Corporate Update
January 2020
Leading group in air transport of passengers and cargo in Latin America
Leading group of airlines in Latin America
69 million passengers carried in 2018
Regional leader in number of passengers carried
Leading frequent flyer and loyalty programs with over 38
millon members
Over 300-aircraftfleet, with and average age of ~9 years
Leading network in Latin America
69
33 31
23 22 18
10
LATAM Gol Linhas | Avianca | Azul | Aeromexico Volaris | Copa |
Aereas | Holdings |
Passengers carried during 20181 (million)
Leading network and platform in Latin America, with hubs in | Multiple Bilateral Agreements | |
Sao Paulo, Lima and Santiago | ||
More than 140 destinations in 27 countries:
Market Share2: 1° in Chile, Brazil and Peru, 2° in
Argentina, Colombia and Ecuador
- Regional operations in South America and long-haul operations to 5 continents
Source: Integrated Report 2018 and Bloomberg | |
1Data as of December, 2018 | 1 |
2As of September 2019 for Ecuador, October 2019 for Peru and Colombia, November 2019 for Argentina, Brazil and Chile |
LATAM is amongst the largest airline groups in the world
PAX carried 20181 (million)
204
192
158
#1 Latin American airline group and #14 in the world in PAX carried
#1 Latin American airline group and #4 in the world in FFP members(Over 30 million members)
142 140 135 | |||||||||||||||||||||||||||||||||||||
121 120 113 | 110 101 | ||||||||||||||||||||||||||||||||||||
89 | |||||||||||||||||||||||||||||||||||||
75 | 69 | 59 | |||||||||||||||||||||||||||||||||||
56 | 55 | 54 | 51 | 46 | |||||||||||||||||||||||||||||||||
42 | |||||||||||||||||||||||||||||||||||||
40 | 38 | 36 | 35 | 33 | 31 | 29 | 29 | ||||||||||||||||||||||||||||||
27 | 25 | 23 | |||||||||||||||||||||||||||||||||||
22 | 22 | 18 | |||||||||||||||||||||||||||||||||||
18 | 17 | ||||||||||||||||||||||||||||||||||||
10 | |||||||||||||||||||||||||||||||||||||
American Airlines | Delta | United | Lufthansa | China Southern | Southwest | China Eastern | Ryanair | IAG | Air China LTD | Air France - KLM | easyJet | Turkish Airlines | LATAM Airlines | Emirates | Aeroflot | Qantas Airways | ANA Holdings | Air Canada | Alaska Air | JetBlue | Japan Airlines | Garuda Indonesia | Singapore Airlines | Cathay Pacific Airways | Gol Linhas Aereas | Avianca Holdings | Qatar Airways | Scandinavian Airlines | Korean Airlines | Virgin Australia | Azul | Aeromexico | Thai Airways | Volaris | Etihad Airways | Air New Zealand | Copa |
Other Latin American Airlines
Source: Company's websites, Bloomberg | |
1 Data as of Dec 31, 2018 except for: Emirates (LTM March 2019) | 2 |
Ownership structure1 and Board of Directors as of January 10, 2020
Others 15,9%
Cueto Group | |
21,5% | |
Foreign Investors | |
9,7% | |
Pension Funds | Delta Air Lines |
20,0% | |
17,6% | |
Qatar | |
Airways | |
10,0% | |
ADRs | |
3,4% Amaro Group
2,0%
Board of directors
Ignacio Cueto Plaza
Juan José Cueto Plaza
Henri Philippe Reichstul
Sonia J.S. Villalobos
Carlos Heller Solari
Nicolás Eblen Hirmas
Giles Edward Agutter
Eduardo Novoa Castellón
Patrick Horn García
Source: DCV and www.latamairlinesgroup.net | |
1 Preliminary information, subject to changes of share's custody after the completion of the tender offer. | 3 |
Large region, little traffic
