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
March 2023
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 ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
LATAM AIRLINES GROUP S.A.
The following exhibit is attached:
| EXHIBIT NO. | DESCRIPTION | |
| 99.1 | LATAM Airlines Group 4Q 2022 Results |
1
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.
| Date: March 10, 2023 | LATAM AIRLINES GROUP S.A. | |
| By: | /s/ Ramiro Alfonsín | |
| Name: | Ramiro Alfonsín | |
| Title: | CFO | |
2
Exhibit 99.1
LATAM REPORTS EBITDAR OF US$467 MILLION IN THE FOURTH QUARTER AND CLOSES 2022 WITH US$2.3 BILLION OF LIQUIDITY
Santiago, Chile, March 9, 2023 – LATAM Airlines Group S.A. (SSE: LTM), announced today its consolidated financial results for the fourth quarter ending December 31, 2022. “LATAM” or “the Company” makes reference to the consolidated entity, which includes its passenger and cargo affiliated airlines in Latin America. LATAM prepares its financial statements under IFRS as issued by the IASB, however, for ease of presentation and comparison, the Income Statement in this report is presented in an adapted US Format. On some occasions, adjustments to these Income Statement figures are made for Special Items. A table reconciling these figures adjusted for Special Items to their as-reported IFRS figures can be found at the end of the report. All figures in this report are expressed in U.S. dollars. Percentages and certain U.S. dollar, Chilean peso and Brazilian real amounts contained in this report have been rounded for ease of presentation. Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding. The Brazilian real / U.S. dollar average exchange rate for the quarter was BRL 5.26 per USD.
HIGHLIGHTS
| ● | On November 3, 2022, LATAM successfully emerged from Chapter 11, following more than two years of significant transformation that improved LATAM’s cost and capital structures, positioning the group as a clear leader in the region. The table below succinctly outlines the transformation in a few key operational and financial indicators: |
| Prior to Chapter 11 (2019) | Post Chapter 11 (2022) | |||
| Gross Debt | US$10.4 billion | US$6.5 billion | ||
| Liquidity | US$1.3 billion | US$2.3 billion | ||
| Passenger Revenue | US$9,006 million | US$7,636 million | ||
| Cargo Revenue | US$1,064 million | US$1,726 million | ||
| Liquidity (% of LTM revenues ) | 19.7% | 24.3% | ||
| Adjusted Passenger CASK Ex-Fuel (4Q19 / 4Q22) | US$4.3 cents | US$4.0 cents | ||
| Fleet Cash Costs | ~ US$1.4 billion | ~ US$0.8 billion |
Note: Gross Debt and Liquidity at Chapter 11 filing. Gross Debt excludes associated guarantees.
| ● | As of the year-end, and as a result of its reorganization proceedings, the Company was able to reduce its gross debt by 37.5% to US$6.5 billion and increase its liquidity by 77% to US$2.3 billion. Additionally, the group has been able to maintain or strengthen its market share in the five domestic markets and the international segments where it operates when compared to pre-filing. |
| ● | During the fourth quarter, the group’s consolidated operations were 83.2% of 2019 levels (measured in ASKs), representing the highest level of quarterly operations since the beginning of the pandemic when compared with 2019 numbers and a steady recovery. Furthermore, LATAM group finished the year operating 144 destinations in 22 countries, in line with the number of destinations flown as of 2019 year end. In December, the domestic operation for the Brazilian affiliate reached 97.6% of 2019 levels (measured in ASKs), while the affiliates in the Spanish-speaking countries (Colombia, Chile, Peru and Ecuador) and international operations reached 80.7% and 79.5% of 2019 levels, respectively. |
| ● | During the quarter, total operating revenues (including other income from operating activities) registered US$2,744 million (+37.5% vs 2021 and -4.4% vs 2019), while operating expenses were US$2,604 million (+35.5% vs 2021 and +3.3% vs 2019), propelled by a 51.5% increase in jet fuel price versus 2021. As a result, LATAM reported US$139.7 million in operating income for an operating margin of 5.1% and an adjusted operating margin, net of special items, of 8 % for the quarter, outperforming the Updated Business Plan projection for the period. EBITDAR amounted to US$466.8 million in the quarter and, adjusting for special items, LATAM reported an Adjusted EBITDAR of US$520.1 million. Adjusted EBITDAR in the full year 2022 was US$1,314.3 million. |
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| ● | The group registered a net income attributable to the owners of the parent company of US$2,538 million in the fourth quarter and a full year net income of US$1,339 million. This result is explained by gains on the renegotiation of its accounts payable and financial liabilities, and the derecognition of right-of-use assets, during the fourth quarter following the group’s emergence from its Chapter 11 proceedings. Due to the group’s accumulated losses as of the year end, the net income is not eligible for profit distribution via dividends. However, the Board has proposed to submit to the consideration of the shareholders of the Company (and recommended to approve), a reduction of the statutory capital of the Company through the total absorption of the accumulated losses. |
| ● | At an extraordinary shareholders’ meeting held on November 15, 2022, LATAM’s shareholders elected a new board of directors, which will hold office for a period of two years. The board is currently composed of nine members: Ignacio Cueto Plaza (Chairman), Bornah Moghbel (Vice-Chairman), Enrique Cueto Plaza, Frederico Curado, Antonio Gil Nievas, Michael Neruda, Bouk van Geloven, Sonia J.S. Villalobos, and Alexander D. Wilcox. |
| ● | Following the Company’s capital increase of approximately US$10.3 billion (including a cash injection of approximately US$5.4 billion), carried out in the context of its reorganization proceedings and approved at the extraordinary shareholders’ meeting held on July 5, 2022, as of December 31, 2022, LATAM group had 605,231,854,725 shares subscribed and paid. This represents more than 99.8% of the group’s statutory capital, represented by 606,407,693,000 shares. |
| ● | After the quarter end, on January 19, 2023, the Company released its guidance for full year 2023. For 2023, LATAM expects an annual growth in its passenger and cargo operations of over 20%, accompanied by a Passenger CASK ex-fuel of US$4.0-4.1 cents, reflecting LATAM’s transformation post Chapter 11 and the result of all the cost savings initiatives fully implemented during the reorganization process. LATAM expects an EBITDAR in 2023 between US$2.0 – 2.2 billion, and in terms of leverage, the group expects to have a Net Debt/Adjusted EBITDAR between 2.9x – 3.1x by the end of 2023. LATAM group continues driving its efforts towards further decrease costs and increase capacity, while keeping a strong focus on profitability and cash generation. |
MANAGEMENT COMMENTS – FULL YEAR 2022
2022 was a milestone year for LATAM group, in which it successfully completed a major financial restructuring while continuing to advance in its strategic objectives and the recovery of its operations. As a result of the reorganization process, the group was able to reduce gross debt by 37.5%, increase liquidity by 77%, and reduce Passenger CASK ex-Fuel by 6% despite inflationary pressures. During the year, LATAM group transported approximately 62 million passengers, representing an increase of 22 million passengers from 2021 and alongside the significant recovery of its network and operations. The group ended the period operating a similar number of destinations as compared to pre-pandemic and 83.2% of capacity (measured in ASKs) versus 2019 levels. The ramp up is expected to continue during 2023 in which LATAM group expects to operate 20% more than 2022 with regard to its passenger and cargo operations (measured in ASK and ATK).
Following the JVA’s with Delta Air Lines approval in September of 2022, the airlines have begun to work closely together on its implementation within the JVA scope, coordinating capacity, scheduling and pricing for both passenger and cargo business. As a result, two new routes have been announced under the JVA. In July 2023, LATAM Airlines Brazil will operate Los Angeles – Sao Paulo and LATAM Airlines Colombia will operate Orlando – Bogota, helping Delta and LATAM group to further expand the JVA network between North America and South America.
During 2022, LATAM retrofitted 81 aircraft, reaching 89% of progress in the homologation and densification of all its narrow body fleet (excluding aircraft available for sale). This as part of its continued efforts towards improving its product offering and transforming the experience of its passengers. In addition, the group has worked to incorporate in-flight Wi-Fi in its Brazilian operations and as of the year-end had 98 narrow body aircraft operating with in-cabin Wi-Fi. This feature will be fully functioning in all of the Brazilian affiliate’s fleet during the first half of 2023. The project has already started to show its benefits in customer experience, with approximately 18% of passengers in domestic Brazil having used this feature at the end of 2022.
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Recently, LATAM was once again recognized by S&P for its 2022 Corporate Sustainability Assessment as the leading airline in the Americas and Europe and fifth worldwide in terms of its environmental, social and governance sustainability practices.
