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FINANCIAL RISK MANAGEMENT

12 Months Ended

Dec. 31, 2019

Disclosure of financial risk management [text block] [Abstract]

Disclosure of financial risk management [text block]

NOTE 3 - FINANCIAL RISK MANAGEMENT

3.1.

Financial risk factors

The Company is exposed to different financial risks: (a) market risk, (b) credit risk, and (c) liquidity risk. The program overall risk management of the Company aims to minimize the adverse effects of financial risks affecting the company.

(a)

Market risk

Due to the nature of its operations, the Company is exposed to market factors such as: (i) fuel-price risk, (ii) exchange -rate risk (FX), and (iii) interest -rate risk.

The Company has developed policies and procedures for managing market risk, which aim to identify, quantify, monitor and mitigate the adverse effects of changes in market factors mentioned above.

For this, the Administration monitors the evolution of price levels, exchange rates and interest rates, and quantifies their risk exposures (Value at Risk), and develops and implements hedging strategies.

(i)

Fuel-price risk:

Exposition:

For the execution of its operations the Company purchases a fuel called Jet Fuel grade 54 USGC, which is subject to the fluctuations of international fuel prices.

Mitigation:

To cover the risk exposure fuel, the Company operates with derivative instruments (swaps and options) whose underlying assets may be different from Jet Fuel, being possible use West Texas Intermediate (“WTI”) crude, Brent (“BRENT”) crude and distillate Heating Oil (“HO”), which have a high correlation with Jet Fuel and greater liquidity.

Fuel Hedging Results:

During the period ended december 31, 2019, the Company recognized losses of US$ 23.1 million for fuel coverage net of premium. During the same period of 2018, the Company recognized gains of US$ 29.7 million for the same concept.

As of december 31, 2019, the market value of fuel positions amounted to US$ 48.5 million (positive). At the end of december 2018, this market value was US$ 15.8 million (negative).

The following tables show the level of hedge for different periods:

Positions as of December 31, 2019 (*)	Maturities
	Q120			Q220			Q320			Q420			Total
Percentage of coverage over the expected volume of consumption		65	%		61	%		20	%		19	%		41	%

(*)

The volume shown in the table considers all the hedging instruments (swaps and options).

Positions as of December 31, 2018 (*)	Maturities
	Q119			Q219			Q319			Q419			Total
Percentage of coverage over the expected volume of consumption		66	%		58	%		40	%		15	%		45	%

(*)

The volume shown in the table considers all the hedging instruments (swaps and options).

Sensitivity analysis

A drop in fuel price positively affects the Company through a reduction in costs. However, also negatively affects contracted positions as these are acquired to protect the Company against the risk of a rise in price. The policy therefore is to maintain a hedge-free percentage in order to be competitive in the event of a drop in price.

The current hedge positions they are booked as cash flow hedge contracts, so a variation in the fuel price has an impact on the Company’s net equity.

The following table shows the sensitivity analysis of the financial instruments according to reasonable changes in the fuel price and their effect on equity. The term of the projection was defined until the end of the last current fuel hedge contract, being the last business day of the third quarter of 2020.

The calculations were made considering a parallel movement of US$ 5 per barrel in the curve of the JET crude futures benchmark price at the end of December 2019 and the end of December 2018.

	Positions as of december 31, 2019	Positions as of december 31, 2018
Benchmark price	effect on equity	effect on equity
(US$ per barrel)	(millions of US$)	(millions of US$)
+5	+ 15.4	+7.4
-5	- 34.5	- 5.5

Given the structure of fuel coverage during 2019, considers a hedge-free portion, a vertical drop of 5 dollars in the JET reference price (considered as the monthly average), would have meant an approximate impact US$ 121.8 million of lower fuel costs. For the same period, a vertical rise of US$ 5 in the JET reference price (considered as the monthly average) would have meant an impact of approximately US$ 114.2 million of higher fuel costs.

(ii)

Foreign exchange rate risk:

Exposition:

The functional and presentation currency of the financial statements of the Parent Company is the US dollar, so that the risk of the Transactional and Conversion exchange rate arises mainly from the Company’s business, strategic and accounting operating activities that are expressed in a monetary unit other than the functional currency.

The subsidiaries of LATAM are also exposed to foreign exchange risk whose impact affects the Company’s Consolidated Income.

The largest operational exposure to LATAM’s exchange risk comes from the concentration of businesses in Brazil, which are mostly denominated in Brazilian Real (BRL), and are actively managed by the company.

At a lower concentration, the Company is also exposed to the fluctuation of other currencies, such as: Euro, Pound sterling, Australian dollar, Colombian peso, Chilean peso, Argentine peso, Paraguayan Guarani, Mexican peso, Peruvian Sol and New Zealand dollar.

Mitigation:

The Company mitigates currency risk exposures by contracting derivative instruments or through natural hedges or execution of internal operations.

