LATAM Airlines plans to become profitable again on 2024

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LATAM Airlines projects, al 2024, return to profitability at levels of 2019, and an increase in the operating income of the 78% al 2026, compared to the pre-pandemic period.

Within the process of Chapter 11 started in May 2020 LATAM, it advances in the reorganization process, renegotiation and refinancing that will allow it to leave this necessary stage soon to be able to face the current and upcoming challenges.

That is why the airline has publicly presented how this process is progressing and how the final path will be until the end of this stage that was forced to enter due to the coronavirus pandemic. COVID-19.

Business plan

The business plan includes a vision of demand recovery, The plan of fleet, financial and operational projections 2026, among others. Regarding the capacity (ASKs) projected, the group expects to return to pre-pandemic levels in the 2024 and to a growth of 7% al 2026, compared to 2019. Said result would be explained by a total recovery of the domestic and international markets 2022 and 2024 respectively, subject to market changes.

This recovery is supported by the operational increase in the domestic market of LATAM Airlines Brazil to date, reached a capacity (measure in ASK) of the 77% in August, in comparison with 2019, and is expected to exceed 100% of the levels of 2019 at the beginning of 2022. The domestic markets of the subsidiaries in Colombia, Ecuador, Peru and Chile have already reached the 72% in August while the international recovery of the group, both regional and long range, continues to be affected by travel restrictions.

Total revenue would increase 13% al 2026; those of passengers would grow 8% while those of cargo would reach an increase of 59% in respect of 2019.

Cost reduction initiatives during the Chapter 11, including improved efficiency thanks to digital transformation, the renegotiation with suppliers and the restructuring of the fleet would add up to over US$900 million per year.

Request for extension of the exclusivity period

LATAM filed a motion that seeks to extend the exclusivity period to present its reorganization plan until 15 October 2021 and request approvals from the same plan until 15 from December to 2021.

Update on the Chapter process 11

Currently, LATAM is negotiating with several interest groups to agree on a reorganization and exit plan to successfully emerge from the Chapter 11 in compliance with all applicable laws.

During the last months, as part of the Chapter process 11, LATAM has developed and made available certain material non-public information to interested parties that are under confidentiality agreements..

Such information includes five-year projections and an initial estimate (with high and low stages) of all claims. This initial estimate amounts to approximately US$8 billion in the scenario under (US$14.2 billion including intercompany claims) and US$9.9 billion in the high scenario (US$16 billion including intercompany claims).

LATAM presented an indicative structure proposal for its reorganization for US$5 billion of capital financing and contemplated a plan agreed upon by the stakeholders that included, among other things, compromise of certain rights, by these, in addition to compliance with both the United States Bankruptcy Code and Chilean law.

In response to your submission, LATAM received several non-binding financing and capital exit proposals as well as restructuring proposals from its main creditors and majority shareholders. Each proposal contemplates raising more than US$5 billion through the issuance of new debt and capital in LATAM Airlines Group S.A., that would be supported by the parties making the proposal. What's more, in each proposal, the proponents contemplate that if it is approved and implemented, this would result in a substantial dilution of the currently existing shares of LATAM Airlines Group S.A..

LATAM will keep its shareholders and the market informed about the progress of the Chapter procedures 11 and, further, contemplates convening its shareholders to an extraordinary shareholders' meeting when appropriate according to the progress of the negotiations with the various interested parties that are currently pending.

As the recovery of your network of destinations progresses, where for example in Ecuador it was already reached 100% pre-pandemic domestic routes, the airline will seek to close the year with good news driven by the high travel season.

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