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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2022

Disclosure Of Property Plant And Equipment Text Block Abstract

NOTE 16 - PROPERTY, PLANT AND EQUIPMENT

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

	Gross Book Value				Accumulated depreciation						Net Book Value
	As of		As of		As of			As of			As of		As of
	December 31,		December 31,		December 31,			December 31,			December 31,		December 31,
	2022		2021		2022			2021			2022		2021
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
a) Property, plant and equipment
Construction in progress (1)		388,810		473,797		-			-			388,810		473,797
Land		44,349		43,276		-			-			44,349		43,276
Buildings		124,507		121,972		(55,511	)		(61,521	)		68,996		60,451
Plant and equipment		11,135,425		11,024,722		(4,836,926	)		(4,462,706	)		6,298,499		6,562,016
Own aircraft (3) (4)		10,427,950		10,377,850		(4,619,279	)		(4,237,585	)		5,808,671		6,140,265
Other (2)		707,475		646,872		(217,647	)		(225,121	)		489,828		421,751
Machinery		27,090		25,764		(25,479	)		(23,501	)		1,611		2,263
Information technology equipment		153,355		146,986		(136,746	)		(130,150	)		16,609		16,836
Fixed installations and accessories		155,351		147,402		(118,279	)		(108,661	)		37,072		38,741
Motor vehicles		51,504		49,186		(46,343	)		(44,423	)		5,161		4,763
Leasehold improvements		202,753		248,733		(42,726	)		(115,758	)		160,027		132,975
Subtotal Properties, plant and equipment		12,283,144		12,281,838		(5,262,010	)		(4,946,720	)		7,021,134		7,335,118
b) Right of use
Aircraft (3)		4,391,690		5,211,153		(3,064,869	)		(3,109,411	)		1,326,821		2,101,742
Other assets		246,078		243,014		(182,372	)		(190,007	)		63,706		53,007
Subtotal Right of use		4,637,768		5,454,167		(3,247,241	)		(3,299,418	)		1,390,527		2,154,749
Total		16,920,912		17,736,005		(8,509,251	)		(8,246,138	)		8,411,661		9,489,867

(1)

As of December 31, 2022, includes advances paid to aircraft manufacturers for ThUS$ 357,979 (ThUS$ 368,625 as of December 31, 2021)

(2)

Consider mainly rotables and tools.

(3)

As of December 31, 2021, due to Chapter 11, 13 aircraft lease contract were rejected, of which 4 were recorded as Property, plant and equipment, (4 A350) and 9 were presented as right of use assets, (2 A320 and 7 A350).

(4)

During 2022, six A320 and twenty-eight A319 aircraft were reclassified to Non-current assets or groups of assets for disposal as held for sale.

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, 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			-			-			(142,179	)		656			8,869			-			(4,841	)		(136,018	)
Changes, total		5,372			(5,428	)		(9,655	)		(1,675,547	)		(5,945	)		(10,635	)		(81	)		(24,052	)		(1,725,971	)
Closing balance as of December 31, 2020		377,961			42,978			65,207			7,698,969			14,831			49,199			396			74,408			8,323,949
Opening balance as of January 1, 2021		377,961			42,978			65,207			7,698,969			14,831			49,199			396			74,408			8,323,949
Additions		84,392			1,550			92			563,023			6,455			6			17			6,543			662,078
Disposals		-			-			-			(169	)		(26	)		(309	)		(17	)		-			(521	)
Rejection fleet (*)		-			-			-			(469,878	)		-			-			-			(46,816	)		(516,694	)
Retirements		(279	)		-			-			(44,684	)		(212	)		(1,885	)		-			(26	)		(47,086	)
Depreciation expenses		-			-			(4,074	)		(620,349	)		(4,345	)		(8,304	)		(61	)		(11,649	)		(648,782	)
Foreign exchange		(1,720	)		(1,252	)		(833	)		(19,199	)		(404	)		(1,752	)		(11	)		(13,074	)		(38,245	)
Other increases (decreases) (**)		13,443			-			59			(538,996	)		537			1,786			1			123,589			(399,581	)
Changes, total		95,836			298			(4,756	)		(1,130,252	)		2,005			(10,458	)		(71	)		58,567			(988,831	)
Closing balance as of December 31, 2021		473,797			43,276			60,451			6,568,717			16,836			38,741			325			132,975			7,335,118
Opening balance as of January 1, 2022		473,797			43,276			60,451			6,568,717			16,836			38,741			325			132,975			7,335,118
Additions		16,332			-			-			843,808			6,426			113			258			27,160			894,097
Disposals		-			-			-			(4,140	)		-			(264	)		(3	)		-			(4,407	)
Withdrawals		(75	)		-			(2	)		(42,055	)		(24	)		(836	)		-			(313	)		(43,305	)
Retirements		-			-			(3,285	)		(669,059	)		(5,662	)		(7,914	)		(55	)		(13,071	)		(699,046	)
Depreciation expenses		(1,282	)		1,073			918			11,527			(84	)		2,365			(28	)		7,593			22,082
Foreing exchange		(99,962	)		-			10,914			(403,950	)		(883	)		4,867			(74	)		5,683			(483,405	)
Other increases (decreases)		-			-			-			-			-			-			-			-			-
Changes, total		(84,987	)		1,073			8,545			(263,869	)		(227	)		(1,669	)		98			27,052			(313,984	)
Closing balance as of December 31, 2022		388,810			44,349			68,996			6,304,848			16,609			37,072			423			160,027			7,021,134

