Board of directors

Mauricio Rolim Amaro

Mr. Mauricio Rolim Amaro has served as member of LATAM Airlines Group’s board of directors since June 2012. He was reelected to the board of directors of LATAM in April 2014 and has served as Chairman since September 2012. Mr. Amaro’s current term as chairman ends in April 2015. Mr. Amaro has previously held various positions in the TAM Group and served as a professional pilot at TAM Linhas Aéreas S.A. and TAM Aviação Executiva S.A. Mr. Amaro has been a member of the Board of TAM S.A. since 2004, and vice-chairman of the Board since April 2007. He is also an executive officer at TAM Empreendimentos e Participações S.A. and chairman of the boards of Multiplus S.A. (subsidiary of TAM S.A.) and of TAM AviaçãoExecutiva e Taxi Aéreo S.A.

Henri Philippe Reichstul

Mr. Henri Philippe Reichstul joined LATAM´s board of directors in April 2014. Mr. Reichstul´s term as a director ends in April 2015. Mr. Reichstul has served as President of Petrobras and the IPEA-Institute for Economic and Social Planning and Executive Vice President of Banco Inter American Express S.A. Currently, in addition to Administrative Board member of TAM and LATAM group, he is also a member of the Board of Directors of Repsol YPF, Peugeot Citroen and SEMCO Partners, among others. Mr. Reichstul is an economist with an undergraduate degree from the Faculty of Economics and Administration, University of São Paulo, and postgraduate work degrees in the same discipline - Hertford College - Oxford University.

Juan José Cueto Plaza

Mr. Juan José Cueto Plaza has served on LAN’s board of directors since 1994 and was reelected to the board of directors of LATAM in April 2014. Mr. Cueto’s term as a director ends in April 2015. Mr. Cueto currently serves as Executive Vice President of Inversiones Costa Verde S.A., a position he has held since 1990, and serves on the boards of directors of Consorcio Maderero S.A., Minera Michilla S.A., Inversiones del Buen Retiro S.A., Inmobiliaria e Inversiones Asturias S.A., Inversiones Mineras del Cantábrico S.A., Costa Verde Aeronáutica S.A., Sinergia Inmobiliaria S.A. and Valle Escondido S.A. Mr. Cueto is the brother of Messrs. Enrique and Ignacio Cueto Plaza, LATAM Airlines Group Executive Vice-President and LAN CEO, respectively. Mr. Cueto is a member of the Cueto Group (LATAM Airlines Group’s Controlling Shareholder).

Georges de Bourguignon Arndt

Mr. Georges de Bourguignon, has served on LATAM Airlines Group’s board of directors since September 2012. Mr. de Bourguignon’s term as a director ends in April 2015. Mr. de Bourguignon has been a partner and executive director of Asset Chile S.A., a Chilean investment bank, since 1994. He is currently member of the board of directors of Asset Chile S.A. and several of its affiliates, is also an independent board member of Sal Lobos S.A., Chilean subsidiary of the German group K+S, and Salmones Austral Spa, a Chilean salmon farming company. In the past he has served in several other boards of public and private companies, as well as of boards of non profit organisations. Before co-founding Asset Chile, he was manager of the Financial Institutions Group at Citibank S.A. in Chile, and was a professor of economics at the Catholic University of Chile. He is an economist from Catholic University of Chile and a graduate of Harvard Business School.

Ramón Eblen Kadis

Mr. Ramón Eblen Kadis has served on LAN’s board of directors since June 1994 and was reelected to the board of directors of LATAM in April 2014. Mr. Eblen’s term as a director ends in April 2015. Mr. Eblen has served as President of Comercial Los Lagos Ltda., Inversiones Santa Blanca S.A., Inversiones Andes SpA, Granja Marina Tornagaleones S.A. and TJC Chile S.A. Mr. Eblen is a member of the Eblen Group (a major shareholder of LATAM Airlines Group).

Ricardo J. Caballero

Mr. Ricardo J. Caballero joined LATAM’s board of directors in April 2014. Mr. Caballero is the Ford International Professor of Economics and Director of the World Economic Laboratory at the Massachusetts Institute of Technology, an NBER Research Associate, and an advisor of QFR Capital Management LP. Mr. Caballero was the Chairman of MIT's Economics Department (2008-2011) and has been a visiting scholar and consultant at many major central banks and international financial institutions. His teaching and research fields are macroeconomics, international economics, and finance. His current research looks at global capital markets, speculative episodes and financial bubbles, systemic crises prevention mechanisms, and dynamic restructuring. His policy work focuses on aggregate risk management and insurance arrangements for emerging markets and developed economies. He has also written about aggregate consumption and investment, exchange rates, externalities, growth, price rigidity, dynamic aggregation, networks and complexity. Mr.Caballero has served on the editorial board of several academic journals and has a very extensive list of publications in all major academic journals. In April 1998 Caballero was elected a Fellow of the Econometric Society and subsequently of the American Academy of Arts and Sciences in April 2010.

