LATAM Airlines S A : Corporate Update

Corporate Update

January 2020

Leading group in air transport of passengers and cargo in Latin America

Leading group of airlines in Latin America

69 million passengers carried in 2018

Regional leader in number of passengers carried

Leading frequent flyer and loyalty programs with over 38

millon members

Over 300-aircraftfleet, with and average age of ~9 years

Leading network in Latin America

69

33 31

23 22 18

10

LATAM Gol Linhas	Avianca	Azul	Aeromexico Volaris	Copa
Aereas	Holdings

Passengers carried during 20181 (million)

Leading network and platform in Latin America, with hubs in		Multiple Bilateral Agreements
Sao Paulo, Lima and Santiago

More than 140 destinations in 27 countries:

 Market Share2: 1° in Chile, Brazil and Peru, 2° in

Argentina, Colombia and Ecuador

• Regional operations in South America and long-haul operations to 5 continents

Source: Integrated Report 2018 and Bloomberg
1Data as of December, 2018	1
2As of September 2019 for Ecuador, October 2019 for Peru and Colombia, November 2019 for Argentina, Brazil and Chile

LATAM is amongst the largest airline groups in the world

PAX carried 20181 (million)

204

192

158

#1 Latin American airline group and #14 in the world in PAX carried

#1 Latin American airline group and #4 in the world in FFP members(Over 30 million members)

			142 140 135
						121 120 113	110 101
											89
												75	69	59
														56	55	54	51	46
																		42
																			40	38	36	35	33	31	29	29
																							27	25	23
																										22	22	18
																													18	17
																																		10
American Airlines	Delta	United	Lufthansa	China Southern	Southwest	China Eastern	Ryanair	IAG	Air China LTD	Air France - KLM	easyJet	Turkish Airlines	LATAM Airlines	Emirates	Aeroflot	Qantas Airways	ANA Holdings	Air Canada	Alaska Air	JetBlue	Japan Airlines	Garuda Indonesia	Singapore Airlines	Cathay Pacific Airways	Gol Linhas Aereas	Avianca Holdings	Qatar Airways	Scandinavian Airlines	Korean Airlines	Virgin Australia	Azul	Aeromexico	Thai Airways	Volaris	Etihad Airways	Air New Zealand	Copa

Other Latin American Airlines

Source: Company's websites, Bloomberg
1 Data as of Dec 31, 2018 except for: Emirates (LTM March 2019)	2

Ownership structure1 and Board of Directors as of January 10, 2020

Others 15,9%

	Cueto Group
	21,5%
Foreign Investors
9,7%
Pension Funds	Delta Air Lines
20,0%
17,6%
	Qatar
	Airways
	10,0%
ADRs

3,4% Amaro Group

2,0%

Board of directors

Ignacio Cueto Plaza

Juan José Cueto Plaza

Henri Philippe Reichstul

Sonia J.S. Villalobos

Carlos Heller Solari

Nicolás Eblen Hirmas

Giles Edward Agutter

Eduardo Novoa Castellón

Patrick Horn García

Source: DCV and www.latamairlinesgroup.net
1 Preliminary information, subject to changes of share's custody after the completion of the tender offer.	3

Large region, little traffic

	World share (%)1
AmericaNorth 22%	Europe 27%

Asia

Pacific

Middle

East

Latin America

35%

9%

5%

Africa 2%

Source: IATA
1 % of industry RPK in 2018	4

LATAM is well positioned to capitalize on Latin America's growth potential

Trips per capita1

17%	54%				2010		2018
2,3	2,7	2,5
	92%	81%
	1,6
								28%	127%		84%
			1,0
						0,7
		0,5	0,4		0,4	0,5	0,6		0,4
				0,2
										0,2
US	UK	Chile			Colombia		Brazil	Peru	Argentina

RPKs growth 2019E - 2038E

	2018
	6,2%				5,9%	5,9%	5,5%
					5,1%
								Average 4.6%
										3,6%
										3,2%

Latin America

Latin America

Africa

Asia-Pacific

Middle East

Europe

North America

Source: World Bank and Boeing Commercial Market Outlook 2019-2039
1 Trips per capita refers to both domestic and international aircraft passengers carried by air carriers registered in the country divided by such country's population.	5

Market size of LATAM's main markets

Market size (number of passengers)