In context of its “A Necessary Destination” sustainability agenda, at the end of 2022, LATAM group announced the expansion of the Alliance with the Cataruben Foundation, located in the Colombian Orinoquia wetlands region. The project, which is a key area for biodiversity, aims for the conservation of 575,000 hectares and promotes a collaborative compensation model, as it supports 700 families and expects to capture more than 11 million tons of CO2 by 2030. Additionally, as part of the group’s commitment to eliminate single-use plastics from operations in 2023, the group recently reported a 77% reduction, on track to meet its goal. This important reduction is the result of the different initiatives developed during 2022, mainly driven by the substitution of on-board catering to reusable and sustainable materials. Finally, midway through the year, LATAM announced that it seeks to reach 5% of Sustainable Aviation Fuels (SAF) use of total fuel consumption in 2030, ideally favoring local producers. In this same vein, LATAM made its first flight using SAF, in March of 2023, continuing to advance in its intention of accelerating efforts to generate the necessary conditions for a more sustainable commercial aviation industry.
MANAGEMENT DISCUSSION AND ANALYSIS OF FOURTH QUARTER 2022 RESULTS
LATAM’s total operating revenues amounted to US$2,744 million in the fourth quarter of 2022, well above the previous year’s levels, posting a 37.5% increase versus 4Q21 and mainly influenced by the 55.3% increase in passenger revenues over the prior year. During the fourth quarter, passenger revenues represented 83.5% of total operating revenues, while cargo operations amounted to 15.3% of LATAM’s quarterly total operating revenues.
Total revenues for full year 2022 reached US$9,517 million compared to US$5,111 million in 2021. The 86.2% increase is explained by a 128.5% increase in passenger revenues, and a 12.0% increase in cargo revenues. Passenger and cargo revenues accounted for 80.2% and 18.1% of total operating revenues, respectively, for the full year 2022.
Passenger revenues increased 55.3% versus 2021, to US$2,291 million, following a sustained increase in operations accompanied by healthy demand and yields. During the period, passenger demand (measured in RPKs) increased 31.1% and passenger yields grew 18.5% versus 2021. In terms of capacity versus 2019 levels, passenger operations once again posted a positive quarter-over-quarter increase, with total ASKs reaching 83.2% of 2019 levels, representing the highest level of operations since the beginning of the pandemic. During the quarter, LATAM group reached a solid consolidated load factor of 81.4% (-1.5 p.p. versus 2019).
Cargo revenues decreased 9.6% in the quarter compared to the previous year to US$420 million, mainly explained by the softening of cargo yields in the recent months. Compared to the pre-pandemic context, revenues outperformed the same period of 2019 by 50%, mainly explained by the context of increased cargo yields and the expansion of the group’s cargo-dedicated fleet. As of December 31, 2022, LATAM had 16 cargo-dedicated freighters. For the second quarter in a row, consolidated cargo capacity (measured in ATKs) exceeded 2019 levels, representing a 6.2% increase, accompanied by a 45.6% increase in average cargo yields.
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Other income amounted to US$32.7 million, decreasing 41.4% versus the previous year, mainly due to the cessation of certain compensation payments from Delta Air Lines as agreed upon in the signing of the Joint Venture Agreement in 2019 and the subleasing of aircraft to third parties.
Total operating expenses in the quarter totaled US$2,605 million, an increase versus the previous year in accordance with the increased operations, though propelled by the significant increase in the price of jet fuel. In the fourth quarter of 2022, average fuel price (excluding hedges) increased 51.5% versus the previous year and 66.7% versus the same period of 2019.
Excluding fuel, operating expenses were 13.5% below the same period of 2019 and a pre-pandemic context.
The changes in adjusted operating expenses during the quarter were mainly explained by:
| ● | Wages and benefits decreased 11.2% versus 2019 following a 22.4% reduction in average headcount compared with the same quarter of 2019 and partially offset by the impact of a “Corporate Incentive Plan” for employees as considered in the reorganization plan, recognized during the quarter, which is presented as a special item and has therefore been adjusted for in the adjusted financial figures. |
| ● | Aircraft fuel costs increased 44.2% compared to 2019 mainly explained by the increase in fuel price. During the quarter, average fuel price (excluding hedges) noted a 66.7% increase versus the same period of 2019 (+51.5% versus 2021). During the year 2022, LATAM recognized a gain of US$18.8 million related to hedging contracts, which compares to a gain of US$10.1 million during the same period of 2021. |
| ● | Commissions to agents decreased 10.1% versus 2019, in line with a 7.5% reduction in passenger revenues as compared to 2019. |
| ● | Depreciation and amortization dropped 23.1% versus 2019, mainly explained by the fleet reduction and other related negotiations carried out during the group’s reorganization process. |
| ● | Other rental and landing fees decreased by 22.1% compared to 2019, driven by the reduced level of operations. |
| ● | Passenger services expenses fell 6.4% versus 2019, mostly due to a 14.0% reduction in the total number of passengers carried during the quarter and partially offset by an increase in catering and onboard services expenses. | |
| ● | Aircraft rentals expenses, which correspond to LATAM’s fleet’s power-by-the-hour (PBH) contracts, amounted to US$26.7 million, representing a US$35.4 million decrease versus 4Q21. This expense is considered a special item since there is a non-cash double counting of fleet PBH in Aircraft Rentals and in the Depreciation & Amortization line, and therefore has been adjusted for in the adjusted financial figures. PBH contracts will continue to be in place in 2023 as certain wide-body fleet contracts remain in effect until 2024. These variable payment agreements were implemented following their approval by the U.S. Bankruptcy Court in context of Chapter 11 proceedings during the second and third quarters of 20211. |
| ● | Aircraft maintenance expenses totaled US$144 million, corresponding to a 12.5% increase versus 2019, mainly explained by higher unit costs due to global inflationary pressures and an increase in the group’s projected future operations. The main items registered in this line include engine maintenance and repairs, in addition to aircraft in-cabin maintenance. |
| ● | Other operating expenses decreased by 17.7% compared to 2019, mainly due to lower costs related with cabin crew variable costs and booking systems. |
| 1 | Beginning in the second quarter of 2021, LATAM amended its Aircraft Lease contracts, which included lease payment based on Power by the Hour (PBH) at the beginning of the contract and then switches to fixed-rent payments. A right of use asset and a lease liability was recognized as result of those amendments at the date of modification of the contract, even if they initially have a variable payment period. As a result of the application of the lease accounting policy, the right of use assets continues to be amortized on a straight-line basis over the term of the lease from the contract modification date. The expenses for the period 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 from the beginning of the contract (included in the Depreciation line) and interest from the lease liability (included in Lease Liabilities). |
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Non-operating Result
| ● | Interest income amounted to US$1,017.8 million in the quarter versus US$10.0 million in 2019. The quarter’s result is attributed to the group’s emergence from Chapter 11 in which it recognized gains on the renegotiation of certain financial claims as well as a reversal of previously recognized accrued interest for financial liabilities that were restructured. |
| ● | Interest expense increased 44.6% compared with 2019, to US$237 million during the fourth quarter of 2022 mainly due to the DIP financing that the company had in place until the exit of Chapter 11, and DIP-to-Exit financing. |
| ● | Under other income (expense), the Company registered a US$1,716 million income during the quarter. This was mainly explained by gains on the settlement of Chapter 11 claims for its accounts payable, financial liabilities and derecognition of right-of-use assets, result of the renegotiations during the Chapter 11 proceedings and recognized during the fourth quarter following LATAM’s emergence. In the quarter, LATAM also reported foreign exchange losses of US$23.4 million due to the depreciation of the Spanish-speaking countries’ currencies. |
| ● | Net profit attributable to the owners of the parent company during the quarter was US$2,538 million, conditioned by the restructuring activities gains aforementioned registered under the adjusted non-operating result lines. Due to the group’s accumulated losses as of the year end, the net income is not eligible for profit distribution via dividends. However, the Board has proposed to submit to the consideration of the shareholders of the Company (and recommended to approve), a reduction of the statutory capital of the Company through the absorption of the accumulated losses. |
LIQUIDITY AND FINANCING
At the end of 2022, LATAM’s financial debt amounted to US$4.2 billion, while gross debt (financial debt and lease liabilities) was US$6.5 billion. As a result, as of December 31, 2022, LATAM had reduced its gross debt by approximately US$3.9 billion when compared to the pre-filing amount, representing a 37.5% decrease. At the end of the period LATAM reported leverage (net financial debt/ EBITDAR) of 4.2x.
Additionally, LATAM reported liquidity of US$2,317 million, comprised of US$1,217 million in cash and cash equivalents and certain highly liquid investments accounted for in other current financial assets, plus US$1,100 million in available and fully undrawn revolving credit facilities (“RCF”), as of December 31, 2022. In 2022, LATAM registered a net increase in cash and cash equivalents of US$169.8 million. Total liquidity as a percentage of last twelve months’ revenues amounts to 24.3%.