Carlos Heller Solari

Mr. Carlos Heller Solari joined the board of LAN in May 2010 and was re-elected to the Board of Directors of LATAM in April 2014. The mandate of Mr. Heller as a director ends in April 2015. The Mr. Heller has vast experience in retail (retail) through SACI Falabella in transport and logistics, agriculture, wine, Horse Riding and communications category. Mr. Heller is president of Bethia SA ("Bethia") (parent company of Axxion SA and Betlan Dos SA), Chairman of Axxion SA, Betlan Dos SA, Equestrian Club of Santiago, Sotraser SA and Agricultural Ancali Ltda .. also serves on the boards of SACI Falabella Falabella Retail SA, Sodimac SA, Titanium SA, Betfam SA Viña Indómita SA, Viña Santa Alicia SA, Viña Dos Andes SA Blue Express SA and Aero Andina SA In addition he is the principal shareholder and president of "Azul Azul" through Inversiones Limitada Alpes (first division team manager football at the University of Chile).

Gerardo Jofré Miranda

Mr. Gerardo Jofré Miranda, joined LATAM Airlines’s Board of directors on May 2010 and was reelected to the board of directors of LATAM in April 2014. Mr. Jofré’s term as a director ends in April 2015. Mr. Jofré is member of the board of directors of Codelco. Mr. Jofré is member of the Real Estate Investment Council of Santander Real Estate Funds. From 2005 to 2010 he served as member of the boards of directors of Endesa Chile S.A., Viña San Pedro Tarapacá S.A., D&S S.A., Inmobiliaria Titanium S.A. Construmart S.A.,Inmobiliaria Playa Amarilla S.A. and Inmobiliaria Parque del Sendero S.A. and was President of Saber Más Foundation. Mr. Jofré was Director of Insurance for America for Santander Group of Spain between the years 2004 and 2005. From 1989 to 2004 he served on Santander Group in Chile, as Vice Chairman of the Group and as CEO, member of the boards of directors and Chairman of many of the Group’s companies.

Francisco Luzón López

Mr. Francisco Luzón López has served on LATAM Airlines Group’s board of directors since September 2012 and was reelected to the board of directors of LATAM in April 2014. Mr. Luzón’s term as a director ends in April 2015. He has served as a consultant of the Inter-American Development Bank (BID) and he has been Teacher “Visiting Leader” of the School of Business China-Europe (CEIBS) in Shanghai (2012-2013). He is currently a member of the board of La Haya Real Estate (September 2014) and an Independent Director at Willis Group (June 2013). Between 1999 and 2012, Mr. Luzon served as Executive Vice President for Latin America of Banco Santander. In this period, he was also Worldwide Vice President of Universia SA. Between 1991 and 1996 he was Chairman and CEO of Argentaria Bank Group. Previously, in 1987, he was appointed Director and General Manager of Banco de Vizcaya and in 1988 Counselor and General Director of Banking Group at BBV. During his career Mr. Luzon has held positions on the boards of several companies, most recently participating in the council of the global textile company Inditex-Zara from 1997 until 2012.

Senior Management

Enrique Cueto Plaza

Mr. Enrique Cueto Plaza, is LATAM Airlines Group’s Chief Executive Officer (“CEO”). From 1994 to 2012, Mr. Cueto was the CEO of LAN. From 1983 to 1993, Mr. Cueto was Chief Executive Officer of Fast Air, a Chilean Cargo airline. Mr. Cueto also served on the LAN board of directors from 1993 to 1994. Mr. Cueto has in-depth knowledge of passenger and cargo airline management, both in commercial and operational aspects, gained during his 24 years in the airline industry. Mr. Cueto is an active member of the oneworld® Alliance Governing Board, the IATA (International Air Transport Association) Board of Governors. He is also member of the Board of the Federation of Chilean Industry (SOFOFA) and of the Board of the Endeavor foundation, an organization dedicated to the promotion of entrepreneurship in Chile. Mr. Cueto is the brother of Mers. Juan José and Ignacio Cueto Plaza, member of the board and LAN CEO, respectively. Mr. Cueto is also a member of the Cueto Group (LATAM Airlines Group’s Controlling Shareholder).

Ignacio Cueto Plaza

Mr. Ignacio Cueto Plaza, is LAN’s CEO. Mr. Cueto served as President of LAN Cargo from 1995 to 1998, as Chief Executive Officer-Passenger Business from 1999 to 2005, and as President and Chief Operating Officer of LAN since 2005 until the merger with TAM in 2012. Mr. Cueto has previously served on the board of directors of LAN (from 1995 to 1997) and Ladeco (from 1994 to 1997). In addition, Mr. Cueto served as Chief Executive Officer of Fast Air from 1993 to 1995. Between 1985 and 1993, Mr. Cueto held several positions at Fast Air, including Service Manager for the Miami sales office, Director of Sales for Chile and Vice President of Sales and Marketing. Mr. Cueto is the brother of Messrs. Juan José and Enrique Cueto Plaza, Director and LATAM’s CEO, respectively. Mr. Cueto is also a member of the Cueto Group (which is a controlling shareholder of LATAM).

