LATAM(LTMAY) - 2024 Q2 - Quarterly Report

Financial Position - As of March 31, 2024, LATAM Airlines Group reported total current assets of ThUS$4,336,111, an increase of 3.2% from ThUS$4,203,362 as of December 31, 2023[6] - Total non-current assets amounted to ThUS$6,230,992, slightly up from ThUS$6,260,591, indicating a decrease of 0.5%[6] - The total assets of LATAM Airlines Group reached ThUS$10,567,103, a rise of 1.0% compared to ThUS$10,463,953 at the end of 2023[6] - Total current liabilities as of March 31, 2024, amounted to ThUS$5,685,574, slightly down from ThUS$5,688,135 as of December 31, 2023[35] - Non-current liabilities increased to ThUS$8,629,586 as of March 31, 2024, compared to ThUS$8,540,905 at the end of 2023[35] - Total liabilities reached ThUS$14,315,160 as of March 31, 2024, up from ThUS$14,229,040 as of December 31, 2023[35] - Total equity rose to ThUS$588,054 as of March 31, 2024, compared to ThUS$438,275 as of December 31, 2023, indicating a significant increase[35] Revenue and Profitability - Revenue for the period ended March 31, 2024, was $3,267,199, representing a 17.9% increase from $2,771,642 for the same period in 2023[37] - Gross margin increased to $873,340, up from $602,573, indicating a significant improvement in profitability[37] - Net income for the period was $259,955, a substantial increase of 114.5% compared to $121,057 in the previous year[39] - Basic earnings per share rose to $0.000427, compared to $0.000202, reflecting improved earnings performance[37] - Income from operational activities reached $394,331, up from $243,350, showcasing strong operational efficiency[37] - Total comprehensive income for the period was $227,551, compared to $100,697, highlighting robust financial health[39] Cash Flow and Investments - As of March 31, 2024, LATAM Airlines Group reported cash collection from operating activities of ThUS$3,313,955, an increase from ThUS$3,062,687 in the previous period[45] - The net cash inflow from operating activities for the period was ThUS$458,125, compared to ThUS$441,935 in the prior year[45] - The company reported a net cash outflow from investing activities of ThUS$30,809, compared to a net outflow of ThUS$25,746 in the previous period[45] - Net cash outflow from financing activities was ThUS$266,465, an increase from ThUS$226,294 in the prior year[45] Shareholder and Capital Changes - LATAM Airlines Group executed a capital reduction of ThUS$175,140 in Inversiones Aéreas S.A. to absorb accumulated losses, reducing the number of shares by 6,634,496[25] - On September 15, 2023, a capital increase of ThUS$106,104 was made in TAM S.A. through accounts receivable from LATAM Airlines Group, with no significant changes in shareholder composition[25] - The company incorporated Prime Cargo SpA on December 6, 2023, which is 100% owned by Lan Cargo S.A. for storage activities[25] Employee and Operational Metrics - LATAM Airlines had a total of 36,477 employees as of March 31, 2024, an increase from an average of 36,190 employees during the year[46] Risk Management - The Company is exposed to market risks including fuel-price risk, exchange-rate risk, and interest-rate risk, and has developed strategies to mitigate these risks[70] - The Company purchases Jet Fuel grade 54 USGC, which is subject to international price fluctuations, and uses derivative instruments to hedge against fuel-price risk[70] - The company has fuel, interest rate, and exchange rate hedging strategies involving derivatives contracts with various financial institutions[116] Financial Instruments and Valuation - Financial assets are classified into categories based on the business model, with debt instruments measured at amortized cost or fair value[84] - The company applies the simplified approach for expected credit losses on commercial accounts receivable, recognizing lifetime losses upon initial recognition[88] - The company has classified its financial instruments into three levels based on the fair value measurement hierarchy, with Level I being based on quoted prices in active markets[160] Deferred Revenue and Loyalty Programs - Deferred revenue associated with the LATAM Pass Brazil loyalty program increased to ThUS$202,806 as of March 31, 2024, from ThUS$179,151 as of December 31, 2023[167] - The LATAM Pass loyalty program's deferred revenue from Spanish-speaking countries increased to ThUS$1,058,870 as of March 31, 2024, compared to ThUS$1,099,580 as of December 31, 2023[167] Currency and Foreign Exchange - The company is exposed to foreign exchange risk, particularly from operations in Brazil, which are mostly denominated in Brazilian real (R$)[129] - A 10% appreciation of R$/US$ would have a positive effect on equity of US$11.2 million as of March 31, 2024[129] Impairment and Provisions - The company has concluded that its properties, plant, and equipment cannot generate cash inflows independently, leading to an impairment assessment as part of the Air Transport cash-generating unit[163] - The provision for obsolescence of technical stock increased to ThUS$50,724 from ThUS$45,621 as of December 31, 2023[178] Miscellaneous - The Argentine economy is considered hyperinflationary, leading to the restatement of financial statements for subsidiaries using the Argentine Peso[80] - The company maintains ownership of 99.81% in Latam Airlines Perú S.A. as of March 31, 2024[185]