With respect to LATAM’s fuel hedging policy, the main objective of the policy is to protect against medium-term liquidity risk from fuel price increases, while benefiting from fuel price reductions. Accordingly, LATAM hedges a portion of its estimated fuel consumption. Hedge positions per quarter for the next months, as of February 28, 2023, are shown in the table below:
| 1Q23 | 2Q23 | 3Q23 | 4Q23 | |||||||||||||
| Hedge positions | ||||||||||||||||
| Estimated Fuel consumption hedged | 26 | % | 44 | % | 28 | % | 13 | % | ||||||||
CHAPTER 11 MILESTONES
On November 3, 2022, LATAM and certain of its subsidiaries successfully emerged from their Chapter 11 proceedings as a more efficient and cost-competitive group. The reorganization process gave LATAM group an opportunity to work with its respective creditors and other stakeholders to reduce debt, access new sources of financing, and continue its operations, while enabling the group to adapt its business to the new reality. As a result, the group had a gross debt of US$6.5 billion and total liquidity of over US$2.3 billion as of December 31, 2022, representing a 37.5% decrease in debt and 77% increase in liquidity compared to pre-filing.
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In order to emerge from the Chapter 11 process, LATAM conducted a capital raise of approximately US$10.3 billion (including an approximate US$5.4 billion injection of new funds) comprised of an equity rights offering (“ERO”) of US$800 million and the issuance of three classes of convertible notes for approximately US$9.5 billion. As of December 31, 2022, almost the entirety of the convertible notes (ie. 99.8%) had been converted into shares - a total of 18,820,511,197 shares underlying Convertible Notes Series A; 126,657,203,849 shares underlying Convertible Notes Series B; and 385,337,856,192 shares underlying Convertible Notes Series C had been delivered as a result of such conversions. Following the ongoing conversion process of Convertible Notes, LATAM had a total of 605,231,854,725 subscribed and paid shares, representing 99.8% of the Company’s statutory capital, which is represented by 606,407,693,000 shares.
The new common stock resulting from LATAM’s capital raise trades freely on the Santiago Stock Exchange with the same ticker “LTM”. The capital increase’s instruments were sold pursuant to exemptions from SEC registration and thus may be restricted securities for a period of time in the United States. As a result, the company’s current ADR program, with JP Morgan as Depositary Bank, will maintain until further notice the books closed for issuances and open for cancellations. As previously informed, due to the Chapter 11 filing, LATAM’s ADR program was delisted from the NYSE and currently, its ADR’s continue to trade on the over-the-counter exchange under the ticker “LTMAY”.
It is the Company’s intention to relist on the New York Stock Exchange, however, it is currently evaluating the timing of its occurrence and working to determine an appropriate launch date and will inform the market when it has any further information.
LATAM FLEET PLAN
LATAM’s fleet is comprised of 237 Airbus narrow-body aircraft, 57 Boeing wide-body aircraft and 16 Boeing cargo freighters, totaling 310 aircraft with an average age of 11.6 years. For a breakdown of the current fleet, see the fleet chart in the reference tables section toward the end of this report. As of the date of publication, LATAM has fleet commitment agreements with Airbus and Boeing for new aircraft and additionally has signed several contracts with lessors to receive both narrow-body Airbus and wide-body Boeing aircraft in the coming years, as detailed below. These newer aircraft will allow LATAM to renew and expand its fleet and reflect LATAM’s commitment to a modern fleet and its long-term sustainability strategy toward carbon neutrality by 2050.
With regard to its cargo fleet, the group is carrying out an expansion plan by converting B767 passenger aircraft into cargo freighters. As of the publication date, four freighters have already been converted, with the remaining six conversions to take place in 2023 and 2024. Additionally, the company expects to sell three of its cargo freighters, and thus estimates a total freighter fleet of 19 freighters in 2024.
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As it looks forward, LATAM expects to operate similar levels of capacity (ASKs) with a reduced fleet when compared to pre-pandemic. This is attributed to cabin densification as part of its retrofit process to renovate cabin interiors, increased aircraft utilization and the incorporation of newer, larger capacity aircraft to its fleet.
| Fleet Plan | 2023 | 2024 | 2025 | |||||||||
| Passenger Aircraft | ||||||||||||
| Narrow Body | ||||||||||||
| Airbus Ceo Family | 214 | 176 | 173 | |||||||||
| Airbus Neo Family | 31 | 46 | 63 | |||||||||
| Total NB | 245 | 222 | 236 | |||||||||
| Wide Body | ||||||||||||
| Boeing 787 | 37 | 37 | 41 | |||||||||
| Other Boeing | 21 | 19 | 19 | |||||||||
| Total WB | 58 | 56 | 60 | |||||||||
| TOTAL | 303 | 278 | 296 | |||||||||
| Cargo Aircraft | ||||||||||||
| Boeing 767-300F | 20 | 19 | 19 | |||||||||
| TOTAL | 20 | 19 | 19 | |||||||||
| TOTAL FLEET | 323 | 297 | 315 | |||||||||
2023 GUIDANCE
Guidance for 2023 remains unchanged with respect to the guidance update issued by the Company on January 19, 2023 (see table below).
| Guidance | 2023E | ||||
| ASK Growth vs 2022 (billion) | International | 37 - 40% | |||
| Brazil Domestic | 8 - 11% | ||||
| Spanish Speaking Countries Domestic | 8 - 11% | ||||
| TOTAL | 20 - 24% | ||||
| ATK Growth vs 2022 (billion) | 20 - 23% | ||||
| Revenues (US$ billion) | 11 - 11.5 | ||||
| CASK ex fuel (US$ cents) | 4.6 - 4.7 | ||||
| Passenger CASK ex fuel1 (US$ cents) | 4.0 - 4.1 | ||||
| EBIT Margin | 5 - 7% | ||||
| Adjusted EBIT Margin2 | 6 - 8% | ||||
| Adjusted EBITDAR2 (US$ billion) | 2.0 - 2.2 | ||||
| Liquidity3 (US$ billion) | 2.3 - 2.4 | ||||
| Financial Net Debt4 (US$ billion) | 6.1 - 6.2 | ||||
| Net Debt/Adjusted EBITDAR (x) | 2.9x - 3.1x |
Footnotes:
| 1) | Passenger CASK ex fuel excludes cargo costs associated with belly and freighter operations and variable Aircraft Rental expenses (non-cash P&L effect). |
| 2) | Adjusted EBIT Margin and Adjusted EBITDAR exclude non-recurring items and variable Aircraft Rental expenses (non-cash P&L effect). |
| 3) | Liquidity is defined as Cash and Cash Equivalents and undrawn, committed revolving credit facilities. |
| 4) | Financial Net Debt includes operating leases liabilities, financial leases and other financial debt excluding associated guarantees, net of Cash and Cash Equivalents. |
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Financial Statements Publication & Conference Call
LATAM filed its yearly financial statements for the year ended December 31, 2022, with the Comisión para el Mercado Financiero (CMF) of Chile on March 9, 2022. These financial statements are available in Spanish and English at http://www.latamairlinesgroup.net. For further inquiries, please contact the Investor Relations team at InvestorRelations@latam.com.
The Company will hold a conference call to discuss the fourth quarter 2022 financial results on Friday, March 10, 2023, at 8:00 am ET / 10:00 am Santiago.
Webcast Link: click here
Teleconference Link: click here
About LATAM Airlines Group S.A.
LATAM Airlines Group S.A and its affiliates are the principal group of airlines in Latin America present in five domestic markets in the region: Brazil, Chile, Colombia, Ecuador and Peru, in addition to international operations within Latin America and to/from Europe, the United States, Oceania and the Caribbean.
The group has a fleet of Boeing 767, 777, 787, Airbus A321, A320, A320neo and A319 aircraft.
LATAM Cargo Chile, LATAM Cargo Colombia, and LATAM Cargo Brazil are the LATAM group cargo subsidiaries. In addition to having access to the bellies of the passenger affiliates’ aircraft, they have a fleet of 16 freighters, which will gradually increase to a total of up to 20 freighters by 2024.
They operate on the LATAM group network as well as international routes that are solely used for shipping. They offer modern infrastructure, a wide variety of services and protection options to meet all customer needs.
For LATAM Cargo press inquiries, write to comunicaciones.externas@latam.com. More financial information is available at www.latamairlinesgroup.net.
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LATAM Airlines Group S.A.
