Resumen corto:
LATAM Airlines confirma plan de reorganización tras Chapter 11, proyecta US$13.9 mil millones en ingresos en 2027 y reduce deuda a menos de US$7 mil millones en 2022
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DocuSign Envelope ID: 2C9BB4AF-491F-4C5A-AA68-OB68AB5ECGF9
3 LATAM
HECHO ESENCIAL
LATAM AIRLINES GROUP S.A.
Inscripción Registro de Valores N* 306
Santiago, 29 de agosto de 2022
Señora
Solange Berstein Jáuregui
Presidente
Comisión para el Mercado Financiero Av. Libertador Bernardo OHiggins 1449
Santiago Ref.: Comunica HECHO ESENCIAL
De mi consideración:
De acuerdo a lo establecido en el Artículo 9* y en el inciso segundo del Artículo 10% de la Ley de Mercado de Valores, y en la Norma de Carácter General N* 30, debidamente facultado, por medio del presente informo el siguiente HECHO ESENCIAL de LATAM Airlines Group S.A. (‘LATAN o la Sociedad), inscripción Registro de Valores N? 306:
1. Como se informó anteriormente, mediante resolución dictada el 18 de junio de 2022, el Tribunal de Quiebras del Distrito Sur de Nueva York (el Tribunal de Quiebras) que conoce del procedimiento de reorganización (el Procedimiento Capítulo 11) de LATAM y algunas de sus filiales directas e indirectas (conjuntamente con LATAM, los Deudores) bajo el Capítulo 11 del Título 11 del Código de los Estados Unidos, confirmó el plan de reorganización y financiamiento (el Plan de Reorganización o el Plan) propuesto por los Deudores para emerger con éxito del Procedimiento Capítulo 11.
2. Como parte del Procedimiento Capítulo 11, y en relación con las obligaciones de los Deudores en virtud de (i) el Acuerdo de Apoyo a la Reestructuración (Restructuring Support Agreement) celebrado en apoyo al Plan (el RSA), y (ii) los acuerdos de confidencialidad (los NDAs) celebrados con determinadas contrapartes del RSA, los Deudores han proporcionado a dichas contrapartes ciertos informes y actualizaciones financieras que constituyen información material no pública (dicha información material no pública, la Información Revelada).
3. De acuerdo con los NDAs y al ocurrir ciertos eventos establecidos en los mismos, la Sociedad acordó divulgar públicamente la Información Revelada. En cumplimiento de sus obligaciones en virtud de los NDAs, la Sociedad proporciona la Información Revelada como Anexo 99.1 del presente documento.
4. La Información Revelada incluye información financiera proyectada. Dicha información financiera proyectada constituye información prospectiva y se proporciona únicamente con fines ilustrativos y no debe confiarse en ella como si
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DocuSign Envelope ID: 2C9BB4AF-491F-4C5A-AA68-OB68AB5ECGF9
3 LATAM fuera necesariamente indicativa de resultados futuros. El uso de proyecciones y estimaciones específicas en la Información Revelada no pretende mostrar la convicción de la administración acerca de que se alcanzará una proyección o estimación concreta, sino que la proyección o estimación está dentro del ámbito de los posibles resultados, asumiendo otros factores inherentes al plan de negocio actualizado. Los resultados presentados pueden estar en el punto medio, inferior o superior del alcance.
Cierta información incluida en la Información Revelada describe o asume los términos esperados de las transacciones que la Sociedad espera ejecutar en relación con su reestructuración según lo contemplado en el Plan de Reorganización. La consumación de dichas transacciones está sujeta a otros riesgos y contingencias diversas, incluidas las condiciones de cierre. No se puede asegurar que dichas transacciones se lleven a cabo en los términos asumidos en ellas o de otra manera. Por lo tanto, el contenido de la Información Revelada está en evolución y está sujeto a cambios por parte de LATAM a su absoluta discreción.
Además, no se asume ninguna responsabilidad por los cambios en las condiciones del mercado y LATAM no asume ninguna obligación de actualizar Información Revelada para reflejar los acontecimientos o condiciones que se produzcan con posterioridad a la fecha del presente documento. Además, las suposiciones y estimaciones que subyacen a la información financiera proyectada contenida en la Información Revelada son inherentemente inciertas y están sujetas a una amplia variedad de riesgos e incertidumbres comerciales, económicas, competitivas y de otro tipo. Los resultados reales pueden diferir materialmente de los resultados contemplados por la información financiera proyectada contenida en la Información Revelada, y la inclusión de dicha información en la Información Revelada no debe considerarse como una declaración por parte de ninguna persona de que los resultados reflejados en dichas proyecciones se alcanzarán.
Sin otro particular, le saluda muy atentamente,
DocuSigned by:
Kolrto (llas Roberto Alvo Ñ Gerente General LATAM Airlines Group S.A.
Adjunto: Anexo 99.1 – Updated Business Plan and Lender Presentation
FLATAM
LATAM AIRLINES GROUP
NI E tel
Subject to Applicable Confidentiality Agreements and Requirements
August 2022
Privileged Draft – Interim Work Product Disclaimers prepared at the direction of Counsel
Disclaimer
HIGHLY CONFIDENTIAL FLATAM
This presentation (Presentation) is for informational purposes only. The purpose of this Presentation is to disclose the updated consolidated business plan projections of LATAM Airlines Group S.A. and its affiliated entities (LATAM or the Company) to parties interested in the Company’s ongoing chapter 11 proceeding and for no other purpose. This Presentation shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities. Management does not endorse the use of any information in this Presentation for use in making an investment decision. Investors should consider only historical information on deciding whether to buy or sell securities. This information was prepared in connection with the Company’s ongoing dialogue with its creditors.
Certain information included herein describes or assumes the expected terms of transactions the Company expects to execute in connection with its restructuring as contemplated under the Company’s Plan of Reorganization. The consummation of such transactions is subject to other various risks and contingencies, including closing conditions. There can be no assurance that such transactions will be consummated with the terms assumed herein or otherwise. As such, the subject matter of these materials is evolving and is subject to further change by LATAM in its absolute discretion. No responsibility is taken for changes in market conditions and no obligation is assumed by LATAM to revise this Presentation to reflect the events or conditions that occur subsequent to the date hereof.
Neither the United States Securities and Exchange Commission (SEC) nor the Chilean Comisión para el Mercado Financiero (the CMF) nor any securities commission of any other U.S. or non-U.S. jurisdiction has reviewed, approved or disapproved of this Presentation, or determined that this Presentation is truthful or complete. No representations or warranties, express or implied, are given in, or in respect of, this Presentation. To the fullest extent permitted by law in no circumstances will LATAM or any of its respective subsidiaries, shareholders, affiliates, representatives, directors, officers, employees, advisers or agents be responsible or liable for a direct, indirect or consequential loss or loss of profit arising from the use of this Presentation, its contents, its omissions, reliance on the information contained within it, or on opinions communicated in relation thereto or otherwise arising in connection therewith. Industry and market data used in this Presentation have been obtained from third-party industry publications and sources as well as from research reports prepared for other purposes. LATAM has not independently verified the data obtained from these sources and cannot assure you of the data’s accuracy or completeness. This data is subject to change. In addition, this Presentation does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of LATAM or LATAM’s business plan. Viewers of this Presentation should read the same in full together with the Company’s SEC filings indicated herein and each make their own evaluation of LATAM and of the relevance and adequacy of the information taken as a whole and should make such other investigations as they deem necessary.
