Report of Foreign Issuer (6-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

November 12, 2015

Commission File Number 1-14728

LATAM Airlines Group S.A.

(Translation of Registrant’s Name Into English)

Presidente Riesco 5711, 20th floor

Las Condes

Santiago, Chile

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

SVS

Santiago, Chile, November, 12 2015 – LATAM Airlines Group S.A. (NYSE: LFL; IPSA: LAN; BOVESPA: LATM33), the leading airline group in Latin America, announced today its consolidated financial results for the first quarter ended September, 30, 2015. “LATAM” or “the Company” makes reference to the consolidated entity, which includes passenger and cargo airlines in Latin America. All figures were prepared in accordance with standards established by the Chilean Superintendency of Securities and Insurance and are expressed in U.S. dollars.

LOGO

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

PREPARED IN ACCORDANCE WITH STANDARDS ESTABLISHED

BY THE CHILEAN SUPERINTENDENCY OF SECURITIES AND INSURANCE

(FREE TRANSLATION)

SEPTEMBER 30, 2015

CONTENTS


Interim Consolidated Statement of Financial Position
Interim Consolidated Statement of Income by Function
Interim Consolidated Statement of Comprehensive Income
Interim Consolidated Statement of Changes in Equity
Interim Consolidated Statement of Cash Flows - Direct Method
Notes to Interim the Consolidated Financial Statements


CLP	-	CHILEAN PESO
ARS	-	ARGENTINE PESO
US$	-	UNITED STATES DOLLAR
THUS$	-	THOUSANDS OF UNITED STATES DOLLARS
COP	-	COLOMBIAN PESO
BRL/R$	-	BRAZILIAN REAL
THR$	-	THOUSANDS OF BRAZILIAN REAL
MXN	-	MEXICAN PESO
VEF	-	STRONG BOLIVAR

Contents of the notes to the interim consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.


Notes	Page

1 - General information		1
2 - Summary of significant accounting policies		4
2.1. Basis of Preparation		4
2.2. Basis of Consolidation		7
2.3. Foreign currency transactions		8
2.4. Property, plant and equipment		9
2.5. Intangible assets other than goodwill		10
2.6. Goodwill		10
2.7. Borrowing costs		11
2.8. Losses for impairment of non-financial assets		11
2.9. Financial assets		11
2.10. Derivative financial instruments and hedging activities		12
2.11. Inventories		13
2.12. Trade and other accounts receivable		13
2.13. Cash and cash equivalents		14
2.14. Capital		14
2.15. Trade and other accounts payables		14
2.16. Interest-bearing loans		14
2.17. Current and deferred taxes		14
2.18. Employee benefits		15
2.19. Provisions		16
2.20. Revenue recognition		16
2.21. Leases		17
2.22. Non-current assets (or disposal groups) classified as held for sale		17
2.23. Maintenance		17
2.24. Environmental costs		18
3 - Financial risk management		18
3.1. Financial risk factors		18
3.2. Capital risk management		32
3.3. Estimates of fair value		33
4 - Accounting estimates and judgments		36
5 - Segmental information		37
6 - Cash and cash equivalents		40
7 - Financial instruments		43
7.1. Financial instruments by category		43
7.2. Financial instruments by currency		45
8 - Trade, other accounts receivable and non-current accounts receivable		46
9 - Accounts receivable from/payable to related entities		49
10 - Inventories		50
11 - Other financial assets		51
12 - Other non-financial assets		52
13 - Investments in subsidiaries		53
14 - Intangible assets other than goodwill		56


15 - Goodwill			57
16 - Property, plant and equipment			59
17 - Current and deferred tax			65
18 - Other financial liabilities			71
19 - Trade and other accounts payables			80
20 - Other provisions			82
21 - Other non-financial liabilities			85
22 - Employee benefits			86
23 - Accounts payable, non-current			87
24 - Equity			87
25 - Revenue			92
26 - Costs and expenses by nature			93
27 - Other income, by function			94
28 - Foreign currency and exchange rate differences			95
29 - Earnings per share			103
30 - Contingencies			104
31 - Commitments			112
32 - Transactions with related parties			118
33 - Share based payments			119
34 - The environment			122
35 - Events subsequent to the date of the financial statements			123

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS


	Note	As of September 30, 2015		As of December 31, 2014
		ThUS$		ThUS$
		Unaudited
Current assets
Cash and cash equivalents	6 - 7		1.022.926		989.396
Other financial assets	7 - 11		588.276		650.401
Other non-financial assets	12		344.102		247.871
Trade and other accounts receivable	7 - 8		976.144		1.378.837
Accounts receivable from related entities	7 - 9		392		308
Inventories	10		203.512		266.039
Tax assets	17		71.469		100.708


Total current assets other than non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners			3.206.821		3.633.560


Non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners			929		1.064


Total current assets			3.207.750		3.634.624

Non-current assets
Other financial assets	7 - 11		66.004		84.986
Other non-financial assets	12		268.038		342.813
Accounts receivable	7 - 8		9.889		30.465
Intangible assets other than goodwill	14		1.286.661		1.880.079
Goodwill	15		2.244.869		3.313.401
Property, plant and equipment	16		10.558.010		10.773.076
Tax assets	17		25.628		17.663
Deferred tax assets	17		308.178		407.323

Total non-current assets			14.767.277		16.849.806

Total assets			17.975.027		20.484.430

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

LIABILITIES AND EQUITY


	Note	As of September 30, 2015			As of December 31, 2014
		ThUS$			ThUS$
		Unaudited
LIABILITIES
Current liabilities
Other financial liabilities	7 - 18		1.629.078			1.624.615
Trade and other accounts payables	7 - 19		1.390.531			1.489.396
Accounts payable to related entities	7 - 9		38			35
Other provisions	20		2.984			12.411
Tax liabilities	17		19.444			17.889
Other non-financial liabilities	21		2.389.506			2.685.386

Total current liabilities			5.431.581			5.829.732

Non-current liabilities
Other financial liabilities	7 - 18		7.338.891			7.389.012
Accounts payable	7 - 23		566.675			577.454
Other provisions	20		476.466			703.140
Deferred tax liabilities	17		799.761			1.051.894
Employee benefits	22		77.379			74.102
Other non-financial liabilities	21		331.619			355.401

Total non-current liabilities			9.590.791			10.151.003

Total liabilities			15.022.372			15.980.735


EQUITY
Share capital	24		2.545.705			2.545.705
Retained earnings	24		334.736			536.190
Treasury Shares	24		(178	)		(178	)
Other reserves	24		(6.286	)		1.320.179

Parent’s ownership interest			2.873.977			4.401.896
Non-controlling interest	13		78.678			101.799

Total equity			2.952.655			4.503.695

Total liabilities and equity			17.975.027			20.484.430

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF INCOME BY FUNCTION


		For the 9 months ended September 30,						For the 3 months ended September 30,
	Note	2015			2014			2015			2014
		ThUS$			ThUS$			ThUS$			ThUS$
		Unaudited
Revenue	25		7,428,919			9,109,787			2,423,464			3,047,572
Cost of sales			(5,868,748	)		(7,311,171	)		(1,905,681	)		(2,440,103	)

Gross margin			1,560,171			1,798,616			517,783			607,469

Other income	27		289,899			256,676			91,358			93,728
Distribution costs			(588,130	)		(762,492	)		(199,224	)		(250,515	)
Administrative expenses			(658,154	)		(750,486	)		(192,383	)		(225,880	)
Other expenses			(247,846	)		(301,488	)		(97,136	)		(106,695	)
Other gains/(losses)			10,254			(96,603	)		10,636			(7,484	)

Income from operation activities			366,194			144,223			131,034			110,623

Financial income			64,590			68,596			32,706			23,347
Financial costs	26		(313,492	)		(330,348	)		(107,909	)		(85,930	)
Share of profit of investments accounted for using the equity method			37			(4,470	)		—			(889	)
Foreign exchange gains/(losses)	28		(410,755	)		(39,944	)		(241,533	)		(144,093	)
Result of indexation units			485			(16	)		9			3


Income (loss) before taxes			(292,941	)		(161,959	)		(185,693	)		(96,939	)
Income (loss) tax expense / benefit	17		119,157			(24,785	)		82,204			4,106


NET INCOME (LOSS) FOR THE PERIOD			(173,784	)		(186,744	)		(103,489	)		(92,833	)

Income (loss) attributable to owners of the parent			(203,018	)		(208,072	)		(113,344	)		(107,829	)
Income (loss) attributable to non-controlling interest	13		29,234			21,328			9,855			14,996


Net income (loss) for the year			(173,784	)		(186,744	)		(103,489	)		(92,833	)

EARNINGS PER SHARE
Basic earnings (losses) per share (US$)	29		(0.37214	)		(0.38140	)		(0.20776	)		(0.19765	)
Diluted earnings (losses) per share (US$)	29		(0.37214	)		(0.38140	)		(0.20776	)		(0.19765	)

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


		For the 9 months ended September 30,						For the 3 months ended September 30,
	Note	2015			2014			2015			2014
		ThUS$			ThUS$			ThUS$			ThUS$
		Unaudited
NET INCOME (LOSS)			(173,784	)		(186,744	)		(103,489	)		(92,833	)
Components of other comprehensive income that will be reclassified to income before taxes
Currency translation differences

Gains (losses) on currency translation, before tax	28		(1,437,025	)		(261,280	)		(776,941	)		(542,025	)

Other comprehensive income, before taxes, currency translation differences			(1,437,025	)		(261,280	)		(776,941	)		(542,025	)

Cash flow hedges
Gains (losses) on cash flow hedges before taxes	18		110,051			(46,827	)		(22,452	)		(14,250	)

Other comprehensive income (losses), before taxes, cash flow hedges			110,051			(46,827	)		(22,452	)		(14,250	)

Other components of other comprehensive income (loss), before taxes			(1,326,974	)		(308,107	)		(799,393	)		(556,275	)

Income tax relating to other comprehensive income that will be reclassified to income

Income tax related to cash flow hedges in other comprehensive income			(28,143	)		16,205			8,252			10,959

Income taxes related to components of other comprehensive income that will be reclassified to income			(28,143	)		16,205			8,252			10,959

Other comprehensive income (loss)			(1,355,117	)		(291,902	)		(791,141	)		(545,316	)

Total comprehensive income (loss)			(1,528,901	)		(478,646	)		(894,630	)		(638,149	)

Comprehensive income (loss) attributable to owners of the parent			(1,537,542	)		(471,498	)		(889,310	)		(631,594	)
Comprehensive income (loss) attributable to non-controlling interests			8,641			(7,148	)		(5,320	)		(6,555	)

TOTAL COMPREHENSIVE INCOME (LOSS)			(1,528,901	)		(478,646	)		(894,630	)		(638,149	)

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


		Attributable to owners of the parent
							Change in other reserves
	Note	Share capital		Treasury shares			Currency translation reserve			Cash flow hedging reserve			Shares based payments reserve		Other sundry reserve		Total other reserve			Retained earnings			Parent’s ownership interest			Non- controlling interest			Total equity
		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity as of January 1, 2015			2,545,705		(178	)		(1,193,871	)		(151,340	)		29,642		2,635,748		1,320,179			536,190			4,401,896			101,799			4,503,695
Total increase (decrease) in equity
Comprehensive income
Gain (losses)	24		—		—			—			—			—		—		—			(203,018	)		(203,018	)		29,234			(173,784	)
Other comprehensive income			—		—			(1,418,037	)		83,513			—				(1,334,524	)		—			(1,334,524	)		(20,593	)		(1,355,117	)

Total comprehensive income			—		—			(1,418,037	)		83,513			—		—		(1,334,524	)		(203,018	)		(1,537,542	)		8,641			(1,528,901	)

Transactions with shareholders
Increase (decrease) through transfers and other changes, equity	24-33		—		—			—			—			3,809		4,250		8,059			1,564			9,623			(31,762	)		(22,139	)

Total transactions with shareholders			—		—			—			—			3,809		4,250		8,059			1,564			9,623			(31,762	)		(22,139	)


Closing balance as of September 30, 2015 (Unaudited)			2,545,705		(178	)		(2,611,908	)		(67,827	)		33,451		2,639,998		(6,286	)		334,736			2,873,977			78,678			2,952,655

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


		Attributable to owners of the parent
							Change in other reserves
	Note	Share capital		Treasury shares			Currency translation reserve			Cash flow hedging reserve			Shares based payments reserve		Other sundry reserve			Total other reserve			Retained earnings			Parent’s ownership interest			Non- controlling interest			Total equity
		ThUS$		ThUS$			ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Equity as of January 1, 2014			2,389,384		(178	)		(589,991	)		(34,508	)		21,011		2,657,800			2,054,312			795,303			5,238,821			87,638			5,326,459
Total increase (decrease) in equity
Comprehensive income
Gain (losses)	24		—		—			—			—			—		—			—			(208,072	)		(208,072	)		21,328			(186,744	)
Other comprehensive income			—		—			(231,635	)		(31,791	)		—		—			(263,426	)		—			(263,426	)		(28,476	)		(291,902	)

Total comprehensive income			—		—			(231,635	)		(31,791	)		—		—			(263,426	)		(208,072	)		(471,498	)		(7,148	)		(478,646	)

Transactions with shareholders
Equity issuance	24-33		156,321		—			—			—			—		—			—			—			156,321			—			156,321
Increase (decrease) through transfers and other changes, equity	24-33		—		—			—			—			8,157		(18,279	)		(10,122	)		(150,151	)		(160,273	)		18,643			(141,630	)

Total transactions with shareholders			156,321		—			—			—			8,157		(18,279	)		(10,122	)		(150,151	)		(3,952	)		18,643			14,691


Closing balance as of September 30, 2014 (Unaudited)			2,545,705		(178	)		(821,626	)		(66,299	)		29,168		2,639,521			1,780,764			437,080			4,763,371			99,133			4,862,504

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS DIRECT – METHOD


		For the periods ended September 30,
	Note	2015			2014
		ThUS$			ThUS$
		Unaudited
Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services			8.546.230			9.434.101
Other cash receipts from operating activities			69.853			76.377
Payments for operating activities
Payments to suppliers for goods and services			(5.316.193	)		(6.607.670	)
Payments to and on behalf of employees			(1.669.876	)		(1.832.337	)
Other payments for operating activities			(231.010	)		(362.026	)
Interest received			34.465			8.236
Income taxes refunded (paid)			(30.077	)		(79.234	)
Other cash inflows (outflows)	6		(191.865	)		(30.026	)

Net cash flows from operating activities			1.211.527			607.421

Cash flows used in investing activities
Other cash receipts from sales of equity or debt instruments of other entities			273.390			441.720
Other payments to acquire equity or debt instruments of other entities			(348.301	)		(303.847	)
Amounts raised from sale of property, plant and equipment			45.016			517.739
Purchases of property, plant and equipment			(886.475	)		(888.930	)
Amounts raised from sale of intangible assets			104			—
Purchases of intangible assets			(13.357	)		(36.267	)
Other cash inflows (outflows)	6		15.301			(15.723	)

Net cash flow from (used in) investing activities			(914.322	)		(285.308	)

Cash flows from (used in) financing activities
Amounts raised from issuance of shares			—			156.344
Payments to acquire or redeem the shares of the entity			—			792
Amounts raised from long-term loans			1.161.306			428.080
Amounts raised from short-term loans			115.000			561.151
Loans repayments			(949.875	)		(2.012.490	)
Payments of finance lease liabilities			(241.778	)		(280.979	)
Dividends paid			(25.683	)		(26.874	)
Interest paid			(237.148	)		(284.115	)
Other cash inflows (outflows)	6		(33.600	)		(14.949	)

Net cash flows from (used in) financing activities			(211.778	)		(1.473.040	)

Net increase (decrease) in cash and cash equivalents before effect of exchanges rate change			85.427			(1.150.927	)
Effects of variation in the exchange rate on cash and cash equivalents			(51.897	)		(83.667	)

Net increase (decrease) in cash and cash equivalents			33.530			(1.234.594	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	6		989.396			1.984.903

CASH AND CASH EQUIVALENTS AT END OF PERIOD	6		1.022.926			750.309

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A AND SUBSIDIARIES

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2015 (UNAUDITED)

NOTE 1 - GENERAL INFORMATION

LATAM Airlines Group S.A. (the “Company”) is a public company registered with the Chilean Superintendency of Securities and Insurance (SVS), under No. 306, whose shares are quoted in Chile on the Stock Brokers - Stock Exchange (Valparaíso) - the Chilean Electronic Stock Exchange and the Santiago Stock Exchange; it is also quoted in the United States of America on the New York Stock Exchange (“NYSE”) in New York in the form of American Depositary Receipts (“ADRs”) and in Brazil BM & FBOVESPA S.A. – Stock Exchange, Mercadorias e Futuros, in the form of Brazilian Depositary Receipts (“BDRs”).

Its principal business is passenger and cargo air transportation, both in the domestic markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil and in a developed series of regional and international routes in America, Europe and Oceania. These businesses are performed directly or through its subsidiaries in different countries. In addition, the Company has subsidiaries operating in the freight business in Mexico, Brazil and Colombia.

The Company is located in Santiago, Chile, at Avenida Américo Vespucio Sur No. 901, commune of Renca.

Corporate Governance practices of the Company are set in accordance with Securities Market Law the Corporations Law and its regulations, and the regulations of the SVS and the laws and regulations of the United States of America and the U.S. Securities and Exchange Commission (“SEC”) of that country, with respect to the issuance of ADRs, and the Federal Republic of Brazil and the Comissão de Valores Mobiliarios (“CVM”) of that country, as it pertains to the issuance of BDRs.

The Board of the Company is composed of nine members who are elected every two years by the ordinary shareholders’ meeting. The Board meets in regular monthly sessions and in extraordinary sessions as the corporate needs demand. Of the nine board members, three form part of its Directors’ Committee which fulfills both the role foreseen in the Corporations Law and the functions of the Audit Committee required by the Sarbanes Oxley Law of the United States of America and the respective regulations of the SEC.

The majority shareholder of the Company is the Cueto Group, which through Costa Verde Aeronáutica S.A., Costa Verde Aeronáutica SpA, Inversiones Nueva Costa Verde Aeronáutica Limitada, Inversiones Priesca Dos y Cía. Ltda., Inversiones Caravia Dos y Cía. Ltda., Inversiones El Fano Dos y Cía. Ltda., Inversiones La Espasa Dos S.A., Inversiones Puerto Claro Dos Limitada, Inversiones La Espasa Dos y Cía. Ltda., Inversiones Puerto Claro Dos y Cía. Limitada and Inversiones Mineras del Cantábrico S.A. owns 26.47% of the shares issued by the Company, and therefore is the controlling shareholder of the Company in accordance with the provisions of the letter b) of Article 97 and Article 99 of the Securities Market Law, given that there is a decisive influence on its administration.

As of September 30, 2015, the Company had a total of 1,564 registered shareholders. At that date approximately 3.6 % of the Company’s share capital was in the form of ADRs and approximately 0.51% in the form of BDRs.

For the period ended September 30, 2015, the Company had an average of 53,145 employees, ending this period with a total of 51,866 employees, spread over 6,829 Administrative employees, 7,096 in Maintenance, 19,910 in Operations, 9,170 in Cabin Crew, 3,957 in Controls Crew, and 4,924 in Sales.

The main subsidiaries included in these consolidated financial statements are as follows:

a)	Participation rate


				As September 30, 2015						As December 31, 2014
Tax No.	Company	Country of origin	Functional Currency	Direct		Indirect		Total		Direct		Indirect		Total
				%		%		%		%		%		%
				Unaudited
96.518.860-6	Lantours Division Servicios Terrestres S.A. y Filial	Chile	US$		99.9900		0.0100		100.0000		99.9900		0.0100		100.0000
96.763.900-1	Inmobiliaria Aeronáutica S.A.	Chile	US$		99.0100		0.9900		100.0000		99.0100		0.9900		100.0000
96.969.680-0	Lan Pax Group S.A. and Subsidiaries	Chile	US$		99.8361		0.1639		100.0000		99.8361		0.1639		100.0000
Foreign	Lan Perú S.A.	Peru	US$		49.0000		21.0000		70.0000		49.0000		21.0000		70.0000
Foreign	Lan Chile Investments Limited and Subsidiary	Cayman Island	US$		99.9900		0.0100		100.0000		99.9900		0.0100		100.0000
93.383.000-4	Lan Cargo S.A.	Chile	US$		99.8939		0.0041		99.8980		99.8939		0.0041		99.8980
Foreign	Connecta Corporation	U.S.A.	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Prime Airport Services Inc. y Filial	U.S.A.	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.951.280-7	Transporte Aéreo S.A.	Chile	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Aircraft International Leasing Limited	U.S.A.	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.631.520-2	Fast Air Almacenes de Carga S.A.	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.631.410-9	Ladeco Cargo S.A.	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Laser Cargo S.R.L.	Argentina	ARS		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Lan Cargo Overseas Limited and Subsidiaries	Bahamas	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.969.690-8	Lan Cargo Inversiones S.A. y Filial	Chile	CLP		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
96.575.810-0	Inversiones Lan S.A. and Subsidiaries	Chile	CLP		99.7100		0.2900		100.0000		99.7100		0.0000		99.7100
59.068.920-3	Technical Trainning LATAM S.A.	Chile	CLP		99.8300		0.1700		100.0000		99.8300		0.1700		100.0000
Foreign	TAM S.A. and Subsidiaries (*)	Brazil	BRL		63.0901		36.9099		100.0000		63.0901		36.9099		100.0000

(*)

The indirect participation percentage over TAM S.A. and Subsidiaries comes from Holdco I S.A., entity for which LATAM Airlines Group S.A. holds a 99.9983% participation on the economic rights. Additionally LATAM Airlines Group S.A. owns 226 voting shares of Holdco I S.A., equivalent to 19.42% of total voting shares of that company.

b)	Statement of financial position


		Statement of financial position														Net Income
		As of September 30, 2015							As of December 31, 2014							For the periods ended September 30,
																2015			2014
Tax No.	Company	Assets		Liabilities		Equity			Assets		Liabilities		Equity			Gain /(loss)
		ThUS$		ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$			ThUS$
		Unaudited														Unaudited
96.518.860-6	Lantours Division Servicios Terrestres S.A. y Filial		9,285		5,792		3,493			3,229		2,289		940			2,543			1,098
96.763.900-1	Inmobiliaria Aeronáutica S.A.		39,701		15,296		24,405			39,920		16,854		23,066			1,339			1,524
96.969.680-0	Lan Pax Group S.A. and Subsidiaries (*)		526,847		1,018,198		(485,194	)		640,020		1,065,157		(426,016	)		(21,433	)		(100,702	)
Foreign	Lan Perú S.A.		277,829		269,937		7,892			239,470		228,395		11,075			(1,793	)		(102	)
Foreign	Lan Chile Investments Limited
Foreign	and Subsidiary (*)		2,015		1		2,014			2,015		—		2,015			(1	)		(4	)
93.383.000-4	Lan Cargo S.A.		512,341		228,107		284,234			575,979		234,772		341,207			(56,973	)		(39,795	)
Foreign	Connecta Corporation		35,888		46,155		(10,267	)		27,431		28,853		(1,422	)		(8,845	)		85
Foreign	Prime Airport Services Inc. y Filial (*)		23,300		27,771		(4,471	)		18,120		22,897		(4,777	)		305			(649	)
96.951.280-7	Transporte Aéreo S.A.		355,605		142,489		213,116			367,570		147,278		220,292			8,395			(11,366	)
Foreign	Aircraft International Leasing Limited		—		—		—			—		—		—			—			(1	)
96.631.520-2	Fast Air Almacenes de Carga S.A.		—		4		(4	)		9,601		3,912		5,689			(4	)		757
96.631.410-9	Ladeco Cargo S.A.		8,181		2,167		6,014			346		13		333			1,251			4
Foreign	Laser Cargo S.R.L.		303		13		290			41		138		(97	)		(1	)		(53	)
Foreign	Lan Cargo Overseas Limited and Subsidiaries (*)		37		54		(17	)		60,634		46,686		12,218			69			(4,358	)
96.969.690-8	Lan Cargo Inversiones S.A. y Filial (*)		62,431		43,441		15,426			45,589		59,768		(12,711	)		3,207			(7,102	)
96.575.810-0	Inversiones Lan S.A. and Subsidiaries (*)		66,360		77,221		(9,891	)		16,035		14,746		1,272			2,823			(96	)
59.068.920-3	Technical Trainning LATAM S.A.		14,982		13,392		1,565			1,660		263		1,397			427			—
Foreign	TAM S.A. and Subsidiaries () (*)		4,839,717		4,345,979		421,050			6,817,698		5,809,529		912,634			(171,609	)		57,708

(*)	The Equity reported corresponds to Equity attributable to owners of the parent, does not include Non-controlling interest.

(**)	During 2014 LATAM Airlines Group S.A. made a capital increase in TAM S.A. for the total amount of ThUS$ 250,000.

Additionally, we have proceeded to consolidate the following special purpose entities: 1) JOL (Japanese Operating Lease) created in order to finance the purchase of certain aircraft; 2) Chercán Leasing Limited created to finance the pre-delivery payments on aircraft; 3) Guanay Finance Limited created to issue a bond collateralized with future credit card receivables, and 4) Private investment funds. These companies have been consolidated as required by IFRS 10.

All the entities controlled have been included in the consolidation.

Changes in the scope of consolidation between January 1, 2014 and September 30, 2015, are detailed below:

(1)	Incorporation or acquisition of companies

•

Lan Pax Group S.A., a subsidiary of Latam Airlines Group S. A., was the direct owner of 55% of Aerolane Líneas Aéreas Nacionales del Ecuador S.A.. During 2014, Lan Pax Group S.A. obtained 100% of the economic rights in Aerolane, through its participation in the company Holdco Ecuador S.A., who is the owner of the 45% remaining of Aerolane. By this Lan Pax Group S.A. is the owner of 20% of shares with voting rights and is owner of 100% with the economic rights of Holdco Ecuador S.A.. As Latam Airlines Group S. A. was controlled Aerolane Líneas Aéreas Nacionales del Ecuador S.A. through Lan Pax Group S.A. for accounting purposes, this transaction was recorded as a transaction with non-controlling interests.

•

In November 2014, LATAM Airlines Group S.A. acquires the remaining 50% shares of Lufthansa Lan Technical Training S.A. becoming in subsidiary. Subsequently it changed the business name to Technical Training LATAM S.A.

(2)	Dissolution of companies

•

In December 2014, the Company Ediciones Ladeco América S.A. subsidiary of Lan Cargo S.A. was dissolved.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following describes the principal accounting policies adopted in the preparation of these consolidated financial statements.

2.1.	Basis of Preparation

The consolidated financial statements of LATAM Airlines Group S.A. are for the period ended September 30, 2015, and have been prepared in accordance with Standards an Instructions by Chilean Superintendency of Securities and Insurance (“SVS”), which, except as provided by its Office Circular No. 856, as detailed in the following paragraph are in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (“IASB”) incorporated therein and with the interpretations issued by the International Financial Reporting Standards Interpretations Committee (IFRIC).

On September 26, 2014 the law No. 20,780 was promulgated, and on September 29, 2014 was published in the Official Journal of the Republic of Chile, which introduces modifications to the tax system in Chile concerning income tax, among other matters. In relation to the Law, on October 17, 2014 the SVS issued Office Circular No. 856, in which it decided that the restatement of assets and liabilities by deferred income taxes that occur as a direct effect of the First- Category Tax rate increase introduced by Law No. 20,780 (Tax reform) will be held in equity and not as indicates the IAS 12. In notes 2.17 and 17 the criteria and impacts related to the registration of the effects of the reform and the implementation of the Circular cited are detailed.

The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments.

The preparation of the consolidated financial statements in accordance with described above requires the use of certain critical accounting estimates. It also requires management to use its judgment in applying the Company’s accounting policies. Note 4 shows the areas that imply a greater degree of judgment or complexity or the areas where the assumptions and estimates are significant to the consolidated financial statements. These interim consolidated financial statements have been prepared under IAS 34.

The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments.

In order to facilitate the comparison, there have been some minor reclassifications to the consolidated financial statements corresponding to the previous year.

(a)	Accounting pronouncements with implementation effective from January 1, 2015:


	Date of issue	Mandatory Application: Annual periods beginning on or after
(i) Standards and amendments

Amendment to IAS 19: Employee Benefits	November 2013	07/01/2014

(ii) Improvements

Improvements to the International Financial Reporting Standards (2012): IFRS 2: Share-based Payment; IFRS 3: Business Combinations Therefore, IFRS 9, IAS 37, and IAS 39 are also modified; IFRS 8: Operating Segments, IFRS 13: Fair Value Measurement, IFRS 9 and IAS 39 were consequently changed; IAS 16: Property, Plant and Equipment, and IAS 38: Intangible Assets; and IAS 24: Related Party Disclosures.	December 2013	07/01/2014


	Date of issue	Mandatory Application: Annual periods beginning on or after
(ii) Improvements

Improvements to the International Financial Reporting Standards (2013): IFRS 1: First-time Adoption of International Financial Reporting Standards; IFRS 3: Business Combinations; IFRS 13: Fair Value Measurement; and IAS 40: Investment Property.	December 2013	07/01/2014

The application of standards, amendments, interpretations and improvements had no material impact on the consolidated financial statements of the Company.

(b) Accounting pronouncements not yet in force for financial years beginning on January 1, 2015 and which has not been effected early adoption


	Date of issue	Mandatory Application: Annual periods beginning on or after
(i) Standards and amendments

IFRS 9: Financial instruments.	December 2009	01/01/2018

IFRS 15: Revenue from contracts with customers.	May 2014	01/01/2017

Amendment to IFRS 9: Financial instruments.	November 2013	01/01/2018

Amendment to IFRS 11: Joint arrangements.	May 2014	01/01/2016

Amendment to IAS 16: Property, plant and equipment, and IAS 38: Intangible assets.	May 2014	01/01/2016

Amendment to IAS 27: Separate financial statements.	August 2014	01/01/2016

Amendment to IFRS 10: Consolidated financial statements and IAS 28 Investments in associates and joint ventures.	September 2014	01/01/2016


	Date of issue	Mandatory Application: Annual periods beginning on or after
(i) Standards and amendments

Amendment IAS 1: Presentation of Financial Statements	December 2014	01/01/2016

Amendment to IFRS 10: Consolidated financial statements, IFRS 12: Disclosure of Interests in other entities and IAS 28: Investments in associates and joint ventures.	December 2014	01/01/2016

(ii) Improvements

Improvements to International Financial Reporting Standards (2012-2014 cycle): IFRS 5 Non-current assets held for sale and discontinued operations; IFRS 7 Financial instruments: Disclosures; IAS 19 Employee benefits and IAS 34 Interim financial reporting.	September 2014	01/01/2016

The Company’s management believes that the adoption of the standards, amendments and interpretations described above but not yet effective would not have had a significant impact on the Company’s consolidated financial statements in the year of their first application.

2.2.	Basis of Consolidation

(a)	Subsidiaries

Subsidiaries are all the entities (including special-purpose entities) over which the Company has the power to control the financial and operating policies, which are generally accompanied by a holding of more than half of the voting rights. In evaluating whether the Company controls another entity, the existence and effect of potential voting rights that are currently exercisable or convertible at the date of the consolidated financial statements are considered. The subsidiaries are consolidated from the date on which control is passed to the Company and they are excluded from the consolidation on the date they cease to be so controlled. The results and flows are incorporated from the date of acquisition.

Inter-company transactions, balances and unrealized gains on transactions between the Company’s entities are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment loss of the asset transferred. When necessary in order to ensure uniformity with the policies adopted by the Company, the accounting policies of the subsidiaries are modified.

To account for and identify the financial information to be revealed when carrying out a business combination, such as the acquisition of an entity by the Company, shall apply the acquisition method provided for in IFRS 3: Business combination.

(b)	Transactions with non-controlling interests

The Company applies the policy of considering transactions with non-controlling interests, when not related to loss of control, as equity transactions without an effect on income.

(c)	Sales of subsidiaries

When a subsidiary is sold and a percentage of participation is not retained, the Company derecognizes assets and liabilities of the subsidiary, the non-controlling and other components of equity related to the subsidiary. Any gain or loss resulting from the loss of control is recognized in the consolidated income statement in Other gains (losses).

If LATAM Airlines Group S.A. and Subsidiaries retain an ownership of participation in the sold subsidiary, and does not represent control, this is recognized at fair value on the date that control is lost, the amounts previously recognized in Other comprehensive income are accounted as if the Company had disposed directly from the assets and related liabilities, which can cause these amounts are reclassified to profit or loss. The percentage retained valued at fair value is subsequently accounted using the equity method.

(d)	Investees or associates

Investees or associates are all entities over which LATAM Airlines Group S.A. and Subsidiaries have significant influence but have no control. This usually arises from holding between 20% and 50% of the voting rights. Investments in associates are booked using the equity method and are initially recognized at their cost.

