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COMMITMENTS | 12 Months Ended
--- | ---
Dec. 31, 2017
Commitments |
COMMITMENTS | NOTE 32 – COMMITMENTS
(a) | Loan covenants
With respect to various loans signed by the Company for the financing of Boeing 767, 767F, 777F and 787 aircraft, which carry the guarantee of the United States Export–Import Bank, limits have been set on some of the Company’s financial indicators on a consolidated basis, for which, in any case non-compliance does not generate acceleration of the loans. Moreover, and related to these same contracts, restrictions are also in place on the Company’s management in terms of its ownership, in relation to the ownership structure and the controlling group, and disposal of the assets which mainly refers to important transfers of assets. The Company and its subsidiaries do not maintain financial credit contracts with banks in Chile that indicate some limits on financial indicators of the Company or its subsidiaries. The Revolving Credit Facility ("Revolving Credit Facility") with guaranteed aircraft, engines, spare parts and supplies for a total amount of US $ 450 million includes restrictions of minimum liquidity measured at the level of the Consolidated Company and measured at the individual level for the companies LATAM Airlines Group S.A. and TAM Linhas Aéreas S.A. which remain stand by while the credit line is not used. This credit line established with a consortium of eleven banks led by Citibank, is not used as of December 31, 2017. As of December 31, 2017, the Company is in compliance with all the indicators detailed above.
(b) | Commitments under operating leases as lessee
Details of the main operating leases are as follows:
|  |  |  | As of |  |  | As of |
|  |  |  | December 31, |  |  | December 31, |
Lessor |  | Aircraft |  | 2017 |  |  | 2016 |
ACS Aero 1 Alpha limited |  | Airbus A320 |  |  | 1 |  |  |  | - |
Aircraft 76B-26329 Inc. |  | Boeing 767 |  |  | 1 |  |  |  | 1 |
Aircraft 76B-27615 Inc. |  | Boeing 767 |  |  | - |  |  |  | 1 |
Aircraft 76B-28206 Inc. |  | Boeing 767 |  |  | 1 |  |  |  | 1 |
Aviación Centaurus, A.I.E. |  | Airbus A319 |  |  | 3 |  |  |  | 3 |
Aviación Centaurus, A.I.E. |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
Aviación Real A.I.E. |  | Airbus A319 |  |  | 1 |  |  |  | 1 |
Aviación Real A.I.E. |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
Aviación Tritón A.I.E. |  | Airbus A319 |  |  | 3 |  |  |  | 3 |
Avolon Aerospace AOE 19 Limited |  | Airbus A320 |  |  | - |  |  |  | 1 |
Avolon Aerospace AOE 20 Limited |  | Airbus A320 |  |  | - |  |  |  | 1 |
Avolon Aerospace AOE 6 Limited |  | Airbus A320 |  |  | - |  |  |  | 1 |
Avolon Aerospace AOE 62 Limited |  | Boeing 777 |  |  | 1 |  |  |  | 1 |
Avolon Aerospace AOE 100 Limited |  | Airbus A320 |  |  | 2 |  |  |  | - |
AWAS 5234 Trust |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
Baker & Spice Aviation Limited |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
Bank of America |  | Airbus A321 |  |  | 2 |  |  |  | 2 |
Bank of Utah |  | Boeing 787 |  |  | 2 |  |  |  | - |
CIT Aerospace International |  | Airbus A320 |  |  | 1 |  |  |  | 2 |
ECAF I 1215 DAC |  | Airbus A320 |  |  | - |  |  |  | 1 |
ECAF I 2838 DAC |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
ECAF I 40589 DAC |  | Boeing 777 |  |  | 1 |  |  |  | 1 |
Eden Irish Aircr Leasing MSN 1459 |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
GECAS Sverige Aircraft Leasing Worldwide AB |  | Airbus A320 |  |  | - |  |  |  | 1 |
GFL Aircraft Leasing Netherlands B.V. |  | Airbus A320 |  |  | - |  |  |  | 1 |
IC Airlease One Limited |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
JSA Aircraft 38484, LLC |  | Boeing 787 |  |  | 1 |  |  |  | 1 |
JSA Aircraft 7126, LLC |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
JSA Aircraft 7128, LLC |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
JSA Aircraft 7239, LLC |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
JSA Aircraft 7298, LLC |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
Macquarie Aerospace Finance 5125-2 Trust |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
Macquarie Aerospace Finance 5178 Limited |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
|  |  |  | As of |  |  | As of |
