Deutsche Bank

Deutsche Bank
Andean Region Conference
London, May, 2016
This presentation may include forward-looking comments regarding the Company’s business
outlook and anticipated financial and operating results. These expectations are highly
dependent on the economy, the airline industry, commodity prices, international markets and
external events. Therefore, they are subject to change and we undertake no obligation to
publicly update or revise any forward looking statements to reflect events or circumstances
that may arise after the date of this presentation. More information on the risk factors that
could affect our results are contained on our Form 20-F for the year ended December 31, 2015.
Information, tables and logos contained in this presentation may not be used without consent
from LATAM Airlines Group S.A.
LATAM Business Model
3
Investment Highlights
World class airline operator
Unique regional network with
presence in 6 Home markets
LATAM Airlines compares to largest
international carriers
3x its next largest South American
competitor in terms of revenues
Strong market position in countries with high growth potential
Number 1 or 2 in all the Home
markets where LATAM operates
Compared to developed countries,
Latin America has low trips per
capita rates
Strong long term traffic growth
expectations for the region


Diversified business operations
4 different business units with
presence in 6 different countries
Solid long term hub strategy
(Santiago, Lima, Brasilia, Sao Paulo)
Low cost business model in all of
LATAM’s domestic operations

Flexible and comprehensive business strategy
Maximize efficiency and cost
reductions
Capture the preference of
customers
Best network of destinations

One of the most modern fleets in Latin America and in the World
Average fleet age of ~7.0 years
One of the first airlines in the region
to start renewing its fleet
Lower unscheduled maintenance
costs and lower fuel consumption

4
LATAM is the largest airline group in Latin America
Unique regional platform provides LATAM with a competitive advantage
Dom. Colombia
22% market share
#2
Dom. Ecuador
33% market share
#2
Dom. Brazil
37% market share
Dom. Peru
62% market share
#1
#1



6 Home markets (~90% of regional traffic)
~50% Market share intra-regional flights
3x its next competitor in terms of
revenues
Dom. Chile
75% market share
#1
Dom. Argentina
25% market share
#2
Data as of December 31, 2015
5
LATAM has diversified sources of revenue
Revenue by Business Unit
Revenue by Geographic Area
Others
5%
Cargo
13%
Chile
16%
International
42%
Domestic SSC
17%
APAC & Other
Latin
America;
7%
Peru
7%
Argentina
10%
U.S.A
11%
Ecuador
2%
Europe
7%
Colombia
4%
Domestic
Brazil
23%
Total = US$10,126mm
Data as of December 31, 2015
Brazil
36%
14.2 million members
73% owned by LATAM
Total = US$10,126mm
6
Latin America continues to offer significant growth potential
Passenger traffic growth estimates
Trips per capita 2014
(RPKs 2015–2034)
2015 Growth
10.0%
6.2%
8.6%
6.1%
6.7%
6.0%
2.9%
-
5.1%
4.3%
World Average
4.9%
5.7%
3.8%
3.7%
Ecuador
0.50
Argentina
0.50
Peru
0.54
Mexico
0.55
Brazil
0.56
Colombia
3.1%
Chile
0.71
1.02
USA
UK
Middle
East
Asia
Latin
Pacific America
Africa
Europe
CIS
2.68
3.73
North
America
Includes domestic and international trips by all carriers. (Boeing, IATA and LATAM estimates); “2015 Growth” represents actual figures published by IATA
7
One of the Most Modern Fleets in Latin America and the World
LATAM is one of the first airlines in the region to start renewing its fleet
 The average age of LATAM’s fleet is approx. 7.0 years, making it one of the most modern in Latin America
and in the world
 Modern fleet allows for lower unscheduled maintenance costs, lower fuel consumption, and operational and
cost efficiencies achieved through operating fewer fleet types
 Flexible fleet arrangements to respond to market conditions
Short Haul
Long Haul
Seats
Dec.2015
2018
144
50
-
A320/N
168-174
154
+
A321/N
220
36
+
A319
Total
240
Seats
Dec.2015
2018
A330
223
10

B767
221-238
38
-
B787-8/9
247-313
17
+
A350
348
1
+
B777
363
10
-
Total
76
9
LATAM defined its strategy and aspiration
Be the leading airline group in South America and one of the top airline groups in the world
Network leadership
Customer experience
Cost competitiveness
We are the best and most convenient
option for customers because we offer
more destinations with better schedule
and competitive price
Customers want to choose us because of
our customer experience and of what
our brand stands for
Competitors can’t afford pricing us
out of existing markets or keep us
away from new markets
 Strengthening the use of regional hubs
 Focus on increasing NPS
 Reaffirm cost competitiveness
 Strengthen partnership and alliances
 Focus on generating one brand
 Consolidate cost improvement
culture
 Manage our fleet models best suited
for each market
8
Network: Strengthening the use of hubs
Key trends
Map of LATAM’s hubs
2016 New flights
Bogota
Sao Paulo
 Johannesburgo
Lima






