Integrated Report 2022
Index
24 Operations
25 Passenger operations
28 LATAM Cargo group
30 Fleet
32 Corporate governance
33 Ownership structure
36 Decision-making bodies
41 Corporate guidelines
43 Stakeholder engagement
45 Financing Policy
46 Market Risk Policy
48 Financial Policy
49
Liquidity and Financial
Investment Policy
50 Our business
Industry context
51
53 Financial results
56 Stock information
57
Investment Plan
58 Safety
59 Number 1 Priority
63 Commitment to the future
64 Objectives and results
66 Shared value
68 Climate change
74 Circular economy
77
Environmental management and
eco-efficiency
80 Employees
81
Better, simpler and more
transparent
87 Who makes up LATAM group
88 Clients
89 The best experience
94 Suppliers
95 Supply chain management
98 About the Report
99 Material topics
100 GRI and SASB content index
104 NCG 461 content index
106 Glossary
107 External assurance
108 Appendices
191 Financial information
192 Financial statements
292 Affiliates and subsidiaries
330 Rationale
341 Sworn statement
342 Corporate structure
343 Credits and Corporate
information
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Index
2
3
Presentation
5 Highlights
8
Letter from the CEO
11 Who we are
12 LATAM group
13 Our strategy
18 Value generation model
19 Timeline
23 Awards and acknowledgements
Integrated Report 2022 Presentation GRI 2-2 and 2-3
In its Integrated Report, LATAM
Airlines Group S.A. annually presents
its main advances and challenges
considering all the companies in
the group, the economic, social and
environmental dimensions of the
business, and the relationships with
its stakeholders.
This edition corresponds to the period
from January 1, 2022 to December 31,
2022 and meets the requirements of
General Standard (NCG, for its Spanish
acronym) 461, of Chile’s Financial
Market Commission (CMF, for its
Spanish acronym), which incorporates
sustainability and corporate governance
issues in the annual report. For LATAM,
the new mandatory regulations
represent an opportunity to deepen
the movement initiated in 2018, when
the group first published an Integrated
Report, strategically connecting
financial and non-financial information,
previously the subject of two different
publications: The Annual Report and
the Sustainability Report. In addition to
giving greater visibility to the corporate
governance practices that the Company
has always followed.
In the report of the information
related to the relevant sustainability
topics and the indicators that monitor
the group’s performance in these
topics, the guidelines were the Global
Reporting Initiative (GRI) standards—
the main global benchmark for
sustainability communication and
management. The contents and
indicators linked to the GRI standards
were subjected to external verification
by Deloitte.
Metrics established for airlines,
defined by the Sustainability
Accounting Standards Board (SASB)/
International Financial Reporting
Standards (IFRS) Foundation,
complement the sustainability
information.
LATAM's Consolidated Financial
Statements are an integral part
of the Report. They comprise the
financial situation as at December 31,
2021 and 2022, and were externally
audited by PwC. In addition to being
available in this publication, starting
on page 192, they can also be viewed
on the CMF website and on the LATAM
Airlines Investor Relations website.
CONVENTIONS
Currency and Exchange Rate
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 Airlines Group: Except
where the context requires it,
mentions of LATAM Airlines
Group refer to LATAM Airlines
Group S.A., a non-consolidated
operating entity.
Presentation
3
Integrated Report 2022 LATAM: 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), LAN 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), Transportes 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 Brazil) in Brazil.
Other mentions of LATAM, as the
context may require, refer to the
LATAM brand, launched in 2016, and
which 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.
LATAM Cargo group: Refers to the
group of cargo operators – LAN Cargo
S.A. (LATAM Cargo) and 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
Brazil) in Brazil.
• LAN: Mentions of LAN refer to
LAN Airlines S.A., currently known
as LATAM Airlines Group S.A., in
connection with circumstances
and events 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).
STANDARDS USED
Throughout the text, the information
related to each of the standards used
(NCG 461, SASB, and GRI), is indicated,
ordered within two specific content indexes
on pages 100 and 104. The aim is to
make it easier for the reader to obtain the
information related to each standard.
MORE INFORMATION
GRI 2-3
Any suggestions,
criticisms, or
concerns about
the Report can
be submitted to
investorrelations
investorrelations@
latam.com and
sostenibilidad@
latam.com.
Presentation
4
Integrated Report 2022 Highlights
Solid financial results
During the Chapter 11 proceeding,
LATAM was able to improve its cost
and capital structure
GROSS DEBT (US$ MILLION)
LIQUIDITY (US$ MILLION)
EBITDA1 (US$ MILLION)
-37.5
0
0
4
,
0
1
0
0
5
,
6
2019
(At filing)
2022
4.2x
Leverage
+78%
0
0
3
,
1
0
0
3
,
2
Revolving Lines of
Credit: US$1,100
Cash and cash
equivalents: US$1,200
2019
(At filing)
2022
Equivalent
to 24.3%
of total
revenues in
2022
21.2%
6
.
1
1
2
,
2
11.1%
0.9%
-6.4%
9
.
5
7
2
-
1
.
6
4
2
.
8
5
0
,
1
2019
2020
2021
2022
EBITDA MARGIN
1 Earnings before interest, tax,
depreciation, and amortization.
a:
DIVERSIFIED REVENUE STRUCTURE AND OPERATIONS
BY CURRENCY TYPE
a: 60%
b: 40%
a: Dollar (USD) and Euro (EUR)
b: Other currencies
BY CAPACITY (ASK)
(PASSENGER OPERATION)
a: 20%
a: 44%
b: 36%
a: International
b: Domestic Brazil
c: Domestic SSC
BY BUSINESS UNIT
e: 2%
d: 18%
c: 18%
b: 28%
a: 33%
a: Passengers (international)
b: Passengers (domestic Brazil)
c: Passengers (domestic SSC)
d: Cargo
e: Others
Total (US$ million)
9,516.8
ASK: available seat-kilometers.
SSC: Spanish-speaking countries.
Highlights
5
Integrated Report 2022
Operational recovery
PASSENGER OPERATIONS
62 million passengers 144 destinations 22 countries
INT024
Load factor: 81.3%
Consolidated traffic (RPK - million): 92,588
Capacity (ASK- million): 113,852
ASK: available seat-kilometers.
RPK: revenue passenger-kilometers.
The operation
showed a steady
recovery since
the onset of the
pandemic, reaching
85.2% (ASK) of
2019 levels in
December 2022
CARGO OPERATIONS
transported
901 thousand tons
154
destinations
(10 exclusively cargo) in
17 countries (3 exclusively cargo)
Customer focus
JOINT VENTURE WITH
DELTA AIR LINES
Access to over
300 destinations
between the
United States/
Canada and
South America
NEW CABINS
> Flexibility to serve the different
passenger segments
> Competitive rates
> Renovated cabins in
89% of the narrow-body fleet
LATAM LOUNGE IN SANTIAGO - CHILE
4,200 meters in 3 lounges
> Colors inspired by the nature of Chile
> Sustainable furniture
> 80% of the energy consumed comes from
renewable sources
Load factor: 56.5%
Consolidated traffic
(RTK- million): 3,532
Capacity
(ATK- million): 6,256
RTK: revenue ton-kilometers.
ATK: available ton-kilometers.
Highlights
6
Integrated Report 2022 Our people
44
32,507
nationalities
professionals
DIVERSITY AND INCLUSION
77 points in McKinsey's
Inclusion Assessment
2-point increase
compared to 2021
Sustainability Strategy – Pillars
>> CLIMATE CHANGE
687.9TRA064 thousand tons
of greenhouse
gas emissions
managed
through offsets
and reducctions
> Emission reductions
through operational
improvements
> Emissions offsets
and ecosystem
preservation
(LATAM + clients)
>> SHARED VALUE
117 million vaccines
against COVID-19
transported free of charge
by the Solidary Plane
program
Networking: 51
alliances and
agreements with
organizations in
5 countries
AVERAGE TRAINING
(h/employee)
>> CIRCULAR ECONOMY
Women: 39%
9
.
0
3
3
.
6
3
7
.
2
4
2020
2021
2022
77% reduction
of single-use
plastics1 on board
1 Examples: cutlery,
glasses, cups, trays,
mixers, bags and lids.
Men: 61%
LATAM was recognized by S&P's Corporate Sustainability Assessment as
the fifth most sustainable airline worldwide
Highlights
7
Integrated Report 2022
Letter from the CEO
GRI 2-22
Rarely in life does one find oneself
confronted with a crisis such as the one
that the pandemic was for the entire
world and, in particular, for commercial
aviation. From mid- to late March 2020,
the LATAM group reduced passenger
operations by 95%. The effects of the
pandemic were dramatic and extended
far beyond what we all expected. At the
close of 2022, almost 3 years since the
beginning of this crisis, we have not yet
fully resumed our previous operation.
In these hard months and years, we
had to make difficult, but unfortunately
necessary, decisions for the continuity
of the group. In this context, the LATAM
group was forced to enter a financial
reorganization process under Chapter
11 of U.S. Law in May 2020. This period
has been extraordinarily challenging,
but at the same time, it has offered
a unique opportunity to review very
deeply what the group has built over
time, what should be kept and what
should be changed.
On November 3, 2022, and after nearly
30 months, the LATAM group emerged
from Chapter 11 strengthened, with
a stronger financial condition and an
extremely competitive cost structure.
But more importantly, with a renewed
sense of purpose, with clarity of what
we must improve to be an asset in the
societies where we participate, and to
be better every day for our customers,
people and the environment.
2022 reflects a strengthened group. The
year ended with even healthier liquidity
and debt levels than we had in the pre-
pandemic period: liquidity of US$2.3
billion at the end of 2022 and a reduction
in gross debt of 37.5% vs. US$10.4 billion
upon entering Chapter 11, reflecting a
leverage of 4.2x. Moreover, we have a
better cost structure. The cash cost of
the fleet is more than 40% lower than in
2019, and in the fourth quarter, the ex-
fuel ASK (available seat-kilometers) cost
of passenger operations was US$0,04,
offsetting the inflation seen in recent years.
By the end of the year, in the group’s
passenger operations, capacity reached
85.2% of the 2019 level measured in
ASK and, on average, throughout 2022,
it was 76.4% compared to 2019. The
LATAM group transported approximately
62 million passengers last year,
representing an increase of 22 million
passengers vs. 2021. By last December,
the LATAM group operated 144
passenger destinations in 22 countries,
matching the number of destinations
flown during the same period in 2019.
The group continued to show its
strength in the region, with subsidiaries
in Brazil, Chile and Peru ranking first
in market share in their respective
domestic segments. In the case of the
Brazil affiliate, it went from 34% market
share in 2019 to 37% in 2022, while
the affiliate in Peru went from 62% to
65%, and the one in Chile, from 58% to
60%. In turn, the LATAM group resumed
14 international routes that had been
suspended due to the pandemic.
Nobody connects South America like
LATAM. In 2023, LATAM Airlines Brazil
will resume operations to Africa and the
group will fly 38 new routes that it did not
operate in 2019, including two that fall
within the joint venture with Delta Air Lines.
The JV with Delta Air Lines will enable
us to deliver more and better services
to our passengers, as well as to connect
them to more than 300 destinations in
the United States, Canada and South
America. As a first step, we have
announced direct flights between São
Paulo (Brazil) and Los Angeles (United
States), and between Bogota (Colombia)
and Orlando (United States). Regarding
the latter, the Colombia affiliate plans
to transport 120 thousand passengers
per year, offering better connection
alternatives from the inmost regions of
Colombia and Ecuador to the East Coast
of the United States through Delta's hub
in Orlando and LATAM's hub in Bogota.
Letter from de CEO
8
Integrated Report 2022 By the end of the year,
capacity (measured
in ASK) in passenger
operations reached 85.2%
of the pre-pandemic level
Due to its transportation and
connectivity capacity, LATAM Cargo S.A.
and its cargo subsidiaries in Colombia
and Brazil played an important role in
local supply logistics and exports. Our
cargo capacity increased 30.7% compared
to 2021. The cargo subsidiary ended
the year with almost 901 thousand tons
transported, representing an increase of
12.4% over the previous year.
In terms of projections, for this year, the
group expects to continue progressing,
with annual growth of more than 20% in
its passenger and cargo operations.
Focused on providing passengers with
a simpler, faster and more autonomous
travel experience, we worked hard on the
digital transformation. Progress in this
arena is reflected in the Net Promoter
Score (NPS) indicator, which speaks of
customer satisfaction. In 2022, the digital
experience rating reached 50 points, an
increase of 10 points versus 2021, and
the passenger operation's NPS was 46.
Meanwhile, at LATAM Cargo, we reached
51 points in this gauge in 2022, up 21
points from 2021 and 33 points over the
last two years—the best result in the
history of the cargo business since we
began measuring this in 2016.
At the same time, and with a view
to improve passenger experience,
we retrofitted 81 airplanes in 2022,
bringing the total number of aircraft
with renovated interiors to 198. In Brazil,
98 aircraft that the affiliate operates
domestically have in-cabin Wi-Fi—a
feature that will be included across the
entire LATAM Airlines Brazil fleet during
the first half of 2023. At the same time,
and under the name "LATAM Lounge",
LATAM Group opened the doors of a
renovated space in Chile dedicated to
prime passengers and airline partners
with commercial agreements, where
they can await their flight departure or
connection to their destination.
Last year, we continued to work to be an
asset in the different communities where
the group operate, seeking to be part of
the solution to current and future social,
environmental and economic growth
challenges. The guideline is the LATAM
Sustainability Strategy, developed after
much dialog and reflection during the first
year of the pandemic, and launched in
2021 as a roadmap for the next 30 years.
Three pillars support it, each with clear
goals, deadlines and action plans.
Under the pillar of climate change,
the LATAM group has committed to
reduce and offset the equivalent of
50% of domestic greenhouse gas
(GHG) emissions by 2030 and to be a
carbon neutral group by 2050. In 2022,
the company surpassed its plan for
the year, with 688 thousand tons of
emissions managed, including operational
improvement initiatives and support
for preservation projects in strategic
ecosystems across the region.
In 2022, the expansion of the partnership
with the Cataruben Foundation in CO2Bio
was announced; this is a project for the
preservation and restoration of flooded
savannas and forests in South America.
Letter from de CEO
9
Integrated Report 2022 Located in the Colombian Orinoco basin,
the CO2Bio project expects to capture
11.3 million tons of CO2 in a property of
575,000 hectares by 2030, equivalent to
more than three times the size of cities
such as Bogota or São Paulo.
The LATAM group continues to invest in
modernizing the fleet with more efficient
aircraft models, in addition to reducing
the fuel consumption of the current fleet.
Last year, LATAM made a commitment to
get 5% of its fuel consumption to come
from sustainable aviation fuels (SAF) by
2030, favoring production generated in
South America. Although production is
still below 1% of international demand,
this type of fuel has the potential to
reduce emissions by up to 80% compared
to fossil fuels, making it a central tool
for meeting our goal of achieving carbon
neutrality by 2050.
Under the pillar of circular economy,
progress was made on the goal of
eliminating single-use plastic by 2023
and becoming a zero-waste-to-landfill
group by 2027. By changing materials
and improving processes, it was possible
to eliminate 77% of single-use plastics
from the in-flight service, surpassing the
60% target set for the year. In addition,
progress was made in the design and
implementation of a rigorous plan to
reduce plastic in cargo operations.
Last, within the pillar of shared
value, the Solidary Plane makes the
connectivity, expertise and capacity
of the passenger and cargo operations
available to benefit communities in
South America. At the end of 2022,
the program had partnerships with
51 organizations in the countries
with domestic operations, focusing
its work on health, environment and
disasters. Within this framework,
the group transported 117 million
vaccines against COVID-19, free of
charge, and considering what has been
transported since the beginning of
the pandemic, this figure reaches 376
million vaccines. In Brazil alone, LATAM
Airlines Brazil was responsible for the
transportation, by air, of two out of
every three doses within the country
during 2022.
The sustainability management and
performance have been recognized
by S&P Global, which is responsible
for selecting the companies that
make up the Dow Jones Sustainability
Index (DJSI). In S&P's 2022 Corporate
Sustainability Assessment, LATAM
ranked as the fifth most sustainable
in the global airline industry. The
results achieved by the group in
the arenas of corporate citizenship,
circular economy and labor practices
are noteworthy.
A new LATAM is under construction
and none of this would be possible
without the support of each of the
32,507 people who make up this group,
comprising 44 different nationalities
thanks to the diversity of our operations.
The multiculturalism of the group is
an encouragement to move forward in
building more inclusive work environments
and we are taking important steps in
gender equality by incorporating more
women as pilots and maintenance
mechanics, and in equal opportunities and
professional success for all employees.
I began this letter by talking about
the unique challenge that the crisis
represented, and I would like to end it by
highlighting what a privilege it has been
to be part of a team like LATAM group's
along this journey. The will, courage and
commitment of each and every one of
us was the driving force that pushed
us out of this crisis. The group came
away strengthened, united and with a
renewed sense of purpose.
May this message also serve as a tribute
to each and every one of those who
have made this possible. It's an honor to
count myself among you.
Roberto Alvo Milosawlewitsch
CEO LATAM Airlines Group
Letter from de CEO
10
Integrated Report 2022 Who we are
IN THIS CHAPTER
LATAM group
Business model
Our strategy
12
13
18
19
Timeline
Awards and
acknowledgements
23
Who we are
11
Integrated Report 2022 LATAM group
NCG 461: 6.1 INDUSTRIAL SECTOR and
6.2 BUSINESSES | GRI 2-1, 2-6 and 3-3
LATAM group has domestic operations
in five countries in South America—
Brazil, Chile, Colombia, Ecuador,
and Peru—and offers the best
connectivity within, to, and from Latin
America, covering 144 destinations
in 22 countries with its pasenger
operations and 154 destinations with
its cargo operations.
This network, together with the
flight frequency and the connection
possibilities that it offers to its
passengers, enhanced with the
connection hubs of São Paulo (Brazil),
Santiago (Chile), and Lima (Peru),
makes it a benchmark in the regional
and global airline industry and allows
it to have a geographically diversified
revenue base, from both passengers
and cargo.
In 2020, LATAM group entered one of
the most challenging periods in its
history. The coronavirus pandemic
brought along border shutdowns
and prolonged quarantines, directly
affecting the entire industry. Given
this scenario, LATAM Airlines Group
S.A. and its subsidiaries in Chile,
Colombia, Ecuador, Peru, the United
States and Brazil requested voluntary
protection under the financial
reorganization statute of the U.S.
Chapter 11 in 2020, seeking to
reorganize its debt to its creditors,
as well as to access new sources of
financing and transform its business
in response to the global pandemic.
After more than two years of
intense work in the reorganization
process, and together with the
necessary support from creditors and
shareholders, in early November 2022,
LATAM successfully completed its
restructuring. Through the process, it
achieved significant cost savings and
a reduction in debt with the resulting
improvement in capital structure.
After successfully overcoming this
difficult process, LATAM emerged as
a more efficient group, with less debt
and more liquidity, a modern fleet,
the largest network of connections in
South America, and the largest loyalty
program in the continent.
The process also allowed LATAM to
become more competitive and open
new routes. In Brazil, for example, the
group operates 10 new destinations
compared to what it was flying pre-
pandemic, and globally, it expects to
reach another 38 new routes during
2023, compared to what it was
operating pre-pandemic.
In 2022, LATAM group signed its
joint venture with Delta Air Lines,
which applies for the markets of
the United States, Canada, Brazil,
Chile, Colombia, Paraguay, Peru and
Uruguay and expands connectivity
between the United States/Canada
and South America.
Towards the end of December, LATAM
Airlines Group reached a passenger
operation of 85% (measured in
available seats-kilometer, or ASK)
compared to the same period of 2019,
continuing on the path of recovery to
pre-pandemic levels.
MORE INFORMATION
Operations
(page 24)
Financial results
(page 53)
Legal incorporation
(page 109)
Company purpose
(page 109)
Property, Plant,
and equipment
(page 109)
Brands, trademarks,
licenses and franchises
(page 110)
Sales channels
(page 111)
Additional information
(page 111)
Who we are
12
Integrated Report 2022 Our strategy NCG 461: 2.1 MISSION
MISSION AND
PURPOSE
We make sure dreams reach their destination.
VISION
VALUES
CORPORATE
PRINCIPLES
To be the group of airlines that connects Latin America with the world and the world
with Latin America, and that accepts its social responsibility by being fair, empathetic,
transparent and simple with its customers, employees and other key stakeholders.
Our conduct is guided by the values of:
Safety
We guarantee at all times
our own safety, that of
our team, and that of our
clients.
Being attentive
We genuinely care about
people’s needs and offer them a
fair, empathic, transparent and
simple experience (JETS, for its
Spanish acronym).
Sustainability
We continually seek balance
between economic growth, efficiency,
environmental care and social well-
being for a more sustainable future.
Our internal value proposition establishes the corporate principles:
INDUSTRY
To be part of an
attractive, global and
multicultural industry.
ENVIRONMENT
To integrate a dynamic
environment, with constant
changes and challenges.
CAREER
To have broad and
multiple career
development options.
TRAVEL
To have the opportunity to
know the world and access
other benefits that LATAM
Airlines has to offer.
JETS
To take care of people
in a fair, empathetic,
transparent, and simple
work environment.
SUSTAINABILITY
To be part of a group
committed to the diversity
and sustainable development
of South America.
Who we are
Who we are
13
Integrated Report 2022 Strategic objectives
NCG 461: 4.2 STRATEGIC OBJECTIVES | GRI 3-3
Ongoing
strengthening of
the network
Ongoing strengthening of the
network: LATAM is the only airline
group in South America with a
local presence in five countries and
national and international operations,
creating the best connectivity within
and to the region.
Improve efficiency
and cost
competitiveness
Maintaining a competitive cost
structure and further improving its
efficiency is part of LATAM’s challenges,
with which it seeks to streamline the
organization and increase the flexibility
and speed in decision making. To do
this, it aims to reduce costs in areas
related to fuel and fees, procurement,
operations, overheads, and
distribution costs, and is working on
the implementation of a personalized
service in national
Enhance brand
leadership
and customer
experience
The group is constantly working to be
the preferred choice of passengers in
South America, and for this purpose,
it focuses on leveraging mobile digital
technologies with its digital strategy,
which seeks to provide information
and solutions to customers in a
timely and transparent manner.
Organizational
strength
LATAM comprises a group of
passionate people, who work in a
simple and aligned way, with leaders
who make agile decisions, all of
which allows it to offer a distinctive
valu proposition to its customers and
operate sustainably in the long term.
Proactive risk
management
The group has a holistic and
responsible view of risk in
decisionmaking, and focuses its
efforts on those risks that represent
a high potential impact and a
low probability of occurrence and
that could significantly affect its
strategic objectives.
Who we are
14
Integrated Report 2022 INTEGRATED MANAGEMENT
NCG 461: 3.6 RISK MANAGEMENT AND
4.2 STRATEGIC OBJECTIVES
At LATAM, the economic, social,
environmental, and governance
dimensions of the business are managed
in an integrated manner. The focus
on generating and sharing value with
shareholders, investors, employees,
customers, suppliers, and the whole of
society is a fundamental part of the
group’s long-term role.
and social risks are identified and
consolidated by the Corporate Affairs
and Sustainability Directorate, and
then reported to the Risk Management
Unit to be integrated into the overall
risk matrix of the group. Currently,
these business components have
identified risks mainly associated with
climate change. No other social and
environmental risks relevant to the
operation were identified.
This expanded view also applies to
risk management. The environmental
In 2021, after a series of dialogs
between LATAM and representatives
of non-governmental organizations
(NGOs) from the five countries where
it is present with domestic operations
through its affiliates, the group launched
its sustainability strategy, which aims
to maintain a balance in economic
development, and guide the behavior of
the group in the next few years.
In this renewed strategy, LATAM
defined challenging commitments with
the ultimate goal being to be an asset
in the countries where it operates,
generating economic, environmental
and social value. These commitments
were built in line with the Sustainable
Development Goals (SDGs) up to 2030
and, in turn, are part of the group’s
strategic objectives.
Progress on the implementation
of the sustainability strategy in its
different areas or pillars, which include
environmental management, circular
economy, climate change and shared
value, is presented regularly to the
Executive Committee and annually to the
Board of Directors. In addition, in each of
these pillars, high-level decision-making
bodies are developed, involving the
executives who lead the initiatives.
Sustainability commitments and goals
To be carbon neutral
in ground and air
operations by 2050
To be a zero waste to
landfill group by 2027
AIR010
To promote the Avion
Solidario (Solidary Plane)
program, which contributes
through its expertise and
connectivity to the benefit
of society in South America
To reduce and offset
the equivalent of
50% of domestic air
emissions by 2030
To eliminate
single-use plastics
throughout the
operation by 2023
The progress and results
achieved in 2022 on the
sustainability goals are covered
in the chapter Commitment to
the future (page 65)
LATAM’s
sustainability
strategy responds
to the region’s
climate, social and
healthcare needs
Who we are
15
Integrated Report 2022 HUMAN RIGHTS
LATAM’s commitment to human
rights is embodied in a public
declaration, which defines
the guidelines for action in its
operations and relationships, such
as the rejection of child labor,
forced labor and labor similar to
slavery, or situations of moral,
physical and sexual harassment;
and the commitment to freedom
of association, health and safety,
fair remuneration, adequate working
conditions, without restrictions on
gender, race, age, sexual orientation,
religion, and nationality. The
document, prepared according to
international standards such as the
Universal Declaration of Human
Rights, the Charter of the United
Nations and the Fundamental
Principles and Rights at Work of the
International Labour Organization
(ILO), also contains the envisaged
consequences in case of violation of
any of these principles.
The group periodically monitors the
risks related to the topic throughout
its operation using a matrix that
considers its potential impacts and
the probability of occurrence.
In 2022, the group received 260
reports of sexual harassment and
41 reports of moral harassment
under Chile’s law No. 20.005 and
equivalent legislation in foreign
jurisdictions where the group
operates. All complaints followed
the corresponding procedure
depending on the country. NCG 461:
5.5 WORKPLACE AND SEXUAL HARASSMENT
PRINCIPLES AND COMMITMENTS
NCG 461: 2.1 MISSION
LATAM is committed to the
Sustainable Development Goals
(SDGs), a global agenda of the
United Nations Organization (UN)
that proposes 17 objectives and 169
goals that governments, companies
and institutions must achieve by
2030. The group seeks to actively
contribute to the achievement of
these goals and focuses its efforts on
ten priority SDGs.
The group does not currently adhere
to the UN Guiding Principles on
Business and Human Rights. LATAM
adheres to the Global Compact,
which mobilizes 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.
MORE INFORMATION
Human rights:
• Declaration of
Commitment
• Risk mitigation
actions
Who we are
16
Integrated Report 2022 BENCHMARKING
LATAM uses as a management,
measurement and benchmark tool,
the S&P Corporate Sustainability
Assessment, responsible for the
selection of companies that make up
the Dow Jones Sustainability Index.
The assessment is applied annually
to companies and covers economic,
environmental and social topics.
In 2022, according to this
assessment, LATAM’s sustainability
performance was the fifth best in the
world. The group’s results stand out
mainly in the variables associated
with corporate citizenship, circular
economy and indicators of labor
practices.
ECONOMIC DIMENSION AND
CORPORATE GOVERNANCE
ENVIRONMENTAL DIMENSION
SOCIAL DIMENSION
h:
48 I 29
g:
71 I 29
f:
83 I 19
a:
42 I 47
100
80
60
40
20
e:
100 I 23
b:
77 I 33
h:
98 I 14
c:
78 I 29
g:
31 I 26
a:
100 I 54
100
80
60
40
20
b:
72 I 30
j:
69 I 28
c:
58 I 24
i:
22 I 13
h:
99 I 32
a:
100 I 47
100
80
60
40
20
b:
90 I 36
c:
62 I 21
d:
62 I 39
d:
82 I 46
f:
42 I 11
d:
8 I 4
e:
66 I 31
g:
100 I 29
e:
48 I 18
f:
83 I 39
a: Corporate governance
b: Materiality
c: Risk and crisis management
d: Business ethics
e: Policy influence
f: Supply chain management
g: Information security, cybersecurity
and system availability
h: Efficiency and reliability
a: Environmental reports
b: Environmental policy and
management systems
c: Operational eco-efficiency
d: Biodiversity
e: Climate strategy
f: Food loss and waste
g: Fleet management
h: Packaging
LATAM
Industry
average
a: Social reports
b: Labor practice indicators
c: Human rights
d: Human capital development
e: Talent attraction and retention
f: Corporate citizenship and
philanthropy
g: Passenger safety
h: Customer relations management
i: Sustainable marketing and brand
perception
j: Privacy protection
Who we are
17
Integrated Report 2022 Value generation model
1
To carry out its business,
LATAM uses capitals of various
natures, which serve as inputs
for work.
2
Through its
activities, LATAM
transforms these
inputs into results
and impacts.
3
The results are the
most visible facet of
the operation,
the materialization
of the work.
4
However, the company’s main
value output is its capacity
to generate lasting positive
impacts for the business and its
stakeholders.
INPUTS
Human capital
Employees
Intellectual capital
Knowledge of the
region and the
business
Operating licenses
and slot rights at
airports
Management Systems
(environmental;
security)
Analytics (Customizing
the Customer
Experience)
Financial capital
Natural capital
Jet Fuel
Industrial capital
Fleet
Maintenance
Bases
Hangars
Revenues
Capital
Assets
Social and Relational
capital
Frequent Flyer
Programs
LATAM Brand
Relations with
authorities and
industry
“Avión Solidario”
program
ACTIVITIES
WHAT WE DO
AND HOW WE
DO IT
Governance and
Management
• Ethics
• Financial responsibility
• Safety and efficiency
• Developing employees
Sustainability
• “Avión Solidario” program
• Climate change
• Circular economy
Customer orientation
• Digital experience and innovation
• Flexible sales model
• Trade agreements and partnerships
• Loyalty programs
RESULTS
Financial
results
Operational
excellence
Broad
destination
network
Customer
base
diversity
Organizational
health and
development
opportunities
For LATAM
For stakeholders
IMPACTS
Customer-
centric value
proposition
Connectivity
Safety
Eco-efficiency
Commitment
to the region
Strategic
debate
Different profiles and segments
Adapted to different needs and expectations
Income diversification
Autonomy and freedom of choice
Market share
Mobility
Leadership in the region
Economic boost
Credibility
Confidence
Competitive advantage
Economy of natural resources
Cost reduction
Less environmental impact and noise
Be a relevant player in society
Economic development
Identity and purpose
Social strengthening
Environmental care
Knowledge sharing
Joint construction
Sector development
Topics of interest of the various audiences
Compliance
Who we are
18
Integrated Report 2022
Timeline
NCG 461: 2.2 HISTORICAL INFORMATION
Brazil filed for Chapter 11 of the
U.S. Bankruptcy Act, as a result of
the sharp drop in air transportation
caused by the global confinement
due to the COVID-19 pandemic.
At the end of 2021, the company
presented its Reorganization Plan
in the U.S. court, which was widely
accepted by shareholders and
creditors in 2022.
Finally, in November 2022,
LATAM successfully completed its
restructuring process, managing to
restructure its debt and raise funding
to prepare for a new stage in its
history. The group emerged from the
reorganization process as a more
efficient group, with a modern fleet,
the largest network of connections in
South America and the largest loyalty
program on the continent.
These and other important
milestones in the group’s history are
highlighted below.
It was in 1929 when the history of
LATAM began, following the emergence
of Línea Aérea Nacional de Chile, LAN,
the national airline. The airline made
its first international expansion in 1946
with a Santiago-Buenos Aires trip, to
which routes were next added to Lima,
Peru; then to Miami, United States;
and later, to Europe.
In 1983, it became Línea Aérea
Nacional Chile Limitada through
the Chilean Economic Development
Agency (CORFO, for its Spanish
acronym); in 1985, it became a joint
stock corporation known as LAN Chile;
and in 1989, its privatization process
began. Following its growth path, in
1997, the airline was listed on the New
York Stock Exchange trading American
Depositary Receipts (ADR), becoming
the first Latin American group of
airlines to achieve this milestone.
In 2012, following the association
with Brazilian airline TAM, created in
1961, LAN changed its name to LATAM
Airlines Group S.A. and consolidated
its expansion on a regional level.
In 2020, LATAM Airlines Group S.A.
Began one of the most challenging
periods in its history when its
subsidiaries in Chile, Peru, Colombia,
Ecuador, the United States, and
1929
Creation of LAN (Línea
Aérea Nacional de Chile)
by Commander Arturo
Merino Benitez.
1947
First international flight:
Santiago (Chile) – Buenos
Aires (Argentina).
1956
Opening of operations in
Lima (Peru).
1958
Start of operations to Miami
(United States).
1961
Creation of TAM (Taxi
Aéreo Marília), by five
charter flight pilots.
Who we are
19
Integrated Report 2022 London, England.
1970
LAN begins
to offer flights
to Europe.
1975
1976
1983
1985
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.
Incorporation of Línea Aérea
Nacional –Chile Limitada, through
CORFO (Production Development
Corporation).
LAN becomes a corporation.
1986
1989
1990
1993
1994
TAM acquires VOTEC (Brasil Central
Linhas Aéreas), another regional airline
operating in the northern and central
sectors of Brazil.
The privatization process begins: Chile's
government sells 51% of its equity to
domestic investors and to Scandinavian
Airlines System (SAS).
Brasil Central is renamed TAM –
Transportes Aéreos Meridionais.
TAM establishes TAM
Fidelidade, the first
frequent flyer program
in Brazil.
The privatization process of LATAM
ends with the acquisition of 98.7% of
the company’s stock by the current
controllers and other shareholders.
1996
1997
1998
1999
• TAM buys airline Lapsa from the
Paraguayan government and creates TAM
Mercosur.
• Start of São Paulo (Brazil) – Asuncion
(Paraguay) flights.
LAN lists its shares on the New York
Stock Exchange, becoming the first Latin
American airline to trade ADRs in this
important stock market.
The first Airbus A330 arrives
and the airline performs its first
international flight from São Paulo
(Brazil) – Miami (United States).
The company’s
expansion process begins: start
of operations of LAN Peru.
2000
LAN joins oneworld®.
Who we are
20
Integrated Report 2022 2001
• 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).
2005
• Another step in LAN’s regional expansion plan: start of
operations of LAN Argentina.
• TAM S.A. goes public listing its shares on Bovespa, Brazil.
• Launch of flights to New York (United States) and Buenos
Aires (Argentina).
2006
• Start of flights to London (United Kingdom) and to Zurich and
Geneva (Switzerland) through its agreement with Air France.
LAN alliance with Qantas
and Lufthansa Cargo.
• Launch of the new Premium Business Class.
• TAM publicly listed on the New York Stock Exchange in the
United States.
2002
2003
The company’s expansion process
continues: start of operations of
LAN Ecuador.
2004
• Launch of the new Business Class for
flights to Paris (France) and Miami
(United States).
• Corporate Image Change: LAN
Airlines S.A.
2007
• 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.
2008
• The short-haul fleet renewal process is completed, now
consisting of A320-family aircraft.
• TAM begins to fly to Santiago (Chile).
• LATAM receives its first Boieng 777-300ER.
2009
• Start of cargo operations in Colombia and passenger
operations in the domestic market in Ecuador.
• Launch of Multiplus.
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
• LATAM Airlines Group is born, through the
association of LAN and TAM.
• Placement of 2.9 million shares.
2013
Capital increase of
US$940.5 million.
Who we are
21
Integrated Report 2022 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.
2015
• 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.
2016
Capital increase of US$608 million, with which
Qatar Airways acquires 9.999999918% of
LATAM's total subscribed and paid shares.
2017
Implementation of the new business model in
domestic markets by subsidiaries.
2018
• Inauguration of the first flight to Asia.
• 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 the oneworld®
alliance as of May 1, 2020.
2020
• 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.
2021
• Launch of the new Sustainability Strategy, which includes
commitments to eliminate 100% of single-use plastics
used in its operation by 2023, be zero waste to landfill
by 2027, offset 50% of domestic emissions by 2030 and
achieve carbon neutrality by 2050.
• LATAM releases its five-year business plan.
• Presentation of the reorganization plan, within the
framework of Chapter 11 of the US Bankruptcy Law.
2022
• LATAM receives creditors’ approval of its restructuring
plan and successfully emerges from the Chapter 11
proceeding.
• Final approval of the joint venture with Delta Air Lines,
which applies to the markets of the United States,
Canada, Brazil, Chile, Colombia, Paraguay, Peru and
Uruguay and provides passengers in both groups with
access to 300 destinations between the United States/
Canada and South America.
• LATAM makes progress in the implementation of its
sustainability commitments with a 14% reduction and
offsetting of its domestic emissions (vs. a target of 50%
by 2030), the strengthening of the “Avión Solidario”
alliance network and a 77% reduction of single-use
plastics (vs. the goal of eliminating this type of material
by 2023).
Who we are
22
Integrated Report 2022 Awards and
acknowledgements
LATAM Airlines Group receives awards
each year from different entities,
in recognition of the quality of the
service it offers to its passengers and
other deliveries of the business to its
stakeholders. Some of those awards
received in 2022 are as follows:
APEX PASSENGER CHOICE AWARDS
It recognized LATAM as a 5-Star
Global Airline, the highest level of its
global airline ranking, which is based
on the vote of clients of more than
600 airlines worldwide. In turn, they
selected the airline as a leader in the
Best Catering and Best Seat Comfort
categories in South America.
WORLD AIRLINE AWARDS– SKYTRAX,
THE MOST IMPORTANT AWARD IN
THE AIRLINE INDUSTRY
LATAM became the “Best Airline
in South America” for the third
consecutive year. In addition, it
received awards in the following
categories: “Best Airline Staff in South
America”, “Best Cabin Crew in South
America”, “Best Business Cabin in
South America”, “Best Economy Cabin
in South America”, and “Cleanest Cabin
in South America”.
WORLD TRAVEL AWARDS 2022
LATAM was again recognized in the
categories “Leading Airline in South
America” and “Leading Airline Brand
in South America”. It should be noted
that the company has earned these
distinctions for the seventh and third
consecutive year, respectively.
PAX INTERNATIONAL
The renowned international
publication awarded LATAM for
“Exceptional Gastronomic Service of
a South American Airline”, and for the
“Best Business Class Amenity Kit”,
based on its readers’ vote.
DESIGN AIR
Chosen as the airline with the best
design in South America in 2022 and
with the best VIP Lounge in 2022,
due to the recently opened VIP
Lounge in Santiago.
WORLD LUXURY TRAVEL
AWARDS 2022
Awarded LATAM the “Best Lounge in
South America” award for its facilities
at the airport in Santiago, Chile.
ONBOARD AWARDS
In its 2022 edition, it ranks LATAM
Airlines as a leader in the categories
“Class Amenity Kit” and “Best
Sustainability On Board”.
Who we are
23
Integrated Report 2022
Operations
IN THIS CHAPTER
Passenger
operations
25
LATAM
Cargo group
28
Fleet
30
Operations
24
Integrated Report 2022
Passenger
operations GRI 2-1 and 2-6
In the international passenger
market, which considers flights
within the region and long-term
flights to three continents, LATAM
group offers 46 international
destinations in 22 countries. In 2022,
14 international routes, suspended
as a result of the pandemic, were
resumed, including Lima and San Jose
de Costa Rica, Santiago and Cusco,
and Rome/Fiumicino.
Capacity, measured in ASK, increased
by 142.3% compared to 2021
(although it was still below 2019
levels), and passenger demand,
measured in RPK, increased by
204.7% compared to 2021. A total
of 8.6 million passengers flew
with LATAM group to international
destinations during 2022 and the
load factor was 83.0%, 17 percentage
points above the level recorded in
2021.
In 2022, LATAM group gradually
recovered its operations, driven by
the end of most of the restrictions
resulting from the pandemic,
and by improvements in its cost
structure, which allowed it to
operate new routes and more
efficiently. Throughout the year,
LATAM resumed routes and opened
new destinations, connecting 144
destinations in 22 countries.
In December 2022, consolidated
capacity, measured in ASK
(available seat kilometers) reached
85.2% of the pre-pandemic level,
with an annual average of 76.3%
capacity compared to 2019.
In domestic markets, the
operations of affiliates in Brazil,
Colombia, Ecuador and Peru
reached a size equal to or greater
than in 2019 in terms of capacity,
while LATAM Airlines Chile has had
a relatively slower recovery. One
of the highlights of the year was
the resumption of the emblematic
route that connects Santiago with
Easter Island/Rapa Nui, after two
years without operations due to
the pandemic. LATAM Airlines
Brazil recorded an average of 570
flights per day and the combined
operations of LATAM Airlines Chile,
LATAM Airlines Colombia, LATAM
Airlines Ecuador and LATAM
Airlines Peru recorded an average
of 500 flights per day. LATAM's
domestic operations cover
115 destinations. Overall, the
company transported 25.3 million
passengers—a 44.4% increase
from the previous year.
In the year, passenger demand,
measured in RPK (revenue
passenger kilometers), increased
41.8% in Spanish-speaking
countries (SSC), while supply,
measured in ASK (available seat
kilometers), increased 31.0%, and
the load factor was 81.0%, 6.2
percentage points lower than in
2021.
In the Brazilian domestic market,
LATAM Airlines Brazil operated
a capacity 39.4% higher than in
the previous year and 1.1% higher
than in 2019, covering a total
of 54 destinations—ten more
than in the pre-pandemic period.
This performance is attributed
to the efficiencies generated
as a result of the restructuring
transformations ensuing from the
Chapter 11 proceeding. A total
of 28.6 million passengers were
transported within Brazil.
Operations
25
Integrated Report 2022 More than
300 destinations
through the
joint venture
with Delta Air
Lines
STRATEGIC AGREEMENT
In 2022, the joint venture between
LATAM and Delta Air Lines was made
official, applying to the markets of the
United States, Canada, Brazil, Chile,
Colombia, Paraguay, Peru, and Uruguay
and provides benefits to clients, such as
the joint accumulation of miles/points
in frequent flyer programs and faster
connections to access more than 300
destinations between the United States/
Canada and South America. On the other
hand, it allows the companies included
in LATAM group and Delta to coordinate
capacity and prices within the markets
that are part of the agreement.
As part of this joint venture agreement,
LATAM Airlines Brazil will start a direct
flight between the cities of São Paulo
(Brazil) and Los Angeles (United States)
in July 2023, from where clients will
be able to connect with Delta’s most
important destinations on the west
coast of the United States, including
San Francisco, Las Vegas and Seattle.
Meanwhile, passengers will be able to
connect from the hub in São Paulo with
the different destinations in the domestic
network of LATAM Brazil and other points
that the group serves in the region.
Operations
26
San Francisco, USA.
Integrated Report 2022 LATAM group passenger operations
NCG 461: 6.1 INDUSTRIAL SECTOR
62
million passengers
Consolidated traffic (RPK): 92.58 billion
Capacity (ASK): 13.85 billion
Load factor: 81.3%
144
LATAM destinations
289
Code sharing
5 North America
129 Latin America
and the
Caribbean
8 Europe
2 Asia and
Australasia
105 North America
32 South America
86 Europe
38 Asia
17 Australasia
11 Africa
LATAM Airlines
Brasil
LATAM Airlines
Chile
LATAM Airlines
Colombia
LATAM Airlines
Ecuador
LATAM Airlines
Perú
54
destinations
17
destinations
17
destinations
8
destinations
19
destinations
Market share
37%
Main competitors:
Gol, Azul
Market share
60%
Main competitors:
Sky Airlines,
JetSmart
Market share
42%
Main competitors:
Avianca, Equair
Market share
25%
Main competitors:
Avianca, Viva
Colombia, EasyFly,
Satena, Copa Airlines
Colombia (“Wingo”)
Market share:
65%
Main competitors:
Sky Airlines Perú,
JetSmart Perú, Viva
Airlines Perú, Star
Perú
Source: websites of Agência Nacional de Aviação Civil (Anac) in Brazil (RPKs); Junta de Aeronáutica Civil (JAC) in Chile (RPKs); Dirección General
de Aviación Civil (DGAC) in Peru (number of passengers transported); and Diio.net in Colombia and Ecuador (ASKs) for the whole of 2022.
Operations
27
Integrated Report 2022 LATAM Cargo
group GRI 2-6 and 3-3
LATAM Cargo S.A. and the cargo
subsidiaries in Colombia and Brazil
stand out among the air operators in
Latin America for having a transport
capacity and connectivity that are
essential for local supply logistics. They
carry out relevant work in the import
of technological products, critical spare
parts and pharmaceutical products, and
in the export of flowers, fish and fruit.
The data provided by WorldACD, a
global benchmark regarding cargo,
demonstrate the relevance of LATAM
Cargo group in the exports made
by air in the region in 2022. LATAM
transported 70% of the fish and
fruits exported by Brazil; 50% of the
fish exported from Chile; and 37% of
perishable products from Peru (such as
asparagus, fish and fruit). In the flower
export market, it transported 36% of
the cargo from Ecuador and 33% from
Colombia.
In absolute terms, during 2022, 900,614
tons of cargo were transported—an
increase of 12.4% compared to 2021.
Revenues increased by 12% in the
period compared to 2021 and revenue
per ATK (available ton kilometers)
decreased by 14%, as a result of the
normalization of fares related to
the recovery of belly capacity at the
industrial level. The load factor was
56%. Cargo capacity increased by
30.7% as a result of progress on the
three-year cargo fleet expansion plan
initiated in 2021.
During the year, cargo operations
recovered their pre-pandemic levels,
ending the year with 62% growth in
revenues compared to 2019 data.
Its contribution to LATAM group’s
consolidated revenues in 2022 was 18%.
The LATAM Cargo group prepared for
a new global scenario in which the
business is expected to normalize with
indicators similar to those registered
in the years prior to the pandemic.
That is why, in addition to advancing
the growth plan, which includes
renewing and expanding the freight
fleet and developing new routes that
are sustainable in the long term, cargo
operators also worked to strengthen
their value proposition, diversify
revenues and increase productivity.
As part of this strategy, during
2022, the implementation of a new
technological system for international
operations was completed, which
provides customers with more and
better information regarding their
cargo, as well as delivering a more
efficient service and a better user
experience. All the data on the
shipments – from quotation to
payment – integrate a single end-to-
end platform hosted on the cloud. The
solution began to be applied in 2021
to part of international operations,
a task completed in early 2022.
During the year, progress was made
on the implementation in domestic
operations, which will end in 2023.
In the same vein, LATAM Cargo
group expanded its distribution
through partnerships with
Webcargo and Cargo.one, two
digital marketplaces specializing in
cargo transportation. The strategy
of making its capacity available
on both platforms responds to the
group’s vision of giving its clients
all the options available for the
dispatch of their cargo.
Cargo subsidiaries
support local
sourcing and the
export industry in
the region
Operations
28
Integrated Report 2022 The group quickly approved the
audit process, confirming the
quality of its risk control and
mitigation processes. Likewise, all
cargo transportation carried out by
the group’s cargo and passenger
operators follows these same
processes and protocols, delivering
the same standard of service
throughout the network—a critical
issue for air transportation safety.
Since 2018, the group has also
been certified by IATA as a Center
of Excellence of Independent
Validators (CEIV) Pharma, which
ensures compliance to safeguard
the integrity of the product until its
final destination. The certification
was fundamental to the support that
LATAM provided to countries with
the mass transportation of vaccines
against COVID-19.
CUSTOMER SATISFACTION
The group’s efforts in the design and
execution of its value proposition
were favorably reflected in the
evolution of LATAM Cargo group’s
Net Promoter Score (NPS), which
reached 51 points in 2022—an
increase of 21 points compared to
2021, and of 33 points in the last
two years. The result was the best
in the history of the cargo business
since the indicator began to be
measured, in 2016.
CERTIFICATIONS
In 2022, the LATAM Cargo group
became the first airline group
worldwide to receive the Center
of Excellence for Independent
Validators (CEIV) lithium battery
certification from the International
Air Transport Association (IATA),
aimed at improving safety in the
handling and transportation of
lithium batteries throughout the
supply chain. These batteries,
whether alone or inside finished
products, pose a risk due to their
high level of combustion, and their
transportation must comply with
global safety standards covering
the manufacturing process, testing,
packaging, branding, labeling, and
documentation included.
Cargo operations
17countries
3 exclusively for cargo
Guatemala, Netherlands,
Panama
203.5
thousand
doses of vaccines against
COVID-19 transported to
South America, between the
countries of the continent and
at the domestic level
Of these, more than 117
million were mobilized for free
as part of the Solidarity Plane
program (see page 67)
154 destinations
10 exclusively for cargo
Amsterdam (Netherlands), Cabo Frio
and Campinas (Brazil), Guatemala City
(Guatemala), Panama City (Panama),
Ciudad del Este (Paraguay), Chicago
(United States), Zaragoza (Spain),
Santo Domingo (Dominican Republic),
Huntsville (United States).
36% of
flowers
Ecuador
Colombia
33% of
flowers
Peru
37% of
perishable
products, such
as asparagus,
fish and fruit
Brazil
70% of fish
and fruit
50% of
fish
Support
to export
industries in
South America
Chile
Operations
29
Integrated Report 2022
Fleet
SASB TR-AL-000.F
noise. The fleet for domestic and
regional operations in South America
consists of Airbus aircraft, mainly
of the narrow-body type, such as
Airbus A320, Airbus A321, and Airbus
A320neo, which is 15% more fuel
efficient and generates half the noise
than the previous equivalent model.
LATAM Cargo group's operating fleet
totals 16 Boeing 767 aircraft. In 2022,
the group made progress with its plan
to expand the cargo fleet through
the conversion of up to 19 passenger
aircraft into cargo aircraft by 2024,
representing an increase of over 70% in
its capacity. The first of the 10 Boeing
767 passengers converted for the cargo
operation arrived at the end of 2021, and
throughout 2022, another three were
delivered. The conversion of the other six
aircraft is planned for 2023 and 2024.
As at December 31, 2021, 310 aircraft
made up LATAM group's total fleet, with
an average age of 11.6 years.
The international operations have
57 wide-body aircraft, all Boeing,
including Boeing 767, Boeing 77, and
Boeing 787 Dreamliner (versions
8 and 9), worldwide benchmarks
for fuel efficiency and reduction of
greenhouse gas (GHG) emissions and
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 contingent
maintenance services for third parties.
The Chilean base is located in
Santiago and can serve two narrow-
body and one wide-body aircraft
simultaneously. In Brazil, the base
is located in São Carlos and has
capacity for nine narrow-body or
wide-body aircraft.
In 2022, the two bases were
responsible for 479 maintenance
services, representing 88.8% of total
fleet maintenance and a total of
1.6 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 group hangars,
such as those located in Santiago
(Chile); São Carlos, Congonhas/São
Paulo, and Brasilia (Brazil); Lima
(Peru), and Miami (United States).
That network offers a series of
automated and integrated services
that ensure compliance with all safety
requirements and in accordance with
local and international regulations.
Operations
30
Integrated Report 2022 At December 31, 2022
Off balance On balance
Total
OPERATING FLEET
Passenger fleet1
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
TOTAL FLEET
1
40
15
30
0
6
6
19
117
1
1
118
402
913
1
19
164
4
4
2
41
131
16
49
16
10
10
21
177
294
155
15
192
16
16
310
1 All passenger aircraft bellies are available for cargo.
2 Includes 28 Airbus A319-200 aircraft classified as non-current
assets and available for sale.
3 Includes 3 Airbus A320-200 aircraft classified as non-current
assets and available for sale.
4 Includes 1 Boeing B767-300ER aircraft classified as non-
current assets and available for sale.
5 Includes 2 Boeing B767-300 Freighter aircraft classified as non-
current assets and available for sale.
For more information on 2-3-4-5, see note 13 of the consolidated
and audited Financial Statements.
Boeing 767
-300ER
Boeing 777
-300ER
Boeing 787-8
Boeing 787-9
Cargo operations
Boeing 767
-300F
11.6 years
is the average
age of the
aircraft in the
LATAM fleet
Snapshot
Length
(m)
Wingspan
(m)
Seats
Cruise
speed
(km/h)
Maximum
take-off
weight (kg)
Passenger operation
SASB TR-AL-000.A, TR-AL-000.B
and TR-AL-000.C
2020
2021
2022
Passenger operations – short haul/narrow-body fleet
Airbus A319
-100
Airbus A320
-200
Airbus A320
- 200neo
Airbus A321
-200
33,8
37.6
37.6
44.5
34.1
144
34.1 156-168-174
34.1
34.1
174
220
Passenger operations – long haul /wide-body fleet
54.9
73.9
56.7
62.8
47.6
221-238
64.8
60.2
60.2
379
247
313
Capacity (ASK) – million
55,718
67.636
113,852
Revenue per Passenger-
Kilometer (RPK) – million
42,624
50,317
92,588
Load factor (ASK)
76.5%
74.4%
81.3%
Revenue/ASK (US$ cents)
4.9
4.9
6.7
Total PAX transported
(thousands)
Cargo operation SASB TR-AL-000.D
28,299
40,195
62,467
Capacity (ATK) – million
4,708
4,788
6,256
Revenue per ton-kilometer
(RTK) – million
Load factor (ATK)
Revenue/ATK (US$ cents)
Tons transported (thousands)
3,078
3,035
3,532
65.4%
25.7
784.5
63.4%
32.2
801.5
56.5%
27.6
900.6
830
830
830
830
851
894
903
903
70.000
77.000
77.000
89.000
186.880
346.500
227.900
252.650
54.9
47.6
445.3
851
186.880
Operations
31
Integrated Report 2022 Corporate
governance
IN THIS CHAPTER
Ownership
structure
33
Decision-making
bodies
36
Corporate
guidelines
41
Stakeholder
engagement
43
Financing
Policy
45
Market
Risk Policy
46
Financial
Policy
48
Liquidity
and Financial
Investment Policy
49
Corporate governance
32
Integrated Report 2022 Ownership
structure
NCG 461: 2.3.1 CONTROL SITUATION and 2.3.4 STOCKS,
THEIR CHARACTERISTICS AND RIGHTS
by the provisions included in the
Chilean Corporations Act and its
Regulations.
The Company’s Extraordinary
Shareholders’ Meeting, held
on July 5, 2022, agreed to
increase the Company’s capital
by US$10,293,269,524, through
the issuance of 73,809,875,794
common stock and 531,991,409,513
backup shares, the last thing to
be destined to respond to the
conversion of convertible bonds,
all ordinary, of the same and single
series, without face value Within the
context of its Reorganization Plan,
the Company carried out the capital
increase and by the end of 2022,
99.8% of the convertible bonds had
been converted into shares. As a
result of the above, the ownership
structure underwent significant
changes, illustrated in the graphs on
the next page.
At December 31, 2022, the
group does not have a controlling
shareholder.
LATAM Airlines Group S.A. must
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.
By December 31, 2022, the
Company's statutory capital is
represented by 606,407,693,000
shares, all issued, common, and
without par value. Of this amount,
605,231,854,725 shares had
been subscribed and paid by that
date. The group’s paid-in capital
at December 31, 2022, totaled
ThUS$13,298,486 divided among
605,231,854,725 shares from
the same and only nominative,
ordinary series, without par value.
A year earlier, that is, at December
31, 2021, the paid-in capital was
ThUS$3,146,265 divided among
606,407,693 shares, also 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
Corporate governance
33
Integrated Report 2022 OWNERSHIP 2022
NCG 461: 2.3.2 MAJOR CHANGES IN OWNERSHIP OR CONTROL, 2.3.3 IDENTIFICATION OF
MAJORITY PARTNERS OR SHAREHOLDERS and 2.3.5 OTHER VALUES
Main shareholders
Sixth Street Partners Management
Company
Strategic Value Partners
Delta Airlines, Inc.
Total shares
168,669,825,995
96,815,692,279
60,722,284,826
%
27.87
16.00
10.03
Qatar Airways Investments (UK) LTD
60,640,769,249
10.021
Sculptor Capital
Cueto Group
AFPs
ADRs
Others
Total
39,724,001,608
30,389,446,225
6,534,051,959
86,064,978
6.56
5.02
1.08
0.01
141,884,529,792
23.44
605,231,854,725
100.00
1 Qatar holds 9.999999918% of the total statutory capital, represented by
606,407,693,000 shares.
OWNERSHIP 20211
Main shareholders
Delta Air Lines
Cueto Group
Qatar Airways
Eblen Group
Hirmas Group
Others
American Depositary Receipt (ADR)
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
10.002
4.56
4.56
33.52
13.07
2.22
606,407,693
100.00
1 At 12/31/2021, the shareholders' record at the Central Securities Deposit
(DCV, for its Spanish acronym) did not register direct holding of 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.
OWNERSHIP 2022 (%)
OWNERSHIP 2021 (%)
i: 23.44
a: 27.87
h: 0.01
g: 1.08
f: 5.02
e: 6.56
b: 16
d:10.02
c: 10.03
Total
h: 2.22
g: 13.07
a: 20.00
b: 16.39
c: 10
e: 4.56
d: 4.56
f: 33.52
Total
605,231,854,725
606,407,693
a: Sixth Street Partners Management Company
b: Strategic Value Partners
c: Delta Airlines, Inc.
d: Qatar Airways Investments (UK) LTD.
e: Sculptor Capital
f: Cueto Group
g: AFPs
h: ADRs
i: Others
a: Delta Air Lines
b: Grupo Cueto
c: Qatar Airways
d: Grupo Eblen
e: Grupo Hirmas
f: Others
g: American Depositary Receipt
(ADR)
h: Foreign investors
Corporate governance
34
Integrated Report 2022 MAIN SHAREHOLDERS
NCG 461: 2.3.2 MAJOR CHANGES IN OWNERSHIP OR CONTROL, 2.3.3 IDENTIFICATION OF MAJORITY PARTNERS
OR SHAREHOLDERS, 2.3.4 STOCKS, THEIR CHARACTERISTICS AND RIGHTS and 2.3.5 OTHER VALUES
At December 31, 20221
Name
Banco de Chile on behalf of State Street
Banco de Chile on behalf of non-resident third parties
Delta Air Lines, Inc.
Qatar Airways Investments,(UK) Ltd.
Banco Santander Chile
Costa Verde Aeronáutica S.A.
Banco Santander on behalf of foreign investors
Larrain Phial S.A. Corredora de Bolsa
Costa Verde Inversiones Financieras
Banchile Corredores de Bolsa
Cia de seguros de vida Consorcio Nacional de Seguros S.A.
AFP CUPRUM S.A. para fondos de pensión C
At December 31, 2021
Name
Delta Airlines Inc.
Costa Verde Aeronáutica S.A.
JP Morgan Chase Bank
Banchile Corredores de Bolsa S.A.
Qatar Airways Investments (UK) Ltd.
Santander Corredores de Bolsa Limitada
BCI Corredores de Bolsa S.A.
Andes Air 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 Phial 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
Shares subscribed and paid
284,198,481,733
76,741,518,770
60,722,284,826
60,640,769,249
41,104,259,947
23,789,209,717
13,371,541,340
10,473,987,639
6,592,460,617
2,604,713,175
2,328,707,088
2,248,823,180
Shares subscribed and paid
121,281,538
91,605,886
79,240,114
61,271,228
60,640,768
25,667,681
19,433,331
19,339,670
16,902,522
13,112,092
11,469,576
10,823,190
8,872,048
8,171,069
7,775,891
%
46.96%
12.68%
10.03%
10.02%2
6.79%
3.93%
2.21%
1.73%
1.09%
0.43%
0.38%
0.37%
%
20.00%
15.11%
13.07%
10.10%
10.00%3
4.23%
3.20%
3.19%
2.79%
2.16%
1.89%
1.78%
1.46%
1.35%
1.28%
All shares are
part of the same
series. LATAM has
only one series of
shares.
1 Ignacio Cueto
(Chairman of the
Board of LATAM),
Enrique Cueto
(member of the
Board at LATAM),
and certain other
Cueto family
members and
entities controlled
by them, comprise
the Cueto Group.
By December
31, 2022, the
Cueto group's
shareholding
stands at 5.0% of
the shares.
2 Qatar holds
9.999999918%
of the total
statutory capital,
represented by
606,407,693,000
shares.
3 Qatar owns
9.999999918% of
total issued shares
of LATAM.
DIVIDENDS
NCG 461: 2.3.4 STOCKS, THEIR
CHARACTERISTICS AND RIGHTS
In accordance with the Chilean
Corporate Law, and provided it
does not have carryover financial
losses, LATAM must distribute cash
dividends equal to at least 30% of
its annual consolidated net income
calculated in accordance with IFRS
subject to the terms of Oficio
Circular no. 856 issued on October
17, 2014 by the Chilean Financial
Market Commission, subject to
limited exceptions. If there is no net
income in a given year, LATAM can
elect but is not legally obligated to
distribute dividends out of retained
earnings. The board of directors
may declare interim dividends
out of profits earned during such
interim period. Pursuant to LATAM’s
bylaws, the annual cash dividend
MORE INFORMATION
• Shareholders’s
Agreement (page 112)
is approved by the shareholders at
the annual ordinary shareholders’
meeting held between February 1
and April 30 of the year following
the year with regard to which the
dividend is proposed. All outstanding
common shares are entitled to share
equally in all dividends declared by
LATAM, except for the shares that
have not been fully paid by the
shareholder after being subscribed.
In 2022, since the Company incurred
losses in financial year 2021, there
was no dividend payment, pursuant
to the legislation in force.
Corporate governance
35
Integrated Report 2022 Decision-making
bodies
The main governing body of LATAM
Airlines Group S.A. is the Board, which
defines and monitors the Company’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.
This structure is fixed. In cases of
contingency or crisis (mainly in aviation
emergencies) the Board of Directors
remains unchanged and continues
to function normally, supporting the
continuity of the business’ operations.
The Board of Directors holds regular
meetings, both ordinary, as well as
NCG 461: 3.2 BOARD
OF DIRECTORS and 3.3
BOARD COMMITTEES
| GRI 2-9 and 2-11
extraordinary, which are held according
to social needs and that are convened
following the legal requirements.
There is no estimate of minimum
face-to-face and remote time required
for them.
In 2022, the average attendance at the
41 ordinary and extraordinary sessions
carried was 98.1%. Directors Ignacio
Cueto, Alexander Wilcox and Henri
Philippe Reichstul attended 97.6% of
the meetings, Director Sonia Villalobos
attended 95.1% of the meetings, and
Directors Nicolas Eblen and Eduardo
Novoa attended 92.7% of the meetings,
while the other members of the Board
attended 100% of the sessions.
During 2022, the Board of Directors
visited some of the LATAM group's
facilities. In July, the directors visited
the San Carlos Maintenance Base and
the main hangar at Brazil's Congonhas
airport. In December, the new Board of
Directors visited the cargo operation's
facilities in the United States. These
visits were accompanied by the general
manager and other executives and were
aimed at providing more information
about the operation and the opinions of
the local teams.
DIRECTORS’ COMMITTEE
The Directors’ Committee reports
monthly to the Board of Directors. Its
function consists mainly of:
•
reviewing and evaluating external
auditor reports, balance sheets and
other financial statements;
• proposing to the Shareholders'
Meeting the names of external
auditors and risk rating agencies;
• examining and reporting on all
related-party transactions; and
• examining the remuneration
systems and compensation plans
for the group’s management, senior
executives, and workers.
In compliance with 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), the
Directors’ Committee also acts as the
Audit Committee.
At December 31, 2022, the Committee
was comprised by Frederico Curado,
Michael Neruda and Sonia J. S. Villalobos,
all considered independent under section
10A of the Securities Exchange Act.
Pursuant to the Chilean Corporations
Act (LSA, for its Spanish acronym),
Frederico Curado, member and
chairman of the Committee, qualifies
as independent; that is, he has no
links, interests, economic, professional,
credit, or commercial dependence of
any relevant nature or volume on the
company, the other subsidiaries of
the group, its controller, or the main
executives, nor any family ties with the
latter, among other characteristics.
At December 31, 2021, the Committee
included Eduardo Novoa Castellon,
Patrick Horn García, and Nicolas Eblen
Hirmas. According to the Chilean
Corporations Act (LSA), the former
two were considered independent, and
according to Article 10A of the SEC, all
three had that status.
In addition to the Directors’ or Audit
Committees, four other sub-committees
support the Board in decision-making:
Strategy & Sustainability, Leadership,
Finance, and Clients.
Corporate governance
36
Integrated Report 2022 TRAINING AND EVALUATION
OF THE BOARD
NCG 461:3.2 BOARD OF DIRECTORS |
GRI 2-17 and 2-18
Following the group’s Induction Policy,
after each election, new members
receive the data and background
information related to matters under
evaluation and analysis by the Board,
and a training on the regulatory
framework and the duties involved in
the position as members of the Board.
This includes, among other aspects:
sustainability and social responsibility
issues; policies and guidelines,
particularly the Code of Conduct;
the regulatory framework and duties
applicable to the group and its directors;
business affairs; risks; and financial and
accounting aspects of the group.
The Board of Directors is committed
to an annual internal review of its
performance. In 2022, the review was
carried out in October, prior to the
changes in its composition.
EXECUTIVE SPHERE
NCG 461: 3.6 RISK MANAGEMENT
The executive sphere is divided into five
large areas: Clients, People, Operations,
Commercial, and Finance, with clearly
divided responsibilities to execute and
monitor the strategy. The executives in
these five areas and the Vice Presidents
of Legal & Compliance, Technology &
Digital, and Corporate Affairs and the
LATAM Brazil CEO form an Executive
Committee, which meets weekly with
the CEO. The Strategic Planning area
support the Executive Committee, and
other vice-presidencies participate in
meetings to address specific issues.
The Security, Legal and Compliance,
Corporate Affairs, Technology, Strategic
Planning, and Audit departments are
transversal.
The Internal Audit team has an
independent role, and its main
responsibility is to ensure an
independent review of the operation of
the Risk Management Model developed
in the organization. This model is
managed by a dedicated team, where
the Risk Owners—generally leaders
of the various vice-presidencies—are
the main individuals responsible for the
identification and management of risks.
Each subsidiary has a CEO and a group
of executives, who are responsible for
the operations of each affiliate.
The Strategy and Sustainability
Committee of the Board of
Directors is the highest authority
for analyzing results and making
decisions on sustainability
SUSTAINABILITY
NCG 461: 3.1 GOVERNANCE FRAMEWORK and
3.2 BOARD OF DIRECTORS| GRI 2-12 and 2-13
The commitment to sustainability is
a comprehensive part of the business
and decision-making at all levels of
the group.
Within the Corporate Affairs
Directorate is the Sustainability
department, which organizes the
group in terms of its long-term
sustainability strategy and promotes
its implementation through focal
points in each of the countries where
LATAM operates.
Quarterly, Corporate Affairs
consolidates information on the
main advances and gaps associated
with environmental management,
climate change, circular economy and
shared value, which includes the social
variable of the strategy.
According to the schedule, the results
are presented to the Executive
Committee, which also receives
information on issues that require
the support or involvement of senior
management.
The Strategy and Sustainability
Committee of the Board of Directors
is the highest authority for analyzing
results and making strategic decisions
on sustainability, and it is periodically
informed of the progress on the goals
and commitments in this arena.
Corporate governance
37
Integrated Report 2022 Organizational chart
NCG 461: 3.1 GOVERNANCE FRAMEWORK
CEO
BOARD
LATAM Airlines Chile
Digital and IT Vice-presidency
LATAM Airlines Colombia
Vice-presidency of Operations
Vice-presidency of Finance
(includes Management Control and Investor Relations)
Legal Affairs and Compliance Vice-Presidency
Directors’ Committee
LATAM Airlines Ecuador
LATAM Airlines Peru
Commercial Vice-Presidency
Human Rights Vice-Presidency
Customers Vice-Presidency
Strategic Planning
Safety
LATAM Airlines Brazil
Corporate Affairs
(includes External Communications and Sustainability)
Internal Audit and Control
(includes Risk Management)
MORE INFORMATION
Board composition
(page 114)
Annual Report
of the Directors’
Committee’s
Administration
(page 117)
Main executives
(page 123)
Corporate governance
38
Integrated Report 2022 The compensation for participation on
the Board of Directors is determined
by the Shareholders' Meeting and is
the same for all directors, except the
Chairman, who receives double the sum
SALARY RATIO (women/men)1
Average2 Median3
NCG 461 3.2 BOARD
OF DIRECTORS
Ordinary members4 100%
Deputy members
NA
100%
NA
NA: Not applicable. There are no
deputy members.
1 Proportion of women’s gross hourly salary
vs. men’s gross hourly salary. Gross salary
includes all fixed and variable pay, such
as base salary, social laws, transportation
and food allowances, bonuses, overtime,
commissions, or others.
2 Average: Average value of women’s gross
hourly salary divided by men’s average
gross hourly salary.
3 For the calculation of the median, the
values of the gross hourly salary of women
and men are ordered from lowest to
highest, and the central value of the first
group is divided by the central value of the
second group.
BOARD COMPENSATION
NCG 461: 3.2 BOARD OF DIRECTORS and 3.3
BOARD COMMITTEES | GRI 2-19
The compensations reported represent
a monthly compensation for the Board
and the Directors’ Committee, approved
in the Ordinary Shareholders’ Meeting
held on Tuesday, November 15, 2022.
During financial year 2022, the Board of
Directors reported $25,000 in consulting
expenses related to Human Resources
matters and the Directors' Committee did
not record any consulting expenses.
GUIDELINES FOR ENGAGING SERVICES
The Board may hire experts to advise
them on specific subjects, such as
accounting, finance, taxes, legal issues
or other matters. The director(s) who
require the hiring of an expert must
justify this in a Board meeting. The
engagement of the advisor must
follow the Company’s policies for
hiring suppliers, conflicts of interests,
and market conditions. Additionally,
Management will propose a list of
names for the Board Members to choose
from. It will be possible for one or more
Board Members to veto the hiring of a
specific advisor. Regarding the services
engaged with the audit firm in charge of
auditing financial statements, or other
entities, there are no relevant deviations
from the annual budget of the Board.
REMUNERATION – ALLOWANCE1 2022 (US$)
Name
Position
Ignacio Cueto Plaza
Chairman
Bornah Moghbel2
Vice-chairman
Enrique Miguel Cueto Plaza
Board member
Frederico Curado
Antonio Gil Nievas
Michael Neruda2
Bouk Van Geloven2
Board member
Board member
Board member
Board member
Sonia J. S. Villalobos
Board member
Alexander D. Wilcox
Board member
Board
165,078.0
-
82,260.2
8,725.6
10,331.0
-
-
60,601.5
75,142.2
Nicolás Eblen Hirmas
Former board member
69,980.1
Patrick Horn García
Former board member
75,957.8
Eduardo Novoa Castellón
Former board member
69,867.8
Enrique Ostalé Cambiaso
Former board member
54,858.4
Henri Philippe Reichstul
Former board member
53,317.0
REMUNERATION – ALLOWANCE1 2021 (US$)
Name
Position
Board
Ignacio Cueto Plaza
Chairman
125,287.1
Sonia J. S. Villalobos
Board member
Eduardo Novoa Castellón
Board member
Nicolás Eblen Hirmas
Board member
Patrick Horn García
Board member
Henri Philippe Reichstul
Board member
Enrique Miguel Cueto Plaza
Board member
Enrique Ostalé Cambiaso
Board member
Alexander D. Wilcox
Board member
43,797.3
62,643.6
62,643.6
62,643.6
42,212.3
62,643.6
43,643.2
39,271.1
Directors’
Committee
Subcommittee
Total
-
-
-
21,112.1
186,190.1
-
-
20,900.1
103,160.3
3,612.1
2,086.6
14,424.4
-
-
-
2,889.2
13,220.2
-
-
-
-
3,612.1
13,955.5
78,169.2
-
12,780.0
87,922.2
38,295.1
91,479.1
88,624.8
-
-
16,433.9
124,709.1
24,493.5
191,930.4
18,010.9
176,503.5
11,832.3
66,690.7
13,012.3
66,329.3
Directors’
Committee
-
-
109,287.2
41,964.7
109,287.2
-
-
-
-
Subcommittee
Total
30,199.8
155,486.9
20,672.8
64,470.1
26,759.9
198,690.6
28,623.9
133,232.2
25,141.4
197,072.1
21,811.0
64,023.3
26,759.9
89,403.4
14,520.7
58,163.9
15,867.0
55,138.0
1 Net amounts.
2 Directors Bornah
Moghbel, Michael
Neruda and Bouk
Van Geloven waived
their compensation.
Corporate governance
39
Integrated Report 2022 EXECUTIVES’ COMPENSATION
NCG 461: 3.4 SENIOR EXECUTIVES and
3.6 RISK MANAGEMENT
LATAM has a compensation policy for
salary structures, consisting of the
methodology of weighting positions
(points and grades) and salary scales
(based on market research), which guides
all salary movements, both for merit and
promotions within the company. This
applies to all positions in the group.
The Leadership Committee, comprising
four directors, is responsible for analyzing
LATAM’s high-level organizational
structure and corporate compensation
policy. The goal is to align with the
company's strategic objectives, reward
good performance and behavior, and
to prevent the compensation policy
from generating any kind of incentive
for senior executives to act against the
interests of the group, its policies and
guidelines or the current regulations. The
work includes the review and evaluation
of models and best practices available in
the market (benchmarking).
In addition, whenever there is a change,
the group's senior vice-president
of Human Resources presents the
compensation policy and compensation
systems to the Directors' Committee.
Once a year, the compensation for senior
executives is presented to the Board.
The Leadership Committee analyzes
the top-level organizational
structure and the corporate
compensation policy
The policy is not disclosed to the general
public, but it is published on LATAM’s
internal portal for employees.
In 2022, executive remuneration totaled
US$36,439,727 (US$21,277,246 from
remuneration and US$15,162,482
from profit-sharing in March, 2023).
In 2021, US$19,895,749 were paid
as remuneration and US$0 were paid
out as profit-sharing, amounting
to US$19,895,749 as total gross
remuneration.
Corporate Incentive Plan: As part
of the Backstop Agreements, the
parties agreed on proposed terms for
a Corporate Incentive Plan, subject
to the approval, allocation and
implementation by the company’s
board of directors. The Corporate
Incentive Plan is expected to be
equivalent to 2.5% of the fully-
diluted, fully-converted post-
reorganization shares, is intended to
be implemented after the date of
substantial consummation of the Plan
of Reorganization (the “Effective Date”)
– November 3, 2022 – by the Board
of Directors elected on November
15, and is anticipated to cover senior
executives, other executives, and other
employees, in the terms and conditions
of, and as described in the Backstop
Agreements. The terms and conditions
of any subsequent incentive plans
are expected to be determined and
approved by the Board of Directors, in
its sole discretion.
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.
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.
Corporate governance
40
Integrated Report 2022 Corporate
guidelines
NCG 461: 3.1 GOVERNANCE FRAMEWORK, 3.5
ADHERENCE TO NATIONAL AND INTERNATIONAL
CODES, 3.6 RISK MANAGEMENT, 8.1.1 LEGAL
AND REGULATORY COMPLIANCE IN RELATION TO
CLIENTS, 8.1.2 IN RELATION TO THEIR WORKERS,
8.1.4 FREE COMPETITION and 8.2 SUSTAINABILITY
INDICATORS | GRI 2-26, 2-27, 206-1 and 3-3 |
SASB TR-AL-520a.1
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 Receipts). Its
corporate governance model is in line with
the applicable existing regulation, the Stock
Market laws (n° 18,045) and Corporations
Act (n° 18,046), and the CMF rules, as well
as the US, SEC and specific regulations of
the countries where it operates.
A series of corporate guidelines direct
employee behavior, in accordance with
standards of ethics, integrity, transparency,
accountability, combating illegal acts
(corruption, bribery, antitrust, and money
laundering), and the group constantly
evaluates the possibility of implementing
better practices, such as adhering to
national or international codes.
The group’s Code of Conduct applies
to all employees and collaborators of
LATAM group companies, its branches,
affiliates and offices around the world.
The Compliance Program, managed by the
Legal and Compliance Vice-presidency,
directs monitoring and control processes
and their ongoing evolution.
The group also has policies in place to
prevent and detect regulatory breaches
related to the rights of its customers
and employees or that may affect
free competition. A series of trainings
prepare professionals on the subject.
There were no penalties enforced in
these arenas in 2022, or monetary
losses as a result of legal proceedings
relating to unfair competition regulation.
Finally, LATAM has a Crime Prevention
Manual to prevent the crimes of
bribery, money laundering, financing
of terrorism, handling of stolen goods,
incompatible negotiations, corruption
among private parties, misappropriation
and false administration.
CONFLICT OF INTEREST
NCG 461: 3.1 GOVERNANCE FRAMEWORK and
8.1.5 LEGAL AND REGULATORY COMPLIANCE –
OTHERS | GRI 2-11 and 2-15
LATAM has an internal process to detect
and manage conflicts of interest.
Currently, all new employees are
required to complete the conflict of
interest statement prior to being hired.
It is also completed each time they take
the Code of Conduct course and when a
potential conflict is identified. Suppliers
must also answer a questionnaire on
the subject. Cases where a potential or
actual conflict is identified are reviewed
by Compliance and raised before the
appropriate bodies for approval.
On the other hand, LATAM employees
and partners must request permission
beforehand for non-routine meetings
with competitors and public officials;
this is done through the Approval
System, where they must send the
requirement and the agenda previously
approved by Legal; finally, Compliance
approves it in the system.
RELATED-PARTY TRANSACTIONS
LATAM has a Related-Party Transactions
Control Policy applicable to the parent,
all affiliates, 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 at the time
of the transaction, 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, pursuant to
applicable law.
The consolidated financial statements
for the financial year ended December
31, 2022, report the transactions carried
out in 2022 between LATAM and its
affiliates. For more information, see
note 33 of the Financial Statements.
MORE INFORMATION
Code of Conduct
Corporate Practices
Manual
Political
Contributions Policy
Code of Conduct for
Third Parties and
Intermediaries
Corporate governance
41
Integrated Report 2022 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. GRI 415-1
ETHICS AND COMPLIANCE NCG 461: 3.6
RISK MANAGEMENT | GRI 205-2 and 205-3
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 2022, 100% of the Board of Directors
and all employees participated in Code
of Conduct trainings. Communications
on anti-corruption procedures reached
80% of employees and all suppliers.
They are informed of the matter by
accepting the Supplier Code of Conduct,
at the beginning of the business
relationship, in addition to committing
to the anti-corruption clauses contained
in contracts and purchase orders.
There were no cases of corruption in
2022. 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.
CONFIDENTIAL CHANNEL NCG 461: 3.6
RISK MANAGEMENT | GRI 2-16 and 2-26
The LATAM Confidential 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 different stakeholders
of the group can access this anonymously
and LATAM ensures the principle of non-
retaliation when reported in good faith.
The channel is on the platform of an
external and non-company provider.
When filing the report, the complainant
receives an identification number, with
which they can monitor their case. The
information provided is only about the
status of the case, such as if it is open,
if it is being investigated, if it has been
closed confirming the facts, or not. No
EMPLOYEES TRAINED1 ON THE CODE OF CONDUCT GRI 205-2
Brazil
Chile
Colombia Ecuador United States2
Peru Others
LATAM group
Senior management
Top management
Middle management
Operators
Sales Force
Administrative staff
14
150
625
37
332
421
9,273
1,887
242
308
285
407
Other professionals
855
1,144
1
22
67
743
12
65
42
1
9
34
94
11
24
14
4
31
48
8
5
12
40
1
20
76
3
23
60
935
384
48
85
40
31
44
25
41
61
587
1,331
13,324
634
945
2,160
9,419
Other technicians
5,145
1,826
696
217
0 1,494
1 This percentage does not include personnel on permanent medical leave.
2 Percentage based on the personnel to whom the course is made available, i.e. direct personnel hired by LATAM.
information is given of the possible
penalties that might be received by the
people reported.
The investigation is carried out internally
by the Compliance team, with support
from the HR, Legal and any other
departments or individuals necessary for
the investigation.
The channel is announced through
communications, training carried out by
the Compliance team, e-learning and
group policies.
EMPLOYEES TRAINED ON
THE CODE OF CONDUCT
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
LATAM group
94%
81%
95%
98%
78%
86%
86%
90%
EMPLOYEE
CATEGORIES
Senior management
CEO, Vice President,
Director.
Top management
Senior Manager,
Manager, Assistant
Manager.
Middle
management
Area Manager,
Department
Manager.
Operators
Cargo Operations,
Maintenance,
Airport and
Operations Control
Center.
Sales Force
Sales Operations,
Customer Care.
Administrative staff
230,1
Support activities
and general roles.
Other professionals
Middle
management in
support activities.
Other technicians
Command and
cabin crew.
Corporate governance
42
Integrated Report 2022 Stakeholder
engagement
NCG 461: 3.1 GOVERNANCE
FRAMEWORK, 3.7 STAKEHOLDER
ENGAGEMENT, 6.1 INDUSTRIAL
SECTOR and 6.3 STAKEHOLDERS|
GRI 2-28
LATAM’s main stakeholders include:
•
•
•
•
•
•
•
•
authorities and different government
bodies, which define the regulatory
framework and public policies affecting
the group and its operations;
trade associations, with which LATAM
shares common interests;
international organizations, responsible
for the international regulatory
framework, and sector benchmarks
and references that allow the group
to comparatively analyze its own
performance;
capitals market—a key player for
business sustainability and access to
financing;
communities, with which LATAM
puts into practice its commitment to
generating and sharing value;
employees, who make LATAM, being
essential to the business and its
operations;
network of suppliers with whom LATAM
maintains business relationships;
customers who choose to fly with
LATAM.
CAPITALS MARKET
LATAM establishes an ongoing dialog
with its shareholders, others players in
the debt and capitals market, and the
press. It also has Investor Relations
and External Communications
departments to manage relationships
with these stakeholders.
The Investor Relations department
makes it possible to clarify the
concerns of shareholders, investors
and other players of the capitals
market about the group, its financial,
economic or legal situation, the main
risks, strategy and other aspects of
the business.
In the Investor Relations website, the
group offers a detail of the corporate
governance structure, and releases
updated financial statements,
quarterly reports, and other
relevant data to assist shareholders,
investors and market analysts in
their decision-making process. The
contents are available in English,
Spanish, and Portuguese.
The Investor Relations department
reviews internally, without having
external experts, the information
presented to the market by other
players in its industry to annually
evaluate improvement opportunities
for the data and the information
presented to the public.
Shareholders’ Meetings
All shareholders may participate in the
Shareholders’ Meetings, and have the
right to voice and vote therein. In order
to carry them out, LATAM complies with
the times and information required by
General Standard 30 of the CMF.
Prior to the Shareholders’ Meetings with
the agreement of the Board, LATAM
uploads all the relevant information to
said process into the Investor Relations
website. As board member nominations
are received, LATAM publishes the names
of the shareholders’s nominees along with
their nomination and acceptance letters
or sworn statements, as may be the
case. No information is published on the
Board’s opinion regarding the experience,
visions and abilities that are advisable
for new members, nor is any information
published on the experience, profession
or trade of candidates to the Board.
The most recent Shareholders’ Meetings
have been held remotely or in a hybrid
format, and shareholders have been able
to participate and exercise their right
to vote remotely and live. LATAM does
not have a real-time audio and video
streaming service for non-shareholder
audiences.
Corporate governance
43
Integrated Report 2022 RELATIONSHIP WITH THE PRESS
The External Communications
department engages with the media
for all their requirements and to
communicate the milestones of LATAM
group.
External Communications - Contact:
ComunicacionesExternas@latam.com
ASSOCIATION MEMBERSHIP
NCG 461: 6.1 INDUSTRIAL SECTOR
and 6.3 STAKEHOLDERS | GRI 2-28
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 2022, financial
contributions to the different entities
totaled US$1.4 million. The entities that
received the largest contributions were:
International Air Transport Association
(IATA), Sindicato Nacional das Empresas
Aeroviárias (SNEA) Sociedad de
Fomento Fabril (SOFOFA)
Argentina
• Cámara de Compañías Aéreas en
Argentina (JURCA)
•
Junta dos Representantes das
Companhias Aéreas Internacionais do
Brasil (Jurcaib)
Colombia
• Asociación de Líneas Aéreas
Internacionales en Colombia
(ALAICO) – Carga
• SPC&VB – São Paulo Convention &
Visitors Bureau
• Asociación de Transporte Aéreo de
• Cámara Nacional de Turismo
(CANATUR)
• Cámara Regional de Turismo de
Cusco (CARTUC)
Brazil
• Associação Brasileira de Agências de
Viagens (Abav)
• Associação Brasileira de Agências de
Viagens Corporativas (Abracorp)
• Associação Brasileira das Empresas
• Sindicato Nacional das Empresas
Aeroviárias (Snea)
Chile
• Asociación Chilena de Aerolíneas
Colombia (ATAC)
•
Instituto Peruano de Economía (IPE)
Ecuador
• Asociación de Representantes de
• Perú Sostenible
Líneas Aéreas (ARLAE)
• Sociedad de Comercio Exterior del
Perú (COMEX PERÚ)
• Asociación Peruana de Hidrógeno
Aéreas (Abear)
(ACHILA)
• Cámara de Industrias de Guayaquil
• Associação Brasileira de
Anunciantes (ABA)
•
International Air Transport
Association (Iata)
• Associação Brasileira das Empresas
de Mercado de Fidelização (Abemf)
• Asociación Latinoamericana y del
Caribe de Transporte Aéreo (ALTA)
• Cámara de Industrias y Producción
(H2 PERÚ)
(CIP)
• Club 30%
• Global Compact
• UNESCO – Pact for Culture
• Associação Brasileira de
• Cámara Chileno Norteamericana de
Comunicação Empresarial (Aberje)
Comercio (Amcham – Chile)
• Cámara de Comercio Ecuatoriano
• Associação Latino Americana
• Cámara de Comercio de Santiago
de Gestão de Eventos e Viagens
Corporativas (Alagev)
•
International Air Transport
Association (IATA)
• Câmara Americana de Comércio
para o Brasil (Amcham Brasil)
•
•
•
Federación de las Empresas de
Turismo de Chile (Fedetur)
Fundación Chilena del Pacífico
Instituto Chileno de Administración
Racional de Empresas (ICARE)
Chilena
Perú
• Asociación de Empresas de
Transporte Aéreo Internacional
(AETAI)
• Asociación Peruana de Empresas
Aéreas (APEA)
MORE INFORMATION
Manual for Handling Relevant
Information for Markets
Investor Relations:
latamairlinesgroup.net
IR - Contact:
InvestorRelations@latam.com
•
Flight Safety Foundation (FSF)
• Pacto Global
• Cámara de Comercio Americana del
Perú (AMCHAM PERÚ)
External Communications - Contact:
ComunicacionesExternas@latam.com
• G100 Brasil (G100 Brasil)
• Sociedad de Fomento Fabril (SOFOFA)
Corporate governance
44
Integrated Report 2022 Financing Policy
The scope of LATAM’s Financing
Policy is to meet the group’s
financing needs, including working
capital financing, the acquisition of
fleet assets, such as aircraft and
engines, and the financing of other
investments.
During the reorganization process
under Chapter 11 of the United
States Bankruptcy Act, LATAM
obtained debtor-in-possession
financing (DIP), initially for US$2.45
billion and up to US$3.70 billion,
US$2.75 billion of which were drawn.
This DIP financing allowed LATAM to
operate with sufficient liquidity during
the pandemic and its reorganization
process. On October 12, 2022, said
DIP credit agreement was fully paid
through the DIP-to-Exit financing
amounting to US$2.25 billion in a
combination bridge-to-term loan
financing, added to US$1.14 billion
from a Junior DIP, effective during the
remaining period of the Chapter 11,
and a new Revolving Credit Facility
(RCF) worth US$500 million that
became fully available.
On October 18, 2022, the bridge loans
were partially repaid through a bond
issuance. Subsequently, on November
3, 2022, the bridge loans were fully
repaid and replaced by an increase in
term financing. Likewise, on that date,
LATAM completed its reorganization
process, achieving a reduction of 35%
of its financial liabilities, in addition to
a re-profiling of its debt maturities,
with the upcoming important
maturities due in 2027 corresponding
to the US$1.1 billion Term Financing
and the US$450 million 2027 Bonds,
and the year 2029 corresponding
to the US$700 million 2029
Bonds. As part of its new capital
structure, LATAM has two committed
revolving credit facilities for a total
of US$1.1billion, one for US$600
million, secured by aicraft, spare
engines and other spare parts and
the aforementioned US$500 million
line secured by intangibles. As at
December 31, 2022, both lines are
fully committed and undrawn.
During its reorganization, LATAM
focused its resources on maintaining
the operation and adjusting fleet
size in line with current and projected
demand for the next few years.
LATAM reached agreements with
Boeing to cancel and postpone
aircraft arrivals, as well as to
obtain more favorable terms for
its financed fleet and fleet under
operating leases, such as variable
payment periods, rental reduction,
and extended payment periods. By
December 31, 2022, LATAM had placed
orders with Boeing for two B787-9
aircraft and with Airbus for 83 A320neo
family aircraft with delivery by 2029.
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.
In November 2022,
LATAM completed its
reorganization process,
reducing its financial
liabilities by 35%
Corporate governance
45
Integrated Report 2022 Market Risk
Policy
Given the nature of its operations,
LATAM 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. LATAM has the
ability to trade derivatives based on
Jet Fuel, as well as other underlying
assets, such as Jet Fuel, Brent, WTI
and Heating Oil.
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, among other factors.
Moreover, this Policy sets hedging
zones, a premiums budget, and other
strategic considerations, which 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.
Interest rate risk on cash flows:
Interest rate variations depend largely
on the state of the global economy.
A change in the long-term economic
outlook could modify rates, along with
possible government interventions
that could raise or lower rates, among
other possible measures, in response
to specific situations or to manage
inflation targets.
the investments they 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 mitigate the impact from an
eventual hike in interest rates, LATAM
can use interest rate swaps, swaptions,
or other derivatives.
At December 31, 2022, the market value
of interest rate derivatives positions
totaled US$8.8 million (positive).
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.
The uncertainty surrounding how
the market and the governments
will behave, and thus, how the
interest rate will change, leads to a
risk related mainly to LATAM's debt
subject to variable interest and to
Cash flow risk is a consequence of
the net revenue position and costs in
currencies other than US dollars. LATAM
sells its services in U.S. dollars and in
local currencies. In the international
passenger business, most fares depend
Corporate governance
46
Integrated Report 2022 on the US dollar and, to a lesser
extent, the euro. On the other hand,
in domestic businesses, most rates
are in local currency. On the other
hand, some of the group’s expenses
are denominated in US dollars or
equivalent to the USD, like fuel
costs, and aircraft leases. Other
expenses, such as compensation, are
denominated in local currencies.
U.S. dollars, even though its assets
are stated in local 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 2022,
LATAM made no hedges against
balance sheet risk.
Thereby, LATAM is exposed to the
fluctuations in various currencies,
mainly the Brazilian Real. At
December 31, 2022, LATAM is
hedged against the Brazilian Real for
US$108 million for 2023.
On the other hand, balance sheet
risks appears when entries in the
balance sheet are exposed to
exchange rate fluctuations, given
that said entries are expressed
in a currency unit other than the
functional currency and must be
converted to the relevant functional
currency. 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
Corporate governance
47
Integrated Report 2022 Financial Policy
The Corporate Finance Department
is responsible for managing the
Company's Financial Policy.
This Policy makes it possible to
effectively respond to changes in
the environment, and conditions
under which the Company operates,
and thus maintain and anticipate a
stable flow of funds to ensure the
operation’s continuity and growth
and the fulfillment of its financial
obligations.
Moreover, the Finance Committee,
comprising the Executive Vice-
Presidency and members of LATAM's
Board of Directors, meets periodically
to review the Company's financial
situation and its compliance with this
Financial Policy, and to propose to
the Board the approval of issues that
are not regulated by the Financial
Policy. LATAM Airlines Group's
Financial Policy S.A. 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 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 maintain a suitable level of credit
lines with local and foreign banks to
gain access to additional liquidity to
face contingencies.
To manage counterparty risk through
the diversification and limits on
investments and transactions with
counterparties.
To maintain an optimal debt level,
diversify financing sources, manage
the debt maturity profile, and
minimize the cost of financing.
To maintain, at all times, a short,
medium, and long-term visibility of the
group's projected financial situation to
anticipate situations of low liquidity,
financial ratio deterioration, etc.
Capitalize excess cash flow through
financial investments that will
guarantee a risk and liquidity
level consistent with the Financial
Investment Policy.
The Financial Policy delivers guidelines
and restrictions to manage Liquidity
and Financial Investment transactions,
Financing Activities, and Market Risk
Management.
Corporate governance
48
Integrated Report 2022 Liquidity and
Financial
Investment Policy
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 characterized
globally by very low rates, whereas
2022 witnessed an increase in
interest rates. During the Chapter 11
process, paragraph 345(b) regulates
the holding of cash for companies
under reorganization. In compliance
with this regulation, LATAM held
most of its deposits in authorized
depository banks by the US Trustee
of the Southern District of New York
of the U.S. Bankruptcy Court. At the
end of the year, this regulation did
not apply, so LATAM maintained its
deposits in investment instruments
such as DDA Accounts, term
deposits and mutual funds with our
different relationship banks.
LATAM seeks to maintain an adequate
liquidity position for the purpose of
safeguarding against potential external
shocks and the volatility and cycles
inherent to the industry. In this sense,
it seeks to maintain liquidity levels
above 20% of the total income of the
last 12 months.
This liquidity considers the cash
available and short-term liquid
investments in addition to a revolving
credit line committed for a total of
US$1.10 billion with 13 financial
institutions, both local and international
(the RCF or revolving credit facility).
On November 3, 2022, LATAM
completed its reorganization
process. As part of its new capital
structure, LATAM has two committed
revolving credit facilities for a total of
US$1.1billion, one for US$600 million,
secured by aicraft, spare engines and
other spare parts and another for
US$500 millon secured with intangible
assets. As at December 31, 2022,
both lines are fully undrawn. By the
end of the year, LATAM closed with a
total liquidity of US$2.30 billion and a
liquidity index of 24%.
With regard to the Financial Investment
Policy, its goal is to centralize
investment decisions to optimize
LATAM seeks to
maintain liquidity levels
above 20% of the total
income of the last 12
months
Corporate governance
49
Integrated Report 2022 Our business
IN THIS CHAPTER
Industry context
51
Financial results
53
Stock information
56
Investment plan
57
Our business
50
Integrated Report 2022
Industry context
NCG 461: 6.2 BUSINESSES
The world enters 2023 amid high
inflationary pressures, the Russia-
Ukraine war and the resurgence of
COVID-19 in parts of China. With the
pandemic in full retreat worldwide, the
opening of economies was an imminent
event during 2022 but, just as normalcy
returned, the slowdown in global
economic activity also became evident.
While the previous economic outlook
suggested a pessimistic 2022, the
results have surprised the market, with
a stronger than expected real GDP in the
third quarter, driven mainly by domestic
factors, such as consumption and private
investment, as well as fiscal support
above what was previously expected.
With this, the International Monetary
Fund (IMF) in its latest projection dated
January 2023, estimates 3.4% growth
for the global economy in 2022, while
projecting 2.9% growth for 2023. The
latter is 0.2 percentage points higher
than was estimated in its previous
report. For 2024, it estimates a higher
growth of 3.1%.
