EX-99.1 2 ea137367ex99-1_latamair.htm CONSOLIDATED FINANCIAL STATEMENTS OF LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

Exhibit 99.1

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020

CONTENTS

Consolidated Statement of Financial Position	1
Consolidated Statement of Income by Function	3
Consolidated Statement of Comprehensive Income	4
Consolidated Statement of Changes in Equity	5
Consolidated Statement of Cash Flows - Direct Method	8
Notes to the Consolidated Financial Statements	9

CLP	-	CHILEAN PESO
ARS	-	ARGENTINE PESO
US$	-	united states dollar
THUS$	-	THOUSANDS OF UNITED STATES DOLLARS
mUS$	-	millions of united states dollars
COP	-	COLOMBIAN PESO
brl/R$	-	braZILIAN REAL
thr$	-	Thousands of Brazilian reaL

Contents of the Notes to the consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.

Notes

				Page
1	-	General information		9
2	-	Summary of significant accounting policies		13
		2.1.	Basis of Preparation	13
		2.2.	Basis of Consolidation	23
		2.3.	Foreign currency transactions	24
		2.4.	Property, plant and equipment	26
		2.5.	Intangible assets other than goodwill	26
		2.6.	Goodwill	27
		2.7.	Borrowing costs	27
		2.8.	Losses for impairment of non-financial assets	27
		2.9.	Financial assets	28
		2.10.	Derivative financial instruments and hedging activities	29
		2.11.	Inventories	30
		2.12.	Trade and other accounts receivable	30
		2.13.	Cash and cash equivalents	30
		2.14.	Capital	31
		2.15.	Trade and other accounts payables	31
		2.16.	Interest-bearing loans	31
		2.17.	Current and deferred taxes	31
		2.18.	Employee benefits	32
		2.19.	Provisions	32
		2.20.	Revenue recognition	33
		2.21.	Leases	34
		2.22.	Non-current assets (or disposal groups) classified as held for sale	35
		2.23.	Maintenance	36
		2.24.	Environmental costs	36
3	-	Financial risk management		37
		3.1.	Financial risk factors	37
		3.2.	Capital risk management	52
		3.3.	Estimates of fair value	52
4	-	Accounting estimates and judgments		55
5	-	Segmental information		59
6	-	Cash and cash equivalents		60
7	-	Financial instruments		61
8	-	Trade and other accounts receivable current, and non-current accounts receivable		63
9	-	Accounts receivable from/payable to related entities		65
10	-	Inventories		66
11	-	Other financial assets		67
12	-	Other non-financial assets		68
13	-	Non-current assets and disposal group classified as held for sale		69
14	-	Investments in subsidiaries		70
15	-	Intangible assets other than goodwill		73
16	-	Goodwill and intangible assets of indefinite useful life		74

17	-	Property, plant and equipment	77
18	-	Current and deferred tax	83
19	-	Other financial liabilities	87
20	-	Trade and other accounts payables	97
21	-	Other provisions	99
22	-	Other non financial liabilities	102
23	-	Employee benefits	103
24	-	Accounts payable, non-current	105
25	-	Equity	105
26	-	Revenue	110
27	-	Costs and expenses by nature	110
28	-	Other income, by function	112
29	-	Foreign currency and exchange rate differences	113
30	-	Earnings/(loss) per share	121
31	-	Contingencies	122
32	-	Commitments	137
33	-	Transactions with related parties	139
34	-	Share based payments	140
35	-	Statement of cash flows	141
36	-	The environment	143
37	-	Events subsequent to the date of the financial statements	145
38	-	Parent Company Financial Information	145

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS

		As of		As of
		December 31,		December 31,
	Note	2020		2019
		ThUS$		ThUS$
Cash and cash equivalents
Cash and cash equivalents	6 - 7		1,695,841		1,072,579
Other financial assets	7 - 11		50,250		499,504
Other non-financial assets	12		155,892		313,449
Trade and other accounts receivable	7 - 8		599,381		1,244,348
Accounts receivable from related entities	7 - 9		158		19,645
Inventories	10		323,574		354,232
Current tax assets	18		42,320		29,321

Total current assets other than non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners			2,867,416		3,533,078

Non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners	13		276,122		485,150

Total current assets			3,143,538		4,018,228
Non-current assets
Other financial assets	7 - 11		33,140		46,907
Other non-financial assets	12		126,782		204,928
Accounts receivable	7 - 8		4,986		4,725
Intangible assets other than goodwill	15 - 16		1,046,559		1,448,241
Goodwill	16		-		2,209,576
Property, plant and equipment	17		10,730,269		12,919,618
Deferred tax assets	18		564,816		235,583
Total non-current assets			12,506,552		17,069,578
Total assets			15,650,090		21,087,806

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

LIABILITIES AND EQUITY

		As of			As of
		December 31,			December 31,
LIABILITIES	Note	2020			2019
		ThUS$			ThUS$
Current liabilities

Other financial liabilities	7 - 19		3,055,730			1,885,660
Trade and other accounts payables	7 - 20		2,322,125			2,222,874
Accounts payable to related entities	7 - 9		812			56
Other provisions	21		23,774			5,206
Current tax liabilities	18		656			11,925
Other non-financial liabilities	22		2,088,791			2,835,221
Total current liabilities other than non-current liabilities (or disposal groups) classified as held for sale			7,491,888			6,960,942
Total current liabilities			7,491,888			6,960,942
Non-current liabilities
Other financial liabilities	7 - 19		7,803,801			8,530,418
Accounts payable	7 - 24		651,600			619,110
Accounts payable to related entities	7 - 9		396,423			-
Other provisions	21		588,359			286,403
Deferred tax liabilities	18		384,280			616,803
Employee benefits	23		74,116			93,570
Other non-financial liabilities	22		702,008			851,383
Total non-current liabilities			10,600,587			10,997,687
Total liabilities			18,092,475			17,958,629
EQUITY
Share capital	25		3,146,265			3,146,265
Retained earnings/(losses)	25		(4,193,615	)		352,272
Treasury Shares	25		(178	)		(178	)
Other reserves			(1,388,185	)		(367,577	)
Parent’s ownership interest			(2,435,713	)		3,130,782
Non-controlling interest	14		(6,672	)		(1,605	)
Total equity			(2,442,385	)		3,129,177
Total liabilities and equity			15,650,090			21,087,806

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME BY FUNCTION

		For the year ended
		December 31,
	Note	2020			2019			2018
		ThUS$			ThUS$			ThUS$

Revenue	26		3,923,667			10,070,063			9,895,456
Cost of sales	27		(4,513,228	)		(7,951,269	)		(7,773,432	)
Gross margin			(589,561	)		2,118,794			2,122,024
Other income	28		411,002			360,864			472,758
Distribution costs	27		(294,278	)		(580,046	)		(615,214	)
Administrative expenses	27		(499,512	)		(735,218	)		(736,333	)
Other expenses	27		(692,939	)		(422,792	)		(356,250	)
Restructuring activities expenses	27		(990,009	)		-			-
Other gains/(losses)	27		(1,874,789	)		11,525			53,499
Income from operation activities			(4,530,086	)		753,127			940,484
Financial income			50,397			26,283			53,253
Financial costs	27		(586,979	)		(589,934	)		(539,137	)
Foreign exchange gains/(losses)	29		(48,403	)		(32,571	)		(38,070	)
Result of indexation units			9,348			(14,989	)		(865	)
Income (loss) before taxes			(5,105,723	)		141,916			415,665
Income tax expense/benefit	18		550,188			53,697			(73,879	)

NET INCOME (LOSS) FOR THE YEAR			(4,555,535	)		195,613			341,786
Income (loss) attributable to owners of the parent			(4,545,887	)		190,430			309,811
Income (loss) attributable to non-controlling interest	14		(9,648	)		5,183			31,975
Net income (loss) for the year			(4,555,535	)		195,613			341,786

EARNINGS PER SHARE
Basic earnings (losses) per share (US$)	30		(7.49642	)		0.31403			0.51090
Diluted earnings (losses) per share (US$)	30		(7.49642	)		0.31403			0.51090

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		For the year ended December 31,
	Note	2020			2019			2018
		ThUS$			ThUS$			ThUS$
NET INCOME			(4,555,535	)		195,613			341,786
Components of other comprehensive income that will not be reclassified to income before taxes
Other comprehensive income, before taxes, gains by new measurements on defined benefit plans	25		(3,968	)		(10,636	)		(5,819	)
Total other comprehensive (loss) that will not be reclassified to income before taxes			(3,968	)		(10,636	)		(5,819	)
Components of other comprehensive income that will be reclassified to income before taxes
Currency translation differences
Gains (losses) on currency translation, before tax	29		(894,394	)		(243,271	)		(743,516	)
Other comprehensive loss, before taxes, currency translation differences			(894,394	)		(243,271	)		(743,516	)
Cash flow hedges
Gains (losses) on cash flow hedges before taxes	19		(119,970	)		66,856			(27,797	)
Other comprehensive income (losses), before taxes, cash flow hedges			(119,970	)		66,856			(27,797	)
Total other comprehensive (loss) that will be reclassified to income before taxes			(1,014,364	)		(176,415	)		(771,313	)
Other components of other comprehensive income (loss), before taxes			(1,018,332	)		(187,051	)		(777,132	)
Income tax relating to other comprehensive income that will not be reclassified to income
Income tax relating to new measurements on defined benefit plans	18		924			2,873			1,566
Accumulate income tax relating to other comprehensive income (loss) that will not be reclassified to income			924			2,873			1,566
Income tax relating to other comprehensive income (loss) that will be reclassified to income
Income tax related to cash flow hedges in other comprehensive income (loss)			959			414			(269	)
Income taxes related to components of other comprehensive loss will be reclassified to income			959			414			(269	)
Total Other comprehensive (loss)			(1,016,449	)		(183,764	)		(775,835	)
Total comprehensive income (loss)			(5,571,984	)		11,849			(434,049	)
Comprehensive income (loss) attributable to owners of the parent			(5,566,991	)		15,250			(452,844	)
Comprehensive income (loss) attributable to non-controlling interests			(4,993	)		(3,401	)		18,795
TOTAL COMPREHENSIVE INCOME (LOSS)			(5,571,984	)		11,849			(434,049	)

The accompanying Notes 1 to 38 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
							Change in other reserves
	Note	Share capital		Treasury shares			Currency translation reserve			Cash flow hedging reserve			Actuarial gains or losses on defined benefit plans reserve			Shares based payments reserve		Other sundry reserve			Total other reserve			Retained earnings/ (losses)			Parent’s ownership interest			Non- controlling interest			Total equity
		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity as of January 1, 2020			3,146,265		(178	)		(2,890,287	)		56,892			(22,940	)		36,289		2,452,469			(367,577	)		352,272			3,130,782			(1,605	)		3,129,177
Total increase (decrease) in equity
Net income/(loss) for the period	25		-		-			-			-			-			-		-			-			(4,545,887	)		(4,545,887	)		(9,648	)		(4,555,535	)
Other comprehensive income			-		-			(900,226	)		(117,833	)		(3,045	)		-		-			(1,021,104	)		-			(1,021,104	)		4,655			(1,016,449	)
Total comprehensive income			-		-			(900,226	)		(117,833	)		(3,045	)		-		-			(1,021,104	)		(4,545,887	)		(5,566,991	)		(4,993	)		(5,571,984	)
Transactions with shareholders
Dividends	25		-		-			-			-			-			-		-			-			-			-			-			-
Increase (decrease) through transfers and other changes, equity	25-34		-		-			-			-			-			946		(450	)		496			-			496			(74	)		422
Total transactions with shareholder			-		-			-			-			-			946		(450	)		496			-			496			(74	)		422
Closing balance as of December 31, 2020			3,146,265		(178	)		(3,790,513	)		(60,941	)		(25,985	)		37,235		2,452,019			(1,388,185	)		(4,193,615	)		(2,435,713	)		(6,672	)		(2,442,385	)

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
							Change in other reserves
	Note	Share capital		Treasury shares			Currency translation reserve			Cash flow hedging reserve			Actuarial gains or losses on defined benefit plans reserve			Shares based payments reserve			Other sundry reserve			Total other reserve			Retained earnings			Parent’s ownership interest			Non- controlling interest			Total equity
		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity as of January 1, 2019			3,146,265		(178	)		(2,656,644	)		(9,333	)		(15,178	)		37,874			2,638,916			(4,365	)		218,971			3,360,693			79,908			3,440,601
Total increase (decrease) in equity
Net income for the year	25		-		-			-			-			-			-			-			-			190,430			190,430			5,183			195,613
Other comprehensive income			-		-			(233,643	)		66,225			(7,762	)		-			-			(175,180	)		-			(175,180	)		(8,584	)		(183,764	)
Total comprehensive income			-		-			(233,643	)		66,225			(7,762	)		-			-			(175,180	)		190,430			15,250			(3,401	)		11,849
Transactions with shareholders
Dividends	25		-		-			-			-			-			-			-			-			(57,129	)		(57,129	)		-			(57,129	)
Increase (decrease) through transfers and other changes, equity	25-34		-		-			-			-			-			(1,585	)		(186,447	)		(188,032	)		-			(188,032	)		(78,112	)		(266,144	)
Total transactions with shareholders			-		-			-			-			-			(1,585	)		(186,447	)		(188,032	)		(57,129	)		(245,161	)		(78,112	)		(323,273	)
Closing balance as of December 31, 2019			3,146,265		(178	)		(2,890,287	)		56,892			(22,940	)		36,289			2,452,469			(367,577	)		352,272			3,130,782			(1,605	)		3,129,177

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
							Change in other reserves
	Note	Share capital		Treasury shares			Currency translation reserve			Cash flow hedging reserve			Actuarial gains or losses on defined benefit plans reserve			Shares based payments reserve			Other sundry reserve			Total other reserve			Retained earnings			Parent’s ownership interest			Non- controlling interest			Total equity
		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity as of January 1, 2018			3,146,265		(178	)		(1,925,714	)		18,140			(10,926	)		39,481			2,639,780			760,761			(31,464	)		3,875,384			90,457			3,965,841
Increase (decrease) by application of new accounting standards	2 - 25		-		-			-			-			-			-			-			-			(9,548	)		(9,548	)		-			(9,548	)
Initial balance			3,146,265		(178	)		(1,925,714	)		18,140			(10,926	)		39,481			2,639,780			760,761			(41,012	)		3,865,836			90,457			3,956,293
Total increase (decrease) in equity
Net income for the year	25		-		-			-			-			-			-			-			-			309,811			309,811			31,975			341,786
Other comprehensive loss			-		-			(730,930	)		(27,473	)		(4,252	)		-			-			(762,655	)		-			(762,655	)		(13,180	)		(775,835	)
Total comprehensive income			-		-			(730,930	)		(27,473	)		(4,252	)		-			-			(762,655	)		309,811			(452,844	)		18,795			(434,049	)
Transactions with shareholders
Dividends	25		-		-			-			-			-			-			-			-			(54,580	)		(54,580	)		-			(54,580	)
Increase (decrease) through transfers and other changes, equity	25-34		-		-			-			-			-			(1,607	)		(864	)		(2,471	)		4,752			2,281			(29,344	)		(27,063	)
Total transactions with shareholders			-		-			-			-			-			(1,607	)		(864	)		(2,471	)		(49,828	)		(52,299	)		(29,344	)		(81,643	)
Closing balance as of December 31, 2018			3,146,265		(178	)		(2,656,644	)		(9,333	)		(15,178	)		37,874			2,638,916			(4,365	)		218,971			3,360,693			79,908			3,440,601

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS - DIRECT METHOD

		For the year ended December 31,
	Note	2020			2019			2018
		ThUS$			ThUS$			ThUS$
Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services			4,620,409			11,079,333			10,787,804
Other cash receipts from operating activities			51,900			127,683			95,099
Payments for operating activities
Payments to suppliers for goods and services			(3,817,339	)		(6,663,875	)		(6,775,003	)
Payments to and on behalf of employees			(1,227,010	)		(1,644,806	)		(1,789,022	)
Other payments for operating activities			(70,558	)		(267,643	)		(255,988	)
Income taxes (paid)			(65,692	)		(45,311	)		(29,186	)
Other cash inflows (outflows)	35		13,593			241,286			39,612
Net cash (outflow) inflow from operating activities			(494,697	)		2,826,667			2,073,316
Cash flows from investing activities
Cash flows from losses of control of subsidiaries or other businesses			-			-			69,724
Other cash receipts from sales of equity or debt instruments of other entities			1,464,012			4,063,582			3,640,208
Other payments to acquire equity or debt instruments of other entities			(1,140,940	)		(4,131,890	)		(3,542,839	)
Amounts raised from sale of property, plant and equipment			75,566			50,322			223,753
Purchases of property, plant and equipment			(324,264	)		(1,276,621	)		(660,707	)
Purchases of intangible assets			(75,433	)		(140,173	)		(96,206	)
Interest received			36,859			17,822			10,175
Other cash inflows (outflows)	35		(2,192	)		(2,249	)		(2,476	)
Net cash inflow (outflow) from investing activities			33,608			(1,419,207	)		(358,368	)
Cash flows from financing activities	35
Payments for changes in ownership interests in subsidiaries that do not result in loss of control			(3,225	)		(294,105	)		(2	)
Amounts raised from long-term loans			1,425,184			1,781,728			779,062
Amounts raised from short-term loans			560,296			93,000			293,000
Loans from Related Entities			373,125			-			-
Loans repayments			(793,712	)		(1,860,455	)		(1,738,348	)
Payments of lease liabilities			(122,062	)		(398,992	)		(373,439	)
Dividends paid			(571	)		(55,116	)		(72,620	)
Interest paid			(210,418	)		(550,877	)		(540,303	)
Other cash inflows (outflows)	35		(107,788	)		(58,704	)		44,053
Net cash inflow (outflow) from financing activities			1,120,829			(1,343,521	)		(1,608,597	)
Net increase in cash and cash equivalents before effect of exchanges rate change			659,740			63,939			106,351
Effects of variation in the exchange rate on cash and cash equivalents			(36,478	)		(73,002	)		(166,713	)
Net increase (decrease) in cash and cash equivalents			623,262			(9,063	)		(60,362	)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR	6		1,072,579			1,081,642			1,142,004
CASH AND CASH EQUIVALENTS AT THE END OF YEAR	6		1,695,841			1,072,579			1,081,642

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020 AND 2019

NOTE 1 - GENERAL INFORMATION

LATAM Airlines Group S.A. (the “Company”) is an open stock company registered with the Commission for the Financial Market under No. 306, whose shares are listed in Chile on the Electronic Stock Exchange of Chile - Stock Exchange and the Santiago Stock Exchange. After Chapter 11 filing, the ADR program is no longer trading on NYSE. Since then Latam’s ADR are trading in the United States of America on the OTC (Over-The-Counter) markets.

Its main business is the air transport of passengers and cargo, both in the domestic markets of Chile, Peru, Colombia, Ecuador and Brazil, as well as in a series of regional and international routes in America, Europe and Oceania. These businesses are developed directly or by its subsidiaries in Ecuador, Peru, Brazil, Colombia, Argentine and Paraguay. In addition, the Company has subsidiaries that operate in the cargo business in Chile, Brazil and Colombia.

The Company is located in Chile, in the city of Santiago, on Avenida Américo Vespucio Sur No. 901, Renca commune.

As of December 31, 2020, the Company’s statutory capital is represented by 604,407,693 ordinary shares without nominal value. All shares are subscribed and paid considering the capital reduction that occurred in full, after the legal period of three years to subscribe the balance of 466.382 outstanding shares, of the last capital increase approved in August of the year 2016.

The major shareholders of the Company are Delta Air Lines who owns 20% of the shares and the Cueto Group, which through the companies Costa Verde Aeronáutica S.A., Costa Verde Aeronáutica SpA, and Inv. Costa Verde Ltda y Cia at CPA., owns 16.39% of the shares issued by the Company.

As of December 31, 2020, the Company had a total of 4,131 shareholders in its registry. At that date, approximately 8.75% of the Company’s property was in the form of ADRs.

For the year ended December 31, 2020, the Company had an average of 35,717 employees, ending this year with a total number of 29,115 people, distributed in 4,477 Administration employees, 15,664 in Operations, 5,918 Cabin Crew and 3,056 Command crew.

The main subsidiaries included in these consolidated financial statements are as follows:

a) Participation rate

		Country	Functional	As December 31, 2020						As December 31, 2019						As December 31, 2018
Tax No.	Company	of origin	Currency	Direct		Indirect		Total		Direct		Indirect		Total		Direct		Indirect		Total
				%		%		%		%		%		%		%		%		%
96.518.860-6	Latam Travel Chile S.A. and Subsidiary	Chile	US$		-		-		-		-		-		-		99.9900		0.0100		100.0000
96.969.680-0	Lan Pax Group S.A. and Subsidiaries	Chile	US$		99.8361		0.1639		100.0000		99.8361		0.1639		100.0000		99.8361		0.1639		100.0000
Foreign	Latam Airlines Perú S.A.	Peru	US$		23.6200		76.1900		99.8100		49.0000		21.0000		70.0000		49.0000		21.0000		70.0000
93.383.000-4	Lan Cargo S.A.	Chile	US$		99.8940		0.0041		99.8981		99.8940		0.0041		99.8981		99.8940		0.0041		99.8981
Foreign	Connecta Corporation	U.S.A.	US$		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Prime Airport Services Inc. and Subsidiary	U.S.A.	US$		99.9714		0.0286		100.0000		99.9714		0.0286		100.0000		0.0000		100.0000		100.0000
96.951.280-7	Transporte Aéreo S.A.	Chile	US$		0.0000		100.0000		100.0000		99.9999		0.0001		100.0000		0.0000		100.0000		100.0000
96.631.520-2	Fast Air Almacenes de Carga S.A.	Chile	CLP		99.8900		0.1100		100.0000		99.8900		0.1100		100.0000		0.0000		100.0000		100.0000
Foreign	Laser Cargo S.R.L.	Argentina	ARS		96.2208		3.2208		99.4416		96.2208		3.7792		100.0000		0.0000		100.0000		100.0000
Foreign	Lan Cargo Overseas Limited and Subsidiaries	Bahamas	US$		99.9800		0.0200		100.0000		99.9800		0.0200		100.0000		0.0000		100.0000		100.0000
96.969.690-8	Lan Cargo Inversiones S.A. and Subsidiary	Chile	US$		99.0000		1.0000		100.0000		99.0000		1.0000		100.0000		0.0000		100.0000		100.0000
96.575.810-0	Inversiones Lan S.A. and Subsidiaries	Chile	US$		99.7100		0.2900		100.0000		99.7100		0.2900		100.0000		99.7100		0.2900		100.0000
96.847.880-K	Technical Trainning LATAM S.A.	Chile	CLP		99.8300		0.1700		100.0000		99.8300		0.1700		100.0000		99.8300		0.1700		100.0000
Foreign	Latam Finance Limited	Cayman Island	US$		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000
Foreign	Peuco Finance Limited	Cayman Island	US$		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000
Foreign	Profesional Airline Services INC.	U.S.A.	US$		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000		0.0000		100.0000
Foreign	Jarletul S.A.	Uruguay	US$		99.0000		1.0000		100.0000		99.0000		1.0000		100.0000		99.0000		1.0000		100.0000
Foreign	TAM S.A. and Subsidiaries (*)	Brazil	BRL		63.0901		36.9099		100.0000		63.0901		36.9099		100.0000		63.0901		36.9099		100.0000

(*)

As of December 31, 2020, the indirect participation percentage on TAM S.A. and Subsidiaries is from Holdco I S.A., a company over which LATAM Airlines Group S.A. it has a 99.9983% share on economic rights and 51.04% of political rights. Its percentage arise as a result of the provisional measure No. 863 of the Brazilian government implemented in December 2018 that allows foreign capital to have up to 100% of the property.

b) Financial Information

		Statement of financial position																							Net Income
																									For the year ended December 31,
		As of December 31, 2020								As of December 31, 2019								As of December 31, 2018							2020			2019			2018
Tax No.	Company	Assets			Liabilities		Equity			Assets			Liabilities		Equity			Assets		Liabilities		Equity			Gain/(loss)
		ThUS$			ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$
96.518.860-6	Latam Travel Chile S.A. and Subsidiary		-			-		-			-			-		-			10,841		3,909		6,932			-			-			2,385
96.969.680-0	Lan Pax Group S.A. and Subsidiaries (*)		404,944			1,624,944		(1,219,539	)		632,673			1,487,248		(853,624	)		526,017		1,281,800		(751,960	)		(290,980	)		(26,551	)		(48,061	)
Foreign	Latam Airlines Perú S.A.		661,721			486,098		175,623			519,363			510,672		8,691			419,325		409,221		10,104			(175,485	)		(3,550	)		5,416
93.383.000-4	Lan Cargo S.A.		749,789			567,128		182,661			634,852			462,666		172,186			513,367		336,715		176,652			10,936			(4,157	)		(34,322	)
Foreign	Connecta Corporation		57,922			17,335		40,587			64,110			24,023		40,087			66,593		28,183		38,410			500			1,677			16,923
Foreign	Prime Airport Services Inc. and Subsidiary (*)		25,050			26,265		(1,215	)		22,068			23,102		(1,034	)		15,817		17,654		(1,837	)		(181	)		802			1,225
96.951.280-7	Transporte Aéreo S.A.		546,216			347,714		198,502			359,335			142,423		216,912			331,496		129,233		202,263			(39,032	)		14,610			(17,609	)
96.631.520-2	Fast Air Almacenes de Carga S.A.		20,132			11,576		8,556			20,182			12,601		7,581			17,057		9,614		7,443			500			796			(3	)
Foreign	Laser Cargo S.R.L.		(6	)		-		(6	)		(10	)		-		(10	)		26		13		13			-			-			(3	)
Foreign	Lan Cargo Overseas Limited and Subsidiaries (*)		218,435			14,355		203,829			48,929			15,228		33,450			53,326		13,040		40,028			(92,623	)		(6,579	)		19,121
96.969.690-8	Lan Cargo Inversiones S.A. and Subsidiary (*)		250,027			86,691		130,823			65,422			78,890		(12,111	)		181,522		192,059		(9,614	)		1,452			(2,497	)		497
96.575.810-0	Inversiones Lan S.A. and Subsidiaries (*)		1,394			65		1,329			1,329			50		1,279			1,383		50		1,333			50			(54	)		(4,774	)
96.847.880-K	Technical Trainning LATAM S.A.		2,181			625		1,556			2,378			1,075		1,303			2,879		1,031		1,848			60			(282	)		884
Foreign	Latam Finance Limited		1,310,735			1,584,311		(273,576	)		1,362,762			1,531,238		(168,476	)		679,034		756,774		(77,740	)		(105,100	)		(90,736	)		(47,723	)
Foreign	Peuco Finance Limited		1,307,721			1,307,721		-			664,458			664,458		-			608,191		608,191		-			-			-			-
Foreign	Profesional Airline Services INC.		17,345			14,772		2,573			3,509			1,950		1,559			2,430		1,967		463			1,014			1,096			197
Foreign	Jarletul S.A.		34			1,076		(1,042	)		150			860		(710	)		18		125		(107	)		(332	)		(603	)		(107	)
Foreign	TAM S.A. and Subsidiaries (*)		3,110,055			3,004,935		105,120			5,090,180			3,550,875		1,539,305			4,420,546		3,256,017		1,164,529			(1,025,814	)		186,140			389,072

(*) The Equity reported corresponds to Equity attributable to owners of the parent, it does not include Non-controlling interest.

In addition, special purpose entities have been consolidated: 1. Chercán Leasing Limited, intended to finance advance payments of aircraft; 2. Guanay Finance Limited, intended for the issue of a securitized bond with future credit card payments; 3. Private investment funds; 4. Dia Patagonia Limited, Alma Leasing C.O. Limited, FC Initial Leasing Limited, Vari Leasing Limited, Dia Iguazu Limited, Condor Leasing C.O. Limited, FI Timothy Leasing Limited, Yamasa Sangyo Aircraft LA1 Kumiai, Yamasa Sangyo Aircraft LA2 Kumiai, LS-Aviation No.17 Co. Limited, LS-Aviation No.18 Co. Limited, LS-Aviation No.19 C.O. Limited, LS-Aviation No.20 C.O. Limited, LS-Aviation No.21 C.O. Limited, LS-Aviation No.22 C.O. Limited, LS-Aviation No.23 Co. Limited, and LS-Aviation No.24 Co. Limited, requirements for financing aircraft. These companies have been consolidated as required by IFRS 10.

All entities over which Latam has control have been included in the consolidation. The Company has analyzed the control criteria in accordance with the requirements of IFRS 10. For those subsidiaries that filed for bankruptcy under Chapter 11 (See note 2 to the consolidated financial statements), although in this reorganization process in certain cases decisions are subject to authorization by the Court, considering that the Company and various subsidiaries filed for bankruptcy before the same Court, and before the same judge, the Court generally views the consolidated entity as a single group and management considers that the Company continues to maintain control over its subsidiaries and therefore have considered appropriate to continue to consolidate these subsidiaries.

Changes occurred in the consolidation perimeter between January 1, 2019 and December 31, 2020, are detailed below:

(1)

Incorporation or acquisition of companies

On December 22, 2020, Línea Aérea Carguera de Colombia S.A. carries out a capital increase for 1,861,785 shares, consequently, its shareholding composition is as follows: LATAM Airlines Group S.A. with 4.57%, Fast Air S.A. with 1.53%, Inversiones Lan S.A. with 1.53%, Lan Pax Group S.A. with 1.53% and Lan Cargo Inversiones S.A. 81.31%.

On December 22, 2020, Inversiones Aéreas S.A. carries out a capital increase for 9,504,335 shares, consequently its shareholding composition as follows: LATAM Airlines Group S.A. with 33.41%, Línea Aérea Carguera de Colombia S.A. with 66.43% and Mas Investment Limited with 0.16%.

On December 22, 2020, Latam Airlines Perú S.A. carries out a capital increase for 12,312,020 shares, consequently its shareholding composition as follows: LATAM Airlines Group S.A. with 23.62% and Inversiones Aéreas S.A. with 76.19%.

On December 16, 2020, Lan Pax Group S.A. carries out capital increase for 23,678 shares. However, the shareholding composition has not changed.

On December 18, 2020, Latam Ecuador S.A. carries out a capital increase for 30,000,000 shares. However, the shareholding composition is not modified.

On March 23, 2020, Transporte Aéreo S.A. carries out a capital increase for 109,662 shares which were acquired by Mas Investment Limited, consequently, the shareholding of Transporte Aéreo S.A. is as follows: Lan Cargo S.A. with 87.12567%, Inversiones Lan S.A. with 0.00012% and Mas Investment Limited with 12.87421%.

In April 2019, TAM Linhas Aereas S.A, through a public offering of shares, acquired 27.26% of the shares of Multiplus S.A., owned by minority shareholders. Subsequently, the Company TAM S.A assigned 72,74% of its stake in Multiplus S.A., through a capital increase, to TAM Linhas Aerea S.A.; Because of 100% of the shares remain under the control of TAM Linhas Aereas S.A. a merge with Multiplus S.A. was materialized, leaving Multiplus S.A. from being an independent company on May 31, 2019. As result of the merger by incorporation, the Coalition and Loyalty Program of Multiplus S.A. which was identified as an independent Cash Generating Unit (CGU), and which also represented an operating segment, becomes part, as well as, the other loyalty programs of the group (LATAM Pass and LATAM Fidelidade), of the CGU Air Transport. Additionally, from that moment LATAM has a single operating segment within the Group.

The value of the acquisition of this transaction was ThUS $ 294,105.

By public deed dated November 20, 2019 LATAM Airlines Group S.A. acquires 100% of the shares of LATAM Travel Chile S.A.

Under the provisions of No. 2 of Art. 103 of Law No. 18,046 on Corporations, for having collected all the shares held by a single shareholder and for having elapsed the period of 10 days without having amended said situation, the company LATAM Travel Chile S.A. It has been fully dissolved on December 1, 2019.

As a result of the dissolution of the company LATAM Travel Chile S.A., the company LATAM Airlines Group S.A. assumes from that date all obligations and rights corresponding to the first.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following describes the principal accounting policies adopted in the preparation of these consolidated financial statements.

2.1. Basis of Preparation

These consolidated financial statements of LATAM Airlines Group S.A. as of December 31, 2020 and 2019 and for the three years ended December 31, 2020 and have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (“IASB”) and with the interpretations issued by the interpretations committee of the International Financial Reporting Standards (IFRIC).

The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments.

The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to use its judgment in applying the Company’s accounting policies. Note 4 shows the areas that imply a greater degree of judgment or complexity or the areas where the assumptions and estimates are significant to the consolidated financial statements.

The consolidated financial statements have been prepared in accordance with the accounting policies used by the Company for the consolidated financial statements 2019, except for the standards and interpretations adopted as of January 1, 2020.

(a) Accounting pronouncements with implementation effective from January 1, 2020:

(i) Standards and amendments	Date of issue	Effective Date:

Amendment to IFRS 3: Business combinations.	October 2018	01/01/2020

Amendment to IAS 1: Presentation of Financial Statements and IAS 8 Accounting policies, changes in accounting estimates and errors.	October 2018	01/01/2020

Amendment to IFRS 9: Financial instruments; IAS 39: Financial Instruments: Recognition and Measurement; and IFRS 7: Financial Instruments: Disclosure	September 2019	01/01/2020

The application of these accounting pronouncements as of January 1, 2020, had no significant effect on the Company’s consolidated financial statements.

(b) Accounting pronouncements not in force for the financial years beginning on January 1, 2020:

(b.1.) Not early adopted:

(i) Standards and amendments	Date of issue	Effective Date:

Amendment to IFRS 9: Financial instruments; IAS 39: Financial Instruments: Recognition and Measurement; IFRS 7: Financial Instruments: Disclosure; IFRS 4: Insurance contracts; and IFRS 16: Leases.	August 2020	01/01/2021

Amendment to IFRS 4: Insurance contracts	June 2020	01/01/2023

Amendment to IFRS 17: Insurance contracts.	June 2020	01/01/2023

Amendment to IFRS 3: Business combinations.	May 2020	01/01/2022

Amendment to IAS 37: Provisions, contingent liabilities and contingent assets.	May 2020	01/01/2022

Amendment to IAS 16: Property, plant and equipment.	May 2020	01/01/2022

Amendment to IAS 1: Presentation of financial statements.	January 2020	01/01/2023

IFRS 17: Insurance contracts	May 2017	01/01/2023

Amendment to IFRS 10: Consolidated financial statements and IAS 28: Investments in associates and joint ventures.	September 2014	Not determined

(ii) Improvements

Improvements to International Information Standards Financial (2018-2020 cycle) IFRS 1: First-time adoption of international financial reporting standards, IFRS 9: Financial Instruments, illustrative examples accompanying IFRS 16: Leases, IAS 41: Agriculture	May 2020	01/01/2022

The Company’s management estimates that the adoption of the standards, amendments and interpretations described above will not have a significant impact on the Company’s consolidated financial statements in the exercise of their first application.

(b.2.) Early adopted standard:

(i) Standards and amendments	Date of issue	Effective Date:

Amendment to IFRS 16: Leases.	May 2020	06/01/2020

(b.3.) Adoption of IFRS 9 Financial Instruments for hedge accounting:

On January 1, 2018, the effective adoption date of IFRS 9 Financial Instruments, the Company established the accounting policy to continue applying IAS 39 Financial Instruments: Recognition and Measurement for hedge accounting. On January 1, 2021, the Company will modify this accounting policy and adopt IFRS 9 in relation to hedge accounting, aligning the requirements for hedge accounting with the Company’s risk management policies.

