1
ANNUAL REPORT 2023 Index
03
06
09
10
13
14
15
20
21
24
25
26
28
30
Presentation
Highlights
Sustainability strategy
Letter from the CEO
About us
LATAM group
Our strategy
Value generation model
Timeline
Awards and recognitions
Operations
Passenger operation
Cargo operation
Fleet
2
32
Corporate governance
33
36
39
45
49
51
53
Ownership structure
Composition of the board of directors
Decision-making bodies
Main executives
Corporate guidelines
Stakeholder engagement
Financial policies
57
Our business
58
59
61
62
Industry context
Financial results
Investment plan
Stock information
63
Safety
64
Priority Nº1
69
70
71
72
76
83
87
89
90
99
Commitment to sustainability
112
About the report
Objetives and results
113
Material topics
Sustainability strategy
116
Index of GRI and SASB contents
Environmental management
120
Index of NCG contents
Climate change
Circular economy
Shared value
Employees
121
Glossary
122
External assurance
124
Annexes
Better, simpler, more transparent
164
Financial Reports
Who makes up LATAM group
165
Financial statements
100
Clients
101
The best experience
107
Suppliers
108
Supply chain management
259
Affiliates and subsidaries
286
Financial analysis
294
Sworn statement
295
Company structure
ANNUAL REPORT 2023 01 Presentation
In this chapter
Highlights
06
09
Sustainability
strategy
10 Letter from
the CEO
01 —Presentation
Presentation
GRI 2-2 AND 2-3
In its Integrated Report, LATAM Airlines Group S.A. presents each year the main
achievements and challenges of both the company and its affiliates, considering
the different areas of the business (economic, social and environmental), corporate
governance and safety, as well as the relationship with its stakeholders.
This edition refers to the period from January 1 to December 31, 2023 and meets
the requirements of General Standard (NCG, for its Spanish acronym) N° 30 and
N° 461 of Chile’s Financial Market Commission (CMF, for its Spanish acronym),
which incorporates sustainability and corporate governance issues in the annual
reports. It should be noted that, for LATAM, this mandatory regulation offers an
opportunity to strengthen what was begun in 2018, when the group first published
an Integrated Report, i.e. a document that strategically integrated both financial
and non-financial information (previously, these were presented separately in two
publications: the Annual Report and the Sustainability Report), as well as lending
visibility to the corporate governance practices that the company has historically
followed.
In this regard, LATAM’s Consolidated Financial Statements, which include the fi-
nancial position as at December 31, 2022 and 2023, are an essential part of this
report and have been externally audited by Pricewaterhouse Cooper (PwC). In
addition to being available in this document, starting on page 165, they can also
be viewed on the CMF website and on the LATAM Investor Relations website.
Furthermore, in the section that provides the information linked to the relevant
sustainability topics and the indicators that monitor the group’s performance in
these affairs, the guidelines were the Global Reporting Initiative (GRI) standards,
the main global benchmark for sustainability communication and management.
In turn, the contents and indicators linked to the GRI standards were subjected
to external verification by Deloitte. Likewise, the information on sustainability is
complemented by metrics established for airlines by the Sustainability Account-
ing Standards Board (SASB)/ International Financial Reporting Standards (IFRS)
Foundation. Moreover, this publication has incorporated indicators from the S&P
Global Corporate Sustainability Assessment, which is voluntarily completed by
LATAM each year.
This edition will be available on LATAM's website, as well as on the CMF website,
starting from April 2024.
4
ANNUAL REPORT 2023 01 —Presentation
CONVENTIONS
GRI 2-1
Currency and Exchange Rate
LATAM Airlines Group S.A. and most of its affiliates
maintain accounting records and prepare their financial
statements in US dollars (USD). At the same time, some
of its affiliates use Chilean pesos (CLP), Colombian
pesos (COP) or Brazilian reals (BRL). However, the
group’s consolidated financial statements include the
results of these affiliates converted into USD.
In accordance with the International Accounting
Standards (IASB), assets and liabilities consider the
exchange rate at the end of the period. In turn, 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 in cases where the
context requires it, mentions of LATAM Airlines Group
refer to LATAM Airlines Group S.A., a non-consolidated
operating entity.
GUIDE TO READING THE REPORT
LATAM: References to LATAM, the Group, and the
company refer to LATAM Airlines Group S.A. and its
consolidated affiliates. These are 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); and the cargo subsidiaries,
which are: LAN Cargo S.A. (LATAM Cargo Chile) Línea
Aérea Carguera de Colombia S.A. (LANCO or LATAM
Cargo Colombia);, and Aerolinhas Brasileiras S.A.
(ABSA or LATAM Cargo Brazil).
Other references to LATAM, as the context may re-
quire, refer to the LATAM brand, launched in 2016,
and comprises, 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: This refers to the group of cargo
operators, i.e. LAN Cargo S.A. (LATAM Cargo Chile),
Línea Aérea Carguera de Colombia S.A. (LANCO or
LATAM Cargo Colombia) and Aerolinhas Brasileiras
S.A. (ABSA or LATAM Cargo Brasil).
LAN: Mentions of LAN refer to LAN Airlines S.A.,
currently LATAM Airlines Group S.A. This is due to
circumstances and events occurring prior to the com-
pletion date of the combination between LAN Airlines
S.A. and TAM S.A.
TAM: Unless the context requires another form, men-
tions 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 Mer-
cosur).
STANDARDS USED
This report includes information required by General
Standard No. 461 and No. 30, the SASB standard for
the airline industry and indicators suggested by the
Global Reporting Initiative (GRI). The document in-
cludes the information related to each of the standards
used, ordered within two specific content indexes on
pages 116-120. This is to make it easier to obtain the
information related to each standard.
NCG 461
GRI
SASB
Icon NCG N°461
Contents of General Stan-
dard No. 461 applicable to
Chilean Annual Reports.
Icon GRI
Contents of the international
standard Global Reporting
Initiative (GRI).
Icon SASB
Contents of the transportation sec-
tor from the Sustainability Accoun-
ting Standards Board (SASB).
MORE INFORMATION
(GRI 2-3)
Any suggestions, criticisms, or concerns about this report can be sent to
e-mails investorrelations@latam.com and/or sostenibilidad@latam.com.
5
ANNUAL REPORT 2023 Highlights
Operational and financial
performance
TOTAL REVENUES
11,789 MILLION
+23.9% vs. 2022
DOLLARS
ASK
137,251 MILLION
+20.6% vs. 2022
01 —Presentation —Highlights
• Revenues by business unit
Cargo 12%
1% Others
TOTAL REVENUES
(million dollars)
ADJUSTED EBIT
MARGIN
NET LEVERAGE1
Passengers
(domestic SSC5) 17%
1
3
4
0
1
,
7
1
5
9
,
9
8
7
1
1
,
%
1
7
.
%
4
1
.
%
3
1
1
.
2019 2022
2023
2019 2022
2023
40% Passengers
(international)
Passengers
(domestic Brazil) 30%
• Diversification of passenger operations (ASK)
ADJUSTED EBITDAR
(million dollars)
NET INCOME2
(million dollars)
2
1
2
2
,
4
1
3
1
,
3
3
5
2
,
0
9
1
2
8
5
1
4
3
-
2019 2022
2023
2019 2022
2023
4.0x
2022
2.1x
2023
LIQUIDITY3
(% last twelve
months of revenues)
24%
2023
49%
International
1 Calculation formula: Net Debt / Adjusted EBITDAR.
2 The 2022 result excludes non-opertating impacts worth MUSD$1,680, due to the Chapter 11
restructuring, exited on November 2022.
3 Calculation formula: Cash and cash equivalents and committed and unused revolving credit lines.
4 ASK: Acronym for "available seat kilometers"
5 SSC: Acronym for "Spanish-speaking countries"
SEE MORE
In chapter "Our Business" (Page 57).
Total revenues in 2023 were
better than pre-pandemic
levels (2019) and operating
and financial results surpassed
LATAM group's 2023 Guidance
and updated 2022 Business
Plan (both previously released).
1 Guidance delivered in the company's 2Q23 report
6
Domestic
SSC5 18%
Domestic
Brazil 33%
ANNUAL REPORT 2023 01 —Presentation —Highlights
Passenger operations
Cargo operations
74 million
passengers transported
26 countries
148 destinations
4 continents*
*America, Europe, Oceania and Africa
945,500
tons transported
33 countries (7 exclusively cargo)
166 destinations (18 exclusively cargo)
Load factor: 83.1%
Consolidated traffic (RPK): 114.00 billion
Capacity (ASK): 137.25 billion
Load factor: 51.6%
Consolidated traffic (RTK): 3.70 billion
Capacity (ATK): 7.17 billion
RPK: Acronym for "revenue passenger-kilometers".
RTK: Acronym for "revenue ton-kilometers".
ATK: Acronym for "available ton-kilometers".
ASK: Acronym for "available seat-kilometers".
Focus on the customer
4 routes started
operating during 2023 as part of the
first year of the joint venture with
Delta Air Linea, reaching six in total.
6,481 m2 of lounges
distributed across 5
destinations
30 aircraft
joined LATAM fleet in 2023
5 Wide-Body
25 Narrow-Body
20 freighter aircraft
are part of the LATAM cargo
fleet 2023.
• Bogotá El Dorado International
Airport (BOG): 640 m2
• Buenos Aires Ezeiza International
Airport (EZE): 653 m2
• Santiago de Chile Arturo Merino
Benitez International Airport (SCL):
2,400 m2
• São Paulo São Paulo - Guarulhos
International Airport (GRU): 1,835 m2
• Miami Miami International Airport
(MIA): 953 m2
In-flight Wi-Fi service
on 99%
of LATAM Airlines Brazil narrow-body aircraft
and installation began on similar aircraft
operating in Spanish-speaking markets.
More than 45 million
members enrolled in the frequent
flyer program LATAM Pass.
SEE MORE
In chapters "Clients" (Page 100) and "Operations" (Page 25).
7
ANNUAL REPORT 2023
01 —Presentation —Highlights
Our people
GRI 2-9
35,568
employees
More than
• 4,000 Pilots
• 8,500 Crew members
• 6,000 Professionals
• 7,800 Airport staff
• 4,800 Maintenance
• 4,000 Clerical staff
Diversity and inclusion
50
nationalities
We are present in
20+ countries
around the world.
Headquarters in Brazil, Chile,
Colombia, Ecuador, Peru and
the USA.
8
LATAM´s culture
genuinely cares about
people and offers a fair,
empathetic, transparent
and streamlined
experience.
78 points on the
Organizational Health Index (OHI)
on a scale of 0 to 100.
AVERAGE TRAINING
h/employee
1-point increase
versus last year.
LATAM was within the first quartile
of the more than one thousand
large companies in the world that
implement this survey.
.
3
6
3
.
7
2
4
.
9
9
4
2021 2022
2023
78
points
on a scale from 0 to 100
in the Inclusion Evaluation.
Women
40%
Men
60%
SEE MORE
In chapter "Employees" (Page 89).
ANNUAL REPORT 2023
Sustainability
strategy
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY INDUSTRY
SASB TR-AL-110A.2
LATAM is committed to becoming an in-
creasingly sustainable company. In fact,
according to the most recent Corporate
Sustainability Assessment (CSA) by
Standard & Poor's (S&P Global), LATAM
was the best-performing airline group
in terms of sustainability across Latin
America and the seventh best in the
world in 2023.
This achievement also made it the only
airline group in the region to be included
in the 2024 edition of "The Sustainability
Yearbook", in which the prestigious risk
rating agency highlights those companies
that have achieved outstanding growth
in the evaluation.
01 —Presentation —Environmental management
ENVIRONMENTAL MANAGEMENT
CLIMATE CHANGE
CIRCULAR ECONOMY
SHARED VALUE
The Environmental Management
System certification under IATA's
voluntary Environmental Assessment
Program (IEnvA) Stage 2 standard was
maintained in the affiliates in Chile,
Colombia, Peru, Ecuador and Brazil.
850,932 thousand
tons of greenhouse gas emissions
managed through reduction or
offsetting in 2023.
110,000 tons of CO2
reduced, which translates into 35%
increase over the previous year.
740,932 tons of CO2 were
managed through offsetting in
strategic ecosystems in
Latin America.
Elimination of more than
1,700 tons
of single-use plastics1
throughout the operation,
96%
of the scope defined
since the beginning of
the strategy.
With its partners, LATAM group
transported in 2023, free of charge
for social and environmental
causes through the Avión Solidario
program more than
4,500
people
483
tons of cargo
(such as medicines, medical
supplies, food, and others).
9
1 Cutlery, straws, trays, food containers and bags, among others, are considered single-use plastics.
More information at: latamairlines.com/cl/es/sostenibilidad/economia-circular
SEE MORE
In chapter "Commitment to Sustainability" (Page 69)
ANNUAL REPORT 2023
Letter from
the CEO
GRI 2-22
10
01 —Presentation —Letter from the CEO
GRI 2-22
2023 was a year of important progress for LATAM.
After the devastating pandemic, which paralyzed the
industry worldwide, and a long restructuring process,
we were able to implement and apply many of the
lessons learned and the plans the group set forth
during those difficult years.
sentence will probably not disagree with the objective.
It is true that we work hard on improving the travel
experience, but today we devote the same amount
of effort to improving the whole experience of in-
teracting with LATAM group at any time and at any
touchpoint. Today’s product definition encompasses
all these interactions. From the intention to travel, to
the reception of luggage.
Our most important reflection was to understand
that results should not be an end in themselves. To
understand that they come if things are done right.
Thus, we decided to build on the progress and work
of the last 25 years. On the solid foundations that
LATAM group has developed: its cost structure and
sound balance sheet, its network, its brand, its fre-
quent flyer program and its service, among others,
and on devoting our energy and efforts to taking care
of our people, clients and environments, supporting
the societies where the group's companies are present.
In other words, we set out to work to make LATAM
more human.
Thus, in 2023, the group made great strides in
improving service at all times, especially when clients
encounter an issue. We are proud of the results, but we
are not satisfied. In Chile, Peru, Brazil and Colombia,
government agencies have complaint portals and
periodically publish their corresponding statistics.
In each of these four countries, the companies in
LATAM group had the lowest number of complaints
per passenger during the past year. Nonetheless, we
are aware that there is room for improvement and
that, for some of our clients, we did not meet their
expectations. We will work in 2024 so that these cases
will be fewer each time.
Today, we understand that our people are the group’s
most relevant asset. Companies are first and foremost
social organizations. Everything we think and build
is based on people feeling a sense of belonging and
commitment. It is a priority that, for each of them,
working at one of the companies in LATAM group
makes sense both professionally and personally. In
2023, the Organizational Health Index (OHI) reached
its best result ever, with 78 points. This places the
group in the top quartile of the more than 1,000 large
companies worldwide that use this survey. This reflects
the group's effort to create a fairer, more empathetic,
more transparent and simpler environment for the
teams and to bring purpose to our daily work.
Regarding the travel experience, important changes
and improvements were implemented last year.
On the one hand, the group incorporated the Premi-
um cabin on all its flights. Thus, all of our operations
with narrow-body aircraft have a Premium Economy
cabin, and all of our wide-body flights have a Premium
Business cabin. At the same time, the group continued
to equip narrow-body aircraft with wifi, reaching 65%
of the fleet. In-flight connectivity is already available
on 99% of the Brazilian affiliate’s narrow-body fleet,
on more than 50% of the Colombian, and on 30% of
the Chilean.
"Every day we strive to make traveling with LATAM
a more distinctive experience." Whoever reads this
Also last year, construction began on the LATAM
Lounge in Lima, Peru, which will become the group's
fifth lounge once the new Jorge Chávez International
Our most important reflection
was to understand that
results should not be an end
in and of themselves. Rather,
to understand that they come
if things are done right.
Airport is inaugurated. In addition,we continued to
renovate the lounges located in the international air-
ports of São Paulo, Bogota and Buenos Aires-Ezeiza.
I could comment on many other measures, but what
matters in the end has been the results. The tool
used by the group to measure customer satisfaction,
at a general level, is the Net Promoter Score (NPS). In
2023, the NPS for all our passengers was 48 points,
reaching 55 points for our high-value passengers and
58 points for our cargo clients. Each of these results
is an all-time high.
In terms of the commitment to the environment and
to being a contributor to the societies where the group
operates, progress was also made and recognition
was awarded. The group was, once again, in the spot-
light in Standard & Poor's (S&P Global) Sustainability
Yearbook. Likewise, LATAM Cargo Chile received the
Air Cargo Sustainability Award from The International
Air Cargo Association (TIACA).
While these recognitions reinforce that the sustain-
ability strategy launched by the group in 2021 based
on four pillars— Environmental Management, Climate
Change, Circular Economy and Shared Value— is on
ANNUAL REPORT 2023 01 —Presentation —Letter from the CEO
the right track, there is still a lot of work to be done. With regard
to the Environmental Management Pillar, in 2023 the company
continued to work on strengthening its Environmental Man-
agement System, which is IEnvA Stage 2 certified in Colombia,
Peru, Ecuador, Brazil and Chile, and ISO 14001 certified at our
Miami base. With regard to Climate Change, the group's goal is
to achieve net zero emissions by 2050. With this goal in mind,
LATAM group is working along four lines of action: Operational
efficiency, through its Fuel Efficiency program (which this year
reached 6.3% fuel efficiency, measured on the same type of
operation, since it began to be implemented; fleet renewal,
incorporating the latest generation aircraft, which are up to
20% more efficient in fuel consumption compared to previous
models; and the use of Sustainable Aviation Fuel (SAF), making
its first two international flights in 2023. Lastly, as a comple-
mentary measure, LATAM and its clients, together, offset more
than 740 thousand tons of CO2 equivalent in projects aimed
at preserving strategic ecosystems in the region.
Currently, there are technological and logistical gaps that could
limit the feasibility of significantly expanding the use of SAF
worldwide. For this reason, together with Airbus, LATAM group
announced in 2023 the financing of a study with the presti-
gious MIT Joint Program on the Science and Policy of Global
Change across six Latin American countries—namely, Brazil,
Chile, Colombia, Ecuador, Mexico and Peru. This report, which
is still under development, will seek to provide a comprehen-
sive analysis of scenarios for the deployment of SAF and the
development of alternatives related to, among other things,
carbon capture and storage, as well as evaluate the use of
incentives, carbon taxes and other types of offsets.
Regarding the Circular Economy pillar, the group set itself a very
relevant challenge: to eliminate single-use plastics throughout
its operations. To this end, over the past three years, LATAM’s
different areas have joined forces to generate a transformation,
not only at the operational level, but also at the cultural level.
Thus, by the end of 2023, the group achieved the elimination
of more than 1,700 tons, equivalent to 96% of the baseline.
As for the "Second Flight" program, which is also encompassed
under Circular Economy, it seeks to give a second life to un-
used uniforms. Their transformation into more than 20,000
products was achieved through agreements with eleven NGOs
in the region.
Meanwhile, for Shared Value, the Solidary Plane program con-
tinued to take off throughout the region. This year, the group's
connectivity was again made available to contribute to health,
environmental and natural disaster needs. The period ended
with 43 solidarity alliances in five South American countries
through the Solidary Plane program.
These results enabled us to record an adjusted net debt ratio
(measured as adjusted EBITDAR to net financial debt) of 2.1x,
which translates into a very significant decrease compared to
the 4.0x ratio recorded in 2022.
In turn, LATAM was the official airline group of the 2023 Pan
American and Parapan American Games and of Team Chile.
The group had the opportunity to transport the Pan American
Fire from Mexico to Chile in one of its airplanes and mobilize
thousands of athletes and their families to be part of the great
sporting event.
Financial results
Everything we have done in our financial restructuring, together
with the actions that the group has developed with regard to its
people, clients and the environment, has allowed us to achieve
sound economic results. To this effect, LATAM ended 2023
with an adjusted operating profit (adjusted EBIT) of 11.3%,
and a solid liquidity of over USD$2.8 billion, representing 24%
of our revenues. The group also reported a record net profit
of US$582 million.
Regarding the size of the
operations, and after four years,
the group managed to return
to near pre-pandemic levels,
reaching 74 million passengers
transported in 2023—a figure
that was 18.3% higher than in
2022 and similar to 2019.
.
ú
r
e
P
,
o
c
z
u
C
11
ANNUAL REPORT 2023
01 —Presentation —Letter from the CEO
As published for 2024, the group is forecasting an-
nual growth of between 12% and 14% in capacity for
passenger operations (ASK) and between 10% and
12% in capacity for cargo operations (ATK).
This progress is the result of years of effort and learn-
ing, but we know that we still have a long way to go.
We wish to continue strengthening LATAM group in
each of our focus areas defined, guaranteeing safety
and customer service and striving for efficiency, care
for the environment and social well-being.
I would like to express my most sincere thanks to our
clients who choose us every day, to the more than 35
thousand employees who are part of LATAM group.
Their commitment to our mission has been funda-
mental in driving the group's progress, and enabling
us to consolidate as a sounder group, always focused
on the future.
Let us celebrate the present together and prepare for
a future full of opportunities.
ROBERTO ALVO M.
CEO LATAM Airlines Group
This went hand in hand with a major expansion and
modernization of the fleet. Thirty aircraft were re-
ceived (5 wide-body and 25 narrow-body) and four
passenger aircraft were converted from passenger to
cargo, closing the financial year with 20 freighters.
In addition, the group continued to offer its passen-
gers the best connectivity in the region, reaching
148 destinations in 26 countries, which provided its
customers with unprecedented freedom of choice in
terms of destinations and services. In the same vein,
LATAM group has launched four new routes under
the joint venture with Delta Airlines, bringing the
total to six. This alliance completed its first year in
2023, benefiting millions of clients through ongoing
collaborative work.
At the regional level, the affiliates increased their
presence in all the markets where they operate and
maintained their shares in three of the five home
markets: LATAM Airlines Chile, LATAM Airlines Brazil
and LATAM Airlines Peru. On the other hand, LATAM
Airlines Colombia increased its market share by nine
percentage points, with its quick reaction to allocate
additional capacity in Colombia.
During the year, LATAM Pass strengthened its presence
as the largest loyalty program in Latin America with
more than 45 million members, being recognized as
the "Best Program of the Year" by Frequent Traveler
Awards in 2023.
As for LATAM Cargo S.A. and its cargo affiliates in
Brazil and Colombia, they played an important role in
local supply logistics and exports during the year. In
fact, the affiliates in Colombia and Ecuador became
the number one airlines in the transport of flowers.
This is because cargo capacity, which is measured in
ATK ("available ton-kilometers"), increased 14.6% in
2023 versus the previous year.
12
ANNUAL REPORT 2023 02 About us
In this chapter
group
14 LATAM
21 Timeline
strategy
15 Our
24 Awards and
Recognitions
20 Value generation
model
LATAM
group
14
02 —Abaut us —LATAM group
NCG 461: 6.1 INDUSTRIAL SECTOR AND 6.2 BUSINESSES
GRI 2-1, 2-6 AND 3-3
LATAM is one of the largest airline groups in the world and the largest in Latin
America, with expansive passenger and cargo operations and the largest frequent
flyer program in the region. Along this line, it has domestic operations in five South
American countries: Brazil, Chile, Colombia, Ecuador and Peru. It also offers the
best connectivity within, to and from Latin America, covering 148 destinations in
26 countries with its passenger operations, and 166 destinations in 33 countries
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, enabling it to have a geographically diversified oper-
ation and revenue base.
After emerging from Chapter 11 of the US Bankruptcy Code, which it filed for in
2020, LATAM emerged as a more efficient and competitive group, with significant
cost savings, a reduction in debt and a resulting improvement in capital structure.
In 2023, the group continued to build on this path and improved its customer and
employee satisfaction indicators, as well as adding 30 new aircraft to its fleet. In
addition, it added 21 new routes, 17 of which are international and 4 are domestic.
On the other hand, in September 2023, LATAM and its affiliates completed one
year of the joint venture with Delta Air Lines, which includes the markets of Brazil,
Canada, Chile, Colombia, the United States, Paraguay, Peru and Uruguay. During
this period, six new routes have already begun operations. This is in addition to
what has already been achieved between LATAM and its subsidiaries, with Delta
Air Lines since 2019, the year when they announced their agreement, which in-
cludes the accrual and redemption of miles, as well as benefits for passengers;
shared terminals in the airports of Santiago (Arturo Merino Benitez International
Airport), São Paulo (São Paulo - Guarulhos International Airport) and New York
(John F. Kennedy International Airport); and mutual access to 53 Delta Sky Club
lounges in the United States and five LATAM Lounges in South America.
Likewise, in 2023, the airline took significant steps in its commitment to improve
its passengers’ travel experience. This is verified by the Official Airline Guide (OAG),
which states that LATAM was the second airline among the 20 largest airlines
with the best on-time performance during 2023.
MORE INFORMATION
25
Operations
164
Financial results
124
Legal Incorporation
124
Company Purpose
125
Property, Plant, And Equipment
Sales Channels
126
Trademarks, Patents, Licenses and Franchises 124
126
Additional Information
ANNUAL REPORT 2023 02 —Abaut us —Our strategy
NCG 461: 2.1. MISSION, VISION, PURPOSE AND VALUES
We ensure that dreams reach their destination.
Purpose
Mission
Vision
Our mission is to connect the region with the rest of the
world, providing a wide network for the transportation
of cargo and passengers, in a safe manner and taking
care of our customers, always seeking a balance be-
tween economic growth, efficiency, environmental care,
and social well-being.
To be the airline group that connects Latin America
with the world and the world with Latin America,
assuming its social responsibility by being fair,
empathetic, transparent, and simple with its
customers, employees, and other key stakeholders.
Values
Safety
Being attentive
Sustainability
We guarantee at all times our safe-
ty, the safety of our team and the
seafety of our customers.
We genuinely care about peo-
ple’s needs and offer them a
fair, empathetic, transparent,
and simple (JETS) experience.
We continuously seek a balance
between economic growth, effi-
ciency, environmental care, and
social well-being for a more sus-
tainable future.
Our
strategy
15
15
ANNUAL REPORT 2023
02 —Abaut us —Our strategy
Pillars of the LATAM group strategy
NCG 461: 4.2 STRATEGIC OBJECTIVES & 4.1 TIME HORIZONS
LATAM undertakes an annual strategic planning process to review and/or
establish the strategic objectives for the medium and long term, which are
currently explained below:
1
To be a dedicated group
focused on providing the best
solution to our clients.
2
To be a financially sound
and healthy group of
companies
3
To be a group of companies
that takes on the challenges
of the future
UNIQUE PRODUCT AND CONNECTIVITY
To be the airline that offers the best range
of destinations to, from and within Latin
America, offering an appealing frequent flyer
program, and delivering alternatives for all
our passengers, keeping in mind their reasons
for traveling. To provide an excellent cargo
service that makes the best use of our assets
deployed across the continent and the world.
• Unique network: To continue to expand and
diversify our route network to meet the
growing demand and explore new opportu-
nities towards the rest of the world.
• Provide a diversified product: To strengthen
our business diversity, providing passengers
and cargo clients with flexible choices.
• Strategic agreements: To bolster commercial
agreements to improve global and regional
connectivity that contribute to the sustain-
able growth and expansion of our network.
CUSTOMER EXPERIENCE
AS A FOCAL POINT
CULTURE OF COMMITTED INDIVIDUALS
OPERATIONAL EXCELLENCE
SOCIAL AND SUSTAINABLE ASSET
To offer a customer-centric service, ensuring
reliability, operational safety and generating
loyalty through the LATAM Pass program,
increasing the benefits to our passengers.
Maximize the motivation and commitment
of our team to provide a close, cheerful and
caring service, capitalizing on the passion and
dedication of our people to constant customer
care.
To continue to provide a frictionless and safe operation for our em-
ployees and our clients,
• Safety: Absolute priority in delivering safety at all times. Which
involves ensuring the safety of both our clients and our team.
Through our role in transportation and connectivity, we seek to become
an asset that promotes social, environmental and economic develop-
ment in the places where we operate. We work to contribute to our
community and environment through collaboration and the creation
of long-term ties with the various groups with which we interact.
• Comprehensive and personalized experi-
ence: To improve the customer experience
from flight selection to baggage arrival,
emphasizing safety, autonomy and ease at
every stage.
• Investments in technology and digitization:
Committed to excellence, we continue to
incorporate technology into key processes
of the travel experience.
• Reliability: Deliver to all passengers and
cargo customers, always and at all times,
100% of the products we promised to deliver.
• Development culture: To strengthen or-
ganizational health through a culture of
learning that encourages the professional
and personal growth of our team.
• Diversity and inclusion: To build a diverse
and inclusive workforce reflecting the plu-
rality of the societies in which we operate.
• Efficiency in talent management: To im-
prove efficiency in hiring and retention,
consolidating effective leaders, ensuring
pay equity and maintaining high standards
of job security.
• On-time performance: Taking care of our passengers’ time. We make
every effort to ensure that our flights depart and arrive on time at
their destinations.
• Progress on sustainability issues through work based on the pillars of
the long-term sustainability strategy: Environmental Management,
Climate Change, Circular Economy and Shared Value.
• Proactive risk management: To remain committed to proactive risk
management, implementing preventive measures and keeping abreast
of best practices.
• Relations with suppliers: To maintain a close and effective relation-
ship with all our suppliers.
DIGITAL INTEGRATION
To change the way in which we work to bolster the use of technology,
integrating it into all our processes to improve our clients’ experience
and be more efficient and streamlined every day.
• Continuous innovation: To keep up with the latest technological
EFFICIENT PERFORMANCE AND A HEALTHY CAPITAL STRUCTURE
trends and exploring new opportunities.
To maintain a sound capital structure, ensuring the long-term sus-
tainability of the group through a robust financial structure, efficient
operations, and sustainable growth.
• Security and data protection: To ensure the security and privacy
of our clients’ data by implementing robust security measures and
complying with relevant regulations.
• Operating efficiency: To maintain a competitive and efficient cost
to ensure financial sustainability.
• Cybersecurity: To constantly strengthen our culture and systems
to safeguard the operation in its technological development, with
efficient methodologies and infrastructures against risks.
• Sound financial indicators: To maintain levels within our financial
and liquidity policies.
16
ANNUAL REPORT 2023 02 —Abaut us —Our strategy
SUSTAINABILITY: A NECESSARY DESTINATION
NCG 461 4.2 STRATEGIC OBJECTIVES
In 2021, the group launched its sustainability strategy,
following a series of dialogs between the organization
and representatives of its different stakeholders in
the five countries where it is present with domestic
operations. In this strategy, LATAM group seeks to
move forward with challenging commitments, to play
an active role in the region, generating economic, en-
vironmental and social value.
The aspirations and commitments that guide LATAM
and its subsidiaries were constructed in line with the
Sustainable Development aspirations (SDGs) estab-
lished by the United Nations for 2030.
On the other hand, progress on the implementation
of the sustainability strategy in each of its pillars
(Environmental Management, Shared Value, Circular
Economy, and Climate Change) is reported regular-
ly to the Executive Committee and annually to the
Board of Directors. In addition, in each of these pillars,
decision-making bodies are developed, involving the
executives who lead the respective initiatives.
SUSTAINABILITY COMMITMENTS AND GOALS
LATAM group seeks to contribute through the following aspirations
and commitments:
• To maintain and continuously improve the Environmental Manage-
ment System in all our operations under the IATA IEnvA standard.
• To achieve net zero in Direct emissions (Scope 1), using 2019 as
the base year.
• To achieve net zero emissions by 2050.
• To reduce and/or offset the equivalent of 50% of domestic green-
house gas (GHG) emissions by 2030, using 2019 as the base year.
• Aim to be a zero-waste-to-landfill group by 2027.
• To eliminate single-use plastics throughout the operation by 2023.
• To have the connectivity, capacity, and speed of our passenger and
cargo operations for the benefit of communities in South America
on three fronts: health, environment and natural disasters.
LATAM’s sustainability strategy
addresses the environmental and
social needs of South America.
The progress and results achieved in 2023 on the
sustainability aspirations are covered in the chapter called
“Commitment to Sustainability” (Page 69).
17
ANNUAL REPORT 2023 02 —Abaut us —Our strategy
SUSTAINABLE DEVELOPMENT GOALS
NCG 461: 4.2 STRATEGIC OBJECTIVES
GRI 2-23
HUMAN RIGHTS
NCG 461: 2.1 MISSION, VISION, PURPOSE AND VALUES;
4.2. STRATEGIC OBJECTIVES; 5.5 WORKPLACE
LATAM is committed to the Sustainable Development
Goals (SDGs) for 2030, established by the United Na-
tions in 2015. In fact, it focuses its efforts on nine of
them in particular:
AND SEXUAL HARASSMENT
GRI 2-23 & 3-3
In order to generate social, environmental and eco-
nomic value under ethical principles, LATAM group
made a public commitment to respect Human Rights
in 2018. This document defines the principles that its
employees, partners, and third parties must follow,
including the rejection of child labor, forced labor and
labor similar to slavery or situations of moral, phys-
ical 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.
This commitment was designed following interna-
tional guidelines, 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), and it
sets forth the envisaged consequences in case of of
breaches.
In this regard, it should be noted that LATAM has an
ethics channel that seeks to detect any violation of
human rights, which is available to everyone who in-
teracts with the organization, including Board mem-
bers, employees and stakeholders. This channel is
constantly monitored by the Compliance team and,
in the event that a case is confirmed, LATAM applies
plans for both the individuals involved and the groups
affected, ranging from training, feedback, and sus-
pensions, even to contract termination, legal action
or other measures that may be applicable.
In addition, the company has mitigation measures in
place to prevent such situations, as well as for cases
where remediation is required, as defined in its in-
ternal procedures.
In 2023, LATAM received 20 reports of sexual ha-
rassment and 64 reports of moral harassment under
Chile’s law No. 20,005 and equivalent legislation in
foreign jurisdictions where the group operates. All of
them followed the corresponding procedure according
to the policies of each country.
UN Global Compact and Guiding Principles on Human
Rights
LATAM group adheres to the UN Global Compact,
which mobilizes the international business community
to adopt, in their business practices, fundamental and
internationally accepted values in the arena of human
rights, labor relations, environment, and anticorruption.
Nonetheless, LATAM does not formally adhere to the
United Nations Guiding Principles on Business and
Human Rights.
MORE INFORMATION
Human Rights:
• Declaration of Commitment
• Risk mitigation actions
18
18
ANNUAL REPORT 2023 02 —Abaut us —Our strategy
BENCHMARKING
RESULTS OF THE 2023 CORPORATE SUSTAINABILITY ASSESSMENT
LATAM group uses the Standard & Poor’s
Global (S&P Global) Corporate Sustain-
ability Assessment (CSA) as a manage-
ment, measurement and benchmarking
tool. Every year, nearly three thousand
companies from more than 60 different
industries participate in this question-
naire, which measures their economic,
social and environmental performance
under some cross-cutting criteria and
others specific to each sector. In addition,
the results of the process are the basis
of information used by the Dow Jones
Sustainability Indexes (DJSI) to determine
membership.
The 2023 evaluation questionnaire com-
pleted by LATAM group considered 26
criteria and 114 sub-criteria correspond-
ing to the airline industry. In a year with
relevant changes in the requirements,
the organization obtained a score that
allowed it to be ranked seventh in its
industry at a global level and first among
Latin American airlines.
S&P GLOBAL SUSTAINABILITY YEAR-
BOOK 2024
LATAM group was highlighted in the S&P
Global Sustainability Yearbook 2024, the
prestigious publication that recognized
leaders based on their 2023 Corporate
Sustainability Assessment (CSA).
ECONOMIC DIMENSION AND CORPORATE GOVERNANCE
TRANSPARENCY AND
REPORTING
CORPORATE
GOVERNANCE
MATERIALITY
RISK AND CRISIS
MANAGEMENT
BUSINESS
ETHICS
POLITICAL
INFLUENCE
POLITICAL
INFLUENCE
INFORMATION SECURITY,
CYBERSECURITY, SYSTEM
AVAILABILITY
100
44
39
47
70
29
77
23
90
47
70
19
46
14
77
32
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
ENVIRONMENTAL DIMENSION
ENVIRONMENTAL
MANAGEMENT
POLICIES AND SYSTEMS
EMISSIONS
RESOURCE
EFFICIENCY AND
CIRCULARITY
WASTE
WATER
CLIMATE
STRATEGY
BIODIVERSITY
FOOD LOSS
AND WASTE
FLEET
DECARBONIZATION
45
30
82
42
79
22
96
45
100
28
75
33
14
8
42
14
37
20
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
SOCIAL DIMENSION IN 2023
LABOR PRACTICE
INDICATORS
HUMAN RIGHTS
HUMAN CAPITAL
DEVELOPMENT
TALENT ATTRACTION
AND RETENTION
OCCUPATIONAL
HEALTH AND SAFETY
PASSENGER
SAFETY
CUSTOMER RELATIONS
MANAGEMENT
SUSTAINABLE
MARKETING AND BRAND
PERCEPTION
PRIVACY
PROTECTION
90
40
88
23
62
43
60
21
72
38
86
30
83
26
40
14
46
33
LATAM Promedio
LATAM Promedio
de la industria
de la industria
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
LATAM
Industry
average
19
*Results obtained from the S&P Global CSA platform as at February 29, 2024.
ANNUAL REPORT 2023
02 —Abaut us —Value generation model
Value generation model
• LATAM group makes use of capital
of various natures (human, financial,
natural, intellectual, social and
relational, and industrial) that serve as
inputs to carry out its own business.
• LATAM group transforms these
inputs into results and impacts
through its activities.
• Materialization of the work:
The results are the most visible
dimensions of the operation.
• The added value of the LATAM group
lies in its capacity to generate lasting
positive impacts for the business and
its stakeholders.
INPUTS
Human Capital
• Employees
Financial Capital
• Revenues
• Capital
• Assets
Natural Capital
• Jet Fuel
Intellectual Capital
• Knowledge of the region and the business.
• Operating licenses and slot rights at airports.
• Management Systems (environmental and
security).
• Analytics (customizing the customer
experience).
Social and Relational Capital
• Frequent Flyer Programs
• LATAM brand
• Relations with authorities and industry
• “Avión Solidario” program
Industrial Capital
• Fleet
• Maintenance Bases
• Hangars
ACTIVITIES
RESULTS
IMPACTS
• Broad destination network
• Customer base diversity
• Organizational health and
development opportunities
• Operational excellence
• Financial results
What we do and how we do it
Governance and Management
• Ethics
• Financial responsibility
• Safety and efficiency
• Developing employees
Sustainability
• Environmental management
• Climate change
• Circular economy
• Shared Value
Customer orientation
• Digital experience and innovation
• Flexible sales model
• Trade agreements and partnerships
• Loyalty programs
Commitment to the region
• For LATAM: To be a relevant player
in society, and to have an identity and
purpose.
• For stakeholders: Economic
development, social strengthening and
environmental care.
Strategic dialog
• For LATAM: Knowledge sharing, industry
development and compliance.
• For stakeholders: Joint construction and
topics of interest of the various audiences.
Customer-centric value proposition
• For LATAM: Different customer profiles
and segments, as well as revenue
diversification.
• For stakeholders: Offering adjusted to
different needs and expectations, as well
as autonomy and freedom of choice.
Connectivity
• For LATAM: Market share and leadership
in the region.
• For stakeholders: Mobility and economic
momentum.
Safety
• For LATAM: reliability
• For stakeholders: trust
Eco-efficiency
• For LATAM: Competitive edge and cost
reduction.
• For stakeholders: Natural resource
economy, and less environmental and
noise impact.
2020
ANNUAL REPORT 2023 Timeline
NCG 461: 2.2 HISTORICAL INFORMATION
LATAM group’s history began in 1929 with the emergence of
Línea Aérea Nacional de Chile (LAN). Later, in 1946, it made its
first international expansion through a trip that included the
Santiago (Chile) - Buenos Aires (Argentina) route. Subsequently,
routes to Lima (Peru), Miami (United States) and later to Europe
were added.
In 1983, Línea Aérea Nacional Chile Limitada was incorporated
by Corporación de Fomento a la Producción (CORFO) which, in
1985, became a corporation under the name of LAN Chile. In
1989, the privatization process began. In 1997, on its growth
path, this airline began trading on the New York Stock Exchange
(NYSE), trading American Depositary Receipts (ADRs). Thus, it
became the first Latin American airline company to achieve this
milestone.
In 2012, following the association with Brazilian company TAM,
which was created in 1961, LAN changed its name to LATAM
Airlines Group S.A., consolidating its expansion on a regional level.
In 2020, the LATAM group experienced one of the most chal-
lenging periods in its history with the COVID-19 pandemic, which
affected all its operations; this meant that the subsidiaries in
Brazil, Chile, Colombia, Ecuador, the United States and Peru had
to file for Chapter 11 of the US Bankruptcy Code. In November
2022, LATAM and its subsidiaries successfully completed their
restructuring process, managing to restructure their debt and
raise funding to prepare for a new stage in their history.
Finally, during 2023, the LATAM group strengthened its oper-
ations after its exit from Chapter 11, proving clarity in both its
strategic and financial objectives. In addition, it reached the
one-year mark since the start of its joint venture with Delta Air
Lines, which applies to eight markets in North and South America
(Brazil, Canada, Chile, Colombia, the United States, Paraguay,
Peru and Uruguay).
21
02 —Abaut us —Timeline
Important LATAM group milestones since 1929
LAN’s first international
flight: the route was
Santiago (Chile) – Buenos
Aires (Argentina).
LAN begins operations to
Miami (United States).
19471947
19581958
LAN begins to offer
flights to Europe.
19701970
Beginning of TAM services in
Brazilian cities, especially in
Mato Grosso and São Paulo.
19761976
19561956
Inauguration of travel to
Lima by LAN (Peru).
19611961
Creation of Taxi Aéreo
Marília (TAM), by five
charter flight pilots.
19751975
Establishment of TAM
Transportes Aéreos
Regionais by Captain
Rolim Adolfo Amaro.
LAN becomes a
corporation (LAN
Chile).
19851985
The privatization process of LAN
Chile is carried out: The Chilean
government sells 51% of its
equity to domestic investors and
to Scandinavian Airlines System
(SAS).
19891989
TAM establishes
TAM Fidelidade, the
first frequent flyer
program in Brazil.
19931993
TAM buys airline Lapsa from the
Paraguayan government and
creates TAM Mercosur. Along
this line, the São Paulo (Brazil) -
Asunción (Paraguay) route begins.
19961996
19861986
TAM acquires VOTEC
(Brasil Central Linhas
Aéreas), another
regional airline
operating in the
northern and central
sectors of Brazil.
19901990
VOTEC is renamed
Transportes Aéreos
Meridionais (TAM).
19941994
The privatization
process of LAN
Chile ends with the
acquisition of 98.7% of
the company’s stock by
the current controllers
and other shareholders.
19291929
Establishment of LAN
Establishment of LAN
Línea Aérea Nacional
Línea Aérea Nacional
de Chile (LAN) by
de Chile (LAN) by
Commander Arturo
Commander Arturo
Merino Benitez.
Merino Benitez.
19831983
Incorporation of Línea
Aérea Nacional Chile
Limitada through
CORFO.
ANNUAL REPORT 2023 02 —Abaut us —Timeline
The first Airbus A330 arrives
and TAM performs its first
international flight from São
Paulo (Brazil) a Miami (United
States).
LAN Chile joins
oneworld®, an alliance
of fourteen commercial
airlines.
19981998
2000
2000
LAN Chile’s alliance
with Qantas and
Lufthansa Cargo.
20022002
Corporate Image Change: LAN
Chile becomes LAN Airlines,
which launches the new business
class for flights to Paris (France)
and Miami (United States).
Meanwhile, TAM begins to fly to
Santiago (Chile).
TAM starts flying to London (United
Kingdom), Zurich and Geneva
(Switzerland) through an agreement
with Air France. It also launches the
new “Premium Business” class and is
publicly listed on the New York Stock
Exchange (NYSE).
2004
2004
2006
2006
19971997
LAN Chile publicly lists its
shares on the New York Stock
Exchange (NYSE), becoming
the first Latin American airline
to trade American Depositary
Receipts (ADRs).
19991999
LAN Chile’s expansion
process begins: start of
LAN Peru.
2001
2001
LAN Chile’s alliance with Iberia
and inauguration of the Cargo
terminal in Miami (United
States). Likewise, TAM opens the
Technology Center and Service
Academy in São Paulo (Brazil).
20032003
LAN Chile’s expansion
process continues: start
of LAN Ecuador.
2005
2005
Progress in LAN Airlines’ regional
expansion plan: start of LAN
Argentina. Meanwhile, TAM is
publicly listed on the São Paulo
Stock Exchange (Bovespa) and
announces flights to New York
(United States) and Buenos Aires
(Argentina).
TAM completes the short-
haul fleet renewal process,
consisting of A320-family
aircraft and receives the
first Boeing 777-300ER.
LAN Airlines acquires Colombian
airline Aires and TAM officially joins
Star Alliance, the airline alliance
founded in 1997.
LATAM Airlines Group
S.A. is born from the
association of LAN Airlines
and TAM. Here, there is
an issuance of 2.9 million
shares.
TAM joins oneworld®, making
oneworld® the global alliance for
LATAM Airlines Group.
Capital increase of US$608 million,
with which Qatar Airways acquires
9.999999918% of LATAM’s total
subscribed and paid-in shares.
2008
2008
20102010
20122012
20142014
20162016
20072007
2009
2009
20112011
TAM launches the Milan (Italy) and
Cordoba (Spain) route. In addition,
Brazil’s National Civil Aviation Agency
(ANAC, for its Portuguese acronym)
authorizes TAM to begin flights
to Madrid (Spain) and Frankfurt
(Germany). Meanwhile, LAN Airlines
implements the Low Cost model in
domestic markets and receives a
capital increase of ThUSD$320,000.
22
Start of cargo operations
in Colombia and passenger
operations in the domestic
market in Ecuador. In addition,
TAM launches the “Multiplus”
miles program.
LAN Airlines and TAM sign
binding agreements for the
partnership between the two
airlines.
20132013
LATAM makes a capital
increase of USD$940.5
million.
20152015
LATAM begins its “Strategic
Plan 2015– 2018”, focused
on becoming one of the most
important airline groups in the
world.
ANNUAL REPORT 2023 02 —Abaut us —Timeline
Implementation of the new
business model in domestic
markets by subsidiaries.
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. In turn,
LATAM announces its exit from the oneworld®
alliance as of May 1, 2020, to begin offering
miles/benefits with airlines that have some
type of partnership.
Launch of the new Sustainability Strategy
and LATAM makes public its five-year
business plan (2022-2027), and presents
its reorganization plan under Chapter 11 of
the US Bankruptcy Law.
20172017
20192019
20212021
20182018
20202020
20222022
The joint venture between LATAM and Delta Air
Lines, between North America (United States/
Canada) and South America, reaches the one-
year mark. In turn, LATAM is making progress
on the implementation of its sustainability
commitments with a 96% reduction of single-use
plastics, equivalent to more than 1,700 tons.
20232023
Inauguration of the first
flight to Asia (Tel Aviv, Israel)
and a new sales model
reaches international flights.
LATAM and its subsidiaries in Brazil, Chile,
Colombia, Ecuador, Peru and the United States
enter the financial reorganization process
under Chapter 11 of the US Bankruptcy Act
and obtain access to up to USD$2.45 billion
in debtor-in-possession (DIP) financing.
Moreover, the E-Business unit launched,
with the aim of improving the digital
customer experience. In addition, initiatives
are developed to support the fight against
COVID-19 in South America.
LATAM group and its subsidiaries
successfully exit Chapter 11 of the
US Bankruptcy Law. On the other
hand, the joint venture with Delta Air
Lines, which applies to the markets
of Brazil, Canada, Chile, Colombia,
the United States, Paraguay, Peru
and Uruguay, is approved.
23
ANNUAL REPORT 2023 02 —Abaut us —Awards and recognitions
ONBOARD HOSPITALITY AWARDS
WORLD TRAVEL AWARDS 2023
THE SUSTAINABILITY YEARBOOK 2024
LATAM was recognized in the Sustainability category
of the Onboard Hospitality Awards 2023, for three
of its circular economy projects implemented in its
in-flight service.
World Travel Awards recognized LATAM group for the
eighth consecutive year in the “Leading Airline in South
America” category. Likewise, it was awarded in the
“Best Airline Application in Latin America” and “Best
Airline Website in Latin America” categories, too.
AIR CARGO INNOVATION AWARD - INTERNA-
TIONAL AIR TRANSPORT ASSOCIATION (IATA)
FREQUENT TRAVELER AWARD
LATAM group’s cargo subsidiaries received this award
from IATA for their plastic reduction projects in their
Chilean and Brazilian operations.
WORLD AIRLINE AWARDS | SKYTRAX
The Skytrax World Airline Awards, which is considered
the airline industry’s most important award, named
LATAM the “Best Airline in South America” for the
fourth consecutive year. In addition, LATAM was recog-
nized for the second consecutive year in the category
of “Best Airline Staff in South America” and was also
awarded for “Best Business Cabin in South America”,
“Best Economy Cabin in South America” and “Best
Business Class VIP Lounge in South America”.
APEX PASSENGER CHOICE AWARDS
APEX recognized LATAM for the second consecutive
year with the highest rating in the global airline cate-
gory. In particular, it was recognized in the Passenger
Choice Awards (PCAs), which is based on customer
voting among more than 600 airlines worldwide, for
having the “Best Seat Comfort” and “Best Catering”
in South America.
For the eighth consecutive year, the World Travel
Awards recognized LATAM group in the “Leading Airline
in South America” category. It also won in the cate-
gories of “Best Airline Application in Latin America”
and “Best Airline Website in Latin America”.
SUSTAINABILITY AWARD | THE INTERNA-
TIONAL AIR CARGO ASSOCIATION (TIACA)
LATAM Cargo was recognized in the fifth edition of
the Air Cargo Sustainability Award presented by The
International Air Cargo Association (TIACA), for the
initiatives of the LATAM group’s sustainability strategy.
RESILIENT BRANDING | CADEM CITIZEN
BRANDS
After facing and successfully overcoming the worst
crisis in its history due to the Covid-19 pandemic,
LATAM Airlines Group was awarded as “Resilient Cit-
izen Brand” in the 13th edition of CADEM’s “Citizen
Brands” study.
| S&P GLOBAL
LATAM’s results in the Corporate Sustainability As-
sessment (CSA) ranked it seventh in the global airline
industry and first in Latin America. In addition, its
performance was recognized by S&P Global’s Sustain-
ability Yearbook, which highlights leading companies
for the sustainability practices and transparency in
their businesses.
For the fourth consecutive
year, LATAM was recognized
with the World Airline Award
from Skytrax as “Best Airline
in South America”
Awards and
recognitions
24
24
ANNUAL REPORT 2023
03 Operations
In this chapter
26
Passenger
operations
28
Cargo
operations 30 Fleet
Passenger
operation
26
03 —Operations —Passenger operation
GRI 3-3, 2-1 & 2-6
By December 2023, LATAM group had increased the
number of passengers transported by 18.3% compared
to the previous year, approaching 74 million passen-
gers transported, a figure similar to the pre-pandemic
levels. In fact, the group’s capacity in this segment,
which is measured in ASK (available seat-kilometer),
increased from 113,852,000 in 2022 to 137,251,000 at
the end of last year, translating into 20.6% growth. In
addition, the LATAM group closed last year operating
a total of 148 destinations in 26 countries.
In detail, in domestic markets, the passenger oper-
ations of LATAM affiliates in Brazil, Chile, Colombia,
Ecuador and Peru reached a size above that of 2022 in
terms of capacity. Along these lines, in 2023, LATAM
Airlines Chile averaged 149.8 flights per day, while
LATAM Airlines Brazil averaged 675.1 flights per day.
Meanwhile, the combined operations of LATAM Airlines
Colombia, LATAM Airlines Ecuador and LATAM Airlines
Peru recorded an average of 210.2 flights per day.
On the other hand, LATAM Airlines Brazil operated
9.5% more capacity (ASK) in 2023 compare to the
previous year, covering a total of 66 destinations. In
fact, a total of 12.9 million passengers were trans-
ported within Brazil. In turn, passenger demand in
“Spanish-speaking countries” (SSC), measured in
RPK (revenue passenger-kilometer), grew by 8.1%
during 2023, while supply, which is measured in ASK,
increased 6.8% and the load factor reached 82%, one
percentage point higher than in 2022.
It is worth mentioning that the passenger operations
of LATAM group subsidiaries at the domestic level
cover a total of 110 destinations and that, during
2023, 61 million passengers were transported—i.e.,
12.9% more than in the previous year.
On the other hand, in the international market, which
considers flights within the Americas (North America,
and Latin America and the Caribbean) and to three
other continents (Africa, Europe and Oceania), the
offer for passengers by LATAM group (ASK) increased
by 36.2% in 2023 compared to 2022, while passenger
demand (RPK) rose by 39.4% during the same period.
In this scenario, a total of 13 million passengers flew
with LATAM group to international destinations during
2023 and the load factor was 84.9%, 1.9 percentage
points above the level recorded in 2022.
STRATEGIC AGREEMENT
LATAM completed one year of implementation of the
joint venture with Delta Air Lines, which has enabled
the launch of six new routes, approximately 15,000
flights, more than three million passengers transported
and more than 90 million kilometers flown. In fact,
Miami, LATAM group’s main hub in the United States,
has seen a 10% increase in capacity, expanding con-
nection opportunities to 11 of the cities Delta serves.
New routes
Of the six new routes, four are operated by LATAM
Airlines Group S.A.: Atlanta, USA - Lima, Peru; Bogota,
Colombia - Orlando, USA; Medellin, Colombia - Miami,
USA; and São Paulo/Guarulhos, Brazil - Los Angeles,
USA. Two others are operated by Delta Air Lines: At-
lanta, USA - Cartagena de Indias, Colombia; and Rio
de Janeiro/Galeão - New York/John F. Kennedy, USA.
During 2024, LATAM and its affiliates with Delta Air
Lines will seek to open more new routes to connect
more and more passengers between South America
and North America.
PROGRESS ON THE JOINT VENTURE WITH DELTA
AIR LINES SINCE ITS BEGINNING (2022)
6 operational routes
4 routes
operated by LATAM Airlines Group S.A.
2 routes
operated by Delta Air Lines
15,000 flights
3,000,000 +
passengers
transported
90 million + km
traveled
equivalent to the distance between
Earth and Mars
ANNUAL REPORT 2023 03 —Operations —Passenger operation
LATAM group’s passenger
operations in 2023
NCG 461: 6.1 INDUSTRIAL SECTOR
BRAZIL
CHILE
COLOMBIA
ECUADOR
PERU
52
Destinations
16
Destinations
18
Destinations
7
Destinations
19
Destinations
39%
61%
32%
44%
63%
Domestic market share
Domestic market share
Domestic market share
Domestic market share
Domestic market share
Main competitors
Gol and Azul
Main competitors
Sky Airlines and
JetSmart
Main competitors
Avianca, EasyFly, Satena
and Wingo (Copa Airlines
Colombia)
Main competitors
Avianca
Main competitors
Sky Airlines Perú,
JetSmart Perú and Star
Perú
Source: ANAC website (Brazil) and market share considers RPKs as at December 2023.
Source: JAC website (Chile) and market share considers RPKs as at December 2023.
Source: DGAC website (Peru) and market share considers the number of passengers as at December 2023.
Source: Diio.net. webiste (Colombia and Ecuador) and market considers ASK as at December 2023.
.
l
i
z
a
r
B
,
o
a
h
n
a
r
a
M
s
a
h
n
i
r
i
e
r
r
a
B
k
r
a
p
l
a
n
o
i
t
a
N
272727
74 million
passengers
Consolidated traffic (RPK):
114,007,000
Capacity (ASK): 137,251,000
Load factor: 83.1%
148 LATAM group
destinations
North America: 8
South America: 128
Europe: 8
Asia and Australasia: 3
Africa: 1
346 codeshare
destinations
North America: 112
South America: 62
Europe: 94
Asia: 41
Australasia: 18
Africa: 19
ANNUAL REPORT 2023
Cargo
operation
28
03 —Operations —Cargo operation
GRI 2-6, 3-3 & 203-2
The group’s cargo operations stand out for their high
transportation capacity, extensive connectivity and
expertise in the handling of cargo transported to,
from and within South America. Within it, the main
exports include flowers, fish and fruit, and imports
include technological products, critical spare parts and
pharmaceutical products, among others. The figures
provided by WorldACD—a Dutch global benchmark
in cargo market data—indicate that, in 2023, the
LATAM Cargo group transported 45% of the fish ex-
ported from Chile, 40% of the perishables from Peru,
such as asparagus, fish and fruit, and 88% of the fish
and 16% of the fruit exported by Brazil. Likewise, in
the flower export market, it transported 40% of the
cargo from Colombia to North America and 65% from
Ecuador, standing as the leader in the transportation
of flowers from both countries.
In absolute terms, throughout 2023, 945,500 tons of
cargo were transported, translating into an increase
of 4.9% compared to the figure from 2022. In terms
of contribution, cargo operations represent 13% of the
LATAM group’s consolidated revenues.
Last year, freight revenues decreased by 17% in the
period compared to 2022. Meanwhile, revenue per
ATK (available ton-kilometers) decreased by 28%,
influenced by a 21.3% reduction in yield. The latter
was the result of a combination of a normalization
of demand after the peak produced by the pandemic
and the recovery of belly capacity (transport in the
hold of passenger aircraft) at the industrial level. On
the other hand, load factor was 51.7%, while cargo
capacity increased by 15 as a result of the progress
made in the three-year cargo fleet expansion plan,
which began in 2021.
This growth plan is consistent with the group’s long-
term strategy of expanding the Boeing 767-300
freighter fleet to between 19 and 21 aircraft. In view
of the speedy recovery of belly capacity, the group
opted for a fleet of 19 of these aircraft, which are the
ideal model to operate in the region thanks to their
efficiency, versatility and size. This plan includes the
staggered replacement of some of the older freighters,
which is why by the end of 2023, the fleet included
20 Boeing 767-300F/BCF aircraft. With this progress,
LATAM Cargo achieved a growth of more than 70% in
its cargo capacity compared to 2019.
In addition, during 2023, LATAM group’s cargo airlines
developed new routes and worked to strengthen
their value proposition, diversify their revenues and
increase their productivity. In this sense, last year the
company continued to make progress on the imple-
mentation of the new technological system, which
had been implemented in international operations in
2022, now adding domestic cargo operations in Brazil.
The system will provide clients with more and better
information about their cargo, deliver a more efficient
service and a better user experience, as all shipment
data—from quote to payment—is integrated into a
single end-to-end platform. It also strengthened its
long-standing partnerships with Webcargo and cargo.
one, two digital marketplaces specializing in interna-
tional cargo transportation.
The cargo airlines of LATAM
group are key players in the
local supply chain and the
export industry.
CARGO CUSTOMER SATISFACTION
The LATAM Cargo group’s efforts in the design and
execution of its value proposition were reflected in the
evolution of the Net Promoter Score (NPS), a metric
used in customer experience programs, reaching 58
points in 2023. This figure represents a seven-point
uptick over 2022 and was the best in the history of the
cargo business since the measurement began in 2016.
30 points
2021
51 points
2022
58 points
2023
ANNUAL REPORT 2023 03 —Operations —Cargo operation
33
Countries
166
Destinations
7
exclusively for cargo
Belgium, El Salvador, Guatemala,
Guyana, Honduras, Netherlands and
Panama. vs. 3 in 2022
18
exclusively cargo hubs
Amsterdam, Netherlands; Brussels
and Liege, Belgium; Chicago, Huntsville
and Houston, United States; Cabo Frio,
Campinas and São José dos Campos,
Brazil; Ciudad del Este, Paraguay;
Guatemala City, Guatemala; Panama
City, Panama; Santo Domingo,
Dominican Republic; San Salvador, El
Salvador; San Pedro Sula, Honduras;
Santa Lucia, Mexico; Timehri, Guyana;
and Zaragoza, Spain. vs. 10 in 2022
Tons of cargo transported
Cargo capacity (ATK)
945,500
in 2023
7,171
million ATK in 2023
900,600
in 2022
6,256
million ATK in 2022
801,500
in 2021
4,788
million ATK in 2021
SUPPORT TO EXPORT INDUSTRIES IN SOUTH AMERICA
Market share by country
GRI 203-2
BRAZIL
CHILE
COLOMBIA
ECUADOR
PERU
88% of fish and
16% of fruit
45% of fish
40% of flowers
65% of flowers
Source: WorldACD, considering subsidiaries Absa, Lanco and LATAM Cargo.
40% of perishable
products, such as
asparagus, fish and
fruit
29
CERTIFICATIONS
Since 2022, and being the first in the world to obtain it, the
cargo airlines of LATAM group have the certification Center
of Excellence for Independent Validators (CEIV) of lithium
batteries certification from the International Air Transport
Association (IATA), aimed at improving safety in the handling
and transportation of lithium batteries throughout the sup-
ply chain. This is because 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.
Along these lines, the LATAM Cargo group quickly passed the
audit process, thus confirming the quality of its risk control
and mitigation processes, which also extends to passenger
operations, as all LATAM group transports follow the same
processes and protocols.
Likewise, since 2017, the group has also held IATA’s CEIV Pharma
certification, which guarantees compliance with safeguarding
the integrity of pharmaceutical products requiring a certain
temperature until their final destination. The certification was
fundamental to the support that LATAM provided at the time to
countries with the mass transportation of COVID-19 vaccines.
In 2023, LATAM Cargo received two prestigious sustainability
awards. The first, the IATA Innovation Award, was given in
recognition of its Circular Economy initiatives aimed at re-
ducing the use of plastic in its operations. The company also
received the Air Cargo Sustainability Award from TIACA, a
leading organization in the air cargo industry. This recognition
was attributed to the LATAM group’s sustainability strategy
and the progress made by the cargo subsidiaries within the
three fundamental pillars of this strategy.
ANNUAL REPORT 2023 Fleet
30
30
aircraft received in 2023
5 Wide-body
25 Narrow-body
03 —Operations —Fleet
GRI 3-3
SASB TR-AL-000.F
As of December 31, 2023, the LATAM group’s total fleet
consists of 333 aircraft with an average age of 11.48
years.
In this regard, the long-haul international operation
has 57 wide-body aircraft, all Boeing, (Models 767,
777, and 787 Dreamliner versions 8 and 9), world-
wide benchmarks for fuel efficiency and reduction of
greenhouse gas (GHG) emissions and noise. Meanwhile,
the fleet dedicated to domestic and regional opera-
tions in South America consists of 256 narrow-body
Airbus aircraft (models A319, A320, A321, A320neo
and A321neo). We should note that “neo” aircrafts
use more efficient engines and feature aerodynamic
improvements and the latest technologies, which
provide 20% more fuel efficiency and improvements
in related carbon emissions.
On the other hand, LATAM group’s operating cargo
fleet totaled 20 Boeing 767F and Boeing 767BCF
aircraft by 2023. In fact, since 2021, the group has
been making progress on its plan to expand its cargo
fleet through the conversion of 10 passenger aircraft
to freighters. Along these lines, throughout 2023, four
Boeing 767 passenger planes converted for the cargo
operation arrived, thus completing its fleet growth
plan announced in 2021, and achieving an increase
of more than 70% of its cargo capacity, compared to
2019. As for 2024, the group will continue to make
progress in expanding its fleet.
MAINTENANCE
Aircraft maintenance, planning, and return activities in
compliance with the fleet plan are carried out at the LA-
TAM group’s Maintenance, Repair, and Operation (MRO)
bases in Brazil and Chile. Likewise, the units perform
contingent maintenance services for third parties.
In Brazil, there are two bases: one is located in São
Carlos and has capacity for nine narrow-body or wide-
body aircraft, while the other is in Guarulhos and has
capacity for LG and check C replacements for B777
and 24M for the narrow-body fleet, 1 service line. In
Chile, it is located in Santiago and can simultaneously
service two narrow-body and one wide-body aircraft,
and in Lima (Peru), 24M narrow-body aircraft are ser-
viced with one production line.
During 2023, the four bases were responsible for 186
maintenance services, representing 89% of total fleet
maintenance and a total of 1.5 million man-hours
worked. In turn, the rest of the aircraft were serviced
by external vendors.
On the other hand, line maintenance (minor, pre-
ventive and corrective tasks) is distributed across
different LATAM group hangars located in Congonhas
and Guarulhos/São Paulo (Brazil); Santiago (Chile);
Bogotá (Colombia); Quito (Ecuador); Miami (United
States) and Lima (Peru), among others. This network
offers various automated and integrated services that
ensure compliance with all safety requirements and
with local and international regulations.
However, it should be noted that, in terms of mainte-
nance, the LATAM group also invests in the replace-
ment of engines with more modern and fuel-efficient
models, thus contributing significantly to the reduction
of the fleet’s carbon footprint and the promotion of
more sustainable practices in the aviation industry.
Along this line, it has modified the Serial System
Controllers of the Auxiliary Power Units (APU SSC)
of the A320-200 aircraft for the APU 131-9A, which
is configured to reduce fuel consumption. In fact, the
savings are approximately 2.5% per year.
ANNUAL REPORT 2023 03 —Operations —Fleet
333 is the total number of aircraft in
the LATAM group’s fleet in 2023
OPERATING FLEET
AT DECEMBER 31, 2023
AIRCRAFT ON
RIGHT OF USE
UNDER IFRS16
AIRCRAFT ON
PROPERTY, PLANT
& EQUIPMENT
TOTAL
Passenger fleet1
Airbus A319-100
Airbus A320-200
Airbus A320neo
Airbus A321-200
Airbus A321neo
Boeing 767-300ER
Boeing 777-300ER
Boeing 787-8
Boeing 787-9
Total
Cargo Fleet
Boeing 767-300F
Total
Total fleet
1
46
23
30
7
0
6
6
24
143
1
1
144
392
903
1
19
0
11
4
4
2
170
194
19
189
40
136
24
49
7
11
10
10
26
313
20
20
333
1 All passenger aircraft bellies are available for cargo.
2 Includes 28 Airbus A319-100 aircraft classified as non-current assets and available for sale.
3 Includes 7 Airbus A320-200 aircraft classified as non-current assets and available for sale.
4 Includes 3 Boeing B767-300 Freighter aircraft classified as non-current assets and available for sale.
For more information 2,3 and 4, see the Consolidated and Audited Financial Statements.
31
LENGTH (M)
WINGSPAN (M)
SEATS
CRUISE MAXIMUM TAKE-
OFF WEIGHT (KG)
SPEED (KM/H)
Passenger Operation – short haul/narrow-body fleet
Airbus A319-100
Airbus A320-200
Airbus A320 -200neo
Airbus A321-200
Airbus A321- neo
33.8
37.6
37.7
44.5
44.5
Passenger operation – long haul /wide-body fleet
Boeing 767 -300ER
Boeing 777 -300ER
Boeing 787-8
Boeing 787-9
Cargo operations
54.9
73.9
56.7
62.8
34.1
34.2
34.3
34.4
35.8
47.6
64.8
60.2
60.3
144
180
180
224
224
233
410
247
300
830
830
830
830
800
851
894
903
903
70,000
70,000
70,000
89,000
93,500
186,880
346,500
227,900
252,650
Boeing 767 – 300F
54.9
47.6
N/A
851
186,880
SNAPSHOT
Passenger operation
SASB TR-AL-000.A, TR-AL-000.B, TR-AL-000.C, TR-AL-000.E
UNIT
2021
2022
2023
Capacity (ASK)
Revenue passenger-kilometer (RPK)
Load factor (ASK)
Revenues/ASK
Total PAX transported
Passenger flights per year
Cargo operations
SASB TR-AL-000.D
Capacity
Revenue tons-kilometer
Load factor
Revenues/ATK
Tons transported
RTK: revenue ton-kilometers
ATK: Available ton-kilometers
ASK- million
million
%
USD$ cents
thousands
N/A
ATK- million
RTK- million
ATK(%)
USD$ cents
thousands
67,636
50,317
74.40%
4.9
40,195
N/A
4,788
3,035
63.4%
32.2
801.5
N/A: Not applicable
N/A: Not Available
113,852
92,588
81.3%
6.7
62,467
439,309
6,256
3,532
56.5%
27.6
900.6
137,251
114,007
83.1%
7.4
73,898
522,558
7,171
3,704
51.7%
19.9
945.5
ANNUAL REPORT 2023
04 Corporate Governance
In this chapter
33
47
Ownership
structure
Corporate
Guidelines
36
49
Corporate
Governance
Stakeholder
Engagement
39
51
Decision-
makers
Financial
policies
43
Organizational
chart
04 —Corporate Governance —Ownership structure
NCG 461: 2.3.1 CONTROL SITUATION, 2.3.4 STOCKS, THEIR CHARACTERISTICS AND RIGHTS AND 2.3.5
OTHER SECURITIES
LATAM needs to maintain a suitable level of capitalization to ensure safe access
to financial markets, and thus, to develop its medium- and long-term goals, op-
timizing returns to its shareholders and maintaining a sound financial position.
On the other hand, LATAM’s Extraordinary Shareholders’ Meeting held on April 20,
2023, agreed to reduce capital by USD$7,501,895,316.23 through the absorption
of the total net accumulated losses as at December 31, 2022.
Thus, by December 31, 2023, LATAM’s statutory capital is represented by
604,441,789,335 shares, all issued, common, and without par value. Of this amount,
at that time, 604,437,877,587 shares had been subscribed and paid up. Meanwhile,
the group’s paid-in capital at December 31, 2023 totaled ThUSD$5,003,534 divid-
ed among 604,437,877,587 shares from the same and only nominative, ordinary
series, without par value.
A year earlier, that is, at December 31, 2022, the paid-in capital was
ThUSD$13,298,486 divided among 604,437,584,048 shares, also from the same
and only nominative, ordinary series, without par value.
We should note that there are no special series of shares, nor preferences. Thus,
the form of the stock certificates, their issuance, exchange, disablement, loss,
replacement, and any other circumstance, as well as the transfer of shares, are
ruled by the provisions included in the Chilean Corporations Act (“LSA”, for its
Spanish acronym) and its Regulations.
At December 31, 2023, the
group has no controlling
shareholder and the total
number of registered
shareholders is 2,100.
Ownership
structure
.
e
l
i
h
C
,
a
u
c
s
a
P
e
d
a
l
s
I
33
ANNUAL REPORT 2023
04 —Corporate Governance —Ownership structure
SHAREHOLDER STRUCTURE
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 SECURITIES
2023
2022
TOTAL SHARES
%
TOTAL SHARES
%
2023
2022
Sixth Street Partners
Management Company
Strategic Value Partners
Delta Air Lines, Inc
Qatar Airways
Investments (UK) LTD
Cueto Group
AFP
ADR
Others
Total
168,669,825,995
96,815,692,279
60,722,284,826
60,640,769,249
30,389,556,225
13,511,737,270
86,064,978
173,601,946,765
604,437,877,587
27.91%
16.02%
10.05%
168,669,825,995
96,815,692,279
60,722.284,826
10.03%
5.03%
2.24%
0.01%
28.72%
100.00%
60,640,769,249
30,389,556,225
6,534,051,959
86,064,978
180,579,338,537
604,437,584,048
27.91%
16.02%
10.05%
10.03%
5.03%
1.08%
0.01%
29.88%
100.00%
BOARD MEMBERS’ AND MAIN EXECUTIVES’ STAKES
NCG 461: 3.4.IV SENIOR EXECUTIVES
As in 2022, Ignacio Cueto (Chairman of the BOD of LATAM),
Enrique Cueto (member of the BOD at LATAM), and certain
other Cueto family members and entities controlled by them,
comprise the Cueto Group. Along these lines, by December 31,
2023, the Cueto group’s shareholding stands at 5.03% of the
shares the same percentage as in the previous year. And just
as at the end of the previous year, there are no other Directors
or senior executives of the Company who have an ownership
stake in the issuer.
34
0.01%
86,064,978
ADR
27.91%
168,669,825,995
Sixth Street Partners
Management
Company
29.88%
180,579,338,537
Others
0.01%
86,064,978
ADR
27.91%
168,669,825,995
Sixth Street
Partners
Management
Company
16.02%
96,815,692,279
Strategic Value
Partners
10.05%
60,722,284,826
Delta Air Lines, Inc
1.08%
6,534,051,959
AFP
5.03%
30,389,556,225
Cueto Group
16.02%
96,815,692,279
Strategic Value
Partners
10.05%
60,722,284,826
Delta Air Lines, Inc
10.03%
60,640,769,249
Qatar Airways
Investments (UK) LTD
28.72%
173,601,946,765
Others
2.24%
13,511,737,270
AFP
5.03%
30,389,556,225
Cueto Group
10.03%
60,640,769,249
Qatar Airways
Investments
(UK) LTD
CHANGES IN OWNERSHIP
NCG 461: 2.3.4 STOCKS, THEIR CHARACTERISTICS AND RIGHTS
Over the last three years, the only significant changes in the
percentage of ownership held by any of LATAM’s current ma-
jor shareholders (with more than 5% ownership) have been
represented by (i) a decrease in the Cueto group’s ownership
from 16.39% by February 28, 2022 to 5.03% by December 31,
2023, (ii) a decrease in Delta Airlines’ ownership from 20.00%
by February 28, 2022 to 10.05% by December 31, 2023, and
(iii) a decrease in Sculptor Capital’s ownership from 6.52% by
January 31, 2023 to 2.48% by December 31, 2023.
ANNUAL REPORT 2023
04 —Corporate Governance —Ownership structure
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 SECURITIES
AT DECEMBER 31, 2023
NAME
RUT
SHARES SUBSCRIBED
AND PAID
%
NAME
RUT
SHARES SUBSCRIBED
AND PAID
AT DECEMBER 31, 2022
Banco de Chile por cuenta de State Street
Banco de Chile por cuenta de terceros no residentes
Delta Air Lines, Inc
Qatar Airways Investments (UK) Ltd
Banco Santander por cuenta de inv extranjeros
Costa Verde Aeronautica S.A.
Banco Santander Chile
Larrain Vial S.A. Corredora de Bolsa
Costa Verde Inversiones Financieras S.A.
Banchile Corredores De Bolsa S.A.
Banco de Chile por cuenta de Citi Na New York Clie
AFP Habitat S.A. Fondo Tipo C
97.004.000-5
97.004.000-5
59.288.750-9
59.222.850-5
97.036.000-K
81.062.300-4
97.036.000-K
80.537.000-9
76.183.853-9
96.571.220-8
97.004.000-5
98.000.100-8
277,500,905,697
70,343,556,555
60,722,284,826
60,640,769,249
25,550,380,291
23,789,209,717
15,382,571,149
7,394,408,211
6,592,460,617
5,240,203,041
4,407,844,262
2,232,103,282
45.81
11.94
10.05
10.03
3.94
3.94
3.02
1.19
1.09
0.82
0.73
0.41
Banco de Chile por cuenta de State Street
Banco de Chile por cuenta de terceros no residentes
Delta Air Lines, Inc
Qatar Airways Investments (UK) Ltd
Banco Santander Chile
Costa Verde Aeronáutica S.A.
Banco Santander por cuenta de inversionistas extranjeros
Larrain Vial 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 fondo de pensión C
97.004.000-5
97.004.000-5
59.288.750-9
59.222.850-5
97.036.000-K
81.062.300-4
97.036.000-K
80.537.000-9
76.183.853-9
96.571.220-8
99.012.000-5
76.240.079-0
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
9,678,756,864
6,592,460,617
2,604,713,175
2,328,707,088
2,248,823,180
%
47.02
12.70
10.05
10.03
6.80
3.94
2.21
1.60
1.09
0.43
0.39
0.37
DIVIDENDS
NCG 461: 2.3.4 STOCKS, THEIR CHARACTERISTICS AND RIGHTS
Pursuant to the LSA and, provided that no financial losses
are recorded for balances carried forward from past financial
years, LATAM must distribute cash dividends equivalent to at
least 30% of the prior year’s net profit corresponding to the
consolidated annual net income calculated in accordance with
International Financial Reporting Standards (IFRS), subject to
the terms of Circular No. 856 issued on October 17, 2014 by
the CMF, Chile, subject to limited exceptions.
for that year, although it is not legally obligated, LATAM may
choose to distribute dividends out of its retained earnings.
Moreover, as long as there are no accrued losses from previous
years, the Board of Directors, under the personal responsibil-
ity of the members attending the respective resolution, may
agree to distribute interim dividends during the year out of
the profits generated during the year.
Notwithstanding the above, if according to the balance sheet
up to December 31 of the previous year there are no net profits
Pursuant to LATAM’s bylaws, the annual cash dividend must
be approved by the shareholders at an ordinary shareholders’
meeting to be held within the first four months of the year
immediately following the year out of which the dividend is to
be paid. It should be noted that all common shares outstanding
are entitled to an equitable share in the dividends declared by
LATAM, except for shares that have not been fully paid up by
the shareholder after subscription. This policy is intended to
be maintained for the next two years.
The gain for fiscal year 2022 of USD$1,339,210 was entirely
used to absorb the accrued losses recorded, which totaled
USD$8,841,106. Therefore, there was no payment of dividends,
in accordance with current legislation.
35
MORE INFORMATION
Shareholders’ Agreement (Page 128).
ANNUAL REPORT 2023
04 —Corporate Governance —Corporate Governance
Composition of the Board of Directors
NCG 461 3.2 BOARD OF DIRECTORS
GRI 2-9, 2-10, 2-11
IGNACIO CUETO
CHAIRMAN*
RUT: 7.040.324-2
BORNAH MOGHBEL
VICE-CHAIRMAN OF THE BOARD*
RUT: FOREIGNER
Ignacio Cueto has served as a member of LATAM Airlines Group’s board of directors
and as Chairman since April 2017 and was re-elected to the board of directors
of LATAM in April 2019, April 2020 and November 2022. Ignacio Cueto’s career
in the airline industry extends over 30 years. In 1985, he assumed the position
of Vice President of Sales at Fast Air Carrier, a national cargo company of that
time and also became Service Manager and Commercial Manager for the Miami
sales office. Ignacio Cueto later served on the board of directors of Ladeco (from
1994 to 1997) and LAN (from 1995 to 1997). In addition, Ignacio Cueto served as
President of LAN Cargo from 1995 to 1998, as Chief Executive Officer-Passen-
ger Business from 1999 to 2005, and as President and Chief Operating Officer
of LAN since 2005 until the merger with TAM in 2012. Ignacio Cueto later served
as LAN’s CEO until April 2017 and also led the establishment of the different
affiliates that the Company has in South America, as well as the implementation
of key alliances with other airlines. Ignacio Cueto is a member of the Board of
the Colunga foundation dedicated to child welfare and is a member of the Cueto
Group. As of December 31, 2023, Ignacio Cueto shared in the beneficial owner of
30,389,446,225 common shares of LATAM Airlines Group (5.03% of LATAM Airlines
Group’s outstanding shares) held by the Cueto Group.
Bornah Moghbel has been the Vice-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, Bornah Moghbel leads Sixth Street’s cor-
porate investing in public markets as well as its global asset investing business.
After co-founding Sixth Street in 2009, Bornah Moghbel established the firm’s
presence in Europe before returning to the United States in 2016. Prior to joining
Sixth Street, Bornah 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.
*Note: LATAM group’s Board of Directors was re-elected on November 15, 2022.
36
ANNUAL REPORT 2023 04 —Corporate Governance —Corporate Governance
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 has served as a member of LATAM Airlines
Group’s board of directors since April 2020. Formerly, he held
the position of LATAM Airlines Group’s Chief Executive Offi-
cer (“CEO”), since the merger between LAN and TAM in June
2012. From 1983 to 1993, Enrique Cueto was Chief Executive
Officer of Fast Air, a Chilean Cargo airline. From 1993 to 1994,
Enrique Cueto was a member of the board of LAN Airlines.
Thereafter, Enrique Cueto held the position of CEO of LAN
until June 2012. Enrique Cueto is a member of the Board of
the Colunga foundation dedicated to child welfare and was a
member of the Endeavor foundation, an organization dedicat-
ed to the promotion of entrepreneurship in Chile for 15 years.
Enrique Cueto holds a degree in Economic Sciences from the
Catholic University of Chile and is the brother of Ignacio Cueto,
Chairman of the board. Enrique Cueto is also a member of the
Cueto Group. As of December 31, 2023, Enrique Cueto is the
beneficial owner of 30,389,446,225 common shares of LATAM
Airlines Group (5.03% of LATAM Airlines Group’s outstanding
shares) held by the Cueto Group.
Frederico P. Fleury 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. Frederico
Curado is also an independent director at ABB since 2016 and
is Chair of its Compensation Committee. He was CEO of Em-
braer from 2007 to 2016 and CEO of Ultrapar from 2017 to
2021. Frederico 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
Sociedad Química y Minera de Chile S.A., a Chilean and NYSE
publicly listed company. Antonio Gil Nievas has over 25 years
of experience in strategic, management, financial and invest-
ment 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 busi-
nesses, among other positions, and he was formerly a strategic
consultant for BCG. Antonio 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.
37
*Note: LATAM group’s Board of Directors was re-elected on November 15, 2022.
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. Michael
Neruda is Head of Restructuring and Distressed Investing and
leads Sixth Street’s cross-platform investing in businesses
where a combination of public markets expertise and private
capital financing may be utilized to improve a company’s
balance sheet. Prior to joining Sixth Street in 2015, he was a
Director at Watershed Asset Management, where he led that
firm’s investments in the consumer and energy sectors. Mi-
chael 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, and is a CFA Charterholder. Michael Neru-
da has served as a board member and investor representative
on numerous corporate boards including with LATAM Airlines,
Neiman Marcus, and Stallion Infrastructure Services, as well
as serving on the Board of Governors of the Boys & Girls Clubs
of San Francisco.
ANNUAL REPORT 2023 04 —Corporate Governance —Corporate Governance
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 air-
lines, infrastructure, packaging and industrials. From 2011
to 2014, Bouk Van Geloven was at J.P. Morgan Cazenove in
their Strategic M&A Advisory team. Bouk Van Geloven has
two Master of Science degrees in Econometrics and Quanti-
tative Finance from the Vrije Universiteit Amsterdam. He has
served on multiple boards whilst at SVP and he is currently
a member of the Board of Klöckner Pentaplast and is part of
the Advisory Committee of Mattress Firm.
Sonia J.S. Villalobos joined the Board of LATAM Airlines in Au-
gust 2018. Sonia Villalobos is a Brazilian citizen and a found-
ing partner of the company Villalobos Consultoria Starting
in 2016, she has participated as a regular board member of
Brazilian listed companies, such as Petrobras and Telefónica
Vivo. Between 2005 and 2009, she was the Manager of Funds
in Latin America, in Chile, managing mutual and institutional
funds of Larrain Vial AGF. From 1996 to 2002, Sonia Villalobos
was responsible for Private Equity investments in Brazil, Ar-
gentina and Chile for Bassini, Playfair & Associates, LLC. As
of 1989 she was Head of Research of Banco de Investimentos
Garantia. She graduated in Public Administration from Escola
de Administração de Empresas de São Paulo in 1984 and ob-
tained a Master in Finance from the same institution in 2004.
She was the first person to receive the CFA certification in Lat-
in America, in 1994.
Alexander Wilcox has served on LATAM Airlines Group’s board
of directors since October 2020. Wilcox resides in the Unit-
ed States and has broad experience in the aviation industry
where he has held executive positions in several airlines since
1996, including as a founder of JetBlue Airways and as the
founding President and COO of a large airline in India. Wilcox
is a cofounder and the CEO of JSX, a public charter commuter
air carrier in the U.S. and the highest rated air carrier in North
America by NPS. Wilcox has been a Henry Crown Fellow of
the Aspen Institute since 2011 and is a member of the Dallas
chapter of Young Presidents Organization (YPO Gold). Wil-
cox has been a private pilot since 1987. Wilcox also serves
on the Board of Directors of The Compass School of Texas,
an elementary school in Dallas. Wilcox holds a BA degree in
Political Science and English from the University of Vermont.
*Note: LATAM group’s Board of Directors was re-elected on November 15, 2022.
38
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ANNUAL REPORT 2023
Decision-
making bodies
39
04 —Corporate Governance —Decision-making bodies
NCG 461: 3.2 BOARD OF DIRECTORS AND 3.3 BOARD
COMMITTEES
GRI 2-9, 2-10 Y 2-11
The Board of Directors defines and monitors the
strategic guidelines of LATAM Airlines Group S.A. It is
comprised by nine regular members, who are elected
individually for two-year terms by the cumulative
voting system—i.e., each shareholder has one vote
per share and may cast all their votes in favor of one
candidate or distribute them among several. This
system is followed to ensure that shareholders of
10% of the shares outstanding can choose at least
one representative.
It should be noted that this is a fixed structure, and in
cases of contingency or crisis (mainly in aviation emer-
gencies), the Board of Directors remains unchanged
and continues to function normally, supporting the
continuity of the business’ operations.
MEETINGS
The Board of Directors holds both ordinary and ex-
traordinary meetings on a regular basis, depending on
the company’s needs, following legal requirements.
They do not have a minimum time commitment,
whether on-site or remote. In accordance with the
provisions of the Company’s Bylaws, the Board of
Directors must meet at least once a month in ordi-
nary meetings, except in February, which implies a
minimum of eleven ordinary meetings per year.
For each meeting, the members of the Board of Di-
rectors are summoned well in advance, usually one
week before, and have access to a digital information
system where documents with relevant background
information for their preparation, minutes of previous
meetings, and the matters to be discussed at the
meeting are centralized. This system keeps a record
of the historical data of the Board’s documents since
2016 and is updated approximately one month after
each meeting with the corresponding minutes, re-
maining available going forward.
FIELD VISITS
NCG 461: 3.2 BOARD OF DIRECTORS
In 2023, the Board of Directors visited some of LATAM
group’s facilities. During the year, they visited the São
Carlos maintenance facilities in Brazil, the hangars in
Guarulhos (GRU) and Congonhas (CGH), and the cor-
porate facilities in Santiago (Chile) and Miami (United
States), including the Cargo operation in the latter.
These visits, which were aimed at learning more about
the operation and the opinions of the local teams,
included the general manager and other group exec-
utives.
MEETINGS WITH RISK MANAGEMENT, INTER-
NAL AUDIT AND SOCIAL RESPONSIBILITY UNITS
AND WITH INTERNAL AUDIT FIRM
NCG 461: 3.2.VI BOARD OF DIRECTORS AND 3.3 BOARD
COMMITTEES
In 2023, the average attendance at the 17 ordinary
and extraordinary meetings held was 98.7%. In detail,
attendance at the meetings was 100% for directors
Ignacio Cueto, Enrique Cueto, Frederico Curado, An-
tonio Gil, Michael Neruda, Bouk Van Geloven and
Alexander Wilcox, while attendance was 94.1% for
directors Sonia Villalobos and Bornah Moghbel.
As stated below, the Board of Directors operates
through the Directors’ Committee, which also acts
as Audit Committee, reporting monthly to the Board
of Directors, through the account delivered by the
Chair of the Audit Committee to the Board of Direc-
tors during the latter’s ordinary meetings held each
month, regarding the Company’s audit and internal
control, including internal audit and risk management
matters. The main topics discussed in the arena of
internal audit pertain, among others, to the approval
and follow-up of the internal audit plan, monitoring of
the progress and results of the external audit and SOX
certification (Sarbanes Oxley Act); and in the sphere
of risk management, they pertain to a review of the
overall status of the main risks and their management.
The Company has a Sub-Committee of the Board
of Directors, called the Strategy & Sustainability
Sub-Committee, which reviews the Company’s so-
cial responsibility issues and reports to the Board of
Directors.
The Board meets with the external auditing firm in
charge of auditing the financial statements four times
a year, which takes place in additional and extraordi-
nary meetings, to review and approve the Company’s
quarterly and annual financial statements.
Additionally, said audit firm reports to the Board of
Directors, usually once a year, the external audit work
plan for the following year, sometimes coinciding with
one of the four meetings mentioned above. The main
topics covered in the external audit correspond to the
work plan, its scope and focus areas; the results of the
audit include a brief review of the main focus points
and any recommendations that may have come up.
All of the Board meetings mentioned above are reg-
ularly attended by the CEO, the CFO, and the Legal
Vice-President, as well as by the senior executives
in charge of the different subjects to be reviewed at
each Board meeting.
ANNUAL REPORT 2023 04 —Corporate Governance —Decision-making bodies
AUDIT COMMITTEE
NCG 461: 3.3 BOARD OF DIRECTORS COMMITTEES AND 3.2 BOARD
OF DIRECTORS VI AND VII
larly by the Legal Vice-President, as well as the main executives
in charge o the various topics reviewed in each Board meeting.
The CEO doesn’t generally participate in said meetings.
Audit Committee, LATAM has three other sub-committees that
support the Board in decision-making: Strategy & Sustainability,
Leadership, and Finance.
The Audit Committee reports monthly to the Board of Directors,
through the account delivered by the Chair of the Audit Com-
mittee to the Board of Directors at the ordinary meetings held
each month, regarding the Company’s audit and internal control,
including internal audit and risk management matters.
In addition, in compliance with the requirements of the LSA, the
U.S. Sarbanes-Oxley Act and the guidelines of the U.S. Securities
and Exchange Commission (SEC), the Directors’ Committee also
serves as the Audit Committee.
Therefore, the main topics discussed in the arena of internal au-
dit pertain, among others, to the approval and follow-up of the
internal audit plan, monitoring of the progress and results of the
external audit and SOX certification (Sarbanes Oxley Act); and in
the sphere of risk management, they pertain to a review of the
overall status of the main risks and their management.
In fact, the Internal Audit and Control department, which is in
charge of internal audit and risk management matters, reports
regularly to the Audit Committee. This is done at the same meet-
ings held by the Audit Committee. In this regard, during financial
year 2023, the Audit Committee met ten times with the Audit
and Internal Control department to discuss internal audit issues,
and on two other occasions, also with the same department, to
discuss risk management issues.
The Corporate Affairs and Sustainability department, in charge
of topics of social responsibility, among others, reports to the
CEO and generally presents once a year before the Audit Com-
mittee and the Board. In these meetings, the progress on the
implementaiton of the LATAM group Sustainability Strategy has
been presented, with a review of its four pillars: environmental
management, climate change, circular economy and shared value.
On their part, the Audit Committee also meets with the company
in charge of auditing the financial statements four times a year,
which takes place in ordinary and extraordinary sessions, to re-
view and make pronouncements on the Company’s quarterly and
annual financial statements, pursuant to the terms of Article 50
bis of the Corporations Act. In addition, they met on three occa-
sions where the main topics discussed regarding external auditing
correspond to work planning, scope and focus areas; relationship
with regulatory requirements in the sphere of communication;
and the consolidated audit approach, among others. Likewise, the
audit firm also reports to the Board of Directors, usually once a
year, which sometimes coincides with one of the four meetings
mentioned above, the external audit work plan for the following
year; the results of the audit, including a brief review of the main
potential issues and any recommendations that come up. In all
of the Audit Committee meetings mentioned above are regularly
attended by the Legal Vice-President. The CEO does not partic-
ipate regularly in them.
BOARD MEMBER TRAINING AND EVALUATION
NCG 461: 3.2 BOARD OF DIRECTORS
GRI 2-17 AND 2-18
Following each election and in observance of the Induction
Policy, new members of the Board receive the information and
background related to matters under evaluation and analysis
by the Board, as well as training on the regulatory framework
and the duties involved in the position as Members of the
Board. This includes, among other aspects: Sustainability
issues, including social responsibility; policies and guidelines,
particularly the Code of Conduct; business affairs; risks; and
financial and accounting aspects of LATAM.
Following the repeal of NCG No. 385 and the incorporation of
several of its topics into the Annual Report, the Board of Direc-
tors has not implemented additional performance evaluations.
In addition to the Audit Committee, LATAM has three other
sub-committees that assist the Board in the decision-making
process: Strategy & Sustainability, Leadership and Finance.
EXECUTIVE SPHERE
GRI 2-13
By both December 31, 2022 and December 31, 2023, the Audit
Committee was comprised by Frederico Curado, Michael Neruda
and Sonia J. S. Villalobos, all considered independent under section
10A of the Securities Exchange Act. Meanwhile, according to
the Chilean Corporations Act (LSA), only the Board member and
Chair of the Audit Committee Frederico Curado is considered an
independent Board Member; that is, he has no links, interests,
economic, professional, credit, or commercial dependence of any
relevant nature or volume on LATAM, the other subsidiaries of
the group, or the main executives, nor any family ties with the
latter, among other characteristics.
LATAM’s executive sphere is divided into five large areas. These
are Clients, People, Operations, Commercial and Finance. Each
has clearly divided responsibilities to execute and monitors the
group’s strategy. Along these lines, the executives in these five
areas, in addition to the Vice-Presidents of Legal & Compliance,
Technology & Digital, Corporate Affairs and the Brazil CEO form
an Executive Committee, which meets on a weekly basis with the
LATAM CEO. Likewise, the Strategic Planning area supports the
Executive Committee, and other vice-presidencies participate in
meetings to address more specific issues.
It should be noted that each subsidiary has a CEO, as well as a
group of executives. They are responsible for each of the oper-
ations, respectively.
All the Audit Committee meetings mentioned are attended regu-
On the other hand, in addition to the Directors’ Committee or
40
SUSTAINABILITY
NCG 461: 3.1 GOVERNANCE FRAMEWORK AND 3.2.VI. BOARD OF
DIRECTORS & 3.6.IV RISK MANAGEMENT
GRI 2-12 AND 2-13
The commitment to sustainability is a comprehensive part
of the business and decision-making at all levels of LATAM.
Accordingly, the Corporate Affairs and Sustainability Directorate,
together with the organization’s leaders and in accordance
with the company’s objectives and best practices worldwide,
defines the group’s strategy in this arena and promotes its
implementation in the countries where it operates.
To ensure compliance with the objectives, on a quarterly
basis, Corporate Affairs consolidates information on the main
progress and gaps related to Environmental Management,
Climate Change, Circular Economy and Shared Value, which
address environmental and social issues that are priorities for
the organization. Thus, normally and based on their criticality
and relevance, the results are presented to the members of the
Executive Committee and the CEO of the group for decision-
making, and in addition to this, an annual management review
of the results of the Environmental Management System (EMS)
is carried out.
Nonetheless, 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 informed annually of the progress on the aspirations and
commitments in this arena, including social responsibility topics.
In fact, in 2023, this presentation was made in the last quarter.
The Strategy and Sustainability
Committee of the Board of Directors is
the highest authority after the Board
itself for analyzing results and making
decisions regarding sustainability.
ANNUAL REPORT 2023
04 —Corporate Governance —Decision-making bodies
RISK MANAGEMENT
GRI 3-3
NCG 3.6 RISK GOVERNANCE
In LATAM group, the processes and governance in this area are
guided by the Comprehensive Risk Management Policy, whose
purpose is to support the achievement of the group’s strategic
objectives, establishing a transversal model for managing the
risks that compromise: sustainability, operational continuity,
clients, finances and reputation, together with identifying the
main functions and strategies to be developed for each of them.