Consolidated Financial Results for the Fourth Quarter 2022 (in thousands of US Dollars)
As of this quarter, LATAM is reporting adjustments for special items that management believes distort the financial results. The adjustments in the quarter include LATAM’s variable fleet payments (PBH) accounted for in Aircraft Rentals as well as employee compensation associated with the Corporate Incentive Plan. Applicable adjustments have been made for the 2021 and 2019 periods in order to be comparable and thus explaining any difference from previously reported figures.
| For the three month period ended December 31 | ||||||||||||||||||||||||||||
| 2022 | Adjustments | 2022 Adjusted | 2021 Adjusted | % Change | 2019 Adjusted | % Change | ||||||||||||||||||||||
| REVENUE | ||||||||||||||||||||||||||||
| Passenger | 2,291,419 | 2,291,419 | 1,475,129 | 55.3 | % | 2,477,675 | -7.5 | % | ||||||||||||||||||||
| Cargo | 420,113 | 420,113 | 464,814 | -9.6 | % | 279,986 | 50.0 | % | ||||||||||||||||||||
| Other Income | 32,739 | 32,739 | 55,914 | -41.4 | % | 112,941 | -71.0 | % | ||||||||||||||||||||
| TOTAL OPERATING REVENUE | 2,744,271 | 2,744,271 | 1,995,857 | 37.5 | % | 2,870,602 | -4.4 | % | ||||||||||||||||||||
| EXPENSES | ||||||||||||||||||||||||||||
| Wages and Benefits | (390,286 | ) | 53,300 | (336,986 | ) | (288,641 | ) | 16.7 | % | (439,737 | ) | -23.4 | % | |||||||||||||||
| Aircraft Fuel | (1,072,850 | ) | (1,072,850 | ) | (561,955 | ) | 90.9 | % | (743,781 | ) | 44.2 | % | ||||||||||||||||
| Commissions to Agents | (49,704 | ) | (49,704 | ) | (37,005 | ) | 34.3 | % | (55,311 | ) | -10.1 | % | ||||||||||||||||
| Depreciation and Amortization | (300,364 | ) | (300,364 | ) | (312,529 | ) | -3.9 | % | (390,762 | ) | -23.1 | % | ||||||||||||||||
| Other Rental and Landing Fees | (264,145 | ) | (264,145 | ) | (227,544 | ) | 16.1 | % | (339,215 | ) | -22.1 | % | ||||||||||||||||
| Passenger Services | (65,545 | ) | (65,545 | ) | (28,860 | ) | 127.1 | % | (70,021 | ) | -6.4 | % | ||||||||||||||||
| Aircraft Rentals | (26,709 | ) | 26,709 | - | - | n.m. | - | n.m. | ||||||||||||||||||||
| Aircraft Maintenance | (144,052 | ) | (144,052 | ) | (121,734 | ) | 18.3 | % | (128,050 | ) | 12.5 | % | ||||||||||||||||
| Other Operating Expenses | (290,876 | ) | (290,876 | ) | (247,677 | ) | 17.4 | % | (353,328 | ) | -17.7 | % | ||||||||||||||||
| TOTAL OPERATING EXPENSES | (2,604,531 | ) | 80,009 | (2,524,522 | ) | (1,825,945 | ) | 38.3 | % | (2,520,205 | ) | 0.2 | % | |||||||||||||||
| OPERATING INCOME/(LOSS) | 139,740 | 80,009 | 219,749 | 169,912 | 29 | % | 350,397 | -37 | % | |||||||||||||||||||
| Operating Margin | 5.1 | % | 2.9 | pp | 8.0 | % | 8.5 | % | -0.5 | pp | 12.2 | % | -4.2 | pp | ||||||||||||||
| Interest Income | 1,017,799 | 1,017,799 | 6,256 | 16169.2 | % | 10,020 | 10057.7 | % | ||||||||||||||||||||
| Interest Expense | (236,952 | ) | (236,952 | ) | (216,887 | ) | 9.3 | % | (163,876 | ) | 44.6 | % | ||||||||||||||||
| Adjusted Other Income (Expense) | 1,715,674 | 1,715,674 | (1,383,596 | ) | -224.0 | % | 1,306 | 131268.6 | % | |||||||||||||||||||
| INCOME/(LOSS) BEFORE TAXES | 2,636,261 | 80,009 | 2,716,270 | (1,424,315 | ) | -290.7 | % | 197,847 | 1272.9 | % | ||||||||||||||||||
| Income Taxes | (97,098 | ) | (97,098 | ) | (1,232,247 | ) | -92.1 | % | 30,770 | -415.6 | % | |||||||||||||||||
| NET INCOME/(LOSS) | 2,539,163 | 80,009 | 2,619,172 | (2,656,562 | ) | -198.6 | % | 228,617 | 1045.7 | % | ||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||||||
| Owners of the parent | 2,538,448 | 80,009 | 2,458,439 | (2,658,631 | ) | -192.5 | % | 227,057 | 982.7 | % | ||||||||||||||||||
| Non-controlling interest | 715 | 715 | 2,069 | -65.4 | % | 1,560 | -54.2 | % | ||||||||||||||||||||
| NET INCOME/(LOSS) attributable to the owners of the parent | 2,538,448 | 80,009 | 2,458,439 | (2,658,631 | ) | -192 | % | 227,057 | 983 | % | ||||||||||||||||||
| Net Margin attributable to the owners of the parent | 92.5 | % | -2.9 | pp | 89.6 | % | -133.2 | % | 222.8 | pp | 7.9 | % | 81.7 | pp | ||||||||||||||
| Effective Tax Rate | -3.7 | % | 0.1 | pp | -3.6 | % | 86.5 | % | -90.1 | pp | 15.6 | % | -19.1 | pp | ||||||||||||||
| EBITDA | 440,104 | 80,009 | 520,113 | 482,441 | 7.8 | % | 741,159 | -29.8 | % | |||||||||||||||||||
| EBITDA Margin | 16.0 | % | 2.9 | pp. | 19.0 | % | 24.2 | % | -5.2 | pp. | 25.8 | % | -6.9 | pp. | ||||||||||||||
| EBITDAR | 466,813 | 53,300 | 520,113 | 482,441 | 7.8 | % | 741,159 | -29.8 | % | |||||||||||||||||||
| EBITDAR Margin | 17.0 | % | 1.9 | pp. | 19.0 | % | 24.2 | % | -5.2 | pp. | 25.8 | % | -6.9 | pp. | ||||||||||||||
| 9 |
LATAM Airlines Group S.A.
Consolidated Financial Results for the twelve-month period ended December (in thousands of US Dollars)
As of this quarter, LATAM is reporting adjustments for special items that management believes distort the financial results. The adjustments in the year include LATAM’s variable fleet payments (PBH) accounted for in Aircraft Rentals as well as employee compensation associated with the Corporate Incentive Plan. Applicable adjustments have been made for the 2021 and 2019 periods in order to be comparable and thus explaining any difference from previously reported figures.
| For the twelve month period ended December 31 | ||||||||||||||||||||||||||||
| 2022 | Adjustments | 2022 Adjusted | 2021 Adjusted | % Change | 2019 Adjusted | % Change | ||||||||||||||||||||||
| REVENUE | ||||||||||||||||||||||||||||
| Passenger | 7,636,429 | 7,636,429 | 3,342,381 | 128.5 | % | 9,005,629 | -15.2 | % | ||||||||||||||||||||
| Cargo | 1,726,092 | 1,726,092 | 1,541,634 | 12.0 | % | 1,064,434 | 62.2 | % | ||||||||||||||||||||
| Other Income | 154,286 | 154,286 | 227,331 | -32.1 | % | 360,864 | -57.2 | % | ||||||||||||||||||||
| TOTAL OPERATING REVENUE | 9,516,807 | 9,516,807 | 5,111,346 | 86.2 | % | 10,430,927 | -8.8 | % | ||||||||||||||||||||
| EXPENSES | ||||||||||||||||||||||||||||
| Wages and Benefits | (1,266,336 | ) | 53,300 | (1,213,036 | ) | (1,007,536 | ) | 20.4 | % | (1,794,762 | ) | -32.4 | % | |||||||||||||||
| Aircraft Fuel | (3,882,505 | ) | (3,882,505 | ) | (1,487,776 | ) | 161.0 | % | (2,929,008 | ) | 32.6 | % | ||||||||||||||||
| Commissions to Agents | (167,035 | ) | (167,035 | ) | (89,208 | ) | 87.2 | % | (221,884 | ) | -24.7 | % | ||||||||||||||||
| Depreciation and Amortization | (1,179,512 | ) | (1,179,512 | ) | (1,165,394 | ) | 1.2 | % | (1,469,976 | ) | -19.8 | % | ||||||||||||||||
| Other Rental and Landing Fees | (1,036,158 | ) | (1,036,158 | ) | (755,188 | ) | 37.2 | % | (1,275,859 | ) | -18.8 | % | ||||||||||||||||