Washington D.C
Montevideo
Antofagasta
Salta
Rosario
Mendoza
North East
Lima
Brasilia
Sao Paulo
Santiago
LATAM hubs
Connecting flows
10
Network: Two new joint business agreements
American Airlines
IAG
12
Customer Experience: Continuous Improvement
Airport
 Check-in unification implemented at our 10 main
airports
 Self bag tag is being tested in two airports (GRU,BSB)
 VIP Lounge: GRU, BOG, EZE, SCL
Contingency and Contact Center
 Live Chat now available in flights from SCL, LIM and
BOG
 Flight Status available in LAN.com and LAN APP
Digital
 Wireless entertainment system for personal devices
in our narrow body fleet. New app that allows
passengers to be in charge of their own journey.
New Brand implementation
 Visibility starting on May 2016
 Process of implementation over a 3 year period
11
Cost Initiatives: Reduction target of 5%
Work Fronts
Fuel, Fees,& Fleet
Operational Labor
Overhead
Procurement
Distribution &
Commissions
Other
TOTAL
Main Cost Saving Drivers
▪ Fuel Efficiency Initiatives
▪ Supply Chain Efficiency
▪ Crews
▪ Contact Center
▪ Project Simplification
Cost Saving (%)
2%
7%
20%
▪ Project Total Cost of Ownership
7%
▪ Passenger Service System
▪ Channel Mix
8%
▪ Financial and Others
18%
5%
13
Cost Initiatives: Our strategy is delivering results
CASK-equivalent1 (US cents)
-20.4%
6,4
6,2
6,1
2012
2013
2014
CASK-equivalent1 ex –fuel (US cents)
4,8
2015
Fuel Cost ASK-equivalent1 (US cents)
-12.0%
4,2
2012
4,1
4,0
2013
2014
3,5
2015
-37.1%
2,2
2,1
2,0
2012
2013
2014
¹ASK-equivalent is the sum of passenger ASKs and the quotient of cargo ATK and 0.095 (including LAN and TAM cargo operations)
1,3
2015
14
Business Unit Overview
15
LATAM´s business units provide a diverse revenue stream
International
Passenger
LTM Rev
24 destinations
14.2 million passengers
42%
US$ 4.3bn LTM
Domestic Brazil
40 destinations
32.1 million passengers
23%
US$2.4bn LTM
Cargo
LTM Rev
143 destinations
1.0 million tons
13%
US$ 1.3bn LTM
LTM Rev
Domestic SSC
LTM Rev
71 destinations
17%
5 countries
21.5 million passengers
US$ 1.7bn LTM
FFP
Multiplus:
14,2 million members
Lanpass:
11.3 million members
Data as of December 31, 2015
LATAM Airlines Group
Total Revenues
US$ 10,126 mm
16
International Passenger Business Unit
Market Facts 2015
$
Operations
% of Total revenues
4.3
42%
Passengers (MM)
14.1
2015 revenues (US$ Bn)
Change (%)
% of Total ASKs
Capacity (ASK millions)
4%
52%
69.750
65.539
# of aircrafts
Unit Revenue (RASK US$ cents)
7,6
5,9
17.089
118
2014
2015
2014
2015
Market Share (%)
(US – S. America)
24%
(Europe – S. America)
12%
43%
(Regional)
17
Domestic Brazil Passenger Business Unit
Market Facts 2015
$
Operations
% of Total revenues
2.4
23%
Passengers (MM)
32.1
Change (%)
-4%
% of Total ASKs
32%
2015 revenues (US$ Bn)
Capacity (ASK millions)
43.561
42.478
Unit Revenue (RASK US$ cents)
8,6
5,9
# of aircrafts
10.948
120
2014
Market Share (%)
2015
2014
2015
37%
18
Spanish Speaking Countries (“SSC”) Passenger Business Unit
Market Facts 2015
$
Operations
% of Total revenues
1.7
17%
Passengers (MM)
21.5
2015 revenues (US$ Bn)
Capacity (ASK millions)
Unit Revenue (RASK US$ cents)
4%
Change (%)
% of Total ASKs
16%
9,1
8,3
5.595
73
# of aircrafts
22.073
21.010
2014
2015
2014
2015
Market Share (%)
25%
75%
22%
33%
62%
19
Cargo Business Unit
Market Facts 2015
$
Operations
% of Total revenues
1.3
13%
Tons(MM)
1.0
2015 revenues (US$ Bn)
Change (%)
# of aircrafts
Capacity (ATK millions)
Unit Revenue (RASK US$ cents)
-9,0%
11
7.220
7.083
23,7
18,8
1.767
Market Share (%)
(US – Latin America)
(Europe – Latin America)
Domestic Brazil
39%
24%
54%
2014
2015
2014
2015
20
Outlook for 2016
Guidance
ASK Growth
ATK Growth
Operating Margin
Assumptions
Average exchange rate BRL/USD
Jet Fuel Price (US$/bl)