The Company has evaluated the hedge relationships in force as of December 31, 2020, and has determined that they meet the criteria for hedge accounting under IFRS 9 Financial Instruments as of January 1, 2021 and, consequently, they will be considered relationships continuous coverage.

The time value of the options used as hedging instruments, effective at the closing of these Consolidated Financial Statements, will not continue to be designated as part of the hedging relationship but their recognition will continue in Other Comprehensive Income until the forecast transaction occurs at which time will be recognized in the income statement. As of December 31, 2020, the amount recognized in Equity corresponding to the temporal value of the options is ThUS $ (380).

The hedge accounting requirements of IFRS 9 will be applied prospectively. The Company estimates that the application of this part of the standard will not have significant impact on consolidated financial statements.

The Company is modifying the documentation of the existing hedging relationships as of December 31, 2020 in accordance with the provisions of IFRS 9 Financial Instruments.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As disclosed in the accompanying consolidated financial statements, the Company incurred a net loss attributable to owners of the parent of US$ 4,546 million for the year ended December 31, 2020. As of that date, the Company has a negative working capital of US$ 4,348 million and will require additional working capital during 2021 to support a sustainable business operation. As of December 31, 2020, the company has negative equity of US$ 2,436 million, which corresponds to the attributable equity to the owners of the parent.

On May 26, 2020 (the “Initial Petition Date”), LATAM Airlines Group S.A. and certain of its direct and indirect subsidiaries (collectively, the “Initial Debtors”) filed voluntary petitions for reorganization (the “Initial Bankruptcy Filing”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On July 7, 2020 (the “Piquero Petition Date”), Piquero Leasing Limited (“Piquero”) also filed a petition for reorganization with the Bankruptcy Court (the “Piquero Bankruptcy Filing”). On July 9, 2020 (together with the Initial Petition Date and Piquero Petition Date, as applicable, the “Petition Date”), TAM S.A. and certain of its subsidiaries in Brazil (together with the Initial Debtors and Piquero, the “Debtors”) also filed petitions for reorganization (together with the Initial Bankruptcy Filing and the Piquero Bankruptcy Filing, the “Bankruptcy Filing”), as a consequence of the prolonged effects of the COVID-19 Pandemic. The Bankruptcy Filing for each of the Debtors is being jointly administered under the caption “In re LATAM Airlines Group S.A.” Case Number 20-11254. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

The Bankruptcy Filing is intended to permit the Company to reorganize and improve liquidity, wind down unprofitable contracts and amend its capacity purchase agreements to enable sustainable profitability. The Company’s goal is to develop and implement a plan of reorganization that meets the standards for confirmation under the Bankruptcy Code.

As part of their overall reorganization process, the Debtors also have sought and received relief in certain non-U.S. jurisdictions. On May 27, 2020, the Grand Court of the Cayman Islands granted the applications of certain of the Debtors for the appointment of provisional liquidators (“JPLs”) pursuant to section 104(3) of the Companies Law (2020 Revision). On June 4, 2020, the 2nd Civil Court of Santiago, Chile issued an order recognizing the Chapter 11 proceeding with respect to the LATAM Airlines Group S.A., Lan Cargo S.A., Fast Air Almacenes de Carga S.A., Latam Travel Chile II S.A., Lan Cargo Inversiones S.A., Transporte Aéreo S.A., Inversiones Lan S.A., Lan Pax Group S.A. and Technical Training LATAM S.A. All remedies filed against the order have been rejected and the decision is, then, final. Finally, on June 12, 2020, the Superintendence of Companies of Colombia granted recognition to the Chapter 11 proceedings. On July 10, 2020, the Grand Court of the Cayman Islands granted the Debtors’ application for the appointment of JPLs to Piquero Leasing Limited.

Operation and Implication of the Bankruptcy Filing:

The Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As debtors-in-possession, the Debtors are authorized to engage in transactions within the ordinary course of business without prior authorization of the Bankruptcy Court. The protections afforded by the Bankruptcy Code allows the Debtors to operate their business without interruption, and the Bankruptcy Court has granted additional relief including, inter alia, the authority, but not the obligation, to (i) pay amounts owed under certain critical airline agreements; (ii) pay certain third-parties who hold liens or other possessory interests in the Debtors’ property; (iii) pay employee wages and continue employee benefit programs; (iv) pay prepetition taxes and related fees; (v) continue insurance and surety bond programs; (vi) pay certain de minimis litigation judgements or settlements without prior approval of the Bankruptcy Court; (vii) pay fuel supplies; and (viii) pay certain foreign vendors and certain vendors deemed critical to the Debtors’ operations.

As debtors-in-possession, the Debtors may use, sell, or lease property of their estates, subject to the Bankruptcy Court’s approval if not otherwise in the ordinary course of business. The Debtors have not yet prepared or filed with the Bankruptcy Court a plan of reorganization, and, pursuant to section 1121 of the Bankruptcy Code, have the exclusive right to propose such a plan on or before June 30, 2021, or such later date as may be further ordered by the Bankruptcy Court. The ultimate plan of reorganization, which can only be adopted after meeting all requirements set forth in sections 1126 and 1129 of the Bankruptcy Code and subject to approval by the Bankruptcy Court, could materially change the amounts and classifications in the consolidated financial statements, including the value, if any, of the Debtors’ prepetition liabilities and securities.

Events Leading to the Chapter 11 Cases:

Since the first quarter of 2020, the passenger air transportation business has been affected worldwide by a significant decrease in international air traffic, due to the closure of international borders with the aim of protecting the population from the effects of COVID-19, an infectious disease caused by a new virus, declared a pandemic by the World Health Organization.

LATAM’s preliminary assessment in the beginning of March 2020 indicated previous disease outbreaks have peaked after few months and recovered pre-outbreak levels in no more than 6 to 7 months, and the effect with scenery impacting mainly on Asia Pacific Airlines, indicating impact on Latin America of a marginal decrease of Revenue Per Kilometers forecast.

For the Company, the reduction in its operation began in the middle of March 2020 with the announcement of a 30% decrease in its operations and the suspension of the guidance for 2020 in line with protection measures and boarding restrictions implemented by local governments (March 16, 2020 for Peru, Colombia and Argentina, March 18, 2020 for Chile and March 27, 2020 for Brazil). On March 16, 2020, the Company announced an update of its projection to a progressive decrease in its operation up to 70%.

By March 29, 2020, COVID 19 had already generated an unprecedented shock on Airlines Industry, specifically on airlines passenger revenue. The situation has both broadened and deepened beyond the initial assessment.

In response to COVID 19, governments have been imposing much more severe border restrictions and airlines have been subsequently announcing sharp capacity cuts in response to a dramatic drop in travel demand. On April 2, 2020, the Company announced a decrease in its operation by 95%.

The Company’s passenger traffic for the year ended December 31, 2020, decreased by 65,8% compared to the year 2019.

In order to protect liquidity, the Company has carried out financial transactions, such as the use of funds from the Revolving Credit Facility (Revolving Credit Facility) for US $ 600 million, which have affected its financial assets and liabilities, especially the items of Cash and cash equivalents and other financial liabilities.

In the second quarter of 2020, the Company estimated that reactivation of its operations would occur during the third and fourth quarters of 2020. At this time there is an approximately 30% increase in the Company’s operations, however, the exact moment and pace of the full recovery are uncertain, given the significant impact of the pandemic on the countries in which it operates.

Among the initiatives that the Company studied and committed to protect liquidity were the following:

(i)	Reduction and postponement of the investment plan for different projects;

(ii)	Implementation of control measurements for payments to suppliers and purchases of new goods and services;

(iii)	Negotiation of the payment conditions with suppliers;

(iv)	Ticket refunds via travel vouchers and Frequent Flyer Program points and miles; all in all, the LATAM Group will continue to honor all current and future tickets, as well as travel vouchers, frequent flyer miles and benefits, and flexibility policies;

(v)

Temporary reduction of salaries, considering the legal framework of each country: as of the second quarter, the Company implemented a voluntary process to reduce salaries in force until December 31, 2020. Associated with the restructuring plan and in order to adapt to the new demand scenario, the company has designed a staff reduction plan in the different countries where it operates. The costs associated with the execution of this plan were recorded in income as Restructuring activities expenses. (See note 27d);

(vi)	Short-term debt and debt maturities renewal;

(vii)

Governmental loan request in different countries in which the company operates; and Reduction of non-essential fleet and non-fleet investments.

The Company, in consultation with its advisors, also evaluated a variety of potential restructuring options. In the opinion of the Board, the timings for a conventional bilateral process, the possibility that creditors may have decided to engage in collection actions, the impossibility of curing defaults and the need to implement a comprehensive restructuring of LATAM Airlines to which all its creditors and other interested parties must join, lead the Board to consider an in-court bankruptcy proceedings the best alternative.

In addition, the Board noted that other benefits of an in-court bankruptcy proceeding, including the imposition of the Bankruptcy Code’s “automatic stay,” which protects the Company from efforts by creditors and other interested parties to take action in respect of pre-bankruptcy debt, but which, at the same time, allows it to continue operating with its main assets, suppliers, financial parties, regulators and employees, while structuring a binding reorganization to be financially viable in a post-pandemic scenario.

Due to the foregoing, and after consulting the administration and the legal and financial advisors of the Company, on May 26, 2020 the Board has resolved unanimously that LATAM Airlines should initiate a reorganization process in the United States of America according to the rules established in the Bankruptcy Code by filing a voluntary petition for relief in accordance with the same.

Since the Chapter 11 filing, the Company secured up to US$ 2.45 billion in a debtor-in-possession financing facility (the “DIP Facility”) (See Note 3.1 c)).

Plan of Reorganization:

In order for the Company to emerge successfully from Chapter 11, the Company must obtain the Bankruptcy Court’s approval of a plan of reorganization, which will enable the Company to transition from Chapter 11 into ordinary course operations outside of bankruptcy. In connection with a plan of reorganization, the Company also may require a new credit facility, or “exit financing.” The Company’s ability to obtain such approval and financing will depend on, among other things, the timing and outcome of various ongoing matters related to the Bankruptcy Filing. A plan of reorganization determines the rights and satisfaction of claims of various creditors and parties-in-interest, and is subject to the ultimate outcome of negotiations and Bankruptcy Court decisions ongoing through the date on which the plan of reorganization is confirmed. On October 1, 2020, the Court entered an order extending the period by which the Debtors have the exclusive right to submit a plan of reorganization through and including January 29, 2021; on January 12, 2021, the Company requested a further extension until June 30, 2021. There is no guarantee that the Company will be able to obtain approval of the proposed reorganization plan from the Bankruptcy Court.

The Company presently expects that any proposed plan of reorganization will provide, among other things, mechanisms for settlement of claims against the Debtors’ estates, treatment of the Company’s existing equity and debt holders, and certain corporate governance and administrative matters pertaining to the reorganized Company. Any proposed plan of reorganization will be subject to revision prior to submission to the Bankruptcy Court based upon discussions with the Company’s creditors and other interested parties, and thereafter in response to interested parties’ objections and the requirements of the Bankruptcy Code and Bankruptcy Court. There can be no assurance that the Company will be able to secure approval for the Company’s proposed plan of reorganization from the Bankruptcy Court.

Going Concern:

These Consolidated Financial Statements have also been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, the Consolidated Financial Statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Debtors be unable to continue as a going concern.

As a result of the Chapter 11 proceedings, the satisfaction of the Company’s liabilities and funding of ongoing operations are subject to uncertainty as a product of the COVID-19 pandemic and the impossibility of knowing its duration at this date and, accordingly, there is a substantial doubt regarding the Company’s ability to continue as a going concern. There is no assurance that the Company will be able to emerge successfully from Chapter 11. Additionally, there is no assurance that long-term funding would be available at rates and on terms and conditions that would be financially acceptable and viable to the Company in the long term. If the Company is unable to generate additional working capital or raise additional financing when needed, it may not able to reinitiate currently suspended operations as a result of the COVID-19 pandemic, sell assets or enter into a merger or other combination with a third party, any of which could adversely affect the value of the Company’s common stock, or render it worthless. If the Company issues additional debt or equity securities, such securities may enjoy rights, privileges and priorities superior to those enjoyed by holders of the Company’s common stock, thereby diluting the value of the Company’s common stock. Additionally, in connection with the Chapter 11 Filing, material modifications could be made to the Company’s fleet and capacity purchase agreements. These modifications could materially affect the Company’s financial results going forward, and could result in future impairment charges.

Chapter 11 Milestones

Notice to Creditors - Effect of the Automatic Stay:

The Debtors have notified all known current or potential creditors that the Chapter 11 Cases were filed. Pursuant to the Bankruptcy Code and subject to certain limited exceptions, the filing of the Chapter 11 Cases gave rise to an automatic, worldwide injunction that precludes, among other things, any act to (i) obtain possession of property of or from the Debtors’ estates, (ii) create, perfect, or enforce any lien against property of the Debtors’ estates; (iii) exercise control over property of the Debtors’ estate, wherever in the world that property may be located; and further enjoined or stayed (iv) and also ordered or suspended the commencement or continuation of any judicial, administrative, or other action or proceeding against the debtor that could have been commenced before the Petition Date or efforts to recover a claim against the Debtors that arose before the Petition Date. Vendors are being paid for goods furnished and services provided postpetition in the ordinary course of business.

On August 31, 2020 (the “First Stay Motion”), and December 30, 2020 (the “Second Stay Motion”), Corporación Nacional de Consumidores y Usuarios de Chile (“CONADECUS”) filed two motions in the Bankruptcy Court seeking relief from the automatic stay in order prosecute certain actions against LATAM that are currently pending before the courts of Chile. LATAM filed a brief in opposition to the First Stay Motion, and on December 16, 2020, the Bankruptcy Court heard oral arguments on the First Stay Motion. At that hearing, the Bankruptcy Court granted the First Stay Motion for the limited purpose of allowing CONADECUS to further prosecute its pending appeal before the courts of Chile. On February 9, 2021, the Bankruptcy Court granted the Second Stay Motion on the same narrow grounds as the First Stay Motion. The Bankruptcy Court’s decisions on the First Stay Motion and Second Stay Motion did not affect the underlying proceedings in Chile beyond allowing CONADECUS to continue its pending appeals.

Appointment of the Creditors’ Committee:

On June 5, 2020, the United States Trustee for Region 2 appointed an official committee of unsecured creditors (the “Creditors’ Committee”) in the Initial Chapter 11 Cases. The United States Trustee has not solicited additional members for the Creditors’ Committee as a result of TAM S.A. or any of its applicable subsidiaries joining the Bankruptcy Filing. On June 12, 2020, one of the Creditors’ Committee’s members, Compañía de Seguros de Vida Consorcio Nactional de Seguros S.A. resigned from the Creditors’ Committee. No trustee or examiner has been appointed in any of these Chapter 11 Cases. No other official committee have been solicited or appointed.

Assumption & Rejection of Executory Contracts:

Pursuant to the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), the Debtors are authorized to assume, assign or reject certain executory contracts and unexpired leases. Absent certain exceptions, the Debtors’ rejection of an executory contract or an unexpired lease is generally treated as prepetition breach, which entitles the contract counterparty to file a general unsecured claim against the Debtors and simultaneously relives the Debtors from their future obligations under the contract or lease. Further, the Debtors’ assumption of an executory contract or unexpired lease would generally require the Debtors to satisfy certain prepetition amounts due and owning under such contract or lease.

On June 28, 2020, the Bankruptcy Court authorized the Debtors to establish procedures for the rejection of certain executory contracts and unexpired leases. In accordance with these rejection procedures, the Bankruptcy Code and the Bankruptcy Rules the Debtors have or will reject certain contracts and leases (see note 17, 19 and 27). Relatedly, the Bankruptcy Court approved the Debtors’ request to extend the date by which the Debtors may assume or reject unexpired non-residential, real property leases until December 22, 2020. Following consent of certain lessors to further extend the deadline in order to finalize productive negotiations, the Debtors have moved to assume multiple airport leases at Miami-Dade, LAX and JFK related to the Debtors’ passenger and cargo businesses.

Further, the Debtors have or will file motions to reject certain aircraft and engine leases:

Bankruptcy Court approval date:		Asset rejected:
June 8, 2020		(i) 1 Boeing 767
June 24, 2020		(i) 16 Airbus A320-family aircraft; (ii) 2 Airbus A350 aircraft; and (iii) 4 Boeing 787-9
June 28, 2020		(i) 2 Engine model V2527-A5; and (ii) 2 Engine model CFM56-5B4/3
July 29, 2020		(i) 1 Engine model CFM56-5B3/3
August 19, 2020		(i) 1 Boeing 767
October 26, 2020		(i) 3 Airbus A320-family aircraft
October 28, 2020		(i) 1 Airbus A319
November 5, 2020		(i) 1 A320-family aircraft

As of December 31, 2020, and as a result of these contract rejections, obligations with the lenders and lessors were extinguish and also the Company lost control over the related assets, which led to the derecognition of the assets and the liabilities associated with these aircraft. See note 17, 19 and 27. All accounting effects were recorded during the year ended December 31, 2020 as Restructuring activities expenses.

On November 23, 2020, the Bankruptcy Court also entered order authorizing the Debtors to assume key commercial agreements with Delta Air Lines, Inc. Relatedly, the Debtors have or will file motions to enter into certain aircraft lease amendment agreements which have the effect of, among other things, reducing the Debtors’ rental payment obligations. On December 31, 2020, the Bankruptcy Court entered an order authorizing the Debtors to enter into a lease amendment agreement with Vermillion Aviation (Two) Limited. The agreement requires the Debtors to assume the amended lease through a plan of reorganization, with certain limited exceptions.

Statements and Schedules:

On September 8, 2020, the Debtors filed with the Bankruptcy Court schedules and statements of financial affairs setting forth, among other things, the assets and liabilities of the Debtors (the “Statements and Schedules”). The Statements and Schedules are prepared according to the requirements of applicable bankruptcy law and are subject to further amendment or modification by the Debtors, for example: “Monthly Operating Report” (MOR). The Company on a monthly basis makes the presentation of these schedules and statements.

Although the Debtors believe that these materials provide the information required under the Bankruptcy Code or orders of the Bankruptcy Court, they are nonetheless unaudited and prepared in a format different from the consolidated financial reports historically prepared by LATAM in accordance with IFRS (International Financial Reporting Standards). Certain of the information contained in the Statements and Schedules may be prepared on an unconsolidated basis. Accordingly, the Debtors believe that the substance and format of these materials do not allow meaningful comparison with their regularly publicly-disclosed consolidated financial statements. Moreover, the materials filed with the Bankruptcy Court are not prepared for the purpose of providing a basis for an investment decision relating to the Debtors’ securities, or claims against the Debtors, or for comparison with other financial information required to be reported under applicable securities law.

Intercompany and Affiliate Transactions:

The Debtors are authorized to continue performing certain postpetition intercompany and affiliate transactions in the ordinary course of business, including transactions with non-debtor affiliates, and to honor obligations in connection with such transactions; provided, however, the Debtors shall not make any cash payments on account of prepetition transactions with affiliates absent permission from the Bankruptcy Court, including any repayments on any prepetition loans to non-debtor affiliates pursuant to any such transactions. Out of an abundance of caution, the Debtors have also sought and received Bankruptcy Court approval to contribute capital, capitalize intercompany debt and issue shares between certain debtor affiliates.

Debtor in Possession Financing

On September 19, 2020, the Bankruptcy Court entered an order authorizing the Debtors to obtain postpetition “debtor-in-possession financing” in the form of a multi-draw term loan facility in an aggregate principal amount of up to US$2.45 billion (See note 3.1 c)).

Establishment of Bar Dates.

On September 24, 2020, the Bankruptcy Court entered an order (the “Bar Date Order”) establishing December 18, 2020, as the general deadline (the “General Bar Date”) by which persons or entities who believe they hold any claims against any Debtor that arose prior to the Petition Date, as applicable to each Debtor, must have submitted written documentation of such claims (a “Proof of Claim”). The General Bar Date was not applicable to governmental units, which must have submitted Proofs of Claims by January 5, 2021 (the “Governmental Bar Date”). Finally, as more fully described in the Bar Date Order, claims with respect to rejected contracts or unexpired leases may be subject to a deadline later than the General Bar Date (the “Rejection Bar Date” and, together with the General Bar Date and the Governmental Bar Date, the “Bar Dates’). Any person or entity that fails to timely file its Proof of Claim by the applicable Bar Date will be forever barred from asserting their claim and will not receive any distributions made as part of the ultimate plan of reorganization. Notice of the Bar Dates, as well as instructions on how to file Proof of Claims, were sent to all known creditors and published in various newspapers in the United States and South America.

On December 17, 2020, the Court entered an order establishing a supplemental bar date of February 5, 2021 (the “Supplemental Bar Date”), for certain non-U.S. claimants not otherwise subject to the General Bar Date. The Supplemental Bar Date applies only to those entities and individuals specifically identified in the court order. Any person or entity that fails to timely file its Proof of Claim by the Supplemental Bar Date will be forever barred from asserting their claim and will not receive any distributions made as part of the ultimate plan of reorganization.

Following the close of the General Bar Date and the Supplemental Bar Date, the Debtors have continued the process of reconciling approximately 6,000 submitted claims and have developed procedures to streamline the claims process. The Company has already filed objections to a number of claims and anticipates continuing to do so in the coming months. Although many objections have been entered on an omnibus basis, some claims disputes will likely require individualized adjudication by the Bankruptcy Court. Further, the Company has also filed a motion requesting approval of alternative dispute resolution procedures to resolves certain claims disputes outside of the Bankruptcy Court. Given the need to reconcile claims against the Company’s books and records and to resolve claims disputes both in and outside of the Bankruptcy Court, the Company is not yet able to make a reliable estimate of the final claims pool, both in terms of the final number of claims and the value of such claims.

2.2. Basis of Consolidation

(a) Subsidiaries

Subsidiaries are all the entities (including special-purpose entities) over which the Company has the power to control the financial and operating policies, which are generally accompanied by a holding of more than half of the voting rights. In evaluating whether the Company controls another entity, the existence and effect of potential voting rights that are currently exercisable or convertible at the date of the consolidated financial statements are considered. The subsidiaries are consolidated from the date on which control is passed to the Company and they are excluded from the consolidation on the date they cease to be so controlled. The results and flows are incorporated from the date of acquisition.

Balances, transactions and unrealized gains on transactions between the Company’s entities are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment loss of the asset transferred. When necessary in order to ensure uniformity with the policies adopted by the Company, the accounting policies of the subsidiaries are modified.

To account for and identify the financial information revealed when carrying out a business combination, such as the acquisition of an entity by the Company, is apply the acquisition method provided for in IFRS 3: Business combination.

(b) Transactions with non-controlling interests

The Group applies the policy of considering transactions with non-controlling interests, when not related to loss of control, as equity transactions without an effect on income.

When a subsidiary is sold and a percentage of participation is not retained, the Company derecognizes assets and liabilities of the subsidiary, the non-controlling and other components of equity related to the subsidiary. Any gain or loss resulting from the loss of control is recognized in the consolidated income statement in Other gains (losses).

If LATAM Airlines Group S.A. and Subsidiaries retain an ownership of participation in the sold subsidiary, and does not represent control, this is recognized at fair value on the date that control is lost, the amounts previously recognized in Other comprehensive income are accounted as if the Company had disposed directly from the assets and related liabilities, which can cause these amounts are reclassified to profit or loss. The percentage retained valued at fair value is subsequently accounted using the equity method.

(d) Investees or associates

Investees or associates are all entities over which LATAM Airlines Group S.A. and Subsidiaries have significant influence but have no control. This usually arises from holding between 20% and 50% of the voting rights. Investments in associates are booked using the equity method and are initially recognized at their cost.

2.3. Foreign currency transactions

(a) Presentation and functional currencies

The items included in the financial statements of each of the entities of LATAM Airlines Group S.A. and Subsidiaries are valued using the currency of the main economic environment in which the entity operates (the functional currency). The functional currency of LATAM Airlines Group S.A. is the United States dollar which is also the presentation currency of the consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.

(b) Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange rates on the transaction dates. Foreign currency gains and losses resulting from the liquidation of these transactions and from the translation at the closing exchange rates of the monetary assets and liabilities denominated in foreign currency are shown in the consolidated statement of income by function except when deferred in Other comprehensive income as qualifying cash flow hedges.

After July 1, 2018, the Argentine economy was considered, for purposes of IFRS, hyperinflationary. The financial statements of the subsidiaries whose functional currency is the Argentine Peso have been restated.

The non-monetary items of the statement of financial position as well as the income statement, comprehensive incomes and cash flows of the group’s entities, whose functional currency corresponds to a hyperinflationary economy, are adjusted for inflation and re-expressed in accordance with the variation of the consumer price index (“CPI”), at each presentation date of its financial statements. The re-expression of non-monetary items is made from the date of initial recognition in the statements of financial position and considering that the financial statements are prepared under the historical cost criterion.

Net losses or gains arising from the re-expression of non-monetary items and income and costs are recognized in the consolidated income statement under “Result of indexation units”.

Net gains and losses on the re-expression of opening balances due to the initial application of IAS 29 are recognized in the consolidated retained earnings.

Re-expression due to hyperinflation will be recorded until the period or exercise in which the economy of the entity ceases to be considered as a hyperinflationary economy, at that time, the adjustments made by hyperinflation will be part of the cost of non-monetary assets and liabilities.

The comparative amounts in the Consolidated financial statements of the Company are presented in a stable currency and are not adjusted for subsequent changes in the price level or exchange rates.

(d) Group entities

The results and the financial situation of the Group’s entities, whose functional currency is different from the presentation currency of the consolidated financial statements, of LATAM Airlines Group S.A., which does not correspond to the currency of a hyperinflationary economy, are converted into the currency of presentation as follows:

(i) Assets and liabilities of each consolidated statement of financial position presented are translated at the closing exchange rate on the consolidated statement of financial position date;

(ii) The revenues and expenses of each income statement account are translated at the exchange rates prevailing on the transaction dates, and

(iii) All the resultant exchange differences by conversion are shown as a separate component in other comprehensive income, within “Gain (losses) from exchange rate difference, before tax”.

For those subsidiaries of the group whose functional currency is different from the presentation currency and, moreover, corresponds to the currency of a hyperinflationary economy; its restated results, cash flow and financial situation are converted to the presentation currency at the closing exchange rate on the date of the consolidated financial statements.

The exchange rates used correspond to those fixed in the country where the subsidiary is located, whose functional currency is different to the U.S. dollar.

Adjustments to the Goodwill and fair value arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate or period informed, restated when the currency came from the functional entity of the foreign entity corresponds to that of a hyperinflationary economy, the adjustments for the restatement of goodwill are recognized in the consolidated equity.

2.4. Property, plant and equipment

The land of LATAM Airlines Group S.A. and Subsidiaries, are recognized at cost less any accumulated impairment loss. The rest of the Properties, plants and equipment are recorded, both in their initial recognition and in their subsequent measurement, at their historical cost, restated for inflation when appropriate, less the corresponding depreciation and any loss due to deterioration.

The amounts of advances paid to the aircraft manufacturers are activated by the Company under Construction in progress until they are received.

Subsequent costs (replacement of components, improvements, extensions, etc.) are included in the value of the initial asset or are recognized as a separate asset, only when it is probable that the future economic benefits associated with the elements of property, plant and equipment, they will flow to the Company and the cost of the item can be determined reliably. The value of the replaced component is written off. The rest of the repairs and maintenance are charged to the result of the year in which they are incurred.

The depreciation of the properties, plants and equipment is calculated using the linear method over their estimated technical useful lives; except in the case of certain technical components which are depreciated on the basis of cycles and hours flown. This charge is recognized in the captions “Cost of sale” and “Administrative expenses”.

The residual value and the useful life of the assets are reviewed and adjusted, if necessary, once a year.

When the value of an asset exceeds its estimated recoverable amount, its value is immediately reduced to its recoverable amount.

Losses and gains from the sale of property, plant and equipment are calculated by comparing the consideration with the book value and are included in the consolidated statement of income.

2.5. Intangible assets other than goodwill

(a) Airport slots and Loyalty program

Airport slots and the Loyalty program correspond to intangible assets with indefinite useful lives and are annually tested for impairment as an integral part of the CGU Air Transport.

Airport Slots correspond to an administrative authorization to carry out operations of arrival and departure of aircraft, at a specific airport, within a certain period of time.

The Loyalty program corresponds to the system of accumulation and exchange of points that is part of TAM Linhas Aereas S.A.

The airport slots and Loyalty program were recognized at fair value under IFRS 3, as a consequence of the business combination with TAM S.A. and Subsidiaries.

(b) Computer software

Licenses for computer software acquired are capitalized on the basis of the costs incurred in acquiring them and preparing them for using the specific software. These costs are amortized over their estimated useful lives, for which the Company has been defined useful lives between 3 and 10 years.

Expenses related to the development or maintenance of computer software which do not qualify for capitalization, are shown as an expense when incurred. The personnel costs and others cost directly related to the production of unique and identifiable computer software controlled by the Company, are shown as intangible Assets others than Goodwill when they have met all the criteria for capitalization.

The Brands were acquired in the business combination with TAM S.A. and Subsidiaries and, recognized at fair value under IFRS 3. The Company has defined a useful life of five years, period in which the value of the brands will be amortized.

2.6. Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the Company’s participation in the net identifiable assets of the subsidiary or associate on the acquisition date. Goodwill related to acquisition of subsidiaries is not amortized but tested for impairment annually or each time that there is evidence of impairment. Gains and losses on the sale of an entity include the book amount of the goodwill related to the entity sold.

2.7. Borrowing costs

Interest costs incurred for the construction of any qualified asset are capitalized over the time necessary for completing and preparing the asset for its intended use. Other interest costs are recognized in the consolidated statement of income when accrued.

2.8. Losses for impairment of non-financial assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Assets subject to amortization are tested for impairment losses whenever any event or change in circumstances indicates that the carrying amount may not be recoverable. An impairment loss is recognized for the excess of the carrying amount of the asset over its recoverable amount. The recoverable amount is the fair value of an asset less the costs for sale or the value in use, whichever is greater. For the purpose of evaluating impairment losses, assets are grouped at the lowest level for which there are largely independent cash inflows (cash generating unit. Non-financial assets, other than goodwill, that would have suffered an impairment loss are reviewed if there are indicators of reversal of losses. Impairment losses are recognized in the consolidated statement of income under “Other gains (losses)”.

2.9. Financial assets

The Company classifies its financial assets in the following categories: at fair value (either through other comprehensive income, or through gains or losses), and at amortized cost. The classification depends on the business model of the entity to manage the financial assets and the contractual terms of the cash flows.

The group reclassifies debt investments when, and only when, it changes its business model to manage those assets.

In the initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset classified at amortized cost, the transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets accounted for at fair value through profit or loss are recorded as expenses in the income statement.

(a) Debt instruments

The subsequent measurement of debt instruments depends on the group’s business model to manage the asset and cash flow characteristics of the asset. The Company has two measurement categories in which the group classifies its debt instruments:

Amortized cost: the assets held for the collection of contractual cash flows where those cash flows represent only payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in income when the asset is derecognized or impaired. Interest income from these financial assets is included in financial income using the effective interest rate method.

Fair value through profit or loss: assets that do not meet the criteria of amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and is presented net in the income statement within other gains / (losses) in the period or exercise in which it arises.

(b) Equity instruments

Changes in the fair value of financial assets at fair value through profit or loss are recognized in other gains / (losses) in the statement of income as appropriate.

The Company evaluates in advance the expected credit losses associated with its debt instruments recorded at amortized cost. The applied impairment methodology depends on whether there has been a significant increase in credit risk.

2.10. Derivative financial instruments and hedging activities

Derivatives are recognized, in accordance with IAS 39 for hedge accounting and IFRS 9 for derivatives not qualify as hedge accounting, initially at fair value on the date on which the derivative contract was made and are subsequently valued at their fair value. The method to recognize the resulting loss or gain depends on whether the derivative has been designated as a hedging instrument and, if so, the nature of the item being hedged. The Company designates certain derivatives as:

(a)

Hedge of the fair value of recognized assets (fair value hedge);

(b)

Hedge of an identified risk associated with a recognized liability or an expected highly- Probable transaction (cash-flow hedge), or

(c)

Derivatives that do not qualify for hedge accounting.

The Company documents, at the inception of each transaction, the relationship between the hedging instrument and the hedged item, as well as its objectives for managing risk and the strategy for carrying out various hedging transactions. The Company also documents its assessment, both at the beginning and on an ongoing basis, as to whether the derivatives used in the hedging transactions are highly effective in offsetting the changes in the fair value or cash flows of the items being hedged.

The total fair value of the hedging derivatives is booked as Other non-current financial asset or liability if the remaining maturity of the item hedged is over 12 months, and as an other current financial asset or liability if the remaining term of the item hedged is less than 12 months. Derivatives not booked as hedges are classified as Other financial assets or liabilities.

(a) Fair value hedges

Changes in the fair value of designated derivatives that qualify as fair value hedges are shown in the consolidated statement of income, together with any change in the fair value of the asset or liability hedged that is attributable to the risk being hedged.

(b) Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is shown in the statement of other comprehensive income. The loss or gain relating to the ineffective portion is recognized immediately in the consolidated statement of income under other gains (losses). Amounts accumulated in equity are reclassified to profit or loss in the periods or exercise when the hedged item affects profit or loss.

In case of variable interest-rate hedges, the amounts recognized in the statement of other comprehensive income are reclassified to results within financial costs at the same time the associated debts accrue interest.

For fuel price hedges, the amounts shown in the statement of other comprehensive income are reclassified to results under the line item Cost of sales to the extent that the fuel subject to the hedge is used.

For foreign currency hedges, the amounts recognized in the statement of other comprehensive income are reclassified to income as deferred revenue resulting from the use of points, are recognized as Income.

When hedging instrument mature, is sold or fails to meet the requirements to be accounted for as hedges, any gain or loss accumulated in the statement of Other comprehensive income until that moment, remains in the statement of other comprehensive income and is reclassified to the consolidated statement of income when the hedged transaction is finally recognized. When it is expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in the statement of other comprehensive income is taken immediately to the consolidated statement of income as “Other gains (losses)”.

The changes in fair value of any derivative instrument that is not booked as a hedge are shown immediately in the consolidated statement of income in “Other gains (losses)”.

2.11. Inventories

Inventories, are shown at the lower of cost and their net realizable value. The cost is determined on the basis of the weighted average cost method (WAC). The net realizable value is the estimated selling price in the normal course of business, less estimated costs necessary to make the sale.

2.12. Trade and other accounts receivable

Commercial accounts receivable are initially recognized at their fair value and subsequently at their amortized cost in accordance with the effective rate method, less the provision for impairment according to the model of the expected credit losses. The Company applies the simplified approach permitted by IFRS 9, which requires that expected lifetime losses be recognized upon initial recognition of accounts receivable.

In the event that the Company transfers its rights to any financial asset (generally accounts receivable) to a third party in exchange for a cash payment, the Company evaluates whether all risks and rewards have been transferred, in which case the account receivable is derecognized.

The existence of significant financial difficulties on the part of the debtor, the probability that the debtor goes bankrupt or financial reorganization are considered indicators of a significant increase in credit risk.

The carrying amount of the asset is reduced as the provision account is used and the loss is recognized in the consolidated income statement under “Cost of sales”. When an account receivable is written off, it is regularized against the provision account for the account receivable.

2.13. Cash and cash equivalents

Cash and cash equivalents include cash and bank balances, time deposits in financial institutions, and other short-term and highly liquid investments.