Roles and responsibilities:
The Board of Directors is responsible for ensuring the existence
of a comprehensive process, approving the related policies
and promoting a risk culture. To this end, it instructs the Audit
Committee to oversee the development and assessment of
risks relevant to the company.
In turn, the Audit Committee delegates to the Risk Management
Department the administration of the model, which involves
detecting, supervising and consolidating the most relevant
risks for the companies in LATAM group. To achieve this, Risk
Management assists and centralizes the information gathered
by the different leaders of the various areas of the Company,
who are generally directly responsible for identifying, assessing,
monitoring and managing the risks pertaining to their areas.
On the other hand, LATAM group has an Internal Audit de-
partment, which is responsible for independently ensuring the
operation, effectiveness and compliance with the organization’s
Risk Management Model. This team is led by the Audit and
Internal Control Director, who reports directly to the Audit
Committee.
Three lines of defense
Using international risk management methodologies as a
benchmark, LATAM group has established a three lines of
defense model to maintain an adequate identification and
mitigation process.
In this structure, the first line is made up of the business
process owners, who are primarily responsible for the identifi-
cation, evaluation, management and monitoring of their risks.
Additionally, areas have been established to operate as second
lines of defense, with the purpose of providing specialized sup-
port and advice to the businesses to properly manage, through
the application of specific frameworks and methodologies,
the risks related to their areas. For example, the Operational
Safety area does so by following the Safety Management
System (SMS); the Sustainability Management applies dual
materiality to identify, evaluate and prioritize environmental,
social and economic or corporate governance risks; and the
Information Security Management follows standards based
on ISO/IEC 27001 and NIST, among others.
The second line departments also carry out inspection, veri-
fication and external audits. Examples of this are the exter-
nal inspections and audits for the certification process under
the IATA Environmental Assessment (IEnvA) standard for the
subsidiaries in Brazil, Chile, Colombia, Ecuador and Peru, as
well as the system checks and stress tests carried out by the
cybersecurity team, among others.
These activities are complemented with the assurance func-
tions of Internal Audit, which acts as a third line of defense.
41
LATAM’S THREE LINES OF DEFENSE MODEL
FIRST LINE
SECOND LINE
THIRD LINE
• Person responsible: Business pro-
cess owners.
• Role: Directly responsible for identify-
ing, evaluating, monitoring and reporting
them, as well as establishing mitigation
measures so that risks remain at ade-
quate levels, as defined by the Board of
Directors.
• Person responsible: Risk Manage-
ment and other departments associated
with specific models, such as: Operational
Security, Compliance, Comptrollership,
Information Security, or Sustainability,
among others.
• Role: Provide methodological support
and specialized advice, supervise and
monitor the the first line in its risk man-
agement process.
• Person responsible: Internal Audit
• Role: Independently evaluates the
effectiveness of the comprehensive risk
management process, as well as the prop-
er application of policies and procedures.
FIRST LINE
OF DEFENSE
SECOND LINE
OF DEFENSE
THIRD LINE
OF DEFENSE
Finance, Leadership Strategy
committees, among others
Audit
Committee
Board of Directors
MORE INFORMATION
In Risk Factors, in Annexes. Pages 140-152.
ANNUAL REPORT 2023
04 —Corporate Governance —Decision-making bodies
chapters, such as: the “Employees” chapter describes measures
for organizational climate assessment, benefits offered and
other initiatives related to talent management and organiza-
tional culture. Likewise, the chapter named “Commitment to
Sustainability” explains the strategies aimed at addressing
environmental risks. The sections “Operations”, “Number 1
Priority” and “Clients”, discuss the plans and initiatives that
the organization develops to address operational and security
risks, among others.
In addition, the main risk factors are presented annually in
the 20-F Annual Report and in this Annual Report (see pages
141-153). The risks published in 2023 include those associated
with the business, operations and safety, regulations and the
environment, indebtedness, and those related to the industry
and countries in which the LATAM group operates.
Risk Culture
The LATAM group’s risk management model focuses on
strengthening the capacity to anticipate risks, manage them
appropriately, and promote a culture of valuing the capabilities
and aptitudes of its employees and collaborators in the face
of risks, encouraging self-assessment.
The LATAM group fosters a risk culture through training, pro-
active risk identification, employee performance evaluation
criteria and escalation channels. In addition to the Confidential
Channel, other bodies have been implemented to escalate risks
within the organization, such as internal Committees of the
areas—for example, the Information Security and Technological
Risks Committee and the Operational Security Committee for
the detection and escalation of technological and operational
security risks, respectively.
Risk assessment and mitigation
The Comprehensive Risk Management is part of a fundamental
process that allows the LATAM group to deal effectively with
uncertainty, identifying risks and opportunities, optimizing
the capacity to generate value and achieve the organization’s
strategic objectives. This process is continuous and must be
maintained considering that Risk Management is dynamic,
structured and methodical but adaptable over time, as it ad-
justs to the internal and external contexts of the LATAM group
and is strengthened by the learning and experience that the
organization acquires over time.
For this purpose, it has implemented a comprehensive risk man-
agement model that uses methodologies such as ISO 31,000
and COSO ERM as benchmarks. This process is based on the
evaluation and weighting of potential impacts and the proba-
bility of occurrence of risks. The impact assessment considers
several dimensions, such as financial and reputational, and
probabilities are rated on a scale from remote to near certain.
Risk Management updates the exposure status of corporate
risks every quarter, delivering a report to the different indi-
viduals responsible to be reviewed and managed with the
corresponding areas. In addition, in 2023, the Risk team made
two presentations to the Audit Committee with an update on
the group’s risks, in April and December (see details on pages
130-132).
The group implements specific strategies to mitigate risks and
ensure operational stability. Some examples of these are in the
financial area, where there is a manual for fuel and exchange
rate hedging to reduce exposure to fuel prices and exchange
rates. In operational terms, it has solid insurance coverage and
adopts proactive safety measures, such as the Safety Man-
agement System (SMS) and the Emergency Response Plan.
Said actions reflect LATAM Airlines’ commitment to effective
risk management and operational continuity, and many of
them are described in the organization’s Annual Report in other
42
.
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ANNUAL REPORT 2023
Organizational chart
NCG 461: 3.1 GOVERNANCE FRAMEWORK
04 —Corporate Governance —Organizational chart
CEO
Board
LATAM AIRLINES
CHILE
LATAM AIRLINES
COLOMBIA
LATAM AIRLINES
ECUADOR
LATAM AIRLINES
PERU
LATAM AIRLINES
BRAZIL
Digital and IT
Vice-Presidency
Finance Vice-Presidency
(includes Management Control
and Investor Relations)
Vice-presidency
of Operations
Legal Affairs and
Compliance Vice-Presidency
Commercial Vice
presidency
Human Rights
Vice-Presidency
LATAM
Cargo Group
Customers Vice
presidency
Strategic
Planning
Safety
Audit
Committee
Internal Audit
and Control
(includes Risk Management)
43
Corporate Affairs
(includes External Communications
and Sustainability)
MORE INFORMATION
Board Composition (Page 36).
Annual management report of the Audit Committee (Page 130).
Composition of the executive sphere (Page 40).
ANNUAL REPORT 2023 BOARD OF DIRECTORS’ REMUNERATION
NCG 461: 3.2 BOARD OF DIRECTORS AND 3.3 BOARD COMMITTEES
GRI 2-19
The remunerations reported correspond to fixed allowances
for attendance to meetings and variable remuneration for the
Board of Directors and the Audit Committee. These were ap-
proved in the Ordinary Shareholders’ Meeting held on Monday,
April 20, 2023, a year in which the Board of Directors reported
no expenses for accounting, tax, financial, legal or other con-
sulting services. Likewise, the Audit Committee did not record
any expenses for consulting services
GUIDELINES FOR ENGAGING SERVICES
NCG 461: 3.2 BOARD OF DIRECTORS
The Board of Directors may hire experts to give advice on spe-
cific matters, such as accounting, finance, taxes, legal or others;
however, the director or directors who require the engagement
of an expert must justify it at a meeting. Along these lines, the
engagement of the advisor must follow LATAM’s policies for
hiring suppliers, conflicts of interests, and market conditions.
In addition, senior management will propose a list of names
for the Board members to choose from. In fact, it is possible
that one or more of its members veto the engagement of a
specific advisor. Nonetheless, regarding the services engaged
with the company in charge of auditing the Financial State-
ments or other entities, there are no relevant deviations from
the annual budget of the Board.
04 —Corporate Governance —Organizational chart
The fixed allowance for
participation on the Board of
Directors is determined by the
Shareholders’ Meeting and is the
same for all Board members,
except the Chairman, who receives
twice the sum of other directors.
REMUNERATION– ALLOWANCE1 2023 (USD$)
NAME
POSITION
BOARD
AUDIT
COMMITTEE
Chairman
Ignacio Cueto Plaza
Bornah Moghbel
Vice-chairman
Enrique Cueto Plaza Board member
Board member
Frederico Curado
Board member
Antonio Gil Nievas
Board member
Bouk Van Geloven
Michael Neruda
Board member
Sonia J. S. Villalobos Board member
Board member
Alexander D. Wilcox
160,336
-
80,174
80,174
80,174
-
-
80,174
80,174
0
-
0
76,839
0
-
-
50,110
0
SUBCOMMITTEE
VARIABLE
TOTAL
REMUNERATION REMUNERATION
50,778
0
40,081
50,778
50,778
-
-
40,081
40,081
80,802
-
80,802
107,736
80,802
-
-
107,736
80,802
291,916
-
201,057
315,527
211,754
-
-
278,101
201,057
ALLOWANCE RATIO (MEN/WOMEN) 1
NCG 461 3.2 BOARD OF DIRECTORS
REMUNERATION– ALLOWANCE1 2022 (USD$)
AVERAGE2
MEDIAN3
COMMITTEE
NAME
POSITION
BOARD
AUDIT SUBCOMMITTEE
TOTAL
Regular members
Deputy members
100%
N/A*
100%
N/A*
* Not applicable. There are no deputy members.
1 Proportion of women’s gross hourly allowance vs. men’s gross hourly allowance.
2 Average: Average value of women’s gross allowance divided by men’s
average gross allowance.
3 For the calculation of the median, the values of the gross allowance 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.
Ignacio Cueto Plaza
Bornah Moghbel2
Enrique Cueto Plaza
Frederico Curado
Antonio Gil Nievas
Michael Neruda2
Bouk Van Geloven2
Sonia J. S. Villalobos
Alexander D. Wilcox
Nicolas Eblen Hirmas
Patrick Horn García
Eduardo Novoa Castellon
Enrique Ostale Cambiaso
Henri Philippe Reichstul
Chairman
Vice-chairman
Board member
Board member
Board member
Board member
Board member
Board member
Board member
Former board member
Former board member
Former board member
Former board member
Former board member
165,078.0
-
82,260.2
8,725.6
10,331.0
-
-
60,601.5
75,142.2
69,980.1
75,957.8
69,867.8
54,858.4
53,317.0
-
-
-
3,612.1
-
-
-
3,612.1
-
38,295.1
91,479.1
88,624.8
-
-
21,112.1
-
20,900.1
2,086.6
2,889.2
-
-
13,955.5
12,780.0
16,433.9
24,493.5
18,010.9
11,832.3
13,012.3
186,190.1
-
103,160.3
14,424.4
13,220.2
-
-
78,169.2
87,922.2
124,709.1
191,930.4
176,503.5
66,690.7
66,329.3
MORE INFORMATION
In annexes pages 132.
44
1 Liquid sums.
2 Directors Michael Neruda, Bouk van Geloven, and Bornah Moghbel have waived their compensations as board members,
members of the Audit Committee and members of the sub committees.
ANNUAL REPORT 2023
04 —Corporate Governance —Organizational chart
Main executives
NCG 461: 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
EMILIO DEL REAL
VICE-PRESIDENT OF HUMAN RESOURCES
RUT: 9.908.112-0
JUAN CARLOS MENCIÓ
LEGAL AFFAIRS AND COMPLIANCE OFFICER
RUT: 24.725.433-1
PAULO MIRANDA
CLIENTS VICE-PRESIDENT
RUT: FOREIGNER
Ramiro Alfonsín is LATAM’s Chief Financial Of-
ficer (“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 the utilities
sector, he worked for five years in Corporate and
Investment Banking for several European banks.
Ramiro Alfonsin holds a degree in Business Ad-
ministration from Pontificia Catholic University
of Argentina.
Emilio del Real is the LATAM Chief People Officer,
a position he took over in August 2005. Between
2003 and 2005, he was Human Resources Man-
ager 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. Emilio del Real has a degree in
Psychology from the Gabriela Mistral University.
Juan Carlos Menció has been the Chief Legal Of-
ficer at LATAM Airlines Group since September 1,
2014. Previously, he 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 LATAM, he was in private
practice in New York and Florida, representing
various international airlines. Juan Carlos Menció
obtained his Bachelor’s Degree in International Fi-
nance and Marketing from the School of Business
at the University of Miami and his Juris Doctor
Degree from Loyola University.
Paulo Miranda has been LATAM’s Chief Customer
Officer 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, Paulo Miranda was re-
sponsible for the Client Experience department,
having previously worked in finance and alliances,
as well as in the negotiation and implementation
of joint ventures. Paulo Miranda holds a Bache-
lor of Business Administration degree from the
Carlson School of Management, University of
Minnesota, USA.
Roberto Alvo has been the Chief Executive Officer
(“CEO”) of LATAM since March 31, 2020. Prior
to this, he worked as Chief Commercial Officer
(“CCO”) of LATAM, in charge of managing the
group’s passenger and cargo revenue. Previously,
he was Vice-President of International and Alli-
ances at LATAM Airlines, and Vice-President of
Strategic Planning and Development. Roberto Alvo
joined LAN Airlines in November 2001, where he
served as Chief Financial Officer of LAN Argen-
tina, as Manager of Development and Financial
Planning at LAN Airlines, and as Deputy Chief
Financial Officer of LAN Airlines. Before working
for the group, Roberto Alvo held various positions
at Sociedad Química y Minera de Chile S.A. He
is a civil engineer, and holds an MBA from IMD
Business School in Lausanne, Switzerland.
45
ANNUAL REPORT 2023
04 —Corporate Governance —Organizational chart
HERNÁN PASMAN
CHIEF OPERATING OFFICER
RUT: 21.828.810-3
JULIANA RIOS
IT & DIGITAL VICE-PRESIDENT
RUT: FOREIGNER
MARTIN ST. GEORGE1
CHIEF COMMERCIAL OFFICER
RUT: FOREIGNER
Hernán Pasman has been the Chief Operations
Officer of LATAM Airlines Group since October
2015. He joined LAN Airlines in 2005 as a head
of strategic planning and financial analysis of the
technical areas. Between 2007 and 2010, Hernán
Pasman was the Chief operating officer of LAN
Argentina, then, in 2011 he served as Chief Ex-
ecutive Officer for LAN Colombia. Prior to joining
the company, between 2001 and 2005, Hernán
Pasman was a consultant at McKinsey & Compa-
ny in Chicago. Between 1995 and 2001, Hernan
held positions at Citicorp Equity Investments,
Telefonica de Argentina and Argentina Motorola.
Hernán Pasman holds a Civil Engineering degree
from Instituto Tecnológico de Buenos Aires and
an MBA from Kellogg Graduate School of Man-
agement (2001).
Juliana Rios been the Chief Digital and IT Officer
of LATAM Airlines since January 2021. Juliana Rios
has over 20 years of experience in services and
technology in the financial and airline industries.
Her career spans business transformation, merg-
ers & acquisitions, digitization, IT, and large-scale
project management, such as PSS migration. As
Chief IT & Digital Officer, she leads LATAM Air-
lines’ digital transformation efforts. Prior to joining
LATAM, Juliana 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. Juliana Rios holds a Bachelor
degree in Business Administration and an MBA
in Corporate Management from IBMEC, Brazil.
Martin St. George joined LATAM Airlines Group
in 2020 as Chief Commercial Officer after a 30+
year career in the airline industry in both North
America and Europe. Prior to joining LATAM, he
ran a strategy-consulting firm for airlines and
travel industry clients in the United States, the
Caribbean and Europe, and served as acting CCO
at Norwegian Air Shuttle ASA. From 2006 to
2019, he worked for JetBlue Airways in several
positions in marketing and as COO. Martin St.
George holds a degree in civil engineering from
the Massachusetts Institute of Technology.
1 Martin St. George submitted his voluntary resignation
effective February 23, 2024.
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. Juan
José Tohá has vast experience in the design and
implementation of communication strategies
and the interaction of organizations with their
environment. Juan José Tohá 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 oth-
ers. In 2019, he joined LATAM group as Director
of Corporate Affairs and Sustainability, reporting
directly to the CEO of LATAM group, and he coor-
dinates the corporate strategy of Public Affairs,
External Communications, and Sustainability.
ANDRÉS BIANCHI
CHIEF CARGO OFFICER LATAM
RUT: 8.867.785-4
Andrés Bianchi has been LATAM Cargo’s Chief Ex-
ecutive Officer since 2017. In this role he manages
and coordinates the air freight activities of the
Group’s affiliates. Andrés Bianchi joined LATAM
Cargo in 2010 and has held various leadership
roles prior to his current position, including VP
Commercial North America, Europe & Asia, VP
Cargo Network and VP of Finance. Prior to joining
LATAM Cargo, he worked as a consultant at McK-
insey and Company. Additionally, from 2002 to
2006 he served as LAN Airlines’ Head of Investor
Relations. Andrés Bianchi holds a Business Ad-
ministration degree from Pontificia Universidad
Catolica de Chile and an MBA from The Wharton
School of the University of Pennsylvania.
46
ANNUAL REPORT 2023 04 —Corporate Governance —Organizational chart
EXECUTIVE REMUNERATION
NCG 461: 3.4 MAIN EXECUTIVES AND 3.6 RISK MANAGEMENT
LATAM has a remuneration policy for salary structures, which
applies to all positions across the group, and consists of the
methodology of weighting positions (points and grades) and
salary scales (based on market research), which rules all
salary movements, both for merit and promotions within the
organization.
The Leadership Committee, comprised of four directors, is
responsible for analyzing LATAM’s top-level organizational
structure and corporate remuneration policy. Its function is to
align remuneration with the company’s strategic objectives,
to reward good performance and behavior, and to prevent the
remuneration policy from generating any type of incentive
for key executives to act contrary to the interests of the
group, its policies, guidelines and current regulations. Along
these lines, the Committee’s work includes the review and
evaluation of models and best practices available in the market
(benchmarking).
In turn, each time there is a change, the LATAM Vice-President
of Human Resources must present it to the Audit Committee.
Furthermore, once a year, the remuneration for senior
management is presented to the Board. It should be noted
that the policy is not disclosed to the general public, but it is
published on LATAM’s internal portal for employees.
In 2023, executive remuneration totaled USD$38,687,858
(USD$24,768,065 from remuneration and USD$13,919,794 from
profit-sharing in March 2024). In turn, in 2022, USD$21,277,246
were paid as remuneration and USD$15,162,482 as profit-
sharing, totaling USD$36,439,727 as gross remuneration.
The Leadership Committee
is responsible for analyzing
LATAM’s top-level organizational
structure and corporate
remuneration policy.
CIP GEM
The LATAM group implemented a talent retention program for
GEM executives (CEOs and employees whose job description
is “Vice-Presidents” or “directors”) and those who participate
are eligible to receive cash payments for the remuneration
units whose value is considered, by way of reference, to be
equivalent to the value of one share of LATAM Airlines Group
S.A., and consequently, in the event that they are paid, they
entitle the employee to receive the cash payment resulting from
multiplying the number of Units paid by the value per share
of LATAM Airlines Group S.A. to be considered in accordance
with the CIP GEM. These units are as follows:
1. Retention Shares Units (RSUs)
That is, units associated with the employee’s permanence in
the group and, consequently, are associated with the passing
of time. Overall, the CIP considers up to 2,346,862,183 RSUs,
payable in installments as indicated below.
It should be noted that, as a general rule, RSUs will be eligible
to vest at the rate of one-third on each of the following dates:
month 24, month 36 and month 42, in each case, counted
from the date of the exit date of LATAM group from the re-
organization proceedings (the “Chapter 11 Proceeding”) under
Chapter 11 of the United States of America (the “Exit Date”).
The foregoing, subject to the occurrence of a triggering event
GUARANTEED MINIMUM VESTING OF RSUS
Percentage of Units to be vested
Month 30 from Date of Departure
Month 42 from Date of Departure
Month 60 from Date of Departure
20%
30%
50%
related to the volume of transactions of securities issued
by LATAM Airlines Group S.A. under the terms considered in
the CIP (hereinafter, a “VTE”—Volume Triggering Event). The
number of RSUs that are actually vested will be determined
based on the net resources accrued as a result of a VTE on the
respective determination date (hereinafter, this adjustment
will be referred to as the “Pro Rata Factor”).
Notwithstanding the foregoing, the CIP GEM also considers
a “Guaranteed Minimum Vesting” pursuant to which the per-
centage of RSUs set forth below will be vested on each date
indicated, even if no VTE has occurred. The foregoing, net of
any RSUs that may have been vested previously.
2. Performance Shares Units (PSUs)
That is, units associated with both the employee’s permanence
in the group and the performance of LATAM Airlines Group
S.A. as measured by the share price. Consequently, like RSUs,
these units are associated with the passing of time. However,
PSUs also consider the market value of LATAM Airlines Group
S.A. stock, considering a liquid market. However, in the absence
of such a liquid market, the share sprice will be determined
on the basis of representative transactions. Overall, the CIP
considers up to 4,251,780,158 RSUs, payable in installments
as indicated below.
It should be noted that, as a general rule, PSUs will be eligible
to vest at the rate of one-third on each of the following dates:
month 24, month 36 and month 42, in each case, counted
from the Date of Departure. The foregoing, subject to (i) the
occurrence of a VTE; and (ii) the quotient (hereinafter, the
“Net Price/ERO Price Ratio” (EQUITY RIGHTS OFFERING) be-
tween the net price of the sales originated in a VTE, divided
by the price per share at which the shares issued by virtue
of the capital increase agreed at the LATAM Airlines Group
S. A. Extraordinary Shareholders’ Meeting were placed (i.e.
USD$0.01083865799), being greater than 50%. The number
of PSUs that will actually be vested will be determined based
on the Pro Rata Factor and the Net Price/ERO Price Quotient).
It follows that the PSUs constitute a contingent and non-guar-
anteed payment. In addition, certain of the GEM Executives will
also be entitled to receive a fixed, guaranteed cash payment
(“MPP” - Management Protection Plan) on certain dates under
the Reorganization Plan, approved and confirmed under the
Chapter 11 Proceeding, at the rate of 33% in the 18th month
from the Date of Departure, 34% in the 24th month from the
Date of Departure, and 33% in the 30th month from the Date
of Departure. On the other hand, those employees who are
eligible for this MPP will also be eligible for a limited number
of additional RSUs (“MPP Based RSUs”). In total, the CIP con-
siders 1,438,926,658 MPP Based RSUs. As a general rule, MPP
Based RSUs will be eligible to be vested under the same terms
and conditions as the RSUs; provided, however, that they will
be eligible for vesting at the rate of one-third on each of the
following dates: month 18, month 24 and month 30, in each
case, counted from the Date of Departure.
In both cases, the respective employees must have remained
as such in the group at the corresponding accrual date to be
eligible to receive these benefits.
Given the characteristics of this program, it has been recorded
in accordance with IFRS 2 (Share-based payment) and has been
considered as a cash settlement award and, therefore, record-
ed at fair value as a liability under line items Trade accounts
payable, other accounts payable and Provisions for non-cur-
rent employee benefits, which is restated at the closing date
47
ANNUAL REPORT 2023
04 —Corporate Governance —Organizational chart
of each financial statement, affecting the income for
the period classified in the line item Administrative
expenses of the Consolidated Income Statement by
function.
solidated statement of financial position is US$118.9
million. For a detailed description, please see Note
22 (Employee Benefits) in our audited consolidated
financial statements.
Nonetheless, the fair value has been determined
based on the current value and the best estimate of
the future value of the Company’s shares, multiplied
by the number of base units awarded. This estimate
was based on the group’s Business Plan and its main
indicators such as EBITDAR, adjusted net debt.
CIP (Corporate Incentive Plan)
With the aim of incentivizing the retention of talent
among the executives of the Company and in response
to the exit of the Chapter 11 Procedure, our Board
of Directors approved on April 25, 2023, to extend
the grant of an extraordinary and exceptional incen-
tive called Corporate Incentive Plan (“CIP”). The CIP
contemplates incentives divided in three categories
tailored to three different groups or categories of
employees, depending on whether employees were
hired by the Company directly or by other companies
of the LATAM Airlines Group. These categories are as
follows: Non-Executive Employees; Executives Not
part of the Global Executive Meeting o “GEM”; and
GEM Executives. Employees in each of these groups
are only eligible for the CIP that corresponds to their
respective category. The terms of each of these CIP
categories were communicated to the respective em-
ployees between the months of January to December
2023. In all cases, the respective employees must
have remained as such in the Company at the corre-
sponding accrual date to qualify for these benefits.
During 2023, the amount accrued related to the CIP
was US$66.8 million, which is recorded in the “Admin-
istrative expenses” line of the Interim Consolidated
Statement of Income by Function. As of December
31, 2023, the amount of the CIP recorded in the con-
.
e
l
i
h
C
,
é
o
l
i
h
C
48
ANNUAL REPORT 2023
04 —Corporate Governance —Corporate guidelines
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 & 3-3
SASB TR-AL-520A.1
LATAM group’s parent company is LATAM Airlines Group S.A., a
corporation with securities registered in the Securities Registry
of the CMF in Chile, and as such, is an open corporation in Chile.
LATAM Airlines Group S.A. shares are traded on the Santiago
Stock Exchange, the Chilean Electronic Stock Exchange, and
the over-the-counter (OTC) market in the United States in the
form of American Depositary Receipts (ADR). Therefore, its
corporate governance model is ruled by 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.
Meanwhile, 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). Along these lines,
LATAM constantly evaluates the possibility of implementing
best practices, such as adherence to national or international
codes.
In fact, the group’s Code of Conduct applies to all employees
and collaborators of its companies, branches, subsidiaries and
offices. Indeed, the Compliance Program, managed by the Le-
gal and Compliance Vice-Presidency, directs monitoring and
control processes and their ongoing evolution.
49
Likewise, LATAM has policies to prevent and detect regulatory
breaches regarding the rights of its employees or clients, or
that could affect fair competition. Thus, there are a series of
trainings on the subject for professionals. We wish to mention
that, during 2023, there were no penalties or monetary losses
resulting from judicial proceedings related to anti-trust or unfair
competition regulations. The number of penalties levied against
LATAM and/or any of its affiliates under Law No. 19,496 on
Consumer Rights Protection and/or the equivalent legislation
in the territories where LATAM group operates are: a) Europe:
1; b) USA: 1; c) Colombia: 1; d) Argentina: 4; e) Chile: 37; f)
Brazil: 194; g) Peru: 98; these penalties translate into a total
of CLP$2,133,736,953. The number of labor sanctions levied
against LATAM and/or any of its affiliates is: a) Chile: 36; b)
Argentina: 28; c) Peru: 2; d) Brazil: 19. These penalties total
CLP$490,678,963. Only Chile and Colombia were subject to
labor rights tutela actions, without any sanctions levied so far.
CONFLICT OF INTEREST
NCG 461: 3.1 GOVERNANCE FRAMEWORK AND 8.1.5 LEGAL AND REGULA-
TORY COMPLIANCE – OTHERS
GRI 2-11 AND 2-15
LATAM has an internal process to detect and manage conflicts
of interest. In fact, all candidates to work at LATAM group are
required to fill out the Conflict of Interest Statement prior
to being hired. Likewise, periodically, group employees must
complete a Conflict of Interest form each time they take the
Code of Conduct course, as well as update this document when
a potential conflict is identified. In addition, suppliers must
answer a questionnaire on the subject.
It should be noted that in the event that a potential or actual
conflict is identified, whether involving candidates, employees
or suppliers, it is reviewed by the Compliance team and sub-
mitted to the corresponding authorities for approval.
On the other hand, both employees and collaborators of the
LATAM group must request prior permission for non-routine
meetings with competitors and public officials. This is done
through the Approvals System, which is operated by Com-
pliance, by sending a request and an agenda, which must be
previously approved by the Legal department.
We should note that, since the creation of the policy (in late
2016), LATAM has not made any political contributions.
In addition, LATAM has a Crime Prevention Manual. The pur-
pose is to prevent crimes of bribery, asset laundering, terrorist
financing, handling of stolen goods, incompatible negotiations,
corruption among private individuals, misappropriation, and
fraudulent administration, among others considered under
Chilean Law no. 20,393 and its amendments. In 2023, LATAM
had no penalties related to Law no. 20,393.
RELATED-PARTY TRANSACTIONS
LATAM has a Related-Party Transactions Control Policy applica-
ble to the parent, all subsidiaries and all members of the group
(directors and employees). The policy states that related-party
transactions must be conducted in accordance with the law,
under market conditions at the time of the transaction, and
must contribute to the social interest. Likewise, the document
establishes that, where appropriate, these transactions must
be submitted for evaluation by the Audit Committee and for
the approval of the Board of Directors or the Shareholders’
Meeting, pursuant to applicable law.
Along these lines, the consolidated Financial Statements for the
financial year ended December 31, 2023, report the transac-
tions carried out in 2023 between LATAM and its subsidiaries.
For more information, see page 163.
POLITICAL CONTRIBUTIONS
GRI 415-1
NCG 461: 3.1 GOVERNANCE FRAMEWORK
ETHICS AND COMPLIANCE
NCG 461: 3.6 RISK MANAGEMENT
GRI 205-2 AND 205-3
All LATAM employees, upon entering the group, undergo training
on the guidelines for integrity and compliance in the onboard-
ing process. In addition, the different teams’ annual training
agenda includes topics such as ethics, corruption prevention,
and free competition. There is also specific training on the
content of the group’s Code of Conduct, which is mandatory
and must be revalidated every two years.
During 2023, 100% of the Board of Directors and 91% of the
employees participated in trainings on the Code of Conduct.
Meanwhile, communications on anti-corruption procedures
reached 91% of employees and all suppliers. The latter must
accept the so-called Code of Conduct for Third Parties and
Third-Party Intermediaries at the beginning of the business
relationship, in addition to committing to the anti-corruption
clauses contained in contracts and purchase orders.
It should be noted that there were no cases of corruption in
2023. Likewise, LATAM uses the Foreign Corrupt Practices Act
(FCPA) definition of corruption. Within it, 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 official position,
regardless of whether the corrupt act succeeds in its purpose.
The guidelines regarding possible financial support to parties
and candidates during electoral campaigns are established in
the Political Contributions Policy, which applies to all LATAM
countries of operation. Along these lines, contributions must
adhere to current local legislation and be in line with the group’s
Code of Conduct.
MORE INFORMATION
Code of Conduct.
Corporate Practices Manual (in English).
Political Contributions Policy.
Code of Conduct for Third Parties and Intermediaries.
ANNUAL REPORT 2023 04 —Corporate Governance —Corporate guidelines
WORKPLACE HARASSMENT (MOBBING)
NCG 461: 5.5 WORKPLACE AND SEXUAL HARASSMENT
LATAM group’s Code of Conduct prohibits all harassing behav-
ior in the workplace, whether sexual or not, and specifies the
agencies for escalating and reporting incidents through the
Confidential Reports Channel.
Each country where the LATAM group is based has its own
workplace and sexual harassment protocols. In the case of
Chile, the process is reported in the Internal Regulations for
Order, Hygiene and Safety, as required by local regulations.
The LATAM group trains its employees on labor and sexual
harassment issues, as part of its Code of Conduct trainings.
In addition, the Compliance department conducted focused
training sessions on the subject for more than 3,600 employ-
ees in 2023.
CONFIDENTIAL CHANNEL
NCG 461: 3.6 RISK MANAGEMENT
GRI 2-16 AND 2-26
LATAM has a Confidential Channel to receive potential reports
on breaches of laws and internal rules; breaches of the Code of
Conduct; labor irregularities; discrimination; workplace and sex-
ual harassment; fraud; corruption; and bribery, among others.
In fact, the LATAM stakeholders can access this anonymously
and LATAM guarantees the principle of “non-retaliation” when
reports are in good faith.
When a report is made through this channel, which is on the
platform of an external and non-LATAM provider, the com-
plainant receives an identification number with which they can
follow up on their case. The information provided only refers
to the status of the case (whether it is open, under investi-
gation or closed with findings of fact). Along these lines, no
information is disclosed of the possible penalties that might
be levied against the individuals reported.
In the case of investigation, it is carried out internally by the
Compliance team, with support from HR, Legal and any other
departments or individuals necessary. The channel is made
known through communications, training carried out by the
Compliance team, e-learning and group policies.
EMPLOYEES1 TRAINED ON THE CODE OF CONDUCT 2023
GRI 205-2
96%
80%
94%
95%
88%
86%
93%
91%
BRAZIL
CHILE
COLOMBIA
ECUADOR
UNITED
STATES2
PERU
OTHERS
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
11
128
685
9,627
230
317
832
6,049
37
330
438
1,961
293
354
1,315
2,269
1
23
71
936
18
58
54
958
0
7
29
119
10
18
11
277
5
30
64
28
2
9
47
2
1
15
65
901
41
50
42
1,750
3
28
65
436
40
68
25
67
LATAM
GROUP
5
561
1,417
14,008
634
874
2,326
11,372
FUNCTIONAL CATEGORIES
Senior management
CEOs, Vice-Presidents and
directors.
Sales force
Sales Operations and
Customer Care.
Management
Senior managers, managers
and assistant managers.
Administrative
Support activities and
general roles.
Leadership
Area managers and
department managers.
Other professionals
Middle management in
support activities.
Operators
Cargo Operations,
Maintenance, Airport and
Operations Control Center.
Other technicians
Command and cabin crew.
1 This percentage does not include personnel on permanent medical leave. Also, LATAM has no professionals in the Auxiliary category.
2 Percentage based on the personnel to whom the course is made available, i.e. direct personnel hired by LATAM.
50
ANNUAL REPORT 2023
Stakeholder
engagement
51
04 —Corporate Governance —Stakeholder engagement
NCG 461: 3.1 GOVERNANCE FRAMEWORK, 3.7 STAKEHOLDER ENGAGEMENT, 6.1 INDUSTRIAL SEC-
TOR AND 6.3 STAKEHOLDERS
GRI 2-29 AND 3-3
LATAM’s main stakeholders include:
• Authorities and different government agencies, which define the regulatory
framework and public policies affecting the group and its operations.
financial statements, quarterly reports, and other relevant data to assist share-
holders, investors and market analysts in their decision-making process. All these
contents are available in English, Spanish, and Portuguese.
Moreover, without the assistance of external experts, the Investor Relations de-
partment does annually reviews internally of the information presented to the
market by other players in its industry to evaluate improvement, opportunities
for the data and information presented to the public.
• Trade associations, with which LATAM shares common interests.
Shareholders’ Meetings
• International organizations, responsible for the international regulatory frame-
work, and sector benchmarks and references that allow the group to make a
comparative analysis of its own performance.
All shareholders may participate in the so-called 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 the LSA, its Regulations and other
applicable regulations (including General Standard 30 of the CMF).
• Capitals market—a key player for business continuity and access to financing.
• Communities with which LATAM puts into practice its commitment to generate
and share value.
• Employees, who make LATAM, being essential to the business and its operations.
• Network of suppliers with whom LATAM maintains business relationships.
• Clients who choose to fly with LATAM.
Likewise, prior to the Shareholders’ Meetings with the agreement of the Board,
LATAM uploads all the relevant information to said process into the Investor Re-
lations website. Meanwhile, with regard to the Board member elections, LATAM
publishes the names of the shareholders’ nominees along with their nomination
and acceptance letters or sworn statements, as may be the case. It is worth noting
that no information is published on the Board’s opinion regarding the experience,
vision and skills that are advisable for new members.
The most recent Shareholders’ Meetings have been held remotely or in hybrid
format, and shareholders have been able to participate and exercise their right to
vote both remotely or on site. Still, LATAM does not have a real-time audio and
video streaming service for non-shareholder audiences.
CAPITALS MARKET
NCG 461: 3.7.II
MEDIA RELATIONS
LATAM establishes an ongoing dialog with its shareholders, other players in the
debt and capitals market, and the press. It also has Investor Relations and External
Communications departments to manage relationships with its stakeholder groups.
The External Communications department engages with the media for all their
requirements and to communicate the milestones of the LATAM group. Contact
is via e-mail at ComunicacionesExternas@latam.com.
Specifically, LATAM’s Investor Relations department makes it possible to clarify
the concerns of shareholders, investors and other players of the capitals market
regarding its financial and economic situation, the main risks, strategy and other
aspects of the business. In fact, in the Investor Relations website, the group of-
fers a breakdown of the corporate governance structure, and publishes updated
ANNUAL REPORT 2023 04 —Corporate Governance —Stakeholder engagement
ASSOCIATION MEMBERSHIP
NCG 461: 6.1 INDUSTRIAL SECTOR & 6.3 STAKEHOLDERS
GRI 2-28
LATAM group participates, through memberships, in representative agencies that promote initiatives for
strategic debate and the joint construction of solutions. It also collaborates in the discussion of public
policies and regulations relevant to the sector. In fact, In 2023, financial contributions to the different
agencies totaled USD$1,829,742. All of these amounts went to trade associations, with the largest con-
tributions going to Associação Brasileira das Empresas Aéreas (Abear), which received USD$1,126,644,
Sindicato Nacional das Empresas Aeroviárias (Snea), which received USD$208,714, and Sociedad de
Fomento Fabril (SOFOFA), which received USD$58,786.
Argentina
• Cámara de Compañías Aéreas en Argentina (JURCA)
Brazil
• Cámara Chileno Norteamericana de Comercio (Amcham–Chile)
• Cámara de Comercio de Santiago (CCS)
• Federación de las Empresas de Turismo de Chile (Fedetur)
• Fundación Chilena del Pacífico
• Instituto Chileno de Administración Racional de Empresas
• Cámara de Comercio Americana
• Pacto Global
• Cámara Ecuatoriano Alemana
• YPO
(ICARE)
Peru
• Associação Brasileira das Empresas Aéreas (Abear)
• Associação Brasileira das Empresas de Mercado de
• Pacto Global
• Sociedad de Fomento Fabril (SOFOFA)
Fidelização (Abemf)
• Associação Brasileira de Comunicação Empresarial
Colombia
(Aberje)
• Câmara Americana de Comércio para o Brasil
• Asociación de Líneas Aéreas Internacionales en Colombia
(Amcham Brasil)
(ALAICO) – Carga
• G100 Brasil (G100 Brasil)
• Junta dos Representantes das Companhias Aéreas
Internacionais do Brasil (Jurcaib)
• Sindicato Nacional das Empresas Aeroviárias (Snea)
• Asociación de Transporte Aéreo de Colombia (ATAC)
• Asociación Nacional de Empresarios de Colombia (ANDI)
• Federación Nacional de Comerciantes (FENALCO)
• Cámara de la Diversidad
Chile
Ecuador
• Asociación Chilena de Aerolíneas (ACHILA)
• Asociación Latinoamericana y del Caribe de Trans-
porte Aéreo (ALTA)
• Cámara de Industrias de Guayaquil
• Cámara de Industrias y Producción (CIP)
• Club 30% (OPEV)
• Asociación de Empresas de Transporte Aéreo Internacional
(AETAI)
• Confederación Nacional De Instituciones Empresariales
Privadas (CONFIEP)
• Asociación Peruana de Empresas Aéreas (APEA)
• Cámara de Comercio Americana del Perú (AMCHAM PERÚ)
• Cámara Nacional de Turismo (CANATUR)
• Cámara Regional de Turismo de Cusco (CARTUC)
• Instituto Peruano de Economía (IPE)
• Perú Sostenible
• Sociedad de Comercio Exterior del Perú (COMEX PERÚ)
• Asociación Peruana de Hidrógeno (H2 PERÚ)
• UNESCO – Pacto por la Cultura
• Patronato Hombro a Hombro
• Asociación Femenina de Ejecutivas de Empresas Turísticas
52
POLITICAL CONTRIBUTIONS
GRI 3-3: 205
Since the creation of the Political Contributions Policy
in late 2016 until the end of 2023, the LATAM group
has not made any political contributions.
Nonetheless, it is worth noting that the Policy es-
tablishes guidelines for possible financial support to
parties and candidates during election campaigns in
all the countries where the group operates. These
guidelines state, among other things, that contribu-
tions must adhere to current local legislation and be
in line with LATAM’s Code of Conduct.
MORE INFORMATION
Manual for Handling Relevant Information for Markets
Investor Relations: latamairlinesgroup.net
Contact: InvestorRelations@latam.com or
ComunicacionesExternas@latam.com
ANNUAL REPORT 2023 Financial
policies
04 —Corporate Governance —Financial policies
FINANCING POLICY
The scope of the LATAM group’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.
the various aircraft financing structures are mostly for 12 years. Moreover, the
LATAM group 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%.
During the Chapter 11 Proceeding the LATAM group obtained Debtor-in-Possession
(DIP) financing, initially for USD$2.45 billion and up to USD$3.70 billion, USD$2.75
billion of which were drawn. This DIP financing allowed the LATAM group to op-
erate 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 USD$2.25 billion in a combination of bridge loans
with Term Financing, added to USD$1.14 billion from a Junior DIP, effective during
the remaining period of the Chapter 11, and a new Revolving Credit Facility (RCF)
for USD$500 million that became fully available.
On October 18, 2022, the bridge loans were partially repaid through bond issuance
under SEC Rule 144A. Subsequently, on November 3, 2022, the bridge loans were
fully repaid and replaced by an increase in the term financing mentioned above.
Likewise, on that date, the LATAM group 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 next important maturities due in 2027, corresponding
to the Term Financing worth USD$1.10 billion and the 2027 Notes for USD$450
million, and in 2029, corresponding to the 2029 Notes for USD$700 million. As
part of its new capital structure, the LATAM group has two committed lines of
credit totaling USD$1.1 billion, one for USD$600 million secured by aircraft, spare
engines and spare parts in general, and the other line for USD$500 million, secured
by intangibles. As at December 31, 2023, both lines are fully available.
During its reorganization, the LATAM group focused its resources on maintaining
operations and adjusting fleet size in line with current and projected demand for
the next few years. The LATAM group 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 pay periods, rental
reduction, and extended payment periods. By December 31, 2023, the LATAM
group had placed orders with Boeing for five B787-9 aircraft and with Airbus for
88 A320neo and A321XLR aircraft with delivery by 2029. Normally, the LATAM
group finances between 70% and 85% of the value of the assets through bank
loans, secured notes covered by the export promotion agencies, or through com-
mercial loans, capital investments, or its own funds. The payment schedules of
53
ANNUAL REPORT 2023 04 —Corporate Governance —Financial policies
MARKET RISK MANUAL
Given the nature of its operations, the LATAM group is subject
to market risks, such as:
1. Fuel price risk.
2. Interest rate risk.
3. Exchange rate risk.
In order to hedge fully or partially against these risks, the
LATAM group 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.
1. 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. The LATAM group 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 group’s Finance
Committee.
With regard to fuel hedging instruments, the Policy makes
it possible to contract combined Swaps and Options only for
hedging purposes.
2. 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 uncertainty surrounding how the market and the govern-
ments will behave, and thus, how interest rates will change,
leads to a risk related mainly to the LATAM group’s debt subject
to variable interest and to the investments it makes. 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.
The LATAM group’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 in-
terest rates, the LATAM group can use interest rate swaps,
swaptions, or other derivatives.
At December 31, 2023, the company has no interest rates
derivatives positions.
3. Exchange rate risk
The functional currency used by the parent Company is the
US dollar. There are two types of exchange rate risks: Flow
risk and balance sheet risk.
Cash flow risk is a consequence of the net revenue position and
costs in currencies other than US dollars. The LATAM group
sells its services in U.S. dollars and in local currencies. In the
54
international passenger business, most fares depend 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 denomi-
nated in US dollars or equivalent to the USD, like fuel costs,
and aircraft leases. Other expenses, such as remuneration, are
denominated in local currencies.
Thereby, the LATAM group is exposed to the fluctuations in
various currencies, mainly the Brazilian Real. Up to December
31, 2024, the LATAM group is hedged against the Brazilian
Real for USD$414 million for 2023.
On the other hand, balance sheet risks appears when entries
in the balance sheet are exposed to exchange rate fluctua-
tions, 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 U.S. dollars,
even though its assets are stated in local currency. While the
LATAM group may take out 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 2023, the LATAM group made no hedges
against balance sheet risk.
.
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ANNUAL REPORT 2023
04 —Corporate Governance —Financial policies
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 Compa-
ny’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.
The Financial Policy of the LATAM group aims to achieve the following goals:
• To maintain an optimal debt level, diversify financing sources, manage the debt
maturity profile, and minimize the cost of financing.
La Política Financiera del grupo LATAM busca los siguientes objetivos:
• To preserve and maintain suitable cash flow levels to ensure the requirements of
the operations, support growth, and fulfill the group’s financial obligations.
• To maintain, at all times, a short, medium, and long-term visibility of the group’s
projected financial situation to anticipate scenarios of low liquidity, financial ratio
deterioration, etc.
• 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 capitalize excess cash flow through financial investments that will guarantee
a risk and liquidity level consistent with the Financial Investment Policy.
• To maintain a suitable level of credit lines with local and foreign banks to gain
access to additional liquidity to face contingencies.
• The Financial Policy delivers guidelines and restrictions to manage Liquidity and
Financial Investment transactions, Financing Activities, and Market Risk Management.
• To manage counterparty risk through the diversification and limits on investments
and transactions with counterparties.
55
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ANNUAL REPORT 2023
04 —Corporate Governance —Financial policies
LIQUIDITY AND FINANCIAL INVESTMENT POLICY
The LATAM group seeks to maintain an adequate liquidity posi-
tion 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.
As part of its new capital structure, the LATAM group has
two committed lines of credit totaling USD$1.1 billion, one
for USD$600 million secured by aircraft, spare engines and
spare parts in general, and the other line for USD$500 million,
secured by intangibles. At yearend, both lines are fully avail-
able. In addition, LATAM ended the year with a total liquidity
of around USD$2.8 billion and a liquidity index of 23.9%.
With regard to the Financial Investment Policy, its goal is to
centralize investment decisions to optimize profitability, ad-
justed 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 marked globally by very low rates, whereas 2022
and 2023 witnessed an increase in interest rates.
56
ANNUAL REPORT 2023
05Our Business
In this chapter
58
Industry
context
59
Financial
results
61
Investment
plan
62
Stock
information
Industry
context
58
05 —Our Business —Industry context
NCG 461: 6.2 BUSINESSES
shortage of qualified personnel in the airline industry.
In 2023, the world economy remained on a path of
slow growth, mainly due to the tightening of monetary
policies to reduce inflation. Thus, in its latest projec-
tion from January 2024, the International Monetary
Fund (IMF) estimated a growth of 3.1% for the global
economy in both 2023 and 2024.
Under the same projection, the IMF calculated that
developed economies will face a slight decrease this
year, from a projected growth of 1.6% in 2023 to 1.5%
during 2024. Along this line, according to the IMF, the
United States will expand by 2.1% in 2024, which is
0.6 percentage points higher than was projected in its
October report, due to an increase in both public and
private spending, as well as an expansion of supply.
Meanwhile, for the euro zone, the IMF considered 0.9%
growth during 2024, down 0.3 percentage points vs.
the October 2023 projection, reflecting a decline in
consumer confidence, persistently high energy prices
and weak investment in both the business and man-
ufacturing sectors.
In addition, the International Air Transport Association
(IATA) indicated in its latest report, released in January
2024, that there was a strong recovery throughout
the airline industry during 2023. In fact, on a global
level, passenger capacity, which is measured in ASK
(available seat kilometers), grew 24.1% vs. 2022,
while passenger demand, which is measured in RPK
(revenue-passenger kilometers), increased 25.3% over
the same period. On parallel, cargo capacity, which is
measured in ATK (available ton-kilometers), increased
by 13.6% in 2023 compared to the previous year. How-
ever, IATA has pointed out that there is a production
crisis in both aircraft engines and aircraft worldwide.
This is due to difficulties in the supply chain and higher
raw material prices. In addition, there has also been a
As for Latin America and the Caribbean, they are
experiencing socio-political processes that have had
impacted the economic scenarios of the region’s coun-
tries. For example, during April 2023, general elections
were held in Paraguay, where a new president (San-
tiago Peña) and vice-president (Pedro Alliana) were
elected for the 2023-2028 five-year term, in addition
to senators, congressmen, governors and members
of the departmental councils.
The IMF estimated 3.1%
growth for the global
economy in 2023 and 2024.
In turn, in November 2023, the second round of the
presidential election was held in Argentina (the first
round was held in October 2023, as part of the gen-
eral elections), with Javier Milei winning 56% of the
votes over Peronist Sergio Massa, who obtained 44%
of the votes.
However, the projections for Latin America and the
Caribbean in the latest IMF report were adjusted with
regard to the estimates that it presented in October.
Along this line, the growth for the region was fore-
cast to be 1.9% in 2024, with a downward revision of
0.4 percentage points compared to the October es-
timate. This is due to Argentina’s negative growth in
the context of a significant adjustment of economic
policy to restore macroeconomic stability. However,
the IMF expects Brazil to grow 1.7% in 2024. Mean-
while, for 2025, the IMF estimates an expansion of
2.5% for the region.
In Chile, after a 4-year constitutional process, the
citizenry decided to reject the last proposed consti-
tution, thus keeping the one approved in 1980, which
has undergone several reforms since then. Thus, in
February 2024, the Central Bank of Chile estimat-
ed that Chilean GDP will close at -0.2%, and that
the expansion ranges will stand between 1.25% and
2.25%, and between 2% and 3% for 2024 and 2025,
respectively, according to its December 2023 Mon-
etary Policy Report (IPoM, for its Spanish acronym).
1.9%
Latin America and the
Caribbean are expected to show
1.9% growth in 2024.
1.7%
Brazil’s economy is expected to
grow 1.7% in 2024.
between 1.25%
and 2.25%
The range of expansion that the
Central Bank projects for Chile
in 2024 is between 1.25% and
2.25%.
ANNUAL REPORT 2023 05 —Our Business —Financial results
Financial
results
GRI 3-3
As of to December 31, 2023, LATAM reported a gain of
ThUS$581,831, translating into a negative variation of
ThUS$757,379 vs. the previous year’s ThUS$1,339,210. This
positive balance for 2022 is explained by ThUSD$1,680,934
corresponding to positive non-operating impacts related to the
Chapter 11 restructuring process, so taking this into account,
the comparable amount is ThUSD -$341,724. Meanwhile, the
net margin for the year reached 4.9% in 2023, while during
2022, it was 14.1%. In turn, adjusted operating income for 2023
amounted to ThUS$1,327,901, while adjusted operating margin
reached 11.3%, 9.8 percentage points higher than the margin
of 1.4% recorded in 2022. On the other hand, operating income
for the financial year increased 23.9% vs. the same period of
2022, totaling ThUS$11,789,182. This is largely explained by a
33.8% increase in passenger revenues and a 17.4% contraction
in cargo revenues.
In detail, passenger revenues reached ThUS$10,215,148, com-
pared to ThUS$7,636,429 at December 31, 2022. This varia-
tion is due to a 23.1% increase in demand and an 8.6% hike in
yields compared to the same period of the previous year. On
other hand, load factor also shows a positive variation of 1.8
percentage points, reaching 83.1% during 2023, explained by
a strong hike in demand.
As for cargo revenues, they settled at ThUS$1,425,393 at
December 31, 2023, i.e. 17.4% less than in 2022, explained
59
by the weakening of cargo yields, given the higher capacity.
Nonetheless, cargo revenues increased by 33.9% compared to
the same period of 2019.
Aircraft Rentals reported costs of ThUSD$91,876 as a result
of the different agreements reached by LATAM.
The other income item recorded a total of ThUS$148,641
during the year, which translates into a decrease of 3.7%, in
line with the previous year. On the other hand, adjusted op-
erating costs amounted to ThUSD$10,461,281, higher than in
2022, mainly due to the increase in passenger operations and
particularly in international operations, which grew by 36.2%
compared to 2022.
Wages and benefits increased ThUS$303,484, mainly due to
higher crew costs, a 9.6% increase in the average headcount
and compensation paid to employees during the last quarter
of 2023.
Fuel increased 1.7%, equivalent to ThUSD$64,715. This increase
is mainly due to a larger operation, with a 17.5% increase in
gallon consumption, net of a lower unhedged price of 13.6%.
Agent commissions showed an increase of ThUSD$77,125,
mainly as a result of the increase in operations related to pas-
senger revenues, and the rise in operations across all segments,
especially due to the growth of the international business.
Depreciation and amortization increased by ThUSD$25,861,
equivalent to 2.2%. This variation is mainly explained by main-
tenance depreciation costs due to a higher average fleet size
during the year compared to the previous year.
Other rental and landing fees increased ThUSD$286,637,
mainly in the costs of airport charges and handling services,
impacted by the recovery of operations across all segments,
both on the domestic and international fronts.
Passenger services reported higher costs, translating into an
increase of 47.5% vs. 2022, explained by a significant growth
in demand. In fact, the number of passengers transported
rose by 18.3%.
We should note that aircraft leasing includes the costs relat-
ed to leasing payments by the hour (PBH) for contracts that
have been modified to incorporate 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, a
right-of-use asset and a lease liability were recognized for these
amounts at the date of the 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.
Maintenance expenses were higher (an increase of
ThUSD$18,956), mainly due to a higher average number of
aircraft compared to the previous year.
The other operating expenses reported a percentage increase
of 18.9%, due to the effect of higher costs in the crew, mar-
keting, sales, and reservation systems variables.
Overall, interest income totaled ThUS$125,356 which, com-
pared to the ThUS$1,052,295 reported in 2022, represents a
decrease of 88.1%. This variation is largely due to movements
in the Chapter 11 restructuring process totaling $911.7 million
dollars.
Meanwhile, interest expenses decreased 25.9%, totaling
ThUSD$698,231 by December 31, 2023, mainly explained by
the significant reduction of the company’s debt by 40%, pos-
sible because of the exit from Chapter 11.
Other income/expenses totaled ThUSD$159 at December 31,
2023. On the other hand, the main items of the consolidated
financial statement of TAM S.A. and its Subsidiaries, which
produced a gain of ThUS$50,701 due to exchange rate dif-
ferences at December 31, 2023, are: other financial liabilities,
which generated a gain of ThUSD$26,871 thanks to loans
and financial leasing for the acquisition of fleet denominated
in US dollars; net accounts receivable and payable to related
companies, which recorded a gain of ThUSD$46,531; and net
accounts receivable and payable to third parties, which had a
loss of ThUSD$17,532. We should note that the other items
of net assets and liabilities generated a loss of ThUSD$5,168.
Total revenues
USD$11.8 billion
Adjusted operating margin of
11.3%
Net income of
USD$582 million
ANNUAL REPORT 2023 05 —Our Business —Financial results
ECONOMIC VALUE GENERATED AND DISTRIBUTED 1
(USD$ THOUSANDS)
SNAPSHOT
FINANCIAL INDICATORS (USD$ THOUSANDS)
GRI 201-1
a) Direct economic value generated1
(income, financial investments, sale of assets)
b) Economic value distributed
Operating expenses
Employee wages and benefits
Payment to capital providers (interest payment to lenders and
dividend distribution)
Payments to government (taxes)
Community investments
b) Retained economic value (a-b)
2023
11,914,538
11,507,537
9,036,619
1,583,337
872,621
14,942
18
407,001
1 This indicator provides an overview of how an organization generates value for its
stakeholders.
Operating income
Adjusted operating expenses
Adjusted operating income
Adjusted operating margin
Net profit/(loss)1
Net Margin
Adj. EBITDAR
EBITDAR margin
Cash and cash equivalents2
/revenues last 12 months
Net leverage3
2021
2022
2023
5,111,346
-6,230,630
-964,284
-18.90%
-4,653,142
N/S
201,110
3.90%
20.50%
N/S
9,516,807
-9,381,941
134,866
1.42%
1,337,137
14.07%
1,314,379
13.81%
24.30%
4.0x
11,789,182
-10,461,281
1,327,894
11.26%
581,550
4.94%
2,533,274
21.49%
23.9%
2.1x
N/S Not significant.
1 Net profit before minority interest.
2 Includes the revolving credit line.
3 Adjusted net debt/Adjusted EBITDAR (last 12 months).
MORE INFORMATION
Risk Factors, in Annexes. Pages 141-153.
.
e
l
i
h
C
,
o
g
a
i
t
n
a
S
60
ANNUAL REPORT 2023
05 —Our Business —Investment plan
Investment
plan
NCG 461: 4.3 INVESTMENT PLANS
Capital expenditures are related to aircraft acquisition, maintenance CAPEX, spare
parts replacement, information technology-related CAPEX, fleet projects such as
cabin refurbishment, freighter conversions and other specific strategic projects.
Along this line, the LATAM group’s capital expenditures are recorded in the cash flow
statement through the following lines: Purchases of Property, Plant and Equipment,
Purchases of Intangible Assets, and partially, Payments to Suppliers for the Supply
of Goods and Services (Leased Maintenance Payments).
HISTORICAL CAPITAL EXPENDITURES
as of December 31, 2023
(MILLION USD$)
Purchases of Property, Plant,
And Equipment
Purchases of Intangible Assets
Lease Maintenance Payments
2021
2022
2023
(597.1)
(88.5)
(163.7)
(780.5)
(50.1)
(149.1)
(795.8)
(68.1)
(294.5)
On the other hand, the table below shows the LATAM group’s estimated capital
expenditures for the years 2024, 2025 and 2026, which are subject to change and
may differ from actual capital expenditures. In turn, pre-delivery payments (PDPs)
and non-fleet CAPEX represent estimated cash outlays for the company that will
be recorded under net cash flow from (used in) activities of investment in Property,
Plant and Equipment and Purchases of Intangible Assets, as well as in net cash flow
from operating activities in the case of maintenance related to operating leases.
Meanwhile, fleet commitments such as the manufacturers’ retail price and the
present value of lessors’ fleet commitments to be received under operating leases,
according to International Financial Reporting Standards (IFRS 16), are presented in
the table below.
ESTIMATED CAPITAL EXPENDITURES PER YEAR
as of December 31, 2023
(MILLION USD$)
ESTIMATES PER YEAR
as of December 31, 2023
(MILLION USD$)
2024
2025
2026
2024
2025
2026
Fleet commitments1
(511)
(1,209)
(757)
Prepayments (PDPs)1
Non-fleet CAPEX2
(91)
(1,402)
(20)
(1,182)
(322)
(1,196)
1 Includes all committed deliveries (from manufacturers and lessors) with estimates of
current scheduled delivery dates.
1 Pre-delivery payments made by the LATAM group or revenue received by the LATAM
group after the aircraft is delivered.
2 Including estimates of capital expenditures on spare engines and parts, fleet maintenance,
projects and others, plus purchases of intangible assets.
It should be noted that, in general, the LATAM group evaluates financing alternatives
to meet its fleet commitments and, therefore, the amounts presented are not nec-
essarily indicative of a cash outflow and, depending on the type of lease (operating
or financial), the Cash Flow Statement will record the delivery of the fleet differently:
in the case of finance leases, the cash outflow will be recorded under Net cash flow
from (used in) investment activities based on the purchase price of the aircraft.
However, aircraft arriving under an operating lease do not represent a cash outflow
upon 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 per the
accounting rules of the IFRS.
61
ANNUAL REPORT 2023
Stock
information
NCG 461: 2.3.4 STOCKS, THEIR CHARACTERISTICS AND RIGHTS
LATAM Airlines Group S.A. is an open stock corporation registered before the Financial
Market Commission (CMF, for its Spanish acronym), under Nº 306, whose shares are
traded in Chile on the Santiago Stock Exchange, (BCS, for its Spanish acronym) and
the Chilean Electronic Exchange-Stock Exchange (BEC, for its Spanish acronym). On
the other hand, following the filing for Chapter 11, the American Depositary Receipts
(ADR) program is no longer listed on the New York Stock Exchange (NYSE), but is
traded in the United States on the Over-the-Counter (OTC) market.
ANNUAL RETURN
+22.92%
+63.81%
ADR
Local share
+24.73%
+18.17%
S&P 500
IPSA S&P
62
05 —Our Business —Sock information
VOLUMES TRADED BY QUARTER—LOCAL STOCK
(SANTIAGO STOCK EXCHANGE)
2023
First quarter
Second quarter
Third quarter
Fourth quarter
N° of shares
traded
(million)
20,210
35,920
55,150
61,900
Average
price
(CLP)
5.90
6.24
8.15
7.99
Total
value
(million CLP)
118,124
224,141
449,473
494,581
VOLUMES TRADED BY QUARTER - ADR
2023
First quarter
Second quarter
Third quarter
Fourth quarter
N° of shares
traded
6,967,870
9,228,850
11,697,850
6,812,404
Average
price
(CLP)
0.4691
0.3814
0.6197
0.5473
Total
value
(million CLP)
3.27
3.52
7.25
3.73
LOCAL SHARE 2023
IPSA
LT
M
02/01/2023
29/12/2023
ADR 2023
S&P 500
ADR
80,0%
70,0%
60,0%
50,0%
40,0%
30,0%
20,0%
10,0%
0,0%
-10,0%
-20,0%
80,0%
60,0%
40,0%
20,0%
0,0%
-20,0%
-40,0%
-60,0%
02/01/2023
29/12/2023
ANNUAL REPORT 2023
06 Safety
In this chapter
64 Number 1
Priority
Priority
Nº1
64
06 —Safety —Number 1 priority
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY INDUSTRY
GRI 3-3, 403-1 & 403-2
SASB TR-AL-540A.1
For the LATAM group, the safety of its employees,
clients and the communities where it operates is fun-
damental and the number one priority. In this sense,
it bases its actions on the Safety, Quality, Health and
Environment Policy, which establishes the highest
standards to safeguard safety as a non-negotiable
value in LATAM group. This document complies with
the parameters established by the International Civil
Aviation Organization (ICAO) and promotes the de-
velopment of the organization’s Safety Management
System for the identification, prevention and mitiga-
tion of risks.
The group’s safety culture focuses on the active par-
ticipation of teams, continuous improvement of pro-
cesses and constant monitoring of performance, with
the aim of frequently perfecting safety indicators. In
addition to rigorously applying the operational proce-
dures established by the authorities, manufacturers,
and the company itself as an airline operator, LATAM
seeks to surpass its own standards. This is why it
increasingly relies on technology and data provided
by its systems for decision-making, and collaborates
with international and national organizations, as well
as with agencies chaired by authorities, with the aim
of developing best practices to mitigate risks and
promote a safe operation.
INTEGRATED SAFETY MANAGEMENT SYSTEM
(SMS)
(SASB TR-AL-540A.1)
The LATAM group’s Integrated Safety Management
System (SMS) considers the areas of Health, Safety
and Environment (HSE) and the 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.
Along these lines, the SMS brings together tools and
programs that enable LATAM to act proactively, mon-
itor performance, identify risk situations, and react
promptly to minimize them. In fact, 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.
In addition to the internal information that streamlines
the prioritization of potential risks, the LATAM group
annually reviews the risks highlighted in the IATA
Annual Safety Report and publishes on its website a
breakdown of the mitigation measures for each risk. In
addition, it discloses its participation in organizations
chaired by national and international authorities and
organizations related to commercial aviation, with a
focus on the safety of the sector.
SMS 2023 results
25,801 hazards and dangerous situations* were iden-
tified by the SMS.
Ninety percent of these situations were mitigated
through investigations or some type of audit.
*Note: Risks and hazardous situations are broadly defined as
any existing or potential condition that could lead to an accident
or incident. The percentage that has not yet been mitigated has
already been assigned a management level and will be handled
in 2024, in line with internal procedures.
Also, as part of the integrated system, the LATAM
group conducts a series of periodic audits to improve
its internal processes, as well as to identify new op-
portunities in security matters. These are divided into
three types:
• 1. Periodic internal audits: They are carried out
by the LATAM team and assess the maturity of the
operational processes implemented in the Airports
and Maintenance areas.
• 2. Internal audits based on the guidelines of the
International Air Transport Association (IATA) Op-
erational Safety Audit: It aims to ensure compliance
with local regulations and that all operational areas
meet the highest safety standards in the industry.
• 3. IOSA recertification audits: IATA’s team of auditors
has been verifying compliance with IOSA standards in
all subsidiaries since 2007. This process is carried out
every two years and the most recent edition was held
in 2023. The result of this process provides LATAM
with improvement opportunities for all its safety
processes.
The SMS brings together tools
and programs that enable
LATAM group to act proactively,
monitor performance, identify
risk situations, and react
promptly to minimize them.
ANNUAL REPORT 2023 06 —Safety —Number 1 priority
ANALYTICS AND ADVANCED DATA USAGE
LATAM has been a pioneer
in the aviation sector in the
use of data from its routine
operation to develop action
plans and ongoing improvement
of operational safety.
Project Safety II
Since 2020, the LATAM group has developed project
Safety II, which generates valuable flight information
and allows the analysis of different variables with the
potential to affect operational performance, such as
meteorological data, maintenance reports and flight
crew alert levels, among others.
In 2023, the growth of this project prompted the cre-
ation of the Safety Data Department in the compa-
ny, with the aim of supporting all operational safety
directorate decisions. In addition, the quality and
availability of data obtained from various sources
was improved. For example, the Human Factor and
Dispatch areas were involved, making it possible to
broaden the collection of data from different sources
and increase the correlation possibilities. This, in turn,
opens the opportunity to add new teams from the
Vice-Presidency of Security.
Another relevant advance was the development of
a new indicator (Safety Performance Index - SPI II),
which makes it possible to visualize the nuances of
performance in all phases of flight. All these advances
have strengthened the capacity to generate correla-
tions, identify trends and carry out other validation
exercises to detect strengths and opportunities for
improvement in the operation.
ing valuable information to mitigate risk and prevent
future recurrences.
DATA MONITORING
Aircraft dispatch processes
After conducting a diagnosis of passenger boarding
processes in 2022, which mapped the risks associat-
ed with aircraft dispatch, the group has continued to
strengthen these processes. In 2023, an automated
monitoring system was implemented to collect actual
data on potential safety events (Safety Performance
Index- SPI) that were previously unavailable.
Additionally, the FOQA provides information segment-
ed by pilot, which is handled with absolute confidenti-
ality. This data is housed in a mobile application called
Pilot LATAM, a mobile application designed specifically
for LATAM group pilots, which functions as a full op-
erational information tool and allows crews to view
details of their performance, compare it with the fleet
average and access incidents identified during flights.
WELL-BEING
GRI 403-7
Through a series of improvements coordinated with
Airport Operations in the boarding process, we were
able to reduce potential security risk events by more
than 90% per month, indicating a significant down-
ward trend. This translates into improved control of
the shipping process, reflecting the success of the
interventions and improvements implemented during
the year.
While the LATAM group is concerned with the safety
of all its employees, it is aware that they themselves
are the main players in making its operations increas-
ingly safer. Thus, the group invests on an ongoing ba-
sis in generating awareness and commitment among
all its teams and seeks to bolster the safety culture
through training and initiatives in engagement and
communication.
Flights
LLATAM has a Flight Operations Quality Assurance
(FOQA) program designed to monitor flight data. This
computerized system allows us to compare actual
flight parameters with standard operating procedures
(SOPs), as it collects information from each flight,
automatically processes the data and identifies devia-
tions in operations, facilitating an operational analysis
of our procedures and the management of preventive
maintenance processes.
The FOQA is a key component in the Security Man-
agement System, essential to detect and identify
security breaches. Thanks to this program, in 2023,
it was possible to monitor over 96% of flights, provid-
Through internal campaigns, the LATAM group seeks to
raise awareness among its teams about the importance
of safe behavior. In addition, it has implemented an
online platform that collects notifications of incidents
and deviations. This valuable information is used to
map risks and generate improvement plans for the
constant evolution towards safer practices.
Microlearning Project
Four Microlearning Project courses were successfully
implemented in 2023, which are complementary to
the gate-keeper activation process (pilots in charge
of analyzing flight data). These have been designed to
strengthen key pilot skills in operational events. Based
on the PBL (Problem-Based Learning) methodology,
65
65
ANNUAL REPORT 2023 06 —Safety —Number 1 priority
these courses have raised the situational awareness of 128
pilots, marking a significant milestone in the improvement of
safety and operational efficiency.
Moreover, a detailed analysis of the root cause and contribut-
ing causes is carried out in each situation, seeking to promote
continuous improvement in any process that may have had an
influence, even minimally, on these behaviors within LATAM.
Human Factors Program
Although this is a common problem in the industry and LATAM’s
statistics similarly reflect what is happening at the sector lev-
el, the organization continues to work on promoting measures
together with the authorities to ensure a regulatory framework
that establishes consequences for disruptive passengers and
that protects the company should it decide not to transport
a passenger deemed dangerous.
CONSTANT IMPROVEMENT: TECHNICAL ASSISTANCE
In 2023, the LATAM group’s Chilean affiliate passenger oper-
ation collaborated with the Boeing Flight Operations Support
Program (FOSP) to receive technical advice on flight operations
safety and training, as well as to improve communications. In
addition, the company participated in the Airbus Global Re-
gional Airbus Safety Program (GRASP), which evaluated and
strengthened the Safety Management System (SMS) and the
Quality Management System (QMS). The evaluation included
executive surveys, attendance at Safety Committee meetings,
process reviews in Brazil and Chile, with a focus on passenger
transportation, and in the United States, for cargo, as well as
interviews with leaders in all areas. The final GRASP report
provided valuable feedback to optimize our SMS, with the goal
of implementing identified improvements in 2024.
During this year, a Human Factors Manual was launched that
establishes a theoretical framework for application in teaching
and work settings. In addition, online training on fatigue and
prevention of psychoactive substances was updated, reaffirm-
ing the commitment to a safe and healthy work environment.
This is in addition to the “Peer Support Pilot” program, which
brings together volunteer pilots in all subsidiaries to develop
indicators related to the psychological well-being of this role,
and “SeguraMente”, which offers medical consultations and
psychological support to pilots.
DISRUPTIVE PASSENGERS
GRI 403-7
In the last three years, disruptions in the LATAM group were
mostly linked to COVID-19 pandemic protocols. In 2023, with
the recovery of operations, alcohol consumption detected in
our passengers has become the main trigger for disruptive
behavior. In response to this, courses and training for airport
staff have been updated and improved to identify passengers
in an altered state prior to boarding.
Each month, statistics on disruptive passengers are presented
to the boards of directors and at the highest decision-mak-
ing levels, with the purpose of reviewing these situations and
taking pertinent actions.
In addition, LATAM group has a Sexual Harassment or Sexual
Molestation Procedure, which is activated in the event of this
type of aggression towards its personnel, ensuring that their
physical and emotional well-being is protected during events
of this nature and providing professional support afterwards.
66
ANNUAL REPORT 2023 06 —Safety —Number 1 priority
AIRPORT SECURITY
When it comes to airport security, LATAM follows
national and international standards and invests
permanently in the continuous improvement of its
processes so that the passengers and cargo it trans-
ports arrive safely at their destinations.
Security Management System (SeMS)
Inspections
During 2023, LATAM implemented the Security Management System (SeMS) in-
ternational standard, with the purpose of further strengthening the structure of
the pillars that make it possible to address and maintain airport and facility se-
curity. This achievement applied to all LATAM group operations, considering both
passengers and employees, and seeks to help ensure operational continuity and
safeguard operations against possible threats and risks, with the highest levels
of security.
This system incorporates procedures for investigating undesirable situations that
apply to the entire LATAM group to identify the causes of events, so that im-
provement measures can be implemented to prevent the occurrence of new cases.
Staff engagement and an organizational culture around safety are crucial to the
SeMS objectives, so the Safety team defines the evaluation and validation of all
content managed by the LATAM Corporate Training Academy, with a focus on
occupational health and safety. They also participate in defining the content of
security briefings for operational teams and often take an active role in these
communication sessions.
LATAM carries out safety inspections through a work plan that covers the different
airport processes, considering infrastructure, mobile equipment, ladders, work-at-
height systems and any condition or activity that poses a critical risk, to mitigate
risks and the impact on people and operations both for the care of passengers
(in accordance with aeronautical regulations) and for the care of employees. In
addition, the goal is to fully comply with international and national regulations,
as well as internal policies to immediately identify any breach of processes that
may arise and that could create exposure to any event of illicit interference, for
which reason we establish permanent monitoring of the way in which each of the
tasks related to access control to aircraft, cargo holds and facilities are carried
out, with particular emphasis on restricted areas.
67
ANNUAL REPORT 2023 06 —Safety —Number 1 priority
EMERGENCY RESPONSE PLAN
SECURITY INCIDENTS
SASB TR-AL-540A.2
SNAPSHOT
In 2023, there were no aviation accidents in the LATAM group’s
operations. During the period, there was one incident that ac-
tivated the Emergency Response Plan for the runway crossing
event, which occurred in Florianopolis on July 12. The situation
was resolved smoothly, after involving the Chilean and Brazilian
committees, which provided all the necessary support for the
proper disembarkation of all crew members and passengers.
In addition, the relevant analysis was subsequently carried
out to identify operational reasons and strengthen security
structures.
LATAM teams maintain the safety management systems
active, monitoring each event for opportunities to improve
processes, and supervising safety indicators to maintain ac-
ceptable levels and seek constant improvements. As a result,
we have achieved improved safety levels that are reflected in
the absence of significant events.
Accident and safety management
NCG 461: 8.2 SUSTAINABILITY INDICATORS
Aviation accidents1
SASB TR-AL-540A.2
Government measures for the implementation
of aviation safety regulations2
SASB TR-AL-540A.3
Emergency Response
2020
2021
2022
2023
1
0
N/D
N/D
2
0
0
1
Members of the emergency team
People trained in procedures
2,814
746
2,240
3,400
N/D
3,500
573
3,549
N/A: not available.
1 In 2020: Accident with the crew. In 2022: Accident with crew on
runway due to collision with fire truck and emergency landing due
to bad weather conditions.
2 The indicator began to be collected in this way in 2022, so there
is no information available for previous years.
LATAM has an Emergency Response Plan, which determines
what resources and people should be activated in the event of
an air emergency; i.e., in incidents or accidents involving damage
to property or people. The goal 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. Likewise, this plan establishes the
organization’s bases for other types of emergencies that seri-
ously affect operations, such as natural disasters, pandemics,
strikes or severe contingencies.
In fact, there are currently Emergency Committees in each
of the LATAM group’s subsidiaries in Brazil, Chile, Colombia,
Ecuador, Peru and Paraguay, as well as in cities where LATAM
has personnel, such as Miami, Buenos Aires and Madrid. The
committees participate in working groups, where they interact
with experts from different areas, in addition to volunteers,
who could provide support should there be affected individuals.
Each year, these Emergency Committees are trained and
emergency drills are carried out periodically to ensure the
correct response of each area in the event of such a situation
occurring. An important training event was the Safety Week
held in 2023, which included training sessions focused on
emergency response for all subsidiaries, as well as activations
of the committees in Ecuador and Chile. Along this line, during
2023, classroom and online trainings exceeded three thousand
employees.
In addition, eight simulation exercises were carried out during
the year, with the activation of one or more committees si-
multaneously, to prepare the teams and systems for possible
occurrences in the most efficient way possible.
68
ANNUAL REPORT 2023
07 Commitment
to sustainability
In this chapter
70
83
Objectives
and results
Circular
Economy
71
87
Sustainability
Strategy
72
Environmental
management
76
Climate
Change
Shared
Value
LATAM AIRLINES GROUP REPORT 2023 07 —Commitment to sustainability —Objectives and results
Objectives
and results
.
r
o
d
a
u
c
E
,
s
o
g
a
p
á
l
a
G
s
a
l
s
I
70
For years, LATAM group has sought to collaborate with sustainable development
in South America, and in 2021, decided to raise the priority of this mission by
placing it at the heart of its decisions. The group charted a course for the next
three decades, marking a milestone in its history. This is how its Sustainability
Strategy was born, as a result of a deep and thorough reflection on the LATAM
group’s organizations, together with an open and committed dialog with its
various stakeholders.
This strategy is based on four pillars that aim to have a positive impact on the
stakeholders with whom LATAM group interacts: Environmental Management,
Climate Change, Circular Economy and Shared Value. Together, these pillars
strengthen the group’s role as one of the players seeking to contribute to solving
the social, environmental and economic growth challenges facing society today.
It is thus that its name is established: “A necessary destination”.
In each pillar of the LATAM group strategy, commitments, as well as challenging
and traceable goals, were defined, which contribute to the United Nations’ (UN)
Sustainable Development Goals (SDGs). All the initiatives that are part of the
strategy seek to contribute especially to the following: SDG 3 Good Health and
Wellbeing; SDG 5 Gender Equality; SDG 8 Decent Work and Economic 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.
ANNUAL REPORT 2023
07 —Commitment to sustainability —Sustainability Strategy
Sustainability Strategy
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY INDUSTRY
SASB TR-AL-110a.2
GRI 305-5
ENVIRONMENTAL MANAGEMENT
CLIMATE CHANGE
CIRCULAR ECONOMY
SHARED VALUE
COMMITMENT
• To maintain and continuously improve the Environmental
Management System in all our operations under the IATA IEnvA
standard.
2023 GOALS
• Strengthening of Environmental Management Programs.
• Coordination of critical suppliers to support them in their efforts
to improve their environmental management performance.
PROGRESS IN 2023
• Establishment of strategic environmental management programs
for the mitigation and/or management of environmental impacts
and gradual coordination of critical suppliers.
STATUS OF THE COMMITMENT
• Implementation of environmental management plans.
1 Tons of CO2 equivalent (tCO2e).
2 Domestic emissions includes Scope 1 emissions, associated
with fuel consumption, mainly from all passenger and cargo
flights. In addition to land mobile sources, stationary sources
and fugitive emissions (refrigerants).
3 For more information, visit:
latamairlines.com/us/en/sustainability/circular-economy
7171
COMMITMENT
• To achieve net zero carbon Direct emissions (Scope 1) using 2019
as the base year.
• To reduce and/or offset the equivalent of 50% of domestic2
greenhouse gas (GHG) emissions by 2030, using 2019 as the base
year.
• To achieve net zero emissions by 2050.
2023 GOALS
• To reduce and offset 780,806 tons of GHG1 emissions, including
carbon offsetting programs with clients.
• To make progress in the consolidation of a portfolio of preserva-
tion projects in strategic areas of the region.
PROGRESS IN 2023
• 850,932 GHG emissions1 managed (13% through operational
improvements; i.e. emission reductions, and 87% by supporting
the conservation of strategic ecosystems, mainly in the Colombian
Orinoco region; i.e. offsetting). On the other hand, through LATAM’s
carbon offsetting program, its customers offset a total of 66,419
GHG emissions1.
STATUS OF THE COMMITMENT
• Overall, the reduction of GHG1 emissions, the offsets made by the
group and by clients under the LATAM carbon offseting program
are equivalent to 850,932 tons of GHG3 emissions, translating into
15.9% of domestic2 emissions.
COMMITMENT
• Eliminate single-use plastics throughout the operation by 20233.
• Aim to be a zero-waste-to-landfill group by 2027.
2023 GOALS
• To reduce single-use plastics3 in the operation by 100%.
• To make progress with the waste management system at a
transversal level.
PROGRESS IN 2023
• Elimination of 96% of single-use plastics3 across the operation.
• Implementation of the system in the main bases.
STATUS OF THE COMMITMENT
• 96% of the target for the reduction of single-use plastics1 was
achieved. The remaining 4% corresponds to a set of elements that
could not be replaced or eliminated for legal, safety, sanitary or
operational reasons, or because there were no replacement options
available on the market.
• New infrastructure and indicators for monitoring waste manage-
ment were incorporated at the main bases in Brazil, Chile, Peru,
Colombia, Ecuador and the United States.
COMMITMENT
To have the connectivity, capacity, and speed of our passenger and
cargo operations for the benefit of communities in South America
on three fronts:
• Health
• Environment
• Natural disasters
2023 GOALS
• To strengthen the network of strategic partnerships of the Avión
Solidario program.
PROGRESS IN 2023
• 43 partnerships with organizations, foundations and government
agencies in five countries.
• More than 4,500 individuals transported free of charge, equiva-
lent to 26 full A320 aircraft
• 485 tons transported free of charge for social and environmental
causes, equivalent to 10 full B767F aircraft.
STATUS OF THE COMMITMENT
• The Avión Solidario program was bolstered through co-creation
with the partnerships.
• Work also began on the design of a system for measuring the
social and environmental impact of the program.
ANNUAL REPORT 2023 07 —Commitment to sustainability —Environmental management
Environmental
management
LATAM’s environmental management system is guid-
ed by the Safety, Quality, Health and Environment
Policy, which establishes the group’s commitment to
environmental protection, pollution prevention and the
implementation of best industry practices to achieve
this end. In addition, the document was approved by
LATAM’s senior management, is reviewed at least once
a year and is publicly available to its stakeholders.
industry, the team maintained the certification of
its Environmental Management System in the Unit-
ed States subsidiary, through ISO 14.001 standards,
which covers air cargo and aircraft maintenance ser-
vices, including ORG (corporate and administrative
activities); GRH (ground activities); MNT (maintenance
activities); CGO (cargo and warehouse activities); and
SEC (safety, security and environmental activities).
In addition, during this period, we worked on updating
the governance structure for the group’s environmental
management, creating the Environmental Management
Sub-directorate, which is part of the Sustainability
Directorate, within the Corporate Affairs and
Sustainability Department.
Notwithstanding this progress, in 2024, one of
the major challenges in terms of environmental
management for LATAM will focus on continuing to
strengthen the programs in its subsidiaries and the
coordination of its critical suppliers, in order to support
them in their efforts to bring the group’s operations
to incorporate best practices at a global level.
Brazil, Chile, Colombia,
Ecuador and Peru have
IEnvA-Stage 2 certification.
In line with its policy, LATAM group applies a
world-class, transparent, auditable and certified
environmental management system in its operations
in Chile, Colombia, Peru, Ecuador, Brazil and the United
States. The main benchmarks and certifications
used by LATAM group are the IATA Environmental
Assessment (IEnvA) standard of the International Air
Transport Association (IATA), as well as ISO standard
14.001.
The former, present in Brazil, Chile, Colombia, Ecua-
dor and Peru, consists of a voluntary environmental
assessment program designed in two stages:
• Stage 1 considers the commitment of senior man-
agement, and the mapping of the relevant environ-
mental legal requirements and the environmental
aspects and impacts of the activities.
• Stage 2 includes the setting of goals, implemen-
tation of programs and operational controls, audits,
and team training.
As of 2022, LATAM and the subsidiaries mentioned
above have IEnvA - Stage 2 certification, which in-
cludes key business processes defined as Core and
Core+ (MRO), corresponding to administrative activ-
ities, flight operations, as well as aircraft overhaul,
maintenance and repair.
Likewise, in LATAM group’s ongoing quest to inte-
grate the best environmental practices in the airline
ENVIRONMENTAL COMPLIANCE
NCG 461: 8.1.3 LEGAL AND REGULATORY COMPLIANCE-
ENVIRONMENTAL
LATAM’s Environmental Management System follows
an ongoing process to identify and evaluate environ-
mental compliance with applicable legal requirements
in its various subsidiaries, under the guidelines pro-
posed by the IATA Environmental Assessment Program
(IEnvA).
As part of this process, the organization has developed
a procedure to identify and evaluate legal require-
ments, to determine the applicable environmental
legal requirements by country in a matrix, covering
components such as water and energy use, waste
management, atmospheric emissions and environ-
mental contingencies.
This matrix records the applicability of the require-
ments in the different processes, the steps for their
compliance, the individuals in charge of their im-
plementation, as well as a list of evidence to verify
compliance, among other details that streamline their
handling.
With regard to compliance deadlines, they are sub-
ject to those established in the applicable standards.
The Environmental Management System also has an
environmental database establishing the compliance
plans and the deadlines set for them.
In addition, to ensure that IEnvA and ISO 14.001
standards remain current and constantly improving,
LATAM carries out annual inspections of their facili-
ties by country, along with drills on how to deal with
environmental emergencies. These procedures make
it possible to verify that the practical training received
by personnel is implemented in accordance with the
72
ANNUAL REPORT 2023 established protocols, to reduce any impact on the environ-
ment and ensure the safety of the people involved.
Based on the above, inspections, drills, and internal audits were
conducted during 2023, which allowed us to strengthen the
action plans to be applied in the different operations. This also
made it possible to identify emerging applicable regulations,
which have been integrated into the matrix to be addressed
in a timely manner.
COMPLIANCE1
NCG 461: 8.1.3 ENVIRONMENTAL LEGAL COMPLIANCE
GRI 2-27
In 2023, under the reporting of environmental processes re-
quired by General Rule No. 461, LATAM group has no fines
outstanding and had three enforceable sanctions and/or an
accumulated environmental liability at the end of the year2
totaling CLP$28,361,8323. On the other hand, three compliance
programs have been approved and no compliance programs
have been implemented. Last, it is worth mentioning that there
are no remediation plans for environmental damage presented
or implemented in 2023.
1 Considering internal and external consumption
2 Considering the Public Sanctions Registry of Chile’s Superintendency of
the Environment (Superintendencia del Medioambiente) and equivalent
agencies in other jurisdictions.
3 Value converted to Chilean pesos at the exchange rate established by
the Central Bank of Chile as at December 2023 (R$182.04); the fines in
Reals amount to R$155,800.
MORE INFORMATION
More information on the Environmental Management pillar is available in Spanish at
https://www.latamairlines.com/cl/es/sostenibilidad/gestion-ambiental
73
07 —Commitment to sustainability —Environmental management
NATURAL RESOURCES
LATAM group seeks to reduce the en-
vironmental impacts of its operation
through eco-efficiency measures in en-
ergy and water consumption.
We should note that the energy con-
sumed by LATAM is acquired through the
power grid of each country; therefore, the
composition in terms of renewable and
non-renewable energy is built with the
latest available information about the
composition of the matrix of each of the
countries, distributing the consumption
according to the corresponding weight.
P OW E R CO N S U M P T I O N (MW H)1 A N D E N E R G Y I N T E N S I T Y (MW H/F T E)2
GRI 302-3
2.2
9
7
3
3
6
,
1.4
9
2
3
9
3
,
1.7
9
1
4
7
5
,
1.2
7
7
1
4
4
,
2020
2021
2022
2023
Consumption
⚫ Energy intensity
WATER EXTRACTION AND CONSUMPTION (m3)1
GRI 303-3
1 MWh: Megawatt
2 FTE: Acronym for “full-time
employee”.
UNIT
2020
2021
2022
2023
Extraction: Total
municipal water supply
Extraction: Fresh water (lakes, rivers, etc.)
Extraction: Groundwater
Discharge: Water returned to
its source of extraction, at a
higher or similar quality to that extracted
Million
cubic meters
Million
cubic meters
Million
cubic meters
Million
cubic meters
0.082
0.099
0.086
0.272
0
0
0
0
0
0
0
0
0
0
0
0
Total fresh water consumption
Million cubic meters
0.082
0.099
0.086
0.272
1 Supply is obtained from the municipal networks of the various countries
of operation, without LATAM’s direct collection of water.
2 100% corresponds to fresh water.
ANNUAL REPORT 2023
07 —Commitment to sustainability —Environmental management
INTERNAL ENERGY CONSUMPTION
GRI 302-1
FUEL CONSUMPTION
SASB TR-AL-110 A.3
UNIT
2020
2021
2022
2023
UNIT
2020
2021
2022
2023
Non-renewable energy
Jet Fuel
Gasoline
Diesel
Liquefied petroleum gas
Natural gas
Electricity2
Total non-renewable energy
Renewable energy
Ethanol
Electricity2
Total renewable energy3
TOTAL
TJ
TJ
TJ
TJ
TJ
TJ
TJ
TJ
TJ
TJ
TJ
76,826.10
3.97
97.74
6.28
0.29
35.96
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
156,368.83
5.16
111.20
366.17
N/A1
136.25
76.970,35
88,933.7
134,251.72
156,987.61
0.20
105.62
0.56
177.87
0.00
184.99
105,83
178,43
184,99
0.08
22.79
22,87
77,076.18
89,112.08
134,436.71
157,010.48
1 Natural gas is not among the energy sources for the year 2023.
2 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.
3 In previous years, the share of renewable energy from each country’s power
grid was used to determine LATAM’s share, as energy is acquired through said
grids. As of 2023, what is reported as renewable energy only refers to the
renewable energy acquired for which the company holds certificates.
74
LATAM fuel efficiency
Passenger operations
Cargo operations
Fuel Consumption
% of alternative fuels
% of sustainable fuel
litros/100 RTK
litros/100 RPK
litros/100 RTK
GJ
%
%
30.1
3.2
20.7
76.826.100
0.0
0.0
31.7
3.4
20.1
88,734,840
0
0
30
3.7
22.1
133,991,160
0
0
29.8
3.1
23.1
156,368,834
0
0
ELECTRIC ENERGY CONSUMPTION4 - 2023
Non-renewable
sources:
37,846 MWh
85.7%
Renewable
sources
6,330 MWh
14.3%
4 Based on information on the composition
of the energy matrix of each country, with
H2LAC as the source; this program was created
in 2020 by the Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) together
with the World Bank, ECLAC, and the European
Union’s Euroclima+ Program.
ANNUAL REPORT 2023
07 —Commitment to sustainability —Environmental management
SNAPSHOT
ECO-EFFICIENCY
Energy
GRI 302-1 and 302-3
UNIT
2021
2022
2023
Energy consumption – ground and air operations
Energy intensity
Water consumption
Waste Generation
Environmental management
Units with Environmental Management System (EMS)/Total Units
Units with certified EMS/total units
TJ
MWh/100 RTK
Cubic meters
Tons
%
%
89,112
0.8
98,846
28,803
95%
90%
134,436.71
0.5
85,656
37,990
99%
99%
157,010.48
0.3
271,5711
37,367
100%
100%
1 The result for 2023 resembles the pre-pandemic
operation in size, considering that consumption in
2019 was 216,626 m3.
75
ANNUAL REPORT 2023
Climate
change
07 —Commitment to sustainability —Climate change
NCG 461: 8.2 SUSTAINABILITY INDICATORS
GRI 3-3
SASB TR-AL-110a.2
The climate emergency has positioned itself as one of the greatest global challeng-
es today and potentially one of the most relevant that humanity will experience
in the coming years. In this context, the aviation industry faces the challenge of
uniting on multiple fronts to contribute to both the mitigation and adaptation of
climate change. To this end, LATAM group has established various mechanisms,
such as the implementation of new technologies to improve efficiency, opera-
tional improvements to reduce fuel consumption, ecosystem conservation and
carbon sequestration programs, and the development of a roadmap for the use
of sustainable fuels, among others.
It is crucial to strategically prioritize each of these efforts, considering both
their effectiveness in the short, medium and long term, as well as the specific
geographic conditions where they are applied. In this sense, the group seeks to
balance climate urgency with the connectivity and sustainability needs of the
aviation industry, fostering an informed transition that considers the necessary
public policies and the availability of resources in the regions where it operates,
as well as the timing of the actions.
The group’s commitment to achieve net zero emissions in its operations not only
involves the management of operational improvements and conservation strategies
in critical areas, but also considers collaborative work with industry, public-private
players in the value chain, NGOs and academia. In this sense, moreover, LATAM
group has proposed to move forward with the disclosure of climate information,
aligned with the transparency frameworks that are a global benchmark.
LATAM’S MANAGEMENT OF CLIMATE CHANGE
Operating Efficiency
Both air and ground fuel efficiency initiatives, such as route optimization, ratio-
nalizing the use of auxiliary power units, and weight reduction on flights, among
others.
New Technologies
Fleet renewal, use of new software, among others.
Sustainable aviation fuels (SAF)
This type of fuel is crucial to achieve net zero carbon emissions in the operation.
However, its production is only incipient in the world and nonexistent in South
America, so it is necessary to develop an agenda with the different players to
progress in its production and use.
LATAM aims for SAF to represent 5% of its fuel consumption by 2030.
Offsetting Emissions
Development and participation in compensation programs based on strategic
ecosystem conservation projects in Latin America. The initiatives involve clients
and NGOs, among others.
76
ANNUAL REPORT 2023 07 —Commitment to sustainability —Climate change
JOINT EFFORT
In the aviation sector, effort coordination is essential, as tech-
nological solutions for the transition to a low-carbon-emissions
energy model are not yet available on a massive scale or are
in the pilot stages. In this regard, LATAM group has aligned
itself with the main international standards and agreements
to contribute.
In 2024, LATAM group will incorporate the results obtained in
its risk and opportunity monitoring and management processes,
as part of its continuous improvement approach. Depending
on the evolution of these aspects, the need to expand on the
identified risks or to re-evaluate them will be reviewed. In
addition, a climate scenario analysis will also be carried out
for two timeframes: medium and long term.
TCFD
Since 2022, LATAM group began work to incorporate the rec-
ommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). The initiative seeks to consolidate best
practices in climate risk management and to help standardize
climate disclosures for all companies.
Aware of the impacts that climate change could bring to the
industry, LATAM group conducted its first climate-related risk
and opportunity analysis under the TCFD framework in 2023.
This exercise involved the countries where LATAM group has
domestic operations, with the participation of more than 30
representatives from different areas of the organization, and
aimed to identify the risks that could affect the group’s busi-
ness in the medium (2030) and long term (2050). As a result
of this process, 12 risks and opportunities were prioritized and
will be published in 2024.
This analysis identified significant information regarding the
changes that could take place in the long term, based on
weather patterns, to prevent possible physical risks, as well
as transition risks. The latter, among others, are related to
local, national and international regulations that apply to the
operation. In this sense, the company seeks to adopt the best
practices that allow it to anticipate these environmental re-
quirements and maintain the initiatives it has been working on
for several years, such as measuring and reducing the carbon
footprint, improvements in resource and waste management,
among others.
CORSIA
In 2016, the Carbon Offsetting and Reduction Scheme for
International Aviation (CORSIA), a global initiative aimed at
reducing the GHG emissions of international civil aviation, was
established. This agreement is designed to be implemented in
three stages: pilot (2021-2023), first phase (2024-2026) and
second phase (2027-2035).
In the first two stages and until 2026, countries’ participation
is voluntary. Along this line, until 2023, 115 countries were
part of the pilot phase and another eleven States, including
Ecuador, had committed to begin in 2024.
LATAM is governed by the CORSIA agreement and has designed
its climate change targets to cooperate with the aspirations
of that plan, on a voluntary and proactive basis.