|  |  |  | December 31, |  |  | December 31, |
Lessor |  | Aircraft |  | 2017 |  |  | 2016 |
Magix Airlease Limited |  | Airbus A320 |  |  | - |  |  |  | 1 |
MASL Sweden (8) AB |  | Airbus A320 |  |  | - |  |  |  | 1 |
Merlin Aviation Leasing (Ireland) 18 Limited |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
Merlin Aviation Leasing (Ireland) 7 Limited |  | Airbus A320 |  |  | 1 |  |  |  | - |
NBB Cuckoo Co., Ltd |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
NBB Grosbeak Co., Ltd |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
NBB Redstart Co. Ltd |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
NBB-6658 Lease Partnership |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
NBB-6670 Lease Partnership |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
Orix Aviation Systems Limited |  | Airbus A320 |  |  | 4 |  |  |  | 5 |
PAAL Aquila Company Limited |  | Airbus A321 |  |  | 2 |  |  |  | 2 |
PAAL Gemini Company Limited |  | Airbus A321 |  |  | 1 |  |  |  | 1 |
SASOF II (J) Aviation Ireland Limited |  | Airbus A319 |  |  | - |  |  |  | 1 |
Shenton Aircraft Leasing Limited |  | Airbus A320 |  |  | 1 |  |  |  | 1 |
Sky High XXIV Leasing Company Limited |  | Airbus A320 |  |  | 5 |  |  |  | 5 |
Sky High XXV Leasing Company Limited |  | Airbus A320 |  |  | 2 |  |  |  | 2 |
SMBC Aviation Capital Limited |  | Airbus A320 |  |  | 4 |  |  |  | 6 |
SMBC Aviation Capital Limited |  | Airbus A321 |  |  | 2 |  |  |  | 2 |
TC-CIT Aviation Ireland Limited |  | Airbus A320 |  |  | - |  |  |  | 1 |
Volito Aviation August 2007 AB |  | Airbus A320 |  |  | 2 |  |  |  | 2 |
Volito Aviation November 2006 AB |  | Airbus A320 |  |  | 2 |  |  |  | 2 |
Volito November 2006 AB |  | Airbus A320 |  |  | 2 |  |  |  | 2 |
Wells Fargo Bank North National Association |  | Airbus A319 |  |  | 2 |  |  |  | 3 |
Wells Fargo Bank North National Association |  | Airbus A320 |  |  | - |  |  |  | 2 |
Wells Fargo Bank Northwest National Association |  | Airbus A320 |  |  | 5 |  |  |  | 7 |
Wells Fargo Bank Northwest National Association |  | Airbus A350 |  |  | 2 |  |  |  | 2 |
Wells Fargo Bank Northwest National Association |  | Boeing 767 |  |  | 2 |  |  |  | 3 |
Wells Fargo Bank Northwest National Association |  | Boeing 777 |  |  | 4 |  |  |  | 6 |
Wells Fargo Bank Northwest National Association |  | Boeing 787 |  |  | 11 |  |  |  | 11 |
Wilmington Trust Company |  | Airbus A319 |  |  | - |  |  |  | 1 |
Total |  |  |  |  | 93 |  |  |  | 111 |
The rentals are shown in results for the period for which they are incurred. The minimum future lease payments not yet payable are the following:
|  | As of |  |  | As of |
|  | December 31, |  |  | December 31, |
|  | 2017 |  |  | 2016 |
|  | ThUS$ |  |  | ThUS$ |
No later than one year |  |  | 462,205 |  |  |  | 533,319 |
Between one and five years |  |  | 1,620,253 |  |  |  | 1,459,362 |
Over five years |  |  | 1,498,064 |  |  |  | 1,262,509 |
Total |  |  | 3,580,522 |  |  |  | 3,255,190 |
The minimum operating lease payments charged to income are the following:
|  | For the period ended |
|  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
|  | ThUS$ |  |  | ThUS$ |  |  | ThUS$ |
Minimum operating lease payments |  |  | 579,551 |  |  |  | 568,979 |  |  |  | 525,134 |
Total |  |  | 579,551 |  |  |  | 568,979 |  |  |  | 525,134 |
During 2017 two Airbus A320-200N were added for a period of twelve years each and two Airbus A319-100 aircraft, fifteen Airbus A320 aircraft were returned. On the other hand, two Boeing 787-9 aircraft were added for a period of twelve year each and one Boeing 767-300ER aircraft and one Boeing 767-300 Freighter aircraft were returned. The operating lease agreements entered into by the Parent Company and its subsidiaries establish that aircraft maintenance must be carried out in accordance with the technical provisions of the manufacturer and in the margins agreed in the contracts with the lessor, a cost assumed by the lessee. Additionally, for each aircraft, the lessee must purchase policies that cover the associated risk and the amount of the assets involved. As for the rent payments, these are unrestricted and cannot be netted from other accounts receivable or payable by the lessor and the lessee. At December 31, 2017 the Company has existing letters of credit related to operating leasing as follows:
