UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
July 2024
Commission File Number 1-14728
LATAM Airlines Group S.A.
(Translation of Registrant’s Name Into
English)
Presidente Riesco 5711, 20th floor
Las Condes
Santiago, Chile
(Address of principal executive offices)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒
Form 40-F ☐
LATAM AIRLINES GROUP S.A.
The following exhibits are attached:
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
LATAM Airlines Group S.A. |
|
|
|
|
By: |
/s/ Ramiro Alfonsin |
|
|
Name: |
Ramiro Alfonsin |
|
|
Title: |
CFO |
Date: July 18, 2024
2
Exhibit 99.1
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
CLP |
- |
CHILEAN PESO |
UF |
- |
CHILEAN UNIDAD DE FOMENTO |
ARS |
- |
ARGENTINE PESO |
US$ |
- |
UNITED STATES DOLLAR |
THUS$ |
- |
THOUSANDS OF UNITED STATES DOLLARS |
MUS$ |
- |
MILLIONS OF UNITED STATES DOLLARS |
COP |
- |
COLOMBIAN PESO |
BRL/R$ |
- |
BRAZILIAN REAL |
THR$ |
- |
THOUSANDS OF BRAZILIAN REAL |
Contents of the Notes to the interim consolidated financial statements
of LATAM Airlines Group S.A. and Subsidiaries.
Notes |
|
Page |
1 - General information |
|
F-10 |
2 - Summary of material accounting policies |
|
F-15 |
2.1. Basis of Preparation |
|
F-15 |
2.2. Basis of Consolidation |
|
F-17 |
2.3. Foreign currency transactions |
|
F-17 |
2.4. Property, plant and equipment |
|
F-19 |
2.5. Intangible assets other than goodwill |
|
F-19 |
2.6. Borrowing costs |
|
F-19 |
2.7. Losses for impairment of non-financial assets
|
|
F-20 |
2.8. Financial assets |
|
F-20 |
2.9. Derivative financial instruments and embedded
derivatives |
|
F-20 |
2.10. Inventories |
|
F-22 |
2.11. Trade and other accounts receivable |
|
F-22 |
2.12. Cash and cash equivalents |
|
F-22 |
2.13. Capital |
|
F-22 |
2.14. Trade and other accounts payables |
|
F-22 |
2.15. Interest-bearing loans |
|
F-22 |
2.16. Current and deferred taxes |
|
F-23 |
2.17. Employee benefits |
|
F-23 |
2.18. Provisions |
|
F-24 |
2.19. Revenue from contracts with customers |
|
F-24 |
2.20. Leases |
|
F-25 |
2.21. Non-current assets (or disposal groups) classified
as held for sale |
|
F-26 |
2.22. Maintenance |
|
F-26 |
2.23. Environmental costs |
|
F-27 |
3 - Financial risk management |
|
F-27 |
3.1. Financial risk factors |
|
F-27 |
3.2. Capital risk management |
|
F-37 |
3.3. Estimates of fair value |
|
F-37 |
4 - Accounting estimates and judgments |
|
F-39 |
5 - Segment information |
|
F-41 |
6 - Cash and cash equivalents |
|
F-43 |
7 - Financial instruments |
|
F-44 |
8 - Trade and other accounts receivable current, and non-current accounts receivable |
|
F-45 |
9 - Accounts receivable from/payable to related entities |
|
F-47 |
10 - Inventories |
|
F-48 |
11 - Other financial assets |
|
F-49 |
12 - Other non-financial assets |
|
F-50 |
13 - Non-current assets and disposal group classified as held for sale |
|
F-51 |
14 - Investments in subsidiaries |
|
F-52 |
15 - Intangible assets other than goodwill |
|
F-55 |
16 - Property, plant and equipment |
|
F-57 |
17 - Current and deferred tax |
|
F-62 |
18 - Other financial liabilities |
|
F-67 |
19 - Trade and other accounts payables |
|
F-75 |
20 - Other provisions |
|
F-76 |
21 - Other non financial liabilities |
|
F-78 |
22 - Employee benefits |
|
F-79 |
23 - Accounts payable, non-current |
|
F-82 |
24 - Equity |
|
F-82 |
25 - Revenue |
|
F-89 |
26 - Costs and expenses by nature |
|
F-89 |
27 - Other income, by function |
|
F-91 |
28 - Foreign currency and exchange rate differences |
|
F-91 |
29 - Earning (Loss) per share |
|
F-97 |
30 - Contingencies |
|
F-98 |
31 - Commitments |
|
F-122 |
32 - Transactions with related parties |
|
F-125 |
33 - Share based payments |
|
F-127 |
34 - Statement of cash flows |
|
F-130 |
35 - Events subsequent to the date of the financial statements |
|
F-133 |
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS
| |
| |
As of | | |
As of | |
| |
Note | |
March 31, 2024 | | |
December 31, 2023 | |
| |
| |
ThUS$ | | |
ThUS$ | |
| |
| |
Unaudited | | |
| |
Current Assets | |
| |
| | |
| |
Cash and cash equivalents | |
6 - 7 | |
| 1,851,373 | | |
| 1,714,761 | |
Other financial assets | |
7 - 11 | |
| 178,325 | | |
| 174,819 | |
Other non-financial assets | |
12 | |
| 181,786 | | |
| 185,264 | |
Trade and other accounts receivable | |
7 - 8 | |
| 1,369,166 | | |
| 1,385,910 | |
Accounts receivable from related entities | |
7 - 9 | |
| 7 | | |
| 28 | |
Inventories | |
10 | |
| 585,315 | | |
| 592,880 | |
Current tax assets | |
17 | |
| 67,276 | | |
| 47,030 | |
Total
current assets other than non-current assets (or disposal groups) classified as held for sale | |
| |
| 4,233,248 | | |
| 4,100,692 | |
Non-current assets (or disposal groups) classified as held for sale | |
13 | |
| 102,863 | | |
| 102,670 | |
Total current assets | |
| |
| 4,336,111 | | |
| 4,203,362 | |
Non-current assets | |
| |
| | | |
| | |
Other financial assets | |
7 - 11 | |
| 39,260 | | |
| 34,485 | |
Other non-financial assets | |
12 | |
| 161,388 | | |
| 168,621 | |
Accounts receivable | |
7 - 8 | |
| 12,371 | | |
| 12,949 | |
Intangible assets other than goodwill | |
15 | |
| 1,124,053 | | |
| 1,151,986 | |
Property, plant and equipment | |
16 | |
| 9,225,657 | | |
| 9,091,130 | |
Deferred tax assets | |
17 | |
| 4,374 | | |
| 4,782 | |
Total non-current assets | |
| |
| 10,567,103 | | |
| 10,463,953 | |
Total assets | |
| |
| 14,903,214 | | |
| 14,667,315 | |
The accompanying Notes 1 to 35 form an integral part of these interim
consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
LIABILITIES AND EQUITY
LIABILITIES | |
Note | |
As of March 31, 2024 | | |
As of December 31, 2023 | |
| |
| |
ThUS$ | | |
ThUS$ | |
| |
| |
Unaudited | | |
| |
Current liabilities | |
| |
| | |
| |
Other financial liabilities | |
7 - 18 | |
| 676,638 | | |
| 596,063 | |
Trade and other accounts payables | |
7 - 19 | |
| 1,742,214 | | |
| 1,765,279 | |
Accounts payable to related entities | |
7 - 9 | |
| 12,291 | | |
| 7,444 | |
Other provisions | |
20 | |
| 9,533 | | |
| 15,072 | |
Current tax liabilities | |
17 | |
| 2,658 | | |
| 2,371 | |
Other non-financial liabilities | |
21 | |
| 3,242,240 | | |
| 3,301,906 | |
Total current liabilities | |
| |
| 5,685,574 | | |
| 5,688,135 | |
| |
| |
| | | |
| | |
Non-current liabilities | |
| |
| | | |
| | |
Other financial liabilities | |
7 - 18 | |
| 6,400,346 | | |
| 6,341,669 | |
Accounts payable | |
7 - 23 | |
| 435,147 | | |
| 418,587 | |
Other provisions | |
20 | |
| 983,749 | | |
| 926,736 | |
Deferred tax liabilities | |
17 | |
| 372,448 | | |
| 382,359 | |
Employee benefits | |
22 | |
| 139,845 | | |
| 122,618 | |
Other non-financial liabilities | |
21 | |
| 298,051 | | |
| 348,936 | |
Total non-current liabilities | |
| |
| 8,629,586 | | |
| 8,540,905 | |
Total liabilities | |
| |
| 14,315,160 | | |
| 14,229,040 | |
| |
| |
| | | |
| | |
EQUITY | |
| |
| | | |
| | |
Share capital | |
24 | |
| 5,003,534 | | |
| 5,003,534 | |
Retained earnings/(losses) | |
24 | |
| 645,207 | | |
| 464,411 | |
Other equity | |
24 | |
| 39 | | |
| 39 | |
Other reserves | |
24 | |
| (5,050,063 | ) | |
| (5,017,682 | ) |
Parent’s ownership interest | |
| |
| 598,717 | | |
| 450,302 | |
Non-controlling interest | |
14 | |
| (10,663 | ) | |
| (12,027 | ) |
Total equity | |
| |
| 588,054 | | |
| 438,275 | |
Total liabilities and equity | |
| |
| 14,903,214 | | |
| 14,667,315 | |
The accompanying Notes 1 to 35 form an integral part of these interim
consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME BY FUNCTION
| |
| |
For the period ended
March 31, | |
| |
Note | |
2024 | | |
2023 | |
| |
| |
ThUS$ | | |
ThUS$ | |
| |
| |
Unaudited | | |
| |
| |
| |
| | |
| |
Revenue | |
5 - 25 | |
| 3,267,199 | | |
| 2,771,642 | |
Cost of sales | |
26 | |
| (2,393,859 | ) | |
| (2,169,069 | ) |
Gross margin | |
| |
| 873,340 | | |
| 602,573 | |
Other income | |
27 | |
| 54,134 | | |
| 33,816 | |
Distribution costs | |
26 | |
| (158,292 | ) | |
| (121,359 | ) |
Administrative expenses | |
26 | |
| (187,442 | ) | |
| (145,552 | ) |
Other expenses | |
26 | |
| (140,978 | ) | |
| (106,445 | ) |
Other (losses) | |
| |
| (46,431 | ) | |
| (19,683 | ) |
Income from the operational activities | |
| |
| 394,331 | | |
| 243,350 | |
Financial income | |
| |
| 31,450 | | |
| 17,922 | |
Financial costs | |
26 | |
| (191,385 | ) | |
| (164,164 | ) |
Foreign exchange gains | |
| |
| 39,627 | | |
| 17,408 | |
Result of indexation units | |
| |
| 1,075 | | |
| (338 | ) |
Income before taxes | |
| |
| 275,098 | | |
| 114,178 | |
Income tax benefits/(expense) | |
17 | |
| (15,143 | ) | |
| 6,879 | |
NET INCOME FOR THE PERIOD | |
| |
| 259,955 | | |
| 121,057 | |
| |
| |
| | | |
| | |
Income attributable to owners of the parent | |
| |
| 258,279 | | |
| 121,801 | |
Income attributable to non-controlling interest | |
14 | |
| 1,676 | | |
| (744 | ) |
NET INCOME FOR THE PERIOD | |
| |
| 259,955 | | |
| 121,057 | |
EARNING PER SHARE | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Basic earnings per share (US$) | |
29 | |
| 0.000427 | | |
| 0.000202 | |
Diluted earnings per share (US$) | |
29 | |
| 0.000427 | | |
| 0.000201 | |
The accompanying Notes 1 to 35 form an integral part of these interim
consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| |
| |
For the period ended at
March 31, | |
| |
Note | |
2024 | | |
2023 | |
| |
| |
ThUS$ | | |
ThUS$ | |
| |
| |
Unaudited | | |
| |
| |
| |
| |
NET INCOME FOR THE PERIOD | |
| |
| 259,955 | | |
| 121,057 | |
Components of other comprehensive income (loss) that will not be reclassified to income before taxes | |
| |
| | | |
| | |
Other comprehensive (loss), before taxes, (losses) by new measurements on defined benefit plans | |
24 | |
| (15,295 | ) | |
| (5,777 | ) |
Total other comprehensive (loss) that will not be reclassified to income before taxes | |
| |
| (15,295 | ) | |
| (5,777 | ) |
Components of other comprehensive income that will be reclassified to income before taxes | |
| |
| | | |
| | |
Currency translation differences (losses) on currency translation, before tax | |
| |
| (43,769 | ) | |
| (5,804 | ) |
Other comprehensive loss, before taxes, currency translation differences | |
| |
| (43,769 | ) | |
| (5,804 | ) |
Cash flow hedges | |
| |
| | | |
| | |
Gains (losses) on cash flow hedges before taxes | |
24 | |
| 72,287 | | |
| (28,876 | ) |
Reclassification adjustment on cash flow hedges before tax | |
24 | |
| (26,406 | ) | |
| (1,833 | ) |
Other comprehensive income (losses), before taxes, cash flow hedges | |
| |
| 45,881 | | |
| (30,709 | ) |
Change in value of time value of options | |
| |
| | | |
| | |
Gains/(Losses) on change in value of time value of options before tax | |
24 | |
| (28,627 | ) | |
| 16,359 | |
Reclassification adjustments on change in value of time value of options before tax | |
24 | |
| 8,812 | | |
| 5,598 | |
Other comprehensive income, before taxes, changes in the time value of the options | |
| |
| (19,815 | ) | |
| 21,957 | |
Total other comprehensive income that will be reclassified to income before taxes | |
| |
| (17,703 | ) | |
| (14,556 | ) |
Other components of other comprehensive income (loss), before taxes | |
| |
| (32,998 | ) | |
| (20,333 | ) |
Income tax relating to other comprehensive income that will not be reclassified to income | |
| |
| | | |
| | |
Income tax relating to new measurements on defined benefit plans | |
17 | |
| 594 | | |
| 70 | |
Income tax relating to other comprehensive income that will not be reclassified to income | |
| |
| 594 | | |
| 70 | |
Income tax relating to other comprehensive income (loss) that will be reclassified to income | |
| |
| | | |
| | |
| |
| |
| | | |
| | |
Income tax related to cash flow hedges in other comprehensive income (loss) | |
17 | |
| — | | |
| (97 | ) |
Income taxes related to components of other comprehensive loss will be reclassified to income | |
| |
| — | | |
| (97 | ) |
Total Other comprehensive income | |
| |
| (32,404 | ) | |
| (20,360 | ) |
Total comprehensive income | |
| |
| 227,551 | | |
| 100,697 | |
| |
| |
| | | |
| | |
Comprehensive income attributable to owners of the parent | |
| |
| 225,898 | | |
| 101,600 | |
Comprehensive income attributable to non-controlling interests | |
| |
| 1,653 | | |
| (903 | ) |
TOTAL COMPREHENSIVE INCOME | |
| |
| 227,551 | | |
| 100,697 | |
The accompanying Notes 1 to 35 form an integral part of these interim
consolidated 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 | | |
| | |
| | |
| | |
| |
| |
Note | |
Share
capital | | |
Other
equity | | |
Treasury
shares | | |
Currency
translation
reserve | | |
Cash
flow
hedging
reserve | | |
Gains
(Losses)
from
changes in
the time
value of
the
options | | |
Actuarial
gains or
losses on
defined
benefit
plans
reserve | | |
Shares
based
payments
reserve | | |
Other
sundry
reserve | | |
Total
other
reserve | | |
Retained
earnings/
(losses) | | |
Parent’s
ownership
interest | | |
Non-
controlling
interest | | |
Total
equity | |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Equity
as of January 1, 2024 | |
| |
| 5,003,534 | | |
| 39 | | |
| — | | |
| (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 | |
Total
increase (decrease) in equity | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
income for the period | |
24 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 258,279 | | |
| 258,279 | | |
| 1,676 | | |
| 259,955 | |
Other
comprehensive income (loss) | |
| |
| — | | |
| — | | |
| — | | |
| (43,750 | ) | |
| 45,881 | | |
| (19,815 | ) | |
| (14,697 | ) | |
| — | | |
| — | | |
| (32,381 | ) | |
| — | | |
| (32,381 | ) | |
| (23 | ) | |
| (32,404 | ) |
Total
comprehensive income | |
| |
| — | | |
| — | | |
| — | | |
| (43,750 | ) | |
| 45,881 | | |
| (19,815 | ) | |
| (14,697 | ) | |
| — | | |
| — | | |
| (32,381 | ) | |
| 258,279 | | |
| 225,898 | | |
| 1,653 | | |
| 227,551 | |
Transactions
with shareholders | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Dividends | |
25 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (77,483 | ) | |
| (77,483 | ) | |
| — | | |
| (77,483 | ) |
Increase
(decrease) through transfers and other changes, equity | |
24-34 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| (289 | ) | |
| (289 | ) |
Total
transactions with shareholders | |
| |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (77,483 | ) | |
| (77,483 | ) | |
| (289 | ) | |
| (77,772 | ) |
Closing
balance as of March 31, 2024 (Unaudited) | |
| |
| 5,003,534 | | |
| 39 | | |
| — | | |
| (3,874,361 | ) | |
| 7,203 | | |
| 13,132 | | |
| (63,256 | ) | |
| 37,235 | | |
| (1,170,016 | ) | |
| (5,050,063 | ) | |
| 645,207 | | |
| 598,717 | | |
| (10,663 | ) | |
| 588,054 | |
The accompanying Notes 1 to 35 form an integral part of these interim
consolidated 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 | | |
| | |
| | |
| | |
| |
| |
| |
| | |
| | |
| | |
| | |
Cash | | |
Gains
(Losses) from changes in the time | | |
Actuarial
gains or losses on defined | | |
Shares | | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| |
| | |
| | |
| | |
Currency | | |
flow | | |
value
of | | |
benefit | | |
based | | |
Other | | |
Total | | |
Retained | | |
Parent’s | | |
Non- | | |
| |
| |
| |
Share | | |
Other | | |
Treasury | | |
translation | | |
hedging | | |
the | | |
plans | | |
payments | | |
sundry | | |
other | | |
earnings/ | | |
ownership | | |
controlling | | |
Total | |
| |
Note | |
capital | | |
equity | | |
shares | | |
reserve | | |
reserve | | |
options | | |
reserve | | |
reserve | | |
reserve | | |
reserve | | |
(losses) | | |
interest | | |
interest | | |
equity | |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Equity
as of January 1, 2023 | |
| |
| 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 | |
Total
increase (decrease) in equity | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
income/(loss) for the period | |
24 | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 121,801 | | |
| 121,801 | | |
| (744 | ) | |
| 121,057 | |
Other
comprehensive income | |
| |
| — | | |
| — | | |
| — | | |
| (5,646 | ) | |
| (30,806 | ) | |
| 21,957 | | |
| (5,706 | ) | |
| — | | |
| — | | |
| (20,201 | ) | |
| — | | |
| (20,201 | ) | |
| (159 | ) | |
| (20,360 | ) |
Total
comprehensive income | |
| |
| — | | |
| — | | |
| — | | |
| (5,646 | ) | |
| (30,806 | ) | |
| 21,957 | | |
| (5,706 | ) | |
| — | | |
| — | | |
| (20,201 | ) | |
| 121,801 | | |
| 101,600 | | |
| (903 | ) | |
| 100,697 | |
Transactions
with shareholders Increase for other Contributions from the owners | |
24 | |
| — | | |
| 4,926 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (4,076 | ) | |
| (4,076 | ) | |
| — | | |
| 850 | | |
| — | | |
| 850 | |
Increase
(decrease) Through transfers and other changes, Equity | |
24
-33 | |
| 4,926 | | |
| (4,926 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 57,129 | | |
| 57,129 | | |
| (79 | ) | |
| 57,050 | |
Total
transactions with shareholders | |
| |
| 4,926 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (4,076 | ) | |
| (4,076 | ) | |
| 57,129 | | |
| 57,979 | | |
| (79 | ) | |
| 57,900 | |
Closing
balance as of March 31, 2023 (Unaudited) | |
| |
| 13,303,412 | | |
| 39 | | |
| (178 | ) | |
| (3,811,206 | ) | |
| 5,736 | | |
| 335 | | |
| (33,823 | ) | |
| 37,235 | | |
| (1,976,727 | ) | |
| (5,778,450 | ) | |
| (7,322,966 | ) | |
| 201,857 | | |
| (12,539 | ) | |
| 189,318 | |
The accompanying Notes 1 to 35 form an integral part of these
interim consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - DIRECT
METHOD
| |
| |
For the period ended | |
| |
| |
March 31, | |
| |
Note | |
2024 | | |
2023 | |
| |
| |
ThUS$ | | |
ThUS$ | |
| |
| |
Unaudited | |
Cash flows from operating activities | |
| |
| | |
| |
Cash collection from operating activities | |
| |
| | |
| |
Proceeds from sales of goods and services | |
| |
| 3,313,955 | | |
| 3,062,687 | |
Other cash receipts from operating activities | |
| |
| 79,829 | | |
| 42,779 | |
Payments for operating activities | |
| |
| | | |
| | |
Payments to suppliers for the supply goods and services | |
34 | |
| (2,510,340 | ) | |
| (2,198,954 | ) |
Payments to and on behalf of employees | |
| |
| (344,111 | ) | |
| (363,929 | ) |
Other payments for operating activities | |
| |
| (94,536 | ) | |
| (64,261 | ) |
Income taxes (paid) | |
| |
| (22,644 | ) | |
| (5,653 | ) |
Other cash inflows (outflows) | |
34 | |
| 35,972 | | |
| (30,734 | ) |
Net cash (outflow) inflow from operating activities | |
| |
| 458,125 | | |
| 441,935 | |
Amounts raised from sale of property, plant and equipment | |
| |
| 19,966 | | |
| 42,349 | |
Purchases of property, plant and equipment | |
| |
| (102,484 | ) | |
| (97,886 | ) |
Purchases of intangible assets | |
| |
| (13,297 | ) | |
| (13,593 | ) |
Interest received | |
| |
| 37,417 | | |
| 23,273 | |
Other cash inflows (outflows) | |
34 | |
| 27,589 | | |
| 20,111 | |
Net cash (outflow) inflow from investing activities | |
| |
| (30,809 | ) | |
| (25,746 | ) |
Cash flows inflow (out flow) from financing activities | |
| |
| | | |
| | |
Loans repayments | |
34 | |
| (51,350 | ) | |
| (82,363 | ) |
Payments of lease liabilities | |
34 | |
| (86,035 | ) | |
| (56,687 | ) |
Dividends paid | |
34 | |
| (289 | ) | |
| — | |
Interest paid | |
| |
| (129,510 | ) | |
| (84,298 | ) |
Other cash (outflows) inflows | |
34 | |
| 719 | | |
| (2,946 | ) |
Net cash inflow (outflow) from financing activities | |
| |
| (266,465 | ) | |
| (226,294 | ) |
Net (decrease) increase in cash and cash equivalents before effect of exchanges rate change | |
| |
| 160,851 | | |
| 189,895 | |
Effects of variation in the exchange rate on cash and cash equivalents | |
| |
| (24,239 | ) | |
| 8,850 | |
Net (decrease) increase in cash and cash equivalents | |
| |
| 136,612 | | |
| 198,745 | |
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | |
6 | |
| 1,714,761 | | |
| 1,216,675 | |
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | |
6 | |
| 1,851,373 | | |
| 1,415,420 | |
The accompanying Notes 1 to 35 form an integral part of these interim
consolidated financial statements.
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2024 (UNAUDITED)
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 March 31, 2024, 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 45.98%, Banco de Chile on behalf of
Non-Resident Third Parties with 11.54%, Delta Air Lines with 10.05% and Qatar Airways with 10.03% ownership.
As of March 31, 2024, the Company had a total of 2,163 shareholders
in its registry. At that date, approximately 0.01% of the Company’s capital stock was in the form of ADRs.
During 2024, the Company had an average of 36,190 employees, ending
this period with a total of 36,477 collaborator, distributed in 5,178 Administration employees, 18,289 in Operations, 8,840 Cabin Crew
and 4,170 Command crew.
The main subsidiaries included in these consolidated financial statements
are as follows:
| |
| |
Country | |
Functional | |
As March 31, 2024 | | |
As December 31, 2023 | |
Tax No. | |
Company | |
of origin | |
Currency | |
Direct | | |
Indirect | | |
Total | | |
Direct | | |
Indirect | | |
Total | |
| |
| |
| |
| |
% | | |
% | | |
% | | |
% | | |
% | | |
% | |
| |
| |
| |
| |
Unaudited | | |
| | |
| | |
| |
96.969.680-0 | |
Lan Pax Group S.A. and Subsidiaries | |
Chile | |
US$ | |
| 99.9959 | | |
| 0.0041 | | |
| 100.0000 | | |
| 99.9959 | | |
| 0.0041 | | |
| 100.0000 | |
Foreign | |
Latam Airlines Perú S.A. | |
Peru | |
US$ | |
| 23.6200 | | |
| 76.1900 | | |
| 99.8100 | | |
| 23.6200 | | |
| 76.1900 | | |
| 99.8100 | |
93.383.000-4 | |
Lan Cargo S.A. | |
Chile | |
US$ | |
| 99.8940 | | |
| 0.0041 | | |
| 99.8981 | | |
| 99.8940 | | |
| 0.0041 | | |
| 99.8981 | |
76.717.244-3 | |
Prime Cargo SpA. | |
Chile | |
CLP | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
Foreign | |
Connecta Corporation | |
U.S.A. | |
US$ | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
Foreign | |
Prime Airport Services Inc. and Subsidiary | |
U.S.A. | |
US$ | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
96.951.280-7 | |
Transporte Aéreo S.A. | |
Chile | |
US$ | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
96.631.520-2 | |
Fast Air Almacenes de Carga S.A. | |
Chile | |
CLP | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
Foreign | |
Laser Cargo S.R.L. | |
Argentina | |
ARS | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
96.969.690-8 | |
Lan Cargo Inversiones S.A. and Subsidiary | |
Chile | |
US$ | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
96.575.810-0 | |
Inversiones Lan S.A. | |
Chile | |
US$ | |
| 99.9000 | | |
| 0.1000 | | |
| 100.0000 | | |
| 99.9000 | | |
| 0.1000 | | |
| 100.0000 | |
96.847.880-K | |
Technical Training LATAM S.A. | |
Chile | |
CLP | |
| 99.8300 | | |
| 0.1700 | | |
| 100.0000 | | |
| 99.8300 | | |
| 0.1700 | | |
| 100.0000 | |
Foreign | |
Latam Finance Limited | |
Cayman Island | |
US$ | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | |
Foreign | |
Peuco Finance Limited | |
Cayman Island | |
US$ | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | |
Foreign | |
Professional Airline Services INC. | |
U.S.A. | |
US$ | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | |
Foreign | |
Jarletul S.A. | |
Uruguay | |
US$ | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | | |
| 0.0000 | | |
| 100.0000 | | |
| 100.0000 | |
Foreign | |
Latam Travel S.R.L. | |
Bolivia | |
US$ | |
| 99.0000 | | |
| 1.0000 | | |
| 100.0000 | | |
| 99.0000 | | |
| 1.0000 | | |
| 100.0000 | |
76.262.894-5 | |
Latam Travel Chile II S.A. | |
Chile | |
US$ | |
| 99.9900 | | |
| 0.0100 | | |
| 100.0000 | | |
| 99.9900 | | |
| 0.0100 | | |
| 100.0000 | |
Foreign | |
Latam Travel S.A. | |
Argentina | |
ARS | |
| 94.0100 | | |
| 5.9900 | | |
| 100.0000 | | |
| 94.0100 | | |
| 5.9900 | | |
| 100.0000 | |
Foreign | |
TAM S.A. and Subsidiaries (*) | |
Brazil | |
BRL | |
| 63.0987 | | |
| 36.9013 | | |
| 100.0000 | | |
| 63.0987 | | |
| 36.9013 | | |
| 100.0000 | |
(*) | As of March 31, 2024, 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. |
| |
| |
Statement of financial position | | |
Net Income | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
For the period ended | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
At March 31, | |
| |
| |
As of March 31, 2024 | | |
As of December 31, 2023 | | |
2024 | | |
2023 | |
Tax No. | |
Company | |
Assets | | |
Liabilities | | |
Equity | | |
Assets | | |
Liabilities | | |
Equity | | |
Gain/(loss) | |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| |
Unaudited | | |
| | |
| | |
| | |
Unaudited | |
96.969.680-0 | |
Lan Pax Group S.A. and Subsidiaries (*) | |
| 391,940 | | |
| 1,793,206 | | |
| (1,046,717 | ) | |
| 487,236 | | |
| 1,835,537 | | |
| (1,000,622 | ) | |
| (53,974 | ) | |
| 44,557 | |
Foreign | |
Latam Airlines Perú S.A. | |
| 374,525 | | |
| 287,981 | | |
| 86,544 | | |
| 334,481 | | |
| 285,645 | | |
| 48,836 | | |
| 37,707 | | |
| (14,356 | ) |
93.383.000-4 | |
Lan Cargo S.A. | |
| 423,771 | | |
| 210,954 | | |
| 212,817 | | |
| 391,430 | | |
| 189,019 | | |
| 202,411 | | |
| 12,417 | | |
| (25,684 | ) |
76.717.244-3 | |
Prime Cargo SpA. | |
| 815 | | |
| — | | |
| 815 | | |
| 912 | | |
| — | | |
| 912 | | |
| — | | |
| — | |
Foreign | |
Connecta Corporation | |
| 61,795 | | |
| 6,804 | | |
| 54,991 | | |
| 64,054 | | |
| 6,790 | | |
| 57,264 | | |
| (2,273 | ) | |
| (790 | ) |
Foreign | |
Prime Airport Services Inc. and Subsidiary (*) | |
| 19,487 | | |
| 16,926 | | |
| 2,560 | | |
| 19,435 | | |
| 17,241 | | |
| 2,194 | | |
| 368 | | |
| 195 | |
96.951.280-7 | |
Transporte Aéreo S.A. | |
| 280,084 | | |
| 152,730 | | |
| 127,354 | | |
| 280,117 | | |
| 151,066 | | |
| 129,051 | | |
| (78 | ) | |
| 17,092 | |
96.631.520-2 | |
Fast Air Almacenes de Carga S.A. | |
| 12,526 | | |
| 7,931 | | |
| 4,595 | | |
| 14,255 | | |
| 10,455 | | |
| 3,800 | | |
| 1,592 | | |
| 250 | |
Foreign | |
Laser Cargo S.R.L. | |
| — | | |
| 1 | | |
| (1 | ) | |
| — | | |
| 1 | | |
| (1 | ) | |
| — | | |
| — | |
Foreign | |
Lan Cargo Overseas Limited and Subsidiaries (*) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (319 | ) |
96.969.690-8 | |
Lan Cargo Inversiones S.A. and Subsidiary (*) | |
| 198,792 | | |
| 96,816 | | |
| (58,884 | ) | |
| 166,503 | | |
| 80,502 | | |
| (71,744 | ) | |
| 15,975 | | |
| (6,202 | ) |
96.575.810-0 | |
Inversiones Lan S.A. (*) | |
| 1,196 | | |
| 47 | | |
| 1,149 | | |
| 1,238 | | |
| 50 | | |
| 1,188 | | |
| (40 | ) | |
| 33 | |
96.847.880-K | |
Technical Training LATAM S.A. | |
| 1,297 | | |
| 892 | | |
| 405 | | |
| 1,246 | | |
| 893 | | |
| 353 | | |
| 110 | | |
| 118 | |
Foreign | |
Latam Finance Limited | |
| 113 | | |
| 208,620 | | |
| (208,507 | ) | |
| 114 | | |
| 208,621 | | |
| (208,507 | ) | |
| — | | |
| — | |
Foreign | |
Professional Airline Services INC. | |
| 17,337 | | |
| 12,154 | | |
| 5,183 | | |
| 15,571 | | |
| 10,943 | | |
| 4,628 | | |
| 310 | | |
| 413 | |
Foreign | |
Jarletul S.A. | |
| 16 | | |
| 1,101 | | |
| (1,085 | ) | |
| 16 | | |
| 1,101 | | |
| (1,085 | ) | |
| — | | |
| (2 | ) |
Foreign | |
Latam Travel S.R.L. | |
| 93 | | |
| — | | |
| 93 | | |
| 92 | | |
| — | | |
| 92 | | |
| — | | |
| — | |
76.262.894-5 | |
Latam Travel Chile II S.A. | |
| 356 | | |
| 1,239 | | |
| (883 | ) | |
| 356 | | |
| 1,239 | | |
| (883 | ) | |
| — | | |
| — | |
Foreign | |
Latam Travel S.A. | |
| 3,987 | | |
| 1,301 | | |
| 2,686 | | |
| 4,547 | | |
| 1,554 | | |
| 2,993 | | |
| (3,136 | ) | |
| (1,079 | ) |
Foreign | |
TAM S.A. and Subsidiaries (*) | |
| 4,251,039 | | |
| 2,909,425 | | |
| 1,341,614 | | |
| 4,240,748 | | |
| 3,027,373 | | |
| 1,212,329 | | |
| 168,595 | | |
| 3,693 | |
(*) | 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,
2023 and March 31, 2024, are detailed below:
| (1) | Incorporation or acquisition of companies |
| - | 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. |
| - | On March 29, 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$785,865; consequently, there were no significant changes
in the shareholder composition and therefore did not generate any effect within the Consolidated Financial Statements. |
| - | On March 29, 2023, a capital increase was made in Aerovías de Integración Regional 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., 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. |
| - | 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., 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. |
| - | On March 18, 2024, a capital reduction was carried out in Inversiones Aéreas S.A. through the absorption
of accumulated losses in the sum of ThUS$175,140. As a consequence of this decrease in capital, the number of shares was reduced by 6,634,496,
without modifying the original participation of its shareholders. This transaction did not generate any effect within the Consolidated
Financial Statements. |
NOTE 2 - SUMMARY OF MATERIAL ACCOUNTING POLICIES
The following describes the principal accounting policies adopted in
the preparation of these consolidated financial statements.
These consolidated financial statements of LATAM
Airlines Group S.A. and Subsidiaries as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, have been prepared in
accordance with International Accounting Standard 34 (IAS 34), Interim Financial Reporting, as issued by the International Accounting
Standards Board.
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 2023 consolidated financial statements, except for the standards
and interpretations adopted as of January 1, 2024.
| (a) | Application of new standards for the year 2024: |
Accounting pronouncements with implementation effective from January
1, 2024:
|
Issuance Date |
|
Effective Date: |
(i) Standards and amendments |
|
|
|
|
|
|
|
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 noncurrent liabilities with covenants. |
October 2022 |
|
01/01/2024 |
|
|
|
|
Amendment to IFRS 16: Leases, on sales with leaseback. |
September 2022 |
|
01/01/2024 |
|
|
|
|
Amendments to IAS 7 “Statement of cash flows” and IFRS 7 “Financial Instruments: Information to be Disclosed” |
May 2023 |
|
01/01/2024 |
The application of these accounting standards as of January 1, 2024,
had no significant effect on the Company’s consolidated financial statements.
| (b) | Accounting pronouncements not in force for the financial
year beginning on January 1, 2024: |
|
Issuance Date |
|
Effective Date: |
(i) Standards and amendments |
|
|
|
|
|
|
|
Amendments to IAS 21: Lack of Exchangeability |
August 2023 |
|
01/01/2025 |
|
|
|
|
IFRS 18: Presentation and disclosures in the financial statements |
April 2024 |
|
01/01/2027 |
The Company’s management is evaluating
the impacts that the application of IFRS 18 Presentation and disclosures in the financial statements may have on the consolidated
financial statements. Where it is estimated that the adoption of the amendment to IAS 21 will not have significant effects on the
company’s consolidated financial statements in the year of its first adoption.
| (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”).
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).
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”. Thereafter, 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.
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.
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).
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.
| 2.2. | Basis of Consolidation |
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.
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
currency are shown in the consolidated statement of income by function except when deferred in Other comprehensive income as qualifying
cash flow hedges.
| (c) | Adjustment due to hyperinflation |
After July 1, 2018, the Argentine economy was considered, for
purposes of IFRS 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.