Marco Antonio Bologna

Mr. Marco Bologna, is TAM’s CEO since May, 2010. He is also board member of Suzano Papel e Celulose S/A. He joined TAM in March 2001, when he was appointed Vice President for Finance and Management, and Market Relations Director. From 2004 to 2007 he served as President of TAM Linhas Aéreas, and in March 2009 he took over as President of TAM Aviação Executiva and Táxi Aéreo S.A. Since April 30, 2010 he has chaired the holding company TAM S.A., which brings together TAM Linhas Aéreas, TAM Airlines (formerly TAM Mercosur), Multiplus Fidelidade, and the maintenance unit TAM MRO. In February 2012, he was also appointed President of TAM Linhas Aéreas. Mr. Bologna has extensive experience in the aviation industry, and has worked in the financial markets for over 20 years. Mr. Bologna will cease to be CEO of TAM on April 1ST, 2015.

Claudia Sender Ramírez

Mrs. Claudia Sender Ramirez, has served as TAM Airlines’ CEO since May 2013. Mrs. Sender joined the company in December 2011, as Commercial and Marketing Vice-President. After June 2012, with the conclusion of TAM-LAN merger and the creation of LATAM Airlines Group, she became the head of Brazil Domestic Business Unit, and her functions were expanded in order to include TAM’s entire Customer Service structure. Mrs. Sender dedicated most of her career in consumer goods industry, focused in Marketing and Strategic Planning. Prior to joining TAM, she was Marketing Vice-President at Whirlpool Latin America for seven years. She also worked as a consultant at Bain&Company, developing projects for large companies in various industries, including TAM Airlines and other players of the global aviation sector. She has a bachelor degree in Chemical Engineering from the Polytechnic School at the University of São Paulo (USP) and a MBA from Harvard Business School.

Armando Valdivieso Montes

Mr. Armando Valdivieso Montes, is President of LAN. Between 1997 and 2005 he served as Chief Executive Officer-Cargo Business of LAN and from 2006 until 2012 he served as the General Manager-Passenger. After the merger with TAM in 2012, Mr. Valdivieso served as LATAM’s Spanish Speaking Countries Executive Vice-President, before being named to his current position. From 1994 to 1997, Mr. Valdivieso was President of Fast Air. From 1991 to 1994, Mr. Valdivieso served as Vice President, North America of Fast Air Miami.

Cristian Ureta Larraín

Mr. Cristian Ureta Larrain, is LATAM’s Cargo Executive Vice-President. From 1998 and 2002, Mr. Ureta was LAN Cargo’s Planning and Development Vice-President and in 2002 he was promoted to Production Vice President. In 2005, Mr. Ureta assumed the position of General Manager-Cargo. Mr. Ureta has an Engineering degree from Pontificia Universidad Católica and a Special Executive Program from Stanford University. Prior to that, Mr. Ureta served as General Director and Commercial Director at Mas Air, and as Service Manager for Fast Air.

Roberto Alvo Milosawlewitsch

Mr. Roberto Alvo Milosawlewitsch, is LATAM’s Senior VP Planning and Network. Mr. Alvo has served in various roles within LAN since 2001, including as CFO of LAN Argentina from 2005 until 2008, as Vice-president of Development of LATAM Airlines Group from 2003 until 2005 and Vice-President of Treasury of LATAM Airlines Group from 2001 until 2003. He assumed the position of Senior Vice-President Strategic Planning and Development in 2008. Before 2001 Mr. Alvo held various positions at Sociedad Química y Minera de Chile S.A., a leading non-metallic Chilean mining company. Mr. Alvo is a civil engineer and obtained an MBA from IMD in Lausanne, Switzerland.

Jerome Cadier

Mr. Jerome Cadier, is Chief Marketing Officer, a position he assumed in March 1st, 2013. Mr. Cadier has a Masters degree from the Kellogg Graduate School of Business, USA and a Industrial Engineer degree from Escola Politecnica da Universidade de Sao Paulo, Brasil. Between 1994 and 2002, Mr. Cadier worked as a management consultant for McKinsey and Co. in Sao Paulo, Brasil. In 2003 he joined Whirlpool Home Appliances where he held several positions among which are head of sales and marketing for Brazil and CEO for Whirlpool Oceania.

Juan Carlos Menció

Mr. Juan Carlos Mencio is Senior Vice President of Legal Affairs and Compliance for LATAM Airlines Group since June 1, 2014. Mr. Mencio had previously held the position of General Counsel for North America for LATAM Airlines Group and its related companies, as well as General Counsel for its worldwide Cargo Operations, both since 1998. Prior to joining LAN, he was in private practice in New York and Florida representing various international airlines. Mr. Mencio obtained his Bachelor’s Degree in International Finance and Marketing from the School of Business at the University of Miami and his Juris Doctor Degree from Loyola University.

Emilio del Real Sota

Mr. Emilio del Real Sota, is LATAM’s HR Executive Vice-President, a position he assumed (with LAN) in August 2005. Mr. del Real has a Psychology degree from Universidad Gabriela Mistral. Between 2003 and 2005, Mr. del Real was the Human Resource Manager of D&S, a Chilean retail company. Between 1997 and 2003 Mr. del Real served in various positions in Unilever, including Human Resource Manager for Chile, and Training and Recruitment Manager and Management Development Manager for Latin America.

Andrés Osorio Hermansen

Mr. Andrés Osorio, is LATAM’s Chief Financial Officer (“CFO”), and has held this position since August, 2013.. He holds a Business degree from the Catholic University of Chile and has over 20 years of experience leading financial areas in companies such as Cencosud, where he was CFO for 7 years, and Metrogas, among others. He has also been CEO of Empresas Indumotora, a Chilean automobile conglomerate, and was a partner at PricewaterhouseCoopers in Chile.