Dom: 29 mm

Inter: 16 mm

Dom: 3 mm

Inter: 4 mm

Dom: 14 mm

Inter: 12 mm

Dom: 15 mm

Inter: 11 mm

Dom: 95 mm

Inter: 24 mm

LIM

GRU

SCL

Dom:16 mm

Inter: 15 mm

Source: Ministerio de Transporte de Perú, EANA Argentina, JAC Chile, ANAC Brasil, Aeronáutica Civil Colombia y Cominicad Andina Secretaría General

Note: LTM as of June 2019 for Ecuador, October 2019 for Peru and Colombia, November 2019 for Argentina, Brazil and Chile

6

Domestic: Leading market share across markets with positive passenger growth dynamics

Market Share (%)

1st

2nd

AIRLINES PERU

66%1

13%	11%
4%	3%

AIRLINES CHILE	AIRLINES BRAZIL
62%2	39%2
24%	37%
13%	23%

AIRLINES COLOMBIA	+5 mm
passenger
22%	1
2019 vs 2018
		growth
51%		14%
8%		3%

AIRLINES ECUADOR	AIRLINES ARGENTINA
32%3	17%1
38%	62%	6%
30%	9%	5%

Source: Ministerio de Transporte de Perú, EANA Argentina, JAC Chile, ANAC Brasil, Aeronáutica Civil Colombia y Diio Mi;
1	Market share (PAX): October 2019 for Peru and Colombia, November 2019 for Argentina	7
2	Market share (RPK): November 2019 for Chile and Brazil

3 Market share (ASK): September 2019 for Ecuador

International: Unparalleled network connecting Latin America

Market Share (%)1

Within South America

41%	1st
18%	9%
8%	3%
2%	1%

South America - Asia Pacific

South America - North America

22% 2nd

22%12%

LIM

	8%	8%
GRU	6%	5%

SCL	South America - Europe

58%

1st

11%

3rd

24%

18%

Source: Diio.net

1 Market share (ASK): September 2019

20% 17%

10% 8%

6%	5%	8

Geographic diversification of LATAM Airlines Group and its subsidiaries

LTM Revenue by Business Unit			LTM Revenue by Point of Sale		LTM ASK by Country
	Others						Colombia	Ecuador		Ecuador	Argentina
Cargo					Peru	4%
4%					2%	2%	4%
		8%
10%						Colombia
					Europe			3%
				7%				Peru
			APAC and other		Brazil	15%
		International		38%
			Latin America
Domestic SSC
44%
	8%
17%
										Brazil
											51%
Domestic Brazil				Argentina	USA			Chile
			Chile	26%
	25%			6%	10%
								16%

Total revenue = US$ 10.3 bn		Total ASK = 147.9 bn

Source: www.latamairlinesgroup.net
Information as of September 2019	9

Third Quarter 2019 Financial Summary

(US$ Millions)

Total Operating Revenues

Passenger

Cargo

Others

Total Operating Costs

Fuel

Ex-fuel

3Q19 3Q18 Change

2,665	2,492	6.9%
2,340	2,107	11.1%
252	279	-9.8%
73	106	-31.0%

-2,396	-2,271	5.5%
-717	-747	-4.0%
-1,679	-1,524	10.2%

Operating Income	269	221	21.8%
Operating Margin	10.1%	8.9%	1.2 p.p.
Net Income	86	35	145.0%
EBITDA	645	565	14.1%
EBITDA Margin	24.2%	22.7%	1.5 p.p.

Source: www.latamairlinesgroup.net
Note: 2018 re-expressed under IFRS16	10

Third Quarter 2019 Operating Statistics

% YoY	System Capacity	Capacity	Traffic	Load Factor	RASK/RATK (USc)1
		(ASK)	(RPK)		(% YoY)

International

(Long Haul & Regional)

54%

-4.1%	-1.8%	85.2%	6.0
		(+2.0 p.p.)	(+0.5%)
			BRL
			3Q19: +24.3%

Domestic Brazil

SSC Domestic

28%

18%

+9.8%	+10.4%	82.1%	7.4
		(+0.5 p.p.)	(+22.7%)
+9.5%	+9.3%	81.3%	6.5
		(-0.2 p.p.)	(-9.5%)

Passenger	+1.8%	+3.2%	83.6%	6.2
(+1.1 p.p.)	(+9.1%)
Cargo2	+0.1%	+0.8%	53.6%	15.8
(+0.4 p.p.)	(-6.2%)

1	RASK by business unit includes ticket revenue, breakage, frequent flyer program contribution and ancillary revenues.
2	Excluding the sale of MasAir	11

Delivering on cost initiatives to enhance operational performance

CASK Ex-fuel evolution (US$ cents)