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) | Assets and liabilities of each consolidated statement of
financial position presented are translated at the closing exchange rate on the consolidated statement of financial position date; |
| (ii) | The revenues and expenses of each income statement account
are translated at the exchange rates prevailing on the transaction dates, and |
| (iii) | All the resultant exchange differences by conversion are
shown as a separate component in other comprehensive income, within “Gain (losses) from exchange rate difference, before tax”. |
For those subsidiaries of the group whose
functional currency is different from the presentation currency and 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.
| 2.4. | Property, plant and equipment |
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.
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.
Interest costs incurred for the construction of any qualified
asset are capitalized over the time necessary for completing and preparing the asset for its intended use. Other interest costs are recognized
in the consolidated statement of income by function when accrued.
| 2.7. | Losses for impairment of non-financial assets |
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)”.
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.
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.
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.
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.
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 this 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)”.
Embedded derivatives
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.
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.
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 and compliance with contractual agreements at the closing
date of these financial statements.
Convertible Notes
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 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. When deferred taxes arise from the initial recognition of a liability or an asset in a transaction other than a business
combination, which at the time of the transaction does not affect either the accounting result or the tax profit or loss, they are recorded.
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 March 31, 2024, 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, 2024). 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, relating to the recognition
and disclosure of deferred tax assets and liabilities related to Pillar Two income taxes.
The Company recognizes the expense for personnel vacations on an accrual
basis.
| (b) | Share-based compensation |
The compensation plans implemented based on the value of the shares
of the Company are recognized in the consolidated financial statements in accordance with IFRS 2: Share-based payments, for 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.
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.
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.
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.
| (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.
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 |
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.
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) | That
the Company initially acquired the aircraft or took an important part in the process of direct
acquisition with the manufacturers. |
| |
(b) | Due
to the contractual conditions, it is virtually certain that the Company will execute the purchase option of the aircraft at the end of
the lease term. |
Since
these financing agreements are “substantially purchases” and not leases, the related liability is considered as a financial
debt classified under IFRS 9 and continues to be presented within the “Other financial liabilities” described in Note 18.
On the other hand, the aircraft are presented in Property, Plant and Equipment, as described in Note 16, as “own aircraft”.
The
Group qualifies as sale and lease transactions, operations that lead to a sale according to IFRS 15. More specifically, a sale is considered
as such if there is no option to purchase the goods at the end of the lease term.
If
the sale by the seller-lessee is classified as a sale in accordance with IFRS 15, the underlying asset is derecognized, and a right-of-use
asset equal to the portion retained proportionally of the amount of the asset is recognized.
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.
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; and once done, recovery is requested to the lessor. At the end of the contract period, there is
comparison between the reserves that have been paid and required return conditions, and compensation between the parties are made if
applicable.
The
unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred.
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.
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.
Exposure:
For
the execution of its operations, the Company purchases a fuel called Jet Fuel grade 54 USGC, which is subject to the fluctuations of
international fuel prices.
Mitigation:
To
hedge the fuel-price risk exposure, the Company operates with derivative instruments (swaps and options) whose underlying assets may
be different from Jet Fuel, such as West Texas Intermediate (“WTI”) crude, Brent (“BRENT”) crude and distillate
Heating Oil (“HO”), which may have a high correlation with Jet Fuel and greater liquidity.
Fuel
Hedging Results:
During
the period ended March 31, 2024, the Company recognized gains of US$19.1 million for fuel hedging net of premiums in the costs of
sales for the year. During the period ended March 31, 2023, the Company recognized gains of US$0.8 million for fuel hedging net of
premiums in the costs of sales for the year.
As
of March 31, 2024, the market value of the fuel positions amounted to US$37.20 million (positive). At the end of December 2023, this
market value was US$22.1 million (positive).
The
following tables show the level of hedge for different periods:
Positions
as of March 31, 2024 (*) (Unaudited) | |
Maturities | |
| |
Q224 | | |
Q324 | | |
Q424 | | |
Q125 | | |
Total | |
Percentage
of coverage over the expected volume of consumption | |
| 32 | % | |
| 30 | % | |
| 30 | % | |
| 3 | % | |
| 24 | % |
Positions
as of December 31, 2023 (*) | |
Maturities | |
| |
Q124 | | |
Q224 | | |
Q324 | | |
Q424 | | |
Total | |
Percentage
of coverage over the expected volume of consumption | |
| 35 | % | |
| 32 | % | |
| 30 | % | |
| 22 | % | |
| 30 | % |
| (*) | The
percentage shown in the table considers all the hedging instruments (swaps and options). |
Sensitivity analysis
A
drop in fuel price positively affects the Company through a reduction in costs. However, also negatively affects contracted positions
as these are acquired to protect the Company against the risk of a rise in price. Therefore, the policy is to maintain a hedge-free percentage
in order to be competitive in the event of a drop in price.
The
current hedge positions are booked as cash flow hedge contracts, so a variation in the fuel price has an impact on the Company’s
net equity.
The
following table shows the sensitivity of financial instruments according to reasonable changes in the price of fuel and their effect
on equity.
The
calculations were made considering a parallel movement of US$ 5 per barrel in the underlying reference price curve at the end of
March 2024 and the end of December 2023. 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 2025.
Benchmark price | | |
Positions as of March 31, 2024
effect on Equity | | |
Positions as of December 31, 2023
effect on Equity | |
(US$ per barrel) | | |
(MUS$) | | |
(MUS$) | |
| | |
Unaudited | | |
| |
+5 | | |
+10.2 | | |
+10.8 | |
-5 | | |
-12.7 | | |
-10.7 | |
Given
the fuel hedging structure for the year 2024, 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$ 34.2 million lower fuel
cost. For the same period, a vertical rise of 5 dollars in the JET reference price (considered as the monthly daily average), would
have meant an approximate impact of US$ 40.2 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.
Exchange
Rate Hedging Results (FX):
As
of March 31, 2024, the Company recognized losses of US$1.4 million for FX hedging derivatives net of premiums reflected in the cost of
sale. At the end of March of 2023, the Company recognize gains for US$1.9 million for FX hedging derivatives cost of sales.
As
of March 31, 2024, the market value of hedging FX derivative positions is US$2.9 million (positive). As of December 31, 2023, the
market value of the hedging FX derivative positions was US$ 1.5 million (negative). As of March 31, 2024, the Company has current
hedging FX derivatives for US$160 million. . As of December 31, 2023, the Company holds current hedging FX derivatives of US$414
million.
Sensitivity
analysis:
A
depreciation of the R$/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) | | |
Effect on equity as of
March 31, 2024 | | |
Effect on equity as of
December 31, 2023 | |
of R$/US$ | | |
(MUS$) | | |
(MUS$) | |
| | |
Unaudited | | |
| |
-10% | | |
-11.1 | | |
-10.0 | |
+10% | | |
+11.2 | | |
+19.0 | |
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 US dollar to Brazilian reais, 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) | | |
Effect on Income Statement
for the year ended March 31, 2024 | | |
Effect on Income Statement
for the year ended March 31, 2023 | |
of R$/US$ | | |
(MUS$) | | |
(MUS$) | |
| | |
Unaudited | | |
Unaudited | |
-10% | | |
-15.1 | | |
+44.1 | |
+10% | | |
+15.1 | | |
-44.1 | |
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.
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 of 10% in the exchange rate R$/US$:
Appreciation (depreciation) | | |
Effect
at March 31, 2024 | | |
Effect
at December 31, 2023 | |
of R$/US$ | | |
MUS$ | | |
MUS$ | |
|
|
|
Unaudited |
|
|
| |
-10% | | |
+335.42 | | |
+327.01 | |
+10% | | |
-274.44 | | |
-267.56 | |
| (iii) | Interest
-rate risk: |
Exposure:
The
Company has exposure to fluctuations in interest rates affecting the 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% (50% as of December 31, 2023) of the debt has fixed rate. 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 March 31, 2024, the Company did not recognized any losses for premiums paid. As of March 31, 2023, losses of US$1.3
million (negative) were recognized corresponding to the recognition in profit for premiums paid.
As
of March 31, 2024, the Company has no interest rate derivatives outstanding, at the end of December 2023 the Company did not have interest
rate derivatives outstanding.
As
of March 31, 2024, the Company did not recognize a decrease in the right-of-use asset due to the expiration of derivatives associated
with some aircraft leases. On this same date, a lower depreciation expense of the right-of-use asset for US$ 0.5 million (positive) is
recognized. At the end of December 2023, the Company recognized US$ 0.2 million for this same concept.
As
of March 31, 2024, the Company did not settle any derivatives 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.
Increase
(decrease) | | |
Positions
as of March 31, 2024
effect on Income | | |
Positions
as of December 31, 2023
effect on Income | |
of
future curve | | |
(Loss)
before taxes | | |
(Loss)
before tax | |
SOFR
rate | | |
(MUS$) | | |
(MUS$) | |
| | |
Unaudited | | |
Unaudited | |
+100
basis points | | |
-19.99 | | |
-20.27 | |
-100
basis points | | |
+19.99 | | |
+20.27 | |
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.
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 did not record any losses for ineffectiveness in the consolidated income statement for this type of
coverage.
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 March 31, 2024 has experienced an increased by 6% compared to the balance as of December 31, 2023, mainly due to an
increase in passenger transportation operations (travel agencies and corporate) that increased by 20% in its sales, mainly affecting
the payment methods credit card 23%, and cash sales 15%. In relation to the cargo business, it presented a decrease in its
operations of 7% compared to December 2023. There was special 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 March 2024 had a decrease 8%
compared to the end of December 2023, 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.
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 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 mitigate 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.
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 March 31, 2024, the balance of liquid funds is US$1,851 million ((US$ 1,715 million as of December 31, 2023), which are invested in
short-term instruments through financial entities with a high credit rating classification.
As
of March 31, 2024, LATAM maintains 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$500 million, which are fully available. The first of these lines is secured by and subject
to the availability of certain collateral (i.e. aircraft, engines and spare parts). The second one, is secured by certain
intangibles assets of the Company, which are shared with other Chapter 11 exit financing debt.
Class
of liability for the analysis of liquidity risk ordered by date of maturity as of March 31, 2024 (Unaudited)
Debtor: LATAM Airlines Group
S.A. Tax No. 89.862.200-2 Chile.
| |
| | |
| | |
| | |
Up
to | | |
More than
90 days | | |
More than
one to | | |
More than
three to | | |
More
than | | |
| | |
| | |
| | |
Annual | |
Tax
No. | |
Creditor | | |
Creditor
country | | |
Currency | | |
90
days | | |
to one
year | | |
three
years | | |
five
years | | |
five
years | | |
Total | | |
Nominal
value | | |
Amortization | | |
Effective
rate | | |
Nominal
rate | |
| |
| | |
| | |
| | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| | |
% | | |
% | |
Bank
loans | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
0-E | |
| GOLDMAN
SACHS | | |
U.S.A. | | |
| US$ | | |
| 43,843 | | |
| 129,838 | | |
| 314,827 | | |
| 1,158,315 | | |
| — | | |
| 1,646,823 | | |
| 1,086,250 | | |
| Quarterly | | |
| 20.24 | | |
| 14.97 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Obligations
with the public | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
97.036.000-K | |
| SANTANDER | | |
Chile | | |
| UF | | |
| — | | |
| 2,912 | | |
| 5,772 | | |
| 5,772 | | |
| 164,495 | | |
| 178,951 | | |
| 144,291 | | |
| To
the expiration | | |
| 2.00 | | |
| 2.00 | |
0-E | |
| WILMINGTON
TRUST COMPANY | | |
U.S.A. | | |
| US$ | | |
| 76,906 | | |
| 76,906 | | |
| 307,625 | | |
| 697,438 | | |
| 793,625 | | |
| 1,952,500 | | |
| 1,150,000 | | |
| To
the expiration | | |
| 15.00 | | |
| 13.38 | |
97.036.000-K | |
| SANTANDER | | |
Chile | | |
| US$ | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6 | | |
| 6 | | |
| 3 | | |
| To
the expiration | | |
| 1.00 | | |
| 1.00 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Guaranteed
obligations | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| BNP
PARIBAS | | |
U.S.A. | | |
| US$ | | |
| 5,853 | | |
| 17,525 | | |
| 43,006 | | |
| 41,319 | | |
| 116,416 | | |
| 224,119 | | |
| 168,792 | | |
| Quarterly | | |
| 6.92 | | |
| 6.92 | |
0-E | |
| WILMINGTON
TRUST COMPANY | | |
U.S.A. | | |
| US$ | | |
| 5,902 | | |
| 17,142 | | |
| 42,745 | | |
| 40,781 | | |
| 47,801 | | |
| 154,371 | | |
| 127,409 | | |
| Quarterly/Monthly | | |
| 8.73 | | |
| 8.73 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other
guaranteed obligation | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| EXIM
BANK | | |
U.S.A. | | |
| US$ | | |
| 444 | | |
| 6,351 | | |
| 43,524 | | |
| 43,488 | | |
| 11,231 | | |
| 105,038 | | |
| 99,109 | | |
| Quarterly | | |
| 2.29 | | |
| 2.05 | |
0-E | |
| MUFG | | |
U.S.A. | | |
| US$ | | |
| 12,770 | | |
| 37,754 | | |
| 4,218 | | |
| — | | |
| — | | |
| 54,742 | | |
| 52,335 | | |
| Quarterly | | |
| 7.11 | | |
| 7.11 | |
0-E | |
| CREDIT
AGRICOLE | | |
France | | |
| US$ | | |
| 13,661 | | |
| 26,027 | | |
| 75,003 | | |
| 238,441 | | |
| — | | |
| 353,132 | | |
| 266,768 | | |
| To
the expiration | | |
| 9.39 | | |
| 9.39 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Financial
lease | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| NATIXIS | | |
France | | |
| US$ | | |
| 10,469 | | |
| 30,704 | | |
| 75,073 | | |
| 71,001 | | |
| 87,580 | | |
| 274,827 | | |
| 206,865 | | |
| Quarterly | | |
| 7.54 | | |
| 7.54 | |
0-E | |
| US
BANK | | |
U.S.A. | | |
| US$ | | |
| 17,193 | | |
| 42,018 | | |
| 6,573 | | |
| — | | |
| — | | |
| 65,784 | | |
| 64,524 | | |
| Quarterly | | |
| 4.51 | | |
| 3.20 | |
0-E | |
| EXIM
BANK | | |
U.S.A. | | |
| US$ | | |
| 3,193 | | |
| 42,550 | | |
| 200,756 | | |
| 143,197 | | |
| 60,588 | | |
| 450,284 | | |
| 413,072 | | |
| Quarterly | | |
| 4.12 | | |
| 3.30 | |
0-E | |
| BANK
OF UTAH | | |
U.S.A. | | |
| US$ | | |
| 5,896 | | |
| 17,724 | | |
| 47,679 | | |
| 58,688 | | |
| 107,262 | | |
| 237,249 | | |
| 170,008 | | |
| Monthly | | |
| 10.71 | | |
| 10.71 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Others
loans | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| OTHERS
(*) | | |
Chile | | |
| US$ | | |
| 99 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 99 | | |
| 99 | | |
| To
the expiration | | |
| — | | |
| — | |
| |
| TOTAL | | |
| | |
| | | |
| 196,229 | | |
| 447,451 | | |
| 1,166,801 | | |
| 2,498,440 | | |
| 1,389,004 | | |
| 5,697,925 | | |
| 3,949,525 | | |
| | | |
| | | |
| | |
(●) |
Obligation with creditors for executed letters of credit. |
Class
of liability for the analysis of liquidity risk ordered by date of maturity as of March 31, 2024 (Unaudited)
Debtor:
TAM S.A. Tax No. 02.012.862/0001-60, Brazil.
| |
| | |
| | |
| | |
Up
to | | |
More than
90 days | | |
More than
one to | | |
More than
three to | | |
More
than | | |
| | |
| | |
| | |
Annual | |
Tax
No. | |
Creditor | | |
Creditor
country | | |
Currency | | |
90
days | | |
to one
year | | |
three
years | | |
five
years | | |
five
years | | |
Total | | |
Nominal
value | | |
Amortization | | |
Effective
rate | | |
Nominal
rate | |
| |
| | |
| | |
| | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| | |
% | | |
% | |
Financial
lease | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
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 | | |
| | | |
| | | |
| | |
Class
of liability for the analysis of liquidity risk ordered by date of maturity as of March 31, 2024 (Unaudited) Debtor:
LATAM Airlines Group
S.A. Tax No. 89.862.200-2, Chile.
| |
| | |
| | |
| | |
Up
to | | |
More than
90 days | | |
More than
one to | | |
More than
three to | | |
More
than | | |
| | |
| | |
| | |
Annual | |
Tax
No. | |
Creditor | | |
Creditor
country | | |
Currency | | |
90
days | | |
to one
year | | |
three
years | | |
five
years | | |
five
years | | |
Total | | |
Nominal
value | | |
Amortization | | |
Effective
rate | | |
Nominal
rate | |
| |
| | |
| | |
| | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| | |
% | | |
% | |
Lease
Liability | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
AIRCRAFT | | |
OTHERS | | |
|
US$ | | |
|
144,478 | | |
|
436,400 | | |
|
1,154,914 | | |
|
961,011 | | |
|
1,780,072 | | |
|
4,476,875 | | |
|
3,017,820 | | |
|
— | | |
|
— | | |
|
— | |
| |
| OTHER | | |
OTHERS | | |
| US$ | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| ASSETS | | |
| | |
| | | |
| 2,532 | | |
| 7,578 | | |
| 20,101 | | |
| 20,620 | | |
| 61,531 | | |
| 112,362 | | |
| 62,149 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| CLP | | |
| 17 | | |
| 52 | | |
| 67 | | |
| — | | |
| — | | |
| 136 | | |
| 134 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| UF | | |
| 405 | | |
| 1,142 | | |
| 2,601 | | |
| 2,205 | | |
| 4,361 | | |
| 10,714 | | |
| 10,705 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| COP | | |
| 122 | | |
| 234 | | |
| 243 | | |
| 128 | | |
| — | | |
| 727 | | |
| 564 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| EUR | | |
| 30 | | |
| 84 | | |
| 120 | | |
| 16 | | |
| — | | |
| 250 | | |
| 240 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| BRL | | |
| 2,318 | | |
| 6,835 | | |
| 14,830 | | |
| 14,505 | | |
| 24,084 | | |
| 62,572 | | |
| 34,924 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| MXN | | |
| 104 | | |
| 295 | | |
| 211 | | |
| — | | |
| — | | |
| 610 | | |
| 608 | | |
| — | | |
| — | | |
| — | |
Trade
and other accounts payables | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
OTHERS | | |
OTHERS | | |
|
US$ | | |
|
990,209 | | |
|
8,117 | | |
|
— | | |
|
— | | |
|
— | | |
|
998,326 | | |
|
709,933 | | |
|
— | | |
|
— | | |
|
— | |
| |
| | | |
| | |
| CLP | | |
| 31,647 | | |
| 1,857 | | |
| — | | |
| — | | |
| — | | |
| 33,504 | | |
| 64,317 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| BRL | | |
| 296,091 | | |
| 7,282 | | |
| — | | |
| — | | |
| — | | |
| 303,373 | | |
| 409,474 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| Other
currency | | |
| 136,528 | | |
| 2,089 | | |
| — | | |
| — | | |
| — | | |
| 138,617 | | |
| 118,189 | | |
| — | | |
| — | | |
| — | |
Accounts
payable to related parties currents | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign | |
| Qatar Airways | | |
Qatar | | |
| US$ | | |
| — | | |
| 4,895 | | |
| — | | |
| — | | |
| — | | |
| 4,895 | | |
| 4,895 | | |
| — | | |
| — | | |
| — | |
Foreign | |
| Delta
Air
Lines, Inc. | | |
USA | | |
| US$ | | |
| — | | |
| 7,396 | | |
| — | | |
| — | | |
| — | | |
| 7,396 | | |
| 7,396 | | |
| — | | |
| — | | |
| — | |
| |
| Total | | |
| | |
| | | |
| 1,604,481 | | |
| 484,256 | | |
| 1,193,087 | | |
| 998,485 | | |
| 1,870,048 | | |
| 6,150,357 | | |
| 4,441,348 | | |
| | | |
| | | |
| | |
| |
| Total
consolidated | | |
| | |
| | | |
| 1,801,220 | | |
| 933,237 | | |
| 2,363,968 | | |
| 3,506,811 | | |
| 3,259,052 | | |
| 11,864,288 | | |
| 8,406,879 | | |
| | | |
| | | |
| | |
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.
| |
| | |
| | |
| | |
Up
to | | |
More than
90 days | | |
More than
one to | | |
More than
three to | | |
More
than | | |
| | |
| | |
| | |
Annual | |
Tax
No. | |
Creditor | | |
Creditor
country | | |
Currency | | |
90
days | | |
to one
year | | |
three
years | | |
five
years | | |
five
years | | |
Total | | |
Nominal
value | | |
Amortization | | |
Effective
rate | | |
Nominal
rate | |
| |
| | |
| | |
| | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| | |
% | | |
% | |
Bank
loans | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
97.023.000-9 | |
GOLDMAN
| SACHS | | |
U.S.A. | | |
| US$ | | |
| 44,721 | | |
| 127,878 | | |
| 302,953 | | |
| 1,192,355 | | |
| — | | |
| 1,667,907 | | |
| 1,089,000 | | |
| Quarterly | | |
| 20.31 | | |
| 15.04 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Obligations
with the public | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
97.030.000-7 | |
| SANTANDER | | |
Chile | | |
| UF | | |
| — | | |
| 3,230 | | |
| 6,409 | | |
| 6,409 | | |
| 182,647 | | |
| 198,695 | | |
| 160,214 | | |
| At
Expiration | | |
| 2.00 | | |
| 2.00 | |
0-E | |
| WILMINGTON
TRUST COMPANY | | |
U.S.A. | | |
| US$ | | |
| — | | |
| 153,813 | | |
| 307,625 | | |
| 697,438 | | |
| 793,625 | | |
| 1,952,501 | | |
| 1,150,000 | | |
| At
Expiration | | |
| 15.00 | | |
| 13.38 | |
97.036.000-K | |
| SANTANDER | | |
Chile | | |
| US$ | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6 | | |
| 6 | | |
| 3 | | |
| At
Expiration | | |
| 1.00 | | |
| 1.00 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Guaranteed
obligations | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| BNP
PARIBAS | | |
U.S.A. | | |
| US$ | | |
| 5,940 | | |
| 17,082 | | |
| 41,319 | | |
| 40,578 | | |
| 120,730 | | |
| 225,649 | | |
| 171,704 | | |
| Quarterly | | |
| 6.98 | | |
| 6.98 | |
0-E | |
| WILMINGTON
TRUST COMPANY | | |
U.S.A. | | |
| US$ | | |
| 5,948 | | |
| 16,928 | | |
| 42,098 | | |
| 40,736 | | |
| 54,056 | | |
| 159,766 | | |
| 132,585 | | |
| Quarterly/Monthly | | |
| 8.76 | | |
| 8.76 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other
guaranteed obligation | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| EXIM
BANK | | |
U.S.A. | | |
| US$ | | |
| 452 | | |
| 1,348 | | |
| 43,531 | | |
| 43,494 | | |
| 16,665 | | |
| 105,490 | | |
| 99,109 | | |
| Quarterly | | |
| 2.29 | | |
| 2.05 | |
0-E | |
| MUFG | | |
U.S.A. | | |
| US$ | | |
| 12,919 | | |
| 37,926 | | |
| 16,649 | | |
| — | | |
| — | | |
| 67,494 | | |
| 64,102 | | |
| Quarterly | | |
| 7.11 | | |
| 7.11 | |
0-E | |
| CREDIT
AGRICOLE | | |
France | | |
| US$ | | |
| 6,451 | | |
| 33,576 | | |
| 75,714 | | |
| 243,842 | | |
| — | | |
| 359,583 | | |
| 266,768 | | |
| At
Expiration | | |
| 9.43 | | |
| 9.43 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Financial
lease | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| NATIXIS | | |
France | | |
| US$ | | |
| 10,653 | | |
| 30,443 | | |
| 73,474 | | |
| 70,443 | | |
| 94,995 | | |
| 280,008 | | |
| 215,357 | | |
| Quarterly | | |
| 7.58 | | |
| 7.58 | |
0-E | |
| US
BANK | | |
U.S.A. | | |
| US$ | | |
| 17,984 | | |
| 50,411 | | |
| 17,681 | | |
| — | | |
| — | | |
| 86,076 | | |
| 84,177 | | |
| Quarterly | | |
| 4.41 | | |
| 3.16 | |
0-E | |
| PK AIRFINANCE | | |
U.S.A. | | |
| US$ | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| Quarterly | | |
| — | | |
| — | |
0-E | |
| EXIM BANK | | |
U.S.A. | | |
| US$ | | |
| 3,262 | | |
| 9,389 | | |
| 216,015 | | |
| 148,582 | | |
| 75,118 | | |
| 452,366 | | |
| 413,072 | | |
| Quarterly | | |
| 4.13 | | |
| 3.31 | |
0-E | |
| BANK
OF UTAH | | |
U.S.A. | | |
| US$ | | |
| 5,891 | | |
| 17,705 | | |
| 47,590 | | |
| 54,357 | | |
| 117,597 | | |
| 243,140 | | |
| 172,582 | | |
| Monthly | | |
| 10.71 | | |
| 10.71 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Others
loans | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| OTHERS
(*) | | |
Chile | | |
| US$ | | |
| 104 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 104 | | |
| 104 | | |
| At
Expiration | | |
| — | | |
| — | |
| |
| TOTAL | | |
| | |
| | | |
| 114,325 | | |
| 499,729 | | |
| 1,191,058 | | |
| 2,538,234 | | |
| 1,455,439 | | |
| 5,798,785 | | |
| 4,018,777 | | |
| | | |
| | | |
| | |
(●) |
Obligation with creditors for executed letters of credit. |
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.
| |
| | |
| | |
| | |
Up
to | | |
More than
90 days | | |
More than
one to | | |
More than
three to | | |
More
than | | |
| | |
| | |
| | |
Annual | |
Tax
No. | |
Creditor | | |
Creditor
country | | |
Currency | | |
90
days | | |
to one
year | | |
three
years | | |
five
years | | |
five
years | | |
Total | | |
Nominal
value | | |
Amortization | | |
Effective
rate | | |
Nominal
rate | |
| |
| | |
| | |
| | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| | |
% | | |
% | |
Financial
leases | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
0-E | |
| NATIXIS | | |
France | | |
| US$ | | |
| 1,020 | | |
| 1,530 | | |
| 4,080 | | |
| 9,376 | | |
| — | | |
| 16,006 | | |
| 16,006 | | |
| Semiannual/Quarterly | | |
| — | | |
| — | |
| |
| TOTAL | | |
| | |
| | | |
| 1,020 | | |
| 1,530 | | |
| 4,080 | | |
| 9,376 | | |
| — | | |
| 16,006 | | |
| 16,006 | | |
| | | |
| | | |
| | |
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.
| |
| | |
| | |
| | |
Up
to | | |
More than
90 days | | |
More than
one to | | |
More than
three to | | |
More
than | | |
| | |
| | |
| | |
Annual | |
Tax
No. | |
Creditor | | |
Creditor
country | | |
Currency | | |
90
days | | |
to one
year | | |
three
years | | |
five
years | | |
five
years | | |
Total | | |
Nominal
value | | |
Amortization | | |
Effective
rate | | |
Nominal
rate | |
| |
| | |
| | |
| | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| | |
% | | |
% | |
Lease
Liability | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
AIRCRAFT | | |
OTHERS | | |
|
US$ | | |
|
139,599 | | |
|
419,554 | | |
|
1,116,682 | | |
|
928,238 | | |
|
1,685,262 | | |
|
4,289,335 | | |
|
2,894,195 | | |
|
— | | |
|
— | | |
|
— | |
| |
| OTHER | | |
OTHERS | | |
| US$ | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| ASSETS | | |
| | |
| | | |
| 2,523 | | |
| 7,276 | | |
| 14,863 | | |
| 846 | | |
| 1,404 | | |
| 26,912 | | |
| 25,680 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| CLP | | |
| 19 | | |
| 57 | | |
| 94 | | |
| — | | |
| — | | |
| 170 | | |
| 135 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| UF | | |
| 557 | | |
| 1,255 | | |
| 2,906 | | |
| 2,426 | | |
| 5,099 | | |
| 12,243 | | |
| 11,097 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| COP | | |
| 122 | | |
| 308 | | |
| 266 | | |
| 148 | | |
| — | | |
| 844 | | |
| 667 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| EUR | | |
| 63 | | |
| 101 | | |
| 172 | | |
| 23 | | |
| — | | |
| 359 | | |
| 296 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| BRL | | |
| 2,314 | | |
| 6,871 | | |
| 15,177 | | |
| 14,438 | | |
| 25,742 | | |
| 64,542 | | |
| 35,841 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| MXN | | |
| 24 | | |
| 71 | | |
| 8 | | |
| — | | |
| — | | |
| 103 | | |
| 84 | | |
| — | | |
| — | | |
| — | |
Trade
and other accounts payables | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
OTHERS | | |
OTHERS | | |
|
US$ | | |
|
846,541 | | |
|
7,063 | | |
|
— | | |
|
— | | |
|
— | | |
|
853,604 | | |
|
709,933 | | |
|
— | | |
|
— | | |
|
— | |
| |
| | | |
| | |
| CLP | | |
| 44,593 | | |
| 8,072 | | |
| — | | |
| — | | |
| — | | |
| 52,665 | | |
| 64,317 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| BRL | | |
| 309,999 | | |
| 7,671 | | |
| — | | |
| — | | |
| — | | |
| 317,670 | | |
| 409,474 | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | |
| Other
currency | | |
| 178,740 | | |
| 5,522 | | |
| — | | |
| — | | |
| — | | |
| 184,262 | | |
| 118,189 | | |
| — | | |
| — | | |
| — | |
Accounts
payable to related parties currents | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign | |
| Qatar Airways | | |
Qatar | | |
| US$ | | |
| — | | |
| 2,312 | | |
| — | | |
| — | | |
| — | | |
| 2,312 | | |
| 2,312 | | |
| — | | |
| — | | |
| — | |
Foreign | |
| Delta
Air
Lines, Inc. | | |
USA | | |
| US$ | | |
| — | | |
| 5,132 | | |
| — | | |
| — | | |
| — | | |
| 5,132 | | |
| 5,132 | | |
| — | | |
| — | | |
| — | |
| |
| Total | | |
| | |
| | | |
| 1,525,094 | | |
| 471,265 | | |
| 1,150,168 | | |
| 946,119 | | |
| 1,717,507 | | |
| 5,810,153 | | |
| 4,277,352 | | |
| | | |
| | | |
| | |
| |
| Total
consolidated | | |
| | |
| | | |
| 1,640,439 | | |
| 972,524 | | |
| 2,345,306 | | |
| 3,493,729 | | |
| 3,172,946 | | |
| 11,624,944 | | |
| 8,312,135 | | |
| | | |
| | | |
| | |
The
Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with different financial institutions.
As
of March 31, 2024, the Company maintains guarantees for US$6.6 million corresponding to derivative transactions. The decrease 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
2023, the Company had guarantees for US $ 11 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
Company’s international credit rating is the result of its ability to meet its long-term financial commitments. As of March
31, 2024, The Company has a national scale rating of BBB with stable outlook by Fitch, a rating of BBB with stable outlook by ICR
and a rating of BBB- with stable outlook by Feller. On an international scale, it has a rating of B+ with a positive outlook by
Standard & Poor’s and a rating of B1 with a stable outlook by Moody’s.
| 3.3. | Estimates
of fair value. |
At
March 31, 2024, 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:
| - | Fuel
derivative contracts, |
| - | Currency
derivative contracts. |
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.
The
following table shows the classification of financial instruments at fair value, depending on the level of information used in the assessment:
| |
As of March 31, 2024 | | |
As of December 31, 2023 | |
| |
| | |
Fair value measurements using
values considered as | | |
| | |
Fair value measurements using
values considered as | |
| |
Fair value | | |
Level I | | |
Level II | | |
Level III | | |
Fair value | | |
Level I | | |
Level II | | |
Level III | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
| | |
| | |
| |
Assets | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Cash and cash equivalents | |
| 58,608 | | |
| 58,608 | | |
| — | | |
| — | | |
| 89,706 | | |
| 89,706 | | |
| — | | |
| — | |
Short-term mutual funds | |
| 58,608 | | |
| 58,608 | | |
| — | | |
| — | | |
| 89,706 | | |
| 89,706 | | |
| — | | |
| — | |
Other financial assets, current | |
| 40,309 | | |
| — | | |
| 40,309 | | |
| — | | |
| 22,136 | | |
| — | | |
| 22,136 | | |
| — | |
Fair value of fuel derivatives | |
| 37,177 | | |
| — | | |
| 37,177 | | |
| — | | |
| 22,136 | | |
| — | | |
| 22,136 | | |
| — | |
Fair value of foreign currency derivative | |
| 3,132 | | |
| — | | |
| 3,132 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other financial liabilities, current | |
| 247 | | |
| — | | |
| 247 | | |
| — | | |
| 1,544 | | |
| — | | |
| 1,544 | | |
| — | |
Fair value of foreign currency derivatives | |
| 247 | | |
| — | | |
| 247 | | |
| — | | |
| 1,544 | | |
| — | | |
| 1,544 | | |
| — | |
Additionally,
at March 31, 2024, 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:
| |
As of March 31, 2024 | | |
As of December 31, 2023 | |
| |
Book value | | |
Fair value | | |
Book value | | |
Fair value | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
| |
Cash and cash equivalents | |
| 1,792,765 | | |
| 1,792,765 | | |
| 1,625,055 | | |
| 1,625,055 | |
Cash on hand | |
| 3,006 | | |
| 3,006 | | |
| 2,019 | | |
| 2,019 | |
Bank balance | |
| 657,917 | | |
| 657,917 | | |
| 552,187 | | |
| 552,187 | |
Overnight | |
| 29,865 | | |
| 29,865 | | |
| 75,236 | | |
| 75,236 | |
Time deposits | |
| 1,101,977 | | |
| 1,101,977 | | |
| 995,613 | | |
| 995,613 | |
Other financial assets, current | |
| 138,016 | | |
| 138,016 | | |
| 152,683 | | |
| 152,683 | |
Other financial assets | |
| 138,016 | | |
| 138,016 | | |
| 152,683 | | |
| 152,683 | |
Trade debtors, other accounts receivable and Current accounts receivable | |
| 1,369,166 | | |
| 1,369,166 | | |
| 1,385,910 | | |
| 1,385,910 | |
Accounts receivable from entities related, current | |
| 7 | | |
| 7 | | |
| 28 | | |
| 28 | |
Other financial assets, non-current | |
| 39,260 | | |
| 39,260 | | |
| 34,485 | | |
| 34,485 | |
Accounts receivable, non-current | |
| 12,371 | | |
| 12,371 | | |
| 12,949 | | |
| 12,949 | |
Other current financial liabilities | |
| 676,391 | | |
| 905,500 | | |
| 594,519 | | |
| 867,791 | |
Accounts payable for trade and other accounts payable, current | |
| 1,742,214 | | |
| 1,742,214 | | |
| 1,765,279 | | |
| 1,765,279 | |
Accounts payable to entities related, current | |
| 12,291 | | |
| 12,291 | | |
| 7,444 | | |
| 7,444 | |
Other financial liabilities, non current | |
| 6,400,346 | | |
| 6,260,143 | | |
| 6,341,669 | | |
| 6,174,294 | |
Accounts payable, non current | |
| 435,147 | | |
| 435,147 | | |
| 418,587 | | |
| 418,587 | |
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.
| (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 March 31, 2024, deferred revenues associated with air tickets sold amount to ThUS$1,837,179 (ThUS$2,009,242 as of December 31,
2023). A hypothetical change of one percentage point in the probability of expiration of up to ThUS$9,792 per month (ThUS$10,150 as
of December 31, 2023).
| (e) | Valuation
of the miles and points awarded to the holders of the loyalty programs, pending use. |
As
of March 31, 2024, deferred revenue associated with the LATAM Pass loyalty program from Spanish-speaking countries increased to ThUS
$1,058,870 (ThUS$1,099,580 as of December 31, 2023). An hypothetical change of one percentage point in the probability of redemption
would translate into a cumulative impact of ThUS$31,965 on the results of 2024 (ThUS$as of March 31, 2023). Deferred revenue
associated with the LATAM Pass Brazil loyalty program increased to ThUS$202,806 as of March 31, 2024 (ThUS$179,151 as of December
31, 2023). An hypothetical change of one percentage point in the exchange probability would result in an accumulated impact of
ThUS$4,998 on the results of 2023 (ThUS$3,728 as of March 31, 2023).