2.3.	Foreign currency transactions

(a)	Presentation and functional currencies

The items included in the financial statements of each of the entities of LATAM Airlines Group S.A. and Subsidiaries are valued using the currency of the main economic environment in which the entity operates (the functional currency). The functional currency of LATAM Airlines Group S.A. is the United States dollar which is also the presentation currency of the consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.

(b)	Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange rates on the transaction dates. Foreign currency gains and losses resulting from the liquidation of these transactions and from the translation at the closing exchange rates of the monetary assets and liabilities denominated in foreign currency are shown in the consolidated statement of income by function except when deferred in Other comprehensive income as qualifying cash flow hedges.

(c)	Group entities

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency other than the presentation currency are translated to the presentation currency as follows:

(i) Assets and liabilities of each consolidated statement of financial position presented are translated at the closing exchange rate on the consolidated statement of financial position date;

(ii) The revenues and expenses of each income statement account are translated at the exchange rates prevailing on the transaction dates, and

(iii) All the resultant exchange differences by conversion are shown as a separate component in Other comprehensive income.

The exchange rates used correspond to those fixed in the country where the subsidiary is located, whose functional currency is different to the U.S. dollar.

Adjustments to the Goodwill and fair value arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate or period informed.

2.4.	Property, plant and equipment

The land of LATAM Airlines Group S.A. and Subsidiaries is recognized at cost less any accumulated impairment loss. The rest of the Property, plant and equipment are registered, initially and subsequently, at historic cost less the corresponding depreciation and any impairment loss.

The amounts of advance payments to aircraft manufacturers are capitalized by the Company under Construction in progress until receipt of the aircraft.

Subsequent costs (replacement of components, improvements, extensions, etc.) are included in the value of the initial asset or shown as a separate asset only when it is probable that the future economic benefits associated with the elements of Property, plant and equipment are going to flow to the Company and the cost of the element can be determined reliably. The value of the component replaced is written off in the books at the time of replacement. The rest of the repairs and maintenance are charged to the results of the year in which they are incurred.

Depreciation of Property, plant and equipment is calculated using the straight-line method over their estimated technical useful lives; except in the case of certain technical components which are depreciated on the basis of cycles and hours flown.

The residual value and useful life of assets are reviewed, and adjusted if necessary, once per year.

When the carrying amount of an asset is higher than its estimated recoverable amount, its value is reduced immediately to its recoverable amount (Note 2.8).

Losses and gains on the sale of Property, plant and equipment are calculated by comparing the compensation with the book value and are included in the consolidated statement of income.

2.5.	Intangible assets other than goodwill

(a)	Brands, Airport slots and Loyalty program

Brands, Airport slots and Coalition and Loyalty program are intangible assets of indefinite useful life and are subject to impairment tests annually as an integral part of each CGU, in accordance with the premises that are applicable, included as follows:

Airport slots – Air transport CGU

Loyalty program – Coalition and loyalty program Multiplus CGU

Brand – Air transport CGU

(See Note 15)

The airport slots correspond to an administrative authorization to carry out operations of arrival and departure of aircraft at a specific airport, within a specified period.

The Loyalty program corresponds to the system of accumulation and redemption of points that has developed Multiplus S.A., subsidiary of TAM S.A.

The Brands, airport Slots and Loyalty program were recognized in fair values determined in accordance with IFRS 3, as a consequence of the business combination with TAM and Subsidiaries.

(b)	Computer software

Licenses for computer software acquired are capitalized on the basis of the costs incurred in acquiring them and preparing them for using the specific software. These costs are amortized over their estimated useful lives, for which the Company has been defined useful lives between 3 and 10 years.

Expenses related to the development or maintenance of computer software which do not qualify for capitalization, are shown as an expense when incurred. The personnel costs and others costs directly related to the production of unique and identifiable computer software controlled by the Company, are shown as intangible Assets others than Goodwill when they have met all the criteria for capitalization.

2.6.

Goodwill

Goodwill represents the excess of acquisition cost over the fair value of the Company’s participation in the net identifiable assets of the subsidiary or associate on the acquisition date. Goodwill related to acquisition of subsidiaries is not amortized but tested for impairment annually. Gains and losses on the sale of an entity include the book amount of the goodwill related to the entity sold.

2.7.	Borrowing costs

Interest costs incurred for the construction of any qualified asset are capitalized over the time necessary for completing and preparing the asset for its intended use. Other interest costs are recognized in the consolidated income statement when they are accrued.

2.8.	Losses for impairment of non-financial assets

Intangible assets that have an indefinite useful life, and developing IT projects, are not subject to amortization and are subject to annual testing for impairment. Assets subject to amortization are subjected to impairment tests whenever any event or change in circumstances indicates that the book value of the assets may not be recoverable. An impairment loss is recorded when the book value is greater than the recoverable amount. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. In evaluating the impairment, the assets are grouped at the lowest level for which cash flows are separately identifiable (CGUs). Non-financial assets other than goodwill that have suffered an impairment loss are reviewed if there are indicators of reverse losses at each reporting date.

2.9.	Financial assets

The Company classifies its financial instruments in the following categories: financial assets at fair value through profit and loss and loans and receivables. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at the time of initial recognition, which occurs on the date of transaction.

(a)	Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss are financial instruments held for trading and those which have been designated at fair value through profit or loss in their initial classification. A financial asset is classified in this category if acquired mainly for the purpose of being sold in the near future or when these assets are managed and measured using fair value. Derivatives are also classified as held for trading unless they are designated as hedges. The financial assets in this category and have been designated initial recognition through profit or loss, are classified as Cash and cash equivalents and Other current financial assets and those designated as instruments held for trading are classified as Other current and non-current financial assets.

(b)	Loans and receivables

Loans and receivables are non-derivative financial instruments with fixed or determinable payments not traded on an active market. These items are classified in current assets except for those with maturity over 12 months from the date of the consolidated statement of financial position, which are classified as non-current assets. Loans and receivables are included in trade and other accounts receivable in the consolidated statement of financial position (Note 2.12).

The regular purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or losses are initially recognized at fair value,

and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

The financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest rate method.

At the date of each consolidated statement of financial position, the Company assesses if there is objective evidence that a financial asset or group of financial assets may have suffered an impairment loss.

2.10.

Derivative financial instruments and hedging activities

Derivatives are booked initially at fair value on the date the derivative contracts are signed and later they continue to be valued at their fair value. The method for booking the resultant loss or gain depends on whether the derivative has been designated as a hedging instrument and if so, the nature of the item hedged. The Company designates certain derivatives as:

(a) Hedge of the fair value of recognized assets (fair value hedge);

(b) Hedge of an identified risk associated with a recognized liability or an expected highly- Probable transaction (cash-flow hedge), or

The Company documents, at the inception of each transaction, the relationship between the hedging instrument and the hedged item, as well as its objectives for managing risk and the strategy for carrying out various hedging transactions. The Company also documents its assessment, both at the beginning and on an ongoing basis, as to whether the derivatives used in the hedging transactions are highly effective in offsetting the changes in the fair value or cash flows of the items being hedged.

The total fair value of the hedging derivatives is booked as Other non-current financial asset or liability if the remaining maturity of the item hedged is over 12 months, and as an other current financial asset or liability if the remaining term of the item hedged is less than 12 months. Derivatives not booked as hedges are classified as Other financial assets or liabilities.

(a)	Fair value hedges

Changes in the fair value of designated derivatives that qualify as fair value hedges are shown in the consolidated statement of income, together with any change in the fair value of the asset or liability hedged that is attributable to the risk being hedged.

(b)	Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is shown in the statement of other comprehensive income. The loss or gain relating to the ineffective portion is recognized immediately in the consolidated statement of income under Other gains (losses). Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.

In case of variable interest-rate hedges, the amounts recognized in the statement of Other comprehensive income are reclassified to results within financial costs at the same time the associated debts accrue interest.

For fuel price hedges, the amounts shown in the statement of Other comprehensive income are reclassified to results under the line item Cost of sales to the extent that the fuel subject to the hedge is used.

For foreign currency hedges, the amounts recognized in the statement of Other comprehensive income are reclassified to income as deferred revenue resulting from the use of points, are recognized as Income.

When hedging instruments mature or are sold or when they do not meet the requirements to be accounted for as hedges, any gain or loss accumulated in the statement of Other comprehensive income until that moment remains in the statement of other comprehensive income and is reclassified to the consolidated statement of income when the hedged transaction is finally recognized. When it is expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in the statement of other comprehensive income is taken immediately to the consolidated statement of income as “Other gains (losses)”.

(c)	Derivatives not booked as a hedge

The changes in fair value of any derivative instrument that is not booked as a hedge are shown immediately in the consolidated statement of income in “Other gains (losses)”.

2.11.

Inventories

Inventories, detailed in Note 10, are shown at the lower of cost and their net realizable value. The cost is determined on the basis of the weighted average cost method (WAC). The net realizable value is the estimated selling price in the normal course of business, less estimated costs necessary to make the sale.

2.12.

Trade and other accounts receivable

Trade accounts receivable are shown initially at their fair value and later at their amortized cost in accordance with the effective interest rate method, less the allowance for impairment losses. An allowance for impairment loss of trade accounts receivable is made when there is objective evidence that the Company will not be able to recover all the amounts due according to the original terms of the accounts receivable.

The existence of significant financial difficulties on the part of the debtor, the probability that the debtor is entering bankruptcy or financial reorganization and the default or delay in making payments are considered indicators that the receivable has been impaired. The amount of the provision is the difference between the book value of the assets and the present value of the estimated future cash flows, discounted at the original effective interest rate. The book value of the asset is reduced by the amount of the allowance and the loss is shown in the consolidated statement of income in Cost of sales. When an account receivable is written off, it is charged to the allowance account for accounts receivable.

2.13.

Cash and cash equivalents

Cash and cash equivalents include cash and bank balances, time deposits in financial institutions, and other short-term and highly liquid investments.

2.14.

Capital

The common shares are classified as net equity.

Incremental costs directly attributable to the issuance of new shares or options are shown in net equity as a deduction from the proceeds received from the placement of shares.

2.15.

Trade and other accounts payables

Trade payables and other accounts payable are initially recognized at fair value and subsequently at amortized cost.

2.16.

Interest-bearing loans

Financial liabilities are shown initially at their fair value, net of the costs incurred in the transaction. Later, these financial liabilities are valued at their amortized cost; any difference between the proceeds obtained (net of the necessary arrangement| costs) and the repayment value, is shown in the consolidated statement of income during the term of the debt, according to the effective interest rate method.

Financial liabilities are classified in current and non-current liabilities according to the contractual payment dates of the nominal principal.

2.17.

Current and deferred taxes

The expense by current tax is comprised of income and deferred taxes.

The charge for current tax is calculated based on tax laws in force on the date of statement of financial position, in the countries in which the subsidiaries and associates operate and generate taxable income.

Deferred taxes are calculated using the liability method, on the temporary differences arising between the tax bases of assets and liabilities and their book values. However, if the temporary differences arise from the initial recognition of a liability or an asset in a transaction different from a business combination that at the time of the transaction does not affect the accounting result or the tax gain or loss, they are not booked. The deferred tax is determined using the tax rates (and laws) that have been enacted or substantially enacted at the consolidated financial statements close, and are expected to apply when the related deferred tax asset is realized or the deferred tax liability discharged.

Deferred tax assets are recognized when it is probable that there will be sufficient future tax earnings with which to compensate the temporary differences.

According to the instructions of Chilean Superintendency of Securities and Insurance in his Office Circular No. 856 of October 17, 2014, the effects on assets and liabilities by deferred tax as a result of the rate increase of the First Category Tax approved by Law No. 20,780 (tax reform) about deferred income tax, according to IAS 12 should be imputed to income (loss) of period, have been classified as Retained earnings, under Retained earnings. The subsequent amendments shall be recognized in income (loss) of period according to IAS 12.

Except as mentioned in the previous subparagraph, the tax (current and deferred) is recognized in income by function, unless it relates to an item recognized in Other comprehensive income, directly in equity or from business combination. In that case the tax is also recognized in Other comprehensive income, directly in income by function or goodwill, respectively.

2.18.

Employee benefits

(a)	Personnel vacations

The Company recognizes the expense for personnel vacations on an accrual basis.

(b)	Share-based compensation

The compensation plans implemented by the granting of options for the subscription and payment of shares are shown in the consolidated financial statements in accordance with IFRS 2: Share based payments, showing the effect of the fair value of the options granted as a charge to remuneration on a straight-line basis between the date of granting such options and the date on which these become vested.

(c)	Post-employment and other long-term benefits

Provisions are made for these obligations by applying the method of the projected unit credit method, and taking into account estimates of future permanence, mortality rates and future wage increases determined on the basis of actuarial calculations. The discount rates are determined by reference to market interest-rate curves. Actuarial gains or losses are shown in other comprehensive income.

(d)	Incentives

The Company has an annual incentives plan for its personnel for compliance with objectives and individual contribution to the results. The incentives eventually granted consist of a given number or portion of monthly remuneration and the provision is made on the basis of the amount estimated for distribution.

2.19.

Provisions

Provisions are recognized when:

(i)	The Company has a present legal or implicit obligation as a result of past events;

(ii)	It is probable that payment is going to be necessary to settle an obligation; and

(iii)

The amount has been reliably estimated.

2.20.

Revenue recognition

Revenues include the fair value of the proceeds received or to be received on sales of goods and rendering services in the ordinary course of the Company’s business. Revenues are shown net of refunds, rebates and discounts.

(a)	Rendering of services

(i)	Passenger and cargo transport

The Company shows revenue from the transportation of passengers and cargo once the service has been provided.

Consistent with the foregoing, the Company presents the deferred revenues, generated by anticipated sale of flight tickets and freight services, in heading Other non-financial liabilities in the Statement of Financial Position.

(ii)	Frequent flyer program

The Company currently has a frequent flyer programs, whose objective is customer loyalty through the delivery of kilometers or points fly whenever the programs holders make certain flights, use the services of entities registered with the program or make purchases with an associated credit card. The kilometers or points earned can be exchanged for flight tickets or other services of associated entities.

The consolidated financial statements include liabilities for this concept (deferred income), according to the estimate of the valuation established for the kilometers or points accumulated pending use at that date, in accordance with IFRIC 13: Customer loyalty programs.

(iii)

Other revenues

The Company records revenues for other services when these have been provided.

(b)	Interest income

Interest income is booked using the effective interest rate method.

(c)	Dividend income

Dividend income is booked when the right to receive the payment is established.

2.21.

Leases

(a)	When the Company is the lessee – financial lease

The Company leases certain Property, plant and equipment in which it has substantially all the risk and benefits deriving from the ownership; they are therefore classified as financial leases. Financial leases are initially recorded at the lower of the fair value of the asset leased and the present value of the minimum lease payments.

Every lease payment is separated between the liability component and the financial expenses so as to obtain a constant interest rate over the outstanding amount of the debt. The corresponding leasing obligations, net of financial charges, are included in Other financial liabilities. The element of interest in the financial cost is charged to the consolidated statement of income over the lease period so that it produces a constant periodic rate of interest on the remaining balance of the liability for each year. The asset acquired under a financial lease is depreciated over its useful life and is included in Property, plant and equipment.

(b)	When the Company is the lessee – operating lease

Leases, in which the lessor retains an important part of the risks and benefits deriving from ownership, are classified as operating leases. Payments with respect to operating leases (net of any incentive received from the lessor) are charged in the consolidated statement of income on a straight-line basis over the term of the lease.

2.22.

Non-current assets or disposal groups classified as held for sale

Non-current assets (or disposal groups) classified as assets held for sale are shown at the lesser of their book value and the fair value less costs to sell.

2.23.

Maintenance

The costs incurred for scheduled heavy maintenance of the aircraft’s fuselage and engines are capitalized and depreciated until the next maintenance. The depreciation rate is determined on technical grounds, according to the use of the aircraft expressed in terms of cycles and flight hours.

In case of own aircraft or under financial leases, these maintenance cost are capitalized as Property, plant and equipment, while in the case of aircraft under operating leases, a liability is accrued based on the use of the main components is recognized, since a contractual obligation with the lessor to return the aircraft on agreed terms of maintenance levels exists. These are recognized as Cost of sales.

Additionally, some leases establish the obligation of the lessee to make deposits to the lessor as a guarantee of compliance with the maintenance and return conditions. These deposits, often called maintenance reserves, accumulate until a major maintenance is performed, once made, the recovery is requested to the lessor. At the end of the contract period, the balance between paid reservations and conditions agreed with levels of maintain in delivering, offsetting the parties if applicable.

The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred.

2.24.

Environmental costs

Disbursements related to environmental protection are charged to results when incurred.

NOTE 3 - FINANCIAL RISK MANAGEMENT

3.1.	Financial risk factors

The Company is exposed to different financial risks: (a) market risk, (b) credit risk, and (c) liquidity risk. The program overall risk management of the Company aims to minimize the adverse effects of financial risks affecting the company.

(a)	Market risk

Due to the nature of its operations, the Company is exposed to market factors such as: (i) fuel-price risk, (ii) exchange -rate risk, and (iii) interest -rate risk

The Company has developed policies and procedures for managing market risk, which aim to identify, quantify, monitor and mitigate the adverse effects of changes in market factors mentioned above.

For this, the Administration monitors the evolution of price levels and rates, and quantifies their risk exposures (Value at Risk), and develops and implements hedging strategies.

(i)	Fuel-price risk:

Exposition:

For the execution of its operations the Company purchases a fuel called Jet Fuel grade 54 USGC, which is subject to the fluctuations of international fuel prices.

Mitigation:

To cover the risk exposure fuel, the Company operates with derivative instruments (swaps and options) whose underlying assets may be different from Jet Fuel, being possible use West Texas Intermediate (“WTI”) crude, Brent (“BRENT”) crude and distillate Heating Oil (“HO”), which have a high correlation with Jet Fuel and are highly liquid.

Fuel Hedging Results:

During the nine months ended at September 30, 2015, the Company recognized losses of US$ 198.9 million on fuel derivative. During the same period of 2014, the Company recognized losses of US$ 5.0 million for the same reason.

At September 30, 2015, the market value of its fuel positions amounted to US$ 54.5 million (negative). At December 31, 2014, this market value was US$ 157.2 million (negative).

The following tables show the level of hedge for different periods:


Positions as of September 30, 2015 (Unaudited) (*)	Maturities
	Q415			Q116			Q216			Q316			Q416			Total
Percentage of the hedge of expected consumption value		50	%		43	%		27	%		27	%		11	%		32	%

(*)	The volume shown in the table considers all the hedging instruments (swaps and options).


Positions as of December 31, 2014 (*)	Maturities
	Q115			Q215			Q315			Q415			Total
Percentage of the hedge of expected consumption value		30	%		15	%		30	%		20	%		24	%

(*)	The volume shown in the table considers all the hedging instruments (swaps and options).

Sensitivity analysis

A drop in fuel price positively affects the Company through a reduction in costs. However, also negatively affects contracted positions as these are acquired to protect the Company against the risk of a rise in price. The policy therefore is to maintain a hedge-free percentage in order to be competitive in the event of a drop in price.

The current hedge positions they are booked as cash flow hedge contracts, so a variation in the fuel price has an impact on the Company’s net equity.

The following table shows the sensitivity analysis of the financial instruments according to reasonable changes in the fuel price and their effect on equity. The term of the projection was defined until the end of the last current fuel hedge contract, being the last business day of the second quarter of 2016.

The calculations were made considering a parallel movement of US$ 5 per barrel in the curve of the BRENT and JET crude futures benchmark price at the end of September, 2015 and the end of December, 2014.


Benchmark price (US$ per barrel)	Positions as of September 30, 2015 effect on equity (millions of US$)	Positions as of December 31, 2014 effect on equity (millions of US$)
	(Unaudited)
+5	+18.32	+24.90
-5	- 13.42	-25.06

Given the fuel hedge structure during the first half of 2015, which considers a hedge-free portion, a vertical fall by 5 dollars in the BRENT and JET benchmark price (the monthly daily average), would have meant an impact of approximately US$ 87.14 million in the cost of total fuel consumption for the same period. For the first half of 2015, a vertical rise by 5 dollars in the BRENT and JET benchmark price (the monthly daily average) would have meant an impact of approximately US$ 83.98 million of increased fuel costs.

(ii)	Foreign exchange rate risk:

Exposition:

The functional and presentation currency of the Financial Statements of the Parent Company is the United States dollar, so the risk of Transactional exchange rate and Conversion arises mainly from its own operating activities of the business, strategic and accounting of the Company are denominated in a different currency than the functional currency.

LATAM Subsidiaries are also exposed to currency risk that impacts the consolidated results of the Company.

Most currency exposure of LATAM comes from the concentration of business in Brazil, which are mostly denominated in Brazilian Real (BRL), being actively managed by the company.

Additionally, the company manages the economic exposure to operating revenues in Euro (EUR) and Pound Sterling (GBP).

In lower concentrations the Company is therefore exposed to fluctuations in others currencies, such as: Chilean peso, Argentine peso, Paraguayan guaraní, Mexican peso, Peruvian sol, Colombian peso, Australian dollar and New Zealand dollar.

Mitigation:

The Company mitigates currency risk exposures by contracting derivative instruments or through natural hedges or execution of internal operations.

FX Hedging Results:

With the aim of reducing exposure to exchange rate risk on operating cash flows in 2015 and secure the operating margin, LATAM and TAM conduct hedging through FX derivatives.

At September 30, 2015, the market value of its FX positions amounted to US$ 7.3 million (negative). At end of December 2014 the market value was of US$ 0.1 million (negative).

During the period ended at September 30, 2015 the Company recognized gains of US$ 12.9 million on hedging FX. During the same period of 2014 the Company recognized gains of US$ 6.3 million on hedging FX.

At end of September 2015, the Company has contracted FX derivatives for US$ 155 million to BRL, US$ 109 million to EUR and US$ 42 million to GBP. At end of December 2014, the Company had contracted derivatives for US$ 100 million to BRL, while for EUR and GBP there were no current positions.

Sensitivity analysis:

A depreciation of exchange rate R$/US$, US$/EUR and US$/GBP affects negatively the Company for a rise of its costs in US$, however, it also affects positively the value of contracted derivate positions.

The FX derivatives are registered for as hedges of cash flow, therefore, a variation in the exchange rate has an impact on the market value of derivatives, whose changes impact on the Company’s net equity.

The following table presents the sensitivity of derivative FX Forward instruments agrees with reasonable changes to exchange rate and its effect on equity. The projection term was defined until the end of the last current contract hedge, being the last business day of the first quarter of 2016:


Appreciation (depreciation) of R$/US$	Effect at September 30, 2015 Millions of US$	Effect at December 31, 2014 Millions of US$
	(Unaudited)
-10%	-11.07	-9.98
+10%	+9.92	+9.98

In the case of TAM S.A, which operates with the Brazilian Real as its functional currency, a large proportion of the company’s assets liabilities are expressed in United States Dollars. Therefore, this subsidiary’s profit and loss varies when its financial assets and liabilities, and its accounts receivable listed in dollars are converted to Brazilian Reals. This impact on profit and loss is consolidated in the Company.

In order to reduce the volatility on the financial statements of the Company caused by rises and falls in the R$/US$ exchange rate, the Company has conducted transactions for to reduce the net US$ liabilities held by TAM S.A.

The following table shows the variation of financial performance to appreciate or depreciate 10% exchange rate R$/US$:


Appreciation (depreciation) of R$/US$	Effect at September 30, 2015 Millions of US$	Effect at December 31, 2014 Millions of US$
	(Unaudited)
-10%	+54.9	+69.8
+10%	-54.9	-69.8

Effects of exchange rate derivatives in the Financial Statements

The profit or losses caused by changes in the fair value of hedging instruments are segregated between intrinsic value and temporary value. The intrinsic value is the actual percentage of cash flow covered, initially shown in equity and later transferred to income, while the hedge transaction is recorded in income. The temporary value corresponds to the ineffective portion of cash flow hedge which is recognized in the financial results of the Company (Note 18).

Due to the functional currency of TAM S.A. and Subsidiaries is the Brazilian real, the Company presents the effects of the exchange rate fluctuations in Other comprehensive income by converting the Statement of financial position and Income statement of TAM S.A. and Subsidiaries from their functional currency to the U.S. dollar, which is the presentation currency of the consolidated financial statement of LATAM Airlines Group S.A. and Subsidiaries. The Goodwill generated in the Business combination is recognized as an asset of TAM S.A. and Subsidiaries in Brazilian real whose conversion to U.S. dollar also produces effects in Other comprehensive income.

The following table shows the change in Other comprehensive income recognized in Total equity in the case of appreciate or depreciate 10% the exchange rate R$/US$:


Appreciation (depreciation) of R$/US$	Effect at September 30, 2015 Millions of US$	Effect at December 31, 2014 Millions of US$
	(Unaudited)
-10%	+290.26	+464.01
+10%	-237.48	-379.69

(iii)

Interest -rate risk:

Exposition:

The Company is exposed to fluctuations in interest rates affecting the markets future cash flows of the assets, and current and future financial liabilities.

The Company is exposed in one portion to the variations of London Inter-Bank Offer Rate (“LIBOR”) and other interest rates of less relevance are Brazilian Interbank Deposit Certificate (“ILC”), and the Interest Rate Term of Brazil (“TJLP”).

Mitigation:

In order to reduce the risk of an eventual rise in interest rates, the Company has signed interest-rate swap and call option contracts. Currently a 70% (69% at December 31, 2014) of the debt is fixed to fluctuations in interest rate.

Rate Hedging Results:

At September 30, 2015, the market value of the positions of interest rate derivatives amounted to US$ 50.2 million (negative). At end of December 2014 this market value was US$ 60.7 million (negative).

Sensitivity analysis:

The following table shows the sensitivity of changes in financial obligations that are not hedged against interest-rate variations. These changes are considered reasonably possible, based on current market conditions.


Increase (decrease) futures curve in libor 3 months	Positions as of September 30, 2015 effect on profit or loss before tax (millions of US$)	Positions as of December 31, 2014 effect on profit or loss before tax (millions of US$)
	(Unaudited)
+100 basis points	-26.98	-27.53
-100 basis points	+26.98	+27.53

Much of the current rate derivatives are registered for as hedges of cash flow, therefore, a variation in the exchange rate has an impact on the market value of derivatives, whose changes impact on the Company’s net equity.

The calculations were made increasing (decreasing) vertically 100 basis points of the three-month Libor futures curve, being both reasonably possible scenarios according to historical market conditions.


Increase (decrease) futures curve in libor 3 months	Positions as of September 30, 2015 effect on equity (millions of US$)	Positions as of December 31, 2014 effect on equity (millions of US$)
	(Unaudited)
+100 basis points	+10.45	+15.33
-100 basis points	-10.84	-15.95

The assumptions of sensitivity calculation must assume that forward curves of interest rates do not necessarily reflect the real value of the compensation flows. Moreover, the structure of interest rates is dynamic over time.

During the periods presented, the Company has no registered amounts by ineffectiveness in consolidated statement of income for this kind of hedging.

(b)	Credit risk

Credit risk occurs when the counterparty to a financial agreement or instrument fails to discharge an obligation due or financial instrument, leading to a loss in market value of a financial instrument (only financial assets, not liabilities).

The Company is exposed to credit risk due to its operative and financial activities, including deposits with banks and financial institutions, investments in other kinds of instruments, exchange-rate transactions and the contracting of derivative instruments or options.

As a way to mitigate credit risk related to financial activities, the Company requires that the counterparty to the financial activities remain at least investment grade by major Risk Assessment Agencies. Additionally the company has established maximum limits for investments which are monitored regularly.

(i)	Financial activities

Cash surpluses that remain after the financing of assets necessary for the operation are invested according to credit limits approved by the Company’s Board, mainly in time deposits with different financial institutions, private investment funds, short-term mutual funds, and easily-liquidated corporate and sovereign bonds with short remaining maturities. These investments are booked as Cash and cash equivalents and Other current financial assets.

In order to reduce counterparty risk and to ensure that the risk assumed is known and managed by the Company, investments are diversified among different banking institutions (both local and international). The Company evaluates the credit standing of each counterparty and the levels of investment, based on (i) their credit rating, (ii) the equity size of the counterparty, and (iii) investment limits according to the Company’s level of liquidity. According to these three parameters, the Company chooses the most restrictive parameter of the previous three and based on this, establishes limits for operations with each counterparty.

The Company has no guarantees to mitigate this exposure.

(ii)	Operational activities

The Company has four large sales “clusters”: travel agencies, cargo agents, airlines and credit-card administrators. The first three are governed by International Air Transport Association, international (“IATA”) organization comprising most of the airlines that represent over 90% of scheduled commercial traffic and one of its main objectives is to regulate the financial transactions between airlines and travel agents and cargo. When an agency or airline does not pay their debt, they are excluded from operating with IATA’s member airlines. In the case of credit-card administrators, they are fully guaranteed by 100% by the issuing institutions.

The exposure consists of the term granted, which fluctuates between 1 and 45 days.

One of the tools the Company uses for reducing credit risk is to participate in global entities related to the industry, such as IATA, Business Sales Processing (“BSP”), Cargo Account Settlement Systems (“CASS”), IATA Clearing House (“ICH”) and banks (credit cards). These institutions fulfill the role of collectors and distributors between airlines and travel and cargo agencies. In the case of the Clearing House, it acts as an offsetting entity between airlines for the services provided between them. A reduction in term and implementation of guarantees has been achieved through these entities. Currently the sales invoicing of TAM Linhas Aéreas S.A. related with travel agents and cargo agents for domestic transportation in Brazil is done directly by TAM Linhas Aéreas S.A.

Credit quality of financial assets

The external credit evaluation system used by the Company is provided by IATA. Internal systems are also used for particular evaluations or specific markets based on trade reports available on the local market. The internal classification system is complementary to the external one, i.e. for agencies or airlines not members of IATA, the internal demands are greater.

To reduce the credit risk associated with operational activities, the Company has established credit limits to abridge the exposure of their debtors which are monitored permanently (mainly in case of operational activities of TAM Linhas Aéreas S.A. with travel agents). The bad-debt rate in the principal countries where the Company has a presence is insignificant.

(c)	Liquidity risk

Liquidity risk represents the risk that the Company has no sufficient funds to meet its obligations.

Because of the cyclical nature of the business, the operation, and its investment and financing needs related to the acquisition of new aircraft and renewal of its fleet, plus the financing needs, the Company requires liquid funds, defined as cash and cash equivalents plus other short term financial assets, to meet its payment obligations.

The liquid funds, the future cash generation and the capacity to obtain additional funding, through bond issuance and banking loans, will allow the Company to obtain sufficient alternatives to face its investment and financing future commitments.

The liquid funds balance as of September, 2015 is US$1,542 million, invested in short term instruments through financial high credit rating levels entities.

In addition to the liquid funds, the Company has access to short term credit line. As of September, 2015, LATAM has working capital credit lines with multiple banks and additionally has a US$130 million undrawn committed credit line.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of September 30, 2015 (Unaudited)

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.


Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Nominal value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Loans to exporters

97.032.000-8	BBVA	Chile	US$		100.164		—		—		—		—		100.164		100.000	At expiration		0,65		0,65
97.036.000-K	SANTANDER	Chile	US$		60.170		—		—		—		—		60.170		60.000	At expiration		1,12		1,12
97.006.000-6	ESTADO	Chile	US$		40.099		15.066		—		—		—		55.165		55.000	At expiration		1,00		1,00
97.030.000-6	BCI	Chile	US$		50.071		—		—		—		—		50.071		50.000	At expiration		1,60		1,60
76.645.030-K	ITAU	Chile	US$		30.032		—		—		—		—		30.032		30.000	At expiration		1,29		1,29
0-E	BANCO DO BRASIL	Chile	US$		70.193		—		—		—		—		70.193		70.000	At expiration		1,10		1,10
97.951.000-4	HSBC	Chile	US$		12.018		—		—		—		—		12.018		12.000	At expiration		0,60		0,60

Bank loans

97.023.000-9	CORPBANCA	Chile	UF		20.195		59.309		126.875		41.474		—		247.853		229.381	Quarterly		4,20		4,20
97.036.000-K	SANTANDER	Chile	US$		1.579		1.073		312.130		—		—		314.782		312.131	Quarterly		2,32		2,32

Obligations with the public

0-E	BANK OF NEW YORK	U.S.A.	US$		18.125		18.125		72.500		572.500		—		681.250		500.000	-		7,77		7,25

Guaranteed obligations

0-E	CREDIT AGRICOLE	France	US$		29.945		84.511		197.824		57.617		18.723		388.620		375.154	Quarterly		1,79		1,60
0-E	BNP PARIBAS	U.S.A.	US$		9.837		29.836		81.699		83.397		159.367		364.136		327.474	Quarterly		2,22		2,14
0-E	WELLS FARGO	U.S.A.	US$		35.605		106.946		285.846		286.835		590.540		1.305.772		1.211.509	Quarterly		2,27		1,57
0-E	WILMINGTON TRUST COMPANY	U.S.A.	US$		2.145		29.086		58.391		54.272		225.207		369.101		282.204	Quarterly		4,25		4,25
0-E	CITIBANK	U.S.A.	US$		19.417		58.590		158.534		162.005		286.779		685.325		633.935	Quarterly		2,30		1,56
97.036.000-K	SANTANDER	Chile	US$		5.560		16.803		45.520		46.602		56.027		170.512		164.869	Quarterly		1,39		0,85
0-E	BTMU	U.S.A.	US$		2.978		9.006		24.463		25.125		43.118		104.690		99.648	Quarterly		1,70		1,10
0-E	APPLE BANK	U.S.A.	US$		1.461		4.429		12.038		12.385		21.672		51.985		49.465	Quarterly		1,69		1,10
0-E	US BANK	U.S.A.	US$		18.662		55.881		148.151		146.873		321.866		691.433		605.441	Quarterly		3,99		2,81
0-E	DEUTSCHE BANK	U.S.A.	US$		5.898		17.841		41.351		30.661		67.133		162.884		141.409	Quarterly		3,32		3,32
0-E	NATIXIS	France	US$		13.674		41.459		114.612		103.361		260.875		533.981		480.729	Quarterly		1,94		1,91
0-E	HSBC	U.S.A.	US$		1.584		4.781		12.883		13.086		26.825		59.159		54.948	Quarterly		2,37		1,56
0-E	PK AIRFINANCE US, INC.	U.S.A.	US$		2.148		6.599		18.712		20.562		20.818		68.839		64.363	Monthly		1,90		1,90
0-E	KFW IPEX-BANK	Germany	US$		720		2.206		5.949		4.081		2.197		15.153		14.235	Quarterly		2,18		2,18

Other guaranteed obligations

0-E	DVB BANK SE	U.S.A.	US$		8.221		24.684		8.235		—		—		41.140		40.501	Quarterly		2,00		2,00

Financial leases

0-E	ING	U.S.A.	US$		9.189		27.703		45.067		30.218		2.041		114.218		103.008	Quarterly		5,04		4,49
0-E	CREDIT AGRICOLE	France	US$		1.694		5.186		8.978		—		—		15.858		15.599	Quarterly		1,26		1,26
0-E	CITIBANK	U.S.A.	US$		6.083		18.250		48.667		42.639		2.040		117.679		101.973	Quarterly		6,40		5,67
0-E	PEFCO	U.S.A.	US$		17.560		52.671		123.894		32.808		—		226.933		207.991	Quarterly		5,36		4,76
0-E	BNP PARIBAS	U.S.A.	US$		11.335		34.204		92.546		35.340		1.559		174.984		162.913	Quarterly		4,09		3,65
0-E	WELLS FARGO	U.S.A.	US$		5.596		16.772		44.674		44.578		29.690		141.310		126.110	Quarterly		3,98		3,53
0-E	DVB BANK S E	U.S.A.	US$		4.727		14.210		19.015		—		—		37.952		37.107	Quarterly		1,98		1,98
0-E	BANC OF AMERICA	U.S.A.	US$		703		3.670		—		—		—		4.373		3.437	Monthly		1,41		1,41

Other loans

0-E	BOEING	U.S.A.	US$		781		1.992		188.573		—		—		191.346		188.573	At expiration		1,75		1,75
0-E	CITIBANK (*)	U.S.A.	US$		6.750		76.765		207.229		206.793		26.823		524.360		450.000	Quarterly		6,00		6,00

Hedging derivatives

-	OTHERS	-	US$		12.545		33.080		47.707		4.576		61		97.969		93.273	-		—		—

	Total				637.464		870.734		2.552.063		2.057.788		2.163.361		8.281.410		7.454.380

(*)	Securitized bond with the future flows from the sales with credit card in United States and Canada.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of September 30, 2015 (Unaudited)

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.


Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Nominal value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Bank loans

0-E	NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ	Holland	US$		182		493		1,315		1,314		876		4,180		3,467	Monthly		6.01		6.01

Obligation with the public

0-E	THE BANK OF NEW YORK	U.S.A.	US$		433		1,298		303,006		2,792		501,124		808,653		800,000	At Expiration		8.17		8.00

Financial leases

0-E	AFS INVESTMENT IX LLC	U.S.A.	US$		2,781		7,700		20,528		20,518		855		52,382		45,449	Monthly		1.25		1.25
0-E	AIRBUS FINANCIAL	U.S.A.	US$		3,692		10,963		23,558		16,030		1,687		55,930		53,319	Monthly		1.43		1.43
0-E	CREDIT AGRICOLE-CIB	U.S.A.	US$		27,176		—		—		—		—		27,176		27,059	Quarterly		1.10		1.10
0-E	CREDIT AGRICOLE -CIB	France	US$		1,585		4,514		—		—		—		6,099		6,000	Quarterly/ Semiannual		3.25		3.25
0-E	DVB BANK SE	U.S.A.	US$		151		363		404		—		—		918		902	Monthly		1.64		1.64
0-E	GENERAL ELECTRIC CAPITAL CORPORATION	U.S.A.	US$		3,809		11,408		12,870		—		—		28,087		27,387	Monthly		1.25		1.25
0-E	KFW IPEX-BANK	Germany	US$		3,825		7,862		16,518		14,180		—		42,385		40,449	Monthly/ Quarterly		1.72		1.72
0-E	NATIXIS	France	US$		2,724		7,584		24,070		23,093		73,022		130,493		116,362	Quarterly/ Semiannual		3.85		3.85
0-E	PK AIRFINANCE US, INC.	U.S.A.	US$		1,419		4,200		19,180		—		—		24,799		24,304	Monthly		1.75		1.75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		534		1,421		3,287		2,600		12,328		20,170		18,759	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		12,022		31,800		85,636		112,983		102,576		345,017		320,538	Quarterly		3.63		3.55
0-E	BANCO IBM S.A	Brazil	BRL		256		809		1,494		—		—		2,559		1,912	Monthly		14.13		14.13
0-E	HP FINANCIAL SERVICE	Brazil	BRL		247		554		369		—		—		1,170		1,081	Monthly		10.02		10.02
0-E	SOCIÉTÉ GÉNÉRALE	France	BRL		99		315		726		—		—		1,140		846	Monthly		14.13		14.13

Other loans

0-E	COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO	Brazil	BRL		19,532		10,698		—		—		—		30,230		30,230	Monthly		5.00		5.00

	Total				80,467		101,982		512,961		193,510		692,468		1,581,388		1,518,064

Class of liability for the analysis of liquidity risk ordered by date of maturity as of September 30, 2015 (Unaudited)

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.


Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Nominal value		Amortization		Nominal rate		Effective rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$				%		%

Trade and other accounts payables

-	OTHERS	OTHERS	US$		528.803		25.888		—		—		—		554.691		554.691		—		—		—
			CLP		39.506		616		—		—		—		40.122		40.122		—		—		—
			BRL		76.400		20		—		—		—		76.420		76.420		—		—		—
			Others currencies		332.561		10.659		—		—		—		343.220		343.220		—		—		—

Accounts payable to related parties currents

65.216.000-1	COMUNIDAD MUJER	Chile	CLP		10		—		—		—		—		10		10		—		—		—
78.591.370-1	BETHIA S.A. AND SUBSIDIARIES	Chile	CLP		6		—		—		—		—		6		6		—		—		—
0-E	INVERSORA AERONÁUTICA ARGENTINA	Argentina	US$		22		—		—		—		—		22		22		—		—		—

	Total				977.308		37.183		—		—		—		1.014.491		1.014.491



	Total consolidated				1.695.239		1.009.899		3.065.024		2.251.298		2.855.829		10.877.289		9.986.935

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2014

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.


Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Nominal value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Loans to exporters

97.032.000-8	BBVA	Chile	US$		100,102		—		—		—		—		100,102		100,000	At expiration		0.40		0.40
97.036.000-K	SANTANDER	Chile	US$		45,044		—		—		—		—		45,044		45,000	At expiration		0.34		0.34
97.006.000-6	ESTADO	Chile	US$		55,076		—		—		—		—		55,076		55,000	At expiration		0.52		0.52
97.030.000-7	BCI	Chile	US$		100,157		—		—		—		—		100,157		100,000	At expiration		0.47		0.47
76.645.030-K	ITAU	Chile	US$		15,025		—		—		—		—		15,025		15,000	At expiration		0.65		0.65
97.951.000-4	HSBC	Chile	US$		12,010		—		—		—		—		12,010		12,000	At expiration		0.50		0.50

Bank loans

97.023.000-9	CORPBANCA	Chile	UF		16,575		48,581		121,945		17,621		—		204,722		188,268	Quarterly		4.85		4.85
0-E	CITIBANK	Argentina	ARS		1,298		18,700		—		—		—		19,998		17,542	Monthly		31.00		31.00
0-E	BBVA	Argentina	ARS		1,713		23,403		—		—		—		25,116		21,050	Monthly		33.00		33.00
97.036.000-K	SANTANDER	U.S.A.	US$		1,610		3,476		283,438		—		—		288,524		282,967	Quarterly		2.33		2.33

Guaranteed obligations

0-E	CREDIT AGRICOLE	France	US$		18,670		55,089		109,536		64,101		36,625		284,021		273,599	Quarterly		1.68		1.43
0-E	BNP PARIBAS	U.S.A.	US$		9,634		29,259		80,097		83,020		190,070		392,080		351,217	Quarterly		2.13		2.04
0-E	WELLS FARGO	U.S.A.	US$		35,533		106,692		285,218		286,264		698,052		1,411,759		1,302,968	Quarterly		2.26		1.57
0-E	CITIBANK	U.S.A.	US$		19,149		57,915		156,757		160,323		347,710		741,854		684,114	Quarterly		2.24		1.49
97.036.000-K	SANTANDER	Chile	US$		5,482		16,572		44,925		46,047		73,544		186,570		180,341	Quarterly		1.32		0.78
0-E	BTMU	U.S.A.	US$		2,931		8,863		24,091		24,778		52,541		113,204		107,645	Quarterly		1.64		1.04
0-E	APPLE BANK	U.S.A.	US$		1,437		4,358		11,849		12,206		26,318		56,168		53,390	Quarterly		1.63		1.03
0-E	US BANK	U.S.A.	US$		18,713		56,052		148,622		147,357		376,792		747,536		648,158	Quarterly		3.99		2.81
0-E	DEUTSCHE BANK	U.S.A.	US$		5,834		17,621		47,600		30,300		78,509		179,864		155,279	Quarterly		3.25		3.25
0-E	NATIXIS	France	US$		11,783		35,803		99,012		98,632		259,912		505,142		454,230	Quarterly		1.86		1.81
0-E	HSBC	U.S.A.	US$		1,564		4,725		12,738		12,956		31,701		63,684		59,005	Quarterly		2.29		1.48
0-E	PK AirFinance US, Inc.	U.S.A.	US$		2,074		6,378		18,091		19,836		28,763		75,142		69,721	Monthly		1.86		1.86
0-E	KFW IPEX-BANK	Germany	US$		696		2,124		6,048		4,587		3,771		17,226		16,088	Quarterly		2.10		2.10

Other guaranteed obligations

0-E	DVB BANK SE	U.S.A.	US$		8,199		24,623		32,904		—		—		65,726		64,246	Quarterly		2.00		2.00
0-E	CREDIT AGRICOLE	U.S.A.	US$		7,864		23,394		62,540		—		—		93,798		91,337	Quarterly		1.73		1.73

Financial leases

0-E	ING	U.S.A.	US$		9,137		27,520		58,821		34,067		12,134		141,679		126,528	Quarterly		4.84		4.33
0-E	CREDIT AGRICOLE	France	US$		1,643		5,036		14,152		—		—		20,831		20,413	Quarterly		1.20		1.20
0-E	CITIBANK	U.S.A.	US$		6,083		18,250		48,667		48,667		14,262		135,929		115,449	Quarterly		6.40		5.67
0-E	PEFCO	U.S.A.	US$		17,555		52,678		138,380		67,095		3,899		279,607		252,205	Quarterly		5.35		4.76
0-E	BNP PARIBAS	U.S.A.	US$		11,240		33,917		91,743		60,834		10,974		208,708		191,672	Quarterly		4.14		3.68
0-E	WELLS FARGO	U.S.A.	US$		5,604		16,784		44,705		44,615		46,394		158,102		139,325	Quarterly		3.98		3.53
0-E	DVB BANK S E	U.S.A.	US$		4,701		14,145		33,201		—		—		52,047		50,569	Quarterly		1.89		1.89
0-E	US BANK	U.S.A.	US$		326		6,247		5,455		—		—		12,028		11,981	Monthly		—		—
0-E	BANC OF AMERICA	U.S.A.	US$		720		2,118		2,912		—		—		5,750		5,462	Monthly		1.41		1.41

Other loans

0-E	BOEING	U.S.A.	US$		—		4,994		180,583		—		—		185,577		179,507	At expiration		1.74		1.74
0-E	CITIBANK (*)	U.S.A.	US$		6,825		20,175		209,730		209,778		104,852		551,360		450,000	Quarterly		6.00		6.00

Hedging derivatives

-	OTHERS	-	US$		11,702		30,761		48,667		7,311		245		98,686		93,513	-		—		—

Non - hedging derivatives

-	OTHERS	-	US$		1,002		628		—		—		—		1,630		730	-		—		—

	Total				574,711		776,881		2,422,427		1,480,395		2,397,068		7,651,482		6,985,519

(*)	Securitized bond with the future flows from the sales with credit card in United States and Canada.

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2014

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.


Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Nominal value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Bank loans

0-E	NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ	Holland	US$		184		493		1,315		1,315		1,369		4,676		3,796	Monthly		6.01		6.01

Obligation with the public

0-E	THE BANK OF NEW YORK	U.S.A.	US$		14,639		82,006		481,920		148,037		880,604		1,607,206		1,100,000	At Expiration		7.99		7.19

Financial leases

0-E	AFS INVESTMENT IX LLC	U.S.A.	US$		2,808		7,701		20,531		20,522		8,548		60,110		51,120	Monthly		1.25		1.25
0-E	AIRBUS FINANCIAL	U.S.A.	US$		3,623		10,709		28,593		15,908		7,736		66,569		63,021	Monthly		1.42		1.42
0-E	CREDIT AGRICOLE-CIB	U.S.A.	US$		2,897		32,805		—		—		—		35,702		35,170	Quarterly		1.10		1.10
0-E	CREDIT AGRICOLE -CIB	France	US$		1,653		4,683		4,514		—		—		10,850		10,500	Quarterly/ Semiannual		3.25		3.25
0-E	DVB BANK SE	Germany	US$		3,247		9,470		—		—		—		12,717		12,500	Quarterly		2.50		2.50
0-E	DVB BANK SE	U.S.A.	US$		206		554		767		—		—		1,527		1,492	Monthly		1.68		1.68
0-E	GENERAL ELECTRIC CAPITAL CORPORATION	U.S.A.	US$		2,512		11,229		24,278		—		—		38,019		36,848	Monthly		1.25		1.25
0-E	KFW IPEX-BANK	Germany	US$		3,596		11,209		19,167		14,028		5,365		53,365		50,687	Monthly/ Quarterly		1.72		1.72
0-E	NATIXIS	France	US$		5,121		9,778		27,874		28,520		87,769		159,062		139,693	Quarterly/ Semiannual		3.87		3.87
0-E	PK AIRFINANCE US, INC.	U.S.A.	US$		1,392		4,103		20,694		—		—		26,189		25,293	Monthly		1.75		1.75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		573		1,528		3,559		2,852		13,226		21,738		19,982	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		9,777		27,207		75,066		78,964		170,509		361,523		344,106	Quarterly		3.06		3.58
0-E	BANCO DE LAGE LANDEN BRASIL S.A	Brazil	BRL		8		—		—		—		—		8		—	Monthly		11.70		11.70
0-E	BANCO IBM S.A	Brazil	BRL		356		1,118		3,405		40		—		4,919		3,817	Monthly		10.58		10.58
0-E	HP FINANCIAL SERVICE	Brazil	BRL		276		829		1,381		—		—		2,486		2,229	Monthly		9.90		9.90
0-E	SOCIETE AIR FRANCE	France	EUR		547		—		—		—		—		547		114	Monthly		6.82		6.82
0-E	SOCIÉTÉ GÉNÉRALE	France	BRL		155		446		1,351		206		—		2,158		1,643	Monthly		11.60		11.60

Other loans

0-E	COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO	Brazil	BRL		30,281		15,576		—		—		—		45,857		45,857	Monthly		4.23		4.23

	Total				83,851		231,444		714,415		310,392		1,175,126		2,515,228		1,947,868

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2014

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.


Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total		Nominal value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Trade and other accounts payables
-	OTHERS	OTHERS	US$		529,043		26,483		—		—		—		555,526		555,526	—		—		—
			USD		1,107		10,449		—		—		—		11,556		11,431	Quarterly		2.11		2.11
			CLP		23,878		241		—		—		—		24,119		24,119	—		—		—
			BRL		380,766		13		—		—		—		380,779		380,779	—		—		—
			Others currencies		224,040		228		—		—		—		224,268		224,268	—		—		—

Accounts payable to related parties currents
65.216.000-1	COMUNIDAD MUJER	Chile	CLP		2		—		—		—		—		2		2	—		—		—
78.591.370-1	BETHIA S.A. AND SUBSIDIARIES	Chile	CLP		6		—		—		—		—		6		6	—		—		—
0-E	INVERSORA AERONÁUTICA ARGENTINA	Argentina	US$		27		—		—		—		—		27		27	—		—		—

	Total				1,158,869		37,414		—		—		—		1,196,283		1,196,158



	Total consolidated				1,817,431		1,045,739		3,136,842		1,790,787		3,572,194		11,362,993		10,129,545

The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with different financial institutions. The Company has margin facilities with each financial institution in order to regulate the mutual exposure produced by changes in the market valuation of the derivatives.

At the end of 2014, the Company provided US$ 91.8 million in derivative margin guarantees, for cash and stand-by letters of credit. At September 30, 2015, the Company had provided US$ 66.2 million in guarantees for Cash and cash equivalent and stand-by letters of credit. The fall was due at i) maturity of hedge contracts, ii) acquire of new fuel purchase contracts, and iii) changes in fuel prices, exchange rate and interest rates.

3.2.	Capital risk management

The Company’s objectives, with respect to the management of capital, are (i) to comply with the restrictions of minimum equity and (ii) to maintain an optimal capital structure.

The Company monitors its contractual obligations and the regulatory limitations in the different countries where the entities of the group are domiciled to assure they meet the limit of minimum net equity, where the most restrictive limitation is to maintain a positive net equity.

Additionally, the Company periodically monitors the short and long term cash flow projections to assure the Company has adequate sources of funding to generate the cash requirement to face its investment and funding future commitments.

The Company international credit rating is the consequence of the Company capacity to face its long terms financing commitments. As of September 30, 2015 the Company has an international long term credit rating of BB with stable outlook by Standard & Poor’s, a BB- rating with stable outlook by Fitch Ratings and a Ba2 rating with stable outlook by Moody’s.

Adjusted leverage ratios:


	As of September 30, 2015			As of December 31, 2014
	ThUS$			ThUS$
	Unaudited
Total financial loans		8.873.849			8.817.215
Last twelve months Operating lease payment x 8		4.157.616			4.171.072
Less:
Cash and marketable securities		(1.542.275	)		(1.533.770	)

Total net adjusted debt		11.489.190			11.454.517

Net Equity		2.873.977			4.401.896
Cash flow hedging reserve		67.827			151.340

Adjusted equity		2.941.804			4.553.236

Total adjusted debt and equity		14.430.994			16.007.753


Adjusted leverage		79,6	%		71,6	%

See information related to financial covenants in Note 31 (a).

3.3.	Estimates of fair value.

At September 30, 2015, the Company maintained financial instruments that should be recorded at fair value. These are grouped into two categories:

1.	Hedge Instruments:

This category includes the following instruments:

•

Interest rate derivative contracts,

•

Fuel derivative contracts,

•

Currency derivative contracts

2.	Financial Investments:

This category includes the following instruments:

•

Investments in short-term Mutual Funds (cash equivalent),

•

Bank certificate of deposit – CBD,

•

Private investment funds

The Company has classified the fair value measurement using a hierarchy that reflects the level of information used in the assessment. This hierarchy consists of 3 levels (I) fair value based on quoted prices in active markets for identical assets or liabilities, (II) fair value calculated through valuation methods based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) and (III) fair value based on inputs for the asset or liability that are not based on observable market data.

The fair value of financial instruments traded in active markets, such as investments acquired for trading, is based on quoted market prices at the close of the period using the current price of the buyer. The fair value of financial assets not traded in active markets (derivative contracts) is determined using valuation techniques that maximize use of available market information. Valuation techniques generally used by the Company are quoted market prices of similar instruments and / or estimating the present value of future cash flows using forward price curves of the market at period end.

The following table shows the classification of financial instruments at fair value, depending on the level of information used in the assessment:


	As of September 30, 2015 (Unaudited)								As of December 31, 2014
			Fair value measurements using values considered as								Fair value measurements using values considered as
	Fair value		Level I		Level II		Level III		Fair value		Level I		Level II		Level III
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Assets
Cash and cash equivalents		83,485		83,485		—		—		200,753		200,753		—		—

Short-term mutual funds		83,485		83,485		—		—		200,753		200,753		—		—

Other financial assets, current		550,788		519,349		31,439		—		546,535		526,081		20,454		—
Fair value of interest rate derivatives		—		—		—		—		1		—		1		—
Fair value of fuel derivatives		16,353		—		16,353		—		1,783		—		1,783		—
Fair value of foreign currency derivatives		13,965		—		13,965		—		—		—		—		—
Interest accrued since the last payment date of Cross Currency Swap		1,036		—		1,036		—		377		—		377		—
Foreign currency derivatives not recognized as a hedge		85		—		85		—		—		—		—		—
Private investment funds		501,205		501,205		—		—		480,777		480,777		—		—
Certificate of deposit CDB		—		—		—		—		18,293		—		18,293		—
Domestic and foreign bonds		18,144		18,144		—		—		41,111		41,111		—		—
Other investments		—		—		—		—		4,193		4,193		—		—

Liabilities
Other financial liabilities, current		132,805		—		132,805		—		227,233		—		227,233		—
Fair value of interest rate derivatives		22,670		—		22,670		—		26,395		—		26,395		—
Fair value of fuel derivatives		50,988		—		50,988		—		157,233				157,233
Fair value of foreign currency derivatives		54,451		—		54,451		—		37,242		—		37,242		—
Interest accrued since the last payment date of Currency Swap		4,696		—		4,696		—		5,173		—		5,173		—
Interest rate derivatives not recognized as a hedge		—		—		—		—		1,190				1,190

Other financial liabilities, non current		22,810		—		22,810		—		28,327		—		28,327		—
Fair value of interest rate derivatives		22,810		—		22,810		—		28,327		—		28,327		—

Additionally, at September 30, 2015, the Company has financial instruments which are not recorded at fair value. In order to meet the disclosure requirements of fair values, the Company has valued these instruments as shown in the table below:


	As of September 30, 2015				As of December 31, 2014
	Book value		Fair value		Book value		Fair value
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Cash and cash equivalents		939.441		939.441		788.643		788.643
Cash on hand		15.745		15.745		11.568		11.568
Bank balance		244.910		244.910		239.514		239.514
Overnight		360.951		360.951		154.666		154.666
Time deposits		317.835		317.835		382.895		382.895

Other financial assets, current		37.488		37.488		103.866		103.866
Other financial assets		37.488		37.488		103.866		103.866

Trade and other accounts receivable current		976.144		976.144		1.378.837		1.378.837
Accounts receivable from related entities		392		392		308		308
Other financial assets, non current		66.004		66.004		84.986		84.986
Accounts receivable		9.889		9.889		30.465		30.465

Other financial liabilities, current (*)		1.496.273		1.658.877		1.397.382		1.446.100
Trade and other accounts payables		1.390.531		1.390.531		1.489.396		1.489.396
Accounts payable to related entities		38		38		35		35
Other financial liabilities, non current (*)		7.316.081		7.811.335		7.360.685		8.319.022
Accounts payable, non-current		566.675		566.675		577.454		577.454

(*)	Fair value Level II

The book values of accounts receivable and payable are assumed to approximate their fair values, due to their short-term nature. In the case of cash on hand, bank balances, overnight, time deposits and accounts payable, non-current, fair value approximates their carrying values.

The fair value of Other financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate for similar financial instruments. In the case of Other financial assets, the valuation was performed according to market prices at period end.

NOTE 4 - ACCOUNTING ESTIMATES AND JUDGMENTS

The Company has used estimates to value and book some of the assets, liabilities, revenues, expenses and commitments; these relate principally to:

(a)	The evaluation of possible impairment losses for certain assets.

(b)	The useful lives and residual values of fixed and intangible assets.

(c)	The criteria employed in the valuation of certain assets.

(d)	Air tickets sold that are not actually used.

(e)	The calculation of deferred income at the end of the period, corresponding to the valuation of kilometers or points credited to holders of the loyalty programs which have not yet been used.

(f)	The need for provisions and where required, the determination of their values.

(g)	The recoverability of deferred tax assets.

These estimates are made on the basis of the best information available on the matters analyzed.

In any case, it is possible that events will require modification of the estimates in the future, in which case the effects would be accounted for prospectively.

The management has applied judgment in determining that LATAM Airlines Group S.A. has control over TAM S.A. and Subsidiaries for accounting purposes and therefore has consolidated their financial statements. This judgment is made on the basis that LATAM issued their ordinary shares in exchange for all of the outstanding common and preferred shares of TAM, except those shareholders of TAM who did not accept exchange and which were subject of the squeeze-out entitling LATAM to substantially all of the economic benefits that will be generated by the LATAM Group and also, consequently, exposing it to substantially all the risks incidental to the operations of TAM. This exchange aligns the economic interests of LATAM and all of its shareholders, including the TAM controlling shareholders, ensuring that the shareholders and directors of TAM will have no incentive to exercise their rights in a manner that is beneficial to TAM but detrimental to LATAM. Further, all significant actions required for the operation of the airlines require the affirmative vote of both LATAM and the TAM controlling shareholders.

Since the integration of LAN and TAM operations, most critical airline activities in Brazil have been managed under the TAM CEO and global activities have been managed by the LATAM CEO, who is in charge of the overall operation of the LATAM Group and who reports to the LATAM board. Further, the LATAM CEO evaluates performance of the LATAM Group executives and, together with the LATAM board, determines compensation. Although there are restrictions on voting interests that currently may be held by foreign investors under Brazilian law, LATAM believes that the economic substance of these arrangements satisfies the requirements established by the applicable accounting standards and that consolidation by LATAM of TAM’s operations is appropriate.

NOTE 5 - SEGMENTAL INFORMATION

The Company has determined that it has two operating segments: the air transportation business and the coalition and loyalty program Multiplus.

The Air transport segment corresponds to the route network for air transport and it is based on the way that the business is run and managed, according to the centralized nature of its operations, the ability to open and close routes and reallocate resources (aircraft, crew, staff, etc..) within the network, which is a functional relationship between all of them, making them inseparable. This segment definition is the most common level used by the global airline industry.

The segment of loyalty coalition called Multiplus, unlike LanPass and TAM Fidelidade, is a frequent flyer programs which operate as a unilateral system of loyalty that offers a flexible coalition system, interrelated among its members, with 13.3 million of members, along with being a regulated entity with a separately business and not directly related to air transport.

(a) For the 9 months ended


	Air transportation At September 30,						Coalition and loyalty program Multiplus At September 30,						Eliminations At September 30,						Consolidated At September 30,
	2015			2014			2015			2014			2015			2014			2015			2014
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited
Income from ordinary activities from external customers (*)		7.060.894			8.727.774			368.025			382.013			—			—			7.428.919			9.109.787

LAN passenger		3.169.485			3.354.163			—			—			—			—			3.169.485			3.354.163
TAM passenger		2.896.861			4.117.481			368.025			382.013			—			—			3.264.886			4.499.494
Freight		994.548			1.256.130			—			—			—			—			994.548			1.256.130

Income from ordinary activities from transactions with other operating segments		368.025			382.013			49.758			85.223			(417.783	)		(467.236	)		—			—

Other operating income		172.980			138.521			116.919			118.155			—			—			289.899			256.676

Interest income		23.632			25.202			51.388			43.394			(10.430	)		—			64.590			68.596
Interest expense		(323.922	)		(330.344	)		—			(4	)		10.430			—			(313.492	)		(330.348	)

Total net interest expense		(300.290	)		(305.142	)		51.388			43.390			—			—			(248.902	)		(261.752	)

Depreciation and amortization		(692.616	)		(738.777	)		(12.969	)		(5.483	)		—			—			(705.585	)		(744.260	)

Material non-cash items other than depreciation and amortization		(446.299	)		(69.640	)		1.129			(230	)		—			—			(445.170	)		(69.870	)

Disposal of fixed assets and inventory losses		(25.559	)		(11.946	)		—			(282	)		—			—			(25.559	)		(12.228	)
Doubtful accounts		(8.270	)		(17.749	)		(1.071	)		67			—			—			(9.341	)		(17.682	)
Exchange differences		(412.955	)		(39.929	)		2.200			(15	)		—			—			(410.755	)		(39.944	)
Result of indexation units		485			(16	)		—			—			—			—			485			(16	)

Income (loss) attributable to owners of the parents		(304.705	)		(313.991	)		101.687			105.919			—			—			(203.018	)		(208.072	)

Participation of the entity in the income of associates		37			(2.224	)		—			(2.246	)		—			—			37			(4.470	)
Expenses for income tax		174.044			31.509			(54.887	)		(56.294	)		—			—			119.157			(24.785	)
Segment profit / (loss)		(275.471	)		(292.663	)		101.687			105.919			—			—			(173.784	)		(186.744	)
Assets of segment		16.839.969			18.955.549			1.145.684			1.850.640			(10.626	)		(158.990	)		17.975.027			20.647.199
Investments in associates		—			1.059			—			780			—			—			—			1.839

Amount of non-current asset additions		831.672			901.989			—			—			—			—			831.672			901.989

Property, plant and equipment		800.165			847.333			—			—			—			—			800.165			847.333
Intangibles other than goodwill		31.507			54.656			—			—			—			—			31.507			54.656

Segment liabilities		14.629.948			15.068.325			426.398			798.235			(33.974	)		(81.865	)		15.022.372			15.784.695
Purchase of non-monetary assets of segment		899.832			925.197			—			—			—			—			899.832			925.197

(*)	The Company does not have any interest revenue that should be recognized as income from ordinary activities by interest.

(b) For the 3 months ended


	Air transportation At September 30,						Coalition and loyalty program Multiplus At September 30,						Eliminations At September 30,						Consolidated At September 30,
	2015			2014			2015			2014			2015			2014			2015			2014
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited
Income from ordinary activities from external customers (*)		2.310.076			2.907.137			113.388			140.435			—			—			2.423.464			3.047.572

LAN passenger		1.058.136			1.151.082			—			—			—			—			1.058.136			1.151.082
TAM passenger		942.159			1.345.569			113.388			140.435			—			—			1.055.547			1.486.004
Freight		309.781			410.486			—			—			—			—			309.781			410.486

Income from ordinary activities from transactions with other operating segments		113.388			140.435			14.049			24.211			(127.437	)		(164.646	)		—			—

Other operating income		58.477			48.884			32.881			44.844			—			—			91.358			93.728

Interest income		9.147			7.852			25.598			15.495			(2.039	)		—			32.706			23.347
Interest expense		(109.948	)		(85.926	)		—			(4	)		2.039			—			(107.909	)		(85.930	)

Total net interest expense		(100.801	)		(78.074	)		25.598			15.491			—			—			(75.203	)		(62.583	)

Depreciation and amortization		(227.701	)		(249.166	)		(5.351	)		(2.065	)		—			—			(233.052	)		(251.231	)

Material non-cash items other than depreciation and amortization		(251.660	)		(153.237	)		(129	)		(214	)		—			—			(251.789	)		(153.451	)

Disposal of fixed assets and inventory losses		(7.146	)		(3.184	)		—			(210	)		—			—			(7.146	)		(3.394	)
Doubtful accounts		(2.009	)		(5.968	)		(1.110	)		1			—			—			(3.119	)		(5.967	)
Exchange differences		(242.514	)		(144.088	)		981			(5	)		—			—			(241.533	)		(144.093	)
Result of indexation units		9			3			—			—			—			—			9			3

Income (loss) attributable to owners of the parents		(146.375	)		(150.445	)		33.031			42.616			—			—			(113.344	)		(107.829	)

Participation of the entity in the income of associates		—			(155	)		—			(734	)		—			—			—			(889	)
Expenses for income tax		102.653			23.944			(20.449	)		(19.838	)		—			—			82.204			4.106
Segment profit / (loss)		(136.520	)		(135.449	)		33.031			42.616			—			—			(103.489	)		(92.833	)
Assets of segment		16.839.969			18.955.549			1.145.684			1.850.640			(10.626	)		(158.990	)		17.975.027			20.647.199
Investments in associates		—			1.059			—			780			—			—			—			1.839

Amount of non-current asset additions		505.142			386.360			—			—			—			—			505.142			386.360

Property, plant and equipment		491.317			367.757			—			—			—			—			491.317			367.757
Intangibles other than goodwill		13.825			18.603			—			—			—			—			13.825			18.603

Segment liabilities		14.629.948			15.068.325			426.398			798.235			(33.974	)		(81.865	)		15.022.372			15.784.695
Purchase of non-monetary assets of segment		399.116			369.557			—			—			—			—			399.116			369.557

(*)	The Company does not have any interest revenue that should be recognized as income from ordinary activities by interest.

