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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2019

Disclosure of property, plant and equipment [text block] [Abstract]

Disclosure of property, plant and equipment [text block]

NOTE 17 - PROPERTY, PLANT AND EQUIPMENT

The composition by category of Property, plant and equipment is as follows:

	Gross Book Value				Accumulated depreciation						Net Book Value
	As of		As of		As of			As of			As of		As of
	December 31,		December 31,		December 31,			December 31,			December 31,		December 31,
	2019		2018		2019			2018			2019		2018
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
			Restated					Restated					Restated
Construction in progress (1)		372,589		630,320		-			-			372,589		630,320
Land		48,406		45,424		-			-			48,406		45,424
Buildings		133,488		179,907		(58,626	)		(67,342	)		74,862		112,565
Plant and equipment		13,993,044		13,333,837		(4,630,001	)		(4,361,337	)		9,363,043		8,972,500
Own aircraft		13,268,562		12,595,223		(4,421,211	)		(4,096,975	)		8,847,351		8,498,248
Other (2)		724,482		738,614		(208,790	)		(264,362	)		515,692		474,252
Machinery		33,658		34,253		(28,441	)		(27,659	)		5,217		6,594
Information technology equipment		161,992		160,936		(141,216	)		(138,372	)		20,776		22,564
Fixed installations and accessories		171,469		182,629		(111,635	)		(111,620	)		59,834		71,009
Motor vehicles		67,060		69,653		(60,327	)		(60,531	)		6,733		9,122
Leasehold improvements		234,249		211,322		(135,789	)		(128,055	)		98,460		83,267
Right of use		5,693,553		4,987,953		(2,823,855	)		(2,439,509	)		2,869,698		2,548,444
Aircraft		5,438,404		4,761,529		(2,669,864	)		(2,305,195	)		2,768,540		2,456,334
Other assets		255,149		226,424		(153,991	)		(134,314	)		101,158		92,110
Total		20,909,508		19,836,234		(7,989,890	)		(7,334,425	)		12,919,618		12,501,809

(1)

As of December 31, 2019, includes advances paid to aircraft manufacturers for ThUS$ 348,148 (ThUS$ 612,236 as of December 31, 2018)

(2)

Consider mainly rotables and tools.

Movement in the different categories of Property, plant and equipment:

													Information			Fixed												Property,
										Plant and			technology			installations			Motor			Leasehold			Rights			Plant and
	Construction						Buildings			equipment			equipment			& accessories			Vehicles			improvements			of use			equipment
	in progress			Land			net			net			net			net			net			net			net			net
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance as of January 1, 2017 Restated		470,065			50,148			130,219			9,618,505			39,714			83,912			1,045			104,541			2,931,101			13,429,250
Additions		11,145			-			-			300,098			5,708			329			77			8,156			288,142			613,655
Disposals		-			-			-			(16,031	)		(6	)		(10	)		(43	)		-			-			(16,090	)
Retirements		(127	)		-			(6	)		(25,951	)		(473	)		(497	)		-			-			-			(27,054	)
Depreciation expenses		-			-			(7,946	)		(701,094	)		(14,587	)		(14,124	)		(187	)		(27,266	)		(375,510	)		(1,140,714	)
Foreign exchange		107			(368	)		(275	)		(9,716	)		(183	)		(820	)		(8	)		(243	)		-			(11,506	)
Other increases (decreases)		75,632			-			2,556			(27,220	)		(17	)		11,987			(448	)		(963	)		21,584			83,111
Changes, total		86,757			(368	)		(5,671	)		(479,914	)		(9,558	)		(3,135	)		(609	)		(20,316	)		(65,784	)		(498,598	)
Closing balance as of December 31, 2017		556,822			49,780			124,548			9,138,591			30,156			80,777			436			84,225			2,865,317			12,930,652
Opening balance as of January 1, 2018 Restated		556,822			49,780			124,548			9,138,591			30,156			80,777			436			84,225			2,865,317			12,930,652
Additions		7,927			-			-			635,367			4,995			64			24			20,410			326,298			995,085
Disposals		-			(8	)		(1,412	)		(4,747	)		(30	)		(74	)		(14	)		-			-			(6,285	)
Retirements		(80	)		-			(19	)		(63,774	)		(92	)		(27	)		-			(4	)		-			(63,996	)
Depreciation expenses		-			-			(6,219	)		(705,577	)		(11,677	)		(12,538	)		(146	)		(27,766	)		(391,138	)		(1,155,061	)
Foreign exchange		(714	)		(4,348	)		(4,244	)		(94,488	)		(1,819	)		(8,499	)		(28	)		(2,351	)		(13,751	)		(130,242	)
Other increases (decreases)		65,992			-			(89	)		78,341			732			10,195			273			8,753			(238,282	)		(74,085	)
Adjustment application IAS 29		373			-			-			3,869			299			1,111			89			-			-			5,741
Changes, total		73,498			(4,356	)		(11,983	)		(151,009	)		(7,592	)		(9,768	)		198			(958	)		(316,873	)		(428,843	)
Closing balance as of December 31, 2018 Restated		630,320			45,424			112,565			8,987,582			22,564			71,009			634			83,267			2,548,444			12,501,809
Opening balance as of January 1, 2019 (Restated )		630,320			45,424			112,565			8,987,582			22,564			71,009			634			83,267			2,548,444			12,501,809
Additions		21,884			7,950			-			1,694,640			6,580			26			73			34,988			753,164			2,519,305
Disposals		-			(28	)		(47	)		(23,945	)		(13	)		(75	)		(11	)		-			-			(24,119	)
Retirements		(20	)		-			-			(64,838	)		(85	)		(77	)		-			(362	)		-			(65,382	)
Depreciation expenses		-			-			(5,768	)		(776,225	)		(8,574	)		(11,945	)		(94	)		(19,001	)		(400,384	)		(1,221,991	)
Foreign exchange		(1,340	)		(1,103	)		(914	)		(24,615	)		(234	)		(2,007	)		(125	)		(432	)		(4,561	)		(35,331	)
Other increases (decreases)		(278,255	)		(3,837	)		(30,974	)		(418,083	)		538			2,903			-			-			(26,965	)		(754,673	)
Changes, total		(257,731	)		2,982			(37,703	)		386,934			(1,788	)		(11,175	)		(157	)		15,193			321,254			417,809
Closing balance as of December 31, 2019		372,589			48,406			74,862			9,374,516			20,776			59,834			477			98,460			2,869,698			12,919,618

(b)

Composition of the fleet:

		Aircraft included						Aircraft included
		in Property,						as Rights						Total
		plant and equipment						of use assets						fleet
		As of			As of			As of			As of			As of			As of
		December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
Aircraft	Model	2019			2018			2019			2018			2019			2018

Boeing 767	300ER		28			33			2			2			30			35
Boeing 767	300F		11	(1)		9	(1)		1			1			12	(1)		10	(1)
Boeing 777	300ER		4			4			6			6			10			10
Boeing 777	200ER		-			-			-			2			-			2
Boeing 787	800		6			6			4			4			10			10
Boeing 787	900		6			4			10			10			16			14
Airbus A319	100		37			37			9			9			46			46
Airbus A320	200		96	(2)		97	(2)		46			34			142	(2)		131	(2)
Airbus A320	NEO		7			1			6			3			13			4
Airbus A321	200		30			30			19			19			49			49
Airbus A350	900		2			5			7	(3)		4	(3)		9	(3)		9
Total			227			226			110			94			337			320

(1) One aircraft leased to Aerotransportes Mas de Carga S.A. de C.V.

(2) Three aircraft leased to Salam Air and two to Sundair

(3) Four aircraft leased to Qatar Airways, which are in assets by right of use.

(c)

Method used for the depreciation of Property, plant and equipment:

		Useful life (years)
	Method	minimum		maximum
Buildings	Straight line without residual value		20		50
Plant and equipment	Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet. (*)		5		30
Information technology equipment	Straight line without residual value		5		10
Fixed installations and accessories	Straight line without residual value		10		10
Motor vehicle	Straight line without residual value		10		10
Leasehold improvements	Straight line without residual value		5		8
Assets for rights of use	Straight line without residual value		1		25

(*)

Except in the case of the Boeing 767 300ER and Boeing 767 300F fleets that consider a lower residual value due to the extension of their useful life to 22 and 30 years respectively. Additionally, certain technical components are depreciated based on cycles and hours flown.