SBTi
LATAM group continues to develop efforts in pursuit of achieving
its goal of being a company with zero net emissions by 2050.
In 2020, the company committed to establishing metrics based
on the voluntary Science Based Target Initiative (SBTi). Since
then, the SBTi has modified its registration requirements for
the industry.
LATAM group has continued to work diligently to improve its
77
climate strategy and increase transparency in its management.
However, due to changes in SBTi requirements, the group is
reviewing its ability to adhere, ensuring that the model adopted
is the most appropriate to sustain the organization in the long
term, in line with climate urgency. In a dynamic environment
where new initiatives have emerged, LATAM approaches this
decision with the seriousness it deserves; this requires informed
and thorough reflection to establish the most effective en-
gagement in this process.
REDUCING 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 improving operating efficiency to optimize their savings.
Between 2011 and 2023, the group achieved 6.3% jet fuel ef-
ficiency through the program, and the gross savings amounted
to 77 million gallons—an equivalent of 737 thousand tons of
CO2 that were no longer emitted. This is due to the increase in
energy efficiency across the operation, taking as a baseline the
start of the program. Meanwhile, in economic terms, savings
were close to USD$237 million.
The group has joined different initiatives to promote these
results. In fact, some have already been routinely incorporated
into the operation, based on lessons learned year after year,
and program consistency. At the same time, the program seeks
to encourage research and development measures that will
make it possible to continue increasing efficiency by constantly
implementing new measures.
Some examples of initiatives to improve fuel efficiency are:
• Use of external equipment to reduce auxiliary
power unit consumption.
• Implementation of advanced analytics models to
reduce flight distance and time, improving flight
planning, and therefore, fuel consumption.
• Search for opportunities to eliminate unnec-
essary weight during the flight, for example the
in-flight water program, which consists in reducing
the potable water load on the aircraft, based on
different pre-calculated factors that ensure the
availability of this resource during the flight, thus
reducing fuel consumption due to less weight and
at the same time, increasing the available cargo
weight capacity.
• Upgrades and replacement of engines, through
adjustments to their original configuration, allow-
ing a reduction in performance, to maximize fuel
savings. In addition, the engines are washed to
maintain their operation with greater efficiency.
• Standardization of LATAM’s reserve fuel policy.
ANNUAL REPORT 2023
07 —Commitment to sustainability —Climate change
Through operational efficiencies,
new technologies, sustainable fuels
and offsetting, LATAM will seek to
achieve its climate commitments.
FLEET OVERHAULS
In 2023, LATAM group continued to make progress on its
commitment to have a fleet prepared to offer a safer, more
comfortable and efficient travel experience. In fact, during the
period, it incorporated Boeing wide-body aircraft, including five
aircrafts of the 787-9 model, a last-generation aircraft that
also emits 20% less CO2 than an average aircraft of previous
generations, according to its manufacturer’s data.
It also added eight A320neo and seven A321neo, models that
are equipped with more fuel-efficient technology vs. previous
versions, and therefore have lower associated carbon emis-
sions. In fact, according to the manufacturer’s data, both are
20% more fuel efficient and reduce their acoustic footprint by
at least 50% compared to previous generations.
The group also added two Boeing 767-300F freighters to
its fleet, as they have a modern air-conditioning system for
transporting perishable products, enhancing versatility and
efficiency in cargo transportation.
Overall, LATAM group’s new fleet reflects the company’s com-
mitment to efficiency and innovation in sustainability, priori-
tizing investment in modern aircraft that contribute favorably
to climate change mitigation in the aviation industry.
78
ANNUAL REPORT 2023 07 —Commitment to sustainability —Climate change
Fuels (SAF) working group in Chile. The latter is part of the
Vuelo Limpio (Clean Flight) program, which seeks, through
industry collaboration and innovation, to achieve operational
improvements that reduce emissions.
LATAM group works closely with its corporate clients to promote
the use of this sustainable fuel. During 2023, LATAM group
established alliances with two corporate clients through LATAM
Cargo, carrying out its first international flight using this type
of fuel. This flight took off from Zaragoza to North America,
using the first batch of SAF produced in Zaragoza by AirBP.
Likewise, the group generated a second strategic alliance, also
through LATAM Cargo, in which an equivalent amount of SAF
was used to reduce emissions from a flight transporting flowers
from Bogota to Miami during the Mother’s Day season.
In addition, as part of its fleet overhaul plan and in collaboration
with Airbus, LATAM group carried out its first Ferry Flight
using SAF, with a flight from Toulouse (France) to Fortaleza
(Brazil). A Ferry Flight is a flight that has a purpose other than
transporting cargo or passengers, such as moving the aircraft
from one base to another, or to a maintenance facility. In total,
10 such flights were conducted using sustainable fuels as part
of this initiative.
SAF - SUSTAINABLE FUELS
NCG 461: GOVERNANCE FRAMEWORK
Aware of the need to develop a more sustainable commercial
aviation and move towards the decarbonization of the industry,
LATAM group reinforced in 2023 its goal to incorporate
sustainable aviation fuel (SAF) into its operations. 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 more sustainable aviation operation.
Currently, the development of the SAF market faces significant
challenges due to high costs, ranging from 2 to 5 times higher
than conventional jet fuel, and shortages in supply. According
to IATA data for 2023, SAF production represents only 0.1%
to 0.15% of total jet fuel consumption, which poses a major
obstacle to its expansion.
Added to this, there is no local production of SAF, despite the
region’s potential for its production, as can be seen in cases
such as Brazil and Colombia, countries that already have an
established industry and experience in biofuels, or in the case
of Chile, with its promising potential in the production of green
hydrogen.
Against this backdrop, LATAM group is working closely with
various public and private sector players in the region to foster
the creation and development of the SAF market, as well as to
promote the creation of public policies tailored to local needs
and realities.
In this sense, LATAM group actively participates in different
initiatives with the aim of generating conditions in the region
to enable the development of SAF both at the public and
private level in the various countries. An example of this was
its representation in the National Sustainable Aviation Fuels
Program (Programa Nacional de Combustível Sustentável de
Aviação or ProBioQAV) in Brazil, the SAF Technical Roundtable
in Colombia and the public-private Sustainable Aviation
79
Study on decarbonization options in
Latin America with MIT and Airbus
LATAM has a challenging target of 5% of the total fuel con-
sumption of its fleet to come from SAF, to the extent that it
is produced primarily in the region by 2030. Therefore, during
2023, together with Airbus, it has funded a Massachusetts
Institute of Technology (MIT) Joint Program study on Global
Climate Change Science and Policy.
The study, entitled “Options to sustainably decarbonize avia-
tion in Latin America: an assessment of carbon policies, carbon
prices and aviation fuel consumption up to 2050,” analyzes
scenarios for the deployment of sustainable aviation fuels (SAF)
and explores avenues such as low-carbon hydrogen, direct air
capture and bioenergy with carbon sequestration and storage.
It also evaluates policy instruments, such as incentives and
carbon taxes, to offset aviation emissions.
Along these lines, the researchers of the MIT Joint Program aim
to publish the results in April 2024 and their analysis includes
viable recommendations for Brazil, Chile, Colombia, Ecuador,
Mexico and Peru on ways to decarbonize the airline industry.
With this in mind, LATAM expects to continue contributing to
the innovation and development of the decarbonization of the
industry and of the conditions to enable it in the region.
ANNUAL REPORT 2023 07 —Commitment to sustainability —Climate change
PRESERVE ECOSYSTEMS
GRI 3-3
Within LATAM group’s climate change pillar, two fundamental
aspects are the conservation of strategic ecosystems and the
preservation of biodiversity. In line with these objectives, the
group supports projects that contribute to these goals, using the
carbon sequestration potential of these initiatives and making
progress on emissions offsets as a complementary measure.
As for eligibility criteria, LATAM group prioritizes nature-based
solutions implemented in Latin America, recognizing the im-
portance and need to protect the region’s natural resources.
Collaborative work that generates environmental, social and
economic benefits is especially valued, as is the engagement
with local communities committed to the protection of eco-
systems and the scalability of the initiatives.
CO2BIO INITIATIVE
In 2023, LATAM group reaffirmed its commitment to the CO2Bio
alliance, an initiative of the Cataruben Foundation of Colombia
and the community in the Orinoco Region of that country. 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.
During the period, we worked jointly on structuring the initia-
tive’s governance system and strengthened its corporate gov-
ernance to streamline decision-making. In addition, compliance
processes were consolidated and communication mechanisms
were strengthened through two-way channels.
Thanks to this progress, CO2Bio received two important awards.
On the one hand, it was recognized among nearly 120 applicants
with the BIBO award, granted by Colombian media El Especta-
dor, winning first place in the category of Social Appropriation
of Knowledge. On the other hand, non-profit organization Re-
forestamos México also recognized this program for its positive
impact on forest ecosystems with the “Los Boscares” award
in the transportation and energy sector.
Specifically, the CO2Bio project, which is located in the Ori-
noco Region of Colombia and was supported by the Natural
Wealth Program of the United States Agency for International
Development (USAID), expects to preserve areas of great en-
vironmental importance by 2030, totaling more than 575,000
hectares—the equivalent of more than three times the size of
cities such as Bogota or Sao Paulo. In turn, it seeks to benefit
700 families in the area and contribute to the protection of
around 2,000 species, some of them considered endangered,
threatened or vulnerable. Moreover, it has the potential to
capture 11.3 million tons of CO2 by 2030.
EMISSIONS OFFSETTING (1 + 1 SCHEME)
Aiming to contribute to the protection of the environment and
ecosystems in a collaborative manner, as well as to engage its
clients in these initiatives, LATAM group offers its corporate
clients, in cargo and passenger operations, the opportunity to
participate in the offsetting of emissions generated on their
flights.
Along these lines, the group developed its 1+1 Scheme
compensation program, through which clients can choose
from a portfolio of projects with high environmental value that
have been previously verified and validated by LATAM group,
to offset the emissions generated by their air travel. Then, for
every ton that the client decides to offset, the group matches
the number of tons offset by them to leverage that impact.
In keeping with this commitment, the program expanded its
scope in 2023 to allow final passengers of the affiliates in
Peru, Ecuador and Chile to access this initiative.
LATAM-supported projects
contribute environmental, social
and economic co-benefits to the
communities.
80
ANNUAL REPORT 2023 07 —Commitment to sustainability —Climate change
CARBON FOOTPRINT IN 2023 (t CO2e)
GRI 305-1, 305-2, 305-3
Total by country
LATAM Cargo group1
1,305,810
Peru
2,120,843
Ecuador
268,906
Colombia
758,648
Chile
3,263,633
Total by scope
Scope 2
(indirect emissions from
electric energy purchases)
5,217
Brazil
6,906,566
Scope 3
(other indirect
emissions – value chain)
3,094,768
Scope 1
(direct
emissions)
11,524,420
1 Considering the sum of the five countries
where LATAM group has cargo operations.
TOTAL: 14,624,405 t CO2e
Challenges for 2024
Continue to strengthen fuel efficiency
programs to maintain and improve
the achievements to date.
Make progress in the coordination of
preservation and restoration projects
in strategic areas of South America.
Strengthen the agenda for the
development and use of sustainable
aviation fuels in South America.
ACTIVITY COMPARISON 2020-2023
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
5,614,368
6,497,576
9,780,288
11,524,420
16,355
24,827
14,549
2,446
Scope 1
Scope 2
Scope 3
7,150
3,198,317
5,217
3,094,768
Note: With regard to the significant variation in
scope 3 emissions reported in 2020 and 2021,
compared to 2022 and 2023, this is because,
in its process of constant improvement and
strengthening of the carbon inventory, LATAM
added into its report seven new scope 3 categories
in all the countries as of 2022, measuring other
indirect emissions from the value chain.
CARBON FOOTPRINT
SASB: TR-AL-110A.1
GRI 305
LATAM group monitors its impacts on climate change and the
results of reduction initiatives through the greenhouse gas
inventory, which is conducted annually based on ISO 14.064
and the GHG Protocol.
In 2023, emissions totaled 14,624,405 tons of CO2e—a 12.7%
increase compared to 2022. This growth was mainly due to the
recovery of operations, which are approaching pre-pandemic
levels. In fact, considering that LATAM group’s passenger ope-
rations grew by 20.5% and the amount of cargo transported
increased by 4.9% compared to the previous year, emissions
intensity was reduced by 5% in its total footprint and 0.5% in
its scope 1, measured in kgCO2e/100RTK. This reduction in
scope 1 emissions intensity is mainly explained by the mea-
sures implemented within the framework of the LATAM Fuel
Efficiency program and the fleet renewal plan. In turn, the
reduction in total footprint intensity is mainly explained by
the decrease in scope 3 emissions, which fell by 3.2% to 2022.
In turn, in view of its commitment to carbon-neutral growth
in its direct emissions (Scope 1) compared to 2022, in 2023,
LATAM group offset 674,513 tons of CO2e through carbon credits
from preservation projects. Mainly from the project located
in the Orinoco Region (Colombia1) of the BioCarbon Registry,
which uses the BCR0002 methodology (Quantification of GHG
Emission Reductions from REDD+ Projects).
1 Project ID: PCR-CO-635-141-001.
81
ANNUAL REPORT 2023 07 —Commitment to sustainability —Climate change
1Data corrected in
relation to the 2022
Annual Report.
2022
2023
BREAKDOWN OF SCOPE 3 INDIRECT EMISSIONS
GRI 305-3
Goods and services purchased
Capital goods
Activities related to fuel and energy
(not included in scopes 1 or 2)
Upstream transport and distribution
Waste generated in operations
Business travel
Employee commutes
Upstream leased assets
Downstream transportation and distribution
Processing of products sold
Use of products sold
End-of-life treatment of products sold
Downstream leased assets
Franchises
Investments
Others upstream
Others downstream
UNIT
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
1,100,644
N/A
2,030,710
37,637
2,091
14,582
12,364
N/A
N/A1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
OTHER EMISSION INDICATORS
GRI 305-4
UNIT
2020
2021
2022
Intensity Scope 1
Intensity Total footprint
Intensity of net emissions
in the total operation
kg CO2e/1OO RTK
kg CO2e/1OO RTK
76.31
76.87
kg CO2e/1OO RTK
75.04
80.55
80.76
76.1
76.67
101.8
97.02
MORE INFORMATION
• Greenhouse gases: Inventory, emission factors and scope of information (Pages 154-155).
• Significant atmospheric emissions (Page 155)
82
380,599
251,032
2,390,446
56,606
1,373
1,055
13,656
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2023
76.16
96.65
92.19
SNAPSHOT
NCG 461: 8.2 SUSTAINABILITY INDICATORS BY INDUSTRY
GRI 305-1, 305-2 & 305-3
SASB TR-AL-110A.1
Total emissions
Net emissions2
UNIT
20201
20211
2022
2023
t CO2e
5,655,551
6,514,570
12,985,755
14,624,405
t CO2e
5,521,062
6,138,957
12,411,550
13,949,892
Scope 13 emissions
t CO2e
5,614,368
6,497,576
9,780,288
11,524,420
Scope 2 Emissions
Market based
Location based
t CO2e
t CO2e
t CO2e
16,355
N/A
16,355
14,549
N/A
14,549
7,150
N/A
7,150
5,217
N/A
5,217
Scope 3 Emissions
t CO2e
24,827
2,446
3,198,317
3,094,768
RTK: Acronym for “revenue ton-kilometers”.
RPK: Acronym for “revenue passenger-kilometers”.
1 Not including the measurement of Scope 3 emissions.
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.
2 Net emissions are the total emissions, minus the offsets made.
N/A: Not applicable.
ANNUAL REPORT 2023
Circular
economy
07 —Commitment to sustainability —Circular economy
GRI 306-1 y 306-2
ZERO WASTE ROADMAP
LATAM has two challenging goals, which are: to seek to be a zero waste-to-landfill
(read definition in the box) group by 2027, and to eliminate single-use plastics.
Along these lines, the group ended 2023 with a reduction of more than 1,700
tons, representing 96% of the scope defined by LATAM as single-use plastics.1
These goals were established based on the diagnosis carried out in 2021 in the
main areas that generate waste across the operation, such as in-flight service,
cargo, maintenance and airport. Likewise, the survey made it possible to es-
tablish the most relevant types of waste and, therefore, those where changes
in processes and materiality would have the greatest impact.
As a result, a strong cultural change and transversal involvement across different
areas of the group were initiated, coordinating the transformation of processes,
from the design of the travel experience through to the operational lines, with
a common goal.
These efforts, which resulted in the elimination of 96% of single-use plastics,
involved relevant changes throughout the company, the highlight being the use
of materials evaluated using sustainabiilty criteria, and the redefinition of prod-
ucts used in the in-flight service, airports, lounges, maintenance, and offices.
The limitations linked to the remaining 4% are related to legal, safety, health,
and operational restrictions, or because there are no viable replacement options
available on the market1.
The Circular Economy pillar makes it possible to contribute to the fulfillment of
four of the United Nations’ (UN) Sustainable Development Goals (SDGs). These
are: 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.
The definition of our roadmap towards being a zero waste-to-landfill group in-
volves differentiated actions according to the type of management and operation,
whether it is LATAM’s own or outsourced. Among the strategies to be followed, we
will strengthen and incorporate new facilities into our Waste Management System,
we will work on the inclusion of supplier contract clauses for waste management
and/or recovery of waste and on the creation of strong partnerships with key
suppliers.
The above, alongside the reduction in the use of materials, changes to reusable
and/or recyclable materials, and services redesign of processes and services,
among others.
In 2023,
more than
1,700
tons
were reduced
representing
about
96% of the
scope
defined by LATAM
for single-use
plastics.
equivalent to
266 million
plastic bags.
DEFINITION OF ZERO WASTE TO LANDFILL
According to the TRUE (Total Resource Use and Efficiency) Zero Waste
certification, “zero waste to landfill” refers to an average of 90% or
greater overall diverting of non-hazardous solid waste from disposal
in landfills, dumps, incineration and the environment.
83
1MORE INFORMATION
For more information, visit https://www.latamairlines.com/us/en/sustainability/circular-economy
ANNUAL REPORT 2023 07 —Commitment to sustainability —Circular economy
PROGRAMS AND INITIATIVES
GRI 306-2
Waste Management System at our operating bases:
Second Flight: uniform upcycling
Composting
With expert advice, we implemented improvements in our Waste
Management System in Chile (Santiago), Colombia (Bogota), Ecuador
(Quito), Peru (Lima), Brazil (Guarulhos and São Carlos) and the
United States (Miami). Among the improvements were the inclusion
of new infrastructure for waste management and segregation, the
implementation of recovery or recycling processes for different
materials, indicator monitoring systems, the creation of a Recycling
Committee, and guidelines and training for employees. In addition,
modifications were made to the purchasing policy, including
sustainability criteria.
Project Fénix
In 2023, the Phoenix Project was launched in Chilean and Brazilian
operations, which seeks to recover aircraft parts for internal use, sale
or reutilization by third parties. Along these lines, at the end of 2023,
1,800 aircraft parts were recovered for operational inventory (valued
at ThUSD$5.2), which reduced the recovery time of an aircraft on the
ground (AOG) by 26% and diverted more than 30 tons of waste from
landfill disposal.
Recycle Your Trip
Program that seeks to separate and recycle waste from the domestic
in-flight service. In Brazil, Chile and Peru, segregation of PET plastic
bottles is carried out by the in-flight crew, and in Colombia and
Ecuador, segregation of aluminum, PET plastic and Tetra Pak is carried
out on the ground by the airports, in Bogota and Quito, respectively.
In 2023, the program was launched in Brazil and bolstered in the
countries where it was already in operation: Chile, Ecuador, Peru and
Colombia, ensuring the recycling of PET plastic bottles. This allowed
more than 170 tons of these bottles to be recycled.
The Second Flight program allows LATAM to give a second life to its
employees’ unused uniforms and transform them into new products.
Through Second Flight, the company not only reduces the impact on
the environment with the conversion of textile waste, but also is also
able to build a more sustainable community through partnerships,
employment generation, and the encouragement of responsible
consumption.
During 2023, we worked in partnership with 14 organizations in Bra-
zil, Chile, Colombia, Ecuador, Peru and Paraguay. Thirty-one tons of
unused uniforms were handed in, enabling the creation of more than
21,000 new products such as key rings, handbags, passport holders,
purses, luggage identifiers and cases. Some of these products were
then used in the group’s events and activities, while others were sold
and generated income for the craftswomen in the program.
More sustainable lounges
The group is working on a gradual transformation of its lounges to
offer a more sustainable experience through the use of renewable
energies, elimination of single-use plastics, waste segregation, water
and energy efficiency, among others.
Throughout last year, LATAM, together with the Chilean consulting
firm Ecoretorna, conducted a diagnosis of Chile’s lounges and
evaluated their gaps in order to obtain TRUE Zero Waste and LEED
O&M certifications. These verify criteria related to zero waste, energy
and water efficiency, resource use, and environmental quality, among
others. Based on this information, we will continue to make progress
on the processes and implement best practices in the other LATAM
lounges
At our maintenance base in Chile, the organic waste generated in the
mess hall is segregated by the employees themselves. In this pro-
gram, 33 tons of food waste were composted. In addition, 157 tons
of wood were composted at the base.
Project Upcycling Brazil
22 tons of disused products that were previously part of LATAM’s
operation were recovered. Some of them were redistributed and
others sold, through the LATAM Brazil Guild Association (GRETAM,
for its Portuguese acronym), including 81 triple seats, 42 trolleys and
1,207 used crew bags, among others.
Donations
In Brazil, 29 used notebooks, 21,960 snacks, 1,913 emergency kit
bags, 600 units of masks, 1,232 rolls of toilet paper and 180 units
of aprons were donated. Meanwhile, in Colombia, 480 masks (face-
masks) were donated, in addition to items that passengers forget on
the planes and do not claim, such as neck rests, toys, hats and caps,
books and eyeglasses. At the same time, support was provided to
the Pudahuel commune through the donation of water during the rain
and river flooding emergency in Chile. Also, in Peru, 175 desk chairs
were donated to support the Ciudad de Papel Foundation.
84
ANNUAL REPORT 2023 07 —Commitment to sustainability —Circular economy
SINGLE-USE PLASTICS
GRI 306-2
Over the past three years, LATAM group has been working on
one of the biggest challenges on which it decided to embark
after launching its Sustainability strategy in 2021: eliminating
single-use plastics from the operation by 2023.
This path has involved promoting a cultural change to do things
differently, as well as many challenges, such as involving dif-
ferent areas of the group transversally, from travel experience
design to operational lines, adjusting internal processes of each
airline and with suppliers, looking for alternatives, increasing
budgets, among others.
Thus, LATAM ended 2023 having made significant progress in
the elimination of single-use plastics throughout its operation,
managing to reduce more than 1,700 tons, which translated
into about 96% of the scope defined by LATAM1 as single-use
plastics, equivalent to 266 million plastic bags. The remaining
4% corresponds to those elements that could not be replaced
or eliminated for legal, safety, sanitary or operational reasons,
or because there were no replacement options available on the
market. The group will continue to work on finding solutions
to reduce its waste, replace materials for reusable, recyclable,
and/or biodegradable ones, expanding its scope and strength-
ening its awareness of its waste.
Some concrete examples and additional efforts to the defined
scope are highlighted below.
Economy Cabin:
Maintenance and offices:
• Plastic cups were replaced by paper cups, cutlery and stirrers
by bamboo utensils, disposable pans (food containers) by
reusable ones.
• Plastic bags were replaced by trolleys, trays and paper bags
for transporting aircraft maintenance items.
• The plastic bags containing rest items were replaced with
paper tapes.
• Item separation bags inside the aircraft cabinets were
eliminated.
Business Cabin:
• Plastic cups were replaced by paper or reusable cups in
offices.
Cargo
Despite falling short of the established goal, the group made
significant efforts to reduce the use of plastic film and increase
recycling in the cargo operation.
• The bags used to cover rest items (blankets, pillows,
headphones and throws) were replaced with reusable cotton
bags.
• Reusable blankets to cover pallets for cargo transportation
in Chile and Brazil, which have led to a reduction of up to 90%
in the use of plastic film in certain processes.
• The bags that covered slippers and contained the elements
inside the amenity kits were eliminated.
• 3M machine and tapes, which allow an 80% reduction of
plastic film in the storage process of cargo imports in Chile.
• Amenity kits: the toothbrush has been replaced by a bamboo
one, and the socks and eye covers are now made of recycled,
vegan and cruelty-free material. These products are designed
by South American artists chosen for their emerging career
path and/or for being transformers of their communities.
Aeropuertos
• New labels and courtesy bags made 100% of paper were
implemented.
This resulted in a reduction of 53 tons of plastic film use and
recycling of 208 tons (16% more than in 2022). These combined
efforts are equivalent to avoiding the use of more than 100,000
new rolls of plastic film.
Although the reduction of plastic waste is the main focus of
the cargo affiliates in matters of circular economy, added are
other initiatives such as those related to the repair of pallets
to be reused in the same operations or, in some cases, converted
into leisure furniture, tables, and others.
1MORE INFORMATION
For more information, visit
https://www.latamairlines.com/us/en/sustainability/circular-economy
85
Lounges
• Toothbrushes were replaced with bamboo toothbrushes,
plastic spoons and stirrers were replaced with reusable metal
spoons, plastic bags were eliminated from towels and amenities,
and anti-sneeze plates were incorporated to replace plastic
film for food (in Bogota).
ANNUAL REPORT 2023 07 —Commitment to sustainability —Circular economy
Percentage of waste
transported to landfills
WASTE DISPOSAL
GRI 306-3, 306-4 Y 306-5
WASTE
5,3%
2023
2022
2021
3.9%
5.8%
14.4%
2020
6.583 t
37,367 t
37,990 t
28,803 t
Total waste
generated
UNIT
2020
2021
2022
2023
Total waste generated
Transported to landfills
Percentage of hazardous waste
Percentage of non-hazardous waste
tons
%
%
%
14.4%
73%
27%
5.8%
93%
7%
3.9%
94%
6%
5,3%
90%
10%
Note: The waste shown in the graph corresponds to waste for which there are documents supporting its disposal. Therefore,
the distribution does not represent LATAM’s overall waste generation, mainly because in several of the operation’s facilities,
for non-hazardous waste that goes to landfills, the service provider does not render supporting documents. In addition, we are
currently improving the control process for our overall waste generation, which is why these values could experience variations;
for instance, those related to hazardous waste generated during wastewater treatment.
86
Waste not intended for disposal
Preparation for reuse
Recycling1
Other recovery operations1
Waste intended for disposal1
Incineration (with energy recovery)1
Incineration (no energy recovery)1
Transfer to landfill1
Other disposal operations1
Total waste
1 Off site.
UNIT
HAZARDOUS
NON-HAZARDOUS
TOTAL
t
t
t
t
t
t
t
t
t
t
133
0
133
0
33,389
374
36
304
32,676
33,522
1,819
0
1,626
194
2,026
229
0
1,679
118
3,845
1,952
0
1,759
194
35,415
603
36
1,983
32,793
37,367
Note: The waste data comes mainly from the information generated in the bases where we
have our own operations and those places where we can access this information. Waste
management is part of our environmental management system. In this process, waste gen-
eration points are identified, waste is classified according to its type and composition, stored
and finally transferred to an external recipient for recycling or final disposal, its traceability
being a fundamental matter, as it is related to regulatory compliance.
ANNUAL REPORT 2023
Shared
value
87
07 —Commitment to sustainability —Shared value
GRI 3-3 y 203-1
Since 2011, the Avión Solidario (Solidary Plane) program has reflected LATAM
group’s commitment to being an asset to society in South America. The group
offers its connectivity, structure and transportation capacity to support, free of
charge, organizations that address needs in three areas: health, environment and
natural disasters.
During these years, the program has been strengthened with a collaborative ap-
proach, and in 2023, it totaled 43 strategic alliances within five countries with
domestic operations: Brazil, Chile, Colombia, Ecuador and Peru. LATAM group’s
partners are organizations, foundations and governmental agencies that support
the needs of the region and work alongside LATAM group to generate a positive
impact on the community through connectivity.
The relationship with the organizations is based on the concept of co-creation, so
that each partnership established within the framework of the program can also
bring initiatives that generate value for their environments and communities. In
this manner, the program contributes directly to the fulfillment of three of the UN
Sustainable Development Goals (SDGs), namely SDG 3 Good health and Well-being
SDG 13 Climate Action and SDG 17 Partnerships for the Goals.
SNAPSHOT
SOLIDARY PLANE
GRI 3-3
GRI 203-1
Health
Air tickets donated
Organs, tissues, and stem cells transported
Medical supplies
Disasters
UNIT
Number
Number
Number
Cargo transported as humanitarian aid
Tons
Environment
Animals rescued and transported
Recyclable materials transporteds
Number
Tons
2021
3,210
976
59
3
192
195
2022
3,554
964
4,577
149
246
170
2023
4,563
1,847
6881
155
122
256
1 The decrease was due to a reduction in the number of requirements during the year.
ANNUAL REPORT 2023
07 —Commitment to sustainability —Shared value
AVIÓN SOLIDARIO (SOLIDARY PLANE)
HEALTH
ENVIRONMENT
DISASTERS
Organs and tissues
Donation of airline tickets
Animal Rescue
Removal of recyclable waste
Humanitarian aid
Transportation of
1,847 organs and
tissues free of charge
for transplants in Brazil and Chile, from
islands such as Chiloé and Easter Island.
More than 4,500
patients, medical
personnel and
healthcare teams
were transported
free of charge
for treatment or surgery.
1,847 animals
transported, free of
charge,
in Peru and Brazil for rehabilitation,
conservation and protection, including
birds, turtles, monkeys, primates
native to the Brazilian Amazon
Rainforest, flamingos, boas, otters and
penguins. Professionals linked to the
execution of conservation projects and
work with the community were also
connected.
275 tons of waste
were removed and
transported
from Easter Island /Rapa Nui
(Chile), San Andres (Colombia), and
the Galapagos Islands Archipelago
(Ecuador) for their proper management
and recycling. The program
collaborates with waste management
in strategic areas, due to their
environmental importance, as is the
case of these island destinations.
104 tons of
various items for
humanitarian aid were
transported.
These included tents for refugees,
food, clothing, hygiene items and other
donations. Individuals who were survivors
of natural disasters and emergencies,
as well as support personnel for various
causes, were also transported.
88
ANNUAL REPORT 2023
08 Employees
In this chapter
90
Better, simpler
and more
transparent
99
Who makes
up the LATAM
group
08 —Employees —Better, simpler and more transparent
GRI 3-3
ORGANIZATIONAL HEALTH
In 2023, the LATAM group achieved its best-ever result in the McKinsey & Com-
pany Organizational Health Index (OHI), a survey that has been conducted for a
decade, and that mainly evaluates work climate and motivation aspects. The 78
points obtained is one points higher than the last evaluation carried out in 2022,
positioning the group’s companies among those with the best organizational health
in the world.
Furthermore, 2023 results also stood out for the record voluntary participation in
the survey, as 79% of the total workforce of the group’s companies took it, which
translates into more than 25,000 responses at the time.
It should be noted that this survey has questions that evaluate different strate-
gic focuses for the LATAM group, such as leadership, technological adaptation,
diversity and inclusion, and employee experience, which includes meaning and/
or purpose, as well as psychological safety, among others.
78 points in the Organizational Health
Index in 2023—the best in LATAM’s history.
People management is one of the critical processes for the companies in the LATAM
group in implementing the mission to connect people and destinations. In this
task, the group’s companies consider structured training and career advancement
practices that respond to the transformations and trends of the labor markets of
the countries in which they operate. They also consider dialog and approachability
between the staff and management of each company, which are important factors
in bolstering the joint commitment to the execution of the business strategy and
in making the Companies in the LATAM group better and better, simpler, and
more transparent.
Along this line, the dialog agenda includes meetings led by the Human Resources
departments and the leaders of different areas of the group’s companies on top-
ics such as leadership, sustainability, diversity and inclusion, among others. The
goal is to bolster the strategic alignment and empathy towards the employees of
the Companies in the LATAM group, and gather insights that make it possible to
improve human capital management. Other bodies that reinforce the permanent
dialog are:
• LATAM News: Weekly meetings 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.
We should note that leaders are trained to manage their teams and act in align-
ment with the leadership model defined by the LATAM group. In fact, they are
evaluated in their role as heads of the teams via the leadership index and the
tool called “Barometer”. The tools include, among others, variables that allow
the group’s companies to measure progress toward their 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, there is
a measurement from the team itself toward their superiors, making it possible to
extract a 360° view of the leader’s performance, whose fundamental role is that
of driving overall development.
Better, simpler and
more transparent
90
ANNUAL REPORT 2023 08 —Employees —Better, simpler and more transparent
36.3
2021
42.7
2022
49.9
2023
Average of 50 hours
of training per
employee.
TRAINING
NCG 461: 5.8 TRAINING AND BENEFITS
GRI 404-1 & 403-5
AVERAGE TRAINING
(H/EMPLOYEE)
The LATAM group’s training policies establish the
guidelines and principles for the skills and knowledge
development processes in the different areas of the
group’s airlines and, in turn, are focused on ensuring
compliance with all applicable local requirements and
regulations. In fact, in their procedures, the compa-
nies of the LATAM group establish the periodicity,
the updating system, the selection and training of
instructors, and the different responsibilities that
ensure that the training programs are carried out.
Among the subjects that have been addressed in
these spaces are operational and air safety; workplace
safety; diversity and inclusion; leadership; commercial
and customer service skills; in-flight service; human
factors; dangerous goods; internal procedures of the
group’s companies; Code of Conduct (Compliance);
and technical specialties for aeronautical maintenance.
Along this line, during 2023, the LATAM group invested
USD$13.2 million in professional training activities
for its teams, which translates into 0.12% of total
operating income.
Meanwhile, 32,139 individuals were trained (90.36%
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.
As a result, a total of 1.6 million hours of classes or
training were completed, with an average of 50 hours
per employee.
91
AVERAGE TRAINING IN 2023 (H/EMPLOYEE)
NCG 461: 5.8 TRAINING AND BENEFITS
GRI 404-1
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
MEN
WOMEN
12.6
12.9
29.0
45.0
11.9
16.4
38.0
14.2
6.6
11.0
21.0
51.4
11.9
11.7
71.4
12.1
Note: the calculation takes into account the average of the group’s companies.
ANNUAL REPORT 2023
The LATAM group’s companies have a Succession Plan that identifies potential re-
placements for the CEO and main executives among internal and external profes-
sionals. This plan is reviewed and updated annually and, in the event of the exit of
critical executives, is the first thing that is reviewed to decide 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
GRI 401-1
FUNCTIONAL CATEGORIES
Senior Management
CEOs
Vice-presidents
Directors
Management
Senior managers
Managers
Assistant Managers
Airport
Operations control center
Sales force
Sales operations
Customer care
Administrative
Support activities and general roles
Throughout 2023, the companies in the LATAM group hired 6,827 individuals, re-
sulting in a hiring rate of 19%. Meanwhile, the turnover rate was 10.84%, which is
lower than the figure for 2022 (11.4%).
Leadership
Area managers
Department heads
Other professionals
Middle management in support activi-
ties
Operators
Cargo operations
Maintenance
Other technicians
Command crew
Cabin crew
08 —Employees —Better, simpler and more transparent
PERFORMANCE REVIEW
GRI 404-3
SUCCESSION PLAN
NCG 461: 3.6 RISK MANAGEMENT
Annually, the Companies in the LATAM group hold a performance evaluation pro-
cess based on objectives, aligned with skills differentiated by segment. Executives,
middle management, supervisors and cabin and airport operational areas are part
of this process, designed to contribute to the development of each employee and
of the human capital within each organization.
The competencies defined are aligned with the organizations’ strategy and include
aspects such as safety, risk management and compliance, as well as health and
safety, among others. This measure seeks to ensure compliance with policies and
procedures that are crucial for the LATAM group’s companies, understanding their
relevance and their stakeholders.
In addition to the competency-based evaluation, at the beginning of each period,
these teams establish measurable annual goals, which are evaluated by their man-
agers and have a feedback process to generate relevant conversations that facilitate
continuous improvement and decision-making.
During 2023, 99% of the employees1 of the Companies in the LATAM group subject
to the process took part in the performance evaluation.
1 78% of the total number of employees of the LATAM group’s companies were due to receive a
performance evaluation in 2023.
92
ANNUAL REPORT 2023 08 —Employees —Better, simpler and more transparent
NEW HIRES AND WORKFORCE TURNOVER IN 2023
GRI 401-1
LATAM Airlines Brazil
LATAM Airlines Chile
LATAM Airlines Colombia
LATAM Airlines Ecuador
United States Regional Office
LATAM Airlines Peru
Others4
Total
NEW HIRES
TURNOVER
TOTAL
HIRING RATE 1
TOTAL2
TURNOVER RATE3
2,957
1,689
876
122
466
590
127
6,827
8.31%
4.75%
2.46%
0.34%
1.31%
1.66%
0.36%
2024
700
311
30
384
326
79
5.69%
1.97%
0.87%
0.08%
1.08%
0.92%
0.22%
19.19%
3,854
10.84%
1 Total hired/Total workforce as at December 31, 2023.
2 Total number of employees who left the group voluntarily or due to severance, retirement, or death in service.
3 Total number of employees who left the group voluntarily or due to severance, retirement, or death in service/total workforce as at
December 31, 2023.
4 LATAM group operations in other countries in the Americas, Europe and Oceania.
6,827
people were hired
during the year
93
MORE INFORMATION:
Annexes (Pages 156-162).
BENEFITS
NCG 461: 5.7 POSTNATAL LEAVE AND 5.8 TRAINING AND BENEFITS
GRI 401-2
The Companies in the LATAM group provide their employees
with a series of benefits that are not part of the remuneration.
These include:
1. Stress management in the workplace: The Wellness Pro-
gram of the Companies in the LATAM group focuses on stress
management in the workplace and on promoting employees’
well-being. This program consists of four components: “Getting
to Know Each Other” to foster connections, “Travel Club” with
travel tips, “Wellness Tips” to improve mental, emotional and
physical health, and “LATAM Club”, offering discounts to em-
ployees and their families in various categories. This program
is accessible through the LATAM Portal and RH Connect.
• Getting to Know Each Other: A monthly section that allows
employees to meet and connect with different individuals from
the LATAM group’s companies. Up to two people per month
per country are featured.
• Travel Club: This section offers the presentations and record-
ings of each live session where, month after month, a worker
from one of the companies in the LATAM group showcases
a new corner of the world. From their own experience, they
share the main tips and advice to inspire, without boundaries,
the next adventure, connecting with the Staff Travel benefit.
• Wellness Tips: A space where useful information and articles
are published monthly to enhance the wellbeing, self-care and
mental health of workers across the companies in the LATAM
group.
Health and Fitness, Education and Training, among others,
which may vary by country. In fact, as an employee of one
of the companies in the LATAM group, they can also access
many of the discounts that are part of the benefits of one of
the group’s companies in other countries and not only those
in the employee’s country of residence.
2. Wellness and health initiatives: Each company in the group
manages different initiatives aimed at promoting physical ac-
tivities. For example, during summer, the group’s companies
in Chile invite employees to participate in a variety of free
sports activities held at facilities known as “LATAM Park”.
This includes reserving courts or pitches for various sports
or enrolling in classes, such as Zumba, functional training, or
spinning, among others.
In addition, all employees with permanent and fixed-term
contracts are provided:
• Life insurance: Given the importance of prevention in diffi-
cult times and with the support of loved ones in mind, most
of the companies in the LATAM group have life insurance for
their employees.
• Health insurance: Given that employees’ health is one of the
main concerns for the companies in the LATAM group, they
have private medical insurance which includes, among other
things, coverage for outpatient and inpatient medical services,
medicines and treatments. In fact, in some companies in Chile,
it also includes free telemedicine on topics such as psycholo-
gy, nutrition, sports medicine, chronic disease support, sleep
disorders, sexual health and LGBT+ counseling. Likewise, the
group’s companies in Chile, have a collective Isapre health plan
agreement with Colmena for preferential and fixed prices.
• LATAM Club: Exclusive network with discounts and promo-
tions for employees of the companies in the LATAM group and
certain additional beneficiaries, with different benefits that are
offered in all countries and in more than ten categories, such
as: Hotel and Tourism (with large hotel chains), Gastronomy,
• Medical Assistance Insurance on business trips outside the
base country: Transcending in the care of their workers during
the performance of their duties, the companies in the LATAM
group have travel assistance insurance to take care of them
in the event of illness and accidents while they are on duty
ANNUAL REPORT 2023
08 —Employees —Better, simpler and more transparent
outside their countries of residence. This also extends to both cabin and flight
crews in the performance of their duties.
3. Part-time work options: For some specific roles, part-time contracts are avail-
able that allow employees to work fewer hours per week in lieu of traditional
full-time contracts. This program is available in different countries, according to
their national regulations.
4. Teleworking: Depending on the nature of their duties, certain employees of the
Companies in the LATAM group can work in hybrid mode, which consists of two
days working in the office and three days working from home. In addition, some
specific roles work 100% from home because of their functions, such as the IT
teams and the Contact Center. The companies of the LATAM group cover some
expenses derived from hybrid work, such as food and internet costs, pursuant to
the regulations of each country.
5. Flexible work schedules: For certain countries and specific job positions, the
LATAM group offers the option of flexible working hours, in accordance with na-
tional regulations. This implies a flexible schedule that allows employees to decide
when to start and/or end their working day, based on their individual needs and
within the time range defined by the companies where it is applied.
6. Childcare facilities: In accordance with the regulations of each country, child-
care benefits are granted to working women to care for their children after the
postnatal period, or they are provided childcare contributions, as an alternative for
parents who work shifts or whose child has a health condition that makes them
unfit for childcare facilities.
10. Ticket discounts benefit (Staff Travel): As part of their value proposition, the
companies in the LATAM group enable their employees and their beneficiaries to
get to know the world through the Staff Travel ticket benefit. Through it, they get
access to an annual coupon book on routes operated by the LATAM group to reach
more than 140 destinations around the world, using tickets subject to vacancy
with a 100% discount (2), with a 90% discount (12), with a 50% discount (12) and
confirmed tickets whose discount and number varies by sublevel. In addition,
workers have access to unlimited flights with significant discounts on more than
90 airlines with agreements. These coupons apply for each worker and for each
registered beneficiary according to the current policy.
11. Special benefits of the LATAM Pass frequent flyer program: The companies
in the LATAM group allow employees registered in the LATAM Pass program to
access special benefits that complement the Staff Travel benefit experience, in-
cluding: a special mileage bonus when registering for the first time with LATAM
Pass, double mileage accrual on the purchase of Staff Travel tickets and the option
to purchase Staff Travel tickets directly with miles. The latter is implemented in
several countries and work is underway to make it available in all countries where
the group operates.
12. Special benefits in ground handling services offered by LATAM: Complement-
ing the Staff Travel benefit experience, the companies in the LATAM group allow
workers to access discounts on ground handling services offered to commercial
passengers (car rental, hotels, tours, etc.). Along this line, all the countries include
discounts on car rentals and we are working to include hotel discounts as well. For
Chile, Brazil, Peru and Paraguay, special discounts also apply to all other services.
7. Lactation facilities: Some facilities of the Companies in the LATAM group have
dedicated lactation rooms in the workplaces. These spaces offer privacy, con-
venience, storage and hygiene for mothers to express breast milk. This support
program is available in different countries, depending on their national regulations.
13. Loans: Certain companies in the LATAM group offers financial support in the
form of loans catering to different groups of workers, which are applied according
to local conditions in the different countries’ current collective bargaining agree-
ments. This is done to help employees faced with various situations during their
working lives.
8. Maternity and paternity leave (postnatal): The companies of the LATAM group
guarantee the granting of maternity and paternity leave for mothers and fathers
in accordance with the legal regulations of each country.
9. Paid family care leave beyond parental leave: Certain companies of the LATAM
group guarantee the granting of paid family care leave for their employees, in
accordance with the legal regulations of each country.
94
ANNUAL REPORT 2023 08 —Employees —Better, simpler and more transparent
others, existing in the societies where it operates.
It should be noted that, in line with the Diversity commitments,
which aim to achieve a gender balance of around 40/60 by
2030 at all functional levels, the LATAM group incorporated
more women in the roles of pilots and maintenance mechan-
ics, and reached a total ratio of 39.2/60.8 in those categories.
The group’s progress in building increasingly inclusive work
environments was also reflected in the results of the Inclusion
Evaluation. This diagnosis considers the organizational systems
and leadership practices that the group carries out, in addition
to the perception of subgroups of employees regarding equal
opportunities for growth and professional success. Thus, in
2023, the LATAM group reached 78 points in the evaluation,
one more than in 2022, maintaining a positive trend over the
last three years.
LATAM group aspires to achieve a
gender balance of around 40/60
by 2030 at all functional levels.
DIVERSITY, EQUALITY AND INCLUSION
NCG 461: 3.1 GOVERNANCE FRAMEWORK and 5.4.1 EQUALITY POLICY
GRI 3-3; 405-1
The companies in the LATAM group address diversity and
inclusion in a broad and comprehensive way, aware of the
challenges related to its different social groups. Along this
line, the recruitment and selection processes, which adhere
to the Global Diversity and Inclusion Policy, are supported
by a network of foundations, organizations, and consultants
specialized in attracting and hiring plural talents.
Furthermore, working hand in hand with an external consultant,
the companies in the group gather the opinion of employees
from all the countries where they operate, identifying the differ-
ent experiences and outlooks 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, the internal value proposition and employee experience.
These actions, in addition to other specific actions, allow the
group to strengthen inclusion, seeking to ensure that all indi-
viduals who are part of the group’s companies can contribute
their capabilities fully and feel that they belong. In fact, some
of the transversal actions developed are:
• Informing and educating 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.
In addition, the LATAM group has set diversity goals focused
on increasing the representation of women in leadership and
technical roles; increasing the representation of people with
disabilities in different roles; and promoting plurality in pro-
fessional profiles to reflect the diversity of race and ethnicity,
generation, sexual orientation and gender identity, among
95
ANNUAL REPORT 2023 08 —Employees —Better, simpler and more transparent
WORKERS BY GENDER AND CATEGORY OF THE COMPANIES IN THE LATAM GROUP
GRI 405-1
SALARY RATIO (WOMEN/MEN) 1
NCG 461: 5.4.2 WAGE GAP
GRI 405-2
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
LATAM group
MEN
59
416
1,030
11,002
180
483
1,617
6,654
21,441
MEN %
WOMEN
WOMEN %
AVERAGE2
MEDIAN3
85.5%
64.2%
64.9%
68.4%
24%
46.9%
60.7%
52.1%
60.2%
10
231
556
5,064
567
546
1,044
6,109
14,127
14.4%
35.7%
35%
31.5%
75.9%
53%
39.2%
47.8%
39.7%
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
87%
94%
95%
92%
98%
97%
97%
89%
87%
95%
95%
91%
98%
98%
97%
90%
*LATAM has no professionals in the Auxiliary category.
PAY EQUALITY
NCG 461: 5.4.2 PAY GAP
GRI 405-2
The companies in the LATAM group have policies and practices
in place to ensure equitable compensation among employees,
based on their roles and responsibilities. Along this line, the
policy begins with the position weighting methodology (points
and grades) to define the relative weight of each position with-
in the organizations. Additionally, salary scales by grade are
defined, through market surveys, to position each employee
within the salary range defined for their grade.
It should be noted that all individuals within the same pay
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 per-
formance, which are the only determining factors for income
differences. In fact, there is an annual review of merit income,
which is always based on the individual’s performance.
96
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, bonuses,
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 the groups by country, pay grade, and seniority
category, and 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.
FUNCTIONAL CATEGORIES
Senior management
CEOs
Vice-presidents
Directors
Management
Senior managers
Managers
Assistant Managers
Leadership
Area managers
Department heads
Operators
Cargo operations
Maintenance
Airport
Operations control center
Sales force
Sales operations
Customer care
Administrative
Support activities and general roles
Other professionals
Middle management in support activities.
Other technicians
Command crew
Cabin crew
ANNUAL REPORT 2023
08 —Employees —Better, simpler and more transparent
JOB SAFETY
NCG 461: 5.6 OCCUPATIONAL SAFETY
GRI 3-3, 403-1, 403-2, 403-7 & 403-9
Safety is a fundamental and non-negotiable value for the
companies in the LATAM group. This commitment is set forth
in the Safety, Quality, Health and Environment Policy and
translates into the promotion of an Occupational Health and
Safety management system aimed at preventing workplace
injuries and illnesses for all members of the operation.
The supervision of this system, which comprises various oc-
cupational health and safety programs, is the responsibility of
the leaders of each operational area, who apply the system’s
guidelines and receive support from the Corporate Safety
area. The companies in the LATAM group observes regulatory
compliance in all countries where they operate and ensure
comprehensive compliance with the LATAM group’s Quality,
Health and Environment Policy.
The companies have established a comprehensive workplace
safety governance strategy that encompasses several key
procedures:
• Hazard identification and risk assessment: The companies
in the LATAM group have procedures in place for systematic
hazard detection and risk assessments. In each case, control
measures are defined in the processes and facilities, ensuring
workers’ protection and well-being.
• Occupational safety inspections: The companies in the
LATAM group conduct periodic inspections and detailed reports
describing identified risks and potential impacts on operations
and people, including mitigation action plans2.
• Management and Control of Action Plans: With a focus on
prevention, this process reduces operational risks and impacts
by implementing action plans and addressing root causes
identified during inspections. To prioritize these plans, the
companies in the LATAM group use the Action Plan Index (API),
which makes it possible to evaluate, prioritize and integrate
the different potential risk mitigation plans.
• Change Management Evaluation: In addition, hazards as-
sociated with internal and external procedural changes are
proactively identified and mitigated, safeguarding the safety
of new ways of operating.
Likewise, the companies in the LATAM group evaluate the ef-
fectiveness of their management system on an ongoing basis
by monitoring indicators related to accident rates, such as the
injury rate and the potential Serious Injury and Fatality (SIF)
indicator. The latter was included during 2023 to strengthen
the anticipation of possible risks and the implementation of
preventive measures.
Overall, these indicators are reviewed against annual targets
on a regular basis in all countries and operational areas within
the companies in the LATAM group. This record also includes
third-party service providers that collaborate with the compa-
nies in the LATAM group, who must contractually comply with
their local regulations and, in some cases, actively participate
in the monitoring of these safety indicators. The availability
of information facilitates the prioritization and integration of
the different action plans through the Action Plan Index (API),
which evaluates risks based on their probability and severity,
making it possible to determine the most efficient plans in
the different cases.
2 During 2023, safety inspections were carried out on the critical risks iden-
tified by the companies in the group, through a thorough work plan. This
process involved inspections of more than 1,100 pallet trucks, more than
600 forklifts, more than 2,000 anchoring systems, 800 man lifts and 2,400
ladders. In addition, more than 800 infrastructure inspection reports and
9,000 inspections focused on safe behavior (IPS) were performed.
97
SNAPSHOT
HUMAN CAPITAL MANAGEMENT LATAM GROUP COMPANIES
NCG 461: 5.8 TRAINING AND BENEFITS
2021
2022
2023
Total employees
Turnover rate1
Average hours of training2
Total individuals trained (% of total workforce)
Investments in training (% of revenues)
29,114
22.5%
36.3
N/D
N/D
32,507
11.4%
42.7
30,600 (93%)
0.14%
35,568
10.8%
49.9
32,100 (90%)
0.12%
OHI survey
Result
Quartile
77
1
77
1
78
1
1 Employees who left one of the companies in 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.
0 fatality
year 2023
0.61
accidents
per 100
workers
0 workplace
accidents
with serious
consequences
year 2023
year 2023
ANNUAL REPORT 2023
08 —Employees —Better, simpler and more transparent
OCCUPATIONAL SAFETY1
NGC 461: 5.6 OCCUPATIONAL SAFETY
Accident rate (per one hundred workers)2
GRI 403-9
Fatality rate3-4
Occupational disease rate
(per 100 workers)5
Average number of days lost due to accidents6
GRI 403-9
Accident rate per occupational injury
with major consequences GRI 403-9 7,8-9
Absenteeism rate
2020
0.39
0
0.03
12.54
0.01
4.4
2021
0.48
0
0.04
10.24
0.00
4.7
2022
0.64
0
0.03
11.48
0.00
4.1
2023
0.61
0
0.03
11.62
0.00
4.4
TARGET
0.63
0
N/A: information not available.
N/A: Not applicable.
1 Some indicators in this section began to be counted in this way in 2022, so there is no information from previous years.
2 Total work accidents/Average workforce X 100.
3 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.
4 The calculation of the rate follows the formula: Total fatalities per work accident/Average workforce X 100,000.
5 Total occupational diseases/Average workforce X 100.
6 Total days lost due to work accident/Total work accidents. NB: The count of lost days begins on the day after the accident.
7 Accidents related to some critical risk and high-impact events (accidents resulting in over 100 days lost) represent 1.5 in the calculation.
8 Rate calculation formula: total injuries with work interruptions/average no. of employees x 100.
9 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 (gender, nationality, age range, seniority, people with disabilities): Pages 156-158.
• Postnatal leave: Pages 161-162.
• Formality of work (type of contract, type of work hours, work flexibility): Page 159.
• Freedom of association: Page 159.
• Idle days due to work stoppages: Page 159.
98
ANNUAL REPORT 2023
08 —Employees —Who makes the LATAM group
EMPLOYEES BY COUNTRY IN 2023
12,018
Men
6,670 Women
4,836
3,887 Women
Men
1,239
1,043 Women
Men
BRAZIL
CHILE
COLOMBIA
Who makes up
the LATAM group
GRI 2-7
35,568 individuals
Men
300
197 Women
896 Men
315 Women
1,747
1,601 Women
Men
ECUADOR
UNITED STATES
PERU
Men
405
414 Women
OTHERS
21,441 Men
14,127 Women
LATAM GROUP
EMPLOYEES BY AGE RANGE IN 2023
EMPLOYEES BY SENIORITY IN 2023
EMPLOYEES BY COUNTRY IN 2023
606
From 61 to 70
years old
38
Over 70
years old
3,377
From 51 to
60 years
old
8,894
From 41 to
50 years old
11,366
Over
12 years
15,401
Under 3
years
8,846
Under 30
years
13,807
From 30 to 40
years old
3,093
More than
9 and up
to 12 years
2,331
More than 6 and
up to 9 years
3,377
From 3 to 6 years
99
1,211
United States
3,348
Peru
819
Others
497
Ecuador
2,282
Colombia
8,723
Chile
18,688
Brazil
ANNUAL REPORT 2023 09 Clients
In this chapter
101 The best
experience
The best
experience
GRI 3-3
LATAM group seeks to give its passengers the best experience,
from the moment they choose their flight, until they pick up
their bags upon arriving at their destination. In addition, it
seeks to build long-term relationships with its clients by de-
livering exclusive benefits through its frequent flyer program,
LATAM Pass.
During 2023, the group continued to integrate improvements
into the travel experience, with new cabins for greater com-
fort, technology that provides autonomy and makes every
decision more agile, award-winning gastronomy, and in-flight
entertainment with exclusive content. All this, while ensuring
punctuality and a range of service options.
In addition, dialog channels are kept open to receive feedback
in the search for constant improvement and, of course, safety
is a top priority for the group.
New cabins
In 2023, LATAM group, made progress in the aircraft cabin
transformation process, contributing more flexibility to serve
different customer segments and offering more comfort, es-
pecially on long-haul journeys.
101
09 —Clients —The best experience
Along this line, during the past year, the group received five
additional Boeing 787-9 Dreamliner aircraft, with a completely
overhauled cabin interior, including a Premium Business cabin:
full-flat seats, direct aisle access, greater privacy, and space
for personal items; an Economy cabin, with state-of-the-art
seats; and a renovated in-flight entertainment system with
18-inch screens in Premium Business and 12-inch screens in
Economy.
In addition, in 2023, the group began receiving Airbus A320Neo
and A321Neo aircraft with the new Airspace cabin configuration
which, among its new features, includes personalized lighting,
new luggage racks with up to 60% more space, bathrooms with
antimicrobial surfaces, and seats with tablet holders so that
passengers can use their personal devices more comfortably.
On the other hand, the group completed the overhaul on its
narrow-body fleet, implementing the latest cabin standards.
In this class, we also find the Premium Economy class, which
offers more foot space, blocked middle seat, exclusive luggage
space, and a differentiated gastronomic service.
In-flight service overhaul
During 2023, the menu was revamped to include local South
American products that reflect the regional heritage, with
high quality ingredients and an additional main course option,
as well as the inclusion of new service elements. In addition,
on long-haul flights, an initiative was launched to value the
talent of up-and-coming female chefs in the region through
the co-creation of signature dishes with LATAM chefs, which
is offered in the Premium Business and Economy cabins.
In addition, new snack varieties were introduced in the Economy
cabin on domestic flights in Brazil during October, providing more
flavors and quality, renewed every two months. It also increased
the range of flights offering the full range of liquids to accompany
snacks, including water, coffee, soft drinks and juices.
Circular Economy
Increase in Premium Economy rows
Last year, LATAM group increased the number of Premium
Economy seat rows on seven routes within Brazil to meet
growing demand in the market for the enhanced level of ser-
vice that the Premium Economy class delivers.
In-flight Wi-Fi connectivity
By the end of 2023, LATAM completed the implementation of
Wi-Fi in all narrow-body aircraft of LATAM Airlines Brazil, and
began installation in Spanish-speaking markets, ending 2023
with 23% of the Spanish-speaking fleet connected. With the
installation of this service, passengers will be able to access
the free messaging service, as well as purchase browsing and
streaming packages, based on their preferences.
Throughout 2023, 96% of single-use plastics were eliminated
from the whole in-flight experience for both Premium Business
and Economy cabins, achieving a reduction of more than 1,700
tons, to be replaced with rotable and/or bio-based materials,
such as paper cups, bamboo cutlery and sugarcane lids. In this
sense, in Business class, the rest items come in reusable bags
and the amenity kits, which have been designed by up-and-
coming South American artists, are made of friendly materials.
In addition, LATAM launched the “Recicla tu Viaje” (Recycle
your Trip) program in the Brazilian domestic operation, which
is already operational in the domestic markets of the group’s
subsidiaries. On this point, it is worth noting that LATAM man-
aged to recycle more than 120 tons of PET bottles.
LATAM Play
LATAM Play is the platform that seeks to provide a high-quality
entertainment experience with the latest in-flight releases to
satisfy the tastes and preferences of each passenger.
Thus, LATAM Play allows clients to access different content
from their own personal devices on narrow-body aircraft, while
passengers of wide-body aircraft access the system through
in-flight screens, which provide the largest content library in
South America. During 2023, this platform offered over 170
movies, 430 series and 100 music albums, as well as docu-
mentaries, games and in-flight reading alternatives.
During the same period, LATAM group launched its partnership
with major streaming platforms HBO Max and Paramount+.
By 2024, the company aims to increase its content offer by
over 50%, consolidating its position as a leader in the region,
with world-class content.
ANNUAL REPORT 2023 09 —Clients —The best experience
Better service at airports
The signage and image of all the network’s airports was updat-
ed and improved to achieve both greater brand visibility and
greater simplicity in the client orientation process. In addition,
the image of the premium check-in was renewed to provide a
better experience for frequent flyers. Likewise, the group set
up operations at more than ten new airports (for new routes)
to continue connecting clients.
New lounge in Lima
In early 2023, the company decided to build a new LATAM
Lounge in Lima, Peru, which will span 2,400 m2 in two lounges:
the Signature Lounge and the Premium Lounge. This milestone
will allow LATAM group to consolidate its network of own
lounges in its most important hubs.
During the second half of the year, progress was made in the
design process and in late 2023, the bidding process for con-
struction began, which will be carried out throughout 2024. In
addition, in May 2023, LATAM’s alliance with Visa was imple-
mented in the Bogotá Lounge.
Dialog channels and personalized attention
The group has adopted a proactive approach to better un-
derstand its clients’ preferences and expectations through a
monitoring and analysis model that allows it to collect data on
customer interactions and feedback. This data analysis is used
to continuously adjust the services offered, ensuring that the
customer service and solutions provided are aligned with the
changing needs and expectations of LATAM’s customer base.
In addition to improvements in digital channels, LATAM group
has strengthened its customer service capabilities through its
contact center, providing clients with a centralized touchpoint
to obtain assistance and resolve queries. This has become a
fundamental element of the customer service strategy, pro-
viding fast, efficient and personalized service to meet clients’
demands at all stages of their travel experience.
App LATAM
LATAM App: A notice was implemented to notify clients when
the boarding of their flight begins, to reduce their waiting time
at the boarding gate. In addition, the process to purchase tick-
ets, request cabin upgrades and check on flight status was
improved, and the stages for purchasing additional services,
such as extra baggage or seat choice, were simplified.
Other relevant developments in the app were the option to
bring forward or postpone the passenger’s trip, complement
the trip with lodging, car rentals and packages, and request
assistance and special services.
LATAM group has implemented significant improvements in its
communication channels with clients, covering a wide range of
platforms, from its mobile app to its website and the use of
WhatsApp as an additional form of contact. These enhance-
ments have not only expanded interaction options but have
also been designed to offer a more personalized experience
focused on each client’s individual needs.
In 2023, the app positioned itself as a relevant channel for the
client’s day of travel, reaching three million active users per
month and 46.5% of passengers using the app on their flight
by December 2023—8% growth over the same period in the
previous year. Similarly, 33% of frequent flyer program mem-
bers have created a user in the application, with 64% of them
being high-value passengers.
102
Automatic check-in (for domestic flights) and digital self-
check-in at kiosks or through the App
Coverage of this service was extended over the last year,
reaching 92.5%.
LATAM group completed the
modernization of its narrow-body
fleet, implementing new standards
in passenger cabins.
Automatic Bag Tag
LATAM group is a pioneer in South America in implementing
technology that allows the client to do the bag drop autono-
mously. This improves the passenger experience by reducing
queuing times. Thus, in 2023, 26 airports had self-bag drop
available, representing a coverage of 79%. In turn, in 2024, the
expectation is to continue to increase coverage at new strategic
airports and add more machines at existing airports.
Facial recognition by biometrics during boarding
Until 2022, LATAM group had a two-step biometric boarding
system, which managed the individual’s identity through facial
recognition technology and the scanning of their boarding pass,
both in Miami (MIA) and New York (JFK), in the United States.
In late 2023, the group implemented new technology to further
streamline the boarding process with a one-step biometric
system in Miami (MIA). This change allowed passengers to
carry out both the identity check and boarding procedures,
with the sole use of the facial recognition system.
The group seeks to further expand the implementation of this
system to New York (JFK), Orlando (MCO), Los Angeles (LAX),
Boston (BOS) and Atlanta (ATL) during the first half of 2024.
ANNUAL REPORT 2023 09 —Clients —The best experience
and complementing them with money, which makes
LATAM group’s destinations more accessible.
In 2024, LATAM group wants to bring the program even
closer to its members, seeking to accompany them
not only when they travel, but also in their daily lives.
Along this line, it will seek to give greater tangibility,
liquidity and accessibility to the program through the
growth of its non-air ecosystem, and the strengthening
of its financial partnerships and its value proposition
for members, delivering an experience in redemption,
accumulation, digital and personalization. At the
same time, for this year, LATAM has the challenge of
having a program that is not only more present, but
also simpler and more personalized, allowing program
members to enjoy more and more of the benefits of
belonging to the largest loyalty program in the region.
TECHNOLOGY THAT CONNECTS
Since 2021, each LATAM cabin crew member has a
tablet and online connection to access different infor-
mation from the database to better serve passengers.
This device provides information about whether the
client had any type of inconvenience in previous seg-
ments, such as a delay in a connection, if they require
some special type of food or special assistance, and
even if it is their birthday.
We should note that this tool inspired a group of crew
members to record safety instructions in videos using
the sign languages of each of the five countries where
LATAM has domestic operations, to provide guidance
to hearing-impaired passengers.
ASD CLIENT SERVICE CERTIFICATION
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 provided by Au-
tism Double-Checked, an organization dedicated to
preparing and advocating for adequate care for this
audience and reached ten thousand employees who
interact with clients.
Specifically, the training considers three steps: Au-
tism 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 Dou-
ble-Checked, focused on publishing the information
so that the autism community can be guided and have
a more enjoyable flight.
Likewise, with the support of the Hidden Disabilities
Sunflower program, LATAM implemented the use of a
lanyard that seeks to discreetly and voluntarily pro-
mote the self-identification of people in a situation
of disability that cannot otherwise be recognized with
the naked eye. The lanyard is available at 19 airports
in the group’s network in Brazil, Chile, Colombia, Ec-
uador, and Peru, and is delivered free of charge to
anyone who requires it when traveling.
The initiatives mentioned above 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.
LATAM PASS
The LATAM Pass Frequent Flyer program has 45 mil-
lion members. This allows members to earn miles or
points for trips taken, and for the purchase of goods
and services in the financial partnership network,
enabling them to reach different membership cate-
gories and enjoy the benefits associated with each of
them. These benefits include cabin upgrades, premi-
um boarding, VIP lounge access and priority baggage
delivery at destination. Nonetheless, passengers can
also redeem points or miles for airplane tickets or
products.
Along these lines, during 2023, new benefits were
implemented to continue delivering the best to LATAM
Pass members. These include preferential call center
service for all Elite members, elimination of the ser-
vice charge on ticket redemptions and simplification
of the upgrade model with complimentary segments.
It also includes improved upgrade priority for Elite
members with LATAM Pass credit cards, delivery of
lifetime categories, and exclusive remote boarding
transportation service at Congonhas for Black Signa-
ture members in electric cars in partnership with Audi.
Likewise, there is the launch of the “Miles + Money”
product in the redemption of tickets, where program
members can purchase their tickets using their miles,
103
ANNUAL REPORT 2023 09 —Clients —The best experience
ON-TIME PERFORMANCE
GRI 3-3
figure two percentage points higher than the one obtained in
2022.
Meanwhile, the digital experience rating rose from 50 points in
2022 to 61 points in 2023, while the contact center experience
closed the year with -2, marking its best result ever.
However, in 2024, LATAM will continue to expand and improve
the way it collects the voice of its customers. To this end, it
established 25 satisfaction goals for different internal teams,
which shows that its customer focus continues to gain strength.
Thus, special attention was paid to the cycle closure process,
where several teams replied to the comments from clients in
thousands of surveys.
FEEDBACK ON VIDEO
Since October 2022, clients of domestic operations in Brazil,
Chile and Colombia can leave their comments by recording a
video. In fact, during the first three months of operation of
the new tool, LATAM received 1,500 videos (3,500 minutes),
which translates into approximately 200 videos per week (45%
of them from customer promoters). This initiative is very use-
ful to strengthen empathy and humanize customer feedback,
expanding the impact to improve customer-facing processes
and better understand their pain points and suggestions.
Throughout 2023, the tool was extended to include passengers
from Ecuador, Peru and international routes.
In 2023, LATAM achieved 86% in the DEP15 indicator, which
analyzes flights departing up to 15 minutes after the sched-
uled time. This result shows a two percentage-point decrease
compared to 2022. This is mainly explained by the Brazilian
affiliate, since after the increase in slots at the São Paulo air-
ports, traffic congestion increased significantly, affecting the
punctuality of all airlines operating in that city. Nonetheless,
the group maintains its commitment to on-time performance.
Along these lines, together with suppliers and airport author-
ities, the group is working on the necessary adjustments and
process improvements to provide passengers with an excellent
service.
According to the Official Airline Guide (OAG), LATAM was the
second airline among the 20 largest airlines with the best on-
time performance during 2023.
Cabin overhauls were part of
the actions to improve customer
experience.
SATISFACTION
LATAM group’s companies constantly monitor customer per-
ception regarding their operation and service, using a series of
surveys at different customer contact opportunities.
Along these lines, 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 willing-
ness to recommend the service, on a scale from -100 to +100.
During 2023, it stood at 48 points in passenger operations, a
104104104
SNAPSHOT
CLIENTS
LATAM Pass (Enrolled– Millions)
Technology
Self bag drop
Easy check-in (automatic or digital)
On Time performance22
OTP DEP0
OTP DEP15
OTP ARR14
Domestic Operation
International Operation
Net Promoter Score (-100 to +100 scale)
Passenger operations
Cargo operations
2021
39
67%1
90%
77%1
92%
91%
91%
85%
511
30
2022
42
76%
95%
2023
45
79%
92%
66% (target 68%)
88% (target N/A)
86% (target 87%)
87%
83%
62% (target 67%)
86% (target N/A)
84% (target 86%)
84%
82%
46
51
48
58
N/A: 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).
ANNUAL REPORT 2023
09 —Clients —The best experience
TECHNOLOGY, DATA PROTECTION AND
CYBERSECURITY
GRI 3-3 & 418: CUSTOMER PRIVACY
tive control of the Information Security Policies, as
well as the procedures for the protection of personal
data, through risk management, security and privacy.
evaluation, within the Safety, Risk Management and
Compliance criterion.
In 2023, LATAM participated in the PCI REB Brazil (PCI
Regional Engagement Brazil) as the only airline. This
roundtable is led by the Chair of the PCI Council for
Latin America, and includes companies from various
industries that offer services associated with card
payments that seek to generate continuous improve-
ments in matters of security and data protection.
It should be noted that internal review planning is
carried out every year by the Cybersecurity man-
agement to ensure compliance with the privacy and
data protection controls of the systems that manage
personal data in LATAM, as well as the review and
updating of documentation. In addition, there is an
Internal Audit department that audits compliance
with the company’s security controls.
These processes contributed to LATAM ending the year
2023 with no information security breaches and no
impact on clients or employees. However, the group
continues to work hard in this sphere, due to the rap-
idly changing threats in the environment.
Governance of information security
LATAM prioritizes the privacy and security of client,
employee and business partner information. That is
why the group has defined an organizational structure
with a specialized team dedicated to the design and
maintenance of a suitable system for the identification,
monitoring, control and mitigation of data protection
and cybersecurity risks.
As part of this organizational structure, it is worth
noting the role of the Chief Information Security Officer
(CISO), who reports to the LATAM Executive Committee
on the results of the monitoring of risk management
strategies in these matters, and hierarchically, to the
Chief Information Officer (CIO).
The latter, in turn, reports to the group’s CEO and pres-
ents to the Board of Directors at quarterly meetings
on cybersecurity risks, the evolution of cyberthreats
and the effectiveness of measures taken to mitigate
them.
Data governance and cybersecurity
To guarantee the protection of its clients’ information,
LATAM establishes guidelines through its Information
Security Policies, which are adapted to the local reg-
ulations of each country where the group operates.
These specific documents are available on LATAM’s
website, thus providing transparency and accessibility
to its clients regarding the security measures imple-
mented.
The Cybersecurity management, which reports to
LATAM´s CISO, is responsible for ensuring the effec-
During 2023, LATAM Airlines Group was re-certi-
fied for compliance with the Payment Card Industry
Data Security Standard (PCI DSS) as a result of an
independent audit. This achievement shows that the
group has implemented suitable security measures to
protect the payment card information of customers
who purchase products and services through its sales
channels.
It should be noted that all LATAM’s information se-
curity policies, regulations, standards and procedures
are based on ISO/IEC 27001 and NIST standards.
LATAM’s digital infrastructure is also outsourced and
independently reviewed through System and Organi-
zation Controls (SOC1 and SOC2) reports, and is ISO/
IEC 27001 certified.
Cybersecurity and data protection culture
• Awareness: Each year, the group develops a training
and communication program on information security,
adapted to all roles in the company.
• Risk escalation process: An escalation channel is
available through LATAM’s intranet portal and the
Computer Security Incident Response Team (CSIRT)
contact, so that employees can report suspected
technological or cybersecurity risks.
• Compliance and consequence management: The
Code of Conduct sets forth the attitudes expected
by LATAM in the arena of Information Security and
Data Protection, and establishes the consequences
of non-compliance with the established procedures,
which can escalate to contract termination. In addi-
tion, this subject is part of the employee performance
105
ANNUAL REPORT 2023 09 —Clients —The best experience
Data Intelligence
LATAM group uses data analytics tools to develop custom-
er-oriented solutions, improve efficiency in different processes
and enhance revenue opportunities for the group, driven by
Data Management.
Throughout 2023, the group continued to advance develop-
ments that allow its customers an increasingly personalized
experience, taking into account their preferences and service
needs. This approach has been particularly significant in im-
proving the user experience of the LATAM Pass program, where
the group strives to offer exceptional service.
On the other hand, we continued to work on the democratiza-
tion of data, enabling employees in non-operational areas to
access information autonomously, facilitating decision-making
and promoting improvements in different processes. Examples
of the application of these technologies include solutions for
jet fuel load optimization and fraud prevention, among others.
In addition, as part of its efforts to maintain the highest stan-
dards of personal data protection, LATAM group has reinforced
the use of artificial intelligence in its data storage architecture.
Thus, all information collected and processed by LATAM is
always handled respecting the privacy of its clients and em-
ployees, in accordance with the regulations of each country
and internal policies in force.
Systems in the cloud
LATAM group has made remarkable progress in its cloud mi-
gration process, with significant achievements in several key
aspects. Among these milestones is the simplification of its
technological platforms, which has led to a considerable re-
duction in the obsolescence of IT elements and platforms.
This approach has resulted in a lower impact on transversal
incidents, allowing for a more efficient and safer operation.
There were no information
security breaches affecting clients
or employees in 2023.
INNOVATION
NCG 461: 3.1.V GOVERNANCE FRAMEWORK
LATAM group invests annually in different forms of innovation
to deliver solutions aligned with passenger needs, prioritizing
the company’s digital transformation. In addition, the group
is continuously making progress in the modernization of its
processes and the inclusion of new technologies, through in-
vestment in advanced analytics, the total migration of its da-
tacenters to the cloud, and in Generative Artificial Intelligence.
As part of the innovation initiatives promoted by LATAM group,
LATAM Labs, the open innovation hub that makes it possible
to test new disruptive ideas in the group’s companies, has
been in place since 2020. This hub tests ideas generated by
employees themselves and by external ecosystems, such as
universities, entrepreneurs, startups and knowledge centers,
in the companies’ real operating environments. During 2023,
LATAM Labs had eight external partners.
Among the ideas already tested by LATAM Labs and imple-
mented throughout LATAM are the project to use artificial
intelligence to improve customer service at airports, the cre-
ation of a digital solution to serve customers in Brazilian Sign
Language (known as Libras, in Portuguese) through the Libras
Interpreter Center, and the application of neural networks and
deep learning in the customer experience during their trip.
106
ANNUAL REPORT 2023 10 Suppliers
In this chapter
108 Supply chain
management
Supply chain
management
10 —Suppliers —Supply chain management
GRI 2-6
NCG 6.2: BUSINESSES
Suppliers are essential to fulfill our commitments to
our clients. During 2023, LATAM group established
partnerships with a total of 5,557 suppliers, which
are classified according to criticality, 270 being criti-
cal and 5,288 non-critical, for a total procurement of
USD$9.84 billion.
It is worth noting that, during this period, 26 suppliers
individually represented more than 10% of their
category.
LATAM group has important suppliers that are part of
the aeronautical industry, such as the leading aircraft
manufacturers Airbus and Boeing. Its supply chain
also includes different companies that manufacture
components, accessories and spare parts for aircraft,
among others. Examples include 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.
Fuel suppliers include Petrobras, WFS, Copec, Terpel,
Repsol and AirBP.
DISTRIBUTION BY COUNTRY1 IN 2023 GRI
(number of suppliers)
DISTRIBUTION BY CATEGORY1 IN 2023
(value of acquisitions)
Others 20.6%
Peru 8.1%
31.2% Brazil
Other non-technical
purchases 29.2%
39.7% Fuel
1 Based on company
headquarters and volume of
acquisitions.
United States 13.4%
16.0% Chile
7.0% Colombia
3.8% Ecuador
Technology and systems 3.3%
17.7% Fleet, engines and technical purchases
Uniforms 0.1%
2.5% Provisioning and catering
Hotels and transportation 2.0%
0.5% Management
Infrastructure 0.6%
4.3% Ground handling (support services for aircrafts,
passengers, and cargo)
108
ANNUAL REPORT 2023 10 —Suppliers —Supply chain management
GUIDELINES
GRI 3-3, 2-24, 205-2
NCG 461: 5.9 OUTSOURCING POLICY
LATAM group’s supplier management follows supply quality guidelines ensuring
transparency, competitiveness, legal compliance and safety for all supply processes.
Procurement is governed by the Corporate Procurement Policy, which is aligned
with the Anti-Corruption Policy, and establishes the requirements that suppliers
must meet, in addition to the social and environmental recommendations that
apply to all purchases of materials and services. It should be noted that most of
the contracts used by LATAM group have a specific clause requiring the reporting
of environmental incidents or damage.
Thus, the specific expectations that the group has for its suppliers are commu-
nicated through contractual agreements, regular meetings and, in the case of
strategic and/or critical suppliers, through a much more direct and close commu-
nication, led by the commercial and user areas together.
In the case of Third-Party Intermediaries (TPIs), which are suppliers that interact
on behalf of LATAM group with national and international government agencies and
public officials, there is a due diligence process prior to engagement. In addtion,
the anticorruption and antibribery clauses are also included and, during the life
of the contract, are monitored to ensure compliance with the Code of Conduct
and Anti-Corruption Policy.
Subcontractors
With regard to the selection of subcontractor suppliers whose personnel will perform
functions within the facilities, the group has established clear guidelines governing
their engagement. These are incorporated as essential requirements in the tender
processes and, in turn, define the obligations of service providers, ensuring compliance
with the legal and regulatory provisions applicable to their personnel.
LATAM group’s approach covers various aspects, including obligations related to
remuneration, stipends, employee benefits, social security, work-related accident
regulations, occupational diseases and health and safety aspects. All these points
are detailed in the group’s contracts, which include a specific annex dedicated to
the labor obligations to be met by these suppliers.
LATAM group is strengthening its Contractor Regulations as part of its guidelines.
This step aims to ensure the effective implementation of the Health, Safety and
Environment Policy, together with its corresponding management system. In addition,
LATAM has begun work on the “LATAM group’s Commitment to Human Rights” to
inform its contractors and suppliers of its human rights commitments.
Supplier contracts are governed by the Corporate
Procurement Policy, which is aligned with the
Anti-Corruption Policy.
Code of Conduct for Suppliers and Third-Party Intermediaries
As part of the commitment of the LATAM group and its subsidiaries to global sus-
tainability standards, anti-corruption laws and conflicts of interest, and anti-trust
and human rights, it seeks to ensure that the suppliers and third parties adhere
to the Code of Conduct for Suppliers and Third-Party Intermediaries (TPIs), in all
countries in which the organization operates.
In this regard, the group reaffirms its commitment by providing additional guid-
ance and clarification on the provisions mentioned in the Code. In it, suppliers
commit to comply with competition laws, not to engage in insider trading, to fight
corruption and financial crimes, to respect human and labor rights, to protect the
brand and privacy, and to contribute to sustainability by protecting the environ-
ment and their relationship with their communities.
According to this Code, suppliers and TPIs are responsible for reporting irregular-
ities through the LATAM group’s ethics channel, and non-compliance may result
in the termination of contracts or penalties previously set forth in the contracts.
109109109
ANNUAL REPORT 2023 10 —Suppliers —Supply chain management
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. However, LATAM group promotes timely payment terms to suppliers as a way of extending its Fair, Empathet-
ic, Transparent and Simple culture (JETS, for its Spanish acronym) towards these stakeholders. Therefore, proper compliance
with the pre-established number of days is monitored across the group; this is 90 days, except for small and medium-sized
companies, in which case the regulations of each country are observed, as established in specific policies for each of LATAM
group’s subsidiaries.
During 2023, the company made progress on modifications to the reception, digitalization and accounting platform to achieve
a more optimal centralization of payments. Currently, the company has succeeded in implementing the process in 80% of the
group’s invoicing and is expected to cover the entire operation during 2024.
It should be noted that in 2023, no agreements were entered in the Chilean Ministry of Economy’s Registry of Agreements with
an Exceptional Payment Period.
PAYMENT TO SUPPLIERS IN 2023
UP TO 30 DAYS
Nationals
Foreigners
FROM 31 TO 60 DAYS
Foreigners
Nationals
MORE THAN 60 DAYS
Foreigners
Nationals
Invoices paid during the year
Total paid (USD$ million)
Total suppliers to whom the invoices
were paid in each range
159,564
4,181
89,721
3,382
29,803
464
46,965
589
55,866
571
37,766
655
2,401
1,058
516
302
1,140
647
Notes: A total of USD$160,000 was paid in interest for late payment of two invoices issued. On the
other hand, suppliers with a tax ID number (RUT, for its Spanish acronym) from the same country as the
contracting LATAM subsidiary are considered national.
110
SELECTION AND EVALUATION
Supplier selection
Choosing each supplier is an opportunity to forge solid and
collaborative relationships, which makes careful selection
especially relevant. For this purpose, the LATAM group has a
specialized team that performs a comprehensive analysis of
each candidate with the aid of technological systems, mainly
considering their technical and economic aptitudes.
It should be noted that LATAM group does not limit the choice
of suppliers based on their origin from a particular country,
sector or raw material. Although these considerations are not
defining criteria, there may be specific exceptions. An ex-
ample of this has been the selection of suppliers of in-flight
materials, where requirements have been established with
material recyclability and certifications criteria, in line with
the Sustainability strategy published by the group.
Moreover, the group is working on an update of its Procurement
Policy that will allow it to suggest recommendations for the
selection of those suppliers that comply with sustainability
recommendations, focusing specifically on Zero Waste, Ma-
terial Recyclability and Certifications, among other aspects.
Supplier evaluation
NCG 461: 7.2 SUPPLIER ASSESSMENT
LATAM group uses artificial intelligence and machine learning
technology to identify and analyze potential risks, such as
money laundering, terrorist financing and trade sanctions in
its supply chain. These tools also analyze data from various
sources, including government sanctions lists, company data-
bases, and property registries. Likewise, they allow continuous
risk assessments, monitoring changes to sanctions lists and
other relevant data sources.
Similarly, each supplier that records movements during a month
is part of a review process through a comprehensive regulatory
and business information and analysis system. This makes it
possible to identify alerts related to possible violations of our
Code of Conduct, addressing issues such as money laundering,
legal disputes, child labor, and cybercrime, among others.
Specifically, for our Third-Party Intermediaries (TPIs), a monthly
review is carried out by the Procurement areas in conjunction
with the Compliance team. This process determines whether
LATAM group can continue its commercial relationship with
each respective supplier. In both scenarios, if the platform
signals an alert, the Compliance team has the authority to
suggest and carry out corrective actions, or else, terminate
the relationship.
On the other hand, it is worth mentioning that the Occupa-
tional Safety team conducts on-site audits of contractors and
subcontractors operating at airports in Chile. This process is
carried out to assess their adherence to the health, safety and
environmental guidelines established in local regulations. As
a result of the assessment, these suppliers are provided with
corrective action plans to address the gaps, which are actively
monitored by the group.
In addition, maintenance providers are evaluated under leading
standards with a focus on safeguarding quality, while IT and
systems providers are classified under standards based on the
NIST 800-161 and ISO 27001 framework, in addition to SOX
and PCI-DSS validations.
ANNUAL REPORT 2023
SNAPSHOT
SUPPLY CHAIN
GRI 414-1, 414-2, 308-1 & 308-2
Total LATAM suppliers by December 31
Critical Suppliers1
Share of the supplier base
Share of critical suppliers in
acquisitions volume
Identification of potential risks
Suppliers analyzed by sustainability criteria (social or environmental)
NCG 461: 7.2 SUPPLIER EVALUATION
% of the total suppliers analyzed
% of total purchases
Preventive analyses carried out in the international database systems
(% of the total base)
Suppliers considered high risk in compliance aspects
(% of those analyzed)
Detailed evaluations based on the system alerts
(% of the high-risk group)
Monitoring and management
Audited suppliers
Suppliers with mitigation plans in place (% of suppliers audited)
Action plans defined based on audits
Contracts terminated due to noncompliance
Payment to suppliers
NCG 461: 7.1 PAYMENT TO SUPPLIERS
% of invoices paid with a term of up to 30 days
To domestic suppliers
To foreign suppliers
111
2021
8,052
11%
91%
N/D
N/D
N/D
5,367
(67%)
148
(3%)
148
(100%)
40
93%
331
0
N/D
N/D
10 —Suppliers —Supply chain management
4
2
0
2
M
A
T
A
L
A
R
O
M
E
M
I
2022
6,190
7%
95%
0
0
0
N/D
369
03
53
91%
186
0
81%
63%
2023
5,557
5%
69%
0
0
0
5,557
(100%)
185
(3%)
03
N/D4
N/D4
N/D4
N/D4
65%
51%
N/A: information not available.
1 Contracts worth over US$1 million,
suppliers interacting with government
agencies on behalf of the LATAM
group or supplying the operation
with essential or difficult to replace
elements.
2 Invoices paid at 30 days/Total
invoices.
3 All cases are analyzed; however, an
in-depth evaluation was not carried
out because there was no evidence of
alerts that required it.
4 The audits consist of the analysis
of information relating to deferred
years, with a focus on occupational
health and safety. The 2023 audits
will be conducted this year in March
and April 2024, and their results will
be available during the year.
ANNUAL REPORT 2023
11 About the
Report
In this chapter
113
121
Material
topics
Glossary
116
122
GRI and SASB
content index
External
assurance
120 NCG 461
content index
Material
topics
11 —About the report —Material topics
NCG 461: 3.1 GOVERNANCE FRAMEWORK
GRI 2-29, 3-1, 3-2 AND 2-14
In 2023 LATAM group updated its list of material topics
in sustainability. For the first time, this process was
carried out following the guidelines of double ma-
teriality, a methodology endorsed by the European
Sustainability Reporting Standards (ESRS)1, to promote
best practices in sustainability reporting.
The double materiality approach implies that com-
panies must disclose not only the impacts that their
activity has on society, the environment and gover-
nance systems, but also how these aspects can af-
fect the company itself in terms of its development,
performance and position. In other words, it considers
both the impact that the company has on its environ-
ment and stakeholders (impact materiality), and the
impact the environment may have on the company
itself (financial materiality).
The selection of content for the LATAM Annual Report
2023 was based on the most relevant topics, most
relevant, which are presented in the double materiality
matrix included in this report.
PROCESS
Step 1: Identification of impacts, risks and oppor-
tunities
scope, and irredeemability (the latter, only in the case
of risks or negative impacts). Likewise, the evaluation
considered likelihood, also rating it on a scale of one
to five.
An exhaustive diagnosis was carried out with internal
and external information to build a list of external
impacts and financial risks and opportunities-positive
and negative, as well as potential and real.
In addition, the materiality threshold was established,
making it possible to define the most important
impacts, risks and opportunities, which were then
grouped to form the material topics.
• Internal Information: The company’s strategic doc-
umentation, such as policies and processes, was an-
alyzed and more than 30 expert leaders from various
departments were interviewed.
• External Information: The results of surveys con-
ducted with stakeholders (clients, employees, and
shareholders, among others) were evaluated, represen-
tatives of these groups were interviewed, benchmark-
ing was carried out with airline industry players and
sustainability standards and indices were examined,
in addition to analyzing other sources, such as news
and social media.
Step 2: Impact Assessment and Construction of Ma-
terial Topics
• Workshops were held with representatives from dif-
ferent countries and areas of the company to assess
impacts, risks and opportunities according to severity
and probability factors.
These impacts, risks and opportunities were grouped
into sub-topics and then into material topics.
Step 3: Prioritization of material topics and drafting
of final matrix
• The evaluation of impacts, risks and opportunities
made it possible to prioritize the material topics in a
double materiality matrix, which considers both the
external impacts of the company and the external risks
and opportunities affecting business development.
• This matrix was validated by the Director of Corpo-
rate Affairs and Sustainability, the Director of Internal
Audit, Risk and Control, and finally, by the CEO of
LATAM Airlines.
• Material topics will be reviewed annually, to adapt
quickly to the constant changes in the environment
and ensure LATAM maintains a continuous improve-
ment in the sustainability management.
113
1 The methodology proposed by the ESRS guided the process for
creating the double materiality; however, disclosure requirements
remain an area of opportunity that could be implemented in future
editions of LATAM group’s Annual Report.
The assessment of impacts, risks and opportunities
was done based on their severity, rating them on a
scale of one to five for each of the factors: degree,
Note: Process assurance on page 123.
ANNUAL REPORT 2023 Double materiality matrix
11 —About the report —Material topics
1
Climate change
strategy
Connectivity
and regional
development
10
11
Human
Rights
2
Digital transformation
and cybersecurity
Sustainable
innovation
4
Ecosystem
protection
8
5
Operational
safety
Team
7
3
Customer
experience
Accountability and
collaboration with
suppliers
13
12
Ethics and
compliance
y
t
i
l
a
i
r
e
t
a
m
t
c
a
p
m
I
100%
75%
50%
25%
MATERIAL TOPICS
n°1 Climate change strategy
We seek to mitigate the climate impact, ensuring the continuity
and resilience of the operations through the implementation
of climate change adaptation measures.
n°2 Digital transformation and cybersecurity
In the face of technological development and a constant digital
transformation, efforts are focused on information manage-
ment and on bolstering the protection on the systems and
operations against any security breach. In this way, information
privacy is also incorporated as a priority for the protection of
the clients’ and employees’ personal data.
n°3 Customer experience
We focus on offering a rewarding customer experience in the
services prioritizing adaptability based on the different re-
quirements of each client. In the Cargo business, we strive to
ensure that cargo arrives on time and in optimal condition.
n°4 Sustainable innovation
To be a benchmark in the aeronautical industry through the
implementation and dissemination of cutting-edge solutions
in sustainability issues, in order to address challenges of the
sector. Similarly, to promote innovative measures, like waste
management and the principals of circular economy, throughout
the value chain. The transition depends on suppliers, authorities
and other key players that influence the operation, with whom
we will seek to collaborate strategically.
0%
114
25%
50%
75%
100%
Financial materiality
● Low / ● Moderate / ● High
Continuous
adaptation
to the
environment
9
6
Fleet efficiency
ANNUAL REPORT 2023
11 —About the report —Material topics
n°5 Operational safety
n°9 Continuous adaptation to the environment
n°13 Accountability and collaboration with suppliers
Prioritize incident and accident prevention throughout the
operational, implementing proactive measures focused on the
development of best practices both in the air and on the ground.
We guarantee the health and safety of the team, clients and
suppliers by fostering an environment where everyone feels
protected.
n°6 Fleet efficiency
Advance in fleet renewal and the incorporation of technolog-
ical improvements in our aircraft, focusing on reducing fuel
consumption to improve flight planning, reduce emissions
and avoid service interruptions caused by extended periods
of aircraft maintenance.
n°7 Team
Nurture internal skills among the employees, fostering an
environment of continuous learning and personal growth. We
aim for employee work to be recognized and valued, thus con-
tributing to a motivating work environment. Finally, fostering
meaningful relationships that allow us to reach fair agreements
with the representatives of our employees.
Focus on ongoing adaptation, proactive risk management and
resilience in a complex and changing global environment. We
have the foundation to be able to adapt to different political,
economic and social contexts, considering both shifts in the
market and all our stakeholders.
n°10 Connectivity and regional development
Drive the social, environmental and economic development
of South America through connectivity and tourism. We seek
to contribute through the business and what we know how to
do: connect.
n°11 Human Rights
To safeguard human rights and the integrity of individuals
through the implementation of policies and related practices.
Promote gender equality, prevent human trafficking, ensure
development within a healthy environment and avoid any form
of discrimination, among others. All of the above, guaranteeing
fair and respectful treatment for all people and communities,
taking into consideration the clients, employees, contractors
and suppliers.
n°8 Ecosystem protection
n°12 Ethics and compliance
Develop programs that promote the protection, conservation
and rehabilitation of ecosystems and their biodiversity. As an
established airline in South America, our contribution focuses
primarily on preventing wildlife trafficking, as well as seeking
nature-based solutions through collaborative work to protect
the region’s ecosystems, understanding their fundamental role
in carbon sequestration.
To promote corporate integrity and accountability across all
operations, with a strategic focus that includes compliance pro-
grams with employees and suppliers. We address uncertainty
related to emerging regulations and regulatory transforma-
tions by anticipating and adopting best regulatory practices
among the different countries where we operate, in addition
to international standards.
Work together with suppliers to develop sustainable and ethical
relationships with the supply chain in a collaborative manner.
Generate strategies to integrate good practices that allow
us to support the suppliers and incorporate sustainability in
business development.
MATERIAL TOPICS
Changes compared to materiality 2018
GRI 3-2
Three new material topics are added to the double materiality 2023:
“Digital transformation and cybersecurity”, “Human Rights” and “Supplier
Accountability and Collaboration”. On the other hand, material topic 2018
“Economic and Financial Sustainability” is no longer part of the matrix. The
remaining material topics in this new financial year include aspects of the
previous topics, from a different viewpoint, represented in the change of
name and definition.
115
ANNUAL REPORT 2023 11 —About the report —Content index
Content
index
GRI
SASB
Declaration of use
GRI 2: General Contents 2021
LATAM Airlines Group has presented the
information cited in this GRI content index
2-1 Organizational details
for the period from January 1 to December
2-2 Entities included in the organization’s sustainability reporting
31, 2023, based on the GRI Standards.