| Passenger Services | (184,357 | ) | (184,357 | ) | (77,363 | ) | 138.3 | % | (261,330 | ) | -29.5 | % | ||||||||||||||||
| Aircraft Rentals | (202,845 | ) | 202,845 | - | - | n.m. | - | n.m. | ||||||||||||||||||||
| Aircraft Maintenance | (582,848 | ) | (582,848 | ) | (533,738 | ) | 9.2 | % | (444,611 | ) | 31.1 | % | ||||||||||||||||
| Other Operating Expenses | (1,136,490 | ) | (1,136,490 | ) | (959,427 | ) | 18.5 | % | (1,291,895 | ) | -12.0 | % | ||||||||||||||||
| TOTAL OPERATING EXPENSES | (9,638,086 | ) | 256,145 | (9,381,941 | ) | (6,075,630 | ) | 54.4 | % | (9,689,325 | ) | -3.2 | % | |||||||||||||||
| OPERATING INCOME/(LOSS) | (121,279 | ) | 256,145 | 134,866 | (964,284 | ) | -114 | % | 741,602 | -82 | % | |||||||||||||||||
| Operating Margin | -1.3 | % | 2.7 | pp | 1.4 | % | -18.9 | % | 20.3 | pp | 7.1 | % | -5.7 | pp | ||||||||||||||
| Interest Income | 1,052,295 | 1,052,295 | 21,107 | 4885.5 | % | 26,283 | 3903.7 | % | ||||||||||||||||||||
| Interest Expense | (942,403 | ) | (942,403 | ) | (805,544 | ) | 17.0 | % | (589,934 | ) | 59.7 | % | ||||||||||||||||
| Adjusted Other Income (Expense) | 1,357,438 | 1,357,438 | (2,180,493 | ) | -162.3 | % | (36,035 | ) | -3867.0 | % | ||||||||||||||||||
| INCOME/(LOSS) BEFORE TAXES | 1,346,051 | 256,145 | 1,602,196 | (3,929,214 | ) | -140.8 | % | 141,916 | 1029.0 | % | ||||||||||||||||||
| Income Taxes | (8,914 | ) | (8,914 | ) | (568,935 | ) | -98.4 | % | 53,697 | -116.6 | % | |||||||||||||||||
| NET INCOME/(LOSS) | 1,337,137 | 256,145 | 1,593,282 | (4,498,149 | ) | -135.4 | % | 195,613 | 714.5 | % | ||||||||||||||||||
| Attributable to: | ||||||||||||||||||||||||||||
| Owners of the parent | 1,339,210 | 256,145 | 1,595,355 | (4,492,498 | ) | -135.5 | % | 190,430 | 737.8 | % | ||||||||||||||||||
| Non-controlling interest | (2,073 | ) | (2,073 | ) | (5,651 | ) | -63.3 | % | 5,183 | -140.0 | % | |||||||||||||||||
| NET INCOME/(LOSS) attributable to the owners of the parent | 1,339,210 | 256,145 | 1,595,355 | (4,492,498 | ) | -136 | % | 190,430 | 738 | % | ||||||||||||||||||
| Net Margin attributable to the owners of the parent | 14.1 | % | 2.7 | pp | 16.8 | % | -87.9 | % | 104.7 | pp | 1.8 | % | 14.9 | pp | ||||||||||||||
| Effective Tax Rate | -0.7 | % | 0.1 | pp | -0.6 | % | 14.5 | % | -15.0 | pp | 37.8 | % | -38.4 | pp | ||||||||||||||
| EBITDA | 1,058,233 | 256,145 | 1,314,378 | 201,110 | 553.6 | % | 2,211,578 | -40.6 | % | |||||||||||||||||||
| EBITDA Margin | 11.1 | % | 2.7 | pp. | 13.8 | % | 3.9 | % | 9.9 | pp. | 21.2 | % | -7.4 | pp. | ||||||||||||||
| EBITDAR | 1,261,078 | 53,300 | 1,314,378 | 201,110 | 553.6 | % | 2,211,578 | -40.6 | % | |||||||||||||||||||
| EBITDAR Margin | 13.3 | % | 0.6 | pp. | 13.8 | % | 3.9 | % | 9.9 | pp. | 21.2 | % | -7.4 | pp. | ||||||||||||||
| 10 |
LATAM Airlines Group S.A.
Consolidated Operational Statistics
| For the three month period ended December 31 | For the twelve month period ended December 31 | |||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | 2019 | % Change | 2022 | 2021 | % Change | 2019 | % Change | |||||||||||||||||||||||||||||||
| System | ||||||||||||||||||||||||||||||||||||||||
| Costs per ASK (US Cent) | 8.1 | 7.9 | 3.4 | % | 6.6 | 24.1 | % | 8.5 | 9.2 | -8.1 | % | 6.5 | 30.3 | % | ||||||||||||||||||||||||||
| Costs per ASK ex fuel (US Cents) | 4.8 | 5.6 | -14.1 | % | 4.6 | 3.6 | % | 5.1 | 7.0 | -27.9 | % | 4.5 | 11.5 | % | ||||||||||||||||||||||||||
| Passenger CASK ex fuel (US$ cents) | 4.0 | 4.6 | -13.0 | % | 4.3 | -6.1 | % | 4.3 | 5.8 | -25.9 | % | 4.2 | 2.9 | % | ||||||||||||||||||||||||||
| Fuel Gallons Consumed (millions) | 283.6 | 226.1 | 25.4 | % | 327.3 | -13.3 | % | 1,017.2 | 677.1 | 50.2 | % | 1,272.7 | -20.1 | % | ||||||||||||||||||||||||||
| Fuel Gallons Consumed per 1,000 ASKs | 8.9 | 9.3 | -4.3 | % | 8.5 | 4.1 | % | 8.9 | 10.0 | -10.8 | % | 8.5 | 4.7 | % | ||||||||||||||||||||||||||
| Fuel Price (with hedge) (US$ per gallon) | 3.78 | 2.49 | 52.2 | % | 2.28 | 66.2 | % | 3.82 | 2.20 | 73.7 | % | 2.30 | 65.7 | % | ||||||||||||||||||||||||||
| Fuel Price (without hedge) (US$ per gallon) | 3.79 | 2.50 | 51.5 | % | 2.28 | 66.7 | % | 3.84 | 2.21 | 73.4 | % | 2.28 | 67.9 | % | ||||||||||||||||||||||||||
| Average Trip Length (km) | 1,242 | 1,210 | 2.6 | % | 1,352 | -8.1 | % | 1,233 | 1,139 | 8.3 | % | 1,407 | -12.4 | % | ||||||||||||||||||||||||||
| Total Number of Employees (average) | 32,195 | 29,227 | 10.2 | % | 41,495 | -22.4 | % | 30,877 | 28,429 | 8.6 | % | 41,043 | -24.8 | % | ||||||||||||||||||||||||||
| Total Number of Employees (end of the period) | 32,507 | 29,114 | 11.7 | % | 41,729 | -22.1 | % | 32,507 | 29,114 | 11.7 | % | 41,729 | -22.1 | % | ||||||||||||||||||||||||||
| Passenger | ||||||||||||||||||||||||||||||||||||||||
| ASKs (millions) | 31,971 | 24,401 | 31.0 | % | 38,405 | -16.8 | % | 113,852 | 67,636 | 68.3 | % | 149,112 | -23.6 | % | ||||||||||||||||||||||||||
| RPKs (millions) | 26,012 | 19,845 | 31.1 | % | 31,835 | -18.3 | % | 92,588 | 50,317 | 84.0 | % | 124,521 | -25.6 | % | ||||||||||||||||||||||||||
| Passengers Transported (thousands) | 17,153 | 14,848 | 15.5 | % | 19,946 | -14.0 | % | 62,467 | 40,195 | 55.4 | % | 74,189 | -15.8 | % | ||||||||||||||||||||||||||
| Load Factor (based on ASKs) % | 81.4 | % | 81.3 | % | 0.0 pp | 82.9 | % | -1.5 pp | 81.3 | % | 74.4 | % | 6.9 pp | 83.5 | % | -2.2 pp | ||||||||||||||||||||||||
| Yield based on RPKs (US Cents) | 8.8 | 7.4 | 18.5 | % | 7.8 | 13.2 | % | 8.2 | 6.6 | 24.2 | % | 7.2 | 14.0 | % | ||||||||||||||||||||||||||
| Revenues per ASK (US cents) | 7.2 | 6.0 | 18.6 | % | 6.5 | 11.1 | % | 6.7 | 4.9 | 35.7 | % | 6.0 | 11.1 | % | ||||||||||||||||||||||||||
| Cargo | ||||||||||||||||||||||||||||||||||||||||
| ATKs (millions) | 1,742 | 1,395 | 24.9 | % | 1,640 | 6.2 | % | 6,256 | 4,788 | 30.7 | % | 6,357 | -1.6 | % | ||||||||||||||||||||||||||
| RTKs (millions) | 953 | 833 | 14.4 | % | 925 | 3.1 | % | 3,532 | 3,035 | 16.4 | % | 3,526 | 0.2 | % | ||||||||||||||||||||||||||
| Tons Transported (thousands) | 240 | 216 | 10.9 | % | 244 | -1.8 | % | 901 | 802 | 12.4 | % | 904 | -0.4 | % | ||||||||||||||||||||||||||
| Load Factor (based on ATKs) % | 54.7 | % | 59.7 | % | -5.0 pp | 56.4 | % | -1.7 pp | 56.5 | % | 63.4 | % | -6.9 pp | 55.5 | % | 1.0 pp | ||||||||||||||||||||||||
| Yield based on RTKs (US Cents) | 44.1 | 55.8 | -21.0 | % | 30.3 | 45.6 | % | 48.9 | 50.8 | -3.8 | % | 30.2 | 61.9 | % | ||||||||||||||||||||||||||
| Revenues per ATK (US Cents) | 24.1 | 33.3 | -27.7 | % | 17.1 | 41.2 | % | 27.6 | 32.2 | -14.3 | % | 16.7 | 64.8 | % | ||||||||||||||||||||||||||
Note: Passenger CASK ex fuel excludes special items
| 11 |
LATAM Airlines Group S.A.