Corporate Governance Practices

LATAM Airlines Group S.A. is a listed joint stock company registered with the Superintendencia de Valores y Seguros (SVS), Chile’s stock market regulator, under Inscription N°306. Its shares trade on the Santiago Stock Exchange, Chile’s Electronic Stock Exchange and the Valparaíso Stock Exchange as well as on the New York Stock Exchange (NYSE) as American Depositary Receipts (ADRs) and on Brazil’s Stock, Commodity and Futures Exchange (BM&FBOVESPA S.A.) in the form of Brazilian Depositary Receipts (BDRs).

LATAM Airlines Group’s corporate governance practices are regulated by Chile’s Securities Market Law (Nº 18.045) and its Corporations Law (Nº 18.046), including their associated norms, as well as other norms issued by the SVS. In addition, it is subject to the legislation and regulation of the United States and that country’s Securities and Exchange Commission (SEC) as they apply to the issue of ADRs and the laws and regulation of the Federal Republic of Brazil and the Comissão de Valores Mobiliários (CVM), the country’s stock market regulator, as they apply to the issue of BDRs.

The corporate governance practices of LATAM Airlines Group are subject to constant review in order to ensure that its internal self-regulation processes are totally aligned with the regulation in force and the LATAM’s values.

LATAM Airlines Group’s decisions and commercial activities are underpinned by the ethical principles established in LATAM’s Code of Conduct.


As of 31 de December 2014, LATAM Airlines Group had a total of 1,626 registered shareholders. LATAM Airlines Group is controlled by the Cueto group, represented by Costa Verde Aeronáutica S.A., Inversiones Nueva Costa Verde Aeronáutica Ltda., Costa Verde Aeronáutica SpA, Inversiones Priesca Dos y Cía. Ltda., Inversiones Caravia Dos y Cía. Ltda., Inversiones El Fano Dos y Cía. Ltda. Inversiones la Espasa Dos y Cia. Limitada, Inversiones Puerto Claro Dos y Cia. Ltda., Inversiones La Espasa Dos S.A., Inversiones Puerto Claro Dos Limitada and Inversiones Mineras del Cantábrico S.A. As of end-2013, these companies together held a 25.49% stake while the remainder corresponded to different institutional investors, companies and individuals.

As of 31 December 2014, 7.69% of LATAM was held in the form of ADRs and 0.53% as BDRs. The main bodies responsible for LATAM Airlines Group’s corporate governance are its Board of Directors and the Directors’ Committee (which also fulfills the functions of the Audit Committee required under the Sarbanes-Oxley Act of the United States), together with the Strategy, Finance, Leadership and Product, Brand and Frequent Flyer Program Committees created after the association between LAN Airlines and TAM. The main functions of these bodies are set out below.


LATAM Airlines Group’s Board of Directors has nine members and is the body responsible for analyzing and defining LATAM’s strategic vision, thereby playing a fundamental role in its corporate governance. All the Board seats come up for election every two years and, under LATAM Airlines Group’s statutes, directors are elected through cumulative voting.

Each shareholder has one vote per share and can use all his or her votes to support one candidate or divide them among any number of candidates. This arrangement ensures that a shareholder with more than a 10% stake can elect at least one director. The present Board of Directors was elected by the Ordinary Shareholders’ Meeting which took place on April 29th, 2014.

LATAM Airlines Group’s Board holds ordinary monthly meetings and extraordinary meetings whenever the Company’s affairs so require. Directors’ fees must be approved by vote at the Ordinary Shareholders’ Meeting. The Directors’ Committee usually meets monthly and its functions and powers are those established by the applicable legislation and regulation.


Under Chilean law, listed joint stock companies must appoint at least one independent director and a Directors’ Committee when they have a market capitalization of at least 1,500,000 unidades de fomento (an inflation-indexed currency unit) and at least 12.5% of the voting shares are held by shareholders who individually control or possess less than 10% of these shares. Three of the nine Board members form a Directors’ Committee, which fulfills both the functions required under Chile’s Corporations Law and those of the Audit Committee required under the Sarbanes-Oxley Act of the United States and the corresponding SEC norms.

The Directors’ and Audit Committee has the functions established in Article 50 bis of Chile’s Corporations Law (Nº 18.046) and the other applicable regulation. These include:

  • To examine the reports of LATAM Airlines Group’s external auditors, general balance sheets and other financial statements that LATAM Airlines Group’s administrators provide to shareholders and to express an opinion about these reports prior to their presentation for approval by shareholders.
  • To put to the Board proposals as to the external auditors and credit rating agencies to be used.
  • To examine internal control reports and any related complaints.
  • To examine and report on all matters regarding related-party transactions.
  • To examine the pay scale of LATAM’s senior management.

The requirements for directors’ independence are set out in Chile’s Corporations Law (Nº 18.046) and its subsequent modifications under Law Nº 19.705 on the relationship between directors and LATAM’s controlling shareholders.