The Company’s revenues by geographic area are as follows:


	For the 9 months ended At September 30,				For the 3 months ended At September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Peru		502,093		484,562		179,655		176,383
Argentina		720,921		620,146		254,579		194,630
U.S.A.		768,812		944,287		245,855		299,536
Europe		520,162		702,403		173,102		225,514
Colombia		263,191		285,909		78,977		105,221
Brazil		2,761,112		4,047,081		869,570		1,472,609
Ecuador		181,765		181,228		59,125		62,436
Chili		1,185,981		1,190,567		388,118		402,477
Asia Pacific and rest of Latin America		524,882		653,604		174,483		108,766

Income from ordinary activities		7,428,919		9,109,787		2,423,464		3,047,572

Other operating income		289,899		256,676		91,358		93,728

The Company allocates revenues by geographic area based on the point of sale of the passenger ticket or cargo. Assets are composed primarily of aircraft and aeronautical equipment, which are used throughout the different countries, so it is not possible to assign a geographic area.

The Company has no customers that individually represent more than 10% of sales.

NOTE 6 - CASH AND CASH EQUIVALENTS


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Cash on hand		15,745		11,568
Bank balances		244,910		239,514
Overnight		360,951		154,666

Total Cash		621,606		405,748


Cash equivalents
Time deposits		317,835		382,895
Mutual funds		83,485		200,753

Total cash equivalents		401,320		583,648

Total cash and cash equivalents		1,022,926		989,396

Cash and cash equivalents are denominated in the following currencies:


Currency	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Argentine peso		53,710		44,697
Brazilian real		85,263		45,591
Chilean peso (*)		33,369		30,758
Colombian peso		12,560		17,188
Euro		7,755		9,639
US Dollar		778,245		745,214
Strong bolivar (**)		45,902		63,236
Other currencies		6,122		33,073

Total		1,022,926		989,396

(*)	At September 30, 2015 and at December 31, 2014, the Company no maintains currency derivative contracts (forward)), for conversion into dollars of investments in pesos.

(**)

At September 30, 2015, the Company has approximately ThUS$ 45,902 in Cash and cash equivalents in Strong Bolivar. The exchange rate used in the determination of equivalence in US dollars is 13.5 VEF /US, modified on September 1, 2015, which represented a charge in results for the amount approximately ThUS$ 5,000. The Company has certain restrictions for freely remitting these funds outside Venezuela.

During 2014, the Company has modified the exchange rate used in determining equivalence of United States Dollar in cash and cash equivalents held in Strong Bolivar, from 6.3 VEF/US$ to 12.0 VEF/US$, which represented a charge in results for the period 2014 by foreign exchange, equivalent amount of ThUS$ 61,021.

The Company has done significant non-cash transactions mainly with financial leases, which are detailed in Note 16 letter (d), additional information in numeral (iv) Financial leases.

Other inflows (outflows) of cash:


	For the periods ended September 30,
	2015			2014
	ThUS$			ThUS$
	Unaudited
Hedging margin guarantees		89.280			27.900
Change reservation systems		11.000			—
Bank commissions, taxes paid and other		(4.028	)		(16.613	)
Tax paid on financial transaction		(8.905	)		—
Guarantees		(15.117	)		(34.115	)
Fuel derivatives premiums		(18.979	)		(2.858	)
Currency hedge		(25.047	)		(5.477	)
Fuel hedge		(220.069	)		1.137

Total Other inflows (outflows) Operation flow		(191.865	)		(30.026	)


Recovery loans convertible into shares		20.000			—
Certificate of bank deposits		3.497			(15.723	)
Tax paid on financial transaction		(8.196	)		—

Total Other inflows (outflows) Investment flow		15.301			(15.723	)


Aircraft Financing advances		9.067			769
Credit card loan manager		3.227			19.951
Early redemption of bonds TAM 2020		(15.328	)		—
Settlement of derivative contracts		(27.744	)		(32.321	)
Others		(2.822	)		(3.348	)


Total Other inflows (outflows) Financing flow		(33.600	)		(14.949	)

NOTE 7 - FINANCIAL INSTRUMENTS

7.1.	Financial instruments by category

As of September 30, 2015 (Unaudited)


Assets	Loans and receivables		Hedge derivatives		Held for trading		Initial designation as fair value through profit and loss		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		939.441		—		—		83.485		1.022.926
Other financial assets, current (*)		37.488		31.354		18.229		501.205		588.276
Trade and others accounts receivable, current		976.144		—		—		—		976.144
Accounts receivable from related entities, current		392		—		—		—		392
Other financial assets, non current (*)		65.408		—		596		—		66.004
Accounts receivable, non current		9.889		—		—		—		9.889

Total		2.028.762		31.354		18.825		584.690		2.663.631


Liabilities	Other financial liabilities		Held Hedge derivatives		Total
	ThUS$		ThUS$		ThUS$
Other liabilities, current		1.496.273		132.805		1.629.078
Trade and others accounts payable, current		1.390.531		—		1.390.531
Accounts payable to related entities, current		38		—		38
Other financial liabilities, non-current		7.316.081		22.810		7.338.891
Accounts payable, non-current		566.675		—		566.675

Total		10.769.598		155.615		10.925.213

(*)	The value presented as initial designation as fair value through profit and loss, corresponds mainly to private investment funds; and loans and receivables corresponds to guarantees given.

As of December 31, 2014


Assets	Loans and receivables		Hedge derivatives		Held for trading		Initial designation as fair value through profit and loss		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		788,643		—		—		200,753		989,396
Other financial assets, current (*)		103,866		2,161		41,111		503,263		650,401
Trade and others accounts receivable, current		1,378,837		—		—		—		1,378,837
Accounts receivable from related entities, current		308		—		—		—		308
Other financial assets, non current (*)		84,495		—		491		—		84,986
Accounts receivable, non current		30,465		—		—		—		30,465

Total		2,386,614		2,161		41,602		704,016		3,134,393


Liabilities	Other financial liabilities		Hedge derivatives		Held for trading		Total
	ThUS$		ThUS$		ThUS$		ThUS$
Other liabilities, current		1,397,382		226,043		1,190		1,624,615
Trade and others accounts payable, current		1,489,396		—		—		1,489,396
Accounts payable to related entities, current		35		—		—		35
Other financial liabilities, non-current		7,360,685		28,327		—		7,389,012
Accounts payable, non-current		577,454		—		—		577,454

Total		10,824,952		254,370		1,190		11,080,512

(*)	The value presented as initial designation as fair value through profit and loss, corresponds mainly to private investment funds; and loans and receivables corresponds to guarantees given.

7.2.	Financial instruments by currency

Assets


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Cash and cash equivalents		1,022,926		989,396
Argentine peso		53,710		44,697
Brazilian real		85,263		45,591
Chilean peso		33,369		30,758
Colombian peso		12,560		17,188
Euro		7,755		9,639
US Dollar		778,245		745,214
Strong bolivar		45,902		63,236
Other currencies		6,122		33,073
Other financial assets (current and non-current)		654,280		735,387
Argentine peso		17,991		45,169
Brazilian real		512,594		500,875
Chilean peso		1,589		26,881
Colombian peso		326		406
Euro		519		4,244
US Dollar		119,294		156,687
Strong bolivar		20		43
Other currencies		1,947		1,082
Trade and other accounts receivable, current		976,144		1,378,837
Argentine peso		140,220		100,798
Brazilian real		218,926		528,404
Chilean peso		91,001		131,191
Colombian peso		6,717		9,021
Euro		40,750		38,764
US Dollar		351,391		369,774
Strong bolivar		1,797		4,895
Other currencies (*)		125,342		195,990
Accounts receivable, non-current		9,889		30,465
Brazilian real		512		761
Chilean peso		4,221		5,814
US Dollar		5,000		23,734
Other currencies (*)		156		156
Accounts receivable from related entities, current		392		308
Brazilian real		—		9
Chilean peso		302		299
Other currencies (*)		90		—
Total assets		2,663,631		3,134,393
Argentine peso		211,921		190,664
Brazilian real		817,295		1,075,640
Chilean peso		130,482		194,943
Colombian peso		19,603		26,615
Euro		49,024		52,647
US Dollar		1,253,930		1,295,409
Strong bolivar		47,719		68,174
Other currencies		133,657		230,301

(*)	See the composition of the others currencies in Note 8 Trade, other accounts receivable and non-current accounts receivable.

b)	Liabilities

Liabilities information is detailed in the table within Note 3 Financial risk management.

NOTE 8 - TRADE AND OTHER ACCOUNTS RECEIVABLE CURRENT, AND NON-CURRENT ACCOUNTS RECEIVABLE


	As of September 30, 2015			As of December 31, 2014
	ThUS$			ThUS$
	Unaudited
Trade accounts receivable		871,594			1,269,435
Other accounts receivable		177,613			210,909

Total trade and other accounts receivable		1,049,207			1,480,344
Less: Allowance for impairment loss		(63,174	)		(71,042	)

Total net trade and accounts receivable		986,033			1,409,302
Less: non-current portion – accounts receivable		(9,889	)		(30,465	)

Trade and other accounts receivable, current		976,144			1,378,837

The fair value of trade and other accounts receivable does not differ significantly from the book value.

The maturity of these accounts at the end of each period is as follows:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Fully performing		739,796		1,088,364
Matured accounts receivable, but not impaired
Expired from 1 to 90 days		38,151		83,599
Expired from 91 to 180 days		18,012		11,521
More than 180 days overdue (*)		12,461		14,909

Total matured accounts receivable, but not impaired		68,624		110,029

Matured accounts receivable and impaired
Judicial, pre-judicial collection and protested documents		28,476		53,956
Debtor under pre-judicial collection process and portfolio sensitization		34,698		17,086

Total matured accounts receivable and impaired		63,174		71,042

Total		871,594		1,269,435

(*)	Value of this segment corresponds primarily to accounts receivable that were evaluated in their ability to recover, therefore not requiring a provision.

Currency balances that make up the Trade and other accounts receivable and non-current accounts receivable:


Currency	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Argentine Peso		140,220		100,798
Brazilian Real		219,438		529,165
Chilean Peso		95,222		137,005
Colombian peso		6,717		9,021
Euro		40,750		38,764
US Dollar		356,391		393,508
Strong bolivar		1,797		4,895
Other currency (*)		125,498		196,146

Total		986,033		1,409,302


(*) Other currencies
Australian Dollar		13,634		15,243
Chinese Yuan		6,184		35,626
Danish Krone		3,785		8,814
Pound Sterling		33,869		33,624
Indian Rupee		105		1,887
Japanese Yen		3,405		4,635
Norwegian Kroner		7,580		16,516
Swiss Franc		6,382		5,701
Korean Won		7,976		25,203
New Taiwanese Dollar		4,801		10,323
Other currencies		37,777		38,574

Total		125,498		196,146

The Company records allowances when there is evidence of impairment of trade receivables. The criteria used to determine that there is objective evidence of impairment losses are the maturity of the portfolio, specific acts of damage (default) and specific market signals.


Maturity	Impairment
Judicial and pre-judicial collection assets		100	%
Over 1 year		100	%
Between 6 and 12 months		50	%

Movement in the allowance for impairment loss of Trade and other accounts receivables:


Periods	Opening balance ThUS$			Write-offs ThUS$		(Increase) Decrease ThUS$			Closing balance ThUS$
From January 1 to September 30, 2014 (Unaudited)		(70,602	)		2,398		(7,639	)		(75,843	)
From April 1 to December 31, 2014		(75,843	)		4,466		335			(71,042	)
From January 1 to September 30, 2015 (Unaudited)		(71,042	)		613		7,255			(63,174	)

Once pre-judicial and judicial collection efforts are exhausted, the assets are written off against the allowance. The Company only uses the allowance method rather than direct write-off, to ensure control.

Historic and current re-negotiations are not relevant and the policy is to analyze case by case in order to classify them according to the existence of risk, determining whether it is appropriate to re-classify accounts to pre-judicial recovery. If such re-classification is justified, an allowance is made for the account, whether overdue or falling due.

The maximum credit-risk exposure at the date of presentation of the information is the fair value of each one of the categories of accounts receivable indicated above.


	As of September 30, 2015 (Unaudited)							As of December 31, 2014
	Gross exposure according to balance		Gross impaired exposure			Exposure net of risk concentrations		Gross exposure according to balance		Gross Impaired exposure			Exposure net of risk concentrations
	ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$

Trade accounts receivable		871,594		(63,174	)		808,420		1,269,435		(71,042	)		1,198,393
Other accounts receivable		177,613		—			177,613		210,909		—			210,909

There are no relevant guarantees covering credit risk and these are valued when they are settled; no materially significant direct guarantees exist. Existing guarantees, if appropriate, are made through IATA.

NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES

(a)	Accounts Receivable

Tax No.

Related party

Relationship

Country
of origin

Currency

As of
September 30,
2015

As of
December 31,
2014

ThUS$

Unaudited

78.591.370-1

Inversiones Costa Verde Ltda. y CPA.

Controller

Chile

CLP

—

78.591.370-1

Bethia S.A. and Subsidiaries

Others related parties

Chile

CLP

292

284

79.773.440-1

Transportes San Felipe S.A.

Others related parties

Chile

CLP

—

87.752.000-5

Granja Marina Tornagaleones S.A.

Others related parties

Chile

CLP

Foreign

Consultoría Administrativa Profesional

Others related parties

Mexico

MXN

—

Foreign

Prisma Fidelidade S.A.

Joint Venture

Brazil

BRL

—

Total current assets

392

308

(b)	Accounts payable

Tax No.

Related party

Relationship

Country
of origin

Currency

As of
September 30,
2015

As of
December 31,
2014

ThUS$

Unaudited

65.216.000-K

Comunidad Mujer

Other related parties

Chile

CLP

78.591.370-1

Bethia S.A. and Subsidiaries

Other related parties

Chile

CLP

Foreign

Inversora Aeronaútica Argentina

Other related parties

Argentina

US$

Total current liabilities

Transactions between related parties have been carried out on free-trade conditions between interested and duly-informed parties. The transaction times are between 30 and 45 days, and the nature of settlement of the transactions is monetary.

NOTE 10 - INVENTORIES


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited

Technical stock		167,680		229,313
Non-technical stock		35,832		36,726

Total production suppliers		203,512		266,039

The items included in this heading are spare parts and materials that will be used mainly in consumption in in-flight and maintenance services provided to the Company and third parties, which are valued at average cost, net of provision for obsolescence that as of September 30, 2015 amounts to ThUS$ 4,924 (ThUS$ 2,982 as of December 31, 2014). The resulting amounts do not exceed the respective net realizable values.

As of September 30, 2015, the Company recorded ThUS$ 122,248 (ThUS$ 133,529 as of September 30, 2014) within the income statement, mainly due to in-flight consumption and maintenance, which forms part of Cost of sales.

During the period of 2015 no reversals of write-downs resulting from an increase in net realizable value were recognized.

NOTE 11 - OTHER FINANCIAL ASSETS

The composition of Other financial assets is as follows:


	Current Assets				Non-current assets				Total Assets
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
(a) Other financial assets

Private investment funds		501,205		480,777		—		—		501,205		480,777
Deposits in guarantee (aircraft)		28,139		8,458		59,743		70,155		87,882		78,613
Certificate of deposit (CBD)		—		18,293		—		—		—		18,293
Guarantees for margins of derivatives		3,274		92,556		—		—		3,274		92,556
Deposits in guarantee (loan)		—		—		2,560		11,116		2,560		11,116
Other investments		—		4,193		596		491		596		4,684
Domestic and foreign bonds		18,144		41,111		—		—		18,144		41,111
Other guarantees given		6,075		2,852		3,105		3,224		9,180		6,076

Subtotal of other financial assets		556,837		648,240		66,004		84,986		622,841		733,226


(b) Hedging assets

Interest accrued since the last payment date of Cross currency swap		1,036		377		—		—		1,036		377
Fair value of interest rate derivatives		—		1		—		—		—		1
Fair value of foreign currency derivatives (*)		13,965		—		—		—		13,965		—
Fair value of fuel price derivatives		16,353		1,783		—		—		16,353		1,783

Subtotal of hedging assets		31,354		2,161		—		—		31,354		2,161


(c) Derivatives not recognized as a hedge

Foreign currency derivatives not recognized as a hedge		85		—		—		—		85		—

Subtotal of hedging assets		85		—		—		—		85		—

Total Other Financial Assets		588,276		650,401		66,004		84,986		654,280		735,387

(*)	The foreign currency derivatives correspond to forward and combination of options.

The types of derivative hedging contracts maintained by the Company at the end of each period are presented in Note 18.

NOTE 12 - OTHER NON-FINANCIAL ASSETS

The composition of Other non-financial assets is as follows:


	Current assets				Non-current assets				Total Assets
	As of September 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
(a) Advance payments

Aircraft leases		32.555		26.039		31.845		26.201		64.400		52.240
Aircraft insurance and other		18.517		12.160		—		—		18.517		12.160
Others		18.236		17.970		41.888		36.450		60.124		54.420

Subtotal advance payments		69.308		56.169		73.733		62.651		143.041		118.820


(b) Other as sets

Aircraft maintenance reserve (*)		101.446		31.108		74.543		123.588		175.989		154.696
Sales tax		168.599		155.795		54.697		64.652		223.296		220.447
Other taxes		4.150		3.513		—		—		4.150		3.513
Contributions to Société Internationale de Télécommunications Aéronautiques (“SITA”)		599		599		453		453		1.052		1.052
Judicial deposits		—		—		63.430		90.450		63.430		90.450
Others		—		687		1.182		1.019		1.182		1.706

Subtotal other assets		274.794		191.702		194.305		280.162		469.099		471.864

Total Other Non-Financial Assets		344.102		247.871		268.038		342.813		612.140		590.684

(*)	Aircraft maintenance reserves reflect prepayment deposits made by the group to lessors of certain aircraft under operating lease agreements in order to ensure that funds are available to support the scheduled heavy maintenance of the aircraft.

These amounts are calculated based on performance measures, such as flight hours or cycles, are paid periodically (usually monthly) and are contractually required to be repaid to the lessee upon the completion of the required maintenance of the leased aircraft. At the end of the lease term, any unused maintenance reserves are either returned to the Company in cash or used to offset amounts that we may owe the lessor as a maintenance adjustment.

In some cases (5 lease agreements), if the maintenance cost incurred by LATAM is less than the corresponding maintenance reserves, the lessor is entitled to retain those excess amounts at the time the heavy maintenance is performed. The Company periodically reviews its maintenance reserves for each of its leased aircraft to ensure that they will be recovered, and recognizes an expense if any such amounts are less than probable of being returned. Since the acquisition of TAM in June 2012, the cost of aircraft maintenance has been higher than the related maintenance reserves for all aircraft.

As of September 30, 2015, LATAM had ThUS$ 175,989 in maintenance reserves (ThUS$ 154,696 at December 31, 2014), corresponding to 10 aircraft out of a total fleet of 328 (12 aircraft out of a total fleet of 327 at December 31, 2014). All of the Company’s aircraft leases containing provisions for maintenance reserves will expire fully by 2017.

Aircraft maintenance reserves are classified as current or non-current depending on the dates when the related maintenance is expected to be performed (Note 2.23).

NOTE 13 - INVESTMENTS IN SUBSIDIARIES

(a)	Investments in subsidiaries

The Company has investments in companies recognized as investments in subsidiaries. All the companies defined as subsidiaries have been consolidated within the financial statements of LATAM Airlines Group S.A. and Subsidiaries. The consolidation also includes special-purpose entities.

Detail of significant subsidiaries and summarized financial information:

Ownership

Name of significant subsidiary

Country
of
incorporation

Functional
currency

As of
September 30,
2015
%

As of
December 31,
2014
%

Unaudited

Lan Perú S.A.

Peru

US$

69.97858

Lan Cargo S.A.

Chile

US$

99.89803

Lan Argentina S.A.

Argentina

ARS

94.99055

Transporte Aéreo S.A.

Chile

US$

99.89804

Aerolane Líneas Aéreas Nacionales del Ecuador S.A.

Ecuador

US$

100.00000

Aerovías de Integración Regional, AIRES S.A.

Colombia

COP

99.01646

TAM S.A.

Brazil

BRL

99.99938

The consolidated subsidiaries do not have significant restrictions for transferring funds to controller.

Summary financial information of significant subsidiaries


	Statement of financial position as of September 30, 2015												Results for the period ended September 30, 2015
Name of significant subsidiary	Total Assets		Current Assets		Non-current Assets		Total Liabilities		Current Liabilities		Non-current Liabilities		Revenue		Net Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited												Unaudited
Lan Perú S.A.		277,829		252,357		25,472		269,937		268,178		1,759		815,691		(1,793	)
Lan Cargo S.A.		512,341		185,704		326,637		228,107		148,005		80,102		207,538		(56,973	)
Lan Argentina S.A.		214,041		190,455		23,586		178,078		175,640		2,438		328,172		10,152
Transporte Aéreo S.A.		355,605		73,201		282,404		142,489		64,053		78,436		247,727		8,395
Aerolane Líneas Aéreas Nacionales del Ecuador S.A.		116,152		66,083		50,069		103,213		98,099		5,114		186,160		1,813
Aerovías de Integración Regional, AIRES S.A.		133,953		70,062		63,891		71,750		61,319		10,431		215,385		(28,670	)
TAM S.A. (*)		4,839,717		1,484,526		3,355,191		4,345,979		1,797,507		2,548,472		3,601,767		(171,609	)


	Statement of financial position as of December 31, 2014												Results for the period ended September 30, 2014
Name of significant subsidiary	Total Assets		Current Assets		Non-current Assets		Total Liabilities		Current Liabilities		Non-current Liabilities		Revenue		Net Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
													Unaudited
Lan Perú S.A.		239,470		214,245		25,225		228,395		226,784		1,611		840,740		(102	)
Lan Cargo S.A.		575,979		250,174		325,805		234,772		119,111		115,661		204,867		(39,795	)
Lan Argentina S.A.		233,142		206,503		26,639		201,168		198,593		2,575		323,258		(22,624	)
Transporte Aéreo S.A.		367,570		80,090		287,480		147,278		59,805		87,473		268,861		(11,366	)
Aerolane Líneas Aéreas Nacionales del Ecuador S.A.		126,472		78,306		48,166		116,040		111,718		4,322		189,897		(16,147	)
Aerovías de Integración Regional, AIRES S.A.		131,324		38,751		92,573		61,736		49,577		12,159		304,338		(68,192	)
TAM S.A. (*)		6,817,698		1,921,316		4,896,382		5,809,529		2,279,110		3,530,419		5,031,711		57,708

(b)	Non-controlling interest


Equity	Tax No.	Country of origin	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015			As of December 31, 2014
			%		%		ThUS$			ThUS$
			Unaudited				Unaudited
Lan Perú S.A	0-E	Peru		30.00000		30.00000		2,368			3,323
Lan Cargo S.A. and Subsidiaries	93.383.000-4	Chile		0.10605		0.10605		1,010			925
Inversiones Lan S.A. and Subsidiaries	96.575.810-0	Chile		0.00000		0.29000		—			5
Promotora Aérea Latinoamericana S.A. and Subsidiaries	0-E	Mexico		51.00000		51.00000		3,564			1,730
Inversora Cordillera S.A. and Subsidiaries	0-E	Argentina		4.22000		4.22000		(945	)		195
Lan Argentina S.A.	0-E	Argentina		1.00000		1.00000		(142	)		217
Americonsult de Guatemala S.A.	0-E	Guatemala		1.00000		1.00000		6			5
Americonsult Costa Rica S.A.	0-E	Costa Rica		1.00000		1.00000		11			6
Linea Aérea Carguera de Colombiana S.A.	0-E	Colombia		10.00000		10.00000		(493	)		(826	)
Aerolíneas Regionales de Integración Aires S.A.	0-E	Colombia		0.98307		0.98307		611			684
Transportes Aereos del Mercosur S.A.	0-E	Paraguay		5.02000		5.02000		957			825
Multiplus S.A.	0-E	Brazil		27.26000		27.26000		71,731			94,710

Total								78,678			101,799


Incomes	Tax No.	Country of origin	As of September 30, 2015		As of December 31, 2014		For the 9 months ended September 30,						For the 3 months ended September 30,
Incomes	Tax No.	Country of origin	As of September 30, 2015		As of December 31, 2014		2015			2014			2015			2014
			%		%		ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited
Lan Perú S.A	0-E	Peru		30.00000		30.00000		(538	)		(31	)		114			3,837
Lan Cargo S.A. and Subsidiaries	93.383.000-4	Chile		0.10605		0.10605		(53	)		(66	)		(35	)		(31	)
Inversiones Lan S.A. and Subsidiaries	96.575.810-0	Chile		0.00000		0.29000		—			(1	)		—			(2	)
Promotora Aerea Latinoamericana S.A. and Subsidiaries	0-E	Mexico		51.00000		51.00000		1,829			(247	)		322			59
Aerolane, Lineas Aéreas Nacionales del Ecuador S.A.	0-E	Ecuador		28.05000		28.05000		—			(5,758	)		—			63
Inversora Cordillera S.A. and Subsidiaries	0-E	Argentina		4.22000		4.22000		202			200			68			67
Lan Argentina S.A.	0-E	Argentina		1.00000		1.00000		44			44			15			15
Americonsult de Guatemala S.A.	0-E	Guatemala		1.00000		1.00000		1			2			—			2
Americonsult Costa Rica S.A.	0-E	Costa Rica		1.00000		1.00000		4			4			1			1
Linea Aérea Carguera de Colombiana S.A.	0-E	Colombia		10.00000		10.00000		332			(828	)		379			(119	)
Aerolíneas Regionales de Integración Aires S.A.	0-E	Colombia		0.98307		0.98307		(282	)		(670	)		(145	)		(346	)
Transportes Aereos del Mercosur S.A.	0-E	Paraguay		5.02000		5.02000		(26	)		(111	)		132			(142	)
Multiplus S.A.	0-E	Brazil		27.26000		27.26000		27,721			28,790			9,004			11,592

Total								29,234			21,328			9,855			14,996

NOTE 14 - INTANGIBLE ASSETS OTHER THAN GOODWILL

The details of intangible assets are as follows:


	Classes of intangible assets (net)				Classes of intangible assets (gross)
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited

Airport slots		802,982		1,201,028		802,982		1,201,028
Loyalty program		267,644		400,317		267,644		400,317
Computer software		95,755		126,797		310,707		309,846
Developing software		68,206		74,050		68,206		74,050
Trademarks		52,074		77,887		52,074		77,887
Other assets		—		—		808		808

Total		1,286,661		1,880,079		1,502,421		2,063,936

Movement in Intangible assets other than goodwill:


	Computer software Net			Developing software			Airport slots (*)			Trademarks and loyalty program (*)			Other assets Net			Total
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance as of January 1, 2014		143,124			46,075			1,361,807			542,221			81			2,093,308
Additions		12,562			42,094			—			—			—			54,656
Withdrawals		(1,214	)		(2,669	)		—			—			—			(3,883	)
Transfer software		18,732			(21,036	)		—			—			—			(2,304	)
Foreing exchange		(2,466	)		(1,812	)		(60,228	)		(23,981	)		—			(88,487	)
Amortization		(37,647	)		—			—			—			—			(37,647	)

Closing balance as of September 30, 2014 (Unaudited)		133,091			62,652			1,301,579			518,240			81			2,015,643


Opening balance as of October 1, 2014		133,091			62,652			1,301,579			518,240			81			2,015,643
Additions		4,340			18,900			—			—			—			23,240
Withdrawals		(151	)		(907	)		—			—			—			(1,058	)
Transfer software		3,619			(3,503	)		—			—			—			116
Foreing exchange		(4,297	)		(3,092	)		(100,551	)		(40,036	)		—			(147,976	)
Amortization		(9,805	)		—			—			—			(81	)		(9,886	)

Closing balance as of December 31, 2014		126,797			74,050			1,201,028			478,204			—			1,880,079


Opening balance as of January 1, 2015		126,797			74,050			1,201,028			478,204			—			1,880,079
Additions		4,218			27,289			—			—			—			31,507
Withdrawals		(3,429	)		—			—			—			—			(3,429	)
Transfer software		15,552			(15,750	)		—			—			—			(198	)
Foreing exchange		(15,480	)		(17,383	)		(398,046	)		(158,486	)		—			(589,395	)
Amortization		(31,903	)		—			—			—			—			(31,903	)

Closing balance as of September 30, 2015 (Unaudited)		95,755			68,206			802,982			319,718			—			1,286,661

The amortization of the period is shown in the consolidated statement of income in administrative expenses. The accumulated amortization of computer programs as of September 30, 2015 amounts to ThUS$ 214,952 (ThUS$ 183,049 as of December 31, 2014). The accumulated amortization of other identifiable intangible assets as of September 30, 2015 amounts to ThUS$ 808 (ThUS$ 808 as of December 31, 2014).

(*)	See Note 2.5

NOTE 15 - GOODWILL

The Goodwill amount at September 30, 2015 is ThUS$ 2,244,869 (ThUS$ 3,313,401 at December 31, 2014).

The Company has two cash- generating units (CGUs), confirming the existence of two cash- generating units: “Air transportation” and, “Coalition and loyalty program Multiplus”; consistent with this, at December 31, 2014 was performed impairment tests based on value in use and no impairment was identified. These tests are done at least once per year.

At December 31, 2014, the recoverable amounts of cash generating units have been determined from estimated cash flows by the Administration. The main assumptions used are disclosed as follows:


		Air transportation CGU	Coalition and loyalty program Multiplus CGU (2)
Annual growth rate (Terminal)	%	1.5 and 2.5	4.7 and 5.7
Exchange rate (1)	R$/US$	2.7 and 3.62	2.7 and 3.62
Discount rate based on the weighted average cost of capital (WACC)	%	9.8 and 10.8	—
Discount rate based on cost of equity (CoE)	%	—	18.0 and 24.0
Fuel Price from futures price curves commodities markets	US$/barril	90	—

(1)	In line with the expectations of the Central Bank of Brazil

Given the expectation of growth and the long investment cycles characteristic of the industry, projections of ten years are used.

The result of the impairment test, which includes a sensitivity analysis of the main variables, showed that the estimated recoverable amount is higher than carrying value of the book value of net assets allocated to the cash generating unit, and therefore impairment was not detected.

The sensitivity analysis included individual impact of variations in the key assumptions with impact on the determination of the recoverable amounts, namely:


	Increase Maximum WACC		Increase Maximum CoE		Decrease Minimum terminal growth rate
	%		%		%
Air transportation CGU		10.8		—		1.5
Coalition and loyalty program Multiplus CGU		—		24.0		4.7

In none of the previous cases impairment in the cash- generating unit was presented.

In June 2015, changes in economic conditions in the region as well as the Company’s share price, gave rise to impairment indicators requiring an early assessment of possible impairment of the CGU Air Transport. Management determined as a result of this assessment that there was no impairment.


		CGU
Annual growth rate (Terminal)	%	1.5 and 2.5
Exchange rate (1)	R$/US$	3.2 and 3.85
Discount rate based on the weighted average cost of capital (WACC)	%	10.1 and 10.8
Discount rate based on cost of equity (CoE)	%	—
Fuel Price from futures price curves commodities markets	US$/barril	74.2 and 90

(1)	In line with the expectations of the Central Bank of Brazil

Given the expectation of growth and the long investment cycles characteristic of the industry, projections of ten years are used.

At September 30, 2015, there have not been any new indications of impairment requiring an impairment test.