2.14. Capital

The common shares are classified as net equity.

Incremental costs directly attributable to the issuance of new shares or options are shown in net equity as a deduction from the proceeds received from the placement of shares.

2.15. Trade and other accounts payables

Trade payables and other accounts payable are initially recognized at fair value and subsequently at amortized cost.

2.16. Interest-bearing loans

Financial liabilities are shown initially at their fair value, net of the costs incurred in the transaction. Later, these financial liabilities are valued at their amortized cost; any difference between the proceeds obtained (net of the necessary arrangement| costs) and the repayment value, is shown in the consolidated statement of income during the term of the debt, according to the effective interest rate method.

Financial liabilities are classified in current and non-current liabilities according to the contractual payment dates of the nominal principal.

2.17. Current and deferred taxes

The tax expense for the period comprises income and deferred taxes.

The current income tax expense is calculated based on tax laws in enacted the date of statement of financial position, in the countries in which the subsidiaries and associates operate and generate taxable income.

Deferred taxes are recognized, on the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from the initial recognition of an assets or a liability in transaction other than a business combination that at the time of the transaction does not affect the accounting or the taxable profit or loss. Deferred tax is determined using the tax rates (and laws) that have been enacted or substantially enacted at the date of the consolidated statements of financial position, and are expected to apply when the related deferred tax asset is realized or the deferred tax liability discharged.

Deferred tax assets are recognized only to the extent it is probable that the future taxable profit will be available against which the temporary differences can be utilized.

The tax (current and deferred) is recognized in statement of income by function, unless it relates to an item recognized in other comprehensive income, directly in equity. In this case the tax is also recognized in other comprehensive income or, directly in the statement of income by function, respectively.

2.18. Employee benefits

(a) Personnel vacations

The Company recognizes the expense for personnel vacations on an accrual basis.

(b) Share-based compensation

The compensation plans implemented based on the shares of the Company are recognized in the consolidated financial statements in accordance with IFRS 2: Share-based payments, for plans based on the granting of options, the effect of fair value is recorded in equity with a charge to remuneration in a linear manner between the date of grant of said options and the date on which they become irrevocable, for the plans considered as cash settled award the fair value, updated as of the closing date of each reporting period or exercise, is recorded as a liability with charge to remuneration.

Provisions are made for these obligations by applying the method of the projected unit credit method, and considering estimates of future permanence, mortality rates and future wage increases determined on the basis of actuarial calculations. The discount rates are determined by reference to market interest-rate curves. Actuarial gains or losses are shown in other comprehensive income.

(d) Incentives

The Company has an annual incentives plan for its personnel for compliance with objectives and individual contribution to the results. The incentives eventually granted consist of a given number or portion of monthly remuneration and the provision is made on the basis of the amount estimated for distribution.

(e) Termination benefits

The group recognizes termination benefits at the earlier of the following dates: (a) when the group terminates laboral relation; and (b) when the entity recognizes costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits.

2.19. Provisions

Provisions are recognized when:

(i)	The Company has a present legal or implicit obligation as a result of past events;

(ii)	It is probable that payment is going to be necessary to settle an obligation; and

(iii)

The amount has been reliably estimated.

2.20. Revenue from contracts with customers

(a) Transportation of passengers and cargo

The Company recognizes the sale for the transportation service as a deferred income liability, which is recognized as income when the transportation service has been lent or expired. In the case of air transport services sold by the Company and that will be made by other airlines, the liability is reduced when they are remitted to said airlines. The Company periodically reviews whether it is necessary to make an adjustment to deferred income liabilities, mainly related to returns, changes, among others.

Compensations granted to clients for changes in the levels of services or billing of additional services such as additional baggage, change of seat, among others, are considered modifications of the initial contract, therefore, they are deferred until the corresponding service is provided.

(b) Expiration of air tickets

The Company estimates in a monthly basis the probability of expiration of air tickets, with refund clauses, based on the history of use of the same. Air tickets without refund clause are expired on the date of the flight in case the passenger does not show up.

The costs related to the sale of air tickets are activated and deferred until the moment of providing the corresponding service. These assets are included under the heading “Other current non-financial assets” in the Consolidated Classified Statement of Financial Position.

(d) Frequent passenger program

The Company maintains the following loyalty programs: LATAM Pass and LATAM Pass Brasil, whose objective is building customer loyalty through the delivery of miles or points.

These programs give their frequent passengers the possibility of earning LATAMPASS’s miles or points, which grant the right to a selection of both air and non-air awards. Additionally, the Company sells the LATAMPASS miles or points to financial and non-financial partners through commercial alliances to award miles or points to their customers.

To reflect the miles and points earned, the loyalty program mainly includes two types of transactions that are considered revenue arrangements with multiple performance obligations: (1) Passenger Ticket Sales Earning miles or points (2) miles or points sold to financial and non-financial partner

(1) Passenger Ticket Sales Earning Miles or Points.

In this case, the miles or points are awarded to customers at the time that the company performs the flight.

To value the miles or points earned with travel, we consider the quantitative value a passenger receives by redeeming miles for a ticket rather than paying cash, which is referred to as Equivalent Ticket Value (“ETV”). Our estimate of ETV is adjusted for miles and point that are not likely to be redeemed (“breakage”).

The balance of miles and point that are pending to redeem are include on deferred revenue.

(2) Miles sold to financial and non-financial partner

To value the miles or points earns through financial and non-financial partners,the performance obligations with the client are estimated separately. To calculate these performance obligations, different components that add value in the commercial contract must be considered, such as marketing, advertising and other benefits, and finally the value of the points awarded to customers based on our ETV. The value of each of these components is finally allocated in proportion to their relative prices. The performance obligations associated with the valuation of the points or miles earned become part of the Deferred Revenue, and the remaining performance obligations, are recorded as revenue when the miles or points are delivered to the client.

When the miles and points are exchanged for products and services other than the services provided by the Company, the income is recognized immediately, when the exchange is made for air tickets of any airline of LATAM Airlines Group S.A. and subsidiaries, the income is deferred until the air transport service is provided.

The miles and points that the Company estimates will not be exchanged are recognized in the results based on the consumption pattern of the miles or points effectively exchanged by customers. The Company uses statistical models to estimate the probability of exchange, which is based on historical patterns and projections.

(e) Dividend income

Dividend income is recognized when the right to receive payment is established.

2.21. Leases

The Company recognizes contracts that meet the definition of a lease, as a right of use asset and a lease liability on the date when the underlying asset is available for use.

Assets for right of use are measured at cost including the following:

The amount of the initial measurement of the lease liability;

Lease payment made at or before commencement date;

Initial direct costs, and

Restoration costs.

The assets by right of use are recognized in the statement of financial position in Properties, plants and equipment.

Lease liabilities include the net present value of the following payments:

Fixed payments including in substance fixed payment.

Variable lease payments that depend on an index or a rate;

The exercise price of a purchase options, if is reasonably certain to exercise that option.

The Company determines the present value of the lease payments using the implicit rates for the aircraft leasing contracts and for the rest of the underlying assets, uses the incremental borrowing rate.

Lease liabilities are recognized in the statement of financial position under Other financial liabilities, current or non-current.

Interest accrued on financial liabilities is recognized in the consolidated statement of income in “Financial costs”.

Payments associated with short-term leases without purchase options and leases of low-value assets are recognized on a straight-line basis in profit or loss at the time of accrual. Those payments are presented in cash flows use in operation activities.

The Company analyzes the financing agreements of aircrafts, mainly considering characteristics such as:

(a) that the Company initially acquired the aircraft or took an important part in the process of direct acquisition with the manufacturers.

(b) Due to the contractual conditions, it is virtually certain that the Company will execute the purchase option of the aircraft at the end of the lease term.

Since these financing agreements are “substantially purchases” and not leases, the related liability is considered as a financial debt classified under to IFRS 9 and continue to be presented within the “Other financial liabilities” described in Note 19. On the other hand, the aircraft are presented in Property, Plants and Equipment, as described in Note 17, as “own aircraft”.

The Group qualifies as sale and lease transactions, operations that lead to a sale according to IFRS 15. More specifically, a sale is considered as such if there is no option to purchase the goods at the end of the lease term.

If the sale by the seller-lessee is classified as a sale in accordance with IFRS 15, the underlying asset is derecognized, and a right-of-use asset equal to the portion retained proportionally of the amount of the asset is recognized.

If the sale by the seller-lessee is not classified as a sale in accordance with IFRS 15, the transferred assets are kept in the financial statements and a financial liability equal to the sale price is recognized (received from the buyer-lessor).

The Company has applied the practical solution allowed by IFRS 16 for those contracts that meet the established requirements and that allows a lessee to choose not to evaluate if the concessions that it obtains derived from COVID-19 are a modification of the lease.

2.22. Non-current assets or disposal groups classified as held for sale

Non-current assets (or disposal groups) classified as assets held for sale are shown at the lesser of their book value and the fair value less costs to sell.

2.23. Maintenance

The costs incurred for scheduled heavy maintenance of the aircraft’s fuselage and engines are capitalized and depreciated until the next maintenance. The depreciation rate is determined on technical grounds, according to the use of the aircraft expressed in terms of cycles and flight hours.

In case of aircraft include in property, plant and equipment, these maintenance cost are capitalized as Property, plant and equipment, while in the case of aircraft on right of use, a liability is accrued based on the use of the main components is recognized, since a contractual obligation with the lessor to return the aircraft on agreed terms of maintenance levels exists. These are recognized as Cost of sales.

Additionally, some contracts that comply with the definition of lease establish the obligation of the lessee to make deposits to the lessor as a guarantee of compliance with maintenance and return conditions. These deposits, often called maintenance reserves, accumulate until a major maintenance is performed, once made, the recovery is requested to the lessor. At the end of the contract period, there is comparison between the reserves that have been paid and required return conditions, and compensation between the parties are made if applicable.

The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred.

2.24. Environmental costs

Disbursements related to environmental protection are charged to results when incurred.

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 the foregoing, Management monitors the evolution of price levels, exchange rates and interest rates, quantifies exposures and their risk, and develops and executes hedging strategies.

(i) Fuel-price risk:

Exposure:

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 hedge 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 year ended December 31, 2020, the Company recognized losses of US$ 14.3 million (negative) for fuel hedge net of premiums in the costs of sale for the year. During the same year of 2019, the Company recognized losses of US$ 23.1 million for the same concept.

As of the end of March 31, the Company has determined that the highly probable expected transactions, which made up the hedged item, will no longer occur in the formally established magnitudes, therefore it has stopped recognizing these contracts under the accounting of hedge recognizing for the year ended December 31,2020 a loss of US$ 50.8 million in the line in Other gains (losses) of the income statement, as a reclassification effect from other reserves from the statement of comprehensive income and a loss of US$ 30.8 million corresponding to the premiums associated with these contracts. On November 2020, the new fuel derivatives taken by the Company were classified as hedge accounting.

As of December 31, 2020 the market value of the fuel positions was US$ 1.3 million (positive). At the end of December 2019, this market value was US$ 48.5 million (positive).

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

Positions as of December 31, 2020 (*)	Maturities
	Q121			Q221			Q321			Q421			Total

Percentage of coverage over the expected volume of consumption		3.0	%		2.8	%		2.6	%		2.6	%		2.7	%

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

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).

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 tables show the sensitization of financial instruments according to reasonable changes in the price of fuel and their effect on equity.

The calculations were made considering a parallel movement of US$ 5 per barrel in the underlying reference price curve at the end of December 2019 and 2020. The projection period was defined until the end of the last fuel hedging contract in force, being the last business day of the fourth quarter of the year 2021.

	Positions as of December 31, 2020	Positions as of December 31, 2019
Benchmark price	effect on Statement of Income	effect on Equity
(US$ per barrel)	(MUS$)	(MUS$)

+5	+0.6	+15.4
-5	-0.6	- 34.5

Given the fuel hedging structure during 2020, which considers a portion free of hedges, a vertical drop of 5 dollars in the JET reference price (considered as the monthly daily average), would have meant an impact of approximately US$ 160.5 million lower fuel cost. For the same period, a vertical rise of 5 dollars in the JET reference price (considered as the monthly daily average), would have meant an approximate impact of US$ 135.0 million in higher fuel costs.

(ii) Foreign exchange rate risk:

Exposure:

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 2020, and securing the operating margin, LATAM makes hedges using FX derivatives.

As of December 31, 2020, the Company did not maintain FX derivatives. At the end of December 2019, this market value was MUS$ 0.01 (negative).

During the year ended December 31, 2020, the Company recognized gains of US$ 3.2 million for FX coverage net of premiums. During the same period of 2019, the Company recognized gains of US$ 1.9 million for FX hedging net of premiums.

As of December 31, 2020, the Company had no current FX derivatives for BRL. At the end of December 2019, the Company maintain current FX derivatives for BRL for MUS$ 15.

During 2019 the company contracted FX derivatives recognized in results amounts to USS$ 6.2 million (negative) net of premiums. As of December 31, 2020, the Company does not hold FX derivatives that are not under hedge accounting.

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 Company did not maintain FX derivatives in force for BRL as of December 31, 2020:

Appreciation (depreciation)(*)	Effect at December 31, 2020	Effect at December 31, 2019
of R$	MUS$	MUS$

-10%	-	-0.6
+10%	-	+1.1

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

During 2017 and 2019, the Company contracted swap currency derivatives for debt coverage issued the same years by notionals UF 8.7 million and UF 5.0 million, respectively. As of December 31, 2020 Company does not has currency hedge swap. At the end of December 2019, this market value was MUS$ 22.7 (negative).

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, 2020	Effect at December, 2019
of R$/US$(*)	MUS$	MUS$

-10%	+10.9	+9.5
+10%	- 10.9	-9.5

(*)

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, 2020	Effect at December 31, 2019
of R$/US$	MUS$	MUS$

-10%	+191.53	+402.48
+10%	-156.71	-329.29

(iii) Interest -rate risk:

Exposure:

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:

At the end of December 2020, the Company did not have current interest rate derivative positions. Currently a 42% (62% at December 31, 2019) of the debt is fixed to fluctuations in interest rate.

Rate Hedging Results:

As of December 31, 2020, the Company did not hold current interest rate derivative positions. At the end of December 2019, this market value was US$ 2.6 million (positive).

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, 2020	Positions as of December 31, 2019
futures curve	effect on profit or loss before tax	effect on profit or loss before tax
in libor 3 months	(MUS$)	(MUS$)

+100 basis points	-42.11	-27.60
-100 basis points	+42.11	+27.60

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.

At December 31, 2020 Company does not has interest rate hedge. 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, 2020	Positions as of December 31, 2019
futures curve	effect on equity	effect on equity
in libor 3 months	(MUS$)	(MUS$)

+100 basis points	-	+13.62
-100 basis points	-	-14.71

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.

On July 27, 2017, the Financial Conduct Authority (LIBOR regulating authority) announced its intention to stop asking banks to submit rates for the calculation of LIBOR after 2021. The Federal Reserve Board and the Fed of New York then convened the Alternative Reference Rates Committee (ARRC), a group of private market participants, to help ensure a successful transition from LIBOR in US dollars (USD) to a more robust reference rate, their recommended alternative, the Overnight Guaranteed Financing Rate (SOFR). Although the adoption of SOFR is voluntary, the impending discontinuation of LIBOR makes it essential that market participants consider moving to alternative rates such as SOFR and that they have appropriate alternative language in existing contracts that reference LIBOR.

(b) Credit risk

Credit risk occurs when the counterparty does not meet its obligations to the Company under a specific contract or financial instrument, resulting in a loss in the market value of a financial instrument (only financial assets, not liabilities). Given the impact of COVID-19 on the operation, the client portfolio as of December 31, 2020 decreased when compared to the balance as of December 31, 2019 by 51%, due to a reduction in company-wide operations, mainly in passenger transport (travel agencies and corporate) and in the case of clients who were left with debt and that management considered risky, the corresponding measures were taken to consider their expected credit loss. For this reason, the provision at the end of December 2020 had an increase of 21.7% compared to the previous period.

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

To reduce the credit risk related to operational activities, the Company has implemented credit limits to limit the exposure of its debtors, which are permanently monitored for the LATAM network, when deemed necessary, agencies have been blocked for cargo and passenger businesses.

(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.

Additionally, section 345(b) of the Chapter 11 of the US Bankruptcy Code imposes restrictions on, among other things, the institutions where the Debtors can hold their cash. In particular, it establishes that cash should be held in what are called Authorized Bank Depositories, which are US Banking Institutions that are accepted by the US Trustee Program of the US Department of Justice. Such Authorized Bank Depositories have generally agreed with the US Trustee Program to maintain collateral of no less than 115% of the aggregate funds on deposit (in excess of FDIC insurance limit) by (i) surety bond or (ii) US Treasury securities. Consequently, pursuant to Section 345(b), as implemented through an agreement with the Office of the United States Trustee, as of the year end the Company held the majority of its cash and equivalents in Banks in the US that are depositories authorized by Office of the United States Trustee for the Southern District of New York. Otherwise, the DIP Facility contains certain restrictions on new investments made by the Debtors during the term of the facility.

(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.

Under certain of the Company’s credit card processing agreements, the financial institutions have the right to require that the Company maintain a reserve equal to a portion of advance ticket sales that have been processed by that financial institution, but for which the Company has not yet provided the air transportation. Additionally, the financial institutions have the ability to require additional collateral reserves or withhold payments related to receivables to be collected if increased risk is perceived related to liquidity covenants in these agreements or negative balances occur.

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.

Liquidity risk represents the risk that the Company does not have sufficient funds to pay its obligations.

Due to the cyclical nature of its business, the operation and investment needs, along with the need for financing, the Company requires liquid funds, defined as Cash and cash equivalents plus other short-term financial assets, to meet its payment obligations. On May 26, 2020, the Company and its subsidiaries in Chile, Peru, Colombia, Ecuador and the United States began a voluntary process of reorganization and restructuring of their debt under the protection of the Chapter 11 of the United States, to which on July 9, the Brazilian subsidiary and certain of its subsidiaries were included, in order to preserve the group’s liquidity. In light of the unprecedented impact COVID-19 has had on the global aviation industry, this reorganization process provides LATAM with the opportunity to work with the group’s creditors, and main stakeholders, to reduce its debt and obtain new sources of financing, providing the company with the tools to adapt the group to this new reality.

The balance of liquid funds, future cash generation and the ability to obtain financing, provides the Company with alternatives to meet future investment and financing commitments.

As of December 31, 2020, the balance of liquid funds is US$ 1,696 million (US $ 1,073 million as of December 31, 2019), which are invested in short-term instruments through financial entities with high-risk classification.

As of December 31, 2020, LATAM maintains a committed revolving credit facility (Revolving Credit Facility) for a total amount of US$ 600 million, which is fully drawn. This line is secured by and subject to the availability of collateral (i.e. aircraft, engines and spare parts).

In order to preserve liquidity, the Company has implemented a series of measures. Among them, the Company proposed 50% salary reduction to the entire organization for the second quarter, which was accepted by more than 90% of the employees. For the third quarter, the salary reduction to the entire organization was between 20% and 25%, which also had an adhesion of more than 90% of the group’s employees, and for the fourth quarter a reduction of 15% was proposed, which also achieved high levels of adherence.

Finally, during the year 2020, the company has reduced its planned investments for 2020 by approximately US$ 698 million, mainly related to maintenance, given the lower operation, purchase of engines, investments in cabins and other projects, given the reduced operation. In addition, LATAM did not receive aircrafts that were previously committed to be delivered during 2020, which at the beginning of the year amounted to US$ 408 million.

After filing Chapter 11 protection, the company received authorization from the Bankruptcy Court for the “debtors in possession” (DIP) financing, in the form of a multi-draw term loan facility in an aggregate principal amount of up to US$ 2,450 million. This facility consists of two tranches in which the following creditors participate:

1) A Tranche A, which is committed for up to US$ 1,300 million, out of which (i) US$ 1,125 million were be provided by Oaktree Capital Management, L.P. or certain entities related to it; and (ii) US$ 175 million were be provided by Knighthead, Jefferies and / or other entities that are part of the syndicate of creditors organized by Jefferies; and

2) A Tranche C for a capital amount of up to US$ 1,150 million, of which (i) US$ 750 million was provided by a certain group of LATAM’s shareholders composed by Grupo Cueto, Grupo Eblen and Qatar Airways, or certain related entities; (ii) US$ 250 million was provided by Knighthead, Jefferies and / or other entities that are part of the syndicate of creditors organized by Jefferies; and (iii) US$ 150 million which was committed by certain additional shareholder investors through a public investment fund managed by Toesca S.A. on November 6, 2020 through a joinder to the DIP Agreement.

In addition, this proposal contemplates a possible Tranche B for up to an additional US$ 750 million, subject to the authorization of the Court and other customary conditions for this type of operations.

On October 8, 2020, the first disbursement took place under the DIP Credit Agreement for a 50% of the total funds committed to that date, US$ 1,150 million. Pursuant to the terms of the DIP Agreement, the Debtors will be required to maintain consolidated liquidity of at least US$ 400 million, taking into consideration the undrawn portion of the DIP financing, and meet certain milestones with respect to the bankruptcy process).

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2020

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

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

Loans to exporters

97.018.000-1	SCOTIABANK	Chile	US$		76,929		-		-		-		-		76,929		74,000	At Expiration		3.08		3.08
97.030.000-7	BANCO ESTADO	Chile	US$		41,543		-		-		-		-		41,543		40,000	At Expiration		3.49		3.49
76.645.030-K	ITAU	Chile	US$		20,685		-		-		-		-		20,685		20,000	At Expiration		4.20		4.20
97.951.000-4	HSBC	Chile	US$		12,545		-		-		-		-		12,545		12,000	At Expiration		4.15		4.15

Bank loans

97.023.000-9	CORP BANCA	Chile	UF		11,631		-		-		-		-		11,631		11,255	Quarterly		3.35		3.35
0-E	SANTANDER	Spain	US$		3,323		2,678		139,459		-		-		145,460		139,459	Quarterly		2.80		2.80
76.362.099-9	BTG	Chile	UF		2,104		68,920		-		-		-		71,024		67,868	At Expiration		3.10		3.10

Obligations with the public

97.030.000-7	BANCO ESTADO	Chile	UF		23,210		26,857		217,555		35,041		429,101		731,764		560,113	At Expiration		4.81		4.81
0-E	BANK OF NEW YORK	U.S.A.	US$		80,063		76,125		208,250		836,063		828,000		2,028,501		1,500,000	At Expiration		7.16		6.94

Guaranteed obligations

0-E	BNP PARIBAS	U.S.A.	US$		50,500		40,889		104,166		107,342		219,666		522,563		474,273	Quarterly / Semiannual		2.95		2.95
0-E	NATIXIS	France	US$		47,918		37,509		84,048		84,487		35,712		289,674		271,129	Quarterly		3.11		3.11
0-E	INVESTEC	England	US$		11,502		9,425		21,042		-		-		41,969		37,870	Semiannual		6.21		6.21
0-E	MUFG	U.S.A.	US$		37,114		28,497		77,881		80,678		194,901		419,071		382,413	Quarterly		2.88		2.88
0-E	SMBC	U.S.A.	US$		131,345		-		-				-		131,345		130,000	At Expiration		1.73		1.73

Other guaranteed obligation

0-E	CREDIT AGRICOLE	France	US$		1,347		275,773		-		-		-		277,120		273,199	At Expiration		1.92		1.92
0-E	MUFG	U.S.A.	US$		87,611		74,852		119,460		19,950		-		301,873		291,519	Quarterly		2.67		2.67
0-E	CITIBANK	U.S.A.	US$		3,405		10,404		603,443		-		-		617,252		600,000	At Expiration		2.27		2.27
0-E	BANK OF UTAH	U.S.A.	US$		-		-		952,990		-		-		952,990		793,003	At Expiration		22.19		13.19

Financial lease

0-E	ING	U.S.A.	US$		5,965		-		-		-		-		5,965		5,965	Quarterly		5.71		5.01
0-E	CREDIT AGRICOLE	France	US$		13,889		2,057		2,062		-		-		18,008		17,961	Quarterly		1.99		1.54
0-E	CITIBANK	U.S.A.	US$		79,117		61,983		118,372		46,115		19,118		324,705		312,792	Quarterly		2.58		1.77
0-E	PEFCO	U.S.A.	US$		1,926		-		-		-		-		1,926		1,926	Quarterly		5.65		5.03
0-E	BNP PARIBAS	U.S.A.	US$		14,851		2,343		793		-		-		17,987		17,951	Quarterly		1.81		1.41
0-E	WELLS FARGO	U.S.A.	US$		114,952		104,946		237,945		99,232		-		557,075		541,406	Quarterly		2.43		1.74

97.036.000-K	SANTANDER	Chile	US$		21,551		17,851		26,308		-		-		65,710		65,247	Quarterly		1.30		0.76

0-E	RRPF ENGINE LEASING	England	US$		4,093		3,382		8,826		4,870		-		21,171		18,489	Monthly		4.01		4.01
0-E	APPLE BANK	U.S.A.	US$		4,589		4,763		12,977		755		-		23,084		22,730	Quarterly		1.61		1.01
0-E	BTMU	U.S.A.	US$		11,620		9,647		26,261		770		-		48,298		47,609	Quarterly		1.63		1.03
0-E	US BANK	U.S.A.	US$		60,527		54,611		144,670		86,076		-		345,884		327,419	Quarterly		4.00		2.82
0-E	PK AIRFINANCE	U.S.A.	US$		4,624		12,202		3,153		-				19,979		19,522	Monthly		1.98		1.98
	TOTAL				980,479		925,714		3,109,661		1,401,379		1,726,498		8,143,731		7,077,118

(*)

Oblligation are presented according original contractual condition and do not considered any Chapter 11 resolution. See detail on Note 19.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2020

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

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

0-E	NCM	Netherlands	US$		452		497		61		-		-	1,010	943	Monthly		6.01	6.01
0-E	BANCO BRADESCO	Brazil	BRL		91,672		-		-		-		-	91,672	80,175	Monthly		4.34	4.33
0-E	BANCO DO BRASIL	Brazil	BRL		208,987		-		-		-		-	208,987	199,557	Monthly		3.95	3.95

Financial leases

0-E	NATIXIS	France	US$		31,482		9,276		42,383		-		-	83,141	81,260	Quarterly / Semiannual		4.09	4.09
0-E	WAC AP OU LEASING S.A.	Luxembourg	US$		2,460		2,442		25		-		-	4,927	4,759	Quarterly		2.00	2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		134,919		-		-		-		-	134,919	144,120	Quarterly		3.07	3.01
0-E	GA TELESIS LLC	U.S.A.	US$		758		1,753		4,675		4,675		7,969	19,830	12,261	Monthly		14.72	14.72

	TOTAL				470,730		13,968		47,144		4,675		7,969	544,486	523,075

(*)

Oblligation are presented according original contractual condition and do not considered any Chapter 11 resolution. See detail on Note 19.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2020

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

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

Lease Liability
-	AIRCRAFT	OTHERS	US$		226,510		679,529		877,438		812,821		889,072		3,485,370		3,026,573		-		-		-
-	OTHER ASSETS	OTHERS	US$		3,403		9,953		6,706		18,271		6,349		44,682		46,520		-		-		-
			UF		2,103		5,836		1,072		1,973		2,485		13,469		11,401		-		-		-
			COP		22		7		14		-		-		43		48		-		-		-
			EUR		156		443		188		-		-		787		772		-		-		-
			PEN		29		15		49		-		-		93		137		-		-		-
			BRL		1,002		3,891		14,414		-		-		19,307		35,555		-		-		-

Trade and other accounts payables
-	OTHERS	OTHERS	US$		330,172		47,781		-		-				377,953		377,953		-		-		-
			CLP		230,997		119,337		-		-				350,334		350,334		-		-		-
			BRL		359,350		5,859		-		-				365,209		365,209		-		-		-
			Other currency		598,619		65,684		-		-				664,303		664,303		-		-		-
Accounts payable to related parties currents
Foreign	Delta Airlines	U.S.A	US$		805		-		-		-				805		805		-		-		-
Foreign	Patagonia Seafarms INC	U.S.A	CLP		7		-		-		-				7		7
97.810.370-9	Inversiones Costa Verde Ltda. y CPA.	Chile	CLP		-		-		105,713		-				105,713		105,713
Foreign	QA Investments Ltd	Jersey Channel Islands	US$		-		-		132,141		-				132,141		132,141		-		-		-
Foreign	QA Investments 2 Ltd	Jersey Channel Islands	US$		-		-		132,141		-				132,141		132,141
Foreign	Lozuy S.A.	Uruguay	US$		-		-		26,428		-		-		26,428		26,428		-		-		-

	Total				1,753,175		938,335		1,296,304		833,065		897,906		5,718,785		5,276,040

	Total consolidated				3,204,384		1,878,017		4,453,109		2,239,119		2,632,373		14,407,002		12,876,233

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.

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

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

Bank loans

97.023.000-9	CORP BANCA	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

Obligations with the public

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

Guaranteed obligations

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

Other guaranteed obligation

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

Financial lease

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 IP EX-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

Other loans

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

Hedge derivative

-	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, through the Guanay Finance Limited company.

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.

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

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

Financial leases

0-E	NATIXIS	France	US$		4,140		7,965		77,028		-		-	89,133	86,256	Quarterly / Semiannual		6.29	6.29
0-E	WACAP OULEASING 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 Teles is 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.

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

-	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	-		-	-
Trade and other accounts payables
-	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	-		-	-
Accounts payable to related parties currents
78.591.370-1	Bethia S.A. y Filiales	Chile	CLP		53		-		-		-		-	53	53	-		-	-
Foreign	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

The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with different financial institutions.

At the end of 2019, the Company had delivered US$ 2.37 million in guarantees for derivative margins, corresponding to cash and standby letters of credit. As of December 31, 2020, the Company maintains guarantees for US $ 0.6 million corresponding to derivative transactions. The decrease 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 objectives of the Company, in relation to capital management are: (i) to meet the minimum equity requirements and (ii) to maintain an optimal capital structure.

The Company monitors contractual obligations and regulatory requirements in the different countries where the group’s companies are domiciled to ensure faithful compliance with the minimum equity requirement, the most restrictive limit of which is to maintain positive liquid equity.

Additionally, the Company periodically monitors the short and long term cash flow projections to ensure that it has sufficient cash generation alternatives to meet future investment and financing commitments.

The international credit rating of the Company is the result of the ability to meet long-term financial commitments. As of December 31, 2020, and as a consequence of the expected decline in demand due to the COVID-19 pandemic and the Company’s filing for voluntary protection under the U.S. Chapter 11 reorganization statute, Standard & Poor’s, Moody’s y Fitch Ratings withdrew their credit ratings for LATAM

3.3.

Estimates of fair value.

At December 31, 2020, the Company maintained financial instruments that should be recorded at fair value. These are grouped into two categories:

Hedge Instruments:

This category includes the following instruments:

Interest rate derivative contracts,

Fuel derivative contracts,

Currency derivative contracts.

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. Valuation techniques generally used by the Company are quoted market prices of similar instruments and / or estimating the present value of future cash flows using forward price curves of the market at period end.

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, 2020 As of December 31, 2019

Fair value measurements using values Fair value measurements using values

considered as 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 32,782 32,782 - - 222,094 222,094 - -

Short-term mutual funds 32,782 32,782 - - 222,094 222,094 - -

Other financial assets, current 4,097 366 3,731 - 471,797 386,688 85,109 -

Fair value interest rate derivatives - - - - 27,044 - 27,044 -

Fair value of fuel derivatives 1,296 - 1,296 - 48,542 - 48,044 -

Fair value of foreign currency derivative - - - - 586 - 586 -

Accrued interest since the last payment date Swap of currencies - - - - 3 - 3 -

Private investment funds 348 348 - - 386,669 386,669 - -

Certificate of Deposit (CBD) 2,435 - 2,435 - 8,934 - 8,934 -

Domestic and foreign bonds 18 18 - - 19 19 - -

Liabilities

Other financial liabilities, current 5,671 - 5,671 - 50,372 - 50,372 -

Fair value of interest rate derivatives 2,734 - 2,734 - 302 - 302 -

Fair value of foreign currency derivatives - - - - 48,347 - 48,347 -

Interest accrued since the last payment date of Currency Swap - - - - 1,723 - 1,723 -

Currency derivative not registered as hedge accounting 2,937 - 2,937 - - - - -

Additionally, at December 31, 2020, 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, 2020				As of December 31, 2019
	Book		Fair		Book		Fair
	value		value		value		value
	ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		1,663,059		1,663,059		850,486		850,486
Cash on hand		4,277		4,277		4,982		4,982
Bank balance		732,578		732,578		329,633		329,633
Overnight		802,220		802,220		350,080		350,080
Time deposits		123,984		123,894		165,791		165,791
Other financial assets, current		46,153		46,153		27,707		27,707
Other financial assets		46,153		46,153		27,707		27,707
Trade debtors, other accounts receivable and Current accounts receivable		599,180		599,180		1,244,348		1,244,348
Accounts receivable from entities related, current		158		158		19,645		19,645
Other financial assets, not current		33,140		33,140		46,907		46,907
Accounts receivable, non-current		4,986		4,986		4,725		4,725

Other current financial liabilities		3,050,059		2,995,768		1,835,288		2,019,068
Accounts payable for trade and other accounts payable, current		2,322,961		2,322,961		2,222,874		2,222,874
Accounts payable to entities related, current		812		812		56		56
Other financial liabilities, not current		7,803,801		6,509,081		8,530,418		8,846,418
Accounts payable, not current		651,600		651,600		619,110		619,110
Accounts payable to entities related, non-current		396,423		410,706		-		-

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.

NOTE 4 - ACCOUNTING ESTIMATES AND JUDGMENTS

The Company has used estimates to value and record some of the assets, liabilities, income, expenses and commitments. Basically, these estimates refer to:

(a) Evaluation of possible losses due to impairment of goodwill and intangible assets with indefinite useful life

Management conducts an impairment test annually or more frequently if events or changes in circumstances indicate potential impairment. An impairment loss is recognized for the amount by which the carrying amount of the cash generating unit (CGU) exceeds its recoverable amount.

Management’s value-in-use calculations included significant judgments and assumptions relating to revenue growth rates, exchange rate, discount rate, inflation rates, fuel price. The estimation of these assumptions requires significant judgment by the management, as these variables feature inherent uncertainty; however, the assumptions used are consistent with Company’s forecasts approved by management. Therefore, management evaluates and updates the estimates as necessary, in light of conditions that affect these variables. The main assumptions used as well as the corresponding sensitivity analyses are showed in Note 16.

(b) Useful life, residual value, and impairment of property, plant, and equipment

The depreciation of assets is calculated based on the linear model, except for certain technical components depreciated on cycles and hours flown. These useful lives are reviewed on an annual basis according with the Company’s future economic benefits associated with them.

Changes in circumstances such as: technological advances, business model, planned use of assets or capital strategy may render the useful life different to the lifespan estimated. When it is determined that the useful life of property, plant, and equipment must be reduced, as may occur in line with changes in planned usage of assets, the difference between the net book value and estimated recoverable value is depreciated, in accordance with the revised remaining useful life.

The residual values are estimated according to the market value that said assets will have at the end of their life. The residual value and useful life of the assets are reviewed, and adjusted if necessary, once a year. When the value of an asset is greater than its estimated recoverable amount, its value is immediately reduced to its recoverable amount.

The Company has concluded that the Properties, Plant and Equipment cannot generate cash inflows to a large extent independent of other assets, therefore the impairment assessment is made as an integral part of the only Cash Generating Unit maintained by the Company, Air Transport. The Company checks when there are signs of impairment, whether the assets have suffered any impairment losses at the Cash Generated Unit level.

