##### Table of Contents

-As filed with the Securities and Exchange Commission on March 30, 2017







UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F/A

(Amendment No. 1)







|☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2016

OR



|☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



|☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Commission File Number: 1-14728





LATAM Airlines Group S.A.

(Exact name of registrant as specified in its charter)







|                                                |  |                                                
|----------------------------------------------- |  | -----------------------------------------------
|LATAM Airlines Group S.A.                       |  | Republic of Chile                              
|(Translation of registrants name into English) |  | (Jurisdiction of incorporation or organization)

Presidente Riesco 5711, 20th Floor

Las Condes

Santiago,
Chile

(Address of principal executive offices)

Gisela Escobar

Tel.: 56-2-2565-3944  E-mail: InvestorRelations@latam.com



Presidente Riesco 5711, 20th Floor

Las Condes

Santiago, Chile

(Name,
telephone, e-mail and/or facsimile number and address of company contact person)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:



|                                                                                                                                          |  |                                           
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------
|Title of each class:                                                                                                                      |  | Name of each exchange on which
registered:
|American Depositary Shares (as evidenced by American Depositary Receipts), each representing one share of Common Stock, without par value |  | New York Stock Exchange                   

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for
which there is a reporting obligation pursuant to Section 15(d) of the Act:

None





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual
report: 606,407,693.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes ☒    No ☐

If this report is an annual or transition report, indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes ☐    No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☐    No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer  ☒                
Accelerated filer  ☐                 Non-Accelerated filer  ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP  ☐ |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board  ☒ |  | Other  ☐

If Other has been checked in response to the previous question, indicate by check mark which financial statement
item the registrant has elected to follow:

Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes ☐    No ☒









---

##### Table of Contents

EXPLANATORY NOTE

This Amendment (the Amendment) to the Annual Report on Form 20-F of LATAM Airlines Group
S.A. for the fiscal year ended December 21, 2016, as filed with the Securities and Exchange Commission on March 29, 2017 (the Original Filing), is being filed for the purpose of including the signature page to the Original and
to include under Item 18 the report of PricewaterhouseCoopers, which were inadvertently omitted from the Original Filing.

This Amendment speaks as of the filing date of the Original Filing. Other than as set forth above, this Amendment does not, and does not
purport to, amend, update or restate any other information included in the Original Filing, including the exhibits, or reflect any events that have occurred since the Original Filing.



---

##### Table of Contents

TABLE OF CONTENTS



|                            |  |                                                                              |   |  |     | 
|--------------------------- |  | ---------------------------------------------------------------------------- | - |  | --- | 
|PRESENTATION OF INFORMATION |  |                                                                              | 2 | 
|                            | 
|FORWARD-LOOKING STATEMENTS  |  |                                                                              | 3 | 
|                            | 
|GLOSSARY OF TERMS           |  |                                                                              | 3 | 
|                            | 
|PART I                      |  |                                                                              |   | 
|                            |  |                                                                             
|ITEM 1.                     |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |   |  | 5   | 
|                            |  |                                                                             
|ITEM 2.                     |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |   |  | 5   | 
|                            |  |                                                                             
|ITEM 3.                     |  | KEY INFORMATION                                                              |   |  | 5   | 
|                            |  |                                                                             
|ITEM 4.                     |  | INFORMATION ON THE COMPANY                                                   |   |  | 17  | 
|                            |  |                                                                             
|ITEM 4A                     |  | UNRESOLVED STAFF COMMENTS                                                    |   |  | 47  | 
|                            |  |                                                                             
|ITEM 5.                     |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |   |  | 47  | 
|                            |  |                                                                             
|ITEM 6.                     |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |   |  | 68  | 
|                            |  |                                                                             
|ITEM 7.                     |  | CONTROLLING SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                      |   |  | 77  | 
|                            |  |                                                                             
|ITEM 8.                     |  | FINANCIAL INFORMATION                                                        |   |  | 83  | 
|                            |  |                                                                             
|ITEM 9.                     |  | THE OFFER AND LISTING                                                        |   |  | 86  | 
|                            |  |                                                                             
|ITEM 10.                    |  | ADDITIONAL INFORMATION                                                       |   |  | 88  | 
|                            |  |                                                                             
|ITEM 11.                    |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |   |  | 114 | 
|                            |  |                                                                             
|ITEM 12.                    |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |   |  | 118 | 
|                            | 
|PART II                     |  |                                                                              |   | 
|                            |  |                                                                             
|ITEM 13.                    |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |   |  | 119 | 
|                            |  |                                                                             
|ITEM 14.                    |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |   |  | 119 | 
|                            |  |                                                                             
|ITEM 15.                    |  | CONTROLS AND PROCEDURES                                                      |   |  | 119 | 
|                            |  |                                                                             
|ITEM 16.                    |  | RESERVED                                                                     |   |  | 120 | 
|                            | 
|PART III                    |  |                                                                              |   | 
|                            |  |                                                                             
|ITEM 17.                    |  | FINANCIAL STATEMENTS                                                         |   |  |     | 
|                            |  |                                                                             
|ITEM 18.                    |  | FINANCIAL STATEMENTS                                                         |   |  |     | 
|                            |  |                                                                             
|ITEM 19.                    |  | EXHIBITS                                                                     |   |  |     | 



1



---

##### Table of Contents

PRESENTATION OF INFORMATION

Throughout this annual report on Form 20-F we make numerous references to LATAM. Unless
the context otherwise requires, references to LATAM Airlines Group are to LATAM Airlines Group S.A., the unconsolidated operating entity, and references to LATAM, we, us or the Company are
to LATAM Airlines Group S.A. and its consolidated affiliates: Transporte Aéreo S.A. (which does business under the name LATAM Airlines Chile), LAN Perú S.A. (LATAM Airlines Peru), Aerolane, Líneas
Aéreas Nacionales del Ecuador S.A. (LATAM Airlines Ecuador), LAN Argentina S.A. (LATAM Airlines Argentina, previously Aero 2000 S.A.), Aerovías de Integración Regional, Aires S.A. (which does business
under the name LATAM Airlines Colombia), TAM S.A. (TAM), LAN Cargo S.A. (LATAM Cargo) and its three regional affiliates: Aero Transportes Mas de Carga S.A. de C.V. (MasAir) in Mexico, Linea Aerea
Carguera de Colombia S.A. (LANCO) in Colombia and Aerolinhas Brasileiras S.A. (ABSA) in Brazil. Other references to LATAM, however, are to the LATAM brand which was launched in 2016 and brings together, under one
internationally recognized name, all of the affiliate brands such as LATAM Airlines Chile, LATAM Airlines Peru, LATAM Airlines Argentina, LATAM Airlines Colombia, LATAM Airlines Ecuador and LATAM Airlines Brazil.

References to LATAM and all references to LAN are to LAN Airlines S.A., currently known as LATAM Airlines Group S.A.
and its consolidated affiliates, in connection with circumstances and facts occurring prior to the completion date of the combination between LAN Airlines S.A. and TAM S.A. See Item 4. Information on the CompanyA. History and Development
of the CompanyCombination of LAN and TAM.

In this annual report on Form 20-F, unless the
context otherwise requires, references to TAM are to TAM S.A., and its consolidated affiliates, including TAM Linhas Aereas S.A. (TLA), which does business under the name LATAM Airlines Brazil, Multiplus S.A.
(Multiplus), Fidelidade Viagens e Turismo Limited (TAM Viagens) and Transportes Aéreos Del Mercosur S.A. (TAM Mercosur).

LATAM Airlines Group and the majority of our affiliates maintain their accounting records and prepare their financial statements in U.S.
dollars. Some of our other affiliates, however, maintain their accounting records and prepare their financial statements in Chilean pesos, Argentinean pesos, Colombian pesos or Brazilian reais. In particular, TAM maintains its accounting records and
prepares its financial statements in Brazilian reais. Our audited consolidated financial statements include the results of these affiliates translated into U.S. dollars. International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), require assets and liabilities to be translated at period-end exchange rates, while revenue and expense accounts are translated at each transaction
date, although a monthly rate may also be used if exchange rates do not vary widely.

In this annual report on Form 20-F, all references to Chile are references to the Republic of Chile. This annual report contains conversions of certain Chilean peso and Brazilian real amounts into U.S. dollars at specified rates
solely for the convenience of the reader. These conversions should not be construed as representations that the Chilean peso and the Brazilian real amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the
rate indicated. Unless we specify otherwise, all references to $, US$, U.S. dollars or dollars are to United States dollars, references to pesos, Chilean pesos or
Ch$ are to Chilean pesos. References to reais, Brazilian reais or R$ are to Brazilian reais, and references to UF are to Unidades de Fomento, a daily indexed Chilean peso-denominated
monetary unit that takes into account the effect of the Chilean inflation rate. Unless we indicate otherwise, the U.S. dollar equivalent for information in Chilean pesos used in this annual report and in our audited consolidated financial statements
is based on the dólar observado or observed exchange rate published by Banco Central de Chile (which we refer to as the Central Bank of Chile) on December 31, 2016, which was Ch$669.47 = US$1.00. The
observed exchange rate on February 28, 2017, was Ch$645.19= US$1.00. Unless we indicate otherwise, the U.S. dollar equivalent for information in Brazilian reais used in this annual report and in our audited consolidated financial statements is
based on the average bid and offer ratepublished by Banco Central do Brasil (which we refer to as the Central Bank of Brazil) on December 31, 2016, which was R$3.259 = US$1.00. The observed exchange rate on
February 28, 2017 was $R$3.099 = US$1.00. The Federal Reserve Bank of New York does not report a noon buying rate for Chilean pesos or Brazilian reais.

We have rounded percentages and certain U.S. dollar, Chilean peso and Brazilian reais amounts contained in this annual report for ease of
presentation. Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding.

LATAMs audited
consolidated financial statements for the periods ended December 31, 2012, 2013, 2014, 2015 and 2016 were prepared in accordance with IFRS.

This annual report contains certain terms that may be unfamiliar to some readers. You can find a glossary of these terms on page 4 of this
annual report.



2



---

##### Table of Contents

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. Such statements may include words such as anticipate, could
estimate, expect, project, intend, plan, believe or other similar expressions. Forward-looking statements, including statements about our beliefs and expectations, are not
statements of historical facts. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. There is no assurance that the expected events, trends or results will actually
occur. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors
include, but are not limited to:



| |  | the factors described in Item 3. Key InformationRisk Factors;
| | - | ----------------------------------------------------------------



| |  | our ability to service our debt and fund our working capital requirements;
| | - | --------------------------------------------------------------------------



| |  | future demand for passenger and cargo air service in Chile, Brazil, other countries in Latin America and the rest of the world;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| |  | the maintenance of relationships with customers;
| | - | ------------------------------------------------



| |  | the state of the Chilean, Brazilian, Latin American and world economies and their impact on the airline industry;
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | the effects of competition;
| | - | ---------------------------



| |  | future terrorist incidents, cyberattacks or related activities affecting the airline industry;
| | - | ----------------------------------------------------------------------------------------------



| |  | future outbreak of diseases, or the spread of already existing diseases, affecting traveling behavior and/or exports;
| | - | ---------------------------------------------------------------------------------------------------------------------



| |  | natural disasters affecting traveling behavior and/or exports;
| | - | --------------------------------------------------------------



| |  | the relative value of the Chilean and other Latin American currencies compared to other world currencies;
| | - | ---------------------------------------------------------------------------------------------------------



| |  | inflation;
| | - | ----------



| |  | competitive pressures on pricing;
| | - | ---------------------------------



| |  | our capital expenditure plans;
| | - | ------------------------------



| |  | changes in labor costs, maintenance costs and insurance premiums;
| | - | -----------------------------------------------------------------



| |  | fluctuation of crude oil prices and its effect on fuel costs;
| | - | -------------------------------------------------------------



| |  | cyclical and seasonal fluctuations in our operating results;
| | - | ------------------------------------------------------------



| |  | defects or mechanical problems with our aircraft;
| | - | -------------------------------------------------



| |  | our ability to successfully implement our growth strategy;
| | - | ----------------------------------------------------------



| |  | increases in interest rates; and
| | - | --------------------------------



| |  | changes in regulations, including regulations related to access to routes in which we operate.
| | - | ----------------------------------------------------------------------------------------------

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them, whether in
light of new information, future events or otherwise. You should also read carefully the risk factors described in Item 3. Key InformationRisk Factors.

GLOSSARY OF TERMS

The following terms, as used in this annual report, have the meanings set forth below.



|                                                           |  |                                                                                                                                                                                                              
|---------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Capacity Measurements:                                     |  |                                                                                                                                                                                                              
|                                                           | 
|available seat kilometers or ASKs                      |  | The sum, across our network, of the number of seats made available for sale on each flight multiplied by the kilometers flown by the respective flight.                                                      
|                                                           | 
|available ton kilometers or ATKs                       |  | The sum, across our network, of the number of tons available for the transportation of revenue load (cargo) on each flight multiplied by the kilometers flown by the respective flight.                      
|                                                           | 
|available seat kilometers equivalent or ASK equivalent |  | The sum, across our network, of the number of seats made available for sale on each flight plus the quotient of cargo ATKs divided by 0.095, all multiplied by the kilometers flown by the respective
flight.



3



---

##### Table of Contents

|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|---------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                         | 
|Traffic Measurements:                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                         | 
|revenue passenger kilometers or RPKs |  | The sum, across our network, of the number of passengers on each flight multiplied by the number of kilometers flown by the respective flight.                                                                                                                                                                                                                                                                                                                                                                          
|                                         | 
|revenue ton kilometers or RTKs       |  | The sum, across our network, of the load (cargo) in tons on each flight multiplied by the kilometers flown by the respective flight.                                                                                                                                                                                                                                                                                                                                                                                    
|                                         | 
|traffic revenue                        |  | Revenue from passenger and cargo operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                         | 
|Yield Measurements:                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                         | 
|cargo yield                            |  | Revenue from cargo operations divided by RTKs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                         | 
|passenger yield                        |  | Revenue from passenger operations divided by RPKs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                         | 
|Load Factors:                            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                         | 
|cargo load factor                      |  | RTKs expressed as a percentage of ATKs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                         | 
|passenger load factor                  |  | RPKs expressed as a percentage of ASKs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                         | 
|Other:                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                         | 
|Airbus A320-Family Aircraft            |  | The Airbus A318, Airbus A319, Airbus A320 and Airbus A321 models of aircraft.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                         | 
|m2                                     |  | Square meters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                         | 
|ton                                    |  | A metric ton, equivalent to 2,204.6 pounds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                         | 
|utilization rates                      |  | The actual number of flight hours per aircraft per operating day.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                         | 
|operating expenses                     |  | Operating expenses, which are calculated in accordance with IFRS, comprise the sum of the line items cost of sales plus distribution costs plus administrative expenses plus other operating
expenses, as shown on our consolidated statement of comprehensive income. These operating expenses include: wages and benefits, fuel, depreciation and amortization, commissions to agents, aircraft rentals, other rental and landing fees,
passenger services, aircraft maintenance and other operating expenses.
|                                         | 
|MiSchDynamicDT                         |  | Market Intelligence Schedule Dynamic Table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                         | 
|Diio Mi                                |  | Data In Intelligence Out Market Intelligence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                         | 
|CO2                                    |  | Carbon Dioxide Gas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



4



---

##### Table of Contents

PART I



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not applicable.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------

A. Selected Financial Data

LATAMs Historical Financial Information

The summary consolidated annual financial information of LATAM as of December 31, 2016, 2015, 2014, 2013 and 2012 has been prepared in
accordance with IFRS(*). On June 22, 2012, LATAM Airlines Group was formed through the business combination of LAN and TAM. Following the combination, LAN Airlines S.A. became LATAM Airlines Group S.A. and TAM continues to exist as
a subsidiary of LATAM Airlines Group. Financial statements for LATAM fully consolidate TAMs results since June 23, 2012.