World share (%)1 | |
AmericaNorth 22% | Europe 27% |
Asia
Pacific
Middle
East
Latin America
35%
9%
5%
Africa 2%
Source: IATA | |
1 % of industry RPK in 2018 | 4 |
LATAM is well positioned to capitalize on Latin America's growth potential
Trips per capita1
17% | 54% | 2010 | 2018 | |||||||||
2,3 | 2,7 | 2,5 | ||||||||||
92% | 81% | |||||||||||
1,6 | ||||||||||||
28% | 127% | 84% | ||||||||||
1,0 | ||||||||||||
0,7 | ||||||||||||
0,5 | 0,4 | 0,4 | 0,5 | 0,6 | 0,4 | |||||||
0,2 | ||||||||||||
0,2 | ||||||||||||
US | UK | Chile | Colombia | Brazil | Peru | Argentina |
RPKs growth 2019E - 2038E
2018 | ||||||||||
6,2% | 5,9% | 5,9% | 5,5% | |||||||
5,1% | ||||||||||
Average 4.6% | ||||||||||
3,6% | ||||||||||
3,2% | ||||||||||
Latin America | Latin America | Africa | Asia-Pacific | Middle East | Europe | North America |
Source: World Bank and Boeing Commercial Market Outlook 2019-2039 | |
1 Trips per capita refers to both domestic and international aircraft passengers carried by air carriers registered in the country divided by such country's population. | 5 |
Market size of LATAM's main markets
Market size (number of passengers)
Dom: 29 mm
Inter: 16 mm
Dom: 3 mm
Inter: 4 mm
Dom: 14 mm
Inter: 12 mm
Dom: 15 mm
Inter: 11 mm
Dom: 95 mm
Inter: 24 mm
LIM
GRU
SCL
Dom:16 mm
Inter: 15 mm
Source: Ministerio de Transporte de Perú, EANA Argentina, JAC Chile, ANAC Brasil, Aeronáutica Civil Colombia y Cominicad Andina Secretaría General
Note: LTM as of June 2019 for Ecuador, October 2019 for Peru and Colombia, November 2019 for Argentina, Brazil and Chile
6
Domestic: Leading market share across markets with positive passenger growth dynamics
Market Share (%)
1st | 2nd |
AIRLINES PERU
66%1
13% | 11% |
4% | 3% |
AIRLINES CHILE | AIRLINES BRAZIL |
62%2 | 39%2 |
24% | 37% |
13% | 23% |
AIRLINES COLOMBIA | +5 mm | |
passenger | ||
22% | 1 | |
2019 vs 2018 | ||
growth | ||
51% | 14% | |
8% | 3% |
AIRLINES ECUADOR | AIRLINES ARGENTINA | |
32%3 | 17%1 | |
38% | 62% | 6% |
30% | 9% | 5% |
Source: Ministerio de Transporte de Perú, EANA Argentina, JAC Chile, ANAC Brasil, Aeronáutica Civil Colombia y Diio Mi; | ||
1 | Market share (PAX): October 2019 for Peru and Colombia, November 2019 for Argentina | 7 |
2 | Market share (RPK): November 2019 for Chile and Brazil |
3 Market share (ASK): September 2019 for Ecuador
International: Unparalleled network connecting Latin America
Market Share (%)1
Within South America
41% | 1st |
18% | 9% |
8% | 3% |
2% | 1% |
South America - Asia Pacific
South America - North America
22% 2nd
22%12%
LIM
8% | 8% | |
GRU | 6% | 5% |
SCL | South America - Europe |
58%
1st
11%
3rd
24%
18%
Source: Diio.net
1 Market share (ASK): September 2019
20% 17%
10% 8%
6% | 5% | 8 |
Geographic diversification of LATAM Airlines Group and its subsidiaries
LTM Revenue by Business Unit | LTM Revenue by Point of Sale | LTM ASK by Country | |||||||||
Others | Colombia | Ecuador | Ecuador | Argentina | |||||||
Cargo | Peru | 4% | |||||||||
4% | 2% | 2% | 4% | ||||||||
8% | |||||||||||
10% | Colombia | ||||||||||
Europe | 3% | ||||||||||
7% | Peru | ||||||||||
APAC and other | Brazil | 15% | |||||||||
International | 38% | ||||||||||
Latin America | |||||||||||
Domestic SSC | |||||||||||
44% | |||||||||||
8% | |||||||||||