The
company, in conjunction with an external consultant, estimates the probability of non-use based on a predictive model, according to the
redemption behaviors and validity of miles and points using significant judgments and critical assumptions which consider the historical
use activity and the expected use pattern.
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.
In
year 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.
To
determine the present value of lease payments, the Company uses the implicit rate in the contracts when it is easily determinable.
Otherwise, it uses the lessee's estimated incremental borrowing rate, which is derived from the information available at the lease
commencement date. We consider our recent debt issuances as well as publicly available data for instruments with similar
characteristics when calculating our incremental borrowing rates. A one percentage point decrease in our estimate of the rates used
in determining the current lease liabilities for the registered fleet as of March 31, 2024, would increase the lease liability by
approximately US$116 million (US$111 million as of December 31, 2023).
In
determining the lease term, all facts and circumstances that create an economic incentive to exercise an extension option are
considered. Extension options (or periods after termination options) are only included in the lease term if it is reasonably certain
that the lease will be extended (or not terminated). This is reviewed if a significant event or significant change in circumstances
occurs that affects this assessment and is within the lessee's control.
In
any case, it is possible that events that may take place in the future make it necessary to modify them in future periods, which would
be done prospectively.
NOTE
5 - SEGMENT INFORMATION
As
of March 31, 2024, the Company considers that it has a single operating segment, Air Transport. This segment corresponds to the
route network for air transport and is based on the way in which the business is managed, according to the centralized nature of its
operations, the ability to open and close routes, as well as reassignment (airplanes, crew, personnel, etc.) within the network,
which implies a functional interrelation between all of them, making them inseparable. This segment definition is one of the most
common in the worldwide airline industry.
The
Company’s revenues by geographic area are as follows:
| |
For the period ended at March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Peru | |
| 269,152 | | |
| 217,290 | |
Argentina | |
| 74,829 | | |
| 73,506 | |
U.S.A. | |
| 323,692 | | |
| 289,986 | |
Europe | |
| 244,908 | | |
| 230,860 | |
Colombia | |
| 170,625 | | |
| 133,800 | |
Brazil | |
| 1,418,423 | | |
| 1,090,692 | |
Ecuador | |
| 93,417 | | |
| 80,105 | |
Chile | |
| 501,787 | | |
| 492,877 | |
Asia Pacific and rest of Latin America | |
| 170,366 | | |
| 162,526 | |
Income from ordinary activities | |
| 3,267,199 | | |
| 2,771,642 | |
Other operating income | |
| 54,134 | | |
| 33,816 | |
The
Company allocates revenues by geographic area based on the point of sale of the passenger ticket or cargo. Assets are composed primarily
of aircraft and aeronautical equipment, which are used throughout the different countries, so it is not possible to assign a geographic
area.
The
Company has no customers that individually represent more than 10% of sales.
NOTE
6 - CASH AND CASH EQUIVALENTS
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Cash on hand | |
| 3,006 | | |
| 2,019 | |
Bank balances (1) | |
| 657,917 | | |
| 552,187 | |
Overnight | |
| 29,865 | | |
| 75,236 | |
Total Cash | |
| 690,788 | | |
| 629,442 | |
Cash equivalents | |
| | | |
| | |
Time deposits | |
| 1,101,977 | | |
| 995,613 | |
Mutual funds | |
| 58,608 | | |
| 89,706 | |
Total cash equivalents | |
| 1,160,585 | | |
| 1,085,319 | |
Total cash and cash equivalents | |
| 1,851,373 | | |
| 1,714,761 | |
| (1) | As
of March 31, 2024, within the item bank balances are ThUS$513,865 related to banks accounts that pay interest to the Company for the
daily or monthly balances (ThUS$391,966 as of December 31, 2023) |
Cash
and cash equivalents are denominated in the following currencies:
| |
As of | | |
As of | |
Currency | |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Argentine peso | |
| 4,990 | | |
| 3,438 | |
Brazilian real | |
| 452,055 | | |
| 520,796 | |
Chilean peso | |
| 27,520 | | |
| 47,933 | |
Colombian peso | |
| 29,910 | | |
| 36,326 | |
Euro | |
| 20,445 | | |
| 25,329 | |
US Dollar | |
| 1,257,907 | | |
| 1,020,467 | |
Pound Sterling | |
| 7,203 | | |
| 5,073 | |
Mexican peso | |
| 6,276 | | |
| 8,159 | |
R.P. Chinese Yuan | |
| 24,500 | | |
| 20,801 | |
Other currencies | |
| 20,567 | | |
| 26,439 | |
Total | |
| 1,851,373 | | |
| 1,714,761 | |
NOTE
7 - FINANCIAL INSTRUMENTS
Financial
instruments by category
As
of March 31, 2024 (Unaudited)
| |
Measured at | | |
At fair value with | | |
| | |
| |
| |
amortized | | |
changes | | |
Hedge | | |
| |
Assets | |
cost | | |
in results | | |
derivatives | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Cash and cash equivalents | |
| 1,792,765 | | |
| 58,608 | | |
| — | | |
| 1,851,373 | |
Other financial assets, current | |
| 138,016 | | |
| — | | |
| 40,309 | | |
| 178,325 | |
Trade and others accounts receivable, current | |
| 1,369,166 | | |
| — | | |
| — | | |
| 1,369,166 | |
Accounts receivable from related entities, current | |
| 7 | | |
| — | | |
| — | | |
| 7 | |
Other financial assets, non current | |
| 39,260 | | |
| — | | |
| — | | |
| 39,260 | |
Accounts receivable, non current | |
| 12,371 | | |
| — | | |
| — | | |
| 12,371 | |
Total | |
| 3,351,585 | | |
| 58,608 | | |
| 40,309 | | |
| 3,450,502 | |
| |
Measured at | | |
At fair value with | | |
| | |
| |
| |
amortized | | |
changes | | |
Hedge | | |
| |
Liabilities | |
cost | | |
in results | | |
derivatives | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Other financial liabilities, current | |
| 676,391 | | |
| — | | |
| 247 | | |
| 676,638 | |
Trade and others accounts payable, current | |
| 1,742,214 | | |
| — | | |
| — | | |
| 1,742,214 | |
Accounts payable to related entities, current | |
| 12,291 | | |
| — | | |
| — | | |
| 12,291 | |
Other financial liabilities, non-current | |
| 6,400,346 | | |
| — | | |
| — | | |
| 6,400,346 | |
Accounts payable, non-current | |
| 435,147 | | |
| — | | |
| — | | |
| 435,147 | |
Total | |
| 9,266,389 | | |
| — | | |
| 247 | | |
| 9,266,636 | |
As
of December 31, 2023
| |
Measured at | | |
At fair value with | | |
| | |
| |
| |
amortized | | |
changes | | |
Hedge | | |
| |
Assets | |
cost | | |
in results | | |
derivatives | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Cash and cash equivalents | |
| 1,625,055 | | |
| 89,706 | | |
| — | | |
| 1,714,761 | |
Other financial assets, current | |
| 152,683 | | |
| — | | |
| 22,136 | | |
| 174,819 | |
Trade and others accounts receivable, current | |
| 1,385,910 | | |
| — | | |
| — | | |
| 1,385,910 | |
Accounts receivable from related entities, current | |
| 28 | | |
| — | | |
| — | | |
| 28 | |
Other financial assets, non current | |
| 34,485 | | |
| — | | |
| — | | |
| 34,485 | |
Accounts receivable, non current | |
| 12,949 | | |
| — | | |
| — | | |
| 12,949 | |
Total | |
| 3,211,110 | | |
| 89,706 | | |
| 22,136 | | |
| 3,322,952 | |
| |
Measured at | | |
At fair value with | | |
| | |
| |
| |
amortized | | |
changes | | |
Hedge | | |
| |
Liabilities | |
cost | | |
in results | | |
derivatives | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Other financial liabilities, current | |
| 594,519 | | |
| — | | |
| 1,544 | | |
| 596,063 | |
Trade and others accounts payable, current | |
| 1,765,279 | | |
| — | | |
| — | | |
| 1,765,279 | |
Accounts payable to related entities, current | |
| 7,444 | | |
| — | | |
| — | | |
| 7,444 | |
Other financial liabilities, non-current | |
| 6,341,669 | | |
| — | | |
| — | | |
| 6,341,669 | |
Accounts payable, non-current | |
| 418,587 | | |
| — | | |
| — | | |
| 418,587 | |
Total | |
| 9,127,498 | | |
| — | | |
| 1,544 | | |
| 9,129,042 | |
NOTE
8 - TRADE AND OTHER ACCOUNTS RECEIVABLE CURRENT, AND NON-CURRENT ACCOUNTS RECEIVABLE
| |
As of
March 31, | | |
As of
December 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Trade accounts receivable | |
| 1,258,820 | | |
| 1,185,792 | |
Other accounts receivable | |
| 182,119 | | |
| 277,845 | |
Total trade and other accounts receivable | |
| 1,440,939 | | |
| 1,463,637 | |
Less: Expected credit loss | |
| (59,402 | ) | |
| (64,778 | ) |
Total net trade and accounts receivable | |
| 1,381,537 | | |
| 1,398,859 | |
Less: non-current portion – accounts receivable | |
| (12,371 | ) | |
| (12,949 | ) |
Trade and other accounts receivable, current | |
| 1,369,166 | | |
| 1,385,910 | |
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.
| |
As of March 31, 2024 | | |
As December 31, 2023 | |
| |
Expected | | |
Gross book | | |
Impairment loss | | |
Expected | | |
Gross book | | |
Impairment loss | |
Portfolio maturity | |
loss rate (1) | | |
value (2) | | |
Provision | | |
loss rate (1) | | |
value (2) | | |
Provision | |
| |
% | | |
ThUS$ | | |
ThUS$ | | |
% | | |
ThUS$ | | |
ThUS$ | |
| |
| | |
Unaudited | | |
| | |
| | |
| | |
| |
Up to date | |
| 1% | | |
| 1,101,148 | | |
| (13,183 | ) | |
| 1% | | |
| 1,022,845 | | |
| (12,672 | ) |
From 1 to 90 days | |
| 1% | | |
| 101,376 | | |
| (1,470 | ) | |
| 3% | | |
| 102,977 | | |
| (2,989 | ) |
From 91 to 180 days | |
| 28% | | |
| 10,219 | | |
| (2,842 | ) | |
| 25% | | |
| 8,350 | | |
| (2,048 | ) |
From 181 to 360 days | |
| 39% | | |
| 6,515 | | |
| (2,561 | ) | |
| 44% | | |
| 7,868 | | |
| (3,491 | ) |
Over 360 days | |
| 99% | | |
| 39,562 | | |
| (39,346 | ) | |
| 100% | | |
| 43,752 | | |
| (43,578 | ) |
Total | |
| | | |
| 1,258,820 | | |
| (59,402 | ) | |
| | | |
| 1,185,792 | | |
| (64,778 | ) |
(1) | Corresponds
to the consolidated expected rate of accounts receivable. |
(2) | The
gross book value represents the maximum credit risk value of trade accounts receivables. |
Currency
balances composition of Trade and other accounts receivable and non-current accounts receivable are as follow:
| |
As of
March 31, | | |
As of December 31, | |
Currency | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Argentine Peso | |
| 13,057 | | |
| 13,827 | |
Brazilian Real | |
| 923,317 | | |
| 825,749 | |
Chilean Peso | |
| 75,847 | | |
| 75,050 | |
Colombian Peso | |
| 10,669 | | |
| 12,720 | |
Euro | |
| 88,249 | | |
| 90,699 | |
US Dollar | |
| 233,528 | | |
| 344,347 | |
Australian Dollar | |
| 6,288 | | |
| 5,097 | |
Japanese Yen | |
| 3,880 | | |
| 4,695 | |
Pound Sterling | |
| 2,952 | | |
| 3,390 | |
Peruvian Sol | |
| 9,527 | | |
| 7,640 | |
Korean Won | |
| 7,428 | | |
| 5,882 | |
Other Currencies | |
| 6,795 | | |
| 9,763 | |
Total | |
| 1,381,537 | | |
| 1,398,859 | |
Movements
of the expected credit losses of Trade accounts receivables are as follows:
| |
Opening balance | | |
Write-offs | | |
(Increase) Decrease | | |
Closing balance | |
Periods | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
From January 1 to March 31, 2023 (Unaudited) | |
| (67,232 | ) | |
| 3,091 | | |
| 6 | | |
| (64,135 | ) |
From April 1 to December 31, 2023 (Unaudited) | |
| (64,135 | ) | |
| 4,031 | | |
| (4,674 | ) | |
| (64,778 | ) |
From January 1 to March 31, 2024 (Unaudited) | |
| (64,778 | ) | |
| 4,966 | | |
| 410 | | |
| (59,402 | ) |
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 March 31, 2024 (Unaudited) | | |
As of December 31, 2023 | |
| |
Gross exposure | | |
Gross | | |
Exposure net | | |
Gross exposure | | |
Gross | | |
Exposure net | |
| |
according to | | |
impaired | | |
of risk | | |
according to | | |
Impaired | | |
of risk | |
| |
balance | | |
exposure | | |
concentrations | | |
balance | | |
exposure | | |
concentrations | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Trade accounts receivable | |
| 1,258,820 | | |
| (59,402 | ) | |
| 1,199,418 | | |
| 1,185,792 | | |
| (64,778 | ) | |
| 1,121,014 | |
Other accounts receivable | |
| 182,119 | | |
| — | | |
| 182,119 | | |
| 277,845 | | |
| — | | |
| 277,845 | |
There
are no relevant guarantees covering credit risk and these are valued when they are settled; no materially significant direct guarantees
exist. Existing guarantees, if appropriate, are made through IATA.
NOTE
9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES
Tax No. | |
Related party | |
Relationship | |
Country of
origin | | |
Currency | | |
As of
March 31,
2024 | | |
As of
December 31,
2023 | |
| |
| |
| |
| | |
| | |
ThUS$ | | |
ThUS$ | |
| |
| |
| |
| | |
| | |
Unaudited | | |
| |
76.335.600-0 | |
Parque de Chile S.A. | |
Related director | |
Chile | | |
CLP | | |
| 2 | | |
| 2 | |
96.810.370-9 | |
Inversiones Costa Verde Ltda. y CPA. | |
Related director | |
Chile | | |
CLP | | |
| 5 | | |
| 25 | |
Foreign | |
Inversora Aeronáutica Argentina S.A. | |
Related director | |
Argentina | | |
ARS | | |
| — | | |
| 1 | |
| |
Total current assets | |
| |
| | |
| | |
| 7 | | |
| 28 | |
| |
| |
| |
| | |
| | |
Current liabilities | |
Tax No. | |
Related party | |
Relationship | |
Country of
origin | | |
Currency | | |
As of
March 31,
2024 | | |
As of
December 31,
2023 | |
| |
| |
| |
| | |
| | |
ThUS$ | | |
ThUS$ | |
| |
| |
| |
| | |
| | |
Unaudited | | |
| |
Foreign | |
Qatar Airways | |
Indirect shareholder | |
Qatar | | |
US$ | | |
| 4,895 | | |
| 2,312 | |
Foreign | |
Delta Air Lines, Inc. | |
Shareholder | |
U.S.A. | | |
US$ | | |
| 7,396 | | |
| 5,132 | |
| |
Total current liabilities | |
| |
| | |
| | |
| 12,291 | | |
| 7,444 | |
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 2024 correspond from 30 days to 1 year of maturity, and the nature of the
settlement of transactions are monetary.
NOTE
10 - INVENTORIES
The
composition of Inventories is as follows:
| |
As of | | |
As of | |
| |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Technical stock (*) | |
| 531,475 | | |
| 540,342 | |
Non-technical stock (**) | |
| 53,840 | | |
| 52,538 | |
Total | |
| 585,315 | | |
| 592,880 | |
(*) | 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:
| |
As of | | |
As of | |
| |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Provision for obsolescence Technical stock | |
| 50,724 | | |
| 45,621 | |
Provision for obsolescence Non-technical stock | |
| 3,541 | | |
| 5,228 | |
Total | |
| 54,265 | | |
| 50,849 | |
The
resulting amounts do not exceed the respective net realization values.
As
of March 31, 2024, the Company registered ThUS$65,247 (ThUS$47,281 for the period ended March 31, 2023), the income statements, mainly
related to on-board consumption and maintenance, which is part of the Cost of sales.
NOTE
11 - OTHER FINANCIAL ASSETS
(a) | The
composition of other financial assets is as follows: |
| |
Current Assets | | |
Non-current assets | | |
Total Assets | |
| |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
(1) Other financial assets | |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deposits in guarantee (aircraft) | |
| 29,252 | | |
| 31,624 | | |
| 14,475 | | |
| 9,736 | | |
| 43,727 | | |
| 41,360 | |
Guarantees for margins of derivatives | |
| 6,595 | | |
| 12,829 | | |
| — | | |
| — | | |
| 6,595 | | |
| 12,829 | |
Other investments | |
| — | | |
| — | | |
| 494 | | |
| 494 | | |
| 494 | | |
| 494 | |
Other guarantees given | |
| 102,169 | | |
| 108,230 | | |
| 24,291 | | |
| 24,255 | | |
| 126,460 | | |
| 132,485 | |
Subtotal of other financial assets | |
| 138,016 | | |
| 152,683 | | |
| 39,260 | | |
| 34,485 | | |
| 177,276 | | |
| 187,168 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(2) Hedging derivative asset | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Fair value of foreign currency derivatives | |
| 3,132 | | |
| — | | |
| — | | |
| — | | |
| 3,132 | | |
| — | |
Fair value of fuel price derivatives | |
| 37,177 | | |
| 22,136 | | |
| — | | |
| — | | |
| 37,177 | | |
| 22,136 | |
Subtotal of derivative assets | |
| 40,309 | | |
| 22,136 | | |
| — | | |
| — | | |
| 40,309 | | |
| 22,136 | |
Total Other Financial Assets | |
| 178,325 | | |
| 174,819 | | |
| 39,260 | | |
| 34,485 | | |
| 217,585 | | |
| 209,304 | |
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: |
| |
As of | | |
As of | |
Type of currency | |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Brazilian real | |
| 21,251 | | |
| 18,767 | |
Chilean peso | |
| 5,698 | | |
| 6,440 | |
Colombian peso | |
| 1,454 | | |
| 1,461 | |
Euro | |
| 7,265 | | |
| 7,974 | |
U.S.A dollar | |
| 179,074 | | |
| 171,852 | |
Other currencies | |
| 2,843 | | |
| 2,810 | |
Total | |
| 217,585 | | |
| 209,304 | |
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 | | |
As of | | |
As of | | |
As of | | |
As of | | |
As of | |
| |
March 31, 2024 | | |
December 31, 2023 | | |
March 31, 2024 | | |
December 31, 2023 | | |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
(a) Advance payments | |
| | |
| | |
| | |
| | |
| | |
| |
Aircraft insurance and other | |
| 20,858 | | |
| 25,992 | | |
| — | | |
| — | | |
| 20,858 | | |
| 25,992 | |
Others | |
| 3,287 | | |
| 3,740 | | |
| 4,469 | | |
| 5,740 | | |
| 7,756 | | |
| 9,480 | |
Subtotal advance payments | |
| 24,145 | | |
| 29,732 | | |
| 4,469 | | |
| 5,740 | | |
| 28,614 | | |
| 35,472 | |
(b) Contract assets (1) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
GDS costs | |
| 18,203 | | |
| 22,738 | | |
| — | | |
| — | | |
| 18,203 | | |
| 22,738 | |
Credit card commissions | |
| 34,667 | | |
| 37,200 | | |
| — | | |
| — | | |
| 34,667 | | |
| 37,200 | |
Travel agencies commissions | |
| 10,772 | | |
| 12,421 | | |
| — | | |
| — | | |
| 10,772 | | |
| 12,421 | |
Subtotal advance payments | |
| 63,642 | | |
| 72,359 | | |
| — | | |
| — | | |
| 63,642 | | |
| 72,359 | |
(c) Other assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Sales tax | |
| 92,598 | | |
| 81,785 | | |
| 10,218 | | |
| 13,753 | | |
| 102,816 | | |
| 95,538 | |
Other taxes | |
| 1,143 | | |
| 1,130 | | |
| — | | |
| — | | |
| 1,143 | | |
| 1,130 | |
Contributions to the International Aeronautical Telecommunications Society (“SITA”) | |
| 258 | | |
| 258 | | |
| 739 | | |
| 739 | | |
| 997 | | |
| 997 | |
Contributions to Aeronautical Service Companies | |
| — | | |
| — | | |
| 60 | | |
| 60 | | |
| 60 | | |
| 60 | |
Judicial deposits | |
| — | | |
| — | | |
| 145,902 | | |
| 148,329 | | |
| 145,902 | | |
| 148,329 | |
Subtotal other assets | |
| 93,999 | | |
| 83,173 | | |
| 156,919 | | |
| 162,881 | | |
| 250,918 | | |
| 246,054 | |
Total Other Non - Financial Assets | |
| 181,786 | | |
| 185,264 | | |
| 161,388 | | |
| 168,621 | | |
| 343,174 | | |
| 353,885 | |
(1)
Movement of Contracts assets:
| |
| | |
| | |
Cumulative | | |
| | |
| |
| |
| | |
| | |
translation | | |
| | |
| |
| |
Initial balance | | |
Activation | | |
adjustment | | |
Amortization | | |
Final balance | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
From January 1 to March 31, 2023 (Unaudited) | |
| 48,567 | | |
| 47,152 | | |
| (8,020 | ) | |
| (38,341 | ) | |
| 49,358 | |
From April 1 to December 31, 2023 (Unaudited) | |
| 49,358 | | |
| 195,565 | | |
| 10,052 | | |
| (182,616 | ) | |
| 72,359 | |
From January 1 to March 31, 2024 (Unaudited) | |
| 72,359 | | |
| 60,704 | | |
| (951 | ) | |
| (68,470 | ) | |
| 63,642 | |
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 March 31, 2024 and December 31, 2023, are detailed below:
| |
As of | | |
As of | |
| |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | |
Current assets | |
Unaudited | | |
| |
Aircraft | |
| 100,963 | | |
| 100,658 | |
Engines and rotables | |
| 1,900 | | |
| 2,012 | |
Other assets | |
| — | | |
| — | |
Total | |
| 102,863 | | |
| 102,670 | |
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
period.
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 $39 million, which were recorded in the result as part of Other gains (losses), in order to register
these assets at their net realizable value.
During
2022, 6 aircraft and 8 engines of the Airbus A320 family were transferred from Property, plant and equipment to Non-current assets or
asset groups for disposal classified as held for sale, and as of December 31, 2022, the sale of 3 aircrafts were finalized and as of
December 31, 2023, the sale of 2 aircraft and 8 engines were finalized. During 2022, adjustments for US$ 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.
The
detail of the fleet classified as non-current assets and disposal group classified as held for sale is as follows:
| |
| | |
As of | | |
As of | |
Aircraft | |
Model | | |
March 31,
2024 | | |
December 31,
2023 | |
| |
| | |
Unaudited | | |
| |
Boeing 767 | |
| 300F | | |
| 3 | | |
| 3 | |
Airbus A320 | |
| 200 | | |
| 7 | | |
| 7 | |
Airbus A319 | |
| 100 | | |
| 28 | | |
| 28 | |
Total | |
| | | |
| 38 | | |
| 38 | |
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:
| |
| | |
| | |
Ownership | |
Name of significant subsidiary | |
Country of
incorporation | | |
Functional
currency | | |
As of
March 31,
2024 | | |
As of
December 31,
2023 | |
| |
| | |
| | |
% | | |
% | |
| |
| | |
| | |
Unaudited | | |
| |
Latam Airlines Perú S.A. | |
Peru | | |
US$ | | |
| 99.81000 | | |
| 99.81000 | |
Lan Cargo S.A. | |
Chile | | |
US$ | | |
| 99.89810 | | |
| 99.89810 | |
Línea Aérea Carguera de Colombia S.A. | |
Colombia | | |
US$ | | |
| 90.46000 | | |
| 90.46000 | |
Transporte Aéreo S.A. | |
Chile | | |
US$ | | |
| 100.00000 | | |
| 100.00000 | |
Latam Airlines Ecuador S.A. | |
Ecuador | | |
US$ | | |
| 100.00000 | | |
| 100.00000 | |
Aerovías de Integración Regional S.A. | |
Colombia | | |
COP | | |
| 99.23168 | | |
| 99.23168 | |
TAM Linhas aéreas S.A. | |
Brazil | | |
BRL | | |
| 100.00000 | | |
| 100.00000 | |
ABSA Aerolimhas Brasileiras S.A. | |
Brazil | | |
US$ | | |
| 100.00000 | | |
| 100.00000 | |
Transportes Aéreos del Mercosur S.A. | |
Paraguay | | |
PYG | | |
| 94.98000 | | |
| 94.98000 | |
The
consolidated subsidiaries do not have significant restrictions for transferring funds to the parent company.
Summary
financial information of significant subsidiaries
| |
| | |
| | |
| | |
| | |
| | |
| | |
Statement of Income for the | |
| |
| | |
3 months period ended at | |
| |
Statement of financial position as of March 31, 2024 | | |
March 31,
2024 | |
Name of significant subsidiary | |
Total
Assets | | |
Current
Assets | | |
Non-current
Assets | | |
Total
Liabilities | | |
Current
Liabilities | | |
Non-current
Liabilities | | |
Revenue | | |
Net
Income/(loss) | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
Unaudited | |
Latam Airlines Perú S.A. | |
| 374,525 | | |
| 355,672 | | |
| 18,853 | | |
| 287,981 | | |
| 283,387 | | |
| 4,594 | | |
| 428,041 | | |
| 37,726 | |
Lan Cargo S.A. | |
| 423,771 | | |
| 125,325 | | |
| 298,446 | | |
| 210,954 | | |
| 142,742 | | |
| 68,212 | | |
| 109,184 | | |
| 12,417 | |
Línea Aérea Carguera de Colombia S.A. | |
| 198,792 | | |
| 70,791 | | |
| 128,001 | | |
| 75,948 | | |
| 75,661 | | |
| 287 | | |
| 65,747 | | |
| 15,964 | |
Transporte Aéreo S.A. | |
| 280,084 | | |
| 37,044 | | |
| 243,040 | | |
| 152,730 | | |
| 120,487 | | |
| 32,243 | | |
| 102,321 | | |
| (78 | ) |
Latam Airlines Ecuador S.A. | |
| 135,177 | | |
| 131,602 | | |
| 3,575 | | |
| 119,507 | | |
| 108,582 | | |
| 10,925 | | |
| 76,760 | | |
| (5,518 | ) |
Aerovías de Integración Regional S.A. | |
| 136,330 | | |
| 131,216 | | |
| 5,114 | | |
| 143,470 | | |
| 140,594 | | |
| 2,876 | | |
| 139,887 | | |
| (13,755 | ) |
TAM Linhas Aéreas S.A. | |
| 4,120,183 | | |
| 2,457,053 | | |
| 1,663,130 | | |
| 2,894,320 | | |
| 1,930,149 | | |
| 964,171 | | |
| 1,573,653 | | |
| 166,073 | |
ABSA Aerolinhas Brasileiras S.A. | |
| 519,627 | | |
| 509,823 | | |
| 9,804 | | |
| 560,394 | | |
| 532,994 | | |
| 27,400 | | |
| 40,553 | | |
| (1,963 | ) |
Transportes Aéreos del Mercosur S.A. | |
| 42,679 | | |
| 40,024 | | |
| 2,655 | | |
| 22,640 | | |
| 20,744 | | |
| 1,896 | | |
| 15,123 | | |
| 3,203 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
Statement of Income for the | |
| |
| | |
3 months period ended at | |
| |
Statement of financial position as of December 31, 2023 | | |
March 31,
2024 | |
Name of significant subsidiary | |
Total
Assets | | |
Current
Assets | | |
Non-current
Assets | | |
Total
Liabilities | | |
Current
Liabilities | | |
Non-current
Liabilities | | |
Revenue | | |
Net
Income/(loss) | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
Unaudited | |
Latam Airlines Perú S.A. | |
| 334,481 | | |
| 312,628 | | |
| 21,853 | | |
| 285,645 | | |
| 281,208 | | |
| 4,437 | | |
| 329,455 | | |
| (14,356 | ) |
Lan Cargo S.A. | |
| 391,430 | | |
| 122,877 | | |
| 268,553 | | |
| 189,019 | | |
| 157,003 | | |
| 32,016 | | |
| 78,329 | | |
| (25,684 | ) |
Línea Aérea Carguera de Colombia S.A. | |
| 166,520 | | |
| 57,240 | | |
| 109,280 | | |
| 59,640 | | |
| 59,344 | | |
| 296 | | |
| 49,810 | | |
| (76 | ) |
Transporte Aéreo S.A. | |
| 280,117 | | |
| 37,436 | | |
| 242,681 | | |
| 151,066 | | |
| 117,121 | | |
| 33,945 | | |
| 110,248 | | |
| 17,092 | |
Latam Airlines Ecuador S.A. | |
| 152,676 | | |
| 149,155 | | |
| 3,521 | | |
| 131,488 | | |
| 120,917 | | |
| 10,571 | | |
| 61,164 | | |
| 4,033 | |
Aerovías de Integración Regional S.A. | |
| 191,878 | | |
| 186,612 | | |
| 5,266 | | |
| 185,799 | | |
| 182,923 | | |
| 2,876 | | |
| 100,032 | | |
| (11,223 | ) |
TAM Linhas Aéreas S.A. | |
| 4,119,149 | | |
| 2,417,115 | | |
| 1,702,034 | | |
| 3,024,805 | | |
| 2,061,406 | | |
| 963,399 | | |
| 1,228,158 | | |
| 28,873 | |
ABSA Aerolinhas Brasileiras S.A. | |
| 500,177 | | |
| 490,548 | | |
| 9,629 | | |
| 538,982 | | |
| 510,978 | | |
| 28,004 | | |
| 37,756 | | |
| (25,297 | ) |
Transportes Aéreos del Mercosur S.A. | |
| 49,713 | | |
| 46,976 | | |
| 2,737 | | |
| 26,772 | | |
| 24,833 | | |
| 1,939 | | |
| 12,893 | | |
| 1,795 | |
| (b) | Non-controlling
interests |
| |
| |
Country | |
As of March
31, | | |
As of December 31, | | |
As of March
31, | | |
As of December 31, | |
Equity | |
Tax
No. | |
of
origin | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
| |
| |
% | | |
% | | |
ThUS$ | | |
ThUS$ | |
| |
| |
| |
Unaudited | | |
| | |
Unaudited | | |
| |
Latam
Airlines Perú S.A. | |
Foreign | |
Peru | |
| 0.19000 | | |
| 0.19000 | | |
| 164 | | |
| 93 | |
Aerovías
de Integración Regional S.A. | |
Foreign | |
Colombia | |
| 0.77400 | | |
| 0.77400 | | |
| (5,152 | ) | |
| (5,049 | ) |
Linea
Aérea Carguera de Colombia S.A. | |
Foreign | |
Colombia | |
| 9.54000 | | |
| 9.54000 | | |
| (6,898 | ) | |
| (8,421 | ) |
Transportes
Aéreos del Mercosur S.A. | |
Foreign | |
Paraguay | |
| 5.02000 | | |
| 5.02000 | | |
| 1,006 | | |
| 1,152 | |
Lan
Cargo S.A. and Subsidiaries | |
93.383.000-4 | |
Chile | |
| 0.10196 | | |
| 0.10196 | | |
| 217 | | |
| 198 | |
Total | |
| |
| |
| | | |
| | | |
| (10,663 | ) | |
| (12,027 | ) |
| |
| |
Country | |
For
the period ended At March 31, | | |
For
the period ended
At March 31, | |
Incomes | |
Tax
No. | |
of
origin | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
| |
| |
% | | |
% | | |
ThUS$ | | |
ThUS$ | |
| |
| |
| |
| | |
| | |
Unaudited | | |
| |
Latam
Airlines Perú S.A | |
Foreign | |
Peru | |
| 0.19000 | | |
| 0.19000 | | |
| 72 | | |
| (726 | ) |
Aerovías
de Integración Regional S.A. | |
Foreign | |
Colombia | |
| 0.77400 | | |
| 0.78236 | | |
| (106 | ) | |
| (88 | ) |
Linea
Aérea Carguera de Colombia S.A. | |
Foreign | |
Colombia | |
| 9.54000 | | |
| 9.54000 | | |
| 1,523 | | |
| — | |
Transportes
Aéreos del Mercosur S.A. | |
Foreign | |
Paraguay | |
| 5.02000 | | |
| 5.02000 | | |
| 161 | | |
| 90 | |
Lan
Cargo S.A. and Subsidiaries | |
93.383.000-4 | |
Chile | |
| 0.10196 | | |
| 0.10196 | | |
| 26 | | |
| (17 | ) |
Other
companies | |
| |
| |
| | | |
| | | |
| — | | |
| (3 | ) |
Total | |
| |
| |
| | | |
| | | |
| 1,676 | | |
| (744 | ) |
NOTE
15 - INTANGIBLE ASSETS OTHER THAN GOODWILL
The
details of intangible assets are as follows:
| |
Classes of intangible
assets | | |
Classes of intangible
assets | |
| |
(net) | | |
(gross) | |
| |
As of | | |
As of | | |
As of | | |
As of | |
| |
March
31,
2024 | | |
December 31,
2023 | | |
March
31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| |
Airport slots | |
| 638,520 | | |
| 658,949 | | |
| 638,520 | | |
| 658,949 | |
Loyalty program | |
| 212,826 | | |
| 219,636 | | |
| 212,826 | | |
| 219,636 | |
Computer software | |
| 140,789 | | |
| 156,337 | | |
| 594,308 | | |
| 597,164 | |
Developing software | |
| 131,864 | | |
| 117,010 | | |
| 131,864 | | |
| 117,010 | |
Other
assets | |
| 54 | | |
| 54 | | |
| 1,369 | | |
| 1,369 | |
Total | |
| 1,124,053 | | |
| 1,151,986 | | |
| 1,578,887 | | |
| 1,594,128 | |
| a) | Movement
in Intangible assets other than goodwill: |
| |
Computer | | |
| | |
| | |
| | |
| |
| |
software and | | |
| | |
| | |
| | |
| |
| |
others | | |
Developing | | |
Airport | | |
Loyalty | | |
| |
| |
Net | | |
software | | |
slots | | |
program
(1) | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Opening balance as January 1, 2023 | |
| 143,575 | | |
| 107,652 | | |
| 625,368 | | |
| 203,791 | | |
| 1,080,386 | |
Additions | |
| — | | |
| 8,672 | | |
| — | | |
| — | | |
| 8,672 | |
Transfer software and others | |
| 34,826 | | |
| (34,830 | ) | |
| — | | |
| — | | |
| (4 | ) |
Foreign exchange | |
| 919 | | |
| 172 | | |
| 15,877 | | |
| 5,508 | | |
| 22,476 | |
Amortization | |
| (14,447 | ) | |
| — | | |
| — | | |
| — | | |
| (14,447 | ) |
Closing balance as of March 31, 2023 (Unaudited) | |
| 164,873 | | |
| 81,666 | | |
| 641,245 | | |
| 209,299 | | |
| 1,097,083 | |
Opening balance as of April 1, 2023 (Unaudited) | |
| 164,873 | | |
| 81,666 | | |
| 641,245 | | |
| 209,299 | | |
| 1,097,083 | |
Additions | |
| 298 | | |
| 70,174 | | |
| — | | |
| — | | |
| 70,472 | |
Transfer software and others | |
| 34,384 | | |
| (35,098 | ) | |
| — | | |
| — | | |
| (714 | ) |
Foreign exchange | |
| 1,693 | | |
| 268 | | |
| 17,704 | | |
| 10,337 | | |
| 30,002 | |
Amortization | |
| (44,857 | ) | |
| — | | |
| — | | |
| — | | |
| (44,857 | ) |
Closing balance as of December
31, 2023 | |
| 156,391 | | |
| 117,010 | | |
| 658,949 | | |
| 219,636 | | |
| 1,151,986 | |
Opening balance as of January 1, 2024 | |
| 156,391 | | |
| 117,010 | | |
| 658,949 | | |
| 219,636 | | |
| 1,151,986 | |
Additions | |
| — | | |
| 16,178 | | |
| — | | |
| — | | |
| 16,178 | |
Transfer software and others | |
| 1,025 | | |
| (1,127 | ) | |
| — | | |
| — | | |
| (102 | ) |
Foreign exchange | |
| (1,052 | ) | |
| (197 | ) | |
| (20,429 | ) | |
| (6,810 | ) | |
| (28,488 | ) |
Amortization | |
| (15,521 | ) | |
| — | | |
| — | | |
| — | | |
| (15,521 | ) |
Closing balance as of March
31, 2024 (Unaudited) | |
| 140,843 | | |
| 131,864 | | |
| 638,520 | | |
| 212,826 | | |
| 1,124,053 | |
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 March 31, 2024 amounts to ThUS$454,834 (ThUS$442,142 as of December 31,
2023).
| b) | Impairment
Test Intangible Assets with an indefinite useful life |
As
of March 31, 2024, the Company maintains only the CGU “Air Transport”.