LATAMs
Annual Financial Information



|                                                                  |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|----------------------------------------------------------------- |  | ---------------------------------------------------------- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | - |  | ---- | ----------- | - |  |  | ----------- | -
|                                                                  |  | Year ended December 31,                                    |            
|                                                                  |  | 2016                                                       |             |   | 2015 |  |             | 2014 |  |  | 2013        |   |  | 2012 |            
|                                                                  |  | (in US$ millions, except per share and capital stock data) |            
|The Company(1)(2)                                                 |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Statement of Income Data:                                         |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |  
|Operating revenues                                                |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Passenger                                                         |  |                                                            | 7,877.7     |   |      |  | 8,410.6     |      |  |  | 10,380.1    |   |  |      | 11,061.5    |   |  |  | 7,966.8     |  
|Cargo                                                             |  |                                                            | 1,110.6     |   |      |  | 1,329.4     |      |  |  | 1,713.4     |   |  |      | 1,863.0     |   |  |  | 1,743.6     |  
|                                                                  |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Total operating revenues                                          |  |                                                            | 8,988.3     |   |      |  | 9,740.0     |      |  |  | 12,093.5    |   |  |      | 12,924.5    |   |  |  | 9,710.4     |  
|Cost of sales                                                     |  |                                                            | (6,967.0    | ) |      |  | (7,636.7    | )    |  |  | (9,624.5    | ) |  |      | (10,054.2   | ) |  |  | (7,634.5    | )
|                                                                  |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Gross margin                                                      |  |                                                            | 2,021.3     |   |      |  | 2,103.3     |      |  |  | 2,469.0     |   |  |      | 2,870.3     |   |  |  | 2,075.9     |  
|Other operating income(3)                                         |  |                                                            | 538.7       |   |      |  | 385.8       |      |  |  | 377.6       |   |  |      | 341.6       |   |  |  | 220.2       |  
|Distribution costs                                                |  |                                                            | (747.4      | ) |      |  | (783.3      | )    |  |  | (957.1      | ) |  |      | (1,025.9    | ) |  |  | (803.6      | )
|Administrative expenses                                           |  |                                                            | (873.0      | ) |      |  | (878.0      | )    |  |  | (980.7      | ) |  |      | (1,136.1    | ) |  |  | (888.7      | )
|Other expenses                                                    |  |                                                            | (373.7      | ) |      |  | (324.0      | )    |  |  | (401.0      | ) |  |      | (408.7      | ) |  |  | (311.8      | )
|Other gains/(losses)                                              |  |                                                            | (72.6       | ) |      |  | (55.3       | )    |  |  | 33.5        |   |  |      | (55.4       | ) |  |  | (45.8       | )
|Financial income                                                  |  |                                                            | 74.9        |   |      |  | 75.1        |      |  |  | 90.5        |   |  |      | 72.8        |   |  |  | 77.5        |  
|Financial costs                                                   |  |                                                            | (416.3      | ) |      |  | (413.4      | )    |  |  | (430.0      | ) |  |      | (462.5      | ) |  |  | (294.6      | )
|Equity accounted earnings                                         |  |                                                            | 0.0         |   |      |  | 0.0         |      |  |  | (6.5        | ) |  |      | 2.0         |   |  |  | 1.0         |  
|Exchange rate differences                                         |  |                                                            | 121.7       |   |      |  | (467.9      | )    |  |  | (130.2      | ) |  |      | (482.2      | ) |  |  | 66.6        |  
|Result of indexation units                                        |  |                                                            | 0.3         |   |      |  | 0.6         |      |  |  | 0.1         |   |  |      | 0.3         |   |  |  | 0.0         |  
|                                                                  |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Income (loss) before income taxes                                 |  |                                                            | 273.9       |   |      |  | (357.1      | )    |  |  | 65.2        |   |  |      | (283.8      | ) |  |  | 96.7        |  
|Income (loss) tax expense/benefit                                 |  |                                                            | (163.2      | ) |      |  | 178.4       |      |  |  | (292.4      | ) |  |      | 20.0        |   |  |  | (102.3      | )
|                                                                  |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Net (loss) income for the period                                  |  |                                                            | 110.7       |   |      |  | (178.7      | )    |  |  | (227.2      | ) |  |      | (263.8      | ) |  |  | (5.6        | )
|Income (loss) attributable to the parent companys equity holders |  |                                                            | 69.2        |   |      |  | (219.3      | )    |  |  | (260.0      | ) |  |      | (281.1      | ) |  |  | (19.1       | )
|Income (loss) attributable to non-controlling
interests           |  |                                                            | 41.5        |   |      |  | 40.5        |      |  |  | 32.8        |   |  |      | 17.3        |   |  |  | 13.5        |  
|                                                                  |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Net income (loss) for the year                                    |  |                                                            | 110.7       |   |      |  | (178.7      | )    |  |  | (227.2      | ) |  |      | (263.8      | ) |  |  | (5.6        | )
|Earnings per share                                                |  |                                                            |             |   |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Average number of Shares                                          |  |                                                            | 549,559,559 |   |      |  | 545,547,819 |      |  |  | 545,547,819 |   |  |      | 487,930,977 |   |  |  | 412,267,624 |  



5



---

##### Table of Contents

|                                                               |  |                                                            |             |  |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|-------------------------------------------------------------- |  | ---------------------------------------------------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- | - |  | ---- | ----------- | - |  |  | ----------- | -
|                                                               |  | Year ended December 31,                                    |            
|                                                               |  | 2016                                                       |             |  | 2015 |  |             | 2014 |  |  | 2013        |   |  | 2012 |            
|                                                               |  | (in US$ millions, except per share and capital stock data) |            
|Basic earnings (loss) per share (US$)                          |  |                                                            | 0.12665     |  |      |  | (0.40193    | )    |  |  | (0.47656    | ) |  |      | (0.57613    | ) |  |  | (0.0463     | )
|Diluted earnings (loss) per share (US$)                        |  |                                                            | 0.12665     |  |      |  | (0.40193    | )    |  |  | (0.47656    | ) |  |      | (0.57613    | ) |  |  | (0.0463     | )
|                                                               | 
|                                                               |  | At December 31,                                            |            
|                                                               |  | 2016                                                       |             |  | 2015 |  |             | 2014 |  |  | 2013        |   |  | 2012 |            
|                                                               |  | (in US$ millions, except per share and capital stock data) |            
|Balance Sheet Data:                                            |  |                                                            |             | 
|Cash, and cash equivalents                                     |  |                                                            | 949.3       |  |      |  | 753.5       |      |  |  | 989.4       |   |  |      | 1,984.9     |   |  |  | 650.3       |  
|Other current assets in operation                              |  |                                                            | 2,340.3     |  |      |  | 2,067.4     |      |  |  | 2,644.1     |   |  |      | 2,992.2     |   |  |  | 2,626.2     |  
|Non-current assets and disposal groups held for
sale           |  |                                                            | 337.2       |  |      |  | 2.0         |      |  |  | 1.1         |   |  |      | 2.4         |   |  |  | 47.7        |  
|                                                               |  |                                                            |             |  |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Total current assets                                           |  |                                                            | 3,626.8     |  |      |  | 2,822.9     |      |  |  | 3,634.6     |   |  |      | 4,979.5     |   |  |  | 3,324.2     |  
|Property and equipment                                         |  |                                                            | 10,498.1    |  |      |  | 10,938.7    |      |  |  | 10,773.1    |   |  |      | 10,982.8    |   |  |  | 11,807.1    |  
|Other non-current assets                                       |  |                                                            | 5,073.3     |  |      |  | 4,339.8     |      |  |  | 6,076.7     |   |  |      | 6,668.8     |   |  |  | 7,195.0     |  
|                                                               |  |                                                            |             |  |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Total non-current assets                                       |  |                                                            | 15,571.4    |  |      |  | 15,278.5    |      |  |  | 16,849.8    |   |  |      | 17,651.6    |   |  |  | 19,002.1    |  
|                                                               |  |                                                            |             |  |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Total assets                                                   |  |                                                            | 19,198.2    |  |      |  | 18,101.4    |      |  |  | 20,484.4    |   |  |      | 22,631.1    |   |  |  | 22,326.3    |  
|Total current liabilities                                      |  |                                                            | 6,222.2     |  |      |  | 5,641.0     |      |  |  | 5,829.7     |   |  |      | 6,509.1     |   |  |  | 6,297.5     |  
|Total non-current liabilities                                  |  |                                                            | 8,790.7     |  |      |  | 9,522.9     |      |  |  | 10,151.0    |   |  |      | 10,795.6    |   |  |  | 10,808.1    |  
|                                                               |  |                                                            |             |  |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Total liabilities                                              |  |                                                            | 15,012.9    |  |      |  | 15,163.9    |      |  |  | 15,980.7    |   |  |      | 17,304.7    |   |  |  | 17,105.6    |  
|Issued capital                                                 |  |                                                            | 3,149.6     |  |      |  | 2,545.7     |      |  |  | 2,545.7     |   |  |      | 2,389.4     |   |  |  | 1,501.0     |  
|Net equity attributable to the parent companys equity holders |  |                                                            | 4,096.7     |  |      |  | 2,856.5     |      |  |  | 4,401.9     |   |  |      | 5,238.8     |   |  |  | 5,112.1     |  
|Non-controlling interest                                       |  |                                                            | 88.6        |  |      |  | 81.0        |      |  |  | 101.8       |   |  |      | 87.7        |   |  |  | 108.6       |  
|                                                               |  |                                                            |             |  |      |  |             |      |  |  |             |   |  |      |             |   |  |  |             |  
|Total net equity                                               |  |                                                            | 4,185.3     |  |      |  | 2,937.5     |      |  |  | 4,503.7     |   |  |      | 5,326.5     |   |  |  | 5,220.7     |  
|Shares Outstanding                                             |  |                                                            | 606,407,693 |  |      |  | 545,547,819 |      |  |  | 545,547,819 |   |  |      | 535,243,229 |   |  |  | 479,107,860 |  



|(1) | For more information on the affiliates included in this consolidated information, see Note 1 to our audited consolidated financial statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The addition of the items may differ from the total amount due to rounding.
|--- | ---------------------------------------------------------------------------

|(3) | Other operating income included in this Statement of Income Data is equivalent to the sum of income derived from Colation and Loyalty Program, Tours, Duty free, aircraft leasing, Maintenance, customs and warehousing
operations, and other miscellaneous income. For more information, see Note 28 to our audited consolidated financial statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(*)Law No. 20,780 issued on September 29, 2014, introduced modifications to the income tax system in Chile and other tax matters. On
October 17, 2014 the Chilean Superintendence of Securities and Insurance (the SVS) issued Circular No. 856, which established that the effects of the change in the income tax rates on deferred tax assets and liabilities must be
recognized directly on the Balance Sheet within Retained earnings instead of on the Income Statement as required by IAS 12. In order to comply with IAS 12, the financial statements in this document for the period ended December 31,
2014 are different from those presented to the SVS as the modifications introduced by Law No. 20,780 have been recognized within the income statement. For more information on the reconciliation of such differences see Note 2.1 and Note
18 to our audited consolidated financial statements.

The table below presents LATAMs unaudited operating data as of and for the
year ended December 31, 2012 (which includes TAMs data since June 23, 2012), and as of and for the years ended December 31, 2013, December 31, 2014, December 31, 2015 and December 31, 2016. LATAM believes this
operating data is useful in reporting the operating performance of its business and may be used by certain investors in evaluating companies operating in the global air transportation sector. However, these measures may differ from similarly titled
measures reported by other companies, and should not be considered in isolation or as a substitute for measures of performance in accordance with IFRS. This unaudited operating data is not included in or derived from LATAMs financial
statements.



6



---

##### Table of Contents

|                         |  |                                           |           |  |      |  |           |      |  |  |           |  |  |      |           |  |  |  |           | 
|------------------------ |  | ----------------------------------------- | --------- |  | ---- |  | --------- | ---- |  |  | --------- |  |  | ---- | --------- |  |  |  | --------- | 
|                         |  | For the year ended and as of December 31, |          
|                         |  | 2016                                      |           |  | 2015 |  |           | 2014 |  |  | 2013      |  |  | 2012 |          
|Operating Data:          |  |                                           |           |  |      |  |           |      |  |  |           |  |  |      |           |  |  |  |           | 
|ASKs (million)           |  |                                           | 134,967.7 |  |      |  | 134,167.1 |      |  |  | 130,200.9 |  |  |      | 131,690.9 |  |  |  | 132,186.0 | 
|RPKs (million)           |  |                                           | 113,626.9 |  |      |  | 111,509.9 |      |  |  | 108,534.0 |  |  |      | 106,466.5 |  |  |  | 103,886.1 | 
|ATKs (million)           |  |                                           | 6,704.1   |  |      |  | 7,082.8   |      |  |  | 7,219.7   |  |  |      | 7,651.9   |  |  |  | 7,645.9   | 
|RTKs (million)           |  |                                           | 3,465.9   |  |      |  | 3,797.0   |      |  |  | 4,317.2   |  |  |      | 4,466.7   |  |  |  | 4,488.3   | 
|ASK Equivalent (million) |  |                                           | 205,537.5 |  |      |  | 208,722.5 |      |  |  | 206,197.9 |  |  |      | 212,237.0 |  |  |  | 212,669.6 | 

Dividend Policy

In accordance with the Ley sobre Sociedades Anónimas No.18,046 (Chilean Corporation Act) and
Reglamento de Sociedades Anónimas(Regulation to the Chilean Corporation Act) (collectively, the Chilean Corporation Law), we must pay annual cash dividends equal to at least 30.0% of our annual consolidated net
income for the prior year, subject to limited exceptions. LATAM Airlines Groups board of directors has the authority to declare interim dividends. Year-end dividends, if any, are declared by our
shareholders at our annual meeting. For a description of our dividend policy, see Item 8. Financial InformationConsolidated Financial Statements and Other Financial InformationDividend Policy and Item 10. Additional
InformationDividend and Liquidation Rights. LATAM did not pay dividends in 2014, 2015 or 2016. Dividend reserves of US$20,766,199 have been set aside in 2016, to be paid in 2017.

We declare cash dividends in U.S. dollars, but make dividend payments in Chilean pesos, converted from U.S. dollars at the observed exchange
rate two business days prior to the day we first make payment to shareholders. Payments of cash dividends to holders of ADSs, if any, are made in Chilean pesos to the custodian, which converts those Chilean pesos into U.S. dollars and delivers U.S.
dollars to the depositary for distribution to holders. The amount of U.S. dollars distributed to holders of ADSs may be adversely affected by a devaluation of the Chilean currency that may occur before such dividends are converted and remitted.

Chilean Peso Exchange Rates

The
following table sets forth, for the periods indicated, the high, low, average and period-end observed exchange rate for the purchase of U.S. dollars, expressed in Chilean pesos per U.S. dollar. The rates have
not been restated in constant currency units. On February 28, 2017 the observed exchange rate was Ch$645.19 = US$1.00.



|                        |  |                              |        |  |     |  |        |            |  |  |            |  |  |  |        | 
|----------------------- |  | ---------------------------- | ------ |  | --- |  | ------ | ---------- |  |  | ---------- |  |  |  | ------ | 
|                        |  | Daily Observed Exchange Rate |       
|Year Ended December 31, |  | High                         |        |  | Low |  |        | Average(1) |  |  | Period-End | 
|                        |  | Ch$ per US$                  |       
|2012                    |  |                              | 519.69 |  |     |  | 469.65 |            |  |  | 486.75     |  |  |  | 478.60 | 
|2013                    |  |                              | 533.95 |  |     |  | 466.50 |            |  |  | 495.00     |  |  |  | 523.76 | 
|2014                    |  |                              | 621.41 |  |     |  | 524.61 |            |  |  | 570.01     |  |  |  | 607.38 | 
|2015                    |  |                              | 715.66 |  |     |  | 597.10 |            |  |  | 654.25     |  |  |  | 707.34 | 
|2016                    |  |                              | 730.31 |  |     |  | 645.22 |            |  |  | 676.83     |  |  |  | 669.47 | 
|2016                    |  |                              |        |  |     |  |        |            |  |  |            |  |  |  |        | 
|October                 |  |                              | 670.88 |  |     |  | 651.65 |            |  |  | 663.92     |  |  |  | 651.65 | 
|November                |  |                              | 679.24 |  |     |  | 650.72 |            |  |  | 666.12     |  |  |  | 675.48 | 
|December                |  |                              | 677.11 |  |     |  | 649.40 |            |  |  | 667.17     |  |  |  | 669.47 | 
|2017                    |  |                              |        |  |     |  |        |            |  |  |            |  |  |  |        | 



7



---

##### Table of Contents

|                        |  |                              |        |  |     |  |        |            |  |  |            |  |  |  |        | 
|----------------------- |  | ---------------------------- | ------ |  | --- |  | ------ | ---------- |  |  | ---------- |  |  |  | ------ | 
|                        |  | Daily Observed Exchange Rate |       
|Year Ended December 31, |  | High                         |        |  | Low |  |        | Average(1) |  |  | Period-End | 
|                        |  | Ch$ per US$                  |       
|January                 |  |                              | 673.36 |  |     |  | 648.31 |            |  |  | 661.19     |  |  |  | 648.87 | 
|February                |  |                              | 646.97 |  |     |  | 638.35 |            |  |  | 643.21     |  |  |  | 645.19 | 



Source: Central Bank of Chile

|(1) | For each year, the average daily exchange rates for the relevant year. For each month, the average daily exchange rate for the relevant month.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

B. Capitalization and Indebtedness

Not
applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

The following important factors, and those important factors described in other reports we submit to or file with the Securities and Exchange
Commission (SEC), could affect our actual results and could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. In particular, as we are a non-U.S. company, there are risks associated with investing in our ADSs that are not typical for investments in the shares of U.S. companies. Prior to making an investment decision, you should carefully consider all
of the information contained in this document, including the following risk factors.

