with the affirmative vote of the required qualified members of Congress, the impeachment 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 had been undergoing political and social unrest, followed by multiple protests within the country. On November 15, 2020, Manuel Arturo Merino de Lama resigned from his Appendices 160 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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. On June 6, 2021, the second electoral round between Keiko Fujimori and Pedro Castillo was held. The winner of the election by a tight margin was Pedro Castillo, however, accusations of electoral fraud have arisen since then, generating instability in the country and raising the US dollar exchange rate to historical levels. Currently, the instability in the country continues due to the policies implemented by the current president and the current Congress of the Republic, a period that has also been marked by a high level of uncertainty following recurrent changes in the members of the government’s cabinet. In October 2019, Chile saw significant protests associated 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 impact 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 pension 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 convention took place on May 15 and 16, 2021. On July 4, 2021, the constitutional convention was installed, having 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 held presidential elections in December 2021, with leftist Gabriel Boric winning by a wide margin. developments in Latin America generally may result in a reduction in passenger traffic, which could materially and negatively affect our financial condition and results of operations. Latin American countries have experienced periods of adverse macroeconomic conditions. The business is dependent upon economic conditions prevalent in Latin America. Latin American countries have historically experienced economic instability, including uneven periods of economic growth as well as significant downturns. High interest, inflation (in some cases substantial and prolonged), and unemployment rates generally characterize each economy. Because commodities such as agricultural products, 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. recession, currency devaluation, high inflation, and political instability, which have led to adverse economic consequences. LATAM cannot ensure that Peru will not experience similar adverse developments in the future even though for some years now, several democratic procedures have been completed without any violence. LATAM cannot ensure that the current or any future administration will maintain business-friendly and open market economic policies or policies that stimulate economic growth and social stability. In Brazil, the Brazil Real gross domestic product decreased 3.5% in 2015, decreased 3.3% in 2016, increased 1.3% in 2017, increased 1.8% in 2018 and 1.1% in 2019, and decreased 4.1% in 2020, according to the Brazilian Institute for Geography and Statistics (Instituto Brasileiro de Geografia e Estadística, or “IGBE”). In addition, the credit rating of the Brazilian federal government was downgraded in 2015 and 2016 by all major credit rating agencies and is no longer investment grade. LATAM can offer no assurances as to the policies that may be implemented by the recently elected Argentine administration, or that political developments in Argentina will not adversely affect the Argentine economy. Although conditions throughout Latin America vary from country to country, our customers’ reactions to For example, in the past, Peru has experienced periods of severe economic Accordingly, any changes in the economies of the Latin American countries in which LATAM and its Appendices 161 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS affiliates operate or the governments’ economic policies may have a negative 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 bankruptcy court. The reorganization of our capital structure may include exchanges of new equity securities for existing equity 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 extinguished. In this case, amounts invested by holders of the ADSs or our shares will not be recoverable and these securities 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, effective 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 provide 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 relationship to the actual recovery, if any, by their holders in the context of our Chapter 11 proceedings. Additionally, trading prices of ADSs or our shares may experience significant 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 proceedings 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, 2022. In addition, other shareholders including, Delta Air Lines, Inc, which, as of February 28, 2022, held 20.00% of our common shares, and Qatar Airways Investments (UK) Ltd., which as of February 28, 2022, held 9.999999918% of our common shares, could have interests that may differ from those of our other shareholders. Moreover, our shareholder structure may change after emergence from Chapter 11 proceedings, and future major shareholders 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 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 designated 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 majority shareholders, which may differ from those of our other shareholders. Historically, our board of directors has designated its chairman to exercise this right; for example, the members of the board of directors elected by the shareholders in 2021 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 depositary 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. Appendices 162 Integrated Report 2021Our business FINANCIAL RESULTS RISK FACTORS 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 received 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 incur foreign currency conversion costs (to be borne by the holders of the ADRs) in connection with the foreign currency 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 regulations 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 exchange controls. Nevertheless, foreign investors still have to provide the Central Bank with information related to equity investments and must conduct such operations within the formal exchange market. Furthermore, any changes in withholding 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 may attempt to sell the holder’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 secondary market for the sale of preemptive rights can be expected to develop if the subscription price of the shares of our common stock upon exercise of the rights is below the prevailing market price of the shares of our common stock. However, we cannot assure you that a secondary market in preemptive rights will develop in connection with any future issuance of shares of our common stock or that if a market develops, a premium can be recognized on their sale. Amounts received in exchange for the sale or assignment of preemptive rights relating to shares of our common stock will be taxable in Chile and in the United States. The inability of holders of ADSs to exercise preemptive rights in respect of common shares underlying their ADSs could result in a change in their percentage ownership 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 apply to a U.S. company and, as a result, you may receive less information about us than you would receive from a comparable U.S. company. We are subject to the reporting requirements 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. issuers. 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 investors in such markets as compared with the level of regulation of the securities markets in the United States and in certain other developed countries. Appendices 163 Integrated Report 2021Commitment to the future CLIMATE CHANGE AND ECOSYSTEM PROTECTION Greenhouse gases (t CO2e) 305-1, 305-2, 305-3 and 305-4 2018 2019 2020 2021 ∆ 2021/2020 Direct emissions1 Indirect emissions2 Other indirect emissions3 11,513,608 12,149,725 5,614,368 6,497,576 16,759 4,750 18,423 218,174 16,355 24,827 14,549 2,446 Total 11,535,117 12,386,323 5,655,551 6,514,570 15.7% -11.0% -90,1 15.2% EMISSIONS 5.4% 80,69 80,34 80,06 83,69 81,62 86,04 82,02 Emissions intensity in total operations (kg CO2e/100 RTK) Emissions intensity in air operations (kg CO2e/100 RTK) Emissions intensity (net value) in total operations (kg CO2e/100 RTK)4 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. 81,08 85,57 82,79 79,68 77,86 6.0% 1.8% Source Jet Fuel1 Gasolina Diesel Natural gas Liquefied petroleum gas (LPG) Emission factor 3.16 kg CO2/kg fuel 69,300 kg CO2/TJ 74,100 kg CO2/TJ 56,100 kg CO2/TJ 63,100 kg CO2/TJ Scope of the information (%) Jet fuel – air operation Fuel – stationary sources Diesel Natural gas Gasoline LPG Fuel – mobile sources Diesel Gasoline GLP Refrigerating gases (various) Electricity Transportation using other airlines (jet fuel) 2018 100 2019 100 2020 100 2021 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 Significant atmospheric emissions 305-6 and 305-7 2018 2019 2020 2021 ∆ 2021/2020 Nitrogen oxides (NOx) – (t) 39,485 41,697 19,207 22,184 Intensity in passenger operations (g/RPK) 0.256 0.261 0.273 0.330 Intensidad en la operación de carga (g/RTK) 1,718 1,880 1,792 1,734 Sulfur oxides (SOx) – (t) Intensity in passenger operations (g/RPK) Intensity in cargo operations (g/RTK) Gases that affect the ozone laye1 1,749 0.011 0.076 46.7 1,847 0.012 0.083 21.2 851 0.012 0.079 7.8 983 0.013 0.077 0.2 15.5% 21.1% -3.2% 15.5% 6.6% -3.2% -97.7% 1 The factor was updated in information report 2021. For previous years, the factor of 3.15 kg CO2/kg of fuel was maintained. 1 Including: Halon-1301; HCFC-141b; HCFC-22; HFC-125; HFC-134a; HFC143a; HFC-32; R410A; and R507A. Appendices 164 Integrated Report 2021Employees CULTURAL TRANSFORMATION Turnover OHI Team profile LATAM Group and Affiliates – Hiring and Turnover (2021) 401-1 Organizational Health Index (2021) Total LATAM Group and Affiliates— Employees (2021) 102-8 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 of operation Argentina Brazil Chile Colombia Ecuador Peru United States Others Total Notes: Total 4,141 2,442 3,307 2,278 792 188 18 22 3,490 1,745 509 35 300 401 81 6,583 Hiring Rate (%) 23.2% 21.7% 55.2% 19.4% 9.9% 6.7% 3.3% 8.6% 22.2% 24.3% 33.8% 10.9% 11.3% 40.3% 17.2% 22.6% Turnover rate(%) 24.9% 18.7% 31.5% 22.7% 17.3% 16.3% 27.9% 230.1% 20.4% 23.9% 7.4% 58.3% 12.4% 31.9% 19.1% 22.5% Hiring Rate: New hires in the year/ Total employees by December 31. Turnover rate: Employees who left the group (voluntarily, by dismis- sal, retirement, or death in service) during the year/Total employees by December 31. By gender Men Women By age From 18 to 24 years old From 25 to 34 years old From 35 to 44 years old From 45 to 54 years old From 55 to 64 years old Over 65 years old By seniority Under 2 years From 2 to 5 years From 6 to 10 years From 11 to 15 years From 16 to 20 years Over 21 years Total 76 77 78 77 75 77 78 80 82 77 75 75 75 76 77 By country of operation Argentina Brazil Chile Colombia Ecuador Peru United States Others Total Men Women % Total % Total 118 10,250 46.1% 65.1% 4,055 56.6% 871 192 57.9% 59.8% 138 53.9% 5,483 3,114 634 129 34.9% 43.4% 42.1% 40.2% 1,380 51.8% 1,282 48.2% 768 243 77.1% 51.5% 228 229 22.9% 48.5% 17,877 61.4% 11,237 38.6% By type of employment contract Full time Part-time 17,559 61.9% 10,797 38.1% 318 42.0% 440 58.0% Note: 94.9% of all contracts are for an indefinite period. LATAM Group and Affiliates – Management Level Employees1 (2021) By country of operation Argentina Brazil Chile Colombia Ecuador Peru United States Others Total Men Women Total % Total 5 111 274 18 4 15 25 14 466 83.3 70.7 68.8 66.7 40.0 62.5 69.4 70.0 68.7 1 46 124 9 6 9 11 6 212 % 16.7 29.3 31.2 33.3 60.0 37.5 30.6 30.0 31.3 1 Management level: positions of assistant manager, manager, senior manager, director, and vice-president. Appendices 165 Integrated Report 2021Board (2021) 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 By nationality Brazil Chile United States Total Total 8 1 0 1 0 4 4 4 4 1 0 0 2 6 1 9 % 88.9% 11.1% 0.0% 11.1% 0.0% 44.4% 44.4% 44.4% 44.4% 11.1% 0.0% 0.0% 22.2% 66.7% 11.1% 100% Health and Safety LATAM Group and Affiliates – Health and Safety (2021) 403-9 Occupational injury with major consequences1 Total Recordable work accident injuries2 Brazil Chile Colombia Ecuador Peru Others Total Deaths resulting from injury from work accident3 Total Total Tasa 0 0 49.5 42.0 10.0 0.0 29.0 0.33 0.58 0.86 0.00 1.08 4.0 0.002 134.5 0.48 0 0 1 Injury resulting in death or damage such that the worker cannot fully recover the state of health from before the accident within 6 months. The rate calculation uses the formula: Injuries/Average payroll X 100. 2 Injury, illness, or work-related sickness with some of the following re- sults: days of work leave, labor restriction or transfer to other positions, medical treatment beyond first aid; or serious injury or illness diagnosed by a doctor or other health care professional to those same results. The rate calculation uses the formula: Injuries/Average payroll X 100. 3 Includes road accidents in cases where transportation is carried out by LATAM. Employees CULTURAL TRANSFORMATION Diversity LATAM Group and Affiliates – Total Employees (2021) 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 Total 17,877 11,237 5,994 11,755 7,993 2,824 548 9,518 2,933 3,783 3,703 9,177 29,114 % 61.4% 38.6% 20.6% 40.4% 27.5% 9.7% 1.9% 32.7% 10.1% 13.0% 12.7% 31.5% LATAM Group and Affiliates – Management Level Employees (2021) 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 Total 466 212 % 68.80% 31.20% 16 310 243 94 15 81 82 149 115 251 678 2.4% 45.7% 35.8% 13.9% 2.2% 11.9% 12.1% 22.0% 17.0% 37.0% 1 Management level: positions of assistant manager, manager, senior manager, director, and vice-president. Appendices 166 Integrated Report 2021Financial information In this chapter 168 Financial statements 266 Affiliates and subsdiaries 296 Rationale Financial Information 167 Integrated Report 2021Financial statements LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 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 Financial Information 168 Integrated Report 2021 Santiago, March 8, 2022 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, 2021 and 2020, and the results of operations and cash flows for the years then ended 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 discussed in Note 2 to the consolidated financial statements, Latam Airlines Group S.A. and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code and as a result, the satisfaction of the Company’s liabilities and funding of ongoing operation are subject to uncertainty. The Company has stated that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2 to the consolidated financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified as a result of this matter. REPORT OF INDEPENDENT AUDITORS (Free translation from the original in Spanish) Santiago, March 8, 2022 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, 2021 and 2020 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. Financial Information 169 Integrated Report 2021 18 - Current and deferred tax ............................................................................................................ 79 19 - Other financial liabilities ............................................................................................................ 83 20 - Trade and other accounts payables ............................................................................................ 92 21 - Other provisions ......................................................................................................................... 94 22 - Other non financial liabilities ..................................................................................................... 96 23 - Employee benefits ...................................................................................................................... 97 24 - Accounts payable, non-current .................................................................................................. 99 25 - Equity ......................................................................................................................................... 99 26 - Revenue ................................................................................................................................... 102 27 - Costs and expenses by nature .................................................................................................. 103 28 - Other income, by function ....................................................................................................... 106 29 - Foreign currency and exchange rate differences ...................................................................... 106 30 - Earnings/(loss) per share .......................................................................................................... 114 31 - Contingencies ........................................................................................................................... 115 32 - Commitments ........................................................................................................................... 132 33 - Transactions with related parties ............................................................................................. 135 34 - Share based payments .............................................................................................................. 136 35 - Statement of cash flows ........................................................................................................... 137 36 - The environment ...................................................................................................................... 139 37 - Events subsequent to the date of the financial statements ....................................................... 142 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 ........................................................................................................... 19 2.3. Foreign currency transactions ................................................................................................ 20 2.4. Property, plant and equipment ............................................................................................... 22 2.5. Intangible assets other than goodwill ..................................................................................... 23 2.6. Goodwill ................................................................................................................................. 23 2.7. Borrowing costs ..................................................................................................................... 23 2.8. Losses for impairment of non-financial assets ....................................................................... 24 2.9. Financial assets ....................................................................................................................... 24 2.10. Derivative financial instruments and hedging activities ...................................................... 25 2.11. Inventories ............................................................................................................................ 26 2.12. Trade and other accounts receivable .................................................................................... 26 2.13. Cash and cash equivalents .................................................................................................... 26 2.14. Capital .................................................................................................................................. 27 2.15. Trade and other accounts payables ....................................................................................... 27 2.16. Interest-bearing loans ........................................................................................................... 27 2.17. Current and deferred taxes ................................................................................................... 27 2.18. Employee benefits ................................................................................................................ 28 2.19. Provisions ............................................................................................................................. 28 2.20. Revenue recognition ............................................................................................................. 28 2.21. Leases ................................................................................................................................... 30 2.22. Non-current assets (or disposal groups) classified as held for sale ...................................... 32 2.23. Maintenance ......................................................................................................................... 32 2.24. Environmental costs ............................................................................................................. 32 3 - Financial risk management .......................................................................................................... 33 3.1. Financial risk factors .............................................................................................................. 33 3.2. Capital risk management ........................................................................................................ 48 3.3. Estimates of fair value ............................................................................................................ 48 4 - Accounting estimates and judgments ........................................................................................... 51 5 - Segmental information ................................................................................................................. 55 6 - Cash and cash equivalents ........................................................................................................... 56 7 - Financial instruments ................................................................................................................... 57 8 - Trade and other accounts receivable current, and non-current accounts receivable .................... 59 9 - Accounts receivable from/payable to related entities .................................................................. 61 10 - Inventories ................................................................................................................................. 62 11 - Other financial assets ................................................................................................................. 63 12 - Other non-financial assets .......................................................................................................... 64 13 - Non-current assets and disposal group classified as held for sale ............................................. 66 14 - Investments in subsidiaries ........................................................................................................ 67 15 - Intangible assets other than goodwill ......................................................................................... 70 16 - Goodwill .................................................................................................................................... 72 17 - Property, plant and equipment ................................................................................................... 73 Financial Information 170 Integrated Report 2021 LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION CONSOLIDATED STATEMENTS 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 As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ 1,046,835 101,138 108,368 902,672 724 287,337 41,264 1,695,841 50,250 155,892 599,381 158 323,574 42,320 Note 6 - 7 7 - 11 12 7 - 8 7 - 9 10 18 Total current assets other than non-current assets (or disposal groups) classified as held for sale 2,488,338 2,867,416 Non-current assets (or disposal groups) classified as held for sale 13 146,792 276,122 Total current assets Non-current assets Other financial assets Other non-financial assets Accounts receivable Intangible assets other than goodwill Property, plant and equipment Deferred tax assets Total non-current assets Total assets 7 - 11 12 7 - 8 15 17 18 2,635,130 3,143,538 15,622 125,432 12,201 1,018,892 9,489,867 15,290 33,140 126,782 4,986 1,046,559 10,730,269 564,816 10,677,304 12,506,552 13,312,434 15,650,090 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 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, 2021 ThUS$ As of December 31, 2020 ThUS$ 4,453,451 4,860,153 661,602 27,872 675 2,332,576 12,336,329 5,948,702 472,426 - 712,581 341,011 56,233 512,056 8,043,009 20,379,338 3,146,265 (8,841,106) (178) (1,361,529) (7,056,548) (10,356) (7,066,904) 13,312,434 3,055,730 2,322,125 812 23,774 656 2,088,791 7,491,888 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 The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements. The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements. Financial Information 171 Integrated Report 2021 LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME BY FUNCTION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Revenue Cost of sales Gross margin Other income Distribution costs Administrative expenses Other expenses Restructuring activities expenses Other gains/(losses) Income (loss) 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 18 14 30 30 For the year ended December 31, 2021 ThUS$ 2020 ThUS$ 4,884,015 (4,963,485) 3,923,667 (4,513,228) (79,470) (589,561) 227,331 (291,820) (439,494) (535,824) (2,337,182) 30,674 411,002 (294,278) (499,512) (692,939) (990,009) (1,874,789) (3,425,785) (4,530,086) 21,107 (805,544) 131,408 (5,393) 50,397 (586,979) (48,403) 9,348 (4,084,207) (568,935) (5,105,723) 550,188 (4,653,142) (4,555,535) (4,647,491) (4,545,887) (5,651) (9,648) (4,653,142) (4,555,535) (7.66397) (7.66397) (7.49642) (7.49642) The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements. Note For the year ended December 31, 2021 ThUS$ 2020 ThUS$ (4,653,142) (4,555,535) 25 10,018 (3,968) 10,018 (3,968) NET INCOM E (LOSS) 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 Gains (losses) on currency translation, before tax 20,008 (894,394) Other comprehensive loss, before taxes, currency translation differences Cash flow hedges 20,008 (894,394) 19 Gains (losses) on cash flow hedges before taxes Reclasification adjustment on cash flow hedges before tax 25 38,870 (16,641) (105,280) (14,690) Other comprehensive income (losses), before taxes, cash flow hedges Change in value of time value of options Gains (losses) on change in value of time value of options before tax Reclassification adjustments on change in value of time value of options before tax Other comprehensive income (losses), before taxes, changes in the time value of the options Total other comprehensive (loss) that will be reclassified to income before taxes 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 22,229 (119,970) (23,692) 6,509 (17,183) - - - 25,054 (1,014,364) 35,072 (1,018,332) 18 (2,783) (2,783) (58) (58) 924 924 959 959 32,231 (4,620,911) (1,016,449) (5,571,984) (4,616,914) (5,566,991) (3,997) (4,993) TOTAL COM PREHENSIVE INCOM E (LOSS) (4,620,911) (5,571,984) The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements. Financial Information 172 Integrated Report 2021 LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Attributa ble to o wne rs o f the pa re nt C ha nge in o the r re s e rve s Ga ins (Lo s s e s ) Ac tua ria l ga ins fro m c ha nge s o r lo s s e s o n C urre nc y C a s h flo w in the tim e de fine d be ne fit S ha re s ba s e d Othe r S ha re Tre a s ury tra ns la tio n he dging No te c a pita l ThUS $ s ha re s ThUS $ re s e rve ThUS $ re s e rve ThUS $ va lue o f the o ptio ns ThUS $ pla ns re s e rve ThUS $ pa ym e nts re s e rve ThUS $ s undry re s e rve ThUS $ To ta l o the r re s e rve ThUS $ P a re nt's No n- R e ta ine d o wne rs hip c o ntro lling e a rnings /(lo s s e s ) ThUS $ inte re s t ThUS $ inte re s t ThUS $ To ta l e quity ThUS $ 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) 2 - 25 - 3,146,265 - (178) - (3,790,513) 380 (60,561) - - - - - - - - - - - 18,354 18,354 - 22,171 22,171 - - - - (380) (380) - (17,183) (17,183) - - - (25,985) - 37,235 - 2,452,019 - (1,388,185) - (4,193,615) - (2,435,713) - (6,672) - (2,442,385) - 7,235 7,235 - - - - - - - - - - - 30,577 30,577 (4,647,491) - (4,647,491) (4,647,491) 30,577 (4,616,914) (5,651) 1,654 (3,997) (4,653,142) 32,231 (4,620,911) (3,921) (3,921) (3,921) (3,921) - - (3,921) (3,921) 313 313 (3,608) (3,608) Equity a s o f J a nua ry 1, 2021 Inc re a s e (de c re a s e ) by a pplic a tio n o f ne w a c c o unting s ta nda rds Initia l ba la nc e re s ta te d To ta l inc re a s e (de c re a s e ) in e quity Ne t inc o m e /(lo s s ) fo r the ye a r Othe r c o m pre he ns ive inc o m e 25 To ta l c o m pre he ns ive inc o m e Tra ns a c tio ns with s ha re ho lde rs Inc re a s e (de c re a s e ) thro ugh tra ns fe rs a nd o the r c ha nge s , e quity To ta l tra ns a c tio ns with s ha re ho lde rs 25-34 C lo s ing ba la nc e a s o f De c e m be r 31, 2021 3,146,265 (178) (3,772,159) (38,390) (17,563) (18,750) 37,235 2,448,098 (1,361,529) (8,841,106) (7,056,548) (10,356) (7,066,904) The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements. Financial Information 173 Integrated Report 2021 LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS 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$ Equity as of January 1, 2020 T otal increase (decrease) in equity Net income/(loss) for the year Other comprehensive income 25 T otal comprehensive income T ransactions with shareholders Increase (decrease) through transfers and other changes, equity T otal transactions with shareholders 25-34 Closing balance as of December 31, 2020 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) - - - - - - - (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) - - - - - - 946 946 (450) (450) 496 496 - - 496 496 (74) (74) 422 422 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 Information 174 Integrated Report 2021 LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - DIRECT METHOD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 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) For the year ended December 31, Note 2021 T hUS$ 2020 T hUS$ 5,359,778 52,084 4,620,409 51,900 (4,401,485) (941,068) (156,395) (9,437) (87,576) (3,817,339) (1,227,010) (70,558) (65,692) 13,593 35 Net cash (outflow) inflow from operating activities (184,099) (494,697) Cash flows from investing activities Cash flows from losses of control of subsidiaries or other businesses 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 EQUIVALENT S AT T HE BEGINNING OF YEAR CASH AND CASH EQUIVALENT S AT T HE END OF YEAR 752 - 35 1,464,012 (208) 105,000 (587,245) (88,518) 9,056 18,475 (542,653) - - 661,609 130,102 (463,048) (103,366) - (104,621) (11,034) (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) 109,642 1,120,829 (617,110) (31,896) (649,006) 1,695,841 1,046,835 659,740 (36,478) 623,262 1,072,579 1,695,841 35 35 35 6 6 The accompanying Notes 1 to 37 form an integral part of these consolidated financial statements. AS OF DECEMBER 31, 2021 AND 2020 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. LATAM Airlines Group S.A. and certain of its direct and indirect affiliates are currently subject to a reorganization process in the United States of America under Chapter 11 of Title 11 of the United States Code at the United States Bankruptcy Court for the Southern District of New York (the "Chapter 11 Proceedings"). 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, Argentine 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, 2021, the Company's statutory capital is represented by 606,407,693 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, 2021, the Company had a total of 4,828 shareholders in its registry. At that date, approximately 13.07% of the Company's property was in the form of ADRs. For the year ended December 31, 2021, the Company had an average of 28,600 employees, ending this year with a total number of 29,114 people, distributed in 4,372 Administration employees, 14,784 in Operations, 6,708 Cabin Crew and 3,250 Command crew. Financial Information 175 Integrated Report 2021 2 3 The main subsidiaries included in these consolidated financial statements are as follows: b) Financial Information S ta te m e nt o f fina nc ia l po s itio n a) Percentage ownership Co untry Functio nal As Decemb er 3 1, 2 0 2 1 As Decemb er 3 1, 2 0 2 0 As o f De c e m be r 31, 2021 As o f De c e m be r 31, 2020 Ne t Inc o m e F o r the ye a r e nde d De c e m be r 31, 2021 2020 Tax No . Co mp any o f o rig in Currency Direct Ind irect To tal Direct Ind irect To tal 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 ) Fo reig n Fo reig n 9 6 .9 6 9 .6 8 0 -0 Lan Pax Gro up S.A. and Sub s id iaries Fo reig n Latam Airlines Perú S.A. 9 3 .3 8 3 .0 0 0 -4 Lan Carg o S.A. Fo reig n Fo reig n Co nnecta Co rp o ratio n Prime Airp o rt Services Inc. and Sub s id iary 9 6 .9 51.2 8 0 -7 Trans p o rte Aéreo S.A. 9 6 .6 3 1.52 0 -2 Fas t Air Almacenes d e Carg a S.A. Chile Peru Chile U.S.A. U.S.A. Chile Chile % % % % % % US$ US$ US$ US$ US$ US$ CLP 9 9 .8 3 6 1 0 .16 3 9 10 0 .0 0 0 0 9 9 .8 3 6 1 0 .16 3 9 10 0 .0 0 0 0 2 3 .6 2 0 0 76 .19 0 0 9 9 .8 10 0 2 3 .6 2 0 0 76 .19 0 0 70 .0 0 0 0 9 9 .8 9 4 0 0 .0 0 4 1 9 9 .8 9 8 1 9 9 .8 9 4 0 0 .0 0 4 1 9 9 .8 9 8 1 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 9 9 .9 714 0 .0 2 8 6 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 9 9 .8 9 0 0 0 .110 0 10 0 .0 0 0 0 Las er Carg o S.R.L. Arg entina ARS 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 9 6 .2 2 0 8 3 .2 2 0 8 10 0 .0 0 0 0 Lan Carg o Overs eas Limited and Sub s id iaries Bahamas 9 6 .9 6 9 .6 9 0 -8 Lan Carg o Invers io nes S.A. and Sub s id iary 9 6 .575.8 10 -0 Invers io nes Lan S.A. and Sub s id iaries 9 6 .8 4 7.8 8 0 -K Technical Trainning LATAM S.A. Fo reig n Fo reig n Fo reig n Fo reig n Fo reig n Latam Finance Limited Peuco Finance Limited Pro fes io nal Airline Services INC. J arletul S.A. LatamTravel S.R.L. 76 .2 6 2 .8 9 4 -5 Latam Travel Chile II S.A. Fo reig n TAM S.A. and Sub s id iaries (*) Chile Chile Chile Cayman Is land Cayman Is land U.S.A. Urug uay Bo livia Chile Brazil US$ US$ US$ CLP US$ US$ US$ US$ US$ US$ 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 9 9 .9 8 0 0 0 .0 2 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 9 9 .0 0 0 0 1.0 0 0 0 10 0 .0 0 0 0 9 9 .9 0 0 0 0 .10 0 0 10 0 .0 0 0 0 9 9 .710 0 0 .2 9 0 0 10 0 .0 0 0 0 9 9 .8 3 0 0 0 .170 0 10 0 .0 0 0 0 9 9 .8 3 0 0 0 .170 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 10 0 .0 0 0 0 0 .0 0 0 0 10 0 .0 0 0 0 9 9 .0 0 0 0 1.0 0 0 0 10 0 .0 0 0 0 9 9 .0 0 0 0 1.0 0 0 0 10 0 .0 0 0 0 9 9 .0 0 0 0 1.0 0 0 0 10 0 .0 0 0 0 9 9 .0 0 0 0 1.0 0 0 0 10 0 .0 0 0 0 9 9 .9 9 0 0 0 .0 10 0 10 0 .0 0 0 0 9 9 .9 9 0 0 0 .0 10 0 10 0 .0 0 0 0 BRL 6 3 .0 9 0 1 3 6 .9 0 9 9 10 0 .0 0 0 0 6 3 .0 9 0 1 3 6 .9 0 9 9 10 0 .0 0 0 0 (*) As of December 31, 2021, 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. ThUS $ ThUS $ ThUS $ ThUS $ ThUS $ ThUS $ ThUS $ ThUS $ 96.969.680-0 La n P a x Gro up S .A. a nd S ubs idia rie s (*) 432,271 1,648,715 (1,236,243) 404,944 1,624,944 (1,219,539) (7,289) (290,980) F o re ign La ta m Airline s P e rú S .A. 93.383.000-4 La n C a rgo S .A. F o re ign F o re ign C o nne c ta C o rpo ra tio n P rim e Airpo rt S e rvic e s Inc . a nd S ubs idia ry (*) 484,388 721,484 61,068 24,654 417,067 537,180 19,312 25,680 67,321 661,721 486,098 175,623 (109,392) (175,485) 184,304 749,789 567,128 182,661 41,756 (1,026) 57,922 25,050 17,335 26,265 40,587 (1,215) 1,590 1,169 190 10,936 500 (181) 96.951.280-7 Tra ns po rte Aé re o S .A. 471,094 327,955 143,139 546,216 347,714 198,502 (56,135) (39,032) 96.631.520-2 F a s t Air Alm a c e ne s de C a rga S .A. 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 a nd S ubs idia rie s (*) 96.969.690-8 La n C a rgo Inve rs io ne s S .A. a nd S ubs idia ry (*) 202,402 96.575.810-0 Inve rs io ne s La n S .A. a nd S ubs idia rie s (*) Te c hnic a l Tra inning LATAM S .A. La ta m F ina nc e Lim ite d P e uc o F ina nc e Lim ite d 96.847.880-K F o re ign F o re ign F o re ign F o re ign F o re ign J a rle tul S .A. La ta m Tra ve l S .R .L. 76.262.894-5 La ta m Tra ve l C hile II S .A. 18,303 10,948 (5) - 7,355 (5) 20,132 11,576 (6) - 8,556 (6) 48 - 500 - 36,617 1,284 2,004 14,669 113,930 45 467 21,940 23,563 1,239 1,537 218,435 250,027 1,394 2,181 14,355 203,829 (806) (92,623) 86,691 130,823 (54,961) 1,452 65 625 1,329 1,556 (90) 181 50 60 1,310,733 1,688,821 (378,088) 1,310,735 1,584,311 (273,576) (104,512) (105,100) 1,307,721 1,307,721 - 1,307,721 1,307,721 24 64 588 1,116 132 1,457 2,851 (1,092) (68) (869) 17,345 34 1,061 943 14,772 1,076 1,106 1,841 - 2,573 (1,042) (45) (898) - 278 (50) (23) 29 - 1,014 (332) (33) 392 P ro fe s io na l Airline S e rvic e s INC . 61,659 58,808 F o re ign TAM S .A. a nd S ubs idia rie s (*) 2,608,859 3,257,148 (648,289) 3,110,055 3,004,935 105,120 (756,633) (1,025,814) (*) 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. Vari 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. Financial Information 176 Integrated Report 2021 4 5 Changes occurred in the consolidation perimeter between January 1, 2020 and December 31, 2021, are detailed below: NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (1) Incorporation or acquisition of companies - On January 21, 2021, Transporte Aéreos del Mercosur S.A. puchased 2,392,166 preferred shares of Inversora Cordillera S.A. consequently, the shareholding composition of Inversora Cordillera S.A. is as follows: Lan Pax Group S.A. with 90.5% and Transporte Aéreos del Mercosur S.A. with 9.5%. - On January 21, 2021, Transporte Aéreos del Mercosur S.A. purchased 53,376 preferred shares of Lan Argentina S.A. consequently, the shareholding composition of Lan Argentina S.A. is as follows: Inversora Cordillera S.A. with 95%, Lan Pax Group S.A. with 4% and Transporte Aéreos del Mercosur S.A. with 1%. - 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%. 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. as of December 31, 2021 and 2020 and for the three years ended December 31, 2021 and 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). The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments. 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. The consolidated financial statements have been prepared in accordance with the accounting policies used by the Company for the consolidated financial statements 2020, except for the standards and interpretations adopted as of January 1, 2021. (a) Application of new standards for the year 2021: (a.1.) Accounting pronouncements with implementation effective from January 1, 2021: (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 The application of these accounting pronouncements as of January 1, 2021, had no significant effect on the Company's consolidated financial statements. (a.2.) Adoption of IFRS 9 Financial Instruments for hedge accounting: On January 1, 2018, the effective adoption date of IFRS 9 Financial Instruments, the Company decided to continue applying IAS 39 Financial Instruments: Recognition and Measurement for hedge accounting. On January 1, 2021, the Company modified this accounting policy and adopted IFRS 9 in relation to hedge accounting, aligning the requirements for hedge accounting with the Company's risk management policies. Financial Information 177 Integrated Report 2021 6 7 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, the hedge continue. The time value of the options used as hedging instruments, at December 31, 2020, will not continue to be designated as part of the hedging relationship, but it recognition will continue been in Other Comprehensive Income until the forecast transaction occurs at which time will be recycled 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 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 modified the documentation of the existing hedging relationships as of December 31, 2020 in accordance with the provisions of IFRS 9 Financial Instruments. (b) Accounting pronouncements not in force for the financial years beginning on January 1, 2021: Date of issue Effective Date: May 2021 March 2021 February 2021 01/01/2023 04/01/2021 01/01/2023 February 2021 01/01/2023 (i) Standards and amendments Amendment to IAS 12: Income taxes. Amendment to IFRS 16: Lease. Amendment to IAS 8: Accounting policies, changes in accounting estimates and error. Amendment to IAS 1: Presentation of financial statements and IFRS practice statements 2 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 Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17) May 2017 December 2021 01/01/2023 01/01/2023 01/01/2022 01/01/2022 01/01/2022 01/01/2023 01/01/2023 An entity that elects to amendment apply applies it first applies IFRS 17 the it when Amendment to IFRS 10: Consolidated financial statements and IAS 28: Investments in associates and joint ventures. September 2014 Not determined (ii) Improvements Improvements to International Information Standards Financial (2018-2020 cycle) IFRS 1: First-time adoption of international IFRS 9: reporting Financial Instruments, illustrative examples accompanying IFRS 16: Leases, IAS 41: Agriculture standards, financial May 2020 01/01/2022 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. (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$ 4,642 million for the year ended December 31, 2021. As of that date, the Company has a negative working capital of US$ 9,701 million and will require additional working capital during 2021 to support a sustainable business operation. As of December 31, 2021, the company has negative equity of US$ 7,051 million, which corresponds to the attributable equity to the owners of the parent. LATAM Group passenger traffic for the year ended December 31, 2021, increasing by 18% compared to the same period in 2020 (decreasing by 59,6% compared to the same exercise in 2019). In December 2021, the group’s revenues amounted to approximately 49% of revenues for the year ended December 31, 2019. At this time, the pace to meet the pre-COVID demand are uncertain and highly dependent on the evolution of the COVID-19 pandemic in the markets in which LATAM Group operates, therefore, management cannot make specific predictions as to this timing, but considers it reasonable to expect that the pace of the demand recovery will be different for each country. 