XML 42 R27.htm IDEA: XBRL DOCUMENT

OTHER PROVISIONS

12 Months Ended

Dec. 31, 2020

NOTE 21 - OTHER PROVISIONS

	Current liabilities				Non-current liabilities				Total Liabilities
	As of		As of		As of		As of		As of		As of
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019		2020		2019
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Provision for contingencies (1)
Tax contingencies		21,188		2,033		364,342		164,190		385,530		166,223
Civil contingencies		2,266		2,202		103,984		66,605		106,250		68,807
Labor contingencies		320		971		48,115		26,505		48,435		27,476
Other		-		-		17,821		19,886		17,821		19,886
Provision for European
Commission investigation (2)		-		-		10,097		9,217		10,097		9,217

Provisions for onerous contracts (3)		-		-		44,000		-		44,000		-

Total other provisions (4)		23,774		5,206		588,359		286,403		612,133		291,609

(1)

Provisions for contingencies:

The tax contingencies correspond to litigation and tax criteria related to the tax treatment applicable to direct and indirect taxes, which are found in both administrative and judicial stage.

The civil contingencies correspond to different demands of civil order filed against the Company.

The labor contingencies correspond to different demands of labor order filed against the Company.

The Provisions are recognized in the consolidated income statement in administrative expenses or tax expenses, as appropriate.

(2)

Provision made for proceedings brought by the European Commission for possible breaches of free competition in the freight market.

(3)

Based on market information on the drop in the price of some assets, a provision was made for onerous contracts associated with the purchase commitments of aircraft.

(4)

Total other provision as of December 31, 2020, and December 31, 2019, include the fair value correspond to those contingencies from the business combination with TAM S.A and subsidiaries, with a probability of loss under 50%, which are not provided for the normal application of IFRS enforcement and that only must be recognized in the context of a business combination in accordance with IFRS 3.

Movement of provisions:

				European
	Legal			Commission			Onerous
	claims (1)			Investigation (2)			Contracts		Total
	ThUS$			ThUS$			ThUS$		ThUS$

Opening balance as of January 1, 2018		367,493			9,883			-		377,376
Increase in provisions		106,870			-			-		106,870
Provision used		(59,032	)		-			-		(59,032	)
Difference by subsidiaries conversion		(48,330	)		-			-		(48,330	)
Reversal of provision		(66,965	)		-			-		(66,965	)
Exchange difference		(1,150	)		(480	)		-		(1,630	)

Closing balance as of December 31, 2018		298,886			9,403			-		308,289

Opening balance as of January 1, 2019		298,886			9,403			-		308,289
Increase in provisions		134,847			-			-		134,847
Provision used		(82,212	)		-			-		(82,212	)
Difference by subsidiaries conversion		(10,764	)		-			-		(10,764	)
Reversal of provision		(58,063	)		-			-		(58,063	)
Exchange difference		(302	)		(186	)		-		(488	)

Closing balance as of December 31, 2019		282,392			9,217			-		291,609

Opening balance as of January 1, 2020		282,392			9,217			-		291,609
Increase in provisions		408,078			-			44,000		452,078
Provision used		(47,238	)		-			-		(47,238	)
Difference by subsidiaries conversion		(58,654	)		-			-		(58,654	)
Reversal of provision		(25,563	)		-			-		(25,563	)
Exchange difference		(979	)		880			-		(99	)

Closing balance as of December 31, 2020		558,036			10,097			44,000		612,133

(1)

Accumulated balances include a judicial deposit delivered in guarantee, with respect to the “Fundo Aeroviario” (FA), for ThUS$ 69, made in order to suspend the collection and the application of a fine. The Company is discussing in Court the constitutionality of the requirement made by FA calculated at the ratio of 2.5% on the payroll in a legal claim. Initially the payment of said contribution was suspended by a preliminary judicial decision and about 10 years later, this same decision was reversed. As the decision is not final, the Company has deposited the securities open until that date, in order to avoid collection processing and the application of the fine.

Finally, if the final decision is favorable to the Company, the deposit made and payments made later will return to TAM. On the other hand, if the court confirms the first decision, said deposit will become a final payment in favor of the Government of Brazil. The procedural stage as of December 31, 2020 is described in Note 31 in the Role of the case 2001.51.01.012530-0.

(2)

European Commission Provision

Provision constituted on the occasion of the process initiated in December 2007 by the General Competition Directorate of the European Commission against more than 25 cargo airlines, among which is Lan Cargo SA, which forms part of the global investigation initiated in 2006 for possible infractions of free competition in the air cargo market, which was carried out jointly by the European and United States authorities.

With respect to Europe, the General Directorate of Competition imposed fines totaling € 799,445,000 (seven hundred and ninety-nine million four hundred and forty-five thousand Euros) for infractions of European Union regulations on free competition against eleven (11) airlines, among which are LATAM Airlines Group SA and its subsidiary Lan Cargo S.A .,For its part, LATAM Airlines Group S.A. and Lan Cargo S.A., jointly and severally, have been fined for the amount of € 8,220,000 (eight million two hundred twenty thousand euros), for these infractions, an amount that was provisioned in the financial statements of LATAM. On January 24, 2011, LATAM Airlines Group S.A. and Lan Cargo S.A. They appealed the decision before the Court of Justice of the European Union. On December 16, 2015, the European Court resolved the appeal and annulled the Commission’s Decision. The European Commission did not appeal the judgment, but on March 17, 2017, the European Commission again adopted its original decision to impose on the eleven lines original areas, the same fine previously imposed, amounting to a total of 776,465,000 Euros. In the case of LAN Cargo and its parent, LATAM Airlines Group S.A. imposed the same fine mentioned above. The procedural stage as of December 31, 2020 is described in Note 31 in section 2 judgments received by LATAM Airlines Group S.A. and Subsidiaries.