121 - Investor Relations Solutions

JP Morgan Global Emerging Markets
Miami, February 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, 2014.
Information, tables and logos contained in this presentation may not be used without consent
from LATAM Airlines Group S.A.
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LATAM is the largest airline group in Latin America
Unique regional platform provides LATAM with an exceptional advantage
Dom. Colombia
21% market share
#2
Dom. Brazil
37% market share
Dom. Ecuador
33% market share
#1
#2
Dom. Peru
62% market share
#1
 6 Home markets (~90% of regional traffic)
 ~50% Market share intra-regional flights
 3x its next competitor in terms of revenues
Dom. Chile
77% market share
#1
Dom. Argentina
25% market share
#2
Company estimates, December 2015.
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Diversified Business Units
LTM Rev
International
Passenger
LTM Rev
41%
Domestic Brazil
LTM Rev
26%
Domestic SSC1
24 destinations
13.9 million passengers
40 destinations
33.2 million passengers
71 destinations
5 countries
21.4 million passengers
US$ 4.4bn LTM
US$2.8bn LTM
US$ 1.8bn LTM
17%
LATAM Airlines Group
Cargo
143 destinations
1.0 million tons
US$ 1.5bn LTM
LTM Rev
13%
FFP
Multiplus2:
13.8 million members
Lanpass:
9.8 million members
Note: Information for LTM September 30st, 2015
(1) The group of Spanish Speaking Countries “SSC” is composed of Chile, Argentina, Peru, Colombia and Ecuador
(2) Multiplus is 73% owned by LATAM.
(3) Revenues include total operating revenues and other operating income. Breakdown of passenger revenues are Company estimates
Total Revenues3
US$ 10,824 mm
4
Latin America Continues to Offer Significant Growth Potential
Passenger traffic growth estimates*
(RPKs 2015–2034)
6.2%
6.1%
6.0%
Trips per capita 2014**
5.7%
World Average 4.9%
3.8%
3.7%
3.1%
Ecuador
0.50
Argentina
0.50
Peru
0.54
Mexico
0.55
Brazil
0.56
Colombia
Chile
USA
UK
Middle
East
Asia
Latin
Pacific America
Africa
Europe
CIS
0.71
1.02
2.68
3.73
North
America
(*) RPKs to, from and within the continent, according to Boeing as of December 2015.
(**) Domestic and international trips by all carriers.
Source: Boeing, IATA and LATAM estimates.
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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
3Q15
2018
37
2
144
51
A320/N
168-174
155
A321/N
220
31

+
+
Dash Q200
A319
Total
239
Seats
3Q15
2018
A330
223
10
B767
221-238
38
B787-8/9
247
10
B787-9
313
6
A350
348
0
B777
363
10

+
+
+
-
Total
74
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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
We are the best and most
convenient option for customers
because we offer more destinations
with better schedule and
competitive price
 Strengthening the use of regional
hubs
 Strengthen partnership and alliances
Customer experience
Cost competitiveness
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
 Focus on increasing NPS
 Reaffirm cost competitiveness
 Focus on generating one brand
 Consolidate cost improvement
culture
 Manage our fleet models best suited
for each market
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Network: Strengthening the use of regional hubs
Strengthening the use of regional hubs
Sao Paulo
Lima
• Barcelona
• Antofagasta
• Toronto (Via NYC)
• Orlando
• Cancun
• Montevideo
• Punta del Este
• Washington
• Bogotá
• Orlando
Map of LATAM’s hubs
Bogota
North East
Lima
Brasilia
• Johannesburg
Sao Paulo
Brasilia
Santiago
• Orlando
• Buenos Aires
• Punta Cana
LATAM hubs
Santiago
Connecting flows
• Milan (Via GRU)
8
Network: Two new joint business agreements : American Airlines and IAG
Access to a network over 420
destinations
More flights and better connections
 More than 200 destinations served by
American Airlines
 2,500 flights daily AA flights within the US
and Canada
 87 destinations served by IAG
 More than 900 daily IAG flights to Europe
Increase seat availability and more
competitive prices
Better options for our passengers
 More flights options and better connections
to destinations that are not served by
LATAM and its affiliates and more
competitive fares
 All flights included in the 2 agreements will
be available to attends client´s need, such
as reservations changes
Note: Both agreements are subject to regulatory approval in different countries which could take approximately 12-18 months.
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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
Digital
 Wireless entertainment system for personal
devices in 131 aircraft. We expect to complete
the implementation in all of our narrow body
fleet by 1H16.
New Brand implementation
 Live Chat now available in flights from SCL, LIM
and BOG
 Visibility starting on May 2016
 Flight Status available in LAN.com and LAN APP
 Process of implementation over a 3 year period
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Costs: Realistic Cost Reduction Target of ~5% of Total Operating Costs from
2015 – 2018
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
▪
Project Total Cost of Ownership
Cost Saving Target
(%)
2%
7%
(3-10%)
20%
(15%-25%)
7%
▪ Passenger Service System
▪ Channel Mix
8%
▪ Financial and Others
18%
5%
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Costs: Improvement in our cost performance
CASK-equivalent1 (US cents)
-19.8%
6.4
6.2
6.1
6.2
2012
2013
2014
Sep’14
CASK-equivalent1 ex –fuel (US cents)
5.0
Sep’15
Fuel Cost ASK-equivalent1 (US cents)
-53.8%
-12.3%
4.2
4.1
4.0
4.2
2012
2013
2014
Sep’14
2.2
2.1
2.0
2.1
2013
2014
Sep’14
3.6
Sep’15
2012
1.3
Sep’15
Source: Company estimates
¹ASK-equivalent is the sum of passenger ASKs and the quotient of cargo ATK and 0.095 (including LAN and TAM cargo operations )
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9M15 Financial Summary
(US$ Millions)
3Q15
3Q14
Change
9M15
9M14
Change
Total Operating Revenues
2.515
3.141
-19,9%
7.719
9.366
-17,6%
2.114
2.637
-19,8%
6.434
7.854
-18,1%
310
410
-24,5%
995
1.256
-20,8%
-2.394
-3.023
-20,8%
-7.354
-9.120
-19,4%
121
118
1,9%
365
246
48,1%
4,8%
3,8%
1,0pp
4,7%
2,6%
2,1pp
Net Income
-113
-108
5,1%
-203
-208
-2,4%
EBITDAR
487
501
-2,8%
1.461
1.383
5,6%
19,4%
16,0%
3,4pp
18,9%
14,8%
4,2pp
Passenger
Cargo
Total Operating Costs
Operating Income
Operating Margin
EBITDAR Margin
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9M15 Operational Summary
International
(Long Haul & Regional)
Domestic Brazil
SSC Domestic
50%
52%
32%
33%
16%
16%
13%
Capacity
(million ASK)
Traffic
(million RPK)
Load Factor
RASK
(US Cents)
+8.5%
+6.5%
86.0%
-1.6pp
6.4
-17.1%
-0.5%
+0.1%
81.9%
+0.5 pp
5.7
-32.2%
+5.6%
+5.4%
81.4%
-0.1 pp
8.1
-11.8%
Capacity
(million ATK)
Traffic
(million RTK)
Load Factor
Cargo
.1.70%
-11.6%
53.0%
-5.9 pp
RATK
(US Cents)
18.9
-19.4%
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Guidance 2015 and 2016
Guidance
ASK Growth
2016
International (Long Haul & Regional)
Brazil Domestic
ATK Growth
Operating Margin
4% - 6%
(9%) –(6%)
SSC domestic
6% - 8%
TOTAL
0% - 3%
(2%) - 0%
~4.5% / 6.5%
Assumptions
Average exchange rate BRL/USD
Jet Fuel Price (US$/bl)