Management records deferred taxes on the temporary differences that arise between the tax bases of assets and liabilities and their amounts in the financial statements. Deferred tax assets on tax losses are recognized to the extent that it is probable that future tax benefits will be available to offset temporary differences.

The Company applies significant judgment in evaluating the recoverability of deferred tax assets. In determining the amounts of the deferred tax asset to be accounted for, management considers historical profitability, projected future taxable income (considering assumptions such as: growth rate, exchange rate, discount rate, fuel price online with those used in the impairment analysis of the group’s cash-generating unit) and the expected timing of reversals of existing temporary differences.

(d) Air tickets sold that will not be finally used.

The Company records the sale of air tickets as deferred income. Ordinary income from the sale of tickets is recognized in the income statement when the passenger transport service is provided or expired for non-use. The Company evaluates monthly the probability of expiration of air tickets, with return clauses, based on the history of use of air tickets. A change in this probability could generate an impact on revenue in the year in which the change occurs and in future years.

In effect and due to the worldwide contingency of the COVID 19 pandemic, the company has established new commercial policies with clients regarding the validity of air tickets, making it easier to use in flight, reissue and return.

Under this new scenario, in the year 2020 no income for expiration ticket’s revenue were recorded, which in a normal scenario would have amounted to approximately ThUS $ 70,000.

As of December 31, 2020, deferred income associated with air tickets sold amounted to ThUS $ 904,558 (ThUS $ 1,511,179 as of December 31, 2019).

(e) Valuation of miles and points awarded to holders of loyalty programs, pending use.

As of December 31, 2020, the deferred income associated with the LATAM Pass loyalty program amounts to ThUS $ 1,365,534 (ThUS $ 1,332,173 as of December 31, 2019). A hypothetical change of one percentage point in the probability of swaps would translate into an impact of ThUS $ 24,425 in the results as of 2020 (ThUS $ 30,506 in the results as of 2019). The deferred income associated with the LATAM Pass Brasil loyalty program (See Note 22) amounts to ThUS $ 187,493 as of December 31, 2020 (ThUS $ 354,847 as of December 31, 2019). A hypothetical change of two percentage points in exchange probability would translate into an impact of ThUS $ 2,950 in the results as of 2020 (ThUS $ 3,150 in the results as of 2019).

Management used statistical models to estimate the miles and point awarded that will not be redeemed, by the programs members (breakage) which involved significant judgments and assumptions relating the historical redemption and expiration activity and forecasted redemption and expiration patterns.

For the LATAM Pass Brasil loyalty program, expiration occurs after a fixed period of time from accumulation, the model is built by the administration considering historical expiration rates, exchange behaviors and relevant segmentations.

For LATAM Pass there are rules that allow members to renew their miles, so the management in conjunction with an external specialist develop a predictive model of non-use miles, which allows to generate non-use rates on the basis of historical information, based on behavior of the accumulation, use and expiration of the miles.

(f) Provisions needs, and their valuation when required

In the case of known contingencies, the Company records a provision when it has a present obligation, whether legal or implicit, as a result of past events, it is likely that an outflow of resources will be necessary to settle the obligation and the amount is has reliably estimated. Based on available information, the Company uses the knowledge, experience and professional judgment, to the specific characteristics of the known risks. This process facilitates the early assessment and quantification of potential risks in individual cases or in the development of contingent matters.

Company recognized as the present obligation under an onerous contract as a provision when a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

(g) Leases

(i) Discount rate

The discount rate used to calculate the lease debt corresponds, for each aircraft, to the implicit interest rate calculated by the contractual elements and residual market values. The implicit rate of the contract is the discount rate that gives the aggregate present value of the minimum lease payments and the unguaranteed residual value.

For assets other than aircraft, the estimated lessee’s incremental loan rate was used, which is derived from the information available on the lease commencement date, to determine the present value of the lease payments. We consider our recent debt issues, as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

A decrease of one percentage point in our estimate of the rates used as of January 1, 2019 (the date of adoption of the standard) would increase the lease liability by approximately ThUS $ 105 million.

(ii) Lease term

In determining the term of the lease, all the facts and circumstances that create an economic incentive to exercise an extension option are considered. Extension options (or periods after termination options) are only included in the term of the lease if you are reasonably certain that the lease will be extended (or not terminated). This is reviewed if a significant event or significant change in circumstances occurs that affects this assessment and is within the control of the lessee.

(h) Investment in subsidiary (TAM)

The management has applied its judgment in determining that LATAM Airlines Group S.A. controls TAM S.A. and Subsidiaries, for accounting purposes, and has therefore consolidated the financial statements.

The grounds for this decision are that LATAM issued ordinary shares in exchange for the majority of circulating ordinary and preferential shares in TAM, except for those TAM shareholders who did not accept the exchange, which were subject to a squeeze out, entitling LATAM to substantially all economic benefits generated by the LATAM Group, and thus exposing it to substantially all risks relating to the operations of TAM. This exchange aligns the economic interests of LATAM and all of its shareholders, including the controlling shareholders of TAM, thus ensuring that the shareholders and directors of TAM shall have no incentive to exercise their rights in a manner that would be beneficial to TAM but detrimental to LATAM. Furthermore, all significant actions necessary of the operation of the airlines require votes in favor by the controlling shareholders of both LATAM and TAM.

Since the integration of LAN and TAM operations, the most critical airline operations in Brazil have been managed by the CEO of TAM while global activities have been managed by the CEO of LATAM, who is in charge of the operation of the LATAM Group as a whole and reports to the LATAM Board.

The CEO of LATAM also evaluates the performance of LATAM Group executives and, together with the LATAM Board, determines compensation. Although Brazilian law currently imposes restrictions on the percentages of voting rights that may be held by foreign investors, LATAM believes that the economic basis of these agreements meets the requirements of accounting standards in force, and that the consolidation of the operations of LAN and LATAM is appropriate.

These estimates were made based on the best information available relating to the matters analyzed.

In any case, it is possible that events that may take place in the future could lead to their modification in future reporting periods, which would be made in a prospective manner.

NOTE 5 - SEGMENTAL INFORMATION

As of December 31, 2020, the Company considers that it has a single operating segment, Air Transport. This segment corresponds to the route network for air transport and is based on the way in which the business is managed, according to the centralized nature of its operations, the ability to open and close routes, as well as reassignment (airplanes, crew, personnel, etc.) within the network, which implies a functional interrelation between all of them, making them inseparable. This segment definition is one of the most common in the worldwide airline industry.

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

	For the year ended
	At December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Peru		297,549		801,965		705,133
Argentina		172,229		584,959		989,883
U.S.A.		505,145		1,004,238		985,919
Europe		338,565		726,165		782,197
Colombia		177,007		380,449		372,794
Brazil		1,304,006		3,949,797		3,433,877
Ecuador		112,581		203,334		203,842
Chile		638,225		1,546,960		1,591,313
Asia Pacific and rest of Latin America		378,360		872,196		830,498
Income from ordinary activities		3,923,667		10,070,063		9,895,456
Other operating income		411,002		360,864		472,758

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.

NOTE 6 - CASH AND CASH EQUIVALENTS

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$
Cash on hand		4,277		4,982
Bank balances		732,578		329,632
Overnight		802,220		350,080
Total Cash		1,539,075		684,694
Cash equivalents
Time deposits		123,984		165,791
Mutual funds		32,782		222,094
Total cash equivalents		156,766		387,885

Total cash and cash equivalents		1,695,841		1,072,579

Balance include Cash and Cash equivalent from the Group’s Companies that file for Chapter 11. Due to a motion approved by the US bankruptcy court these balance can only be used on normal course of business activities and invested on specific banks also approved on the motion.

Cash and cash equivalents are denominated in the following currencies:

	As of		As of
	December 31,		December 31,
Currency	2020		2019
	ThUS$		ThUS$
Argentine peso		20,107		16,579
Brazilian real		136,938		197,354
Chilean peso		32,649		50,521
Colombian peso		17,185		48,191
Euro		10,361		21,927
US Dollar		1,438,846		667,785
Other currencies		39,755		70,222
Total		1,695,841		1,072,579

NOTE 7 - FINANCIAL INSTRUMENTS

Financial instruments by category

As of December 31, 2020

	Measured at		At fair value
	amortized		with changes		Hedge
Assets	cost		in results		derivatives		Total
	ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		1,663,059		32,782		-		1,695,841
Other financial assets, current (*)		48,605		348		1,297		50,250
Trade and others accounts receivable, current		599,381		-		-		599,381
Accounts receivable from related entities, current		158		-		-		158
Other financial assets, non current		33,140		-		-		33,140
Accounts receivable, non current		4,986		-		-		4,986
Total		2,349,329		33,130		1,297		2,383,756

	Measured at		At fair value
	amortized		with changes		Hedge
Liabilities	cost		in results		derivatives		Total
	ThUS$		ThUS$		ThUS$		ThUS$
Other financial liabilities, current		3,050,059		2,937		2,734		3,055,730
Trade and others accounts payable, current		2,322,125		-		-		2,322,125
Accounts payable to related entities, current		812		-		-		812
Other financial liabilities, non-current		7,803,801		-		-		7,803,801
Accounts payable, non-current		651,600		-		-		651,600
Accounts payable to related entities, non-current		396,423		-		-		396,423
Total		14,224,820		2,937		2,734		14,230,491

(*)

The value presented as fair value with changes in the result, corresponds mainly to private investment funds; and as measured at amortized cost correspond to guarantees delivered.

As of December 31, 2019

	Measured at		At fair value
	amortized		with changes		Hedge
Assets	cost		in results		derivatives		Total
	ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		850,485		222,094		-		1,072,579
Other financial assets, current (*)		36,660		386,669		76,175		499,504
Trade and others accounts receivable, current		1,244,348		-		-		1,244,348
Accounts receivable from related entities, current		19,645		-		-		19,645
Other financial assets, non current		46,907		-		-		46,907
Accounts receivable, non current		4,725		-		-		4,725
Total		2,202,770		608,763		76,175		2,887,708

	Measured at
	amortized		Hedge
Liabilities	cost		derivatives		Total
	ThUS$		ThUS$		ThUS$
Other financial liabilities, current		1,835,288		50,372		1,885,660
Trade and others accounts payable, current accounts payables, current		2,222,874		-		2,222,874
Accounts payable to related entities, current		56		-		56
Other financial liabilities, non current		8,530,396		22		8,530,418
Accounts payable, non-current		619,110		-		619,110
Total		13,207,724		50,394		13,258,118

(*)

The value presented as initial designation as fair value through profit and loss, corresponds mainly to private investment funds; and as measured at amortized cost they correspond to the guarantees granted

NOTE 8 - TRADE AND OTHER ACCOUNTS RECEIVABLE CURRENT, AND NON-CURRENT ACCOUNTS RECEIVABLE

	As of			As of
	December 31,			December 31,
	2020			2019
	ThUS$			ThUS$
Trade accounts receivable		532,106			1,073,599
Other accounts receivable		194,454			275,876
Total trade and other accounts receivable		726,560			1,349,475
Less: Expected credit loss		(122,193	)		(100,402	)
Total net trade and accounts receivable		604,367			1,249,073
Less: non-current portion – accounts receivable		(4,986	)		(4,725	)
Trade and other accounts receivable, current		599,381			1,244,348

The fair value of trade and other accounts receivable does not differ significantly from the book value.

To determine the expected credit losses, the Company groups accounts receivable for passenger and cargo transportation; depending on the characteristics of shared credit risk and maturity.

	As of December 31, 2020								As December 31, 2019
	Expected			Gross book		Impairment loss			Expected			Gross book		Impairment loss
Portfolio maturity	loss rate (1)			value (2)		Provision			loss rate (1)			value (2)		Provision
	%			ThUS$		ThUS$			%			ThUS$		ThUS$
Up to date		4	%		302,079		(11,112	)		2	%		875,889		(16,433	)
From 1 to 90 days		4	%		103,615		(4,049	)		8	%		56,537		(4,253	)
From 91 to 180 days		66	%		15,989		(10,501	)		28	%		16,922		(4,747	)
From 181 to 360 days		80	%		40,621		(32,627	)		39	%		47,865		(18,459	)
more of 360 days		92	%		69,802		(63,904	)		74	%		76,386		(56,510	)
Total		23	%		532,106		(122,193	)		9	%		1,073,599		(100,402	)

(1) Corresponds to the consolidated expected rate of accounts receivable.

(2) The gross book value represents the maximum credit risk value of trade accounts receivables.

Currency balances composition of the Trade and other accounts receivable and non-current accounts receivable are as follow:

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

Argentine Peso		6,517		47,079
Brazilian Real		221,952		537,224
Chilean Peso		44,737		131,543
Colombian Peso		1,292		2,288
Euro		24,370		32,711
US Dollar		292,125		436,774
Korean Won		79		8,172
Mexican Peso		4,624		6,093
Australian Dollar		49		20,964
Pound Sterling		5,647		7,428
South African Rand		-		2,982
Uruguayan Peso (New)		792		1,375
Thai Bht		-		1,559
Swiss Franc		754		535
Russian Ruble		-		896
Japanese Yen		77		1,222
Swedish crown		129		2,012
New Zealand Dollar		-		1,148
Costa Rican Colon		-		1,390
Other Currencies		1,223		5,678
Total		604,367		1,249,073

The movements of the provision for impairment losses of the Trade Debtors and other accounts receivable are as follows:

				Adoption
	Opening			adjustment					(Increase)			Closing
	balance			IFRS 9 (*)			Write-offs		Decrease			balance
Periods	ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
From January 1 to December 31, 2018		(87,909	)		(10,524	)		8,620		(8,178	)		(97,991	)
From January 1 to December 31, 2019		(97,991	)		-			12,569		(14,980	)		(100,402	)
From January 1 to December 31, 2020		(100,402	)		-			30,754		(52,545	)		(122,193	)

Once pre-judicial and judicial collection efforts are exhausted, the assets are written off against the allowance. The Company only uses the allowance method rather than direct write-off, to ensure control.

The historical and current renegotiations are not very relevant, and the policy is to analyze case by case to classify them according to the existence of risk, determining if their reclassification corresponds to pre-judicial collection accounts.

The maximum credit-risk exposure at the date of presentation of the information is the fair value of each one of the categories of accounts receivable indicated above.

As of December 31, 2020

As of December 31, 2019

Gross exposure

Gross

Exposure net

Gross exposure

Gross

Exposure net

according to

impaired

of risk

according to

Impaired

of risk

balance

exposure

concentrations

balance

exposure

concentrations

ThUS$

Trade accounts receivable

532,106

(122,193

)

409,913

1,073,599

(100,402

)

973,197

Other accounts receivable

194,454

275,876

There are no relevant guarantees covering credit risk and these are valued when they are settled; no materially significant direct guarantees exist. Existing guarantees, if appropriate, are made through IATA.

NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES

(a)

Accounts Receivable

As of

Country

December 31,

Tax No.

Related party

Relationship

of origin

Currency

2020

2019

ThUS$

Foreign

Qatar Airways

Indirect shareholder

Qatar

US$

148

19,400

Foreign

TAM Aviação Executiva e

Taxi Aéreo S.A.

Common shareholder

Brazil

BRL

Foreign

Delta Air Lines Inc.

Shareholder

U.S.A.

US$

205

87.752.000-5

Granja Marina Tornagaleones S.A.

Common shareholder

Chile

CLP

96.782.530-1

Inmobiliaria e Inversiones Asturias S.A.

Related director

Chile

CLP

76.335.600-0

Parque de Chile S.A.

Related director

Chile

CLP

96.989.370-3

Rio Dulce S.A.

Related director

Chile

CLP

96.810.370-9

Inversiones Costa Verde

Ltda. y CPA.

Related director

Chile

CLP

Total current assets

158

19,645

(b)

Current and non current accounts payable

					Current liabilities				Non current liabilities
					As of		As of		As of		As of
			Country		December 31,		December 31,		December 31,		December 31,
Tax No.	Related party	Relationship	of origin	Currency	2020		2019		2020		2019
					ThUS$		ThUS$		ThUS$		ThUS$
78.591.370-1	Bethia S.A. and Subsidiaries	Related director	Chile	CLP		-		53		-		-
Foreign	Delta Airlines, Inc.	Shareholder	U.S.A.	US$		805		-		-		-
Foreign	Patagonia Seafarms INC	Related director	U.S.A.	US$		7		3		-		-
96.810.370-9	Inversiones Costa Verde Ltda. y CPA. (*)	Related director	Chile	CLP		-		-		105,713		-
Foreign	QA Investments Ltd (*)	Common shareholder	Jersey Channel Islands	US$		-		-		132,141		-
Foreign	QA Investments 2 Ltd (*)	Common shareholder	Jersey Channel Islands	US$		-		-		132,141		-
Foreign	Lozuy S.A. (*)	Common shareholder	Uruguay	US$		-		-		26,428		-
	Total current and non current liabilities					812		56		396,423		-

(*)

The balance correspond to DIP loan which is explained on Note 3.1 c).

Transactions between related parties have been carried out on arm’s lenght conditions between interested and duly-informed parties. The transaction times for Current and Non-Current Liabilities, they correspond to between 30 to 45 days and 1 to 2 years respectively, and the nature of settlement of the transactions is monetary.

NOTE 10 - INVENTORIES

The composition of Inventories is as follows:

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$
Technical stock		284,409		315,286
Non-technical stock		39,165		38,946
Total		323,574		354,232

The items included in this item correspond to spare parts and materials which will be used, mainly, in consumptions of on-board services and in own and third-party maintenance services; These are valued at their average acquisition cost net of their obsolescence provision according to the following detail:

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$
Provision for obsolescence Technical stock		42,979		21,193
Provision for obsolescence Non-technical stock		4,651		11,610
Total		47,630		32,803

The resulting amounts do not exceed the respective net realization values.

As of December 31, 2020, the Company registered ThUS$ 55,507 (ThUS$ 133,286 as of December 31, 2019) in results, mainly related to on-board consumption and maintenance, which is part of the Cost of sales.

NOTE 11 - OTHER FINANCIAL ASSETS

(a) The composition of other financial assets is as follows:

	Current Assets				Non-current assets				Total Assets
	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$

(a) Other financial assets
Private investment funds		348		386,669		-		-		348		386,669
Deposits in guarantee (aircraft)		2,435		8,934		21,498		28,599		23,933		37,533
Guarantees for margins of derivatives		3,047		21,200		-		-		3,047		21,200
Other investments		-		-		493		494		493		494
Domestic and foreign bonds		18		19		-		-		18		19
Other guarantees given		43,106		6,507		11,149		15,138		54,255		21,645
Subtotal of other financial assets		48,954		423,329		33,140		44,231		82,094		467,560
(b) Hedging derivate asset
Accrued Interest since the last payment date
Cross currency swap of currencies		-		3		-		-		-		3
Fair value of interest rate derivatives		-		27,044		-		2,676		-		29,720
Fair value of foreign currency derivatives		-		586		-		-		-		586
Fair value of fuel price derivatives		1,296		48,542		-		-		1,296		48,542
Subtotal of derivate assets		1,296		76,175		-		2,676		1,296		78,851
Total Other Financial Assets		50,250		499,504		33,140		46,907		83,390		546,411

The different derivative hedging contracts maintained by the Company at the end of each fiscal year are described in Note 19.

(b) The balances composition by currencies of the Other financial assets are as follows:

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

Argentine peso		460		94
Brazilian real		8,475		417,477
Chilean peso		4,056		26,073
Colombian peso		500		522
Euro		3,236		1,525
U.S.A dollar		63,922		97,988
Other currencies		2,741		2,732
Total		83,390		546,411

NOTE 12 - OTHER NON-FINANCIAL ASSETS

The composition of other non-financial assets is as follows:

	Current assets				Non-current assets				Total Assets
	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$

(a) Advance payments
Aircraft insurance and other		10,137		11,179		-		523		10,137		11,702
Others		15,375		15,167		2,998		1,832		18,373		16,999
Subtotal advance payments		25,512		26,346		2,998		2,355		28,510		28,701
(b) Contract assets (1)
GDS costs		4,491		16,593		-		-		4,491		16,593
Credit card commissions		6,021		23,437		-		-		6,021		23,437
Travel agencies commissions		4,964		16,546		-		-		4,964		16,546
Subtotal advance payments		15,476		56,576		-		-		15,476		56,576
(c) Other assets
Aircraft maintenance reserve (2)		8,613		27,987		-		17,844		8,613		45,831
Sales tax		102,010		167,987		46,210		34,680		148,220		202,667
Other taxes		4,023		34,295		-		-		4,023		34,295
Contributions to the International Aeronautical
Telecommunications Society (“SITA”)		258		258		739		739		997		997
Judicial deposits		-		-		76,835		149,310		76,835		149,310
Subtotal other assets		114,904		230,527		123,784		202,573		238,688		433,100
Total Other Non - Financial Assets		155,892		313,449		126,782		204,928		282,674		518,377

(1) Movement of Contracts assets:

Initial balance
Activation Cummulative
translation
adjustment Amortization Final balance

ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

From January 1 to December 31, 2019 48,957 166,300 (4,950 ) (153,731 ) 56,576

From January 1 to December 31, 2020 56,576 146,778 (14,672 ) (173,206 ) 15,476

(2) Aircraft maintenance reserves reflect prepayment deposits made by the group to lessors of certain aircraft under operating lease agreements in order to ensure that funds are available to support the scheduled heavy maintenance of the aircraft.

These deposits are calculated based on the operation, measured in cycles or flight hours, are paid periodically, and it is contractually stipulated that they be returned to the Company each time major maintenance is carried out. At the end of the lease, the unused maintenance reserves are returned to the Company or used to compensate the lessor for any debt related to the maintenance conditions of the aircraft.

In some cases, (2 lease agreements), if the maintenance cost incurred by LATAM is less than the corresponding maintenance reserves, the lessor is entitled to retain those excess amounts at the time the heavy maintenance is performed. The Company periodically reviews its maintenance reserves for each of its leased aircraft to ensure that they will be recovered and recognizes an expense if any such amounts are less than probable of being returned. The cost of aircraft maintenance in the last years has been higher than the related maintenance reserves for all aircraft.

As of December 31, 2020, maintenance reserves amount to ThUS$ 8,613 (ThUS$ 45,831 as of December 31, 2019), corresponding to 2 aircraft that maintain remaining balances, which will be settled in the next maintenance or return.

Aircraft maintenance reserves are classified as current or non-current depending on the dates when the related maintenance is expected to be performed (Note 2.23).

NOTE 13 - NON-CURRENT ASSETS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

Non-current assets and disposal group classified as held for sale at December 31, 2020 and December 31, 2019, are detailed below:

	As of December 31, 2020		As of December 31, 2019
	ThUS$		ThUS$
Current assets
Aircraft		275,000		482,806
Engines and rotables		740		1,943
Other assets		382		401
Total		276,122		485,150

The balances are presented at the lower of book value and fair value less cost to sell. The fair value of these assets was determined based on quoted prices in active markets for similar assets or liabilities. This is a level II measurement as per the fair value hierarchy set out in Note 3.3 (2). There were no transfers between levels for recurring fair value measurements during the year.

Assets reclassified from Property, plant and equipment to Non-current assets or groups of assets for disposal classified as held for sale.

During 2019, four Airbus A350, aircraft two Boeing 767, were reclassified from Property, plants and equipment to Non-current assets or groups of assets for disposal classified as held for sale.

Additionally, during the same year 2019, the sale of one motor spare Boeing 767 and one Boeing 767 aircraft were materialized. As a result of the above, during 2019, adjustments for US $ 2 million of expense were recognized to record these assets at their net realizable value.

During the year 2020, the sale of a Boeing 767 aircraft took place and therefore US $ 5.5 million was recognized as profit from the transaction.

Additionally, during the year 2020, Delta Air Lines, Inc. canceled the purchase of four Airbus A350 aircraft, given this, LATAM was compensated with the payment of ThUS $ 62,000, which was recorded in the income statement as other income. These four aircraft were reclassified to Property, plant and equipment.

During 2020, eleven Boeing 767 aircraft were transferred from the Property, plant and equipment item, to the Non-current assets item or groups of assets for disposal classified as held for sale.

Additionally, during the year 2020, adjustments for US $ 332 million of were recognized in income statement to adjust the assets to its fair value less the cost of sales, which were recorded the income statements as part of the expenses of restructuring activities.

The detail of the fleet classified as non-current assets and disposal group classified as held for sale is as follows:

	As of		As of
	December 31,		December 31,
Aircraft	2020		2019
Boeing 767		11		1
Airbus A350		-		4
Total		11		5

NOTE 14 - INVESTMENTS IN SUBSIDIARIES

(a) Investments in subsidiaries

The Company has investments in companies recognized as investments in subsidiaries. All the companies defined as subsidiaries have been consolidated within the financial statements of LATAM Airlines Group S.A. and Subsidiaries. The consolidation also includes special-purpose entities.

Detail of significant subsidiaries:

Ownership

As of

Country of

Functional

December 31,

Name of significant subsidiary

incorporation

currency

2020

2019

Latam Airlines Perú S.A.

Peru

US$

99.81000

70.00000

Lan Cargo S.A.

Chile

US$

99.89395

Lan Argentina S.A.

Argentina

ARS

99.98370

Transporte Aéreo S.A.

Chile

US$

100.00000

Latam Airlines Ecuador S.A.

Ecuador

US$

100.00000

Aerovías de Integración Regional, AIRES S.A.

Colombia

COP

99.19414

TAM S.A.

Brazil

BRL

99.99938

The consolidated subsidiaries do not have significant restrictions for transferring funds to the controlling entity in the normal course of operations, except for those imposed by Chapter 11 of the United States Bankruptcy Law, on dividend payments prior to the application for protection.

Summary financial information of significant subsidiaries

	Statement of financial position as of December 31, 2020												Income for the year ended December 31, 2020
	Total		Current		Non-current		Total		Current		Non-current				Net Income/
Name of significant subsidiary	Assets		Assets		Assets		Liabilities		Liabilities		Liabilities		Revenue		(loss)
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Latam Airlines Perú S.A.		661,721		629,910		31,811		486,098		484,450		1,648		372,255		(96,066	)
Lan Cargo S.A.		749,789		472,869		276,920		567,128		516,985		50,143		207,854		10,936
Lan Argentina S.A.		176,790		171,613		5,177		148,824		146,555		2,269		49,101		(220,667	)
Transporte Aéreo S.A.		546,216		264,690		281,526		347,714		278,319		69,395		142,096		(39,032	)
Latam Airlines Ecuador S.A.		108,086		104,534		3,552		99,538		87,437		12,101		51,205		(22,655	)
Aerovías de Integración Regional, AIRES S.A.		76,770		73,446		3,324		77,471		68,433		9,038		90,668		(89,707	)
TAM S.A. (*)		3,110,055		1,492,792		1,617,263		3,004,935		2,206,089		798,846		1,808,314		(1,025,618	)

	Statement of financial position as of December 31, 2019												Income for the year ended December 31, 2019
	Total		Current		Non-current		Total		Current		Non-current				Net Income/
Name of significant subsidiary	Assets		Assets		Assets		Liabilities		Liabilities		Liabilities		Revenue		(loss)
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Latam Airlines Perú S.A.		519,363		481,592		37,771		510,672		508,541		2,131		1,186,668		(1,739	)
Lan Cargo S.A.		634,852		334,725		300,127		462,666		398,872		63,794		274,774		(4,157	)
Lan Argentina S.A.		262,049		255,641		6,408		89,070		86,912		2,158		218,989		(133,408	)
Transporte Aéreo S.A.		359,335		101,128		258,207		142,423		46,383		96,040		315,105		14,610
Latam Airlines Ecuador S.A.		99,019		95,187		3,832		97,198		86,810		10,388		229,797		(3,411	)
Aerovías de Integración Regional, AIRES S.A.		187,001		135,344		51,657		78,990		70,643		8,347		291,235		(3,099	)
TAM S.A. (*)		5,036,864		2,580,665		2,456,199		3,497,559		2,556,280		941,279		5,013,293		185,720

	Statement of financial position as of December 31, 2018												Income for the year ended December 31, 2018
Name of significant subsidiary	Total Assets		Current Assets		Non-current Assets		Total Liabilities		Current Liabilities		Non-current Liabilities		Revenue		Net Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Latam Airlines Perú S.A.		419,325		379,490		39,835		409,221		406,159		3,062		871,860		2,732
Lan Cargo S.A.		513,367		243,499		269,868		336,715		292,399		44,316		190,997		(34,322	)
Lan Argentina S.A.		243,230		235,919		7,311		239,234		236,786		2,448		154,878		(132,538	)
Transporte Aéreo S.A.		331,496		72,597		258,899		129,233		28,277		100,956		231,221		(17,609	)
Latam Airlines Ecuador S.A.		108,735		96,564		12,171		98,238		89,921		8,317		174,821		4,354
Aerovías de Integración Regional, AIRES S.A.		116,352		55,865		60,487		77,984		69,150		8,834		215,366		(6,396	)
TAM S.A. (*)		4,420,546		2,007,830		2,412,716		3,256,017		1,832,796		1,423,221		3,434,453		358,616

(*) Corresponds to consolidated information of TAM S.A. and subsidiaries

(b)

Non-controlling interest

		Country	As of December 31,		As of December 31,		As of December 31,			As of December 31,
Equity	Tax No.	of origin	2020		2019		2020			2019
			%		%		ThUS$			ThUS$
Latam Airlines Perú S.A	0-E	Peru		0.19000		30.00000		(7,238	)		2,609
Lan Cargo S.A. and Subsidiaries	93.383.000-4	Chile		0.10196		0.10196		666			369
Inversora Cordillera S.A. and Subsidiaries	0-E	Argentina		0.01630		0.01630		(276	)		(6,276	)
Lan Argentina S.A.	0-E	Argentina		0.00344		0.00344		1			50
Americonsult de Guatemala S.A.	0-E	Guatemala		0.87000		0.87000		1			1
Americonsult S.A. and Subsidiaries	0-E	Mexico		0.20000		0.20000		(6	)		(7	)
Americonsult Costa Rica S.A.	0-E	Costa Rica		0.20000		0.20000		2			2
Linea Aérea Carguera de Colombiana S.A.	0-E	Colombia		9.54000		10.00000		(522	)		(755	)
Aerolíneas Regionales de Integración Aires S.A.	0-E	Colombia		0.79880		0.79880		(13	)		899
Transportes Aereos del Mercosur S.A.	0-E	Paraguay		5.02000		5.02000		713			1,503
Total								(6,672	)		(1,605	)

			For the year ended						For the year ended
		Country	December 31,		December 31,		December 31,		December 31,
Incomes	Tax No.	of origin	2020		2019		2018		2020			2019			2018
			%		%		%		ThUS$			ThUS$			ThUS$

Latam Airlines Perú S.A	0-E	Peru		0.19000		30.00000		30.00000		(8,102	)		(1,065	)		1,673
Lan Cargo S.A. and Subsidiaries	93.383.000-4	Chile		0.10196		0.10196		0.10196		(121	)		19			(406	)
Inversora Cordillera S.A. and Subsidiaries	0-E	Argentina		0.01630		4.22000		0.13940		360			359			66
Lan Argentina S.A.	0-E	Argentina		0.00344		0.00344		0.02890		70			48			39
Americonsult S.A. and Subsidiaries	0-E	Mexico		0.20000		0.20000		0.20000		1			(7	)		2
Linea Aérea Carguera de Colombiana S.A.	0-E	Colombia		9.54000		10.00000		10.00000		(943	)		(293	)		58
Aerolíneas Regionales de Integración Aires S.A.	0-E	Colombia		0.79880		0.79880		0.79880		(724	)		(24	)		87
Transportes Aereos del Mercosur S.A.	0-E	Paraguay		5.02000		5.02000		5.02000		(189	)		420			717
Multiplus S.A.(*)	0-E	Brazil		-		-		27.26000		-			5,726			29,739
Total										(9,648	)		5,183			31,975

(*) See Note 1 letter (b)

NOTE 15 - INTANGIBLE ASSETS OTHER THAN GOODWILL

The details of intangible assets are as follows:

	Classes of intangible assets (net)				Classes of intangible assets (gross)
	As of December 31, 2020		As of December 31, 2019		As of December 31, 2020		As of December 31, 2019
	ThUS$		ThUS$		ThUS$		ThUS$
Airport slots		627,742		845,959		627,742		845,959
Loyalty program		204,615		263,806		204,615		263,806
Computer software		139,113		220,993		528,097		656,699
Developing software		68,521		99,193		69,379		99,193
Trademarks (1)		6,340		17,959		39,803		51,326
Other assets		228		331		1,315		1,315
Total		1,046,559		1,448,241		1,470,951		1,918,298

Movement in Intangible assets other than goodwill:

	Computer software Net			Developing software			Airport slots (2)			Trademarks and loyalty program (1) ( 2)			Total
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance as of January 1, 2018		160,970			123,415			964,513			368,349			1,617,247
Additions		791			94,301			-			-			95,092
Withdrawals		(403	)		(125	)		-			-			(528	)
Transfer software		59,771			(61,087	)		-			-			(1,316	)
Foreign exchange		(10,231	)		(4,651	)		(135,544	)		(53,522	)		(203,948	)
Amortization		(54,549	)		-			-			(11,046	)		(65,595	)
Adjustment application IAS 29 by hyperinflation Argentina		120			-			-			-			120

Closing balance as of December 31, 2018		156,469			151,853			828,969			303,781			1,441,072

Opening balance as of January 1, 2019		156,469			151,853			828,969			303,781			1,441,072
Additions		278			91,371			47,587			-			139,236
Withdrawals		(270	)		(1,123	)		-			-			(1,393	)
Transfer software		136,935			(140,102	)		-			-			(3,167	)
Foreign exchange		(1,981	)		(2,806	)		(30,597	)		(11,612	)		(46,996	)
Amortization		(70,107	)		-			-			(10,404	)		(80,511	)

Closing balance as of December 31, 2019		221,324			99,193			845,959			281,765			1,448,241

Opening balance as of January 1, 2020		221,324			99,193			845,959			281,765			1,448,241
Additions		45			76,331			-			-			76,376
Withdrawals		(333	)		(454	)		(36,896	)		-			(37,683	)
Transfer software		101,015			(99,890	)		-			-			1,125
Foreign exchange		(20,242	)		(6,659	)		(181,321	)		(63,478	)		(271,700	)
Amortization		(162,468	)		-			-			(7,332	)		(169,800	)

Closing balance as of December 31, 2020		139,341			68,521			627,742			210,955			1,046,559

(1)

In 2016, the Company resolved to adopt a unique name and identity, and announced that the group’s brand will be LATAM, which united all the companies under a single image.

The estimate of the new useful life is 5 years, equivalent to the period necessary to complete the change of image.

(2)

See Note 2.5

(3)

In 2020, a digital transformation was implemented (LATAM XP), as a result some projects became obsolete and were fully amortized.

For further detail on impairment test see Note 16.

The amortization of each period is recognized in the consolidated income statement in the administrative expenses. The cumulative amortization of computer programs, brands and other assets as of December 31, 2020, amounts to ThUS $ 424,932 (ThUS $ 470,057 as of December 31, 2019).

NOTE 16 - GOODWILL AND INTANGIBLE ASSETS OF INDEFINITE USEFUL LIFE

During the year 2020, the Company, as a result of what is described below, has recognized an impairment for the total Goodwill. As of December 31, 2019, its value was ThUS $ 2,209,576.