In this same projection, the IMF
estimates that developed economies
will face a downturn next year, with
growth in 2022 projected at 2.7%
and falling to 1.2% in 2023. The IMF
estimates that the U.S. will expand
by 1.4% during 2023, which is 0.4
percentage points higher than projected
The IMF estimates
3.4% growth of in 2022
and 2.9% in 2023 for the
global economy
in its October report, in response
to the carryover effects of resilient
domestic demand. For 2024, growth
is expected to reach 1.0% in the
United States. As for the Euro Zone,
the IMF estimates growth of 0.7%
during 2023, upwardly revised by
0.2 percentage points reflecting
more aggressive interest rate
increases by the European Central
Bank, in addition to the erosion
of real incomes. These have been
neutralized by the 2022 results: led
by lower wholesale energy prices and
the announcement of new energy
cost-buffering strategies through
price controls and direct transfers.
As for Latin America, socio-political
processes are being experienced
that have had repercussions on the
economic scenarios of the region's
countries. In Brazil, during October
2022, presidential elections were held
between the right-wing Jair Bolsonaro
and former president Luiz Inácio
Lula da Silva, with the latter winning.
Bolsonaro challenged the election
results, giving way to a series of mass
demonstrations against the current
government.
In June 2021, presidential elections
were held in Peru, where Pedro
Castillo was declared the winner
over Keiko Fujimori in the closest
election in the country's history.
The elections were not without
controversy, with accusations of
electoral fraud surfacing after the
polls closed. Less than two years into
Castillo's administration, the president
announced the dissolution of Congress
and called for elections, triggering
a coup d'état. He was subsequently
removed from office and arrested,
Our business
51
Integrated Report 2022 SIG036
1.8%
is the growth
projection for Latin
America and the
Caribbean in 2023
and power fell to Vice President
Dina Boluarte. Since that time in
2022, Peru has been immersed in a
social crisis with protests across the
country, dozens of deaths and serious
consequences for the local economy.
Considering the socio-political
backdrop of the region, the projections
for the area in the IMF's latest report
were adjusted with regard to the
estimates delivered in October. For
Latin America and the Caribbean,
growth is projected at 1.8% in 2023
with an upward revision of 0.1
percentage points compared to the
October estimate. This readjustment
in the projections is mainly due to the
unexpected resilience in domestic
demand, higher than expected growth
in the economies of major trading
partners, and in the case of Brazil,
higher than expected fiscal support.
For 2024, the IMF estimates an
expansion of 2.1% for the region,
which shows a downward revision
of 0.3 percentage points. Brazil's
economy is expected to grow by
1.2%, which is 0.2 percentage points
above the last projection.
In Chile, President Gabriel Boric
took office in March 2022, after a
period of elections that polarized
the country's political scenario. In
this context, the current president
was elected with a wide margin over
his right-wing opponent Jose Antonio
Kast. At the same time, a constituent
process was being carried out with the
goal of proposing a new Magna Carta
for the country. On September 4, the
final referendum was held regarding
the constitutional draft that had been
developed during the year. The proposal
was rejected with 62% of the votes,
giving way to a new constitutional
process agreed upon transversally by
the legislators, and on which work began
during December. Subsequently, the
Central Bank, in its last Monetary Policy
Report (IPoM, for its Spanish acronym)
estimated growth of between -1.75%
and -0.75% for 2023.
Our business
52
Integrated Report 2022 Financial
results
At December 31, 2022, the controlling
company reported a ThUS$1,339,210
gain, translating into a positive variation
of ThUS$5,986,701 vs. the previous
year’s loss of ThUS$4,647,491. Net
margin for the year settled at 14.1% in
2022 and -90.9% during 2021.
The operating result for the year 2022
amounts to a loss of ThUS$121,279,
compared to a loss of ThUS$1,119,277
at December 31, 2021, while operating
margin reached -1.3%, 20.6 percentage
points higher than the margin of
-21.9% in 2021.
Operating income for the financial year
increased 86.2% vs. the same period
of 2021, totaling ThUS$9,516,807. This
increase is largely due to a 128.5% rise
in Passenger revenues and 12.0% in
Cargo revenues, while Other revenues
decreased by 32.1%. The effect of the
Brazilian Real’s appreciation translated
into higher ordinary revenues by
around US$111 million.
Passenger revenues totaled
ThUS$7,636,429 which, compared to the
ThUS$3,342,381 at December 31, 2021,
translates into a 128.5% increase. This
variation is due to an 84.0% increase in
demand measured in RPK and a 24.2%
increase in yields compared to the same
period of the previous year. On the other
hand, the load factor also shows a positive
variation of 6.9 percentage points, reaching
81.3% during 2022. This increase is
explained by a strong hike in demand.
By December 31, 2022, cargo revenues
reached ThUS$1,726,092, translating
into an increase of 12.0% over 2021;
yields decreased 3.8%, while traffic
measured in RTK increased 16.4%, as a
result of the recovery in international
operations and a solid performance of
the cargo fleet.
The Other income item presents a
decrease of ThUS$73,045, mainly due
to the negative variation of income
received for indemnification from
Delta Air Lines, Inc., related to the
implementation of the JBA signed in
2019 for ThUS$87,780, partially offset
by higher income from Tour Services
during the period of 2022.
At December 31, 2022, Operating
costs totaled ThUS$9,638,086 which,
compared to 2021, translates into
higher costs by ThUS$3,407,463,
equivalent to a 54.7% increase, whereas
unit cost per ASK decreased by 8.1%.
Furthermore, the effect of the Brazilian
Real’s appreciation on this line item
translates into higher costs by roughly
US$78 million. Item variations are
explained as follows:
a) Wages and benefits increased
ThUS$224,437 mainly due to higher crew
costs, a 7.6% increase in the average
headcount and compensation paid to
employees during the last quarter of 2022.
b) Fuel increased 161.0%, equivalent
to ThUS$2,394,729. This increase
corresponds mainly to 73.4% higher
average unhedged prices and
50.2% growth in consumption measured
in gallons. The Company recognized a
fuel hedge profit of ThUS$18,755 in
2022, compared to a ThUS$10,100 loss
in financial year 2021.
c) Commissions to agents show an
increase of ThUS$77,827, mainly due
to the hike in operations related to
passenger revenues.
d) Depreciation and amortization
increased by ThUS$14,118, equivalent
to 1.2%, a variation that is mainly
explained by maintenance depreciation
costs resulting from increased
operations, offset by a smaller average
fleet during fiscal year 2022.
Our business
53
Integrated Report 2022 e) Other Rental and Landing Fees
increased ThUS$280,970, mainly
in the costs of airport taxes and
handling services, impacted by the
recovery of the operation.
f) Passenger Services presents
higher costs by ThUS$106,994,
which translates into a variation
of 138.3%, mainly explained by an
increase in catering and in-flight
service costs, due to the lifting
of restrictions on food delivery
during most of 2021 because of
the COVID-19 pandemic, as well
as a significant growth in demand,
which represents an increase of
55.4% in the number of passengers
transported, mainly in the
international segment.
g) Aircraft Rentals costs total
ThUS$82,215. Since the second
quarter of 2021, operating aircraft
leases under variable mode were
reported, as a result of the various
agreements reached by Company.
Aircraft Rentals 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 from 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$49,110, equivalent to 9.2%,
mainly due to a higher operation.
i) Other Operating Costs increased
ThUS$177,063, mainly due to the
effect of higher variable costs of
crew, marketing, sales and reservation
systems, all of which are the result
of the growth of the operation during
2022.
Financial income totaled
ThUS$1,052,295, which compared
to the ThUS$21,107 from 2021,
translates into higher income by
ThUS$1,031,188, mainly due to
the fair value adjustment of the
converted bonds whose origin was
financial debt totaling ThUS$420,436
and write-offs of financial debt worth
ThUS$491,326.
Financial costs increased 17.0%,
totaling ThUS$942,403 by December
31, 2022, mainly due to the DIP
financing and DIP to Exit financing
that the Company had in place until
the exit from Chapter 11. This effect
was also increased by the impact on
variable debt due to the high prime
rates that the market is experiencing.
Other income / costs totaled
ThUS$1,357,438 at December 31,
2022 which, compared to 2021, shows
a positive variation of ThUS$3,537,931.
This impact is mainly explained by
ThUS$2,550,306 corresponding to the
fair value adjustment of the converted
bonds whose origin was Trade accounts
payable and Other accounts payable,
in addition to a lower expense of
ThUS$1,564,973 related to the
rejection of fleet contracts recognized
during financial year 2021, partially
Our business
54
Integrated Report 2022 net accounts receivable and payable
to related companies, totaling a
gain of THUS$16,791, and net
accounts receivable and payable
to third parties, totaling a loss of
THUS$6,854. The other items of net
assets and liabilities generated a
gain of MUS$13,791.
offset by higher costs of ThUS$345,410
associated with the reclassification of 28
A319 aircraft to the line item of Assets
held for sale, during the fourth quarter of
2022.
The main line items in the Consolidated
Financial Statement of TAM S.A. and
Affiliates, which caused a currency
exchange gain of ThUS$36,973 at
December 31, 2022, were the following:
Other financial liabilities; ThUS$13,246
gain from USD-denominated loans and
financial leasing for fleet acquisitions;
ECONOMIC VALUE GENERATED AND DISTRIBUTED1
(US$ THOUSANDS) GRI 201-1
Direct economic value generated (income, financial
investments, sale of assets)
Economic value distributed
Operating Costs
Employee salaries and benefits
Payment to capital providers (interest payment to lenders and divi-
dend distribution)
Payments to government (taxes)
Community investments
Retained economic value
1 This indicator provides an overview of how an organization generates
value for its stakeholders.
2022
10,569,102
9,231,965
8,371,732
1,266,336
-415,035
8,914
18
1,337,137
Snapshot
FINANCIAL INDICATORS
(US$ THOUSAND)
Operating income
Operating expenses
Operating Results
Operating Margin
Net profit/(loss)
Net Margin
EBITDA
EBITDA margin
Cash and cash equivalents1/
revenues last 12 months
Leverage2
NS: Not significant.
2020
2021
2022
4,334,668
5,111,346
9,516,807
(5,999,957)
(6,230,623)
(9,638,086)
(1,665,289)
(1,119,277)
(121,279)
-38.4%
-21.9%
-1.3%
-4,545,887
-4,647,142
1,339,210
-104.9%
-275,903
-6.4%
39.0%
NS
-90.9%
46,117
0.9%
20.5%
NS
14.1%
1,058,233
11.1%
24.3%
4.2x
1 Includes the revolving credit line.
2 Adjusted net debt/EBITDAR (last 12 months).
MORE
INFORMATION
Risk Factors
(page 164)
Our business
55
Integrated Report 2022 Stock information
NCG 461: 2.3.4 STOCKS, THEIR
CHARACTERISTICS AND RIGHTS
Receipts (ADR) program is no longer
listed on the New York Stock Exchange.
Since then, LATAM ADRs are traded in
the United States of America on the
over-the-counter (OTC) market.
Annual return
20.00%
ADR
-19.44%
S&P 500
-98.27%
22.38%
Acción local
S&P IPSA
Volumes traded by quarter—local stock
(Santiago Stock Exchange)
2022
First quarter
Second quarter
Third quarter
Fourth quarter
N° of shares
traded
Average
price (clp)
51,875,200
79,325,000
687,100,980
11,790,342,900
278
290
173
17
Total value
(million
clp)
14,432
22,999
118,881
203,977
LATAM Airlines Group S.A. is an open
stock corporation registered before
the Financial Market Commission
(CMF, for its Spanish acronym), under
n° 306, whose stocks are traded in
Chile on the Santiago Stock Exchange,
and the Chilean Electronic Exchange-
Stock Exchange. Due to the filing for
Chapter 11, the American Depositary
Volumes traded by quarter – ADR
2022
First quarter
Second quarter
Third quarter
Fourth quarter
N° of shares
traded
22,006,960
28,723,100
45,615,330
86,296,710
Average
price
(USD)
0.38
Total value
(million
usd)
8.44
0.33
0.25
0.46
9.37
11.27
40.07
LOCAL STOCK – 2022
12/30/21
01/26/22
02/21/22
03/25/22
04/29/22
05/25/22
06/30/22
07/26/22
08/30/22
09/27/22
10/24/22
11/29/22
12/26/22
IPSA (points)
Local stock (CLP)
ADR – 2022
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
400
300
200
100
0
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
12/31/21
01/26/22
02/21/22
03/25/22
04/29/22
05/25/22
06/30/22
07/26/22
08/30/22
09/27/22
10/24/22
11/29/22
12/26/22
S&P 500 (points)
ADR (USD)
Our business
56
Integrated Report 2022 Investment plan
NCG 461: 4.3 INVESTMENT PLANS
Capital expenditures are related to the
acquisition of aircraft, maintenance
CAPEX, restocking of parts, IT-related
CAPEX, fleet projects such as cabin
retrofits, cargo freighter conversions,
and certain other strategic projects.
LATAM’s capital expenditures is recorded
in the Financial Statements in its cash
flow statement through the following
lines: Purchase of Property, Plant and
Equipment, Purchases of Intangible
Assets, and is part of Payments to
Suppliers for the Supply of Goods and
Services. Purchase of Property, Plant
and Equipment totaled US$780.5
million in 2022, US$597.1 million in
2021 and US$324.3 million in 2020, and
purchases of intangible assets totaled
US$50.1 million in 2022, US$88.5
million in 2021 and US$75.4 million in
2020. Maintenance CAPEX associated
with operating leases included in
Payments to Suppliers totaled US$163.7
million in 2022, US$149.1 million in
2021 and US$66.0 million in 2020.
The following chart sets forth
the Company’s estimated capital
expenditures from 2023 to 2025
calendar year, which are subject to
change and may differ from the actual
capital expenditures. PDPs and Other
expenditures, as shown in the table
below, represent estimated cash out
flows for the Company that will be
recorded in the Net cash flow from (used
in) investing activities under the Property
Plant and Equipment and Purchases of
Intangible Assets and in the Net cash
flow from operating activities for the
case of the maintenance related to the
operating leases fleet. In the case of fleet
commitments, in the below table they
are presented as estimated Fleet CAPEX
and the aircraft price of Fleet CAPEX
represents the present value of the right
of use aircraft (as per IFRS16) assumed
to be received under operating lease
agreements. However, aircraft arriving
under an operating lease do not represent
a cash outflow upon their arrival, but
rather represent the recognition of a
right-of-use asset and a lease liability,
and therefore will not be recorded in
the Cash Flow Statement as per IFRS
accounting rules.
ESTIMATED CAPITAL EXPENDITURES BY YEAR,
AS OF DECEMBER 31, 2023 (US$ MILLIONS)
Fleet commitments1
PDPs2
Other expenditures3
2023
(835)
50
2024
(539)
(57)
(1,165)
(1,301)
2025
(1,253)
(66)
(1,068)
1 The number of aircraft included in Fleet CAPEX calculation includes all the committed deliveries (from
manufacturers and lessors) with estimates regarding current scheduled delivery dates. The aircraft price of Fleet
CAPEX represents the present value of the right of use aircraft under operating lease agreements, as per IFRS16.
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, maintenance of
fleet, projects and others, plus purchases of intangible assets.
For reference, LATAM group’s fleet
commitments presented as the value of
all committed deliveries by manufacturers
and/or lessors by year are US$1,217.0
million for 2023, US$756.8 million for
2024 and US$1,520.5 million for 2025. In
the table above these commitments are
assumed to be received under operating
leases. In general, LATAM evaluates
financing alternatives to meet its fleet
commitments and therefore the amounts
presented are not necessarily indicative
of a cash outflow and depending on the
type of lease agreement (operating or
financial lease), the Cash Flow Statement
will record fleet delivery differently: for
financial leases, cash out will be recorded
in the Net cash flow from (used in)
investing activities based on the purchase
price of the aircraft.
Our business
57
Integrated Report 2022 Safety
IN THIS CHAPTER
Number 1 priority
59
Safety
58
Integrated Report 2022 Number 1 priority
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY
INDUSTRY | GRI 3-3 |SASB TR-AL-540a.1
For LATAM group, the safety of its
customers, employees and the
communities where it operates is
fundamental and the number one
priority. The group bases its actions
on the Safety, Quality, Health and
Environment Policy, which contains
the guidelines on the subject and
complies with the parameters
established by the International Civil
Aviation Organization (ICAO).
The group's safety culture aims at
the continuous improvement of
its processes and the permanent
monitoring of its performance, in
order to constantly perfect its safety
indicators. In addition to being
rigorous in the application of the
operational procedures established
by the authorities, manufacturers
and the company itself as an airline
operator, LATAM seeks to continually
surpass its own standards. In its
quest for excellence, the group relies
increasingly on the use of technology
and the data that its systems provide
for decision-making.
INTEGRATED SAFETY MANAGEMENT
SYSTEM (SMS)
LATAM's SMS considers the areas of
Safety, Security, Health, Safety and
Environment (HSE) and Emergency
Response Plan, meeting the
requirements and guidelines of ICAO
Annex 19 and the regulations required
in the different countries where the
group's subsidiaries are headquartered.
The Safety Management System
includes tools and programs that
enable LATAM to act proactively, monitor
performance, identify risk situations, and
react promptly to minimize them. The
actions are guided by the matrix of risk
factors and criticality degrees, updated
periodically with data from internal
analyses and events related to global
aviation.
As part of the system, the group
performs a series of periodic audits,
divided into three types:
Periodical internal
audits, which assess
the maturity of the
operational processes
implemented in
the Airports and
Maintenance arenas;
Internal audits based on IOSA
(IATA Operational Safety Audit)
guidelines, which aim to ensure
that all operational areas
comply with the highest safety
parameters in the industry; and
IOSA recertification audits.
All affiliates have had this
certification since 2007 and
undergo a recertification
every two years. The most
recent recertification was in
2022.
Safety
59
Integrated Report 2022 With this information available,
LATAM can improve its internal
processes in a permanent
effort to seek opportunities for
improvement in safety matters.
An example of this is the task on
which the company embarked in
2022: a diagnosis of passenger
boarding processes, with the aim
of mapping the risks related to
aircraft dispatch, in terms of weight
and balance, and defining action
plans to mitigate them. This work,
carried out in conjunction with an
external consultant, enabled the
implementation of measures to
improve the safety of the operation,
employees and passengers.
ANALYTICS AND
ADVANCED DATA USAGE
LATAM has been a pioneer in the
sector in the use of data from its
routine operation in the development
and generation of action plans and
ongoing improvement of operational
safety. Since 2020, it has been
moving forward with the Safety II
or Data Learning for Safety (DLS)
project, which generates valuable
information about flights and
allows it to analyze variables with
the potential to affect operating
performance.
The project continued its
development in 2022, reaching
several milestones. Among them
is the implementation of the
infrastructure to integrate different
safety databases, such as flight data
monitoring, advanced qualification
program (Flight Operations
Training Program), meteorological
information, maintenance reports,
and flight crew alert levels, among
others. This database currently
includes more than 670 thousand
flights and has the capacity
to process and analyze all the
information in just one hour. The
company is also working on the
development of the Safety II
indicator, with the capacity to point
out best practices in flight operations
and not only focus on adverse
events. The next step of this project
is to incorporate this new indicator
into the monitoring and control
processes.
DATA MONITORING
LATAM group has implemented a
program that supports its internal
processes, such as flight data
monitoring, the Flight Operations
Quality Assurance (FOQA) program,
which makes it possible to compare
actual flight parameters with
Standard Operating Procedures.
This is a computer system that
collects 96% of the information of
each flight, and processes the data
automatically to identify deviations
in operations and to manage
preventive maintenance services.
This safety program is a
key element of the Safety
Management System and is crucial
for detecting and identifying
safety violations. Thanks to this
program, in 2022, it was possible
to monitor over 95% of the flights
of LATAM group, providing useful
information to mitigate risk and
prevent future recurrences.
Likewise, the system provides
segmented information by pilot
and houses this data in the Pilot
LATAM application, through which
crews can view the details of
their performance and compare
it to the average of the fleet
to which they belong, and have
access to the incidents identified
during flights. We should note
that pilot data is treated with
absolute confidentiality.
670 thousand
flights in
the Safety II
database
TECHNICAL ASSISTANCE
During the second half of 2022,
LATAM received a team of consultants
from the Boeing Flight Operations
Support Program (FOSP) to provide
technical assistance on safety issues
related to flight operations and
training and to create effective lines
of communication. In addition, the
FOSP provides LATAM Airlines with an
objective view of its operations from a
global perspective.
HUMAN FACTOR GRI 403-7
While it is concerned with the safety
of all its employees, the LATAM group
is aware that they themselves are the
main players in making its operations
increasingly safer. The group invests
Safety
60
Integrated Report 2022 permanently in generating awareness
and commitment among all its
employees and seeks to bolster
the safety culture through training
and initiatives in engagement and
communication. Through internal
campaigns, LATAM group raises
awareness among its teams about the
importance of safe behavior, and an
online platform receives notifications
of incidents and deviations, whose
information is used to map risks and
generate improvement plans.
Efforts along this line during 2022
focused on consolidating the Peer
Support Pilot Program, which brought
together the program's Volunteer
Pilots in all subsidiaries and through
which it is possible to develop
indicators related to the psychological
wellbeing of its pilots.
This program is additional to
"SeguraMente” (safe mind), which
offers support to pilots in cases
of personal and family problems,
through medical consultation and
psychological support.
AIRPORT
SECURITY
When it comes to
airport security,
LATAM group
follows national
and international
standards
and invests
permanently in
the continuous
improvement of
its processes so
that the cargo
and passengers it
transports arrive
safely at their
destinations.
DISRUPTIVE PASSENGERS
NCG 461: 3.6 RISK MANAGEMENT
Between 2020 and 2021, the
rate of disruptive passengers
increased, the main cause being
the protocols associated with the
Covid-19 pandemic, displacing
passengers under the influence
of alcohol. Complementing the
procedure for disruptive passengers
and their categorization, in early
2022, the Sexual Harassment or
Sexual Molestation Procedure was
generated and published, describing
and addressing these behaviors. In
addition, and in a joint effort between
the vice-presidencies of Human
Capital and Safety, a protocol was
established to offer support to abused
employees, in order to ensure their
physical and emotional wellbeing in
this type of events with professional
support.
This issue continues to be very
relevant, since the level of
aggressiveness and the variety of this
type of events has increased, currently
representing a concern not only for
LATAM but also for the industry in
general. Along this line, LATAM Airlines
Group S.A. focuses its efforts on crew
training, providing the necessary tools
to deal with these issues in the best
possible way.
Particularly in Brazil, LATAM
Airlines Brasil is working hand
in hand with the authorities to
generate a regulatory framework
that establishes consequences
for disruptive passengers and that
protects the company should it
decide not to transport a passenger
considered dangerous. LATAM Airlines
Brasil expects to have a regulation
soon, as this is an issue that the
authority also understands as
fundamental for air traffic safety.
EMERGENCY RESPONSE PLAN
LATAM group has an Emergency
Response Plan that determines
which resources and people should
be activated in the event of an
air emergency, considered as an
accident with deceased persons.
The objective of this plan is to
support the affected people and
their families, acting as facilitator
with the aeronautical authorities in
the investigations, and maintaining
communication with the different
stakeholders to ensure the continuity
of the operation.
There are currently Emergency
Response committees in eight
subsidiaries of the group: Chile,
Brazil, Peru, Colombia, Ecuador, the
Safety
61
Integrated Report 2022 an emergency landing in the
Paraguayan capital.
For both cases that affected
LATAM group's safety, the airline's
responsibility is focused on
understanding and identifying the
operational reasons behind these
events, analyzing the cases self-
critically and working to strengthen
the safety culture as an effective
tool to manage risk in its operation.
United States, Paraguay and Spain
are holding work groups with ground
teams and volunteers to support the
people affected and their families.
Likewise, the group performs
emergency drills and training
annually in all its subsidiaries
within the framework of the Safety
Weeks. During 2022, face-to-
face and online training reached
3.5 thousand employees.
In 2023, the focus will be on
increasing the capacity to respond
to major events, and on training
and coordination sessions
among the Emergency Response
Committees before critical events
in the operation.
SECURITY INCIDENTS
In 2022, LATAM group had to face
two emergency situations in which
it implemented the Emergency
Response Plan, which is practiced
continuously to be able to respond
to such occurrences as quickly and
efficiently as possible.
In November, a LATAM Airlines
Peru flight (LA 2213), covering the
Lima - Juliaca route, was hit by a
fire truck that entered the runway
during its take-off run at the Jorge
Chavez International Airport in
the Peruvian capital. Although no
crew member or passenger was
injured and they were taken to
health centers as a precautionary
measure, the subsidiary regretted
the death of the two aeronautical
firefighters who were in the fire
truck. The reasons for the vehicle
entering the runway are still under
investigation by the Peruvian
aeronautical authorities. LATAM
Airlines Peru deployed all its human
and technical resources to assist
those affected and to support the
corresponding investigations.
The other case occurred in October.
A LATAM Airlines Paraguay flight
(1325) between Santiago de Chile
and Asunción de Paraguay was
affected by bad weather conditions
and hail, requiring a stopover at
the international airport of Foz do
Iguazu in Brazil and, subsequently,
Snapshot
SECURITY
NCG 461: 8.2 SUSTAINABILITY INDICATORS
2020
2021
2022
Aviation accidents1 SASB TR-AL-540a.2
1
0
Government measures for the
implementation of aviation safety
regulations2 SASB TR-AL-540a.3
Emergency Response
Members of the emergency team
People trained
N/A
N/A
2
0
2,814
746
2,240
3,400
N/A
3,500
N/A: information not available.
1 In 2020: Accident with the crew, due to turbulence. En 2022: As described
on this page.
2 The indicator began to be collected in this way in 2022, so there is no
information available for previous years.
Safety
62
Integrated Report 2022 Commitment
to the future
IN THIS CHAPTER
Objectives and results
Climate change
Shared value
64
66
68
74
Circular economy
Environmental
management
and eco-efficiency
77
Commitment to the future
63
Integrated Report 2022 Objectives
and results
Growth, SDG 9 Industry, Innovation
and Infrastructure, SDG 12 Responsible
Consumption and Production, SDG 13
Climate Action, SDG 15 Life on Land
and SDG 17 Partnerships for the Goals.
Shared value,
climate change
and the circular
economy are the
priorities of the
Sustainability
Strategy
With a view towards the long term,
LATAM laid the groundwork for the
future of the business by launching
its new Sustainability Strategy in
2021. More than just renewing the
group’s commitment to sustainable
development in Latin America, the
new strategy serves as a roadmap
for the next 30 years.
The focus on climate change, circular
economy and shared value guides
LATAM’s work and strengthens its
role as part of the solution to the
social, environmental and economic
growth challenges facing society. The
path to achieving clear objectives
and challenging goals is a collective
effort and involves different internal
and external stakeholders.
Given each pillar that makes up
the strategy, commitments and
challenging and traceable goals were
defined, which in turn contribute to
the Sustainable Development Goals
(SDGs) of the United Nations (UN),
specifically SDG 3 Good Health and
Well-being, SDG 5 Gender Equality,
SDG 8 Decent Work and Economic
Commitment to the future
64
Integrated Report 2022 Sustainability Strategy
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY INDUSTRY | SASB TR-AL-110a.2
SHARED
VALUE
CLIMATE
CHANGE
CIRCULAR
ECONOMY
COMMITMENTS AND TARGETS
2022 GOALS
PROGRESS IN 2022
STATUS OF THE COMMITMENT
Provide the connectivity, capacity,
and speed of our passenger and
cargo operations for the benefit of
communities in South America on
three action fronts:
> Health
> Environment
> Natural disasters
> Achieve carbon neutral growth in
scope 1 (direct emissions) with 2019
as the base year
> Reduce and offset the equivalent
of 50% of domestic greenhouse gas
(GHG) emissions by 2030
> Be a Carbon Neutral group by 2050
> Eliminate single-use plastics1
throughout the operation by 2023
> Be a zero-waste-to-landfill group
by 2027
Expand and strengthen the
network of strategic partnerships
of the Solidary Plane program
> Partnerships and agreements with 51 organizations,
foundations and government agencies in five countries
> 117 million vaccines transported
> 3,554 people transported free of charge within the
framework of the alliances
Commitment fulfilled; the
program was strengthened,
from evaluating partnerships to
measuring the impact and the
expansion of the scope of those
partnerships
> Reduce and offset 670,000 tons of CO2
emissions, including offset programs with
clients.
> Make progress in the consolidation of
a portfolio of preservation projects in
strategic areas of the region
> 687,968 tons of CO2 emissions managed
> 82,000 t from operational improvements (emission reduction)
> 572,782 t from support to the preservation of strategic
ecosystems, mainly in the Colombian Orinoco basin (offset)
> Additionally, through the offset program of LATAM Airlines
Group S.A., its clients offset a total of 33,184 tons of CO2e
Overall, the emission reduction,
the offsets made by the group, and
those made by clients under the
LATAM offset program resulted in
the management of 687,968 tons
of CO2e, equivalent to 13.6% of
domestic emissions
Reduce single-use plastics on
board by 60%
> Eliminate 77% of single-use plastics in the in-flight service,
where that material is most used – compliance with the 2022
target at 128%
77% reduction of
single-use plastics
on board
> Pilot tests for plastics reduction in the cargo operation
1 Single-use plastics are considered cutlery, glasses, cups, straws, plates, trays, food wrappers and bags, among others. (View the list on page 75).
Commitment to the future
65
Integrated Report 2022 Shared
valueGRI 3-3 and 203-1
The Solidary Plane program is
emblematic in LATAM’s commitment
to be an asset for society in South
America. The initiative was created in
2011 and, making use of its structure,
connectivity and transport capacity.
It meets needs in three arenas, free
of charge: Health, Environment and
Disasters.
LATAM’s expertise in cargo and
passenger transportation is
complemented by the knowledge and
experience of a whole network of
organizations with social purposes and
government agencies with which the
group establishes partnerships and
agreements. At the end of 2022, the
Solidary Plane program worked with 51
organizations in countries where LATAM
has domestic operations.
The focus on shared value, and its most
emblematic Solidary Plane program,
allows the company to contribute
directly to the fulfillment of the
Sustainable Development Goals 3 Good
Health and Well-being, SDG 5 Gender
Equality, and SDG 17 Partnerships for
the goals.
As of 2023, the group will seek to
reinforce the concept of co-creation, so
that organizations in partnership with
the Solidary Plane can also bring forth
initiatives that generate value for their
environments and communities.
Snapshot
Solidary Plane GRI 203-1
2020
2021
2022
Health
Air tickets donated
Organs, tissues, and stem cells transported
Medical supplies (t)
Vaccine doses – COVID-19 (million)
Disasters
1,374
1,174
395
NA
3,210
3,554
976
59
208
964
4,577
117
Cargo transported as humanitarian aid (t)
525
3
149
Environment
Animals transported
Recyclable materials transported (t)
NA: not applicable
143
192
195
246
170
Commitment to the future
66
Integrated Report 2022 Solidary Plane
HEALTH
Vaccines against COVID
ENVIRONMENT
Animal rescue
Since the first doses of COVID-19 vaccines
were made available, LATAM has provided
support free of charge to the governments of
Brazil, Chile, Ecuador and Peru in domestic
transportation. In 2022, 117 million doses
were transported, totaling 376 million
mobilized since the end of 2020. In Brazil,
LATAM was responsible for the transportation,
by air, of two out of every three doses within
the country during 2022.
Organs and tissues
Transportation of 952 organs and tissues
and 12 stem cells to support transplants.
Donation of airplane tickets
3,554
patients, medical personnel and health
teams transported for treatment or surgery,
professionals involved in the implementation
of preservation projects and work with the
community.
246
animals transported, eincluding
birds, turtles, monkeys, primates
typical of the Amazon rainforest
of Brazil, flamingos, boa, otters
and penguins.
The program supports organizations
for the rehabilitation, preservation and
protection of species.
Removal of recyclable waste
170 tons of waste removed from
Easter Island /Rapa Nui (Chile),
San Andres (Colombia), and the
Galapagos Islands archipelago
(Ecuador).
The program collaborates with waste
management in particularly challenging
environments, such as islands.
DISASTERS
149
tons of various elements for
humanitarian aid in situations
such as floods in the northern
region of Brazil, or forest fires in
Chile, among others.
Commitment to the future
67
Integrated Report 2022 Climate change
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY
INDUSTRY| GRI 3-3 | SASB TR-AL-110a.2
The climate emergency is one of
today’s major global challenges.
Tackling it requires the joint work of
governments, companies, research and
development centers, organizations
and individuals, as well as the
implementation of different strategies.
In the aviation sector, especially, where
technological solutions for the transition
to a low-carbon energy model are not
yet available on a massive scale or are
in the pilot phase, effort coordination
becomes even more important.
JOINT EFFORT
CORSIA: In 2009, the airline industry
pioneered the development of a
global climate action plan, with long-
term goals aligned with the Paris
Agreement. In 2016, the Carbon
Offsetting and Reduction Scheme
for International Aviation (CORSIA)
was established, through which the
sector regulates the GHG emissions of
international civil aviation.
AT LATAM, CLIMATE CHANGE MANAGEMENT FOCUSES ON
Operating
efficiency:
fleet renewal,
adoption of new
technologies and
practices, that
contribute to
fuel savings and
efficient use;
Sustainable Aviation Fuels (SAF):
this type of fuel is crucial to achieving
carbon neutrality in the operation.
However, its production is only
incipient in the world and null in the
region, so it is necessary to develop
an agenda with the different players
to progress in its production and use
in the region. LATAM seeks SAF to
represent 5% of all fuel consumption
in its fleet by 2030;
Emissions offsetting:
development and
participation in offsetting
programs based on
reforestation and
ecosystem preservation
projects in strategic areas
across the region. The
initiatives involve clients,
NGOs and academia,
among others.
The scheme is being implemented in
three stages: pilot (2021-2023), first
phase (2024-2026) and second phase
(2027-2035). In the first two, until 2026,
countries’ participation is voluntary.
Until 2022, 110 countries were part of
the pilot phase and another eight had
committed to participate as of 2023. The
first phase already has the commitment
of 115 countries.
TCFD: In 2022, LATAM began work to
incorporate the recommendations of
the Task Force on Climate-Related
Financial Disclosures (TCFD), which
was created in 2015 by the Financial
Stability Board (FSB) to develop
consistent disclosures of climate-
related financial risks. The initiative
seeks to consolidate best practices
in climate risk management and
help standardize climate disclosures
for all companies. By assuming this
commitment to the TCFD, throughout
2023, LATAM will identify and evaluate
the risks and opportunities related
to the climate to start publishing its
information under these standards as
of 2024.
Commitment to the future
68
Integrated Report 2022
Clean Flight: In Chile, LATAM participates
in the Clean Flight program, an initiative
of the Civil Aeronautical Board and the
Energy Sustainability Agency, which
promotes public-private collaboration
with the aim of improving the energy
and environmental management of the
airline industry. The program seeks to
identify and implement opportunities to
reduce fuel consumption and encourage
the use of cleaner technologies, such as
sustainable aviation fuels (SAF).
National Carbon Neutrality Program
Colombia: LATAM participates in the
program promoted by the Ministry
of Environment, which aims to boost,
strengthen and make visible the
management of GHG emissions in public
and private organizations. Participants
are organized into four work groups,
according to their level of progress in
GHG emissions management. LATAM was
ranked at level 4, the most advanced and
where organizations that have carbon
neutrality exercises and are interested
in strengthening their capabilities for
the identification and alignment of
Colombia’s climate goals to 2030 and
2050 are registered.
Reduce emissions
LATAM FUEL EFFICIENCY
NCG 461: 3.1 GOVERNANCE FRAMEWORK
LATAM Fuel Efficiency is the corporate
fuel-efficiency program, which
considers initiatives focused on
reducing consumption and operational
efficiency to optimize their savings.
Between 2010 and 2022, the group
achieved 6% jet fuel efficiency through
the program, and the gross savings
amounted to 53 million gallons—an
equivalent of 507.1 thousand tons of
CO2 that stopped being emitted, thanks
to the increase in energy efficiency in
the operation, taking the start of the
program as the baseline. In economic
terms, savings were close to 212
million dollars.
Different initiatives were added to
lead to these results. Some have
already been routinely incorporated
into the operation, based on lessons
learned year after year, and program
consistency. Some examples:
rationalizing the use of the auxiliary
engine, optimizing flight routes and
plans, finding opportunities to eliminate
unnecessary weight during the flight,
in addition to the implementation of
DPO (Descent Profile Optimization)—
software that improves the aircraft
computer and descent performance
database, reducing about 40 kilos of
fuel in this phase.
FLEET OVERHAULS
In 2022, the group added five new Airbus
A320neo aircraft, now totaling 16 in the
fleet, and by the end of the decade, it
plans to have more than 100 A320neo,
A321neo and A321XLR aircraft. These
aircraf use more efficient engines and
feature aerodynamic improvements and
the latest technologies that provide 20%
more fuel efficiency and related carbon
emissions. The new models also make
it possible to reduce 50% of nitrogen
oxide emissions and 50% of the acoustic
footprint. In addition, the group has 31
aircraft in its current fleet of Boeing 787
Dreamliners, also noted for their fuel
efficiency, and therefore, lower emissions.
Fleet renewal actions also involve
upgrading aircraft with new technologies.
Since 2021, LATAM has been incorporating
the Descent Profile Optimization (DPO)
function into the A319, A320 and A321
aircraft. The new software updates the
descent models provided in the Flight
Management System (FMS) database and
proposes optimized procedures. In 2022,
193 aircrafts out of a total of 196 were
upgraded as such.
Commitment to the future
69
5%
of the fuel
consumption of
LATAM's fleet will
be SAF by 2030
Integrated Report 2022 SAF
NCG 461: 3.1 GOVERNANCE FRAMEWORK
and 3.6 RISK MANAGEMENT
Aware of the need to develop a more
sustainable commercial aviation and
progress towards the decarbonization
of the industry, LATAM reinforced in
2022 its goal to incorporate sustainable
aviation fuel into its operation, preferring
the production generated in South
America.
According to data from the International
Air Transport Association (IATA), SAF
provides a reduction in emissions of up
to 80% compared to traditional fuels, and
is proposed as the most immediate tool
to contribute to a sustainable aviation
operation. However, its high production
costs and the immaturity of the market
pose great challenges for its mass use.
The region has a high production
potential due to its unbeatable
conditions in terms of resource
availability and sustainable raw
materials. Brazil could produce up to
9 billion liters of SAF from different
sources, such as agricultural and
logging industry waste, and Chile
has the potential to produce green
hydrogen under highly competitive
conditions. Raw materials for the
production of SAF are also found in
other countries of the region.
Despite these privileged conditions to
make progress in the construction of a
solid market for sustainable aviation fuels
in the region, there is still a long way to
go in matters of regulation, promotion
of technology and innovation, support to
production and logistics chain, and cost
reduction mechanisms, among others.
That is why LATAM has been working
on this issue and during 2022, began
partnerships with two strategic partners
to promote projects related to the use of
sustainable alternative fuels.
LATAM is working to meet the
challenge of having 5% of the total fuel
consumption in its fleet come from
sustainable alternative fuels produced
mainly in the region by 2030. To this
end, LATAM actively participates in the
different agencies and dialogs in Latin
America, with the aim of generating
enabling conditions in the region for the
development of SAF, both at the public
and private level. Among these agencies,
it is worth noting the participation in
the Programa Nacional de Combustivel
Sustentavel de Aviação (ProBioQAV) in
Brazil, and the public-private round table
of Sustainable Aviation Fuels (SAF) in
Chile, within the framework of the Clean
Flight program, which seeks, through
industry collaboration and innovation, to
achieve operational improvements that
reduce emissions.
According to IATA,
SAF can reduce
emissions by up
to 80% compared
to traditional
fuels
Commitment to the future
70
Integrated Report 2022 Preserve ecosystems
One of the distinctive features of
LATAM’s strategy in climate change
management is the search for the
preservation of global strategic
ecosystems, located in the region.
The group supports such projects
and, supported by the carbon capture
potential of the initiatives, makes
progress in offsetting emissions as a
complementary measure.
In terms of eligibility criteria, LATAM
is mainly focused on nature-based,
collaborative work solutions that provide
environmental, social and economic co-
benefits, are linked with communities
capable of protecting ecosystems, and
can be scalable.
CO2BIO INITIATIVE
In 2022, the LATAM group expanded
the scope of its alliance with CO2Bio,
an initiative of the Cataruben
Foundation and the community in
the Colombian Orinoco basin. The
partnership aims to preserve and
restore flooded savannas and forests,
whose importance lies in their high
capacity to capture carbon dioxide, the
preservation of biodiversity and the
positive impacts on the community.
Located in the Colombian Orinoco basin,
the CO2Bio project expects to preserve
environmentally important areas
that total 575,000 hectares by 2030,
equivalent to more than three times
the extension of cities such as Bogota
or São Paulo. The initiative will benefit
700 families in the area, contributing to
the protection of around 2,000 species,
some of them considered endangered,
threatened or vulnerable. In turn, it has
the potential to capture 11.3 million
tons of CO2 by 2030. It was supported
by the Natural Wealth Program of the
United States Agency for International
Development (USAID).
EMISSIONS OFFSETTING
(SCHEME 1 + 1)
In both passenger and cargo operations,
LATAM initially offers corporate
customers the opportunity to participate
in emissions offsetting. By means of a
1+1 scheme, for every ton offset by a
client in previously verified and validated
environmental projects, LATAM matches
the amount of tons offset by the client.
As part of the program, LATAM also
promotes the Fly Neutral Friday initiative,
through which it supports ecosystem
preservation and restoration projects
in Brazil, Peru and Colombia to offset
the emissions from flights operated on
Fridays on emblematic regional routes.
In the passenger operation, the initiative
covers the Galapagos – Guayaquil,
Guayaquil – Baltra Island, Santiago de
Chile-Castro, Arequipa – Cusco, Rio de
Janeiro – São Paulo, Brasilia – Belem
routes. In cargo, the shipments that are
transported on passenger planes on the
Iquitos – Lima, Guayaquil – Baltra Island,
Brasilia – Belem and Bogota – Miami
routes are offset.
LATAM-supported
projects contribute
environmental,
social and
economic
co-benefits
Commitment to the future
71
Integrated Report 2022 Carbon footprint
LATAM monitors its impacts on
climate change and the results of
reduction initiatives through the
greenhouse gas inventory, conducted
annually based on ISO 14.064 and the
GHG Protocol.
In 2022, emissions totaled 12,985,755
tons of CO2e—a significant increase
from 2021, a year still affected by
the pandemic. This growth is due to
two reasons, mainly. On the one hand,
there is the recovery of operations
in all countries, which reached levels
of around 85% compared to the pre-
pandemic period. On the other hand, in
its process of continuous improvement
and strengthening of its carbon
inventory, LATAM incorporated seven
new categories from Scope 3, in all
countries, which measures other indirect
emissions from the value chain.
In view of its commitment to carbon-
neutral growth in Scope 1 compared
to 2019, in 2022, LATAM offset
572,784 tons of CO2e, through carbon
credits from two preservation projects.
Through the project located in the
Colombian Orinoco basin, CO2Bio1,
of the BioCarbon Registry, using the
BCR0002 methodology (quantification
of GHG emissions reduction REDD+
Projects) 568,981 tons of CO2e
were offset, and through the Jari-
Amapa project2, of the Verra registry,
using the VM0015 methodology
(Methodology for Avoided Unplanned
Deforestation) 3,803 tons of CO2e
were offset. All these offsets are
directed to the group’s Scope 1
(direct emissions).
Notes:
1 Project ID: PCR-CO-635-141-001.
2 Project ID: VCS 1115.
TOTAL CARBON FOOTPRINT BY
COUNTRY (t CO2e)
TOTAL CARBON FOOTPRINT BY
SCOPE (t CO2e)
TOTAL FOOTPRINT AND INTENSITY
SCOPE 1
f: 1,089,560
(8%)
e: 1,876,764
(14%)
a: 6,247,970
(48%)
c: 3,198,317
(24.6%)
a: 9,780,288
(75.3%)
d:190,761 (1%)
c: 691,751 (5%)
b: 7.150
(0.1%)
b: 2,888,948
(22%)
a: Brazil
b: Chile
c: Colombia
d: Ecuador
d: Peru
e: Ecuador
f: LATAM Cargo group
a: Scope 1 (direct emissions)
b: Scope 2 (Indirect emissions
from electric energy
purchases)
c: Scope 3 (Other indirect
emissions – value chain)
Total
12,985,755
Total
12,985,755
5
5
.
0
8
0
7
5
,
4
1
5
,
6
5
5
7
,
5
8
9
,
2
1
7
6
.
6
7
t
1
2
x
x
2
.
,
x
2
9
3
,
2
1
2
7
.
5
7
1
3
.
6
7
t
4
7
3
4
5
0
,
.
5
1
5
4
6
,
5
2019
2020 2021 2022
GHG emissions
Intensity indicator
– Scope 1
(kgCO2e/100RTK)
RTK: revenue-ton kilometers.
Commitment to the future
72
Integrated Report 2022
For the year 2022, the footprint
calculation contains the inclusion of
more categories from Scope 3 compared
to previous years, including indirect
emissions related to fuel and energy
(cargo and passengers) and the purchase
of goods and services. Formerly, it
considered mainly ground transportation
related to operations. This inclusion
represents a 23% increase in the 2022
footprint compared to 2019.
CHALLENGES FOR 2023
Continue to strengthen
efficiency programs to
maintain and improve
efficiency achieved to date
Make progress in t
he articulation of
preservation and
restoration projects in
strategic areas of the region
Strengthen the agenda
for the development and
use of sustainable aviation
fuels in South America
Snapshot
CLIMATE CHANGE
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY
INDUSTRY | GRI 305-4
Climate change
Total emissions (tCO2e)
Net emissions (tCO2e)2
Scope 13 emissions
Intensity Scope 1 (kg CO2e/100 RTK)
Intensity total footprint (kg CO2e/100 RTK)
Net emissions intensity in total operations
(kg CO2e/100 RTK)
Rational fuel use (reduction compared with
IATA average)
LATAM fuel efficiency (liters/100 RPK)
Passenger operations
Cargo Operations
Fuel consumption (GJ)
SASB TR-AL-110a.3
% of alternative fuels
% of sustainable fuel
20191
20201
20211
2022
12,392,221
5,655,551
6,514,570
12,985,755
12,253,203
5,521,062
6,138,957
12,411,550
12,149,725
5,614,368
6,497,576
9,780,288
75.72
77.20
76.33
N/A
N/A
N/A
N/A
76.31
76.87
75.04
12.6%
30.1
3.2
20.7
80.55
80.76
76.10
2.3%
31.7
3.4
20.1
76.67
101.80
97.02
3.2%
30.0
3.7
22.1
166,786,630
76,826,100
88,734,840 133,991,160
0%
0%
0%
0%
0%
0%
0%
0%
N/A: information not available.
RTK: Revenue ton-kilometer.
RPK: Revenue passenger-kilometer.
1 They do not include the measurement of Scope 3 emissions, which are equivalent to 24.6% of the
total carbon footprint in 2022.
2 Net emissions are the total emissions minus the offsets made.
3 Scope 1 emissions: refers to direct emissions—fuel consumption in air operations,
fixed sources, and LATAM fleet vehicles, as well as fugitive refrigerant gas
emissions.
MORE INFORMATION
• Greenhouse
gases: Inventory,
emission factors
and scope of
information
(pages 185
and 186)
• Significant
atmospheric
emissions
(page 186)
Commitment to the future
73
Integrated Report 2022
Circular
economy GRI 306-1 and 306-2
LATAM made progress in its
challenge of eliminating single-use
plastic by 2023 and becoming a
zero-waste-to-landfill group by
2027. The group ended 2022 at
77% of the target related to single-
use plastics on board (see table),
exceeding the plan for the year,
which was 60%.
These levels were possible thanks to
the involvement of the experience
and operations departments in the
leadership of the project and the
diagnosis carried out in 2021 in the
main areas that generate waste
in the operation, such as Airport,
Maintenance, In-flight Service and
Cargo. The survey also made it possible
to establish the most common types
of waste and, therefore, those where
changes in processes and materiality
would have the greatest impact.
Among the actions it is worth noting
the change of mixers and cutlery from
plastic to bamboo, paper cups instead
of plastic cups, the use of reusable
bags and pans, replacement of plastic
lids for sugar cane lids, and the
progressive elimination of plastic bags
to cover rest items with the use of
paper tapes in the Economy cabin and
reusable bags in the Premium Business
cabin, among others. In addition, new
amenity kits, with less environmental
impact, were implemented in the
Premium Business cabins of the
group's international routes. The kits
consist of toothbrushes made of
bamboo with sugar cane caps, reusable
eye mask and socks, and vegan and
cruelty-free products (which do not
involve experiments on animals).
The products are designed by South
American artists chosen for their
emerging career and/or for being
transformers of their communities.
In the cargo business, pilot tests
were developed to implement
alternatives for the use of plastic
film, which is high in the operation.
In 2022, around 20 initiatives were
tested to replace this material with
reusable products or products with
less environmental impact. The work
included seven initiatives promoted
by the subsidiaries’ employees
themselves, based on their knowledge
and expertise in the area and the
operation. Two of them have already
been approved and another five are in
the pilot stage.
One of the proposals of the team,
already approved, was the use of
pallet blankets, which are reusable
and made of polyester, and which
keep the cargo protected during
transport. This initiative is initially
being developed in Chile and Brazil,
precisely where more waste is
generated in the operation, and the
project is expected to be extrapolated
to other markets.
Another initiative is related to the bulk
palletizing process, which consists
of fixing and stabilizing boxes of
different sizes for transport. The use
of narrow recyclable plastic tapes
Amenity kits y bolsas
reutilizables para los
elementos de descanso en la
cabina Premium Business
Change of materials in
the Economy cabin
Commitment to the future
74
Integrated Report 2022 instead of several meters of plastic film
that is discarded at the time of delivery
enabled an 80% reduction in the plastic
used in this specific process in the import
cargo in Santiago, Chile.
Although the reduction of plastic waste
is the main focus of the cargo affiliates
in matters of circular economy, there are
other initiatives such as those related
to wooden pallets for transport, which
are repaired to be reused in the same
operations or, in some cases, converted
into leisure furniture, tables, and others.
Finally, the Circular Economy pillar
makes it possible to contribute to the
achievement of SDG 8 Decent Work
and Economic Growth, SDG 9 Industry,
Innovation and Infrastructure, SDG 12
Responsible Consumption and Production,
and SDG 17 Partnerships for the goals.
14.4%
5.8% 3.9%
t
0
9
9
7,
3
94%
t
3
0
8
,
8
2
93%
7%
6%
t
t
7
7
4
4
t
0
0
3
.
.
8
1
1
5
4
4
,
6
72%
27%
8%
2019
2020
2021 2022
Transfer to landfill
Hazardous
Non-hazardous
Note: The waste shown
in the graph corresponds
to waste for which
there are supporting
documents; therefore,
the distribution does
not represent LATAM's
overall waste generation
because in several of the
operation's facilities for
non-hazardous waste
that goes to landfills,
the service provider does
not provide supporting
documents. This
process of control of
the generation of non-
hazardous waste is being
improved in 2023.
SINGLE-USE PLASTIC
WASTE
After thoroughly reviewing the applicable regulations of
Brazil, Chile, Colombia, Ecuador, the United States, Peru and
the European Union on single-use plastics and taking the
most demanding list applicable to the airline industry, LATAM
defined the products included in its disposal plan. The main
examples are:
5.1%
t
7
4
0
,
1
4
92%
Cutlery (fork,
spoon, knife,
toothpicks)
Balloons
and their plastic supports,
used in internal and external
employee events
Bags used for packing,
carrying or transporting
packages and goods (including
bags for advertising and
washing)
Food containers
or packaging,
such as boxes, with or without
a lid (intended for immediate
consumption, on-site or
takeaway)
Glasses, cups, and
bowls (including
lids and caps)
Plates, dishes,
trays and
individual
Straws
and mixers
WASTE DISPOSAL (t) 2022 GRI 306-3, 306-4 and 306-5
Hazardous Non-hazardous
Waste not intended for disposal
Preparation for reuse
Recycling
Other recovery operations
Waste intended for disposal
Incineration (with energy recovery)
Incineration (no energy recovery)
Transfer to landfill
Other disposal operations
248.9
0
131.9
117
35,575.7
0
36.5
349.6
35,189.66
Commitment to the future
1,046.8
0
915
131.8
1.118.6
0
0
1,117.6
1
75
Integrated Report 2022
WHAT IS THE CIRCULAR ECONOMY?
HOW DOES LATAM IMPLEMENT THE CONCEPT?
LINEAR ECONOMY
CIRCULAR ECONOMY
Some examples:
Raw Material
Production
Consumption
Waste
Raw Material
New cycle
Production
Consumption
Raw materials are extracted,
produced, consumed and then
discarded.
Waste is disposed of in
landfills, incineration processes
or other operations.
The value of the products, their
parts and materials, is maintained
for the longest possible time.
The materials that would be
waste from a process return
to the production cycle as raw
material.
Reducing the use
of materials
> Reusing boxes in cargo and
warehouse processes
> Aircraft material, such as seats,
galleys and mats
• Reuse in the same operation
and by other companies
• Internal sales campaigns for
parts that can be reused in the
home
• Shipping to suppliers of
recycling
> Reuse, repair and re-manufacture
of pallets (for use as pallets or in
the production of furniture and
signs)
Changing to recyclable
or lower-impact
materials
Redesigning processes and
services
Comprehensive vision of waste
management
> Amenity kits
> Pallet-covering blankets (cargo
transport)
> Replacement of the plastic film
with recyclable tapes to secure
the load
Composting
Maintenance Base in Chile:
36 tons of food waste and
92 tons of wood composted
Uniform recycling
Brazil, Chile, Colombia,
Ecuador and Peru
> More than 38 tons of fabric
(discarded uniforms) donated to
organizations and artisans that
generate job opportunities and with
which new products are created
> More than 3 thousand artisans
benefited
> Training in leadership skills,
teamwork, and business topics,
such as finance, marketing, and
management
Recycle Your Trip
> Separation and recycling of
waste from the in-flight service
> Participation of customers and
suppliers in domestic flights
Donation
Donation of crockery and
items to keep warm to
non-profit foundations
Commitment to the future
76
Integrated Report 2022 Environmental
management and
eco-efficiency
In its environmental management,
throughout the operation, LATAM
applies a world-class, transparent,
auditable system certified under the
IEnvA (IATA Environmental Assessment)
standard, which is IATA’s voluntary
environmental assessment program,
designed in two stages:
• Stage 1 considers the
environmental management
system, the commitment
of senior management, and
the mapping of the relevant
environmental legal requirements
and the environmental aspects
and impacts of the activities.
• Stage 2 includes the definition
of goals, the implementation of
programs and operational controls,
audits, and team training.
LATAM Airlines Group S.A. and
its subsidiaries in Brazil, Chile,
Colombia, Ecuador and Peru were
certified under IEnvA – Stage 1. In
2022, the group focused its efforts
on getting certified in Stage 2. The
internal audit carried out by IATA
was successfully approved while
the results of the external audit
detected some observations, for
which a Corrective Action Plan
was implemented to obtain final
certification in Stage 2.
It should be noted that the
completed implementation and
certification process corresponds
to Stage 2 and includes Core and
Core+ (MRO), i.e. it considers
administrative and flight activities,
as well as aircraft inspection,
maintenance and repair activities.
With this certification, LATAM
Airlines Group S.A. becomes part of
the select group of thirteen airlines
worldwide that have this Stage 2
certification under this scope.
Looking ahead in 2023, one of the
major challenges in environmental
management will focus on
strengthening environmental
management programs and the
articulation of critical suppliers
that render services to the group
to support them in their efforts
to improve their performance in
environmental management. In
this context, the program will start
with critical ground assistance
providers, to continue throughout
the year with the same process
with suppliers in general.
ENVIRONMENTAL COMPLIANCE
NCG 461: 8.1. 8.1 LEGAL AND REGULATORY
COMPLIANCE| ENVIRONMENTAL
LATAM’s Environmental Management
System is carried out under the
IATA Environmental Assessment
Program. For each country, an
environmental compliance matrix is
established, evidencing the applicable
requirements and standards, their
compliance, and the related evidence.
The information serves as the basis
for defining action plans and execution
times, according to the scope of the
initiative and the legal deadlines.
Identification of legal requirements:
In the framework of the implementation
of its environmental management
system under the IEnvA – Stage 2
standard, LATAM updated the internal
diagnosis of the environmental
standards applicable to its operation,
identifying about 10 thousand that
apply in the different arenas, such
as water, energy, waste, emissions
management, and environmental
contingencies.
Compliance Plans: The Directorate of
Safety and HSE (Health, Safety and
Environment) is responsible for leading the
environmental compliance action plans
in the group. The work is supported by
the Corporate Affairs and Sustainability
Directorate and by the direct participation
of the leaders of the operational areas.
Environmental Compliance Update:
Annually, the areas responsible for
overseeing environmental compliance
must conduct an environmental
compliance audit and, in the event of
non-compliance, they are evaluated
according to the company's risk matrix.
MORE INFORMATION
https://www.
latamairlines.com/
co/es/sostenibilidad
Commitment to the future
77
Integrated Report 2022 NATURAL RESOURCES
LATAM seeks to reduce the
environmental impacts of its operation
through eco-efficiency measures in
Energy and water consumption.
The energy consumed by LATAM
Airlines Group S.A. is acquired through
the power grid of each country;
therefore, the composition in terms of
renewable and non-renewable energy
is constructed with the latest available
information about the composition of
the matrix of each of the countries,
distributing the consumption according
to the corresponding weight.
POWER CONSUMPTION
(MWh) AND ENERGY INTENSITY
(MWh/FTE) GRI 302-3
2.2
1.7
1.4
1.4
8
7
1
.
0
6
9
2
3
.
9
3
9
7
3
.
3
6
9
1
4
.
7
5
2019
2020
2021
2022
Energy intensity
Note:
FTE: full-time employee.
WATER WITHDRAWAL
(m3)1 GRI 303-3
2019
2020
2021
2022
82.480
98.846
85.6562
216.626
230,1
230,1
Notes:
1 Supply is obtained from the
municipal networks of the various
countries of operation, without
LATAM’s direct collection of water.
2 In 2022, 100% corresponds to
fresh water.
INTERNAL ENERGY CONSUMPTION (TJ) GRI 302-1
Non-renewable energy
Jet Fuel
Gasoline
Diesel
Liquefied petroleum gas
Natural gas
Electricity1
Total non-renewable energy
Renewable energy
Ethanol
Electricity1
Total renewable energy
TOTAL
2019
2020
2021
2022
166,786.63
9.64
118.63
8.35
0.42
55.19
166,978.86
76,826.10
3.97
97.74
6.28
0.29
35.96
76,970.35
88,734.84
24.32
118.5
5.41
0.11
50.47
133,991.16
162.53
67.49
8.75
0.02
21.772
88,933.7 134,251.72
20.65
161.44
182.09
0.20
105.62
105.83
0.56
177.87
178.43
0.00
184.99
184.99
167,316.18
77,076.18
89,112.08 134,436.71
1 The energy consumed comes from different sources. The share percentage of each source varies year over
year, based on the power grid of each country.
Commitment to the future
78
Integrated Report 2022
ELECTRIC ENERGY
CONSUMPTION1 – 2022
Non-renewable
sources
25.1%
Renewable
sources
74.9%
Total
57,419 MWh
1 Based on information on the
composition of the energy matrix of
each country, with H2LAC as the source;
this is a program created in 2020 by the
Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ) together with the
World Bank, ECLAC, and the European
Union’s Euroclima+ Program.
Snapshot
ECO-EFFICIENCY
Energy GRI 302-1 and 302-3
Energy consumption – ground and
air operations (TJ)
Energy intensity (MWh/100 RTK)1
Water consumption (m3)
Waste disposal (t)
ENVIRONMENTAL MANAGEMENT
Units with Environmental Management
System (EMS)/Total Units
Units with certified EMS/total units
2020
2021
2022
COMPLIANCE2
NCG 461: 8.1.3 ENVIRONMENTAL LEGAL
COMPLIANCE | GRI 2-27
77,076
89,112
134,436.71
Enforced sanctions3
0.6
0.8
0.5
Fines (CLP th.)
82,480 98,846
6,583
28,803
85,656
37,990
Approved compliance programs
Compliance programs executed
successfully
91%
3%
95%
90%
99%
99%
Environmental damage recovery plans
presented
Environmental damage recovery plans
executed satisfactorily
2020 2021
2022
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1
1,528,072.704
85
76
NA
NA
N/A: information not available.
NA: not applicable
1 Considering internal and external consumption.
2 The information was first collected in this format in 2022 and therefore the previous information is not available.
3 Considers the Public Sanctions Registry of the Chilean Environment Superintendency (Superintendencia del Medioambiente) and equivalent
bodies in other jurisdictions. The information from 2022 corresponds to a case in Brazil that arose due to failure to make a timely payment of the
TCFA (Environmental Control and Inspection Tax).
4 Value converted to Chilean pesos with the exchange rate from February 16, 2023; the fine in reais amounts to R$10,072.36.
5 Seven in Brazil and one in Chile.
6 Six in Brazil, still in execution, and one completed in Chile.
Commitment to the future
79
Integrated Report 2022 Employees
IN THIS CHAPTER
Better, simpler and
more transparent
Who makes
LATAM group
81
87
Employees
80
Integrated Report 2022 Better, simpler and
more transparent
GRI 3-3
People management is one of
the critical processes for LATAM
in implementing its mission to
connect people and destinations.
In this work, the group considers
structured training and professional
promotion practices that respond to
the transformations and trends of
the labor market. Likewise, dialog
and closeness between staff and
management are important factors
to reinforce their joint commitment
to the execution of the business
strategy and make LATAM better,
simpler and more transparent.
The dialog agenda includes meetings
conducted by the Human Resources
department and leaders from
different areas of the group on topics
such as leadership, sustainability, and
diversity and inclusion, among others.
The goal is to reinforce strategic
alignment and empathy with LATAM
group employees and gather insights
that make it possible to improve
human capital management. Other
bodies that reinforce the permanent
dialog are:
• LATAM News: weekly meetings
meeting between leaders and their
teams
• Expanded: periodic meetings
conducted by the vice-presidents
• 1:1 Accompaniment: specific
conversations between
the employee and their leader to
support the professional individual
training and development process
Leaders are trained to manage
their teams and act in line with the
leadership model defined by LATAM.
They are evaluated in their role at
the head of the teams by means of
the leadership index and the tool
called Barometer. The tools include,
among others, variables that allow
the group to measure progress
toward its objectives of simplicity and
transparency, as well as compliance
with leadership practices, such as
timely feedback,team meetings, 1 to 1
meetings, and recognition. In addition,
77 points in the
Organizational
Health Index
in 2022, same
level as in
2021, and the
best in LATAM
group's history
there is a measurement from the team
itself toward their superiors, making
it possible to extract a 360° view of
the leader's performance, which has
the fundamental role of driving overall
development.
ORGANIZATIONAL HEALTH
In 2022, the group reached 77 points on
the Organizational Health Index (OHI),
which measures employee perception in
different dimensions, such as alignment,
ability to execute, and ability to renew
and adapt to market needs. The index
is a repeat of the one reached in 2021,
which was the best in LATAM group's
history. The result shows a robust
organizational health and places LATAM
in the first quartile of the survey, which
ranks 25% of the best companies.
The group excelled mainly in topics such
as strategic direction, leadership and
external orientation.
A total of 21,570 people participated
voluntarily in the survey, translating into
76% of the total workforce when the
consultation was conducted.
Employees
81
Integrated Report 2022 TRAINING
In 2022, LATAM group invested
US$13.2 million in professional
training activities for its teams,
which translates into 0.14% of total
operating income.
30.6 thousand people were trained
(93% of the total workforce)
in matters such as operational
and job safety, diversity and
inclusion, leadership, aeronautical
maintenance, emergencies, first
aid, risk prevention and hazardous
goods, among others. Overall,
the trainings totaled 1.3 million,
with an average of 42.7 hours per
employee.
These initiatives open up room for
teams’ professional growth.
AVERAGE TRAINING
(hours/employee)
2020
2021
2022
30.9
36.3
42.7
AVERAGE TRAINING (h/employee)
NCG 461: 5.8 TRAINING AND BENEFITS | GRI 404-1
Men Women
Senior management
Top management
Middle management
Operators
Sales Force
Administrative staff
Other professionals
Other technicians
Subtotal by genre
Total
6.6
11.0
21.0
51.4
11.9
11.7
71.4
12.1
49.9
12.6
12.9
29.0
45.0
11.9
16.4
38.0
14.2
38.2
42.7
NB: The calculation considers the average workforce.
1.3 million
trainings,
42.7 hours per
employee
SUCCESSION PLAN
NCG 461: 3.6 RISK MANAGEMENT
The LATAM group's companies have
Succession Plan that identifies
potential replacements for the
CEO position and the main executives
among internal and external
professionals. This plan is reviewed
and updated annually and, in the event
of the exit of critical executives, is the
first thing that is reviewed in deciding
on the replacement. On the other
hand, with some possible successors,
development plans are worked out to
better prepare them to take over the
higher position.
HIRING AND TURNOVER
Throughout the year, 6,930 people
were hired, resulting in a hiring rate of
21.3%. The turnover rate was 11.4%,
which is much lower than in 2021
(22.5%) and similar to pre-pandemic
levels (13.7% in 2019).
EMPLOYEE
CATEGORIES
Senior management
CEO, Vice President,
Director.
Top management
Senior Manager,
Manager, Assistant
Manager.
Middle
management
Area Manager,
Department
Manager.
Operators
Cargo Operations,
Maintenance,
Airport and
Operations Control
Center.
Sales Force
Sales Operations,
Customer Care.
Administrative staff
Support activities
and general roles.
Other professionals
Middle
management in
support activities.
Other technicians
Command and
cabin crew.
Employees
82
Integrated Report 2022 NEW HIRES AND
WORKFORCE
TURNOVER GRI 401-1
LATAM Airlines Brasil
LATAM Airlines Chile
LATAM Airlines Colombia
LATAM Airlines Ecuador
United States
LATAM Airlines Perú
Others3
Total
New hires
Total
3,847
1,469
499
109
393
464
149
Rate1
21.7%
19.0%
29.2%
26.7%
36.3%
15.3%
19.6%
6,930
21.3%
Turnover
rate2
10.2%
11.8%
17.4%
5.6%
32.0%
7.0%
15.6%
11.4%
1 Total hired/Total workforce as at December 31.
2 Total number of employees who left the organization
voluntarily or due to severance, retirement, or death in service/
Total workforce as at December 31.
3 LATAM operations in other countries of the Americas, Europe
and Oceania.
6,930 individuals
hired throughout
the year
BENEFITS
NCG 461: 5.7 POSTNATAL LEAVE and
5.8 TRAINING AND BENEFITS
The LATAM group's companies
provide their employees with a
series of benefits that are not
part of the remuneration. These
include: health and life insurance
(with different conditions and
applicability in each country) and
medical insurance for international
work travel, subject to the policies
of each affiliate and the applicable
local legislation.
There is also a discount ticket
policies so that employees and
their registered beneficiaries can
fly on LATAM or other airlines.
In addition, some companies in the
group provide other benefits that
vary according to legal regulations,
market practices and/or collective
agreements.
The postnatal leave granted by
the group's companies complies
with the legal regulations in each
country.
Diversity, equality and inclusion
NCG 461: 3.1 GOVERNANCE FRAMEWORK and 5.4.1 EQUALITY POLICY | GRI 3-3
LATAM group addresses diversity
and inclusion in a broad and
comprehensive way, aware of the
challenges related to the different
social groups that comprise it.
In the recruitment and selection
processes, the group has the
support of a network of foundations,
organizations, and consultants
specialized in attracting and hiring
plural talents. The process is based
on the Global Diversity and Inclusion
Policy.
Working hand in hand with an external
consultant, the group gathers the
opinion of employees from all the
countries where it operates, identifying
the different experiences and visions
on the subject. In addition, there are
agencies of open dialog with leaders
in the Human Capital department
and internal periodic measurements
regarding the workforce's perception
on key aspects of the organizational
culture, internal value proposition and
employee experience.
The group develops specific actions for
five groups: women, people of color,
LGBTQIA+, people with disabilities,
and multi-generations. The goal is to
foster plurality in professional profiles
to reflect the societies in which it
operates. Among the transversal
actions developed, the following are
noteworthy:
Inform and
educate
employees to
strengthen
the culture of
inclusion
Develop
inclusive
leadership
Gather information
that supports
decision-making
and timely
management
of initiatives to
promote diversity
and inclusion
Employees
83
Integrated Report 2022 5 groups
with specific
inclusion actions
In line with the Diversity
Commitments, which aim to have a
gender balance of around 40/60 by
2030 at all functional levels, LATAM
incorporated more women in the
roles of pilots and maintenance
mechanics, and reached a ratio of
39/61 in those categories.
The group’s progress in building
increasingly inclusive work
environments was also reflected in
the results of McKinsey’s Inclusion
Assessment. The diagnosis
considers the organizational
systems and leadership practices
that the company carries out,
in addition to the perception of
subgroups of employees regarding
equal opportunities for growth
and professional success. In 2022,
LATAM reached 77 points in the
assessment—two more than in
2021—ranking in the third quartile
globally.
LATAM GROUP
Senior management
13%
Top management
35%
Middle management
33%
Operators
31%
Sales Force
24%
Administrative staff
45%
Other professionals
61%
Other technicians
47%
LATAM group
39%
Women
Men
87%
65%
67%
69%
76%
55%
39%
53%
61%
PAY EQUITY
LATAM has policies and practices in
place to ensure equal compensation
among employees, in accordance
with their roles and responsibilities.
The policy begins with the position
weighting methodology (points
and grades) to define the relative
weight of each position within the
organization. Additionally, salary
scales by grade are defined, through
market surveys, in order to position
each employee within the salary
range defined for their grade.
230,1
230,1
230,1
230,1
230,1
230,1
All individuals within the same
salary grade have the same income
range (between 80% and 120% of
the segment), but the particular
position of each one in the range
will depend on aspects such as
seniority and performance, which
are the only determining factors for
230,1
income differences.
230,1
230,1
230,1
The annual merit review is
aimed at reducing those gaps,
but always based on the
performance of the individual.
SALARY RATIO (WOMEN/MEN)1
NCG 461: 5.4.2 WAGE GAP
AVERAGE2
MEDIAN3
Senior management
Top management
Middle management
Operators
Sales Force
Administrative staff
Other professionals
Other technicians
101%
94%
91%
92%
100%
98%
98%
85%
87%
95%
88%
90%
107%
90%
89%
90%
1 Proportion of women’s gross hourly wage vs. men’s gross hourly
wage in each functional category. Gross salary includes all fixed
and variable pay, such as base salary, social laws, transportation
and food allowances, bonuses, overtime, commissions, or others.
2 The calculation methodology considers the average income by
country, pay grade and seniority category, excluding data where
there is no record for both genders.
3 For the calculation of the median, the values of the gross hourly
salary of women and men are ordered from lowest to highest
(considering country, pay grade and seniority category, excluding
data where there is no record for both genders) and the central value
of the first group is divided by the central value of the second group.
EMPLOYEE
CATEGORIES
Senior management
CEO, Vice President,
Director.
Top management
Senior Manager,
Manager, Assistant
Manager.
Middle
management
Area Manager,
Department
Manager.
Operators
Cargo Operations,
Maintenance,
Airport and
Operations Control
Center.
Sales Force
Sales Operations,
Customer Care.
Administrative staff
Support activities
and general roles.
Other professionals
Middle
management in
support activities.
Other technicians
Command and
cabin crew.
Employees
84
Integrated Report 2022 work at height) and more than 700
infrastructure inspections. Nearly 200
audits of work at height and another
400 of the use of personal protective
equipment were also carried out. With
the aim of training employees to deal
with accident situations, 35 drills were
carried out.
In the last quarter of the year, a risk
mitigation methodology based on
the level of exposure was adopted
under a pilot program. The goal is
to capitalize on the lessons learned
through the experience and extend it
to the entire operation in 2023.
Performance in the monitored
indicators was positive. The API
(Action Plan Index), which manages
the effectiveness of potential risk
mitigation plans (all identified and
different severity levels) settled at
95.5%, above the 0% target. The
accident rate per 100 employees
reached 0.64—15% below the target
for the year.
OCCUPATIONAL SAFETY NCG 461: 5.6
OCCUPATIONAL SAFETY | GRI 403-7 and 403-9
Employee safety is a priority for the
LATAM group's companies and its
management is supported by risk
analysis, awareness programs, and
mitigation and prevention plans. Five
risks are classified as critical in the
operation because of their potential to
cause employees’ death or permanent
disability, and are the subject of
permanent work for the group:
• Operation of mobile equipment,
• Exposure a noise,
• Work in confined spaces,
• Handling hydraulic systems,
• Handling aircraft engines, and
• Work at height.
In 2022, LATAM group made structured
progress in the management of critical
risks, implementing an inspection plan
for all subsidiaries. The work included
an analysis of the safety conditions
of more than 8 thousand equipment
items related to critical risks
(ladders, forklifts, mobile equipment,
manlift, and anchor systems for
Employees
85
Integrated Report 2022 Snapshot
LATAM GROUP PEOPLE MANAGEMENT
NCG 461: 5.8 TRAINING AND BENEFITS
Total employees
Turnover rate1
Average hours of training2
NCG 461: 5.8 TRAINING AND BENEFITS
Total individuals trained | % of total workforce
Investments in training (% of revenues)
OHI survey
Result
Quartile
2020
28,396
53.7%
30.9
N/A
N/A
75
1
2021
29,114
22.5%
36.3
2022
32,507
11.4%
42.7
N/A
30,600 | 93%
N/A
0.14%
77
1
77
1
Occupational safety NCG 461: 5.6 OCCUPATIONAL SAFETY3 | GRI 403-9
Accident rate4 (target | result)
Work accident fatalities5
(Total | Rate6: Target | Result)
Occupational disease rate
(target7 | result)
Average number of days lost due to accidents8
N/A
N/A
0.75| 0.64
0| 0.00| 0.00
0| 0.00| 0.00
0| 0.00| 0.00
N/A
N/A
N/A
N/A
NA | 0.03
5,26
Recordable work accidents9 (Total10 | Rate11)
145.5| 0.41
134.5| 0.48
192.0| 0.64
Occupational accidents with severe consequences12
(Total10 | Rate11)
3.0| 0.01
0.0| 0.00
0| 0.00
N/A: information not available.
NA: not applicable.
1 Employees who left the group (voluntarily, due to severance,
retirement, or death in service)/Total employees as at December 31.
2 Hours of training in the year/Average workforce.
3 Some indicators in this section began to be counted in this way in
2022, so there is no information from previous years.
4 Total work accidents/Average workforce X 100.
5 Excluding those related to accidents in transit and those
suffered by leaders of trade union institutions because of, or in the
performance of their trade union duties.
6 The calculation of the rate follows the formula: Total fatalities per
work accident/Average workforce X 100,000.
7 Total occupational diseases/Average workforce X 100.
8 Total days lost due to work accident/Total work accidents. NB.: The
count of lost days begins on the day after the accident.
9 Accidents resulting in death, days off work, work restrictions,
transfer to other positions, fainting or medical treatment beyond
first aid.
10 Accidents related to some critical risk and high-impact events
(accidents resulting in over 100 days lost) represent 1.5 in the
calculation.
11 Rate calculation formula: total injuries with work interruptions/
average no. of employees x 100.
12 Accidents resulting in such damage that the worker cannot
recover, does not recover, or is not expected to fully recover their
state of health from before the accident, within six months.
MORE INFORMATION
Employee profile
(sex, nationality,
age range,
seniority, people
with disabilities):
page 187
Postnatal leave:
page 190
Formality of work
(type of contract,
type of work hours,
work flexibility):
page 189
Freedom of
association:
page 189
Number of work
stoppages and total
days idle: page 189
Employees
86
Integrated Report 2022
Who makes
up LATAM
group
EMPLOYEES – BY COUNTRY
EMPLOYEES – BY GENDER and
COUNTRY
EMPLOYEES – BY AGE GROUP
EMPLOYEES – BY SENIORITY
Brazil
Chile
a: 54.7%
35%
65%
230,1
e: 1.6%
d: 9.2%
230,1
f: 0.1%
a: 22.8%
e: 33.3%
a: 35.3%
g: 2.3%
f: 9.3%
e: 3.3%
c: 5.3%
d: 1.3%
b: 23.8%
a: Brazil
b: Chile
c: Colombia
d: Ecuador
e: United States
f: Peru
g: Others (Germany, Argentina,
Bolivia, Cuba, Spain, France,
Italy, Mexico, Oceania -
several countries, Netherlands,
Paraguay, Peru, Portugal,
United Kingdom and Uruguay)
56%
58%
60%
75%
52%
50%
61%
230,1
Colombia
Ecuador
44%
42%
40%
United States
25%
Peru
Others
48%
50%
LATAM group
39%
Women
Men
230,1
c: 25.5%
230,1
230,1
230,1
b: 40.8%
d: 10.5%
c: 8.8%
b: 12.1%
230,1
a: Under 30 years
b: From 30 to 40 years old
c: From 41 to 50 years old
d: From 51 to 60 years old
e: From 61 to 70 years old
f: Over 70 years
230,1
a: Under 3 years
b: From 3 to 6 years
c: More than 6 and up to 9 years
d: More than 9 and up to 12 years
e: Over 12 years
32,507 employees
Employees
87
Integrated Report 2022 Clients
IN THIS CHAPTER
The best
experience
89
Clients
88
Integrated Report 2022 The best
experience
GRI 3-3
Focused on the customer, LATAM works
to offer the best experience throughout
the process of interaction with the brand,
from choosing the flight to claiming
their baggage. This careful management
considers aspects such as security,
autonomy and convenience in booking,
checking in and making changes, channels
for dialog, on-time performance, cabin
comfort, entertainment on board and
service options, among others. The work
is supported by a culture of customer
care, and technology is an important ally.
In 2022, the group continued to invest in
process automation and simplification,
as well as in adding new functionalities
to the digital services it offers. Some of
the advances are:
LATAM App: A web view was
implemented to purchase tickets,
make cabin upgrades and check
on flight status, and the stages
for hiring additional services, such
as extra baggage or seat choice,
were simplified.
The entire experience in cases
of voluntary or involuntary flight
changes was also overhauled
to allow the client to digitally
manage the process, with
positive results. Throughout
2022, there was an increase from
20% to 80% in the use of the
LATAM App by customers to get
answers to their concerns. The
review of these flows enabled
LATAM to reduce the term for
processing refunds from 14 to 7
days, while increasing fulfillment
from 64% in 2021 to 88%
in 2022.
Boarding Pass: New LATAM app
functionality that allows the user
to export their boarding pass to
Apple and Google Play wallets.
Automatic check-in (for domestic
flights) and digital self-check-
in at kiosks or through the App:
Coverage was extended and the
service reached a satisfaction
level of over 63% among
passengers.
Self Bag Tag: 24 airports in seven
countries offer self bag tag, which
translates into almost 50% of
passengers. In 2023, 24 more
airports will be added, aiming to
improve performance, service
times and travel experience.
Validation of the necessary
documentation for international
flights to the United States and
the domestic network in Brazil is
also ongoing.
Facial recognition by biometrics
during boarding: With this
technology, passengers only need
to present their documents to the
police authorities once. In 2022,
improvements were made to the
facial recognition system for the
digital login of clients in Chile.
The system implementation was
completed in all the airports in
the United States where LATAM
operates and this functionality was
launched under a pilot program in
Brazil.
LATAM Play: The platform
offers more than 150 movies,
400 TV shows and 100 albums.
LATAM was the only airline in the
world to offer the premiere of
the series "House of the Dragon"
on its on board entertainment
platform, 48 hours after the
global launch on HBO. The series
is a prequel to Game of Thrones,
one of the most watched series
in the world.
In-flight Wi-fi connectivity:
Currently, 98 LATAM Airlines
Brazil airplanes have this
service, which will be extended
to the entire narrow-body fleet
operating in the country during
the first half of 2023.
Dialog channels: LATAM
maintains channels for dialoging
with customers via its app,
website and WhatsApp.
Clients
89
Integrated Report 2022
TECHNOLOGY THAT
BRINGS US CLOSER
Since 2021, each LATAM
cabin crew has a tablet
and online connection to
access different information
from the database to
serve customers in a
more personalized way.
The device provides
information about whether
the client had any type of
inconvenience in previous
segments, such as a delay
in a connection, if they
require some special type
of food or special care, and
even if it is their birthday.
The tool inspired a group
of crew members to
record safety instructions
in videos using the sign
languages of each of the six
countries where LATAM has
domestic operations. The
video is used to guide deaf
passengers.
AUTISM SPECTRUM
LATAM was the first airline group
in South America to receive
certification for training customer
service teams to serve passengers
with Autism Spectrum Disorder
(ASD). The training was carried out
by Autism Double-Checked, an
organization dedicated to preparing
and advocating adequate care for this
audience and reached 10 thousand
employees who interact with clients.
The training considers three steps:
Autism Aware, which provides
awareness tools; Autism Ready,
which provides professionals with
job-specific information and trains
them for situations that may arise
and how to address them; and
Autism Double-Checked, focused on
publishing the information so that
the autism community can be guided
and have a more enjoyable flight.
With the support of the Hidden
Disabilities Sunflower program,
the group also implemented the
use of a lanyard that seeks to
discreetly and voluntarily facilitate
the self-identification of people
in a situation of disability that
cannot otherwise be recognized with
the naked eye. The lanyards are
available at 19 airports in the LATAM
Clients
90
Integrated Report 2022 network in Chile, Peru, Brazil, Ecuador,
and Colombia and are delivered free
of charge to anyone who requires
them when traveling.
The initiatives are a first step in
generating change processes that
improve the travel experience of
passengers with ASD and help
teams identify challenging factors
for that audience, such as excessive
noise or crowds.
DATA INTELLIGENCE
LATAM applies advanced analytics
and machine learning tools
to automatically process large
volumes of information that guide
their decision-making, streamline
processes, and make it possible to
customize the customer experience.
Fraud prevention, aircraft fueling
optimization and flight experience
customization are some of the
improvements that can be achieved.
The group’s data lake (centralized
repository of information that feeds
the business intelligence system)
already covers 80% of all operational
data, and LATAM is making progress
in the integration of the remaining
information. One of the focuses of
the work in 2022 was to integrate
into the data lake databases
related to the strategic agreement
with Delta Air Lines, enabling new
business opportunities adjusted to
the different regulatory frameworks
of all the countries affected by the
agreement.
SYSTEMS IN THE CLOUD
The move of applications to a cloud
environment continued throughout
2022, and should be completed in
the first quarter of 2023. The work
aims to streamline the ecosystem
of technological platforms and
consolidate applications in the
cloud, providing the group with a
simpler, more elastic and stable
infrastructure.
DATA GOVERNANCE AND
CYBERSECURITY
In data governance and protection,
LATAM applies the strictest
regulations, such as the European
or Brazilian ones, in compliance
with the General Data Protection
Regulation (GDPR).
The data monitoring and
governance structure was
expanded, with more than 50
people in charge. Within the
89%
of the narrow-body
fleet has new cabins
data lake, 100% compliance with
governance standards was achieved
on the 18 thousand data assets, in line
with the growth plan.
Advances included the application
of new and more advanced quality
and performance control processes
for the Customer Data Platform
(CDP), enabling LATAM to develop
customization tools in the future.
Looking at cybersecurity, the group
also focused efforts on strengthening
digital defenses with advanced cyber-
attack protection processes and tools
and employee awareness campaigns.
NEW CABINS
The aircraft cabin transformation
process progressed, contributing
more flexibility to serve different
customer segments, offering more
comfort, especially on long-haul
trips, and a product at competitive
rates. Customers can choose, on
the same plane, the type of seat
that best meets their needs. The
first rows have seats with greater
spacing between them, exclusive
areas to store carry-ons, and larger
individual screens, as well as priority
boarding. The back section of the
plane optimizes the cost-benefit
ratio to serve passengers seeking
lower airfares.
By the end of 2022, 89% of the
entire narrow-body fleet has been
retrofitted.
Clients
91
Integrated Report 2022 MINDING EACH DETAIL
Other customer-focused
enhancements:
New Lounge in Santiago: Opened
in April 2022, the LATAM Lounge
in Santiago’s new Terminal 2
(International) has 4,200 square
meters separated into three
lounges: Signature, Premium and
WorldMember. Its world-class
interior design surprises through
the design of different elements:
Comfortable, sustainable furniture
with a combination of colors inspired
in the nature of Chile, a"virtual sky"
and pergolas that help to generate
more welcoming and private spaces,
as well as a display of sculptures
by emerging artists created with
recycled materials. The lounges are
powered by 80% renewable energy,
prioritize efficient use of resources,
and feature interactive games for
children, focused on recycling and
reforestation.
Overhauled in-flight service:
At the beginning of the second
semester, the Economy cabin
menu for international flights was
renewed, mainly showcasing the
local ingredients and preparations
that evoke the dishes of the
destinations where LATAM group
operates. Additional elements are
incorporated into the service and
the new proposal also makes it
possible to offer hot sandwiches
on regional flights, where they
were previously delivered cold.
In the Premium Business cabin,
the overhaul took place in two
stages starting in October, when
the easing of health measures
resulting from the pandemic
made it possible to adjust some
protocols for customer interaction.
These are small details that
promote a better experience,
such as offering to hang jackets in
closets, sauna towels to freshen
up before meal services. And a
welcome snack. The second stage
was implemented in January 2023
and focused on a new gastronomic
proposal. Local products reflecting
regional heritage were included,
with high-quality ingredients and
an additional main course option.
In addition, new elements were
added to the service such as an
entrée, a green salad, diversity of
breads, and a greater variety of
desserts.
Circular economy: Over a thousand
tons of in-flight plastic materials
were replaced by more sustainable
alternatives throughout the year,
contributing to LATAM’s goal of
eliminating single-use plastics
by 2023 (see page 65). Care for
sustainability also guided the
creation of the new Amenity Kits
for the Premium Business and
Premium Economy cabins, made of
materials with less environmental
impact (see page 74).
LATAM PASS
The LATAM Pass Frequent Flyer
program has 42 million members.
Members accumulate miles or
points for trips taken and for the
acquisition of goods and services
through the network of financial
partners, which enables them to
reach different Elite categories
and enjoy the benefits associated
with each of them, such as cabin
upgrades, preferential check-in,
access to VIP lounges, and baggage
allowance. They can also redeem
points or miles for airplane tickets
or products.
In 2022, a call center was launched
for all Elite members and the
redemption fee was eliminated.
During 2023, there are plans to
improve the priority system for the
cabin upgrade for Elite customers
The redesign
of the in-flight
service was
one of the
actions to
improve
customer
experience
with credit card. Work is also
being done to improve the digital
experience and services of the
program, expanding the scope of the
redemption of miles or points for
more ancillary airline services.
ON-TIME PERFORMANCE GRI 3-3
In 2022, LATAM group achieved
88% in the DEP15 indicator, which
analyzes flights departing up to 15
minutes after the scheduled time.
This result is the same as that
recorded in 2019, pre-pandemic,
when the group was recognized
as the world's most punctual
airline group by OAG and Cirium,
global benchmarks for the airline
industry. However, this represents
a four percentage-point decrease
compared to 2021, which is
attributed to the reduction in the
industry’s performance, due to the
increase in operation, traffic, and the
simultaneity of flights.
LATAM group maintains its
commitment to on-time
performance. Together with
suppliers and airport authorities,
the group is working on the
necessary adjustments and process
improvement to provide passengers
with an excellent service.
Clients
92
Integrated Report 2022 SATISFACTION
The LATAM group’s companies
constantly monitor customer
perception regarding its operation
and service using a series of surveys
at different customer contact
opportunities. Perception indicators are
fundamental within the group and allow
for continuous improvement within the
different teams and to make decisions
considering the voice of the customer.
One of these—a more strategic
survey—is the Net Promoter Score
(NPS), which measures customer
willingness to recommend the service,
on a scale from -100 to +100. 2022
was a positive year as, for the first
time, goals were set under the NPS
methodology for the three main
touchpoints: Contact Center, Digital
and Flight Day.
The result achieved in 2022 in the
passenger operation was 46 points,
five points below the level reached
in 2021. The decrease is attributed
mainly to delays, cancellations and
service flaws, as a result of the
adjustments that were applied to
the operation in the post-pandemic
resumption process. Regarding Elite
passengers, for the first time, a better
perception was obtained compared
to the total passengers, where
nearly 90 initiatives were carried out
that enabled this; for example, the
deployment of the new Premium
cabins and the restoration of in-
flight services, after the lifting of the
restrictions imposed in the wake of the
pandemic.
Digital Experience valuation reached
50 points in 2022, an increase of
10 points compared to 2021. The
Contact Center experience settled at
-22 points, an increase of 13 points
compared to the previous year.
FEEDBACK ON VIDEO
Since October 2022, clients of domestic operations in Brazil,
Colombia and Chile can leave their comments by recording
a video. In the first three months of operation of the new
tool, LATAM received 1,500 videos (3,500 minutes). That
is, approximately 200 videos are received per week; 45% of
them are from advocate clients.
This initiative is very useful to strengthen empathy and
humanize customer feedback, expanding the impact to
improve customer-facing processes and better understand
their pain points and suggestions. As of 2023, the tool will
be extended to include passengers from Peru, Ecuador and
international routes.
Snapshot
CLIENTS
LATAM Pass (enrolled– millions)
Technology
Self bag drop
Easy check-in (automatic or digital)
On Time performance2
OTP DEP0
OTP DEP15
OTP ARR14
Domestic Operation
International Operation
2020
38
35%
87%
72%
90%
89%
90%
84%
Net Promoter Score (-100 to +100 scale)
Passenger Operations
Cargo Operations
40
18
2021
39
67%1
90%
2022
42
76%
95%
77%1
66% (target 68%)
92%
91%
91%
85%
511
30
88% (target NA)
86% (target 87%)
87%
83%
46
51
NA: not applicable.
1 The information published in the Integrated Report 2021 was corrected.
2 Percentage of flights departing exactly at the scheduled time (DEP0) and
with a delay of up to 15 minutes (DEP15); percentage of flights arriving up to
14 minutes after the scheduled time (ARR14).
Clients
93
Integrated Report 2022 Suppliers
IN THIS CHAPTER
Supply chain
management
95
Suppliers
94
Integrated Report 2022
Supply chain
management GRI 2-6
The LATAM group conducts
business with 6,190 suppliers,
registering a total acquisition
volume of US$8.26 billion in 2022.
Suppliers of products and services
are divided between technical
(directly related to the operation)
and non-technical procurement
categories (see graph).
LATAM’s main suppliers are
aircraft manufacturers: Airbus
and Boeing. Suppliers of aircraft
accessories, spare parts, and
aircraft components are also
relevant partners, including: MTU
Maintenance, Pratt and Whitney
Canada, CFM International,
General Electric Commercial
Aviation Services Ltd., General
Electric Celma, General Electric
Engines Service, Rolls-Royce,
Honeywell, and Israel Aerospace
Industries (engines and auxiliary
power units or APU); Zodiac
Seats US, Recaro, Thompson Aero
Seating (seats); Honeywell and
Rockwell Collins (avionics and
APU); Air France/KLM, Lufthansa
Technik (maintenance, repair,
and operations components, or
MRO); Zodiac Inflight Innovations,
Panasonic and Thales (in-flight
entertainment); Safran Landing
Systems, AAR Corporation (landing
trains and brakes); UTC Aerospace
and Nordam (engine mount).
Among fuel suppliers, the main
ones are: Petrobras, Air BP-
Copec, World Fuel Services, AirBP
PBF, YPF, Terpel and Repsol.
DISTRIBUTION BY COUNTRY1
DISTRIBUTION BY CATEGORY1
d:13%
c: 7%
e: 12%
a: 43%
a: 51%
d:11%
c: 19%
b: 37%
b: 7%
a: Chile
b: Brazil
c: Peru
d: Other
countries
a: Fuel
b: Fleet and engines
c: Other-technical purchases
d: Ground support services,
technology and systems, hotels
and uniforms, supply and
catering
e: Other non-technical purchases
1 Based on
company
headquarters
and volume of
acquisitions.
Suppliers
95
Integrated Report 2022 GUIDELINES
NCG 461: 5.9 OUTSOURCING POLICY
Supplier management follows
guidelines on quality and regularity
of supply, competitive prices,
legal compliance, and good social,
environmental and corporate
governance 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.
As a Subcontracting Policy, the
group establishes objectives through
which guidelines are provided for the
contracting and control of outsourcing
suppliers that will perform functions
within LATAM group; it defines the
obligations of service providers to
comply with legal and regulatory
provisions related to their staff,
among other matters. Among the
topics covered are the obligations of
remuneration, stipends, work benefits,
social security, regulations on
occupational accidents, occupational
diseases, and health and safety
issues, which are also explained in
LATAM’s standard contracts.
For Third-Party Intermediaries
(TPIs), suppliers that interact on
behalf of LATAM with national
and international public officials,
there is a due diligence process
prior to engagement. The contract
also includes anticorruption
and antibribery clauses and,
during the life of the contract,
that supplier must prove their
adherence to the Code of Conduct
and Anticorruption Policy.
PAYMENT POLICY
NCG 461: 7.1 PAYMENT TO SUPPLIERS
The group’s payment policy applies
equally to all suppliers and terms of
payment are established based on
what is negotiated in each contract.
The exception are small and medium-
sized companies, which may have
specific policies established in each
of LATAM’s subsidiaries. The payment
period for SMEs corresponds to 25
days in Argentina and 30 in all other
subsidiaries.
In 2022, there were no agreements
registered in the Ministry of Economy
of Chile’s Registry of Agreements with
an Exceptional Payment Period.
Supplier contracts
are governed by the
Corporate Procurement
Policy, aligned with the
Anticorruption Policy
PAYMENT TO SUPPLIERS
Up to 30 days
From 31 to 60 days
More than 60 days
Nationals
Foreigners
Nationals
Foreigners
Nationals
Foreigners
Invoices paid during the year
249,668
85,878
32,587
29,112
25,910
21,878
Total paid (US$ million)
4,313,9
2,642,7
377,9
268,4
242,2
420,2
Total suppliers to whom the
invoices were paid in each range
- NB.: They are not additive
4,145
764
755
220
444
1,247
Notes
There was no interest (paid or payable) for late invoices issued.
Suppliers with a tax RUT from the same country as the contracting LATAM subsidiary are considered national.
Suppliers
96
Integrated Report 2022 EVALUATION
NCG 461: 7.2 SUPPLIER ASSESSMENT
The group uses artificial intelligence
and machine learning technology to
identify and analyze potential risks,
such as money laundering, terrorist
financing and trade sanctions. The
tool analyzes data from various
sources, including government
sanctions lists, company databases,
and property registries. It also
allows continuous risk assessments,
monitoring changes to sanctions
lists and other relevant data
sources.
LATAM verifies in detail all the
cases of alerts raised in the
system, and in case of confirming
the risk or legal breach, it defines
the measures to be taken, which
may include suspension of the
contract.
Snapshot
SUPPLY CHAIN
Total LATAM suppliers by December 31
Critical Suppliers1
Share of the supplier base
Share in acquisitions volume
Identification of potential risks
Suppliers analyzed by sustainability criteria2
NCG 461: 7.2 SUPPLIER ASSESSMENT
% of the total suppliers analyzed
% of total purchases
2020
9,013
2021
8,052
11%
89%
N/A
N/A
N/A
11%
91%
N/A
N/A
N/A
Preventive analyses carried out in the international database
systems (% of the total base)
6,680
(74%)
5,367
(67%)
Suppliers considered high risk in sustainability aspects
(% of those analyzed)
Detailed evaluations based on system alerts
(% of the high-risk group)
178 (3%)
148 (3%)
178 (100%)
148 (100%)
Monitoring and management
Audited suppliers
122
270
Suppliers with agreed mitigation plans (% of suppliers audited)
112 (92%)
270 (100%)
Action plans defined based on audits
Contracts terminated due to noncompliance
717
0
% invoices paid with a term of up to 30 days3 NCG 461: 7.1 PAYMENT TO SUPPLIERS
To domestic suppliers
To foreign suppliers
N/A
N/A
1,056
0
N/A
N/A
2022
6,190
7%
95%
0
0
0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
81%
63%
N/A: information not available.