-2%

4.6

4.5

9M18

9M19

Number of Employees

ASK / Operating Fleet (million ASK per Aircraft)

# employees

FTE / AC 1

ASK/Operating Fleet

Total aircraft

2

-3.8%

132127

40,97441,193

Sep'18Sep'19

Source: www.latamairlinesgroup.net 1 Full time employees per aircraft 2 Excluding short tem leases

				324
	310
	+0.4%
	455	457

LTM Sep'18

LTM Sep'19

12

Guidance 2020

2019E2020E

		International	0%	0% - 2%
		Domestic Brazil	8%	7% - 9%
	Passengers (ASK)
		Domestic Spanish-	11%	6% - 8%
		speaking countries
		Total	4%	3% - 5%

	Cargo (ATK)	-2%	4% - 6%

	Operating Margin (%)	~7%	7.0% - 8.5%

13

Current Financial Situation

Financial Debt and Leverage		Liquidity
								RCF (US$ million)
		Financial Debt (US$ million)			On Balance Leases (IFRS 16)

Net Debt / EBITDA LTM						Cash and Equivalents (US$ million)
	3.500,00					Liquidity1

50%

4,5x

4,2x

3.000,00

10.65010.517

2.500,00

2.9333.032

2.000,00

1.500,00

1.000,00

7.7177.485

500,00

0,00

2Q193Q19

19,5%19,3%

600600

1.3811.392

2Q193Q19

30%

10%

-10%

-30%

-50%

-70%

-90%

Source: www.latamairlinesgroup.net

1 Considers cash & cash equivalents + RCF

14

Proactively reshaping our debt profile

Debt maturity profile1 (US$ million) as of September 30, 20192

-262make-whole			Prepayment LATAM2020		Local Bond			Unsecured			Secured
	LATAM2020
1.013	1.013	824		1.063		953
322				536		218		343		215	204
										10
4Q19	2020	2021	2022	2023	2024	2025	2026	2027	2028	2029	2030

Debt type as of September 30, 2019			Rating agencies
PDP 5.0%	2
						Ba3
Banks 3.9%
Fleet 3.8%	WACD
4.8%					BB-
Bonds 6.9%

BB-

July 10, 2019

Source: www.latamairlinesgroup.net
1	Debt maturity profiles don't include PDP and short term rolling debt	15
2	Proforma adjusted by liability management

Partnership LATAM - Delta: Strategic Agreement

Tender Offer

Delta invested $1.9 billion for a 20 percent stake in LATAM through a public tender offer at $16 per share, which was completed on January 3, 2019

Airplane Purchase

Delta will acquire four A350 aircraft from LATAM and assume LATAM's commitment to

purchase 10 additional aircraft to be delivered beginning in 2020

Commercial

Joint venture, code sharing agreement and $350 million from Delta to support

transition costs for strategic partnership

Note: The joint venture and the tender offer is subject to customary closing conditions and governmental and regulatory approvals.

16

3241 aircraft operating fleet with an average age of ~9,0 years

Narrow body: 241		Wide body (PAX): 74		Wide body (Cargo): 9
Owned2: 163 aircraft		Owned2: 49 aircraft		Owned2: 8 aircraft
Leases3: 78 aircraft		Leases3: 25 aircraft		Leases3: 1 aircraft

A350

​A321 A319

​78

​A320N

​76

​767F

A320	​77

Airbus A320N		Boeing 787-9		Boeing 767F

Source: Public Company Filings, Offering Memorandum
1 Excludes short-term leases	17
2 Aircraft included in Property, Plant and Equipment (Own + Financial Leases)

3 Operating Leases.

Fleet Plan 2019E-2022E

Narrow Body Wide Body Freighter

	338	345	358
330		11	11
11
11

		77	77
75	77

244	250	257	270

2019E	2020E	2021E	2022E
Fleet Commitments (US$mm)
1,197	796	889	619

18

Refocusing investments to passenger experience and loyalty

Cabin experience (US$400 million in cabin retrofits in 2 years)

Acquisition of Multiplus (~US$300 million)

• +38 million members
• 4th Largest FFP in the world
• Unified value proposition
• Revenue management

22 Wide-body aircraft and 150 Narrow-body aircraft

New seat design and layout of passenger accommodation; comfort, segmentation & efficiency

Worldwide recognition

Best Airline in South		Best on-time
America		performance

Best
"Business Class"	"Most punctual global
"Business Class Lounge"	network airline in the
"Economy Class"	world in 2019"