17% | |||||||||||
Brazil | |||||||||||
51% | |||||||||||
Domestic Brazil | Argentina | USA | Chile | ||||||||
Chile | 26% | ||||||||||
25% | 6% | 10% | |||||||||
16% |
Total revenue = US$ 10.3 bn | Total ASK = 147.9 bn | |
Source: www.latamairlinesgroup.net | |
Information as of September 2019 | 9 |
Third Quarter 2019 Financial Summary
(US$ Millions)
Total Operating Revenues
Passenger
Cargo
Others
Total Operating Costs
Fuel
Ex-fuel
3Q19 3Q18 Change
2,665 | 2,492 | 6.9% |
2,340 | 2,107 | 11.1% |
252 | 279 | -9.8% |
73 | 106 | -31.0% |
-2,396 | -2,271 | 5.5% |
-717 | -747 | -4.0% |
-1,679 | -1,524 | 10.2% |
Operating Income | 269 | 221 | 21.8% |
Operating Margin | 10.1% | 8.9% | 1.2 p.p. |
Net Income | 86 | 35 | 145.0% |
EBITDA | 645 | 565 | 14.1% |
EBITDA Margin | 24.2% | 22.7% | 1.5 p.p. |
Source: www.latamairlinesgroup.net | |
Note: 2018 re-expressed under IFRS16 | 10 |
Third Quarter 2019 Operating Statistics
% YoY | System Capacity | Capacity | Traffic | Load Factor | RASK/RATK (USc)1 |
(ASK) | (RPK) | (% YoY) |
International
(Long Haul & Regional) | 54% |
-4.1% | -1.8% | 85.2% | 6.0 |
(+2.0 p.p.) | (+0.5%) | ||
BRL | |||
3Q19: +24.3% |
Domestic Brazil
SSC Domestic
28%
18%
+9.8% | +10.4% | 82.1% | 7.4 |
(+0.5 p.p.) | (+22.7%) | ||
+9.5% | +9.3% | 81.3% | 6.5 |
(-0.2 p.p.) | (-9.5%) |
Passenger | +1.8% | +3.2% | 83.6% | 6.2 |
(+1.1 p.p.) | (+9.1%) | |||
Cargo2 | +0.1% | +0.8% | 53.6% | 15.8 |
(+0.4 p.p.) | (-6.2%) | |||
1 | RASK by business unit includes ticket revenue, breakage, frequent flyer program contribution and ancillary revenues. | |
2 | Excluding the sale of MasAir | 11 |
Delivering on cost initiatives to enhance operational performance
CASK Ex-fuel evolution (US$ cents)
-2%
4.6
4.5 | |||||||||||||
9M18 | 9M19 | ||||||||||||
Number of Employees | ASK / Operating Fleet (million ASK per Aircraft) | ||||||||||||
# employees | FTE / AC 1 | ASK/Operating Fleet | Total aircraft | 2 | |||||||||
-3.8%
132127
40,97441,193
Sep'18Sep'19
Source: www.latamairlinesgroup.net 1 Full time employees per aircraft 2 Excluding short tem leases
324 | ||||||
310 | ||||||
+0.4% | ||||||
455 | 457 | |||||
LTM Sep'18 | LTM Sep'19 |
12
Guidance 2020
2019E2020E
International | 0% | 0% - 2% | ||
Domestic Brazil | 8% | 7% - 9% | ||
Passengers (ASK) | ||||
Domestic Spanish- | 11% | 6% - 8% | ||
speaking countries | ||||
Total | 4% | 3% - 5% | ||
Cargo (ATK) | -2% | 4% - 6% | |
Operating Margin (%) | ~7% | 7.0% - 8.5% | |
13
Current Financial Situation
Financial Debt and Leverage | Liquidity | |||||||
RCF (US$ million) | ||||||||
Financial Debt (US$ million) | On Balance Leases (IFRS 16) | |||||||
Net Debt / EBITDA LTM | Cash and Equivalents (US$ million) | |||||
3.500,00 | Liquidity1 | |||||
50%
4,5x
4,2x
3.000,00
10.65010.517
2.500,00
2.9333.032
2.000,00
1.500,00
1.000,00
7.7177.485
500,00
0,00
2Q193Q19
19,5%19,3%
600600
1.3811.392
2Q193Q19
30%
10%
-10%
-30%
-50%
-70%
-90%
Source: www.latamairlinesgroup.net
1 Considers cash & cash equivalents + RCF
14
Proactively reshaping our debt profile
Debt maturity profile1 (US$ million) as of September 30, 20192
-262make-whole | Prepayment LATAM2020 | Local Bond | Unsecured | Secured | ||||||||||||||
LATAM2020 | ||||||||||||||||||
1.013 | 1.013 | 824 | 1.063 | 953 | ||||||||||||||