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.
2 Invoices paid at 30 days/Total invoices.
Suppliers
97
Integrated Report 2022 About the
Report
IN THIS CHAPTER
Material topics
99
GRI and SASB
content index
100
NCG 461
content index
104
Glossary
106
External assurance
107
About the Report
98
Integrated Report 2022 Material topics
NCG 461: 3.1 GOVERNANCE
FRAMEWORK | GRI 2-29, 3-1 and 3-2
The content selection of the LATAM
Integrated Report 2022 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, carried out in 2018, analyzed
the main economic, environmental,
and social impacts of the business
and the expectations of the main
LATAM stakeholders, considering:
•
•
close to 2,400 online survey
answers from employees, clients
and suppliers,
the sustainability issues that
are part of the policies and
publications of the main
investors and shareholders of
the group when the process was
carried out1,
In a second stage, 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, resulting in
the following list:
• Health and safety in the air and on
the ground
• Ethics and anti-corruption
• On-time performance
• Economic and financial
sustainability
• Developing employees
• Mitigating climate change
• Customer focus
•
various regulatory authorities2,
• Destination network
•
representatives of the aviation
industry3,
•
civil society organizations4,
•
sustainability benchmarks5,
• press releases on LATAM in 2017.
• Relations with authorities
• Sustainable tourism
The list of topics is revalidated
annually as part of the management
and planning processes.
1 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/
Rapa Nui 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 of the LATAM
partnership network when the process
was carried out: 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
99
Integrated Report 2022 GRI and SASB
content index
Statement of use
LATAM Airlines Group has reported the information cited in this GRI content index for the period January, 1 to
December, 31, 2022 with reference to the GRI Standards.
GRI 1 used GRI 1
GRI 1: FOUNDATION 2021
GRI STANDARD| SASB AIRLINES
GRI 2: General Disclosures 2021
2-1 Organizational details
2-2 Entities included in the organization’s sustainability reporting
2-3 Reporting period, frequency and contact point
2-4 Restatements of information
2-5 External assurance
2-6 Activities, value chain and other business relationships
2-7 Employees
2-8 Workers who are not employees
2-9 Governance structure and composition
2-11 Chair of the highest governance body
2-12 Fuole of the highest governance body in overseeing the management of impacts
2-13 Delegation of responsibility for managing impacts
2-15 Conflicts of interest
2-16 Communication of critical concerns
2-17 Collective knowledge of the highest governance body
2-18 Evaluation of the performance of the highest governance body
2-19 Remuneration policies
2-22 Statement on sustainable development strategy
2-26 Mechanisms for seeking advice and raising concerns
2-27 Compliance with laws and regulations
2-28 Membership associations
2-29 Approach to stakeholder engagement
2-30 Collective bargaining agreements
GRI 3: Material topics 2021
3-1 Process to determine material topics
3-2 List of material topics
Location
12, 25, 110
3
3, 4
Cases of updated previously published information
are clearly indicated in the corresponding tables
107
12, 25, 28, 95
187, 189
187
36
36, 41
37
37
41
42
37
37
39
8
41, 42
41, 79
43, 44
99
189
99
99
100
About the Report
Integrated Report 2022 GRI Standard/SASB Airlines
Disclosure
Location
Material topic: Health and safety in the air and on the ground
GRI 3: MATERIAL TOPICS
3-3 Management of material topics
SASB AIRLINES - ACCIDENT AND SAFETY MANAGEMENT
TR-AL- 540a.1 Description of implementation and outcomes of a Safety Management System
GRI 403: OCCUPATIONAL HEALTH AND SAFETY 2018
SASB AIRLINES - ACCIDENT AND SAFETY MANAGEMENT
Material topic: Ethics and anti-corruption
403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships
403-9 Work-related injuries
TR-AL-540a.2 Number of aviation accidents
TR-AL-540a.3 Number of governmental enforcement actions of aviation safety regulations
GRI 3 MATERIAL TOPICS
3-3 Management of material topicss
GRI 205:ANTICORRUPTION 2016
205-2 Communication and training about anti-corruption policies and procedures
205-3 Confirmed incidents of corruption and actions taken
GRI 206: ANTI-COMPETITIVE BEHAVIOR 2016
206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices
SASB AIRLINES - COMPETITIVE BEHAVIOR
TR-AL-520a.1 Total amount of monetary losses as a result of legal proceedings associated with anticompetitive behavior regulations
Material topic: On-time performance
GRI 3 MATERIAL TOPICS
OTHER DISCLOSURES
3-3 Management of material topics
OTP
Material topic: Economic and financial sustainability
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 201: ECONOMIC PERFORMANCE 2016
201-1 Direct economic value generated and distributed
Material topic: Developing employees
GRI 3 MATERIAL TOPICS
GRI 401: EMPLOYMENT 2016
3-3 Management of material topics
401-1 New employee hires and employee turnover
GRI 404: TRAINING AND EDUCATION 2016
404-1 Average hours of training per year per employee
OTHER DISCLOSURES
Organizational Health Index (OHI)
About the Report
59
59
60, 85
85, 86
62
62
41
42
42
41
41
92
92, 93
14
55
14, 81, 83
83
82
81
101
Integrated Report 2022 GRI Standard/SASB Airlines
Disclosure
Location
Material topic: Mitigating climate change
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
SASB AIRLINES - GHG EMISSIONS
TR-AL-110a.2 Discussion of long-term and short-term strategy or plan
GRI 302: ENERGY 2016
302-1 Energy consumption within the organization
302-3 Energy intensity
GRI 305: EMISSIONS 2016
305-1 Direct (Scope 1) GHG emissions
SASB AIRLINES - GHG EMISSIONS
TR-AL- 110a.1 Gross global Scope 1 emissions
SASB AIRLINES - GHG EMISSIONS
TR-AL-110a.3 Total fuel consumed, percentage alternative, percentage sustainable
GRI 305: EMISSIONS 2016
305-3 Other indirect (Scope 3) GHG emissions
305-2 Energy indirect (Scope 2) GHG emissions
305-4 GHG emissions intensity
306-1 Waste generation and significant waste-related impacts
306-2 Management of significant waste-related impacts
GRI 306: WASTE 2020
306-3 Waste generated
Material topic: Customer focus
GRI 3 MATERIAL TOPICS
OTHER DISCLOSURES
306-4 Waste diverted from disposal
306-5 Waste directed to disposal
3-3 Management of material topics
Net Promoter Score
65, 68
65, 68
78, 79
78, 79
185
185
73
73, 185
185
185
74
74
75
75
75
14, 28, 89
29, 93
About the Report
102
Integrated Report 2022 GRI Standard/SASB Airlines
Disclosure
Location
Material topic: Destination network
GRI 3 MATERIAL TOPICS
OTHER DISCLOSURES
Material topic: Relations with authorities
3-3 Management of material topics
Destinations
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 415: PUBLIC POLICY 2016
415-1 Political contributions
Material topic: Sustainable tourism
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 203: INDIRECT ECONOMIC IMPACTS 2016
203-1 Infrastructure investments and services supported
Other GRI and SASB disclosures
GRI 303: WATER AND EFFLUENTS 2018
303-3 Water withdrawal
GRI 305: EMISSIONS 2016
SASB AIRLINES - LABOR PRACTICES
305-6 Emissions of ozone-depleting substances (ODS)
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions
TR-AL-310a.1 Percentage of active workforce covered under collective bargaining agreements
TR-AL-310a.2 Number of work stoppages and total days idle
TR-AL-000.A Available seat kilometers (ASK)
TR-AL-000.B Passenger load factor
SASB AIRLINES - ACTIVITY METRICS
TR-AL-000.C Revenue passenger kilometers (RPK)
TR-AL-000.D Revenue ton kilometers (RTK)
TR-AL-000.F Average age of fleet
12, 14
27
43
42
66
66
78
186
186
189
189
31
31
31
31
30
About the Report
103
Integrated Report 2022 NCG 461
Content index
Table of Contents
Location
2. Organization’s profile
3. Corporate governance
4. Strategy
5. People
2.1 Mission, vision, purpose and values
2.2 Historical Information
2.3 Ownership
2.3.1 Control situation
2.3.2 Major changes in ownership or control
2.3.3 Identification of majority partners or shareholders
2.3.4 Stocks, their characteristics and rights
2.3.5 Ownership– Other values
3.1 Governance framework
3.2 Board of Directors
3.3 Board Committees
3.4 Main executives
3.5 Adherence to national or international codes
13
16
33
34, 35
34, 35
33, 35, 56
34
37, 38, 41, 43, 69, 70, 83, 99
36-38, 114
36, 38, 117
40, 123
41
3.6 Risk management
15, 40-42, 60, 82, 164
3.7 Relationship with stakeholders and the general public
4.1 Time horizons
4.2 Strategic objectives
4.3 Investment plans
5.1 Staffing
5.1.1 Number of individuals by sex
5.1.2 Number of individuals by nationality
5.1.3 Number of individuals by age range
5.1.4 Labor seniority
5.1.5 Number of individuals with disabilities
5.2 Labor formality
5.3 Work adaptability
43
239
14, 15
57
Note: LATAM does not have
any professionals in the
Ancillary category.
187
187
187
188
188
189
189
About the Report
104
Integrated Report 2022 Table of Contents
Location
5. People
5.4 Wage equity by sex
5.4.1 Equality policy
5.4.2 Wage gap
5.5 Workplace and sexual harassment
5.6 Job safety
5.7 Postnatal leave
5.8 Training and benefits
5.9 Outsourcing policy
6.1 Industrial sector
6.2 Businesses
6.3 Stakeholders
6. Business model
6.4 Properties and facilities
6.5 Subsidiaries, partners and investments in other companies
7. Suppliers
8. Indicators
6.5.1 Subsidiaries and partners
6.5.2 Investment in other companies
7.1 Payment to suppliers
7.2 Supplier assessment
8.1 Legal and regulatory compliance
8.1.1 Regarding customers
8.1.2 Regarding its workers
8.1.3 Environmental
8.1.4 Free competition
8.1.5 Others
8.2 Sustainability indicators by industry
9. Relevant or material facts
10. Comments from shareholders and Directors’ Committee
11 Financial statements
About the Report
83
84
16
85, 86
85, 190
82, 83, 86
96
18, 27, 43, 61, 111, 126
12, 51, 61
43
109
342
Not applicable
96, 97
97
41
41
77
41
41
134
117
192
105
Integrated Report 2022 Glossary
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
UN: United Nations Organization
ADR: American Depositary Receipts
AFP: Chilean Pension Fund Managers
ANAC: National Civil Aviation
Agency – Brazil
ASK: available seat-kilometer –
equivalent to the number of
seats available multiplied by the
distance flown
ATK: available ton-kilometers –
equivalent to the capacity available in
tons multiplied by the distance flown
CMF: Financial Market
Commission (Chile)
CORSIA: Carbon Compensation
and Reduction Scheme for
International Aviation
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
EBITDA: Earnings before interest, tax,
depreciation, and amortization
EBITDAR: Earnings before interest,
tax, depreciation, amortization, and
aircraft rentals
GHG: greenhouse gases
GRI: Global Reporting Initiative
IATA: International Air Transport
Association
ICAO: International Civil Aviation
Organization
IEnvA: IATA Environmental Assessment
IFRS: International Financial
Reporting Standard
IOSA: IATA Operational Safety Audit
JBA: Joint Business Agreement
LSA: Chilean Corporations Act
MRO: Maintenance, Repair,
and Operation
NPS: Net Promoter Score
NYSE: New York Stock Exchange
OHI: Organizational Health Index
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)
RASK: revenue per available seat-
kilometer– gauges the efficiency of
the airline; it is obtained by dividing the
operating income by the ASK
About the Report
106
Integrated Report 2022 External
assurance GRI 2-5
INTEGRATED REPORT 2022
Mister
Juan José Toha
Director de Asuntos Corporativos y Sostenibilidad
Latam Airlines Group
Of our consideration:
We have reviewed the following aspects of the LATAM Integrated
Report 2022:
SCOPE
Limited assurance engagement of the adherence of the contents
and indicators included in the 2022 Integrated Report to the Global
Reporting Initiative (GRI) Standards, regarding the organization’s profile
and material indicators arising from the materiality process that the
Company carried out following said Standards related to the economic,
social, and environmental dimensions.
STANDARDS AND ASSURANCE PROCESS
We have carried out our task in accordance with the guidelines of the
International Standard on Assurance Engagements Other than Audits
or Reviews of Historical Financial Information (ISAE 3000) issued by
the International Auditing and Assurance Standard Board (IAASB) of
the International Federation of Accountants (IFAC).
Our review has consisted in an inquiry process involving different
LATAM units and management areas, involved in the process of
developing the Report, as well as in the application of analytic
procedures and verification tests, which are described in the
following items:
√ Meeting with Sustainability management.
√ Requirements and review of evidence with the areas participating
in the preparation of the 2022 Integrated Report.
√ Analysis of the adherence of the contents of the 2022 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 GRIStandards indicators
included in the 2022 Report, and its adequate gathering from the
dataprovided by LATAM information sources.
CONCLUSIONS
√The assurance process was based on the indicators established in
the materiality process carriedout by LATAM. Once those indicators
were identified, prioritized, and validated, they wereincluded in the
report. The reported and verified indicators appear in the following
table:
2-1
2-2
2-3
2-4
2-5
2-6
2-7
2-8
2-9
2-11
2-12
2-13
2-15
2-16
2-17
2-18
2-19
2-22
2-26
2-27
2-28
2-29
2-30
3-1
3-2
3-3
201-1 203-1 205-2 205-3
206-1 302-1 302-3 303-3 305-1 305-2 305-3 305-4 305-6 305-7
√ Regarding the verified indicators, we can affirm that no aspect
has been revealed that makes usbelieve that these indicators
incorporated in the Integrated Report 2022 of LATAM S.A., have
notbeen prepared in accordance with the GRI Standard in the
aspects and indicators indicated in thescope of this document.
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 2022 Integrated Report, as well as its contents
are under LATAMresponsibility, which is in charge of the definition,
adaptation, and maintenance of themanagement and internal
control systems from who the information is obtained.
-Our responsibility is to issue an independent letter based on the
procedures applied in ourreview.
-This report has been prepared exclusively by LATAM's request, in
accordance with the termsestablished in the service proposal.
-We have developed our work according to the standards of
Independence established in theCode 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 27,
2023.
- The scope of a limited assurance engagement is essentially
inferior to a reasonable assurance engagement, thus, we are not
hereby providing opinion about the 2022 LATAM Integrated Report.
306-1 306-2 306-3 306-4 306-5 401-1 403-7 403-9 404-1 415-1
Deloitte
About the Report
107
Integrated Report 2022 Appendices
IN THIS CHAPTER
109
112
126
185
187
Who we are
Legal incorporation
Company purpose
Properties, plants, and
equipment Trademarks,
patents, licenses and
franchises
Sales channels
Additional information
Corporate governance
Shareholders’s Agreement
Board composition
Annual Report of the
Directors’ Committee’s
Administration
Main executives
Our business
Regulation
Material facts
Risk factors
Commitment to
the future
Greenhouse gases
Significant atmospheric
emissions
Employees
Employee profile
Postnatal leave
Formality of work
Freedom of association
Work stoppages and
days idle
Appendices
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Integrated Report 2022 Who we are
LATAM GROUP
LATAM AIRLINES GROUP S.A
RUT: 89.862.200-2
Address: Santiago, Chile
Trade names: LATAM Airlines, LATAM
Airlines Group, LATAM group, LAN
Airlines, LAN Group and/or LAN
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.
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;
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.
PROPERTY, PLANT, AND EQUIPMENT
NCG 461: 6.4 PROPERTIES AND FACILITIES
Chile
COMPANY PURPOSE
a) To market air and/or ground
transportation in any of its forms,
be it for passengers, cargo, mail, and
• 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 Santiago.
acquisition, and logistics of aeronautical
materials within the hangars of the
Congonhas airport.
• 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.
• 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.
Brasil
• 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,
• 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
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.
Appendices
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Integrated Report 2022Integrated Report 2022 Who we are
LATAM GROUP
been registered in Argentina, Línea
Aérea Carguera de Colombia has been
registered in Colombia.
TAM has filed for trademark registration,
registered or renewed the following
trademarks in Brazil, LATAM; LATAM
Airlines; LATAM Airlines Brasil; LATAM
Cargo, LATAM Cargo Brasil; LATAM
Fidelidade; LATAM MRO, LATAM Pass;
LATAM Trade; TAM Linhas Aéreas; LATAM
Travel; LATAM Viagens; LATAMPLAY;
Mercado LATAM; VAMOS LATAM.
BRANDS, TRADEMARKS, LICENCES
AND FRANCHISES NCG 461: 6.2
BUSINESSES | GRI 2-1
Trademark LATAM has been registered
in Argentina, Australia, Bolivia, Canadá,
China, Colombia, South Korea, Costa
Rica, Cuba, Ecuador, El Salvador,
Guatemala, Honduras, Hong Kong,
India, Japan, Mexico, Nicaragua, New
Zealand, Panama, Paraguay, Peru,
Dominican Republic, Taiwan, European
Union, Uruguay, the United States, and
Venezuela; Trademark LATAM Airlines
has been registered in Argentina,
Bolivia, China, Colombia, South Korea,
Cuba, Ecuador, El Salvador, Guatemala,
Honduras, India, Japan, Mexico,
Nicaragua, Panama, Paraguay, Peru,
Dominican Republic, Taiwan, European
Union, Uruguay and Venezuela.
LATAM Airlines Argentina has been
registered in Argentina; LATAM Airlines
Colombia has been registered in
Colombia; LATAM Airlines Ecuador
has been registered in Ecuador;
LATAM AIRLINES PARAGUAY has been
registered in Paraguay and LATAM
Airlines Peru has been registered in
Peru. LATAM Cargo has been registered
and/or renewed in Argentina, Bolivia,
Colombia, Ecuador, Mexico, Paraguay,
Peru, European Union, United
Kingdom, Uruguay, the United States,
and Venezuela. LATAM Cargo Brasil
has been registered in Brazil; LATAM
Cargo Colombia has been registered
in Colombia; LATAM Cargo Mexico has
been registered in Mexico.
LATAM Corporate has been registered
in Argentina, Bolivia, Colombia, Costa
Rica, Ecuador, El Salvador, Guatemala,
Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Dominican Republic,
European Union, United Kingdom
and Uruguay. LATAM Fidelidade has
been registered in the following
countries, Argentina, Australia,
Colombia, Ecuador, Mexico, New
Zealand, Paraguay, Peru, European
Union, United Kingdom, Uruguay,
and the United States. FIDELIDAD
has been registered in Argentina;
FIDELIDAD TAM has been registered
in Paraguay; LATAM Lineas Aereas
has been registered in Argentina,
Colombia, Ecuador and Peru; LATAM
MRO has been registered in Argentina;
Bolivia, Colombia, Ecuador, Mexico,
Paraguay, Peru, European Union,
United Kingdom, Uruguay, the United
States, and Venezuela. LATAM Pass
has been registered in Argentina,
Bolivia, Colombia, Ecuador, Mexico,
New Zealand, Paraguay, Peru,
European Union, United Kingdom,
Uruguay, the United States, Venezuela.
LATAM Pass Miles has been registered
in New Zealand and Australia.
LATAM Tours has been registered in
Argentina, Colombia, Ecuador and Peru.
LATAM Trade has been registered in
Argentina, Bolivia, Colombia, Costa
Rica, Ecuador, El Salvador, Guatemala,
Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Dominican Republic,
European Union, United Kingdom and
Uruguay. Trademark LATAM Travel
has been registered in Argentina,
Bolivia, Colombia, Ecuador, Mexico,
Paraguay, Peru, European Union, United
Kingdom, Uruguay, the United States,
and Venezuela; trademark LATAM
Travel Solutions has been registered
in Panama; LATAM Viagens has been
registered in Brazil; LATAM, JUNTOS MÁS
LEJOS has been registered in Argentina
and Ecuador. LATAM, TOGETHER,
FURTHER has been registered in
Australia, New Zealand, United Kingdom
and the European Union.
LATAMPLAY has been registered in
Argentina, Colombia and Ecuador. LATIN
Airline Network has been registered
in Mexico, Nicaragua, New Zealand,
United Kingdom and the European
Union. LIBREVOLADOR has been
registered in Bolivia, Ecuador, Paraguay
and Peru. LIBREVOLADORES has been
registered in Bolivia, Ecuador, Paraguay
and Peru. LIDERES DEL SERVICIO has
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Integrated Report 2022Integrated Report 2022 Who we are
LATAM GROUP
SALES CHANNELS
NCG 461: 6.2 BUSINESSES
ADDITIONAL INFORMATION
NCG 461: 6.2 BUSINESSES
Passenger operations:
• Airport offices
• Contact Center
• Face-to-face agencies
• Online agencies
• Sales offices
• Website (LATAM.COM)
• Other airlines’ websites
Cargo operations:
• Airport offices
• Contact Center
• Agencies
• Website (LATAMCARGO.COM)
• Marketplaces (Virtual Agency)
Aviation insurance: LATAM group
has Aviation Insurance, including
Hull, and Legal Liability, which
covers risks inherent to aviation,
such as the loss or damage of
aircraft, engines and parts, and
third-party liability (passengers,
cargo, baggage, airports, etc.).
LATAM group insurance is jointly
managed by Grupo IAG (consisting
of British Airways, Iberia, and its
subsidiaries, and franchisees). The
increase in business volumes has
translated into better coverage and
more competitive prices.
General insurance: includes various
risks that could eventually affect
the company's equity, with a multi-
risk insurance policy (including
risk of fire, theft, computer
equipment, security remittances,
and others), car insurance, air and
maritime transport insurance, and
civil liability insurance. Moreover,
the company has life, and health
and accident insurance contracts
covering the group’s personnel.
Customers: None of LATAM's clients
individually represents over 10% of
its sales.
Suppliers: In 2022, 29 suppliers
individually represented over 10% of
their category: Talma, Orbital and
Acciona (airport); Unilode Aviation
Solutions, Envirotainer, STI and
American Sales & Management (local
administration); Airbus and Boeing
(technical), Gate Gourmet and LSG
Sky Chefs (in-flight catering); Google
and Globant (IT & Systems); Clearly
Gottieb and Accenture (professional
services); Expeditors (transportation),
Facebook and Graphene (marketing);
Infraero (infrastructure); Alelo, CAE and
Amil (employee services); API Lodging
Solutions and Pullman MIA (hotels);
Everfit (uniforms); and Petrobras, WFS,
Copec and Repsol (fuel).
Appendices
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Integrated Report 2022Integrated Report 2022 Corporate governance
OWNERSHIP STRUCTURE
SHAREHOLDERS' AGREEMENTS
the New Convertible Notes Class B
to the extent the conversion option
thereunder is exercised, shall be
subordinated to any right of recovery
for any shares delivered or to be
delivered upon conversion of the New
Convertible Notes Class A or New
Convertible Notes Class C, in each case
held by the Backstop Creditors on the
Effective Date.
COMPOSITION OF THE LATAM
AIRLINES GROUP BOARD
On November 15, 2022, Mr. Ignacio
Cueto Plaza was elected as President
of the Board.
On November 15, 2022 the board
of directors of LATAM Airlines Group
was renewed, with Mr. Ignacio Cueto
Plaza, Mr. Bornah Moghbel, Mr. Enrique
Cueto Plaza, Mr. Frederico Curado, Mr.
Antonio Gil Nievas, Mr. Michael Neruda,
Mr. Bouk van Geloven, Mrs. Sonia J.S.
Villalobos, and Mr. Alexander Wilcox
elected.
On or around the date of LATAM’s
emergence from bankruptcy
proceedings (the “Effective Date”)
in accordance with the terms and
conditions of the Chapter 11 plan
confirmed by the Bankruptcy Court
on June 18, 2022, the Backstop
Creditors and the Backstop
Shareholders entered into a
Shareholders’ Agreement (the
“Shareholders’ Agreement”) that
provides, among other things, that:
(A) for a two year term following
the Effective Date, the parties to
the Shareholders’ Agreement shall
vote their shares so that the LATAM
Airlines Group S.A. Board of Directors
will comprise, both initially and in
the filling of any vacancies thereon,
nine directors, who in accordance
with Chilean law, shall be appointed
as follows: (i) five directors, including
the vice-chair of the LATAM Airlines
Group S.A. Board of Directors,
nominated by the Backstop Creditors;
and (ii) four directors, including the
chair of the LATAM Airlines Group S.A.
Board of Directors (who shall be a
Chilean national), nominated by the
Backstop Shareholders; and (B) for
the first five years after the Effective
Date, in the event of a wind-down
liquidation or dissolution of LATAM
Airlines Group S.A., recoveries on
the shares delivered in exchange for
MANAGEMENT OF THE LATAM
AIRLINES GROUP
The CEO of LATAM is the highest
ranked officer of LATAM Airlines
Group and reports directly to the
LATAM board of directors. The CEO
LATAM is tasked with the general
supervision, direction and control of
the business of the LATAM Airlines
Group. In the case of a departure of
the current CEO LATAM, our board
of directors will select the successor
after receiving the recommendation
of the Leadership Committee.
The head office of the LATAM Airlines
Group continues to be located in
Santiago, Chile.
VOTING AGREEMENTS, TRANSFERS
AND OTHER ARRANGEMENTS
Voting Agreements
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
As provided in the aforementioned
shareholders’ agreements, TEP Chile
may sell all 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. 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. As a result of the
implementation of the restructuring
set forth in our Plan of Reorganization,
a “release event” occurred. However,
no sale of the voting shares of Holdco
I beneficially owned by TEP Chile has
been implemented.
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)
Appendices
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Integrated Report 2022Integrated Report 2022 Corporate governance
OWNERSHIP STRUCTURE
SHAREHOLDERS' AGREEMENTS
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.
If we can purchase and/or convert our
shares and we do not timely exercise
our right to do so, 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.
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 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 (as
defined above under the “Transfer
restrictions” section). In February
2019, we completed the procedures
Appendices
113
Integrated Report 2022Integrated Report 2022 BOARD OF DIRECTORS PROFILE1
NCG 461 3.2 BOARD OF DIRECTORS| GRI 2-9
Men Women
By sex
By nationality
Brazil
Chile
Spain
United States
The Netherlands
By age group
Under 30 years
From 30 to 40 years old
From 41 to 50 years old
From 51 to 60 years old
From 61 to 70 years old
Over 70 years old
By seniority
Under 3 years
From 3 to 6 years
More than 6 and up to 9 years
More than 9 and up to 12 years
Over 12 years old
Personas con discapacidad
8
1
2
1
3
1
0
3
0
3
2
0
7
1
0
0
0
0
1
1
0
0
0
0
0
0
0
1
0
0
0
1
0
0
0
0
1 There are no deputy board member; they are all
ordinary members.
IGNACIO CUETO
CHAIRMAN
RUT: 7.040.324-2
Ignacio Cueto is a member of LATAM
Airlines group’s Board of Directors
and Chairman since 2017. Cueto’s
career extends back over 30 years.
In 1985, assumed the position of
Vice president of Sales at Fast Air
Carrier, and later became Service
Manager and Commercial Manager
for the Miami sales office. Cueto was
on the Board of Directors of Ladeco,
LAN and LAN Cargo. He was Chief
Executive Officer-Passenger Business
and as President and Chief Operating
Officer of LAN from 2005 until the
combination with TAM in 2012.
Cueto also led the establishment of
the different affiliates that LATAM
has in South America, as well as the
implementation of key alliances with
other airlines.
BORNAH MOGHBEL
VICE-CHAIRMAN OF THE BOARD
RUT: FOREIGNER
Bornah Moghbel has been the
Chairman of the Board at LATAM
Airlines Group since November 2022.
He is a Co-Founder and Partner
of Sixth Street, a leading global
investment firm that offers capital
solutions to companies across all
stages of growth. Based in New York,
Moghbel leads Sixth Street’s corporate
investing in public markets as well as
its global asset investing business.
After co-founding Sixth Street in
2009, Moghbel established the firm’s
presence in Europe before returning
to the United States in 2016. Prior to
joining Sixth Street, Moghbel was an
investor at Silver Point Capital and
he began his career in the Financial
Sponsors Group at UBS Investment
Bank. He earned a B.A. in Economics,
with high honors, and a minor in
Business Administration from the
University of California, Berkeley.
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Corporate governanceDECISION-MAKING BODIESBOARD: COMPOSITION AND RESUMÉSNCG 461: 3.2 BOARD OF DIRECTORSIntegrated Report 2022Integrated Report 2022 ENRIQUE CUETO
ORDINARY BOARD MEMBER
RUT: 6.694.239-2
FREDERICO CURADO
ORDINARY BOARD MEMBER
RUT: FOREIGNER
ANTONIO GIL NIEVAS
ORDINARY BOARD MEMBER
RUT: 23.605.789-5
MICHAEL NERUDA
ORDINARY BOARD MEMBER
RUT: FOREIGNER
Enrique Cueto is 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, since the
combination between LAN and TAM
in June 2012. From 1983 to 1993,
Cueto was Chief Executive Officer of
Fast Air, a Chilean Cargo airline. From
1993 to 1994, Cueto was a member of
the board of LAN Airlines. Thereafter,
Cueto held the position of CEO of LAN
until June 2012. Cueto is a member of
the Board of the Endeavor foundation,
an organization dedicated to the
promotion of entrepreneurship in Chile.
Cueto holds a degree in Economic
Sciences from the Catholic University
of Chile.
Frederico Curado has been on the
Board of LATAM Airlines Group since
November 2022, as an independent
director. He has also been an
independent director of Transocean
since 2013, is Chair of its HSE and
Sustainability Committee and a
member of the Corporate Governance
Committee. Curado is also an
independent director at ABB since
2016 and is Chair of its Compensation
Committee. He was CEO of Embraer
from 2007 to 2016 and CEO of
Ultrapar from 2017 to 2021.
Curado holds a B.Sc in Mechanical-
Aeronautical Engineering from the
Aeronautics Institute of Technology
(ITA) and an Executive MBA from the
University of São Paulo, Brazil.
Antonio Gil Nievas joined LATAM Airlines
group’s Board of Directors in November
2022. He is also a board member at
SQM, a Chilean and NYSE publicly listed
company. Antonio has over 25 years of
experience in strategic, management,
financial and investment leadership roles
at global, European and Latin American
levels. He was CEO of Moneda Asset
Management and worked at JP Morgan,
serving as Managing Director, Global
CFO and member of the global executive
committees of several businesses,
among other positions. Gil Nievas holds
a MSc. and BSc. in industrial engineering
with a major in electronics from ICAI
(Universidad Pontificia Comillas, Spain).
He obtained his MBA from Harvard
Business School and also completed the
Stanford Executive Program.
Michael Neruda has been a member
of the Board at LATAM Airlines
Group since November 2022. He is
a Partner of Sixth Street, a leading
global investment firm that offers
capital solutions to companies across
all stages of growth. Based in San
Francisco, Neruda leads Sixth Street’s
corporate investing in public markets.
Prior to joining Sixth Street in 2015,
Neruda was a Director at Watershed
Asset Management, where he led
investments in the consumer and
energy sectors. Neruda was previously
an investment analyst at MHR Fund
Management, Silver Point Capital and
Merrill Lynch. He received a B.S. in
Management Science and Engineering
from Stanford University, is a CFA
Charterholder and currently serves on
the Board of Governors of the Boys &
Girls Clubs of San Francisco.
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Corporate governanceDECISION-MAKING BODIESBOARD: COMPOSITION AND RESUMÉSNCG 461: 3.2 BOARD OF DIRECTORSIntegrated Report 2022Integrated Report 2022 BOUK VAN GELOVEN
ORDINARY BOARD MEMBER
RUT: FOREIGNER
SONIA VILLALOBOS
ORDINARY BOARD MEMBER
RUT: 21.743.859-4
ALEXANDER WILCOX
ORDINARY BOARD MEMBER
RUT: FOREIGNER
Bouk van Geloven joined the Board
of LATAM Airlines Group in November
2022. He is the Managing Director of
the North American investment team
at Strategic Value Partners LLC, which
he joined in 2014, with a focus on
sectors such as airlines, infrastructure,
packaging and industrials. From 2011
to 2014, Mr. van Geloven was at J.P.
Morgan Cazenove in their Strategic
M&A Advisory team. Mr. van Geloven
has two Master of Science degrees in
Econometrics and Quantitative Finance
from the Vrije Universiteit Amsterdam.
He has served on multiple boards
whilst at SVP and he is currently a
member of the Boards of Klöckner
Pentaplast and Southern Graphics
Systems, and is part of the Advisory
Committee of Mattress Firm.
Sonia Villalobos joined LATAM Airlines
group’s Board of Directors in August
2018. Villalobos is a regular member
of the board of directors of Petrobras
and Telefónica Vivo, founding partner
of the company Villalobos Consultoria
and a professor of post-graduate
courses in finance at Insper. She
was the Manager of Funds in Latin
America, in Chile, managing mutual
and institutional funds of Larrain Vial
AGF. She was responsible for Private
Equity investments in Brazil, Argentina
and Chile for Bassini, Playfair &
Associates, LLC. She graduated in
Public Administration from EAESP/
FGV in 1984 and obtained a Master in
Finance from the same institution.
Alexander Wilcox has been a member
of the Board at LATAM Airlines Group
since October 2020. He has broad
experience in the aviation industry,
where he has held executive positions
at various airlines between 1996 and
2005. Wilcox is a cofounder and the
CEO of JSX, a public charter commuter
air carrier in the U.S. Wilcox attended
the University of Vermont and earned a
BA in Political Science and English.
Appendices
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Corporate governanceDECISION-MAKING BODIESBOARD: COMPOSITION AND RESUMÉSNCG 461: 3.2 BOARD OF DIRECTORSIntegrated Report 2022Integrated Report 2022 ANNUAL REPORT OF THE DIRECTORS’
COMMITTEE’S ADMINISTRATION
NCG 461: 3.3 BOARD COMMITTEES and
10. COMMENTS FROM SHAREHOLDERS AND
DIRECTORS’ COMMITTEE
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 2022.
I. COMPOSITION OF THE DIRECTOR’S
COMMITTEE
As part of the renewal of the Board of
Directors by the Shareholders’ Meeting
on November 15, 2022, the Company’s
Board of Directors was comprised until
that date by Eduardo Novoa Castellon,
Patrick Horn Garcia, and Nicolas Eblen
Hirmas. Since November 15, 2022, the
Committee has been comprised by
Frederico Curado, Sonia J.S. Villalobos
and Michael Neruda. It should be noted
that Mr. Curado is an independent board
member and chairs the Committee.
II. COMMITTEE’S ACTIVITY REPORT
During financial year 2022, the
Directors’ Committee met on 46
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 exit Chapter 11.
Below, is a report of the main issues
discussed.
Examination of balance sheet and
Financial Statements
The Directors’ Committee examined
and reviewed the Company’s financial
statements as at December 31,
2021, as well as at the end of the
quarters ended on March 31, June
30, and September 30, 2022, in
extraordinary meetings held on March
8, May 10, August 9, and November
8, 2022, respectively, including the
reports from the Company’s external
auditors, PriceWaterhouseCoopers
Consultores, Auditores SPA (“PwC”), who
participated in the four sessions.
Review impairment reports
At the meetings held on January 24,
April 11, July 8, and October 11, 2022,
the Directors’ Committee addressed
issues related to the 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 2021 and
September 2022, as well as analyses
of evidence of impairment at March 31,
2022 and June 30, 2022, 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 07, 2022,
the Committee examined the existing
wage systems and compensation plans
for the Company’s main executives and
workers.
Internal Audit
In ordinary and extraordinary meetings
of the Directors’ Committee held on
January 24, March 15, May 9, June
13, August 8, August 22, October 11,
November 14 and December 14, 2022,
topics regarding the Internal Audit were
reviewed. The status of the Internal
Audit Plan carried out during 2021
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
2022 work plan 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 24, March 7, May 9, October
11, November 14, and December 14,
2022, discussed the plan to be followed
regarding SOX standards for certification
during 2022. A report was also issued
including the SOX certification results
obtained during 2021, regarding the
most relevant issues to be considered
during 2022, Company projects that
could have an impact regarding SOX
standards, the main environmental
impacts of the COVID-19 and Chapter
11 contingencies, and a timeline to be
followed regarding this certification
during 2022.
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External auditing services
In the meeting held on June 13, 2022,
PWC presented the work plan to be
followed regarding the External Audit
during 2022, addressing topics related
to the regulatory requirements in
terms of communication and project
deliverables, the composition of the
PwC team, 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.
Bidding process for the external
audit services
In ordinary and extraordinary meetings
of the Directors’ Committee held on
May 9, July 8 and 15, and August 8,
2022, the bidding process for External
Auditors was reviewed to propose to
the Board and subsequently to the
Shareholders' Meeting the candidates
for their final election.
Corporate Risk Management
In ordinary and extraordinary meetings
of the Directors’ Committee held on
January 18, April 11, and August 22,
2022, matters related to corporate risks
were reviewed, including prevention, the
risk model, and its status.
Safety
In the meetings of the Directors’
Committee held on March 7, and July
8, 2022, various security issues were
discussed, including physical and air
security, and the Data Protection Act.
Compliance
In the ordinary meetings held on
April 11 and September 12, 2022,
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,
the development of policies, training
and communications, the status of
Third Party Intermediaries (“TPIs”),
identification and management of
Compliance risks, and the report on
Compliance at the corporate level,
among others.
LATAM Policies
In the meetings held on May 9, July 8,
and August 8, 2022, both modifications
to existing policies and some new
policies were analyzed, including
Policy for Control to Logical Access to
Information, Risk Management Policy,
Funds to be Settled and Fixed Funds
Policy.
Examination of reports pertaining to
the Related-Party Transactions Policy
(“RPT”)
In the Committee meeting held on
June 13, 2022, in compliance with the
reporting obligation established in the
RPT Policy, 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 DIP (debtor in possession)
financing under the Chapter 11
proceeding
In the ordinary and extraordinary
meetings of the Directors’ Committee
held on February 7, 9, and 16, March
4, 6, 13, 14, and 15, April 5, June 7,
September 1, and October 11, the
Directors’ Committee reviewed and
analyzed the background regarding the
DIP (debtor in possession) Financing under
the Chapter 11 proceeding, complying
with the regulations concerning related-
party transactions, in the corresponding
cases. Likewise, in the sessions held on
March 7 and April 5, issues related with
the DIP financing were discussed.
Review of the Reorganization Plan under
the Chapter 11 proceeding
In the Directors’ Committee meetings
held on January 4, 6, 8, 10, and 11,
February 7, 9, and 16, March, 4, 6, 13,
14, and 15, April 5, 20, and 28, May 4,
6, and 10, June 7, and September 1,
all in 2022, the Directors’ Committee
reviewed and analyzed the background
they presented regarding the
reorganization and financing plan (the
“Reorganization Plan”) in the context
of the Chapter 11 proceeding in the
United States.
Corporate Governance Practices
In the meeting held on 11 April, 2022,
the Directors' Committee reported on
the repeal of General Standard N° 385
of the Commission for the Financial
Market (CMF, for its Spanish acronym)
and the new General Standard N° 461
of the CMF that would be enforced on
LATAM as of the 2022 Report, which is
presented in 2023. In addition, in this
same session, Annex I of Standard N°
385, which had already been revised to
be submitted for consideration by the
Board, is ratified.
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Directors' Committee Recommendations
On the other hand, the
Directors’ Committee issued the
recommendations stated below,
regarding the appointment of the
Company’s External Auditors and
Private Risk Rating Agencies for 2022.
Report of Activities by Directors’
Committee Meeting
The Directors' Committee met and
discussed at the times described
below, with a brief list of the topics
examined at each of these meetings:
1) Extraordinary meeting n° 55 –
01/04/2022
• Update on LATAM Reorganization
Plan.
2) Extraordinary meeting n° 156 –
01/06/2022
• Update on LATAM Reorganization
Plan.
3) Extraordinary meeting n° 157 –
01/08/2022
• Update on LATAM Reorganization
Plan.
4) Extraordinary meeting n° 158 –
01/10/2022
• Update on LATAM Reorganization
Plan.
5) Extraordinary meeting n° 159 –
01/11/2022
• Update on LATAM Reorganization
Plan.
• Backstop Commitment Agreement
(BCA).
6) Extraordinary meeting n° 160 –
01/18/2022
• Risk Management Model.
7) Ordinary meeting n° 228 –
01/24/2022
• Status of SOX Certification.
• Topic Legal Research/Compliance.
• Update-Topic Environment, Health,
Safety Management (EHS).
• CEO Reserved topic.
• Impairment test related to the
Financial Statement as at 12.31.2021.
• Deloitte report-consulting conclusion.
• Internal Audit topic.
8) Extraordinary meeting n° 161 –
02/03/2022
• Update on LATAM Reorganization
Plan.
9) Extraordinary meeting n° 162 –
02/07/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
10) Extraordinary meeting n° 163 –
02/09/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
11) Extraordinary meeting n° 164 –
02/16/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
12) Extraordinary meeting n° 165 –
03/04/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
13) Extraordinary meeting n° 166 –
03/06/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
14) Ordinary meeting n° 229 –
03/07/2022
• Update on DIP matters.
• Annual report of the Directors’
Committee’s management.
• SOX 2021 certification results.
• Corporate Topics (Proposal of external
auditors and private risk rating agencies
for 2022).
• Update-Topic Environment, Health,
Safety Management (EHS).
• Company Executive and Worker Salary
Systems and Compensation Plans.
• Risk Analysis – Safety equipment.
15) Extraordinary meeting n° 167 –
03/08/2022
• Review of the MOR for December
2021, in the framework of compliance
with obligations under the Chapter 11
proceeding.
• Review of Financial Statements up to
12/31/2021.
• Review of Financial Statements up to
12/31/2022 by PwC.
• Review of the MOR for January 2022
in the framework of compliance with
obligations under the Chapter 11
proceeding.
16) Extraordinary meeting n° 168 –
03/13/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
17) Extraordinary meeting n° 169 –
03/14/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
18) Extraordinary meeting n° 170 –
03/15/2022
• 2022 goals and transformation plan
• Proposal of Internal Audit Plan 2022.
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19) Extraordinary meeting n° 171 –
03/15/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
24) Extraordinary meeting n° 175 –
04/28/2022
• Update on LATAM Reorganization
Plan.
• Topic related to Insurance Policy.
20) Extraordinary meeting n° 172 –
03/29/2022
• Review of the MOR for February
2022, in the framework of compliance
with obligations under the Chapter 11
proceeding.
21) Extraordinary meeting n° 173 –
04/05/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
22) Ordinary meeting n° 230 –
04/11/2022
• General Standard Nº 385 of the CMF.
• Update-Topic Environment, Health,
Safety Management (EHS).
• Signs of impairment related to the
Financial Statements as at 3/31/2022.
• April 2022 Close/SAP.
• Update Topic Compliance.
• Risk Pillar Status.
23) Extraordinary meeting n° 174 –
04/20/2022
• Update on LATAM Reorganization
Plan.
25) Extraordinary meeting n° 176 –
05/04/2022
• Update on LATAM Reorganization
Plan.
26) Extraordinary meeting n° 177 –
05/06/2022
• Update on LATAM Reorganization
Plan.
27) Ordinary meeting n° 231 –
05/09/2022
• Reserved topic Internal Audit
• Environmental management and
geopolitical risk.
• Tendering process External Auditors.
• Policy for Control of Logical
Access to Information and Update
Topic Environment, Health, Safety
Management (EHS).
• Planning of SOX 2022.
• Other topics Internal Audit.
28) Extraordinary meeting n° 178 –
05/10/2022
• Update on LATAM Reorganization
Plan.
29) Extraordinary meeting n° 179 –
05/10/2022
• Review of the MOR for March 2022
in the framework of compliance with
obligations under the Chapter 11
proceeding.
• Review of Financial Statements up to
03/31/2022.
• Review of Financial Statements up to
03/31/2022 by PwC.
30) Ordinary meeting n° 180 –
06/07/2022
• Update on LATAM Reorganization
Plan.
• DIP refinancing.
• Chapter 11 Exit Funding.
31) Ordinary meeting n° 232 –
06/13/2022
• Engine sale to Delta.
• 2022 Plan External Auditor PwC.
• Presentation of tax matters and
related-party transactions.
• Brownfield Project Status.
• Internal Audit topics.
32) Extraordinary meeting n° 181 –
06/14/2022
• Review of the MOR for April 2022,
in the framework of compliance with
obligations under the Chapter 11
proceeding.
33) Ordinary meeting n° 233 –
07/08/2022
• Signs of impairment related to the
Financial Statements as at 6/30/2022.
• Status Topic General Data Protection
Act (GDPA).
• Coordination External Auditor Tender
process.
• Update-Topic Environment, Health,
Safety Management (EHS).
• LATAM policy updates.
34) Extraordinary meeting n° 182 –
07/12/2022
• Review of the MOR for May 2022,
in the framework of compliance with
obligations under the Chapter 11
proceeding.
35) Extraordinary meeting n° 183 –
07/15/2022
• Technical presentation of the External
Auditor firms participating in the tender
for these services.
36) Ordinary meeting n° 234 –
08/08/2022
• Legal topic.
• Loyalty Project.
• External Audit service tender process.
• Update Fixed Fund Policies.
• Internal Audit topics.
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45) Ordinary meeting n° 237 –
11/14/2022
• Status of SOX Certification.
• Internal Audit topic.
46) Ordinary meeting n° 238 –
12/14/2022
• Operation of the Directors’ Committee
– main objectives and responsibilities.
• Status of External Audit and SOX
Certification.
• Internal Audit topics.
37) Extraordinary meeting n° 184 –
09/09/2022
• Review of the MOR for June 2022
in the framework of compliance with
obligations under the Chapter 11
proceeding.
• Review of Financial Statements up to
06/30/2021.
• Review of Financial Statements up to
06/30/2022 by PwC.
38) Extraordinary meeting n° 185 –
08/22/2022
• Risk Pillar Status.
• Matters relating to the Internal Audit
transformation plan.
39) Extraordinary meeting n° 186 –
08/29/2022
• Review of the MOR for July 2022,
in the framework of compliance with
obligations under the Chapter 11
proceeding.
40) Extraordinary meeting n° 187 –
09/01/2022
• Update on LATAM Reorganization
Plan.
• Chapter 11 Exit Funding.
41) Ordinary meeting n° 235 –
09/12/2022
• Update Topic Legal.
• Update Topic Compliance.
• Tax issues.
• Status action plans of topic
Environment, Health, Safety
Management (EHS) and Brownfield.
42) Extraordinary meeting n° 188 –
10/04/2022
• Review of the MOR for August 2022,
in the framework of compliance with
obligations under the Chapter 11
proceeding.
43) Ordinary meeting n° 236 –
10/11/2022
• Update on DIP matters.
• Impairment test for Q3.
• Main accounting impacts – Chapter
11 exit.
• Status of SOX Certification
9/30/2022.
• Update topic Fraud.
• Internal Audit topic.
44) Extraordinary meeting n° 189 –
11/08/2022
• Review of the MOR for September
2022 in the framework of compliance
with obligations under the Chapter 11
proceeding.
• Review of Financial Statements up to
09/30/2022.
• Review of Financial Statements up to
09/30/2022 by PwC.
III. DIRECTORS’ COMMITTEE
COMPENSATION AND SPENDING.
The Company’s Ordinary Shareholders’
Meeting held on April 20, 2022,
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.
Following the Extraordinary
Shareholders’ Meeting of the Company,
held on November 15, 2022, it was
agreed that each director who is
a member of the Committee shall
receive a fixed annual remuneration of
US$50,000, regardless of the number
of meetings they attend.
For purposes of the operation of the
Directors’ Committee and its advisors,
Law Nº 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 regard, the Ordinary
Shareholders’ Meeting held on April 20,
2022, approved a spending budget for
the Committee of 2,880 Unidades de
Fomento for 2022. During 2022, this
spending budget was not used. Later,
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COMMENTS FROM SHAREHOLDERS AND
DIRECTORS’ COMMITTEE
Agencies for the Company's Ordinary
Shareholders’ Meeting on April 20,
2022. 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 Rating
Services.
the Ordinary Shareholders’ Meeting
held on November 15, 2022, approved
a spending budget for the Committee
of US$150,000 for 2023.
IV. DIRECTORS' COMMITTEE
RECOMMENDATIONS
IV.1 Proposal for Appointment of
External Auditors.
At the meeting of the Board of
Directors held on March 7, 2022, and
in accordance with the provisions of
paragraph 2) section eight of article
50 bis of Law N° 18.046 on Limited
Corporations, it was greed to propose
to the Company’s Board of Directors,
based on the analysis carried out by
management regarding the work and
the performance evaluation in 2021,
to continue with the external auditors
PwC for financial year 2022. The
above proposal was approved by the
Company’s Shareholders’ Meeting held
on April 20, 2022.
IV.2 Proposal of Private Risk-Rating
Agencies.
In its meeting held on March 7, 2022,
and in accordance with Article 50
bis, section 8, paragraph 2) of Law
Nº 18,046 on Limited Corporations,
the Directors’ Committee agreed to
propose to the Board the Risk-Rating
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MAIN EXECUTIVES
NCG 3.4 MAIN EXECUTIVES
ROBERTO ALVO
CEO LATAM AIRLINES GROUP
RUT: 8.823.367-0
RAMIRO ALFONSÍN
CHIEF FINANCIAL OFFICER
RUT: 22.357.225-1
Roberto Alvo has been the CEO
of LATAM since March 31, 2020.
Prior to this, he worked as COO of
LATAM, in charge of managing the
group’s passenger and cargo revenue.
Previously, he was Vice-President
of International and Alliances at
LATAM Airlines, and Vice-President of
Strategic Planning and Development.
Alvo joined LAN Airlines in November
2001, where he served as Chief
Ramiro Alfonsín is LATAM’s CFO, a
position he has held since July 2016.
Formerly, he worked 16 years for
Endesa, a leading utilities company, in
Spain, Italy and Chile, where he served
as Deputy Chief Executive Officer and
Chief Financial Officer for their Latin
American operations. Before joining
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 working for the group, 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.
the utilities sector, he worked for five years
in Corporate and Investment Banking for
several European banks. Alfonsin holds a
degree in Business Administration from
Pontificial Catholic University of Argentina.
EMILIO DEL REAL
VICE-PRESIDENT OF HUMAN
RESOURCES
RUT: 9.908.112-0
Emilio del Real is the LATAM Vice-
President of Human Resources, a
position he took over in August 2005.
Between 2003 and 2005, he was
Human Resources Manager at D&S,
a Chilean retail company. Between
1997 and 2003, he 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. Del Real has a degree in
Psychology from the Gabriela Mistral
University.
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NCG 3.4 MAIN EXECUTIVES
JUAN CARLOS MENCIÓ
LEGAL AFFAIRS AND COMPLIANCE
OFFICER
RUT: 24.725.433-1
Juan Carlos Menció, has been the
Vice-President of Legal Affairs and
Compliance at LATAM Airlines Group
since September 1, 2014. Previously,
held the position of General Counsel
for North America for LATAM Airlines
Group and its affiliates, 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,
representing various international airlines.
Mencio 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.
PAULO MIRANDA
CLIENTS VICE-PRESIDENT
RUT: FOREIGNER
HERNÁN PASMAN
CHIEF OPERATING OFFICER
RUT: 21.828.810-3
Paulo Miranda has been the LATAM
Clients Vice-President since May
2019. Miranda has over 20 years of
experience in the aviation industry,
having held different positions, first at
Delta Air Lines in the United States,
and then at Gol Linhas Aéreas in
Brazil. In his last role, Miranda was
responsible for the Client Experience
department, having previously worked
in finance and alliances, as well as in the
negotiation and implementation of joint
ventures. Miranda holds a Bachelor of
Business Administration degree from the
Carlson School of Management, University
of Minnesota, USA.
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 Head of Strategic
Planning and Financial Analysis of the
technical areas. Between 2007 and
2010, Pasman was the COO of LAN
Argentina; he has served as CEO for
LAN Colombia since 2011. Prior to joining
LATAM, Pasman was a consultant at
McKinsey & Company in Chicago, and held
positions at Citicorp Equity Investments,
Telefónica de Argentina, and Motorola
de Argentina. Pasman holds a Civil
Engineering degree from ITBA (1995) and
an MBA from Kellogg Graduate School of
Management (2001).
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NCG 3.4 MAIN EXECUTIVES
JULIANA RIOS
IT & DIGITAL VICE-PRESIDENT
RUT: FOREIGNER
Juliana Rios has over 20 years of
experience in services and technology in
the financial and airline industries. Her
career spans business transformation,
mergers & acquisitions, digitization, IT,
and large-scale project management,
such as PSS migration. As IT & Digital
Vice-President, she leads LATAM
Airlines’ digital transformation efforts.
Prior to joining LATAM, Rios was a
senior executive at Banco Santander,
Brazil, spearheading the retail business
and customer experience strategy. She
headed integration programs in Brazil,
Italy and the Netherlands. Rios holds a
Bachelor’s in Business Administration and
an MBA in Corporate Management from
IBMEC, Brazil.
MARTIN ST. GEORGE
CHIEF COMMERCIAL OFFICER
RUT: FOREIGNER
Martin St. George joined LATAM
Airlines Group in 2020 as CCO after
a career of more than 30 years in the
aviation industry in both North America
and Europe. Prior to LATAM, he ran
a strategy consulting firm for airlines
and travel industry clients in the United
States, the Caribbean and Europe, and
even served as Acting CCO at Norwegian
Air Shuttle ASA. From 2006 to 2019, he
worked for JetBlue Airways, in positions
in marketing, networking, and finally, as
COO at JetBlue. St. George holds a degree
in civil engineering from the Massachusetts
Institute of Technology.
JUAN JOSÉ TOHÁ
DIRECTOR OF CORPORATE AFFAIRS
AND SUSTAINABILITY
RUT: 16.655.612-0
Juan José Tohá is a journalist with a
specialty in Sustainability from Oxford
University, as well as a Master's
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
Manager for Codelco and BHP South
America, among others. In 2019, he joined
LATAM group as Director of Corporate
Affairs and Sustainability, reporting
directly to the CEO of LATAM group, and
he coordinates the corporate strategy of
Public Affairs, External Communications,
and Sustainability.
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INDUSTRY CONTEXT
REGULATION
NCG 461: 6.1 INDUSTRIAL SECTOR
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
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, is
being implemented in various phases
by ICAO member states starting in
2021 (with the voluntary member
states).
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.
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 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.
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
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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.
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.
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
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.
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.
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”
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.
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PERU
Aeronautical regulation
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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.
ECUADOR
Aeronautical regulation
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.
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;
• Maintaining the National Aircraft
Registry;
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• 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).
LATAM group has obtained and
maintains 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,
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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 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, in order 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 charge a fuel surcharge.
In the case that a fuel surcharge is
charged, it must be part of the fare,
but shall be informed separately on the
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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.
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
LADECO, 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.
In June 2012, the antitrust authorities
in Chile and Brazil each imposed
certain mitigation measures as
part of their approval of LAN -
TAM transaction. Furthermore, the
association was also submitted to
the antitrust authorities in Germany,
Italy, Spain and Argentina. All these
jurisdictions granted unconditional
clearances for this transaction. For
more information regarding these
mitigation measures please see below:
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 proposed
combination between LAN and TAM,
subject to 14 conditions, as generally
described below:
1. Exchange of certain slots in the
Guarulhos Airport at São Paulo, Brazil;
2. Extension of the frequent flyer
program to airlines 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;
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3. Execution of interline agreements
with airlines operating the Santiago-
São Paulo, Santiago-Río de Janeiro
and Santiago-Asunción routes;
4. Certain capacity and other
transitory restrictions applicable to
the Santiago-São Paulo route;
8. The abandonment of four air traffic
frequencies with fifth freedom rights
between Chile and Peru and limitations on
acquiring in excess of 75%, as applicable,
of the air traffic frequencies in that route
and the period that certain air traffic
frequencies may be granted by the
Chilean air transport authorities to LATAM;
5. Certain amendments to LAN’s self-
regulatory fare plan approved by the
TDLC with respect to LAN’s domestic
passenger business;
6. 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 otherwise, or to elect
not to participate in any global airline
alliance;
7. Certain restrictions on code-sharing
agreements outside the global airline
alliance to which LATAM belongs for
routes with origin or destination in
Chile or that connect to North America
and Europe, or with Avianca/TACA or
Gol for 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;
9. 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;
10. Promotion by LATAM of the growth
and normal operation of the Guarulhos
(Brazil) and Arturo Merino Benítez (Chile)
airports, to facilitate access thereto to
other airlines;
11. Certain restrictions regarding
incentives to travel agencies;
12. To maintain temporarily 12 round
trip flights per week between Chile and
the United States and at least seven
round trip non-stop flights per week
between Chile and Europe;
13. Certain transitory restrictions on
increasing fares in the Santiago-São Paulo
and Santiago-Río de Janeiro routes for the
passenger business and for the Chile-
Brazil routes for the cargo business; and
14. Engaging an independent consultant,
expert in airline 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
Air Lines 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 does not
belong to a global airline alliance.
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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.
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LATAM Airlines Group S.A. and Delta
Air Lines successfully reached an
agreement on the implementation,
along with certain mitigation measures
for their 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
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.
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 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.
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
On September 30, 2022, the U.S.
Department of Transportation
(“DOT”) approved the joint venture
between Delta Air Lines and
LATAM Airlines Group.
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Integrated Report 2022Integrated Report 2022 Santiago, January 12, 2022
EDITORS AND SHAREHOLDERS
BACKSTOP AGREEMENTS
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
and 99.2 hereto.
Santiago, January 12, 2022
CREDITORS AND SHAREHOLDERS
BACKSTOP AGREEMENTS
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. As previously reported, 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”) under the rules set
forth in Chapter 11 of Title 11 of the
United States Code (the “Bankruptcy
Code”), before the United States
Bankruptcy Court for the Southern
District of New York (the “Court”),
on November 26, 2021 the Debtors
filed before 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.
2. Such Plan of Reorganization
contemplates the support of (i) a
group of unsecured creditors of
LATAM represented by Evercore
(the “Backstop Creditors”); and
(ii) Delta Air Lines, Inc. (“Delta”),
Qatar Airways Investment (UK) Ltd.
(“Qatar”), the Cueto group (i.e.,
Costa Verde Aeronáutica S.A. and
Inversiones Costa Verde Ltda. y Cía.
en Comandita Por Acciones), and the
Eblen group (i.e., Andes Aérea SpA,
Inversiones Pia SpA and Comercial
Las Vertientes SpA). Hereinafter,
Delta, Qatar and the Cueto group,
the “Backstop Shareholders”, and
together with the Backstop Creditors,
the “Backstop Parties”.
3. As previously disclosed, the Plan
of Reorganization, contemplates
among other things:
i. The issuance of new common
stock (the “New Common Stock”),
representing approximately US$800
million. Such New Common Stock
will be preemptively offered to all
of the Company’s shareholders,
as required by current legislation;
provided, that subject to the
execution of backstop commitment
agreements (the “Backstop
Agreements”) and definitive
documentation, (y) the Backstop
Shareholders have 2 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 (z) the
Backstop Creditors have agreed to
backstop the remaining US$400
million, in exchange of a payment of
20% calculated over such amount.
ii. The issuance of three classes of
new convertible notes (the “New
Convertible Notes”) denominated
“New Convertible Notes Class A”, “New
Convertible Notes Class B” and “New
Convertible Notes Class C”.
The New Convertible Notes Class
B are intended to raise new
money in the aggregate amount of
approximately US$1,373 million.
On the other hand, the New
Convertible Notes Class C are for the
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 aggregate amount of approximately
US$6,816 million. To the extent
such New Convertible Notes Class
C are subscribed by unsecured
creditors, such subscription
would require (i) a new money
contribution of approximately
US$3,269 million; and (ii) the
acceptance of such instruments,
by way of settlement of their
claims, for approximately US$3,547
million. All New Convertible Notes
will be preemptively offered to
LATAM’s shareholders as required
by applicable law; provided, that
subject to the execution of the
Backstop Agreements and definitive
documentation, (y) the Backstop
Shareholders have agreed to fully
backstop the placement of the New
Convertible Notes Class B without
being entitled to any payment in
exchange of such commitment;
and (z) the Backstop Creditors
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.
4. In furtherance of the backstop
commitments described above, on
the date hereof LATAM has executed,
with the Backstop Parties, Backstop
Agreements, which main terms are
described below:
i. Outside Date: The Backstop
Agreements contemplate September
30, 2022 as the outside date of
the commitments provided by the
Backstop Parties thereunder and
under the Plan of Reorganization,
subject certain customary extensions
in this type of transactions (including,
without limitation, the delay of the
emergence from the Chapter 11
Proceeding due to identification of a
new variant of COVID-19).
ii. Direct Allocation: To the extent
not subscribed by the shareholders’
of LATAM during the respective
preemptive rights offering period,
50% of the New Convertible
Notes Class C (corresponding to
approximately, the amount of
US$3,408 million) shall be directly
allocated to the Backstop Creditors
in exchange of a combination of,
on the one hand, a new money
contribution, and on the other hand,
a settlement of their unsecured
claims, in the following proportion:
52.037% in settlement of their
unsecured claims; and 47.963% of a
new money contribution.
iii. Backstop Payment: The Backstop
Creditors are entitled to a payment
of 20%, payable in cash, calculated
over the amount of new money
contribution that the Backstop
Creditors have agreed to contribute
to LATAM (i.e. calculated over
approximately US$3,669 million).
(the “Backstop Payment”).
iv. Alternative Transaction: The
Debtors shall not seek, propose or
enter into any transactions that are
an alternative to the restructuring
transactions set forth in the Plan of
Reorganization, subject to certain
exceptions, such as those consistent
with fiduciary duties of the board of
directors of the Company.
v. Termination Events: The Backstop
Agreements contain customary
termination events mutually
acceptable to the Debtors and
the Backstop Parties, including
termination events triggered by:
(i) the occurrence of events having
a material adverse effect on the
Company or its operations; and (ii)
shortfalls in Company liquidity or
decreases in revenues.
vi. Termination Payments: The
Backstop Agreement executed with
the Backstop Creditors contemplates
termination payments in case such
Backstop Agreement is terminated.
Such termination payments range
between 10% and 50% of the
Backstop Payment, depending
on the event that triggered the
termination of such agreement.
vii. R&W; Conditions Precedents;
and Covenants: The Backstop
Agreements contain representations
and warranties, conditions precedents
and covenants customary for this type
of restructuring.
viii. Registration Rights Agreement:
LATAM and the Backstop Creditors
shall negotiate in good faith a
registration rights agreement of the
new shares to be delivered to the
Backstop Creditors in connection
with the Plan of Reorganization,
which will allow such Backstop
Parties to list shares in the United
States of America in the form of
ADSs.
5. Under Chapter 11 of the
Bankruptcy Code, the Court shall
approve these Backstop Agreements
and the Backstop Payment.
Accordingly, on this date the
Company has filed these Backstop
Agreements with the Court for their
approval and confirmation.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 6. The Company will keep its
shareholders, creditors and the
market informed on the progress
of the Chapter 11 Proceeding.
Further, LATAM continues to focus on
ensuring that its exit strategy allows
it to emerge with a robust capital
structure, adequate liquidity and the
ability to successfully execute its
business plan in a sustainable manner
over time and in compliance with all
applicable laws.
Santiago, February 18, 2022
AMENDED AND RESTATED DIP
CREDIT AGREEMENT
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:
States of America (the “Chapter 11
Proceeding”) pending before the
Bankruptcy Court of the Southern
District of New York hearing the
Chapter 11 Proceeding (the “Court”),
contemplates a Tranche A facility,
a Tranche B facility, and a Tranche
C facility, for up to US$1.3 billion,
US$750 million, and US$1.15 billion,
respectively.
• As previously informed, the
scheduled maturity date of the
Existing DIP Credit Agreement is
April 8, 2022. Considering this, and in
light that the Chapter 11 Proceeding
is currently ongoing and that the
Debtors are not going to emerge
therefrom by April 8, 2022, LATAM
sought and received various financing
proposals for an extension and/
or refinancing of the Existing DIP
Credit Agreement which have been
evaluated and negotiated in a timely
manner by the Company together
with its advisors.
• As previously reported, the Super-
Priority Debtor-In-Possession Term
Loan Agreement (the “Existing DIP
Credit Agreement”) entered into in the
context of the reorganization process
of LATAM and certain of its direct and
indirect subsidiaries (collectively with
LATAM, the “Debtors”) in the United
• In this regard, LATAM’s Directors
Committee, at a meeting held
on February 16, 2022, reviewed
such financing proposals and
recommended the Board of Directors
to approve the proposal submitted
by a group of financiers comprised
of (i) Oaktree Capital Management,
L.P., and certain funds, accounts
and entities advised by Oaktree
(“OCM”); (ii) Apollo Management
Holdings, L.P., and certain funds,
accounts and entities advised by
Apollo (“Apollo”); (iii) QA Investments
Limited (“QA”); (iv) Costa Verde
Aeronáutica S.A. (“Costa Verde”); (v)
Lozuy S.A. (“Louzy”); and (vi) Delta
Air Lines, Inc. (“Delta”) (hereinafter,
the “Amended and Restated DIP
Financing Proposal”). At a meeting
held on February 17 2022, the Board
of Directors of the Company, by
unanimous vote of the independent
directors, resolved to approve the
Amended and Restated DIP Financing
Proposal, subject to the Court’s
approval.
• An amendment and restatement of
the Existing DIP Credit Agreement
(the “Amended and Restated DIP
Credit Agreement”) was submitted to
the Court for approval on February 18,
2022. The Amended and Restated
DIP Credit Agreement extends
the scheduled maturity date of all
tranches under the Existing DIP Credit
Agreement, refinances and replaces
the Tranche C facility existing under
the Existing DIP Credit Agreement
and includes certain reductions in
fees and interest as described more
fully below:
»Lenders:
» The lenders under Tranche A
and Tranche B remain the same
as provided for in the Existing DIP
Credit Agreement.
» Tranche C lenders consist of QA,
Costa Verde, Louzy, Delta, OCM and
Apollo. QA, Costa Verde, Lozuy and
Delta are Tranche C lenders under
the Existing DIP Credit Agreement
and will continue to extend their
Tranche C financing commitments
while OCM and Apollo will provide
new financing under the Amended
and Restated DIP Credit Agreement.
»Committed Amount:
» The committed amount under
Tranche A and Tranche B remain
unchanged, and therefore continue
to be US$1.3 billion and US$750
million, for principal amount,
respectively.
» In turn, the committed amount
under Tranche C is increased from
the existing US$1.15 billion to
US$1.245 billion, for principal
amount. This increase is intended
to cover the costs of refinancing the
Tranche C facility existing under the
Existing DIP Credit Agreement.
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136
Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 »Scheduled Maturity Date:
» The Tranche A facility, the
Tranche B Facility and the
Tranche C facility will have a
scheduled maturity date of
August 8, 2022, subject to the
possibility that LATAM may
extend such maturity date at
its discretion, in one or more
extensions of periods of at
least 30 days each, to a date
no later than October 31, 2022,
provided LATAM may further
extend the maturity date to a
date no later than the (x) earlier
of November 30, 2022 or (y) the
termination of the Restructuring
Support Agreement executed
in furtherance of the plan of
reorganization submitted by
the Debtors in the context of
the Chapter 11 Proceeding, in
accordance with their terms
in the event the World Health
Organization or the U.S. Centers
for Disease Control shall have
designated or characterized any
variant of SARS-CoV-2 (i.e., the
virus that causes COVID-19) as a
“variant of concern.”
» 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”).
interest at LIBO plus 9.50% per
annum for Eurodollar loans, and
8.50% per annum plus the base
rate for ABR loans.
»Interests and Fees:
» Interests under Tranche A and
Tranche B:
► Both the applicable interest
rate and the interest payment
dates will depend on the choice
made by LATAM at the time
of requesting a disbursement
under the Tranche A facility and
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”).
►Tranche A loans whose interest
is either payable in cash at the
end of each interest period or
whose interest is capitalized on
a quarterly basis for payment
on the Maturity Date will bear
►The interest rate on the
Tranche B loans remains
unchanged from the Existing DIP
Credit Agreement. Thus, in the
case of Tranche B loans that are
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).
In turn, in the case of Tranche B
loans that are payable in cash
at the end of each quarterly
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).
»Interests under Tranche C:
» Interest on Tranche C loans will
be accrued at LIBOR plus 12%
per annum, and will be payable
on the Maturity Date, and will be
calculated as if it had accrued daily
and capitalized quarterly.
»Fees and Other Charges:
» An availability fee (Undrawn
Commitment Fee) payable in
cash equal to 0.50% on the daily
unused Tranche A and Tranche B
commitments per annum, which
will be calculated daily, and will
be payable on the last business
day of each quarter until the
Maturity Date.
» An availability fee (Undrawn
Commitment Fee) payable
in cash equal to 0.50% on
the daily unused Tranche C
commitments per annum, which
will be payable on the Maturity
Date and will be calculated
as if it had accrued daily and
capitalized monthly.
» An exit fee with respect to
the Tranche C facility upon the
repayment or prepayment in
full of the Tranche C loans of
3.0% of the amount equal to the
principal amount outstanding
of all Tranche C loans held by
certain of the Tranche C lenders
(the “Tranche C Exit Fee”).
» A maturity date fee due on
the maturity of the Tranche C
facility, of 5.5% of the amount
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 equal to the sum of (x) the
principal amount outstanding of
all Tranche C loans held by the
Tranche C lenders receiving the
Tranche C Exit Fee and (y) the
Tranche C Exit Fee.
» An amendment fee earned
at closing but due upon the
voluntary prepayment or upon
the repayment of the Tranche
A facility on the Maturity Date,
payable in cash in an aggregate
amount equal to 3.00% of the
Tranche A commitments in
effect on the closing date of
the Amended and Restated DIP
Credit Agreement.
» An amendment fee earned
at closing but due upon the
voluntary prepayment or upon
the repayment of the Tranche
B facility on the Maturity Date,
payable in cash in an aggregate
amount equal to 3.00% of the
Tranche B commitments in
effect on the closing date of
the Amended and Restated DIP
Credit Agreement.
»Collateral and Preferences: The
refinanced Tranche C facility will
continue to be secured by the same
assets that currently secure and the
existing Tranche C facility under the
Existing DIP Credit Agreement.
LATAM is awaiting the Court’s decision
in response to the Amended and
Restated DIP Financing Proposal.
Santiago, February 23, 2022
REGISTRATION OF ADDITIONAL
ADRs
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 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”). Although
the Company’s ADRs (American
Depositary Receipt), were delisted
from the New York Stock Exchange
(NYSE), they continue trading on the
OTC market (over-the-counter) in the
United States.
Given that the last registration of
LATAM ADRs with the Securities
and Exchange Commission (“SEC”)
was solicited and approved in 2011
for 200 million ADRs, and to date,
the majority of said ADRs have
already been issued, the Company’s
management considers it appropriate
to present a request to register 200
million additional ADRs with the SEC,
intending for them to be available for
issuance in the market.
It should be noted that with this
increased availability of ADRs, the
Company is not issuing new shares
nor 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.
Santiago, March 7, 2022
AMENDED AND RESTATED DIP
CREDIT AGREEMENT
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:
• Reference is made to the material
fact dated February 18, 2022,
regarding that certain proposal for
an amendment and restatement
of the Super-Priority Debtor-
InPossession Term Loan Agreement
(such agreement, the “Existing DIP
Credit Agreement”, and the proposal
for the amendment and restatement
thereof, the “Proposed Amended and
Restated DIP Credit Agreement”)
filed for the approval of the
Bankruptcy Court of the Southern
District of New York (the “Court”) on
February 17, 2022.
• LATAM and certain of its direct and
indirect subsidiaries (collectively,
the “Debtors”) have agreed to
certain additional modifications (the
“Additional Amendments”) to the
Proposed Amended and Restated
DIP Credit Agreement with the
prospective lenders thereunder.
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,
• LATAM’s Directors Committee,
at a meeting held on March 6,
2022, reviewed such Additional
Amendments and recommended
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138
Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 the Board of Directors to approve
them. At a meeting held on March 6,
2022, the Board of Directors of the
Company, by unanimous vote of the
independent directors, resolved to
approve the Additional Amendments,
subject to the Court’s approval.
Accordingly, a revised draft of the
Proposed Amended and Restated
DIP Credit Agreement (including
the Additional Amendments) was
submitted to the Court for its
approval on March 7, 2022.
• The terms of the Proposed Amended
and Restated DIP Credit Agreement
(as further modified by the Additional
Amendments) maintain, in essence,
the structure of the Proposed
Amended and Restated DIP Credit
Agreement filed before the Court on
February 17, 2022. The main changes
relate to the following:
»Interest and Fees:
» Interest:
►The interest rate on Tranche A
loans whose interest is payable
in cash at the end of each
interest period is increased from
LIBO plus 9.50% per annum
to LIBO plus 9.75% per annum
for eurodollar loans and from
the base rate plus 8.50% to
the base rate plus 8.75% for
borrowings made with reference
to the alternate base rate.
►The interest rate on Tranche
A loans whose interest is
capitalized on a quarterly basis
for payment on the maturity
date is increased from LIBO
plus 9.50% per annum to LIBO
plus 11.00% per annum for
eurodollar loans and from
the base rate plus 8.50% to
the base rate plus 10.00% for
borrowings made with reference
to the alternate base rate.
►The interest rate on Tranche
C loans is increased from LIBO
plus 12% per annum to LIBO
plus 15% per annum.
»Fees
» The Debtors shall pay an
additional fee equal to 1.00%
of the drawn and undrawn
commitments of each (i) Tranche
A Lender, (ii) Tranche B Lender,
and (iii) each Tranche C Lender
that, according to the Proposed
Amended and Restated DIP Credit
Agreement, qualifies as an Apollo
or Oaktree lender (the “Back-end
Fees”), which Back-End Fees
shall be earned in full on the
closing date of the Proposed
Amended and Restated DIP
Credit Agreement.
»Additional Terms:
» It shall be a condition to
funding that the Court have
entered into the disclosure
statement order and the
backstop approval order.
LATAM is awaiting the Court’s
decision in response to the Proposed
Amended and Restated DIP Credit
Agreement.
Santiago, March 8, 2022
MONTHLY OPERATING REPORT-
JANUARY
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”):
• 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 above mentioned,
we hereby make available for your
Commission and for the market the
MOR corresponding to the month
of December 2021 and the MOR
corresponding to the month of
January 2022, dated as of today.
• 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.
Santiago, March 8, 2022
DIP CREDIT AGREEMENT
DISBURSEMENT
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:
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 • 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,
November 10, 2021, and December
23, 2021, LATAM informed that the
first, second, third and fourth draws
under the DIP Credit Agreement
took place for an amount of
US$1,150 million, US$500 million,
US$200 million and US$100 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$300 million. This
disbursement would be made in
US$38,552,295.92 by the Tranche
A financiers, in US$227,343,750.00
by the Tranche B financiers, and in
US$34,103,954.08 by the Tranche
C financiers, in accordance with
the provisions of the DIP Credit
Agreement.
Santiago, March 14, 2022
NEW AMENDED AND RESTATED
DIP CREDIT AGREEMENT
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:
• Reference is made to the material
facts dated February 18, 2022
and March 7, 2022, regarding
that certain proposal (the “Initial
Amended and Restated DIP
Proposal”) for an amendment and
restatement of the Super-Priority
Debtor-In-Possession Term Loan
Agreement (such agreement, the
“Existing DIP Credit Agreement”)
entered into in the context of the
reorganization process 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”) pending before the
Bankruptcy Court of the Southern
District of New York hearing the
Chapter 11 Proceeding (the “Court”).
As previously disclosed, the Initial
Amended and Restated DIP Proposal
was initially filed for the approval of
the Court on February 17, 2022, and
thereafter on March 7, 2022.
• Notwithstanding the foregoing,
the Debtors have continued to
engage in a marketing process for
an amendment and restatement of
the Existing DIP Credit Agreement
with the expectation of obtaining
better terms and conditions than
those included in the Initial Amended
and Restated DIP Proposal. On this
regard, the Debtors have agreed to
an alternative proposal provided
by a different group of prospective
lenders (such proposal, the “New
Amended and Restated DIP Financing
Proposal”). The New Amended and
Restated DIP Financing Proposal
has been evaluated and negotiated
in a timely manner by the Company
together with its advisors.
• On this regard, LATAM’s Directors
Committee, at a meeting held on
March 14, 2022, reviewed the New
Amended and Restated DIP Financing
Proposal and recommended the
Board of Directors to approve such
proposal. At a meeting held on March
14, 2022, the Board of Directors of
the Company, by unanimous vote of
the independent directors, resolved
to approve the New Amended and
Restated DIP Financing Proposal,
subject to the Court’s approval.
• A new amendment and restatement
text of the Existing DIP Credit
Agreement (the “New Amended and
Restated DIP Credit Agreement”)
was submitted to the Court for
approval on March 14, 2022. The New
Amended and Restated DIP Credit
Agreement (i) refinances and replaces
in its entirety Tranche A, Tranche B
and Tranche C facilities existing under
the Existing DIP Credit Agreement;
(ii) contemplates a maturity date
according with the timing that the
Debtors are envisioning to emerge
from the Chapter 11 Proceeding; and
(iii) includes certain reductions in
fees and interest as compared to the
Existing DIP Credit Agreement and
the Initial Amended and Restated
DIP Financing Proposal as more
thoroughly described below:
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 »Lenders:
» Tranche A lenders consist of
JPMorgan Chase Bank, N.A. and
its affiliates (“JPM”) and certain
entities and funds belonging to a
syndicate arranged by JPM.
» Tranche C lenders consist
of certain parties to that
certain Restructuring Support
Agreement dated as of November
26, 2021 (the “Restructuring
Support Agreement”) executed
in furtherance of the plan of
reorganization submitted by
the Debtors in the Chapter
11 Proceeding (the “Plan of
Reorganization”).
»Tranches and Committed Amount;
Funding:
» The New Amended and
Restated DIP Financing
Proposal contemplates a
new Tranche A facility and a
new Tranche C facility for up
to US$2,050,000,000 and
US$1,650,000,000, respectively.
»The New Amended and
Restated DIP Financing
Proposal contemplates an initial
disbursement of US$2,750,000,000,
which shall occur on the closing date
of the New Amended and Restated
DIP Credit Agreement.
»Scheduled Maturity Date:
» The New Amended and
Restated DIP Financing Proposal
contemplates a scheduled maturity
date of August 8, 2022, subject
to 3 the possibility that LATAM
may extend such maturity date
at its discretion, in one or more
extensions of periods of at least
30 days each, to a date no later
than October 14, 2022, provided
LATAM may further extend the
maturity date to a date no later
than the (x) earlier of November
30, 2022 or (y) the termination
of the Restructuring Support
Agreement, in accordance with
its terms in the event the World
Health Organization or the U.S.
Centers for Disease Control shall
have designated or characterized
any variant of SARS-CoV-2 (i.e.,
the virus that causes COVID-19) as
a “variant of concern.” Hereinafter,
the scheduled maturity date, as
may be extended as provided
herein, the “Maturity Date”.
» Any extension beyond October
14, 2022 will be possible to the
extent (i) no default or event
of default shall have occurred
and be continuing and (ii) the
outside date under the backstop
commitment agreements
executed shall have been
extended to a date even with,
or subsequent to, the Maturity
Date (after giving effect to such
extension request).
» 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 New Amended and Restated
DIP Credit Agreement.
»Interest and Fees:
» Interests under the Tranche A
and Tranche C:
►Both the applicable interest
rate and the interest payment
dates will depend on the choice
made by LATAM at the time
of requesting a disbursement
under the Tranche A facility and
Tranche C 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 SOFR or the
Alternate Base Rate (“ABR”).
►Tranche A loans whose interest
is either payable in cash at the
end of each interest period or
whose interest is capitalized on
a quarterly basis for payment
on the Maturity Date will bear
interest at SOFR plus 7.50% per
annum (for loans denominated at
the SOFR), and 6.50% per annum
plus the base rate (for loans
denominated at the ABR).
►Tranche C loans whose interest
is payable in cash at the end of
each interest period will bear
interest at SOFR plus 13% per
annum (for loans denominated
at the SOFR), and 12% per
annum plus the base rate (for
loans denominated at the ABR).
Tranche C loans whose interest is
capitalized on a quarterly basis for
payment on the Maturity Date will
bear interest at SOFR plus 13.50%
per annum (for loans denominated
at the SOFR), and 12.50% per
annum plus the base rate (for
loans denominated at the ABR).
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 » Fees
» An availability fee (Undrawn
Commitment Fee), payable in
cash, equal to 1.00% on the daily
unused Tranche C commitments
per annum, which will be
calculated daily, and payable in
arrears on the last business day
of each calendar quarter of each
year until the Maturity Date.
» An exit fee, payable in cash,
with respect to the Tranche A
facility upon a total or partial
repayment or prepayment of the
Tranche A loans of 0.5% of the
amount being paid or prepaid
(including interests and fees).
» An exit fee, payable in cash,
with respect to the Tranche C
facility upon a repayment or
prepayment in full of the Tranche
C loans of 0.75% calculated over
the drawn and undrawn tranche
C commitments in effect as
of the closing date of the New
Amended and Restated DIP
Credit Agreement.
» A closing fee, payable in cash,
with respect to the Tranche A
facility in the amount of 0.50% of
the principal amount of Tranche
A loans funded on the closing
date of the New Amended and
Restated DIP Credit Agreement.
» A closing fee, with respect
to the Tranche C facility in the
amount of 0.75% of the Tranche
C commitments. This closing
fee will be payable in kind and
will be added to the aggregate
principal amount of the Tranche
C loans on the closing date of
the New Amended and Restated
DIP Credit Agreement.
» The prepayment of the
Tranche C loans is subject
to the payment of a make-
whole amount under certain
circumstances, consisting of
an additional interest of SOFR,
plus 13.5% calculated over the
Tranche C loans being prepaid.
5 This additional interest will
accrue between the date of
such payment, repayment or
prepayment until the earlier
of: (a) the later of (i) October
14, 2022 and (ii) the scheduled
maturity date of the New
Amended and Restated DIP
Credit Agreement and (b) the
consummation date of any
Chapter 11 plan or reorganization
confirmed by the Court.
» In addition, LATAM shall pay
to the administrative agent,
the Tranche A DIP Lenders, the
collateral agent and the local
collateral agents the fees set
forth in those certain fee letters
between LATAM and the parties
thereto, as described in the filling
made with the Court.
»Additional Terms:
» Removes the condition to
funding included in the Initial
Amended and Restated DIP
Proposal, which required that
the Court have entered into the
disclosure statement order and
the backstop approval order.
» Also, removes the milestone
related with the confirmation
of the Chapter 11 Plan of
Reorganization.
LATAM is awaiting the Court’s decision
in response to the New Amended and
Restated DIP Financing Proposal.
Santiago, March 15, 2022
BACKSTOP AGREEMENTS AND THE
NEW AMENDED AND RESTATED DIP
CREDIT AGREEMENT APPROVAL
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:
1. As informed by Material Fact
dated January 12, 2022, on such
date, LATAM entered with (i) a group
of LATAM’s unsecured creditors
represented by Evercore; (ii) Delta Air
Lines, Inc, Qatar Airways Investment
(UK) Ltd., the Cueto group; and (iii)
with the Eblen group, into backstop
commitment agreements (the
“Backstop Agreements”) in support
to the plan of reorganization and
financing proposed by LATAM and
certain of its direct and indirect
subsidiaries (collectively with LATAM,
the “Debtors”) in their reorganization
proceeding in the United States
of America (the “Chapter 11
Proceeding”) under the rules set forth
in Chapter 11 (the “Chapter 11”) of
Title 11 of the United States Code.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 As informed in said Material Fact,
pursuant to the provisions of Chapter
11, the court hearing the Chapter
11 Proceeding (the “Court”) had to
approve these Backstop Agreements,
and to such effect, the same were
filed with the Court for approval and
confirmation also on January 12, 2022.
2. As informed by a Material Fact
dated March 14, 2022, on such date
LATAM filed for approval of the Court
a proposal (the “New Amended and
Restated DIP Financing Proposal”) for
an amended and restated text of the
Super-Priority Debtor-InPossession
Term Loan Agreement entered into
in the context of the Chapter 11
Proceeding (the “Existing DIP Credit
Agreement”).
3. On this date, the Court resolved to
approve the Backstop Agreements
and the New Amended and Restated
DIP Financing Proposal, whose main
terms and conditions were described
in the Material Facts referred to in the
preceding paragraphs.
4. Pursuant to the approval of the
New Amended and Restated DIP
Financing Proposal, on April 8, 2022,
an amended and restated text of the
Existing DIP Credit Agreement will
be executed which will replace and
refinance in full the Existing DIP
Credit Agreement.
Santiago, March 29, 2022
SHAREHOLDERS MEETING NOTICE
5. It is worth mentioning that
the Tranche C lenders of the
New Amended and Restated DIP
Financing Proposal have agreed to
allow LATAM’s group of shareholders
comprised of the Cueto Group,
Qatar and Delta, which are lenders
under Tranche C of the Existing DIP
Credit Agreement, to participate in
Tranche C of the New Amended and
Restated DIP Financing Proposal. In
this regard, the LATAM’s Directors
Committee, at a meeting held on
March 15, 2022, reviewed this
development and recommended its
approval to the Board of Directors.
The Board of Directors of the
Company, at a meeting held on the
same date, unanimously agreed to
approve the participation of such
shareholders in Tranche C of the
New Amended and Restated DIP
Financing Proposal. Consequently,
the lenders under Tranche C of the
New Amended and Restated DIP
Financing Proposal would be such
shareholders, plus the Tranche C
lenders that committed to the
New Amended and Restated DIP
Financing Proposal filed with the
Court on March 14, 2022.
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 29, 2022, and
agreed to schedule the Company’s
Annual Shareholders’ Meeting (the
“Meeting”) for April 20, 2022, at
11:00 am, in Rosario Norte 615,
Las Condes, Santiago, which will be
carried out remotely, exclusively
in digital format as detailed below,
with the objective of reviewing
and deciding upon the following
resolutions:
1. Annual Report, Balance Sheet
and Financial Statements for
the year 2021; situation of the
Company; and respective External
Audit Firm’s report
2. Board Compensation for the
2022 Fiscal Year
3. Compensation and budget of the
Audit Committee for the 2022 Fiscal
Year
4. Appointment of the External
Auditing Firm
5. Appointment of the Risk Rating
Agencies
6. Determination of the newspaper
for publications to be made by the
Company
7. Account of transactions with
related parties
8. 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 12, 2022,
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
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 avoid exposure to COVID-19 for those
in attendance. Any shareholder, or
their representative, interested in
participating, should pre-register by
3pm the day before the Meeting at
https://autenticacion.dcv.cl/ or send
an email to registrojuntas@dcv.cl
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 8, 13 and 15,
2022.
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 8,
2022. 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
8, 2022, in order to do so. Information
related to the designation of the
external auditing firm for the fiscal year
2022 to be proposed at the Annual
Shareholders’ Meeting will also be
available alongside these documents.
Santiago, March 29, 2022
MONTHLY OPERATING REPORT-
FEBRUARY
• As part of the reporting obligations
it has to comply with as part of the
Chapter 11 Proceedings, LATAM has to
prepare and deliver a Monthly Operating
Report (“MOR”) corresponding to the
month of February 2022.
Santiago, April 8, 2022
AMENDED AND RESTATED DIP CREDIT
AGREEMENT DISBURSEMENT
Pursuant to the provisions of Article
9 and the second paragraph of Article
10 of the Securities Market Law, and
General Rule nº 30, duly authorized, I
hereby report the following material
fact of LATAM Airlines Group S.A.
(“LATAM”), Securities Registration nº
306:
• As previously reported, on March
15, 2022, the bankruptcy court
of the Southern District of New
York hearing the reorganization
proceeding in the United States
of America (the “Chapter 11
Proceeding”) of LATAM and certain
of its direct and indirect subsidiaries
that are parties thereto, resolved to
approve a proposed amended and
restated text (the “Amended and
Restated DIP Credit Agreement”)
of the financing agreement entered
into in the context of the Chapter
11 Proceeding, denominated Super-
Priority Debtor-In-Possession
Term Loan Agreement, which was
in effect until the date hereof (the
“Existing DIP Credit Agreement”).
The main terms and conditions of
the Amended and Restated DIP
Credit Agreement were described in
the Material Facts dated March 14
and 15, 2022.
• On this date, the Amended and
Restated DIP Credit Agreement
for a total amount of US$ 3,700
million was executed, and the
initial disbursement there under
took place, in the amount of
US$2,750 million. Such Amended
and Restated DIP Credit Agreement
amends and restates the Existing
DIP Credit Agreement, and
repays the outstanding obligations
thereunder.
Santiago, May 10, 2022
MONTHLY OPERATING REPORT-
MARCH
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of March
2022.
Santiago, May 11, 2022
BANCO ESTADO AND UNSECURED
CREDITORS COMMITTEE
AGREEMENTS
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:
1. As a result of the mediation
process currently outgoing in the
context of the plan of reorganization
and financing (the “Plan of
Reorganization” or the “Plan”)
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 proposed by LATAM and certain of
its direct and indirect subsidiaries
(collectively with LATAM, the
“Debtors”) in their reorganization
proceeding in the United States
of America (the “Chapter 11
Proceeding”) before the Bankruptcy
Court of the Southern District of New
York (the “Bankruptcy Court”) under
the rules set forth in Chapter 11 of
Title 11 of the United States Code, (i)
the Debtors; (ii) the group of LATAM’s
unsecured creditors represented
by Evercore (the “Commitment
Creditors”), Delta Air Lines, Inc,
Qatar Airways Investment (UK) Ltd.,
the Cueto group (collectively, the
“Backstop Shareholders”, and jointly
with the Commitment Creditors, the
“Backstop Parties”); (iii) the Eblen
group; (iv) Banco del Estado de
Chile (“Banco Estado”) as trustee
for the Chilean notes issued by
LATAM; (v) certain holders of such
Chilean bonds (the “Supporting
Chilean Bondholders”); and (vi) the
Unsecured Creditors’ Committee (the
“UCC”) of the Chapter 11 Proceeding,
reached a settlement resolving
(y) the objections to the Plan and
challenges to existing orders of the
Bankruptcy Court, filed by Banco
Estado; and (z) objections to the Plan
and other bankruptcy related actions,
filed by the UCC.
2. This settlement further paves the
path towards the Plan’s confirmation
hearing scheduled for May 17 and
May 18, and adds support to the
Company’s consensual Plan further
paving the path for a successful
emergence. At the same time,
it allows the holders of Chilean
notes to increase their recovery
under the Plan and to provide
financing commitments under the
backstop commitment agreements
entered into by the Debtors and
the Commitment Creditors (the
“Commitment Creditors Backstop
Agreement”) in support of the Plan
of Reorganization.
3. The key terms of this settlement
are the following:
a. The treatment afforded to general
unsecured creditors under class 5
of the Plan is amended. Under the
original Plan, general unsecured
creditors in this class could opt
between participating in the New
Convertible Notes Class A or the
New Convertible Notes Class C
depending on whether or not they
elected to contribute new funds.
General Unsecured Creditors that
opted for New Convertible Notes
Class A would receive such notes
in settlement of their allowed
unsecured claims, and those that
chose the New Convertible Notes
Class C would receive such notes
in exchange of a combination
of a settlement of their allowed
general unsecured claims, and a
new money contribution at a ratio
of approximately US$0.921692
of new money for each US$1 of
claims. Under the settlement, such
ratio is amended to approximately
US$0.899774 of new money for each
US$1 of claims.
b. According to the settlement,
general unsecured creditors in
class 5 that elect to receive New
Convertible Notes Class A or New
Convertible Notes Class C will
now also be entitled to receive a
one-time cash distribution (the
“Additional Cash Distribution”) equal
to (1) approximately US$212 million;
or (2) to the extent the EBITDAR of
the business plan of the Company
for the period between January 1,
2022 and the date that is 15 days
prior to the exit from the Chapter 11
Proceeding, is surpassed by more
than US$100 million by the actual
EBITDAR of LATAM for the same
period, approximately (y) US$250
million plus, (z) 75% of excess
over US$250 million of difference
between the actual EBITDAR of
LATAM over the EBITDAR under
the business plan of the Company,
if applicable. The Additional Cash
Distribution shall be reduced by
certain fees payable to the Backstop
Parties under their respective
backstop commitment agreements
(including the Extension Payment, as
defined herein), and by settlements
payable in cash by the Company
with the support of the Commitment
Creditors within the context of the
Chapter 11 Proceeding.
c. The Additional Cash Distribution
will be distributed between the
general unsecured creditors that opt
to receive New Convertible Notes
Class A and New Convertible Notes
Class C; provided, however, that
general unsecured creditors that
participate exclusively in the New
Convertible Notes Class A will be
entitled to receive a cash payment
equal to no less than 4.875% of
the value of their claims, and those
that participate both in the New
Convertible Notes Class A and the
New Convertible Notes Class C and
are not Commitment Creditors,
will be entitled to receive half of
that payment for the proportion
of their claims that participate in
the New Convertible Notes Class A.
To the extent the Additional Cash
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 Distribution determined as provided
in the preceding paragraph is lower
than such amount, any shortfall
shall be covered by the Commitment
Creditors (i) from Additional Cash
Distributions received in connection
with their participation in the New
Convertible Notes Class C; and, if
necessary (ii) from the fees paid
to them under the Commitment
Creditors Backstop Agreement.
d. The Plan now contemplates
the issuance of new Chilean notes
denominated in Unidades de
Fomento, in an amount equivalent
up to US$180 million, which will be
provided in settlement of claims of
general unsecured creditors in class
5 that elect to receive such notes in
lieu of the New Convertible Notes
Class A and New Convertible Notes
Class C and the aforementioned
Additional Cash Distribution; 3
provided, however, that the Backstop
Parties will not be allowed to elect
to receive such notes. These new
Chilean notes will accrue a 2%
interest per annum, and will mature
on December 31, 2042.
e. The Supporting Chilean
Bondholders, representing in the
aggregate approximately US$135
million, joined the Restructuring
Support Agreement (the “RSA”)
executed in furtherance of the Plan,
and agreed to provide backstop
commitments under the Commitment
Creditors Backstop Agreement for
up to approximately US$86 million.
Accordingly, they have agreed to
backstop the subscription of a portion
of the new common stock and the
New Convertible Notes Class C to
be issued under the Plan, up to the
aforementioned amount of US$86
million, in exchange of a 20% payment
calculated over such amount.
f. Subject to the satisfaction of
certain conditions, the Backstop
Parties have granted to LATAM the
option to extend the outside date
under their respective backstop
commitment agreements from
October 30, 2022 until November
30, 2022 in exchange of a 1.34846%
payment calculated over their
respective backstopped amounts
(the “Extension Payment”),
payable soley to the extent the
Company exercises this option.