Risk Factors Relating to our Company

LATAM does not control the voting shares or board of directors of TAM

Due to Brazilian law restrictions on foreign ownership of Brazilian airlines, LATAM does not control the voting shares or board of directors of
TAM. As of February 28, 2017, the ownership structure of TAM is as follows:



| |  | Holdco I owns 100% of the TAM common shares previously outstanding;
| | - | -------------------------------------------------------------------



| |  | the Amaro family (the Amaro Group) own approximately 51% of the outstanding Holdco I voting shares through TEP Chile (a Chilean entity wholly owned by the TAM Controlling Shareholders) and LAN owns the
remainder of the voting shares;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | LATAM owns 100% of the outstanding Holdco I non-voting shares, entitling it to substantially all of the economic rights in respect of the TAM common shares held by Holdco I; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | LATAM owns 100% of the TAM preferred shares previously outstanding.
| | - | -------------------------------------------------------------------

As a result of this
ownership structure:



| |  | The Amaro Group Controlling Shareholders retain voting and board control of TAM and each subsidiary of TAM; and
| | - | ---------------------------------------------------------------------------------------------------------------



| |  | LATAM is entitled to substantially all of the economic rights in TAM.
| | - | ---------------------------------------------------------------------

LATAM Airlines Group
and TEP Chile and other parties have entered into shareholders agreements that establish agreements and restrictions relating to corporate governance with respect to TAM. Certain specified actions require supermajority approval, which in turn
means they require the prior approval of both LATAM and TEP Chile. Examples of actions requiring supermajority approval by the board of directors of Holdco I or TAM include, among others, entering into acquisitions or business collaborations,
amending or approving budgets, business plans, financial statements and accounting policies, incurring indebtedness, encumbering assets, entering into certain agreements, making certain investments, modifying rights or claims, entering into
settlements, appointing executives, creating security interests, issuing, redeeming or repurchasing securities and voting on matters as a shareholder of affiliates



8



---

##### Table of Contents

of TAM. Actions requiring supermajority shareholder approval of Holdco I or TAM include, among others, certain changes to the by-laws of Holdco I, TAM or
TAMs affiliates or any dissolution/liquidation, corporate reorganization, payment of dividends, issuance of securities, disposal or encumbrance of certain assets, creation of security interests or entering into guarantees and agreements with
related parties. For more information on the shareholders agreements, see Item 7. Controlling Shareholders and Related Party TransactionsShareholders Agreements.

Our assets include a significant amount of goodwill.

Our assets included US$2,710.4 million of goodwill as of December 31, 2016, US$2,582.5 million of which results from the
combination of LAN and TAM. Under IFRS, goodwill is subject to an annual impairment test and may be required to be tested more frequently if events or circumstances indicate a potential impairment. In 2016, mainly as a result of the appreciation of
the Brazilian real against the U.S. dollar, the value of our goodwill increased by 18.8% as compared with 2015. Any impairment could result in the recognition of a significant charge to earnings in our statement of income, which could materially and
adversely impact our consolidated results for the period in which the impairment occurs.

A failure to successfully implement our
strategy or a failure adjusting the strategy to the current economic situation would harm our business and the market value of our ADSs and common shares.

We have developed a strategic plan with the goal of becoming one of the best airlines in the world and renewing our commitment to sustained
profitability and superior returns to shareholders. Our strategy requires us to identify value propositions that are attractive to our clients, to find efficiencies in our daily operations, and to transform ourselves into a stronger and more
risk-resilient company. A tenet of our strategic plan is the adoption of a new travel model for domestic services in the six countries where we have domestic operations to address the changing dynamics of customers and the industry, and to increase
our competitiveness. The new travel model is based on a continued reduction in air fares that makes air travel accessible to a wider audience, and in particular to those wish to fly more frequently. This model requires continued cost reduction
efforts, and in order to achieve this the Company is implementing a series of initiatives to reduce cost per ASK in all its domestic operations.

Difficulties in implementing our strategy may adversely affect our business, results of operation and the market value of our ADSs and common
shares.

A failure to successfully transfer the value proposition of the LAN and TAM brands to a new single brand, may adversely affect
our business and the market value of our ADSs and common shares.

Following the combination in 2012, LAN and TAM continued to operate
with their original brands. During 2016, we began the transition of LAN and TAM into a single brand. LAN and TAM had different value propositions, and there can be no assurances that we will be able to fully transfer the value of the original LAN
and TAM brands to our new single brand LATAM. Difficulties in implementing our single brand may prevent us from consolidating as a customer preferred carrier and may adversely affect our business and results of operations and the market
value of our ADSs and common shares.

It may take time to combine the frequent flyer programs of LAN and TAM.

We have integrated the separate frequent flyer programs of LAN and TAM so that passengers can use frequent flyer miles earned with either LAN
or TAM interchangeably. During 2016, LAN and TAM announced their revamped frequent flyer programs, which have new names: LATAM Pass and LATAM Fidelidade, respectively. The change is part of the process of consolidating the airline groups new
brand identity (LATAM) and the evolution of the programs, which enhances existing benefits and introduces new benefits for program members. However, there is no guarantee that full integration of the two plans will be completed in the near term or
at all. Even if the integration occurs, the successful integration of these programs will involve some time and expense. Moreover, during 2016, LATAM Pass and LATAM Fidelidade approved changes in their mileage earning policy which may impact the
attractiveness of the programs to passengers. Until we effectively combine these programs, passengers may prefer frequent flyer programs offered by other airlines, which may adversely affect our business.

Our financial results are exposed to foreign currency fluctuations.

We prepare and present our consolidated financial statements in U.S. dollars. LATAM and its affiliates operate in numerous countries and face
the risk of variation in foreign currency exchange rates against the U.S. dollar or between the currencies of these various countries. Changes in the exchange rate between the U.S. dollar and the currencies in the countries in which we operate could
adversely affect our business, financial condition and results of operations.. If the value of the Brazilian real, Chilean peso or other currencies in which revenues are denominated declines against the U.S. dollar, our results of operations and
financial condition will be affected. The exchange rate of the Chilean peso, Brazilian real and other currencies against the U.S. dollar may fluctuate significantly in the future.



9



---

##### Table of Contents

Changes in Chilean, Brazilian and other governmental economic policies affecting foreign exchange
rates could also adversely affect our business, financial condition, results of operations and the return to our shareholders on their common shares or ADSs.

We depend on strategic alliances or commercial relationships in many of the countries in which we operate, and our business may suffer if any of our
strategic alliances or commercial relationships terminates.

We maintain a number of alliances and other commercial relationships in
many of the jurisdictions in which LATAM and its affiliates operate. These alliances or commercial relationships allow us to enhance our network and, in some cases, to offer our customers services that we could not otherwise offer. If any of our
strategic alliances or commercial relationships, deteriorates, or any of these agreements are terminated, our business, financial condition and results of operations could be adversely affected.

Our business and results of operations may suffer if we fail to obtain and maintain routes, suitable airport access, slots and other operating permits.

Our business depends upon our access to key routes and airports. Bilateral aviation agreements between countries, open skies laws and
local aviation approvals frequently involve political and other considerations outside of our control. Our operations could be constrained by any delay or inability to gain access to key routes or airports, including:



| |  | limitations on our ability to process more passengers;
| | - | ------------------------------------------------------



| |  | the imposition of flight capacity restrictions;
| | - | -----------------------------------------------



| |  | the inability to secure or maintain route rights in local markets or under bilateral agreements; or
| | - | ---------------------------------------------------------------------------------------------------



| |  | the inability to maintain our existing slots and obtain additional slots.
| | - | -------------------------------------------------------------------------

We operate numerous
international routes, subject to bilateral agreements, and also internal flights within Chile, Peru, Brazil, Argentina, Ecuador, Colombia and other countries, subject to local route and airport access approvals. See Item 4. Information on the
CompanyB. Business OverviewRegulation.

There can be no assurance that existing bilateral agreements with the countries
in which our companies are based and permits from foreign governments will continue. A modification, suspension or revocation of one or more bilateral agreements could have a material adverse effect on our business, financial condition and results
of operations. The suspension of our permission to operate in certain airports, destinations or slots, or the imposition of other sanctions could also have a material adverse effect. A change in the administration of current laws and regulations or
the adoption of new laws and regulations in any of the countries in which we operate that restrict our route, airport or other access may have a material adverse effect on our business, financial condition and results of operations.

A significant portion of our cargo revenue comes from relatively few product types and may be impacted by events affecting their production, trade or
demand.

Our cargo demand, especially from Latin American exporters, is concentrated in a small number of product categories, such as
exports of fish, sea products and fruits from Chile, and asparagus from Peru, and exports of fresh flowers from Ecuador and Colombia. Events that adversely affect the production, trade or demand for these goods may adversely affect the volume of
goods that we transport and may have a significant impact on our results of operations. Some of our cargo products are sensitive to foreign exchange rates and, therefore, traffic volumes could be impacted by the appreciation or depreciation of local
currencies.

Our operations are subject to fluctuations in the supply and cost of jet fuel, which could adversely impact our business.

Higher jet fuel prices could have a materially adverse effect on our business, financial condition and results of operations. Jet fuel costs
have historically accounted for a significant amount of our operating expenses, and accounted for 23.0% of our operating expenses in 2016. Both the cost and availability of fuel are subject to many economic and political factors and events that we
can neither control nor predict. We have entered into fuel hedging arrangements, but there can be no assurance that such arrangements will be adequate to protect us from an increase in fuel prices in the near future or in the long term. Also, while
these hedging arrangements are designed to limit the effect of an increase in fuel prices, our hedging methods may also limit our ability to take advantage of any decrease in fuel prices, as was the case in 2015 and, to a lesser extent, in
2016. Although we have implemented measures to pass a portion of incremental fuel costs to our customers, our ability to lessen the impact of any increase in fuel costs using these types of mechanisms may be limited.

We rely on maintaining a high aircraft utilization rate to increase our revenues and absorb our fixed costs, which makes us especially vulnerable to
delays.

A key element of our strategy is to maintain a high daily aircraft utilization rate, which measures the number of flight hours
we use our aircraft per day. High daily aircraft utilization allows us to maximize the amount of revenue we generate from our aircraft and



10



---

##### Table of Contents

absorb the fixed costs associated with our fleet and is achieved, in part, by reducing turnaround times at airports and developing schedules that enable us to increase the average hours flown per
day. Our rate of aircraft utilization could be adversely affected by a number of different factors that are beyond our control, including air traffic and airport congestion, adverse weather conditions, unanticipated maintenance and delays by
third-party service providers relating to matters such as fueling and ground handling. If an aircraft falls behind schedule, the resulting delays could cause a disruption in our operating performance.

We fly and depend upon Airbus and Boeing aircraft, and our business could suffer if we do not receive timely deliveries of aircraft, if aircraft from these
companies becomes unavailable or if the public negatively perceives our aircraft.

As our fleet has grown, our reliance on Airbus and
Boeing has also grown. As of December 31, 2016, LATAM Airlines Group has a fleet of 250 Airbus and 82 Boeing aircraft. Risks relating to Airbus and Boeing include:



| |  | our failure or inability to obtain Airbus or Boeing aircraft, parts or related support services on a timely basis because of high demand or other factors;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the interruption of fleet service as a result of unscheduled or unanticipated maintenance requirements for these aircraft;
| | - | --------------------------------------------------------------------------------------------------------------------------



| |  | the issuance by the Chilean or other aviation authorities of other directives restricting or prohibiting the use of our Airbus or Boeing aircraft, or requiring time-consuming inspections and maintenance;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | adverse public perception of a manufacturer as a result of an accident or other negative publicity; or
| | - | ------------------------------------------------------------------------------------------------------



| |  | delays between the time we realize the need for new aircraft and the time it takes us to arrange for Airbus and Boeing or for a third-party provider to deliver this aircraft.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The occurrence of any one or more of these factors could restrict our ability to use aircraft to generate profits, respond to increased
demands, or could otherwise limit our operations and adversely affect our business.

If we are unable to incorporate leased aircraft into our fleet at
acceptable rates and terms in the future, our business could be adversely affected.

A large portion of our aircraft fleet is subject
to long-term operating leases. Our operating leases typically run from three to 12 years from the date of delivery. We may face more competition for, or a limited supply of, leased aircraft, making it difficult for us to negotiate on competitive
terms upon expiration of our current operating leases or to lease additional capacity required for our targeted level of operations. If we are forced to pay higher lease rates in the future to maintain our capacity and the number of aircraft in our
fleet, our profitability could be adversely affected.

Our business may be adversely affected if we are unable to service our debt or meet our future
financing requirements.

We have a high degree of debt and payment obligations under our aircraft operating leases and financial debt
arrangements. We require significant amounts of financing to meet our aircraft capital requirements and may require additional financing to fund our other business needs. We cannot guarantee that we will have access to or be able to arrange for
financing in the future on favorable terms. Following the combination of LAN and TAM, Fitch Ratings Inc. and Standard and Poors downgraded LATAM Airlines Group S.A.s credit rating to levels that are below investment grade. Any further
securities rating agencies downgrades could increase our financing costs. Higher financing costs could affect our ability to expand or renew our fleet, which in turn could adversely affect our business.

In addition, the majority of our property and equipment is subject to liens securing our indebtedness. In the event that we fail to make
payments on secured indebtedness, creditors enforcement of liens could limit or end our ability to use the affected property and equipment to fulfill our operational needs and thus generate revenue.

Moreover, external conditions in the financial and credit markets may limit the availability of funding at particular times or increase its
costs, which could adversely affect our profitability, our competitive position and result in lower net interest margins, earnings and cash flows, as well as lower returns on shareholders equity and invested capital. Factors that may affect
the availability of funding or cause an increase in our funding costs include global macro-economic crises, reduction of our credit rating, and other potential market disruptions.

We have significant exposure to LIBOR and other floating interest rates; increases in interest rates will increase our financing costs and may have adverse
effects on our financial condition and results of operations.

We are exposed to the risk of interest rate variations, principally in
relation to the U.S. dollar London Interbank Offer Rate (LIBOR). Many of our operating and financial leases are denominated in U.S. dollars and bear interest at a floating rate. 36.9% of our outstanding consolidated debt as of
December 31, 2016 bears interest at a floating rate after giving effect to interest rate hedging agreements. Volatility in LIBOR or other reference rates could increase our periodic interest and lease payments and have an adverse effect on our
total financing costs. We may be unable to adequately adjust our prices to offset any increased financing costs, which would have an adverse effect on our revenues and our results of operations.



11



---

##### Table of Contents

Increases in insurance costs and/or significant reductions in coverage could harm our financial condition and
results of operations.

Major events affecting the aviation insurance industry (such as terrorist attacks, hijackings or airline
crashes) may result in significant increases of airlines insurance premiums or in significant decreases of insurance coverage, as occurred after the September 11, 2001 terrorist attacks. Increases in insurance costs and/or significant
reductions in coverage could harm our financial condition and results of operations and increases the risk that we experience uncovered losses.

Problems with air traffic control systems or other technical failures could interrupt our operations and have a material adverse effect on our business.

Our operations, including our ability to deliver customer service, are dependent on the effective operation of our equipment,
including our aircraft, maintenance systems and reservation systems. Our operations are also dependent on the effective operation of domestic and international air traffic control systems and the air traffic control infrastructure by the
corresponding authorities in the markets in which we operate. Equipment failures, personnel shortages, air traffic control problems and other factors that could interrupt operations could adversely affect our operations and financial results as well
as our reputation.

We depend on a limited number of suppliers for certain aircraft and engine parts.

We depend on a limited number of suppliers for aircraft, aircraft engines and many aircraft and engine parts. As a result, we are vulnerable to
any problems associated with the supply of those aircraft, parts and engines, including design defects, mechanical problems, contractual performance by the suppliers, or adverse perception by the public that would result in customer avoidance or in
actions by the aviation authorities resulting in an inability to operate our aircraft.

Our business relies extensively on third-party service
providers. Failure of these parties to perform as expected, or interruptions in our relationships with these providers or their provision of services to us, could have an adverse effect on our financial position and results of operations.

We have engaged a significant number of third-party service providers to perform a large number of functions that are integral to our business,
including regional operations, operation of customer service call centers, distribution and sale of airline seat inventory, provision of information technology infrastructure and services, provision of aircraft maintenance and repairs, catering,
ground services, and provision of various utilities and performance of aircraft fueling operations, among other vital functions and services. We do not directly control these third-party service providers, although we do enter into agreements with
many of them that define expected service performance. Any of these third-party service providers, however, may materially fail to meet their service performance commitments, may suffer disruptions to their systems that could impact their services,
or the agreements with such providers may be terminated. For example, flight reservations booked by customers and/or travel agencies via third-party GDSs (Global Distribution Systems) may be adversely affected by disruptions in our business
relationships with GDS operators. Such disruptions, including a failure to agree upon acceptable contract terms when contracts expire or otherwise become subject to renegotiation, may cause the carriers flight information to be limited or
unavailable for display, significantly increase fees for both us and GDS users, and impair our relationships with customers and travel agencies. The failure of any of our third-party service providers to adequately perform their service obligations,
or other interruptions of services, may reduce our revenues and increase our expenses or prevent us from operating our flights and providing other services to our customers. In addition, our business, financial performance and reputation could
be materially harmed if our customers believe that our services are unreliable or unsatisfactory.

Disruptions or security breaches of our information
technology infrastructure or systems could interfere with our operations, compromise passenger or employee information, and expose us to liability, possibly causing our business and reputation to suffer.