A director is considered independent when he or she does not, in general, have ties, interests or economic, professional, credit or commercial dependence of a significant nature or size with or on the company, the other companies in the group of which it forms part, its controller or principal executives or a family relationship with the latter or any of the other types of ties specified in Law Nº 18.046.

Under US regulation, it is necessary to have an Audit Committee, comprising at least three Board members, that fulfills the independence requirements established under Rule 10A of the Exchange Act. Given the similarity of the functions of the Directors’ Committee and the Audit Committee, LATAM Airlines Group’s Directors Committee acts as an Audit Committee under Rule 10A of the Exchange Act.

As of 31 December 2014, all the members of the Directors’ Committee, who also act as part of the Audit Committee, were independent directors as defined under Rule 10A of the Exchange Act. At that date, its members were Messrs. Ramón Eblen Kadis, Georges de Bourguignon Arndt and Juan Gerardo Jofré Miranda (chairman of the Committee). For the purposes of Chile’s Corporations Law (Nº 18.046), Ramón Eblen Kadis is not considered an independent director.


As required under Article 50 bis of Law Nº 18.046, the matters examined by the Directors' Committee in 2014 are set out below:

1) Extraordinary Session N°25 30/1/2014:

  • Review of calculation of impairment of certain assets included in financial statements already issued.

2) Ordinary Session N°141 31/1/14:

  • System of remunerations and compensation plan for executives.
  • Analysis of Multiplus business.

3) Extraordinary Session N°26 7/3/14:

  • RReview of calculation of impairment of certain assets included in financial statements at 31 December 2013.
  • Approval of fees of PwC.

4) Extraordinary Session N°27 17/3/14:

  • Review of financial statements at 31 December 2013.

5) Ordinary Session N°142 4/4/14:

  • Proposal for external auditors and private credit rating agencies for 2014
  • Other business.
  • Annual report of Directors' Committee.

6) Ordinary Session N°143 5/5/14:

  • Accounting effect of fleet restructuring/redelivery.
  • Identification of issues pending analysis that were raised in requests presented by the Committee in 2013 and 2014 to date.
  • Fees for proposed services of external auditors PwC.

7) Extraordinary Session N°28 13/5/14:

  • Review of financial statements at 31 March 2014.

8) Ordinary Session N°144 9/6/14:

  • Evaluation of CEO and senior executives.
  • Closure of 2013 audit plan and 2014 plan.

9) Ordinary Session N°145 4/7/14:

  • Closure of 2013 audit plan and 2014 plan
  • Fees for proposed services of external auditors PwC and letter of independence
  • Evaluation of CEO and senior executives.

10) Ordinary Session N°146 4/8/14:

  • Situation in Venezuela as regards foreign currency remittances.
  • Government investigations.
  • Follow-up of list of issues raised by the Committee.
  • LATAM risk matrix project.

11) Extraordinary Session N°29 12/8/14:

  • Review of financial statements at 30 June 2014.

12) Ordinary Session N°147 1/9/14:

  • CClosure of 2013 audit plan and 2014 plan.

13) Ordinary Session N°148 9/10/14:

  • 2014 audit plan.
  • Tax reform.
  • Situation in Venezuela.
  • External auditors' fees.

14) Extraordinary Session N°30 24/10/14:

  • Tax contingencies.
  • Tax reform in Chile – implementation plan.

15) Ordinary Session N°149 3/11/14:

  • Related-party transactions .
  • Tax reform.
  • Compliance plan. Compliance training for Directors made by the Chief Compliance Officer, in charge of crime prevention at LATAM.
  • External auditors' fees.

16) Extraordinary Session N°31 12/11/14:

  • Review of financial statements at 30 September 2014.
  • Situation in Venezuela.
  • External auditors' fees.
  • Letter received from external auditors.

17) Ordinary Session N°150 9/12/14

  • 2014 external audit plan .
  • Corporate governance .
  • Law 20.393 crime prevention model
  • External auditors' fees.


In accordance with the shareholders’ agreement of 25 January 2012 between LATAM Airlines Group S.A. (previously LAN Airlines S.A.) and TEP Chile S.A., the Ordinary Board Session of 3 August 2012 established the following four committees to review, discuss and make recommendations to the Board about the issues related to their respective areas of responsibility:

(i) Strategy Committee, (ii) Leadership Committee, (iii) Finance Committee, and (iv) Brand, Product and Frequent Flyer Program Committee. In accordance with the said shareholders’ agreement, each subcommittee will comprise two or more directors of LATAM Airlines Group and at least one of their members must be a director elected by TEP Chile S.A.

The Strategy Committee will focus on corporate strategy, current strategic affairs and the three-year plans and budgets of the main business units and functional areas and high-level review strategies. The Leadership Committee will focus on areas that include group culture, high-level organizational structure, appointment of the executive vice-president of LATAM Airlines Group (henceforth, “CEO of LATAM”) and those who report to this person, the philosophy of corporate remunerations, structures and levels of remunerations and objectives for the CEO of LATAM and other key staff, the succession or contingency plan for the CEO of LATAM and evaluation of the performance of the CEO of LATAM.

