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.
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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’
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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.
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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;
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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
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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.
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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).
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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.
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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.
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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
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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
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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
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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.
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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
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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
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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”
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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;
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• 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
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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.
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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
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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
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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
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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:
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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.
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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
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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
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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
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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,
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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
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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
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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-
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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.
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• 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.
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• 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
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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.
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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
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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.
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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;
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• 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:
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• 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
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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
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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;
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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.
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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.
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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.
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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.
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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
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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".
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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.
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2.8.
Losses for impairment of non-financial assets
(b) Equity instruments
Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and
are tested annually for impairment, or more frequently if events or changes in circumstances
indicate that they might be impaired. Assets subject to amortization are tested for impairment losses
whenever any event or change in circumstances indicates that the carrying amount may not be
recoverable. An impairment loss is recognized for the excess of the carrying amount of the asset
over its recoverable amount. The recoverable amount is the fair value of an asset less the costs for
sale or the value in use, whichever is greater. For the purpose of evaluating impairment losses,
assets are grouped at the lowest level for which there are largely independent cash inflows (cash
generating unit. Non-financial assets, other than goodwill, that would have suffered an impairment
loss are reviewed if there are indicators of reversal of losses. Impairment losses are recognized in
the consolidated statement of income 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.
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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.
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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.
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(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.
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2.22. Non-current assets or disposal groups classified as held for sale
Non-current assets (or disposal groups) classified as assets held for sale are shown at the lesser of
their book value and the fair value less costs to sell.
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).
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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.
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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
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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.
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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
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C la s s o f lia bility fo r the a na lys is o f liquidity ris k o rde re d by da te o f m a turity a s o f De c e m be r 31, 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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