A serious internal technology error or failure impacting systems hosted internally at our data centers or externally at third-party locations,
or large-scale interruption in technology infrastructure we depend on, such as power, telecommunications or the internet, may disrupt our technology network with potential impacton our operations. Our technology systems and related data may
also be vulnerable to a variety of sources of interruption, including natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers and other security issues. While we have in place, and continue to invest in,
technology security initiatives and disaster recovery plans, these measures may not be adequate or implemented properly so as to prevent a business disruption and its adverse financial and reputational consequences to our business.

In addition, as a part of our ordinary business operations, we collect and store sensitive data, including personal information of our
passengers and employees and information of our business partners. The secure operation of the networks and systems on which this type of information is stored, processed and maintained is critical to our business operations and strategy.
Unauthorized parties may attempt to gain access to our systems or information through fraud or deception. Hardware or software we develop or acquire



12



---

##### Table of Contents

may contain defects that could unexpectedly compromise information security. The compromise of our technology systems resulting in the loss, disclosure, misappropriation of, or access to,
customers, employees or business partners information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disruption to our operations and damage
to our reputation, any or all of which could adversely affect our business.

Increases in our labor costs, which constitute a substantial portion of
our total operating expenses, could directly impact our earnings.

Labor costs constitute a significant percentage of our total
operating expenses (21.8% in 2016) and at times in our operating history we have experienced pressure to increase wages and benefits for our employees. A significant increase in our labor costs could result in a material reduction in our earnings.

Our business may experience adverse consequences if we are unable to reach satisfactory collective bargaining agreements with our unionized employees.

As of December 31, 2016, approximately 72.9% of our employees, including administrative personnel, cabin crew, flight attendants,
pilots and maintenance technicians are members of unions and have contracts and collective bargaining agreements which expire on a regular basis. Our business, financial condition and results of operations could be materially adversely affected by a
failure to reach agreement with any labor union representing such employees or by an agreement with a labor union that contains terms that are not in line with our expectations or that prevent us from competing effectively with other airlines.

Collective action by employees could cause operating disruptions and adversely impact our business.

Certain employee groups such as pilots, flight attendants, mechanics and our airport personnel have highly specialized skills. As a
consequence, actions by these groups, such as strikes, walk-outs or stoppages, could severely disrupt our operations and adversely impact our operating and financial performance, as well as our image.

We may experience difficulty finding, training and retaining employees.

Our business is labor intensive. We employ a large number of pilots, flight attendants, maintenance technicians and other operating and
administrative personnel. The airline industry has, from time to time, experienced a shortage of qualified personnel, especially pilots and maintenance technicians. In addition, as is common with most of our competitors, we may, from time to time,
face considerable turnover of our employees. Should the turnover of employees, particularly pilots and maintenance technicians, sharply increase, our training costs will be significantly higher. A failure to recruit, train and retain qualified
employees at a reasonable cost could materially adversely affect our business, financial condition and results of operations.

Risks Related to the
Airline Industry and the Countries in Which We Operate

Our performance is heavily dependent on economic conditions in the countries in which we do
business. Negative economic conditions in those countries could adversely impact our business and results of operations and cause the market price of our common shares and ADSs to decrease.

Passenger and cargo demand is heavily cyclical and highly dependent on global and local economic growth, economic expectations and foreign
exchange rate variations, among other things. In the past, our business has been adversely affected by global economic recessionary conditions, weak economic growth in Chile, recession in Brazil and Argentina and poor economic performance in certain
emerging market countries in which we operate. The occurrence of similar events in the future could adversely affect our business. We plan to continue to expand our operations based in Latin America and our performance will, therefore, continue to
depend heavily on economic conditions in the region.

Any of the following factors could adversely affect our business, financial
condition and results of operations in the countries in which we operate:



| |  | changes in economic or other governmental policies;
| | - | ---------------------------------------------------



| |  | weak economic performance, including, but not limited to, low economic growth, low consumption and/or investment rates, and increased inflation rates; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | other political or economic developments over which we have no control.
| | - | -----------------------------------------------------------------------

No assurance can be
given that capacity reductions or other steps we may take in response to weakened demand will be adequate to offset any future reduction in our cargo and/or air travel demand in Brazil or in other markets in which we operate. Sustained weakened
demand may adversely impact our revenues, results of operations or financial condition.



13



---

##### Table of Contents

We are exposed to increases in landing fees and other airport service charges that could adversely affect our
margin and competitive position.

Airlines must pay fees to airport operators for the use of airport facilities. Passenger taxes and
airport charges have increased substantially in recent years. We cannot assure you that the airports in which we operate will not increase or maintain high passenger taxes and service charges in the future. Any substantial increase in airport
charges could have a material adverse impact on our results of operations. In addition, any increase in passenger taxes could negatively impact demand for air travel and affect our results.

Our business is highly regulated and changes in the regulatory environment in which we operate may adversely affect our business and results of operations.

Our business is highly regulated and depends substantially upon the regulatory environment in the countries in which we operate or
intend to operate. For example, price controls on fares may limit our ability to effectively apply customer segmentation profit maximization techniques (passenger revenue management) and adjust prices to reflect cost pressures. High
levels of government regulation may limit the scope of our operations and our growth plans. The possible failure of aviation authorities to maintain the required governmental authorizations or our failure to comply with applicable regulations, may
adversely affect our business and results of operations.

Losses and liabilities in the event of an accident involving one or more of our aircraft
could materially affect our business.

We are exposed to potential catastrophic losses in the event of an aircraft accident, terrorist
incident or any other similar event. There can be no assurance that, as a result of an aircraft accident or significant incident:



| |  | we will not need to increase our insurance coverage;
| | - | ----------------------------------------------------



| |  | our insurance premiums will not increase significantly;
| | - | -------------------------------------------------------



| |  | our insurance coverage will fully cover all of our liability; or
| | - | ----------------------------------------------------------------



| |  | we will not be forced to bear substantial losses.
| | - | -------------------------------------------------

Substantial claims resulting from an
accident or significant incident in excess of our related insurance coverage could have a material adverse effect on our business, financial condition and results of operations. Moreover, any aircraft accident, even if fully insured, could cause the
negative public perception that our aircraft are less safe or reliable than those operated by other airlines, which could have a material adverse effect on our business, financial condition and results of operations.

Insurance premiums may also increase due to an accident or incident affecting one of our alliance partners or other airlines.

High levels of competition in the airline industry may adversely affect our level of operations.

Our business, financial condition and results of operations could be adversely affected by high levels of competition within the industry,
particularly the entrance of new competitors into the markets in which we operate. Airlines compete primarily over fare levels, frequency and dependability of service, brand recognition, passenger amenities (such as frequent flyer programs) and the
availability and convenience of other passenger or cargo services. New and existing airlines (and companies providing ground cargo or passenger transportation) could enter our markets and compete with us on any of these bases, including by offering
lower prices, more attractive services or increasing their route offerings in an effort to gain greater market share.

Some of our competitors may
receive external support, which could adversely impact our competitive position.

Some of our competitors may receive support from
external sources, such as their national governments, which may be unavailable to us. Support may include, among others, subsidies, financial aid or tax waivers. This support could place us at a competitive disadvantage and adversely affect our
operations and financial performance.

Our operations are subject to local, national and international environmental regulations; costs of compliance
with applicable regulations, or the consequences of noncompliance, could adversely affect our results, our business or our reputation.

Our operations are covered by environmental regulations at local, national and international levels. These regulations cover, among other
things, emissions to the atmosphere, disposal of solid waste and aqueous effluents, aircraft noise and other activities incident to our business. Future operations and financial results may vary as a result of such regulations. Compliance with these
regulations and new or existing regulations that may be applicable to us in the future could increase our cost base and adversely affect our operations and financial results. In addition, failure to comply with these regulations could adversely
affect us in a variety of ways, including adverse effects on our reputation.



14



---

##### Table of Contents

In 2016, the ICAO adopted a resolution creating the Carbon Offsetting and Reduction Scheme for
International Aviation (CORSIA), providing a framework for a global market-based measure to stabilize carbon dioxide (CO2) emissions in international civil aviation (i.e., civil aviation flights that depart in one country and arrive in a
different country). The CORSIA will be implemented in phases, starting with the participation of ICAO member states on a voluntary basis during a pilot phase (from 2021 through 2023), followed by a first phase (from 2024 through 2026) and a second
phase (from 2027). Currently, CORSIA focuses on defining standards for monitoring, reporting and verification of emissions from air operators, as well as on defining steps to offset CO2 emissions after 2020. To the extent most of the countries in
which we operate continue to be ICAO member states, in the future we may be affected by regulations adopted pursuant to the CORSIA framework.

The proliferation of national regulations and taxes on CO2 emissions in the countries that we have domestic operations, including recent
enviromental regulations that the airline industry is facing in Colombia, may also affect our costs of operations and our margins.

Our business may be
adversely affected by a downturn in the airline industry caused by exogenous events that affect travel behavior or increase costs, such as outbreak of disease, weather conditions and natural disasters, war or terrorist attacks.

Demand for air transportation may be adversely impacted by exogenous events, such as adverse weather conditions and natural disasters,
epidemics (such as Ebola and Zika), terrorist attacks, war or political and social instability. Situations such as these in one or more of the markets in which we operate could have a material impact on our business, financial condition and results
of operations. Furthermore, these types of situations could have a prolonged effect on air transportation demand and on certain cost items.

Revenues for airlines depend on the number of passengers carried, the fare paid by each passenger and service factors, such as the timeliness
of flight departures and arrivals. During periods of fog, ice, low temperatures, storms or other adverse weather conditions, some or all of our flights may be cancelled or significantly delayed, reducing our revenues. In addition, fuel prices and
supplies, which constitute a significant cost for us, may increase as a result of any future terrorist attacks, a general increase in hostilities or a reduction in output of fuel, voluntary or otherwise, by
oil-producing countries. Such increases may result in both higher airline ticket prices and decreased demand for air travel generally, which could have an adverse effect on our revenues and results of
operations.

We are subject to risks related to litigation and administrative proceedings that could adversely affect our business and financial
performance in the event of an unfavorable ruling.

The nature of our business exposes us to litigation relating to labor, insurance
and safety matters, regulatory, tax and administrative proceedings, governmental investigations, tort claims and contract disputes. Litigation is inherently costly and unpredictable, making it difficult to accurately estimate the outcome among other
matters. Currently, as in the past, we are subject to proceedings or investigations of actual or potential litigation. Although we establish provisions as we deem necessary, the amounts that we reserve could vary significantly from any amounts we
actually pay due to the inherent uncertainties in the estimation process. We cannot assure you that these or other legal proceedings will not materially affect our business.

We are subject to anti-corruption, anti-bribery, anti-money laundering and antitrust laws and regulations in Chile, the United States and in the various
countries we operate. Violations of any such laws or regulations could have a material adverse impact on our reputation and results of operations and financial condition.

We are subject to anti-corruption, anti-bribery, anti-money laundering, antitrust and other international laws and regulations and are required
to comply with the applicable laws and regulations of Chile, Brazil, the United States and certain other jurisdictions where we operate. In addition, we are subject to economic sanctions regulations that restrict our dealings with certain
sanctioned countries, individuals and entities. There can be no assurance that our internal policies and procedures will be sufficient to prevent or detect all inappropriate practices, fraud or violations of law by our affiliates, employees,
directors, officers, partners, agents and service providers or that any such persons will not take actions in violation of our policies and procedures. Any violations by us of anti-bribery and anti-corruption laws or sanctions regulations could
have a material adverse effect on our business, reputation, results of operations and financial condition.

The Brazilian government has exercised, and
may continue to exercise, significant influence over the Brazilian economy, which may have an adverse impact on our business, financial condition and results of operations.

The Brazilian economy has been characterized by the significant involvement of the Brazilian government, which often changes monetary, credit,
fiscal and other policies to influence Brazils economy. The Brazilian governments actions to control inflation and implement other policies have involved wage and price controls, depreciation of the real, controls over remittance of
funds abroad, intervention by the Central Bank to affect base interest rates and other measures. We have no control over, and cannot predict what measures or policies the Brazilian government may take in the future.



15



---

##### Table of Contents

Risks Related to our Common Shares and ADSs

Our major shareholders may have interests that differ from those of our other shareholders.

One of our major shareholder groups, the Cueto Group (the LATAM Controlling Shareholders),which as of February 28, 2017,
beneficially owned 28.27% of our common shares, is entitled to elect three of the nine members of our board of directors and is in a position to direct our management. In addition, the LATAM Controlling Shareholders have entered into a shareholders
agreement with the Amaro Group, which as of January 31, 2017, held a 3.02% of LATAM shares through TEP Chile, in addition to the indirect stake they have through the 21.88% interest they hold in Costa Verde Aeronáutica S.A., the main
legal vehicle through which the Cueto Group holds LATAM shares), pursuant to which these two major shareholder groups have agreed to vote together to elect individuals to our board of directors in accordance with their direct and indirect
shareholder interest in LATAM. Pursuant to a shareholders agreement, the LATAM Controlling Shareholders and the Amaro Group have also agreed to use their good faith efforts to reach an agreement and act jointly on all actions to be taken by
our board of directors or shareholders meeting, and if unable to reach to such agreement, to follow the proposal made by our board of directors. Decisions by the Company that require supermajority votes under Chilean law are also subject to voting
arrangements by the LATAM Controlling Shareholders and the Amaro Group. In addition, another major shareholder, Qatar Airways Investments (UK) Ltd., which as of January 31, 2017, held
10.03%(1) of our outstanding common shares, is entitled to appoint one individual to our board of directors. The interests of our major shareholders may differ from those of our other
shareholders. See Item 7. Controlling Shareholders and Related Party TransactionsA. Major Shareholders.

Under the terms
of the deposit agreement governing the ADSs, if holders of ADSs do not provide JP Morgan Chase Bank, N.A., in its capacity as depositary for the ADSs, with timely instructions on the voting of the common shares underlying their ADRs, the depositary
will be deemed to have been instructed to give a person designated by the board of directors the discretionary right to vote those common shares. The person designated by the board of directors to exercise this discretionary voting right may have
interests that are aligned with our controlling shareholders, which may differ from those of our other shareholders. Historically, our board of directors has designated its chairman, currently Mauricio Amaro, to serve in this role.

Trading of our ADSs and common shares in the securities markets is limited and could experience further illiquidity and price volatility.

Our common shares are listed on the various Chilean stock exchanges. Chilean securities markets are substantially smaller, less liquid and more
volatile than major securities markets in the United States. In addition, Chilean securities markets may be materially affected by developments in other emerging markets, particularly other countries in Latin America. Accordingly, although you are
entitled to withdraw the common shares underlying the ADSs from the depositary at any time, your ability to sell the common shares underlying ADSs in the amount and at the price and time of your choice may be substantially limited. This limited
trading market may also increase the price volatility of the ADSs or the common shares underlying the ADSs.

Holders of ADRs may be adversely affected
by currency devaluations and foreign exchange fluctuations.

If the Chilean peso exchange rate falls relative to the U.S. dollar, the
value of the ADSs and any distributions made thereon from the depositary could be adversely affected. Cash distributions made in respect of the ADSs are received by the depositary (represented by the custodian bank in Chile) in pesos, converted by
the custodian bank into U.S. dollars at the then-prevailing exchange rate and distributed by the depositary to the holders of the ADRs evidencing those ADSs. In addition, the depositary will incur foreign currency conversion costs (to be borne by
the holders of the ADRs) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to the ADSs.

Future changes in Chilean foreign investment controls and withholding taxes could negatively affect non-Chilean
residents that invest in our shares.

Equity investments in Chile by non-Chilean residents have
been subject in the past to various exchange control regulations that govern investment repatriation and earnings thereon. Although not currently in effect, regulations of the Central Bank of Chile have in the past required, and could again require,
foreign investors acquiring securities in the secondary market in Chile to maintain a cash reserve or to pay a fee upon conversion of foreign currency to purchase such securities. Furthermore, future changes in withholding taxes could negatively
affect non-Chilean residents that invest in our shares.

We cannot assure you that additional
Chilean restrictions applicable to the holders of ADRs, the disposition of the common shares underlying ADSs or the repatriation of the proceeds from an acquisition, a disposition or a dividend payment, will not be imposed or required in the future,
nor could we make an assessment as to the duration or impact, were any such restrictions to be imposed or required. For further information, see Item 10. Additional InformationD. Exchange ControlsForeign Investment and Exchange
Controls in Chile.



|(1) | Qatar owns 9.999999918% of the total issued shares of LATAM.
|--- | ------------------------------------------------------------



16



---

##### Table of Contents

Our ADS holders may not be able to exercise preemptive rights in certain circumstances.

The Chilean Corporation Law provides that preemptive rights shall be granted to all shareholders whenever a company issues new shares for cash,
giving such holders the right to purchase a sufficient number of shares to maintain their existing ownership percentage. We will not be able to offer shares to holders of ADSs and shareholders located in the United States pursuant to the preemptive
rights granted to shareholders in connection with any future issuance of shares unless a registration statement under the U.S. Securities Act of 1933, as amended, (the Securities Act), is effective with respect to such rights and shares,
or an exemption from the registration requirements of the Securities Act is available. At the time of any rights offering, we will evaluate the potential costs and liabilities associated with any such registration statement in light of any indirect
benefit to us of enabling U.S. holders of ADRs evidencing ADSs and shareholders located in the United States to exercise preemptive rights, as well as any other factors that may be considered appropriate at that time, and we will then make a
decision as to whether we will file a registration statement. We cannot assure you that we will decide to file a registration statement or that such rights will be available to ADS holders and shareholders located in the United States.