Privileged Draft – Interim Work Product ra Disclaimers prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
FLATAM Forward Looking Statements
Certain statements included in this Presentation that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as believe, may, will, estimate, continue, anticipate, intend, expect, should, would, plan, predict, potential, seem, seek, future, outlook, and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this Presentation, and on the current expectations of the respective management of LATAM and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by an investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of LATAM. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, and legal conditions; the inability of LATAM to emerge from the chapter 11 proceeding, including the risk that any regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the Company; risks relating to the uncertainty of the projected financial information with respect to LATAM, risks related to the performance of LATAM’s business and the timing of expected business or revenue milestones; the effects of competition on LATAM’s business; and those factors discussed in LATAM’s annual report on Form 20-F for the year ended December 31, 2021 filed with the SEC on March 30, 2022 (the Annual Report) under the heading Risk Factors, and other documents LATAM has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements.
There may be additional risks that LATAM does not presently know, or that LATAM currently believes are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect LATAM’s expectations, plans, or forecasts of future events and views as of the date of this Presentation. LATAM anticipates that subsequent events and developments will cause LATAM’s assessments to change. However, while LATAM may elect to update these forward-looking statements at some point in the future, LATAM specifically disclaims any obligation to do so. These forward-looking statements at some point should not be relied upon as representing LATAM’s assessments of any date subsequent to the date of this Presentation. Accordingly, undue reliance should not be placed upon the forward-looking statements contained in this Presentation.
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Privileged Draft – Interim Work Product ra Disclaimers prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
FLATAM
Use of Projections and Use of Data
Use of Projections
This Presentation contains projected financial information. Such projected financial information constitutes forward-looking information, and is for illustrative purposes only and should not be relied upon as necessarily being indicative of future results. The use of specific projections and estimates, valuation, appraisal in this Presentation is not intended to indicate management’s belief that a particular projection, valuation, appraisal or estimate will be achieved, but rather that the projection, valuation, appraisal or estimate is within the scope of potential outcomes assuming other factors inherent in the business plan. The outcomes presented maybe at the midpoint, bottom or top of the scope. Pro forma estimates and assumptions, including estimates and assumptions related to the Company’s financial position at emergence, remain subject to ongoing revision and change due to, among other things, the impact of the ongoing claims reconciliation process on cash at hand and the outcome of the Company’s emergence financing transactions, and may vary upon emergence.
The assumptions and estimates underlying such financial forecast information are inherently uncertain and are subject to a wide variety of significant business, economic, competitive, and other risks and uncertainties. See Forward Looking Statements above. Actual results may differ materially from the results contemplated by the financial forecast information contained in this Presentation, and the inclusion of such information in this Presentation should not be regarded as a representation by any person that the results reflected in such forecasts will be achieved.
Use of Data
The information contained in this Presentation, including, but not limited to, projections, analyses, third-party reports, appraisals, valuations and other information, is believed to be reliable, however, it has not been verified except as set forth in this Presentation. No warranty is given to the accuracy of such information. The data contained herein is derived from various internal and external sources. Valuation information is provided on a group basis unless otherwise indicated. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any projections or modeling or any other information contained herein. Any data on past performance or modeling contained herein is not an indication as to future performance. LATAM assumes no obligation to update the information in this Presentation.
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Privileged Draft – Interim Work Product prepared at the direction of Counsel HIGHLY CONFIDENTIAL
FLATAM
Disclaimers
Use of Non-GAAP Financial Metrics and Other Key Financial Metrics
Use of Non-GAAP Financial Metrics and Other Key Financial Metrics
This Presentation includes certain non-IFRS financial measures (including on a forward-looking basis) such as EBIT (which consists of earnings for the period before income taxes and financial costs and financial income), EBITDA (which consists of earnings for the period before income taxes and financial costs and financial income, plus depreciation and amortization expense) and EBITDAR (which consists of earnings for the period before income taxes and financial costs and financial income, plus depreciation and amortization expenses and rentals expenses). In addition EBIT margin which is calculated by dividing EBIT by total operating revenue) These non-IFRS measures are an addition to, and not substitute for or superior to, measures of financial performance prepared in accordance with an IFRS alternative to net income or any other measures derived in accordance with IFRS.
LATAM believes that these non-IFRS measures of financial results (including on a forward-looking basis) provide useful supplemental information to investors about LATAM. LATAM’s non-IFRS measures may not be directly comparable to similarly titled measures of other companies.
Disclaimers prepared at the direction of Counsel
Privileged Draft – Interim Work Product rivileged Draft – Interim Work Produc HIGHLY CONFIDENTIAL
FLATAM
Certain Risks Related to LATAM
Certain Risks Related to LATAM
The risks presented below are examples, among others, of certain of the general risks related to the LATAM’s business, industry and operations and are not exhaustive. The list below is not exhaustive and you should review the risk factors and other disclosures contained in the Company’s Annual Report and the Company’s other filings with the SEC, including any future filings. These risks speak only as of the date of this Presentation and we make no commitment to update such disclosure. The risks highlighted in future filings with the SEC may differ significantly from and will be more extensive than the risks set forth in existing filings, which include but are not limited to: developments relating to our chapter 11 proceeding and our ability to effectively implement our plan of reorganization; uncertainty regarding the terms of our plan of reorganization; conflicting interests among the multiple parties on which our restructuring efforts depend; the sufficiency of our exit financing to allow us to continue our operations; our ability to obtain new financing upon our emergence from Chapter 11; unpredictability of the general economic, political and business conditions in our core markets of Chile, Brazil, other Latin American countries and the other geographic markets we serve; developments relating to the COVID-19 pandemic or any other pandemic and measures to address them; our ability to service our debt and fund our working capital requirements; future demand for passenger and cargo air services in Chile, Brazil, other countries in Latin America and the rest of the world; the strength of our relationships with customers and the acceptance of ancillary products and services; the state of the Chilean, Brazilian, other Latin American and world economies and their impact on the airline industry; the effects of competition in the airline industry;
Privileged Draft – Interim Work Product ra Disclaimers prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
FLATAM Certain Risks Related to LATAM = future terrorist incidents, cyberattacks or related activities affecting the airline industry; = future outbreak of diseases, or the spread of already existing diseases, affecting travel behavior andor exports; = natural disasters affecting travel behavior andor exports; = therelative value of the Chilean peso, Brazilian real and other Latin American currencies compared to other world currencies; = inflation; = competitive landscape; = our capital expenditure plans and change in aircraft engine retirement plan; = changes in labor costs, maintenance costs and insurance premiums; = fluctuation of crude oil prices and its effect on fuel costs; = cyclical and seasonal fluctuations in our operating results; = defects or mechanical problems with our aircraft and supply chain restrictions impacting operational standard; = our ability to successfully implement our growth strategy; = our ability to continue to implement cost initiatives; = increases in interest rates; and = changes in regulations, including regulations related to access to routes, limitation on specific service and product charges and tax and environmental regulations.