Notwithstanding the foregoing,
currently the Company is not
contemplating to exercise this option
and is expecting to successfully
close its restructuring by the end of
October of the current year.
g. Banco Estado and the UCC will
withdraw all pending objections to
the Plan and withdraw all challenges
to existing orders of the Bankruptcy
Court. The UCC will also discontinue
pursuing other bankruptcy
related actions in the Chapter 11
Proceeding. Also, Banco Estado, the
Supporting Chilean Bondholders
and the UCC agreed to support the
confirmation and implementation of
the Plan.
4. In order to implement the
agreements reached as part of the
settlement, several amendments
have been introduced to the Plan,
the RSA, the backstop commitment
agreements entered into with the
Backstop Parties, and have been
submitted to the Bankruptcy Court.
Further, Banco Estado, and the
Supporting Chilean Bondholders
have executed joinders to the RSA
and the Commitment Creditors
Backstop Agreement.
The Company will keep its
shareholders, creditors and the
market informed on the progress of
the Chapter 11 Proceeding.
Santiago, June 11, 2022
EXIT FINANCING COMMITMENT
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:
1. As previously reported, the plan
of reorganization and financing
(the “Plan of Reorganization” or
the “Plan”) proposed by LATAM and
certain of its direct and indirect
subsidiaries (collectively with LATAM,
the “Debtors”) in their reorganization
proceeding in the United States
of America (the “Chapter 11
Proceeding”) before the Bankruptcy
Court of the Southern District of
New York (the “Bankruptcy Court”)
under the rules set forth in Chapter
11 of Title 11 of the United States
Code (the “U.S. Bankruptcy Code”),
contemplates among other things,
the incurrence of new debt for
approximately US$2,250 million
and a new revolving credit facility
for approximately US$500 million
(collectively, the “Exit Financing”).
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 2. After conducting competitive
process in the market in order
to obtain the best financial
conditions available for the Exit
Financing, on June 10, 2022 the
Debtors have entered into debt
commitment letters (the “Exit
Financing Commitment Letters”)
that contain a proposal for the
provision of Exit Financing (the
“Exit Financing Proposal”), with
JPMorgan Chase Bank, N.A. (“JPM”),
Goldman Sachs Lending Partners
LLC (“GS”), Barclays Bank PLC
(“Barclays”), BNP Paribas, BNP
Paribas Securities Corp. (collectively,
“BNP”) and Natixis, New York Branch
(“Natixis”, and collectively with JPM,
GS, Barclays, and BNP and their
affiliates parties thereto, the “Exit
Financing Lenders”). Pursuant to
the Exit Commitment Letters, such
financiers have agreed to grant the
Exit Financing to the Debtors.
3. According to the rules set forth in
Chapter 11 of the U.S. Bankruptcy
Court, the Exit Financing Proposal
is subject to the approval by the
Bankruptcy Court.
4. The Exit Financing Proposal has
been structured as a combination of
(i) a US$500,000,000 Exit Revolving
Facility (the “Revolving Facility
Proposal”); (ii) a US$750,000,000
Exit Term Loan B Facility (the “Term
Loan B Facility Proposal”); (iii) a
U$750,000,000 Exit Bridge to 5Y
Notes Facility (the “Bridge to 5Y
Notes Facility Proposal”); and (iv)
a US$750,00,000 Exit Bridge to
7Y Notes Facility (the “Bridge to
7Y Notes Facility Proposal”, and
collectively with the Revolving
Facility Proposal, the Term Loan B
Facility Proposal and the Bridge to
5Y Notes Facility Proposal, the “Exit
Facilities”); provided, however, that
the principal amounts of each Exit
Facility (other than the Revolving
Facility Proposal) may be increased
so long as any such increase is offset
by a corresponding decrease in other
Exit Facilities.
5. The Exit Financing Proposal
also contemplates up to
US$1,172,882,484 in financing to
be provided in the form of a junior
debtor-in-possession facility (the
“Junior DIP Financing”) during
the pendency of the Chapter 11
Proceeding (prior to the emergence
thereto). In connection with
the foregoing, after conducting
competitive process in the market
in order to obtain the best financial
conditions available for the Junior
DIP Financing, on June 10, 2022 the
Debtors have entered into a debt
commitment letter that contain a
proposal for the provision of Junior
DIP Financing (the “Junior DIP
Commitment Letter”, and together
with the Exit Financing Commitment
Letters, the “Commitment
Letters”), with Delta Air Lines,
Inc., Lozuy S.A., Costa Verde
Aeronáutica S.A., QA Investments
Limited, and the members of the
ad hoc group of LATAM Parent
claimholders represented by
Evercore (collectively, the “Junior
DIP Financing Lenders”). According
to the rules set forth in Chapter
11 of the U.S. Bankruptcy Court,
the Junior DIP Financing proposal
is subject to the approval by the
Bankruptcy Court.
6. The Exit Facilities have been
structured as debtor-in possession
facilities that will close during
the pendency of the Chapter
11 Proceeding. Notwithstanding
the foregoing, and unlike the
existing amended and restated
DIP financing (the “Existing DIP
Financing”), the Exit Facilities have
been structured to remain in place
after the emergence of the Debtors
from the Chapter 11 Proceeding,
subject to the satisfaction of certain
conditions which are customary
in this type of transactions.
Therefore, to the extent such
conditions are met, at emergence
(the “Conversion Date”) the Exit
Facilities will be automatically
converted into a financing that will
remain in effect after emergence.
The foregoing does not apply with
respect to the Junior DIP Financing
which shall be fully repaid prior to
emergence from the Chapter 11
Proceeding.
7. Upon the closing of the Exit
Facilities and the Junior DIP
Financing, the Existing DIP
Financing will be fully repaid with
the proceeds obtained therefrom.
8. Below is a description of certain
key terms and conditions of
the Exit Facilities and the Junior
DIP Financing as contemplated
in the Commitment Letters;
provided, that the actual terms
and conditions thereof will be
determined based on market
conditions available at the time of
contracting which may potentially
differ materially from the terms
and conditions set forth below,
subject in all cases, to certain
limits set forth in the Commitment
Letters:
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 a. Revolving Facility Proposal:
v. Security Interests and Preference:
i. Lenders: Exit Financing Lenders.
ii. Principal Amount:
US$500,000,000.
iii. Scheduled Maturity Date: The
earlier of: (i) December 31, 2026; ii)
four and a half years after closing;
iii) four years after the Conversion
Date. The Revolving Facility Proposal
includes a mechanic to allow
individual lenders thereunder to
extend their financing commitments
or loans, provided that any offer to
extend the maturity date shall be
offered to all lenders ratably.
iv. Interest: At LATAM’s election,
either: (i) the alternate base rate
(“ABR”) plus an applicable margin
of 3.00%; or (ii) Adjusted Term
SOFR rate plus an applicable margin
of 4.00%. Notwithstanding the
foregoing, the Revolving Facility
Proposal contemplates that a
portion of such facility of at least
US$50,000,000 shall be available
in the form of swingline loans (i.e.,
loans that can be requested on a
shorter notice). With respect to such
swingline loans, interest shall in all
cases accrue based upon the ABR.
1. In essence to be secured with the
same guaranties and collateral that
secure the Existing DIP Financing, with
certain variations.
2. Prior to the Conversion Date, will
have a super-priority administrative
claim as provided in the U.S.
Bankruptcy Code.
b. Term Loan B Facility Proposal:
v. Applicable Margin, OID and Upfront
Fees: The applicable margin and
original issue discount or upfront
fees for the Term Loan B Facility are
expected to be determined based on
market conditions available at the
time of the allocation thereof subject
to certain limits set forth in the Exit
Financing Commitment Letters relating
to the Term Loan B Facility Proposal.
vi. Security Interests and Preference:
Same as Revolving Facility Proposal.
i. Lenders: Exit Financing Lenders.
c. Bridge to 5Y Notes Facility
Proposal:
ii. Principal Amount:
US$750,000,000.
iii. Scheduled Maturity Date:
Five years from the closing date;
provided, however, that if the
Conversion Date does not occur on
or prior to December 1, 2023, the
maturity date shall be December 1,
2023.
iv. Interest: At LATAM’s election,
either: (i) ABR plus an applicable
margin to be determined at time of
allocation thereof; or (ii) Adjusted
Term SOFR rate plus an applicable
margin to be determined at time of
allocation thereof.
i. Lenders: Exit Financing Lenders.
ii. Principal Amount:
US$750,000,000.
iii. Maturity Date:
1. Scheduled Maturity Date: One
year from the closing date; provided,
however, that if the Conversion Date
does not occur on or prior to December
1, 2023, the maturity date shall be
December 1, 2023.
2. Rollover: Notwithstanding
the foregoing, subject to certain
conditions precedent, on the first
anniversary from the closing date,
any loans under the Bridge to 5Y
Notes Facility Proposal that have
not been previously repaid will be
automatically converted into a senior
secured term loan due on the date
that is five years after the closing
date; provided, however, that if the
Conversion Date does not occur on
or prior to December 1, 2023, this
extended maturity date shall be
December 1, 2023.
iv. Interest Rate, OID and Upfront
Fees: The interest rate and original
issue discount or upfront fees
for the loans or notes issued in
accordance with the Bridge to
5Y Notes Facility Proposal are
expected to be determined based
on market conditions available
at the time of the allocation or
pricing thereof, subject to certain
limits set forth in the Exit Financing
Commitment Letters relating to
the Bridge to 5Y Notes Facility
Proposal.
v. Security Interests and Preference:
Same as Revolving Facility Proposal.
d. Bridge to 7Y Notes Facility
Proposal:
i. Lenders: Exit Financing Lenders.
Appendices
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 ii. Principal Amount:
US$750,000,000.
iii. Maturity Date:
1. Scheduled Maturity Date: One
year from the closing date; provided,
however, that if the Conversion
Date does not occur on or prior to
December 1, 2023, the maturity date
shall be December 1, 2023.
2. Rollover: Notwithstanding
the foregoing, subject to certain
conditions precedent, on the first
anniversary from the closing date,
any loans under the Bridge to 7Y
Notes Facility Proposal that have
not been previously repaid will be
automatically converted into a
senior secured term loan due on
the date that is seven years after
the closing date; provided, however,
that if the Conversion Date does
not occur on or prior to December 1,
2023, this extended maturity date
shall be December 1, 2023.
iv. Interest Rate, OID and Upfront
Fees: The interest rate and original
issue discount or upfront fees
for the loans or notes issued in
accordance with the Bridge to
7Y Notes Facility Proposal are
expected to be determined based
on market conditions available at
the time of the allocation or pricing
thereof, subject to certain limits set
forth in the fee letter relating to the
Bridge to 7Y Notes Facility Proposal.
v. Security Interests and Preference:
Same as Revolving Facility Proposal.
vi. Security Interests and
Preference: The same guaranties
and collateral that secure the
Existing DIP Financing; provided,
however, that the Exit Facilities
will be senior to the Junior DIP
Financing.
9. The Exit Facilities contemplate
commitment fees that are
customary in transactions of this
type. The commitment fee with
respect to each Exit Facility does not
exceed 2% of the aggregate principal
amount of such facility. LATAM will
disclose more details about such
fees upon finalizing negotiations
that are currently ongoing, which
may be affected in the event the
amount of such fees was disclosed
on the date hereof. In any event, the
Company will disclose more precise
information regarding such fees upon
conclusion of the aforementioned
negotiations that are currently
ongoing.
The Company will keep its
shareholders, creditors and the market
informed on the progress of the
Chapter 11 Proceeding.
e. Junior DIP Financing:
i. Lenders: Junior DIP Financing
Lenders.
ii. Principal Amount: Up to
US$1,172,882,484.
iii. Scheduled Maturity Date: The
earlier of December 1, 2023 and the
date in which the Debtors emerge
from the Chapter 11 Proceeding.
iv. Interest: At LATAM’s election,
either (i) the ABR plus 12.5% or (ii) the
Term SOFR Rate plus 13.5%.
v. Make-whole payment: To the
extent any loans under the Junior
DIP Financing are repaid before
October 14, 2022, LATAM shall pay
a makewhole payment equal to the
Term SOFR plus 13.5% calculated
over the loans under the Junior DIP
Financing that would otherwise be
payable on or after October 14, 2022.
Santiago, June 14, 2022
MONTHLY OPERATING REPORT-
APRIL
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of April
2022.
Santiago, June 20, 2022
EXTRAORDINARY SHAREHOLDERS
MEETING NOTICE
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, by
order entered on June 18, 2022
the Bankruptcy Court for the
Southern District of New York
(the “Bankruptcy Court”) hearing
the reorganization proceeding
(the “Chapter 11 Proceeding”) of
LATAM and certain of its direct and
indirect subsidiaries (collectively
Appendices
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 with LATAM, the “Debtors”) under
Chapter 11 of Title 11 of the United
States Code, confirmed the plan of
reorganization and financing (the
“Plan of Reorganization” or the
“Plan”) proposed by the Debtors
to successfully emerge from the
Chapter 11 Proceeding. The Plan
had previously been approved by the
vast majority of the creditors whose
claims are affected by the Plan.
The confirmation of the Plan by
the Bankruptcy Court represents
the final milestone of the Chapter
11 Proceeding in the United States
of America. It is now necessary to
implement the Bankruptcy Court’s
order by making the corresponding
amendments to LATAM’s bylaws,
which will allow the Debtors to
successfully exit the Chapter 11
Proceeding. The amendments to
the bylaws also consider proposed
amendments that are a consequence
of specific requirements of the
parties backstopping the Plan, as
well as others necessary to adapt
the bylaws to current corporate
legislation.. For this purpose, the
Company’s Board of Directors, in an
extraordinary meeting held on the
date hereof, has agreed to summon
its shareholders to an Extraordinary
Shareholders’ Meeting (the
“Meeting”), to be held exclusively on a
remote basis, on July 5 2022, at 4:30
p.m., in order to hear and decide the
following matters:
1. Inform shareholders about the
Chapter 11 Proceeding and the Plan of
Reorganization.
2. Approve the issuance of three
classes of notes convertible
into shares of the Company (the
“Convertible Notes”), as provided in the
Plan of Reorganization.
3. Recognize, for applicable purposes,
ipso jure decreases of the capital
stock effective as of June 12, 2018
and August 19, 2019, due to the
expiration of the term for subscription
and payment regarding the portion
of the capital increases agreed at the
Extraordinary Shareholders’ Meetings
of June 11, 2013 and August 18, 2016,
respectively, that were pending of
placement.
4. Resolve to increase the Company’s
capital by US$10,456 million or such
amount as may be determined at the
Meeting, by issuing 605,801,285,307
shares or such number of shares as
may be determined at the Meeting,
all ordinary, without par value, of
which: (i) US$9,656 million or such
amount as may be determined
at the Meeting, represented by
531,991,409,513 new shares or such
number of shares as determined by
the Meeting, to be used in respect
of the conversion of the Convertible
Notes; and (ii) US$800 million
or such amount as determined
by the Meeting, represented by
73,809,875,794 new shares or such
number of shares as determined
by the Meeting, to be offered
preemptively to the shareholders
and, the unplaced balance, among
the shareholders and/or third parties.
5. Approve a new text of the fifth
and sole transitory articles of the
bylaws, relating to the capital stock,
reflecting the resolutions adopted by
virtue of numbers 2, 3 and 4 above.
6. Approve a new text of the second
article, regarding the corporate
domicile, to establish that it shall be
the part of the province of Santiago
over which the Santiago Registry of
Commerce has jurisdiction.
7. Approve a new text of article four,
regarding the corporate purpose, in
order to partially amend the order
of the activities that comprise said
purpose.
8. Approve a new text of the
Company’s bylaws, replacing the
current bylaws in its entirety,
which includes the amendments
to the bylaws adopted by virtue
of numbers 5, 6 and 7 above; and
that, in addition: (i) amend the
text of the following articles, as
follows: (a) article six, regarding
agreements between shareholders,
to conform it with the provisions
of the Corporations Act (the
“Act”); (b) article ten, regarding
the remuneration of the Board of
Directors and the reimbursement
of Directors for certain fees and
expenses; (c) article eleven, regarding
Board Meetings, the casting vote of
the chairman, the appointment of
the secretary, and the participation
of Directors in remote Meetings,
by technological means; (d) article
twelfth, regarding the summoning
by the Chairman to Extraordinary
Board Meetings; (e) article thirteenth,
regarding the powers of the Board
of Directors, as to eliminate a
reference to article 40 of the Act and
to expand the persons to whom the
Board of Directors may delegate such
powers in part; (f) article fourteen,
regarding the minutes of the Board
of Directors and their signature,
as to the record in the minutes of
the Board of Directors of the death
Appendices
150
Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 or inability to sign of a Director;
(g) article fifteen, regarding the
position of Chief Executive Officer
and its denomination, and the
delegation of powers to the latter
by the Board of Directors; (h) article
sixteen, regarding the opportunity
in which the Ordinary Shareholders’
Meeting must be held; (i) article
seventeen, regarding the reference
to the matters of the Ordinary
Shareholders’ Meeting; (j) article
eighteen, regarding the reference
to the matters of the Extraordinary
Shareholders’ Meeting; (k) article
nineteen, regarding the notice of 3
meetings, regarding the reference
to the applicable regulations,
the formalities of notice and the
requirements for self-convocation
in accordance with the provisions
of article 60 of the Act; (l) article
twenty, relating to the Shareholders’
Meetings, as to the quorums and
requirements for constitution,
remote participation and voting, and
the requirements for publication
of notices in second summons;
(m) article twenty-one, relating
to the Shareholders’ Meetings,
as to the quorums for adopting
resolutions in them, the shareholders
entitled to participate in them,
and to eliminate the reference
to the election of Directors; (n)
article twenty-three, regarding the
systems for recording attendance
at the Shareholders’ Meetings; (o)
article twentyfour, regarding the
signatures of the minutes of the
Shareholders’ Meetings, the content
of the latter and the sending of
a copy thereof to the Comisión
para el Mercado Fianciero (the
“Commission”); (p) article twenty-
five, regarding the annual balance
sheet, regarding formal references
and applicable regulations; (q)
article twenty-seventh, regarding
the distribution of profits, as to its
adaptation to current regulations;
(r) article twenty-eighth, regarding
the documentation that must be
made available to the shareholders
prior to the Ordinary Shareholders’
Meeting; (s) article twenty-ninth,
regarding the availability and
publication of information regarding
the annual financial statements
and the report of the External
Auditing Firm, in accordance with
the provisions of article 76 of the
Act; and (t) article thirty-eighth,
regarding the documentation that
must be made available to the
shareholders prior to the Ordinary
Shareholders’ Meeting; and (t) the
thirty-second article, regarding
arbitration and conflict resolution,
as to the type of arbitration, the
rules governing it, and the possibility
of the plaintiff to remove a conflict
from the knowledge of the arbitrator
in accordance with the provisions of
article 125 of the Act; (ii) incorporate
three new transitory articles, with
the sole transitory article becoming
the first transitory article, in order
to: (a) establish the prohibition, only
until the date on which the Plan of
Reorganization becomes effective
(the “Effective Date of the Plan”), of
issuing shares or any other securities
convertible into shares without voting
rights; (b) establish that during the
period of two years counted from
the Effective Date of the Plan, the
resolutions referred to in the second
subsection of Article 67 of the Act,
shall require the affirmative vote of
at least 73% of the issued shares
with voting rights; and (c) regulate
the time of renewal and duration
of the members of the Board of
Directors of the Company, for the
two periods following the Effective
Date of the Plan; all in accordance
with the provisions of the Plan of
Reorganization; and (iii) replace in the
articles the terms “Superintendencia
de Valores y Seguros” with “Comisión
para el Mercado Financiero” and
“Auditores Externos” with “Empresa
de Auditoría Externa”, in accordance
with the regulations in force.
9. Determine the price, procedure
and other aspects and conditions
of the placement of the notes
and shares to be issued pursuant
to the Meeting; and/or to broadly
empower the Board of Directors of
the Company to (i) fix the procedure
and other aspects and conditions of
the placement of the referred notes
and shares; (ii) fix the placement
price of the shares, in the event
that the Meeting delegates this
power to it in accordance with the
applicable regulations; and (iii) in
general, resolve and implement all
aspects, modalities, actions and
details that may arise in connection
with the amendments to the bylaws
and other resolutions adopted at the
Meeting.
10. In general, to adopt the
amendments to the bylaws and
all other resolutions that may be
necessary or convenient to carry
out the decisions adopted by the
Meeting. 4 The holders of shares
registered in the Shareholders’
Registry at midnight on the fifth
business day prior to the day of the
Meeting, i.e., registered at midnight
on June 29, 2022, shall have the right
to participate in the Meeting and to
exercise their right to speak and vote.
Appendices
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 As previously indicated, it has been
resolved that the Meeting will be
held exclusively on a remote basis,
thus the technological means to
be used will constitute the sole
mechanism for participating and
voting thereat, in order to prevent
the persons attending the Meeting
from being exposed to contagion.
For this purpose, the shareholder
interested in participating in the
Meeting, or his representative, must,
until 3:00 p.m. on the day before
the Meeting, register on the website
https://autenticacion.dcv.cl/ or
send an e-mail to registrojuntas@
dcv.cl, expressing his interest
in participating in the Meeting,
attaching a scanned image of his
identity card on both sides or his
passport; of the proxy, if applicable;
and of the application form for
participation in the Meeting. The
Meeting will be held through the
Zoom videoconference platform and
voting by acclamation or viva voce,
or through the electronic voting
platform provided by DCV Registros
S.A., which will be accessed through
the Click&Vote platform, through
the link “Join the Meeting”. The
rest of the required documentation
and more detailed information on
how to register, participate and
vote remotely at the Meeting and
other relevant aspects will be
made available and communicated
in a timely manner through an
instruction that will be uploaded
to the Company’s website, www.
latamairlinesgroup.net.
The notices of summoning will
be published in the newspaper La
Tercera of Santiago, on 24, 28 and
30 of June, 2022.
Shareholders may obtain copies
of the documents supporting the
matters to be heard at the Meeting,
beginning on June 24, 2022, from
the Company’s website, www.
latamairlinesgroup.net. In addition,
any shareholder wishing to
obtain a copy of such documents
may contact the Company’s
Investor Service Department at
InvestorRelations@latam.com or
(562) 2565-8785 for such purpose,
also beginning on June 24, 2022.
LATAM expects to complete its exit
from the Chapter 11 Proceeding
during the second half of 2022. The
Company will keep its shareholders,
creditors and the market informed
on the progress of the Chapter 11
Proceeding.
Santiago, July 5, 2022
PLAN OF REORGANIZATION
APPROVAL BY SHAREHOLDERS
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”), that in the Extraordinary
Shareholders’ Meeting celebrated
on this date (the “Meeting”), the
following main resolutions were
adopted:
1. The issuance of three classes
of convertible notes into shares
of the Company (the “Convertible
Notes”) for a total amount of
US$9,493,269,524.
Pursuant to LATAM’s plan of
reorganization (the “Plan of
Reorganization”) which was
confirmed on June 18, 2022,
by the Bankruptcy Court for the
Southern District of New York which
presides over the reorganization
proceeding of the Company and
certain of its direct and indirect
affiliates under the rules of Chapter
11 of Title 11 of the United States
Code, these Convertible Notes
are illustratively referred to as the
Class A Convertible Notes, Class
B Convertible Notes and Class C
Convertible Notes, notwithstanding
the final denomination thereof at
the time of issuance.
2. To recognize, for the pertinent
purposes, the decreases in capital
stock effective as of June 12,
2018 -- by US$23,622,047.25,
representing 1,500,000 shares of
the compensation plan approved
at the Extraordinary Shareholders’
Meeting held on June 11, 2013 --
and as of August 19, 2019 -- by
US$4,668,320, representing 466,832
shares of the capital increase
approved at the Extraordinary
Shareholders’ Meeting held on
August 18, 2016--, for not having
been subscribed or paid within
the maximum terms established
for this purpose; and to state
that the capital stock, as a result
of the foregoing, amounts to
US$3,146,265,152.04, divided into
606,407,693 shares, of one and the
same series, with no par value, fully
subscribed and paid.
3. To increase the capital of the
Company by US$10,293,269,524,
through the issuance of
605,801,285,307 shares, all
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 common, of one and the same series,
without par value, of which: (a)
US$9,493,269,524, represented by
531,991,409,513 new shares, to be
destined to respond to the conversion
of the Convertible Notes (the “Back-
up Shares”); and (b) US$800,000,000,
represented by 73,809,875,794 new
shares, to be offered preferentially to
the shareholders and, the unplaced
balance, among the shareholders and/
or third parties (the “New Common
Stock”).
4. Approve a new text for the fifth
and sole transitory articles of the
bylaws, regarding the corporate capital,
in order to reflect the resolutions
adopted by virtue of the previous
numbers; approve a new text of the
second article, regarding the corporate
domicile, to establish that this shall be
the part of the province of Santiago
over which the Santiago Commercial
Registry has jurisdiction; and approve
a new text for the fourth article,
regarding the corporate purpose, in
order to modify in part the order of the
activities that compose said purpose.
5. Approve a new text of LATAM’s
bylaws, which will fully replace the
current one, which includes the
amendments to the bylaws adopted
under the previous number; and the
other internal reforms that were
indicated in detail in the notices of
convocation and summons to the
Meeting.
6. To broadly empower the Board
of Directors so that, within the
framework of the resolutions
adopted at the Meeting and in
accordance with the provisions of
the Plan of Reorganization, it may
proceed with the issuance of the
Convertible Notes, the Back-up
Shares and the New Common Stock;
negotiate, agree, subscribe and
comply with the respective contract
for the issuance of the Convertible
Notes, as well as any amendment
thereto; to fix the placement price
of the New Common Stock, in
accordance with the rule contained
in the second paragraph of Article 23
of the Corporations Regulation; to
carry out or arrange all the necessary
formalities for the registration of
the Convertible Bonds, the Back-
up Shares and the New Common
Stock in the Securities Registry
kept by your Commission; so that,
once the Convertible Notes and
the New Common Stock have been
registered, to resolve and carry
out their placement, to represent
the Company or arrange for its
representation before all types
of authorities, entities or persons;
to resolve on the procedure for
the conversion of the Convertible
Notes, and the characteristics and
conditions thereof; grant such powers
of attorney as may be necessary or
convenient to carry out all or part
of the foregoing; and, in general, to
resolve all situations, modalities,
complements and details that may
arise or be required in connection
with the issuance and placement of
the Convertible Notes, the Back-up
Shares and the New Common Stock
and other related matters approved
at the Meeting.
The new capital structure considered
in the Plan of Reorganization was
approved by 99.82% of the shares
in attendance or represented in the
Meeting, which represent 82.17%
of the total voting shares issued by
LATAM.
Santiago, July 12, 2022
MONTHLY OPERATING REPORT-MAY
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of May
2022.
Santiago, August 9, 2022
MONTHLY OPERATING REPORT-
JUNE
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of June
2022.
Santiago, August 29, 2022
UPDATED FIVE YEAR BUSINESS
PLAN
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. As previously reported, by
order entered on June 18, 2022,
the Bankruptcy Court for the
Southern District of New York
(the “Bankruptcy Court”) hearing
the reorganization proceeding
(the “Chapter 11 Proceeding”) of
LATAM and certain of its direct
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 and indirect subsidiaries (collectively
with LATAM, the “Debtors”) under
Chapter 11 of Title 11 of the United
States Code, confirmed the plan of
reorganization and financing (the
“Plan of Reorganization” or the
“Plan”) proposed by the Debtors to
successfully emerge from the Chapter
11 Proceeding.
2. As part of the Chapter 11
Proceeding, and in connection with
the obligations of the Debtors
under (i) the Restructuring Support
Agreement executed in furtherance
of the Plan (the “RSA”), and (ii) those
certain non-disclosure agreements
(the “NDAs”) entered into with
certain counterparties to the RSA,
the Debtors have provided to such
counterparties certain financial
reports and updates that constitute
material non-public information (such
material non-public information, the
“Cleansing Materials”).
3. In accordance with the NDAs
and upon the occurrence of certain
events set forth therein, the Company
agreed to publicly disclose the
Cleansing Materials. In satisfaction of
its obligations under the NDAs, the
Company is furnishing the Cleansing
Materials as Exhibit 99.1 hereto.
4. The Cleansing Materials include
projected financial information.
Such projected financial information
constitutes forward-looking
information and is provided for
illustrative purposes only and should
not be relied upon as necessarily
being indicative of future results.
The use of specific projections
and estimates in the Cleansing
Materials is not intended to
indicate management’s belief that
a particular projection or estimate
will be achieved, but rather that
the projection or estimate is within
the scope of potential outcomes
assuming other factors inherent
in the updated business plan. The
outcomes presented may be at
the midpoint, bottom or top of the
scope.
5. Certain information included in
the Cleansing Materials describes
or assumes the expected terms of
transactions the Company expects
to execute in connection with its
restructuring as contemplated under
the Plan of Reorganization. The
consummation of such transactions
is subject to other various risks
and contingencies, including
closing conditions. There can be no
assurance that such transactions
will be consummated with the terms
assumed therein or otherwise. As
such, the subject matter of the
Cleansing Materials is evolving and
is subject to further change by
LATAM in its absolute discretion.
Furthermore, no responsibility
is taken for changes in market
conditions and no obligation is
assumed by LATAM to revise the
Cleansing Materials to reflect the
events or conditions that occur
subsequent to the date hereof.
Furthermore, the assumptions
and estimates underlying the
projected financial information
contained in the Cleansing
Materials are inherently uncertain
and are subject to a wide variety
of significant business, economic,
competitive, and other risks and
uncertainties. Actual results may
differ materially from the results
contemplated by the financial
forecast information contained in
the Cleansing Materials, and the
inclusion of such information in
the Cleansing Materials should not
be regarded as a representation
by any person that the results
reflected in such forecasts will be
achieved.
Santiago, August 29, 2022
MONTHLY OPERATING REPORT-JULY
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of July
2022.
Santiago, September 5, 2022
CAPITAL RAISE AND PREEMPTIVE
RIGHTS PERIOD
Pursuant to the provisions set forth
in Article 9 and the second paragraph
of Article 10 of Law nº 18,045,
and in General Rule nº 30, of your
Commission (the “Commission”),
duly authorized, I hereby report the
following MATERIAL FACT of LATAM
Airlines Group S.A. (“LATAM” or the
“Company”):
I. As informed by Material Fact on
June 18, 2022, the reorganization
and financing plan (the " Plan of
Reorganization") previously approved
by the Company's Board of Directors
was confirmed by resolution
dated June 18, 2022, by the Court
of Bankruptcy of the Southern
District of New York that hears
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 the reorganization proceeding (the
“Chapter 11 Proceeding”) of LATAM
and some of its direct and indirect
subsidiaries (together with LATAM,
the “Debtors”) under Chapter 11 of
Title 11 of the Code of the United
States of America. The Plan of
Reorganization, which will allow the
Debtors to successfully emerge from
the Chapter 11 Proceeding, is binding
for the Company. In compliance
with the Plan of Reorganization,
the Company's Board of Directors
adopted the agreements set forth in
point II below.
II. In the Meeting held today, the
Company's Board of Directors
adopted, among others, the following
agreements:
1. Notice was taken of the
registration in the Securities
Registry of the Commission of: (i)
the 605,801,285,307 shares of the
Company corresponding to the capital
increase approved at the Company’s
Extraordinary Shareholders Meeting
held on July 5, 2022 (the “Meeting");
and (ii) the three classes of bonds
convertible into shares of the
Company whose issuance was also
approved at the Meeting (jointly, the
“Convertible Bonds”). On September
2, 2022: (i) the aforementioned
605,801,285,307 shares were
registered in the Securities Registry
of the Commission under nº 1120;
and (ii) the Convertible Bonds, in
turn, were registered in the same
Registry under nº 1116. Of said
605,801,285,307 shares of the
Company: (i) 531,991,409,513
shares will be used to respond to the
conversion of the Convertible Bonds;
and (ii) the remaining 73,809,875,794
shares will be offered preferentially
to the shareholders and, the
unplaced remainder, between the
shareholders and/or third parties (the
“New Common Stock”), in the terms
approved at the Meeting;
2. The placement price of the
aforementioned 73,809,875,794
New Common Stock was set at
US$0.01083865799 (zero point
zero one zero eight three eight six
five seven nine nine United States
dollars). in turn, the subscription
value of the Convertible Bonds will be
US$1 per bond. These values will be
reported in the notices established
in article 10 of the Corporations
Regulations;
3. It was agreed to start the offer
and placement of the New Common
Stock and the Convertible Bonds. In
this regard, it was resolved that the
legal preemptive rights offering
period of 30 days for the New
Common Stock and the Convertible
Bonds run simultaneously, from
September 13, 2022 to October
12, 2022. The shareholders who
have the preemptive right, both
with respect to the New Common
Stock and the Convertible Bonds,
are those registered at midnight
on September 7, 2022. These
dates and other essential details
will be communicated through the
publication of notices in the terms
established in articles 10 and 26 of
the Corporations Regulations;
4. The notices that must be published
in accordance with the Corporations
Regulations are the following:
NOTICE PUBLICATION
DATE
NEWSPAPER
September 6,
2022
“La Tercera”
of Santiago
Article
10
Notice
Article
26
Notice
Santiago, October 4, 2022
MONTHLY OPERATING REPORT-
AUGUST
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of
August 2022.
Santiago, October 11, 2022
EXIT FINANCING PRICING
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:
September 13,
2022
“La Tercera”
of Santiago
I. Exit Financing
1. As previously reported by
material fact dated as of June 11,
2022, on June 10, 2022 LATAM and
certain of its direct and indirect
subsidiaries (collectively with
LATAM, the “Debtors”) entered into
debt commitment letters (the “Exit
Financing Commitment Letters”)
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 with JPMorgan Chase Bank, N.A.
(“JPM”), Goldman Sachs Lending
Partners LLC (“GS”), Barclays Bank
PLC (“Barclays”), BNP Paribas, BNP
Paribas Securities Corp. (collectively,
“BNP”) and Natixis, New York
Branch (“Natixis”, and collectively
with JPM, GS, Barclays, and BNP
and their affiliates parties thereto,
the “Exit Financing Lenders”).
The Exit Financing Commitment
Letters contain a commitment
for the provision of a US$2,250
million financing and a US$500
million new revolving credit facility
(collectively, the “Exit Financing”).
The foregoing, as contemplated
in the plan of reorganization and
financing of the Debtors (the “Plan
of Reorganization”) that has been
approved and confirmed in their
reorganization proceeding in the
United States of America (the
“Chapter 11 Proceeding”) before the
Bankruptcy Court of the Southern
District of New York under the rules
set forth in Chapter 11 of Title 11 of
the United States Code.
2. The Exit Financing has been
structured as a combination of (i)
a US$500,000,000 Exit Revolving
Facility (the “Revolving Facility”);
(ii) a US$1,100,000,000 Exit Term
Loan B Facility (the “Term Loan B
Facility”); (iii) a US$750,000,000
bridge-to-5Y notes term loan
facility (“Bridge to 5Y Facility”);
(iv) a note issuance exempt from
registration under the U.S. Securities
Act of 1933, as amended (the
“Securities Act”), in accordance
with Rule 144A and Regulation
S, both under the Securities Act,
maturing five years after issuance
(5NC2) (the “5Y Notes” and
together with the Bridge to 5Y
Facility, the “5Y Bridge Facility/
Notes”), in an aggregate principal
amount of US$450,000,000; (v)
a US$750,000,000 bridge-to-7Y
notes term loan facility (“Bridge to
7Y Facility”, and collectively with
the Bridge to 5Y Facility, the “Bridge
Facilities”); and (vi) a note issuance
exempt from registration under the
Securities Act in accordance with
Rule 144A and Regulation S, both
under the Securities Act, maturing
seven years after issuance (7NC3)
(the “7Y Notes”, and together with
the Bridge to 7Y Facility, the “7Y
Bridge/Facility Notes”, and together
with the 5Y Bridge Facility/Notes,
the “Bridge Facility/Notes”), in
an aggregate principal amount of
US$700,000,000.
from the Chapter 11 Proceeding with
proceeds obtained as a result of the
placement of the 5Y Notes and the
7Y Notes (collectively, the “Notes”),
and proceeds obtained under the Term
Loan B Facility. Thus, as of such date,
the Exit Financing going forward will
be comprised by a US$2,250 million
financing and a US$500 million new
revolving credit facility.
4. The Company intends to
execute the applicable agreements
documenting the Revolving Facility, the
Term Loan B Facility and the Bridge
Facilities on October 12, 2022 and
draw thereunder as follows:
B Facility and the Notes have been
structured as debtor-in possession
facilities that will close during
the pendency of the Chapter 11
Proceeding; provided, however, that
they have been structured to remain
in place after the Debtors’ emergence
from the Chapter 11 Proceeding. Thus,
subject to the satisfaction of certain
customary conditions at emergence
(the “Conversion Date”), they will
be automatically converted into a
financing that will remain in effect
after emergence.
7. The key terms and conditions of the
Exit Financing are set forth below:
a. The Bridge Facilities on October
12, 2022; and
a. Revolving Facility:
b. With respect to the Term Loan
B Facility: (i) an initial amount
of US$750,000,000 on October
12, 2022; and (ii) the remainder
thereunder of US$350,000,000 on
the date of emergence from the
Chapter 11 Proceeding.
5. In turn, the settlement of the Notes
is expected to close on October 18,
2022.
i. Borrower: La Sociedad, actuando a
través de su sucursal de Florida.
ii. Garantes: The Company, acting
through its Florida branch. ii.
Guarantors: The Debtors (other than
LATAM), and additional affiliates
of the Company that may become
guarantors thereunder from time to
time (collectively, the “Guarantors”).
iii. Lenders: Exit Financing Lenders
3. The Bridge Facilities will be repaid
on or before the date of emergence
6. As previously reported, the
Revolving Facility, the Term Loan
iv. Principal Amount: US$500,000,000.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 v. Scheduled Maturity Date: The
earlier of: (i) December 31, 2026;
(ii) four and a half years after
closing; (iii) four years after the
Conversion Date. The Revolving
Facility includes a mechanic to
allow individual lenders thereunder
to extend their financing
commitments or loans, provided
that any offer to extend the
maturity date shall be offered to
all lenders ratably.
vi. Interest: At LATAM's election,
either: (i) the alternate base rate
("ABR") (with a floor of 1.00%) plus
an applicable margin of 3.00%;
or (ii) Adjusted Term SOFR rate
(with a floor of 0.00%) plus an
applicable margin of 4.00%.
vii. Fees:
1. Each Exit Financing Lender
shall receive an amount equal to
1.50% of the aggregate amount of
the commitments of such lender,
payable on, and subject to the
occurrence of, the closing date.
2. Wilmington Trust, N.A.,
acting as collateral trustee,
trustee, registrar, paying agent,
and collateral agent to the Exit
Financing facilities will receive (i)
an acceptance fee of US$25,000,
(ii) an annual administration fee
of US$10,000 per facility and (iii)
an annual collateral agent fee
of US$50,000 plus US$5,000
per joinder to the facilities
comprising the Exit Financing.
3. JPMorgan, in its capacity
as administrative agent, shall
receive an annual administration
fee of US$75,000.
b. Term Loan B Facility:
i. Borrowers: The Company (as
borrower), and Professional Airlines
Services, Inc. (“PAS”), a Florida
corporation and a wholly owned
subsidiary of LATAM (as co-
borrower) (the “Co-Borrower”).
of 0.50%) plus an applicable margin
of 9.75% and, after LATAM emerges
from Chapter 11, at LATAM’s option,
alternatively at: (i) ABR (with a floor
of 1.50%) plus an applicable margin
of 8.5%; or (ii) Adjusted Term SOFR
(with a floor of 0.50%) plus an
applicable margin of 9.5%.
ii. Guarantors: The Guarantors.
vii. Offering Issue Discount: 8,5%.
iii. Lenders: Exit Financing Lenders.
viii. Fees:
viii. Security Interest and
Preference:
iv. Principal Amount:
US$1,100,000,000.
1. To be secured pari passu with
the remaining facilities of the
Exit Financing, with the following
guaranties and collateral: (i)
prior to the Conversion Date,
with substantially the same
guaranties and collateral that
secure the DIP financing currently
in place (the “Existing DIP
Financing”); and (ii) after the
Conversion Date, with the same
guaranties and collateral, with
certain variations.
2. Prior to the Conversion
Date, will have a super-priority
administrative claim as provided
in the U.S. Bankruptcy Code.
v. Scheduled Maturity Date:
Five years from the closing date;
provided, however, that if the
Conversion Date does not occur on
or prior to December 1, 2023, the
maturity date shall be December
1, 2023. Further, this facility will be
subject to amortization payments
of 1.00% of its original principal
amount per year, payable quarterly,
commencing the first full fiscal
quarter after the Term Loan B
Facility closing date, with a bullet
repayment at maturity.
vi. Interest: At LATAM’s election,
either: (i) ABR (with a floor of 1.50%)
plus an applicable margin of 8.75%; or
(ii) Adjusted Term SOFR (with a floor
1. Each Exit Financing Lender
shall receive an amount equal to
2.00% of the aggregate amount of
the commitments of such lender,
payable on, and subject to the
occurrence of, the closing date.
2. Duration fee in an amount equal
to 0.25% of the aggregate amount
of the commitments of such party
as of September 30, 2022, payable
on, and subject to the occurrence
of, the closing date.
3. GS, in its capacity as
administrative agent, shall receive
an annual administration fee of
US$75,000.
4. See paragraph 6(a)(vii)(2) for a
description of the fees payable to
Wilmington Trust, N.A.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 ix. Security Interest and Preference:
Same as the Revolving Facility.
The Term Loan B Facility will be able
to be repaid at par starting in year
three.
c. Bridge Facility/Notes:
i. Bridge Facilities:
1. The Debtors have obtained
commitments from affiliates of the
Exit Financing Lenders for the Bridge
Facilities; provided that as previously
indicated, the Bridge Facilities will
be repaid with proceeds obtained
from the Notes and the Term Loan B
Facility.
2. Except as set forth below with
respect to the maturity date and
fees, the terms and conditions of the
Bridge Facilities shall be substantially
similar to the ones of the Notes as
described further down.
a. Maturity Date:
ii. Rollover: Notwithstanding
the foregoing, subject to certain
conditions precedent, on the first
anniversary from the closing date,
any loans under the Bridge Facilities
that have not been previously repaid
will be automatically converted into
a senior secured term loan due on
the date that is (y) five years after
the closing date (in the case of the
5Y Notes) or (z) seven years after
the closing date (in the case of the
7Y Notes); provided, however, that if
the Conversion Date does not occur
on or prior to December 1, 2023,
this extended maturity date shall
be December 1, 2023 (the “Rollover
Date”).
b. Fees: Each Exit Financing Lender
shall receive:
i. An amount equal to 1.125% of
its aggregate committed principal
amount under the Bridge Facilities.
This fee shall be payable on, and
subject to the occurrence of, the
closing date.
i. Scheduled Maturity Date: One
year from the closing date; provided,
however, that if the Conversion Date
does not occur on or prior to December
1, 2023, the maturity date shall be
December 1, 2023.
ii. A commitment fee in an amount
equal to 1.125% of its aggregate
committed principal amount under
the Bridge Facilities. This fee shall
payable on, and subject to the
occurrence of, the closing date.
iii. A duration fee in an amount
equal to 0.25% of its aggregate
committed principal amount as of
September 30, 2022, payable on,
and subject to the occurrence of,
the closing date.
iv. A funding fee in each case
equal to 1.250% of its aggregate
committed principal amount
under the Bridge Facilities that are
actually funded on the closing date.
This fee shall be payable on, and
subject to the occurrence of, the
closing date.
v. A rollover fee equal to 1.50% of
its aggregate committed principal
amount under the Bridge Facilities,
outstanding on the Rollover Date,
payable on, and subject to the
occurrence of, the closing date.
vi. See paragraph 6(a)(vii)(2) for a
description of the fees payable to
Wilmington Trust, N.A.
ii. Notes:
1. Issuers/Borrowers: The Company
(as borrower), and PAS, (as Co-
Borrower).
2. Guarantors: The Guarantors.
3. Principal Amount:
a. In the case of the 5Y Notes,
US$450,000,000.
b. In the case of the 7Y Notes,
US$700,000,000.
4. Scheduled Maturity Date:
a. In the case of the 5Y Notes,
October 15, 2027.
b. In the case of the 7Y Notes,
October 15, 2029.
5. Interest:
a. In the case of the 5Y Notes,
13.375%.
b. In the case of the 7Y Notes,
13.375%.
6. Offering Issue Discount:
a. In the case of the 5Y Notes,
5.6%.
b. In the case of the 7Y Notes,
6.9%.
7. Fees: See paragraph 6(a)(vii)
(2) for a description of the fees
payable to Wilmington Trust, N.A.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 8. Security Interest and Preference:
Same as the Revolving Facility.
8. As previously reported, the Exit
Financing Commitment Letters also
contemplate an additional financing
to be provided in the form of a junior
debtor-in-possession financing
(the “Junior DIP Financing”) during
the pendency of the Chapter 11
Proceeding (prior to the emergence
thereto). To this effect, on October
3, 2022, the Company entered into
a US$1,145,672,141.67 debtor-
in-possession term loan credit
agreement, and expects to close
this financing on October 12, 2022
concurrently with the closing of
the Exit Financing. The key terms
and conditions of the Junior DIP
Financing are set forth below:
a. Borrower: The Company.
b. Guarantors: The Debtors
(different from LATAM).
c. Principal Amount:
US$1,145,672,141.67
d. Scheduled Maturity Date: The
earlier of December 1, 2023 and the
date in which the Debtors emerge
from the Chapter 11 Proceeding.
e. Interest: At LATAM’s election, either
(i) the ABR (with a floor of 1.50%) plus
12.5% or (ii) the Term SOFR Rate (with
a floor of 0.50%) plus 13.5%.
f. Fees:
i. JPM will receive a monthly
administration fee of $6,250 per
month.
ii. Wilmington Trust, N.A., will
receive an annual junior collateral
agent fee of US$30,000 plus
U.S.$5,000 per joinder.
g. Security Interest and Preference:
To be secured substantially with the
same guaranties and collateral that
secure the Existing DIP Financing;
provided, however, that the Exit
Financing will be senior to the Junior
DIP Financing.
9. Upon the closing of the Exit Financing
and the Junior DIP Financing, the Existing
DIP Financing will be fully repaid with the
proceeds obtained therefrom.
II. Backstop Commitment
Agreements
(the “Backstop Commitment
Agreements”) with certain
supporting claimholders and
shareholders (collectively, the
“Backstop Parties”) in furtherance to
restructuring transactions set forth
in the Plan of Reorganization.
2. As reported in the material fact
dated May 11, 2022, the outside
date currently set forth under the
Backstop Commitment Agreements
is October 30, 2022. However, the
Debtors are entitled to extend such
date until November 30, 2022 in
exchange of a 1.34846% payment
calculated over the amounts
backstopped thereunder (i.e.,
approximately US$73 million) (the
“Extension Payment”).
3. Given that the Debtors are
currently contemplating to emerge
from Chapter 11 during the first
week of November, they were
required to extend the outside date
under the Backstop Commitment
Agreements to November 30,
2022, and will therefore pay
the Extension Payment to the
Backstop Parties.
1. As previously reported, the
Company has entered into
backstop commitment agreements
4. As previously reported in the
material fact dated May 11, 2022,
the Extension Payment shall be
deducted from the additional one-
time cash distribution that will be
distributed to general unsecured
creditors that elect to receive the
New Convertible Notes Class A
or New Convertible Notes Class
C contemplated in the Plan of
Reorganization in settlement of
their claims. Thus, payment of this
Extension Fee will not constitute
an additional disbursement by
the Company from what has been
previously disclosed.
The Company will keep its
shareholders, creditors and the
market informed on the progress of
the Chapter 11 Proceeding.
Santiago, October 13, 2022
PREEMPTIVE RIGHTS PERIOD AND
SECOND ROUND RESULTS
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:
1. As previously reported by the
Company by means of information
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022
of interest published on this date,
on October 12, 2022 expired the
30-day preemptive rights offering
period (the “POP”) of (i) the
73,809,875,794 new shares, issued
and registered in the Securities
Registry of the Comisión para el
Mercado Financiero (“CMF”) (the
“ERO”); and (ii) 1,257,002,540
notes convertible into shares
Serie G, the 1,372,839,695 notes
convertible into shares Serie H, and
the 6,863,427,289 notes convertible
into shares Serie I, all registered in
the Securities Registry of the CMF
(jointly, the “Convertible Notes”).
The ERO and the Convertible Notes
were issued within the context
of the agreements reached at
the Extraordinary Shareholders
Meeting of LATAM held on July 5,
2022, pursuant to the provisions
of the plan of reorganization and
financing of LATAM and certain
of its subsidiaries (the “Plan of
Reorganization”) that has been
approved and confirmed in their
reorganization proceeding in the
United States of America (the
“Chapter 11 Proceeding”) before the
Bankruptcy Court of the Southern
District of New York under the rules
set forth in Chapter 11 of Title 11 of
the United States Code.
2. On this date, the second round
(the “Second Round”) of subscription
of the ERO has taken place, in which
had the right to participate, the
shareholders (or their assignees)
that subscribed ERO in the POP and
expressed to LATAM, at the time of
the subscription, their intention to
participate in the Second Round.
3. After expiration of the POP and
Second Round, the shareholders
(or their respective assignees) have
subscribed 42,460,487,574 ERO,
17,868 Convertible Notes Serie G,
636,975,241 Convertible Notes Serie
H and 83,777 Convertible Notes
Serie I. Therefore, remain available
31,349,388,220 ERO, 1,256,984,672
Convertible Notes 2 Serie G,
735,864,454 Convertible Notes Serie
H and 6,863,343,512 Convertible
Notes Serie I (the “Remainder”).
4. As previously reported, the
Remainder will be placed, in
compliance with the applicable laws
and regulations, according to the rules
governing the offering of the ERO
and the Convertible Notes, which are
contained in the notices published
on the newspaper La Tercera on
September 6, 2022, as provided
in Article 10 of the Regulations
of the Corporations Law. Such
placement includes, among other
things, the placement of a portion
of the Remainder with (i) a group
of unsecured creditors of LATAM
represented by Evercore and certain
holders of Chilean notes issued by
LATAM (collectively, the “Backstop
Creditors”); and (ii) Delta Air Lines,
Inc., Qatar Airways Investments (UK)
Ltd. and the Cueto group (collectively,
the “Backstop Shareholders”; y them
jointly with the Backstop Creditors,
the “Backstop Parties”) according to
the rules of their respective backstop
commitment agreements (the
“Backstop Agreements”).
5. For purposes of the above, the
Company will exercise its rights under
the Backstop Agreements and will
therefore require the Backstop Parties
to subscribe and pay their respective
portion of the Remainder, as provided
in such agreements. Given the
funding period contemplated in the
Backstop Agreements, the Company
contemplates that the effective date
of the Plan of Reorganization should
occur on or around November 3 of
this year.
The Company will keep its
shareholders, creditors and the
market informed on the progress of
the Chapter 11 Proceeding.
Santiago, October 26, 2022
PLAN OF REORGANIZATION
IMPLEMENTATION INFORMATION
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:
1. As previously reported, the
Company expects the effective
date (the “Effective Date”)
of its plan of reorganization
and financing (the “Plan of
Reorganization”) that has been
approved and confirmed in its
reorganization proceeding in the
United States of America (the
“Chapter 11 Proceeding”) under
the rules set forth in Chapter 11 of
Title 11 of the United States Code
to occur on November 3, 2022.
Accordingly, on the Effective Date,
the Company, together with its
various subsidiaries that are parties
to the Chapter 11 Proceeding, will
emerge from the aforementioned
proceeding.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 2. In connection with the foregoing:
a. The Company contemplates
that (i) the 73,809,875,794 new
common stock, registered in
the Securities Registry of the
Financial Market Commission
(“CMF”); (ii) the portion of
the 1,257,002,540 Series G
convertible notes that have been
subscribed, (iii) the 1,372,839,695
Series H convertible notes;
(iv) the 6,863,427,289 Series I
convertible notes, all registered in
the Securities Registry of the CMF
(collectively, the notes referred
to in (ii), (iii) and (iv) above, the
“Convertible Notes”); and (v) the
portion of the 3,818,042 new
Series F corporate notes not
convertible into shares that have
been subscribed, also registered in
the Securities Registry of the CMF,
to be delivered to their respective
subscribers on the Effective Date.
b. The conversion periods of the
Convertible Notes will commence
as of the Effective Date, under
the terms and conditions set forth
in the respective indentures. It
is reminded that the holders of
Convertible Notes who wish to
exercise their conversion option
must do so in accordance with the
procedure established for such purpose
in the respective indenture, by means
of a written communication addressed
to LATAM, to the e-mail address
InvestorRelations@latam.com with
the subject “Solicitud de Conversión
Bonos Convertibles”, according to the
form attached as Annex Three to the
indenture. For convenience, a copy of
said format is available at https://
www.latamairlinesgroup.net/es/
news-releases/news-releasedetails/
informacion-sobre-proceso-de-
conversion-de-bonos-convertibles.
c. As previously reported in an material
fact dated May 11, 2022, general
unsecured creditors that have elected
to receive Series G Convertible Notes
and Series I Convertible Notes will be
entitled to receive a one-time cash
distribution (the “Additional Cash
Distribution”) determined based on
the difference between the Company’s
EBITDAR contemplated in its original
business plan and the actual EBITDAR
of the Company between January 1,
2022 and the date that is 15 days
prior to the exit of the Chapter 11
Proceeding. Such Additional Cash
Distribution shall be paid starting on
the Effective Date.
The gross amount of such Additional
Cash Distribution will ultimately be
US$250 million, less (i) the fees
payable to the backstop parties
to the Plan of Reorganization
under their respective backstop
commitment agreements as
disclosed in an material fact dated
October 11, 2022, for extending the
outside date under such agreements
until November 30, 2022; and
(ii) certain cash payments to be
made by the Company with the
support of the backstop creditors
in the context of the Chapter 11
Proceeding. Considering these
adjustments, the amount to be
distributed as an Additional Cash
Distribution will be approximately
US$175 million.
3. As soon as the Effective Date
occurs, the Board of Directors
will summon an Extraordinary
Shareholders’ Meeting to proceed
with the total renewal of the
Company’s Board of Directors, in
accordance with the terms set forth
in Transitory Article Four of the
Company’s bylaws.
Santiago, November 3, 2022
CHAPTER 11 EMERGENCE AND
EXTRAORDINARY SHAREHOLDERS
MEETING NOTICE
In accordance with the provisions of
Article 9 and the second paragraph
of Article 10 of the Securities
Market Law, and in General Rule nº
30, duly empowered, I hereby report
the following MATERIAL FACT of
LATAM Airlines Group SA (“LATAM”
or the “Company”), Securities
Registry entry nº 306:
1. The effective date (the "Effective
Date") of the reorganization and
financing plan of LATAM (the
"Reorganization Plan") that has
been approved and confirmed in
its reorganization proceeding in
the United States of America (the
"Chapter 11 Proceeding") under the
rules established in Chapter 11 of
Title 11 of the United States Code,
has occurred on this date, November
3, 2022, as previously reported
by the Company. Consequently,
on this same date, the Company,
together with its various subsidiaries
that were part of the Chapter 11
Procedure, have emerged from it.
2. As reported in the Material
Fact of October 26, 2022, in
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 accordance with the terms of
the Reorganization Plan and the
fourth transitional article of the
Company's bylaws, as soon as the
Effective Date occurs, the Board of
Directors will call an Extraordinary
Shareholders' Meeting to proceed
with the total renewal of the
Company's Board of Directors.
3. For the purposes of what
is indicated in point 2 above,
the Board of Directors, in an
extraordinary meeting held on
this same date, has agreed to
summon its shareholders to an
Extraordinary Shareholders' Meeting
(the "Meeting"), which will be held
remotely, for November 15, 2022,
at 12:00 p.m., in order to inform and
rule on the following matters:
a. Inform shareholders about the
exit of the Chapter 11 Procedure
and the implementation of the
Reorganization Plan.
b. Proceed with the total renewal
of the Board of Directors.
c. Resolve on the remuneration
of the Board of Directors and
the Audit Committee; and on the
budget of the latter.
The holders of shares registered
in the Shareholders' Registry at
midnight of the fifth business day
prior to the day of its celebration,
this is, registered at midnight of
November 9, 2022, will have the
right to participate in the meeting
and exercise their right to vote.
As indicated, it has been resolved
that the Meeting be held remotely,
in order to prevent people
who attend it from exposing
themselves to contagion. To do
this, the shareholder interested in
participating in the Meeting, or his
representative, must, until 3:00
p.m. the day before the Meeting,
register on the website https://
autenticacion.dcv.cl/ or send an
email to the box Registrojuntas@
dcv.cl, expressing your interest
in participating in the Meeting,
attaching a scanned image of your
identity card on both sides or your
passport; of power, if applicable;
and the application form for
participation in the Meeting. The
Meeting will be held through the
Zoom videoconference platform
and voting by acclamation or voice
voting, or through the electronic
voting platform provided by
DCV Registros SA, which will be
accessed through the Click&Vote
platform, through the “Join the
Board” link. The rest of the required
documentation and more detailed
information regarding how to
register, participate and vote
remotely at the Meeting and other
aspects that are relevant to that
effect, will be available and will be
communicated in a timely manner
through instructions that will be
uploaded to the Company website,
www.latamairlinesgroup.net.
The notices summoning the meeting
will be published in the newspaper
La Tercera on November 5, 8 and 10,
2022.
The shareholders may obtain a copy
of the documents that support the
matters on which the Meeting will
be informed, as of November 5,
2022, on the Company's website,
www.latamairlinesgroup.net. In
addition, any shareholder who
wishes to obtain a copy of said
documents can contact, also from
November 5, 2022, the Company's
investor service department at the
email address InvestorRelations@
latam.com or by telephone (562)
2565-3844, for this purpose.
Finally, on this date, a supplement
to the Plan of Reorganization,
with documents granted in the
context of the termination of
the reorganization process under
Chapter 11, including among
others, a Registration Rights
Agreement, has been presented in
the Chapter 11 proceeding file.
Santiago, November 8, 2022
MONTHLY ORDINARY REPORT-
SEPTEMBER
As part of the reporting obligations
it has to comply with as part
of the Chapter 11 Proceedings,
LATAM has to prepare and deliver a
Monthly Operating Report (“MOR”)
corresponding to the month of
September 2022.
Santiago, November 15, 2022
BOARD OF DIRECTORS ELECTION
In accordance with the provisions
of articles 9 and 10 of Law nº
18.045 on Securities Market, and
as established in the Commissions’
General Rule nº 30 of 1989, I
hereby inform as material fact that
at the Extraordinary Shareholders'
Meeting (the "Meeting") of LATAM
Airlines Group SA ("LATAM") held on
this same date, the shareholders
of LATAM proceeded to elect the
members of the Board of Directors
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 of LATAM, which will last in their
positions for two years.
In the election that took place in the
Meeting, the following persons were
elected as Directors:
1. Ignacio Cueto Plaza;
2. Sonia J.S. Villalobos;
3. Bouk van Geloven;
4. Antonio Gil Nievas;
5. Alexander D. Wilcox;
6. Bornah Moghbel;
7. Enrique Cueto Plaza;
8. Michael Neruda; and
9. Frederico Curado
(as independent director).
It is hereby stated that, at a Board
Meeting held on this same date, Mr.
Ignacio Cueto Plaza and Mr. Bornah
Moghbel were appointed as Chairman
and Vice-Chairman of the Board of
Directors, respectively. Likewise, it
is reported that, in accordance with
article 50 bis of Law nº 18.046 on
Corporations, the Directors Messrs.
Frederico Curado (as independent
director), and Michael Neruda and
Sonia J.S. Villalobos were elected as
members of the Directors' Committee.
Santiago, December 15, 2022
MONTHLY OPERATING REPORT-
OCTOBER
• As informed, LATAM was part of 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
Proceeding”). As informed in material
fact dated November 3, 2022, on that
date LATAM successfully emerged
from said Chapter 11 Proceeding.
Finally, please note that even though
LATAM emerged from the Chapter 11
Proceeding on November 3, 2022,
certain rules of Chapter 11 of Title
11 of the Code of the United States
of America still impose certain
obligations for the Company. One of
such obligations consists in issuing
as part of the closing of the Chapter
11 Proceeding “Post Confirmation
Reports” on a quarterly basis. Such
reports will be issued together with
the quarterly financial statements.
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Our businessINDUSTRY CONTEXTMATERIAL FACTSNCG 461: 9 RELEVANT OR MATERIAL FACTSIntegrated Report 2022Integrated Report 2022 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.
with customers, suppliers, vendors,
contractors or employees. Many risks
exist due to uncertainties around our
recent emergence from bankruptcy,
including the following:
• Key suppliers, vendors or other
contract counterparties could, among
other things, renegotiate the terms of
our agreements, attempt to terminate
their relationships with us or require
financial assurances from us;
• Our ability to renew existing
contracts and obtain new contracts
on reasonably acceptable terms and
conditions may be adversely affected;
• Our ability to attract, motivate and
retain executives and employees may
be adversely affected; and
RISKS RELATING TO OUR
EMERGENCE FROM CHAPTER 11
BANKRUPTCY
We recently emerged from
bankruptcy, which could adversely
affect our business and relationships.
Our having filed for bankruptcy,
notwithstanding our recent emergence
from the Chapter 1v1 bankruptcy
proceedings, could adversely affect
our business and relationships
• Competitors may take business away
from us, and our ability to compete
for new business and attract and
retain customers may be negatively
impacted.
The occurrence of one or more of these
events could have a material and adverse
effect on our operations, financial
condition and reputation and we cannot
assure you that having been subject to
bankruptcy proceedings will not adversely
affect our operations in the future.
Upon emergence from bankruptcy, the
composition of our board of directors
changed significantly.
The composition of our board of
directors changed significantly upon
emergence from bankruptcy. Our new
board is comprised of the following
members: Ignacio Cueto Plaza, Sonia
J.S. Villalobos, Bouk van Geloven,
Antonio Gil Nievas, Alexander D.
Wilcox, Bornah Moghbel, Enrique Cueto
Plaza, Michael Neruda and Frederico
Curado (as independent director).
While there has been an orderly
transition process as we integrate
newly appointed board members, our
new board of directors may change
views on strategic initiatives and a
range of issues that will determine the
future of the Company. As a result,
the future strategy and plans of the
Company may differ materially from
those of the past.
The ability to attract and retain key
personnel is critical to the success of
our business and may be affected by
our emergence from bankruptcy.
The success of our business depends
on key personnel. The ability to
attract and retain these key personnel
may be affected by our emergence
from bankruptcy, the uncertainties
currently facing the business and
the changes we may make to the
organizational structure to adjust to
changing circumstances. We may
need to enter into retention or other
arrangements that could be costly to
maintain. If executives, managers or
other key personnel resign, retire or are
terminated or their service is otherwise
interrupted, we may not be able to
replace them in a timely manner
and we could experience significant
declines in productivity.
RISKS RELATING TO OUR COMPANY
The continuing effects of COVID-19
are highly unpredictable and could be
significant, and may have an adverse
effect on the group’s business and
results of operations.
The COVID-19 pandemic and
accompanying fear of widespread
outbreaks of contagious illnesses that
may occur in the future have materially
reduced, and may continue to further
reduce, demand for, and availability
of, worldwide air travel. As a result,
our business, operations and financial
performance have been, and may
continue to be, materially adversely
affected by COVID-19.
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 The COVID-19 pandemic and its
variants 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
effect on our results may be material
and adverse if supply chain disruptions
persist and preclude our ability to
adequately maintain our fleet.
Although vaccines have generally
proved to be effective and certain
of the government-imposed travel
restrictions associated with the
COVID-19 pandemic have been eased,
the ongoing pandemic, including large
outbreaks, resurgences of COVID-19
in various regions and appearances
of new variants of the virus, has
resulted and may continue to result
in significantly reduced demand for
travel. During 2022 many countries
lifted travel restrictions but the spread
of new variants of COVID-19 led
some of them to return with some
measures. 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, our
operations have been, and could in the
future be, negatively affected further
if our employees are quarantined as
the result of exposure to COVID-19.
Health safety and sanitation measures
that we have implemented as a group
also 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. These issues have had
and could continue to have a material
adverse effect on the group’s business
and results of operations. 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
and its variants, the airline industry
may experience consumer behavior
changes, regarding 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
and its variants exists and could lead
to adverse financial impacts for the
Company. Corporate travel increased
during 2022, thanks to the lift of
travel restrictions, but has not yet
fully recovered to prior COVID-19
levels. 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 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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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.
Our operations are subject to
fluctuations in the supply and cost of
jet fuel, which could adversely impact
our business.
Higher jet fuel prices could have
a materially adverse effect on our
business, financial condition and
results of operations. Jet fuel costs
have historically accounted for a
significant amount of our operating
expenses, and accounted for 47.9%
of our total costs of sales in 2022.
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 continued unrest
in the Middle East, 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
of fuel. 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.
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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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
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 to extend the concession
period, which expires in 2035, or
to renegotiate the current income
percentage of participation that they
must share with the government. This
dispute implies a risk to future OPEX
and CAPEX investments and adverse
effects to the airport’s operations.
Santiago’s International Airport
opened its new International
Terminal, called Terminal 2, 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.
Additionally, Terminal 1 is currently
undergoing remodeling to adapt
its infrastructure into a national
operations dedicated terminal. These
works are scheduled to be completed
by 2025.
Due to the previous airport
concessions provided by the Chilean
government in 2019, there are
two airports currently undergoing
construction in Chile: Iquique’s Diego
Aracena International Airport and
Arica’s Chacalluta International Airport,
which are both undergoing terminal
and platform expansions. These works
are expected to be completed by
2023 and they imply a risk of adverse
effects to the airports’ operations.
In addition, there are three other
new concessions in Chile planning to
start terminal work during the years
2023 and 2024: Balmaceda Airport,
La Florida International Airport and
Presidente Carlos Ibáñez del Campo
International Airport.
In Peru, one of the major operational
risks that we currently face at the
Jorge Chávez International Airport
in Lima is the limitation of growth
capacity on the airside (including with
respect to runway and apron, as well as
parking spaces), and challenges relating
to the interior infrastructure of the
airport, which has collapsed in most
of its processes (AVSEC, boarding &
migrations). Jorge Chávez International
Airport in Lima is currently in the
process of building a second runway
in 2024 and a new terminal in early
2025. Any delay or limitation due to
ongoing works could negatively affect
our operations, limit our ability to grow
and affect our competitiveness in the
country and 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.
In 2023, after two years of delay
due to the COVID-19 pandemic, GRU
Airport, concessionaire of Guarulhos
Airport, will start the last phase
of infrastructure expansion works,
including the construction of a new
fast exit on the main runway and a new
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 taxiway. In addition, the construction
of a new pier and the expansion of the
apron are planned, a process which will
operate until 2025 and will allow an
increase in operations at the busiest
airport in the country.
In 2022, continuing the state government
airport concession program in Brazil
(the “Concession Program”), 15 Airports
in Brazil were granted concessions in
3 blocks, 8 of which are operated by
LATAM, including Congonhas Airport,
which is located in downtown São Paulo.
The acceleration of the Concession
Program makes possible important
investments in infrastructure, but it
implies a high volume of work to be
undertaken simultaneously. Over the
next 5 years, 29 of the 55 Airports
operated by LATAM in Brazil will undergo
infrastructure improvement works, which
may generate temporary restrictions,
especially in terms of paid cargo.
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.
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 aircraft fall behind
schedule, the resulting delays could
cause a disruption in our operating
performance and have a financial impact
on our results.
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, 2022, LATAM
Airlines Group has a total fleet of 237
Airbus and 73 Boeing aircraft (34 of
these 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.
During 2022, Airbus and Boeing
announced delays in some of their
models due to several reasons including
supply chain problems and the rapid
increase in demand due to the recovery
of the airline industry. The occurrence
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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.
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.
We face reputational risks related to
the use of social media.
LATAM frequently uses social media
platforms as marketing tools. These
platforms provide LATAM, as well
as individuals, with access to a
broad audience of consumers and
other interested persons. Negative
commentary regarding LATAM or the
products it sells may be posted on
social media platforms and similar
devices at any time and may be
adverse to LATAM’s reputation or
business. Further, as laws, regulations,
and different platforms’ terms of
service rapidly evolve to govern the
use of social media, the failure by
LATAM, its employees or third parties
acting at LATAM’s direction to abide
by applicable laws and regulations
in the use of these platforms and
devices could adversely impact the
LATAM’s business, financial condition,
and results of operations or subject it
to fines or other penalties.
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 secured bonds and loans.
In the event that we fail to make
payments on our bonds and loans,
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.
We have substantial liquidity needs
and continue to pursue various
financing options. 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
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.
Upon exiting Chapter 11, we
restructured our debt decreasing it by
approximately 35% as of emergence
to a total gross debt of approximately
US$6.8 billion, and improved our
liquidity conditions, comprised of cash
and cash equivalents of approximately
US$1.1 billion and revolving facilities
fully undrawn in the amount of US$1.1
billion.
We have significant exposure to
SOFR 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.
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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 a more robust reference rate, its
recommended alternative, the
Secured Overnight Financing Rate
(SOFR). Although the adoption of
SOFR is voluntary, the impending
discontinuation of LIBOR makes it
essential that market participants
consider moving to alternative rates
such as SOFR and that they have
appropriate fallback language in
existing contracts referencing LIBOR.
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
migrated to the adoption of SOFR
as an alternative rate. The impact of
such a transition away from LIBOR
could be significant for us because
of our substantial indebtedness.
SOFR will fluctuate with changing
market conditions and, as SOFR
increases, our interest expense will
mechanically increase, which could
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. In addition,
there is no guarantee that SOFR or
other replacement rates for LIBOR will
maintain market acceptance.
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 adversely 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 2022, 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 Canada, MTU Maintenance,
Rolls-Royce, General Electric
Commercial Aviation Services Ltd.,
General Electric Celma, General Electric
Engines Service, CMF International and
Honeywell, among others.
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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 aircraft fueling operations, among
other vital functions and services. We
do not directly control these third-
party service providers, although we
do enter into agreements with many
of them that define expected service
performance. Any of these third-
party service providers, however, may
materially fail to meet their service
performance commitments, may
suffer disruptions to their systems
that could impact their services, or the
agreements with such providers may
be terminated. For example, flight
reservations booked by customers and/
or travel agencies via third-party GDSs
(Global Distribution Systems) may be
adversely affected by disruptions in
our business relationships with GDS
operators or by issues in the GDS’s
operations. Such disruptions, including
a failure to agree upon acceptable
contract terms when contracts expire
or otherwise become subject to
renegotiation, may cause the carriers’
flight information to be limited or
unavailable for display, significantly
increase fees for both us and GDS
users, and impair our relationships
with customers and travel agencies.
The failure of any of our third-party
service providers to adequately
perform their service obligations, or
other interruptions of services, may
reduce our revenues and increase our
expenses or prevent us from operating
our flights and providing other services
to our customers. In addition, our
business, financial performance
and reputation could be materially
harmed if our customers believe
that our services are unreliable or
unsatisfactory.
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.
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
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, at the beginning of 2022,
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. All processes
of digitization and technological
innovation may be exposed to this risk.
Similarly, the rapidly increasing
technological transformation may
advance faster than the review and
control capacity of the authorities
and the knowledge about the effects
of their possible impacts, which could
affect us directly or indirectly in ways
we cannot foresee.
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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
(12% in 2022) 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.
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.
In November 2022, a union
representing the majority of our
pilots in Chile voted to begin a
strike, initiating a mediation process
mandated by Chilean law. On
November 9, 2022, we announced
that we had reached an agreement
averting a strike. There is no
guarantee, however, that we will be
able to reach a mutually beneficial
agreement in the event of future
disagreements with our employees.
Our business may experience adverse
consequences if we are unable
to reach satisfactory collective
bargaining agreements with unionized
employees.
As of December 31, 2022,
approximately 49% 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 by our recent
emergence from bankruptcy and the
resulting uncertainties facing the
business. 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.
The group may also experience
increased levels of employee attrition
associated with the recent emergence
from Chapter 11 proceedings. A loss
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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.
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.
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.
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
Any of the following factors could
adversely affect the business, financial
condition and results of operations
in the countries in which the group
operates:
• Changes in economic or other
governmental policies;
• Changes in regulatory, legal or
administrative practices;
• Weak economic performance,
including, but not limited to, a
slowdown in the Brazilian economy,
political instability, low economic
growth, low consumption and/or
investment rates, and increased
inflation rates; or
• Other political or economic
developments over which we have no
control.
No assurance can be given that
capacity reductions or other steps
the group may take in response to
weakened demand will be adequate
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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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) where the slots previously
operated by Avianca Brazil were
reassigned mostly to Azul, and where
Agência Nacional de Aviação Civil in Brazil
(“ANAC”) has approved new rules to the
distribution of new slots. 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.
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:
The business is highly regulated and
changes in the regulatory environment
in the different countries may
adversely affect our business and
results of operations.
• Interest rates;
• Currency fluctuations;
• Monetary policies;
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
• 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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 ownership or effective control or in a
foreign government’s administration
of current laws and regulations or the
adoption of new laws and regulations
will not have a material adverse effect
on our business, financial condition and
results of operations.
Losses and liabilities in the event of
an accident involving one or more of
our aircraft could materially affect
our business.
We are exposed to potential
catastrophic losses in the event of an
aircraft accident, terrorist incident or
any other similar event. There can be
no assurance that, as a result of an
aircraft accident or significant incident:
• We will not need to increase our
insurance coverage;
• Our insurance premiums will not
increase significantly;
• Our insurance coverage will fully cover
all of our liabilities; or
• We will not be forced to bear
substantial losses.
Substantial claims resulting from
an accident or significant incident
in excess of our related insurance
coverage could have a material adverse
effect on our business, financial
condition and results of operations.
Moreover, any aircraft accident, even if
fully insured, could cause the negative
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 that affected our
Peruvian affiliate. On November 18,
2022, LATAM Airlines Peru reported
that during the take-off of flight
LA 2213 at Lima’s Jorge Chávez
International Airport a fire engine
entered the runway and collided with
its aircraft. Authorities subsequently
confirmed fatalities of two firefighters
who were in the fire engine that struck
the aircraft. There were no fatalities
among the 102 passengers and 6
crew members. The investigation
of the cause of the accident is still
in progress. LATAM Airlines Peru
is cooperating with the relevant
investigations. The aircraft damage is
covered by insurance. We are not yet
able to make a final conclusion as to
the financial impact of this incident.
High levels of competition in the airline
industry, such as the increase of low-
cost carriers and the consolidation
or mergers of competitors in the
markets in which the group operates,
may adversely affect the level of
operations.
Our business, financial condition and
results of operations could be adversely
affected by high levels of competition
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, followed by the entrance
of JetSmart in June 2022. In Colombia,
low-cost competitor VivaColombia has
been operating in the domestic market
since May 2012. Due to the impacts
associated to the COVID-19 pandemic,
some of these airlines have adopted
strategies to consolidate in alliances
or mergers with legacy airlines, such as
Avianca and Gol (Abra Group), Avianca
and Viva in Colombia, or JetSmart where
American Airlines had been approved
by authorities without any conditions to
acquire minor participation. In the Cargo
business, and also due to some effects
of COVID-19 pandemic and the scarcity
of containers, companies such as
Maersk, CMA CGM and MSC have begun
to compete in air transportation; CMA
CGM and Air France-KLM airlines agreed
to share cargo space in their airplanes;
and American Airlines Cargo and Web
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 established, which could increase
the risk perception of doing business
in that specific market and as a
consequence impact the business and
financial results.
of compliance with applicable
regulations, or the consequences
of noncompliance, could adversely
affect our results, our business or our
reputation.
Cargo have partnered to increase their
destinations. These consolidations,
mergers or new alliances might continue
to appear, increasing the concentration
and levels of competition. Specifically,
in February 2023, LATAM expressed
its interest in initiating negotiations to
acquire VivaColombia. Any transaction
is subject to a financial analysis, an
agreement between the parties, and the
corresponding regulatory approvals.
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.
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 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.
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 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.
Some of our competitors may receive
support from external sources,
such as their national governments,
Some of the countries where the
group operates may not comply with
international agreements previously
LATAM’s operations are subject to
local, national and international
environmental regulations; costs
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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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. In order to
comply with this strategy, we have
developed sustainability strategies
focused on climate change and we
have taken different measures, such
as the alliance with the Cataruben
foundation in Colombia, with the
objectives of offsetting CO2 through
reducing deforestation and switching
to sustainable agriculture practices,
amongst others, thus contributing
to improve the communities’
life quality and the protection of
biodiversity. In addition, we have
other initiatives in place such as
the promotion of SAF (green fuel
produced with vegetable bases and
mixed with conventional fossil fuels)
with local governments and the
lean fuel program. Nevertheless, 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. In addition,
frameworks such as the Emissions
Trading System, both in the EU and
UK (“EU-ETS” and “UK-ETS”), are
regulations related to the European
market, where airlines have a pre-
established amount of CO2 emissions
for each year, which are then reduced
over time, similar to a “cap and
trade” system. Airlines must report
and verify emissions related to this
scheme and surrender the allocated
allowances in time in order to
comply. Should operations exceed
the maximum allocated emissions,
airlines must either acquire more
from the market or pay the
corresponding fee to the authority.
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,
where limits on offsetting programs
were included in the new Tax Reform
of 2022, 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 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 its variants
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.
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.
Revenues for airlines depend on the
number of passengers carried, the fare
paid by each passenger and service
factors, such as the timeliness of flight
departures and arrivals. During periods
of fog, ice, low temperatures, storms
or other adverse weather conditions
or natural disasters outside of our
control, some or all of our flights may
be canceled or significantly delayed,
affecting and disrupting our operations
and reducing profitability. For example,
in 2011, a volcanic eruption in Chile
had a prolonged adverse effect on
air travel, halting flights in Argentina,
Chile, Uruguay and the southern part
of Brazil for several days. As a result,
our operations to and from these
regions were temporarily disrupted,
including certain aircraft being
grounded in the affected regions. In
2012, an incident with an aircraft from
a cargo airline caused the closing of
a runway at Viracopos airport for 45
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 hours, which negatively impacted
our operations and forced us to
re-accommodate our passengers to
new flights. In 2022, a LATAM aircraft
was severely damaged after flying
through stormy weather on approach
to Asuncion Airport in Paraguay,
having to make an emergency
landing. Increases in the frequency,
severity or duration of thunderstorms,
hurricanes, typhoons, floods or other
severe weather events, including
from changes in the global climate
and rising global temperatures, could
result in increases in delays and
cancellations, turbulence-related
injuries and fuel consumption to
avoid such weather, any of which
could result in loss of revenue and
higher costs. 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.
Our business may be adversely
affected by the consequences of
climate change.
There are regulatory risks associated
with the management of climate
change in the short and medium term,
due to the fact that, in an effort of
different countries to contribute to
the fight against climate change, there
is a tendency to impose economic
instruments such as carbon taxes
or emissions trading systems that
seek to regulate emissions from
different industries, including the
aviation industry. These mechanisms
seek to discourage the consumption
of fossil fuels, through imposing an
additional cost. However, in the case
of the airline industry, especially in
the South American region, there is
no viable substitute fuel that would
allow the industry to migrate to
other types of fuels. The related
risks present an opportunity to
work hand in hand with the relevant
governments to implement public
policies allowing for progress in the
production of sustainable aviation
fuels in the region, thus promoting
the migration away from fossil fuels
and creating policies and instruments
relevant to industries such as aviation,
which currently has no substitute
fuel available in South America. In
the long term, there are physical
risks associated with climate
change, including the risk for
greater intensity of meteorological
phenomena, such as storms,
tornados, hurricanes, floods and
others, which in turn may pose a
risk to infrastructure (destinations,
airports) and communities. As a
consequence, it may be necessary
to modify routes and destinations.
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 were outside of
LATAM’s control resulted in an
unprecedented number of requests
for ticket refunds from customers
due to changed or canceled
flights. Although at this time
the issue has been managed, we
cannot assure 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.
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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.
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
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.
Latin American governments have
exercised and continue to exercise
significant influence over their
economies.
Governments in Latin America
frequently intervene in the economies
of their respective countries and
occasionally make significant changes
in policy and regulations. 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
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 (“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 and
recently re-elected 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. Operation Car Wash is still
in progress by Brazilian authorities
and additional relevant information
may come to light affecting the
Brazilian economy.
Furthermore, former President Jair
Bolsonaro is being investigated by the
Brazilian Supreme Court for alleged
misconduct. Several impeachment
procedures have been filed in relation
to the management of the response
to the COVID-19 pandemic by the
president.
In addition, after having his criminal
convictions related to Operation Car
Wash overturned and his political
rights restored by the Brazilian
Supreme Court, former President Luiz
Inácio Lula da Silva ran for office in
the presidential election of October
2022 and narrowly defeated President
Bolsonaro. Former President Bolsonaro
questioned the results of the elections,
resulting in demonstrations across the
country. Luiz Inácio Lula da Silva was
sworn in as president in January 2023.
We cannot predict which policies the
incoming president Luiz Inácio Lula
da Silva may adopt or change during
his term in office, or the effect that
any such policies might have on our
business and on the Brazilian economy.
In Peru, on December 7, 2022,
President Pedro Castillo announced
the dissolution of the congress and
called for new elections as soon as
possible, provoking an attempted coup
d’état. Subsequently, he was removed
from office and arrested. On the same
day, Vice President Dina Boluarte
assumed the presidency of Peru, to
serve the remaining presidential term
until 2026. However, on December
11, 2022, President Boluarte
announced she would introduce a bill
to move the general elections up to
April 2024, which proposal is under
discussion and may be subject to
change. Since then, there has been
considerable political unrest in Peru,
and demonstrations related to the
political situation have led to multiple
clashes between protestors and
security forces, resulting in casualties
and deaths. The political unrest has
also given rise to many roadblocks
across the country. In addition, some
smaller airports such as Andahuaylas,
Cusco, Juliaca and Arequipa across
Peru have seen their operations
interrupted.
On December 14, 2022, the Peruvian
government declared a national
state of emergency for 30 days. No
assurance can be given as to how
long the unrest and blockades will
continue. The effect of any such
disruption or interference cannot
accurately be predicted and could
have a significant adverse effect on
our business, financial conditions or
results of operations.
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. 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. The proposed constitution
was finalized on July 4, 2022. On
September 4, 2022, a referendum
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Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 was held, in which the proposed
constitution was rejected by a margin
of 62% to 38% of voters. On December
12, 2022, Chilean lawmakers
announced that they had agreed to a
document entitled “Acuerdo por Chile”
(Agreement for Chile). This document
constitutes a new consensus and a
starting point to begin drafting a new
constitution. On December 26, 2022,
the Constitutional Commission of
the Senate started working on this
document. In addition, Chile held
presidential elections in December
2021, with leftist Gabriel Boric winning
by a wide margin. Mr. Boric was sworn
in as president in March 2022. There
can be no assurance that the recent
changes in the Chilean administration,
its constitution or any future civil
unrest will not adversely affect our
business, operating results and
financial condition in Chile.
Presidential elections were held in
Colombia in 2022, and Gustavo Petro
was narrowly elected president in
Colombia, becoming the country’s
first elected leftist president. Such
elections recorded the lowest
abstention percentages ever in
Colombia. On August 7, 2022, Gustavo
Petro was sworn in as the new
president of Colombia.
In Ecuador, during June of 2022,
people took to the streets of
Guayaquil. There was a mixture of
claims ranging from high prices, lack
of medicines, insecurity and even
voices calling for the resignation
of the current president, Guillermo
Lasso.
Although conditions throughout
Latin America vary from country to
country, our customers’ reactions
to 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.
(Instituto Brasileiro de Geografia e
Estadística, or “IGBE”). In addition, the
credit rating of Perú was downgraded
in 2021 and in 2022 is rated as BBB
with a negative outlook. Ecuador and
Chile were also downgraded in 2020,
and Colombia in 2021, but keep a
stable outlook. Brazil has a stable
outlook but in monitoring due to recent
events and protests related to the
transition of government.
For example, in the past, Peru has
experienced periods of severe
economic 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
increased 1.2% in 2019, decreased
3.9% in 2020, and increased 4.6%
in 2021, according to the Brazilian
Institute for Geography and Statistics
Accordingly, any changes in the
economies of the Latin American
countries in which LATAM and its
affiliates operate or the governments’
economic policies may have a negative
effect on the business, financial
condition and results of operations.
RISKS RELATING TO OUR COMMON
SHARES AND ADSS
Holders of ADRs may be adversely
affected by the substantial dilution of
the shares represented by ADRs.
On June 18, 2022, the United States
Bankruptcy Court for the Southern
District of New York entered an
order confirming the joint plan of
reorganization (as amended, restated,
modified, revised or supplemented
from time to time, the “Plan”) filed by
Appendices
181
Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 the Reorganized Debtors and dated
as of May 25, 2022 [ECF No. 5753].
Pursuant to the Plan, on September
13, 2022, the Reorganized Debtors
commenced the preemptive rights
offerings for the New Convertible
Notes Class A, New Convertible Notes
Class B, New Convertible Notes Class
C (collectively, “New Convertible
Notes”) and ERO New Common Stock
(each as defined in the Plan), which
offerings concluded on October 12,
2022. On November 3, 2022, the Plan
became effective pursuant to its terms
and we emerged from bankruptcy. In
connection with our emergence and
the conversion of the New Convertible
Notes into shares of the Company,
the equity interests of existing
shareholders were substantially diluted.
The shares represented by ADRs
currently amount to a small portion of
our capital. The market prices of the
shares represented by ADRs may be
adversely affected by such dilution and
may experience significant fluctuation
and volatility.
Our major shareholders may have
interests that differ from those of our
other shareholders.
As of February 28, 2023, Sixth Street
Partners beneficially owned 27.9% of
our common shares; Strategic Value
Partners beneficially owned 16.0% of
our common shares, Delta Air Lines
owned 10.0% of our common shares;
Qatar Airways Investments (UK)
Ltd. owned 10.0% of our common
shares (9.999999992% over LATAM’s
statutory capital), Sculptor Capital
beneficially owned 6.5% of our
common shares; and the Cueto
Group (the “Cueto Group”) owned
5.0% of our common shares. These
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 major shareholders,
which may differ from those of our
other shareholders. Historically, our
board of directors has designated its
chairman to exercise this right, which
is however no guarantee that it will
do so in the future. The members of
the board of directors elected by the
shareholders in 2022 designated Mr.
Ignacio Cueto, to serve in this role.
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 of our ADSs and common
shares in the securities markets is
limited and could experience further
illiquidity and price volatility.
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, and our ADR
program, with JP Morgan Chase
Bank, N.A. as depositary, is not open
for issuances. There is no defined
timeline for re-opening the ADR
program or for returning to the U.S.
public markets. In addition, 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
Our common shares are listed on the
Santiago Stock Exchange. 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, which could
also result in price disparity between
the trading prices of the two.
Appendices
182
Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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.
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.
Equity investments in Chile by non-
Chilean residents have been subject
in the past to various exchange
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. See “Item 10.
Additional Information-E. Taxation-
Chilean Tax-Capital Gains.” 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.
Pursuant to the Registration Rights
Agreement, we have entered into
with the Backstop Creditors and the
Backstop Shareholders, we have
reached an agreement to amend
the terms of the deposit agreement
governing our ADSs, to provide for (a)
full flexibility (subject to applicable
fees and procedures contained in
the deposit agreement) to deposit
and withdraw, at the election of
the respective holders of ADS, any
ordinary shares from time to time
held by the backstop parties or their
transferees into or out of the ADS
program; (b) participation in dividends
and distributions subject to the
procedures of the depositary as set
forth in the deposit agreement and
subject to compliance with applicable
law (including, without limitation,
Chilean law); (c) participation in
voting at the instruction of the
respective holders of ADS, subject to
the procedures of the depositary as
set forth in the deposit agreement
Appendices
183
Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 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.
and subject to compliance with
applicable law (including, without
limitation, Chilean law); and (d)
participation in preemptive rights
offerings in the form of additional ADS
subject to compliance with applicable
law (including, without limitation,
Chilean law) and the procedures
of the Depositary set forth in the
deposit agreement; provided that
such offerings are for ordinary shares
constituting at least two percent (2%)
of the outstanding ordinary shares
(excluding any Ordinary Shares subject
to lock-up).
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
Appendices
184
Our businessINDUSTRY CONTEXTRISK FACTORS NCG 461: 3.6 RISK MANAGEMENTIntegrated Report 2022Integrated Report 2022 Commitment to the future
CLIMATE CHANGE
GREENHOUSE GASES (t CO2e)
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY INDUSTRY
TYPE | GRI 305-1, 305-2, 305-3 and 305-4
2019
2020
2021
2022 ∆ 2022/2021
Direct emissions1 – SASB TR-AL-110a.1
12,149,725
5,614,368
6,497,576
9,780,288
50.5%
Indirect emissions2
Other indirect emissions3
Total
18,423
16,355
14,549
7,150
-50.9%
218,174
24,827
2,446
3,198,317
130,657.0%
12,386,323
5,655,551
6,514,570
12,985,755
Emissions intensity in total operations (kg CO2e/100 RTK)
Emissions intensity in air operations (kg CO2e/100 RTK)
Intensity of net emissions in the operation4
77.20
75.72
76.33
76.87
76.31
75.04
80.76
80.55
76.10
101.8
76.67
97.02
RTK: Revenue tons-kilometer.
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), air travel (in other companies) of employees for work-
related activities, purchase of goods and services, capital goods, emissions related to
fuel and energy (cargo and passengers), waste generated in the operation and emissions
generated by indirect transportation (performed by an external supplier).
4 Net emissions across the total operation: total emissions minus the offsets made.
99.3%
26.0%
-4.8%
27.5%
Appendices
185
Integrated Report 2022Integrated Report 2022 Commitment to the future
CLIMATE CHANGE
SCOPE OF THE INFORMATION (%)
2019
2020
2021
2022
Jet fuel - air operation
100
100
100
100
SOURCE
Jet Fuel1
Gasoline
Diesel
Natural gas
EMISSION FACTOR
3.16 kgCO2/ kg
68,700 kgCO2/ TJ
74,400 kgCO2/ TJ
55,600 kgCO2/ TJ
Liquefied petroleum gas (LPG)
64,100 kgCO2/ TJ
1 The factor was updated from the 2021 Report. For previous years,
the factor of 3.15 kg CO2/kg of fuel was maintained.
Fuel – stationary sources
Diesel
Natural gas
Gasoline
LPG
Fuel – mobile sources
Diesel
Gasoline
LPG
Refrigerating gases (various)
Electricity
Transportation using other airlines (jet fuel)
SIGNIFICANT ATMOSPHERIC EMISSIONS
GRI 305-6 and 305-7
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
100
100
100
100
96
96
100
100
100
100
2019
2020
2021
2022 ∆ 2022/2021
Nitrogen oxides (NOx) – (t)
41,697
19,207
22,184 33,1986
Intensity in passenger operations (g/RPK)
0.261
0.273
0.330
0.478
Intensity in cargo operations (g/RTK)
1.880
1.792
1.734
1.912
Sulfur oxides (SOx) – (t)
1,847
851
983
1,470
Intensity in passenger operations (g/RPK)
0.012
0.012
0.013
0.014
Intensity in cargo operations (g/RTK)
0.083
0.079
0.077
0.085
Gases that affect the ozone layer tCO2e1
25,030.74
154.30
7,666.68
11,859
49%
45%
10%
49%
7.69%
10%
54%
1 Including: Halon-1301; HCFC-141b; HCFC-22. For the year 2022, values from previous years are adjusted to show
all data in tCO2e.
RPK: Revenue passenger-kilometer.
RTK: Revenue tons-kilometer.
Appendices
186
Integrated Report 2022Integrated Report 2022 Employees
BETTER, SIMPLER AND MORE TRANSPARENT
LATAM GROUP – EMPLOYEE PROFILE
NCG 461: 5.1.1 NUMBER OF PERSONS BY SEX and 5.1.2 NUMBER OF PERSONS BY NATIONALITY | GRI 2-7 and 2-8
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
LATAM group
Senior management
Top management
M
14
97
W
1
57
Middle management
452
187
M
38
243
305
Operators
Sales Force
Administrative staff
Other professionals
7,054
2,609
1,487
64
162
499
181
165
353
89
191
790
W
4
126
179
838
313
253
456
M
1
17
47
W
0
6
23
447
328
2
12
24
10
26
21
M
0
4
24
72
2
8
7
Other technicians
3,180
2,690
1,203
1,226
Total1
11,522 6,243
4,346 3,395
438
988
307
721
127
244
W
1
5
10
23
9
17
6
94
M
4
22
48
W
1
14
22
M
1
15
50
W
0
8
34
M
2
20
38
W
2
6
30
M
60
418
964
W
9
222
485
700
206
557
462
247
225
10,564
4,691
2
4
28
1
4
9
19
0
15
31
23
45
34
24
889
850
14
22
13
28
31
28
15
40
188
430
1,384
5,866
593
532
894
5,207
165
809
275
1,581
1,457
384
377
19,874 12,633
1 In addition to the 32,507 employees, LATAM's workforce includes approximately 1,000 temporary workers, hired through outsourced companies
for a maximum term of 6 months to fill temporary vacancies due to employee leave or expiration of external contracts.
LATAM GROUP – EMPLOYEE PROFILE
NCG 461: 5.1.3 NUMBER OF INDIVIDUALS BY AGE RANGE
Under 30 years old
From 30 to 40
years old
From 41 to 50
years old
From 51 to 60
years old
From 61 to 70
years old
Over 70 years old
Senior management
Top management
Middle management
Operators
Sales Force
Administrative staff
Other professionals
Other technicians
Total
M
0
8
91
W
0
3
62
M
6
209
412
W
1
136
260
M
31
138
311
2,616
2,022
4,020
1,796
2,585
15
80
398
755
51
80
264
954
3,963
3,436
87
153
630
235
232
420
67
135
243
2,279
7,796
2,396
5,476
1,800
5,310
1,609
870
2,982
2,324
W
7
64
114
657
206
160
165
M
20
53
129
1,108
15
46
83
W
1
18
45
M
3
10
20
196
218
85
53
41
235
674
3
16
24
156
450
W
0
1
4
19
16
7
4
13
64
M
0
0
1
17
1
0
6
6
31
W
0
0
0
1
0
0
0
0
1
EMPLOYEE
CATEGORIES
Senior management
CEO, Vice President,
Director.
Top management
Senior Manager,
Manager, Assistant
Manager.
Middle
management
Area Manager,
Department
Manager.
Operators
Cargo Operations,
Maintenance,
Airport and
Operations Control
Center.
Sales Force
Sales Operations,
Customer Care.
Administrative staff
Support activities
and general roles.
Other professionals
Middle
management in
support activities.
Other technicians
Command and
cabin crew.
Appendices
187
Integrated Report 2022Integrated Report 2022 Employees
BETTER, SIMPLER AND MORE TRANSPARENT
LATAM GROUP – EMPLOYEE PROFILE
NCG 461: 5.1.4 NUMBER OF INDIVIDUALS BY SENIORITY
Senior management
Top management
Middle management
Operators
Sales Force
Administrative staff
Other professionals
Other technicians
Total
Under 3 years
From 3 to 6 years
More than 6 and
up to 9 years
More than 9 and
up to 12 years
Over 12 years old
M
7
30
84
W
0
28
56
4,409
2,601
30
104
536
1,674
6,874
76
108
358
1,384
4,611
M
7
42
133
1,486
39
55
206
488
W
1
27
80
689
101
78
118
384
M
5
63
92
866
32
46
143
389
W
1
36
57
442
72
57
106
442
M
4
83
149
1,326
32
65
163
452
2,456
1,478
1,636
1,213
2,274
W
2
63
71
386
103
74
94
355
1,148
M
37
200
506
2,477
55
160
336
2,863
6,634
W
5
68
221
573
241
215
218
2,642
4,183
LATAM GROUP – EMPLOYEE PROFILE
NCG 461: 5.1.5 INDIVIDUALS WITH DISABILITIES
Senior management
Top management
Middle management
Operators
Sales Force
Administrative staff
Other professionals
Other technicians
Men
Women
0
0
0
14
266
6
15
19
0
0
2
2
77
8
16
11
EMPLOYEE
CATEGORIES
Senior management
CEO, Vice President,
Director.