2-3 Reporting period, frequency and contact point
14, 125
4-5
4-5
GRI 1 used
GRI 1: 2021 FOUNDATION
GRI/ SASB STANDARD AIRLINES
2-4 Restatements of information
Cases of updated previously published information
are clearly indicated in the corresponding tables
82, 104, 113
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 of sustainable development strategy
2-23 Policy Commitments
2-5 External assurance
122-123
2-26 Mechanisms for seeking advice and raising concerns
40, 129
40
44, 47-48, 132
10-12
18
49-50
2-6 Activities, value chain and other business relationships
14, 26-31, 108
2-27 Compliance with laws and regulations
49, 73, 133-138
2-7 Employees
2-8 Workers who are not employees
2-9 Governance structure and composition
2-10 Nomination and selection of the highest governance body
2-11 Chair of the highest governance body
2-12 Role of the highest governance body in overseeing the management of impacts
2-13 Delegation of responsibility for managing impacts
2-14 Role of the highest governance body in sustainability reporting
2- 15 Conflicts of interest
2-16 Communication of critical concerns
8, 156-158
156-157
36-40, 129
39
36, 128
39-40
39-40
113
49
50
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
52
51
159
113-114
114-115
116
ANNUAL REPORT 2023
11 —About the report —Content index
GRI/ SASB STANDARD AIRLINES
TABLE OF CONTENTS
Material topic: Health and safety in the air and on the ground
GRI 3 MATERIAL TOPICS
SASB AIRLINES- GHG EMISSIONS
3-3 Management of material topics
TR-AL- 110a.1 Gross global scope 1 emissions
GRI 302: ENERGY 2016
GRI 305: EMISSIONS 2016
Material topic: Digital transformation and cybersecurity
GRI 3 MATERIAL TOPICS
GRI 418: Customer Privacy
Material topic: Customer experience
GRI 3 MATERIAL TOPICS
OTHER DISCLOSURES
Material topic: Sustainable innovation
GRI 3 MATERIAL TOPICS
GRI 306: WASTE 2020
117
TR-AL- 110a.2 Discussion of the long-terms and short-term strategy or plan
TR-AL-110a.3 Total fuel consumed, percentage alternative, percentage sustainable
302-1 Energy consumption within the organization
302-3 Energy intensity
305-1 Direct (Scope 1) GHG emissions
305-2 Energy indirect (Scope 2) GHG emissions
305-3 Other indirect (Scope 3) GHG emissions
305-4 GHG emissions intensity
305-5 Reduction of GHG emissions
305-6 Emissions of ozone-depleting substances (ODS)
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions
3-3 Management of material topics
418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data
3-3 Management of material topics
Net Promoter Score (NPS)
On-time performance (OTP)
3-3 Management of material topics
306-1 Waste generation and significant waste-related impacts
306-2 Management of significant waste-related impacts
306-3 Waste generated
306-4 Waste diverted from disposal
306-5 Waste directed to disposal
LOCATION
17, 76-82, 154-155
81-82, 154
9, 76-82, 154-155
74
74-75
73, 75
81-82, 154-155
81-82, 154-155
81-82, 154-155
82, 154
154
155
155
105-106
105
14, 28, 101-104
28, 104
104
83-86
84
84-85
86
86
86
ANNUAL REPORT 2023
11 —About the report —Content index
GRI/ SASB STANDARD AIRLINES
TABLE OF CONTENTS
Material topic: Operational safety
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 403: OCCUPATIONAL HEALTH AND SAFETY 201
403-1 Occupational health and safety management system
403-2 Hazard identification, risk assessment, and incident investigation
403-5 Worker training on occupational health and safety
403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships
403-9 Work-related injuries
SASB AIRLINES- ACCIDENT AND SAFETY MANAGEMENT
TR-AL- 540a.1 Description of implementation and outcomes of a Safety Management System
TR-AL-540a.2 Number of aviation accidents
TR-AL-540A.3 Number of governmental enforcement actions of aviation safety regulations
Material topic: Fleet efficiency
GRI 3 MATERIAL TOPICS
SASB AIRLINES - ACTIVITY METRICS
Material topic: Team
GRI 3 MATERIAL TOPICS
GRI 401: EMPLEO 2016
3-3 Management of material topics
TR-AL-000.A Available seat-kilometers (ASK)
TR-AL-000.B Passenger load factor
TR-AL-000.C Revenue passenger-kilometers (RPK)
TR-AL-000.D Revenue ton-kilometers (RTK)
TR-AL-000.E Number of takeoffs
TR-AL-000.F Average age of fleet
3-3 Management of material topics
401-1 New employee hires and employee turnover
401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees
401-3 Parental leave
GRI 404: TRAINING AND EDUCATION 2016
404-1 Average hours of training per year per employee
SASB AIRLINES - LABOR PRACTICES
TR-AL-310a.1 Percentage of active workforce covered under collective bargaining agreements
OTHER DISCLOSURES
Organizational Health Index (OHI)
TR-AL-310a.2 Number of work stoppages and total days idle
404-3 Percentage of employees receiving regular performance and career development reviews
Material topic: Ecosystem protection
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
118
LOCATION
64-68, 97
64, 97
97
91
65-66, 97
97-98
64
68
68
7, 14, 26-31
31
31
31
31
31
30
8, 90-99
92-93, 160
92-93
161-162
91
92
159
159
90
80, 87-88
ANNUAL REPORT 2023
11 —About the report —Content index
GRI/ SASB STANDARD AIRLINES
TABLE OF CONTENTS
Material topic: Continuous adaptation to the environment
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
Material topic: Connectivity and regional development
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 201: ECONOMIC PERFORMANCE 2016
201-1 Direct economic value generated and distributed
GRI 203: INDIRECT ECONOMIC IMPACTS 2016
203-1 Infrastructure investments and services supported
203-2 Significant indirect economic impacts
OTHER DISCLOSURES
Destinations
Material topic: Human Rights
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 405: DIVERSITY AND EQUAL OPPORTUNITY 2016
405-1 Diversity of governance bodies and employees
405-2 Ratio of basic salary and remuneration of women to men
GRI 406: NON-DISCRIMINATION
406-1 Incidents of discrimination and corrective actions taken
Material topic: Ethics and compliance
GRI 3 MATERIAL TOPICS
GRI 205: ANTI-CORRUPTION 2016
3-3 Management of material topics
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
GRI 415: PUBLIC POLICY 2016
415-1 Political contributions
SASB AIRLINES- ANTI-COMPETITIVE BEHAVIOR
TR-AL-520a.1 Total amount of monetary losses as a result of legal proceedings associated with anti-competitive behavior regulations
Material topic: Accountability and collaboration with suppliers
GRI 3 MATERIAL TOPICS
3-3 Management of material topics
GRI 414: SUPPLIER SOCIAL ASSESSMENT 2016
414-1 New suppliers that were screened using social criteria
GRI 308: SUPPLIER ENVIRONMENTAL ASSESSMENT 2016
308-1 New suppliers that were screened using environmental criteria
308-2 Negative environmental impacts in the supply chain and actions taken
414-2 Negative social impacts in the supply chain and actions taken
Other GRI and SASB indicators reported
GRI 303: WATER AND EFFLUENTS 2018
119
303-3 Water withdrawal
LOCATION
41-42, 59, 141-153
14, 51, 59, 87-88
60
87
28-29
7,14, 26-29
18, 95, 109, 127
8, 95, 156-157
44, 96
127
49-50, 109, 133-138
49, 109
49, 127
49
49
49
108-111
111
111
111
111
73
ANNUAL REPORT 2023
Content
index
NCG 461
2. Organization’s profile
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
15, 18
21-23
33
34-35
2.3.3 Identification of majority partners or shareholders 34-35
2.3.4 Stocks, their characteristics and rights
33-35, 62
2.3.5 Ownership – 2.3.5 Other securities
33-35
3. Corporate governance
11 —About the report —Content index
4. Strategy
4.1 Time horizons
4.2 Strategic objectives
4.3 Investment plans
5. People
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
5.4 Wage equity by sex
5.4.1 Equality policy
5.4.2 Wage gap
3.1 Governance framework
40, 43, 49, 51, 77, 79, 95, 106
5.5 Workplace and sexual harassment
3.2 Board of Directors
36-40, 44, 128-129, 132
3.3 Board Committees
39-40, 44, 130-132
5.6 Occupational safety
5.7 Postnatal leave
3.4 Senior Executives
34, 45-48
5.8 Training and benefits
3.5 Adherence to national or international codes
49
5.9 Outsourcing policy
3.6 Risk management
41-42, 47-50, 92, 141-153
3.7 Relationship with stakeholders and the general public
51
120
16
16-18
61
156-157
156-157
158
158
158
159
159
95-96
96
50, 127
97-98
93-94, 161-162
91, 93-94, 97
109
6. Business Model
6.1 Industrial sector
14, 27, 51-52, 133-138
6.2 Businesses
6.3 Stakeholders
6.4 Properties and facilities
14, 58, 108, 126-127
51-52
125-126
6.5 Subsidiaries, partners and investments in other companies
6.5.1 Subsidiaries and partners
259-268, 295
6.5.2 Investment in other companies
NAP
7. Suppliers
7.1 Payment to suppliers
7.2 Supplier assessment
8. Indicators
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
110-111
110-111
49
49
72-73
49
49
8.2 Sustainability indicators by industry
See the detail in the GRI-SASB index, pages 117-119
9. Material or essential events
139-140
10. Comments from shareholders and the Board of Directors
11. Financial information
165-258, 269-293
130-131
ANNUAL REPORT 2023
Glossary
121
11 —About the report —Glossary
ADR: American Depositary Receipts
LSA: Chilean Corporations Act.
AFPs: Spanish acronym for Chilean Pension Fund Managers
MRO: Maintenance, Repair, and Operation.
ANAC: Portuguese acronym for National Civil Aviation Agency (Brazil)
NPS: Net Promoter Score
ASK: Available seat kilometers (equivalent to the number of available
seats multiplied by the distance traveled)
NYSE: “New York Stock Exchange”
ICAO: International Civil Aviation Organization.
ATK: Available ton-kilometers (equivalent to the total available capacity
in tons multiplied by the distance flown)
SDG: Sustainable Development GoalsOHI: Organizational Health Index
CMF: Spanish acronym for the Financial Market Commission (Chile)
UN: United Nations Organization.
CORSIA: “Carbon Compensation and Reduction Scheme for International
Aviation”
OTC: Over-the-counter market, where financial instruments are traded
directly between the parties, outside the scope of organized markets.
DIP: Debtor-in-Possession, a financing mechanism provided for in Chap-
ter 11 of the U.S. law in which loan creditors have priority in receiving
securities
OTP: On-time performance (punctuality indicator)
SSC: Spanish-speaking countries.
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
RASK: revenue per available seat-kilometer–gauges the efficiency of
the airline; it is obtained by dividing the operating income by the ASK
RPK: Revenue passenger-kilometers (equivalent to total paid passengers
multiplied by distance traveled)
RTK: Revenue ton-kilometers (equivalent to total tons transported mul-
tiplied by distance traveled)
IATA: “International Air Transport Association”
SEC: “United States Securities and Exchange Commission”
IEnvA: “IATA Environmental Assessment”
TDLC: Spanish acronym for the Chilean Antitrust Court
IFRS: International Financial Reporting Standard
IOSA: ATA Operational Safety Audit
JBA OR JVA: Joint Business Agreement or Joint Venture Agreement
ANNUAL REPORT 2023 11 —About the report —External assurance
External
assurance
• Requirements and review of evidence, for the indicators detailed in this letter as
a result of the materiality process, with the areas participating in the preparation
of the 2023 Annual Report.
DJSI Indicators
1.5.4
1.7.5
1.7.6
1.8.3
2.3.2
2.3.3
2.8.2
3.1.4
3.5.2
• Analysis of the adherence of the contents of the 2023 Annual Report to the GRI
Standards and verification of the indicators verified and included in this letter are
based on the protocols established by this guide.
Regarding the verified indicators, we can affirm that no aspect has been revealed
that makes us believe that these indicators incorporated in the Annual Report 2023
of the Company, have not been prepared in accordance with the GRI Standard in
the aspects and indicators indicated in the scope.
April 4, 2024
• Verification, through tests of quantitative and qualitative information correspond-
ing to the GRI Standards indicators included in the 2023 Annual Report, and its
adequate gathering from the data provided by the Company information sources.
MANAGEMENT AND DELOITTE RESPONSIBILITIES
LATAM Airlines
Of our consideration:
We have reviewed the following aspects of the LATAM Airlines, (hereinafter “the-
Company”) Annual Report 2023.
SCOPE
Limited assurance engagement of the adherence of the contents and indicators in-
cluded in the 2023 Annual Report to the Global Reporting Initiative (GRI) Standard,
regarding the profile of the organization and material indicators arising from the
materiality process performed by the company around the criteria established by
said standard, 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 Fi-
nancial Information (ISAE 3000) issued by the International Auditing and Assurance
Standard Board (IAASB).
Our review has consisted in an inquiry process involving different the Company 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 the team that led the process of preparing the 2023 Annual Report.
122
CONCLUSION
The assurance process was based on the indicators established in the materiality
process performed by the Company. Once those indicators were identified, priori-
tized, and validated, they were included in the report. The indicators reviewed and
verified are detailed bellow:
General and specific GRI Indicators:
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
3-1
3-1
3-1
• The 2023 Annual Report preparation, as well as its contents are under the Company
responsibility, management is responsible to maintain the internal control systems
where the information is obtained.
• Our responsibility is to issue an independent letter based on the procedures per-
formed.
• This report has been prepared exclusively by the Company request, in accordance
with the terms established in the service proposal.
• We have developed our work according to the standards of Independence estab-
lished in the Code of Ethics of the IFAC.
• The conclusions of the verification made by Deloitte apply to the latest version of
the Company Annual Report received on April 3, 2024.
3-2
3-2
3-3
3-3
3-3
3-3
3-3
3-3
3-3
3-3
3-3
3-3
3-3
201-1
203-1
205-2
205-3
206-1
• The scope of a limited assurance engagement is essentially inferior to a reason-
able assurance engagement thus, we are not hereby providing opinion about the
Company’s 2023 Annual Report.
302-1
302-3
303-3
305-1
305-2
305-3
305-4 305-6
305-7
Sincerely,
306-1 306-2
306-3 306-4
306-5
401-1
403-7 403-9
404-1
415-1
Deloitte
ANNUAL REPORT 2023
Deloitte Consultoria Limitada
Rosario Norte 407
Las Condes, Santiago
Chile
Phone: (56) 227 297 000
Fax: (56) 223 749 177
deloittechile@deloitte.com
www.deloitte.cl
INDEPENDENT REVIEW REPORT OF DOUBLE MATERIALITY STUDY 2023 LATAM
Mr.
Juan José Tohá,
Vice-President of Corporate Affairs and
Sustainability LATAM Airlines
Dear Sir:
We have reviewed the following aspects of the Double Materiality Study conducted by LATAM Airlines Group S.A.
(LATAM):
Standard and scope
The review of the double materiality study was conducted in accordance with the Enterprise Sustainability Reporting
Standard (ESRS), an initiative of the European Financial Reporting Advisory Group (EFRAG), in collaboration with the
European Commission's Council for Sustainable Development Reporting Standards (CDRS).
The ESRS incorporates both development and disclosure criteria. This independent review is limited solely to the
analysis of development criteria. The requirements associated with the disclosure stage were not considered in the
scope of the process of developing the double materiality study and, therefore, neither were they included in the
independent review.
Independent Review Process
Our review work consisted of analyzing the evidence provided by LATAM to support the exercise it conducted for its
double materiality study. In each of the steps, the corresponding evidence was analyzed to understand how the
analysis was performed and whether it was aligned with the requirements of ESRS and ESRS 2. For this review, the
application of analytical procedures and study tests described below were examined:
• We met with the counterpart in charge of preparing the double materiality study to clarify questions and
review the methodology used.
• We analyzed the evidence presented to verify the analysis process, including the methodological application,
the results obtained and the parties involved in the process.
• We conducted review tests of the quantitative and qualitative information, ensuring that the methodological
requirements established by the standard were met.
Conclusions
As a result of the independent review process, having evaluated those criteria mentioned in the Enterprise
Sustainability Reporting Standard (ESRS), we can conclude that evidence has been presented to indicate that the
Double Materiality Study conducted by LATAM was performed following the guidelines established in ESRS 1 and ESRS
2. Specifically, and in accordance with the above, we reviewed the following criteria of the ESRS 1 3; 3.1; 3.2; 3.3; 3.4;
3.5; 3.6; 3.7 and ESRS 2 SBM-3; IRO-1; IRO-2.
We appreciate LATAM's cooperation and willingness during the review process. If you have any questions or require
further information, please do not hesitate to contact us.
Regards,
Manuel Gálvez
Partner
March 21, 2024
.
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C
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s
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A
123
ANNUAL REPORT 2023
12 Annexes
In this chapter
125
154
About us
128
Corporate
governance 133 Our
business
Commitment to
Sustainability
156
Employees
About us
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
125
11 —Annexes —Who we are
GRI 2-1
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 Air-
lines Group S.A.) which, by express provision of law n°
18,400, has the quality of legal follower of the state-
owned company created in the year 1929 under the
name Línea Aérea Nacional de Chile, pursuant to the
aeronautical and radio communications concessions,
traffic rights, and other administrative concessions.
COMPANY PURPOSE
• To market air and/or ground transportation in any
of its forms, be it for passengers, cargo, mail, and
anything directly or indirectly related to that activ-
ity within or outside the country, on its own behalf
or for third parties.
• To render services related to the maintenance and
repair of its own or third parties’ aircraft.
• To develop and operate other activities derived
from and/or related, connected, contributing, or
complementary to the company's corporate purpose;
• Trade and development of activities related to
travel, tourism, and lodging.
• The performance and exploitation of other ac-
tivities derived from the corporate purpose and/or
linked, connected, contributing, or complementary
to it.
• To participate in partnerships of any kind that will
enable the company to fulfill its goals.
PROPERTY, PLANT AND EQUIPMENT
NCG 461: 6.4 PROPERTY AND FACILITIES
Chile
Headquarters: Our main corporate facility is located in
Las Condes, where we rent 6,750 m2 for our executive
offices in a central location of Santiago, Chile. This
space is distributed in seven floors along one building.
Maintenance Base: Our 160,000 m2 maintenance base
is located on a site that we own inside Comodoro Ar-
turo Merino Benítez International Airport. This facility
contains our aircraft hangar (12,000 m2), warehouses
(10,000 m2), workshops (5,300 m2) and offices (11,000
m2), other spaces (20,000 m2), as well as a 98,000 m2
aircraft parking area capable of accommodating up to
seventeen short-haul aircraft. We also lease from the
Sociedad Concesionaria Nuevo Pudahuel S.A. approxi-
mately 6,220 m2 of space inside the Comodoro Arturo
Merino Benítez International Airport for operational
and service purposes.
Other Facilities: We own sixteen acres of land and
a building on the west side of the Comodoro Arturo
Merino Benítez International Airport that houses a
flight-training center. This facility features three full-
flight simulators (which are not property of LATAM),
one for Boeing 787 and two for Airbus A320 aircraft.
Fast Air Almacenes de Carga S.A., one of our affiliates
that operates import customs warehouses, utilizes
a 10.500 m2 warehouse located at Comodoro Arturo
Merino Benítez International Airport.
Brazil
Headquarters: LATAM Airlines Brazil’s main facilities are
located in São Paulo, in hangars within the Congonhas
Airport and nearby. At Congonhas Airport, LATAM Air-
lines Brazil leases office facilities in converted hangars
belonging to INFRAERO (the Local Airport Administra-
tor). These facilities comprise an area of approximately
38,807 m2.
Headquarters of the Presidency: The Headquarters
of the Presidency and Service Academy is located at
Rua Atica, about 2.5 km from Congonhas Airport. This
property, which LATAM Airlines Brazil owns, is used for
human resources selection, medical services, training,
mock-ups and offices- The Service Academy comprises
15,342 m2 of land area and 9,032 m2 of building area.
Maintenance Base: At Hangars II and V in Congonhas
Airport, which LATAM Airlines Brazil leases from IN-
FRAERO, LATAM Airlines Brazil has 23,886 m2 of offices
and hangars with about 1,300 workstations. This site
also houses the aircraft maintenance, procurement,
aeronautical materials logistics and retrofitting de-
partments.
Other Facilities: In São Paulo, LATAM Airlines Brazil
has other facilities, including a call center building with
3,199 m2, distributed over five floors (plus a ground
floor and a basement) that currently holds about 272
workstations and support rooms (meetings / training
/ dining room / coordination) of the operations of call
center reservations, and other ABSA back office services.
In Guarulhos, LATAM has a total area of approximately
12,649 m2 distributed within the passenger terminal,
including areas such as check-in, ticket sales, check-out,
operations areas, a VIP Lounge and aircraft maintenance
spaces. The Hangar Complex adds an area of 65,080
m2. The cargo terminal has 252 m2 of office and 17,215
m2 of open area. Our distribution center supplies area
occupies 3,030 m2.
ANNUAL REPORT 2023 11 —Annexes —Who we are
New Facilities
LATAM Airlines Brazil completed several infrastructure projects
in Brazil during 2023, including:
1. Delivery of a new Board Room in Hangar II, at Guarulhos
airport.
2. Optimization and adaptation to the new quality standards
of the São Carlos MRO.
3. Initiation of the project to build a new hangar at MRO in
São Carlos with 5,000 m2.
4. Obtaining the “Building Accessibility Certificate of the
Service Academy”, in compliance with Brazilian regulations.
5. Update of the visual communication at Cargo Terminals.
6. Development of the required infrastructure at Passo Fun-
do Airport, to enable Passo Fundo as one of LATAM's desti-
nations.
7. Closing of the Juiz de Fora (IZA) and Presidente Prudente
(PPB) bases.
Other locations
We occupy a 36.3-acre site at the Miami International Airport
that has been leased to us under a concession agreement by
the Miami Dade Aviation Department. Our facilities include a
13,609 m2 corporate building, a 115,824 m2 cargo warehouse
(including 35,561 m2 refrigerated area) and a 238,658 m2 air-
craft-parking platform. These facilities were constructed and
are now leased to us under a long-term contract by Aeroterm, a
division of Realterm. For the year ended 2023, we paid US$10.8
million in rent under the foregoing leases.
In February 2014, the Company entered into a lease agreement
with Miami-Dade County covering approximately 1.81 acres of
land located on the grounds of the Miami International Airport.
The lease has a term of 30 years with a total annual land cost
of US$172,080.
Under the lease, we retained the right to construct a hangar
facility on the leased premises. The Company completed
construction in November 2015 and the hangar has been op-
erational
126
since June 2016. The property has a 15,479 m2 aircraft main-
tenance space, sufficient to house a Boeing 777 aircraft, in
addition to a 9,888 m2 area designated for office space. Total
investment in this hangar in construction and related expen-
ditures by LATAM was US$16.5 million.
RESEARCH AND DEVELOPMENT, PATENTS AND
LICENSES, ETC.
NCG 461: 6.2 BUSINESSES
GRI 2-1
LATAM has been registered and/or renewed in Argentina, Aus-
tralia, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa
Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Euro-
pean Union, Guatemala, Honduras, Hong Kong, India, Japan,
Mexico, Nicaragua, New Zealand, Panama, Paraguay, Peru,
South Korea, , Uruguay, the United States, United Kingdom
and Venezuela; LATAM AIRLINES has been registered and/or
renewed in Argentina, Bolivia, Brazil, Chile, China, Colombia,
Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador,
European Union, Guatemala, Honduras, India, Japan, Mexico,
Nicaragua, Panama, Paraguay, Peru, South Korea, Spain, Tai-
wan, United Kingdom, Uruguay and Venezuela.
LATAM AIRLINES ARGENTINA has been registered and/or
renewed in Argentina; LATAM AIRLINES COLOMBIA has been
registered and/or renewed in Colombia; LATAM AIRLINES EC-
UADOR has been registered and/or renewed in Ecuador; LATAM
AIRLINES PARAGUAY has been registered and/or renewed in
Paraguay and LATAM AIRLINES PERU has been registered and/
or renewed in Peru.
LAN has been registered and/or renewed in Chile, Mexico,
United Kingdom and the European Union; LAN AMERICA has
been registered and/or renewed in Bolivia; LAN BOLIVIA has
been registered and/or renewed in Bolivia; LAN CHILE has
been registered and/or renewed in Chile; LANPERU has been
registered and/or renewed in Costa Rica; LAN PERU has been
registered and/or renewed in Brazil; TAM has been registered
and/or renewed in Mexico and Peru; LANTAM GRUPO LATAM
AIRLINES has been registered and/or renewed in Ecuador.
LATAM CORPORATE has been registered and/or renewed in
Argentina, Bolivia, Colombia, Chile, Costa Rica, Ecuador, El
Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Dominican Republic, European Union, United
Kingdom and Uruguay. LATAM LINEAS AEREAS has been reg-
istered and/or renewed in Argentina, Chile, Colombia, Ecuador
and Peru; LATAM MRO has been registered and/or renewed
in Argentina; Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico,
Paraguay, Peru, European Union, United Kingdom, Uruguay,
the United States and Venezuela.
LATAM CARGO has been registered and/or renewed and/or
renewed in Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador,
Mexico, Paraguay, Peru, European Union, United Kingdom,
Uruguay, the United States and Venezuela; LATAM CARGO
BRASIL has been registered and/or renewed in Brazil; LATAM
CARGO COLOMBIA has been registered and/or renewed in
Colombia; LINEA AEREA CARGUERA DE COLOMBIA has been
registered and/or renewed in Colombia; LATAM CARGO MEXICO
has been registered and/or renewed in Mexico; LAN CARGO
MEXICO has been registered and/or renewed in Mexico; ABSA
has been registered and/or renewed in Chile; LAN CARGO
COLOMBIA has been registered and/or renewed in Colombia;
LAN ECUADOR has been registered and/or renewed in United
Kingdom and the European Union; TAM CARGO been renewed
in Brazil; TAM CARGO CONVENCIONAL has been registered
and/or renewed in Brazil.
LATAM FIDELIDADE has been registered and/or renewed in
Argentina, Australia, Brazil, Chile, Colombia, Ecuador, Mexico,
New Zealand, Paraguay, Peru, European Union, United King-
dom, Uruguay and the United States; FIDELIDAD has been
registered and/or renewed in Argentina; FIDELIDADE has been
registered and/or renewed in Argentina; FIDELIDAD TAM has
been registered and/or renewed in Paraguay; FIDELIDADE TAM
has been registered and/or renewed in Paraguay.
LATAM PASS has been registered and/or renewed in Argentina,
Australia, Bolivia, Brazil, Chile, Canada, Colombia, Ecuador,
Mexico, New Zealand, Paraguay, Peru, European Union, United
Kingdom, Uruguay, the United States and Venezuela; LAT-
AM PASS MILES has been registered and/or renewed in New
Zealand and Australia; LAN PASS has been registered and/or
renewed in Chile.
LATAM TOURS has been registered and/or renewed in Argentina,
Chile, Colombia, Ecuador and Peru; LATAM TRADE has been
registered and/or renewed in Argentina, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Hon-
duras, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominican
Republic, European Union, United Kingdom and Uruguay; LAT-
AM TRAVEL has been registered and/or renewed in Argentina,
Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay,
Peru, European Union, United Kingdom, Uruguay, the United
States and Venezuela; LATAM TRAVEL SOLUTIONS has been
registered and/or renewed in Panama; LATAM VIAGENS has
been registered and/or renewed in Brazil; TAM VIAGENS been
renewed in Brazil. TAM VACATIONS been renewed in Argentina
and Brazil; DESTINOS LANTOURS has been registered and/or
renewed in Peru.
LATAM, JUNTOS MÁS LEJOS has been registered and/or re-
newed in Argentina, Chile, and Ecuador; LATAM, TOGETHER,
FURTHER has been registered and/or renewed in Australia,
New Zealand, United Kingdom and the European Union.
LATAMPLAY has been registered and/or renewed in Argentina,
Brazil, Chile, Colombia and Ecuador; LATIN AIRLINE NETWORK
has been registered and/or renewed in Chile; LIBREVOLADOR
has been registered and/or renewed in Bolivia, Chile, Ecuador,
Paraguay and Peru; LIBREVOLADORES has been registered
and/or renewed in Bolivia, Chile, Ecuador, Paraguay and Peru;
LIDERES DEL SERVICIO has been registered and/or renewed
in Argentina.
LATAM AIRLINES, SANS FRONTIÈRES has been registered and/
or renewed in France; LATAM AIRLINES, GRENZENLOS has been
registered and/or renewed in Germany; LATAM AIRLINES, SIN
FRONTERAS has been registered and/or renewed in Spain;
LATAM, SIN FRONTERAS has been registered and/or renewed
in Honduras; LATAM AIRLINES, SENZA FRONTIERE has been
registered and/or renewed in Italy.
ANNUAL REPORT 2023 11 —Annexes —Who we are
SUA VIAGEM, LATAM SEM FRONTEIRAS, LATAM WALLET,
MAX, MEGA PROMO, MUSEU TAM, PAIXÃO PELO RIO TAM,
PREFERRED PARTNERS LAN, PROMO, RED REPORT, RELAX,
TAM, TAM AIRLINES, TAM BUSCA PREÇO, TAM CARGO, TAM
CARGO , ONVENCIONAL, TAM CARGO PRÓXIMO DIA, TAM
CARGO PRÓXIMO VÔO, TAM ESPAÇO +, TAM ESPAÇO MAIS,
TAM EXPRESS, TAM MILOR, TAM PREMIUM BUSINESS, TAM
PREMIUM ECONOMY, TAM SEARCH BY , RICE, TAM TARIFA
LIGHT, TAM TARIFA MAX, TAM TARIFA PROMO, TAM TARIFA
TOP, TAM VACATIONS, TAM VIAGENS.
SALES CHANNELS
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)
HUMAN RIGHTS
5.5 Workplace and sexual harassment
NCG 461: 5.5 WORKPLACE AND SEXUAL HARASSMENT
GRI 406-1
During 2023, cases of discrimination and conflicts of interest
were reported in both Brazil and Spanish-speaking countries. In
response to these cases, LATAM began a review of processes,
created and reinforced control, auditing and training systems
as mitigation measures, and levied sanctions under local labor
regulations, such as remediation.
ADDITIONAL INFORMATION
NCG 461: 6.2 BUSINESSES
• Aviation insurance: LATAM group has Aviation Insurance,
including Hull, and Legal Liability, covering risks inherent to
aviation, such as damages to aircraft, engines and parts, and
third-party liability (passengers, cargo, etc.). LATAM group’s
insurance is jointly managed by Grupo IAG (consisting of British
Airways, Iberia, and its subsidiaries, and franchisees). The in-
crease in business volumes has translated into better coverage
and more competitive prices.
• General insurance: These include various risks that may
eventually affect the company's assets and equity, consider-
ing multi-risk coverage (including damages and losses derived
from fire, natural disasters, theft and other risks), automobile
insurance and liability insurance. Moreover, the company has
life, and health and accident insurance contracts covering the
group’s personnel.
• Clients: None of LATAM's clients individually represents over
10% of its sales.
• Suppliers: In 2023, 26 suppliers individually represented over
10% of their category.
LATAM, SOSTENIBILIDAD: UN DESTINO NECESARIO has been
registered and/or renewed in the European Union; LATAM UN
DESTINO NECESARIO has been registered and/or renewed in
Chile, Colombia, Ecuador, Mexico and Peru; LATAM A NECES-
SARY DESTINATION has been registered and/or renewed in
United Kingdom; LATAM DESTINADAS A ESTAR JUNTAS has
been registered and/or renewed in Peru.
LATAM VUELA NEUTRAL has been registered and/or renewed
in Bolivia and Uruguay; SOSELVA has been registered and/or
renewed in Peru; POSITIVE FS POSITIVE FLIGHT SPECIFIC has
been registered and/or renewed in Canada.
LATAM RECICLE SUA VIAGEM has been registered and/or re-
newed in Brazil; LATAM RECICLA TU VIAJE has been registered
and/or renewed in Bolivia, Chile, Paraguay and Uruguay.
LATAM 1+1 COMPENSAR PARA CONSERVAR has been regis-
tered and/or renewed in Chile, Peru and Mexico; LATAM 1+1
OFFSET TO CONSERVE has been registered and/or renewed
in Australia, United Kingdom and New Zealand.
LATAM SEGUNDO VUELO has been registered and/or renewed
in Bolivia, Chile, Ecuador, Mexico, Peru, the European Union and
Uruguay; LATAM SECOND FLIGHT has been registered and/or
renewed in Australia, United Kingdom and New Zealand.
LATAM AVIÓN SOLIDARIO has been registered and/or renewed in
Bolivia, Chile, Paraguay and Uruguay; LATAM AVIÃO SOLIDÁRIO
has been registered and/or renewed in Brazil.
TAM has filed for trademark registration, registered or renewed
the following trademarks in Brazil, LATAM; LATAM AIRLINES;
LATAM AIRLINES BRASIL; LATAM CARGO, LATAM CARGO BRA-
SIL; LATAM FIDELIDADE; LATAM MRO, LATAM PASS; LATAM
TRADE; LATAM LINHAS AÉREAS; LATAM TRAVEL; LATAM VIA-
GENS; LATAM TRADE; LATAMPLAY; MERCADO LATAM; VAMOS
LATAM. AJATO, BUSINESS CLASSIC, BUSINESS PLUS, CLASSIC,
FIDELIDADE, FIRST, LAN. LAN CARGO, LAN COLOMBIA, LAN
PERU, LAN.COM, LATAM AVIÃO SOLIDÁRIO, LATAM RECICLE
127
CONFIDENTIAL CHANNEL
GRI 205-3 & 406-1
NCG 461: 5.5 WORKPLACE AND SEXUAL HARASSMENT
REPORTING AREAS
SPANISH
-SPEAKING
BRAZIL COUNTRIES
0
Corruption or bribery
86
Discrimination or harassment
0
Customer privacy data
Conflicts of interest
9
Money laundering or insider trading 0
0
11
0
1
0
TOTAL
0
97
0
10
0
ANNUAL REPORT 2023
Corporate
Governance
128
11 —Annexes —Corporate Governance
Shareholders’ Agreements
On or around the date of LATAM group's exit from its
Chapter 11 reorganization proceeding in the United
States of America (the "Exit Date") pursuant to the
terms and conditions of the reorganization plan (the
"Reorganization Plan") that was approved and con-
firmed on June 18, 2022 by the Bankruptcy Court
in said reorganization proceeding, the Supporting
Creditors and the Supporting Stockholders of said
Reorganization Plan entered into a Stockholders'
Agreement (the "Stockholders' Agreement") which
provides, among other things, that: (A) For a period
of two years from the Exit Date, the parties to the
Shareholders' Agreement shall vote with their shares
for the Board of Directors of LATAM Airlines Group
S.A. to be comprised, both initially and upon filling
the corresponding vacancies, of nine members who,
in accordance with Chilean law, shall be appointed as
follows: (i) five members, including the vice-chairman
of the LATAM Airlines Group S.A. Board of Directors,
nominated by the Supporting Creditors; and (ii) four
members, including the chairman of the LATAM Airlines
Group S.A. Board of Directors (who shall be a Chilean
national), nominated by the Supporting Sharehold-
ers; and (B) during the first five years following the
Exit Date, in the event of liquidation or dissolution
of LATAM Airlines Group S.A., recoveries of shares
surrendered upon exercise of the conversion option
for the New Series H Convertible Notes (illustratively
referred to as "Class B" in the Reorganization Plan),
will be subordinated to any right of recovery for any
backstop shares surrendered upon exercise of the
conversion option for the New Series G Convertible
Notes (illustratively referred to as "Class A" in the
Reorganization Plan) or the New Series I Convertible
Notes (illustratively referred to as "Class C," in the
Reorganization Plan), in each case payable monthly at
the rate of one-twelfth of said amount regardless of
the number of Audit Committee meetings attended,
with no limit on the number of meetings.
COMPOSITION OF THE LATAM AIRLINES GROUP
BOARD
NCG 461: 3.2 BOARD OF DIRECTORS
GRI 2-11
On November 15, 2022, Ignacio Cueto Plaza was elected
as President of the Board.
On November 15, 2022 the board of directors of LA-
TAM Airlines Group was renewed, with Ignacio Cueto
Plaza, Bornah Moghbel, Enrique Cueto Plaza, Frederico
P. Fleury Curado, Antonio Gil Nievas, Michael Neruda,
Bouk Van Geloven, Sonia J.S. Villalobos, and Alexander
Wilcox elected.
MANAGEMENT OF THE LATAM AIRLINES GROUP
The CEO of LATAM Airlines Group is the highest ranked
officer of LATAM and reports directly to the LATAM
Airlines Group's board of directors. The CEO LATAM is
tasked with the general supervision, direction and control
of the business of LATAM. 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 LATAM 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’ agree-
ments, TEP Chile S.A. (“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 Air-
lines 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 complet-
ed, 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 ben-
eficially 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) at any time when TEP
Chile owns any voting shares of Holdco I. However, LA-
TAM 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.
ANNUAL REPORT 2023 11 —Annexes —Corporate Governance
Conversion Option
Characteristics of the Board
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 ad-
verse effect (as defined above under the “-Transfer Restrictions”
section). In February 2019, we completed the procedures for
the exchange of shares of Holdco I S.A., through which LATAM
Airlines Group SA increased its indirect participation in TAM
S.A., from 48.99% to 51.04%. This transaction was undertaken
pursuant to the Provisional Measure No. 863/2018 issued by
CADE on 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 share-
holders 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 con-
sideration.
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 merger will be made by Holdco I.
Board Profile 1
NCG 461 3.2 BOARD OF DIRECTORS
GRI 2-9
Board members’ experience
NCG 2.3.2
GRI 2-17
MEN WOMEN
Skills, knowledge and prior experience
By sex
By nationality
Brazil
Chile
Spain
United States
The Netherlands
By age group
Under 30 years
Between 30 and 40 years old
Between 41 and 50 years old
Between 51 and 60 years old
Between 61 and 70 years old
Over 70 years old
8
1
2
1
3
1
-
1
2
3
2
-
By seniority group
Under 3 years
5
2
Between 3 and 6 years old
More than 6 and up to 9 years 1
More than 9 and up to 12 years -
-
Over 12 years old
People with disabilities
-
1
1
-
-
-
-
-
-
-
1
-
-
-
1
-
-
-
-
1 There are no deputy board members; they are
all ordinary members.
EXPERIENCE IN
THE AVIATION
INDUSTRY
EXPERIENCE IN
CORPORATE
STRATEGY
EXPERIENCE IN
RISKS
ECONOMY
AND FINANCE
EXPERIENCE IN
COMPLIANCE
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
ESG
●
●
Director 1
Director 2
Director 3
Director 4
Director 5
Director 6
Director 7
Director 8
Director 9
GRI 2-9
Other mandates
None of the board members hold senior positions (director or CEO) in four or more other publicly listed external companies.
Average length of service
The average length of service of the members of the Board of Directors by 2023 is 2.4 years.
129
ANNUAL REPORT 2023
11 —Annexes —Corporate Governance
ANNUAL MANAGEMENT REPORT OF THE AUDIT COM-
MITTEE
NCG 461: 3.3 BOARD COMMITTEES and 10. COMMENTS FROM
SHAREHOLDERS AND FROM THE AUDIT COMMITTEE
Pursuant to article 50 Bis, paragraph 8, item 5, of Law No 18,046
on Limited Corporations, the Audit Committee of LATAM Airlines
Group S.A. (the “Company” or “LATAM”) proceeds to issue the
following annual report of its management for the year 2023.
Integration of the audit committee
Since November 15, 2022, the Company's Audit Committee
includes Frederico Curado, Sonia J.S. Villalobos and Michael
Neruda, who hold independent status under U.S. legislation.
Under Chilean legislation, Mr. Frederico Curado has the status of
independent director and is the chair of the Audit Committee.
The directors were elected at the Extraordinary Shareholders'
Meeting held on November 15, 2022, and their term of office is
two years, in accordance with the provisions of the Company's
bylaws.
Committee activity report
During fiscal year 2023, the Audit Committee met 13 times,
to exercise its powers and comply with its duties pursuant to
Article 50 Bis of Law No. 18,046 on Limited Corporations, as
well as to review or evaluate those other matters that the Audit
Committee deemed necessary.
The main issues discussed are reported below.
Review of balance sheet and financial statements
The Audit Committee examined and reviewed the Company's
financial statements as at December 31, 2022, as well as at the
end of the quarters ended March 31, June 30 and September
30, 2023, at ordinary meetings held on March 9 and August 2,
2023, respectively, and extraordinary meetings held on May 3
and October 30, 2023, including the reports from the Compa-
ny's external auditors, PriceWaterhouseCoopers Consultores,
Auditores SPA ("PwC”), who participated in the 4 meetings.
Audits under SOX standards
Review of impairment reports
In the meetings held on January 18, April 24, July 11, October
10 and December 13, 2023, the Audit Committee discussed
issues related to the analysis of indications of impairment
regarding certain assets included in the financial statements
of the Air Transport cash-generating unit. Specifically, the
results of the impairment test as at December 31, 2022 were
discussed, as were the analyses of indications of impairment
at March 31, June 30, and September 30, 2023, concluding that
no indications of impairment were found that would warrant
the need for the Company to carry out additional tests on said
date, nor carry forward an accounting adjustment of assets
on the testing date.
Executives and workers’ remuneration systems
In the meetings held on July 11, September 13 and October
10, 2023, the Committee examined the current remuneration
and systems policies and the updates to remuneration plans
for the Company's main executives and workers, including the
Corporate Incentive Program (CIP).
Internal audit
In the meetings held on January 18, March 9, May 9, June
14, July 11, August 2, September 13, October 10, November
7 and December 13, 2023, matters related to Internal Audit
were discussed. The status of the Internal Audit plan carried
out during 2022 was reviewed, highlighting the number of
projects addressed, the relevant aspects of the work carried
out and the presentation of audit reports which analyzed the
most important risks, the presentation and agreement of the
work plan for 2023, and the progress of the work with regard
to said plan.
In the meetings of the Audit Committee held on January 18,
March 9, May 9, August 2, September 13, October 10, November
7 and December 13, 2023, the plan to be followed in terms of
SOX regulations for the 2023 certification was presented. The
results obtained in the SOX certification during 2022, the most
relevant issues to be considered during 2023, the Company's
projects that could affect SOX regulations, and a schedule to
be followed with regard to this certification during 2023 were
also presented.
External audit services
In the meetings held on June 14, October 10 and December 13,
2023, PwC presented the work plan to be followed in the arena
of external auditing during 2023, addressing issues related to
the regulatory requirements for communication and work de-
liverables, the composition of the PwC team, the consolidated
audit approach, the progress achieved during the year in the
review of internal control and the schedule of activities and
communications that will be maintained with the members of
the Committee.
Corporate risk management
At the meetings of the Audit Committee held on April 24 and
December 13, 2023, matters related to corporate risks were
reviewed, including prevention, the risk model and its status.
At the meetings of the Audit Committee held on April 24 and
December 13, 2023, matters related to corporate risks were
reviewed, including prevention, the risk model and its status.
Compliance
In the meetings held on January 18 and September 13, 2023,
the Audit Committee received the semi-annual reports and
training on Compliance, reviewing, among other matters, the
current Compliance Program and its main contents, which
include the commitment of senior management, the most
relevant rules and laws, the development of policies, trainings
and communications, the status of Third Party Intermediaries
("TPIs"), the identification and handling of Compliance risks,
and the reporting of Compliance at the corporate level, among
others. Additionally, in the meetings held on March 9, April 24
and July 11, updates on Compliance issues, such as corporate
policies, the crime prevention model and the new Economic
Crimes Law, were presented.
LATAM policies
At the meetings held on April 24 and December 13, 2023,
the process for the drafting, review and approval of existing
policies was discussed, and updates to existing policies and
some new policies were analyzed, including the Policy for the
Recovery of Erroneously Awarded Remuneration (Clawback).
Examination of reports pertaining to the Related-Party Trans-
actions Policy (“RPT”)
At the Committee meetings held on March 9, June 14 and Sep-
tember 13, 2023, in compliance with the reporting obligation
established in the Company's current RPT Policy, management
informed the Audit Committee about: (i) the usual transactions
entered into by the LATAM group with those subsidiaries in
which it has a stake of less than 95%, (ii) the main transactions
entered into between the LATAM group companies in general,
and (iii) those transactions disclosed in the note to the financial
statements on related-party transactions.
Audit Committee recommendations
On the other hand, the Audit Committee made the recommen-
dations indicated below, in terms of the appointment of the
Company's External Auditors, Private Risk Rating Agencies for
the financial year 2023, and other matters related to their role.
130130
ANNUAL REPORT 2023 11 —Annexes —Corporate Governance
Audit Committee Report on Meeting Activity
5) Ordinary meeting N°242 05/09/2023
10) Ordinary meeting N°247 10/10/2023
The Audit Committee met and held meetings on 13 occasions,
with the participation of its three members in each of these
sessions, as detailed below, with a brief list of the main issues
discussed in each of the meetings:
1) Ordinary meeting N°239 01/18/2023
· Status of SOX Certification 2022
· Impairment test in relation to the Financial Statements as
at 12.31.22
· Fraud Management Model
· Compliance Program update
· Internal Audit work plan 2023
· Internal Audit goal Results 2022
· Executive meeting – reserved slot for LATAM CEO
2) Ordinary meeting N°240 03/09/2023
· Review of the Financial Statements as at 12.31.22
· SOX Certification 2022 report
· Performance evaluation of the External Auditor
· Proposal of External Auditors and Private Risk Rating
Agencies for 2023
· Review of related-party transactions
· Annual Audit Committee management report
· Internal Audit goals for 2023
3) Ordinary meeting N° 241 04/24/2023
· Indications of impairment for the first quarter of 2023
· Corporate Policies review
· Corporate Risk status
· Executive meeting– reserved slot for Legal VP
4) Extraordinary meeting N°190 05/03/2023
· Review of Financial Statements as at 03.31.23
· Internal Audit and SOx Certification 2023 work plan update
· Review of Brazil topics
6) Ordinary meeting N°243 06/14/2023
· External Auditor 2023 work plan
· Status of Brazil tax matters
· Review of related-party transactions
· Review of Colombia topics
· Status of projects included in the Internal Audit plan
· Executive meeting– reserved slot for LATAM CFO
7) Ordinary session N°244 07/11/2023
· Remuneration systems and Company executives and work-
ers’ remuneration plans (CIP)
· Indications of impairment for the second quarter of 2023
· Draft law- Model for the Prevention of Economic Crimes
and Attacks on the Environment
· Status of projects included in the Internal Audit plan
· Executive meeting– reserved slot for External Auditor
8) Ordinary meeting N°245 08/02/2023
· Review of Financial Statements as at 06.30.23
· Status of Internal Audit work plan
· Review of Peru topics
9) Ordinary meeting N°246 09/13/2023
· Update on Company executives and workers’ remuneration
plans (CIP)
· Review of Ecuador topics
· Review of related-party transactions
· Status of Internal Audit work plan
· Compliance Program update
· Executive meeting – reserved slot for Legal VP
· Indications of impairment for the third quarter of 2023
· Accounting treatment of CIP
· Status of SOX Certification 2023 work plan
· Review of Paraguay topics
· Status of projects included in the Internal Audit plan
· Executive meeting– reserved slot for LATAM CEO
11) Extraordinary meeting N°191 10/30/2023
· Review of Financial Statements as at 09.30.23
12) Ordinary meeting N°248 11/7/2023
· Tax matters
· Review of estimates and relevant accounting policies
· Status of Internal Audit work plan
· Review of USA and Cargo topics
· Group structure simplification process
· Executive meeting– reserved slot for Internal Audit Direc-
tor
13) Ordinary meeting N°249 12/13/2023
· Impairment test
· Status of SOX 2023 Certification work plan
· Review of related-party transactions
· Review of Corporate Policies
· Corporate Risk Status
· Status of Internal Audit work plan
· Executive meeting– reserved slot for External Auditor
131
ANNUAL REPORT 2023 11 —Annexes —Corporate Governance
technical and economic evaluation of the bidding process for
this service carried out in 2022 and the work and performance
evaluation of the audit work done in the previous year, to con-
tinue with external auditors PwC for financial year 2023. The
above proposal was approved by the Company's Shareholders'
Meeting held on April 20, 2023.
IV.2 Proposal of Private Risk-Rating Agencies
At its meeting held on March 9, 2023, and in accordance with
the provisions of paragraph 2) clause eight of Article 50 Bis of
Law number 18,046 on Limited Corporations, the Audit Com-
mittee agreed to propose to the Board of Directors the Risk
Rating Agencies to be submitted for approval at the Compa-
ny’s Ordinary Shareholders' Meeting on April 20, 2023. In this
regard, the Committee resolved to propose to the Company's
Board of Directors the appointment of the following local risk
rating agencies: Fitch Chile Clasificadora de Riesgo Limitada,
Feller-Rate Clasificadora de Riesgo Limitada and International
Credit Rating (ICR) Compañía Clasificadora de Riesgo Limitada.
As for international risk rating agencies, the Audit Committee
agreed to propose to the Board of Directors the appointment
of the following firms: Fitch Ratings, Inc, Moody's Investors
Service and Standard & Poor's Ratings Services.
IV. 3 Other recommendations
In addition to the recommendations indicated above and as
part of its usual activities, the Audit Committee recommended
to the Board of Directors, among other matters, the approval
of the Quarterly Financial Statements for March, June and
September; the adoption of new corporate policies and their
updates; the Company Incentive Plan for executives and em-
ployees (CIP).
AUDIT COMMITTEE REMUNERATION AND SPENDING
GRI-19
The Company’s Ordinary Shareholders' Meeting, held on April
20, 2023, resolved for financial year 2023 and until the next
Ordinary Shareholders' Meeting to be held in 2024:
1. As base remuneration for each Director member of the Au-
dit Committee, a fixed annual allowance of US$50,000 and
US$85,417 for the Chair of the Audit Committee, payable
on a monthly basis, at a ratio of one twelfth of said amount,
regardless of the number of Audit Committee meetings at-
tended, with no limit on the number of meetings.
2. As additional remuneration for each Director member of the
Audit Committee, a variable amount, equivalent to an addition-
al one third (1/3) calculated as additional remuneration units
(URA, for its Spanish acronym) that the respective member of
the Committee is entitled to as Director, considering the time
that each has served as a member of the Committee.
For the operation of the Audit Committee and its advisors,
Law No. 18,046 on Limited Corporations establishes that the
expense budget must be at least equal to the sum of the an-
nual remuneration of the members of the Committee. Thus,
the Ordinary Shareholders' Meeting held on April 20, 2023,
approved an annual expense budget for the committee of
US$185,417 for financial year 2023 and until the next Ordinary
Shareholders' Meeting to be held in 2024. No use was made
of this expense budget during 2023.
AUDIT COMMITTEE RECOMMENDATIONS
IV.1 Proposal for the appointment of External Auditors
At the Audit Committee meeting held on March 9, 2023, and in
accordance with the provisions of paragraph 2) of clause eight
of Article 50 Bis of Law No. 18,046 on Limited Corporations, it
was agreed to propose to the Company’s Board of Directors,
based on the analysis made by management regarding the
132
NEW ANNUAL REMUNERATION STRUCTURE OF THE BOARD
NCG 461: 3.2 & 3.3
On April 20, 2023, the ordinary shareholders’ meeting approved the
new annual remuneration structure of the Board, for the fiscal year
2023 and until the next ordinary shareholders’ meeting scheduled
to take place within the first quarter of 2024. On such meeting, the
shareholders agreed on a fixed annual compensation of US$80,000
for each board member (US$160,000 in the case of the chairman).
The aforementioned remuneration is payable monthly at the rate
of onetwelfth of the amount, regardless of the number of board
meetings directors attend, without limit of sessions. In addition to
the base remuneration, an additional remuneration was approved
for each Board member within the shareholders’ meeting held on
April 20, 2023, to be determined based on the following criteria:
a. From November 15, 2022 through November 15, 2023, each
Board member was entitled to receive an additional remuneration
equivalent to 9,226,234 units of remuneration or “URAs”, provided
that the director served continuously as a member of the Board
until the end of such period. b. From November 16, 2023 through
November 15, 2024, each Board member will be entitled to re-
ceive another additional amount equivalent to 9,226,234 URAs,
provided that the director serves continuously as a member of
the Board until the end of such period. c. Additionally, members
of the Board that are also members of the Board of Directors’
Committee and Audit Committee are entitled to certain fixed and
variable compensation (see “Board of Directors’ Committee and
Audit Committee” below).
ANNUAL REPORT 2023 Our business
Industry context
11 —Annexes —Our business
Regulatory framework
NCG 461: 6.1 INDUSTRIAL SECTOR
GRI 2-27
REGULATION
ENVIRONMENTAL AND NOISE REGULATION
SAFETY AND SECURITY
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 main-
tained the necessary authority, including authoriza-
tions and operative certificates where required, which
are subject to ongoing compliance with statutes, rules
and regulations pertaining to the airline industry, in-
cluding any rules and regulations that may be adopted
in the future.
The countries where we carry out most of our opera-
tions are contracting states and permanent members
of the ICAO, an agency of the United Nations estab-
lished in 1947 to assist in the planning and develop-
ment 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 stan-
dards. We believe that we are in material compliance
with all such relevant technical standards.
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 Chile, Brazil, Colombia, Ecuador, Peru, among others,
aircraft must comply with certain noise restrictions.
LATAM’s aircraft substantially comply with all such
restrictions, having implemented at least the standard
known as “Stage 3 Requirements” across its fleet.
In 2016, the ICAO adopted a resolution creating the
Carbon Offsetting and Reduction Scheme for Inter-
national Aviation (CORSIA), providing a framework
for a global market-based measure to stabilize CO2
emissions in international civil aviation (i.e., civil avi-
ation 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).
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 oper-
ation of aircraft and its maintenance.
In the United States, the Aviation and Transportation
Security Act requires, among other things, the imple-
mentation 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 Se-
curity Act is provided in part by a US$5.60 per seg-
ment passenger security fee, subject to a US$11.20
per round-trip cap; however, airlines are responsible
for costs in excess of this fee. Implementation of the
requirements of the Aviation Security Act has resulted
in increased costs for airlines and their passengers.
Since the events of September 11, 2001, the Unit-
ed 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.
Below are some specific aeronautical regulations re-
lated to route rights and pricing policy in the countries
where we operate.
133
ANNUAL REPORT 2023 11 —Annexes —Our business
BRAZIL
Aeronautical Regulation
safety or maintenance, ANAC has incorporated by reference
the majority of the ICAO’s technical standards.
how it could be revoked and reassigned. This provision of the
resolution came into force in September 2019.
Route Rights
Airfare Pricing Policy
The Brazilian aviation industry is regulated and overseen by the
ANAC. The ANAC reports directly to the Civil Aviation Secre-
tary, 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 stan-
dards, 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 Airlines Brazil has obtained and maintains the neces-
sary 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 reg-
ulations 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 tech-
nical 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
Domestic Routes: Brazilian airlines operate under a public
services concession, and for that reason Brazilian airlines are
required to obtain a concession to provide passenger and cargo
air transportation services from the Brazilian authorities. In
addition, an Air Operator Certificate (“AOC”) is also required
for Brazilian Airlines to provide regular domestic passenger
or cargo transportation services. Brazilian Airlines also need
to comply with all technical requirements established by 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 pro-
viding 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 vari-
ous 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 destina-
tions. 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
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.
CHILE
Aeronautical Regulation
Both the DGAC and the Junta de Aeronáutica Civil (“JAC”)
oversee and regulate the Chilean aviation industry. The DGAC
reports directly to the Chilean Air Force and is responsible
for supervising compliance with Chilean laws and regulations
relating to air navigation. The JAC is the Chilean civil aviation
authority. Primarily on the basis of Decree Law No. 2,564,
which regulates commercial aviation, the JAC establishes the
main commercial policies for the aviation industry in Chile and
regulates the assignment of international routes and the com-
pliance 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 sub-
ject 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 inter-
national 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 agree-
ments 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
134
ANNUAL REPORT 2023 other methods of marketing used by the company.
• controlling air traffic control inside domestic air space;
11 —Annexes —Our business
entire domestic territory, in charge of regulating and supervis-
ing 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 Regu-
lations (“RAC”). The AC also grants the necessary permits for
air transportation.
Route Rights
The AC grants operation permits to domestic and foreign car-
riers 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 invest-
ment in domestic airlines.
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.
ECUADOR
Aeronautical Regulation
There are two institutions that control commercial aviation on
behalf of the State: (i) The Consejo Nacional de Aviación Civil
(“CNAC”), which directs aviation policy; and (ii) the Dirección
General de Aviación Civil (“DGAC”), which is a technical regu-
latory 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.
Airfare Pricing Policy
Fundamentally, the DGAC is responsible for:
Since July 2007, as stated in resolution 3299 of the Aeronau-
tical 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 pas-
sengers 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 tickets, advertising or
• ensuring that the national standards and technical regulations
and international ICAO standards and regulations are observed;
• keeping records on insurance, airworthiness and licenses of
Ecuadorian civil aircraft;
• maintaining the National Aircraft Registry;
• issuing licenses to crews;
• approving shared codes; and
• modifying operations permits.
The DGAC also must comply with the standards and recom-
mended 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 transporta-
tion. 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, oth-
erwise, 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 ac-
cess 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 prac-
tices. 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.
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. Inter-
national route frequencies are freely transferable. In October
2023, a public auction was held by JAC for 13 international
frequencies for the Santiago – Lima route where three Chilean
airlines participated, LATAM won ten of thirteen, for which we
paid US$ 315.000.
Airfare Pricing Policy
Chilean airlines are permitted to establish their own domes-
tic and international fares without government regulation.
For more information, see “-Antitrust Regulation” below. In
1997, the Antitrust Commission approved and imposed a spe-
cific 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.
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
135
ANNUAL REPORT 2023 11 —Annexes —Our business
In general, bilateral treaties regarding air transportation allow
for airfares to be regulated by the regulation of the country
of origin.
are not permitted to provide domestic air service between
destinations in Peru.
“Antitrust Law.” The Antitrust Law considers as anticompetitive,
any conduct that prevents, restricts or hinders competition,
or sets out to produce said effects.
PERU
Aeronautical Regulation
The Peruvian Dirección General de Aeronáutica Civil (the
“PDGAC”) oversees and regulates the Peruvian aviation indus-
try. The PDGAC reports directly to the Ministry of Transpor-
tation 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 opera-
tions, including personnel, aircraft and security standards, air
traffic control and airport management. We have obtained and
maintain the necessary authorizations from the Peruvian gov-
ernment 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 inter-
national aviation industry, which Peruvian authorities have
incorporated into Peruvian laws and regulations. In the ab-
sence 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.
International Routes: As an airline providing services on in-
ternational 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 vari-
ous other countries. There can be no assurance that existing
bilateral agreements between Peru and foreign governments
will continue, and a modification, suspension or revocation of
one or more bilateral treaties could have a material adverse
effect on our operations and financial results.
International route rights, as well as the corresponding landing
rights, are derived from a variety of air transport agreements
negotiated between Peru and foreign governments. Under
such agreements, the government of one country grants the
government of another country the right to designate one or
more of its domestic airlines to operate scheduled services
to certain destinations of the former and, in certain cases, to
further connect to third-country destinations. In Peru, when
additional route frequencies to and from foreign cities become
available, any eligible airline may apply to obtain them. If there
is more than one applicant for a route frequency, the PDGAC
awards it in compliance with different designation rules for a
period of four years. The PDGAC grants route frequencies sub-
ject 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.
ANTITRUST REGULATION
Route Rights
Chile
Domestic Routes: Peruvian airlines are required to obtain per-
mits in connection with carrying passengers or cargo on any
domestic routes and to comply with the technical and legal
requirements established by the PDGAC. Non-Peruvian airlines
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
136
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 prac-
tices as (i) the abusive exploitation by an economic agent, or
a group thereof, of a dominant position in the market, fixing
sale or purchase prices, the imposition to acquire a specific
product within a sale, allocating territories or market quotas or
imposing similar abuses on other competitors; and (ii) predatory
practices, or unfair competition, carried out with the purpose
of reaching, maintaining or increasing a dominant position in
the market.
An aggrieved person may sue for damages arising from a breach
of Antitrust Law by suing in the Chilean Antitrust 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 infringement; and/or (iii) the imposition of a
fine up to 30% of the sales of the infringing entity correspond-
ing 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; or when none of
these alternatives can be applied, a fine up to approximately
US$50 million (60,000 UTA).
On August 17, 2023 Chilean Law No. 21,595 (the Economic
Crimes Act, or “ECA”) was published in the Official Gazette.
The ECA became effective on such same date with respect
to individuals and will come into effect with respect to legal
entities (e.g., such as LATAM Airlines Group) on September 1,
2024.
including the following:
1. The ECA expands the list of criminal offenses that can trig-
ger the legal entity’s criminal liability from 20 to around 230
offenses.
2. The ECA expands the individuals capable of triggering crim-
inal liability of a legal entity, which as amended, consist of:
a. Those who hold an office, position or perform duties within
the corresponding legal entity.
b. Those who provide services managing the legal entity’s af-
fairs with third parties, with or without representation.
c. Those individuals captured by (a) and (b) above that (i)
provide services to another legal entity or (ii) have ownership
or stake in such another legal entity in a way that the other
legal entity lacks operational autonomy (i.e., an employee of
a controlled subsidiary may trigger the criminal liability of the
holding company).
3. The ECA adds the appointment by the courts of a super-
visor of the legal entity as a potential sanction or protective
order that may be adopted during the investigation stage of
the criminal procedure. The instructions provided by the su-
pervisor are binding to the company.
4. The ECA will no longer require that the crime be committed
in the benefit of the legal entity for the entity to be criminally
responsible. The legal entity will only be exempt from this re-
sponsibility when the crime is committed exclusively against
such legal entity.
5. There will be a special day-rate system of fines for legal
entities. In this case, the potentially applicable fines will range
from approximately US$725 to US$145 million.
Among other things, the ECA considerably modifies the cur-
rent regulation of criminal liability applicable to legal entities,
As described above under “—Route Rights—Airfare Pricing
Policy,” pursuant to Resolution No. 445 of August 1995, the
ANNUAL REPORT 2023 11 —Annexes —Our business
3. execution of interline agreements with airlines operating
the Santiago-São Paulo, Santiago-Río de Janeiro and Santia-
go-Asunción routes;
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;
TDLC approved a merger 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 mar-
ket. 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-reg-
ulatory 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 the LAN/TAM merger. 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 “De-
cision”) with respect to the consultation procedure initiated on
January 28, 2011, in connection with the merger between LAN
and TAM. The TDLC approved the proposed merger between
LAN and TAM, subject to 14 conditions as generally described
below:
4. certain capacity and other transitory restrictions applicable
to the Santiago-São Paulo route;
5. certain amendments to LAN’s self-regulatory fare plan ap-
proved by the TDLC with respect to LAN’s domestic passenger
business;
6. the obligation of LATAM to resign to one global airline alliance
within 24 months from the date in which the merger 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 Ameri-
ca 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 execu-
tion of certain of those codeshare agreements (the “Seventh
Condition”);
8. the abandonment of four air traffic frequencies with free-
dom rights between Chile and Peru, limitations to acquire
more than 75% of the air traffic frequencies in that route, and
the periods in which air traffic frequencies may be granted to
LATAM by the Chilean authorities;
1. swap certain slots in the Guarulhos Airport at São Paulo,
Brazil, to be used by an occasional third party interested in of-
fering direct non-stop flights between São Paulo and Santiago;
9. issuance of a statement by LATAM supporting the unilateral
opening of the Chilean domestic skies (cabotage) and absten-
tion from any actions that would prevent such opening;
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
merger;
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;
137
13. certain transitory restrictions on increasing fares in the
Santiago-São Paulo and Santiago-Río de Janeiro routes for
the passenger business and for the Chile-Brazil routes for the
cargo business; and
14. engaging an independent consultant, expert in airline op-
erations to, in coordination with the FNE, monitor and audit
compliance with the conditions imposed by the Decision for
36 months.
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 in the seventh condition. Although LATAM
opposed to 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 by LATAM of the TDLC resolutions or
any applicable antitrust regulations by LATAM. The Settlement
Agreement did establish the obligation of LATAM to amend
and 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 be-
tween LATAM and International Airlines Group (“IAG”), subject
to nine mitigation measures. On May 23, 2019 the Supreme
Court of Chile revoked the TDLC decision to approve these
agreements, and by the end of 2019 LATAM decided to ter-
minate both agreements.
On October 15, 2019, LATAM Airlines Group was notified that
the Chilean Economic Prosecution (Fiscalía Nacional Económi-
ca, “FNE”) had commenced an investigation regarding a joint
venture agreement entered into between LATAM Airlines Group
and Delta Airlines Inc. (“Delta”). On August 13, 2021, Delta and
LATAM reached an out-of-court-agreement with FNE to close
the investigation and allow the implementation of their joint
venture agreement, subject to certain mitigation measures. On
October 28, 2021 the settlement was approved by the TDLC.
The mitigation measures included, among others, obligations
for LATAM to restrict and isolate information exchanges and
databases related to joint venture markets, as well as updating
the company’s compliance program. The settlement also im-
poses certain obligations on Delta and on directors to LATAM’s
board nominated with Delta’s votes, such as affidavits attesting
the independence of LATAM’s directors nominated with Delta’s
votes, compliance measures to restrict the exchange of com-
mercially sensitive information, and periodic antitrust training
regarding their obligations under the settlement.
Relatedly, on August 12, 2021, LATAM was notified of a resolu-
tion issued by the FNE alleging non-compliance of restrictions
imposed with respect to certain codeshare agreements. On
November 6, 2023, LATAM, Delta Air Lines and FNE reached
an out-of-court agreement to amend part of the codeshare
agreements, which was approved by the TDLC on December
7, 2023.
Brazil
The CADE approved the LAN/TAM merger by unanimous
decision during its hearing on December 14, 2011, subject to
the following conditions: (1) the new combined group (LATAM)
should leave one of the two global alliances to which it was a
part of (Star Alliance or oneworld); and (2) the new combined
group (LATAM) should offer to swap two pairs of slots in Gua-
rulhos 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.
ANNUAL REPORT 2023 11 —Annexes —Our business
On February 24, 2021, the CADE approved without remedies
the Joint Venture Agreement between Delta Air Lines and
LATAM Airlines Group. Previously, in a separate case, the CADE
approved without remedies the acquisition by Delta Air Lines
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 Agreement 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 applied for ap-
proval and antitrust clearance of all the agreements related
to their Joint Venture Agreement before the U.S. Department
of Transportation (“DOT”). On September 30, 2022, the DOT
approved the Joint Venture Agreement between Delta Air Lines
and LATAM group.
Colombia
On September 4, 2020 LATAM and Delta Air Lines applied for
an approval of the Joint Venture Agreement before Aerocivil,
which was finally received on May 10, 2021.
138
ANNUAL REPORT 2023 11 —Annexes —Our business
Material events
NCG 461: 9 RELEVANT OR MATERIAL EVENTS
Santiago, March 9, 2023
OTHERS
Pursuant to the provisions of Article 9 and item two of Article
10 of Law No. 18,045, and the provisions of General Standard
No. 30, duly authorized by the Board of Directors in its meet-
ing held on this same date, it informed the Financial Market
Commission (the "Commission"), as a MATERIAL EVENT of
LATAM Airlines Group S.A. ("LATAM" or the "Company"), of
the following:
As informed by a material fact dated December 15, 2022, on
November 3, 2022, LATAM emerged from its reorganization
proceeding in the United States of America pursuant to the
rules set forth in Chapter 11 of Title 11 of the United States
Code (the "Chapter 11 Proceeding"). Notwithstanding the fore-
going, certain provisions of Chapter 11 of Title 11 of the United
States Code still impose certain obligations on the Company.
One of these obligations is to issue as part of the closing of
the Chapter 11 proceeding, on a quarterly basis, reports called
"Post Confirmation Reports" ("PCR").
By virtue of the foregoing, we hereby make available to your
Commission and to the market in general, the quarterly PCR
for the year ended December 31, 2022, which was issued to-
day together with the annual financial statements and which
is included herein as an Annex.
The PCR does not in any way replace the financial information
that the Company regularly delivers pursuant to applicable
securities and/or regulatory standards and has been prepared
solely for the purpose of complying with the post-exit obli-
gations of the Chapter 11 Proceeding. Without limiting the
generality of the foregoing, financial information does not con-
stitute or replace in any way the delivery of the corresponding
financial statements to the Commission and the market, in
terms of content requirements, procedures and filing deadlines
established by said Service in current regulation.
net losses stated in the preceding paragraph. To this end, in
the next few days, the Board of Directors plans to convene an
extraordinary shareholders' meeting to decide on this matter.
• Selection of the newspaper for any publications to be made
by the Company;
Consequently, and without prejudice to the other limitations
set forth in the PCR, we declare that the information contained
in this report, made exclusively to comply with the obligations
following the exit of the Chapter 11 Procedure, is unaudited,
limited in scope and covers a restricted period. Therefore, said
information is subject to material changes as the corresponding
quarter progresses and in accordance with the regular processes
for the preparation of quarterly financial statements, including
limited review by the external auditors, when applicable.
Santiago, March 9, 2023
OTHERS
Pursuant to the provisions of Article 9 and item two of Article
10 of Law No. 18,045, and the provisions of General Standard
No. 30, duly authorized by the Board of Directors in its meet-
ing held on this same date, it informed the Financial Market
Commission, as a MATERIAL EVENT of LATAM Airlines Group
S.A. ("LATAM" or the "Company"), of the following:
Today, in an extraordinary meeting, LATAM's Board of Directors
approved the Annual Financial Statements for the year ended
December 31, 2022, which report a profit for the year of USD$
1,339,210,295. On the other hand, the Company has accrued
losses from prior years in the amount of USD$8,841,105,611,
which are mainly due to negative results caused by the impact
of the COVID-19 pandemic on business operations from 2020
to 2022. In view of the above, the profits for the year ended
December 31, 2022, should be allocated first to absorb such
losses. After performing these transactions, LATAM has net
accrued losses of USD$7,501,895,316 up to December 31,
2022. Therefore, there is no distribution of dividends for the
year ended December 31, 2022.
At the same meeting, the Board of Directors agreed to recom-
mend to the shareholders to decrease the capital stock in the
amount of USD$7,501,895,316, by absorbing the total accrued
Santiago, March 27, 2023
NOTICE OF ORDINARY AND EXTRAORDINARY SHAREHOLD-
ERS' MEETINGS
• Other matters of corporate interest that pertain to the Or-
dinary Shareholders' Meeting.
• Related-party transactions account; and
Pursuant to the provisions of Article 9 and section two of Ar-
ticle 10 of Law N° 18,045, and to the provisions of the Com-
mission’s General Standard N° 30, duly empowered, I hereby
inform you of the following Material Event regarding LATAM
Airlines Group S.A. (the Company):
In a meeting held today, the Company’s Board of Directors
resolved to convene an Ordinary Shareholders' Meeting to be
held on April 20, 2023, at 11:00 a.m., and an Extraordinary
Shareholders' Meeting, to be held immediately after, both to
be held at Mac-Iver 125, 17th floor, Santiago, to hear or decide,
as the case may be, on the matters indicated below:
Ordinary Shareholders’ Meeting
The purpose of the Ordinary Meeting shall be the following
matters:
• Annual Report, Balance Sheet and Financial Statements cor-
responding to Fiscal Year 2022; the situation of the Company;
and the corresponding report by the External Auditing Firm;
• Compensation of the Board of Directors for Financial Year
2023;
• Remuneration and budget of the Audit Committee for Fi-
nancial Year 2023;
• Appointment of the External Auditors firm;
• Appointment of Risk Rating Agencies;
Extraordinary Shareholders’ Meeting
The purpose of the Extraordinary Meeting shall be the follow-
ing matters:
1. To agree on a decrease in the Company’s capital by ab-
sorbing the accrued losses of the Company up to December
31, 2022, after allocating the profits of Financial Year 2022 to
such accrued losses;
2. To agree on a decrease in the Company's capital through
the absorption of the equity account "Treasury shares held",
produced as a result of the January 2012 rightful decrease in
capital stock, which took place pursuant to the provisions of
Article 27 of the Corporations Law;
3. To recognize any change in the capital stock resulting from
the placement of shares and convertible notes charged to the
capital increase approved at the Extraordinary Shareholders'
Meeting held on July 5, 2022; and to deduct from the paid-in
capital the costs of issuance and placement of such shares
and convertible notes; and
4. In general, to adopt amendments to the bylaws and all other
resolutions that may be necessary or convenient to carry out
the decisions adopted by the Shareholders.
The holders of shares registered in the Shareholders' Register
by midnight on the fifth business day prior to the day of the
Meeting—i.e., registered at midnight on April 14, 2023—shall
be entitled to participate in the Meetings and to exercise their
right to speak and vote.
139
ANNUAL REPORT 2023 11 —Annexes —Our business
It has been resolved that the Meetings will be held remotely,
to avoid exposing those attending the meetings to infection.
For this purpose, any shareholders interested in participat-
ing in the Meetings, or their representatives must, until 3:00
p.m. on the day before the Meetings, register by sending an
e-mail to registrojuntas@dcv.cl, expressing their interest in
participating in the Meetings, attaching a scanned image of
their identity card on both sides, or of their passport; of the
proxy, if applicable; and of the application form to participate
in the Meetings. The Meetings will be held through the Zoom
videoconference platform and voting via 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 "Join the Meeting” link. The rest of the
required documentation and more detailed information on how
to register, participate and vote remotely in the Meetings and
other relevant aspects will be made available and communi-
cated in due course through instructions that will be uploaded
to the Company's website, www.latamairlinesgroup.net.
The meeting notices will be published in the Diario La Tercera
journal of Santiago, on April 10, 12 and 17, 2023.
Shareholders will be able to obtain a copy of the documents
supporting the matters on which they must vote at the Share-
holders' Meetings, as of April 10, 2023, on the Company's web-
site, www.latamairlinesgroup.net. In addition, any shareholder
wishing to obtain a copy of these documents may contact,
also as of April 10, 2023, the Company's Investor Relations
Department at the following e-mail address InvestorRela-
tions@latam.com or by telephone at (56-2) 2565-8785, for
such purpose. Among such documents, information on the
alternatives of external auditing firms to be proposed to the
Ordinary Shareholders' Meeting for financial year 2023 and
their respective rationale will be available.
Santiago, May 3, 2023
OTHERS
In accordance with the provisions of Article 9 and item two of
Article 10 of Law No. 18,045, and the provisions of General
Standard No. 30, duly authorized by the Board of Directors in
its meeting held on this same date, it informed the Financial
Market Commission (the "Commission"), as a MATERIAL EVENT
of LATAM Airlines Group S.A. ("LATAM" or the "Company"), of
the following:
• As informed by a material fact dated December 15, 2022,
on November 3, 2022, LATAM emerged from its reorgani-
zation proceeding in the United States of America pursuant
to the rules set forth in Chapter 11 of Title 11 of the United
States Code (the "Chapter 11 Proceeding"). Notwithstanding
the foregoing, certain provisions of Chapter 11 of Title 11 of
the United States Code still impose certain obligations on the
Company. One of these obligations is to issue as part of the
closing of the Chapter 11 proceeding, on a quarterly basis,
reports called "Post Confirmation Reports" ("PCR").
• By virtue of the foregoing, we hereby make available to your
Commission and to the market in general, the quarterly PCR
for the year ended March 31, 2023, which was issued today
together with the annual financial statements and which is
included herein as an Annex.
• The PCR does not in any way replace the financial information
that the Company regularly delivers pursuant to applicable
securities rules and/or regulation and has been prepared solely
for the purpose of complying with the post-exit obligations of
the Chapter 11 Proceeding. Notwithstanding the foregoing, this
financial information does not constitute or replace in any way
the delivery of the corresponding financial statements to the
Commission and the market, in terms of content requirements,
procedures and filing deadlines established by said Service in
current regulation.
Consequently, and without prejudice to the other limitations
set forth in the PCR, we declare that the information contained
in this report, made exclusively to comply with the obligations
following the exit of the Chapter 11 Procedure, is unaudited,
limited in scope and covers a restricted period. Therefore, said
information is subject to material changes as the corresponding
quarter progresses and in accordance with the regular processes
for the preparation of quarterly financial statements, including
limited review by the external auditors, when applicable.
Santiago, August 2, 2023
OTHERS
In accordance with the provisions of Article 9 and item two of
Article 10 of Law No. 18,045, and the provisions of General
Standard No. 30, duly authorized by the Board of Directors in
its meeting held on this same date, it informed the Financial
Market Commission (the "Commission"), as a MATERIAL EVENT
of LATAM Airlines Group S.A. ("LATAM" or the "Company"), of
the following:
• As informed by a material fact dated December 15, 2022,
on November 3, 2022, LATAM emerged from its reorgani-
zation proceeding in the United States of America pursuant
to the rules set forth in Chapter 11 of Title 11 of the United
States Code (the "Chapter 11 Proceeding"). Notwithstanding
the foregoing, certain provisions of Chapter 11 of Title 11 of
the United States Code still impose certain obligations on the
Company. One of these obligations is to issue as part of the
closing of the Chapter 11 proceeding, on a quarterly basis,
reports called "Post Confirmation Reports" ("PCR").
• On June 29, 2023, following the substantial resolution of the
remaining issues in the Chapter 11 Proceeding and all appeals
from the Confirmation Order, the Bankruptcy Court issued the
final decree in the Chapter 11 Proceeding and ordered the case
closed (the "Closing Date").
• By virtue of the foregoing, we hereby make available to your
Commission and to the market in general, the last PCR with
partial information up to the Closing Date which, together with
140
the quarterly financial statements up to June 20, 2023, was
issued today and is included herein as an Annex.
• The PCR does not in any way replace the financial information
that the Company regularly delivers pursuant to applicable
securities and/or regulatory standards and has been prepared
solely for the purpose of complying with the post-exit obli-
gations of the Chapter 11 Proceeding. Notwithstanding the
foregoing, this financial information does not constitute or
replace in any way the delivery of the corresponding financial
statements to the Commission and the market, in terms of
content requirements, procedures and filing deadlines estab-
lished by said Service in current regulation.
Consequently, and without prejudice to the other limitations
set forth in the PCR, we declare that the information contained
in this report, made exclusively to comply with the obligations
following the exit of the Chapter 11 Procedure, is unaudited,
limited in scope and covers a restricted period. Therefore, such
information is subject to and qualified by what is stated in our
quarterly financial statements up to June 30, 2023, disclosed
on this same date, including the limited review of the external
auditors where applicable.
ANNUAL REPORT 2023 11 —Annexes —Our business
Risk factors
NCG 461: 3.6 RISK MANAGEMENT
GRI 3-3
The following risk factors, and those important risk factors
described in other reports we submit to or file with the Securi-
ties 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 order to assess the risks outlined in the risk factors, we
have a comprehensive risk model that encompasses various
aspects of our business and it is reviewed quarterly. This risk
model serves as a framework to identify, assess, and mitigate
potential risks that may impact our organization. We under-
stand that risk landscapes evolve, and therefore, we conduct
continuous reviews of our risk model to ensure its relevance
and effectiveness in addressing emerging risks.
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 those
described below.
Risk Factors Summary
The following is a summary of the principal risks that could
adversely affect our business, operations and financial results.
Risks Relating to our Business
• High levels of competition in the airline industry and the
consolidation or mergers of competitors in the markets in
which the group operates, may adversely affect the level of
operations.
• Some of our competitors may receive external support, which
could adversely impact our competitive position.
• We rely on maintaining a high aircraft utilization rate to in-
crease our revenues and absorb our fixed costs, which makes
us especially vulnerable to delays.
• Problems with air traffic control systems or other technical
failures could interrupt our operations and have a material
adverse effect on our business.
• The group’s business and results of operations may be ad-
versely affected if we fail to obtain and maintain routes, suit-
able airport access, slots and other operating permits.
• Our operations are subject to fluctuations in the supply and
cost of jet fuel, which could adversely impact our business.
• Losses and liabilities in the event of an accident involving one
or more of our aircraft could materially affect our business.
• It cannot be assured that in the future we will have access
to adequate facilities and landing rights necessary to achieve
our expansion plans.
• We are exposed to increases in landing fees and other airport
service charges that could adversely affect our margin and
competitive position.
• Prolonged technical and operational issues with the airport
infrastructure in cities where we have a significant presence
may have a material adverse effect on our operations.
• The group depends on strategic alliances or commercial re-
lationships in many different countries, and the business may
suffer if any of our strategic alliances or commercial relation-
ships terminates.
• A significant portion of our cargo revenue comes from rel-
atively few product types and may be impacted by events
affecting their production, trade or demand.
• 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.
• A failure to successfully implement the group’s strategy or
a failure to adjust such strategy to the current economic sit-
uation would harm the group’s business and the market value
of our ADSs and common shares.
• An accumulation of ticket refunds could have an adverse
effect on our financial results.
• 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.
• LATAM may experience difficulty finding, training and retain-
ing employees, which can lead to increased costs and impair
our ability to execute strategy and implement operational
initiatives.
• Increases in insurance costs and/or significant reductions
in coverage could harm our financial condition and results of
operations.
• The impacts of a pandemic and the efforts to mitigate the
spread of a virus may adversely impact the group’s business,
operations and financial results.
• 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, which may adversely affect our business and
reputation.
• If we lose senior management and other key employees and
they are not replaced by individuals with comparable skills, or
we otherwise fail to maintain our company culture, our busi-
ness and results of operations could be materially adversely
affected.
• Our business may experience adverse consequences if we are
unable to reach satisfactory collective bargaining agreements
with unionized employees. Collective action by employees
could cause operating disruptions and adversely impact our
business.
• Increases in our labor costs, which constitute a substantial
portion of our total operating expenses, could directly impact
our earnings.
Risks Relating to the Airline Industry and the Countries in
Which We Operate
• We face reputational risks related to the use of social media.
Safety & Operational Risks
• We depend on a limited number of suppliers for certain air-
craft and engine parts. LATAM flies and depends on Airbus and
Boeing aircraft, and our business could be adversely affected if
we do not receive timely deliveries of aircraft, if aircraft from
these suppliers become unavailable or if the public develops
a negative perception of the aircraft we use in our operations.
• Because our performance is heavily dependent on economic
conditions in the countries in which the group does business,
negative economic conditions in those countries could ad-
versely impact the group’s business and results of operations
and cause the market price of our common shares and ADSs
to decrease.
• Latin American governments have exercised and continue to
exercise significant influence over their economies.
• Political instability and social unrest in Latin America may
141
ANNUAL REPORT 2023 11 —Annexes —Our business
adversely affect our business.
generate risks in implementation and regulatory control.
withholding taxes could negatively affect non-Chilean residents
that invest in our shares.
• Because 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.
• Our financial results are exposed to foreign currency fluc-
tuations.
Environmental and Regulatory Risks
• Our reputation and brand could be adversely impacted if
we fail to make progress towards achieving our environmen-
tal sustainability and diversity, equity and inclusion goals.
Our operations are subject to local, national and international
environmental regulations; costs of compliance with applica-
ble regulations, or the consequences of noncompliance, could
adversely affect our results, our business or our reputation.
• Our business may be adversely affected by the consequences
of climate change.
• The business is highly regulated and changes in the regulatory
environment in the different countries may adversely affect
our business and results of operations.
• We are 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 we operate. Violations of any such laws or regulations
could have a material adverse impact on our reputation and
results of operations and financial condition.
• Our reputation and brand could be adversely impacted if we
fail to make progress towards achieving our environmental
sustainability and diversity, equity and inclusion goals.
• Our ADS holders may not be able to exercise preemptive
rights in certain circumstances.
Risks Related to our Indebtedness
• We have substantial liquidity needs and continue to pursue
various financing options. Our business may be adversely af-
fected if we are unable to service our debt or meet our future
financing requirements.
• We are not required to disclose as much information to in-
vestors 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.
Risks Relating to our Business
• We have significant exposure to SOFR and other floating
interest rates; increases in interest rates will increase our fi-
nancing cost and may have adverse effects on our financial
condition and results of operations.
High levels of competition in the airline industry and the
consolidation or mergers of competitors in the markets in
which the group operates, may adversely affect the level of
operations.
• Our debt agreements contain various affirmative, negative
and financial covenants, which could limit our ability to con-
duct our business. A breach of certain negative covenants
could also trigger an event of default and acceleration of our
indebtedness.
Risks Relating to our Common shares and ADRs
• Our major shareholders may have interests that differ from
those of ADRs holders.
• Holders of ADRs may be adversely affected by the substan-
tial dilution of the shares represented by ADRs.
• Trading of our ADSs and common shares in the securities
markets is limited and could experience further illiquidity and
price volatility.
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, and the potential
implementation of aggressive pricing strategies by compet-
itors. Airlines compete primarily over fare levels, frequency
and dependability of service, brand recognition, passenger
amenities (such as frequent flyer programs) and the availabil-
ity 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. For more
information regarding our main competitors, see “Item 4. In-
formation of the Company—Business Overview—Passenger
Operations-International Passenger Operations” and “Item 4.
Information of the Company—Business Overview—Passenger
Operations—Business Model for Domestic Operations”.
Low-cost carriers have an important impact on the industry’s
• We are subject to risks relating to litigation and administra-
tive proceedings that could adversely affect the business and
financial performance in the event of an unfavorable ruling.
• Holders of ADRs may be adversely affected by currency
devaluations and foreign exchange fluctuations.
• Rapid technological advancements and digitalization could
• Future changes in Chilean foreign investment controls and
142
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 legacy carriers 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, Sky Airline and JetSmart are main competitors
in the Chilean and Peruvian markets and both have low-cost
business models. Moreover, the COVID-19 pandemic has
prompted changes in business models, with Avianca transition-
ing to a low-cost model. Additionally, some of these airlines
have pursued strategies of consolidation through alliances or
mergers with legacy carriers. Examples include the creation
of Abra Group (Avianca and Gol) and the recent approval by
relevant authorities for American Airlines to acquire a minority
stake in JetSmart.
In the Cargo business, companies such as Maersk, CMA CGM
and MSC have begun to compete in air transportation, in part
due to the COVID-19 pandemic and the scarcity of containers;
CMA CGM and Air France-KLM airlines agreed to share cargo
space in their airplanes; and American Airlines Cargo and Web
Cargo have partnered to increase their destinations. These
consolidations, mergers or new alliances might continue to
appear, increasing the concentration and levels of competition.
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 ven-
tures, 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.
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. The
group may not be able to obtain those approvals, while other
ANNUAL REPORT 2023 11 —Annexes —Our business
competitors might be approved. Accordingly, we might not
be able to compete for the same routes as our competitors,
which could diminish our market share and adversely impact
our financial results. No assurances can be given as to any
benefits, if any, that we may derive from such agreements.
Some of our competitors may receive external support, which
could adversely impact our competitive position.
Some of our competitors may receive support from external
sources, such as their national governments, which may be
unavailable to us. Support may include, among others, sub-
sidies, 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. Ad-
ditionally, during the COVID-19 pandemic, some competitors
on long-haul routes (such as American Airlines, Delta Airlines,
Southwest, United and Airfrance-KLM) received government
support. This support could place us at a competitive disad-
vantage and adversely affect our business, financial condition
and results of operations
The group’s business and results of operations may be adverse-
ly affected if we fail to obtain and maintain routes, suitable
airport access, slots and other operating permits.
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
143
markets or under bilateral agreements; or
• the inability to maintain our existing slots and obtain addi-
tional 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. See “Item 4. Information on the
Company—Business Overview—Regulation.”
There can be no assurance that existing bilateral agreements
with the countries in which the group’s companies are based
and permits from foreign governments will continue to be in
effect. A modification, suspension or revocation of one or more
bilateral agreements could have a material adverse effect on
our business, financial condition and results of operations. The
suspension of our permission to operate at certain airports,
destinations or slots, or the imposition of other sanctions could
also have a material adverse effect on our business. 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.
It cannot be assured that in the future we will have access to
adequate facilities and landing rights necessary to achieve
our expansion plans.
Certain airports that we currently serve or plan to serve in
the future may have capacity constraints and impose various
restrictions. These restrictions include limitations on takeoff
and landing slots during specific periods of the day and re-
strictions on aircraft noise levels. We cannot guarantee that
our group will be able to secure an adequate number of slots,
gates, and other facilities at airports to expand our services in
line with our growth strategy. Additionally, airports that are
currently not subject to capacity constraints may face such
constraints in the future.
Furthermore, airlines must use their slots regularly and prompt-
ly, or they risk losing them to other carriers. If slots or other
airport resources are unavailable or restricted in any way, we
may need to modify schedules, alter routes, or reduce aircraft
utilization. It is also possible that aviation authorities in the
countries where our group operates may change the rules for
assigning takeoff and landing slots. An example of this is the
São Paulo airport (Congonhas), where slots previously operated
by Avianca Brazil were reassigned primarily to Azul in 2019,
after the Agência Nacional de Aviação Civil in Brazil (ANAC)
approved new rules for slot distribution. Likewise, on June 7,
2022, ANAC passed Resolution No. 682, by which the ANAC
approved new regulation for airport coordination and defined
the rules for allocating and monitoring the use of airport infra-
structure through the use of slots (e.g., coordination of arrival
and departure times) at coordinated airports. It also updated
the parameters applicable to the airports of Congonhas, Gua-
rulhos (Governador André Franco Montoro International Air-
port), Rio de Janeiro (Santos Dumont Airport), Recife (Gilberto
Freyre International Airport) and Pampulha (Carlos Drummond
de Andrade Airport). The occurrence of any of these scenarios
involving LATAM operations could have a negative financial
impact on our business.
Moreover, we cannot guarantee that airports without current
restrictions will not implement restrictions in the future, or
that existing restrictions will not become more burdensome.
These restrictions may limit our ability to continue providing
services or expanding our operations at these airports.
The group depends on strategic alliances or commercial rela-
tionships in many different countries, and the business may
suffer if any of our strategic alliances or commercial relation-
ships terminates.
We maintain a number of alliances and other commercial rela-
tionships 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.
A failure to successfully implement the group’s strategy or a
failure to adjust such strategy to the current economic situ-
ation 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 re-
turns 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 passenger segmentation and fare unbundling, allowing air
travel to be accessible to a wider audience and, with a special
focus on those who wish to fly more frequently and those
seeking a premium service. This model requires continued
cost reduction efforts and increasing revenues from ancillary
activities. In connection with these efforts, the group 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.
ANNUAL REPORT 2023
11 —Annexes —Our business
LATAM may experience difficulty finding, training and retain-
ing employees, which can lead to increased costs and impair
our ability to execute strategy and implement operational
initiatives.
The airline industry is labor intensive. We employ a large number
of pilots, flight attendants, maintenance technicians and other
operating and administrative personnel, such as specialized
technology personnel. The airline industry has, from time to
time, experienced a shortage of qualified personnel, especial-
ly pilots and maintenance technicians, which has somewhat
intensified during the recovery phase of air traffic following
the peak of the pandemic. Should turnover of employees,
particularly pilots and maintenance technicians, sharply in-
crease, 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. A loss of key personnel
or material erosion of employee morale could impair the abil-
ity to execute strategy and implement operational initiatives,
thereby adversely affecting the group.
If we lose senior management and other key employees and
they are not replaced by individuals with comparable skills, or
we otherwise fail to maintain our company culture, our busi-
ness and results of operations could be materially adversely
affected.
tional qualified senior management and other key personnel
as needed in the future.
Our business may experience adverse consequences if we are
unable to reach satisfactory collective bargaining agreements
with unionized employees. Collective action by employees
could cause operating disruptions and adversely impact our
business.
As of December 31, 2023, approximately 45% 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 agree-
ments 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. For further information regarding the unions
representing employees in each country in which the group
operates and where we have established collective bargaining
agreements, see “Item 6. Directors, Senior Management and
Employees—Employees—Labor Relations.”
Certain employee groups such as pilots, flight attendants, me-
chanics 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.
We are dependent on the experience and industry knowledge
of our officers and other key employees to design and execute
our business plans. If we experience a substantial turnover in
our leadership and other key employees and we are not able
to replace these persons with individuals with comparable
skills, or we otherwise fail to maintain our company culture,
our performance could be materially adversely impacted.
Furthermore, we may be unable to attract and retain addi-
A strike, work interruption or stoppage or any prolonged dis-
pute with employees who are represented by any of these
unions could have an adverse impact on operations. These
risks are typically exacerbated during periods of 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.
On October 6, 2023, the unionized air traffic controllers affiliated
with the Chilean College of Air Traffic Controllers (Colegio de
Controladores de Tránsito Aéreo, ATC) held a partial nationwide
strike to demand several concessions from national authorities.
The strike lasted 2 days and affected only domestic flights at
Arturo Merino Benitez Airport in Chile.
On October 3, 2023 airport employees at Governador André
Franco Montoro International Airport, in Guarulhos, Brazil,
protested against the ban on the use of cell phones in loading
and unloading areas during working hours. This event caused
delays in LATAM Airlines Brazil’s domestic flights which also
impacted on the group’s international operations. However, this
event lasted 2 days, after which we took mitigation actions
(such as changes of date, flight, rerouting and destinations) to
regularize our operations.
Although LATAM has established protocols to contain these
type of situations, there is no guarantee that we will be able
to reach a mutually beneficial agreement in the event of any
future disagreements with our employees and unions.
We rely on maintaining a high aircraft utilization rate to in-
crease 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 main-
tenance 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.
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 37.2%
of our total costs of sales in 2023. For additional information,
see “Item 11. Quantitative and Qualitative Disclosures about
Market Risk—Risk of Fluctuations in Fuel Prices.” 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 circum-
stances 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
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ANNUAL REPORT 2023 11 —Annexes —Our business
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. See “Item 11. Quantitative and Qualitative
Disclosures About Market Risk—Risk of Fluctuations in Fuel
Prices.”
We are exposed to increases in landing fees and other airport
service charges that could adversely affect our margins and
competitive position.
The group must pay fees to airport operators for the use of
their facilities. Any substantial increase in airport charges, in-
cluding 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 tax-
es 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.
A significant portion of our cargo revenue comes from relatively
few product types and may be impacted by events affecting
their production, trade or demand.
The group’s cargo demand, especially from Latin American
exporters, is concentrated in a small number of product cat-
egories, such as exports of fish, shell fish and fruit from Chile,
asparagus from Peru and fresh flowers from Ecuador and Co-
lombia. 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 vol-
umes could be impacted by the appreciation or depreciation
of local currencies.
Increases in insurance costs and/or significant reductions in
coverage could harm our financial condition and results of
operations.
An accumulation of ticket refunds could have an adverse ef-
fect on our financial results.
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, LATAM
has agreements with financial institutions that process cus-
tomer credit card transactions for the sale of air travel and
other services. Under certain of LATAM’s credit card processing
agreements, the financial institutions in certain circumstances
have the right to require that LATAM maintain a reserve equal
to a portion of advance ticket sales that have been processed
by that financial institution, but for which LATAM has not yet
provided the service (i.e., 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 LATAM 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 col-
lateral with the credit card companies for advance ticket sales.
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 3 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.
Significant events affecting the aviation insurance industry
(such as terrorist attacks, airline crashes or accidents and
health epidemics and the related widespread government-im-
posed 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.
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 (14.9%% in 2023) 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.
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 in-
terested 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 LAT-
AM’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 on LATAM’s behalf to abide by appli-
cable 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.
Safety & Operational Risks
We depend on a limited number of suppliers for certain air-
craft and engine parts. LATAM flies and depends on Airbus
and Boeing aircraft, and our business could be adversely
affected if we do not receive timely deliveries of aircraft, if
aircraft from these suppliers become unavailable or if the
public develops a negative perception of the aircraft we use
in our operations.
We depend on a limited number of suppliers for aircraft, air-
craft engines and many aircraft and engine parts. As a result,
we are vulnerable to problems associated with the supply of
those aircraft, parts and engines, including design defects,
mechanical problems, contractual performance by the suppli-
ers, or adverse perception by the public that would result in
unscheduled maintenance requirements, in customer avoid-
ance or in actions by the aviation authorities resulting in an
inability to operate our aircraft. During the year 2023, LATAM
Airlines 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.
As of December 31, 2023, LATAM Group had a total fleet of
256 Airbus and 77 Boeing aircraft (38 of these aircraft are
non-current assets classified as held 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
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ANNUAL REPORT 2023 11 —Annexes —Our business
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.
