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SEGMENTAL INFORMATION

12 Months Ended

Dec. 31, 2017

NOTE 5 - SEGMENTAL INFORMATION

The Company has determined that it has two operating segments: the air transportation business and the coalition and loyalty program Multiplus.

The Air transport segment corresponds to the route network for air transport and it is based on the way that the business is run and managed, according to the centralized nature of its operations, the ability to open and close routes and reallocate resources (aircraft, crew, staff, etc..) within the network, which is a functional relationship between all of them, making them inseparable. This segment definition is the most common level used by the global airline industry.

The segment of loyalty coalition called Multiplus, unlike LATAM Pass and LATAM Fidelidade, is a frequent flyer programs which operate as a unilateral system of loyalty that offers a flexible coalition system, interrelated among its members, with 19.4 million of members, along with being a regulated entity with a separately business and not directly related to air transport.

For the periods ended

										Coalition and
	Air									loyalty program
	transportation									Multiplus									Eliminations									Consolidated
	At December 31,									At December 31,									At December 31,									At December 31,
	2017			2016			2015			2017			2016			2015			2017			2016			2015			2017			2016			2015
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Income from ordinary activities from external customers (*)		9,159,031			8,587,772			9,278,041			454,876			400,568			462,004			-			-			-			9,613,907			8,988,340			9,740,045

LAN passenger		4,313,287			4,104,348			4,241,918			-			-			-			-			-			-			4,313,287			4,104,348			4,241,918
TAM passenger		3,726,314			3,372,799			3,706,692			454,876			400,568			462,004			-			-			-			4,181,190			3,773,367			4,168,696
Freight		1,119,430			1,110,625			1,329,431			-			-			-			-			-			-			1,119,430			1,110,625			1,329,431

Income from ordinary activities from transactions with other operating segments		454,876			400,568			462,004			67,554			65,969			67,826			(522,430	)		(466,537	)		(529,830	)		-			-

Other operating income		308,937			364,551			230,823			240,952			174,197			154,958			-			-			-			549,889			538,748			385,781

Interest income		28,184			27,287			21,818			50,511			58,380			63,647						(10,718	)		(10,385	)		78,695			74,949			75,080
Interest expense		(393,286	)		(427,054	)		(423,742	)		-			-						-			10,718			10,385			(393,286	)		(416,336	)		(413,357	)

Total net interest expense		(365,102	)		(399,767	)		(401,924	)		50,511			58,380			63,647			-			-			-			(314,591	)		(341,387	)		(338,277	)

Depreciation and amortization		(994,416	)		(952,285	)		(923,311	)		(7,209	)		(8,043	)		(11,095	)		-			-			-			(1,001,625	)		(960,328	)		(934,406	)

Material non-cash items other than depreciation and amortization		(75,479	)		10,069			(507,921	)		(145	)		(991	)		1,893			-			-			-			(75,624	)		9,078			(506,028	)

Disposal of fixed assets and inventory losses		(39,238	)		(82,734	)		(20,932	)		-			-			-			-			-			-			(39,238	)		(82,734	)		(20,932	)
Doubtful accounts		(18,272	)		(29,674	)		(18,292	)		(144	)		(476	)		611			-			-			-			(18,416	)		(30,150	)		(17,681	)
Exchange differences		(18,717	)		122,129			(469,178	)		(1	)		(478	)		1,282			-			-			-			(18,718	)		121,651			(467,896	)
Result of indexation units		748			348			481			-			(37	)		-			-			-			-			748			311			481

Income (loss) atributable to owners of the parents		(3,482	)		(83,653	)		(356,039	)		158,783			152,873			136,765			-			-			-			155,301			69,220			(219,274	)

Participation of the entity in the income of associates		-			-			37			-			-			-			-			-			-			-			-			37
Expenses for income tax		(104,376	)		(92,476	)		249,090			(69,128	)		(70,728	)		(70,707	)		-			-			-			(173,504	)		(163,204	)		178,383
Segment profit / (loss)		41,931			(42,203	)		(315,497	)		158,783			152,873			136,765			-			-			-			200,714			110,670			(178,732	)
Assets of segment		17,430,937			17,805,749			16,924,200			1,373,049			1,400,432			1,182,111			(6,014	)		(7,987	)		(4,893	)		18,797,972			19,198,194			18,101,418
Segment liabilities		14,007,916			14,469,505			14,700,072			563,849			572,065			490,076			(41,029	)		(28,680	)		(26,278	)		14,530,736			15,012,890			15,163,870

Amount of non-current asset additions		412,846			1,481,090			1,492,281			-			-			-			-			-			-			412,846			1,481,090			1,492,281

Property, plant and equipment		325,513			1,390,730			1,439,057			-			-			-			-			-			-			325,513			1,390,730			1,439,057
Intangibles other than goodwill		87,333			90,360			53,224			-			-			-			-			-			-			87,333			90,360			53,224

Purchase of non-monetary assets of segment		490,983			782,957			1,622,198			-			-			-			-			-			-			490,983			782,957			1,622,198

(*) The Company does not have any interest revenue that should be recognized as income from ordinary activities by interest.

For the periods ended

										Coalition and
	Air									loyalty program
	transportation									Multiplus									Eliminations									Consolidated
	At December 31,									At December 31,									At December 31,									At December 31,
	2017			2016			2015			2017			2016			2015			2017			2016			2015			2017			2016			2015
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Net cash flows from
Purchases of property, plant and equipment		403,282			693,581			691,930			384			789			2,440			-			-			-			403,666			694,370			694,370
Additions associated with maintenance		218,537			197,866			230,526			-			-			-			-			-			-			218,537			197,866			230,526
Other additions		184,745			495,715			461,404			384			789			2,440			-			-			-			185,129			496,504			463,844
Purchases of intangible assets		79,102			84,377			41,399			8,216			4,210			11,050			-			-			-			87,318			88,587			52,449

Net cash flows from (used in) operating activities		1,489,797			827,108			1,531,395			186,367			154,411			147,348			(9,424	)		(635	)		(6,642	)		1,666,740			980,884			1,672,101
Net cash flow from (used in) investing activities		(278,790	)		(426,989	)		(1,679,272	)		(8,632	)		(4,800	)		(16,423	)		-			-			-			(287,422	)		(431,789	)		(1,695,695	)
Net cash flows from (used in) financing activities		(1,010,705	)		(246,907	)		(4,708	)		(168,383	)		(149,372	)		(123,652	)		-			-			-			(1,179,088	)		(396,279	)		(128,360	)

(**) The company does not have the cash flows of intangible asset acquisitions associated with maintenance.

The Company’s revenues by geographic area are as follows:

	For the period ended
	At December 31,
	2017		2016		2015
	ThUS$		ThUS$		ThUS$

Peru		626,316		627,215		681,340
Argentina		1,113,467		1,030,973		979,324
U.S.A.		900,413		933,130		1,025,475
Europe		676,282		714,436		723,062
Colombia		359,276		343,001		353,007
Brazil		3,436,402		2,974,234		3,464,297
Ecuador		190,268		198,171		238,500
Chile		1,527,158		1,512,570		1,575,519
Asia Pacific and rest of Latin America		784,325		654,610		699,521
Income from ordinary activities		9,613,907		8,988,340		9,740,045
Other operating income		549,889		538,748		385,781

The Company allocates revenues by geographic area based on the point of sale of the passenger ticket or cargo. Assets are composed primarily of aircraft and aeronautical equipment, which are used throughout the different countries, so it is not possible to assign a geographic area.

The Company has no customers that individually represent more than 10% of sales.