Top management
Senior Manager,
Manager, Assistant
Manager.
Middle
management
Area Manager,
Department
Manager.
Operators
Cargo Operations,
Maintenance,
Airport and
Operations Control
Center.
Sales Force
Sales Operations,
Customer Care.
Administrative staff
Support activities
and general roles.
Other professionals
Middle
management in
support activities.
Other technicians
Command and
cabin crew.
Appendices
188
Integrated Report 2022Integrated Report 2022 Employees
BETTER, SIMPLER AND MORE TRANSPARENT
LATAM GROUP – EMPLOYEE PROFILE
Contract Type1
GRI 2-7 EMPLOYEES
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
Indefinite term
Fixed term
W
6,243
3,021
478
165
274
1,089
372
M
0
384
165
1
296
4
8
W
0
374
243
0
368
1
5
M
11,522
3,962
823
243
805
1,285
376
LATAM group
19,016| 58.5%
11,642| 35.8%
858| 2.6%
991| 3.0%
NCG 461: 5: 2 LABOR FORMALITY
1 NB: There are no contracts per job or task.
LATAM GROUP – EMPLOYEE PROFILE
Type of work hours
GRI 2-7 EMPLOYEES
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
Ordinary work hours
Part-time1
M
11,287
4,300
988
244
802
1,581
338
W
6,054
3,276
720
165
254
1,443
335
M
235
46
0
0
7
0
46
W
189
119
1
0
21
14
42
LATAM group
19,540| 60.1% 12,247| 37.7% 334| 1.0%
386| 1.2%
NCG: 461: 5.3 LABOR FLEXIBILITY
1 Also includes employees with flexibility pacts for workers with family responsibilities.
Others:
Germany,
Argentina,
Bolivia, Cuba,
Spain, France,
Italy, Mexico,
Oceania(
several
countries),
Netherlands,
Paraguay,
Peru, Portugal,
United
Kingdom, and
Uruguay.
GRI 2-30 COLLECTIVE BARGAINING AGREEMENTS1
NCG 461: 8.2 SUSTAINABILITY INDICATORS | SASB TR-AL- 310a.1
Employees covered by collective bargaining agreements
Unionized employees
1 Based on the total workforce on December 31, 2022.
86%
49%
Overall, the group applies its own
policies to define working conditions
and terms of employment for
employees not covered by collective
bargaining agreements. The exception
is Chile where, since September 2016,
in compliance with the provisions of
the law, some basic and transversal
benefits, such as the benefit of airfare,
defined in a collective union agreement,
are extended to the new hires.
NCG 461: 8.2 SUSTAINABILITY INDICATORS | SASB
TR-AL-310a. 2
During 2022, there were no labor
stoppages involving more than a
thousand workers, nor idle days as a
result of work stoppages.
Appendices
189
Integrated Report 2022Integrated Report 2022 Employees
BETTER, SIMPLER AND MORE TRANSPARENT
NCG 461: 5.7 POSTNATAL LEAVE
Countries
Benefited
group1
Average number of paternity leave days in 2022
Senior
management
Top
management
Middle
management
Operators
Sales
Force
Administrative
staff
Other
professionals
Other
technicians
Germany
Argentina
Bolivia
Brazil
Chile
Colombia
Cuba
Ecuador
Spain
United
States
France
Italy
Mexico
Oceanía
(several
countries)
The
Netherlands
Paraguay
Peru
Portugal
UK
Uruguay
0
0
4.20%
1.92%
15.21%
2.44%
0
1%
1 person
1,77%
0
1 person
0
0
0
0%
2.17%
0
0
0%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
20
5
14
0
0
112
0
0
3
0
0
0
0
0
0
0
0
0
0
0
20
5
14
0
0
0
5
0
0
0
0
0
0
10
0
0
0
0
0
3
20
6
14
0
12
0
0
0
0
0
0
0
0
10
0
0
0
0
0
0
20
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
20
7
14
0
0
0
5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
11
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
20
7
14
0
15
0
0
0
0
0
0
0
0
10
0
0
0
Benefited
group2
0
1.26%
0%
6.92%
50.94%
2.09%
0
1%
2.80%
0%
0
0
3.70%
0.14%
0
1.60%
4.23%
0.03%
0
0.00%
Average number of paternity leave days in 2022
Senior
management
Top
management
Middle
management
Operators
Sales
Force
Administrative
staff
Other
professionals
Other
technicians
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
180
189
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
180
188
124
0
0
0
0
0
0
0
180
0
0
0
0
0
0
0
180
160
124
0
0
0
0
0
0
0
0
0
0
98
0
0
0
0
180
127
124
0
0
112
0
0
0
84
0
0
0
0
0
0
0
180
0
180
155
0
0
0
0
0
0
0
0
0
0
0
98
0
0
0
0
152
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
180
190
124
0
84
0
0
0
0
0
0
0
112
98
0
0
1 Men who used paternity leave in 2022 (% of the total workforce as at December).
2 Women who used maternity leave in 2022 (% of the total workforce as at December).
Appendices
190
Integrated Report 2022Integrated Report 2022 Financial
information
IN THIS CHAPTER
Financial Statements
192
Affiliates and
subsidiaries
292
Rationale
330
Financial information
191
Integrated Report 2022
Financial Statements
NCG 461: 11 FINANCIAL STATEMENTS
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022
CONTENTS
Report of Independent Auditors
Consolidated Statements of Financial Position
Consolidated Statements of Income by Function
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows - Direct Method
Notes to the Consolidated Financial Statements
CHILEAN PESO
CHILEAN UNIDAD DE FOMENTO
-
-
- ARGENTINE PESO
- UNITED STATES DOLLAR
CLP
UF
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
192
Integrated Report 2022
REPORT OF INDEPENDENT AUDITORS
(Free translation from the original in Spanish)
Santiago, March 9, 2023
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, 2022
and 2021 and the consolidated statements of income by function, comprehensive income, changes in
equity and 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. This responsibility
includes the design, implementation and maintenance of a relevant internal control for the preparation
and fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Chilean Generally Accepted Auditing Standards.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. As a consequence we do not
express that kind of opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Santiago, March 9, 2023
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, 2022 and 2021, and the results
of its operations and cash flows for the years then ended in accordance with the International Financial
Reporting Standards.
Emphasis of matter – Substantial Doubt About the Company’s Ability to Continue as a Going Concern
Has Been Removed
In our audit of the consolidated financial statements as of December 31, 2021 and for the year then
ended, management and we previously concluded there was substantial doubt about the Company’s
ability to continue as a going concern. As discussed in Note 2, management has subsequently taken
certain actions, which management and we have concluded remove that substantial doubt. Our opinion
is not modified as a result of this matter.
Jonathan Yeomans Gibbons
RUT: 13.473.972-K
Financial information
193
Integrated Report 2022
21 - Other non financial liabilities ..................................................................................................... 93
22 - Employee benefits ...................................................................................................................... 94
23 - Accounts payable, non-current .................................................................................................. 96
24 - Equity ......................................................................................................................................... 96
25 - Revenue ................................................................................................................................... 103
26 - Costs and expenses by nature .................................................................................................. 104
27 - Other income, by function ....................................................................................................... 107
28 - Foreign currency and exchange rate differences ...................................................................... 108
29 – Earning (Loss) per share ......................................................................................................... 116
30 - Contingencies ........................................................................................................................... 117
31 - Commitments ........................................................................................................................... 137
32 - Transactions with related parties ............................................................................................. 139
33 - Share based payments .............................................................................................................. 141
34 - Statement of cash flows ........................................................................................................... 141
35 - The environment ...................................................................................................................... 146
36 - Events subsequent to the date of the financial statements ....................................................... 148
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.................................................................................. 4
2.1. Basis of Preparation ................................................................................................................. 4
2.2. Basis of Consolidation ........................................................................................................... 14
2.3. Foreign currency transactions ................................................................................................ 15
2.4. Property, plant and equipment ............................................................................................... 16
2.5. Intangible assets other than goodwill ..................................................................................... 17
2.6. Borrowing costs ..................................................................................................................... 18
2.7. Losses for impairment of non-financial assets ....................................................................... 18
2.8. Financial assets....................................................................................................................... 18
2.9. Derivative financial instruments and embedded derivatives.................................................. 19
2.10. Inventories............................................................................................................................ 20
2.11. Trade and other accounts receivable .................................................................................... 21
2.12. Cash and cash equivalents.................................................................................................... 21
2.13. Capital .................................................................................................................................. 21
2.14. Trade and other accounts payables....................................................................................... 21
2.15. Interest-bearing loans ........................................................................................................... 21
2.16. Current and deferred taxes ................................................................................................... 22
2.17. Employee benefits ................................................................................................................ 23
2.18. Provisions............................................................................................................................. 23
2.19. Revenue from contracts with customers .............................................................................. 24
2.20. Leases................................................................................................................................... 25
2.21. Non-current assets (or disposal groups) classified as held for sale ...................................... 27
2.22. Maintenance ......................................................................................................................... 27
2.23. Environmental costs ............................................................................................................. 27
3 - Financial risk management .......................................................................................................... 28
3.1. Financial risk factors .............................................................................................................. 28
3.2. Capital risk management........................................................................................................ 43
3.3. Estimates of fair value............................................................................................................ 43
4 - Accounting estimates and judgments........................................................................................... 46
5 - Segment information.................................................................................................................... 49
6 - Cash and cash equivalents ........................................................................................................... 50
7 - Financial instruments ................................................................................................................... 51
8 - Trade and other accounts receivable current, and non-current accounts receivable .................... 52
9 - Accounts receivable from/payable to related entities .................................................................. 55
10 - Inventories ................................................................................................................................. 56
11 - Other financial assets ................................................................................................................. 57
12 - Other non-financial assets.......................................................................................................... 58
13 - Non-current assets and disposal group classified as held for sale ............................................. 59
14 - Investments in subsidiaries ........................................................................................................ 60
15 - Intangible assets other than goodwill......................................................................................... 63
16 - Property, plant and equipment ................................................................................................... 66
17 - Current and deferred tax ............................................................................................................ 75
18 - Other financial liabilities............................................................................................................ 79
19 - Trade and other accounts payables ............................................................................................ 89
20 - Other provisions......................................................................................................................... 90
Financial information
194
Integrated Report 2022
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
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
Total current assets other than non-current assets
(or disposal groups) classified as held for sale
Non-current assets (or disposal groups) classified as
held for sale
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
Note
6 - 7
7 - 11
12
7 - 8
7 - 9
10
17
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
1,216,675
503,515
191,364
1,008,109
19,523
477,789
33,033
1,046,835
101,138
108,368
881,770
724
287,337
41,264
3,450,008
2,467,436
13
86,416
146,792
7 - 11
12
7 - 8
15
16
17
3,536,424
2,614,228
15,517
148,378
12,743
1,080,386
8,411,661
5,915
9,674,600
15,622
125,432
12,201
1,018,892
9,489,867
15,290
10,677,304
13,211,024
13,291,532
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Other financial liabilities
Trade and other accounts payables
Accounts payable to related entities
Other provisions
Current tax liabilities
Other non-financial liabilities
Total current liabilities
Non-current liabilities
EQUITY
Other financial liabilities
Accounts payable
Other provisions
Deferred tax liabilities
Employee benefits
Other non-financial liabilities
Total non-current liabilities
Total liabilities
Share capital
Retained earnings/(losses)
Treasury Shares
Other equity
Other reserves
Parent's ownership interest
Non-controlling interest
Total equity
Total liabilities and equity
Note
7 - 18
7 - 19
7 - 9
20
17
21
7 - 18
7 - 23
20
17
22
21
24
24
24
24
24
14
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
802,841
1,627,992
12
14,573
1,026
2,642,251
5,088,695
5,979,039
326,284
927,964
344,625
93,488
420,208
8,091,608
4,453,451
4,839,251
661,602
27,872
675
2,332,576
12,315,427
5,948,702
472,426
712,581
341,011
56,233
512,056
8,043,009
13,180,303
20,358,436
13,298,486
(7,501,896)
(178)
39
(5,754,173)
42,278
(11,557)
30,721
13,211,024
3,146,265
(8,841,106)
(178)
-
(1,361,529)
(7,056,548)
(10,356)
(7,066,904)
13,291,532
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
Financial information
195
Integrated Report 2022
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME BY FUNCTION
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the year ended
December 31,
2022
ThUS$
2021
ThUS$
9,362,521
4,884,015
(8,103,483)
(4,963,485)
1,259,038
154,286
(426,599)
(576,429)
(531,575)
1,679,934
(347,077)
(79,470)
227,331
(291,820)
(439,494)
(535,824)
(2,337,182)
30,674
1,211,578
(3,425,785)
1,052,295
(942,403)
25,993
(1,412)
21,107
(805,544)
131,408
(5,393)
1,346,051
(4,084,207)
(8,914)
(568,935)
1,337,137
(4,653,142)
1,339,210
(4,647,491)
(2,073)
(5,651)
1,337,137
(4,653,142)
0.013861
0.013592
(7.66397)
(7.66397)
Note
5 - 25
26
27
26
26
26
26
26
26
26
17
14
29
29
Revenue
Cost of sales
Gross margin
Other income
Distribution costs
Administrative expenses
Other expenses
Gain (losses) from restructuring activities
Other gains/(losses)
Income (Loss) from operation activities
Financial income
Financial costs
Foreign exchange
Result of indexation units
Income (Loss) before taxes
Income tax (expense) / benefits
NET INCOME (LOSS)
Income (Loss) attributable to owners
of the parent
Loss attributable to
non-controlling interest
Net Income (Loss)
EARNING (LOSS) PER SHARE
Basic earning (loss) per share (US$)
Diluted earning (loss) per share (US$)
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
NET INCOME/(LOSS)
Components of other comprehensive income
that will not be reclassified to income before taxes
Other comprehensive income, before taxes,
gains (losses) by new measurements
on defined benefit plans
T otal 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
Other comprehensive loss, before taxes,
currency translation differences
Cash flow hedges
Gains (losses) on cash flow hedges before taxes
Reclassification adjustment on cash flow hedges before tax
Amounts removed from equity and included in the carrying amount
of non-financial assets (liabilities) that were acquired or incurred
through a highly probable hedged forecast transaction, before tax
Other comprehensive income (losses),
before taxes, cash flow hedges
Change in value of time value of options
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),
24
24
24
24
24
Note
For the year ended
December 31,
2022
T hUS$
2021
T hUS$
1,337,137
(4,653,142)
24
(9,935)
10,018
(9,935)
10,018
(32,563)
20,008
(32,563)
20,008
52,017
31,293
38,870
(16,641)
(8,143)
-
75,167
22,229
(24,005)
(23,692)
19,946
6,509
before taxes, changes in the time value of the options
(4,059)
(17,183)
T otal other comprehensive income (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 (loss) tax relating to new measurements on defined benefit plans 17
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
T otal Other comprehensive income (loss)
T otal comprehensive income (loss)
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income (loss) attributable to non-controlling interests
T OT AL COMPREHENSIVE INCOME (LOSS)
38,545
28,610
25,054
35,072
567
(2,783)
567
(2,783)
(235)
(58)
(235)
28,942
1,366,079
1,367,315
(1,236)
1,366,079
(58)
32,231
(4,620,911)
(4,616,914)
(3,997)
(4,620,911)
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
Financial information
196
Integrated Report 2022
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
C urre nc y
C a s h flo w
Othe r
e quity
ThUS $
Tre a s ury
tra ns la tio n
he dging
s ha re s
ThUS $
re s e rve
ThUS $
re s e rve
ThUS $
Ga ins
(Lo s s e s )
Ac tua ria l
ga ins
fro m c ha nge s
in the tim e
va lue o f the
o ptio ns
ThUS $
o r lo s s e s o n
de fine d
be ne fit
pla ns
re s e rve
ThUS $
S ha re s ba s e d
Othe r
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 $
-
-
-
-
-
(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)
-
-
-
-
-
-
-
-
(33,401)
(33,401)
-
74,932
74,932
-
(4,059)
(4,059)
-
(9,367)
(9,367)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
28,105
28,105
-
(4,340,749)
(4,340,749)
(80,000)
(4,420,749)
(80,000)
(4,420,749)
1,339,210
-
1,339,210
-
-
-
-
1,339,210
28,105
1,367,315
800,000
4,909,480
22,031
5,731,511
(2,073)
837
(1,236)
-
-
35
35
1,337,137
28,942
1,366,079
800,000
4,909,480
22,066
5,731,546
No te
24
S ha re
c a pita l
ThUS $
3,146,265
-
-
-
24-34
800,000
24
-
9,250,229
24-34
9,352,221
10,152,221
(9,250,190)
39
Equity a s o f J a nua ry 1, 2022
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 pe rio d
Othe r c o m pre he ns ive inc o m e
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
Equity is s ue
Inc re a s e fo r o the r c o ntributio ns
fro m the o wne 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
C lo s ing ba la nc e a s o f
De c e m be r 31, 2022
13,298,486
39
(178)
(3,805,560)
36,542
(21,622)
(28,117)
37,235
(1,972,651)
(5,754,173)
(7,501,896)
42,278
(11,557)
30,721
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
Financial information
197
Integrated Report 2022
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the parent
Change in other reserves
Gains (Losses)
Actuarial gains
from changes
or losses on
Currency
Cash flow
in the time
defined benefit
Shares based
Note
Share
capital
ThUS$
Treasury
shares
ThUS$
translation
reserve
ThUS$
hedging
reserve
ThUS$
value of the
options
ThUS$
plans
reserve
ThUS$
payments
reserve
ThUS$
Other
sundry
reserve
ThUS$
Total
other
reserve
ThUS$
Retained
earnings/(losses)
ThUS$
Parent's
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
Equity as of January 1, 2021
Increase (decrease) by application
of new accounting standards
Initial balance restated
Total increase (decrease) in equity
Net income/(loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with shareholders
Increase (decrease) through
transfers and other changes, equity
Total transactions with shareholders
Closing balance as of
3,146,265
(178)
(3,790,513)
(60,941)
2 - 25
-
3,146,265
-
(178)
-
(3,790,513)
380
(60,561)
25
25-34
-
-
-
-
-
-
-
-
-
-
-
18,354
18,354
-
22,171
22,171
-
-
-
-
-
(380)
(380)
-
(17,183)
(17,183)
-
-
-
(25,985)
-
7,235
7,235
-
-
-
-
-
-
-
(25,985)
37,235
2,452,019
(1,388,185)
(4,193,615)
(2,435,713)
(6,672)
(2,442,385)
-
37,235
-
2,452,019
-
(1,388,185)
-
(4,193,615)
-
(2,435,713)
-
-
-
-
30,577
30,577
(4,647,491)
-
(4,647,491)
(4,647,491)
30,577
(4,616,914)
-
(6,672)
(5,651)
1,654
(3,997)
-
(2,442,385)
(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)
December 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 36 form an integral part of these consolidated financial statements.
Financial information
198
Integrated Report 2022
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - DIRECT METHOD
Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services
Other cash receipts from operating activities
Payments for operating activities
Payments to suppliers for the supply goods and services
Payments to and on behalf of employees
Other payments for operating activities
Income taxes (paid)
Other cash inflows (outflows)
Net cash (outflow) inflow from operating activities
Cash flows from investing activities
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 (outflow) inflow from investing activities
Proceeds from the issuance of shares
Amounts from the issuance of other equity instruments
Amounts raised from long-term loans
Amounts raised from short-term loans
Loans from Related Entities
Loans repayments
Payments of lease liabilities
Payments of loans to related entities
Dividends paid
Interest paid
Other cash (outflows) inflows
Net cash inflow (outflow) from financing activities
Net (decrease) 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 (decrease) increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
For the year ended
December 31,
Note
2022
2021
ThUS$
ThUS$
10,549,542
117,118
(9,113,130)
(1,039,336)
(272,823)
(14,314)
(130,260)
5,359,778
52,084
(4,391,627)
(941,068)
(156,395)
(9,437)
(87,576)
96,797
(174,241)
-
417
(331)
56,377
(780,538)
(50,116)
18,934
6,300
(748,957)
549,038
3,202,790
2,361,875
4,856,025
770,522
(8,759,413)
(131,917)
(1,008,483)
-
(521,716)
(463,766)
854,955
202,795
(32,955)
169,840
1,046,835
1,216,675
752
35
(208)
105,000
(597,103)
(88,518)
9,056
18,475
(552,511)
-
-
-
661,609
130,102
(463,048)
(103,366)
-
-
(104,621)
(11,034)
109,642
(617,110)
(31,896)
(649,006)
1,695,841
1,046,835
34
34
34
34
34
34
34
32
34
34
34
34
6
6
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022
NOTE 1 - GENERAL INFORMATION
LATAM Airlines Group S.A. (“LATAM” or the "Company") is an open stock company which
holds the values inscribed in the Registro de Valores of 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. Latam’s ADR are currently 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 announced their emergence on November 3, 2022, from
their reorganization proceedings 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 Presidente Riesco No. 5711,
Las Condes commune.
As of December 31, 2022, the Company's statutory capital is represented by 606,407,693,000
ordinary shares without nominal value. Of such amount, as of said date, 605,231,854,725 shares
were subscribed and paid. The foregoing, considering the capital increase approved by the
shareholders of the company at an extraordinary meeting held on July 5, 2022, in the context of the
implementation of its reorganization plan approved and confirmed in the Chapter 11 Proceedings.
The major shareholders of the Company considering the total amount of subscribed and paid shares
are Banco de Chile on behalf of State Street which owns 46,96%, Banco de Chile on behalf of Non-
Resident Third Parties with 12.68%, Delta Air Lines with 10.03% and Qatar Airways with 10,02%
ownership (9.999999992% considering the total amount of authorized shares).
As of December 31, 2022, the Company had a total of 2,092 shareholders in its registry. At that
date, approximately 0.01% of the Company's capital stock was in the form of ADRs.
During 2022, the Company had an average of 30,877 employees, ending this year with a total
number of 32,507 people, distributed in 4,627 Administration employees, 16,803 in Operations,
7,423 Cabin Crew and 3,654 Command crew.
Financial information
199
Integrated Report 2022
2
3
The main subsidiaries included in these consolidated financial statements are as follows:
b)
Financial Information
a) Percentage ownership
Tax No .
Co mp any
o f o rig in
Currency
Direct
Ind irect
To t al
Direct
Ind irect
To t al
%
%
%
%
%
%
Co unt ry
Funct io nal
As Decemb er 3 1, 2 0 2 2
As Decemb er 3 1, 2 0 2 1
9 6 .9 6 9 .6 8 0 -0 Lan Pax Gro up S.A. and Sub s id iaries
Fo reig n
Lat am 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 nnect a Co rp o rat io n
Prime Airp o rt Services Inc. and Sub s id iary
9 6 .9 51.2 8 0 -7 Trans p o rt e 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 .9 9 59
0 .0 0 4 1
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
9 9 .8 10 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
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
10 0 .0 0 0 0
0 .0 0 0 0
10 0 .0 0 0 0
10 0 .0 0 0 0
Las er Carg o S.R.L.
Arg ent ina
ARS
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
Lan Carg o Overs eas Limit ed 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.
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
Lat am Finance Limit ed
Peuco Finance Limit ed
Pro fes io nal Airline Services INC.
J arlet ul S.A.
Lat amTravel S.R.L.
76 .2 6 2 .8 9 4 -5 Lat am Travel Chile II S.A.
Fo reig n
Fo reig n
Lat am Travel S.A.
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
Arg ent ina
Brazil
US$
US$
US$
CLP
US$
US$
US$
US$
US$
US$
ARS
BRL
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
9 9 .9 0 0 0
0 .10 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 .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
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 .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
9 4 .0 10 0
5.9 9 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
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
Fo reig n
Fo reig n
S ta te m e nt o f fina nc ia l po s itio n
Ne t Inc o m e
As o f De c e m be r 31, 2022
As o f De c e m be r 31, 2021
F o r the pe rio d e nde d
De c e m be r 31,
2022
2021
Ta x No .
C o m pa ny
As s e ts
Lia bilitie s
Equity
As s e ts
Lia bilitie s
Equity
Ga in /(lo s s )
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
ThUS $
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 (*)
35,991
15,3 3 4
2 0 ,6 56
96.969.690-8 La n C a rgo Inve rs io ne s S .A. a nd S ubs idia ry (*)
220,144
14 8 ,4 8 9
11,6 6 1
202,402
96.969.680-0 La n P a x Gro up S .A. a nd S ubs idia rie s (*)
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
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 (*)
F o re ign
96.951.280-7 Tra ns po rte Aé re o S .A.
96.631.520-2 F a s t Air Alm a c e ne s de C a rga S .A.
96.575.810-0 Inve rs io ne s La n S .A.
96.847.880-K
F o re ign
F o re ign
F o re ign
F o re ign
F o re ign
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
P ro fe s io na l Airline S e rvic e s INC .
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.
F o re ign
F o re ign
La ta m Tra ve l S .A.
392,232
335,773
394,378
78,905
25,118
283,166
16,150
(3)
1,281
1,417
3,011
-
56,895
16
92
368
7,303
1,72 7,9 6 8
(1,3 4 2 ,6 8 7)
432,271
1,648,715 (1,236,243)
(12 0 ,717)
(7,2 8 9 )
2 8 1,178
54 ,59 5
2 12 ,0 9 4
18 2 ,2 8 4
2 2 ,3 3 4
2 4 ,3 2 5
177,10 9
12 ,6 2 3
-
56 ,571
8 13
10 6 ,0 57
3 ,52 7
(3 )
484,388
721,484
61,068
24,654
471,094
18,303
(5)
36,617
56
1,110
1,2 2 5
3 0 7
1,284
2,004
417,067
537,180
19,312
25,680
327,955
10,948
-
14,669
113,930
45
467
67,321
184,304
41,756
(1,026)
143,139
7,355
(5)
21,940
23,563
1,239
1,537
(12 ,72 6 )
(10 9 ,3 9 2 )
(1,2 3 0 )
14 ,8 14
1,8 3 8
1,59 0
1,16 9
19 0
(3 6 ,19 0 )
(56 ,13 5)
1,154
-
4 8
-
(1,2 8 7)
(8 0 6 )
(11,9 0 1)
(54 ,9 6 1)
(14 )
77
(9 0 )
18 1
2 11,517
(2 0 8 ,50 6 )
1,310,733
1,688,821
(378,088)
16 9 ,58 2
(10 4 ,512 )
-
53 ,78 6
1,10 9
5
1,2 3 4
2 ,715
-
1,307,721
1,307,721
3 ,10 9
(1,0 9 3 )
8 7
(8 6 6 )
4 ,58 8
61,659
58,808
24
64
588
3,778
1,116
132
1,457
6,135
-
2,851
(1,092)
(68)
(869)
2,357
-
2 58
(2 )
154
2
-
2 78
(50 )
(2 3 )
2 9
(6 ,18 7)
(2 ,8 0 4 )
TAM S .A. a nd S ubs idia rie s (*)
3,497,848
4 ,2 3 1,54 7
(73 3 ,6 9 9 )
2,608,859
3,257,148
(648,289)
(6 9 ,9 3 2 )
(756 ,6 3 3 )
(*) As of December 31, 2022, 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 arises 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.
(*)
The Equity reported corresponds to Equity attributable to owners of the parent, it does not
include Non-controlling participation.
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,
earmarked for aircraft financing. 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.
Changes occurred in the consolidation perimeter between January 1, 2021 and December 31, 2022,
are detailed below:
(1)
Incorporation or acquisition of companies
- On December 22, 2022, LATAM Airlines Group S.A. made the purchase of
1,390,468,967 preferred shares of Latam Travel S.A. Consequently, the shareholding
composition of Latam Travel S.A. is as follows: Lan Pax Group S.A. with 5.69%,
Inversora Cordillera S.A. with 0.30% and LATAM Airlines Group S.A. with
Financial information
200
Integrated Report 2022 4
5
94.01%. These transactions were between LATAM Airlines Group entities and
therefore did not generate any effects within the consolidated financial statements.
- On January 21, 2021, Transporte Aéreos del Mercosur S.A. puchased 2,392,166
preferred shares of Inversora Cordillera S.A. from a non-controlling shareholder.
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.
from a non-controlling shareholder.
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%.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following describes the principal accounting policies adopted in the preparation of these
consolidated financial statements.
2.1.
Basis of Preparation
These consolidated financial statements of LATAM Airlines Group S.A. as of December 31, 2022
and 2021, for the three years ended December 31, 2022 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 2021 consolidated financial statements, except for the
standards and interpretations adopted as of January 1, 2022.
Amendment to IFRS 3: Business combinations.
Amendment to IAS 37: Provisions, contingent liabilities and
contingent assets.
Amendment to IAS 16: Property, plant and equipment.
to
International Financial Reporting
Improvements
Standards
Financial (2018-2020 cycle) IFRS 1: First-time adoption of
IFRS 9:
reporting
international
Financial Instruments, illustrative examples accompanying
IFRS 16: Leases, IAS 41: Agriculture
standards,
financial
May 2020
May 2020
May 2020
May 2020
01/01/2022
01/01/2022
01/01/2022
01/01/2022
The application of these accounting pronouncements as of January 1, 2022, had no significant effect
on the Company's consolidated financial statements.
(b) Accounting pronouncements not in force for the financial year beginning on January 1, 2022:
Date of issue
Effective Date:
(i) Standards and amendments
Amendment to IAS 12: Income taxes.
Amendment to IAS 8: Accounting policies, changes in
accounting estimates and error.
May 2021
February 2021
Amendment to IAS 1: Presentation of financial statements.
January 2020
IFRS 17: Insurance contracts, replaces IFRS 4.
May 2017
Amendment to IAS 1: Non-current liabilities with covenants October 2022
Amendment to IFRS 16: Leases
Initial Application of IFRS 17 and IFRS 9 — Comparative
Information (Amendment to IFRS 17)
September 2022
December 2021
01/01/2023
01/01/2023
01/01/2024
01/01/2023
01/01/2024
01/01/2024
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
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
(a)
Application of new standards for the year 2022:
i) Going Concern
(a.1.)
Accounting pronouncements with implementation effective from January 1, 2022:
(i) Standards and amendments
Date of issue
Effective Date:
These consolidated financial statements have 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.
Financial information
201
Integrated Report 2022 6
7
The Company previously disclosed that as of December 31, 2021, as a result of the Chapter 11
proceedings, the fulfillment of the Company's obligations and the financing of ongoing operations
were subject to material uncertainty due to the COVID-19 pandemic and the impossibility of
knowing as of that date, their duration and, consequently, those events or conditions indicated that a
material uncertainty existed that created significant doubt or raised substantial doubt about the
Company's ability to continue as a going concern..
On November 3, 2022, LATAM Parent and certain of its affiliates emerged from the Chapter 11
Proceedings. The emergence from the Chapter 11 proceedings and consummation of the Plan
addressed liquidity concerns as it provided for new funds originated by the new financing and the
capital restructuring. As a result, the Company expects that sufficient cash flows will be generated
to finance the debts and the working capital requirements working capital for the next twelve
months. Therefore, there is no longer a material uncertainty that may cast significant doubt or cast
substantial doubt to continue as a going concern during the twelve months after the date of issuance
of the financial statements.
ii) Chapter 11 Filing
Due to the effects on the operation of the restrictions established in the countries to control the
effects of the COVID-19 pandemic, on May 25, 2020 the Board resolved unanimously that
LATAM Parent and some subsidiaries of the group should initiate a reorganization process in the
United States of America according to the rules established in the Bankruptcy Code title 11 by
filing a voluntary petition for relief in accordance with the same, which was carried out on May 26,
2020. Subsequently, Piquero Leasing Limited (July 7, 2020) and TAM S.A. joined this process and
its subsidiaries in Brazil (July 9, 2020) (the voluntary petitions, collectively, the “Bankruptcy
Filing” and each LATAM entity that filed a petition, a “Debtor” and jointly, the "Debtors”).
The Bankruptcy Filing for each of the Debtors (each one, respectively, a “Petition Date”) was
jointly administered under the caption “In re LATAM Airlines Group S.A. et al.” Case Number 20-
11254. Prior to November 3, 2022, the Debtors operated their businesses as “debtors-in-
possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Bankruptcy Filing
permitted the Company to reorganize and improve liquidity, wind down unprofitable contracts and
amend its capacity purchase agreements to enable sustainable profitability. As of November 3, 2022
(the “Effective Date”), the Plan (as defined below) was substantially consummated and the Debtors
have each emerged from the Chapter 11 proceedings as the “Reorganized Debtors”. However,
according to the rules of the Bankruptcy Code, the Chapter 11 proceedings of the Reorganized
Debtors continued to be ongoing after the Effective Date to resolve certain remaining matters.
Later, on December 14, 2022, the Bankruptcy Court entered an order consolidating the
administration of all remaining matters in the lead Chapter 11 case of LATAM Parent and closing
the cases of its debtor-related person. Therefore, as of the date hereof the Chapter 11 proceeding has
been closed with respect to LATAM Parent’s subsidiaries that were part thereof, and continue
ongoing solely with respect to LATAM Parent to resolve certain remaining matters. The
Bankruptcy Court continues to administer the Chapter 11 proceedings for LATAM Parent in order
to resolve the few remaining matters therein, including resolving remaining claims.
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 proceedings with respect to
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 has become 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. Bearing in mind that on November 3, 2022, the Effective Date of the
Reorganization Plan approved and confirmed in the main proceedings occurred, on November 10,
2022, the representative of the foreign proceeding filed with the court his last monthly report under
the Protocol on Cross-Border Communications
Operation and Implication of the Bankruptcy Filing
As of the Effective Date, the Plan was substantially consummated. Pursuant to the Plan, the
Reorganized Debtors are permitted to operate their businesses and manage their properties without
supervision of the Bankruptcy Court and free of the restrictions of the Bankruptcy Code.
Plan of Reorganization
On November 26, 2021, the Debtors filed a joint plan of reorganization (as amended or revised, the
“Plan” or “Plan of Reorganization”) and the related disclosure statement (as amended or revised,
the “Disclosure Statement”) with the Bankruptcy Court. As detailed in the Disclosure Statement,
the Plan was supported by a restructuring support agreement executed among the Debtors, creditors
holding more than 70% of the general unsecured claims asserted against LATAM Airlines Group
S.A., and holders of more than 50% of LATAM Airlines Group S.A.’s existing equity (the
“Restructuring Support Agreement” or “RSA”). From time to time in the Chapter 11 Cases, the
Debtors filed revised versions of the Plan and associated Disclosure Statement. On February 10,
2022 the Debtors executed a joinder Agreement to the RSA (each joinder agreement a “W&C
Creditor Group Joinder Agreement”), effective as of February 10, 2022 under which certain
creditors agreed to commitments made by the Commitment Parties under the RSA.
On March 21, 2022, the Bankruptcy Court entered an order approving the adequacy of the
Disclosure Statement and procedures for the solicitation with respect to the Plan (the “Disclosure
Statement Order”). Pursuant to the Disclosure Statement Order, the Debtors distributed the
solicitation version of the Plan, the Disclosure Statement (as approved), voting ballots and certain
other solicitation materials to creditors.
In accordance with the Restructuring Support Agreement, on January 12, 2022 the Debtors filed a
motion seeking approval to enter into a backstop commitment agreement with certain shareholders,
and a backstop commitment agreement with certain creditors (the “Backstop Agreements”). On
March 15, 2022, the Bankruptcy Court issued a memorandum decision approving the Debtors’
entry into the Backstop Agreements and issued a corresponding order (the “Backstop Order”) on
March 22, 2022.
As part of their overall reorganization process, the Debtors also 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”)
The Debtors received objections to the Plan from certain parties, including the United States
Trustee, the Official Committee of Unsecured Creditors (the “Committee”), Banco del Estado de
Chile in its capacity as indenture trustee under certain Chilean local bonds issued by LATAM
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Parent (“BancoEstado”), an ad hoc group of unsecured claimants and a group of holders of claims
against LATAM affiliate TAM Linhas Aéreas S.A. Following the Plan objection deadline, the
Debtors participated in a mediation with BancoEstado, the Committee and the parties to the RSA in
an effort to resolve their objections to the Plan and related disputes, which proved successful. On
May 11, 2022, the Debtors filed a revised version of the Plan reflecting the terms of a settlement
with the parties.
At a hearing held on May 17, 18 and 20, 2022, the Bankruptcy Court considered the remaining
objections that had not been resolved pursuant to the settlement. On June 18, 2022, the
Bankruptcy Court issued a memorandum decision approving the Plan and overruling all
remaining objections (the “Memorandum Decision”) and entered an order confirming the Plan
(the “Confirmation Order”).
Certain parties in interest appealed the Bankruptcy Court’s decisions. On June 21, 2022, the Ad
Hoc Group of Unsecured Claimants filed a notice of appeal of the memorandum decision and order
approving entry into the Backstop Agreements, as well as the Memorandum Decision approving
the Plan and the Confirmation Order.
On June 27, 2022, the Ad Hoc Group of Unsecured Claimants filed a motion seeking to stay the
Confirmation Order pending appeal. On July 16, 2022, the motion to stay was denied by the
Bankruptcy Court. On June 23, 2022, the TLA Claimholders Group also filed a motion seeking to
stay the Confirmation Order pending appeal or, in the alternative, an affirmative injunction
requiring the Debtors to fund an escrow account in the amount of the outstanding post-petition
interest. On July 8, 2022, the Bankruptcy Court issued a bench memorandum and order denying the
TLA Claimholders Group’s motion to stay. On June 28, 2022, Columbus Hill Capital Management
(“Columbus Hill”) filed a notice of appeal of the Memorandum Decision and the Confirmation
Order, which it later withdrew on July 5, 2022. On July 13, 2022, the Debtors filed a motion to
approve a settlement agreement with Columbus Hill, which was granted by the Bankruptcy Court
on July 21, 2022, bringing full and final resolution to the Columbus Hill appeal and any other
potential objections from this claimant.
On August 31, 2022, after briefing and oral argument by the parties, the District Court issued an
opinion denying the appeals of both the Ad Hoc Group of Unsecured Claimants and the TLA
Claimholders Group. The District Court rejected the Ad Hoc Group of Unsecured Claimants’
arguments that the Plan and Backstop Agreement violated the Bankruptcy Code and held that the
Backstop Agreement did not constitute impermissible vote buying. The Ad Hoc Group of
Unsecured Claimants did not further appeal the District Court’s decision.
With respect to the TLA Claimholders Group’s appeal, the District Court denied its request for
payment of post-petition interest on its claims and found that the Bankruptcy Court was not
mistaken with respect to its factual finding that TLA was insolvent. The District Court also denied
the TLA Claimholders Group’s motion to stay the Confirmation Order.
On September 2, 2022 the TLA Claimholders Group filed a notice of appeal in the District Court
(the “Second Circuit Appeal”) further appealing the Confirmation Order to the United States Court
of Appeals for the Second Circuit (the “Second Circuit”). Both parties filed briefs regarding the
merits of the Second Circuit Appeal, oral argument occurred on October 12, 2022, and on
December 14, 2022, the Second Circuit unanimously affirmed the District Court’s decision
rejecting the Second Circuit Appeal. No further appeals have been filed to date.
As of the Effective Date, the Plan was substantially consummated. Pursuant to the Plan, the
Company received an infusion of approximately US$ 8.19 billion through a mix of new equity,
convertible notes and debt, which enabled the Company to exit Chapter 11 with appropriate
capitalization to effectuate its business plan. Upon emergence, the Company had total debt of
approximately US$ 6.8 billion, cash and cash equivalents of approximately US$1.1 billion and
revolving undrawn facilities in the amount of US$1.1 billion. Specifically, the Plan provided that:
The Company conducted a US$ 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 were issued by the Company, all of which were
preemptively offered to shareholders. The preemptive rights offering period closed on
October 12, 2022. For those securities not subscribed by the Company’s shareholders
during the respective preemptive rights period:
o New Convertible Notes Class A, hereinafter Class G Convertible notes (by the
denomination with which they were registered in the Registro de Valores of the
CMF), were delivered to certain general unsecured creditors of the Company in
settlement of their allowed claims under the Plan.
The Issuance conditions:
Nominal Value : Approximately Th US$1,257,003
Conversion Ratio: 15,9046155045956. The Convertible Notes Class G Conversion
Ratio shall step down by 50% on the day that is sixty (60) days after the Effective
Date.
Backup Actions: 19,992,142,087
Maturity: 31 Dec. 2121
Interest rate: 0%
Conversion Conditions: They may be converted into shares of the Company within
twelve months from the Effective Date of the Plan. As soon as 50% of the holders
of New Class G Convertible Notes have opted to convert, the remaining Class G
Convertible Notes will be automatically converted.
o New Convertible Notes Class B, hereinafter Class H Convertible notes (by the
denomination with which they were registered in the Registro de Valores of the
CMF), were subscribed and purchased by the shareholder that are part of the RSA.
The Issuance conditions:
Nominal Value: Approximately ThUS$1,372,840
Conversion Ratio: 92.2623446840237. The conversion ratio of Class H
Convertible Notes will be reduced by 50% sixty (60) days after the fifth
anniversary counted from the Effective Date .
Backup Actions: 126,661,409,136
Maturity: 31 Dec. 2121
Interest rate: 1% interest rate payable in cash annually with no interest in the first
60 days.
Conversion Conditions:
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(a) First Convertible Notes Class H Conversion Period: Each holder of
Convertible Notes Class H will have the ability to convert its Convertible
Notes Class H into shares of the Company within sixty (60) days from the
Effective Date.
(b) Second Convertible Notes Class H Conversion Period: Each holder of
Convertible Notes Class H will have the subsequent ability to convert their
Convertible Notes Class H into shares of the Company beginning on the fifth
(5th) anniversary of the Effective Date.
o New Convertible Notes Class C, hereinafter Class I Convertible notes (by the
denomination with which they were registered in the Registro de Valores of the
CMF), were provided to certain general unsecured creditors in exchange for a
combination of new money to the Company and the settlement of their allowed
claims under the Plan, subject to certain limitations and holdbacks by the
backstopping parties.
The Issuance conditions:
Nominal Value: Approximately ThUS$6,863,427
Conversion Ratio: 56.143649821654. The Convertible Notes Class C Conversion
Ratio shall step down by 50% on the day that is sixty (60) days after the Effective
Date.
Backup Actions: 385,337,858,290
Maturity: 31 Dec. 2121
Interest rate: 0%
Conversion Conditions: They may be converted into shares within twelve months
from the Effective Date of the Plan. As soon as 50% of the holders of Class I
Convertible Notes have opted to convert, then the remaining Class I Convertible
Notes will be automatically converted. The allocated amounts of the unused Class I
Convertible Notes were distributed to the supporting parties of the Class I
Convertible Notes in accordance with the respective Support Agreement.
The election period for the Convertible Notes Class G and Convertible Notes Class I by
creditors ended on October 6, 2022.
General unsecured creditors that elected to receive Convertible Notes Class G or
Convertible Notes Class I were entitled to receive a one-time cash distribution in an
aggregate amount of approximately US$ 175 million, distributed among the general
unsecured creditors that opted to receive Convertible Notes Class G and I. (see Note 36).
The Convertible Notes Classes H and I were issued, totally or partially, in consideration of
a new money contribution for the aggregate amount of approximately US$ 4.64 billion
fully backstopped by the parties to the RSA.
In lieu of receiving Convertible Notes Class G or Convertible Notes Class I (and the
aforementioned one-time cash distribution), general unsecured creditors were provided
with the alternative of opting to receive New Local Notes issued by LATAM. As set forth
in the Plan and based on the elections made by general unsecured creditors, such notes
were issued in the amount of UF 3,818,042 (equal to approximately US$ 130 million as of
the date of their issuance).
Pursuant to the Plan and Backstop Agreements, LATAM raised up to US$ 500 million through a
new revolving credit facility and approximately US$ 2.25 billion in total new money debt financing
through exit financing (new term loan and new notes).
On September 2, 2022, the Convertible Notes Classes G, H and I together with the shares
contemplated in the Plan were registered with the Chilean Registro de Valores of the Financial
Market Commission (the “CMF”). The CMF approved the New Local Notes on September 5,
2022. The Debtors established September 12, 2022 as the record date with respect to creditors
entitled to participate in the Convertible Notes Class G and Convertible Notes Class I, and
commenced the offering of the Convertible Notes to claimholders on the same day.
As of December 31, 2022, 94,14% of the Convertible Notes Class G, 99.997% of the
Convertible Notes Class H and 99.999% of the Convertible Notes Class I had been converted to
equity, respectively.
On November 17, 2022 the Reorganized Debtors filed a motion to consolidate the
administration of certain remaining matters, including the reconciliation of claims that have not
yet been allowed or disallowed, in the lead Chapter 11 case of LATAM Parent and for entry of
a final decree closing the Chapter 11 cases of LATAM Parent’s debtor -affiliates. The
Bankruptcy Court entered an Order on December 14, 2022 granting the motion to consolidate
the administration of remaining matters in the lead Chapter 11 case of LATAM Parent. As a
result, the dockets for all 37 debtor-affiliates of LATAM Parent were marked “closed” on
December 23, 2022.
Chapter 11 Milestones during the period covered by these consolidated financial statements
Assumption, Amendment & Rejection of Executory Contracts & Leases
Prior to the Effective Date, pursuant to the Bankruptcy Code and the Federal Rules of Bankruptcy
Procedure (the “Bankruptcy Rules”), the Debtors were 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
relieves 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 cure
outstanding defaults under such contract or lease.
Other Key Filings
On June 16, 2021, the 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. In connection with the negotiation of the RSA, the Plan provided for the
full settlement and release for Qatar and Delta of all potential claims described in the Standing
Motions upon the effective date of the Plan. As the Plan became effective on November 3, 2022,
such claims have been released.
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Statements and Schedules
On September 8, 2020, each of the Debtors filed Schedules of Assets and Liabilities (“Schedules”)
and Statements of Financial Affairs (“Statements”) that described the Debtors’ financial
circumstances as of their respective Petition Date. On August 13, 2021 and December 3, 2021,
certain Debtors filed amended Schedules that supplemented and amended the initial Schedules.
From the Petition Date through the Plan Effective Date (as defined in the Plan), the Company was
also required to file “Monthly Operating Reports” (MORs) to disclose the receipt, administration
and disposition of property by the Debtors during the pendency of the Chapter 11 Cases. After the
Effective Date, the Company will be required to file a more streamlined “Post-confirmation Report”
(PCR) each calendar quarter until the Chapter 11 Cases of LATAM Parent are closed.
While the Reorganized Debtors believe that these materials provide the information required by the
Bankruptcy Code and Bankruptcy Court, they are nonetheless unaudited documents that are
prepared in a format different from the consolidated financial reports historically prepared by
LATAM in accordance with IFRS (International Financial Reporting Standards). For example,
certain of the debtor-specific information contained in the Statements and Schedules may normally
be prepared on an unconsolidated basis in the ordinary course. Accordingly, the Reorganized
Debtors believe that the substance and format of these materials may 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 Reorganized Debtors’ securities, or claims against the
Reorganized Debtors, or for comparison with other financial information required to be reported
under applicable securities law.
Bearing in mind that November 3, 2022 was the Effective Date of the reorganization plan approved
and confirmed in the main proceeding, on November 10, 2022, the representative of the foreign
proceeding submitted to the court his last monthly report in accordance with the Protocol of Cross
Border Communications.
Intercompany and Affiliate Transactions
On January 10, 2022, the Committee filed an objection with respect to an intercompany claim
asserted by LATAM Finance Ltd. against Peuco Finance Ltd. The Bankruptcy Court held a hearing
on the objection on March 10, 2022. Post-hearing briefs were submitted by the parties on March
17, 2022, and closing arguments were held on March 18, 2022. On April 29, 2022, the Court
entered a decision and order overruling the objection (the "Intercompany Claim Decision"). On
May 13, 2022, the Committee appealed the Intercompany Claim Decision to the District Court. On
May 26, 2022 the District Court granted a joint motion of the Debtors and the Committee to stay
such appeal until the effective date of the Plan. Following the Effective Date, the Committee sought
to dismiss the appeal, and the District Court entered an order dismissing the appeal on November 7,
2022.
Debtor-in-Possession Financing and Exit Financing
As previously reported, on June 10, 2022 the Debtors entered into debt commitment letters (the
“Exit Financing Commitment Letters”) providing commitments from various lenders for (i) an
approximately US$1.170 billion of junior debtor-in-possession term loan facility (the “Junior DIP
Facility”); (ii) a US$500 million debtor-in-possession and exit revolving credit facility (the
“Revolving Facility”), (iii) a US$750 million debtor-in-possession and exit term loan B credit
facility (the “Term Loan B Facility”; together with the Revolving Facility, the “Credit Facilities”),
(iv) a US$750 million debtor-in-possession and exit bridge loan facility (the “Bridge to 5Y Notes
Facility”) and (v) US$750 million debtor-in-possession and exit bridge loan facility (the “Bridge to
7Y Notes Facility” and together with the Bridge to 5Y Notes Facility, and the Credit Facilities, the
“Debt Facilities”). According to the terms of the Exit Financing Commitment Letters, the
committed amounts under the Term Loan B Facility and the Bridge Facilities could be reallocated
amount such facilities. The Debt Facilities were structured to remain in place after the emergence of
the Reorganized Debtors from the Chapter 11, subject to the satisfaction of certain conditions at
emergence (the “Conversion Date”).
In the context of the Company's exit from Chapter 11, on October 12, the Consolidated and
Amended DIP Financing Agreement was paid in full. The repayment has been made entirely with
funds from (i) a Junior DIP Financing of approximately US$1,146 million; (ii) a US$500 million
Revolving Credit Line; (iii) a Term B Loan of US$750 million; (iv) a 5-year Bond Bridge Loan of
US$750 million (v) a 7-year Bond Bridge Loan of US$750 million.
On October 18, 2022, the Bridge Loans were partially repaid by: i) a bond issue exempt from
registration under U.S. Securities Act of 1933, as amended (the “Securities Act”), pursuant to Rule
144A and Regulation S, both under the Securities Act, due 2027 (the “5-Year Bonds”), by a total
principal amount of US$450 million and ii) a bond issue exempt from registration under the
Securities Law pursuant to Rule 144A and Regulation S, both under the Securities Law, due 2029
(the “Bonds to 7 Years”), for a total principal amount of US$700 million.
Additionally, on November 3, the repayment of the Bridge Loans and the junior DIP was completed
with the proceeds from the Exit Financing, which was made up of: US$450 million in senior
guaranteed bonds maturing in 2027, US$700 million in senior secured notes due 2029 and an
incremental "Term Loan B" loan for US$350 million
Establishment of Bar Dates and Claims Reconciliation
On September 24, 2020, the Bankruptcy Court entered an order (the “Bar Date Order”) establishing
December 18, 2020, as the general deadline (the “General Bar Date”) by which persons or entities
(other than governmental units) who believe they hold any claims (other than certain damages
claims arising out of the rejection of executory contracts or unexpired leases) against any Debtor
that arose prior to the Petition Date, as applicable to each Debtor, must have submitted written
documentation of such claims (a “Proof of Claim”). On December 17, 2020, the Court entered an
order (the “Supplemental Bar Date Order”) establishing a supplemental bar date of February 5,
2021 (the “Supplemental Bar Date”), for certain non-U.S. claimants not otherwise subject to the
General Bar Date. Any person or entity that failed to timely file its Proof of Claim by the
applicable Bar Date will be forever barred from asserting their claim and will not receive any
distributions made as part of the ultimate plan of reorganization. On the Effective Date, the
Reorganized Debtors established December 3, 2022 as the deadline (the “Administrative Expense
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Bar Date”) by which persons or entities (other than those exempted under the Plan) must submit a
Proof of Claim establishing their claim against the Reorganized Debtors for costs and expenses of
administration of the Chapter 11 proceedings.
Following the close of the General Bar Date, the Supplemental Bar Date, and the Administrative
Expense Bar Date, the Reorganized Debtors have continued the process of reconciling
approximately 6,575 submitted claims. As of December 31, 2022, the Reorganized Debtors have
objected to or have resolved through claims withdrawals, stipulations and court orders
approximately 5,030 claims with a total value of approximately US$ 163.5 billion. As the
Reorganized 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 are not asserted in the
proper amount or classification 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. Under the Plan, a further
1,352 litigation claims will ride through. As of December 31, 2022, approximately 64 of the Claims
filed against the Debtors are still being reconciled with an estimated total value of approximately
US$ 354.7 million.
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
on the date they cease to be so controlled. The results and cash are incorporated from the date of
acquisition.
Balances, transactions and unrealized gains on transactions between the Company’s entities are
eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an
impairment loss of the asset transferred. When necessary, in order to ensure uniformity with the
policies adopted by the Company, the accounting policies of the subsidiaries are modified.
To account for and identify the financial information to be disclosed when carrying out a business
combination, such as the acquisition of an entity by the Company, the acquisition method provided
for in IFRS 3: Business combinations is used.
(b)
Transactions with non-controlling interests
The Group applies the policy of considering transactions with non-controlling interests, when not
related to the 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 the assets and liabilities of the subsidiary, the non-controlling interest 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 within Other gains (losses).
If LATAM Airlines Group S.A. and Subsidiaries retain an ownership of participation in the
disposed subsidiary which does not represent control, this is recognized at fair value on the date that
control is lost and the amounts previously recognized in Other comprehensive income are
accounted as if the Company had disposed directly the assets and related liabilities, which can cause
these amounts to be reclassified to profit or loss. The percentage retained valued at fair value is
subsequently accounted using the equity method.
(d)
Investees or associates
Investees or associates are all entities over which LATAM Airlines Group S.A. and Subsidiaries
have significant influence but have no control. This usually arises from holding between 20% and
50% of the voting rights. Investments in associates are booked using the equity method and are
initially recognized at their cost.
2.3.
Foreign currency transactions
(a)
Presentation and functional currencies
The items included in the financial statements of each of the entities of LATAM Airlines Group
S.A. and Subsidiaries are valued using the currency of the main economic environment in which the
entity operates (the functional currency). The functional currency of LATAM Airlines Group S.A.
is the United States dollar which is also the presentation currency of the consolidated financial
statements of LATAM Airlines Group S.A. and Subsidiaries.
(b)
Transactions and balances
Foreign currency transactions are translated to the functional currency using the exchange rates on
the transaction dates. Foreign currency gains and losses resulting from the liquidation of these
transactions and from the translation at the closing exchange rates of the monetary assets and
liabilities denominated in foreign currency are shown in the consolidated statement of income by
function except when deferred in Other comprehensive income as qualifying cash flow hedges.
(c)
Adjustment due to hyperinflation
After July 1, 2018, the Argentine economy was considered, for purposes of IFRS, hyperinflationary.
The 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 income and cash flows of the group's entities, whose functional currency
corresponds to a hyperinflationary economy, are adjusted for inflation and re-expressed in
accordance with the variation of the consumer price index ("CPI"), at each presentation date of its
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financial statements. The re-expression of non-monetary items is made from the date of initial
recognition in the statements of financial position and considering that the financial statements are
prepared under the historical cost criterion.
Net losses or gains arising from the re-expression of non-monetary items and income and costs are
recognized in the consolidated income statement under "Result of indexation units".
Net gains and losses on the re-expression of opening balances due to the initial application of IAS
29 are recognized in 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;
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, 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 income when 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 16 (d).
When the value of an asset exceeds its estimated recoverable amount, its value is immediately
reduced to its recoverable amount.
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.
2.5.
Intangible assets other than goodwill
(a)
Airport slots and Loyalty program
The revenues and expenses of each income statement account are translated at the exchange
(ii)
rates prevailing on the transaction dates, and
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.
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".
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.
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 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.
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.
(b)
Computer software
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 impairment.
The amounts of advances paid to the aircraft manufacturers are capitalized by the Company under
Construction in progress until they are received.
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 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 other costs directly
related to the production of unique and identifiable computer software controlled by the Company,
are shown as intangible Assets other than Goodwill when they have met all the criteria for
capitalization.
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(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 (see note 15).
2.6.
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.
2.7.
Losses for impairment of non-financial assets
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 of
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)".
2.8.
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
through 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.
(b) Equity instruments
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.
2.9.
Derivative financial instruments and embedded derivatives
Derivative financial instruments and hedging activities
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.
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(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. When these
amounts correspond to hedging derivatives of highly probable items that give rise to non-financial
assets or liabilities, in which case, they are recorded as part of the non-financial assets or liabilities.
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.
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 a hedging instrument mature, is sold or fails to meet the requirements to be accounted for as
a 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
2.11. Trade and other accounts receivable
Commercial accounts receivable are initially recognized at their fair value and subsequently at their
amortized cost in accordance with the effective rate method, less the provision for impairment
according to the model of the expected credit losses. The Company applies the simplified approach
permitted by IFRS 9, which requires that expected lifetime losses be recognized upon initial
recognition of accounts receivable.
In the event that the Company transfers its rights to any financial asset (generally accounts
receivable) to a third party in exchange for a cash payment, the Company evaluates whether all
risks and rewards have been transferred, in which case the account receivable is derecognized.
The existence of significant financial difficulties on the part of the debtor, the probability that the
debtor goes bankrupt or financial reorganization are considered indicators of a significant increase
in credit risk.
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.
2.12. 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.
2.13. Capital
The common shares are classified as net equity.
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)”.
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.
Embedded derivatives
2.14. Trade and other accounts payables
The Company assesses the existence of embedded derivatives in financial instrument contracts.
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when
they meet the definition of a derivative, their risks and characteristics are not closely related to those
of the host contracts and the contracts are not measured at FVTPL as a whole. LATAM Airlines
Group S.A. has determined that no embedded derivatives currently exist.
2.10.
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.
Trade payables and other accounts payable are initially recognized at fair value and subsequently at
amortized cost.
2.15.
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.
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Convertible Notes
The component parts of the convertible notes issued by LATAM are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing
market interest rate for similar non-convertible instruments. This amount is recorded as a liability
on an amortized cost basis using the effective interest method until extinguished upon conversion
or at the instrument’s maturity date. The conversion option classified as equity is determined by the
deducting the amount of the liability component from the fair value of the compound instrument as
a whole. This is recognized and included in other equity, net of income tax effects. and is not
subsequently remeasured. In addition, the conversion option classified as equity will remain in
other equity until the conversion option is exercised, in which case, the balance recognized in other
equity will be transferred to share capital. Where the conversion option remains unexercised at
maturity date of the convertible bond, the balance recognized in other equity will be transferred to
retained earnings. No gain or loss is recognized in profit or loss upon conversion or expiration of
the conversion option.
Transaction costs that relate to the issue of the convertible notes are allocated to the liability and
equity components in proportion to the allocation of the gross proceeds. Transaction costs relating
to the equity component are charged directly to equity.
(a) there is a legally enforceable right to set off current tax assets and liabilities, and
(b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority
on either: (i) the same taxable entity, or (ii) different taxable entities which intend to settle current
tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax liabilities or
assets are expected to be settled or recovered.
2.17. 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 value of the shares of the Company are
recognized in the consolidated financial statements in accordance with IFRS 2: Share-based
payments. For equity settled plans the fair value is recorded in equity with a charge to remuneration
in a linear manner between the grant of said options and the date on which they become vested. For
cash settled awards the fair value, updated as of the closing date of each reporting period or
exercise, is recorded as a liability with charge to remuneration.
2.16. Current and deferred taxes
(c) Post-employment and other long-term benefits
The tax expense for the period or exercise comprises income and deferred taxes.
The current income tax expense is calculated based on tax laws enacted at the date of the 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 asset or a
liability in a 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 the 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.
Deferred tax assets and liabilities are offset if, and only if:
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 the employee relationship; 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.
2.18. Provisions
Provisions are recognized when:
(i)
The Company has a present legal or constructive obligation as a result of a past event;
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(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.
2.19. 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 provided 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 on a monthly basis the probability of expiration of air tickets, with refund
clauses, based on their history of use. Air tickets without a refund clause expire on the date of the
flight in case the passenger does not show up.
(c) Costs associated with the contract
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 points that are not likely to be
redeemed ("breakage").
The balance of miles and points that are pending to redeem are included within deferred revenue.
(2) Miles sold to financial and non-financial partners
To value the miles or points earned 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.
The costs related to the sale of air tickets are capitalized 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.
(e) Dividend income
Dividend income is recognized when the right to receive payment is established.
(d) Frequent passenger program
2.20. Leases
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.
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.
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.
Right of use assets 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 right of use assets are recognized in the statement of financial position in Property, plant and
equipment.
Lease liabilities include the net present value of the following payments:
- Fixed payments including in substance fixed payment.
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- Variable lease payments that depend on an index or a rate;
- The exercise price of a purchase option, if it is reasonably certain that the option will be
exercised.
The discount rate that LATAM uses is the interest rate implicit in the lease, if that rate can be
readily determined. This is the rate of interest that causes the present value of (a) lease payments
and (b) the unguaranteed residual value to equal the sum of (i) the fair value of the underlying asset
and (ii) any initial direct costs of the lessor.
LATAM uses its incremental borrowing rate if the interest rate implicit in the lease cannot be
readily determined.
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.
2.21. 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.
Lease liabilities are recognized in the statement of financial position under Other financial
liabilities, current or non-current.
2.22. Maintenance
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, within financing cash flows.
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 within operating cash flows.
The Company analyzes the financing agreements of aircraft, 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 IFRS 9 and continues to be presented within the
“Other financial liabilities” described in Note 18. On the other hand, the aircraft are presented in
Property, Plant and Equipment, as described in Note 16, 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.
The costs incurred for scheduled heavy maintenance of the aircraft’s fuselage and engines are
capitalized and depreciated until the next maintenance. The depreciation rate is determined on
technical grounds, according to the use of the aircraft expressed in terms of cycles and flight hours.
In case of aircraft include in property, plant and equipment, these maintenance cost are capitalized
as Property, plant and equipment, while in the case of aircraft on right of use, a liability is accrued
based on the use of the main components is recognized, since a contractual obligation with the
lessor to return the aircraft on agreed terms of maintenance levels exists. These are recognized as
Cost of sales.
Additionally, some contracts that comply with the definition of lease establish the obligation of the
lessee to make deposits to the lessor as a guarantee of compliance with maintenance and return
conditions. These deposits, often called maintenance reserves, accumulate until a major
maintenance is performed. Once made, the recovery is requested to the lessor. At the end of the
contract period, there is comparison between the reserves that have been paid and required return
conditions, and compensation between the parties are made if applicable.
The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to
results as incurred.
2.23. Environmental costs
Disbursements related to environmental protection are charged to results when incurred or accrue.
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NOTE 3 - FINANCIAL RISK MANAGEMENT
3.1.
Financial risk factors
The Company is exposed to different financial risks: (a) market risk, (b) credit risk, and (c)
liquidity risk. The 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 has exposure 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 to manage the market risk, which goal is 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 their exposures and their risk, and develops and executes hedging
strategies.
(i)
Fuel-price risk
Exposure:
For the execution of its operations, the Company purchases a fuel called Jet Fuel grade 54 USGC,
which is subject to the fluctuations of international fuel prices.
Mitigation:
To hedge the fuel-price risk exposure, 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 may
have a high correlation with Jet Fuel and greater liquidity.
Fuel Hedging Results:
During the period ended December 31, 2022, the Company recognized gains of US$ 18.8 million
for fuel hedging net of premiums in the costs of sales for the year. During the period ended
December 31, 2021, the Company recognized gains of US$ 10.1 million for fuel hedging net of
premiums in the costs of sales for the year.
As of December 31, 2022, the market value of the fuel positions amounted to US$12.6 million
(positive). At the end of December 2021, this market value was US$ 17.6 million (positive).
The following tables show the level of hedge for different periods:
Positions as of December 31, 2022 (*)
Maturities
Percentage of coverage over the expected volume of consumption
24%
24%
15%
5%
17%
Q123
Q223
Q323
Q423
Total
(*) The percentage shown in the table considers all the hedging instruments (swaps and options).
Positions as of December 31, 2021 (*)
Maturities
Q122
Q222
Q322
Q422
Total
Percentage of coverage over the expected volume of consumption
25%
30%
17%
14%
21%
(*) 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. Therefore, the policy 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 table shows 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 2022 and the end of December 2021. The projection
period was defined until the end date of the last contract in force, corresponding to the last business
day of the fourth quarter 2023.
Benchmark price
(US$ per barrel)
Positions as of December 31, 2022
effect on Equity
(MUS$)
Positions as of December 31, 2021
effect on Equity
(MUS$)
+5
-5
+2.2
-2.3
+2.7
-3.3
Given the fuel coverage structure for the year 2022, 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$ 123 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$ 122.1 million in higher fuel costs.
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(ii)
Foreign exchange rate risk:
Exposure:
The functional 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 hedging or non-hedging derivative
instruments or through natural hedges or execution of internal operations.
Exchange Rate Hedging Results (FX):
As of December 31, 2022, the Company recognized gains of US$ 5,2 million for FX hedging
derivatives net of premiums in sales revenue for the year. At the end of December 2021, the
Company did not recognize gains or losses for FX hedging derivatives.
As of December 31, 2022, the market value of hedging FX derivative positions is US$ 0,2 million
(positive). As of December 31, 2022, the Company has current hedging FX derivatives for MUS$
108. As of December 31, 2021, the Company has no current hedging FX derivatives.
During the period ended December 31, 2022, the Company recognized losses of US$ 1,8 million for
FX non-hedging derivatives, net of premiums in the costs of sales for the year. As of December 31,
2022, the Company does not maintain current non-hedged FX derivatives. At the end of December
2021, the Company did not recognize gains or losses for FX non-hedging derivatives.
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.
The following table shows the sensitivity of current hedging FX derivative instruments according to
reasonable changes in the exchange rate and its effect on equity.
Appreciation (depreciation)
of R$/US$
Effect on equity as of December 31, 2022
(MUS$)
Effect on equity as of December 31, 2021
(MUS$)
-10%
+10%
-2.9
+3.0
-
-
As of December 31, 2022, the Company does not have currency Swap derivatives. At the end of
December 2021, the Company did not have currency Swap derivatives.
Impact of Exchange rate variation in the Consolidated Income Statements (Foreign exchange
gains/losses)
In the case of TAM S.A., whose functional currency is the Brazilian real, a large part of its
liabilities is expressed in US dollars. Therefore, when converting financial assets and liabilities,
from dollar to real, they have an impact on the result of TAM S.A., which is consolidated in the
Company's Income Statement.
In order to reduce the impact on the Company's result caused by appreciations or depreciations of
R$/US$, the Company carries out internal operations to reduce the net exposure in US$ for TAM
S.A.
The following table shows the impact of the Exchange Rate variation on the Consolidated Income
Statement when the R$/US$ exchange rate appreciates or depreciates by 10%:
Appreciation (depreciation)
of R$/US$
Effect on Income Statement
for the period ended December 31, 2022
(MUS$)
Effect on Income Statement
for the period ended December 31, 2021
(MUS$)
-10%
+10%
+70.7
-70.7
+51.9
-51.9
Impact of the exchange rate variation in the Equity, from translate the subsidiaries financial
statements into US Dollars (Cumulative Translate Adjustment)
Since 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 (Cumulative
Translation Adjustment) 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.
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The following table shows the impact on the Cumulative Translation Adjustment included in Other
comprehensive income recognized in Total equity in the case of an appreciation or depreciation
10% the exchange rate R$/US$:
Appreciation (depreciation)
of R$/US$
Effect at December 31, 2022
MUS$
Effect at December 31, 2021
MUS$
-10%
+10%
+98.11
-80.28
+96.66
-79.09
(iii)
Interest -rate risk:
Exposure:
Rate Hedging Results:
During the period ended December 31, 2022, the Company recognized losses of US$ 7 million
(negative) corresponding to the recognition for premiums paid.
As of December 31, 2022, the value of interest rate derivative positions amounted to MUS$ 8.8
(positive) corresponding to operating lease hedges in order to fix the rents upon delivery of the
aircraft. As of December 31, 2021, the Company did not maintain interest rate derivative positions
in force.
As of December 31, 2022, the Company recognized a decrease in the right-of-use asset upon
settlement of a derivative of US$ 8.1 million associated with leased aircraft. On this same date, a
lower expense for depreciation of the right-of-use asset for US$ 0,1 million (positive) is recognized.
At the end of December 2021, the Company did not earn profits or losses for this same concept.
The Company has exposure to fluctuations in interest rates affecting the markets future cash flows
of the assets, and current and future financial liabilities.
Sensitivity analysis:
The Company is mainly exposed to the Secured Overnight Financing Rate (“SOFR”), also to the
London InterBank Offered Rate (“LIBOR”) and other less relevant interest rates such as Brazilian
Interbank Certificates of Deposit (“CDI”). As the publication of LIBOR will cease by June 2023,
the company has begun to migrate to the adoption of SOFR as an alternative rate, which will fully
materialize with the cessation of LIBOR.
Regarding rate exposure, a portion of the company's variable financial debt maintains exposure to
the LIBOR rate. However, all these contracts will have definitive migration to the SOFR rate. This
migration has been redacted within each of the existing financial debt contracts benchmarked to the
LIBOR rate.
Currently, 31% of the financial debt contracts subject to variable rates maintain exposure to the
LIBOR rate, and 69% of them have exposure to the SOFR rate. All of these contracts will migrate
to SOFR rate since mid 2023.
Mitigation:
Currently, 52% (40% as of December 31, 2021) of the debt is fixed against fluctuations in interest
rates. Of the variable debt, most of it is indexed to the reference rate based on SOFR.
To mitigate the effect of those derivatives that will be affected by the transition from LIBOR to
SOFR, the Company is following the recommendations of the relevant authorities, including the
Alternative Reference Rates Committee ("ARRC") and the International Standard Derivatives
Association in line with the measures generally adopted by the market for the replacement of
LIBOR in debt and derivative contracts.
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, 2022
effect on profit or loss before tax
(MUS$)
Positions as of December 31, 2021
effect on profit or loss before tax
(MUS$)
+ 100 basis points
- 100 basis points
-22.64
+22.64
-46.31
+46.31
A large part of the derivatives of current rates are recorded as cash flow hedge contracts, therefore,
a variation in interest rates has an impact on the market value of the derivatives, whose changes
affect the equity of the entity. Society.
The calculations were made by vertically increasing (decreasing) 100 base points of the interest rate
curve, both scenarios being reasonably possible according to historical market conditions.
Increase (decrease)
interest rate curve
Positions as of December 31, 2022
effect on equity
(MUS$)
Positions as of December 31, 2021
effect on equity
(MUS$)
+100 basis points
- 100 basis points
+6.9
-8.2
-
-
The sensitivity calculation hypothesis must assume that the forward curves of interest rates will not
necessarily reflect the real value of the compensation of the flows. In addition, the interest rate
structure is dynamic over time.
During the periods presented, the Company has not recorded amounts for ineffectiveness in the
consolidated income statement for this type of coverage.
Financial information
215
Integrated Report 2022
34
35
(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 as of December 31, 2022
increased by 25% when compared to the balance as of December 31, 2021, mainly due to an
increase in passenger transport operations (travel agencies and corporate) that increased by 53% in
its sales, mainly affecting the forms of payment credit card 58%, and cash sales 54%. In relation to
the cargo business, it presented an increase in its operations of 1% compared to December 2021. In
the case of clients with debt that management considered risky, the corresponding measures were
taken to consider their expected credit loss. The provision at the end of December 2022 had a
decrease of 17 % compared to the end of December 2021, as a result of the decrease in the portfolio
due to recoveries, application of write-offs and updates of the risk matrix factors.
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 derivatives contracts.
To reduce the credit risk related to operational activities, the Company has implemented limits to
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) its 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.
(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 (“IATA”),
international 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, it is
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.
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.
The balance of liquid funds, future cash generation and the ability to obtain financing, provide the
Company with alternatives to meet future investment and financing commitments.
As of December 31, 2022, the balance of liquid funds is US$ 1,216 million (US $ 1,047 million as
of December 31, 2021), which are invested in short-term instruments through financial entities with
a high credit rating classification.
Financial information
216
Integrated Report 2022
36
As of December 31, 2022, LATAM maintains two engaged Revolving Credit Facility for a total of
US$ 1,100 million, one for an amount of US$600 million and another for an amount of US$500
million, which are fully available. These lines are secured by and subject to the availability of
collateral (i.e. aircraft, engines and spare parts).
After voluntary petition for amparo of Chapter 11 Proceedings, the Company received authorization
from the Bankruptcy Court for the “debtors in possession” (DIP) financing, in the form of a multi-
draw term loan facility in an aggregate principal amount of up to US$ 3.2 billion divided in Tranche
A, B and C (hereinafter the contract that documented such financing, the Original DIP Credit
Agreement"). Initially, Tranches A and C were committed for a total of US$2.450 billion. To date,
these three tranches are fully committed after the approval on October 18, 2021, 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.
On April 8, 2022, a consolidated and modified text (the "Reconsolidated and Modified DIP Credit
Agreement") of the Existing Original DIP Credit Agreement was signed, which modifies and
recasts said agreement and repays the pending payment obligations under it. (that is, under its
Tranches A, B and C). The total amount of the Consolidated and Modified DIP Credit Agreement
was US$3.7 billion. The Revised and Amended DIP Credit Agreement included certain reductions
in fees and interest compared to the DIP Credit Agreement; and contemplated an expiration date in
accordance with the calendar that LATAM anticipated to emerge from the Chapter 11 Procedure.
In the context of the Company's exit from Chapter 11, on October 12, 2022, the Amended and
Restated DIP Financing Contract was repaid in full. The repayment was fully made with funds from
(i) a Junior DIP Financing of approximately US$1,146Mn; (ii) a Revolving Credit Facility of
US$500 million; (iii) a Term Loan B of US$ 750 million; (iv) a Bridge Loan of 5Y Notes of
US$750 million; (v) a Bridge Loan of 7Y Notes of US$750million.
On October 18, 2022, the Bridge Loans were partially repaid by; (i) a Note issued from registration
under U.S. Securities Act of 1933, as amended (“the “Securities Act”), pursuant to Rule 144A and
Regulation S, both under the Securities Act, due in 2027 (the “5 Year Note”), with a total principal
amount of US$ 450 million, and (ii) a Note issued from registration under the Securities Act
pursuant to Rule 144A and Regulation A, both under the Securities Act, due in 2029 (the “7 Year
Note”), with a total principal amount of US$ 700 million.
Additionally, on November 3, 2022, the repayments of outstanding balances of the Bridge Loan and
the Junior DIP were finished with the funds obtained under from the Exit Financing. Starting in
November 2022, the exit financing was composed of: (i) a Revolving Credit Line for an amount of
US$500 million; (ii) a tranche B term loan for an amount of US$1,100 million (this is the original
US$750 million, plus an incremental loan under it obtained on November 3, 2022 for an amount of
US$350 million), US$450 million in senior secured notes due in 2027 and US$700 million in senior
secured notes due in 2029.
Financial information
217
Integrated Report 2022
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, 2022
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 .
37
Ta x No .
C re dito r
C re dito r
c o untry
C urre nc y
Up to
90
da ys
ThUS $
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $
five
ye a rs
ThUS $
thre e to M o re tha n
five
ye a rs
ThUS $
To ta l
ThUS $
No m ina l
va lue
ThUS $
Am o rtiza tio n
Annua l
Effe c tive No m ina l
ra te
%
ra te
%
B a nk lo a ns
0-E
0-E
GOLDM AN S AC HS
S ANTANDER
U.S .A.
S pa in
US $
US $
32,071
122,278
323,125
1,361,595
19,164
55,288
-
-
-
-
1,839,069
74,452
1,100,000
70,951
Qua rte rly
Qua rte rly
18.46
7.26
13.38
7.26
Obliga tio ns with the public
97.036.000-K S ANTANDER
C hile
0-E
WILM INGTON TR US T C OM P ANYU.S .A.
97.036.000-K S ANTANDER
C hile
UF
US $
US $
Gua ra nte e d o bliga tio ns
-
-
-
3,136
6,271
6,271
152,531
307,625
757,625
-
-
-
178,736
887,250
6
194,414
2,105,031
6
156,783
To the e xpira tio n
1,150,000
To the e xpira tio n
3
To the e xpira tio n
2.00
15.00
1.00
2.00
13.38
1.00
0-E
0-E
U.S .A.
B NP P AR IB AS
WILM INGTON TR US T C OM P ANYU.S .A.
US $
US $
6,692
3,839
14,705
13,465
39,215
45,564
39,215
43,444
138,345
75,505
238,172
181,817
184,198
Qua rte rly
141,605 Qua rte ly/M o nthly
5.76
8.20
5.76
8.20
Othe r gua ra nte e d o bliga tio n
0-E
0-E
0-E
EXIM B ANK
M UF G
C R EDIT AGR IC OLE
F ina nc ia l le a s e
0-E
0-E
0-E
0-E
0-E
0-E
0-E
C ITIB ANK
B NP P AR IB AS
NATIXIS
US B ANK
P K AIR F INANC E
EXIM B ANK
B ANK OF UTAH
Othe rs lo a ns
0-E
OTHER S (*)
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.
U.S .A.
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
394
13,091
5,769
1,171
38,914
31,478
12,119
69,916
70,890
6,995
6,978
9,864
18,072
1,749
3,176
5,878
5,844
20,662
29,468
54,088
5,165
9,681
17,651
-
1,543
75,525
86,076
6,665
137,930
47,306
21,111
60,857
-
267,615
-
-
70,787
-
-
193,551
50,649
-
-
-
-
129,582
-
-
157,978
145,184
95,652
121,921
375,752
12,839
29,183
315,226
158,236
13,579
502,316
266,668
86,612
112,388
Qua rte rly
Qua rte rly
275,000
To the e xpira tio n
12,514
28,165
239,138
152,693
12,590
446,509
182,237
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
Qua rte rly
M o nthly
2.01
6.23
8.24
6.19
5.99
6.44
4.06
5.97
3.58
10.45
1.78
6.23
8.24
5.47
5.39
6.44
2.85
5.97
2.79
10.45
2,028
-
-
-
-
2,028
2,028
To the e xpira tio n
-
-
TOTAL
135,760
575,525
1,229,770
2,811,863
1,773,443
6,526,361
4,353,414
(*) 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
218
Integrated Report 2022
38
1 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, 2022
De bto r: TAM S .A. a nd S ubs idia rie s , Ta x No . 02.012.862/0001-60, B ra zil.
Ta x No .
C re dito r
F ina nc ia l le a s e s
C re dito r
c o untry
C urre nc y
Up to
90
da ys
ThUS $
M o re tha nM o re tha nM 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
ra te
%
No m ina l
ra te
%
0-E
NATIXIS
F ra nc e
US $
510
1,530
4,080
4,080
7,846
18,046
18,046 S e m ia nnua l/Qua rte rly
7.23
7.23
B a nk lo a ns
0-E
M ER R IL LYNC H
C R EDIT P R ODUC TS LLC
B ra zil
B R L
304,549
-
-
-
-
304,549
304,549
M o nthly
3.95
3.95
TOTAL
305,059
1,530
4,080
4,080
7,846
322,595
322,595
Financial information
219
Integrated Report 2022
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, 2022
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 .
39
Ta x No .
C re dito r
Le a s e Lia bility
C re dito r
c o untry
C urre nc y
Up to
90
da ys
ThUS $
M o re tha n M o re tha n M o re tha n
o ne to
thre e
ye a rs
ThUS $
90 da ys
to o ne
ye a r
ThUS $
five
ye a rs
ThUS $
thre e to M o re tha n
five
ye a rs
ThUS $
To ta l
ThUS $
No m ina l
va lue
ThUS $
Am o rtiza tio n
Annua l
Effe c tive No m ina l
ra te
%
ra te
%
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
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
Inve rs o ra Ae ro ná utic a Arge ntina S .A. Qa ta rArge ntina
P a ta go nia S e a fa rm s INC
C hileU.S .A
US $
US $
C LP
UF
C OP
EUR
BRL
80,602
1,727
20
574
76
84
2,064
250,297
8,080
34
1,568
227
253
6,192
845,215
20,641
69
3,007
301
246
14,851
776,431
6,251
-
2,515
-
24
12,491
1,094,935
1,763
-
6,273
-
-
28,625
3,047,480
38,462
123
13,937
604
607
64,223
US $
C LP
B R L
Othe r c urre nc y
80,557
168,393
370,772
583,118
US $
C LP
5
7
35,542
1,231
5,242
3,935
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
116,099
169,624
376,014
587,053
5
7
2,134,968
35,157
111
11,703
518
571
33,425
116,099
169,624
376,014
587,053
5
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
To ta l
To ta l c o ns o lida te d
1,287,999
312,601
884,330
797,712
1,131,596
4,414,238
3,465,255
1,728,818
889,656
2,118,180
3,613,655
2,912,885
11,263,194
8,141,264
Financial information
220
Integrated Report 2022
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2021
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.
40
Creditor
country
Currency
Tax No.
Creditor
Loans to exporters
97.018.000-1
CITIBANK
97.030.000-7
0-E
ITAU
HSBC
Bank loans
97.023.000-9
0-E
0-E
CORPBANCA
SANTANDER
CITIBANK
Obligations with the public
97.030.000-7
0-E
BANCO ESTADO
BANK OF NEW YORK
Guaranteed obligations
0-E
0-E
0-E
BNP PARIBAS
MUFG
WILMINGTON TRUST COMPANY U.S.A.
Other guaranteed obligation
0-E
0-E
0-E
0-E
0-E
Financial lease
0-E
0-E
0-E
0-E
0-E
0-E
0-E
CREDIT AGRICOLE
MUFG
CITIBANK
BANK OF UTAH
EXIM BANK
CREDIT AGRICOLE
CITIBANK
BNP PARIBAS
NATIXIS
US BANK
PK AIRFINANCE
EXIM BANK
Others loans
0-E
OTHERS (*)
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.
Chile
Chile
Chile
Chile
Spain
U.S.A.
Chile
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$
Up to
90
days
ThUS$
115,350
20,140
12,123
More than More than More than
one to
90 days
three to More than
to one
year
ThUS$
three
years
ThUS$
five
years
ThUS$
five
years
ThUS$
-
-
-
-
-
-
-
106,939
-
-
-
-
-
-
-
-
-
-
-
-
-
10,236
751
60,935
-
2,604
-
Total
ThUS$
115,350
20,140
12,123
10,236
110,294
60,935
Nominal
value
ThUS$
Amortization
114,000
At Expiration
20,000
12,000
At Expiration
At Expiration
10,106
106,427
60,935
Quarterly
Quarterly
At Expiration
36,171
184,188
179,601
104,125
31,461
31,461
369,537
648,231
502,897
At Expiration
884,188
856,000
-
2,028,501
1,500,000
At Expiration
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
Quarterly
Quarterly
144,358 Quarterly / Monthly
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
600,000
At Expiration
Quarterly
At Expiration
1,858,051
1,644,876
At Expiration
271
1,173
3,375
10,546
55,957
71,322
62,890
Quarterly
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
-
-
-
-
-
-
59,930
6,573
-
130,131
-
-
2,086
84,511
55,555
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
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Annual
Effective Nominal
rate
%
rate
%
2.96
4.20
4.15
3.35
2.80
3.10
4.81
7.16
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
2.96
4.20
4.15
3.35
2.80
3.10
4.81
6.94
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 Expiration
-
-
TOTAL
1,493,535
2,445,619
1,519,275
1,344,761
1,064,747
7,867,937
6,801,685
(*) Obligation with creditors for executed letters of credit.
Financial information
221
Integrated Report 2022
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2021
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.
41
Tax No.
Creditor
Bank loans
0-E
0-E
0-E
Financial leases
0-E
0-E
Others Loans
NCM
MERRIL LYNCH
CREDIT PRODUCTS LLC
BANCO BRADESCO
NATIXIS
GA TELESIS LLC
0-E
Deustche Bank (*)
Creditor
country
Currency
Up to
90
days
ThUS$
More than More than More than
three to
one to
90 days
five
three
to one
years
year
years
ThUS$
ThUS$
ThUS$
More than
five
years
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective Nominal
rate
%
rate
%
Netherlands
U.S.A.
Brazil
France
U.S.A.
Brazil
US$
BRL
BRL
US$
US$
US$
990
185,833
74,661
-
-
-
-
-
-
-
-
-
-
-
-
990
185,833
74,661
943
185,833
74,661
Monthly
Monthly
Monthly
6.01
3.95
4.33
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
Quarterly
Monthly
2.74
14.72
2.74
14.72
20,689
-
-
-
-
20,689
20,689
At Expiration
-
-
TOTAL
283,421
4,941
8,755
15,722
5,077
317,916
310,451
(*) Obligation with creditors for executed letters of credit
Financial information
222
Integrated Report 2022
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2021
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.
42
Tax No.
Creditor
Lease Liability
-
-
AIRCRAFT
OTHER ASSETS
Trade and other accounts payables
-
OTHERS
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$
Total
ThUS$
OTHERS
OTHERS
OTHERS
US$
US$
UF
COP
EUR
PEN
US$
CLP
BRL
Other currency
694,568
9,859
1,759
2
198
4
644,743
214,224
365,486
542,304
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
809,828
219,136
370,744
546,023
5
2,268
7
175,819
219,774
219,774
43,955
Nominal
value
ThUS$
2,883,657
73,615
2,621
42
599
103
809,828
219,136
370,744
546,023
5
2,268
7
175,819
219,774
219,774
43,955
Amortization
Annual
Effective Nominal
rate
%
rate
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Accounts payable to related parties currents (*)
Foreign
Foreign
Foreign
81.062.300-4
Foreign
Foreign
Foreign
Inversora Aeronáutica Argentina S.A.
Delta Airlines
Patagonia Seafarms INC
Costa Verde Aeronautica S.A.
QA Investments Ltd
QA Investments 2 Ltd
Lozuy S.A.
QatarArgentina
U.S.A
ChileU.S.A
Chile
Jersey Channel Islands
Jersey Channel Islands
Uruguay
US$
US$
US$
US$
US$
US$
US$
Total
Total consolidated
2,473,147
1,323,072
790,732
835,284
787,495
6,209,730
5,567,970
4,250,103
3,773,632
2,318,762
2,195,767
1,857,319
14,395,583
12,680,106
(*)Trade and other accounts payables include claims resulting from Chapter 11 negotiation and are subject to settlement in accordance with the Reorganization plan.
Financial information
223
Integrated Report 2022
43
44
The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives
contracts with different financial institutions.
As of December 31, 2022, the Company maintains guarantees for US$7.5 million corresponding to
derivative transactions. The increase is due to: i) Increase in the number of hedging contracts and ii)
changes in fuel prices, exchange rates and interest rates. At the end of 2021, the Company had
guarantees for US$ 5.5 million corresponding to derivative transactions.
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, 2022, The Company has a national rating of BBB- by Fitch, a
rating of B- by Standard & Poor's, and a preliminary rating at the exit of the Chapter 11 process of
B2 with a stable outlook by Moody's.
3.3. Estimates of fair value.
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, 2022
As of December 31, 2021
Fair value measurements using values
considered as
Fair value measurements using values
considered as
Fair value
Level I
T hUS$
Level II
T hUS$
Level III
T hUS$
Fair value Level I
T hUS$
T hUS$
Level II
T hUS$
Level III
T hUS$
Assets
Cash and cash equivalents
Short-term mutual funds
Investment funds
Other financial assets, current
Fair value interest rate derivatives
Fair value of fuel derivatives
Fair value of foreign currency derivative
Private investment funds
Liabilities
T hUS$
95,452
95,452
21,878
8,816
12,594
191
277
At December 31, 2022, the Company maintained financial instruments that should be recorded at
fair value. These are grouped into two categories:
Other financial liabilities, current
Fair value of interest rate derivatives
Currency derivative not registered as hedge accounting
-
-
-
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.
95,452
95,452
277
-
-
-
277
-
-
-
-
-
21,601
8,816
12,594
191
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,025
26,025
17,988
-
17,641
-
347
5,671
2,734
2,937
26,025
26,025
347
-
-
-
347
-
-
-
-
-
17,641
-
17,641
-
-
5,671
2,734
2,937
-
-
-
-
-
-
-
-
-
-
-
Financial information
224
Integrated Report 2022
45
46
Additionally, at December 31, 2022, 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, 2022
As of December 31, 2021
Book
value
T hUS$
1,121,223
2,248
480,566
259,129
379,280
481,637
481,637
Fair
value
T hUS$
1,121,223
2,248
480,566
259,129
379,280
481,637
481,637
Book
value
T hUS$
1,020,810
2,120
558,078
386,034
74,578
83,150
83,150
Fair
value
T hUS$
1,020,810
2,120
558,078
386,034
74,578
83,150
83,150
1,008,109
1,008,109
881,770
881,770
19,523
15,517
12,743
19,523
15,517
12,743
724
15,622
12,201
724
15,622
12,201
802,841
824,167
4,447,780
4,339,370
1,627,992
1,627,992
4,839,251
4,839,251
12
5,979,039
326,284
12
5,533,131
326,284
661,602
5,948,702
472,426
662,345
5,467,594
472,426
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 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 rates, discount rates, inflation rates, fuel price. The estimation of
these assumptions requires significant judgment by management as these variables are inherently
uncertain; however, the assumptions used are consistent with the 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 shown in Note 15.
(b) Useful life, residual value, and impairment of property, plant, and equipment
The depreciation of assets is calculated based on a straight-line basis, except for certain technical
components depreciated on cycles and hours flown. These useful lives are reviewed on an annual
basis according to 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 result in a useful life different from what has been 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 the 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
225
Integrated Report 2022
47
48
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 and fuel price consistent 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 airline tickets as deferred income. Ordinary revenue from the sale
of tickets is recognized in the income statement when the passenger transport service is provided or
expires due to non-use. The Company evaluates on a monthly basis the probability of expiration of
the air tickets, with return clauses, based on the history of use of the air tickets. A change in this
probability could have an impact on revenue in the year in which the change occurs and in future
years.
As of December 31, 2022, deferred income associated with air tickets sold amounts to
ThUS$1,574,145 (ThUS$1,126,371 as of December 31, 2021). A hypothetical change of one
percentage point in the behavior of the passenger regarding the use would translate into an impact
of up to ThUS$7,453 per month.
(e) Valuation of miles and points awarded to holders of loyalty programs, pending use.
As of December 31, 2022, the deferred income associated with the LATAM Pass loyalty program
amounts to ThUS$1,120,565 (ThUS$1,285,732 as of December 31, 2021). A hypothetical change
of one percentage point in the exchange probability would translate into a cumulative impact of
ThUS$29,571 in the results of 2022 (ThUS$27,151 in 2021). Deferred income associated with the
LATAM Pass Brasil loyalty program (See Note 21) amounts to ThUS$140,486 as of December 31,
2022 (ThUS$192,381 as of December 31, 2021). A hypothetical change of two percentage points in
the probability of exchange would translate into a cumulative impact of ThUS$7,453 in the results
of 2022 (ThUS$5,100 in 2021).
Management used statistical models to estimate the miles and points awarded that will not be
redeemed by the program’s members (breakage) which involved significant judgments and
assumptions relating to the historical redemption and expiration activity and forecasted redemption
and expiration patterns.
The management in conjunction with an external specialist developed 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) The need to establish a provision and its valuation
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.
The Company recognizes 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 from it.
(g) Leases
During 2022, as a result of the arrival of new aircraft and the significant change in the flows of
many current contracts, the Company evaluated the relevance in the current scenario of continuing
to use the implicit rate, a methodology used in recent years, or whether it should in instead use a
different approximation for calculating the rate. It was concluded that the implicit rate was not
being able to reflect the economic environment in which the company operates, therefore it was not
accurately representing the Company's indebtedness conditions. Because of this, all new contracts
entered into during 2022 and all contracts that were modified during 2022 used the incremental
rate. Existing contracts that remained unchanged continued using the original implicit discount rate.
(i) Discount rate
The discount rates used to calculate the aircraft lease debt correspond to: (i) For aircraft that did not
have contractual changes associated with the exit from Chapter 11, the rate used was the implicit
rate of the contract, this is the discount rate that results from the aggregate present value of the
minimum lease payments and the unguaranteed residual value, and (ii) For aircraft that had
contractual changes associated with exit from Chapter 11, the rate used was the incremental rate,
this discount rate was calculated considering our recent aircraft debt negotiations, as well as
publicly available data for instruments with similar characteristics when calculating our incremental
borrowing rates.
For assets other than aircraft, the estimated lessee's incremental borrowing rate, which is derived
from information available at the lease inception date, was used to determine the present value of
the lease payments. We consider our recent debt issuances as well as publicly available data for
instruments with similar characteristics when calculating our incremental borrowing ratios.
A decrease of one percentage point in our estimate of the rates used to determine the lease liabilities
of new and modified fleet contracts booked as of December 31, 2022 would increase the lease
liability by approximately US$82 million.
(ii) Lease term
In determining the lease term, all facts and circumstances that create an economic incentive to
exercise an extension option are considered. Extension options (or periods after termination
options) are only included in the lease term if it is reasonably certain that the lease will be extended
(or not terminated). This is reviewed if a significant event or significant change in circumstances
occurs that affects this assessment and is within the lessee's control.
Financial information
226
Integrated Report 2022
49
50
These estimates are made based on the best information available on the events analyzed.
In any case, it is possible that events that may take place in the future make it necessary to modify
them in future periods, which would be done prospectively.
NOTE 5 - SEGMENT INFORMATION
As of December 31, 2022, the Company considers that it has a single operating segment, Air
Transport. This segment corresponds to the route network for air transport and is based on the way
in which the business is managed, according to the centralized nature of its operations, the ability to
open and close routes, as well as reassignment (airplanes, crew, personnel, etc.) within the network,
which implies a functional interrelation between all of them, making them inseparable. This
segment definition is one of the most common in the worldwide airline industry.
The Company’s revenues by geographic area are as follows:
P eru
Argent ina
U.S.A.
Europe
Colombia
Brazil
Ecuador
Chile
Asia P acific and rest of Lat in America
For the y ear ended
At December 31,
2022
T hUS$
2021
T hUS$
858.957
206.856
1.058.107
768.980
540.231
3.724.466
248.454
1.514.645
441.825
503.616
75.513
577.970
376.857
368.474
1.664.523
162.959
794.122
359.981
Income from ordinary act ivit ies
9.362.521
4.884.015
Ot her operat ing income
154.286
227.331
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.