We are not required to disclose as much information to investors as a U.S. issuer is required to disclose and, as a result, you may receive less
information about us than you would receive from a comparable U.S. company.

The corporate disclosure requirements that apply to us may
not be equivalent to the disclosure requirements that apply to a U.S. company and, as a result, you may receive less information about us than you would receive from a comparable U.S. company. We are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act. The disclosure requirements applicable to foreign issuers under the Exchange Act are more limited than the disclosure requirements applicable to U.S. issuers. Publicly available
information about issuers of securities listed on Chilean stock exchanges also provides less detail in certain respects than the information regularly published by listed companies in the United States or in certain other countries. Furthermore,
there is a lower level of regulation of the Chilean securities market and of the activities of investors in such markets as compared with the level of regulation of the securities markets in the United States and in certain other developed
countries.



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

A. HISTORY AND DEVELOPMENT OF THE COMPANY

General

LATAM Airlines Group is a
Chilean-based airline holding company formed by the combination of LAN of Chile and TAM of Brazil in 2012. Following the combination, LAN Airlines S.A. became LATAM Airlines Group S.A. and TAM continues to exist a subsidiary of LATAM.
The Company is primarily involved in the transportation of passengers and cargo and operates as one unified business enterprise. During 2016, we began the transition of LAN and TAM into a single brand: LATAM.

LATAMs airline holdings include LATAM and its affiliates in Peru, Argentina, Colombia and Ecuador, and LATAM Cargo and its affiliates
MasAir (in Mexico) and LANCO (in Colombia), as well as TAM S.A. and its affiliates TAM Linhas Aereas S.A (LATAM Airlines Brazil), TAM Transportes Aereos del Mercosur S.A., (LATAM Airlines Paraguay), LATAM Cargo and Multiplus. LATAM is a publicly
traded corporation listed in the Santiago Stock Exchange (SSE), the Valparaiso Stock Exchange, the Chilean Electronic Exchange and the New York Stock Exchange (NYSE).

LAN was founded in 1929 by the Chilean government. In 1989, the Chilean government sold 51.0% of LANs capital stock to Chilean investors
and to the Scandinavian Airlines System. In 1994, LATAMs current controlling shareholders, together with other major shareholders, acquired 98.7% of LANs stock, including the remaining shares then held by the Chilean government. In 1997,
LAN became the first Latin American airline to list its shares (which trade in the form of ADRs) on the New York Stock Exchange. Over the past decade, LATAM has significantly expanded its operations in Latin America, initiating services in Peru in
1999, Argentina in 2005, Ecuador in 2009, and in Colombia in 2010 through the acquisition of Aerovias de Integracion Regional, Aires S.A. (dba LAN Colombia), and the combination with TAM in 2012.

LATAM Airlines Brazil is one of the leading domestic and international airlines in the Brazilian market, offering flights throughout Brazil
with a strong domestic market share, international passenger services and significant cargo operations. The company was founded in 1997 (under the name CITCompanhia de Investimentos em Transportes), for the purpose of participating in,
managing and consolidating shareholdings in airlines. In 2002, its name was changed to TAM S.A. and its shares were listed on Bovespa in June 2005. From 2006 until the combination with LAN in 2012, TAM American Depositary Shares were also listed on
the New York Stock Exchange.



17



---

##### Table of Contents

Our principal executive offices are located at Presidente Riesco 5711, 20th floor, Las Condes,
Santiago, Chile and our general telephone number at this location is (56-2) 2565-2525. We have designated LATAM Airlines Group as our agent in the United States, located at 970 South Dixie Highway, Miami,
Florida 33156. Our website address is www.latamairlinesgroup.net. Information obtained on, or accessible through, this website is not incorporated by reference herein and shall not be considered part of this annual report. For more information
contact Gisela Escobar, Senior Vice President, Corporate Controller and Investor Relations, at InvestorRelations@latam.com.

Combination of LAN and TAM

On June 22, 2012, LAN and TAM successfully completed an exchange offer resulting in the combination of the two businesses and the
creation of LATAM Airlines Group.

Following the combination, on July 18, 2012, the registration of TAM as a publicly listed company
in Brazil was cancelled and TAM was delisted from Bovespa.

In order to implement this combination, the Amaro Group controlling
shareholders formed four new sociedades anónimas cerradas with limited liability under the laws of Chile: TEP Chile, Holdco I, Holdco II and Sister Holdco. After the transaction was completed, Holdco II and Sister Holdco ceased to
exist. The beneficial ownership and organizational structure of LATAM Airlines Group as of January 31, 2017 was as follows:



LOGO

Capital Expenditures

For a description of our capital expenditures, see Item 5. Operating and Financial Review and ProspectsB. Liquidity and Capital
ResourcesCapital Expenditures.

B. BUSINESS OVERVIEW

General

LATAM Airlines Group is the
largest passenger and cargo airline in South America. We are also one of the largest airline groups in the world in terms of network connections, providing passenger transport services to approximately 135 destinations in 24 countries and cargo
services to approximately 139 destinations in 29 countries, with a fleet of 332 aircraft and a set of bilateral



18



---

##### Table of Contents

alliances. In total, LATAM Airlines Group has near to 46,000 employees. LATAM Airlines Group and its affiliates currently provide domestic services in Brazil, Chile, Perú, Argentina,
Colombia and Ecuador; we also provide intra-regional and long-haul operations. The cargo affiliate carriers of LATAM in Chile, Brazil, Colombia and Mexico carry out cargo operations through the use of belly spaces on the passenger flights and
dedicated cargo operations using freight aircraft. We also offer other services, such as ground handling, courier, logistics and maintenance.

As of December 31, 2016, we provided scheduled passenger service to 16 destinations in Chile, 17 destinations in Peru, five destinations
in Ecuador, 15 destinations in Argentina, 14 destinations in Colombia, 41 destinations in Brazil, 12 destinations in other Latin American countries and the Caribbean, five destinations in North America, six destinations in Europe, three destinations
in the South Pacific and one destination in Africa. In addition, as of December 31, 2016, through our various code-sharing and interline agreements, we offer service to 84 destinations in North America, 46 destinations in Europe, 22
destinations in Australasia, 9 destinations in Asia and 4 destinations in Africa.

Competitive Strengths

Our strategy is to maintain LATAM Airlines Groups position as the leading airline in South America by leveraging our unique position in
the airline industry. LATAM Airlines Group is the only airline group in the region with a local presence in six markets, as well as intra-regional and long-haul operations. As a result, the Company has more flexibility, as well as a proven track
record of acting quickly to adapt our business to economic challenges. Moreover, LATAMs unique leadership position in a region with growth potential and the focus in our existing competitive strengths will allow us to continue building our
business model and to fuel our future growth. We believe our most important competitive strengths are:

Leader in the South America Airlines space,
with a Unique Leadership Position among Global Airlines

Through a successful regional expansion strategy, LATAM Airlines Group has
become the leading international and domestic passenger airline group in South America, as well as the largest cargo operator in Latin America. LATAM and its affiliates have domestic passenger operations in Chile, Brazil, Peru, Argentina, Colombia
and Ecuador. These six countries are among the most significant passenger markets in South America and represent approximately 96% of the domestic ASKs in the region. We are also the largest operator of intra-regional routes, connecting the main
cities in South America. Furthermore, through our significant presence in the largest hubs in South AmericaLima and São Paulowe are able to offer the best connectivity between South America and the rest of the world. In addition,
our cargo companies are the largest air cargo operators within, to and from Latin America, and particularly in Brazil.

Geographically Diversified
Revenue Base, including both Passenger and Cargo Operations

The operations of LATAM Airlines Group are highly geographically
diversified, including domestic operations in six different countries, as well as operations within South America and connecting South America with various international destinations. We believe this provides resilience to external shocks that may
occur in any particular market. Furthermore, we believe that one of our distinct competitive advantages is our ability to profitably integrate our scheduled passenger and cargo operations. We take into account potential cargo services when planning
passenger routes, and also serve certain dedicated cargo routes using our freighter aircraft when needed. By adding cargo revenues to our existing passenger service, we are able to increase the productivity of our assets and maximize revenue,
contributing to our fixed operating expenses per flight, lowering break-even load factors and enhancing per flight profitability. Additionally, this revenue diversification helps offset seasonal revenue fluctuations and reduces the volatility of our
business over time. For the year ended December 31, 2016, passenger, cargo and other revenues accounted for 82.7%, 11.7% and 5.7% of total revenues respectively.

Modern Fleet and Optimized Fleet Strategy

The average age of our fleet is approximately seven years, making it one of the most modern in Latin America and in the world. A younger fleet
makes us more cost competitive because it reduces fuel consumption and maintenance costs, and enables us to enjoy a high degree of performance reliability. In addition, a modern and fuel-efficient fleet reflects our strong commitment to the
environment as new aircraft incorporate the industrys latest technology, allowing for a substantial reduction in emissions, and also decreasing noise levels.

We select our aircraft based on their ability to effectively and efficiently serve our short- and long-haul flight needs, while still striving
to minimize the number of different aircraft types we operate.

The Companys current fleet plans envisage a short-haul fleet formed
exclusively by aircraft from the A320 family, with a focus on the A321 and A320neo. In 2016, LATAM incorporated two A320neo, a re-engined A320, becoming the first airline in Latin America to fly this model.



19



---

##### Table of Contents

For long-haul passenger flights, we operate the Boeing
767-300ER, the Boeing 787-8 and Boeing 787-9 aircraft, the Boeing 777-300ER aircraft and
the Airbus A350-900 that started operation in 2016. The Boeing 787 and Airbus A350 models allow us to achieve important savings in fuel consumption, while incorporating modern technology to deliver the best
travel experience for our passengers. In 2016, we incorporated five Boeing 787-9 and six Airbus 350-900 into our fleet.

LATAM continues to take a flexible approach to its fleet plan in order to better align it to market conditions. During 2016, we achieved a
significant reduction in our fleet commitments for the coming years, allowing us to defer capital expenditures and continue to strenghten our Balance Sheet.

Strong Brand Teamed with Key Global Strategic Alliances

In May 2016 our new brand, LATAM, was officially launched. We believe that our new brand is associated with superior service, aircraft and
technologically advanced operations, and is well recognized and respected in the markets in which we operate. In 2016, our operations in Chile, Argentina, Ecuador, Peru and Colombia were awarded the top prize as the Best Airlines in South
America by the SkyTrax World Airline Awards. These awards are considered a global barometer for customer satisfaction within the industry, thanks to their exclusive reliance on the opinion of passengers.

LAN joined the oneworld®alliance, one of the worlds leading airline alliances, in 2000. TAM (now LATAM Airlines Brazil) joined oneworld®in
2014, marking a significant milestone and completing the entry of all LATAM Airlines intooneworld®. To our passengers, this means greater convenience when traveling, since they
will have the same standard of high-quality customer service, regardless of their international destination. Our strategic global alliances and existing commercial agreements provide our customers with access to more than 1,000 destinations
worldwide, a combined reservations system, itinerary flexibility and various other benefits, which substantially enhance our competitive position within the Latin American market.

In 2016 LATAM entered into two new joint business agreements: an agreement with American Airlines and an agreement with British Airways and
Iberia. These agreements further strengthen our relationship with other oneworld® partners. Both agreements will allow LATAM to expand its network to more than 420 destinations
worldwide, operating routes from South America to the United States and Canada with American Airlines and routes from South America to Europe with British Airways and Iberia. The agreements remain subject to regulatory approval in different
countries. Some approvals have already been granted: in March, 2017, the administrative court of economic defense of the CADE (Administrative Council for Economic Defense) in Brazil, approved the agreement with British Airways and Iberia,
representing the final stage of an evaluation process that began in June 2016. During the review, the CADE evaluated the scope of the agreement in terms of free competition and the benefits that it will bring to passengers, including improved
connectivity, an expansion of the destination network and reduced prices. Both agreements have been approved in Uruguay.

Financial Flexibility

We have historically managed our business to maintain financial flexibility and a strong balance sheet, seeking to accommodate our
growth objectives while having the ability to respond to changing market conditions. Our financial flexibility has allowed us to secure large aircraft deliveries, including an important part of our current
re-fleeting program, at attractive financing rates.

Recognized Loyalty Programs

On March 1, 2016, we announced our rebranded and improved frequent flyer programs named LATAM Pass (corresponding to the previous LAN
Pass) and LATAM Fidelidade (corresponding to the former TAM Fidelidade). The change is part of the process of consolidating our new brand identity (LATAM) and the evolution of our loyalty programs.

LATAM Fidelidade and LATAM Pass together represent the leading frequent flyer programs in South America, with strong participation rates and
brand recognition by our customers. Customers in each program earn points or kilometers based on distance flown, class of ticket purchased, and elite level, as well as by using the services of outside partners in the program. In addition, in 2009
TAM launched its affiliate Multiplus, a coalition of loyalty programs, which allows members to accumulate points not just by flying with LATAM, but also by making purchases through credit cards or using services and products at partner
establishments, and allows members to redeem points for LATAM Airlines Brazil flights and other products at partner establishments.

We
believe these flexible programs are attractive to customers because they do not impose restrictions on those flights for which points can be redeemed, or the number of seats available on any particular flight to members using the loyalty program.
LATAM Pass and LATAM Fidelidade members can also accrue and redeem points for flights on other oneworld® member airlines.



20



---

##### Table of Contents

Business Strategy

Our mission is to connect people safely, with operational excellence and a personal touch, seeking to become one of the best airline groups in
the world. In order to achieve our mission, the principal areas on which we plan to focus our efforts going forward are as follows:

Continually
Strengthen Our Network

We intend to continue to strengthen our route network in South America, offering the best connectivity within
the region at competitive prices and ensuring that we are the most convenient option for our passengers. We are the only airline group in the world with a local presence in six home markets and an international and intra-regional operation. This
position is bolstered by our enhanced infrastructure in several of our key hubs, allowing us to further strengthen our network and connection. We intend to leverage our position to create a leading portfolio of services and destinations, providing
more options to our passengers and building a platform to support continued growth.

Enhance Brand Leadership and Customer Experience

We will always seek to be the preferred choice of passengers in South America. Our efforts are supported by a differentiated passenger
experience, and our leveraging of mobile digital technologies. We continue working on the implementation of our single, unified brand, culture, product and value proposition for our passengers. Additionally, we are focused on defining LATAMs
digital strategy, including applications to achieve ancillary revenues and improving the management of contingencies, so that we are able to provide information and solutions to our customers in a timely and transparent manner. We continually assess
opportunities to incorporate service improvements in order to respond effectively to our customers needs.

Improving Efficiency and Cost
Competitiveness

We are continually working to maintain a competitive cost structure and further improve our effectiveness, simplify
our organization and increase flexibility and speed in decision-making. As previously announced, LATAM is embarked on an important project to introduce a new travel model for its domestic passenger services in South America, in order to increase
competitiveness and ensure the sustainability of the domestic business model in the long term. This model requires continued cost efforts to reduce selling and distribution expenses, increase fleet utilization and operational productivity and
simplify back-office and support functions, while controlling fixed costs.

Organizational Strength

We aspire to be a group of passionate people, working in a simple and aligned manner, with inspiring leaders making agile decisions. This will
allow us to deliver a distinctive value proposition to our customers, surpass our competitors consistently and operate sustainably for the long term.

Proactive Risk Management

We strive to
have a holistic and responsible view of risk in decision-making. We put special focus on risks that have high potential impact and low probability of occurrence, which could significantly affect LATAMs strategic objectives.