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. On July 7, 2020 (the “Piquero Petition Date”), Piquero Leasing Limited (“Piquero”) also filed a petition for reorganization with the Bankruptcy Court (the “Piquero Bankruptc 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 (collectively, the “Subsequent Debtors” and, 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 (each one, respectively, a “Petition Date”) is being jointly administered under the caption “In re LATAM Airlines Group S.A. et al.” 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. On June 28, 2021, LATAM Airlines Perú withdrew its request for a preventive bankruptcy process previously filed y Financial Information 178 Integrated Report 2021 8 9 before the Indecopi of Peru, entity which approved said withdrawal by resolution without further comments. 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. On November 26, 2021, the Debtors filed a joint plan of reorganization (the “Plan”) and the related disclosure statement (the “Disclosure Statement”) with the Bankruptcy Court. As detailed in the Disclosure Statement, the Plan is supported by a restructuring support agreement executed among the Debtors, creditors holding more than 70% of the general unsecured claims asserted against LATAM Airline Group S.A., and holders of more than 50% of LATAM Airline Group S.A.’s existing equity. As of December 31, 2021, the Plan remains subject to approval by the Bankruptcy Court and could materially change the amounts and classifications in the consolidated financial statements, including the value, if any, of the Debtors’ prepetition liabilities and securities. On December 17, 2021, December 20, 2021, January 24, 2022, January 27, 2022, and February 28, 2022, the Debtors filed a revised Plan and associated Disclosure Statement. On November 1, 2021, the Bankruptcy Court entered an order extending the periods in which the Debtors have the exclusive right to file and solicit a plan of reorganization to November 26, 2021 and January 26, 2022 respectively. On November 26, 2021, the Debtors filed a motion to further extend such periods, solely with respect to the Subsequent Debtors, to January 7, 2022 and March 7, 2022 respectively. On December 15, 2021, the Creditors’ Committee filed an objection to the Subsequent Debtors’ motion. That same day, the Creditors’ Committee also filed a motion seeking to terminate the Debtors’ exclusivity periods. Certain other interested parties subsequently filed joinders to the Creditors’ Committee’s termination motion, while others filed statements opposing the termination motion. On February 14, 2022, the Bankruptcy Court entered an order approving the Subsequent Debtors’ motion and denying the Creditors’ Committee’s motion. Events Leading to the Chapter 11 Cases Since the first quarter of 2020, the passenger air transportation business was 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 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%. 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 liabilitie. Among the initiatives that the Company studied and committed to protect liquidity were the following: Reduction and postponement of the investment plan for different projects; Implementation of control measurements for payments to suppliers and purchases of new (i) (ii) goods and services; Financial Information 179 Integrated Report 2021 10 11 Negotiation of the payment conditions with suppliers; (iii) (iv) 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 (v) 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); (vi) (vii) Governmental loan request in different countries in which the company operates; and Reduction of non-essential fleet and non-fleet investments. Short-term debt and debt maturities renewal; 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 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$ 3.2 billion in a debtor-in-possession financing facility (the “DIP Facility”), as provided for in in the Super-Priority Debtor-in-Possession Term Loan Agreement (the “DIP Credit Agreement”) (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. 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. Any proposed plan of reorganization will be subject to revision 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 is no guarantee at this time that the Company will be able to obtain approval of the Plan from the Bankruptcy Court. On November 26, 2021, the Company filed the Plan and associated Disclosure Statement. The Plan is accompanied by a Restructuring Support Agreement (the “RSA”) with the largest unsecured creditor group in the Chapter 11 Cases—holding of more than 70% of unsecured claims filed against LATAM Airlines Group S.A. and holders of approximately 48% of the US-law governed notes issued by LATAM Finance Ltd. due 2024 and 2026—as well as certain of the Company’s shareholders holding more than 50% of LATAM Airlines Group S.A.’s existing equity. The Plan proposes the infusion of up to approximately $8.19 billion through a mix of new equity, convertible notes, and debt, which will enable the Company to exit Chapter 11 with appropriate capitalization to effectuate its business plan. Upon emergence, the Company is expected to have total debt of approximately $7.26 billion and liquidity of approximately $2.67 billion. Specifically, the Plan outlines that:  Upon confirmation of the Plan, the Company intends to launch an $800 million common equity rights offering, open to all shareholders in accordance with their preemptive rights under applicable Chilean law, and fully backstopped by the parties participating in the RSA;  Three distinct classes of convertible notes will be issued by the Company, all of which will be preemptively offered to shareholders. To the extent not subscribed by the Company’s shareholders during the respective preemptive rights period: o Convertible Notes Class A will be provided to certain general unsecured creditors of the Company in settlement of their allowed claims under the Plan; o Convertible Notes Class B will be subscribed and purchased by the shareholders parties to the RSA; and o Convertible Notes Class C will be provided to certain general unsecured creditors in exchange for a combination of new money to the Company and the settlement of their claims, subject to certain limitations and holdbacks by backstopping parties.  The convertible notes belonging to the New Convertible Notes Classes B and C will be provided, totally or partially, in consideration of a new money contribution for the aggregate amount of approximately $4.64 billion fully backstopped by the parties to the RSA; and  LATAM will raise a $500 million new revolving credit facility and approximately $2.25 billion in total new money debt financing, consisting of either a new term loan or new notes. The general deadline to file objections to the Plan and Disclosure Statement was January 7, 2022, and such deadline was further extended to January 12, 2022 and January 14, 2022 for certain interested parties. Financial Information 180 Integrated Report 2021 12 13 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 material uncertainty as a product of the COVID-19 pandemic and the impossibility of knowing its duration at this date and, accordingly, a material uncertainty exists that may cast significant doubt on 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, which could adversely affect the value of the Company’s common stock, or render it worthless. 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 (See Note 31 I 2 for any updates this proceedings). 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. Since the formation of the Creditors’ Committee, three Creditors’ Committee’s members - Compañía de Seguros de Vida Consorcio Nactional de Seguros S.A., AerCap Holdings N.V., and Aircastle Limited - have resigned from the Creditors’ Committee. The Office of the United States Trustee has not appointed replacements for these members. No trustee or examiner has been appointed in any of these Chapter 11 Cases. No other official committee have been solicited or appointed. Assumption, Amendment & Rejection of Executory Contracts & Leases 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 notes 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 Bankruptcy Court granted the Debtors’ motions to assume multiple airport leases at Miami-Dade, LAX and JFK related to the Debtors’ passenger and cargo businesses. The Debtors have also assumed a number of important agreements. For example, on June 1, 2021, the Bankruptcy Court approved the assumption and ratification of certain purchase agreements, as amended, with The Boeing Company. In addition, on July 1, 2021, the Court approved the Debtors’ assumption of the Export Credit Agency-backed fleets, which comprises 65 total aircraft. On December 15, 2021, the Debtors filed a motion for an order approving streamlined procedures for the assumption of executory contracts and unexpired leases. At the December 29, 2021 hearing, the Bankruptcy Court granted the Debtors’ motion. Financial Information 181 Integrated Report 2021 14 15 Further, the Debtors have filed 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 January 29, 2021 April 23, 2021 May 14, 2021 June 17, 2021 June 24, 2021 November 3, 2021 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 Airbus A320-family aircraft (i) 2 Airbus A320-family aircraft (i) 1 Airbus A350-941 aircraft (i) 6 Airbus A350 aircraft (i) 1 Airbus A350-941 aircraft (i) 3 Airbus A350-941 aircraft (i) 1 Rolls-Royce Trent XWB-84K engine; and (ii) 1 Rolls-Royce International Aero Engine AG V2527M-A5 As of December 31, 2021, and as a result of these contract rejections, obligations with the lenders and lessors were extinguished and the Company lost control over the related assets resulting in the derecognition of the assets and the liabilities associated with these aircraft. See note 17, 19 and 27. All accounting effects were recorded as Restructuring activities expenses during the year ending December 31, 2020 and 2021 as Restructuring activities expenses. The Debtors also have filed or will file motions to enter into certain new aircraft lease agreements, including: Bankruptcy Court Approval Date: March 8, 2021 April 12, 2021 May 30, 2021 August 31, 2021 MSN Number /Counterparty Vermillion Aviation (nine) Limited, Aircraft MSNs 4860 and 4827 Wilmington Trust Company, Solely in its Capacity as Trustee, Aircraft MSNs 6698, 6780, 6797, 6798, 6894, 6895, 6899, 6949, 7005, 7036, 7081 UMB Bank N.A., Solely in its Capacity as Trustee Aircraft MSNs 38459, 38478, 38479, 38461 (i) Avolon Aerospace Leasing Limited or its Affiliates, MSNs 38891, 38893, 38895 (ii) Sky Aero Management Ltd. In addition, the Debtors also have filed or will file motions to enter into certain aircraft lease amendment agreement which have the effect of, among other things, reducing the Debtors’ rental payment obligations and extension on the lease term. Certain amendments also involved updates to related financing arrangements. These amendments include: Bankruptcy Court Approval Date: December 31, 2020 April 14, 2021 April 15, 2021 April 27, 2021 May 4, 2021 May 5, 2021 May 27, 2021 May 28, 2021 May 30, 2021 July 1, 2021 July 8, 2021 July 15, 2021 Amended Lease Agreement/Counterparty Vermillion Aviation (two) Limited (1) Bank of Utah (2) AWAS 5234 Trust (3) Sapucaia Leasing Limited, PK Airfinance US, LLC and PK Air 1 LP Aviator IV 3058, Limited Bank of America Leasing Ireland Co., (1) NBB Grosbeak Co., Ltd, NBB Cuckoo Co., Ltd., NBB-6658 Lease Partnership, NBB- 6670 Lease Partnership and NBB Redstart Co. Ltd. (2) Sky High XXIV Leasing Company Limited and Sky High XXV Leasing Company Limited (3) SMBC Aviation Capital Limited (1) JSA International US Holdings LLC and Wells Fargo Trust Company N.A. (2) Orix Aviation Systems Limited (1) Shenton Aircraft Leasing 3 (Ireland) Limited. (2) Chishima Real Estate Company, Limited and PAAL Aquila Company Limited MAF Aviation 1 Designated Activity Company (1) IC Airlease One Limited (2) UMB Bank, National Association, Macquarie Aerospace Finance 5125-2 Trust and Macquarie Aerospace Finance 5178 Limited (3) Wilmington Trust SP Services (Dublin) Limited (4) Aercap Holdings N.V. (5) Banc of America Leasing Ireland Co. (6) Castlelake L.P. EX-IM Fleet Greylag Goose Leasing 38887 Designated Activity Company (1) ECAF I 40589 DAC (2) Wells Fargo Company, National Associates, as Owner Trustee (3) Orix Aviation Systems Limited (4) Wells Fargo Trust Company, N.A. Financial Information 182 Integrated Report 2021 16 17 July 20, 2021 July 27, 2021 August 30, 2021 (1) Avolon AOE 62 Limited (2) Avolon Aerospace (Ireland) AOE 99 Limited, Avolon Aerospace (Ireland) AOE 100 Limited, Avolon Aerospace (Ireland) AOE 101 Limited, Avolon Aerospace 102 Limited, Avolon (Ireland) AOE Aerospace (Ireland) AOE 103 Limited, Avolon Aerospace AOE 130 Limited, Avolon Aerospace AOE 134 Limited (1) Merlin Aviation Leasing (Ireland) 18 Limited (2) JSA International U.S. Holdings, LLC (1) Yamasa Sangyo Aircraft LA1 Kumiai and Yamasa Sangyo Aircraft LA2 Kumiai (2) Dia Patagonia Ltd. and DIa Iguazu Ltd. Condor Leasing Co., Ltd., FC Initial Leasing Ltd., Alma Leasing Co., Ltd., and FI Timothy Leasing Ltd. (3) Platero Fleet (4) SL Alcyone Ltd. (5) NBB Crow Co., Ltd. (6) NBB Sao Paulo Lease Co., Ltd., NBB Rio Janeiro Lease Co., Ltd. And NBB Brasilia Lease LLC (7) Gallo Finance Limited (8) Orix Aviation Systems Limited The amendment on lease agreement were accounted as a lease modification and the impact are disclosure on note 17 and 19. The Debtors also have filed or will file motions to enter into certain engine lease amendment agreements which have the effect of, among other things, reducing the Debtors’ rental payment obligations and extension on the lease term, including: Bankruptcy Court Approval Date: September 7, 2021 November 4, 2021 December 28, 2021 Amended Lease Agreement/Counterparty General Electric Affiliated Engine Servicers (1) Engine Lease Finance Corporation (GE 90 Engines) (1) Engine Lease Finance Corporation (CFM56-5B3/3 Engines) In relation to several of these lease and engine amendment agreements, the Debtors have or will enter into claims settlement stipulations for prepetition amounts due upon assumption of those agreements. Other Key Filings On August 5, 2021, the Debtors filed two motions seeking to (i) approve certain restructuring arrangements with Airbus S.A.S. and Banco Santander, S.A. and (ii) to assume certain purchase agreements with Airbus S.A.S. Orders approving these motions were entered on August 27, 2021. In addition, on August 5, 2021, the Debtors filed a motion seeking authorization to enter into a sale and leaseback transaction with Sky Aero Management Ltd., pursuant to which the Debtors will sell and leaseback certain aircraft purchased in the Airbus purchase agreements that were assumed. In addition, on August 5, 2021 the Debtors filed a motion seeking authorization to purchase certain aircraft from Wacapou Leasing S.A. Orders approving both of these motions were entered on August 30, 2021. On June 16, 2021 Banco del Estado de Chile (“BancoEstado”) filed a motion seeking to set a briefing and discovery schedule in connection with BancoEstado’s separate motion to substantively consolidating the estates of LATAM Airlines Group S.A., LATAM Finance Ltd. and Peuco Finance Ltd (the “Substantive Consolidation Motion”). BancoEstado filed the BancoEstado Motion on June 18, 2021. On June 23, 2021, the Debtors as well as certain other interested parties each filed an objection to BancoEstado’s motion. BancoEstado filed a reply in response to such objections on July 19, 2021. The Bankruptcy Court denied BancoEstado’s motion to set a briefing and discovery schedule on July 22, 2021, but the Bankruptcy Court indicated that BancoEstado could resubmit their motion as an objection to the Disclosure Statement. On June 16, 2021, the Creditors’ Committee filed two motions seeking standing to prosecute certain claims on behalf of the Debtors against Delta Airlines, Inc. (the “Delta Motion”) and Qatar Airways O.C.S.C. (the “Qatar Motion”), and, together with the Delta Motion, (the “Standing Motions”), which were opposed by certain parties. The Standing Motions were scheduled to be heard at a hearing on July 30, 2021. The Bankruptcy Court proposed that the parties mediate certain matters related to the claims raised in the Standing Motions in the first instance. The Bankruptcy Court asked that the parties coordinate to select a mediator and establish a proposed plan for the mediation. On August 31, 2021, the Bankruptcy Court entered an order appointing the Honorable Allan L. Gropper (Ret.) as mediator, and the parties subsequently began mediating these matters. On October 15, 2021, the mediator issued a notice terminating the mediation, noting that the mediation had failed. The Creditors’ Committee has asked the Bankruptcy Court to re-schedule a hearing on the Standing Motions on the Bankruptcy Court’s next available hearing date. On September 10, 2021, the Debtors filed a motion to assume various aircraft agreements and for related relief in connection with the Triton, Centaurus and JOLCO aircraft. The motion was adjourned sine die on December 22, 2021. On December 8, 2021, the Debtors filed (i) a motion for entry of an order authorizing long term restructuring agreements with the Centaurus/Triton Lessors, SBI Lessors, and Pilar II Leasing Limited and approving related settlement agreement with certain claimants and (ii) a motion for entry of an order approving settlement stipulation with Sajama Investments, Inc. The Creditors’ Committee and BancoEstado objected to both motions, and an evidentiary hearing on the motions was scheduled for January 21, 2022. On January 28, 2022, the Bankruptcy Court overruled the objections and granted the motion. Financial Information 183 Integrated Report 2021 18 19 Statements and Schedules Since 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. On August 13, 2021 and December 3, 2021, the Debtors filed amended schedules. The Company is also required to file “Monthly Operating Reports” (MOR), to account for the receipt, administration and disposition of property during the pendency of the Chapter 11 Cases. 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)). On October 18, 2021, the Bankruptcy Court entered an order approving a third tranche of secured financing for $750 million, as provided for in the DIP Credit Agreement. Accordingly, as of December 31, 2021, the Debtors have secured a DIP Facility in the total aggregate amount of up to $3.2 billion. 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 6,400 submitted claims, including those related to the Debtors fleet obligations, 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, on March 18, 2021, the Bankruptcy Court entered an order approving alternative dispute resolution procedures to resolves certain claims disputes outside of the Bankruptcy Court. As of December 23, 2021, the Debtors have objected to or have resolved through claims withdrawals, stipulations and court orders approximately 3,400 claims with a total value of approximately US$60 billion. As noted above, the Debtors have entered into claims stipulations in connection with their lease amendment agreements. As the Debtors continue to reconcile claims against the Company’s books and records, they will object to and contest such claims that they determine are not valid or asserted in the proper amount and will resolve other claims disputes in and outside of the Bankruptcy Court. A Claim is recorded as a liability when it has a present obligation, whether legal or constructive, as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the obligation amount can be made. As of December 31, 2021 approximately 3,568 of the Claims filed against Latam are still being reconciled and so at this time the amounts of such Claims cannot be reliably estimated. 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, 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 Financial Information 184 Integrated Report 2021 20 21 on the date they cease to be so controlled. The results and flows are incorporated from the date of acquisition. (b) Transactions and balances 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 by function 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. 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 consolidated 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, 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 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 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". Financial Information 185 Integrated Report 2021 22 23 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. Useful lives are detailed in Note 17 (d). When the value of an asset exceeds its estimated recoverable amount, its value is immediately reduced to its recoverable amount. 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. 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. 2.7. Borrowing costs 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 by function when accrued. Financial Information 186 Integrated Report 2021 24 25 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 by function 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 consolidated statement of income by function. (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 fair value trought other comprehensive income 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 consolidated statement of income by function 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 consolidated statement of income by function 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 Until December 31, 2020 the Company recognized the hedging derivatives in accordance with IAS 39, as of January 1, 2021 the Company changed the recognition of these derivatives in accordance with IFRS 9 and continues to recognize under this same standard the derivatives that do not qualify as hedges. 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 designated as a hedging instrument and, if so, the nature of the item being hedged. The Company designates certain derivatives as: (a) (b) 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. At the beginning of the transaction, the Company documents the economic relationship between the hedged items existing between the hedging instruments and the hedged items, as well as its objectives for risk management and the strategy to carry out various hedging operations. 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) 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 by function 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. 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. Financial Information 187 Integrated Report 2021 26 27 Gains or losses related to the effective part of the change in the intrinsic value of the options are recognized in the cash flow hedge reserve within equity. Changes in the time value of the options related to the part are recognized within Other Consolidated Comprehensive Income in the costs of the hedge reserve within equity. 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 by function as “Other gains (losses)”. (b) 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. 2.14. 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 2.12. Trade and other accounts receivable The tax expense for the period or exercise comprises income and deferred taxes. 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. 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. 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 and a low risk of loss of value. 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. 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. Financial Information 188 Integrated Report 2021 28 29 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 constructive obligation as a result of a past event; (ii) It is probable that payment is going to be required to settle an obligation; and (iii) A reliable estimate of the obligation amount can be made. 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. 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. Financial Information 189 Integrated Report 2021 30 31 (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". Principal and interest are present in the consolidated cash flow as "Payments of lease liability" and "Interest paid", respectively, in cash flows use in financing activities 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. Financial Information 190 Integrated Report 2021 32 33 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. NOTE 3 - FINANCIAL RISK MANAGEMENT 3.1. Financial risk factors 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 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 fuel price levels, exchange rates and interest rates, quantifies exposures and their risk, and develops and executes hedging strategies. (i) Fuel-price risk: Exposure: The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred. 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. 2.24. Environmental costs Mitigation: Disbursements related to environmental protection are charged to results when incurred or accrue. To hedge the risk exposure fuel, the Company operates with derivative instruments (swaps and options) whose underlying assets may be different from Jet Fuel, such as 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: As of December 31, 2021, the Company recognized profit of US$ 10.1 million for fuel hedge net of premiums in the costs of sale for the year. During the same period of 2020, the Company recognized losses of US$ 14,3 million for the same concept. As of December 31, 2021 the market value of the fuel positions was US$ 17.6 million (positive). At the end of December 2020, this market value was US$ 1.3 million (positive). Financial Information 191 Integrated Report 2021 34 35 The following tables show the level of hedge for different periods: Positions as of December 31, 2021 (*) Maturities Percentage of coverage over the expected volume of consumption 25% 30% 17% 14% 21% Q122 Q222 Q322 Q422 Total (*) The percentage shown in the table considers all the hedging instruments (swaps and options). Positions as of December 31, 2020 (*) Maturities Q121 Q221 Q321 Q421 Total Percentage of coverage over the expected volume of consumption 3% 3% 3% 3% 3% (*) The volume shown in the table considers all the hedging instruments (swaps and options). Sensitivity analysis 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 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 sensitivity 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 2021 and the end of December 2020. The projection period was defined until the end of the last fuel hedging contract in force, corresponding to the last business day of the fourth quarter of the year 2022. Benchmark price (US$ per barrel) +5 -5 Positions as of December 31, 2021 effect on Equity (MUS$) +2.7 -3.3 Positions as of December 31, 2020 effect on Equity (MUS$) +0.6 - 0.6 Given the fuel hedging structure during half – year 2021, 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$ 79.2 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$ 80.8 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 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. Mitigation: 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 2021, and securing the operating margin, LATAM makes hedges using FX derivatives. As of December 31, 2021 and December 31, 2020 the Company did not maintain FX derivatives. During the year ended December 31, 2021, the Company did not recognize earnings for FX coverage net of premiums. During the same period of 2020, the Company recognized gains of US$ 3.2 million for FX hedging net of premiums. As of December 31, 2021 and December 31, 2020 the company does not hold FX derivatives that are not recognized as 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. As of December 31, 2021 and December 31, 2020 the Company had no current FX derivatives for BRL. Financial Information 192 Integrated Report 2021 36 37 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. migrate to the adoption of SOFR as an alternative rate, which will materialize with the termination of LIBOR. Mitigation: 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. At the end of December 31, the Company did not have current interest rate derivative positions. Currently a 40% (42% at December 31, 2020) of the debt is fixed to fluctuations in interest rate. Most of this debt is indexed to a benchmark rate based on LIBOR. The following table shows the variation in financial results when the R$/US$ exchange rate appreciates or depreciates by 10%: Appreciation (depreciation) De R$/US$ -10% +10% Effect December 31, 2021 (MUS$) +51.9 -51.9 Effect December 31, 2020 (MUS$) +18.9 -18.0 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 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, 2021 MUS$ Effect at December 31, 2020 MUS$ -10% +10% +96.66 -79.09 +191.53 -156.71 (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"). Because the publication of LIBOR will cease for June 2023, the company has begun to To mitigate the effect of those derivatives that will be affected by the transition from LIBOR to SOFR, the Company is evaluating adherence to the ISDA protocol in the case of derivatives and is following the recommendations of the relevant authorities, including the Alternative Reference Rates Committee. ("ARRC") in the case of debt, in line with the measures generally adopted by the market for the replacement of LIBOR in debt contracts. Rate Hedging Results: As of December 31, 2021, the Company did not hold current interest rate derivative positions. At the end of December 2020, the Company did not hold current interest rate derivative positions. 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, 2021 effect on profit or loss before tax (MUS$) Positions as of December 31, 2020 effect on profit or loss before tax (MUS$) +100 basis points -100 basis points -46.31 +46.31 -42.11 +42.11 As of December 31, 2021, the Company does not hold current interest rate derivative positions. The above calculations were vertically increased (decreased) 100 basis points of the three-month Libor future curve, both scenarios being reasonably possible based on historical market conditions. 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. On March 5, 2021, the ICE Benchmark Administration (“IBA”) announced that, as a result of little access to the information necessary for calculating rates, the publication of the 1-week, 2-months USD rates will cease to be published on December 31, 2021 and the remaining terms will cease on June 30, 2023. Although the adoption of alternative rates 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 the discontinuation of LIBOR. In this regard, the Company identifies that its derivative and debt contracts may be affected by the change in the relevant rate. To mitigate the effect, the Financial Information 193 Integrated Report 2021 38 39 Company is evaluating adherence to the ISDA protocol in the case of derivatives and is following the recommendations of the relevant authorities, including the Alternative Reference Rates Committee ("ARRC") in the case of debt, online with the measures generally adopted by the market for the replacement of LIBOR in debt contracts. Currently, the Company only has fuel derivatives with a nominal value equivalent to 21%'s hedge of the total consumption expected for the next 12 months. (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). The client portfolio at December 31, 2021 increased when compared to the balance as of December 31, 2020 by 48%, mainly due to an increase in passenger transport operations (travel agencies and corporate) that increased by 124% in sales, mainly from a 68% of credit card payments and 32% in cash sales. Instead, the cargo business showed a increase in its net income of 23% compared to December 2020. The cargo business increase in its operation in a 23% compared to December 2020. In the case of clients who still have pending balances and that the administration considered risky, the corresponding measures were taken to consider expected credit loss The provision at the end of December 2021 had a decrease of 34% compared to December 31, 2020, as a result of the decrease in the portfolio for recoveries and for the application of write-offs in the years. 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. 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. Financial Information 194 Integrated Report 2021 40 41 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, 2021, the balance of liquid funds is US$ 1,047 million (US $ 1,696 million as of December 31, 2020), which are invested in short-term instruments through financial entities with a high credit rating classification. As of December 31, 2021, 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). Finally, during the fourth quarter of 2021, the company has reduced budgeted investments by approximately US$ 146 million, mainly related to maintenance, given the lower operation, purchase of engines, investments in cabins and other projects. In addition, LATAM has not received aircraft that it was committed to receiving in 2021, which at the beginning of the year reached US$ 773 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$ 3.2 billion divided in Tranche A, B and C. Initially, Tranches A and C were committed for a total of US$2.45 billion. To date, these three tranches are fully committed after the approval on October 18 of a proposal to grant financing under Tranche B of the DIP for a total of US$750 million, thus allowing LATAM to access lower financing costs in the next disbursements of the DIP financing. 1) A Tranche A, which is committed for up to US$ 1.3 billion, out of which (i) US$ 1.125 billion 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; 2) A Tranche B for an amount up to US $750 million that will be contributed by a group of financiers including Oaktree Capital Management, L.P. and Apollo Management Holdings, L.P. and other certain funds advised by them; and 3) A Tranche C for a capital amount of up to US$ 1.15 billion, of which (i) US$ 750 million was provided by a certain group of LATAM's shareholders composed by Grupo Cueto, Grupo Eblen and Qatar Airways, or certain related entities; (ii) US$ 250 million was 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 was committed by certain additional shareholder investors through a public investment fund managed by Toesca S.A., through a “joinder” or supplement to the “DIP Agreement” subscripted on November 6, 2020. In consideration of the extension of the health and mobility restrictions imposed by the authorities in the countries where the group operates, as well as the analysis of the company's liquidity projection, beginning on October 8, 2020, LATAM has made four withdrawals under the DIP Credit Agreement. In accordance with the terms of the “DIP Agreement”, Debtors must maintain consolidated liquidity of at least US $ 400 million, considering the undrawn line of the DIP, and meet certain milestones with respect to the chapter 11 process. The amounts by Tranche are summarized in the table below: As of December 31, 2021 Tranche Commited amount Withdrew amount Available amount As of December 31, 2020 Withdrew amount Commited amount Available amount M US$ M US$ M US$ M US$ M US$ M US$ Tranche A Tranche B Tranche C Total 1,300 750 1,150 3,200 876 300 774 424 450 376 1,950 1,250 1,300 - 1,150 2,450 650 - 500 650 - 650 1,150 1,300 Financial Information 195 Integrated Report 2021 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, 2021 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 Lo a ns to e xpo rte rs 97.018.000-1 C ITIB ANK 97.030.000-7 ITAU 0-E HS B C B a nk lo a ns 97.023.000-9 C OR P B ANC A S ANTANDER 0-E 0-E C ITIB ANK Obliga tio ns with the public C re dito r c o untry C urre nc y C hile C hile C hile C hile S pa in U.S .A. US $ US $ US $ UF US $ UF Up to 90 da ys ThUS $ 115,350 20,140 12,123 10,236 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 - - - - - - - - - - - - - - - - - - - - 115,350 20,140 12,123 10,236 110,294 60,935 114,000 20,000 12,000 At Expira tio n At Expira tio n At Expira tio n 10,106 106,427 60,935 Qua rte rly Qua rte rly At Expira tio n 751 2,604 106,939 60,935 - - Annua l Effe c tive No m ina l ra te % ra te % 2.96 4.20 4.15 3.35 2.80 3.10 2.96 4.20 4.15 3.35 2.80 3.10 97.030.000-7 B ANC O ES TADO 0-E B ANK OF NEW YOR K C hile U.S .A. UF US $ 36,171 179,601 31,461 31,461 369,537 648,231 502,897 At Expira tio n 184,188 104,125 884,188 856,000 - 2,028,501 1,500,000 At Expira tio n 4.81 7.16 4.81 6.94 Gua ra nte e d o bliga tio ns 0-E 0-E 0-E B NP P AR IB AS M UF G U.S .A. U.S .A. WILM INGTON TR US T C OM P ANYU.S .A. Othe r gua ra nte e d o bliga tio n 0-E 0-E 0-E 0-E 0-E F ina nc ia l le a s e 0-E 0-E 0-E 0-E 0-E 0-E 0-E C R EDIT AGR IC OLE M UF G C ITIB ANK B ANK OF UTAH EXIM B ANK C R EDIT AGR IC OLE C ITIB ANK B NP P AR IB AS NATIXIS US B ANK P K AIR F INANC E EXIM B ANK Othe rs lo a ns 0-E OTHER S (**) F ra nc e U.S .A. U.S .A. U.S .A. U.S .A. F ra nc e U.S .A. U.S .A. F ra nc e U.S .A. U.S .A. U.S .A. US $ US $ US $ US $ US $ US $ US $ US $ US $ US $ US $ US $ US $ US $ US $ 17,182 29,652 933 19,425 17,921 4,990 40,087 36,660 29,851 41,862 37,829 36,337 95,475 55,297 89,263 214,031 177,359 161,374 198,475 166,712 Qua rte rly Qua rte rly 144,358 Qua rte rly / M o nthly 273,199 - - - 8,150 46,746 94,062 14,757 613,419 - - 1,858,051 - - - - - - - - 273,199 163,715 613,419 273,199 156,933 At Expira tio n Qua rte rly 600,000 At Expira tio n 1,858,051 1,644,876 At Expira tio n 271 1,173 3,375 10,546 55,957 71,322 62,890 Qua rte rly 699 19,268 7,351 5,929 18,158 853 2,758 1,387 59,522 26,519 34,328 72,424 5,763 11,040 - 5,721 21,685 59,574 133,592 10,913 61,167 - - - - - - 2,086 84,511 55,555 59,930 6,573 - 130,131 289,892 - - 230,747 17,529 249,466 269,087 593,518 2,052 83,985 54,918 261,458 219,667 16,851 533,127 Qua rte rly Qua rte rly Qua rte rly Qua rte rly Qua rte rly Qua rte rly Qua rte rly 1.48 1.64 3.17 1.82 1.72 2.00 22.71 1.84 3.68 1.37 1.56 2.09 4.03 1.88 2.88 1.48 1.64 1.60 1.82 1.72 2.00 12.97 1.84 3.23 0.79 0.96 2.09 2.84 1.88 2.03 US $ 55,819 - - - - 55,819 55,819 At Expira tio n - - TOTAL 1,493,535 2,445,619 1,519,275 1,344,761 1,064,747 7,867,937 6,801,685 (*) No te tha t the lia bilitie s re fle c t the ir c o ntra c tua l o bliga tio ns in fo rc e a t De c e m be r 31, 2021 (**) Obliga tio n with c re dito rs fo r e xe c ute d le tte rs o f c re dit. Financial Information 196 Integrated Report 2021 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, 2021 De bto r: TAM S .A. a nd S ubs idia rie s , Ta x No . 