Fourth Quarter 2019 Results Presentation

March 4, 2020

Full Year 2019 Highlights

Operations & Network

  • 74 million passengers, +5 million YoY
  • 26 new routes in 2019
  • Most punctual airline group in the world
  • CASK ex-fuel stable at 4.5 cents

Commercial Agreements

  • Framework Agreement with Delta
  • US$1.1bn reduction in fleet commitments 2020-2022
  • New codeshare partners, leaving oneworld on May 1, 2020

Customer Experience

  • Focus of investments in passengers
  • Acquisition of Multiplus
  • New cabins (A320, A321, B767, B777)
  • "Best Airline in South America"1

Financial position

  • EBIT 7.1% / Net income US$190 million
  • US$1.1bn cash flow after investments2
  • Leverage 4.0x (from 4.2x in September)
  • US$2.1 bn liquidity (20% LTM Revenues)

1Skytrax World Airline Awards and APEX Passenger Choice awards

2

2Cash flow from operating activities - Cash flow used in investing activities - Payments for changes in ownership interests in subsidiaries (Multiplus)

Fourth Quarter 2019 Financial Summary

(US$ Millions)

4Q19

4Q18

Change

FY19

FY18

Change

Total Operating Revenues

2,871

2,788

3.0%

10,431

10,368

0.6%

Passenger

2,478

2,327

6.5%

9,006

8,709

3.4%

Cargo

280

312

-10.3%

1,064

1,186

-10.3%

Others

113

149

-24.2%

361

473

-23.7%

Total Operating Costs

-2,520

-2,445

3.1%

-9,689

-9,481

2.2%

Fuel

-744

-832

-10.6%

-2,929

-2,983

-1.8%

Ex-fuel

-1,776

-1,613

10.1%

-6,760

-6,498

4.0%

Operating Income

350

343

2.1%

742

887

-16.4%

Operating Margin

12.2%

12.3%

-0.1 p.p.

7.1%

8.6%

-1.4 p.p.

Net Income

227

390

-41.8%

190

310

-38.5%

EBITDA

741

685

8.1%

2,212

2,260

-2.1%

EBITDA Margin

25.8%

24.6%

1.2 p.p.

21.2%

21.8%

-0.6 p.p.

3

Fourth Quarter 2019 Operating Statistics

% YoY

System Capacity

Capacity

Traffic

Load Factor

RASK/RATK (USc)

1

(ASK)

(RPK)

(% YoY)

International

(Long Haul & Regional)

51%

Domestic Brazil

30%

19%

SSC Domestic

-5.4%

-5.2%

83.2%

6.0

(+0.2 p.p.)

(+4.6%)

BRL

4Q19: +13.0%

+17.7%

+20.0%

85.2%

7.1

(+1.7 p.p.)

(+5.9%)

+9.0%

+3.8%

78.3%

6.6

(-3.9 p.p.)

(-4.7%)

Passenger

+3.2%

+3.0%

82.9%

6.5

(-0.2 p.p.)

(+3.1%)

Cargo2

+0.6%

-0.6%

56.4%

17.1

(-0.7 p.p.)

(-8.7%)

1

RASK by business unit includes ticket revenue, breakage, frequent flyer program contribution and ancillary revenues

4

2

Excluding the sale of MasAir

Revenues by point of sale last twelve months evolution

Full year 2018

Full year 2019

Peru

Colombia

Ecuador

Peru

Colombia

Ecuador

4%

2%

4%

2%

7%

8%

Europe

Europe

8%

Brazil

7%

35%

Brazil

Others

Others

39%

8%

9%

Argentina

10%

Chile

Argentina

USA

USA

6%

Chile

10%

16%

10%

15%

+2%

Passenger + Cargo revenues = US$9,895 million

Passenger + Cargo revenues = US$10,070 million

Source: Financial statements as of December 2019

5

Cost per ASK fell by 0.1% YoY in fourth quarter

Passenger ASK (millions)

Number of Passengers (thousands)

Number of employees per

+3.2%

+9.4%

operating aircraft

-8 FTE/aircraft

38.405

19.946

37.207

18.232

133

125

4Q18

4Q19

4Q18

4Q19

4Q18

4Q19

Total Costs US$MM

4Q19

4Q18

Change

Fuel Cost

744

832

-10.6%

Wages & Benefits

440

466

-5.7%

Fleet Cost

519

419

+23.9%

Others

818

728

+12.4%

Operating Costs

2,520

2,445

+3.1%

CASK(US cents)

6.6

6.6

-0.1%

CASK ex-fuel (US cents)

4.6

4.3

+6.7%

6

LATAM adjusts its fleet commitments for 2020-2022

Fleet commitments

US$ million

Previous Plan (March 2019)

# aircraft deliveries

11

15

12

1.118

990

708

2020

2021

2022

Current Plan

5

12

11

(March 2020)

773

US$1.1bn

408

574

reduction

2020

2021

2022

Subject to execution of the related contract documentation with manufacturers

7

Continued investing in transforming the customer experience

New cabins

Self-Bag Drop

New VIP Lounge in MIA

New Premium Economy

8

Fourth quarter 2019 credit metrics

Net Debt / EBITDA LTM

4,2x

4,0x

3.0323.172

7.4857.194

Sep 19

Dic 19

Financial Debt (US$ MM)

Lease liabilities (US$ MM)

Net Debt / EBITDA

Cash and Equivalents as % of LTM revenues

19,3%

19,7%

1.992

2.059

600

600

1.459

1.392

Sep 19

Dic 19

Cash (US$ MM)

Committed Lines & RCF (US$ MM)

Fuel Hedge (% consumption)

Cost of debt as of December 31, 2019

PDP

Banks 4.6%

3.6%

65%

81%

Bonds

Fleet

WACD

56%

49%

3.7%

4.6%

6.8%

4Q19

1Q20

2Q20

3Q20

Source: Financial Statements

9

Guidance 2020

Guidance 2020

Passenger (ASK)

International

0% - 2%

Domestic Brazil

7% - 9%

Domestic Spanish

6% - 8%

Speaking Countries

Total

3% - 5%

Cargo (ATK)

4% - 6%

Operating Margin (%)

7% - 8.5%

10

Fourth Quarter 2019 Results Presentation

March 4, 2020

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LATAM Airlines Group SA published this content on 04 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2020 13:32:04 UTC