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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2020

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

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 December 31, 2020		As of December 31, 2019		As of December 31, 2020			As of December 31, 2019			As of December 31, 2020		As of December 31, 2019
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
a) Property, plant and equipment
Construction in progress (1)	377,961		372,589		-			-			377,961		372,589
Land		42,979		48,406		-			-			42,979		48,406
Buildings		123,836		133,488		(58,629	)		(58,626	)		65,207		74,862
Plant and equipment		12,983,173		13,993,044		(5,292,429	)		(4,630,001	)		7,690,744		9,363,043
Own aircraft (3) (4)		12,375,500		13,268,562		(5,088,297	)		(4,421,211	)		7,287,203		8,847,351
Other (2)		607,673		724,482		(204,132	)		(208,790	)		403,541		515,692
Machinery		27,402		33,658		(23,986	)		(28,441	)		3,416		5,217
Information technology equipment		147,754		161,992		(132,923	)		(141,216	)		14,831		20,776
Fixed installations and accessories		154,414		171,469		(105,215	)		(111,635	)		49,199		59,834
Motor vehicles		49,345		67,060		(44,140	)		(60,327	)		5,205		6,733
Leasehold improvements		201,828		234,249		(127,420	)		(135,789	)		74,408		98,460
Subtotal Properties, plant and equipment		14,108,692		15,215,955		(5,784,742	)		(5,166,035	)		8,323,950		10,049,920
b) Right of use
Aircraft (3)		5,369,519		5,438,404		(3,031,477	)		(2,669,864	)		2,338,042		2,768,540
Other assets		244,847		255,149		(176,570	)		(153,991	)		68,277		101,158
Subtotal Right of use		5,614,366		5,693,553		(3,208,047	)		(2,823,855	)		2,406,319		2,869,698
Total		19,723,058		20,909,508		(8,992,789	)		(7,989,890	)		10,730,269		12,919,618

(1)

As of December 31, 2020, includes advances paid to aircraft manufacturers for ThUS$ 360,387 (ThUS$ 348,148 as of December 31, 2019)

(2)

Consider mainly rotables and tools.

(3)

As of December 31, 2020, due to the process of Chapter 11, 29 aircraft lease contract were rejected, 19 were presented as to Property, plant and equipment, (2 A350, 11 A321, 1 A320, 1 A320N and 4 B787) and 10 were presented as to right of use assets, (1 A319, 7 A320 and 2 B767).

(4)

As of December 31, 2020, eleven B767 aircraft were classified as non-current assets or groups of assets for disposal as held for sale.

(a)

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

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

Opening balance as of January 1, 2018		556,822			49,780			124,548			9,138,591			30,156			80,777			436			84,225			10,065,335
Additions		7,927			-			-			635,367			4,995			64			24			20,410			668,787
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	)		(763,923	)
Foreign exchange		(714	)		(4,348	)		(4,244	)		(94,488	)		(1,819	)		(8,499	)		(28	)		(2,351	)		(116,491	)
Other increases (decreases)		65,992			-			(89	)		78,341			732			10,195			273			8,753			164,197
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	)		(111,970	)
Closing balance as of December 31, 2018		630,320			45,424			112,565			8,987,582			22,564			71,009			634			83,267			9,953,365

Opening balance as of January 1, 2019		630,320			45,424			112,565			8,987,582			22,564			71,009			634			83,267			9,953,365

Additions		21,884			7,950			-			1,694,640			6,580			26			73			34,988			1,766,141
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	)		(821,607	)
Foreign exchange		(1,340	)		(1,103	)		(914	)		(24,615	)		(234	)		(2,007	)		(125	)		(432	)		(30,770	)
Other increases (decreases)		(278,255	)		(3,837	)		(30,974	)		(418,083	)		538			2,903			-			-			(727,708	)
Changes, total		(257,731	)		2,982			(37,703	)		386,934			(1,788	)		(11,175	)		(157	)		15,193			96,555
Closing balance as of December 31, 2019		372,589			48,406			74,862			9,374,516			20,776			59,834			477			98,460			10,049,920

Opening balance as of January 1, 2020		372,589			48,406			74,862			9,374,516			20,776			59,834			477			98,460			10,049,920

Additions		6,535			-			-			485,800			1,295			9			-			-			493,639
Disposals		-			-			-			(1,439	)		(112	)		(31	)		(4	)		-			(1,586	)
Rejection fleet (*)		-			-			-			(1,081,496	)		-			-			-			(82	)		(1,081,578	)
Retirements		(39	)		-			-			(107,912	)		(55	)		(3,250	)								(111,256	)
Depreciation expenses		-			-			(4,819	)		(682,102	)		(6,186	)		(9,037	)		(81	)		(16,542	)		(718,767	)
Foreign exchange		(2,601	)		(5,428	)		(4,836	)		(146,219	)		(1,543	)		(7,195	)		4			(2,587	)		(170,405	)
Other increases (decreases) (**)		1,477			1			-			(142,179	)		656			8,869			-			(4,841	)		(136,017	)
Changes, total		5,372			(5,427	)		(9,655	)		(1,675,547	)		(5,945	)		(10,635	)		(81	)		(24,052	)		(1,725,970	)

Closing balance as of December 31, 2020		377,961			42,979			65,207			7,698,969			14,831			49,199			396			74,408			8,323,950

(*)

Include aircraft lease rejection due to Chapter 11 process.