02.012.862/0001-60, B ra zil. 43 Ta x No . C re dito r B a nk lo a ns 0-E 0-E 0-E F ina nc ia l le a s e s NC M M ER R IL LYNC H C R EDIT P R ODUC TS LLC B ANC O B R ADES C O 0-E 0-E NATIXIS GA TELES IS LLC Othe rs Lo a ns 0-E De us tc he B a nk (**) C re dito r c o untry C urre nc y Ne the rla nds US $ U.S .A. B ra zil F ra nc e U.S .A. B ra zil B R L B R L US $ US $ US $ Up to 90 da ys ThUS $ 990 185,833 74,661 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 - - - - - - - - - - - - 990 185,833 74,661 943 M o nthly 185,833 M o nthly 74,661 M o nthly Annua l Effe c tive No m ina l ra te % 6.01 3.95 4.33 ra te % 6.01 3.95 4.33 486 762 2,235 2,706 4,080 4,675 11,076 4,646 - 5,077 17,877 17,866 17,326 10,999 Qua rte rly M o nthly 2.74 14.72 2.74 14.72 20,689 - - - - 20,689 20,689 At Expira tio n - - TOTAL 283,421 4,941 8,755 15,722 5,077 317,916 310,451 (*) No te tha t the lia bilitie s re fle c t the ir c o ntra c tua l o bliga tio ns in fo rc e a t De c e m be r 31, 2021 (**) Obliga tio n with c re dito rs fo r e xe c ute d le tte rs o f c re dit Financial Information 197 Integrated Report 2021 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, 2021 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 . 44 Ta x No . C re dito r C re dito r c o untry C urre nc y Le a s e Lia bility - - AIR C R AF T OTHER AS S ETS OTHER S OTHER S Tra de a nd o the r a c c o unts pa ya ble s - OTHER S OTHER S US $ US $ UF C OP EUR P EN US $ C LP B R L Othe r c urre nc y Ac c o unts pa ya ble to re la te d pa rtie s c urre nts (*) F o re ign F o re ign F o re ign 8 1.0 6 2 .3 0 0 -4 F o re ign F o re ign F o re ign Inve rs o ra Ae ro ná utic a Arge ntina S .A. Qa ta rArge ntina De lta Airline s P a ta go nia S e a fa rm s INC C o s ta Ve rde Ae ro na utic a S .A. QA Inve s tm e nts Ltd QA Inve s tm e nts 2 Ltd Lo zuy S .A. US $ US $ U.S .A C LP C hileU.S .A C LP C hile J e rs e y C ha nne l Is la nds US $ J e rs e y C ha nne l Is la nds US $ US $ Urugua y Up to 90 da ys ThUS $ 694,568 9,859 1,759 2 198 4 665,645 214,224 365,486 542,304 - - - - - - - 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 % 469,568 11,820 982 7 112 7 165,085 4,912 5,258 3,719 5 2,268 7 175,819 219,774 219,774 43,955 767,629 22,433 245 35 293 97 811,843 23,365 76 - - - 778,613 8,651 231 - - - 3,522,221 76,128 3,293 44 603 108 2,883,657 73,615 2,621 42 599 103 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 830,730 219,136 370,744 546,023 5 2,268 7 175,819 219,774 219,774 43,955 830,730 219,136 370,744 546,023 5 2,268 7 175,819 219,774 219,774 43,955 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - To ta l 2,494,049 1,323,072 790,732 835,284 787,495 6,230,632 5,588,872 To ta l c o ns o lida te d 4,271,005 3,773,632 2,318,762 2,195,767 1,857,319 14,416,485 12,701,008 (*)Tra de a nd o the r a c c o unts pa ya ble s inc lude c la im s re s ulting fro m C ha pte r 11 ne go tia tio n a nd a re s ubje c t to s e ttle m e nt in a c c o rda nc e with the R e o rga niza tio n pla n. Financial Information 198 Integrated Report 2021 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, 2020 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 . 45 Ta x No . C re dito r C re dito r c o untry C urre nc y S C OTIAB ANK Lo a ns to e xpo rte rs 97.018.000-1 97.030.000-7 B ANC O ES TADO 76.645.030-K ITAU 97.951.000-4 HS B C B a nk lo a ns 97.023.000-9 C OR P B ANC A 0-E S ANTANDER 76.362.099-9 B TG 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 0-E 0-E 0-E 0-E 0-E B NP P AR IB AS NATIXIS INVES TEC M UF G S M B C Othe r gua ra nte e d o bliga tio n 0-E 0-E 0-E 0-E C R EDIT AGR IC OLE M UF G C ITIB ANK B ANK OF UTAH F ina nc ia l le a s e 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 R R P F ENGINE LEAS ING AP P LE B ANK B TM U US B ANK P K AIR F INANC E C hile C hile C hile C hile C hile S pa in C hile C hile U.S .A. U.S .A. F ra nc e Engla nd U.S .A. U.S .A. F ra nc e U.S .A. U.S .A. 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. 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 $ Up to 90 da ys ThUS $ 76,929 41,543 20,685 12,545 M o re tha n M o re tha n M o re tha n o ne to thre e ye a rs ThUS $ thre e to five ye a rs ThUS $ 90 da ys to o ne ye a r ThUS $ M o re tha n five ye a rs ThUS $ To ta l ThUS $ No m ina l va lue ThUS $ - - - - - - - - 11,631 3,323 2,104 - 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 Am o rtiza tio n At Expira tio n At Expira tio n At Expira tio n At Expira tio n Qua rte rly Qua rte rly At Expira tio n 23,210 80,063 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 Expira tio n At Expira tio n 50,500 47,918 11,502 37,114 131,345 40,889 37,509 9,425 28,497 - 104,166 84,048 21,042 77,881 - 107,342 84,487 - 80,678 219,666 35,712 - 194,901 - 522,563 289,674 41,969 419,071 131,345 474,273 271,129 37,870 382,413 130,000 Qua rte rly / S e m ia nnua l Qua rte rly S e m ia nnua l Qua rte rly At Expira tio n 1,347 87,611 3,405 - 275,773 74,852 10,404 - - 119,460 603,443 952,990 5,965 13,889 79,117 1,926 14,851 114,952 21,551 4,093 4,589 11,620 60,527 4,624 - 2,057 61,983 - 2,343 104,946 17,851 3,382 4,763 9,647 54,611 12,202 - 2,062 118,372 - 793 237,945 26,308 8,826 12,977 26,261 144,670 3,153 - 19,950 - - - - 46,115 - - 99,232 - 4,870 755 770 86,076 - - - - - 277,120 301,873 617,252 952,990 273,199 291,519 600,000 793,003 At Expira tio n Qua rte rly At Expira tio n At Expira tio n - - 19,118 - - - - - - - - 5,965 18,008 324,705 1,926 17,987 557,075 65,710 21,171 23,084 48,298 345,884 19,979 5,965 17,961 312,792 1,926 17,951 541,406 65,247 18,489 22,730 47,609 327,419 19,522 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 M o nthly Annua l Effe c tive No m ina l ra te % 3.08 3.49 4.20 4.15 ra te % 3.08 3.49 4.20 4.15 3.35 2.80 3.10 3.35 2.80 3.10 4.81 7.16 4.81 6.94 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 (*) No te tha t the lia bilitie s re fle c t the ir c o ntra c tua l o bliga tio ns in fo rc e a t De c e m be r 31, 2020 Financial Information 199 Integrated Report 2021 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, 2020 De bto r: TAM S .A. a nd S ubs idia rie s , Ta x No . 02.012.862/0001-60, B ra zil. 46 Ta x No . C re dito r B a nk lo a ns 0-E 0-E 0-E F ina nc ia l le a s e s NC M B ANC O B R ADES C O B ANC O DO B R AS IL C re dito r c o untry C urre nc y Ne the rla nds B ra zil B ra zil US $ B R L B R L 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 Ita ly GA TELES IS LLC F ra nc e US $ Luxe m bo urg US $ US $ US $ U.S .A. Up to 90 da ys ThUS $ 452 91,672 208,987 31,482 2,460 134,919 758 TOTAL 470,730 13,968 47,144 (*) No te tha t the lia bilitie s re fle c t the ir c o ntra c tua l o bliga tio ns in fo rc e a t De c e m be r 31, 2020 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 497 - - 9,276 2,442 - 1,753 61 - - 42,383 25 - 4,675 - - - - - - 4,675 4,675 - - - 1,010 91,672 208,987 943 80,175 199,557 M o nthly M o nthly M o nthly - - - 7,969 83,141 4,927 134,919 19,830 81,260 Qua rte rly / S e m ia nnua l 4,759 144,120 12,261 Qua rte rly Qua rte rly M o nthly 4.09 2.00 3.07 14.72 7,969 544,486 523,075 ra te % 6.01 4.34 3.95 ra te % 6.01 4.33 3.95 4.09 2.00 3.01 14.72 Financial Information 200 Integrated Report 2021 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. 47 Tax No. Creditor Lease Liability - - AIRCRAFT OTHER ASSETS OTHERS OTHERS Trade and other accounts payables - OTHERS OTHERS Accounts payable to related parties currents Delta Airlines Foreign Foreign Patagonia Seafarms INC 97.810.370-9 Inversiones Costa Verde Ltda. y CPA. 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 US$ CLP CLP US$ US$ US$ 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 years year ThUS$ ThUS$ ThUS$ More than five years ThUS$ 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 % - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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 Information 201 Integrated Report 2021 48 49 The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with different financial institutions. At the end of 2020, the Company had delivered US$ 3 million in guarantees for derivative margins corresponding to cash and stanby letters of credit. As of December 31, 2021, the Company maintains guarantees for US$ 5.5 million corresponding to derivative transactions. The increase was due to: i) greater subscription of hedging contracts than their maturity and ii) changes in fuel prices, 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, 2021, 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, 2021, the Company maintained financial instruments that should be recorded at fair value. These are grouped into two categories: 1. Derivative financial 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 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, 2021 As of December 31, 2020 Fair value measurements using values considered as Fair value measurements using values considered as Fair value Level I ThUS$ Level II ThUS$ Level III ThUS$ Fair value Level I ThUS$ ThUS$ Level II ThUS$ Level III ThUS$ Assets Cash and cash equivalents Short-term mutual funds Investment funds Other financial assets, current Fair value of fuel derivatives Private investment funds Certificate of Deposit (CBD) Domestic and foreign bonds Liabilities Other financial liabilities, current Fair value of interest rate derivatives Currency derivative not registered as hedge accounting ThUS$ 26,025 26,025 26,467 17,641 347 7,189 1,290 5,671 2,734 2,937 26,025 26,025 1,637 - 347 - 1,290 - - - - - 24,830 17,641 - 7,189 - 5,671 2,734 2,937 - - - - - - - - - - 32,782 32,782 4,097 1,296 348 2,435 18 5,671 2,734 2,937 32,782 32,782 366 - 348 - 18 - - - - - 3,731 1,296 - 2,435 - 5,671 2,734 2,937 - - - - - - - - - - - Financial Information 202 Integrated Report 2021 50 51 Additionally, at December 31, 2021, 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 T ime deposits Other financial assets, current Other financial assets T rade 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 As of December 31, 2021 As of December 31, 2020 Book value T hUS$ 1,020,810 2,120 558,078 386,034 74,578 74,671 74,671 Fair value T hUS$ 1,020,810 2,120 558,078 386,034 74,578 74,671 74,671 Book value T hUS$ 1,663,059 4,277 732,578 802,220 123,984 46,153 46,153 Fair value T hUS$ 1,663,059 4,277 732,578 802,220 123,894 46,153 46,153 902,672 902,672 599,180 599,180 724 15,622 12,201 724 15,622 12,201 158 33,140 4,986 158 33,140 4,986 4,447,780 4,339,370 3,050,059 2,995,768 4,860,153 4,860,153 2,322,961 2,322,961 661,602 5,948,702 472,426 662,345 5,467,594 472,426 812 7,803,801 396,423 812 6,509,081 410,706 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 15. (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. Financial Information 203 Integrated Report 2021 52 53 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 tax planning strategies historical profitability, projected future 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. taxable (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, what has been considered at the time of estimating expired tickets. As of December 31, 2021, deferred income associated with air tickets sold amounted to ThUS $ 1,126,371 (ThUS $ 904,558 as of December 31, 2020). (e) Valuation of miles and points awarded to holders of loyalty programs, pending use. As of December 31, 2021, the deferred income associated with the LATAM Pass loyalty program amounts to ThUS $ 1,285,732 (ThUS $ 1,365,534 as of December 31, 2020). A hypothetical change of one percentage point in the probability of swaps would translate into an impact of ThUS $ 27,151 in the results as of 2021 (ThUS $ 24,425 in the results as of 2020). The deferred income associated with the LATAM Pass Brasil loyalty program (See Note 22) amounts to ThUS $ 192,381 as of December 31, 2021 (ThUS $ 187,493 as of December 31, 2020). A hypothetical change of two percentage points in exchange probability would translate into an impact of ThUS $ 5,100 in the results as of 2021 (ThUS $ 4,948 in the results as of 2020). 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. The management in conjunction with an external specialist develop a predictive model of non-use miles or points, 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 or points. (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 constructive, as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the obligation amount can be made. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events, the likelihood of loss being incurred and when determining whether a reliable estimate of the loss can be made. The Company assesses its liabilities and contingencies based upon the best information available, 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. If we are unable to reliably estimate the obligation or conclude no loss is probable but it is reasonably possible that a loss may be incurred, no provision is recorded but the contingency is disclosed in the notes to the consolidated financial statements. 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 in the calculation of the new and amendment contract as of December 31, 2021 would increase the lease liability by approximately US $ 76 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 Financial Information 204 Integrated Report 2021 54 55 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 LATAM, who is in charge of the operation of the LATAM Group as a whole and reports to the LATAM Board. 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, 2021, 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 Income from ordinary activities Other operating income For the year ended At December 31, 2021 ThUS$ 503,616 75,513 577,970 376,857 368,474 2020 ThUS$ 297,549 172,229 505,145 338,565 177,007 1,664,523 1,304,006 162,959 794,122 359,981 4,884,015 227,331 112,581 638,225 378,360 3,923,667 411,002 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. Financial Information 205 Integrated Report 2021 56 57 NOTE 6 - CASH AND CASH EQUIVALENTS Cash on hand Bank balances Overnight Total Cash Cash equivalents Time deposits Mutual funds Total cash equivalents As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ 2,120 558,078 386,034 946,232 74,578 26,025 100,603 4,277 732,578 802,220 1,539,075 123,984 32,782 156,766 Total cash and cash equivalents 1,046,835 1,695,841 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 in 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 Total As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ 7,148 89,083 9,800 13,535 7,099 886,627 33,543 20,107 136,938 32,649 17,185 10,361 1,438,846 39,755 1,046,835 1,695,841 NOTE 7 - FINANCIAL INSTRUMENTS Financial instruments by category As of December 31, 2021 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 payable to related entities, current Other financial liabilities, non-current Accounts payable, non-current Total M easured at At fair value with changes amortized in results cost ThUS$ ThUS$ 1,020,810 83,150 902,672 724 15,622 12,201 2,035,179 26,025 347 - - - - - 26,372 Hedge derivatives ThUS$ - 17,641 - - - - - 17,641 M easured at amortized cost At fair value with changes in results Hedge derivatives ThUS$ 4,447,780 4,860,153 661,602 5,948,702 472,426 16,390,663 ThUS$ ThUS$ 2,937 - - - - 2,937 2,734 - - - - 2,734 Total ThUS$ 1,046,835 101,138 902,672 724 15,622 12,201 - 2,079,192 Total ThUS$ 4,453,451 4,860,153 661,602 5,948,702 472,426 16,396,334 (*) 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. Financial Information 206 Integrated Report 2021 58 59 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 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 Measured at At fair value with changes in results ThUS$ amortized cost ThUS$ 1,663,059 48,605 599,381 158 33,140 4,986 2,349,329 Hedge derivatives ThUS$ - 1,297 - - - - - 1,297 32,782 348 - - - - - 33,130 Measured at amortized cost ThUS$ 3,050,059 2,322,125 812 7,803,801 651,600 396,423 14,224,820 At fair value with changes in results ThUS$ Hedge derivatives ThUS$ 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 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, 2021 ThUS$ As of December 31, 2020 ThUS$ 785,952 209,925 995,877 (81,004) 914,873 (12,201) 902,672 532,106 194,454 726,560 (122,193) 604,367 (4,986) 599,381 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. 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 Expected loss rate (1) As of December 31, 2021 Gross book value (2) Impairment loss Provision Expected loss rate (1) As December 31, 2020 Gross book value (2) Impairment loss Provision % 1% 10% 31% 72% 86% ThUS$ 591,210 116,613 11,376 3,863 62,890 785,952 ThUS$ (8,806) (11,840) (3,567) (2,766) (54,025) (81,004) % 4% 4% 66% 80% 92% 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) (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. Financial Information 207 Integrated Report 2021 60 61 As of December 31, 2021 As of December 31, 2020 Gross exposure according to balance ThUS$ Gross impaired exposure ThUS$ Trade accounts receivable 785,952 (81,004) Exposure net of risk concentrations ThUS$ 704,948 Gross exposure according to balance ThUS$ Gross Impaired exposure ThUS$ 532,106 (122,193) Exposure net of risk concentrations ThUS$ 409,913 Other accounts receivable 209,925 - 209,925 194,454 - 194,454 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. 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, 2021 ThUS$ 2020 ThUS$ Foreign Foreign 87.752.000-5 76.335.600-0 96.989.370-3 96.810.370-9 Qatar Airways Indirect shareholder Qatar US$ 703 148 TAM Aviação Executiva e Taxi Aéreo S.A. Granja Marina Tornagaleones S.A. Parque de Chile S.A. Rio Dulce S.A. Inversiones Costa Verde Ltda. y CPA. Total current assets Common shareholder Common shareholder Related director Related director Related director Brazil Chile Chile Chile Chile BRL CLP CLP CLP CLP 2 6 2 4 7 724 * 1 6 2 1 - 158 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 Uruguayan Peso (New) Swiss Franc Japanese Yen Swedish crown Other Currencies Total As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ 7,282 361,745 53,488 5,658 24,143 453,781 844 2,428 62 12,728 860 360 106 488 3,603 927,576 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 The movements of the provision for impairment losses of the Trade Debtors and other accounts receivable are as follows: Periods Opening balance T hUS$ Write-offs T hUS$ From January 1 to December 31, 2020 From January 1 to December 31, 2021 (100,402) (122,193) 30,754 26,435 (Increase) Decrease T hUS$ (52,545) 14,754 Closing balance T hUS$ (122,193) (81,004) 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. Financial Information 208 Integrated Report 2021 62 63 (b) Current and non current accounts payable Tax No. Related party Relationship Country of origin Currency Current liabilities As of December 31, 2021 As of December 31, 2020 Non current liabilities As of As of December 31, December 31, 2021 2020 ThUS$ ThUS$ ThUS$ ThUS$ Foreign Foreign Foreign 81.062.300-4 Foreign Foreign Foreign Delta Airlines, Inc. Inversora Aeronáutica Argentina S.A. Patagonia Seafarms INC Shareholder U.S.A. Related director Argentina Related director Costa Verde Aeronautica S.A. (*) Shareholder QA Investments Ltd (*) Common shareholder QA Investments 2 Ltd (*) Common shareholder Lozuy S.A. (*) Common shareholder Total current and non current liabilities U.S.A. Chile Jersey Channel Islands Jersey Channel Islands Uruguay US$ US$ US$ US$ US$ US$ US$ 2,268 805 5 7 175,819 219,774 219,774 43,955 661,602 - 7 - - - - 812 - - - - - - - - - - - 105,713 132,141 132,141 26,428 396,423 (*)Corresponds to drewdawns of Tranche C of the DIP loan (See Note 3.1c) Transactions between related parties have been carried out on arm’s length conditions between interested and duly-informed parties. The transaction terms for the Liabilities of the period 2021 correspond from 30 days to 1 year of maturity, and the nature of the settlement of transactions are monetary. NOTE 10 - INVENTORIES The composition of Inventories is as follows: Technical stock Non-technical stock Total As of December 31, 2021 As of December 31, 2020 ThUS$ 250,327 37,010 287,337 ThUS$ 284,409 39,165 323,574 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, 2021 ThUS$ 64,455 5,785 70,240 As of December 31, 2020 ThUS$ 42,979 4,651 47,630 The resulting amounts do not exceed the respective net realization values. As of December 31, 2021, the Company registered ThUS$ 47,362 (ThUS$ 55,507 as of December 31, 2020) in results, mainly related to on-board consumption and maintenance, which is part of the Cost of sales. NOTE 11 - OTHER FINANCIAL ASSETS (a) The composition of other financial assets is as follows: Current Assets Non-current assets Total Assets As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 347 7,189 5,451 - 1,290 69,220 83,497 17,641 17,641 101,138 348 2,435 3,047 - 18 43,106 48,954 1,296 1,296 50,250 - 2,758 - 493 - 12,371 15,622 - - - 21,498 - 493 - 11,149 33,140 - - 15,622 33,140 347 9,947 5,451 493 1,290 81,591 99,119 17,641 17,641 116,760 348 23,933 3,047 493 18 54,255 82,094 1,296 1,296 83,390 (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 Fair value of fuel price derivatives Subtotal of derivate assets Total Other Financial Assets The different derivative hedging contracts maintained by the Company at the end of each fiscal year are described in Note 19. Financial Information 209 Integrated Report 2021 64 65 (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, 2021 As of December 31, 2020 ThUS $ ThUS $ 16 9,775 4,502 1,727 4,104 93,247 3,389 116,760 460 8,475 4,056 500 3,236 63,922 2,741 83,390 NOTE 12 - OTHER NON-FINANCIAL ASSETS The composition of other non-financial assets is as follows: Current assets As of December 2021 T hUS$ As of December 2020 T hUS$ Non-current assets As of December 2021 T hUS$ 2020 T hUS$ As of December T otal Assets As of December 2021 T hUS$ As of December 2020 T hUS$ (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 (c) Other assets Aircraft maintenance reserve (2) Sales tax Other taxes Contributions to the International Aeronautical T elecommunications Society ("SIT A") Contributions to Universal Air T ravel Plan "UAT P" Judicial deposits 12,331 11,404 - 23,735 6,439 10,550 8,091 - 25,080 - 57,634 1,661 258 - - 10,137 15,375 25,512 4,491 6,021 4,964 15,476 - 2,002 2,002 - 2,998 2,998 12,331 13,406 10,137 18,373 25,737 28,510 - - - - - - - - 6,439 10,550 8,091 4,491 6,021 4,964 25,080 15,476 8,613 102,010 4,023 - 33,212 - - 46,210 - - 90,846 1,661 8,613 148,220 4,023 258 - - 739 739 997 997 20 89,459 - 76,835 20 89,459 - 76,835 Subtotal other assets 59,553 114,904 123,430 123,784 182,983 238,688 T otal Other Non - Financial Assets 108,368 155,892 125,432 126,782 233,800 282,674 (1) Movement of Contracts assets: Initial balance Activation Cummulative translation adjustment Amortization Final balance T hUS$ T hUS$ T hUS$ T hUS$ T hUS$ 56,576 146,778 (14,672) (173,206) 15,476 15,476 67,647 (6,680) (51,363) 25,080 From January 1 to December 31, 2020 From January 1 to December 31, 2021 (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. 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, 2021, the company does not maintain maintenance reserves, these were exercised by the lessors for the non-payment of rent as a result of the chapter 11 process (ThUS$ 8,613 as of December 31, 2020). 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). Financial Information 210 Integrated Report 2021 66 67 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, 2021 and December 31, 2020, are detailed below: Current assets Aircraft Engines and rotables Other assets Total As of December 31, 2021 ThUS$ 99,694 46,724 374 - 146,792 As of December 31, 2020 ThUS$ 275,000 740 382 - 276,122 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 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. During 2021, the sale of five aircraft were completed. During the third quarter of the year 2021, associated with the fleet restructuring plan, they were transferred from the Property, plant and equipment component of spare parts and engines to the Non-current assets or groups of assets for disposal classified as held for sale. During the fourth quarter of 2021, according to the Chapter 11 Procedure, an engine of the XWB family included in this group of assets was rejected, due to finally not complete the sales. Additionally, a loss was recognized for US$85 million during the year (US$ 332 million at December 31, 2020) to adjust the assets to its fair value less the cost of sales, which were recorded in the income statement as part of the restructuring activities expenses. The detail of the fleet classified as non-current assets and disposal group classified as held for sale is as follows: Aircraft Boeing 767 Total As of As of December 31, 2021 6 6 December 31, 2020 11 11 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: Name of significant subsidiary Latam Airlines Perú S.A. Lan Cargo S.A. Lan Argentina S.A. (*) Transporte Aéreo S.A. Latam Airlines Ecuador S.A. Aerovías de Integración Regional, AIRES S.A. TAM S.A. (*) See Note 1 Country of incorporation Functional currency Peru Chile Argentina Chile Ecuador Colombia Brazil US$ US$ ARS US$ US$ COP BRL Ownership As of December 31, As of December 31, 2021 % 2020 % 99.81000 99.89395 100.00000 100.00000 100.00000 99.20120 100.00000 99.81000 99.89395 99.98370 100.00000 100.00000 99.19414 99.99938 The consolidated subsidiaries do not have significant restrictions for transferring funds to the controlling entity in the normal course of operations, except for those imposed by Chapter 11, on dividend payments prior to the application for protection. Financial Information 211 Integrated Report 2021 68 Summary financial information of significant subsidiaries Statement of financial position as of December 31, 2021 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$ 484,388 721,484 162,995 471,094 112,437 70,490 2,608,859 Current Assets T hUS$ 454,266 452,981 158,008 184,235 108,851 67,809 1,262,825 Non-current Assets T otal Liabilities T hUS$ T hUS$ 30,122 268,503 4,987 286,859 3,586 2,681 1,346,034 417,067 537,180 119,700 327,955 97,111 87,749 3,257,148 Current Liabilities T hUS$ 414,997 488,535 98,316 275,246 80,861 75,621 2,410,426 Non-current Liabilities T hUS$ 2,070 48,645 21,384 52,709 16,250 12,128 846,722 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, 2020 T otal Assets T hUS$ 661,721 749,789 176,790 546,216 108,086 76,770 Current Assets T hUS$ 629,910 472,869 171,613 264,690 104,534 73,446 Non-current Assets T otal Liabilities Current Liabilities Non-current Liabilities T hUS$ 31,811 276,920 5,177 281,526 3,552 3,324 T hUS$ 486,098 567,128 148,824 347,714 99,538 77,471 T hUS$ 484,450 516,985 146,555 278,319 87,437 68,433 T hUS$ 1,648 50,143 2,269 69,395 12,101 9,038 3,110,055 1,492,792 1,617,263 3,004,935 2,206,089 798,846 1,808,314 (1,025,618) Income for the year ended December 31, 2021 Revenue T hUS$ 584,929 215,811 242 203,411 68,762 239,988 2,003,922 Net Income/(loss) T hUS$ (83,346) 1,590 (190,299) (56,135) (3,078) (19,615) (756,694) Income for the year ended December 31, 2020 Revenue T hUS$ 372,255 207,854 49,101 142,096 51,205 90,668 Net Income/(loss) T hUS$ (96,066) 10,936 (220,667) (39,032) (22,655) (89,707) (*) Corresponds to consolidated information of TAM S.A. and subsidiaries Financial Information 212 Integrated Report 2021 69 (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 1 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 2 1 As o f De c e mb e r 3 1, 2 0 2 0 % % 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 0 0 0 0 0 .0 0 0 0 0 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 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 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. 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 1 % De c e mb e r 3 1, 2 0 2 0 % 0 - E 9 3 .3 8 3 .0 0 0 - 4 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 0 .19 0 0 0 0 .10 19 6 0 .0 0 0 0 0 0 .0 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 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 (13 ,0 3 5 ) 2 ,4 8 1 - - - (6 ) 2 (4 2 2 ) (14 5 ) 7 6 9 (10 ,3 5 6 ) (7 ,2 3 8 ) 6 6 6 (2 7 6 ) 1 1 (6 ) 2 (5 2 2 ) (13 ) 7 13 (6 ,6 7 2 ) Fo r th e ye a r e n d e d De c e mb e r 3 1, 2 0 2 1 Th US $ (5 ,5 5 3 ) (8 2 ) (19 ) (5 ) (1) 10 0 (15 8 ) 6 7 (5 ,6 5 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 ) Financial Information 213 Integrated Report 2021 70 NOTE 15 - INTANGIBLE ASSETS OTHER THAN GOODWILL The details of intangible assets are as follows: Classes of intangible assets (net) As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ Classes of intangible assets (gross) As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 587,214 190,542 136,135 104,874 - 127 627,742 204,615 139,113 68,521 6,340 228 587,214 190,542 463,478 105,673 36,723 1,315 627,742 204,615 528,097 69,379 39,803 1,315 1,018,892 1,046,559 1,384,945 1,470,951 Airport slots Loyalty program Computer software Developing software Trademarks (1) Other assets Total Movement in Intangible assets other than goodwill: C o m pute r s o ftwa re 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, 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) 1,448,241 76,376 (37,683) 1,125 (271,700) - (7,332) (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 Ope ning ba la nc e a s o f J a nua ry 1, 2021 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 139,341 - (275) 46,144 (3,571) (45,377) 68,521 82,798 (429) (45,657) (359) - 627,742 - - - (40,528) - 210,955 - - (352) (14,276) (5,785) 1,046,559 82,798 (704) 135 (58,734) (51,162) C lo s ing ba la nc e a s o f De c e m be r 31, 2021 136,262 104,874 587,214 190,542 1,018,892 (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. At December 31, 2021 TAM's trademark is fully amortized (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. 71 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, 2021, amounts to ThUS $ 366,053 (ThUS $ 424,932 as of December 31, 2020). b) Impairment Test Intangible Assets with an indefinite useful life As of December 31, 2021, the Company maintains only the CGU “Air Transport”. 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 December 31, 2021, in accordance with the accounting policy, the Company performed the annual impairment test. 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 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. The recoverable values were determined using the following assumptions: Annual growth arte (Terminal) Exchange rate (1) Discount rate base don the weighted average Cost of Capital (WACC) Fuel Price from future prices curves CGU Air transport 1.1 – 2.5 5.4 – 5.7 % R$/US$ % 8.60 – 10.60 Commodities markets US$/barrel 71 - 73 (1) In line with expectations of the Central Bank of Brazil. The result of the impairment test, which includes a sensitivity analysis of its main variables, showed that the calculated recoverable values exceed the book value of the cash-generating unit, and therefore no impairment was detected. Financial Information 214 Integrated Report 2021 72 The CGU is sensitive to annual growth rates, discounts and exchange rates. The sensitivity analysis included the individual impact of changes in critical estimates in determining recoverable amounts, namely: Increase WACC Maximum % 10.6 Decrease rate Terminal growth Minimal % 1.1 Air Transportation CGU In none of the above scenarios an impairment of the cash-generating unit was identified. NOTE 16 - GOODWILL Movement of Goodwill, separated by CGU: Opening balance as of January 1, 2020 Increase (decrease) due to exchange rate differences Impairment loss Closing balance as of December 31, 2020 Opening balance as of January 1, 2021 Increase (decrease) due to exchange rate differences Impairment loss Closing balance as of December 31, 2021 Air T ransport T hUS$ 2,209,576 (480,601) (1,728,975) - - - Coalition and loyalty program Multiplus T hUS$ T otal T hUS$ 2,209,576 (480,601) (1,728,975) - - - - - - - - - - - - - During fiscal year 2020, the Company recognized an impairment for the total Goodwill. Financial Information 215 Integrated Report 2021 NOTE 17 - PROPERTY, PLANT AND EQUIPMENT The composition by category of Property, plant and equipment is as follows: 73 Gross Book Value Accumulated depreciation Net Book Value As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ 473,797 43,276 121,972 11,024,722 10,377,850 646,872 25,764 146,986 147,402 49,186 248,733 12,281,838 5,211,153 243,014 5,454,167 377,961 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 - - (61,521) (4,462,706) (4,237,585) (225,121) (23,501) (130,150) (108,661) (44,423) (115,758) (4,946,720) (3,109,411) (190,007) (3,299,418) - - (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) 473,797 43,276 60,451 6,562,016 6,140,265 421,751 2,263 16,836 38,741 4,763 132,975 7,335,118 2,101,742 53,007 2,154,749 377,961 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 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 17,736,005 19,723,058 (8,246,138) (8,992,789) 9,489,867 10,730,269 (1) As of December 31, 2021, includes advances paid to aircraft manufacturers for ThUS$ 377,590 (ThUS$ 360,387 as of December 31, 2020) (2) Consider mainly rotables and tools. (3) As of December 31, 2020, due to 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 right of use assets, (1 A319, 7 A320 and 2 B767). As of December 31, 2021, due to Chapter 11, 13 aircraft lease contract were rejected, 4 were presented as to Property, plant and equipment, (4 A350) and 9 were presented as right of use assets, (2 A320 and 7 A350). (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 Information 216 Integrated Report 2021 (a) Movement in the different categories of Property, plant and equipment: 74 C o ns truc tio n in pro gre s s ThUS $ La nd ThUS $ 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 $ 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 $ 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 lo s ing ba la nc e a s o f De c e m be r 31, 2020 Ope ning ba la nc e a s o f J a nua ry 1, 2021 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 372,589 6,535 - - (39) - (2,601) 1,477 5,372 377,961 377,961 84,392 - - (279) - (1,720) 13,443 95,836 48,406 - - - - - (5,428) (5,428) 42,978 42,978 1,550 - - - - (1,252) - 74,862 - - - - (4,819) (4,836) - (9,655) 65,207 9,374,516 485,800 (1,439) (1,081,496) (107,912) (682,102) (146,219) (142,179) (1,675,547) 7,698,969 65,207 7,698,969 92 - - - (4,074) (833) 59 563,023 (169) (469,878) (44,684) (620,349) (19,199) (538,996) 298 (4,756) (1,130,252) C lo s ing ba la nc e a s o f De c e m be r 31, 2021 473,797 43,276 60,451 6,568,717 20,776 1,295 (112) - (55) (6,186) (1,543) 656 (5,945) 14,831 14,831 6,455 (26) - (212) (4,345) (404) 537 2,005 16,836 59,834 9 (31) - (3,250) (9,037) (7,195) 8,869 (10,635) 49,199 49,199 6 (309) - (1,885) (8,304) (1,752) 1,786 (10,458) 38,741 477 - (4) - (81) 4 - (81) 396 396 17 (17) - - (61) (11) 1 (71) 325 98,460 10,049,920 - - - (82) (16,542) (2,587) (4,841) (24,052) 74,408 74,408 6,543 - (46,816) (26) (11,649) (13,074) 123,589 58,567 132,975 493,639 (1,586) (1,081,578) (111,256) (718,767) (170,405) (136,018) (1,725,971) 8,323,949 8,323,949 662,078 (521) (516,694) (47,086) (648,782) (38,245) (399,581) (988,831) 7,335,118 (*) Include aircraft lease rejection due to Chapter 11. (**) As of December 31, 2021, it includes the lease contract amendment of two B787 aircraft ThUS$ (397,569) and six A320N aircraft ThUS$ (284,952). Include the reclassification of 4 A350 aircraft that were incorporated on property plant and equipment from available for sale for ThUS$ 464.812 and the reclassification of 11 B767 aircraft that were moved to available for sales for ThUS$(606,522) (see note 13). Financial Information 217 Integrated Report 2021 (b) Right of use assets: 75 Aircraft T hUS $ Others T hUS $ Net right of use assets T hUS $ Opening balances as of January 1, 2020 2,768,540 101,158 2,869,698 Additions Fleet rejection (*) Depreciation expense Cummulative translate adjustment Other increases (decreases) ** T otal changes Final balances as of December 31, 2020 Opening balances as of January 1, 2021 Additions Fleet rejection (*) Depreciation expense Cummulative translate adjustment Other increases (decreases) ** - (9,090) (395,936) (6,578) (18,894) (430,498) 2,338,042 2,338,042 537,995 (573,047) (317,616) (574) 116,942 399 - (22,492) (11,173) 385 399 (9,090) (418,428) (17,751) (18,509) (32,881) (463,379) 68,277 2,406,319 68,277 2,406,319 1,406 539,401 (4,577) (577,624) (16,597) (334,213) (1,933) 6,431 (2,507) 123,373 T otal changes (236,300) (15,270) (251,570) Final balances as of December 31, 2021 2,101,742 53,007 2,154,749 (*) Include aircraft lease rejection due to Chapter 11. (**) Include the amendment of 109 aircraft lease contract (1 A319, 37 A320, 12 A320N, 19 A321, 1 B767, 6 B777 and 16 B787). Financial Information 218 Integrated Report 2021 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 2021 2020 2021 2020 2021 2020 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 77 (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: Wilm ingto n M UF G Airc ra ft a nd e ngine s Trus t C o m pa ny 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 777 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 Useful life (years) minimum maximum 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, 2021 As o f De c e m be r 31, 2020 Exis ting De bt ThUS $ B o o k Va lue ThUS $ Exis ting De bt ThUS $ B o o k Va lue ThUS $ 58,611 51,543 46,779 144,358 - 1,073 139,192 30,733 10,404 91,797 198,475 - - - - 27,936 128,030 41,599 15,960 90,846 23,156 162,477 166,712 - - 259,036 227,604 168,315 141,620 - 6,419 117,130 27,427 30,958 38,551 233,501 - - - - 45,849 181,224 75,092 26,507 181,246 17,036 134,846 258,875 - 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 (c) Composition of the fleet 76 Aircraft included in Property, plant and equipment Aircraft included as Rights of use assets T otal fleet 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) 16 12 4 4 2 37 94 - 18 - (1) (2) 17 11 4 6 2 37 96 6 19 4 - 1 6 6 15 7 39 12 31 - 187 202 117 (1) One aircraft leased to Aerotransportes Mas de Carga S.A. de C.V. (2) T wo aircraft leased to Sundair. - 1 6 4 10 7 38 6 19 7 98 (1) 16 13 10 10 17 44 133 12 49 - 304 (1) (2) 17 12 10 10 12 44 134 12 38 11 300 (d) Method used for the depreciation of Property, plant and equipment: Buildings Plant and equipment Information technology equipment Fixed installations and accessories Motor vehicle Leasehold improvements Assets for rights of use Method 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. To ta l dire c t gua ra nte e 1,429,681 2,171,236 2,350,405 3,371,878 (1) For the syndicated loans, is the Guarantee Agent that represent different creditors. 