Source: www.latamairlinesgroup.net

19

Key takeaways

1	LATAM is the leading and largest airline group in Latin America with an unmatched network
2	Delivered resilient operational and financial results despite challenges
3	Disciplined financial policy focused on continuous de-leveraging and balance sheet
strengthening
4	Successful implementation of transformational initiatives including (i) a rigorous cost cutting
program, (ii) the reduction of fleet commitments (iii) acquisition of the minority stake in Multiplus,
	and (iv) transforming the cabin experience
5	Future performance anchored on an unique network strategy and positive business dynamics

20

Exhibits

April 2017

Results of the transformation plan

1

	
Focus on improving
operational performance	
while solidifying the business

model resilience …



2015	2016	2017	2018	'15 vs. '18
			136	143	+6,7%
134	135
ASK LTM (billion)
327	329		1
			307	310
Operational Fleet (units)
					-5,2%
		6,0%	7,0%	6,8%	+180 pbs
5,0%

EBIT Margin (%)2

2				69	155	182	+US$
			401 mm
 Net Income LTM
	Has proven to be a		(US$ million)
			-219
	compelling path to drive
	profitability and cash					1.379	1.159
	generation …	 Free Cash Flow			+US$
			549			1.183 mm
			(US$ million)3
				-24
3		Adjusted net financial	5,8x	5,3x	4,5x	4,3x
	leverage (x)4
	Maintaining a rigorous		9,1	8,6
		7,9
	financial discipline for	Financial Debt			7,3
					-US$
	continuous de-leveraging		(US$ billion)
						1,8 mmm

Source: Public Company Filings

1 Excludes 2 short-term leased aircrafts, as of December 2018.

2	EBIT margin defined as EBIT divided by Revenue + Other Income. EBIT defined as Revenue + Other Income - Operating Expenses.	22
3	Free Cash Flow defined as Cash Flow from Operating Activities less Cash Flow used in Investing Activities.
4	Adjusted Net Leverage defined as Adjusted Net Debt / LTM EBITDAR. Adjusted Net Debt defined as Gross Debt - Cash & Cash Equivalents + Aircraft Leases (7x LTM Aircraft Rentals).

Financial hedging strategy to protect medium term operational margin

Fuel Hedge (% consumption)		BRL Hedge (US$MM)1		Reduced exposure to floating
		rates

70%

62%

20% 20%

1Q20 2Q20 3Q20 4Q20

29

12

3Q19

4Q19

1Q20

2Q20

U$2.8bnU$4.6bn

37%

62%

1%

U$0.1bn

Fixed		Floating w/ Hedge		Floating

Source: www.latamairlinesgroup.net

23

Year-to-date 2019 Financial Summary

(US$ Millions)		9M19	9M18	Change
Total Operating Revenues	7,560	7,580	-0.3%
Passenger	6,528	6,382	2.3%
Cargo	784	874	-10.3%
Others	248	324	-23.4%
Total Operating Costs	-7,169	-7,036	1.9%
Fuel	-2,185	-2,151	1.6%
Ex-fuel	-4,984	-4,885	2.0%
Operating Income	391	544	-28.1%
Operating Margin	5.2%	7.2%	-2.0 p.p.
Net Income	-37	-80	-54.4%
EBITDA	1,470	1,574	-6.6%
EBITDA Margin	19.4%	20.8%	-1,4 p.p.

Source: www.latamairlinesgroup.net
Note: 2018 re-expressed under IFRS16	24

Year-to-date 2019 Operating Statistics

% YoY	System Capacity	Capacity	Traffic	Load Factor	RASK/RATK (USc)1
		(ASK)	(RPK)		(% YoY)

International	56%
(Long Haul & Regional)

Domestic Brazil

26%

+2.3%	+3.1%	85.4%	5.7
		(+0.7 p.p.)	(-8.7%)
			BRL
			9M19: +21.0%
+4.3%	+5.6%	81.4%	6.8
		(+1.0 p.p.)	(+10.9%)

SSC Domestic

18%

+11.5%	+11.3%	81.7%	6.5
		(-0.1 p.p.)	(-9.3%)

Passenger	+4.4%	+5.1%	83.7%	5.9
(+0.6 p.p.)	(-2.0%)
Cargo2	+0.2%	+2.4%	55.2%	16.6
(+1.2 p.p.)	(-6.8%)

Note: Information as of September 2019

1 RASK by business unit includes ticket revenue, breakage, frequent flyer program contribution and ancillary revenues.25 2 Excluding the sale of MasAir

Thank you!

April 2017