The COVID-19 pandemic and its impact on the aviation indus-
try, along with the subsequent global supply chain challenges
faced by manufacturers and distributors, resulted in a wide-
spread shortage of aircraft and delays in scheduled deliveries.
Consequently, the waiting period for obtaining new aircraft as
well as the time between a new order and its delivery became
longer, affecting both Airbus and Boeing, as well as LATAM.
On July 25, 2023, Pratt & Whitney disclosed a powder metal
contamination issue affecting PW1100 GTF engines, which
power Airbus Neo Family aircraft. Pratt & Whitney also dis-
closed that they had designed a plan to remove and inspect
those engines. As of December 31, 2023, LATAM group reported
31 Airbus Neo family aircraft within its fleet (approximately
9% of the total fleet). The total number of AOG (Aircraft on
Ground) affecting LATAM group’s operations is a fraction of
this number and will depend on the turnaround time of the
shop inspection and engine repair, and the level of cycles that
the engines have. While we do not yet know the full impact of
these operational disruptions resulting from engine shortages
from Pratt & Whitney, potential reduction of air traffic could
have an adverse effect on our business, result of operations
and financial condition. Our business could also be materially
adversely affected if the passengers avoid flying on our air-
craft due to an adverse perception of aircraft manufacturing,
whether because of safety concerns or other problems, real or
perceived, or in the event of an accident involving such aircraft
or its engines.
The occurrence of any one or more of the above mentioned
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
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, in-
cluding 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 au-
thorities 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.
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; and
• 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 when comprehensively 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.
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 truck entered the runway while
performing an emergency drill and collided with its aircraft.
Authorities subsequently confirmed fatalities of three fire-
fighters who were in the fire truck that struck the aircraft.
There were no fatalities among the 102 passengers and 6
crew members of the aircraft. According to the final report of
the Aviation Accidents Investigation Commission (Comisión
de Investigación de Accidentes de Aviación, “CIAA”) issued in
September 2023, this chain of events was originated by the
airport operator's inadequate planning and coordination, as
well as the failure to use the communication and International
Civil Aviation Organization (“ICAO”) standardized phraseology.
The aircraft damage from this event was covered by LATAM’s
insurance policies.
Prolonged technical and operational problems with the airport
infrastructure in cities where we have a significant presence
may have a material adverse effect on our operations.
Our operations and growth strategy are dependent on the fa-
cilities and infrastructure of key airports, including Santiago’s
International Airport, São Paulo’s Guarulhos International and
Congonhas Airports, Brasilia’s International Airport, Bogota's
El Dorado International Airport, and Lima’s Jorge Chavez In-
ternational Airport.
Santiago’s International Airport opened its new Internation-
al Terminal, called Terminal 2, at the end of February 2022.
The new terminal reduced assisted check-in counters by 50%,
which poses a challenge to the airlines as it obligates them
to implement self-service models. Additionally, Terminal 1 is
currently undergoing a remodeling plan for the national termi-
nal, which is being carried out in two phases (east and west).
During the initial phase, LATAM has effectively maintained
and concentrated operations in the east sector, utilizing the
existing facilities. However, in August 2024, the concessionaire
will start with the second phase of the remodeling, and the
entire operation of the national terminal will be shifted to the
west sector, resulting in significant impact on LATAM’s use of
the facilities. The completion of this phase and the entire re-
modeling project is scheduled to be finalized by August 2025.
Furthermore, due to the previous airport concessions provid-
ed by the Chilean government in 2019, there are two airports
currently under 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 the first half
2024 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 construction work during
2024 and 2026: Balmaceda Airport, Calama Airport, La Florida
International Airport and Presidente Carlos Ibáñez del Campo
International Airport.
In Peru, the Jorge Chávez International Airport in Lima has a
limited growth capacity on the air side (including the runway
and apron, as well as parking spaces), and faces challenges
relating to the interior infrastructure of the airport, which is
overly crowded. The airport concessionaire is currently in the
process of building a second runway and a new terminal to be
completed at the end of 2024. 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.
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ANNUAL REPORT 2023 11 —Annexes —Our business
On the other hand, Jaén Airport and Jauja Airport in Perú have
experienced significant runway infrastructure issues, resulting
in severe operational challenges and flight cancellations. Urgent
intervention was requested to the Peruvian government in 2023
to address these needs and rectify these problems, in order
to ensure the efficient and safe functioning of air operations.
Brazilian airports, such as the Brasília 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 2022, under the state government airport concession pro-
gram in Brazil (the “Concession Program”), 15 airports in Brazil
were granted under new concessions, 8 of those airports are
operated by LATAM, including the Congonhas Airport located
at downtown São Paulo. The Concession Program allows for
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 Bra-
zil will undergo infrastructure improvement works, which may
generate temporary restrictions and could affect our revenues.
In 2023, after two years of delay due to the COVID-19 pan-
demic, GRU Airport, the concessionaire of Guarulhos Airport,
began the last phase of infrastructure expansion works, in-
cluding the construction of a new fast exit on the main runway
and a new taxiway. In addition, there are plans to build a new
pier and expand of the apron, which are expected to be com-
pleted by 2025. These developments will facilitate an increase
in operations at the country's busiest airport.
While LATAM is closely coordinating with and supporting the
airport concessionaires, any delays on the completion of the
ongoing remodeling or expansion works of any of the airports
indicated above would materially adversely affect our oper-
ations.
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, weath-
er 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 geo-
political tensions and hostilities in connection with the conflict
in Ukraine, and in the Middle East, 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.
Following a terrorist attack by Hamas in the Gaza strip on Oc-
tober 7, 2023, Israel declared war on Hamas and other terrorist
organizations in Gaza. The military conflict is ongoing, and
its length and outcome are highly unpredictable. The Israel
conflict and 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 af-
fect 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 timelines 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 reduc-
ing profitability. For example, in 2022, a LATAM aircraft was
severely damaged after flying through stormy weather on
approach to Asuncion Airport in Paraguay, and was required
to make an emergency landing. Increases in the frequency,
severity or duration of thunderstorms, hurricanes, typhoons,
floods or other severe weather events, including from chang-
es in the global climate and rising global temperatures, could
result in increases in delays and cancellations, turbulence-re-
lated injuries and fuel consumption to avoid such weather, any
of which could result in loss of revenue and higher costs. For
example, in October 2023, there were significant delays and
cancellations due to strong weather conditions in Guarulhos
airport, Brazil. Likewise, in February, 2024, forest fires in Chile
affecting the Valparaiso Region and La Araucanía Region im-
pacted LATAM’s operations at the Arturo Merino Benitez In-
ternational Airport and at La Araucanía International Airport,
respectively, delaying flights and increasing operational costs
derived from certain commercial flexibility measures granted
to passengers affected by the fires.
In addition, fuel prices and supplies, which constitute a signifi-
cant cost for us, may increase as a result of any future terrorist
attacks, a general increase in hostilities or a reduction in out-
put 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.
The impacts of a pandemic and the efforts to mitigate the
spread of a virus may adversely impact the group’s business,
operations and financial results.
A pandemic, such as COVID-19, and its variants may negatively
affect global economic conditions, disrupt supply chains and
negatively affect aircraft manufacturing operations and reduce
the availability of aircraft spare parts.
There is a possibility of changes in consumer behavior in
the medium and long term as a result of a pandemic and
its variants that may generate adverse financial impacts for
LATAM. The COVID-19 pandemic and the accompanying fear
of widespread outbreaks of communicable diseases materially
reduced the demand for and availability of air travel around
the world, materially affecting our business, operations and
financial performance.
By the end of 2023, our operations in domestic markets were
fully recovered, while the international segment is expected
to recover during the first quarter of 2024. LATAM corporate
segment is close to reaching pre-pandemic RPK levels. Nev-
ertheless, we cannot assure that a new pandemic or any of its
variants will not affect the business in the future.
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, which may adversely affect our business and
reputation.
A serious internal technology error, failure, or cybersecurity
incident impacting systems hosted internally at our data cen-
ters, 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 fail-
ures, computer viruses, cyber-attacks, security breaches in
the supply chain (suppliers) and other security issues. These
systems include our computerized airline reservation system,
flight operations system, telecommunications systems, web-
site, customer, self-service applications (“apps”), maintenance
systems, check-in kiosks, in-flight entertainment systems and
data centers.
Furthermore, in light of the rise of generative Artificial Intelli-
gence technology (AI), generative AI systems have the potential
to create deceptive or harmful content, such as deep fakes or
fake news, leading to misinformation and manipulation. The
misuse or malicious intent of generative AI could pose a threat
to our operations and reputation.
In addition, as a part of our ordinary business operations, we
collect and store sensitive data, including personal informa-
tion of our customers and employees and information of our
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ANNUAL REPORT 2023 11 —Annexes —Our business
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 compro-
mise information security. The compromise of our technology
systems resulting in the loss, disclosure, misappropriation of,
or access to, customers’, employees’ or business partners’ in-
formation 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.
To date we have not experienced any major incidents related
to cybersecurity or our information systems. Any such incident
could cause damage to our reputation and may require us to
expend substantial resources to remedy the situation, and could
therefore have a material adverse effect on our business and
results of operations. In addition, there can be no assurance
that any efforts we make to prevent these incidents will be
successful in avoiding harm to our business. See “Item 16K.
Cybersecurity.”
Risks Relating to the Airline Industry and the Countries in
Which the Group Operates
Because our performance is heavily dependent on economic
conditions in the countries in which the group does business,
negative economic conditions in those countries could ad-
versely impact the group’s business and results of operations
and cause the market price of our common shares and ADSs
to decrease.
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.
Latin American countries have historically experienced economic
instability, including uneven periods of economic growth as
well as significant downturns (e.g., periods of severe economic
recession, currency devaluation, high inflation, and political
instability). Our business has been adversely affected by these
factors and global economic recessionary conditions, which
include weak economic growth in Chile, recessions in Brazil and
Argentina, and poor economic performance in certain emerging
market countries in which the group operates.
High interest rates, inflation (in some cases substantial and
prolonged), and unemployment rates generally characterize
each economy. Because commodities such as agricultural prod-
ucts, minerals, and metals represent a significant percentage
of exports of many Latin American countries, the economies
of those countries are particularly sensitive to fluctuations
in commodity prices. Investments in the region may also be
subject to currency risks, such as restrictions on the flow of
money in and out of the country, extreme volatility relative
to the U.S. dollar, and devaluation.
Accordingly, our business, financial condition and results of
operations may be adversely affected by changes in govern-
ment policies or regulations in Latin America, including such
factors as exchange rates and exchange control policies, infla-
tion 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.
Passenger and cargo demand is heavily cyclical and highly
dependent on global and local economic growth, economic ex-
pectations and foreign exchange rate variations, among other
things. The occurrence of similar events in the future could
According to S&P, as of January 31, 2024 long term local cur-
rency ratings of the countries where LATAM group operates in
South America are as follow: Ecuador B-, Peru BBB+, Colombia
BBB-, and Chile A+, all of them with a negative outlook, while
Brazil is rated BB with a stable outlook. On the other hand, long
term foreign currency ratings of these countries are: Ecuador
B-, Peru BBB, Colombia BB+, and Chile A, all of them with a
negative outlook, while Brazil is rated BB with a stable outlook.
LATAM cannot ensure that any country will not experience
similar adverse developments in the future or 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.
Latin American governments have exercised and continue to
exercise significant influence over their economies.
Governments in Latin America frequently intervene in the
economies of their respective countries and occasionally
make significant changes in policy and regulations. Govern-
mental actions have often involved, among other measures,
nationalizations and expropriations, price controls, 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, in-
cluding 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 oversight). For ex-
ample, the Brazilian government’s actions to control inflation
and implement other policies have involved wage and price
controls, depreciation of the real, restrictions on remittance,
and intervention by the Central Bank to affect base interest
rates.
In the future, the level of intervention by Latin American gov-
ernments 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 July 2017, Brazilian 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”. However, the conviction was overturned
and his political rights restored by the Brazilian Supreme
Court. 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 protests across the
country. Luiz Inácio Lula da Silva was sworn in as president in
January 2023. We cannot predict which policies the 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 an-
nounced the dissolution of the congress and called for new
elections to be held immediately, 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. Dina Boluarte is the sixth president Peru has had
since 2018. None of her five predecessors in office managed to
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ANNUAL REPORT 2023 11 —Annexes —Our business
complete the five-year term established by the Constitution
and several former presidents are in prison or prosecuted in
judicial proceedings.
In October 2019, Chile saw significant protests associated with
economic conditions which resulted 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 intensify again, 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 pen-
sion reforms, among others. On October 25, 2020, Chile widely
approved a referendum to redraft the constitution via constitu-
tional 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 convened for
a nine-month period, 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 was held, in which the proposed consti-
tution 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” (Agree-
ment for Chile). This document marked the establishment of
a new consensus and served as foundation for redrafting the
new proposed constitution. The second proposed constitution
was finalized on October 30, 2023. On December 17, 2023, a
referendum was held, in which the proposed constitution was
rejected by a margin of 55% to 45% of voters.
Chile held presidential elections in December 2021, with left-
wing Gabriel Boric winning by a wide margin. Gabriel Boric was
sworn in as president in March 2022. There can be no assur-
ance 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.
In Ecuador, Guillermo Lasso was elected as President in 2021,
for the 2021-2025 period. On May 16, 2023, following the
media exposure of the “Encuentro Case”, which revealed
the connections between the Lasso government and certain
members of the Albanian mafia, the National Assembly ini-
tiated an impeachment process against President Lasso, for
embezzlement. However, the next day, Guillermo Lasso issued
an executive decree (Decreto Ejecutivo 741), which ordered the
dissolution of the National Assembly and called for extraor-
dinary presidential and legislative elections to complete the
period. On October 15, 2023, Daniel Noboa was elected as an
interim president of the Republic of Ecuador for a period of 18
months. He became the youngest president elected by popular
vote in the history of the country at thirty-five years of age,
and the second youngest president in the country's history.
On January 7, 2024, Adolfo Macias, the leader of a major drug
cartel in Ecuador, escaped from prison. This event revealed
strong connections between the gangs controlling the prisons
in the country and governmental officers, and caused a se-
ries of riots and violent attacks across the country, including
looting, burning vehicles, shootings, explosions and abductions
of police officers and civilians. As a consequence, on January
8, 2024, President Daniel Noboa declared a 60-day state of
emergency in an attempt to control gang violence, with the
support of the army.
On August 7, 2022, Gustavo Petro, candidate for the left-wing
“Pacto Histórico” party, was elected President of Colombia.
Although throughout history elected governments (and the
Colombian Congress) have pursued free market economic
policies, with almost no economic interventions, we cannot
predict whether the policies that could be adopted by the ad-
ministration would have a negative impact on the Colombian
economy or our business operations and financial performance.
Further, regional elections were held on October 29, 2023, to
elect governors for the 32 departments in Colombia as well
as mayors and members of the local Administrative boards
of the national territory.
On November 19, 2023, Javier Milei was elected president of
the Republic of Argentina for a period of four years. Javier Milei
is a right-wing politician and economist, who has proposed a
comprehensive overhaul of the country’s fiscal and structural
policies (among others, to dollarize the economy, privatize
state public companies, remove subsidies on public utilities
and close the Argentine Central Bank of Argentina). However,
we cannot predict if and to what degree such policies will be
implemented, nor if our operations or the legal framework
under which we operate could be affected.
reservations booked by customers and/or travel agencies via
third-party GDSs (Global Distribution Systems) may be ad-
versely 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.
Although conditions throughout Latin America vary from coun-
try 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 finan-
cial condition and results of operations.
Because 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.
As of May 1, 2023, LATAM has launched a new distribution
channel called “New Distribution Capability” (NDC) by LATAM,
which follows the International Air Transport Association’s (IATA)
modernized standard language (XML based) to transmit data.
This distribution channel is an alternative for travel agencies
across all regions where the group operates, to access our
content, and be able to shop, book, and manage orders. While
this distribution channel mitigates risks of interruption of our
services and lowers our dependency on GDS's technology, we
cannot assure that the NDC by LATAM will operate without
disruptions that may affect our 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, opera-
tion 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 main-
tenance and repairs, catering, ground services, and provision
of various utilities and performance of aircraft fueling oper-
ations, 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
The failure of any of our third-party service providers to ade-
quately perform their service obligations, or other interruptions
of services including those of NDC by LATAM, may reduce our
revenues and increase our expenses or prevent us from oper-
ating 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.
Our financial results are exposed to foreign currency fluctu-
ations.
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 curren-
cies of these various countries. Changes in the exchange rate
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ANNUAL REPORT 2023 11 —Annexes —Our business
between the U.S. dollar and the currencies in the countries in
which the group operates could adversely affect the business,
financial condition and results of operations. If the value of
the Brazilian real, Chilean peso or other currencies in which
revenues are denominated declines against the U.S. dollar, our
results of operations and financial condition will be affected.
The exchange rate of the Chilean peso, Brazilian real and other
currencies against the U.S. dollar may fluctuate significantly
in the future.
Changes in Chilean, Brazilian and other governmental economic
policies affecting foreign exchange rates could also adversely
affect the business, financial condition, results of operations
and the return to our shareholders on their common shares
or ADSs. We actively manage the Brazilian real to U.S. dollar
(R$/US$) exchange rate risk by entering into FX derivative
contracts and carrying out internal operations for obtaining
natural hedging. For further information, see “Item 11. Quan-
titative and Qualitative Disclosures About Market Risk—Risk
of Variation in Foreign Exchange Rates.”
Environmental and Regulatory Risks
Our operations are subject to local, national and international
environmental regulations; costs of compliance with applica-
ble regulations, or the consequences of noncompliance, could
adversely affect our results, our business or our reputation.
LATAM’s operations are affected by environmental regulations
at local, national and international levels. These regulations
cover, among other things, emissions to the atmosphere, dis-
posal 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 regula-
tions 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 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 in-
ternational 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, report-
ing 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 sustainabil-
ity 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 (Sustainable Aviation Fuel) with local
governments and the lean fuel program which seeks to improve
fuel efficiency. 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 max-
imum 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 emis-
sions in the countries that the group has 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 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 from different countries to contribute
to the fight against climate change, there is a tendency to im-
pose 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 opportu-
nity to work hand in hand with the relevant governments to
implement public policies allowing for progress in the produc-
tion 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 (desti-
nations, airports) and communities. As a consequence, it may
be necessary to modify routes and destinations, which in turn
may affect our business and results of operations.
The business is highly regulated and changes in the regulatory
environment in the different countries may adversely affect
our business and results of operations.
scope of our operations and our growth plans. The possible
failure of aviation authorities to maintain the required govern-
mental 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:
• interest rates;
• currency fluctuations;
• monetary policies;
• inflation;
• liquidity of capital and lending markets;
• tax and social security policies;
• labor regulations;
• energy and water shortages and rationing; and
• other political, social and economic developments in or
affecting Brazil, Chile, Peru, and the United States, among
others.
For example, the Brazilian federal government has frequently
intervened in the domestic economy and made drastic changes
in policy and regulations to control inflation and affect other
policies and regulations. This has required the federal gov-
ernment 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.
Our business is highly regulated and depends substantially
upon the regulatory environment in the countries in which
the group operates or intends to operate. For example, price
controls on fares may limit our ability to effectively apply
customer segmentation profit maximization techniques (“pas-
senger revenue management”) and adjust prices to reflect cost
pressures. High levels of government regulation may limit the
Uncertainty over whether the Brazilian federal government
will implement changes in policy or regulation affecting these
or other factors may contribute to economic uncertainty in
Brazil and to heightened volatility in the Brazilian securities
markets and securities issued abroad by Brazilian companies.
These and other developments in the Brazilian economy and
governmental policies may adversely affect us and our busi-
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ANNUAL REPORT 2023 11 —Annexes —Our business
ness and results of operations and may adversely affect the
trading price of our common shares and ADSs.
We are also subject to international bilateral air transport
agreements that provide for the exchange of air traffic rights
between the countries where the group operates, and we must
obtain permission from the applicable foreign governments to
provide service to foreign destinations. There can be no assur-
ance 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. Cer-
tain 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, finan-
cial 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 au-
thorizations at certain high-density airports or the imposition
of other sanctions could also have a negative impact on our
business. We cannot be certain that a change in ownership or
effective control or in a foreign government’s administration
of current laws and regulations or the adoption of new laws
and regulations will not have a material adverse effect on our
business, financial condition and results of operations.
We are 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 we operate. Violations of any such laws or regulations
could have a material adverse impact on our reputation and
results of operations and financial condition.
policies and procedures will be sufficient to prevent or detect
all inappropriate practices, fraud or violations of law by af-
filiates, 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.
We are subject to risks relating to litigation and administra-
tive proceedings that could adversely affect our 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 po-
tential 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. For further information,
see “Item 8. Financial Information—Legal and Arbitration Pro-
ceedings” and Note 30 to our audited consolidated financial
statements included in this report.
Rapid technological advancements and digitalization could
generate risks in implementation and regulatory control.
We are subject to anti-corruption, anti-bribery, anti-money
laundering, antitrust and other international laws and regu-
lations 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, indi-
viduals and entities. There can be no assurance that internal
Globally, there have been large advances in processes of digi-
tization and technological innovation. These new technologies
could generate new risks in their implementation that could
impact us directly or indirectly. As an example, at the begin-
ning 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 Federal Aviation Administration
(“FAA”) on the specific requirements for its implementation.
Additionally, during the course of 2023, while the widespread
adoption and growth of Generative Artificial Intelligence sys-
tems demonstrated significant innovation and advancement
in our operations, they could present certain risks that would
likely require a regulatory framework to effectively address
them. While LATAM is working on internal policies to regulate
the use of these technologies, all processes of digitization and
technological innovation may be exposed to risks, or may need
to adjust to comply with future regulatory frameworks.
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.
Our reputation and brand could be adversely impacted if we
fail to make progress towards achieving our environmental
sustainability and diversity, equity and inclusion goals.
Our reputation and brand could also be adversely impacted
by, among other things, failure to make progress toward and
achieve our environmental sustainability and diversity, equity
and inclusion goals, as well as public pressure from investors or
policy groups to change our policies or negative public perception
of the environmental impact of air travel. For example, we have
established ambitious goals to reduce our carbon emissions,
with the long-term goal to be net-zero carbon emissions by
2050. Achieving these ambitious goals will require significant
capital investment from manufacturers and other stakehold-
ers, as we are unable to achieve these goals using our existing
fleet, current technologies and available fuel sources. We are
continuing to develop our climate strategy and transition plan;
however, our ability to execute on such a plan is subject to
substantial risks and uncertainties, as it is dependent on the
actions of governments and third parties and will require, among
other things, significant capital investment, including from
third parties, research and development from manufacturers
and other stakeholders, along with government policies and
incentives to reduce the cost, and incent production of tech-
nologies that are not available at scale. Significant damage to
our reputation and brand could have a material adverse effect
on our business and financial results, including as a result of
litigation related to any of these matters.
Risks Related to Our Indebtedness
We have substantial liquidity needs and continue to pursue
various financing options. Our business may be adversely af-
fected if we are unable to service our debt or meet our future
financing requirements.
We have a high degree of debt and payment obligations un-
der our aircraft leases and financial debt arrangements. We
require significant amounts of financing to meet our aircraft
capital requirements and may require additional financing to
fund our other business needs. We cannot guarantee that we
will have access to or be able to arrange for financing in the
future on favorable terms. Higher financing costs could affect
our ability to expand or renew our fleet, which in turn could
adversely affect our business.
In addition, a substantial portion of our property and equip-
ment is subject to liens securing our indebtedness, including
our 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 prop-
erty and equipment to fulfill our operational needs and thus
generate revenue. For further information, related to current
contractual obligations, see “Item 5. Operating and Financial
Review and Prospects—Contractual Obligations—Long Term
Indebtedness”.
Moreover, external conditions in the financial and credit mar-
kets 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
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ANNUAL REPORT 2023 11 —Annexes —Our business
of funding or cause an increase in our funding costs include
global macro-economic crises, reductions in our credit rating or
in that of our issuances, and other potential market disruptions.
We have significant exposure to 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 regulated LI-
BOR) announced that it intended 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 LIBOR
to a more robust reference rate, its recommended alternative,
the Secured Overnight Financing Rate ("SOFR"). Although the
adoption of SOFR was voluntary, the impending discontin-
uation of LIBOR made it essential that market participants
considered moving to alternative rates such as SOFR and that
they have appropriate fallback language in existing contracts
referencing LIBOR.
Because the publication of LIBOR was discontinued on June 30,
2023, we have amended our derivative and debt contracts to
replace the LIBOR rate for SOFR as an alternative rate as con-
vened by the ARRC. 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. As of December 31, 2023, our variable
interest rate debt amounted to US$2,027 million.
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. If we are unable to adequately
adjust our prices, our revenue might not be sufficient to offset
the increased payments due under our loans and this would
adversely affect our financial condition and results of oper-
ations. In addition, there is no guarantee that SOFR or other
replacement rates for LIBOR will maintain market acceptance.
See also the discussion of interest rate risk in “Item 11. Quan-
titative and Qualitative Disclosures About Market Risks—Risk
of Fluctuations in Interest Rates.”
Our debt agreements contain various affirmative, negative
and financial covenants, which could limit our ability to con-
duct our business. A breach of certain negative covenants
could also trigger an event of default and acceleration of our
indebtedness.
Certain of our debt instruments, including our five-year term
loan facility (the “Term Loan B Facility”) and the indentures
governing our 2027 Notes and 2029 Notes, contain an asset
coverage ratio and certain limitations to the incurrence of ad-
ditional indebtedness by us and our subsidiaries. A decline in
this coverage ratio, including due to factors that are beyond our
control, could require us to post additional collateral, trigger
an increase in the annual interest rates stipulated under our
various debt instruments, or an event of default.
Complying with certain of the covenants in our debt agree-
ments and other restrictive covenants that may be contained
in any future debt agreements could limit our ability to operate
our business and to take advantage of business opportunities
that are in our long-term interest. See Note 31 of our audited
consolidated financial statements.
While the covenants in our debt agreements are subject to
important exceptions and qualifications, if we fail to comply
with them and are unable to obtain a waiver or amendment,
refinance the indebtedness subject to these covenants or take
other mitigating actions, an event of default would result. These
arrangements also contain other events of default custom-
ary for such financings. If an event of default were to occur,
the lenders or noteholders could, among other things, declare
outstanding amounts due and payable and where applicable
and subject to the terms of relevant collateral agreements,
repossess collateral, including aircraft or other valuable assets.
In addition, an event of default or acceleration of indebtedness
under one agreement could result in an event of default under
other of our debt instruments. The acceleration of significant
indebtedness could require us to seek to renegotiate, repay or
refinance the obligations under our debt arrangements, and
there is no assurance that such renegotiation or refinancing
efforts would be successful.
Risks Relating to our Common shares and ADRs
Our major shareholders may have interests that differ from
ADRs holders.
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 instruc-
tions on the voting of the common shares underlying their
ADRs, the depositary will be deemed to have been instruct-
ed 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 discretion-
ary voting right may have interests that are aligned with our
major shareholders, which may differ from those of our ADSs
holders. 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 Ig-
nacio Cueto, to serve in this role. For more information about
LATAM beneficial ownership, see “Item 7. Major Shareholders
and Related Party Transactions—Major Shareholders.
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 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 offer-
ings 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 repre-
sented by ADRs may be adversely affected by such dilution
and may experience significant fluctuation and volatility.
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 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.
Our common shares are listed on the Santiago Stock Exchange.
152
ANNUAL REPORT 2023 11 —Annexes —Our business
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, partic-
ularly other countries in Latin America. Accordingly, although
holders are entitled to withdraw the common shares under-
lying the ADSs from the depositary at any time, the ability to
sell the common shares underlying ADSs in the amount and
at the price and time of choice may be substantially limited.
This limited trading market may also increase the price vola-
tility of the ADSs or the common shares underlying the ADSs,
which could also result in price disparity between the trading
prices of the two.
Holders of ADRs may be adversely affected by currency de-
valuations 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 resi-
dents that invest in our shares.
Equity investments in Chile by non-Chilean residents have been
subject in the past to various exchange control regulations that
govern investment repatriation and earnings thereon. Although
not currently in effect, regulations of the Central Bank of Chile
have in the past imposed such exchange controls. Nevertheless,
foreign investors still have to provide the Central Bank with
information related to equity investments and must conduct
such operations within the formal exchange market. Further-
more, any changes in withholding taxes could negatively affect
non-Chilean residents that invest in our shares.
We cannot assure you that additional Chilean restrictions ap-
plicable 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. For further information,
see “Item 10. Additional Information—Exchange Controls —
Foreign Investment and Exchange Controls in Chile".
Our ADS holders may not be able to exercise preemptive rights
in certain circumstances.
As described further in “Item 10. Additional Information—Pre-
emptive Rights and Increases in Share Capital,” 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—Taxation-Chil-
ean Tax—Capital Gains.” As described further in this annual
report, the inability of holders of ADSs to exercise preemptive
rights in respect of common shares underlying their ADSs could
result in a change in their percentage ownership of common
shares following a preemptive rights offering. See “Item 10.
Additional Information—Memorandum and Articles of Asso-
ciation—Preemptive Rights and Increases in Share Capital,” 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 entered into on
November 10, 2022 with certain of our creditors, which the
group refers to as the “Creditor Backstop Agreement” and the
“Backstop Creditors”, respectively (the “Registration Rights
Agreement”), 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 limita-
tion, 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 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 in-
vestors as a U.S. issuer is required to disclose and, as a result,
you may receive less information about us than you would
153
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 informa-
tion about us than you would receive from a comparable U.S.
company. We are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The disclosure requirements applicable to foreign issuers
under the Exchange Act are more limited than the disclosure
requirements applicable to U.S. issuers. Publicly available in-
formation 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.
ANNUAL REPORT 2023 Commitment to
sustainability
climate change
11 —Annexes —Commitment to sustainability
EMISSIONS REDUCTION TARGETS
SASB: TR-AL-110A.2
GRI 305-5
SCOPE COVERED BY THE TARGET
BASE YEAR
TARGET YEAR
BASE YEAR
EMISSIONS
COVERED (TCO2e)
% OF TOTAL TARGET % REDUCTION
COMPARED TO THE
BASE YEAR
BENCHMARK YEAR
EMISSIONS
Scope 1 (air emissions)
2019
2030
12,149,725
100%
50%
The year 2019 was the last pre-pandemic year and is considered the aviation industry standard for comparisons, being widely accepted by international initiatives such as SBTi.
GREENHOUSE GASES (tCO2e)
NCG 461: 8.2 SUSTAINABILITY INDICATORS
BY TYPE OF INDUSTRY
GRI 305-1, 305-2, 305-3 & 305-4
SASB: TR-AL-110A.1. & TR-AL- 110A.2
Direct emissions (Scope 1)
Indirect emissions (Scope 2)
Other indirect emissions (Scope 3)
Total
UNIT
2020
2021
2022
2023
2023 VS.2022
tCO2e
tCO2e
tCO2e
tCO2e
5,614,368
16,355
24,827
6,497,576
14,549
2,446
9,780,288
7,150
3,198,317
11,524,420
5,217
3,094,768
5,655,551
6,514,570
12,985,755
14.624.405
17.8%
-27.0%
-3.2%
12.7%
-5.1%
-0.7%
-5.0%
80.76
80.55
76.10
101.8
76.67
97.02
96.65
76.16
92.19
Emissions intensity across the whole operation
(kgCO2e/100RTK)
Emissions intensity in air operation
(kgCO2e/100RTK)
Net emissions intensity across operations1
(kgCO2e/100RTK)
1 Net emissions across the whole operation: total emissions minus the offsets made.
RTK: Acronym for "revenue ton-kilometers".
SOURCE2
Jet fuel
Jet fuel
Gasoline
Diesel
Natural gas
Liquefied petroleum gas (LPG)
2 Source: Huella Chile - IPCC 2006
UNIT
kgCO2 /kg
kgC02e/kg
kgCO2 /TJ
kgCO2 /TJ
kgCO2 /TJ
kgCO2 /TJ
76.87
76.31
75.04
EMISSION
FACTOR
3.16
3.18
68,700
74,400
55,600
64,1002
154
ANNUAL REPORT 2023
11 —Annexes —Commitment to sustainability
SCOPE OF THE INFORMATION
Jet fuel- air operation
Jet fuel - air operation
Diesel
Natural gas
Gasoline
LPG
Fuel - mobile sources
Diesel
Gasoline
LPG
Refrigerating gases (various)
Electricity
Transportation using other airlines (jet fuel)
UNIT
%
%
%
%
%
%
%
%
%
%
%
2020
100
96
100
100
100
96
96
100
100
100
100
1 Natural gas is not among the energy sources for the year 2023.
2 Liquefied petroleum gas (LPG) for mobile sources is not among the energy sources for the year 2023.
SIGNIFICANT ATMOSPHERIC EMISSIONS
GRI 305-6 AND 305-7
Nitrogen oxides (NOx)
Passenger operation intensity
Cargo operation intensity
Sulfur oxides (SOx)
Passenger operation intensity
Cargo operation intensity
Gases affecting the Ozone layer1
UNIT
tCO2e
(g/RPK)
(g/RPK)
tCO2e
(g/RPK)
(g/RPK)
tCO2e
2020
19,207
0.273
1.792
851
0.012
0.079
7,667
2021
100
96
100
100
100
96
96
100
100
100
100
2021
22,184
0.330
1.734
983
0.013
0.077
7,474
2022
100
96
100
100
100
96
96
100
100
100
100
2022
33,198
0.325
1.718
1,470
0.014
0.085
11,859
1 Including: Halon-1301; HCFC-141b; HCFC-22. For the year 2023, values from previous years are adjusted to show all data in tCO2e.
RPK: Acronym for "revenue passenger-kilometers".
RTK: Acronym for "revenue ton-kilometers".
2023
100
96
N/A1
100
100
98
100
N/A2
100
100
100
2023
2023 VS. 2022
39,092
0.266
2.005
1,731
0.012
0.089
9,712
17.8%
-18.2%
17.0%
17.8%
-14.3%
4.7%
-18.1%
155
ANNUAL REPORT 2023
11 —Annexes —Employees
Employees
Better, simpler and more
transparent
LATAM GROUP – EMPLOYEE PROFILE 2023
NCG 461: 5.1.1 NUMBER OF INDIVIDUALS BY SEX and 5.1.2 NUMBER OF INDIVIDUALS BY NATIONALITY
GRI 2-7 AND 2-8 ; 405-1
BRAZIL
CHILE
COLOMBIA
ECUADOR
UNITED STATES
PERU
OTHERS
LATAM GROUP
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
M
14
89
482
W
2
55
237
7,208 2,757
192
160
377
3,453 2,890
69
181
522
M
37
250
326
1,524
77
192
977
W
4
135
190
872
286
243
569
1,453 1,588
M
1
16
54
579
5
26
37
521
W
-
8
25
441
13
41
27
488
M
-
4
24
91
2
8
4
167
W
1
5
8
32
9
11
9
122
M
4
22
51
781
2
1
33
2
W
1
13
28
241
1
9
22
-
M
2
14
53
570
12
40
28
1,028
W
-
7
36
485
33
37
26
977
M
1
21
40
249
13
35
16
30
W
2
8
32
236
33
45
14
44
M
59
416
1,030
W
10
231
556
11,002 5,064
567
546
1,617 1,044
6,654 6,109
180
483
Total
12,018 6,670
4,836 3,887
1,239 1,043
300
197
896
315
1,747 1,601
405
414
21,441 14,127
Note: In addition to the 35,568 employees, LATAM's workforce is comprised by transitory workers, hired through outsourcing companies for a maximum of 6 months to fill temporary vacancies due
to employee leave or the expiration of external contracts.
* LATAM has no professionals in the Auxiliary category.
156
ANNUAL REPORT 2023
11 —Annexes —Employees
OTHERS (IN DETAIL)
NCG 461: 5.1.1 NCG 461: 5.1.1 NUMBER OF INDIVIDUALS BY SEX and 5.1.2 NUMBER OF INDIVIDUALS BY NATIONALITY
GRI 2-7 AND 2-8 ; 405-1
GERMANY ARGENTINA AUSTRALIA
BOLIVIA
COSTA RICA
CUBA
SPAIN
FRANCE
ITALY
MEXICO
ZEALAND NETHERLANDS PARAGUAY PORTUGAL
UK
NEW
THE
SOUTH
AFRICA
URUGUAY VENEZUELA
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
M W
-
-
-
1
-
2
9
8
1
1
-
-
1
-
-
-
M W
-
-
2
4
10
8
84
72
4
1
9
11
3
1
-
-
M W
-
-
-
1
1
-
3
2
1
-
1
-
1
-
-
-
M W
-
-
-
-
1
-
14
18
-
-
-
-
-
1
-
-
M W
-
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
M W
-
-
-
-
-
-
2
3
-
-
-
-
-
-
-
-
M W
2
1
5
10
10
11
64
60
16
3
8
2
8
11
-
-
M W
-
-
-
-
1
-
1
6
3
-
-
-
-
-
-
-
M W
-
-
-
1
-
-
3
1
-
1
-
-
-
-
-
-
M W M W
-
-
-
-
-
5
3
34
-
4
-
15
-
1
-
-
-
-
3
1
-
2
-
-
-
1
3
30
-
20
-
-
M
-
-
2
1
-
1
1
-
W
-
-
-
1
-
2
-
-
M
-
3
5
21
1
4
-
30
W
-
-
3
7
6
5
1
44
M
-
-
-
1
-
-
-
-
W
-
-
-
4
1
-
-
-
M
-
-
1
11
1
-
-
-
W
-
-
-
4
1
-
-
-
M
-
-
-
-
-
-
-
-
W
-
-
-
1
-
-
-
-
M
-
1
2
10
1
-
1
-
W
-
-
2
5
-
-
-
-
M W
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
Total
12
11
97 112
3
7
19
15
1
1
3
2
98 113
6
5
3
3
59
54
6
3
5
3
64
66
1
5
13
5
-
1
15
7
-
1
* LATAM has no professionals in the Auxiliary category.
157
ANNUAL REPORT 2023
11 —Annexes —Employees
LATAM GROUP – EMPLOYEE PROFILE 2023
NCG 461: 5.1.3 NUMBER OF INDIVIDUALS BY AGE RANGE
GRI 405-1
BY AGE RANGE
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
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
M
-
7
75
2,900
20
108
446
1,077
W
-
3
54
2,187
45
100
329
1,495
M
5
209
426
3,913
73
177
733
2,497
W
-
136
310
1,877
213
230
466
2,542
M
25
134
346
2,712
67
132
294
1,903
W
8
69
139
753
204
145
202
1,761
M
25
57
156
1,199
17
46
100
991
W
2
20
48
224
91
65
42
294
M
4
9
25
260
3
20
34
180
Total
4,633
4,213
8,033
5,774
5,613
3,281
2,591
786
535
W
-
3
5
22
14
5
5
17
71
M
-
-
2
18
-
-
10
6
36
W
-
-
-
1
-
1
-
-
2
FUNCTIONAL CATEGORIES
Senior management
CEOs
Vice-presidents
Directors
Management
SeniorManagers
Managers
Assistant Managers
Leadership
Area managers
Department heads
Operators
Cargo operations
Maintenance Operations
Airport Operations
Operations control center
Sales force
Sales operations
Customer care
Administrative
Support activities and general roles
Other professionals
Middle management in support activities
Other technicians
Command crew
Cabin crew
NCG 461: 5.1.4 NUMBER OF INDIVIDUALS BY SENIORITY
NCG 461: 5.1.5 INDIVIDUALS WITH DISABILITIES
GRI 405-1
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
INDIVIDUALS WITH DISABILITIES
MEN
WOMEN
Senior management
Management
Leadership
Operators
Sales force
Administrative
Other professionals
Other technicians
M
2
36
108
5,208
45
168
771
2,630
W
1
27
80
3,077
115
161
486
2,486
M
7
38
110
1,291
31
40
214
393
W
1
25
82
573
71
60
132
309
M
6
53
102
621
18
38
87
366
W
1
36
51
386
45
43
81
397
M
5
72
129
1,164
32
60
170
359
W
1
52
70
382
78
62
112
345
M
39
217
581
2,718
54
177
375
2,906
W
6
91
273
646
258
220
233
2,572
Senior management
Management
Leadership
Operators
Sales force
Administrative
Auxiliary
Other professionals
Other technicians
Total
8,968
6,433
2,124
1,253
1,291
1,040
1,991
1,102
7,067
4,299
0
3
19
419
10
30
0
27
4
0
1
4
144
16
14
0
17
6
* LATAM has no professionals in the Auxiliary category
158
ANNUAL REPORT 2023
11 —Annexes —Employees
CONTRACT TYPE1
GRI 2-7 EMPLOYEES
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
INDEFINITE TERM
FIXED TERM
M
12,018
4,353
950
300
895
1,383
399
W
6,670
3,410
648
197
313
1,180
400
M
-
483
289
-
1
364
6
W
-
477
395
-
2
421
14
EMPLOYEES
NCG 461: 5.2 NCG 461: 5.2 LABOR FORMALITY
20,298 / 57.1%
12,818 / 36%
1,143 / 3.2%
1,309 / 3.7%
1 NB: There are no contracts per job or task.
Others: Argentina, Australia, Bolivia, Costa Rica, Cuba, France, Germany, Italy, Mexico, Netherlands, New Zealand, Paraguay, Portugal, South Africa,
Spain, United Kingdom, Uruguay and Venezuela.
CONTRACT TYPE
GRI 2-7 EMPLOYEES
Brazil
Chile
Colombia
Ecuador
United States
Peru
Others
ORDINARY WORK HOURS
PART-TIME1
M
11,797
4,788
1,239
300
889
1,747
369
W
6,491
3,793
1,043
197
297
1,590
379
M
221
48
-
-
7
-
36
W
179
94
-
-
18
11
35
LATAM Group
NCG 461: 5.3 WORK ADAPTABILIT
21,129 / 59.40%
13,790 / 38.77%
312 / 0.88%
337 / 0.95%
Others: Argentina, Australia, Bolivia, Costa Rica, Cuba, France, Germany, Italy, Mexico, Netherlands, New Zealand, Paraguay, Portugal, South Africa,
Spain, United Kingdom, Uruguay and Venezuela.
In 2023, there were no individuals entering workday adaptability agreements for
workers with family duties or other reasons.
On the other hand, 5,149 individuals adopted telework, 2,977 of whom were men
(8.37% of the total workforce) and 2,172 women (6.11% of the total workforce).
159
COLLECTIVE BARGAINING AGREEMENTS3 IN 2023
NCG 461: 8.2 SUSTAINABILITY INDICATORS
SASB TR-AL- 310A.1
GRI 2-30
Employees covered by collective bargaining agreements
Unionized employees
89%
45%
3 Based on the total workforce on December 31, 2023.
Overall, the group affiliates apply their own policies to define
working conditions and terms of employment for workers 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 tickets, defined in a collective union
agreement, are extended to new hires.
NCG 461: 8.2 SUSTAINABILITY INDICATORS
SASB TR-AL-310A.2
During 2023, there were no labor stoppages involving more than
a thousand workers, nor idle days as a result of work stoppages.
ANNUAL REPORT 2023
11 —Annexes —Employees
LATAM GROUP - NEW HIRES AND WORKFORCE TURNOVER IN 2023
GRI 401-1
STAFF TURNOVER RATE BY COUNTRY 2023
LONG-TERM INCENTIVES FOR LATAM GROUP EMPLOYEES
TOTAL NUMBER OF HIRES
HIRING RATE
LATAM Airlines Brazil
LATAM Airlines Chile
LATAM Airlines Colombia
LATAM Airlines Ecuador
United States Regional Office
LATAM Airlines Peru
Others2
Total
2,957
1,689
876
122
466
590
127
6,827
TOTAL NUMBER OF
PEOPLE WHO LEFT
LATAM GROUP1
TURNOVER
RATE
2,024
700
311
30
384
326
79
5.69%
1.97%
0.87%
0.08%
1.08%
0.92%
0.22%
8.31%
4.75%
2.46%
0.34%
1.31%
1.66%
0.36%
19.19%
3,854
10.84%
1 Individuals who left the LATAM Group either voluntarily, through dismissal, retirement or death in service.
2 Considering LATAM group operations in other countries of the Americas, Europe and Oceania.
INTERNAL HIRES
81% of open positions were filled by internal candidates in 2023.
NEW HIRES BY GENDER IN 2023
GRI 401-1
COUNTRY
Brazil
Chile
Colombia
Ecuador
Peru
United States
Others
Total
160
WOMEN
37.0%
49.9%
54.0%
41.0%
53.6%
23.2%
46.5%
43.1%
MEN
63.00%
50.10%
46.00%
59.00%
46.40%
76.80%
53.50%
56.90%
COUNTRY
Brazil
Chile
Colombia
Ecuador
Peru
United States
Others
FY 2023
43.3%
24.7%
12.8%
1.8%
8.6%
6.8%
1.9%
As a long-term incentive for the employees, during 2023, LATAM
group had the "unit-based pay" program. This comprises units
granted to each employee, which are paid over a period of up
to 42 months, and are linked to:
• The employee's permanence in LATAM group.
• The share price compared to the value of the ERO.
LATAM AIMS TO ACHIEVE A GENDER BALANCE OF AROUND
40/60 AT ALL FUNCTIONAL LEVELS BY 2030.
• The occurrence of events related to the volume of transac-
tions and liquidity of the stock.
• Performance defined on the basis of fulfillment of certain
company indicators.
This program applies to executives who are not part of the
Global Executive Meeting (GEM)—i.e., who are Senior Man-
agers, Managers and Assistant Managers of different areas or
business units in LATAM group.
PAY GAP BY GENDER 2023
INDICATOR
Pay gap by gender: average
Pay gap by gender: median
Bonus gap: average
Bonus gap: median
DIFFERENCE BETWEEN MALE
AND FEMALE EMPLOYEES
94%
94%
95%
96%
SHARE OF WOMEN
Women in the whole workforce
Women in all leadership positions (junior, middle and top)
Women in all junior leadership positions
Women in all top leadership positions
Women in leadership positions in revenue-generating
functions
Women in STEM positions (**)
2023
39.7%
34.6%
35.6%
14.7%
37.8%
26.5%
(*) Support positions such as human capital, legal, information technolo-
gy, etc. are excluded.
(**) STEM: Personnel with background and a position related to science,
technology, engineering and mathematics.
LABOR FORCE SHARE BY NATIONALITY 2023
NATIONALITY
Brasil
Chile
Colombia
Ecuador
Estados Unidos
Perú
Otros
SHARE OF
THE WHOLE
WORKFORCE
SHARE IN
LEADERSHIP
POSITIONS
52.9%
22.3%
6.9%
1.6%
1.7%
9.6%
5.0%
40.4%
33.6%
6.6%
2.3%
2.8%
6.0%
8.3%
ANNUAL REPORT 2023
11 —Annexes —Employees
INDIVIDUALS WHO TOOK POSTNATAL LEAVE IN 2023
GRI 401-3
COUNTRY
SENIOR
MANAGEMENT
MANAGEMENT
LEADERSHIP
SALES FORCE
ADMINISTRATIVE
OPERATORS
OTHER
PROFESSIONALS
OTHER
TECHNICIANS
TOTAL
Germany
Argentina
Bolivia
Brazil
Chile
Colombia
Cuba
Ecuador
Spain
United States
France
Italy
Mexico
Oceanía (New Zeland and Australia)
The Netherlands
Paraguay
Peru
Portugal
UK
Uruguay
Others (Costa Rica, Venezuela and South Africa)
TOTAL
M
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
W
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
M
0
0
0
1
11
0
0
0
1
0
0
1
0
0
0
0
1
0
0
0
0
15
W
0
0
0
3
19
0
0
0
1
1
0
0
0
0
0
0
1
0
0
0
0
25
M
0
0
0
11
6
1
0
1
0
1
0
0
0
0
0
0
1
0
0
0
0
21
W
0
2
0
18
9
0
0
0
0
0
0
0
0
0
0
0
3
0
0
0
0
32
M
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
3
0
0
0
0
4
W
0
0
0
4
8
2
0
1
0
1
0
0
0
0
0
0
6
0
0
0
0
M
0
0
0
35
2
0
0
2
0
0
0
0
0
0
0
0
0
0
0
0
0
W
1
0
0
116
5
6
0
2
0
2
0
0
0
0
0
0
0
0
0
0
0
M
0
0
1
78
37
7
0
3
0
0
0
0
0
0
0
1
7
0
0
0
0
W
0
0
0
18
52
0
0
0
2
0
0
0
0
0
0
0
2
0
0
0
0
M
1
0
0
37
19
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
W
0
0
0
37
23
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
M
0
0
0
61
4
11
0
1
0
0
0
0
0
0
0
1
25
0
0
0
0
W
0
0
0
72
88
11
0
1
0
0
0
0
0
0
0
3
23
0
0
0
0
M
1
0
1
223
79
19
0
7
2
2
0
1
0
0
0
2
37
0
0
0
0
W
1
2
0
268
204
19
0
4
3
4
0
0
0
0
0
3
35
0
0
0
0
22
39
132
134
74
58
60
103
198
374
543
Note: 100% of individuals who requested postnatal leave were granted access to this benefit.
Note: LATAM has no professionals in the Auxiliary category
161
ANNUAL REPORT 2023
11 —Annexes —Employees
AVERAGE NUMBER OF DAYS OF POSTNATAL LEAVE USED IN 2023
GRI 401-3
COUNTRY
SENIOR
MANAGEMENT
MANAGEMENT
LEADERSHIP
SALES FORCE
ADMINISTRATIVE
OPERATORS
OTHER
PROFESSIONALS
OTHER
TECHNICIANS
Germany
Argentina
Bolivia
Brazil
Chile
Colombia
Cuba
Ecuador
Spain
United States
France
Italy
Mexico
Oceanía (New Zeland and Australia)
The Netherlands
Paraguay
Peru
Portugal
UK
Uruguay
Others (Costa Rica, Venezuela and South Africa)
M
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Note: LATAM has no professionals in the Auxiliary category.
W
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
M
0
0
0
7
4
0
0
0
67
0
0
10
0
0
0
0
10
0
0
0
0
W
0
0
0
161
17
0
0
0
29
84
0
0
0
0
0
0
98
0
0
0
0
M
0
0
0
17
4
14
0
15
0
5
0
0
0
0
0
0
10
0
0
0
0
W
0
90
0
147
46
0
0
0
0
0
0
0
0
0
0
0
98
0
0
0
0
M
0
0
0
0
0
0
0
0
0
5
0
0
0
0
0
0
10
0
0
0
0
W
0
0
0
59
41
126
0
84
0
84
0
0
0
0
0
0
98
0
0
0
0
M
0
0
0
18
5
0
0
15
0
0
0
0
0
0
0
0
0
0
0
0
0
W
4
0
0
130
33
126
0
84
0
84
0
0
0
0
0
0
0
0
0
0
0
M
0
0
3
17
3
14
0
15
0
0
0
0
0
0
0
15
10
0
0
0
0
W
0
0
0
127
23
0
0
0
81
0
0
0
0
0
0
0
85
0
0
0
0
M
4
0
0
18
3
0
0
0
84
0
0
0
0
0
0
0
0
0
0
0
0
W
0
0
0
138
47
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
M
0
0
0
17
4
20
0
15
0
0
0
0
0
0
0
15
11
0
0
0
0
W
0
0
0
120
49
126
0
84
0
0
0
0
0
0
0
126
94
0
0
0
0
Particularly regarding post-natal leave available to male workers in Chile, 100% opted for the 5-day leave from among the options provided by Chilean Law.
162
ANNUAL REPORT 2023
11 —Annexes —Supply Chain Management
ANNEXES
Supply Chain Management - Corporate Sustainability Assessment (CSA)
• KPIs for Supplier Screening:
Supplier Screening
Total number of significant suppliers in Tier-1
% of total spend on significant suppliers in Tier-1
Total number of significant suppliers in non Tier-1
• KPIs for Supplier Assessment and Development:
Supplier assessment
Total number of suppliers assessed via desk assessments or on-site assessments
% of suppliers assessed with potential negative impacts supported in corrective
action plan implementation
2023
270
100%
0
2023
5,557
1%
163
ANNUAL REPORT 2023 13
Financial reports
In this chapter
165
294
Financial
statements
Sworn
statement
259
295
Affiliates and
subsidiaries 286 Financial
analysis
Company
structure
13 —Financial reports —Financial statements
Financial
statements
NCG 461: 11. FINANCIAL REPORTS
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
CONTENTS
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$ -
MUS$
COP
BRL/R$ - BRAZILIAN REAL
THR$
- THOUSANDS OF BRAZILIAN REAL
- MILLIONS OF UNITED STATES DOLLARS
- COLOMBIAN PESO
THOUSANDS OF UNITED STATES DOLLARS
165
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
REPORT OF INDEPENDENT AUDITORS
(Free translation from the original in Spanish)
Santiago, February 22, 2024
To the Board of Directors and Shareholders
LATAM Airlines Group S.A.
Opinion
We have audited the consolidated financial statements of LATAM Airlines Group S.A. and subsidiaries,
which comprise the consolidated statements of financial position as of December 31, 2023 and 2022
and the related consolidated statements of income by function, comprehensive income, changes in
equity and cash flows direct method for the years then ended and the related notes to the consolidated
financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the financial position of LATAM Airlines Group S.A. and subsidiaries as of December 31, 2023
and 2022, the results of its operations and its cash flows for the years then ended in accordance with
International Financial Reporting Standards as issued by the International Accounting Standards
Board.
Basis for opinion
We conducted our audits in accordance with Generally Accepted Auditing Standards in Chile. Our
responsibilities under those standards are described in the paragraphs under the section "Auditor's
responsibilities for the audit of the consolidated financial statements” in this report. In accordance with
relevant ethical requirements, for our audits of the consolidated financial statements, we are required
to be independent of LATAM Airlines Group S.A. and subsidiaries and to comply with other ethical
responsibilities in accordance with such requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. 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.
In preparing and presenting the consolidated financial statements, Management is required to evaluate
whether there are facts or circumstances that, taken as a whole, raise substantial doubt about the ability
of LATAM Airlines Group S.A. and subsidiaries to continue as a going concern for the foreseeable
future.
Santiago, February 22, 2024
LATAM Airlines Group S.A.
2
Auditor’s responsibility for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
report that includes our opinion. Reasonable assurance is a high, but not absolute, level of assurance
and, therefore, does not guarantee that an audit performed in accordance with Generally Accepted
Auditing Standards in Chile will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement due to fraud is greater than the risk of not detecting a material
misstatement due to error, as fraud may involve collusion, forgery, intentional omissions, concealment,
misrepresentations or disregard of controls by Management. A misstatement is considered material if,
individually or in the aggregate, it would influence the judgment of a reasonable user based on these
consolidated financial statements.
As part of an audit conducted in accordance with Generally Accepted Auditing Standards in Chile, we:
● Exercise our professional judgment and maintain our professional skepticism throughout the
audit.
●
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error; we design and perform audit procedures in response to those risks.
Such procedures include examining evidence, on a test basis, regarding the amounts and
disclosures in the consolidated financial statements.
● Obtain an understanding of internal control relevant to an audit 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 LATAM Airlines Group S.A. and subsidiaries internal control. Consequently, we do
not express such an opinion.
● We assess the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by Management, as well as assessing the appropriateness of the overall
presentation of the consolidated financial statements.
Santiago, February 22, 2024
LATAM Airlines Group S.A.
● We conclude whether in our judgment there are facts or circumstances that, taken as a whole, cast
3
substantial doubt about the ability of LATAM Airlines Group S.A. and subsidiaries to continue as a
going concern for the foreseeable future.
We are required to communicate to those charged with governance, among other matters, the planned
timing and scope of the audit and significant audit findings, including any significant deficiencies and
material weaknesses in internal control that we identify during our audit.
166
Jonathan Yeomans Gibbons
RUT: 13.473.972-K
ANNUAL REPORT 2023
34 - Statement of cash flows ...................................................................................................................... 129
35 - The environment ................................................................................................................................ 134
36 - Events subsequent to the date of the financial statements .................................................................. 136
13 —Financial reports —Financial statements
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 material accounting policies ................................................................................................ 6
2.1. Basis of Preparation ........................................................................................................................... 6
2.2. Basis of Consolidation ...................................................................................................................... 10
2.3. Foreign currency transactions ........................................................................................................... 10
2.4. Property, plant and equipment .......................................................................................................... 12
2.5. Intangible assets other than goodwill ................................................................................................12
2.6. Borrowing costs ................................................................................................................................ 12
2.7. Losses for impairment of non-financial assets ................................................................................. 13
2.8. Financial assets ................................................................................................................................. 13
2.9. Derivative financial instruments and embedded derivatives ............................................................ 13
2.10. Inventories....................................................................................................................................... 15
2.11. Trade and other accounts receivable .............................................................................................. 15
2.12. Cash and cash equivalents .............................................................................................................. 15
2.13. Capital ............................................................................................................................................. 15
2.14. Trade and other accounts payables ................................................................................................. 15
2.15. Interest-bearing loans ...................................................................................................................... 15
2.16. Current and deferred taxes .............................................................................................................. 16
2.17. Employee benefits .......................................................................................................................... 16
2.18. Provisions ....................................................................................................................................... 17
2.19. Revenue from contracts with customers ......................................................................................... 17
2.20. Leases ............................................................................................................................................. 18
2.21. Non-current assets (or disposal groups) classified as held for sale................................................. 19
2.22. Maintenance .................................................................................................................................... 19
2.23. Environmental costs ........................................................................................................................ 20
3 - Financial risk management ..................................................................................................................... 20
3.1. Financial risk factors ........................................................................................................................ 20
3.2. Capital risk management .................................................................................................................. 33
3.3. Estimates of fair value ...................................................................................................................... 33
4 - Accounting estimates and judgments...................................................................................................... 35
5 - Segment information .............................................................................................................................. 38
6 - Cash and cash equivalents ...................................................................................................................... 39
7 - Financial instruments ............................................................................................................................. 40
8 - Trade and other accounts receivable current, and non-current accounts receivable .............................. 41
9 - Accounts receivable from/payable to related entities ............................................................................ 43
10 - Inventories ............................................................................................................................................ 44
11 - Other financial assets ........................................................................................................................... 45
12 - Other non-financial assets .................................................................................................................... 46
13 - Non-current assets and disposal group classified as held for sale......................................................... 47
14 - Investments in subsidiaries .................................................................................................................. 48
15 - Intangible assets other than goodwill ................................................................................................... 51
16 - Property, plant and equipment .............................................................................................................. 53
17 - Current and deferred tax ....................................................................................................................... 58
18 - Other financial liabilities ...................................................................................................................... 63
19 - Trade and other accounts payables ....................................................................................................... 71
20 - Other provisions.................................................................................................................................... 72
21 - Other non financial liabilities ............................................................................................................... 73
22 - Employee benefits ................................................................................................................................ 74
23 - Accounts payable, non-current ............................................................................................................ 77
24 - Equity ................................................................................................................................................... 78
25 - Revenue ................................................................................................................................................ 86
26 - Costs and expenses by nature ............................................................................................................... 86
27 - Other income, by function ................................................................................................................... 89
28 - Foreign currency and exchange rate differences ................................................................................. 89
29 – Earning (Loss) per share...................................................................................................................... 96
30 - Contingencies ..................................................................................................................................... 97
31 - Commitments ..................................................................................................................................... 122
32 - Transactions with related parties ........................................................................................................ 125
33 - Share based payments ........................................................................................................................ 127
167
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS
Current Assets
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
Note
6 - 7
7 - 11
12
7 - 8
7 - 9
10
17
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
13
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
1,714,761
174,819
185,264
1,385,910
28
592,880
47,030
4,100,692
102,670
1,216,675
503,515
191,364
1,008,109
19,523
477,789
33,033
3,450,008
86,416
Total current assets
4,203,362
3,536,424
Non-current assets
Other financial assets
Other non-financial assets
Accounts receivable
Intangible assets other than goodwill
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
7 - 11
12
7 - 8
15
16
17
34,485
168,621
12,949
1,151,986
9,091,130
4,782
10,463,953
14,667,315
15,517
148,378
12,743
1,080,386
8,411,661
5,915
9,674,600
13,211,024
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities
Other financial liabilities
Trade and other accounts payables
Accounts payable to related entities
Other provisions
Current tax liabilities
Other non-financial liabilities
Total current liabilities
Non-current liabilities
Other financial liabilities
Accounts payable
Other provisions
Deferred tax liabilities
Employee benefits
Other non-financial liabilities
Total non-current liabilities
Total liabilities
EQUITY
Share capital
Retained earnings/(losses)
Treasury Shares
Other 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,
2023
ThUS$
As of
December 31,
2022
ThUS$
596,063
1,765,279
7,444
15,072
2,371
3,301,906
5,688,135
6,341,669
418,587
926,736
382,359
122,618
348,936
8,540,905
14,229,040
5,003,534
464,411
—
39
(5,017,682)
450,302
(12,027)
438,275
14,667,315
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
13,180,303
13,298,486
(7,501,896)
(178)
39
(5,754,173)
42,278
(11,557)
30,721
13,211,024
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
168
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
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
Revenue
Cost of sales
Gross margin
Other income
Distribution costs
Administrative expenses
Other expenses
Gains/(losses) from restructuring activities
Other gains/(losses)
Income (loss) from operation activities
Financial income
Financial costs
Foreign exchange gains/(losses)
Result of indexation units
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Income (loss) attributable to non-controlling interest
Net Income (loss) for the year
EARNING (LOSS) PER SHARE
Basic earnings (loss) per share (US$)
Diluted earnings (loss) per share (US$)
For the year ended December
31,
Note
2023
ThUS$
2022
ThUS$
5 - 25
26
11,640,541
(8,816,590)
2,823,951
9,362,521
(8,103,483)
1,259,038
27
26
26
26
26
26
26
26
17
14
29
29
148,641
(587,272)
(683,311)
(532,801)
—
(91,043)
1,078,165
125,356
(698,231)
85,891
5,311
596,492
(14,942)
154,286
(426,599)
(576,429)
(531,575)
1,679,934
(347,077)
1,211,578
1,052,295
(942,403)
25,993
(1,412)
1,346,051
(8,914)
581,550
1,337,137
581,831
(281)
1,339,210
(2,073)
581,550
1,337,137
0.000963
0.000963
0.013861
0.013592
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
Note
For the year ended at
December 31,
2023
ThUS$
2022
ThUS$
NET INCOME/(LOSS)
Components of other comprehensive income (loss) that will not be reclassified to income
581,550
1,337,137
before taxes
Other comprehensive income (loss), before taxes, gains (losses) by new measurements on
defined benefit plans
Total other comprehensive (loss) that will not be reclassified to income before taxes
Components of other comprehensive income that will be reclassified to income before taxes
Currency translation differences Gains (losses) on currency translation, before tax
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
Gains/(Losses) on change in value of time value of options before tax
Reclassification adjustments on change in value of time value of options before tax
Other comprehensive income, before taxes, changes in the time value of the options
Total other comprehensive income that will be reclassified to income before taxes
Other components of other comprehensive income (loss), before taxes
Income tax relating to other comprehensive income that will not be reclassified to income
Income tax relating to new measurements on defined benefit plans
Income tax relating to other comprehensive income that will not be reclassified to income
Income tax relating to other comprehensive income (loss) that will be reclassified to income
24
24
24
24
24
24
17
(21,198)
(21,198)
(9,935)
(9,935)
(12,423)
(12,423)
(41,144)
(26,568)
(11,112)
(78,824)
25,751
28,818
54,569
(36,678)
(57,876)
751
751
(32,563)
(32,563)
52,017
31,293
(8,143)
75,167
(24,005)
19,946
(4,059)
38,545
28,610
567
567
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
17
3,604
(235)
income
Total Other comprehensive income (loss)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income (loss) attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS)
3,604
(53,521)
528,029
(235)
28,942
1,366,079
515,687
12,342
528,029
1,367,315
(1,236)
1,366,079
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
169
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
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)
from
changes
in the time
value of the
options
Actuarial
gains
or losses on
defined
benefit
plans
reserve
Shares
based
payments
reserve
Currency
translation
reserve
Cash flow
hedging
reserve
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Note
Share
capital
ThUS$
Other
equity
ThUS$
Treasury
shares
ThUS$
Other
sundry
reserve
ThUS$
Total
other
reserve
ThUS$
Retained
earnings/
(losses)
ThUS$
Parent’s
ownership
interest
Non-
controlling
interest
ThUS$
ThUS$
Total
equity
ThUS$
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
24
25
24
—
—
—
—
—
—
—
—
—
17,401
24-34
(8,294,952)
(17,401)
(8,294,952)
5,003,534
—
39
—
—
—
—
—
178
178
—
—
—
—
(25,051)
(75,220)
54,569
(20,442)
(25,051)
(75,220)
54,569
(20,442)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
581,831
581,831
(281)
581,550
(66,144)
—
(66,144)
12,623
(53,521)
(66,144)
581,831
515,687
12,342
528,029
—
(174,549)
(174,549)
—
(174,549)
—
(14,401)
(14,401)
—
3,000
—
3,000
—
—
817,036
817,036
7,559,025
63,886
(12,812)
51,074
802,635
802,635
7,384,476
(107,663)
(12,812)
(120,475)
—
(3,830,611)
(38,678)
32,947
(48,559)
37,235
(1,170,016)
(5,017,682)
464,411
450,302
(12,027)
438,275
Equity as of January 1,
2023
Total increase (decrease)
in equity
Net income/(loss) for
the period
Other comprehensive
income
Total comprehensive
income
Transactions with
shareholders
Dividends
Increase for other
contributions from the
owners
Increase (decrease)
through transfers and
other changes, equity
Total transactions with
shareholders
Closing balance as of
December 31, 2023
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
170
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
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)
from
changes
in the time
value of the
options
Actuarial
gains
or losses on
defined
benefit
plans
reserve
Shares
based
payments
reserve
Treasury
shares
Currency
translation
reserve
Cash flow
hedging
reserve
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Note
Share
capital
ThUS$
Other
equity
ThUS$
Other
sundry
reserve
ThUS$
Total
other
reserve
ThUS$
Retained
earnings/
(losses)
Parent’s
ownership
interest
Non-
controlling
interest
ThUS$
ThUS$
ThUS$
Total
equity
ThUS$
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)
Equity as of January 1,
2022
Total increase (decrease) in
equity
Net income/(loss) for the
period
24
Other comprehensive
income
Total comprehensive
income
Transactions with
shareholders
Equity issue
Increase for other
contributions from the
owners
Increase (decrease)
through transfers and
other changes, equity
Total transactions with
shareholders
Closing balance as of
December 31, 2022
—
—
—
—
—
—
24
-33
24
24
-33
800,000
—
—
9,250,229
9,352,221
(9,250,190)
10,152,221
13,298,486
39
39
—
—
—
—
—
—
—
—
—
—
—
(33,401)
74,932
(4,059)
(9,367)
(33,401)
74,932
(4,059)
(9,367)
—
—
—
—
—
—
—
1,339,210
1,339,210
(2,073)
1,337,137
28,105
—
28,105
837
28,942
28,105
1,339,210
1,367,315
(1,236)
1,366,079
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
800,000
—
800,000
—
(4,340,749)
(4,340,749)
—
4,909,480
—
4,909,480
—
(80,000)
(80,000)
—
22,031
35
22,066
—
(4,420,749)
(4,420,749)
—
5,731,511
35
5,731,546
(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.
171
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - DIRECT METHOD
Note
For the year ended
December 31,
2023
ThUS$
2022
ThUS$
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
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
Cash flows inflow (out flow) from investing activities
Proceeds from the issuance of shares
Amounts from the issuance of other equity instruments
Payments for changes in ownership interests in subsidiaries that do not result in loss of control
Amounts raised from long-term loans
Amounts raised from short-term loans
Loans from related entities
Loans repayments
Payments of lease liabilities
Payments of loans to related entities
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
34
34
34
34
34
24
34
34
32
34
34
34
34
6
6
13,397,385
169,692
10,549,542
117,118
(9,689,508) (9,113,130)
(1,304,696) (1,039,336)
(272,823)
(14,314)
(130,260)
(270,580)
(18,379)
(20,346)
2,263,568
—
—
46,524
(795,787)
(68,052)
98,552
59,258
96,797
417
(331)
56,377
(780,538)
(50,116)
18,934
6,300
(659,505)
(748,957)
—
—
(23)
—
—
—
549,038
3,202,790
—
2,361,875
4,856,025
770,522
(342,005) (8,759,413)
(131,917)
(225,358)
(1,008,483)
(521,716)
(463,766)
854,955
202,795
(32,955)
169,840
1,046,835
1,216,675
(1,150,215)
453,848
44,238
498,086
1,216,675
1,714,761
(594,234)
11,405
—
The accompanying Notes 1 to 36 form an integral part of these consolidated financial statements.
172
1
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2023
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, whose shares are listed in
Chile on the Electronic Stock Exchange of Chile - Stock Exchange and the Santiago Stock Exchange.
LATAM’s ADRs are currently trading in the United States of America on the OTC (Over-The-Counter)
markets.
Its main business is the air transport of passengers and cargo, both in the domestic markets of Chile, Peru,
Colombia, Ecuador and Brazil, as well as in a series of regional and international routes in America, Europe and
Oceania. These businesses are developed directly or by its subsidiaries in Chile, Ecuador, Peru, Brazil,
Colombia 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, 2023, the Company's statutory capital is represented by 604,441,789,335 ordinary shares
without nominal value. As of that date, 604,437,877,587 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, as well as the Capital decrease required for the Chilean Capital Markets law that
appears in a public deed dated September 6, 2023, granted at the Notaría of Santiago of Mr. Eduardo Javier
Diez Morello.
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 45.81%, Banco de Chile on behalf of Non-Resident Third Parties
with 11.94%, Delta Air Lines with 10.05% and Qatar Airways with 10.03% ownership.
As of December 31, 2023, the Company had a total of 2,100 shareholders in its registry. At that date,
approximately 0.01% of the Company's capital stock was in the form of ADRs.
During 2023, the Company had an average of 34,174 employees, ending this year with a total of 35,568
collaborator, distributed in 5,149 Administration employees, 17,655 in Operations, 8,688 Cabin Crew and 4,076
Command crew.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
The main subsidiaries included in these consolidated financial statements are as follows:
2
a) Percentage ownership
Tax No.
Company
Country
of origin
Functional
Currency
96.969.680-0 Lan Pax Group S.A. and Subsidiaries
Foreign
Latam Airlines Perú S.A.
93.383.000-4 Lan Cargo S.A.
76.717.244-3
Prime Cargo SpA.
Foreign
Foreign
Connecta Corporation
Prime Airport Services Inc. and Subsidiary
96.951.280-7 Transporte Aéreo S.A.
96.631.520-2
Fast Air Almacenes de Carga S.A.
Foreign
Foreign
Laser Cargo S.R.L.
Lan Cargo Overseas Limited and Subsidiaries
96.969.690-8 Lan Cargo Inversiones S.A. and Subsidiary
96.575.810-0
Inversiones Lan S.A.
Chile
Peru
Chile
Chile
U.S.A.
U.S.A.
Chile
Chile
Argentina
Bahamas
Chile
Chile
US$
US$
US$
CLP
US$
US$
US$
CLP
ARS
US$
US$
US$
As December 31, 2023
As December 31, 2022
Direct
Indirect
Total
Direct
Indirect
%
%
%
%
%
Total
%
99.9959
0.0041
100.0000
99.9959
0.0041
100.0000
23.6200
76.1900
99.8100
23.6200
76.1900
99.8100
99.8940
0.0041
99.8981
99.8940
0.0000
100.0000
100.0000
0.0000
0.0041
0.0000
99.8981
0.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
0.0000
0.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
99.9000
0.1000
100.0000
99.9000
0.1000
100.0000
Technical Training LATAM S.A.
Chile
CLP
99.8300
0.1700
100.0000
99.8300
0.1700
100.0000
96.847.880-
K
Foreign
Foreign
Foreign
Foreign
Foreign
Latam Finance Limited
Peuco Finance Limited
Professional Airline Services INC.
Jarletul S.A.
Latam Travel S.R.L.
76.262.894-5 Latam Travel Chile II S.A.
Foreign
Latam Travel S.A.
Foreign
TAM S.A. and Subsidiaries (*)
Cayman
Island
Cayman
Island
U.S.A.
Uruguay
Bolivia
Chile
Argentina
Brazil
US$
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
US$
US$
US$
US$
US$
ARS
BRL
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
0.0000
100.0000
100.0000
0.0000
100.0000
100.0000
99.0000
99.9900
94.0100
1.0000
100.0000
99.0000
1.0000
100.0000
0.0100
100.0000
99.9900
0.0100
100.0000
5.9900
100.0000
94.0100
5.9900
100.0000
63.0987
36.9013
100.0000
63.0901
36.9099
100.0000
(*) As of December 31, 2023, the indirect participation percentage of TAM S.A. and its Subsidiaries is
from Holdco I S.A., a company which LATAM Airlines Group S.A. has a 100% share on economic rights and
51.04% of political rights. Its percentage arose as a result of the provisional measure No. 863 of the Brazilian
government implemented in December of 2018 that allows foreign capital to have up to 100% of the share
ownership of a Brazilian Airline.
173
b)
Financial Information
3
Tax No.
Company
Statement of financial position
Net Income
For the year ended
At December 31,
As of December 31, 2023
As of December 31, 2022
2023
2022
Assets
Liabilities
ThUS$
ThUS$
Equity
ThUS$
Assets
Liabilities
Equity
Gain /(loss)
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
96.969.680-0
Foreign
93.383.000-4
76.717.244-3
Foreign
Foreign
96.951.280-7
96.631.520-2
Foreign
Foreign
96.969.690-8
96.575.810-0
96.847.880-K
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Lan Pax Group S.A. and Subsidiaries (*)
487,236
1,835,537
(1,000,622)
392,232
1,727,968
(1,342,687)
7,514
(121,673)
Latam Airlines Perú S.A.
334,481
285,645
48,836
335,773
281,178
54,595
(4,666)
(12,726)
Lan Cargo S.A.
Prime Cargo SpA.
Connecta Corporation
Prime Airport Services Inc. and Subsidiary (*)
391,430
189,019
202,411
394,378
212,094
182,284
22,677
(1,230)
912
64,054
19,435
—
6,790
17,241
912
57,264
2,194
—
78,905
25,118
—
22,334
24,305
—
—
—
56,571
693
14,814
813
1,380
1,838
Transporte Aéreo S.A.
280,117
151,066
129,051
283,166
177,109
106,057
24,871
(36,190)
Fast Air Almacenes de Carga S.A.
14,255
10,455
3,800
16,150
12,623
3,527
Laser Cargo S.R.L.
Lan Cargo Overseas Limited and Subsidiaries (*)
—
—
1
—
(1)
—
—
3
(3)
35,991
15,334
20,656
462
—
—
1,154
—
(1,287)
Lan Cargo Inversiones S.A. and Subsidiary (*)
166,503
80,502
(71,744)
220,144
148,489
11,661
(5,345)
(11,901)
Inversiones Lan S.A. (*)
Technical Training LATAM S.A.
Latam Finance Limited
Professional Airline Services INC.
Jarletul S.A.
Latam Travel S.R.L.
76.262.894-5
Latam Travel Chile II S.A.
Latam Travel S.A.
1,238
1,246
50
893
1,188
353
1,281
1,417
56
1,110
1,225
307
(36)
165
(14)
77
114
208,621
(208,507)
3,011
211,517
(208,506)
(1)
169,582
15,571
16
92
356
4,547
10,943
1,101
—
1,239
1,554
4,628
56,895
(1,085)
92
(883)
2,993
16
92
368
7,303
53,786
1,109
5
1,234
2,715
3,109
1,681
(1,093)
87
(866)
4,588
8
5
(16)
940
258
(2)
154
2
(6,187)
TAM S.A. and Subsidiaries (*)
4,240,748
3,027,373
1,212,329
3,497,848
4,231,547
(733,699)
740,783
(69,932)
(*) The Equity reported corresponds to Equity attributable to owners of the parent, it does not include Non-
controlling participation.
In addition, the following 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 (Liquidated in May 2023); and (3) 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, 2022 and December 31, 2023, are detailed
below:
(1)
Incorporation or acquisition of companies
- On December 22, 2022, LATAM Airlines Group S.A. purchased 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 94.01%. These transactions were between LATAM Airlines Group
entities and therefore did not generate any effects within the consolidated financial statements.
- On March 29, 2023, a capital increase was made in TAM S.A. carried out a capital increase,
through the contribution of LATAM Airlines Group S.A. of accounts receivable for
ThUS$785,865; consequently, there were no significant changes in the shareholder composition
and therefore did not generate any effect within the Consolidated Financial Statements.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
4
- On March 29, 2023, a capital increase was made in TAM Linheas Aéreas S.A carried out a
increase,
capital
ThUS$785,865; consequently, there were no significant changes in the shareholder composition
and therefore did not generate any effect within the Consolidated Financial Statements.
the contribution of TAM S.A. of accounts receivable for
through
- On March 29, 2023, a capital increase was made in Aerovías de Integración Regional S.A. Aires
S.A. through the contribution of made a capital increase where Holdco Colombia I SpA made a
contribution through accounts receivable for ThUS$120,410, consequently, there were no
significant changes in the shareholder composition and therefore did not generate any effect
within the Consolidated Financial Statements.
- On April 14, 2023, a capital reduction was carried out in Lan Argentina S.A. through the
absorption of losses in the sum of ThUS$160,170. Consequently, there were no significant
changes in the shareholding composition and therefore it did not generate any effect within the
Consolidated Financial Statements.
- On June 7, 2023, a capital increase was made in TAM S.A. carried out a capital increase, through
the contribution of LATAM Airlines Group S.A. of accounts receivable for ThUS$308,031,
consequently, there were no significant changes in the shareholder composition and therefore did
not generate any effect within the Consolidated Financial Statements.
- On June 7, 2023, a capital increase was made in TAM Linheas Aéreas S.A carried out a capital
increase, through the contribution of TAM S.A. of accounts receivable for ThUS$308,031,
consequently, there were no significant changes in the shareholder composition and therefore did
not generate any effect within the Consolidated Financial Statements.
- On June 13 and 14, 2023, Inversiones Lan S.A. made a purchase of 923 shares from third parties,
for an a total amount of ThUS$ 23, of the subsidiary Aerovías de Integración Regional S.A. Aires
S.A., consequently, these transactions generated a decrease in the non-controlling interest,
without generating significant effects on the Consolidated Financial Statements.
- On July 21, 2023, a capital increase was carried out in Latam Airlines Ecuador S.A through the
contribution of accounts receivable held by Holdco Ecuador S.A for ThUS$3,100, consequently,
there were no significant changes in the shareholding composition and Therefore, it did not
generate any effect within the Consolidated Financial Statements.
- On July 28, 2023, Lan Cargo S.A purchased 1 share of Lan Cargo Overseas Limited from
Inversiones Lan S.A. Consequently, there were no significant changes in the shareholding
composition and therefore did not generate any effect within the Consolidated Financial
Statements.
- On August 1, 2023, Inversiones Lan S.A. purchased 1 share of Americonsult SA de CV from Lan
Cargo Overseas Limited. Consequently, there were no significant changes in the shareholding
composition and therefore did not generate any effect within the Consolidated Financial
Statements.
- On August 4, 2023, the merger of Holdco Colombia II SpA into Lan Pax Group S.A takes place,
acquiring the latter all of its assets, liabilities, rights and obligations. As a result of the above,
Holdco Colombia II SpA is dissolved. On the same date Lan Pax Group S.A carries out a capital
increase of ThUS$347 in Holdco Colombia I SpA through the contribution of 47,010 shares of
Aerovías de Integración Regional S.A. These transactions were carried out between entities under
common control of LATAM Airlines Group S.A. Group. and, therefore, did not generate any
effect within the Consolidated Financial Statements.
174
5
- On September 11, 2023, the company Mas Investment Limited was liquidated and its controller
Lan Cargo Overseas Limited acquired all its assets, liabilities, rights and obligations, as a result
of the liquidation, including the investments that Mas Investment Limited held in the following
companies: (i) Consultoría Administrativa Profesional S.A. de C.V., equivalent to 49,500 shares;
(ii) Americonsult, S.A. de C.V., equivalent to 499 shares; (iii) Transporte Aéreo S.A. equivalent
to 109,662 shares; and (iv) Inversiones Aereas S.A., equivalent to 15,216 shares. These
transactions were carried out between entities under common control of LATAM Airlines Group
S.A. and, therefore, did not generate any effect within the Consolidated Financial Statements.
- On September 11, 2023, the company Lan Cargo Overseas Limited was liquidated and its
controller Lan Cargo S.A acquired all its all its assets, liabilities, rights and obligations, as a
result of the liquidation, including the investments that Lan Cargo Overseas Limited held in the
following companies: (i) Prime Airport Services Inc., equivalent to 105 shares; (ii) Americonsult
de Costa Rica S.A, equivalent to 66 shares; (iii) Americonsult de Guatemala, Sociedad Anónima,
equivalent to 50 shares; (iv) Consultoría Administrativa Profesional S.A. de C.V., equivalent to
49,500 shares; (v) Americonsult, S.A. de C.V., equivalent to 499 shares; (vi) Transporte Aéreo
S.A. equivalent to 109,662 shares; and (vii) Inversiones Aereas S.A., equivalent to 15,216 shares.
These transactions were carried out between entities under common control of LATAM Airlines
Group S.A. and, therefore, did not generate any effect within the Consolidated Financial
Statements.
- On September 15, 2023, a capital increase was made in TAM S.A. through the contribution of
ThUS$106,104 on accounts receivable from LATAM Airlines Group S.A.; consequently, there
were no significant changes in the shareholder composition and therefore did not generate any
effect within the Consolidated Financial Statements.
- On September 15, 2023, a capital increase was made in TAM Linheas Aéreas S.A through the
contribution of ThUS$106,104 on accounts receivable from TAM S.A., consequently, there were
no significant changes in the shareholder composition and therefore did not generate any effect
within the Consolidated Financial Statements.
- On October 23 and 30, 2023, Inversiones Lan S.A. purchased a total 183 shares from Non-
controlling interest, for an a total amount of ThUS$2, of the subsidiary Aerovías de Integración
Regional S.A. Aires S.A., consequently, these transactions generated a decrease in non-
controlling interest, with no generating significant effects on the Consolidated Financial
Statements.
- On December 6, 2023, the company Prime Cargo SpA was incorporated, which is 100% owned
by Lan Cargo S.A., whose exclusive purpose is to carry out storage activities for all types of
products and/or merchandise.
- On December 29, 2023, LATAM Airlines Group S.A. purchased of 2,392,166 preferred shares of
Inversora Cordillera S.A. a Transportes Aéreos del Mercosur S.A.;consequently, the shareholding
composition of Inversora Cordillera S.A. is as follows: Lan Pax Group S.A. with 99.95% and
LATAM Airlines Group S.A. with 0.05%. These transactions were between subsidiaries of
LATAM Airlines Group not generating any effects within the Consolidated Financial Statements.
- On December 29, 2023, LATAM Airlines Group S.A. purchased of 53,376 preferred shares of
LAN Argentina S.A. a Transportes Aéreos del Mercosur S.A.;consequently, the shareholding
composition of LAN Argentina S.A. is as follows: Lan Pax Group S.A. with 4.99%, Inversora
Cordillera S.A. with 94.96% and LATAM Airlines Group S.A. with 0.05%. These transactions
were between subsidiaries of LATAM Airlines Group not generating any effects within the
Consolidated Financial Statements.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
6
NOTE 2 - SUMMARY OF MATERIAL 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. and Subsidiaries as of December 31,
2023 and 2022, have been prepared in accordance with the International Financial Reporting Standards as
issued by the International Accounting Standards Board (IFRS Accounting Standards) and with the
interpretations issued by the International Financial Reporting Standards Interpretations Committee (IFRIC IC).
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 Accounting Standards
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 describe 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.
These consolidated financial statements have been prepared in accordance with the accounting policies used by
the Company in the preparation of the 2022 consolidated financial statements, except for the standards and
interpretations adopted as of January 1, 2023.
(a)
Application of new standards for the year 2023:
Accounting pronouncements with implementation effective from January 1, 2023:
(i) Standards and amendments
Issuance Date
Effective Date:
IFRS 17: Insurance contracts, replaces IFRS 4.
May 2017
01/01/2023
Initial Application of IFRS 17 and IFRS 9 — Comparative Information
(Amendment to IFRS 17)
December
2021
An entity that elects to apply
the amendment applies it
when it first applies IFRS 17
Amendment to IAS 1: Presentation of financial statements, on
materiality accounting policies.
February 2021
01/01/2023
Amendment to IAS 8: Accounting policies, changes in accounting
estimates and error, on separating between changes in accounting
estimates and changes in accounting policies.
February 2021
01/01/2023
Amendment to IAS 12: Income taxes, on international tax reform – rules
of the two pillar model.
May 2023
01/01/2023
Amendment to IAS 12: Income taxes, Deferred taxes related to assets
and liabilities that arise from a single transaction.
May 2021
01/01/2023
The application of these accounting standards as of January 1, 2023, had no significant effect on the Company's
consolidated financial statements.
175
(b)
Accounting pronouncements not in force for the financial year beginning on January 1, 2023:
7
(i) Standards and amendments
Issuance Date
Effective Date:
Amendment to IAS 1: Presentation of financial statements, on
classification of liabilities.
January 2020
01/01/2024
Amendment to IAS 1: Presentation of financial statements, on non-
current liabilities with covenants.
October 2022
01/01/2024
Amendment to IFRS 16: Leases, on sales with leaseback.
September 2022
01/01/2024
Amendment to IFRS 10: Consolidated financial statements and IAS
28: Investments in associates and joint ventures.
September 2014
Not determined
Amendments to IAS 7 "Statement of cash flows" and IFRS 7
"Financial Instruments: Information to be Disclosed"
May 2023
01/01/2024
Amendments to IAS 21: Lack of Exchangeability
August 2023
01/01/2025
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 Exit
Chapter 11 Filing and Procedure: 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 of LATAM Airlines
Group S.A. (“LATAM Parent”) resolved unanimously that LATAM Parent and some its subsidiaries should
initiate a reorganization process in the United States of America according to the rules established in the
Bankruptcy Code by filing a voluntary petition for relief in accordance with the same, which petition was
submitted on May 26, 2020 and was jointly administered under Case Number 20-11254. Subsequently, Piquero
Leasing Limited (July 7, 2020) and TAM S.A. and its subsidiaries in Brazil (July 9, 2020) joined the process
(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. On June 18,
2022, the Bankruptcy Court issued a memorandum decision approving the Debtors’ joint plan of reorganization
(the “Plan”) and rejecting all remaining objections and entered an order confirming the Plan (the “Confirmation
Order”). On November 3, 2022 (the “Effective Date”), the Plan was substantially consummated and each of the
Debtors emerged from the Chapter 11 proceedings as “Reorganized Debtors”. 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 Restructuring Support Agreement (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:
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
8
• 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 ThUS$1,257,003
Conversion Ratio: 15.904615504595600. The Convertible Notes Class G Conversion Ratio
shall step down by 50% after the sixty days (60) counted from the Effective Date.
Backup Shares: 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.
• 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% after the sixty days (60) counted from the fifth (5th) anniversary from the
Effective Date .
Backup Shares: 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:
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: Additionally, each holder of
Convertible Notes Class H will have the ability to convert their Convertible Notes Class H
into shares of the Company beginning on the fifth (5th) anniversary of the Effective Date
and until the sixth (6th) anniversary of the Effective Date.
• 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 a contribution 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 I Conversion Ratio shall
step down by 50% after the sixty days (60) counted from the Effective Date.
Backup Shares: 385,337,858,290
Maturity: 31 Dec. 2121
Interest rate: 0%
Conversion Conditions: They may be converted into shares within 12 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.
176
9
•
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.
•
•
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, 2023, 100.000% of the Convertible Notes Class G was placed, 99.997% of the Convertible
Notes Class H was placed and 100.000% of the Convertible Notes Class I was placed had been converted into
equity, respectively (See Note 24)
As of the Effective Date, the Plan was substantially consummated. Pursuant to the Plan, the Reorganized
Debtors were permitted to operate their businesses and manage their properties without supervision of the
Bankruptcy Court and free of the restrictions of the Bankruptcy Code.
As customary in this type of restructurings, the docket of the Chapter 11 proceedings remained open after the
Effective Date to finalize the reconciliation process of certain claims that were still outstanding as of the
Effective Date, as well as to resolve certain administrative matters.
On June 29, 2023, the Bankruptcy Court entered a final decree in the Chapter 11 proceedings ordering that Case
Number 20-11254 and its docket be closed (the “Final Decree”). The foregoing, as a result of the resolution of
substantially all remaining matters in the Chapter 11 proceedings and all appeals of the Confirmation Order.
As part of their overall reorganization process, while the Chapter 11 proceedings were outstanding the Debtors
sought and received relief in certain non-U.S. jurisdictions (i.e., Cayman Islands, Chile and Colombia).
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
2.2.
Basis of Consolidation
(a)
Subsidiaries
10
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 its
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
177
currency are shown in the consolidated statement of income by function except when deferred in Other
comprehensive income as qualifying cash flow hedges.
11
(c)
Adjustment due to hyperinflation
After July 1, 2018, the Argentine economy was considered, for purposes of IFRS Accounting Standards,
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 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 ítems 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:
(i)
the closing exchange rate on the consolidated statement of financial position date;
Assets and liabilities of each consolidated statement of financial position presented are translated at
(ii)
prevailing on the transaction dates, and
The revenues and expenses of each income statement account are translated at the exchange rates
(iii)
comprehensive income, within "Gain (losses) from exchange rate difference, before tax".
All the resultant exchange differences by conversion are shown as a separate component in other
For those subsidiaries of the group whose functional currency is different from the presentation currency and
corresponds to the currency of a hyperinflationary economy; its restated results, cash flow and financial
situation are converted to the presentation currency at the closing exchange rate on the date of the consolidated
financial statements.
The exchange rates used correspond to those fixed in the country where the subsidiary is located, whose
functional currency is different to the U.S. dollar.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
2.4.
Property, plant and equipment
12
The land of LATAM Airlines Group S.A. and its Subsidiaries, are recognized at cost less any accumulated
impairment loss. The rest of the Property, plant and equipment are recorded, both at their initial recognition and
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.
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 Property, plant 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 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
Airport slots and the Loyalty program correspond to intangible assets with indefinite useful lives and are
annually tested for impairment as an integral part of the CGU Air Transport.
Airport Slots correspond to an administrative authorization to carry out operations of arrival and departure of
aircraft, at a specific airport, within a certain period of time.
The Loyalty program corresponds to the system of accumulation and exchange of points that is part of TAM
Linhas Aereas S.A.
The airport slots and Loyalty program were recognized at fair value under IFRS 3, as a consequence of the
business combination with TAM S.A. and Subsidiaries.
(b)
Computer software
Licenses for computer software acquired are capitalized on the basis of the costs incurred in acquiring them and
preparing them for using the specific software. These costs are amortized over their estimated useful lives, for
which the Company has 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.
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.
178
2.7.
Losses for impairment of non-financial assets
13
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.
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.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
14
The Company designates certain derivatives as:
(a) Hedge of an identified risk associated with a recognized liability or an expected highly- probable
transaction (cash-flow hedge), or
(b) Derivatives that do not qualify for hedge accounting.
At the beginning of the transaction, the Company documents the economic relationship between the hedged
items existing between the hedging instruments and the hedged items, as well as its objectives for risk
management and the strategy to carry out various hedging operations. The Company also documents its
assessment, both at the beginning and on an ongoing basis, as to whether the derivatives used in the hedging
transactions are highly effective in offsetting the changes in the fair value or cash flows of the items being
hedged.
The total fair value of the hedging derivatives is booked as Other non-current financial asset or liability if the
remaining maturity of the item hedged is over 12 months, and as an Other current financial asset or liability if
the remaining term of the item hedged is less than 12 months. Derivatives not booked as hedges are classified as
Other financial assets or liabilities.
(a) Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is shown in the statement of other comprehensive income. The loss or gain relating to the ineffective
portion is recognized immediately in the consolidated statement of income by function under other gains
(losses). Amounts accumulated in equity are reclassified to profit or loss in the periods or exercise when the
hedged item affects profit or loss. 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 matures, is sold, or fails to meet the requirements to be accounted for as a hedge,
any gain or loss accumulated in the statement of Other comprehensive income until that moment, remains in the
statement of other comprehensive income and is reclassified to the consolidated statement of income when the
hedged transaction is finally recognized.
When it is expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in the
statement of other comprehensive income is taken immediately to the consolidated statement of income by
function as “Other gains (losses)”.
(b) Derivatives not booked as a hedge
The changes in fair value of any derivative instrument that is not booked as a hedge are shown immediately in
the consolidated statement of income in “Other gains (losses)”.
15
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.
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.
Incremental costs directly attributable to the issuance of new shares or options are shown in net equity as a
deduction from the proceeds received from the placement of shares.
2.14. Trade and other accounts payables
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.
Embedded derivatives
Convertible Notes
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.
The component parts of the convertible notes issued by LATAM Airlines Group S.A. 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
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ANNUAL REPORT 2023 13 —Financial reports —Financial statements
16
17
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.
2.16. Current and deferred taxes
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 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:
(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 realize 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.
LATAM Airlines Group S.A has evaluated the potential impact from the implementation of the “GloBE or
Pillar Two rules”, which seeks to ensure that multinational groups pay a minimum effective tax rate of 15%. As
of December 31, 2023, this regulation has not been adopted in Chile (where LATAM has its headquarters) or in
other jurisdictions where LATAM Airlines Group S.A has operating companies. Therefore, it has not been
necessary to estimate a potential impact of its application from its entry into force (January 1, 2023). At the
close of this Financial Statements, the group does not present expenses or income for current taxes related to the
Pillar Two income tax.
LATAM Airlines Group S.A. and its Subsidiaries have adopted the exception of paragraph 4A of IAS 12,
incorporated in the amendment published on May 23, 2023.
2.17. Employee benefits
(a)
Personnel vacations
The Company recognizes the expense for personnel vacations on an accrual basis.
180
(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 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.
(c) Post-employment and other long-term benefits
Provisions are made for these obligations by applying the method of the projected unit credit method, and
considering estimates of future permanence, mortality rates and future wage increases determined on the basis
of actuarial calculations. The discount rates are determined by reference to market interest-rate curves. Actuarial
gains or losses are shown in other comprehensive income.
(d)
Incentives
The Company has an annual incentives plan for its personnel for compliance with objectives and individual
contribution to the results. The incentives eventually granted consist of a given number or portion of monthly
remuneration and the provision is made on the basis of the amount estimated for distribution.
(e)
Termination benefits
The group recognizes termination benefits at the earlier of the following dates: (a) when the group terminates
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;
(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
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.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
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19
(d)
Frequent passenger program
The Company maintains the following loyalty programs: LATAMPASS’s and LATAMPASS’s Brazil, whose
objective is building customer loyalty through the delivery of miles or points.