Movement of Goodwill, separated by CGU:


	Air Transport			Coalition and loyalty program Multiplus			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2014		2,985,037			742,568			3,727,605
Increase (decrease) due to exchange rate differences		(129,567	)		(32,842	)		(162,409	)

Closing balance as of September 30, 2014 (Unaudited)		2,855,470			709,726			3,565,196

Opening balance as of October 1, 2014		2,855,470			709,726			3,565,196
Increase (decrease) due to exchange rate differences		(230,804	)		(54,828	)		(285,632	)
Others		33,837			—			33,837

Closing balance as of December 31, 2014		2,658,503			654,898			3,313,401

Opening balance as of January 1, 2015		2,658,503			654,898			3,313,401
Increase (decrease) due to exchange rate differences		(851,485	)		(217,047	)		(1,068,532	)

Closing balance as of September 30, 2015 (Unaudited)		1,807,018			437,851			2,244,869

NOTE 16 - PROPERTY, PLANT AND EQUIPMENT

The composition by category of Property, plant and equipment is as follows:


	Gross Book Value				Acumulated depreciation						Net Book Value
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015			As of December 31, 2014			As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
	Unaudited				Unaudited						Unaudited
Construction in progress		1,093,583		937,279		—			—			1,093,583		937,279
Land		44,762		57,988		—			—			44,762		57,988
Buildings		126,055		249,361		(39,990	)		(82,355	)		86,065		167,006
Plant and equipment		8,841,493		8,660,352		(1,891,716	)		(1,770,560	)		6,949,777		6,889,792
Own aircraft		8,326,213		7,531,526		(1,700,300	)		(1,407,704	)		6,625,913		6,123,822
Other		515,280		1,128,826		(191,416	)		(362,856	)		323,864		765,970
Machinery		35,579		65,832		(20,199	)		(42,099	)		15,380		23,733
Information technology equipment		156,415		188,208		(114,395	)		(137,199	)		42,020		51,009
Fixed installations and accessories		175,642		97,090		(88,439	)		(53,307	)		87,203		43,783
Motor vehicles		95,788		95,981		(62,107	)		(53,452	)		33,681		42,529
Leasehold improvements		118,490		144,230		(66,837	)		(87,707	)		51,653		56,523
Other property, plants and equipment		3,617,495		4,522,589		(1,463,609	)		(2,019,155	)		2,153,886		2,503,434
Financial leasing aircraft		3,469,132		4,365,247		(1,429,645	)		(1,985,458	)		2,039,487		2,379,789
Other		148,363		157,342		(33,964	)		(33,697	)		114,399		123,645

Total		14,305,302		15,018,910		(3,747,292	)		(4,245,834	)		10,558,010		10,773,076

(*)	It includes pre-delivery payments to aircraft manufacturers for ThUS$ 944,582 (ThUS$ 816,324 as of December 31, 2015)

(**)	Mainly considers rotable and tools.

(a)	The movement in the different categories of Property, plant and equipment from January 1, 2014 to September 30, 2015 is shown below:


	Construction in progress			Land			Buildings net			Plant and equipment net			Information technology equipment net			Fixed installations & accessories net			Motor vehicles net			Leasehold improvements net			Other property, plant and equipment net			Property, Plant and equipment net
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$			ThUS$

Opening balance as of January 1, 2014		858,650			59,352			171,785			6,807,118			46,219			50,592			1,744			16,769			2,970,557			10,982,786

Additions		17,612			—			10,720			681,503			17,400			1,802			1,468			—			116,828			847,333
Disposals		—			—			—			(570,917	) (*)		(40	)		—			—			—			(328	)		(571,285	)
Retirements		(310	)		—			(142	)		(20,323	)		(181	)		(223	)		(53	)		(2,874	)		(31,246	)		(55,352	)
Depreciation expenses		—			—			(10,340	)		(319,890	)		(12,494	)		(6,709	)		(375	)		(14,664	)		(224,926	)		(589,398	)
Foreing exchange		1,314			(1,800	)		(4,912	)		(23,118	)		(1,639	)		(942	)		(100	)		—			(31,855	)		(63,052	)
Other increases (decreases)		46,210			—			2,767			149,346			1,950			3,212			34			58,931			(207,471	)		54,979

Changes, total		64,826			(1,800	)		(1,907	)		(103,399	)		4,996			(2,860	)		974			41,393			(378,998	)		(376,775	)

Closing balance as of September 30, 2014 (Unaudited)		923,476			57,552			169,878			6,703,719			51,215			47,732			2,718			58,162			2,591,559			10,606,011


Opening balance as of October 1, 2014		923,476			57,552			169,878			6,703,719			51,215			47,732			2,718			58,162			2,591,559			10,606,011

Additions		12,368			3,440			5,916			532,779			4,839			388			118			—			37,221			597,069
Disposals		—			—			—			(89,212	)		(17	)		—			(4	)		—			—			(89,233	)
Retirements		(395	)		—			(261	)		(19,140	)		(24	)		(7	)		—			2,824			(3,036	)		(20,039	)
Depreciation expenses		—			—			(3,640	)		(112,077	)		(4,395	)		(2,190	)		(666	)		(4,463	)		(61,107	)		(188,538	)
Foreing exchange		(581	)		(3,004	)		(7,429	)		(36,839	)		(1,956	)		(567	)		430			—			(78,872	)		(128,818	)
Other increases (decreases)		2,411			—			2,542			(25,141	)		1,347			(1,573	)		(631	)		—			17,669			(3,376	)

Changes, total		13,803			436			(2,872	)		250,370			(206	)		(3,949	)		(753	)		(1,639	)		(88,125	)		167,065

Closing balance as of December 31, 2014		937,279			57,988			167,006			6,954,089			51,009			43,783			1,965			56,523			2,503,434			10,773,076

Opening balance as of January 1, 2015		937,279			57,988			167,006			6,954,089			51,009			43,783			1,965			56,523			2,503,434			10,773,076

Additions		26,970			—			—			706,106			9,978			1,334			228			11,408			44,141			800,165
Disposals		—			—			(500	)		(73,019	)		(26	)		—			(6	)		—			(11	)		(73,562	)
Retirements		(38	)		—			—			(26,188	)		(87	)		(207	)		(4	)		—			(5,876	)		(32,400	)
Depreciation expenses		—			—			(6,385	)		(382,418	)		(12,578	)		(8,155	)		(280	)		(10,751	)		(134,464	)		(555,031	)
Foreing exchange		104			(12,160	)		(19,311	)		(151,242	)		(5,946	)		(12,442	)		(453	)		(2,458	)		(243,467	)		(447,375	)
Other increases (decreases)		129,268			(1,066	)		(54,745	)		(30,248	)		(330	)		62,890			308			(3,069	)		(9,871	)		93,137

Changes, total		156,304			(13,226	)		(80,941	)		42,991			(8,989	)		43,420			(207	)		(4,870	)		(349,548	)		(215,066	)

Closing balance as of September 30, 2015 (Unaudited)		1,093,583			44,762			86,065			6,997,080			42,020			87,203			1,758			51,653			2,153,886			10,558,010

(*)	During the first half of 2014 four Boeing 777-300ER aircraft were sold and subsequently leased.

(b)	Composition of the fleet:


		Aircraft included in the Company’s Property, plant and equipment						Operating leases				Total fleet
Aircraft	Model	As of September 30, 2015			As of December 31, 2014			As of September 30, 2015		As of December 31, 2014		As of September 30, 2015			As of December 31, 2014
		Unaudited						Unaudited				Unaudited
Boeing 767	300ER		34			34			4		4		38			38
Boeing 767	300F		8	(2)		8	(1)		3		3		11	(2)		11	(1)
Boeing 777	300ER		4			4			6		6		10			10
Boeing 777	Freighter		2			2			2		2		4			4
Boeing 787	800		6			6			4		4		10			10
Boeing 787	900		2			—			4		—		6			—
Airbus A319	100		39			40			12		12		51			52
Airbus A320	200		95			95			60		63		155			158
Airbus A321	200		21			18			10		3		31			21
Airbus A330	200		8			8			2		5		10			13
Airbus A340	300		—			3			—		—		—			3
Bombardier	Dhc8-200		—			2			2		5		2			7

Total			219			220			109		107		328			327

(1)	Two aircraft leased to FEDEX

(2)	Two aircraft leased to FEDEX

(c)	Method used for the depreciation of Property, plant and equipment:


	Method	Useful life
		minimum		maximum
Buildings	Straight line without residual value		20		50
Plant and equipment	Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet. (*)		5		20
Information technology equipment	Straight line without residual value		5		10
Fixed installations and accessories	Straight line without residual value		10		10
Motor vehicle	Straight line without residual value		10		10
Leasehold improvements	Straight line without residual value		5		5
Other property, plant and equipment	Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet. (*)		10		20

(*)	Except for certain technical components, which are depreciated on the basis of cycles and flight hours.

The aircraft with remarketing clause (**) under modality of financial leasing, which are depreciated according to the duration of their contracts, between 12 and 18 years. Its residual values are estimated according to market value at the end of such contracts.

(**)	Aircraft with remarketing clause are those that are required to sell at the end of the contract.

The depreciation charged to income in the period, which is included in the consolidated statement of income, amounts to ThUS$ 555,031 (ThUS$ 589,398 at September 30, 2014). Depreciation charges for the year are recognized in Cost of sales and administrative expenses in the consolidated statement of income.

(d)	Additional information regarding Property, plant and equipment:

(i)	Property, plant and equipment pledged as guarantee:

In the period ended September 30, 2015, direct guarantees by three Airbus A321-200 aircraft and two Boeing 787-9 aircraft were added. Additionally, as a result of the transfer plan fleet of TAM Linhas Aéreas S.A. to LATAM Airlines Group S.A.. the direct guarantee of one Airbus A320-200 aircraft was added.

Description of Property, plant and equipment pledged as guarantee:


			As of September 30, 2015				As of December 31, 2014
Creditor of guarantee	Assets committed	Fleet	Existing Debt		Book Value		Existing Debt		Book Value
			ThUS$		ThUS$		ThUS$		ThUS$
			Unaudited
Wilmington Trust Company	Aircraft and engines	Airbus A321		79,106		102,196		—		—
Wilmington Trust Company		Boeing 767		931,001		1,236,034		1,001,311		1,277,357
		Boeing 777 / 787		624,610		729,864		452,622		518,788
Banco Santander S.A.	Aircraft and engines	Airbus A319		60,481		96,785		66,318		100,485
		Airbus A320		539,887		767,151		585,008		788,706
		Airbus A321		37,192		45,842		39,739		45,161
BNP Paribas	Aircraft and engines	Airbus A319		159,850		233,524		174,714		238,103
		Airbus A320		149,746		196,026		162,304		207,881
Credit Agricole	Aircraft and engines	Airbus A319		42,341		112,206		55,797		121,038
		Airbus A320		125,996		219,695		157,514		219,460
		Airbus A321		53,039		101,348		60,288		63,939
JP Morgan	Aircraft and engines	Boeing 777		220,852		266,902		237,463		278,169
Wells Fargo	Aircraft and engines	Airbus A320		286,149		353,303		305,949		360,064
Bank of Utah	Aircraft and engines	Airbus A320		244,965		317,512		259,260		327,094
Natixis	Aircraft and engines	Airbus A320		58,736		83,378		48,814		55,946
		Airbus A321		421,994		548,636		405,416		488,198
Citibank N. A.	Aircraft and engines	Airbus A320		131,040		176,257		142,591		146,535
		Airbus A321		51,075		75,091		55,836		59,452
HSBC	Aircraft and engines	Airbus A320		54,948		65,138		59,005		59,342
KfW IPEX-Bank	Aircraft and engines	Airbus A320		14,234		17,042		16,088		17,516
PK AirFinance US, Inc.	Aircraft and engines	Airbus A320		64,363		48,068		69,721		70,102

Total direct guarantee				4,351,605		5,791,998		4,355,758		5,443,336

The amounts of existing debt are presented at nominal value. Book value corresponds to the carrying value of the goods provided as guarantees.

Additionally, there are indirect guarantees related to assets recorded in Property, plant and equipment whose total debt at September 30, 2015 amounted to ThUS$ 1,382,965 (ThUS$ 1,626,257 at December 31, 2014). The book value of assets with indirect guarantees as of September 30, 2015 amounts to ThUS$ 2,017,657 (ThUS$ 2,335,135 as of December 31, 2014).

(ii)	Commitments and others

Fully depreciated assets and commitments for future purchases are as follows:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$

Gross book value of fully depreciated property, plant and equipment still in use		130,587		138,960
Commitments for the acquisition of aircraft (*)		20,800,000		21,500,000

(*)	Acording to the manufacturer’s price list.

Purchase commitment of aircraft


	Year of delivery
Manufacturer	2015		2016		2017		2018		2019		2020		2021		Total

Airbus S.A.S.		6		23		26		25		13		14		7		114

A320-NEO		—		2		18		16		8		8		—		52
A321		5		15		—		—		—		—		—		20
A321-NEO		—		—		—		6		—		4		5		15
A350		1		6		8		3		2		5		2		27

The Boeing Company		1		4		1		4		6		—		—		16

B777		—		—		—		—		2		—		—		2
B787-8		—		—		—		—		4		—		—		4
B787-9		1		4		1		4		—		—		—		10

Total		7		27		27		29		19		14		7		130

In July 2014 the cancellation of 4 Airbus A320 was signed and changing 12 Airbus A320 aircraft for 12 Airbus A320 NEO aircraft. In December 2014 a contract was signed changing 4 Airbus A320 aircraft for 4 Airbus A320 NEO aircraft and changing 9 Airbus A321 aircraft for 9 Airbus A321 NEO aircraft. In September 2015 the change of 6 Airbus A350-900 aircraft for 6 Airbus A350-1000 aircraft was signed.

At September 30, 2015, as a result of the different aircraft purchase agreements signed with Airbus S.A.S., 87 aircraft Airbus A320 family, with deliveries between 2015 and 2021, and 27 Airbus aircraft A350 family with delivery dates starting from 2015 remain to be receive.

The approximate amount is ThUS$ 17,100,000, according to the manufacturer’s price list. Additionally, the Company has valid purchase options for 5 Airbus A350 aircraft.

In April 2015 the change of 8 Boeing 787-8 aircraft for 8 Boeing 787-8 aircraft was signed.

As of September 30, 2015, and as a result of different aircraft purchase contracts signed with The Boeing Company, a total of 14 787 Dreamliner aircraft, with delivery dates between 2015 and 2019, and two 777 with delivery expected for 2019 remain to receive. Additionally, the Company has valid purchase options for 15 787 Dreamliner aircraft.

The approximate amount, according to the manufacturer’s price list, is ThUS$ 3,700,000.

(iii)

Capitalized interest costs with respect to Property, plant and equipment.


		For the periods ended September 30,
		2015		2014
		Unaudited
Average rate of capitalization of capitalized interest costs	%		2.92		3.38
Costs of capitalized interest	ThUS$		15,835		15,464

(iv)	Financial leases

The detail of the main financial leases is as follows:


Lessor	Aircraft	Model	As of September 30, 2015		As of December 31, 2014
			Unaudited
Agonandra Statutory Trust	Airbus A319	100		—		4
Agonandra Statutory Trust	Airbus A320	200		2		2
Becacina Leasing LLC	Boeing 767	300ER		1		1
Caiquen Leasing LLC	Boeing 767	300F		1		1
Cernicalo Leasing LLC	Boeing 767	300F		2		2
Chirihue Leasing Trust	Boeing 767	300F		2		2
Cisne Leasing LLC	Boeing 767	300ER		2		2
Codorniz Leasing Limited	Airbus A319	100		2		2
Conure Leasing Limited	Airbus A320	200		2		2
Flamenco Leasing LLC	Boeing 767	300ER		1		1
FLYAFI 1 S.R.L.	Boeing 777	300ER		1		1
FLYAFI 2 S.R.L.	Boeing 777	300ER		1		1
FLYAFI 3 S.R.L.	Boeing 777	300ER		1		1
Forderum Holding B.V. (GECAS)	Airbus A320	200		2		2
Garza Leasing LLC	Boeing 767	300ER		1		1
General Electric Capital Corporation	Airbus A330	200		3		3
Intraelo BETA Corpotation (KFW)	Airbus A320	200		1		1
Juliana Leasing Limited	Airbus A320	200		2		2
Linnet Leasing Limited	Airbus A320	200		—		4
Loica Leasing Limited	Airbus A319	100		2		2
Loica Leasing Limited	Airbus A320	200		2		2
Mirlo Leasing LLC	Boeing 767	300ER		1		1
NBB Rio de Janeiro Lease CO and Brasilia Lease LLC (BBAM)	Airbus A320	200		1		1
NBB São Paulo Lease CO. Limited (BBAM)	Airbus A321	200		1		1
Osprey Leasing Limited	Airbus A319	100		8		8
Petrel Leasing LLC	Boeing 767	300ER		1		1
Pilpilen Leasing Limited	Airbus A320	200		4		—
Pochard Leasing LLC	Boeing 767	300ER		2		2
Quetro Leasing LLC	Boeing 767	300ER		3		3
SG Infraestructure Italia S.R.L.	Boeing 777	300ER		1		1
SL Alcyone LTD (Showa)	Airbus A320	200		1		1
TMF Interlease Aviation B.V.	Airbus A320	200		—		1
TMF Interlease Aviation B.V.	Airbus A330	200		1		1
TMF Interlease Aviation II B.V.	Airbus A319	100		5		5
TMF Interlease Aviation II B.V.	Airbus A320	200		2		2
Tricahue Leasing LLC	Boeing 767	300ER		3		3
Wacapou Leasing S.A	Airbus A320	200		1		1

Total				66		71

Financial leasing contracts where the Company acts as the lessee of aircrafts establish duration between 12 and 18 year terms and semi-annual, quarterly and monthly payments of obligations.

Additionally, the lessee will have the obligation to contract and maintain active the insurance coverage for the aircraft, perform maintenance on the aircraft and update the airworthiness certificates at their own cost.

Fixed assets acquired under financial leases are classified as Other property, plant and equipment. As of September 30, 2015 the Company had sixty six aircraft (seventy one aircraft as of December 31, 2014).

As of September 30, 2015, as a result of the transfer plan fleet of TAM Linhas Aéreas S.A. to LATAM Airlines Group S.A., the Company reduces its number of aircraft leasing in four Airbus A319-100 and one Airbus A320-200 aircraft.

The book value of assets under financial leases as of September 30, 2015 amounts to ThUS$ 2,039,487 (ThUS$ 2,379,789 as of December 31, 2014).

The minimum payments under financial leases are as follows:


	As of September 30, 2015 (Unaudited)							As of December 31, 2014
	Gross Value		Interest			Present Value		Gross Value		Interest			Present Value
	ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
No later than one year		366,562		(47,831	)		318,731		403,840		(48,197	)		355,643
Between one and five years		933,414		(74,057	)		859,357		1,121,190		(97,909	)		1,023,281
Over five years		179,171		1,720			180,891		261,877		(6,409	)		255,468

Total		1,479,147		(120,168	)		1,358,979		1,786,907		(152,515	)		1,634,392

NOTE 17 - CURRENT AND DEFERRED TAXES

In the period ended September 30, 2015, the income tax provision was calculated at the rate of 22.5% for the business year 2015, in accordance with the recently enacted Law No. 20,780 published in the Official Journal of the Republic of Chile on September 29, 2014.

Among the main changes is the progressive increase of the First Category Tax which will reach 27% in 2018 if the “Partially Integrated Taxation System”(*) is chosen. Alternatively, if the Company chooses the “Attributed Income Taxation System”(*) the top rate would reach 25% in 2017.

As LATAM Airlines Group S.A. is a public company, by default it must choose the “Partially Integrated Taxation System”, unless a future Extraordinary Meeting of Shareholders of the Company agrees, by a minimum of 2/3 of the votes, to choose the “Attributed Income Taxation System”. This decision must be taken at the latest in the last quarter of 2016.

The effects of the updating of deferred tax assets and liabilities according to rates changes introduced by Law No. 20,780 depending on their period back were recorded equity in accordance with the instructions of Chilean Superintendency of Securities and Insurance in his Office Circular No. 856 of October 17, 2014. The total effect in equity was ThUS $ 150,210, which is explained by

an increase in deferred tax assets of ThUS$ 87 and an increase in deferred tax liabilities of ThUS$ 145,253 and an increase in equity by deferred tax of ThUS$ 5,044. The net effect on the assets and liabilities by deferred tax was an increase on liabilities for ThUS$ 145,166.

Deferred tax assets and liabilities are offset if there is a legal right to offset assets and liabilities for income taxes relating to the same entity and tax authority.

(*)	The Partially Integrated Taxation System is one of the tax regimes approved through the Tax Reform previously mentioned, which is based on the taxation by the perception of profits and the Attributed Income Taxation System is based on the taxation by the accrual of profits.

(a)	Current taxes

(a.1)

The composition of the current tax assets is the following:


	Current assets				Non-current assets				Total assets
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Provisional monthly payments (advances)		45,756		68,752		—		—		45,756		68,752
Other recoverable credits		25,713		31,956		25,628		17,663		51,341		49,619

Total current tax assets		71,469		100,708		25,628		17,663		97,097		118,371

(a.2)

The composition of the current tax liabilities are as follows:


	Current liabilities				Non-current liabilities				Total liabilities
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Income tax provision		19,067		16,712		—		—		19,067		16,712
Additional tax provision		377		1,177		—		—		377		1,177

Total current tax liabilities		19,444		17,889		—		—		19,444		17,889

(b)	Deferred taxes

The balances of deferred tax are the following:


	Assets						Liabilities
Concept	As of September 30, 2015			As of December 31, 2014			As of September 30, 2015			As of December 31, 2014
	Unaudited						Unaudited
	ThUS$			ThUS$			ThUS$			ThUS$
Depreciation		(17,489	)		(23,675	)		1,029,180			847,965
Leased assets		(87,141	)		(102,457	)		109,391			83,318
Amortization		(29,196	)		(31,750	)		92,797			128,350
Provisions		227,303			416,153			(46,550	)		65,076
Revaluation of financial instruments		530			270			(9,581	)		(12,536	)
Tax losses		226,818			151,569			(725,441	)		(571,180	)
Revaluation property, plant and equipment		—			—			(4,011	)		(5,999	)
Intangibles		—			—			349,852			523,275
Others		(12,647	)		(2,787	)		4,124			(6,375	)

Total		308,178			407,323			799,761			1,051,894

The balance of deferred tax assets and liabilities are composed primarily of temporary differences to be reversed in the long term.

Movements of Deferred tax assets and liabilities

(a)	From January 1 to September 30, 2014


	Opening balance Assets/(liabilities)			Recognized in consolidated income			Recognized in comprehensive income		Exchange rate variation			Efect from change in tax rate			Others			Ending balance Asset (liability)
	ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$			ThUS$

Depreciation		(574.997	)		(59.308	)		—		1.339			(225.595	)		—			(858.561	)
Leased assets		(193.762	)		12.675			—		1.224			(43.029	)		—			(222.892	)
Amortization		(124.357	)		(18.448	)		—		722			(16.050	)		—			(158.133	)
Provisions		525.241			(101.467	)		—		(19.888	)		(21.812	)		—			382.074
Revaluation of financial instruments		16.070			(20.657	)		16.205		(499	)		3.763			—			14.882
Tax losses (*)		551.528			214.324			—		(5.232	)		163.596			—			924.216
Revaluation propety, plant and equipment		18.544			(9.835	)		—		(2.308	)		—			—			6.401
Intangibles		(593.325	)		—			—		26.241			—			—			(567.084	)
Others		10.792			23.321			—		(8.795	)		(6.039	)		(6.806	)		12.473


Total		(364.266	)		40.605			16.205		(7.196	)		(145.166	)		(6.806	)		(466.624	)

(b)	From October 1 to December 31, 2014


	Opening balance Assets/(liabilities)			Recognized in consolidated income			Recognized in comprehensive income		Exchange rate variation			Others			Ending balance Asset (liability)
	ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$

Depreciation		(858,561	)		(15,315	)		—		2,236			—			(871,640	)
Leased assets		(222,892	)		35,074			—		2,043			—			(185,775	)
Amortization		(158,133	)		(3,173	)		—		1,206			—			(160,100	)
Provisions		382,074			2,205			—		(33,202	)		—			351,077
Revaluation of financial instruments		14,882			(33,018	)		31,774		(832	)		—			12,806
Tax losses (*)		924,216			(66,526	)		—		(8,736	)		(126,205	)		722,749
Revaluation propety, plant and equipment		6,401			3,451			—		(3,853	)		—			5,999
Intangibles		(567,084	)		—			—		43,809			—			(523,275	)
Others		12,473			(9,866	)		—		(17,405	)		18,386			3,588


Total		(466,624	)		(87,168	)		31,774		(14,734	)		(107,819	)		(644,571	)

(c)	From January 1 to September 30, 2015


	Opening balance Assets/(liabilities)			Recognized in consolidated income			Recognized in comprehensive income			Exchange rate variation			Others		Ending Balance Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$

Depreciation		(871,640	)		(183,881	)		—			8,852			—		(1,046,669	)
Leased assets		(185,775	)		(18,844	)		—			8,087			—		(196,532	)
Amortization		(160,100	)		33,333			—			4,774			—		(121,993	)
Provisions		351,077			54,213			—			(131,437	)		—		273,853
Revaluation of financial instruments		12,806			28,743			(28,143	)		(3,295	)		—		10,111
Tax losses (*)		722,749			264,091			—			(34,581	)		—		952,259
Revaluation propety, plant and equipment		5,999			13,265			—			(15,253	)		—		4,011
Intangibles		(523,275	)		—			—			173,423			—		(349,852	)
Others		3,588			(1,769	)		—			(24,774	)		6,184		(16,771	)


Total		(644,571	)		189,151			(28,143	)		(14,204	)		6,184		(491,583	)

(*)

In relation to the Tax Recovery Program (REFIS), established in Law No. 11,941/09, the Provisional Measure No. 651/2014 approved by the Brazilian National Congress and signed into Law No. 13,043/14, in its Section VIII, Article 33, establishes that taxpayers that have tax debts can anticipate paying their tax debt by using tax credits related to tax loss carryforwards up to an amount of 70% of the total debt if they pay the other 30% in cash. The Company adhered to the program and paid its debt through this mechanism.

Therefore, during the business year 2014 the company TAM Linhas Aéreas S.A. decreased its liability associated with the REFIS program using its deferred tax assets related to its tax loss of ThUS $ 126,205 at September 30, 2015, generating no effect on the outcome of tax.

Deferred tax assets not recognized:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Tax losses		—		2,781

Total Deferred tax assets not recognized		—		2,781

Deferred tax assets on tax loss carry-forwards, are recognized to the extent that it is likely to provide relevant tax benefit through future taxable profits. During the business year 2015, the Company has not ceased to recognize deferred tax assets (ThUS$ 2,781 at December 31, 2014 according with a loss of ThUS$ 11,620 at December 31, 2014) to offset against future years tax benefits.

Deferred tax expense and current income taxes:


	For the 9 months ended						For the 3 months ended
	September 30,						September 30,
	2015			2014			2015			2014
	ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited
Current tax expense
Current tax expense		69,672			67,114			28,163			25,780
Adjustment to previous period’s current tax		322			(1,724	)		279			(2,128	)

Total current tax expense, net		69,994			65,390			28,442			23,652


Deferred tax expense
Deferred expense for taxes related to the creation and reversal of temporary differences		(189,151	)		(44,692	)		(110,646	)		(27,758	)
Reduction (increase) in value of deferred tax assets during the evaluation of its usefulness		—			4,087			—			—

Total deferred tax expense, net		(189,151	)		(40,605	)		(110,646	)		(27,758	)

Income tax expense		(119,157	)		24,785			(82,204	)		(4,106	)

Composition of income tax expense (income):


	For the 9 months ended September 30,						For the 3 months ended September 30,
	2015			2014			2015			2014
	ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited
Current tax expense, net, foreign		68.044			64.431			27.713			22.048
Current tax expense, net, Chile		1.950			959			729			1.604

Total current tax expense, net		69.994			65.390			28.442			23.652


Deferred tax expense, net, foreign		(171.035	)		83.866			(95.815	)		43.026
Deferred tax expense, net, Chile		(18.116	)		(124.471	)		(14.831	)		(70.784	)

Deferred tax expense, net, total		(189.151	)		(40.605	)		(110.646	)		(27.758	)

Income tax expense		(119.157	)		24.785			(82.204	)		(4.106	)

Profit before tax by the legal tax rate in Chile (22.5% and 21% at September 30, 2015 and 2014, respectively)


	For the 9 months ended September 30,						For the 3 months ended September 30,
	2015			2014			2015			2014
	ThUS$			ThUS$			%			%
	Unaudited						Unaudited
Tax expense using the legal rate		(72,489	) (*)		(38,490	)		22.50	(*)		21.00

Tax effect of rates in other jurisdictions		(24,946	)		(5,482	)		7.74			2.99
Tax effect of non-taxable operating revenues		(48,029	)		(32,945	)		14.91			17.97
Tax effect of disallowable expenses		26,825			99,734			(8.33	)		(54.41	)
Other increases (decreases) in legal tax charge		(518	)		1,968			0.16			(1.07	)

Total adjustments to tax expense using the legal rate		(46,668	)		63,275			14.48			(34.52	)

Tax expense using the effective rate		(119,157	)		24,785			36.98			(13.52	)

(*)

On September 29, 2014, Law No. 20,780 “Amendment to the system of income taxation and introduces various adjustments in the tax system.” was published in the Official Journal of the Republic of Chile. Within major tax reforms that this law contains, the First- Category Tax rate is gradually modified from 2014 to 2018 and should be declared and paid in tax year 2015.

Thus, at December 31, 2014, the Company recognized a loss on their retained earnings ThUS$ 150,210 as a result of the rate increase.

Deferred taxes related to items charged to net equity:


	For the 9 months ended September 30,						For the 3 months ended September 30,
	2015			2014			2015		2014
	ThUS$			ThUS$			ThUS$		ThUS$
	Unaudited						Unaudited
Aggregate deferred taxation of components of other comprehensive income		(28,143	)		8,453			8,252		3,207
Tax effect by change legal tax rate in other comprehensive income (*)		—			7,752			—		7,752
Aggregate deferred taxation related to items charged to net equity		2,139			(2,581	)		713		(861	)
Tax effect by change legal tax rate in net equity (*)		—			(2,708	)		—		(2,708	)

(*)	Correspond to the tax by tax rate increases Law No. 20,780, tax reform, published in the Official Journal of the Republic of Chile on September 29, 2014.

NOTE 18 - OTHER FINANCIAL LIABILITIES

The composition of Other financial liabilities is as follows:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Current
(a) Interest bearing loans		1.496.273		1.397.382
(b) Derivatives not recognized as a hedge		—		1.190
(c) Hedge derivatives		132.805		226.043

Total current		1.629.078		1.624.615


Non-current
(a) Interest bearing loans		7.316.081		7.360.685
(c) Hedge derivatives		22.810		28.327

Total non-current		7.338.891		7.389.012

(a)	Interest bearing loans

Obligations with credit institutions and debt instruments:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Current
Loans to exporters		377,304		327,278
Bank loans		73,234		98,711
Guaranteed obligations		551,455		502,938
Other guaranteed obligations		32,329		31,798

Subtotal bank loans		1,034,322		960,725

Obligation with the public		34,884		21,206
Financial leases		334,791		364,514
Other loans		92,276		50,937

Total current		1,496,273		1,397,382

(a)	Interest bearing loans

Obligations with credit institutions and debt instruments:


Non-current
Bank loans	471.874	415.667
Guaranteed obligations	3.858.908	3.827.018
Other guaranteed obligations	8.193	32.492

Subtotal bank loans	4.338.975	4.275.177
Obligation with the public (1)	1.290.335	1.111.481
Financial leases	1.106.460	1.344.520
Other loans	580.311	629.507

Total non-current	7.316.081	7.360.685

Total obligations with financial institutions	8.812.354	8.758.067

(1)

On June 9, 2015 LATAM Airlines Group S.A. has issued and placed on the international market under Rule 144-A and Regulation S of the securities laws of the United States of America, unsecured long-term bonds in the amount of US$ 500,000,000, maturing 2020, at initial interest rate of 7.25% per annum.

As reported in the Essential Matter of May 20 and June 5, 2015, the Issuance and placement of the Bonds 144-A shall be: (i) finance the repurchase, conversion and redemption of secured long-term bonds issued by the company TAM Capital 2 Inc., under Rule 144-A and Regulation S of the securities laws of the United States of America, maturing 2020; (ii) in the event there is any remnant fund other general corporate purposes. The aforementioned bonds TAM Capital 2 Inc. were redeemed in whole (US$ 300,000,000) through a process of exchange for new bonds dated June 9, 2015 and then the remaining bonds were redeemed by running the prepay dated June 18, 2015.

All interest-bearing liabilities are recorded using the effective interest rate method. Under IFRS, the effective interest rate for loans with a fixed interest rate does not vary throughout the loan, while in the case of loans with variable interest rates, the effective rate changes on each date of reprising of the loan.

Currency balances that make the interest bearing loans:


	As of September 30, 2015		As of December 31, 2014
Currency	ThUS$		ThUS$
	Unaudited

Argentine peso		—		39.053
Brazilian real		34.078		53.410
Chilean peso (U.F.)		228.593		187.614
Euro		—		547
US Dollar		8.549.683		8.477.443


Total		8.812.354		8.758.067

Interest-bearing loans due in installments to September 30, 2015 (Unaudited)

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.