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, 2021, amounts to ThUS$ 1,200,382 (ThUS$ 1,642,779 as of December 31, 2020). The book value of the assets with indirect guarantees as of December 31, 2021, amounts to ThUS$ 2,884,563 (ThUS$ 3,496,397 as of December 31, 2020). As of December 31, 2020, given Chapter 11, nineteen aircraft corresponding to Property, plant and equipment were rejected, of which eighteen had direct guarantees and one indirect guarantee. As of December 31, 2021, the Company keeps valid letters of credit related to assets by right of use according to the following detail: Financial Information 219 Integrated Report 2021 78 79 Creditor Guarantee Debtor T ype Value T hUS$ Release date NOTE 18 - CURRENT AND DEFERRED TAXES GE Capital Aviation Services Ltd. Merlin Aviation Leasing (Ireland) 18 Limited T am Linhas Aéreas S.A. RB Comercial Properties 49 Empreendimentos Imobiliarios LT DA T am Linhas Aéreas S.A. Latam Airlines Group S.A. T hree letters of credit T wo letters of credit 12,198 3,852 J a n 20, 2022 M a r 15, 2022 One letter of credit 25,835 41,885 Apr 29, 2022 (ii) Commitments and others Fully depreciated assets and commitments for future purchases are as follows: As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ In the year ended December 31, 2021, 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. Gross book value of fully depreciated property, 223,608 206,497 plant and equipment still in use Commitments for the acquisition of aircraft (*) 10,800,000 7,500,000 (a) Current taxes (a.1) The composition of the current tax assets is the following: (*) According to the manufacturer’s price list. Purchase commitment of aircraft Manufacturer Airbus S.A.S. A320-NEO Family The Boeing Company Boeing 787-9 Total Year of delivery 2022-2028 Total 70 70 2 2 72 70 70 2 2 72 As of December 31, 2021, as a result of the different aircraft purchase contracts signed with Airbus SAS, 70 Airbus A320 family aircraft remain to be received with deliveries between 2020 and 2028. The approximate amount, according to the manufacturer's list prices, is ThUS $ 10,200,000. As of December 31, 2021, as a result of the different aircraft purchase contracts signed with The Boeing Company, 2 Boeing 787 Dreamliner aircraft remain to be received with delivery dates between 2022. The approximate amount, according to list prices from the manufacturer, is ThUS $ 600,000. (iii) Capitalized interest costs with respect to Property, plant and equipment. Average rate of capitalization of capitalized interest costs Costs of capitalized interest % ThUS$ 5.06 7,345 3.52 11,627 For the year ended December 31, 2021 2020 Cu rre n t a s s e ts No n - c u rre n t a s s e ts To ta l a s s e ts As o f De c e mb e r 3 1, 2 0 2 1 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 2 1 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 2 1 As o f De c e mb e r 3 1, 2 0 2 0 Th US $ Th US $ Th US $ Th US $ Th US $ Th US $ P ro vis io n a l mo n th ly p a yme n ts (a d va n c e s ) Oth e r re c o ve ra b le c re d its To ta l c u rre n t ta x a s s e ts 3 2 ,0 8 6 9 ,17 1 4 1,2 5 7 3 6 ,7 8 8 5 ,5 3 2 4 2 ,3 2 0 - - - - - - 3 2 ,0 8 6 9 ,17 1 4 1,2 5 7 3 6 ,7 8 8 5 ,5 3 2 4 2 ,3 2 0 (a.2) The composition of the current tax liabilities are as follows: Cu rre n t lia b ilitie s As o f De c e mb e r 3 1, 2 0 2 1 As o f De c e mb e r 3 1, 2 0 2 0 No n - c u rre n t lia b ilitie s As o f De c e mb e r 3 1, 2 0 2 1 As o f De c e mb e r 3 1, 2 0 2 0 To ta l lia b ilitie s As o f De c e mb e r 3 1, 2 0 2 1 As o f De c e mb e r 3 1, 2 0 2 0 In c o me ta x p ro vis io n Th US $ 6 7 5 To ta l c u rre n t ta x lia b ilitie s 6 7 5 Th US $ 6 5 6 6 5 6 Th US $ - - Th US $ - - Th US $ 6 7 5 6 7 5 Th US $ 6 5 6 6 5 6 Financial Information 220 Integrated Report 2021 80 80 (b) Deferred taxes The balances of deferred tax are the following: (b) Deferred taxes The balances of deferred tax are the following: Concept Concept Properties, Plants and equipment Assets by right of use Amortization Properties, Plants and equipment Provisions Assets by right of use Revaluation of financial instruments Amortization Tax losses Provisions Intangibles Revaluation of financial instruments Other Tax losses Intangibles Total Other As of December 31, 2021 As of ThUS$ December 31, 2021 (1,128,225) ThUS$ 715,440 (44,605) (1,128,225) 111,468 715,440 (16,575) (44,605) 358,284 111,468 - (16,575) 19,503 358,284 - 15,290 19,503 Assets Assets As of December 31, 2020 As of ThUS$ December 31, 2020 (1,314,456) ThUS$ 229,119 (65,139) (1,314,456) 212,492 229,119 (18,133) (65,139) 1,496,952 212,492 - (18,133) 23,981 1,496,952 - 564,816 23,981 Liabilities Liabilities ThUS$ As of December 31, 2021 As of ThUS$ December 31, 2021 80,468 (68) 10 80,468 74,047 (68) - 10 (87,378) 74,047 254,155 - 19,777 (87,378) 254,155 341,011 19,777 As of December 31, 2020 As of ThUS$ December 31, 2020 81,881 ThUS$ (136) 9 81,881 68,462 (136) - 9 (60,785) 68,462 270,681 - 24,168 (60,785) 270,681 384,280 24,168 Total 15,290 564,816 341,011 384,280 The balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed in the long term. The balance of deferred tax assets and liabilities are composed primarily of temporary differences to Movements of Deferred tax assets and liabilities be reversed in the long term. Movements of Deferred tax assets and liabilities (a) From January 1 to December 31, 2020 (a) 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 ) Ope ning inc o m e R e c o gnize d in inc o m e R e c o gnize d in va ria tio n Exc ha nge As s e t (lia bility) Ending ba la nc e ThUS $ ThUS $ c o ns o lida te d ThUS $ c o m pre he ns ive ThUS $ ra te ThUS $ ba la nc e 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 pe rty, pla nt a nd e quipm e nt P ro vis io ns As s e ts fo r right o f us e R e va lua tio n o f fina nc ia l ins trum e nts Am o rtiza tio n Ta x lo s s e s P ro vis io ns Inta ngible s R e va lua tio n o f fina nc ia l ins trum e nts Othe rs Ta x lo s s e s Inta ngible s Othe rs To ta l ThUS $ (1,513,904) As s e ts /(lia bilitie s ) 133,481 (53,136) (1,513,904) 43,567 133,481 10,279 (53,136) 1,356,268 43,567 (349,082) 10,279 (8,693) 1,356,268 (381,220) (349,082) (8,693) inc o m e 110,010 95,774 ThUS $ (14,142) 110,010 158,178 95,774 (27,901) (14,142) 216,897 158,178 1,030 (27,901) 6,541 216,897 546,387 1,030 6,541 inc o m e ThUS $ - - - - 924 - 959 - - 924 - 959 - - 1,883 - - 7,557 va ria tio n - ThUS $ 2,130 7,557 (58,639) - (1,470) 2,130 (15,428) (58,639) 77,371 (1,470) 1,965 (15,428) 13,486 77,371 1,965 (1,396,337) As s e t (lia bility) 229,255 ThUS $ (65,148) (1,396,337) 144,030 229,255 (18,133) (65,148) 1,557,737 144,030 (270,681) (18,133) (187) 1,557,737 180,536 (270,681) (187) To ta l (381,220) 546,387 1,883 13,486 180,536 Financial Information 221 Integrated Report 2021 81 82 (b) From January 1 to December 31, 2021 Composition of income/(loss) tax expense: 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 $ (1,396,337) 229,255 (65,148) 144,030 (18,133) 1,557,737 (270,681) (187) 187,644 486,253 20,533 (103,826) 1,616 (1,112,075) (1,394) (87) 180,536 (521,336) - - - (2,783) (58) - - - (2,841) - - - - - - 17,920 - 17,920 (1,208,693) 715,508 (44,615) 37,421 (16,575) 445,662 (254,155) (274) (325,721) 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 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. In total the company has not recognized deferred tax assets for ThUS$ 2,638,473 (ThUS$ 749,100 as of December 31, 2020) which include deferred tax assets related to negative tax results of ThUS$ 9,030,059 (ThUS$ 1,433,474 at December 31, 2020). (*) As stated in note 2c), on November 26th, 2021 the Company filed a Reorganization Plan and Disclosure Statement in which, among other ítems, financial forecasts are included together with the proposed issuance of new shares and convertible bonds. With the referred information, the Company management updated its analysis on the recoverability of deferred tax assets and determined that during the time covered by the financial forecast it will not be probable that part of such deferred tax assets may offset future taxable profits. Therefore, the Company during the fourth quarter of 2021 derecognized deferred tax assets not considered recoverable in the amount of THUS$1,251,912. Deferred tax expense and current income/(loss) taxes: Current tax expense Current tax expense Adjustment to previous period’s current tax Total current tax expense, net Deferred tax expense Deferred expense for taxes related to the creation and reversal of temporary differences Total deferred tax expense, net Income/(loss) tax expense For the year ended December 31, 2021 ThUS$ 2020 ThUS$ (47,139) (460) (47,599) 3,602 199 3,801 (521,336) (521,336) (568,935) 546,387 546,387 550,188 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 tax (expense)/benefit For the year ended December 31, 2021 ThUS$ (9,943) (37,656) (47,599) 4,309 (525,645) (521,336) (568,935) 2020 ThUS$ (4,232) 8,033 3,801 (235,963) 782,350 546,387 550,188 Income before tax from the Chilean legal tax rate (27% as of December 31, 2021 and 2020) For the year ended December 31, 2021 T hUS$ 2020 T hUS$ For the year ended December 31, 2021 2020 % % T ax expense using the legal rate 1,102,736 1,378,547 (27.00) (27.00) T ax effect of rates in other jurisdictions T ax effect of non-taxable operating revenues T ax effect of disallowable expenses Other increases (decreases): Derecognition of deferred tax liabilities for early termination of aircraft financing T ax effect for goodwill impairment losses Derecognition of deferred tax assets not recoverable Deferred tax asset not recognized Other increases (decreases): T otal adjustments to tax expense using the legal rate 54,775 9,444 (30,928) 58,268 19,529 (40,528) 205,458 - (1,251,912) (667,702) 9,194 (1,671,671) 294,969 (453,681) (237,637) (414,741) (54,538) (828,359) (1.34) (0.23) 0.76 (5.03) - 30.65 16.35 (0.23) 40.93 (1.14) (0.38) 0.79 (5.78) 8.89 4.65 8.12 1.07 16.22 T ax expense using the effective rate (568,935) 550,188 13.93 (10.78) Deferred taxes related to items charged to equity: Aggregate deferred taxation of components of other comprehensive income For the year ended December 31, 2021 ThUS$ 2020 ThUS$ (2,841) 1,883 Financial Information 222 Integrated Report 2021 83 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 Total current Non-current (a) Interest bearing loans (b) Lease Liability Total non-current (a) Interest bearing loans Obligations with credit institutions and debt instruments: Current Loans to exporters Bank loans Guaranteed obligations (3)(4)(7)(8)(10) Other guaranteed obligations (1)(5) Subtotal bank loans Obligation with the public Financial leases (3)(4)(6)(7)(8)(9) Other loans Total current Non-current Bank loans Guaranteed obligations (3)(4)(7)(8)(10) Other guaranteed obligations (1)(5) Subtotal bank loans Obligation with the public Financial leases (3)(4)(6)(7)(8)(9) Total non-current Total obligations with financial institutions As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 3,869,040 578,740 2,734 2,937 4,453,451 3,566,804 2,381,898 5,948,702 2,243,776 806,283 2,734 2,937 3,055,730 5,489,078 2,314,723 7,803,801 As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 159,161 415,087 75,593 2,546,461 3,196,302 396,345 199,885 76,508 3,869,040 106,751 434,942 178,961 720,654 1,856,853 989,297 3,566,804 7,435,844 151,701 385,490 388,492 435,413 1,361,096 108,301 774,379 - 2,243,776 139,783 930,364 1,503,703 2,573,850 2,075,106 840,122 5,489,078 7,732,854 84 During March and April 2020, LATAM Airlines Group S.A. it drew down the entire (1) (US$ 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. (2) 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 9, 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 period, 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 September 30, 2021, 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. For those agreements that have already been modified or extinguished, the financial information has been properly presented according to the new contracts' terms and conditions. (3) On June 24, 2020, the United States Court for the Southern District of New York approved 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 ThUS$ 844.1 and an aircraft financed with a financial lease with an amount of ThUS$ 4.5. (4) On October 20, 2020, the United States Court for the Southern District of New York approved the motion presented by the Company to reject an aircraft lease contract financed as financial lease in the amount of ThUS$ 34.3. (5) On September 29, 2020, LATAM Airlines Group S.A. entered into a ThUS$ 2,450 Debtor- in-Possession financing (the “DIP Financing”), consisting of a ThUS$ 1,300 Tranche A Facility and a ThUS$1,150 Tranche C Facility, of which ThUS$ 750 are committed by related parties. The obligations under the DIP Financing are secured by collateral consisting of certain assets of LATAM and certain of its subsidiaries, including, but not limited to, equity, certain engines and spare parts. On October 8, 2020, LATAM made a partial withdrawal for MUS$ 1,150 from Tranche A and Tranche C, and then, on or around June 22, 2021, LATAM made an additional withdrawal for MUS$ 500 from Tranche A and Tranch C. On October 18, 2021, LATAM Airlines Group S.A. obtained court approval for a Tranche B (“Tranche B”) of the Debtor-in-Possesion (“DIP”) Financing for up to a total of US$ 750 million. The obligations of this Tranche B, like the previous tranches, are guaranteed with the same guarantees granted by LATAM and its subsidiaries subject to the Chapter 11 Procedure, without limitation, pledges on shares, certain engines and spare parts. The following turns of the DIP must be made to Tranche B until the proportion turned of the latter is equal to that of the previous tranches. Once this ratio is equal, spins are pro-rata. Financial Information 223 Integrated Report 2021 85 On November 10, 2021, the company made a partial transfer for MUS$ 200 from Tranche B and later on December 28, 2021, LATAM made a new transfer for MUS$ 100. After these transfers, LATAM still It has ThUS$1,250 of line available for future transfers. The DIP has an expiration date of April 8, 2022, subject to a potential extension, at LATAM's decision, for an additional 60 days in the event that LATAM's reorganization plan has been confirmed by a United States Court order. for the Southern District of New York, but the plan is not yet effective. (6) On March 31, 2021, the United States Court for the Southern District of New York approved and, subsequently, on April 13, 2021, issued an order approving the motion presented by the Company to extend certain leases of 3 aircraft. (7) On June 17, 2021, the United States Court for the Southern District of New York approved the motion presented by the Company to reject the lease of an aircraft financed under a financial lease in the amount of ThUS $ 130.7. (8) On June 30, 2021, the United States Court for the Southern District of New York approved the motion filed by the Company to reject the lease contract for 3 aircraft financed under a financial lease in the amount of ThUS $307.4. (9) On November 1, 2021, the United States Court for the Southern District of New York approved the motion filed by the Company to reject the lease contract for 1 engine financed under a financial lease in the amount of ThUS$19.5. (10) In the year ended December 31, 2021, the Company transferred its ownership in 5 special purpose vehicules and ceased to control 6 Special Purpose entities. As a result of the foregoing, the classification of the financial liabilities associated with 18 aircraft was changed from guaranteed obligations; 10 to financial leases and 8 to lease liabilities.. Balances by currency of interest bearing loans are as follows: Currency Brazilian real Chilean peso (U.F.) US Dollar Total As of December 31, 2021 ThUS$ 338,953 639,710 6,457,181 7,435,844 As of December 31, 2020 ThUS$ 300,659 679,983 6,752,212 7,732,854 Financial Information 224 Integrated Report 2021 86 Interes t-b earing lo ans d ue in ins tallments to Decemb er 3 1, 2 0 2 1 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. Up to 9 0 d ays ThUS$ 114 ,0 0 0 2 0 ,0 0 0 12 ,0 0 0 10 ,10 6 - 6 0 ,9 3 5 Tax No . Cred ito r co untry Currency Cred ito r Lo ans to exp o rters CITIBANK 0 -E 76 .6 4 5.0 3 0 -K ITAU HSBC 0 -E Bank lo ans 9 7.0 2 3 .0 0 0 -9 CORPBANCA SANTANDER 0 -E CITIBANK 0 -E Ob lig atio ns with the p ub lic 9 7.0 3 0 .0 0 0 -7 BANCOESTADO 0 -E BANK OF NEW YORK Guaranteed o b lig atio ns 0 -E 0 -E 0 -E BNP PARIBAS M UFG WILM INGTON TRUST COM PANY U.S.A. Chile Eng land Chile Sp ain U.S.A. Chile U.S.A. U.S.A. U.S.A. U.S.A. - SWAP Received aircraft - Other g uaranteed o b lig atio ns 0 -E 0 -E 0 -E 0 -E 0 -E CREDIT AGRICOLE M UFG CITIBANK BANK OF UTAH EXIM BANK Financial leas es 0 -E 0 -E 0 -E 0 -E 0 -E 0 -E 0 -E Others lo ans 0 -E CREDIT AGRICOLE CITIBANK BNP PARIBAS NATIXIS US BANK PK AIRFINANCE EXIM BANK Vario us (**) To tal France U.S.A. U.S.A. U.S.A. U.S.A. France U.S.A. U.S.A. France U.S.A. U.S.A. U.S.A. 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$ 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 9 0 d ays to o ne year ThUS$ o ne to three years ThUS$ three to M o re than To tal five years ThUS$ five years ThUS$ 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 M o re than To tal five years ThUS$ five years ThUS$ acco unting value ThUS$ Amo rtizatio n Annual Effective No minal rate % rate % - - - - - - - - - - 10 6 ,4 2 7 - - - - - - - - - - - - - 114 ,0 0 0 2 0 ,0 0 0 12 ,0 0 0 12 3 ,3 6 6 2 2 ,74 2 13 ,0 53 10 ,10 6 10 6 ,4 2 7 6 0 ,9 3 5 11,0 4 0 13 5 6 4 ,2 9 3 - - - - - - - - - - 10 6 ,4 2 7 - - - - - - - - - - - - - 12 3 ,3 6 6 2 2 ,74 2 13 ,0 53 At Exp iratio n At Exp iratio n At Exp iratio n 11,0 4 0 10 6 ,56 2 6 4 ,2 9 3 Quaterly Quaterly At Exp iratio n - - 159 ,6 79 - - 70 0 ,0 0 0 - 8 0 0 ,0 0 0 3 4 3 ,2 18 - 50 2 ,8 9 7 1,50 0 ,0 0 0 4 9 ,58 4 18 7,0 8 2 159 ,6 79 - - 6 9 8 ,4 50 - 8 0 3 ,2 8 9 3 55,114 - 56 4 ,3 77 At Exp iratio n 1,6 8 8 ,8 2 1 At Exp iratio n 16 ,0 79 2 9 ,0 54 12 ,4 12 11,6 6 1 3 4 ,9 58 3 2 ,6 3 9 3 7,8 9 1 3 4 ,9 70 9 7,13 5 58 ,3 8 8 19 8 ,4 75 16 6 ,712 17,9 2 6 3 1,3 75 12 ,4 12 11,6 6 1 3 4 ,0 4 4 3 2 ,18 8 3 7,4 6 6 3 4 ,73 3 9 6 ,3 79 57,9 8 3 19 8 ,2 2 7 16 7,9 4 0 Quaterly Quaterly - 10 2 ,2 0 9 2 4 ,70 3 3 2 ,3 2 7 8 5,119 14 4 ,3 58 - - - - 10 - 10 2 ,2 0 9 2 4 ,70 3 3 2 ,3 2 7 8 5,119 14 4 ,3 58 Quaterly/M ens ual 3 .17 - - - - 10 Quaterly - 2 73 ,19 9 7,551 - - - - 3 3 ,13 1 6 0 0 ,0 0 0 1,6 4 4 ,8 76 - 6 8 2 19 ,10 1 7,2 16 1,3 3 5 16 ,6 0 1 8 0 0 - 1,3 70 52 ,3 71 19 ,53 7 15,6 12 50 ,3 73 3 ,8 4 2 - - 9 1,4 3 5 - - - - 12 ,513 2 8 ,16 5 52 ,0 10 13 5,2 0 1 11,56 2 - - 2 4 ,8 16 - - 2 5,8 76 - - - 54 ,4 4 3 17,4 9 2 6 4 7 2 4 8 ,3 54 - - - - 3 7,0 14 2 73 ,19 9 156 ,9 3 3 6 0 0 ,0 0 0 1,6 4 4 ,8 76 6 2 ,8 9 0 2 74 ,4 0 3 8 ,2 59 9 5 - 18 3 - 3 3 ,13 1 6 0 0 ,0 0 0 1,6 3 0 ,3 9 0 - - - - 13 8 ,0 58 - - 2 8 4 ,773 2 ,0 52 8 3 ,9 8 5 54 ,9 18 2 6 1,4 58 2 19 ,6 6 7 16 ,8 51 53 3 ,12 7 6 9 4 19 ,19 8 7,3 13 4 ,4 72 17,755 9 0 3 1,771 1,3 70 52 ,3 71 19 ,53 7 15,6 12 50 ,3 73 3 ,8 4 2 - - 9 1,2 55 - - - - 12 ,3 59 2 7,9 0 5 51,6 4 7 12 7,72 1 11,56 2 - - 2 4 ,8 16 - - 2 5,8 76 - - - 54 ,0 6 4 17,18 8 6 4 7 2 4 4 ,4 9 0 - - - - 3 7,0 14 2 74 ,4 0 3 157,4 6 1 6 0 0 ,0 9 5 1,6 3 0 ,3 9 0 6 3 ,0 73 At Exp iratio n Quaterly At Exp iratio n At Exp iratio n Quaterly - - - 13 7,4 3 0 - - 2 8 0 ,3 4 1 2 ,0 6 4 8 3 ,9 2 8 54 ,755 2 6 3 ,2 2 5 2 13 ,0 3 7 16 ,9 54 52 6 ,6 0 2 Quaterly Quaterly Quaterly Quaterly Quaterly Quaterly Quaterly 1.8 2 1.72 2 .0 0 2 2 .71 1.8 4 3 .6 8 1.3 7 1.56 2 .0 9 4 .0 3 1.8 8 2 .8 8 2 .9 6 4 .2 0 4 .15 3 .3 5 2 .8 0 3 .10 4 .8 1 7.16 1.4 8 1.6 4 2 .9 6 4 .2 0 4 .15 3 .3 5 2 .8 0 3 .10 4 .8 1 6 .9 4 1.4 8 1.6 4 1.6 0 - 1.8 2 1.72 2 .0 0 12 .9 7 1.8 4 3 .2 3 0 .79 0 .9 6 2 .0 9 2 .8 4 1.8 8 2 .0 3 55,8 19 6 4 4 ,4 8 8 - 2 ,6 0 7,0 73 - 1,2 2 9 ,6 13 - 1,2 76 ,8 16 - 1,0 4 3 ,70 5 55,8 19 6 ,8 0 1,6 9 5 55,8 19 9 11,4 71 - 2 ,59 2 ,58 7 - 1,2 18 ,2 6 1 - 1,2 74 ,8 9 6 - 1,0 4 9 ,3 8 0 55,8 19 7,0 4 6 ,59 5 At Exp iratio n - - (*) No te tha t the o bliga tio ns a re due to e xpire a nd c o ntra c tua l o bliga tio ns , fo r no t pre s e nting a ny re s o lutio n o f c ha pte r 11. (**) Obliga tio n to c re dito rs fo r e xe c ute d le tte rs o f c re ditre s o lutio n. Financial Information 225 Integrated Report 2021 87 Interes t-b earing lo ans d ue in ins tallments to Decemb er 3 1, 2 0 2 1 Deb to r: TAM S.A. and Sub s id iaries , Tax No . 0 2 .0 12 .8 6 2 /0 0 0 1-6 0 , Brazil Tax No . Cred ito r Co untry Currency Bank lo ans 0 -E 0 -E 0 -E NCM BANCO BRADESCO M erril Lynch Cred it Pro d ucts LLC Netherland s Brazil U.S.A. Financial leas e 0 -E 0 -E NATIXIS GA Teles s is LLC France U.S.A. Others lo ans US$ BRL BRL US$ US$ No minal values Acco unting values Up to 9 0 d ays ThUS$ M o re than M o re than M o re than 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$ M o re than M o re than M o re than 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 % 6 19 74 ,6 6 1 18 5,8 3 3 - - - 3 2 4 - - - - - - - - 9 4 3 74 ,6 6 1 6 6 6 9 8 ,8 6 4 18 5,8 3 3 2 4 0 ,0 8 9 - - - 3 2 4 - - - - - - - - 9 9 0 9 8 ,8 6 4 M o nthly M o nthly 6 .0 1 4 .3 3 6 .0 1 4 .3 3 2 4 0 ,0 8 9 M o nthly 3 .9 5 3 .9 5 4 3 3 3 2 0 2 ,4 8 2 1,14 7 2 ,8 72 2 ,6 9 5 11,53 9 2 ,8 50 - 3 ,9 8 7 17,3 2 6 10 ,9 9 9 6 3 7 4 0 9 2 ,4 8 1 1,14 7 2 ,8 72 2 ,6 9 5 11,53 9 2 ,8 50 - 3 ,9 8 7 17,52 9 11,0 8 8 Quaterly M o nthly 2 .74 14 .72 2 .74 14 .72 0 -E DEUTCHEBANK (*) Brazil US$ 2 0 ,6 8 9 - - - - 2 0 ,6 8 9 2 0 ,6 8 9 - - - - 2 0 ,6 8 9 At Exp iratio n - - To tal 2 8 2 ,555 3 ,6 2 9 5,8 9 1 14 ,3 8 9 3 ,9 8 7 3 10 ,4 51 3 6 1,3 54 3 ,6 2 8 5,8 9 1 14 ,3 8 9 3 ,9 8 7 3 8 9 ,2 4 9 To tal co ns o lid ated 9 2 7,0 4 3 2 ,6 10 ,70 2 1,2 3 5,50 4 1,2 9 1,2 0 5 1,0 4 7,6 9 2 7,112 ,14 6 1,2 72 ,8 2 5 2 ,59 6 ,2 15 1,2 2 4 ,152 1,2 8 9 ,2 8 5 1,0 53 ,3 6 7 7,4 3 5,8 4 4 (*) Ob lig atio n to cred ito rs fo r executed letters o f cred it Financial Information 226 Integrated Report 2021 88 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 M ore than M ore than M ore than M ore than M ore than M ore than Creditor country Currency Up to 90 days ThUS$ 90 days to one year ThUS$ one to three years ThUS$ three to five years ThUS$ M ore 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$ M ore than five years Total accounting value ThUS$ ThUS$ Tax No. Creditor 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 ESTADO Chile Chile Chile Chile Chile Spain Chile Chile 0-E BANK OF NEW YORK U.S.A. Guaranteed obligations 0-E 0-E 0-E 0-E 0-E - BNP PARIBAS NATIXIS INVESTEC M UFG SM BC 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 M UFG CITIBANK BANK OF UTAH ING CREDIT AGRICOLE CITIBANK PEFCO BNP PARIBAS WELLS FARGO SANTANDER RRPF ENGINE APPLE BANK BTM U US BANK PK AIRFINANCE Total 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 14,834 112,987 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 - - - - - - - - - 700,000 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 97,621 81,244 - 72,881 - - - 19,731 - - - - 43,778 - - 98,028 - 5,035 753 768 84,178 - - - - - - - - 382,267 800,000 210,956 35,302 - 187,132 - - - - - - - - 18,841 - - - - - - - - - 74,000 40,000 20,000 12,000 11,255 139,459 67,868 560,113 1,500,000 474,273 271,129 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 - - 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 Amortization At Expiration At Expiration At Expiration At Expiration Quarterly Quarterly At Expiration - - - - - - - 76,929 41,542 20,685 12,545 11,665 142,759 69,222 395,652 803,289 599,096 1,584,311 At Expiration At Expiration - - - - - 139,459 - 177,715 - - - - - - - - - 698,450 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 M onthly Quarterly Quarterly Quarterly M onthly 815,121 783,680 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 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 Financial Information 227 Integrated Report 2021 89 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. Tax No. Creditor Country Creditor Currency M ore than M ore than M ore than M ore than M ore than M ore than Up to 90 days ThUS$ 90 days to one year ThUS$ one to three years ThUS$ three to five years ThUS$ M ore 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$ M ore than five years ThUS$ Total accounting value ThUS$ Amortization Annual Effective Nominal rate % rate % Nominal values Accounting values Bank loans 0-E 0-E 0-E Financial lease 0-E 0-E 0-E 0-E NEDERLANDSCHE CREDIETVERZEKERING M AATSCHAPPIJNetherlands BANCO BRADESCO BANCO DO BRASIL Brazil Brazil NATIXIS WACAPOU LEASING S.A. SOCIÉTÉ GÉNÉRALE M ILAN BRANCH Italy GA Telessis LLC U.S.A. France Luxembourg US$ BRL BRL US$ US$ US$ US$ 409 80,175 199,557 30,253 2,342 144,120 486 318 - - - 797 - 950 216 - - 51,007 1,620 - 2,623 - - - - - - 2,772 - - - 943 80,175 199,557 333 91,672 208,987 - - - 5,430 81,260 4,759 144,120 12,261 31,308 2,439 141,094 486 311 - - - 797 - 991 324 - - 51,007 1,620 - 2,623 - - - - - - 2,772 - - - 968 91,672 208,987 M onthly M onthly M onthly 6.01 4.34 3.95 6.01 4.34 3.95 - - - 5,642 82,315 Quarterly / Semiannual 4,856 141,094 12,514 Quarterly Quarterly M onthly 4.09 2.00 3.07 14.72 4.09 2.00 3.01 14.72 Total Total consolidated 457,342 2,065 55,466 2,772 5,430 523,075 476,319 2,099 55,574 2,772 5,642 542,406 1,272,463 785,745 2,695,278 1,206,789 1,639,928 7,600,203 1,454,155 789,621 2,637,151 1,197,861 1,654,066 7,732,854 Financial Information 228 Integrated Report 2021 90 91 (b) Lease Liability: 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, 2020 3,042,231 129,926 3,172,157 Ne w c o ntra c ts Le a s e te rm ina tio n (*) 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 ) - (7,435) (35,049) (131,427) 158,253 - - - 543 (285) 4,919 (36,689) 9,348 (7,967) (38) (5,324) 543 (7,720) (30,130) (168,116) 167,601 (7,967) (38) (5,324) C ha nge s (15,658) (35,493) (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 Ope ning ba la nc e a s J a nua ry 1, 2021 3,026,573 94,433 3,121,006 Ne w c o ntra c ts Le a s e te rm ina tio n (*) 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 518,478 (724,193) 101,486 (95,831) 88,245 - - (31,097) (142,912) 875 (5,300) 5,717 (24,192) 8,334 3,356 (2,332) (3,914) (17,456) 519,353 (729,493) 107,203 (120,023) 96,579 3,356 (2,332) (35,011) (160,368) C lo s ing ba la nc e a s o f De c e m be r 31,2021 2,883,661 76,977 2,960,638 (*) Fleet rejections of the period 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 Current liabilities Non-current liabilities Total hedge derivatives As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Fair value of interest rate derivatives Total hedge derivatives 2,734 2,734 2,734 2,734 - - - - 2,734 2,734 2,734 2,734 (d) Derivatives that do not qualify for hedge accounting Current liabilities Non-current liabilities Total derivatives of no coverage As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 2,937 2,937 2,937 2,937 - - - - 2,937 2,937 2,937 2,937 Derivative of foreign currency not registered as hedge Total 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: Interest rate swaps (2) Fuel options (3) As of December 31, 2021 ThUS$ (2,734) 17,641 As of December 31, 2020 ThUS$ (2,734) 1,296 (1) Hedge 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. (2) Hedge 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. 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. Financial Information 229 Integrated Report 2021 92 93 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 year Debit (credit) transferred from net equity to income during the year For the year ended December 31, 2021 T hUS$ 2020 T hUS$ 38,870 (105,776) 16,641 (13,016) See note 25 f) 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 Total trade and other accounts payables (a) Trade and other accounts payable: Trade creditors Other accounts payable Total As of December 31, 2021 ThUS$ 1,966,633 2,893,520 4,860,153 As of December 31, 2020 ThUS$ 1,757,799 564,326 2,322,125 As of December 31, 2021 ThUS$ 1,460,832 505,801 1,966,633 As of December 31, 2020 ThUS$ 1,281,432 476,367 1,757,799 Maintenance Suppliers technical purchases Handling and ground handling Boarding Fees Leases, maintenance and IT services Professional services and advisory Airport charges and overflight Other personnel expenses Aircraft Fuel Services on board Marketing Air companies Crew Achievement of goals Jol Fleet Land services Others As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 375,144 328,811 176,142 171,128 143,586 129,682 104,241 90,410 77,171 56,072 49,865 32,152 12,007 11,144 9,891 6,553 192,634 116,103 281,452 137,626 181,049 110,472 146,753 142,709 105,696 143,119 58,099 53,419 27,668 16,541 6,622 7,840 10,466 212,165 Total trade and other accounts payables 1,966,633 1,757,799 (b) Liabilities accrued: Aircraft and engine maintenance (*) Accrued personnel expenses Accounts payable to personnel (**) Other settled claims (****) Others accrued liabilities (***) T otal accrued liabilities As of December 31, 2021 T hUS$ 1,166,181 59,327 58,153 1,575,005 34,854 2,893,520 As of December 31, 2020 T hUS$ 460,082 72,696 2,186 - 29,362 564,326 (*) In addition to the account payable for maintenance in the normal course of operations, this amount includes some claims agreed with aircraft lessors, related to maintenance. (**) Profits and bonus participation (Note 23 letter b). (***) See Note 22. (****) This amount includes some agreed fleet claims, associated with the negotiations resulting from the Chapter 11 process. 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 09 for certain subsidiaries in Brazil. Financial Information 230 Integrated Report 2021 NOTE 21 - OTHER PROVISIONS Movement of provisions: 94 Current liabilities Non-current liabilities T otal Liabilities As of As of As of As of December 31, December 31, December 31, December 31, 2021 T hUS$ 2020 T hUS$ 2021 T hUS$ 2020 T hUS$ As of December 31, 2021 As of December 31, 2020 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) 24,330 3,154 388 - - - 21,188 2,266 320 - - - 490,217 92,955 98,254 21,855 364,342 103,984 48,115 17,821 514,547 96,109 98,642 21,855 385,530 106,250 48,435 17,821 9,300 10,097 9,300 10,097 - 44,000 - 44,000 T otal other provisions (4) 27,872 23,774 712,581 588,359 740,453 612,133 (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, 2021, and December 31, 2020, 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. 95 European Legal Commission Onerous claims (1) Investigation (2) Contracts T hUS$ T hUS$ T hUS$ Opening balance as of January 1, 2020 Increase in provisions Provision used Difference by subsidiaries conversion Reversal of provision Exchange difference Closing balance as of December 31, 2020 Opening balance as of January 1, 2021 Increase in provisions Provision used Difference by subsidiaries conversion Reversal of provision Exchange difference Closing balance as of December 31, 2021 282,392 408,078 (47,238) (58,654) (25,563) (979) 558,036 558,036 403,229 (84,497) (25,531) (119,029) (1,055) 731,153 9,217 - - - - 880 10,097 10,097 - - - - (797) 9,300 T otal T hUS$ 291,609 452,078 (47,238) (58,654) (25,563) (99) 612,133 612,133 403,229 (84,497) (25,531) (163,029) (1,852) - 44,000 - - - - 44,000 44,000 - - - (44,000) - - 740,453 (1) Accumulated balances include a judicial deposit delivered in guarantee, with respect to the “Fundo Aeroviario” (FA), for MUS$ 65, 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, 2021 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 Financial Information 231 Integrated Report 2021 96 97 fined for the amount of € 8,220,000 (eight million two hundred twenty thousand euros), for 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 Total Liabilities As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 ThUS$ 2,273,137 3,870 31,509 4,916 - 19,144 2,332,576 ThUS$ 2,036,880 7,609 27,853 3,931 - 12,518 2,088,791 ThUS$ ThUS$ 512,056 - - - - - 512,056 702,008 - - - - - 702,008 ThUS$ 2,785,193 3,870 31,509 4,916 - 19,144 2,844,632 ThUS$ 2,738,888 7,609 27,853 3,931 - 12,518 2,790,799 Deferred revenues (1)(2) Sales tax Retentions Others taxes Dividends payable Other sundry liabilities Total other non-financial liabilities Deferred Income Movement De fe rre d inc o m e Initia l ba la nc e (1) R e c o gnitio n Us e Lo ya lty pro gra m (Awa rd a nd re de e m ) Expira tio n o f tic ke ts 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, 2020 3,540,466 1,970,203 (2,554,476) (137,176) (72,670) (3,485) (3,974) 2,738,888 F ro m J a nua ry 1 to De c e m be r 31, 2021 2,738,888 4,221,168 (4,053,345) (12,091) (114,227) - 4,800 2,785,193 (1) The balance includes mainly, deferred income for services not provided as of December 31, 2021 and December 31, 2020; and for the frequent flyer LATAM Pass program. 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. (2) As of December 31, 2021, Deferred Income includes ThUS $ 58,509 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 $ 118,188 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 Total liability for employee benefits As of December 31, 2021 As of December 31, 2020 ThUS$ 35,075 5,817 15,341 56,233 ThUS$ 51,007 8,230 14,879 74,116 (a) The movement in retirements and resignation payments and other obligations: Opening balance ThUS$ 93,570 74,116 Increase (decrease) current service provision ThUS$ Benefits paid ThUS$ Actuarial (gains) losses ThUS$ Currency translation ThUS$ Closing balance ThUS$ (18,759) (8,634) 3,968 3,971 (11,391) (5,136) 10,018 (11,374) 74,116 56,233 From January 1 to December 31, 2020 From January 1 to December 31, 2021 The principal assumptions used in the calculation to the provision in Chile, are presented below: Assumptions Discount rate Expected rate of salary increase Rate of turnover Mortality rate Inflation rate Retirement age of women Retirement age of men For the year ended December 31, 2021 2020 5.81% 3.00% 5.14% RV-2014 3.4% 60 65 2.67% 2.80% 5.56% 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 Financial Information 232 Integrated Report 2021 98 Chile and; for the determination of the inflation rates; the market performance curves of BCU Central Bank of Chile papers 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 incease, rotation and inflation. The sensitivity analysis for these variables is presented below: 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. 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. (b) The liability for short-term: Effect on the liability As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ (2,642) 2,959 2,849 (2,613) (4,576) 5,244 4,946 (4,678) As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ Profit-sharing and bonuses (*) 58,153 2,186 (*) Accounts payables to employees (Note 20 letter b) NOTE 24 - ACCOUNTS PAYABLE, NON-CURRENT 99 Aircraft and engine maintenance Fleet (JOL) Airport and Overflight Taxes Provision for vacations and bonuses Other sundry liabilities As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 276,816 124,387 26,321 14,545 30,357 392,347 208,037 - 15,036 36,180 Total accounts payable, non-current 472,426 651,600 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, 2021 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, 2020), 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. The participation in profits and bonuses related to an annual incentive plan for achievement of certain objectives. (b) Subscribed and paid shares (c) Employment expenses are detailed below: The following table shows the movement of authorized and fully paid shares previously described above: Salaries and wages Short-term employee benefits Other personnel expenses Total For the year ended December 31, 2021 ThUS$ 825,792 122,650 93,457 2020 ThUS$ 850,557 41,259 70,244 1,041,899 962,060 Movement fully paid shares Paid shares as of January 1, 2020 There are no movements of shares paid during the 2020 year Paid shares as of December 31, 2020 Paid shares as of January 1, 2021 There are no movements of shares paid during the 2021 year Movement value of shares (1) ThUS$ Cost of issuance and placement of shares (2) ThUS$ Paid- in Capital ThUS$ 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) (14,453) - 3,146,265 3,146,265 - - - - Paid shares as of December 31, 2021 606,407,693 3,160,718 (14,453) 3,146,265 Financial Information 233 Integrated Report 2021 100 101 Amounts reported represent only those arising from the payment of the shares subscribed. (1) (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, 2021, 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, 2020 From January 1 to December 31, 2021 Opening balance ThUS$ 36,289 37,235 Stock option plan ThUS$ Closing balance ThUS$ 946 - 37,235 37,235 Corresponds to the difference between the value of the shares of TAM S.A., acquired by (1) 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) and acquisition of the minority stake in LAN Argentina S.A. and Inversora Cordillera through Transportes Aéreos del Mercosur S.A. for an amount of ThUS $ (3,383). These reserves are related to the “Share-based payments” explained in Note 34. (f) Reserves with effect in other comprehensive income. (e) Other sundry reserves Movement of Other sundry reserves: Periods From January 1 to December 31, 2020 From January 1 to December 31, 2021 Opening balance ThUS$ 2,452,469 2,452,019 Transactions with non-controlling interest ThUS$ Legal reserves ThUS$ Closing balance ThUS$ (3,125) (3,383) 2,675 (538) 2,452,019 2,448,098 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 December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ 2,665,692 2,620 (216,656) (3,558) 2,448,098 2,665,692 2,620 (213,273) (3,020) 2,452,019 Gains (Losses) on change on value of time value of options Actuarial gain or loss on defined benefit plans reserve ThUS$ ThUS$ Total ThUS$ (2,856,335) (105,776) (13,016) 959 (3,968) 923 (900,226) (22,940) - - - (3,968) 923 - Movement of Reserves with effect in other comprehensive income: 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 Translation difference subsidiaries Currency translation reserve ThUS$ (2,890,287) - - - - - (900,226) Cash flow hedging reserve ThUS$ 56,892 (105,776) (13,016) 959 - - - Closing balance as of December 31, 2020 (3,790,513) (60,941) Increase (decrease) due to application of new accounting standards Opening balance as of January 1, 2021 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 Translation difference subsidiaries - (3,790,513) - - - - - 18,354 380 (60,561) 39,602 (16,641) (58) - - (732) - - - - - - - - (380) (380) (23,692) 6,509 - - - - Closing balance as of December 31, 2021 (3,772,159) (38,390) (17,563) (25,985) (3,877,439) - (25,985) - - - 10,017 (2,782) - (18,750) - (3,877,439) 15,910 (10,132) (58) 10,017 (2,782) 17,622 (3,846,862) Financial Information 234 Integrated Report 2021 (f.1) Cumulative translate difference 102 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 event. (g) Retained earnings/(losses) Movement of Retained earnings/(losses): Periods Opening balance ThUS$ Result for the year ThUS$ Dividends ThUS$ Closing balance ThUS$ From January 1 to December 31, 2020 From January 1 to December 31, 2021 352,272 (4,193,615) (4,545,887) (4,647,491) - - (4,193,615) (8,841,106) (h) Dividends per share During the year 2021 and 2020 no dividend was paid. NOTE 26 - REVENUE The detail of revenues is as follows: For the year ended December 31, 2021 ThUS$ 3,342,381 1,541,634 4,884,015 2020 ThUS$ 2,713,774 1,209,893 3,923,667 Passengers Cargo Total 103 NOTE 27 - COSTS AND EXPENSES BY NATURE (a) Costs and operating expenses The main operating costs and administrative expenses are detailed below: Aircraft fuel Other rentals and landing fees (*) Aircraft rentals (**) Aircraft maintenance Comisions Passenger services Other operating expenses Total For the year ended December 31, 2021 ThUS$ 2020 ThUS$ 1,487,776 1,045,343 755,188 120,630 533,738 89,208 77,363 720,005 - 472,382 91,910 97,688 959,427 1,221,183 4,023,330 3,648,511 (*) Lease expenses are included within this amount (See Note 2.21) (**) During 2021, the Company amended its Aircraft Lease Contracts which included lease payment based on Power by the Hour (PBH) at the beginning of the contract and then switches to fixed-rent payments. A right of use asset and a lease liability was recognized as result of those amendments at the date of modification of the contract, even if they initially have a variable payment period. As a result of the application of the lease accounting policy, the right of use assets continues to be amortized on a straight-line basis over the term of the lease from the contract modification date. The expenses for the year include both: the lease expense for variable payments (Aircraft Rentals) as well as the expenses resulting from the amortization of the right of use assets from the beginning of the contract (included in the Depreciation line b) below) and interest from the lease liability (included in Lease Liabilities c) below). Payments for leases of low-value assets Rent concessions recognized directly in profit or loss Total For the year ended December 31, 2021 ThUS$ 2020 ThUS$ 19,793 - 21,178 (110) 19,793 21,068 Financial Information 235 Integrated Report 2021 104 (b) Depreciation and amortization Depreciation and amortization are detailed below: Depreciation (*) Amortization Total For the year ended December 31, 2021 ThUS$ 1,114,232 51,162 1,165,394 2020 ThUS$ 1,219,586 169,800 1,389,386 (*) 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, 2021 is ThUS $ 351,701, ThUS $ 276,908 for year 2020 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 For the year ended December 31, 2021 ThUS$ 580,193 46,679 121,147 57,525 805,544 2020 ThUS$ 314,468 45,245 170,918 56,348 586,979 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. 