Exchange Rate Hedging Results (FX):

With the objective of reducing exposure to the exchange rate risk in the operational cash flows of 2019, and securing the operating margin, LATAM makes hedges using FX derivatives.

As of december 31, 2019, the market value of FX derivative positions amounted to US $ 0.04 million (negative). At the end of December 2018, the Company did not maintain derivatives of current FX hedges.

During the period ended december 31, 2019, the Company recognized gains of US $ 1.9 million for FX coverage net of premiums. During the same period of 2018, the Company recognized gains of US$ 18.3 million.

As of december 31, 2019, the Company has contracted FX derivatives for US $ 15 million for BRL. At the end of december 2018, the Company did not maintain current FX derivatives.

During 2018 the company contracted FX derivatives which were not registered under hedge accounting. As of december 31, 2019, the amount recognized in results amounts to US $ 6.2 million (negative) net of premiums.

Sensitivity analysis:

A depreciation of the R$/US$ exchange rate, negatively affects the Company’s operating cash flows, however, also positively affects the value of the positions of derivatives contracted.

FX derivatives are recorded as cash flow hedge contracts; therefore, a variation in the exchange rate has an impact on the market value of the derivatives, the changes of which affect the Company’s net equity.

The following table shows the sensitization of FX derivative instruments according to reasonable changes in the exchange rate and its effect on equity. The projection period was defined until the end of the last coverage contract in force, with the last business day of the first quarter of the year 2020:

Appreciation (depreciation)(*)	Effect at december 31, 2019	Effect at december 31, 2018
of R$	Millions of US$	Millions of US$
-10%	-0.6	-
+10%	+1.1	-

(*)

Appreciation (depreciation) of US$ regard to the covered currencies.

During 2018 and 2019, the Company contracted swap currency derivatives for debt coverage issued the same year for a notional UF 8.7 million and UF 5.0 million, respectively. As of December 31, 2019, the market value of the currency swaps derivative positions amounted to US $ 22.7 million (negative). At the end of December 2018, this market value was US $ 15.1 million (positive).

In the case of TAM S.A, whose functional currency is the Brazilian real, a large part of its liabilities is expressed in US dollars. Therefore, when converting financial assets and liabilities, from dollar to real, they have an impact on the result of TAM S.A., which is consolidated in the Company’s Income Statement.

In order to reduce the impact on the Company’s result caused by appreciations or depreciations of R $ / US $, the Company has executed internal operations to reduce the net exposure in US $ for TAM S.A.

The following table shows the variation of financial performance to appreciate or depreciate 10% exchange rate R$/US$:

Appreciation (depreciation)(*)	Effect at december 31, 2019	Effect at december 31, 2018
of R$/US$(*)	Millions of US$	Millions of US$
-10%	+9.5	+39.8
+10%	- 9.5	-39.8

(*)

Appreciation (depreciation) of US$ regard to the covered currencies.

Effects of exchange rate derivatives in the Financial Statements

The profit or losses caused by changes in the fair value of hedging instruments are segregated between intrinsic value and temporary value. The intrinsic value is the actual percentage of cash flow covered, initially shown in equity and later transferred to income, while the hedge transaction is recorded in income. The temporary value corresponds to the ineffective portion of cash flow hedge which is recognized in the financial results of the Company (Note 19).

Due to the functional currency of TAM S.A. and Subsidiaries is the Brazilian real, the Company presents the effects of the exchange rate fluctuations in Other comprehensive income by converting the Statement of financial position and Income statement of TAM S.A. and Subsidiaries from their functional currency to the U.S. dollar, which is the presentation currency of the consolidated financial statement of LATAM Airlines Group S.A. and Subsidiaries. The Goodwill generated in the Business combination is recognized as an asset of TAM S.A. and Subsidiaries in Brazilian real whose conversion to U.S. dollar also produces effects in other comprehensive income.

The following table shows the change in Other comprehensive income recognized in Total equity in the case of appreciate or depreciate 10% the exchange rate R$/US$:

Appreciation (depreciation)	Effect at december 31, 2019	Effect at december 31, 2018
of R$/US$	Millions of US$	Millions of US$
-10%	+402.48	+384.73
+10%	-329.29	-314.78

(iii)

Interest -rate risk:

Exposition:

The Company is exposed to fluctuations in interest rates affecting the markets future cash flows of the assets, and current and future financial liabilities.

The Company is exposed in one portion to the variations of London Inter-Bank Offer Rate (“LIBOR”) and other interest rates of less relevance are Brazilian Interbank Deposit Certificate (“IDC”).

Mitigation:

In order to reduce the risk of an eventual rise in interest rates, the Company has signed interest-rate swap and call option contracts. Currently a 62% (60% at December 31, 2018) of the debt is fixed to fluctuations in interest rate.

Rate Hedging Results:

As of december 31, 2019, the market value of the derivative positions of interest rates amounted to US$ 2.6 million (positive). At the end of December 2018, this market value was US$ 2.2 million (negative).