Movement of Goodwill, separated by CGU:

	Air Transport			Coalition and loyalty program Multiplus			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2018		2,146,692			525,858			2,672,550
Increase (decrease) due to exchange rate differences		(300,203	)		(76,922	)		(377,125	)
Adjustment IAS 29, hyperinflation Argentina		335			-			335
Others		(1,688	)		-			(1,688	)
Closing balance as of December 31, 2018		1,845,136			448,936			2,294,072
Opening balance as of January 1, 2019		1,845,136			448,936			2,294,072
Increase (decrease) due to exchange rate differences		(67,133	)		(17,363	)		(84,496	)
Transfer from Multiplus S.A. (see nota 1)		431,573			(431,573	)		-
Closing balance as of December 31, 2019		2,209,576			-			2,209,576
Opening balance as of January 1, 2020		2,209,576			-			2,209,576
Increase (decrease) due to exchange rate differences		(480,601	)		-			(480,601	)
Impairment loss		(1,728,975	)		-			(1,728,975	)
Closing balance as of December 31, 2020		-			-			-

As of December 31, 2020, the Company maintains only the CGU “Air Transport”, due to the merger of Multiplus S.A. in TAM Linhas Aereas in the year 2019 (see Note 1), and changes in the management structure.

The CGU “Air Transport” considers the transport of passengers and cargo, both in the domestic markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil, as well as in a series of regional and international routes in America, Europe, Africa and Oceania.

As of March 31, 2020 LATAM Airlines Group S.A. maintained a suspension of a large part of the operation and as a result of the impacts mentioned in Note 2 associated with COVID 19, impairment indicator were identified that led the Company to carry out an impairment test. Impairment indicator identified were: Increase in uncertainty about pandemic (on the economic and health situation, the lengths of the crisis, the extent of the closure of operations, among others), increase in market interest rates, fall in share price and decrease in operations.

The recoverable amount of the CGU was determined based on calculations of the value in use. These calculations use projections of 5 years cash flows after taxes from the financial budgets approved by the Administration. Cash flows beyond the budgeted period are extrapolated using growth rates and estimated average volumes, which do not exceed long-term average growth rates.

Management’s cash flow projections included significant judgements and assumptions related to annual revenue growth rates, discount rate, inflation rates, the exchange rate and price of fuel. The annual revenue growth rate is based on past performance and management’s expectations of market development in each of the countries in which it operates. The discount rates used, for the CGU “Air Transport”, are in determined in US dollars, after taxes, and reflect specific risks related to the relevant countries of each of the operations. Inflation rates and exchange rates are based on the data available from the countries and the information provided by the Central Banks of the various countries where it operates, and the price of fuel is determined based on estimated levels of production, the competitive environment of the market in which they operate and their commercial strategy.

As of March 31, 2020 the recoverable values were determined using the following assumptions presented below:

		Air transportation CGU
Annual growth rate (Terminal)	%		1.1
Exchange rate (1)	R$/US$		4.8 - 5.2
Discount rate based on the weighted average cost of capital (WACC) (2)	%		8.0 - 19.4
Fuel Price from futures price curves commodities markets	US$/barrel		52-75

(1)

In line with the expectations of the Central Bank of Brazil

(2)

As a result of the distortion generated by the current contingency in market rates, a multi-period WACC was used for each of the years of the projection, starting at 19.4% for the first year and reaching 8.0% from the Third year onward.

WACC sensitivity

At using a single rate the possible impairment scenario will be as follow:

	Actual		7.5%	8.0%		9.0%		10.0%
WACC	MUS$		MUS$	MUS$		MUS$		MUS$

Excess (Impairment)	(1,716	)	381	(564	)	(2,095	)	(3,280	)

The estimated recoverable amount as of March 31, 2020 of ThUS $ 9,398 was compared to the net book values of the cash-generating unit on the same date, resulting in an impairment loss of MUS $ 1,729. The total amount was recognized in the consolidated statement of income under Other gains (losses). There were no additional amounts of impairment that needed to be adjusted to other non-financial assets.

As of December 31, 2020, in accordance with its accounting policy, the Company performed the annual impairment test. Compared to the test carried out as of March 31, 2020, the only methodological difference is that a single discount rate (WACC) was used again for all periods, and the uncertainty that exists in the current market was incorporated into multiple probability-weighted scenarios.

As of December 31, 2020, the recoverable values were determined using the following assumptions:

		Air Transportation CGU
Annual growth rate (terminal)	%	0.6-1.6
Exchange rate (1)	R$/US$	5.4-5.6
Discount rate based on weighted average cost of capital (WACC - Weighted Average Cost of Capital)	%	8.65-9.65
Fuel price from future price curves of the commodity markets.	US$/barril	60-78

(1)

In line with the expectations of the Central Bank of Brazil.

(2)

The ranges incorporate the variables of the multiple probability-weighted scenarios.

The result of the impairment test, which includes a sensitivity analysis of its principal assumptions, conclude that the calculated value in use exceed the book value of the assets net of the cash-generating unit, and therefore no impairment was detected.

The CGU is sensitive to annual growth, discount and exchange rates. The analysis of sensitivity included the individual impact of variations in critical assumptions when determine the value in use, as follow:

	Increase	Decrease rate
	WACC	terminal growth
	Maximum	minimal
	%	%
Air Transportation CGU	9.65	0.6

In none of the above scenarios an impairment of the cash-generating unit was identified.

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

NOTE 18 - CURRENT AND DEFERRED TAXES

In the year ended December 31, 2020, the income tax provision was calculated for such period, applying the partially semi-integrated taxation system and a rate of 27%, in accordance with the Law No. 21,210, which modernizes the Tax Legislation, published in the Journal of the Republic of Chile, dated February 24, 2020.

The net result for deferred tax corresponds to the variation of the year, of the assets and liabilities for deferred taxes generated by temporary differences and tax losses.

For the permanent differences that give rise to a book value of assets and liabilities other than their tax value, no deferred tax has been recorded since they are caused by transactions that are recorded in the financial statements and that will have no effect on spending tax for income tax.

(a)

Current taxes

(a.1)

The composition of the current tax assets is the following:

	Current assets				Non-current assets				Total assets
	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$
Provisional monthly payments (advances)		36,788		10,968		-		-		36,788		10,968
Other recoverable credits		5,532		18,353		-		-		5,532		18,353
Total assets by current tax		42,320		29,321		-		-		42,320		29,321

(a.2)

The composition of the current tax liabilities are as follows:

	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$
Income tax provision		656		11,925		-		-		656		11,925
Total liabilities by current tax		656		11,925		-		-		656		11,925

(b) Deferred taxes

The balances of deferred tax are the following:

	Assets						Liabilities
Concept	As of December 31, 2020			As of December 31, 2019			As of December 31, 2020			As of December 31, 2019
	ThUS$			ThUS$			ThUS$			ThUS$

Properties, Plants and equipment		(1,314,456	)		186,311			81,881			1,700,215
Assets by right of use		229,119			42,011			(136	)		(91,470	)
Amortization		(65,139	)		(903	)		9			52,233
Provisions		212,492			(139,346	)		68,462			(182,913	)
Revaluation of financial instruments		(18,133	)		422			-			(9,857	)
Tax losses		1,496,952			155,539			(60,785	)		(1,200,729	)
Intangibles		-			-			270,681			349,082
Other		23,981			(8,451	)		24,168			242
Total		564,816			235,583			384,280			616,803

The balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed in the long term.

Movements of Deferred tax assets and liabilities

(a) From January 1 to December 31, 2018

	Opening balance Assets/ (liabilities)			Recognized in consolidated income			Recognized in comprehensive income			Exchange rate variation			Ending balance Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Property, plant and equipment		(1,568,764	)		(19,735	)		-			6,003			(1,582,496	)
Assets for right of use		75,849			9,903			-			-			85,752
Amortization		(54,820	)		(3,735	)		-			1,692			(56,863	)
Provisions		(10,461	)		92,804			1,566			(46,581	)		37,328
Revaluation of financial instruments		3,750			(2,326	)		(269	)		(1,168	)		(13	)
Tax losses		1,479,560			(98,154	)		-			(12,256	)		1,369,150
Intangibles		(406,536	)		20,000			-			35,298			(351,238	)
Others		(28,405	)		5,439			-			8,304			(14,662	)
Total		(509,827	)		4,196			1,297			(8,708	)		(513,042	)

(b) From January 1 to December 31, 2019

	Opening balance Assets/ (liabilities)			Recognized in consolidated income			Recognized in comprehensive income		Exchange rate variation			Ending balance Asset (liability)
	ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
Property, plant and equipment		(1,582,496	)		67,237			-		1,355			(1,513,904	)
Assets for right of use		85,752			47,729			-		-			133,481
Amortization		(56,863	)		3,345			-		382			(53,136	)
Provisions		37,328			13,881			2,873		(10,515	)		43,567
Revaluation of financial instruments		(13	)		10,142			414		(264	)		10,279
Tax losses		1,369,150			(10,116	)		-		(2,766	)		1,356,268
Intangibles		(351,238	)		(11,718	)		-		13,874			(349,082	)
Others		(14,662	)		5,844			-		125			(8,693	)
Total		(513,042	)		126,344			3,287		2,191			(381,220	)

(c)

From January 1 to December 31, 2020

	Opening balance Assets/ (liabilities)			Recognized in consolidated income			Recognized in comprehensive income		Exchange rate variation			Ending balance Asset (liability)
	ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
Property, plant and equipment		(1,513,904	)		110,010			-		7,557			(1,396,337	)
Assets for right of use		133,481			95,774			-		-			229,255
Amortization		(53,136	)		(14,142	)		-		2,130			(65,148	)
Provisions		43,567			158,178			924		(58,639	)		144,030
Revaluation of financial instruments		10,279			(27,901	)		959		(1,470	)		(18,133	)
Tax losses		1,356,268			216,897			-		(15,428	)		1,557,737
Intangibles		(349,082	)		1,030			-		77,371			(270,681	)
Others		(8,693	)		6,541			-		1,965			(187	)
Total		(381,220	)		546,387			1,883		13,486			180,536

Unrecognized deferred tax assets:

Deferred tax assets are recognized to the extent that it is probable that the corresponding tax benefit will be realized in the future. Therefore, as of December 31, 2020, the Company has recognized provision with an impact on income, for the deferred tax assets that it estimates will not be recoverable in the foreseeable future for ThUS$ 237,637, in total the company has not recognized deferred tax assets for ThUS$ 749,100 (ThUS$ 110,933 as of December 31, 2019) which include deferred tax assets related to negative tax results of ThUS$ 1,433,474 (ThUS$ 338,679 at December 31, 2019).

Deferred tax expense and current income taxes:

	For the year ended
	December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$

Current tax expense
Current tax expense		(3,602	)		72,999			77,713
Adjustment to previous period’s current tax		(199	)		(352	)		362
Total current tax expense, net		(3,801	)		72,647			78,075
Deferred tax expense
Deferred expense for taxes related to the creation and reversal of temporary differences		(546,387	)		(126,344	)		(126,344	)
Total deferred tax expense, net		(546,387	)		(126,344	)		(126,344	)
Income/(loss) tax expense		(550,188	)		(53,697	)		(48,269	)

Composition of income/(loss) tax expense:

	For the year ended
	December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$
Current tax expense, net, foreign		4,232			76,806			65,850
Current tax expense, net, Chile		(8,033	)		(4,159	)		12,225
Total current tax expense, net		(3,801	)		72,647			78,075
Deferred tax expense, net, foreign		235,963			37,294			58,271
Deferred tax expense, net, Chile		(782,350	)		(163,638	)		(62,467	)
Deferred tax expense, net, total		(546,387	)		(126,344	)		(4,196	)
Income/(loss) tax expense		(550,188	)		(53,697	)		73,879

Income before tax from the Chilean legal tax rate (27% as of December 31, 2020 and 2019)

	For the year ended									For the year ended
	December 31,									December 31,
	2020			2019			2018			2020			2019			2018
	ThUS$			ThUS$			ThUS$			%			%			%
Tax expense using the legal rate		(1,378,547	)		38,318			11,230			27.00			27.00			27.00
Tax effect by change in tax rate		-			-			5,587			-			-			1.34
Tax effect of rates in other jurisdictions		(58,268	)		20,082			15,905			1.14			14.15			3.83
Tax effect of non-taxable operating revenues		(19,529	)		(13,125	)		(3,076	)		0.38			(9.25	)		(0.74	)
Tax effect of disallowable expenses		40,528			66,257			61,295			(0.79	)		46.69			14.75
Other increases (decreases):
Derecognition of deferred tax liabilities for early termination of aircraft financing		(294,969	)		(145,930	)		-			5.78			(102.83	)		-
Tax effect for goodwill impairment losses		453,681			-			-			(8.89	)		-			-
Derecognition of deferred tax assets not recoverable		237,637			-			-			(4.65	)		-			-
Deferred tax asset not recognized		414,741			-			-			(8.12	)		-			-
Other increases (decreases):		54,538			(19,299	)		-			(1.07	)		(13.60	)		-
Total adjustments to tax expense using the legal rate		828,359			(92,015	)		79,711			(16.22	)		(64.84	)		19.18
Tax expense using the effective rate		(550,188	)		(53,697	)		90,941			10.78			(37.84	)		46.18

Deferred taxes related to items charged to equity:

	For the year ended
	December 31,
	2020		2019
	ThUS$		ThUS$
Aggregate deferred taxation of components of other comprehensive income		1,883		3,287

NOTE 19 - OTHER FINANCIAL LIABILITIES

The composition of other financial liabilities is as follows:

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$
Current
(a) Interest bearing loans		2,243,776		1,421,261
(b) Lease Liability		806,283		414,027
(c) Hedge derivatives		2,734		50,372
(d) Derivative non classified as hedge accounting		2,937		-
Total current		3,055,730		1,885,660

Non-current
(a) Interest bearing loans		5,489,078		5,772,266
(b) Lease Liability		2,314,723		2,758,130
(c) Hedge derivatives		-		22
Total non-current		7,803,801		8,530,418

(a) Interest bearing loans

Obligations with credit institutions and debt instruments:

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$
Current
Loans to exporters		151,701		341,475
Bank loans		385,490		16,534
Guaranteed obligations (7)(8)(10)		388,492		237,951
Other guaranteed obligations		435,413		97,730
Subtotal bank loans		1,361,096		693,690
Obligation with the public		108,301		32,061
Financial leases (7)(8)(10)		774,379		594,249
Other loans (4)		-		101,261
Total current		2,243,776		1,421,261
Non-current
Bank loans		139,783		200,721
Guaranteed obligations (7)(8)(10)		930,364		1,919,376
Other guaranteed obligations (5)(9)		1,503,703		482,702
Subtotal bank loans		2,573,850		2,602,799
Obligation with the public (1)(2)(3)		2,075,106		2,032,873
Financial leases (7)(8)(10)		840,122		1,136,594
Total non-current		5,489,078		5,772,266
Total obligations with financial institutions		7,732,854		7,193,527

(1)

On February 11, 2019, LATAM Finance Limited, a company incorporated in the Cayman Islands with limited liability and exclusively owned by LATAM Airlines Group S.A., has issued on the international market, pursuant to Rule 144-A and Regulation S of the securities laws of the United States of America, unsecured long-term bonds for a nominal amount of US $ 600,000,000 at an annual interest rate of 7.00%. The bonds were placed at an issue price of 99.309% with respect to its even value. The bonds have semiannual interest payments and amortization of all capital at maturity and maturity date on March 1, 2026, unless they will be redeemed early according to their terms. As reported to the market, the issuance and placement was intended to finance general corporate purposes.

(2)

On June 6, 2019, LATAM Airlines Group S.A. has issued in the local market (Santiago Stock Exchange) long-term unsecured bonds called Series E (BLATM-E), which correspond to the first series of bonds charged to the line registered in the Registro de Comisión para el Mercado Financiero (“CMF”) under the number Nº 921 dated November 26, 2018 for a total of UF 9,000,000.

The total amount issued was UF 5,000,000 with an expiration date on April 15, 2029 and a 3.60% annual coupon rate with semiannual interest payments. The placement rate was 2.73%, equivalent to an amount of ThUS$ 215,093.

The funds from the issuance were allocated 50% to the refinancing of liabilities, 30% for the financing of investments and 20% for general corporate purposes.

(3)

On July 11, 2019, LATAM Finance Limited, a company incorporated in the Cayman Islands with limited liability and exclusive property of LATAM Airlines Group SA, issued a re-opening of the LATAM 2026 bond, issued on February 11 of 2019, for US $ 200,000,000. This re-opening had a placement rate of 5.979%.

Simultaneously, dated July 11, 2019, LATAM Airlines Group S.A. announced an offer for the repurchase of up to US $ 300 million of the unsecured LATAM 2020 bond, which was issued on June 9, 2015 for an amount of US $ 500 million at a coupon rate of 7.25% and due in June 2020. Offer repurchase price was 103.8 cents per dollar of nominal amount for the bonds offered until July 24, 2019, after this date and until August 7, 2019, the offered repurchase price was reduced to 100.8 cents for dollar at the expiration of the offer, a total of US $ 238,412,000 of the bonds were redeemed, of which US $ 238,162,000 arrived on or before July 24, 2019 and US $ 250,000 after that date. The net proceeds obtained from the re-opening of the LATAM 2026 bond was used to pay a portion of the public offer of the LATAM 2020 bond. The remainder of the public offer was paid in cash.

On December 17, 2019, LATAM Airlines Group S.A. The repurchase of the remainder (US $ 262 million) of the unsecured bond LATAM2020 ended, which, added to the repurchase of July 11, 2019, ends the entire balance of the bond. The repurchase was carried out through the buy-back mechanism called “Make-Whole,” which is a right of the bond issuer to repurchase the entire outstanding balance of debt based on a price that is calculated using government treasury bonds. of the United States with maturity close to that of the bond and adding a spread. The repurchase price was 102.45 cents per dollar of nominal bond amount.

(4)

On March 16, 2020, the obligations contained in the contract called “Indenture” signed between Guanay Finance Limited (see Note 1), LATAM Airlines Group S.A. expired. and Citibank, N.A. dated November 7, 2013. The bonds securitized with the future flows of credit card sales in the United States and Canada were issued in 2013 for a total of US $ 450 million.

(5)

During March and April 2020, LATAM Airlines Group S.A. it drew down the entire (US $600 million) of the committed credit line “Revolving Credit Facility (RCF)”. The financing expires on March 29, 2022. The line is guaranteed with collateral consisting of airplanes, engines and spare parts. The first withdrawal was on March 27, 2020 with an amount of US $ 504.7 million, the second withdrawal was on April 7, 2020 for US $ 72 million, the third withdrawal was on April 14, 2020 for US $ 11.2 million and the fourth and last withdrawal was on April 21, 2020 of US $ 12.1 million.

(6)

On May 26, 2020, LATAM Airlines Group S.A. and its subsidiaries in Chile, Peru, Colombia and Ecuador availed themselves, in court for the southern district of New York, to the protection of Chapter 11 of the bankruptcy law of the United States. Under Section 362 of the Bankruptcy Code. The same happened for TAM LINHAS AÉREAS S.A and certain subsidiaries (all LATAM subsidiary in Brazil), on July 8, 2020. Having filed for Chapter 11 automatically suspends most actions against LATAM and its subsidiaries, including most actions to collect financial obligations incurred before the date of receipt of Chapter 11 or to exercise control over the property of LATAM and its subsidiaries. Consequently, although the bankruptcy filing may have led to breaches of some of the obligations of LATAM and its subsidiaries, the counterparties cannot take any action as a result of said breaches.

At the end of the year, Chapter 11 retains most of the actions on the debtors so the repayment of the debt is not accelerated. The Group continues to present its financial information as of December 31, 2020, including its interest bearing loan and leases, in accordance with the originally agreed conditions, pending future agreements that it may reach with its creditors under Chapter 11.

(7)

On June 24, 2020, the United States Court for the Southern District of New York approved the motion filed by the Company to reject certain aircraft lease contracts. Rejected contracts include, 17 aircraft financed under the EETC structure with an amount of MUS $ 844.1 and an aircraft financed with a financial lease with an amount of MUS $ 4.5.

(8)

On October 20, 2020, the United States Court for the Southern District of New York approved the motion presented by the Company to reject an aircraft lease contract financed as financial lease in the amount of MUS $ 34.3.

(9)

On October 10, 2020, LATAM Airlines Group S.A. partially drew down (MUS $ 1,150) of the committed credit line of the “DIP” financing. The financing expires on April 10, 2022. The line is guaranteed with collateral consisting of routes, slots, engines and spare parts. After this, transfer, the company still has MUS $ 1,300 available. This line is committed for a total of US $ 2,450 million, of which US $ 750 million are committed by related parties.

(10)

In the year ended December 31, 2020, the Company transferred its interest in 7 special purpose entities. As a result of the above, the classification of financial liabilities associated with 3 aircraft within guaranteed obligations was modified, and classified as financial leases.

Balances by currency of interest bearing loans are as follows:

	As of		As of
	December 31,		December 31,
	2020		2019
Currency	ThUS$		ThUS$
Brazilian real		300,659		-
Chilean peso (U.F.)		679,983		611,542
US Dollar		6,752,212		6,581,985
Total		7,732,854		7,193,527

Interest-bearing loans due in installments to December 31, 2020

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

				Nominal values												Accounting values

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

Loans to exporters
97.032.000-8	BBVA	Chile	US$		74,000		-		-		-		-		74,000		76,929		-		-		-		-		76,929	At Expiration		3.08		3.08
97.030.000-7	ESTADO	Chile	US$		40,000		-		-		-		-		40,000		41,542		-		-		-		-		41,542	At Expiration		3.49		3.49
76.645.030-K	ITAU	Chile	US$		20,000		-		-		-		-		20,000		20,685		-		-		-		-		20,685	At Expiration		4.20		4.20
97.951.000-4	HSBC	Chile	US$		12,000		-		-		-		-		12,000		12,545		-		-		-		-		12,545	At Expiration		4.15		4.15
Bank loans
97.023.000-9	CORPBANCA	Chile	UF		11,255		-		-		-		-		11,255		11,665		-		-		-		-		11,665	Quarterly		3.35		3.35
0-E	SANTANDER	Spain	US$		-		-		139,459		-		-		139,459		3,300		-		139,459		-		-		142,759	Quarterly		2.80		2.80
76.362.099-9	BTG PACTUAL CHILE	Chile	UF		-		67,868		-		-		-		67,868		1,985		67,237		-		-		-		69,222	At Expiration		3.10		3.10
Obligations with the public
97.030.000-7	ESTADO	Chile	UF		-		-		177,846		-		382,267		560,113		25,729		-		177,715		-		395,652		599,096	At Expiration		4.81		4.81
0-E	BANK OF NEW YORK	U.S.A.	US$		-		-		-		700,000		800,000		1,500,000		82,572		-		-		698,450		803,289		1,584,311	At Expiration		7.16		6.94
Guaranteed obligations
0-E	BNP PARIBAS	U.S.A.	US$		31,039		43,655		91,002		97,621		210,956		474,273		40,931		47,668		87,767		96,513		209,612		482,491	Quarterly / Semiannual		2.95		2.95
0-E	NATIXIS	France	US$		42,740		34,150		77,693		81,244		35,302		271,129		50,001		34,150		75,808		80,316		34,969		275,244	Quarterly		3.11		3.11
0-E	INVESTEC	England	US$		6,329		11,606		19,935		-		-		37,870		7,952		12,522		19,588		-		-		40,062	Semiannual		6.21		6.21
0-E	MUFG	U.S.A.	US$		30,590		24,080		67,730		72,881		187,132		382,413		39,516		24,080		67,014		72,494		186,283		389,387	Quarterly		2.88		2.88
0-E	SMBC	U.S.A.	US$		130,000		-		-		-		-		130,000		131,662		-		-		-		-		131,662	At Expiration		1.73		1.73
-	SWAP Received aircraft	-	US$		10		-		-		-		-		10		10		-		-		-		-		10	Quarterly		-		-
Other guaranteed obligations
0-E	CREDIT AGRICOLE	France	US$		-		273,199		-		-		-		273,199		1,395		272,794		-		-		-		274,189	At Expiration		1.92		1.92
0-E	MUFG	U.S.A.	US$		82,498		72,206		117,084		19,731		-		291,519		88,880		72,206		114,589		19,499		-		295,174	Quarterly		2.67		2.67
0-E	CITIBANK	U.S.A.	US$		-		-		600,000		-		-		600,000		138		-		600,000		-		-		600,138	At Expiration		2.27		2.27
0-E	BANK OF UTAH	U.S.A.	US$		-		-		793,003		-		-		793,003		-		-		769,615		-		-		769,615	At Expiration		18.95		12.26
Financial leases
0-E	ING	U.S.A.	US$		5,965		-		-		-		-		5,965		6,017		-		-		-		-		6,017	Quarterly		5.71		5.01
0-E	CREDIT AGRICOLE	France	US$		13,875		2,034		2,052		-		-		17,961		13,922		2,034		2,052		-		-		18,008	Quarterly		1.99		1.54
0-E	CITIBANK	U.S.A.	US$		77,994		58,993		113,186		43,778		18,841		312,792		78,860		58,993		109,086		42,558		18,619		308,116	Quarterly		2.58		1.77
0-E	PEFCO	U.S.A.	US$		1,926		-		-		-		-		1,926		1,938		-		-		-		-		1,938	Quarterly		5.65		5.03
0-E	BNP PARIBAS	U.S.A.	US$		14,934		2,326		791		-		-		17,951		14,909		2,326		788		-		-		18,023	Quarterly		1.81		1.41
0-E	WELLS FARGO	U.S.A.	US$		112,987		99,975		230,416		98,028		-		541,406		114,994		99,975		219,624		96,556		-		531,149	Quarterly		2.43		1.74
97.036.000-K	SANTANDER	Chile	US$		21,456		17,626		26,165		-		-		65,247		21,550		17,626		25,840		-		-		65,016	Quarterly		1.30		0.76
0-E	RRPF ENGINE	England	US$		2,058		3,644		7,752		5,035		-		18,489		2,602		3,644		7,752		5,035		-		19,033	Monthly		4.01		4.01
0-E	APPLE BANK	U.S.A.	US$		4,538		4,631		12,808		753		-		22,730		4,599		4,632		12,608		752		-		22,591	Quarterly		1.61		1.01
0-E	BTMU	U.S.A.	US$		11,519		9,385		25,937		768		-		47,609		11,595		9,386		25,563		767		-		47,311	Quarterly		1.63		1.03
0-E	US BANK	U.S.A.	US$		58,512		49,240		135,489		84,178		-		327,419		60,094		49,240		125,274		82,149		-		316,757	Quarterly		4.00		2.82
0-E	PK AIRFINANCE	U.S.A.	US$		8,996		9,062		1,464		-		-		19,522		9,319		9,009		1,435		-		-		19,763	Monthly		1.98		1.98

	Total				815,221		783,680		2,639,812		1,204,017		1,634,498		7,077,128		977,836		787,522		2,581,577		1,195,089		1,648,424		7,190,448

Interest-bearing loans due in installments to December 31, 2020

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

				Nominal values												Accounting values
						More than		More than		More than								More than		More than		More than
				Up to		90 days		one to		three to		More than		Total		Up to		90 days		one to		three to		More than		Total			Annual
		Creditor		90		to one		three		five		five		nominal		90		to one		three		five		five		accounting			Effective		Nominal
Tax No.		Country	Currency	days		year		years		years		years		value		days		year		years		years		years		value		Amortization	rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%
Bank loans

0-E	NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ	Netherlands	US$		409		318		216		-		-		943		333		311		324		-		-		968	Monthly		6.01		6.01
0-E	BANCO BRADESCO	Brazil	BRL		80,175		-		-		-		-		80,175		91,672		-		-		-		-		91,672	Monthly		4.34		4.34
0-E	BANCO DO BRASIL	Brazil	BRL		199,557		-		-		-		-		199,557		208,987		-		-		-		-		208,987	Monthly		3.95		3.95

Financial lease

0-E	NATIXIS	France	US$		30,253		-		51,007		-		-		81,260		31,308		-		51,007		-		-		82,315	Quarterly / Semiannual		4.09		4.09
0-E	WACAPOU LEASING S.A.	Luxembourg	US$		2,342		797		1,620		-		-		4,759		2,439		797		1,620		-		-		4,856	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		144,120		-		-		-		-		144,120		141,094		-		-		-		-		141,094	Quarterly		3.07		3.01
0-E	GA Telessis LLC	U.S.A.	US$		486		950		2,623		2,772		5,430		12,261		486		991		2,623		2,772		5,642		12,514	Monthly		14.72		14.72

	Total				457,342		2,065		55,466		2,772		5,430		523,075		476,319		2,099		55,574		2,772		5,642		542,406

	Total consolidated				1,272,563		785,745		2,695,278		1,206,789		1,639,928		7,600,203		1,454,155		789,621		2,637,151		1,197,861		1,654,066		7,732,854

Interest-bearing loans due in installments to December 31, 2019

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

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

Loans to exporters

97.032.000-8	BBVA	Chile	US$		24,000		75,000		-		-		-		99,000		24,910		75,000		-		-		-		99,910	At Expiration		3.29		3.29
97.003.000-K	BANCO DO BRASIL	Chile	UF		150,000		50,000		-		-		-		200,000		150,257		50,283		-		-		-		200,540	At Expiration		2.93		2.93
97.951.000-4	HSBC	Chile	US$		12,000		-		-		-		-		12,000		12,016		-		-		-		-		12,016	At Expiration		3.25		3.25
76.100.458-1	BLADEX	Chile	US$		-		29,000		-		-		-		29,000		-		29,009		-		-		-		29,009	At Expiration		2.82		2.82
Bank loans
97.023.000-9	CORP BANCA	Chile	UF		5,205		10,410		-		-		-		15,615		5,192		10,369		-		-		-		15,561	Quarterly		3.35		3.35
0-E	SANTANDER	Spain	US$		-		-		137,860		-		-		137,860		255		-		137,860		-		-		138,115	Quarterly		3.62		4.61
76.362.099-9	BTG PACTUAL CHILE	Chile	UF		-		-		62,769		-		-		62,769		113		-		62,172		-		-		62,285	At Expiration		3.10		3.10
Obligations with the public
0-E	ESTADO	Chile	UF		-		-		164,485		-		353,547		518,032		-		2,642		164,398		-366,656		-		533,696	At Expiration		4.81		4.81
97.030.000-7	BANK OF NEW YORK	U.S.A.	US$		-		-		-		700,000		800,000		1,500,000		18,640		10,779		-		698,256		803,563		1,531,238	At Expiration		7.16		6.94
Guaranteed obligations
0-E	BNP PARIBAS	U.S.A.	US$		8,115		36,282		93,788		100,622		275,134		513,941		10,058		36,855		91,224		99,297		273,038		510,472	Quarterly		3.81		3.81
0-E	WILMINGTON TRUST	U.S.A.	US$		22,090		66,710		183,332		196,452		397,639		866,223		27,229		66,710		178,784		194,741		395,983		863,447	Quarterly		4.45		4.45
0-E	CITIBANK	U.S.A.	US$		4,805		14,608		40,414		42,626		41,022		143,475		5,461		14,608		36,178		40,932		40,310		137,489	Quarterly		3.76		2.68
0-E	NATIXIS	France	US$		10,675		32,708		84,674		78,123		76,726		282,906		11,410		32,708		83,072		77,195		75,928		280,313	Quarterly		3.82		3.82
0-E	INVESTEC	England	US$		1,538		8,976		22,977		10,596		-		44,087		1,867		9,112		22,597		10,565		-		44,141	Semiannual		6.35		6.35
0-E	MUFG	U.S.A.	US$		2,973		18,593		53,816		57,993		189,285		322,660		3,182		18,593		53,367		57,694		188,471		321,307	Quarterly		3.43		3.43
-	SWAP Received Aircraft	-	US$		80		78		-		-		-		158		80		78		-		-		-		158	Quarterly		-		-
Other guaranteed obligations
0-E	CREDIT AGRICOLE	France	US$		-		-		253,692		-		-		253,692		2,370		-		252,747		-		-		255,117	At Expiration		3.74		3.74
0-E	MUFG	U.S.A.	US$		23,669		71,432		188,440		44,482		-		328,023		23,929		71,431		185,938		44,017		-		325,315	Quarterly		3.54		3.54
Financial leases
0-E	ING	U.S.A.	US$		3,875		7,931		-		-		-		11,806		3,952		7,931		-		-		-		11,883	Quarterly		5.71		5.01
0-E	CREDIT AGRICOLE	France	US$		4,831		14,723		6,537		-		-		26,091		4,943		14,723		6,537		-		-		26,203	Quarterly		3.15		2.52
0-E	CITIBANK	U.S.A.	US$		17,972		52,790		113,746		16,399		-		200,907		18,633		52,790		112,712		16,368		-		200,503	Quarterly		3.39		2.80
0-E	PEFCO	U.S.A.	US$		1,901		1,926		-		-		-		3,827		1,918		1,926		-		-		-		3,844	Quarterly		5.65		5.03
0-E	BNP PARIBAS	U.S.A.	US$		8,523		23,197		25,182		20,717		10,110		87,729		9,042		23,197		24,675		20,424		9,975		87,313	Quarterly		3.85		3.72
0-E	WELLS FARGO	U.S.A.	US$		32,321		97,956		248,086		199,037		14,284		591,684		34,868		97,956		233,822		195,209		14,138		575,993	Quarterly		2.67		1.98
97.036.000-K	SANTANDER	Chile	US$		5,690		17,255		46,472		3,134		-		72,551		5,959		17,255		45,805		3,128		-		72,147	Quarterly		3.00		2.46
0-E	RRPF ENGINE	England	US$		864		2,348		7,441		8,075		915		19,643		908		2,348		7,441		8,075		915		19,687	Monthly		4.01		4.01
0-E	APPLE BANK	U.S.A.	US$		1,483		4,509		12,474		7,242		-		25,708		1,632		4,509		12,162		7,212		-		25,515	Quarterly		3.33		2.73
0-E	BTMU	U.S.A.	US$		3,010		9,148		25,278		13,904		-		51,340		3,191		9,148		24,661		13,849		-		50,849	Quarterly		3.33		2.73
0-E	NATIXIS	France	US$		702		2,173		2,279		-		-		5,154		723		2,173		2,279		-		-		5,175	Quarterly		4.41		4.41
0-E	KFW IP EX-BANK	Germany	US$		1,760		3,568		-		-		-		5,328		1,769		3,568		-		-		-		5,337	Quarterly		3.55		3.55
0-E	AIRBUS FINANCIAL	U.S.A.	US$		1,977		5,687		-		-		-		7,664		1,992		5,687		-		-		-		7,679	Monthly		3.31		3.31
0-E	US BANK	U.S.A.	US$		15,862		48,132		132,441		135,200		17,492		349,127		17,610		48,132		119,881		130,865		17,188		333,676	Quarterly		4.01		2.82
0-E	PK AIRFINANCE	U.S.A.	US$		2,487		7,729		17,871		-		-		28,087		2,530		7,729		17,871		-		-		28,130	Monthly		3.45		3.45
Other loans
0-E	CITIBANK (*)	U.S.A.	US$		24,595		76,431		-		-		-		101,026		24,830		76,431		-		-		-		101,261	Quarterly		6.00		6.00

	Total				393,003		789,300		1,924,054		1,634,602		2,176,154		6,917,113		431,469		803,680		1,876,183		1,617,827		2,186,165		6,915,324

(*)

Securitized bond with the future flows from the sales with credit card in United States and Canada, through the company Guanay Finance Limited.