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HIGHLY CONFIDENTIAL
Company Overview
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Privileged Draft – Interim Work Product Company Overview prepared at the direction of Counsel
LATAM — Latin America’s Leading Airline Group and Global Player
DN O ER 074) Business GAS Unbeatable network and diversified business segments sets LATAM apart
412 = Largest airline group in Latin America and major player globally 1
Airline Group Globally by + transported passengers*
HIGHLY CONFIDENTIAL 3LATAM = Comprehensive network connecting the subcontinent with North
Latin American Airline Group* America, Eu rope a nd Asia-Pacific
ETA (65% of = >2xthe next regional competitor in revenue and transported TIE passengers $41 129 = ¿tl in punctuality globally in Mega Airlines category Domestic Market Share of Affiliates Passenger Destinations Serviced in Brazil, Peru, Chile, and Ecuador? Worldwide? = ¿fl in Region and +2 Globally in sustainability? = Largest cargo player in Latin America
1 . 41 oy Cargo = 800k+ tons of cargo transported in 2021 Largest FFP in South America* and 447 (30% of
Largest Mileage Program Globally, SAITO = Revenue increased nearly $500mm in 2021 vs. 2019 with 39mm Members?
Largest Cargo Business in Latin America, Connecting 22 Countries? = Transported more than 300 million vaccines within the region
Strategic andor Commercial Agreements = Largest Frequent Flyer program in Latin America
A D E L T A QAOR Ei = Core differentiator driving significant customer retention WS ro UU 3BCP> ” Santander m $ Program = Additional source of liquidity for the business = – Alliances with leading banks in each market
Source: Company filings. * Estimates based on companies’ public filings and news reports, measured by number of passengers transported in 2021. ? ANAC Brazil’s website (as measured by RPKs), JAC Chile’s website (RPKs), DGAC Peru’s website (number of passengers carried), Diio.net for Colombia and Ecuador (ASKs) as of December 2021. * As of December 31, 2021. * Estimates based on companies public filings and news reports. * As measured by total number of members at the end of 2021. € Based on 2021 Revenue. ? Official Airline Guide Punctuality List 2021. $ S8.P Global The Sustainability Yearbook 2021. ==
Privileged Draft – Interim Work Product
Company Overview prepared at the direction of Counsel
Product 8. Service Recognitions
FLATAM
Sustainability
DAG A On Time Performance in 2021! pa *4. South American Airline for 2″4 year in a HER row (2021)
Net Promoter Score up +11 and +18 points vs. 2020 € 2019 respectively?
SéP Global
+ Most sustainable airline in region, and
+4 worldwide | Bronze Class inclusion
+ Most sustainable airline in region, and A $2 worldwide | Silver Class inclusion
Long-Term Sustainability Commitments
Carbon neutral by 2050 (50% of domestic ops. by 2030) Zero waste to landfills by 2027
Eliminate single-use plastics in all operations by 2023
Expansive Network cl lata Digitalization IE Commercial Agreements
Dre LEAN A) SES ADELTA QATAR NS GS SAN o Best network in South o o NS o
AL EA ES NE le ASS SEO Toe Morte NN
Myriad of possible services and E SR it MENE jet way (automatic check-in, iS Y CATHAY PACIFIC
NIN CU) Ñ Ñ AN DAS Al BRITISH AIRWAYS Ostrea
<) Lufthansa NS cima tas:
Privileged Draft – Interim Work Product ra prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
FLATAM
Company Overview
LATAM Group’s Market-Leading Global Network ” LATAM groups vast global network enjoys a competitive advantage over other South
20 1 9 American carriers weno Fer – Customers are offered a superior value proposition, while LATAM utilizes the ms . . mos .
* network to optimize market coverage and minimize costs eros MADRID eS S een vom co macho – Unparalleled network for cargo, combining freighter with passenger operations ANGELES e ñ . .
l under a cargo strategy that leverages freighter and belly capacity a “. o : : : : 1
O. perating units serve both domestic and regional travel . q S OS ¡Pr MEDCOCTY A má – iio PTA ESOS , ” LATAM groupss international operations are based out of 3 hubs sam Jost e mars y usos y E A : L ” +30 new routes opened in 2021, demonstrating large scale of operations and growing Y A z A e i pa A ; y demand across geographies El A de ELA Sa rca a q, , er > S malo ale ree ¿ . . . . . . . .
A 7 ns E ” Destinations operated and capacity continue to recover in 2022, with destinations pa o socia covered as of July 2022 reaching 96% of 2019 levels, and ASKs for June 2022 reaching rios o E 74% of 2019 levels ma ni ; A cp sao a , mus O) SCL (Chile): connectivity to North America, y q Xx e .
E on ae Europe and Oceania aa tirano 2 A ji Je o cea 9. 10 MONTEVIDEO: a SS e DOI MA DIOSES a e) GRU (Brazil): connectivity to Europe, Africa, Asia PA Ad MESE N Ñ ASA : PP. Re a PA O) a as (Tel Aviv), and select service in North America no LATA ALL IME S ARGE TIA ao e SIATADO Ecos ancuceza comaccn mcr AAA NEL Coma, e A LIM (Peru): connectivity to North America, the LATA AUPLIME S ECUADOR AR pe eiii Pe Caribbean, and Europe
Note: Data as of 2019; LATAM Argentina ceased operation in 2020. Appraisal value of slots at JFK and LHR of US$ 35 million as of December 2021. Appraisal value of passenger and cargo brands and IP $615 million as of January 2022. * Excluding Paraguay,
Privileged Draft – Interim Work Product o Company Overview prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
3LATAM
LATAM Group’s Leading Market Share in Domestic and International Markets
Domestic Affiliate Market Share: International Capacity Share?
Dec 2021 ASK Dec 2021 3LATAM Y E 28%
COLOMBIA LA YY > LATAM VS 4 > LATAM Within South America == 53% ECUADOR voy ; 3LATAM MM ? LATAR : 5% th America z z 17% , uth America – SS PERU A 68% North America Mad es 4 F3LATAM e a 36% UN Ns PLATAM ; Vu 3LATAM Y 60″ og SE A Yé 16″ CHILE EN v29 South America – Europe Y We E Se 28e
– 7
Leading market share across domestic markets and unparalleled network connecting Latin America to the rest of the world
Note: LATAM Argentina ceased operation in 2020.
