Corporate Presentation Miami, FL February 25th, 2015
AGENDA • LATAM Airlines in figures • Cargo Unit • Business Update
The Company We are one of the ten largest passenger and cargo airlines in the world. PAX: 135+ destinations in 22 countries Cargo: 144+ destinations in 27 countries $ 13.3 billion 53 thousand 60,000,000 1.2 million USD Employees Passengers Tons
LATAM is a leader in the South American airline space 2013 Percenteges by Region – Gross Revenues
Our Business Units OCEANIA 1% 2013 Percentages by Region – Gross Revenues
Cargo Unit
Our Cargo Unit in Figures Revenue by Geographic Area 2013 EUROPE U.S.A. 15% ASIA 36% 7% CENTRAL AMERICA 2% OCEANIA 1% REST OF LATIN AMERICA THE WORLD 39% <1 % 2013 Percentages by Region – Gross Revenues
Composition of Air Cargo Markets Demand is extremely sensitive to route and direction (e.g. SCL-MIA ≠ MIA- SCL) Perishables Urgent General Cargo Valuables
Air Cargo in Latin America Northbound Southbound 24.8% 25% 26% 41.8% 4% 14.2% 5% 18% 6% 4% 10.3% 5% 15% Flowers Fish Industrial and Specialized Machinery Vegetables Electrical Machinery Industrial and Specialized Machinery Small Packages and Shipments Small Packages and Shipments Specialized Equipment Electrical Machinery Ferrous Products Others Others Operational efficiencies must be obtained by managing Source: Boeing World Air unbalanced flows and seasonal fluctuations Cargo Forecast 2012 – 2013
Business Model Passenger Flights Freighter Flights STABILITY AND FREQUENCY FLEXIBILITY AND VERSATILITY Ensures a consistent Allows adjustment of service level supply levels ~80-85% % of revenue (post-merger) ~50% ~50%
Post-merger LATAM Airlines became one of the largest cargo airlines in the world… 0 500 1000 1500 2000 2500 3000 3500 4000 Cargo Revenue (MUSD) AF-KLM Lufthansa Emirates Cathay Korean Cargolux LATAM Singapore ANA IAG China Air Air China China Eastem EVA Source:2013 Financial China Southern Statements of each company. Qantas Excludes integrated JAL competitors such as FedEx, United-Cont UPS, DHL, TNT. AVCA THAI
…providing significant revenue diversification for LATAM Airlines… 0% 20% 40% 60% 80% 100% Cargolux Atlas China Air Eva Korean Cathay Singapore Emirates Number LATAM 9 % Carga Cargo THAI % Otros Others AF-KLM Lufthansa ANA China Eastem Air China AVCA JAL China Southern Source:2013 Financial Qantas Statements of each company. IAG
…and a leading position in key markets… ~50% ~63% ~76% ~50% ~37% ~24% USA - Latin America Europe - Latin America Domestic Brazil (RT). Market Share (RT). Market Share Market Share Operations on cargo aircraft and in bellies of passenger aircraft. More than 60 destinations. USA Markets: Europe Markets: MIA-Brazil/SCL/LIM EUR-VCP/GRU/CWB SCL/LIM/COL/UIO-MIA EUR-SCL/COL/LIM/UIO/BRA-EUR Source: Internal Estimations and Customs Reports. H1 2014
LATAM Airlines Fleet 312 PASSENGER AIRCRAFT 324 aircraft 12 FREIGHTERS
Network London Frankfurt Paris Madrid Miami LATAM NETWORK Bogota Quito Guayaquil Lima Rio de Janeiro International passenger and 135 Sao Paulo cargo destinations. Santiago International cargo only 9 Buenos Aires destinations. International cargo 9 destinations in Brazil. More than 40 domestic 40 desinations in Brazil.
Presence FRA YUL AMS YVR YYZ CDG MIL NRT ORD ICN KIX MAD ATL NGO IAH PVG Regional MIA TPE Office SJU HKG MNL KUL TPE SIN Colombia Regional Office GSA v Domestic Markets Headquarters Cargo Affiliates
Business Update
LATAM Cargo’s International Strategy is anchored in three main pillars LATAM Airlines Vision: be one of the three best airlines in the world. • Product portfolio development Enhanced client • Robust SLA’s experience • Improved customer interactions • Leveraging belly capacity Network Optimization • Disciplined capacity management & Development • Smart asset utilization (ie. Freighter supporting belly) • Lean & reliable operations Execution • Seamless connectivity Excellence
Market Overview 2014 Context LATAM Cargo • • Weak regional cargo markets Focus on optimizing belly capacity • Increased competition from regional and international cargo carriers ATK distribution by business unit (LAN LATAM) Rational and disciplined approach towards LAN LATAM freighter capacity 30% 45% • No additional orders 55% • Expiration of leases 70% • Leasing 3 B767F to other carrier Belly Freighter
Update on Capacity & Fleet Capacity Evolution 2012-2015 Freighter Fleet 2012-2015 # Pax WB ATKs by type (2012 = 100) Number of Aircraft 20 120 79 84 78 75 100 51.8 49.5 15 46.2 45.3 4 4 Freighter 80 4 B777 10 4 B777 60 B767 51.3 48.2 49.7 48.1 40 12 12 5 9 B767 8 PAX 20 0 0 2012 2013 2014 2015 2012 2013 2014 2015 • Passenger bellies to remain key growth driver in 2015, freighter capacity to remain roughly flat • 25% reduction in B767 fleet helps match supply and demand without major itinerary adjustments
Market Outlook 2015 Flows % Growth YoY Drivers • Recovery in imports to Brazil after 2-4% NAM-SA World Cup • Expected growth in auto industry 4-5% EUR-SA • Increased cargo from Asia • Steady growth of main commodities 1-3% SA-NAM offset by very weak seed season • Growth led by COL and ECU exports SA-EUR 3-5%
Introducing new freighter operation AMS/BSL – GRU- EZE-SCL - Direct dedicated freighter ex BSL supports pharma opperation - Only direct freighter alternative into GRU ex EUR
Asia Project (ECTSA) Opportunity Build a setup that would enable us to offer a virtual online service from main Asian origins to Latin America Enhanced Cargo Transfer and Service Agreement • Reliability • Visibility & Traceability • Service Recovery Protocol • Flexible shipping units 23
Thank You Miami, FL February 25th, 2015
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