Consolidated Balance Sheet (in thousands of US Dollars)
| As of December 31 | As of December 31 | As of December 31 | ||||||||||
| 2022 | 2021 | 2019 | ||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | 1,216,675 | 1,046,835 | 1,072,579 | |||||||||
| Other financial assets | 503,515 | 101,138 | 499,504 | |||||||||
| Other non-financial assets | 191,364 | 108,368 | 313,449 | |||||||||
| Trade and other accounts receivable | 1,008,109 | 881,770 | 1,244,348 | |||||||||
| Accounts receivable from related entities | 19,523 | 724 | 19,645 | |||||||||
| Inventories | 477,789 | 287,337 | 354,232 | |||||||||
| Current tax assets | 33,033 | 41,264 | 29,321 | |||||||||
| Total current assets other than non-current assets (or disposal groups) classified as held for sale | 3,450,008 | 2,467,436 | 3,533,078 | |||||||||
| Non-current assets (or disposal groups) | 86,416 | 146,792 | 485,150 | |||||||||
| classified as held for sale | ||||||||||||
| Total current assets | 3,536,424 | 2,614,228 | 4,018,228 | |||||||||
| Other financial assets | 15,517 | 15,622 | 46,907 | |||||||||
| Other non-financial assets | 148,378 | 125,432 | 204,928 | |||||||||
| Accounts receivable | 12,743 | 12,201 | 4,725 | |||||||||
| Intangible assets other than goodwill | 1,080,386 | 1,018,892 | 1,448,241 | |||||||||
| Goodwill | - | - | 2,209,576 | |||||||||
| Property, plant and equipment | 8,411,661 | 9,489,867 | 12,919,618 | |||||||||
| Deferred tax assets | 5,915 | 15,290 | 235,583 | |||||||||
| Total non- current assets | 9,674,600 | 10,677,304 | 17,069,578 | |||||||||
| Total assets | 13,211,024 | 13,291,532 | 21,087,806 | |||||||||
| Liabilities and shareholders’ equity: | ||||||||||||
| Other financial liabilities | 802,841 | 4,453,451 | 1,885,660 | |||||||||
| Trade and other accounts payables | 1,627,992 | 4,839,251 | 2,222,874 | |||||||||
| Accounts payable to related entities | 12 | 661,602 | 56 | |||||||||
| Other provisions | 14,573 | 27,872 | 5,206 | |||||||||
| Current tax liabilities | 1,026 | 675 | 11,925 | |||||||||
| Other non-financial liabilities | 2,642,251 | 2,332,576 | 2,835,221 | |||||||||
| Total current liabilities | 5,088,695 | 12,315,427 | 6,960,942 | |||||||||
| Other financial liabilities | 5,979,039 | 5,948,702 | 8,530,418 | |||||||||
| Accounts payable | 326,284 | 472,426 | 619,110 | |||||||||
| Other provisions | 927,964 | 712,581 | 286,403 | |||||||||
| Deferred tax liabilities | 344,625 | 341,011 | 616,803 | |||||||||
| Employee benefits | 93,488 | 56,233 | 93,570 | |||||||||
| Other non-financial liabilities | 420,208 | 512,056 | 851,383 | |||||||||
| Total non-current liabilities | 8,091,608 | 8,043,009 | 10,997,687 | |||||||||
| Total liabilities | 13,180,303 | 20,358,436 | 17,958,629 | |||||||||
| Share capital | 13,298,486 | 3,146,265 | 3,146,265 | |||||||||
| Retained earnings/(losses) | (7,501,896 | ) | (8,841,106 | ) | 352,272 | |||||||
| Treasury Shares | (178 | ) | (178 | ) | (178 | ) | ||||||
| Other equity | 39 | - | - | |||||||||
| Other reserves | (5,754,173 | ) | (1,361,529 | ) | (367,577 | ) | ||||||
| Parent’s ownership interest | 42,278 | (7,056,548 | ) | 3,130,782 | ||||||||
| Non-controlling interest | (11,557 | ) | (10,356 | ) | (1,605 | ) | ||||||
| Total equity | 30,721 | (7,066,904 | ) | 3,129,177 | ||||||||
| Total liabilities and equity | 13,211,024 | 13,291,532 | 21,087,806 | |||||||||
| 12 |
LATAM Airlines Group S.A.
Consolidated Statement of Cash Flow – Direct Method (in thousands of US Dollars)
| As of December 31, 2022 | As of December 31, 2021 | As of December 31, 2019 | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Cash collection from operating activities | ||||||||||||
| Proceeds from sales of goods and services | 10,549,542 | 5,359,778 | 11,079,333 | |||||||||
| Other cash receipts from operating activities | 117,118 | 52,084 | 127,683 | |||||||||
| Payments for operating activities | ||||||||||||
| Payments to suppliers for goods and services | (9,113,130 | ) | (4,391,627 | ) | (6,663,875 | ) | ||||||
| Payments to and on behalf of employees | (1,039,336 | ) | (941,068 | ) | (1,644,806 | ) | ||||||
| Other payments for operating activities | (272,823 | ) | (156,395 | ) | (267,643 | ) | ||||||
| Income taxes (paid) | (14,314 | ) | (9,437 | ) | (45,311 | ) | ||||||
| Other cash inflows (outflows) | (130,260 | ) | (87,576 | ) | 241,286 | |||||||
| Net cash (out flow) inflow from operating activities | 96,797 | (174,241 | ) | 2,826,667 | ||||||||
| Cash flow from investing activities | ||||||||||||
| Cash flows arising from losing control of subsidiaries or other businesses | - | 752 | - | |||||||||
| Other cash receipts from sales of equity or debt instruments of other entities | 417 | 35 | 4,063,582 | |||||||||
| Other payments to acquire equity or debt instruments of other entities | (331 | ) | (208 | ) | (4,131,890 | ) | ||||||
| Amounts raised from sale of property, plant and equipment | 56,377 | 105,000 | 50,322 | |||||||||
| Purchases of property, plant and equipment | (780,538 | ) | (597,103 | ) | (1,276,621 | ) | ||||||
| Purchases of intangible assets | (50,116 | ) | (88,518 | ) | (140,173 | ) | ||||||
| Interest Received | 18,934 | 9,056 | 17,822 | |||||||||
| Other cash inflows (outflows) | 6,300 | 18,475 | (2,249 | ) | ||||||||
| Net cash inflow (out flow) from investing activities | (748,957 | ) | (552,511 | ) | (1,419,207 | ) | ||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from issuance of shares | 549,038 | - | - | |||||||||
| Payments for changes in ownership interests in subsidiaries that do not result in loss of control | - | - | (294,105 | ) | ||||||||
| Amounts from issuance of other equity instruments | 3,202,790 | - | - | |||||||||
| Amounts raised from long-term loans | 2,361,875 | - | 1,781,728 | |||||||||
| Amounts raised from short-term loans | 4,856,025 | 661,609 | 93,000 | |||||||||
| Loans from Related Entities | 770,522 | 130,102 | - | |||||||||
| Loans repayments | (8,759,413 | ) | (463,048 | ) | (1,860,455 | ) | ||||||
| Payments of lease liabilities | (131,917 | ) | (103,366 | ) | (398,992 | ) | ||||||
| Payments of loans to related entities | (1,008,483 | ) | - | - | ||||||||
| Dividends paid | - | - | (55,116 | ) | ||||||||
| Interest paid | (521,716 | ) | (104,621 | ) | (550,877 | ) | ||||||
| Other cash inflows (outflows) | (463,766 | ) | (11,034 | ) | (58,704 | ) | ||||||
| Net cash inflow (out flow) from financing activities | 854,955 | 109,642 | (1,343,521 | ) | ||||||||
| Net increase (decrease) in cash and cash equivalents before effect of exchange rate change | 202,795 | (617,110 | ) | 63,939 | ||||||||
| Effects of variation in the exchange rate on cash and equivalents | (32,955 | ) | (31,896 | ) | (73,002 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | 169,840 | (649,006 | ) | (9,063 | ) | |||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 1,046,835 | 1,695,841 | 1,081,642 | |||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,216,675 | 1,046,835 | 1,072,579 | |||||||||
| 13 |
LATAM Airlines Group S.A.