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,
2022
As of
December 31,
2021
ThUS$
ThUS$
2,248
480,566
259,129
741,943
379,280
95,452
474,732
2,120
558,078
386,034
946,232
74,578
26,025
100,603
Total cash and cash equivalents
1,216,675
1,046,835
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,
2022
ThUS$
As of
December 31,
2021
ThUS$
10,711
193,289
17,643
22,607
19,361
906,666
46,398
7,148
89,083
9,800
13,535
7,099
886,627
33,543
1,216,675
1,046,835
Financial information
227
Integrated Report 2022
51
52
NOTE 7 - FINANCIAL INSTRUMENTS
Financial instruments by category
As of December 31, 2022
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
in results
ThUS$
amortized
cost
ThUS$
1,121,223
481,637
1,008,109
19,523
15,517
12,743
2,658,752
Hedge
derivatives
ThUS$
-
21,601
-
-
-
-
-
21,601
95,452
277
-
-
-
-
-
95,729
M easured at
amortized
cost
At fair value
with changes
in results
Hedge
derivatives
ThUS$
802,841
1,627,992
12
5,979,039
326,284
8,736,168
ThUS$
ThUS$
-
-
-
-
-
-
-
-
-
-
-
-
Total
ThUS$
1,216,675
503,515
1,008,109
19,523
15,517
12,743
-
2,776,082
Total
ThUS$
802,841
1,627,992
12
5,979,039
326,284
8,736,168
(*) The amount presented as at fair value with changes in the results corresponds mainly to private
investment funds. The amount presented as measured at amortized cost relates to ThUS$340,008 of
in Note 11) and guarantees.
funds delivered as
restricted advances
(as described
As of December 31, 2021
Assets
Cash and cash equivalents
Other financial assets, current (*)
Trade and others accounts receivable, current
Accounts receivable from related entities, current
Other financial assets, non current
Accounts receivable, non current
Total
Liabilities
Other financial liabilities, current
Trade and others accounts payable, current
Accounts payable to related entities, current
Other financial liabilities, non-current
Accounts payable, non-current
Total
Measured at At fair value
with changes
in results
ThUS$
amortized
cost
ThUS$
1,020,810
83,150
881,770
724
15,622
12,201
2,014,277
Hedge
derivatives
ThUS$
-
17,641
-
-
-
-
-
17,641
26,025
347
-
-
-
-
-
26,372
Measured at
amortized
cost
ThUS$
4,447,780
4,839,251
661,602
5,948,702
472,426
16,369,761
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
2,937
-
-
-
-
2,937
2,734
-
-
-
-
2,734
Total
ThUS$
1,046,835
101,138
881,770
724
15,622
12,201
-
2,058,290
Total
ThUS$
4,453,451
4,839,251
661,602
5,948,702
472,426
16,375,432
(*) The amount presented as at fair value with changes in results corresponds mainly to private
investment funds. The amount presented as measured at amortized cost relates to guarantees.
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,
2022
ThUS$
As of
December 31,
2021
ThUS$
952,625
135,459
1,088,084
(67,232)
1,020,852
(12,743)
1,008,109
765,050
209,925
974,975
(81,004)
893,971
(12,201)
881,770
The fair value of trade and other accounts receivable does not differ significantly from the book
value.
Financial information
228
Integrated Report 2022
53
54
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.
The movements of the provision for impairment losses of the Trade Debtors and other accounts
receivable are as follows:
Portfolio maturity
Expected
loss rate (1)
As of December 31, 2022
Gross book
value (2)
Impairment loss
Provision
Expected
loss rate (1)
Up to date
From 1 to 90 days
From 91 to 180 days
From 181 to 360 days
more of 360 days
Total
%
1%
3%
15%
79%
98%
ThUS$
ThUS$
745,334
142,780
8,622
8,269
47,620
952,625
(8,749)
(3,758)
(1,297)
(6,565)
(46,863)
(67,232)
%
2%
10%
31%
72%
86%
As December 31, 2021
Gross book
value (2)
Impairment loss
Provision
ThUS$
ThUS$
570,307
116,613
11,376
3,864
62,890
765,050
(8,806)
(11,840)
(3,567)
(2,766)
(54,025)
(81,004)
(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.
Periods
From January 1 to December 31, 2021
From January 1 to December 31, 2022
Opening
balance
T hUS$
(122.193)
(81.004)
Write-offs
T hUS$
26.435
5.966
(Increase)
Decrease
T hUS$
14.754
7.806
Closing
balance
T hUS$
(81.004)
(67.232)
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 significant, and the policy is to analyze case by
case to classify them according to the existence of risk, determining they need to be reclassified to
pre-judicial collection accounts.
Currency balances composition of Trade and other accounts receivable and non-current accounts
receivable are as follow:
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.
Currency
Argentine Peso
Brazilian Real
Chilean Peso
Colombian Peso
Euro
US Dollar
Korean Won
M exican Peso
Australian Dollar
Pound Sterling
Uruguayan Peso (New)
Swiss Franc
Japanese Yen
Swedish crown
Other Currencies
Total
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
25,559
389,451
36,626
6,779
12,506
510,916
6,337
1,536
9,808
9,149
45
2,621
2,802
223
6,494
1,020,852
7,282
352,027
53,488
5,657
24,548
429,091
844
2,428
62
13,105
860
361
106
490
3,622
893,971
As of December 31, 2022
As of December 31, 2021
Gross exposure
according to
balance
T hUS$
Gross
impaired
exposure
T hUS$
Exposure net
of risk
concentrations
Gross exposure
according to
balance
T hUS$
T hUS$
Gross
Impaired
exposure
T hUS$
Exposure net
of risk
concentrations
T hUS$
952,625
(67,232)
885,393
765,050
(81,004)
684,046
135,459
-
135,459
209,925
-
209,925
T rade accounts receivable
Other accounts
receivable
There are no relevant guarantees covering credit risk and these are valued when they are settled; no
materially significant direct guarantees exist. Existing guarantees, if appropriate, are made through
IATA.
Financial information
229
Integrated Report 2022
55
56
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,
2022
ThUS$
2021
ThUS$
Foreign
Foreign
Qatar Airways
Indirect shareholder
Qatar
US$
257
703
TAM Aviação Executiva e
Taxi Aéreo S.A.
Common shareholder
Foreign
Delta Air Lines Inc.
Shareholder
87.752.000-5
76.335.600-0
96.989.370-3
96.810.370-9
Granja Marina Tornagaleones S.A.
Parque de Chile S.A.
Rio Dulce S.A.
Inversiones Costa Verde
Ltda. y CPA.
Common shareholder
Related director
Related director
Related director
Brazil
U.S.A.
Chile
Chile
Chile
Chile
BRL
US$
CLP
CLP
CLP
CLP
Total current assets
(b) Current accounts payable
T ax No.
Related party
Relationship
Country
of origin
Currency
-
19,228
-
2
1
35
2
-
6
2
4
7
19,523
724
*
Current liabilities
As of
December 31,
2021
As of
December
2022
T hUS$
T hUS$
Foreign
Foreign
Foreign
81.062.300-4
Foreign
Foreign
Foreign
Delta Airlines, Inc.
Inversora Aeronáutica Argentina S.A.
Patagonia Seafarms INC
Costa Verde Aeronautica S.A. (*)
QA Investments Ltd (*)
QA Investments 2 Ltd (*)
Lozuy S.A. (*)
Shareholder
Related director
Related director
Shareholder
Common shareholder
Common shareholder
Common shareholder
U.S.A.
Argentina
U.S.A.
Chile
U.K.
U.K.
Uruguay
US$
US$
US$
US$
US$
US$
US$
T otal current and non current liabilities
(*)corresponds to drawdowns tranche C of the DIP loan (See note 3.1c)
-
5
7
-
-
-
-
2,268
5
7
175,819
219,774
219,774
43,955
12
661,602
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 2022
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,
2022
ThUS$
As of
December 31,
2021
ThUS$
438,717
39,072
477,789
250,327
37,010
287,337
(*) Correspond to spare parts and materials that will be used in own maintenance services as well as
those of third parties.
(**) Consumption of on-board services, uniforms and other indirect materials
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,
2022
ThUS$
As of
December 31,
2021
ThUS$
49,981
5,823
55,804
64,455
5,785
70,240
The resulting amounts do not exceed the respective net realization values.
As of December 31, 2022, the Company registered ThUS$ 148,790 (ThUS$ 47,362 as of December
31, 2021) in results, mainly related to on-board consumption and maintenance, which is part of the
Cost of sales.
Financial information
230
Integrated Report 2022
57
58
NOTE 11 - OTHER FINANCIAL ASSETS
(a)
The composition of other financial assets is as follows:
NOTE 12 - OTHER NON-FINANCIAL ASSETS
The composition of other non-financial assets is as follows:
Current Assets
Non-current assets
Total Assets
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
Current assets
Non-current assets
T otal Assets
As of
December 31,
2022
T hUS$
As of
December 31,
2021
T hUS$
As of
December 31,
2022
T hUS$
As of
As of
December 31, December 31,
2021
T hUS$
2022
T hUS$
As of
December 31,
2021
T hUS$
(a) Other financial assets
Private investment funds
Deposits in guarantee (aircraft)
Guarantees for margins of derivatives
Other investments
Domestic and foreign bonds
Guaranteed debt advances Chapter 11 (*)
Other guarantees given
Subtotal of other financial assets
(b) Hedging derivative asset
Fair value of interest rate derivatives
Fair value of foreign currency derivatives
Fair value of fuel price derivatives
Fair value of fuel price derivatives
Subtotal of derivative assets
Total Other Financial Assets
277
22,340
7,460
-
-
340,008
111,829
481,914
8,816
191
12,594
-
21,601
503,515
347
7,189
5,451
-
1,290
-
69,220
83,497
-
-
17,641
-
17,641
101,138
-
1,273
-
493
-
-
13,751
15,517
-
-
-
-
-
-
2,758
-
493
-
-
12,371
15,622
-
-
-
-
-
15,517
15,622
277
23,613
7,460
493
-
340,008
125,580
497,431
8,816
191
12,594
-
21,601
519,032
347
9,947
5,451
493
1,290
-
81,591
99,119
-
-
17,641
-
17,641
116,760
(*) As of December 31, 2022, there are ThUS$340,008 of funds delivered to an agent as restricted
advances, the purpose of which is to settle the claims pending resolution existing at the exit of the
Chapter 11 process. See claims in force at the end of the period in Note 34b.
The different derivative hedging contracts maintained by the Company at the end of each fiscal year
are described in Note 18.
(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,
2022
As of
December 31,
2021
ThUS $
ThUS $
5
336,676
5,847
1,716
6,791
165,457
2,540
519,032
16
9,775
4,502
1,727
4,104
93,247
3,389
116,760
(a) Advance payments
Aircraft insurance and other
Others
Subtotal advance payments
(b) Contract assets (1)
GDS costs
Credit card commissions
T ravel agencies commissions
27,122
13,039
-
40,161
9,530
26,124
12,912
12,331
11,404
23,735
6,439
10,550
8,091
Subtotal advance payments
48,566
25,080
-
1,733
1,733
-
-
-
-
-
2,002
2,002
-
-
-
-
27,122
14,772
41,894
9,530
26,124
12,912
12,331
13,406
25,737
6,439
10,550
8,091
48,566
25,080
(c) Other assets
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
Subtotal other assets
T otal Other Non - Financial Assets
102,637
191,364
59,553
108,368
(1) Movement of Contracts assets:
100,665
1,688
57,634
1,661
27,962
-
33,212
-
128,627
1,688
90,846
1,661
258
-
26
258
-
-
739
739
997
997
40
117,904
146,645
148,378
20
89,459
123,430
125,432
40
117,930
249,282
339,742
20
89,459
182,983
233,800
Initial balance
Activation
Cumulative
translation
adjustment
Amortization
Final balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
15,476
25,080
67,647
(6,680)
(51,363)
302,290
(37,145)
(241,658)
25,080
48,567
From January 1 to
December 31, 2021
From January 1 to
December 31, 2022
Financial information
231
Integrated Report 2022
59
60
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, 2022 and
December 31, 2021, are detailed below:
During the year ended December 31, 2021, adjustments for US$ 85 million (US$ 332 million at
December 31, 2020) of expenses were recognized to record these assets at their net realizable value,
which were recorded as restructuring activity expenses.
The detail of the fleet classified as non-current assets and disposal group classified as held for sale
is as follows:
As of
December 31,
2022
As of
December 31,
2021
T hUS$
T hUS$
64,483
21,552
381
-
86,416
99,694
46,724
374
-
146,792
Current assets
Aircraft
Engines and rotables
Other assets
T otal
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 2020, eleven Boeing 767 aircraft were transferred from the Property, plant and equipment,
to Non-current assets item or groups of assets for disposal classified as held for sale. During 2021,
the sale of five aircraft was completed. Additionally, during the year 2022 the sale of three aircraft
was finalized.
During 2021, associated with the fleet restructuring plan, 3 engines of the A350 fleet were
transferred from the Property, plant and equipment to Non-current assets or groups of assets for
disposal classified as held for sale, of which during the same year the sale of an engine was
finalized. Additionally, during the year 2022, the sale of an engine was finalized and some materials
and spare parts of this same fleet were transferred to Non-current assets or groups of assets for
disposal classified as held for sale.
During 2022, 28 A319 family aircraft were transferred from Property, plant and equipment to Non-
current assets or asset groups for disposal classified as held for sale. Additionally, adjustments for
US$ 345 million of expenses were recognized within results as part of Other gains (losses) to record
these assets at their net realizable value.
During the year 2022, 6 aircraft and 8 engines of the A320 family were transferred from Property,
plant and equipment to Non-current assets or asset groups for disposal classified as held for sale, of
which during the year 2022 the sale of three aircraft was finalized. Additionally, adjustments for
US$ 25 million of expenses were recognized to record these assets at their net realizable value, and
since the fleet restructuring process had already been completed, these adjustments were recorded in
results as part of Other expenses by function.
Aircraft
As of
As of
December 31,
2022
December 31,
2021
Boeing 767
Airbus A320
Airbus A319
Total
3
3
28
34
6
-
-
6
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
Country of
incorporation
Functional
currency
Ownership
As of
December 31,
As of
December 31,
2022
%
2021
%
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.
Peru
Chile
Argentina
Chile
Ecuador
Colombia
Brazil
US$
US$
ARS
US$
US$
COP
BRL
99.81000
99.89810
100.00000
100.00000
100.00000
99.21764
100.00000
99.81000
99.89810
100.00000
100.00000
100.00000
99.20120
100.00000
The consolidated subsidiaries do not have significant restrictions for transferring funds to the parent
company.
As of December 31, 2021 the consolidated subsidiaries do not have significant restrictions for
transferring funds to the parent entity in the normal course of operations, except for those imposed
by Chapter 11 on dividend payments.
Financial information
232
Integrated Report 2022
61
Summary financial information 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. (*)
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. (*)
Total
Assets
ThUS$
335,773
394,378
178,881
283,166
110,821
112,501
3,497,848
Total
Assets
ThUS$
484,388
721,484
162,995
471,094
112,437
70,490
2,608,859
Statement of financial position as of December 31, 2022
Current
Assets
ThUS$
305,288
144,854
175,130
47,238
107,313
109,076
1,998,284
Non-current
Assets
Total
Liabilities
ThUS$
ThUS$
Current
Liabilities
ThUS$
Non-current
Liabilities
ThUS$
30,485
249,524
3,751
235,928
3,508
3,425
1,499,564
281,178
212,094
176,707
177,109
93,975
213,941
4,231,547
276,875
165,297
111,306
145,446
82,687
211,679
3,302,692
4,303
46,797
65,401
31,663
11,288
2,262
928,855
Statement of financial position as of December 31, 2021
Current
Assets
ThUS$
454,266
452,981
158,008
184,235
108,851
67,809
1,262,825
Non-current
Assets
Total
Liabilities
ThUS$
ThUS$
Current
Liabilities
ThUS$
Non-current
Liabilities
ThUS$
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
414,997
488,535
98,316
275,246
80,861
75,621
2,410,426
2,070
48,645
21,384
52,709
16,250
12,128
846,722
(*) Corresponds to consolidated information of TAM S.A. and subsidiaries
Income for the period
ended December 31, 2022
Revenue
ThUS$
1,257,865
333,054
3,108
320,187
134,622
394,430
4,255,115
Net
Income/(loss)
ThUS$
(12,726)
(1,230)
(450,755)
(36,190)
1,519
(122,199)
(69,932)
Income for the period
ended December 31, 2021
Revenue
ThUS$
584,929
215,811
242
203,411
68,762
239,988
2,003,922
Net
Income/(loss)
ThUS$
(109,390)
1,590
(200,315)
(56,135)
(5,596)
(19,810)
(741,791)
Financial information
233
Integrated Report 2022
62
(b) Non-controlling interests
Equity
Tax No.
Country
of origin
As of
December 31,
2022
As of
December 31,
2021
%
%
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
Latam Airlines Perú S.A
Lan Cargo S.A. and Subsidiaries
Lan Pax Airlines Group S.A. y Filiales
Linea Aérea Carguera de Colombiana S.A.
Transportes Aereos del Mercosur S.A.
Foreign
93.383.000-4
96.969.680-0
Foreign
Foreign
Peru
Chile
Chile
Colombia
Paraguay
0.19000
0.10196
0.00000
9.54000
5.02000
0.19000
0.10196
0.00000
9.54000
5.02000
Total
Incomes
Latam Airlines Perú S.A
Lan Cargo S.A. and Subsidiaries
Lan Pax Airlines Group S.A. y Filiales
Linea Aérea Carguera de Colombiana S.A.
Transportes Aereos del Mercosur S.A.
Total
Tax No.
Country
of origin
For the year ended
December 31,
2022
%
2021
%
Foreign
93.383.000-4
96.969.680-0
Foreign
Foreign
Peru
Chile
Chile
Colombia
Paraguay
0.19000
0.10196
-
9.54000
5.02000
0.19000
0.10196
-
9.54000
0.79880
(12,392)
(1,638)
1,691
129
653
(11,557)
(13,035)
2,481
(149)
(422)
769
(10,356)
For the year ended
December 31,
2022
ThUS$
643
(4,118)
967
551
(116)
(2,073)
2021
ThUS$
(5,553)
(1,771)
(182)
1,788
67
(5,651)
Financial information
234
Integrated Report 2022
63
64
NOTE 15 - INTANGIBLE ASSETS OTHER THAN GOODWILL
The details of intangible assets are as follows:
Classes of intangible assets
(net)
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
Classes of intangible assets
(gross)
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
625,368
203,791
143,550
107,652
-
25
587,214
190,542
136,135
104,874
-
127
625,368
203,791
518,971
107,651
37,904
1,315
587,214
190,542
463,478
105,673
36,723
1,315
1,080,386
1,018,892
1,495,000
1,384,945
Airport slots
Loyalty program
Computer software
Developing software
Trademarks (1)
Other assets
Total
a) Movement in Intangible assets other than goodwill:
Ope ning ba la nc e a s o f J a nua ry 1, 2021
Additio ns
Withdrawa ls
Trans fer s o ftwa re a nd o the rs
Fo reign e xc ha nge
Amo rtizatio n
Clo s ing ba la nc e a s o f De c e mbe r 31, 2021
Ope ning ba la nc e a s o f J a nua ry 1, 2022
Additio ns
Withdrawa ls
Trans fer s o ftwa re a nd o the rs
Fo reign e xc ha nge
Amo rtizatio n
Clo s ing ba la nc e a s o f De c e mbe r 31, 2022
Co mpute r
s o ftwa re a nd o the rs
Ne t
De ve lo ping
s o ftwa re
ThUS$
ThUS$
Airpo rt
s lo ts
ThUS$
Trade ma rks
a nd lo ya lty
pro gram (1)
To ta l
ThUS$
ThUS$
139.341
-
(275)
46.144
(3.571)
(45.377)
136.262
136.262
47
(2.947)
61.212
3.359
(54.358)
143.575
68.521
82.798
(429)
(45.657)
(359)
-
104.874
104.874
66.820
(245)
(63.658)
(139)
-
627.742
-
-
-
(40.528)
-
587.214
587.214
-
-
-
38.154
-
210.955
-
-
(352)
(14.276)
(5.785)
1.046.559
82.798
(704)
135
(58.734)
(51.162)
190.542
1.018.892
190.542
-
-
-
13.249
-
1.018.892
66.867
(3.192)
(2.446)
54.623
(54.358)
107.652
625.368
203.791
1.080.386
(1) In 2016, the Company decided 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.
As of December, 31, 2022, the TAM brand is fully amortized.
See Note 2.5
The amortization of each period is recognized in the consolidated income statement within
administrative expenses.
The cumulative amortization of computer programs, brands and other assets as of December 31,
2022 amounts to ThUS $ 414,614 (ThUS $ 366,053 as of December 31, 2021).
Impairment Test Intangible Assets with an indefinite useful life
b)
As of December 31, 2022, 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, 2022, 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 of cash flows after taxes from the financial budgets
approved by management. 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 the 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 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 rate (Terminal)
Exchange rate (1)
Discount rate based don the Weighted Average
Cost of Capital (WACC)
Fuel Price from future prices curves
%
R$/US$
CGU
Air transport
0.0 – 3.5
5.40 – 5.63
%
8.40– 12.40
Commodities markets
US$/barrel
100 – 130
(1) In line with expectations of the Central Bank of Brazil.
The result of the impairment test, which includes a sensitivity analysis of its main variables, showed
that the recoverable amount exceeded the book value of the cash-generating unit, and therefore no
impairment was identified.
Financial information
235
Integrated Report 2022
65
The CGU is sensitive to annual growth rates, discounts and exchange rates and fuel price. The
sensitivity analysis included the individual impact of changes in critical estimates in determining
recoverable amounts, namely:
Increase
WACC
Maximum
%
Decrease rate
Terminal growth
Minimal
%
Air Transportation CGU
12.4
0
Increase
fuel price
Maximum
US$/barrel
130
In none of the above scenarios an impairment of the cash-generating unit was identified.
Financial information
236
Integrated Report 2022
66
NOTE 16 - PROPERTY, PLANT AND EQUIPMENT
The composition by category of Property, plant and equipment is as follows:
Gross Book Value
Accumulated depreciation
Net Book Value
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
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
388,810
44,349
124,507
11,135,425
10,427,950
707,475
27,090
153,355
155,351
51,504
202,753
12,283,144
4,391,690
246,078
4,637,768
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
-
-
(55,511)
(4,836,926)
(4,619,279)
(217,647)
(25,479)
(136,746)
(118,279)
(46,343)
(42,726)
(5,262,010)
(3,064,869)
(182,372)
(3,247,241)
-
-
(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)
388,810
44,349
68,996
6,298,499
5,808,671
489,828
1,611
16,609
37,072
5,161
160,027
7,021,134
1,326,821
63,706
1,390,527
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
Total
16,920,912
17,736,005
(8,509,251)
(8,246,138)
8,411,661
9,489,867
(1) As of December 31, 2022, includes advances paid to aircraft manufacturers for ThUS$ 357,979 (ThUS$ 368,625 as of December
31, 2021)
(2) Consider mainly rotables and tools.
(3) As of December 31, 2021, due to Chapter 11, 13 aircraft lease contract were rejected, of which 4 were recorded as Property, plant
and equipment, (4 A350) and 9 were presented as right of use assets, (2 A320 and 7 A350).
(4) During 2022, six A320 and twenty-eight A319 aircraft were reclassified to Non-current assets or groups of assets for disposal as
held for sale.
Financial information
237
Integrated Report 2022
Movement in the different categories of Property, plant and equipment:
67
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, 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
C lo s ing ba la nc e a s o f De c e m be r 31, 2021
C o ns truc tio n
in pro gre s s
ThUS $
377,961
84,392
-
-
(279)
-
(1,720)
13,443
95,836
473,797
La nd
ThUS $
42,978
1,550
-
-
-
-
(1,252)
-
298
43,276
65,207
7,698,969
14,831
92
-
-
-
(4,074)
(833)
59
(4,756)
60,451
563,023
(169)
(469,878)
(44,684)
(620,349)
(19,199)
(538,996)
(1,130,252)
6,568,717
6,455
(26)
-
(212)
(4,345)
(404)
537
2,005
16,836
49,199
6
(309)
-
(1,885)
(8,304)
(1,752)
1,786
(10,458)
38,741
Ope ning ba la nc e a s o f J a nua ry 1, 2022
473,797
43,276
60,451
6,568,717
16,836
38,741
Additio ns
Dis po s a ls
Withdra wa ls
R e tire m e nts
De pre c ia tio n e xpe ns e s
F o re ing 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, 2022
16,332
-
(75)
-
(1,282)
(99,962)
-
(84,987)
388,810
-
-
-
-
1,073
-
-
1,073
44,349
-
-
(2)
(3,285)
918
10,914
-
8,545
68,996
843,808
(4,140)
(42,055)
(669,059)
11,527
(403,950)
-
(263,869)
6,304,848
6,426
-
(24)
(5,662)
(84)
(883)
-
(227)
16,609
113
(264)
(836)
(7,914)
2,365
4,867
-
(1,669)
37,072
396
17
(17)
-
-
(61)
(11)
1
(71)
325
325
258
(3)
-
(55)
(28)
(74)
-
98
423
74,408
6,543
-
(46,816)
(26)
(11,649)
(13,074)
123,589
58,567
132,975
8,323,949
662,078
(521)
(516,694)
(47,086)
(648,782)
(38,245)
(399,581)
(988,831)
7,335,118
132,975
7,335,118
27,160
-
(313)
(13,071)
7,593
5,683
-
27,052
160,027
894,097
(4,407)
(43,305)
(699,046)
22,082
(483,405)
-
(313,984)
7,021,134
(*) Include aircraft lease rejection due to Chapter 11.
(**) As of December 31, 2022, six A320 ThUS$ (29,328) and twenty-eight A319 ThUS$ (373,410) aircraft were reclassified to Non-
current assets or groups of assets for disposal as held for sale. 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) (see note 13).
Financial information
238
Integrated Report 2022
68
69
NCG 461:4.1 TIME
HORIZONS
(c) Right of use assets:
Opening balances as of January 1, 2021
Additions
Fleet rejection (*)
Depreciation expense
Cumulative translate adjustment
Other increases (decreases) (**)
T otal changes
Final balances as of December 31, 2021
Opening balances as of January 1, 2022
Additions
Depreciation expense
Cumulative translate adjustment
Other increases (decreases) (***)
T otal changes
Final balances as of December 31, 2022
Aircraft
T hUS $
2,338,042
537,995
(573,047)
Net right
of use
assets
T hUS $
2,406,319
Others
T hUS $
68,277
1,406
539,401
(4,577)
(577,624)
(317,616)
(16,597)
(334,213)
(574)
116,942
(1,933)
6,431
(2,507)
123,373
(236,300)
(15,270)
(251,570)
2,101,742
2,101,742
372,571
(249,802)
919
(898,609)
(774,921)
1,326,821
53,007
2,154,749
53,007
13,087
(16,368)
1,392
12,588
2,154,749
385,658
(266,170)
2,311
(886,021)
10,699
63,706
(764,222)
1,390,527
(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
Useful life (years)
minimum
maximum
20
5
5
10
10
5
1
50
30
10
10
10
8
25
(*) Except in the case of the Boeing 767 300ER, Airbus 320 Family and Boeing 767 300F fleets
that consider a lower residual value, due to the extension of their useful life to 22, 25 and 30 years
respectively. Additionally, certain technical components are depreciated based on cycles and hours
flown.
(*) Include aircraft lease rejection due to Chapter 11.
(**) Includes the renegotiations of 92 aircraft (1 A319, 37 A320, 12 A320N, 19 A321, 1 B767, 6
B777 and 16 B787).
(***) Include the renegotiations of 115 aircraft (1 A319, 39 A320, 14 A320N, 30 A321, 1 B767,
6 B777 and 24 B787).
(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:
Aircraft included
in Property,
plant and equipment
Aircraft included
as Rights
of use assets
T otal
fleet
Aircraft
Model
As of
December 31,
2022
As of
December 31,
2021
As of
As of
December 31, December 31,
2022
2021
As of
December 31,
2022
As of
December 31,
2021
Boeing 767
Boeing 767
Boeing 777
Boeing 787
Boeing 787
Airbus A319
Airbus A320
Airbus A320
Airbus A321
T otal
300ER
300F
300ER
800
900
100
200
NEO
200
15
13
4
4
2
12
88
1
19
(3)
(1)
16
12
4
4
2
37
94
-
18
-
1
6
6
19
1
40
15
30
(2)
-
1
6
6
15
7
39
12
31
158
187
118
117
15
14
10
10
21
13
128
16
49
276
(2)
(1)
16
13
10
10
17
44
133
12
49
304
(1) An aircraft leased to Aerotransportes Mas de Carga S.A. de C.V, was returned to LAT AM Airlines Group S.A. in 2022.
(2) An aircraft with a short-term operating lease is not considered value for right of use.
(3) Twenty-eight A319 aircraft were classified under non-current assets or groups of assets for disposal as held for sale, (see Note 13)
Guarantee
agent (1)
Creditor
company
Committed
Assets
Fleet
Wilmington
MUFG
Aircraft and engines
Trust Company
Credit Agricole
Credit Agricole
Aircraft and engines
Airbus A319
Airbus A320
Boeing 767
Boeing 777
Airbus A319
Airbus A320
Airbus A321 / A350
Boeing 767
Boeing 787
Bank Of Utah
BNP Paribas
Aircraft and engines
Boeing 787
Citibank N.A.
Citibank N.A.
Aircraft and engines
UMB Bank
MUFG
Aircraft and engines
Airbus A319
Airbus A320
Airbus A321
Airbus A350
Airbus B767
Airbus B787
Rotables
Airbus A320
As of
Deceember 31,
2022
Existing
Debt
ThUS$
Book
Value
ThUS$
As of
December 31,
2021
Existing
Debt
ThUS$
Book
Value
ThUS$
4,554
33,154
35,043
141,605
3,518
195,864
6,192
9,121
60,305
184,199
-
-
-
-
-
-
-
-
-
13,205
203,788
164,448
144,065
5,311
161,397
4,827
23,323
34,077
221,311
-
-
-
-
-
-
-
-
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
Total direct guarantee
673,555
975,752
1,429,681
2,171,236
(1) For the syndicated loans, the Guarantee Agent represents different creditors.
Financial information
239
Integrated Report 2022
70
71
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 booked within Property, Plant and
Equipment whose total debt as of December 31, 2022, amounts to ThUS$ 1,037,122 (ThUS$
1,200,382 as of December 31, 2021). The book value of the assets with indirect guarantees as of
December 31, 2022, amounts to ThUS$ 2,306,233 (ThUS$ 2,884,563 as of December 31, 2021).
As of December 31, 2021, given Chapter 11, four aircraft included within Property, plant and
equipment were rejected, of which four had direct guarantees and one indirect guarantee.
As of December 31, 2022, the Company keeps valid letters of credit related to right of use assets
according to the following detail:
Creditor Guarantee
Debtor
Type
GE Capital Aviation Services Ltd.
Merlin Aviation Leasing (Ireland) 18 Limited
RB Comercial Properties 49
Empreendimentos Imobiliarios LTDA
LATAM Airlines Group S.A.
Tam Linhas Aéreas S.A.
Three letters of credit
Two letters of credit
Tam Linhas Aéreas S.A.
One letter of credit
Value
ThUS$
Release
date
12,198
3,852
27,091
43,141
Dec 6, 2023
Mar 15, 2023
Apr 20, 2023
(ii)
Commitments and others
Fully depreciated assets and commitments for future purchases are as follows:
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
Gross book value of fully depreciated property,
266,896
223,608
plant and equipment still in use
Commitments for the acquisition of aircraft (*)
13,186,000
10,800,000
(*) According to the manufacturer’s price list.
Purchase commitment of aircraft
Manufacturer
2023
2024
2025
2026-2029
T otal
Year of delivery
Airbus S.A.S.
A320-NEO Family
T he Boeing Company
Boeing 787-9
T otal
8
8
2
2
10
8
8
-
-
8
11
11
-
-
11
56
56
-
-
56
83
83
2
2
85
As of December 31, 2022, as a result of the different aircraft purchase contracts signed with Airbus
S.A.S., 83 Airbus aircraft of the A320 family remain to be received with deliveries between 2023
and 2029. The approximate amount, according to manufacturer list prices, is ThUS$12,586,000.
As of December 31, 2022, as a result of the different aircraft purchase contracts signed with The
Boeing Company, 2 Boeing 787 Dreamliner aircraft remain to be received with delivery dates
during 2023. The approximate amount, according to list prices from the manufacturer, is ThUS$
600,000.
As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with
AerCap Holdings N.V., 8 Airbus aircraft of the A320 Neo family remain to be received with
deliveries between 2023 and 2024.
As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with
Air Lease Corporation, 2 Airbus aircraft of the A320 Neo family remain to be received with
deliveries between 2023 and 2024.
As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with
Avolon Aerospace Leasing Limited, 3 Airbus aircraft of the A320 Neo family remain to be received
with deliveries between 2023 and 2024.
As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with
CDB Aviation, 1 Airbus aircraft of the A320 Neo family with a delivery date of 2023 remains to be
received.
As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with
Air Lease Corporation, 5 Airbus A321XLR family aircraft remain to be received with deliveries
between 2025 and 2026.
As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with
ORIX Aviation Systems Ltd., 4 Boeing 787 Dreamliner aircraft with a delivery date of 2023 remain
to be received.
(iii) Capitalized interest costs with respect to Property, plant and equipment.
For the period ended
December 31,
2022
2021
Average rate of capitalization of
capitalized interest costs
Costs of capitalized interest
%
ThUS$
7.12
10,575
5.06
7,345
(f)
Assumption, Amendment & Rejection of Executory Contracts & Leases
On June 28, 2020, the Bankruptcy Court authorized the Debtors to establish procedures for the
rejection of certain executory contracts and unexpired leases and on September 24, 2020, the
Bankruptcy Court authorized the Debtors to establish procedures for the rejection of certain
unexpired aircraft lease agreements, aircraft engine agreements and the abandonment of certain
related assets. In accordance with these rejection procedures, the Bankruptcy Code and the
Financial information
240
Integrated Report 2022
72
73
Bankruptcy Rules the Debtors have or will reject certain contracts and leases (see notes 18 and 26).
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. Pursuant to the Disclosure Statement Order, the Debtors have until the Effective Date of the
Plan (as defined in the Plan) to assume or reject executory contracts and unexpired leases.
Further, the Debtors have filed motions to reject certain aircraft and engine leases and related
agreements:
Bankruptcy Court approval date:
January 29, 2021
April 23, 2021
May 14, 2021
June 17, 2021
June 24, 2021
November 3, 2021
January 5, 2022
March 22, 2022
May 18, 2022
Asset rejected:
(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;
(ii) 1 Rolls-Royce International Aero Engine
AG V2527M-A5;
(i) General Terms Agreement between Rolls-
Royce PLC and Rolls-Royce Totalcare
Services Limited and TAM Linhas Aereas
S.A.;
(i) 1 International Aero Engines AG V2527-
A5 engine; and
(i) Framework Deed Relating to the purchase
and leaseback of ten used Airbus A330-200
aircraft, nine new Airbus A350-900 aircraft,
four new Boeing 787-9 aircraft and two new
Boeing 787-8 aircraft.
As of December 31, 2021, and as a result of these contract rejections, performance 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 18 and 26.
Contracts rejected during 2022 in the previous table do not result in changes in the asset or
liabilities structure of the Company, since these were general terms of agreement for purchases,
engine maintenance contracts and short term leases which according to the accounting policies (see
Note 2) should not be registered as right of use assets.
The Debtors also have filed motions to enter into certain new aircraft lease agreements, including:
Bankruptcy Court Approval Date:
March 8, 2021
Counterparty / Aircraft
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
April 12, 2021
May 30, 2021
August 31, 2021
February 23, 2022
March 17, 2022
March 17, 2022
March 17, 2022
March 18, 2022
April 14, 2022
June 29, 2022
August 12, 2022
September 8, 2022
(i) Avolon Aerospace Leasing Limited or its
Affiliates, Aircraft MSNs 38891, 38893,
38895
(ii) Sky Aero Management Ltd. Ten Airbus
A320neo
Vmo Aircraft Leasing, Two Boeing 787-9
Avolon Aerospace Leasing Limited, Two
Airbus A321neo
Air Lease Corporation, Three Airbus A321NX
AerCap Ireland, Two Airbus A321-200NEO
CDB Aviation Lease Finance DAC, Two
Airbus A321NX
Macquarie Aircraft Leasing Services (Ireland)
Ltd., One Airbus A320-233
UK Export Finance, Four Boeing 787-9
Air Lease Corporation, Three Airbus
A321XLR
Air Lease Corporation, Two Airbus A321XLR
In addition, the Debtors also have filed motions to enter into certain aircraft lease amendment
agreements 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:
April 14, 2021
April 15, 2021
April 27, 2021
May 4, 2021
May 5, 2021
May 27, 2021
May 28, 2021
May 30, 2021
Amended Lease Agreement/Counterparty
(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
Financial information
241
Integrated Report 2022
July 1, 2021
July 8, 2021
July 15, 2021
July 20, 2021
July 27, 2021
August 30, 2021
74
75
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.
(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
NOTE 17 - CURRENT AND DEFERRED TAXES
The Company calculated and booked its income tax provision for the period ended December 31,
2022 using the partially integrated system with a tax rate of 27%, in accordance with the Law No.
21,210, published in the Journal of the Republic of Chile, dated February 24, 2020, which update
the Tax Legislation.
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 income tax expense.
(a)
Current taxes
(a.1) The composition of the current tax assets is the following:
Current assets
Non-current assets
Total assets
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Provisional monthly
payments (advances)
Other recoverable credits
Total current tax assets
18,559
14,474
33,033
32,086
9,178
41,264
-
-
-
-
-
-
18,559
14,474
33,033
32,086
9,178
41,264
(a.2) The composition of the current tax liabilities are as follows:
Current liabilities
Non-current liabilities
Total liabilities
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Income tax provision
Total current tax liabilities
1,026
1,026
675
675
-
-
-
-
1,026
1,026
675
675
The lease amendment agreements were accounted for as lease modifications (see Note 18).
In relation to several of these lease amendment agreements, the Debtors entered into claims
settlement stipulations for prepetition amounts due upon assumption of those agreements.
Financial information
242
Integrated Report 2022
76
77
(b) Deferred taxes
The balances of deferred tax are the following:
Concept
Properties, Plants and equipment
Assets by right of use
Amortization
Provisions
Revaluation of financial instruments
Tax losses
Intangibles
Other
Assets
Liabilities
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
(1,006,814)
249,462
(88,172)
(20,563)
2,438
852,654
-
16,910
(1,128,225)
715,440
(44,605)
111,468
(16,575)
358,284
-
19,503
81,326
(45)
10
69,519
-
(94,005)
270,512
17,308
344,625
80,468
(68)
10
74,047
-
(87,378)
254,155
19,777
341,011
Total
5,915
15,290
The balance of deferred tax assets and liabilities are composed primarily of temporary differences to
be reversed in the long term.
Movements of Deferred tax assets and liabilities
(b.1)
From January 1 to December 31, 2021
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
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)
(b.2
From January 1 to December 31, 2022
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
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
As s e ts /(lia bilitie s )
inc o m e
ThUS $
(1,208,693)
715,508
(44,615)
37,421
(16,575)
445,662
(254,155)
(274)
ThUS $
120,553
(466,001)
(43,567)
(128,070)
19,248
500,997
2,114
(124)
To ta l
(325,721)
5,150
inc o m e
ThUS $
-
-
-
567
(235)
-
-
-
332
va ria tio n
As s e t (lia bility)
ThUS $
-
-
-
-
-
-
(18,471)
-
(18,471)
ThUS $
(1,088,140)
249,507
(88,182)
(90,082)
2,438
946,659
(270,512)
(398)
(338,710)
Unrecognized deferred tax assets:
Deferred tax assets are recognized to the extent that it is probable that sufficient taxable profits will
be generated in the future. In total the Company has not recognized deferred tax assets for ThUS$
3,651,023 at December 31, 2022 (ThUS$ 2,638,473 as of December 31, 2021) which include
deferred tax assets related to negative tax results of ThUS$ 14,930,487 at December 31, 2022
(ThUS$ 9,030,059 at December 31, 2021).
(*) As stated in note 2c), on November 26th, 2021 the Company filed a Reorganization Plan and
Disclosure Statement in which, among other items, financial forecasts were included together with
the proposed issuance of new shares and convertible notes. With that information the Company´s
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 be offset by 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. On the other hand, on December 31, 2022 the Company management of
subsidiary Lan Cargo S.A determined that considering financial forecast it will not be probable that
part of the deferred tax assets may be offset with future taxable profits. Therefore, the Company
derecognized deferred tax assets not considered recoverable in the amount of ThUS$6,173.
(Expenses)/income from deferred taxes and income tax:
Income tax (expense)/benefit
Current tax (expense) benefit
Adjustments to the current tax of the previous year
Total current tax (expense) benefit
For the year ended
December 31,
2022
ThUS$
2021
ThUS$
(14,064)
-
(14,064)
(47,139)
(460)
(47,599)
(Expense)/benefit from deferred income taxes
Deferred (expense) benefit for taxes related to the creation
and reversal of temporary differences
5,150
(521,336)
Income tax (expense)/benefit
Total deferred tax (expense)benefit
5,150
(8,914)
(521,336)
(568,935)
Financial information
243
Integrated Report 2022
78
79
Income tax (expense)benefit
Current tax (expense) benefit, foreign
Current tax (expense) benefit , domestic
Total current tax (expense) benefit
Deferred tax (expense) benefit, foreign
Deferred tax (expense) benefit, domestic
Total deferred tax (expense)benefit
Income tax (expense)/benefit
For the year ended
December 31,
2022
ThUS$
19,573
(33,637)
(14,064)
(532)
5,682
5,150
(8,914)
2021
ThUS$
(9,943)
(37,656)
(47,599)
4,309
(525,645)
(521,336)
(568,935)
Income before tax from the Chilean legal tax rate (27% as of December 31, 2022 and 2021)
Income tax benefit/(expense) using the legal tax rate
T ax effect by change in tax rate
T ax effect of rates in other jurisdictions
T ax effect of non-taxable income (*)
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
For the year ended
December 31,
2021
T hUS$
For the year ended
December 31,
2022
%
2021
%
2022
T hUS$
(363,434)
9,016
20,398
1,201,618
(33,855)
-
54,775
9,444
(30,928)
90,823
205,458
-
(6,173)
(990,095)
62,788
354,520
-
(1,251,912)
(667,702)
9,194
(1,671,671)
0.67
1.52
89.27
(2.52)
6.75
-
(0.46)
(73.56)
4.66
26.33
(0.67)
-
(1.34)
(0.23)
0.76
(5.03)
-
30.65
16.35
(0.23)
40.93
13.93
Income tax benefit/(expense) using the effective rate
(8,914)
(568,935)
(*) As of December 31, 2022, this amount mainly includes ThUS$974,826 and ThUS$218,775
related to amounts resulting from the gain resulting from the de-recognition of financial liabilities
as a result of emergence from Chapter 11, and the equity issuance cost which is not taxable
respectively.
Deferred taxes related to items charged to equity:
For the year ended
December 31,
2022
ThUS$
2021
ThUS$
Aggregate deferred taxation of components
of other comprehensive income
332
(2,841)
NOTE 18 - 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
Current
Loans to exporters
Bank loans (3)
Guaranteed obligations (5)(6)
Other guaranteed obligations (1)(3)
Subtotal bank loans
Obligation with the public (3)
Financial leases (4)(5)(6)(7)
Other loans
Total current (2)
Non-current
Bank loans (3)
Guaranteed obligations (5)(6)
Other guaranteed obligations
Subtotal bank loans
Obligation with the public (3)
Financial leases (4)(5)(6)(7)
Total non-current (2)
Total obligations with financial institutions (2)
1,102,736
(27.00)
(27.00)
Obligations with credit institutions and debt instruments:
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
629,106
173,735
-
-
802,841
3,936,320
2,042,719
5,979,039
3,869,040
578,740
2,734
2,937
4,453,451
3,566,804
2,381,898
5,948,702
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
-
353,284
17,887
66,239
437,410
33,383
156,285
2,028
629,106
1,032,711
307,174
408,065
1,747,950
1,256,416
931,954
3,936,320
4,565,426
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
Financial information
244
Integrated Report 2022
80
81
(1) During March and April 2020, LATAM Airlines Group S.A. drew the entirety (US$ 600
million) of the committed credit line “Revolving Credit Facility (RCF)”. The line is guaranteed with
collateral made up of aircraft, engines and spare parts, which was fully drawn until November 3,
2022. Once emerged from Chapter 11, this line was fully repaid and is available to be drawn.
(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 Court
for the Southern District of New York. Under Section 362 of the Bankruptcy Code. The same
occurred for TAM LINHAS AÉREAS S.A and its affiliates (all LATAM affiliates in Brazil), dated
July 9, 2020. Filing for Chapter 11 automatically suspends most actions against LATAM and its
affiliates, including most of actions to collect financial obligations incurred before the Chapter 11
filing date or to exercise control over the property of LATAM and its affiliates. Consequently,
although the bankruptcy filing may have caused defaults for some of the obligations of LATAM
and its affiliates, the counterparties cannot take any action as a result of such defaults.
Then, on November 3, 2022, the Company and all of its subsidiaries successfully emerged from
Chapter 11.
(3) On September 29, 2020, LATAM Airlines Group S.A. obtained Debtor-in-Possession (“DIP”)
financing for a total of US$2,450 million, composed of US$1,300 million of a tranche A (“Tranche
A”) and US$1,150 million of a tranche C (“Tranche C” ), of which US$750 million were provided
by related parties. Obligations under the DIP were secured by assets owned by 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$1,150 million from Tranche A and
Tranche C, and then, on or around June 22, 2021, LATAM made an additional withdrawal for
US$500 million from Tranche A and Tranche C.
On October 18, 2021, LATAM Airlines Group S.A. obtained court approval for a Tranche B
(“Tranche B”) of the DIP Financing for up to a total of US$750 million. The obligations of this
Tranche B, like the previous tranches, were guaranteed with the same guarantees granted by
LATAM and its subsidiaries subject to the Chapter 11 Procedure, included without limitation, by
pledges on shares, certain engines and spare parts. The following draws on the DIP must be done
from Tranche B until the proportion drawn is equal to the proportion drawn on the other tranches.
When the proportions were the same, new draws are done on a pro-rata basis on all tranches.
On November 10, 2021, the Company made a partial transfer for US$200 million from Tranche B
and later on December 28, 2021, LATAM made a new transfer for MUS$ 100. After these transfers,
LATAM still It had US$1,250 million of line available for future transfers.
On March 14, 2022, LATAM made a transfer for MUS$ 38.6 from Tranche A, US$227.3 million
from Tranche B and US$34.1 million from Tranche C.
The DIP had 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. Finally, it should be noted that this extension was not carried out and that this DIP
financing was paid in full on April 8, 2022, being replaced by a new consolidated and modified DIP
Credit Agreement.
On February 17, 2022, LATAM submitted an initial proposal (the “Consolidated and Modified
Initial DIP Financing Proposal”) of a consolidated and modified text of the contract called Super-
Priority Debtor-In-Possession Term Loan Agreement before the Court of Bankruptcies of the
Southern District of New York.
On March 14, 2022, the Board of Directors of the Company, unanimously, approved the Amended
and Restated DIP Financing Proposal, subject to the approval of the Court. On March 14, 2022, a
new consolidated and modified contract of the Existing DIP Credit Agreement (the “Amended and
Restated DIP Credit Agreement”) was submitted to the Court for its approval. The NewDIP Credit
Agreement (i) refinances and fully replaces the existing Tranches A, B and C in the Existing DIP
Credit Agreement; (ii) contemplates a maturity date in accordance with the calendar that the
Debtors foresee to emerge from the Chapter 11 Procedure; and (iii) includes certain reductions in
fees and interest compared to the Existing DIP Credit Agreement and the Recast and Amended DIP
Initial Financing Proposal. Obligations under the DIP were secured by assets owned by LATAM
and certain of its subsidiaries, including, but not limited to, shares, certain engines and spare parts.
On April 8, 2022, a consolidated and modified text was signed (the "Amended and restated DIP
Credit Agreement") of the Original DIP Credit Agreement, which modifies and recasts said
agreement and repays the obligations pending payment under it. (that is, under its Tranches A, B
and C). The total amount of the Consolidated and Modified DIP Credit Agreement is US$3.700
million. The Consolidated and Amended DIP Credit Agreement (i) includes certain reductions in
fees and interest compared to the Existing DIP Credit Agreement; and (ii) contemplates an
expiration date in accordance with the calendar that LATAM foresees to emerge from the Chapter
11 Procedure. Regarding the latter, the scheduled expiration date of the intitial DIP Credit
Agreement was August 8, 2022, subject to to possible extensions that, in certain cases, had a
deadline of November 30, 2022.
Likewise, on April 8, 2022, the initial disbursement took place under the Amended and Restated
DIP Credit Agreement for the amount of US$2,750 million. On April 28, 2022, an amendment to
this contract was signed, extending the expiration date from August 8, 2022 to October 14, 2022.
On October 12, 2022, this Amended and Restated DIP Credit Agreement was fully repaid with the
DIP-to-Exit financing, which contemplated US$750 million of a bridge financing for senior secured
notes maturing in 2027, US$750 million of another bridge financing for senior secured notes due
2029, US$750 Mn of a Term Financing, US$1,146 million of a Junior DIP financing, and US$ 500
million of an undrawn Revolving Credit Facility. The DIP-to-exit financing was collateralized by
assets owned by LATAM and by certain of its subsidiaries. The Junior DIP contemplated a
subordinate priority to the rest of the credits.
On October 18, 2022, the Bridge Loans were partially repaid by; (i) a Note issued from registration
under U.S. Securities Act of 1933, as amended (“the “Securities Act”), pursuant to Rule 144A and
Regulation S, both under the Securities Act, due in 2027 (the “5 Year Note”), with a total principal
amount of US$ 450 million, and (ii) a Note issued from registration under the Securities Act
pursuant to Rule 144A and Regulation A, both under the Securities Act, due in 2029 (the “7 Year
Note”), with a total principal amount of US$ 700 million.
Financial information
245
Integrated Report 2022
82
In the context of the Company's exit from the Chapter 11 proceedings on November 3, 2022, the
DIP-to-Exit financing was fully repaid with the funds from the exit financing issued by the
Company, which included US$350 million corresponding to an incremental loan Term B; US$450
million in senior secured notes due 2027, US$700 million in senior secured notes due 2029 and a
Term Financing of US$1,1 billion, with part of the proceeds from the capital increase implemented
in the context of the reorganization process for a total of approximately US$10,3 billion, through
the issuance of new payment shares and convertible notes.
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.
(4)
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 US$130.7 million.
(5)
On June 30, 2021, the United States Court for the Southern District of New York approved
the motion filed by the Company to reject the lease contract for 3 aircraft financed under a financial
lease in the amount of US$ 307.4 million.
(6)
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 US$ 19.5 million.
Balances by currency of interest bearing loans are as follows:
Currency
Brazilian real
Chilean peso (U.F.)
US Dollar
Total
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
314,322
157,288
4,093,816
4,565,426
338,953
639,710
6,457,181
7,435,844
Financial information
246
Integrated Report 2022
83
Interest-bearing loans due in installments to December 31, 2022
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.
Tax No.
Creditor
Creditor
country
Currency
Up to
90
days
ThUS$
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$
Amortization
Annual
Effective
rate
Nominal
rate
%
%
Nominal values
Accounting values
M ore than
M ore than
M ore than
M ore than
M ore than
M ore than
Bank loans
0-E
0-E
SANTANDER
GOLDM AN SACHS
Spain
U.S.A.
Obligations with the public
97.036.000- K
97.036.000- K
0- E
Chile
SANTANDER
SANTANDER
U.S.A.
WILMINGTON TRUS T COMP ANY U.S.A.
Guaranteed obligations
0-E
0-E
BNP PARIBAS
WILM INGTON TRUST
COM PANY
U.S.A.
U.S.A.
- SWAP Received aircraft
-
Other guaranteed obligations
0-E
0-E
0-E
0-E
CREDIT AGRICOLE
M UFG
CITIBANK
EXIM BANK
Financial leases
0-E
0-E
0-E
0-E
0-E
0-E
0-E
Others loans
0-E
CITIBANK
BNP PARIBAS
NATIXIS
US BANK
PK AIRFINANCE
EXIM BANK
BANK OF UTAH
Various (*)
Total
France
U.S.A.
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.
US$
US$
UF
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
2,750
-
8,250
70,951
22,000
-
1,067,000
-
-
70,951
1,100,000
173
30,539
-
8,250
70,951
22,000
-
939,760
-
-
71,124
1,000,549
Quaterly
Quaterly
7,26
18.46
-
-
-
1,761
2,208
-
-
11,345
-
-
6,825
6,596
6,419
16,984
1,533
-
2321
-
-
-
6,907
6,110
-
14,667
34,624
-
-
5,689
20,048
19,341
51,532
4,664
-
6568
-
-
-
-
-
450,000
156,783
3
700,000
156,783
3
1,150,000
22,890
32,620
-
29,333
66,419
-
17,737
-
1,521
53,207
84,177
6,393
113,668
20990
26,035
33,210
-
231,000
-
-
36,431
-
-
55,696
-
-
180,260
30557
126,605
184,198
67,457
141,605
-
-
-
-
-
32,444
-
-
104,475
-
-
152,581
121801
275,000
112,388
-
86,612
12,514
28,165
239,138
152,693
12,590
446,509
182,237
505
-
-
2,637
2,233
-
3,837
11,404
1470
237
6,888
6,776
8,545
17,831
1,579
1,923
2321
-
-
32,878
6,907
6,110
-
14,667
34,624
22,212
32,620
-
26,153
66,419
-
17,738
5,689
20,048
19,341
51,532
4,664
-
6568
-
1,516
52,881
79,805
6,393
112,666
20990
-
-
-
-
-
430,290
156,783
3
669,340
157,288
3
1,132,508
At Expiration
At Expiration
At Expiration
2.00
1,00
15.00
25,627
33,210
-
228,880
-
-
36,431
-
-
55,478
-
-
178,672
30557
126,048
183,431
Quaterly
5,76
67,457
141,630 Quaterly/M onthly 8.20
-
-
Quaterly
-
-
-
-
32,444
-
-
103,905
-
-
151,236
121801
273,537
112,447
1,470
86,850
Quaterly
Quaterly
At Expiration
Quaterly
8,24
6.23
1,00
2.01
12,577
28,340
240,150
149,168
12,636
444,497
182,237
Quaterly
Quaterly
Quaterly
Quaterly
Quaterly
Quaterly
M onthly
6.19
5.99
6.44
4.06
5.97
3.58
10,45
7,26
13.38
2.00
1,00
13,38
5,76
8.20
-
8,24
6.23
1,00
1.78
5.47
5.39
6.44
2.85
5.97
2.79
10,45
2,028
-
-
-
-
2,028
2,028
-
-
-
-
2,028
At Expiration
-
-
60,770
178,400
541,906
2,110,189
1,462,149
4,353,414
100,926
211,278
532,344
1,958,905
1,429,017
4,232,470
(*) Obligation to creditors for executed letters of credit.
Financial information
247
Integrated Report 2022
84
Interest-bearing loans due in installments to December 31, 2022
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil
Nominal values
Accounting values
Tax No.
Creditor
Country
Currency
Up to
90
days
ThUS$
90 days
to one
year
ThUS$
More than
More than More than
three to
five
years
ThUS$
More than
five
years
ThUS$
one to
three
years
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
ThUS$
More than
More than More than
one to
three
years
ThUS$
three to
five
years
ThUS$
90 days
to one
year
ThUS$
More than
five
years
ThUS$
Total
accounting
value
ThUS$
Amortization
Annual
Effective Nominal
rate
%
rate
%
Bank loans
0-E
Merril Lynch Credit
Products LLC
Financial lease
U.S.A.
BRL
304,549
-
-
-
-
304,549
314,322
-
-
-
-
314,322
Monthly
3,95
3,95
0-E
NATIXIS
France
US$
510
1,530
4,080
4,080
7,846
18,046
1,050
1,530
4,080
4,080
7,894
18,634
Semiannual/Quaterly
7.23
7.23
Total
Total consolidated
305,059
1,530
4,080
4,080
7,846
322,595
315,372
1,530
4,080
4,080
7,894
332,956
365,829
179,930
545,986
2,114,269
1,469,995
4,676,009
416,298
212,808
536,424
1,962,985
1,436,911
4,565,426
Financial information
248
Integrated Report 2022
Interest-bearing loans due in installments to December 31, 2021
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.
85
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$
Amortization
Annual
Effective
rate
Nominal
rate
%
%
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$
114,000
20,000
12,000
10,106
-
60,935
-
-
-
-
-
-
-
-
-
-
106,427
-
-
-
-
-
-
-
-
-
-
-
-
-
114,000
20,000
12,000
123,366
22,742
13,053
10,106
106,427
60,935
11,040
135
64,293
-
-
-
-
-
-
-
-
-
-
106,427
-
-
-
-
-
-
-
-
-
-
-
-
-
123,366
22,742
13,053
At Expiration
At Expiration
At Expiration
11,040
106,562
64,293
Quaterly
Quaterly
At Expiration
-
-
159,679
-
-
700,000
-
800,000
343,218
-
502,897
1,500,000
49,584
187,082
159,679
-
-
698,450
-
803,289
355,114
-
564,377
1,688,821
At Expiration
At Expiration
16,079
29,054
-
10
273,199
7,551
-
-
-
682
19,101
7,216
1,335
16,601
800
-
12,412
11,661
2,209
-
-
33,131
600,000
1,644,876
-
1,370
52,371
19,537
15,612
50,373
3,842
-
34,958
32,639
24,703
-
-
91,435
-
-
-
-
12,513
28,165
52,010
135,201
11,562
-
37,891
34,970
32,327
-
-
24,816
-
-
25,876
-
-
-
54,443
17,492
647
248,354
97,135
58,388
85,119
-
-
-
-
-
37,014
-
-
-
138,058
-
-
284,773
198,475
166,712
144,358
10
273,199
156,933
600,000
1,644,876
62,890
2,052
83,985
54,918
261,458
219,667
16,851
533,127
17,926
31,375
-
10
274,403
8,259
95
-
183
694
19,198
7,313
4,472
17,755
903
1,771
12,412
11,661
2,209
-
-
33,131
600,000
1,630,390
-
1,370
52,371
19,537
15,612
50,373
3,842
-
34,044
32,188
24,703
-
-
91,255
-
-
-
-
12,359
27,905
51,647
127,721
11,562
-
37,466
34,733
32,327
-
-
24,816
-
-
25,876
-
-
-
54,064
17,188
647
244,490
96,379
57,983
85,119
-
-
-
-
-
37,014
-
-
-
137,430
-
-
280,341
198,227
167,940
Quaterly
Quaterly
144,358 Quaterly/M ensual
10
Quaterly
274,403
157,461
600,095
1,630,390
63,073
At Expiration
Quaterly
At Expiration
At Expiration
Quaterly
2,064
83,928
54,755
263,225
213,037
16,954
526,602
Quaterly
Quaterly
Quaterly
Quaterly
Quaterly
Quaterly
Quaterly
2.96
4.20
4.15
3.35
2.80
3.10
4.81
7.16
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
2.96
4.20
4.15
3.35
2.80
3.10
4.81
6.94
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
55,819
644,488
-
2,607,073
-
1,229,613
-
1,276,816
-
1,043,705
55,819
6,801,695
55,819
911,471
-
2,592,587
-
1,218,261
-
1,274,896
-
1,049,380
55,819
7,046,595
At Expiration
-
-
Tax No.
Creditor
Loans to exporters
0-E
76.645.030-K
0-E
CITIBANK
ITAU
HSBC
Bank loans
97.023.000-9
0-E
0-E
CORPBANCA
SANTANDER
CITIBANK
Obligations with the public
97.030.000-7
0-E
BANCOESTADO
BANK OF NEW YORK
Guaranteed obligations
0-E
0-E
0-E
BNP PARIBAS
M UFG
WILM INGTON TRUST
COM PANY
U.S.A.
Chile
England
Chile
Spain
U.S.A.
Chile
U.S.A.
U.S.A.
U.S.A.
U.S.A.
- SWAP Received aircraft
-
Other guaranteed obligations
0-E
0-E
0-E
0-E
0-E
CREDIT AGRICOLE
M UFG
CITIBANK
BANK OF UTAH
EXIM BANK
Financial leases
0-E
0-E
0-E
0-E
0-E
0-E
0-E
Others loans
0-E
CREDIT AGRICOLE
CITIBANK
BNP PARIBAS
NATIXIS
US BANK
PK AIRFINANCE
EXIM BANK
Various (*)
Total
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.
(*) Obligation to creditors for executed letters of credit.
Financial information
249
Integrated Report 2022
86
Nominal values
Accounting values
Up to
90
days
ThUS$
M ore than M ore than M ore than
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$
M ore than
M ore than M ore than
one to
three
years
ThUS$
90 days
to one
year
ThUS$
three to
five
years
ThUS$
M ore than
five
years
ThUS$
Total
accounting
value
ThUS$
Amortization
Annual
Effective Nominal
rate
%
rate
%
619
74,661
185,833
-
-
-
324
-
-
-
-
-
-
-
-
943
74,661
666
98,864
185,833
240,089
-
-
-
324
-
-
-
-
-
-
-
-
990
98,864
M onthly
M onthly
240,089
M onthly
6.01
4.33
3.95
6.01
4.33
3.95
433
320
2,482
1,147
2,872
2,695
11,539
2,850
-
3,987
17,326
10,999
637
409
2,481
1,147
2,872
2,695
11,539
2,850
-
3,987
17,529
11,088
Quaterly
M onthly
2.74
14.72
2.74
14.72
Interest-bearing loans due in installments to December 31, 2021
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil
Tax No.
Creditor
Country
Currency
Bank loans
0-E
0-E
0-E
NCM
BANCO BRADESCO
M erril Lynch Credit
Products LLC
Netherlands
Brazil
U.S.A.
Financial lease
0-E
0-E
NATIXIS
GA Telessis LLC
France
U.S.A.
Others loans
US$
BRL
BRL
US$
US$
0-E
DEUTCHEBANK (*)
Brazil
US$
20,689
-
-
-
-
20,689
20,689
-
-
-
-
20,689 At Expiration
-
-
Total
Total consolidated
(*) Obligation to creditors for executed letters of credit
282,555
3,629
5,891
14,389
3,987
310,451
361,354
3,628
5,891
14,389
3,987
389,249
927,043
2,610,702
1,235,504
1,291,205
1,047,692
7,112,146
1,272,825
2,596,215
1,224,152
1,289,285
1,053,367
7,435,844
Financial information
250
Integrated Report 2022
(b) Lease Liability:
(d) Derivatives that do not qualify for hedge accounting
87
88
The movement of the lease liabilities corresponding to the years reported are as follow:
.
Aircraft
T hUS$
Others
T hUS$
Lease
Liability
total
T hUS$
Opening balance as January 1, 2021
3,026,573
94,433
3,121,006
New contracts
Lease termination (*)
Renegotiations
Payments
Accrued interest
Exchange differences
Cumulative translation adjustment
Other increases (decreases)
518,478
(724,193)
101,486
(95,831)
88,245
-
-
(31,097)
875
(5,300)
5,717
(24,192)
8,334
3,356
(2,332)
(3,914)
519,353
(729,493)
107,203
(120,023)
96,579
3,356
(2,332)
(35,011)
Changes
(142,912)
(17,456)
(160,368)
Closing balance as of December 31,2021
2,883,661
Opening balance as January 1, 2022
New contracts
Lease termination (*)
Renegotiations
Exit effect of chapter 11 (**)
Payments
accrued interest
Exchange differences
Subsidiaries conversion difference
other variations
2,883,661
354,924
(19,606)
(76,233)
(995,888)
(154,823)
142,939
-
(2)
-
76,977
76,977
13,019
-
(4,198)
-
(26,172)
9,194
2,279
7,463
2,920
2,960,638
2,960,638
367,943
(19,606)
(80,431)
(995,888)
(180,995)
152,133
2,279
7,461
2,920
Changes
(748,689)
4,505
(744,184)
Closing balance as of December 31,2022
2,134,972
81,482
2,216,454
(*) As of December 31, 2022 these correspond to anticipated lease terminations. For December 31,
2021 these correspond to fleet rejections.
(**) Corresponds to the effect of emergence from Chapter 11 ThUS$679,273 associated with
claims (Derecognition of assets for right of use for ThUS$639,728 (See Note 24 (4)) and
conversion of Notes for ThUS$39,545) and ThUS$316,615 due to IBR rate change.
The company recognizes the interest payments related to the lease liabilities in the consolidated
result under Financial expenses (See Note 26 (c)).
(c) Hedge derivatives
Current liabilities
Non-current liabilities
Total hedge
derivatives
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Fair value of interest rate derivatives
Total hedge derivatives
-
-
2,734
2,734
-
-
-
-
-
-
2,734
2,734
Current liabilities
Non-current liabilities
Total derivatives of
no coverage
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Derivative of foreign currency
not registered as hedge
Total derived not qualify
as hedge accounting
-
-
2,937
2,937
-
-
-
-
-
-
2,937
2,937
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 (1)
Fuel options (2)
Foreign currency derivative R$/US$ (3)
As of
December 31,
2022
ThUS$
8,816
12,594
191
As of
December 31,
2021
ThUS$
(2,734)
17,641
-
(1) They cover the significant variations in the cash flows associated with the market risk implicit
in the increases in the 3-month LIBOR interest rate, SOFR, among others, for long-term loans
originated by the acquisition or rental of aircraft and Bank credits. These contracts are recorded
as cash flow hedge contracts.
(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.
(3) Hedge significant variations in expected cash flows associated with the market risk implicit in
changes in exchange rates, particularly the BRL/R$. These contracts are recorded as cash flow
hedge contracts.
The Company only maintains cash flow hedges. In the case of fuel hedges, the cash flows subject to
such hedges will occur and will impact results in the next 12 months from the date of the
consolidated statement of financial position.
All hedging operations have been performed for highly probable transactions, except for fuel hedge.
See Note 3.
See Note 24 (h) for reclassification to profit or loss for each hedging operation and Note 17 (b) for
deferred taxes related.
Financial information
251
Integrated Report 2022
89
90
NOTE 19 - TRADE AND OTHER ACCOUNTS PAYABLES
The composition of Trade and other accounts payables is as follows:
Current
(a) Trade and other accounts payables
(b) Accrued liabilities
Total trade and other accounts payables
(a)
Trade and other accounts payable:
Trade creditors
Other accounts payable
Total
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
1,248,790
379,202
1,627,992
1,945,731
2,893,520
4,839,251
As of
December 31
2022
ThUS$
967,468
281,322
1,248,790
As of
December 31,
2021
ThUS$
1,439,929
505,802
1,945,731
(b) Liabilities accrued:
Aircraft and engine maintenance (1)
Accrued personnel expenses
Accounts payable to personnel (2)
Other agreed claims (3)
Others accrued liabilities
Total accrued liabilities
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
184,753
81,857
74,802
-
37,790
379,202
1,166,181
59,327
58,153
1,575,005
34,854
2,893,520
(1) As of December 31, 2021, these amounts include some claims agreed with aircraft lessors
related to maintenance in addition to agreed fleet claims, both associated with the negotiations
resulting from the Chapter 11 procedure.The balances of commercial accounts and other accounts
payable for 2021, include the amounts that were part of the reorganization agreement, as a result of
the entry into the Chapter 11 Procedure on May 26, 2020, and on July 9 for the subsidiaries of
LATAM in Brazil. These balances were paid upon exit from Chapter 11, from November to
December 2022.
(2) Participation in profits and bonuses (Note 22 letter b).
(3) For the other agreed claims, ThUS$ 26,145 were compensated with Convert G and ThUS$
1,548,860 with Convert I.
The details of Trade and other accounts payables are as follows:
NOTE 20 - OTHER PROVISIONS
Maintenance
Suppliers technical purchases
Professional services and advisory
Boarding Fees
Leases, maintenance and IT services
Handling and ground handling
Aircraft Fuel
Other personnel expenses
Airport charges and overflight
Marketing
Services on board
Air companies
Crew
Bonus Payable
Land services
Jol Fleet
Others
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
108,402
136,594
131,991
209,370
81,119
126,464
52,606
124,000
90,386
37,351
43,349
14,496
11,428
9,450
3,049
-
68,735
375,144
328,811
129,682
171,128
143,586
176,142
77,171
90,410
104,241
49,865
56,072
11,250
12,007
11,144
6,553
9,891
192,634
Total trade and other accounts payables
1,248,790
1,945,731
Current liabilities
Non-current liabilities
Total Liabilities
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Provision for contingencies (1)
Tax contingencies
Civil contingencies
Labor contingencies
Other
Provision for European
Commission investigation (2)
8,733
5,490
350
-
-
24,330
3,154
388
-
617,692
119,483
175,212
13,180
490,217
92,955
98,254
21,855
626,425
124,973
175,562
13,180
514,547
96,109
98,642
21,855
-
2,397
9,300
2,397
9,300
Total other provisions (3)
14,573
27,872
927,964
712,581
942,537
740,453
(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.
Financial information
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92
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) Total other provision as of December 31, 2022, and December 31, 2021, include the fair value
of the contingencies arising at the time of the business combination with TAM S.A and
subsidiaries, with a probability of loss under 50%, which wold not be provided for except in
the context of a business combination in accordance with IFRS 3.
Movement of provisions:
European
Legal
Commission
Onerous
claims (1)
Investigation (2)
Contracts
ThUS$
ThUS$
ThUS$
558,036
403,229
(84,497)
(25,531)
(119,029)
(1,055)
731,153
731,153
687,558
(63,087)
28,655
(427,979)
(16,160)
940,140
10,097
-
-
-
-
(797)
9,300
9,300
-
-
-
(6,630)
(273)
2,397
44,000
-
-
-
(44,000)
-
-
-
-
-
-
-
-
-
Total
ThUS$
612,133
403,229
(84,497)
(25,531)
(163,029)
(1,852)
740,453
740,453
687,558
(63,087)
28,655
(434,609)
(16,433)
942,537
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
Opening balance as of January 1, 2022
Increase in provisions
Provision used
Difference by subsidiaries conversion
Reversal of provision
Exchange difference
Closing balance as of December 31, 2022
(1) Accumulated balances include a judicial deposit delivered in guarantee, with respect to the
“Fundo Aeroviario” (FA), for MUS$ 74, 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 amounts 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, 2022 is described in Note 30 under in the Role of the case
2001.51.01.012530-0.
(2) European Commission Provision
Provision constituted on the occasion of the process initiated in December 2007 by the General
Competition Directorate of the European Commission against more than 25 cargo airlines,
among which is Lan Cargo SA, which forms part of the global investigation initiated in 2006
for possible infractions of free competition in the air cargo market, which was carried out
jointly by the European and United States authorities.
With respect to Europe, the General Directorate of Competition imposed fines totaling
€ 799,445,000 (seven hundred and ninety-nine million four hundred and forty-five thousand
Euros) for infractions of European Union regulations on free competition against eleven (11)
airlines, among which are LATAM Airlines Group SA and its subsidiary Lan Cargo S.A .,For
its part, LATAM Airlines Group S.A. and Lan Cargo S.A., jointly and severally, have been
fined for the amount of € 8,220,000 (eight million two hundred twenty thousand euros), for
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. On May
31, 2017 Lan Cargo S.A. and LATAM Airlines Group S.A. requested the annulment of this
Decision to the General Court of the European Union. We presented our defense in December
2017. On July 12, 2019, we participated in a hearing before the European Court of Justice in
which we confirmed our request for annulment of the decision or a reduction in the amount of
the fine instead. On March 30, 2022, the European Court issued its ruling and reduced the
amount of our fine from € 8,220,000 Euros to € 2,240,000 Euros. This ruling can be appealed
by both parties before June 15, 2022. Likewise, on December 17, 2020, the European
Commission had presented a proof of claim for the total amount of the fine of € 8,220,000
Euros before the Court of New York dealing with the financial reorganization procedure
requested by LATAM Airlines Group, S.A. and LAN Cargo, S.A. (Chapter 11) in May 2020.
The amount of this claim could be modified subject to the eventual appeal of the ruling of the
European Court. The procedural stage as of December 31, 2022 is described in Note 30 in
section 2 lawsuits received by LATAM Airlines Group S.A. and Subsidiaries.
Financial information
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Integrated Report 2022
93
94
NOTE 21 - OTHER NON-FINANCIAL LIABILITIES
Current liabilities
Non-current liabilities
Total Liabilities
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
2,533,081
7,194
40,810
12,045
49,121
2,642,251
2,273,137
3,870
31,509
4,916
19,144
2,332,576
420,208
-
-
-
-
420,208
512,056
-
-
-
-
512,056
2,953,289
7,194
40,810
12,045
49,121
3,062,459
2,785,193
3,870
31,509
4,916
19,144
2,844,632
Deferred revenues (1)(2)
Sales tax
Retentions
Other taxes
Other sundry liabilities
Total other non-financial liabilities
Deferred Income Movement
Deferred inco me
Initial balance
(1)
Reco gnitio n
Us e
Lo yalty pro gram
(Award
and redeem)
Expiratio n o f Trans latio n
Difference
tickets
Others
pro vis io ns
Final balance
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Fro m J anuary 1 to
December 31, 2021
Fro m 1 de J anuary to
December 31, 2022
2,738,888
4,221,168
(4,053,345)
(12,091)
(114,227)
-
4,800
2,785,193
2,785,193
9,772,469
(9,077,188)
(241,201)
(314,027)
4,585
23,458
2,953,289
(1) The balance includes mainly, deferred income for services not provided as of December 31,
2022 and December 31, 2021 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 airlines associated with the program, as well as by buying 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, 2022, Deferred Income includes ThUS$ 41,318 related to the
compensation from Delta Air Lines, Inc., which is recognized in the income statement based
on the estimation of income differentials until the implementation of the strategic alliance.
During the period, the Company has recognized ThUS $ 30,408 within the income statement
related with this compensation.
Additionally, as of December 31, 2021, the Company maintains a balance of ThUS $ 29,507
in Trade accounts payable of the Statement of Financial Position, corresponding to the
compensation of costs to be incurred.
NOTE 22 - EMPLOYEE BENEFITS
Retirements payments
Resignation payments
Other obligations
Total liability for employee benefits
As of
December, 31,
2022
As of
December 31,
2021
ThUS$
45,076
6,365
42,047
93,488
ThUS$
35,075
5,817
15,341
56,233
(a) The movement in retirements, resignations and other obligations:
Opening
balance
ThUS$
Increase (decrease)
current service
provision
Benefits
paid
Actuarial
(gains)
losses
Currency
translation
ThUS$
ThUS$
ThUS$
ThUS$
Closing
balance
ThUS$
74,116
(11,391)
(5,136)
10,018
(11,374)
56,233
56,233
53,254
(4,375)
(9,935)
(1,689)
93,488
From January 1 to
December 31, 2021
From January 1 to
December 31, 2022
The main assumptions used in the calculation of 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 period ended
December 31,
2022
2021
5.37%
5.23%
5.14%
RV-2014
3.61%
60
65
5.81%
3.00%
5.14%
RV-2014
3.44%
60
65
The discount rate is based on the bonds issued by the Central Bank of Chile with a maturity of 20
years. The RV-2014 mortality tables correspond to those established by the Commission for the
Financial Market of Chile. The inflation rates are based on the yield curves of the long term
nominal and inflation adjusted bonds issued by the Central Bank of Chile.
The calculation of the present value of the defined benefit obligation is sensitive to the variation of
some actuarial assumptions such as discount rate, salary increase, rotation and inflation.
Financial information
254
Integrated Report 2022
The sensitivity analysis for these variables is presented below:
95
96
NOTE 23 - ACCOUNTS PAYABLE, NON-CURRENT
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,
2022
ThUS$
As of
December 31,
2021
ThUS$
(3,308)
3,724
3,520
(3,216)
(2,642)
2,959
2,849
(2,613)
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
Profit-sharing and bonuses (*)
74,802
58,153
(*) Accounts payables to employees (Note 19 letter b)
The participation in profits and bonuses related to an annual incentive plan for achievement of
certain objectives.
(c)
Employment expenses are detailed below:
Salaries and wages
Short -t erm employee benefit s
Ot her personnel expenses
T ot al
For the p eriod ended
December 31,
2022
T hUS$
2021
T hUS$
(1,024,304)
(825,792)
(121,882)
(122,650)
(120,150)
(93,457)
(1,266,336)
(1,041,899)
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
249,710
40,000
19,866
16,539
169
326,284
276,816
124,387
26,321
14,545
30,357
472,426
Aircraft and engine maintenance
Fleet (JOL)
Airport and Overflight Taxes
Provision for vacations and bonuses
Other sundry liabilities
Total accounts payable, non-current
NOTE 24 - 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, 2022 amounts to ThUS$ 13,298,486 divided into
605,231,854,725 common stock of a same series (ThUS$ 3,146,265 divided into 606,407,693
shares as of December 31, 2021), a single series nominative, ordinary character with no par value.
The total number of authorized shares of the Company December, 31, 2022, corresponds to
606.407.693.000 shares. 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 the Corporate
Law and its regulations.
At the Company's Extraordinary Shareholders' Meeting held on July 5, 2022, it was agreed to
increase the Company's capital by US$ 10,293,269,524 through the issuance of 73,809,875,794
paid shares and 531,991,409,513 backup shares, all ordinary, of the same and single series, without
par value, of which: (a) US$ 9,493,269,524 represented by 531,991,409,513 new shares, to be used
to respond to the conversion of the Convertible Notes, according to this term is defined below (the
“Support Shares”); and (b) US$800,000,000 represented by 73,809,875,794 new paid shares (the
“New Paid Shares”), to be offered preferentially to shareholders. On September 12, 2022, the
preferential placement of the convertible notes and, in turn, of the new paid shares began, ending on
the following dates, as explained below:
1. On October 12, 2022 expired the 30-day preemptive rights offering period (the “POP”) of
(i) the 73,809,875,794 new paid shares, issued and registered in the Securities Registry of
the Comisión para el Mercado Financiero
(ii)
US$1,257,002,540 notes convertible into shares Serie G, the US$1,372,839,695 notes
convertible into shares Serie H, and the US$6,863,427,289 notes convertible into shares
Serie I, all registered in the Securities Registry of the CMF (jointly, the “Convertible
Notes”).
(the “ERO”); and
(“CMF”)
Financial information
255
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97
98
2. On October 13, 2022, the second round (the “Second Round”) of subscription of the ERO
has taken place, in which had the right to participate, the shareholders (or their assignees)
that subscribed ERO in the POP and expressed to LATAM, at the time of the subscription,
their intention to participate in the Second Round.
3. As previously reported, the Remainder will be placed, in compliance with the applicable
laws and regulations, according to the rules governing the offering of the ERO and the
Convertible Notes, as provided in Article 10 of the Regulations of the Corporations Law.
Such placement includes, among other things, the placement of a portion of the Remainder
with (i) a group of unsecured creditors of LATAM represented by Evercore and certain
holders of Chilean notes issued by LATAM (collectively, the “Backstop Creditors”); and
(ii) Delta Air Lines, Inc., Qatar Airways Investments (UK) Ltd. and the Cueto group
(collectively, the “Backstop Shareholders”;and them jointly with the Backstop Creditors,
the “Backstop Parties”) according to the rules of their respective backstop commitment
agreements (the “Backstop Agreements”).
4. For purposes of the above, the Company will exercise its rights under the Backstop
Agreements and will therefore require the Backstop Parties to subscribe and pay their
respective portion of the Remainder, as provided in such agreements. Given the funding
period contemplated in the Backstop Agreements, the Company managed to exit the
Chapter 11on November 3, 2022. Consequently, on this same date the Company, together
with its various subsidiaries that were part of the Chapter 11 Procedure, have emerged
from bankruptcy. (See Note 2, c).
5. As part of the implementation of its Reorganization Plan within the framework of the exit
from Chapter 11, LATAM issued US$800 million in new paid shares and US$9,493
million through the issue of three classes of notes convertible into Company shares,
equivalent to a total of 605,801,285,307 paid shares. As of December 31, 2022, from the
aforementioned capital increase, 604,625,447,032 shares were subscribed and paid,
equivalent to ThUS$ 10,152,221 and issuance and placement costs of ThUS$ 810,279
were incurred, which are currently presented under other reserve and will be reclassified
to "share capital" upon approval for such transfer during the next Extraordinary
Shareholders' Meeting.
(b) Movement of authorized shares
The following table shows the movement of the authorized, fully paid shares and back-up shares to
be delivered in the event that the respective conversion option is exercised under the convertible
notes currently issued by the Company:
N° of
authorized shares
as of December 31, 2022
N° of
N° of
Subscribed of
shares and paid or
delivered pursuant
to the exercise of
the conversion
option
convertible
notes back-up
shares pending
to place
N° of
N° of
as of December 31, 2021
N° of
N° of
shares to
subscribe or not
used
authorized shares
subscribed shares
and
paid
shares to
subscribe or not
used
Opening Balance
606,407,693
606,407,693
-
-
606,407,693
606,407,693
New shares issued
Convertible Notes G
Convertible Notes H
Convertible Notes I
Subtotal
73,809,875,794
19,992,142,087
126,661,409,136
385,337,858,290
605,801,285,307
73,809,875,794
18,820,511,197
126,657,203,849
385,337,856,192
604,625,447,032
-
960,098
4,205,287
-
5,165,385
-
1,170,670,792
-
2,098
1,170,672,890
-
-
-
-
-
-
-
-
-
-
Closing Balance
606,407,693,000
605,231,854,725
5,165,385
1,170,672,890
606,407,693
606,407,693
-
-
-
-
-
-
-
(c) Share capital
The following table shows the movement of share capital:
Movement fully paid shares
Initial balance as of January 1, 2021
T here are no movements of shares paid
during the 2021 period
Ending balance as of December 31, 2021
Initial balance as of January 1, 2022
New shares issued (ERO)
Conversion options of convertible notes exercised during the year - Convertible Notes G (1)
Conversion options of convertible notes exercised during the year - Convertible Notes H
Conversion options of convertible notes exercised during the year - Convertible Notes I (2)
Subtotal
Ending balance as of December 31, 2022
Paid- in
Capital
T hUS$
3,146,265
-
3,146,265
3,146,265
800,000
1,115,996
1,372,798
6,863,427
10,152,221
13,298,486
(1) It only includes Convertible Notes issued in exchange for the settlement of Chapter 11 claims.
(2) Part of the Convertible Notes received in cash and the rest in exchange for the settlement of
Chapter 11 claims.
Financial information
256
Integrated Report 2022
99
100
in equity will be transferred to share capital. As of December 31, 2022, the portion not converted
into equity corresponds to ThUS$39.
(e.3) The Convertible Notes
The contractual conditions of the G, H and I Convertible Notes consider the delivery of a fixed
number of shares of LATAM Airlines Group S.A. at the time of settlement of the conversion option
of each of them. The foregoing determined the classification of convertible notes as equity
instruments, with the exception of Bond H, which considers, in addition to the delivery of a fixed
number of shares, the payment of 1% annual interest with certain conditions for its payment and its
accrual from 60 days after the exit Date. The payment of this interest gives rise to the recognition of
a liability component for the class H convertible notes.
At the date of issue, the fair value of the liability component in the amount of ThUS$ 102,031 was
estimated using the prevailing market interest rate for similar non-convertible instruments.
Transaction costs relating to the liability component are included in the carrying amount of the
liability portion and amortized over the period of the convertible notes using the effective interest
method. At December 31, 2022, the debt portion was converted into equity. Transaction costs
relating to the equity component are recognised as part of Other reserves within Equity.
(f) Reserve of share- based payments
Movement of Reserves of share- based payments:
Periods
From January 1 to December 31, 2021
From January 1 to December 31, 2022
Opening
balance
T hUS$
37,235
37,235
Stock
option
plan
T hUS$
-
-
Closing
balance
T hUS$
37,235
37,235
These reserves are related to the “Share-based payments” explained in Note 33.
(g) Other sundry reserves
Movement of Other sundry reserves:
Periods
From January 1 to December 31, 2021
From January 1 to December 31, 2022
Opening
balance
T hUS$
2,452,019
2,448,098
T ransactions with
non-controlling interest
T hUS$
Legal
reserves
T hUS$
Other sundry
reserves
T hUS$
Closing
balance
T hUS$
(3,383)
-
(538)
-
-
(4,420,749)
2,448,098
(1,972,651)
(d)
Treasury stock
At December 31, 2022, 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.
(e) Other equity- Value of conversion right - Convertible Notes
(e.1) Notes subscription
The Convertible Notes were issued to be place in exchange for a cash contribution, in exchange for
settlement of Chapter 11 Proceeding or a combination of both. Convertible Notes issued in
exchange for cash were valued at fair value (the cash received). Notes issued in exchange for
settlement of Chapter 11 claims were valued considering the discount that each group of liabilities
settled on at the emergence date. The table below shows the 3 Convertible Notes at their nominal
values, the adjustment, if any, to arrive at their fair values and the amount of transaction costs. The
conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. The equity portion is
recognized under Other equity at the time the Convertible Notes are issued.
Concepts
Face Value
Convertible
Notes G
THUS$
Convertible
Notes H
THUS$
Convertible
Notes I
THUS$
Total
Convertible
Notes
THUS$
1,115,996
1,372,837
6,863,427
9,352,260
Adjustment to fair value
Convertible Notes at the date of issue
Issuance cost
(923,616)
-
-
(24,812)
(2,686,854)
(705,467)
(3,610,470)
(730,279)
Subtotal
(923,616)
(24,812)
(3,392,321)
(4,340,749)
Fair Value of Notes
Debt component at the date of issue
Equity component at the date of issue
192,380
192,380
1,348,025
(102,031)
1,245,994
3,471,106
-
3,471,106
5,011,511
(102,031)
4,909,480
(e.2) Conversion of notes into shares
As of December 31, 2022, the following notes have been converted into shares:
Concepts
Convertible
Notes G
ThUS$
Convertible
Notes H
ThUS$
Convertible
Notes I
ThUS$
Total
Convertible
Notes
ThUS$
Conversion percentage
Conversion option of convertible notes exercised
Converted debt component
100.000%
1,115,996
-
99.997%
1,270,767
102,031
100.000%
6,863,427
-
9,250,190
102,031
Total Converted Notes
1,115,996
1,372,798
6,863,427
9,352,221
The conversion option from the issuance of convertible notes classified as equity is determined by
deducting the amount of the liability component from the fair value of the compound instrument
(i.e. convertible notes) as a whole. This is recognized and included in equity, net of income tax
effects, and is not subsequently remeasured. In addition, the conversion option classified as equity
will remain in equity until the conversion option is exercised, in which case, the balance recognized
Financial information
257
Integrated Report 2022
101
102
Balance of Other sundry reserves comprise the following:
(h) Reserves with effect in other comprehensive income.
Movement of Reserves with effect in other comprehensive income:
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
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)
Adjustment to the fair value of the New Convertible Notes (4)
Cost of issuing shares and New Convertible Notes (5)
Others
Total
2,665,692
2,620
(216,656)
(3,610,470)
(810,279)
(3,558)
(1,972,651)
2,665,692
2,620
(216,656)
-
-
(3,558)
2,448,098
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, 2022 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).
(4)
The adjustment to the fair value of the Convertible Notes issued in exchange for settlement
of Chapter 11 claims was valued considering the discount that each group of liabilities settled on at
the emergence date. These relate to: gain on the haircut for the accounts payable and other accounts
payable for ThUS$2,550,306 (see note 26d), gain on the haircut for the financial liabilities for
ThUS$420,436 (see note 26e) and gain on the haircut of lease liabilities which is booked against the
right of use asset for THUS$639,728.
(5)
Corresponds to 20% of the sum of the commitment of new funds of the Backstop Parties
under the Series I Convertible Bonds and the New Paid Shares, plus additional costs for extension
of the Backstop agreement.
Ope ning ba la nc e a s o f J a nua ry 1, 2021
C ha nge in fa ir va lue o f he dging ins trum e nt re c o gnis e d in OC I
R e c la s s ifie d fro m OC I to pro fit o r lo s s
De fe rre d ta x
Ac tua ria l re s e rve s
by e m plo ye e be ne fit pla ns
De fe rre d ta x a c tua ria l IAS
by e m plo ye e be ne fit pla ns
Tra ns la tio n diffe re nc e s ubs idia rie s
C urre nc y
tra ns la tio n
re s e rve
ThUS $
(3,790,513)
-
-
-
(60,561)
39,602
(16,641)
(58)
-
-
-
18,354
-
(732)
C a s h flo w
he dging
re s e rve
ThUS $
Ga ins (Lo s s e s )
o n c ha nge o n va lue
o f tim e va lue
o f o ptio ns
ThUS $
Ac tua ria l
ga in
o r lo s s o n
de fine d
be ne fit
ThUS $
(25,985)
-
-
-
10,017
(2,782)
-
To ta l
ThUS $
(3,877,439)
15,910
(10,132)
(58)
10,017
(2,782)
17,622
(380)
(23,692)
6,509
-
-
-
-
C lo s ing ba la nc e a s o f De c e m be r 31, 2021
(3,772,159)
(38,390)
(17,563)
(18,750)
(3,846,862)
Ope ning ba la nc e a s o f J a nua ry 1, 2022
C ha nge in fa ir va lue o f he dging ins trum e nt re c o gnis e d in OC I
R e c la s s ifie d fro m OC I to pro fit o r lo s s
R e c la s s ifie d fro m OC I to the va lue o f the he dge d a s s e t
De fe rre d ta x
Ac tua ria l re s e rve s
by e m plo ye e be ne fit pla ns
De fe rre d ta x a c tua ria l IAS
by e m plo ye e be ne fit pla ns
Tra ns la tio n diffe re nc e s ubs idia rie s
C lo s ing ba la nc e a s o f De c e m be r 31, 2022
(3,772,159)
-
-
-
-
-
-
(33,401)
(38,390)
51,323
31,293
(8,143)
(235)
-
-
694
(17,563)
(23,845)
19,946
-
-
(18,750)
-
-
-
-
(3,846,862)
27,478
51,239
(8,143)
(235)
-
(9,933)
(9,933)
-
(160)
566
-
566
(32,867)
(3,805,560)
36,542
(21,622)
(28,117)
(3,818,757)
(h.1) Cumulative translate difference
These are originated from exchange differences arising from the translation of any investment in
foreign entities (or Chilean investments 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
Financial information
258
Integrated Report 2022
103
104
(h.2) Cash flow hedging reserve
These are originated 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.
(h.3) Reserves of actuarial gains or losses on defined benefit plans
Correspond to the increase or decrease in the present value obligation for defined benefit plans due
to changes in actuarial assumptions, and experience adjustments, which are the effects of
differences between the previous actuarial assumptions and the actual events that have occurred.
(i) Retained earnings/(losses)
Movement of Retained earnings/(losses):
Periods
Opening
balance
ThUS$
Result
for the
period
ThUS$
Dividends
ThUS$
Closing
balance
ThUS$
From January 1 to December 31, 2021
From January 1 to December 31, 2022
(4,193,615)
(8,841,106)
(4,647,491)
1,339,210
-
-
(8,841,106)
(7,501,896)
(j) Dividends per share
During the years 2022 and 2021 no dividends have been paid.
NOTE 25 - REVENUE
The detail of revenues is as follows:
For the year ended
December 31,
2022
ThUS$
7,636,429
1,726,092
9,362,521
2021
ThUS$
3,342,381
1,541,634
4,884,015
Passengers
Cargo
Total
NOTE 26 - 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 M aintenance
Aircraft rental (*)
Comisions
Passenger services
Other operating expenses
For the year. ended
December 31,
2022
ThUS$
2021
ThUS$
(3,882,505)
(1,036,158)
(582,848)
(202,845)
(167,035)
(184,357)
(1,136,490)
(1,487,776)
(755,188)
(533,738)
(120,630)
(89,208)
(77,363)
(959,427)
Total
(7,192,238)
(4,023,330)
(*) During 2021, the Company amended its Aircraft Lease Contracts to include lease payments
based on Power by the Hour (PBH) at the beginning of the contract and fixed-rent payments later
on. For these contracts that contain an initial period based on PBH and then a fixed amount, a right
of use asset and a lease liability was recognized at the date of modification of the contract. These
amounts continue to be amortized over the contract term on a straight-line basis starting from the
modification date of the contract. Therefore, as a result of the application of the lease accounting
policy, 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 (included
in the Depreciation line included in b) below) and interest from the lease liability (included in Lease
Liabilities letter c) below)
For the year ended
December 31,
2022
ThUS$
2021
ThUS$
Payments for leases of low-value assets
Rent concessions recognized directly in profit or loss
Total
(17,959)
-
(17,959)
(19,793)
-
(19,793)
Financial information
259
Integrated Report 2022
105
106
(b) Depreciation and amortization
Depreciation and amortization are detailed below:
For the y ear ended
December 31,
2022
ThUS$
2021
ThUS$
(1,125,154)
(54,358)
(1,114,232)
(51,162)
(1,179,512)
(1,165,394)
Dep reciation (*)
Amortization
Total
(*) Included within this amount is the depreciation of the Property, plant and equipment (See Note
16 (a)) and the maintenance of the aircraft recognized as right of use assets. The maintenance cost
amount included in the depreciation line for the period ended December 31, 2022 is ThUS$ 463,306
(ThUS $ 351,701 for the same period in 2021).
(c) Financial costs
The detail of financial costs is as follows:
Bank loan interests
Financial leases
Lease liabilities
Other financial instruments
Total
For the y ear ended
December 31,
2022
ThUS$
2021
ThUS$
(714,310)
(45,384)
(152,132)
(30,577)
(580,193)
(46,679)
(121,147)
(57,525)
(942,403)
(805,544)
Costs and expenses by nature presented in this note plus the Employee expenses disclosed in
Note 22, are equivalent to the sum of cost of sales, distribution costs, administrative expenses, other
expenses and financing costs presented in the consolidated statement of income by function.
(d) Gain (losses) from restructuring activities
Gains (losses) from restructuring activities are detailed below:
For the y ear ended
December 31,
2022
ThUS$
2021
ThUS$
Renegotiation of fleet contracts
Legal advice
Emp loy ee reestructuring p lan (*)
Rejection of fleet contracts
Rejection of IT contracts
Adjustment net realizable value fleet available for sale
Gains resulting from the settlement of Chap ter 11 claims (**)
Others
Total
(483,068)
(323,204)
(80,407)
-
(2,586)
-
2,550,306
18,893
1,679,934
(516,559)
(91,870)
(46,938)
(1,564,973)
(26,368)
(73,595)
-
(16,879)
(2,337,182)
(*) See note 2.1, c.
(**) See Note 24 (g)
(e) Financial income
Financial income is detailed below:
Financial claims (*)
Gains resulting from the settlement of Chapter 11 claims (**)
Finance lease rate change effect
Other miscellaneous income
T otal
(*) See Note 34 (a.4.)
(**) See Note 24 (g)
For the year ended
December 31,
2022
T hUS$
491,326
420,436
49,824
90,709
1,052,295
2021
T hUS$
-
-
-
21,107
21,107
Financial information
260
Integrated Report 2022
107
108
(f) Other (gains) losses
Other (gains) losses are detailed below:
Provision for onerous contract related to purchase commitment
Adjustment net realizable value fleet available for sale
Other
Total
NOTE 27 - OTHER INCOME, BY FUNCTION
Other income, by function is as follows:
For the year ended
December 31,
2022
ThUS$
2021
ThUS$
-
(345,410)
(1,667)
(347,077)
44,000
-
(13,326)
30,674
For the year ended
December 31,
2022
ThUS$
2021
ThUS$
Tours
Aircraft leasing
Customs and warehousing
M aintenance
Income from non-airlines products latam pass
Other miscellaneous income (*)
Total
24,068
18,164
30,323
7,995
23,954
49,782
154,286
11,209
6,852
27,089
15,602
40,481
126,098
227,331
(*) Included within this amount are ThUS$30,408 in December 2022 and ThUS$118,188 in
December 2021 related to the compensation of Delta Air Lines Inc. for the JBA signed in 2019.