The aircraft with remarketing clause (**) under modality of financial leasing, which are depreciated according to the duration of their contracts, between 12 and 18 years. Its residual values are estimated according to market value at the end of such contracts.

(**)

Aircraft with remarketing clause are those that are required to sell at the end of the contract.

In the year 2019, the charge to income for the depreciation of the year, which is included in the consolidated statement of income, amounts to ThUS$ 1,221,991, ThUS$ 1,155,061 and ThUS$ 1,462,562 for the same period of the year 2018 and 2017; those amounts include depreciation of assets for right of use, for ThUS$ 400,384, ThUS$ 391,138 and ThUS$ 375,510, respectively. This expense is recognized in the cost of sales and administrative expenses of the consolidated statement of income.

(d)

Additional information regarding Property, plant and equipment:

(i)

Property, plant and equipment pledged as guarantee:

Description of Property, plant and equipment pledged as guarantee:

			As of				As of
			December 31,				December 31,
			2019				2018
Guarantee	Creditor		Existing		Book		Existing		Book
agent (1)	company	Fleet	Debt		Value		Debt		Value
			ThUS$		ThUS$		ThUS$		ThUS$

Wilmington	MUFG	Airbus A319		74,713		256,937		96,057		234,329
Trust Company		Airbus A320		70,644		256,651		98,903		220,390
		Boeing 767		61,728		196,244		82,793		206,868
		Boeing 787		120,938		127,283		144,312		133,388
		Airbus A321		353,774		452,107		389,080		477,778
		Boeing 787		332,131		374,998		365,375		398,510
	Aircraft and engines	Airbus A350		180,320		192,620		198,301		204,860
		Boeing 787		143,475		191,804		162,378		204,961
Banco Santander S.A.	Aircraft and engines	Airbus A320		-		-		172,474		275,511
		Airbus A321		-		-		25,661		41,957
BNP Paribas	Aircraft and engines	Airbus A319		-		-		9,693		19,113
BNP Paribas		Airbus A319		-		-		17,009		26,407
Credit Agricole		Airbus A319		-		-		11,154		31,865
		Airbus A320		85,986		95,148		134,328		132,301
		Airbus A321 / A350		83,281		67,882		22,439		24,939
		Boeing 767		10,404		35,226		21,830		43,568
	Aircraft and engines	Boeing 787		74,023		36,594		74,023		42,228
Wells Fargo	Aircraft and engines	Airbus A320		-		-		196,540		285,877
Bank Of Utah	Aircraft and engines (2)	Airbus A320 / A350		296,441		378,462		502,006		630,065
		Boeing 787		217,500		259,934		-		-
	Aircraft and engines (2)	Airbus A320 / A350		44,088		-		54,014		-
	Aircraft and engines
Natixis		Airbus A321		282,927		384,224		324,524		410,771
Citibank N.A.	Aircraft and engines	Airbus A320		-		-		78,049		132,296
		Airbus A321		-		-		28,938		70,333
UMB Bank	Aircraft and engines	Airbus A320		106,250		149,607		-		-
MUFG Bank	Aircraft and engines	Airbus A320		216,411		310,311		-		-

PK AirFinance US, Inc.	Aircraft and engines	Airbus A320		-		-		37,615		52,435
Banco BBVA	Land and buildings (3)			-		-		50,785		64,500
Total direct guarantee				2,755,034		3,766,032		3,298,281		4,365,250

(1)

For syndicated loans, is the Guarantee Agent that, represent different creditors.

(2)

As of December 31, 2019, three A350 aircraft are classified under Non-current assets or groups of assets for disposal as held for sale.

(3)

Corresponds to a debt classified under item loans to exporters (see Note 19).

The amounts of the current debt are presented at their nominal value. The book value corresponds to the goods granted as collateral.