The
CGU “Air transport” considers the transport of passengers and cargo, both in the domestic markets of Chile, Peru, Argentina,
Colombia, Ecuador and Brazil, as well as in a series of regional and international routes in America, Europe, Africa and Oceania.
As
of March 31, 2024, no indications of impairment have been identified for the Air Transport CGU, which require a new impairment test to
be carried out.
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:
| |
| |
CGU | |
| |
| |
Air
transport | |
Annual growth rate (Terminal) | |
% | |
0.0 – 4.3 | |
Exchange rate | |
R$/US$ | |
5.28 – 5.57 | |
Discount
rate based on the Weighted Average Cost of Capital (WACC) | |
% | |
8.7 – 10.7 | |
Fuel Price | |
US$/barrel | |
100 | |
The
result of the impairment test, which includes a sensitivity analysis of its main variables, showed that the recoverable amount exceeded
the book value of the cash-generating unit, and therefore no impairment was identified.
The
CGU is sensitive to annual growth rates, discounts and exchange rates and fuel price. The sensitivity analysis included the individual
impact of changes in critical estimates in determining recoverable amounts, namely:
| |
Increase
WACC
Maximum | | |
Decrease rate
Terminal
growth
Minimal | | |
Increase
fuel price
Maximum
US$/barrel | |
| |
% | | |
% | | |
| |
Air Transportation
CGU | |
| 10.7 | | |
| 0 | | |
| 100 | |
In
none of the above scenarios an impairment of the cash-generating unit was identified.
NOTE
16 - PROPERTY, PLANT AND EQUIPMENT
The
composition by category of Property, plant and equipment is as follows:
| |
Gross
Book Value | | |
Accumulated
depreciation | | |
Net
Book Value | |
| |
As of | | |
As of | | |
As of | | |
As of | | |
As of | | |
As of | |
| |
March 31, | | |
December 31, | | |
March 31, | | |
December 31, | | |
March 31, | | |
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
a) Property, plant and equipment | |
| | |
| | |
| | |
| | |
| | |
| |
Construction
in progress (1) | |
| 275,171 | | |
| 258,246 | | |
| — | | |
| — | | |
| 275,171 | | |
| 258,246 | |
Land | |
| 43,606 | | |
| 44,244 | | |
| — | | |
| — | | |
| 43,606 | | |
| 44,244 | |
Buildings | |
| 127,885 | | |
| 129,036 | | |
| (61,807 | ) | |
| (61,478 | ) | |
| 66,078 | | |
| 67,558 | |
Plant
and equipment | |
| 10,853,715 | | |
| 10,738,500 | | |
| (4,670,282 | ) | |
| (4,508,356 | ) | |
| 6,183,433 | | |
| 6,230,144 | |
Own
aircraft (3) | |
| 9,956,696 | | |
| 9,856,365 | | |
| (4,414,742 | ) | |
| (4,259,729 | ) | |
| 5,541,954 | | |
| 5,596,636 | |
Other
(2) | |
| 897,019 | | |
| 882,135 | | |
| (255,540 | ) | |
| (248,627 | ) | |
| 641,479 | | |
| 633,508 | |
Machinery | |
| 28,504 | | |
| 29,092 | | |
| (27,099 | ) | |
| (27,716 | ) | |
| 1,405 | | |
| 1,376 | |
Information
technology equipment | |
| 163,002 | | |
| 163,382 | | |
| (145,830 | ) | |
| (146,040 | ) | |
| 17,172 | | |
| 17,342 | |
Fixed
installations and accessories | |
| 183,502 | | |
| 186,179 | | |
| (131,897 | ) | |
| (131,769 | ) | |
| 51,605 | | |
| 54,410 | |
Motor
vehicles | |
| 49,741 | | |
| 49,560 | | |
| (44,244 | ) | |
| (44,385 | ) | |
| 5,497 | | |
| 5,175 | |
Leasehold
improvements | |
| 263,104 | | |
| 266,631 | | |
| (55,774 | ) | |
| (53,201 | ) | |
| 207,330 | | |
| 213,430 | |
Subtotal
Properties, plant and equipment | |
| 11,988,230 | | |
| 11,864,870 | | |
| (5,136,933 | ) | |
| (4,972,945 | ) | |
| 6,851,297 | | |
| 6,891,925 | |
b)
Right of use | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Aircraft
(3) | |
| 5,334,810 | | |
| 5,388,147 | | |
| (3,052,111 | ) | |
| (3,243,065 | ) | |
| 2,282,699 | | |
| 2,145,082 | |
Other
assets | |
| 275,000 | | |
| 248,614 | | |
| (183,339 | ) | |
| (194,491 | ) | |
| 91,661 | | |
| 54,123 | |
Subtotal
Right of use | |
| 5,609,810 | | |
| 5,636,761 | | |
| (3,235,450 | ) | |
| (3,437,556 | ) | |
| 2,374,360 | | |
| 2,199,205 | |
Total | |
| 17,598,040 | | |
| 17,501,631 | | |
| (8,372,383 | ) | |
| (8,410,501 | ) | |
| 9,225,657 | | |
| 9,091,130 | |
| (1) | As
of March 31, 2024, includes advances paid to aircraft manufacturers for ThUS$247,780 (ThUS$242,069
as of December 31, 2023). |
| (2) | Consider
mainly rotables and tools. |
| (3) | There
were reclassified to Non-current assets or groups of assets for disposal as held for sale
the following aircrafts: As of December 31, 2023, 1 Boeing B767 and 6 Airbus A320 (see Note
13). |
| (a) | Movement
in the different categories of Property, plant and equipment: |
| |
| | |
| | |
| | |
Plant and | | |
Information
technology | | |
Fixed
installations & | | |
Motor | | |
Leasehold | | |
Property,
Plant and | |
| |
Construction
in progress | | |
Land | | |
Buildings
net | | |
equipment
net | | |
equipment
net | | |
accessories net | | |
vehicles
net | | |
improvements
net | | |
equipment
net | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Opening
balance as January 1, 2023 | |
| 388,810 | | |
| 44,349 | | |
| 68,996 | | |
| 6,304,848 | | |
| 16,609 | | |
| 37,072 | | |
| 423 | | |
| 160,027 | | |
| 7,021,134 | |
Additions | |
| 3,185 | | |
| — | | |
| — | | |
| 139,859 | | |
| 1,246 | | |
| — | | |
| — | | |
| 2,283 | | |
| 146,573 | |
Disposals | |
| — | | |
| — | | |
| — | | |
| (8,807 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (8,807 | ) |
Retirements | |
| — | | |
| — | | |
| — | | |
| (23,533 | ) | |
| — | | |
| (1 | ) | |
| — | | |
| — | | |
| (23,534 | ) |
Depreciation
expenses | |
| — | | |
| — | | |
| (1,024 | ) | |
| (166,070 | ) | |
| (1,402 | ) | |
| (1,852 | ) | |
| (17 | ) | |
| (2,464 | ) | |
| (172,829 | ) |
Foreign
exchange | |
| 1,131 | | |
| 535 | | |
| 375 | | |
| 7,538 | | |
| 164 | | |
| 611 | | |
| — | | |
| 3,807 | | |
| 14,161 | |
Other
increases (decreases) (*) | |
| 9,921 | | |
| — | | |
| — | | |
| 30,211 | | |
| 59 | | |
| 64 | | |
| — | | |
| 4,768 | | |
| 45,023 | |
Changes,
total | |
| 14,237 | | |
| 535 | | |
| (649 | ) | |
| (20,802 | ) | |
| 67 | | |
| (1,178 | ) | |
| (17 | ) | |
| 8,394 | | |
| 587 | |
Closing
balance as of March 31, 2023 (Unaudited) | |
| 403,047 | | |
| 44,884 | | |
| 68,347 | | |
| 6,284,046 | | |
| 16,676 | | |
| 35,894 | | |
| 406 | | |
| 168,421 | | |
| 7,021,721 | |
Opening
balance as of April 1, 2023 (Unaudited) | |
| 403,047 | | |
| 44,884 | | |
| 68,347 | | |
| 6,284,046 | | |
| 16,676 | | |
| 35,894 | | |
| 406 | | |
| 168,421 | | |
| 7,021,721 | |
Additions | |
| 5,650 | | |
| — | | |
| — | | |
| 730,781 | | |
| 4,548 | | |
| 4,246 | | |
| — | | |
| 46,583 | | |
| 791,808 | |
Disposals | |
| — | | |
| — | | |
| — | | |
| 6,106 | | |
| (1 | ) | |
| — | | |
| (16 | ) | |
| — | | |
| 6,089 | |
Retirements | |
| (83 | ) | |
| — | | |
| — | | |
| (64,119 | ) | |
| (12 | ) | |
| (1 | ) | |
| — | | |
| — | | |
| (64,215 | ) |
Depreciation
expenses | |
| — | | |
| — | | |
| (3,080 | ) | |
| (550,520 | ) | |
| (4,516 | ) | |
| (6,937 | ) | |
| (51 | ) | |
| (7,721 | ) | |
| (572,825 | ) |
Foreign
exchange | |
| (405 | ) | |
| 910 | | |
| 1,130 | | |
| 16,307 | | |
| 372 | | |
| 665 | | |
| 12 | | |
| 7,690 | | |
| 26,681 | |
Other
increases (decreases) (*) | |
| (149,963 | ) | |
| (1,550 | ) | |
| 1,161 | | |
| (186,257 | ) | |
| 275 | | |
| 20,543 | | |
| — | | |
| (1,543 | ) | |
| (317,334 | ) |
Changes,
total | |
| (144,801 | ) | |
| (640 | ) | |
| (789 | ) | |
| (47,702 | ) | |
| 666 | | |
| 18,516 | | |
| (55 | ) | |
| 45,009 | | |
| (129,796 | ) |
Closing
balance as of December 31, 2023 | |
| 258,246 | | |
| 44,244 | | |
| 67,558 | | |
| 6,236,344 | | |
| 17,342 | | |
| 54,410 | | |
| 351 | | |
| 213,430 | | |
| 6,891,925 | |
Opening
balance as of January 1, 2024 | |
| 258,246 | | |
| 44,244 | | |
| 67,558 | | |
| 6,236,344 | | |
| 17,342 | | |
| 54,410 | | |
| 351 | | |
| 213,430 | | |
| 6,891,925 | |
Additions | |
| 1,977 | | |
| — | | |
| — | | |
| 187,933 | | |
| 1,575 | | |
| 143 | | |
| — | | |
| 119 | | |
| 191,747 | |
Disposals | |
| — | | |
| — | | |
| — | | |
| (4 | ) | |
| (8 | ) | |
| — | | |
| — | | |
| — | | |
| (12 | ) |
Retirements | |
| — | | |
| — | | |
| — | | |
| (10,452 | ) | |
| — | | |
| (5 | ) | |
| — | | |
| — | | |
| (10,457 | ) |
Depreciation
expenses | |
| — | | |
| — | | |
| (1,019 | ) | |
| (183,457 | ) | |
| (1,458 | ) | |
| (2,247 | ) | |
| (16 | ) | |
| (2,730 | ) | |
| (190,927 | ) |
Foreign
exchange | |
| (287 | ) | |
| (638 | ) | |
| (461 | ) | |
| (13,641 | ) | |
| (221 | ) | |
| (1,831 | ) | |
| — | | |
| (5,551 | ) | |
| (22,630 | ) |
Other
increases (decreases) | |
| 15,235 | | |
| — | | |
| — | | |
| (26,723 | ) | |
| (58 | ) | |
| 1,135 | | |
| — | | |
| 2,062 | | |
| (8,349 | ) |
Changes,
total | |
| 16,925 | | |
| (638 | ) | |
| (1,480 | ) | |
| (46,344 | ) | |
| (170 | ) | |
| (2,805 | ) | |
| (16 | ) | |
| (6,100 | ) | |
| (40,628 | ) |
Closing
balance as of March 31, 2024 (Unaudited) | |
| 275,171 | | |
| 43,606 | | |
| 66,078 | | |
| 6,190,000 | | |
| 17,172 | | |
| 51,605 | | |
| 335 | | |
| 207,330 | | |
| 6,851,297 | |
| (*) | 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, 1 Boeing B767 ThUS$(21,578) and 6
Airbus A320 ThUS$(36,326). |
| |
| | |
| | |
Net right | |
| |
| | |
| | |
of use | |
| |
Aircraft | | |
Others | | |
assets | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Opening balance
as January 1, 2023 | |
| 1,326,821 | | |
| 63,706 | | |
| 1,390,527 | |
Additions | |
| — | | |
| 1,099 | | |
| 1,099 | |
Depreciation
expense | |
| (37,800 | ) | |
| (4,029 | ) | |
| (41,829 | ) |
Cumulative
translate adjustment | |
| 23 | | |
| 623 | | |
| 646 | |
Other
increases (decreases) | |
| (15,792 | ) | |
| (2,094 | ) | |
| (17,886 | ) |
Total
changes | |
| (53,569 | ) | |
| (4,401 | ) | |
| (57,970 | ) |
Closing balance as of March 31, 2023 (Unaudited) | |
| 1,273,252 | | |
| 59,305 | | |
| 1,332,557 | |
Opening balance as of
April 1, 2023 (Unaudited) | |
| 1,273,252 | | |
| 59,305 | | |
| 1,332,557 | |
Additions | |
| 1,013,314 | | |
| 1,889 | | |
| 1,015,203 | |
Depreciation
expense | |
| (140,770 | ) | |
| (10,787 | ) | |
| (151,557 | ) |
Cumulative
translate adjustment | |
| 33 | | |
| 2,728 | | |
| 2,761 | |
Other
increases (decreases) | |
| (747 | ) | |
| 988 | | |
| 241 | |
Total
changes | |
| 871,830 | | |
| (5,182 | ) | |
| 866,648 | |
Closing balance as of December
31, 2023 | |
| 2,145,082 | | |
| 54,123 | | |
| 2,199,205 | |
Opening balance as of
January 1, 2024 | |
| 2,145,082 | | |
| 54,123 | | |
| 2,199,205 | |
Additions | |
| 121,003 | | |
| 556 | | |
| 121,559 | |
Depreciation
expense | |
| (61,789 | ) | |
| (2,778 | ) | |
| (64,567 | ) |
Cumulative
translate adjustment | |
| (6 | ) | |
| (774 | ) | |
| (780 | ) |
Other
increases (decreases) | |
| 78,409 | | |
| 40,534 | | |
| 118,943 | |
Total
changes | |
| 137,617 | | |
| 37,538 | | |
| 175,155 | |
Closing balance as of March
31, 2024 (Unaudited) | |
| 2,282,699 | | |
| 91,661 | | |
| 2,374,360 | |
| |
| |
Aircraft included | | |
Aircraft included | | |
| |
| |
| |
in
Property, plant and equipment | | |
as
Rights of use assets | | |
Total
fleet | |
| |
| |
As of | | |
As of | | |
As of | | |
As of | | |
As of | | |
As of | |
Aircraft | |
Model | |
March
31, 2024 | | |
December 31,
2023 | | |
March
31, 2024 | | |
December 31,
2023 | | |
March
31, 2024 | | |
December 31,
2023 | |
| |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Boeing 767 | |
300ER | |
| 11 | (3) | |
| 11 | (3) | |
| — | | |
| — | | |
| 11 | | |
| 11 | |
Boeing 767 | |
300F | |
| 16 | (2) (3) | |
| 16 | (2) (3) | |
| 1 | | |
| 1 | | |
| 17 | | |
| 17 | |
Boeing 777 | |
300ER | |
| 4 | | |
| 4 | | |
| 6 | | |
| 6 | | |
| 10 | | |
| 10 | |
Boeing 787 | |
8 | |
| 4 | | |
| 4 | | |
| 6 | | |
| 6 | | |
| 10 | | |
| 10 | |
Boeing 787 | |
9 | |
| 2 | | |
| 2 | | |
| 25 | | |
| 24 | | |
| 27 | | |
| 26 | |
Airbus A319 | |
100 | |
| 11 | (2) | |
| 11 | | |
| 1 | | |
| 1 | | |
| 12 | | |
| 12 | |
Airbus A320 | |
200 | |
| 85 | (2) | |
| 83 | (2) | |
| 44 | | |
| 46 | (1) | |
| 129 | | |
| 129 | |
Airbus A320 | |
NEO | |
| 1 | | |
| 1 | | |
| 23 | | |
| 23 | | |
| 24 | | |
| 24 | |
Airbus A321 | |
200 | |
| 19 | | |
| 19 | | |
| 30 | | |
| 30 | | |
| 49 | | |
| 49 | |
Airbus
A321 | |
NEO | |
| — | | |
| — | | |
| 9 | | |
| 7 | | |
| 9 | | |
| 7 | |
Total | |
| |
| 153 | | |
| 151 | | |
| 145 | | |
| 144 | | |
| 298 | | |
| 295 | |
| (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. |
| (d) | Method
used for the depreciation of Property, plant and equipment: |
| |
| |
Useful
life (years) | |
| |
Depreciation
method | |
minimum | | |
maximum | |
Buildings | |
Straight line
without residual value | |
| 20 | | |
| 50 | |
Plant
and equipment | |
Straight line with residual
value of 20% in the short-haul fleet and 36% in the long-haul fleet. (*) | |
| 5 | | |
| 30 | |
Information technology equipment | |
Straight line without residual
value | |
| 5 | | |
| 10 | |
Fixed installations and accessories | |
Straight line without residual
value | |
| 10 | | |
| 10 | |
Motor vehicle | |
Straight line without residual
value | |
| 10 | | |
| 10 | |
Leasehold improvements | |
Straight line without residual
value | |
| 5 | | |
| 8 | |
Assets for rights of use | |
Straight line without residual
value | |
| 1 | | |
| 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) | Additional
information regarding Property, plant and equipment: |
| (i) | Property,
plant and equipment pledged as guarantee: |
Description
of Property, plant and equipment pledged as guarantee:
| |
| |
| |
| |
As
of March 31, 2024 | | |
As
of December 31, 2023 | |
Guarantee
agent (1) | |
Creditor
company | |
Committed
Assets | |
Fleet | |
Existing
Debt | | |
Book
Value | | |
Existing
Debt | | |
Book
Value | |
| |
| |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| |
| |
| |
Unaudited | | |
| | |
| |
Wilmington
Trust Company | |
MUFG | |
Aircraft and engines | |
Airbus A319 | |
| 2,227 | | |
| 12,018 | | |
| 2,703 | | |
| 12,326 | |
| |
| |
| |
Airbus A320 | |
| 9,397 | | |
| 119,414 | | |
| 17,441 | | |
| 151,873 | |
| |
| |
| |
Boeing 767 | |
| 16,664 | | |
| 139,125 | | |
| 20,427 | | |
| 143,281 | |
| |
| |
| |
Boeing 777 | |
| 127,409 | | |
| 141,784 | | |
| 132,585 | | |
| 144,186 | |
| |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
Credit
Agricole | |
Credit Agricole | |
Aircraft and engines | |
Airbus A319 | |
| 3,413 | | |
| 3,375 | | |
| 3,413 | | |
| 3,752 | |
| |
| |
| |
Airbus A320 | |
| 190,001 | | |
| 136,506 | | |
| 190,001 | | |
| 142,075 | |
| |
| |
| |
Airbus A321 | |
| 6,007 | | |
| 4,280 | | |
| 6,007 | | |
| 4,393 | |
| |
| |
| |
Boeing 767 | |
| 8,849 | | |
| 22,038 | | |
| 8,849 | | |
| 23,018 | |
| |
| |
| |
Boeing 787 | |
| 58,499 | | |
| 38,147 | | |
| 58,499 | | |
| 38,971 | |
| |
| |
| |
| |
| | | |
| | | |
| | | |
| | |
Bank
Of Utah | |
BNP
Paribas | |
Aircraft
and engines | |
Boeing 787 | |
| 168,792 | | |
| 205,503 | | |
| 171,704 | | |
| 208,601 | |
Total
direct guarantee | |
| |
| |
| |
| 591,258 | | |
| 822,190 | | |
| 611,629 | | |
| 872,476 | |
| 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 March 31, 2024,
amounts to ThUS$873,017 (ThUS$898,166 as of December 31, 2023). The book value of the assets with indirect guarantees as of March 31,
2024, amounts to ThUS$1,910,744 (ThUS$1,925,069 as of December 31, 2023).
As
of March 31, 2024, the Company keeps valid letters of credit related to right of use assets according to the following detail:
Creditor
Guarantee | |
Debtor | |
Type | |
Value
ThUS$ | | |
Release
date |
GE
Capital Aviation Services Ltd. | |
LATAM
Airlines Group S.A. | |
Three letters
of credit | |
| 5,544 | | |
Dec 6, 2024 |
Empreendimentos
Imobiliarios LTDA | |
Tam
Linhas Aéreas S.A. | |
One
letter of credit | |
| 25,820 | | |
Apr
29, 2024 |
| |
| |
| |
| 31,364 | | |
|
| (ii) | Commitments
and others |
Fully
depreciated assets and commitments for future purchases are as follows:
| |
As of | | |
As of | |
| |
March
31, 2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Gross book value
of fully depreciated property, plant and equipment still in use | |
| 290,948 | | |
| 288,454 | |
Commitments for the acquisition
of aircraft (*) | |
| 15,700,000 | | |
| 15,700,000 | |
| (*) | According
to the manufacturer’s price list. |
Aircraft
purchase commitments:
| |
Year
of delivery | |
Manufacturer | |
2024 | | |
2025 | | |
2026 | | |
2027-2030 | | |
Total | |
Airbus S.A.S. | |
| | |
| | |
| | |
| | |
| |
A320neo
Family | |
| 3 | | |
| 11 | | |
| 9 | | |
| 65 | | |
| 88 | |
The Boeing Company | |
| | | |
| | | |
| | | |
| | | |
| | |
Boeing
787-9 | |
| - | | |
| - | | |
| - | | |
| 5 | | |
| 5 | |
Total | |
| 3 | | |
| 11 | | |
| 9 | | |
| 70 | | |
| 93 | |
As
of March 31, 2024, 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 March 31, 2024, 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$1,900,000.
The
delivery dates of some of these aircraft could be modified as a result of the continuous discussions that are held with suppliers in
the context of the current manufacturers’ supply chain.
Aircraft
operational lease commitments:
As
of March 31, 2024, as a result of the different aircraft operating lease contracts signed with AerCap Holdings N.V., 3 Airbus aircraft
of the Airbus A320neo family with delivery between 2024 and 4 Boeing 787 Dreamliner aircraft with delivery dates within 2025 remain to
be received.
As
of March 31, 2024, as a result of the different aircraft operating lease contracts signed with Air Lease Corporative , 1 Airbus aircraft
of the A320neo family with delivery dates within 2024 remain to be received.
As
of March 31, 2024, as a result of the different aircraft operating lease contracts signed with Avolon Aerospace Leasing Limited, 1 Airbus
aircraft of the A320neo family with delivery date within 2024 remain to be received.
As
of March 31, 2024, as a result of the different aircraft operating lease contracts signed with Air Lease Corporation, 5 Airbus A321XLR
family aircraft with delivery dates between 2026 and 2027 remain to be received.
| (iii) | Capitalized
interest costs with respect to Property, plant and equipment. |
| |
| |
For
the period ended At March 31, | |
| |
| |
2024 | | |
2023 | |
| |
| |
Unaudited | |
Average rate of
capitalization of capitalized interest costs | |
% | |
| 10.73 | | |
| 8.45 | |
Costs of capitalized interest | |
ThUS$ | |
| 5,635 | | |
| 6,268 | |
NOTE
17 - CURRENT AND DEFERRED TAXES
In
the year ended March 31, 2024, 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.1)
The composition of the current tax assets is the following:
| |
Current
assets | | |
Non-current
assets | | |
Total
assets | |
| |
As of | | |
As of | | |
As of | | |
As of | | |
As of | | |
As of | |
| |
March
31,
2024 | | |
December 31,
2023 | | |
March
31,
2024 | | |
December 31,
2023 | | |
March
31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Provisional
monthly payments (advances) | |
| 41,439 | | |
| 18,982 | | |
| — | | |
| — | | |
| 41,439 | | |
| 18,982 | |
Other
recoverable credits | |
| 25,837 | | |
| 28,048 | | |
| — | | |
| — | | |
| 25,837 | | |
| 28,048 | |
Total
current tax assets | |
| 67,276 | | |
| 47,030 | | |
| — | | |
| — | | |
| 67,276 | | |
| 47,030 | |
(a.2)
The composition of the current tax liabilities are as follows:
| |
Current
liabilities | | |
Non-current
liabilities | | |
Total
liabilities | |
| |
As of | | |
As of | | |
As of | | |
As of | | |
As of | | |
As of | |
| |
March
31, 2024 | | |
December 31,
2023 | | |
March
31, 2024 | | |
December 31,
2023 | | |
March
31, 2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Income
tax provision | |
| 2,658 | | |
| 2,371 | | |
| — | | |
| — | | |
| 2,658 | | |
| 2,371 | |
Total
current tax liabilities | |
| 2,658 | | |
| 2,371 | | |
| — | | |
| — | | |
| 2,658 | | |
| 2,371 | |
The
balances of deferred tax are the following:
| |
Assets | | |
Liabilities | |
| |
As of | | |
As of | | |
As of | | |
As of | |
Concept | |
March 31, 2024 | | |
December 31, 2023 | | |
March 31, 2024 | | |
December 31, 2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| |
Properties, Plants and equipment | |
| (911,318 | ) | |
| (941,136 | ) | |
| 71,474 | | |
| 70,745 | |
Assets by right of use | |
| (629,100 | ) | |
| (585,957 | ) | |
| 38 | | |
| 54 | |
Lease Liabilities | |
| 835,482 | | |
| 792,781 | | |
| (33 | ) | |
| (74 | ) |
Amortization | |
| (111,321 | ) | |
| (112,002 | ) | |
| — | | |
| 10 | |
Provisions | |
| 182,354 | | |
| 222,409 | | |
| 80,887 | | |
| 81,091 | |
Revaluation of financial instruments | |
| 4,844 | | |
| (889 | ) | |
| — | | |
| — | |
Tax losses | |
| 617,497 | | |
| 613,264 | | |
| (87,107 | ) | |
| (86,320 | ) |
Intangibles | |
| — | | |
| — | | |
| 291,055 | | |
| 300,359 | |
Other | |
| 15,936 | | |
| 16,312 | | |
| 16,134 | | |
| 16,494 | |
Total | |
| 4,374 | | |
| 4,782 | | |
| 372,448 | | |
| 382,359 | |
The
balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed in the long term.
Movements
of Deferred tax assets and liabilities
(b.1)
From January 1 to March 31, 2023 (Unaudited)
| |
Opening
balance | | |
Recognized in | | |
Recognized in | | |
Exchange | | |
Ending | |
| |
Assets/ | | |
consolidated | | |
comprehensive | | |
rate | | |
balance | |
| |
(liabilities) | | |
income | | |
income | | |
variation | | |
Asset (liability) | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Property, plant
and equipment | |
| (1,088,140 | ) | |
| 11,142 | | |
| — | | |
| — | | |
| (1,076,998 | ) |
Assets for right of use | |
| (367,182 | ) | |
| 15,553 | | |
| — | | |
| — | | |
| (351,629 | ) |
Lease Liabilities | |
| 586,993 | | |
| (10,945 | ) | |
| — | | |
| — | | |
| 576,048 | |
Amortization | |
| (88,182 | ) | |
| 1,162 | | |
| — | | |
| — | | |
| (87,020 | ) |
Provisions | |
| (60,386 | ) | |
| 14,106 | | |
| 70 | | |
| — | | |
| (46,210 | ) |
Revaluation of financial instruments | |
| 2,438 | | |
| (2,343 | ) | |
| (97 | ) | |
| — | | |
| (2 | ) |
Tax losses (*) | |
| 946,659 | | |
| (35,535 | ) | |
| — | | |
| — | | |
| 911,124 | |
Intangibles | |
| (270,512 | ) | |
| (436 | ) | |
| — | | |
| (6,988 | ) | |
| (277,936 | ) |
Others | |
| (398 | ) | |
| 38 | | |
| — | | |
| — | | |
| (360 | ) |
Total | |
| (338,710 | ) | |
| (7,258 | ) | |
| (27 | ) | |
| (6,988 | ) | |
| (352,983 | ) |
(b.2)
From April 1 to December 31, 2023 (Unaudited)
| |
Opening
balance | | |
Recognized in | | |
Recognized in | | |
Exchange | | |
Ending | |
| |
Assets/ | | |
consolidated | | |
comprehensive | | |
rate | | |
balance | |
| |
(liabilities) | | |
income | | |
income | | |
variation | | |
Asset (liability) | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Property, plant
and equipment | |
| (1,076,998 | ) | |
| 65,117 | | |
| — | | |
| — | | |
| (1,011,881 | ) |
Assets for right of use | |
| (351,629 | ) | |
| (234,382 | ) | |
| — | | |
| — | | |
| (586,011 | ) |
Lease Liabilities | |
| 576,048 | | |
| 216,807 | | |
| — | | |
| — | | |
| 792,855 | |
Amortization | |
| (87,020 | ) | |
| (24,992 | ) | |
| — | | |
| — | | |
| (112,012 | ) |
Provisions | |
| (46,210 | ) | |
| 186,847 | | |
| 681 | | |
| — | | |
| 141,318 | |
Revaluation of financial instruments | |
| (2 | ) | |
| (4,588 | ) | |
| 3,701 | | |
| — | | |
| (889 | ) |
Tax losses (*) | |
| 911,124 | | |
| (211,540 | ) | |
| — | | |
| — | | |
| 699,584 | |
Intangibles | |
| (277,936 | ) | |
| (5,771 | ) | |
| — | | |
| (16,652 | ) | |
| (300,359 | ) |
Others | |
| (360 | ) | |
| 178 | | |
| — | | |
| — | | |
| (182 | ) |
Total | |
| (352,983 | ) | |
| (12,324 | ) | |
| 4,382 | | |
| (16,652 | ) | |
| (377,577 | ) |
(b.3)
From January 1 to March 31, 2024 (Unaudited)
| |
Opening
balance | | |
Recognized in | | |
Recognized in | | |
Exchange | | |
Ending | |
| |
Assets/ | | |
consolidated | | |
comprehensive | | |
rate | | |
balance | |
| |
(liabilities) | | |
income | | |
income | | |
variation | | |
Asset (liability) | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Property, plant
and equipment | |
| (1,011,881 | ) | |
| 29,089 | | |
| — | | |
| — | | |
| (982,792 | ) |
Assets for right of use | |
| (586,011 | ) | |
| (43,127 | ) | |
| — | | |
| — | | |
| (629,138 | ) |
Lease Liabilities | |
| 792,855 | | |
| 42,660 | | |
| — | | |
| — | | |
| 835,515 | |
Amortization | |
| (112,012 | ) | |
| 691 | | |
| — | | |
| — | | |
| (111,321 | ) |
Provisions | |
| 141,318 | | |
| (40,445 | ) | |
| 594 | | |
| — | | |
| 101,467 | |
Revaluation of financial instruments | |
| (889 | ) | |
| 5,733 | | |
| — | | |
| — | | |
| 4,844 | |
Tax losses (*) | |
| 699,584 | | |
| 5,020 | | |
| — | | |
| — | | |
| 704,604 | |
Intangibles | |
| (300,359 | ) | |
| 146 | | |
| — | | |
| 9,158 | | |
| (291,055 | ) |
Others | |
| (182 | ) | |
| (16 | ) | |
| — | | |
| — | | |
| (198 | ) |
Total | |
| (377,577 | ) | |
| (249 | ) | |
| 594 | | |
| 9,158 | | |
| (368,074 | ) |
| (*) | 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$3,483,065 at March 31, 2024 (ThUS$3,572,528 as of December 31, 2023) which
include deferred tax assets related to negative tax results of ThUS$12,097,966 at March 31, 2024 (ThUS$12,206,634 at December 31, 2023).