Sensitivity analysis:

The following table shows the sensitivity of changes in financial obligations that are not hedged against interest-rate variations. These changes are considered reasonably possible, based on current market conditions each date.

Increase (decrease)	Positions as of december 31, 2019	Positions as of december 31, 2018
futures curve	effect on profit or loss before tax	effect on profit or loss before tax
in libor 3 months	(millions of US$)	(millions of US$)
+100 basis points	-27.60	-29.62
-100 basis points	+27.60	+29.62

Much of the current rate derivatives are registered for as hedges of cash flow, therefore, a variation in the exchange rate has an impact on the market value of derivatives, whose changes impact on the Company’s net equity.

The calculations were made increasing (decreasing) vertically 100 basis points of the three-month Libor futures curve, being both reasonably possible scenarios according to historical market conditions.

Increase (decrease)	Positions as of december 31, 2019	Positions as of december 31, 2018
futures curve	effect on equity	effect on equity
in libor 3 months	(millions of US$)	(millions of US$)
+100 basis points	+13.62	+0.70
-100 basis points	-14.71	-0.71

The assumptions of sensitivity calculation must assume that forward curves of interest rates do not necessarily reflect the real value of the compensation flows. Moreover, the structure of interest rates is dynamic over time.

During the periods presented, the Company has no registered amounts by ineffectiveness in consolidated statement of income for this kind of hedging.

(b)

Credit risk

Credit risk occurs when the counterparty to a financial agreement or instrument fails to discharge an obligation due or financial instrument, leading to a loss in market value of a financial instrument (only financial assets, not liabilities).

The Company is exposed to credit risk due to its operative and financial activities, including deposits with banks and financial institutions, investments in other kinds of instruments, exchange-rate transactions and the contracting of derivative instruments or options.

As a way to mitigate credit risk related to financial activities, the Company requires that the counterparty to the financial activities remain at least investment grade by major Risk Assessment Agencies. Additionally, the Company has established maximum limits for investments which are monitored regularly.

(i)

Financial activities

Cash surpluses that remain after the financing of assets necessary for the operation are invested according to credit limits approved by the Company’s Board, mainly in time deposits with different financial institutions, private investment funds, short-term mutual funds, and easily-liquidated corporate and sovereign bonds with short remaining maturities. These investments are booked as Cash and cash equivalents and other current financial assets.

In order to reduce counterparty risk and to ensure that the risk assumed is known and managed by the Company, investments are diversified among different banking institutions (both local and international). The Company evaluates the credit standing of each counterparty and the levels of investment, based on (i) their credit rating, (ii) the equity size of the counterparty, and (iii) investment limits according to the Company’s level of liquidity. According to these three parameters, the Company chooses the most restrictive parameter of the previous three and based on this, establishes limits for operations with each counterparty.

The Company has no guarantees to mitigate this exposure.

(ii)

Operational activities

The Company has four large sales “clusters”: travel agencies, cargo agents, airlines and credit-card administrators. The first three are governed by International Air Transport Association, international (“IATA”) organization comprising most of the airlines that represent over 90% of scheduled commercial traffic and one of its main objectives is to regulate the financial transactions between airlines and travel agents and cargo. When an agency or airline does not pay their debt, they are excluded from operating with IATA’s member airlines. In the case of credit-card administrators, they are fully guaranteed by 100% by the issuing institutions.

The exposure consists of the term granted, which fluctuates between 1 and 45 days.

One of the tools the Company uses for reducing credit risk is to participate in global entities related to the industry, such as IATA, Business Sales Processing (“BSP”), Cargo Account Settlement Systems (“CASS”), IATA Clearing House (“ICH”) and banks (credit cards). These institutions fulfill the role of collectors and distributors between airlines and travel and cargo agencies. In the case of the Clearing House, it acts as an offsetting entity between airlines for the services provided between them. A reduction in term and implementation of guarantees has been achieved through these entities. Currently the sales invoicing of TAM Linhas Aéreas S.A. related with travel agents and cargo agents for domestic transportation in Brazil is done directly by TAM Linhas Aéreas S.A.

Credit quality of financial assets

The external credit evaluation system used by the Company is provided by IATA. Internal systems are also used for particular evaluations or specific markets based on trade reports available on the local market. The internal classification system is complementary to the external one, i.e. for agencies or airlines not members of IATA, the internal demands are greater.

To reduce the credit risk associated with operational activities, the Company has established credit limits to abridge the exposure of their debtors which are monitored permanently (mainly in case of operational activities of TAM Linhas Aéreas S.A. with travel agents). The bad-debt rate in the principal countries where the Company has a presence is insignificant.

(c)

Liquidity risk

Liquidity risk represents the risk that the Company has no sufficient funds to meet its obligations.