These programs give their frequent passengers the possibility of earning LATAMPASS’s miles or points, which
grant the right to a selection of both air and non-air awards. Additionally, the Company sells the LATAMPASS
miles or points to financial and non-financial partners through commercial alliances to award miles or points to
their customers.
To reflect the miles and points earned, the loyalty program mainly includes two types of transactions that are
considered revenue arrangements with multiple performance obligations: (1) Passenger Ticket Sales Earning
miles or points (2) miles or points sold to financial and non-financial partner.
(1)
Passenger Ticket Sales Earning Miles or Points.
In this case, the miles or points are awarded to customers at the time that the company performs the flight.
To value the miles or points earned with travel, we consider the quantitative value a passenger receives by
redeeming miles for a ticket rather than paying cash, which is referred to as Equivalent Ticket Value ("ETV").
Our estimate of ETV is adjusted for miles and 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.
2.20. Leases
The Company recognizes contracts that meet the definition of a lease as a right of use asset and a lease liability
on the date when the underlying asset is available for use.
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;
Initial direct costs, and
-
-
-
- Restoration costs.
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.
-
- 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 Airlines Group S.A. 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.
181
LATAM Airlines Group S.A. uses its incremental borrowing rate if the interest rate implicit in the lease cannot
be readily determined.
Lease liabilities are recognized in the statement of financial position under “Other financial liabilities, current or
non-current”.
Interest accrued on financial liabilities is recognized in the consolidated statement of income in "Financial
costs".
Principal and interest are present in the consolidated cash flow as "Payments of lease liability" and "Interest
paid", respectively, 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)
acquisition with the manufacturers.
That the Company initially acquired the aircraft or took an important part in the process of direct
(b)
option of the aircraft at the end of the lease term.
Due to the contractual conditions, it is virtually certain that the Company will execute the purchase
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.
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).
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.
2.22. Maintenance
The costs incurred for scheduled heavy maintenance of the aircraft’s fuselage and engines are capitalized and
depreciated until the next maintenance. The depreciation rate is determined on technical grounds, according to
the use of the aircraft expressed in terms of cycles and flight hours.
In case of aircraft include in property, plant and equipment, these maintenance cost are capitalized as Property,
plant and equipment, while in the case of aircraft on right of use, a liability is accrued based on the use of the
main components is recognized, since a contractual obligation with the lessor to return the aircraft on agreed
terms of maintenance levels exists. These are recognized as Cost of sales.
Additionally, some contracts that comply with the definition of lease establish the obligation of the lessee to
make deposits to the lessor as a guarantee of compliance with maintenance and return conditions. These
deposits, often called maintenance reserves, accumulate until a major maintenance is performed. Once made,
the recovery is requested to the lessor. At the end of the contract period, there is comparison between the
reserves that have been paid and required return conditions, and compensation between the parties are made if
applicable.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
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21
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.
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 manuals 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:
Positions as of December 31, 2022 (*)
Q123
Q223
Maturities
Q323
Q423
Total
Percentage of coverage over the expected volume of
consumption
24%
24%
15%
5%
17%
(*) The percentage 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 2023 and the end of December 2022. The projection period was defined
until the end of the last fuel hedging contract in force, being the last business day of the second half of 2024.
Benchmark price
(US$ per barrel)
Positions as of December 31, 2023
effect on Equity
(MUS$)
Positions as of December 31, 2022
effect on Equity
(MUS$)
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.
+5
-5
+10.8
-10.7
+2.2
-2.3
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, 2023, the Company recognized gains of US$15.7 million for fuel
hedging net of premiums in the costs of sales for the year. 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.
As of December 31, 2023, the market value of the fuel positions amounted to US$22.10 million (positive). At
the end of December 2022, this market value was US$12.6 million (positive).
The following tables show the level of hedge for different periods:
Positions as of December 31, 2023 (*)
Percentage of coverage over the expected volume of
consumption
Q124
Q224
Maturities
Q324
Q424
Total
35%
32%
30%
22%
30%
Given the fuel hedging structure for the year of 2023, which considers a portion free of hedges, a vertical drop
of 5 dollars in the JET reference price (considered as the monthly daily average), would have meant an impact
of approximately US$ 131.6 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$
131.3 million in higher fuel costs.
(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 (R$), 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.
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ANNUAL REPORT 2023 13 —Financial reports —Financial statements
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23
Exchange Rate Hedging Results (FX):
As of December 31, 2023, the Company recognized losses of US$10.1 million for FX hedging derivatives net
of premiums reflected in the cost of sale. At the end of December of 2022, the Company recognize gains for
US$5.2 million for FX hedging derivatives cost of sales.
As of December 31, 2023, the market value of hedging FX derivative positions is US$1.5 million (negative). As
of December 31, 2022, the market value of the hedging FX derivative positions was US$ 0.2 million (positive).
As of December 31, 2023, the Company has current hedging FX derivatives for US$414 million. . As of
December 31, 2022, the Company holds current hedging FX derivatives of US$108 million.
As of December 31, 2023, the Company does not maintain for FX non-hedging derivatives. At the end of
December of 2022, the Company recognized losses of US$1.8 million in non-hedging FX derivatives net of
premiums reflected in Other gains/(losses).
Sensitivity analysis:
A depreciation of the R$/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, 2023
(MUS$)
Effect on equity as of
December 31, 2022
(MUS$)
-10%
+10%
-10.0
+19.0
-2.9
+3.0
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 year ended December 31, 2023
(MUS$)
Effect on Income Statement
for the year ended December 31, 2022
(MUS$)
-10%
+10%
+6.6
-6.6
+70.7
-70.7
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.
183
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, 2023
MUS$
Effect at December 31, 2022
MUS$
-10%
+10%
+327.01
-267.56
+98.11
-80.28
(iii)
Interest -rate risk:
Exposure:
The Company has exposure to fluctuations in interest rates affecting the markets future cash flows of the assets,
and current and future financial liabilities.
The Company is mainly exposed to the Secured Overnight Financing Rate (“SOFR”) and other less relevant
interest rates such as Brazilian Interbank Certificates of Deposit (“CDI”) . Due to the fact that the publication of
LIBOR ceased by June 30th 2023, the company has effectively migrated to SOFR as an alternative rate, which
was fully materialized on September 30th 2023.
Of the company's financial debt subject to variable rates, all of the contracts maintain exposure to the SOFR
reference rate.
Mitigation:
Currently, 50% (52% as of December 31, 2022) of the debt is fixed against fluctuations in interest rates. The
variable debt is indexed to the reference rate based on SOFR.
Likewise, most of the company's liquidity is denominated in dollars and indexed to a return rate similar and
with alike fluctuation to the SOFR rate, which helps reduce exposure.
Rate Hedging Results:
During the period ended December 31, 2023, the Company recognized losses of US$1.8 million (negative)
corresponding to the recognition for premiums paid.
As of December 31, 2023, the Company has no interest rate derivatives outstanding , at the end of December
2022 this market value was US$8.8 million (positive).
As of December 31, 2023, the Company recognized a decrease in the right-of-use asset due to the expiration of
derivatives for US$ 14.9 million associated with the aircraft lease. On this same date, a lower depreciation
expense of the right-of-use asset for US$ 1.1 million (positive) is recognized. At the end of December 2022, the
Company recognized US$ 0.1 million for this same concept.
As of December 31, 2023, the Company settled derivatives for US$ 14.8 million associated with hedges of
leased aircraft.
Sensitivity analysis:
The following table shows the sensitivity of changes in financial obligations that are not hedged against
interest-rate variations. These changes are considered reasonably possible, based on current market conditions
each date.
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13 —Financial reports —Financial statements
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25
Increase (decrease)
of future curve
SOFR rate
Positions as of December 31, 2023 effect
on Income (Loss) before taxes
(MUS$)
Positions as of December 31, 2022 effect
on Income (Loss) before tax
(MUS$)
+100 basis points
-100 basis points
-20.27
+20.27
-22.64
+22.64
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.
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
+100 basis points
-100 basis points
Positions as of December 31, 2023
effect on equity
(MUS$)
Positions as of December 31, 2022
effect on equity
(MUS$)
—
—
+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 recorded US$ 0.1 million (negative) for ineffectiveness in the
consolidated income statement for this type of coverage.
(b)
Credit risk
Credit risk occurs when the counterparty does not comply with 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 customer portfolio as of December 31, 2023 has experienced an increased by 24%
compared to the balance as of December 31, 2022, mainly due to an increase in passenger transportation
operations (travel agencies and corporate) that increased by 22% in its sales, mainly affecting the payment
methods credit card 29%, and cash sales 9%. In relation to the cargo business, it presented a decrease in its
operations of 5% compared to December 2022. There was especial consideration for the Expected Credit Loss
calculation for the clients with balance at the year end that management considered risky. The Expected Credit
Loss at the end of December 2023 had a decrease 4% compared to the end of December 2022, as a result of the
decrease in the portfolio due to collection, and due to the application of write-offs.
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 credit limits to limit the
exposure of its debtors, which are permanently monitored for the LATAM network, when deemed necessary,
agencies have been blocked for cargo and passenger businesses.
(i)
Financial activities
Cash surpluses that remain after the financing of assets necessary for the operation are invested according to
credit limits approved by the Company’s Board, mainly in time deposits with different financial institutions,
private investment funds and short-term mutual funds. 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, and (ii) investment limits according to the Company’s level of liquidity. According to these two
184
parameters, the Company chooses the most restrictive parameter of the previous two 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.
The sales invoicing of TAM Linhas Aéreas S.A. related with cargo agents for domestic transportation in Brazil
is done directly by TAM Linhas Aereas 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, 2023, the balance of liquid funds is US$1,715 million ((US$ 1,217 million as of December
31, 2022), which are invested in short-term instruments through financial entities with a high credit rating
26
classification.
As of December 31, 2023, LATAM maintains engaged two 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$500 million, which
are fully available. The first of these lines is secured by and subject to the availability of certain collateral (i.e.
aircraft, engines and spare parts). The second one, is secured by certain intangibles assets of the Company,
which are shared with other Chapter 11 exit financing.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
27
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2023
Debtor: LATAM Airlines Group S.A. Tax No. 89.862.200-2 Chile.
Tax No.
Creditor
Creditor
country
Currency
Up to
90
days
ThUS$
More than
90 days
to one
year
ThUS$
More than
one to
three
years
ThUS$
More than
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective
rate
Nominal
rate
%
%
U.S.A.
US$
44,721
127,878
302,953
1,192,355
—
1,667,907
1,089,000
Quarterly
20.31
15.04
Bank loans
0-E
GOLDMAN
SACHS
Obligations with the public
97.036.000-K
SANTANDER
0-E
WILMINGTON
TRUST
COMPANY
Chile
U.S.A.
UF
US$
97.036.000-K
SANTANDER
Chile
US$
Guaranteed obligations
0-E
0-E
BNP PARIBAS
WILMINGTON
TRUST
COMPANY
U.S.A.
U.S.A.
US$
US$
Other guaranteed obligation
0-E
0-E
0-E
EXIM BANK
MUFG
CREDIT
AGRICOLE
U.S.A.
U.S.A.
France
Financial lease
0-E
0-E
0-E
0-E
Others loans
NATIXIS
US BANK
EXIM BANK
France
U.S.A.
U.S.A.
BANK OF UTAH
U.S.A.
US$
US$
US$
US$
US$
US$
US$
—
—
—
3,230
6,409
6,409
182,647
198,695
160,214
To the expiration
2.00
2.00
153,813
307,625
697,438
793,625
1,952,501
1,150,000
To the expiration
—
—
—
6
6
3
To the expiration
15.00
1.00
13.38
1.00
5,940
17,082
41,319
40,578
120,730
225,649
171,704
Quarterly
6.98
6.98
5,948
16,928
42,098
40,736
54,056
159,766
132,585 Quarterly/Monthly
8.76
8.76
452
12,919
1,348
37,926
43,531
16,649
43,494
—
6,451
33,576
75,714
243,842
10,653
17,984
3,262
5,891
30,443
50,411
9,389
17,705
73,474
17,681
216,015
47,590
70,443
—
148,582
54,357
16,665
—
—
94,995
—
75,118
117,597
105,490
67,494
99,109
64,102
Quarterly
Quarterly
359,583
266,768
To the expiration
280,008
86,076
452,366
243,140
215,357
84,177
413,072
172,582
Quarterly
Quarterly
Quarterly
Monthly
2.29
7.11
9.43
7.58
4.41
4.13
2.05
7.11
9.43
7.58
3.16
3.31
10.71
10.71
0-E
OTHERS (*)
Chile
US$
104
—
—
—
—
104
104
To the expiration
—
—
TOTAL
114,325
499,729
1,191,058
2,538,234
1,455,439
5,798,785
4,018,777
185
(•) Obligation with creditors for executed letters of credit.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
28
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2023
Debtor: TAM S.A. Tax No. 02.012.862/0001-60, Brazil.
Tax No.
Creditor
Creditor
country
Currency
Up to
90
days
ThUS$
More than
90 days
to one
year
ThUS$
More than
one to
three
years
ThUS$
More than
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective
rate
%
Nominal
rate
%
Financial leases
0-E
NATIXIS
France
US$
510
1,530
4,080
9,886
—
16,006
16,006
Quarterly
—
—
TOTAL
510
1,530
4,080
9,886
—
16,006
16,006
186
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
29
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2023
Debtor: LATAM Airlines Group S.A. Tax No. 89.862.200-2, Chile.
Tax No.
Creditor
Creditor
country
Currency
Lease Liability
Up to
90
days
ThUS$
More than
90 days
to one
year
ThUS$
More than
one to
three
years
ThUS$
More than
three to
five
years
ThUS$
More than
five
years
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective
rate
Nominal
rate
%
%
AIRCRAFT
OTHERS US$
139,599
419,554
1,116,682
928,238
1,685,262
4,289,335
2,894,195
OTHER
ASSETS
OTHERS US$
CLP
UF
COP
EUR
BRL
MXN
2,523
19
557
122
63
2,314
24
Trade and other accounts payables
-
OTHERS
OTHERS US$
CLP
BRL
Other
currency
846,541
44,593
309,999
178,740
Accounts payable to related parties currents
Qatar Airways
Foreign
Qatar
Foreign
Delta Air Lines,
Inc.
U.S.A
US$
US$
—
—
7,276
57
1,255
308
101
6,871
71
7,063
8,072
7,671
5,522
2,312
5,132
14,863
94
2,906
266
172
15,177
8
—
—
—
—
—
—
846
—
2,426
148
23
14,438
—
—
—
—
—
—
—
1,404
—
5,099
—
—
25,742
—
—
—
—
—
—
—
26,912
170
12,243
844
359
64,542
103
25,680
135
11,097
667
296
35,841
84
853,604
52,665
317,670
709,933
64,317
409,474
184,262
118,189
2,312
2,312
5,132
5,132
Total
Total
consolidated
1,525,094
471,265
1,150,168
946,119
1,717,507
5,810,153
4,277,352
1,639,929
972,524
2,345,306
3,494,239
3,172,946
11,624,944
8,312,135
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
187
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
30
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2022
Debtor: LATAM Airlines Group S.A. Tax No. 89.862.200-2 Chile.
Tax No.
Creditor
Creditor
country
Currency
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective
rate
%
Nominal
rate
%
Bank loans
97.023.000-9
GOLDMAN SACHS U.S.A.
0-E
SANTANDER
Spain
Obligations with the public
97.030.000-7
SANTANDER
0-E
WILMINGTON
TRUST COMPANY
Chile
U.S.A.
97.036.000-K
SANTANDER
Chile
Guaranteed obligations
0-E
BNP PARIBAS
0-E
WILMINGTON
TRUST COMPANY
Other guaranteed obligation
0-E
EXIM BANK
MUFG
CREDIT
AGRICOLE
CITIBANK
BNP PARIBAS
NATIXIS
US BANK
PK AIRFINANCE
EXIM BANK
BANK OF UTAH
0-E
0-E
Financial lease
0-E
0-E
0-E
0-E
0-E
0-E
0-E
Others loans
0-E
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.
U.S.A.
US$
US$
UF
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
32,071
19,164
122,278
55,288
323,125
1,361,595
—
—
—
—
1,839,069
1,100,000
Quarterly
74,452
70,951
Quarterly
—
—
—
3,136
6,271
6,271
178,736
194,414
156,783 At Expiration
152,531
307,625
757,625
887,250
2,105,031
1,150,000 At Expiration
—
—
—
6
6
3 At Expiration
6,692
14,705
39,215
39,215
138,345
238,172
184,198
Quarterly
3,839
13,465
45,564
43,444
75,505
181,817
141,605
Quarterly /
Monthly
394
13,091
1,171
38,914
12,119
69,916
21,111
60,857
5,769
31,478
70,890
267,615
—
—
—
—
—
—
—
70,787
129,582
—
—
—
—
193,551
50,649
157,978
145,184
95,652
121,921
86,612
Quarterly
112,388
Quarterly
375,752
275,000 At Expiration
12,839
29,183
315,226
158,236
13,579
502,316
266,668
12,514
28,165
239,138
152,693
Quarterly
Quarterly
Quarterly
Quarterly
12,590
Quarterly
446,509
182,237
Quarterly
Monthly
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
18.46
7.26
2.00
15.00
1.00
5.76
8.20
2.01
6.23
8.24
6.19
5.99
6.44
4.06
5.97
3.58
13.38
7.26
2.00
13.38
1.00
5.76
8.20
1.78
6.23
8.24
5.47
5.39
6.44
2.85
5.97
2.79
10.45
10.45
OTHERS (*)
Chile
TOTAL
2,028
—
—
—
—
2,028
2,028 At Expiration
—
—
135,760
575,525
1,229,770
2,811,863
1,773,443
6,526,361
4,353,414
188
(•) Obligation with creditors for executed letters of credit.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
31
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2022
Debtor: TAM S.A. Tax No. 02.012.862/0001-60, Brazil.
Tax No.
Creditor
Creditor
country
Currency
Financial Leases
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective
rate
%
Nominal
rate
%
0-E
NATIXIS
France
US$
510
1,530
4,080
4,080
7,846
18,046
18,046
Semiannual
/Quarterly
7.23
7.23
Bank loans
0-E
MERRILL
LYNCH
CREDIT
PRODUCTS,
LLC
TOTAL
Brazil
BRL
304,549
—
—
—
—
304,549
304,549 Monthly
3.95
3.95
305,059
1,530
4,080
4,080
7,846
322,595
322,595
´
189
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
32
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2022
Debtor: LATAM Airlines Group S.A. Tax No. 89.862.200-2, Chile.
Tax
No.
Creditor
Creditor
country
Currency
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
ThUS$
Nominal
value
ThUS$
Amortization
Annual
Effective
rate
%
Nominal
rate
%
Lease Liability
AIRCRAFT
OTHERS
OTHER ASSETS
OTHERS
US$
US$
CLP
UF
COP
EUR
BRL
80,602
1,727
20
574
76
84
250,297
8,080
34
1,568
227
253
845,215
20,641
69
3,007
301
246
776,431
1,094,935
3,047,480
2,134,968
6,251
—
2,515
—
24
1,763
—
6,273
—
—
38,462
123
13,937
604
607
35,157
111
11,703
518
571
2,064
6,192
14,851
12,491
28,625
64,223
33,425
Trade and other accounts payables
OTHERS
OTHERS
US$
CLP
BRL
Other
currency
80,557
168,393
370,772
58,342
1,231
5,242
583,118
3,935
Accounts payable to related parties currents
Foreign
Inversora
Aeronáutica
Argentina S.A.
Foreign
Patagonia
Seafarms
Argentina
U.S.A
US$
US$
5
7
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
138,899
169,624
376,014
138,899
169,624
376,014
587,053
587,053
5
7
5
7
Total
Total consolidated
1,287,999
1,728,818
335,401
912,456
884,330
797,712
1,131,596
4,437,038
3,488,055
2,118,180
3,613,655
2,912,885
11,285,994
8,164,064
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
190
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
33
34
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, 2023
As of December 31, 2022
Fair value measurements
using
values considered as
Fair value measurements
using
values considered as
Fair
value
ThUS$
Level I
ThUS$
Level II
ThUS$
Level
III
ThUS$
Fair
value
ThUS$
Level I
ThUS$
Level II
ThUS$
Level
III
ThUS$
89,706
89,706
89,706
89,706
—
—
—
—
95,452
95,452
95,452
95,452
—
—
22,136
—
22,136
—
21,601
—
21,601
—
—
—
—
8,816
—
8,816
22,136
—
22,136
—
12,594
—
12,594
—
—
—
—
191
—
191
Assets
Cash and cash equivalents
Short-term mutual funds
Other financial assets, current
Fair value interest rate
derivatives
Fair value of fuel
derivatives
Fair value of foreign
currency derivative
Liabilities
Other financial liabilities,
current
Fair value of foreign
currency derivatives
1,544
—
1,544
1,544
—
1,544
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with
different financial institutions.
As of December 31, 2023, the Company maintains guarantees for US$11.0 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 2022, the Company had guarantees for US$7.5 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, 2023, the Company has a national rating of BBB- by Fitch, and international
rating by Standard & Poor's of B with a positive outlook, and B1 with a stable outlook by Moody's.
3.3.
Estimates of fair value.
At December 31, 2023, the Company maintained financial instruments that should be recorded at fair value.
These are grouped into two categories:
1.
Derivative financial instruments:
This category includes the following instruments:
Interest rate derivative contracts,
-
-
Fuel derivative contracts,
- Currency derivative contracts.
2.
Financial Investments:
This category includes the following instruments:
-
Investments in short-term Mutual Funds (cash equivalent).
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.
191
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
35
Additionally, at December 31, 2023, the Company has financial instruments which are not recorded at fair
value. In order to meet the disclosure requirements of fair values, the Company has valued these instruments as
shown in the table below:
Cash and cash equivalents
Cash on hand
Bank balance
Overnight
Time deposits
Other financial assets, current
Other financial assets
Trade debtors, other accounts receivable and Current
accounts receivable
Accounts receivable from entities related, current
Other financial assets, non-current
Accounts receivable, non-current
As of December 31, 2023
Fair value
Book value
ThUS$
ThUS$
As of December 31, 2022
Fair value
Book value
ThUS$
ThUS$
1,625,055
2,019
552,187
75,236
995,613
152,683
152,683
1,385,910
28
34,485
12,949
1,625,055
2,019
552,187
75,236
995,613
152,683
152,683
1,385,910
28
34,485
12,949
1,121,223
2,248
480,566
259,129
379,280
481,914
481,914
1,008,109
19,523
15,517
12,743
1,121,223
2,248
480,566
259,129
379,280
481,914
481,914
1,008,109
19,523
15,517
12,743
Other current financial liabilities
Accounts payable for trade and other accounts payable,
current
Accounts payable to entities related, current
Other financial liabilities, non current
Accounts payable, non current
594,519
867,791
802,841
824,167
1,765,279
7,444
6,341,669
418,587
1,765,279
7,444
6,174,294
418,587
1,627,992
12
5,979,039
326,284
1,627,992
12
5,533,131
326,284
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, revenue, expenses and
commitments. Basically, these estimates refer to:
(a)
Impairment of Intangible asset 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.
192
36
(b)
Depreciation expense and impairment of Properties, 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.
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 taxable 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.
(d)
Air tickets sold that will not be finally used.
The Company records the sale of air tickets as deferred revenue. Ordinary revenue from the sale of tickets is
recognized in the statement of income when the passenger transportation service is provided or expires due to
non-use. The Company evaluates the probability of expiration of air tickets on a monthly basis, based on the
history of use. A change in this probability could impact revenue in the year in which the change occurs and in
future years.
As of December 31, 2023, deferred revenues associated with air tickets sold amount to ThUS$ 2,009,242
(ThUS$ 1,574,145 as of December 31, 2022). An hypothetical change of one percentage point in passenger
behavior with respect to use would result an impact of up to ThUS$ 10,150 per month (ThUS$ 7,453 as of
December 31, 2022).
(e)
Valuation of the miles and points awarded to the holders of the loyalty programs, pending use.
As of December 31, 2023, deferred revenue associated with the LATAM Pass loyalty program from Spanish-
speaking countries increased to ThUS$ 1,099,580 (ThUS$ 1,120,565 as of December 31, 2022). An
hypothetical change of one percentage point in the probability of redemption would translate into a cumulative
impact of ThUS$ 31,510 on the results of 2023 (ThUS$ 29,571 as of December 31, 2022). Deferred revenue
associated with the LATAM Pass Brazil loyalty program increased to ThUS$179,151 as of December 31, 2023
(ThUS$ 140,486 as of December 31, 2022). An hypothetical change of one percentage point in the exchange
probability would result in an accumulated impact of ThUS$ 5,125 on the results of 2023 (ThUS$ 3,772 as of
December 31, 2022).
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.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
37
38
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)
Legal Contingencies
In the case of known contingencies, the Company records a provision when it has a present obligation, whether
legal or constructive, as a result of a past event, it is probable that an outflow of resources will be required to
settle the obligation and a reliable estimate of the obligation amount can be made. The assessment of
contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future
events, the likelihood of loss being incurred and when determining whether a reliable estimate of the loss can
be made. The Company assesses its liabilities and contingencies based upon the best information available, uses
the knowledge, experience and professional judgment to the specific characteristics of the known risks. This
process facilitates the early assessment and quantification of potential risks in individual cases or in the
development of contingent matters. If we are unable to reliably estimate the obligation or conclude no loss is
probable but it is reasonably possible that a loss may be incurred, no provision is recorded but the contingency
is disclosed in the notes to the consolidated financial statements.
Company recognized as the present obligation under an onerous contract as a provision when a contract under
which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits
expected to be received under it.
(g)
Leases
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 from 2022 and all contracts that were modified from 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 current
registered fleet as of December 31, 2023 would increase the lease liability by approximately US$ 111 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.
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.
193
NOTE 5 - SEGMENT INFORMATION
As of December 31, 2023, the Company considers that it has a single operating segment, Air Transport. This
segment corresponds to the route network for air transport and is based on the way in which the business is
managed, according to the centralized nature of its operations, the ability to open and close routes, as well as
reassignment (airplanes, crew, personnel, etc.) within the network, which implies a functional interrelation
between all of them, making them inseparable. This segment definition is one of the most common in the
worldwide airline industry.
The Company’s revenues by geographic area are as follows:
Peru
Argentina
U.S.A.
Europe
Colombia
Brazil
Ecuador
Chile
Asia Pacific and rest of Latin America
Income from ordinary activities
Other operating income
For the year ended at
December 31,
2023
ThUS$
2022
ThUS$
988,908
244,413
1,044,822
800,897
662,263
5,006,377
332,801
1,898,150
661,910
11,640,541
148,641
858,957
206,856
1,058,107
768,980
540,231
3,724,466
248,454
1,514,645
441,825
9,362,521
154,286
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.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
39
40
NOTE 6 - CASH AND CASH EQUIVALENTS
Cash on hand
Bank balances (1)
Overnight
Total Cash
Cash equivalents
Time deposits
Mutual funds
Total cash equivalents
Total cash and cash equivalents
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
2,019
552,187
75,236
629,442
995,613
89,706
1,085,319
1,714,761
2,248
480,566
259,129
741,943
379,280
95,452
474,732
1,216,675
(1) As of December 31, 2023, within the item bank balances are ThUS$ 391,966 related to banks accounts that
pay interest to the Company for the daily or monthly balances (ThUS$ 274,235 as of December 31, 2022)
Cash and cash equivalents are denominated in the following currencies:
Currency
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
US Dollar
Mexican peso
R.P. Chinese Yuan
Other currencies
Total
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
3,438
520,796
47,933
36,326
25,329
1,020,467
8,159
20,801
31,512
1,714,761
10,711
193,289
17,643
22,607
19,361
906,666
9,406
16,247
20,745
1,216,675
NOTE 7 - FINANCIAL INSTRUMENTS
Financial instruments by category
As of December 31, 2023
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
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
Measured at
amortized
cost
ThUS$
1,625,055
152,683
1,385,910
28
34,485
12,949
3,211,110
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
89,706
—
—
—
—
—
89,706
—
22,136
—
—
—
—
22,136
Total
ThUS$
1,714,761
174,819
1,385,910
28
34,485
12,949
3,322,952
Measured at
amortized
cost
ThUS$
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
Total
ThUS$
594,519
1,765,279
7,444
6,341,669
418,587
9,127,498
—
—
—
—
—
—
1,544
—
—
—
—
596,063
1,765,279
7,444
6,341,669
418,587
1,544
9,129,042
Measured at
amortized
cost
ThUS$
1,121,223
481,637
1,008,109
19,523
15,517
12,743
2,658,752
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
95,452
277
—
—
—
—
95,729
—
21,601
—
—
—
—
21,601
Total
ThUS$
1,216,675
503,515
1,008,109
19,523
15,517
12,743
2,776,082
194
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
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
41
Measured at
amortized
cost
ThUS$
At fair value
with changes
in results
ThUS$
Hedge
derivatives
ThUS$
802,841
1,627,992
12
5,979,039
326,284
8,736,168
—
—
—
—
—
—
—
—
—
—
—
—
Total
ThUS$
802,841
1,627,992
12
5,979,039
326,284
8,736,168
(*) The value presented as measured at amortized cost, mainly correspond to ThUS$ 340,008 of funds delivered
as restricted advances (as described in Note 11) and guarantees delivered.
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,
2023
ThUS$
As of
December 31,
2022
ThUS$
1,185,792
277,845
1,463,637
(64,778)
1,398,859
(12,949)
1,385,910
952,625
135,459
1,088,084
(67,232)
1,020,852
(12,743)
1,008,109
The fair value of trade and other accounts receivable does not differ significantly from the book value.
To determine the expected credit losses, the Company groups accounts receivable for passenger and cargo
transportation depending on the characteristics of shared credit risk and maturity.
Portfolio maturity
Up to date
From 1 to 90 days
From 91 to 180 days
From 181 to 360 days
Over 360 days
Total
As of December 31, 2023
As December 31, 2022
Expected
loss rate (1)
%
Gross book
value (2)
ThUS$
Impairment
loss
Provision
ThUS$
Expected
loss rate (1)
%
Gross book
value (2)
ThUS$
Impairment
loss
Provision
ThUS$
1%
3%
25%
44%
100%
1,022,845
102,977
8,350
7,868
43,752
1,185,792
(12,672)
(2,989)
(2,048)
(3,491)
(43,578)
(64,778)
1%
3%
15%
79%
98%
745,334
142,780
8,622
8,269
47,620
952,625
(8,749)
(3,758)
(1,297)
(6,565)
(46,863)
(67,232)
(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.
195
42
Currency balances composition of Trade and other accounts receivable and non-current accounts receivable are
as follow:
Currency
Argentine Peso
Brazilian Real
Chilean Peso
Colombian Peso
Euro
US Dollar
Australian Dollar
Japanese Yen
Pound Sterling
Korean Won
Other Currencies
Total
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
13,827
825,749
75,050
12,720
90,699
344,347
5,097
4,695
3,390
5,882
17,403
1,398,859
25,559
523,467
36,626
6,779
12,506
376,900
9,808
2,802
9,149
6,337
10,919
1,020,852
Movements of the expected credit losses of Trade accounts receivables are as follows:
Periods
From January 1 to December 31, 2022
From January 1 to December 31, 2023
Opening
balance
ThUS$
Write-offs
ThUS$
(Increase)
Decrease
ThUS$
Closing
balance
ThUS$
(81,004)
(67,232)
5,966
7,122
7,806
(4,668)
(67,232)
(64,778)
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.
The maximum credit-risk exposure at the date of presentation of the information is the fair value of each one of
the categories of accounts receivable indicated above.
As of December 31, 2023
As of December 31, 2022
Gross
exposure
according to
balance
ThUS$
1,185,792
277,845
Trade accounts receivable
Other accounts receivable
Gross
impaired
exposure
ThUS$
(64,778)
-
Exposure net
of risk
concentrations
ThUS$
1,121,014
277,845
Gross
exposure
according to
balance
ThUS$
Gross
Impaired
exposure
ThUS$
Exposure net
of risk
concentrations
ThUS$
952,625
135,459
(67,232)
-
885,393
135,459
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.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
43
NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES
(a)
Accounts Receivable
Tax No.
Related party
Relationship
Country
of origin Currency
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Foreign
Foreign
Qatar Airways
Delta Air Lines, Inc.
76.335.600-0
Parque de Chile S.A.
Indirect shareholder
Qatar
Shareholder
Related director
96.989.370-3
96.810.370-9
Foreign
Rio Dulce S.A. (*)
Related director
Inversiones Costa Verde Ltda. y CPA. Related director
Inversora Aeronáutica Argentina
S.A.
Total current assets
Related director
(b)
Current accounts payable
U.S.A.
Chile
Chile
Chile
Argentin
a
US$
US$
CLP
CLP
CLP
ARS
—
—
2
—
25
1
28
257
19,228
2
1
35
—
19,523
Tax No.
Related party
Relationshi
p
Country
of origin Currency
Current liabilities
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Foreign
Qatar Airways
Foreign Delta Air Lines, Inc.
Foreign
Inversora Aeronáutica Argentina S.A.
Foreign Patagonia Seafarms INC (*)
Total current and non current liabilities
Indirect
shareholder
Shareholder
Related
director
Related
director
Qatar
U.S.A.
US$
US$
Argentina
US$
U.S.A.
US$
2,312
5,132
—
—
7,444
—
—
5
7
12
(*) Related until November 2022.
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 2023 correspond from 30 days to 1
year of maturity, and the nature of the settlement of transactions are monetary.
196
44
NOTE 10 - INVENTORIES
The composition of Inventories is as follows:
Technical stock (*)
Non-technical stock (**)
Total
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
540,342
52,538
592,880
438,717
39,072
477,789
(*) Correspond to spare parts and materials that will be used in both own and third-party maintenance services.
(**) 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,
2023
ThUS$
As of
December 31,
2022
ThUS$
45,621
5,228
50,849
49,981
5,823
55,804
The resulting amounts do not exceed the respective net realization values.
As of December 31, 2023, the Company registered ThUS$296,423 (ThUS$148,790 for the year ended
December 31, 2022), the income statements, mainly related to on-board consumption and maintenance, which is
part of the Cost of sales.
ANNUAL REPORT 2023
45
NOTE 11 - OTHER FINANCIAL ASSETS
(a)
The composition of other financial assets is as follows:
Current Assets
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Non-current assets
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Total Assets
As of
December
31, 2023
As of
December
31, 2022
ThUS$
ThUS$
31,624
22,340
9,736
1,273
41,360
23,613
12,829
—
—
108,230
152,683
7,460
—
340,008
112,106
481,914
—
494
—
24,255
34,485
—
513
—
13,731
15,517
12,829
494
—
132,485
187,168
7,460
513
340,008
125,837
497,431
—
8,816
—
—
—
8,816
—
22,136
22,136
174,819
191
12,594
21,601
503,515
—
—
—
34,485
—
—
—
15,517
—
22,136
22,136
209,304
191
12,594
21,601
519,032
(1) Other financial assets
Deposits in guarantee (aircraft)
Guarantees for margins of
derivatives
Other investments
Guaranteed debt advances Chapter
11 (*)
Other guarantees given
Subtotal of other financial assets
(2) Hedging derivative asset
Fair value of interest rate
derivatives
Fair value of foreign currency
derivatives
Fair value of fuel price derivatives
Subtotal of derivative assets
Total Other Financial Assets
(*) As of December 31, 2022, there were ThUS$340,008 of funds delivered to an agent as restricted advances,
the purpose of which is to settle the claims pending resolution existing at the exit of the Chapter 11 process.
The different derivative hedging contracts maintained by the Company are described in Note 18.
(b)
The balances composition by currencies of the Other financial assets are as follows:
Type of currency
Brazilian real
Chilean peso
Colombian peso
Euro
U.S.A dollar
Other currencies
Total
197
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
18,767
6,440
1,461
7,974
171,852
2,810
209,304
19,589
5,847
1,716
6,791
482,544
2,545
519,032
46
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,
2023
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
(a) Advance payments
Aircraft insurance and other
Others
Subtotal advance payments
(b) Contract assets (1)
GDS costs
Credit card commissions
Travel agencies commissions
Subtotal advance payments
(c) Other assets
Sales tax
Other taxes
Contributions to the International
Aeronautical
Telecommunications Society
(“SITA”)
Contributions to Aeronautical
Service Companies
Judicial deposits
Subtotal other assets
Total Other Non - Financial Assets
25,992
3,740
29,732
22,738
37,200
12,421
72,359
81,785
1,130
258
—
—
83,173
185,264
27,122
13,039
40,161
9,530
26,124
12,912
48,566
100,665
1,688
258
—
26
102,637
191,364
—
5,740
5,740
—
—
—
—
—
1,773
1,773
—
—
—
—
13,753
—
27,962
—
739
60
148,329
162,881
168,621
739
—
117,904
146,605
148,378
25,992
9,480
35,472
22,738
37,200
12,421
72,359
95,538
1,130
997
60
148,329
246,054
353,885
27,122
14,812
41,934
9,530
26,124
12,912
48,566
128,627
1,688
997
—
117,930
249,242
339,742
(1) Movement of Contracts assets:
Initial
balance
ThUS$
Activation
ThUS$
From January 1 to December 31, 2022
From January 1 to December 31, 2023
25,080
48,566
302,290
242,717
Cumulative
translation
adjustment Amortization Final balance
ThUS$
(241,658)
(220,957)
(37,146)
2,033
48,566
72,359
ThUS$
ThUS$
ANNUAL REPORT 2023
47
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, 2023 and December 31, 2022,
are detailed below:
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
100,658
2,012
—
102,670
64,483
21,552
381
86,416
Current assets
Aircraft
Engines and rotables
Other assets
Total
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 exercise.
Assets reclassified from Property, plant and equipment to Non-current assets or groups of assets for disposal
classified as held for sale.
During 2020, 11 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 5 aircraft was
completed. During the year 2022 the sale of 3 aircraft was finalized and during the year 2023 the sale of 1
aircraft was finalized.
During 2021, associated with the fleet restructuring plan, 3 engines of the Airbus 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 1 engine was finalized. Additionally, during the year 2022,
the sale of 1 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 the year 2023, the sale of 1
engine, some spare parts, and materials was finalized.
During 2022, 28 Airbus 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 2023, the engines associated with these aircraft were added, generating additional
adjustments of US$39 million, which were recorded in the result as part of Other gains (losses), in order to
register these assets at their net realizable value.
During 2022, 6 aircraft and 8 engines of the Airbus A320 family were transferred from Property, plant and
equipment to Non-current assets or asset groups for disposal classified as held for sale, and as of December 31,
2022, the sale of 3 aircrafts were finalized and as of December 31, 2023, the sale of 2 aircraft and 8 engines
were finalized. Additionally, for the year ended December 31, 2022, adjustments for US$ 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. During the year 2023, 6 Airbus A320 aircraft were transferred from the Property, Plant, and
Equipment category to the Non-current Assets or Asset Groups held for sale category. Additionally, during the
year 2023, adjustments of US$9 million in expenses were recognized to record these assets at their net
realizable value. These adjustments were recorded in the results as part of Other expenses by function.
During 2023, 1 Boeing 767 family aircraft was transferred from Property, plant and equipment to Non-current
assets or asset groups for disposal classified as held for sale. Additionally, adjustments for US$ 3 million of
expenses were recognized within results as part of Other expenses by function to record these assets at their net
realizable value.
198
The detail of the fleet classified as non-current assets and disposal group classified as held for sale is as follows:
48
Aircraft
Boeing 767
Airbus A320
Airbus A319
Total
Model
300F
200
100
As of
December 31,
2023
As of
December 31,
2022
3
7
28
38
3
3
28
34
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
Latam Airlines Perú S.A.
Lan Cargo S.A.
Línea Aérea Carguera de Colombia S.A.
Transporte Aéreo S.A.
Latam Airlines Ecuador S.A.
Aerovías de Integración Regional S.A. Aires S.A.
TAM Linhas aéreas S.A.
ABSA Aerolimhas Brasileiras S.A.
Transportes Aéreos del Mercosur S.A.
Peru
Chile
Colombia
Chile
Ecuador
Colombia
Brazil
Brazil
Paraguay
US$
US$
US$
US$
US$
COP
BRL
US$
PYG
Ownership
As of
December 31,
2023
%
As of
December 31,
2022
%
99.81000
99.89810
90.46000
100.00000
100.00000
99.23168
100.00000
100.00000
94.98000
99.81000
99.89810
90.46000
100.00000
100.00000
99.21764
99.99935
100.00000
94.98000
The consolidated subsidiaries do not have significant restrictions for transferring funds to the parent company.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
49
Summary financial information of significant subsidiaries
Name of significant subsidiary
Statement of financial position as of December 31, 2023
Income for the year
ended December 31, 2023
Total
Assets
ThUS$
Current
Assets
ThUS$
Non-current
Assets
ThUS$
Total
Liabilities
ThUS$
Current
Liabilities
ThUS$
Non-current
Liabilities
ThUS$
Revenue
ThUS$
Net
Income/(loss)
ThUS$
Latam Airlines Perú S.A.
Lan Cargo S.A.
Línea Aérea Carguera de Colombia S.A.
Transporte Aéreo S.A.
Latam Airlines Ecuador S.A.
Aerovías de Integración Regional S.A. Aires
S.A.
TAM Linhas Aéreas S.A.
ABSA Aerolinhas Brasileiras S.A.
Transportes Aéreos del Mercosur S.A.
334,481
391,430
166,520
280,117
152,676
191,878
4,119,149
500,177
49,713
312,628
122,877
57,240
37,436
149,155
186,612
2,417,115
490,548
46,976
21,853
268,553
109,280
242,681
3,521
285,645
189,019
59,640
151,066
131,488
281,208
157,003
59,344
117,121
120,917
5,266
1,702,034
9,629
185,799
3,024,805
538,982
182,923
2,061,406
510,978
2,737
26,772
24,833
4,437
32,016
296
33,945
10,571
2,876
963,399
28,004
1,939
1,404,061
403,051
222,397
387,515
260,426
516,410
5,587,692
162,580
50,990
(4,666)
22,677
(5,331)
24,871
1,242
(12,724)
736,209
28
6,060
Name of significant subsidiary
Statement of financial position as of December 31, 2022
Income for the year
ended December 31, 2022
Total
Assets
ThUS$
Current
Assets
ThUS$
Non-current
Assets
ThUS$
Total
Liabilities
ThUS$
Current
Liabilities
ThUS$
Non-current
Liabilities
ThUS$
Revenue
ThUS$
Net
Income/(loss)
ThUS$
Latam Airlines Perú S.A.
Lan Cargo S.A.
Línea Aérea Carguera de Colombia S.A.
Transporte Aéreo S.A.
Latam Airlines Ecuador S.A.
Aerovías de Integración Regional S.A. Aires
S.A.
TAM Linhas Aéreas S.A.
ABSA Aerolinhas Brasileiras S.A.
Transportes Aéreos del Mercosur S.A.
335,773
394,378
307,161
283,166
110,821
112,501
3,329,695
223,701
70,883
305,288
144,854
126,648
47,238
107,313
109,076
1,925,948
215,700
65,395
30,485
249,524
180,513
235,928
3,508
3,425
1,403,747
8,001
5,488
281,178
212,094
127,629
177,109
93,975
213,941
4,166,754
262,534
54,340
276,875
165,297
127,380
145,446
82,687
211,679
3,264,814
233,739
52,332
4,303
46,797
249
31,663
11,288
2,262
901,940
28,795
2,008
1,257,865
333,054
226,587
320,187
134,622
394,430
3,966,615
244,028
44,449
(12,726)
(1,230)
(5,727)
(36,190)
1,519
(122,199)
(65,190)
(7,853)
2,306
199
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(b)
Non-controlling interests
50
Equity
Tax No.
Country
of origin
As of
December 31,
2023
As of
December 31,
2022
As of
December 31,
2023
As of
December 31,
2022
%
%
ThUS$
ThUS$
Latam Airlines Perú S.A.
Foreign
Peru
0.19000
0.19000
93
(13,678)
Aerovías de Integración Regional S.A. Aires
S.A.
Linea Aérea Carguera de Colombia S.A.
Transportes Aéreos del Mercosur S.A.
Foreign
Foreign
Foreign
Colombia
Colombia
Paraguay
Lan Cargo S.A. and Subsidiaries
93.383.000-4 Chile
0.77400
9.54000
5.02000
0.10196
0.78236
9.54000
5.02000
0.10196
Other companies
Total
(5,049)
(8,421)
1,152
198
—
(264)
(973)
885
2,475
(2)
(12,027)
(11,557)
Incomes
Tax No.
Country
of origin
For the year ended
At December 31,
For the year ended
At December 31,
2023
%
2022
%
2023
ThUS$
2022
ThUS$
Latam Airlines Perú S.A
Foreign
Peru
0.19000
0.19000
(9)
(643)
Aerovías de Integración Regional S.A. Aires
S.A.
Linea Aérea Carguera de Colombia S.A.
Transportes Aéreos del Mercosur S.A.
Lan Cargo S.A. and Subsidiaries
Other companies
Total
Foreign
Foreign
Foreign
Colombia
Colombia
Paraguay
93.383.000-4
Chile
0.77400
9.54000
5.02000
0.10196
0.78236
9.54000
5.02000
0.10196
(101)
(500)
304
(956)
(551)
116
25
—
(281)
(26)
(13)
(2,073)
200
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
51
NOTE 15 - INTANGIBLE ASSETS OTHER THAN GOODWILL
The details of intangible assets are as follows:
Classes of intangible assets
(net)
Classes of intangible assets
(gross)
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
658,949
219,636
156,337
117,010
54
1,151,986
625,368
203,791
143,550
107,652
25
1,080,386
658,949
219,636
597,164
117,010
1,369
1,594,128
625,368
203,791
518,971
107,651
1,315
1,457,096
Airport slots
Loyalty program
Computer software
Developing software
Other assets
Total
a)
Movement in Intangible assets other than goodwill:
Computer
software and
others
Net
ThUS$
Opening balance as of January 1, 2022
Additions
Withdrawals
Transfer software and others
Foreign exchange
Amortization
Closing balance as of December 31, 2022
Opening balance as of January 1, 2023
Additions
Transfer software and others
Foreign exchange
Amortization
Closing balance as of December 31, 2023
Developing
software
ThUS$
104,874
66,820
Airport
slots
ThUS$
587,214
—
—
—
38,154
—
625,368
625,368
—
—
33,581
—
658,949
Loyalty
program (1)
ThUS$
190,542
—
—
—
13,249
—
203,791
203,791
—
—
15,845
—
219,636
Total
ThUS$
1,018,892
66,867
(3,192)
(2,446)
54,623
(54,358)
1,080,386
1,080,386
79,144
(718)
52,478
(59,304)
1,151,986
(245)
(63,658)
(139)
—
107,652
107,652
78,846
(69,928)
440
—
117,010
136,262
47
(2,947)
61,212
3,359
(54,358)
143,575
143,575
298
69,210
2,612
(59,304)
156,391
The amortization of each period is recognized in the consolidated income statement within administrative
expenses.
The cumulative amortization of computer software and others as of December 31, 2023 amounts to
ThUS$442,142 (ThUS$414,614 as of December 31, 2022).
b)
Impairment Test Intangible Assets with an indefinite useful life
As of December 31, 2023, 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.
201
52
As of December 31, 2023, 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
Discount rate based on the Weighted Average Cost of Capital (WACC)
Fuel Price
CGU
Air transport
0.0 – 4.3
5.28 – 5.57
8.7 – 10.7
100
%
R$/US$
%
US$/barrel
The result of the impairment test, which includes a sensitivity analysis of its main variables, showed that the
recoverable amount exceeded the book value of the cash-generating unit, and therefore no impairment was
identified.
The CGU is sensitive to annual growth rates, discounts and exchange rates and fuel price. The sensitivity
analysis included the individual impact of changes in critical estimates in determining recoverable amounts,
namely:
Air Transportation CGU
Increase
WACC
Maximum
%
Decrease rate
Terminal
growth
Minimal
%
Increase
fuel price
Maximum
US$/barrel
10.7
0
100
In none of the above scenarios an impairment of the cash-generating unit was identified.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
53
NOTE 16 - PROPERTY, PLANT AND EQUIPMENT
The composition by category of Property, plant and equipment is as follows:
Gross Book Value
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Accumulated depreciation
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Net Book Value
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
a) Property, plant and equipment
Construction in progress (1)
Land
Buildings
Plant and equipment
Own aircraft (3)
Other (2)
Machinery
Information technology equipment
Fixed installations and accessories
Motor vehicles
Leasehold improvements
Subtotal Properties, plant and equipment
b) Right of use
Aircraft (3)
Other assets
Subtotal Right of use
Total
258,246
44,244
129,036
10,738,500
9,856,365
882,135
29,092
163,382
186,179
49,560
266,631
11,864,870
5,388,147
248,614
5,636,761
17,501,631
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
16,920,912
—
—
(61,478)
(4,508,356)
(4,259,729)
(248,627)
(27,716)
(146,040)
(131,769)
(44,385)
(53,201)
(4,972,945)
(3,243,065)
(194,491)
(3,437,556)
(8,410,501)
—
—
(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)
(8,509,251)
258,246
44,244
67,558
6,230,144
5,596,636
633,508
1,376
17,342
54,410
5,175
213,430
6,891,925
2,145,082
54,123
2,199,205
9,091,130
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
8,411,661
(1) As of December 31, 2023, includes advances paid to aircraft manufacturers for ThUS$ 242,069 (ThUS$ 357,979 as of December 31, 2022).
(2) Consider mainly rotables and tools.
(3) There were reclassified to Non-current assets or groups of assets for disposal as held for sale the following aircrafts: As of December 31, 2023,
one Boeing B767 and six Airbus A320, as of December 31, 2022, six Airbus A320 and twenty-eight Airbus A319 (see Note 13). As of December 31,
2021, includes advances paid to aircraft manufacturers for ThUS$ 377,590.
202
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(a)
Movement in the different categories of Property, plant and equipment:
54
Construction
in progress
ThUS$
Land
ThUS$
Buildings
net
ThUS$
Plant and
equipment
net
Information
technology
equipment
net
Fixed
installations
& accessories
net
ThUS$
ThUS$
ThUS$
Motor
vehicles
net
ThUS$
Leasehold
improvements
net
ThUS$
Property,
Plant and
equipment
net
ThUS$
Opening balance as of January 1, 2022
Additions
Disposals
Retirements
Depreciation expenses
Foreign exchange
Other increases (decreases) (*)
Changes, total
Closing balance as of December 31, 2022
Opening balance as of January 1, 2023
Additions
Disposals
Retirements
Depreciation expenses
Foreign exchange
Other increases (decreases) (*)
Changes, total
Closing balance as of December 31, 2023
473,797
16,332
—
(75)
—
(1,282)
(99,962)
(84,987)
388,810
388,810
8,835
—
(83)
—
726
(140,042)
(130,564)
258,246
43,276
60,451
6,568,717
—
—
(2)
843,808
(4,140)
(42,055)
16,836
6,426
—
(24)
(3,285)
(669,059)
(5,662)
918
10,914
8,545
68,996
11,527
(403,950)
(263,869)
(84)
(883)
(227)
6,304,848
16,609
44,349
68,996
6,304,848
—
—
—
870,640
(2,701)
(87,652)
16,609
5,794
(1)
(12)
38,741
113
(264)
(836)
(7,914)
2,365
4,867
(1,669)
37,072
37,072
4,246
—
(2)
(4,104)
(716,590)
(5,918)
(8,789)
1,505
1,161
(1,438)
67,558
23,845
(156,046)
(68,504)
536
334
733
6,236,344
17,342
1,276
20,607
17,338
54,410
—
—
—
—
1,073
—
1,073
44,349
—
—
—
—
1,445
(1,550)
(105)
44,244
325
258
(3)
—
(55)
(28)
(74)
98
423
423
—
(16)
—
(68)
12
—
(72)
351
132,975
27,160
—
(313)
(13,071)
7,593
5,683
27,052
160,027
160,027
48,866
—
—
(10,185)
11,497
3,225
53,403
7,335,118
894,097
(4,407)
(43,305)
(699,046)
22,082
(483,405)
(313,984)
7,021,134
7,021,134
938,381
(2,718)
(87,749)
(745,654)
40,842
(272,311)
(129,209)
213,430
6,891,925
(*) This Amount included the following aircrafts reclassified to Non-current assets or groups of assets for disposal as held for sale: As of December
31, 2023, one Boeing B767 ThUS$ (21,578) and six Airbus A320 ThUS$ (36,326)). As of December 31, 2022, six Airbus A320 ThUS$ (29,328) and
twenty-eight Airbus A319 ThUS$ (373,410).
203
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(b)
Right of use assets:
55
Opening balance as of January 1, 2022
Additions
Depreciation expense
Cumulative translate adjustment
Other increases (decreases) (***)
Total changes
Closing balance as of December 31, 2022
Opening balance as of January 1, 2023
Additions
Depreciation expense
Cumulative translate adjustment
Other increases (decreases)
Total changes
Closing balance as of December 31, 2023
Aircraft
ThUS$
2,101,742
372,571
(249,802)
919
(898,609)
(774,921)
1,326,821
1,326,821
1,013,314
(178,570)
56
(16,539)
818,261
2,145,082
Others
ThUS$
53,007
13,087
(16,368)
1,392
12,588
10,699
63,706
63,706
2,988
(14,816)
3,351
(1,106)
(9,583)
54,123
Net right
of use
assets
ThUS$
2,154,749
385,658
(266,170)
2,311
(886,021)
(764,222)
1,390,527
1,390,527
1,016,302
(193,386)
3,407
(17,645)
808,678
2,199,205
(*) Considers the renegotiation of 115 aircraft (1 Airbus A319, 39 Airbus A320, 14 Airbus A320neo, 30 Airbus
A321, 1 Boeing 767, 6 Boeing 777 and 24 Boeing 787 Dreamliner).
(c)
Fleet composition
Aircraft included
in Property,
plant and equipment
Aircraft included
as Rights
of use assets
Total fleet
Aircraft
Model
As of
December
31, 2023
As of
December
31, 2022
As of
December 31,
2023
As of
December 31,
2022
As of
December 31,
2023
As of
December 31,
2022
Boeing 767
Boeing 767
Boeing 777
Boeing 787
Boeing 787
Airbus A319
Airbus A320
Airbus A320
Airbus A321
Airbus A321
Total
300ER
300F
300ER
8
9
100
200
NEO
200
NEO
11 (3)
16 (2) (3)
4
4
2
11
83 (2)
1
19
—
151
15
13 (2)
4
4
2
12 (2)
88 (2)
1
19
—
158
—
1
6
6
24
1
46
23
30
7
144
—
1
6
6
19
1
40 (1)
15
30
—
118
11
17
10
10
26
12
129
24
49
7
295
15
14
10
10
21
13
128
16
49
—
276
(1) Include one aircraft with a short-term lease, which was excluded from the right of use.
(2) Some aircraft of these fleets were reclassified to non-current assets or groups of assets for disposal as held for sale, (see Note 13).
(3) Considers the conversions from Boeing 767-300ER to Boeing 767-300F Aircraft.
204
56
(d)
Method used for the depreciation of Property, plant and equipment:
Buildings
Plant and equipment
Depreciation 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. (*)
Information technology equipment Straight line without residual value
Fixed installations and accessories Straight line without residual value
Straight line without residual value
Motor vehicle
Straight line without residual value
Leasehold improvements
Straight line without residual value
Assets for rights of use
Useful life (years)
minimum maximum
50
20
5
5
10
10
5
1
30
10
10
10
8
25
(*) Except in the case of Boeing 767-300ER, Airbus A320 Family and Boeing 767-300F fleets which 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.
(e)
(i)
Additional information regarding Property, plant and equipment:
Property, plant and equipment pledged as guarantee:
Description of Property, plant and equipment pledged as guarantee:
Guarantee
agent (1)
Creditor
company
Committed
Assets
Fleet
Wilmington Trust
Company
MUFG
Aircraft and
engines
Credit Agricole
Credit Agricole
Aircraft and
engines
Bank Of Utah
BNP Paribas
Aircraft and
engines
Total direct
guarantee
Airbus A319
Airbus A320
Boeing 767
Boeing 777
Airbus A319
Airbus A320
Airbus A321
Boeing 767
Boeing 787
Boeing 787
As of
December 31, 2023
As of
December 31, 2022
Existing
Debt
ThUS$
Book
Value
ThUS$
Existing
Debt
ThUS$
Book
Value
ThUS$
2,703
17,441
20,427
132,585
3,413
190,001
6,007
8,849
58,499
12,326
151,873
143,281
144,186
3,752
142,075
4,393
23,018
38,971
4,554
33,154
35,043
141,605
3,518
195,864
6,192
9,121
60,305
13,205
203,788
164,448
144,065
5,311
161,397
4,827
23,323
34,077
171,704
208,601
184,199
221,311
611,629
872,476
673,555
975,752
(1) For syndicated loans, given their own characteristics, the guarantee agent is the representative of the
creditors.
The amounts of the current debts are presented at their nominal value. The net book values correspond 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, 2023, amounts to ThUS$ 898,166 (ThUS$ 1,037,122 as of December 31,
2022). The book value of the assets with indirect guarantees as of December 31, 2023, amounts to ThUS$
1,925,069 (ThUS$ 2,306,233 as of December 31, 2022).
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
57
As of December 31, 2023, the Company keeps valid letters of credit related to right of use assets according to
the following detail:
Creditor Guarantee
GE Capital Aviation Services Ltd.
Merlin Aviation Leasing (Ireland) 18
Limited RB Comercial Properties 49
Empreendimentos Imobiliarios LTDA
Debtor
LATAM Airlines Group S.A.
Tam Linhas Aéreas S.A.
Type
Three letters of credit
Two letters of credit
Tam Linhas Aéreas S.A.
One letter of credit
Value
ThUS$
Release
date
5,544 Dec 6, 2024
3,852 Mar 11, 2024
25,820 Apr 29, 2024
35,216
(ii)
Commitments and others
Fully depreciated assets and commitments for future purchases are as follows:
58
As of December 31, 2023, as a result of the different aircraft operating lease contracts signed with Air Lease
Corporative , 1 Airbus aircraft of the A320neo family with delivery dates within 2024 remain to be received.
As of December 31, 2023, as a result of the different aircraft operating lease contracts signed with Avolon
Aerospace Leasing Limited, 2 Airbus aircraft of the A320neo family with delivery date within 2024 remain to
be received.
As of December 31, 2023, as a result of the different aircraft operating lease contracts signed with Air Lease
Corporation, 5 Airbus A321XLR family aircraft with delivery dates between 2025 and 2026 remain to be
received.
(iii)
Capitalized interest costs with respect to Property, plant and equipment.
For the year ended
At December 31,
2023
2022
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Average rate of capitalization of capitalized interest
costs
Costs of capitalized interest
%
ThUS$
10.66
10,136
7.12
10,575
Gross book value of fully depreciated property, plant and equipment still in use
Commitments for the acquisition of aircraft (*)
288,454
15,700,000
266,896
13,100,000
(*) According to the manufacturer’s price list.
Aircraft purchase commitments:
Manufacturer
Airbus S.A.S.
A320neo Family
The Boeing Company
Boeing 787-9
Total
Year of delivery
2024
2025
2026
2027-2030
Total
3
-
3
11
-
11
9
-
9
65
5
70
88
5
93
As of December 31, 2023, as a result of the different aircraft purchase contracts signed with Airbus S.A.S., 88
Airbus aircraft of the A320 family remain to be received with deliveries between 2024 and 2030. The
approximate amount, according to manufacturer list prices, is ThUS$13,800,000.
As of December 31, 2023, as a result of the different aircraft purchase contracts signed with The Boeing
Company, 5 Boeing aircraft of the 787 Dreamliner remain to be received with deliveries between 2027 and
2028. The approximate amount, according to manufacturer list prices, is ThUS$1,900,000.
Aircraft operational lease commitments:
As of December 31, 2023, as a result of the different aircraft operating lease contracts signed with AerCap
Holdings N.V., 4 Airbus aircraft of the Airbus A320neo family with delivery between 2024 and 4 Boeing 787
Dreamliner aircraft with delivery dates within 2025 remain to be received.
As of December 31, 2023, as a result of the different aircraft operating lease contracts signed with Aergo, 1
Boeing 787 Dreamliner aircraft, with delivery dates within 2024, remain to be received.
205
NOTE 17 - CURRENT AND DEFERRED TAXES
In the year ended December 31, 2023, the income tax provision was calculated and recorded, applying the semi-
integrated tax system and a rate of 27%, based on the provisions of the Law. No. 21,210, published in the
Official Gazette of the Republic of Chile, dated February 24, 2020, which updates the Tax Legislation.
The net result for deferred tax corresponds to the variation of the period, of the assets and liabilities for deferred
taxes generated by temporary differences and tax losses.
For the permanent differences that give rise to a book value of assets and liabilities other than their tax value, no
deferred tax has been recorded since they are caused by transactions that are recorded in the financial statements
and that will have no effect on income tax expense.
(a)
Current taxes
(a.1)
The composition of the current tax assets is the following:
Current assets
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Non-current assets
As of
As of
December
December
31, 2023
31, 2022
ThUS$
ThUS$
Total assets
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Provisional monthly payments
(advances)
Other recoverable credits
Total current tax assets
18,982
28,048
47,030
18,559
14,474
33,033
—
—
—
—
—
—
18,982
28,048
47,030
18,559
14,474
33,033
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(a.2)
The composition of the current tax liabilities are as follows:
59
Current liabilities
As of
As of
December
December
31, 2023
31, 2022
ThUS$
ThUS$
Non-current liabilities
As of
As of
December
December
31, 2023
31, 2022
ThUS$
ThUS$
Total liabilities
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Income tax provision
Total current tax liabilities
2,371
2,371
1,026
1,026
—
—
—
—
2,371
2,371
1,026
1,026
(b)
Deferred taxes
The balances of deferred tax are the following:
Concept
Properties, Plants and equipment
Assets by right of use
Lease Liabilities
Amortization
Provisions
Revaluation of financial instruments
Tax losses
Intangibles
Other
Total
Assets
Liabilities
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
(941,136)
(585,957)
792,781
(112,002)
222,409
(889)
613,264
—
16,312
4,782
(1,006,814)
(367,112)
586,878
(88,172)
9,133
2,438
852,654
—
16,910
5,915
70,745
54
(74)
10
81,091
—
(86,320)
300,359
16,494
382,359
81,326
70
(115)
10
69,519
—
(94,005)
270,512
17,308
344,625
The balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed
in the long term.
60
Movements of Deferred tax assets and liabilities
(b.1)
From January 1 to December 31, 2022
Opening
balance
Assets/
(liabilities)
ThUS$
(1,208,693)
(572,727)
773,129
(44,615)
552,527
(16,575)
445,662
(254,155)
(274)
(325,721)
Opening
balance
Assets/
(liabilities)
ThUS$
(1,088,140)
(367,182)
586,993
(88,182)
(60,386)
2,438
946,659
(270,512)
(398)
(338,710)
Recognized in
consolidated
income
ThUS$
Recognized in
comprehensive
income
ThUS$
Exchange
rate
variation
ThUS$
120,553
205,545
(186,136)
(43,567)
(613,480)
19,248
500,997
2,114
(124)
5,150
—
—
—
—
567
(235)
—
—
—
332
—
—
—
—
—
—
—
(18,471)
—
(18,471)
Recognized in
consolidated
income
ThUS$
Recognized in
comprehensive
income
ThUS$
Exchange
rate
variation
ThUS$
76,259
(218,829)
205,862
(23,830)
200,953
(6,931)
(247,075)
(6,207)
216
(19,582)
—
—
—
—
751
3,604
—
—
—
4,355
—
—
—
—
—
—
—
(23,640)
—
(23,640)
Ending
balance
Asset
(liability)
ThUS$
(1,088,140)
(367,182)
586,993
(88,182)
(60,386)
2,438
946,659
(270,512)
(398)
(338,710)
Ending
balance
Asset
(liability)
ThUS$
(1,011,881)
(586,011)
792,855
(112,012)
141,318
(889)
699,584
(300,359)
(182)
(377,577)
Property, plant and equipment
Assets for right of use
Lease Liabilities
Amortization
Provisions
Revaluation of financial instruments
Tax losses (*)
Intangibles
Others
Total
(b.2)
From January 1 to December 31, 2023
Property, plant and equipment
Assets for right of use
Lease Liabilities
Amortization
Provisions
Revaluation of financial instruments
Tax losses (*)
Intangibles
Others
Total
206
(*) 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$ 3,572,528 at
December 31, 2023 (ThUS$ 3,651,023 as of December 31, 2022) which include deferred tax assets related to
negative tax results of ThUS$ 12,206,634 at December 31, 2023 (ThUS$ 14,930,487 at December 31, 2022).
As of December 31, 2022, the Management of the subsidiary Lan Cargo S.A., taking into account financial
projections for future years, company derecognized DTA in the amount of ThUS$ 6.173 because it is not
probable that future taxable profits would be generated in the future.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(Expenses) / Income from deferred taxes and income tax:
Income before tax from the Chilean legal tax rate (27% as of December 31, 2023 and 2022)
61
62
Income tax (expense)/benefit
Current tax (expense) benefit
Adjustments to the current tax of the previous year
Total current tax (expense) benefit
(Expense)/benefit for deferred tax recognition for tax losses (*)
Deferred income for relative taxes to the creation and reversal of
temporary differences
Total deferred income tax
Income tax (expense)/benefit
Income tax (expense) / Income benefit:
Current tax (expense) benefit, foreign
Current tax (expense) benefit, domestic
Total current tax (expense) benefit
Foreign Deferred tax (expense) benefit, for tax losses
compensation (*)
Deferred tax (expense) benefit, foreign
Deferred tax (expense) benefit, domestic
Total deferred tax (expense)benefit
Income tax (expense)/benefit
For the year ended at
December 31,
2023
ThUS$
2022
ThUS$
(12,659)
(193)
(12,852)
17,492
(14,064)
—
(14,064)
—
(19,582)
(2,090)
(14,942)
5,150
5,150
(8,914)
For the year ended at
December 31,
2023
ThUS$
2022
ThUS$
(10,410)
(2,442)
(12,852)
19,573
(33,637)
(14,064)
17,492
(10,780)
(8,802)
(2,090)
(14,942)
—
(532)
5,682
5,150
(8,914)
(*) As a result of an agreement reached with the Brazilian tax authority TAM Linhas Aereas S.A. was
authorized to use part of its available tax losses to pay some tax contingencies. As the company does not have
recognized deferred tax asset for those tax losses, it was recognized as income to write off those tax
contingencies.
207
For the year ended
At December 31,
2022
ThUS$
2023
ThUS$
For the year ended
At December 31,
2022
2023
%
%
-27.00
—
-8.39
4.27
-3.90
8.91
—
26.34
-2.73
24.50
-2.50
-27.00
0.67
1.52
89.27
-2.52
6.75
-0.46
-73.56
4.66
26.33
-0.67
Income tax benefit/(expense) using the legal tax rate
Tax effect by change in tax rate
Tax effect of rates in other jurisdictions
Tax effect of non-taxable income
Tax effect of disallowable expenses
(161,053)
(363,434)
9,016
20,398
1,201,618
(33,855)
—
(50,042)
25,459
(23,272)
Other increases (decreases):
Derecognition of deferred tax liabilities for early termination of
aircraft financing
Derecognition of deferred tax assets not recoverable
Deferred tax asset not recognized
Other increases (decreases)
Total adjustments to tax expense using the legal rate
Income tax benefit/(expense) using the effective rate
53,162
—
157,089
(16,285)
146,111
(14,942)
90,823
(6,173)
(990,095)
62,788
354,520
(8,914)
Deferred taxes related to items charged to equity:
For the year ended
At December 31,
2022
2023
ThUS$
ThUS$
Aggregate deferred taxation of components of other comprehensive
income
4,355
332
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
63
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
Total current
Non-current
(a) Interest bearing loans
(b) Lease Liability
Total non-current
(a)
Interest bearing loans
Obligations with credit institutions and debt instruments:
Current
Bank loans (2)
Guaranteed obligations
Other guaranteed obligations (1)(2)
Subtotal bank loans
Obligation with the public (2)
Financial leases
Other loans
Total current
Non-current
Bank loans (2)
Guaranteed obligations
Other guaranteed obligations (1)
Subtotal bank loans
Obligation with the public (2)
Financial leases
Total non-current
Total obligations with financial institutions
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
292,982
301,537
1,544
596,063
629,106
173,735
—
802,841
3,675,212
2,666,457
6,341,669
3,936,320
2,042,719
5,979,039
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
53,141
28,697
67,005
148,843
34,731
109,304
104
292,982
976,293
275,225
363,345
1,614,863
1,268,107
792,242
3,675,212
3,968,194
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
208
64
(1) The committed "Revolving Credit Facility (RCF)" is guaranteed by collateral composed of aircraft, engines
and spare parts, which was fully drawn until November 3, 2022. Once emerged from Chapter 11, the line was
fully paid and of December 31, 2023 and December 31, 2022, it is available to be used.
(2) On March 14, 2022, a new consolidated and modified text of the Existing DIP Credit Agreement (the “New
Consolidated and Modified DIP Credit Agreement”) was submitted to the Court for its approval. The New
Consolidated and Amended DIP Credit Agreement (i) fully refinanced and replaced the existing Tranches A, B
and C in the Existing DIP Credit Agreement; (ii) contemplated a maturity date in accordance with the calendar
that the Debtors anticipated to emerge from the Chapter 11 Procedure; and (iii) included certain reductions in
fees and interest compared to the Existing DIP Credit Agreement and the Recast and Amended DIP Initial
Financing Proposal. The obligations under the DIP were secured by assets owned by LATAM and certain of its
affiliates, including, but not limited to, shares, certain engines and spare parts.
On April 8, 2022, a consolidated and modified text was signed (the “Recast and Modified DIP Credit
Agreement”) of the Original DIP Credit Agreement, which modified and consolidated said agreement and
repaid 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 was MUS$3,700. The Consolidated and Amended DIP
Credit Agreement (i) included certain reductions in fees and interest compared to the Existing DIP Credit
Agreement; and (ii) contemplated an expiration date in accordance with the calendar that LATAM anticipated
to emerge from the Chapter 11 Procedure. Regarding the latter, the scheduled expiration date of the
Consolidated and Modified 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 Consolidated and Modified DIP Credit
Agreement for the amount of MUS$2,750. On April 28, 2022, an amendment to said contract was signed,
extending the expiration date from August 8, 2022 to October 14, 2022.
On October 12, 2022, said Consolidated and Modified DIP Credit Agreement was repaid in its entirety with the
DIP-to-Exit financing, which contemplated bridge financing for senior secured bonds maturing in 2027 for
MUS$750, MUS$750 in other bridge financing for senior secured notes due 2029, a MUS$750 Term Financing,
a financing called Junior DIP, for a total of MUS$1,146 , and, lastly, a US Revolving Credit Facility MUS$500,
which is not drawn. The DIP-to-exit financing was collateralized by assets owned by LATAM and certain of its
affiliates. Of these, 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 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 MUS$450 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 MUS$700.
In the context of the exit of the Company from the Chapter 11 Procedure on November 3, 2022, the Bridge
Loans were repaid with additional: MUS$350 corresponding to an incremental loan of Term Loan B.
On November 3, 2022, the company and all of its subsidiaries successfully emerged from Chapter 11.
Balances by currency of interest bearing loans are as follows:
Currency
Brazilian real
Chilean peso (U.F.)
US Dollar
Total
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
—
160,730
3,807,464
3,968,194
314,322
157,288
4,093,816
4,565,426
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
65
Interest-bearing loans due in installments to December 31, 2023
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.
Tax No.
Bank loans
0-E
Obligations with the public
97.036.000-K
97.036.000-K
0-E
Guaranteed obligations
0-E
0-E
Other guaranteed
obligations
0-E
0-E
0-E
0-E
0-E
Financial leases
0-E
0-E
0-E
0-E
Others loans
0-E
Creditor
Creditor
country
Currency
Nominal values
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
ThUS$
More
than
90 days
to one
year
ThUS$
Accounting values
More
than
one to
three
years
More than
three to
five
years
More than
five
years
Total
accounting
value
Amortization
ThUS$
ThUS$
ThUS$
ThUS$
Annual
Effective
rate
Nominal
rate
%
%
GOLDMAN SACHS
U.S.A.
US$
2,750
8,250
22,000
1,056,000
—
1,089,000
44,891
8,250
22,000
954,293
—
1,029,434
Quarterly
20.31
15.04
SANTANDER
SANTANDER
Chile
Chile
UF
US$
WILMINGTON TRUST
COMPANY
U.S.A.
US$
—
—
—
—
—
—
—
—
—
—
—
160,214
160,214
3
3
450,000
700,000
1,150,000
—
—
—
516
—
34,215
—
—
—
—
—
160,214
160,730
At Expiration
3
3
At Expiration
2.00
1.00
2.00
1.00
434,204
673,686
1,142,105
At Expiration
15.00
13.38
BNP PARIBAS
U.S.A.
US$
2,912
9,168
26,772
28,945
103,907
171,704
3,936
9,168
26,121
28,553
103,541
171,319
Quarterly
6.98
6.98
U.S.A.
US$
3,854
11,693
32,356
34,083
50,599
132,585
3,900
11,693
32,356
34,083
50,571
132,603
Quarterly/Monthly
8.76
8.76
WILMINGTON TRUST
COMPANY
CITIBANK
JP MORGAN CHASE
CREDIT AGRICOLE
MUFG
EXIM BANK
NATIXIS
US BANK
EXIM BANK
BANK OF UTAH
Various (*)
Total
—
—
—
11,768
—
6,516
17,374
—
2,575
U.S.A.
U.S.A.
France
U.S.A.
U.S.A.
France
U.S.A.
U.S.A.
U.S.A.
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
—
—
14,667
35,960
—
19,779
49,311
—
—
29,333
16,374
40,662
54,443
17,492
—
—
222,768
—
—
—
—
—
—
—
33
17
266,768
4,241
64,102
11,805
42,122
16,325
99,109
282
56,972
77,647
215,357
8,559
—
—
84,177
17,905
—
—
14,667
35,960
—
19,779
49,311
—
—
26,154
16,374
40,662
54,117
15,731
—
—
221,708
—
—
—
—
—
42,122
16,325
56,754
77,555
216,764
—
—
—
197,499
141,169
74,404
7,202
23,637
37,304
101,864
413,072
172,582
1,933
2,575
—
195,741
141,169
74,404
7,202
23,637
37,304
101,864
33
17
Quarterly
Quarterly
266,770
At Expiration
64,139
99,391
82,947
413,247
172,582
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Monthly
1.00
0.63
9.43
7.11
2.29
7.58
4.41
4.13
1.00
0.63
9.43
7.11
2.05
7.58
3.16
3.31
10.71
10.71
104
—
—
—
—
104
104
—
—
—
—
104
At Expiration
—
—
47,853
156,030
460,568
2,069,363
1,284,963
4,018,777
100,181
190,761
452,893
1,950,190
1,258,163
3,952,188
(*)
Obligation to creditors for executed letters of credit.
209
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
66
Interest-bearing loans due in installments to December 31, 2023
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil
Tax No.
Creditor
Country
Currency
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More
than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More
than
five
years
Total
accounting
value
Amortization
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Annual
Effective
rate
%
Nominal
rate
%
Nominal values
Accounting values
Financial lease
0-E
NATIXIS
Total
Total consolidated
France
US$
510
510
1,530
1,530
4,080
4,080
9,886
9,886
—
—
16,006
16,006
510
510
1,530
1,530
4,080
4,080
9,886
9,886
—
—
16,006
16,006
Quarterly
—
—
48,363
157,560
464,648
2,079,249
1,284,963
4,034,783
100,691
192,291
456,973
1,960,076
1,258,163
3,968,194
210
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
67
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
Bank loans
0-E
0-E
Obligations
with the public
SANTANDER
Spain
GOLDMANS
ACHS
U.S.A.
97.036.000- K
SANTANDER
97.036.000- K
SANTANDER
Chile
Chile
US$
US$
UF
US$
U.S.A.
US$
WILMINGTO
N TRUST
COMPANY
BNP
PARIBAS
WILMINGTO
N TRUST
COMPANY
0-E
Guaranteed
obligations
0-E
0-E
Other
guaranteed
obligations
0-E
0-E
0-E
0-E
Financial
leases
0-E
0-E
0-E
0-E
0-E
0-E
0-E
Other loan
0-E
Nominal values
Accounting values
Annual
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More
than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
ThUS$
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More
than
five
years
Total
accounting
value
Amortization
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Effective
rate
%
Nominal
rate
%
—
—
70,951
—
—
70,951
173
—
70,951
—
2,750
8,250
22,000
1,067,000
—
1,100,000
30,539
8,250
22,000
939,760
—
—
71,124
Quarterly
7.26
7.26
1,000,549
Quarterly
18.46
13.38
—
—
—
—
—
—
—
—
—
—
156,783
156,783
3
3
505
—
—
—
—
—
—
—
156,783
157,288 At Expiration
3
3 At Expiration
2.00
1.00
2.00
1.00
—
450,000
700,000
1,150,000
—
32,878
—
430,290
669,340
1,132,508 At Expiration
15.00
13.38
U.S.A.
US$
1,761
6,907
22,890
26,035
126,605
184,198
2,637
6,907
22,212
25,627
126,048
183,431
Quarterly
5.76
5.76
U.S.A.
US$
2,208
6,110
32,620
33,210
67,457
141,605
2,233
6,110
32,620
33,210
67,457
141,630
Quarterly/
Monthly
8.20
8.20
CREDIT
AGRICOLE
MUFG
CITIBANK
EXIM BANK
France
U.S.A.
U.S.A.
U.S.A.
CITIBANK
U.S.A.
U.S.A.
France
U.S.A.
U.S.A.
U.S.A.
U.S.A.
BNP
PARIBAS
NATIXIS
US BANK
PK
AIRFINANCE
EXIM BANK
BANK OF
UTAH
Various (*)
Total
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
—
11,345
—
—
14,667
34,624
—
—
29,333
66,419
—
231,000
—
—
—
—
—
275,000
112,388
—
17,737
36,431
32,444
86,612
3,837
11,404
1,470
237
14,667
34,624
—
—
26,153
66,419
—
228,880
—
—
—
—
—
273,537
Quarterly
112,447
Quarterly
1,470 At Expiration
17,738
36,431
32,444
86,850
Quarterly
6,825
5,689
—
12,514
6,888
5,689
—
6,596
6,419
16,984
1,533
—
20,048
19,341
51,532
1,521
53,207
84,177
4,664
6,393
—
—
—
—
55,696
104,475
—
—
—
—
28,165
239,138
152,693
12,590
6,776
8,545
17,831
1,579
1,923
20,048
19,341
51,532
1,516
52,881
79,805
4,664
6,393
—
—
—
—
12,577
Quarterly
28,340
Quarterly
55,478
103,905
240,150
Quarterly
—
—
—
—
149,168
Quarterly
12,636
Quarterly
—
113,668
180,260
152,581
446,509
—
112,666
178,672
151,236
444,497
Quarterly
8.24
6.23
1.00
2.01
6.19
5.99
6.44
4.06
5.97
3.58
8.24
6.23
1.00
1.78
5.47
5.39
6.44
2.85
5.97
2.79
2,321
6,568
20,990
30,557
121,801
182,237
2,321
6,568
20,990
30,557
121,801
182,237
Monthly
10.45
10.45
2,028
60,770
—
—
—
—
2,028
2,028
—
—
—
—
2,028 At Expiration
—
—
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
211
(*)
Obligation to creditors for executed letters of credit.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
68
Interest-bearing loans due in installments to December 31, 2022
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil
Tax No.
Creditor
Country
Currency
Nominal values
Accounting values
Annual
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More
than
five
years
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Total
nominal
value
ThUS$
Up to
90
days
More than
90 days
to one
year
More than
one to
three
years
More than
three to
five
years
More
than
five
years
Total
accounting
value
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
ThUS$
Amortization
Effective
rate
%
Nominal
rate
%
Bank loans
0-E
Financial
lease
Merril Lynch Credit
Products LLC
Brazil
BRL
304,549
—
—
—
—
304,549
314,322
—
—
—
—
314,322
Monthly
3.95
3.95
0-E
NATIXIS
France
US$
Total
Total consolidated
510
305,059
365,829
1,530
1,530
4,080
4,080
4,080
4,080
7,846
7,846
18,046
322,595
179,930
545,986
2,114,269
1,469,995
4,676,009
1,050
315,372
416,298
1,530
1,530
4,080
4,080
4,080
4,080
7,894
7,894
18,634
332,956
212,808
536,424
1,962,985
1,436,911
4,565,426
Semiannual/
Quarterly
7.23
7.23
(*)
Obligation to creditors for executed letters of credit.
212
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(b)
Lease Liability:
69
The movement of the lease liabilities corresponding to the period reported are as follow:
Opening balance as of January 1, 2022
New contracts
Lease termination
Renegotiations
Exit effect of chapter 11 (*)
Payments
Accrued interest
Exchange differences
Cumulative translation adjustment
Other increases (decreases)
Changes
Closing balance as of December 31, 2022
Opening balance as of January 1, 2023
New contracts
Lease termination
Renegotiations
Payments
Accrued interest
Exchange differences
Subsidiaries conversion difference
Changes
Closing balance as of December 31, 2023
Aircraft
ThUS$
2,883,661
354,924
(19,606)
(76,233)
(995,888)
(154,823)
142,939
—
(2)
—
(748,689)
2,134,972
2,134,972
943,178
(13,258)
(7,194)
(376,006)
212,500
—
6
759,226
2,894,198
Others
ThUS$
76,977
13,019
—
(4,198)
—
(26,172)
9,194
2,279
7,463
2,920
4,505
81,482
81,482
2,976
(1,812)
2,219
(23,277)
9,633
2,278
297
(7,686)
73,796
Lease
Liability
Total
ThUS$
2,960,638
367,943
(19,606)
(80,431)
(995,888)
(180,995)
152,133
2,279
7,461
2,920
(744,184)
2,216,454
2,216,454
946,154
(15,070)
(4,975)
(399,283)
222,133
2,278
303
751,540
2,967,994
(*) Corresponds to the effect of emergence from Chapter 11 ThUS$679,273,000 associated with claim
settlement (Derecognition of assets for right of use for ThUS$639,728,000 (See Note 24 letter g (4))
and conversion of Notes for ThUS$39,545,000) and ThUS$316,615,000 due to IBR rate change.
The Company recognizes interest payments related to lease liabilities in the consolidated result under Finance
costs (See Note 26(c)). The Average discount rates for calculation of lease liability are as follows.
Discount rate
December 2023
Discount rate
December 2022
Aircraft
Others
9.10 %
13.00 %
8.80 %
10.70 %
213
(c) Hedge derivatives
70
Current liabilities
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Non-current liabilities
As of
As of
December
December
31, 2022
31, 2023
ThUS$
ThUS$
Total hedge derivatives
As of
As of
December
December
31, 2022
31, 2023
ThUS$
ThUS$
Fair value of foreign
currency derivatives
Total hedge derivatives
1,544
1,544
—
—
—
—
—
—
1,544
1,544
—
—
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:
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Interest rate option (1)
Fuel options (2)
Foreign currency derivative R$/BRL$ (3)
—
22,136
(1,544)
8,816
12,594
191
(1) They cover significant variations in cash flows associated with the market risk implicit in increases in the
SOFR interest rate for long-term loans originating from the acquisition of aircraft and bank loans. 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 US$/BRL. These contracts are recorded as cash flow hedge contracts.
The Company only maintains cash flow hedges. In the case of fuel and currency hedges, the cash flows subject
to said hedges will occur and will impact results in the next 12 months from the date of the consolidated
statement of financial position. In the case of interest rate derivatives, the settlements will occur in the next 6
months and will remain in the balance until the date of arrival of the associated aircraft, date on which it will be
part of the right-of-use asset and will begin to impact results on a monthly basis until the expiration of the
respective lease
All hedging operations have been performed for highly probable transactions, except for fuel hedge. See Note 3.
See Note 24 (f) for reclassification to profit or loss for each hedging operation and Note 17 (b) for deferred
taxes related.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
NOTE 19 - TRADE AND OTHER ACCOUNTS PAYABLES
71
The composition of Trade and other accounts payables is as follows:
Current
(a) Trade and other accounts payables
(b) Accrued liabilities
Total trade and other accounts payables
(a)
Trade and other accounts payable:
Trade creditors
Other accounts payable
Total
The details of Trade and other accounts payables are as follows:
Boarding Fees
Maintenance
Airport charges and overflight
Handling and ground handling
Suppliers technical purchases
Leases, maintenance and IT services
Other personnel expenses
Aircraft Fuel
Professional services and advisory
Services on board
Marketing
Air companies
Crew
Agencies sales commissions
Aircraft Insurance
Others
Total trade and other accounts payables
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
1,408,201
357,078
1,765,279
1,271,590
356,402
1,627,992
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
1,176,985
231,216
1,408,201
904,964
366,626
1,271,590
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
249,291
167,466
138,901
133,114
126,302
100,842
96,351
94,878
63,756
58,365
51,035
26,371
25,936
16,899
12,256
46,438
1,408,201
208,783
100,823
89,966
130,482
123,743
83,751
116,244
44,153
134,191
42,545
37,928
8,182
11,511
9,852
7,241
122,195
1,271,590
214
72
(b) Liabilities accrued:
Aircraft and engine maintenance
Accrued personnel expenses
Accounts payable to personnel (1)
Others accrued liabilities
Total accrued liabilities
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
129,473
97,733
114,769
15,103
357,078
184,753
81,857
81,508
8,284
356,402
(1) Participation in profits and bonuses (Note 22 letter b).
NOTE 20 - OTHER PROVISIONS
Current liabilities
As of
As of
December
December
31, 2023
31, 2022
ThUS$
ThUS$
Non-current liabilities
As of
As of
December
December
31, 2023
31, 2022
ThUS$
ThUS$
Total Liabilities
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
7,003
7,702
367
—
8,733
5,490
350
—
614,882
142,305
155,501
11,571
617,692
119,483
175,212
13,180
621,885
150,007
155,868
11,571
626,425
124,973
175,562
13,180
Provision for contingencies (1)
Tax contingencies
Civil contingencies
Labor contingencies
Other
Provision for European
Commission investigation (2)
—
—
2,477
2,397
2,477
2,397
Total other provisions (3)
15,072
14,573
926,736
927,964
941,808
942,537
(1) Provisions for contingencies:
The tax contingencies correspond to litigation and tax criteria related to the tax treatment applicable to
direct and indirect taxes, which are found in both administrative and judicial stage.
The civil contingencies correspond to different demands of civil order filed against the Company.The labor
contingencies correspond to different demands of labor order filed against the Company.
Provisions are recognized in the consolidated income statement in administrative expenses or tax expenses,
as appropriate.
The Company maintains other judicial processes, individually and cumulatively , do not have a significant
impact on these financial statements
(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, 2023, and December 31, 2022, 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 are not recognized in the normal course of IFRS Accounting
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
Standards application and which only in the context of a business combination should be recognized under
IFRS Accounting Standards.
73
Movement of provisions:
Deferred Revenue Movement
74
Deferred revenue
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
Opening balance as of January 1, 2023
Increase in provisions
Provision used
Difference by subsidiaries conversion
Reversal of provision
Exchange difference
Closing balance as of December 31, 2023
Legal
claims (1)
ThUS$
European
Commission
Investigation
(1)
ThUS$
Total
ThUS$
731,153
687,558
(63,087)
28,655
(427,979)
(16,160)
940,140
940,140
449,406
(70,844)
(69,563)
(310,118)
310
939,331
9,300
—
—
—
(6,630)
(273)
2,397
2,397
—
—
—
—
80
2,477
740,453
687,558
(63,087)
28,655
(434,609)
(16,433)
942,537
942,537
449,406
(70,844)
(69,563)
(310,118)
390
941,808
(1) See details of litigation and government investigations with a material impact in Note 30.
NOTE 21 - OTHER NON-FINANCIAL LIABILITIES
Current liabilities
As of
As of
December
December
31, 2022
31, 2023
ThUS$
ThUS$
Non-current liabilities
As of
As of
December
December
31, 2022
31, 2023
ThUS$
ThUS$
Total Liabilities
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Deferred revenue (1)(2)
Sales tax
Retentions
Other taxes
Dividends payable
Other sundry liabilities
Total other non-financial liabilities
3,044,664
17,801
48,649
6,892
174,549
9,351
3,301,906
2,533,081
7,194
40,810
12,045
—
49,121
2,642,251
348,936
—
—
—
—
—
348,936
420,208
—
—
—
—
—
420,208
3,393,600
17,801
48,649
6,892
174,549
9,351
3,650,842
2,953,289
7,194
40,810
12,045
—
49,121
3,062,459
Initial
balance
ThUS$
(1)
Recognition
ThUS$
Use
ThUS$
Loyalty
program
(Award and
redeem)
ThUS$
Expiration
of
tickets
ThUS$
Translation
Difference
ThUS$
Others
provisions
ThUS$
Final
balance
ThUS$
From January 1 to
December 31, 2022
From January 1 to
December 31, 2023
2,785,193
9,772,469
(9,077,188)
(241,201) (314,027)
4,585
23,458
2,953,289
2,953,289
14,238,959
(13,505,496)
17,680
(391,998)
84,988
(3,822) 3,393,600
(1) The balance includes mainly, deferred revenue for services not provided as of December 31, 2023 and
December 31, 2022 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 points
LATAM Pass 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, 2023, Deferred Income includes Th US$40,500 related to the compensation from
Delta Air Lines, Inc., which is recognized in the income statement based on the estimation of income
differentials until the implementation of the strategic alliance.
NOTE 22 - EMPLOYEE BENEFITS
Retirements payments
Resignation payments
Other obligations
Total liability for employee benefits
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
57,785
11,537
53,296
122,618
45,076
6,365
42,047
93,488
(a)
The movement in retirements, resignations and other obligations:
Increase
(decrease)
current service
provision
ThUS$
Opening
balance
ThUS$
Benefits
paid
ThUS$
Actuarial
(gains)
losses
ThUS$
Currency
translation
ThUS$
Closing
balance
ThUS$
From January 1 to December 31, 2022
From January 1 to December 31, 2023
56,233
93,488
53,254
58,436
(4,375)
(6,701)
(9,935)
(21,198)
93,488
(1,689)
(1,407) 122,618
215
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
The main assumptions used in the calculation of the provision in Chile are presented below:
75
Assumptions
Discount rate
Expected rate of salary increase
Rate of turnover
Mortality rate
Inflation rate
Retirement age of women
Retirement age of men
For the year ended
At December 31,
2023
2022
5.40 %
3.00 %
5.02 %
RV-2020
2.99 %
60
65
5.37 %
5.23 %
5.14 %
RV-2014
3.61 %
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-2020 and 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 based on BCU and BCPs 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.
The sensitivity analysis for these variables is presented below:
Discount rate
Change in the accrued liability an closing for increase in 100 b.p.
Change in the accrued liability an closing for decrease of 100 b.p.
Rate of wage growth
Change in the accrued liability an closing for increase in 100 b.p.
Change in the accrued liability an closing for decrease of 100 b.p.
(b)
The liability for short-term:
Effect on the liability
As of
As of
December 31,
December 31,
2023
2022
ThUS$
ThUS$
(3,913)
4,369
4,133
(3,811)
(3,308)
3,724
3,520
(3,216)
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Profit-sharing and bonuses (*)
114,769
81,508
(*) 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.
216
(c)
CIP (Corporate Incentive Plan)
76
With the aim of incentivizing the retention of talent among the executives of the Company and in response to
the exit of the Chapter 11 Procedure, it was agreed to grant an extraordinary and exceptional incentive called
Corporate Incentive Plan (hereinafter also "CIP"), which will be enforceable and paid subject to compliance
with the terms, clauses and conditions approved at the Board meeting dated April 25, 2023. In summary, the
CIP contemplates three categories oriented to three different groups or categories of employees, whether they
are hired by the Company directly, or in other companies of the LATAM group. These categories are as
follows: Non-Executive Employees; Executives Not part of the Global Executive Meeting o “GEM”; and GEM
Executives. Employees in each of these groups are only eligible for the CIP that corresponds to their respective
category. The terms of each of these CIP categories were communicated to the respective employees between
the months of January to December 2023.
Below are more background on each of the different categories of the CIP. Additionally, in Note 33 describes in
more detail the main terms and conditions of the last two categories of the CIP (i.e., Non-GEM Executives; and
GEM Executives):
i)
ii)
Non-Executive Employees: The first subprogram was aimed at non-executive employees who, while
hired in LATAM as of December 31, 2020, were still in their position as of April 30, 2023, which
includes a fixed and guaranteed payment in cash on certain dates, depending on the country where the
employee is hired.
This subprogram is available to those employees who were unable to qualify for one of the two
categories below, or who were able to do so, chose not to participate in them.
Executives Not part of the GEM: The second subprogram applies to senior executives not part of the
GEM (Global Executive Meeting – Senior Managers, Managers, Assistant Managers). This program
contemplates the creation of remuneration synthetic Units (hereinafter, simply "Units") that, by
reference, are considered as equivalent to the price of one share of LATAM Airlines Group S.A., and
consequently, in case they become effective, they grant the worker the right to receive the payment in
cash that results from multiplying the number of Units that become effective by the value per share of
LATAM Airlines Group S.A. that should be considered in accordance with CIP.
In this context, this program contemplates two different bonuses: (1) a withholding bonus, consisting of
the amount in cash resulting from Units that are assigned to the respective employee, these Units being
paid at 20% at month 15 and 80% at month 24, in each case, counted from the exit date of Chapter 11
Procedure (i.e., November 3, 2022) (the "Exit Date"). This is consequently a guaranteed payment for
these employees; and (2) a bonus associated with the certain financial indicators of LATAM Airlines
Group S.A. and its subsidiaries, which is reflected in Note 19 (b), becoming effective 20% at month 15
and 80% at month 24, in each case, from the Exit Date. Consequently, this is an eventual payment that
is only made if these indicators are reached.
iii) GEM Executives: The third subprogram applies to the Company´s GEM executives (Global Executive
Meeting) (CEO and employees whose job description is "vice presidents" or "directors"). This program,
in essence, contemplates the creation of remuneration synthetic Units that, by referential means, are
considered as equivalent to the price of one share of LATAM Airlines Group S.A. and consequently, in
case they become effective, they grant the worker the right to receive the payment in cash that results
from multiplying the number of Units that become effective by the value per share of LATAM Airlines
Group S.A. that must be considered according to the CIP.
These Units are divided into:
(1) Units associated with the employee's permanence in the Company ("RSUs" – Retention Shares
Units); and (2) Units associated with both the employee's permanence in the Company and the
performance of LATAM Airlines Group S.A. ("PSUs" – Performance Shares Units). This performance
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
77
is ultimately measured according to the share price of LATAM Airlines Group S.A. in the terms and
conditions of the CIP.