NOTE 28 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES
The functional currency of LATAM Airlines Group S.A. is the US dollar, LATAM has subsidiaries
whose functional currency is different to the US dollar, such as the chilean peso, argentine peso,
colombian peso, brazilian real and guaraní.
The functional currency is defined as the currency of the primary economic environment in which
an entity operates. For each entity and all othercurrencies are defined as a foreign currency.
Considering the above, the balances by currency mentioned in this note correspond to the sum of
foreign currency of each of the entities that are part of the LATAM Airlines Group S.A. and
Subsidiaries.
Following are the current exchange rates for the US dollar, on the dates indicated:
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
Australian dollar
Boliviano
Mexican peso
New Zealand dollar
Peruvian Sol
Paraguayan Guarani
Uruguayan peso
As of December 31,
2022
2021
177.12
5.29
855.86
4,845.35
0.93
1.47
6.86
19.50
1.58
3.81
7,332.2
39.71
102.75
5.57
844.69
4,002.52
0.88
1.38
6.86
20.53
1.46
3.98
6,866.4
44.43
Financial information
261
Integrated Report 2022
109
110
Foreign currency
The foreign currency detail of balances of monetary items in current and non-current assets is as
follows:
Current assets
Cash and cash equivalents
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Other financial assets, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
265,371
6,712
3,355
17,591
8,415
19,361
168,139
41,798
14,530
3
24
5,778
93
2,483
5,709
440
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
Current assets
As of
As of
December 31,
December 31,
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
2022
ThUS$
19,425
381
2,303
3,341
544
622
4,369
7,865
127,666
25,035
10,669
31,258
176
12,506
9,584
38,438
138
31
107
15,623
186
669
1,569
1,921
68
2
10,300
908
442,753
32,317
17,020
59,568
11,149
35,040
187,910
99,749
2021
ThUS$
34,613
5,715
1,488
20,074
121
1,936
1,106
4,173
144,367
6,850
53
47,392
455
24,548
43,418
21,651
502
19
483
8,674
322
47
681
1,618
70
406
4,450
1,080
463,770
19,331
10,665
82,365
7,050
35,373
245,919
63,067
Financial information
262
Integrated Report 2022
Non-current assets
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
111
112
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
13,366
3,495
69
1,344
4,308
2,050
2,100
11,909
12
8,082
3,815
-
4,526
4,526
2,948
2,567
20
361
32,749
12
11,577
4,595
3,911
4,308
5,885
2,461
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
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,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
T hUS$
T hUS$
T hUS$
T hUS$
17,062
1
-
10,697
621
5,558
185
720,688
45,345
48,511
146,395
2,330
29,502
328,540
7,426
12,969
37,788
1,199
60,683
-
-
-
29
-
29
179,777
1
31
135,431
259
43,919
136
772,216
26,523
31,013
75,860
1,579
45,047
474,285
2,487
11,297
45,473
775
57,877
57
6
51
-
-
-
602
-
-
602
-
-
-
20,995
3,446
651
1,231
31
11
2,883
10,886
75
19
1,110
652
-
-
-
11,655
29
11,626
177,471
-
210
159,541
184
17,460
76
50,319
2,335
653
44,438
1,134
887
80
310
29
86
58
309
-
-
-
4,980
25
4,955
Financial information
263
Integrated Report 2022
113
114
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,
2022
As of
December 31,
2021
As of
December 31,
2022
As of
December 31,
2021
ThUS$
ThUS$
ThUS$
ThUS$
16,315
87
220
1,568
294
546
12,975
625
754,095
45,433
48,731
158,660
2,624
30,669
347,073
120,905
29,057
1,604
859
1,332
941
1,375
21,174
1,772
981,129
28,128
31,903
212,629
2,520
46,681
539,429
119,839
9,071
6,563
11
178
798
173
1,063
285
42,323
10,009
662
2,040
829
184
3,946
24,653
-
-
-
-
-
-
-
-
232,770
2,335
863
204,004
1,134
1,071
17,540
5,823
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
Chilean peso
Colombian peso
Euro
U.S. dollar
Provisions for
employees benefits, non-current
Chilean peso
Total 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,
2022
ThUS$
As of
December 31,
2021
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2021
ThUS$
32,036
11,544
16
1,409
18,354
713
58,449
17,259
39,717
1,473
43,301
1,917
37,982
-
202
2,944
256
55,454
55,454
189,240
1,917
37,998
84,257
202
4,353
58,327
2,186
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
774
774
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
774
-
-
774
-
-
-
-
15,375
896
-
90
14,389
-
1,451
1,451
-
-
-
-
-
-
-
-
-
-
-
16,826
-
-
2,347
-
90
14,389
-
170,437
170,437
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
170,437
-
-
170,437
-
-
-
-
359,623
355,636
-
-
3,987
-
342
342
-
-
-
-
-
-
-
-
-
-
-
359,965
-
-
355,978
-
-
3,987
-
Financial information
264
Integrated Report 2022
General summary of foreign currency:
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
115
116
As of
As of
December 31,
December 31,
2022
ThUS$
2021
ThUS$
475,502
497,372
32,329
28,597
64,163
15,060
39,348
193,795
102,210
19,363
20,915
86,412
11,998
37,757
253,694
67,233
1,156,869
1,832,228
57,359
87,391
416,168
3,655
35,206
409,346
147,744
(25,030)
(58,794)
(352,005)
11,405
4,142
(215,551)
(45,534)
31,537
60,384
862,742
3,909
58,797
687,836
127,023
(12,174)
(39,469)
(776,330)
8,089
(21,040)
(434,142)
(59,790)
NOTE 29 – EARNINGS (LOSS) PER SHARE
For t he year ended
December 31,
Basic earnings (loss) per share
2022
2021
Income (Loss) at t ribut able t o owners
of t he parent (T hUS$)
1,339,210
(4,647,491)
Weight ed average number
of shares, basic
96,614,464,231
(*)
606,407,693
Basic earnings (loss) per share (US$)
0.013861
(7.66397)
For t he year ended
December 31,
Dilut ed earnings (loss) per share
2022
2021
Income (Loss) at t ribut able t o owners
of t he parent (T hUS$)
1,339,210
(***)
(4,647,491)
Weight ed average number
of shares, dilut ed
Weight ed average number
of shares, dilut ed (2)
98,530,451,071
(**)
606,407,693
98,530,451,071
606,407,693
Dilut ed earnings (loss) per share (US$)
0.013592
(7.66397)
(*) As of December 31, 2022, the weighted average number of shares considers 606,407,693 shares
outstanding from January 1, 2022 until November 2, 2022. From November 3, 2022 until December
31, 2022 the number of shares outstanding increases due to the equity rights offering and then
increases daily as the holders of the convertible notes convert them into shares (See movement of
shares in Note 24).
(**) As of December 31, 2022, the weighted average number of fully diluted shares considers
606,407,693 shares outstanding from January 1, 2022 until November 2, 2022, and
605,801,285,307 shares outstanding from November 3, 2022 until December 31, 2022 which
includes the equity rights offering and assumes the conversion of all convertible notes that were
issued upon emergence from Chapter 11 (See movement of shares in Note 24).
(***) Profit (Loss) attributable to holders of equity instruments of the parent company is unchanged
when calculating diluted EPS because only Convertible Note H accrued interest. However, this
Note was converted into shares immediately after issuance and therefore did not accrue interest
during the year.
Financial information
265
Integrated Report 2022
117
NOTE 30 – CONTINGENCIES
I.
Lawsuits
1) Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries
Company
Court
Case Number
Origin
Stage of trial
United States
Bankruptcy Court for
the Southern District
of New York
Case No. 20-11254
LATAM Airlines Group S.A., Aerovías de Integración
Regional S.A., LATAM Airlines Peru S.A., LATAM
Airlines Ecuador S.A., LAN Cargo S.A., TAM Linhas
Aereas S.A. and 32 subsidiaries began a reorganization in
the United States of America according to Chapter 11 of
Title 11 of the U.S. Code. They filed a voluntary petition
for Chapter 11 protection (the “Chapter 11 Procedure”)
that granted an automatic foreclosure suspension 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
On May 26, 2020, LATAM Airlines Group S.A. and 28
subsidiaries (the “Initial Debtors”) individually filed a voluntary
reorganization petition with U.S. Bankruptcy Court for the
Southern District of New York according to Chapter 11 of the
U.S. Bankruptcy Code. On July 7 and 9, 2020, 9 additional
affiliated debtors (the “Subsequent Debtors,” and together with the
Initial Debtors, the “Debtors”), including TAM Linhas Aereas
S.A., filed a voluntary reorganization petition with the Court
according to Chapter 11 of the U.S. Bankruptcy Code. On
November 26, 2021, the Debtors submitted a joint reorganization
plan together with an informational statement. On May 11, 2022,
the Debtors submitted a revised version of the Plan. On June 18,
2022, the Bankruptcy Court issued an order confirming the
Reorganization Plan filed by the Debtors (the “Confirmation
Order”). On July 5, 2022, a Special Shareholders Meeting of
LATAM approved implementing the Restructuring Plan and
issuing the required instruments to be able to exit the Chapter
11 Procedure. On November 3, 2022, LATAM Airlines Group
S.A. and its various subsidiaries (the “Debtors”) that were
parties to the Chapter 11 Procedure exited that Procedure. The
effective date of the exit (the “Effective Date”) of LATAM’s
reorganization and financing plan (the “Reorganization Plan”)
was approved and confirmed in the U.S. reorganization
procedure (the “Chapter 11 Procedure”) according to the rules
of Chapter 11 in Title 11 of the U.S. Code. On November 17,
2022, the 37 subsidiaries of LATAM Airlines Group S.A.
filed a petition to close the Chapter 11 Proceeding. On
December 14, 2022, the Bankruptcy Court approved the
petition. The process remains open with respect to LATAM
Airlines Group S.A. Limited claims pending in the Chapter 11
proceedings continue to be reconciled.
Amounts
Committed (*)
ThUS$
-0-
Financial information
266
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
118
LATAM Airlines
Group S.A.
2° Juzgado Civil de
Santiago
C-8553-2020
Request for recognition of the foreign reorganization
proceeding.
On June 1, 2020, LATAM Airlines Group SA, in its capacity as
foreign representative of the reorganization procedure under the
rules of Chapter 11 of Title 11 of the United States Code, filed the
request for recognition of the foreign reorganization proceeding as
the main proceeding, pursuant to Law 20,720. On June 4, 2020,
the Court issued the ruling recognizing in Chile the bankruptcy
proceeding for the foreign reorganization of the company LATAM
Airlines Group S.A. All remedies filed against the decision have
been dismissed, so the decision is final. Considering that
November 3, 2022 was
the
reorganization plan approved and confirmed in the main
proceeding, on November 10, 2022, the representative of the
foreign proceeding submitted to the court his last monthly
report in accordance with the Communications Protocol
Cross-border.
the Effective Date of
Aerovías de
Integración
Regional S.A.
Superintendencia de
Sociedades
-
Request for recognition of the foreign reorganization
proceeding.
the
On June 4, 2020, LATAM Airlines Group and the companies that
were admitted to the Chapter 11 reorganization procedure (the
“Borrower”) before the U.S. District Court for the Southern
District of New York (the “U.S. Bankruptcy Court”) filed a
the Colombian Companies Commission (the
petition with
“Companies Commission”) for recognition of the Chapter 11
reorganization procedure in Colombia based on Colombian cross-
border insolvency regulations (Title III of Law 1116 of 2006). On
June 12, 2020, the Superintendency of Companies recognized in
the
Colombia
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 August 26, 2022, the
Companies Commission (i) recognized the Bankruptcy Court’s
June 24, 2022 order approving 8 exit financing strategies
presented by LATAM Airlines Group S.A. and its subsidiary,
Aerovías de Integración Regional S.A., and (ii) authorized the
termination of the guarantees granted in the DIP loan and the
establishment of the new guarantees. On November 3, 2022, the
Borrowers notified the U.S. Bankruptcy Court, lenders and
stakeholders of the Reorganization Plan effective date.
reorganization proceeding
filed before
Amounts
Committed (*)
ThUS$
-0-
-0-
Financial information
267
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
119
LATAM Finance
Limited
Grand Court of the
Cayman Islands
Peuco Finance
Limited
Grand Court of the
Cayman Islands
-
-
Request
bankruptcy process.
for
a provisional
Request
bankruptcy process.
for
a provisional
On May 26, 2020, LATAM Finance Limited submitted a request for a provisional liquidation
in the Grand Court of the Cayman Islands, 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. 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. 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. On December 1, 2021,
LATAM Finance Limited filed a petition to suspend the liquidation, which was accepted by
the Grand Court of Cayman Islands. This extended the status of the provisional liquidation
through April 9, 2022. The procedure continues. On August 22, 2022, LATAM Finance
Limited petitioned for a suspension of the liquidation, which was granted by the Grand Court
of the Cayman Islands. The provisional liquidation was extended to October 9, 2022 and the
process continues in effect. That petition was sustained by the Grand Court of the Cayman
Islands on October 4, 2022. On September 30, 2022, LATAM Finance Limited filed an
application for validation of security obligations arising in connection with the DIP to Exit
and new DIP facilities. On October 04, 2022, the Grand Court made an Order validating such
application. Currently the proceeding remains open.
Peuco Finance Limited submitted a request for a provisional liquidation in Grand Court of
the Cayman Islands, 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. 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 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 December 1, 2021, Peuco Finance Limited filed a petition to
suspend the liquidation, which was accepted by the Grand Court of Cayman Islands. This
extended the status of the provisional liquidation through April 9, 2022. The procedure
continues. On August 22, 2022, Peuco Finance Limited petitioned for a suspension of the
liquidation, which was granted by the Grand Court of the Cayman Islands. The provisional
liquidation was extended to October 9, 2022 and the process continues in effect. That
petition was sustained by the Grand Court of the Cayman Islands on October 4, 2022. On
September 30, 2022, Peuco Finance Limited filed an application for validation of security
obligations arising in connection with the DIP to Exit and new DIP facilities. On October 04,
2022, the Grand Court made an Order validating such application. Currently the proceeding
remains open.
Amounts
Committed (*)
ThUS$
-0-
-0-
Financial information
268
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
120
Piquero Leasing
Limited
Grand Court of the
Cayman Islands
-
Request
bankruptcy process.
for
a provisional
On July 07, 2020, Piquero Leasing Limited submitted a request for a provisional liquidation
in Grand Court of the Cayman Islands, 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. 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, 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, Piquero Leasing Limited filed a petition to
suspend the liquidation, which was accepted by the Grand Court of Cayman Islands. This
extended the status of the provisional liquidation through April 9, 2022. The procedure
continues. On August 22, 2022, Piquero Leasing Limited petitioned for a suspension of the
liquidation, which was granted by the Grand Court of the Cayman Islands. The provisional
liquidation was extended to October 9, 2022 and the process continues in effect. Currently
the proceeding remains open.
Amounts
Committed (*)
ThUS$
-0-
Financial information
269
Integrated Report 2022
Amounts
Committed (*)
ThUS$
2,397
2) Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries.
121
Company
Court
Case Number
Origin
Stage of trial
LATAM Airlines
Group S.A. y Lan
Cargo S.A.
European Commission.
Investigation of alleged infringements to free
competition of cargo airlines, especially fuel
surcharge. On December 26th, 2007, the General
Directorate for Competition of the European
Commission notified Lan Cargo S.A. and
LATAM Airlines Group S.A. the instruction
five cargo airlines,
process against
including Lan Cargo S.A., for alleged breaches of
competition in the air cargo market in Europe,
especially the alleged fixed fuel surcharge and
freight.
twenty
On April 14th, 2008, the notification of the European Commission
was replied. The appeal was filed on January
24, 2011.
On May 11, 2015, we attended a hearing at which we petitioned for
the vacation of the Decision based on discrepancies in the Decision
between the operating section, which mentions four infringements
(depending on the routes involved) but refers to Lan in only one of
those four routes; and the ruling section (which mentions one single
conjoint infraction).
On November 9th, 2010, the General Directorate for Competition
of the European Commission notified Lan Cargo S.A. and LATAM
Airlines Group S.A. the imposition of a fine in the amount of
THUS$8,797 (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. On March 30, 2022, the European Court issued
its ruling and lowered the amount of our fine from KUS$8,797
(8,220,000 Euros) to KUS$2,397 (2,240,000 Euros). This ruling
was appealed by LAN Cargo S.A. and LATAM on June 9, 2022.
The other eleven airlines also appealed the ruling affecting them.
The European Commission responded to our appeal of September
7, 2022. Lan Cargo S.A. and LATAM answered the Commission’s
arguments on November 11, 2022. The European Commission has
until January 24, 2023 to reply to our defense. On December 17,
2020, the European Commission had presentaded proof of claim
for the total amount of the fine (ThUS$8,797 (€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.
The amount of this claim has been modified subject to the possible
appeal of the ruling of the European Court.
Financial information
270
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
122
Lan Cargo S.A. y
LATAM Airlines
Group S.A.
the Ovre Romerike
In
District Court (Norway) y
Directie Juridische Zaken
Afdeling Ceveil Recht
(Netherlands)
Aerolinhas
Brasileiras S.A.
Federal Justice.
0008285-
53.2015.403.6105
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, these claims were filed in England,
Norway, the Netherlands and Germany, but are only
ongoing in Norway and the Netherlands.
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
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$3,478– R$18.148.281,61- probable). We must await a decision on
the Treasury appeal.
Amounts
Committed
(*)
ThUS$
-0-
9,847
7,822
Financial information
271
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
123
Tam Linhas
Aéreas S.A.
Court of the Second
Region.
2001.51.01.012530-0
to
(linked
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$73,986. The court
decision requesting that the Expert make all clarifications requested
by the parties in a period of 30 days was published on March 29,
2016. The plaintiffs’ submitted a petition on June 21, 2016
requesting acceptance of the opinion of their consultant and an
urgent ruling on the dispute. No amount additional to the deposit
that has already been made is required if this case is lost.
The objection (manifestação de inconformidade) filed by the
company was rejected, which is why the voluntary appeal was
filed. The case was assigned to the 1st Ordinary Group of Brazil’s
Administrative Council of Tax Appeals (CARF) on June 8, 2015.
TAM’s appeal was included in the CARF session held August 25,
2016. An agreement that converted the proceedings into a formal
case was published on October 7, 2016. The amount has been
reduced after some set-offs were approved by the Department of
Federal Revenue of Brazil. We must wait until the due diligence is
complete.
Amounts
Committed (*)
ThUS$
73,986
32,989
Financial information
272
Integrated Report 2022
Company
Court
Aerovías de
Integración
Regional,
AIRES S.A.
United States Court of
Appeals for the Eleventh
Circuit, Florida, U.S.A.
45th Civil Court of the
Bogota Circuit in
Colombia.
Case
Number
2013-20319
CA 01
Amounts
Committed (*)
ThUS$
-0-
124
Origin
Stage of trial
arising
The July 30th, 2012 Aerovías de Integración
Recional, Aires S.A. (LATAM AIRLINES
COLOMBIA) initiated a legal process in
Colombia against Regional One INC and
Volvo Aero Services LLC, to declare that
these companies are civilly liable for moral
and material damages caused to LATAM
AIRLINES COLOMBIA
from
breach of contractual obligations of the
aircraft HK-4107.
The June 20th, 2013 AIRES SA And / Or
LATAM AIRLINES COLOMBIA was
notified of the lawsuit filed in U.S. for
Regional One INC and Dash 224 LLC for
damages caused by the aircraft HK-4107
arguing failure of LATAM AIRLINES
GROUP S.A. customs duty to obtain import
declaration when the aircraft in April 2010
entered Colombia for maintenance required
by Regional One.
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. On January 21, 2022, VAS submitted a remedy of reconsideration and,
alternatively, an appeal against the interim decision because it did not order costs to be paid
to it. The parties were given notice to present a response between February 2 and 4, 2022.
The proceedings continue with the judge while they decide on costs. These costs will not be
enforced under the settlement made in the USA by VAS and LATAM Airlines Colombia.
Financial information
273
Integrated Report 2022
125
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, Regional One and VAS filed unsecured claims with the U.S.
Bankruptcy Court by the deadline that creditors have according to Chapter 11. On October
18, 2021, Regional One, Dash and LATAM AIRLINES COLOMBIA 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. VAS and Regional One informed the Court of a settlement agreement
between them. VAS has informally presented a modified Chapter 11 claim to LATAM
AIRLINES COLOMBIA in the intent to claim an indemnity of USD$1,197,539. LATAM
AIRLINES COLOMBIA has not yet responded. VAS withdrew the damage indemnity claim
against LATAM Airlines Colombia.
Financial information
274
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
126
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
that
issued a notice of violation stating
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.
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 final calculations of the Federal Income Tax Bureau are pending.
The Company received notice of a civil liability
claim by Inversiones Ranco Tres S.A. on January
18, 2017. It is represented by Mr. Jorge Enrique
Said Yarur. It was filed against LATAM
Airlines Group S.A. for an alleged contractual
default by the Company and against Ramon
Eblen Kadiz, Jorge Awad Mehech, Juan Jose
Cueto Plaza, Enrique Cueto Plaza and Ignacio
Cueto Plaza, directors and officers, for alleged
breaches of their duties. In the case of Juan Jose
Cueto Plaza, Enrique Cueto Plaza and Ignacio
Cueto Plaza, it alleges a breach, as controllers of
the Company, of
the
incorporation agreement. LATAM has retained
legal counsel specializing in this area to defend
it.
their duties under
The claim was answered on March 22, 2017 and the plaintiff filed its replication on
April 4, 2017. LATAM filed its rejoinder on April 13, 2017, which concluded the
argument stage of the lawsuit. A reconciliation hearing was held on May 2, 2017,
but the parties did not reach an agreement. The Court issued the evidentiary decree
on May 12, 2017. We filed a petition for reconsideration because we disagreed with
certain points of evidence. That petition was partially sustained by the Court on
June 27, 2017. The evidentiary stage commenced and then concluded on July 20,
2017. Observations to the evidence must now be presented. That period expires
August 1, 2017. We filed our observations to the evidence on August 1, 2017. We
were served the decision on December 13, 2017 that dismissed the claim since
LATAM was in no way liable. The plaintiff filed an appeal on December 26, 2017.
Arguments were pled before the Santiago Court of Appeals on April 23, 2019, and
on April 30, 2019, this Court confirmed the ruling of the trial court absolving
LATAM. The losing party was ordered to pay costs in both cases. On May 18,
2019, Inversiones Ranco Tres S.A. filed a remedy of vacation of judgment based on
technicalities and on substance against the Appellate Court decision. The Appellate
Court admitted both appeals on May 29, 2019 and the appeals are pending a hearing
by the Supreme Court. 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. In December 2022 LATAM requested the end of
the suspension.
Amounts
Committed (*)
ThUS$
10,095
15,488
Financial information
275
Integrated Report 2022
127
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. The
evidentiary stage has begun.
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. A hearing
will be held on October 19, 2022. A new decision was rendered against
the company and the discussion at the administrative level ended. The
debt will be disputed in a claim to be filed in January 2023.
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$
30,811
9,071
18,307
13,023
26,580
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.
83,636
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.
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. A decision in favor of the company was rendered on October 22,
2022. The process was archived in favor of the company.
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.
-0-
13,661
106,331
SNEA (Sindicato
Nacional das
empresas
aeroviárias)
TAM Linhas
Aéreas S/A
União Federal
União Federal
Financial information
276
Integrated Report 2022
128
Company
Court
Case Number
Origin
Stage of trial
TAM
Aéreas S/A
Linhas
Department
of
Federal Revenue
of Brazil
10880.938832/20
13-19
The decision denied the reallocation petition and did not equate
the Social Security Tax (COFINS) credit declarations for the
second quarter of 2011, which were determined to be in the non-
cumulative system
An administrative defense was argued on March 19, 2019. The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S/A
Department of
Federal Revenue
of Brazil
10880.938834/20
13-16
The decision denied the reallocation petition and did not equate the
Social Security Tax (COFINS) credit declarations for the third
quarter of 2011, which were determined to be in the non-
cumulative system.
An administrative defense was argued on March 19, 2019. The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S/A
Department of
Federal Revenue
of Brazil
10880.938837/20
13-41
The decision denied the reallocation petition and did not equate the
Social Security Tax (COFINS) credit declarations for the fourth
quarter of 2011, which were determined to be in the non-
cumulative system.
An administrative defense was argued on March 19, 2019. The Court
dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S/A
Department of
Federal Revenue
of Brazil
10880.938838/20
13-96
The decision denied the reallocation petition and did not equate the
Social Security Tax (COFINS) credit declarations for the first
quarter of 2012, which were determined to be in the non-
cumulative system.
We presented our administrative defense. The Court dismissed the
Company’s defense in December 2020. The Company filed a
voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
LATAM Airlines
Group Argentina,
Brasil, Perú,
Ecuador, y TAM
Mercosur.
Commercial and
Civil Trial Court
No. 11 of Buenos
Aires.
1408/2017
Consumidores Libres Coop. Ltda. filed this claim on March 14,
2017 regarding a provision of services. It petitioned for the
reimbursement of certain fees or the difference in fees charged for
passengers who purchased a ticket in the last 10 years but did not
use it.
TAM Linhas
Aéreas S.A
Department of
Federal Revenue
of Brazil
10.880.938842/20
13-54
The decision denied the petition for reassignment and did not
equate the COFINS credit statements for the third quarter of 2012
that had been determined to be in the non-accumulative system.
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.
The evidentiary stage has not yet begun in this case.
We presented our administrative defense. The Court dismissed the
Company’s defense in December 2020. The Company filed a
voluntary appeal to the Brazilian Administrative Council of Tax
Appeals (CARF) that is pending a decision.
TAM Linhas
Aéreas S.A
Department of
Federal Revenue
of Brazil
10.880.93844/201
3-43
The decision denied the petition for reassignment and did not
equate the 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.
TAM Linhas
Aéreas S.A
Department of
Federal Revenue
of Brazil
10880.938841/20
13-18
The decision denied the petition for reassignment and did not
equate the 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$
19,632
14,586
18,989
12,162
-0-
14,047
12,838
12,690
Financial information
277
Integrated Report 2022
129
Company
Court
Case Number
Origin
Stage of trial
TAM Linhas
Aéreas S.A
Receita Federal de Brasil
10840.727719/20
19-71
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
indemnity for damages caused by
commercial use of
Jose Marti
International Airport in Cuba that he says
were repaired and reconditioned by his
family before the change in government in
1959.
the
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910559/20
17-91
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. The process was under a temporary Suspension
Order from April 6, 2020 to September 2021 because of the inability to proceed
regularly as a result of the indefinite duration and restrictions imposed by the world
pandemic. Jose Ramon Lopez Regueiro filed a Second Amendment to the Claim on
September 27, 2021 of undetermined amount. This case was dismissed by the Court
on June 30, 2022 because the property was not confiscated by a U.S. national and
the plaintiff was not a U.S. citizen when they acquired the alleged claim to the
property or at least not before the enactment of the Helms-Burton Act (March 12,
1996). The suspension of claims against LATAM remained in effect until the
Chapter 11 proceedings concluded. Since the plaintiff did not present a proof of
claim against LATAM as part of the Chapter 11 proceedings, they could not file
any claim against LATAM. Consequently, the plaintiff agreed to withdraw their
claim. A status report was presented to the Court that confirmed this. 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.
TAM Linhas
Aéreas S.A.
TAM Linhas
Aéreas S.A.
Receita Federal de Brasil
10880.910547/20
17-67
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.
Receita Federal de Brasil
10880.910553/20
17-14
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.
Amounts
Committed (*)
ThUS$
37,062
12,505
-0-
10,979
12,710
12,221
Financial information
278
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
130
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$
12,893
11,226
13,051
Financial information
279
Integrated Report 2022
131
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.
(Manifestação de
We presented our administrative defense
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$
10,927
10,346
29,474
16,551
10,022
10,628
Financial information
280
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
132
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. On March 1, 2023, the Court of Appeals
resolved to omit the hearing of the case and pronouncement regarding
the appeal, in view of the fact that in January 2023 LATAM's request
the end of the suspension of the process that was decreed by resolution
of July 17, 2020 in case file C-8498-2020 of the 23rd Civil Court of
Santiago, for which the file is expected to return to the first instance to
continue the processing. The amount at the moment is undetermined.
Amounts
Committed (*)
ThUS$
-0-
Financial information
281
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
133
Latam
Group S.A
Airlines
25° 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
13074.726429/2021-
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, November 19,
2021 and May 19, 2022, which concluded its obligation to report on
that implementation. On 12/28/22 the Civil Court ordered the filing of
the file. CONADECUS still has appeals pending against these
decisions before the Court of Appeals of Santiago under entry number
14.213-2020. The amount at the moment is undetermined.
TAM
Inconformidade). A decision is pending
administrative defense.
filed
its
(Manifestação de
16,738
Amounts
Committed (*)
ThUS$
-0-
TAM Linhas
Aéreas S.A
Receita Federal de Brasil
2007.34.00.009919-
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
Aéreas S.A.
Linhas
Delegacía da Receita
Federal
13896.720385/2017-
96
It is about the refund request regarding the negative
balance of IRPJ, corresponding to the calendar year 2011.
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.
Presented the defense, which was denied by RFB. TAM resource
partially accepted. The Federal Revenue Service of Brazil issued a
decision granting the request for a refund. The process was closed with
a decision favorable to the company.
TAM
Aéreas S.A.
Linhas
Tribunal del Trabajo de
Brasília/DF
0000038-
25.2021.5.10.0017
This civil suit was filed by the National Pilots Union
seeking that the company be ordered to pay for meals
daily when pilots are on alert status.
The hearing is scheduled for March 06, 2023.
TAM
Aéreas S.A.
Linhas
Receita Federal de Brasil
13896.720386/2017-
31
This claim is seeking reimbursement of the negative
balance of the social tax on net profits (CSLL) from the
2011 calendar year.
The defensive arguments were presented, but the claim was denied by
the Brazilian Federal Revenue Agency (RFB). TAM’s appeal was
sustained in part. The Federal Revenue Service of Brazil issued a
decision granting the request for a refund. The process was closed with
a decision favorable to the company.
64,998
8,909
28,174
11,572
10,142
Financial information
282
Integrated Report 2022
Company
Court
Case Number
Origin
Stage of trial
134
TAM
Aéreas S.A.
Linhas
UNIÃO FEDERAL
0052711-
85.1998.4.01.000
0
economic
An indemnity claim to collect a differentiated price
from the Federal Union because of the disruption of
the
concession
agreements between 1988 and 1992. The indemnity,
should the action prosper, cannot be estimated (Price
Freeze).
equilibrium
the
in
TAM
Aéreas S.A
Linhas
UNIÃO FEDERAL
1012674-
80.2018.4.01.340
0
Legal actions for members to have the right to collect
contributions in the payroll collectible on the basis of
gross sales.
The lawsuit began in 1993. In 1998, there was a decision favorable
to TAM. The process reached the Court, and in 2019, the decision
was against TAM. The company has appealed and a decision is
pending.
This claim was filed in 2018. In January 2020, a decision favorable
to the Company was rendered so that contributions would be
collected on the basis of gross income. The company recently
rendering decisions
learned
unfavorable
the
contributor in a recent decision (jointly with the legal team and
prosecutor). A provision has been made in the accounting for
KUS$17.137 (R$ 89.417.472,87).
to contributors. They have ruled against
the Superior Courts are
that
TAM
Aéreas S.A
Linhas
Tribunal do Trabajo de
São Paulo
1000115-
90.2022.5.02.031
2
A class action whereby the Air Transport Union is
petitioning for payment of additional hazardous and
unhealthy work retroactively and in the future for
maintenance/CML employees.
The instruction hearing is pending in this case, scheduled for 12:02
p.m. on March 24, 2023.
TAM
Aéreas S.A
Linhas
Fazenda do Estado de
Sao Paulo
4.037.054-9
The Finance Department of the State of São Paulo
filed a claim of a violation because the tax on the
circulation of merchandise and services (ICMS) was
not paid for telecommunications services. It is being
heard by the Office of the Secretary of Finance of the
State of São Paulo. We were served the claim on
September 20, 2014.
Presentada la defensa. Dictada sentencia de primera instancia que
mantuvo la Notificación de Infracción en su totalidad. Presentamos
un Recurso Ordinario, que aguarda sentencia del TIT / SP. En
noviembre de 2021 tuvimos un juicio que anuló la decisión anterior
y determinó un nuevo juicio. A defense has been presented. The
first-instance decision maintained all of the Violation Notice. We
filed an ordinary remedy that is pending a decision by the Taxes
and Imposts Court of Sao Paulo. There was a lawsuit in November
2021 that voided the previous decision and ordered a new lawsuit.
In November 2022, we received a decision ordering payment of
part of the debt. The remaining part of the debt will be disputed
before the courts.
TAM
Aéreas S.A
Linhas
Receita Federal
15746.728063/20
22-00
This is an administrative claim regarding alleged
irregularities in the payment of Technical Assistance
(SAT) in 2018.
We will be presenting a defense.
Amounts
Committed (*)
ThUS$
-0-
-0-
13,141
10.013
15.904
Financial information
283
Integrated Report 2022
135
136
-
In order to cover any financial obligations arising from legal proceedings in effect at December
31, 2022 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 20.
- The Company has not disclosed the individual probability of success for each contingency in
order to not negatively affect its outcome.
(*) 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 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 activity in this investigation corresponds to
request for information received 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
National Economic Prosecutor’s Office archived the investigation on November 29, 2022.
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. In April and October
2022, the external auditors presented preliminary reports agreed upon with the National Consumer
Service (SERNAC).
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 August 25, 2022, 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. On August 25, 2022,
LATAM sent a letter to the FNE accompanying information related to the LATAM Cargo website,
complying with the request of the National Economic Prosecutor. The last activity in this
investigation corresponds to an official letter from the FNE received on 10/24/2022 that must be
answered on 11/08/2022.
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 related to restrictions as to certain codeshare agreements. The most recent
activity in this investigation was an official letter received in June of this year, which was answered
on July 21, 2022.
7) On September 16, 2021, the National Consumer Service of Chile (SERNAC) issued the Ordinary
Resolution No. 721 which proposed to LATAM Airlines Group S.A. a collective voluntary
mediation procedure regarding the execution of solutions offered by the Company to customers
during the COVID-19 pandemic. The Company decided to voluntary participate in the mediation
procedure, which resulted an agreement on April 20, 2022. Pursuant the agreement, an external
auditor will review the fulfillment, by the Company, of the solutions offered to customers between
July 17, 2020, and September 16, 2021. Additionally, the external auditor must report to SERNAC
any measure aiming to enhance customer service and implemented by the Company between the
July 17, 2020, and October 13, 2022, timeframe. The implementation of the agreement begun on
May 13, 2022. The external auditors presented the preliminary report agreed upon with the National
Consumer Service (SERNAC) on August 19, 2022. On December 27, 2022 SERNAC issued the
resolution that concluded the procedures related to this agreement, terminating it.
8) On May 21, 2022, Agunsa filed a petition for a preliminary preparatory measure of exhibition of
documents in respect of Aerosan, Depocargo, Sociedad Concesionaria Nuevo Pudahuel and Fast
Air in which Agunsa claimed that it was impacted by alleged anti-competition practices on the
import cargo warehousing market at the Arturo Merino Benitez International Airport. Fast Air was
served on June 9, 2022 and on June 13, 2022, it lodged opposition against this petition, which was
partially sustained by the Antitrust Court (TDLC) on July 19, 2022, in which the new exhibition
date was set as August 22nd (the original date set by the court was July 1, 2022). On July 25, 2022,
Fast Air requested a reconsideration of this latter court decision and petitioned that the temporary
scope of the exhibition be reduced. Fast Air’s petition was sustained and the scope of the documents
to be revealed was limited even further. On August 12th, Fast Air petitioned that a new date and
time be set for the exhibition hearing. The court granted this latter request on August 17th and set
the exhibition date as August 31st. Fast Air appeared with 368 files and asked for confidentiality
and/or secrecy of all of the information presented.
9) On October 27, 2021, LATAM Airlines Group S.A. received an official letter from the Office of
Aviation Consumer Protection of the U.S. Department of Transportation (DOT) asking about the
delay in making and/or refusal to make reimbursements to passengers potentially impacted by flight
cancellations during the pandemic (March 20, 2020 to July 31, 2021), a potential violation of
requirements under 14 CFR Part 259 and 49 U.S.C. § 41712. The most recent activity in this
investigation is a response sent by LATAM Airlines Group on July 19, 2022 to a request by the
DOT to explain related information provided by LATAM Airlines Group S.A. in December 2021
and March 2022.
Financial information
284
Integrated Report 2022
137
138
NOTE 31 - COMMITMENTS
(a)
Commitments arising from loans
In relation to certain contracts committed by the Company for the financing of the Boeing 777
aircraft, which are guaranteed by the 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 no circumstance does non-compliance
with these limits generate loan acceleration.
The Company and its subsidiaries do not have credit agreements that impose limits on financial
indicators of the Company or its subsidiaries, with the exception of those detailed below:
On October 12, 2022, LATAM Airlines Group S.A., acting through its subsidiary Professional
Airline Services Inc, closed a new four-year revolving credit facility (“Exit RCF”) of US$ 500
million with a consortium of five banks led by Goldman Sachs. As of December 31, 2022, this
credit facility is undrawn and fully available. In addition, on October 18, 2022, LATAM Airlines
Group S.A., together with Professional Airline Services, Inc., a Florida corporation and a wholly
owned subsidiary of LATAM Airlines Group S.A., issued (i) a five-year term loan facility (“Term
Loan B Facility”) of US$ 1,100 million (US$1,100 million outstanding as of December 31, 2022),
(ii) 13.375% senior secured notes due 2027 (“2027 Notes”) for an aggregate principal amount of
US$ 450 million and (iii) 13.375% senior secured notes due 2029 (“2029 Notes”, together with the
2027 Notes, the “Notes”) for and aggregate principal amount of US$ 700 million. The Exit RCF,
the Term Loan B Facility and the Notes (together, the “Exit Financing”) share the same intangible
collateral composed mainly of the FFP (LATAM Pass loyalty program) business receivables, Cargo
business receivables, certain slots, gates and routes and LATAM’s intellectual property and brands.
The Exit Financing contains certain covenants limiting us and our restricted subsidiaries’ ability to,
among other things, make certain types of restricted payments, incur debt or liens, merge or
consolidate with others, dispose of assets, enter into certain transactions with affiliates, engage in
certain business activities or make certain investments. In addition, the agreements include a
minimum liquidity restriction, requiring us to maintain a minimum liquidity, measured at the
consolidated Company (LATAM Airlines Group S.A.) level, of US$ 750 million.
On November 3, 2022, LATAM Airlines Group S.A., acting through its subsidiary Professional
Airline Services Inc, amended and extended the 2016 revolving credit facility (“RCF”) with a
consortium of thirteen financial institutions led by Citibank, N.A., guaranteed by aircraft, engines
and spare parts for a total committed amount of US$ 600 million. The RCF includes restrictions of
minimum liquidity measured at the consolidated Company level (with a minimum level of US$ 750
million) and measured individually for LATAM Airlines Group S.A. and TAM Linhas Aéreas S.A.
(with a minimum level of US$ 400 million). Compliance with these restrictions is a prerequisite for
drawing under the line; if the line is used, compliance with said restrictions must be reported
periodically, and non-compliance with these restrictions may trigger an acceleration of the loan. As
of December 31, 2022, this line of credit is undrawn and fully available.
On November 3, 2022, LATAM Airlines Group S.A., acting through subsidiary its Professional
Airline Services Inc, executed a five-year credit facility (“Spare Engine Facility”) with, among
others, Crédit Agricole Corporate and Investment Bank, acting through its New York branch, as
facility agent and arranger and guaranteed by spare engines for a principal amount of US$ 275
million. As of December 31, 2022, the outstanding amount under the Spare Engine Facility is US$
275 million. The facility includes restrictions of minimum liquidity measured at the consolidated
Company level (with a minimum level of US$ 750 million) and measured individually for LATAM
Airlines Group S.A. and TAM Linhas Aéreas S.A. (with a minimum level of US $ 400 million).
As of December 31, 2022, the Company complies with the aforementioned minimum liquidity
covenants.
b) Other commitments
As of December 31, 2022, the Company maintains valid letters of credit, guarantee notes and
guarantee insurance policies, according to the following detail:
Creditor Guarantee
Debtor
Type
Value
ThUS$
Release
Date
Superintendencia Nacional de Aduanas
y de Administración Tributaria
Lima Airport Partners S.R.L.
Servicio Nacional de Aduana del Ecuador
Aena Aeropuertos S.A.
American Alternative Insurance
Corporation
Comisión Europea
M etropolitan Dade County
JFK International Air Terminal LLC.
Servicio Nacional de Aduanas
Isoceles
BBVA
Sociedad Concesionaria Nuevo Pudahuel
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
Vara Civel Campinas SP.
JFK International Air Terminal LLC.
7ª Turma do Tribunal Regional
Federal da 1ª Região.
Bond Safeguard Insurance Company.
Fundacao de Protecao e Defesa
do Consumidor Procon.
Uniao Federal Fazenda Nacional.
Uniao Federal PGFN.
1° Vara de Execuções Fiscais e de Crimes
LATAM Airlines Perú S.A.
LATAM Airlines Perú S.A.
LATAM Airlines Ecuador S.A.
LATAM Airlines Group S.A.
Forty-four letters of credit
Two letters of credit
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.
LATAM Airlines Group S.A.
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
Eighteen letters of credit
One letter of credit
Five letters of credit
One letter of credit
Three letters of credit
One letter of credit
One letter of credit
fifte e n le tte rs o f c re d it
Two insurance policy guarantee
Five insurance policy guarantee
TAM Linhas Aéreas S.A.
One insurance policy guarantee
TAM Linhas Aéreas S.A.
One insurance policy guarantee
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
Six insurance policy guarantee
TAM Linhas Aéreas S.A.
One insurance policy guarantee
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
One insurance policy guarantee
One insurance policy guarantee
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
One insurance policy guarantee
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
Two insurance policy guarantee
One insurance policy guarantee
Three insurance policy guarantee
contra a Ordem Trib da Com de Fortaleza.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
Fundacao de Protecao e Defesa
do Consumidor Procon.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
Fiança TAM Linhas Aéreas x Juiz Federal de uma
das varas da Seção Judiciária de Brasília.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
Juizo de Direito da Vara da Fazenda Publica
Estadual da Comarca Da
Capital do Estado do Rio de Janeiro.
M unicipio Do Rio De Janeiro.
Vara das Execuções Fiscais Estaduais
Da Comarca De São Paulo.
Fundacao de Protecao e Defesa
TAM Linhas Aéreas S.A.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
One insurance policy guarantee
TAM Linhas Aéreas S.A.
One insurance policy guarantee
do Consumidor Do Estado De São Paulo.
TAM Linhas Aéreas S.A.
One insurance policy guarantee
Tribunal de Justição
Uniao Federal Fazenda Nacional
de São Paulo.
Uniao Federal PGFN
Tribunal de Justição
de São Paulo.
3ª Vara Federal da Subseção
Judiciária de Campinas SP
7ª Turma do Tribunal Regional
Federal da 1ª Região
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.
Absa Linhas Aereas
Brasileira S.A.
Two insurance policy guarantee
Three insurance policy guarantee
Two insurance policy guarantee
Two insurance policy guarantee
One insurance policy guarantee
One insurance policy guarantee
189,708
1,620
2,130
1,183
6,460
2,586
2,281
2,300
1,287
41,000
4,126
1,7 5 5
2,340
9,731
1,485
1,681
1,337
8 ,3 8 9
2,355
1,406
1,6 5 3
1,300
43,003
2,700
4,276
31,860
18,469
2,355
2,024
1,687
1,127
1,154
9,077
1,073
1,499
15,215
20,681
5,836
1,734
1,677
453,560
Jan 5, 2023
Nov 30, 2023
Aug 5, 2023
Nov 15, 2023
M ar 22, 2023
M ar 29, 2023
M ar 13, 2023
Jan 27, 2023
Jul 28, 2023
Aug 6, 2023
Jan 17, 2023
Dec 13, 2023
Nov 17, 2025
Feb 4, 2025
Apr 24, 2025
Jul 5, 2023
Dec 31, 2023
Jan 4, 2023
Jun 25, 2023
M ay 29, 2025
Jun 14, 2024
Jan 25, 2023
Apr 20, 2023
Jul 20, 2023
Sep 20, 2023
Jul 30, 2024
Jan 4, 2024
Dec 31, 2023
Feb 10, 2026
Dec 31, 2023
Dec 31, 2023
Dec 31, 2023
Apr 15, 2025
Dec 31, 2023
Dec 31, 2023
Feb 4, 2025
Feb 22, 2025
Dec 31, 2023
Nov 30, 2025
M ay 7, 2023
Letters of credit related to right-of-use assets are included in Note 16 Property, plant and equipment
letter (d) Additional information Property, plant and equipment, in numeral (i) Property, plant and
equipment delivered as collateral.
Financial information
285
Integrated Report 2022
139
NOTE 32 - 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 o rigin
Na ture o f
re la te d pa rtie s
tra ns a c tio ns
96.810.370-9
81.062.300-4
Inve rs io ne s C o s ta Ve rde Ltda . y C P A.
C o s ta Ve rde Ae ro na utic a S .A.
R e la te d dire c to r
C o m m o n s ha re ho lde r
C hile
C hile
Tic ke ts s a le s
Lo a ns re c e ive d (*)
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
Inve rs o ra Ae ro ná utic a Arge ntina S .A.
R e la te d dire c to r
R e la te d dire c to r
R e la te d dire c to r
C hile
U.S .A
Arge ntina
F o re ign
F o re ign
TAM Avia ç ã o Exe c utiva e Ta xi Aé re o
Qa ta r Airwa ys
C o m m o n s ha re ho lde r
Indire c t s ha re ho lde r
B ra zil
Qa ta r
F o re ign
De lta Air Line s , Inc .
S ha re ho lde r
U.S .A
F o re ign
QA Inve s tm e nts Ltd
C o m m o n s ha re ho lde r
Inte re s t re c e ive d (*)
C a pita l c o ntributio n
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
R e a l e s ta te le a s e s re c e ive d
S e rvic e s pro vide d o f pa s s e nge r tra ns po rt
Inte rline a l re c e ive d s e rvic e
S e rvic e s pro vide d by a irc ra ft le a s e
Inte rline a l pro vide d s e rvic e
S e rvic e s pro vide d o f ha ndling
S e rvic e s re c e ive d m ile s
C o m pe ns a tio n fo r e a rly re turn o f a irc ra ft
S e rvic e s pro vide d / re c e ive d o the rs
Inte rline a l re c e ive d s e rvic e
Inte rline a l pro vide d s e rvic e
Lo a ns re c e ive d (*)
Inte re s t re c e ive d (*)
C a pita l c o ntributio n
S e rvic e s pro vide d o f ha ndling
Engine s a le
S e rvic e s pro vide d m a inte na nc e
S e rvic e s pro vide d / re c e ive d o the rs
Lo a ns re c e ive d (*)
F o re ign
QA Inve s tm e nts 2 Ltd
C o m m o n s ha re ho lde r
Lo a ns re c e ive d (*)
U.K.
F o re ign
Lo zuy S .A.
C o m m o n s ha re ho lde r
Urugua y
Inte re s t re c e ive d (*)
Lo a ns re c e ive d (*)
Inte re s t re c e ive d (*)
(*) Op e ra tio n s c o rre s p o n d in g to DIP lo a n s tra n c h e C.
Th e b a la n c e s c o rre s p o n d in g to Ac c o u n ts re c e iva b le a n d a c c o u n ts p a ya b le to re la te d e n titie s a re d is c lo s e d in No te 9 .
Tra n s a c tio n s b e twe e n re la te d p a rtie s h a ve b e e n c a rrie d o u t u n d e r ma rke t c o n d itio n s a n d d u ly in fo rme d .
U.K.
Inte re s t re c e ive d (*)
C a pita l c o ntributio n
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
2022
ThUS $
2021
ThUS $
C LP
US $
US $
US $
C LP
C LP
US $
AR S
US D
B R L
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
US $
87
23
(231,714)
(21,329)
170,962
(35,412)
(34,694)
-
36
2
-
(63)
-
4
(23,110)
-
37,855
692
(4,974)
-
(434)
(111,706)
102,580
(233,008)
(10,374)
163,979
(4,340)
19,405
-
(1,893)
(240,440)
26
9
15
-
-
12
(6,387)
-
6,283
1,493
-
-
(963)
(11,768)
7,695
-
-
-
-
-
(59)
(318)
(44,266)
(26,153)
(43,367)
163,979
-
(7,414)
(44,266)
(15,780)
(43,367)
(57,928)
(5,332)
(8,853)
(8,673)
Financial information
286
Integrated Report 2022
140
141
(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,
2022
ThUS$
2021
ThUS$
10,651
1,109
565
11,814
1,157
25,296
9,981
1,016
501
16,639
513
28,650
Remuneration
Board compensation
Non-monetary benefits
Short-term benefits
Termination benefits (*)
Total
NOTE 33 - SHARE-BASED PAYMENTS
LP3 compensation plans (2020-2023)
The Company implemented a program for a group of executives, which runs from October 2020
and lasts until March 2023, where the percentage that is collected is annual and cumulative. The
methodology is based on the allocation of a quantity of units where the goal is the achievement of a
specified share price.
The benefit is vested if the target of the share price defined in each year is met. In case the benefit
accumulates up to the last year the total benefit is doubled (in case the share price is achieved).
This Compensation Plan has not yet been provisioned due to the fact that the share price required
for collection is below the initial target.
NOTE 34 - STATEMENT OF CASH FLOWS
(a) The Company has carried out the following non-monetary transactions mainly related for:
a.1.) Proceeds from the issuance of shares:
(*) Includes termination benefits ThUS $ 1,157 related to the reorganization within the framework
of Chapter 11 and classified as expenses of restructuring activities, for the 12 months ended
December 31, 2022. (Note 26 d).
Detail
Issuance of shares
Issuance costs
DIP Junior offset
Total cash flow
THUS$
800,000
(80,000)
(170,962)
549,038
From the total capital increase for ThUS$800,000, ThUS$549,038 were cash Inflows presented in
Financing Activities. ThUS$170,962 were offset against a portion of the Junior DIP maintained
with the shareholder Inversiones Costa Verde Ltda. y CPA Additionally, there were ThUS$80,000
deducted related to equity issuance cost, that are presented within Other sundry reserves of equity.
a.2.) Amount from the issuance of other equity instruments:
Detail
Fair Value (see note 24)
Use for settement of claim
Issuance costs
DIP Junior offset
Convertible
Notes H
ThUS$
Convertible
Notes I
ThUS$
1,372,837
-
(24,812)
(327,957)
4,097,788
(828,581)
(705,467)
(381,018)
Total
ThUS$
5,470,625
(828,581)
(730,279)
(708,975)
Cash inflow
1,020,068
2,182,722
3,202,790
Financial information
287
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142
143
The payment of DIP Junior offset is related to payment of the Junior Dip through the issues of the
Convertible Notes subscribed for the shareholders Delta Air Lines, Inc and QA Investment Ltd.
ThUS$327,957 and of the other creditor for Th$381.018.
a.3.) As a result of the exit from Chapter 11, in relation to trade accounts payable and other
accounts payable, the conversion into shares for Notes G and I was carried out, for a total of
ThUS$3,610,470 and a decrease in said item with effect in result which is included in Earning
(Loss) from restructuring activities for ThUS$ 2,550,306 (see note 26d) and with effect in results in
financial income for ThUS$ 420,436 (see note 26e).
a.4.) As a result of the exit from Chapter 11, the Other financial liabilities item decreased its balance
by ThUS$ 2,673,256, which is detailed in letter, d). The break down of this decrease corresponds
mainly to ThUS$ 491,326 (see note 26e), ThUS$ 354,249 (decrease with effect in Property, plant
and equipment, mainly related to the effect of rate change), ThUS$ 381,018 related to the
compensation of the debt with the effect of increasing Capital, ThUS$1,443,066 associated with the
conversion of debt into shares and other minor effects of ThUS$3,596.
(b) Other inflows (outflows) of cash:
Fuel hedge
Hedging margin guarantees
Tax paid on bank transactions
Fuel derivatives premiums
Bank commissions, taxes paid and other
Guarantees
Court deposits
Delta Air Lines Inc. Compensation
Funds delivered as restricted advances
For the year ended
December 31,
2022
2021
ThUS$
ThUS$
35,857
(40,207)
(2,134)
(23,372)
(5,441)
(47,384)
(20,661)
-
(26,918)
14,269
(4,900)
(2,530)
(17,077)
(21,287)
(39,728)
(16,323)
-
-
Total Other inflows (outflows) Operation flow
(130,260)
(87,576)
Tax paid on bank transactions
Guarantee deposit received from the sale of aircraft
Total Other inflows (outflows) Investment flow
Settlement of derivative contracts
Funds delivered as restricted advances
Payments of claims associated with the debt
RCF guarantee placement
Debt-related legal advice
Debt Issuance Cost - Stamp Tax
-
6,300
6,300
-
(313,090)
(21,924)
(7,500)
(87,993)
(33,259)
(425)
18,900
18,475
-
-
-
-
(11,034)
-
Total Other inflows (outflows) Financing flow
(463,766)
(11,034)
(c) Dividends:
As of December 31, 2022 and 2021, there were no disbursements associated with this concept.
(d)
Reconciliation of liabilities arising from financing activities:
Obligations with
December 31,
Obtainment
As of
Cash flows
Payment
Non cash-Flow Movements
As of
December 31,
financial institutions
2021
Capital (*)
Capital (**)
Interests
Transaction
cost
Extinguishment of
debt under
Chapter 11
Interest accrued and
others
Reclassifications
2022
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
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
159,161
521,838
510,535
2,725,422
2,253,198
1,189,182
76,508
2,960,638
-
982,425
-
3,658,690
1,109,750
-
1,467,035
-
-
(36,466)
(18,136)
(5,408,540)
(1,501,739)
(270,734)
(1,523,798)
(131,917)
-
(10,420)
(13,253)
(391,639)
(17,499)
(34,201)
(5,628)
(49,076)
-
-
(25)
(91,247)
-
-
3,281
(2)
(161,975)
(196,619)
-
(381,018)
(843,950)
(37,630)
(56,176)
(995,888)
2,814
128,077
13,882
339,475
148,703
37,211
40,806
492,592
-
(2,840)
(167,942)
23,161
141,336
204,411
-
(59,893)
-
1,385,995
325,061
474,304
1,289,799
1,088,239
2,028
2,216,454
10,396,482
7,217,900
(8,891,330)
(521,716)
(87,993)
(2,673,256)
1,203,560
138,233
6,781,880
Obligations with
December 31,
Obtainment
As of
Cash flows
Payment
financial institutions
2020
Capital (*)
Capital (**)
Interests
Transaction
cost
Non cash-Flow Movements
Interest accrued
As of
December 31,
and others
Reclassifications
2021
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
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
151,701
525,273
1,318,856
1,939,116
2,183,407
1,614,501
-
3,121,006
-
-
-
661,609
-
-
-
-
-
-
(14,605)
(26,991)
-
(421,452)
-
(103,366)
-
(546)
(17,405)
(28,510)
-
(40,392)
-
(17,768)
10,853,860
661,609
(566,414)
(104,621)
-
-
-
-
-
-
-
-
-
(***)
7,460
(2,889)
(513,276)
135,405
69,791
(181,717)
76,508
(39,234)
(447,952)
-
-
(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
10,396,482
During 2022, at the time of the subscription of Note H, the fair value of the liability component
amounted to ThUS$102,031. As of December 31, 2022, the liability component was converted into
equity (see note 24(e.2)).
(*) As of December 31, 2022, the Company obtained ThUS$2,361,875 amounts from long-term
loans and ThUS$4,856,025 (ThUS$661,609 in 2021) amounts from short-term loans, totaling
ThUS$7,217,900.
(**) As of December 31, 2022, loan repayments ThUS$8,759,413 and payments of lease liabilities
ThUS$131,917 disclosed in flows from financing activities and as of December 31, 2021, loan
repayments ThUS$463,048 and liability payments for leases ThUS$103,366 disclosed in flows
from financing activities.
(***) As of December 31, 2021, Accrued interest and others, includes ThUS$458,642, associated
with the rejection of fleet contracts.
Financial information
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144
145
Below are the details obtained (payments) of flows related to financing:
For the exercises of December 31
Capital
raising
ThUS$
2022
Payments
Capital
ThUS$
-
-
7,217,900
(331,292)
(131,917)
(8,428,121)
Interest
ThUS$
(52,088)
(49,075)
(420,553)
Capital
raising
ThUS$
-
-
661,609
2021
Payments
Capital
ThUS$
(463,048)
(103,366)
-
Interest
ThUS$
(63,763)
(17,768)
(23,090)
7,217,900
(8,891,330)
(521,716)
661,609
(566,414)
(104,621)
Flow of
Aircraft financing
Lease liability
Non-aircraft financing
Total obligations with
Financial institutions
(e) Advances of aircraft
(f)
Additions of property, plant and equipment and Intangibles
Net cash flows from
Purchases of property, plant and equiment
Additions associated with maintenance
Other additions
Purchases of intangible assets
Other additions
For the period ended
At December 31,
2022
2021
ThUS$
ThUS$
780,538
486,231
294,307
50,116
50,116
597,103
302,858
294,245
88,518
88,518
Corresponds to the cash flows associated with aircraft purchases, which are included in the
statement of consolidated cash flows, within Purchases of property, plant and equipment.
(g) The net effect of the application of hyperinflation in the consolidated cash flow statement
corresponds to:
Inc re a s e s (pa ym e nts )
R e c o ve rie s
To ta l c a s h flo ws
F o r the ye a r e nde d
De c e m be r 31,
2022
ThUS $
2021
ThUS $
(23,118)
43,902
20,784
(9,858)
-
(9,858)
The Company has revised its consolidated statement of cash flows for the year ended December 31,
2021 to correct the classification of cash flows related to property, plant and equipment additions.
This correction resulted in an increase in net cash used in investing activities of ThUS$9,858 and a
decrease in cash used in operating activities in the same amount.
For the period ended
December 31,
2022
ThUS$
(36,701)
(146)
7,703
29,144
-
2021
ThUS$
(65,901)
17,223
-
48,678
-
Net cash flows from (used in) operating activities
Net cash flows from (used in) investment activities
Net cash flows from (used in) financing activities
Effects of variation in the exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
(h) Payments of leased maintenance
Payments to suppliers for the supply of goods and services include the value paid associated with
leased maintenance capitalizations for ThUS$149,142 (ThUS$163,717 as of December 31, 2021).
(i) Payments of loans to related entities
For the period ended
December 31,
2022
ThUS$
(78,947)
(78,947)
(257,533)
(107,122)
(242,967)
(242,967)
(1,008,483)
Delta Air Lines, Inc.
Qatar Airways
Costa Verde Aeronautica S.A.
Lozuy S.A.
QA Invesments Ltd
QA Invesments 2 Ltd
Payments of loans to related entities
Financial information
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Integrated Report 2022
146
147
NOTE 35 - 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.
The main functions of Corporate Affairs and Sustainability Department in environmental issues, in
conjunction with the various areas of the company, are 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 Management, 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 scenarios.
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, 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 the equivalent of 50% of domestic emissions by 2030 and
be carbon-neutral by 2050, for this it has focused its strategy in:
1. 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.
2. 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 and Colombia, which has recognized and long-standing experience in
biofuels; and Chile, a country with high development potential in green hydrogen.
3. 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 by 2023 and be a zero waste to landfill group by
2027. To achieve these goals, it has reviewed the materiality used in its process and 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.
Within the framework of the implementation of the strategy, during 2023, the company has been
working on the following initiatives:
●
●
●
●
●
●
●
●
Implementation and Certification of all LATAM operations under the IATA Environmental
Assessment Program IEnvA in stage 2.
Support for conservation projects and compensation of emissions.
Measurement and management of the corporate carbon footprint.
Neutralization of domestic air operations in Colombia.
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.
Implementing processes for the elimination of single-use plastic in the operation and
reduction of waste to landfills.
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 2023, 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,
Financial information
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148
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.
NOTE 36 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS
A) On February 10, 2023, the airline Fast Colombia S.A.S. ("Viva Air Colombia") announced that
it began in Colombia a business recovery process (PRE), an extrajudicial process regulated in
Decreto 560 of 2020. Subsequently, on February 14, 2023, LATAM Airlines Colombia, a
subsidiary of LATAM Airlines Group S.A., expressed its interest in initiating negotiations to
acquire Viva Air Colombia. The transaction is subject to a financial analysis, an eventual
agreement between the parties and the corresponding regulatory approvals. To date, LATAM
has not submitted any purchase proposal to Viva Air Colombia or its controlling shareholders.
On February 27, 2023, Viva Air Colombia announced the suspension of its operations with
immediate effect.
B) On March 2, 2023, an agreement was signed to receive under operational lease 4 aircraft of the
Boeing 787 family, whose deliveries will be during 2025.
C) After December 31, 2022, 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.
D) The consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries as of
December 31, 2022, have been approved in the Extraordinary Session of the Board of
Directors on March 9, 2023.
Financial information
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Integrated Report 2022
Affiliates and
subsidiaries
LATAM AIRLINES GROUP S.A.
Name: LATAM Airlines Group S.A.
RUT: 89.862.200-2
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 in Santiago, 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
aeronautical and radio communications
concessions, traffic rights, and other
administrative concessions.
An excerpt of the deed to which the
Minutes of said Meeting referred was
recorded in the Santiago Commerce
Registry on page 25,128 item 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 Shareholders’ Meeting
of LAN Chile S.A. held on December 21,
2011, agreed to change the name of
the company to “LATAM Airlines Group
S.A.”. An excerpt of the deed to which
the Minutes of said Meeting referred
was recorded in the Santiago Commerce
Registry on page 4,238 item 2,921 of
the year 2012, and published in the
Official Gazette on January 14, 2012. The
effective date for the name change was
June 22, 2004.
LATAM Airlines Group S.A. is governed
by the regulation applicable to open
stock companies, and registered to
this effect under number 0306, dated
January 22, 1987, in the Securities
Register of the Superintendence of
Securities and Insurance (SVS, for its
Spanish acronym).
The Extraordinary Shareholders’
Meeting of LAN Chile S.A. held on July
23, 2004, agreed to change the name
of the company to “LAN Airlines S.A.”.
Note: A summary of the subsidiaries’ Finan-
cial Statements is presented herein. The full
information is available to the public in our
offices and at the Superintendency of Se-
curities and Insurance.
TAM S.A. AND AFFILIATES
Incorporation: Joint Stock Corporation
established in Brazil in May 1997.
Purpose: To participate as a
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 transportation.
Paid-in Capital: ThUS$3,661,680
Profit for the period: ThUS$(70,047)
Stake in 2022: 100.00%
Year over Year Variance (YoY): 0.00%
% of Holding's assets: -5.55986%
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
Financial information
292
Integrated Report 2022
(h) The analysis and development of
programs and systems;
ABSA: Aerolinhas Brasileiras
S.A. and affiliate
(i) The purchase and sale of
aeronautical parts, accessories, and
equipment;
Individualization: Joint Stock
Corporation established in Brazil.
AFFILIATE COMPANIES OF TAM S.A.
TAM Linhas Aéreas S.A. and affiliates
Individualization: Joint Stock
Corporation established in Brazil.
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;
(j) The development and
implementation of other activities,
related to or complementary to
aviation, in addition to those expressly
listed above;
(k) The import and export of finished
lubricating oil; and
(l) The use of bank correspondents’
services.
Paid-in Capital: ThUS$903,879
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: -5.45214%
(e) The rendering of yard and runway
care services, provision of the aircraft
cleaning staff;
Chairman of the Board:
Jerome Paul Jacques Cadier
(f) The rendering of engineering services,
technical assistance and other activities
related to the aviation industry;
Board Members:
Jefferson Cestari– CFO
Sérgio Fernando Bernardes Novato–
COO
(g) The performance of instruction
and training related to aeronautical
activities;
Purpose: (a) Operate scheduled
domestic and international air
transport services for passengers,
cargo, and postal services, pursuant to
existing legislation;
(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;
(c) Commercial and operational leasing,
as well as the transport of aircraft;
(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.
Paid-in Capital: ThUS$9,716
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: -0.29393%
Paid-in Capital: ThUS$7,836
Stake in 2022: 94.98%
YOY variation: 0.00%
% of Holding's assets: 0.11893%
Chairman of the Board:
Jerome Paul Jacques Cadier
Chairman of the Board
Enrique Alcaide Hidalgo
Board Members:
Diogo Abadio – Commercial Director
Jefferson Cestari– CFO
Transportes Aéreos 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.
Board Members
Executive: Enrique Alcaide Hidalgo
Permanent Member: Esteban Burt
Permanent Member: Diego Martínez
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 May
2013.
Purpose: (i) devoted to private and
non-private travel agency and tourism
activities, provided in the valid tourism
legislation; and (ii) management and
operation of tourist activities for events
and leisure.
Financial information
293
Integrated Report 2022
Paid-in Capital: ThUS$22,695
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.05476%
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.
Purpose: (i) To participate in other civil
or trade companies, as a shareholder
or creditor; and (ii) To manage its own
assets.
TP Franchising Limited
Individualization: Limited Liability
Company established in Brazil.
Purpose: (a) to award franchises;
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$6
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.00823%
Managers:
Claudia Sender Ramirez
Marcelo Eduardo Guzzi Dezem
Daniel Levy
Prisma Fidelidade Ltda.
(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
present or future owner or licensee,
for the development, implementation,
operation, or management of the
franchises that it may grant;
(c) to develop any and all necessary
activities to ensure, insofar as possible,
the ongoing maintenance and perfecting
of the actuation patterns of its franchise
network;
programs or other exchange currencies
that can be converted into loyalty
program points;
(iii) rendering of commercial
representation and brokerage services
for the sale of retail products in general,
in addition to the rendering of brokerage
services for the contracting of insurance
and extended warranty products; and
(iv) participation in other companies.
Paid-in Capital: ThUS$8,669
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.17614%
Paid-in Capital: ThUS$37
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.00081%
(d) to develop implementation,
operation, and management models for
its franchise network and their transfer
to the franchisees; and
Chairman of the Board:
None
Board Members:
Claudia Sender Ramirez
(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
Individualization: Limited Liability
Company established in Brazil.
Managers:
Purpose: (i) the rendering of various
services related to customer loyalty
programs and incentive programs for
the companies' sales chain including,
among others, customer relationship
management, technical consulting, and
technology consulting;
(ii) the development of customer
loyalty/customer relationship programs
and sales chain incentive programs for
companies, including through points
Multiplus Corredora de Seguros Ltda.
Individualization: Limited Liability
Company established in Brazil.
Purpose: Brokerage of insurance in
the basic lines of insurance, property
and casualty, life (individuals),
capitalization, plans, social security,
health and all other lines of insurance
provided for in the regulations.
Paid-in Capital: ThUS$1,010
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: -0,00108%
Managers:
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.
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Integrated Report 2022
Pursuant to the public deed dated
November 20, 1998, and an excerpt
of which has been recorded on
page 30,091 number 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,
number 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. Dated August
17, 2004 were reduced, the name
was changed to “LAN Chile Cargo
S.A.”. An excerpt of this deed was
recorded in the Register of Commerce
of the Santiago Real Estate Records
on page 26,994, number 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$83,226
Profit for the period: ThUS$(53,459)
Stake in 2022: 99.89804%
YOY variation: 0.00%
% of Holding's assets: 0.79127%
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
Laser Cargo S.R.L.
Individualization: Limited Liability
Company established in Argentina.
Purpose: To render services on its
own account and/or on behalf of third
parties as an agent for air and sea
freight forwarding, air and sea container
operation, loading and unloading control
of conventional aircraft, freighters,
conventional ships and container ships,
consolidation and deconsolidation,
operations and contracts with
transportation, distribution, and
promotion companies of air, sea,
river and land cargo companies, and
related activities and services, import
and export; such operations shall be
carried out in accordance with the
manner provided by the laws of the
country and regulations governing such
professions and activities, the legal
provisions of customs and regulations
of the Argentine Naval Prefecture
(PNA), Argentine Air Force, as well
as entrusting to third parties the
performance of tasks assigned by the
existing legislation for customs brokers;
also deposit and transportation on
its own account and/or on behalf of
third parties, of fruits, products, raw
materials, goods in general, and all kinds
of documentation: packaging of goods
in general, on its own account and/or on
behalf of third parties. To perform said
activities, the company may register as
sea or air agent, importer and exporter,
sea and air contractor and supplier
before the corresponding authorities.
In turn, it will carry out postal activities
destined to the admission, classification,
transportation, distribution, and delivery
of correspondence, letters, postcards,
and parcels weighing up to 50 kg,
within the Argentine Republic and to
or from other countries. This activity
includes the tasks carried out by so-
called couriers or courier companies,
and all other assimilated or assimilable
activities pursuant to Art. 4 of Decree
1187/93. The company may also carry
out the logistics process consisting
in transferring, storing, assembling,
fractioning, packaging, and conditioning
of general merchandise to be later
transported and distributed to the end
customer, as well as managing the
pertinent information to fulfill this goal;
that is: the logistics process consisting
in transferring raw material from the
supplier to delivering the finished product
to the customer, and the information
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Integrated Report 2022 regulation to guarantee the efficiency in
this management process.
the Customs Ordinance, its rules, and
other corresponding regulation.
its rules, and other corresponding
regulation.
Individualization: Joint Stock
Corporation established in Chile.
Warehouse at the Rosario International
Airport.
Paid-in Capital: ThUS$68
Stake in 2022: 96.22%
YOY variation: 0.00%
% of Holding's assets: 0.00002%
Paid-in Capital: ThUS$6,741
Stake in 2022: 99.89%
YOY variation: 0.00%
% of Holding's assets: 0.02669%
Paid-in Capital: ThUS$2
Stake in 2022: 99.971%
YOY variation: 0.00%
% of Holding's assets: 0.0601%
Purpose: To participate in any act or
activity that is not expressly forbidden
by any existing law in Bahamas.
Paid-in Capital: ThUS$(7)
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.0%
Board Members:
Esteban Bojanich
Management:
Esteban Bojanich,
Rosario Altgelt
María Marta Forcada,
Facundo Rocha
Gonzalo Perez Corral
Nicolás Obejero
Norberto Díaz
Board Members:
Jorge Patricio Marín Muñoz
(LATAM executive)
Andrés Bianchi Urdinola
(LATAM executive)
Roberto Alvo Milosawiewitsch
(LATAM executive)
General Manager:
José Benjamin Paté Moreno
(LATAM executive)
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.
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
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,
Paid-in Capital: ThUS$55
Stake in 2022: 99.98%
YOY variation: 0.00%
% of Holding's assets: 0.15635%
Board Members:
Andrés del Valle (LATAM Executive)
Management:
Andrés del Valle (LATAM Executive)
Transporte Aéreo S.A.
Paid-in Capital: ThUS$32,469
Stake in 2022: 87.126%
YOY variation: 0.00%
% of Holding's assets: 0.80279%
Board Members:
Andrés del Valle Eitel (LATAM Executive)
Ramiro Alfonsin Balza (LATAM
Executive)
Roberto Alvo Milosawiewitsch
(LATAM Executive)
General Manager:
José Tomás Covarrubias Cervero (LATAM
Executive)
Consorcio Fast Air Almacenes de Carga
S.A. – Laser Cargo S.R.L.
Individualization: Transitory merger of
companies established in Argentina.
Purpose: Bidding at National and
International Public Tender N° 11/2000
to be awarded the License of Use for
the Installation and Operation of a Tax
Board Members:
Esteban Bojanich
Management:
Esteban Bojanich
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;
c) Trade and development of activities
related to travel, tourism, and lodging;
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Integrated Report 2022
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$88,577
Stake in 2022: 99.00%
YOY variation: 0.00%
% of Holding's assets: 0.42335%
Board Members:
Andrés Bianchi Urdinola Plaza
(LATAM executive)
Andrés del Valle Eitel (LATAM
Executive)
Roberto Alvo Milosawiewitsch
(LATAM executive)
General Manager:
Andrés del Valle Eitel (LATAM Executive)
Connecta Corporation
Individualization: Corporation
established in the United States.
Purpose: Ownership, operating leasing,
and subleasing of aircraft.
or cargo, and in general, companies that
provide services to the aeronautical
sector.
that are not expressily forbidden by
Bahamas law, and specifically, to hold
stakes in other LAN affiliates.
Paid-in Capital: ThUS$1
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.42821%
General Manager:
Andrés Bianchi Urdinola
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
Paid-in Capital: ThUS$89,226
Stake in 2022: 81.3%
YOY variation: 0.00%
% of Holding's assets: 0.58538%
Paid-in Capital: ThUS$1,446
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.17409%
Board Members:
Jorge Nicolas Cortazar Cardoso
(ordinary member)
José Mauricio Rodriguez Munera
(ordinary member)
Jaime Antonio Gongora Esguerra
(ordinary member)
Andrés Bianchi Urdinola (deputy member)
Santiago Alvarez Matamoros
(deputy member)
Helen Victoria Warner Sanchez
(deputy member)
Management:
Jaime Antonio Gongora Esguerra
(ordinary member)
Erika Zarante Bahamon (deputy member)
Mas Investment Limited (Subsidiary of
LAN Overseas Limited)
Individualization: Limited Liability
Company incorporated in Bahamas.
Purpose: To perform all activities
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: (a) 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;
(b) The acquisition, disposal and, in
general, the trading of all kinds of
shares, stakes, and any other security
permitted by law; and
(c) The rendering or contracting of
technical, advisory and consulting
services, as well as the execution of
contracts or agreements for these
purposes.
Paid-in Capital: ThUS$263,430
Stake in 2022: 66.43%
YOY variation: 0.00%
% of Holding's assets: 0.66613%
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
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Integrated Report 2022
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 2022: 99.80%
YOY variation: 0.00%
% of Holding's assets: -0.032255%
Management:
Luis Ignacio Sierra Arriola
Hector Ivan Iriarte
Claudio Torres
Americonsult de Guatemala
S.A. (Subsidiary of Americonsul
S.A de C.V.)
Individualization: Joint Stock
Corporation established in Guatemala.
Purpose: Powers to represent, broker,
trade, and market; carry out all types
of commercial and industrial activities;
all manner of trade in general; broad
purpose that allows for all manner of
operations within the country.
Paid-in Capital: ThUS$76
Stake in 2022: 99.13%
YOY variation: 0.00%
% of Holding’s assets: -0.00132%
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.
Paid-in Capital: ThUS$20
Stake in 2022: 99.80%
YOY variation: 0.00%
% of Holding's assets: 0.00824%
Management:
Luis Ignacio Sierra Arriola
Treasurer: Alejandro Fernández
Espinoza
Luis Miguel Renguel López
Tomás Nassar Pérez
Marjorie Hernández Valverde
LATAM AIRLINES PERÚ S.A.
INVERSIONES LAN 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$43,445
Profit (loss) for the period:
ThUS$(12,725)
Stake in 2022: 99.81%
YOY variation: 0.00%
% of Holding's assets: 0.46818%
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)
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 1990, and
published in the Official Gazette of
February 2, 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$458
Profit (loss) for the period: ThUS$(14)
Stake in 2022: 100.00%
YOY variation: 0.0%
% of Holding's assets: 0.00927%
Chairman of the Board:
Andrés del Valle (LATAM Executive)
Ramiro Alfonsin Balza (LATAM Executive)
Roberto Alvo Milosawlewitsch
(LATAM Executive)
General Manager:
Manuel Van Oordt
General Manager:
Gregorio Bekes (LATAM Executive)
LATAM TRAVEL CHILE II 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) booking
seats and selling tickets for all
types of national and international
transportation, (b) booking,
acquisition, and sale of lodging
and tourist services, and tickets
to all types of entertainment,
museums, monuments, and
protected areas in the country, (c)
organization, promotion, and sale
of tourist packages, understood
as the group of tourist services
(food, transportation, lodging,
etc.), adjusted or projected at the
client's behest, at a preset price, to
be operated in national territory,
(d) air, land, sea, and river tourist
transportation within the national
territory and abroad, (e) leasing
and charter of planes, ships,
buses, trains, and other forms of
transportation for the provision of
tourist services, (f) marketing of air
Financial information
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Integrated Report 2022
transportation in any form, whether
of passengers, cargo, or mail, and
(g) any other activity directly or
indirectly related to the rendering of
the abovementioned services.
Paid-in Capital: ThUS$0
Stake in 2022: 99.00%
YOY variation: 0.00%
% of Holding's assets: 0.00066%
Paid-in Capital: ThUS$10
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: -0.00656%
Board Members:
Andrés del Valle Eitel (LATAM
Executive)
Roberto Alvo Milosawlewitsch
(LATAM Executive)
Ramiro Alfonsin Balza (LATAM Executive)
General Manager:
Claudia Caceres Araya (LATAM
Executive)
LATAM TRAVEL S.R.L.
Incorporation: Limited Liability
Company incorporated in Bolivia.
Purpose: Operation, management,
and representation of national or
foreign companies or businesses in
the lodging, shipping, aviation, and
tourism activities in general.
Board Members:
Julio Quintanilla Quiroga
Sergio Antelmo
LAN PAX GROUP S.A.
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 assets 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. 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$16,925
Profit for the period: ThUS$(120,717)
Stake in 2022: 100.00%
YOY variation: 0.00%
% of holding's assets: -10.13001%
Board Members:
Andrés del Valle Eitel (LATAM
Executive)
Roberto Alvo Milosawlewitsch
(LATAM Executive)
Ramiro Alfonsin Balza (LATAM
Executive)
General Manager:
Andrés del Valle Eitel (LATAM
Executive)
AFFILIATE COMPANIES OF LAN PAX
GROUP S.A. AND STAKES
Inversora Cordillera S.A. and affiliates
Paid-in Capital: ThUS$671,220
Stake in 2022: 99.95%
YOY variation: 0.00%
% of Holding's assets: 0.02004%
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 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.
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
Atlantic Aviation Investments LLC
Individualization: Limited Liability
Company established in the United
States.
Purpose: Any and all lawful business
that the company may undertake.
Paid-in Capital: ThUS$1
Stake in 2022: 99.00%
YOY variation: 0.00%
% of Holding's assets: 0.08668%
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Integrated Report 2022
Board Members:
Andrés del Valle Eitel
Management:
Andrés del Valle (LATAM Executive)
Holdco Ecuador S.A
Individualization: Joint Stock
Corporation established in Chile.
LATAM Airlines Ecuador S.A.
(Formerly, 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$31,000
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.12751%
Board Members:
Xavier Rivera
Monica Fistrovic
Professional-Counselor: Mariela
Anchundia
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.
Paid-in Capital: ThUS$491
Stake in 2022: 54.791%
YOY variation: 0.0%
% of Holding's assets: 0.00736%
Board Members:
Antonio Stagg (External)
Manuel Van Oordt (LATAM Executive)
Mariana Villagomez (External)
General Manager:
Ramiro Alfonsin Balza (LATAM Executive)
Aerovias de Integración Regional S.A.–
Aires S.A.
General Manager:
Mariela Anchundia
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 establishment
and execution of contracts for the
transportation of passengers, objects
or baggage, 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 future,
adhering fully to the provisions of the
Code of Commerce, the Colombian
Aviation Regulations, and any other
rules issued to that effect. Likewise, to
provide 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: (a) to overhaul, inspect,
maintain and/or repair its own aircraft
and those of third parties, as well
as their spare parts and accessories,
through the Company's Aeronautical
Repair Shops, providing the necessary
training for this purpose; (b) organize,
establish and invest in commercial
transportation companies in Colombia
or abroad, to operate industrially
or commercially the economic
activity that constitutes its purpose;
consequently the company may
acquire for any reason the aircraft,
spare parts, components and
accessories of all kinds, necessary
for public and air transportation
and to dispose of them, and set
up and operate workshops for the
repair and maintenance of aircraft;
(c) enter into leasing, chartering,
code-sharing, rental or any other
contract regarding aircraft to
fulfill its purpose; (d) operate
scheduled air transportation lines for
passengers, cargo, correspondence
and valuables, as well as the vehicle
to coordinate the development of
the company's operation; (e) to join
the same, similar or complementary
companies to perform its activity;
(f) to accept national or foreign
representations of services of the
same or complementary branches;
(g) to acquire assets and real estate
property for the development of its
corporate purposes, to erect these
facilities or constructions, such as
warehouses, storage facilities, offices
etc., sell or encumber them; (h) to
perform all imports and exports, as
well as all foreign trade operations
that may be required; (i) to take
money at interest and to offer it as
real and bank personal guarantees,
either on its own behalf or for third
parties; (j) to enter into all kinds of
operations with securities, as well as
the purchase and sale of debentures
acquired by third parties when their
effect is the economic or equity benefit
of the company, and to obtain loans by
means of notes or liability instruments;
(k) enter contracts with third parties
for the administration and operation
of the businesses it organizes for the
achievement of its corporate purposes;
(l) enter into partnership agreements
and acquire shares or stakes in those
already established, whether domestic
or foreign, and make contributions to
one or the other; (m) merge with other
companies and enter partnerships with
equal entities to seek the development
of air transportation or for other trade
purposes; (n) promote, technically
assist, finance or manage companies or
corporations related to the corporate
purpose; (o) enter into or execute all
types of civil or commercial, industrial
or financial contracts that may be
necessary or convenient for the
achievement of its own purposes; (p)
enter into business deals and perform
activities that procure customers, and
obtain from the competent authorities
the necessary authorizations and
licenses for the rendering of its services;
(q) develop and operate other activities
derived from the corporate purpose
and/or related, connected, contributory
Financial information
300
Integrated Report 2022
or complementary activities thereto,
including the rendering of tourist
services under any modality permitted
by law, such as travel agencies; (r)
engage in any lawful business or
activity, whether commercial or not,
as long as it is related to its corporate
purpose or that allows the most rational
operation of the public service to be
rendered; and (s) make investments of
any kind to use the funds and reserves
established in accordance with the law
or these bylaws.
Paid-in Capital: ThUS$3,389
Stake in 2022: 99.21764%
YOY variation: 0.00%
% of Holding's assets: -0.76030%
Board Members:
Jorge Nicolas Cortazar Cardoso
(ordinary member)
Jaime Antonio Gongora Esguerra
(ordinary member)
Jose Mauricio Rodriguez Munera
(ordinary member)
Gabriel Vallejo López (deputy member)
Helen Victoria Warner Sanchez
(deputy member)
Santiago Alvarez Matamoros (deputy
member)
Management:
Erika Zarante Bahamon
Jaime Antonio Gongora Esguerra
LAN Argentina S.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. II)
COMMERCIAL: Through the purchase,
sale, exchange, rental in all its forms,
leasing, imports, and exports of all
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.
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. V) COMMISSIONS:
Fulfill mandates and commissions.
VI) FINANCIAL: Perform any type
of 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. 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.
Paid-in Capital: ThUS$724,976
Stake in 2022: 94.9953%
YOY variation: 0.00%
% of Holding's assets: 0.02021%
Board Members:
Manuel Maria Benites
Jorge Luis Perez Alati
Rosario Altgelt
Management:
Manuel María Benites
Jorge Luis Perez Alati
Jeronimo Cortes
Diego Potenza
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 item 675 of the year 1998.
Purpose: Its corporate purpose is to
provide technical training and other
types of related services.
Paid-in Capital: ThUS$625
Profit for the period: ThUS$77
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.00232%
Board Members:
Sebastián Acuto (LATAM Executive)
Ramiro Alfonsin Balza (LATAM
Executive)
Hernán Pasman (LATAM Executive)
General Manager:
Guido Opazo Aneotz (LATAM
Executive)
Financial information
301
Integrated Report 2022
JARLETUL S.A.
PROFESIONAL AIRLINE SERVICES INC.
Incorporation: Joint Stock Corporation
established in Brazil in November 2017.
Incorporation: Company established in
the United States in February 1994.
Board Members:
Andrés del Valle Eitel
Ramiro Alfonsin Balza
Joaquín Arias Acuña
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$0
Profit for the period: ThUS$(2)
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: -0.0827%
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.
Paid-in Capital: ThUS$63
Profit for the period: ThUS$258
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding’s assets: 0.02353%
Board Members:
Francisco Arana
LATAM FINANCE LIMITED
Incorporation: Company established in
the Caiman Islands in September 2016.
Purpose: Its purpose is to issue
securitized bonds
Paid-in Capital: ThUS$0
Profit for the period: ThUS$169,582
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: -1.57827%
Chairman of the Board:
Not applicable
PEUCO FINANCE LIMITED
Incorporation: Stock corporation
established in the Caiman Islands in
November 2015.
Purpose: Its purpose is to participate
in financing operations with other
companies of LATAM group.
Paid-in Capital: ThUS$0
Profit for the period: ThUS$0
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0%
Chairman of the Board:
Not applicable
Board Members:
Andrés del Valle Eitel
Joaquín Arias Acuña
LATAM TRAVEL S.A.
Incorporation: 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,
Financial information
302
Integrated Report 2022
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$15,332
Stake in 2022: 100.00%
YOY variation: 0.00%
% of Holding's assets: 0.03473%
Board member:
Jeronimo Cortes
Javier Norberto Macías (deputy
member)
Management:
Jeronimo Cortes
Javier Norberto Macías
Diego Potenza
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 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
Financial information
303
Integrated Report 2022 Affiliates and subsidiaries - Financial statements
LAN CARGO S.A. AND AFFILIATES
Financial Statement
LAN Cargo S.A. and affiliates
Financial Statement
LAN Cargo S.A. and affiliates
Financial Statement
LAN CARGO S.A. AND AFFILIATES
Consolidated Statement of Earnings by Function LAN Cargo S.A. and affiliates
LAN Cargo S.A. and affiliates
Consolidated Statement of Earnings by Function
Consolidated Statement of Earnings by Function
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total liabilities
EQUITY
EQUITY
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
Total equity
Total equity and liabilities
Total equity and liabilities
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
1,132,425
(1,244,086)
(111,661)
(281,759)
(270,123)
22,985
(247,138)
(242,249)
(4,889)
(247,138)
187,148
415,766
Revenues from ordinary activities
Cost of sales
695,341
469,437
Revenues from ordinary activities
187,148
695,341
Cost of sales
415,766
469,437
2,136,257
(2,068,992)
1,132,425
(1,244,086)
2,136,257
(2,068,992)
602,914
1,164,778
Gross profit (loss)
602,914
Gross profit (loss)
1,164,778
Gain (Loss) from operational activities
Gain (Loss) from operational activities
At December 31
2022
THUS$
283,435
275,650
559,085
104,535
(60,706)
43,829
602,914
Profit (loss), before tax
At December 31
Income tax expenses
2021
THUS$
Profit (Loss) for the period
Profit (loss), before tax
At December 31
2022
THUS$
At December 31
2021
THUS$
Profit (Loss) for the period
Income tax expenses
Gain (Loss) attributable to the parent company's owners
Gain(Loss) attributable to non-controlling interests
Gain (Loss) attributable to the parent company's owners
Gain(Loss) attributable to non-controlling interests
785,977
Profit (Loss) for the period
278,667
1,064,644
283,435
275,650
559,085
785,977
Profit (Loss) for the period
278,667
1,064,644
164,653
(64,519)
100,134
1,164,778
104,535
(60,706)
43,829
602,914
164,653
(64,519)
100,134
1,164,778
67,265
(11,120)
(57,858)
3,215
(54,643)
(53,459)
(1,184)
(54,643)
(111,661)
(281,759)
(270,123)
22,985
(247,138)
(242,249)
(4,889)
(247,138)
67,265
(11,120)
(57,858)
3,215
(54,643)
(53,459)
(1,184)
(54,643)
Financial information
304
Integrated Report 2022 LAN CARGO S.A. AND AFFILIATES
Consolidated Statement of Comprehensive Income
LAN Cargo S.A. and affiliates
Consolidated Statement of Comprehensive Income
LAN CARGO S.A. AND AFFILIATES
Statement of Changes in Consolidated Equity
LAN Cargo S.A. and affiliates
Statement of Changes in Consolidated Equity
PROFIT (LOSS) FOR THE PERIOD
Total other comprehensive Income not to be reclassified as Income before tax for the period
Total other comprehensive income not to be reclassified as Income before tax for the period
Other components of other comprehensive Income, before tax
Tax on accrued earnings related to components of other comprehensive Income not to be classified as
earnings for the period
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to the parent company's owners
Comprehensive income attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME
LAN CARGO S.A. Y FILIALES
Consolidated Cash Flow Statement - Direct Method
LAN Cargo S.A. and affiliates
Consolidated Cash Flow Statement �- Direct Method
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from (used in) financing activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
At December 31
2022
THUS$
At December 31
2021
THUS$
(54,643)
(247,148)
(2,274)
(21)
(2,295)
567
(1,728)
(56,371)
(55,187)
(1,184)
(56,371)
1,118
220
1,338
(303)
1,035
(246,113)
(241,214)
(4,899)
(246,113)
Equity
01/01/22
Changes in equity
Comprehensive income
Profit (loss)
Other comprehensive income
Total comprehensive income
Increase (decrease)
from transfers and other changes
Final balance of current period
12/31/22
At December 31
2022
THUS$
At December 31
2021
THUS$
15,354
(7,977)
(8,353)
(975)
45,209
6,449
(6,900)
(7,105)
(7,555)
47,052
Equity
01/01/21
Changes in equity
Comprehensive income
Profit (loss)
Other comprehensive income
Total comprehensive income
Increase (decrease)
from transfers and other changes
Final balance of current period
12/31/21
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
Non-
parent company
THUS$
Equity
total
THUS$
164,653
(64,519)
100,134
(53,459)
(1,728)
(55,187)
(4,931)
(1,184)
-
(1,184)
4,997
(54,643)
(1,728)
(56,371)
66
104,535
(60,706)
43,829
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
Non-
Parent company
THUS$
Equity
total
THUS$
578,004
(59,620)
518,384
(242,249)
1,035
(241,214)
(172,137)
(4,899)
-
(4,899)
(247,148)
1,035
(246,113)
-
(172,137)
164,653
(64,519)
100,134
Financial information
305
Integrated Report 2022 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$
Stake
non-
Parent company
THUS$
ASSETS
Equity
total
THUS$
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
INVERSIONES LAN S.A.
Financial Statement
ASSETS
Inversiones LAN S.A.
Financial Statement
Inversiones LAN S.A.
Financial Statement
Equity
01/01/20
Increase (decrease) due to application
of new accounting standards
Modified initial balance Restated
Changes in equity
Comprehensive income
Profit (loss)
Other comprehensive income
Total comprehensive income
Increase (decrease)
349,351
-
349,351
(192,820)
(781)
(193,601)
(746)
-
(746)
(75,630)
-
(75,630)
from transfers and other changes
422,254
16,756
LIABILITIES AND EQUITY
348,605
LIABILITIES AND EQUITY
-
LIABILITIES
348,605
LIABILITIES
Total current liabilities
Total non-current liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
(268,450)
(781)
EQUITY
Total liabilities
EQUITY
(269,231)
439,010
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
1,223
58
1,281
1,226
58
1,284
1,223
58
1,281
1,226
58
1,284
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
11
45
56
1,225
1,225
1,281
-
45
45
11
45
56
1,239
1,239
1,284
1,225
1,225
1,281
-
45
45
1,239
1,239
1,284
Final balance of current period
12/31/20
578,004
(59,620)
518,384
INVERSIONES LAN S.A.
Consolidated Statement of Earnings by Function
Inversiones LAN S.A.
Consolidated Statement of Earnings by Function
Inversiones LAN S.A.
Consolidated Statement of Earnings by Function
Gain (Loss) from operational activities
Profit (loss), before tax
Gain (Loss) from operational activities
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
Profit (Loss) for the period
Gain (Loss) attributable to the parent company's owners
Profit (Loss) for the period
At December 31
2022
THUS$
At December 31
At December 31
2021
2022
THUS$
THUS$
At December 31
2021
THUS$
7
(1)
(13)
(14)
(14)
(14)
6
7
(1)
(90)
-
(13)
(14)
(90)
(90)
(14)
(14)
(90)
6
(90)
-
(90)
(90)
(90)
Financial information
306
Integrated Report 2022 INVERSIONES LAN S.A.
Consolidated Statement of Comprehensive Income
Inversiones LAN S.A.
Consolidated Statement of Comprehensive Income
Inversiones LAN S.A.
Consolidated Statement of Comprehensive Income
INVERSIONES LAN S.A.
Statement of Changes in Consolidated Equity
Inversiones LAN S.A.
Statement of Changes in Consolidated Equity
At December 31
2022
THUS$
At December 31
At December 31
2021
2022
THUS$
THUS$
At December 31
2021
THUS$
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
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
(14)
(14)
(14)
(14)
(14)
(90)
(14)
(90)
(14)
(90)
(14)
(90)
(90)
(90)
(90)
Equity
01/01/22
(90)
Total comprehensive income
Final balance of current period
12/31/22
Equity
attributable to
owners
of the
Parent company
THUS$
1,239
(14)
1,225
Stake
non-
Parent company
THUS$
Equity
total
THUS$
-
-
-
1,239
(14)
1,225
INVERSIONES LAN S.A.
Consolidated Cash Flow Statement - Direct Method
Inversiones LAN S.A.
Consolidated Cash Flow Statement �- Direct Method
Inversiones LAN S.A.
Consolidated Cash Flow Statement �- Direct Method
INVERSIONES LAN S.A.
Inversiones LAN S.A.