Interest-bearing loans due in installments to December 31, 2019

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

				Nominal values												Accounting values
						More than		More than		More than								More than		More than		More than
				Up to		90 days		one to		three to		More than		Total		Up to		90 days		one to		three to		More than		Total			Annual
		Creditor		90		to one		three		five		five		nominal		90		to one		three		five		five		accounting			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		value		days		year		years		years		years		value		Amortization	rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%
Bank loans

0-E	NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ	Netherland	US$		148		452		689		-		-		1,289		153		452		689		-		-		1,294	Monthly		6.01		6.01

Financial leases

0-E	NATIXIS	France	US$		3,243		6,906		76,107		-		-		86,256		3,723		6,906		76,107		-		-		86,736	Quarterly/Semiannual		6.29		6.29
0-E	WACAPOULEASING S.A.	Luxemburg	US$		757		2,317		3,206		-		-		6,280		777		2,317		3,206		-		-		6,300	Quarterly		4.32		4.32
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		9,855		160,076		-		-		-		169,931		10,409		159,876		-		-		-		170,285	Quarterly		5.39		5.39
0-E	GA Telessis LLC	U.S.A	US$		306		1,100		2,385		2,694		7,010		13,495		399		1,100		2,385		2,694		7,010		13,588	Monthly		14.72		14.72

	Total				14,309		170,851		82,387		2,694		7,010		277,251		15,461		170,651		82,387		2,694		7,010		278,203

	Total consolidated				407,312		960,151		2,006,441		1,637,296		2,183,164		7,194,364		446,930		974,331		1,958,570		1,620,521		2,193,175		7,193,527

(b)

Lease Liability:

The movement of the lease liabilities corresponding to the years reported are as follow:

							Lease
							Liability
	Aircraft			Others			total
	ThUS$			ThUS$			ThUS$

Opening balance as January 1, 2018		3,037,585			109,387			3,146,972
New contracts		283,620			36,191			319,811
Renegotiations		(240,047	)		1,397			(238,650	)
Payments		(526,071	)		(30,316	)		(556,387	)
Accrued interest		174,327			8,623			182,950
Exchange differences		-			(5,667	)		(5,667	)
Other increases (decreases)		8,395			625			9,020

Changes		(299,776	)		10,853			(288,923	)

Closing balance as of December 31, 2018		2,737,809			120,240			2,858,049

Opening balance as January 1, 2019		2,737,809			120,240			2,858,049

New contracts		719,525			23,878			743,403
Renegotiations		(41,535	)		12,208			(29,327	)
Payments		(539,549	)		(37,391	)		(576,940	)
Accrued interest		165,981			11,968			177,949
Exchange differences		-			1,614			1,614
Cumulative translation adjustment		-			(467	)		(467	)
Other increases (decreases)		-			(2,124	)		(2,124	)

Changes		304,422			9,686			314,108

Closing balance as of December 31, 2019		3,042,231			129,926			3,172,157

Opening balance as January 1, 2020		3,042,231			129,926			3,172,157

New contracts		-			543			543
Write off		(7,435	)		(285	)		(7,720	)
Renegotiations		(35,049	)		4,919			(30,130	)
Payments		(131,427	)		(36,689	)		(168,116	)
Accrued interest		158,253			9,348			167,601
Exchange differences		-			(7,967	)		(7,967	)
Cumulative translation adjustment		-			(38	)		(38	)
Other increases (decreases)		-			(5,324	)		(5,324	)

Changes		(15,658	)		(35,493	)		(51,151	)

Closing balance as of December 31, 2020		3,026,573			94,433			3,121,006

The company recognizes the interest payments related to the lease liabilities in the consolidated result under Financial expenses (See Note 27 (d)).

(c)	Hedge derivatives

	Current liabilities				Non-current liabilities				Total hedge derivatives
	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$
Accrued interest from the last date of interest rate swap		-		1,723		-		-		-		1,723
Fair value of interest rate derivatives		2,734		302		-		22		2,734		324
Fair value of fuel derivatives		-		-		-		-		-		-
Fair value of foreign currency derivatives		-		48,347		-		-		-		48,347
Total hedge derivatives		2,734		50,372		-		22		2,734		50,394

(d)

Derivatives that do not qualify for hedge accounting

									Total derivatives of
	Current liabilities				Non-current liabilities				no coverage
	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$

Derivative of foreign currency not registered as hedge		2,937		-		-		-		2,937		-
Total derived not qualify as hedge accounting		2,937		-		-		-		2,937		-

The foreign currency derivatives correspond to options, forwards and swaps.

Hedging operation

The fair values of net assets/ (liabilities), by type of derivative, of the contracts held as hedging instruments are presented below:

	As of			As of
	December 31,			December 31,
	2020			2019
	ThUS$			ThUS$
Cross currency swaps (CCS) (1)		-			(22,662	)
Interest rate swaps (2)		(2,734	)		2,618
Fuel options (3)		1,296			48,542
Currency options R$/US$ (4)		-			(41	)

(1)	Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate and the exchange rate US$/UF of bank loans. These contracts are recorded as cash flow hedges and fair value.

(2)	Covers the significant variations in cash flows associated with market risk implicit in the increases in the 3 months LIBOR interest rates for long-term loans incurred in the acquisition of aircraft and bank loans. These contracts are recorded as cash flow hedges.

(3)	Covers significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases. These contracts are recorded as cash flow hedges.

(4)

They cover the exposure to foreign exchange risk of operating cash flows, mainly caused by the fluctuation of the CLP/US$, R$/US$, US$/EUR and US$/GBP exchange rate. These contracts are registered as cash flow hedge contracts.

The Company only has cash flow and fair value hedges (in the case of CCS). In the case of fuel hedges, the cash flows subject to such hedges will occur and will impact results in the next 12 months from the date of the consolidated statement of financial position, while in the case of hedges of interest rates, these they will occur and will impact results throughout the life of the associated loans, up to their maturity. In the case of currency hedges through a CCS, there is a group of hedging relationships, in which two types of hedge accounting are generated, one of cash flow for the US $ / UF component; and another of fair value, for the floating rate component US $. The other group of hedging relationships only generates cash flow hedge accounting for the US $ / UF component.

All hedging operations have been performed for highly probable transactions, except for fuel hedge. See Note 3.

Since none of the hedges resulted in the recognition of a non-financial asset, no portion of the result of derivatives recognized in equity was transferred to the initial value of that type of asset.

The amounts recognized in comprehensive income during the period and transferred from net equity to income are as follows:

	For the year ended
	December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$
Debit (credit) recognized in comprehensive income during the period		(119,970	)		66,856			(27,797	)
Debit (credit) transferred from net equity to income during the period		(13,016	)		(30,074	)		39,915

See note 3.1 a) for reclassification to profit or loss for each hedging operation and Note 18 b) for deferred taxes related.

NOTE 20 - TRADE AND OTHER ACCOUNTS PAYABLES

The composition of Trade and other accounts payables is as follows:

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

Current
(a) Trade and other accounts payables		1,757,799		1,671,304
(b) Accrued liabilities at the reporting date		564,326		551,570

Total trade and other accounts payables		2,322,125		2,222,874

(a) Trade and other accounts payable:

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

Trade creditors		1,281,432		1,408,690
Other accounts payable		476,367		262,614

Total		1,757,799		1,671,304

The details of Trade and other accounts payables are as follows:

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

Suppliers technical purchases		281,452		145,973
Boarding Fees		181,049		234,070
Professional services and advisory		146,753		87,825
Aircraft Fuel		143,119		476,320
Handling and ground handling		137,626		114,163
Airport charges and overflight		142,709		81,459
Leases, maintenance and IT services		110,472		59,011
Other personnel expenses		105,696		93,490
Maintenance		116,103		42,202
Services on board		58,099		59,647
Marketing		53,419		60,850
Air companies		27,668		79,958
Crew		16,541		22,921
Land services		10,466		18,166
Achievement of goals		7,840		30,635
Jol Fleet		6,622		3,997
Others		212,165		60,617
Total trade and other accounts payables		1,757,799		1,671,304

(b) Liabilities accrued:

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

Aircraft and engine maintenance		460,082		292,793
Accrued personnel expenses		72,696		118,199
Accounts payable to personnel (*)		2,186		91,153
Others accrued liabilities (**)		29,362		49,425
Total accrued liabilities		564,326		551,570

(*)

Profits and bonus participation (Note 23 letter b).

(**)

See Note 22.

The balances include the amounts that will be part of the reorganization agreement, product of the entry into the Chapter 11 process on May 26, 2020 for LATAM, and July 08 for certain subsidiaries in Brazil.

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

100

(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.

101

NOTE 22 - OTHER NON-FINANCIAL LIABILITIES

	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$
Deferred revenues (1)(2)		2,036,880		2,689,083		702,008		851,383		2,738,888		3,540,466
Sales tax		7,609		2,556		-		-		7,609		2,556
Retentions		27,853		43,916		-		-		27,853		43,916
Others taxes		3,931		7,555		-		-		3,931		7,555
Dividends payable		-		57,129		-		-		-		57,129
Other sundry liabilities		12,518		34,982		-		-		12,518		34,982
Total other non-financial liabilities		2,088,791		2,835,221		702,008		851,383		2,790,799		3,686,604

Deferred Income Movement

			Deferred income
	Initial balance		(1) Recognition		Use			Loyalty (accreditation and exchange)			Expiration of tickets			Adjustment application IAS 29, Argentina hyperinflation			Others Provisions			Final balance
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

From January 1 to December 31, 2019		2,974,760		8,264,970		(7,703,011	)		124,548			(156,435	)		2,232			33,402			3,540,466
From January 1 to December 31, 2020		3,540,466		1,970,203		(2,554,476	)		(137,176	)		(72,670	)		(3,485	)		(3,974	)		2,738,888

(1)

The balance includes mainly, deferred income for services not provided as of December 31, 2020 and December 31, 2019; and for the frequent flyer LATAM Pass program.

LATAM Pass is LATAM’s frequent flyer program that allows rewarding the preference and loyalty of its customers with multiple benefits and privileges, through the accumulation of miles or points that can be exchanged for tickets or for a varied range of products and services. Clients accumulate miles or LATAM Pass points every time they fly in LATAM and other connections associated with the program, as well as buy in stores or use the services of a vast network of companies that have agreements with the program around the world.

On September 26, 2019, the Company signed a framework agreement with Delta Air Lines, Inc, in which the latter agreed to pay ThUS $ 350,000 for compensation of costs and income that the Company must incur or stop receiving, respectively, during the transition period until the implementation of the strategic alliance.

During December 2019, the Company sold its rights to receive future payments of the committed transition. The payments consisted of ThUS $ 200,000 payable in 8 quarterly installments of ThUS $ 25,000 as of January 2, 2020. On December 13, 2019, the Company received ThUS $ 194,068 for said sale.

The account receivable was derecognized and the interest of ThUS $ 5,932 was recognized in the item Financial Costs of the Consolidated Statement of Income.

102

(2)

As of December 31, 2020, Deferred Income includes ThUS $ 179,612 corresponding to the balance to be accrued from the committed compensation from Delta Air Lines, Inc., which is recognized in Income Statement, based on the estimation of differentials of income, until the implementation of the strategic alliance. During the period, the Company has recognized ThUS $ 132,467 for this concept.

Additionally, the Company maintains a balance of ThUS $ 29,507 in the Trade accounts payable item of the Statement of Financial Position, corresponding to the compensation of costs to be incurred.

NOTE 23 - EMPLOYEE BENEFITS

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

Retirements payments		51,007		64,824
Resignation payments		8,230		9,722
Other obligations		14,879		19,024
Total liability for employee benefits		74,116		93,570

(a) The movement in retirements and resignation payments and other obligations:

			Increase (decrease)						Actuarial
	Opening		current service			Benefits			(gains)		Currency			Closing
	balance		provision			paid			losses		translation			balance
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
From January 1 to December 31, 2018		101,087		(7,384	)		(6,018	)		5,819		(11,139	)		82,365
From January 1 to December 31, 2019		82,365		11,242			(4,390	)		10,636		(6,283	)		93,570
From January 1 to December 31, 2020		93,570		(18,759	)		(8,634	)		3,968		3,971			74,116

103

The principal assumptions used in the calculation to the provision in Chile, are presented below:

	For the period ended
	December 31,
Assumptions	2020			2019

Discount rate		2.67	%		3.13	%
Expected rate of salary increase		2.80	%		4.50	%
Rate of turnover		5.56	%		6.04	%
Mortality rate		RV-2014			RV-2014
Inflation rate		2.8	%		2.8	%
Retirement age of women		60			60
Retirement age of men		65			65

The discount rate corresponds to the 20 years Central Bank of Chile Bonds (BCP). The RV-2014 mortality tables correspond to those established by the Commission for the Financial Market of Chile and; for the determination of the inflation rates; the market performance curves of BCU Central Bank of Chile papers have been used and BCP long term at the scope date.

The calculation of the present value of the defined benefit obligation is sensitive to the variation of some actuarial assumptions such as discount rate, salary increase, rotation and inflation.

The sensitivity analysis for these variables is presented below:

	Effect on the liability
	As of			As of
	December 31,			December 31,
	2020			2019
	ThUS$			ThUS$
Discount rate
Change in the accrued liability an closing for increase in 100 p.b.		(4,576	)		(7,257	)
Change in the accrued liability an closing for decrease of 100 p.b.		5,244			5,365

Rate of wage growth
Change in the accrued liability an closing for increase in 100 p.b.		4,946			4,989
Change in the accrued liability an closing for decrease of 100 p.b.		(4,678	)		(7,159	)

(b) The liability for short-term:

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

Profit-sharing and bonuses (*)		2,186		91,153

(*) Accounts payables to employees (Note 20 letter b)

104

The participation in profits and bonuses related to an annual incentive plan for achievement of certain objectives.

	For the year ended
	December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$

Salaries and wages		850,557		1,478,804		1,481,357
Short-term employee benefits		41,259		147,576		132,394
Termination benefits (*)		-		54,256		54,007
Other personnel expenses		70,244		114,126		152,211

Total		962,060		1,794,762		1,819,969

(*) The termination benefits related to the reorganization under Chapter 11 are classified in Note 27, Restructuring activities expense.

NOTE 24 - ACCOUNTS PAYABLE, NON-CURRENT

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

Aircraft and engine maintenance		392,347		412,710
Fleet (JOL)		208,037		190,225
Provision for vacations and bonuses		15,036		15,868
Other sundry liabilities		36,180		307
Total accounts payable, non-current		651,600		619,110

NOTE 25 - EQUITY

(a) Capital

The Company’s objective is to maintain an appropriate level of capitalization that enables it to ensure access to the financial markets for carrying out its medium and long-term objectives, optimizing the return for its shareholders and maintaining a solid financial position.

The paid capital of the Company at December 31, 2020 amounts to ThUS$ 3,146,265 divided into 606,407,693 common stock of a same series (ThUS$ 3,146,265 divided into 606,407,693 shares as of December 31, 2019), a single series nominative, ordinary character with no par value. There are no special series of shares and no privileges. The form of its stock certificates and their issuance, exchange, disablement, loss, replacement and other similar circumstances, as well as the transfer of the shares, is governed by the provisions of Corporations Law and its regulations.

105

(b) Subscribed and paid shares

During the year 2019, the Company fully reduced 466,832 shares pending placement and payment, corresponding to the authorized capital increase in the extraordinary shareholders meeting of August 18, 2016. Consequently, as of December 31, 2020, the statutory capital of the Company is demonstrated by 606,407,693 shares fully subscribed and paid.

The following table shows the movement of authorized and fully paid shares previously described above:

Movement of authorized shares

Nro. Of shares	Opening balance		Expired shares intended for compensation plans and others			Closing balance

From January 1 to December 31, 2019		606,874,525		(466,832	)		606,407,693
From January 1 to December 31, 2020		606,407,693		-			606,407,693

Movement fully paid shares

	N° of shares		Movement value of shares (1)		Cost of issuance and placement of shares (2)			Paid- in Capital
			ThUS$		ThUS$			ThUS$
Paid shares as of January 1, 2018		606,407,693		3,160,718		(14,453	)		3,146,265
There are no movements of shares paid during the 2018 period		-		-		-			-
Paid shares as of December 31, 2018		606,407,693		3,160,718		(14,453	)		3,146,265
Paid shares as of January 1, 2019		606,407,693		3,160,718		(14,453	)		3,146,265
There are no movements of shares paid during the 2019 period		-		-		-			-
Paid shares as of December 31, 2019		606,407,693		3,160,718		(14,453	)		3,146,265
Paid shares as of January 1, 2020		606,407,693		3,160,718		(14,453	)		3,146,265
There are no movements of shares paid during the 2020 period		-		-		-			-
Paid shares as of December 31, 2020		606,407,693		3,160,718		(14,453	)		3,146,265

(1)

Amounts reported represent only those arising from the payment of the shares subscribed.

(2)

Decrease of capital by capitalization of reserves for cost of issuance and placement of shares established according to Extraordinary Shareholder´s Meetings, where such decreases were authorized.

At December 31, 2020, the Company held no treasury stock, the remaining of ThUS$ (178) corresponds to the difference between the amount paid for the shares and their book value, at the time of the full right decrease of the shares which held in its portfolio.

106

(d)

Reserve of share- based payments

Movement of Reserves of share- based payments:

			Stock
	Opening		option			Closing
Periods	balance		plan			balance
	ThUS$		ThUS$			ThUS$
From January 1 to December 31, 2018		39,481		(1,607	)		37,874
From January 1 to December 31, 2019		37,874		(1,585	)		36,289
From January 1 to December 31, 2020		36,289		946			37,235

These reserves are related to the “Share-based payments” explained in Note 34.

(e)

Other sundry reserves

Movement of Other sundry reserves:

	Opening		Transactions			Legal			Closing
Periods	balance		with minorities			reserves			balance
	ThUS$		ThUS$			ThUS$			ThUS$
From January 1 to December 31, 2018		2,639,780		-			(864	)		2,638,916
From January 1 to December 31, 2019		2,638,916		(184,135	)		(2,312	)		2,452,469
From January 1 to December 31, 2020		2,452,469		(3,125	)		2,675			2,452,019

Balance of Other sundry reserves comprise the following:

	As of			As of			As of
	December 31,			December 31,			December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$
Higher value for TAM S.A. share exchange (1)		2,665,692			2,665,692			2,665,692
Reserve for the adjustment to the value of fixed assets (2)		2,620			2,620			2,620
Transactions with non-controlling interest (3)		(213,273	)		(210,048	)		(25,913	)
Others		(3,020	)		(5,795	)		(3,483	)
Total		2,452,019			2,452,469			2,638,916

(1)

Corresponds to the difference between the value of the shares of TAM S.A., acquired by Sister Holdco S.A. (under the Subscriptions) and by Holdco II S.A. (by virtue of the Exchange Offer), which is recorded in the declaration of completion of the merger by absorption, and the fair value of the shares exchanged by LATAM Airlines Group S.A. as of June 22, 2012.

(2)

Corresponds to the technical revaluation of the fixed assets authorized by the Commission for the Financial Market in the year 1979, in Circular No. 1529. The revaluation was optional and could be made only once; the originated reserve is not distributable and can only be capitalized.

107

(3)

The balance as of December 31, 2020 corresponds to the loss generated by: Lan Pax Group S.A. e Inversiones Lan S.A. in the acquisition of shares of Aerovías de Integración Regional Aires S.A. for ThUS $ (3,480) and ThUS $ (20), respectively; the acquisition of TAM S.A. of the minority interest in Aerolinhas Brasileiras S.A. for ThUS $ (885), the acquisition of Inversiones Lan S.A. of the minority participation in Aires Integra Regional Airlines S.A. for an amount of ThUS $ (2) and the acquisition of a minority stake in Aerolane S.A. by Lan Pax Group S.A. for an amount of ThUS $ (21,526) through Holdco Ecuador S.A. (3) The loss due to the acquisition of the minority interest of Multiplus S.A. for ThUS $ (184,135) (see Note 1), (4) and the acquisition of a minority interest in Latam Airlines Perú S.A through Latam Airlines Group S.A for an amount of ThUS $ (3,225).

(f)

Reserves with effect in other comprehensive income.

Movement of Reserves with effect in other comprehensive income:

							Actuarial gain
	Currency			Cash flow			or loss on defined
	translation			hedging			benefit plans
	reserve			reserve			reserve			Total
	ThUS$			ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2018		(1,925,714	)		18,140			(10,926	)		(1,918,500	)
Increase (decrease) by application of new accounting standards		-			-			-			-
Initial balance		(1,925,714	)		18,140			(10,926	)		(1,918,500	)

Change in fair value of hedging instrument recognised in OCI		-			(56,917	)		-			(56,917	)
Reclassified from OCI to profit or loss		-			30,018			-			30,018
Deferred tax		-			(574	)		-			(574	)
Actuarial reserves by employee benefit plans		-			-			(5,818	)		(5,818	)
Deferred tax actuarial IAS by employee benefit plans		-			-			1,566			1,566
Translation difference subsidiaries		(730,930	)		-			-			(730,930	)
Closing balance as of December 31, 2018		(2,656,644	)		(9,333	)		(15,178	)		(2,681,155	)

Opening balance as of January 1, 2019		(2,656,644	)		(9,333	)		(15,178	)		(2,681,155	)
Change in fair value of hedging instrument recognised in OCI		-			95,954			-			95,954
Reclassified from OCI to profit or loss		-			(30,074	)		-			(30,074	)
Deferred tax		-			345			-			345
Actuarial reserves by employee benefit plans		-			-			(10,635	)		(10,635	)
Deferred tax actuarial IAS by employee benefit plans		-			-			2,873			2,873
Translation difference subsidiaries		(233,643	)		-			-			(233,643	)
Closing balance as of December 31, 2019		(2,890,287	)		56,892			(22,940	)		(2,856,335	)

Opening balance as of January 1, 2020		(2,890,287	)		56,892			(22,940	)		(2,856,335	)
Change in fair value of hedging instrument recognised in OCI		-			(105,776	)		-			(105,776	)
Reclassified from OCI to profit or loss		-			(13,016	)		-			(13,016	)
Deferred tax		-			959			-			959
Actuarial reserves by employee benefit plans		-			-			(3,968	)		(3,968	)
Deferred tax actuarial IAS by employee benefit plans		-			-			923			923
Translation difference subsidiaries		(900,226	)		-			-			(900,226	)
Closing balance as of December 31, 2020		(3,790,513	)		(60,941	)		(25,985	)		(3,877,439	)

108

(f.1) Cumulative translate difference

These are originate from exchange differences arising from the translation of any investment in foreign entities (or Chilean investment with a functional currency different to that of the parent), and from loans and other instruments in foreign currency designated as hedges for such investments. When the investment (all or part) is sold or disposed and a loss of control occurs, these reserves are shown in the consolidated statement of income as part of the loss or gain on the sale or disposal. If the sale does not involve loss of control, these reserves are transferred to non-controlling interests.

(f.2) Cash flow hedging reserve

These are originate from the fair value valuation at the end of each period of the outstanding derivative contracts that have been defined as cash flow hedges. When these contracts expire, these reserves should be adjusted, and the corresponding results recognized.

(f.3) Reserves of actuarial gains or losses on defined benefit plans

Correspond to the increase or decrease in the obligation present value for defined benefit plan due to changes in actuarial assumptions, and experience adjustments, which are the effects of differences between the previous actuarial assumptions and the actual event.

(g) Retained earnings/(losses)

Movement of Retained earnings/(losses):

				Increase			Result						Other
	Opening			(decrease) by			for the						increase		Closing
Periods	balance			new standards			period			Dividends			(decreases)		balance
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
From January 1 to December 31, 2018		(31,464	)		(9,548	)		309,811			(54,580	)		4,752		218,971
From January 1 to December 31, 2019		218,971			-			190,430			(57,129	)		-		352,272
From January 1 to December 31, 2020		352,272			-			(4,545,887	)		-			-		(4,193,615	)

(h)

Dividends per share

	Minimum mandatory	Minimum mandatory
	dividend	dividend
Description of dividend	2020	2019

Date of dividend	12-31-2020	12-31-2019
Amount of the dividend (ThUS$)	-	57,129
Number of shares among which the dividend is distributed	606,407,693	606,407,693
Dividend per share (US$)	-	0.0942

109

NOTE 26 - REVENUE

The detail of revenues is as follows:

	For the year ended
	December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$

Passengers		2,713,774		9,005,629		8,708,988
Cargo		1,209,893		1,064,434		1,186,468
Total		3,923,667		10,070,063		9,895,456

NOTE 27 - COSTS AND EXPENSES BY NATURE

(a)

Costs and operating expenses

The main operating costs and administrative expenses are detailed below:

	For the year ended December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$

Aircraft fuel		1,045,343		2,929,008		2,983,028
Other rentals and landing fees (*)		720,005		1,275,859		1,206,881
Aircraft maintenance		472,382		444,611		366,627
Comisions		91,910		221,884		222,506
Passenger services		97,688		261,330		280,279
Other operating expenses		1,221,183		1,291,895		1,229,311
Total		3,648,511		6,424,587		6,288,632

(*)

Lease expenses are included within this amount (See Note 2.21)

	For the period ended December 31,
	2020			2019		2018
	ThUS$			ThUS$		ThUS$
Payments for leases of low-value assets		21,178			31,982		27,929
Rent concessions recognized directly in profit or loss		(110	)		-		-
Total		21,068			31,982		27,929

110

(b)

Depreciation and amortization

Depreciation and amortization are detailed below:

	For the year ended December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Depreciation (*)		1,219,586		1,389,465		1,307,032
Amortization		169,800		80,511		65,596
Total		1,389,386		1,469,976		1,372,628

(*)

Included within this amount is the depreciation of the Properties, plants and equipment (See Note 17 (a)) and the maintenance of the aircraft recognized as assets by right of use. The maintenance cost amount included in the depreciation line for the year ended December 31, 2020 is ThUS $ 276,908 and ThUS $ 445,680 for the same year 2019.

(c)

Financial costs

The detail of financial costs is as follows:

	For the year ended December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Bank loan interest		314,468		325,650		283,786
Financial leases		45,245		61,980		62,202
Lease liabilities		170,918		181,814		182,868
Other financial instruments		56,348		20,490		10,281
Total		586,979		589,934		539,137

Costs and expenses by nature presented in this Note plus the Employee expenses disclosed in Note 23, are equivalent to the sum of cost of sales, distribution costs, administrative expenses, other expenses and financing costs presented in the consolidated statement of income by function.

(d)

Restructuring activities expenses

The Restructuring activities expenses are detailed below:

	For the year ended December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Fair value adjustment of fleet available for sale		331,522		-		-
Rejection of aircraft lease contract		269,467		-		-
Employee restructuring plan (*)		290,831		-		-
Legal and financial advice		76,541		-		-
Others		21,648		-		-
Total		990,009		-		-

(*) See note 2.1, letter c.

111

(e)

Other (gains) losses

Other (gains) losses are detailed below:

	For the year ended December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$
Fuel hedging		82,487			-			-
Slot Write Off		36,896			-			-
Provision for onerous contract related to purchase commitment		44,000			-			-
Goodwill Impairment		1,728,975			-			-
Other		(17,569	)		(11,525	)		53,499
Total		1,874,789			(11,525	)		53,499

NOTE 28 - OTHER INCOME, BY FUNCTION

Other income, by function is as follows:

	For the year ended
	December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Coalition and loyalty program Multiplus		-		36,172		126,443
Tours		22,499		96,997		108,448
Aircraft leasing		46,045		102,704		78,056
Customs and warehousing		25,138		29,353		26,667
Duty free		-		543		3,555
Maintenance		18,579		10,471		16,569
Income from non-airlines products Latam Pass		42,913		42,791		19,864
Other miscellaneous income (*)		255,828		41,833		93,156
Total		411,002		360,864		472,758

(*)

For 2020 included in this amount is ThUS$ 62,000 from compensation of the cancellation of the purchase of 4 A350 aircraft from Delta Air Lines Inc and ThUS$ 9,240 to the early return of leased aircraft from Qatar Airways and ThUS$ 132,467 corresponding to compensation of Delta Air Lines Inc from JBA signed in 2019.

112

NOTE 29 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES

The functional currency of LATAM Airlines Group S.A. is the US dollar, also it has subsidiaries whose functional currency is different to the US dollar, such as the chilean peso, argentine peso, colombian peso, brazilian real and guaraní.

The functional currency is defined as the currency of the primary economic environment in which an entity operates and in each entity and all other currencies are defined as foreign currency.

Considering the above, the balances by currency mentioned in this Note correspond to the sum of foreign currency of each of the entities that make LATAM Airlines Group S.A. and Subsidiaries.

Following are the current exchange rates for the US dollar, on the dates indicated:

	As of December 31,
	2020		2019		2018		2017

Argentine peso		84.14		59.83		37.74		18.57
Brazilian real		5.18		4.01		3.87		3.31
Chilean peso		710.95		748.74		694.77		614.75
Colombian peso		3,421.00		3,271.55		3,239.45		2,984.77
Euro		0.81		0.89		0.87		0.83
Australian dollar		1.30		1.43		1.42		1.28
Boliviano		6.86		6.86		6.86		6.86
Mexican peso		19.93		18.89		19.68		19.66
New Zealand dollar		1.39		1.49		1.49		1.41
Peruvian Sol		3.62		3.31		3.37		3.24
Uruguayan peso		42.14		37.24		32.38		28.74

113

Foreign currency

The foreign currency detail of balances of monetary items in current and non-current assets is as follows:

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

Cash and cash equivalents		483,303		242,624
Argentine peso		16,885		10,974
Brazilian real		13,157		9,407
Chilean peso		32,368		50,421
Colombian peso		2,168		5,971
Euro		10,361		21,927
U.S. dollar		369,455		77,933
Other currency		38,909		65,991

Other financial assets, current		12,981		47,328
Argentine peso		311		7
Brazilian real		4		17,395
Chilean peso		3,987		26,008
Colombian peso		132		138
Euro		1,867		-
U.S. dollar		5,639		2,795
Other currency		1,041		985

114

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

Other non - financial assets, current		42,973		81,521
Argentine peso		11,058		11,263
Brazilian real		2,985		20,553
Chilean peso		15,913		24,451
Colombian peso		175		61
Euro		2,667		2,878
U.S. dollar		2,351		5,140
Other currency		7,824		17,175

Trade and other accounts receivable, current		177,491		501,006
Argentine peso		1,881		22,809
Brazilian real		841		1,457
Chilean peso		38,340		125,342
Colombian peso		209		545
Euro		24,370		32,711
U.S. dollar		98,385		257,421
Other currency		13,465		60,721

Accounts receivable from related entities, current		430		537
Chilean peso		9		42
U.S. dollar		421		495

Tax current assets		11,050		19,506
Argentine peso		389		1,560
Brazilian real		887		1,006
Chilean peso		1,003		1,111
Colombian peso		675		54
Euro		235		264
U.S. dollar		354		-
Peruvian sun		5,220		13,707
Other currency		2,287		1,804

Total current assets		728,228		892,522
Argentine peso		30,524		46,613
Brazilian real		17,874		49,818
Chilean peso		91,620		227,375
Colombian peso		3,359		6,769
Euro		39,500		57,780
U.S. Dollar		476,605		343,784
Other currency		68,746		160,383

115

	As of		As of
	December 31,		December 31,
Non-current assets	2020		2019
	ThUS$		ThUS$

Other financial assets, non-current		9,486		10,243
Brazilian real		3,574		4,441
Chilean peso		69		65
Colombian peso		284		296
Euro		1,369		1,525
U.S. dollar		2,490		2,169
Other currency		1,700		1,747

Other non - financial assets, non-current		36,251		29,166
Argentine peso		39		54
Brazilian real		12,974		7,891
U.S. dollar		3,732		3
Other currency		19,506		21,218

Accounts receivable, non-current		4,984		4,722
Chilean peso		4,984		4,722

Deferred tax assets		2,228		3,339
Colombian peso		221		487
U.S. dollar		13		856
Other currency		1,994		1,996

Total non-current assets		52,949		47,470
Argentine peso		39		54
Brazilian real		16,548		12,332
Chilean peso		5,053		4,787
Colombian peso		505		783
Euro		1,369		1,525
U.S. dollar		6,235		3,028
Other currency		23,200		24,961

116

The foreign currency detail of balances of monetary items in current liabilities and non-current is as follows:

	Up to 90 days					91 days to 1 year
	As of			As of		As of		As of
	December 31,			December 31,		December 31,		December 31,
Current liabilities	2020			2019		2020		2019
	ThUS$			ThUS$		ThUS$		ThUS$

Other financial liabilities, current		239,712			69,623		86,573		210,627
Argentine peso		2			1		-		2
Brazilian real		59			128		163		118
Chilean peso		40,552			42,625		70,639		15,229
Euro		87			145		258		339
U.S. dollar		198,996			26,676		15,504		194,896
Other currency		16			48		9		43

Trade and other accounts payables, current		1,285,233			1,338,123		20,908		10,091
Argentine peso		228,069			252,799		7,315		1,096
Brazilian real		71,446			59,837		37		320
Chilean peso		312,921			322,996		10,991		1,295
Colombian peso		12,300			2,558		1,165		868
Euro		143,780			113,733		41		484
U.S. dollar		392,914			480,129		912		4,263
Peruvian sol		11,759			24,197		222		1,447
Mexican peso		16,546			5,233		60		33
Pound sterling		35,269			20,289		45		119
Uruguayan peso		441			1,018		-		29
Other currency		59,788			55,334		120		137

Accounts payable to related entities, current		(229	)		53		-		-
Chilean peso		-			53		-		-
U.S. dollar		(229	)		-		-		-

Other provisions, current		14			2,079		1,628		-
Chilean peso		-			27		29		-
Other currency		14			2,052		1,599		-

117

	Up to 90 days				91 days to 1 year
	As of		As of		As of		As of
	December 31,		December 31,		December 31,		December 31,
Current liabilities	2020		2019		2020		2019
	ThUS$		ThUS$		ThUS$		ThUS$

Other non-financial liabilities, current		42,467		19,335		50		-
Argentine peso		961		348		-		-
Brazilian real		976		1,537		3		-
Chilean peso		5,836		705		1		-
Colombian peso		622		3,059		38		-
Euro		3,206		3,133		-		-
U.S. dollar		19,707		4,531		-		-
Other currency		11,159		6,022		8		-

Total current liabilities		1,567,596		1,429,213		109,159		220,718
Argentine peso		229,032		253,148		7,315		1,098
Brazilian real		72,481		61,502		203		438
Chilean peso		359,309		366,406		81,660		16,524
Colombian peso		12,922		5,617		1,203		868
Euro		147,073		117,011		299		823
U.S. dollar		611,787		511,336		16,416		199,159
Other currency		134,992		114,193		2,063		1,808

118

	More than 1 to 3 years				More than 3 to 5 years				More than 5 years
	As of		As of		As of		As of		As of		As of
	December 31,		December 31,		December 31,		December 31,		December 31,		December 31,
Non-current liabilities	2020		2019		2020		2019		2020		2019
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$

Other financial liabilities, non-current		268,320		366,889		4,250		12,915		403,841		376,535
Chilean peso		180,150		236,346		1,320		2,291		398,199		369,525
Brazillian real		351		700		-		40		-		-
Euro		427		550		-		141		-		-
U.S. dollar		87,280		128,820		2,930		10,308		5,642		7,010
Other currency		112		473		-		135		-		-

Accounts payable, non-current		70,145		151,254		1,390		-		241		-
Chilean peso		47,752		14,367		1,390		-		241		-
U.S. dollar		21,051		135,541		-		-		-		-
Other currency		1,342		1,346		-		-		-		-

Other provisions, non-current		45,834		36,615		-		-		-		-
Argentine peso		696		485		-		-		-		-
Brazillian real		26,872		20,538		-		-		-		-
Colombian peso		278		281		-		-		-		-
Euro		11,736		9,217		-		-		-		-
U.S. dollar		6,252		6,094		-		-		-		-

Provisions for employees benefits, non-current		64,152		80,628		-		-		-		-
Chilean peso		64,152		80,628		-		-		-		-
U.S. dollar		-		-		-		-		-		-

Total non-current liabilities		448,451		635,386		5,640		12,915		404,082		376,535
Argentine peso		696		485		-		-		-		-
Brazilian real		27,223		21,238		-		40		-		-
Chilean peso		292,054		331,341		2,710		2,291		398,440		369,525
Colombian peso		278		281		-		-		-		-
Euro		12,163		9,767		-		141		-		-
U.S. dollar		114,583		270,455		2,930		10,308		5,642		7,010
Other currency		1,454		1,819		-		135		-		-

119

	As of			As of
	December 31,			December 31,
General summary of foreign currency:	2020			2019
	ThUS$			ThUS$

Total assets		781,177			939,992
Argentine peso		30,563			46,667
Brazilian real		34,422			62,150
Chilean peso		96,673			232,162
Colombian peso		3,864			7,552
Euro		40,869			59,305
U.S. dollar		482,840			346,812
Other currency		91,946			185,344

Total liabilities		2,534,928			2,674,767
Argentine peso		237,043			254,731
Brazilian real		99,907			83,218
Chilean peso		1,134,173			1,086,087
Colombian peso		14,403			6,766
Euro		159,535			127,742
U.S. dollar		751,358			998,268
Other currency		138,509			117,955

Net position
Argentine peso		(206,480	)		(208,064	)
Brazilian real		(65,485	)		(21,068	)
Chilean peso		(1,037,500	)		(853,925	)
Colombian peso		(10,539	)		786
Euro		(118,666	)		(68,437	)
U.S. dollar		(268,518	)		(651,456	)
Other currency		(46,563	)		67,389

120

NOTE 30 - EARNINGS / (LOSS) PER SHARE

	For the year ended
	December 31,
Basic earnings / (loss) per share	2020			2019		2018

Earnings / (loss) attributable to owners of the parent (ThUS$)		(4,545,887	)		190,430		309,811

Weighted average number of shares, basic		606,407,693			606,407,693		606,407,693

Basic earnings / (loss) per share (US$)		(7.49642	)		0.31403		0.51090

	For the year ended
	December 31,
Diluted earnings / (loss) per share	2020			2019		2018

Earnings / (loss) attributable to owners of the parent (ThUS$)		(4,545,887	)		190,430		309,811

Weighted average number of shares, basic		606,407,693			606,407,693		606,407,693

Weighted average number of shares, diluted		606,407,693			606,407,693		606,407,693

Diluted earnings / (loss) per share (US$)		(7.49642	)		0.31403		0.51090

121

NOTE 31 – CONTINGENCIES

Lawsuits

Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries

Company

Court

Case Number

Origin

Stage of trial

Amounts
Committed (*)

ThUS$

Fidelidade Viagens e Turismo

Fazenda Pública do Município de São Paulo.