21



---

##### Table of Contents

Airline Operations and Route Network

The following tables sets forth our operating revenues by activity and point of sale for the periods indicated:



|                                       |  |                         |         |  |      |  |         |      |  |  |          | 
|-------------------------------------- |  | ----------------------- | ------- |  | ---- |  | ------- | ---- |  |  | -------- | 
|                                       |  | Year ended December 31, |        
|                                       |  | 2016                    |         |  | 2015 |  |         | 2014 | 
|                                       |  | (in US$ millions)       |        
|Total passenger revenues               |  |                         | 7,877.7 |  |      |  | 8,410.6 |      |  |  | 10,380.1 | 
|Total cargo revenues                   |  |                         | 1,110.6 |  |      |  | 1,329.4 |      |  |  | 1,713.4  | 
|Total traffic revenues                 |  |                         | 8,988.3 |  |      |  | 9,740.0 |      |  |  | 12,093.5 | 
|                                       | 
|                                       |  | Year ended December 31, |        
|                                       |  | 2016                    |         |  | 2015 |  |         | 2014 | 
|                                       |  | (in US$ millions)       |        
|Peru                                   |  |                         | 627.2   |  |      |  | 681.3   |      |  |  | 660.1    | 
|Argentina                              |  |                         | 1,031.0 |  |      |  | 979.3   |      |  |  | 813.5    | 
|United States                          |  |                         | 933.1   |  |      |  | 1,025.5 |      |  |  | 1,224.3  | 
|Europe                                 |  |                         | 714.4   |  |      |  | 723.1   |      |  |  | 935.9    | 
|Colombia                               |  |                         | 343.0   |  |      |  | 353.0   |      |  |  | 391.7    | 
|Brazil                                 |  |                         | 2,974.2 |  |      |  | 3,464.3 |      |  |  | 5,361.6  | 
|Ecuador                                |  |                         | 198.2   |  |      |  | 238.5   |      |  |  | 248.6    | 
|Chile                                  |  |                         | 1,512.6 |  |      |  | 1,575.5 |      |  |  | 1,589.2  | 
|Asia Pacific and rest of Latin America |  |                         | 654.6   |  |      |  | 699.5   |      |  |  | 868.6    | 
|Total Operating Revenues               |  |                         | 8,988.3 |  |      |  | 9,740.0 |      |  |  | 12,093.7 | 

Passenger Operations

General

As of December 31, 2016, our
passenger operations were performed through airlines in Chile, Brazil, Peru, Argentina, Colombia and Ecuador, where we operate both domestic and international services. We collect and report operating data for our passenger operations in three
categories: international (connecting more than one country), Domestic operations in Spanish speaking countries or SSC (including Chile, Peru, Argentina, Colombia, and Ecuador), and Domestic Brazil (wholly within Brazil).

The following table sets forth certain of our passenger operating data for international and domestic routes for the periods indicated:



|                               |  |                                  |           |  |      |  |           |      |  |  |           | 
|------------------------------ |  | -------------------------------- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                               |  | Year ended and as at December 31 |          
|                               |  | 2016                             |           |  | 2015 |  |           | 2014 | 
|ASKs (million) (at period end) |  |                                  |           |  |      |  |           |      |  |  |           | 
|International                  |  |                                  | 73,541.9  |  |      |  | 69,615.9  |      |  |  | 65,574.6  | 
|SSC                            |  |                                  | 23,847.1  |  |      |  | 22,072.8  |      |  |  | 21,065.8  | 
|Domestic Brazil                |  |                                  | 37,578.7  |  |      |  | 42,478.5  |      |  |  | 43,560.5  | 
|Total                          |  |                                  | 134,967.7 |  |      |  | 134,167.1 |      |  |  | 130,200.9 | 
|RPKs (million)                 |  |                                  |           |  |      |  |           |      |  |  |           | 
|International                  |  |                                  | 63,392.6  |  |      |  | 59,003.4  |      |  |  | 55,980.1  | 
|SSC                            |  |                                  | 19,293.7  |  |      |  | 17,858.4  |      |  |  | 16,964.3  | 
|Domestic Brazil                |  |                                  | 30,940.5  |  |      |  | 34,648.1  |      |  |  | 35,589.7  | 
|Total                          |  |                                  | 113,626.9 |  |      |  | 111,509.9 |      |  |  | 108,534.0 | 
|Passengers (thousands)         |  |                                  |           |  |      |  |           |      |  |  |           | 



22



---

##### Table of Contents

|                                                     |  |                                  |        |   |      |  |        |      |  |  |        |  
|---------------------------------------------------- |  | -------------------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                                                     |  | Year ended and as at December 31 |       
|                                                     |  | 2016                             |        |   | 2015 |  |        | 2014 | 
|International                                        |  |                                  | 15,107 |   |      |  | 14,156 |      |  |  | 13,630 |  
|SSC                                                  |  |                                  | 22,829 |   |      |  | 21,540 |      |  |  | 20,735 |  
|Domestic Brazil                                      |  |                                  | 29,024 |   |      |  | 32,139 |      |  |  | 33,468 |  
|Total                                                |  |                                  | 66,960 |   |      |  | 67,835 |      |  |  | 67,833 |  
|Passenger RASK (passenger revenues/ASK, in US cents) |  |                                  |        |   |      |  |        |      |  |  |        |  
|International(1)                                     |  |                                  | US¢5.8 |   |      |  | US¢6.5 |      |  |  | US¢7.6 |  
|SSC(1)                                               |  |                                  | US¢6.9 |   |      |  | US¢8.3 |      |  |  | US¢9.1 |  
|Domestic Brazil(1)                                   |  |                                  | US¢5.8 |   |      |  | US¢5.9 |      |  |  | US¢8.6 |  
|Combined Passenger RASK(2)                           |  |                                  | US¢5.8 |   |      |  | US¢6.3 |      |  |  | US¢8.0 |  
|Passenger load factor (%)                            |  |                                  |        |   |      |  |        |      |  |  |        |  
|International                                        |  |                                  | 86.2   | % |      |  | 84.8   | %    |  |  | 85.4   | %
|SSC                                                  |  |                                  | 80.9   | % |      |  | 80.9   | %    |  |  | 80.5   | %
|Domestic Brazil                                      |  |                                  | 82.3   | % |      |  | 81.6   | %    |  |  | 81.7   | %
|Combined load factor                                 |  |                                  | 84.2   | % |      |  | 83.1   | %    |  |  | 83.4   | %



|(1) | RASK information for each of our business units is provided because LATAM believes that it is useful information to understand trends in each of our operations. We use our revenues as defined under IFRS to calculate
this metric. The revenues per business unit include ticket revenue, breakage, excess baggage fee, frequent flyer program revenues and other revenues. These operating measures may differ from similarly titled measures reported by other companies and
should not be considered in isolation or as a substitute for measures of performance in accordance with IFRS. This unaudited operating data is not included in or derived from LATAMs financial statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The combined Passenger RASK for LATAM is calculated by dividing passenger revenues by total passenger ASKs.
|--- | -----------------------------------------------------------------------------------------------------------

International Passenger Operations

Our
international network combines the international operations of our Chilean, Peruvian, and Ecuadorian, Argentinean, Colombian and Brazilian affiliates. We have operated international services out of Chile since 1946 and have greatly expanded our
international services, offering flights out of Peru, Ecuador, Argentina, Colombia and Brazil. As of December 31, 2016, we offer 27 international destinations in 18 countries, in addition to our domestic destinations and international flights
and connections between our domestic destinations. As of 2016, we combined all of our operations under the LATAM brand.

Our general
strategy to expand our international network is aimed at enhancing our value proposition by offering customers more destinations and routing alternatives, and promoting tourism to and within South America. Sustained development of our international
network has been a crucial factor in our long-term strategy. The group provides long-haul services out of Santiago, Lima, Guayaquil, Buenos Aires, Bogota, Sao Paulo and Rio de Janeiro. The group also provides regional services from Chile, Peru,
Ecuador, Argentina, Colombia and Brazil.

During 2014, after the necessary infrastructure investments were made, we completed our move to
the new Terminal 3 at Guarulhos Airport in Sao Paulo, with new slots for takeoff and landing, which has allowed us to significantly decrease our connection times. This is a key milestone in the development of our most important hub at Guarulhos
airport. In addition, the group has continued to consolidate our secondary hubs in Lima and Santiago.

During 2016, we received five
Boeing 787-9 Dreamliners (we have orders for nine more), which will allow us to achieve important savings on fuel consumption, while incorporating modern technology to deliver the best travel experience for
our passengers and reduce our carbon footprint, as the Dreamliner produces up to 20% less CO2 than similar aircraft. We also took delivery of six Airbus A350 aircraft (we have orders for 20 more). In addition, we received the first two Airbus
A320neo, out of an order of 34 aircraft of this model, becoming the first airline in Latin America to fly this model.

As part of our
mission, LATAM seeks to promote tourism to South America. Due to our large network of services, visitors from around the world can experience world-renowned destinations such as Cusco, Easter Island, the Galapagos Islands, Iguazu Falls in Brazil,
and Patagonia in Chile and Argentina, including the cities of Punta Arenas, Puerto Natales, Ushuaia, El Calafate and Bariloche.



23



---

##### Table of Contents

Market Share Information

The following table presents air passenger traffic information for international flights (including intra-regional flights) and LATAMs market share in
each geographic market in which we operate:



|             |                       |                            |       |      |                      |  |      |   |  |             |      |   |  |  |           | 
|------------ | --------------------- | -------------------------- | ----- | ---- | -------------------- |  | ---- | - |  | ----------- | ---- | - |  |  | --------- | 
|Country      |                       | Industry passenger figures |       |      | LATAMs Market Share | 
|             | % variation 2016-2015 |                            |       | 2016 |                      |  | 2015 |   |  | % variation |     
|Brazil(1)    |                       |                            | -0.3  | %    |                      |  | 78.9 | % |  |             | 78.5 | % |  |  | +0.4 p.p. | 
|Chile(2)     |                       |                            | +11.5 | %    |                      |  | 61.7 | % |  |             | 62.5 | % |  |  | -0.8 p.p. | 
|Argentina(3) |                       |                            | +9.9  | %    |                      |  | 11.9 | % |  |             | 11.8 | % |  |  | +0.1 p.p. | 
|Peru(4)      |                       |                            | +9.8  | %    |                      |  | 44.0 | % |  |             | 43.9 | % |  |  | +0.1 p.p  | 
|Colombia(5)  |                       |                            | +12.0 | %    |                      |  | 8.0  | % |  |             | 8.0  | % |  |  | 0.0 p.p   | 
|Ecuador(3)   |                       |                            | +11.5 | %    |                      |  | 17.2 | % |  |             | 18.9 | % |  |  | -1.7 p.p. | 



|(1) | Source: ANAC Brazils website. Variation and market share considering RPK. Figures are considering only Brazilian airlines
|--- | --------------------------------------------------------------------------------------------------------------------------

|(2) | Source: JAC Chiles website. Variation and market share considering number of passengers carried.
|--- | -------------------------------------------------------------------------------------------------

|(3) | Source: Diio.net. Variation and market share considering ASKs.
|--- | --------------------------------------------------------------

|(4) | Source: Ministry of Transportation Perus website. Variation and market share considering number of passengers carried.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(5) | Source: DGAC Colombias website. Variation and market share considering RPK.
|--- | ----------------------------------------------------------------------------



24



---

##### Table of Contents

Competitors in international routes

The following table shows LATAMs main competitors in each geographic market in which we operate:



|          |  |               |  |                                                                                                    
|--------- |  | ------------- |  | ---------------------------------------------------------------------------------------------------
|Country   |  | Route         |  | Competitors                                                                                        
|Brazil    |  | North America |  | American Airlines, United Airlines, Delta Air Lines, Azul Linhas Aereas, Air Canada and Aeromexico.
|          |  |              
|          |  | Latin America |  | Copa, Gol, Avianca and Aerolineas Argentinas                                                       
|          |  |              
|          |  | Europe        |  | TAP Portugal, Air France-KLM, Lufthansa, Alitalia, Iberia and British Airways                      
|          |  |              
|Chile     |  | North America |  | American Airlines, Air Canada, United Airlines, Delta Air Lines and Aeromexico.                    
|          |  |              
|          |  | Latin America |  | Copa, Sky, Avianca and Gol.                                                                        
|          |  |              
|          |  | Europe        |  | Air France-KLM, Iberia and Alitalia                                                                
|          |  |              
|          |  | Pacific       |  | Qantas Airways                                                                                     
|          |  |              
|Argentina |  | North America |  | Aerolíneas Argentinas, American Airlines, Aeromexico, Delta Air Lines and United Airlines.         
|          |  |              
|          |  | Latin America |  | Aerolineas Argentinas, Gol, Copa and Avianca                                                       
|          |  |              
|Peru      |  | North America |  | American Airlines, United Airlines, Avianca, Aeromexico, Delta Air Lines and Air Canada.           
|          |  |              
|          |  | Latin America |  | Avianca, Copa, Sky Airlines and Aerolíneas Argentinas                                              
|          |  |              
|          |  | Europe        |  | Air France-KLM, Iberia, Air Europa and British Airways                                             
|          |  |              
|Colombia  |  | North America |  | Avianca, American Airlines, JetBlue Airways, United Airlines, Aeromexico and Delta Air Lines.      
|          |  |              
|          |  | Latin America |  | Avianca, Copa, Aerolineas Argentinas and VivaColombia                                              
|          |  |              
|Ecuador   |  | North America |  | American Airlines, Tame, Delta Air Lines, United Airlines, Aeromexico and JetBlue Airways.         
|          |  |              
|          |  | Latin America |  | Copa, Avianca, Tame and Avior Airlines                                                             
|          |  |              
|          |  | Europe        |  | Air France-KLM and Iberia                                                                          

Domestic Passenger Operations

As of December 31, 2016, domestic passenger services within Chile, Brazil, Peru, Ecuador, Argentina and Colombia were operated
by LATAM Airlines Chile, LATAM Airlines Brazil, LATAM Airlines Peru, LATAM Airlines Ecuador, LATAM Airlines Argentina and LATAM Airlines Colombia, respectively.

Business Model for Domestic Operations

In November 2016, the group announced an important project to revamp the business model of our domestic services offering in the six domestic
markets where the group operates in South America. The purpose of this change is to increase our competitiveness



25



---

##### Table of Contents

and ensure the long-term sustainability of our domestic business model. This project seeks to increase our operational efficiency, allowing us to provide more competitive fares, and contributing
to the development of tourism and the growth of air travel per capita in the region. Our new domestic service model requires continuous cost reduction efforts, and we are implementing a series of initiatives to reduce cost per ASK in all domestic
operations. These efforts are aimed at significantly reducing selling and distribution expenses, increasing fleet utilization and operational productivity and simplifying back-office and support functions, thereby allowing us to expand our
operations while controlling fixed costs.

Another key element of this business model are initiatives to increase our ancillary revenues,
while allowing passengers to customize their journey. Customers will be able to access a simpler sales platform, which will allow them to choose their fare depending on the type of journey they want, and to purchase additional services such as extra
luggage, a variety of food and beverage options on board, preferred seating options and the flexibility to change tickets.

We continue to
develop digital initiatives to empower passengers providing them an enhanced digital experience with end-to-end control of their reservation. LATAM customers will be
able to buy, check-in and manage the after sale service in a simpler and faster manner through their smartphones.

We will implement our new domestic strategy by country, in stages starting in the first half of 2017.



|                                 |  |        |                         |      |       |  |              |           |  |  |                      |      |  |          |                                    |      |         |  |                               |      |  |  |               |     
|-------------------------------- |  | ------ | ----------------------- | ---- | ----- |  | ------------ | --------- |  |  | -------------------- | ---- |  | -------- | ---------------------------------- | ---- | ------- |  | ----------------------------- | ---- |  |  | ------------- | ----
|                                 |  | Brazil |                         |      | Chile |  |              | Argentina |  |  | Peru                 |      |  | Colombia |                                    |      | Ecuador | 
|Destinations                     |  |        | 41                      |      |       |  | 16           |           |  |  | 15                   |      |  |          | 17                                 |      |         |  | 14                            |      |  |  | 5             |     
|Fleet                            |  |        | 100                     |      |       |  | 27           |           |  |  | 15                   |      |  |          | 18                                 |      |         |  | 17                            |      |  |  | 6             |     
|Passengers Transported (million) |  |        | 29.0                    |      |       |  | 7.9          |           |  |  | 2.6                  |      |  |          | 6.6                                |      |         |  | 4.8                           |      |  |  | 1.0           |     
|Change (YoY)                     |  |        | (9.7                    | %)   |       |  | 8.1          | %         |  |  | 7.0                  | %    |  |          | 6.7                                | %    |         |  | 4.4                           | %    |  |  | (8.3          | %)  
|Market share                     |  |        | 35                      | %(1) |       |  | 76           | %(2)      |  |  | 25                   | %(3) |  |          | 62                                 | %(4) |         |  | 21                            | %(5) |  |  | 31            | %(6)
|Main competitors                 |  |        | Gol, Azul,AviancaBrazil |      |       |  | Sky Airlines |           |  |  | AerolíneasArgentinas |      |  |          | Avianca,PeruvianAirlines, StarPerú |      |         |  | Avianca, VivaColombia,Santena |      |  |  | Tame, Avianca |     



|(1) | Source: ANAC Brazils website. Market share considers RPKs.
|--- | -----------------------------------------------------------

|(2) | Source: JAC Chiles website. Market share considers RPKs.
|--- | ---------------------------------------------------------

|(3) | Source: Company ́s estimates.
|--- | ----------------------------

|(4) | Source: Ministry of Transportation Perus website. Market share considers number of passengers carried as of November 2016.
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(5) | Source: DGAC Colombias website. Market share considers ASKs
|--- | ------------------------------------------------------------

|(6) | Source: Company ́s estimates. Market share considers ASKs
|--- | --------------------------------------------------------

Passenger Alliances and Commercial
Agreements

LATAM is currently a member of the global marketing alliance oneworld, which includes Airberlin, American Airlines,
British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines, Qantas, Qatar, Royal Jordanian, Sri Lankan and S7. In the aggregate, oneworld® members serve more
than 1,000 destinations in 157 countries, operating over 13,000 daily departures.