Because of the cyclical nature of the business, the operation, and its investment and financing needs related to the acquisition of new aircraft and renewal of its fleet, plus the financing needs, the Company requires liquid funds, defined as cash and cash equivalents plus other short term financial assets, to meet its payment obligations. The liquid funds, the future cash generation and the capacity to obtain additional funding, through bond issuance and banking loans, will allow the Company to obtain sufficient alternatives to face its investment and financing future commitments.

At december 31, 2019 is US$ 1,459 million (US$ 1,404 million at december 31, 2018), invested in short term instruments through financial high credit rating levels entities.

In addition to the balance of liquid funds, the Company has access to short-term credit lines. As of december 31, 2019, LATAM has credit lines for working capital that are not committed to several banks and additionally has an unused committed line of US$ 600 million (US$ 600 million as of December 31, 2018) subject to availability of collateral.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2019

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.

Tax No.	Creditor	Creditor country	Currency	Up to 90 days ThUS$		More than 90 days to one year ThUS$		More than one to three years ThUS$		More than three to five years ThUS$		More than five years ThUS$		Total ThUS$		Nominal value ThUS$		Amortization	Effective rate %		Nominal rate %




97.032.000-8	BBVA	Chile	US$		24,387		76,256		-		-		-		100,643		99,000	At Expiration		3.29		3.29
97.003.000-K	BANCO DO BRASIL	Chile	US$		151,489		50,758		-		-		-		202,247		200,000	At Expiration		2.93		2.93
76.100.458-1	HSBC	Chile	US$		12,098		-		-		-		-		12,098		12,000	At Expiration		3.25		3.25
76.100.458-1	BLADEX	Chile	US$		-		29,277		-		-		-		29,277		29,000	At Expiration		2.82		2.82

97.023.000-9	CORPBANCA	Chile	UF		5,336		10,544		-		-		-		15,880		15,615	Quarterly		3.35		3.35
76.362.099-9	BTG PACTUAL CHILE	Chile	UF		484		1,451		63,872		-		-		65,807		62,769	At Expiration		3.10		3.10
0-E	SANTANDER	Spain	US$		1,514		4,809		141,719		-		-		148,042		137,860	Quarterly		3.62		4.61

97.030.000-7	BANCO ESTADO	Chile	UF		-		24,702		208,681		32,228		410,774		676,385		518,032	At Expiration		4.81		4.81
0-E	BANK OF NEW YORK	U.S.A.	US$		28,000		76,125		208,250		884,188		884,000		2,080,563		1,500,000	At Expiration		7.16		6.94

0-E	BNP PARIBAS	U.S.A.	US$		11,657		50,428		124,106		124,167		302,092		612,450		513,941	Quarterly / Semiannual		3.81		3.81
0-E	WILMINGTON TRUST COMPANY	U.S.A.	US$		31,733		94,096		244,836		237,815		438,659		1,047,139		866,223	Quarterly		4.45		4.45
0-E	CITIBANK	U.S.A.	US$		5,765		17,296		46,120		46,117		42,175		157,473		143,475	Quarterly		3.76		2.68
0-E	NATIXIS	France	US$		13,365		40,159		99,556		86,984		79,724		319,788		282,906	Quarterly		3.82		3.82
0-E	MUFG	U.S.A.	US$		5,552		27,068		73,726		73,914		209,621		389,881		322,660	Quarterly		3.43		3.43
0-E	INVESTEC	England	US$		1,980		11,164		26,153		11,071		-		50,368		44,087	Semiannual		6.35		6.35

0-E	CREDIT AGRICOLE	France	US$		2,326		6,740		260,259		-		-		269,325		253,692	At Expiration		3.74		3.74
0-E	MUFG	U.S.A.	US$		26,607		78,955		198,783		46,131		-		350,476		328,023	Quarterly		3.54		3.54

0-E	ING	U.S.A.	US$		4,025		8,108		-		-		-		12,133		11,806	Quarterly		5.71		5.01
0-E	CREDIT AGRICOLE	France	US$		4,994		15,026		6,671		-		-		26,691		26,091	Quarterly		3.15		2.52
0-E	CITIBANK	U.S.A.	US$		19,412		56,148		117,881		16,653		-		210,094		200,907	Quarterly		3.39		2.80
0-E	PEFCO	U.S.A.	US$		1,950		1,950		-		-		-		3,900		3,827	Quarterly		5.65		5.03
0-E	BNP PARIBAS	U.S.A.	US$		9,353		25,211		28,663		22,502		10,354		96,083		87,729	Quarterly		3.85		3.72
0-E	WELLS FARGO	U.S.A.	US$		35,251		105,691		261,181		203,232		14,382		619,737		591,684	Quarterly		2.67		1.98
97.036.000-K	SANTANDER	Chile	US$		6,145		18,394		47,911		3,158		-		75,608		72,551	Quarterly		3.00		2.46
0-E	RRPF ENGINE	England	US$		1,152		3,432		8,967		8,679		568		22,798		19,643	Monthly		4.01		4.01
0-E	APPLE BANK	U.S.A.	US$		1,661		4,977		13,259		7,380		-		27,277		25,708	Quarterly		3.33		2.73
0-E	BTMU	U.S.A.	US$		3,367		10,081		26,827		14,153		-		54,428		51,340	Quarterly		3.33		2.73
0-E	NATIXIS	France	US$		759		2,299		2,330		-		-		5,388		5,154	Quarterly		4.41		4.41
0-E	KFW IPEX-BANK	Germany	US$		1,804		3,607		-		-		-		5,411		5,328	Quarterly		3.55		3.55
0-E	AIRBUS FINANCIAL	U.S.A.	US$		2,038		5,746		-		-		-		7,784		7,664	Monthly		3.31		3.31
0-E	US BANK	U.S.A.	US$		18,328		54,864		145,364		140,555		17,681		376,792		349,127	Quarterly		4.01		2.82
0-E	PK AIRFINANCE	U.S.A.	US$		2,652		8,136		18,194		-		-		28,982		28,087	Monthly		3.45		3.45