The Finance Committee will focus on financial policies and strategy, capital structure, control of compliance policies, tax optimization strategy and the quality and reliability of financial information. Finally, the Brand, Product and Frequent Flyer Program Committee will focus on brand strategies and brand construction initiatives for corporate brands and those of the principal business units, the principal characteristics of products and services for each of the principal business units, the strategy of the Frequent Flyer Program and its key characteristics and regular auditing of the brand’s performance.

In addition, by agreement of the Board of LATAM Airlines Group S.A., during the board of directors’ meeting No. 389 on 10 June 2014, a Risk Committee was formed with the purpose of supervising the implementation of the Risk management success factor, included in LATAM’s Strategic Plan, and particularly to oversee LATAM Airlines Group’s risk management of risks of LATAM Airlines Group and ensure a corporate risk matrix structuring.


Under Chile’s Corporations Law, a listed company’s operations with a related party must take place in market conditions and comply with certain authorization and disclosure requirements that are different from those applying to a non-listed company. This applies to listed companies and their subsidiaries.

LATAM Airlines Group has carried out different transactions with its subsidiaries, including entities owned or controlled by some of its majority shareholders. In the normal course of LATAM’s business, different types of services have been provided to or received from related companies, including the rental and exchange of aircraft and cargo transport and booking services.

LATAM Airlines Group’s policy is not to carry out transactions with or for the benefit of any shareholder or Board member or with any entity controlled by these persons or in which they have a significant economic interest, except when the transaction is related to LATAM and the price and other terms are at least as favorable for the LATAM as those which could be obtained from a third party under market conditions.

These transactions are summarized in the audited consolidated financial statements for the year ending on 31 December 2014.

Finally, and along with the rules laid down in the Code of Conduct of LATAM Airlines Group on this matter, for the purposes of letter b) of the last point of Article 147 of Law No. 18.046 on Corporations, LATAM Airlines Group has a general policy on habitual operations which was approved by its Board of Directors in its Session of 29 December 2009 and reported as material news to the Superintendencia de Valores y Seguros on that same date. The operations indicated in this general policy on habitual operations may be carried out without the requirements envisaged in the said Article 147.


LATAM Airlines Group’s good corporate governance is the result of the interaction of different individuals and stakeholders.

Although all employees share responsibility for compliance with the high standards of ethics and adherence to regulation established by LATAM Airlines Group’s Board of Directors, it is the Board, the Directors’ Committee and the Company’s principal executives who are primarily responsible for LATAM Airlines Group’s good corporate governance. In line with the above, LATAM Airlines Group is committed to transparency and compliance with the ethical and regulatory standards established for this purpose by its Board of Directors.


Notwithstanding the responsibilities of the Company’s Board of Directors and its Directors’ Committee, LATAM Airlines Group’s administration has also taken a number of measures to ensure due corporate governance. These include principally:

1. Publication of the new Code of Conduct for LATAM, unique for all of the Company’s employees, which seeks to ensure that all employees adhere to the highest standards of ethics, transparency and compliance with regulation required by LATAM Airlines Group.

- Ethics Lines of LAN ( and TAM ( These facilities provide employees with a direct and private online channel through which to report any concerns in the knowledge that these will be properly processed or investigated without any risk of reprisal against the person reporting them.

2. Code of Ethics for Senior Financial Executives. This fosters honest and ethical conduct in the disclosure of financial information, compliance with regulation and avoidance of conflicts of interest.

3. Manual for Management of Market-Sensitive Information. This is required by the Superintendencia de Valores y Seguros and, since Law Nº 20.382 on Corporate Governance came into force, also by Chilean securities market legislation. LATAM Airlines Group, however, seeks to go further than these norms and regulates the criteria for disclosure of operations, periods of voluntary abstinence from the purchase and sale of LATAM’s shares, mechanisms for continuous disclosure of market-sensitive information and mechanisms for the protection of confidential information by the Company’s employees and executives.

4. Compliance Program. Managed by LATAM’s Compliance Area, which forms part of the Legal Vice-Presidency, in coordination with and under the supervision of the Board of Directors and its Directors’ Committee, this Program supervises compliance with the laws and regulation applicable to LATAM Airlines Group’s businesses and activities in the different countries in which it operates.


On March 31, 2014, the Report on LATAM’s Corporate Practices which was approved by LATAM Airlines Group’s Board of Directors and prepared in accordance with General Norm N° 341 issued by the Superintendencia de Valores y Seguros (SVS) on 29 November 2012., was dispatched to this same organism.The information required under this norm is as of December 31 of each year and must be presented by March 31 of the subsequent year.

The information filed annually with the SVS must refer to the following matters:

  • The functioning of the Board of Directors.
  • The relation between LATAM, its shareholders and the general public.
  • The replacement and remuneration of LATAM’s principal executives.
  • The definition, implementation and supervision of LATAM’s internal control policies and procedures and risk management.

Ownership Structure and Principal Shareholders

31 de Diciembre de 2014

Shareholder %
2 TEP CHILE SA 65.554.075 12.0%
3 J P MORGAN CHASE BANK 41.936.775 7.7%
8 AXXION S A 18.473.333 3.4%
9 INVERSIONES ANDES SPA 17.146.529 3.1%
10 INVERSIONES HS SPA 14.894.024 2.7%

31 de Diciembre de 2014

Shareholder %
2 TEP CHILE SA 65.554.075 12.2%
3 J P MORGAN CHASE BANK 42.318.030 7.9%
7 AXXION S A 18.473.333 3.5%
8 INVERSIONES ANDES SPA 16.120.777 3.0%
9 INVERSIONES HS SPA 15.028.024 2.8%
12 AFP PROVIDA S.A. FONDO TIPO C 7.974.373 1.5%


LATAM Airlines Group’s policy is to pay the minimum dividends required by law or, in other words, 30% of profits in accordance with the regulation in force.