Source: * ANAC Brazil’s website (as measured by RPKs), JAC Chile’s website (RPKs), DGAC Peru’s website (number of passengers carried), Diio.net for Colombia and Ecuador (ASKs) as of December 2021; ? Diio.net measured in ASKs as of December 2021
Privileged Draft – Interim Work Product ect prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
Company Overview > LATAM Cargo Business Overview
Resiliency During COVID-19 Pandemic
Overview Cargo Revenue (US$mm) and Percentage of Total Revenue (%) = LATAM group is the largest cargo player in Latin America, with leading share in key import and export markets
– Combined passenger and freighter network supports operational flexibility
– Efficiency advantage based on O Network design O Optimal freighter fleet (B767) O Handling optimization €. productivity
– Services 137 destinations across 22 countries
– Largest cargo facilities located in MIA, a natural gateway for imports and 8 : , o a . : a a besa 1 exports tofrom Latin America and the United States ZO 20184 A FLO AURA A
Cargo RTK vs. Passenger RPK as Percentage of 2019
100% 96%
71% = Resilient business helped offset some of the impact of the COVID-19 pandemic
– Revenues increased 53% from 2019 to LTM Q1’22 mm Cargo RTKvs. Same Month 2019 = Traffic consistently near 2019 levels Passenger RPK vs. Same Month 2019
* Fleet expansion underway Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22
– Conversion of 10 B767 passenger aircraft into freighters, increasing to a fleet of up to 21 freighters by the end of 2023
Source: Public filings; Traffic data as of June 2022. Appraisal value of cargo business as of January 20:
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Overview of LATAM prepared at the direction of Counsel 3 7 LATAM Frequent Flyer Program Overview LATAM Pass is at the Core of LATAM Largest FFP in South America and 7* largest FFP in the world? Strong revenue and profit contributor to LATAM H members vs. Latin American airlines (2021) (mm) LATAM revenue breakdown (2019) LATAM load factor (%) n LATAM Pass e (OD 26 0f FFP from RPKs Mos P Y (ús) (ERA (5%) 3rd party a sa Ps ina ne Mm 10 8 revenues from 24.8% 83.1% 83.5% 76.5% 74.45% Da cs PLATAM e AviancaN, – Prarnomexico:2 Revenues 80% = Consolidation py LATAM Pass and Multiplus created the largest FFP in the region = In 2019, LATAM acquired the remaining 27% stake in Multiplus to have the program fully aligned with its strategy
2017 2018 2019 2020 2021
LATAM Pass benefits drives engagement with high value customers
LATAM VIP lounge (Santiago) Premium LATAM 2: Courtesy A Access in associate Premium Preferential Special upgrade with LATAM Seat Checked all flights airlines lounges boarding support services coupons +seat selection bags = LATAM Pass includes multiple
00 col sl O o O O offerings from Gold to Black
0— o 0 0 2. … go O Black OQ O O O (y) O o O maximizing retention = Newly opened Santiago VIP lounge is the largest one in O EN O o o o O o o o o
South America
Source: * Estimates based on companies’ public filings and news reports. Appraisal value of FFP as of January 2022: $5.4 billion. Appraisal value includes approximately $534 million of pre-sold miles as o’ December 31, 2021.
Privileged Draft – Interim Work Product prepared at the direction of Counsel
Company Overview
FLATAM
HIGHLY CONFIDENTIAL
Frequent Flyer Program Overview (Cont’d)
Compelling Value Proposition for Customers Driving Significant Engagement
Broad network of commercial agreements…
ADELTA
IBERIA 5 Lufthansa se (7 (Ts
+25 financial TES
SAPAN ALLIPE
QATAR
ALAN dades +100
O commercial BRITISH AIRWAYS Tosntas
NS %- CATHAY PACIFIC G SR ge smnss . with various ways of earning and redeeming miles…
Ways to Earn Miles Ways to Redeem Miles
Y Spending on co-branded Y Air travel cards Y Hotel stays Spending on services or Y sp E . Y Rental cars products of commercial Y Products on catalogue partners Y Flying with LATAM Airlines or our partner airlines Y LATAM Pass direct miles purchases
ERA ET
Non-air commercial agreements
S >BCP> ab Santander = Leading promoter of LATAM credit cards in the U.S.
market = Looking to offer them at
3BCP> CAIXA “Santander BancoDo Brasa | €? bradesco mood. mn Banco de Bogotá G every touch point with passengers
Preron
Diswep Copec A cobify 0.2 O . catering to a diverse and engaged member base
Member breakdown by geography* Active member breakdown?
TOTAL: 39mm
2. en e 4 2 y
1.0mm sw 10%
3.7mm O |
12% tb j Other 5%
4.8mm * 2.0mm
A
Active*
S 50%
19.4mm 30%
P 15% Y 5.9mm
1 As measured by total number of members at the end of 2021. ? Data as of December, 2021. * Active members refers to members who have earned or redeemed miles at least once in the past 24 months A
Privileged Draft – Interim Work Product HIGHLY CONFIDENTIAL i r he direction of Counsel Company Overview prepared at the direction of Counse > LATAM Frequent Flyer Program Overview (Cont’d) Financial Profile Combining Stable Revenues from Non-Airline Partners with High Cash Flow Generation Diversified cash flow streams 3″ Party Sales passengers carried (US$) => Third Party sales (USómm) > Financial partnerships sales as % of total FFP sales = Miles sold to airline and non-airline partners (including 05 Gan io nr esoTa financial institutions) provide liquidity to the business and se o pr prat have a positive effect on working capital 2) Hi Cn CES 16 15 14 A 14 Low cost base ; 1 E a = Efficient and digitalized platform, integrated with LATAMs Ss 11 E 7 AS pues 2017 2018 2019 2020 2021 E = Low redemption cost from targeted offerings to utilize and enable po romanos IA m Non-financial capacity at a marginal cost Members (mm) = Advanced analytics initiatives to increase miles revenue and reduce member churn (dynamic pricing for non-ticket redemption, optimal +30% promotional price) High margin profile = Profitable margin streams from spread on air and non-air redemption, E breakage, financial float and a low cost base = – Multiplus EBITDA margin range before taken private averaged 25% between 2015 and 2017*
2017 2021
1 Based on Multiplus information disclosed in 2015-2017 Annual Reports
Privileged Draft – Interim Work Product Company Overview prepared at the direction of Counsel
FLATAM
5) (E
Y y,
GOALS
Committed not to [edo STEREO Adapt businesstoa | Eliminate rr To NT AA LAT RAT single-use plastics ETA! 2050 consumption come | model, becominga | by 2023 rl UNS group with zero
RS VEIA waste to landfills by by 2030 NAT 2027 Ale
Privileged Draft – Interim Work Product prepared at the direction of Counsel
Company Overview
HIGHLY CONFIDENTIAL
Key Strategic Focus on Sustainability
FLATAM
Through its ESG strategy, LATAM Airlines will measure, monitor and report on its sustainable development impact and advance the
United Nations Sustainable Development Goals
Development Initiatives
United Nations Sustainable Development Goals (UN SDGs) targets
Improve the quality of transport infrastructure and services by:
Elda + Serving 284 routes, of which 62 are uniquely served by LATAM Airlines and 12 connect peripheral can and urban areas
+ Transporting * 40 mm passengers per year and over 800,000 tomnes of cargo per year
9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
Foster climate change mitigation by:
+ Reaching 2.3% of Sustainable Aviation Fuels (SAF) as % of total fuels by 2029
Implementing efforts to reduce CO, emissions per 1000 ATK by * 22% by 2030
Saving * 25 mm gallons of fuel by 2027 through increased fuel efficiency
Reducing Scope1 GhG emissions by * 13% by 2029, achieving carbon neutrality by 2050
Avoiding 1.3 mm tonnes of GhG emissions through carbon offsets purchases in 2027, reducing and offsetting the equivalent to 50% of domestic operations by 2030
+ Obtaining 80% of the carbon credits purchased in 2027 from projects preserving the natural ecosystems in South America
Climate Change:
9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies
13.2: Integrate climate change measures into national policies, strategies and planning
15.1: Ensure the conservation, restoration and sustainable use of terrestrial ecosystems
15.2: By 2020, promote sustainable management of all types of forests
Increase environmental sustainability by: Circular + Reducing white paper consumption (TA + Eliminating single use plastics by 2023
+ Increasing the amount of recycled, reused and sustainable material used in its operations
12.2: By 2030, achieve the sustainable management and efficient use of natural resources
12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse
Support job creation and monitor progress by:
+ Providing over 900,000 annual hours of training to employees
– Supporting over 29,000 jobs through operational activities?