0-E	CITIBANK (*)	U.S.A.	US$		26,111		78,742		-		-		-		104,853		101,026	Quarterly		6.00		6.00

-	OTHERS	-	US$		-		11,582		18,641		13,530		-		43,753		16,972	-		-		-

	Total				461,295		1,013,822		2,391,950		1,972,457		2,410,030		8,249,554		6,933,927

(*) Bonus securitized with the future flows of credit card sales in the United States and Canada.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2019

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.

Tax No.	Creditor	Creditor country	Currency	Up to 90 days ThUS$		More than 90 days to one year ThUS$		More than one to three years ThUS$		More than three to five years ThUS$		More than five years ThUS$		Total ThUS$		Nominal value ThUS$		Amortization	Effective rate %		Nominal rate %




0-E	NCM	Holland	US$		173		499		722		-		-		1,394		1,289	Monthly		6.01		6.01

0-E	NATIXIS	France	US$		4,140		7,965		77,028		-		-		89,133		86,256	Quarterly / Semiannual		6.29		6.29
0-E	WACAPOU LEASING S.A.	Luxembourg	US$		835		2,450		3,277		-		-		6,562		6,280	Quarterly		4.32		4.32
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		11,286		151,047		-		-		-		162,333		169,931	Quarterly		5.39		5.39
0-E	GA Telesis LLC	U.S.A.	US$		677		1,753		4,675		4,675		10,480		22,260		13,495	Monthly		14.72		14.72

	Total				17,111		163,714		85,702		4,675		10,480		281,682		277,251

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2019

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.

Tax No.	Creditor	Creditor country	Currency	Up to 90 days ThUS$		More than 90 days to one year ThUS$		More than one to three years ThUS$		More than three to five years ThUS$		More than five years ThUS$		Total ThUS$		Nominal value ThUS$




	AIRCRAFT	OTHERS	US$		146,036		417,929		1,002,564		877,353		1,357,910		3,801,792		3,042,231
	OTHER ASSETS	OTHERS	US$		3,017		8,649		21,381		19,815		16,314		69,176		53,931
			CLP		160		478		531		-		-		1,169		1,195
			UF		2,713		4,736		5,789		1,373		2,956		17,567		17,145
			COP		71		161		37		2		-		271		259
			EUR		163		387		592		122		-		1,264		1,175
			GBP		16		10		-		-		-		26		24
			MXN		37		93		245		10		-		385		359
			PEN		95		129		83		16		-		323		306
			Other currencies		2,770		8,370		8,508		43,104		-		62,752		55,532

	OTHERS	OTHERS	US$		371,527		13,993		-		-		-		385,520		385,520
			CLP		220,383		905		-		-		-		221,288		221,288
			BRL		486,082		320		-		-		-		486,402		486,402
			Other currencies		576,378		1,716		-		-		-		578,094		578,094
78.591.370-1	Bethia S.A. y Filiales	Chile	CLP		53		-		-		-		-		53		53
Foreing	Patagonia Seafarms INC	U.S.A.	CLP		3		-		-		-		-		3		3

	Total				1,809,504		457,876		1,039,730		941,795		1,377,180		5,626,085		4,843,517

	Total consolidated				2,287,910		1,635,412		3,517,382		2,918,927		3,797,690		14,157,321		12,054,695

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2018 Restated

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.