1004194-37.2018.8.26.0053 (EF 1526893-48.2018.8.26.0090)

This is a voidance action appealing the charges for violations and fines (67.168.795 / 67.168.833 / 67.168.884 / 67.168.906 / 67.168.914 / 67.168.965). We are arguing that numbers are missing from the ISS calculation base since the company supposedly made improper deductions.

The lawsuit was assigned on January 31, 2018. That same day, a decision was rendered suspending the charges without any bond. The municipality filed an appeal against this decision on April 30, 2018. On November 11, 2019 there was a totally favorable decision for Tam Viagens S.A. The Municipio filed an appeal that is pending.

84,652

LATAM Airlines Group S.A., Aerovías de Integración Regional S.A., LATAM Airlines Perú S.A., Latam-Airlines Ecuador S.A., LAN Cargo S.A., TAM Linhas Aereas S.A. and 32 affiliates

United States Bankruptcy Court for the Southern District of New York

Case No. 20-11254

LATAM Airlines initiated a reorganization proceeding in the United States of America in accordance with the regulations established in Chapter 11 of Title 11 of the Code of the United States of America, filing a voluntary request for relief pursuant thereto (the “Chapter 11 Proceeding”), which grants an automatic stay of enforcement for at least 180 days.

On May 26, 2020, LATAM Airlines Group S.A. and 28 affiliates individually filed a voluntary bankruptcy petition with the United States Bankruptcy Court for the Southern District of New York pursuant to Chapter 11 of the United States Bankruptcy Code. Subsequently, on July 7 and 9, 2020, 9 additional affiliated debtors (the “Subsequent Debtors”), including TAM Linhas Aereas S.A., filed voluntary bankruptcy applications with the Court pursuant to Chapter 11 of the United States Bankruptcy Code. The cases are pending ruling before the Honorable Judge James L. Garrity Jr. and are jointly administered under case number 20-11254. On September 18, 2020, LATAM Airlines Group S.A. received approval of the amended proposal on Debtor in Possession (DIP) financing submitted September 17, 2020 to the United States District Court for the Southern District of New York. The Court issued an order setting December 18, 2020 as the general deadline by which LATAM’s creditors can present proof of claim, except for certain litigants in Brazil, who can present proof of claim through February 5, 2021. The judge also extended the period during which LATAM has the exclusive right to present a reorganization plan to January 29, 2021 On January 27, 2021, the Court approved the extension for the period for exclusively filing the reorganization plan until June 30, 2021. Currently, various hearings have been held, the process is in force.

-0-

122

Company

Court

Case Number

Origin

Stage of trial

Amounts
Committed (*)

ThUS$

LATAM Airlines Group S.A.

2° Juzgado Civil de Santiago

C-8553-2020

Request for recognition of the foreign reorganization proceeding.

On June 1, 2020, LATAM Airlines Group SA, in its capacity as foreign representative of the reorganization procedure under the rules of Chapter 11 of Title 11 of the United States Code, filed the request for recognition of the foreign reorganization proceeding as the main proceeding, pursuant to Law 20,720. On June 4, 2020, the Court issued the ruling recognizing in Chile the bankruptcy proceeding for the foreign reorganization of the company LATAM Airlines Group S.A. All remedies filed against the decision have been dismissed, so the decision is final. Currently the proceeding remains open.

-0-

Aerovías de Integración Regional S.A.

Superintendencia de Sociedades

Request for recognition of the foreign reorganization proceeding.

On June 12, 2020, the Superintendency of Companies recognized in Colombia the reorganization proceeding filed before the Bankruptcy Court of the United States of America for the Southern District of New York as a main process, under the terms of Title III of Law 1116 of 2006. On October 2, 2020, the Companies Commission of Colombia acknowledged the decision adopted September 18, 2020, by the United States District Court for the Southern District of New York that approved the Debtor in Possession financing proposal submitted by LATAM Airlines Group S.A. and the companies that voluntarily petitioned for Chapter 11, including the Colombian companies.

-0-

123

Company

Court

Case Number

Origin

Stage of trial

Amounts
Committed (*)

ThUS$

LATAM Airlines Perú S.A

INDECOPI

Request for a preventive bankruptcy process.

On May 27, 2020, LATAM Airlines Peru submitted a request for a preventive bankruptcy process before the Indecopi of Peru and is awaiting admission.

-0-

LATAM Finance Limited

Grand Court of the Cayman Islands

Request for a provisional bankruptcy process.

On May 26, 2020, LATAM Finance Limited submitted a request for a provisional liquidation, covered in the reorganization proceeding filed before the Bankruptcy Court of the United States of America, which was accepted on May 27, 2020 by the Grand Court of the Cayman Islands. Currently the proceeding remains open.

-0-

Peuco Finance Limited

Grand Court of the Cayman Islands

Request for a provisional bankruptcy process.

On May 26, 2020, Peuco Finance Limited submitted a request for a provisional liquidation, covered in the reorganization proceeding filed before the Bankruptcy Court of the United States of America, which was accepted on May 27, 2020 by the Grand Court of the Cayman Islands. Currently the proceeding remains open.

-0-

Piquero Leasing Limited

Grand Court of the Cayman Islands

Request for a provisional bankruptcy process.

On July 07, 2020, Piquero Leasing Limited submitted a request for a provisional liquidation, covered in the reorganization proceeding filed before the Bankruptcy Court of the United States of America, which was accepted on July 10, 2020, by the Grand Court of the Cayman Islands. Currently the proceeding remains open.

-0-

Peuco Finance Limited

Grand Court of the Cayman Islands

A petition for a provisional liquidation.

On September 28, 2020, Peuco Finance Limited filed a petition to suspend the liquidation. On October 9, 2020, the Grand Court of Cayman Islands accepted the petition and extended the status of temporary liquidation for a period of 6 months. The lawsuit continues to be active.

-0-

LATAM Finance Limited

Grand Court of the Cayman Islands

A petition for a provisional liquidation.

On September 28, 2020, LATAM Finance Limited filed a petition to suspend the liquidation. On October 9, 2020, the Grand Court of Cayman Islands accepted the petition and extended the status of temporary liquidation for a period of 6 months. The lawsuit continues to be active.

-0-

124

Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries.

Company

Court

Case Number

Origin

Stage of trial

Amounts
Committed (*)

ThUS$

LATAM Airlines Group S.A. y Lan Cargo S.A.

European Commission.

Investigation of alleged infringements to free competition of cargo airlines, especially fuel surcharge. On December 26th, 2007, the General Directorate for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the instruction process against twenty five cargo airlines, including Lan Cargo S.A., for alleged breaches of competition in the air cargo market in Europe, especially the alleged fixed fuel surcharge and freight.

On April 14th, 2008, the notification of the European Commission was replied. The appeal was filed on January 24, 2011.

On May 11, 2015, we attended a hearing at which we petitioned for the vacation of the Decision based on discrepancies in the Decision between the operating section, which mentions four infringements (depending on the routes involved) but refers to Lan in only one of those four routes; and the ruling section (which mentions one single conjoint infraction).

On November 9th, 2010, the General Directorate for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the imposition of a fine in the amount of THUS$10,072 (8.220.000 Euros)

This fine is being appealed by Lan Cargo S.A. and LATAM Airlines Group S.A. On December 16, 2015, the European Court of Justice revoked the Commission’s decision because of discrepancies. The European Commission did not appeal the decision, but presented a new one on March 17, 2017 reiterating the imposition of the same fine on the eleven original airlines. The fine totals 776,465,000 Euros. It imposed the same fine as before on Lan Cargo and its parent, LATAM Airlines Group S.A., totaling 8.2 million Euros. On May 31, 2017 Lan Cargo S.A. and LATAM Airlines Group S.A. filed a petition with the General Court of the European Union seeking vacation of this decision. We presented our defense in December 2017. On July 12, 2019, we attended a hearing before the European Court of Justice to confirm our petition for vacation of judgment or otherwise, a reduction in the amount of the fine. LATAM AIRLINES GROUP, S.A. expects that the ruling by the General Court of the European Union may reduce the amount of this fine. On December 17, 2020, the European Commission submitted proof of claim for the total amount of the fine (KUS$10,072 or €8,220,000) to the New York Court hearing the Chapter 11 procedure petitioned by LATAM Airlines Group, S.A. and LAN Cargo, S.A. in May 2020.

10,072

125

Company

Court

Case Number

Origin

Stage of trial

Amounts
Committed (*)

ThUS$

Lan Cargo S.A. y LATAM Airlines Group S.A.

In the High Court of Justice Chancery División (England) Ovre Romerike District Court (Norway) y Directie Juridische Zaken Afdeling Ceveil Recht (Netherlands), Cologne Regional Court (Landgerich Köln Germany).

Lawsuits filed against European airlines by users of freight services in private lawsuits as a result of the investigation into alleged breaches of competition of cargo airlines, especially fuel surcharge. Lan Cargo S.A. and LATAM Airlines Group S.A., have been sued in court proceedings directly and/or in third party, based in England, Norway, the Netherlands and Germany.

Cases are in the uncovering evidence stage. In the case in England, mediation was held with nearly all the airlines involved in the aim of attempting to reach an agreement. It began in September, and LATAM Airlines Group S.A. reached an agreement for approximately GBP 636,000. A settlement was signed in December 2018 and payment was made in January 2019. This lawsuit ended for all plaintiffs in the class action, except for one who signed a settlement for approximately GBP 222,469.63 in December 2019. The payment was made in January 2020 and concluded the entire lawsuit in England. The amount remains undetermined for the lawsuits in the remaining countries (Norway, the Netherlands and Germany). In the case of Germany, the suspension of the case has been requested, relying on the financial reorganization procedure requested by LATAM Airlines Group, S.A. and LAN CARGO, S.A. in the United States (Chapter 11) in May 2020. The German Court has not yet ruled on this request. DB Barnsdale AG; British Airways; KLM; Martinair; Air France; Lufthansa; Lufthansa Cargo and Swiss Air filed a claim with the U.S. Bankruptcy Court before the deadline that creditors had to present their Chapter 11 claims, which must be processed accordingly.

-0-

Aerolinhas Brasileiras S.A.

Federal Justice.

0008285-53.2015.403.6105

An action seeking to quash a decision and petioning for early protection in order to obgain a revocation of the penalty imposed by the Brazilian Competition Authority (CADE) in the investigation of cargo airlines alleged fair trade violations, in particular the fuel surcharge.

This action was filed by presenting a guaranty – policy – in order to suspend the effects of the CADE’s decision regarding the payment of the following fines: (i) ABSA: ThUS$10,438; (ii) Norberto Jochmann: ThUS$201; (iii) Hernan Merino: ThUS$ 102; (iv) Felipe Meyer:ThUS$ 102. The action also deals with the affirmative obligation required by the CADE consisting of the duty to publish the condemnation in a widely circulating newspaper. This obligation had also been stayed by the court of federal justice in this process. Awaiting CADE’s statement. ABSA began a judicial review in search of an additional reduction in the fine amount. The Judge’s decision was published on March 12, 2019, and we filed an appeal against it on March 13, 2019

8,353

Aerolinhas Brasileiras S.A.

Federal Justice.

0001872-58.2014.4.03.6105

An annulment action with a motion for preliminary injunction, was filed on 28/02/2014, in order to cancel tax debts of PIS, CONFINS, IPI and II, connected with the administrative process 10831.005704/2006.43.

We have been waiting since August 21, 2015 for a statement by Serasa on TAM’s letter of indemnity and a statement by the Union. The statement was authenticated on January 29, 2016. A new insurance policy was submitted on March 30, 2016 with the change to the guarantee requested by PGFN. On 05/20/2016 the process was sent to PGFN, which was manifested on 06/03/2016. The Decision denied the company’s request in the lawsuit. The court (TRF3) made a decision to eliminate part of the debt and keep the other part (already owed by the Company, but which it has to pay only at the end of the process: KUS$3,283– R$17,063,902.35). We must await a decision on the Treasury appeal.

8,875

126

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

Tam Linhas Aéreas S.A.	Court of the Second Region.	2001.51.01.012530-0	Ordinary judicial action brought for the purpose of declaring the nonexistence of legal relationship obligating the company to collect the Air Fund.	Unfavorable court decision in first instance. Currently expecting the ruling on the appeal filed by the company. In order to suspend chargeability of Tax Credit a Guaranty Deposit to the Court was delivered for R$ 260.223.373,10-original amount in 2012/2013, which currently equals THUS$63,256. The court decision requesting that the Expert make all clarifications requested by the parties in a period of 30 days was published on March 29, 2016. The plaintiffs’ submitted a petition on June 21, 2016 requesting acceptance of the opinion of their consultant and an urgent ruling on the dispute. No amount additional to the deposit that has already been made is required if this case is lost.	68,821

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil.	10880.725950/2011-05	Compensation credits of the Social Integration Program (PIS) and Contribution for Social Security Financing (COFINS) Declared on DCOMPs.	The objection (manifestação de inconformidade) filed by the company was rejected, which is why the voluntary appeal was filed. The case was assigned to the 1st Ordinary Group of Brazil’s Administrative Council of Tax Appeals (CARF) on June 8, 2015. TAM’s appeal was included in the CARF session held August 25, 2016. An agreement that converted the proceedings into a formal case was published on October 7, 2016. The amount has been reduced after some set-offs were approved by the Department of Federal Revenue of Brazil.	20,732

127

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

Aerovías de Integración Regional, AIRES S.A.	United States Court of Appeals for the Eleventh Circuit, Florida, U.S.A. 45th Civil Court of the Bogota Circuit in Colombia.	2013-20319 CA 01	The July 30th, 2012 Aerovías de Integración Recional, Aires S.A. (LATAM AIRLINES COLOMBIA) initiated a legal process in Colombia against Regional One INC and Volvo Aero Services LLC, to declare that these companies are civilly liable for moral and material damages caused to LATAM AIRLINES COLOMBIA arising from breach of contractual obligations of the aircraft HK-4107. The June 20th, 2013 AIRES SA And / Or LATAM AIRLINES COLOMBIA was notified of the lawsuit filed in U.S. for Regional One INC and Dash 224 LLC for damages caused by the aircraft HK-4107 arguing failure of LATAM AIRLINES GROUP S.A. customs duty to obtain import declaration when the aircraft in April 2010 entered Colombia for maintenance required by Regional One.	Colombia. This case is being heard by the 45th Civil Court of the Bogota Circuit in Colombia. Statements were taken from witnesses presented by REGIONAL ONE and VAS on February 12, 2018. The court received the expert opinions requested by REGIONAL ONE and VAS and given their petition, it asked the experts to expand upon their opinions. It also changed the experts requested by LATAM AIRLINES COLOMBIA. The case was brought before the Court on September 10, 2018 and these rulings are pending processing so that a new hearing can be scheduled. On October 31, 2018, the judge postponed the deadline for the parties to answer the objection because of a serious error brought to light by VAS regarding the translation submitted by the expert. The process has been in the judge’s chambers since March 11, 2019 to decide on replacing the damage estimation expert as requested by LATAM AIRLINES COLOMBIA. The one previously appointed did not take office. A petition has also been made by VAS objecting to the translation of the documents in English into Spanish due to serious mistakes, which was served to the parties in October 2018. The 45th Civil Circuit Court issued an order on August 13, 2019 that did not decide on the pending matters but rather voided all actions since September 14, 2018 and ordered the case to be referred to the 46th Civil Circuit Court according to article 121 of the General Code of Procedure. Said article says that court decisions must be rendered in no more than one (1) year as from the service of the court order admitting the claim. If that period expires without any ruling being issued, the Judge will automatically forfeit competence over the proceedings and must give the Administrative Room of the Superior Council of the Judiciary notice of that fact the next day, in addition to referring the case file to the next sitting judge in line, who will have competence and will issue a ruling in no more than 6 months. The case was sent to the 46th Civil Circuit Court on September 4, 2019, which claims that there was a competence conflict and then sent the case to the Superior Court of Bogotá to decide which court, the 45th or 46th, had to continue with the case. The Court decided that 45^th Civil Circuit Court should continue with the case, so this Court on 01/15/2020 has reactivated the procedural process ordering the transfer to the parties of the objection presented by VAS for serious error of the translation to Spanish of documents provided in English. On 02/24/2020 it declares that the parties did not rule on the objection presented by VAS and requires the plaintiff to submit an expert opinion of damages corresponding to the claims of the lawsuit through its channel. Since 03/16/20 a suspension of terms is filed in Courts due to the pandemic. Judicial terms were reactivated on July 1, 2020. On September 18, 2020, an expert opinion on damages was submitted that had been requested by the Court. The Court ordered service of the ruling to the parties on December 12, 2020. Florida. On June 4, 2019, the State Court of Florida allowed REGIONAL ONE to add a new claim against LATAM AIRLINES COLOMBIA for default on a verbal contract. Given the new claim, LATAM AIRLINES COLOMBIA petitioned that the Court postpone the trial to August 2019 to have the time to investigate the facts alleged by REGIONAL ONE to prove a verbal contract. The facts discovery phase continued, including the verbal statements of the experts of both sides, which have been taking place since March 2020. Given the Covid-19 pandemic and the suspension of trials in the County of Miami-Dade, the Court canceled the trial scheduled for June 2020. In addition, the claims against Aires have been suspended given the request for reorganization filed by LATAM AIRLINES GROUP SA and some of its subsidiaries, including Aires, on May 26, 2020, under Chapter 11 of the United States Bankruptcy Code. Dash and Regional One filed a claim with the U.S. Bankruptcy Court in December 2020 before the deadline that creditors had to present their Chapter 11 claims, which must be processed accordingly.	12,443

128

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	10880.722.355/2014-52	On August 19th, 2014 the Federal Tax Service issued a notice of violation stating that compensation credits Program (PIS) and the Contribution for the Financing of Social Security COFINS by TAM are not directly related to the activity of air transport.	An administrative objection was filed on September 17th, 2014. A first-instance ruling was rendered on June 1, 2016 that was partially favorable. The separate fine was revoked. A voluntary appeal was filed on June 30, 2016, which is pending a decision by CARF. On September 9, 2016, the case was referred to the Second Division, Fourth Chamber, of the Third Section of the Administrative Council of Tax Appeals (CARF). In September 2019, the Court rejected the appeal of the Hacienda Nacional. Hacienda Nacional filed a complaint that was denied by the Court.	52,024

TAM Linhas Aéreas S.A.	Sao Paulo Labor Court, Sao Paulo	1001531- 73.2016.5.02.0710	The Ministry of Labor filed an action seeking that the company adapt the ergonomics and comfort of seats.	In August 2016, the Ministry of Labor filed a new lawsuit before the competent Labor Court in Sao Paulo, in the same terms as case 0000009-45.2016.5.02.090, as previously reported, the hearing date is set for October 22, 2018. We were served the decision completely dismissing the claim in March 2019, against which the plaintiff has filed an appeal. We are now awaiting the hearing by the Court of Appeals.	15,260

TAM Linhas Aéreas S.A.	Ministerio de Trabajo	0001734- 78.2014.5.02.0045	This action was filed by the Ministry of Labor seeking compliance with the laws on rest time, overtime and similar issues. It is before the São Paulo Labor Court.	Initial stage. It could potentially impact operations and control of employees’ working hours. The case was won at the trial court level, but the Public Prosecutor appealed that decision, which failed at the appellate court level. The Prosecutor then filed a motion requesting clarification that he later withdrew. He proposed taking it as far as the supreme court, but he did not go through with it. The Prosecutor has filed a remedy internally that is pending a decision by the Labor Supreme Court (TST).	18,243

LATAM Airlines Group S.A.	22° Civil Court of Santiago	C-29.945-2016	The Company received notice of a civil liability claim by Inversiones Ranco Tres S.A. on January 18, 2017. It is represented by Mr. Jorge Enrique Said Yarur. It was filed against LATAM Airlines Group S.A. for an alleged contractual default by the Company and against Ramon Eblen Kadiz, Jorge Awad Mehech, Juan Jose Cueto Plaza, Enrique Cueto Plaza and Ignacio Cueto Plaza, directors and officers, for alleged breaches of their duties. In the case of Juan Jose Cueto Plaza, Enrique Cueto Plaza and Ignacio Cueto Plaza, it alleges a breach, as controllers of the Company, of their duties under the incorporation agreement. LATAM has retained legal counsel specializing in this area to defend it.	The claim was answered on March 22, 2017 and the plaintiff filed its replication on April 4, 2017. LATAM filed its rejoinder on April 13, 2017, which concluded the argument stage of the lawsuit. A reconciliation hearing was held on May 2, 2017, but the parties did not reach an agreement. The Court issued the evidentiary decree on May 12, 2017. We filed a petition for reconsideration because we disagreed with certain points of evidence. That petition was partially sustained by the Court on June 27, 2017. The evidentiary stage commenced and then concluded on July 20, 2017. Observations to the evidence must now be presented. That period expires August 1, 2017. We filed our observations to the evidence on August 1, 2017. We were served the decision on December 13, 2017 that dismissed the claim since LATAM was in no way liable. The plaintiff filed an appeal on December 26, 2017. Arguments were pled before the Santiago Court of Appeals on April 23, 2019, and on April 30, 2019, this Court confirmed the ruling of the trial court absolving LATAM. The losing party was ordered to pay costs in both cases. On May 18, 2019, Inversiones Ranco Tres S.A. filed a remedy of vacation of judgment based on technicalities and on substance against the Appellate Court decision. The Appellate Court admitted both appeals on May 29, 2019 and the appeals are pending a hearing by the Supreme Court.	18,646

129

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

TAM Linhas Aéreas S.A.	10th Jurisdiction of Federal Tax Enforcement of Sao Paulo	0061196-68.2016.4.03.6182	Tax Enforcement Lien No. 0020869-47.2017.4.03.6182 on Profit-Based Social Contributions from 2004 to 2007.	This tax enforcement was referred to the 10th Federal Jurisdiction on February 16, 2017. A petition reporting our request to submit collateral was recorded on April 18, 2017. At this time, the period is pending for the plaintiff to respond to our petition. The bond was replaced. We are waiting for the evidentiary period to begin.	31,392

TAM Linhas Aéreas S.A.	Department of Federal Revenue of Brazil	5002912.29.2019.4.03.6100	A lawsuit disputing the debit in the administrative proceeding 16643.000085/2009-47, reported in previous notes, consisting of a notice demanding recovery of the Income and Social Assessment Tax on the net profit (SCL) resulting from the itemization of royalties and use of the TAM trademark	The lawsuit was assigned on February 28, 2019. A decision was rendered on March 1, 2019 stating that no guarantee was required. Actualmente, debemos esperar la decisión final. On 04/06/2020 TAM Linhas Aéreas S.A. had a favorable decision (sentence). The National Treasury can appeal. Today, we await the final decision.	8,862

TAM Linhas Aéreas S.A	Delegacía de Receita Federal	10611.720630/2017-16	This is an administrative claim about a fine for the incorrectness of an import declaration.	The administrative defensive arguments were presented September 28, 2017. The Court dismissed the Company’s appeal in August 2019. Then on September 17, 2019, Company filed a special appeal (CRSF (Higher Tax Appeals Chamber)) that is pending a decision.	16,204

TAM Linhas Aéreas S.A	Delegacía de Receita Federal	10611.720852/2016-58	An improper charge of the Contribution for the Financing of Social Security (COFINS) on an import	We are currently awaiting a decision. There is no predictable decision date because it depends on the court of the government agency.	11,598

TAM Linhas Aéreas S.A	Delegacía de Receita Federal	16692.721.933/2017-80	The Internal Revenue Service of Brazil issued a notice of violation because TAM applied for credits offsetting the contributions for the Social Integration Program (PIS) and the Social Security Funding Contribution (COFINS) that do not bear a direct relationship to air transport (Referring to 2012).	An administrative defense was presented on May 29, 2018.	24,926

SNEA (Sindicato Nacional das empresas aeroviárias)	União Federal	0012177-54.2016.4.01.3400	A claim against the 72% increase in airport control fees (TAT-ADR) and approach control fees (TAT-APP) charged by the Airspace Control Department (“DECEA”).	A decision is now pending on the appeal presented by SNEA.	58,919

TAM Linhas Aéreas S/A	União Federal	2001.51.01.020420-0	TAM and other airlines filed a recourse claim seeking a finding that there is no legal or tax basis to be released from collecting the Additional Airport Fee (“ATAERO”).	A decision by the superior court is pending. The amount is indeterminate because even though TAM is the plaintiff, if the ruling is against it, it could be ordered to pay a fee.	-0-

TAM Linhas Aéreas S/A	Delegacia da Receita Federal	10880-900.424/2018-07	This is a claim for a negative Legal Entity Income Tax (IRPJ) balance for the 2014 calendar year (2015 fiscal year) because set-offs were not allowed.	The administrative defensive arguments were presented March 19, 2018. An administrative decision is now pending.	13,667

TAM Linhas Aéreas S/A	Department of Federal Revenue of Brazil	19515-720.823/2018-11	An administrative claim to collect alleged differences in SAT payments for the periods 11/2013 to 12/2017.	A defense was presented on November 28, 2018. The Court dismissed the Company’s appeal in August 2019. Then on September 17, 2019, Company filed a voluntary appeal (CRSF (Administrative Tax Appeals Board)) that is pending a decision.	95,878

130

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

TAM Linhas Aéreas S/A	Department of Federal Revenue of Brazil	10880.938832/2013-19	The decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the second quarter of 2011, which were determined to be in the non-cumulative system	An administrative defense was argued on March 19, 2019. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	12,815

TAM Linhas Aéreas S/A	Department of Federal Revenue of Brazil	10880.938834/2013-16	The decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the third quarter of 2011, which were determined to be in the non-cumulative system.	An administrative defense was argued on March 19, 2019. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	9,370

TAM Linhas Aéreas S/A	Department of Federal Revenue of Brazil	10880.938837/2013-41	The decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the fourth quarter of 2011, which were determined to be in the non-cumulative system.	An administrative defense was argued on March 19, 2019. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	12,556

TAM Linhas Aéreas S/A	Department of Federal Revenue of Brazil	10880.938838/2013-96	The decision denied the reallocation petition and did not equate the Social Security Tax (COFINS) credit declarations for the first quarter of 2012, which were determined to be in the non-cumulative system.	We presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	8,665

TAM Linhas Aéreas S/A	Department of Federal Revenue of Brazil	0012541-56.2016.5.03.0144	A class action in which the Union is petitioning that TAM be ordered to make payment of the correct calculation of Sundays and holidays.	A hearing was set for December 17, 2019. On 04/30/2020, we were notified of the unfavorable court ruling in the first instance, filing an appeal. The Court of Appeals confirmed the trial court’s decision.	12,272

LATAM Airlines Argentina	Commercial Trial Court No. 15 of Buenos Aires.	11479/2012	Proconsumer and Rafaella Cabrera filed a claim citing discriminating fees charged to foreign users as compared to domestic users for services retained in Argentina.	The trial court judge dismissed Mrs. Cabrera’s claim on March 7, 2019 and sustained the motion of lack of standing entered by Proconsumer. The ruling was appealed by the plaintiff on April 8, 2019 and will be decided by Room D.	-0-

LATAM Airlines Group Argentina, Brasil, Perú, Ecuador, y TAM Mercosur.	Commercial and Civil Trial Court No. 11 of Buenos Aires.	1408/2017	Consumidores Libres Coop. Ltda. filed this claim on March 14, 2017 regarding a provision of services. It petitioned for the reimbursement of certain fees or the difference in fees charged for passengers who purchased a ticket in the last 10 years but did not use it.	Federal Commercial and Civil Trial Court No. 11 in the city of Buenos Aires. After two years of arguments on jurisdiction and competence, the claim was assigned to this court and an answer was filed on March 19, 2019	-0-

TAM Linhas Aéreas S.A	Department of Federal Revenue of Brazil	10.880.938842/2013-54	The decision denied the petition for reassignment and did not equate the CONFINS credit statements for the third quarter of 2012 that had been determined to be in the non-accumulative system.	We presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	9,169

TAM Linhas Aéreas S.A	Department of Federal Revenue of Brazil	10.880.93844/2013-43	The decision denied the petition for reassignment and did not equate the CONFINS credit statements for the third quarter of 2012 that had been determined to be in the non-accumulative system.	We presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	8,655

TAM Linhas Aéreas S.A	Department of Federal Revenue of Brazil	10880.938841/2013-18	The decision denied the petition for reassignment and did not equate the CONFINS credit statements for the second quarter of 2012 that had been determined to be in the non-accumulative system.	We presented our administrative defense. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	8,189

131

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

TAM Linhas Aéreas S.A	Receita Federal de Brasil	10840.727719/2019-71	Collection of PIS / COFINS tax for the period of 2014.	We presented our administrative defense on January 11, 2020. The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	33,551

Latam-Airlines Ecuador S.A.	Tribunal Distrital de lo Fiscal	17509-2014-0088	An audit of the 2006 Income Tax Return that disallowed fuel expenses, fees and other items because the necessary support was not provided, according to Management.	On August 6, 2018, the District Tax Claims Court rendered a decision denying the request for a refund of a mistaken payment. An appeal seeking vacation of this judgment by the Court was filed on September 5th and we are awaiting a decision by the Appellate judges. As of December 31, 2018, the lawyers believe that the probability of recovering this amount has fallen by 30% to 40%, so the provision was increased to $8.7 million. We have applied IFRIC 23 as of 12/31/19 because of the percentage loss (more than 50%), and we have recorded the entire provision in the income tax item.	12,505

Latam Airlines Group S.A.	Southern District of Florida. United States District Court	19cv23965	A lawsuit filed by Jose Ramon Lopez Regueiro against American Airlines Inc. and Latam Airlines Group S.A. seeking an indemnity for damages caused by the commercial use of the Jose Marti International Airport in Cuba that he says were repaired and reconditioned by his family before the change in government in 1959.	Latam Airlines Group S.A. was served this claim on September 27, 2019. LATAM Airlines Group filed a motion to dismiss on November 26, 2019. In response, a motion to suspend discovery was filed on December 23, 2019 while the Court was deciding on the motion to dismiss. On April 6, 2020 the Court issued a Temporary Suspension Order given the inability to proceed with the case on a regular basis as a result of the indefinite duration and restrictions of the global pandemic. The parties must notify the Court monthly of the possibility of moving forward. The provision is undetermined.	-0-

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910559/2017-91	Compensation non equate by Cofins	It is about the non-approved compensation of Cofins. Administrative defense submitted (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	10,185

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910547/2017-67	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	11,839

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910553/2017-14	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	11,324

132

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910555/2017-11	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	11,976

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910560/2017-16	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	10,354

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910550/2017-81	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	12,117

133

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910549/2017-56	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	10,153

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.910557/2017-01	Compensation non equate by Cofins	We presented our administrative defense (Manifestação de Inconformidade). The Court dismissed the Company’s defense in December 2020. The Company filed a voluntary appeal to the Brazilian Administrative Council of Tax Appeals (CARF) that is pending a decision.	9,604

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10840.722712/2020-05	Administrative trial that deals with the collection of PIS/Cofins proportionality (fiscal year 2015).	We presented our administrative defense (Manifestação de Inconformidade). A decision is pending.	26,454

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.978948/2019-86	It is about the non-approved compensation/reimbursement of Cofins for the 4th Quarter of 2015.	TAM filed its administrative defense on July 14, 2020. A decision is pending.	15,114

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.978946/2019-97	It is about the non-approved compensation/reimbursement of Cofins for the 3th Quarter of 2015	TAM filed its administrative defense on July 14, 2020. A decision is pending.	9,159

TAM Linhas Aéreas S.A.	Receita Federal de Brasil	10880.978944/2019-06	It is about the non-approved compensation/reimbursement of Cofins for the 2th Quarter of 2015	TAM filed its administrative defense on July 14, 2020. A decision is pending.	9,723

134

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					ThUS$

Latam Airlines Group S.A	23° Juzgado Civil de Santiago	C-8498-2020	Class Action Lawsuit filed by the National Corporation of Consumers and Users (CONADECUS) against LATAM Airlines Group S.A. for alleged breaches of the Law on Protection of Consumer Rights due to flight cancellations caused by the COVID-19 Pandemic, requesting the nullity of possible abusive clauses, the imposition of fines and compensation for damages in defense of the collective interest of consumers. LATAM has hired specialist lawyers to undertake its defense.	On 06/25/2020 we were notified of the lawsuit. On 04/07/2020 we filed a motion for reversal against the ruling that declared the action filed by CONADECUS admissible, the decision is pending to date. On 07/11/2020 we requested the Court to comply with the suspension of this case, ruled by the 2nd Civil Court of Santiago, in recognition of the foreign reorganization procedure pursuant to Law No. 20,720, for the entire period that said proceeding lasts, a request that was accepted by the Court. CONADECUS filed a remedy of reconsideration and an appeal against this resolution should the remedy of reconsideration be dismissed. The Court dismissed the reconsideration on August 3, 2020, but admitted the appeal. The appeal is currently pending before the Santiago Court of Appeals. The amount at the moment is undetermined. New York Case. Parallel to the lawsuit in Chile, on August 31, 2020, CONADECUS filed on appeal with U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) because of the automatic suspension imposed by Section 362 of the U.S. Bankruptcy Code that, among other things, prohibits the parties from filing or continuing with claims that involve a preliminary petition against the Borrowers. CONADECUS petitioned (i) for a stay of the automatic suspension to the extent necessary to continue with the class action against LATAM in Chile and (ii) for a joint hearing by the Bankruptcy Court and the Second Civil Court of Santiago in Chile (the “Chile Insolvency Court”) to hear the matters relating to the claims of CONADECUS in Chile. On December 18, 2020, the Bankruptcy Court sustained part of CONADECUS’s petition, but only to allow it to continue its appeal against the decision by the 23rd Civil Court of Santiago and solely so that the Court of Appeals can decide whether or not a stay is admissible under Chilean insolvency law. On December 31, 2020, CONADECUS petitioned to continue with its appeal against the decision by the 25th Civil Court that approved the reconciliation between AGRECU and LATAM.	-0-

Latam Airlines Group S.A	23° Juzgado Civil de Santiago	C-8903-2020	Class Action Lawsuit filed by AGRECU against LATAM Airlines Group S.A. for alleged breaches of the Law on Protection of Consumer Rights due to flight cancellations caused by the COVID-19 Pandemic, requesting the nullity of possible abusive clauses, the imposition of fines and compensation for damages in defense of the collective interest of consumers. LATAM has hired specialist lawyers to undertake its defense.	On July 7, 2020 we were notified of the lawsuit. We filed our answer to the claim on August 21, 2020. A settlement was reached with AGRECU at that hearing that was approved by the Court on October 5, 2020. On October 7, 2020, the 25th Civil Court confirmed that the decision approving the settlement was final and binding. CONADECUS filed a brief on October 4, 2020 to become a party and oppose the agreement, which was dismissed on October 5, 2020. It petitioned for an official correction on October 8, 2020 and the annulment of all proceedings on October 22, 2020, which were dismissed, costs payable by CONADECUS, on November 16, 2020 and November 20, 2020, respectively. CONADECUS still has appeals pending against these decisions. The amount at the moment is undetermined.	-0-

135

In order to deal with any financial obligations arising from legal proceedings in effect at December 31, 2020, whether civil, tax, or labor, LATAM Airlines Group S.A. and Subsidiaries, has made provisions, which are included in Other non-current provisions that are disclosed in Note 21.