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

(**)

As of December 31, 2022, six A320 ThUS$ (29,328) and twenty-eight A319 ThUS$ (373,410) aircraft were reclassified to Non-current assets or groups of assets for disposal as held for sale. As of December 31, 2021, it includes the lease contract amendment of two B787 aircraft ThUS$ (397,569) and six A320N aircraft ThUS$ (284,952) (see note 13).

(a) Right of use assets:

							Net right
							of use
	Aircraft			Others			assets
	ThUS $			ThUS $			ThUS $
Opening balances as of January 1, 2020		2,768,540			101,158			2,869,698
Additions		-			399			399
Fleet rejection (*)		(9,090	)		-			(9,090	)
Depreciation expense		(395,936	)		(22,492	)		(418,428	)
Cumulative 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
Opening balances as of January 1, 2021		2,338,042			68,277			2,406,319
Additions		537,995			1,406			539,401
Fleet rejection (*)		(573,047	)		(4,577	)		(577,624	)
Depreciation expense		(317,616	)		(16,597	)		(334,213	)
Cumulative translate adjustment		(574	)		(1,933	)		(2,507	)
Other increases (decreases) (**)		116,942			6,431			123,373
Total changes		(236,300	)		(15,270	)		(251,570	)
Final balances as of December 31, 2021		2,101,742			53,007			2,154,749
Opening balances as of January 1, 2022		2,101,742			53,007			2,154,749
Additions		372,571			13,087			385,658
Depreciation expense		(249,802	)		(16,368	)		(266,170	)
Cumulative translate adjustment		919			1,392			2,311
Other increases (decreases) (***)		(898,609	)		12,588			(886,021	)
Total changes		(774,921	)		10,699			(764,222	)
Final balances as of December 31, 2022		1,326,821			63,706			1,390,527

(*)

Include aircraft lease rejection due to Chapter 11.

(**)

Includes the renegotiations of 92 aircraft (1 A319, 37 A320, 12 A320N, 19 A321, 1 B767, 6 B777 and 16 B787).

(***) Include the renegotiations of 115 aircraft (1 A319, 39 A320, 14 A320N, 30 A321, 1 B767, 6 B777 and 24 B787).

		Aircraft included in Property, plant and equipment						Aircraft included as Rights of use assets					Total fleet
		As of			As of			As of			As of		As of			As of
		December 31,			December 31,			December 31,			December 31,		December 31,			December 31,
Aircraft	Model	2022			2021			2022			2021		2022			2021
Boeing 767	300ER		15			16			-			-		15			16
Boeing 767	300F		13			12	(1)		1			1		14			13	(1)
Boeing 777	300ER		4			4			6			6		10			10
Boeing 787	800		4			4			6			6		10			10
Boeing 787	900		2			2			19			15		21			17
Airbus A319	100		12	(3)		37			1			7		13			44
Airbus A320	200		88			94			40	(2)		39		128	(2)		133
Airbus A320	NEO		1			-			15			12		16			12
Airbus A321	200		19			18			30			31		49			49
Total			158			187			118			117		276			304