Statement of Changes in Consolidated Equity
Statement of Changes in Consolidated Equity
At December 31
2022
THUS$
At December 31
At December 31
2021
2022
THUS$
THUS$
At December 31
2021
THUS$
Net cash flows from operating activities
Effects of F/X variations on cash and
Net cash flows from operating activities
Effects of F/X variations on cash and
cash equivalents
cash equivalents
Net increase in cash and cash equivalents
Net increase 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
12
(5)
7
413
12
-
(5)
(77)
(77)
7
413
406
-
(77)
(77)
Equity
01/01/21
406
Total comprehensive income
Final balance of current period
12/31/21
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
1,329
(90)
1,239
-
-
-
1,329
(90)
1,239
Financial information
307
Integrated Report 2022 LAN PAX GROUP AND AFFILIATES
Financial Statement
LAN Pax Group and Affiliates
Financial Statement
LAN Pax Group and Affiliates
Financial Statement
LAN PAX GROUP AND AFFILIATES
Consolidated Statement of Earnings by FunctionLAN Pax Group and Affiliates
LAN Pax Group and Affiliates
Consolidated Statement of Earnings by Function
Consolidated Statement of Earnings by Function
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total 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
Total equity
Total equity and liabilities
Non-controlling interest
Total equity
Total equity and liabilities
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
193,479
198,753
392,232
At December 31
2022
THUS$
1,462,843
265,125
1,727,968
(1,342,687)
6,951
(1,335,736)
392,232
193,479
232,185
198,753
200,085
Revenues from ordinary activities
432,270
392,232
Cost of sales
Revenues from ordinary activities
Cost of sales
232,185
200,085
432,270
Gross profit (loss)
Gain (Loss) from operational activities
Profit (loss), before tax
At December 31
2021
THUS$
Income tax expenses
At December 31
2022
THUS$
Profit (Loss) for the period
Gross profit (loss)
Gain (Loss) from operational activities
At December 31
Profit (loss), before tax
2021
Income tax expenses
THUS$
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
1,462,843
265,125
1,727,968
Gain (Loss) attributable to the parent company's owners
Gain(Loss) attributable to non-controlling interests
Profit (Loss) for the period
1,412,684
236,031
1,648,715
1,412,684
236,031
1,648,715
(1,219,473)
3,028
(1,216,445)
432,270
(1,342,687)
(1,219,473)
6,951
(1,335,736)
392,232
LAN PAX GROUP AND AFFILIATES
Consolidated Statement of Comprehensive Income
3,028
(1,216,445)
432,270
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
534,979
(529,730)
5,249
(135,604)
(124,022)
2,349
(121,673)
(120,717)
(956)
(121,673)
310,688
(281,846)
28,842
(48,133)
(6,624)
(823)
(7,447)
534,979
(529,730)
5,249
(135,604)
(124,022)
2,349
(121,673)
(7,289)
(158)
(7,447)
(120,717)
(956)
(121,673)
310,688
(281,846)
28,842
(48,133)
(6,624)
(823)
(7,447)
(7,289)
(158)
(7,447)
LAN Pax Group and Affiliates
Consolidated Statement of Comprehensive Income
LAN Pax Group and Affiliates
Consolidated Statement of Comprehensive Income
At December 31
2022
THUS$
At December 31
At December 31
2021
2022
THUS$
THUS$
At December 31
2021
THUS$
PROFIT (LOSS) FOR THE PERIOD
Gains (losses) by conversion exchange difference, before taxes
PROFIT (LOSS) FOR THE PERIOD
Gains (losses) by conversion exchange difference, before taxes
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 non-controlling interests
Comprehensive income attributable to the parent company's owners
Comprehensive income attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
(121,673)
(15,021)
(136,694)
(126,301)
(10,393)
(136,694)
(7,447)
(193,037)
(200,484)
(121,673)
(15,021)
(136,694)
(213,711)
13,227
(200,484)
(126,301)
(10,393)
(136,694)
(7,447)
(193,037)
(200,484)
(213,711)
13,227
(200,484)
Financial information
308
Integrated Report 2022 LAN PAX GROUP 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
LAN PAX GROUP AND AFFILIATES
Statement of Changes in Consolidated Equity
LAN Pax Group and Affiliates
Statement of Changes in Consolidated Equity
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from operating activities
Net cash flows used in investment activities
24,595
(1,762)
24,595
(1,762)
2,596
11,587
2,596
11,587
Net cash flows from (used in) financing activities
Net cash flows from (used in) financing activities
(33)
(33)
(115)
(115)
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
22,800
22,800
14,068
14,068
Equity
01/01/22
Total comprehensive income
Increase (decrease)
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
(1,219,473)
(126,301)
3,028
(10,393)
(1,216,445)
(136,694)
Effects of F/X variations on cash and cash equivalents
Effects of F/X variations on cash and cash equivalents
(2,653)
(2,653)
(3,838)
(3,838)
from transfers and other changes
3,087
14,316
17,403
Net increase (decrease) in cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
20,150
20,150
10,230
10,230
Final balance of current period
12/31/22
(1,342,687)
6,951
(1,335,736)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
91,687
91,687
71,537
71,537
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
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
(1,219,473)
3,028
(1,216,445)
Financial information
309
Integrated Report 2022
LAN PAX GROUP AND AFFILIATES
Statement of Changes in Consolidated Equity
LAN Pax Group and Affiliates
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
(856,611)
(367,922)
4,214
(1,220,319)
Stake
non-
Parent company
THUS$
2,036
(1,717)
-
319
Equity
01/01/20
Total comprehensive income
Increase (decrease)
from transfers and other changes
Final balance of current period
12/31/20
LATAM FINANCE LIMITED
Consolidated Statement of Earnings by Function
LATAM Finance Limited
Consolidated Statement of Earnings by Function
LATAM Finance Limited
Consolidated Statement of Earnings by Function
Equity
Revenues from ordinary activities
total
Cost of sales
THUS$
Gross profit (loss)
Gain (Loss) from operational activities
Profit (loss), before tax
Profit (Loss) for the period
(369,639)
(854,575)
Revenues from ordinary activities
Cost of sales
Gross profit (loss)
Gain (Loss) from operational activities
Profit (loss), before tax
Profit (Loss) for the period
4,214
(1,220,000)
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
-
-
-
(1)
169,582
169,582
-
(104,511)
(104,511)
(104,512)
(104,512)
(104,512)
-
-
-
(1)
169,582
169,582
-
(104,511)
(104,511)
(104,512)
(104,512)
(104,512)
ASSETS
LATAM FINANCE LIMITED
Financial Statement
ASSETS
LATAM Finance Limited
Financial Statement
Total current assets
Total assets
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total 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 Finance Limited
Financial Statement
At December 31
2022
THUS$
115
115
At December 31
2021
THUS$
1,310,734
1,310,734
At December 31
LATAM FINANCE LIMITED
2022
Consolidated Statement of Comprehensive Income
THUS$
LATAM Finance Limited
Consolidated Statement of Comprehensive Income
At December 31
2021
THUS$
1,310,734
1,310,734
115
115
LATAM Finance Limited
Consolidated Statement of Comprehensive Income
At December 31
2022
THUS$
208,621
-
208,621
(208,506)
(208,506)
115
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
PROFIT (LOSS) FOR THE PERIOD
PROFIT (LOSS) FOR THE PERIOD
Total comprehensive income
Total comprehensive income
187,083
1,501,739
1,688,822
(378,088)
(378,088)
1,310,734
208,621
-
208,621
(208,506)
(208,506)
115
187,083
1,501,739
1,688,822
(378,088)
(378,088)
1,310,734
At December 31
2022
THUS$
169,582
169,582
At December 31
2021
THUS$
(104,512)
(104,512)
At December 31
2022
THUS$
169,582
169,582
At December 31
2021
THUS$
(104,512)
(104,512)
Financial information
310
Integrated Report 2022 LATAM FINANCE LIMITED
Consolidated Cash Flow Statement - Direct Method
LATAM Finance Limited
LATAM Finance Limited
Consolidated Cash Flow Statement �- Direct Method
Consolidated Cash Flow Statement �- Direct Method
LATAM FINANCE LIMITED
Statement of Changes in Consolidated Equity
LATAM Finance Limited
Statement of Changes in Consolidated Equity
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
-
(1)
-
(1)
115
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
-
(1)
-
(1)
-
(1)
115
-
(1)
116
-
(1)
-
(1)
116
Equity
01/01/21
Total comprehensive income
Final balance of current period
12/31/21
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
(273,576)
(104,512)
(378,088)
-
-
-
Equity
total
THUS$
(273,576)
(104,512)
(378,088)
LATAM FINANCE LIMITED
Statement of Changes in Consolidated Equity
LATAM Finance Limited
Statement of Changes in Consolidated Equity
LATAM Finance Limited
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
Equity
01/01/22
Equity
01/01/22
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
12/31/22
12/31/22
(378,088)
169,582
(208,506)
-
(378,088)
(378,088)
-
169,582
169,582
-
(208,506)
(208,506)
-
-
-
LATAM FINANCE LIMITED
Statement of Changes in Consolidated Equity
LATAM Finance Limited
Statement of Changes in Consolidated Equity
Equity
total
THUS$
(378,088)
169,582
(208,506)
Equity
01/01/20
Total comprehensive income
Final balance of current period
12/31/20
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
(168,476)
(105,100)
(273,576)
-
-
-
Equity
total
THUS$
(168,476)
(105,100)
(273,576)
Financial information
311
Integrated Report 2022
PROFESSIONAL AIRLINE SERVICES INC.
Financial Statement
Professional Airline Services Inc.
Financial Statement
Professional Airline Services Inc.
Financial Statement
PROFESSIONAL AIRLINE SERVICES INC.
Consolidated Statement of Comprehensive IncomeProfessional Airline Services Inc.
Professional Airline Services Inc.
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
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 liabilities
Total liabilities
EQUITY
EQUITY
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
At December 31
2022
THUS$
56,896
56,896
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
PROFIT (LOSS) FOR THE PERIOD
33,766
33,766
Total comprehensive income
56,896
56,896
33,766
PROFIT (LOSS) FOR THE PERIOD
33,766
Total comprehensive income
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
258
258
278
278
258
258
278
278
53,787
53,787
3,109
3,109
56,896
30,915
30,915
53,787
53,787
30,915
30,915
2,851
2,851
33,766
3,109
3,109
56,896
2,851
2,851
33,766
PROFESSIONAL AIRLINE SERVICES INC.
Consolidated Cash Flow Statement - Direct Method
Professional Airline Services Inc.
Consolidated Cash Flow Statement �- Direct Method
Professional Airline Services Inc.
Consolidated Cash Flow Statement �- Direct Method
PROFESSIONAL AIRLINE SERVICES INC.
Consolidated Statement of Earnings by Function
Professional Airline Services Inc.
Consolidated Statement of Earnings by Function
Professional Airline Services Inc.
Consolidated Statement of Earnings by Function
Net cash flows from operating activities
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 cash flows from operating activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
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
2022
2022
THUS$
THUS$
At December 31
At December 31
2021
2021
THUS$
THUS$
(1,431)
(1,431)
2,694
2,694
(1,431)
(1,431)
(1,431)
(1,431)
1,452
1,452
2,694
2,694
2,694
2,694
2,883
2,883
Revenues from ordinary activities
Revenues from ordinary activities
Cost of sales
Cost of sales
Gross profit (loss)
Gain (Loss) from operational activities
Profit (loss), before tax
Gross profit (loss)
Gain (Loss) from operational activities
Profit (loss), before tax
Income tax expenses
Income tax expenses
Profit (Loss) for the period
Profit (Loss) for the period
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
64,079
(38,208)
25,871
286
286
(28)
258
61,572
(33,765)
64,079
(38,208)
27,807
478
478
(200)
278
25,871
286
286
(28)
258
61,572
(33,765)
27,807
478
478
(200)
278
Financial information
312
Integrated Report 2022
PROFESSIONAL AIRLINE SERVICES INC.
Statement of Changes in Consolidated Equity
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
attributable to
owners
of the
Equity
Parent company
total
THUS$
THUS$
Equity
total
THUS$
Equity
Equity
01/01/22
01/01/22
Total comprehensive income
Total comprehensive income
Final balance of current period
Final balance of current period
2,851
258
2,851
2,851
258
258
2,851
258
12/31/22
12/31/22
3,109
3,109
3,109
3,109
Equity
01/01/20
Equity
01/01/20
1,559
Total comprehensive income
Final balance of current period
12/31/20
Total comprehensive income
Final balance of current period
1,014
12/31/20
2,573
PROFESSIONAL AIRLINE SERVICES INC.
Statement of Changes in Consolidated Equity
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
attributable to
owners
of the
Parent company
THUS$
1,559
1,014
2,573
Equity
total
THUS$
1,559
1,014
2,573
Equity
total
THUS$
1,559
1,014
2,573
PROFESSIONAL AIRLINE SERVICES INC.
Professional Airline Services Inc.
Statement of Changes in Consolidated Equity
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
attributable to
owners
of the
Equity
Parent company
total
THUS$
THUS$
HOLDCO I S.A.
Financial Statement
Holdco I S.A.
Financial Statement
Holdco I S.A.
Financial Statement
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
Equity
total
THUS$
LIABILITIES
LIABILITIES
Total current liabilities
Total current liabilities
Total liabilities
Total liabilities
Equity
Equity
01/01/21
01/01/21
Total comprehensive income
Total comprehensive income
Final balance of current period
Final balance of current period
12/31/21
12/31/21
2,573
278
2,851
2,573
2,573
278
278
EQUITY
2,573
278
2,851
2,851
2,851
EQUITY
Net equity attributable to the parent company's owners
Total equity
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
Total equity and liabilities
At December 31
2022
THUS$
-
351,587
351,587
At December 31
2021
THUS$
At December 31
2022
THUS$
-
351,587
351,587
-
351,587
351,587
At December 31
2021
THUS$
-
351,587
351,587
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
3,237
3,237
348,350
348,350
351,587
2,740
2,740
3,237
3,237
348,847
348,847
348,350
348,350
351,587
351,587
2,740
2,740
348,847
348,847
351,587
Financial information
313
Integrated Report 2022 HOLDCO I S.A.
Consolidated Statement of Earnings by FunctionHoldco I S.A.
Holdco I S.A.
Consolidated Statement of Earnings by Function
Consolidated Statement of Earnings by Function
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
HOLDCO I S.A.
Consolidated Cash Flow Statement - Direct Method
Holdco I S.A.
Consolidated Cash Flow Statement �- Direct Method
Holdco I S.A.
Consolidated Cash Flow Statement �- Direct Method
At December 31
2021
THUS$
Net cash flows from operating activities
Net cash flows from operating activities
(993)
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
399
(594)
(993)
(515)
18
(497)
399
(594)
(594)
(594)
Net increase (decrease) in cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
(497)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(497)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(594)
(594)
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
-
-
-
-
-
-
(6)
(6)
-
(6)
(6)
-
Gain (Loss) from operational activities
Gain (Loss) from operational activities
Exchange difference
Profit (Loss) for the period
Exchange difference
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
(515)
18
(497)
(497)
(497)
HOLDCO I S.A.
Consolidated Statement of Comprehensive Income
Holdco I S.A.
Consolidated Statement of Comprehensive Income
Holdco I S.A.
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:
Comprehensive income attributable to the parent company's owners
Comprehensive income attributable to the parent company's owners
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
(497)
(497)
(497)
(497)
(594)
(594)
(594)
(594)
(497)
(497)
(497)
(497)
Equity
01/01/22
(594)
(594)
(594)
(594)
Total comprehensive income
Final balance of current period
12/31/22
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
HOLDCO I S.A.
Statement of Changes in Consolidated Equity
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$
Equity
01/01/22
348,847
Stake
non-
Parent company
THUS$
(497)
Total comprehensive income
Final balance of current period
348,350
12/31/22
-
-
-
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
total
THUS$
348,847
348,847
(497)
(497)
348,350
348,350
Stake
non-
Parent company
THUS$
-
-
-
Equity
total
THUS$
348,847
(497)
348,350
Financial information
314
Integrated Report 2022
HOLDCO I S.A.
Statement of Changes in Consolidated Equity
Holdco I S.A.
Statement of Changes in Consolidated Equity
Holdco I S.A.
Statement of Changes in Consolidated Equity
JARLETUL S.A.
Financial Statement
Jarletul S.A.
Financial Statement
Jarletul S.A.
Financial Statement
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
owners
Stake
of the
non-
Parent company
Parent company
THUS$
THUS$
349,441
(594)
349,441
-
(594)
-
Equity
Equity
01/01/21
01/01/21
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
12/31/21
12/31/21
348,847
348,847
-
ASSETS
ASSETS
Stake
non-
Equity
total
Parent company
THUS$
THUS$
Total current assets
Total non-current assets
Equity
total
THUS$
Total assets
LIABILITIES AND EQUITY
-
349,441
349,441
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
-
(594)
(594)
LIABILITIES
348,847
-
348,847
Total current liabilities
LIABILITIES
Total liabilities
Total current liabilities
Total liabilities
EQUITY
EQUITY
HOLDCO I S.A.
Statement of Changes in Consolidated Equity
Holdco I S.A.
Statement of Changes in Consolidated Equity
Holdco I S.A.
Statement of Changes in Consolidated Equity
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
16
-
16
22
2
24
16
-
16
22
2
24
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
1,110
1,110
(1,094)
(1,094)
16
1,116
1,116
(1,092)
(1,092)
24
1,110
1,110
(1,094)
(1,094)
16
1,116
1,116
(1,092)
(1,092)
24
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
Stake
owners
non-
of the
Parent company
Parent company
THUS$
THUS$
Stake
non-
Equity
total
Parent company
THUS$
THUS$
Equity
total
THUS$
349,552
Equity
Equity
01/01/20
01/01/20
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
349,552
(111)
349,552
-
(111)
-
-
349,552
-
(111)
12/31/20
12/31/20
349,441
349,441
-
-
349,441
(111)
Revenues from ordinary activities
Cost of sales
Revenues from ordinary activities
Cost of sales
349,441
Gross profit (loss)
Gain (Loss) from operational activities
Profit (loss), before tax
Gross profit (loss)
Gain (Loss) from operational activities
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 Earnings by Function
Jarletul S.A.
Consolidated Statement of Earnings by Function
Jarletul S.A.
Consolidated Statement of Earnings by Function
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
-
-
-
(2)
(2)
-
(2)
-
-
-
(47)
(47)
(3)
(50)
-
-
-
(2)
(2)
-
(2)
-
-
-
(47)
(47)
(3)
(50)
Financial information
315
Integrated Report 2022 JARLETUL S.A.
Consolidated Statement of Comprehensive Income
Jarletul S.A.
Consolidated Statement of Comprehensive Income
Jarletul S.A.
Consolidated Statement of Comprehensive Income
JARLETUL S.A.
Statement of Changes in Consolidated Equity
Jarletul S.A.
Statement of Changes in Consolidated Equity
Jarletul S.A.
Statement of Changes in Consolidated Equity
PROFIT (LOSS) FOR THE PERIOD
PROFIT (LOSS) FOR THE PERIOD
Total comprehensive income
Total comprehensive income
JARLETUL S.A.
Consolidated Cash Flow Statement - Direct Method
Jarletul S.A.
Consolidated Cash Flow Statement �- Direct Method
Jarletul S.A.
Consolidated Cash Flow Statement �- Direct Method
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
(2)
(2)
(50)
(50)
(2)
(2)
(50)
(50)
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
owners
Stake
of the
non-
Parent company
Parent company
THUS$
THUS$
Stake
non-
Equity
Parent company
total
THUS$
THUS$
Equity
total
THUS$
Equity
01/01/22
Equity
01/01/22
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
12/31/22
12/31/22
(1,092)
(2)
(1,094)
(1,092)
-
-
(2)
(1,092)
(2)
(1,094)
-
(1,094)
-
-
-
(1,092)
(2)
(1,094)
Net cash flows from operating activities
Net cash flows from operating activities
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
At December 31
2022
THUS$
(7)
(7)
(7)
15
At December 31
2021
THUS$
At December 31
2022
THUS$
(10)
(7)
(10)
(7)
(10)
(7)
22
15
At December 31
2021
THUS$
(10)
(10)
(10)
22
JARLETUL S.A.
Statement of Changes in Consolidated Equity
Jarletul S.A.
Statement of Changes in Consolidated Equity
Jarletul S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
Stake
owners
of the
non-
Parent company
Parent company
THUS$
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
Equity
total
THUS$
Equity
01/01/21
Equity
01/01/21
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
12/31/21
12/31/21
(1,042)
(50)
(1,092)
-
(1,042)
-
(50)
(1,042)
(50)
-
(1,092)
(1,092)
-
-
-
(1,042)
(50)
(1,092)
Financial information
316
Integrated Report 2022
LATAM AIRLINES PERÚ S.A.
Financial Statement
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total 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 AIRLINES PERÚ S.A.
Consolidated Statement of Earnings by Function
LATAM Airlines Perú S.A.
Consolidated Statement of Earnings by Function
LATAM Airlines Perú S.A.
Consolidated Statement of Earnings by Function
LATAM Airlines Perú S.A.
Financial Statement
LATAM Airlines Perú S.A.
Financial Statement
At December 31
2022
THUS$
305,288
30,485
335,773
At December 31
2022
THUS$
At December 31
2021
THUS$
305,288
30,485
335,773
454,266
30,122
484,388
At December 31
2021
THUS$
Revenues from ordinary activities
Cost of sales
Revenues from ordinary activities
Cost of sales
454,266
30,122
484,388
Gross profit (loss)
Gross profit (loss)
Gain (Loss) from operational activities
Gain (Loss) from operational activities
Profit (loss), before tax
Profit (loss), before tax
At December 31
2020
THUS$
Income tax expenses
Income tax expenses
At December 31
2021
THUS$
At December 31
2021
THUS$
At December 31
2020
THUS$
276,875
4,303
281,178
54,595
54,595
335,773
414,997
276,875
2,070
4,303
417,067
281,178
54,595
54,595
67,321
67,321
335,773
484,388
Profit (Loss) for the period
Profit (Loss) for the period
414,997
Gain (Loss) attributable to the parent company's owners
Gain (Loss) attributable to the parent company's owners
2,070
Profit (Loss) for the period
Profit (Loss) for the period
417,067
67,321
67,321
484,388
LATAM AIRLINES PERÚ S.A.
Consolidated Statement of Comprehensive Income
LATAM Airlines Perú S.A.
Consolidated Statement of Comprehensive Income
LATAM Airlines Perú S.A.
Consolidated Statement of Comprehensive Income
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
1,257,865
(1,165,039)
92,826
4,774
(12,400)
(325)
(12,725)
(12,725)
(12,725)
1,257,865
(1,165,039)
92,826
4,774
(12,400)
(325)
(12,725)
584,929
(614,102)
(29,173)
(93,410)
(109,180)
(210)
(109,390)
(12,725)
(12,725)
(109,390)
(109,390)
584,929
(614,102)
(29,173)
(93,410)
(109,180)
(210)
(109,390)
(109,390)
(109,390)
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
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
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
(12,725)
(12,725)
(12,725)
(12,725)
(12,725)
(109,390)
(12,725)
(109,390)
(109,390)
(109,390)
(12,725)
(109,390)
(109,390)
(12,725)
(109,390)
(109,390)
Financial information
317
Integrated Report 2022 LATAM AIRLINES PERÚ S.A.
Consolidated Cash Flow Statement - Direct Method
LATAM Airlines Perú S.A.
Consolidated Cash Flow Statement �- Direct Method
LATAM Airlines Perú S.A.
Consolidated Cash Flow Statement �- Direct Method
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from (used in) financing activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
Net increase (decrease) in cash and cash equivalents
Net cash flows from (used in) financing activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
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
(23,373)
(3,947)
(23,373)
(3,947)
37,204
(868)
37,204
(868)
1,888
1,888
(217)
(217)
(25,432)
(25,432)
(25,432)
(25,432)
36,119
36,119
36,119
36,119
56,250
56,250
81,682
81,682
LATAM AIRLINES PERÚ S.A.
Statement of Changes in Consolidated Equity
LATAM Airlines Perú S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
67,321
(12,725)
-
54,596
Stake
non-
Parent company
THUS$
Equity
total
THUS$
-
-
-
-
67,321
(12,725)
-
54,596
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
175,623
(109,394)
1,092
67,321
-
-
-
-
Equity
total
THUS$
175,623
(109,394)
1,092
67,321
Equity
01/01/22
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/22
Equity
01/01/21
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/21
Financial information
318
Integrated Report 2022
LATAM AIRLINES PERÚ S.A.
Statement of Changes in Consolidated Equity
LATAM Airlines Perú S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
8,691
(175,486)
342,418
175,623
-
-
-
Equity
01/01/20
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/20
LATAM TRAVEL CHILE II S.A.
Financial Statement
LATAM Travel Chile II S.A.
Financial Statement
LATAM Travel Chile II S.A.
Financial Statement
LATAM TRAVEL CHILE II S.A.
Consolidated Statement of Earnings by Function
LATAM Travel Chile II S.A.
Consolidated Statement of Earnings by Function
LATAM Travel Chile II S.A.
Consolidated Statement of Earnings by Function
Equity
total
THUS$
Revenues from ordinary activities
Cost of sales
Revenues from ordinary activities
Cost of sales
Gross profit (loss)
Gross profit (loss)
Gain (Loss) from operational activities
Gain (Loss) from operational activities
8,691
Profit (loss), before tax
Profit (loss), before tax
(175,486)
Income tax expenses
Income tax expenses
342,418
Profit (Loss) for the period
Profit (Loss) for the period
175,623
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
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
-
-
-
2
2
-
2
2
2
-
(6)
(6)
86
84
(55)
29
29
29
-
-
-
2
2
-
2
2
2
-
(6)
(6)
86
84
(55)
29
29
29
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total liabilities
EQUITY
EQUITY
Net equity attributable to the parent company's owners
Total equity
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
Total equity and liabilities
31
336
367
At December 31
2022
THUS$
1,234
-
1,234
(867)
(867)
367
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
LATAM TRAVEL CHILE II S.A.
Consolidated Statement of Comprehensive Income
At December 31
2021
THUS$
LATAM Travel Chile II S.A.
251
Consolidated Statement of Comprehensive Income
337
LATAM Travel Chile II S.A.
Consolidated Statement of Comprehensive Income
251
337
588
31
336
367
588
At December 31
PROFIT (LOSS) FOR THE PERIOD
2021
THUS$
Comprehensive income attributable to:
At December 31
2022
THUS$
Total comprehensive income
At December 31
2021
THUS$
PROFIT (LOSS) FOR THE PERIOD
Total comprehensive income
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
1,234
-
1,234
1,457
TOTAL COMPREHENSIVE INCOME
-
1,457
1,457
-
1,457
At December 31
2022
THUS$
2
2
2
2
At December 31
2021
THUS$
At December 31
2022
THUS$
29
29
2
2
29
29
2
2
At December 31
2021
THUS$
29
29
29
29
(869)
(869)
588
(867)
(867)
367
(869)
(869)
588
Financial information
319
Integrated Report 2022 LATAM TRAVEL CHILE II S.A.
Consolidated Cash Flow Statement - Direct Method
LATAM TRAVEL CHILE II S.A.
Statement of Changes in Consolidated Equity
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
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 changes in F/X
rate
Net increase (decrease) in cash and cash equivalents
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
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
(221)
(221)
-
-
(221)
(221)
20
-
-
(221)
(221)
20
(10)
(9)
-
(19)
(19)
241
(10)
(9)
-
(19)
(19)
241
LATAM TRAVEL CHILE II S.A.
Statement of Changes in Consolidated Equity
LATAM Travel Chile II S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
(869)
2
(867)
-
-
-
(869)
2
(867)
Equity
01/01/22
Total comprehensive income
Final balance of current period
12/31/22
LATAM Travel Chile II S.A.
Statement of Changes in Consolidated Equity
LATAM Travel Chile II S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
Equity
01/01/21
Equity
01/01/21
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
12/31/21
12/31/21
(898)
29
(869)
-
-
-
(898)
(898)
29
29
(869)
(869)
-
-
-
LATAM Travel Chile II S.A.
Statement of Changes in Consolidated Equity
LATAM Travel Chile II S.A.
Statement of Changes in Consolidated Equity
LATAM TRAVEL CHILE II S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
Stake
non-
Parent company
THUS$
Equity
01/01/20
Equity
01/01/20
Total comprehensive income
Final balance of current period
Total comprehensive income
Final balance of current period
12/31/20
12/31/20
(682)
(216)
(898)
-
-
-
(682)
(216)
(682)
(216)
(898)
(898)
-
-
-
Equity
total
THUS$
(898)
29
(869)
Equity
total
THUS$
(682)
(216)
(898)
Financial information
320
Integrated Report 2022
ASSETS
ASSETS
LATAM TRAVEL S.A.
Financial Statement
LATAM Travel S.A.
Financial Statement
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total liabilities
EQUITY
EQUITY
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
Total equity
Total equity and liabilities
Total equity and liabilities
At December 31
2022
THUS$
323,426
174,158
497,584
840,714
-
840,714
1,338,298
LATAM Travel S.A.
Financial Statement
At December 31
2022
THUS$
LATAM TRAVEL S.A.
Consolidated Statement of Earnings by Function
Consolidated Statement of Earnings by Function
Consolidated Statement of Earnings by Function
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
1,249,804
88,494
1,338,298
324,961
Revenues from ordinary activities
82,288
Cost of sales
Revenues from ordinary activities
1,249,804
Cost of sales
88,494
324,961
82,288
407,249
Gross profit (loss)
1,338,298
Gross profit (loss)
407,249
Gain (Loss) from operational activities
Gain (Loss) from operational activities
Profit (loss), before tax
At December 31
2021
Income tax expenses
THUS$
Profit (Loss) for the period
At December 31
2022
THUS$
Income tax expenses
Profit (loss), before tax
At December 31
2021
THUS$
Profit (Loss) for the period
Gain (Loss) attributable to the parent company's owners
Gain(Loss) attributable to non-controlling interests
Gain (Loss) attributable to the parent company's owners
Gain(Loss) attributable to non-controlling interests
650,768
10,273
Profit (Loss) for the period
323,426
174,158
650,768
Profit (Loss) for the period
10,273
372,102
(30,992)
341,110
181,724
(1,133,744)
-
(1,133,744)
(1,133,744)
-
(1,133,744)
28,987
9,011
37,998
12,282
372,102
(30,992)
341,110
181,724
(302,098)
(1,133,744)
-
(302,098)
(302,098)
-
(302,098)
-
(1,133,744)
(1,133,744)
-
(1,133,744)
28,987
9,011
37,998
12,282
(302,098)
-
(302,098)
(302,098)
-
(302,098)
661,041
497,584
661,041
(253,792)
-
(253,792)
407,249
840,714
-
840,714
(253,792)
-
(253,792)
1,338,298
LATAM TRAVEL S.A.
Consolidated Statement of Comprehensive Income
407,249
LATAM Travel S.A.
Consolidated Statement of Comprehensive Income
LATAM Travel S.A.
Consolidated Statement of Comprehensive Income
PROFIT (LOSS) FOR THE PERIOD
PROFIT (LOSS) FOR THE PERIOD
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
(1,133,744)
(1,133,744)
(302,098)
(1,133,744)
(302,098)
(1,133,744)
(302,098)
(302,098)
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
Financial information
321
Integrated Report 2022 LATAM TRAVEL S.A.
Consolidated Cash Flow Statement - Direct Method
LATAM Travel S.A.
Consolidated Cash Flow Statement �- Direct Method
LATAM Travel S.A.
Consolidated Cash Flow Statement �- Direct Method
LATAM TRAVEL S.A.
Statement of Changes in Consolidated Equity
LATAM Travel S.A.
Statement of Changes in Consolidated Equity
LATAM Travel S.A.
Statement of Changes in Consolidated Equity
At December 31
2022
THUS$
At December 31
At December 31
2021
2022
THUS$
THUS$
At December 31
2021
THUS$
Net cash flows from operating activities
Net cash flows from operating activities
(989,812)
(989,812)
(132,964)
(132,964)
Net cash flows used in investment 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, before effect of changes in F/X rate
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X rate
90,526
1,411,653
512,367
90,526
1,411,653
-
-
-
-
512,367
(132,964)
(132,964)
Equity
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
165,496
165,496
247,226
247,226
01/01/22
Changes in equity
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
attributable to
owners
of the
Equity
Parent company
total
THUS$
THUS$
Equity
total
THUS$
Equity
01/01/22
Changes in equity
(253,792)
(253,792)
(253,792)
(253,792)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
793,748
793,748
165,496
165,496
Comprehensive income
Comprehensive income
Profit (loss)
Other comprehensive income
Profit (loss)
Other comprehensive income
(1,133,744)
-
Total comprehensive income
Increase (decrease)
Total comprehensive income
Increase (decrease)
(1,133,744)
from transfers and other changes
from transfers and other changes
2,228,250
(1,133,744)
(1,133,744)
-
-
(1,133,744)
(1,133,744)
(1,133,744)
-
(1,133,744)
2,228,250
2,228,250
2,228,250
Final balance of current period
Final balance of current period
12/31/22
12/31/22
840,714
840,714
840,714
840,714
Financial information
322
Integrated Report 2022 LATAM TRAVEL S.A.
Statement of Changes in Consolidated Equity
LATAM Travel S.A.
LATAM Travel S.A.
LATAM Travel S.A.
LATAM Travel S.A.
Statement of Changes in Consolidated Equity
Statement of Changes in Consolidated Equity
Statement of Changes in Consolidated Equity
Statement of Changes in Consolidated Equity
ASSETS
ASSETS
LATAM TRAVEL S.R.L.
Financial Statement
LATAM Travel S.R.L.
Financial Statement
LATAM Travel S.R.L.
Financial Statement
Equity
attributable to
owners
of the
Parent company
THUS$
Equity
Equity
Equity
attributable to
attributable to
attributable to
owners
owners
owners
Equity
of the
of the
of the
Parent company
Parent company
total
Parent company
THUS$
THUS$
THUS$
THUS$
Total current assets
Total current assets
Total non-current assets
Total non-current assets
Total assets
Total assets
Equity
total
THUS$
Equity
Equity
total
total
THUS$
THUS$
Equity
01/01/21
Changes in equity
Equity
Equity
Equity
01/01/21
01/01/21
01/01/21
Changes in equity
Changes in equity
Changes in equity
Comprehensive income
Comprehensive income
Comprehensive income
Profit (loss)
Other comprehensive income
Profit (loss)
Profit (loss)
(302,098)
Other comprehensive income
Other comprehensive income
-
(182,178)
Comprehensive income
Profit (loss)
Other comprehensive income
Total comprehensive income
Increase (decrease)
Total comprehensive income
Total comprehensive income
Total comprehensive income
Increase (decrease)
Increase (decrease)
Increase (decrease)
from transfers and other changes
from transfers and other changes
230,484
from transfers and other changes
(302,098)
from transfers and other changes
(182,178)
(182,178)
(182,178)
(182,178)
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
(182,178)
(182,178)
(182,178)
LIABILITIES
LIABILITIES
Total current liabilities
Total current liabilities
(302,098)
(302,098)
(302,098)
(302,098)
-
-
-
-
(302,098)
(302,098)
(302,098)
-
-
-
Total liabilities
(302,098)
(302,098)
(302,098)
(302,098)
(302,098)
EQUITY
(302,098)
(302,098)
Total liabilities
EQUITY
230,484
230,484
230,484
230,484
230,484
230,484
230,484
Net equity attributable to the parent company's owners
Net equity attributable to the parent company's owners
Total equity
Total equity
Final balance of current period
Final balance of current period
Final balance of current period
12/31/21
Final balance of current period
12/31/21
12/31/21
12/31/21
(253,792)
(253,792)
(253,792)
(253,792)
(253,792)
Total equity and liabilities
(253,792)
(253,792)
(253,792)
Total equity and liabilities
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
64
28
92
64
-
64
64
28
92
64
-
64
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
5
5
87
87
92
132
132
(68)
(68)
64
5
5
87
87
92
132
132
(68)
(68)
64
Financial information
323
Integrated Report 2022 LATAM TRAVEL S.R.L.
Consolidated Statement of Earnings by Function
LATAM Travel S.R.L.
Consolidated Statement of Earnings by Function
LATAM Travel S.R.L.
Consolidated Statement of Earnings by Function
Revenues from ordinary activities
Revenues from ordinary activities
Gross profit (loss)
Profit (loss), before tax
Profit (Loss) for the period
Gross profit (loss)
Profit (loss), before tax
Profit (Loss) for the period
Gain (Loss) attributable to the parent company's owners
Profit (Loss) for the period
Gain (Loss) attributable to the parent company's owners
Profit (Loss) for the period
At December 31
2022
THUS$
-
-
155
155
155
155
At December 31
At December 31
2022
2021
THUS$
THUS$
-
-
-
-
155
(23)
155
(23)
155
(23)
155
(23)
LATAM TRAVEL S.R.L.
Consolidated Statement of Comprehensive Income
LATAM Travel S.R.L.
Consolidated Statement of Comprehensive Income
LATAM Travel S.R.L.
Consolidated Statement of Comprehensive Income
LATAM TRAVEL S.R.L.
Consolidated Cash Flow Statement - Direct Method
LATAM Travel S.R.L.
LATAM Travel S.R.L.
Consolidated Cash Flow Statement �- Direct Method
Consolidated Cash Flow Statement �- Direct Method
At December 31
.
2022
THUS$
-
-
-
64
At December 31
At December 31
.
.
2021
2022
THUS$
THUS$
-
-
133
(2)
At December 31
.
2021
THUS$
-
64
131
64
133
(2)
131
64
At December 31
2021
THUS$
-
-
(23)
(23)
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from operating activities
Net cash flows used in investment 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
(23)
(23)
LATAM TRAVEL S.R.L.
Statement of Changes in Consolidated Equity
LATAM Travel S.R.L.
Statement of Changes in Consolidated Equity
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
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
155
155
155
155
155
(23)
155
(23)
155
(23)
155
(23)
(23)
(23)
Equity
01/01/22
(23)
Total comprehensive income
Final balance of current period
(23)
12/31/22
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
Equity
attributable to
owners
of the
Parent company
THUS$
(68)
155
87
Stake
non-
Parent company
THUS$
Equity
total
THUS$
-
-
-
(68)
155
87
Financial information
324
Integrated Report 2022
LATAM TRAVEL S.R.L.
Statement of Changes in Consolidated Equity
LATAM Travel S.R.L.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
(45)
(23)
(68)
Equity
01/01/21
Total comprehensive income
Final balance of current period
12/31/21
PEUCO FINANCE LIMITED
Financial Statement
Peuco Finance Limited
Financial Statement
Peuco Finance Limited
Financial Statement
ASSETS
ASSETS
Stake
non-
Parent company
THUS$
Total current assets
Equity
total
Total assets
THUS$
LIABILITIES AND EQUITY
-
(45)
-
(23)
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
-
LIABILITIES
(68)
Total current liabilities
Total current liabilities
Total liabilities
Total liabilities
Total equity and liabilities
Total equity and liabilities
At December 31
2022
THUS$
-
-
At December 31
2021
THUS$
1,307,721
1,307,721
At December 31
2022
THUS$
-
-
At December 31
2021
THUS$
1,307,721
1,307,721
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
-
-
-
1,307,721
1,307,721
1,307,721
-
-
-
1,307,721
1,307,721
1,307,721
LATAM TRAVEL S.R.L.
Statement of Changes in Consolidated Equity
LATAM Travel S.R.L.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
Equity
total
THUS$
PEUCO FINANCE LIMITED
Consolidated Cash Flow Statement - Direct Method
Peuco Finance Limited
Consolidated Cash Flow Statement �- Direct Method
Peuco Finance Limited
Consolidated Cash Flow Statement �- Direct Method
Equity
01/01/20
Total comprehensive income
Final balance of current period
12/31/20
23
(68)
(45)
-
-
-
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from operating activities
Net cash flows used in investment activities
23
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
(68)
(45)
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
-
-
-
-
-
-
-
-
-
-
-
-
Financial information
325
Integrated Report 2022 TAM S.A. AND AFFILIATES
Financial Statement
TAM S.A. and affiliates
Financial Statement
TAM S.A. and affiliates
Financial Statement
TAM S.A. AND AFFILIATES
Consolidated Statement of Earnings by Function
TAM S.A. and affiliates
Consolidated Statement of Earnings by Function
TAM S.A. and affiliates
Consolidated Statement of Earnings by Function
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total 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
1,998,284
1,499,564
3,497,848
At December 31
2021
THUS$
3,302,692
928,855
4,231,547
(734,514)
815
(733,699)
3,497,848
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
1,262,825
1,346,034
2,608,859
1,998,284
Revenues from ordinary activities
1,499,564
Cost of sales
3,497,848
1,262,825
Revenues from ordinary activities
1,346,034
Cost of sales
2,608,859
Gross profit (loss)
Gain (Loss) from operational activities
Gross profit (loss)
Gain (Loss) from operational activities
At December 31
2020
THUS$
At December 31
2021
Income tax expenses
THUS$
At December 31
2020
THUS$
Income tax expenses
Profit (loss), before tax
Profit (loss), before tax
Profit (Loss) for the period
Profit (Loss) for the period
2,410,426
846,722
3,257,148
3,302,692
928,855
4,231,547
2,410,426
Gain (Loss) attributable to the parent company's owners
846,722
Gain(Loss) attributable to non-controlling interests
3,257,148
Gain (Loss) attributable to the parent company's owners
Gain(Loss) attributable to non-controlling interests
Profit (Loss) for the period
Profit (Loss) for the period
(649,058)
(734,514)
769
815
(648,289)
(733,699)
2,608,859
3,497,848
(649,058)
769
(648,289)
2,608,859
TAM S.A. AND AFFILIATES
Consolidated Statement of Comprehensive Income
TAM S.A. and affiliates
Consolidated Statement of Comprehensive Income
TAM S.A. and affiliates
Consolidated Statement of Comprehensive Income
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
4,255,115
(3,973,361)
4,255,115
(3,973,361)
2,003,922
(2,161,497)
2,003,922
(2,161,497)
281,754
(163,903)
281,754
(163,903)
(157,575)
(665,917)
(89,464)
(748,514)
19,529
(8,119)
(157,575)
(665,917)
(748,514)
(8,119)
(89,464)
19,529
(69,935)
(70,047)
112
(69,935)
(69,935)
(756,633)
(756,633)
(70,047)
112
(756,698)
65
(756,698)
65
(69,935)
(756,633)
(756,633)
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
PROFIT (LOSS) FOR THE PERIOD
PROFIT (LOSS) FOR THE PERIOD
Other components of other comprehensive Income, before tax
Tax on accrued earnings related to components of other comprehensive Income not
to be classified as earnings for the period
Other components of other comprehensive Income, before tax
Tax on accrued earnings related to components of other comprehensive Income not
to be classified as earnings for the period
Other comprehensive income
Total comprehensive income
Other 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 non-controlling interests
Comprehensive income attributable to the parent company's owners
Comprehensive income attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
(69,935)
(10,792)
689
(10,103)
(80,273)
(80,281)
8
(80,273)
(69,935)
(756,633)
(756,633)
(10,792)
(32,031)
(32,031)
689
(483)
(483)
(10,103)
(80,273)
(32,514)
(789,147)
(32,514)
(789,147)
(80,281)
8
(80,273)
(789,254)
107
(789,147)
(789,254)
107
(789,147)
Financial information
326
Integrated Report 2022 TAM S.A. AND AFFILIATES
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
TAM S.A. AND AFFILIATES
Statement of Changes in Consolidated Equity
TAM S.A. and affiliates
Statement of Changes in Consolidated Equity
At December 31
2022
THUS$
At December 31
2022
THUS$
At December 31
2021
THUS$
At December 31
2021
THUS$
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from operating activities
Net cash flows used in investment activities
Net cash flows from (used in) financing activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
Net cash flows from (used in) financing activities
Net Increase (decrease) In cash and cash equivalents, before effect of 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
886,301
36,345
886,301
36,345
(94,067)
(47,280)
(94,067)
(47,280)
(354,668)
(354,668)
(27,510)
(27,510)
Equity
01/01/21
567,978
567,978
(168,857)
(168,857)
(476,568)
(476,568)
(168,857)
(168,857)
91,410
91,410
(337,714)
(337,714)
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/21
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
384,133
384,133
292,723
292,723
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
104,407
(789,254)
35,789
(649,058)
713
107
(51)
769
Equity
total
THUS$
105,120
(789,147)
35,738
(648,289)
TAM S.A. AND AFFILIATES
Statement of Changes in Consolidated Equity
TAM S.A. and affiliates
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
Stake
non-
Parent company
THUS$
(649,058)
(80,281)
(5,176)
(734,515)
769
35
11
815
Equity
total
THUS$
(648,289)
(80,246)
(5,165)
(733,700)
Equity
01/01/22
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/22
TAM S.A. AND AFFILIATES
Statement of Changes in Consolidated Equity
TAM S.A. and affiliates
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
THUS$
1,537,799
(1,594,481)
161,089
104,407
Stake
non-
Parent company
THUS$
1,506
(611)
(182)
713
Equity
total
THUS$
1,539,305
(1,595,092)
160,907
105,120
Equity
01/01/20
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/20
Financial information
327
Integrated Report 2022
TECHNICAL TRAINING LATAM S.A.
Financial Statement
Technical Training LATAM S.A.
Financial Statement
Technical Training LATAM S.A.
Financial Statement
ASSETS
ASSETS
Total current assets
Total non-current assets
Total current assets
Total non-current assets
Total assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY
LIABILITIES
LIABILITIES
Total current liabilities
Total non-current liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total liabilities
EQUITY
EQUITY
Net equity attributable to the parent company's owners
Total equity
Net equity attributable to the parent company's owners
Total equity
Total equity and liabilities
Total equity and liabilities
At December 31
2022
TH$
1,103,009
111,767
1,214,776
At December 31
2022
TH$
At December 31
At December 31
2021
2022
TH$
TH$
1,103,009
1,616,725
111,767
75,776
1,692,501
1,214,776
At December 31
At December 31
2022
2021
TH$
TH$
684,262
265,927
950,189
264,587
264,587
1,214,776
170,976
684,262
223,250
265,927
950,189
394,226
1,298,275
264,587
264,587
1,298,275
1,692,501
1,214,776
TECHNICAL TRAINING LATAM S.A.
Consolidated Statement of Earnings by Function
Technical Training LATAM S.A.
Consolidated Statement of Earnings by Function
Technical Training LATAM S.A.
Consolidated Statement of Earnings by Function
Revenues from ordinary activities
Cost of sales
Revenues from ordinary activities
Cost of sales
At December 31
2021
TH$
Gross profit (loss)
Gross profit (loss)
1,616,725
Gain (Loss) from operational activities
Gain (Loss) from operational activities
75,776
1,692,501
Profit (loss), before tax
Profit (loss), before tax
Income tax expenses
Income tax expenses
At December 31
Profit (Loss) for the period
2021
TH$
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
2022
TH$
At December 31
2022
TH$
At December 31
2021
TH$
At December 31
2021
TH$
906,015
(818,075)
906,015
(818,075)
844,775
(646,971)
87,940
69,915
69,915
(60)
69,855
69,855
69,855
87,940
69,915
69,915
(60)
69,855
69,855
69,855
197,804
393,553
393,553
(206,118)
187,435
187,435
187,435
844,775
(646,971)
197,804
393,553
393,553
(206,118)
187,435
187,435
187,435
170,976
223,250
394,226
TECHNICAL TRAINING LATAM S.A.
1,298,275
1,298,275
Consolidated Statement of Comprehensive Income
1,692,501
Technical Training LATAM S.A.
Consolidated Statement of Comprehensive Income
Technical Training LATAM S.A.
Consolidated Statement of Comprehensive Income
At December 31
2022
TH$
At December 31
2022
TH$
At December 31
2021
TH$
At December 31
2021
TH$
PROFIT (LOSS) FOR THE PERIOD
PROFIT (LOSS) FOR THE PERIOD
Other components of other comprehensive Income, before tax
Other comprehensive income
Total comprehensive income
Other components of other comprehensive Income, before tax
Other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
Comprehensive income attributable to:
69,855
(15,409)
(15,409)
54,446
69,855
(15,409)
(15,409)
54,446
187,435
12,093
12,093
199,528
187,435
12,093
12,093
199,528
Comprehensive income attributable to the parent company's owners
Comprehensive income attributable to the parent company's owners
TOTAL COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME
54,446
54,446
54,446
54,446
199,528
199,528
199,528
199,528
Financial information
328
Integrated Report 2022 TECHNICAL TRAINING LATAM S.A.
Consolidated Cash Flow Statement - Direct Method
Technical Training LATAM S.A.
Consolidated Cash Flow Statement �- Direct Method
Technical Training LATAM S.A.
Consolidated Cash Flow Statement �- Direct Method
TECHNICAL TRAINING LATAM S.A.
Statement of Changes in Consolidated Equity
Technical Training LATAM S.A.
Statement of Changes in Consolidated Equity
Net cash flows from operating activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
Net cash flows from operating activities
Net Increase (decrease) In cash and cash equivalents, before effect of changes in F/X
rate
At December 31
2022
TH$
(157,977)
At December 31
2022
TH$
(157,977)
At December 31
2021
TH$
(355,265)
At December 31
2021
TH$
(355,265)
(157,977)
(157,977)
(355,265)
(355,265)
Effects of F/X variations on cash and cash equivalents
Effects of F/X variations on cash and cash equivalents
4,710
4,710
51,747
51,747
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
(153,267)
(153,267)
(303,518)
(303,518)
136,469
136,469
289,736
289,736
Equity
01/01/21
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/21
Equity
attributable to
owners
of the
Parent company
TH$
Stake
non-
Parent company
TH$
1,074,271
199,528
24,476
1,298,275
-
-
-
-
Equity
total
TH$
1,074,271
199,528
24,476
1,298,275
TECHNICAL TRAINING LATAM S.A.
Statement of Changes in Consolidated Equity
Technical Training LATAM S.A.
Statement of Changes in Consolidated Equity
Equity
01/01/22
Total comprehensive income
Total transactions with shareholders
Final balance of current period
12/31/22
Equity
attributable to
owners
of the
Parent company
TH$
1,298,275
54,446
(1,088,134)
264,587
Stake
non-
Parent company
TH$
-
-
-
-
Equity
total
TH$
1,298,275
54,446
(1,088,134)
264,587
TECHNICAL TRAINING LATAM S.A.
Statement of Changes in Consolidated Equity
Technical Training LATAM S.A.
Statement of Changes in Consolidated Equity
Equity
attributable to
owners
of the
Parent company
TH$
Stake
non-
Parent company
TH$
976,332
127,164
1,103,496
-
-
-
Equity
total
TH$
976,332
127,164
1,103,496
Equity
01/01/20
Total comprehensive income
Final balance of current period
12/31/20
Financial information
329
Integrated Report 2022
Rationale
Comparative analysis and explanation of
main trends:
1. CONSOLIDATED FINANCIAL
STATEMENT
At December 31, 2022, the
company's assets totaled
ThUS$13,211,024 which, compared
to December 31, 2021, represents a
decrease of ThUS$80,508 (0.6%).
The Company's current assets
increased by ThUS$922,196
(35.3%) vs. yearend 2021. The
main increases were seen in the
following line following items:
Trade and other receivables of
ThUS$126,339 (14.3%), mainly
due to the increase in sales in the
Brazilian, Peruvian and Chilean
markets; Short-term inventories
of ThUS$190,452 (66.3%), largely
associated with the movement of
technical inventories used in both
own and third-party maintenance
services; Other non-financial assets
of ThUS$82,996 (76.6%) explained
by the increase in sales taxes to
be recovered, in contract costs
associated with the liability for
flying that have been capitalized and
aviation insurance; Other financial
assets of ThUS$402,377 (397.9%)
mainly generated by the increase
in Other guarantees awarded for
ThUS$42,609 and ThUS$340,008 of
funds delivered to Kroll as restricted
advances, which are intended to
settle claims pending resolution
related to the emergence from
Chapter 11; and Cash and cash
equivalents for ThUS$169,840
(16.2%), this increase is explained
by the net variation presented in the
Company's consolidated cash flow
statement. The positive variation
of the above items was offset
by a decrease in Current taxes of
ThUS$8,231 (20%) and in Non-
current assets or groups of assets
for disposal classified as held for
sale of ThUS$60,376 (41.1%). (This
decrease is a net amount generated
mainly by sales of aircraft and
engines of ThUS$84,058 and an
increase due to reclassifications
from property, plant and equipment
of ThUS$32,000, recognized at the
lower value between Book Value and
Fair Value less cost of sale).
The Company's liquidity index
showed an increase from 0.21 times
at yearend 2017 to 0.69 times
at the end of December 2022.
Moreover, the the acid test ratio
showed a decrease going from 0.08
times at yearend 2021 to 0.24
times at the end of December 2022,
mainly due to a 58.7% decrease in
Current liabilities.
The company's Non-current assets
decreased by ThUS$1,002,704
(9.4%) vs. yearend 2021. The main
line items of Non-current assets
with decreases are: Property, plant
and equipment for ThUS$1,078,206
(11.4%), whose variation is mainly
explained by the depreciation for
the year of ThUS$965,216 and
other decreases for the year of
ThUS$1,417,138, which consider
the reclassification of six A320
aircraft for ThUS$29,328 and
twenty-eight A319 aircraft for
ThUS$373,410, respectively, under
Non-current assets or groups of
assets for disposal classified as
held for sale, and the renegotiation
of 115 aircraft (1 A319, 39
A320, 14 A320N, 30 A321, 1
B767, 6 B777, and 24 B787) for
ThUS$886,021, offset by an
increase in additions for the year,
of ThUS$1,279,755 and an increase
in the translation difference of
ThUS$24,393; and Deferred tax
assets for ThUS$9,375 (61.3%). All
the above is slightly offset by the
increase in Intangible assets other
than goodwill of ThUS$61,494
(6.0%), due to the translation
adjustment of ThUS$54,623 and
Financial information
330
Integrated Report 2022 the increase due to additions of
ThUS$66,867, both increases offset
by the ThUS$54,358 decrease
corresponding to the amortization
of the year; Other non-financial
assets worth ThUS$22,946 (18.3%),
whose main increase was due to
the rise in judicial deposits for
ThUS$28,445.
At December 31, 2022, the
Company's assets totaled
ThUS$13,180,303 which, compared
to December 31, 2021, represents
a decrease of ThUS$7,178,133
(equivalent to 35.3%).
The Company's current liabilities
decreased by ThUS$7,226,732 (58.7%)
compared to the end of 2021, whereby
the decreases of ThUS$3,650,610
(82.0%) in Other financial liabilities;
ThUS$3,211,259 (66.4%) in Trade
and other accounts payable; and
ThUS$661,590 (100%) in Accounts
payable to related entities, originate
the total variation in Current liabilities.
These items recognize the effects
of decreases in financial debts prior
to the Chapter 11 filing, the short-
term portions originated by the new
financial debts incurred in the exit from
Chapter 11, payments made including
those corresponding to loans received
from related parties and the payment
in Convertible Bonds to commercial
suppliers, all of which were considered
in the company's Chapter 11 exit plan.
All these decreases in current liabilities
are offset by the increase in Other
non-financial current liabilities, totaling
ThUS$309,675 (13.3%).
The indebtedness indicator of the
company's current Liabilities over
Equity for the year stood at 120.36.
The impact of current Liabilities
on total debt decreased by 21.88
percentage points, from 60.49% at
yearend 2021 to 38.61% at the end of
the current period.
The company's non-current Liabilities
increased by ThUS$48,599 (0.6%),
compared to the sum reached by
December 31, 2021. The main
increases are seen in the Other
financial liabilities, non-current item for
ThUS$30,337 (0.5%); Other provisions,
non-current for ThUS$215,383 (30.2%),
mainly explained by new provisions
for ThUS$687,558 associated to
contingencies; translation adjustment
for ThUS$28,655, offset by decreases
in provisions used for ThUS$63.087,
reversals due to labor, tax and civil
causes for revalidation of contingencies
for ThUS$421,310, and effect of
exchange loss for ThUS$16,433;
Provisions for employee benefits for
ThUS$37,255 (66.3%), explained by
an increase of ThUS$53,254 related
to the provision of current services,
offset by a decrease for benefits
paid for ThUS$4,375 and adjustment
for translation and actuarial loss for
ThUS$11,624. The above is offset
by a decrease of ThUS$146,142
(30.9%) in Non-current accounts
payable, explained by a reduciton
of ThUS$84,387 in the fleet (JOL),
maintenance of aircraft and engines
for ThUS$27,106, and airport taxes,
overflight, vacation and bonus
provisions, and other minor items
worth ThUS$34,649, and a decrease
of ThUS$91,848 (17.9%) in Other
non-financial, non-current liabilities.
For a better understanding of the
total decrease of ThUS$3,620,273 in
Other financial liabilities (considering
a reduction of ThUS$3,650,610 in
current financial liabilities and an
increase of ThUS$30,337 in non-
current financial liabilities), the
following table, excluding hedging
and non-hedging derivatives, shows
the movements of cash flows and
non-cash flows:
Obligations with
As of
December 31,
Obtainment
Cash flows
Payment
financial institutions
2021
Capital (*)
Capital (**)
Interests
Transaction cost
Loans to exporters
Bank loans
Guaranteed obligations
Other guaranteed obligations
Obligation with the public
Financial leases
Other loans
Lease liability
Total Obligations with
financial institutions
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
159,161
521,838
510,535
2,725,422
2,253,198
1,189,182
76,508
2,960,638
-
982,425
-
3,658,690
1,109,750
-
1,467,035
-
-
(36,466)
(18,136)
(5,408,540)
(1,501,739)
(270,734)
(1,523,798)
(131,917)
-
(10,420)
(13,253)
(391,639)
(17,499)
(34,201)
(5,628)
(49,076)
-
-
(25)
(91,247)
-
-
3,281
(2)
Non cash-Flow Movements
As of
December 31,
Extinguishment of
debt under Chapter
11
ThUS$
Interest accrued
and others
Reclassifications
2022
ThUS$
ThUS$
ThUS$
(161,975)
(196,619)
-
(381,018)
(843,950)
(37,630)
(56,176)
(995,888)
2,814
128,077
13,882
339,475
148,703
37,211
40,806
492,592
-
(2,840)
(167,942)
23,161
141,336
204,411
-
(59,893)
-
1,385,995
325,061
474,304
1,289,799
1,088,239
2,028
2,216,454
10,396,482
7,217,900
(8,891,330)
(521,716)
(87,993)
(2,673,256)
1,203,560
138,233
6,781,880
Financial information
331
Integrated Report 2022 The indebtedness indicator of the
company's Non-current liabilities
over equity stood at 191.39. The
impact of Current liabilities over total
debt decreased by 21.88 percentage
points, from 39.51% at yearend 2021
to 61.39% at the end of the December
2022.
The indicator of total indebtedness
over the Company's equity at the
end of December 2022 is 311.75,
314.64 times lower than at the end of
December 2021.
At December 31, 2022, 52% (40%
by December 31, 2021) of the debt
is fixed in the face of fluctuations in
interest rates. Of the variable debt,
most is indexed at the reference rate
based on SOFR.
The Equity attributable to the owners
of the parent company increased by
ThUS$7,098,826 (100.6%) from a
negative equity of ThUS$7,056,548 at
December 31, 2021 to a positive equity
of ThUS$42,278 by December 31, 2022.
The main effects correspond to:
a) Capital increase and convertible
bonds
The Company’s Extraordinary
Shareholders’ Meeting, held on
July 5, 2022, agreed to increase
the Company’s capital by
US$10,293,269,524, through the
issuance of 73,809,875,794 common
stock and 531,991,409,513 backup
shares, all ordinary, of the same and
single series, without face value,
whereby: (a) US$9,493,269,524,
represented by 531,991,409,513 new
shares, to be used in response to the
conversion of the Convertible Bonds,
as defined below (the "Backstop
Shares"); and (b) US$800,000,000,
represented by 73,809,875,794 new
common stock (the "New Common
Stock"), to be offered preferentially
to the shareholders.
By December 31, 2022, of
the referred capital increase,
604,625,447,032 shares were
subscribed and paid, equivalent
to ThUS$10,152,221, generating
costs of issuance and placement
of shares and convertible bonds for
ThUS$810,279, which are presented
as part of the "Other reserves"
item and will be reclassified
to paid-in capital once said
transfer is approved at a future
Extraordinary Shareholders' Meeting. The
following table shows the movement of the
ThUS$10,152,221 capital increase per item:
Movement fully paid shares:
Movement fully paid shares:
Initial balance as of January 1, 2020
There are no movements of shares paid
Initial balance as of January 1, 2020
Ending balance as of December 31, 2020
during the 2020 year
There are no movements of shares paid
during the 2020 year
Initial balance as of January 1, 2022
Ending balance as of December 31, 2020
New shares issued (ERO)
Conversion options of convertible notes exercised during the year - Convertible Notes G (1)
Conversion options of convertible notes exercised during the year - Convertible Notes H
Initial balance as of January 1, 2022
Conversion options of convertible notes exercised during the year - Convertible Notes I (2)
New shares issued (ERO)
Subtotal
Conversion options of convertible notes exercised during the year - Convertible Notes G (1)
Ending balance as of December 31, 2022
Conversion options of convertible notes exercised during the year - Convertible Notes H
Conversion options of convertible notes exercised during the year - Convertible Notes I (2)
b) Other equity interests
Subtotal
Ending balance as of December 31, 2022
During the year 2022, Other equity
interests increased by ThUS$9,250,229
related to the valuation of the
convertible bonds; subsequently, once
the conversion option was exercised,
ThUS$9,352,221 were transferred
to Paid-in capital, and at the date of
issuance, the fair value of the liability
component was estimated using the
interest rate prevailing in the market for
similar non-convertible instruments.
This amount was recorded as a
liability on the amortized cost basis
using the effective interest method
until it is extinguished at the time of
conversion or on the maturity date
of the instrument, which corresponds
to ThUS$102,031, leaving finally in
the item Other equity interest a sum
of ThUS$39 corresponding to the
portion not converted into equity.
Paid- in
Capital
ThUS$
3,146,265
-
3,146,265
3,146,265
800,000
1,115,996
1,372,798
6,863,427
10,152,221
13,298,486
Paid- in
Capital
ThUS$
3,146,265
-
3,146,265
3,146,265
800,000
1,115,996
1,372,798
6,863,427
10,152,221
13,298,486
Financial information
332
Integrated Report 2022 c) Other miscellaneous reserves
During the year 2022, the item Other
miscellaneous reserves decreased by
ThUS$4,340,749, as shown below:
Concepts
Concepts
Convertible
Notes G
THUS$
Convertible
Notes G
THUS$
Convertible
Notes H
THUS$
Convertible
Notes H
THUS$
Convertible
Notes I
THUS$
Total
Convertible
Notes
THUS$
Convertible
Notes I
THUS$
Total
Convertible
Notes
THUS$
Face Value
Debt component at the date of issue
Face Value
Debt component at the date of issue
Equity component at the date of issue
Equity component at the date of issue
1,115,996
-
1,372,837
1,115,996
(102,031)
-
1,372,837
(102,031)
6,863,427
-
9,352,260
6,863,427
(102,031)
-
1,115,996
1,115,996
1,270,806
1,270,806
6,863,427
6,863,427
9,250,229
Adjustment to fair value
Convertible Notes at the date of issue
Issuance cost
Adjustment to fair value
Convertible Notes at the date of issue
Issuance cost
(923,616)
-
-
(923,616)
(24,812)
-
(2,686,854)
-
(705,467)
(24,812)
(2,686,854)
(705,467)
(3,610,470)
(730,279)
Total
Total
(923,616)
(923,616)
(24,812)
(24,812)
(3,392,321)
(3,392,321)
(4,340,749)
9,352,260
(102,031)
9,250,229
(3,610,470)
(730,279)
(4,340,749)
Additionally, during fiscal year 2022,
ThUS$80,000 in issuance costs from
the placement of the new common
stock (ERO) were recorded under Other
miscellaneous reserves.
2021. Therefore, the accured
Result decreased from a loss of
ThUS$8,841,106 at December 31,
2021 to a loss of ThUS$7,501,896 at
December 31, 2022.
d) Income attributable to the owners of
the parent company
2. CONSOLIDATED INCOME
STATEMENT
At December 31, 2022, the Company
recorded a gain of ThUS$1,339,210
attributable to the owners of the
parent company, versus a loss of
ThUS$4,647,491 at December 31,
At December 31, 2022, the controlling
company reported a ThUS$1,339,210
gain, translating into a positive
variation of ThUS$5,986,701
vs. the previous year’s loss of
ThUS$4,647,491. Net margin for the
year settled at 14.1% in 2022 and
-90.9% during 2021.
The operating result for the
year 2022 amounts to a loss of
ThUS$121,279, which compared
to the loss of ThUS$1,119,277 as
at December 31, 2021, shows a
variation equivalent to 89.2%, while
operating margin settles at -1.3%,
20.6 percentage points higher than
the -21.9% seen in 2021.
Operating income for the financial
year increased 86.2% vs. the
same period of 2021, totaling
ThUS$9,516,807. This increase
is largely due to a 128.5% rise in
Passenger revenues and 12.0% in
Cargo revenues, while Other revenues
decreased by 32.1%. The effect of
the Brazilian Real’s appreciation
translated into higher ordinary
revenues by around US$111 million.
PAX revenues totaled
ThUS$7,636,429 which, compared to
the ThUS$3,342,381 at December
31, 2021, translates into a 128.5%
increase. This variation is due to an
84.0% increase in demand measured
in RPK and a 24.2% increase in yields
compared to the same period of the
previous year. On the other hand,
the occupancy factor also shows a
positive variation of 6.9 percentage
points, reaching 81.3% during 2022.
This increase is explained by a strong
hike in demand, especially a solid
recovery of the operation to pre-
pandemic levels.
By December 31, 2022, cargo revenues
reached ThUS$1,726,092, translating
into an increase of 12.0% over 2021;
yields decreased 3.8%, while traffic
measured in RTK increased 16.4%, as a
result of the recovery in international
operations and a solid performance of
the cargo fleet.
The Other income item presents a
decrease of ThUS$73,045, mainly due
to the negative variation of income
received for indemnification from
Delta Air Lines, Inc., related to the
implementation of the JBA signed in
2019 for ThUS$87,780, partially offset
by higher income from Tour Services
during the period of 2022.
At December 31, 2022, Operating
costs totaled ThUS$9,638,086 which,
compared to 2021, translates into
higher costs by ThUS$3,407,463,
equivalent to a 54.7% increase,
whereas unit cost per ASK decreased
by 8.1%. Furthermore, the effect of
the Brazilian Real’s appreciation on
this line item translates into higher
costs by roughly US$78 million. Item
variations are explained as follows:
a) Remuneration and benefits
increased ThUS$224,437 mainly
due to higher crew costs, a 7.6%
increase in the average headcount
and compensation paid to employees
during the last quarter of 2022.
b) Fuel increased 161.0%, equivalent
to ThUS$2,394,729. This increase
corresponds mainly to 73.4% higher
average unhedged prices and 50.2%
growth in consumption measured in
gallons. The Company recognized a
fuel hedge profit of ThUS$18,755 in
2022, compared to a ThUS$10,100
loss in financial year 2021.
c) Commissions to agents show an
increase of ThUS$77,827, mainly due
to the increase in operations related
to passenger revenues.
d) Depreciation and amortization
increased by ThUS$14,118,
equivalent to 1.2%, a variation that
is mainly explained by maintenance
depreciation costs resulting from
increased operations, offset by a
smaller average fleet during fiscal
year 2022.
Financial information
333
Integrated Report 2022 e) Other Leases and Landing Fees
increased ThUS$280,970, mainly
in the costs of airport taxes and
handling services, impacted by the
recovery of the operation.
f) Passenger Services presents higher
costs by ThUS$106,994, which
translates into a variation of 138.3%,
mainly explained by an increase in
catering and in-flight service costs,
due to the lifting of restrictions on
food delivery during most of 2021
because of the COVID-19 pandemic,
as well as a significant growth
in demand, which represents an
increase of 55.4% in the number of
passengers transported, mainly in the
international segment.
g) Aircraft Lease costs total
ThUS$82,215. Since the second
quarter of 2021, operating aircraft
leases under variable mode were
reported, as a result of the various
agreements reached by Company.
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 from 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$49,110, equivalent to 9.2%,
mainly due to a higher operation.
i) Other Operating Costs increased
ThUS$177,063, mainly due to the
effect of higher variable costs
of crew, marketing, sales and
reservation systems, all of which
are the result of the growth of the
operation during 2022.
Financial income totaled
ThUS$1,052,295, which compared
to the ThUS$21,107 from 2021,
translates into higher income
by ThUS$1,031,188, mainly due
to the fair value adjustment
of the converted bonds whose
origin was financial debt totaling
ThUS$420,436 and write-offs of
financial debt worth ThUS$491,326.
Financial costs increased 17.0%,
totaling ThUS$942,403 by December
31, 2022, mainly due to the DIP
financing and DIP to Exit financing
that the Company had in place
until the exit from Chapter 11. This
effect was also increased by the
impact on variable debt due to the
high prime rates that the market is
experiencing.
Other income / costs totaled
ThUS$1,357,438 at December
31, 2022 which, compared to
2021, shows a positive variation
of ThUS$3,537,931. This
impact is mainly explained by
ThUS$2,550,306 corresponding to
the fair value adjustment of the
converted bonds whose origin was
Trade accounts payable and Other
accounts payable, in addition to a
lower expense of ThUS$1,564,973
related to the rejection of fleet
contracts recognized during financial
year 2021, partially offset by higher
costs of ThUS$345,410 associated
with the reclassification of 28 A319
aircraft to the line item of Assets
held for sale, during the fourth
quarter of 2022.
The main line items in the
Consolidated Financial Statement
of TAM S.A. and Affiliates, which
caused a currency exchange gain
of ThUS$36,973 at December 31,
2022, were the following: Other
financial liabilities; ThUS$13,246
gain from USD-denominated loans
and financial leasing for fleet
acquisitions; net accounts receivable
and payable to related companies,
totaling a gain of THUS$16,791, and
net accounts receivable and payable
to third parties, totaling a loss of
THUS$6,854. The other items of net
assets and liabilities generated a
gain of MUS$13,791.
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
transportation 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 allowed the protection of the
Company's liquidity.
The Operating Cash Flow as at
December 31, 2022 shows a positive
change of ThUS$271,038 vs. the
previous year, due to the positive change
in Receipts from Sales of Goods and
Service Rendering for ThUS$5,189,764;
Other receipts from operational
activities for ThUS$65,034. The above
is offset by negative variations in
Payments to suppliers for the supply of
goods and services; Other payments for
operating activities, whose variations
are originated by higher payments made
of ThUS$4,721,503 and ThUS$116,428,
respectively; Payments to and on behalf
Financial information
334
Integrated Report 2022 of employees, worth ThUS$98,268;
ThUS$4,877 in Income taxes
refunded; and Other cash inflows and
outflows totaling ThUS$42,684.
The negative flow of ThUS$42,684
in the Other cash inflows and
outflows of the Operating Cash
Flow is mainly originated by the
variation in Guarantees, Judicial
Deposits, Premiums derived from
fuel, Delta Compensation, and funds
delivered to an agent as restricted
advances, which are intended to
settle the claims pending resolution
at the exit from the Chapter 11
proceeding totaling ThUS$80,513,
offset by the positive variation of
the transactions with Fuel derivatives
for ThUS$21,588 and Bank
commissions, taxes and others for
ThUS$16,241.
The Cash Flow from Investing
Activities presents a negative
variation of ThUS$196,446 with
regard to the previous year, mainly
due to the negative variation of
Purchases of Property, plant and
equipment for ThUS$183,435; Sums
from the sale of property, plant
and equipment for ThUS$48,623;
Other cash income (losses) of
ThUS$12,175; Loss of control of
subsidiaries or other businesses for
Detail
ThUS$752; and Other payments to
acquire equity or debt instruments
of other entities for ThUS$123. The
above is offset by positive variations
in Purchases of intangible assets for
ThUS$38,402; Interest received for
ThUS$9,878; and Other collections
from the sale of assets or debt
instruments of other entities for
ThUS$382.
Issuance of shares
Issuance costs
DIP Junior offset
Total cash flow
Detail
Issuance of shares
Issuance costs
DIP Junior offset
Total cash flow
THUS$
800,000
(80,000)
(170,962)
549,038
THUS$
800,000
(80,000)
(170,962)
549,038
ThUS$800,000 Related to the
capital increase; ThUS$549,038 were
received in cash, and are presented
in cash flow from financing activities.
In turn, ThUS$170,962 were offset,
corresponding to the debt with
shareholder Inversiones Costa Verde
Ltda. and CPA. In addition, in this
capital increase, ThUS$80,000 were
offset, related to share issuance and
placement costs, which are presented
under Other miscellaneous reserves of
shareholders' equity.
The amounts raised through the
Issuance of other equity instruments
for ThUS$3,202,790 are composed as
follows:
The Cash Flow from Financing
Activities presents a positive
variation of ThUS$745,313,
compared to the previous year,
which is mainly explained by the
positive variations of Amounts raised
through the issuance of shares for
ThUS$549,038; Amounts raised
through the issuance of other equity
instruments for ThUS$3,202,790;
Amounts raised through short- and
long-term loans for ThUS$4,194,416
and ThUS$2,361,875, respectively;
Loans from related entities for
ThUS$640,420. These variations are
offset by the negative variation of
ThUS$8,296,365 in Loan payments;
ThUS$1,008,483 in Loan payments
to related entities; ThUS$417,095 in
Interest paid; and ThUS$452,732 in
Other cash inflows (outflows).
The breakdown of the proceeds from
the issuance of shares is as follows:
Detail
Fair Value (see note 24)
Use for settement of claim
Issuance costs
DIP Junior offset
Stamp tax
Cash inflow
Convertible
Notes H
ThUS$
Convertible
Notes I
ThUS$
1,372,837
-
(24,812)
(327,957)
-
1,020,068
4,097,788
(828,581)
(705,467)
(381,018)
-
2,182,722
Total
ThUS$
5,470,625
(828,581)
(730,279)
(708,975)
-
3,202,790
Financial information
335
Integrated Report 2022 The positive variation presented in the
Cash Flow from Financing Activities
in the line item Amounts from short-
term loans has its origin in a partial
withdrawal made by the Company on
November 10, 2021 for ThUS$200
from Tranche B, and subsequently, on
December 28, 2021, for ThUS$100.
On March 14, 2022, LATAM made a
withdrawal for ThUS$300 (ThUS$38.6
from Tranche A, ThUS$227.3 from
Tranche B, and ThUS$34.1 from Tranche
C) and subsequently, on April 8, 2022,
the initial disbursement under the
Amended and Restated DIP Credit
Agreement in the amount of US$2.75
billion took place.
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, the “Revolving Credit
Facility (RCF)”. The line is secured
by collateral consisting of aircraft,
engines and spare parts, which
remains fully drawn at the end of
the year.
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.
Finally, on November 3, 2022, the
Company and all of its subsidiaries
successfully emerged from Chapter 11.
3. On September 29, 2020, LATAM
Airlines Group S.A. obtained debtor-
in-possession (“DIP”) financing
facility 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 were
guaranteed by collateral consisting
of certain assets owned by 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 of US$1.15 billion
from Tranche A and Tranche C, and
then, on or around June 22, 2021,
LATAM made an additional withdrawal
of US$500 million from Tranche A and
Tranche C.
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 Company's motion to extend certain
lease contracts on 3 aircraft.
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, by pledges on stocks,
certain engines, and spare parts. The
next DIP drafts must be made on
Tranche B until the ratio drawn on the
latter is equal to that of the previous
tranches. Once this ratio is equal, the
drafts are on a pro-rata basis.
On November 10, 2021, the Company
made a partial withdrawal of US$200
million from 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 billion
available for future withdrawals.
On February 17, 2022, LATAM filed
an initial proposal (the "Amended and
Restated Initial DIP Financing Proposal")
for a restated and amended Super-
Priority Debtor-In-Possession Term Loan
Agreement with the Bankruptcy Court of
the Southern District of New York.
Agreement (the "New Amended and
Restated DIP Credit Agreement") was
submitted to the Court for approval. The
New Amended and Restated DIP Credit
Agreement (i) refinanced and replaced
in its entirety the existing Tranches
A, B and C of the Existing DIP Credit
Agreement; (ii) provided for a maturity
date consistent with the schedule the
Debtors established to emerge from the
Chapter 11 Proceeding; and (iii) included
certain reductions in fees and interest
as compared to the Original DIP Credit
Agreement and the Initial Amended
and Restated DIP Financing Proposal.
Obligations under DIP were guaranteed
by collateral consisting of certain assets
owned by LATAM and certain of its
subsidiaries, including, but not limited
to, shares, certain engines, and spare
parts.
On March 14, 2022, LATAM made a
withdrawal of ThUS$38.6 from Tranche
A, ThUS$227.3 from Tranche B and
ThUS$34.1 from Tranche C.
On March 14, 2022, the Company’s
Board of Directors, by unanimous
vote of the independent directors,
agreed to approve the New Amended
and Restated DIP Financing Proposal,
subject to the approval of the Court. On
March 14, 2022, a new amended and
restated text of the Original DIP Credit
The maturity date 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 Court order from the U.S. Southern
District Court of New York, but the plan
is not yet effective. Finally, it should be
noted that this extension was not made
and that this DIP financing was paid in
full on April 8, 2022, being replaced by
a new restated and amended DIP Credit
Agreement.
Financial information
336
Integrated Report 2022 On April 8, 2022, a restated and
amended text (the "Amended
and Restated DIP Credit
Agreement") of the Original DIP
Credit Agreement was executed,
which amends and restates
said agreement and pays back
the outstanding obligations
thereunder (i.e., under its Tranches
A, B and C). The total amount of
the Amended and Restated DIP
Credit Agreement is ThUS$3.70
billion. The Amended and
Restated DIP Credit Agreement
(i) included certain reductions
in fees and interest compared
to the Original DIP Credit
Agreement; and (ii) contemplated
a maturity date consistent with
LATAM's anticipated schedule for
emergence from the Chapter 11
Proceeding. With regard to the
latter, the scheduled maturity date
of the Amended and Restated
DIP Credit Agreement was August
8, 2022, subject to possible
extensions which, in certain cases,
had a deadline of November 30,
2022.
In addition, on April 8, 2022, the
initial disbursement under the
Amended and Restated DIP Credit
Agreement in the amount of
US$2.75 billion was made. On April
28, 2022, an amendment to this
agreement was signed, extending
the maturity date from August 8,
2022 to October 14, 2022.
On October 12, 2022, the
Amended and Restated DIP
Credit Agreement was paid
back in full by the DIP-to-Exit
financing, which included a
US$750 million bridge financing
for senior secured notes due
in 2027, a bridge financing for
senior secured notes maturing
in 2027, another US$750
million bridge financing for
senior secured notes due in
2029, a US$750 million Term
Financing, and last, a US$1.14
billion Junior DIP financing.
The DIP-to-Exit financing was
collateralized by assets owned
by LATAM and certain of its
subsidiaries. Of these, the Junior
DIP contemplated a subordinate
priority to the rest of the credits.
Finally, on November 3, 2022,
the DIP-to-Exit financing was
repaid in full in the context of the
Company's exit from its Chapter
11 proceeding.
On October 18, 2022, the Bridge
Loans were partially repaid
by: i) an issuance of bonds
exempt from registration under
the U.S. Securities Act of 1933,
as amended (the "Securities
Act"), pursuant to Rule 144A
and Regulation S, both under
the Securities Act, maturing in
2027 (the "5-Year Notes"), in
the aggregate principal amount
of $450 million; and ii) a bond
issuance exempt from registration
under the Securities Act pursuant
to Rule 144A and Regulation S,
both under the Securities Act,
maturing in 2029 (the "7-Year
Notes"), in the aggregate principal
amount of $700 million.
In the context of the Company's exit
from its Chapter 11 proceedings
on November 3, 2022, such DIP-
to-Exit financing was repaid in
full with the proceeds of the exit
financing issued by the Company,
which contemplated US$450
million in senior secured notes due
2027, US$700 million in senior
secured notes due 2029 and a Term
Financing of US$1.100 million, and
with part of the proceeds from the
capital increase implemented in
the context of the reorganization
process for a total of approximately
US$10.3 billion, through the
issuance of new payment shares
and convertible bonds.
4. On June 17, 2021, the United
States Southern District
Court of New York approved
the Company’s motion to
reject the lease contract for
a financial lease-financed
aircraft worth US$130.7
million.
5. On June 30, 2021, the United
States Southern District Court
of New York approved the
Company’s motion to reject
the lease contract for three
financial lease-financed
aircraft worth US$307.4
million.
6. On November 1, 2021, the
United States Southern
District Court of New York
approved the Company’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 at December 31, 2022, prior
to the effects of exchange rate
differences, shows a positive
variation of ThUS$819,905,
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
company.
(a) Market risk
Given the nature of its business,
the Company is exposed to market
factors, such as: (i) fuel price risk,
(ii) interest rate risk, and (iii) local
exchange rate risk.
(i) Fuel price risk
To carry out its operations, the
Company purchases fuel known as
USGC 54 grade Jet Fuel, which is
subject to variations in international
fuel prices.
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.
Financial information
337
Integrated Report 2022 At December 31, 2022, the
Company recognized an
US$18,765 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, 2022, the market
value of existing contracts stood
at ThUS$12,593.
(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, 2022, the Company
holds ThUS$108,000 in outstanding
FX derivatives recorded as hedges.
At December 31, 2022, the market
value of FX derivative hedge positions
totaled US$191 million (positive).
(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 Secured Overnight Financing Rate
(“SOFR”), as well as the London Inter
Bank Offer Rate (“LIBOR”) and other
less relevant interest rates, such as
Brazilian Interbank Deposit Certificates
(“CDI”, for its Portuguese
acronym). As LIBOR will cease to
be published by June 2023, the
Company has begun to migrate
to the adoption of SOFR as an
alternative rate, which will fully
materialize with the cease of
LIBOR.
of interest rate derivative positions
corresponding to operating leases
to fix the lease of future aircraft
arrivals amounted to ThUS$8,816
(positive). At the end of December
2021, the Company held no current
interest rate derivatives positions
under this concept.
In terms of rate exposure, a
portion of the Company's variable
financial debt maintains exposure
to the LIBOR rate. However,
all these contracts will have
definitive migration to the SOFR
rate. This migration is provided
within each of the existing
financial debt contracts subject to
the LIBOR rate.
At December 31, 2022, 52%
(40% by December 31, 2021) of
the debt is fixed in the face of
fluctuations in interest rates. Of
the variable debt, most is indexed
at the reference rate based on
SOFR.
During the period ended
December 31, 2022, the
Company recognized losses
of ThUS$6,897 (negative)
corresponding to the recognition
in income of premiums paid. As
at December 31, 2022, the value
At December 31, 2022, the
Company recognized a decrease
in the right-of-use asset upon
settlement of a derivative for
ThUS$8,143, related to leased
aircraft. A lower expense from
depreciation of the right-of-use
asset of ThUS$133 thousand is
recognized at the same date. At
the end of December 2021, the
Company did not recognize gains or
losses under this same concept.
(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
The world enters 2023 amid
high inflationary pressures, the
Russia-Ukraine war and the
resurgence of COVID-19 in parts
of China. With the pandemic in
full retreat worldwide, the opening
of economies was an imminent
event during 2022 but, just as
normalcy returned, the slowdown
in global economic activity also
became evident. While the previous
economic outlook suggested a
pessimistic 2022, the results have
surprised the market, with a stronger
than expected real GDP in the third
quarter, driven mainly by domestic
factors, such as consumption and
private investment, as well as
fiscal support above what was
previously expected. With this, the
International Monetary Fund (IMF)
estimates 3.4% growth for the global
economy in 2022, while projecting
2.9% growth for 2023. The latter is
0.2 percentage points higher than
was estimated in its previous report.
For 2024, it estimates a higher
growth of 3.1%.
In its latest January projection,
the IMF estimates that developed
economies will face a downturn next
year, with growth in 2022 projected
Financial information
338
Integrated Report 2022 at 2.7% and falling to 1.2% in 2023.
The IMF estimates that the U.S. will
expand by 1.4% during 2023, which
is 0.4 percentage points higher than
projected in its October report, in
response to the carryover effects of
resilient domestic demand. For 2024,
growth is expected to reach 1.0% in
the United States. As for the Euro
Zone, the IMF estimates growth of
0.7% during 2023, upwardly revised by
0.2 percentage points reflecting more
aggressive interest rate increases by the
European Central Bank, in addition to
the erosion of real incomes. These have
been neutralized by the 2022 results:
led by lower wholesale energy prices
and the announcement of new energy
cost-buffering strategies through price
controls and direct transfers.
As for Latin America, socio-political
processes are being witnessed that
have had repercussions on the economic
scenarios of the region's countries.
Against this backdrop, the projections
for the region in the IMF's latest report
were adjusted with regard to the October
estimates. For Latin America and the
Caribbean, growth is projected at 1.8%
in 2023 with an upward revision of 0.1
percentage points compared to the
October estimate. This readjustment
in the projections is mainly due to
the unexpected resilience in domestic
demand, higher than expected growth
in the economies of major trading
partners, and in the case of Brazil,
higher than expected fiscal support. For
2024, the IMF estimates an expansion
of 2.1% for the region. Brazil's economy
is expected to grow by 1.2% in 2023. In
the case of Chile, the Central Bank, in its
last Monetary Policy Report (IPoM) of
December 2022, estimated a growth of
between -1.75% and -0.75% for 2023.
a) Below, we present the main financial
indicators in the Consolidated Financial
Statement:
PROFITABILITY INDICATORS
Liquidity indicators
Current liquidity (times) (Current assets in operation/
current Liability)å
Acid test ratio (times) (Available funds/current liabilities)
Indebtedness indicators
Debt ratio (times): (Current Liability/ Net Worth)
(Non-current Liability/ Net Worth)
(Current liabilities+non-current liabilities/ Net worth)
Current debt/ Total debt (%)
Non-current debt/ Total debt (%)
Hedging of financial expenses (EBIT/financial expenses)
Activity indicators
Total Assets
Investments
Disposal of property
12/31/22
12/31/21
0.69
0.24
120.36
191.39
311.75
38.61
61.39
0.00
0.21
0.09
(1.75)
(1.14)
(2.89)
60.49
39.51
0.00
13,211,024
13,291,532
780,869
56,794
587,453
105,035
Profitability indicators are calculated on equity and income attributable to Majority
Shareholders.
Return on Equity
(Net income / average net equity)
Return on assets
(Net income/ average assets)
Yield of operating assets
(Net income/ operating assets)2 (Average)
12/31/22
12/31/21
31.68
0.10
0.11
-1
(0.35)
(0.24)
1 By December 31, 2021, LATAM Airlines Group S.A. and Affiliates have negative Equity.
2 Total assets less deferred taxes, personnel current accounts, permanent and temporary
investments.
Dividend returns (Dividends paid/ market price)
0.00
0.00
12/31/22
12/31/21
Financial information
339
Integrated Report 2022 b) Below, we present the main financial indicators in the Consolidated Financial Statement.
For the years ended on December 31 (ThUS$)
Operating income
Passengers
Cargo
Others
Operating Costs
Compensation
Fuel
Fees
Depreciation and Amortization
Other Leasing and Landing Fees
Passenger Services
Aircraft Leasing
Maintenance
Other Operating Costs
Operating Results
Operating Margin
Financial Revenues
Financial costs
Other Revenues / Costs1
Income /(loss) before taxes and minority interest
Taxes
Income /(Loss) before minority interest attributable to
Gain/(Loss) attributable to the parent company's owners
Gain/(Loss) , attributable to non-controlling interests
Net Margin
Effective Tax Rate
Total shares, basic
Basic gain/(loss) per share (US$)
Total shares, diluted
Diluted gain/(loss) per share (US$)
EBITDA
2022
9,516,807
7,636,429
1,726,092
154,286
(9,638,086)
(1,266,336)
(3,882,505)
(167,035)
(1,179,512)
(1,036,158)
(184,357)
(202,845)
(582,848)
(1,136,490)
(121,279)
-1.3%
1,052,295
(942,403)
1,357,438
1,346,051
(8,914)
1,337,137
1,339,210
(2,073)
14.1%
0.7%
96,614,464,231
0.01386
98,530,451,071
0.01359
2,417,744
2021
5,111,346
3,342,381
1,541,634
227,331
(6,230,623)
(1,041,899)
(1,487,776)
(89,208)
(1,165,394)
(755,188)
(77,363)
(120,630)
(533,738)
(959,427)
(1,119,277)
-21.9%
21,107
(805,544)
(2,180,493)
(4,084,207)
(568,935)
(4,653,142)
(4,647,491)
(5,651)
-90.9%
13.9%
606,407,693
(7.66397)
606,407,693
(7.66397)
(2,128,725)
1 Other Income/Expenses considers the line items Other gains (losses), Exchange differences, and Results from readjustment units
presented in the Consolidated Financial Statement by function.
Financial information
340
Integrated Report 2022 DocuSign Envelope ID: 78EDE792-138C-4A3A-9BC3-BB16BBAE64C5
DocuSign Envelope ID: 78EDE792-138C-4A3A-9BC3-BB16BBAE64C5
Memoria Integrada 2022
Memoria Integrada 2022
Sworn
Declaración
Declaración
statement
jurada
jurada
As directors, CEO, and CFO of LATAM
En nuestra calidad de directores, gerente
En nuestra calidad de directores, gerente
Airlines Group S.A., we declare under
general y vicepresidente de Finanzas de
general y vicepresidente de Finanzas de
oath our responsibility for the veracity
LATAM Airlines Group S.A., declaramos
LATAM Airlines Group S.A., declaramos
of all information contained in the
bajo juramento nuestra responsabilidad
bajo juramento nuestra responsabilidad
LATAM 2022 Integrated Report.
respecto de la veracidad de toda la
respecto de la veracidad de toda la
información contenida en la Memoria
información contenida en la Memoria
Integrada LATAM 2022.
Integrada LATAM 2022.
IGNACIO CUETO PLAZA
Presidente del Directorio
IGNACIO CUETO PLAZA
IGNACIO CUETO PLAZA
Presidente del Directorio
Chairman of the Board
BORNAH MOGHBEL
BORNAH MOGHBEL
BORNAH MOGHBEL
Vicepresidente del Directorio
Vicepresidente del Directorio
Vice-chairman of the Board
ENRIQUE MIGUEL CUETO PLAZA
Director
ENRIQUE MIGUEL CUETO PLAZA
ENRIQUE MIGUEL CUETO PLAZA
Director
Board member
FREDERICO CURADO
FREDERICO CURADO
Director
Director
ANTONIO GIL NIEVAS
Director
ANTONIO GIL NIEVAS
ANTONIO GIL NIEVAS
Director
Board member
MICHAEL NERUDA
MICHAEL NERUDA
MICHAEL NERUDA
Director
Director
Board member
BOUK VAN GELOVEN
BOUK VAN GELOVEN
BOUK VAN GELOVEN
Director
Director
Board member
SONIA J. S. VILLALOBOS
Directora
SONIA J. S. VILLALOBOS
SONIA J. S. VILLALOBOS
Directora
Board member
ALEXANDER D. WILCOX
Director
ALEXANDER D. WILCOX
ALEXANDER D. WILCOX
Director
Board member
ROBERTO ALVO MILOSAWLEWITSCH
Gerente General
ROBERTO ALVO MILOSAWLEWITSCH
ROBERTO ALVO MILOSAWLEWITSCH
Gerente General
Chief Executive Officer
RAMIRO ALFONSÍN BALZA
Vicepresidente de Finanzas
RAMIRO ALFONSÍN BALZA
RAMIRO ALFONSÍN BALZA
Vicepresidente de Finanzas
Chief Financial Officer
Declaración jurada
Sworn statement
Declaración jurada
344
341
344
Integrated Report 2022 Corporate structure
NCG 461: 6.5.1 SUBSIDIARIES AND PARTNERS
LATAM Airlines Group S.A. [Chile] - [LACL]
99.00%
LATAMTravel S.R.L.
[Bolivia] - [LTBO]
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%
99.89395%
99.9%
99.99%
99.83%
99.9959%
100%
100%
100%
0.10196%
LAN Cargo S.A.
[Chile] - [UCCL]
0.00409%
0.02%
99.98%
LAN Cargo
Overseas Limited
[Holanda] - [X0BS]
100%
0.02857%
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]
12.87421%
87.12567%
Transporte
Aéreo S.A.
[Chile] -
[LUCL]
0.00012%
0.17%
0.00412%
99.00%
Atlantic Aviation
Investments
Limited LLC
[Delaware] -
[X5US]
1.00%
100%
100%
Cargo Handling
Airport Services,
LLC [USA] -
[F6US]
Professional
Airline Cargo
Services, LLC
[USA] - [F7US]
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%
LAN Tours de
Mexico S.A. de C.V.
[México] - [LTMX]
54.79076%
Holdco
Ecuador S.A.
[Chile] - [E2CL]
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]
100%
100%
99.13%
Americonsult de
Guatemala SA
[Guatemala] -
[Q3GT]
0.87%
Maintenance
Service Experts,
LLC
[USA] - [F1US]
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%
81.30%
Línea Aérea
Carguera de
Colombia
[C1CO]
Fast Air
Almacenes
de Carga S.A.
[Chile] - [D2CL]
0.11%
1.53%
50.00%
Consorcio Fast Air
Laser Cargo UTE
[Argentina] - [D7AR]
96.22078%
Laser Cargo
S.R.L.
[Argentina] -
[D6AR]
Aerovías de
Integración
Regional S.A.
(Aires S.A.)
[Colombia] -
[4CCO]
50.00%
0.78236%
49.10825%
3.77922%
1%
Gitary Trade S.A
[Uruguay]
99.00%
100%
Connecta
Corporation [USA] -
[CCUS]
100%
Jarletul S.A.
[Uruguay] - [W9UY]
4.57%
1.53%
45.00%
45.20924%
55.00%
LATAM-Airlines
Ecuador S.A.
[Ecuador] - [XLEC]
49.10825%
0.10479%
Holdco
Colombia I SpA
[Chile] - [E4CL]
100%
0.15704%
Holdco
Colombia II
SpA
[Chile] - [E5CL]
100%
LATAM Travel
S.A. [Argentina]
- [Z6AR]
5.69%
94.01%
4.9963%
LAN
Argentina S.A.
[Argentina] -
[4MAR]
99.95%
95.00%
0.0084%
0.3%
Inversora Cordillera
S.A.
[Argentina] -
[W7AR]
0.05%
0.00169%
99.99831%
Holdco I S.A.
[Chile] - [E3CL]
63.09013%
TAM S.A.
[Brasil] - [N2BR]
36.90987%
99.99935%
99.99%
0.00065%
TAM Linhas
Aereas S.A.
[Brasil] - [JJBR]
0.01%
TP Franchising
Ltda. [Brasil] -
[N3BR]
Corsair
Participacoes
S.A. [Brasil] -
[N6BR]
0.01%
Multiplus
Corredora de
Seguros Ltda.
[Brasil] - [N7BR]
Prismah
Fidelidade
Ltda.
[Brasil] -
[N8BR]
0.01%
100%
99.99%
0.01%
99.99%
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]
100%
100%
94.98%
1%
MINORITY
Piquero
Leasing Limited
100%
Platero
Leasing LLC
100%
Chincol
Leasing LLC
100%
Zorzal Limited
99%
Sumauma
Leasing Limited
100%
Corporate structure
342
Integrated Report 2022 Credits and Corporate
information
CREDITS
Coordination
CORPORATE INFORMATION
Headquarters
ADR Depositary bank
LATAM– Investor Relations
LATAM– Sustainability
LATAM – External communications
Text and design
Conecta Comunicação e
Sustentabilidade
Text: Cristina Molina
Editorial Supervision and
GRI Indicators: Judith Mota
Editorial support: Talita Fusco
Graphic project: Naná de Freitas
Layout: Flavia Ocaranza, Gisele Fujiura,
Gustavo Inafuku and Luciana Mafra
English version
Nuriyah Costa-Laurent (Minx
Translation)
Photography
LATAM archive
5711 Presidente Riesco Ave., 19th
floor– Las Condes
Santiago– Chile
Phone: (56) (2) 2565 3844
Ticker symbol
JPMorgan Chase Bank, N.A.
P.O. Box 64504
St. Paul, MN 55164-0504
Phone: From the US +1 (800) 990-1135
Phone: From other countries (651) 453-2128
Phone: Global Invest Direct
(800) 428-4237
LTM CI– Santiago Stock Exchange
LTM AY– New York Stock Exchange
ADR Custodian bank
Banco Santander Chile
Bandera 140
Santiago– Chile
Custody Department
Phone: (56) (2) 2320 3320
Independent auditors
PricewaterhouseCoopers Consultores,
Auditores y Compañía Limitada
2711 Andrés Bello Ave., 5th floor
Santiago– Chile
Phone: (56) (2) 2940 0000
Investor relations
Investor Relations | LATAM Airlines
Group S.A.
5711 Presidente Riesco Ave., 19th
floor– Las Condes
Santiago– Chile
Phone: (56) (2) 2565 3844
E-mail: InvestorRelations@latam.com
Shareholder queries
Central Securities Depository
1730 Los Conquistadores Ave., 24th
floor, Providencia
Santiago– Chile
Phone: (56) (2) 2393 9003
E-mail: atencionaccionistas@dcv.cl
Credits and Corporate information
343
Integrated Report 2022 www.latamairlinesgroup.net
www.latam.com