105 (d) Restructuring activities expenses The Restructuring activities expenses are detailed below: For the year ended December 31, 2021 ThUS$ 2020 ThUS$ 73,595 1,564,973 26,368 46,938 91,870 516,559 16,879 2,337,182 331,522 269,467 - 290,831 76,541 - 21,648 990,009 Fair value adjustment of fleet available for sale Rejection of aircraft lease contract Rejection of IT contracts Employee restructuring plan (*) Legal advice Renegotiation of fleet contracts Others Total (*) 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, 2021 ThUS$ - - (44,000) - 13,326 (30,674) 2020 ThUS$ 82,487 36,896 44,000 1,728,975 (17,569) 1,874,789 Financial Information 236 Integrated Report 2021 107 Foreign currency The foreign currency detail of balances of monetary items in current and non-current assets is as follows: 106 NOTE 28 - OTHER INCOME, BY FUNCTION Other income, by function is as follows: For the year ended December 31, 2021 ThUS$ 2020 ThUS$ 11,209 6,852 27,089 15,602 40,481 126,098 227,331 22,499 46,045 25,138 18,579 42,913 255,828 411,002 Tours Aircraft leasing Customs and warehousing Maintenance Income from non-airlines products Latam Pass Other miscellaneous income (*) Total (*) Included within this amount is ThUS$118,188 of 2021 and ThUS$132,467 of 2020 corresponding to the compensation of Delta Air Lines Inc for the JBA signed in 2019. Current assets Cash and cash equivalents Argentine peso Brazilian real Chilean peso Colombian peso Euro U.S. dollar Other currency NOTE 29 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES Other financial assets, current Argentine peso Brazilian real Chilean peso Colombian peso Euro U.S. dollar Other currency The functional currency of LATAM Airlines Group S.A. is the US dollar, also it has subsidiaries whose functional currency is different to the US dollar, such as the chilean peso, argentine peso, colombian peso, brazilian real and guaraní. The functional currency is defined as the currency of the primary economic environment in which an entity operates and in each entity and all other currencies are defined as foreign currency. Considering the above, the balances by currency mentioned in this Note correspond to the sum of foreign currency of each of the entities that make LATAM Airlines Group S.A. and Subsidiaries. Following are the current exchange rates for the US dollar, on the dates indicated: Argentine peso Brazilian real Chilean peso Colombian peso Euro Australian dollar Boliviano Mexican peso New Zealand dollar Peruvian Sol Uruguayan peso As of December 31, 2021 2020 2019 2018 102.75 5.57 844.69 4,002.52 0.88 1.38 6.86 20.53 1.46 3.98 44.43 84.14 5.18 710.95 3,421.00 0.81 1.30 6.86 19.93 1.39 3.62 42.14 59.83 4.01 748.74 3,271.55 0.89 1.43 6.86 18.89 1.49 3.31 37.24 37.74 3.87 694.77 3,239.45 0.87 1.42 6.86 19.68 1.49 3.37 32.38 As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 262,886 6,440 9,073 9,759 4,745 7,099 195,264 30,506 12,728 4 4 4,440 111 1,720 5,242 1,207 483,303 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 Financial Information 237 Integrated Report 2021 Current assets As of As of December 31, December 31, Non-current assets 108 109 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 2021 ThUS$ 34,613 5,715 1,488 20,074 121 1,936 1,106 4,173 156,824 6,850 53 47,392 455 24,143 56,676 21,255 502 19 483 8,674 322 47 681 1,618 70 406 4,450 1,080 476,227 19,331 10,665 82,365 7,050 34,968 259,177 62,671 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 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 As of December 31, 2021 ThUS$ As of December 31, 2020 ThUS$ 10,700 3,326 62 231 2,384 2,524 2,173 12,197 32 6,924 5,241 - 3,985 3,985 6,720 4,717 10 1,993 33,602 32 10,250 4,047 4,948 2,384 7,775 4,166 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 Financial Information 238 Integrated Report 2021 110 111 The foreign currency detail of balances of monetary items in current liabilities and non-current is as follows: Current liabilities Other financial liabilities, current Argentine peso Brazilian real Chilean peso Euro U.S. dollar Other currency T rade 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, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 T hUS$ T hUS$ T hUS$ T hUS$ 179,777 1 31 135,431 259 43,919 136 1,317,418 234,358 70,523 280,405 7,673 134,146 472,800 2,487 11,297 45,096 775 57,858 57 6 51 - - - 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 - 14 177,471 - 210 159,541 184 17,460 76 50,312 2,335 653 44,438 1,134 887 73 310 29 86 58 309 - - - 4,980 25 4,955 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 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 Up to 90 days 91 days to 1 year As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 ThUS$ ThUS$ ThUS$ ThUS$ 29,057 1,604 859 1,332 941 1,375 21,174 1,772 1,526,331 235,963 71,413 417,174 8,614 135,780 537,944 119,443 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 - - - - - - - - 232,763 2,335 863 204,004 1,134 1,071 17,533 5,823 50 - 3 1 38 - - 8 109,159 7,315 203 81,660 1,203 299 16,416 2,063 Financial Information 239 Integrated Report 2021 112 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 T otal non-current liabilities Argentine peso Brazilian real Chilean peso Colombian peso Euro U.S. dollar Other currency More than 1 to 3 years More than 3 to 5 years More than 5 years As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 As of December 31, 2021 As of December 31, 2020 T hUS$ T hUS$ T hUS$ T hUS$ T hUS$ T hUS$ 33,205 1,512 86 135 31,413 59 114,097 41,456 71,339 1,302 49,420 1,074 27,532 255 10,820 9,739 44,816 44,816 241,538 1,074 27,618 87,784 255 10,955 112,491 1,361 268,320 180,150 351 427 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 15,375 896 - 90 14,389 - 1,451 1,451 - - - - - - - - - - 16,826 - - 2,347 - 90 14,389 - 4,250 1,320 - - 2,930 - 1,390 1,390 - - - - - - - - - - 5,640 - - 2,710 - - 2,930 - 359,623 355,636 - - 3,987 - 342 342 - - - - - - - - - - 359,965 - - 355,978 - - 3,987 - 403,841 398,199 - - 5,642 - 241 241 - - - - - - - - - - 404,082 - - 398,440 - - 5,642 - Financial Information 240 Integrated Report 2021 113 114 General summary of foreign currency: As of As of December 31, December 31, NOTE 30 - EARNINGS / (LOSS) PER SHARE 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 2021 ThUS$ 509,829 19,363 20,915 86,412 11,998 37,352 266,952 66,837 2,377,423 239,372 99,894 1,067,287 10,003 147,896 686,344 126,627 (220,009) (78,979) (980,875) 1,995 (110,544) (419,392) (59,790) 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) For the year ended December 31, Basic earnings / (loss) per share 2021 2020 Earnings / (loss) attributable to owners of the parent (ThUS$) (4,647,491) (4,545,887) Weighted average number of shares, basic 606,407,693 606,407,693 Basic earnings / (loss) per share (US$) (7.66397) (7.49642) For the year ended December 31, Diluted earnings / (loss) per share 2021 2020 Earnings / (loss) attributable to owners of the parent (ThUS$) (4,647,491) (4,545,887) Weighted average number of shares, basic Weighted average number of shares, diluted 606,407,693 606,407,693 606,407,693 606,407,693 Diluted earnings / (loss) per share (US$) (7.66397) (7.49642) Financial Information 241 Integrated Report 2021 NOTE 31 – CONTINGENCIES I. Lawsuits 1) Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries 115 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 court issued a ruling in favor of Tam Viagens S/A on June 24, 2021. An appeal by the Municipality is pending. On May 26, 2020, LATAM Airlines Group S.A. and 28 subsidiaries (the “Initial Debtors”) individually filed a voluntary petition for reorganization 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" and together with the Initial 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 resolution before the Honorable James L. Garrity Jr. in United States Bankruptcy Court for the Southern District Court of New York (the “Bankruptcy Court”) and are being jointly administered under case number 20-11254. On September 18, 2020, the Debtors received approval of the modified funding proposal for Debtor in Possession (“DIP”) funding filed on September 17, 2020 from the Bankruptcy Court. On October 18, 2021 the Bankruptcy Court approved the Debtors’ request for certain additional DIP funding, namely a “Tranche B” facility. On November 26, 2021, the Debtors filed a joint plan of reorganization together with a disclosure statement. A hearing will be conducted on January 27, 2022 to rule on the adequacy of the disclosure statement. The Bankruptcy Court has extended the Debtors’ exclusive period to solicit acceptances for the plan to January 26, 2022. The Subsequent Debtors have sought an additional extension of their exclusive periods to file and solicit acceptances for the plan, until January 7, 2022 and March 7, 2022 respectively. A hearing on that request will be conducted on January 27, 2022. LATAM has continued its process of reconciling claims and presenting objections. Likewise, LATAM continues to evaluate its contracts and has rejected some of them. It continues with the review of its existing solicitation and confirmation of its plan. fleet obligations, and pursuing Amounts Committed (*) ThUS$ 99,198 -0- Financial Information 242 Integrated Report 2021 Company Court Case Number 116 Origin LATAM Airlines Group S.A. 2° Juzgado Civil de Santiago C-8553-2020 Request for recognition of the foreign reorganization proceeding. Aerovías de Integración Regional S.A. Superintendencia de Sociedades - Request for recognition of the foreign reorganization proceeding. Amounts Committed (*) ThUS$ -0- -0- Stage of trial 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. 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. The Companies Commission adopted the Cross-Border Communications Protocol on November 4, 2020. On December 14, 2020, that Commission recognized the order issued by the Bankruptcy Court on November 20, 2020 authorizing issue, capital contributions and changes to the pledge agreements. On October 27, 2021, the Commission recognized the order issued by the Bankruptcy Court on October 18, 2021 approving the second proposed DIP loan submitted by LATAM Airlines Group S.A. and authorizing a change in the collateral provided in the first DIP loan and the signature of a petition accessory to the DIP loan agreement. The Commission was informed on December 22, 2021 that on November 26, 2021, LATAM Airlines Group S.A. had filed a Reorganization Agreement pursuant to Chapter 11 and that the hearing for the Bankruptcy Court to rule on that Agreement would be held January 27, 2022. That was the last action in the process. the stock Financial Information 243 Integrated Report 2021 Company Court Case Number 117 Origin 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 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 - - - - - - - - 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. A petition for a provisional liquidation. A petition for a provisional liquidation. A petition for a provisional liquidation. Stage of trial Amounts Committed (*) ThUS$ 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. Piquero Leasing Limited entered a motion to suspend the liquidation on September 28, 2020. The Grand Court of the Cayman Islands granted the motion and extended the provisional liquidation status for 6 months. The procedure continues. On May 13, 2021, Peuco Finance Limited filed a petition to suspend the liquidation. On May 18, 2021, the Grand Court of Cayman Islands accepted the petition and extended the status of temporary liquidation until October 9, 2021. The lawsuit continues to be active. On May 13, 2021, LATAM Finance Limited filed a petition to suspend the liquidation. On May 18, 2021, the Grand Court of Cayman Islands accepted the petition and extended the status of temporary liquidation until October 9, 2021. The lawsuit continues to be active. -0- -0- -0- -0- -0- -0- -0- -0- Financial Information 244 Integrated Report 2021 118 Company Court Case Number Origin Stage of trial Amounts Committed (*) ThUS$ 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 Piquero Leasing Limited Grand Court of the Cayman Islands - - - - A petition for a provisional liquidation. A petition for a provisional liquidation. A petition for a provisional liquidation. A petition for a provisional liquidation. On May 13, 2021, Piquero Leasing Limited filed a petition to suspend the liquidation. On May 18, 2021, the Grand Court of Cayman Islands accepted the petition and extended the status of temporary liquidation until October 9, 2021. The lawsuit continues to be active. On December 1, 2021, Peuco Finance Limited filed a petition to suspend the liquidation on December 1, 2021. The process continues. On December 1, 2021, LATAM Finance Limited filed a petition to suspend the liquidation on December 1, 2021. The process continues. On December 1, 2021, Piquero Leasing Limited filed a petition to suspend the liquidation on December 1, 2021. The process continues. -0- -0- -0- -0- Financial Information 245 Integrated Report 2021 2) Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries. 119 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 process against five cargo airlines, 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$9,299 (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, which is expected to be known at the end of March 2022, 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 (ThUS$9.299 (€8,220,000)) to the New York Court hearing the Chapter 11 procedure petitioned by LATAM Airlines Group, S.A. and LAN Cargo, S.A. in May 2020. Amounts Committed (*) ThUS$ 9,299 Financial Information 246 Integrated Report 2021 Company Court Case Number Origin Stage of trial 120 Lan Cargo S.A. y LATAM Airlines Group S.A. the High Court of In 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 10831.005704/2006.43 administrative the 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 2018, 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. For the case in Germany, LATAM petitioned the German Court for a suspension on the basis of the financial reorganization petitioned by LATAM Airlines Group S.A. and Lan Cargo S.A. in the United States (Chapter 11) in May 2020. DB Barnsdale AG also filed a claim with the U.S. Court by the deadline that creditors have under Chapter 11 claims. An agreement was reached with Barnsdale AG before the Courts could rule and that ended all claims in Germany. British Airways; KLM; Martinair; Air France; Lufthansa; Lufthansa Cargo and Swiss Air filed claims with the U.S. Court. LATAM opposed these claims and the U.S. Court dismissed and voided them after a review on May 27, 2021. The two proceedings still pending in Norway and the Netherlands are in the evidentiary stages. There has been no activity in Norway since January 2014 and in the Netherlands, since February 2021. The amounts are indeterminate. 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$3.100– R$ 17.302.858,00). We must await a decision on the Treasury appeal. Amounts Committed (*) ThUS$ -0- 8,643 6,973 Financial Information 247 Integrated Report 2021 Company Court Case Number Origin Stage of trial 121 Tam Linhas Aéreas S.A. Court of the Second Region. 2001.51.01.012530-0 (linked to 19515.721154/2014-71, 19515.002963/2009-12) the procces 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$65.464. The court decision requesting that the Expert make all clarifications requested by the parties in a period of 30 days was published on March 29, 2016. The plaintiffs’ submitted a petition on June 21, 2016 requesting acceptance of the opinion of their consultant and an urgent ruling on the dispute. No amount additional to the deposit that has already been made is required if this case is lost. The objection (manifestação de inconformidade) filed by the company was rejected, which is why the voluntary appeal was filed. The case was assigned to the 1st Ordinary Group of Brazil’s Administrative Council of Tax Appeals (CARF) on June 8, 2015. TAM’s appeal was included in the CARF session held August 25, 2016. An agreement that converted the proceedings into a formal case was published on October 7, 2016. The amount has been reduced after some set-offs were approved by the Department of Federal Revenue of Brazil. We must wait until the due diligence is complete. Amounts Committed (*) ThUS$ 65,464 29,484 Financial Information 248 Integrated Report 2021 Company Court Case Number Origin Stage of trial 122 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. 2013-20319 CA 01 process The July 30th, 2012 Aerovías de Integración Recional, Aires S.A. (LATAM AIRLINES COLOMBIA) initiated a legal in Colombia against Regional One INC and Volvo Aero Services that to declare LLC, these are companies civilly liable for moral and material damages caused LATAM to AIRLINES COLOMBIA arising from breach of contractual obligations of the aircraft HK-4107. The June 20th, 2013 AIRES SA And / Or LATAM AIRLINES was COLOMBIA notified of the lawsuit filed for in U.S. Regional One INC and Dash 224 LLC for damages caused by the HK-4107 aircraft arguing of LATAM AIRLINES GROUP S.A. customs to obtain import duty declaration when the aircraft in April 2010 entered Colombia for maintenance required by Regional One. failure 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 14, 2020. The defendants, REGIONAL ONE and VAS, filed a motion for reconsideration of this decision, petitioning that the evidence of the expert opinion be eliminated because it was presented late. The motion was denied by the Court. On April 30, 2021, they petitioned for a clarification and supplement to the opinion, to which the Court agreed in a decision on May 19, 2021, giving the expert 10 business days to respond. The brief of clarification was filed June 2, 2021 and the docket was presented to the Judge on June 3, 2021. The parties were given notice of the objection on July 21, 2021 based on a serious mistake in the opinion presented by Regional One. The case entered the judgment phase on August 5, 2021. On October 7, 2021, the Court set a date for the instruction and judgment hearing, which will be February 3, 2022. Regional One, the defendant, filed a petition for reconsideration on October 13, 2021 that had not been decided on the date of this report. The claim was withdrawn on January 11, 2022 because the matter had been settled before the Bankruptcy Court hearing the Chapter 11 claim. The Court decreed the end of the proceedings because the claims were withdrawn in a ruling issued January 19, 2022. 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 unsecured claims with the U.S. Bankruptcy Court by the deadline that creditors have according to Chapter 11. On October 18, 2021, the parties participated in a third mediation where they agreed on the terms of a global settlement. On December 16, 2021, the Bankruptcy Court for the Southern District of New York approved the global agreement and release. Therefore, Dash and Regional withdrew their claims against Aires in Florida on December 21, 2021, which put an end to the proceedings. Amounts Committed (*) ThUS$ 9,500 Financial Information 249 Integrated Report 2021 Company Court Case Number Origin Stage of trial 123 Tam Aéreas S.A. Linhas Internal Service of Brazil Revenue 10880.722.355/20 14-52 LATAM Airlines Group S.A. 22° Civil Court of Santiago C-29.945-2016 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. 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 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. 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. On August 11, 2021 Inversiones Ranco Tres S.A. requested the suspension of the hearing of the Appeal, after the recognition by the 2nd Civil Court of Santiago of the foreign reorganization procedure in accordance with Law No. 20,720, for the entire period that said procedure lasts, a request that was accepted by the Supreme Court. Amounts Committed (*) ThUS$ 7,661 15,694 Financial Information 250 Integrated Report 2021 124 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. 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 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. 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. 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. 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. 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. 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. The process has become a judicial proceeding. Amounts Committed (*) ThUS$ 27,129 8,064 15,646 11,193 22,136 SNEA (Sindicato Nacional das empresas aeroviárias) TAM Linhas Aéreas S/A União Federal União Federal 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. 63,585 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. 12,509 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. 92,152 Financial Information 251 Integrated Report 2021 125 Company Court Case Number Origin Stage of trial TAM Aéreas S/A Linhas of Department 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. TAM Linhas Aéreas S/A Department of Federal Revenue of Brazil 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. LATAM Airlines Argentina Commercial Trial Court No. 15 of Buenos Aires. 11479/2012 filed a claim citing Proconsumer and Rafaella Cabrera discriminating fees charged to foreign users as compared to domestic users for services retained in Argentina. 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. The case is now before the Superior Court of Labor. 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 is pending a decision by the D Room. On July 30, 2020, the D Room ordered the General Prosecutor to appear. LATAM Airlines Group Argentina, Brasil, Perú, Ecuador, y TAM Mercosur. TAM Linhas Aéreas S.A 1408/2017 Commercial and Civil Trial Court No. 11 of Buenos Aires. 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. 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. The Court ruled in favor of the defendants on March 26, 2021, denying the precautionary measure petitioned by the plaintiff. Department of Federal Revenue of Brazil 10.880.938842/20 13-54 The decision denied the petition for reassignment and did not equate the COFINS 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 TAM Linhas Aéreas S.A Department of Federal Revenue of Brazil Department of Federal Revenue of Brazil 10.880.93844/201 3-43 The decision denied the petition for reassignment and did not equate the COFINS 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 (CARF) that is pending a decision. 10880.938841/20 13-18 The decision denied the petition for reassignment and did not equate the COFINS 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 (CARF) that is pending a decision. Amounts Committed (*) ThUS$ 17,153 9,436 16,750 11,316 12.256 -0- -0- 12,406 11,292 11,221 Financial Information 252 Integrated Report 2021 126 Company Court Case Number Origin Stage of trial TAM Linhas Aéreas S.A Receita Federal de Brasil 10840.727719/201 9-71 Collection of PIS / COFINS tax for the period of 2014. 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 (CARF) that is pending a decision. 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. seeking an the 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 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 attorneys believed that the probability of recovering this sum had fallen to 30%-40% because of the pressure being put by the Executive Branch on the National Court of Justice and the Judiciary in general for rulings not to affect government revenues and because the case involves differences that are based on insufficient documentation supporting the expense. Given the percentage loss (above 50%), the accounting write-off of this recovery has been carried out. 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 (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 (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 (CARF) that is pending a decision. Amounts Committed (*) ThUS$ 31,996 12,505 -0- 9,612 12,068 11,830 Financial Information 253 Integrated Report 2021 Company Court Case Number Origin Stage of trial 127 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 We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal (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 (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 (CARF) that is pending a decision. Amounts Committed (*) ThUS$ 12,046 10,713 12,559 Financial Information 254 Integrated Report 2021 128 Company Court Case Number Origin Stage of trial 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 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). TAM Linhas Aéreas S.A. 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. We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal (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 (CARF) that is pending a decision. We presented our administrative defense (Manifestação de Inconformidade). A decision is pending. The Company filed a voluntary appeal (CARF) that is pending a decision. TAM filed its administrative defense on July 14, 2020. A decision is pending. The Company filed a voluntary appeal (CARF) that is pending a decision. TAM Linhas Aéreas S.A. 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. The Company filed a voluntary appeal (CARF) that is pending a decision. TAM Linhas Aéreas S.A. 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. The Company filed a voluntary appeal (CARF) that is pending a decision. Amounts Committed (*) ThUS$ 10,530 9,592 25,366 14,377 8,713 9,281 Financial Information 255 Integrated Report 2021 Amounts Committed (*) ThUS$ -0- Company Court Case Number Origin Stage of trial 129 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. On February 9, 2021, the Bankruptcy Court sustained just one of the petitions of CONADECUS. As a result, they can continue their appeal against the decision by the 25th Civil Court that approved the reconciliation of AGRECU and LATAM. Financial Information 256 Integrated Report 2021 Company Court Case Number Origin Stage of trial 130 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. TAM Aéreas S.A Linhas Receita Federal de Brasil 13074.726429/202 1-41 It is about the non-approved compensation/reimbursement of Cofins for the periods 07/2016 to 06/2017. 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. LATAM presented reports on the implementation of the agreement on May 19, 2021 and November 19, 2021. CONADECUS still has appeals pending against these decisions. The amount at the moment is undetermined. filed TAM Inconformidade). A decision is pending administrative defense. its (Manifestação de 14,232 Amounts Committed (*) ThUS$ -0- TAM Linhas Aéreas S.A Receita Federal de Brasil 2007.34.00.00991 9-3(0009850- 54.2007.4.01.3400 ) A lawsuit seeking to review the incidence of the Social Security Contribution taxed on 1/3 of vacations, maternity payments and medical leave for accident. A decision is pending Tam Aéreas S/A. Linhas Justicia Cível do Rio de Janeiro/RJ 0117185- 03.2013.8.19.0001 MAIS Linhas Aéreas filed a claim seeking an indemnity for alleged loss of profit during the period when one of its aircraft was being repaired at the LATAM Technology Center in Sao Carlos, Sao Paulo. TAM was ordered to pay an indemnity to Mais Linhas for loss of profit and moral damage, estimated to be R$48 million. Both parties appealed the decision, but the Rio de Janeiro Court has not issued a ruling on the appeals. Before any appeals decision is rendered, Mais filed a provisional enforcement petition for R$48 million. TAM appealed that petition on September 21, 2021, and presented guarantee insurance on the record to keep its accounts from being frozen. 56,436 8,330 TAM Aéreas S.A. Linhas Delegacía da Receita Federal 13896.720385/201 7-96 It is about the refund request regarding the negative balance of IRPJ, corresponding to the calendar year 2011. Presented the defense, which was denied by RFB. TAM resource partially accepted. A decision is pending 25,889 Financial Information 257 Integrated Report 2021 131 132 - In order to deal with any financial obligations arising from legal proceedings in effect at December 31, 2021, 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 (See Note 20 b). (*) 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 Role No. 2530-19 into the LATAM Pass frequent passenger program. The last move in 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 Role No. 2565-19 into the Alliance Agreement between LATAM Airlines Group S.A. and American Airlines INC. The last move in this investigation corresponds to a request for information received on November 3, 2021. 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. On January 18, 2021, the 14th Civil Court of Santiago approved the aforesaid agreement. LATAM published an abstract of the decision in nationwide newspapers in compliance with the law. LATAM began performance of the agreement on September 3, 2021. 4) On October 15, 2019, LATAM Airlines Group S.A. received the resolution issued by the National Economic Prosecuting Authority (FNE) which begins an investigation Role N°2585-19 into the agreement between LATAM Airlines Group S.A. and Delta Airlines, Inc. On August 13, 2021 FNE, Delta and LATAM reached an out-of-court agreement that put an end to this investigation. On 10/28/21, the Tribunal de Defensa de la Libre Competencia approved the out-of- court agreement reached by LATAM and Delta Air Lines with the National Economic Prosecuting Authority. 5) LATAM Airlines Group S.A. received a resolution by the National Economic Prosecutor (FNE) on February 1, 2018 beginning Investigation 2484-18 on air cargo carriage. The most recent activity in this investigation was received in January 2022. 6) LATAM Airlines Group S.A. received a resolution by the National Economic Prosecutor (FNE) on August 12, 2021 beginning Investigation N° 2669-21 on compliance with condition VII Res. N° 37/2011 H. TDLC. The last movement in this investigation corresponds to a letter received in December 2021 with a response date of January 14, 2022. NOTE 32 - COMMITMENTS (a) Commitments for loans obtained In relation to certain contracts committed by the Company for the financing of the Boeing 777 aircraft, which are guaranteed by Export – Import Bank of the United States of America, commencing on January 1, 2023, limits have been established for some financial indicators of LATAM Airlines Group S.A. on a consolidated basis. Under any circumstance, non-compliance of this limits, does not generate credit acceleration. 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, 2021, this line of credit is fully used. As of December 31, 2021, 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 Financial Information 258 Integrated Report 2021 133 134 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 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, 2021 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows: Creditor Guarantee Debtor Type Value ThUS$ Release Date Superintendencia Nacional de Aduanas y de Administración Tributaria Superintendencia Nacional de Aduanas y de Administración Tributaria Lima Airport Partners S.R.L. Servicio Nacional de Aduana del Ecuador Empresa Pública de Hidrocarburos del Ecuador EP Petroecuador Aena Aeropuertos S.A. American Alternative Insurance Corporation Comisión Europea Metropolitan Dade County BBVA JFK International Air Terminal LLC. Servicio Nacional de Aduanas Isoceles Procon União Federal Vara das Execuções Fiscais Estaduais Da Comarca De São Paulo. Vara das Execuções Fiscais Estaduais Da Comarca De São Paulo. Vara das Execuções Fiscais Estaduais Da Comarca De São Paulo. Procon 17a Vara Cível da Comarca da Capital de João Pessoa/PB. 14ª Vara Federal da Seção Judiciária de Distrito Federal Tribunal de Justição de Rio de Janeiro. Vara Civel Campinas SP. JFK International Air Terminal LLC. 7ª Turma do Tribunal Regional Federal da 1ª Região Procon Bond Safeguard Insurance Company Fundacao de Protecao e Defesa do Consumidor Procon Uniao Federal Fazenda Nacional Uniao Federal PGFN Uniao Federal Fazenda Nacional Uniao Federal Fazenda Nacional Uniao Federal PGFN Tribunal de Justição de São Paulo. 7ª Turma do Tribunal Regional Federal da 1ª Região Latam Airlines Perú S.A. Forty-five letters of credit 228,184 Jan 14, 2022 Latam Airlines Perú S.A. Latam Airlines Perú S.A. Latam Airlines Ecuador S.A. Four letters of credit Two letters of credit Four letters of credit Latam Airlines Ecuador S.A. Latam Airlines Group S.A. Four letters of credit Three letters of credit 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. Latam Airlines Group S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Twelve letters of credit One letter of credit Seven letters of credit One letter of credit One letter of credit Eight letters of credit One letter of credit Two insurance policy guarantee Two insurance policy guarantee 15,176 1,150 2,130 1,500 1,237 4,585 9,333 3,597 4,315 2,300 2,303 12,750 2,233 8,250 Nov 23, 2022 Nov 30, 2022 Aug 5, 2022 Jun 20, 2022 Nov 15, 2022 Mar 22, 2022 Mar 29, 2022 Mar 13, 2022 Jan 16, 2022 Jan 27, 2022 Jul 30, 2022 Aug 6, 2022 Nov 17, 2025 Feb 4, 2025 Tam Linhas Aéreas S.A. One insurance policy guarantee 8,531 Apr 15, 2025 Tam Linhas Aéreas S.A. One insurance policy guarantee Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. One insurance policy guarantee Seven insurance policy guarantee 1,417 1,323 9,542 Apr 4, 2025 Jul 5, 2023 Apr 6, 2022 Tam Linhas Aéreas S.A. One insurance policy guarantee 2,247 Jun 25, 2023 Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Tam Linhas Aéreas S.A. Absa Linhas Aereas Brasileira S.A. Absa Linhas Aereas Brasileira S.A. Absa Linhas Aereas Brasileira S.A. Absa Linhas Aereas Brasileira S.A. One insurance policy guarantee One insurance policy guarantee One insurance policy guarantee One insurance policy guarantee One insurance policy guarantee One insurance policy guarantee One insurance policy guarantee Two insurance policy guarantee One insurance policy guarantee Three póliza de seguro de garantía One insurance policy guarantee 1,342 11,198 1,577 1,300 41,029 1,931 2,700 4,079 2,251 17,621 27,446 May 29, 2025 Aug 30, 2026 Jun 14, 2024 Jan 25, 2022 Apr 20, 2023 Feb 10, 2026 Jul 20, 2022 Sep 20, 2023 Nov 16, 2025 Jan 4, 2024 Jul 30, 2022 Three póliza de seguro de garantía 25,839 Apr 14, 2023 Two póliza de seguro de garantía 19,732 Oct 20, 2022 One insurance policy guarantee 4,709 Mar 31, 2022 One insurance policy guarantee 1,600 May 7, 2023 486,457 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 Information 259 Integrated Report 2021 135 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 C o untry o f Na ture o f re la te d pa rtie s tra ns a c tio ns 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 2021 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 C hile Tic ke ts s a le s Lo a ns re c e ive d (*) Inte re s t a c c rue d (*) C LP C LP 87.752.000-5 96.989.370-3 F o re ign F o re ign 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 C hile 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 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 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 C LP C LP S e rvic e s pro vide d Tic ke ts s a le s S e rvic e s pro vide d o f c a rgo tra ns po rt B R L S e rvic e s pro vide d B R L 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 by a irc ra ft le a s e US $ US $ Inte rline a l re c e ive d s e rvic e US $ Inte rline a l pro vide d s e rvic e S e rvic e s pro vide d o f ha ndling US $ US $ C o m pe ns a tio n fo r e a rly re turn o f a irc ra ft US $ S e rvic e s pro vide d / re c e ive d o the rs US $ Inte rline a l re c e ive d s e rvic e US $ Inte rline a l pro vide d s e rvic e US $ 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 US $ US $ 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 ThUS $ 23 (35,412) (34,694) 26 9 15 12 - - (6,387) 6,283 1,493 - (963) (11,768) 7,695 - (59) (318) 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 F o re ign QA Inve s tm e nts Ltd 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 (*)Lo a ns re c e ive d (*)Inte re s t a c c rue d C o m m o n s ha re ho lde r J e rs e y C ha nne l Is la nds (*)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 F o re ign Lo zuy S .A. C o m m o n s ha re ho lde r Urugua y US $ US $ US $ US $ US $ US $ (8,853) (125,016) (8,673) (7,125) (44,266) (125,016) (43,367) (44,266) (43,367) (7,125) (25,003) (1,425) Financial Information 260 Integrated Report 2021 136 137 (*) Corresponding to DIP tranche C. The balances of Accounts receivable and accounts payable to related parties are disclosed in Note 9. NOTE 35 - STATEMENT OF CASH FLOWS Transactions between related parties have been carried out at arm's length basis. (b) Compensation of key management 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. For the year ended December 31, 2021 ThUS$ 2020 ThUS$ 9,981 1,016 501 16,639 513 28,650 8,395 257 1,719 13,624 4,539 28,534 Remuneration Management fees Non-monetary benefits Short-term benefits Termination benefits Total 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. (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. (b) Other inflows (outflows) of cash: For the year ended December 31, 2021 2020 ThUS$ ThUS$ 14,269 (4,900) (2,530) (17,077) (21,287) (39,728) (16,323) - (87,576) (425) 18,900 18,475 (46,579) 14,962 (1,261) (3,949) (5,828) (44,280) 38,528 62,000 13,593 (2,192) - (2,192) - (11,034) (107,788) - (11,034) (107,788) Fuel hedge Hedging margin guarantees Tax paid on bank transaction Fuel derivatives premiums Bank commissions, taxes paid and other Guarantees Court deposits Delta Air Lines Inc. Compensation Total Other inflows (outflows) Operation flow Tax paid on bank transaction Guarantie deposit received from the sale of aircraft Total Other inflows (outflows) Investment flow Settlement of derivative contracts Fees paid to financial institutions Total Other inflows (outflows) Financing flow (c) Dividends: For the period ended December 31, 2021 2020 ThUS$ ThUS$ - - (571) (571) Latam Airlines Perú S.A. (*) Total dividends paid (*) Dividends paid to non-controlling shareholders Financial Information 261 Integrated Report 2021 138 (d) Reconciliation of liabilities arising from financing activities: As of Cash flows Non cash-Flow Movements Obligations with December 31, Obtainment Payment financial institutions Loans to exporters Bank loans Guaranteed obligations Other guaranteed obligations Obligation with the public Financial leases Other loans Lease liability Total Obligations with financial institutions 2020 ThUS$ 151,701 525,273 1,318,856 1,939,116 2,183,407 1,614,501 - 3,121,006 Capital ThUS$ - - - 661,609 - - - - Capital ThUS$ - - (14,605) (26,991) - (421,452) - (103,366) Interest ThUS$ - (546) (17,405) (28,510) - (40,392) - (17,768) Interest accrued and others (*) ThUS$ 7,460 (2,889) (513,276) 135,405 69,791 (181,717) 76,508 (39,234) As of December 31, Reclassifications ThUS$ 2021 ThUS$ - - (263,035) 44,793 - 218,242 - - 159,161 521,838 510,535 2,725,422 2,253,198 1,189,182 76,508 2,960,638 10,853,860 661,609 (566,414) (104,621) (447,952) - 10,396,482 Obligations with December 31, Obtainment Payment Interest accrued As of Cash flows Non cash-Flow Movements As of December 31, financial institutions 2019 ThUS$ Capital ThUS$ Loans to exporters Bank loans Guaranteed obligations Other guaranteed obligations Obligation with the public Financial leases Other loans Lease liability Total Obligations with 341,475 217,255 2,157,327 580,432 2,064,934 1,730,843 101,261 3,172,157 165,000 265,627 192,972 1,361,881 - - - - Capital ThUS$ (359,000) (4,870) (48,576) (42,721) (774) (236,744) (101,026) (122,063) Interest ThUS$ (4,140) (2,397) (21,163) (27,744) (55,613) (52,155) (1,151) (46,055) and others ThUS$ Reclassifications ThUS$ 2020 ThUS$ 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 financial institutions 10,365,684 1,985,480 (915,774) (210,418) (371,112) - 10,853,860 (*) Accrued interest and others, includes ThUS$ 458,642 (ThUS$ (891,407) as of December 31, 2020), associated with the rejection of fleet contracts. (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 Total cash flows For the year ended December 31, 2021 ThUS$ - - - 2020 ThUS$ (31,803) 8,157 (23,646) Financial Information 262 Integrated Report 2021 139 140 (f) Additions of property, plant and equipment and Intangibles For the year ended At December 31, 2021 2020 ThUS$ ThUS$ Net cash flows from Purchases of property, plant and equipment Additions associated with maintenance Other additions Purchases of intangible assets Other additions 587,245 302,858 284,387 88,518 88,518 324,264 173,740 150,524 75,433 75,433 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, 2021 ThUS$ (65,901) 17,223 - 2020 ThUS$ 18,347 (13,872) - Effects of variation in the exchange rate on cash and cash equivalents 48,678 (4,475) Net increase (decrease) in cash and cash equivalents - - NOTE 36 - THE ENVIRONMENT LATAM Airlines Group S.A is dedicated 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 socio-environmental issues at a corporate level, centralized in the Corporate Affairs and Sustainability Department. The company is committed to monitoring and mitigating its impact on the environment in all its ground and air operations, being a key element in the solution, and searching for alternatives to the challenges of the company and its environment. Some functions of the Corporate Affairs and Sustainability Department in environmental issues, in conjunction with the various areas of the company, is to ensure that environmental legal compliance is maintained in all the countries where it is present, to implement and maintain corporate environmental management, the efficient use of non-renewable resources such as aircraft fuel, the responsible disposal of its waste, and the development of programs and actions that allow it to reduce its greenhouse gas emissions, seeking to generate environmental benefits, social and economic for the company and the countries where it operates. LATAM's sustainability strategy launched in 2021 is based on 4 action fronts: Environmental Management System, Climate Change, Circular Economy and Shared Value, and from these, it manages different areas related to the environment. With these pillars, the company seeks to generate social, environmental, and economic value for society and business, anticipating the risks inherent in the sustainability challenges posed by the current and future scenario. The aspects addressed in from each pillar of the strategy are presented below: Environmental management system The company is working to standardize its environmental management system at a cross-cutting level and under the same structure, this, it seeks to certify its operation under stage II of the IATA Environmental Assessment Program (IEnvA), which is designed to evaluate and improve, independently, the environmental management of airlines, given that in addition to being based on the ISO 14001 standard, it involves the best practices of the industry. Climate Change Management To manage its carbon footprint and contribute to the protection of strategic ecosystems in the region, LATAM has set a goal to offset 50% of domestic emissions by 2030 and be carbon-neutral by 2050, for this it has focused your strategy in: Efficient operation: with the implementation of LATAM Fuel Efficiency, a corporate program for the efficient use of fuel that considers initiatives in all areas of the company that have an impact on