(1)	An aircraft leased to Aerotransportes Mas de Carga S.A. de C.V, was returned to LATAM Airlines Group S.A. in 2022.
(2)	An aircraft with a short-term operating lease is not considered value for right of use.
(3)	Twenty-eight A319 aircraft were classified under non-current assets or groups of assets for disposal as held for sale, (see Note 13)

(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, Airbus 320 Family and Boeing 767 300F fleets that consider a lower residual value, due to the extension of their useful life to 22, 25 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
				Deceember 31,				December 31,
				2022				2021
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		4,554		13,205		58,611		259,036
Trust Company			Airbus A320		33,154		203,788		51,543		227,604
			Boeing 767		35,043		164,448		46,779		168,315
			Boeing 777		141,605		144,065		144,358		141,620

Credit Agricole	Credit Agricole	Aircraft and engines	Airbus A319		3,518		5,311		1,073		6,419
			Airbus A320		195,864		161,397		139,192		117,130
			Airbus A321 / A350		6,192		4,827		30,733		27,427
			Boeing 767		9,121		23,323		10,404		30,958
			Boeing 787		60,305		34,077		91,797		38,551

Bank Of Utah	BNP Paribas	Aircraft and engines	Boeing 787		184,199		221,311		198,475		233,501

Citibank N.A.	Citibank N.A.	Aircraft and engines	Airbus A319		-		-		27,936		45,849
			Airbus A320		-		-		128,030		181,224
			Airbus A321		-		-		41,599		75,092
			Airbus A350		-		-		15,960		26,507
			Airbus B767		-		-		90,846		181,246
			Airbus B787		-		-		23,156		17,036
			Rotables		-		-		162,477		134,846

UMB Bank	MUFG	Aircraft and engines	Airbus A320		-		-		166,712		258,875

Total direct guarantee					673,555		975,752		1,429,681		2,171,236

(1)	For the syndicated loans, the Guarantee Agent represents different creditors.

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 booked within Property, Plant and Equipment whose total debt as of December 31, 2022, amounts to ThUS$ 1,037,122 (ThUS$ 1,200,382 as of December 31, 2021). The book value of the assets with indirect guarantees as of December 31, 2022, amounts to ThUS$ 2,306,233 (ThUS$ 2,884,563 as of December 31, 2021).

As of December 31, 2021, given Chapter 11, four aircraft included within Property, plant and equipment were rejected, of which four had direct guarantees and one indirect guarantee.

As of December 31, 2022, the Company keeps valid letters of credit related to right of use assets according to the following detail:

Creditor Guarantee

Debtor

Type

Value
ThUS$

Release
date

GE Capital Aviation Services Ltd.

LATAM Airlines Group S.A.

Three letters of credit

12,198

Dec 6, 2023

Merlin Aviation Leasing (Ireland) 18 Limited RB Comercial Properties 49

Tam Linhas Aéreas S.A.

Two letters of credit

3,852

Mar 15, 2023

Empreendimentos Imobiliarios LTDA

Tam Linhas Aéreas S.A.

One letter of credit

27,091

Apr 20, 2023

43,141

(ii) Commitments and others

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

	As of December 31, 2022		As of December 31, 2021
	ThUS$		ThUS$
Gross book value of fully depreciated property, plant and equipment still in use		266,896		223,608
Commitments for the acquisition of aircraft (*)		13,186,000		10,800,000

(*)	According to the manufacturer’s price list.

Purchase commitment of aircraft

	Year of delivery
Manufacturer	2023		2024		2025		2026-2029		Total
Airbus S.A.S.		8		8		11		56		83
A320-NEO Family		8		8		11		56		83
The Boeing Company		2		-		-		-		2
Boeing 787-9		2		-		-		-		2
Total		10		8		11		56		85

As of December 31, 2022, as a result of the different aircraft purchase contracts signed with Airbus S.A.S., 83 Airbus aircraft of the A320 family remain to be received with deliveries between 2023 and 2029. The approximate amount, according to manufacturer list prices, is ThUS$12,586,000.

As of December 31, 2022, as a result of the different aircraft purchase contracts signed with The Boeing Company, 2 Boeing 787 Dreamliner aircraft remain to be received with delivery dates during 2023. The approximate amount, according to list prices from the manufacturer, is ThUS$ 600,000.

As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with AerCap Holdings N.V., 8 Airbus aircraft of the A320 Neo family remain to be received with deliveries between 2023 and 2024.