						Nominal values												Accounting values
Tax No.	Creditor	Creditor country		Currency		Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total nominal value		Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total accounting value	Amortization		Effective rate
						ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%

Loans to exporters

97.032.000-8	BBVA	Chile	US$		100.000		—		—		—		—		100.000		100.117		—		—		—		—		100.117	Al vencimiento		0,65		0,65
97.036.000-K	SANTANDER	Chile	US$		60.000		—		—		—		—		60.000		60.043		—		—		—		—		60.043	Al vencimiento		1,12		1,12
97.030.000-7	ESTADO	Chile	US$		40.000		15.000		—		—		—		55.000		40.040		15.004		—		—		—		55.044	Al vencimiento		1,00		1,00
97.006.000-6	BCI	Chile	US$		50.000		—		—		—		—		50.000		50.042		—		—		—		—		50.042	Al vencimiento		1,60		1,60
76.645.030-K	ITAU	Chile	US$		30.000		—		—		—		—		30.000		30.002		—		—		—		—		30.002	Al vencimiento		1,29		1,29
97,003,000-K	BANCO DO BRASIL	Chile	US$		70.000		—		—		—		—		70.000		70.043		—		—		—		—		70.043	Al vencimiento		1,10		1,10
97.951.000-4	HSBC	Chile	US$		12.000		—		—		—		—		12.000		12.013		—		—		—		—		12.013	Al vencimiento		0,60		0,60

Bank loans

97.023.000-9	CORPBANCA	Chile	UF		17.722		53.167		118.544		39.948		—		229.381		18.685		53.167		116.952		39.788		—		228.592	Trimestral		4,20		4,20
97.036.000-K	SANTANDER	Chile	US$		—		—		312.131		—		—		312.131		901		—		312.131		—		—		313.032	Trimestral		2,36		2,36

Obligations with the public
0-E	BANK OF YORK	U.S.A.	US$		—		—		—		500.000		—		500.000		11.378		—		—		487.001		—		498.379	Al vencimiento		7,77		7,25

Guaranteed obligations

0-E	CREDIT AGRICOLE	France	US$		28.032		80.705		191.911		56.146		18.360		375.154		28.736		80.705		191.489		56.146		18.360		375.436	Trimestral		1,79		1,60
0-E	BNP PARIBAS	U.S.A.	US$		8.077		24.752		70.037		74.620		149.988		327.474		9.152		24.751		69.560		74.489		149.981		327.933	Trimestral		2,22		2,14
0-E	WELLS FARGO	U.S.A.	US$		30.758		93.097		254.404		263.598		569.652		1.211.509		34.889		93.098		225.717		250.285		557.542		1.161.531	Trimestral		2,27		1,57
0-E	WILMINGTON TRUST	U.S.A.	US$		—		20.216		37.645		36.573		187.770		282.204		5.872		20.216		37.645		36.573		187.770		288.076	Trimestral		4,25		4,25
0-E	CITIBANK	U.S.A.	US$		16.933		51.460		142.245		149.808		273.489		633.935		18.438		51.460		132.547		145.188		268.217		615.850	Trimestral		2,30		1,56
97.036.000-K	SANTANDER	Chile	US$		5.200		15.784		43.321		45.178		55.386		164.869		5.483		15.783		41.116		44.301		54.986		161.669	Trimestral		1,39		0,85
0-E	BTMU	U.S.A.	US$		2.693		8.197		22.661		23.848		42.249		99.648		2.875		8.197		21.146		23.181		41.793		97.192	Trimestral		1,70		1,10
0-E	APPLE BANK	U.S.A.	US$		1.322		4.029		11.140		11.747		21.227		49.465		1.469		4.029		10.387		11.414		20.994		48.293	Trimestral		1,69		1,10
0-E	US BANK	U.S.A.	US$		14.401		43.699		120.239		125.833		301.269		605.441		17.216		43.699		101.393		116.878		292.422		571.608	Trimestral		3,99		2,81
0-E	DEUTSCHE BANK	U.S.A.	US$		4.713		14.499		34.318		25.542		62.337		141.409		5.297		14.499		34.318		25.542		62.338		141.994	Trimestral		3,32		3,32
0-E	NATIXIS	France	US$		11.559		35.495		97.499		85.680		250.496		480.729		12.208		35.496		97.500		85.680		250.496		481.380	Trimestral		1,94		1,91
0-E	HSBC	U.S.A.	US$		1.365		4.154		11.462		12.037		25.930		54.948		1.496		4.154		11.462		12.037		25.930		55.079	Trimestral		2,37		1,56
0-E	PK AIRFINANCE	U.S.A.	US$		1.849		5.745		16.874		19.402		20.493		64.363		1.898		5.745		16.874		19.402		20.493		64.412	Mensual		1,90		1,90
0-E	KFW IPEX-BANK	U.S.A.	US$		642		1.991		5.548		3.887		2.167		14.235		644		1.991		5.548		3.887		2.166		14.236	Trimestral		2,18		2,18
-	SWAP Aviones llegados	-	US$		526		1.433		2.727		984		4		5.674		526		1.433		2.727		984		4		5.674	Trimestral		—		—

Other guaranteed obligations

0-E	DVB BANK SE	U.S.A.	US$		8.009		24.299		8.193		—		—		40.501		8.030		24.299		8.193		—		—		40.522	Trimestral		2,00		2,00

Financial leases

0-E	ING	U.S.A.	US$		8.010		24.624		39.905		28.453		2.016		103.008		8.857		24.624		39.048		28.268		2.013		102.810	Trimestral		5,04		4,49
0-E	CREDIT AGRICOLE	France	US$		1.644		5.066		8.889		—				15.599		1.682		5.066		8.889		—		—		15.637	Trimestral		1,26		1,26
0-E	CITIBANK	U.S.A.	US$		4.590		14.260		41.125		39.987		2.011		101.973		5.449		14.260		40.040		39.747		2.008		101.504	Trimestral		6,40		5,67
0-E	PEFCO	U.S.A.	US$		15.077		46.313		114.992		31.609		—		207.991		16.453		46.313		113.127		31.487		—		207.380	Trimestral		5,36		4,76
0-E	BNP PARIBAS	U.S.A.	US$		9.806		30.282		86.817		34.450		1.558		162.913		10.379		30.282		85.296		34.269		1.556		161.782	Trimestral		4,09		3,65
0-E	WELLS FARGO	U.S.A.	US$		4.481		13.668		38.206		40.889		28.866		126.110		4.896		13.667		36.859		40.425		28.763		124.610	Trimestral		3,98		3,53
0-E	DVB BANK SE	U.S.A.	US$		4.539		13.789		18.779		—		—		37.107		4.607		13.789		18.778		—		—		37.174	Trimestral		1,98		1,98
0-E	BANC OF AMERICA	U.S.A.	US$		667		2.770		—		—		—		3.437		669		2.770		—		—		—		3.439	Mensual		1,41		1,41

Other loans

0-E	BOEING	U.S.A.	US$		—		—		188.573		—		—		188.573		1.030		1.629		188.573		—		—		191.232	Al vencimiento		1,75		1,75
0-E	CITIBANK (*)	U.S.A.	US$		—		58.262		171.604		193.311		26.823		450.000		1.125		58.262		171.604		193.311		26.823		451.125	Trimestral		6,00		6,00

	Total				564.615		706.756		2.209.789		1.843.530		2.042.091		7.366.781		602.640		708.388		2.138.919		1.800.283		2.014.655		7.264.885

(*)	Securitized bond with the future flows from the sales with credit card in United States and Canada.

Interest-bearing loans due in installments to September 30, 2015 (Unaudited)

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.


				Nominal values												Accounting values
Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total nominal value		Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total accounting value		Amortization		Effective rate		Nominal rate
						ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$				%		%

Bank loans

0-E	NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ	Holland	US$		113		351		1.015		1.145		843		3.467		131		350		1.016		1.144		843		3.484		Monthly		6,01		6,01

Obligation with the public

0-E	THE BANK OF NEW YORK	U.S.A.	US$		—		—		300.000		—		500.000		800.000		23.228		278		301.243		1.423		500.668		826.840		At Expiration		8,17		8,00

Financial leases

0-E	AFS INVESTMENT IX LLC	U.S.A.	US$		1.944		6.000		17.295		19.355		855		45.449		2.158		6.000		17.295		19.355		855		45.663		Monthly		1,25		1,25
0-E	AIRBUS FINANCIAL	U.S.A.	US$		3.324		10.253		22.426		15.631		1.685		53.319		3.417		10.253		22.427		15.631		1.685		53.413		Monthly		1,43		1,43
0-E	CREDIT AGRICOLE-CIB	U.S.A.	US$		27.059		—		—		—		—		27.059		27.098		—		—		—		—		27.098		Quarterly		1,10		1,10
0-E	CREDIT AGRICOLE -CIB	France	US$		1.500		4.500		—		—		—		6.000		1.538		4.500		—		—		—		6.038		Quarterly/ Semiannual		3,25		3,25
0-E	DVB BANK SE	U.S.A.	US$		146		355		401		—		—		902		147		355		401		—		—		903		Monthly		1,64		1,64
0-E	GENERAL ELECTRIC CAPITAL CORPORATION	U.S.A.	US$		3.625		11.050		12.712		—		—		27.387		3.675		11.050		12.711		—		—		27.436		Monthly		1,25		1,25
0-E	KFW IPEX-BANK	Germany	US$		3.550		7.351		15.649		13.899		—		40.449		3.621		7.351		15.650		13.899		—		40.521		Monthly/ Quarterly		1,72		1,72
0-E	NATIXIS	France	US$		1.342		5.167		18.480		19.479		71.894		116.362		1.843		5.167		18.480		19.479		71.894		116.863		Quarterly/ Semiannual		3,85		3,85
0-E	PK AIRFINANCE US, INC.	U.S.A.	US$		1.259		3.881		19.164		—		—		24.304		1.299		3.882		19.164		—		—		24.345		Monthly		1,75		1,75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		391		1.124		2.673		2.259		12.312		18.759		427		1.124		2.673		2.259		12.312		18.795		Quarterly		2,00		2,00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		8.051		24.699		70.503		111.464		105.821		320.538		9.505		24.698		70.503		111.464		105.821		321.991		Quarterly		3,63		3,55
0-E	BANCO IBM S.A	Brazil	BRL		213		640		1.059		—		—		1.912		213		640		1.059		—		—		1.912		Monthly		14,13		14,13
0-E	HP FINANCIAL SERVICE	Brazil	BRL		214		508		359		—		—		1.081		223		508		359		—		—		1.090		Monthly		10,02		10,02
0-E	SOCIETE GENERALE	France	BRL		84		252		510		—		—		846		84		252		511		—		—		847		Monthly		14,13		14,13

Other loans

0-E	COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO	Brazil	BRL		19.532		10.698		—		—		—		30.230		19.532		10.698		—		—		—		30.230		Monthly		5,00		5,00

	Total				72.347		86.829		482.246		183.232		693.410		1.518.064		98.139		87.106		483.492		184.654		694.078		1.547.469



	Total consolidated				636.962		793.585		2.692.035		2.026.762		2.735.501		8.884.845		700.779		795.494		2.622.411		1.984.937		2.708.733		8.812.354

Interest-bearing loans due in installments to December 31, 2014

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.


				Nominal values												Accounting values
Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total nominal value		Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total accounting value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Loans to exporters

97.032.000-8	BBVA	Chile	US$		100,000		—		—		—		—		100,000		100,058		—		—		—		—		100,058	At expiration		0.40		0.40
97.036.000-K	SANTANDER	Chile	US$		45,000		—		—		—		—		45,000		45,040		—		—		—		—		45,040	At expiration		0.34		0.34
97.030.000-7	ESTADO	Chile	US$		55,000		—		—		—		—		55,000		55,022		—		—		—		—		55,022	At expiration		0.52		0.52
97.006.000-6	BCI	Chile	US$		100,000		—		—		—		—		100,000		100,140		—		—		—		—		100,140	At expiration		0.47		0.47
76.645.030-K	ITAU	Chile	US$		15,000		—		—		—		—		15,000		15,018		—		—		—		—		15,018	At expiration		0.65		0.65
97.951.000-4	HSBC	Chile	US$		12,000		—		—		—		—		12,000		12,000		—		—		—		—		12,000	At expiration		0.50		0.50

Bank loans

97.023.000-9	CORPBANCA	Chile	UF		14,242		42,725		113,934		17,367		—		188,268		15,542		42,725		112,160		17,187		—		187,614	Quarterly		4.85		4.85
0-E	CITIBANK	Argentina	ARS		—		17,542		—		—		—		17,542		122		17,542		—		—		—		17,664	Monthly		31.00		31.00
0-E	BBVA	Argentina	ARS		—		21,050		—		—		—		21,050		339		21,050		—		—		—		21,389	Monthly		33.00		33.00
97.036.000-K	BBVA	Chile	US$		—		—		282,967		—		—		282,967		928		—		282,967		—		—		283,895	Quarterly		2.33		2.33

Guaranteed obligations

0-E	CREDIT AGRICOLE	France	US$		17,225		52,658		105,594		62,209		35,883		273,569		17,745		52,658		105,594		62,209		35,883		274,089	Quarterly		1.68		1.43
0-E	BNP PARIBAS	U.S.A.	US$		7,815		24,005		67,806		73,475		178,116		351,217		8,940		24,005		67,248		73,287		178,078		351,558	Quarterly		2.13		2.04
0-E	WELLS FARGO	U.S.A.	US$		30,351		91,866		251,040		260,112		669,599		1,302,968		34,771		91,866		219,808		245,026		653,056		1,244,527	Quarterly		2.26		1.57
0-E	CITIBANK	U.S.A.	US$		16,624		50,489		139,491		146,931		330,579		684,114		18,154		50,489		128,993		141,745		323,754		663,135	Quarterly		2.24		1.49
97.036.000-K	SANTANDER	Chile	US$		5,127		15,545		42,646		44,472		72,551		180,341		5,418		15,545		40,183		43,413		71,879		176,438	Quarterly		1.32		0.78
0-E	BTMU	U.S.A.	US$		2,649		8,042		22,221		23,393		51,340		107,645		2,838		8,042		20,557		22,621		50,668		104,726	Quarterly		1.64		1.04
0-E	APPLE BANK	U.S.A.	US$		1,296		3,952		10,919		11,516		25,707		53,390		1,448		3,952		10,094		11,131		25,366		51,991	Quarterly		1.63		1.03
0-E	US BANK	U.S.A.	US$		14,158		42,960		118,206		123,705		349,129		648,158		17,169		42,960		97,791		113,644		337,272		608,836	Quarterly		3.99		2.81
0-E	DEUTSCHE BANK	U.S.A.	US$		4,552		14,031		39,791		24,725		72,180		155,279		5,190		14,031		39,791		24,726		72,180		155,918	Quarterly		3.25		3.25
0-E	NATIXIS	France	US$		9,739		29,807		84,884		87,304		242,496		454,230		10,278		29,807		84,884		87,304		242,496		454,769	Quarterly		1.86		1.81
0-E	HSBC	U.S.A.	US$		1,340		4,082		11,249		11,820		30,514		59,005		1,474		4,082		11,249		11,820		30,514		59,139	Quarterly		2.29		1.48
0-E	PK AirFinance	U.S.A.	US$		1,755		5,452		16,014		18,412		28,088		69,721		1,810		5,452		16,014		18,412		28,088		69,776	Monthly		1.86		1.86
0-E	KFW IPEX-BANK	U.S.A.	US$		611		1,885		5,568		4,334		3,690		16,088		613		1,885		5,568		4,334		3,690		16,090	Quarterly		2.10		2.10
-	SWAP Aircraft arrivals	-	US$		595		1,647		3,333		1,658		157		7,390		595		1,647		3,333		1,658		157		7,390	Quarterly		—		—

Other guaranteed obligations

0-E	DVB BANK SE	U.S.A.	US$		7,877		23,877		32,492		—		—		64,246		7,920		23,878		32,492		—		—		64,290	Quarterly		2.00		2.00
0-E	CREDIT AGRICOLE	U.S.A.	US$		7,459		22,378		61,500		—		—		91,337		7,696		22,378		61,500		—		—		91,574	Quarterly		1.73		1.73

Financial leases

0-E	ING	U.S.A.	US$		7,744		23,786		52,041		31,151		11,806		126,528		8,754		23,786		50,985		30,853		11,771		126,149	Quarterly		4.84		4.33
0-E	CREDIT AGRICOLE	France	US$		1,581		4,877		13,955		—		—		20,413		1,628		4,877		13,955		—		—		20,460	Quarterly		1.20		1.20
0-E	CITIBANK	U.S.A.	US$		4,409		13,657		39,402		44,177		13,804		115,449		5,384		13,657		38,125		43,767		13,762		114,695	Quarterly		6.40		5.67
0-E	PEFCO	U.S.A.	US$		14,549		44,742		125,130		63,957		3,827		252,205		16,216		44,742		122,596		63,620		3,819		250,993	Quarterly		5.35		4.76
0-E	BNP PARIBAS	U.S.A.	US$		9,457		29,109		83,466		58,792		10,848		191,672		10,125		29,109		81,505		58,421		10,820		189,980	Quarterly		4.14		3.68
0-E	WELLS FARGO	U.S.A.	US$		4,373		13,323		37,242		39,862		44,525		139,325		4,830		13,323		35,710		39,264		44,290		137,417	Quarterly		3.98		3.53
0-E	DVB BANK SE	U.S.A.	US$		4,457		13,545		32,567		—		—		50,569		4,545		13,545		32,567		—		—		50,657	Quarterly		1.89		1.89
0-E	US BANK	U.S.A.	US$		280		11,701		—		—		—		11,981		280		11,701		—		—		—		11,981	Monthly		—		—
0-E	BANC OF AMERICA	U.S.A.	US$		643		2,049		2,770		—		—		5,462		664		2,049		2,770		—		—		5,483	Monthly		1.41		1.41

Other loans

0-E	BOEING	U.S.A.	US$		—		—		179,507		—		—		179,507		3,580		—		179,507		—		—		183,087	At expiration		1.74		1.74
0-E	CITIBANK (*)	U.S.A.	US$		—		—		164,108		184,866		101,026		450,000		1,500		—		164,108		184,866		101,026		451,500	Quarterly		6.00		6.00

	Total				517,908		630,782		2,139,843		1,334,238		2,275,865		6,898,636		543,774		630,783		2,062,054		1,299,308		2,238,569		6,774,488

(*)	Securitized bond with the future flows from the sales with credit card in United States and Canada.

Interest-bearing loans due in installments to December 31, 2014

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.


				Nominal values												Accounting values
Tax No.	Creditor	Creditor country	Currency	Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total nominal value		Up to 90 days		More than 90 days to one year		More than one to three years		More than three to five years		More than five years		Total accounting value		Amortization	Effective rate		Nominal rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%

Bank loans

0-E	NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ	Holland	US$		108		335		971		1,094		1,288		3,796		127		336		971		1,094		1,288		3,816	Monthly		6.01		6.01

Obligation with the public

0-E	THE BANK OF NEW YORK	U.S.A.	US$		—		—		300,000		—		800,000		1,100,000		12,178		9,028		304,377		4,583		802,521		1,132,687	At Expiration		7.99		7.19

Financial leases

0-E	AFS INVESTMENT IX LLC	U.S.A.	US$		1,864		5,752		16,580		18,555		8,369		51,120		2,104		5,752		16,580		18,555		8,369		51,360	Monthly		1.25		1.25
0-E	AIRBUS FINANCIAL	U.S.A.	US$		3,189		9,836		27,070		15,262		7,664		63,021		3,303		9,836		27,070		15,262		7,664		63,135	Monthly		1.42		1.42
0-E	CREDIT AGRICOLE-CIB	U.S.A.	US$		2,704		32,466		—		—		—		35,170		2,752		32,466		—		—		—		35,218	Quarterly		1.10		1.10
0-E	CREDIT AGRICOLE-CIB	France	US$		1,500		4,500		4,500		—		—		10,500		1,566		4,500		4,500		—		—		10,566	Quarterly/ Semiannual		3.25		3.25
0-E	DVB BANK SE	Germany	US$		3,125		9,375		—		—		—		12,500		3,160		9,375		—		—		—		12,535	Quarterly		2.50		2.50
0-E	DVB BANK SE	U.S.A.	US$		197		540		755		—		—		1,492		199		540		755		—		—		1,494	Monthly		1.68		1.68
0-E	GENERAL ELECTRIC CAPITAL CORPORATION	U.S.A.	US$		2,296		10,791		23,761		—		—		36,848		2,346		10,791		23,761		—		—		36,898	Monthly		1.25		1.25
0-E	KFW IPEX-BANK	Germany	US$		3,246		10,541		18,037		13,535		5,328		50,687		3,339		10,541		18,037		13,535		5,328		50,780	Monthly/ Quarterly		1.72		1.72
0-E	NATIXIS	France	US$		2,887		6,705		20,987		23,723		85,391		139,693		4,044		6,705		20,987		23,723		85,391		140,850	Quarterly/ Semiannual		3.87		3.87
0-E	PK AIRFINANCE US, INC.	U.S.A.	US$		1,208		3,725		20,360		—		—		25,293		1,256		3,725		20,360		—		—		25,341	Monthly		1.75		1.75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		416		1,198		2,847		2,406		13,115		19,982		456		1,198		2,847		2,406		13,115		20,022	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		7,761		23,859		67,973		74,783		169,730		344,106		8,574		23,859		67,973		74,783		169,730		344,919	Quarterly		3.06		3.58
0-E	BANCO DE LAGE LANDEN BRASIL S.A	Brazil	BRL		—		—		—		—		—		—		8		—		—		—		—		8	Monthly		11.70		11.70
0-E	BANCO IBM S.A	Brazil	BRL		319		957		2,514		27		—		3,817		91		957		2,604		27		—		3,679	Monthly		10.58		10.58
0-E	HP FINANCIAL SERVICE	Brazil	BRL		225		707		1,297		—		—		2,229		143		707		1,379		—		—		2,229	Monthly		9.90		9.90
0-E	SOCIETE AIR FRANCE	France	EUR		114		—		—		—		—		114		547		—		—		—		—		547	Monthly		6.82		6.82
0-E	SOCIETE GENERALE	France	BRL		126		377		1,005		135		—		1,643		82		377		1,044		135		—		1,638	Monthly		11.60		11.60

Other loans

0-E	COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO	Brazil	BRL		30,281		15,576		—		—		—		45,857		30,281		15,576		—		—		—		45,857	Monthly		4.23		4.23

	Total				61,566		137,240		508,657		149,520		1,090,885		1,947,868		76,556		146,269		513,245		154,103		1,093,406		1,983,579



	Total consolidated				579,474		768,022		2,648,500		1,483,758		3,366,750		8,846,504		620,330		777,052		2,575,299		1,453,411		3,331,975		8,758,067

(b)	Derivatives not recognized as a hedge

Current liabilities

Non-current liabilities

Total derivative
not recognized as a hedge

As of
September 30,
2015

As of
December 31,
2014

As of
September 30,
2015

As of
December 31,
2014

As of
September 30,
2015

As of
December 31,
2014

ThUS$

Unaudited

Interest rate derivative not recognized as a hedge

—

1,190

—

1,190

Total derivatives not recognized as a hedge

—

1,190

—

1,190

(c)	Hedge derivatives


	Current liabilities				Non-current liabilities				Total hedge derivatives
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Accrued interest from the last date of interest rate swap		4.696		5.173		—		—		4.696		5.173
Fair value of interest rate derivatives		22.670		26.395		22.810		28.327		45.480		54.722
Fair value of fuel derivatives		54.451		157.233		—		—		54.451		157.233
Fair value of foreign currency derivatives		50.988		37.242		—		—		50.988		37.242

Total hedge derivatives		132.805		226.043		22.810		28.327		155.615		254.370

The foreign currency derivatives exchanges are FX forward and cross currency swap.

Hedging operation

The fair values of assets/ (liabilities), by type of derivative, of the contracts held as hedging instruments are presented below:


	As of September 30, 2015			As of December 31, 2014
	ThUS$			ThUS$
	Unaudited
Cross currency swaps (CCS) (1)		(46.593	)		(38.802	)
Interest rate options (2)		—			1
Interest rate swaps (3)		(49.622	)		(58.758	)
Fuel collars (4)		—			(32.772	)
Fuel swap (5)		—			(122.678	)
Fuel options (6)		(38.098	)		—
Currency forward US$/GBP$ (7)		207			—
Currency options US$/EUR$ (7)		(3.913	)		—
Currency options R$/US$ (7)		13.758			—

(1)	Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate and the exchange rate dollar-UF of bank loans. These contracts are recorded as cash flow hedges and fair value.

(2)	Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate for long-term loans incurred in the acquisition of aircraft. These contracts are recorded as cash flow hedges.

(3)	Covers the significant variations in cash flows associated with market risk implicit in the increases in the 3 months LIBOR interest rates for long-term loans incurred in the acquisition of aircraft and bank loans. These contracts are recorded as cash flow hedges.

(4)	Covers significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases. These contracts are recorded as cash flow hedges.

(5)	Covers the significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases. These contracts are recorded as cash flow hedges.

(6)	Covers significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases. These contracts are recorded as cash flow hedges.

(7)	Covers the foreign exchange risk exposure of operating cash flows caused mainly by fluctuations in the exchange rate US$/GBP, US$/EUR and R$/US$. These contracts are recorded as cash flow hedges.

During the periods presented, the Company only maintains cash flow hedges and fair value (in the case of CCS). In the case of fuel hedges, the cash flows subject to such hedges will impact results in the next 15 months from the consolidated statement of financial position date, meanwhile in the case of interest rate hedging, the hedges will impact results over the life of the related loans, which are valid initially for 12 years. The hedges on investments will impact results continuously throughout the life of the investment, while the cash flows occur at the maturity of the investment. In the case of currency hedges through a CCS, are generated two types of hedge accounting, a cash flow component by UF, and other fair value by US$ floating rate component.

During the periods presented, no hedging operations of future highly probable transaction that have not been realized have occurred.

Since none of the coverage resulted in the recognition of a non-financial asset, no portion of the result of the derivatives recognized in equity was transferred to the initial value of such assets.

The amounts recognized in comprehensive income during the period and transferred from net equity to income are as follows:


	For the 9 months periods						For the 3 months periods
	September 30,						September 30,
	2015			2014			2015			2014
	ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited						Unaudited
Debit (credit) recognized in comprehensive income during the period		110.051			(46.827	)		(22.452	)		(14.250	)
Debit (credit) transferred from net equity to income during the period		(235.237	)		(52.848	)		(68.620	)		(28.365	)

NOTE 19 - TRADE AND OTHER ACCOUNTS PAYABLES

The composition of Trade and other accounts payables is as follows:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited

Current
(a) Trade and other accounts payables		1,014,453		1,196,123
(b) Accrued liabilities at the reporting date		376,078		293,273

Total trade and other accounts payables		1,390,531		1,489,396

(a)	Trade and other accounts payable:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited

Trade creditors		757,002		924,105
Leasing obligation		21,187		37,322
Other accounts payable		236,264		234,696

Total		1,014,453		1,196,123

The details of Trade and other accounts payables are as follows:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Boarding Fee		167.176		193.263
Aircraft Fuel		154.986		290.109
Airport charges and overflight		105.591		102.111
Other personnel expenses		86.515		114.245
Handling and ground handling		81.270		55.503
Land services		64.793		47.103
Suppliers’ technical purchases		64.070		64.799
Professional services and advisory		49.813		65.445
Marketing		39.562		54.885
Leases, maintenance and IT services		32.306		34.029
Services on board		25.498		24.642
Aircraft and engines leasing		21.187		37.322
Crew		17.621		12.403
Achievement of goals		14.351		12.197
Aviation insurance		13.624		4.749
Distribution sistem		12.018		3.293
Maintenance		9.739		14.757
Communications		3.020		6.447
Others		51.313		58.821

Total trade and other accounts payables		1.014.453		1.196.123

(b)	Liabilities accrued:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Accrued personnel expenses		153,747		130,382
Aircraft and engine maintenance		123,286		121,946
Accounts payable to personnel (*)		73,495		16,407
Others accrued liabilities		25,550		24,538

Total accrued liabilities		376,078		293,273

(*)	Profits and bonds participation (Note 22 letter b)

NOTE 20 - OTHER PROVISIONS

Other provisions:


	Current liabilities				Non-current liabilities				Total Liabilities
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Provision for contingencies (1)
Tax contingencies		1,311		320		405,004		607,371		406,315		607,691
Civil contingencies		1,526		11,870		33,528		47,355		35,054		59,225
Labor contingencies		147		221		16,591		23,064		16,738		23,285
Other		—		—		12,152		15,351		12,152		15,351
Provision for European
Commision investigation (2)		—		—		9,191		9,999		9,191		9,999

Total other provisions (3)		2,984		12,411		476,466		703,140		479,450		715,551

(1)	Provisions for contingencies:

The tax contingencies correspond to litigation and tax criteria related to the tax treatment applicable to direct and indirect taxes, which are found in both administrative and judicial stage.

The civil contingencies correspond to different demands of civil order filed against the company.

The labor contingencies correspond to different demands of labor order filed against the company.

The Provisions are recognized in the consolidated income statement in administrative expenses or tax expenses, as appropriate.

(2)	Provision made for proceedings brought by the European Commission for possible breaches of free competition in the freight market.

(3)

Total other provision at September 30, 2015, and at December 31, 2014, include the fair value correspond to those contingencies from the business combination with TAM S.A and subsidiaries, with a probability of loss under 50%, which are not provided for the normal application of IFRS enforcement and that only must be recognized in the context of a business combination in accordance with IFRS 3.

Movement of provisions:


	Legal claims			European Commission Investigation(*)			Total
	ThUS$			ThUS$			ThUS$

Opening balance as of January 1, 2014		1,138,754			11,349			1,150,103
Increase in provisions		20,746			—			20,746
Provision used		(20,042	)		—			(20,042	)
Difference by subsidiaries conversion		(82,595	)		—			(82,595	)
Reversal of provision		(25,285	)		—			(25,285	)
Exchange difference		(363	)		(965	)		(1,328	)

Closing balance as of September 30, 2014 (Unaudited)		1,031,215			10,384			1,041,599


Opening balance as of October 1, 2014		1,031,215			10,384			1,041,599
Increase in provisions		22,046			—			22,046
Provision used		(7,555	)		—			(7,555	)
Difference by subsidiaries conversion		(49,497	)		—			(49,497	)
Reversal of provision		(290,003	)		—			(290,003	)
Exchange difference		(654	)		(385	)		(1,039	)

Closing balance as of December 31, 2014		705,552			9,999			715,551


Opening balance as of January 1, 2015		705,552			9,999			715,551
Increase in provisions		33,109			—			33,109
Provision used		(12,914	)		—			(12,914	)
Difference by subsidiaries conversion		(228,298	)		—			(228,298	)
Reversal of provision		(26,278	)		—			(26,278	)
Exchange difference		(912	)		(808	)		(1,720	)

Closing balance as of September 30, 2015 (Unaudited)		470,259			9,191			479,450

Accumulated balance includes the judicial deposit in guarantee, related to the “Fundo Aeroviário” (FA), in the amount of US$ 60 million, done in order to suspend the enforceability of the tax credit. The company is discussing over the Tribunal the constitutionality of the requirement made by FA in a legal suit. Initially it was covered by the effects of a provisional remedy, meaning that, the company was not obligated to collect the tax while there was not a judicial decision in this regard. However, the decision taken by a judge in the first instance was publicized in an unfavorable way, revoking the provisional remedy relief. As the legal suit is still in progress (TAM appealed from this first decision), the company needed to do the deposit judicial in guarantee to suspend the enforceability of such tax credit; deposit classified in this category deducting the existing provision. Finally, if the final decision is favorable to the company, the deposit already made is going to come back to TAM. On the other hand, if the tribunal confirms the first decision, such deposit will be converted in a definitive payment in favor of the Brazilian Government. The procedural stage at September 30, 2015 is disclosed in Note 30, at case No. 2001.51.01.012530-3.

(*)	European Commission Provision:

(a)

This provision was established because of the investigation brought by the Directorate General for Competition of the European Commission against more than 25 cargo airlines, including Lan Cargo S.A., as part of a global investigation that begun in 2006 regarding possible unfair competition on the air cargo market. This was a joint investigation by the European and U.S.A. authorities. The start of the investigation was disclosed through an Essential Matter report dated December 27, 2007. The U.S.A. portion of the global investigation concluded when Lan Cargo S.A. and its subsidiary, Aerolíneas Brasileiras S.A. (“ABSA”) signed a Plea Agreement with the U.S.A. Department of Justice, as disclosed in an Essential Matter report notice on January 21, 2009.

(b)

A Essential Matter report dated November 9, 2010, reported that the General Direction of Competition had issued its decision on this case (the “decision”), under which it imposed fines totaling € 799,445,000 (seven hundred and ninety nine million four hundred and forty-five thousand Euros) for infringement of European Union regulations on free competition against eleven (11) airlines, among which are LATAM Airlines Group S.A. and Lan Cargo S.A., Air Canada, Air France, KLM, British Airways, Cargolux, Cathay Pacific, Japan Airlines, Qantas Airways, S.A.S. and Singapore Airlines.