fuel consumption. Sustainable Alternative Fuels (SAF): Given the importance of Sustainable Aviation Fuel (SAF) to combat climate change in the long term, LATAM is developing a work plan focused on Brazil, which has recognized and long-standing experience in biofuels; and Chile, a country with high development potential in green hydrogen. Emission compensation: LATAM has assumed a total commitment to the environment and has established different alliances that will allow it not only to acquire carbon credits for its compensation needs but also to contribute to the conservation of strategic ecosystems in the region. Circular Economy LATAM aims to eliminate single-use plastics before 2023 and be a zero waste to landfill group by 2027. To achieve these goals, it has reviewed its waste management to promote the circular economy within its processes, acting from materiality. Shared Value In creating shared value, the Solidarity Plane program stands out, created in 2011 and with which LATAM makes its structure, connectivity, and passenger and cargo transport capacity available to society for free in South America. The program acts in three areas of action: it supports health needs, promotes the conservation of natural resources, and provides support in the event of natural disasters. Financial Information 263 Integrated Report 2021 141 142 Within the framework of the implementation of the strategy, during 2021, the company worked on the following initiatives: ● Recertification of the standard ISO 14001 in the cargo operation in Miami. NOTE 37 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS Certification of all LATAM operations under the IATA Environmental Assessment ● Program IEnvA in stage 1. (1) Within the context of the Chapter 11 Proceedings in which the Company and some of its subsidiaries find themselves: ● ● Measurement and management of the corporate carbon footprint Neutralization of domestic air operations in Colombia. ● Launching of the Vuela Neutral compensation program, aimed at corporate customers in the passenger and cargo business, allowing customers to know their emissions and choose to offset their emissions with a portfolio project evaluated by LATAM. ● Verification of the company's emissions under the EU-ETS and CORSIA schemes. Structuring of the baseline in waste management to advance in the fulfillment of its circular ● economy goals. ● ● Evaluation of processes for the elimination of single-use plastic in the operation. Strengthening of the Solidarity Plane program. The group was part of the Dow Jones Sustainability Index for six consecutive years, being classified as one of the most sustainable in the world. Today, LATAM does not participate in the selection because it is in the process of financial reorganization, but it continues to use the analysis as benchmarking and as a guide to implementing improvements in its processes. In 2021, according to the S&P Corporate Sustainability Assessment, LATAM was recognized as the most sustainable airline in the region and the fourth worldwide, according to this assessment, LATAM was included in the 2022 Yearbook in the Bronze category, maintaining its position as one of the best-performing companies in sustainability in the industry. a. On February 8, 2022, the judge of the Court of the Southern District of New York approved the request to extend the exclusivity period related to the solicitation period for voting on LATAM’s proposed Reorganization Plan until March 7, 2022. b. On February 10, 2022, an amendment to the restructuring support agreement, or "Restructuring Support Agreement (RSA)", dated November 26, 2021, was signed. Through said amendment, the Ad Hoc Group of LATAM Bondholders, represented by White & Case LLP (W&C), is incorporated as part of the RSA, agreeing among other things, to support the Reorganization Plan presented by LATAM. LATAM agreed mainly to pay certain of this group’s professional fees up to a certain limit With the subscription of this amendment to the RSA, the Reorganization Plan presented by LATAM has, as of this date, the support of more than 67% of the 2024 and 2026 LATAM Bonds, which adds to the support from creditors that represent more than 70% of LATAM's unsecured credits and shareholders that have more than 50% of LATAM's capital. c. On February 17, 2022, upon approval by the Board of Directors on the recommendation of the Committee of Directors, the proposal for the amendment and restatement of the existing DIP Credit Agreement, the “Proposed Amended and Restated DIP Credit Agreement”, was filed for approval with the Court. This proposed Amended & Restated DIP Credit Agreement extends the expected maturity date of all tranches of the Existing DIP Agreement, refinances and replaces the existing Tranche C financing under the existing DIP Credit Agreement, and includes certain reductions in fees and interest. Subsequently, on March 7, 2022, upon approval of the Board of Directors on the recommendation of the Committee of Directors, certain additional amendments (the "Additional Amendments") to the Proposed Amended & Restated DIP Credit Agreement that were agreed upon with potential creditors were submitted to the Court. The terms of the Proposed Consolidated and Amended DIP Credit Agreement (as amended by the Additional Amendments) maintain, in essence, the structure of the Proposed Amended & Restated DIP Credit Agreement submitted to the Court on 17 February 2022. LATAM is awaiting the Court's decision in response to the Proposed Amended & Restated DIP Credit Agreement. Financial Information 264 Integrated Report 2021 143 On February 25, 2022, an agreement was closed to receive 6 aircraft of the A321NEO (2) family under an operating lease, which will be delivered during 2023. (3) During the month of February, the Company filed an application to register an additional 200 million ADRs (American Depositary Receipt) with the Securities Exchange Commission (“SEC”) with the sole purpose of having them available for issuance in the market, since most of the existing registered ADRs have already been issued. The Company informed that this does not mean that the Company is issuing new shares or increasing capital, but rather allowing investors in the United States to access the ADRs, which have as an underlying security LATAM’s previously issued common stock. After December 31, 2021 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, 2021, have been approved in the Extraordinary Meeting Session of March 8, 2022. Financial Information 265 Integrated Report 2021 Affiliates and subsidiaries LATAM AIRLINES GROUP S.A Name: LATAM Airlines Group S.A., R.U.T. 89,862,200-2 aeronautical and radio communications concessions, traffic rights, and other administrative concessions. in the Official Gazette on January 14, 2012. The effective date for the name change was June 22, 2012. Incorporation: It was established as a Limited Liability Company 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 Nº 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 Santiago de Don Miguel Garay Figueroas 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 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, pursuant to the The Extraordinary Meeting of LAN Chile S.A. held on July 23, 2004 agreed to change the name of the company to “LAN Airlines S.A.” An excerpt of the deed to which the Minutes of said Meeting referred was recorded in the Santiago Registry of Commerce on page 25,128 Nº 18,764 of the year 2004 and published in the Official Gazette on August 21, 2004. The effective date for the name change was September 8, 2004. The Extraordinary Meeting of LAN Chile S.A. held on December 21, 2011 agreed to change the name of the company to “LAN Airlines S.A.” An excerpt of the deed to which the Minutes of said Meeting referred was recorded in the Santiago Registry of Commerce of the Real Estate Records on page 4,238 Nº 2,921 of the year 2012 and published LATAM Airlines Group S.A. is ruled by the regulation applicable to open stock companies, and registered to this effect under N° 306, dated January 22, 1987, in the Securities Register of the Superintendence of Securities and Insurance (SVS for its Spanish acronym). 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 Superintendency of Securities and Insurance. Financial Information 266 Integrated Report 2021TAM S.A. AND SUBSIDIARIES TAM S.A. AFFILIATE COMPANIES TAM LINHAS AEREAS S.A. AND AFFILIATES (i) The purchase and sale of aeronautical parts, accessories, and equipment; Incorporation: Joint Stock Corporation established in Brazil in May 1997. Individualization: Joint Stock Corporation established in Brazil. Purpose: To participate as shareholder in other companies, particularly those operating scheduled air transport services on a national and international level, as well as activities connected, related, and complementary to scheduled air transport. Paid-in Capital: MUS$3,661,721 Profit for the period: ThUS$(746,692) Stake in 2021: 100.00% Year over Year Variance (YoY): 0.00% % of Holding assets: -4.80411% Chairman of the Board Jerome Paul Jacques Cadier Board Members Felipe Ignacio Pumarino Mendoza– Financial Director Jerome Paul Jacques Cadier– Chairman and Commercial Director Sérgio Fernando Bernardes Novato– COO Purpose: (a) The operation of scheduled air transport services for passengers, cargo, and baggage, pursuant to existing legislation; (b) The operation of complementary activities of air transport services from the transport of passengers, cargo, and baggage; (c) The rendering of maintenance, repair services for aircraft, own or third parties’, engines, and spare parts; (d) The rendering of aircraft hangar services; (e) The rendering of yard and runway care services, provision of the aircraft cleaning staff; (f) The rendering of engineering services, technical assistance and other activities related to the aviation industry; (g) The performance of instruction and training related to aeronautical activities; (h) The analysis and development of programs and systems; (j) The development and implementation of other activities, related to or complementary to aviation, in addition to those expressly listed above; (b) the operation of auxiliary air transport activities, such as handling, cleaning, and towing of aircraft, cargo monitoring, operational flight clearance, check-in and check-out, and other services provided for in the corresponding legislation; (k) The import and export of finished lubricating oil; and (c) Commercial and operational leasing, as well as the transport of aircraft; (l) The use of bank correspondents’ services Paid-in Capital: ThUS$845,116 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: -4.737% Chairman of the Board Jerome Paul Jacques Cadier (d) Operation of maintenance and marketing services for aircraft parts and equipment; and (e) The development and implementation of other activities, related to or complementary to aviation, in addition to those expressly listed above; Board Members Jefferson Cestari– CFO Sérgio Fernando Bernardes Novato– COO Paid-in Capital: ThUS$9,084 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: -0.23271% ABSA: AEROLINHAS BRASILEIRAS S.A. AND AFFILIATE Chairman of the Board Jerome Paul Jacques Cadier Individualization: Joint Stock Corporation established in Brazil. Board Members Diogo Abadio – Commercial Director Jefferson Cestari– CFO Purpose: (a) Operate scheduled domestic and international air transport services for passengers, cargo, and postal services, pursuant to existing legislation; Financial Information 267 Integrated Report 2021TRANSPORTES AEREOS DEL MERCOSUR S.A. Individualization: Joint Stock Corporation established in Paraguay. Purpose: It has a broad corporate purpose that includes aeronautical, commercial, tourist, service, financial, representation, and investment activities, with a focus on scheduled and charter, 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, accessories, and material for air navigation, among others Paid-in Capital: ThUS$7,326 Stake in 2021: 94.98% YOY variation: 0.00% % of Holding assets: 0.62414% Chairman of the Board Enrique Alcaide Hidalgo Board Members Executive: Enrique Alcaide Hidalgo Permanent Member: Esteban Burt Permanent Member: Diego Martíne Permanent Member: Augusto Sanabria Managers Enrique Alcaide Hidalgo Esteban Burt Artaza Diego Martinez Luis Galeano FIDELIDADE VIAGENS E TURISMO S.A. Individualization: Joint Stock Corporation established in Brazil in December 2013. Purpose: (a) devoted to private and non-private travel agency and tourism activities, provided in the valid tourism legislation; and (b) management and operation of tourist activities for events and leisure Paid-in Capital: ThUS$21,220 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.04646% Board Members: Jerome Paul Jacques Cadier- Chairman Felipe Ignacio Pumarino Mendoza– Financial Director Jefferson Cestari – Director without specific designation Euzebio Angelotti Neto – Director without specific designation CORSAIR PARTICIPAÇÕES LTDA. Individualization: Joint Stock Corporation established in Brazil. present or future owner or licensee, for the development, implementation, operation, or management of the franchises that it may grant; Purpose: (a) To participate in other civil or trade companies, as a shareholder or creditor; and (b) To manage its own assets Paid-in Capital: ThUS$34 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.00822% Chairman of the Board None Board Members Claudia Sender Ramirez TP FRANCHISING LIMITED Individualization: Limited Liability Company established in Brazil 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, personal or real estate, tangible or intangible, owned by the Company, as (c) to develop any and all necessary activities to ensure, insofar as possible, the ongoing maintenance and perfecting of the actuation patterns of its franchise network; (d) to develop implementation, operation, and management models for its franchise network and their transfer to the franchisees; and (e) the distribution, sale, and marketing of airfares 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 projects, or form partnerships with third parties in their projects, even to obtain tax benefits, pursuant to current legislation. Paid-in Capital: ThUS$5 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.03522% Managers Claudia Sender Ramirez Marcelo Eduardo Guzzi Dezem Daniel Levy Financial Information 268 Integrated Report 2021LAN CARGO S.A AND AFFILIATES 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), established on September 3, 1958, before Santiago Notary Jaime Garcia Palazuelos. Pursuant to the public deed dated November 20, 1998, and an excerpt of which has been recorded on page 30,091 Nº 24,117 of the Santiago Registry of Commerce and published in the Official Gazette on December 3, 1998, Ladeco S.A. was merged by incorporation into the affiliate of LAN Chile S.A. known as Fast Air Carrier S.A. By public deed dated October 22, 2001, to which the minutes of the Extraordinary Shareholders’ Meeting of Ladeco S.A. of the same date were reduced, the name was changed to “LAN Chile Cargo S.A.”. An extract from this deed was recorded in the Register of Commerce of the Santiago Real Estate Records on pages 27,746, 22,624 corresponding to the year 2001 and was published in the Official Gazette on November 5, 2001. The name change took effect on December 10, 2001. By public deed dated August 23, 2004, to which the minutes of the Extraordinary Shareholders’ Meeting of LAN Chile Cargo S.A. Held on August 17, 2004, were reduced, the name was changed to “LAN Cargo S.A.”. An extract from this deed was recorded in the Register of Commerce of the Santiago Real Estate Records on page 26,994 n° 20,082 corresponding to the year 2004 and was published in the Official Gazette on August 30, 2004. The company has undergone various reforms, the latest of which is recorded in the public deed dated March 20, 2018 before Notary Patricio Raby Benavente, and recorded on page 28,810, item 15,276 of the Santiago Registry of Commerce for year 2018, and published in the Official Gazette on August 2, 2018, pursuant to which the number of board members was reduced. Purpose: Perform and provide, either for itself or 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 airplanes, spare parts, and aeronautical equipment, and their operation for any given purpose; provide all sorts of services 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 other abovementioned activities and goods, within the country and abroad. In order to meet the abovementioned goals, the Company may perform investments or participate as partner 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 relevant to the purposes described Paid-in Capital: ThUS$346,022 Profit for the period: ThUS$(137,747) Stake in 2021: 99.89804% YOY variation: 0.00% % of Holding assets: 3.71571% Chairman of the Board Andrés del Valle Board Members Andrés Bianchi Urdinola (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) Andrés del Valle (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. Paid-in Capital: ThUS$6,741 Stake in 2021: 99.89% YOY variation: 0.00% % of Holding assets: 0.05528% Board Members Ramiro Alfonsin Balza (LATAM Executive) Andrés Bianchi Urdinola (LATAM Executive) Roberto Alvo Milosawiewitsch (LATAM Executive) Financial Information 269 Integrated Report 2021General Manager Jose Benjamin Pate Moreno (LATAM Executive) Purpose: To participate in any act or activity that is not expressly forbidden by any existing law in Bahamas General Manager José Tomás Covarrubias Cervero (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$263,003 Stake in 2021: 99.98% YOY variation: 0.00% % of Holding assets: 0.89572% Board Members Andrés del Valle (LATAM Executive) Management Andrés del Valle (LATAM Executive) TRANSPORTE AÉREO S.A. Individualization: Joint Stock Corporation established in Chile. LAN CARGO INVERSIONES S.A. AND AFFILIATE Individualization: Joint Stock Corporation established in Chile. Purpose: a) To market air transportation in any of its forms, be it for passengers, mail, and/or cargo, and anything directly 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; Paid-in Capital: ThUS$2 Stake in 2021: 99.971% YOY variation: 0.00% % of Holding assets: 0.00771% General Manager Rene Pascua LAN CARGO OVERSEAS LIMITED AND AFFILIATES Individualization: Limited Liability Company incorporated in Bahamas Purpose: To participate in any act or activity that is not expressly forbidden by any existing law in Bahamas. c) Trade and development of activities related to travel, tourism, and lodging; Paid-in Capital: ThUS$32,469 Stake in 2021: 87.126% YOY variation: 0.00% % of Holding assets: 1.07523% Board Members Enrique Cueto Plaza (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) Roberto Alvo Milosawiewitsch (LATAM Executive) d) the development and/or participation in all kinds of investments, both in Chile and abroad, in matters directly or indirectly related to aeronautical affairs and/or other purposes; and e) development and operation of all other activities derived from and/ or related, connected, contributory, or complementary to the company’s corporate purpose. Paid-in Capital: ThUS$147 Stake in 2021: 99.00% YOY variation: 0.00% % of Holding assets: 1.09786% Board Members Andrés Bianchi Urdinola (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) Roberto Alvo Milosawiewitsch (LATAM Executive) General Manager Andrés del Valle (LATAM Executive) CONNECTA CORPORATION Individualization: Corporation established in the United States Purpose: Ownership, operating leasing, and subleasing of aircraft Paid-in Capital: ThUS$1 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.31366% General Manager Andrés Bianchi Urdinola Financial Information 270 Integrated Report 2021LÍNEA AÉREA CARGUERA DE COLOMBIA S.A.(SUBSIDIARY OF LAN CARGO INVERSIONES) Individualization: Joint Stock Corporation established in Colombia. Purpose: To provide public, commercial cargo, and correspondence 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 theoretical and practical instruction services, as well as training for its own and third-party aeronautical personnel in the various 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. Paid-in Capital: ThUS$796 Stake in 2021: 81.31% YOY variation: 0.00% % of Holding assets: 1.25865% Board Members: Jorge Nicolas Cortazar Cardoso (permanent member) Jose Mauricio Rodriguez Munera (permanent member) Jaime Antonio Gongora Esguerra (permanent member) Andrés Bianchi Urdinola (Alternate Member) Santiago Alvarez Matamoros (Alternate member) Helen Victoria Warner Sanchez (alternate member) Management Jaime Antonio Gongora Esguerra (permanent member) Erika Zarante Bahamon (Alternate member) MAS INVESTMENT LIMITED (A SUBSIDIARY OF LAN OVERSEAS LIMITED) Individualization: Limited Liability Company incorporated in Bahamas Purpose: To perform all activities that are not expressily forbidden by Bahamas law, and specifically, to hold stakes in other LAN affiliates. Paid-in Capital: ThUS$1,446 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.17276% Board Members: J. Richard Evans Carlton Mortimer Charlene Y. Wels Geoffrey D. Andrews INVERSIONES AÉREAS S.A (SUBSIDIARY OF LINEA AEREA CARGUERA DE COLOMBIA) Individualization: Joint Stock Corporation established in Peru Purpose: To promote, establish, organize, operate, and participate in the capital and equity of all types of trade companies, civil associations, industrial, commercial, service, or any other type of associations or companies, both national and foreign, as well as to participate in their management or settlement. *Acquisition, disposal, and overall trading in all types of stocks, equity interests, and any other security allowed by the law. *Providing or contracting technical, advisory, and consulting services, as well as signing contracts or agreements to pursue these goals Paid-in Capital: ThUS$263,430 Stake in 2021: 66.43% YOY variation: 0.00% % of Holding assets: 0.74434% Chairman of the Board Antonio Olortegui Marky Board Members Andrés Enrique del Valle Eitel Ramiro Diego Alfonsín Balza General Manager Antonio Olortegui Marky AMERICONSUL S.A DE C.V. (SUBSIDIARY OF MAS INVESTMENT LIMITED) Individualization: Variable Capital Corporation established in Mexico Purpose: To provide and receive all manner of technical, administrative, or counseling services for industrial, commercial, 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 2021: 99.80% YOY variation: 0.00% % of Holding assets: -0.02242% Management: Luis Ignacio Sierra Arriola Hector Ivan Iriarte Claudio Torres Financial Information 271 Integrated Report 2021AMERICONSULT DE GUATEMALA S.A. (SUBSIDIARY OF AMERICONSUL S.A DE C.V) Individualization: Joint Stock Corporation established in Guatemala Paid-in Capital: ThUS$20 Stake in 2021: 99.80% YOY variation: 0.00% % of Holding assets: 0.00875% 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 Management Luis Ignacio Sierra Arriola Treasurer: Alejandro Fernández Espinoza Luis Miguel Renguel López Tomás Nassar Pérez Marjorie Hernández Valverde Paid-in Capital: ThUS$76 Stake in 2021: 99.13% YOY variation: 0.00% % of Holding assets: 0.00% Chairman of the Board Luis Ignacio Sierra Arriola Board Members Carlos Fernando Pellecer Valenzuela Management Carlos Fernando Pellecer Valenzuela AMERICONSULT DE COSTA RICA S.A. (SUBSIDIARY OF AMERICONSUL S.A DE C.V) Incorporation: Joint Stock Corporation established in Costa Rica Purpose: General trade; industry, agriculture, and livestock LATAM AIRLINES PERU S.A. Incorporation: Joint Stock Corporation established in Peru on February 14, 1997 Purpose: Render air transportation services for passengers, cargo, and correspondence, both nationally and internationally, pursuant to current civil aeronautical legislation. Paid-in Capital: ThUS$43,445 Profit for the period: ThUS$(109,392) Stake in 2021: 99.81% YOY variation: 0.00% % of Holding assets: -0.64188% Chairman of the Board Cesar Emilio Rodríguez Larraín Salinas Board Members 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 Milosawiewitsch (LATAM Executive) LAN INVERSIONES S.A. Incorporation: Established as a joint stock company through the Public Deed dated January 23, 1990 before Notary Humberto Quezada M., recorded in the Santiago Commerce Registry on page 3,462 n° 1,833 of the year 1990, and published in the Official Journal of 2 February 1990 Purpose: Perform investments in all manner of goods, be they assets or real estate, tangible or intangible. Moreover, 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 Profit for the period: ThUS$90 Stake in 2021: 100.00% YOY variation: 0.0% % of Holding assets: 0.00931% Chairman of the Board: Andrés del Valle (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) Roberto Alvo Milosawiewitsch (LATAM Executive) General Manager Manuel Van Oordt General Manager Gregorio Bekes (LATAM Executive) Financial Information 272 Integrated Report 2021LATAM Travel Chile II S.A. LATAM TRAVEL S.R.L. LAN PAX GROUP S.A. Individualization: Joint Stock Corporation established in Chile Purpose: The operation, management, and representation of national or foreign companies or businesses in lodging, shipping, aviation, and tourism activities in general; brokerage of tourist services, such as: (a) the booking of seats and the sale of tickets in all kinds of domestic and international forms of transportation; (e) the lease and charter of aircraft, ships, buses, trains, and other forms of transportation for the rendering of tourist services; (f) offering air transportation in any form, whether for passengers, cargo, or mail; and (g) any other directly or indirectly related to the rendering of the services described above. (b) the booking, acquisition, and sale of accommodation and tourist services, tickets or bills to all types of shows, museums, monuments, and protected areas in the country; Paid-in Capital: ThUS$10 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: -0.00653% Incorporation: Limited Liability Company incorporated in Bolivia Purpose: The operation, management, and representation of national or foreign companies or businesses in lodging, shipping, aviation, and tourism activities in general Paid-in Capital: ThUS$0 Stake in 2021: 99.00% YOY variation: 0.00% % of Holding assets: (0.00011%) Board Members Julio Quintanilla Quiroga Sergio Antelmo Board Members Andrés del Valle (LATAM Executive) Roberto Alvo Milosawiewitsch (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) General Manager Claudia Caceres Araya (LATAM Executive) (c) the organization, promotion, and sale of the so-called tourist packages, understood as the set of tourist services (catering, transportation, accommodation, etc.), adjusted or projected at the request of the client at a pre-set price, to be operated within the national territory; (d) air, land, sea, and river tourist transportation within and outside the national territory; Incorporation: Established as a joint stock 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 personal or real estate, tangible or intangible. Within its line of business, the Company may create other types of companies of any sort; acquire rights in already existing corporations, 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 all manner of contracts conducive to its goals. e) Exercise the development and operation of all other activities derived from and/or related, connected, contributory, or complementary to the company’s corporate purpose Paid-in Capital: ThUS$16,925 Profit for the period: ThUS$(7,447) Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: -9.28638% Financial Information 273 Integrated Report 2021Board Members Andrés del Valle (LATAM Executive) Roberto Alvo Milosawiewitsch (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) are not expressly forbidden by law in compliance with its corporate purpose, and it has full legal capacity to acquire rights, contract obligations, and exercise all acts that are not expressly forbidden by law or statute. General Manager Andrés del Valle (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 companies, regardless of corporate purpose, established or to be established, within the Argentine Republic or abroad, via acquisition, 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 Paid-in Capital: ThUS$467,511 Stake in 2021: 99.984% YOY variation: 0.00% % of Holding assets: 0.40466% Board Members Manuel Maria Benites Jorge Luis Perez Alati Rosario Altgelt Management Manuel María Benites Jorge Luis Perez Alati Jeronimo Cortes Javier Norberto Macías Diego Potenza 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 country 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 airfare, land, river, and sea tickets, both nationally and abroad, or any other service related to the tourism industry in general. 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 convenient for said purpose, be they manual, mechanical, electronic, 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, licensing, and representation of all manner of goods, services, “know-how, ” and technology directly or indirectly related to the purpose described; market, by any means the technology 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 exchange, tourism, excursion, and tour programs; the brokerage 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 other tourist facilities; organization of trips and tourism for 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 their baggage; representing other national or foreign travel and tourism agencies, companies, or institutions, in order to render any of these services on their behalf. c) COMMISSIONER: 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 management, industrial, commercial, technical, and advertising areas, to be provided, when the nature of the issue Financial Information 274 Integrated Report 2021so requires, by certified professionals per the corresponding regulation, and the provision of organization and management, care, maintenance, and surveillance services, and of the suitable 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 establishment of new companies, via the awarding or securing of credits, loans, cash advances secured or unsecured by collateral or 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 expressly forbidden by law or statue, including making borrowings 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$5,640 Stake in 2021: 95.00% YOY variation: 0.00% % of Holding assets: -0.01771% Board member Jeronimo Cortes Javier Norberto Macías (Alternate) Management Jeronimo Cortes Javier Norberto Macías Diego Potenza ATLANTIC AVIATION INVESTMENTS LLC Individualization: Limited Liability Company incorporated in the United States Purpose: Any and all lawful business that the company may undertake Paid-in Capital: ThUS$1 Stake in 2021: 99.00% YOY variation: 0.00% % of Holding assets: 0.08602% Board Members Andrés del Valle Eitel Management: Andrés del Valle (LATAM Executive) LATAM AIRLINES ECUADOR S.A. (AEROLANE LÍNEAS AÉREAS NACIONALES DEL ECUADOR S.A.) Individualization: Joint Stock Corporation established in Ecuador Purpose: Combined air transport of passengers, cargo, and correspondence. Paid-in Capital: ThUS$491 Stake in 2021: 54.791% YOY variation: 0.0% % of Holding assets: 0.00730% Board Members Antonio Stagg (External) Manuel Van Oordt (LATAM Executive) Mariana Villagomez (External) Paid-in Capital: ThUS$31,000 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.11513% Board Members Xavier Rivera Monica Fistrovic – Professional Counsellor Mariela Anchundia General Manager Mariela Anchundia 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, personal or real estate assets, either in Chile or abroad General Manager 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 corporate purpose shall be the operation of national or international commercial air transportation services, in any form, and therefore, the entering into and execution of contracts for the transportation of passengers, objects or luggage, correspondence, and cargo in general, pursuant to the operating permits issued to this effect by the Special Administrative Unit of Civil Aeronautics, or the agency that may carry out said functions in the future, adhering fully to the provisions of the Code of Commerce, the Colombian Aviation Regulations, and any other rules issued on the matter. Likewise, to provide Financial Information 275 Integrated Report 2021maintenance 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: (b) review, inspect, or provide maintenance and/or repairs to its own or third-party aircraft, as well as spare parts and accessories, through the Company’s Aeronautical 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, airplanes, 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 maintenance to the aircraft; (c) enter into lease, charter, shared code, location or any other contracts on aircraft to exercise its purpose; (k) enter into contracts with third parties for the management and operation of the businesses it may organize to achieve its corporate purposes; including the rendering of tourist services under any mode permitted by law, such as travel agencies; (d) operate scheduled air transport lines for passengers, cargo, and mail and securities, as well as the vehicle for coordinating the development of social management; (e) integrate with like, similar, or complementary companies to develop their activity; (l) enter into contracts of companies and acquire shares or stakes in those already established, whether national or foreign; make contributions to both; (f) accept national or foreign representations of services of the same business or of complementary businesses; (m) merge with other companies and partner with like entities to pursue the development of aviation or for other trade purposes; (g) acquire property and real estate for the development of its social purposes, build such facilities or constructions, such as warehouses, offices etc., dispose of or tax them; (h) carry out imports and exports, as well as all foreign trade operations required; (i) take money on interest and provide personal, real, and bank guarantees, either on its own behalf or for third parties; (j) participate 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 obtain loans through bonds or other liability instruments; (n) promote, assist technically, finance or manage enterprises or companies related to the corporate purpose; (n) enter or execute any kind of civil or commercial, industrial, or financial contracts that are necessary or desirable for the achievement of their own ends; (o) conduct business and activities that seek customers, and obtain from the competent authorities the necessary authorizations and permits to render their services; (p) the development and performance of other activities arising from the corporate purpose and/or related, connected, contributory, or complementary activities thereto, (q) managing any lawful business or activity, whether or not in trade, provided that it is related to its corporate purpose, or that it allows the most rational exploitation of the public service to be rendered; and (r) make investments of any kind to use the funds and reserves that are constituted in accordance with the law or these bylaws Paid-in Capital: ThUS$3,389 Stake in 2021: 98.94% YOY variation: 0.00% % of Holding assets: -0.12836% Board Members Jorge Nicolas Cortazar Cardoso (permanent member) Jaime Antonio Gongora Esguerra (permanent member) Jose Mauricio Rodriguez Munera (permanent member) Gabriel Vallejo López (alternate member) Helen Victoria Warner Sanchez (alternate member) Santiago Alvarez Matamoros (Alternate member) Financial Information 276 Integrated Report 2021types of goods, supply and transfer of aircrafts, parts AND components, accessories, materials, and inputs, brokerage in formalizing insurance to cover the risks of the services contracted, and performance of all types of commercial transactions that normally take place in airports; financial transaction in general, except for those provided in the Financial Institutions Act and any others requiring a public tender process; VII) REPRESENTATIONS: Of national or foreign persons related to activities pertaining to its corporate purpose. 