As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with Air Lease Corporation, 2 Airbus aircraft of the A320 Neo family remain to be received with deliveries between 2023 and 2024.

As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with Avolon Aerospace Leasing Limited, 3 Airbus aircraft of the A320 Neo family remain to be received with deliveries between 2023 and 2024.

As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with CDB Aviation, 1 Airbus aircraft of the A320 Neo family with a delivery date of 2023 remains to be received.

As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with Air Lease Corporation, 5 Airbus A321XLR family aircraft remain to be received with deliveries between 2025 and 2026.

As of December 31, 2022, as a result of the different aircraft operating lease contracts signed with ORIX Aviation Systems Ltd., 4 Boeing 787 Dreamliner aircraft with a delivery date of 2023 remain to be received.

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

		For the period ended December 31,
		2022		2021		2020
Average rate of capitalization of capitalized interest costs	%		7.12		5.06		3.52
Costs of capitalized interest	ThUS$		10,575		7,345		11,627

(f) Assumption, Amendment & Rejection of Executory Contracts & Leases

On June 28, 2020, the Bankruptcy Court authorized the Debtors to establish procedures for the rejection of certain executory contracts and unexpired leases and on September 24, 2020, the Bankruptcy Court authorized the Debtors to establish procedures for the rejection of certain unexpired aircraft lease agreements, aircraft engine agreements and the abandonment of certain related assets. In accordance with these rejection procedures, the Bankruptcy Code and the Bankruptcy Rules the Debtors have or will reject certain contracts and leases (see notes 18 and 26). 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. Pursuant to the Disclosure Statement Order, the Debtors have until the Effective Date of the Plan (as defined in the Plan) to assume or reject executory contracts and unexpired leases.

Further, the Debtors have filed motions to reject certain aircraft and engine leases and related agreements:

Bankruptcy Court approval date:		Asset rejected:

January 29, 2021		(i) 2 Airbus A320-family aircraft

April 23, 2021		(i) 1 Airbus A350-941 aircraft

May 14, 2021		(i) 6 Airbus A350 aircraft

June 17, 2021		(i) 1 Airbus A350-941 aircraft

June 24, 2021		(i) 3 Airbus A350-941 aircraft

November 3, 2021		(i) 1 Rolls-Royce Trent XWB-84K engine; (ii) 1 Rolls-Royce International Aero Engine AG V2527M-A5;

January 5, 2022		(i) General Terms Agreement between Rolls-Royce PLC and Rolls-Royce Totalcare Services Limited and TAM Linhas Aereas S.A.;

March 22, 2022		(i) 1 International Aero Engines AG V2527-A5 engine; and

May 18, 2022		(i) Framework Deed Relating to the purchase and leaseback of ten used Airbus A330-200 aircraft, nine new Airbus A350-900 aircraft, four new Boeing 787-9 aircraft and two new Boeing 787-8 aircraft.

As of December 31, 2021, and as a result of these contract rejections, performance obligations with the lenders and lessors were extinguished and the Company lost control over the related assets resulting in the derecognition of the assets and the liabilities associated with these aircraft. See Note 18 and 26.

Contracts rejected during 2022 in the previous table do not result in changes in the asset or liabilities structure of the Company, since these were general terms of agreement for purchases, engine maintenance contracts and short term leases which according to the accounting policies (see Note 2) should not be registered as right of use assets.

The Debtors also have filed motions to enter into certain new aircraft lease agreements, including:

Bankruptcy Court Approval Date:		Counterparty / Aircraft

March 8, 2021		Vermillion Aviation (nine) Limited, Aircraft MSNs 4860 and 4827

April 12, 2021		Wilmington Trust Company, Solely in its Capacity as Trustee, Aircraft MSNs 6698, 6780, 6797, 6798, 6894, 6895, 6899, 6949, 7005, 7036, 7081

May 30, 2021		UMB Bank N.A., Solely in its Capacity as Trustee, Aircraft MSNs 38459, 38478, 38479, 38461

August 31, 2021		(i) Avolon Aerospace Leasing Limited or its Affiliates, Aircraft MSNs 38891, 38893, 38895