LATAM Airlines Group’s policy is to pay the minimum dividends required by law or, in other words, 30% of profits in accordance with the regulation in force. This does not, however, preclude the distribution of dividends above this obligatory minimum level depending on the particular events and circumstances that may arise during the year.

The dividends for 2012 corresponded to 30% of that year’s distributable profits in accordance with international financial reporting standards. No dividends were distributed in years 2013 and 2014 since LATAM reported net losses.

The table below shows the dividend per share paid during the past three years.

Year of profits of dividend payment Payment date Type Total dividend payed Dividendos Number of Number of shares Dividend per share Dividend per ADR
2012 17-May-13 Definitive 3,288,127 483,547,819 0.0068 0.00681
2013 No dividends distributed
2014 No dividends distributed

Financial Policy

The Directorate of Corporate Finances is responsible for managing LATAM's Financial Policy.

The Directorate of Corporate Finances is responsible for managing LATAM's Financial Policy. This Policy enables LATAM Airlines Group to respond effectively to conditions external to the business and, in this way, maintain a stable flow of funds to ensure the continuity of its operations.

The Finance Committee, formed by the Executive Vice-President and members of the Board of Directors, meets periodically to review and make recommendations to the Board about matters not regulated by the Financial Policy.

LATAM Airlines Group's Financial Policy seeks to:

  • Ensure a minimum level of liquidity for the operation. Preserve and maintain cash levels adequate for the needs of the operation and its growth. Maintain an adequate level of lines of credit with local and overseas banks for response to contingencies.
  • Maintain an optimum borrowing level and profile that are reasonably proportionate to the growth of operations and take into account the objective of minimizing financing costs.
  • Achieve a return on cash surpluses through financial investments which guarantee a level of risk and liquidity consistent with the Financial Investment Policy.
  • Reduce the impact on LATAM's net margin of market risks such as variations in the price of fuel, exchange rates and interest rates.
  • Reduce counterparty risk through diversification of and caps on investments and operations with counterparties.
  • Maintain visibility of LATAM's projected long-term financial situation so as to anticipate situations such as failure to comply with covenants, low liquidity, a deterioration of the financial ratios established in undertakings with ratings agencies, etc.
  • LATAM Airlines Group's Financial Policy establishes guidelines and restrictions for managing operations related to Liquidity and Financial Investment, Financing Activities and Management of Market Risk.


In 2014, LATAM Airlines Group carried out capital market operations in order to maintain adequate levels of liquidity, closing in December 2014 with a liquidity ratio of approximately 12% of total sales.

In this context, LATAM successfully implemented a plan to reduce its short-term debt from approximately US$840 million at end-2013 to approximately US$327 million in December 2014. Together with this reduction of its short-term debt, LATAM also signed a line of credit in 2014 to finance pre-delivery payment of its undertaking to acquire 31 A321s with CFM56-5B3 engines and five A350s with Roll Royce engines. This line of credit was for US$366 million of which it had used approximately US$283 million by 31 December 2014

LATAM maintained an adequate level of liquidity for protection against potential external shocks and the industry's inherent volatility and cyclical nature.

Our long term objective is to have a leverage ratio of between 3.5x to 4.0x and maintain a liquidity level of approximately 15%.

In addition, it maintained lines of credit for a total of US$210 million with local and overseas financial institutions which, as of end-2014, it had not used. During the year, it continued to finance out of its own resources an important part of pre-delivery payments for the Boeing and Airbus planes it will receive in the future. As of 31 December 2014, LATAM Airlines Group held US$1,533.8 million in cash and easily convertible securities and US$336.1 million in advances on aircraft financed out of its own resources.

The aim of LATAM's Financial Investment Policy is to centralize investment decisions so as to optimize return adjusted for exchange-rate risk, subject to maintaining an adequate level of security and liquidity.

In addition, it seeks to manage risk through diversification of counterparties, maturities, currencies and instruments.


LATAM Airlines Group's Financing Policy is designed to centralize financing activities and ensure a balance between the useful life of its assets and debt maturity.

The vast majority of LATAM Airlines Group's investments correspond to fleet acquisition programs, which are generally financed using a combination of its own resources and structured long-term financial debt. Normally, LATAM finances between 80% and 85% through bank loans or bonds guaranteed by export promotion agencies and the remainder through commercial loans or out of its own resources.

Maturities under the different financing structures vary from 12 to 16 years but, in the vast majority of cases, are 12 years. As an additional financing measure, an important percentage of LATAM's fleet acquisition undertakings take the form of operational leasing arrangements.

In the case of short-term financing, LATAM held around 4% of its total debt as of 31 December 2014 in the form of exporter/importer loans in order to finance working capital needs.