Adjusted Free Cash Flow Reconciliation (in thousands of US Dollars)
Cash flow statement to facilitate the analysis of LATAM’s free cash flow.
| Adjusted Free Cash flow | For the three month period ended December 31 | For the twelve month period ended December 31 | ||||||
| Adjusted EBITDAR | 520,113 | 1,314,378 | ||||||
| Income statement adjusted for special items | (53,300 | ) | (53,300 | ) | ||||
| EBITDAR | 466,813 | 1,261,078 | ||||||
| Changes in working capital | 61,450 | 155,055 | ||||||
| Cash taxes | (1,969 | ) | (14,314 | ) | ||||
| Operating lease payments | (106,660 | ) | (383,837 | ) | ||||
| Interest Income | 8,854 | 18,934 | ||||||
| Adj. Operating cash flow | -38,325 | -224,162 | ||||||
| Maintenance Capex | (344,946 | ) | (778,607 | ) | ||||
| Capex for growth & Fleet Capex Net of Financing | (50,376 | ) | (201,189 | ) | ||||
| Adj. Investment cash flow | (395,322 | ) | (979,796 | ) | ||||
| Adj. Unlevered FCF | 33,167 | 57,120 | ||||||
| Interest on financial debt | (4,244 | ) | (238,051 | ) | ||||
| Interest on finance leases | (17,050 | ) | (52,088 | ) | ||||
| Adj. Levered FCF | 11,873 | (233,019 | ) | |||||
| Finance lease amortization | (111,638 | ) | (331,292 | ) | ||||
| Non-Fleet Financial debt net amortization | (27,547 | ) | 225,327 | |||||
| Statutory Dividends | 0 | 0 | ||||||
| Chapter 11 Related Transactions | 402,805 | 548,844 | ||||||
| Other (Incl. Asset Sale, Fx and others) | 43,971 | (40,021 | ) | |||||
| Adj. Financing & Others cash flow | 286,298 | 112,720 | ||||||
| Change in cash | 319,465 | 169,840 | ||||||
Notes:
| 1) | Income Statement adjustments for special items in the period include provision of the Corporate Incentive Program (“CIP”). |
| 2) | Operating leases includes variable Aircraft Rentals (Pay by the Hour “PBH”) and Operational Leases under IFRS 16 including amortization and interest (both fleet and non-fleet). |
| 3) | Maintenance Capex primarily includes engine shop visits, aircraft c-checks, restocking of parts, ordinary course IT-related capex, as well as capex associated with fleet projects that do not contribute additional capacity to the group’s operations (i.e. aircraft wi-fi connectivity and cabin retrofit based on age limit policy). |
| 4) | Growth & Fleet capex (net of financing) includes capex associated with additional spare parts and engines, PDPs, fleet projects that contribute additional capacity, certain other strategic projects that add value, and fleet arrivals net of their financing. |
| 5) | Chapter 11 Related Transactions includes Exit Financing and Emergence change in cash. |
| 14 |
LATAM Airlines Group S.A.
Consolidated Balance Sheet Indicators (in thousands of US Dollars)
| As of December 31 | As of December 31 | As of December 31 | ||||||||||
| 2022 | 2021 | 2019 | ||||||||||
| Total Assets | 13,211,024 | 13,291,532 | 21,087,806 | |||||||||
| Total Liabilities | 13,180,303 | 20,358,436 | 17,958,629 | |||||||||
| Total Equity* | 30,721 | (7,066,904 | ) | 3,129,177 | ||||||||
| Total Liabilities and Shareholders equity | 13,211,024 | 13,291,532 | 21,087,806 | |||||||||
| Debt | ||||||||||||
| Current and long term portion of loans from financial institutions** | 3,162,865 | 6,246,662 | 5,462,684 | |||||||||
| Current and long term portion of obligations under capital leases | 1,088,239 | 1,189,182 | 1,730,843 | |||||||||
| Total Financial Debt | 4,251,104 | 7,435,844 | 7,193,527 | |||||||||
| Lease liabilities | 2,216,454 | 2,960,638 | 3,172,157 | |||||||||
| Total Gross Debt | 6,467,558 | 10,396,482 | 10,365,684 | |||||||||
| Cash, cash equivalents and liquid investments*** | (1,216,952 | ) | (1,047,182 | ) | (1,459,248 | ) | ||||||
| Total Net Debt | 5,250,606 | 9,349,300 | 8,906,436 | |||||||||
| * | Includes non-controlling interest. |
| ** | Excluding associated guarantees. |
| *** | Includes “Cash and cash equivalents” and certain highly liquid investments accounted for as “Private investment funds” in “Other Financial Assets”. |
LATAM Airlines Group S.A.
Main Financial Ratios
| As of December 31 | As of December 31 | As of December 31 | ||||||||||
| 2022 | 2021 | 2019 | ||||||||||
| Cash, cash equivalents and liquid investments* as % of LTM revenues | 12.8 | % | 20.5 | % | 14.0 | % | ||||||
| Liquidity** as % of LTM revenues | 24.3 | % | 20.5 | % | 19.7 | % | ||||||
| Gross Debt (US$ thousands) | 6,467,558 | 10,396,482 | 10,365,684 | |||||||||
| Gross Debt / EBITDAR (LTM) | 5.2 | nm | 4.7 | |||||||||
| Gross Debt / Adjusted EBITDAR (LTM) | 4.9 | nm | 4.7 | |||||||||
| Net Debt (US$ thousands) | 5,250,606 | 9,349,300 | 8,906,436 | |||||||||
| Net Debt / EBITDAR (LTM) | 4.2 | nm | 4.0 | |||||||||
| Net Debt / Adjusted EBITDAR (LTM) | 4.0 | nm | 4.0 | |||||||||
Note: Adjusted EBITDAR (LTM) refers to Adjusted EBITDAR (Last Twelve Months) (US$ thousands). As of December 31, 2022. For the ratios as of December 31, 2021, and December 31, 2019, it is calculated using the full twelve months Adjusted EBITDAR in 2019 (US$2,211,578) and 2021 (US$201,110).
| * | Includes “Cash and cash equivalents” and certain highly liquid investments accounted for as “Private investment funds” in “Other Financial Assets”. |
| ** | Includes “Cash and cash equivalents”, certain highly liquid investments accounted for as “Private investment funds” in “Other Financial Assets” and Revolving Credit Facilities fully undrawn (two RCFs of US$600 million and US$500 million with maturities in 2025 and 2026, respectively, as of December 31, 2022). |
Note: Gross and Net Debt excludes associated guarantees.
| 15 |
LATAM Airlines Group S.A.
Consolidated Fleet
| As of December 31, 2022 | ||||||||||||
| Aircraft on Property, Plant & Equipment | Aircraft on Right of Use under IFRS16 | Total | ||||||||||
| Passenger Aircraft | ||||||||||||
| Boeing 767-300 ER | 16 | - | 16 | |||||||||
| Boeing 777-300 ER | 4 | 6 | 10 | |||||||||
| Boeing 787-8 | 4 | 6 | 10 | |||||||||
| Boeing 787-9 | 2 | 19 | 21 | |||||||||
| Airbus A319-100 | 40 | 1 | 41 | |||||||||
| Airbus A320-200 | 91 | 40 | 131 | |||||||||
| Airbus A320- Neo | 1 | 15 | 16 | |||||||||
| Airbus A321-200 | 19 | 30 | 49 | |||||||||
| TOTAL | 177 | 117 | 294 | |||||||||
| Cargo Aircraft | ||||||||||||
| Boeing 767-300F | 15 | 1 | 16 | |||||||||
| TOTAL | 15 | 1 | 16 | |||||||||
| TOTAL FLEET | 192 | 118 | 310 | |||||||||
Note: This table includes three Boeing 767, three Airbus A320 and twenty eight Airbus A319 that were reclassified from Property, Plant and Equipment to Assets Held for Sale.
| 16 |
LATAM Airlines Group S.A.
Reconciliation of Reported Amounts to Non-GAAP Items (in thousands of US Dollars)
LATAM Airlines Group S.A. (“LATAM” or “the Company”) prepares its financial statements under “International Financial Reporting Standards” (“IFRS”) as issued by the IASB, however, for ease of presentation and comparison, the Income Statement in this report is presented in an Adapted by Nature Format. On some occasions, adjustments to these Income Statement figures are made for Special Items. These adjustments to include or exclude special items allows management an additional tool to understand and analyze its core operating performance and allow for more meaningful comparison in the industry. Therefore, LATAM believes these non-GAAP financial measures, derived from the consolidated financial statements but not presented in accordance with IFRS, may provide useful information to investors and others. In this table, you can find a reconciliation of the IFRS and the Adapted by Nature Format as LATAM reports its Income Statement in this earnings release for ease of comparison and further disclosure, as well as the adjustments made for Special Items.
These non-GAAP items may not be comparable to similarly titled non-GAAP items of other companies and should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.