Tax No.	Creditor	Creditor country	Currency	Up to 90 days ThUS$		More than 90 days to one year ThUS$		More than one to three years ThUS$		More than three to five years ThUS$		More than five years ThUS$		Total ThUS$		Nominal value ThUS$		Amortization	Effective rate %		Nominal rate %




97.032.000-8	BBVA	Chile	US$		38,625		76,275		-		-		-		114,900		113,000	At Expiration		3.36		3.36
97.032.000-8	BBVA	Chile	UF		-		52,490		-		-		-		52,490		50,785	At Expiration		3.31		3.31
97.036.000-K	SANTANDER	Chile	US$		23,070		-		-		-		-		23,070		23,000	At Expiration		3.90		3.90
97.003.000-K	BANCO DO BRASIL	Chile	US$		201,884		-		-		-		-		201,884		200,000	At Expiration		3.64		3.64
97.951.000-4	HSBC	Chile	US$		12,094		-		-		-		-		12,094		12,000	At Expiration		3.14		3.14

97.023.000-9	CORPBANCA	Chile	UF		5,778		17,086		16,662		-		-		39,526		38,231	Quarterly		3.35		3.35
0-E	BLADEX	U.S.A.	US$		-		15,766		-		-		-		15,766		15,000	Semiannual		6.74		6.74
97.036.000-K	SANTANDER	Chile	US$		1,347		587		102,521		-		-		104,455		102,521	Quarterly		5.60		5.60
76.362.099-9	BTG	Chile	UF		510		1,531		69,435		-		-		71,476		65,862	At Expiration		3.10		3.10

0-E	BANK OF NEW YORK	U.S.A.	US$		-		84,375		614,375		96,250		724,063		1,519,063		1,200,000	At Expiration		7.44		7.03
97.030.000-7	ESTADO	Chile	UF		-		18,985		37,970		196,970		213,114		467,039		345,182	At Expiration		5.50		5.50

0-E	CREDIT AGRICOLE	France	US$		743		2,201		5,718		2,086		-		10,748		10,080	Quarterly		3.23		3.23
0-E	BNP PARIBAS	U.S.A.	US$		14,741		61,973		152,826		145,252		250,387		625,179		511,698	Quarterly		4.55		4.55
0-E	WILMINGTON TRUST COMPANY	U.S.A.	US$		31,336		96,304		248,720		289,251		509,168		1,174,779		952,758	Quarterly		4.47		4.47
0-E	CITIBANK	U.S.A.	US$		12,757		38,398		102,062		77,710		65,232		296,159		269,365	Quarterly		3.82		2.93
0-E	US BANK	U.S.A.	US$		18,406		55,112		146,045		144,670		86,076		450,309		411,684	Quarterly		4.00		2.82
0-E	NATIXIS	France	US$		14,027		42,132		111,528		92,228		124,910		384,825		324,524	Quarterly		4.69		4.69
0-E	PK AirFinance	U.S.A.	US$		2,490		7,663		25,610		3,153		-		38,916		37,615	Monthly		4.15		4.14
0-E	INVESTEC	England	US$		2,004		11,579		26,874		24,367		-		64,824		54,014	Semiannual		7.17		7.17

0-E	CREDIT AGRICOLE	France	US$		2,576		8,380		273,122		-		-		284,078		253,692	At Expiration		4.11		4.11
0-E	DVB BANK SE	Germany	US$		28,087		83,260		213,177		122,674		20,274		467,472		422,065	Quarterly		4.42		4.42

0-E	ING	U.S.A.	US$		4,025		12,075		12,134		-		-		28,234		26,831	Quarterly		5.70		5.01
0-E	CREDIT AGRICOLE	France	US$		7,618		21,994		27,811		1,684		-		59,107		56,403	Quarterly		3.66		3.31
0-E	CITIBANK	U.S.A.	US$		14,870		44,570		83,389		42,178		-		185,007		172,158	Quarterly		4.40		3.80
0-E	PEFCO	U.S.A.	US$		5,771		13,541		3,899		-		-		23,211		22,407	Quarterly		5.64		5.02
0-E	BNP PARIBAS	U.S.A.	US$		8,467		25,214		26,933		1,641		-		62,255		59,567	Quarterly		3.90		3.58
0-E	WELLS FARGO	U.S.A.	US$		35,458		106,397		282,923		239,168		99,232		763,178		719,338	Quarterly		2.77		2.09
97.036.000-K	SANTANDER	Chile	US$		6,340		19,025		49,945		26,779		-		102,089		95,022	Quarterly		3.68		3.14
0-E	RRPF ENGINE	England	US$		1,167		3,480		9,103		8,826		4,870		27,446		23,012	Monthly		4.01		4.01
0-E	APPLE BANK	U.S.A.	US$		1,711		5,175		13,640		13,394		760		34,680		31,544	Quarterly		3.93		3.33
0-E	BTMU	U.S.A.	US$		3,489		10,485		27,605		27,062		775		69,416		63,189	Quarterly		4.06		3.46
0-E	NATIXIS	France	US$		4,242		9,870		9,815		563		-		24,490		23,161	Quarterly		4.28		4.12
0-E	KFW IPEX-BANK	Germany	US$		1,764		5,328		5,378		-		-		12,470		12,215	Quarterly		4.20		4.19
0-E	AIRBUS FINANCIAL	U.S.A.	US$		2,074		6,197		7,840		-		-		16,111		15,417	Monthly		4.19		4.19

0-E	CITIBANK (*)	U.S.A.	US$		25,705		77,703		103,341		-		-		206,749		196,211	Quarterly		6.00		6.00
0-E	Boeing	U.S.A.	US$		559		1,425		55,728		-		-		57,712		55,727	At Expiration		4.01		4.01

	OTHERS	-	US$		1,224		2,484		681		-		-		4,389		4,021	-		-		-

	Total				534,959		1,039,060		2,866,810		1,555,906		2,098,861		8,095,596		6,989,299

(*) Bonus securitized with the future flows of credit card sales in the United States and Canada.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2018 Restated

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.