(Expenses)
/ Income from deferred taxes and income tax:
| |
For
the period ended
at March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Current tax (expense)
benefit | |
| (14,894 | ) | |
| 14,137 | |
Adjustments
to the current tax of the previous year | |
| — | | |
| — | |
Total
current tax (expense) benefit | |
| (14,894 | ) | |
| 14,137 | |
(Expense)/benefit for deferred
tax recognition for tax losses | |
| — | | |
| — | |
Deferred income for relative
taxes to the creation and reversal of temporary differences | |
| (249 | ) | |
| (7,258 | ) |
Total
deferred income tax | |
| (249 | ) | |
| (7,258 | ) |
Income
tax (expense)/benefit | |
| (15,143 | ) | |
| 6,879 | |
Income
tax (expense) / Income benefit:
| |
For
the period ended
at March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Current tax (expense)
benefit, foreign | |
| (14,322 | ) | |
| 14,393 | |
Current
tax (expense) benefit, domestic | |
| (572 | ) | |
| (256 | ) |
Total
current tax (expense) benefit | |
| (14,894 | ) | |
| 14,137 | |
Foreign
Deferred tax (expense) benefit, for tax losses compensation | |
| — | | |
| — | |
Deferred tax (expense) benefit,
foreign | |
| (215 | ) | |
| (1,040 | ) |
Deferred
tax (expense) benefit, domestic | |
| (34 | ) | |
| (6,218 | ) |
Total
deferred tax (expense) benefit | |
| (249 | ) | |
| (7,258 | ) |
Income
tax (expense)/benefit | |
| (15,143 | ) | |
| 6,879 | |
Income
before tax from the Chilean legal tax rate (27% as of March 31, 2024 and 2023)
| |
For the 3 months
period ended | | |
For the 3 months
period ended | |
| |
At
March 31, | | |
At
March 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
% | | |
% | |
| |
Unaudited | |
Income
tax benefit/(expense) using the legal tax rate | |
| (74,276 | ) | |
| (30,828 | ) | |
| (27.00 | ) | |
| (27.00 | ) |
Tax
effect by change in tax rate | |
| — | | |
| — | | |
| — | | |
| — | |
Tax
effect of rates in other jurisdictions | |
| (13,318 | ) | |
| 1,762 | | |
| (4.84 | ) | |
| 1.54 | |
Tax
effect of non-taxable income | |
| 10,261 | | |
| 1,564 | | |
| 3.73 | | |
| 1.37 | |
Tax
effect of disallowable expenses | |
| (8,201 | ) | |
| (1,670 | ) | |
| (2.98 | ) | |
| (1.46 | ) |
Other
increases (decreases): | |
| | | |
| | | |
| | | |
| | |
Derecognition
of deferred tax liabilities for early termination of aircraft financing | |
| 10,179 | | |
| 13,608 | | |
| 3.70 | | |
| 11.92 | |
Derecognition
of deferred tax assets not recoverable | |
| — | | |
| — | | |
| — | | |
| — | |
Deferred
tax asset not recognized | |
| 67,789 | | |
| 22,141 | | |
| 24.64 | | |
| 19.39 | |
Other
increases (decreases) | |
| (7,577 | ) | |
| 302 | | |
| (2.75 | ) | |
| 0.26 | |
Total
adjustments to tax expense using the legal rate | |
| 59,133 | | |
| 37,707 | | |
| 21.50 | | |
| 33.02 | |
Income
tax benefit/(expense) using the effective rate | |
| (15,143 | ) | |
| 6,879 | | |
| (5.50 | ) | |
| 6.02 | |
Deferred
taxes related to items charged to equity:
| |
For
the 3 months
period ended
At March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Aggregate deferred
taxation of components of other comprehensive income | |
| 594 | | |
| (27 | ) |
NOTE
18 - OTHER FINANCIAL LIABILITIES
The
composition of other financial liabilities is as follows:
| |
As of | | |
As of | |
| |
March
31, 2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Current | |
| | |
| |
(a)
Interest bearing loans | |
| 365,002 | | |
| 292,982 | |
(b)
Lease Liability | |
| 311,389 | | |
| 301,537 | |
(c)
Hedge derivatives | |
| 247 | | |
| 1,544 | |
Total
current | |
| 676,638 | | |
| 596,063 | |
Non-current | |
| | | |
| | |
(a)
Interest bearing loans | |
| 3,584,591 | | |
| 3,675,212 | |
(b)
Lease Liability | |
| 2,815,755 | | |
| 2,666,457 | |
Total
non-current | |
| 6,400,346 | | |
| 6,341,669 | |
| (a) | Interest
bearing loans |
Obligations
with credit institutions and debt instruments:
| |
As of | | |
As of | |
| |
March
31, 2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Current | |
| | |
| |
Bank
loans (2) | |
| 52,277 | | |
| 53,141 | |
Guaranteed
obligations (4) | |
| 29,101 | | |
| 28,697 | |
Other
guaranteed obligations (1) | |
| 72,345 | | |
| 67,005 | |
Subtotal
bank loans | |
| 153,723 | | |
| 148,843 | |
Obligation
with the public (3) | |
| 76,370 | | |
| 34,731 | |
Financial
leases | |
| 134,810 | | |
| 109,304 | |
Other
loans | |
| 99 | | |
| 104 | |
Total
current | |
| 365,002 | | |
| 292,982 | |
Non-current | |
| | | |
| | |
Bank
loans (2) | |
| 980,032 | | |
| 976,293 | |
Guaranteed
obligations (4) | |
| 266,813 | | |
| 275,225 | |
Other
guaranteed obligations (1) | |
| 346,386 | | |
| 363,345 | |
Subtotal
bank loans | |
| 1,593,231 | | |
| 1,614,863 | |
Obligation
with the public (3) | |
| 1,252,184 | | |
| 1,268,107 | |
Financial
leases | |
| 739,176 | | |
| 792,242 | |
Total
non-current | |
| 3,584,591 | | |
| 3,675,212 | |
Total
obligations with financial institutions | |
| 3,949,593 | | |
| 3,968,194 | |
(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 March 31, 2024 and December 31,
2023, it is available to be used. |
(2) | The
“Term Loan B Facility” of US$ 1,100 million (US$ 1,086 million outstanding as of March 31, 2024), includes 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. If these covenant criteria is not fulfilled at any point in time, then the obligations may be accelerated into short-term
obligations, at the lenders request. As of March 31, 2024, the Company complies with the aforementioned minimum liquidity covenant. |
(3) | The
13.375% senior secured notes due 2027 for an aggregate principal amount of US$ 450 million and the 13.375% senior secured notes due 2029
for and aggregate principal amount of MUS$ 700 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. If these covenant criteria is not fulfilled
at any point in time, then the obligations may be accelerated into short-term obligations, at the lenders request. As of March 31, 2024,
the Company complies with the aforementioned minimum liquidity covenant. |
(4) | The
“Spare Engine Facility” of US$ 275 million (US$ 267 million outstanding as of March 31, 2024), includes a minimum liquidity
restriction, requiring us to maintain a minimum liquidity, measured for the consolidated Company (LATAM Airlines Group S.A.) level, of
US$ 750 million. This in addition to another liquidity restriction measured individually for LATAM Airlines Group S.A. and TAM Linhas
Aéreas S.A. with a minimum level of US$ 400 million. If these covenants criteria is not fulfilled at any point in time, then the
obligations may be accelerated into short-term obligations, at the lenders request. As of March 31, 2024, the Company complies with the
aforementioned minimum liquidity covenants. |
Balances
by currency of interest bearing loans are as follows:
| |
As of | | |
As of | |
| |
March
31, 2024 | | |
December 31,
2023 | |
Currency | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Chilean peso (U.F.) | |
| 145,478 | | |
| 160,730 | |
US
Dollar | |
| 3,804,115 | | |
| 3,807,464 | |
Total | |
| 3,949,593 | | |
| 3,968,194 | |
Interest-bearing loans due in installments to March 31, 2024 (Unaudited)
Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2,
Chile.
| |
| |
| |
| |
Nominal values | |
Accounting values | | |
| |
| | |
| |
| |
| |
| |
| |
| | |
More
than | | |
More
than | | |
More
than | | |
More | |
| | |
| |
More
than | | |
More
than | | |
More than | | |
More | | |
| | |
| |
| | |
| |
| |
| |
| |
| |
Up to | | |
90 days | | |
one to | | |
three to | | |
than | |
Total | | |
Up to | |
90 days | | |
one to | | |
three to | | |
than | | |
Total | | |
| |
Annual | |
| |
| |
Creditor | |
| |
90 | | |
to one | | |
three | | |
five | | |
five | |
nominal | | |
90 | |
to one | | |
three | | |
five | | |
five | | |
accounting | | |
| |
Effective | | |
Nominal | |
Tax No. | |
Creditor | |
country | |
Currency | |
days | | |
year | | |
years | | |
years | | |
years | |
value | | |
days | |
year | | |
years | | |
years | | |
years | | |
value | | |
Amortization | |
rate | | |
rate | |
| |
| |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
ThUS$ | | |
ThUS$ | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| |
% | | |
% | |
Bank loans | |
| |
| |
| |
| | |
| | |
| | |
| | |
| |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| |
0-E | |
GOLDMAN SACHS | |
U.S.A. | |
US$ | |
| 2,750 | | |
| 8,250 | | |
| 22,000 | | |
| 1,053,250 | | |
— | |
| 1,086,250 | | |
44,027 | |
| 8,250 | | |
| 22,000 | | |
| 958,032 | | |
| — | | |
| 1,032,309 | | |
Quarterly | |
| 20.24 | | |
| 14.97 | |
Obligations with the | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
public | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
97.036.000-K | |
SANTANDER | |
Chile | |
UF | |
| — | | |
| — | | |
| — | | |
| — | | |
144,291 | |
| 144,291 | | |
— | |
| 1,187 | | |
| — | | |
| — | | |
| 144,291 | | |
| 145,478 | | |
At Expiration | |
| 2.00 | | |
| 2.00 | |
97.036.000-K | |
SANTANDER | |
Chile | |
US$ | |
| — | | |
| — | | |
| — | | |
| — | | |
3 | |
| 3 | | |
— | |
| — | | |
| — | | |
| — | | |
| 3 | | |
| 3 | | |
At Expiration | |
| 1.00 | | |
| 1.00 | |
0-E | |
WILMINGTON TRUST
COMPANY | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| — | | |
| 450,000 | | |
700,000 | |
| 1,150,000 | | |
75,183 | |
| — | | |
| — | | |
| 434,204 | | |
| 673,686 | | |
| 1,183,073 | | |
At Expiration | |
| 15.00 | | |
| 13.38 | |
Guaranteed | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
obligations | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
BNP PARIBAS | |
U.S.A. | |
US$ | |
| 3,001 | | |
| 9,393 | | |
| 27,054 | | |
| 29,216 | | |
100,128 | |
| 168,792 | | |
3,999 | |
| 9,393 | | |
| 26,409 | | |
| 28,827 | | |
| 99,810 | | |
| 168,438 | | |
Quarterly | |
| 6.92 | | |
| 6.92 | |
0-E | |
WILMINGTON TRUST
COMPANY | |
U.S.A. | |
US$ | |
| 3,874 | | |
| 11,767 | | |
| 32,534 | | |
| 34,271 | | |
44,963 | |
| 127,409 | | |
3,942 | |
| 11,767 | | |
| 32,533 | | |
| 34,271 | | |
| 44,963 | | |
| 127,476 | | |
Quarterly/Monthly | |
| 8.73 | | |
| 8.73 | |
Other guaranteed | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
obligations | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
CITIBANK | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| — | | |
| — | | |
— | |
| — | | |
34 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 34 | | |
Quarterly | |
| 1.00 | | |
| 1.00 | |
0-E | |
JP MORGAN CHASE | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| — | | |
| — | | |
— | |
| — | | |
17 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 17 | | |
Quarterly | |
| 0.63 | | |
| 0.63 | |
0-E | |
CREDIT AGRICOLE | |
France | |
US$ | |
| 7,333 | | |
| 7,333 | | |
| 29,334 | | |
| 222,768 | | |
— | |
| 266,768 | | |
11,465 | |
| 7,333 | | |
| 26,154 | | |
| 221,973 | | |
| — | | |
| 266,925 | | |
At Expiration | |
| 9.39 | | |
| 9.39 | |
0-E | |
MUFG | |
U.S.A. | |
US$ | |
| 11,872 | | |
| 36,308 | | |
| 4,155 | | |
| — | | |
— | |
| 52,335 | | |
11,903 | |
| 36,308 | | |
| 4,155 | | |
| — | | |
| — | | |
| 52,366 | | |
Quarterly | |
| 7.11 | | |
| 7.11 | |
0-E | |
EXIM BANK | |
U.S.A. | |
US$ | |
| — | | |
| 5,005 | | |
| 40,842 | | |
| 42,307 | | |
10,955 | |
| 99,109 | | |
280 | |
| 5,005 | | |
| 40,842 | | |
| 42,307 | | |
| 10,955 | | |
| 99,389 | | |
Quarterly | |
| 2.29 | | |
| 2.05 | |
Financial leases | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
NATIXIS | |
France | |
US$ | |
| 6,559 | | |
| 19,891 | | |
| 54,754 | | |
| 54,754 | | |
70,907 | |
| 206,865 | | |
8,235 | |
| 20,698 | | |
| 54,427 | | |
| 57,079 | | |
| 70,278 | | |
| 210,717 | | |
Quarterly | |
| 7.54 | | |
| 7.54 | |
0-E | |
US BANK | |
U.S.A. | |
US$ | |
| 16,743 | | |
| 41,260 | | |
| 6,521 | | |
| — | | |
— | |
| 64,524 | | |
17,153 | |
| 41,261 | | |
| 5,301 | | |
| — | | |
| — | | |
| 63,715 | | |
Quarterly | |
| 4.51 | | |
| 3.20 | |
0-E | |
EXIM BANK | |
U.S.A. | |
US$ | |
| — | | |
| 32,988 | | |
| 184,716 | | |
| 136,646 | | |
58,722 | |
| 413,072 | | |
1,891 | |
| 32,988 | | |
| 183,253 | | |
| 136,645 | | |
| 58,763 | | |
| 413,540 | | |
Quarterly | |
| 4.12 | | |
| 3.30 | |
0-E | |
BANK OF UTAH | |
U.S.A. | |
US$ | |
| 2,643 | | |
| 7,391 | | |
| 24,322 | | |
| 42,408 | | |
93,244 | |
| 170,008 | | |
2,643 | |
| 7,391 | | |
| 24,322 | | |
| 42,408 | | |
| 93,244 | | |
| 170,008 | | |
Monthly | |
| 10.71 | | |
| 10.71 | |
Others loans | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
Various
(*) | |
| |
US$ | |
| 99 | | |
| — | | |
| — | | |
| — | | |
— | |
| 99 | | |
99 | |
| — | | |
| — | | |
| — | | |
| — | | |
| 99 | | |
At Expiration | |
| — | | |
| — | |
| |
Total | |
| |
| |
| 54,874 | | |
| 179,586 | | |
| 426,232 | | |
| 2,065,620 | | |
1,223,213 | |
| 3,949,525 | | |
180,871 | |
| 181,581 | | |
| 419,396 | | |
| 1,955,746 | | |
| 1,195,993 | | |
| 3,933,587 | | |
| |
| | | |
| | |
(*) | Obligation to creditors for executed letters of credit. |
Interest-bearing loans due in installments to March 31, 2024 (Unaudited)
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil
| |
| |
| |
| |
Nominal
values | | |
Accounting
values | | |
| |
| |
| |
| |
| |
| |
| | |
More than | | |
More than | | |
More
than | | |
More | | |
| | |
| | |
More than | | |
More than | | |
More
than | | |
More | | |
| | |
| |
| |
| |
| |
| |
| |
Up to | | |
90 days | | |
one to | | |
three to | | |
than | | |
Total | | |
Up to | | |
90 days | | |
one to | | |
three to | | |
than | | |
Total | | |
| |
Annual | |
| |
| |
Creditor | |
| |
90 | | |
to one | | |
three | | |
five | | |
five | | |
nominal | | |
90 | | |
to one | | |
three | | |
five | | |
five | | |
accounting | | |
| |
Effective | | |
Nominal | |
| |
Tax No. | |
Country | |
Currency | |
days | | |
year | | |
years | | |
years | | |
years | | |
value | | |
days | | |
year | | |
years | | |
years | | |
years | | |
value | | |
Amortization | |
rate | | |
rate | |
| |
| |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| |
% | | |
% | |
Financial lease | |
| |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| |
0-E | |
NATIXIS | |
France | |
US$ | |
| 1,020 | | |
| 1,530 | | |
| 4,080 | | |
| 9,376 | | |
| — | | |
| 16,006 | | |
| 1,020 | | |
| 1,530 | | |
| 4,080 | | |
| 9,376 | | |
| — | | |
| 16,006 | | |
Quarterly | |
| — | | |
| — | |
| |
Total | |
| |
| |
| 1,020 | | |
| 1,530 | | |
| 4,080 | | |
| 9,376 | | |
| — | | |
| 16,006 | | |
| 1,020 | | |
| 1,530 | | |
| 4,080 | | |
| 9,376 | | |
| — | | |
| 16,006 | | |
| |
| | | |
| | |
| |
Total consolidated | |
| |
| |
| 55,894 | | |
| 181,116 | | |
| 430,312 | | |
| 2,074,996 | | |
| 1,223,213 | | |
| 3,965,531 | | |
| 181,891 | | |
| 183,111 | | |
| 423,476 | | |
| 1,965,122 | | |
| 1,195,993 | | |
| 3,949,593 | | |
| |
| | | |
| | |
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.
| |
| |
| |
| |
Nominal
values
| | |
Accounting
values | | |
| |
| | |
| |
| |
| |
| |
| |
| | |
More
than | | |
More
than | | |
More
than | | |
More | | |
| | |
| | |
More
than | | |
More
than | | |
More
than | | |
More | | |
| | |
| |
| | |
| |
| |
| |
| |
| |
Up
to | | |
90
days | | |
one
to | | |
three
to | | |
than | | |
Total | | |
Up
to | | |
90
days | | |
one
to | | |
three
to | | |
than | | |
Total | | |
| |
Annual | |
| |
| |
Creditor | |
| |
90 | | |
to
one | | |
three | | |
five | | |
five | | |
nominal | | |
90 | | |
to
one | | |
three | | |
five | | |
five | | |
accounting | | |
| |
Effective | | |
Nominal | |
Tax
No. | |
Creditor | |
country | |
Currency | |
days | | |
year | | |
years | | |
years | | |
years | | |
value | | |
days | | |
year | | |
years | | |
years | | |
years | | |
value | | |
Amortization | |
rate | | |
rate | |
| |
| |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| |
% | | |
% | |
Bank
loans | |
| |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| |
0-E | |
SANTANDER | |
Spain | |
US$ | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| — | | |
Quarterly | |
| — | | |
| — | |
0-E | |
GOLDMANSACHS | |
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 | |
Obligations | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
with
the | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
public | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
97.036.000-K | |
SANTANDER | |
Chile | |
UF | |
| — | | |
| — | | |
| — | | |
| — | | |
| 160,214 | | |
| 160,214 | | |
| — | | |
| 516 | | |
| — | | |
| — | | |
| 160,214 | | |
| 160,730 | | |
At
Expiration | |
| 2.00 | | |
| 2.00 | |
97.036.000-K | |
SANTANDER | |
Chile | |
US$ | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3 | | |
| 3 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3 | | |
| 3 | | |
At
Expiration | |
| 1.00 | | |
| 1.00 | |
0-E | |
WILMINGTON | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| |
TRUST
COMPANY | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| — | | |
| 450,000 | | |
| 700,000 | | |
| 1,150,000 | | |
| — | | |
| 34,215 | | |
| — | | |
| 434,204 | | |
| 673,686 | | |
| 1,142,105 | | |
At
Expiration | |
| 15.00 | | |
| 13.38 | |
| |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
Guaranteed
obligations | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
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 | |
0-E | |
WILMINGTON | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| |
TRUST
COMPANY | |
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 | |
Other
guaranteed obligations | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
CITIBANK | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 33 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 33 | | |
Quarterly | |
| 1.00 | | |
| 1.00 | |
0-E | |
JP
MORGAN | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| |
CHASE | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 17 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 17 | | |
Quarterly | |
| 0.63 | | |
| 0.63 | |
0-E | |
CREDIT | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| |
AGRICOLE | |
France | |
US$ | |
| — | | |
| 14,667 | | |
| 29,333 | | |
| 222,768 | | |
| — | | |
| 266,768 | | |
| 4,241 | | |
| 14,667 | | |
| 26,154 | | |
| 221,708 | | |
| — | | |
| 266,770 | | |
At
Expiration | |
| 9.43 | | |
| 9.43 | |
0-E | |
MUFG | |
U.S.A. | |
US$ | |
| 11,768 | | |
| 35,960 | | |
| 16,374 | | |
| — | | |
| — | | |
| 64,102 | | |
| 11,805 | | |
| 35,960 | | |
| 16,374 | | |
| — | | |
| — | | |
| 64,139 | | |
Quarterly | |
| 7.11 | | |
| 7.11 | |
0-E | |
EXIM
BANK | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| 40,662 | | |
| 42,122 | | |
| 16,325 | | |
| 99,109 | | |
| 282 | | |
| — | | |
| 40,662 | | |
| 42,122 | | |
| 16,325 | | |
| 99,391 | | |
Quarterly | |
| 2.29 | | |
| 2.05 | |
Financial
leases | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
NATIXIS | |
France | |
US$ | |
| 6,516 | | |
| 19,779 | | |
| 54,443 | | |
| 56,972 | | |
| 77,647 | | |
| 215,357 | | |
| 8,559 | | |
| 19,779 | | |
| 54,117 | | |
| 56,754 | | |
| 77,555 | | |
| 216,764 | | |
Quarterly | |
| 7.58 | | |
| 7.58 | |
0-E | |
US
BANK | |
U.S.A. | |
US$ | |
| 17,374 | | |
| 49,311 | | |
| 17,492 | | |
| — | | |
| — | | |
| 84,177 | | |
| 17,905 | | |
| 49,311 | | |
| 15,731 | | |
| — | | |
| — | | |
| 82,947 | | |
Quarterly | |
| 4.41 | | |
| 3.16 | |
0-E | |
EXIM
BANK | |
U.S.A. | |
US$ | |
| — | | |
| — | | |
| 197,499 | | |
| 141,169 | | |
| 74,404 | | |
| 413,072 | | |
| 1,933 | | |
| — | | |
| 195,741 | | |
| 141,169 | | |
| 74,404 | | |
| 413,247 | | |
Quarterly | |
| 4.13 | | |
| 3.31 | |
0-E | |
BANK
OF UTAH | |
U.S.A. | |
US$ | |
| 2,575 | | |
| 7,202 | | |
| 23,637 | | |
| 37,304 | | |
| 101,864 | | |
| 172,582 | | |
| 2,575 | | |
| 7,202 | | |
| 23,637 | | |
| 37,304 | | |
| 101,864 | | |
| 172,582 | | |
Monthly | |
| 10.71 | | |
| 10.71 | |
Other
loan | |
| |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
0-E | |
Various
(*) | |
| |
US$ | |
| 104 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 104 | | |
| 104 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 104 | | |
At
Expiration | |
| — | | |
| — | |
| |
Total | |
| |
| |
| 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. |
Interest-bearing loans due in installments to December 31, 2023
Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil
| |
| |
| |
| |
Nominal values | | |
Accounting values | | |
| |
| |
| |
| |
| |
| |
| | |
More than | | |
More than | | |
More
than | | |
More | | |
| | |
| | |
More than | | |
More than | | |
More
than | | |
More | | |
| | |
| |
| | |
| |
| |
| |
| |
| |
Up to | | |
90 days | | |
one to | | |
three to | | |
than | | |
Total | | |
Up to | | |
90 days | | |
one to | | |
three to | | |
than | | |
Total | | |
| |
Annual | |
| |
| |
Creditor | |
| |
90 | | |
to one | | |
three | | |
five | | |
five | | |
nominal | | |
90 | | |
to one | | |
three | | |
five | | |
five | | |
accounting | | |
| |
Effective | | |
Nominal | |
| |
Tax No. | |
Country | |
Currency | |
days | | |
year | | |
years | | |
years | | |
years | | |
value | | |
days | | |
year | | |
years | | |
years | | |
years | | |
value | | |
Amortization | |
rate | | |
rate | |
| |
| |
| |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
| |
% | | |
% | |
Financial | |
| |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| |
lease | |
| |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
| |
0-E | |
NATIXIS | |
France | |
US$ | |
| 510 | | |
| 1,530 | | |
| 4,080 | | |
| 9,886 | | |
| — | | |
| 16,006 | | |
| 510 | | |
| 1,530 | | |
| 4,080 | | |
| 9,886 | | |
| — | | |
| 16,006 | | |
Semiannual/Quarterly | |
| — | | |
| — | |
| |
Total | |
| |
| |
| 510 | | |
| 1,530 | | |
| 4,080 | | |
| 9,886 | | |
| — | | |
| 16,006 | | |
| 510 | | |
| 1,530 | | |
| 4,080 | | |
| 9,886 | | |
| — | | |
| 16,006 | | |
| |
| | | |
| | |
| |
Total consolidated | |
| |
| |
| 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 | | |
| |
| | | |
| | |
(*) | Obligation to creditors for executed letters of credit. |
The movement of the lease liabilities corresponding to the period reported
are as follow:
| |
| | |
| | |
Lease | |
| |
Aircraft | | |
Others | | |
Liability Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Opening balance as January 1, 2023 | |
| 2,134,972 | | |
| 81,482 | | |
| 2,216,454 | |
New contracts | |
| — | | |
| 1,099 | | |
| 1,099 | |
Lease termination | |
| — | | |
| (203 | ) | |
| (203 | ) |
Renegotiations | |
| (10,887 | ) | |
| (2,737 | ) | |
| (13,624 | ) |
Payments | |
| (77,430 | ) | |
| (6,944 | ) | |
| (84,374 | ) |
Accrued interest | |
| 46,269 | | |
| 2,375 | | |
| 48,644 | |
Exchange differences | |
| 1 | | |
| 2,537 | | |
| 2,538 | |
Cumulative translation adjustment | |
| (1 | ) | |
| 2,455 | | |
| 2,454 | |
Other increases (decreases) | |
| (258 | ) | |
| — | | |
| (258 | ) |
Changes | |
| (42,306 | ) | |
| (1,418 | ) | |
| (43,724 | ) |
Closing balance as of March 31, 2023 (Unaudited) | |
| 2,092,666 | | |
| 80,064 | | |
| 2,172,730 | |
Opening balance as of April 1, 2023 (Unaudited) | |
| 2,092,666 | | |
| 80,064 | | |
| 2,172,730 | |
New contracts | |
| 943,178 | | |
| 1,877 | | |
| 945,055 | |
Lease termination | |
| (13,258 | ) | |
| (1,609 | ) | |
| (14,867 | ) |
Renegotiations | |
| 3,693 | | |
| 4,956 | | |
| 8,649 | |
Payments | |
| (298,576 | ) | |
| (16,333 | ) | |
| (314,909 | ) |
Accrued interest | |
| 166,231 | | |
| 7,258 | | |
| 173,489 | |
Exchange differences | |
| (1 | ) | |
| (259 | ) | |
| (260 | ) |
Cumulative translation adjustment | |
| 7 | | |
| (2,158 | ) | |
| (2,151 | ) |
Other increases (decreases) | |
| 258 | | |
| — | | |
| 258 | |
Changes | |
| 801,532 | | |
| (6,268 | ) | |
| 795,264 | |
Closing balance as of December 31, 2023 | |
| 2,894,198 | | |
| 73,796 | | |
| 2,967,994 | |
Opening balance as of January 1, 2024 | |
| 2,894,198 | | |
| 73,796 | | |
| 2,967,994 | |
New contracts | |
| 117,607 | | |
| 556 | | |
| 118,163 | |
Lease termination | |
| (1,920 | ) | |
| (8 | ) | |
| (1,928 | ) |
Renegotiations | |
| 78,844 | | |
| 41,770 | | |
| 120,614 | |
Payments | |
| (139,869 | ) | |
| (5,945 | ) | |
| (145,814 | ) |
Accrued interest | |
| 68,963 | | |
| 3,531 | | |
| 72,494 | |
Exchange differences | |
| — | | |
| (2,605 | ) | |
| (2,605 | ) |
Subsidiaries conversion difference | |
| — | | |
| (1,775 | ) | |
| (1,775 | ) |
Changes | |
| 123,626 | | |
| 35,524 | | |
| 159,150 | |
Closing balance as of March 31, 2024 (Unaudited) | |
| 3,017,824 | | |
| 109,320 | | |
| 3,127,144 | |
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 | | |
Discount rate | |
| |
March 2024 | | |
December 2023 | |
| |
Unaudited | | |
| |
Aircraft | |
| 9.18 | % | |
| 9.10 | % |
Others | |
| 7.67 | % | |
| 6.43 | % |
| |
Current liabilities | | |
Non-current liabilities | | |
Total hedge derivatives | |
| |
As of March 31, | | |
As of December 31, | | |
As of March 31, | | |
As of December 31, | | |
As of March 31, | | |
As of December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Fair value of foreign currency derivatives | |
| 247 | | |
| 1,544 | | |
| — | | |
| — | | |
| 247 | | |
| 1,544 | |
Total hedge derivatives | |
| 247 | | |
| 1,544 | | |
| — | | |
| — | | |
| 247 | | |
| 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 | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Fuel options (1) | |
| 37,177 | | |
| 22,136 | |
Foreign currency derivative R$/BRL$ (2) | |
| 2,885 | | |
| (1,544 | ) |
| (1) | 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. |
| (2) | Hedge significant variations in expected cash flows associated with the market risk implicit in changes
in exchange rates, particularly the US$/BRL. These contracts are recorded as cash flow hedge contracts. |
The Company only maintains cash flow hedges. In the case of
fuel and currency hedges, the cash flows subject to said hedges will occur and will impact results in the next 12 months from the date
of the consolidated statement of financial position.
All hedging operations have been performed for highly probable transactions,
except for fuel hedge. See Note 3.
See Note 24 (f) for reclassification to profit or loss for each hedging
operation and Note 17 (b) for deferred taxes related.
NOTE 19 - TRADE AND OTHER ACCOUNTS PAYABLES
The composition of Trade and other accounts payables is as follows:
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Current | |
| | |
| |
(a) Trade and other accounts payables | |
| 1,473,820 | | |
| 1,408,201 | |
(b) Accrued liabilities | |
| 268,394 | | |
| 357,078 | |
Total trade and other accounts payables | |
| 1,742,214 | | |
| 1,765,279 | |
| (a) | Trade and other accounts payable: |
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Trade creditors | |
| 1,227,779 | | |
| 1,176,985 | |
Other accounts payable | |
| 246,041 | | |
| 231,216 | |
Total | |
| 1,473,820 | | |
| 1,408,201 | |
The details of Trade and other accounts payables are as follows:
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Boarding Fees | |
| 250,930 | | |
| 249,291 | |
Maintenance | |
| 213,265 | | |
| 167,466 | |
Airport charges and overflight | |
| 153,284 | | |
| 138,901 | |
Handling and ground handling | |
| 144,492 | | |
| 133,114 | |
Suppliers technical purchases | |
| 142,048 | | |
| 126,302 | |
Aircraft Fuel | |
| 103,590 | | |
| 94,878 | |
Other personnel expenses | |
| 93,514 | | |
| 96,351 | |
Leases, maintenance and IT services | |
| 91,644 | | |
| 100,842 | |
Professional services and advisory | |
| 76,939 | | |
| 63,756 | |
Services on board | |
| 56,740 | | |
| 58,365 | |
Marketing | |
| 27,945 | | |
| 51,035 | |
Crew | |
| 21,831 | | |
| 25,936 | |
Air companies | |
| 17,439 | | |
| 26,371 | |
Agencies sales commissions | |
| 7,053 | | |
| 16,899 | |
Aircraft Insurance | |
| 5,122 | | |
| 12,256 | |
Others | |
| 67,984 | | |
| 46,438 | |
Total trade and other accounts payables | |
| 1,473,820 | | |
| 1,408,201 | |
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Aircraft and engine maintenance | |
| 34,621 | | |
| 129,473 | |
Accrued personnel expenses | |
| 114,650 | | |
| 97,733 | |
Accounts payable to personnel (1) | |
| 92,289 | | |
| 114,769 | |
Others accrued liabilities | |
| 26,834 | | |
| 15,103 | |
Total accrued liabilities | |
| 268,394 | | |
| 357,078 | |
(1) | Participation in profits and bonuses (Note 22 letter b). |
NOTE 20 - OTHER PROVISIONS
| |
Current liabilities | | |
Non-current liabilities | | |
Total Liabilities | |
| |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Provision for contingencies (1) | |
| | |
| | |
| | |
| | |
| | |
| |
Tax contingencies | |
| 3,343 | | |
| 7,003 | | |
| 621,527 | | |
| 614,882 | | |
| 624,870 | | |
| 621,885 | |
Civil contingencies | |
| 5,788 | | |
| 7,702 | | |
| 153,379 | | |
| 142,305 | | |
| 159,167 | | |
| 150,007 | |
Labor contingencies | |
| 402 | | |
| 367 | | |
| 194,883 | | |
| 155,501 | | |
| 195,285 | | |
| 155,868 | |
Other | |
| — | | |
| — | | |
| 11,541 | | |
| 11,571 | | |
| 11,541 | | |
| 11,571 | |
Provision for European | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Commission investigation (2) | |
| — | | |
| — | | |
| 2,419 | | |
| 2,477 | | |
| 2,419 | | |
| 2,477 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total other provisions (3) | |
| 9,533 | | |
| 15,072 | | |
| 983,749 | | |
| 926,736 | | |
| 993,282 | | |
| 941,808 | |
(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 March 31, 2024, and December
31, 2023, 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 Standards application and which only in the context of a business
combination should be recognized under IFRS Accounting Standards. |
Movement of provisions:
| |
Legal | | |
European Commission | | |
| |
| |
claims (1) | | |
Investigation (1) | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| | |
| | |
| |
Opening balance as January 1, 2023 | |
| 940,140 | | |
| 2,397 | | |
| 942,537 | |
Increase in provisions | |
| 96,150 | | |
| — | | |
| 96,150 | |
Provision used | |
| (8,921 | ) | |
| — | | |
| (8,921 | ) |
Difference by subsidiaries conversion | |
| 14,734 | | |
| — | | |
| 14,734 | |
Reversal of provision | |
| (90,077 | ) | |
| — | | |
| (90,077 | ) |
Exchange difference | |
| (9,429 | ) | |
| 35 | | |
| (9,394 | ) |
Closing balance as of March 31, 2023 (Unaudited) | |
| 942,597 | | |
| 2,432 | | |
| 945,029 | |
| |
| | | |
| | | |
| | |
Opening balance as of April 1, 2023 (Unaudited) | |
| 942,597 | | |
| 2,432 | | |
| 945,029 | |
Increase in provisions | |
| 353,256 | | |
| — | | |
| 353,256 | |
Provision used | |
| (61,923 | ) | |
| — | | |
| (61,923 | ) |
Difference by subsidiaries conversion | |
| (84,297 | ) | |
| — | | |
| (84,297 | ) |
Reversal of provision | |
| (220,041 | ) | |
| — | | |
| (220,041 | ) |
Exchange difference | |
| 9,739 | | |
| 45 | | |
| 9,784 | |
Closing balance as of December 31, 2023 | |
| 939,331 | | |
| 2,477 | | |
| 941,808 | |
| |
| | | |
| | | |
| | |
Opening balance as of January 1, 2024 | |
| 939,331 | | |
| 2,477 | | |
| 941,808 | |
Increase in provisions | |
| 150,466 | | |
| | | |
| 150,466 | |
Provision used | |
| (20,214 | ) | |
| | | |
| (20,214 | ) |
Difference by subsidiaries conversion | |
| (21,707 | ) | |
| | | |
| (21,707 | ) |
Reversal of provision | |
| (56,345 | ) | |
| | | |
| (56,345 | ) |
Exchange difference | |
| (668 | ) | |
| (58 | ) | |
| (726 | ) |
Closing balance as of March 31, 2024 (Unaudited) | |
| 990,863 | | |
| 2,419 | | |
| 993,282 | |
(1) | See details of litigation and government investigations with
a material impact in Note 30. |
NOTE 21 - OTHER NON-FINANCIAL LIABILITIES
| |
Current liabilities | | |
Non-current liabilities | | |
Total Liabilities | |
| |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Deferred revenue (1)(2) | |
| 2,905,696 | | |
| 3,044,664 | | |
| 298,051 | | |
| 348,936 | | |
| 3,203,747 | | |
| 3,393,600 | |
Sales tax | |
| 12,404 | | |
| 17,801 | | |
| — | | |
| — | | |
| 12,404 | | |
| 17,801 | |
Retentions | |
| 50,552 | | |
| 48,649 | | |
| — | | |
| — | | |
| 50,552 | | |
| 48,649 | |
Other taxes | |
| 5,314 | | |
| 6,892 | | |
| — | | |
| — | | |
| 5,314 | | |
| 6,892 | |
Dividends payable | |
| 252,032 | | |
| 174,549 | | |
| — | | |
| — | | |
| 252,032 | | |
| 174,549 | |
Other sundry liabilities | |
| 16,242 | | |
| 9,351 | | |
| — | | |
| — | | |
| 16,242 | | |
| 9,351 | |
Total other non-financial liabilities | |
| 3,242,240 | | |
| 3,301,906 | | |
| 298,051 | | |
| 348,936 | | |
| 3,540,291 | | |
| 3,650,842 | |
Deferred Revenue Movement
| |
| | |
Deferred revenue | | |
| | |
| | |
| | |
| |
| |
Initial balance | | |
(1)
Recognition | | |
Use | | |
Loyalty program (Award and redeem) | | |
Expiration of tickets | | |
Translation Difference | | |
Others
provisions | | |
Final
balance | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
From January 1 to March 31, 2023 (Unaudited) | |
| 2,953,289 | | |
| 3,350,319 | | |
| (3,249,507 | ) | |
| 43,131 | | |
| (92,526 | ) | |
| 22,314 | | |
| (6,876 | ) | |
| 3,020,144 | |
From April 1 to December 31, 2023 (Unaudited) | |
| 3,020,144 | | |
| 10,888,640 | | |
| (10,255,989 | ) | |
| (25,451 | ) | |
| (299,472 | ) | |
| 62,674 | | |
| 3,054 | | |
| 3,393,600 | |
From January 1 to March 31, 2024 (Unaudited) | |
| 3,393,600 | | |
| 3,778,075 | | |
| (3,826,388 | ) | |
| (17,055 | ) | |
| (91,890 | ) | |
| (33,684 | ) | |
| 1,089 | | |
| 3,203,747 | |
(1) | The balance includes mainly, deferred revenue for services
not provided as of March 31, 2024 and December 31, 2023 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 March 31, 2024, Deferred Income includes Th US$40,500
related to the compensation from Delta Air Lines, Inc., which is recognized in the income statement based on the estimation of income
differentials until the implementation of the strategic alliance. |
NOTE 22 - EMPLOYEE BENEFITS
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Retirements payments | |
| 70,277 | | |
| 57,785 | |
Resignation payments | |
| 7,091 | | |
| 11,537 | |
Other obligations | |
| 62,477 | | |
| 53,296 | |
Total liability for employee benefits | |
| 139,845 | | |
| 122,618 | |
| (a) | The movement in retirements, resignations and other obligations: |
| |
Opening | | |
Increase (decrease) current service | | |
Benefits | | |
Actuarial (gains) | | |
Currency | | |
Closing | |
| |
balance | | |
provision | | |
paid | | |
losses | | |
translation | | |
balance | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| | |
| | |
| | |
| | |
| | |
| |
From January 1 to March 31, 2023 | |
| 93,488 | | |
| 12,715 | | |
| (579 | ) | |
| (5,777 | ) | |
| 4,948 | | |
| 104,795 | |
From April 1 to December 31, 2023 (Unaudited) | |
| 104,795 | | |
| 45,721 | | |
| (6,122 | ) | |
| (15,421 | ) | |
| (6,355 | ) | |
| 122,618 | |
From January 1 to March 31, 2024 (Unaudited) | |
| 122,618 | | |
| 42,637 | | |
| (1,270 | ) | |
| (15,295 | ) | |
| (8,845 | ) | |
| 139,845 | |
The main assumptions used in the calculation of the provision in Chile are presented below:
| |
For the period ended
At March 31, | |
Assumptions | |
2024 | | |
2023 | |
| |
Unaudited | |
Discount rate | |
| 5.85 | % | |
| 5.37 | % |
Expected rate of salary increase | |
| 3.00 | % | |
| 3.00 | % |
Rate of turnover | |
| 2.96 | % | |
| 5.02 | % |
Mortality rate | |
| RV-2020 | | |
| RV-2014 | |
Inflation rate | |
| 3.23 | % | |
| 3.46 | % |
Retirement age of women | |
| 60 | | |
| 60 | |
Retirement age of men | |
| 65 | | |
| 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:
| |
Effect on the liability | |
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Discount rate | |
| | |
| |
Change in the accrued liability an closing for increase in 100 b.p. | |
| (5,171 | ) | |
| (3,913 | ) |
Change in the accrued liability an closing for decrease of 100 b.p. | |
| 5,902 | | |
| 4,369 | |
Rate of wage growth | |
| | | |
| | |
Change in the accrued liability an closing for increase in 100 b.p. | |
| 5,487 | | |
| 4,133 | |
Change in the accrued liability an closing for decrease of 100 b.p. | |
| (4,983 | ) | |
| (3,811 | ) |
| (b) | The liability for short-term: |
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Profit-sharing and bonuses (*) | |
| 92,289 | | |
| 114,769 | |
(*) | Accounts payables to employees (Note 19 letter b) |
The participation in profits and bonuses related to an annual incentive
plan for achievement of certain objectives.
| (c) | 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, 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) | 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.
| ii) | 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 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 2024 until the month of March,
the amount accrued related to this CIP was MUS$ 20.71, which is recorded in the “Administrative expenses” line of the Consolidated
Statement of Income by Function. As of March 31, 2024, the amount of this plan recorded in the consolidated statement of financial position
is MUS$ 131.28.
| (d) | Employment expenses are detailed below: |
| |
For the period ended
at March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Salaries and wages | |
| 335,635 | | |
| 294,437 | |
Short-term employee benefits | |
| 56,278 | | |
| 34,946 | |
Other personnel expenses | |
| 33,839 | | |
| 30,482 | |
Total | |
| 425,752 | | |
| 359,865 | |
NOTE 23 - ACCOUNTS PAYABLE, NON-CURRENT
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Aircraft and engine maintenance | |
| 369,992 | | |
| 348,578 | |
Fleet (JOL) | |
| 40,000 | | |
| 40,000 | |
Airport and Overflight Taxes | |
| 8,361 | | |
| 11,337 | |
Provision for vacations and bonuses | |
| 16,633 | | |
| 18,518 | |
Other sundry liabilities | |
| 161 | | |
| 154 | |
Total accounts payable, non-current | |
| 435,147 | | |
| 418,587 | |
NOTE 24 - EQUITY
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 March 31, 2024, amounts to
ThUS$5,003,534 divided into 604,437,877,587 common stock of a same series (ThUS $5,003,534 divided into 604,437,877,587 shares as of
December 31, 2023), a single series nominative, ordinary character with no par value. The total number of authorized shares of the
Company as of March 31, 2024, 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 April
20, 2023, it was agreed to:
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;
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.
iii)
Deduction of the Company´s capital the account “Costs of issuing shares and new convertible notes, for an amount of ThUS$810,279.