2016
International (Long Haul & Regional)
Brazil Domestic
SSC domestic
TOTAL
3% - 5%
(8%) –(10%)
6% - 8%
(1%) - 2%
0% - (2%)
4.5% / 6.5%
4.25
52
The Company will continue to review capacity in markets where demand has been most impacted during this
year, but at the same time will continue to pursue growth opportunities in specific markets.
21
Financial Overview
22
Our 2015 operating margin grew 1%
(US$ Millions)
FY2015
FY2014
Change
Total Operating Revenues
10,126
12,471
-18.8%
8,411
1,329
10,380
1,713
-19.0%
-22.4%
-9,612
-11,958
-19.6%
Operating Income
514
513
0.1%
Operating Margin
5.1%
4.1%
1.0pp
-219
-110
99.6%
-468
-130
260.0%
1,973
2,026
-2.6%
19.5%
16.2%
3.2pp
Passenger
Cargo
Total Operating Costs
Net Income
Foreign exchange gains/(losses)
EBITDAR
EBITDAR Margin
Source: LATAM Financial Statements
23
Revised Fleet Commitments 2016 - 2018
Fleet Commitments, March 2015
1.688
2015
2.343
2.471
2.903
2016
2017
2018
1.952
1.409
1.486
2016
2017
2018
391
1,062
1,417
Ʃ (2016-2018) =US$7,7bn
Current Fleet Commitments¹, March 2016
1.688
2015
Fleet Commitments
Reduction (US$mm)
¹The plan above may vary as the Company advances with its ongoing negotiations.
Ʃ (2016-2018) =US$4,8bn
2,870
24
Fleet Plan 2016 - 2018
Total aircraft at the end of the year1
329
327
11
10
76
76
+24 aircraft
336
345
8
8
81
82
+20 aircraft
-22 aircraft
+20 aircraft
-11 aircraft
-13 aircraft
240
243
247
255
2015
2016
2017
2018
Fleet Commitments
(US$mm)
1,689
Narrow Body
1,952
¹The plan above may vary as the Company advances with its ongoing negotiations.
Wide Body
Freighters
1,409
1,486
25
2016 Fleet Financing Distribution
2.0 billion fleet commitments already financed for 2016
18%
59%
23%
EETC 2015 -1
Financial Lease
Sale& Leaseback/ Operating
Lease
 EETC 2015-1: ~USD 324 Million (A321, A350, B787)
 Commercial Loan: ~USD 456 Million (A350/A320N)
 Sale & Leaseback and Operating leases: ~USD 1,170 Million (A321, B787)
26
LATAM Debt Profile
Debt by currency as of December 31,
2015
Debt by type as of December 31, 2015
Secured Loans
21%
USD *
Unsecured
Loans
79%
100%
Total Debt: US$9,1mm
Debt maturity profile (US$MM) as of December 31, 20151
Secured debt
4.106
Unsecured debt
1.466
1.292
924
800
2016
2017
2018
2019
¹The debt maturity profile does not include PDF.
>2020
27
LATAM Financial Ratios
Cash and Equivalents as % of LTM revenues
20,5%
10,0%
8,5%
1.120
19,3%
2.532
208
185
2012
2013
Cash
Buffer
14,0%
14,5%
12,3%
13,4%
1.534
1.361
210
105
2015
2014
Caja + Buffer
Caja
Adjusted Net Debt / Adjusted EBITDAR
7.2x
4.9x
2012
2013
5.5x
2014
5.8x
2015
28
Fuel and FX exposure
LATAM has hedged 48% of its estimated fuel consumption for 2016
Portfolio 2015
Portfolio 2016
63%
27%
27%
37%
27%
1Q16
2Q16
3Q16
LATAM FX rate composition (%)
Others
BRL
USD
100%
13%
29%
58%
Revenue
¹Company estimates as of December, 2015
Others
BRL
USD
100%
12%
23%
65%
11%
4Q16
Operating exposure1
 Gap between revenues and costs in BRL of 6
p.p., between US$600 to 700 mm.
 The Company has a financial hedge of US$616
mm at an average rate of BRL 3.89 per USD.
Cost
29
Thank You
London, May, 2016