The tables below show these reconciliations:
| For the three month period ended December 31 | For the twelve month period ended December 31 | |||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | % Change | 2019 | % Change | 2022 | 2021 | % Change | 2019 | % Change | |||||||||||||||||||||||||||||||
| Cost of sales | (2,150,914 | ) | (1,542,909 | ) | 39.4 | % | (2,066,372 | ) | 4.1 | % | (8,103,483 | ) | (4,963,485 | ) | 63.3 | % | (7,951,269 | ) | 1.9 | % | ||||||||||||||||||||
| (+) Distribution costs | (113,977 | ) | (95,361 | ) | 19.5 | % | (133,264 | ) | -14.5 | % | (426,599 | ) | (291,820 | ) | 46.2 | % | (580,046 | ) | -26.5 | % | ||||||||||||||||||||
| (+) Administrative expenses | (205,122 | ) | (160,858 | ) | 27.5 | % | (219,783 | ) | -6.7 | % | (576,429 | ) | (439,494 | ) | 31.2 | % | (735,218 | ) | -21.6 | % | ||||||||||||||||||||
| (+) Other expenses | (134,519 | ) | (123,299 | ) | 9.1 | % | (100,788 | ) | 33.5 | % | (531,575 | ) | (535,824 | ) | -0.8 | % | (422,792 | ) | 25.7 | % | ||||||||||||||||||||
| TOTAL OPERATING EXPENSES | (2,604,531 | ) | (1,922,427 | ) | 35.5 | % | (2,520,205 | ) | 3.3 | % | (9,638,086 | ) | (6,230,623 | ) | 54.7 | % | (9,689,325 | ) | -0.5 | % | ||||||||||||||||||||
| (-) Adjustments to Wages and benefits | 53,300 | 34,363 | 55.1 | % | - | n.m. | 53,300 | 34,363 | 55.1 | % | - | n.m. | ||||||||||||||||||||||||||||
| (-) Adjustmentes to Aircraft rentals | 26,709 | 62,119 | -57.0 | % | - | n.m. | 202,845 | 120,630 | 68.2 | % | - | n.m. | ||||||||||||||||||||||||||||
| TOTAL ADJUSTED OPERATING EXPENSES | (2,524,522 | ) | (1,825,945 | ) | 38.3 | % | (2,520,205 | ) | 0.2 | % | (9,381,941 | ) | (6,075,630 | ) | 54.4 | % | (9,689,325 | ) | -3.2 | % | ||||||||||||||||||||
| Income/(Loss) from operation activities | 1,877,745 | (1,317,735 | ) | -242.5 | % | 354,951 | 429.0 | % | 1,211,578 | (3,425,785 | ) | -135.4 | % | 753,127 | 60.9 | % | ||||||||||||||||||||||||
| (-) Restructuring activities expenses | (2,065,703 | ) | 1,382,334 | -249.4 | % | - | n.m. | (1,679,934 | ) | 2,337,182 | -171.9 | % | - | n.m. | ||||||||||||||||||||||||||
| (-) Other gains/(losses) | 327,697 | 8,831 | 3610.8 | % | (4,556 | ) | -7293.4 | % | 347,077 | (30,674 | ) | -1231.5 | % | (11,525 | ) | -3111.6 | % | |||||||||||||||||||||||
| OPERATING INCOME/(LOSS) | 139,740 | 73,430 | 90.3 | % | 350,397 | -60.1 | % | (121,279 | ) | (1,119,277 | ) | -89.2 | % | 741,602 | -116.4 | % | ||||||||||||||||||||||||
| (-) Adjustments to Wages and benefits | 53,300 | 34,363 | 55.1 | % | - | n.m. | 53,300 | 34,363 | 55.1 | % | - | n.m. | ||||||||||||||||||||||||||||
| (-) Adjustmentes to Aircraft rentals | 26,709 | 62,119 | -57.0 | % | - | n.m. | 202,845 | 120,630 | 68.2 | % | - | n.m. | ||||||||||||||||||||||||||||
| ADJUSTED OPERATING INCOME/(LOSS) | 219,749 | 169,912 | 29.3 | % | 350,397 | -37.3 | % | 134,866 | (964,284 | ) | -114.0 | % | 741,602 | -81.8 | % | |||||||||||||||||||||||||
| (+) Restructuring activities expenses | 2,065,703 | (1,382,334 | ) | -249.4 | % | - | n.m. | 1,679,934 | (2,337,182 | ) | -171.9 | % | - | n.m. | ||||||||||||||||||||||||||
| (+) Other gains/(losses) | (327,697 | ) | (8,831 | ) | 3610.8 | % | 4,556 | -7292.8 | % | (347,077 | ) | 30,674 | -1231.5 | % | 11,525 | -3111.6 | % | |||||||||||||||||||||||
| (+) Foreign exchange gains/(losses) | (23,361 | ) | 12,001 | -294.7 | % | 9,263 | -352.2 | % | 25,993 | 131,408 | -80.2 | % | (32,571 | ) | -179.8 | % | ||||||||||||||||||||||||
| (+) Result of indexation units | 1,029 | (4,432 | ) | -123.2 | % | (12,510 | ) | -108.2 | % | (1,412 | ) | (5,393 | ) | -73.8 | % | (14,989 | ) | -90.6 | % | |||||||||||||||||||||
| Adjusted Other Income (Expense) | 1,715,674 | (1,383,596 | ) | -224.0 | % | 1,306 | 131228.4 | % | 1,357,438 | (2,180,493 | ) | -162.3 | % | (36,035 | ) | -3867.0 | % | |||||||||||||||||||||||
| NET INCOME/(LOSS) | 2,539,163 | (2,753,044 | ) | -192.2 | % | 228,617 | 1010.7 | % | 1,337,137 | (4,653,142 | ) | -128.7 | % | 195,613 | 583.6 | % | ||||||||||||||||||||||||
| (-) Income Taxes | 97,098 | 1,232,247 | -92.1 | % | (30,770 | ) | -415.6 | % | 8,914 | 568,935 | -98.4 | % | (53,697 | ) | -116.6 | % | ||||||||||||||||||||||||
| (-) Interest Expense | 236,952 | 216,887 | 9.3 | % | 163,876 | 44.6 | % | 942,403 | 805,544 | 17.0 | % | 589,934 | 59.7 | % | ||||||||||||||||||||||||||
| (-) Interest Income | (1,017,799 | ) | (6,256 | ) | 16169.2 | % | (10,020 | ) | 10057.7 | % | (1,052,295 | ) | (21,107 | ) | 4885.5 | % | (26,283 | ) | 3903.7 | % | ||||||||||||||||||||
| (-) Depreciation and Amortization | 300,364 | 312,529 | -3.9 | % | 390,762 | -23.1 | % | 1,179,512 | 1,165,394 | 1.2 | % | 1,469,976 | -19.8 | % | ||||||||||||||||||||||||||
| (-) Adjusted Other Income (Expense) | (1,715,674 | ) | 1,383,596 | -224.0 | % | (1,306 | ) | 131268.6 | % | (1,357,438 | ) | 2,180,493 | -162.3 | % | 36,035 | -3867.0 | % | |||||||||||||||||||||||
| EBITDA | 440,104 | 385,959 | 14.0 | % | 741,159 | -40.6 | % | 1,058,233 | 46,117 | 2194.7 | % | 2,211,578 | -52.2 | % | ||||||||||||||||||||||||||
| (-) Adjustments to Wages and benefits | 53,300 | 34,363 | 55.1 | % | - | n.m. | 53,300 | 34,363 | 55.1 | % | - | - | ||||||||||||||||||||||||||||
| (-) Adjustmentes to Aircraft rentals | 26,709 | 62,119 | -57.0 | % | - | n.m. | 202,845 | 120,630 | 68.2 | % | - | - | ||||||||||||||||||||||||||||
| Adjusted EBITDA | 520,113 | 482,441 | 7.8 | % | 741,159 | -29.8 | % | 1,314,378 | 201,110 | 553.6 | % | 2,211,578 | -40.6 | % | ||||||||||||||||||||||||||
| (-) Aircraft Rentals | 26,709 | 62,119 | -57.0 | % | - | - | 202,845 | 120,630 | 68.2 | % | - | - | ||||||||||||||||||||||||||||
| EBITDAR | 466,813 | 448,078 | 4.2 | % | 741,159 | -37.0 | % | 1,261,078 | 166,747 | 656.3 | % | 2,211,578 | -43.0 | % | ||||||||||||||||||||||||||
| (-) Adjustments to Wages and benefits | 53,300 | 34,363 | 55.1 | % | - | 53,300 | 34,363 | - | ||||||||||||||||||||||||||||||||
| Adjusted EBITDAR | 520,113 | 482,441 | 7.8 | % | 741,159 | -29.8 | % | 1,314,378 | 201,110 | 553.6 | % | 2,211,578 | -40.6 | % | ||||||||||||||||||||||||||
| 17 |