On September 6, 2023, by public deed granted at
the Notary of Santiago of Mr. Eduardo Diez Morello, under repertoire number 15,327-2023 entitled “Declaración de Colocación
y Vencimiento Plazo de Colocación Bonos Convertibles “Series G”, “Series H” and “Series I” and Reducción
de Capital de Pleno Derecho”, it was realized that on September 5, 2023 the maturity of the placement term (the “Placement Term”)
of Convertible Notes issued on the occasion of the capital increase agreed at the Company’s Extraordinary Shareholders’ Meeting held on
July 5, 2022. Consequently, in accordance with the mentioned in number Four of Clause Six of the respective notes issuance contract (the
“Issuance Agreement”), as of that date the amount placed against it remained unchanged, and consequently the Convertible Notes
not placed on that date were null and void. For the sake of completeness, it was declared that upon maturity of the Placement Term, 123,605,720
Series G Convertible Notes and 37 Series I Convertible Notes (collectively, the “Unplaced Convertible Notes”) remained unplaced,
for an amount of US$ 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 was reduced by law in the amount of ThUS$123,606, equivalent to 1,965,903,665 shares. As of that date, 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$42, equivalent to 3,911,748 shares, are pending of
subscription and payment and are intended exclusively to respond to the conversion of 42,398 Series H Convertible Notes.
(b) | Movement
of authorized shares |
The
following table shows the movement of the authorized, fully paid shares and back-up shares to be delivered in the event that the respective
conversion option is exercised under the convertible notes currently issued by the Company:
| |
As of March 31, 2024 (Unaudited) | | |
As of December 31, 2023 | |
| |
N° of authorized Shares | | |
N° of Subscribed of shares and paid or delivered pursuant to the exercise of the conversion option | | |
N° of convertible notes back-up shares pending to place | | |
N° of shares to subscribe or not used | | |
N° of authorized shares | | |
N° of Subscribed of shares and paid or delivered pursuant to the exercise of the conversion option | | |
N° of convertible notes back-up shares pending to place | | |
N° of shares to subscribe or not used | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Opening Balance | |
| 604,441,789,335 | | |
| 604,437,877,587 | | |
| 3,911,748 | | |
| — | | |
| 606,407,693,000 | | |
| 604,437,584,048 | | |
| 4,205,287 | | |
| 1,965,903,665 | |
Convertible Notes H | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 293,539 | | |
| (293,539 | ) | |
| — | |
Reduction of full right (*) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,965,903,665 | ) | |
| — | | |
| — | | |
| (1,965,903,665 | ) |
Subtotal | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,965,903,665 | ) | |
| 293,539 | | |
| (293,539 | ) | |
| (1,965,903,665 | ) |
Closing Balance | |
| 604,441,789,335 | | |
| 604,437,877,587 | | |
| 3,911,748 | | |
| — | | |
| 604,441,789,335 | | |
| 604,437,877,587 | | |
| 3,911,748 | | |
| — | |
| (*) | See
letter (a) above, in the same Note. |
The
following table shows the movement of share capital:
| |
Paid- in | |
| |
Capital | |
| |
ThUS$ | |
Initial balance as of January 1, 2023 | |
| 13,298,486 | |
Placement during the conversion options period - Convertible Notes G | |
| 17,401 | |
Absorption of Accumulated Losses as of December 31, 2022 (2) | |
| (7,501,896 | ) |
Absorption of treasury shares (2) | |
| (178 | ) |
Deduction of issuance and placement costs of shares and bonds convertible into shares (2) | |
| (810,279 | ) |
Subtotal | |
| (8,294,952 | ) |
Ending balance as of December 31, 2023 | |
| 5,003,534 | |
Initial balance as of January 1, 2024 | |
| 5,003,534 | |
There were no movements during the period | |
| — | |
Ending balance as of March 31, 2024 (Unaudited) | |
| 5,003,534 | |
(1) | It
only includes Convertible Notes bonds delivered as payment of debts recognized in Chapter
11. |
(2) | 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. |
At
March 31, 2024, 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$178.
| (e) | Other
equity- Value of conversion right - Convertible Notes |
The
Convertible Notes were issued to be place in exchange for a cash contribution, in exchange for settlement of Chapter 11 Proceeding or
a combination of both. Convertible Notes issued in exchange for cash were valued at fair value (the cash received). Notes issued in exchange
for settlement of Chapter 11 claims were valued considering the discount that each group of liabilities settled on at the emergence date.
The table below shows the 3 Convertible Notes at their nominal values, the adjustment, if any, to arrive at their fair values and the
amount of transaction costs. The conversion option classified as equity is determined by deducting the amount of the liability component
from the fair value of the compound instrument as a whole. The equity portion is recognized under Other equity at the time the Convertible
Notes are issued.
| |
As of December 31, 2023 | |
| |
| | |
| | |
| | |
Total | |
| |
Convertible | | |
Convertible | | |
Convertible | | |
Convertible | |
Concepts | |
Notes G | | |
Notes H | | |
Notes I | | |
Notes | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Face Value | |
| 17,401 | | |
| — | | |
| — | | |
| 17,401 | |
Adjustment to fair value Convertible Notes at the date of issue | |
| (14,401 | ) | |
| — | | |
| — | | |
| (14,401 | ) |
Subtotal | |
| (14,401 | ) | |
| — | | |
| — | | |
| (14,401 | ) |
Fair Value of Notes | |
| 3,000 | | |
| — | | |
| — | | |
| 3,000 | |
Equity component at the date of issue | |
| 3,000 | | |
| — | | |
| — | | |
| 3,000 | |
During
the period ended March 31, 2024, there was no subscription of convertible bonds.
| (e.2) | Conversion
of notes into shares |
As
of December 31, 2023, the following notes have been converted into shares:
| |
As of December 31, 2023 | |
| |
Convertible | | |
Convertible | | |
Convertible | | |
Total Convertible | |
Concepts | |
Notes G | | |
Notes H | | |
Notes I | | |
Notes | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Conversion percentage | |
| 100.000 | % | |
| 99.997 | % | |
| 100.000 | % | |
| | |
Conversion option of convertible notes exercised | |
| 1,133,397 | | |
| 1,372,798 | | |
| 6,863,427 | | |
| 9,369,622 | |
Total Converted Notes | |
| 1,133,397 | | |
| 1,372,798 | | |
| 6,863,427 | | |
| 9,369,622 | |
As
of March 31, 2024, no bonds have been converted into shares.
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$102,031 was estimated using the prevailing market
interest rate for similar non-convertible instruments.
Transaction
costs relating to the liability component are included in the carrying amount of the liability portion and amortized over the period
of the convertible notes using the effective interest method.
| (f) | Reserve
of share-based payments |
Movement of Reserves of share-based payments:
| |
| | |
Stock | | |
| |
| |
Opening | | |
option | | |
Closing | |
Periods | |
balance | | |
plan | | |
balance | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
From January 1 to March 31, 2023 (Unaudited) | |
| 37,235 | | |
| — | | |
| 37,235 | |
From April 1 to December 31, 2023 (Unaudited) | |
| 37,235 | | |
| — | | |
| 37,235 | |
From January 1 to March 31, 2024 (Unaudited) | |
| 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.
Movement of Other sundry reserves:
| |
| | |
Transactions with | | |
| | |
| | |
| | |
| |
| |
Opening | | |
non-controlling | | |
Legal | | |
Other sundry | | |
Others increases | | |
Closing | |
Periods | |
balance | | |
interest | | |
reserves | | |
reserves | | |
(Decreases) | | |
Balance | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
From January 1 to March 31, 2023 (Unaudited) | |
| (1,972,651 | ) | |
| — | | |
| — | | |
| (4,076 | ) | |
| — | | |
| (1,976,727 | ) |
From April 1 to December 31, 2023 (Unaudited) | |
| (1,976,727 | ) | |
| 16,648 | | |
| | | |
| (10,325 | ) | |
| 800,388 | | |
| (1,170,016 | ) |
From January 1 to March 31, 2024 (Unaudited) | |
| (1,170,016 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,170,016 | ) |
Balance
of Other sundry reserves comprise the following:
| |
As
of | | |
As
of | |
| |
March
31, 2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Higher
value for TAM S.A. share exchange (1) | |
| 2,665,692 | | |
| 2,665,692 | |
Reserve
for the adjustment to the value of fixed assets (2) | |
| 2,620 | | |
| 2,620 | |
Transactions
with non-controlling interest (3) | |
| (211,582 | ) | |
| (211,582 | ) |
Adjustment
to the fair value of the New Convertible Notes (4) | |
| (3,624,871 | ) | |
| (3,624,871 | ) |
Others | |
| (1,875 | ) | |
| (1,875 | ) |
Total | |
| (1,170,016 | ) | |
| (1,170,016 | ) |
| (1) | Corresponds
to the difference between the value of the shares of TAM S.A., acquired by Sister Holdco S.A. (under the Subscriptions) and by Holdco
II S.A. (by virtue of the Exchange Offer), which is recorded in the declaration of completion of the merger by absorption, and the fair
value of the shares exchanged by LATAM Airlines Group S.A. as of June 22, 2012. |
| (2) | Corresponds
to the technical revaluation of the fixed assets authorized by the Commission for the Financial Market in the year 1979, in Circular
No. 1529. The revaluation was optional and could be made only once; the originated reserve is not distributable and can only be capitalized. |
| (3) | The
balance corresponds to the loss generated by: Lan Pax Group S.A. e Inversiones Lan S.A. in the acquisition of shares of Aerovías
de Integración Regional S.A. for ThUS$(3,480) and ThUS$(20), respectively; the acquisition of TAM S.A. of the minority interest
in Aerolinhas Brasileiras S.A. for ThUS$(885), the acquisition of Inversiones Lan S.A. of the minority participation in Aerovías
de Integración Regional S.A. for an amount of ThUS$(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. 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. 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 ThUS$2,564,707 as of December 31, 2023, gain on the haircut for the financial liabilities for ThUS$420,436
as of December 31, 2023,and gain on the haircut of lease liabilities which is booked against the right of use asset for ThUS$639,728
as of December 31, 2023. |
| (h) | Reserves
with effect in other comprehensive income. |
Movement of Reserves with effect in other comprehensive income:
| |
Currency | | |
Cash flow | | |
Gains (Losses) on change on value | | |
Actuarial gain or loss on | | |
| |
| |
translation | | |
hedging | | |
of time value | | |
defined benefit | | |
| |
| |
reserve | | |
reserve | | |
of options | | |
plans reserve | | |
Total | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
Opening balance as of January 1, 2023 | |
| (3,805,560 | ) | |
| 36,542 | | |
| (21,622 | ) | |
| (28,117 | ) | |
| (3,818,757 | ) |
Change in fair value of hedging instrument recognized in OCI | |
| — | | |
| (30,725 | ) | |
| 16,364 | | |
| — | | |
| (14,361 | ) |
Reclassified from OCI to profit or loss | |
| — | | |
| (1,833 | ) | |
| 5,598 | | |
| — | | |
| 3,765 | |
Deferred tax | |
| — | | |
| (97 | ) | |
| — | | |
| — | | |
| (97 | ) |
Actuarial reserves by employee benefit plans | |
| — | | |
| — | | |
| — | | |
| (5,776 | ) | |
| (5,776 | ) |
Deferred tax actuarial IAS by employee benefit plans | |
| — | | |
| — | | |
| — | | |
| 70 | | |
| 70 | |
Translation difference subsidiaries | |
| (5,646 | ) | |
| 1,849 | | |
| (5 | ) | |
| — | | |
| (3,802 | ) |
Closing balance as of March 31, 2023 (Unaudited) | |
| (3,811,206 | ) | |
| 5,736 | | |
| 335 | | |
| (33,823 | ) | |
| (3,838,958 | ) |
Increase (decrease) due to application of new accounting standars | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Opening balance as of April 1, 2023 (Unaudited) | |
| (3,811,206 | ) | |
| 5,736 | | |
| 335 | | |
| (33,823 | ) | |
| (3,838,958 | ) |
Change in fair value of hedging instrument recognized in OCI | |
| — | | |
| (2,133 | ) | |
| 9,370 | | |
| — | | |
| 7,237 | |
Reclassified from OCI to profit or loss | |
| — | | |
| (24,735 | ) | |
| 23,220 | | |
| — | | |
| (1,515 | ) |
Reclassified from OCI to the value of the hedged asset | |
| — | | |
| (11,112 | ) | |
| — | | |
| — | | |
| (11,112 | ) |
Deferred tax | |
| — | | |
| 3,701 | | |
| — | | |
| — | | |
| 3,701 | |
Actuarial reserves by employee benefit plans | |
| — | | |
| — | | |
| — | | |
| (15,416 | ) | |
| (15,416 | ) |
Deferred tax actuarial IAS by employee benefit plans | |
| — | | |
| — | | |
| — | | |
| 680 | | |
| 680 | |
Translation difference subsidiaries | |
| (19,405 | ) | |
| (10,135 | ) | |
| 22 | | |
| — | | |
| (29,518 | ) |
Closing balance as of December 31, 2023 | |
| (3,830,611 | ) | |
| (38,678 | ) | |
| 32,947 | | |
| (48,559 | ) | |
| (3,884,901 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Opening balance as of January 1, 2024 | |
| (3,830,611 | ) | |
| (38,678 | ) | |
| 32,947 | | |
| (48,559 | ) | |
| (3,884,901 | ) |
Change in fair value of hedging instrument recognized in OCI | |
| — | | |
| 72,299 | | |
| (28,589 | ) | |
| — | | |
| 43,710 | |
Reclassified from OCI to profit or loss | |
| — | | |
| (26,406 | ) | |
| 8,812 | | |
| — | | |
| (17,594 | ) |
Actuarial reserves by employee benefit plans | |
| — | | |
| | | |
| — | | |
| (15,291 | ) | |
| (15,291 | ) |
Deferred tax actuarial IAS by employee benefit plans | |
| — | | |
| | | |
| — | | |
| 594 | | |
| 594 | |
Translation difference subsidiaries | |
| (43,750 | ) | |
| (12 | ) | |
| (38 | ) | |
| — | | |
| (43,800 | ) |
Closing balance as of March 31, 2024 (Unaudited) | |
| (3,874,361 | ) | |
| 7,203 | | |
| 13,132 | | |
| (63,256 | ) | |
| (3,917,282 | ) |
| (h.1) | Cumulative
translate difference |
These
are originated from exchange differences arising from the translation of any investment in foreign entities (or Chilean investments with
a functional currency different to that of the parent), and from loans and other instruments in foreign currency designated as hedges
for such investments. When the investment (all or part) is sold or disposed and a loss of control occurs, these reserves are shown in
the consolidated statement of income as part of the loss or gain on the sale or disposal. If the sale does not involve loss of control,
these reserves are transferred to non-controlling interests.
| (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): |
| |
| | |
Result | | |
| | |
Others | | |
| |
| |
Opening | | |
for the | | |
| | |
increase | | |
Closing | |
Periods | |
balance | | |
period | | |
Dividends | | |
(decreases) (1) | | |
balance | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
From January 1 to March 31, 2023 (Unaudited) | |
| (7,501,896 | ) | |
| 121,801 | | |
| 57,129 | | |
| — | | |
| (7,322,966 | ) |
From April 1 to December 31, 2023 (Unaudited) | |
| (7,322,966 | ) | |
| 460,030 | | |
| (231,678 | ) | |
| 7,559,025 | | |
| 464,411 | |
From January 1 to March 31, 2024 (Unaudited) | |
| 464,411 | | |
| 258,279 | | |
| (77,483 | ) | |
| — | | |
| 645,207 | |
| (1) | The
detail of Other increases (decreases) is as follows: |
| |
As of | |
| |
December 31,
2023 | |
| |
ThUS$ | |
Absorption accumulated losses (*) | |
| 7,501,896 | |
Reversal of dividends | |
| 57,129 | |
Total | |
| 7,559,025 | |
| (*) | See
letter a) under this same Note. |
| |
Minimum mandatory dividend |
| |
Minimum mandatory dividend |
| |
Description of dividend | |
2024 |
| |
2023 |
| |
Amount of the dividend (ThUS$) | |
| 77,483 |
(*) | |
| 174,549,000 |
(**) | |
Number of shares among which the dividend is distributed | |
| 604,437,877,587 |
| |
| 604,437,877,587 |
| |
Dividend per share (US$) | |
| 0.000128 |
| |
| 0.000289 |
| |
| (*) | It
corresponds to mandatory minimum dividend provision charged to equity related to the net income for the year 2024. In the event of a
net income for the year 2024, the proposed minimum dividend must be approved by the Board of Directors when appropriate in accordance
with the applicable regulations. |
NOTE
25 - REVENUE
The
detail of revenues is as follows:
| |
For the period ended at
March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Passengers | |
| 2,897,842 | | |
| 2,394,352 | |
Cargo | |
| 369,357 | | |
| 377,290 | |
Total | |
| 3,267,199 | | |
| 2,771,642 | |
NOTE
26 - COSTS AND EXPENSES BY NATURE
(a) | Costs
and operating expenses |
The
main operating costs and administrative expenses are detailed below:
| |
For the period ended at
March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Aircraft fuel | |
| (1,024,373 | ) | |
| (1,059,759 | ) |
Other rentals and landing fees | |
| (387,659 | ) | |
| (297,345 | ) |
Aircraft maintenance | |
| (194,231 | ) | |
| (137,603 | ) |
Aircraft rental (*) | |
| (1,233 | ) | |
| (23,732 | ) |
Commissions | |
| (61,732 | ) | |
| (49,980 | ) |
Passenger services | |
| (76,131 | ) | |
| (63,133 | ) |
Other operating expenses | |
| (376,637 | ) | |
| (272,953 | ) |
Total | |
| (2,121,996 | ) | |
| (1,904,505 | ) |
| (*) | 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) |
| |
For the period ended at
March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Payments for leases of low-value assets | |
| (5,645 | ) | |
| (5,138 | ) |
Total | |
| (5,645 | ) | |
| (5,138 | ) |
(b) | Depreciation
and amortization Depreciation and amortization are detailed below: |
| |
For the period ended at
March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Depreciation (*) | |
| (317,301 | ) | |
| (263,607 | ) |
Amortization | |
| (15,521 | ) | |
| (14,447 | ) |
Total | |
| (332,822 | ) | |
| (278,054 | ) |
| (*) | 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 at March 31, 2024 is ThUS$155,463 (ThUS$129,045
for the same period in 2023). |
The
detail of financial costs is as follows:
| |
For the period ended at
March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Bank loan interests | |
| (100,010 | ) | |
| (98,197 | ) |
Financial leases | |
| (13,156 | ) | |
| (15,168 | ) |
Lease liabilities | |
| (73,283 | ) | |
| (49,285 | ) |
Other financial instruments | |
| (4,936 | ) | |
| (1,514 | ) |
Total | |
| (191,385 | ) | |
| (164,164 | ) |
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.
NOTE
27 - OTHER INCOME, BY FUNCTION
Other
income, by function is as follows:
| |
For the period ended at
March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Tours | |
| 15,064 | | |
| 11,176 | |
Customs and warehousing | |
| 7,201 | | |
| 6,197 | |
Maintenance | |
| 1,064 | | |
| 998 | |
Income from non-airlines products LATAM Pass | |
| 12,694 | | |
| 4,865 | |
Other miscellaneous income | |
| 18,111 | | |
| 10,580 | |
Total | |
| 54,134 | | |
| 33,816 | |
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.
Following
are the current exchange rates for the US dollar, on the dates indicated:
| |
As of | | |
As of December 31, | |
| |
March 31, | | |
2023 | | |
2022 | |
| |
Unaudited | | |
| | |
| |
Argentine peso | |
| 857.42 | | |
| 807.98 | | |
| 177.12 | |
Brazilian real | |
| 5.00 | | |
| 4.85 | | |
| 5.29 | |
Chilean peso | |
| 981.71 | | |
| 877.12 | | |
| 855.86 | |
Colombian peso | |
| 3,857.86 | | |
| 3,872.49 | | |
| 4,845.35 | |
Euro | |
| 0.92 | | |
| 0.90 | | |
| 0.93 | |
Australian dollar | |
| 1.53 | | |
| 1.46 | | |
| 1.47 | |
Boliviano | |
| 6.86 | | |
| 6.86 | | |
| 6.86 | |
Mexican peso | |
| 16.61 | | |
| 16.91 | | |
| 19.50 | |
New Zealand dollar | |
| 1.67 | | |
| 1.58 | | |
| 1.58 | |
Peruvian Sol | |
| 3.71 | | |
| 3.70 | | |
| 3.81 | |
Paraguayan Guarani | |
| 7,377.0 | | |
| 7,270.6 | | |
| 7,332.20 | |
Uruguayan peso | |
| 37.35 | | |
| 38.81 | | |
| 39.71 | |
Foreign
currency
The
foreign currency detail of balances of monetary items in current and non-current assets is as follows:
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Current assets | |
| | |
| |
| |
| | |
| |
Cash and cash equivalents | |
| 335,432 | | |
| 386,216 | |
Argentine peso | |
| 2,982 | | |
| 1,808 | |
Brazilian real | |
| 4,114 | | |
| 7,108 | |
Chilean peso | |
| 27,488 | | |
| 47,907 | |
Colombian peso | |
| 13,465 | | |
| 8,968 | |
Euro | |
| 20,445 | | |
| 25,329 | |
U.S. dollar | |
| 209,411 | | |
| 237,251 | |
Other currency | |
| 57,527 | | |
| 57,845 | |
| |
| | | |
| | |
Other financial assets, current | |
| 12,418 | | |
| 14,659 | |
Chilean peso | |
| 2,998 | | |
| 4,367 | |
Euro | |
| 3,633 | | |
| 3,722 | |
U.S. dollar | |
| 5,184 | | |
| 5,971 | |
Other currency | |
| 603 | | |
| 599 | |
| |
| | | |
| | |
Other non - financial assets, current | |
| 45,066 | | |
| 36,654 | |
Chilean peso | |
| 12,036 | | |
| 12,354 | |
Euro | |
| 4,151 | | |
| 5,310 | |
U.S. dollar | |
| 7,608 | | |
| 10,735 | |
Other currency | |
| 21,271 | | |
| 8,255 | |
| |
| | | |
| | |
Trade and other accounts receivable, current | |
| 285,960 | | |
| 279,586 | |
Argentine peso | |
| 12,681 | | |
| 12,831 | |
Chilean peso | |
| 70,763 | | |
| 69,588 | |
Colombian peso | |
| 1,672 | | |
| 1,453 | |
Euro | |
| 88,249 | | |
| 90,699 | |
U.S. dollar | |
| 75,957 | | |
| 68,893 | |
Other currency | |
| 36,638 | | |
| 36,122 | |
| |
| | | |
| | |
Accounts receivable from related entities, current | |
| 7 | | |
| 27 | |
Chilean peso | |
| 7 | | |
| 27 | |
| |
| | | |
| | |
Tax current assets | |
| 22,306 | | |
| 17,258 | |
Chilean peso | |
| 2,999 | | |
| 2,202 | |
Colombian peso | |
| 5,139 | | |
| 6,084 | |
Peruvian sun | |
| 11,837 | | |
| 7,108 | |
Other currency | |
| 2,331 | | |
| 1,864 | |
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Current assets | |
| | |
| |
| |
| | |
| |
Total current assets | |
| 701,189 | | |
| 734,400 | |
Argentine peso | |
| 15,663 | | |
| 14,639 | |
Brazilian real | |
| 4,114 | | |
| 7,108 | |
Chilean peso | |
| 116,291 | | |
| 136,445 | |
Colombian peso | |
| 20,276 | | |
| 16,505 | |
Euro | |
| 116,478 | | |
| 125,060 | |
U.S. Dollar | |
| 298,160 | | |
| 322,850 | |
Other currency | |
| 130,207 | | |
| 111,793 | |
| |
As of | | |
As of | |
| |
March 31,
2024 | | |
December 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
Non-current assets | |
| | |
| |
| |
| | |
| |
Other financial assets, non-current | |
| 15,202 | | |
| 15,375 | |
Brazilian real | |
| 3,690 | | |
| 3,807 | |
Chilean peso | |
| 2,700 | | |
| 2,073 | |
Euro | |
| 3,632 | | |
| 4,252 | |
U.S. dollar | |
| 1,983 | | |
| 2,071 | |
Other currency | |
| 3,197 | | |
| 3,172 | |
| |
| | | |
| | |
Other non - financial assets, non-current | |
| 10,116 | | |
| 9,856 | |
Brazilian real | |
| 10,034 | | |
| 9,789 | |
Other currency | |
| 82 | | |
| 67 | |
| |
| | | |
| | |
Accounts receivable, non-current | |
| 4,155 | | |
| 4,732 | |
Chilean peso | |
| 4,155 | | |
| 4,732 | |
| |
| | | |
| | |
Deferred tax assets | |
| 701 | | |
| 1,048 | |
Colombian peso | |
| 507 | | |
| 859 | |
U.S. dollar | |
| 148 | | |
| 144 | |
Other currency | |
| 46 | | |
| 45 | |
| |
| | | |
| | |
Total non-current assets | |
| 30,174 | | |
| 31,011 | |
Brazilian real | |
| 13,724 | | |
| 13,596 | |
Chilean peso | |
| 6,855 | | |
| 6,805 | |
Colombian peso | |
| 507 | | |
| 1,700 | |
Euro | |
| 3,632 | | |
| 4,252 | |
U.S. dollar | |
| 2,131 | | |
| 2,230 | |
Other currency | |
| 3,325 | | |
| 2,428 | |
The
foreign currency detail of balances of monetary items in current liabilities and non-current is as follows:
| |
Up to 90 days | | |
91 days to 1 year | |
| |
As of | | |
As of | | |
As of | | |
As of | |
| |
March 31, | | |
December 31, | | |
March 31, | | |
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| |
Current liabilities | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| |
Other financial liabilities, current | |
| 4,768 | | |
| 4,331 | | |
| 1,842 | | |
| 1,010 | |
Chilean peso | |
| 1,615 | | |
| 1,364 | | |
| 1,265 | | |
| 702 | |
U.S. dollar | |
| 2,618 | | |
| 2,510 | | |
| — | | |
| — | |
Other currency | |
| 535 | | |
| 457 | | |
| 577 | | |
| 308 | |
Trade and other accounts payables, current | |
| 542,447 | | |
| 616,032 | | |
| 6,574 | | |
| 9,583 | |
Argentine peso | |
| 4,349 | | |
| 2,074 | | |
| 135 | | |
| 132 | |
Brazilian real | |
| 13,088 | | |
| 13,401 | | |
| 757 | | |
| 922 | |
Chilean peso | |
| 100,698 | | |
| 128,838 | | |
| 1,857 | | |
| 1,560 | |
Euro | |
| 33,741 | | |
| 54,744 | | |
| 10 | | |
| 7 | |
U.S. dollar | |
| 344,356 | | |
| 350,635 | | |
| 199 | | |
| 1,797 | |
Peruvian sol | |
| 38,985 | | |
| 42,347 | | |
| 3,585 | | |
| 4,994 | |
Mexican peso | |
| 745 | | |
| 2,019 | | |
| — | | |
| — | |
Pound sterling | |
| 3,667 | | |
| 17,379 | | |
| 1 | | |
| 11 | |
Uruguayan peso | |
| 1,076 | | |
| 706 | | |
| 4 | | |
| 39 | |
Other currency | |
| 1,742 | | |
| 3,889 | | |
| 26 | | |
| 121 | |
Accounts payable to related entities, current | |
| 6,431 | | |
| 5,154 | | |
| — | | |
| — | |
U.S. dollar | |
| 6,431 | | |
| 5,154 | | |
| — | | |
| — | |
Other provisions, current | |
| 17 | | |
| 16 | | |
| 6,889 | | |
| 12,429 | |
Chilean peso | |
| — | | |
| — | | |
| 4 | | |
| 4 | |
Other currency | |
| 17 | | |
| 16 | | |
| 6,885 | | |
| 12,425 | |
| |
| | | |
| | | |
| | | |
| | |
Current liabilities | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Other non-financial liabilities, current | |
| 22,440 | | |
| 15,634 | | |
| 5,149 | | |
| 6,099 | |
Argentine peso | |
| 1,500 | | |
| 836 | | |
| 757 | | |
| 445 | |
Chilean peso | |
| 12,694 | | |
| 4,338 | | |
| 2,181 | | |
| 4,026 | |
Colombian peso | |
| 864 | | |
| 1,456 | | |
| 809 | | |
| 1,066 | |
U.S. dollar | |
| 6,268 | | |
| 7,305 | | |
| 465 | | |
| 416 | |
Other currency | |
| 1,114 | | |
| 1,699 | | |
| 937 | | |
| 146 | |
| |
| | | |
| | | |
| | | |
| | |
Total current liabilities | |
| 576,103 | | |
| 641,167 | | |
| 20,454 | | |
| 29,121 | |
Argentine peso | |
| 5,849 | | |
| 2,910 | | |
| 892 | | |
| 577 | |
Brazilian real | |
| 13,088 | | |
| 13,401 | | |
| 757 | | |
| 922 | |
Chilean peso | |
| 115,007 | | |
| 134,540 | | |
| 5,307 | | |
| 6,292 | |
Colombian peso | |
| 864 | | |
| 1,456 | | |
| 809 | | |
| 1,066 | |
Euro | |
| 33,741 | | |
| 54,744 | | |
| 10 | | |
| 7 | |
U.S. dollar | |
| 359,673 | | |
| 365,604 | | |
| 664 | | |
| 2,213 | |
Other currency | |
| 47,881 | | |
| 68,512 | | |
| 12,015 | | |
| 18,044 | |
| |
More than 1 to 3 years | | |
More than 3 to 5 years | | |
More than 5 years | |
| |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | | |
As of
March 31, | | |
As of
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| | |
Unaudited | | |
| | |
Unaudited | | |
| |
Non-current liabilities | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| |
Other financial liabilities, non- current | |
| 24,663 | | |
| 32,867 | | |
| 7,215 | | |
| 2,871 | | |
| 149,857 | | |
| 165,511 | |
Chilean peso | |
| 9,229 | | |
| 17,020 | | |
| 6,935 | | |
| 2,500 | | |
| 149,301 | | |
| 164,942 | |
U.S. dollar | |
| 13,585 | | |
| 14,110 | | |
| — | | |
| — | | |
| — | | |
| — | |
Other currency | |
| 1,849 | | |
| 1,737 | | |
| 280 | | |
| 371 | | |
| 556 | | |
| 569 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts payable, non-current | |
| 64,258 | | |
| 72,783 | | |
| — | | |
| — | | |
| — | | |
| — | |
Chilean peso | |
| 14,902 | | |
| 16,774 | | |
| — | | |
| — | | |
| — | | |
| — | |
U.S. dollar | |
| 47,772 | | |
| 54,441 | | |
| — | | |
| — | | |
| — | | |
| — | |
Other currency | |
| 1,584 | | |
| 1,568 | | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other provisions, non-current | |
| 48,837 | | |
| 49,427 | | |
| — | | |
| — | | |
| — | | |
| — | |
Argentine peso | |
| 4,059 | | |
| 3,570 | | |
| — | | |
| — | | |
| — | | |
| — | |
Brazilian real | |
| 41,248 | | |
| 42,244 | | |
| — | | |
| — | | |
| — | | |
| — | |
Colombian peso | |
| 389 | | |
| 395 | | |
| — | | |
| — | | |
| — | | |
| — | |
Euro | |
| 2,978 | | |
| 3,053 | | |
| — | | |
| — | | |
| — | | |
| — | |
U.S. dollar | |
| 163 | | |
| 165 | | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Provisions for employees benefits, | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
non-current | |
| 88,836 | | |
| 79,749 | | |
| — | | |
| — | | |
| — | | |
| — | |
Chilean peso | |
| 84,230 | | |
| 76,247 | | |
| — | | |
| — | | |
| — | | |
| — | |
U.S. dollar | |
| 4,606 | | |
| 3,502 | | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total non-current liabilities | |
| 226,594 | | |
| 234,826 | | |
| 7,215 | | |
| 2,871 | | |
| 149,857 | | |
| 165,511 | |
Argentine peso | |
| 4,059 | | |
| 3,570 | | |
| — | | |
| — | | |
| — | | |
| — | |
Brazilian real | |
| 41,248 | | |
| 42,244 | | |
| — | | |
| — | | |
| — | | |
| — | |
Chilean peso | |
| 108,361 | | |
| 110,041 | | |
| 6,935 | | |
| 2,500 | | |
| 149,301 | | |
| 164,942 | |
Colombian peso | |
| 389 | | |
| 395 | | |
| — | | |
| — | | |
| — | | |
| — | |
Euro | |
| 2,978 | | |
| 3,053 | | |
| — | | |
| — | | |
| — | | |
| — | |
U.S. dollar | |
| 66,126 | | |
| 72,218 | | |
| — | | |
| — | | |
| — | | |
| — | |
Other currency | |
| 3,433 | | |
| 3,305 | | |
| 280 | | |
| 371 | | |
| 556 | | |
| 569 | |
| |
As of | | |
As of | |
| |
March 31, | | |
December 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | | |
| |
General summary of foreign currency: | |
| | |
| |
| |
| | |
| |
Total assets | |
| 731,363 | | |
| 765,411 | |
Argentine peso | |
| 15,663 | | |
| 14,639 | |
Brazilian real | |
| 17,838 | | |
| 20,704 | |
Chilean peso | |
| 123,146 | | |
| 143,250 | |
Colombian peso | |
| 20,783 | | |
| 18,205 | |
Euro | |
| 120,110 | | |
| 129,312 | |
U.S. dollar | |
| 300,291 | | |
| 325,080 | |
Other currency | |
| 133,532 | | |
| 114,221 | |
| |
| | | |
| | |
Total liabilities | |
| 980,223 | | |
| 1,073,496 | |
Argentine peso | |
| 10,800 | | |
| 7,057 | |
Brazilian real | |
| 55,093 | | |
| 56,567 | |
Chilean peso | |
| 384,911 | | |
| 418,315 | |
Colombian peso | |
| 2,062 | | |
| 2,917 | |
Euro | |
| 36,729 | | |
| 57,804 | |
U.S. dollar | |
| 426,463 | | |
| 440,035 | |
Other currency | |
| 64,165 | | |
| 90,801 | |
| |
| | | |
| | |
Net position | |
| | | |
| | |
Argentine peso | |
| 4,863 | | |
| 7,582 | |
Brazilian real | |
| (37,255 | ) | |
| (35,863 | ) |
Chilean peso | |
| (261,765 | ) | |
| (275,065 | ) |
Colombian peso | |
| 18,721 | | |
| 15,288 | |
Euro | |
| 83,381 | | |
| 71,508 | |
U.S. dollar | |
| (126,172 | ) | |
| (114,955 | ) |
Other currency | |
| 69,367 | | |
| 23,420 | |
NOTE
29 – EARNINGS (LOSS) PER SHARE
| |
For the period ended at March 31, |
| |
| |
2024 |
| |
2023 |
| |
| |
Unaudited |
| |
Basic earnings per share | |
|
| |
Income attributable to owners of the parent (ThUS$) | |
| 258,279 |
| |
| 121,801 |
| |
Weighted average number of shares, basic | |
| 604,437,877,587 |
(*) | |
| 604,437,844,972 |
(*) | |
Basic earnings per share (US$) | |
| 0.000427 |
| |
| 0.000202 |
| |
| |
For the period ended at March 31, |
| |
| |
2024 |
| | |
2023 |
| |
| |
Unaudited |
| |
Diluted earnings per share | |
|
| |
Income attributable to owners of the parent (ThUS$) | |
| 258,279 |
| | |
121,801 |
| |
Weighted average number of shares, diluted | |
| 604,441,789,335 |
(**) | | |
606,407,693,000 |
(**) | |
Diluted earnings per share (US$) | |
| 0.000427 |
| | |
0.000201 |
| |
(*) | As
of March 31, 2024, the weighted average number of shares considers 604,437,877,587 shares
outstanding from January 1, 2024 to March 31, 2024. As of March 31, 2023, the number of weighted
basic shares considers 604,437,584,048 outstanding shares from January 1, 2023 to March 31,
2023. From January 10 to March 31, 2023, the number of shares outstanding increased due to
the partial conversion of the Convertible Note H. |
(**) | As
of March 31, 2024, the number of weighted diluted shares considers 604,437,877,587 shares
outstanding and 3,911,748 shares outstanding from January 1, 2024 until March 31, 2024, 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 March 31, 2023, the number of weighted diluted
shares considers 604,437,584,048 shares from January 1, 2023 to March 31, 2023, and 1,970,108,952
shares outstanding from January 1 to 31. March 2023, assuming the full conversion of the
convertible bonds that were issued on the date of exit from Chapter 11. |
NOTE
30 – CONTINGENCIES
| 1) | Lawsuits
filed by LATAM Airlines Group S.A. and Subsidiaries |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
LATAM
Finance Limited |
|
Grand
Court of the Cayman Islands |
|
- |
|
Request
for 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. |
|
-0- |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
Peuco
Finance Limited |
|
Grand
Court of the Cayman Islands |
|
- |
|
Request
for 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. |
|
-0- |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
Piquero
Leasing Limited |
|
Grand
Court of the Cayman Islands |
|
- |
|
Request
for 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. |
|
-0- |
| 2) | Lawsuits
received by LATAM Airlines Group S.A. and Subsidiaries. |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
LATAM
Airlines Group S.A. y Lan Cargo S.A. |
|
Comisión
Europea |
|
- |
|
Investigation
of alleged infringements to free competition of cargo airlines, especially fuel surcharge. On December 26th, 2007, the General Directorate
for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the instruction process against
twenty five cargo airlines, including Lan Cargo S.A., for alleged breaches of competition in the air cargo market in Europe, especially
the alleged fixed fuel surcharge and freight. |
|
On
April 14th, 2008, the notification of the European Commission was replied. The appeal was filed on January 24, 2011. On May 11, 2015,
we attended a hearing at which we petitioned for the vacation of the Decision based on discrepancies in the Decision between the
operating section, which mentions four infringements (depending on the routes involved) but refers to Lan in only one of those four
routes; and the ruling section (which mentions one single conjoint infraction). On November 9th, 2010, the General Directorate for
Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the imposition of a fine in the amount