322 | 536 | 218 | 343 | 215 | 204 | |||||||||||||
10 | ||||||||||||||||||
4Q19 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
Debt type as of September 30, 2019 | Rating agencies | ||||||
PDP 5.0% | 2 | ||||||
Ba3 | |||||||
Banks 3.9% | |||||||
Fleet 3.8% | WACD | ||||||
4.8% | BB- | ||||||
Bonds 6.9% | |||||||
BB-
July 10, 2019
Source: www.latamairlinesgroup.net | ||
1 | Debt maturity profiles don't include PDP and short term rolling debt | 15 |
2 | Proforma adjusted by liability management |
Partnership LATAM - Delta: Strategic Agreement
Tender Offer
Delta invested $1.9 billion for a 20 percent stake in LATAM through a public tender offer at $16 per share, which was completed on January 3, 2019
Airplane Purchase
Delta will acquire four A350 aircraft from LATAM and assume LATAM's commitment to
purchase 10 additional aircraft to be delivered beginning in 2020
Commercial
Joint venture, code sharing agreement and $350 million from Delta to support
transition costs for strategic partnership
Note: The joint venture and the tender offer is subject to customary closing conditions and governmental and regulatory approvals.
16
3241 aircraft operating fleet with an average age of ~9,0 years
Narrow body: 241 | Wide body (PAX): 74 | Wide body (Cargo): 9 | ||
Owned2: 163 aircraft | Owned2: 49 aircraft | Owned2: 8 aircraft | ||
Leases3: 78 aircraft | Leases3: 25 aircraft | Leases3: 1 aircraft |
A350
A321 A319
78
A320N
76
767F
A320 | 77 |
Airbus A320N | Boeing 787-9 | Boeing 767F | ||
Source: Public Company Filings, Offering Memorandum | |
1 Excludes short-term leases | 17 |
2 Aircraft included in Property, Plant and Equipment (Own + Financial Leases) |
3 Operating Leases.
Fleet Plan 2019E-2022E
Narrow Body Wide Body Freighter
338 | 345 | 358 | |
330 | 11 | 11 | |
11 | |||
11 | |||
77 | 77 | ||
75 | 77 | ||
244 | 250 | 257 | 270 |
2019E | 2020E | 2021E | 2022E |
Fleet Commitments (US$mm) | |||
1,197 | 796 | 889 | 619 |
18
Refocusing investments to passenger experience and loyalty
Cabin experience (US$400 million in cabin retrofits in 2 years)
Acquisition of Multiplus (~US$300 million)
- +38 million members
- 4th Largest FFP in the world
- Unified value proposition
- Revenue management
22 Wide-body aircraft and 150 Narrow-body aircraft
New seat design and layout of passenger accommodation; comfort, segmentation & efficiency
Worldwide recognition
Best Airline in South | Best on-time | |
America | performance |
Best | |
"Business Class" | "Most punctual global |
"Business Class Lounge" | network airline in the |
"Economy Class" | world in 2019" |
Source: www.latamairlinesgroup.net
19
Key takeaways
1 | LATAM is the leading and largest airline group in Latin America with an unmatched network | |
2 | Delivered resilient operational and financial results despite challenges | |
3 | Disciplined financial policy focused on continuous de-leveraging and balance sheet | |
strengthening | ||
4 | Successful implementation of transformational initiatives including (i) a rigorous cost cutting | |
program, (ii) the reduction of fleet commitments (iii) acquisition of the minority stake in Multiplus, | ||
and (iv) transforming the cabin experience | ||
5 | Future performance anchored on an unique network strategy and positive business dynamics | |