4.25
52
LATAM will review its guidance on a quarterly basis to incorporate any important changes in macroeconomic
variables or operating performance.
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Revised fleet commitments 2016-2018
Fleet Commitments, January 2015 (20F 2014)
1,688
2015
2,343
2,471
2,903
Ʃ (2016-2018) =US$7,7bn
2016
2017
2018
1,849
2,022
Current Fleet Commitments¹, November 2015
1.688
2,000
Ʃ (2016-2018) =US$5,9bn
2015
Fleet Commitments
Reduction (US$mm)
2016
2017
2018
342
622
881
1,845
¹The plan above may vary as the Company advances with its ongoing negotiations.
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LATAM’s revised fleet plan
Total aircraft at the end of the year¹²
326
331
11
76
9
76
+25 aircraft
-20 aircraft
347
8
83
+26 aircraft
-10 aircraft
239
246
256
2015
2016
2017
Fleet Commitments
(US$mm)
1,688
Narrow Body
Wide Body
Freighters
2,000
1,849
¹This fleet plan doesn’t include three 767-300Fs and one 777-200F that LATAM is currently leasing to a third party.
² The plan above may vary as the Company advances with its ongoing negotiations.
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2016 Fleet Financing Distribution
EETC 2015 -1
20%
Financial Lease
55%
25%
Sale& Leaseback/ Operating Lease
From a total of USD 2.0 Billion in financed amounts



EETC 2015-1: ~USD 500 Million (A321, A350, B787)
ECA/Commercial Loan: ~USD 400 Million (A350/A320N)
Sale & Leaseback and Operating leases: ~USD 1,100 Million (A321, B787)
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Credit Metrics
Cash and Equivalents as % of LTM revenues
14.0%
12.3%
15.9%
15.4%
14.0%
14.2%
13.0%
Caja + Buffer
Caja
11.3%
1
1,534
1,364
1,609
1,542
210
210
4Q14
1Q15
210
2Q15
130
3Q15
Cash
Buffer
Adjusted Net Debt / Adjusted EBITDAR
5.4x
4Q14
5.2x
5.1x
5.2x
1Q15
2Q15
3Q15
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Significant Portion of Financial Liabilities was used to Finance Fleet
Renewal
Total debt by type as of September 30, 2015
6.9%
5.1%
Total debt by currency as of September 30, 2015
Aircraft loans
PDP
14.7%
Public obligations
USD **
Bank loans
5.7%
67.7%
100%
Other loans *
Total Debt: US$8,8mm
Debt maturity profile (US$MM) as of September 30, 2015
Secured debt
Unsecured debt
PDPs
3.811
1.405
2016
1.251
2017
Source: Company filings
(*) Other loans includes the Guaranteed bond.
(**) USD denominated debt includes a cross currency swap from CLP to
USD
866
758
2018
2019
>2020
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LATAM’s FX and Fuel Risk Exposure
LATAM has hedged 46% of its estimated fuel consumption for the next twelve months
Portfolio 2015
Portfolio 2016
63%
27%
27%
30%
27%
1Q16
2Q16
3Q16
LATAM FX rate composition (%)
Others
100%
13%
Others
BRL
29%
BRL
USD
58%
USD
Revenue
1.
100%
12%
23%
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$351 mm at
an average rate of BRL 3.97 per USD.
65%
Cost
Company estimates as of December, 2015.
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Thank You
LATAM Airlines Group
Investor Relations
Santiago, Chile
[email protected]
(56-2) 2 565 8785
www.latamairlinesgroup.net
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