of ThUS$8,838 (€8.220.000 Euros) This fine is being appealed by Lan Cargo S.A. and LATAM Airlines Group S.A. On December 16,
2015, the European Court of Justice revoked the Commission’s decision because of discrepancies. The European Commission did
not appeal the decision, but presented a new one on March 17, 2017 reiterating the imposition of the same fine on the eleven original
airlines. The fine totals €776,465,000 Euros. It imposed the same fine as before on Lan Cargo and its parent, LATAM Airlines
Group S.A., totaling €8.2 million Euros. On May 31, 2017 Lan Cargo S.A. and LATAM Airlines Group S.A. filed a petition with
the General Court of the European Union seeking vacation of this decision. We presented our defense in December 2017. On July 12,
2019, we attended a hearing before the European Court of Justice to confirm our petition for vacation of judgment or otherwise, a
reduction in the amount of the fine. On March 30, 2022, the European Court issued its ruling and lowered the amount of our fine from
KUS$8,838 (€8,220,000 Euros) to KUS$2,419 (€2,240,000 Euros). This ruling was appealed by LAN Cargo S.A. and LATAM on June
9, 2022. The other eleven airlines also appealed the ruling affecting them. The European Commission responded to our appeal of September
7, 2022. Lan Cargo S.A. and LATAM answered the Commission’s arguments on November 11, 2022. Finally, the European Commission
replied to our defense in January 2023. On February 13, 2023, LAN Cargo, S.A. and LATAM requested the European Court to hold an oral
hearing to ensure the Court’s full understanding of some points of the discussion. The European Court held a hearing on April 10,
2024. |
|
2,419 |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
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) |
|
- |
|
Lawsuits
filed against European airlines by users of freight services in private lawsuits as a result of the investigation into alleged breaches
of competition of cargo airlines, especially fuel surcharge. Lan Cargo S.A. and LATAM Airlines Group S.A., have been sued in court
proceedings directly and/or in third party, based in England, Norway, the Netherlands and Germany, these claims were filed in England,
Norway, the Netherlands and Germany, but are only ongoing in Norway and the Netherlands. |
|
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. |
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
Aerolinhas
Brasileiras S.A. |
|
Justicia
Federal. |
|
0008285-53.2015.403.6105 |
|
An
action seeking to quash a decision and petitioning for early protection in order protection in order to obtain a revocation of the penalty
imposed by the Brazilian Competition Authority (CADE) in the investigation of cargo airlines alleged fair trade violations, in in particular
the fuel surcharge. |
|
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 |
|
10,850 |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
Aerolinhas
Brasileiras S.A. |
|
Justicia
Federal. |
|
0001872-58.2014.4.03.6105 |
|
An
annulment action with a motion for preliminary injunction, was filed on 28/02/2014, in order to cancel tax debts of PIS, CONFINS,
IPI and II, connected with the administrative process 10831.005704/2006-43 |
|
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$3.850 – R$ 19.252.271,21 - probable y MUS$8.659 –
R$ 43299802,03 - possible). We must await a decision on the Treasury appeal. |
|
12,510 |
|
|
|
|
|
|
|
|
|
|
|
Tam
Linhas Aéreas S.A. |
|
Tribunal
Regional Federal da 2a Região. |
|
2001.51.01.012530-0
(vinculado a esteproceso los Pas 19515.721154/2014-71, 19515.002963/2009-12) |
|
Ordinary
judicial action brought for the purpose of declaring the nonexistence of legal relationship obligating the company to collect the
Air Fund. |
|
Unfavorable
court decision in first instance. Currently expecting the ruling on the appeal filed by the company. In order to suspend chargeability
of Tax Credit a Guaranty Deposit to the Court was delivered for R$ 260.223.373,10-original amount in 2012/2013, which currently equals
ThUS$82.473 (R$412.369.986,27). The court decision requesting that the Expert make all clarifications requested by the parties in
a period of 30 days was published on March 29, 2016. The plaintiffs’ submitted a petition on June 21, 2016 requesting acceptance
of the opinion of their consultant and an urgent ruling on the dispute. No amount additional to the deposit that has already been
made is required if this case is lost. A ruling is currently pending on the company’s appeal. |
|
82,473 |
|
|
|
|
|
|
|
|
|
|
|
Tam
Linhas Aéreas S.A. |
|
Secretaria
da Receita Federal do Brasil. |
|
10880.725950/2011-05 |
|
Ordinary
judicial action brought for the purpose of declaring the nonexistence of legal relationship obligating the company to collect the
Air Fund. |
|
The
objection (manifestação de inconformidade) filed by the company was rejected, which is why the voluntary appeal was
filed. The case was assigned to the 1st Ordinary Group of Brazil’s Administrative Council of Tax Appeals (CARF) on June 8,
2015. TAM’s appeal was included in the CARF session held August 25, 2016. An agreement that converted the proceedings
into a formal case was published on October 7, 2016. The company has received the results of the due diligence and presented a claim.
We must wait for an administrative decision. |
|
36,404 |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
Tam
Linhas Aéreas S.A. | |
Secretaria
da Receita Federal do Brasil.
|
|
10880.722.355/2014-52 |
|
On
August 19th, 2014 the Federal Tax Service issued a notice of violation stating that compensation credits Program (PIS) and the
Contribution for the Financing of Social Security COFINS by TAM are not directly related to the activity of air
transport. |
|
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. |
|
11,365 |
| |
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
10
ª Vara das Execuções Fiscais Federais de São Paulo |
|
0061196-68.2016.4.03.6182 |
|
Tax
Enforcement Lien No. 0020869- 47.2017.4.03.6182 on Profit-Based Social Contributions from 2004 to 2007. |
|
This
tax enforcement was referred to the 10th Federal Jurisdiction on February 16, 2017. A petition reporting our request to submit collateral
was recorded on April 18, 2017. At this time, the period is pending for the plaintiff to respond to our petition. The bond was replaced.
The evidentiary stage has begun. |
|
34,684 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas Federal S.A. |
|
Secretaría
de Receita |
|
5002912.29.2019.4.03.6100 |
|
A lawsuit disputing the debit in the administrative proceeding
16643.000085/2009-47, reported in previous notes, consisting of a notice demanding recovery of the Income and Social Assessment Tax on the net profit (SCL) resulting from the itemization royalties and use of the TAM trademark |
|
The lawsuit was assigned on February 28, 2019. A decision was rendered on March 1, 2019 stating that no guarantee was required. 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. |
|
10,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas Federal S.A. |
|
Delegacía
de Receita |
|
10611.720852/2016-58 |
|
An
improper charge of the Contribution for the Financing of Social Security (COFINS) on an import |
|
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. |
|
15,051 |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas Aéreas S.A. |
|
Delegacía
de Receita Federal |
|
16692.721.933/2017-80 |
|
The
Internal Revenue Service of Brazil issued a notice of violation because TAM applied for credits offsetting contributions for the
the Social Integration Program (PIS) and the Social Security Funding Contribution (COFINS) that do not bear a direct relationship
to air transport (Referring to 2012). |
|
An
administrative defense was presented on May 29, 2018. The process has become a judicial proceeding. |
|
30,330 |
|
|
|
|
|
|
|
|
|
|
|
SNEA
(Sindicato Nacional das empresas aeroviárias) |
|
União
Federal |
|
0012177-
54.2016.4.01.3400 |
|
A
claim against the 72% increase in airport control fees (TAT-ADR) and approach control fees (TAT-APP) charged by the Airspace Control
Department (“DECEA”). |
|
On
January 30th, 2024, SNEA obtained a favorable court decision from the 2nd Instance (TRF1), regarding its appeal. SNEA filed an appeal
(motion for clarification) to clarify missing points regarding the deposits made with the court. The company is awaiting the decision. |
|
104,547 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
União
Federal |
|
2001.51.01.020420-0 |
|
TAM
and other airlines filed a recourse claim seeking a finding that there is no legal or tax basis to be released from collecting the
Additional Airport Fee (“ATAERO”). |
|
A
decision by the superior court is pending. The amount is indeterminate because even though TAM is the plaintiff, if the ruling is
against it, it could be ordered to pay a fee. |
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal do Brasil |
|
19515-720.823/2018-11 |
|
An
administrative claim to collect alleged differences in SAT payments for the periods 11/2013
to 12/2017.
|
|
A
defense was presented on November 28, 2018. The Court dismissed the Company’s appeal
in August 2019. Then on September 17, 2019, Company filed a voluntary appeal (CRSF (Administrative
Tax Appeals Board)) that is pending a decision.
|
|
122,853 |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10880.938832/2013-19 |
|
The
decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the second
quarter of 2011, which were determined to be in the non-cumulative system |
|
An
administrative defense was argued on March 19, 2019. The Court dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision. |
|
22,080 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10880.938834/2013-
16 |
|
The
decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the third quarter
of 2011, which were determined to be in the non-cumulative system. |
|
An
administrative defense was argued on March 19, 2019. The Court dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision. |
|
16,369 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10880.938837/2013-
41 |
|
The
decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the fourth
quarter of 2011, which were determined to be in the non-cumulative system. |
|
An
administrative defense was argued on March 19, 2019. The Court dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision. |
|
21,354 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10880.938838/2013-
96 |
|
The
decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the
first quarter of 2012, which were determined to be in the non-cumulative system. |
|
We
presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary
appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision. |
|
13,753 |
Company |
|
Court |
|
Case
Number |
|
Origin |
|
Stage
of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
LATAM
Airlines Group Argentina, Brasil, Perú, Ecuador, y TAM Mercosur. |
|
Juzgado
de 1° Instancia en lo Civil y Comercial Federal N° 11 de la ciudad de Buenos Aires |
|
1408/2017 |
|
Consumidores
Libres Coop. Ltda. filed this claim on March 14, 2017 regarding a provision of services. It petitioned for the reimbursement of certain
fees or the difference in fees charged for passengers who purchased a ticket in the last 10 years but did not use it. |
|
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- |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10.880.938842/2013-
54 |
|
The
decision denied the petition for reassignment and did not equate the COFINS credit statements for the third quarter of 2012 that
had been determined to be in the non-accumulative system. |
|
We
presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary
appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision. |
|
15,792 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10.880.938844/2013-
43 |
|
The
decision denied the petition for reassignment and did not equate the COFINS credit statements for the third quarter of 2012 that
had been determined to be in the non-accumulative system. |
|
We
presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary
appeal (CARF) that is pending a decision. |
|
14,467 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas Aéreas S.A. |
|
Receita
Federal de Brasil |
|
10880.938841/2013-
18 |
|
The
decision denied the petition for reassignment and did not equate the COFINS credit statements for the second quarter of 2012 that
had been determined to be in the non-accumulative system. |
|
We
presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary
appeal (CARF) that is pending a decision. |
|
14,250 |
Company | |
Court | |
Case
Number | |
Origin | |
Stage
of trial | |
Amounts
Committed (*) |
| |
| |
| |
| |
| |
ThUS$ |
TAM
Linhas Aéreas S.A. | |
Receita
Federal de Brasil | |
10840.727719/2019-
71 | |
Collection
of PIS / COFINS tax for the period of 2014. | |
We
presented our administrative defense on January 11, 2020. The Court dismissed the Company’s defense in December 2020. The Company
filed a voluntary appeal (CARF) that is pending a decision. | |
43,655 |
| |
| |
| |
| |
| |
|
Latam-
Airlines Ecuador S.A. | |
Tribunal
Distrital de lo Fiscal | |
17509-2014-0088 | |
An
audit of the 2006 Income Tax Return that disallowed fuel expenses, fees and other items because the necessary support was
not provided, according to Management. | |
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. The company has decided not to continue with the lawsuit. | |
12,505 |
| |
| |
| |
| |
| |
|
TAM
Linhas Aéreas S.A. | |
Receita
Federal de Brasil | |
10880.910559/2017-
91 | |
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. | |
12,414 |
| |
| |
| |
| |
| |
|
TAM
Linhas Aéreas S.A. | |
Receita
Federal de Brasil | |
10880.910547/2017-
67 | |
Compensation
non equate by Cofins | |
We
presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense
in December 2020. The Company filed a voluntary appeal (CARF) that is pending a decision. | |
14,328 |
| |
| |
| |
| |
| |
|
TAM
Linhas Aéreas S.A. | |
Receita
Federal de Brasil | |
10880.910553/2017-
14 | |
Compensation
non equate by Cofins | |
We
presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense
in December 2020. The Company filed a voluntary appeal (CARF) that is pending a decision. | |
13,830 |
| |
| |
| |
| |
| |
|
TAM
Linhas Aéreas S.A. | |
Receita
Federal de Brasil | |
10880.910555/2017-
11 | |
Compensation
non equate by Cofins | |
We
presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense
in December 2020. The Company filed a voluntary appeal (CARF) that is pending a decision. | |
14,564 |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM Linhas Aéreas S.A. |
|
Receita Federal de Brasil |
|
10880.910560/2017- 16 |
|
Compensation non equate by Cofins |
|
We presented our administrative defense (Manifestação de Inconformidade). The Court
dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal (CARF) that is pending a decision. |
|
12,745 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aéreas S.A. |
|
Receita Federal de Brasil |
|
10880.910550/2017- 81 |
|
Compensation non equate by Cofins |
|
We presented our administrative defense (Manifestação de Inconformidade). The Court
dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal (CARF) that is pending a decision. |
|
14,748 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aéreas S.A. |
|
Receita Federal de Brasil |
|
10880.910549/2017-
56
|
|
Compensation non equate by Cofins |
|
We presented our administrative defense
(Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed
a voluntary appeal (CARF) that is pending a decision.
|
|
12,339 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aéreas S.A. |
|
Receita Federal de Brasil |
|
10880.910557/2017-
01
|
|
Compensation non equate by Cofins |
|
We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal (CARF) that is pending a decision. |
|
11,691 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aéreas S.A |
|
Receita Federal do Brasil |
|
10840.722712/2020-
05 |
|
Administrative trial that deals with the collection of PIS/Cofins proportionality (fiscal year 2015). |
|
We presented our administrative defense (Manifestação
de Inconformidade). A decision is pending. The Company filed a voluntary appeal (CARF) that is pending a decision.
|
|
34,083 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aéreas S.A. |
|
Receita Federal do Brasil |
|
10880.978948/2019- 86 |
|
It is about the non-approved compensation/reimbursement of Cofins for the 4th Quarter of 2015. |
|
TAM filed its administrative defense on July 14, 2020. A decision is pending. The Company filed a voluntary appeal (CARF) that is pending a decision. |
|
18,885 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aéreas S.A. |
|
Receita Federal do Brasil |
|
10880.978946/2019-97 |
|
It is about the non-approved compensation/reimbursement of Cofins for the 3th Quarter of 2015 |
|
TAM filed its administrative defense on July 14, 2020. A decision is pending. The Company filed a voluntary appeal (CARF) that is pending a decision. |
|
11,428 |
|
|
|
|
|
|
|
|
|
|
|
TAM Linhas Aereas S.A. |
|
Receita Federal do Brasil |
|
10880.978944/2019-06 |
|
It is about the non-approved compensation/reimbursement of Cofins for the 2th Quarter of 2015 |
|
TAM filed its administrative defense on July 14, 2020. A decision is pending. The Company filed a voluntary appeal (CARF) that is pending a decision. |
|
12,108 |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
Latam Airlines Group S.A
|
|
23° Juzgado Civil de Santiago |
|
C-8498-2020
|
|
Class Action Lawsuit filed by the National Corporation of Consumers and Users (CONADECUS) against LATAM Airlines Group S.A. for alleged breaches of the Law on Protection of Consumer Rights due to flight cancellations caused by the COVID- 19 Pandemic, requesting the nullity of possible abusive clauses, the imposition of fines and compensation for damages in defense of the collective interest of consumers. LATAM has hired specialist lawyers to undertake its defense. |
|
On 06/25/2020 we were notified of the lawsuit. On
04/07/2020 we filed a motion for reversal against the ruling that declared the action filed by CONADECUS admissible, the decision is
pending to date. On 07/11/2020 we requested the Court to comply with the suspension of this case, ruled by the 2nd Civil
Court of Santiago, in recognition of the foreign reorganization procedure pursuant to Law No. 20,720, for the entire period that
said proceeding lasts, a request that was accepted by the Court. CONADECUS filed a remedy of reconsideration and an appeal against
this resolution should the remedy of reconsideration be dismissed. The Court dismissed the reconsideration on August 3,
2020, but admitted the appeal. On March 1, 2023, the Court of Appeals resolved to omit the hearing of the case and pronouncement
regarding the appeal, in view of the fact that in January 2023 LATAM's request the end of the suspension of the process that was
decreed by resolution of July 17, 2020 in case file C-8498-2020 of the 23rd Civil Court of Santiago, for which the file 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. A reconciliation hearing was held on March 27, 2024, but no agreement was
reached. The amount at the moment is undetermined. |
|
-0- |
Company | |
Court | |
Case Number | |
Origin | |
Stage of trial | |
Amounts Committed (*) |
| |
| |
| |
| |
| |
ThUS$ |
Latam Airlines Group S.A. | |
25° Juzgado Civil de Santiago | |
C-8903-2020 | |
Class Action Lawsuit filed by AGRECU against LATAM Airlines Group S.A. for alleged breaches of the Law on Protection of Consumer Rights due to flight cancellations caused by the COVID-19 Pandemic, requesting the nullity of possible abusive clauses, the imposition of fines and compensation for damages in defense of the collective interest of consumers. LATAM has hired specialist lawyers to undertake its defense. | |
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 its obligation to report on 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 appeals by CONADECUS, costs included. On August 26, 2023, 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 petitioned that the Appellate Court determine the costs of the procedure, which must be defrayed by CONADECUS. The procedural costs were set on December 19, 2023 and personal costs were decided on January 3, 2024. The costs of the trial court are currently pending, which were petitioned by LATAM on December 20, 2023. CONADECUS currently has no petitions against the settlement reached between LATAM and AGRECU. The amount at the moment is undetermined. | |
-0- |
| |
| |
| |
| |
| |
|
TAM Linhas Aéreas S.A | |
Receita Federal de Brasil | |
13074.726429/2021-41 | |
It is about the non-approved compensation/reimbursement of Cofins for the periods 07/2016 to 06/2017. | |
TAM filed its administrative defense. (Manifestação de
Inconformidade). A decision is pending | |
19,531 |
Company | |
Court | |
Case Number | |
Origin | |
Stage of trial | |
Amounts Committed (*) |
| |
| |
| |
| |
| |
ThUS$ |
TAM Linhas Aéreas S.A. | |
Receita Federal de Brasil | |
2007.34.00.009919- 3(0009850- 54.2007.4.01.3400) | |
A lawsuit seeking to review the incidence of the Social Security Contribution taxed on 1/3 of vacations, maternity payments and medical leave for accident. | |
A decision is pending | |
72,573 |
| |
| |
| |
| |
| |
|
TAM Linhas Aéreas S.A. | |
Tribunal del Trabajo de Brasília/DF | |
0000038- 25.2021.5.10.0017 | |
This civil suit was filed by the National Pilots Union seeking that the company be ordered to pay for meals daily when pilots are on alert status. | |
The hearing is scheduled for April 15, 2024. | |
13,933 |
| |
| |
| |
| |
| |
|
TAM Linhas Aéreas S.A. | |
UNIÃO FEDERAL | |
0052711- 85.1998.4.01.0000 | |
An indemnity claim to collect a differentiated price from the Federal Union because of the disruption of the economic equilibrium in the concession agreements between 1988 and 1992. The indemnity, should the action prosper, cannot be estimated (Price Freeze). | |
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- |
| |
| |
| |
| |
| |
|
TAM Linhas Aéreas S.A | |
Tribunal do Trabajo de São Paulo | |
1000115- 90.2022.5.02.0312 | |
A class action whereby the Air Transport Union is petitioning for payment of additional hazardous and unhealthy work retroactively and in the future for maintenance/CML employees. | |
The instruction hearing is pending in this case, scheduled for 12:02 p.m. on April 25, 2024 | |
15,709 |
| |
| |
| |
| |
| |
|
TAM Linhas Aéreas S.A | |
Receita Federal | |
15746.728063/2022- 00 | |
This is an administrative claim regarding alleged irregularities in the payment of Technical Assistance (SAT) in 2018. | |
The administrative defense has been presented and a decision is pending. | |
17,749 |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM Linhas Aéreas
S.A |
|
União
Federal |
|
1003320-78.2023.4.06.3800 |
|
Legal action to discuss the debit of the administrative
process 10611.720630/2017-16 (fine for violation of incorrect registration in DI- import declaration) |
|
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. The decision was in favor of the company and the debt was canceled. A remedy filed
by Fazenda is pending. |
|
21,289 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
12585.720017/2012-84 |
|
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). |
|
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. |
|
10,348 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
10880-982.487/2020-80 |
|
This is a petition to recover a credit (proportional) in
the 4th quarter of 2016 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. A decision on the special
remedy is now pending. |
|
10,169 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
10880-967.530/2022-49 |
|
This is a petition to recover a credit (proportional) in
the 1st quarter of 2018 under the Social Security Financing Contribution program (abbreviated as COFINS in Portuguese). |
|
An administrative defense was presented. A decision is pending. |
|
10,522 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
10880-967.532/2022-38 |
|
This is a petition to recover a credit (proportional) in
the 2nd quarter of 2018 under the Social Security Financing Contribution program (abbreviated as COFINS in Portuguese). |
|
An administrative defense was presented and a decision is pending. |
|
11,290 |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
10880-967.533/2022-82 |
|
This is a petition to recover a credit (proportional) in the 4th quarter of 2018 under the Social Security Financing Contribution program
(abbreviated as COFINS in Portuguese). |
|
An administrative defense was presented and a decision is pending. |
|
19,883 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
19613.725650/2023-86 |
|
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. |
|
An administrative defense was presented and a decision is pending. |
|
13,968 |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Group S.A. |
|
Tribunal de
Defensa de
la Libre
Competencia |
|
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. |
|
-0- |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
LATAM
Airlines
Group S.A. |
|
Tribunal de
Defensa de
la Libre
Competencia |
|
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 final ruling from the Court. The preliminary measure cannot be implemented until such a
decision is rendered. For the time being, the amount is indeterminate. |
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Group S.A. |
|
23° Juzgado
Civil de
Santiago |
|
C-8156-2022 |
|
A class action filed by CONADECUS
against LATAM Airlines Group S.A. for alleged violations of the Consumer Protection Law because of the cancellation of tickets for
international flights purchased through travel agencies. It petitioned for fines and 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. |
|
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. On November 18, 2023, LATAM filed the
statement of defense. For the time being, the amount is undetermined. |
|
-0- |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
10880.967587/2022-48 |
|
This is about the unaccredited
compensation/reimbursement and redress regarding the improper payment of the monthly federal social assistance contribution (Cofins,
as abbreviated in Portuguese) made in the third quarter of 2018. |
|
The administrative defense has been presented and a decision is pending. |
|
11,362 |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Group S.A. |
|
Tribunal de
Defensa de
la Libre
Competencia |
|
NC-388-2011 |
|
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. The Supreme Court unanimously dismissed the appeal against judgment by the Civil Aviation Board
on March 15, 2024. The Board filed a remedy of reconsideration on March 21, 2024 against the Supreme Court’s decision dismissing
its appeal against judgment. LATAM filed a brief with the Supreme Court on March 26, 2024 petitioning the dismissal of that remedy of
reconsideration. The Supreme Court dismissed the Board’s remedy of reconsideration on April 12, 2024. There are no appeals pending
in this case. |
|
-0- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. (Continues on the next page) |
|
|
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
|
|
|
|
|
|
|
|
(Continues from the previous page)
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. The Office of the National Economic Prosecutor (FNE), the JAC,
the National Consumer Service (SERNAC), Sky Airline and CONADECUS also provided information in January and February 2024. The Civil Aviation
Board submitted a petition for clarification to the Antitrust Court on February 13, 2024, asking whether a tender could be convened of
international frequencies on the Santiago-Lima Route that expire in 2024. LATAM filed a brief on February 15, 2024 stating that no matter
needed to be clarified and that the petition should be dismissed. The Antitrust Court ruled against the Civil Aviation Board on February
15, 2024 because there were no obscure or doubtful aspects to clarify. |
|
|
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas S.A. |
|
União
Federal |
|
10880.967612/2022-93 |
|
This is a petition to recover a credit
Cofins in the 1st quarter of 2019 (proportional) |
|
The administrative
defense has been presented and a decision is pending. |
|
11,265 |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas S.A. |
|
Superior
Tribunal Aéreas de
Justiça
(STJ) |
|
0042711-
61.2007.8.05.0001
(1449899) |
|
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 procedure before the Court of Appeal is pending. |
|
11,231 |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Group S.A.
Sucursal
Perú |
|
Tribunal
Fiscal |
|
12511-2022 |
|
Appeal for $34MM, presented on October 11, 2022, against the Intendencia resolution No. 4070140000100, which declared unfounded the claim
filed by the Company on September, 20, 2022, against the Determination Resolutions for alleged omissions of the Income Tax corresponding
to the period 2014 and associated fines for the violation typified in numeral 1 of article 178 of the Tax Code. The main objections relate
to SUNAT’s lack of knowledge of the application of article 8 of the CDI between Peru and Chile regarding: i) Income obtained from the
exclusivity contract of the Latam Pass program with the Banco de Crédito del Perú, ii) Income from sale of miles to non-airline
partners and associated cost (sale of miles from the Latam Pass program to legal companies). |
|
The resolution is pending. |
|
34,000 |
Company |
|
Court |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas
Aéreas S.A |
|
UNIÃO
FEDERAL |
|
1012674-80.2018.4.01.3400 |
|
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- |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Perú S.A. |
|
Tribunal
Fiscal |
|
Expediente de
Apelación N°
2545-2023 |
|
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). |
|
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
this resolution which has been resolved and notified on April 10, 2024 through RTF 3149-9-2024, through which the Tax Court has
decided to revoke RI No. 4070140000253 and proceed to reliquidate the Tax. Currently the file is held by SUNAT for reliquidation. |
|
45,162 |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Perú S.A. |
|
Superintendencia
Nacional de
Administración
Tributaria
(SUNAT) |
|
Expediente de
Reclamación N°
4070340000412. |
|
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. |
|
On January 26, 2023, the Company filed an appeal against 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 |
|
Case Number |
|
Origin |
|
Stage of trial |
|
Amounts
Committed (*) |
|
|
|
|
|
|
|
|
|
|
ThUS$ |
TAM
Linhas
Aéreas S.A |
|
União
Federal |
|
10880-927.871/2023-62 |
|
This is a petition to recover Social Security Funding Contributions (Cofins in Portuguese) from the first semester of 2020 (proportionally). |
|
The administrative defense has been presented and a decision is pending. |
|
12,932 |
|
|
|
|
|
|
|
|
|
|
|
TAM
Linhas
Aéreas |
|
União
Federal |
|
19613.720519/2024-11 |
|
On February 7, 2024, the Brazilian Federal Tax Service issued a tax assessment against TAM Linhas Aéreas (19613.720519/2024- 11)
for the amount of ThUS$52,281 (MR$253,565) related to certain tax credits on “PIS COFINS” (Federal Social Contributions Taxed
on Gross Income) during the 2019/2020 period. |
|
The administrative defense has been presented and a decision is pending. |
|
50,752 |
|
|
|
|
|
|
|
|
|
|
|
LATAM
Airlines
Group S.A
Sucursal
Perú. |
|
Superintendencia
Nacional de
Administración
Tributaria
(SUNAT) |
|
— |
|
A claim will be filed against Cost Decisions #012-003-0137152 to #012-003-0137175 and Fines #012-002-0039543 to 012-002- 0039565 before
the legal deadline, which is April 26, 2024. |
|
The objections being challenged through the amounts indicated above pertain to the 2017 fiscal year. The main objections to Income Tax
involve the National Customs and Tax Administration Commission of Peru’s disregard for the application of Article 8 of the Double-Taxation
Treaty between Peru and Chile regarding: i) the income earned under the exclusivity contract between the LATAM Pass program and Banco
de Credito del Peru; and ii) the income from the sale of miles to non-aviation partners and the associated cost (sale of LATAM Pass miles
to legal entities). The main objections to the General Sales Tax deal with the tax credit for i) booking flights through the LATAM Pass
system that were ticketed by LATAM Airlines Peru; ii) the General Agency Service issued by the Lan Cargo Branch (placing transportation
services qualified as exports); iii) the General Agency Service provided by LATAM Airlines Peru (sale of tickets and interline flights);
and iv) the service of exchanging LATAM Pass prizes issued by Promotick. |
|
50,700 |
In
order to deal with any financial obligations arising from legal proceedings in effect at March 31, 2024, 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. In March 2024, the final report of the external auditors was presented. |
| 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 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. |
| 7) | The
competition authority sent an official letter [or request] to Tam Linhas Aereas S.A. (LATAM Airlines Brazil) seeking information on the
acquisition of other types of aircraft. The company received it on March 22, 2024. LATAM Airlines Brazil is cooperating with the authority
and maintains its commitment to transparency and compliance with all applicable laws and regulations. |
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 March 31, 2024,
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$ 1,086
million outstanding as of March 31, 2024), (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 March 31, 2024, 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 March 31,
2024, 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 March 31, 2024, the Company complies with the aforementioned minimum liquidity covenants.