(**)

Include the reclassification of 4 A350 aircraft that were incorporated on property plant and equipment from available for sale for ThU$ 464,812 and the reclassification of 11 B767 aircraft that were moved to available for sales for ThU$ 606,522 (see note 13).

(b) Right of use assets:

	Aircraft			Others			Net right of use assets
	ThUS $			ThUS $			ThUS $

Opening balances as of January 1, 2018		2,786,685			78,632			2,865,317
Additions		289,209			37,089			326,298
Depreciation expense		(371,789	)		(19,349	)		(391,138	)
Cummulative translate adjustment		(9,490	)		(4,261	)		(13,751	)
Other increases (decreases)		(238,282	)		-			(238,282	)
Total changes		(330,352	)		13,479			(316,873	)
Final balances as of December 31, 2018		2,456,333			92,111			2,548,444

Opening balances as of January 1, 2019		2,456,333			92,111			2,548,444
Additions		732,489			20,675			753,164
Depreciation expense		(377,911	)		(22,473	)		(400,384	)
Cummulative translate adjustment		(2,046	)		(2,515	)		(4,561	)
Other increases (decreases)		(40,325	)		13,360			(26,965	)
Total changes		312,207			9,047			321,254
Final balances as of December 31, 2019		2,768,540			101,158			2,869,698
Opening balances as of January 1, 2020		2,768,540			101,158			2,869,698
Additions		-			399			399
Fleet rejection (*)		(9,090	)		-			(9,090	)
Write off		-			-			-
Depreciation expense		(395,936	)		(22,492	)		(418,428	)
Cummulative translate adjustment		(6,578	)		(11,173	)		(17,751	)
Other increases (decreases)		(18,894	)		385			(18,509	)
Total changes		(430,498	)		(32,881	)		(463,379	)
Final balances as of December 31, 2020		2,338,042			68,277			2,406,319

(*) Include aircraft lease rejection due to Chapter 11 process.

		Aircraft included in Property, plant and equipment						Aircraft included as Rights of use assets				Total fleet
Aircraft	Model	As of December 31, 2020			As of December 31, 2019			As of December 31, 2020		As of December 31, 2019		As of December 31, 2020			As of December 31, 2019

Boeing 767	300ER		17			28			-		2		17			30
Boeing 767	300F		11	(1)		11	(1)		1		1		12	(1)		12	(1)
Boeing 777	300ER		4			4			6		6		10			10
Boeing 787	800		6			6			4		4		10			10
Boeing 787	900		2			6			10		10		12			16
Airbus A319	100		37			37			7		9		44			46
Airbus A320	200		96	(2)		96	(2)		38		46		134	(2)		142	(2)
Airbus A320	NEO		6			7			6		6		12			13
Airbus A321	200		19			30			19		19		38			49
Airbus A350	900		4			2			7		7		11			9
Total			202			227			98		110		300			337

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

(2) Two aircraft leased to Sundair.

(d) 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.

(e) 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,
				2020				2019
Guarantee agent (1)	Creditor company	Committed Assets	Fleet	Existing Debt		Book Value		Existing Debt		Book Value
				ThUS$		ThUS$		ThUS$		ThUS$
						-
Wilmington	MUFG	Aircraft and engines	Airbus A319		69,375		268,746		74,713		256,937
Trust Company			Airbus A320		63,581		257,613		70,644		256,651
			Boeing 767		43,628		180,591		61,728		196,244
			Boeing 787		114,936		119,229		120,938		127,283
	Wilmington	Aircraft and engines	Airbus A321		-		-		353,774		452,107
	Trust Company		Boeing 787		-		-		332,131		374,998
			Airbus A350		-		-		180,320		192,620
	Citibank N.A.	Aircraft and engines	Boeing 787		-		-		143,475		191,804