Tax No.	Creditor	Creditor country	Currency	Up to 90 days ThUS$		More than 90 days to one year ThUS$		More than one to three years ThUS$		More than three to five years ThUS$		More than five years ThUS$		Total ThUS$		Nominal value ThUS$		Amortization	Effective rate %		Nominal rate %





0-E	NEDERLANDSCHE NCM	Holland	US$		175		499		1,332		55		-		2,061		1,851	Monthly		6.01		6.01

0-E	NATIXIS	France	US$		4,195		7,935		46,780		41,872		-		100,782		95,789	Quarterly / Semiannual		6.87		6.87
0-E	WACAPOU LEASING S.A.	Luxembourg	US$		839		2,433		6,542		-		-		9,814		9,226	Quarterly		4.81		4.81
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		11,536		32,312		161,778		-		-		205,626		208,224	Quarterly		5.88		5.82
0-E	GA Telesis LLC	U.S.A.	US$		680		1,753		4,675		4,675		11,318		23,101		13,202	Monthly		15.62		15.62

	Total				17,425		44,932		221,107		46,602		11,318		341,384		328,292

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2018 Restated

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.

Tax No.	Creditor	Creditor country	Currency	Up to 90 days ThUS$		More than 90 days to one year ThUS$		More than one to three years ThUS$		More than three to five years ThUS$		More than five years ThUS$		Total ThUS$		Nominal value ThUS$




	AIRCRAFT	OTHERS	US$		140,780		420,561		1,015,495		785,417		1,298,585		3,660,838		2,721,352
	OTHER ASSETS	OTHERS	US$		4,968		14,536		25,689		20,029		21,138		86,360		86,360
			CLP		57		170		1		-		-		228		228
			UF		1,683		2,565		667		34		-		4,949		4,949
			COP		304		731		366		21		-		1,422		1,422
			EUR		311		431		215		-		-		957		957
			GBP		45		128		36		-		-		209		209
			MXN		33		92		235		115		-		475		475
			PEN		183		409		114		-		-		706		706

	OTHERS	OTHERS	US$		720,718		9,979		-		-		-		730,697		730,697
			CLP		74,566		16,493		-		-		-		91,059		91,059
			BRL		309,552		66		-		-		-		309,618		309,618
			Other currencies		252,116		3,406		-		-		-		255,522		255,522

Foreign	Inversora Aeronáutica Argentina S.A.	Argentina	ARS		15		-		-		-		-		15		15
78.591.370-1	Bethia S.A. y Filiales	Chile	CLP		365		-		-		-		-		365		365
Foreign	TAM Aviação Executiva e Taxi Aéreo S.A.	Brazil	BRL		2		-		-		-		-		2		2

	Total				1,505,698		469,567		1,042,818		805,616		1,319,723		5,143,422		4,203,936

	Total consolidated				2,058,082		1,553,559		4,130,735		2,408,124		3,429,902		13,580,402		11,521,527

The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with different financial institutions. The Company has margin facilities with each financial institution in order to regulate the mutual exposure produced by changes in the market valuation of the derivatives.

At the end of 2018, the Company had delivered US$ 5.0 million in guarantees for derivative margins, corresponding to cash and standby letters of credit. As of December 31, 2019, US$ 23.7 million were delivered in guarantees corresponding to cash and standby letters of credit. The increase was due to: i) the expiration of hedge contracts, ii) acquisition of new hedge contracts, and iii) changes in fuel prices, changes in exchange rates and interest rates.

3.2.

Capital risk management

The Company’s objectives, with respect to the management of capital, are (i) to comply with the restrictions of minimum equity and (ii) to maintain an optimal capital structure.

The Company monitors its contractual obligations and the regulatory limitations in the different countries where the entities of the group are domiciled to assure they meet the limit of minimum net equity, where the most restrictive limitation is to maintain a positive net equity.

Additionally, the Company periodically monitors the short and long term cash flow projections to assure the Company has adequate sources of funding to generate the cash requirement to face its investment and funding future commitments.

The Company international credit rating is the consequence of the Company capacity to face its long terms financing commitments. As of December 31, 2019 the Company has an international long term credit rating of BB- with stable outlook by Standard & Poor’s, a BB- rating with stable outlook by Fitch Ratings and a Ba3 rating with stable outlook by Moody’s.