+ Employing * 36% of women as % of total employees and 30% of women in executive positions as % of total executives
MALTA
4.3: By 2030, ensure equal access for women and men to affordable and quality technical, vocational and tertiary education, including university
5.5: Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life
8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work
Foster corporate and institutional governance by:
+ Developing 15 alliances as part of the Solidarity Plane Program focused on areas as health, environment and natural disaster relief
+ Complying under international standards as IEnvA and lOSA!
+ Publishing an annual sustainability report and participating in annual sustainability assessments
Governance:
12.6: Encourage companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle
17.3: Mobilize additional financial resources for developing countries
17.16: Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships to support the achievement of the SDGs
1 IEnvA: IATA Environmental Assessment; lOSA: IATA Operational Safety Audit; ? As of 1Q 2022 Source: Company information; The development outputs statements and projections reflect various assumptions by the Group.
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FLATAM
Company Overview
LATAM ¡is Ready to Emerge from Chapter 11 Stronger than Ever
Operational actions and balance sheet improvements position LATAM to continue leading the airline sector in Latin America
Cost Structure Gross Debt (USSbn)?? Liquidity (US$bn)+2*
. . 053 RCF Capacity = Wages and benefit savings $10.4 IE cast on estance sheet
– Reduced FTE by 12k* = Rationalized and more efficient fleet
– Reduced from 341 to 301? Cin
(36)% -,
– PBH Interest only arrangements Nor provide flexibility during recovery *x
– Lower cost operations
$6.7 = Improved vendor and supplier contracts
– Renegotiated approximately 1,000 contracts
– Rejected non-competitive contracts = Expected 2H’22 Passenger CASK ex Fuel excluding PBH reaching US$ 4,2 cents
At Filing As of Dec’22 At Filing As of Dec’22
Note: May not sum due to rounding; * At Filing refers to 5252020 petition date debt balances; ? As of Dec’22 is pro forma for financing transactions related to emergence. Cash balance based on assumed cash as of 12312022 under publicly available business plan and remains subject to the impact of the ongoing claims reconciliation process on cash at hand and the outcome of such transactions, and may vary upon; emergence. ; * Includes cash 8. cash equivalents and revolving credit facility capacity; * Refers to 1Q 2020 vs. 2Q 2022; * Refers to Q1 2020 vs. Q2 2022
HIGHLY CONFIDENTIAL
Key Criteria Supporting the Updated Business Plan
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Privileged Draft – Interim Work Product Key Criteria prepared at the direction of Counsel
HIGHLY CONFIDENTIAL
FLATAM
Key criteria supporting the Updated Business Plan = Demand recovery is assumed sustained = Corporate segment recovery in line with previous assumptions = Competitor publicly available capacity information assumed for competitive landscape = Regulatory environment assumed stable = Potential changes in tax and environmental regulations not included = Maintaining operational high standard = Digital enablers supporting costs initiatives delivered on time
HIGHLY CONFIDENTIAL
Demand Capacity Updated Business Plan
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Privileged Draft – Interim Work Product Demand Capacity Updated Business Plan prepared at the direction of Counsel
LATAM”s capacity plan was determined upon two main inputs: the expectation of market demand recovery based on observed trend as of July, 2022 and the anticipated competitive landscape = LATAM completed a thorough analysis to develop market demand and capacity plan assumptions sá
HIGHLY CONFIDENTIAL FLATAM
Market Demand Competitive : O => O p = Capacity Plan Recovery Landscape = Estimated recovery and growth of ” LATAM has made assumptions around ” Capacity Plan by market is based on the market demand; forecast at competitor capacity Demand-Supply equilibrium which segment level (country, length of = Competitor publicly available capacity results from the Market Demand
Recovery and the Competitive haul and type of travel) information is one of the key inputs Landscape informing LATAM capacity deployment ” Market demand recovery aligned .
in each market with Industry forecastÚ), 5% higher when compared to previous BP
Source: (1) Consulting firm’s global air traffic demand scenarios updated as of Jul’22 and internal network planning framework and analysis A
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HIGHLY CONFIDENTIAL
Demand Capacity Updated Business Plan prepared at the direction of Counsel 3 LATAM A bottom-up approach was followed to assess the Market Demand ‘ Recovery
For each of the key affiliate … demand (RPK) recovery and growth forecasted by markets and segments that length of haul and customer type of travel LATAM group serves …
= Brazil Length of haul = Chile = Domestic – at country Level = Colombia E? y = Regional – from given country towithin South America and = Ecuador O Caribbean = Peru = Long haul – from given country to Europe, North America and Asia Pacific Travel type = Business = Leisure .