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 Nº 675 of the year 1998 Purpose: Its corporate purpose is to provide technical training and other types of related services Paid-in Capital: ThUS$633 Profit for the period: ThUS$181 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0.01155% VIII) INVESTING: Establish and participate in companies through shares, fostering their creation, investing in them the necessary capital for those ends, and rendering services to them within the limits established. For said purposes, the Company has full legal capacity to acquire rights, assume obligations, and exercise the acts not expressly forbidden to it by law and by these Bylaws Management Erika Zarante Bahamon Jaime Antonio Gongora Esguerra LAN ARGENTINA S.A (A SUBSIDIARY OF INVERSORA CORDILLERA S.A) Individualization: Joint Stock Corporation established in Argentina. Purpose: Perform, on its own behalf or for third parties, independently or in association with third parties in the country or abroad, the following activities: I) AVIATION: Air transportation in all its forms, scheduled and/or chartered (hired charter or air taxi), local or international, of persons AND things, correspondence, clearing, works, and air services in general, as a public or private concession; operate public services, pilot school, and personnel training in air navigation, design, engineering, research, assembly- manufacturing, import and/ or export of all sorts of aircrafts and their parts, equipment, accessories, and materials for air navigation, as well as render maintenance and technical assistance services to said crafts. III) TOURIST: Through the creation, development, and operation of resorts and properties destined to lodge people, as well as tourist activities in every form, including motor vehicle rentals and tourist reservation services. IV) SERVICES: Through the rendering of maintenance and technical assistance services for all types of aircraft, equipment, accessories, and material for air navigation, computer reservation services, transportation services for people and/or cargo and/ or correspondence, by land or water, as an accessory to air transportation and/ or integrating a combined transportation with the latter, as well as all sorts of assistance for air navigation activities, such as the supply of food and/or elements for use on board; II) COMMERCIAL: Through the purchase, sale, exchange, rental in all its forms, leasing, imports, and exports of all V) COMMISSIONS: Fulfill mandates and commissions; VI) FINANCIAL: Perform any type of Paid-in Capital: ThUS$505,077 Stake in 2021: 95.00% YOY variation: 0.00% % of Holding assets: 0.36174% Board Members Sebastián Acuto (LATAM Executive) Ramiro Alfonsin Balza (LATAM Executive) Hernán Pasman (LATAM Executive) General Manager Guido Opazo Aneotz (LATAM Executive) Board Members Manuel Maria Benites Jorge Luis Perez Alati Rosario Altgelt Management Manuel María Benites Jorge Luis Perez Alati Jeronimo Cortes Diego Potenza Financial Information 277 Integrated Report 2021JARLETUL S.A. PROFESIONAL AIRLINE SERVICES INC. LATAM FINANCE LIMITED PEUCO FINANCE LIMITED Incorporation: Joint Stock Corporation established in Brazil in November 2017. Incorporation: Company established in the United States in February 1994 Incorporation: Company established in the Caiman Islands in September 2016 Incorporation: Company established in the Caiman Islands in November 2015 Purpose: Its corporate purpose is operation, management, and representation of national or foreign companies or businesses in lodging, shipping, aviation, and tourism activities in general Paid-in Capital: ThUS$0 Profit for the period: ThUS$(50) Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: (0.0082%) Chairman of the Board Javier Norberto Macías Raschía Board Members Fernando Augusto Carneiro de Carvalho Patricia Mendoza Mallo Purpose: Its corporate purpose is to provide airport staffing services. Purpose: Its purpose is to issue securitized bonds Purpose: Its purpose is to participate in financing operations with other companies of LATAM Group Paid-in Capital: ThUS$63 Profit for the period: ThUS$278 Stake in 2021: 100.00% YOY var.: 0.00% % of Holding assets: 0.02142% Paid-in Capital: ThUS$0 Profit for the period: ThUS$(104,512) Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: (2.84011)% Board Members Francisco Arana Chairman of the Board Not applicable Board Members Andrés del Valle Eitel Ramiro Alfonsin Balza Joaquín Arias Acuña Paid-in Capital: ThUS$0 Profit for the period: ThUS$0 Stake in 2021: 100.00% YOY variation: 0.00% % of Holding assets: 0% Chairman of the Board Not applicable Board Members Andrés del Valle Eitel Joaquín Arias Acuña Financial Information 278 Integrated Report 2021Affiliates and subsidiaries - Financial statements LAN Cargo S.A. and Affiliates Financial Statement ASSETS ASSETS Lan Cargo S.A. and Affiliates Lan Cargo S.A. and Affiliates Financial Statement Financial Statement Total current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities EQUITY EQUITY Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Non-controlling interest Non-controlling interest Total equity Total equity Total equity and liabilities Total equity and liabilities At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 695,341 695,341 469,437 469,437 1,164,778 1,164,778 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 788,956 788,956 673,874 673,874 1,462,830 1,462,830 At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 785,977 785,977 278,667 278,667 1,064,644 1,064,644 164,653 164,653 (64,519) (64,519) 100,134 100,134 1,164,778 1,164,778 811,274 811,274 133,172 133,172 944,446 944,446 578,004 578,004 (59,620) (59,620) 518,384 518,384 1,462,830 1,462,830 LAN Cargo S.A. and Affiliates Consolidated Statement of Earnings by Function Lan Cargo S.A. and Affiliates Consolidated Statement of Earnings by Function Revenues from ordinary activities Cost of sales Gross profit (loss) Gain (Loss) from operational activities Profit (loss), before tax Income tax expenses Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain(Loss) attributable to non-controlling interests Profit (Loss) for the period At December 31 2021 THUS$ At December 31 2020 THUS$ 1,132,425 (1,244,086) (111,661) (281,759) (270,123) 22,985 (247,138) (242,249) (4,889) (247,138) 532,547 (741,113) (208,566) (238,021) (268,048) (402) (268,450) (192,820) (75,630) (268,450) Financial Information 279 Integrated Report 2021Lan Cargo S.A. and Affiliates Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD Lan Cargo S.A. and Affiliates Consolidated Statement of Comprehensive Income Componentes de otro resultado integral que no se reclasificarán al resultado de ejercicio, antes de LAN Cargo S.A. and Affiliates Consolidated Statement of Comprehensive Income Otro resultado integral, antes de impuestos, ganancia (pérdida) por nuevas mediciones de planes de beneficios definidos Lan Cargo S.A. and Affiliates Lan Cargo S.A. and Affiliates Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD Total other comprehensive income not to be reclassified as Income before tax for the period Componentes de otro resultado integral que no se Componentes de otro resultado integral que se reclasificarán al resultado de ejercicio, antes de reclasificarán al resultado del ejercicio Otro resultado integral, antes de impuestos, ganancia (pérdida) por nuevas PROFIT (LOSS) FOR THE PERIOD Diferencia de cambio de conversion antes de impuesto mediciones de planes de beneficios definidos PROFIT (LOSS) FOR THE PERIOD Componentes de otro resultado integral que no se Ganancia (Pérdida) por diferencia de cambio de conversión, antes de impuesto Total other comprehensive income not to be reclassified as Income Componentes de otro resultado integral que no se reclasificarán al resultado de ejercicio, antes de before tax for the period reclasificarán al resultado de ejercicio, antes de Total other comprehensive income not to be reclassified as Income Componentes de otro resultado integral que se before tax for the period reclasificarán al resultado del ejercicio Otro resultado integral, antes de impuestos, ganancia (pérdida) por nuevas Otro resultado integral, antes de impuestos, ganancia (pérdida) por nuevas mediciones de planes de beneficios definidos mediciones de planes de beneficios definidos Diferencia de cambio de conversion antes de impuesto Total other comprehensive income not to be reclassified as Income Other components of other comprehensive Income, before tax Total other comprehensive income not to be reclassified as Income before tax for the period before tax for the period Tax on accrued earnings related to components of other comprehensive Ganancia (Pérdida) por diferencia de cambio de conversión, antes de impuesto Income not to be classified as earnings for the period Componentes de otro resultado integral que se Componentes de otro resultado integral que se reclasificarán al resultado del ejercicio reclasificarán al resultado del ejercicio Diferencia de cambio de conversion antes de impuesto Diferencia de cambio de conversion antes de impuesto Other comprehensive income Total other comprehensive income not to be reclassified as Income before tax for the period Total comprehensive income Ganancia (Pérdida) por diferencia de cambio de conversión, antes de impuesto Other components of other comprehensive Income, before tax Ganancia (Pérdida) por diferencia de cambio de conversión, antes de impuesto Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Tax on accrued earnings related to components of other comprehensive Total other comprehensive income not to be reclassified as Income Comprehensive income attributable to non-controlling interests Income not to be classified as earnings for the period Total other comprehensive income not to be reclassified as Income before tax for the period before tax for the period TOTAL COMPREHENSIVE INCOME Other comprehensive income Other components of other comprehensive Income, before tax Other components of other comprehensive Income, before tax Total comprehensive income Tax on accrued earnings related to components of other comprehensive Tax on accrued earnings related to components of other comprehensive Income not to be classified as earnings for the period Income not to be classified as earnings for the period Comprehensive income attributable to the parent company's owners Other comprehensive income Comprehensive income attributable to non-controlling interests Other comprehensive income Total comprehensive income TOTAL COMPREHENSIVE INCOME Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners Comprehensive income attributable to non-controlling interests Comprehensive income attributable to non-controlling interests TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME At December 31 At December 31 . 2021 THUS$ . 2020 THUS$ (247,148) (268,450) At December 31 . 2021 THUS$ (369) At December 31 . 2020 (369) THUS$ (247,148) At December 31 1,118 At December 31 . . 2021 2021 THUS$ THUS$ (247,148) 265 (369) (247,148) (268,450) At December 31 (594) At December 31 . . 2020 2020 THUS$ THUS$ (268,450) 265 (369) (268,450) 265 1,118 (369) 220 (369) 1,338 265 1,118 1,118 265 (303) 1,035 265 220 265 (246,113) 265 1,338 265 (241,214) (4,899) (303) 220 220 (246,113) 1,035 1,338 1,338 (246,113) (303) (303) (241,214) 1,035 (4,899) 1,035 (246,113) (246,113) (246,113) (241,214) (241,214) (4,899) (4,899) (246,113) (246,113) 265 (594) (369) (347) (369) (941) 265 (594) (594) 265 - (941) 265 (347) 265 (269,391) 265 (941) 265 (193,601) (75,630) - (347) (347) (269,231) (941) (941) (941) (269,391) - - (193,601) (941) (75,630) (941) (269,391) (269,231) (269,391) (193,601) (193,601) (75,630) (75,630) (269,231) (269,231) LAN Cargo S.A. and Affiliates Statement of Changes in Consolidated Equity Lan Cargo S.A. and Affiliates Statement of Changes in Consolidated Equity Equity attributable to owners of the parent company THUS$ non- controlling stake THUS$ Equity total THUS$ 578,004 (59,620) 518,384 (242,249) 1,035 (241,214) (4,899) - (4,899) (247,148) 1,035 (246,113) Equity 01/01/21 Changes in equity Comprehensive income Profit (loss) Other comprehensive income Total comprehensive income Increase (decrease) from transfers and other changes (172,137) - (172,137) Final balance of current period 12/31/21 164,653 (64,519) 100,134 Financial Information 280 Integrated Report 2021Lan Cargo S.A. and Affiliates Consolidated Cash Flow Statement –- Direct Method LAN Cargo S.A. and Affiliates Consolidated Cash Flow Statement – Direct Method Lan Cargo S.A. and Affiliates Lan Cargo S.A. and Affiliates Consolidated Cash Flow Statement –- Direct Method Consolidated Cash Flow Statement –- Direct Method Net cash flows from operating activities Net cash flows used in investment activities Net cash flows from operating activities Net cash flows from operating activities Net cash flows used in investment activities Net cash flows from (used in) financing activities Net cash flows used in investment activities Net Increase (decrease) In cash and cash equivalents, before effect of Net cash flows from (used in) financing activities changes in F/X rate Net cash flows from (used in) financing activities EFECTIVO Y EQUIVALENTES AL EFECTIVO AL PRINCIPIO DEL EJERCICIO Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD EFECTIVO Y EQUIVALENTES AL EFECTIVO AL PRINCIPIO DEL EJERCICIO EFECTIVO Y EQUIVALENTES AL EFECTIVO AL PRINCIPIO DEL EJERCICIO CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 . 2021 At December 31 THUS$ At December 31 . . 2021 2021 THUS$ THUS$ 6,449 (6,900) 6,449 6,449 (6,900) (7,105) (6,900) (7,105) (7,555) (7,105) 54,607 (7,555) (7,555) 47,052 54,607 54,607 47,052 47,052 At December 31 . 2020 At December 31 THUS$ At December 31 . . 2020 27,416 2020 THUS$ THUS$ (20,669) 27,416 27,416 (20,669) (10,166) (20,669) (10,166) (3,710) (10,166) 58,317 (3,710) (3,710) 54,607 58,317 58,317 54,607 54,607 Inversiones LAN S.A. Financial Statement Inversiones LAN S.A. Inversiones LAN S.A. Financial Statement Financial Statement Inversiones LAN S.A. Financial Statement ASSETS ASSETS ASSETS Total current assets Total non-current assets Total current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES Total current liabilities Total non-current liabilities Total current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities Total liabilities EQUITY EQUITY EQUITY Net equity attributable to the parent company's owners Non-controlling interest Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Non-controlling interest Non-controlling interest Total equity Total equity Total equity Total equity and liabilities Total equity and liabilities Total equity and liabilities At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 . 2021 . . THUS$ 2021 2021 THUS$ THUS$ 1,226 58 1,226 1,226 58 58 1,284 1,284 1,284 . 2021 . . THUS$ 2021 2021 THUS$ THUS$ . 2020 . . THUS$ 2020 2020 THUS$ THUS$ 1,336 58 1,336 1,336 58 58 1,394 1,394 1,394 . 2020 . . THUS$ 2020 2020 THUS$ THUS$ At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 - 45 - - 45 45 45 45 45 1,239 - 1,239 1,239 - - 1,239 1,239 1,239 1,284 1,284 1,284 21 44 21 21 44 44 65 65 65 1,329 - 1,329 1,329 - - 1,329 1,329 1,329 1,394 1,394 1,394 Financial Information 281 Integrated Report 2021Inversiones LAN S.A. Consolidated Statement of Earning by Function Inversiones LAN S.A. Inversiones LAN S.A. Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Inversiones LAN S.A. Statement of Changes in Consolidated Equity Inversiones LAN S.A. Statement of Changes in Consolidated Equity At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ . . 2020 2020 THUS$ THUS$ Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Income tax expenses Income tax expenses Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Profit (Loss) for the period Profit (Loss) for the period 6 6 (90) (90) - - (90) (90) (90) (90) (90) (90) (7) (7) 23 23 27 27 50 50 50 50 50 50 Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 Equity attributable to owners of the parent company THUS$ Non- controlling stake THUS$ 1,329 (90) 1,239 - - - Equity total THUS$ 1,329 (90) 1,239 Inversiones LAN S.A. Consolidated Statement of Comprehensive Income Inversiones LAN S.A. Inversiones LAN S.A. Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income Inversiones LAN S.A. Consolidated Cash Flow Statement - Direct Method Inversiones LAN S.A. Consolidated Cash Flow Statement �- Direct Method PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners Comprehensive income attributable to non-controlling interests Comprehensive income attributable to non-controlling interests TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (90) (90) . . 2020 2020 THUS$ THUS$ 50 50 (90) (90) (90) (90) (90) (90) 50 50 50 50 50 50 Net cash flows from operating activities Effects of F/X variations on cash and cash equivalents Net increase in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 2021 THUS$ 2020 THUS$ - (77) (77) 406 24 - 24 483 Financial Information 282 Integrated Report 2021Lan Pax Group and Affiliates Lan Pax Group and Affiliates Financial Statement Lan Pax Group and Affiliates Financial Statement Financial Statement LAN Pax Group and Affiliates Financial Statement ASSETS ASSETS ASSETS Total current assets Total current assets Total non-current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total non-current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities Total liabilities EQUITY EQUITY EQUITY Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Non-controlling interest Net equity attributable to the parent company's owners Non-controlling interest Total equity Non-controlling interest Total equity Total equity Total equity and liabilities Total equity and liabilities Total equity and liabilities LAN Pax Group and Affiliates Consolidated Statement of Earnings by Function Lan Pax Group and Affiliates Lan Pax Group and Affiliates Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Income tax expenses Income tax expenses Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Gain(Loss) attributable to non-controlling interests Gain(Loss) attributable to non-controlling interests Profit (Loss) for the period Profit (Loss) for the period At December 31 At December 31 . . 2021 2021 THUS$ THUS$ At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 310,688 310,688 (281,846) (281,846) 28,842 28,842 (48,133) (48,133) (6,624) (6,624) (823) (823) (7,447) (7,447) (7,289) (7,289) (158) (158) (7,447) (7,447) 187,176 187,176 (266,110) (266,110) (78,934) (78,934) 28,059 28,059 (260,367) (260,367) (42,427) (42,427) (302,794) (302,794) (291,257) (291,257) (11,537) (11,537) (302,794) (302,794) At December 31 At December 31 . At December 31 . 2021 . 2021 THUS$ 2021 THUS$ THUS$ 232,185 232,185 200,085 232,185 200,085 432,270 200,085 432,270 432,270 At December 31 At December 31 . At December 31 . 2021 . 2021 THUS$ 2021 THUS$ THUS$ 1,412,684 1,412,684 236,031 1,412,684 236,031 1,648,715 236,031 1,648,715 1,648,715 (1,219,473) (1,219,473) 3,028 (1,219,473) 3,028 (1,216,445) 3,028 (1,216,445) 432,270 (1,216,445) 432,270 432,270 At December 31 At December 31 . At December 31 . 2020 . 2020 THUS$ 2020 THUS$ THUS$ 204,062 204,062 200,875 204,062 200,875 404,937 200,875 404,937 404,937 At December 31 At December 31 . At December 31 . 2020 . 2020 THUS$ 2020 THUS$ THUS$ 1,415,327 1,415,327 209,610 1,415,327 209,610 1,624,937 209,610 1,624,937 1,624,937 (1,220,319) (1,220,319) 319 (1,220,319) 319 (1,220,000) 319 (1,220,000) 404,937 (1,220,000) 404,937 404,937 Financial Information 283 Integrated Report 2021LAN Pax Group and Affiliates Statement of Changes in Consolidated Equity Lan Pax Group and Affiliates Statement of Changes in Consolidated Equity LAN Pax aGroup and Affiliates Consolidated Cash Flow Statement – Direct Method Lan Pax Group and Affiliates Lan Pax Group and Affiliates Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Equity attributable to owners of the parent company THUS$ Non- controlling stake THUS$ Equity total THUS$ (1,220,319) (213,711) 319 13,227 (1,220,000) (200,484) Equity 01/01/21 Total comprehensive income Increase (decrease) from transfers and other changes 214,557 (10,518) 204,039 Final balance of current period 12/31/21 Net cash flows from operating activities Net cash flows from operating activities Net cash flows used in investment activities Net cash flows used in investment activities Net cash flows from (used in) financing activities Net cash flows from (used in) financing activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Effects of F/X variations on cash and cash equivalents Effects of F/X variations on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents (1,219,473) 3,028 (1,216,445) CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 . . 2021 2021 THUS$ THUS$ At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 2,596 2,596 11,587 11,587 (115) (115) 14,068 14,068 (3,838) (3,838) 10,230 10,230 71,537 71,537 (61,606) (61,606) (5,607) (5,607) (2,224) (2,224) (69,437) (69,437) 12,010 12,010 (57,427) (57,427) 61,307 61,307 Financial Information 284 Integrated Report 2021 Latam Finance Limited Latam Finance Limited Financial Statement Financial Statement LATAM Finance Limited Financial Statement ASSETS ASSETS Total current assets Total current assets TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities EQUITY EQUITY Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Total equity Total equity Total equity and liabilities Total equity and liabilities At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 1,310,734 1,310,734 1,310,734 1,310,734 . . 2021 2021 THUS$ THUS$ . . 2020 2020 THUS$ THUS$ 1,310,735 1,310,735 1,310,735 1,310,735 . . 2020 2020 THUS$ THUS$ At December 31 At December 31 At December 31 At December 31 LATAM Finance Limited Consolidated Statement of Comprehensive Income Latam Finance Limited Latam Finance Limited Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (104,512) (104,512) (104,512) (104,512) . . 2020 2020 THUS$ THUS$ (105,100) (105,100) (105,100) (105,100) LATAM Finance Limited Statement of Changes in Consolidated Equity LATAM Finance Limited Statement of Changes in Consolidated Equity 187,083 187,083 1,501,739 1,501,739 1,688,822 1,688,822 (378,088) (378,088) (378,088) (378,088) 1,310,734 1,310,734 82,572 82,572 1,501,739 1,501,739 1,584,311 1,584,311 (273,576) (273,576) (273,576) (273,576) 1,310,735 1,310,735 Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 Equity attributable to owners of the parent company THUS$ (273,576) (104,512) (378,088) Non- controlling stake THUS$ - - - Equity total THUS$ (273,576) (104,512) (378,088) LATAM Finance Limited Consolidated Statement of Earnings by Function Latam Finance Limited Latam Finance Limited Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Latam Finance Limited LATAM Finance Limited Consolidated Cash Flow Statement �- Direct Method Latam Finance Limited Consolidated Cash Flow Statement – Direct Method Consolidated Cash Flow Statement �- Direct Method Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Profit (Loss) for the period Profit (Loss) for the period At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ - - (104,511) (104,511) (104,511) (104,511) (104,512) (104,512) (104,512) (104,512) (104,512) (104,512) . . 2020 2020 THUS$ THUS$ 5 5 (105,103) (105,103) (105,098) (105,098) (105,100) (105,100) (105,100) (105,100) (105,100) (105,100) Net cash flows from operating activities Net cash flows used in investment activities Net cash flows from operating activities Net cash flows from (used in) financing activities Net cash flows used in investment activities Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 At December 31 At December 31 . 2021 . THUS$ 2021 THUS$ - (1) - - (1) - (1) (1) 116 116 . 2020 . THUS$ 2020 THUS$ (168) 51,184 (168) (51,982) 51,184 (51,982) (966) (966) 117 117 Financial Information 285 Integrated Report 2021 Professional Airline Services INC Financial Statement Professional Airline Services INC Financial Statement Professional Airline Services INC Consolidated Statement of Comprehensive Income Professional Airline Services INC Professional Airline Services INC Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income ASSETS Total current assets TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES Total current liabilities Total liabilities EQUITY Net equity attributable to the parent company's owners Total equity Total equity and liabilities At December 31 At December 31 2021 THUS$ 33,766 33,766 2020 THUS$ 17,570 17,570 At December 31 At December 31 2021 THUS$ 2020 THUS$ 30,915 30,915 2,851 2,851 33,766 14,997 14,997 2,573 2,573 17,570 Professional Airline Services INC Consolidated Statement of Earnings by Function Professional Airline Services INC Professional Airline Services INC Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Profit (Loss) for the period Profit (Loss) for the period Income tax expenses Income tax expenses At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 61,572 61,572 (33,765) (33,765) 27,807 27,807 478 478 478 478 (200) (200) 278 278 . . 2020 2020 THUS$ THUS$ 51,336 51,336 (28,022) (28,022) 23,314 23,314 1,179 1,179 1,179 1,179 (165) (165) 1,014 1,014 PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income Professional Airline Services INC Statement of Changes in Consolidated Equity Professional Airline Services INC Statement of Changes in Consolidated Equity Equity attributable to owners of the parent company THUS$ Equity total THUS$ 2,573 278 2,573 278 2,851 2,851 Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 Professional Airline Services INC Consolidated Cash Flow Statement – Direct Method Professional Airline Services INC Professional Airline Services INC Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 278 278 278 278 . . 2020 2020 THUS$ THUS$ 1,014 1,014 1,014 1,014 At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 2,694 2,694 2,694 2,694 2,694 2,694 189 189 2,883 2,883 . . 2020 2020 THUS$ THUS$ (1,749) (1,749) (1,749) (1,749) (1,749) (1,749) 1,938 1,938 189 189 Financial Information 286 Integrated Report 2021 Holdco I S.A. Financial Statement Holdco I S.A. Consolidated Statement of Comprehensive Income Holdco I S.A. Consolidated Statement of Comprehensive Income Holdco I S.A. Financial Statement ASSETS Total current assets Total non-current assets TOTAL ASSETS At December 31 At December 31 . 2021 THUS$ - 351,587 . 2020 THUS$ 6 351,587 351,587 351,593 LIABILITIES AND EQUITY At December 31 At December 31 LIABILITIES Total current liabilities Total liabilities EQUITY Net equity attributable to the parent company's owners Total equity Total equity and liabilities Holdco I S.A. Consolidated Statement of Earnings by Function Holdco I S.A. Consolidated Statement of Earnings by Function Gain (Loss) from operational activities Exchange difference Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Profit (Loss) for the period . 2021 THUS$ 2,740 2,740 348,847 348,847 351,587 . 2020 THUS$ 2,152 2,152 349,441 349,441 351,593 At December 31 At December 31 . 2021 THUS$ . 2020 THUS$ (993) 399 (594) (594) (594) - (111) (111) (111) (111) PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners TOTAL COMPREHENSIVE INCOME Holdco I S.A. Statement of Changes in Consolidated Equity Holdco I S.A. Statement of Changes in Consolidated Equity Equity attributable to owners of the parent company THUS$ Non- controlling stake THUS$ 349,441 (594) 348,847 - - - Equity total THUS$ 349,441 (594) 348,847 Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 Holdco I S.A. Consolidated Cash Flow Statement – Direct Method Holdco I S.A. Holdco I S.A. Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities At December 31 At December 31 . 2021 THUS$ (594) (594) (594) (594) . 2020 THUS$ (111) (111) (111) (111) At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ . . 2020 2020 THUS$ THUS$ Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (6) (6) (6) (6) - - - - - - 6 6 Financial Information 287 Integrated Report 2021 Jarletul S.A. Jarletul S.A. Financial Statement Jarletul S.A. Financial Statement Financial Statement Jarletul S.A. Financial Statement ASSETS ASSETS ASSETS Total current assets Total current assets Total non-current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total current liabilities Total liabilities Total liabilities Total liabilities EQUITY EQUITY EQUITY Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Total equity Net equity attributable to the parent company's owners Total equity Total equity Total equity and liabilities Total equity and liabilities Total equity and liabilities Jarletul S.A. Consolidated Statement of Earnings by Function Jarletul S.A. Jarletul S.A. Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Income tax expenses Income tax expenses Profit (Loss) for the period Profit (Loss) for the period Jarletul S.A. Consolidated Statement of Comprehensive Income Jarletul S.A. Jarletul S.A. Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income Jarletul S.A. Statement of Changes in Consolidated Equity Jarletul S.A. Statement of Changes in Consolidated Equity At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (50) (50) (50) (50) . . 2020 2020 THUS$ THUS$ (332) (332) (332) (332) At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 . . 2021 . 2021 THUS$ 2021 THUS$ THUS$ 22 22 2 22 2 24 2 24 24 . . 2021 . 2021 THUS$ 2021 THUS$ THUS$ 1,116 1,116 1,116 1,116 1,116 1,116 . . 2020 . 2020 THUS$ 2020 THUS$ THUS$ 35 35 2 35 2 37 2 37 37 . . 2020 . 2020 THUS$ 2020 THUS$ THUS$ 1,079 1,079 1,079 1,079 1,079 1,079 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 (1,092) (1,092) (1,092) (1,092) (1,092) 24 (1,092) 24 24 (1,042) (1,042) (1,042) (1,042) (1,042) 37 (1,042) 37 37 Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 Equity attributable to owners of the Parent company THUS$ Non- controlling Stake THUS$ (1,042) (50) (1,092) - - - Equity total THUS$ (1,042) (50) (1,092) At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ - - - - - - (47) (47) (47) (47) (3) (3) (50) (50) . . 2020 2020 THUS$ THUS$ 69 69 (30) (30) 39 39 (317) (317) (327) (327) (5) (5) (332) (332) Jarletul S.A. Consolidated Cash Flow Statement – Direct Method Jarletul S.A. Jarletul S.A. Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (10) (10) (10) (10) (10) (10) 22 22 . . 2020 2020 THUS$ THUS$ (91) (91) (91) (91) (91) (91) 32 32 Financial Information 288 Integrated Report 2021 LATAM Airlines Perú S.A. Financial Statement ASSETS ASSETS ASSETS Latam Airlines Perú S.A. Latam Airlines Perú S.A. Financial Statement Latam Airlines Perú S.A. Financial Statement Financial Statement Total current assets Total current assets Total non-current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total non-current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities Total liabilities EQUITY EQUITY EQUITY Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Total equity Net equity attributable to the parent company's owners Total equity Total equity Total equity and liabilities Total equity and liabilities Total equity and liabilities LATAM Airlines Perú S.A. Consolidated Statement of Earnings by Function Latam Airlines Perú S.A. Latam Airlines Perú S.A. Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Income tax expenses Income tax expenses Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Profit (Loss) for the period Profit (Loss) for the period At December 31 At December 31 . At December 31 . 2021 . 2021 THUS$ 2021 THUS$ THUS$ At December 31 At December 31 . At December 31 . 2020 . 2020 THUS$ 2020 THUS$ THUS$ 454,266 454,266 30,122 454,266 30,122 484,388 30,122 484,388 484,388 629,910 629,910 31,811 629,910 31,811 661,721 31,811 661,721 661,721 At December 31 At December 31 . At December 31 . 2021 . 2021 THUS$ 2021 THUS$ THUS$ At December 31 At December 31 . At December 31 . 2020 . 2020 THUS$ 2020 THUS$ THUS$ Latam Airlines Perú S.A. LATAM Airlines Perú S.A. Latam Airlines Perú S.A. Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners LATAM Airlines Perú S.A. Statement of Changes in Consolidated Equity Latam Airlines Perú S.A. Statement of Changes in Consolidated Equity At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (109,390) (109,390) (109,390) (109,390) (109,390) (109,390) (109,390) (109,390) At December 31 At December 31 . . 2020 2020 THUS$ THUS$ (175,486) (175,486) (175,486) (175,486) (175,486) (175,486) (175,486) (175,486) 414,997 414,997 2,070 414,997 2,070 2,070 417,067 417,067 417,067 67,321 67,321 67,321 67,321 67,321 484,388 67,321 484,388 484,388 484,450 484,450 1,648 484,450 1,648 1,648 486,098 486,098 486,098 175,623 175,623 175,623 175,623 175,623 661,721 175,623 661,721 661,721 Equity attributable to owners of the parent company THUS$ Non- controlling stake THUS$ Equity 01/01/21 Total comprehensive income Total transactions with shareholders Final balance of current period 12/31/21 175,623 (109,394) 1,092 67,321 - - - - Equity total THUS$ 175,623 (109,394) 1,092 67,321 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 584,929 584,929 (614,102) (614,102) (29,173) (29,173) (93,410) (93,410) (109,180) (109,180) (210) (210) (109,390) (109,390) (109,390) (109,390) (109,390) (109,390) 372,255 372,255 (467,622) (467,622) (95,367) (95,367) (165,263) (165,263) (171,522) (171,522) (3,964) (3,964) (175,486) (175,486) (175,486) (175,486) (175,486) (175,486) LATAM Airlines Perú S.A. Consolidated Cash Flow Statement – Direct Method Latam Airlines Perú S.A. Latam Airlines Perú S.A. Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities Net cash flows used in investment activities Net cash flows used in investment activities Net cash flows from (used in) financing activities Net cash flows from (used in) financing activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 . . 2021 2021 THUS$ THUS$ At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 37,204 37,204 (868) (868) (217) (217) 36,119 36,119 36,119 36,119 81,682 81,682 (263,744) (263,744) (260) (260) 270,391 270,391 6,387 6,387 6,387 6,387 45,628 45,628 Financial Information 289 Integrated Report 2021 Latam T ravel Chile II S.A. Estado de Flujos de Efectivo Consolidado - Método Directo Flujos de efectivo netos procedentes de actividades de operación Flujos de efectivo netos utilizados en actividades de inversión Flujos de efectivo netos procedentes de (utilizados en) actividades de financiación Incremento neto (disminución en el efectivo y equivalentes al efectivo, antes del efecto de los cambios en la tasa de cambio Incremento (disminución) neto de efectivo y equivalentes al EFECT IVO Y EQUIVALENT ES AL EFECT IVO AL FINAL DEL EJERCICIO ACT IVOS Latam T ravel S.R.L. Estado de Situación Financiera LATAM Travel Chile II S.A. Latam Travel Chile II S.A. Latam Travel Chile II S.A. Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income T otal activos corrientes At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ . . 2020 2020 THUS$ THUS$ 29 29 29 29 29 29 29 29 T otal activos PASIVOS Y PAT RIMONIO PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners PASIVOS TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME T otal pasivos corrientes T otal pasivos LATAM Travel Chile II S.A. Statement of Changes in Consolidated Equity Latam Travel Chile II S.A. Statement of Changes in Consolidated Equity PAT RIMONIO Patrimonio atribuible a los propietarios de la controladora T otal patrimonio T otal patrimonio y pasivos Equity attributable to owners of the parent company THUS$ Non- controlling stake THUS$ Equity total THUS$ Al 31 de Al 31 de diciembre de diciembre de 2021 MUS$ 2020 MUS$ (10) (9) - (19) (19) 241 195 (4) (465) (274) (274) 260 Al 31 de diciembre de 2021 MUS$ 64 64 Al 31 de (216) diciembre de (216) (216) 2021 (216) MUS$ (216) (216) (216) (216) 132 132 (68) (68) 64 Al 31 de diciembre de 2020 MUS$ 1.128 1.128 Al 31 de diciembre de 2020 MUS$ 1.173 1.173 (45) (45) 1.128 Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 (898) 29 (869) - - - (898) 29 (869) Latam Travel Chile II S.A. LATAM Travel Chile II S.A. Latam Travel Chile II S.A. Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement – Direct Method Consolidated Cash Flow Statement �- Direct Method At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ . . 2020 2020 THUS$ THUS$ Net cash flows from operating activities Net cash flows from operating activities Net cash flows used in investment activities Net cash flows used in investment activities Net cash flows from (used in) financing activities Net cash flows from (used in) financing activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (10) (10) (9) (9) - - (19) (19) (19) (19) 241 241 195 195 (4) (4) (465) (465) (274) (274) (274) (274) 260 260 Financial Information 290 LATAM Travel Chile II S.A. Financial Statement ASSETS ASSETS Latam Travel Chile II S.A. Latam Travel Chile II S.A. Financial Statement Financial Statement Total current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities EQUITY EQUITY Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Total equity Total equity Total equity and liabilities Total equity and liabilities LATAM Travel Chile II S.A. Consolidated Statement of Earnings by Function Latam Travel Chile II S.A. Latam Travel Chile II S.A. Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Income tax expenses Income tax expenses Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Profit (Loss) for the period Profit (Loss) for the period At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 251 251 337 337 588 588 2021 2021 THUS$ THUS$ . . 2020 2020 THUS$ THUS$ 293 293 650 650 943 943 2020 2020 THUS$ THUS$ At December 31 At December 31 At December 31 At December 31 1,457 1,457 - - 1,457 1,457 (869) (869) (869) (869) 588 588 1,625 1,625 216 216 1,841 1,841 (898) (898) (898) (898) 943 943 At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ - - (6) (6) (6) (6) 86 86 84 84 (55) (55) 29 29 29 29 29 29 . . 2020 2020 THUS$ THUS$ 407 407 (19) (19) 388 388 (599) (599) (599) (599) 383 383 (216) (216) (216) (216) (216) (216) Integrated Report 2021 LATAM Travel S.R.L. Financial Statement ASSETS Total current assets TOTAL ASSETS Latam Travel S.R.L. Financial Statement LATAM Travel S.R.L. Consolidated Statement of Comprehensive Income Latam Travel S.R.L. Latam Travel S.R.L. Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income At December 31 At December 31 . 2021 THUS$ 64 64 . 2020 THUS$ 1,128 1,128 PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Total comprehensive income Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners LIABILITIES AND EQUITY At December 31 At December 31 TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (23) (23) (23) (23) . . 2020 2020 THUS$ THUS$ (68) (68) (68) (68) (23) (23) (23) (23) (68) (68) (68) (68) LIABILITIES Total current liabilities Total liabilities EQUITY Net equity attributable to the parent company's owners Total equity Total equity and liabilities LATAM Travel S.R.L. Consolidated Statement of Earnings by Function Latam Travel S.R.L. Latam Travel S.R.L. Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Revenues from ordinary activities Revenues from ordinary activities Gross profit (loss) Gross profit (loss) Profit (loss), before tax Profit (loss), before tax Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Profit (Loss) for the period Profit (Loss) for the period . 2021 THUS$ . 2020 THUS$ 132 132 (68) (68) 64 1,173 1,173 (45) (45) 1,128 LATAM Travel S.R.L. Latam Travel S.R.L. Statement of Changes in Consolidated Equity Statement of Changes in Consolidated Equity Equity attributable to owners of the parent company THUS$ Non- controlling stake THUS$ Equity total THUS$ Equity 01/01/21 Total comprehensive income Final balance of current period 12/31/21 (45) (23) (68) - - - (45) (23) (68) At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ - - . . 2020 2020 THUS$ THUS$ 11 11 LATAM Travel S.R.L. Consolidated Cash Flow Statement – Direct Method Latam Travel S.R.L. Consolidated Cash Flow Statement �- Direct Method - - (23) (23) (23) (23) (23) (23) (23) (23) 11 11 (68) (68) (68) (68) (68) (68) (68) (68) Net cash flows from operating activities Net cash flows used in investment activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 . 2021 THUS$ . 2020 THUS$ 133 (2) 131 (67) 64 (59) (28) (87) 20 (67) Financial Information 291 Integrated Report 2021 Peuco Finance Limited Financial Statement ASSETS ASSETS ASSETS Peuco Finance Limited Financial Statement Peuco Finance Limited Peuco Finance Limited Financial Statement Financial Statement Total current assets Total current assets Total current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES Total current liabilities Total current liabilities Total current liabilities Total liabilities Total liabilities Total equity and liabilities Total liabilities Total equity and liabilities Total equity and liabilities At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 At December 31 . 2021 . . THUS$ 2021 2021 1,307,721 THUS$ THUS$ 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 . 2021 . . THUS$ 2021 2021 THUS$ THUS$ 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 . 2020 . . THUS$ 2020 2020 1,307,721 THUS$ THUS$ 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 . 2020 . . THUS$ 2020 2020 THUS$ THUS$ 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 1,307,721 Peuco Finance Limited Consolidated Cash Flow Statement – Direct Method Peuco Finance Limited Peuco Finance Limited Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities Net cash flows used in investment activities Net cash flows used in investment activities CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 At December 31 At December 31 . . 2021 2021 THUS$ THUS$ - - - - - - . . 2020 2020 THUS$ THUS$ (643,263) (643,263) 643,263 643,263 - - Financial Information 292 Integrated Report 2021TAM S.A. y Filiales Financial Statement ASSETS ASSETS ASSETS Tam S.A. and Affiliates Tam S.A. and Affiliates Financial Statement Tam S.A. and Affiliates Financial Statement Financial Statement Total current assets Total current assets Total non-current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES EQUITY EQUITY EQUITY Total current liabilities Total current liabilities Total non-current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities Total liabilities Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Non-controlling interest Net equity attributable to the parent company's owners Non-controlling interest Total equity Non-controlling interest Total equity Total equity Total equity and liabilities Total equity and liabilities Total equity and liabilities TAM S.A. y Filiales Consolidated Statement of Comprehensive Income Tam S.A. and Affiliates Tam S.A. and Affiliates Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Other components of other comprehensive Income, before tax Other components of other comprehensive Income, before tax Tax on accrued earnings related to components of other Tax on accrued earnings related to components of other comprehensive Income not to be classified as earnings for the period comprehensive Income not to be classified as earnings for the period Other comprehensive income Other comprehensive income Total comprehensive income Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners Comprehensive income attributable to non-controlling interests Comprehensive income attributable to non-controlling interests TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME At December 31 At December 31 . At December 31 . 2021 . 2021 THUS$ 2021 THUS$ 1,262,825 THUS$ 1,262,825 1,346,034 1,262,825 1,346,034 2,608,859 1,346,034 2,608,859 2,608,859 At December 31 At December 31 . At December 31 . 2021 . 2021 THUS$ 2021 THUS$ THUS$ 2,410,426 2,410,426 846,722 2,410,426 846,722 3,257,148 846,722 3,257,148 3,257,148 (649,058) (649,058) 769 (649,058) 769 (648,289) 769 (648,289) 2,608,859 (648,289) 2,608,859 2,608,859 At December 31 At December 31 . At December 31 . 2020 . 2020 THUS$ 2020 THUS$ 1,492,792 THUS$ 1,492,792 1,617,263 1,492,792 1,617,263 3,110,055 1,617,263 3,110,055 3,110,055 At December 31 At December 31 . At December 31 . 2020 . 2020 THUS$ 2020 THUS$ THUS$ 2,206,089 2,206,089 798,846 2,206,089 798,846 3,004,935 798,846 3,004,935 3,004,935 104,407 104,407 713 104,407 713 105,120 713 105,120 3,110,055 105,120 3,110,055 3,110,055 TAM S.A. y Filiales Consolidated Statement of Earnings by Function Tam S.A. and Affiliates Tam S.A. and Affiliates Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function TAM S.A. y Filiales Statement of Changes in Consolidated Equity Tam S.A. and Affiliates Statement of Changes in Consolidated Equity Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Income tax expenses Income tax expenses Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Gain(Loss) attributable to non-controlling interests Gain(Loss) attributable to non-controlling interests Profit (Loss) for the period Profit (Loss) for the period At December 31 At December 31 . . 2021 2021 THUS$ THUS$ 2,003,922 2,003,922 (2,161,497) (2,161,497) (157,575) (157,575) (665,917) (665,917) (748,514) (748,514) (8,119) (8,119) (756,633) (756,633) (756,698) (756,698) 65 65 (756,633) (756,633) At December 31 At December 31 . . 2020 2020 THUS$ THUS$ 1,809,314 1,809,314 (2,109,529) (2,109,529) (300,215) (300,215) (847,429) (847,429) (831,918) (831,918) (193,894) (193,894) (1,025,812) (1,025,812) (1,025,624) (1,025,624) (188) (188) (1,025,812) (1,025,812) Equity attributable to owners of the parent company THUS$ 104,407 (789,254) Equity 01/01/21 Total comprehensive income Total transactions with shareholders 35,789 Non- controlling stake THUS$ Equity total THUS$ 713 107 (51) 105,120 (789,147) 35,738 Final balance of current period 12/31/21 (649,058) 769 (648,289) At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (756,633) (756,633) (32,031) (32,031) (483) (483) (32,514) (32,514) (789,147) (789,147) (789,254) (789,254) 107 107 (789,147) (789,147) At December 31 At December 31 . . 