		(ii) Sky Aero Management Ltd. Ten Airbus A320neo

February 23, 2022		Vmo Aircraft Leasing, Two Boeing 787-9

March 17, 2022		Avolon Aerospace Leasing Limited, Two Airbus A321neo

March 17, 2022		Air Lease Corporation, Three Airbus A321NX

March 17, 2022		AerCap Ireland, Two Airbus A321-200NEO

March 18, 2022		CDB Aviation Lease Finance DAC, Two Airbus A321NX

April 14, 2022		Macquarie Aircraft Leasing Services (Ireland) Ltd., One Airbus A320-233

June 29, 2022		UK Export Finance, Four Boeing 787-9

August 12, 2022		Air Lease Corporation, Three Airbus A321XLR

September 8, 2022		Air Lease Corporation, Two Airbus A321XLR

In addition, the Debtors also have filed motions to enter into certain aircraft lease amendment agreements which have the effect of, among other things, reducing the Debtors’ rental payment obligations and extension on the lease term. Certain amendments also involved updates to related financing arrangements. These amendments include:

Bankruptcy Court Approval Date:		Amended Lease Agreement/Counterparty

April 14, 2021		(1) Bank of Utah

		(2) AWAS 5234 Trust

		(3) Sapucaia Leasing Limited, PK Airfinance US, LLC and PK Air 1 LP

April 15, 2021		Aviator IV 3058, Limited

April 27, 2021		Bank of America Leasing Ireland Co.,

May 4, 2021		(1) NBB Grosbeak Co., Ltd, NBB Cuckoo Co., Ltd., NBB-6658 Lease Partnership, NBB-6670 Lease Partnership and NBB Redstart Co. Ltd.

		(2) Sky High XXIV Leasing Company Limited and Sky High XXV Leasing Company Limited

		(3) SMBC Aviation Capital Limited

May 5, 2021		(1) JSA International US Holdings LLC and Wells Fargo Trust Company N.A.

		(2) Orix Aviation Systems Limited

May 27, 2021		(1) Shenton Aircraft Leasing 3 (Ireland) Limited.

		(2) Chishima Real Estate Company, Limited and PAAL Aquila Company Limited

May 28, 2021		MAF Aviation 1 Designated Activity Company

May 30, 2021		(1) IC Airlease One Limited

		(2) UMB Bank, National Association, Macquarie Aerospace Finance 5125-2 Trust and Macquarie Aerospace Finance 5178 Limited

		(3) Wilmington Trust SP Services (Dublin) Limited

		(4) Aercap Holdings N.V.

		(5) Banc of America Leasing Ireland Co.

		(6) Castlelake L.P.

July 1, 2021		EX-IM Fleet

July 8, 2021		Greylag Goose Leasing 38887 Designated Activity Company

July 15, 2021		(1) ECAF I 40589 DAC

		(2) Wells Fargo Company, National Associates, as Owner Trustee

		(3) Orix Aviation Systems Limited

		(4) Wells Fargo Trust Company, N.A.

July 20, 2021		(1) Avolon AOE 62 Limited

		(2) Avolon Aerospace (Ireland) AOE 99 Limited, Avolon Aerospace (Ireland) AOE 100 Limited, Avolon Aerospace (Ireland) AOE 101 Limited, Avolon Aerospace (Ireland) AOE 102 Limited, Avolon Aerospace (Ireland) AOE 103 Limited, Avolon Aerospace AOE 130 Limited, Avolon Aerospace AOE 134 Limited

July 27, 2021		(1) Merlin Aviation Leasing (Ireland) 18 Limited

		(2) JSA International U.S. Holdings, LLC

August 30, 2021		(1) Yamasa Sangyo Aircraft LA1 Kumiai and Yamasa Sangyo Aircraft LA2 Kumiai

		(2) Dia Patagonia Ltd. and DIa Iguazu Ltd.

		Condor Leasing Co., Ltd., FC Initial Leasing Ltd., Alma Leasing Co., Ltd., and FI Timothy Leasing Ltd.

		(3) Platero Fleet

		(4) SL Alcyone Ltd.

		(5) NBB Crow Co., Ltd.

		(6) NBB Sao Paulo Lease Co., Ltd., NBB Rio Janeiro Lease Co., Ltd. And NBB Brasilia Lease LLC

		(7) Gallo Finance Limited

		(8) Orix Aviation Systems Limited

The lease amendment agreements were accounted for as lease modifications (see Note 18).

In relation to several of these lease amendment agreements, the Debtors entered into claims settlement stipulations for prepetition amounts due upon assumption of those agreements.