= Visiting Friends and Relatives (VFR)
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A HIGHLY CONFIDENTIAL Demand Capacity Updated Business Plan prepared at the direction of Counsel
FLATAM A market demand recovery framework was developed which identifies initially 3 phases. All businesses are in Rebound and New Normal phases
Phases Logic €. Variables Segment A RPKs (4) Historic data observed Oo Assumptions a Trough (% of 2019): Lowest point of demand during POT crisis Decline Rebound New normal O Start of recovery (months): Time at which rebound starts
6 Double dip: DecelerationDecline in demand due to second waves
O Initial monthly recovery rate (pp): Slope of the rebound phase
6 Inflection point (month): Point at which recovery slope changes after border reopeningvaccination milestone reached
O Accelerated monthly recovery rate (pp) = Observed initial rate X multiplier: Slope of the rebound phase after inflection point
New normal gap (pts): % of 2019 demand that doesn’t come back
O Post-crisis CAGR (%): Growth rate once new normal demand reached
Source: Global Strategic Consulting Firm Report (April 2021) A =- Total forecast RPKs =– Total baseline RPKs =– Total baseline RPKs + CAGR
Privileged Draft – Interim Work Product Demand Capacity Updated Business Plan prepared at the direction of Counsel
HIGHLY CONFIDENTIAL
– Sp – ?LATAM Demand in affiliate domestic markets expected to reach 2019 levels during
2022, one quarter faster recovery compared to Previous Business Plan
Demand Recovery Assumptions: Domestic Markets = All domestic markets are expected to reach 2019 levels by the end of 2022
Updated BP Average Previous BP Average ] Recovery Recovery Domestic Recovery e Domestic Markets Q3-22 04-22 RPKs billions, monthly
Forecasted 2019 RPK Country (billion) recovery to 8 years CAGR 4.1% 2019 RPKs Brazil 88 Q3 2022 Chile 15 Q4 2022 Peru 9 Q4 2022 Colombia 12 Qqí1 2022 Ecuador 1 Q3 2022 go gh ae sa ¿ae o 9 q a e a ae a ¿ y” se ye ye y” ye y” ye . 2019 Baseline “=” LATAM Forecast
Notes: Domestic Markets consider domestic Brazil, Chile, Colombia, Ecuador and Peru | Consulting firm’s global air traffic demand scenarios updated as of Jul’22 and internal network planning framework and analysis
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2 LATAM Demand in regional markets is expected to recover to 2019 levels by Q422
Demand Recovery Assumptions: Regional Market ” Faster recovery in regional RPKs than Updated BP anticipated in the previous Business Plan (referring to the 5 years projections filed 5 on a Form 6-K on September 9, 2021)
Previous BP Regional Markets Recovery Recovery RPKs billions, monthly
04-22 04-23 ” Based on current trends, recovery to 8 years CAGR 3.5% 2019 levels is forecasted by Q4 2022 assuming travel restrictions continue to be lifted
9 A > qa A o y ae a e ae Pa e ae a == 2019 Baseline “== LATAM Forecast
Note: Includes Regional pairs (country to country within South America) | Consulting firm’s global air traffic demand scenarios updated as of Jul’22 and internal network planning framework and analysis ==
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A HIGHLY CONFIDENTIAL Demand Capacity Updated Business Plan prepared at the direction of Counsel > LATAM Based on current trends, long-haul travel demand is the slowest to recover, expected to reach 2019 levels in -Q2 2023
Demand Recovery Assumptions: Long-Haul Market ” Long haul travel is not expected to reach 2019 RPKs until Q2-23 due to travel restrictions and the change in business Recovery Recovery travel habits
Updated BP Previous BP Long Haul Markets RPKs billions, monthly ” Pentup demand has been driving a faster 20 : : 8 years CAGR 2.7% recovery compared to previous Business Plan during the last months Mé ” It is expected that business travel will have a permanent structural gap of approximately 15% 10 ” Based on current trends, we estimate that by 2027, the long-haul market 5 (including demand associated with the Delta Airlines joint venture) is forecast to recover 121% of 2019 RPK levels 0 o A o A 6 b a es y e > y e , e a os a = 2019 Baseline == LATAM Forecast
Note: Consulting firm’s global air traffic demand scenarios updated as of Jul’22 and internal network planning framework and analysis A
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FLATAM
Demand Capacity Updated Business Plan Business Plan’s Jet Fuel assumptions based on market consensus = Macroeconomic variable assumptions were based on market consensus guidance from multiple international and regional banking institutions, publicly-available information, and in certain cases, internally-developed assumptions = Annual average Jet Fuel prices were forecasted based on view from banking institutions. In the absence of guidance suggesting specific factors that would affect future prices, Jet Fuel per barrel in the Business Plan is assumed to remain flat at US$ 100 per barrel from 2024 onwards
FUEL Units E 020 1 t 1 yz ‘ 026 1 JET FUEL | USDgal | 1.86 | 1.10 | 1.69 | 3.43 | 3.10 | 2.38 | 2.38 | 2.38 | 2.38 JET FUEL | USDbbl | 78,3 | 46.6 | 71.0 | 144.0| 130,0| 100.0 | 100.0 | 100.0 | 100.0
Source: Bloomberg, Latin Focus Forecast (Jul22), Company analysis 2022 updated as of 1st August
HIGHLY CONFIDENTIAL
Updated Business Plan
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FLATAM Current expectations are that Total Revenues increase approximately 30% when compared to pre-COVID levels, reaching an estimated US$ 13.9 billions in 2027 ” Based on available information and current trends, LATAM estimates that it will return to 2019 capacity levels by 2024 when ASKs reach approx. 148 billion, driven primarily by demand recovery in affiliate domestic markets = LATAM forecasts that the group will fly 176 billion ASKs in 2027, an assumption based on the continuing recovery in demand in the later years, primarily in the international segment = Total RASK is expected to increase 13% by the end of the forecast period compared to 2019. The updated Business Plan assumes an important growth in Ancillary revenues as we expect this industry trend to continue. Total Revenue per ASK reduced in 2023 and 2024 driven in part by fuel price reduction assumption
Passenger Operating Statistics Assumptions Total Revenue and RASK Assumptions 34% 82% 83% 83% 83% 83% $ 77% 74% 2019 2021 2023 2024 2025 2026 2027 2019 2020 2021 2022 2023 2024 2025 2026 2027 MM 45% (billions) – “- Load Factor % -PAX MM Total Rovanue – US$ MM. Total RASK – US$ cents
Note: Revenue projections based on trend as of July 2022 and internal analysis. Total Revenues include Passenger, Cargo and Other Revenues AH
Privileged Draft – Interim Work Product ect prepared at the direction of Counsel HIGHLY CONFIDENTIAL Updated Business Plan
FLATAM Cargo expected to use freighter capacity growth to compensate for the impact in belly capacity during the recovery period e LATAM cargo affiliates business strategy reflected in the plan continues being Belly-Supporting Freighter
Updated Business Plan e Based on current trends, capacity expected to return to 2019 level by end of 2023 due to additional belly and freighter capacity available to move cargo e Additional cargo conversions during the period are expected to increase to 19 cargo freighters. Freighter ATK capacity expected to grow approximately 100% (2027 vs. 2019). Total ATKs capacity expected to grow roughly 40%, driven by the Long-Haul passenger demand recovery and wide body additional capacity e Cargo revenues are expected to grow from US$ 1.1 billion in 2019 to an estimated USS 1.9 billion in 2027. System load factor and RATK expected to remain higher than 2019, mainly due to fuel price increase passthrough
Cargo Operating Statistics Assumptions Cargo Revenue and RATK Assumptions
65% 57% 63% 60% 50% 58% 55% de] H 2019 2020 2021 2022 2023 2024 2025 2026 2027 2019 2020 2021 2022 2023 2024 2025 2026 2027 IM ATKs (billions) .= Load Factor % – Cargo IM Cargo Revenue US$ MM mu RATK(US conts por ATX)