Both the RSUs and the PSUs are consequently associated with the passage of time, becoming effective
by partialities according to the calendar contemplated by the CIP. For the case of RSUs, having a
vesting guaranteed by partialities as explained in more detail in Note 33. On the other hand, the PSUs
also consider the market value of the share of LATAM Airlines Group S.A. considering a liquid market.
However, as long as there is no such liquid market, the share price will be determined on the basis of
representative transactions. As explained in more detail in Note 33, PSUs constitute a contingent and
non-guaranteed payment.
In addition, some GEM Executives will also be entitled to receive a fixed and guaranteed cash payment
("MPP" – Management Protection Plan) on certain dates according to the CIP. Those employees who
are eligible for this MPP will also be eligible for a limited number of additional MSUs ("MPP Based
RSUs").
In all cases, the respective employees must have remained as such in the Company at the corresponding accrual
date to qualify for these benefits.
During the year of 2023 until the month of December, the amount accrued related to this CIP was MUS$ 66.8,
which is recorded in the "Administrative expenses" line of the Consolidated Statement of Income by Function.
As of December 31, 2023, the amount of this plan recorded in the consolidated statement of financial position is
MUS$ 118.9.
(d)
Employment expenses are detailed below:
For the year ended at December
31,
2023
ThUS$
2022
ThUS$
1,268,343
181,565
133,429
1,583,337
1,024,304
121,882
120,150
1,266,336
Salaries and wages
Short-term employee benefits
Other personnel expenses
Total
NOTE 23 - ACCOUNTS PAYABLE, NON-CURRENT
Aircraft and engine maintenance
Fleet (JOL)
Airport and Overflight Taxes
Provision for vacations and bonuses
Other sundry liabilities
Total accounts payable, non-current
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
348,578
40,000
11,337
18,518
154
418,587
249,710
40,000
19,866
16,539
169
326,284
217
78
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, 2023, amounts to ThUS$ 5,003,534 divided into
604,437,877,587 common stock of a same series (ThUS$ 13,298,486 divided into 604,437,584,048 shares as of
December 31, 2022), a single series nominative, ordinary character with no par value. The total number of
authorized shares of the Company as of December 31, 2023, corresponds to 604,441,789,335 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 ThUS$ 10,293,270 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)
ThUS$ 9,493,270 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) ThUS$800,000
represented by 73,809,875,794 new paid shares (the “New Paid Shares”), to be offered preferentially to
shareholders. On September 13, 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 (“CMF”) (the “ERO”); and (ii) 1,257,002,540 notes convertible into shares
Serie G, 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”).
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 11 on 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.
5. As part of the implementation of its Reorganization Plan within the framework of the exit from
Chapter 11, LATAM issued MUS$800 in new paid shares and ThUS$9,493,270 through the issue of
three classes of notes convertible into Company shares, backed by 531,991,409,513 shares totaling of
605,801,285,307 shares. As of December 31, 2023, of the aforementioned capital increase,
603,831,469,894 shares were subscribed and paid (603,831,176,355 shares as of December 31, 2022),
equivalent to ThUS$10,169,622 as of December 31, 2023 (ThUS$10,152,221 as of December 31,
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
2022) and as of December 31, 2022 costs of issuance and placement of shares and convertible bonds
were generated for ThUS$ 810,279, which are presented as part of the Other reserves and was
reclassified to "paid-in capital" according to the Extraordinary Shareholders' Meeting held on April 20,
2023, as explained below
79
6. At the Company's Extraordinary Shareholders' Meeting held on April 20, 2023, it was agreed to:
6.i) A decrease in the Company's capital for an amount of ThUS$ 7,501,896, without altering the number
and characteristics of the shares into which it is divided, by absorbing the Company's accumulated losses as
of December 31, 2022 for the same amount;
6.ii) Others decrease of the Company's capital for an amount of ThUS$ 178, without altering the number and
characteristics of the shares into which it is divided, through the absorption of the equity account of
"Treasury Shares" as of December 31, 2022 for the same amount, produced on the occasion of the January
2013 reduction of capital stock by operation of law that took place in accordance with the provisions of
Article 27 of the Corporations Law.
6.iii) Deduction of the Company´s capital the account "Costs of issuing shares and new convertible notes, for
an amount of ThUS$ 810,279.
On September 6, 2023, by public deed granted at the Notary of Santiago of Mr. Eduardo Diez Morello, under
repertoire number 15,327-2023 entitled "Declaración de Colocación y Vencimiento Plazo de Colocación Bonos
Convertibles "Series G", "Series H" and "Series I" and Reducción de Capital de Pleno Derecho", it was realized
that on September 5, 2023 the maturity of the placement term (the "Placement Term") of Convertible Notes.
Consequently, in accordance with the mentioned in number Four of Clause Six of the respective notes issuance
contract (the "Issuance Agreement"), as of that date the amount placed against it remained unchanged, and
consequently the Convertible Notes not placed on that date were null and void. For the sake of completeness, it
was declared that upon maturity of the Placement Term, 123,605,720 Series G Convertible Notes and 37 Series
I Convertible Notes (collectively, the "Unplaced Convertible Notes") remained unplaced, for an amount of US$
123,605,720 and US$37, respectively (hereinafter, together, the "Unplaced Amount"). The conversion option of
the Unplaced Convertible Notes was backed by 1,965,903,665 shares as equity.
Likewise, in the aforementioned deed it was realized that since all the Unplaced Convertible Bonds have been
terminated, since they have been null and void, they cannot be converted into shares of the issuer, consequently
reducing the Company's Capital Share by an amount equal to the Unplaced Amount.
Therefore, as of September 6, 2023, the amount of the Share Capital has been reduced by law in the amount of
ThUS$ 123,606, equivalent to 1,965,903,665 shares. As a result of the foregoing, as of December 31, 2023, the
total statutory share capital of the Company was reduced by law from the amount of ThUS$ 5,127,182, divided
into 606,407,693,000 shares, of the same and unique series, without par value, to the amount of ThUS$
5,003,576, divided into 604,441,789,335 shares, of which MUS$ 5,003,534, equivalent to 604,437,877,587
shares, are fully paid. To date, the balance of MUS$ 42, equivalent to 3,911,748 shares, are pending of
subscription and payment and are intended exclusively to respond to the conversion of 42,398 Series H
Convertible Notes.
218
(b)
Movement of authorized shares
80
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:
As of December 31, 2023
N° of
convertible
notes back-
up shares
pending to
place
N° of Subscribed
of shares and
paid or delivered
pursuant to the
exercise of the
conversion option
N° of authorized
shares
As of December 31, 2022
N° of shares to
subscribe or not
used
N° of authorized
shares
N° of Subscribed
of shares and
paid or delivered
pursuant to the
exercise of the
conversion option
N° of
convertible
notes back-
up shares
pending to
place
N° of shares to
subscribe or not
used
606,407,693,000
604,437,584,048
4,205,287
1,965,903,665
606,407,693
606,407,693
Opening
Balance
New shares
issued
Convertible
Notes G
Convertible
Notes H
Convertible
Notes I
Reduction of
full right (*)
Subtotal
—
—
—
—
(1,965,903,665)
(1,965,903,665)
—
—
—
—
—
—
—
—
—
—
73,809,875,794
73,809,875,794
19,992,142,087
18,026,240,520
— 1,965,901,567
293,539
(293,539)
— 126,661,409,136
126,657,203,849
4,205,287
—
—
—
— 385,337,858,290
385,337,856,192
— (1,965,903,665)
—
—
—
—
—
2,098
—
293,539
(293,539)
(1,965,903,665)
605,801,285,307
603,831,176,355
4,205,287
1,965,903,665
Closing Balance
604,441,789,335
604,437,877,587
3,911,748
— 606,407,693,000
604,437,584,048
4,205,287
1,965,903,665
(*) See letter (a) above, in the same Note.
(c)
Share capital
The following table shows the movement of share capital:
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
Initial balance as of January 1, 2023
Placement during the conversion options period - Convertible Notes G
Absorption of Accumulated Losses as of December 31, 2022 (3)
Absorption of treasury shares (3)
Deduction of issuance and placement costs of shares and bonds convertible into shares (3)
Subtotal
Ending balance as of December 31, 2023
Paid- in
Capital
ThUS$
3,146,265
800,000
1,115,996
1,372,798
6,863,427
10,152,221
13,298,486
13,298,486
17,401
(7,501,896)
(178)
(810,279)
(8,294,952)
5,003,534
(1) It only includes Convertible Notes bonds delivered as payment of debts recognized in Chapter 11.
(2) Part of the Convertible Notes were to extinguish through exchange credits that were recognized in Chapter
11.
(3) As explained in letter a) of this Note, at the Company's Extraordinary Shareholders' Meeting held on April
20, 2023, it was agreed to absorb retained losses and reduce the Company's capital.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(d)
Treasury stock
81
At December 31, 2023, 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. As explained in letter a) of this same Note, at the Company's
Extraordinary Shareholders' Meeting held on April 20, 2023, an absorption of the Company's capital was agreed
for an amount of ThUS$ 178.
(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
Adjustment to fair value Convertible Notes at the
date of issue
Issuance cost
Subtotal
Fair Value of Notes
Debt component at the date of issue
Equity component at the date of issue
Concepts
Face Value
Adjustment to fair value Convertible Notes at the
date of issue
Subtotal
Fair Value of Notes
Equity component at the date of issue
As of December 31, 2022
Convertible
Notes G
ThUS$
1,115,996
Convertible
Notes H
ThUS$
1,372,837
Convertible
Notes I
ThUS$
6,863,427
Total
Convertible
Notes
ThUS$
9,352,260
(923,616)
—
—
(923,616)
192,380
—
192,380
(24,812)
(24,812)
1,348,025
(102,031)
1,245,994
(2,686,854)
(705,467)
(3,392,321)
3,471,106
—
3,471,106
(3,610,470)
(730,279)
(4,340,749)
5,011,511
(102,031)
4,909,480
As of December 31, 2023
Convertible
Notes H
ThUS$
Convertible
Notes I
ThUS$
Total
Convertible
Notes
ThUS$
—
—
—
—
—
—
—
—
—
—
17,401
(14,401)
(14,401)
3,000
3,000
Convertible
Notes G
ThUS$
17,401
(14,401)
(14,401)
3,000
3,000
(e.2) Conversion of notes into shares
82
As of December 31, 2023 and December 31, 2022, the following notes have been converted into shares:
Concepts
Conversion percentage
Conversion option of convertible notes exercised
Total Converted Notes
Concepts
Conversion percentage
Conversion option of convertible notes exercised
Converted debt component
Total Converted Notes
As of December 31, 2023
Convertible
Notes G
ThUS$
100.000%
Convertible
Notes H
ThUS$
99.997%
Convertible
Notes I
ThUS$
100.000%
Total
Convertible
Notes
ThUS$
1,133,397
1,133,397
1,372,798
1,372,798
6,863,427
6,863,427
9,369,622
9,369,622
As of December 31, 2022
Convertible
Notes G
ThUS$
Convertible
Notes H
ThUS$
88.782%
99.997%
Convertible
Notes I
ThUS$
100.000%
Total
Convertible
Notes
ThUS$
1,115,996
—
1,115,996
1,270,767
102,031
1,372,798
6,863,427
—
6,863,427
9,250,190
102,031
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 in equity will be transferred to share capital. To the date of
issuance of these financial statements, 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.
219
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(f)
Reserve of share- based payments
Movement of Reserves of share- based payments:
83
Periods
From January 1 to December 31, 2022
From January 1 to December 31, 2023
Opening
balance
ThUS$
37,235
37,235
Stock
option
plan
ThUS$
Closing
balance
ThUS$
—
—
37,235
37,235
These reserves are related to share based payment plans that expired during the first quarter of 2023. No equity
instruments were issued and no amounts were paid associated with these plans.
(g)
Other sundry reserves
Movement of Other sundry reserves:
Periods
From January 1 to December 31,
2022
From January 1 to December 31,
2023
Transactions
with
non-controlling
interest
ThUS$
Legal
reserves
ThUS$
Other
sundry
reserves
ThUS$
Others
increases
(Decreases)
(5)
ThUS$
Opening
balance
ThUS$
Closing
balance
ThUS$
2,448,098
—
—
(4,420,749)
—
(1,972,651)
(1,972,651)
16,648
(14,401)
800,388
(1,170,016)
Balance of Other sundry reserves comprise the following:
Higher value for TAM S.A. share exchange (1)
Reserve for the adjustment to the value of fixed assets (2)
Transactions with non-controlling interest (3)
Adjustment to the fair value of the New Convertible Notes (4)
Cost of issuing shares and New Convertible Notes (5)
Others
Total
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
2,665,692
2,620
(211,582)
(3,624,871)
—
(1,875)
(1,170,016)
2,665,692
2,620
(216,656)
(3,610,470)
(810,279)
(3,558)
(1,972,651)
(1)
Corresponds to the difference between the value of the shares of TAM S.A., acquired by Sister Holdco
S.A. (under the Subscriptions) and by Holdco II S.A. (by virtue of the Exchange Offer), which is recorded in the
declaration of completion of the merger by absorption, and the fair value of the shares exchanged by LATAM
Airlines Group S.A. as of June 22, 2012.
Corresponds to the technical revaluation of the fixed assets authorized by the Commission for the
(2)
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.
The balance as of December 31, 2022 corresponds to the loss generated by: Lan Pax Group S.A. e
(3)
Inversiones Lan S.A. in the acquisition of shares of Aerovías de Integración Regional S.A. 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
220
84
participation in Aerovías de Integración Regional S.A. Aires 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). The movements during 2023 was the following: (5) acquisition of the non-controlling interest
of Aerovías de Integración Regional S.A. Aires S.A. for an amount of ThUS$(23) and (6) amendment of
articles in the legal statutes of association related to premiums for the issuance of shares in the subsidiaries
Aerovías de Integración Regional S.A. Aires S.A. for a total amount of ThUS$ 5.097.
(4)
The adjustment to the fair value of the Convertible Notes delivered 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 Th
US$2,564,707 (ThUS$ 2,550,306 as of December 31, 2022), gain on the haircut for the financial liabilities for
ThUS$ 420,436 and gain on the haircut of lease liabilities which is booked against the right of use asset for
ThUS$ 639,728 as of December 31, 2023 and December 31, 2022.
(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. At the Company's Extraordinary Shareholders' Meeting held on April 20, 2023, it was agreed to
deduct from the paid-in capital of the Company the account "Costs of issuance and placement of shares and
bonds convertible into shares", for the sum of ThUS$810,279.
(h)
Reserves with effect in other comprehensive income.
Movement of Reserves with effect in other comprehensive income:
Currency
translation
reserve
ThUS$
(3,772,159)
Gains (Losses)
on change on
value
of time value
of options
ThUS$
Actuarial gain
or loss on
defined benefit
plans reserve
ThUS$
Cash flow
hedging
reserve
ThUS$
(38,390)
(17,563)
(18,750)
Total
ThUS$
(3,846,862)
Opening balance as of January 1, 2022
Change in fair value of hedging instrument
recognized in OCI
Add: Costs of hedging deferred and recognized in
OCI
Reclassified from OCI to profit or loss
Reclassified from OCI to the value of the hedged
asset
Deferred tax
Actuarial reserves by employee benefit plans
Deferred tax actuarial IAS by employee benefit plans
Translation difference subsidiaries
Closing balance as of December 31, 2022
(33,401)
(3,805,560)
Opening balance as of January 1, 2023
Change in fair value of hedging instrument
recognized in OCI
Reclassified from OCI to profit or loss
Reclassified from OCI to the value of the hedged
asset
Deferred tax
Actuarial reserves by employee benefit plans
Deferred tax actuarial IAS by employee benefit plans
Translation difference subsidiaries
Closing balance as of December 31, 2023
(25,051)
(3,830,611)
—
—
—
—
—
—
—
—
—
—
—
—
—
51,323
(23,845)
—
31,293
(8,143)
(235)
—
—
694
36,542
—
19,946
—
—
—
—
(160)
(21,622)
—
—
—
27,478
—
51,239
—
—
(9,933)
566
—
(28,117)
(8,143)
(235)
(9,933)
566
(32,867)
(3,818,757)
(32,858)
(26,568)
(11,112)
3,604
(8,286)
(38,678)
25,734
28,818
—
—
—
—
17
32,947
—
—
—
—
(21,192)
750
—
(48,559)
(7,124)
2,250
(11,112)
3,604
(21,192)
750
(33,320)
(3,884,901)
(3,805,560)
36,542
(21,622)
(28,117)
(3,818,757)
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(h.1)
Cumulative translate difference
85
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.
(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
From January 1 to December 31,
2022
From January 1 to December 31,
2023
Opening
balance
ThUS$
Result
for the
period
ThUS$
Others
increase
(decreases) (1)
ThUS$
Dividends
ThUS$
Closing
balance
ThUS$
(8,841,106)
1,339,210
—
—
(7,501,896)
(7,501,896)
581,831
(174,549)
7,559,025
464,411
(1) The detail of Other increases (decreases) is as follows:
ThUS$
7,501,896
57,129
7,559,025
Absorption accumulated losses (*)
Out of Period Adjustment (**)
Total
(*) See letter a) under this same Note.
(**) Out of Period Adjustment
On April 30, 2020, LATAM's Shareholders approved the distribution of a dividend in the amount of
ThUS$ 57,129 to be paid on May 28, 2020. On May 26, 2020, LATAM entered Chapter 11 proceedings which
granted an automatic stay prohibiting the Company from making dividend payments. At that time it was not
clear when this dividend would be paid. On November 3, 2022, upon emergence from Chapter 11 it was clear
this dividend would not be paid, however, it was not derecognized from liabilities and transferred to retained
earnings at that time. During the three months ended March 31, 2023, the Company corrected this matter and
recorded an out of period adjustment to derecognized the dividend payable resulting in an increase of ThUS$
57,129 to retained earnings and a decrease in Trade and other accounts payable in the same amount.
Management has evaluated the impact of this out-of-period adjustment and concluded that it is not material to
the financial statements for the year ended December 31, 2023, or to any previously reported quarter, semester
or annual financial statements.
221
(j)
Dividends per share
86
Description of dividend
Amount of the dividend (ThUS$)(*)
Number of shares among which the dividend is distributed
Dividend per share (US$)
Minimum mandatory
dividend 2023
Minimum mandatory
dividend 2022
174,549
604,437,877,587
0.0003
—
604,437,584,048
0.0000
(*) It Corresponds to mandatory minimum dividend provision charged to the net income for the year 2023, As
of the date of issuance of these financial statements, the Board of Directors has not yet approved a proposal for
payment.
NOTE 25 - REVENUE
The detail of revenues is as follows:
Passengers
Cargo
Total
For the year ended at December 31,
2023
ThUS$
2022
ThUS$
10,215,148
1,425,393
11,640,541
7,636,429
1,726,092
9,362,521
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 maintenance
Aircraft rental (*)
Commissions
Passenger services
Other operating expenses
Total
For the year ended at December 31,
2023
ThUS$
2022
ThUS$
(3,947,220)
(1,322,795)
(601,804)
(91,876)
(244,160)
(271,838)
(1,351,571)
(7,831,264)
(3,882,505)
(1,036,158)
(582,848)
(202,845)
(167,035)
(184,357)
(1,136,490)
(7,192,238)
(*) Aircraft Lease Contracts 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)
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
87
For the year ended at December
31,
2023
ThUS$
2022
ThUS$
(16,632)
(16,632)
(17,959)
(17,959)
Payments for leases of low-value assets
Total
(b)
Depreciation and amortization
Depreciation and amortization are detailed below:
Depreciation (*)
Amortization
Total
For the year ended at December
31,
2023
ThUS$
2022
ThUS$
(1,151,015)
(54,358)
(1,205,373)
(1,125,154)
(54,358)
(1,179,512)
(*) 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, 2023 is ThUS$ 565,384 (ThUS$ 463.306 for the same
period in 2022).
(c)
Financial costs
The detail of financial costs is as follows:
Bank loan interests
Financial leases
Lease liabilities
Other financial instruments
Total
For the year ended at December
31,
2023
ThUS$
2022
ThUS$
(400,052)
(58,011)
(224,824)
(15,344)
(698,231)
(714,310)
(45,384)
(152,132)
(30,577)
(942,403)
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.
222
(d)
Gains (losses) from restructuring activities
88
Gains (losses) restructuring activities are detailed below:
For the year
ended at
December 31,
2022
ThUS$
(483,068)
(323,204)
(80,407)
(2,586)
2,550,306
18,893
1,679,934
Renegotiation of fleet contracts
Legal advice
Employee restructuring plan
Rejection of IT contracts
Gains resulting from the settlement of Chapter 11 claims (*)
Others
Total
The Company did not recorded gains/(losses) restructuring activities during 2023.
(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
Total
(*) See Note 34 (a.4.)
(**) See Note 24 (g)
For the year ended
At December 31,
2023
ThUS$
—
—
—
125,356
125,356
2022
ThUS$
491,326
420,436
49,824
90,709
1,052,295
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
(f)
Other gains (losses)
Other gains (losses) are detailed below:
89
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
At December 31,
2023
ThUS$
2022
ThUS$
(39,163)
(51,880)
(91,043)
(345,410)
(1,667)
(347,077)
For the year ended at December 31,
2023
ThUS$
2022
ThUS$
Tours
Aircraft leasing
Customs and warehousing
Maintenance
Income from non-airlines products LATAM
Pass
Other miscellaneous income (*)
Total
36,297
—
27,553
7,784
15,148
61,859
148,641
24,068
18,164
30,323
7,995
23,954
49,782
154,286
(•) Included within this amount ThUS$30,408 as of December 31, 2022 related to the compensation of Delta
Air Lines Inc. for the JBA signed during 2019.
NOTE 28 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES
The functional currency of LATAM Airlines Group S.A. is the US dollar, LATAM has subsidiaries whose
functional currency is different to the US dollar, such as the chilean peso, argentine peso, colombian peso,
brazilian real and guaraní.
The functional currency is defined as the currency of the primary economic environment in which an entity
operates. For each entity and all other currencies are defined as a foreign currency.
Considering the above, the balances by currency mentioned in this note correspond to the sum of foreign
currency of each of the entities that are part of the LATAM Airlines Group S.A. and Subsidiaries.
223
Following are the current exchange rates for the US dollar, on the dates indicated:
90
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
Australian dollar
Boliviano
Mexican peso
New Zealand dollar
Peruvian Sol
Paraguayan Guarani
Uruguayan peso
Foreign currency
As of
December 31,
As of December 31,
2021
2022
807.98
4.85
877.12
3,872.49
0.90
1.46
6.86
16.91
1.58
3.70
7,270.6
38.81
177.12
5.29
855.86
4,845.35
0.93
1.47
6.86
19.50
1.58
3.81
7,332.2
39.71
102.75
5.57
844.69
4,002.52
0.88
1.38
6.86
20.53
1.46
3.98
6,866.40
44.43
The foreign currency detail of balances of monetary items in current and non-current assets is as follows:
Current assets
Cash and cash equivalents
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
Other financial assets, current
Chilean peso
Euro
U.S. dollar
Other currency
Other non - financial assets, current
Brazilian real
Chilean peso
Euro
U.S. dollar
Other currency
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
386,216
1,808
7,108
47,907
8,968
25,329
237,251
57,845
14,659
4,367
3,722
5,971
599
36,654
719
12,354
5,310
10,735
7,536
265,371
6,712
3,355
17,591
8,415
19,361
168,139
41,798
331,617
5,778
2,483
322,796
560
19,425
2,303
3,341
622
4,369
8,790
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
91
92
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
Chilean peso
Colombian peso
Peruvian sun
Other currency
Total current assets
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. Dollar
Other currency
279,586
12,831
620
69,588
1,453
90,699
68,893
35,502
27
27
—
17,258
2,202
6,084
7,108
1,864
734,400
14,639
8,447
136,445
16,505
125,060
322,850
110,454
143,631
25,035
10,669
31,258
176
12,506
25,549
38,438
138
31
107
15,623
1,569
1,921
10,300
1,833
775,805
31,747
16,327
59,568
10,512
34,972
520,960
101,719
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
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
15,375
3,807
2,073
841
4,252
2,071
2,331
9,856
1
9,789
15
51
4,732
4,732
1,048
859
144
45
31,011
1
13,596
6,805
1,700
4,252
2,230
2,427
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
224
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
The foreign currency detail of balances of monetary items in current liabilities and non-current is as follows:
93
Up to 90 days
91 days to 1 year
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Current liabilities
Other financial liabilities, current
Chilean peso
U.S. dollar
Other currency
Trade and other accounts payables, current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Peruvian sol
Mexican peso
Pound sterling
Uruguayan peso
Other currency
Accounts payable to related entities, current
Chilean peso
U.S. dollar
Other provisions, current
Chilean peso
Other currency
Current liabilities
Other non-financial liabilities, current
Argentine peso
Chilean peso
Colombian peso
U.S. dollar
Other currency
Total current liabilities
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
4,331
1,364
2,510
457
616,032
2,074
13,401
128,838
197
54,744
350,635
42,347
2,019
17,379
706
3,692
5,154
—
5,154
16
—
16
15,634
836
4,338
1,456
7,305
1,699
641,167
2,910
13,401
134,540
1,653
54,744
365,604
68,315
17,062
10,697
5,558
807
720,688
45,345
48,511
146,395
2,330
29,502
328,540
7,426
12,969
37,788
1,199
60,683
6
6
—
29
—
29
16,315
87
1,568
294
12,975
1,391
754,100
45,432
48,511
158,666
2,624
29,502
347,073
122,292
1,010
702
—
308
9,583
132
922
1,560
—
7
1,797
4,994
—
11
39
121
—
—
—
12,429
4
12,425
6,099
445
4,026
1,066
416
146
29,121
577
922
6,292
1,066
7
2,213
18,044
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
9,071
6,563
178
798
1,063
469
42,323
10,009
651
2,040
829
11
3,946
24,837
225
94
More than 1 to 3 years
As of
As of
December
December
31, 2022
31, 2023
ThUS$
ThUS$
More than 3 to 5 years
As of
As of
December
December
31, 2022
31, 2023
ThUS$
ThUS$
More than 5 years
As of
December
31, 2023
ThUS$
As of
December
31, 2022
ThUS$
Non-current liabilities
Other financial liabilities,
non-current
Chilean peso
Brazilian real
Euro
U.S. dollar
Other currency
Accounts payable, non-
current
Chilean peso
U.S. dollar
Other currency
Other provisions, non-
current
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Provisions for employees
benefits, non-current
Chilean peso
U.S. dollar
Total non-current liabilities
Argentine peso
Brazilian real
Chilean peso
Colombian peso
Euro
U.S. dollar
Other currency
32,867
17,020
552
412
14,110
773
72,783
16,774
54,441
1,568
49,427
3,570
42,244
—
395
3,053
165
79,749
76,247
3,502
234,826
3,570
42,796
110,041
395
3,465
72,218
2,341
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
2,871
2,500
—
371
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,871
—
—
2,500
—
371
—
—
774
774
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
774
—
—
774
—
—
—
—
165,511
164,942
—
569
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
170,437
170,437
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
165,511
—
—
164,942
—
569
—
—
170,437
—
—
170,437
—
—
—
—
ANNUAL REPORT 2023
95
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
General summary of foreign currency:
765,411
14,640
22,043
143,250
18,205
129,312
325,080
112,881
1,073,496
7,057
57,119
418,315
3,114
59,156
440,035
88,700
808,554
31,759
27,904
64,163
14,423
39,280
526,845
104,180
1,156,874
57,358
87,160
416,174
3,655
33,866
409,346
149,315
7,583
(35,076)
(275,065)
15,091
70,156
(114,955)
24,181
(25,599)
(59,256)
(352,011)
10,768
5,414
117,499
(45,135)
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
226
NOTE 29 – EARNINGS (LOSS) PER SHARE
96
For the year ended at December 31,
2023
2022
Basic earnings (loss) per share
Income (Loss) attributable to owners of
the parent (ThUS$)
Weighted average number of shares,
basic
Basic earnings (loss) per share (US$)
581,831
1,339,210
604,437,869,545
0.000963
(*)
96,614,464,231
0.013861
(*)
For the year ended at December 31,
2023
2022
Diluted earnings (loss) per share
Income (Loss) attributable to owners of
the parent (ThUS$)
Weighted average number of shares,
diluted
Diluted earnings (loss) per share (US$)
581,831
1,339,210
(***)
604,441,789,335
0.000963
(**) 98,530,451,071
0.013592
(**)
(*) As of December 31, 2023, the weighted average number of shares considers 604,437,584,048 shares
outstanding from January 1, 2023 to December 31, 2023. From January 10, 2023 to December 31, 2023,
the number of shares outstanding increased due to the partial conversion of the Convertible Note H (See
movement of shares in Note 24).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, 2023, the number of weighted diluted shares considers 604,437,584,048 shares from
January 1, 2023 to December 31, 2023. From January 10, 2023 to December 31, 2023, the number of
shares outstanding increased due to the partial conversion of the Convertibles Notes (See movement of
shares in Note 24) and 3,911,748 shares outstanding from January 1, 2023 until December 31, 2023,
assuming the full conversion of the Convertibles Notes that were issued on the date of exit from Chapter
11 (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 Convertibles Notes that were issued upon
emergence from Chapter 11 (See movement of shares in Note 24).
(***) Income (Loss) attributable to owners 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.
ANNUAL REPORT 2023
NOTE 30 – CONTINGENCIES
I.
Lawsuits
1) Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries
97
Case
Number
-
Company
Court
LATAM
Finance
Limited
of
Grand
Court
the
Cayman
Islands
Amounts
Committed (*)
ThUS$
-0-
Origin
Stage of trial
for
Request
a
provisional bankruptcy
process.
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. 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. 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. 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.
227
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
98
Company
Court
Case
Number
Origin
Stage of trial
Peuco
Finance
Limited
-
of
Grand
Court
the
Cayman
Islands
for
Request
a
provisional bankruptcy
process.
On May 26, 2020, 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. 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. 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-
228
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
99
Company
Court
Case
Number
Origin
Stage of trial
Piquero
Leasing
Limited
-
of
Grand
Court
the
Cayman
Islands
for
Request
a
provisional bankruptcy
process.
On July 08, 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. On October 9,
2020 the Grand Court of the Cayman Islands granted the motion and
extended the provisional liquidation status for 6 months. 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. 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. 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-
229
ANNUAL REPORT 2023 Amounts
Committed (*)
ThUS$
2,477
13 —Financial reports —Financial statements
100
2)
Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries.
Company
Court
Case
Number
Origin
Stage of trial
Comisión
Europea
—
LATAM
Airlines
Group S.A. y
Lan Cargo
S.A.
230
to
of
of
Investigation of alleged
free
infringements
cargo
competition
fuel
airlines, especially
surcharge. On December
26th, 2007, the General
for
Directorate
Competition
the
European
Commission
notified Lan Cargo S.A.
and LATAM Airlines
Group S.A. the instruction
process against twenty five
including
cargo airlines,
for
Lan Cargo S.A.,
breaches
alleged
of
the air
in
competition
cargo market in Europe,
especially
alleged
fixed fuel surcharge and
freight.
the
On April 14th, 2008, the notification of the European Commission was
replied. The appeal was filed on January 24, 2011.
On May 11, 2015, we attended a hearing at which we petitioned for the
vacation of the Decision based on discrepancies in the Decision between the
operating section, which mentions four infringements (depending on the
routes involved) but refers to Lan in only one of those four routes; and the
ruling section (which mentions one single conjoint infraction).
On November 9th, 2010, the General Directorate for Competition of the
European Commission notified Lan Cargo S.A. and LATAM Airlines
Group S.A. the imposition of a fine in the amount of ThUS$9,133
(€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$9,133
(€8,220,000 Euros) to KUS$2,477 (€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. Finally, the European Commission replied to our defense in January
2023. On February 13, 2023, LAN Cargo, S.A. and LATAM requested the
European Court to hold an oral hearing to ensure the Court's full
understanding of some points of the discussion. The European Court set the
hearing date as April 10, 2024.
ANNUAL REPORT 2023 Case
Number
—
Company
Court
Lan Cargo
S.A.
y
LATAM
Airlines
Group S.A.
In the Ovre
Romerike
Disrtict
Court
(Noruega)
y Directie
Juridische
Zaken
Afdeling
Ceveil
Recht
(Países
Bajos)
13 —Financial reports —Financial statements
101
Origin
Stage of trial
The two cases still pending, in Norway and the Netherlands, are in the
evidence confirmation stage. The Norway case has been inactive since
January 2014, but there has been judicial activity in the Netherlands case. In
the Netherlands, most of the airlines involved in this case have been forced
to withdraw their claim against LATAM and Lan Cargo after their previous
claims in the Chapter 11 proceedings before the New York Court were
dismissed. So, Lufthansa, Lufthansa Cargo, British Airways, Air France,
KLM, Martinair and Singapore have withdrawn their claims and now only
the Thai Airways claim is still ongoing against LATAM and Lan Cargo.
freight
services
breaches
of
against
filed
Lawsuits
European airlines by users
in
of
private lawsuits as a result
of the investigation into
of
alleged
cargo
competition
fuel
airlines, especially
surcharge. Lan Cargo S.A.
and LATAM Airlines
Group S.A., have been
sued in court proceedings
third
directly and/or
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.
in
Amounts
Committed (*)
ThUS$
-0-
Aerolinhas
Brasileiras
S.A.
Justicia
Federal.
0008285-5
3.2015.403
.6105
An action seeking to quash
a decision and petitioning
in
for early protection
order
a
obtain
to
revocation of the penalty
imposed by the Brazilian
Authority
Competition
the
(CADE)
investigation
cargo
airlines alleged fair trade
violations, in particular the
fuel surcharge.
in
of
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
11,106
231
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
102
Company
Court
Case
Number
Origin
Stage of trial
Aerolinhas
Brasileiras
S.A.
Justicia
Federal.
0001872-5
8.2014.4.0
3.6105
Tam Linhas
Aéreas S.A.
Tribunal
Regional
Federal da
2a Região.
2001.51.01
.012530-0
(vinculado
a este
proceso los
Pas
19515.721
154/2014-7
1,
19515.002
963/2009-1
2)
An annulment action with
a motion for preliminary
injunction, was filed on
28/02/2014, in order to
cancel tax debts of PIS,
II,
CONFINS,
connected
the
process
administrative
10831.005704/2006-43
IPI and
with
Ordinary
judicial action
brought for the purpose of
declaring the nonexistence
relationship
of
obligating the company to
collect the Air Fund.
legal
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: ThUS$3,929 – R$ 19,059,073.03-
probable). We must await a decision on the Treasury appeal.
to
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
the Court was delivered for R$
260.223.373,10-original amount in 2012/2013, which currently equals
ThUS$84,078 (R$407,778,562.13). The court decision requesting that the
Expert make all clarifications requested by the parties in a period of 30 days
was published on March 29, 2016. The plaintiffs’ submitted a petition on
June 21, 2016 requesting acceptance of the opinion of their consultant and
an urgent ruling on the dispute. No amount additional to the deposit that has
already been made is required if this case is lost. A ruling is currently
pending on the company’s appeal.
Tam Linhas
Aéreas S.A.
Secretaria
da Receita
Federal do
Brasil.
10880.725
950/2011-0
5
Ordinary
judicial action
brought for the purpose of
declaring the nonexistence
relationship
of
obligating the company to
collect the Air Fund.
legal
The objection (manifestação de inconformidade) filed by the company was
rejected, which is why the voluntary appeal was filed. The case was
assigned to the 1st Ordinary Group of Brazil’s Administrative Council of
Tax Appeals (CARF) on June 8, 2015. TAM’s appeal was included in the
CARF session held August 25, 2016. An agreement that converted the
proceedings into a formal case was published on October 7, 2016. The
company has received the results of the due diligence and presented a claim.
We must wait for an administrative decision.
Amounts
Committed (*)
ThUS$
12,767
84,078
37,173
232
ANNUAL REPORT 2023 Amounts
Committed (*)
ThUS$
11,567
13 —Financial reports —Financial statements
103
Company
Court
Case
Number
Origin
Stage of trial
On August 19th, 2014 the
Federal Tax Service issued
a notice of violation
stating that compensation
credits Program (PIS) and
the Contribution for the
Financing
Social
Security COFINS by TAM
are not directly related to
the
air
transport.
activity
of
of
An objection was filed administratively on September 17, 2014. The lower
court rendered a partially favorable ruling on June 1, 2016 that reversed the
previous separate fine. A voluntary remedy was filed on June 30, 2015 on
which a judgment by the Board of Tax Appeals is pending. The case was
sent to the Second Panel of the Fourth Room of the Third Judgment Section
of the Board of Tax Appeals (abbreviated as CARF in Portuguese). The
CARF judges partially sustained the company’s appeal to pay part of the
debt (we did not appeal the other part). The Ministry of Finance of Brazil
filed a special remedy. The CARF dismissed the Ministry’s remedy in
September 2019, but it filed a complaint that was denied by the CARF. The
final calculations by the Federal Internal Revenue Service are pending.
Tam Linhas
Aéreas S.A.
Secretaria
da Receita
Federal do
Brasil.
10880.722.
355/2014-5
2
233
ANNUAL REPORT 2023 Company
Court
LATAM
Airlines
Group S.A.
22°
Juzgado
Civil
Santiago
de
Case
Number
C-29.945-2
016
Amounts
Committed (*)
ThUS$
-0-
13 —Financial reports —Financial statements
104
Origin
Stage of trial
The Company
received
notice of a civil liability
Inversiones
claim
by
on
Ranco Tres S.A.
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,
Awad
Jorge
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
their
the Company, of
duties
the
under
incorporation agreement.
LATAM has retained legal
counsel specializing in this
area to defend it.
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. 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, which was granted on February 17, 2023. Arguments were
presented to the Supreme Court on April 27, 2023. On August 4, 2023, the
Supreme Court dismissed the remedies of vacation of judgment based on
substance and form filed by Inversiones Ranco Tres S.A. The resolution
rejecting the claim remains firm and enforceable. The assessment of
personal and procedural costs in favor of LATAM was carried out by both
the Court of Appeals and the Court of First Instance.
TAM Linhas
Aéreas S.A.
10 ª Vara
das
Execuções
Fiscais
Federais
de
Paulo
São
0061196-6
8.2016.4.0
3.6182
Tax Enforcement Lien No.
0020869-47.2017.4.03.618
2 on Profit-Based Social
Contributions from 2004
to 2007.
This tax enforcement was referred to the 10th Federal Jurisdiction on
February 16, 2017. A petition reporting our request to submit collateral was
recorded on April 18, 2017. At this time, the period is pending for the
plaintiff to respond to our petition. The bond was replaced. The evidentiary
stage has begun.
35,300
234
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
105
Company
Court
Case
Number
Origin
Stage of trial
TAM Linhas
Aéreas S.A.
Secretaría
de Receita
Federal
5002912.2
9.2019.4.0
3.6100
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
Social
and
Assessment Tax on the net
profit
resulting
from the itemization of
royalties and use of the
TAM trademark
(SCL)
The lawsuit was assigned on February 28, 2019. A decision was rendered
on March 1, 2019 stating that no guarantee was required. 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.
Amounts
Committed (*)
ThUS$
10,292
TAM Linhas
Aéreas S.A.
Delegacía
de Receita
Federal
10611.720
852/2016-5
8
TAM Linhas
Aéreas S.A.
Delegacía
de Receita
Federal
16692.721.
933/2017-8
0
União
Federal
0012177-5
4.2016.4.0
1.3400
SNEA
(Sindicato
Nacional das
empresas
aeroviárias)
235
An improper charge of the
the
Contribution
Social
Financing
Security (COFINS) on an
import
for
of
The
Internal Revenue
Service of Brazil issued a
notice of violation because
TAM applied for credits
offsetting the contributions
for the Social Integration
the
Program (PIS) and
Social Security Funding
Contribution
(COFINS)
that do not bear a direct
relationship to air transport
(Referring to 2012).
A claim against the 72%
increase in airport control
and
(TAT-ADR)
fees
approach
fees
control
(TAT-APP) charged by
the Airspace Control
Department (“DECEA”).
There is no predictable decision date because it depends on the court of the
government agency. On June 29, 2023, the company decided to propose a
composition to the National Treasurer on payment of the debt, but with the
legal deductions stipulated in Law 246/2022. We are awaiting a response
from the authority.
15,253
An administrative defense was presented on May 29, 2018. The process has
become a judicial proceeding.
30,800
A decision is now pending on the appeal presented by SNEA. On January
30th, 2024, SNEA obtained a favorable court decision from the 2nd
Instance (TRF1), regarding its appeal. The SNEA awaits the publication of
the decision to assess the viability of possible appeals.
101,721
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
106
Company
Court
Case
Number
Origin
Stage of trial
TAM Linhas
Aéreas S.A.
União
Federal
2001.51.01
.020420-0
TAM Linhas
Aéreas S.A.
Receita
Federal do
Brasil
19515-720.
823/2018-1
1
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.938
832/2013-1
9
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.938
834/2013-1
6
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”).
An administrative claim to
collect alleged differences
in SAT payments for the
periods
to
12/2017.
11/2013
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
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.
236
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.
Amounts
Committed (*)
ThUS$
-0-
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.
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.
124,507
22,475
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.
16,669
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
107
Company
Court
Case
Number
Origin
Stage of trial
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.938
837/2013-4
1
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.938
838/2013-9
6
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.
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.
LATAM
Airlines
Group
Argentina,
Brasil, Perú,
y
Ecuador,
TAM
Mercosur.
Juzgado de
1°
Instancia
en lo Civil
y
Comercial
Federal N°
la
11 de
ciudad de
Buenos
Aires
filed
Libres
1408/2017 Consumidores
Coop. Ltda.
this
claim on March 14, 2017
regarding a provision of
services. It petitioned for
of
reimbursement
the
certain
the
or
fees
difference in fees charged
for
who
passengers
purchased a ticket in the
last 10 years but did not
use it.
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10.880.938
842/2013-5
4
237
The decision denied the
petition for reassignment
and did not equate the
COFINS credit statements
for the third quarter of
been
2012
determined to be in the
non-accumulative system.
that
had
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.
Amounts
Committed (*)
ThUS$
21,737
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.
13,987
Federal Commercial and Civil Trial Court No. 11 in the city of Buenos
Aires. After 2 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 plaintiff requested on
several occasions the opening of the trial, which was rejected by the Court
due to the lack of notification of previous resolutions. The evidentiary stage
has not yet begun in this case.
-0-
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.
16,076
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
108
Company
Court
Case
Number
Origin
Stage of trial
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$
14,721
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10.880.938
844/2013-4
3
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.938
841/2013-1
8
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10840.727
719/2019-7
1
Latam-
Airlines
Ecuador S.A.
Tribunal
Distrital de
lo Fiscal
17509-201
4-0088
The decision denied the
petition for reassignment
and did not equate the
COFINS credit statements
for the third quarter of
2012
been
determined to be in the
non-accumulative system.
that
had
The decision denied the
petition for reassignment
and did not equate the
COFINS credit statements
for the second quarter of
been
2012
determined to be in the
non-accumulative system.
that
had
of
Collection
/
COFINS tax for the period
of 2014.
PIS
An audit of
the 2006
Income Tax Return that
disallowed fuel expenses,
and other
fees
items
necessary
the
because
support was not provided,
according to Management.
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.
14,509
43,256
12,505
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.
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. As of this date, the Sala Especializada de lo Contencioso
Tributario de la Corte Nacional de Justicia has decided by ruling not to
accept the appeal, so the Company is analyzing whether to take additional
actions or close the process.
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
559/2017-9
1
Compensation non equate
by Cofins
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.
12,623
238
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
109
Company
Court
Case
Number
Origin
Stage of trial
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
547/2017-6
7
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
553/2017-1
4
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
555/2017-1
1
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
560/2017-1
6
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
550/2017-8
1
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
549/2017-
56
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
10880.910
557/2017-
01
Compensation non equate
by Cofins
TAM Linhas
Aéreas S.A
Receita
Federal do
Brasil
10840.722
712/2020-
05
TAM Linhas
Aéreas S.A.
Receita
Federal do
Brasil
10880.978
948/2019-
86
trial
Administrative
that
deals with the collection of
PIS/Cofins proportionality
(fiscal year 2015).
the non-
is about
It
approved
compensation/
reimbursement of Cofins
for
the 4th Quarter of
2015.
239
our
our
our
our
defense
defense
defense
defense
presented
presented
presented
presented
(Manifestação
(Manifestação
(Manifestação
administrative
administrative
administrative
administrative
We
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
de
Inconformidade). The Court dismissed the Company’s defense in December
2020. The Company filed a voluntary appeal (CARF) that is pending a
decision.
de
We
Inconformidade). The Court dismissed the Company’s defense in December
2020. The Company filed a voluntary appeal (CARF) that is pending a
decision.
We
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
de
Inconformidade). The Court dismissed the Company’s defense in December
2020. The Company filed a voluntary appeal (CARF) that is pending a
decision.
de
We
Inconformidade). The Court dismissed the Company’s defense in December
2020. The Company filed a voluntary appeal (CARF) that is pending a
decision.
We
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
de
Inconformidade). A decision is pending. The Company filed a voluntary
appeal (CARF) that is pending a decision.
administrative
administrative
administrative
administrative
(Manifestação
(Manifestação
(Manifestação
(Manifestação
(Manifestação
presented
presented
presented
presented
defense
defense
defense
defense
our
our
our
our
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$
14,579
14,063
14,815
12,953
15,001
12,552
11,892
34,537
19,178
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
Company
Court
Case
Number
Origin
Stage of trial
110
TAM Linhas
Aéreas S.A.
Receita
Federal do
Brasil
10880.978
946/2019-
97
TAM Linhas
Aereas S.A.
Receita
Federal do
Brasil
10880.978
944/2019-
06
is about
the non-
It
compensation/
approved
reimbursement of Cofins
for the 3th Quarter of 2015
is about
the non-
It
compensation/
approved
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.
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.
Latam
Airlines
Group S.A
C-8498-20
20
23°
Juzgado
Civil
Santiago
de
240
the
Class Action Lawsuit filed
by
National
Corporation of Consumers
Users
and
against
(CONADECUS)
LATAM Airlines Group
S.A. for alleged breaches
of the Law on Protection
of Consumer Rights due to
flight cancellations caused
by
COVID-19
Pandemic, requesting the
nullity of possible abusive
clauses, the imposition of
fines and compensation for
damages in defense of the
collective
of
consumers. LATAM has
hired specialist lawyers to
undertake its defense.
interest
the
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 was sent to the first instance to
continue processing. On November 24, 2023, the Court dismissed
LATAM’S motion for reversal against the ruling that declared the action
filed by CONADECUS admissible. Accordingly, on December 4, 2023,
LATAM filed the statement of defense. The amount at the moment is
undetermined.
Amounts
Committed (*)
ThUS$
11,607
12,299
-0-
ANNUAL REPORT 2023 Company
Court
Latam
Airlines
Group S.A.
25°
Juzgado
Civil
Santiago
de
Case
Number
C-8903-20
20
TAM Linhas
Aéreas S.A
Receita
Federal de
Brasil
13074.726
429/2021-
41
TAM Linhas
Aéreas S.A.
Receita
Federal de
Brasil
2007.34.0
0.009919-
3(0009850
-54.2007.4
.01.3400)
241
Amounts
Committed (*)
ThUS$
-0-
13 —Financial reports —Financial statements
111
Origin
Stage of trial
the
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
COVID-19
by
Pandemic, requesting the
nullity of possible abusive
clauses, the imposition of
fines and compensation for
damages in defense of the
collective
of
consumers. LATAM has
hired specialist lawyers to
undertake its defense.
interest
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 the
settlement was 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
that
implementation. On December 28, 2022 the Civil Court ordered the filing
of the file. The National Consumer and User Association (CONADECUS)
filed appeals against these decisions with the Santiago Appellate Court that
were joined under Case #14,213-2020. Arguments were made on March 8,
2023. In a decision on August 8, 2023, the Appellate Court dismissed the
included. On August 26, 2023,
appeals by CONADECUS, costs
CONADECUS filed a petition based on technicalities and substance against
the Appellate Court ruling in order to have it reversed by the Supreme
Court. LATAM petitioned that such appeals be declared inadmissible in a
brief filed September 13, 2023. On November 30, 2023, the Supreme Court
declared CONADECUS’ petition inadmissible. On December 7, 2023,
LATAM requested the Appellate Court to determine the costs of the
procedure which must be borne by CONADECUS. CONADECUS
currently has no petitions against the settlement reached between LATAM
and AGRECU. The amount at the moment is undetermined.
its obligation
to report on
TAM filed its administrative defense. (Manifestação de Inconformidade).
A decision is pending
19,762
A decision is pending
73,962
lawsuit
is about
the non-
It
compensation/
approved
reimbursement of Cofins
for the periods 07/2016 to
06/2017.
A
to
review the incidence of the
Social
Security
Contribution taxed on 1/3
of vacations, maternity
payments
and medical
leave for accident.
seeking
ANNUAL REPORT 2023 Company
Court
TAM Linhas
Aéreas S.A.
Tribunal
del
Trabajo de
Brasília/
DF
Case
Number
0000038-2
5.2021.5.1
0.0017
TAM Linhas
Aéreas S.A.
UNIÃO
FEDERAL
0052711-8
5.1998.4.0
1.0000
TAM Linhas
Aéreas S.A
Tribunal
do Trabajo
de
São
Paulo
1000115-9
0.2022.5.0
2.0312
TAM Linhas
Aéreas S.A
Receita
Federal
15746.728
063/2022-
00
TAM Linhas
Aéreas S.A
União
Federal
1003320-7
8.2023.4.0
6.3800
242
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.
indemnity claim
An
to
collect
a differentiated
price from
the Federal
the
Union because of
disruption of the economic
the
equilibrium
in
concession
agreements
between 1988 and 1992.
The indemnity, should the
action prosper, cannot be
estimated (Price Freeze).
A class action whereby the
is
Air Transport Union
petitioning for payment of
additional hazardous and
unhealthy
work
retroactively and in the
for maintenance/
future
CML employees.
This is an administrative
regarding alleged
claim
the
in
irregularities
payment
of Technical
Assistance (SAT) in 2018.
Legal action to discuss the
debit of the administrative
process
10611.720630/2017-16
for violation of
(fine
incorrect
in
registration
DI- import declaration)
13 —Financial reports —Financial statements
112
Origin
Stage of trial
The hearing is scheduled for April 15, 2024.
Amounts
Committed (*)
ThUS$
13,923
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.
-0-
The instruction hearing is pending in this case, scheduled for 12:02 p.m. on
April 25, 2024
15,747
The administrative defense has been presented and a decision is pending.
18,974
Distributed on January 19, 2023. The company obtained a precautionary
measure suspending the collection without the need for a guarantee. Process
awaiting response from the National Treasury
21,553
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
113
Origin
Stage of trial
Company
Court
TAM Linhas
Aéreas S.A
União
Federal
Case
Number
12585.720
017/2012-
84
TAM Linhas
Aéreas S.A
União
Federal
10880-982
.487/2020-
80
TAM Linhas
Aéreas S.A
União
Federal
10880-967
.530/2022-
49
TAM Linhas
Aéreas S.A
União
Federal
10880-967
.532/2022-
38
TAM Linhas
Aéreas S.A
União
Federal
10880-967
.533/2022-
82
243
This is a petition to
recover a credit
(proportional) in the 3rd
quarter of 2010 under the
Social Security Financing
Contribution program
(abbreviated as COFINS
in Portuguese).
This is a petition to
recover a credit
(proportional) in the 4rd
quarter of 2016 under the
Social Security Financing
Contribution program
(abbreviated as COFINS
in Portuguese)
This is a petition to
recover a credit
(proportional) in the 1rd
quarter of 2018 under the
Social Security Financing
Contribution program
(abbreviated as COFINS
in Portuguese).
This is a petition to
recover a credit
(proportional) in the 2rd
quarter of 2018 under the
Social Security Financing
Contribution program
(abbreviated as COFINS
in Portuguese).
This is a petition to
recover a credit
(proportional) in the 4rd
quarter of 2018 under the
Social Security Financing
Contribution program
(abbreviated as COFINS
in Portuguese).
An administrative defense was presented but was dismissed. The company
filed a voluntary remedy before CARF that was also dismissed. A decision
on the special remedy is now pending.
Amounts
Committed (*)
ThUS$
10,542
An administrative defense was presented but was dismissed. The company
filed a voluntary remedy before CARF. A decision on the special remedy is
now pending.
10,322
An administrative defense was presented. A decision is pending.
10,671
An administrative defense was presented and a decision is pending.
11,447
An administrative defense was presented and a decision is pending.
20,154
ANNUAL REPORT 2023 Company
Court
TAM Linhas
Aéreas S.A
União
Federal
Case
Number
19613.725
650/2023-
86
13 —Financial reports —Financial statements
114
Origin
Stage of trial
An administrative defense was presented and a decision is pending.
A Notice of Violation
prepared in the petition by
the Social Integration
Program (abbreviated as
PIS in Portuguese) and by
COFINS on taxable events
allegedly occurring
between May 2018 and
December 2018.
LATAM
Airlines
Group S.A.
Tribunal
de Defensa
de la Libre
Competenc
ia
445-2022 On May 21, 2022, Agunsa
filed a petition to TDLC
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. The public versions have
already been added to the case file as final versions. Aerosan began a
separate, but related, non-contentious inquiry on April 20, 2023 before the
Anti-Trust Court (abbreviated as TDLC in Spanish) petitioning that the
TDLC decide whether the enforcement of Exempt Resolution #152 of the
National Customs Bureau would violate Decree Law 211. Said Resolution
#152 granted Agunsa permission to operate as a cargo warehouse at the
North Warehouse facility. On January 10, 2024, the Public Hearing of the
case was held, which was in state of agreement. For the time being, the
amount is indeterminate.
Amounts
Committed (*)
ThUS$
14,174
-0-
244
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
115
Company
Court
Case
Number
Origin
Stage of trial
LATAM
Airlines
Group S.A.
Tribunal
de Defensa
de la Libre
Competenc
ia
489-2023 A preliminary
precautionary measure
was filed by the Tourism
Companies Trade
Association of Chile
seeking that LATAM’s
NDC system cease to be
implemented or,
alternatively, that
collection of the
Distribution Cost
Recovery Fee be
suspended and that
LATAM be forbidden to
limit the inventory of
tickets available through
the indirect distribution
channel.
On May 24, 2023 the preliminary measure was initially rejected. However,
after accepting an appeal for reinstatement of ACHET, said resolution was
annulled on June 8, 2023, providing instead that partially accepts the
precautionary measure only in terms of suspending the Distribution Cost
Recovery Fee and prohibiting any unjustified limitation of the inventory of
tickets available for the indirect distribution channel. Currently awaiting a
the Court. The preliminary measure cannot be
final ruling from
implemented until such a decision is rendered. For the time being, the
amount is indeterminate.
Amounts
Committed (*)
ThUS$
-0-
We were served the claim on September 21, 2023. On September 30, 2023,
we filed a remedy of reconsideration against the decision that declared the
lawsuit filed by CONADECUS admissible, which was dismissed by the
Court on November 11, 2023. A decision on that appeal is pending at this
time. On November 18, 2023, LATAM filed the statement of defense. For
the time being, the amount is undetermined.
-0-
LATAM
Airlines
Group S.A.
23°
Juzgado
Civil de
Santiago
C-8156-20
22
245
the
international
A class action filed by
CONADECUS
against
LATAM Airlines Group
S.A. for alleged violations
of
Consumer
Protection Law because of
the cancellation of tickets
for
flights
purchased through travel
agencies. It petitioned for
fines
damage
indemnities to be imposed
in defense of the collective
and/or diffuse interest of
consumers. LATAM has
retained specialized legal
counsel to defend it.
and
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
116
Origin
Stage of trial
The administrative defense has been presented and a decision is pending.
is
the
about
This
unaccredited
compensation/
reimbursement and redress
regarding
improper
the
payment of the monthly
federal social assistance
contribution
(Cofins, as
abbreviated in Portuguese)
made in the third quarter
of 2018.
Amounts
Committed (*)
ThUS$
11,518
Company
Court
TAM Linhas
Aéreas S.A
União
Federal
Case
Number
10880.967
587/2022-
48
246
ANNUAL REPORT 2023 Company
Court
LATAM
Airlines
Group S.A.
Tribunal
de Defensa
de la Libre
Competenc
ia
Case
Number
NC-388-2
011
Amounts
Committed (*)
ThUS$
-0-
13 —Financial reports —Financial statements
117
Origin
Stage of trial
On August 11, 2012, the
Civil Aviation
Administration (“JAC,” as
abbreviated in Spanish)
filed a petition for
clarification with the Anti-
Trust Court (“TDLC,” as
abbreviated in Spanish)
regarding Condition VIII.4
of Decision #37/2011
(“Condition VII.4”). The
petition seeks to impose a
temporary 5 years
limitation on 23
frequencies assigned by
the JAC to LATAM after
Decision #37 was issued.
LATAM filed a brief with the TDLC on August 27, 2023, petitioning that the JAC
petition for clarification be dismissed because it was an improper request to change
Condition VIII.4. The TDLC dismissed the JAC’s petition for clarification on
September 13, 2023. The JAC filed an appeal against the TDLC’s ruling dismissing
its petition for clarification on September 23, 2023. LATAM petitioned that said
appeal by the JAC be declared inadmissible on September 30, 2023. The TDLC
declared it admissible (it admitted the appeal for processing) on October 2, 2023,
and LATAM filed a remedy of reconsideration against that decision on October 7,
2023, accompanied by a legal opinion. The TDLC accepted LATAM’s remedy of
reconsideration on October 17, 2023 and amended its previous ruling and dismissed
the JAC’s petition for clarification. On October 23, 2023, the JAC presented an
appeal to the Supreme Court requesting that the TDLC resolution be annulled and
petitioned declared admissible the remedy of reconsideration. On November 3,
2023, LATAM became part of the de facto appeal and requested its rejection. On
December 20, 2023, the TDLC sent a report to the Supreme Court. On January 6,
2024, the JAC presented a note in relation to the TDLC report. On January 9, 2024,
LATAM presented a document in response to the JAC presentation in which it
analyzed the TDLC report.
In a separate but related process, JetSmart filed a non-contentious inquiry on
September 26, 2023, in relation to the terms of the future public tender of aviation
frequencies on the Santiago-Lima route. JetSmart requested an injunction to suspend
the tender and maintain the aviation frequency assignments as currently held until
the inquiry has finalized. The TDLC declared the inquiry admissible on October 2,
2023, but only to begin a procedure to determine whether the rules in the terms of
the public aviation frequency tender violate Decree Law 211, and dismissed the
request for provisional measures. On October 4, 2023, JetSmart filed two motions
for reconsideration against the TDLC’s decision. The JAC became a party to such
motions on October 6, 2023 and LATAM became a party to the process on October
10, 2023, and it requested that the motions filed by JetSmart be dismissed. On
October 16, 2023, the TDLC took into account the considerations presented by
LATAM and rejected the two motions for reconsideration filed by JetSmart. On
October 19, 2023 CONADECUS requested to become part of this process and
requested the same injuction previously rejected twice by the TDLC. On October
23, 2023 LATAM submitted a brief to the TDLC requesting the rejection of
saidinjuction now requested by CONADECUS. On October 23, 2023, a public
auction was held by JAC for thirteen international frequencies for the Santiago -
Lima route, LATAM won ten of thirteen of these routes. On October 24, 2023,
JetSmart once again requested that an injunction be issued regarding the public
tender of aviation frequencies on the Santiago-Lima route. On November 2, 2023,
the TDLC rejected the request for injunctions submitted by JetSmart and
CONADECUS. On December 5, 2023, JetSmart complied with TDLC procedural
order and published in the Chilean official newspaper a notice calling interested
parties and stakeholders to submit information and opinions regarding JetSmart’s
inquiry . On December 21, 2023 the FNE requested to be an intervening party in the
process and requested to extend the deadline to provide background information.
The TDLC accepted the postponement, leaving the deadline for providing
information as February 5, 2024. On February 1, 2024, LATAM submitted a brief to
TDLC advocating for its position and providing background information regarding
JetSmart’s inquiry.
247
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
118
Origin
Stage of trial
This is a petition to
recover a credit Cofins in
the 1rd quarter of 2019
(proportional)
Trial involving a
commercial representation
contract signed directly
with the company Gm
Serviços Auxiliares de
Transporte Aéreo Ltda.
alleging the irregular
closing of the contract,
requesting payment of
compensation.
The administrative defense has been presented and a decision is pending.
Amounts
Committed (*)
ThUS$
11,416
The procedure before the Court of Appeal is pending
11,231
Company
Court
TAM Linhas
Aéreas S.A.
União
Federal
Case
Number
10880.967
612/2022-9
3
TAM Linhas
Aéreas S.A.
Superior
Tribunal
de Justiça
(STJ)
0042711-6
1.2007.8.0
5.0001
(1449899)
248
ANNUAL REPORT 2023 Amounts
Committed (*)
ThUS$
34,000
13 —Financial reports —Financial statements
119
Company
Court
Case
Number
Origin
Stage of trial
Tribunal
Fiscal
12511-202
2
LATAM
Airlines
Group
Sucursal
Perú
S.A
The resolution is pending.
Appeal for $34MM,
presented on October 11,
2022, against the
Intendencia resolution No.
4070140000100, which
declared unfounded the
claim filed by the
Company on September,
20, 2022, against the
Determination Resolutions
for alleged omissions of
the Income Tax
corresponding to the
period 2014 and associated
fines for the violation
typified in numeral 1 of
article 178 of the Tax
Code. The main objections
relate to SUNAT's lack of
knowledge of the
application of article 8 of
the CDI between Peru and
Chile regarding: i) Income
obtained from the
exclusivity contract of the
Latam Pass program with
the Banco de Crédito del
Perú, ii) Income from sale
of miles to non-airline
partners and associated
cost (sale of miles from
the Latam Pass program to
legal companies).
TAM Linhas
Aéreas S.A
UNIÃO
FEDERAL
1012674-8
0.2018.4.0
1.3400
Legal actions for members
to have the right to collect
contributions in the payroll
collectible on the basis of
gross sales.
This claim was filed in 2018. In January 2020, a decision favorable to the
Company was rendered so that contributions would be collected on the
basis of gross income. The company recently learned that the Superior
Courts are rendering decisions unfavorable to contributors. They have ruled
against the contributor in a recent decision. In December/2023 the position
was withdrawn.
-0-
249
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
120
Origin
Stage of trial
Amounts
Committed (*)
ThUS$
45,162
On September 16, 2022, an appeal was filed against the determination and
fine resolutions issued by SUNAT; being that, through Resolution of the
Intendencia No. 4070140000253, the claim filed by the company was
partially founded and, in addition, (i) it rectified Annexes No. 01, 04, 05 and
06 of RD No. 0120030126112 to No. 0120030126123. , (ii) the Annex to
RM N° 0120020037412 to N° 0120020037423, (iii) the balance in favor of
the IGV for the tax periods of January and July 2016 contained in RD N°
0120030126112 and 0120030126118; and, (iv) rectified and continued the
collection of the tax debt contained in RD No. 0120030126113 to
0120030126117 and 0120030126119 to 0120030126123 and RM No.
0120020037412 to 0120020037423. On January 11, 2023, an appeal was
filed against the aforementioned resolution, which was admitted for
processing and elevated to room 9 of the Tax Court. Currently the file is
pending resolution.
the Company filed an appeal against
On January 26, 2023,
the
determination and fine resolutions issued by SUNAT. Through Resolution
of the Intendencia No. 4070340000928 dated December 19, 2023, SUNAT
declared the appeal filed by the Company founded and, consequently,
Determination Resolutions No. 012-003-0130232, No. 012-003- 0130245
and Fine Resolution No. 012-002-0038314 are void. Currently, the Gerencia
de Fiscalización I and the Gerencia de Fiscalización Internacional y de
Precios de Transferencia de la Intendencia de Principales Contribuyentes
Nacionales of the SUNAT are pending to issue the inspection requirements
necessary to correct the invalidity defects declared by the Intendencia
Nacional de Impugnaciones.
185,987
Company
Court
LATAM
Airlines Perú
S.A.
Tribunal
Fiscal
Case
Number
Expediente
de
Apelación
N°
2545-2023
LATAM
Airlines Perú
S.A.
Expediente
de
Reclamaci
ón N°
407034000
0412.
Superinten
dencia
Nacional
de
Administra
ción
Tributaria
(SUNAT)
250
Appeal against the
resolution of the
Intendencia No.
4070140000253 that
declared the claim against
Determination Resolutions
No. 0120030126112 to
0120030126123 and RM
No. 0120020037412 to
0120020037423 partially
founded. The objections
contested through the
values indicated above
correspond to the taxable
base of the IGV for the
national interline
(domestic national sale).
Claim against
Determination Resolution
No. 0120030130232, Fine
Resolution No.
0120020038314, notified
on 12.22.2022 and
Determination Resolution
No. 0120030130245 for
indirect disposal of income
not susceptible to
subsequent tax control
linked to the objections
made to determination of
third category net income
for fiscal year 2015
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
121
In order to deal with any financial obligations arising from legal proceedings in effect at December 31, 2023,
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 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, and in
April and November 2023 the external auditors presented preliminary reports agreed upon with the National
Consumer Service (SERNAC). The implementation of a voluntary class procedure concluded on September 3,
2023.
3) 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 Air Lines, Inc (“Delta”). On August 13, 2021 FNE, Delta and LATAM
reached an out-of-court agreement that put an end to this investigation. On October 28, 2021, the Tribunal de
Defensa de la Libre Competencia approved the out-of-court agreement reached by LATAM and Delta with the
FNE.
4) 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 29, 2023, the Office of the National
Economic Prosecutor (FNE) decided to separate part of the information from such investigation and created a
new Case #2729-23 relative to cargo carriage on charter flights from Santiago to Easter Island during the
pandemic. The latest activity in the investigation of Case 2484-18 is an Official Ordinary Letter issued August
28, 2023 in which it requested additional information from LATAM. That letter was answered on September
27, 2023.
5) 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 from TDLC
related to restrictions as to certain codeshare agreements. On October 2, 2023, the FNE decided to separate part
of the information in such investigation. Case #2737-23 will be about the code share agreements between
LATAM and Delta that LATAM petitioned be amended; and Case #2669-21 will be about the remaining code
share agreements. In relation to the investigation with Role No. 2737-23, dated November 06, 2023, the FNE
and LATAM reached an extrajudicial agreement in order to allow certain codeshare agreements between
LATAM and Delta to be modified. On December, 7, 2023, TDLC approved the extrajudicial agreement reached
by LATAM and the FNE.
6) The competition authority sent an inquiry [or request] to TAM Linhas Aéreas S.A. (LATAM Airlines Brasil)
with the objective of obtaining information regarding certain pricing issues, which was received by the
251
company on November 27, 2023. LATAM Airlines Brasil is cooperating with the authority and remains
committed to transparency and compliance with all applicable rules and regulations.
122
.
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, 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 Florida branch, closed a new four year
revolving credit facility (“Exit RCF”) of US$ 500 million with a consortium of five banks led by JP Morgan
Chase Bank, N.A. As of December 31, 2023, this credit facility is undrawn and fully available. In addition,
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) on October 12, 2022, as modified on
November 3, 2022, a five-year term loan facility (“Term Loan B Facility”) of US$ 1,100 million (US$ 1,089
million outstanding as of December 31, 2023), (ii) on October 18, 2022, a 13.375% senior secured notes due
2027 (“2027 Notes”) for an aggregate principal amount of US$ 450 million and (iii) on October 18, 2022, a
13.375% senior secured notes due 2029 (“2029 Notes”, together with the 2027 Notes, the “Notes”) for and
aggregate principal amount of MUS$ 700. 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 Florida branch, 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, 2023, this
line of credit is undrawn and fully available.
On November 3, 2022, LATAM Airlines Group S.A., acting through its Florida branch, 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, 2023, the outstanding amount under the Spare
Engine Facility is US$ 266.8 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
jointly).
As of December 31, 2023, the Company complies with the aforementioned minimum liquidity covenants.
ANNUAL REPORT 2023 13 —Financial reports —Financial statements
123
b)
Other commitments
As of December 31, 2023, the Company maintains valid letters of credit, guarantee notes and guarantee
insurance policies, according to the following detail:
Creditor Guarantee
Debtor
Quantity
Type
Value
ThUS$
Release
Date
SUPERINTENDENCIA NACIONAL DE ADUANAS
Y DE ADMINISTRACION TRIBUTARIA
LATAM Airlines Perú
S.A.
49
Letter of Credit
202,583
Jan 11, 2024
SÉTIMA TURMA DO TRIBUNAL REGIONAL
FEDERAL DA 1ª REGIÃO - PROCEDIMENTO
COMUM CÍVEL - DECEA -
0012177-54.2016.4.01.3400
ISOCELES
UNIÃO FEDERAL ( FAZENDA NACIONAL)
UNIÃO FEDERAL - PGFN
UNIÃO FEDERAL - PGFN
UNIÃO FEDERAL - FAZENDA NACIONAL
UNIÃO FEDERAL
FUNDACAO DE PROTECAO E DEFESA DO
CONSUMIDOR PROCON
VARA DAS EXECUÇÕES FISCAIS ESTADUAIS
DE SÃO PAULO - FORO DAS EXECUÇÕES
FISCAIS DE SÃO PAULO
AMERICAN ALTERNATIVE INS. CO. C/O
ROANOKE INS. GROUP INC
TRIBUNAL DE JUSTIÇA DO ESTADO DE SÃO
PAULO
BBVA
1° VARA DE EXECUÇÕES FISCAIS E DE CRIMES
CONTRA A ORDEM TRIB DA COM DE
FORTALEZA
FUNDAÇÃO DE PROTEÇÃO E DEFESA DO
CONSUMIDOR DE SÃO PAULO - PROCON
BOND SAFEGUARD INSURANCE COMPANY
COMISÓN EUROPEA
UNIAO FEDERAL (FAZENDA NACIONAL)
17ª VARA CÍVEL DA COMARCA DA CAPITAL DE
JOÃO PESSOA/PB
PROCON - FUNDACAO DE PROTECAO E
DEFESA DO CONSUMIDOR
JFK INTERNATIONAL AIR TERMINAL LLC
METROPOLITAN DADE CONTY (MIAMI - DADE
AVIATION DEPARTMENT)
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
TAM Linhas Aereas
S.A.
ABSA Aerolinhas
Brasileiras S.A.
TAM Linhas Aereas
S.A.
ABSA Aerolinhas
Brasileiras S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
ABSA Aerolinhas
Brasileiras S.A.
LATAM Airlines
Group S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
LATAM Airlines
Group S.A.
1
1
1
2
4
2
5
7
1
Guarantee
Insurance
57,554
Apr 20, 2025
Letter of Credit
41,000
Aug 1, 2026
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
33,045
Jul 30, 2024
21,538
Feb 22, 2025
21,131
Sep 28, 2024
17,838
Apr 14, 2025
11,226
Feb 4, 2025
10,844
Apr 2, 2024
9,752
Mar 4, 2025
19
Letter of Credit
6,305
Feb 1, 2024
2
1
1
1
1
1
1
1
2
1
6
Guarantee
Insurance
6,263
Dec 31, 2099
Letter of Credit
3,800
Jan 23, 2025
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
2,962
Dec 31, 2099
5,016
Mar 7, 2025
2,700
Jul 20, 2024
Letter of Credit
2,598
Mar 29, 2024
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
2,457
Nov 16, 2025
2,527
Jun 25, 2028
4,178
Nov 17, 2025
Letter of Credit
2,300
Jan 27, 2024
Letter of Credit
2,462
Mar 13, 2024
252
Creditor Guarantee
Debtor
Quantity
Type
Value
ThUS$
Release
Date
124
SÉTIMA TURMA DO TRIBUNAL REGIONAL
FEDERAL DA 1ª REGIÃO - PROCEDIMENTO
COMUM CÍVEL - DECEA -
0012177-54.2016.4.01.3400
SERVICIO NACIONAL DE ADUANA DEL
ECUADOR
VARA DE EXECUÇÕES FISCAIS ESTADUAIS DA
COMARCA DE SÃO PAULO/SP - EXECUÇÃO
FISCAL N.º 1507367-03.2016.8.26.0014
SOCIEDAD CONCESIONARIA NUEVO
PUDAHUEL S.A.
DISTRITO FEDERAL / TRIBUNAL: 7ª TURMA
DO TRIBUNAL REGIONAL FEDERAL DA 1ª
REGIÃO - ANULATÓRIA N.º
0007263-25.2008.4.01.3400
UNIÃO FEDERAL, REPRESENTADO PELA
PROCURADORIA SECCIONAL DA FAZENDA
NACIONAL EM CAMPINAS
FIANÇA TAM LINHAS AÉREAS X JUIZ
FEDERAL DE UMA DAS VARAS DA SEÇÃO
JUDICIÁRIA DE BRASÍLIA/
LIMA AIRPORT PARTNERS S.R.L.
TRIBUNAL DE JUSTIÇA DO ESTADO DE SÃO
PAULO
UNIDAD ADMINISTRATIVA BOGOTÁ
JUIZO DE DIREITO DA VARA DA FAZENDA
PUBLICA ESTADUAL DA COMARCA DA
CAPITAL DO ESTADO DO RIO DE JANEIRO
JFK INTERNATIONAL AIR TERMINAL LLC
MUNICIPIO DO RIO DE JANEIRO
AENA AEROPUERTOS S.A
CITY OF LOS ANGELES, DEPARTMENT OF
AIRPORTS
ABSA Aerolinhas
Brasileiras S.A.
LATAM-Airlines
Ecuador S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
TAM Linhas Aereas
S.A.
ABSA Aerolinhas
Brasileiras S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
TAM Linhas Aereas
S.A.
LATAM Airlines
Group S.A.
LATAM Airlines
Group S.A.
FUNDAÇÃO DE PROTEÇÃO E DEFESA DO
CONSUMIDOR DO ESTADO DE SÃO PAULO
TAM Linhas Aereas
S.A.
PARQUE DE MAETERIAL AERONAUTICO DO
GALEAO - PAMA GL
TAM Linhas Aereas
S.A.
1
4
1
18
1
1
1
32
1
4
1
1
1
2
5
1
1
Guarantee
Insurance
2,245
May 7, 2025
Letter of Credit
2,130
May 8, 2024
Guarantee
Insurance
2,025
Apr 24, 2025
Letter of Credit
1,551
Mar 29, 2024
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
1,867
May 29, 2025
1,931
Nov 30, 2025
1,810
Dec 31, 2099
Letter of Credit
1,628
Dec 31, 2023
Guarantee
Insurance
964
Dec 31, 2099
Letter of Credit
1,432
Apr 17, 2024
Guarantee
Insurance
Guarantee
Insurance
Guarantee
Insurance
1,435
Dec 31, 2099
1,300
Jan 25, 2024
1,239
Dec 31, 2099
Letter of Credit
2,370
Nov 15, 2024
Letter of Credit
1,074
Jan 2, 2024
Guarantee
Insurance
Guarantee
Insurance
1,152
Dec 31, 2099
1,053
497,285
Jun 18, 2024
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.
ANNUAL REPORT 2023
NOTE 32 - TRANSACTIONS WITH RELATED PARTIES
125
(a)
Details of transactions with related parties as follows:
Tax No.
Related party
Nature of relationship
with related parties
Country
of origin
Nature of related parties
transactions
96.810.370-9
Inversiones Costa
Verde Ltda. y
CPA.
Related director
Chile
Tickets sales
81.062.300-4 Costa Verde
Common shareholder
Chile
Loans received (*)
Aeronautica S.A.
87.752.000-5 Granja Marina
Tornagaleones
S.A.
Common shareholder
Chile
Services provided
Interest received (*)
Capital contribution
96.989.370-3 Rio Dulce S.A.
Related director
Chile
Tickets sales
Related director
Argentina Real estate leases
Foreign
Foreign
Foreign
(**)
Inversora
Aeronáutica
Argentina S.A.
TAM Aviação
Executiva e Taxi
Aéreo S.A.
Qatar Airways
Common shareholder
Brazil
Indirect shareholder
Qatar
Foreign
Delta Air Lines,
Inc.
Shareholder
U.S.A
received
Expense recovery
Services provided of
passenger transport
Interlineal received
service
Interlineal provided
service
Services received of
handling
Services provided of
handling
Services received miles
Services provided miles
Services provided /
received others
Interlineal received
service
Interlineal provided
service
Services received miles
Services provided miles
Loans received (*)
Interest received (*)
Capital contribution
Services provided of
handling
Engine sale
Joint venture
Real estates leases
provided
Services provided /
received others
Foreign
QA Investments
Ltd
Common shareholder
U.K.
Loans received (*)
Foreign
QA Investments 2
Ltd
Common shareholder
U.K.
Loans received (*)
Foreign
Lozuy S.A.
Common shareholder
Uruguay
Interest received (*)
Loans received (*)
Interest received (*)
Interest received (*)
Capital contribution
253
13 —Financial reports —Financial statements
For the year ended At
December 31,
Currency
2023
2022
ThUS$
ThUS$
CLP
US$
US$
US$
CLP
CLP
ARS
ARS
BRL
US$
US$
US$
US$
US$
US$
US$
124
87
— (231,714)
—
—
—
—
(59)
3
(21,329)
170,962
36
2
(63)
—
—
(22,107)
4
(23,110)
31,020
(252)
37,855
—
—
692
(4,657)
1,683
(4,974)
894
1,424
(1,238)
US$
(144,239)
(111,706)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
127,145
(11,069)
7,328
102,580
(3,992)
2,410
— (233,026)
—
—
(10,374)
163,979
(3,657)
—
(10,000)
86
982
(4,340)
19,405
—
—
(311)
— (240,440)
—
—
—
—
—
—
(26,153)
163,979
(7,414)
(15,780)
(57,928)
(5,332)
126
(*) Operations corresponding to DIP loans tranche C.
The balances corresponding to Accounts receivable and accounts payable to related entities are disclosed in
Note 9.
Transactions between related parties have been carried out under market conditions and duly informed.
(**) Related companies until November 2022
(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 at December
31,
2023
ThUS$
2022
ThUS$
12,815
1,429
606
13,604
59
28,513
10,651
1,109
565
11,814
1,157
25,296
Remuneration
Board compensation
Non-monetary benefits
Short-term benefits
Termination benefits (*)
Total
In accordance with current legislation, the Ordinary Shareholders’ Meeting held on April 20, 2023, determined
the amount of the annual remuneration for the Board for the period from that date until the next Ordinary
Shareholders’ Meeting scheduled to take place within the first quarter of 2024. In this context, in addition to the
base remuneration, an additional remuneration was approved for each Board member, with an incremental
amount based on the following criteria:
(a)
During the first year following their appointment, until November 15, 2023, provided that the Director
serves continuously in their position, each Director will be entitled to receive an additional amount to the base
remuneration, equivalent to 9,226,234 units of remuneration or “URAs.”
(b)
For the second year following their appointment, covering the period from the end of the first
anniversary since their designation until November 15, 2024, under the same condition mentioned previously
and approved by the Ordinary Shareholders’ Meeting in the first quarter of 2024, each Director will be entitled
to receive another additional amount equivalent to 9,226,234 URAs.
Likewise, each Director who becomes part of the Board Committee will also receive, as additional
(c)
compensation, a variable amount equivalent to an additional one-third (1/3) calculated on the incremental
remuneration that the respective Committee member is entitled to as a Director, in accordance with the
resolution of the Ordinary Shareholders’ Meeting.
For payment purposes, the value of each URA will be considered as referentially equivalent to the price of a
company’s share. Consequently, URAs will be paid at the weighted average price of stock market transactions
of the company’s shares during the 10 business days preceding the effective date (“Weighted Average Price”).
For the calculation of the Weighted Average Price, transactions on national stock exchanges, as well as those on
foreign exchanges recognized at the national level where LATAM’s American Depositary Shares may
eventually be listed again, will be taken into account.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
127
The amounts paid during the 2023 fiscal year for this concept, in accordance with the above, are:
Paid during the
year
2023
ThUS$
481
53
534
URAs Directors
URAs Board Committee
Total
NOTE 33 - SHARE-BASED PAYMENTS
(a) LP3 compensation plans (2020-2023)
The Company implemented a program for a group of executives, which existed until March 2023, with a
demand period between October 2020 and March 2023, where the collection percentage was annual and
cumulative. The methodology is an estimate of the number of units, where a goal of the value of the action is
set.
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 was finally not executed because the share price required for its collection is below the
initial target.
(b) CIP (Corporate Incentive Plan)
As indicated in Note 22, in the context of the exit from Chapter 11 Proceedings, the Company implemented a
talent retention program for the Company's employees, which is divided into three categories. The first one (i.e.,
Non-Executive Employees) simply contemplates guaranteed payments in cash to the respective employees on
certain dates depending on the country where the employee is hired. On the other hand, the remaining two
categories (i.e., Non-GEM Executives and GEM Executives) contemplated the granting of synthetic units of
remuneration (the "Units") that, by reference, are considered as equivalent to the price of one share of LATAM
Airlines Group S.A. and consequently, in case they become effective, grant the worker the right to receive the
payment in cash that results from multiplying the number of Units that are pay for the value per share of
LATAM Airlines Group S.A. that must be considered in accordance with the CIP.
Below are more details of these two categories.
Non-GEM Executives
The first subprogram applies to senior executives not part of the GEM (Global Executive Meeting - Senior
Managers, Managers, Deputy Managers). In this context, this program contemplates two different bonuses: (1)
a retention bonus, consisting of the amount in money resulting from Units that are assigned to the respective
employee and these Units being paid 20% on month 15 and 80% at month 24, in each case, counted from Exit
date from the Chapter 11 Procedure (i.e., November 3, 2022) (the "Exit Date"). This is consequently, a
guaranteed payment for these employees; and (2) a bonus associated to the performance defined on based on the
compliance of certain financial indicators of LATAM Airlines Group S.A. and its subsidiaries, which is
reflected in Note 19(b), becoming effective 20% at month 15 and 80% at month 24, in each case, from the Exit
Date. Consequently, this is a temporary payment that is only made if these indicators are met.
254
GEM Executives
128
Applies to senior executives of the Company who are part of the GEM (CEO and employees whose job
description is "vice presidents" or "directors"). Employees that participating in this program are eligible to
receive cash payments for Units. These Units are as follows:
1. "RSUs" (Retention Shares Units): That is, Units associated with the employee's permanence in
the Company, and consequently, are associated with the passage of time. In its totality, the CIP contemplates up
to 3,107,603,293 RSUs which are made effective by partialities in the terms indicated below.
As a general rule, RSUs will be eligible to become effective at the rate of one third on each of
the following dates: month 24, month 36 and month 42, in each case, counted from the Exit Date. The
mentioned above, subject to the occurrence of a trigger event related to the volume of transactions of securities
issued by LATAM Airlines Group S.A. in the terms contemplated in the CIP (hereinafter, a "VTE" – Volume
Triggering Event). The number of RSUs actually paid will be determined based on the net resources
accumulated as a result of a VTE on the respective determination date (hereinafter, this adjustment will be
referred to as the "Pro Rata Factor").
Notwithstanding the mentioned above, the CIP also contemplates a "Minimum Guaranteed Vesting" according
to which, the percentage of RSUs indicated below will be effective on each date indicated, even if a VTE has
not occurred. The foregoing, net of the RSUs that may eventually have become effective previously.
Minimum Guaranteed Vesting of RSUs
Month 30 from Exit Date
Month 42 from Exit Date
Month 60 from Exit Date
Percentage of
Units that become
effective
20%
30%
50%
2. "PSUs" (Performance Shares Units): That is, Units associated with both the employee's
permanence in the Company and the performance of LATAM Airlines Group S.A. measured according to the
share price. Consequently, like RSUs, these Units are associated with the passage of time. However, PSUs also
consider the market value of the share of LATAM Airlines Group S.A. considering a liquid market. However,
as long as there is no such liquid market, the share price will be determined on the basis of representative
transactions. In its totality, the CIP contemplates up to 4,251,780,158 PSUs which are made effective by
partialities in the terms indicated below.
As a general rule, PSUs will be eligible to become effective at the rate of one third on each of the following
dates: month 24, month 36 and month 42, in each case, counted from the Exit Date. The foregoing, subject to (i)
a VTE having occurred; and (ii) that the quotient (hereinafter, the "Net Price/ERO (Equity Rights offering)
Quotient") between the net price of sales originating in a VTE, divided by the price of share at which the shares
issued were placed under the capital increase agreed at the extraordinary shareholders' meeting of LATAM
Airlines Group S.A. dated July 5, 2022 (that is, US$ 0.01083865799), is greater than 150%. The number of
PSUs that actually becomes effective will be determined according to the Factor Pro Rata and the Quotient Net
Price/ERO Price).
From the above it flows that the PSUs constitute an eventual and not guaranteed payment.
In addition, some of the GEM Executives will also be entitled to receive a fixed and guaranteed payment in cash
("MPP" – Management Protection Plan) on certain dates under the Plan, at the rate of 33% in the month 18,
34% in the month 24 and 33% in the 30th month, all from the Exit Date. On the other hand, those employees
who are eligible for this MPP will also be eligible for a limited number of additional RSUs ("MPP Based
RSUs"). In its totality, the CIP includes 1,438,926,658 MPP based RSUs. As a general rule, MPP Based RSUs
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
129
will be eligible to become effective on the same terms and conditions as RSUs; however, that they will be
eligible to become effective at a rate of one third on each of the following dates: month 18, month 24 and month
30, in each case, from the Exit Date. The valuation of these Units will be equivalent to the value of the
Company's share less the ERO Price at the time they become effective.
In all cases, the respective employees must have remained as such in the Company at the corresponding accrual
date to qualify for these benefits.
Given the characteristics of this program, it has been recorded in accordance with the provisions of IFRS 2
"Share-based payments" and has been considered as a "cash settlement award" and, therefore, recorded at fair
value as a liability that is part of the items Trade and other accounts payables and Provisions for employee
benefits, non-current, which is updated at the closing date of each financial statement with effect on profit or
loss for the period and classified in the line "Administrative expenses" of the interim Consolidated Statement of
Income by function.
The fair value has been determined on the basis of the current share price and the best estimate of the future
value of the Company's share, multiplied by the number of underlying units granted. This estimate was made
based on the Company's Business Plan and its main indicators such as EBITDAR, adjusted net debt.
The movement of units as of December 31, 2023, is as follows:
RSU - Retention
PSU - Performance
MPPBASEDRSU - Protection
Total
Opening balance
as of 01.01.2023
—
—
—
—
Granted during the
period
3,107,603,293
4,251,780,158
1,438,926,658
8,798,310,109
Vested
—
—
—
—
Exercised
during the
period
Forfeited
during the
period
Closing
balance as of
12.31.2023
—
—
—
—
(121,146,360) 2,986,456,933
(242,192,091) 4,009,588,067
(192,047,245) 1,246,879,413
(555,385,696) 8,242,924,413
NOTE 34 - STATEMENT OF CASH FLOWS
(a)
The Company has carried out the following transactions with non-monetary impact:
a.1)
Proceeds from the issuance of shares as of December 31, 2022:
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.
255
a.2.)
Amount from the issuance of other equity instruments as of December 31, 2022 :
130
Detail
Fair Value (see note 24)
Use for settlement of
claim
Issuance costs
DIP Junior offset
Cash inflow
Convertible
Notes H
ThUS$
1,372,837
Convertible
Notes I
ThUS$
4,097,788
Total
ThUS$
5,470,625
—
(24,812)
(327,957)
1,020,068
(828,581)
(705,467)
(381,018)
2,182,722
(828,581)
(730,279)
(708,975)
3,202,790
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. for ThUS$ 327,957 and of
the other creditor for ThU$ 381.018.
As a result of the exit from Chapter 11, in relation to trade accounts payable and other accounts
a.3.)
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$3,596.
a.5.)
liabilities and Financial leases.
The Company has also carried out non-monetary transactions related to Right of use assets, Lease
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
131
(b)
Other inflows (outflows) of cash:
Restricted Advances
Bank commissions, taxes paid and other
Taxes on financial transactions
Guarantees
Payment for hedging instruments
Court deposits
Derivative margin guarantees
Payment for derivatives premiums
Total Other inflows (outflows) Operation activities
Guarantee deposit received from the sale of aircraft
Insurance recovery
Total Other inflows (outflows) Investment activities
Interest rate derivatives
Funds delivered as restricted advances
Payments of claims associated with the debt
Debt Issuance Cost - Stamp Tax
Taxes on financial transactions
Debt-related legal advice
RCF guarantee placement
Total Other inflows (outflows) Financing activities
For the year ended
At December 31,
2023
ThUS$
2022
ThUS$
20,572
(2,173)
(6,803)
4,406
30,413
(16,349)
(2,559)
(47,853)
(20,346)
48,258
11,000
59,258
15,934
—
—
—
(4,529)
—
—
11,405
(26,918)
(5,441)
(2,134)
(47,384)
35,857
(20,661)
(40,207)
(23,372)
(130,260)
6,300
—
6,300
—
(313,090)
(21,924)
(33,259)
—
(87,993)
(7,500)
(463,766)
(c)
Dividends:
As of December 31, 2023 and 2022, there were no disbursements associated with this concept.
256
132
(d)
Reconciliation of liabilities arising from financing activities:
Obligations with financial
institutions
As of
December
31, 2022
ThUS$
Obtainment
Capital (*)
ThUS$
Payment
Capital (**)
ThUS$
Interests
ThUS$
Interest
accrued
and
others
ThUS$
Reclassifications
(***)
ThUS$
As of
December
31, 2023
ThUS$
Cash flows
Non cash-Flow Movements
Bank loans
Guaranteed obligations
1,385,995
325,061
Other guaranteed
obligations
Obligation with the public
Financial leases
Other loans
Lease liability
Total Obligations with
financial institutions
474,304
1,289,799
1,088,239
2,028
2,216,454
6,781,880
—
—
—
—
—
—
—
—
(81,952)
(19,726)
(153,791)
(20,309)
189,272
20,686
(310,090)
(1,790)
1,029,434
303,922
(56,519)
—
(183,374)
(434)
(225,358)
(42,283)
(155,655)
(48,272)
—
(173,924)
43,037
168,694
58,076
(70)
1,150,822
11,811
—
(13,123)
(1,420)
—
430,350
1,302,838
901,546
104
2,967,994
(567,363)
(594,234)
1,630,517
(314,612)
6,936,188
Cash flows
Non cash-Flow Movements
Obtainment
Payment
Obligations with financial
institutions
As of
December
31, 2021
Capital (*)
Capital (**)
Interests
ThUS$
ThUS$
ThUS$
ThUS$
Extinguis
hment
of debt
under
Chapter
11
ThUS$
Legal
advices
related to
debt
ThUS$
Interest
accrued
and
others
ThUS$
Reclassifications
ThUS$
As of
December
31, 2022
ThUS$
Loans to exporters
Bank loans
Guaranteed obligations
Other guaranteed
obligations
159,161
521,838
510,535
—
—
—
982,425
(36,466)
(10,420)
—
(18,136)
(13,253)
—
—
(25)
(161,975)
2,814
(196,619)
128,077
—
—
(2,840)
1,385,995
—
13,882
(167,942)
325,061
2,725,422
3,658,690
(5,408,540)
(391,639)
(91,247)
(381,018)
339,475
23,161
474,304
Obligation with the public
2,253,198
1,109,750
(1,501,739)
(17,499)
1,189,182
—
(270,734)
(34,201)
76,508
1,467,035
(1,523,798)
(5,628)
3,281
—
—
(843,950)
148,703
141,336
1,289,799
(37,630)
(56,176)
37,211
40,806
204,411
1,088,239
—
2,028
2,960,638
—
(131,917)
(49,076)
(2)
(995,888)
492,592
(59,893)
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 leases
Other loans
Lease liability
Total Obligations with
financial institutions
(*) During the year 2023 , the Company did not obtain financing. During the year 2022, the Company obtained
ThUS$ 2,361,875 amounts from long-term loans and ThUS$ 4,856,025 amounts from short-term loans, totaling
ThUS$ 7,217,900.
(**) As of December 31, 2023, loan repayments ThUS$ 342,005 and payments of lease liabilities
ThUS$ 225,358, disclosed in flows from financing activities and as of December 31, 2022, loan repayments
ThUS$ 8,759,413 and liability payments for leases ThUS$ 131,917 disclosed in flows from financing activities.
(***) As a result of the exit from Chapter 11, Bank Loans decreased mainly by ThUS$ 297,161, related to the
cancellation of the claim of TAM Linhas Aéreas S.A., which was pending resolution upon exit from the Chapter
11 process and which was compensated during 2023 with a fund delivered to an agent as restricted advances
made in November 2022.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
133
Below are the details obtained (payments) of flows related to financing:
Flow of
For the years ended
December 31
Capital
raising
ThUS$
2023
Payments
Capital
ThUS$
Interest
ThUS$
Capital
raising
ThUS$
2022
Payments
Capital
ThUS$
Interest
ThUS$
Aircraft financing
Lease liability
Non-aircraft financing
Total obligations with Financial
institutions
—
—
—
—
(251,388)
(225,358)
(90,617)
—
(76,497)
(173,924)
—
(343,813) 7,217,900
(331,292)
(131,917)
(8,428,121)
(52,088)
(49,076)
(420,553)
(567,363)
(594,234) 7,217,900
(8,891,330)
(521,717)
(e)
Advances of aircraft
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.
For the year ended
At December 31,
2023
ThUS$
2022
ThUS$
(142,782)
215,362
72,580
(23,118)
3,037
(20,081)
Increases (payments)
Recoveries
Total cash flows
(f)
Additions of property, plant and equipment and Intangibles
Net cash flows from
Purchases of property, plant and equipment
Additions associated with maintenance
Other additions
Purchases of intangible assets
Other additions
For the year ended
At December 31,
2023
ThUS$
2022
ThUS$
795,787
337,126
458,661
68,052
68,052
780,538
486,231
294,307
50,116
50,116
257
(g)
The net effect of the application of hyperinflation in the consolidated cash flow statement corresponds
to:
134
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
For the year ended
At December 31,
2023
ThUS$
2022
ThUS$
(47,569)
3,661
—
43,908
—
(36,701)
(146)
7,703
29,144
—
Payments to suppliers for the supply of goods and services include the value paid associated with leased
maintenance capitalizations for ThUS$294,549 (ThUS$149,142 as of December 31, 2022).
(i)
Payments of loans to related entities as December 31, 2022:
Delta Air Lines, Inc.
Qatar Airways
Costa Verde Aeronautica S.A.
Lozuy S.A.