The Company has not disclosed the individual probability of success for each contingency in order to not negatively affect its outcome.

Considering the returns of aircrafts and engines made through the reorganization process, in accordance with the regulations established in Chapter 11 of Title 11 of the Code of the United States of America, which allows the rejection of some contracts, the counterparties could file claims that, in the case of being admitted by the Court, could result in contingent obligations for the Company, which as of this date are not quantifiable.

(*)

The Company has reported the amounts involved only for the lawsuits for which a reliable estimation can be made of the financial impacts and of the possibility of any recovery, pursuant to Paragraph 86 of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

II. Governmental Investigations.

On April 6, 2019, LATAM Airlines Group S.A. received notification of the resolution issued by the National Economic Prosecutor's Office (FNE), which begins an investigation into the LATAM Pass frequent passenger program. The last update in the case Role No. 2530-19 leading this investigation corresponds to the response to a trade in May 2019.

On July 9, 2019, LATAM Airlines Group S.A. received the resolution issued by the National Economic Prosecutor's Office (FNE), which begins an investigation into the Alliance Agreement between LATAM Airlines Group S.A. and American Airlines INC. The last update in the case Role No. 2565-19 leading this investigation corresponds to a statement on September 11, 2019

On July 26, 2019, the National Consumer Service of Chile (SERNAC) issued the Ordinary Resolution No. 12,711 which proposed to initiate a collective voluntary mediation procedure on effectively informing passengers of their rights in cases of cancellation of flights or no show to boarding, as well as the obligation to return the respective boarding fees as provided by art. 133 C of the Aeronautical Code. The Company has voluntarily decided to participate in this proceeding, in which an agreement was reached on March 18, 2020, which implies the return of shipping fees from September 1, 2021, with an initial amount of ThUS$ 5,165, plus ThUS$ 565, as well as information to each passenger who has not flown since March 18, 2020, that their boarding fees are available.

On October 15, 2019, LATAM Airlines Group S.A. received the resolution issued by the National Economic Prosecuting Authority (FNE) advising of the start of an investigation into the agreement between LATAM Airlines Group S.A. and Delta Airlines, Inc. On February 2021, the Company response a letter from the Case N° 2585-19 and no further update have occurred as of the date of this financial statements.

On February 23, 2021 In the framework of the investigation Rol N ° 2484-18, LATAM Airlines Group SA received Ordinary Official Letter N ° 243 of 2021 issued by the National Economic Prosecutor’s Office (FNE), which requests information regarding tariffs of cargo and passengers. In 2018 and 2019, requests for information have been received for complaints associated with the transport of air cargo, the last activity of which occurred in December 2019. In this new notification, the request for information to the passenger business is extended due to new complaints received by the FNE.

136

NOTE 32 - COMMITMENTS

(a)

Commitments for loans obtained

The Company and its subsidiaries do not have credit agreements that indicate limits to some financial indicators of the Company or the subsidiaries, with the exception of those detailed below:

Regarding the revolving committed credit line (“Revolving Credit Facility”) established with a consortium of twelve banks led by Citibank, with a guarantee of aircraft, engines, spare parts and supplies for a total committed amount of US $ 600 million, it includes restrictions of minimum liquidity, measured at the Consolidated Company level (with a minimum level of US $ 750 million) and individually measured for LATAM Airlines Group S.A. companies and TAM Linhas Aéreas S.A. (with a minimum level of US $ 400 million). Compliance with these restrictions is a prerequisite for using the line; if the line is used, said restrictions must be reported quarterly, and non-compliance with these restrictions will accelerate credit. As of December 31, 2020, this line of credit is fully used.

As of December 31, 2020, the Company is in compliance with all the financial indicators detailed above.

On the other hand, the financing agreements of the Company generally establish clauses regarding changes in the ownership structure and in the controller and disposition of assets (which mainly refers to significant transfers of assets).

Under Section 362 of the Bankruptcy Code, the filing of voluntary bankruptcy petitions by the Debtors automatically stayed most actions against the Debtors, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Debtors’ property.

Accordingly, counterparties are stayed from taking any actions as a result of such purported defaults. Specifically, the financing agreements of the Company generally establish that the filing of bankruptcy or similar proceedings constitute an event of default, which are unenforceable under the Bankruptcy Code. At the date of the issuance of these financial statements, the Company has not received notices of termination of financing arrangements, based on such an event of default.

On September 29, 2020 the company signed the so-called “DIP Financing”, which contemplates minimum liquidity restrictions of at least US $ 400 million at a consolidated level.

LATAM’s obligations to the lenders of the DIP Financing have a super administrative preference recognized under Chapter 11 of the U.S. Bankruptcy Code with respect to the other liabilities of the company and entities of its corporate group that have filed for Chapter 11 proceedings (“Related Subsidiaries”) prior to the commencement of the Chapter 11 proceeding.

In addition, in order to secure the debt under the DIP Financing, LATAM and the Related Subsidiaries granted certain guarantees, including, but not limited to, (i) in-rem guarantees to be granted over certain specified assets, such as spare engines, spare inventory, shares in certain subsidiaries (including, but not limited to, (a) a pledge over the shares owned by LATAM in LAN Cargo S.A., Inversiones Lan S.A., Lan Pax Group S.A., LATAM Travel II S.A., Technical Training Latam S.A. and Holdco I S.A., (b) pledge over the shares owned by LAN Cargo S.A. in Transporte Aéreo S.A., Inversiones Lan S.A., Fast Air Almacenes de Carga S.A. and Lan Cargo Inversiones S.A. and (c) pledge over the shares owned by Inversiones LAN S.A. in LAN Cargo S.A., Transporte Aéreo S.A., Lan Pax Group S.A., Fast Air Almacenes de Carga S.A., LATAM Travel Chile II S.A., Technical Training LATAM S.A. and Lan Cargo Inversiones S.A.), among others, under the laws of the jurisdictions in which they are located, (ii) personal guarantees of the Related Subsidiaries and (iii) a in-rem guarentee of general nature over the assets of LATAM and the Related Subsidiaries other than certain “Excluded Assets” comprising, among other things, the aircraft and the “Carve-Out” including, among other things, certain funds assigned for expenses of the Chapter 11 proceedings.

137

(b) Other commitments

At December 31, 2020 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows:

			Value		Release
Creditor Guarantee	Debtor	Type	ThUS$		date
Superintendencia Nacional de Aduanas y de Administración Tributaria	Latam Airlines Perú S.A.	Twenty six letters of credit		188,524	Jan-20-21
Aena Aeropuertos S.A.	Latam Airlines Group S.A.	Four letters of credit		2,871	Dec-04-21
American Alternative Insurance Corporation	Latam Airlines Group S.A.	Eight letters of credit		4,240	Apr-05-21
Comisión Europea	Latam Airlines Group S.A.	One letter of credit		9,682	Mar-29-21
Empresa Pública de Hidrocarburos del Ecuador EP Petroecuador	Latam Airlines Group S.A.	One letter of credit		1,500	Jun-18-21
Metropolitan Dade County	Latam Airlines Group S.A.	Seven letters of credit		2,463	Apr-09-21
BBVA	Latam Airlines Group S.A.	One letter of credit		4,476	Jan-16-22
JFK International Air Terminal LLC.	Latam Airlines Group S.A.	One letter of credit		2,300	Jan-27-21
Sociedad Concesionaria Pudahuel S.A.	Latam Airlines Group S.A.	Sixteen letters of credit		1,953	Apr-01-21
Servicio Nacional de Aduanas	Latam Airlines Group S.A.	Five letters of credit		2,574	Apr-01-21
Tesorería Nacional de la República	Latam Airlines Group S.A.	Five letters of credit		1,416	Apr-30-21
Procon	Tam Linhas Aéreas S.A.	Eleven insurance policy guarantee		14,972	Apr-01-21
União Federal	Tam Linhas Aéreas S.A.	Six insurance policy guarantee		53,718	Nov-09-21
Procuradoria da Fazenda Nacional	Tam Linhas Aéreas S.A.	One letter of credit		6,060	Aug-10-21
Tribunal de Justição de São Paulo.	Tam Linhas Aéreas S.A.	Two insurance policy guarantee		1,047	Sep-23-24
17a Vara Cível da Comarca da Capital de João Pessoa/PB.	Tam Linhas Aéreas S.A.	An insurance policy guarantee		2,300	Jun-25-23
14ª Vara Federal da Seção Judiciária de Distrito Federal	Tam Linhas Aéreas S.A.	An insurance policy guarantee		1,373	May-29-25
Vara das Execuções Fiscais Estaduais	Tam Linhas Aéreas S.A.	Two insurance policy guarantee		2,722	Jul-05-23
Vara Civel Campinas SP	Tam Linhas Aéreas S.A.	An insurance policy guarantee		1,487	Jun-14-24
JFK International Air Terminal LLC.	Tam Linhas Aéreas S.A.	An letter of credit		1,300	Jan-10-21
7ª Turma do Tribunal Regional Federal da 1ª Região	Tam Linhas Aéreas S.A.	An insurance policy guarantee		41,993	Apr-20-23
Vara de Execuções Fiscais Estaduais da Comarca de São Paulo	Tam Linhas Aéreas S.A.	Three insurance policy guarantee		10,775	Jul-05-23
Bond Safeguard Insurance Company	Tam Linhas Aéreas S.A.	Four insurance policy guarantee		2,700	Jul-14-21
União Federal Fazenda Nacional	Tam Linhas Aéreas S.A.	Four insurance policy guarantee		2,304	Nov-16-25
Unia o Federal	ABSA Linhas Aereas Brasileira S.A.	Four insurance policy guarantee		31,247	Feb-22-21
Vara Federal da Subseção de Campinas SP	ABSA Linhas Aereas Brasileira S.A.	An insurance policy guarantee		1,560	Feb-20-23
Tribunal de Justição de São Paulo.	ABSA Linhas Aereas Brasileira S.A.	Two insurance policy guarantee		5,084	Sep-23-24
7ª Turma do Tribunal Regional Federal da 1ª Região	ABSA Linhas Aereas Brasileira S.A.	An insurance policy guarantee		1,638	May-07-23
				404,279

Letters of credit related to assets for right of use are included in Note 17 Properties, plants and equipment letter (d) Additional information Properties, plants and equipment, in numeral (i) Properties, plants and equipment delivered in guarantee.

138

NOTE 33 - TRANSACTIONS WITH RELATED PARTIES

(a)

Details of transactions with related parties as follows:

						Transaction amount
		Nature of		Nature of		with related parties
		relationship with	Country	related parties		As of December 31,
Tax No.	Related party	related parties	of origin	transactions	Currency	2020			2019			2018
						ThUS$			ThUS$			ThUS$
96.810.370-9	Inversiones Costa Verde Ltda. y CPA.	Related director	Chile	Tickets sales			28			16			16
				Loans received (*)	CLP		(100,013	)		-			-
				Interest accrued (*)	CLP		(5,700	)		-			-
78.591.370-1	Bethia S.A and subsidiaries	Related director	Chile	Services provided of cargo transport	CLP		-			556			1,778
				Services received from National and International Courier	CLP		-			(3	)		(85	)
				Sales commissions	CLP		-			(218	)		(821	)
				Services received advertising	CLP		-			(726	)		(1,025	)
87.752.000-5	Granja Marina Tornagaleones S.A.	Common shareholder	Chile	Services provided	CLP		13			61			51
76.335.600-0	Parque de Chile S.A.	Related director	Chile	Tickets sales	CLP		-			9			20
96.989.370-3	Rio Dulce S.A.	Related director	Chile	Tickets sales	CLP		5			-			18
Foreign	Patagonia Seafarms INC	Related director	U.S.A	Services provided of cargo transport			40			-			-
Foreign	TAM Aviação Executiva e Taxi Aéreo S.A.	Common shareholder	Brazil	Services provided
				Services provided of cargo transport	BRL		13			58			62
				Services received	BRL		-			2			8
Foreign	Qatar Airways	Indirect shareholder	Qatar	Services provided by aircraft lease	US$		22,215			39,528			21,321
				Interlineal received service	US$		(4,736	)		(2,050	)		(6,345	)
				Interlineal provided service	US$		3,141			3,739			8,635
				Services provided of handling	US$		1,246			1,106			1,392
				Compensation for early return of aircraft	US$		9,240			-			-
				Services provided / received others	US$		1,160			996			1,805
Foreign	Delta Air Lines, Inc.	Shareholder	U.S.A	Interlineal received service	US$		(4,160	)		-			-
				Interlineal provided service	US$		4,357			-			-
				Compensation for cancellation of aircraft purchase	US$		62,000			-			-
				Compensation for cancellation of aircraft purchase	US$		3,310			-			-
				Compensation for cancellation of aircraft purchase	US$		30			-			-
Foreign	QA Investments Ltd	Common shareholder	Jersey Channel Islands	(*)Loans received	US$		(125,016	)		-			-
				(*)Interest accrued	US$		(7,125	)		-			-
Foreign	QA Investments 2 Ltd	Common shareholder	Jersey Channel Islands	(*)Loans received	US$		(125,016	)		-			-
				(*)Interest accrued	US$		(7,125	)		-			-
Foreign	Lozuy S.A.	Common shareholder	Uruguay	(*)Loans received	US$		(25,003	)		-			-
				(*)Interest accrued	US$		(1,425	)		-			-

(*) Corresponding to DIP tranche C.

The balances of Accounts receivable and accounts payable to related parties are disclosed in Note 9.

Transactions between related parties have been carried out under market conditions between interested and duly informed parties.

139

(b)

Compensation of key management

The Company has defined for these purposes that key management personnel are the executives who define the Company’s policies and macro guidelines and who directly affect the results of the business, considering the levels of Vice-Presidents, Chief Executives and Senior Directors.

	For the year ended
	December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Remuneration		8,395		13,701		14,841
Management fees		257		411		307
Non-monetary benefits		1,719		1,815		748
Short-term benefits		13,624		31,124		45,653
Long-term benefits		-		8,577		2,412
Share-based payments		-		3,296		(7,210	)
Termination benefits (*)		4,539		1,428		1,404
Total		28,534		60,352		58,155

(*)

Includes termination benefits ThUS $ 489 related to the reorganization within the framework of Chapter 11 and classified as expenses of restructuring activities (Note 27).

NOTE 34 - SHARE-BASED PAYMENTS

LP3 compensation plans (2020-2023)

The Company implemented a program for a group of executives, which lasts until March 2023, with a period of enforceability between October 2020 and March 2023, where the collection percentage is annual and cumulative. The methodology is an allocation, of quantity of units, where a goal of the value of the action is set.

The bonus is activated, if the target of the share price defined in each year is met. In case the bonus accumulates, up to the last year, the total bonus is doubled (in case the share price is activated).

This Compensation Plan has not yet been provisioned due to the fact that the action price required for collection is below the initial target.

140

NOTE 35 - STATEMENT OF CASH FLOWS

(a)

The Company has carried out non-monetary transactions mainly related to financial lease and lease liabilities, which are described in Note 19 Other financial liabilities.

(b)

Other inflows (outflows) of cash:

	For the year ended December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$
Delta Air Lines Inc. compensation (1)		62,000			350,000			-
Fuel hedge		(46,579	)		(9,966	)		77,234
Hedging margin guarantees		14,962			(21,200	)		1,573
Currency hedge		-			-			(1,282	)
Tax paid on bank transaction		(1,261	)		(11,369	)		318
Fuel derivatives premiums		(3,949	)		(17,102	)		(13,947	)
Bank commissions, taxes paid and other		(5,828	)		(20,627	)		(8,179	)
Guarantees		(44,279	)		(5,474	)		14,755
Court deposits		38,527			(22,976	)		(30,860	)
Total Other inflows (outflows) Operation flow		13,593			241,286			39,612
Tax paid on bank transaction		(2,192	)		(2,249	)		(2,476	)
Total Other inflows (outflows) Investment flow		(2,192	)		(2,249	)		(2,476	)
Settlement of derivative contracts		(107,788	)		(2,976	)		(11,675	)
Aircraft Financing advances		-			(55,728	)		55,728
Total Other inflows (outflows) Financing flow		(107,788	)		(58,704	)		44,053

(c)	Dividends:

	For the period ended December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$
Latam Airlines Group S.A.		-			(54,580	)		(46,591	)
Multiplus S.A. (*)		-			-			(26,029	)
Latam Airlines Perú S.A. (*)		(571	)		(536	)		-
Total dividends paid		(571	)		(55,116	)		(72,620	)

(*)

Dividends paid to minority shareholders

141

(d)

Reconciliation of liabilities arising from financing activities:

			Cash flows								Non cash-Flow Movements
	As of December 31,		Obtainment		Payment						Interest accrued						As of December 31,
Obligations with financial institutions	2019		Capital		Capital			Interest			and others (*)			Reclassifications			2020
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Loans to exporters		341,475		165,000		(359,000	)		(4,140	)		8,366			-			151,701
Bank loans		217,255		265,627		(4,870	)		(2,397	)		49,658			-			525,273
Guaranteed obligations		2,157,327		192,972		(48,576	)		(21,163	)		(823,984	)		(137,720	)		1,318,856
Other guaranteed obligations		580,432		1,361,881		(42,721	)		(27,744	)		67,268			-			1,939,116
Obligation with the public		2,064,934		-		(774	)		(55,613	)		174,860			-			2,183,407
Financial leases		1,730,843		-		(236,744	)		(52,155	)		34,837			137,720			1,614,501
Other loans		101,261		-		(101,026	)		(1,151	)		916			-			-
Lease liability		3,172,157		-		(122,063	)		(46,055	)		116,967			-			3,121,006
Total Obligations with financial institutions		10,365,684		1,985,480		(915,774	)		(210,418	)		(371,112	)		-			10,853,860

			Cash flows								Non cash-Flow Movements
	As of December 31,		Obtainment		Payment						Interest accrued					As of December 31,
Obligations with financial institutions	2018		Capital		Capital			Interest			and others		Reclassifications			2019
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$

Loans to exporters		400,721		93,000		(145,505	)		(12,934	)		6,193		-			341,475
Bank loans		222,741		164,095		(165,549	)		(11,352	)		7,320		-			217,255
Guaranteed obligations		2,534,021		607,797		(282,721	)		(93,335	)		93,286		(701,721	)		2,157,327
Other guaranteed obligations		673,452		-		(92,549	)		(28,417	)		27,946		-			580,432
Obligation with the public		1,553,079		1,009,836		(487,086	)		(144,932	)		134,037		-			2,064,934
Financial leases		1,624,854		-		(591,861	)		(72,311	)		68,440		701,721			1,730,843
Other loans		252,858		27,864		(178,777	)		(9,648	)		8,964		-			101,261
Lease liability		2,858,049		-		(398,992	)		(177,948	)		891,048		-			3,172,157
Total Obligations with financial institutions		10,119,775		1,902,592		(2,343,040	)		(550,877	)		1,237,234		-			10,365,684

(*)

Accrued interest and others, includes ThUS$ (891,407), associated with the rejection of fleet contracts. This amount includes ThUS$ (886,895) of Other secured obligations and ThUS$ (4,512) of financial leases.

(e)

Advances of aircraft

Below are the cash flows associated with aircraft purchases, which are included in the statement of consolidated cash flow, in the item Purchases of properties, plants and equipment:

	For the year ended December 31,
	2020			2019
	ThUS$			ThUS$

Increases (payments)		(31,803	)		(86,288	)
Recoveries		8,157			349,702
Total cash flows		(23,646	)		263,414

142

(f)

Additions of property, plant and equipment and Intangibles

	For the year ended At December 31,
	2020		2019		2018
	ThUS$		ThUS$		ThUS$
Net cash flows from
Purchases of property, plant and equipment		324,264		1,276,621		660,707
Additions associated with maintenance		173,740		453,827		375,634
Other additions		150,524		822,794		285,073
Purchases of intangible assets		75,433		140,173		96,206
Other additions		75,433		140,173		96,206

(g)

The net effect of the application of hyperinflation in the consolidated cash flow statement for the periods ended December 31 corresponds to:

	For the year ended December 31,
	2020			2019
	ThUS$			ThUS$

Net cash flows from (used in) operating activities		18,347			118,797
Net cash flows from (used in) investment activities		(13,872	)		64,516
Net cash flows from (used in) financing activities		-			(56,866	)
Effects of variation in the exchange rate on cash and cash equivalents		(4,475	)		(126,447	)
Net increase (decrease) in cash and cash equivalents		-			-

NOTE 36 - THE ENVIRONMENT

LATAM Airlines Group S.A is committed to sustainable development seeking to generate social, economic and environmental value for the countries where it operates and for all its stakeholders. The company manages environmental issues at the corporate level, centralized in the Corporate Affairs and Sustainability Management. The company is committed to monitoring and mitigating its impact on the environment in all of its ground and air operations, being a key actor in the solution and search for alternatives to face the challenge of climate change.

Some of the functions of the Corporate Affairs and Sustainability Management in environmental issues, together with the various areas of the company, is to ensure that environmental legal compliance is maintained in all the countries where it is present and in 100% of its operations, to implement and to maintain a corporate environmental management system, to use non-renewable resources such as jet fuel efficiently, to dispose of its waste responsibly, and to develop programs and actions that allow it to reduce its greenhouse gas emissions, seeking to generate environmental, social and economic benefits for the company and its environment.

143

Within the current sustainability strategy, the environment dimension is called Climate Change, and its objective is for the company to assume a leadership role in the region in this area, for which it works on the following aspects:

i. Implementation of management systems and environmental certifications

ii. Promotion of a circular economy

iii. Measurement and management of the corporate carbon footprint

iv. Emissions Offset Program

v. Development of sustainable alternative fuels and energy

vi. Creation of Shared Value

During 2020, the company worked on updating its sustainability strategy, co-building it with its stakeholders and experts in different topics, which allows it to respond to the new challenges it is facing by being part of the solution, with the objective of to be an asset in the countries where it operates and to generate value for them. This update was made in the midst of the health crisis, with the company convinced that its recovery comes hand in hand with being a leader in the region in sustainability. This strategy will be made public during 2021, once it has been validated by all the actors who participated. At the same time, during 2020, the company worked on the following initiatives:

- Maintenance of the certification of the international standard ISO 14001 in the cargo operation in Miami.

- Maintenance of the stage 2 certifications of the IEnvA environmental management system (IATA Environmental Assessment) whose scope is international flights operated from Chile, the most advanced level of this certification; being the first in the continent and one of six airlines in the world that have this certification

- Maintenance of stage 1 certification of the IEnvA environmental management system (IATA Environmental Assessment) whose scope is the domestic and international operations of Colombia

- Response to the DJSI (Dow Jones Sustainability Index) questionnaire

- Neutralization of domestic air operations in Colombian operations

- Incorporation of 100% electrical energy from renewable sources in the facilities of the maintenance base and the corporate building of operations in Chile

- Implementation of the Recycle Your Trip program, which seeks to manage the waste generated on board domestic flights in Chile.

- Verification of company emissions under the EU-ETS and CORSIA schemes.

- Strengthening of the Solidarity Plane program.

It is highlighted that LATAM Airlines Group, during 2020, had an excellent performance in the sustainability evaluation of the Dow Jones Sustainability Index, the best in its history. However, the company was delisted from the different indices (World, MILA and Chile), for being in Chapter 11.

144

NOTE 37 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS

(1) On January 28, 2021, the United States Southern District Court of New York issued an order extending the exclusive period of the debtors’, to present a reorganization plan within Chapter 11 until June 30, 2021 and extending until August 23, 2021, the period to obtain acceptances of said plan.

(2) On January 29, 2021, in accordance with the applicable Chapter 11 procedures, the Debtors were authorized to reject 2 A320 family aircraft registered under IFRS 16 as right-of-use assets.

(3) On February 3, 2021, authorities of the state of Sao Paulo at the petition of the federal district authorities requested at the offices of the subsidiary Latam Airlines Brasil, financial and accounting information relative to two suppliers referring to the period 2012-2014, which was provided by that company, collaborating with the procedure.

(4) On February 24, 2021 LATAM and Delta Air Lines received from the Administrative Council for Economic Defense (CADE) in Brazil the unrestricted approval of their commercial agreement (“Trans-American Joint Venture Agreement” or “JVA”), then of initial approval in September 2020.

After December 31, 2020 and until the date of issuance of these financial statements, there is no knowledge of other events of a financial or other nature, which significantly affect the balances or interpretation thereof.

The consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries as of December 31, 2020, have been approved in the Ordinary Board Session of March 9, 2021.

NOTE 38 - PARENT COMPANY FINANCIAL INFORMATION

In accordance with the requirements of SEC Rule 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information for the financial position, changes in financial position and results of operations and cash flows of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. Due to chapter 11 procedures some subsidiaries are restricted to transfer dividends to the Parent Company.

The condensed financial information of the parent company has been prepared using the same accounting policies as set out in the accompanying consolidated financial statements and include the investment in subdiaries accounted for the equity method.

145

ASSETS

	As of		As of
	December 31,		December 31,
	2020		2019
	ThUS$		ThUS$
Cash and cash equivalents
Cash and cash equivalents		1,295,042		538,200
Other financial assets		32,407		82,041
Other non-financial assets		82,318		126,765
Trade and other accounts receivable		282,896		442,046
Accounts receivable from related entities		412,370		214,693
Inventories		168,686		162,826
Current tax assets		2,545		5,182

Total current assets other than non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners		2,276,264		1,571,753

Non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners		300,367		489,719

Total current assets		2,576,631		2,061,472

Non-current assets
Other financial assets		27,658		35,675
Investments accounted for using the equity method		9,006,797		9,801,639
Other non-financial assets		13,356		33,104
Accounts receivable		2,975		2,313
Accounts receivable from related entities		38,300		56,823
Intangible assets other than goodwill		167,893		222,260
Goodwill		-		38,992
Property, plant and equipment		8,683,419		10,756,213
Deferred tax assets		553,122		-
Total non-current assets		18,493,520		20,947,019

Total assets		21,070,151		23,008,491

146

LIABILITIES AND EQUITY

	As of			As of
	December 31,			December 31,
LIABILITIES	2020			2019
	ThUS$			ThUS$
Current liabilities
Other financial liabilities		2,347,033			1,576,602
Trade and other accounts payables		1,013,399			712,790
Accounts payable to related entities		1,481,281			1,261,916
Other provisions		32			30
Other non-financial liabilities		1,411,582			1,860,979
Total current liabilities other than non-current liabilities (or disposal groups) classified as held for sale		6,253,327			5,412,317

Total current liabilities		6,253,327			5,412,317

Non-current liabilities
Other financial liabilities		5,631,916			6,286,583
Accounts payable		416,034			347,529
Accounts payable to related entities		574,202			177,779
Other provisions		9,892,007			6,539,683
Deferred tax liabilities		-			211,095
Employee benefits		47,915			61,793
Other non-financial liabilities		697,135			842,535
Total non-current liabilities		17,259,209			14,466,997
Total liabilities		23,512,536			19,879,314

EQUITY
Share capital		3,146,265			3,146,265
Retained earnings/(losses)		(4,193,615	)		352,272
Treasury Shares		(178	)		(178	)
Other reserves		(1,388,185	)		(367,577	)
Parent’s ownership interest		(2,435,713	)		3,130,782
Non-controlling interest		(6,672	)		(1,605	)
Total equity		(2,442,385	)		3,129,177
Total liabilities and equity		21,070,151			23,008,491

147

	For the year ended
	December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$

Revenue		1,272,077			2,958,270			3,107,993
Cost of sales		(2,099,716	)		(2,860,173	)		(2,687,140	)
Gross margin		(827,639	)		98,097			420,853
Other income		948,160			1,124,033			1,157,905
Distribution costs		(125,563	)		(222,585	)		(217,828	)
Administrative expenses		(225,557	)		(326,640	)		(339,017	)
Other expenses		(154,582	)		(211,830	)		(189,719	)
Restructuring activities expenses		(837,673	)		-			-
Other gains/(losses)		(98,790	)		15,367			53,446

Income from operation activities		(1,321,644	)		476,442			885,640

Financial income		11,812			23,262			10,906
Financial costs		(410,153	)		(479,596	)		(468,842	)
Share of profit of investments accounted for using the equity method		(3,537,259	)		88,429			(49,115	)
Foreign exchange gains/(losses)		(66,004	)		(76,122	)		(78,566	)
Result of indexation units		-			67			115

Income (loss) before taxes		(5,323,248	)		32,482			300,138
Income tax expense / benefit		767,713			163,131			41,648

NET INCOME (LOSS) FOR THE YEAR		(4,555,535	)		195,613			341,786

148

	For the year ended
	December 31,
	2020			2019			2018
	ThUS$			ThUS$			ThUS$

Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services		2,240,961			6,621,168			5,948,097
Other cash receipts from operating activities		52,192			122,637			89,513
Payments for operating activities
Payments to suppliers for goods and services		(1,713,223	)		(4,491,682	)		(4,325,619	)
Payments to and on behalf of employees		(298,370	)		(466,212	)		(437,946	)
Other payments for operating activities		(27,757	)		(67,056	)		(55,511	)
Interest received		-			5,127			(1,454	)
Income taxes (paid)		(2,764	)		-			-
Other cash inflows (outflows)		61,532			302,246			75,403

Net cash flows from operating activities		312,571			2,026,228			1,292,483

Cash flows from investing activities
Cash flows from losses of control of subsidiaries or other businesses		-			-			39,108
Cash flows used to obtain control of subsidiaries or other businesses		(349,125	)		-			(199,701	)
Other cash receipts from sales of equity or debt instruments of other entities		30,439			172,122			242,253
Other payments to acquire equity or debt instruments of other entities		(27,199	)		(172,295	)		(250,968	)
Loans to related entities		-			-			(48,125	)
Amounts raised from sale of property, plant and equipment		75,566			42,600			112,255
Purchases of property, plant and equipment		(163,022	)		(578,498	)		(545,885	)
Purchases of intangible assets		(70,363	)		(66,018	)		(60,508	)
Interest received		3,235			12,757			6,200

Net cash flow (used in) investing activities		(500,469	)		(589,332	)		(705,371	)

Cash flows from financing activities
Payments for changes in ownership interests in subsidiaries that do not result in loss of control		(3,225	)		-			-
Amounts raised from long-term loans		1,361,807			370,139			769,055
Amounts raised from short-term loans		296,267			93,000			293,000
Loans from Related Entities		373,125			-			-
Loans repayments		(749,258	)		(1,632,577	)		(913,490	)
Payments of lease liabilities		(90,335	)		-			(545,824	)
Dividends paid		-			(54,580	)		(46,591	)
Interest paid		(135,859	)		(283,612	)		(287,730	)
Other cash inflows (outflows)		(107,782	)		(58,704	)		44,053

Net cash flows (used in) financing activities		944,740			(1,566,334	)		(687,527	)
Net increase in cash and cash equivalents before effect of exchanges rate change		756,842			(129,438	)		(100,415	)
Effects of variation in the exchange rate on cash and cash equivalents		-			5,183			-
Net increase (decrease) in cash and cash equivalents		756,842			(124,255	)		(100,415	)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR		538,200			662,455			762,870

CASH AND CASH EQUIVALENTS AT THE END OF YEAR		1,295,042			538,200			662,455

149

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	%

	As of December 31, 2020								As of December 31, 2019
			Fair value measurements using values								Fair value measurements using values
			considered as								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		32,782		32,782		-		-		222,094		222,094		-		-
Short-term mutual funds		32,782		32,782		-		-		222,094		222,094		-		-

Other financial assets, current		4,097		366		3,731		-		471,797		386,688		85,109		-
Fair value interest rate derivatives		-		-		-		-		27,044		-		27,044		-
Fair value of fuel derivatives		1,296		-		1,296		-		48,542		-		48,044		-
Fair value of foreign currency derivative		-		-		-		-		586		-		586		-
Accrued interest since the last payment date Swap of currencies		-		-		-		-		3		-		3		-
Private investment funds		348		348		-		-		386,669		386,669		-		-
Certificate of Deposit (CBD)		2,435		-		2,435		-		8,934		-		8,934		-
Domestic and foreign bonds		18		18		-		-		19		19		-		-

Liabilities
Other financial liabilities, current		5,671		-		5,671		-		50,372		-		50,372		-
Fair value of interest rate derivatives		2,734		-		2,734		-		302		-		302		-
Fair value of foreign currency derivatives		-		-		-		-		48,347		-		48,347		-
Interest accrued since the last payment date of Currency Swap		-		-		-		-		1,723		-		1,723		-
Currency derivative not registered as hedge accounting		2,937		-		2,937		-		-		-		-		-

	Initial balance		Activation		Cummulative translation adjustment			Amortization			Final balance
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$

From January 1 to December 31, 2019		48,957		166,300		(4,950	)		(153,731	)		56,576
From January 1 to December 31, 2020		56,576		146,778		(14,672	)		(173,206	)		15,476