Credit Agricole	Credit Agricole	Aircraft and engines	Airbus A319		1,073		6,936		-		-
			Airbus A320		139,192		122,251		85,986		95,148
			Airbus A321 / A350		30,733		28,127		83,281		67,882
			Boeing 767		10,404		32,802		10,404		35,226
			Boeing 787		91,797		43,020		74,023		36,594
Bank Of Utah	BNP Paribas	Aircraft and engines (2)	Airbus A320 / A350		262,420		289,946		296,441		378,462
			Boeing 787		211,849		246,349		217,500		259,934
	Investec	Aircraft and engines (2)	Airbus A320 / A350		37,870		-		44,088		-
	SMBC	Aircraft and engines (2)	Airbus A350		130,000		134,780		-		-
Natixis	Natixis	Aircraft and engines	Airbus A321		271,129		375,645		282,927		384,224
Citibank N.A.	Citibank N.A.	Aircraft and engines	Airbus A319		27,936		38,836		-		-
			Airbus A320		128,030		214,597		-		-
			Airbus A321		41,599		81,706		-		-
			Airbus A350		15,960		26,823		-		-
			Airbus B767		90,846		197,797		-		-
			Airbus B787		23,156		19,047		-		-
			Rotables		162,477		145,708		-		-
UMB Bank	MUFG	Aircraft and engines	Airbus A320		167,371		246,293		106,250		149,607
MUFG Bank	MUFG Bank	Aircraft and engines	Airbus A320		215,043		295,036		216,411		310,311
Total direct guarantee					2,350,405		3,371,878		2,755,034		3,766,032

(1)

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

(2)

As of December 31, 2020, four A350 aircraft were reincorporated to Property, plant and equipment due to cancellation of the sale contract. Which were classified previously as Non-current assets or groups of assets for disposal as held for sale.

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

Additionally, there are indirect guarantees associated with assets registered in properties, plants and equipment whose total debt as of December 31, 2020, amounts to ThUS$ 1,642,779 (ThUS$ 1,762,611 as of December 31, 2019). The book value of the assets with indirect guarantees as of December 31, 2020, amounts to ThUS$ 3,496,397 (ThUS$ 3,866,237 as of December 31, 2019).

As of December 31, 2020, given the Chapter 11 process, nineteen aircraft corresponding to Property, plant and equipment were rejected, of which eighteen had direct guarantees and one indirect guarantee.

As of December 31, 2020, 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
Avolon Aerospace AOE 62 Limited	Latam Airlines Group S.A.	Seven letters of credit		3,554	Feb 05, 2021
Bank of Utah	Latam Airlines Group S.A.	One letter of credit		2,000	Mar 24, 2021
GE Capital Aviation Services Ltd.	Latam Airlines Group S.A.	Three letters of credit		12,198	Jan 20, 2021
ORIX Aviation Systems Limited	Latam Airlines Group S.A.	Three letters of credit		8,445	Nov 26, 2021
Wells Fargo Bank	Latam Airlines Group S.A.	Six letters of credit		11,870	Feb 04, 2021
BBAM	Latam Airlines Group S.A.	Two letters of credit		1,695	Jan 14, 2021
Merlin Aviation Leasing (Ireland) 18 Limited	Tam Linhas Aéreas S.A.	Two letters of credit		3,852	Mar 15, 2021
RB Comercial Properties 49
Empreendimentos Imobiliarios LTDA	Tam Linhas Aéreas S.A.	One letter of credit		27,193	Apr 29, 2021
				70,807

(ii) Commitments and others

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

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$

Gross book value of fully depreciated property, plant and equipment still in use		206,497		261,792
Commitments for the acquisition of aircraft (*)		7,500,000		7,390,000

(*)

According to the manufacturer’s price list.

Purchase commitment of aircraft

	Year of delivery
Manufacturer	2021-2026		Total
Airbus S.A.S.		44		44
A320-NEO Family		42		42
A350 Family		2		2
The Boeing Company		6		6
Boeing 787-9		6		6
Total		50		50

As of December 31, 2020, as a result of the different aircraft purchase contracts signed with Airbus SAS, 42 Airbus A320 family aircraft remain to be received with deliveries between 2020 and 2024 and 2 Airbus aircraft of the A350 family with delivery dates. by 2026. The approximate amount, according to the manufacturer’s list prices, is ThUS $ 5,700,000.

As of December 31, 2020, as a result of the different aircraft purchase contracts signed with The Boeing Company, 6 Boeing 787 Dreamliner aircraft remain to be received with delivery dates between 2021 and 2023. The approximate amount, according to list prices from the manufacturer, is ThUS $ 1,800,000.

The delivery dates of some aircraft could be modified as a result of the continuous discussions held with aircraft manufacturer in the context of the current situation of the company.

(iii)

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

		For the year ended December 31,
		2020		2019		2018
Average rate of capitalization of capitalized interest costs	%		3.52		4.72		4.64
Costs of capitalized interest	ThUS$		11,627		1,444		13,007