20
Exhibits
April 2017
Results of the transformation plan
1
| |
Focus on improving | |
operational performance | |
while solidifying the business |
model resilience …
2015 | 2016 | 2017 | 2018 | '15 vs. '18 | |
136 | 143 | +6,7% | |||
134 | 135 | ||||
ASK LTM (billion) | |||||
327 | 329 | 1 | |||
307 | 310 | ||||
Operational Fleet (units) | |||||
-5,2% | |||||
6,0% | 7,0% | 6,8% | +180 pbs | ||
5,0% | |||||
EBIT Margin (%)2
2 | 69 | 155 | 182 | +US$ | ||||
401 mm | ||||||||
Net Income LTM | ||||||||
Has proven to be a | (US$ million) | |||||||
-219 | ||||||||
compelling path to drive | ||||||||
profitability and cash | 1.379 | 1.159 | ||||||
generation … | Free Cash Flow | +US$ | ||||||
549 | 1.183 mm | |||||||
(US$ million)3 | ||||||||
-24 | ||||||||
3 | Adjusted net financial | 5,8x | 5,3x | 4,5x | 4,3x | |||
leverage (x)4 | ||||||||
Maintaining a rigorous | | 9,1 | 8,6 | |||||
7,9 | ||||||||
financial discipline for | Financial Debt | 7,3 | ||||||
-US$ | ||||||||
continuous de-leveraging | (US$ billion) | |||||||
1,8 mmm | ||||||||
Source: Public Company Filings
1 Excludes 2 short-term leased aircrafts, as of December 2018.
2 | EBIT margin defined as EBIT divided by Revenue + Other Income. EBIT defined as Revenue + Other Income - Operating Expenses. | 22 |
3 | Free Cash Flow defined as Cash Flow from Operating Activities less Cash Flow used in Investing Activities. | |
4 | Adjusted Net Leverage defined as Adjusted Net Debt / LTM EBITDAR. Adjusted Net Debt defined as Gross Debt - Cash & Cash Equivalents + Aircraft Leases (7x LTM Aircraft Rentals). |
Financial hedging strategy to protect medium term operational margin
Fuel Hedge (% consumption) | BRL Hedge (US$MM)1 | Reduced exposure to floating | ||
rates | ||||
70%
62%
20% 20%
1Q20 2Q20 3Q20 4Q20
29
12
3Q19 | 4Q19 | 1Q20 | 2Q20 |
U$2.8bnU$4.6bn
37%
62%
1%
U$0.1bn
Fixed | Floating w/ Hedge | Floating | ||
Source: www.latamairlinesgroup.net
23
Year-to-date 2019 Financial Summary
(US$ Millions) | 9M19 | 9M18 | Change | |
Total Operating Revenues | 7,560 | 7,580 | -0.3% | |
Passenger | 6,528 | 6,382 | 2.3% | |
Cargo | 784 | 874 | -10.3% | |
Others | 248 | 324 | -23.4% | |
Total Operating Costs | -7,169 | -7,036 | 1.9% | |
Fuel | -2,185 | -2,151 | 1.6% | |
Ex-fuel | -4,984 | -4,885 | 2.0% | |
Operating Income | 391 | 544 | -28.1% | |
Operating Margin | 5.2% | 7.2% | -2.0 p.p. | |
Net Income | -37 | -80 | -54.4% | |
EBITDA | 1,470 | 1,574 | -6.6% | |
EBITDA Margin | 19.4% | 20.8% | -1,4 p.p. |
Source: www.latamairlinesgroup.net | |
Note: 2018 re-expressed under IFRS16 | 24 |
Year-to-date 2019 Operating Statistics
% YoY | System Capacity | Capacity | Traffic | Load Factor | RASK/RATK (USc)1 |
(ASK) | (RPK) | (% YoY) |
International | 56% |
(Long Haul & Regional) | |
Domestic Brazil | 26% |
+2.3% | +3.1% | 85.4% | 5.7 |
(+0.7 p.p.) | (-8.7%) | ||
BRL | |||
9M19: +21.0% | |||
+4.3% | +5.6% | 81.4% | 6.8 |
(+1.0 p.p.) | (+10.9%) |
SSC Domestic
18%
+11.5% | +11.3% | 81.7% | 6.5 |
(-0.1 p.p.) | (-9.3%) |
Passenger | +4.4% | +5.1% | 83.7% | 5.9 |
(+0.6 p.p.) | (-2.0%) | |||
Cargo2 | +0.2% | +2.4% | 55.2% | 16.6 |
(+1.2 p.p.) | (-6.8%) | |||
Note: Information as of September 2019
1 RASK by business unit includes ticket revenue, breakage, frequent flyer program contribution and ancillary revenues.25 2 Excluding the sale of MasAir
Thank you!
April 2017
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LATAM Airlines Group SA published this content on 17 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 January 2020 18:48:08 UTC