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Updated Business Plan
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HIGHLY CONFIDENTIAL 3LATAM
LATAM”s cost-cutting measures during the pandemic are driving a decrease in the Company’s operating costs, ex Fuel, expected to return to 2019 levels in 2023 “= Passenger CASK in 2023 ¡is expected to significantly offset cost escalation and inflation. Majority of 2022 CASK reduction from measures already implemented and improved fixed cost leverage based on run rate volumes = LATAM has executed on several key initiatives to reduce its CASK ex Fuel, including:
Reducing headcount by 27% from 42,000 FTEs in 2019 to 30,600 in June 2022
Negotiating usage basedinterest only terms across the majority of LATAM’S fleet, which extension out into 2023 for Wide Body fleet, and securing reductions in fixed rates (operating leases) thereafter Outsourcing various functions, including airport support staff, effectively converting a fixed cost structure to a variable, more efficient one
Renegotiated over one thousand contracts with vendors and suppliers resulting in lower or more variable rate structures
Implementing process efficiencies and automation throughout digital levers across all passenger journey experience: direct sale penetration, airport automation and post sale resolution
In addition, LATAM is expecting to identify other costs initiatives that allow for cash containment
CASK in US$ cents
CASK ex Fuel 2019 – 2027
13
0.6 0,4
0.4 0.4 0.4 Ñ 2024
0.4 0,4 2019 2020 2021 2022 2023 2025 2026 2027 CASK ex Fuel – Cargo MB CAsk ex Fuel – PAX (US$ Cents) 2022 2023 pL0p zi 2025 2026 y10 PY Adjusted Passenger CASK 4.6 3.9 3.8 3.7 3.7 3.7
CASK ex Fuel adjusted by real inflation from 2022 to 2027
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FLATAM Based on recent trends and assumptions, LATAM forecasts an EBIT in 2024 that could exceed US$ 1 bn, continuing to grow thereafter, achieving an EBIT margin of 12% by 2027
Forecast Income Statement
EBIT Forecast Assumptions = |n 2019, LATAM flew 150 billion ASKs and reported revenue of US$
10.4 billion and EBITDA of USS 2.2 billion
US$ MM 2023 PL 2025 2026 pl0p
Passenger + Other 9,366 3,1125 3,570 7,867 9,505 9,624 10,452 11,241 12,002 = LATAM’s capacity, measured in ASKs, fell to 56 billion in 2020, a Cargo 1064 1210 1542 1787 1954 1784 1801 1827 1,51 63% decrease compared to 2019. Subsequent waves of COVID-19, Total Revenues 10,431 4,335 5111 9655 11,458 11,407 12,252 13,069 13,853 and the associated restrictions on travel, continued to impact Fuel Expenses (2,929) (1,045) (1488) (4,092) (4,39%) (3,599) (3,783) (3,946) (4,149) demand until early 2022 Ex Fuel Expenses (6,760) (4,955) (4,743) (5,774) (6,421) (6,773) (7,172) (7,573) (8,022) ” Based on current trends and assumptions, the updated Business Total Expenses (9,689) (6,000) (6,231) (9,866) (10,815) (10,372) (10,955) (11,519) (12,171) Plan Projections assumes that a recovery to pre-COVID demand EBIT 742 (1,665) (1,119) (211) 643 1035 1297 1550 1,682 (and revenue) will occur faster than expected in the short term EBIT margin 7.1% -38.4% -21.9% -22% 5.6% 9.1% 10.6% 119% 12.1% and similar to the previous Business Plan in the long term, led by LATAM’s domestic markets, followed by international travel (both . EBT 137 (5,096) (2,782) 1,821 47 296 661 787 1,051 regional and long-haul) . : : EBIT and EBITDA _Mmargins expected to structurally improve EBITDA 2212 (276) 26 960 1894 2414 2772 3086 3,310 post-recovery relative to pre-pandemic, driven by Cargo and . – EBITDA margin 21.2% -6.4% 09% 99% 16.5% 212% 22.6% 23.6% 23.9% Ancillary revenues, further expansion of Frequent Flyer Program and continue focus on cost cutting EBITDAR 2,212 (276) 167 1,158 2,003 2,429 2,773 3,087 3,310 EBITDAR margin 21,2% -64% 3,3% 12,0% 17,5% 213% 22,6% 23,6% 23,9%
EBITDAR consists of earnings for the period before income taxes and financial costs and financial income, plus depreciation and amortization expenses and rentals expenses ASKs in billions 150 56 68 115 141 148 158 167 176
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3LATAM
Operational cash flow expected to exceed US$ 2 billion from 2023 onwards
Free Cash Flow Forecast
Operational Cash Flows US$ MM| 2019 2020 2021 2022 2023 2024 2025 2026 2027 . Revenues 10,431 4,3335 5,1111 9655 11,458 11,407 12,252 13,069 13,853 ” Based on current trends and assumptions, LATAM expects to double previous BP EBIT Projection in Expenses (9,689) (6,000) (6,231) (9,866) (10,815) (10,372) (10,955) (11,519) (12,171) 2023, and is expected that EBIT could exceed US$ 1 EBIT 742 (1,665) (1,119) (211) 643 1,035 1,297 1,5550 1,682 billion EBIT in 2024 and double digit EBIT margin in pgaA 1,470 1389 1165 1172 11251 1379 11475 1536 1628 2025 Operational Rentals – – 121 197 109 15 – – – Changes in Working Capital EBITDAR 2,212 (276) 167 1,158 2,003 2,429 2,773 3,087 3,310 ” General: Forecasted working capital in the period Working Capital 787 (80) (51) (1,141) 134 4 108 151 173 2022 to 2027 reflects the recovery in LATAM’s .
. . Operational Rentals – – (121) (197) (109) (15) – – – operations to pre-pandemic levels Tax (45) (66) (9) (18) (20) (14) (89) (198) (236) “= Working capital in 2022 includes expected Operational Cash Flow 2,954 – (422) (14) (199) 2,008 2,404 2,791 3,039 3,247 adjustments to balance sheet due emergence from Chapter 11 “= Working capital accounts are forecasted based on days of sales (DSo’), days inventory on-hand EBITDAR consists of earnings for the period before income taxes and financial costs and financial income, plus depreciation and u amortization expenses and rentals expenses ( DIO ), days of payables ( DPO ) and days of Operational Rentals consists on Pay By Hour (PBH) fleet operational leases deferred revenue (DDR)
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Privileged Draft – Interim Work Product O HIGHLY CONFIDENTIAL Updated Business Plan Updated Business Plan prepared at the direction of Counsel . E > LATAM
Capital expenditures include fleet growth, maintenance and projects, as well as key customer facing transformations: ¡.e. cabin retrofit and digital experience
Free Cash Flow: Capital Expenditures Assumptions “Cash Fleet Capex: represents aircraft financial leases = Non Cash Fleet CAPEX: includes present value of the right to use aircraft under operating lease agreements, as per IFRS16 . All of the arrivals from 2022 onwards are assumed to be financed through operating leases.
= Non-Fleet Capex: includes the maintenance of engines (both on and off-balance)!, the purchase of spare parts, and investment in projects, intangible and components. 2024 includes Cabin Retrofit over USS 300 million “= Others: PDP, Asset Sales and others “= Based on the assumptions in the updated Business Plan and current estimates, Free Cash Flow is forecasted to exceed US $1 billion in 2026 = Non Cash Fleet Debt: this line reverses the outflows included in capex relating to operating leases under IFRS16 (i.e. the present value of the right to use aircraft under operating leases) as they are non-cash items
US$ MM 2019 2020 2021 2022 2023 2024 2025 2026 2027
Operational Cash Flow 2,954 (422) (14) (199) 2,008 2,404 2,791 3,039 3,247
Cash Fleet Capex (601) – – – – – – – – Non Cash Fleet Capex (700) – (537) (374) (1,098) (448) (740) (750) (1,020) Non-Fleet Capex (1,206) (426) (846) (915) (1,165) (1,301) (1,068) (1,024) (1,068) Others 309 26 124 89 50 8 (66) (183) (374)
Investment Cash Flow (2,198) (400) (1,259) (1,200) (2,213) (1,740) (1,874) (1,958) (2,462)
Free Cash Flow 756 (822) (1,273) (1,399) (205) 664 917 1,080 785 Non Cash Fleet Debt 700 – 537 374 1098 448 740 750 1020 Adj. Free Cash Flow! 1,456 (822) (736) (1,025) 893 1,1111 1,657 1,831 1,805
Privileged Draft – Interim Work Product Updated Business Plan prepared at the direction of Counsel
Estimated Annual Fleet cash out saving approx. 40% vs 2019
HIGHLY CONFIDENTIAL FLATAM
NC AS i i ICO Dd] Fleet reduction until 2022 PRE Abs Eo Net +- 2022 2023 2024 2025 2026 2027 . o .