|  |  |  |  |  | Value |  |  | Release
Creditor Guarantee |  | Debtor |  | Type |  | ThUS$ |  |  | date
GE Capital Aviation Services Limited |  | Lan Cargo S.A. |  | One letter of credit |  |  | 1,100 |  |  | Nov 30, 2018
ACS Aero 1 Alpha Limited |  | LATAM Airlines Group S.A. |  | One letter of credit |  |  | 3,255 |  |  | Aug 31, 2018
Bank of America |  | LATAM Airlines Group S.A. |  | Three letter of credit |  |  | 1,043 |  |  | Jul 2, 2018
Bank of Utah |  | LATAM Airlines Group S.A. |  | One letter of credit |  |  | 2,000 |  |  | Mar 24, 2019
Engine Lease Finance Corporation |  | LATAM Airlines Group S.A. |  | One letter of credit |  |  | 4,750 |  |  | Oct 8, 2018
GE Capital Aviation Services Ltd. |  | LATAM Airlines Group S.A. |  | Six letter of credit |  |  | 22,105 |  |  | Apr 30, 2018
International Lease Finance Corp |  | LATAM Airlines Group S.A. |  | Three letter of credit |  |  | 1,450 |  |  | Aug 5, 2018
ORIX Aviation Systems Limited |  | LATAM Airlines Group S.A. |  | Two letter of credit |  |  | 7,366 |  |  | Dec 11, 2018
Wells Fargo Bank |  | LATAM Airlines Group S.A. |  | Nine letter of credit |  |  | 15,160 |  |  | Mar 2, 2018
CIT Aerospace International |  | Tam Linhas Aéreas S.A. |  | One letter of credit |  |  | 6,000 |  |  | Oct 25, 2018
Wells Fargo Bank North N.A. |  | Tam Linhas Aéreas S.A. |  | One letter of credit |  |  | 5,500 |  |  | Jul 15, 2018
|  |  |  |  |  |  | 69,729 |  |  |
(c) | Other commitments
At December 31, 2017 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows:
|  |  |  |  |  | Value |  |  | Release
Creditor Guarantee |  | Debtor |  | Type |  | ThUS$ |  |  | date
Servicio Nacional de Aduana del Ecuador |  | Líneas Aéreas Nacionales del Ecuador S.A. |  | Three letter of credit |  |  | 1,705 |  |  | Aug 5, 2018
Corporación Peruana de Aeropuertos y Aviación Comercial |  | Lan Perú S.A. |  | Twenty five letter of credit |  |  | 1,897 |  |  | Jan 31, 2018
Lima Airport Partners S.R.L. |  | Lan Perú S.A. |  | Eighteen letter of credit |  |  | 996 |  |  | Apr 30, 2018
Superintendencia Nacional de Aduanas y de Administración Tributaria |  | Lan Perú S.A. |  | Ten letter of credit |  |  | 80,000 |  |  | Jan 21, 2018
Aena Aeropuertos S.A. |  | LATAM Airlines Group S.A. |  | Four letter of credit |  |  | 2,809 |  |  | Nov 15, 2018
American Alternative Insurance Corporation |  | LATAM Airlines Group S.A. |  | Six letter of credit |  |  | 3,690 |  |  | Apr 5, 2018
Comisión Europea |  | LATAM Airlines Group S.A. |  | One letter of credit |  |  | 9,868 |  |  | Jun 16, 2018
Deutsche Bank A.G. |  | LATAM Airlines Group S.A. |  | One letter of credit |  |  | 15,000 |  |  | Mar 31, 2018
Dirección General de Aeronáutica Civil |  | LATAM Airlines Group S.A. |  | Fifty three letter of credit |  |  | 19,759 |  |  | Feb 28, 2018
Empresa Pública de Hidrocarburos del Ecuador EP Petroecuador |  | LATAM Airlines Group S.A. |  | One letter of credit |  |  | 5,500 |  |  | Jun 18, 2018
Metropolitan Dade County |  | LATAM Airlines Group S.A. |  | Eight letter of credit |  |  | 2,273 |  |  | Mar 13, 2018
4ª Vara Mista de Bayeux |  | Tam Linhas Aéreas S.A. |  | One insurance policies guarantee |  |  | 1,044 |  |  | Mar 25, 2021
Conselho Administrativo de Conselhos Federais |  | Tam Linhas Aéreas S.A. |  | One insurance policies guarantee |  |  | 12,703 |  |  | May 19, 2020
Fundação de Proteão de Defesa do Consumidor Procon |  | Tam Linhas Aéreas S.A. |  | Two insurance policies guarantee |  |  | 3,926 |  |  | Apr 1, 2021
União Federal |  | Tam Linhas Aéreas S.A. |  | One insurance policies guarantee |  |  | 6,604 |  |  | Oct 20, 2021
União Federal -Fazenda Nacional |  | Tam Linhas Aéreas S.A. |  | One insurance policies guarantee |  |  | 41,243 |  |  | Jul 30, 2020
União Federal - Procuradoira - Gral da fazenda Nacional |  | Tam Linhas Aéreas S.A. |  | Four insurance policies guarantee |  |  | 50,196 |  |  | Jan 4, 2020
União Federal Vara Comarca de DF |  | Tam Linhas Aéreas S.A. |  | One insurance policies guarantee |  |  | 1,551 |  |  | Sep 28, 2021
União Federal Vara Comarca de SP |  | Tam Linhas Aéreas S.A. |  | One insurance policies guarantee |  |  | 19,268 |  |  | Feb 22, 2021
|  |  |  |  |  |  | 280,032 |  |  |

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