3.3.

Estimates of fair value.

At december 31, 2019, the Company maintained financial instruments that should be recorded at fair value. These are grouped into two categories:

1.	Hedge Instruments:

This category includes the following instruments:

Interest rate derivative contracts,

Fuel derivative contracts,

Currency derivative contracts.

2.	Financial Investments:

This category includes the following instruments:

Investments in short-term Mutual Funds (cash equivalent)

Private investment funds.

The Company has classified the fair value measurement using a hierarchy that reflects the level of information used in the assessment. This hierarchy consists of 3 levels (I) fair value based on quoted prices in active markets for identical assets or liabilities, (II) fair value calculated through valuation methods based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) and (III) fair value based on inputs for the asset or liability that are not based on observable market data.

The fair value of financial instruments traded in active markets, such as investments acquired for trading, is based on quoted market prices at the close of the period using the current price of the buyer. The fair value of financial assets not traded in active markets (derivative contracts) is determined using valuation techniques that maximize use of available market information.

The following table shows the classification of financial instruments at fair value, depending on the level of information used in the assessment:

	As of December 31, 2019								As of December 31, 2018
			Fair value measurements using values considered as								Fair value measurements using values considered as
	Fair value		Level I		Level II		Level III		Fair value		Level I		Level II		Level III
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Assets
Cash and cash equivalents		222,094		222,094		-		-		43,653		43,653		-		-
Short-term mutual funds		222,094		222,094		-		-		43,653		43,653		-		-

Other financial assets, current		471,797		386,688		85,109		-		366,573		343,218		23,355		-
Fair value interest rate derivatives		27,044		-		27,044		-		19,460		-		19,460		-
Fair value of fuel derivatives		48,542		-		48,542		-		-		-		-		-
Fair value of foreign currency derivative		586		-		586		-		3,895		-		3,895		-
Accrued interest since the last payment date Swap of currencies		3		-		3		-		-		-		-		-
Derivative not recognized as a hedge		-		-		-		-		19,396		19,396		-		-
Private investment funds		386,669		386,669		-		-		322,428		322,428		-		-
Certificate of Deposit (CBD)		8,934		-		8,934		-		-		-		-		-
Domestic and foreign bonds		19		19		-		-		1,394		1,394		-		-

Liabilities

Other financial liabilities, current		50,372		-		50,372		-		33,633		7,712		25,921		-
Fair value of interest rate derivatives		302		-		302		-		335		-		335		-
Fair value of fuel derivatives		-		-		-		-		15,678		-		15,678		-
Fair value of foreign currency derivatives		48,347		-		48,347		-		7,587		-		7,587		-
Interest accrued since the last payment date of Currency Swap		1,723		-		1,723		-		2,321		-		2,321		-

Other financial liabilities, non current		-		-		-		-		7,712		7,712		-		-
Fair value of interest rate derivatives		-		-		-		-		340		-		340		-
Interest accrued since the last date of Swap interest rates		-		-		-		-		340		-		340		-

Additionally, at December 31, 2019, the Company has financial instruments which are not recorded at fair value. In order to meet the disclosure requirements of fair values, the Company has valued these instruments as shown in the table below:

	As of December 31, 2019				As of December 31, 2018
	Book value		Fair value		Book value		Fair value
	ThUS$		ThUS$		ThUS$		ThUS$
					Restated		Restated
Cash and cash equivalents		850,486		850,486		1,037,989		1,037,989
Cash on hand		4,982		4,982		8,974		8,974
Bank balance		329,633		329,633		331,218		331,218
Overnight		350,080		350,080		282,164		282,164
Time deposits		165,791		165,791		415,633		415,633
Other financial assets, current		-		-		17,411		17,411
Other financial assets		-		-		17,411		17,411
Trade debtors, other accounts receivable and Current accounts receivable		1,244,348		1,244,348		1,162,582		1,162,582
Accounts receivable from entities related, current		19,645		19,645		2,931		2,931
Other financial assets, not current		46,907		46,907		58,700		58,700
Accounts receivable, non-current		4,725		4,725		5,381		5,381

Other current financial liabilities		1,835,288		2,019,068		1,397,156		1,942,332
Accounts payable for trade and other accounts payable, current		2,220,500		2,220,500		1,674,303		1,674,303
Accounts payable to entities related, current		56		56		382		382
Other financial liabilities, not current		8,530,418		8,846,418		5,864,570		8,387,939
Accounts payable, not current		619,110		619,110		483,656		483,656

The book values of accounts receivable and payable are assumed to approximate their fair values, due to their short-term nature. In the case of cash on hand, bank balances, overnight, time deposits and accounts payable, non-current, fair value approximates their carrying values.

The fair value of other financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate for similar financial instruments (Level II). In the case of Other financial assets, the valuation was performed according to market prices at period end. The book value of Other financial liabilities, current or non-current, do not include lease liabilities.