QA Investments Ltd
QA Investments 2 Ltd
Payments of loans to related entities
NOTE 35 - THE ENVIRONMENT
ThUS$
(78,947)
(78,947)
(257,533)
(107,122)
(242,967)
(242,967)
(1,008,483)
LATAM Airlines Group S.A is compromised with 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 matters at a corporate level, centralized in the Corporate Affairs and
Sustainability Department. The company is committed to monitoring and mitigating its impacts 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 matters in conjunction
with the various areas of the company include ensuring that environmental legal compliance would be
maintained in all the countries, implementing and maintaining corporate environmental management, the
efficient use of non-renewable resources such as aircraft fuel, the responsible disposal of its wastes, and the
development of programs and actions that allow it to reduce its greenhouse gas emissions, seeking to generate
environmental social and economic benefits for the company and the countries where it operates.
LATAM's sustainability strategy that was launched in 2021 is based on 4 pillars: Environmental Management
System, Climate Change Management, Circular Economy and Shared Value. With these pillars, the company
seeks to generate social, environmental and economic value for society and the company, anticipating the risks
inherent in the sustainability challenges which is viewed by the current and future scenarios.
ANNUAL REPORT 2023
13 —Financial reports —Financial statements
135
The aspects addressed in each pillar within 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
this structure, certified its operation in accordance with stage II of the IATA Environmental Assessment
Program (IEnvA), which is designed to evaluate and improve the environmental management of airlines, due to
not only being based on the ISO 14001 standard, also 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
aspires to offset and reduce the equivalent of 50% of domestic emissions by 2030 and seeks to be carbon-
neutral by 2050, in accordance with 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 within the company that has an impact on fuel
consumption.
2. Sustainable Alternative Fuels (SAF): Due to the importance of Sustainable Aviation Fuel (SAF) to
reduce the emissions 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 a
high developmental potential in green hydrogen.
3. Offsetting: 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 offsetting needs but also to contribute
to the conservation of strategic ecosystems in the region. During the first half of 2023, LATAM
launched its offsetting program for passengers “1+1 Offset to Conserve”, where passengers are invited
to contribute to the conservation of iconic ecosystems through offsetting their flight’s footprint and for
every ton compensated by its clients, LATAM duplicates the impact by compensating the same amount.
Circular Economy
LATAM seeks to remove single-use plastics as part of its ambition of striving to be a zero-waste group to
landfill by 2027. To achieve these goals, it has reviewed the materials used in its process and its waste
management to promote the circular economy within its processes, acting from materials. During 2023 LATAM
was recognized by IATA, as the winner of the 'Air Cargo Innovation Award' for its projects to reduce plastic in
domestic and international cargo operations in Chile & Brazil.
Shared Value
In shared value, the Solidarity Plane program stands out, it was established in 2011 and through which LATAM
provides its network, connections, and capacity for passenger and freight transit to South American society at
no cost in three areas of action: supports health needs, conservation of natural resources, and assistance in the
event of natural disasters.
Within the framework of the implementation of the strategy, during 2023, the company worked on the
following initiatives:
•
•
Implementation of the environmental management system in accordance with the IATA Environmental
Assessment Program IenvA, stage 2.
Supporting conservation projects and offsetting
• Measurement and management of the corporate carbon footprint.
258
• Offsetting of 50% of domestic air emissions in Colombia.
136
• Verification of the company's emissions in accordance with EU-ETS, UK-ETS and CORSIA schemes.
•
•
•
Structuring of a waste management system to advance in the fulfillment of its circular economy goals.
Implementing processes for the elimination of single-use plastic in the operation and waste reduction to
landfill
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 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 (CSA), LATAM was recognized as the most sustainable airline in the region, according to this
assessment.
NOTE 36 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS
On February 7, 2024, the Brazilian Federal Revenue Service Brazilian issued a tax assessment against TAM
Linhas Aéreas on the amount of ThUS$ 52,281 (ThR$ 253,565) related to certain tax credits on about “PIS
COFINS” (Federal Social Contributions Levied on Gross Revenue) during the period of 2019/2020. The
Company will be filing an administrative response disputing the total amount of the tax assessment.
After December 31, 2023 and up to the date of issuance of these financial statements, there is no knowledge of
other events of a financial or other nature that significantly affect the balances or their interpretation.
The consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries as of December 31,
2023, have been approved in the Extraordinary Session of the Board of Directors on February 22, 2024.
ANNUAL REPORT 2023 Affiliates and
subsidiaries
259
13 —Financial reports —Affiliates and subsidiaries
NCG 461: 6.5.1 SUBSIDIARIES AND PARTNERS
During the last financial year, LATAM had commercial relationships with its sub-
sidiaries in terms of fleet and services, which are expected to continue through
2024.
The acts and contracts entered into between LATAM and its affiliates and the
results obtained are presented in detail in the Financial Statements, including the
following:
Technical Training LATAM S.A.: during this financial year, Technical Training LATAM
S.A. provided technical training services to LATAM and its subsidiaries.- Lan Cargo
S.A. and affiliates: Lan Cargo S.A. and its subsidiaries provided services to LATAM
related to aircraft leasing, cargo transportation, crew leasing and other service
rendering contracts. On the other hand, LATAM provided services to Lan Cargo S.A.
and its affiliated related to aircraft leasing, leasing of assets, and other services.
Inversiones Lan S.A.: LATAM and Inversiones Lan S.A. entered into real estate
leasing agreements.
Lan Pax Group and affiliates: Lan Pax Group S.A. and its affiliates provided ser-
vices to LATAM related to aircraft leasing, maintenance and other services. On
the other hand, LATAM provided services to Lan Pax Group S.A. and its affiliates
related to aircraft leasing, maintenance, distribution and other services.
LATAM Airlines Perú S.A.: LATAM Airlines Peru S.A. provided services to LATAM
related to line maintenance and passenger handling in Peru. On the other hand,
LATAM provided services to LATAM Airlines Perú S.A. related to aircraft leasing,
aircraft maintenance, and others.
TAM S.A. and affiliates: TAM S.A. and its affiliates entered into contracts with
LATAM for the leasing of aircraft and engines, and other service rendering contracts.
LATAM Travel S.R.L.: LATAM Travel S.R.L. provided tour operator services to LATAM.
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 under the trade
name “Línea Aérea Nacional-Chile Limitada”, via a public deed dated December
30, 1983, executed at the Notary Office of Mr. 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, executed at the Santiago
Notary Office of Mr. Miguel Garay Figueroa’s Office, the company became a joint-
stock corporation known as Línea Aérea Nacional Chile S.A. which, by express
provision of Law Number 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.
Subsequently, via a public deed dated November 24, 1986, executed at the San-
tiago Notary Office of Mr. Mario Baros Gonzalez, the company changed its name
to "Línea Aérea Nacional-Chile S.A.".
Later, via a public deed dated May 15, 1998, executed at the Santiago Notary
Office of Mr. Eduardo Pinto Peralta, the company's name was changed to "Lan
Chile S.A.".
The Extraordinary Shareholders' Meeting of LAN Chile S.A. held on July 23, 2004,
resolved to change the name of the company to "LAN Airlines S.A." The minutes
of the Extraordinary Shareholders' Meeting were reduced to public deed on July
28, 2004, at the Santiago Notary Office of Mr. Ivan Torrealba Acevedo. An excerpt
of said deed was recorded in the Real Estate Registry of the Santiago Registry
of Commerce 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 trade 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, 2012.
LATAM Airlines Group S.A. is ruled by the regulation applicable to open stock
ANNUAL REPORT 2023 companies, and registered to this effect under number 0306,
dated January 22, 1987, in the Securities Register of the Fi-
nancial Market Commission (CMF for its Spanish acronym).
Note: A summary of the subsidiaries’ Financial Statements is presented
herein. The full information is available to the public in the offices of
LATAM and at the Superintendency of Securities and Insurance (SVS).
13 —Financial reports —Affiliates and subsidiaries
SUBSIDIARY COMPANIES OF TAM S.A.
k. The import and export of finished lubricating oil.
TAM Linhas Aereas S.A. and affiliates
l. The use of bank correspondents’ services.
Name: TAM Linhas Aéreas S.A.
Paid-in Capital: ThUSD$(2,228,175)
d. Operation of maintenance and marketing services for aircraft
parts and equipment.
e. The development and implementation of other activities,
related to or complementary to aviation, in addition to those
expressly listed above.
Incorporation: Joint Stock Corporation established in Brazil in
1988.
Stake in 2023: 100%
YOY variation: 0.0%
TAM S.A. AND SUBSIDIARIES
Purpose:
Name: TAM S.A.
Incorporation: Joint Stock Corporation established in Brazil in
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 con-
nected, related, and complementary to scheduled air transport.
Paid-in Capital: ThUSD$4,861,640
Profit for the period: ThUSD$740,472
Stake in 2023: 100%
Year over Year Variance (YoY): 0.0%
% of Holding's assets: 8.25766%
a. The operation of scheduled air transport services for pas-
sengers, cargo, and baggage, pursuant to existing legislation.
Chairman of the Board: Jerome Paul Jacques Cadier
% of Holding's assets: 8.33225%
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.
Board Members: Jerome Paul Jacques Cadier (Chairman and
Director without specific designation); Felipe Ignacio Puma-
rino Mendoza (Chief Financial Officer); and Jefferson Cestari
(Director without specific designation).
d. The rendering of aircraft hangar services.
e. The rendering of yard and runway care services, provision
of the aircraft cleaning staff.
ABSA: Aerolinhas Brasileiras S.A. and affiliate
Name: Aerolinhas Brasileiras S.A.
f. The rendering of engineering services, technical assistance
and other activities related to the aviation industry.
Purpose:
g. The performance of instruction and training related to aero-
nautical activities.
a. To operate scheduled domestic and international air transport
services for passengers, cargo, and postal services, pursuant
to existing legislation.
Chairman of the Board: Jerome Paul Jacques Cadier
h. The analysis and development of programs and systems.
Board Members: Jerome Paul Jacques Cadier (Chairman and
Director without specific designation); Felipe Ignacio Puma-
rino Mendoza (Chief Financial Officer); and Jefferson Cestari
(Director without specific designation).
i. The purchase and sale of aeronautical parts, accessories,
and equipment.
j. The development and implementation of other activities,
related to or complementary to aviation, in addition to those
expressly listed above;
260
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.
Stake in 2023: 94.98%
YOY variation: 0.0%
Paid-in Capital: ThUSD$(10,472)
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: -0.26455%
Chairman of the Board: Jerome Paul Jacques Cadier
Board Members: Jerome Paul Jacques Cadier (Chairman and
Director without specific designation); Felipe Ignacio Puma-
rino Mendoza (Chief Financial Officer); and Jefferson Cestari
(Director without specific designation).
Transportes Aéreos del Mercosur S.A.
Purpose: It has a broad corporate purpose that includes aero-
nautical, commercial, tourist, service, financial, representation,
and investment activities, with a focus on scheduled and char-
ter, domestic and international, aeronautical transportation
activities for people, objects, and/or correspondence, among
others, as well as commercial and maintenance and technical
assistance services for all types of aircraft, equipment, acces-
sories, and material for air navigation, among others.
Paid-in Capital: ThUSD$8,445
Incorporation: Joint Stock Corporation established in Brazil in
1995.
Incorporation: Joint Stock Corporation incorporated in Paraguay.
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
% of Holding's assets: 0.14855%
Corsair Participações S.A.
Chairman of the Board: Enrique Alcaide Hidalgo
Incorporation: Joint Stock Corporation established in Brazil in
2011.
Board Members: Enrique Alcaide Hidalgo (Executive), Esteban
Burt Artaza (Regular), Diego Martinez (Regular) and Augusto
Sanabria (Regular)
Purpose:
the development, implementation, operation, or management
of the franchises that it may award.
c. To develop any and all necessary activities to ensure, insofar
as possible, the ongoing maintenance and perfecting of the
actuation patterns of its franchise network.
Managers: Enrique Alcaide Hidalgo, Esteban Burt Artaza, Diego
Martinez and Luis Galeano
a. To participate in other civil or trade companies, as a share-
holder or creditor.
d. To develop implementation, operation, and management
models for its franchise network and their transfer to the
franchisees.
b. The development of customer loyalty/customer relations
programs and sales chain incentive programs for companies,
including through points programs or other exchange currencies
that can be converted into loyalty program points.
c. Rendering of commercial representation and brokerage
services for the sale of retail products in general, in addition
to the rendering of brokerage services for the contracting of
insurance and extended warranty products.
Fidelidade Viagens e Turismo S.A.
Incorporation: Joint Stock Corporation established in Brazil in
2013.
Purpose:
b. To manage its own assets.
Paid-in Capital: ThUSD$(40)
Stake in 2023: 100%
YOY variation: 0.0%
a. Devoted to private and non-private travel agency and tour-
ism activities, provided in the valid tourism legislation.
% of Holding's assets: 0.00085%
Chairman of the Board: Carlos Eduardo Prado
Board Members: Carlos Eduardo Prado (Chairman) and Felipe
Ignacio Pumarino Mendoza (Director without specific desig-
nation).
TP Franchising Ltda.
Incorporation: Limited Liability Company established in Brazil
in 2004.
Purpose:
a. To award franchises.
b. Management and operation of tourist activities for events
and leisure.
Paid-in Capital: ThUSD$(24,460)
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.06925%
Chairman of the Board: Jerome Paul Jacques Cadier
Board Members: Jerome Paul Jacques Cadier (Chairman and
Director without specific designation); Felipe Ignacio Puma-
rino Mendoza (Chief Financial Officer); and Jefferson Cestari
(Director without specific designation).
261
e. The distribution, sale, and marketing of airplane tickets and
related products, as well as any related or accessory business
to its main objective, while also able to participate in other
companies as partner or shareholder, either in Brazil or abroad,
or in consortia, as well as to carry out its own projects, or form
partnerships with third parties in their projects, even to obtain
tax benefits, pursuant to current legislation.
d. Shareholding in other companies.
Paid-in Capital: ThUSD$(9,343)
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.16790%
Paid-in Capital: ThUSD$(6)
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.00872%
Managers: Jerome Paul Jacques Cadier, Felipe Ignacio Puma-
rino Mendoza and Jefferson Cestari.
Prisma Fidelidade Ltda.
Managers: Jerome Paul Jacques Cadier, Felipe Ignacio Puma-
rino Mendoza and Jefferson Cestari.
Multiplus Corredora de Seguros Ltda.
Incorporation: Limited Liability Company established in Brazil
in 2016.
Purpose: Brokerage of insurance in the basic lines of insurance,
property and casualty, life (individuals), capitalization, plans,
social security, health and all other lines of insurance provided
for in the regulations.
Incorporation: Limited Liability Company established in Brazil
in 2015.
Paid-in Capital: ThUSD$(1,089)
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
Purpose:
a. The rendering of various services related to customer loyal-
ty programs and incentive programs for the companies' sales
chain including, among others, customer relations management,
technical consulting, and technology consulting.
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.00098%
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
Managers: Jerome Paul Jacques Cadier, Felipe Ignacio Puma-
rino Mendoza, Jefferson Cestari and Daniele Marques Moreno.
Real Estate Registry of the Santiago Registry of Commerce
on page 26,994 item 20,082 of the year 2004 and published
in the Official Gazette on August 30, 2004.
Ramiro Alfonsin Balza (LATAM Executive) and Andres Del Valle
(LATAM Executive)
LAN CARGO S.A. AND SUBSIDIARIES
Name: Lan Cargo S.A.
Incorporation: established as a closed stock company via a
public deed dated May 22, 1970, awarded at the offices of
Notary Public Sergio Rodriguez Garces, under the name “Línea
Aérea del Cobre S.A.”; an excerpt of this deed is recorded in
the Santiago Commerce Registry on page 5,611 item 2,420 of
the year 1970, and published in the Official Gazette on July
22, 1970.
The company’s Extraordinary Shareholders' Meeting resolved
the merger by incorporation of LADECO S.A. with Fast Air Car-
rier S.A., the latter being the absorbed company. The minutes
of said Shareholders' Meeting were recorded as a public deed
on November 20, 1998 at the Santiago Notary Office of Mr.
Eduardo Pinto Peralta, an extract of which was registered on
page 30,091, item 24,117 of the Santiago Commercial Registry
and published in the Official Gazette on December 3, 1998.
The Extraordinary Shareholders' Meeting of LADECO S.A. held
on October 22, 2001, resolved to change the corporate name
to "LAN Chile Cargo S.A.". The minutes of the Extraordinary
Shareholders' Meeting were recorded as a public deed on the
same date, at the Santiago Notary Office of Mr. Cosme Gomila
Gatica. An excerpt of said deed was recorded in the Real Estate
Registry of the Santiago Registry of Commerce on page 27,746
item 22,624 of the year 2001 and published in the Official
Gazette on November 5, 2001. The name change took effect
on December 10, 2001.
Subsequently, on August 17, 2004, the Extraordinary Share-
holders' Meeting agreed to change the name of LAN Chile Cargo
S.A. to "LAN Cargo S.A.". The minutes of this Extraordinary
Shareholders' Meeting were recorded as a public deed on Au-
gust 23, 2004. An excerpt of said deed was recorded in the
Purpose: Perform and provide, either for itself or third parties,
the following: general transportation in any form and, specifi-
cally, 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 oth-
er abovementioned activities and goods, within the country
and abroad. In order to meet the abovementioned goals, the
Company may perform investments or participate as partner
in other companies, either by purchasing stocks or rights or
stakes in any other type of corporation, be it an already es-
tablished 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: ThUSD$83,226
Profit for the period: ThUSD$24,244
Stake in 2023: 99.89804%
YOY variation: 0.0%
% of Holding's assets: 2.46012%
Chairman of the Board: Andrés del Valle
General Manager: Andrés Bianchi Urdinola
LAN CARGO S.A. AFFILIATE COMPANIES
Laser Cargo S.R.L.
Incorporation: Limited Liability Company established in Ar-
gentina.
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 promo-
tion 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 cus-
toms 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 com-
pany 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.
Board Members: Andres Bianchi Urdinola (LATAM Executive),
This activity includes the tasks carried out by so-called cou-
riers or courier companies, and all other assimilated or as-
similable 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 sup-
plier to delivering the finished product to the customer, and
the information regulation to guarantee the efficiency in this
management process.
Paid-in Capital: ThUSD$68
Stake in 2023: 96.22%
YOY variation: 0.0%
% of Holding's assets: 0.00002%
Board Members: Esteban Bojanich
Management: Esteban Bojanich, Rosario Altgelt María Marta
Forcada, Facundo Rocha Gonzalo Perez Corral Nicolás Obejero
and Norberto Díaz.
Fast Air Almacenes de Carga S.A.
Incorporation: Joint Stock Corporation established in Chile in
1992.
Purpose: To operate or manage the warehouses or storage
facilities of customs deposits, where any type of good or
merchandise can be stored until its withdrawal, for imports,
exports, or other customs destination, pursuant to the terms
stated within the Customs Ordinance, its rules, and other cor-
responding regulation.
Paid-in Capital: ThUSD$6,741
262
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
Stake in 2023: 99.89%
YOY variation: 0.0%
% of Holding's assets: 0.02591%
Transporte Aéreo S.A.
Stake in 2023: 100%
Incorporation: Joint Stock Corporation established in Chile in
2001.
YOY variation: 0.0%
Stake in 2023: 99%
YOY variation: 0.0%
% of Holding's assets: 0.0%
% of Holding's assets: 0.64376%
Board Members: Jorge Patricio Marin Muñoz (LATAM Execu-
tive), Andres Bianchi Urdinola (LATAM Executive) and Roberto
Alvo Milosawiewitsch (LATAM Executive).
General Manager: Patricio Linzmayer Paganini
Purpose: The air transportation business in any form, whether
of passengers, mail and/or cargo, inside or outside the country,
on its own behalf or on behalf of others; maintenance, leasing
and repair of aircrafts; trade and development of activities
related to travel, tourism and hospitality; development and
participation in all kinds of investments in Chile and abroad.
Board Members: Esteban Bojanich
Management: Esteban Bojanich
Board Members: Andres Bianchi Urdinola Plaza (LATAM Exec-
utive), Andres del Valle Eitel (LATAM Executive) and Roberto
Alvo Milosawlewitsch (LATAM Executive).
LAN Cargo Inversiones S.A. and affiliate
General Manager: Andrés del Valle Eitel
Prime Airport Services Inc. and affiliate
Paid-in Capital: ThUSD$32,488
Name: Lan Cargo Investments S.A.
Connecta Corporation
Name: Prime Airport Services Inc.
Stake in 2023: 99.99988%
Incorporation: Corporation established in the United States.
YOY variation: 12.87421%
Incorporation: Joint Stock Corporation established in Chile in
2001.
Incorporation: Corporation established in the United States.
Purpose:
Purpose: Ownership, operating leasing, and subleasing of
aircraft.
Purpose: To operate or manage the warehouses or storage
facilities of customs deposits, where any type of good or
merchandise can be stored until its withdrawal, for imports,
exports, or other customs destination, pursuant to the terms
stated within the Customs Ordinance, its rules, and other cor-
responding regulation.
% of Holding's assets: 0.87985%
Board Members: Andres del Valle Eitel (LATAM Executive),
Ramiro Alfonsin Balza (LATAM Executive) and Roberto Alvo
Milosawlewitsch (LATAM Executive).
a. To market air transportation in any of its forms, be it for
passengers, mail, and/or cargo, and anything directly or indi-
rectly related to that activity within or outside the country,
on its own behalf or for third parties.
Paid-in Capital: ThUSD$1
Stake in 2023: 100%
YOY variation: 0.0%
Paid-in Capital: ThUSD$2
Stake in 2023: 100%
General Manager: Jose Tomas Covarrubias Cervero
Consorcio Fast Air Almacenes de Carga S.A.
– Laser Cargo S.R.L.
b. To render services related to the maintenance and repair of
its own or third parties’ aircraft.
% of Holding's assets: 0.39042%
c. Trade and development of activities related to travel, tour-
ism, and lodging.
General Manager: Andrés Bianchi Urdinola
YOY variation: 0.02857%
Name: Lan Cargo Investments S.A.
% of Holding's assets: 0.01496%
Board member: Andres Bianchi
Chairman: Antonio Orlandini
263
Incorporation: Joint Stock Corporation established in Chile in
2001.
d. The development and/or participation in all kinds of invest-
ments, both in Chile and abroad, in matters directly or indirectly
related to aeronautical affairs and/or other business purposes.
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 Warehouse at the Rosario International
Airport.
e. Development and operation of all other activities derived
from and/or related, connected, contributory, or complemen-
tary to the company’s corporate purpose.
Paid-in Capital: THUSD$159
Paid-in Capital: ThUSD$(2)
Línea Aérea Carguera de Colombia S.A.
(Subsidiary of LAN Cargo Inversiones)
Incorporation: Joint-stock corporation incorporated in Co-
lombia.
Purpose: To provide public, commercial cargo, and correspon-
dence 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
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
b. 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: ThUSD$263,430
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.57005%
Americonsul S.A de C.V. (Subsidiary of Lan Cargo S.A.)
Chairman of the Board: Luis Ignacio Sierra Arriola
Incorporation: Variable Capital Corporation established in
Mexico.
Board Members: Carlos Fernando Pellecer Valenzuela
Purpose: To provide and receive all manner of technical, ad-
ministrative, or counseling services for industrial, commercial,
and service companies; Promote, organize, manage, supervise,
provide, and direct personnel training courses; Perform all types
of studies, plans, projects, and research; Engage the necessary
professional and technical personnel.
Management: Carlos Fernando Pellecer Valenzuela
Americonsult de Costa Rica S.A.
(a subsidiary of Americonsult S.A de C.V.)
Incorporation: Joint Stock Corporation established in Costa
Rica.
Chairman of the Board: Antonio Olortegui Marky
Paid-in Capital: ThUSD$5
Purpose: General trade; industry, agriculture, and livestock.
Board Members: Andres Enrique del Valle, Eitel Ramiro and
Diego Alfonsin Balza
Stake in 2023: 99.80%
Paid-in Capital: ThUSD$20
YOY variation: 0.0%
Stake in 2023: 99.80%
General Manager: Antonio Olortegui Marky
Prime Cargo SpA (a subsidiary of Lan Cargo S.A.)
Incorporation: Joint Stock Corporation established in Chile in
2023.
Purpose: The exclusive purpose of the Company shall be the
performance of warehousing activities of all types of products
and/or merchandise; and, in general, the performance of any
other activity and/or business directly related to or comple-
mentary to warehousing activities, or that are necessary and/
or convenient for the adequate development of such activities,
enabling the Company to provide comprehensive warehousing
solutions.
% of Holding's assets: -0.03523%
YOY variation: 0.0%
Management: Diana Olivares and Eduardo Opazo
% of Holding's assets: 0.00747%
Americonsult de Guatemala S.A.
(a subsidiary of Americonsult S.A de C.V.)
Management: Luis Ignacio Sierra Arriola, Alejandro Fernandez
Espinoza (Treasurer), Luis Miguel Renguel Lopez, Tomas Nassar
Perez and Marjorie Hernandez Valverde.
Incorporation: Joint Stock Corporation incorporated in Gua-
temala.
LATAM AIRLINES PERU S.A.
Purpose: Powers to represent, broker, negotiate, and market;
carry out all types of commercial and industrial activities; all
manner of trade in general; broad purpose that allows for all
manner of operations within the country.
Incorporation: Joint Stock Corporation established in Peru in
1997.
Purpose: Render air transportation services for passengers,
cargo, and correspondence, both nationally and internationally,
pursuant to current civil aeronautical legislation.
Paid-in Capital: ThUSD$912
Paid-in Capital: ThUSD$76
Stake in 2023: 100%
YOY variation: 0.0%
Stake in 2023: 99.13%
YOY variation: 0.0%
Paid-in Capital: ThUSD$43,445
Profit for the period: ThUSD$(12,725)
% of Holding's assets: 0.00622%
% of Holding's assets: -0.0149%
Stake in 2023: 99.81%
practical instruction services, as well as training for its own and
third-party aeronautical personnel in the various modes and
specialties; import spare parts and replacements related to
aeronautical activities, for itself and for third parties; provide
airport services to third parties; represent or broker national
and foreign air transport companies for passengers or cargo,
and in general, companies that provide services to the aero-
nautical sector.
Paid-in Capital: ThUSD$796
Stake in 2023: 81.30%
YOY variation: 0.0%
% of Holding's assets: 0.78611%
Board Members: Jorge Nicolas Cortazar Cardoso (Princi-
pal), Jose Mauricio Rodriguez Munera (regular), Jaime Antonio
Gongora Esguerra (regular), Andres Bianchi Urdinola (deputy
member), Santiago Alvarez Matamoros (deputy member) and
Helen Victoria Warner Sanchez (deputy member).
Management: Jaime Antonio Gongora Esguerra (regular) and
Erika Zarante Bahamon (deputy member).
Inversiones Aéreas S.A.
Incorporation: 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.
264
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
The lease and charter of aircraft, ships, buses, trains, and other
forms of transportation for the rendering of tourist services.
LAN PAX GROUP S.A.
Chairman of the Board: Cesar Emilio Rodríguez Larraín Salinas
Offering air transportation in any form, whether for passen-
gers, cargo, or mail.
YOY variation: 0.0%
% of Holding's assets: 0.33232%
Board Members: Cesar Emilio Rodriguez Larrain Salinas, Ignacio
Cueto Plaza (LATAM Executive), Enrique Cueto Plaza (LATAM
Executive), Jorge Harten Costa, Andres Rodriguez Larrain Miro
Quesada, Emilio Rodriguez Larrain Miro Quesada and Roberto
Alejandro Alvo Milosawlewitsch (LATAM Executive)
General Manager: Manuel Van Oordt
LATAM TRAVEL CHILE II S.A.
Incorporation: Joint Stock Corporation established in Chile in
2012.
Purpose: The operation, management, and representation of
national or foreign companies or businesses in lodging, ship-
ping, aviation, and tourism activities in general; brokerage of
tourist services, such as:
Any others, directly or indirectly related to the rendering of
the services described above.
Paid-in Capital: ThUSD$10
Stake in 2023: 99.99%
YOY variation: 0.0%
% of Holding's assets: 0.00602%
Incorporation: Incorporated as a closed stock company in 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 complemen-
tary to the company's corporate purpose.
Board Members: Andres del Valle Eitel (LATAM Executive),
Roberto Alvo Milosawlewitsch (LATAM Executive) and Ramiro
Alfonsin Balza (LATAM Executive)
General Manager: Nicolas Salazar
LATAM TRAVEL S.R.L.
Paid-in Capital: ThUSD$16,925
Profit for the period: ThUSD$14,167
Stake in 2023: 99.99%
YOY variation: 0.0%
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 estab-
lished, within the Argentine Republic or abroad, via acquisition,
incorporation, or sale of stakes, shares, quotas, bonds, options,
commercial paper, convertible or otherwise, other transfer-
rable 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.
Paid-in Capital: ThUSD$14,845
Stake in 2023: 99.95%
YOY variation: 0.0%
% of Holding's assets: -0.01419%
Board Members: Manuel Maria Benites Jorge Luis Perez Alati
Rosario Altgelt
the booking of seats and the sale of tickets in all kinds of do-
mestic and international forms of transportation.
Incorporation: Limited Liability Company established in Bolivia.
% of Holding's assets: -9.15814%
The booking, acquisition, and sale of accommodation and tour-
ist services, tickets or bills to all types of shows, museums,
monuments, and protected areas in the country.
Purpose: Operation, management, and representation of
national or foreign companies or businesses in the lodging,
shipping, aviation, and tourism activities in general.
The organization, promotion, and sale of the so-called tourist
packages, understood as the set of tourist services (catering,
transportation, accommodation, etc.), adjusted or projected
at the request of the client at a pre-set price, to be operated
within the national territory.
Paid-in Capital: ThUSD$0
Stake in 2023: 100%
YOY variation: 0.0%
Board Members: Andres del Valle Eitel (LATAM Executive),
Roberto Alvo Milosawlewitsch (LATAM Executive) and Felipe
Pumarino (LATAM Executive)
Management: Manuel Maria Benites, Jorge Luis Perez Alati,
Jeronimo Cortes and Diego Potenza.
Atlantic Aviation Investments LLC
General Manager: Andrés del Valle Eitel (LATAM Executive)
AFFILIATE COMPANIES OF LAN PAX GROUP S.A. AND
STAKES
Inversora Cordillera S.A. and affiliates
Incorporation: Limited Liability Company established in the
United States.
Purpose: Any and all lawful business that the company may
undertake.
Air, land, sea, and river tourist transportation within and out-
side the national territory.
% of Holding's assets: 0.00063%
Name: Inversora Cordillera S.A.
Paid-in Capital: ThUSD$1
Board Members: Julio Quintanilla Quiroga and Sergio Antelmo
Incorporation: A joint stock corporation incorporated in Ar-
gentina.
Stake in 2023: 99%
265
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
YOY variation: 0.0%
YOY variation: 0.0%
% of Holding's assets: 0.07807%
% of Holding's assets: 0.00641%
Board Members: Andrés del Valle Eitel
Management: Andrés del Valle (LATAM Executive)
Board Members: Andres del Valle, Manuel Van Oordt and Fe-
lipe Pumarino.
General Manager: Ramiro Alfonsin Balza (LATAM Executive)
LATAM Airlines Ecuador S.A. (Formerly, Aerolane Líneas Aé-
reas Nacionales del Ecuador S.A.)
Aerovias de Integración Regional S.A.– Aires S.A.
Incorporation: Joint Stock Corporation established in Ecuador.
Incorporation: Joint-stock corporation incorporated in Colombo,
Colombiabia.
company can acquire, for any purpose, airplanes, spare parts,
replacements, and accessories of any kind, necessary for public
air transportation, as well as sell them, and to set up and op-
erate stations to repair and give maintenance to the aircraft.
c. Enter into lease, charter, shared code, location or any other
contracts on aircraft to exercise its purpose.
d. Operate scheduled air transport lines for passengers, cargo,
and mail and securities, as well as the vehicle for coordinating
the development of social management.
m. Merge with other companies and partner with like entities
to pursue the development of aviation or for other trade pur-
poses.
n. Promote, assist technically, finance or manage enterprises
or companies related to the corporate purpose.
ñ. Enter or execute any kind of civil or commercial, industrial,
or financial contracts that are necessary or desirable for the
achievement of their own ends.
e. Integrate with like, similar, or complementary companies to
develop their activity.
o. Conduct business and activities that seek customers, and
obtain from the competent authorities the necessary autho-
rizations and permits to render their services.
Purpose: Combined or exclusive air transport of passengers,
cargo, and correspondence.
Paid-in Capital: ThUSD$34,100
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.14446%
Board Members: Xavier Rivera and Mariela Anchundia
CEO: Mariela Anchundia
Holdco Ecuador S.A
Incorporation: Joint Stock Corporation established in Chile in
2014.
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: ThUSD$507
Stake in 2023: 54.79076%
266
Purpose: The company's corporate purpose shall be the oper-
ation of national or international commercial air transportation
services, in any form, and therefore, the entering into and
execution of contracts for the transportation of passengers,
objects or luggage, correspondence, and cargo in general,
pursuant to the operating permits issued to this effect by the
Special Administrative Unit of Civil Aeronautics, or the agency
that may carry out said functions in the future, adhering fully
to the provisions of the Code of Commerce, the Colombian
Aviation Regulations, and any other rules issued on the matter.
Likewise, to provide 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:
f. Accept national or foreign representations of services of the
same business or of complementary businesses.
g. Acquire property and real estate for the development of its
social purposes, build such facilities or constructions, such as
warehouses, offices etc., dispose of or tax them.
h. Carry out imports and exports, as well as all foreign trade
operations required.
i. Take money on interest and provide personal, real, and bank
guarantees, either on its own behalf or for third parties.
j. Participate in all manner of securities transactions, such as
purchase or sale of debentures acquired by third parties when
resulting in an economic or equity benefit for the company,
and obtain loans through bonds or other liability instruments.
a. Check, inspect, or provide maintenance and/or repairs to its
own or third-party aircraft, as well as spare parts and acces-
sories, through the Company’s Aeronautical Repair Stations,
providing the necessary trainings for said purpose.
k. Enter into contracts with third parties for the management
and operation of the businesses it may organize to achieve its
corporate purposes.
p. The development and performance of other activities aris-
ing from the corporate purpose and/or related, connected,
contributory, or complementary activities thereto, including
the rendering of tourist services under any mode permitted
by law, such as travel agencies.
q. Managing any lawful business or activity, whether or not in
trade, provided that it is related to its corporate purpose, or
that it allows the most rational operation of the public service
to be rendered.
r. Make investments of any kind to use the funds and reserves
that are constituted in accordance with the law or these bylaws.
Paid-in Capital: ThUSD$3,389
Stake in 2023: 99.23168%
YOY variation: 0.01404%
% of Holding's assets: 0.07586%
b. Organize, establish, and invest in commercial transportation
companies in Colombia or abroad to perform, industrially or
commercially, the economic activity that is its purpose, so the
l. Enter into contracts of companies and acquire shares or
stakes in those already established, whether national or for-
eign; make contributions to both.
Board Members: Jorge Nicolas Cortazar Cardoso (regular), Jaime
Antonio Gongora Esguerra (regular), Jose Mauricio Rodriguez
Munera (regular), Gabriel Vallejo Lopez (deputy member), Hel-
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
assistance services for all types of aircraft, equipment, acces-
sories, 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 navi-
gation activities, such as the supply of food and/or elements
for use on board.
TECHNICAL TRAINING LATAM S.A.
% of Holding's assets: -0.00740%
Incorporation: Incorporated as a corporation in 1997.
Chairman of the Board: Vacant
Purpose: Its corporate purpose is to provide training and other
types of related services.
Board Members: Fernando Augusto Carneiro de Carvalho and
Patricia Mendoza Mallo
Paid-in Capital: ThUSD$609
PROFESSIONAL AIRLINE SERVICES INC.
en Victoria Warner Sanchez (deputy member) and Santiago
Alvarez Matamoros (deputy member).
Management: Erika Zarante Bahamon and Jaime Antonio
Gongora Esguer
LAN Argentina S.A. (A subsidiary of Inversora Cordillera S.A.)
Incorporation: A joint stock corporation incorporated in Ar-
gentina.
Purpose: Perform, on its own behalf or for third parties, inde-
pendently or in association with third parties in the country or
abroad, the following activities:
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.
Stake in 2023: 100%
YOY variation: 0.0%
Mandates: Fulfill mandates and commissions.
Profit for the period: ThUSD$165
Incorporation: Company established in the United States in
1994.
Purpose: Airport staffing services for LATAM group.
Aeronautics: 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 navi-
gation, 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.
Representations: of national or foreign persons related to
activities pertaining to its corporate purpose.
% of Holding's assets: 0.00241%
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.
Board Members: Sebastian Acuto (LATAM executive), Ramiro
Alfonsin Balza (LATAM executive) and Hernan Pasman (LATAM
executive).
General Manager: Jorge Sturla (LATAM executive)
JARLETUL S.A.
Paid-in Capital: ThUSD$63
Profit for the period: ThUSD$1,520
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding’s assets: 0.03155%
Treasurer: Eduardo Opazo
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.
Paid-in Capital: ThUSD$7,159
Stake in 2023: 94.95770%
YOY variation: -0.03760%
% of Holding's assets: 0.03965%
Incorporation: Joint Stock Corporation established in Uruguay
in 2017.
Chairman: Antonio Orlandini
Purpose: Its corporate purpose is the operation, management,
and representation of national or foreign companies or busi-
nesses in hospitality, shipping, aviation, and tourism activities
in general.
LATAM FINANCE LIMITED
Incorporation: Company established in the Caiman Islands in
2016.
Tourism: 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.
Services: Through the rendering of maintenance and technical
267
Board Members: Manuel Maria Benites, Jorge Luis Perez Alati
and Rosario Altgelt
Profit for the period: ThUSD$8
Paid-in Capital: ThUSD$0
Paid-in Capital: ThUSD$0
Purpose: Its purpose is to issue securitized bonds.
Management: Manuel Maria Benites, Jorge Luis Perez Alati,
Jeronimo Cortes and Diego Potenza
Stake in 2023: 100%
YOY variation: 0.0%
Profit for the period: ThUSD$(1)
Stake in 2023: 100%
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
YOY variation: 0.0%
% of Holding's assets: -1.42158%
Chairman of the Board: Not applicable
Board Members: Andres del Valle Eitel, Ramiro Alfonsin Balza
and Joaquin Arias Acuña
PEUCO FINANCE LIMITED
Incorporation: Company established in the Caiman Islands in
2015.
Purpose: Its purpose is to participate in financing operations
with other companies of LATAM Group.
Paid-in Capital: ThUSD$0
Profit for the period: ThUSD$0
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.0%
Chairman of the Board: Not applicable
Board Members: Andres del Valle Eitel and Joaquin 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:
ner 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 relat-
ed 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 pat-
ent it has acquired or manages; develop, distribute, promote
and market all types of content for mass media of any sort.
Tourism: 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 cre-
ation 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.
Mandatory: Via the acceptance, performance, and granting
of representations, concessions, commissions, agencies, and
mandates in general.
service, development, support, and promotion of companies
related to air transportation activities, but not exclusive to said
activity, in the management, industrial, commercial, techni-
cal, and advertising areas, to be provided, when the nature of
the issue so requires, by certified professionals per the cor-
responding 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.
Financial: Via its participation in other companies already cre-
ated or to be created, either through the acquisition of shares
in established companies, or through the establishment of
new companies, via the awarding or securing of credits, loans,
cash advances secured or unsecured by collateral or personal
guarantee; the awarding of guarantees and sureties in favor
of third parties for a fee or free of charge; placement of funds
in foreign currency, gold or currencies, or bank deposits of any
type. To achieve these purposes, the company has full legal
capacity to exercise all acts not expressly forbidden by law
or statue, including making borrowings publicly or privately
via the issuance of debentures and tradable securities, and
performing all manner of financial transactions except those
comprised under Law 21,526 and any others requiring a public
tender process.
Paid-in Capital: ThUSD$4,432
Stake in 2023: 100%
YOY variation: 0.0%
% of Holding's assets: 0.02041%
Board member: Jeronimo Cortes
Management: Jerónimo Cortés and Diego Potenza
Commercial: Carry out, intervene, develop, or design all man-
Consulting: Provide consulting, support, and management
services on all matters related to the organization, installation,
268
ANNUAL REPORT 2023 13 —Financial reports —Affiliates and subsidiaries
LAN CARGO S.A. AND AFFILIATES
Statements of Financial Position
Statements of Comprehensive Income
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Non-controlling interest
Total equity
Total liabilities and equity
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Income (loss) attributable to non-controlling interest
Net Income (loss) for the year
269
196,254
506,572
702,826
187,148
415,766
602,914
284,256
66,157
350,413
194,360
158,053
352,413
702,826
1,012,966
(952,392)
60,574
52,179
36,679
(12,866)
23,813
24,441
(628)
23,813
283,435
275,650
559,085
104,535
(60,706)
43,829
602,914
2,136,257
(2,068,992)
67,265
(11,120)
(57,858)
3,215
(54,643)
(53,459)
(1,184)
(54,643)
NET INCOME/(LOSS)
23,813
(54,643)
Total other comprehensive (loss) that will not be reclassified
to income before taxes
Total other comprehensive income that will be reclassified
to income before taxes
Other components of other comprehensive income (loss), before taxes
Income taxes related to components of other comprehensive
loss will be reclassified to income
Total comprehensive income (loss)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income (loss) attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS)
17,939
(2,274)
(261)
17,678
751
18,429
17,519
343
17,862
(21)
(2,295)
567
(56,371)
(55,187)
(1,184)
(56,371)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
6,329
15,353
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
Effects of variation in the exchange rate on cash and cash equivalents
(68)
(9,231)
(2,969)
(7,977)
(8,353)
(976)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
42,676
45,209
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
104,535
(60,706)
43,829
Total increase (decrease) in equity
Comprehensive income
Net income/(loss) for the period
Other comprehensive income
24,441
(5,666)
Total comprehensive income
18,775
Increase (decrease) through transfers and other changes, equity 72,306
195,616
Closing balance as of December 31, 2023
(628)
(285)
(913)
218,416
156,797
23,813
(5,951)
17,862
290,722
352,413
YEAR 2022
Patrimonio 1 de enero de 2022
164,653
(64,519)
100,134
Total increase (decrease) in equity
Comprehensive income
Net income/(loss) for the period
Other comprehensive income
(53,459)
(1,728)
(55,187)
Total comprehensive income
Increase (decrease) through transfers and other changes, equity (4,931)
104,535
Closing balance as of December 31, 2022
(1,184)
-
(1,184)
4,997
(60,706)
(54,643)
(1,728)
(56,371)
66
43,829
INVERSIONES LAN S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
1,156
83
1,239
1,223
58
1,281
5
45
50
11
45
56
1,189
1,189
1,225
1,225
Total liabilities and equity
702,826
602,914
Statements of Income by Function
Gross margin
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Net Income (loss) for the year
(28)
(36)
-
(36)
(36)
(36)
7
(1)
(13)
(14)
(14)
(14)
270
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
Statements of Comprehensive Income
NET INCOME/(LOSS)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to owners of the parent
TOTAL COMPREHENSIVE INCOME (LOSS)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
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
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
(36)
(36)
(36)
(36)
(9)
5
(25)
(8)
(37)
413
376
(14)
(14)
(14)
(14)
10
2
-
(5)
7
406
413
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
1,225
(36)
1,189
1,239
(14)
1,225
-
-
-
-
-
-
Total
equity
ThUS$
1,225
(36)
1,189
1,239
(14)
1,225
271
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
288,471
198,765
487,236
193,479
198,753
392,232
1,583,445
252,092
1,835,537
1,462,843
265,125
1,727,968
(1,002,254)
(346,047)
(1,348,301)
(1,342,687)
6,951
(1,335,736)
LAN PAX GROUP AND AFFILIATES
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Non-controlling interest
Total equity
Total liabilities and equity
487,236
392,232
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Income (loss) attributable to non-controlling interest
Net Income (loss) for the year
Statements of Comprehensive Income
NET INCOME/(LOSS)
Other comprehensive loss, before taxes, currency translation differences
Total comprehensive income (loss)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income (loss) attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS)
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
777,370
(701,518)
75,852
(47,826)
8,197
(683)
7,514
14,167
(6,653)
7,514
7,514
(27,517)
(20,003)
22,660
(42,663)
(20,003)
534,979
(529,730)
5,249
(135,604)
(124,022)
2,349
(121,673)
(120,717)
(956)
(121,673)
(121,673)
(15,021)
(136,694)
(126,301)
(10,393)
(136,694)
272
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
Net (decrease) increase in cash and cash equivalents before
effect of exchanges rate change
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As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
93,512
(899)
24,595
(1,762)
112
(33)
92,725
22,800
(263)
(2,653)
Net (decrease) increase in cash and cash equivalents
92,462
20,150
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
184,150
91,687
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Increase (decrease) through transfers and other changes, equity
Closing balance as of December 31, 2023
(1,342,687)
22,660
317,773
(1,002,254)
6,951
(42,663)
(310,335)
(346,047)
(1,335,736)
(20,003)
7,438
(1,348,301)
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Increase (decrease) through transfers and other changes, equity
Closing balance as of December 31, 2022
(1,219,473)
(126,301)
3,087
(1,342,687)
3,028
(10,393)
14,316
6,951
(1,216,445)
(136,694)
17,403
(1,335,736)
273
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
114
114
115
115
208,621
-
208,621
208,621
-
208,621
(208,507)
(208,507)
114
(208,506)
(208,506)
115
-
-
(1)
(1)
-
(1)
169,582
169,582
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Estado de Resultados Integrales Consolidado
NET INCOME/(LOSS)
Total comprehensive income (loss)
(1)
(1)
169,582
169,582
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
Effects of variation in the exchange rate on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
-
(1)
-
(1)
115
114
-
(1)
-
(1)
116
115
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
(208,506)
(1)
(208,507)
(378,088)
169,582
(208,506)
-
-
-
-
-
-
(208,506)
(1)
(208,507)
(378,088)
169,582
(208,506)
LATAM FINANCE LIMITED
Statements of Financial Position
ASSETS
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
Total liabilities and equity
Statements of Income by Function
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
NET INCOME (LOSS) FOR THE YEAR
274
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
PROFESSIONAL AIRLINE SERVICES INC
Statements of Financial Position
ASSETS
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
16,931
16,931
56,896
56,896
12,303
12,303
4,628
4,628
53,787
53,787
3,109
3,109
Total liabilities and equity
16,931
56,896
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
75,007
(45,009)
29,998
1,894
1,894
(374)
1,520
64,079
(38,208)
25,871
285
285
(28)
257
275
Statements of Comprehensive Income
NET INCOME/(LOSS)
TOTAL COMPREHENSIVE INCOME (LOSS)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
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
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
1,520
1,520
257
257
(832)
(832)
(832)
1,452
620
Parent’s
ownership
interest
ThUS$
3,109
1,520
4,629
2,851
258
3,109
(1,431)
(1,431)
(1,431)
2,883
1,452
Total
equity
ThUS$
3,109
1,520
4,629
2,851
258
3,109
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
-
351,587
351,587
-
351,587
351,587
3,791
-
3,791
3,237
-
3,237
347,796
347,796
348,350
348,350
351,587
351,587
-
(554)
-
(554)
(554)
(554)
-
(497)
-
(497)
(497)
(497)
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Statements of Comprehensive Income
NET INCOME/(LOSS)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to owners of the parent
TOTAL COMPREHENSIVE INCOME (LOSS)
(554)
(554)
(554)
(554)
(497)
(497)
(497)
(497)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
348,350
(554)
347,796
348,847
(497)
348,350
-
-
-
-
-
-
348,350
(554)
347,796
348,847
(497)
348,350
HOLDCO I S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
Total patrimonio y pasivos
Statements of Income by Function
Gross margin
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Net Income (loss) for the year
276
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
16
-
16
16
-
16
1,101
1,101
1,110
1,110
(1,085)
(1,085)
(1,094)
(1,094)
16
16
-
-
-
7
8
-
8
-
-
-
(2)
(2)
-
(2)
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Statements of Comprehensive Income
NET INCOME/(LOSS)
Total comprehensive income (loss)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net (decrease) increase in cash and cash equivalents before
effect of exchanges rate change
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
8
8
(6)
(7)
(7)
15
8
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
(1,094)
8
(1,086)
(1,092)
(2)
(1,094)
-
-
-
-
-
-
(2)
(2)
(7)
(7)
(7)
22
15
Total
equity
ThUS$
(1,094)
8
(1,086)
(1,092)
(2)
(1,094)
JARLETUL S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
Total liabilities and equity
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
277
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
312,628
21,853
334,481
305,288
30,485
335,773
281,208
4,437
285,645
276,875
4,303
281,178
48,836
48,836
54,595
54,595
LATAM AIRLINES PERÚ S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
Total liabilities and equity
334,481
335,773
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Net Income (loss) for the year
1,404,081
(1,271,863)
132,218
3,711
(4,341)
(325)
(4,666)
(4,666)
(4,666)
1,257,865
(1,165,039)
92,826
4,774
(12,400)
(325)
(12,725)
(12,725)
(12,725)
278
Statements of Comprehensive Income
NET INCOME/(LOSS)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to owners of the parent
TOTAL COMPREHENSIVE INCOME (LOSS)
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
(4,666)
(4,666)
(12,725)
(12,725)
(4,666)
(4,666)
(12,725)
(12,725)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
Net (decrease) increase in cash and cash equivalents
before effect of exchanges rate change
Net (decrease) increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Total transactions with shareholders
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Total transactions with shareholders
Closing balance as of December 31, 2023
43,277
(1,751)
(91)
41,435
41,435
97,685
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
54,595
(4,666)
(1,093)
48,836
67,321
(12,725)
-
54,596
-
-
-
-
-
-
-
-
(23,373)
(3,947)
1,888
(25,432)
(25,432)
56,250
Total
equity
ThUS$
54,595
(4,666)
(1,093)
48,836
67,321
(12,725)
-
54,596
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
21
336
357
1,240
-
1,240
(883)
(883)
357
(16)
(16)
-
(16)
(16)
(16)
31
336
367
1,234
-
1,234
(867)
(867)
367
2
2
-
2
2
2
LATAM TRAVEL CHILE II S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total pasivos
EQUITY
Parent’s ownership interest
Total equity
Total liabilities and equity
Statements of Income by Function
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Net Income (loss) for the year
279
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Statements of Comprehensive Income
NET INCOME/(LOSS)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to owners of the parent
TOTAL COMPREHENSIVE INCOME (LOSS)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
Net (decrease) increase in cash and cash equivalents before
effect of exchanges rate change
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
(16)
(16)
(16)
(16)
-
-
-
-
-
20
20
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
(867)
(16)
(883)
(869)
2
(867)
-
-
-
-
-
-
2
2
2
2
(221)
-
-
(221)
(221)
241
241
Total
equity
ThUS$
(867)
(16)
(883)
(869)
2
(867)
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
3,648,806
118,296
3,767,102
1,249,804
88,494
1,338,298
577,202
709,536
1,286,738
323,426
174,158
497,584
2,480,364
2,480,364
840,714
840,714
LATAM TRAVEL S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
Total liabilities and equity
3,767,102
1,338,298
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
Net Income (loss) for the year
2,013,547
(495)
2,013,052
1,558,887
778,318
-
778,318
372,102
(30,992)
341,110
181,724
(1,133,744)
-
(1,133,744)
280
Statements of Comprehensive Income
NET INCOME/(LOSS)
TOTAL COMPREHENSIVE INCOME (LOSS)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Net cash inflow (outflow) from financing activities
Net (decrease) increase in cash and cash equivalents
before effect of exchanges rate change
Net (decrease) increase in cash and cash equivalents
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
778,318
778,318
(1,133,744)
(1,133,744)
(2,553,495)
1,364,128
-
(1,189,367)
2,794,378
(989,812)
90,526
1,411,653
512,367
115,976
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
793,839
165,496
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
2,398,850
793,839
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total increase (decrease) in equity
Comprehensive income
Other comprehensive income
Otro resultado integral
Total comprehensive income
Increase (decrease) through transfers and other changes, equity
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total increase (decrease) in equity
Comprehensive income
Net income/(loss) for the period
Other comprehensive income
Total comprehensive income
Increase (decrease) through transfers and other changes, equity
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Total
equity
ThUS$
840,714
840,714
778,318
-
778,318
861,332
2,480,364
778,318
-
778,318
861,332
2,480,364
(253,792)
(253,792)
(1,133,744)
-
(1,133,744)
2,228,250
840,714
(1,133,744)
-
(1,133,744)
2,228,250
840,714
LATAM TRAVEL S.R.L.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
Total liabilities and equity
Statements of Income by Function
Revenue
Gross margin
Income (loss) before taxes
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Net Income (loss) for the year
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
64
28
92
-
-
92
92
92
-
-
5
5
5
5
64
28
92
5
5
87
87
92
-
-
155
155
155
155
281
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
Statements of Comprehensive Income
NET INCOME/(LOSS)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to owners of the parent
TOTAL COMPREHENSIVE INCOME (LOSS)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
Effects of variation in the exchange rate on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
5
5
5
5
-
-
-
64
155
155
155
155
-
-
-
64
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Closing balance as of December 31, 2022
282
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
87
5
92
(68)
155
87
-
-
-
-
-
-
87
5
92
(68)
155
87
PEUCO FINANCE LIMITED
Statements of Financial Position
ASSETS
Total current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total liabilities
Total liabilities and equity
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
TAM S.A. AND AFFILIATES
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Statements of Financial Position
Statements of Comprehensive Income
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Non-controlling interest
Total equity
2,441,250
1,798,452
4,239,702
1,998,284
1,499,564
3,497,848
2,042,204
985,169
3,027,373
3,302,692
928,855
4,231,547
1,211,177
1,152
1,212,329
(734,514)
815
(733,699)
Total liabilities and equity
4,239,702
3,497,848
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Income (loss) attributable to non-controlling interest
Net Income (loss) for the year
5,794,599
(4,587,151)
1,207,448
631,524
739,480
1,303
740,783
740,476
307
740,783
4,255,115
(3,973,361)
281,754
(163,903)
(89,464)
19,529
(69,935)
(70,047)
112
(69,935)
283
NET INCOME/(LOSS)
Total other comprehensive (loss) that will not be reclassified
to income before taxes
Income taxes related to components of other comprehensive
loss will be reclassified to income
Other comprehensive Income / (loss)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to owners of the parent
Comprehensive income (loss) attributable to non-controlling interests
TOTAL COMPREHENSIVE INCOME (LOSS)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating activities
Net cash (outflow) inflow from investing activities
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
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
740,783
(69,935)
796,614
(10,792)
8,322
804,936
1,545,719
1,545,328
391
1,545,719
364,468
(31,311)
(18,698)
314,459
35,215
349,674
689
(10,103)
(80,273)
(80,281)
8
(80,273)
886,301
36,345
(354,668)
567,978
(476,568)
91,410
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
384,133
225,804
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
733,807
384,133
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Total transactions with shareholders
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Total transactions with shareholders
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
(734,515)
1,545,335
400,357
1,211,177
(649,058)
(80,281)
(5,176)
(734,515)
815
391
(54)
1,152
(733,700)
1,545,726
400,303
1,212,329
769
35
11
815
(648,289)
(80,246)
(5,165)
(733,700)
284
TECHNICAL TRAINING LATAM S.A.
Statements of Financial Position
ASSETS
Total current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
LIABILITIES
Total current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Parent’s ownership interest
Total equity
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
977,726
115,135
1,092,861
1,103,009
111,767
1,214,776
396,039
386,878
782,917
684,262
265,927
950,189
309,944
309,944
264,587
264,587
Total liabilities and equity
1,092,861
1,214,776
Statements of Income by Function
Revenue
Cost of sales
Gross margin
Income (loss) from operation activities
Income (loss) before taxes
Income tax (expense)/benefits
NET INCOME (LOSS) FOR THE YEAR
Income (loss) attributable to owners of the parent
Net Income (loss) for the year
1,110,860
(955,841)
155,019
153,438
153,438
(44,699)
108,739
108,739
108,739
906,015
(818,075)
87,940
69,915
69,915
(60)
69,855
69,855
69,855
ANNUAL REPORT 2023
13 —Financial reports —Affiliates and subsidiaries
As of
December 31,
2023
ThUS$
As of
December 31,
2022
ThUS$
Statements of Comprehensive Income
NET INCOME/(LOSS)
108,739
(60)
Total other comprehensive (loss) that will not be
reclassified to income before taxes
Total Other comprehensive income (loss)
Total comprehensive income (loss)
Comprehensive income (loss) attributable to owners of the parent
TOTAL COMPREHENSIVE INCOME (LOSS)
(63,382)
(63,382)
45,357
45,357
45,357
(15,409)
(15,409)
(15,469)
(15,469)
(15,469)
Statements of Cash Flows - Direct Method
Net cash (outflow) inflow from operating 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
(3,269)
(157,977)
(3,269)
4,489
1,220
(157,977)
4,710
(153,267)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
136,469
289,736
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
137,689
136,469
285
Statements of Changes in Equity
YEAR 2023
Equity as of January 1, 2023
Total comprehensive income
Total transactions with shareholders
Closing balance as of December 31, 2023
YEAR 2022
Equity as of January 1, 2022
Total comprehensive income
Total transactions with shareholders
Closing balance as of December 31, 2022
Parent’s
ownership
interest
ThUS$
Non-
controlling
interest
ThUS$
Total
equity
ThUS$
264,587
108,739
(63,382)
309,944
1,298,275
54,446
(1,088,134)
264,587
-
-
-
-
-
-
-
-
264,587
108,739
(63,382)
309,944
1,298,275
54,446
(1,088,134)
264,587
ANNUAL REPORT 2023
13 —Financial reports —Rationale
Comparative analysis and explanation of main trends:
1. CONSOLIDATED FINANCIAL STATEMENT
Below, we are presenting the main financial indicators in the Consolidated Financial Statement:
PROFITABILITY INDICATORS
31-12-2023
31-12-2022
LIQUIDITY INDICATORS
Current liquidity (times) (Current assets in operation/current Liability
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 (R.A.I.I. / financial expenses)
ACTIVITY INDICATORS
Total Assets
Investments
Disposal of property
0.74
0.30
12.63
18.97
31.60
39.98
60.02
2.04
0.69
0.24
120.36
191.39
311.75
38.61
61.39
0.00
14,667,315
795,787
46,524
13,211,024
780,869
56,794
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)1 (Average)
1 Total assets less deferred taxes, personnel current accounts, permanent and temporary investments.
Dividend returns (Dividends paid/ market price)
1.29
0.04
0.04
0.00
31.68
0.10
0.11
0.00
Financial
analysis
286
ANNUAL REPORT 2023 13 —Financial reports —Rationale
At December 31, 2023, the company's assets totaled
ThUSD$14,667,315 which, compared to December 31, 2022,
represents into an increase of ThUSD$1,456,291 (11.0%).
The Company's current assets increased by ThUSD$666,938
(18.9%) vs. yearend 2022. The main increases were seen in the
following line following items: Cash and cash equivalents for
ThUSD$498,086 (40.9%), this increase is explained by the net
variation presented in the Company's consolidated cash flow
statement; Trade and other receivables for ThUSD$377,801
(37.5%), mainly explained by the increase in sales in the
markets of Brazil, Peru and Chile; Current inventories for
ThUSD$115,091 (24.1%), related to an increase in purchases
for ThUSD$206,285 and inventory in transit and others for
ThUSD$22,867, offset by inventory adjustments, write-offs
and others for ThUSD$101,398 and the translation adjustment
of ThUSD$12,781; current taxes of ThUSD$13,997 (42.4%)
and non-current assets or groups of assets classified as held
for sale for ThUSD$16,254 (18.8%) (mainly due to sales of
aircraft and engines). All of the above is offset by a decrease
in: Other financial assets, current, of ThUSD$328,696 (65.3%)
mainly explained by the compensation of a fund delivered to
an agent as restricted advances, related to the derecognition
of TAM Linhas Aéreas S.A.'s claim, which was pending resolu-
tion at the exit of the Chapter 11 proceeding, and which was
offset during 2023; Accounts receivable from related entities,
current, of ThUSD$19,495 (99.9%); and Other non-financial
assets, current, of ThUSD$6,100 (3.2%).
The Company's liquidity index showed an increase from 0.69
times at yearend 2022 to 0.74 times at the end of December
2023. Moreover, we can see that the quick ratio increased
from 0.24 times at yearend 2022 to 0.30 times at the end of
December 2023.
The Company's non-current assets increased by ThUSD$789,353
(8.2%) vs. yearend 2022. The main line items of Non-current
assets with increases are: Property, plant and equipment for
ThUSD$679,469 (8.1%), whose variation is mainly explained by
ThUSD$1,954,683 in additions for the year (mainly additions
related to aircraft maintenance for ThUSD$938,381 and new
asset contracts for rights of use for ThUSD$1,016.302), and
an increase in the translation difference of ThUSD$44,249,
offset by the decrease resulting from the ThUSD$939,040
in depreciation for the year and other decreases worth
ThUSD$380,423; Intangible assets other than goodwill of
ThUSD$71,600 (6.6%), mainly originated by the translation
adjustment of ThUSD$52,478, an increase due to additions for
ThUSD$79,144 (associated to digital transformation projects
for ThUSD$32,484) offset by a decrease of ThUSD$59,304 cor-
responding to the amortization of the year; Other non-current
financial assets for ThUSD$18,968 (122.2%); Other non-fi-
nancial assets for ThUSD$20,243 (13.6%), mainly originated
by increases in judicial deposits of ThUSD$30,425 and other
prepayments of ThUSD$3,967, offset by the decrease in Sales
tax of ThUSD$14,209 and Accounts receivable, non-current
of ThUSD$206 (1.6%). All of the above is slightly offset by a
decrease in deferred tax assets of ThUSD$(1,133) (19.2%).
At December 31, 2023, the company's assets totaled
ThUSD$14,229,040 which, compared to December 31, 2022,
represents an increase of ThUSD$1,048,737 (equivalent to
8.0%).
The Company's Current Liabilities increased by ThUSD$599,440
(11.8%) vs. yearend 2022. The main increases were seen in: Trade
and other accounts payable, current, for ThUSD$137,287 (8.4%),
Other non-financial liabilities, current, for ThUSD$659,655
(25.0%); Accounts payable to related entities, current, for
ThUSD$7,432; Tax liabilities, current, for ThUSD$1,345 (131.1%);
and Other provisions, current, for ThUSD$499 (3.4%). The above
is offset by the ThUSD$206,778 (25.8%) decrease in Other
current financial liabilities.
The indebtedness indicator of the company's current Liabilities
over Equity for the period stood at 12.63 (120.36 by Decem-
ber 31, 2022). The impact of current Liabilities over Total debt
increased by 1.37 percentage points, from 38.61% at yearend
2022 to 39.98% at the end of the current period.
The company's non-current Liabilities increased by
ThUSD$449,297 (5.6%), compared to the figure reported at
December 31, 2022. The main increases are found in the lines
of: Other financial liabilities, non-current, for ThUSD$362,630
(6.1%), Accounts payable, non-current, for ThUSD$92,303
(28.3%), mainly explained by the increase in aircraft and engine
maintenance for ThUSD$98,868, offset by other net effects
for ThUSD$6,565; Provisions for employee benefits, non-cur-
rent, for ThUSD$29,130 (31.2%), explained by an increase of
ThUSD$58,436 related to the provision of current services,
offset by a ThUSD$6,701 decrease for benefits paid and con-
version adjustment and actuarial loss for ThUSD$22,605; and
287
ANNUAL REPORT 2023 13 —Financial reports —Rationale
1 During financial year 2023, the Company did not obtain financing. During
financial year 2022, the Company obtained ThUSD$2,361,875 in amounts
from long-term loans and ThUSD$4,856,025 in amounts from short-term
loans, totaling ThUSD$7,217,900.
2 Up to December 31, 2023, loan repayments of ThUSD$342,005 and
lease liability payments of ThUSD$225,358, disclosed under cash flows
from financing activities and up to December 31, 2022, loan repayments of
ThUSD$8,759,413 and lease liability payments of ThUSD$131,917 disclosed
in cash flows from financing activities.
3 As a result of the exit from Chapter 11, Bank loans decreased mainly by
ThUSD$297,161, related to the derecognition of the TAM Linhas Aéreas S.A.
claim, which was pending resolution at the exit of the Chapter 11 procee-
ding, and offset during 2023 with a fund delivered to an agent as restricted
advances made in November 2022.
Flows
Capital 2
ThUSD$
(81,952)
(19,726)
(56,519)
-
(183,374)
(434)
(225,358)
Paid
Interest
ThUSD$
(153,791)
(20,309)
(42,283)
(155,655)
(48,272)
-
(173,924)
Non-flow movements
Accrued interest
and others
ThUSD$
189,272
20,686
43,037
168,694
58,076
(70)
1,150,822
Reclassification 3
ThUSD$
(310,090)
(1,790)
11,811
-
(13,123)
(1,420)
-
Balance up to
December 31,
2023
ThUSD$
1,029,434
303,922
430,350
1,302,838
901,546
104
2,967,994
(567,363)
(594,234)
1,630,517
(314,612)
6,936,188
The indebtedness indicator of the company's Non-current
liabilities over equity stood at 18.97. The impact of Non-cur-
rent Liabilities over Total debt decreased by (1.37) percentage
points, from 61.39% at yearend 2022 to 60.02% at the end of
the December 2023.
The indicator of total indebtedness over the Company's equity
at the end of December 2023 is 31.60, 280.15 lower than at
the end of December 2022.
Up to December 31, 2023, roughly 49% of debt has a fixed
rate; most of the variable debt is indexed at the benchmark
rate based on SOFR.
The Equity attributable to the owners of the parent company in-
creased by ThUSD$408,024 (965.1%), going from ThUSD$42,278
at December 31, 2022 to an Equity of ThUSD$450,302 by
December 31, 2023. The main effects correspond to:
a) Decrease in share capital
At the Company's Extraordinary Shareholders' Meeting held
on April 20, 2023, the following was agreed, implying a net
movement between equity items and has no effect on the total:
i) A decrease in the Company's capital in the amount of
ThUSD$7,501,896, without altering the number and char-
acteristics of the shares into which it is divided, through the
absorption of the Company's total accumulated losses up to
December 31, 2022 for the same amount;
ii) Another decrease in the Company's capital in the amount of
ThUSD$178, without altering the number and characteristics
of the shares into which it is divided, through the absorption of
the "Treasury shares held" account up to December 31, 2022,
for the same amount, produced as a result of the January 2012
decrease in share capital in accordance with the provisions of
Article 27 of the Corporations Law;
the increase ThUSD$37,734 (10.9%) in deferred tax liabilities. This is offset by the
decrease in Other non-financial liabilities, non-current, of ThUSD$71,272 (17.0%)
and Other provisions, non-current, of ThUSD$1,228 (-0.1%).
For a better understanding of the total increase of ThUSD$155,852 in Other financial
liabilities, considering a reduction of ThUSD$206,778 in current financial liabilities
and an increase of ThUSD$362,630, the following table, excluding hedging and
non-hedging increase derivatives for ThUSD$1,544, shows the movements corre-
sponding to cash flows and non-cash flows:
Obligations to
financial institutions
Bank loans
Secured obligations
Other secured obligations
Obligations to the public
Financial leases
Other loans
Lease liabilities
Balance up
to December 31,
2022
ThUSD$
Received
Capital 1
ThUSD$
1,385,995
325,061
474.304
1,289,799
1,088,239
2.028
2,216,454
-
-
-
-
-
-
-
-
Total Obligations to financial institutions
6,781,880
288
ANNUAL REPORT 2023
13 —Financial reports —Rationale
iiI) ThUSD$810,279 deduction from the Company's paid-in
capital of the "Costs of issuance and placement of shares and
notes convertible into shares” account.
b) Capital Increase and Convertible Notes
During the first half of 2023, the increase in paid-in capital
was recognized, originated by the conversion of class H bonds
and the payment of claims through class G bonds, amounting
to ThUSD$17,401.
Considering a) and b) above, the balance of share capital at
the end of December 2023 stands as follows:
Beginning balance as at January 1, 2023
Convertible Bond G - placement during the period by conversion option
Absorption of Accumulated Losses by December 31, 2022
Absorption of treasury stock
Deduction of issuance and placement costs of shares and notes convertible into shares
Subtotal
Closing balance at December 31, 2023
Paid-in capital
ThUSD$
13,298,486
17,401
(7,501,896)
(178)
(810,279)
(8,294,952)
5,003,534
c) Other miscellaneous reserves
During financial year 2023, the Other miscellaneous reserves line increased by
ThUSD$736,491 mainly related to the ThUSD$810,279 increase due to the capital-
ization of issuance and placement costs of shares and notes convertible into shares,
offset by a ThUSD$14,401 adjustment to the fair value of the converted notes, Ac-
tuarial reserves for employee benefit plans for ThUSD$20,442, Conversion reserve
for ThUSD$25,051 and Reserves related to hedging activities for ThUSD$(20,651).
d) Accrued Earnings/Loss (Accrued Profit/Loss)
Accrued earnings/loss include ThUSD$581,831 of earnings attributable to owners of
the parent company for the financial year and the reversal of ThUSD$57,129 related
to an unpaid dividend in 2020, ThUSD$174,549 corresponding to profit for financial
year 2023, and the Absorption of accrued losses of ThUSD$7,501,896.
Therefore, the accured result increased from a loss of ThUSD$7,501,896 at December
31, 2022 to a profit of ThUSD$464,411 at December 31, 2023.
289
ANNUAL REPORT 2023
13 —Financial reports —Rationale
For the years ended on December 31 (ThUSD$)
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 / Expenses1
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
Gain/(loss) per common share (USD$)
Total shares, diluted
Gain/(loss) per common share (USD$)
R.A.I.I.D.A.
2023
ThUSD$
11,789,182
10,215,148
1,425,393
148,641
(10,619,974)
(1,583,337)
(3,947,220)
(244,160)
(1,205,373)
(1,322,795)
(271,838)
(91,876)
(601,804)
(1,351,571)
1,169,208
9.9%
125,356
(698,231)
159
596,492
(14,942)
581,550
581,831
(281)
4.9%
-2.5%
2022
ThUSD$
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%
604,437,869,545
0.000963
604,441,789,335
0.000963
96,614,464,231
0.013861
98,530,451,071
0.013592
2,375,021
2,417,744
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.
2. CONSOLIDATED INCOME STATEMENT
Below, we present the main financial indicators in the Consol-
idated Financial Statement.
290
ANNUAL REPORT 2023
13 —Financial reports —Rationale
At December 31, 2023, the parent company reported a
ThUSD$581,831 gain, translating into a negative vari-
ation of ThUSD$757,379 vs. the previous year’s gain of
ThUSD$1,339,210. Net margin for the financial year settled
4.9% in 2023 and 14.1% during 2022.
The operating result for 2023 shows a gain of ThUSD$1,169,208
which, compared to the loss of ThUSD$121,279 up to December
31, 2022, represents a variation equivalent to 1,064.1%. Op-
erating margin showed a positive variation of 11.2 percentage
points compared to financial year 2022, reaching 9.9%, driven
mainly by a good performance in the passenger business.
Operating income up to December 31, 2023, increased 23.9%
vs. the same period of 2022, totaling ThUSD$11,789,182. This
increase is largely due to a 33.8% hike in Passenger revenues,
offset by a 17.4% decrease in Cargo revenues and a 3.7% drop in
Other revenues. The effect of the Brazilian Real’s appreciation
translated into higher Ordinary revenues by around USD$106
million.
PAX revenues totaled ThUSD$10,215,148 which, compared
to the ThUSD$7,636,429 of December 31, 2022, translates
into a 33.8% increase. This variation is due to a 23.1% increase
in demand measured in RPK and an 8.6% 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
1.7 percentage points, reaching 83.1% during 2023. In terms
of capacity, passenger operations have registered a positive
increase, with total ASK reaching 92% of 2019 levels by De-
cember 31, 2023, representing the highest level of operations
since the start of the pandemic.
tion from Delta Air Lines, Inc., related to the implementation
of the JBA signed in 2019 for ThUSD$30,408, partially offset
by higher income from sales of spare engines and rotables of
the Airbus A350 and Airbus A320 fleet during 2023.
Up to December 31, 2023, Operating costs totaled
ThUSD$10,619,974 which, compared to the same period of 2022,
represents an increase of 10.2%, equivalent to ThUSD$981,888.
On the other hand, the unit cost per ASK decreased by 8.6%.
Furthermore, the effect of the Brazilian Real’s appreciation on
this line item translates into higher costs by roughly ThUSD$66.
Item variations are explained as follows:
a) Remuneration and benefits increased ThUSD$317,001, mainly
due to higher crew and airport personnel expenses, together
with an 11% increase in the average headcount during 2023.
b) Fuel increased 1.7%, equivalent to ThUSD$64,715. This in-
crease corresponds mainly to 17.5% growth in consumption mea-
sured in gallons, offset by 13.7% lower average unhedged prices.
In 2023, the Company recognized a profit of ThUSD$15,688 due
to fuel hedges, compared to a ThUSD$18,755 profit in 2022.
c) Commissions to agents show an increase of ThUSD$77,125,
mainly due to the hike in operations related to passenger rev-
enues.
d) Depreciation and amortization increased by ThUSD$25,861,
equivalent to 2.2%, a variation that is mainly explained by the
depreciation of the maintenance resulting from the addition
of 19 aircraft at December 31, 2023 compared to 2022, offset
by the renegotiation of the fleet’s operating leases after the
exit of Chapter 11.
By December 31, 2023, Cargo revenues totaled ThUSD$1,425,393,
representing a 17.4% decrease vs. 2022. This fall is due to a
21.7% decline in yields, despite a 4.7% rise in traffic measured
in RTK.
e) Other Leases and Landing Fees increased ThUSD$286,637,
mainly in the costs of airport taxes and handling services,
impacted by a larger operation during 2023.
The Other income line item presents a decrease of ThUSD$5,645,
mainly due to the lower income recognized under indemnifica-
f) Passenger Services show higher costs by ThUSD$87,481,
which translates into a variation of 47.5%, mainly explained
by an increase in catering and in-flight service costs, due to
the lifting of restrictions on food delivery, in place until the
first months of 2022 because of the COVID-19 pandemic, as
well as a significant growth in demand, which translates into
an increase of 18.3% in the number of passengers transported,
mainly in the international segment.
g) Aircraft Leasing shows lower costs by ThUSD$110,969, due
to a decrease in the number of aircraft under the PBH modality.
Aircraft Leasing includes the costs associated with leasing pay-
ments 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 asset by right of use included
in the depreciation line and the interest on the lease liability.
h) Maintenance presents higher costs of ThUSD$18,956, as a
result of a larger average fleet and the increase in operations
during 2023.
i) Other Operating Costs increased ThUSD$215,081, mainly
due to the effect of higher variable costs of crew, booking
systems, sales and advertising, which are the result of the
growth of the operation during 2023.
Financial income totaled ThUSD$125,356 which, compared to
the ThUSD$1,052,295 from the previous financial year, trans-
lates into lower income by ThUSD$926,939, mainly due to the
recognition of fair value adjustments on the converted bonds
whose origin was financial debt totaling ThUSD$420,436 and
291
write-offs of financial debt worth ThUSD$491,326.
Financial costs decreased 25.9%, totaling ThUSD$698,231 up
to December 31, 2023, the variation being the effect of interest
recognized during 2022 related to DIP financing.
Other income/expenses totaled a gain of ThUSD$159 up to
December 31, 2023 which, compared to the same period of
2022, shows an increase of ThUSD$1,357,279. This impact is
mainly explained by the recognition during 2022 of a profit of
ThUSD$2,550,306 corresponding to the fair value adjustment of
the converted bonds whose origin was Trade accounts payable
and Other accounts payable, offset by restructuring activities
expenses recorded during financial year 2022.
The main line items in the Consolidated Financial Statement
of TAM S.A. and its Subsidiaries, which caused a currency ex-
change gain of ThUSD$50,701 at December 31, 2023, were:
Other financial liabilities; gain of ThUSD$26,871 from USD-de-
nominated loans and financial leasing for fleet acquisitions;
net accounts receivable and payable to related companies,
totaling a gain of ThUSD$46,531, and net accounts receivable
and payable to third parties, totaling a loss of ThUSD$17,532.
The other net assets and liabilities line items generated a
ThUSD$5,168 loss.
ANNUAL REPORT 2023 13 —Financial reports —Rationale
3. ANALYSIS AND EXPLANATION OF CONSOLIDATED NET
CASH FLOW GENERATED BY OPERATION, INVESTMENT, AND
FINANCING ACTIVITIES
The Operating Cash Flow up to December 31, 2023 shows a
positive change of ThUSD$2,166,771 vs. the same period of the
previous year, due to the positive change in Receipts from sales
of goods and service rendering for ThUSD$2,847,843, Other
receipts from operational activities for ThUSD$52,574, Other
payment for operating activities for ThUSD$2,243, and Other
cash inflows and outflows for ThUSD$109,914. The above is
offset by negative variations in Payments to suppliers for the
supply of goods and services, whose changes are originated by
higher payments made totaling ThUSD$576,378; Payments to
and on behalf of employees, worth ThUSD$265,360; Income
taxes paid for ThUSD$4,065.
The positive variation of ThUSD$109,914 in the Other cash
inflows and outflows of the Cash Flow from Operating Ac-
tivities is mainly due to the change in Funds received as-
sociated to restricted advances for ThUSD$47,490, a lower
flow related to Guarantees for ThUSD$51,790, judicial de-
posits for ThUSD$4,312, Bank commissions and taxes for
ThUSD$3,268 and Margin guarantees for hedging derivatives
for ThUSD$37,648; offset by the negative change in Taxes on
financial transactions totaling ThUSD$(4,669), Payment of
premiums for derivatives worth ThUSD$24,481 and Hedging
derivatives for ThUSD$5,444.
The Cash Flow from Investment Activities shows a positive
change of ThUSD$89,452 compared to the same period of the
previous year, mainly due to the positive variation of Interest
received worth ThUSD$79,618, Other payments to acquire
equity or debt instruments of other entities for ThUSD$331
and Other cash inflows (outflows) of ThUSD$52,958. The
above is offset by negative variations in Income from the sale
of property, plant and equipment of ThUSD$9,853, Purchases
of intangible assets for ThUSD$17,936, Purchases of property,
plant and equipment for ThUSD$15,249 and Other receipts
from the sale of equity or debt instruments of other entities
for ThUSD$417.
ing, but not limited to, shares, certain engines, and spare parts.
The Cash Flow from Financing Activities shows a negative vari-
ation of ThUSD$2,005,170, compared to the same period of the
previous year, which is mainly explained by the negative changes
in Payments for changes in ownership stakes in subsidiaries
that do not result in loss of control, worth ThUSD$23, Sums
from the issuance of shares for ThUSD$549,038, Sums from
issuance of other equity instruments for ThUSD$3,202,790,
Sums from short-term loans for ThUSD$4,856,025, Sums from
long-term loans for ThUSD$2,361,875, Loans from related
companies for ThUSD$770,522, Interest paid for ThUSD$72,518
and Payments of lease liabilities for ThUSD$93,441. These vari-
ations are offset by the positive variation of ThUSD$8,417,408
in Loan payments; ThUSD$1,008,483 in Loan payments to
related companies; and ThUSD$475,171 in Other cash inflows
(outflows).
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 modified and restated said
agreement and paid back the outstanding obligations thereun-
der (i.e., under its Tranches A, B and C). The total amount of the
Amended and Restated DIP Credit Agreement was ThUSD$3.70
billion. The Amended and Restated DIP Credit Agreement (i)
included certain reductions in fees and interest compared to
the existing DIP Credit Agreement; and (ii) considered a ma-
turity 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.
The flows from loans described above include the following
events:
1. The committed Revolving Credit Facility (RCF) is secured by
collateral comprised of aircraft, engines and spare parts, which
was fully drawn until November 3, 2022. Upon the emergence
from Chapter 11, this facility was fully repaid and is available
for use at December 31, 2023.
2. On March 14, 2022, a new amended and restated text of
the existing DIP Credit 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)
considered a maturity date consistent with the schedule the
Debtors established to emerge from the Chapter 11 Proceed-
ing; and (iii) included certain reductions in fees and interest as
compared to the existing 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, includ-
In addition, on April 8, 2022, the initial disbursement under the
Amended and Restated DIP Credit Agreement in the amount
of USD$2.75 million was made. On April 28, 2022, an amend-
ment 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 repaid in full with the DIP-to-Exit financing,
which included a bridge financing for senior secured notes due
2027 for USD$750 million, USD$750 million in another bridge
financing for senior secured notes due 2029, a Term Financing
of USD$750 million, a so-called Junior DIP financing, for a total
of USD$1.14 billion, and, finally, a Revolving Credit Facility of
USD$500 million, which is undrawn. The DIP-to-Exit financing
was guaranteed by assets owned by LATAM and certain of its
subsidiaries. Of these, the Junior DIP contemplated a subor-
dinate priority to the rest of the credits.
On October 18, 2023, the Bridge Loans were partially settled
through: i) an issuance of notes 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 USD$450 million; and ii) a
note 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 USD$700 million.
In the context of the Company's exit from the Chapter 11
Proceeding on November 3, 2022, the Bridge Loans were set-
tled with the proceeds of US$350 million corresponding to an
incremental loan on Term Loan B.
on November 3, 2022, the Company and all its subsidiaries
successfully emerged from Chapter 11.
Last, the Company’s net cash flow up to December 31, 2023,
prior to the effects of exchange rate differences, shows a
positive variation of ThUSD$251,053, compared to the same
period of a year earlier.
4. FINANCIAL RISK ANALYSIS
The goal of the Company’s global risk management program
is to minimize the adverse effects of the financial risks that
affect the company.
a) Market risk
Given the nature of its business, the Company is exposed to
market factors, such as: (i) fuel price risk, (ii) exchange rate
risk, and (iii) Interest 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
292
ANNUAL REPORT 2023 age points for 2024, mainly due to the negative effects of a
significant adjustment of the Argentinean economy. Brazil's
economy is expected to grow by 1.7% in 2024. According to
the IMF's October projections, Chile is expected to grow by
1.6% in 2024. Peru is expected to grow 2.7% in 2024, Colombia
is expected to grow 2.0% in 2024 and Ecuador is expected to
grow 1.8% in 2023.
13 —Financial reports —Rationale
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 can
be closely related to Jet Fuel and can have greater liquidity.
positions totaled ThUSD$1,543 (negative).
(iii) Interest rate risk
At December 31, 2023, the Company recognized a ThUSD$15.7
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, 2023, the market value of existing contracts
stood at THUSD$22.1 (positive).
(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 Subsidiaries 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 contract-
ing derivative instruments or through natural hedges or the
execution of internal transactions.
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 Fi-
nancing Rate (“SOFR”) and other less relevant interest rates,
such as Brazilian Interbank Deposit Certificates (“CDI”, for its
Portuguese acronym). As LIBOR ceased to be published on June
30, 2023, the Company migrated to the adoption of SOFR as
an alternative rate, which fully materialized on September 30,
2023, with all contracts migrating definitively to SOFR.
At December 31, 2023, 50% (52% by December 31, 2022) of
the debt is fixed against interest rate fluctuations.
During the financial year ended December 31, 2023, the Com-
pany recognized losses of ThUSD$1,810 corresponding to the
recognition in income of premiums paid and other concepts.
At December 31, 2023, the Company had no active Interest
rate derivatives contracts. At the end of December 2022, the
Company held current interest rate derivatives positions with
a value of ThUSD$8,819 (positive).
By December 31, 2023, the Company recognized a decrease
in the right-of-use asset from the maturity of derivatives for
ThUSD$14,904 related to aircraft leases. A lower expense
from depreciation of the right-of-use asset of ThUSD$(1,137)
is recognized at the same date. A lower expense from depre-
ciation of the right-of-use asset of ThUSD$133 (positive) was
recognized at December 31, 2022.
At December 31, 2023, the Company holds ThUSD$414,000
in outstanding FX derivatives recorded as hedges.
5. ECONOMIC ENVIRONMENT
emerging markets. This has also been driven by the fiscal
support provided in China. Nonetheless, forecasts for 2024
and 2025 are lower than the historical average, due in part
to high monetary policy interest rates to combat inflation,
the withdrawal of fiscal support in an environment of heavy
borrowing holding back economic activity, and low underlying
productivity growth. On the inflation side, it is decreasing at
a faster than expected pace in most regions. Thus, risks to
global growth are expected to be broadly balanced. Thus, if
inflation declines more rapidly, there could be an easing of
financial conditions. Conversely, geopolitical shocks could
lead to higher commodity prices and supply shocks, coupled
with persistent core inflation, leading to an extension of tight
monetary conditions.
In its latest January projection, the International Monetary
Fund (IMF) estimates that world growth will be 3.1% in 2023,
remaining steady in 2024 and rising to 3.2% in 2025—data
that is still below the historical average of 3.8% (2000-2019).
Headline inflation is expected to move from 6.8% in 2023 on a
year-on-year basis to 5.8% during 2024, and to 4.4% in 2025,
the latter with a downward revision of 0.2 percentage points.
The IMF estimates that developed economies will face a drop
in projected growth from 1.6% in 2023 to 1.5% in 2024 before
rising to 1.8% in 2025. Growth for emerging economies is ex-
pected to be moderate, standing at 4.1% in both 2023 and
2024 and rising to 4.2% in 2025. According to the IMF, U.S.
growth is expected to decline from 2.5% in 2023 to 2.1% in
2024 and 1.7% in 2025, impacted mainly by the lagged effects
of monetary policy tightening, gradual budget tightening, and
moderation in labor markets. As for the euro zone, its growth
is expected to increase this year, rising from 0.5% in 2023, and
with exposure to the war in Ukraine, to 0.9% in 2024. It is ex-
pected that, as energy prices stabilize and inflation declines,
household consumption will strengthen and contribute to the
economic recovery.
At December 31, 2023, the market value of FX derivative hedge
The resilience of the global recovery following the COVID-19
pandemic and the Russian invasion of Ukraine has been greater
than expected, especially in the United States and other large
For Latin America and the Caribbean, the IMF projects growth
to decline from 2.5% in 2023 to 1.9% in 2024, rising to 2.5% in
2025. This translates into a downward revision of 0.4 percent-
293
ANNUAL REPORT 2023 DocuSign Envelope ID: 978CD6A8-862F-417C-A7A2-7C7F09EDD94E
13 —Financial reports —Sworn statement
13 —Informes financieros —Declaración jurada
Sworn
Declaración
statement
jurada
En nuestra calidad de directores, gerente general y vicepresi-
En nuestra calidad de directores, gerente general y vicepresi-
dente de finanzas de LATAM Airlines Group S.A., declaramos
dente de finanzas de LATAM Airlines Group S.A., declaramos
bajo juramento nuestra responsabilidad respecto de la veraci-
bajo juramento nuestra responsabilidad respecto de la veraci-
dad de toda la información contenida en la Memoria Integrada
dad de toda la información contenida en la Memoria Integrada
LATAM 2023.
LATAM 2023.
3
2
0
2
M
A
T
A
L
A
R
O
M
E
M
I
IGNACIO CUETO PLAZA
IGNACIO CUETO PLAZA
Chairman
Presidente del Directorio
FREDERICO CURADO
FREDERICO CURADO
Board member
Director
MICHAEL NERUDA
MICHAEL NERUDA
Board member
Director
ROBERTO ALVO MILOSAWLEWITSCH
ROBERTO ALVO MILOSAWLEWITSCH
CEO LATAM Airlines Group
Gerente General
BORNAH MOGHBEL
BORNAH MOGHBEL
Vice-chairman
Vicepresidente del Directorio
ANTONIO GIL NIEVAS
ANTONIO GIL NIEVAS
Board member
Director
SONIA J. S. VILLALOBOS
SONIA J. S. VILLALOBOS
Board member
Directora
RAMIRO ALFONSÍN BALZA
RAMIRO ALFONSÍN BALZA
Chief financial officer
Vicepresidente de Finanzas
ENRIQUE CUETO PLAZA
ENRIQUE CUETO PLAZA
Board member
Director
BOUK VAN GELOVEN
BOUK VAN GELOVEN
Board member
Director
ALEXANDER D. WILCOX
ALEXANDER D. WILCOX
Board member
Director
294296
ANNUAL REPORT 2023
13 —Financial reports —Company structure
Company
structure
NCG 461: 6.5.1 AFFILIATES AND SUBSIDIARIES
99,00%
Latam Travel S.R.L.
[Bolivia]-[LTBO]
1,00%
23,62%
Latam Airlines Perú S.A.
[Perú]-[LPPE]
0,19%
M
76,19%
33,41%
Inversiones Aéreas S.A.
[Perú]-[W6PE]
0,16%
66,43%
LATAM Airlines Group S.A. [Chile]-[LACL]
99,89395%
99,90%
99,99%
99,83%
99,9959%
100%
100%
100%
Lan Cargo S.A.
[Chile]-[UCCL]
0,10196%
M
Inversiones Lan S.A.
[Chile]-[W0CL]
[Chile]-[B2CL]
Technical Training
[Chile]-[A3CL]
Lan Pax Group S.A.
[Chile]-[W1CL]
Peuco Finance Ltd.
Professional Airline
Services Inc.
[Florida-USA]-[PAUS]
[Cayman]-[TFKY]
0,00409%
0,01%
0,17%
0,00412%
100%
Prime Cargo SpA
[Chile]
99,99988%
Transporte Aéreo S.A.
[Chile]-[LUCL]
0,10%
0,00012%
99%
100%
100%
1%
Atlantic Aviation
Investments Limited
LLC[Delaware]-[XSUS]
Cargo Handling Airport
Services, LLC
[USA]-[F6US]
Professional Airport
Cargo Services, LLC
[USA]-[F7US]
Prime Airport Services Inc.
[Florida-USA]-[D5US]
100%
99%
Lan Cargo Inversiones S.A.
1%
1%
Lan Tours de
México S.A. de C.V.
[México]-[LTMX]
99%
54,79076%
Holdco Ecuador S.A.
[CHILE]-[E2CL]
45,20924%
M
99,99831%
Holdco S.A.
[Chile]-[E3CL]
0,00169%
M
99%
99,8%
0,2%
100%
Consultoría Administrativa
Profesional S.A. de C.V.
[México]-[CAMX]
1%
Americonsult S.A. de C.V.
[México]-[R3MX]
Lan Cargo Repair Station
[Florida-USA]-[D9US]
M
9,54%
1,53%
81,3%
Línea Aérea Carguera
de Colombia
[C1CO]
Americonsult
de Guatemala S.A.
[Guatemala]-[Q3GT]
99,13%
0,87%
Maintenance Service
Experts, LLC
[USA]-[F1US]
Professional Airline
Maintenance Services, LLC
[USA]-[F2US]
100%
100%
99,89%
Fast Air Almacenes
de Carga S.A.
[Chile]-[D2CL]
1,53%
4,57%
1,53
0,11%
Americonsult
de Costa Rica S.A.
[Costa Rica]-[P3CR]
99,8%
0,2 %
100%
Connecta Corporation
[USA]-[CCUS]
Holdco Colombia I SpA
[CHILE]-[E4CL]
100%
50%
0,76832%
M
0,12585%
Aerovias de Integración
Regional S.A. (Aires S.A.)
[Colombia]-[4CCO]
48,367%
50%
50%
Ecuador S.A.
[Ecuador]-[XLEC]
4,9943%
0,048 %
Lan Argentina S.A.
[Argentina]-[4MAR]
36,9012%
63,0987%
TAM S.A.
[Brasil]-[N2BR]
99,95%
0,05%
Inversora Cordillera S.A.
[Argentina]-[W7AR]
100%
TAM Linhas Aereas S.A.
[Brasil]-[JJBR]
94,96%
0,3%
100%
Corsair Participacoes S.A.
[Brasil]-[N6BR]
5,69%
[Argentina]-[Z6AR]
94,01%
94,01%
100%
Fidelidade Viagens
e Turismo S.A.
[Brasil]-[N1BR]
100%
ABSA - Aerolinhas
Brasileiras S.A.
[Brasil]-[M3BR]
0,1%
Minority
295
1%
Gitary Trade S.A.
[Uruguay]
99%
Piquero Leasing Limited
Platero Leasing LLC
Zorzal Limited
100%
100%
99%
100%
Jarletul S.A.
[Uruguay]-[W9UY]
Chincol Leasing LLC
Sumauma Leasing Limited
100%
100%
0,01%
99,99%
0,01%
99,99%
0,01%
99,99%
Multiplus Corredora
de Seguros Ltda.
[Brasil]-[N7BR]
94,98%
Transportes Aéreos
del Mercosur S.A.
[Paraguay]-[PZPY]
5,02%
M
Prismah Fidelidade Ltda.
[Brasil]-[N8BR]
TP Franchising Ltda.
[Brasil]-[N3BR]
ANNUAL REPORT 2023 CREDITS AND CORPORATE INFORMATION
296
CREDITS
CORPORATE INFORMATION
Coordination
Headquarters
ADR Depository Bank
LATAM- Investor Relations
LATAM- Sustainability
LATAM- External Communication
5711 Presidente Riesco Ave., 19th floor, Las Condes
Región Metropolitana – Chile
Phone: (56) (2) 2565 3844
Text and Design
Stock Market Tickers
SustainaLab
Text: Isidora Barberis Ayala
Editorial supervision and GRI indicators: SustainaLab
Graphic project: Panal Diseño- Panal.cl
Layout: Panal Diseño- Panal.cl
Translation into English: Nuriyah Costa-Laurent
Photography
LATAM files
LTM CI – Santiago Stock Exchange
LTM AY – New York Stock Exchange
Investor Relations
Investor Relations | LATAM Airlines Group S.A.
5711 Presidente Riesco Ave., 19th floor, Las Condes
Región Metropolitana – Chile
Phone: (56) (2) 2565 3844
E-mail: InvestorRelations@latam.com
Shareholder Service
Depósito Central de Valores
Avenida Los Conquistadores 1730, piso 24, Providencia
Región Metropolitana – Chile
Tel: (56) (2) 2393 9003
E-mail: atencionaccionistas@dcv.cl
JPMorgan Chase Bank, N.A. P.O. Box 64504, St. Paul,
MN, 55164-0504
Main phone: +1 (800) 990-1135
Phone: Outside the US (651) 453-2128
Phone: Global Invest Direct (800) 428-4237
ADR Custodian Bank
Banco Santander Chile
140 Bandera, Santiago
Región Metropolitana – Chile
Custody Department
Phone: (56) (2) 2320 3320
Independent Auditors
PricewaterhouseCoopers Consultores Auditores
y Compañía Limitada
2711 Andrés Bello Ave., 5th floor, Providencia
Región Metropolitana – Chile
Phone: (56) (2) 2940 0000
ANNUAL REPORT 2023 www.latamairlinesgroup.net
www.latam.com
297
ANNUAL REPORT 2023