As
of March 31, 2024, 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 | |
| 205,849 | | |
Apr 14, 2024 |
SÉTIMA TURMA DO TRIBUNAL REGIONAL FEDERAL DA 1ª REGIÃO - PROCEDIMENTO COMUM CÍVEL - DECEA - 0012177-54.2016.4.01.3400 | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 57,597 | | |
Apr 20, 2025 |
ISOCELES | |
LATAM Airlines Group S.A. | |
2 | |
Letter of Credit | |
| 82,000 | | |
Oct 30, 2024 |
UNIÃO FEDERAL (FAZENDA NACIONAL) | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 33,071 | | |
Jul 30, 2024 |
UNIÃO FEDERAL - PGFN | |
ABSA Aerolinhas Brasileiras S.A. | |
3 | |
Guarantee Insurance | |
| 38,901 | | |
Feb 22, 2025 |
UNIÃO FEDERAL - PGFN | |
TAM Linhas Aereas S.A. | |
4 | |
Guarantee Insurance | |
| 21,148 | | |
Sep 28, 2024 |
UNIÃO FEDERAL - FAZENDA NACIONAL | |
ABSA Aerolinhas Brasileiras S.A. | |
2 | |
Guarantee Insurance | |
| 2,381 | | |
Apr 14, 2025 |
UNIÃO FEDERAL | |
TAM Linhas Aereas S.A. | |
5 | |
Guarantee Insurance | |
| 11,234 | | |
Feb 4, 2025 |
FUNDACAO DE PROTECAO E DEFESA DO CONSUMIDOR PROCON | |
TAM Linhas Aereas S.A. | |
11 | |
Guarantee Insurance | |
| 18,499 | | |
Apr 2, 2024 |
VARA DAS EXECUÇÕES FISCAIS ESTADUAIS
DE SÃO PAULO - FORO DAS EXECUÇÕES FISCAIS DE SÃO PAULO | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 9,759 | | |
Mar 4, 2025 |
AMERICAN ALTERNATIVE INS. CO. C/O ROANOKE INS. GROUP INC | |
LATAM Airlines Group S.A. | |
17 | |
Letter of Credit | |
| 5,905 | | |
Apr 15, 2024 |
TRIBUNAL DE JUSTIÇA DO ESTADO DE SÃO PAULO | |
ABSA Aerolinhas Brasileiras S.A. | |
2 | |
Guarantee Insurance | |
| 7,486 | | |
Dec 31, 2999 |
BBVA | |
LATAM Airlines Group S.A. | |
1 | |
Letter of Credit | |
| 3,800 | | |
Jan 23, 2025 |
1° VARA DE EXECUÇÕES FISCAIS E DE CRIMES CONTRA A ORDEM TRIB DA COM DE FORTALEZA | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 3,203 | | |
Dec 31, 2999 |
ARQUITETURA DE PROTEÇÃO E DEFESA DO CONSUMIDOR DO ESTADO DO RJ | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,423 | | |
Dec 31, 2999 |
BOND SAFEGUARD INSURANCE COMPANY | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 2,700 | | |
Jul 20, 2024 |
COMISÓN EUROPEA | |
LATAM Airlines Group S.A. | |
1 | |
Letter of Credit | |
| 2,598 | | |
Mar 29, 2025 |
UNIAO FEDERAL (FAZENDA NACIONAL) | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 2,806 | | |
Nov 16, 2025 |
17ª VARA CÍVEL DA COMARCA DA CAPITAL DE JOÃO PESSOA/PB | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 2,454 | | |
Jun 25, 2028 |
JFK INTERNATIONAL AIR TERMINAL LLC | |
LATAM Airlines Group S.A. | |
1 | |
Letter of Credit | |
| 2,300 | | |
Jan 27, 2025 |
METROPOLITAN DADE CONTY (MIAMI - DADE AVIATION DEPARTMENT) | |
LATAM Airlines Group S.A. | |
6 | |
Letter of Credit | |
| 2,989 | | |
Apr 9, 2024 |
Creditor Guarantee | |
Debtor | |
Quantity | |
Type | |
Value ThUS$ | | |
Release Date |
SERVICIO NACIONAL DE ADUANA DEL ECUADOR | |
LATAM-Airlines Ecuador S.A. | |
4 | |
Letter of Credit | |
| 2,130 | | |
May 8, 2024 |
VARA DE EXECUÇÕES FISCAIS ESTADUAIS DA COMARCA DE SÃO PAULO/SP - EXECUÇÃO FISCAL N.º 1507367- 03.2016.8.26.0014 | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,966 | | |
Apr 24, 2025 |
SOCIEDAD CONCESIONARIA NUEVO PUDAHUEL S.A. | |
LATAM Airlines Group S.A. | |
20 | |
Letter of Credit | |
| 1,040 | | |
Dec 31, 2024 |
14ª VARA FEDERAL DA SEÇÃO JUDICIÁRIA DO DISTRITO FEDERAL / TRIBUNAL: 7ª TURMA DO TRIBUNAL REGIONAL FEDERAL DA 1ª REGIÃO - ANULATÓRIA N.º 0007263-25.2008.4.01.3400 | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,813 | | |
May 29, 2025 |
FIANÇA TAM LINHAS AÉREAS X JUIZ FEDERAL DE UMA DAS VARAS DA SEÇÃO JUDICIÁRIA DE BRASÍLIA/ | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 2,207 | | |
Dec 31, 2999 |
LIMA AIRPORT PARTNERS S.R.L. | |
LATAM Airlines Group S.A. | |
22 | |
Letter of Credit | |
| 2,867 | | |
Nov 30, 2024 |
TRIBUNAL DE JUSTIÇA DO ESTADO DE SÃO PAULO | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,165 | | |
Dec 31, 2999 |
UNIDAD ADMINISTRATIVA BOGOTÁ | |
LATAM Airlines Group S.A. | |
4 | |
Letter of Credit | |
| 1,432 | | |
Apr 17, 2024 |
JUIZO DE DIREITO DA VARA DA FAZENDA PUBLICA ESTADUAL DA COMARCA DA CAPITAL DO ESTADO DO RIO DE JANEIRO | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,537 | | |
Dec 31, 2999 |
MUNICIPIO DO RIO DE JANEIRO | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,479 | | |
Dec 31, 2999 |
AENA AEROPUERTOS S.A | |
LATAM Airlines Group S.A. | |
2 | |
Letter of Credit | |
| 2,370 | | |
Nov 15, 2024 |
CITY OF LOS ANGELES, DEPARTMENT OF AIRPORTS | |
LATAM Airlines Group S.A. | |
3 | |
Letter of Credit | |
| 712 | | |
Apr 15, 2024 |
PARQUE DE MAETERIAL AERONAUTICO DO GALEAO - PAMA GL | |
TAM Linhas Aereas S.A. | |
1 | |
Guarantee Insurance | |
| 1,054 | | |
Jun 18, 2024 |
CORPAC S.A. | |
LATAM Airlines Perú S.A. | |
16 | |
Letter of Credit | |
| 2,784 | | |
Sep 28, 2024 |
| |
| |
| |
Total | |
| 542,659 | | |
|
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.
NOTE
32 - TRANSACTIONS WITH RELATED PARTIES
| (a) | Details
of transactions with related parties as follows: |
| |
| |
Nature of relationship with | |
Country | | |
Nature of
related parties | |
| | |
For the period ended At March 31, | |
Tax No. | |
Related party | |
related parties | |
of origin | | |
transactions | |
Currency | | |
2024 | | |
2023 | |
| |
| |
| |
| | |
| |
| | |
ThUS$ | | |
ThUS$ | |
| |
| |
| |
| | |
| |
| | |
Unaudited | |
96.810.370-9 | |
Inversiones Costa Verde Ltda. y CPA. | |
Related director | |
| Chile | | |
Tickets sales | |
| CLP | | |
| 20 | | |
| 13 | |
| |
| |
| |
| | | |
| |
| | | |
| | | |
| | |
Foreign | |
Inversora Aeronáutica Argentina S.A. | |
Related director | |
| Argentina | | |
Real estate leases received | |
| ARS | | |
| (5 | ) | |
| (25 | ) |
| |
| |
| |
| | | |
Expense recovery | |
| ARS | | |
| — | | |
| 3 | |
Foreign | |
Qatar Airways | |
Indirect shareholder | |
| Qatar | | |
Interlineal received service | |
| US$ | | |
| (7,702 | ) | |
| (8,038 | ) |
| |
| |
| |
| | | |
Interlineal provided service | |
| US$ | | |
| 11,446 | | |
| 13,719 | |
| |
| |
| |
| | | |
Services received of handling | |
| US$ | | |
| (5 | ) | |
| — | |
| |
| |
| |
| | | |
Services provided of handling | |
| US$ | | |
| 206 | | |
| — | |
| |
| |
| |
| | | |
Services received miles | |
| US$ | | |
| (1,837 | ) | |
| (231 | ) |
| |
| |
| |
| | | |
Services provided miles | |
| US$ | | |
| 501 | | |
| — | |
| |
| |
| |
| | | |
Services provided / received others | |
| US$ | | |
| 121 | | |
| 520 | |
Foreign | |
Delta Air Lines, Inc. | |
Shareholder | |
| U.S.A | | |
Interlineal received service | |
| US$ | | |
| (73,152 | ) | |
| (45,472 | ) |
| |
| |
| |
| | | |
Interlineal provided service | |
| US$ | | |
| 65,450 | | |
| 47,908 | |
| |
| |
| |
| | | |
Services received miles | |
| US$ | | |
| (7,966 | ) | |
| — | |
| |
| |
| |
| | | |
Services provided miles | |
| US$ | | |
| 2,011 | | |
| — | |
| |
| |
| |
| | | |
Services received of handling | |
| US$ | | |
| (786 | ) | |
| (188 | ) |
| |
| |
| |
| | | |
Real estates leases provided | |
| US$ | | |
| 19 | | |
| — | |
| |
| |
| |
| | | |
Services provided / received others | |
| US$ | | |
| 524 | | |
| 319 | |
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.
| (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 period ended at March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Remuneration | |
| 3,399 | | |
| 3,911 | |
Board compensation | |
| 244 | | |
| 152 | |
Non-monetary benefits | |
| 163 | | |
| 163 | |
Short-term benefits | |
| 3,187 | | |
| 3,402 | |
Termination benefits (*) | |
| 521 | | |
| 13 | |
Total | |
| 7,514 | | |
| 7,641 | |
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. |
| (c) | Likewise,
each Director who becomes part of the Board Committee will also receive, as additional 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.
As
of March 31, 2024 and March 31, 2023, there are no amounts paid for URAs.
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.
GEM
Executives
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 | |
| |
Percentage of
Units that
become effective | |
Month 30 from Exit Date | |
| 20 | % |
Month 42 from Exit Date | |
| 30 | % |
Month 60 from Exit Date | |
| 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 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 and March 31, 2024 , is as follows:
| |
Opening balance as of 01.01.2023 | | |
Granted during the period | | |
Vested | | |
Exercised during the period | | |
Forfeited during the period | | |
Closing balance as
of December 31,
2023 | |
RSU - Retention | |
| — | | |
| 3,107,603,293 | | |
| — | | |
| — | | |
| (121,146,360 | ) | |
| 2,986,456,933 | |
PSU - Performance | |
| — | | |
| 4,251,780,158 | | |
| — | | |
| — | | |
| (242,192,091 | ) | |
| 4,009,588,067 | |
MPPBASEDRSU - Protection | |
| — | | |
| 1,438,926,658 | | |
| — | | |
| — | | |
| (192,047,245 | ) | |
| 1,246,879,413 | |
Total | |
| — | | |
| 8,798,310,109 | | |
| — | | |
| — | | |
| (555,385,696 | ) | |
| 8,242,924,413 | |
| |
Opening
balance as of 01.01.2024 | | |
Granted
during the
period | | |
Vested | | |
Exercised
during the
period | | |
Forfeited
during the
period | | |
Closing balance as
of March 31,
2024 | |
| |
| | |
| | |
| | |
| | |
| | |
Unaudited | |
RSU - Retention | |
| 2,986,456,933 | | |
| — | | |
| — | | |
| (144,875,210 | ) | |
| (34,817,892 | ) | |
| 2,806,763,831 | |
PSU - Performance | |
| 4,009,588,067 | | |
| — | | |
| — | | |
| — | | |
| (40,680,938 | ) | |
| 3,968,907,129 | |
MPPBASEDRSU - Protection | |
| 1,246,879,413 | | |
| — | | |
| — | | |
| — | | |
| (33,516,713 | ) | |
| 1,213,362,700 | |
Total | |
| 8,242,924,413 | | |
| — | | |
| — | | |
| (144,875,210 | ) | |
| (109,015,543 | ) | |
| 7,989,033,660 | |
NOTE
34 - STATEMENT OF CASH FLOWS
| (a) | The
Company has carried out the following transactions with non-monetary impact transactions
mainly related to financial lease and lease liabilities, which are described in Note 19 Other
financial liabilities. |
| (b) | Other
inflows (outflows) of cash: |
| |
For the period ended At March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Restricted Advances | |
| — | | |
| 7,582 | |
Bank commissions, taxes paid and other | |
| (900 | ) | |
| (382 | ) |
Taxes on financial transactions | |
| (1,970 | ) | |
| (1,078 | ) |
Guarantees | |
| 8,220 | | |
| (5,248 | ) |
Payment for hedging instruments | |
| 18,262 | | |
| 5,464 | |
Court deposits | |
| (1,368 | ) | |
| (5,951 | ) |
Derivative margin guarantees | |
| 6,181 | | |
| (17,322 | ) |
Payment for derivatives premiums | |
| (2,241 | ) | |
| (13,798 | ) |
Total Other inflows (outflows) Operation activities | |
| 35,972 | | |
| (30,733 | ) |
| |
| | | |
| | |
Guarantee deposit received from the sale of aircraft | |
| 7,000 | | |
| — | |
Recoveries of credits received | |
| 20,589 | | |
| 20,111 | |
Total Other inflows (outflows) Investment activities | |
| 27,589 | | |
| 20,111 | |
| |
| | | |
| | |
Interest rate derivatives | |
| 1,538 | | |
| — | |
Taxes on financial transactions | |
| — | | |
| (2,946 | ) |
Withholding tax | |
| (819 | ) | |
| — | |
Total Other inflows (outflows) Financing activities | |
| 719 | | |
| (2,946 | ) |
| |
For the period ended At March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Transportes Aéreos del Mercosur S.A. (*) | |
| (289 | ) | |
| — | |
Total dividends paid | |
| (289 | ) | |
| — | |
| (*) | Dividends
paid to minority shareholders |
| (d) | Reconciliation
of liabilities arising from financing activities: |
| |
| | |
Cash flows | | |
Non cash-Flow Movements | | |
| |
| |
As of | | |
| | |
Payment | | |
Interest | | |
| | |
As of | |
Obligations with
financial institutions | |
December 31,
2023 | | |
Obtainment
Capital (*) | | |
Capital (**) | | |
Interests | | |
accrued and
others | | |
Reclassifications | | |
March 31,
2024 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| | |
| | |
| | |
| | |
Unaudited | | |
| | |
| |
Bank loans | |
| 1,029,434 | | |
| — | | |
| (2,750 | ) | |
| (42,046 | ) | |
| 47,671 | | |
| — | | |
| 1,032,309 | |
Guaranteed obligations | |
| 303,922 | | |
| — | | |
| (8,088 | ) | |
| (5,201 | ) | |
| 5,281 | | |
| — | | |
| 295,914 | |
Other guaranteed obligations | |
| 430,350 | | |
| — | | |
| (11,767 | ) | |
| (10,513 | ) | |
| 10,661 | | |
| — | | |
| 418,731 | |
Obligation with the public | |
| 1,302,838 | | |
| — | | |
| — | | |
| — | | |
| 25,716 | | |
| — | | |
| 1,328,554 | |
Financial leases | |
| 901,546 | | |
| — | | |
| (28,745 | ) | |
| (11,971 | ) | |
| 13,156 | | |
| — | | |
| 873,986 | |
Other loans | |
| 104 | | |
| — | | |
| — | | |
| — | | |
| (5 | ) | |
| — | | |
| 99 | |
Lease liability | |
| 2,967,994 | | |
| — | | |
| (86,035 | ) | |
| (59,779 | ) | |
| 304,964 | | |
| — | | |
| 3,127,144 | |
Total Obligations with financial institutions | |
| 6,936,188 | | |
| — | | |
| (137,385 | ) | |
| (129,510 | ) | |
| 407,444 | | |
| — | | |
| 7,076,737 | |
| |
| | |
Cash flows | | |
Non cash-Flow Movements | | |
| |
| |
As of | | |
| | |
Payment | | |
Interest | | |
| | |
As of | |
Obligations with
financial institutions | |
December 31,
2022 | | |
Obtainment
Capital (*) | | |
Capital (**) | | |
Interests | | |
accrued and
others | | |
Reclassifications | | |
March 31,
2023 | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
| | |
| | |
| | |
| | |
Unaudited | | |
| | |
| |
Bank loans | |
| 1,385,995 | | |
| — | | |
| (2,750 | ) | |
| (29,925 | ) | |
| 55,672 | | |
| — | | |
| 1,408,992 | |
Guaranteed obligations | |
| 325,061 | | |
| — | | |
| (4,533 | ) | |
| (4,771 | ) | |
| 4,824 | | |
| (1,790 | ) | |
| 318,791 | |
Other guaranteed obligations | |
| 474,304 | | |
| — | | |
| (11,346 | ) | |
| (10,230 | ) | |
| 9,813 | | |
| 11,811 | | |
| 474,352 | |
Obligation with the public | |
| 1,289,799 | | |
| — | | |
| — | | |
| — | | |
| 56,529 | | |
| — | | |
| 1,346,328 | |
Financial leases | |
| 1,088,239 | | |
| — | | |
| (63,734 | ) | |
| (11,685 | ) | |
| 15,150 | | |
| (13,123 | ) | |
| 1,014,847 | |
Other loans | |
| 2,028 | | |
| — | | |
| — | | |
| — | | |
| (56 | ) | |
| — | | |
| 1,972 | |
Lease liability | |
| 2,216,454 | | |
| — | | |
| (56,687 | ) | |
| (27,687 | ) | |
| 40,649 | | |
| — | | |
| 2,172,729 | |
Total Obligations with financial institutions | |
| 6,781,880 | | |
| — | | |
| (139,050 | ) | |
| (84,298 | ) | |
| 182,581 | | |
| (3,102 | ) | |
| 6,738,011 | |
(*) | During
the year 2024 and 2023, the Company did not obtain financing. |
(**) | As
of March 31, 2024, loan repayments ThUS$51,350 and payments of lease liabilities ThUS$86,035, disclosed in flows from financing activities
and as of March 31, 2023, loan repayments ThUS$82,363 and liability payments for leases ThUS$56,687 disclosed in flows from financing
activities. |
Below
are the details obtained (payments) of flows related to financing:
| |
For the period ended March 31 | |
| |
2024 | | |
2023 | |
| |
Capital | | |
Payments | | |
Capital | | |
Payments | |
Flow of | |
raising | | |
Capital | | |
Interest | | |
raising | | |
Capital | | |
Interest | |
| |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Aircraft financing | |
| — | | |
| (48,600 | ) | |
| (18,766 | ) | |
| — | | |
| (79,613 | ) | |
| (18,321 | ) |
Lease liability | |
| — | | |
| (86,035 | ) | |
| (59,779 | ) | |
| — | | |
| (56,687 | ) | |
| (27,687 | ) |
Non-aircraft financing | |
| — | | |
| (2,750 | ) | |
| (50,964 | ) | |
| — | | |
| (2,750 | ) | |
| (38,290 | ) |
Total obligations with Financial institutions | |
| — | | |
| (137,385 | ) | |
| (129,509 | ) | |
| — | | |
| (139,050 | ) | |
| (84,298 | ) |
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. As of 03.31.2024 and 03.31.2023, the Company did not flows for this concept.
(f) | Additions
of property, plant and equipment and Intangibles |
| |
For the period ended At March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Net cash flows from | |
| |
Purchases of property, plant and equipment | |
| 102,484 | | |
| 97,886 | |
Additions associated with maintenance | |
| 48,372 | | |
| 47,523 | |
Other additions | |
| 54,112 | | |
| 50,363 | |
Purchases of intangible assets | |
| 13,297 | | |
| 13,593 | |
Other additions | |
| 13,297 | | |
| 13,593 | |
(g) | The
net effect of the application of hyperinflation in the consolidated cash flow statement corresponds
to: |
| |
For the period ended At March 31, | |
| |
2024 | | |
2023 | |
| |
ThUS$ | | |
ThUS$ | |
| |
Unaudited | |
Net cash flows from (used in) operating activities | |
| 3,647 | | |
| (6,724 | ) |
Net cash flows from (used in) investment activities | |
| — | | |
| 879 | |
Effects of variation in the exchange rate on cash and cash equivalents | |
| (3,647 | ) | |
| 5,845 | |
Net increase (decrease) in cash and cash equivalents | |
| — | | |
| — | |
| (h) | Payments
of leased maintenance |
Payments
to suppliers for the supply of goods and services include the value paid associated with leased maintenance capitalizations for ThUS$66,906
(ThUS$28,602 as of March 31, 2023).
NOTE
35 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS
On
March 1, 2024, S&P upgraded LATAM’s corporate rating to B+ from B, with a positive outlook. Additionally, on April 12, 2024,
Moody’s upgraded LATAM’s corporate rating to Ba3 (BB-) from B1 (B+) with a stable outlook. Lastly, on April 30th, Feller
Rate upgraded its local rating from BBB- with a stable outlook, to BBB with a positive outlook. The above reflects the recognition of
the company’s consistently stronger credit metrics and its sustained performance.
In
a meeting held on April 3, 2024 by the Company’s Board of Directors approved to begin the process to open and relist the Company’s
ADRs on the New York Stock Exchange (“NYSE”) (the “Relisting of the ADR Program”). This process entails various
procedures and requirements before the Securities and Exchange Commission of the United States of America and the NYSE.
Once
the requirements referred to in the preceding paragraph have been met, and subject to the conditions set forth below, the Board of
Directors will ultimately decide whether or not to approve and make effective the ADR Program Reliste. This decision will be taken:
(i) once the consent is obtained from those who were the main creditors supporting the reorganization plan of the Company (the
“Reorganization Plan”) that was approved and confirmed in its reorganization procedure under Chapter 11 of the
Bankruptcy Code of the United States of America, and without which the Company would not have emerged from said reorganization
procedure; and (ii) considering market conditions and the best interest of the Company. The Relisting of the ADR Program thus
resolved will be opportunely informed by a new material fact, and the process to finalize the Relisting of the ADR Program is
estimated at this date to take up to six months, starting on April 3, 2024.
Additionally,
the Company’s Board of Directors, at the same meeting, took note of the resignation presented by Bouk Van Geloven from his
position as Director of the Company, effective as of April 24, 2024. As a result of this resignation, in the Ordinary
Shareholders’ Meeting held on April 25, 2024, the members of the Board of Directors of the Company were renewed,for a period
of two years from that date, being also elected as Director William de Wulf.
At
the same Ordinary Shareholders’ Meeting, it was approved the distribution of the final dividend proposed by the Board of Directors
in the Ordinary Session of April 3, 2024, amounting to ThUS$174,549, which corresponds to 30% of the net income for the year 2023. The
payment will be made on May 16, 2024.
After
March 31, 2024 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 March 31, 2024, have been approved in the Extraordinary
Session of the Board of Directors on May 2, 2024.
Exhibit 99.2
SUMMARY
FINANCIAL AND OTHER OPERATING INFORMATION
The summary consolidated interim
financial information of LATAM Airlines Group S.A (which we refer to as “LATAM,” the “Company,” the “parent”
or “we”) set forth below as of March 31, 2024, and for the periods ended March 31, 2024 and 2023, has been derived from our
unaudited interim consolidated financial statements for the three-month periods ended March 31, 2024 and 2023 and as of March 31, 2024,
included as Exhibit 99.1 to this Form 6-K (which we refer to as the “unaudited interim consolidated financial statements”).
Our unaudited interim consolidated financial statements are prepared in accordance with International Accounting Standard 34 (IAS 34),
Interim Financial Reporting, as issued by the International Accounting Standards Board.
The following discussion of
the Company’s results of operations for the three-month periods ended March 31, 2024 and 2023 should be read in conjunction with
our unaudited interim consolidated financial statements and our annual report on Form 20-F for the fiscal year ended December 31, 2023,
as filed with the SEC on February 22, 2024 (which we refer to as the “Form 20-F”) and, in particular, “Business Overview”
and “Financial Review” in the Form 20-F.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations as of and for the Three-Month Period Ended March 31, 2024
Net Income
For the three months ended March 31, 2024, we recorded
a net profit of U.S.$260.0 million, of which U.S.$258.3 million is attributable to owners of the parent, which represents an increase
in net income of U.S.$138.9 million and income attributable to owners of the parent of U.S.$136.5 million, respectively, compared to U.S.$121.1
million of net income and U.S.$121.8 million of net income attributable to owners of the parent, for the same period ended March 31, 2023.
Our net income for the three months ended March 31, 2024 was mainly explained by our strong performance during the industry’s high
season in South America.
Revenue
For the three months ended March 31, 2024, total
revenue increased 17.9% relative to the same period of the prior year, reaching U.S.$3,321.3 million. This was due to an increase of 21.0%
in passenger revenues, which was partially offset by a decrease of 2.1% in cargo revenues compared to the same period in 2023.
For the three months ended March 31, 2024, passenger
revenue amounted to U.S.$2,897.8 million, a 21.0% increase compared to U.S.$2,394.4 million in passenger revenue recorded in the same
period of the prior year. Our capacity increased by 17.5% compared to the same period in 2023, while RASK reached US$7.5 cents, reflecting
an increase of 3.0% as compared with the first quarter of 2023. Such an increase was due in large part to general passenger demand, resilient
corporate customer demand, and ongoing recovery of international air travel demand. Yields based on revenue passenger kilometers (“RPK”)
decreased 1.1% for the three months ended March 31, 2024 compared to the same period of the prior year.
For the three months ended March 31, 2024, cargo
revenue was U.S.$369.4 million, 2.1% lower than the cargo revenue recorded in the same period of the prior year. This decrease is mainly
explained by a 12.8% decrease in yields based on revenue tons kilometers (“RTK”). This decrease was partially offset by a
13.4% increase in capacity (measured by available ton kilometers (“ATK”)) for the three months ended March 31, 2024, compared
to the same period of the prior year.
Cost of Sales
For the three months ended March 31, 2024, our
cost of sales increased by 10.4% compared to the same period of the prior year, to U.S.$2,393.9 million, mainly explained by the increase
in passenger operations, and in particular by an increase in international operations, during the three-month period. The following table
presents the breakdown by item, followed by the corresponding explanations below:
| |
Three months ended March 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2024/2023
% change | |
| |
(in U.S.$ million) | | |
(as a percentage of revenue) | | |
| |
Revenue | |
| 3,267.2 | | |
| 2,771.6 | | |
| 100.0 | % | |
| 100.0 | % | |
| 17.9 | % |
Cost of sales | |
| (2,393.9 | ) | |
| (2,169.1 | ) | |
| (73.3 | )% | |
| (78.3 | )% | |
| 10.4 | % |
Aircraft fuel | |
| (1,024.4 | ) | |
| (1,059.3 | ) | |
| (31.4 | )% | |
| (38.2 | )% | |
| (3.3 | )% |
Other rentals and landing fees | |
| (386.6 | ) | |
| (295.8 | ) | |
| (11.8 | )% | |
| (10.7 | )% | |
| 30.7 | % |
Wages and benefits | |
| (328.8 | ) | |
| (279.0 | ) | |
| (10.1 | )% | |
| (10.1 | )% | |
| 17.8 | % |
Depreciation and amortization | |
| (306.3 | ) | |
| (253.0 | ) | |
| (9.4 | )% | |
| (9.1 | )% | |
| 21.1 | % |
Aircraft maintenance | |
| (194.2 | ) | |
| (137.6 | ) | |
| (5.9 | )% | |
| (5.0 | )% | |
| 41.1 | % |
Passenger service | |
| (76.1 | ) | |
| (63.1 | ) | |
| (2.3 | )% | |
| (2.3 | )% | |
| 20.6 | % |
Aircraft rentals expense(a) | |
| (1.2 | ) | |
| (23.7 | ) | |
| (0.0 | )% | |
| (0.9 | )% | |
| (94.9 | )% |
Other cost of sales | |
| (76.3 | ) | |
| (57.6 | ) | |
| (2.3 | )% | |
| (2.1 | )% | |
| 32.5 | % |
(a) | Aircraft rentals expense corresponds exclusively to LATAM group’s fleet PBH contracts. The aircraft rentals expense line item
is used to account for the expenses associated with the group’s variable payments related to aircraft. During 2021, the Company
amended its aircraft lease contracts to include lease payments based on PBH at the beginning of the contract and fixed-rent payments in
future periods. 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 were 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) and interest from the lease liability (included in
Lease Liabilities). |
For the three months ended March 31, 2024, aircraft
fuel expenses were U.S.$1,024.4 million, a 3.3%, or U.S.$34.9 million, decrease compared to U.S.$1,059.3 million in the same period in
2023. This decrease is mainly explained by a 15.1% decrease in average jet fuel price (excluding hedges), which was partially offset by
a 17.5% growth in operations (as measured by ASKs). Additionally, during the three months ended March 31, 2024, we recorded a U.S.$19.1
million gain from fuel hedges compared to a U.S.$0.8 million gain recorded during the same period in 2023.
For the three months ended March 31, 2024, other
rentals and landing fees totaled U.S.$386.6 million, a 30.7%, or U.S.$90.8 million, increase compared to U.S.$295.8 million in the same
period in 2023, mainly due to an increase in passenger operations.
For the three months ended March 31, 2024, wages
and benefits expense totaled U.S.$328.8 million, a 17.8%, or U.S.$49.8 million, increase compared to US.$279.0 million for the same period
in 2023. This increase is mainly explained by higher costs of crews and airport personnel, along with a 10.1% rise in the average headcount
of the group.
For the three months ended March 31, 2024, depreciation
and amortization reached U.S.$306.3 million, a 21.1%, or U.S.$53.3 million, increase compared to U.S.$253.0 million in the same period
in 2023, mainly explained by an increase in the number of aircraft in our fleet during this period, including newer aircraft.
For the three months ended March 31, 2024, aircraft
maintenance totaled U.S.$194.2 million, a 41.1%, or U.S.$56.6 million, increase compared to U.S.$137.6 million in the same period in 2023.
This increase is mainly explained by an increase in the number of aircraft in our fleet and the 17.5% growth in operations (as measured
by ASKs).
For the three months ended March 31, 2024, passenger
service totaled U.S.$76.1 million, a 20.6%, or U.S.$13.0 million, increase compared to U.S.$63.1 million in the same period in 2023, which
is primarily explained by a 19.4% increase in the number of passengers carried during the period, mainly on international flights.
For the three months ended March 31, 2024, aircraft
rentals reached U.S.$1.2 million, a 94.9%, or U.S.$22.5 million, decrease compared to U.S.$23.7 million in the same period in 2023. This
decrease is mainly explained by the expiration of almost all power-by-the-hour (“PBH”) contracts for aircraft, with only a
few wide-body aircraft remaining under PBH. The aircraft rentals expense line item includes costs associated with lease payments based
on PBH for contracts that have been modified to that structure. The aircraft rentals expense line item is used to account for the expenses
associated with the group’s variable payments related to aircraft.
For the three months ended March 31, 2024, other
cost of sales reached U.S.$76.3 million, a 32.5%, or U.S.$18.7 million, increase compared to U.S.$57.6 million in the same period in 2023,
principally due to higher variable costs of crew, reservation systems and sales and advertising, due to an increase in operations in the
period.
As a result of the above,
gross margin (defined as total revenue minus cost of sales) as of March 31, 2024, totaled a gain of US$873.3 million, compared to a gain
of US$602.6 million as of March 31, 2023.
Other Consolidated Results
For the three months ended March 31, 2024, other
income totaled US$54.0 million, a 60.1% increase compared to the same period in 2023. This year-over-year growth is primarily attributed
to the reclassification of the income from non-airline redemptions of the LATAM Pass program, an impact of approximately US$8.0 million,
and the increase in sales of ancillary services related to the LATAM Travel business.
For the three months ended March 31, 2024, distribution
costs totaled U.S.$158.3 million, a 30.4%, or U.S.$36.9 million, increase compared to the same period in 2023, mainly explained by the
increase in passenger traffic and sales commissions.
For the three months ended March 31, 2024, administrative
expenses totaled U.S.$187.4 million, a 28.8%, or U.S.$41.9 million, increase compared to the same period in 2023, mainly due to the increase
in headcount plus an increase in marketing expenses.
For the three months ended March 31, 2024, other
expenses totaled U.S.$141.0 million, a 32.4%, or U.S.$34.5 million, increase compared to the same period in 2023, mainly as a result of
an increase in IT maintenance expenses and higher costs related to contingencies.
For the three months ended March 31, 2024, interest
income totaled U.S.$31.4 million, a 75.5%, or U.S.$13.5 million, increase compared to the same period in 2023, mainly as a result of a
higher level of cash and cash equivalents that were invested in fixed-term bank deposits and higher interest rates compared to the same
period of 2023.
For the three months ended March 31, 2024, interest
expense totaled U.S.$191.4 million, a 16.6%, or U.S.$27.2 million, increase compared to the same period in 2023, mainly as a result of
higher interest rates and the increase in the number of aircraft leases.
For the three months ended March 31, 2024, foreign
exchange gains totaled U.S.$39.6 million, a 127.6%, or U.S.$22.2 million, increase compared to the same period in 2023, mainly as a result
of the appreciation of local currencies in the countries where we operate during the period.
For the three months ended March 31, 2024, other
losses amounted to U.S.$46.4 million, compared to a loss of U.S.$19.7 million in 2023, principally explained by increases in provisions
relating to ongoing labor proceedings in Argentina during the period.
For the three months ended March 31, 2024, income
tax cost totaled U.S.$15.1 million, a 320.1%, or U.S.$8.2 million, increase compared to the same period in 2023, mainly as a result of
higher income in the quarter and the limitation on the use of tax losses in some countries where we operate.
Liquidity and Cash Flow from Operating Activities
Additionally, by the end of the first quarter of
2024, we reported U.S.$1,851.4 million in cash and cash equivalents. In addition, as of March 31, 2024, we had U.S.$1.1 billion in available
and undrawn revolving credit facilities.
During the three months ended March 31, 2024, we
also registered positive net cash flow from operating activities of U.S.$458.1 million, compared to an inflow of U.S.$441.9 million during
the same period of 2023.
As of March 31, 2024, we had consolidated fleet
debt (operational leases and finance leases) of US$4.5 billion, as well as non-fleet financial debt of US$2.6 billion, resulting in total
gross debt of US$7.1 billion.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking
statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements
may include words such as “may,” “will,” “expect,” “intend,” “anticipate,”
“estimate,” “project,” “believe” or other similar expressions. Forward-looking statements are statements
that are not historical facts, including statements about our beliefs and expectations. These statements are based on LATAM’s current
plans, estimates and projections and, therefore, you should not place undue reliance on them. Forward-looking statements involve inherent
known and unknown risks, uncertainties and other factors, many of which are outside of LATAM’s control and difficult to predict.
We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking
statement. These factors and uncertainties include in particular those described in the documents we have filed with the SEC. Forward-looking
statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them, whether in light of
new information, future events or otherwise.
5
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