(c)

Jointly, LATAM Airlines Group S.A. and Lan Cargo S.A., have been fined in the amount of € 8,220,000 (eight million two hundred twenty thousand Euros) for said infractions, which was provisioned in the financial statements of LATAM Airlines Group S.A.. This is a minor fine in comparison to the original decision, as there was a significant reduction in fine because LATAM Airlines Group S.A. cooperated during the investigation.

(d)

On January 24, 2011, LATAM Airlines Group S.A. and Lan Cargo S.A. appealed the decision before the Court of Justice of the European Union. The procedural stage at September 30, 2015 is disclosed in Note 30, in (ii) lawsuits received by Latam Airlines Group S.A. and Subsidiaries in European Commission Court.

NOTE 21 - OTHER NON-FINANCIAL LIABILITIES


	Current liabilities				Non-current liabilities				Total Liabilities
	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Deferred revenues (*)		2,297,389		2,565,391		331,619		355,353		2,629,008		2,920,744
Sales tax		23,869		38,160		—		—		23,869		38,160
Retentions		50,349		52,567		—		—		50,349		52,567
Others taxes		6,298		18,880		—		—		6,298		18,880
Other sundry liabilities		11,601		10,388		—		48		11,601		10,436

Total other non-financial liabilities		2,389,506		2,685,386		331,619		355,401		2,721,125		3,040,787

(*)	Note 2.20.

The balance comprises, mainly, deferred income by services not yet rendered and programs such as: LANPASS, TAM Fidelidade y Multiplus:

LANPASS is the frequent flyer program created by LAN to reward the preference and loyalty of its customers with many benefits and privileges, by the accumulation of kilometers that can be exchanged for free flying tickets or a wide range of products and services. Customers accumulate LANPASS kilometers every time they fly with LAN, TAM, in companies that are members of oneworld® and other airlines associated with the program, as well as when they buy on the stores or use the services of a vast network of companies that have an agreement with the program around the world.

Thinking on people who travel constantly, TAM created the program TAM Fidelidade, in order to improve the passenger attention and give recognition to those who choose the company. By using this program, customers accumulate points in a variety of programs loyalty in a single account and can redeem them at all TAM destinations and related airline companies, and even more, participate in the Red Multiplus Fidelidade.

Multiplus is a coalition of loyalty programs, with the aim of operate accumulation activities and redemption of points. This program has an integrated network by associates including hotels, financial institutions, retail companies, supermarkets, vehicle rentals and magazines, among many other partners from different segments.

NOTE 22 - EMPLOYEE BENEFITS


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Retirements payments		42,154		36,523
Resignation payments		8,770		5,556
Other obligations		26,455		32,023

Total liability for employee benefits		77,379		74,102

(a)	The movement in retirements and resignation payments and other obligations:


	Opening balance		Increase (decrease) current service provision			Benefits paid			Change of model		Closing balance
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
From January 1 to September 30, 2014		45,666		3,261			(690	)		—		48,237
From October 1 to December 31, 2014		48,237		(1,754	)		(1,776	)		29,395		74,102
From January 1 to September 30, 2015		74,102		4,347			(1,070	)		—		77,379

(b) The liability for short-term:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Profit-sharing and bonuses (*)		73,497		16,407

(*)	Accounts payables to employees (Note 19 letter b)

The participation in profits and bonuses correspond to an annual incentives plan for achievement of objectives.

(c)	Employment expenses are detailed below:


	For the 9 months ended September 30,				For the 3 months ended September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Salaries and wages		1,274,890		1,244,777		392,531		412,231
Short-term employee benefits		138,091		345,505		51,461		113,857
Termination benefits		46,345		44,884		12,894		20,728
Other personnel expenses		151,874		188,584		50,465		60,601

Total		1,611,200		1,823,750		507,351		607,417

NOTE 23 - ACCOUNTS PAYABLE, NON-CURRENT


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited

Aircraft and engine maintenance		494,587		506,312
Fleet financing (JOL)		61,495		59,148
Provision for vacations and bonuses		10,369		9,595
Other accounts payable		—		1,945
Other sundry liabilities		224		454

Total accounts payable, non-current		566,675		577,454

NOTE 24 - EQUITY

(a)

Capital

The Company’s objective is to maintain an appropriate level of capitalization that enables it to ensure access to the financial markets for carrying out its medium and long-term objectives, optimizing the return for its shareholders and maintaining a solid financial position.

The Capital of the Company is managed and composed in the following form:

The capital of the Company at September 30, 2015 amounts to ThUS$ 2,545,705 divided into 545,547,819 common stock of a same series (ThUS$ 2,545,705, divided into 545,547,819 shares as of December 31, 2014), no par value. There are no special series of shares and no privileges. The form of its stock certificates and their issuance, exchange, disablement, loss, replacement and other similar circumstances, as well as the transfer of the shares, is governed by the provisions of Corporations Law and its regulations.

(b)	Subscribed and paid shares

The following table shows the movement of the authorized and fully paid shares described above:


Movement of authorized shares	Nro. Of shares

Authorized shares as of January 1, 2014		551,847,819
No movement of authorized shares at September 30, 2014		—


Authorized shares as of September 30, 2014 (Unaudited)		551,847,819


Authorized shares as of October 1, 2014		551,847,819
No movement of authorized shares at December 31, 2014		—

Authorized shares as of December 31, 2014		551,847,819


Authorized shares as of January 1, 2014		551,847,819
No movement of authorized shares at September 30, 2015		—

		551,847,819

Movement fully paid shares


	N° of shares			Movement value of shares (1) ThUS$		Cost of issuance and placement of shares (2) ThUS$			Paid-in Capital ThUS$

Paid shares as of January 1, 2014		535,243,229			2,395,745		(6,361	)		2,389,384
Preferential placement capital increase approved at Extraordinary Shareholders meeting dated June 11, 2013		10,304,590			156,321		—			156,321

Paid shares as of September 30, 2014 (Unaudited)		545,547,819			2,552,066		(6,361	)		2,545,705


Paid shares as of October 1, 2014		545,547,819			2,552,066		(6,361	)		2,545,705
No movement of authorized shares at December 31, 2014		—			—		—			—

Paid shares as of December 31, 2014		545,547,819			2,552,066		(6,361	)		2,545,705


Paid shares as of January 1, 2015		545,547,819			2,552,066		(6,361	)		2,545,705
No movement of authorized shares at September 30, 2015		—			—		—			—

Paid shares as of September 30, 2015 (Unaudited)		545,547,819	(3)		2,552,066		(6,361	)		2,545,705

(1)	Amounts reported represent only those arising from the payment of the shares subscribed.

(2)	Decrease of capital by capitalization of reserves for cost of issuance and placement of shares established according to Extraordinary Shareholder’s Meetings, where such decreases were authorized.

(3)	At September 30, 2015, the difference between authorized shares and fully paid shares are 6,300,000 shares allocated to compensation plans for executives of LATAM Airlines Group S.A. and subsidiaries (see Note 33(a)).

(c)	Treasury stock

At September 30, 2015, the Company held no treasury stock, the remaining of ThUS$ (178) corresponds to the difference between the amount paid for the shares and their book value, at the time of the full right decrease of the shares.

At the Extraordinary Shareholder’s Meeting held on June 11, 2013, the company relinquished all right to 7,972 stocks of its portfolio, this date the Company does not maintain treasury stock.

(d)	Reserve of share- based payments

Movement of Reserves of share- based payments:


Periods	Opening balance		Stock option plan		Deferred tax			Deferred tax by tax effect of change in legal rate (Tax reform) (*)			Closing balance
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$

From January 1 to September 30, 2014 (Unaudited)		21,011		13,446		(2,581	)		(2,708	)		29,168
From October 1 to December 31, 2014		29,168		1,282		(808	)		—			29,642
From January 1 to September 30, 2015 (Unaudited)		29,642		5,948		(2,139	)		—			33,451

(*)

On September 29, 2014, Law No. 20,780 “Amendment to the system of income taxation and introduces various adjustments in the tax system.” was published in the Official Journal of the Republic of Chile. Within major tax reforms that law contains is modified gradually from 2014 to 2018 the First- Category Tax rate to be declared and paid starting in tax year 2015.

These reserves are related to the “Share-based payments” explained in Note 33.

(e)	Other sundry reserves

Movement of Other sundry reserves:


Periods	Opening balance		Transactions with non-controlling interest			Legal reserves			Closing balance
	ThUS$		ThUS$			ThUS$			ThUS$

From January 1 to September 30, 2014 (Unaudited)		2,657,800		(20,536	)		2,257			2,639,521
From October 1 to December 31, 2014		2,639,521		(990	)		(2,783	)		2,635,748
From January 1 to September 30, 2015 (Unaudited)		2,635,748		—			4,250			2,639,998

Balance of Other sundry reserves comprises the following:


	As of September 30, 2015			As of December 31, 2014
	ThUS$			ThUS$
	Unaudited

Higher value for TAM S.A. share exchange (1)		2,665,692			2,665,692
Reserve for the adjustment to the value of fixed assets (2)		2,620			2,620
Transactions with non-controlling interest (3)		(25,891	)		(25,891	)
Cost of issuance and placement of shares		(5,264	)		(5,264	)
Others		2,841			(1,409	)


Total		2,639,998			2,635,748

(1)

Corresponds to the difference in the shares value of TAM S.A. acquired (under subscriptions) by Sister Holdco S.A. and Holdco II S.A. (under the Exchange Offer), as stipulated in the Declaration of Posting of Merger by Absorption and the fair value of these exchange shares of LATAM Airlines Group S.A. at June 22, 2012.

(2)	Corresponds to the technical revaluation of fixed assets authorized by the Superintendence of Securities and Insurance in 1979, in Circular No. 1,529. The revaluation was optional and could be taken only once, the reserve is not distributable and can only be capitalized.

(3)

The balance at September 30, 2015, correspond to the loss generated by the participation of Lan Pax Group S.A. in the acquisition of shares of Aerovías de Integración Regional Aires of ThUS$ (3,480), the acquisition of TAM S.A. of the minority holding of Aerolinhas Brasileiras S.A. of ThUS$ (885) and the acquisition of minority interest of Aerolane S.A. by Lan Pax group S.A. through Holdco Ecuador S.A. for US$ (21,526).

(f)	Reserves with effect in other comprehensive income.

Movement of Reserves with effect in other comprehensive income:


	Currency translation reserve			Cash flow hedging reserve			Total
	ThUS$			ThUS$			ThUS$

Opening balance as of January 1, 2014		(589,991	)		(34,508	)		(624,499	)
Derivatives valuation gains (losses)		—			(48,597	)		(48,597	)
Deferred tax		—			9,054			9,054
Tax effect on deferred tax by change legal tax rate (Tax reform)(*)		—			7,752			7,752
Difference by subsidiaries conversion		(231,635	)		—			(231,635	)

Closing balance as of September 30, 2014 (Unaudited)		(821,626	)		(66,299	)		(887,925	)


Opening balance as of October 1, 2014		(821,626	)		(66,299	)		(887,925	)
Derivatives valuation gains (losses)		—			(116,634	)		(116,634	)
Deferred tax		—			31,593			31,593
Difference by subsidiaries conversion		(372,245	)		—			(372,245	)

Closing balance as of December 31, 2014		(1,193,871	)		(151,340	)		(1,345,211	)


Opening balance as of January 1, 2015		(1,193,871	)		(151,340	)		(1,345,211	)
Derivatives valuation gains (losses)		—			112,483			112,483
Deferred tax		—			(28,970	)		(28,970	)
Difference by subsidiaries conversion		(1,418,037	)		—			(1,418,037	)

Closing balance as of September 30, 2015 (Unaudited)		(2,611,908	)		(67,827	)		(2,679,735	)

(*)

On September 29, 2014, Law No. 20,780 “Amendment to the system of income taxation and introduces various adjustments in the tax system.” was published in the Official Journal of the Republic of Chile. Within major tax reforms that law contains is modified gradually from 2014 to 2018 the First- Category Tax rate to be declared and paid starting in tax year 2015.

(f.1)

Currency translation reserve

These originate from exchange differences arising from the translation of any investment in foreign entities (or Chilean investment with a functional currency different to that of the parent), and from loans and other instruments in foreign currency designated as hedges for such investments. When the investment (all or part) is sold or disposed and loss of control occurs, these reserves are shown in the consolidated statement of income as part of the loss or gain on the sale or disposal. If the sale does not involve loss of control, these reserves are transferred to non-controlling interests.

(f.2)

Cash flow hedging reserve

These originate from the fair value valuation at the end of each period of the outstanding derivative contracts that have been defined as cash flow hedges. When these contracts expire, these reserves should be adjusted and the corresponding results recognized.

(g)	Retained earnings

Movement of Retained earnings:


Periods	Opening balance		Result for the period			Other increase (decreases)		Deferred tax by tax effect of change in legal tax rate (Tax reform) (*)			Closing balance
	ThUS$		ThUS$			ThUS$		ThUS$			ThUS$

From January 1 to September 30, 2014 (Unaudited)		795,303		(208,072	)		59		(150,210	)		437,080
From October 1 to December 31, 2014		437,080		98,282			813		15			536,190
From January 1 to September 30, 2015 (Unaudited)		536,190		(203,018	)		1,564		—			334,736

(*)	According to the instructions of Chilean Superintendency of Securities and Insurance in his Office Circular No. 856 of October 17, 2014, the Company recognized a loss on their retained earnings as a result of the rate increase.

(h)	Dividends per share

As of September 30, 2015 and December 31, 2014, have not been paid dividends and have not been provisioned minimum mandatory dividends.

NOTE 25 - REVENUE

The detail of revenues is as follows:


	For the 9 months ended				For the 3 months ended
	September 30,				September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Passengers LAN		3,169,485		3,354,163		1,058,136		1,151,082
Passengers TAM		3,264,886		4,499,494		1,055,547		1,486,004
Cargo		994,548		1,256,130		309,781		410,486


Total		7,428,919		9,109,787		2,423,464		3,047,572

NOTE 26 - COSTS AND EXPENSES BY NATURE

(a)	Costs and operating expenses

The main operating costs and administrative expenses are detailed below:


	For the 9 months ended				For the 3 months ended
	September 30,				September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Aircraft fuel		2,077,877		3,155,006		658,840		1,047,722
Other rentals and landing fees		834,071		993,318		275,688		330,120
Aircraft rentals		391,134		392,815		133,442		131,742
Aircraft maintenance		352,688		346,033		122,990		114,993
Commissions		235,852		304,311		81,769		95,680
Passenger services		222,679		228,529		78,161		79,603
Other operating expenses		931,792		1,137,615		303,131		364,685

Total		5,046,093		6,557,627		1,654,021		2,164,545

(b)	Depreciation and amortization

Depreciation and amortization are detailed below:


	For the 9 months ended				For the 3 months ended
	September 30,				September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Depreciation (*)		673,682		706,532		223,487		241,169
Amortization		31,903		37,728		9,565		10,062

Total		705,585		744,260		233,052		251,231

(*)	Include the depreciation of Property, plant and equipment and the maintenance cost of aircraft held under operating leases. The amount of maintenance cost included within the depreciation line item at September 30, 2015 is ThUS$ 258,267 (ThUS$ 274,041 at the same period of 2014).

(c)	Personnel expenses

The costs for personnel expenses are disclosed in Note 22 liability for employee benefits.

(d)	Financial costs

The detail of financial costs is as follows:


	For the 9 months ended				For the 3 months ended
	September 30,				September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Bank loan interest		257,977		258,719		91,026		80,973
Financial leases		33,320		55,959		10,268		16,565
Other financial instruments		22,195		15,670		6,615		(11,608	)

Total		313,492		330,348		107,909		85,930

Costs and expenses by nature presented in this note plus the Employee expenses disclosed in Note 22, are equivalent to the sum of cost of sales, distribution costs, administrative expenses, other expenses and financing costs presented in the consolidated statement of income by function.

(e)	Restructuring Costs

As part of the ongoing process of reviewing its fleet plan, the company decided to implement a broad restructuring plan in order to reduce the variety of aircraft currently in operation and gradually withdrawing the less efficient. According with this plan, during the first quarter of 2014 were formalized contracts and commitments having as a result a negative impact on the results of such period of US$ 112 million before tax that are associated with exit costs of seven A330, six A340, five B737, three Q400, five A319 and three B767-33A aircraft. These exit costs are associated with penalties related to early repayment and maintenance costs for returning.

NOTE 27 - OTHER INCOME, BY FUNCTION

Other income by function is as follows:


	For the 9 months ended				For the 3 months ended
	September 30,				September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Tours		82,647		77,614		24,887		26,490
Aircraft leasing		32,863		23,880		11,565		6,116
Customs and warehousing		18,151		16,160		6,912		5,699
Duty free		13,244		13,319		5,189		6,149
Maintenance		7,845		10,869		64		2,297
Other miscellaneous income		135,149		114,834		42,741		46,977

Total		289,899		256,676		91,358		93,728

NOTE 28 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES

The functional currency of LATAM Airlines Group S.A. is the US dollar, also it has subsidiaries whose functional currency is different to the US dollar, such as the Chilean peso, Argentine peso, Colombian peso and Brazilian real.

The functional currency is defined primarily as the currency of the primary economic environment in which an entity operates and in each entity and all other currencies are defined as foreign currency.

Considering the above, the balances by currency mentioned in this note correspond to the sum of foreign currency of each of the entities that make LATAM Airlines Group S.A. and Subsidiaries.

(a)	Foreign currency

The foreign currency detail of balances of monetary items in current and non-current assets is as follows:


Current assets	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Cash and cash equivalents		207,798		213,161
Argentine peso		26,415		22,121
Brazilian real		983		2,365
Chilean peso		33,227		30,453
Colombian peso		1,764		1,622
Euro		7,755		9,639
U.S. dollar		85,630		50,652
Strong bolivar		45,902		63,236
Other currency		6,122		33,073

Other financial assets, current		13,185		73,030
Argentine peso		—		40,939
Chilean peso		629		25,781
Euro		1		1
U.S. dollar		12,308		6,008
Strong bolivar		20		43
Other currency		227		258


Current assets	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited
Other non-financial assets, current		168.555		59.700
Argentine peso		14.841		7.326
Brazilian real		250		148
Chilean peso		32.979		18.073
Colombian peso		752		1.415
Euro		2.942		2.523
U.S. dollar		92.883		5.751
Strong bolivar		348		330
Other currency		23.560		24.134

Trade and other accounts receivable, current		485.570		543.257
Argentine peso		105.855		61.291
Brazilian real		13.877		33.267
Chilean peso		88.309		128.780
Colombian peso		1.346		4.394
Euro		40.750		38.764
U.S. dollar		108.294		75.876
Strong bolivar		1.797		4.895
Other currency		125.342		195.990

Accounts receivable from related entities, current		392		299
Chilean peso		302		299
Other currency		90		—

Tax current assets		19.206		21.605
Argentine peso		2.666		2.300
Brazilian real		2		2
Chilean peso		2.552		5.773
Colombian peso		845		1.995
Euro		26		21
U.S. dollar		44		467
Other currency		13.071		11.047

Total current assets		894.706		911.052
Argentine peso		149.777		133.977
Brazilian real		15.112		35.782
Chilean peso		157.998		209.159
Colombian peso		4.707		9.426
Euro		51.474		50.948
U.S. Dollar		299.159		138.754
Strong bolivar		48.067		68.504
Other currency		168.412		264.502


Non-current assets	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited

Other financial assets, non-current		23,363		36,715
Argentine peso		51		57
Brazilian real		1,041		1,050
Chilean peso		960		1,100
Colombian peso		165		203
Euro		518		4,243
U.S. dollar		18,908		29,238
Other currency		1,720		824

Other non-financial assets, non-current		9,790		18,803
Argentine peso		42		45
U.S. dollar		—		1
Other currency		9,748		18,757

Accounts receivable, non-current		8,848		10,569
Chilean peso		3,692		5,413
U.S. dollar		5,000		5,000
Other currency		156		156

Deferred tax assets		2,727		2,613
Colombian peso		425		256
U.S. dollar		—		3
Other currency		2,302		2,354

Total non-current assets		44,728		68,700
Argentine peso		93		102
Brazilian real		1,041		1,050
Chilean peso		4,652		6,513
Colombian peso		590		459
Euro		518		4,243
U.S. dollar		23,908		34,242
Other currency		13,926		22,091

The foreign currency detail of balances of monetary items in current liabilities and non-current is as follows:


	Up to 90 days				91 days to 1 year
Current liabilities	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited
Other financial liabilities, current		132,916		71,436		128,176		173,416
Chilean peso		54,830		15,542		53,167		42,725
Euro		—		547		—		—
U.S. dollar		78,086		55,347		75,009		130,691

Trade and other accounts payables, current		628,447		421,188		28,849		20,875
Argentine peso		44,888		38,740		2,307		—
Brazilian real		15,571		14,330		20		13
Chilean peso		43,524		25,040		11,558		11,502
Colombian peso		9,693		13,652		264		187
Euro		7,448		35,937		550		8,266
U.S. dollar		275,103		175,298		6,800		827
Strong bolivar		20,619		5,261		—		—
Other currency		211,601		112,930		7,350		80

Accounts payable to related entities, current		38		35		—		—
Chilean peso		16		8		—		—
U.S. dollar		22		27		—		—

Tax liabilities, current		32		268		1		—
Chilean peso		—		268		—		—
Other currency		32		—		1		—


	Up to 90 days					91 days to 1 year
Current liabilities	As of September 30, 2015			As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$			ThUS$		ThUS$		ThUS$
	Unaudited					Unaudited
Other non-financial liabilities, current		157,719			126,953		117		158
Argentine peso		63,523			5,698		—		—
Brazilian real		8,263			959		7		46
Chilean peso		23,053			18,798		18		—
Colombian peso		39			4,670		32		—
Euro		30,204			6,400		—		—
U.S. dollar		8,771			44,728		59		111
Strong bolivar		(108	)		227		—		—
Other currency		23,974			45,473		1		1

Total current liabilities		919,152			619,880		157,143		194,449
Argentine peso		108,411			44,438		2,307		—
Brazilian real		23,834			15,289		27		59
Chilean peso		121,423			59,656		64,743		54,227
Colombian peso		9,732			18,322		296		187
Euro		37,652			42,884		550		8,266
U.S. dollar		361,982			275,400		81,868		131,629
Strong bolivar		20,511			5,488		—		—
Other currency		235,607			158,403		7,352		81


	More than 1 to 3 years				More than 3 to 5 years				More than 5 years
Non-current liabilities	As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014		As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Other financial liabilities, non-current		598.515		625.406		224.443		171.288		801.198		1.088.218
Chilean peso		116.953		112.161		39.788		17.186		—		—
U.S. dollar		481.562		513.245		184.655		154.102		801.198		1.088.218

Accounts payable, non-current		9.654		474.955		433.716		2.316		6		—
Chilean peso		7.691		4.938		173		2.316		6		—
U.S. dollar		—		468.184		433.543		—		—		—
Other currency		1.963		1.833		—		—		—		—

Other provisions, non-current		15.916		16.660		279		—		44		—
Argentine peso		539		454		75		—		—		—
Brazillian real		148		146		—		—		—		—
Chilean peso		38		36		—		—		—		—
Colombian peso		—		—		204		—		—		—
Euro		9.191		9.999		—		—		—		—
U.S. dollar		6.000		6.025		—		—		44		—

Provisions for employees benefits, non-current		908		822		—		—		—		—
U.S. dollar		908		822		—		—		—		—

Total non-current liabilities		624.993		1.117.843		658.438		173.604		801.248		1.088.218
Argentine peso		539		454		75		—		—		—
Brazilian real		148		146		—		—		—		—
Chilean peso		124.682		117.135		39.961		19.502		6		—
Colombian peso		—		—		204		—		—		—
Euro		9.191		9.999		—		—		—		—
U.S. dollar		488.470		988.276		618.198		154.102		801.242		1.088.218
Other currency		1.963		1.833		—		—		—		—

100


General summary of foreign currency:	As of September 30, 2015			As of December 31, 2014
	ThUS$			ThUS$
	Unaudited
Total assets		939.434			979.752
Argentine peso		149.870			134.079
Brazilian real		16.153			36.832
Chilean peso		162.650			215.672
Colombian peso		5.297			9.885
Euro		51.992			55.191
U.S. dollar		323.067			172.996
Strong bolivar		48.067			68.504
Other currency		182.338			286.593

Total liabilities		3.053.854			3.193.994
Argentine peso		111.332			44.892
Brazilian real		24.009			15.494
Chilean peso		350.815			250.520
Colombian peso		10.232			18.509
Euro		47.393			61.149
U.S. dollar		2.244.640			2.637.625
Strong bolivar		20.511			5.488
Other currency		244.922			160.317

Net position
Argentine peso		38.538			89.187
Brazilian real		(7.856	)		21.338
Chilean peso		(188.165	)		(34.848	)
Colombian peso		(4.935	)		(8.624	)
Euro		4.599			(5.958	)
U.S. dollar		(1.921.573	)		(2.464.629	)
Strong bolivar		27.556			63.016
Other currency		(62.584	)		126.276

101

(b)	Exchange differences

Exchange differences recognized in the income statement, except for financial instruments measured at fair value through profit or loss, for the period ended September 30, 2015 and 2014, generated a debit of ThUS$ 410,755 and a credit of ThUS$ 39,944, respectively. In the second quarter of 2015 and 2014, were generated a credit of ThUS$ 241,533 and ThUS$ 144,093, respectively.

Exchange differences recognized in equity as reserves for currency translation differences for the period ended September 30, 2015 and 2014, represented a debit of ThUS$ 1,437,025 and ThUS$ 261,280, respectively. In the third quarter of 2015 and 2014, were generated a debit of ThUS$ 776,941 and ThUS$ 542,025, respectively.

The following shows the current exchange rates for the U.S. dollar, on the dates indicated:


	As of September 30, 2015		As of December 31, 2014
	Unaudited

Argentine peso		9.42		8.55
Brazilian real		3.97		2.66
Chilean peso		698.72		606.75
Colombian peso		3,090.99		2,389.50
Euro		0.89		0.82
Strong bolivar		13.50		12.00
Australian dollar		1.43		1.22
Boliviano		6.86		6.86
Mexican peso		16.93		14.74
New Zealand dollar		1.56		1.28
Peruvian Sol		3.23		2.99
Uruguayan peso		29.05		24.25

102

NOTE 29 - EARNINGS / (LOSS) PER SHARE


	For the 9 months ended						For the 3 months ended
	September 30,						September 30,
Basic earnings / (loss) per share	2015			2014			2015			2014
	Unaudited
Earnings / (loss) attributable to owners of the parent (ThUS$)		(203,018	)		(208,072	)		(113,344	)		(107,829	)
Weighted average number of shares, basic		545,547,819			545,547,819			545,547,819			545,547,819
Basic earnings / (loss) per share (US$)		(0.37214	)		(0.38140	)		(0.20776	)		(0.19765	)


	For the 9 months ended						For the 3 months ended
	September 30,						September 30,
Diluted earnings / (loss) per share	2015			2014			2015			2014
	Unaudited
Earnings / (loss) attributable to owners of the parent (ThUS$)		(203,018	)		(208,072	)		(113,344	)		(107,829	)
Weighted average number of shares, basic		545,547,819			545,547,819			545,547,819			545,547,819

Weighted average number of shares, diluted		545,547,819			545,547,819			545,547,819			545,547,819

Diluted earnings / (loss) per share (US$)		(0.37214	)		(0.38140	)		(0.20776	)		(0.19765	)

103

NOTE 30 - CONTINGENCIES

Lawsuits

(i)	Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Atlantic Aviation Investments LLC (AAI)	Supreme Court of the State of New York County of New York.	07-6022920	Atlantic Aviation Investments LLC. (“AAI”), an indirect subsidiary LATAM Airlines Group S.A., incorporated under the laws of the State of Delaware, sued in August 29^th, 2007 Varig Logistics S.A. (“Variglog”) for non-payment of four documented loans in credit agreements governed by New York law. These contracts establish the acceleration of the loans in the event of sale of the original debtor, VRG Linhas Aéreas S.A.	In implementation stage in Switzerland, the conviction stated that Variglog should pay the principal, interest and costs in favor of AAI. It keeps the embargo of Variglog funds in Switzerland with AAI. Variglog is in the process of judicial recovery in Brazil and has asked Switzerland to recognize the judgment that declared the state of judicial recovery and subsequent bankruptcy.	17,100 Plus interests and costs

Lan Argentina S.A.	National Administrative Court.	36337/13	ORSNA Resolution No. 123 which directs Lan Argentina to vacate the hangar located in the Airport named Aeroparque Metropolitano Jorge Newberry, Argentina.	On June 19th, 2014, the Second Division of the Federal Administrative Chamber confirmed the extension of the injunction granted by the Court of 1st Instance in March. On September 18th, 2014 the Court of 1st Instance decided to extend the validity of the injunction until a sentence is reached in the main trial. On December 30th, 2014 the Supreme Court of Justice of the Nation decided to reject the appeal of complaint presented by ORSNA against the granting of the injunction. On May 15, 2015, the trial court granted another extension of the precautionary measure, which will expire December 15, 2015. The National Airport Authority of Argentina (ORSNA) appealed that decision and the case is now before the National Administrative Court for confirmation or revocation.	Undetermined

104

(ii)	Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

LATAM Airlines Group S.A. y Lan Cargo S.A.	European Commission.	-	Investigation of alleged infringements to free competition of cargo airlines, especially fuel surcharge. On December 26^th, 2007, the General Directorate for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the instruction process against twenty five cargo airlines, including Lan Cargo S.A., for alleged breaches of competition in the air cargo market in Europe, especially the alleged fixed fuel surcharge and freight. On November 9^th, 2010, the General Directorate for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the imposition of a fine in the amount of MUS$ 9.191. This fine is being appealed by Lan Cargo S.A. and LATAM Airlines Group S.A. We cannot predict the outcome of this appeal process.	On April 14^th, 2008, the notification of the European Commission was replied. The appeal was filed on January 24, 2011. On May 11, 2015, we attended a hearing at which we petitioned for the vacation of the Decision based on discrepancies in the Decision between the operating section, which mentions four infringements (depending on the routes involved) but refers to Lan in only one of those four routes; and the ruling section (which mentions one single conjoint infraction). Appeal to be known during the course of next year (2016),	9.191

Lan Cargo S.A. y LATAM Airlines Group S.A.	In the High Court of Justice Chancery División (England) Ovre Romerike District Court (Norway) y Directie Juridische Zaken Afdeling Ceveil Recht (Netherlands), Cologne Regional Court (Landgerich Köln Germany).	-	Lawsuits filed against European airlines by users of freight services in private lawsuits as a result of the investigation into alleged breaches of competition of cargo airlines, especially fuel surcharge. Lan Cargo S.A. and LATAM Airlines Group S.A., have been sued in court proceedings directly and/or in third party, based in England, Norway, the Netherlands and Germany.	Cases are in the uncovering evidence stage.	Undetermined

105


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Aerolinhas Brasileiras S.A.	Federal Courts	0008285-53.2015.403.6105	An action seeking to quash a decision and petioning for early protection in order to obgain a revocation of the penalty imposed by the Brazilian Competition Authority (CADE) in the investigation of cargo airlines alleged fair trade violations, in particular the fuel surcharge.	This action was filed by presenting a guaranty – policy – in order to suspend the effects of the CADE’s decision regarding the payment of the following fines: (i) ABSA: MUS$8.563; (ii) Norberto Jochmann: MUS$ 165; (iii) Hernan Merino: MUS$ 82; (iv) Felipe Meyer:MUS$ 82. The action also deals with the affirmative obligation required by the CADE consisting of the duty to publish the condemnation in a widely circulating newspaper. This obligation had also been stayed by the court of federal justice in this process. Awaiting CADE’s statement.	8.563

Aerolinhas Brasileiras S.A	Federal Justice.	0001872-58.2014.4.03.6105	An annulment action with a motion for preliminary injunction, was filed on 28/2014, in order to cancel tax debts of PIS, CONFINS, IPI and II, connected with the administrative process 10831.005704/2006.43.	The PFN worsened the decision which granted the suspension of the tax credits´ payment discussed in the PA. Currently, the case is waiting for decision of the Court of First Instance.	9.138

Tam Linhas Aéreas S.A	Department of Federal Revenue of Brazil	19515.721155/2014-15	Alleged irregularities in the SAT payments for the periods 1/2009 to 13/2009, 1/2010 to 13/2010 and 1/2011 to 12/2012.	We presented an administrative defense. The decision has been pending since January 12, 2015.	20.849

106


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Tam Linhas Aéreas S.A.	Court of the Second Region.	2001.51.01.012530-0	Ordinary judicial action brought for the purpose of declaring the nonexistence of legal relationship obligating the company to collect the Air Fund.	Unfavorable court decision in first instance. Currently expecting the ruling of the appeal filed by the company. In order to suspend chargeability of Tax Credit a Guaranty Deposit to the Court was delivered by MMUS$ 77 The process is in TRF2 since 28/04/2014 awaiting for sentence on the appeal filed by TAM	74.220