LATAM and its affiliates have ongoing passenger
commercial agreements with several airlines, including American Airlines, Iberia, Quantas, British Airways, Lufthansa, Swiss, Interjet, All Nippon Airways, Cathay Pacific, Japan Airlines, and Jetstar Airways, among others. These commercial
agreements allow us to provide additional benefits to our passengers, including access to a wider network, more flight options with better connection times, more competitive fares to destinations not served by LATAM, and increased potential for
developing new routes and adding direct flights to new destinations and to destinations already served by LATAM.

Moreover, on
January 14, 2016, we entered into two new joint business agreements: an agreement with American Airlines and an agreement with British Airways and Iberia. These agreements further strengthen our relationship with these oneworld® partners.



26



---

##### Table of Contents

The agreements remain subject to regulatory approval in different countries. Some approvals have already been granted: on March, 2017, the administrative court of economic defense of the CADE
(Administrative Council for Economic Defense) in Brazil, approved the agreement with British Airways and Iberia, representing the final stage of an evaluation process that began in June 2016. During the review, the CADE evaluated the scope of the
agreement in terms of free competition and the benefits that it will bring to passengers, including improved connectivity, an expansion of the destination network and reduced prices. Both agreements have been approved in Uruguay.

Passenger Marketing and Sales

Our
long-haul marketing strategy emphasizes attributes valued by our international customers: reliable, high-quality service centered on comfort and entertainment for long-haul travel. We also highlight our extensive network, which covers the most
important destinations in South America and the Caribbean and provides frequent service to major overseas gateways such as New York, Los Angeles, Miami, Orlando, Washington, DC, London, Madrid, Paris, Frankfurt, Milan, Barcelona and Sydney. In a
continuing effort to strengthen our network, during 2016 we launched three new direct routes: Sao PauloJohannesburg, LimaBarcelona and SantiagoMelbourne (the last being our longest flight).

Our short-haul operations are designed to fit our customers needs: punctuality, reliability, frequency, modern aircraft and efficient
operations. To deliver this value proposition, we have been increasing our fleet and frequencies with more point-to-point flights, improved punctuality, and streamlined
processes including Internet sales, web and mobile check-in and airport self-check-in.

We strive to deliver our promise to our customers. Therefore, we constantly monitor customer satisfaction with
in-flight surveys and research, and measure our performance against the highest standards. This commitment to excellence is reflected in the numerous prizes and recognitions earned by the Company, including
Skytraxs 2016, Best Airline in South America and 2016, Best Airline to South America by Global Travelers.

Branding

Our new brand, LATAM, was officially launched in May 2016. The new brand brings together all the passenger and cargo
airline operations of the LATAM Airlines Group carriers: with the new brand, we will continue the legacy of leadership started decades ago by LAN, TAM and their respective affiliate carriers.

We are committed to the future of South America and to connecting it to the world. The new brand allows us to offer a better, consistent
service throughout our network, which in turn strengthens our position in the region.

Using a single brand enables LATAMs customers
to better understand the common service and operating standards among its airlines. LATAMs unified image has improved its visibility, thereby increasing the efficiency of its marketing efforts.

Since the launch of our new brand, we have made significant progress on its implementation, making our brand visible to our passengers. The
new brand has been adopted at 15 airports, and we now offer a new single website for all of our different points of sale. The LATAM brand has also been applied to 43 aircraft, representing approximately 13% of our fleet. We also launched new
uniforms for our crew, adopting the Companys colors of indigo and coral while providing elegance and comfort for our crew.

During
2016, LATAM Airlines Brazil was the official airline sponsor of the Rio 2016 Olympic Games, reinforcing our brand positioning as a leader in the region through our presence in one of the most important sport events worldwide.

Distribution Channels

We are committed
to being the preferred choice of our customers, placing the passenger at the center of our decision making. Our distribution structure is divided into direct and indirect distribution channels, both focused on improving their respective platforms to
allow for easy interaction for our client in sales and services alike. Direct channels owned by LATAM are comprised of city ticket offices, contact-centers and e-Business (including website, mobile and smart
business), and accounted for approximately 52% of total passengers in 2016. These direct channels support sales and service, both before and after the flight.

The e-Business channel is an integral part of our commercial, marketing and service efforts, and
during 2016 our Internet-related sales achieved a better channel mix with an increase of 0.5 percentage points out of our total sales. The Company will continue to improve our e-Business platforms to support
expected future growth.

Our digital strategy includes mobile applications that provide information to our passengers regarding their
trip. These applications improve our management of contingencies, enable us to provide information and solutions to our customers in a timely and transparent manner and will serve as a new direct sales channel.



27



---

##### Table of Contents

Our city ticket offices support the growth of our operations, providing a sales channel. Our
contact centers are a multi-service channel providing support in six languages (Spanish, English, Portuguese, French, German and Italian).

Indirect channels currently include travel agencies, general sales agencies, direct channels from other airlines and online agencies, and
accounted for a 48% of total passengers in 2016.

Frequent Flyer Programs

Our frequent flyer programs are a key element of our marketing and loyalty strategy. These programs reward customer loyalty, and, as a
result, generate incremental revenue and customer retention.

During 2016, we announced our revamped frequent flyer programs named LATAM
Pass and LATAM Fidelidade. This change is part of the process of consolidating the airline groups new brand identity (LATAM) and the evolution of the programs, which enhances existing benefits and introduces new benefits for program members.

We continued working on the homologation of our programs features and benefits. Among other improvements, our initiatives include
cross-level recognition of all members, for example, by allowing LATAM Pass members to upgrade on TAM flights and and LATAM Fidelidade members to upgrade on LAN flights, in addition to having the same services at the airport.

During 2017 LATAM Pass and LATAM Fidelidade will continue their harmonization efforts and will offer new cross benefits for their members,
with the goal of remaining or becoming the leading loyalty program in all of LATAMs home markets. Moreover, beginning on April 22, 2017, LATAMs frequent flyer program will change the way our members earn kilometers from the current
system (based on the distance flown) to a new method based on the price paid for the ticket.

LATAM Pass

As of December 31, 2016, LATAM Pass had 13 million members, an increase of 17% compared to 2015.

LATAM Pass members earn LATAM Pass kilometers in their accounts based on distance flown, class of ticket purchased and their status level, as
well as by purchasing the services of other partners in the the LATAM Pass program. Customers can redeem kilometers for free tickets as well as for other products in an online catalogue. Under our current frequent flyer program, our passengers are
grouped into four different elite levels based on their flying behavior: Gold, Platinum, Black and Black Signature. These different groups determine which benefits customers are eligible to receive, including kilometers earnings bonuses, free
upgrades on a space-available basis, VIP lounge access, and preferred boarding and check-in. These categories have their equivalent in the
oneworld® alliance: Ruby for Gold, Sapphire for Platinum, and Emerald for both Black and Black Signature.

In 2016 LATAM Pass had increases of 32 % in award tickets redeemed, and 9% in non-flight products
redeemed. LATAM Pass has highly rated partners, including other airlines, hotels, car rental agencies, retailers, and credit card issuers from the main financial institutions in Chile, Peru, Ecuador, Argentina, Uruguay, the United States and
Colombia, including Banco Santander in Chile and Banco de Bogotá and Occidente (both members of Grupo Aval) in Colombia. These commercial agreements give our customers the opportunity to earn additional kilometers for using their services.

In the non-banking segment, LATAM Pass continues to leverage its members purchase behavior
to partner with leading players in its markets and become the most attractive loyalty program. In recent years, LATAM Pass has expanded into new industries, such as retail, supermarkets, automotive, real estate, drugstores and health care centers.

In the past few years, we have implemented a number of marketing initiatives to increase customer engagement and activity with the
program in all of its markets. In 2016, membership in LATAM Pass continued growing, expanding by 10% in Chile, 14% in Perú, 38% in Argentina, 6% in Ecuador, 14% in Colombia and 6% in the United States.

LATAM Fidelidade

LATAM Fidelidade was
the first loyalty program launched by a Brazilian airline and represents a key element of LATAMs marketing strategy. LATAM believes LATAM Fidelidade, like LATAM Pass, is one of the most flexible loyalty programs in the market because it
imposes no restrictions on flight availability or on the number of seats available when members redeem accumulated points. LATAM Fidelidade currently has more than 13.2 million members, which represents an increase of 14% compared to 2015.
Members of LATAM Fidelidade, like those of LATAM Pass, receive benefits and increased points for kilometers flown depending on their elite level, allowing them to accrue redeemable points for free travel more quickly. LATAM Fidelidade customers are
classified in the same four elite levels as LATAM Pass: Gold, Platinum, Black and Black Signature.



28



---

##### Table of Contents

Multiplus

In 2009, TAM launched Multiplus, a company designed to create a broader network in which LATAM Airlines Brazils customers can earn points
through the LATAM Fidelidade program. Multiplus is a coalition of loyalty programs that permits the accrual of points that can be redeemed for products and services offered by many different partner companies, in addition to LATAM Airlines Brazil.
We believe this expanded network acts as a sales channel for LATAM Airlines Brazil, helping to capture and retain customers and increase sales. Multiplus is attractive to our less-frequent flyers because it allows them to accrue loyalty points in
many ways besides flying. In 2016, non-air accrual reached 15% of the total points. At the end of 2016, Multiplus had more than 400 partners and approximately 16.5 million participants that can accrue
Multiplus points directly (through LATAM Fidelidade, co-branded cards, apps, retail partners, etc.) and indirectly (by transferring points from a partner program).

Multiplus became a publicly traded company in Brazil following its initial public offering in February 2010. TAM S.A continues to own 72.74%
of the ordinary shares of Multiplus.

On December 10, 2009, Multiplus entered into an Operating Agreement with LATAM Airlines Brazil,
effective as of January 1, 2010, which established the terms and conditions governing the relationship with TLA (the Operating Agreement). Under the Operating Agreement, Multiplus became responsible for, among other tasks,
processing information on accumulating and redeeming points under the LATAM Airlines Brazil Loyalty Program, and delivering awards to the members of said program, in accordance with the rules of the TAM Loyalty Program and the Multiplus network. The
Operating Agreement is valid for 15 years and is automatically renewed every five years thereafter.

Aiming to increase the value created
to Multiplus and LATAM shareholders, and to improve the alignment of interests between Multiplus and TLA, on May 4, 2015, the companies approved a new amendment to the Operating Agreement, effective on that date. This amendment provides that
the cost for each 10,000 points redeemed on TLA air tickets shall be approximately 3% less than Multipluss current prices paid for those 10,000 points. Furthermore, the amendment establishes that from December 1, 2015, fixed prices for
air tickets will come into force with objective rules for annual price adjustments for the purchase of air tickets, paid by Multiplus to TLA. The fixed prices of each are determined by both companies as a function of the market (domestic and
international), fare class, demand, season, distance and flight origin/destination.

The remaining provisions established in the original
Operating Agreement, including, without limitation, those relating to reciprocal exclusivity, term of effectiveness and situations for termination with or without cause, remain, in their essence, unchanged.

On December 14, 2015, Multiplus Board of Directors approved a management proposal for the establishment of a limited liability
company, with the name of Multiplus Corretora de Seguros Ltda., for the purpose of developing an insurance brokerage business. This project is in line with Multiplus main objectives of providing a differentiated experience for its
participants, offering a new source for accrual of points and generating value to its shareholders.

On July 5, 2016, Multiplus S.A.
and Banco Itaucard S/A (Itaucard) signed a Commercial Partnership Contract for the offering, promotion, distribution and sale of co-branded credit cards (Multiplus cards), throughout
Brazils national territory. The partnerships key objective is to offer its network members a product which permits the direct accumulation of Multiplus Points by means of conversion and differentiated bonuses.

On July 12, 2016, Multiplus S.A. signed a partnership with the Expedia Affiliate Network, making 270,000 hotel options available to
members, allowing them to accumulate Multiplus points when making their reservations.

On August 25, 2016, Multiplus Corretora
de Seguros Ltda. started operations as Pontus Corretora. Pontus Corretora debuted with two types of insurance policies offered with different partners: residential insurance, in partnership with Seguradora Porto Seguro, and travel
insurance through Assist Card. Pontus Corretora offers a totally original digital experience, with flexibility, innovation and excellent products from the main insurance companies in the market.

On December 27, 2016, Multiplus announced that it is expanding its Points + Cash offering to allow the redemption of points
for non-air products and services. This allows members who do not have sufficient accumulated points to redeem with network partners to top-up their points with a cash
payment. The objective is to ensure the availability of attractive offers for all Multiplus members, with constant incentives for them to increasingly use and experience the loyalty network.



29



---

##### Table of Contents

Cargo Operations

Our Cargo division operates internationally and domestically through our affiliates under the unified LATAM Cargo brand, which has acquired
significant market recognition. Our cargo business generally operates on the same route network used by our passenger airline business. It includes approximately 138 destinations, of which around 127 are served by passenger and/or freighter aircraft
and approximately 11 are served only by freighter aircraft.

The following table sets forth certain of our cargo-operating statistics for
domestic and international routes for the periods indicated:



|                                                       |  |                                  |         |   |      |  |         |      |  |  |         |  
|------------------------------------------------------ |  | -------------------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                                       |  | Year ended and as atDecember 31, |        
|                                                       |  | 2016                             |         |   | 2015 |  |         | 2014 | 
|ATKs (millions)                                        |  |                                  | 6,704.1 |   |      |  | 7,082.8 |      |  |  | 7,219.7 |  
|RTKs (millions)                                        |  |                                  | 3,465.9 |   |      |  | 3,797.0 |      |  |  | 4,317.2 |  
|Weight of cargo carried (thousands of tons)            |  |                                  | 944.3   |   |      |  | 1,008.7 |      |  |  | 1,102.2 |  
|Total cargo yield (cargo revenues/RTKs, in U.S. cents) |  |                                  | 32.0    |   |      |  | 35.0    |      |  |  | 39.7    |  
|Total cargo load factor (%)                            |  |                                  | 51.7    | % |      |  | 53.6    | %    |  |  | 59.8    | %

We derive our revenues roughly equally between the transport of cargo as follows:

1) Bellies of our passenger aircraft. We consider our passenger network to be a key competitive advantage due to the synergies between
passenger and cargo operations and, accordingly, we have developed a strategy to increase our competitiveness by enhancing our belly offering.

2) Dedicated freighter fleet. As of December 31, 2016, our dedicated freighter fleet under operation consisted of eight Boeing 767-300 freighters, each with a capacity for 58 structural tons of freight each, and two Boeing 777-200 freighters, each with a capacity of 102 structural tons of freight. In
2016 we continued our freighter fleet optimization efforts, subleasing three B767-300F aircraft and one B777-200F to a third party (reclassified from property, plant and equipment to held for sale as of December 31, 2016). Our freighter fleet
program has two main focus areas: first, to support the groups belly business, improving its load factor by feeding cargo into our passenger routes, and second, to provide our customers flexibility in scheduling and destinations. With these
two objectives in mind, we are complementing and enhancing our network. In Latin America, the principal origins of our cargo are Chile, Colombia, Perú, Ecuador, Brazil and Argentina, which represent a large part of our northbound traffic.
This demand is mainly concentrated on a small number of product categories, such as exports of fish, sea products and fruits from Chile, asparagus from Peru, and exports of fresh flowers from Ecuador and Colombia.

For our southbound flights, Brazil is the main import market. Southbound demand is mainly concentrated on a small number of product categories
including high-tech equipment, electronics, auto parts and pharmaceuticals.

Our largest domestic cargo operations are in Brazil, where
LATAM Cargo remains the market leader there, carrying cargo for a variety of customers, including other international air carriers, freight-forwarding companies, export-oriented companies and individual consumers. In order to maintain its
leadership, LATAM Cargo continues to invest in infrastructure, service and security in key cargo terminals.

The United States accounts
for the majority of cargo traffic to and from Latin America. Besides being the main market for Latin American exports by air, the United States is also the main supplier of goods transported by air to Latin American countries. We have thus
headquartered our international cargo operations in Miami. This geographical location is a natural gateway between Latin America and the United States. We also transport cargo to and from eight destinations in Europe: London, Madrid, Milan, Paris,
Barcelona, Frankfurt, Amsterdam and Basel. The first six are served via passenger aircraft, and we also serve Amsterdam, Frankfurt and Basel through freighter operations. In October 2016 LATAM Cargo added a new operation to its belly network: Sao
Paulo, Brazil  Johannesburg, South Africa, opening a gateway between Latin American markets and the African continent.

During 2016,
cargo traffic decreased 8.7%, mainly due to a strong decline in Brazilian imports resulting from economic weakness and currency depreciation in Brazil. However, Latin American exports remain at healthy levels, despite a contraction in production of
fresh salmon in Chile.

The cargo business in the region is highly competitive, as international and regional carriers often have spare
capacity in their cargo operations. Despite this, we have been able to maintain solid market shares through an efficient utilization of our fleet and network. Today, on Latin America-United States routes, our main competitors are Centurion, Avianca
Cargo, Atlas Air and American Airlines. On the Latin America-Europe routes, our main competitors are Cargolux, Lufthansa Cargo, Martinair and Emirates Airlines.