2020 2020 THUS$ THUS$ (1,025,812) (1,025,812) (570,327) (570,327) 1,047 1,047 (569,280) (569,280) (1,595,092) (1,595,092) (1,594,481) (1,594,481) (611) (611) (1,595,092) (1,595,092) Financial Information 293 Integrated Report 2021TAM S.A. y Filiales Consolidated Cash Flow Statement – Direct Method Tam S.A. and Affiliates Tam S.A. and Affiliates Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities Net cash flows used in investment activities Net cash flows used in investment activities Net cash flows from (used in) financing activities Net cash flows from (used in) financing activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Effects of F/X variations on cash and cash equivalents Effects of F/X variations on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 . . 2021 2021 THUS$ THUS$ (94,067) (94,067) (47,280) (47,280) (27,510) (27,510) (168,857) (168,857) (168,857) (168,857) (337,714) (337,714) 292,723 292,723 At December 31 At December 31 . . 2020 2020 THUS$ THUS$ (367,638) (367,638) 227,469 227,469 134,607 134,607 (5,562) (5,562) (76,154) (76,154) (81,716) (81,716) 237,468 237,468 Technical Training LATAM S.A. Financial Statement ASSETS ASSETS ASSETS Technical Training Latam S.A. Technical Training Latam S.A. Financial Statement Technical Training Latam S.A. Financial Statement Financial Statement Total current assets Total current assets Total non-current assets Total current assets Total non-current assets Total non-current assets TOTAL ASSETS TOTAL ASSETS TOTAL ASSETS LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES AND EQUITY LIABILITIES LIABILITIES LIABILITIES EQUITY EQUITY EQUITY Total current liabilities Total current liabilities Total non-current liabilities Total current liabilities Total non-current liabilities Total non-current liabilities Total liabilities Total liabilities Total liabilities Net equity attributable to the parent company's owners Net equity attributable to the parent company's owners Participaciones no controladoras Net equity attributable to the parent company's owners Participaciones no controladoras Total equity Participaciones no controladoras Total equity Total equity Total equity and liabilities Total equity and liabilities Total equity and liabilities At December 31 At December 31 . At December 31 . 2021 . 2021 TH$ 2021 TH$ 1,616,725 TH$ 1,616,725 75,776 1,616,725 75,776 1,692,501 75,776 1,692,501 At December 31 1,692,501 At December 31 . At December 31 . 2021 . 2021 TH$ 2021 TH$ TH$ 170,976 170,976 223,250 170,976 223,250 394,226 223,250 394,226 394,226 1,298,275 1,298,275 - 1,298,275 - 1,298,275 - 1,298,275 1,692,501 1,298,275 1,692,501 1,692,501 At December 31 At December 31 . At December 31 . 2020 . 2020 TH$ 2020 TH$ 1,345,034 TH$ 1,345,034 202,075 1,345,034 202,075 1,547,109 202,075 1,547,109 At December 31 1,547,109 At December 31 . At December 31 . 2020 . 2020 TH$ 2020 TH$ TH$ 118,243 118,243 325,370 118,243 325,370 443,613 325,370 443,613 443,613 1,103,496 1,103,496 - 1,103,496 - 1,103,496 - 1,103,496 1,547,109 1,103,496 1,547,109 1,547,109 Financial Information 294 Integrated Report 2021 Technical Training LATAM S.A. Consolidated Statement of Earnings by Function Technical Training Latam S.A. Technical Training Latam S.A. Consolidated Statement of Earnings by Function Consolidated Statement of Earnings by Function Technical Training LATAM S.A. Statement of Changes in Consolidated Equity Technical Training Latam S.A. Statement of Changes in Consolidated Equity Revenues from ordinary activities Revenues from ordinary activities Cost of sales Cost of sales Gross profit (loss) Gross profit (loss) Gain (Loss) from operational activities Gain (Loss) from operational activities Profit (loss), before tax Profit (loss), before tax Income tax expenses Income tax expenses Profit (Loss) for the period Profit (Loss) for the period Gain (Loss) attributable to the parent company's owners Gain (Loss) attributable to the parent company's owners Profit (Loss) for the period Profit (Loss) for the period Technical Training LATAM S.A. Consolidated Statement of Comprehensive Income Technical Training Latam S.A. Technical Training Latam S.A. Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income PROFIT (LOSS) FOR THE PERIOD PROFIT (LOSS) FOR THE PERIOD Other components of other comprehensive Income, before tax Other components of other comprehensive Income, before tax Other comprehensive income Other comprehensive income Total comprehensive income Total comprehensive income Comprehensive income attributable to: Comprehensive income attributable to: Comprehensive income attributable to the parent company's owners Comprehensive income attributable to the parent company's owners TOTAL COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME At December 31 At December 31 . . 2021 2021 TH$ TH$ 844,775 844,775 (646,971) (646,971) 197,804 197,804 393,553 393,553 393,553 393,553 (206,118) (206,118) 187,435 187,435 187,435 187,435 187,435 187,435 At December 31 At December 31 . . 2020 2020 TH$ TH$ 698,676 698,676 (584,594) (584,594) 114,082 114,082 (128,632) (128,632) (128,632) (128,632) 169,035 169,035 40,403 40,403 40,403 40,403 40,403 40,403 At December 31 At December 31 . . 2021 2021 TH$ TH$ 187,435 187,435 12,093 12,093 12,093 12,093 199,528 199,528 At December 31 At December 31 . . 2020 2020 TH$ TH$ 40,403 40,403 86,761 86,761 86,761 86,761 127,164 127,164 199,528 199,528 199,528 199,528 127,164 127,164 127,164 127,164 Equity attributable to owners of the parent company TH$ Non- controlling stake THUS$ Equity total TH$ 1,074,271 199,528 24,476 1,298,275 - - - - 1,074,271 199,528 24,476 1,298,275 Equity 01/01/21 Total comprehensive income Total transactions with shareholders Final balance of current period 12/31/21 Technical Training LATAM S.A. Consolidated Cash Flow Statement – Direct Method Technical Training Latam S.A. Technical Training Latam S.A. Consolidated Cash Flow Statement �- Direct Method Consolidated Cash Flow Statement �- Direct Method Net cash flows from operating activities Net cash flows from operating activities Net Increase (decrease) In cash and cash equivalents, before effect of Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate changes in F/X rate Effects of F/X variations on cash and cash equivalents Effects of F/X variations on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD At December 31 At December 31 . . 2021 2021 TH$ TH$ (355,265) (355,265) At December 31 At December 31 . . 2020 2020 TH$ TH$ (321,544) (321,544) (355,265) (355,265) 51,747 51,747 (303,518) (303,518) 289,736 289,736 (321,544) (321,544) - - (321,544) (321,544) 593,254 593,254 Financial Information 295 Integrated Report 2021 Rationale Comparative analysis and explanation of main trends: 1. CONSOLIDATED FINANCIAL STATEMENT At December 31, 2021, the company’s assets totaled ThUS$13,312,434 which, compared to December 31, 2020, represents a decrease of ThUS$2,337,656 (14.9%). The company’s-current assets decreased by ThUS$508,408 (16.2%) vs. yearend 2020. The main decreases were seen in the following line items: Cash and cash equivalents for ThUS$649,006 (38.3%). This decrease is explained by the net negative change presented in the Company’s consolidated statement of flows; inventories, current for ThUS$36,237 (11.2%), mainly associated with an increase in material consumption; Non- current assets or groups of assets held for disposal classified as held for sale for ThUS$129,339 (46.8%) originated mainly by the materialization of the sale of 5 aircraft (US$103 million) and the adjustment to the net realizable value of aircraft classified in this heading, offset by an increase in Commercial debtors and other receivables for ThUS$303,291 (50.6%), mainly explained by an increase in credit card sales. The company’s liquidity index showed a decrease going from 0.42 times at yearend 2020 to 0.21 times at the end of December 2021, mainly due to a 64.7% increase in current Liabilities. Moreover, we can see that the quick ratio decreased from 0.23 times at yearend 2020 to 0.08 times at the end of December 2021. The company’s Non-current assets decreased by ThUS$1,829,248 (14.6%) vs. yearend 2020. The main line items of non-current assets with decreases are: Property, plant, and equipment for ThUS$1,240,402 (11.6%), whose negative variation is mainly explained by the depreciation in the year by ThUS$982,995, renegotiations of assets by right of use associated with 109 aircraft for approximately US$180 million, the rejection of fleet due to the Chapter 11 process for ThUS$1,094,318, exchange difference worth ThUS$40,752, and other movements worth ThUS$143,816, offset by year additions worth ThUS$1,201.479; decrease of Intangible assets other than goodwill by ThUS$27,667 (2.6%), mainly due to exchange adjustments for ThUS$58,734, a decrease of ThUS$51,162 corresponding to the amortization of the year, offset by an increase from additions worth ThUS$82,798; decrease of deferred tax assets by ThUS$549,526 (97.3%), generated mainly by provisions for deferred tax assets estimated to be non-recoverable worth ThUS$1,251,912, offset by recognition of deferred tax by operation 2021 for ThUS$702,386. At December 31, 2021, the company’s liabilities totaled ThUS$20,379,338 which, compared to the value as at December 31, 2020, represents an increase of ThUS$2,286,863 (equivalent to 12.6%). The company’s Non-current assets increased by ThUS$4,844,441 (64.7%) vs. yearend 2020. The main increases were seen in: Other financial liabilities, current for ThUS$1,397,721 (45.7%), which are mainly explained by the increase from obtaining new loans associated with the second draft under DIP Credit Contract for ThUS$661,042 and others for ThUS$567, the increase in interest earned worth ThUS$504,599, and movements for fleet renegotiations and other reclassifications from the non- current line item worth ThUS$1,090,885, offset by capital and interest payments made in the period for ThUS$671,035, debt losses due to fleet rejections, ThUS$188,337; Commercial and other accounts payable, current for ThUS$2,538.028 (109.3%), mainly Financial Information 296 Integrated Report 2021explained by agreed claims of rejected aircraft and increased maintenance provisions; Accounts payable to related entities, current for ThUS$660,790, explained by the transfer of non- current position to current position on DIP financing for ThUS$396,423 plus interest earned for ThUS$35,030, obtaining financing for ThUS$130,102 associated with the second draft under DIP Credit Contract, and accrued interest and other movements for ThUS$99,235; Other non-financial liabilities, current for ThUS$243,785 (11.7%), explained by increased deferred income of ThUS$236,257 and other miscellaneous non-financial liabilities worth ThUS$7,528. The indebtedness indicator of the company’s current Liabilities for the period stood at 1.75. The impact of current Liabilities on total debt increased by 19.12 percentage points, from 41.41% at yearend 20202 to 60.53% at the end of the current period. The company’s non-current Liabilities decreased by THUS$2,557,578 (24.1%), compared to the sum reached by December 31, 2020. The main decreases are seen under Other non-current financial liabilities by ThUS$1,855.099 (23.8%). This variation is mainly explained by decreases in debt losses due to fleet rejections for ThUS$999,782 and movements due to fleet renegotiations and other reclassifications to the current heading worth ThUS$1,090,885, offset by other movements of the period for ThUS$235,568. The other decreases are presented under Accounts Payable to Related Entities, Non-Current for ThUS$396,423 (100%) explained mainly by the net effect of reclassification of balance to current position according to the terms of the DIP financing contract; Other non-financial liabilities, non-current for ThUS$189,952 (27.1%), primarily explained by the decrease in deferred income and reclassification to the current compensation position of Delta Air Lines, Inc., offset by an increase in Other provisions, non-current by ThUS$124,222 (21.1%), explained by increases in tax contingencies by ThUS$125,875, Labor contingencies of ThUS$50,139, and the net effect decrease of provisions of onerous contracts and other minor provisions for ThUS$51,792. The indebtedness indicator of the company’s Non-current Liabilities stood at (1.14). The impact of non-current Liabilities on total debt decreased by 19.12 percentage points, from 58.59% at yearend 2020 to 39.47% at the end of December 2021. The indicator of total indebtedness on the Company’s assets at the end of December 2021 is (2.89), 4.54 times lower than at the end of December 2020. At the end of December 2021, the Company did not maintain current interest rate derivatives positions. Currently, 40% (42% by December 31, 2020) of the debt is fixed in the face of fluctuations in interest rates. Most of this debt is indexed at the reference rate based on LIBOR. Considering these hedges, the average rate on the debt is 5.69%. The Equity attributable to the owners of the parent company decreased by ThUS$4,620,835 from a negative equity of ThUS$2,435,713 at December 31, 2020 to a negative equity of ThUS$7,056,548 by December 31, 2021. The main effects correspond to the year’s result attributable to the owners of the controller, corresponding to a loss of ThUS$4,647,491, a conversion adjustment of ThUS$18,354, and other increments in the year by ThUS$8,302. 2. CONSOLIDATED INCOME STATEMENT At December 31, 2021, the controller reported a loss of ThUS$4,647,491, representing a negative variance of ThUS$101,604 compared to a loss of ThUS$4,545,887 in the same period last year. Net margin for the financial year settled at -90.9% in 2021 and -104.9% during 2020. The operating results for the twelve months of 2021 amount to a loss of ThUS$1,119,277 which, compared to the loss of ThUS$1,665,288 as at 31 December 2020, shows a variation equivalent to 32.8%, while operating margin reaches -21.9%, 16.5 percentage points below the margin of -38.4% as at 31 December 2020. Operating income for the financial year increased 17.9% vs. the same period of 2020, totaling THUS$5,111,346. This increase is largely due to a 23.2% rise in passenger revenues and 27.4% in cargo revenues, while Other revenues decreased by 44.7%. The effect of the Brazilian real’s depreciation represents lower ordinary revenues by around US$40 million. During June 2020, the indefinite cessation of operations of LATAM Airlines Argentina S.A. was announced, due to local industry conditions aggravated by Financial Information 297 Integrated Report 2021the COVID-19 pandemic, whereby the airline stopped operating 12 domestic destinations. At the end of 2020, LATAM Airlines Argentina S.A. reported Operating revenues of US$50 million in its Individual income statement. PAX revenues totaled THUS$3,342,381 which, compared to the THUS$2,713,774 from the twelve months of 2020, translates into a 23.2% increase. This variation is due to the 18.0% increase in demand measured in RPK (revenue passenger-kilometer) and 4.3% in the yields compared to the previous year, while load factor shows a negative variation of 2.1 percentage points from the financial year 2020; on the other hand, RASK (revenue per ASK – Available Seat-Kilometer) reported a 1.4% increase, explained by the recovery of demand thanks to the lifting of quarantines and travel restrictions since the second half of the current year. As at 31 December 2021, cargo revenues reached ThUS$1,541,634, a 27.4% increase from 2020. Despite the 1.4% drop in RTK traffic, yields increased 29.2%, driven mainly by a strong import and export scenario. The Other Income line item shows a decrease of ThUS$183,671 due mainly to a fall of ThUS$55,990 in Tour Services and Airplane Leasing, in addition to the compensation received for the cancellation of the purchase of four A350 aircraft from Delta Air Lines Inc. for ThUS$62,000 and ThUS$9,240 for the advance return of leased aircraft to Qatar Airways, both during the second quarter of 2020, together with the negative change in compensation income for ThUS$14,279, received from Delta Air Lines Inc. associated with the implementation of the JBA (joint business agreement) signed in 2019. At December 31, 2021, operating costs totaled THUS$6,230,623 which, compared to 2020, translate into higher costs by THUS$230,666, equivalent to a 3.8% increase, whereas unit cost per ASK decreased by 14.5%. Furthermore, the effect of the Brazilian Real’s depreciation on this line item translates into lower costs by roughly US$38 million. Item variations are explained as follows: a) Remunerations and benefits increased ThUS$79,839 due to higher recognized expenditures for performance bonuses, which were suspended during financial year 2020, partly offset by an 18% decline in the average payroll compared to the previous year. b) Fuel increased 42.3%, equivalent to ThUS$442,433. This increase corresponds mainly to 25.4% higher average unhedged prices and 15.5% growth in consumption measured in gallons. LATAM recognized a ThUS$10,100 fuel hedge profit in 2021, compared to a ThUS$14,316 loss in the twelve months of 2020. c) Commissions show a decrease of ThUS$2,701, as a result of the increase in direct sales in own agencies and digital media during 2021. d) Depreciation and Amortization decreased by ThUS$223,992, mainly explained by a smaller average fleet during 2021 and the penalties levied in the previous year due to the accelerated term of IT projects resulting from the implementation of the LATAM XP digital platform. e) Other Leases and Landing Fees increased ThUS$35,183, mainly in handling costs, impacted by the recovery of the operation during the second half of 2021 and offset by lower airport fees. f) Passenger Service decreased by ThUS$20,325, representing a variation of 20.8%, mainly due to restrictions on in-flight catering services, imposed as a result of the COVID-19 pandemic, and lower costs of passenger assistance due to contingencies. g) Aircraft Lease costs for ThUS$120,630. Since the second quarter of 2021, operational aircraft leases under variable mode were reported, as a result of the various agreements reached by the group. Aircraft Leasing includes the costs associated with leasing payments by the hour (PBH) for contracts that have been modified by incorporating that structure. For these contracts that include variable payments by the hour (PBH) at the beginning of the period and after that, have fixed fees, an asset by right of use and lease liability were recognized for these amounts at the date of contract modification. These sums continue to be amortized on a linear basis during the term of the lease from the date of contract modification, even if at the beginning they have a variable payment period. Therefore, and as a result of the application of the lease accounting policy, the result of the period includes both the leasing expense for variable payments (Aircraft leasing) as well as the expense resulting from the amortization of the right of use included in the depreciation line and the interest on the lease liability. h) Maintenance has higher costs by ThUS$61,356, equivalent to 13.0%, mainly due to a higher operation since the second half of the current year. Financial Information 298 Integrated Report 2021by US$1.72 billion, US$37 million from the penalization of airport slots and US$81 million from fuel hedge contracts, all of which generated a loss during the first quarter of 2020, partly offset by higher reorganization costs during 2021, equivalent to US$1.34 billion. The main line items in the Consolidated Financial Statement of TAM S.A. and Affiliates, which caused a currency exchange loss of ThUS$3,973 at December 31, 2021, were: Other financial liabilities; THUS$75 loss from USD-denominated loans and financial leasing for fleet acquisitions; net accounts receivable and payable to related companies, totaling a gain of THUS$17,970, and net accounts receivable and payable to third parties, totaling a loss of THUS$27,187. The other line items of net assets and liabilities generated a loss of THUS$11,023. i) The Other Operating Costs show a decrease of ThUS$261,757, mainly due to adjustments in the estimates of write- offs and tax, labor, and civil proceedings. Financial revenues totaled ThUS$21,107 which, compared to ThUS$50,397 in 2020, represent lower revenues by ThUS$29,290. Despite higher cash levels during the six-month period compared to the same period in 2020, this reduction is due to the limitations of Chapter 11 on the group’s cash management, requiring 70% of the cash to be maintained in authorized banks. Financial Costs increased 37.2% totaling ThUS$805,544 by December 31, 2021. The draft of DIP (debtor in possession) financing during the fourth quarter of 2020, in addition to the three drafts in June, November, and December 2021, increased debt by US$1.95 billion, with a higher interest rate, leading to an increase of approximately US$330 million in interest earned. The other income/costs as at December 31, 2021 showed a positive change of ThUS$723,360. The contingency generated by the COVID-19 pandemic affected the group’s operations, showing signs of impairment that required the carrying out of impairment tests resulting in the penalization of the total goodwill 3. 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 decrease in passenger transport operations due to border shutdowns and quarantine periods designed to control the COVID 19 pandemic in the countries where the Company operates, and due to the filing of voluntary requests for reorganization under Chapter 11 of the Bankruptcy Code of the United States of America, which has allowed the protection of the Company’s liquidity. The Operating Cash Flow as at December 31, 2021, shows a positive change of ThUS$310,598 over the previous year, due to the positive change in Receipts from Sales of Goods and Service Rendering for ThUS$739,369, Payments to and on Behalf of Employees for ThUS$285,942, and Income Taxes Rebates for ThUS$56,255. This is offset by negative changes in Payments to Suppliers for the provision of goods, whose variations originate from the higher payments made by ThUS$584,146, Other Cash Inflows (Outflows) by ThUS$101,169 and Other Payments for Operating Activities by ThUS$85,837. The negative ThUS$101,169 variation in the Other Cash Inflows and Outflows in Operating Cash Flow is mainly due to the variation in Delta’s compensation for ThUS$62,000, Derivatives Premiums and Margin Guarantees for ThUS$32,990, ThUS$54,851 Court Deposits and Bank Fees, Taxes and Others for ThUS$16,727, offset by a positive variation of ThUS$60,848 in Fuel Derivatives transactions. Flow from Investment Activities shows a negative variation of ThUS$576,261 compared to the previous period, given the negative changes in the following items: Purchases of Property, Plant, and Equipment and purchases of intangible assets for ThUS$262,981 and ThUS$13,085, respectively, Interest accrued of ThUS$27,803 and the net effect between Other receipts for the sale of equity or debt instruments of other entities and Other payments for the acquisition of equity or debt instruments of other entities by ThUS$323,245. This was slightly offset by positive variations in: Sums derived from the sale of property, plant, and equipment for ThUS$29,434 and other cash inflows (outflows) for ThUS$20,667. Cash flow from financing activities shows a negative variation of ThUS$1,011,187, compared to the Financial Information 299 Integrated Report 2021previous year, which is explained by the following negative variations: Sums from short- and long-term loans for ThUS$1,323,871 and related loans for ThUS$243,023. This variation is offset by the following concepts: Loan Payments of ThUS$330,664, Interest Paid of ThUS$105,797, Other Cash Inflows (Outflows) of ThUS$96,754, and Payment of Lease Liabilities of ThUS$18,696, among others. The flows from loans described above include the following events: (1) During March and April 2020, LATAM Airlines Group S.A. withdrew the entire (US$600 million) committed credit line “Revolving Credit Facility (RCF)”. The financing matures on March 29, 2022. The credit line is guaranteed with collateral consisting of aircraft, engines, and spare parts. (2) On May 26, 2020, LATAM Airlines Group S.A. and its subsidiaries in Chile, Peru, Colombia, and Ecuador filed for protection under Chapter 11 of the United States bankruptcy law in the Southern District Court of New York. Under Section 362 of the Bankruptcy Code. The same was true for TAM LINHAS AEREAS S.A. and its subsidiaries (all LATAM subsidiaries in Brazil), on July 9, 2020. Filing for Chapter 11 automatically suspends most actions against LATAM and its subsidiaries, including most actions to collect financial obligations incurred prior to the date of filing for Chapter 11, or to exercise control over the property of LATAM and its affiliates. Consequently, although the bankruptcy filing may have resulted in non- compliance with some of LATAM’s and its subsidiaries’ obligations, counterparties may not take any action as a result of such non-compliance. At the end of the financial year, Chapter 11 retains most of the actions against debtors, so debt repayment does not accelerate. The group continues to submit its financial information as at December 31, 2021, including its financial debt and leases, in accordance with the terms originally agreed, pending future agreements it may reach with its creditors under Chapter 11. For agreements that have already been modified or extinguished, financial information has been disclosed in accordance with the new terms and conditions. (3) On June 24, 2020, the United States Southern District Court of New York approved LATAM’s motion to reject certain aircraft lease contracts. The rejected contracts included 17 aircraft financed under the EETC structure amounting to US$844.1 million, and one aircraft financed with a financial lease of US$4.5 million. (4) On October 20, 2020, the United States Court for the Southern District of New York approved LATAM’s motion to reject an aircraft leasing contract financed under a financial lease in the amount of US$34.3 million. (5) On September 29, 2020, LATAM Airlines Group S.A. obtained debtor in possession (“DIP”) financing for a total of US$2.45 billion, consisting of US$1.30 billion of one tranche A (“Tranche A”) and US$1.15 billion of one tranche C (“Tranche C”), US$750 million of which are provided by related parties. Obligations under DIP are guaranteed by collateral consisting of certain assets of LATAM and certain of its subsidiaries, including, but not limited to, shares, certain engines, and spare parts. On October 8, 2020, LATAM made a partial withdrawal for US$1.15 billion on Tranche A and Tranche C, and then, on or around June 22, 2021, LATAM made an additional withdrawal of US$500 million on Tranche A and Tranche C. On October 18, 2021, LATAM Airlines Group S.A. obtained Court approval for a tranche B (“Tranche B”) of debtor in possession (“DIP”) financing for a total of up to US$750 million. The obligations of this Tranche B, like the previous tranches, are guaranteed with the same collateral provided by LATAM and its subsidiaries subject to the Chapter 11 proceeding, without limitation, including stocks, certain engines, and spare parts. The next DIP drafts must be made on Tranche B until the ratio drawn of the latter is equal to that of the previous tranches. Once this ratio is equal, the drafts are pro-rata. On November 10, 2021, the group made a partial withdrawal of US$200 million of Tranche B and later, on December 28, 2021, LATAM made a new draft of US$100 million. Following these drafts, LATAM still has US$1.25 million available for future withdrawals. The maturity of the DIP is April 8, 2022, subject to potential extension, at LATAM’s choice, for an additional 60 days in the event that the LATAM reorganization plan is confirmed by a U.S. Court order from the Southern District of New York, but the plan is not yet effective. (6) On March 31, 2021, the United States Southern District Court of New York approved and subsequently issued an order dated April 13, 2021, approving the group’s motion to extend certain lease contracts on 3 aircraft. Financial Information 300 Integrated Report 2021(7) On June 17, 2021, the United States Southern District Court of New York approved the group’s motion to reject the lease contract for a financial lease- financed aircraft worth US$130.7 million. (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 international fuel prices. (8) On June 30, 2021, the United States Southern District Court of New York approved the group’s motion to reject the lease contract for 3 financial lease- financed aircraft worth US$307.4 million. (9) On November 1, 2021, the United States Southern District Court of New York approved the group’s motion to reject the lease contract for 1 financial lease- financed engine worth US$19.5 million. Last, the company’s net cash flow as at December 31, 2021, prior to the effects of exchange rate differences, shows a negative variation of ThUS$1,276,850, compared to the previous year. 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 group. (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. To hedge against fuel risk exposure, the Company trades in derivatives instruments (Swaps and Options) whose underlying assets may be different from Jet Fuel, whereby it is possible 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, 2021, the Company recognized a US$10.13 billion gain from fuel hedges net of premiums on the cost of sales of the period. 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. At December 31, 2021, the market value of existing contracts stood at ThUS$17,641. (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 mainly 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 contracting derivative instruments or through natural hedges or the execution of internal transactions. At December 31, 2021, the Company had no active F/X contracts. During the period ended on December 31, 2021, the Company did not recognize gains from F/X hedges net of premiums. During the same period in 2020, the Company recognized a gain of THUS$3.24 from F/X hedges net of premiums. (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”, for its Portuguese acronym). At December 31, 2021, roughly 40% of the debt has a fixed rate or is linked to one of the financial hedging instruments arranged. Considering these hedges, the average rate on the debt is 5.69%. On March 5, 2021, the ICE Benchmark Administration (“IBA”) announced that, as a result of the poor access to the information needed to calculate the rates, the release of the USD 1-week and 2-month rates will cease on December 31, 2021, and for all other terms, on June 30, 2023. Although the adoption of alternative rates is voluntary, the imminent interruption of LIBOR makes it essential for market participants to consider moving to alternative rates, such as SOFR and have appropriate alternative language in existing contracts that refer to the discontinuance of LIBOR. In this regard, the Company identifies that its derivative and debt contracts may be affected by the change in the relevant rate. To mitigate the effect, the Company is evaluating adherence to the ISDA protocol in the case of derivatives and is following the recommendations Financial Information 301 Integrated Report 2021in its last projection in January 2022, the IMF estimated growth of 5.9% for the global economy in 2021, while it projected growth of 4.4% in 2022, 0.5 percentage points (p.p.) below the previous estimate, and a more moderate growth of 3.8% in 2023. For the United States, the IMF has estimated a 4.0% expansion for 2022 in its last January projection, 0.6 percentage points below the last October 2021 estimate, in response to the early withdrawal of monetary policies and the continuation of disruptions in the logistics chain; and a growth of 2.6% for 2023, 0.4 p.p. above the previous estimate. On the other hand, IMF estimates for Europe during 2022 have also been revised downwards from the previous estimate, expecting a growth of 3.9% in 2022, 0.4 p.p. lower versus the previous estimate; and a 2.5% expansion by 2023, 0.5 p.p. above the last estimate. On the other hand, the IMF estimated growth of 2.4% for the Latin America and Caribbean region during 2022, 0.6 percentage points below the previous October 2021 forecast, and an expansion of 2.6% for 2023. Brazil’s economy is expected to grow by 0.3% in 2022, which is 1.2 percentage points below the previous estimate, while for Chile, the Central Bank estimated in its last Monetary Policy Report (IPoM, for its Spanish acronym) in December 2021 an economic expansion in the range of 1.5 to 2.5% by 2022. a) Below, we are presenting the main financial indicators in the Consolidated Financial Statement: of the relevant authorities, including the Alternative Reference Rates Committee (“ARRC”) in the case of debt, in line with the measures generally adopted by the market to replace LIBOR in debt contracts. In the case of derivatives, LATAM does not maintain current contracts indexed to the LIBOR rate. (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 economically and geographically; thus, they are generally short term. Thereby, the Company is not exposed to a significant concentration 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. In the midst of the spread of the new omicron variant of COVID-19 and the emergence of significant inflationary pressures, the global economy has begun 2022 in a weaker position than previously expected. On the one hand, the omicron variant has led some countries to reimpose certain mobility restrictions, while disruptions in the logistics chain and rising oil and energy prices have generated high levels of inflation. These have mainly affected the United States and emerging and developing economies. The International Monetary Fund (IMF) expects inflationary pressures to last longer than previously estimated, as a result of the 2022 continuity of disruptions in the logistics chain and high energy prices, and it should gradually decrease during the year as the supply-demand imbalances balance out, and with the implementation of monetary policies in major economies. In addition, in the context of the war between Russia and Ukraine and the effects of this conflict on the oil supply, there has been a sharp rise in fuel prices, a factor that could continue to significantly impact global inflationary pressures. In line with this challenging environment for the global economy, the IMF’s latest projections consider a cross- cutting downward adjustment between economies for new factors not foreseen in the previous projection related to the early withdrawal of fiscal stimulus mainly in the US, disruptions in the logistics chain, the spread of the omicron variant, and the instability of the real estate sector in China. However, Financial Information 302 Integrated Report 2021Liquidity indicators Current liquidity (times) (Current assets in operation/ Current liabilities) Acid test (times) (Funds available/ current liabilities) INDEBTEDNESS INDICATORS Debt ratio (times): (Current Liability/ Net Worth) (Current liabilities+non-current liabilities/ Net equity) Current debt/ Total debt (%) Non-current debt/ Total debt (%) Hedging of financial expenses (R.A.I.I. / financial expenses) ACTIVITY INDICATORS Total Assets Investments Disposal of property December 31, 2021 December 31, 2020 0.21 0.08 0.42 0.23 -1.75 -3.08 Profitability indicators Profitability indicators are calculated on equity and income attributable to Majority Shareholders For the 12 months ended on December 31 (ThUS$) Operating income Passengers Cargo Others Operating Costs Compensation Fuel Fees 2021 2020 5,111,346 4,334,669 3,342,381 1,541,634 227.331 2,713,774 1,209,893 411.002 -6,230,623 -5,999,957 -1,041,899 -962,060 -1,487,776 -1,045,343 -89,208 -91,910 Depreciation and Amortization -1,165,394 -1,389,386 December 31, 2021 December 31, 2020 Other Leasing and Landing Fees Passenger Services - Aircraft Leasing Return on Equity1 (Net income / average net equity) Return on assets (Net income/ average assets) Yield of operating assets (Net income/ average operating assets2 - (0.35) (0.38) (0.29) (0.31) 60.53 39.47 0 13,312,434 587.453 105.035 41.41 58.59 0 1 By December 31, 2021 and December 31, 2020, LATAM Airlines Group S.A. and its subsidiaries have negative equity. 2 Total assets less deferred taxes, personnel current accounts, perma- nent and temporary investments, and goodwill. 15,650,090 1,465,204 Dividend returns 1,537,386 (Dividends paid/ market price) December 31, 2021 December 31, 2020 0.00 0.00 Maintenance Other Operating Costs Operating Results Operating Margin Financial Revenues Financial costs Other Revenues / Costs Income /(loss) before taxes and minority interest Taxes -755,188 -77,363 -120,630 -533,738 -720,005 -97,688 0 -472,382 -959,427 -1,221,183 -1,119,277 -1,665,288 -21.90% -38.40% 21,107 50,397 -805,544 -586,979 -2,180,493 -2,903,853 -4,084,207 -5,105,723 -568,935 550,188 Income /(loss) before minority interest -4,653,142 -4,555,535 Attributable to: Gain/(Loss) attributable to the parent company’s owners Gain/(Loss) , attributable to non-con- trolling interests Net Margin Effective Tax Rate Total shares Gain/(Loss) per share (US$) EBITDA -4,647,491 -4,545,887 -5,651 -9,648 -90.90% -13.90% -104.90% -10.80% 606,407,693 606,407,693 -7.66397 -7.49642 -2,128,725 -3,170,107 Financial Information 303 Integrated Report 2021DocuSign Envelope ID: 6BFAC263-6377-47F5-B3B1-4D9BA84BB192 Sworn Declaración jurada statement As directors, CEO, and CFO of LATAM En nuestra calidad de directores, gerente AIRLINES GROUP S.A., we declare under general y vicepresidente de Finanzas de oath our responsibility for the veracity LATAM Airlines Group S.A., declaramos of all information contained in the bajo juramento nuestra responsabilidad LATAM 2021 Integrated Report. respecto de la veracidad de toda la información contenida en la Memoria Integrada LATAM 2021. Ignacio Cueto Plaza Ignacio Cueto Plaza Chairman Presidente Henri Philippe Reichstul Henri Philippe Reichstul Board member Director Sonia J. S. Villalobos Sonia J. S. Villalobos Board member Directora Enrique Cueto Plaza Enrique Cueto Plaza Vice-chairman Vicepresidente Patrick Horn García Patrick Horn García Board member Director Roberto Alvo Milosawlewitsch Roberto Alvo Milosawlewitsch Chief Executive Officer Gerente General Enrique Ostalé Cambiaso Enrique Ostalé Cambiaso Board member Director Alexander D. Wilcox Alexander D. Wilcox Board member Director Ramiro Alfonsín Balza Ramiro Alfonsín Balza Chief Financial Officer Vicepresidente de Finanzas Nicolás Eblen Hirmas Nicolás Eblen Hirmas Board member Director Eduardo Novoa Castellón Eduardo Novoa Castellón Board member Director Integrated Report 2021 Memoria Integrada 2021 Financial Information Informes financieros 304 308 Corporate structure LATAM AIRLINES GROUP S.A. [CHILE] - [LACL] 99.00% 99.00% 99.89395% 99.9% 99.99% 99.83% 99.8361% 100% 100% 100% LATAMTRAVEL S.R.L. [BOLIVIA] - [LTBO] JARLETUL S.A. [URUGUAY] - [W9UY] LAN CARGO S.A. [CHILE] - [UCCL] 0.10196% 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% 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% 4.57% 1.53% 50.00% CONSORCIO FAST AIR LASER CARGO UTE [ARGENTINA] - [D7AR] 0.10204% 96.22078% LASER CARGO S.R.L. [ARGENTINA] - [D6AR] 100% 50.00% 3.77922% 0.79880% 49.47057% GITARY TRADE S.A [URUGUAY] 0.00344% 49.47057% HOLDCO COLOMBIA I SPA [CHILE] - [E4CL] 100% AEROVÍAS DE INTEGRACIÓN REGIONAL S.A. (AIRES S.A.) [COLOMBIA] - [4CCO] 0.15802% 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% LATAM TRAVEL S.A. [ARGENTINA] - [Z6AR] 95.00% 4.9966% 99.9837% 5.00% INVERSORA CORDILLERA S.A. [ARGENTINA] - [W7AR] 0.01630% 100% 99.99% MULTIPLUS CORREDORA DE SEGUROS LTDA. [BRASIL] - [N7BR] 99.99% PRISMAH FIDELIDADE LTDA. [BRASIL] - [N8BR] 0.01% 0.01% 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% MINORITY CONNECTA CORPORATION [USA] - [CCUS] JARLETUL S.A. [URUGUAY] - [W9UY] PIQUERO LEASING LIMITED 100% PLATERO LEASING LLC 100% CHINCOL LEASING LLC 100% ZORZAL LIMITED 98% SUMAUMA LEASING LIMITED 100% 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% Financial Information 305 Integrated Report 2021Credits Corporate information COORDINATION LATAM – Investor Relations LATAM – Sustainability LATAM – External Communications TEXT AND DESIGN Conecta Comunicação e Sustentabilidade Text: Cristina Molina and Macarena Pellegrini Editorial supervision and GRI disclosures: Judith Mota Editorial support: Talita Fusco English version: Nuriyah Costa-Laurent (Minx Translation) Graphic project and illustration: Naná Freitas Layout: Gisele Fujiura, Gustavo Inafuku, Luciana Mafra and Naná Freitas PHOTOGRAPHY LATAM archive 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 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 HEADQUARTERS 5711 Presidente Riesco Ave., 19th floor Las Condes, Santiago, Chile Phone: (56) (2) 2565 2525 MAINTENANCE BASE Arturo Merino Benitez Airport Santiago, Chile Phone: (56) (2) 2565 2525 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 Credits 306 Integrated Report 2021www.latamairlinesgroup.net www.latam.com 

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