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	16643.000087/2009-36	This is an administrative proceeding arising from an infraction notice issued on 15.12.2009, by which the authority aims to request social contribution on net income (CSL) on base periods 2004 to 2007, due to the deduction of expenses related to suspended taxes.	The appeal filed by the company was dismissed in 2010. In 2012 the voluntary appeal was also dismissed. Consequently, the special appeal filed by the company awaits judgment of admissibility, since 2012.	18.232

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	10880.725950/2011-05	Compensation credits of the Social Integration Program (PIS) and Contribution for Social Security Financing (COFINS) Declared on DCOMPs.	The objection (manifestação de inconformidade) filed by the company was rejected, which is why the voluntary appeal was filed. Such appeal is waiting for judgment by CARF since 2014.	16.761

107


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Tam Linhas Aéreas S.A.	6th Rod Treasury of San Pablo.	0012938-14.2013.8.26.0053	It is an annulment action filed against the municipality of São Paulo seeking to annul the tax credit constituted by the non-payment of ISS due by INFRAERO for the provision of airport services.	In 2013 the claim was judged partially valid for the interests of the company. The appeal is pending since March 2014.	8.368

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	16643.000085/2009-47	File demanding the recovery of income tax and social contribution on net profits (CSL) derived from royalties and costs of using the TAM brand.	First instance decision was unfavorable to the interests of the company. Currently expecting ruling on the appeal filed by the company on March 15, 2012.	8.069

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	10831.012344/2005-55	Auto infringement presented to demand the import tax (II), the Social Integration Program (PIS) Contribution for Social Security Financing (COFINS) arising from the loss of international unidentified cargo.	Adverse administrative decision to the interests of the company. Case pending before the Court of Tax Appeals (CARF) awaiting decision.	6.491

Tam Linhas Aéreas S.A.	Department of Finance of the State of Sao Paulo.	3.123.785-0	Infringement notice to demand payment of the tax on the circulation of goods and services (ICMS) regulating the import of aircraft.	Currently awaiting the decision on the appeal filed by the company in STF.	6.740

Tam Linhas Aéreas S.A.	1st Civil Court of the District of Goiânia/GO.	200702435095 (ordinary)	Lawsuit filed by a former TAM sales representative that requires compensation for moral and material damages resulting from the termination of his contract as sales representative.	The case was closed by a settlement for ThUS$ 5,789 (23 million reals).	—

108


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Aerovías de Integración Regional, AIRES S.A.	United States Court of Appeals for the Eleventh Circuit, Florida, U.S.A.	2013-20319 CA 01	The July 30^th, 2012 LAN COLOMBIA AIRLINES initiated a legal process in Colombia against Regional One INC and Volvo Aero Services LLC, to declare that these companies are civilly liable for moral and material damages caused to LAN COLOMBIA AIRLINES arising from breach of contractual obligations of the aircraft HK-4107. The June 20^th, 2013 AIRES SA And / Or LAN AIRLINES COLOMBIA was notified of the lawsuit filed in U.S. for Regional One INC and Dash 224 LLC for damages caused by the aircraft HK-4107 arguing failure of LAN COLOMBIA AIRLINES customs duty to obtain import declaration when the aircraft in April 2010 entered Colombia for maintenance required by Regional One.	Through proceedings dated June 5, 2014, the First Civil Overflow Court Room became aware of the process in Colombia and sent a copy of prior pleas submitted to the plaintiffs by the defendant. The Federal Court ruled on March 26^th, 2014 and approved the request from LAN AIRLINES COLOMBIA to suspend the process in the U.S. as the demand in Colombia is underway. Additionally, the U.S. judge closed the case administratively. the Federal Court of Appeals, confirmed the end of the case in the U.S. on April 1^st, 2015.	12.443

Tam Linhas Aéreas S.A.	Department of Finance of the State of Rio de Janeiro.	03.431129-0	The State of Rio de Janeiro requires VAT tax credit for the purchase of kerosene (jet fuel). According to a report, the auditor noted that none of the laws of Rio de Janeiro authorizes the appropriation of credit, so the credit was refused and demanded tribute.	Objection was filed on December 12^th, 2013. Currently, waiting for the trial of the first administrative instance.	57.301

Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	10880.722.355/2014-52	On August 19th, 2014 the Federal Tax Service issued a notice of violation stating that compensation credits Program (PIS) and the Contribution for the Financing of Social Security COFINS by TAM are not directly related to the activity of air transport.	An administrative objection was filed on September 17th, 2014. Currently awaiting for judgment on the objection (manifestações de inconformidade).	113.016

109


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Tam Linhas Aéreas S.A.	Department of Finance of the State of Sao Paulo	4037054-9	On September 20th, 2014 we were notified that the Department of Finance of the State of São Paulo filed an infringement lawsuit for non-payment of tax on the circulation of goods and services relating to telecommunications services ICMS.	Defense presented. First Instance court decision maintained the infraction notice in its entirety. We filed ordinary appeal, which is awaiting for judgment of the TIT / SP.	7.157

Tam Linhas Aéreas S.A.	Labor Court of São Paulo	0001734-78.2014.5.02.0045	Action filed by the Ministry of Labor, which requires compliance with legislation on breaks, extra hours and others.	Early stage. Eventually could affect the operations and control of working hours of employees.	Undetermined

TAM S.A.	Conselho Administrativo de Recursos Fiscais	13855.720077/2014-02	Notice of an alleged infringement presented by Secretaria da Receita Federal do Brasil requiring the payment of IRPJ and CSLL, taxes related to the income earned by TAM on March, 2011, in relation of the reduction of the statute capital of Multiplus S.A.	On January 12, 2014, it was filed an appeal against the object of the notice of infringement. Currently, the company is waiting for the court judgment regarding the appeal filed in the Conselho Administrativo de Recursos Fiscais.	85.662

Tam Linhas Aereas S.A.	1° Civil Court of Goiânia/GO.		That action is filed by the current complainants against the defendant, TAM Linhas Aéreas S / A, for receiving compensation for material and moral damages suffered as a result of an accident with one of its aircraft, which landed on adjacent lands to the Bauru airport, impacting the vehicle of Ms. Savi Gisele Marie de Seixas Pinto and William Savi de Seixas Pinto, causing their death. The first was the wife and mother of the complainants and the second, son and brother, respectively.	Currently under the enforcement phase of the sentence.	9.399

Aerolinhas Brasileiras S.A.	Labor Court of Campinas.	0010498-37.2014.5.15.0095	Lawsuit filed by the National Union of aeronauts, requiring weekly rest payment (DSR) scheduled stopovers, displacement and moral damage.	Trial in initial stage and in negotiation process with the Union.	13.779 Approximate value / estimated

110


Company	Court	Case Number	Origin	Stage of trial	Amounts Committed
					MUS$

Aerolinhas Brasileiras S.A.	Labor Court of Manaus.	0002037-67.2013.5.11.0016	Lawsuit filed by the Union of Manaus Aeroviarios requiring assignment of hazard to ground workers (AEROVIARIOS).	Process in the initial phase. The value is in the calculation stage by the external auditor.	Undetermined

Aerolinhas Brasileiras S.A.	Labor Court of Campinas	0011014-52.2014.5.15.0129	Lawsuit filed by the Union of Air Workers of Campinas requesting risk compensation for ABSA workers.	The process is in its initial phase. The amounts involved are being calculated by the external accountant of the Company.	Undetermined

Aerolane, Líneas Aéreas Nacionales del Ecuador	Internal Revenue Service	17502-2012-0082	Certificate of 2006 Income Tax, items where CEDT is disregarded. They are requesting certification of branch expenses, ARC fees for which no income tax withholding was made by the payer, etc. These proceedings began in 2012.	A decision was rendered on the appeal for a review and payment was made to avoid interest accrual. This payment was also contested before the Court. An accounting review will be made with the Court and experts from SRI and the Company on October 18, 2015.	12.505

TAM Linhas Aéreas	Recife Labor Court	0000070-22.2013.5.06.0017	An action filed by the Public Ministry of Labor seeking that the Company refrain from practicing moral harassment, religious, social, sexual and other discrimination.	The case is just now beginning.	Undetermined

TAM Linhas Aéreas	São Carlos Labor Court	0010476-12.2015.5.15.0008	Action filed by the union seeking additional hazard pay for maintenance (MRO) employees (São Carlos).	The case is just now beginning and calculations are being prepared.	Undetermined

•

Governmental Investigations. The investigation by the authorities of Chile and the United States of America continues, related to payments carried out by LATAM Airlines Group S.A. (before called LAN Airlines S.A.) in 2006-2007, to a consultant that advised it in the resolution of labor matters in Argentina. The Company continues cooperating with the respective authorities in the aforementioned investigation. Presently the Company cannot predict the results in the matter; nor estimate or range the potential losses or risks that may eventually come resulting from the way in which this matter is finally resolved.

•

In order to deal with any financial obligations arising from legal proceedings in effect at September 30, 2015, whether civil, tax, or labor, LATAM Airlines Group S.A. and Subsidiaries, has made provisions, which are included in Other non-current provisions that are disclosed in Note 20.

•

The Company has not disclosed the individual probability of success for each contingency in order to not negatively affect its outcome.

111

NOTE 31 - COMMITMENTS

(a.1)

Loan covenants

With respect to various loans signed by the Company for the financing of Boeing 767, 767F, 777F and 787 aircraft, which carry the guarantee of the United States Export–Import Bank, limits have been set on some of the Company’s financial indicators on a consolidated basis. Moreover, and related to these same contracts, restrictions are also in place on the Company’s management in terms of its ownership and disposal of assets.

The Company and its subsidiaries do not maintain financial credit contracts with banks in Chile that indicate some limits on financial indicators of the Company or its subsidiaries.

At September 30, 2015, the Company is in compliance with all indicators detailed above.

(a.2)

Fleet financing commitments to receive

On May 29, 2015, The Company has issued and placed debt securities denominated Enhanced Equipment Trust Certificates (“EETC”) for an aggregate amount of US $ 1,020,823,000 (the “Certificates”) in accordance with the following:

•

The Certificates were issued and placed in the international market under Rule 144-A and Regulation S of the securities laws of the United States of America by pass-through trusts (“Trusts”).

•

This offer consists of class A Certificates that will have an interest rate of 4.2% per annum, with an estimated distribution date of November 15, 2027, while the Class B Certificates will have an interest rate of 4.5% per annum, with an estimated distribution date of November 15, 2023.

•

Trusts will use the proceeds of the placement, which will initially remain in escrow with a first class bank, to acquire “Equipment Notes” to be issued by four separate special purpose entities, each of which is wholly owned by LATAM (each an “Issuer”).

•

Each Issuer will use the proceeds from the sale of the Equipment Notes and the initial payment under each Lease (as such term is defined below) to finance the acquisition of eleven new Airbus A321-200, two Airbus A350-900s and four Boeing 787 -9, whose deliveries are scheduled between July 2015 and March 2016 (the “Aircrafts”).

•

Each of the Issuers will lease the acquired Aircrats to LATAM according to a finance lease (“Lease”), who may in turn sublease the Aircraft under operating sub-lease agreements.

•

Based on the above, LATAM will recognise these Equipment Notes as debt upon delivery of each Aircraft.

•

The Certificates have not been registered under the United Stated Securities Act of 1933 or under applicable securities laws in any other jurisdiction. Consequently, the Certificates have been offered and sold to persons reasonably believed to qualify as institutional investors in accordance with Rule 144-A under the Securities Act of the United States, and other non-residents of the United States in transactions outside the United States under Regulation S of the normative body.

112

At September 30, 2015 the escrow of EETC is ThUS$ 738,619 corresponding to 13 aircraft by receive.

(b)	Commitments under operating leases as lessee

Details of the main operating leases are as follows:


Lessor	Aircraft	As of September 30, 2015		As of December 31, 2014
		Unaudited
Aircraft 76B-26329 Inc.	Boeing 767		1		1
Aircraft 76B-27615 Inc.	Boeing 767		1		1
Aircraft 76B-28206 Inc.	Boeing 767		1		1
Aviacion Centaurus, A.I.E	Airbus A319		3		3
Aviación Centaurus, A.I.E.	Airbus A321		1		1
Aviación Real A.I.E.	Airbus A319		1		1
Aviación Real A.I.E.	Airbus A320		1		1
Aviación Tritón A.I.E.	Airbus A319		3		3
Avolon Aerospace AOE 19 Limited	Airbus A320		1		1
Avolon Aerospace AOE 20 Limited	Airbus A320		1		1
Avolon Aerospace AOE 6 Limited	Airbus A320		1		1
Avolon Aerospace AOE 62 Limited	Boeing 777		1		1
Avolon Aerospace AOE 63 Limited	Boeing 787		—		1
AWAS 4839 Trust	Airbus A320		1		1
AWAS 5125 Trust	Airbus A320		1		1
AWAS 5178 Limited	Airbus A320		1		1
AWAS 5234 Trust	Airbus A320		1		1

113


Lessor	Aircraft	As of September 30, 2015		As of December 31, 2014
		Unaudited

Baker & Spice Aviation Limited	Airbus A320		1		2
Bank Of America	Airbus A321		3		—
BOC Aviation Pte. Ltd.	Airbus A320		1		1
CIT Aerospace International	Airbus A320		2		2
Delaware Trust Company, National Association	Bombardier Dhc8-200		2		5
ECAF I 1215 DAC	Airbus A320		1		—
ECAF I 2838 DAC	Airbus A320		1		—
Eden Irish Aircr Leasing MSN 1459	Airbus A320		1		1
GECAS Sverige Aircraft Leasing Worldwide AB	Airbus A320		3		6
GFL Aircraft Leasing Netherlands B.V.	Airbus A320		1		1
International Lease Finance Corporation	Boeing 767		1		1
JMA Aircraft 6670 LP	Airbus A321		1		—
JSA Aircraft 38484, LLC	Airbus A320		1		—
Magix Airlease limited	Airbus A320		2		2
MASL Sweden (1) AB	Airbus A320		1		1
MASL Sweden (2) AB	Airbus A320		1		1
MASL Sweden (7) AB	Airbus A320		1		1
MASL Sweden (8) AB	Airbus A320		1		1
NBB Cuckoo Co., Ltd	Airbus A320		1		—
NBB Grosbeak Co., Ltd	Airbus A320		1		—
NBB-6658 Lease Partnership	Airbus A321		1		—
Orix Aviation Systems Limited	Airbus A320		2		2
RBS Aerospace Limited	Airbus A320		—		6
SASOF II (J) Aviation Ireland Limited	Airbus A319		1		1
SKY HIGH V LEASING COMPANY LIMITED	Airbus A320		1		1
Sky High XXIV Leasing Company Limited	Airbus A320		5		5
Sky High XXV Leasing Company Limited	Airbus A320		2		2
SMBC Aviation Capital Limited	Airbus A320		8		2
SMBC Aviation Capital Limited	Airbus A321		2		2
Sunflower Aircraft Leasing Limited	Airbus A320		2		2
TC-CIT Aviation Ireland Limited	Airbus A320		1		1
Volito Aviation August 2007 AB	Airbus A320		2		2
Volito Aviation November 2006 AB	Airbus A320		2		2
Volito November 2006 AB	Airbus A320		2		2
Wells Fargo Bank North National Association	Airbus A319		3		3
Wells Fargo Bank North National Association	Airbus A320		2		2
Wells Fargo Bank Northwest National Association	Airbus A320		6		6
Wells Fargo Bank Northwest National Association	Airbus A330		2		5
Wells Fargo Bank Northwest National Association	Boeing 787		3		3
Wells Fargo Bank Northwest National Association	Boeing 777		7		7
Wells Fargo Bank Northwest National Association	Boeing 787		7		3
Wilmington Trust Company	Airbus A319		1		1
Zipdell Limited	Airbus A320		—		1

Total			109		107

The rentals are shown in results for the period for which they are incurred.

114

The minimum future lease payments not yet payable are the following:


	As of September 30, 2015		As of December 31, 2014
	ThUS$		ThUS$
	Unaudited

No later than one year		514,362		511,624
Between one and five years		1,287,641		1,202,440
Over five years		899,692		441,419

Total		2,701,695		2,155,483

The minimum lease payments charged to income are the following:


	For the 9 months ended September 30,				For the 3 months ended September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited

Minimum operating lease payments		391,134		392,815		133,442		131,742


Total		391,134		392,815		133,442		131,742

In the first quarter of 2014, two Airbus A320-200 aircraft were acquired and two Airbus A321-200 aircraft were leased for a period of 8 years each. Moreover, two Boeing 737-700 aircraft, one Boeing B767-300F aircraft, one Boeing 767-300F aircraft, one Airbus A340-300 aircraft and one Bombardier Dhc8-400 aircraft were returned. Additionally, as a result of its sale and subsequent lease, during March 2014 four Boeing 777-300ER aircraft were added as operative leasing, with each aircraft being leased for periods between four and six years each. During the second quarter of 2014, one Airbus A320-200 aircraft and one Boeing 787-800 aircraft were added by leasing them for a period of 8 and 12 years, respectively. On the other hand, one Bombardier Dhc8-400 aircraft, four Airbus A320-200 aircraft, seven Airbus A330-200 aircraft and three Boeing 737-700 aircraft were returned. In the third quarter of 2014, one Airbus A320-200 aircraft and one Boeing 787-800 aircraft were added by leasing them for a period of 8 and 12 years, respectively. On the other hand, one Bombardier Dhc8-400 aircraft, two Airbus A319-100 aircraft and one Boeing 767-300ER aircraft were returned. In the fourth quarter of 2014, two Airbus A320-200 aircraft and one Boeing 767-300ER aircraft were returned. On the other hand, three A340-300 aircraft and one A319-100 aircraft were bought. Additionally it was reported that the purchase option will be exercised by 2 Bombardier Dhc8-200 aircraft. Therefore, these aircraft were reclassified to the category Property, plant and equipment.

During the first quarter of 2015, two Boeing 787-9 aircraft were leased for a period of twelve years each. On the other hand, two Airbus A320-200 aircraft were returned.

During the second quarter of 2015, two Airbus A321-200 aircraft and one Boeing 787-9 aircraft were leased for a period of twelve years each. On the other hand, one Airbus A320-200 aircraft and two Airbus A330-200 aircraft were returned.

115

During the third quarter of 2015, five Airbus A321-200 aircraft and one Boeing 787-9 aircraft were leased for a period of twelve years each. On the other hand, one Airbus A330-200 aircraft was returned. Additionally a purchase contract and a contract of sales is signed by seven Bombardier 7 Dhc8-200 aircraft.

The operating lease agreements signed by the Company and its subsidiaries state that maintenance of the aircraft should be done according to the manufacturer’s technical instructions and within the margins agreed in the leasing agreements, a cost that must be assumed by the lessee. The lessee should also contract insurance for each aircraft to cover associated risks and the amounts of these assets. Regarding rental payments, these are unrestricted and may not be netted against other accounts receivable or payable between the lessor and lessee.

At September 30, 2015 the Company has existing letters of credit related to operating leasing as follows:


			Value		Release
Creditor Guarantee	Debtor	Type	ThUS$		date
GE Capital Aviation Services Limited	Lan Cargo S.A.	Three letter of credit		5,435	Nov 16, 2015
GE Capital Aviation Services Limited	LATAM Airlines Group S.A.	Six letter of credit		23,456	Dec 4, 2015
International Lease Finance Corp	LATAM Airlines Group S.A.	Four letter of credit		1,700	Oct 13, 2015
ORIX Aviation System Limited	LATAM Airlines Group S.A.	One letter of credit		3,255	Aug 31, 2016
SMBC Aviation Capital Ltd.	LATAM Airlines Group S.A.	Two letter of credit		11,133	Aug 24, 2016
TAF Mercury	LATAM Airlines Group S.A.	One letter of credit		4,000	Dec 4, 2015
TAF Venus	LATAM Airlines Group S.A.	One letter of credit		4,000	Dec 4, 2015
Wells Fargo Bank	LATAM Airlines Group S.A.	Eight letter of credit		13,160	Feb 9, 2016
Cit Aerospace International	Tam Linhas Aéreas S.A.	Two letter of credit		5,000	Oct 25, 2015
SMBC Aviation Capital Ltd.	Tam Linhas Aéreas S.A.	One letter of credit		10,532	Oct 3, 2015
Wells Fargo Bank	Tam Linhas Aéreas S.A.	One letter of credit		5,500	Jul 14, 2016

				87,171

116

(c)	Other commitments

At September 30, 2015 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows:


			Value		Release
Creditor Guarantee	Debtor	Type	ThUS$		date

Aena Aeropuertos S.A.	LATAM Airlines Group S.A.	Four letter of credit		2,118	Nov 15, 2015
American Alternative Insurance Corporation	LATAM Airlines Group S.A.	Four letter of credit		3,140	Apr 5, 2016
Citibank N.A.	LATAM Airlines Group S.A.	One letter of credit		23,225	Dec 20, 2015
Comisión Europea	LATAM Airlines Group S.A.	One letter of credit		9,155	Feb 11, 2016
Deutsche Bank A.G.	LATAM Airlines Group S.A.	Three letter of credit		40,000	Mar 31, 2016
Dirección General de Aeronáutica Civil	LATAM Airlines Group S.A.	Fifty five letter of credit		17,237	Oct 31, 2015
Empresa Pública de Hidrocarburos del Ecuador EP Petroecuador	LATAM Airlines Group S.A.	One letter of credit		5,500	Jun 17, 2016
Metropolitan Dade County	LATAM Airlines Group S.A.	Ten letter of credit		3,108	Mar 13, 2016
The Royal Bank of Scotland plc	LATAM Airlines Group S.A.	Two letter of credit		5,000	May 20, 2016
Washington International Insurance	LATAM Airlines Group S.A.	Three letter of credit		2,450	Apr 5, 2016
União Federal Vara Comarca de DF	Tam Linhas Aéreas S.A.	One insurance policies guarantee		1,292	Sep 28, 2021
6ª Vara de Execuções Fiscais Federal de Campo Grande/MS	Tam Linhas Aéreas S.A. (Pantanal)	Two insurance policies guarantee		19,069	Jan 4, 2016
Fundação de Proteão de Defesa do Consumidor Procon	Tam Linhas Aéreas S.A.	Two insurance policies guarantee		2,423	May 16, 2016

				133,717

117

NOTE 32 - TRANSACTIONS WITH RELATED PARTIES

(a)	Details of transactions with related parties as follows:

Nature of
relationship with

Country

Explanation of
other information

Nature of

related parties

Transaction amount

with related parties

As of September 30,

Tax No.

Related party

related parties

of origin

about related parties

transactions

Currency

2015

2014

ThUS$

Unaudited

96.810.370-9

Inversiones Costa Verde Ltda. y CPA.

Controlling
shareholder

Chile

Investments

Revenue from services provided

CLP

96.847.880-K

Lufthansa Lan Technical Training S.A.

Associate

Chile

Training center

Leases as lessor

CLP

—

172

Services received

CLP

—

(675

)

Services received

US$

—

(594

)

65.216.000-K

Comunidad Mujer

Other related
parties

Chile

Promotion
and training
of women

Revenue from services provided

CLP

Services received

CLP

(11

)

(12

)

78.591.370-1

Bethia S.A and subsidiaries

Other related
parties

Chile

Investments

Leases as lessor

CLP

—

)

Revenue from services provided

CLP

629

1.341

Services received

CLP

(1.509

)

(629

)

Commitments made on behalf of the entity

CLP

577

—

Liabilities settlement on behalf of the entity for the related party

CLP

—

79.773.440-3

Transportes San Felipe S.A

Other related
parties

Chile

Transport

Revenue from services provided

CLP

Services received

CLP

(44

)

(71

)

Commitments made on behalf of the entity

CLP

(86

)

—

87.752.000-5

Granja Marina Tornagaleones S.A.

Other related
parties

Chile

Pisciculture

Revenue from services provided

CLP

133

Foreign

Inversora Aeronáutica Argentina

Other related
parties

Argentina

Investments

Revenue from services provided

ARS

Leases as lessor

US$

(156

)

(250

)

Commitments made on behalf of the entity

ARS

(45

)

—

Foreign

Made In Everywhere Repr. Com. Distr. Ltda.

Other related
parties

Brazil

Transport

Services received

BRL

—

)

Foreign

TAM Aviação Executiva e Taxi Aéreo S/A

Other related
parties

Brazil

Transport

Services received

BRL

—

(13

)

Foreign

Prismah Fidelidade S.A.

Joint
Venture

Brazil

Marketing

Liabilities settlement on behalf of the entity for the related party

BRL

—

(158

)

The balances of Accounts receivable and accounts payable to related parties are disclosed in Note 9.

Transactions between related parties have been carried out on free-trade conditions between interested and duly-informed parties.

118

(b)	Compensation of key management

The Company has defined for these purposes that key management personnel are the executives who define the Company’s policies and major guidelines and who directly affect the results of the business, considering the levels of Vice-Presidents, Chief Executives and Directors.


	For the 9 months ended				For the 3 months ended
	September 30,				September 30,
	2015		2014		2015		2014
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Remuneration		13,002		14,903		4,444		4,755
Management fees		455		628		177		180
Non-monetary benefits		513		827		153		213
Short-term benefits		14,964		13,914		4,812		4,569
Share-based payments		7,921		13,091		2,640		4,300

Total		36,855		43,363		12,226		14,017

NOTE 33 - SHARE-BASED PAYMENTS

(a)	Compensation plan for increase of capital in LATAM Airlines Group S.A.

Compensation plans implemented by providing options for the subscription and payment of shares that have been granted by LATAM Airlines Group S.A. to employees of the Company and its subsidiaries, are recognized in the financial statements in accordance with the provisions of IFRS 2 “Share-based Payment”, showing the effect of the fair value of the options granted under compensation in linear between the date of grant of such options and the date on which these irrevocable.

(a.1)

Compensation plan 2011

At a Special Shareholders Meeting held on December 21, 2011, the Company’s shareholders approved, among other matters, an increase of capital of which 4,800,000 shares were allocated to compensation plans for employees of the Company and its subsidiaries, pursuant to Article 24 of the Companies Law. In this compensation plan no member of the controlling group would be benefited.

119

The granting of options for the subscription and payment of shares has been formalized through conclusion of contracts of options to subscribe for shares, according to the proportions shown in the following schedule of accrual and is related to the permanence condition of the executive as employee of the Company at these dates for the exercise of the options:


Percentage			Period

	30	%	From December 21, 2014 and until December 21, 2016.
	30	%	From December 21, 2015 and until December 21, 2016.
	40	%	From June 21, 2016 and until December 21, 2016.


	Number of share options
Share options in agreements of share-based payments, as of January 1, 2014		4,497,000
Share options granted		160,000
Share options cancelled		(455,000	)

Share options in agreements of share-based payments, as of December 31, 2014		4,202,000

Share options in agreements of share-based payments, as of January 1, 2015		4,202,000
No movement at September 30, 2015		—

Share options in agreements of share-based payments, as of September 30, 2015 (Unaudited)		4,202,000

These options have been valued and recorded at fair value at the grant date, determined by the “Black-Scholes-Merton”. The effect on income to September 2015 corresponds to ThUS$ 7,920 (ThUS$ 12,900 at September 30, 2014).

The input data of option pricing model used for share options granted are as follows:


	Weighted average share price		Exercise price		Expected volatility			Life of option		Dividends expected			Risk-free interest
As of September 30, 2014	US$	23,55	US$	17,57		61,52	%		3.6 years		0	%		0,00550
As of September 30, 2015	US$	15,47	US$	18,29		34,74	%		3.6 years		0	%		0,00696

(a.2)

Compensation plan 2013

At the Extraordinary Shareholders’ Meeting held on June 11, 2013, the Company’s shareholders approved motions including increasing corporate equity, of which 1,500,000 shares were allocated to compensation plans for employees of the Company and its subsidiaries, in conformity with the stipulations established in Article 24 of the Corporations Law. With regard to this compensation, a defined date for implementation does not exist. The granting of options for the subscription and payment of shares has been formalized through conclusion of contracts of options to subscribe for shares, according to the proportions shown in the following schedule of accrual and is related to the permanence condition of the executive at these dates for the exercise of the options:


Percentage			Period

	100	%	From November 15, 2017 and until June 11, 2018.

120

(b)	Subsidiaries compensation plans

TAM Linhas Aereas S.A subsidiary of TAM S.A., have outstanding stock options at September 30, 2015, which amounted to 593,910 shares.

Multiplus S.A.


							4nd Extraordinary
Description	1st Grant		3rd Grant		4th Grant		Grant		Total

Date		10-04-2010		04-16-2012		10-04-2010		11-20-2013

Outstanding option number		3,796		115,298		269,241		205,575		593,910

The Options of TAM Linhas Aéreas S.A., under the plan’s terms, are divided into three equal parts and employees can run a third of its options after three, four and five years respectively, as long as they remain employees of the company. The agreed term of the options is seven years.

For Multiplus S.A., the plan’s terms provide that the options granted to the usual prizes are divided into three equal parts and employees may exercise one-third of their two, three and four, options respectively, as long as they keep being employees of the company. The agreed term of the options is seven years after the grant of the option. The first extraordinary granting was divided into two equal parts, and only half of the options may be exercised after three years and half after four years. The second extraordinary granting was also divided into two equal parts, which may be exercised after one and two years respectively.

Both companies have an option that contains a “service condition” in which the exercise of options depends exclusively on the delivery services by employees during a predetermined period. Terminated employees will be required to meet certain preconditions in order to maintain their right to the options.

The acquisition of the share’s rights, in both companies is as follows:


	Number of shares		Number of shares
Company	Accrued options		Non accrued options
Multiplus S.A.		—		593,910

In accordance with IFRS 2 - Share-based payments, the fair value of the option must be recalculated and recorded as a liability of the Company once payment is made in cash (cash-settled). The fair value of these options was calculated using the Black-Scholes method, where the cases were updated with information LATAM Airlines Group S.A.. There is no value recorded in liabilities and in income at September 30, 2015 (at September 30, 2014 not exist value recorded in liabilities and the amount recognized in in incomes was ThUS$ 191).

121

NOTE 34 - THE ENVIRONMENT

LATAM Airlines Group S.A. manages environmental issues at the corporate level, centralized in Environmental Management. There is a commitment to the highest level to monitor the company and minimize their impact on the environment, where continuous improvement and contribute to the solution of global climate change problems, generating added value to the company and the region, are the pillars of his administration.

One function of Environmental Management, in conjunction with the various areas of the Company, is to ensure environmental compliance, implementing a management system and environmental programs that meet the increasingly demanding requirements globally; well as continuous improvement programs in their internal processes that generate environmental and economic benefits and to join the currently completed.

The Environment Strategy LATAM Airlines Group S.A. is called Climate Change Strategy and it is based on the aim of being a world leader in Climate Change and Eco-efficiency, which is implemented on the following objectives:

i.	Impacto y Rentabilidad:

•

Environmental Management System

•

Risk Management

•

Eco-efficiency

•

Sustainable Alternative Energy

ii.	Compromiso y Reconocimiento:

•

Internal Capacity Development

•

Transparency

•

Value Chain

•

Emissions Offsets

•

Recognition and Communications Projects

For 2015, were established and worked the following topics:

1.	Advance in the implementation of an Environmental Management System;

2.	Manage the Carbon Footprint by measuring, external verification and compensation of our emissions by ground operations;

3.	Corporate Risk Management;

4.	Establishment of corporate strategy to meet the global target of aviation to have a carbon neutral growth by 2020.

Thus, during the first half of the year, we have worked in the following initiatives:

•

Advance in the implementation of an Environmental Management System for main operations, with an emphasis on Santiago and Miami. Achieving certification Environmental Management System ISO 14001 at its facility in Miami.

•

Certification of stage 2, the most advanced IATA Environmental Assestment (IEnvA), been the third airline in the world to achieve this certification.

•

Preparation of the environmental chapter for reporting sustainability of the Company, to measure progress on environmental issues.

•

The preparation of the second report supporting environmental management of the Company.

•

Measurement and external verification of the Corporate Carbon Footprint.

122

It is highlighted that in the 2015 LATAM Airlines Group maintained its selection in the index Dow Jones Sustainability in the global category, being the only two airlines that belong to this select group.

As of September 30, 2015, the Environment Management has spent US$ 92,162 (US$ 227,515 at September 30, 2014). The budget of the Environment Management for 2015 is US$ 324,465 (US$ 520,000 for 2014).

NOTE 35 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS

Subsequent to the closing date of the annual financial statements, at June 30, 2015, has occurred an important variation in the exchange rate R$/US$, from R$ 3.97 per US$ to R$ 3.80 per US$ at November 13, 2015, which represents a 4.36% appreciation of the Brazilian currency.

At the date of issuance of these financial statements, given the complexity of this matter, the administration has not yet concluded the analysis and determination of the financial effects of this situation.

LATAM Airlines Group S.A. and Subsidiaries’ consolidated financial statements as at September 30, 2015, have been approved by the Board of Director’s in an extraordinary meeting held on November 12, 2015.

123

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.