Additionally, there are indirect guarantees associated with assets registered in properties, plants and equipment whose total debt as of December 31, 2019, amounts to ThUS$ 1,762,611 (ThUS$ 1,633,504 as of December 31, 2018). The book value of the assets with indirect guarantees as of December 31, 2019, amounts to ThUS$ 3,866,237 (ThUS$ 3,258,950 as of December 31, 2018).

As of December 31, 2019, the Company keeps valid letters of credit related to assets by right of use according to the following detail:

			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, 2020
Avolon Aerospace AOE 62 Limited	Latam Airlines Group S.A.	Three letter of credit		2,167	Sep 30, 2020
Bank of Utah	Latam Airlines Group S.A.	One letter of credit		2,000	Mar 24, 2020
GE Capital Aviation Services Ltd.	Latam Airlines Group S.A.	Three letter of credit		14,327	Jan 20, 2020
ORIX Aviation Systems Limited	Latam Airlines Group S.A.	Four letter of credit		10,034	Sep 26, 2020
Sky High XXIV Leasing Company	Latam Airlines Group S.A.	Eight letter of credit		6,831	Aug 05, 2020
Merlin Aviation Leasing (Ireland) 18 Limited	Tam Linhas Aéreas S.A.	One letter of credit		3,852	Mar 15, 2020
Shapphire Leasing (AOE) Limited	Tam Linhas Aéreas S.A.	One letter of credit		7,500	Oct 19, 2020
Wells Fargo Bank	Latam Airlines Group S.A.	Nine letter of credit		15,160	Mar 13, 2020
Banc Of America	Latam Airlines Group S.A.	Three letter of credit		1,044	Jul 7, 2020
Macquaire Aircraft Leasing Services	Latam Airlines Group S.A.	Five letter of credit		2,582	Aug 1, 2020
TC Skyward Aviation US Inc	Tam Linhas Aéreas S.A.	One letter of credit		13,100	Oct 6, 2020
RB Comercial Properties 49
Empreendimentos Imobiliarios LTDA	Tam Linhas Aéreas S.A.	One letter of credit		35,974	Apr 29, 2020
				115,671

(ii)

Commitments and others

Fully depreciated assets and commitments for future purchases are as follows:

	As of		As of
	December 31,		December 31,
	2019		2018
	ThUS$		ThUS$

Gross book value of fully depreciated property, plant and equipment still in use		261,792		192,606
Commitments for the acquisition of aircraft ()(*)		7,390,000		14,400,000

(*)

According to the manufacturer’s price list.

(**)

The current commitments do not consider 10 Airbus aircraft of the A350 family, included in a sales contract with Delta Air Lines, Inc.

Purchase commitment of aircraft

	Year of delivery
Manufacturer	2020		2021		2022		2023		2024-2026		Total
Airbus S.A.S. (*)		3		10		11		9		11		44
A320-NEO Family		3		10		11		9		9		42
A350 Family		-		-		-		-		2		2
The Boeing Company		2		2		-		2		-		6
Boeing 787-9		2		2		-		2		-		6
Total		5		12		11		11		11		50

(*)

During the third quarter of 2019 the company signed a sale contract with Delta Air Lines, Inc. for 14 Airbus A350 family aircraft, 10 were within the current aircraft purchase commitments and 4 that were already in PPE were classified as assets held for sale as of December 31, 2019.

As of December 31, 2019, as a result of the different aircraft purchase contracts and agreements signed with Airbus SAS, there are remaining to receive 42 Airbus aircraft of the A320 family, with deliveries between 2020 and 2024, and 2 Airbus aircraft of the A350 family with dates delivery for 2026. The approximate amount, according to manufacturer’s list prices, is ThUS$ 5,640,000.

As of December 31, 2019, as a result of the different aircraft purchase contracts signed with The Boeing Company, there are remaining 6 Boeing 787 Dreamliner aircraft, with delivery dates between 2020 and 2023. The approximate amount, according to manufacturer’s list prices, is ThUS$ 1,750,000.

(iii)

Capitalized interest costs with respect to Property, plant and equipment.

		For the year ended
		December 31,
		2019		2018		2017

Average rate of capitalization of capitalized interest costs	%		4.72		4.64		4,12
Costs of capitalized interest	ThUS$		1,444		13,007		8,210