LATAM(LTMAY) - 2023 Q2 - Quarterly Report

Financial Position - As of June 30, 2023, LATAM Airlines Group reported total assets of ThUS$ 13,638,747, an increase from ThUS$ 13,211,024 as of December 31, 2022, reflecting a growth of approximately 3.2%[15] - Total liabilities increased to ThUS$ 13,392,420 as of June 30, 2023, from ThUS$ 13,180,303 as of December 31, 2022[18] - Total equity rose to ThUS$ 246,327 as of June 30, 2023, compared to ThUS$ 30,721 at the end of 2022, indicating a recovery in financial position[18] - Current liabilities totaled ThUS$ 5,228,787 as of June 30, 2023, slightly up from ThUS$ 5,088,695 at the end of 2022[18] - Non-current liabilities were ThUS$ 8,163,633 as of June 30, 2023, compared to ThUS$ 8,091,608 as of December 31, 2022, indicating a stable long-term debt position[18] Revenue and Income - Total revenue for the six months ended June 30, 2023, was ThUS$ 5,404,519, a 32% increase from ThUS$ 4,093,151 in the same period of 2022[21] - Gross margin for the six months ended June 30, 2023, was ThUS$ 1,217,155, compared to ThUS$ 322,723 in the prior year, reflecting a significant improvement[21] - Net income for the six months ended June 30, 2023, was ThUS$ 265,116, a turnaround from a net loss of ThUS$ 905,539 in the same period of 2022[23] - Basic earnings per share for the six months ended June 30, 2023, was US$ 0.000442, compared to a loss of US$ 1.489544 in the same period of 2022[21] - Total comprehensive income for the six months ended June 30, 2023, was ThUS$ 235,593, a significant improvement from a loss of ThUS$ 924,790 in the same period of 2022[23] Cash Flow - For the period ended June 30, 2023, LATAM Airlines reported cash collection from operating activities of $6,288,152 thousand, an increase from $4,700,096 thousand in the same period of 2022, representing a growth of approximately 33.8%[33] - The net cash inflow from operating activities for the first half of 2023 was $969,870 thousand, compared to $230,874 thousand in the prior year, indicating a significant improvement[33] - LATAM Airlines incurred total payments to suppliers of $4,558,603 thousand for the period, up from $3,799,969 thousand in 2022, reflecting a rise of about 20%[33] Assets and Liabilities - Cash and cash equivalents increased to ThUS$ 1,525,229 from ThUS$ 1,216,675, representing a rise of about 25.4%[15] - Trade and other accounts receivable rose to ThUS$ 1,287,604, up from ThUS$ 1,008,109, indicating an increase of approximately 27.7%[15] - Non-current assets totaled ThUS$ 9,821,691, compared to ThUS$ 9,674,600, marking a growth of around 1.5%[15] - LATAM Airlines Group's total current assets, excluding non-current assets classified as held for sale, reached ThUS$ 3,762,896, up from ThUS$ 3,450,008, which is an increase of about 9.1%[15] - The company reported a significant decrease in other financial assets, which fell to ThUS$ 198,767 from ThUS$ 503,515, a decline of approximately 60.6%[15] Employee and Shareholder Information - The Company had an average of 33,356 employees in 2023, ending the period with a total of 34,118 employees, including 17,297 in Operations and 8,008 Cabin Crew[41] - Major shareholders include Banco de Chile (44.28%), Delta Air Lines (10.05%), and Qatar Airways (10.03%) as of June 30, 2023[40] - The Company completed a capital increase of ThUS$ 785,865 in TAM S.A. on March 29, 2023, with no significant changes in shareholder composition[49] Accounting and Reporting Standards - Management is responsible for ensuring the interim consolidated financial information is prepared in accordance with IAS 34, which is crucial for maintaining transparency and accuracy in financial reporting[6] - The review of the interim consolidated financial statements did not reveal any material modifications needed for compliance with international financial reporting standards[4] - LATAM Airlines Group S.A. prepared its consolidated financial statements in accordance with IAS 34 for the six months ending June 30, 2023[50] - The consolidated financial statements were prepared under the historic-cost criterion, modified by fair value valuation of certain financial instruments[51] - The application of new accounting standards effective from January 1, 2023, including IFRS 17 and amendments to IAS 1, IAS 8, and IAS 12, had no significant effect on the consolidated financial statements[54] Bankruptcy and Legal Matters - LATAM Airlines Group S.A. emerged from Chapter 11 proceedings on June 29, 2023, following the resolution of remaining matters and appeals[60] - The Bankruptcy Court issued a final decree closing Case Number 20-11254, allowing LATAM to operate without Bankruptcy Court supervision[60] Intangible Assets and Depreciation - The company recognizes airport slots and loyalty programs as intangible assets with indefinite useful lives, tested annually for impairment[87] - The loyalty program is part of TAM Linhas Aereas S.A., allowing accumulation and exchange of points[89] - LATAM Airlines Group S.A. capitalizes advances paid to aircraft manufacturers under Construction in progress until delivery[82] - The depreciation of property, plant, and equipment is calculated using the linear method over their estimated useful lives[84] - The company capitalizes costs related to computer software licenses, amortizing them over useful lives defined between 3 and 10 years[91] Hedging and Foreign Exchange - The company recognized losses of MUS$ 15.3 for fuel hedging net of premiums for the period ended June 30, 2023, compared to gains of MUS$ 11.9 for the same period in 2022[176] - As of June 30, 2023, the market value of fuel positions amounted to MUS$ 8.7, down from MUS$ 12.6 at the end of December 2022[177] - The company has a hedge coverage of 48% for Q3 2023 and 34% for Q4 2023 over the expected volume of consumption[179] - The company recognized losses of MUS$ 5.3 for FX hedging derivatives net of premiums for the year ended June 30, 2023, compared to gains of MUS$ 1.2 for the same period in 2022[189] - As of June 30, 2023, the market value of hedging FX derivative positions is MUS$ 4.2 (negative), down from MUS$ 0.2 million (positive) at the end of December 2022[190]