Rejection of 26 aircraft NB 249 (15) 234 244 223 237 234 246 ” Retirement of 11 older NB A319 46 (6) 40 = 158B767s taken out of operation AS20 141 (13) 128 A320neo 13 4 17 ” Addition of 8 new leases into the fleet (2 A321 49 – 49 A320, 1 B787-9) A321neo – – – A321XLR – – – Fleet simplification WB 79 (23) 56 56 59 59 61 61 . A350 13 (13) – .
Withdrawal of 1 WB fleet type (A350) 8767 30 (15) 15 = Consolidation of Brazil operation with B777 B777 10 – 10 and B787 B787-8 10 – 10 B787-9 16 5 21 Pax Fleet 328 (38) 290 300 282 296 295 307 Freighter 12 4 16 Total Fleet 340 (34) 306 322 301 315 314 326
(-) Pending Sales – –
(-) Pending Conversions – (6) EAS: 340 (ET) 306 322 301 E 314 326
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Updated Business Plan
FLATAM
Based on current trends, positive Cash Flow from 2023 onwards are expected
Expected Financing Cash Flows = Non Cash Fleet Debt: this line reverses the outflows included in capex relating to operating leases under IFRS16 (i.e. the present value of the right to use aircraft under operating leases) as they are non-cash items “= Expected dividends paid pursuant to the statutory requirement of 30%, assuming offsets of cumulative net losses = Liquidity?: includes the cash on hand plus available revolver capacity of US$ 1.1 billion. Liquidity from 2023 onwards is expected to be at or above 20% of LTM revenues
US$ MM 2019 2020 2021 2022 2023 2024 2025 2026 2027 Free Cash Flow 756 (822) (1,273) (1,399) (205) 664 917 1,080 785 Non Cash Fleet Debt 700 – 537 374 1,0098 448 740 750 1,020 Adj. Free Cash Flow 1,456 (822) (736) (1,025) 893 1,111 1,657 1,831 1,805 Debt Amortizations (Net) (440) 11443 225 (3,037) (279) (548) (657) (673) (713) Dividend payments (55) (1) – – – (10) (62) (139) (165) Interest 8. Others (907) (384) (139) 4,080 (511) (549) (601) (581) (653) Financing Cash Flow (1,402) 1,058 86 1,043 (789) (1,107) (1,320) (1,393) (1,531) Total Cash Flows 54 236 (649) 18 104 4 338 438 273
Ending Cash
Liquidity
1,459 1,696
20% 69%
1,047 1,066
45% 22%
1,170 1,174 1,511 1,949 2,222
20% 20% 21% 23% 24%
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Updated Business Plan > LATAM
Expected Net leverage of 2.6x in 2024, expected liquidity over 20% from
2023 onwards
Debt and Liquidity Forecast
As a consequence of updated Business Plan assumptions and the Chapter 11 process, debt reduced from USS 10.4 billion in 2019 to < 7 billion in Dec*22 – – Expected reduction of leverage levels in 2023 relative to 2019 – Net Leverage of approximately 2.6x in 2024 would strengthen LATAM’s capital structure – Expected deleveraging thought forecast period due to strong operational cash flow and disciplined investment – – Liquidity over 20% in all the projected period considering the revolver credit facility available US$ MM 2019 2020 2021 2022 2023 plop lA 2025 plop 13 2027 Debt 10,367 11,150 11061 6,702 7,570 7,474 7,575 7,666 7,989 Fleet Debt 7,690 6,350 4,818 3,977 4,686 4,612 4,735 4,849 5,170 Non Fleet 2,677 4,800 6,243 2,725 2,884 2,862 2,840 2,817 2,819 EBITDAR 2,212 -276 167 1,158 2,003 2,429 2,773 3,087 3,310 Cash 1,459 1,696 1,047 1,066 1,170 1,174 1,511 1,949 2,222 Net Debt 8,908 9,454 10,014 5,636 6,400 6,301 6,064 5,717 5,767 Gross Leverage 4,7x NA 240,5x 5.8X 3.8X 3.1x 2.7x 2.5X 2.4x Net Leverage 4.0x NA 217.7x 4.9x 3.2x 2.6x 2.2x 1.9x 1.7x Liquidity (%) 20% 67% 45% 22% 20% 20% 21% 23% 24% A Privileged Draft – Interim Work Product a HIGHLY CONFIDENTIAL Updated Business Plan Updated Busi Pl prepared at the direction of Counsel pdated Business Plan > LATAM
Estimated Sources and Uses – Upon Exit and Emergence
Estimated Sources and Uses as of September 30th, 2022
Sources DS
Bonds Term loans 2,250 Junior DIP 1,143 Total 3,393 DIP? repayment 2,929 DTE? Fees 8 Expenses 118 Additional Cash 346 Total 3,393
(1) DTE: DIP to Exit
(2) RCF: Revolving Credit Facility
(3) Sources and uses information remains subject to change as due to, among other things, the impact of the ongoing reconciliation process on cash at hand and the outcome of the Company’s financing emergence financing transactions, and may
Estimated Sources and Uses as of October 14th, 2022*
OS DESSIVI)
Convert C 3,269 Convert B 1,373 Equity Right Offering 800 Spare Engine Facility 273 Total 5,715 USD Bonds repayment 1,519 Existing RCF repayment 600 Brazil Financial Debt repayment 298 Fees €, Others 743 Administrative Claims 240 Spare Engine Facility 273 Subsidiary Claims 471 Junior DIP 1,150 Cash Distribution Payment 250 Additional Cash 171 Total 5,715 vary upon emergence A
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Updated Business Plan prepared at the direction of Counsel p > LATAM Estimated Balance Sheet Pro Forma as of December 2022 Expected Balance Sheet Pro Forma as of December 2022? RAE] . _ ON . Cash €: cash equivalents 1,066 = Assuming exit financing in September 30th and effective date : : October 14th, 2022 Financial assets 182 ctober ! Accounts receivables 1,175 = Updated Business Plan Balance Sheet as of December 2022 Inventory 342 PPeE 9,904 ” Cash € cash equivalents and Debt does not include fully Other assets 364 available US$ 1,1 billion Revolving Credit Facility Total Assets 13,033 Accounts payable 1,696 Deferred revenue 2,802 Debt 6,599 DIP 10) Other liabilities 1,369 Total Liabilities 12,465 Total Shareholders’ Equity 568 Total Liabilities + Shareholders’ Equity 13,033
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FLATAM
LATAM AIRLINES GROUP
NI E tel
Subject to Applicable Confidentiality Agreements and Requirements
August 2022
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