In the case of short-term financing, LATAM held around 4% of its total debt as of 31 December 2014 in the form of exporter/importer loans in order to finance working capital needs.

A further objective of the Financing Policy is to ensure a stable profile of debt maturity and rental commitments, including debt service and fleet rental payments, which is consistent with the LATAM Airlines Group's operating cash flows.


Due to the nature of its operations, LATAM Airlines Group is exposed to market risks such as: (i) fuel-price risk, (ii) interest-rate risk, and (iii) exchange-rate risk. In order to hedge completely or partially against these risks, LATAM uses different derivatives to fix or cap increases in the underlying assets. Market risk is managed in an integrated manner and takes into account the correlation between each exposure. In order to operate with counterparties, LATAM must have a line approved and an ISDA or LFC contract signed with the chosen counterparty. Counterparties must have a credit rating equivalent to at least A- issued by an international rating agency.

i. Fuel-price risk:

Variations in fuel prices depend to an important extent on world oil supply and demand, decisions taken by the Organization of the Petroleum Exporting Countries (OPEC), world refining capacity and level of stocks as well as the occurrence or not of climatic phenomena and geopolitical factors. The Company buys aircraft fuel known as Jet Fuel 54. There is an international reference index for this underlying asset - the US Gulf Coast Jet 54. The hedging indices used by LATAM Airlines Group are principally Brent crude (BRENT) and the US Gulf Coast Jet 54.

LATAM's Fuel Hedging Policy restricts the minimum and maximum range of fuel to be hedged depending on its capacity to pass on changes in these costs and the market outlook as reflected in the fuel price. In addition, the Policy limits the maximum hedging period.

As instruments for fuel hedging, the Policy permits the use of swaps, collars, options, swaptions or combinations of these instruments.

ii. Interest-rate risk of cash flow:

Variations in interest rates bear a strong relation to the international economic situation, with an improvement in the long-term outlook leading to an increase in long-term rates and a deterioration in the outlook prompting a drop due to market effects. In periods of economic contraction, governments also tend to reduce their benchmark interest rates in order to boost domestic demand by making credit more accessible and to increase output (and, similarly, raise them at times of economic expansion).

Uncertainty as to how the market and governments will behave and, therefore, how interest rates may change implies a risk related to LATAM Airlines Group's floating-rate debt and its investments. The interest-rate risk associated with borrowing is equivalent to the risk of future cash flows on financial instruments due to fluctuations in market interest rates.

LATAM's exposure to variations in market interest rates is related principally to its long-term floating-rate liabilities.

In order to reduce the risk related to an increase in interest rates, LATAM Airlines Group has acquired interest-rate swaps and call options. The instruments that may be used under its Interest-Rate Hedging Policy are swaps, reverse swaps, call options and forward-start swaps.

iii. Local exchange-rate risk:

The US dollar is the functional currency used by the LATAM for the prices of its services, the composition of its classified financial situation and the effects on its operating results. There are two types of exchange-rate risk: flow risk and balance sheet risk. Flow risk arises as a result of the net position of revenues and costs in currencies other than the US dollar.

LATAM sells most of its services in US dollars, in prices equivalent to the US dollar or in Brazilian reais. Approximately 58% of its revenues are denominated in US dollars and approximately 29% in Brazilian reais. A large part of its costs are denominated in US dollars or equivalents to the US dollar. This is the case, particularly, of fuel costs, airport charges, aircraft rentals, insurance and aircraft components and accessories Remunerations, on the other hand, are denominated in local currencies. As a result, some 65% of LATAM's total costs are denominated in US dollars and approximately 23% in Brazilian reais.

The tariffs of LATAM Airlines Group's cargo and international passenger businesses are mostly set in US dollars while, in its domestic businesses, a mix exists. In Peru, sales are in local currency but prices are indexed to the US dollar while, in Brazil, Chile, Argentina and Colombia, prices are in local currency without any form of indexation and, in Ecuador, both tariffs and sales are in US dollars. As a result, LATAM is exposed to fluctuations in different currencies including, principally, the Brazilian real, the Chilean peso and the euro.

LATAM Airlines Group has hedged against exchange-rate risk by acquiring currency forwards. As of 31 December 2014, hedging for the Brazilian real for the period January-December 2015 reached US$100 million.

LATAM's policy allows it to acquire derivatives to protect it against the possible appreciation or depreciation of currencies against the functional currency used by the parent company. Balance sheet risk occurs when items included there are exposed to variations in exchange rates because they are expressed in a currency other than the functional currency.

The main mismatch is in TAM S.A. whose functional currency is the Brazilian real while a large part of its liabilities are denominated in US dollars.

In 2014, in order to reduce the impact of appreciations or depreciations of the real against the US dollar on its results, LATAM carried out transactions that reduced the net dollar-denominated liabilities of TAM S.A. These operations included the reduction of its short-term debt in US dollars, a reduction in debt related to the fleet in line with the original repayment plan and an accelerated reduction in debt related to the fleet as a result of the transfer of the fleet and the corresponding debt from TAM Linhas Aéreas S.A. to LATAM Airlines Group S.A.

LATAM's aim is to continue with these transactions in 2015 in order to achieve the maximum possible reduction in balance sheet exposure which, as of end-2014, reached less than US$1,0 billion.