30



---

##### Table of Contents

Marketing and Sales

Our cargo sales and marketing efforts are carried out directly in cities where we have a local office, or through general sales agents. In
total, we have over 30 international offices. In Latin America, we have our own offices in all key markets. In the United States, we have offices in Miami, New York and Los Angeles, and work with representatives in various other cities. In Europe,
we have offices in Frankfurt, Amsterdam, Madrid and Paris and use agents in other key cities. In Asia our sales efforts are conducted through general sales agents. In total, we maintain a network of more than 30 independent cargo sales agencies
domestically and internationally.

Our cargo marketing strategy emphasizes the combination of our unique freighter and passenger aircraft
cargo network, which offers a wide variety of reliable cargo routing possibilities with different pricing options; strong connectivity to, from and within Latin America; and a clear focus on providing high-quality service for our clients. Our
offering allows our customers to ship large, bulky freight, as well as smaller, high-density cargo, fresh products, express shipments and other types of cargo.

During 2016 we focused on various aspects of our value chain to improve our customer experience. We developed a new portfolio of LATAM Cargo
products with an innovative proposition aligned to the needs of customers, allowing us to deliver greater consistency and a clear service offering to the market. In line with this, we made progress in transforming the Companys internal
processes to ensure they are aligned with our commitments to clients.

Cargo Agreements

During 2016 we maintained our Enhanced Cargo Transfer Interline and other commercial agreements with Asian carriers such as Air China, Korean
Air and Cathay Pacific, among others. Under these agreements, we receive space allocations to move our cargo from the main gateways in Asia to hubs in the United StatesLos Angeles, New York and Miamiand in Europe, where we can connect
with our cargo network. In exchange, we provide these airlines with space from these same hubs in the United States and Europe to all of our Latin American destinations and also provide them with westbound cargo. These agreements have allowed us to
achieve greater visibility, improved support and allowed us to provide better service recovery, further expanding our network between Latin America and Asia.

Cargo-Related Investigations

See
Item 8. Financial InformationA. Consolidated Financial Statements and Other Financial InformationLegal and Arbitration Proceedings.

Fleet

General

As of December 31, 2016, we operated a fleet of 329 aircraft, comprised of 319 passenger aircraft and 10 cargo aircraft. Additionally, we
subleased four cargo aircraft to third parties (one of them not included in the table below as it was reclassified from property plant and equipment held for sale).



|                            |  |                                 |     |  |          |  |    |                |  |  |                                     |  |  |                   |      |  |  |  |     | 
|--------------------------- |  | ------------------------------- | --- |  | -------- |  | -- | -------------- |  |  | ----------------------------------- |  |  | ----------------- | ---- |  |  |  | --- | 
|                            |  | Number of aircraft in operation |     |  |          |  |    |                | 
|                            |  | Total                           |     |  | Owned(1) |  |    | OperatingLease |  |  | Averageterm ofleaseremaining(years) |  |  | Averageage(years) |     
|Passenger aircraft(2)       |  |                                 |     |  |          |  |    |                |  |  |                                     |  |  |                   |      |  |  |  |     | 
|Airbus A320-Family Aircraft |  |                                 |     |  |          |  |    |                |  |  |                                     |  |  |                   |      |  |  |  |     | 
|Airbus A319-100             |  |                                 | 48  |  |          |  | 36 |                |  |  | 12                                  |  |  |                   | 3.4  |  |  |  | 9.2 | 
|Airbus A320-200             |  |                                 | 146 |  |          |  | 93 |                |  |  | 53                                  |  |  |                   | 2.6  |  |  |  | 8.6 | 
|Airbus A321-200             |  |                                 | 47  |  |          |  | 30 |                |  |  | 17                                  |  |  |                   | 9.3  |  |  |  | 2.7 | 
|Airbus A320-200neo          |  |                                 | 2   |  |          |  | 1  |                |  |  | 1                                   |  |  |                   | 9.7  |  |  |  | 0.2 | 
|Airbus A350-Family Aircraft |  |                                 |     |  |          |  |    |                |  |  |                                     |  |  |                   |      |  |  |  |     | 
|Airbus A350-900             |  |                                 | 7   |  |          |  | 5  |                |  |  | 2                                   |  |  |                   | 11.8 |  |  |  | 0.5 | 



31



---

##### Table of Contents

|                             |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      | 
|---------------------------- |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | ---- |  |  |  | ---- | 
|Boeing Aircraft              |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      | 
|Boeing 767-300ER             |  |  | 37  |  |  |  | 34  |  |  |  | 3   |  |  |  | 2.6  |  |  |  | 8.5  | 
|Boeing 787-8                 |  |  | 10  |  |  |  | 6   |  |  |  | 4   |  |  |  | 9.2  |  |  |  | 3.1  | 
|Boeing 787-9                 |  |  | 12  |  |  |  | 4   |  |  |  | 8   |  |  |  | 10.8 |  |  |  | 1.2  | 
|Boeing 777-300ER             |  |  | 10  |  |  |  | 4   |  |  |  | 6   |  |  |  | 2.1  |  |  |  | 5.7  | 
|Total passenger aircraft     |  |  | 319 |  |  |  | 213 |  |  |  | 106 |  |  |  | 4.8  |  |  |  | 7.0  | 
|                             |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      | 
|Cargo aircraft               |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      | 
|Boeing 767-300 Freighter (3) |  |  | 11  |  |  |  | 8   |  |  |  | 3   |  |  |  | 2.0  |  |  |  | 13.1 | 
|Boeing 777-200 Freighter (4) |  |  | 2   |  |  |  |     |  |  |  | 2   |  |  |  | 0.4  |  |  |  | 7.6  | 
|Total cargo aircraft         |  |  | 13  |  |  |  | 8   |  |  |  | 5   |  |  |  | 1.4  |  |  |  | 12.2 | 
|                             |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      | 
|Total fleet                  |  |  | 332 |  |  |  | 221 |  |  |  | 111 |  |  |  | 4.7  |  |  |  | 7.2  | 
|                             |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      | 



|(1) | Aircraft included within property, plant and equipment.
|--- | -------------------------------------------------------

|(2) | All passenger aircraft bellies are available for cargo.
|--- | -------------------------------------------------------

|(3) | Three aircraft leased to FEDEX
|--- | ------------------------------

|(4) | Does not include two B777-200F (one currently leased to a third party), that were reclassified from property plant and equipment to held for sale.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

The average utilization rates of LATAMs aircraft for each of the periods indicated are set forth below, in hours per day.



|                         |  |      |      |  |      |  |      |      |  |  |      | 
|------------------------ |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- | 
|                         |  | 2016 |      |  | 2015 |  |      | 2014 | 
|Passenger aircraft       |  |      |      |  |      |  |      |      |  |  |      | 
|Boeing 767-300ER         |  |      | 10.0 |  |      |  | 11.3 |      |  |  | 10.5 | 
|Boeing 787-8/9           |  |      | 11.0 |  |      |  | 11.7 |      |  |  | 10.5 | 
|Airbus A320-Family       |  |      | 8.9  |  |      |  | 9.5  |      |  |  | 9.8  | 
|Boeing 777-300ER         |  |      | 11.7 |  |      |  | 12.2 |      |  |  | 12.9 | 
|Airbus A330-200          |  |      | 4.4  |  |      |  | 6.2  |      |  |  | 7.0  | 
|Airbus A350-900          |  |      | 8.5  |  |      |  | 0.8  |      |  |  |     | 
|Cargo aircraft           |  |      |      |  |      |  |      |      |  |  |      | 
|Boeing 767-300 Freighter |  |      | 12.1 |  |      |  | 10.9 |      |  |  | 9.5  | 
|Boeing 777-200 Freighter |  |      | 13.7 |  |      |  | 13.0 |      |  |  | 13.2 | 

We operate various different aircraft types that are best suited for our different services, which include
short-haul domestic and regional trips as well as long-haul transcontinental flights. We have selected our aircraft based on their ability to effectively and efficiently serve these missions while trying to minimize the number of aircraft families
we operate.

For short-haul domestic and regional flights, we principally operate Airbus A320-Family Aircraft. The Airbus A320-Family has
been incorporated into our fleet pursuant to operating leases or has been acquired directly from Airbus pursuant to various purchase agreements since 1999. In 2016, we received our first two A320neo,
re-engined A320s, which incorporate the latest technologies including new generation engines and Sharklet wing tip devices, resulting in approximately 15% in fuel savings compared with the original A320. LATAM
was the first airline in the Americas, and the fifth on the world, to operate the A320neo.

For long-haul passenger and cargo flights, we
operate Boeing 767-300 passenger and cargo aircraft, Boeing 787-800 and 787-900 aircraft, Boeing 777 passenger and cargo aircraft
and the Airbus A350-900 passenger aircraft that started operations in 2015. LATAM is the first A350-900 operator in the Americas.

Fleet Leasing and Financing Arrangements

LATAMs fleet financing and leasing structures include borrowing from financial institutions and leasing under financial leases, tax
leases, sale-leaseback transactions and pure operating leases. As of December 31, 2016, LATAM had 332 aircraft, of which three were subleased to third parties resulting in 329 aircraft in operation. Of the aircraft in operation, 156 are
operated by LAN and 163 aircraft are operated by TAM and 10 are operated by LATAM Airlines Cargo.

As of December 31, 2016,
LATAMs operating fleet was comprised of 192 financial leases, 12 tax leases, 102 operating leases, and 10 aircraft as loan guarantees and 13 unencumbered aircraft. Most of LATAMs financial and tax leases are structured with a 12- year
initial term. LATAM has 42 financial aircraft leases supported by the U.S. Export-Import Bank (EXIM Bank) and 85 supported by the European Export Credit Agencies (the ECAs). LATAMs operating lease maturities initially
range from three to 12 years.



32



---

##### Table of Contents

LATAMs aircraft debt, which is comprised of financial and tax leases, is denominated in
U.S. dollars and typically has quarterly amortization payments. Both the financial leases and tax leases have a bank (or group of banks) as counterparty; however, the tax leases also include third parties. 63.1%of our aircraft debt has a fixed interest rate and the balance has a floating rate based on USD LIBOR.

In order to reduce TAMs balance sheet FX exposure to the Brazilian real, as part of the integration plan following the combination with
TAM, we have sought to transfer the majority of the TAM aircraft under financial leases to the LATAM level. As of December 31, 2016, we have transferred 51 aircraft to LATAM, including 13 transferred during 2016. This program has helped reduce
the exposure to approximately US$1.2 billion equivalent. See Item 5. Operating and Financial Review and ProspectsB. Liquidity and Capital ResourcesSources of financing and Item 5. Operating and Financial Review and
ProspectsB. Liquidity and Capital ResourcesCapital Expenditures for a description of expected sources of financing and expected expenditures on aircraft.

Maintenance

LATAM Maintenance

Our heavy maintenance, line maintenance and component shops are equipped and certified to service our entire fleet of Airbus and Boeing
aircraft. Our maintenance capabilities allow us flexibility in scheduling airframe maintenance, offering us an alternative to third-party maintenance providers.

LATAM Line Maintenance

Our Line
Maintenance Network (the Network) provides a full range of aircraft maintenance services to ensure our fleet operates safely and in compliance with all local and international regulations. We strive to provide the best experience to our
passengers, through the highest standards of on time performance and cabin condition.

The Network serves over 190 locations, which are
staffed by over 4,000 LATAM maintenance professionals. In 2016, the Network effectively carried out over 2.1 million man hours of preventive and corrective maintenance tasks on the LATAM fleet. We also rely on certified third party services in
a few destinations where it is economically convenient, such as in Frankfurt (where we are served by Lufthansa Technik), Milan (served by Air France-KLM), and Johannesburg (served by South African Airways).

LATAM Maintenance has used LEAN methodology and developed computerized systems to achieve improved automation and integration processes,
offering sustainable and scalable planning, productive and operational processes.We have deployed more than 600 tablets in order to:



| | 1) | Provide fast and simplified access to technical documents through a native app called Content Management System (CMS Mobile);
| | -- | -----------------------------------------------------------------------------------------------------------------------------



| | 2) | Provide access to our Maintenance System called Maintenix and in-house coordination apps;
| | -- | -----------------------------------------------------------------------------------------



| | 3) | Improve our internal communication through message and video call apps; and
| | -- | ---------------------------------------------------------------------------



| | 4) | Allow use of in-house developments systems like MaintCraft (allocates man hours resources and Gantt charts to each specific maintenance tasks) and MaintControl (manages the
execution of the planned tasks of MaintCraft through a friendly interface, showing all the tasks that each technician has to perform throughout the shift). MaintControl also serves as a platform where the maintenance leaders can monitor their
teams progress and solve problems that arise.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

LATAM Line Maintenance Network has hangar facilities in Santiago,
São Carlos, São Paulo (CGH), Lima, Miami, Buenos Aires (AEP) and Brasilia, among others. These multiple locations improve the flexibility of the Network by allowing the execution of tasks that previously might be restricted because of
adverse weather conditions and environmental authority restrictions.

In order to strictly comply with applicable regulations, all of our
maintenance operations are supervised and audited by the local authorities and international entities around the Network, such as DGAC Chile, ANAC Brazil, the Federal Aviation Administration in the United States (FAA), the International
Air Transport Association Operational Safety Audit (IOSA) (from the International Air Transport Association or IATA) and the International Civil Aviation Organization (ICAO), among others. The audits are conducted
in connection with each countrys certification procedures and enable us to perform maintenance for the aircraft types registered in the certificating jurisdictions. Our repair stations hold FAA Part-145
certifications under these approvals.





33



---

##### Table of Contents

In addition, to ensure the most qualified personnel as needed for safe, accurate and on-time Line Maintenance, we seek to improve our technicians skills through extensive training programs at our LATAM Technical Training Center and through specific training programs designed and conducted by
our partnerships. Our Fleet and Engineering teams participate actively in periodic airline Fleet Reliability meetings, where we share best industry practices and updates of the latest Line Maintenance trends and top technical issues.

LATAM MRO

Our two MRO
(Maintenance, repair and Operations) facilities, one in São Carlos (Brazil) and one in Santiago (Chile), are equipped and certified to service our fleet of Airbus and Boeing aircraft and provide 76% of all heavy maintenance
services that LATAM demands. The services not executed internally are contracted to our extensive network of MRO partners around the globe. Both MRO facilities are FAA Part-145 certified repair stations. We
occasionally perform certain heavy maintenance and component services for other airlines or OEMs. LATAM MRO is also responsible for the planning and execution of aircraft redeliveries.

In MRO São Carlos (LATAM Airlines Brazil MRO), we are prepared to service up to eight aircraft (narrow and wide body) simultaneously
with a dedicated hangar for stripping and painting. In this facility we also have 22 technical component shops, including a full landing gear repair & overhaul shop, hydraulics, pneumatics, electronics (ATEC), electrical components,
electroplating, composites, wheels & brakes, interiors and emergency equipment shops. This facility has a total area of 400 hectares and a hangar area of 100,000 m2, with a dedicated runway of 1,720 meters. MRO São Carlos is
certified and audited by major international aeronautical authorities such as the FAA, the European Aviation Safety Agency (EASA), ANAC Brazil, the Chilean DGAC, the Argentinean Administración Nacional de Aviación
Civil (ANAC Argentina), the Ecuadorian Dirección General de Aviación Civil(DGCA), the Paraguayan Dirección Nacional de Aeronautica Civil (DINAC), and Transport Canada
(TC) , among others, for Heavy Maintenance and Components Repair and Overhaul for the Airbus A-320 family (A318, A319, A320 and A321) and Airbus A330, Boeing 767, ATR-42/72 and the Embraer E-Jet 170/190 families. The MRO also has some minor capabilities for the repair and overhaul of Boeing 777 components. MRO São Carlos includes
its own support engineering capabilities and a full technical training center.

In MRO Santiago, located near Comodoro Arturo Merino
Benítez International Airport in Santiago, we have two hangars capable of servicing one wide body aircraft and two narrow body aircraft simultaneously. MRO Santiago is certified and audited by FAA, ANAC Brazil, DGAC, ANAC Argentina and DGCA,
among others, for Heavy Maintenance for the Airbus A320-Family (A318, A319, A320 and A321) and Boeing 767. MRO Santiago has eight shops prepared to support hangar activities such as cabin shops, galleys, structures and composite materials. We also
have the capability to retrofit aircraft interiors, including the installation of IFE (in-flight entertainment) equipment and blended winglets in the Boeing 767 fleet.

During 2016, LATAM MRO effectively executed 1.2 million man-hours in more than 300 services,
including C checks (114) and Special Checks (209) for the LATAM fleet, maintaining our 2015 labor production. Our shops delivered more than 50,000 components and performed 17 landing gear overhauls.

LATAM Safety and Security

Our most
important priority is the safety of our passengers and employees. LATAM has been working to standardize our operational indicators regarding safety, audits and emergency response throughout our operations.

The divisions that currently support these functions are Safety Management, Emergency Response Management, and Security Management. These divisions function
on the basis of uniform policies and procedures issued from the Corporate Safety and Security Vicepresidency located in Santiago, Chile, and that are represented in each affiliated company.

Organization of the LATAM Safety and Security Vicepresidency

Safety Management Corporate

We give the
highest priority to providing safe and reliable air service. We have unified our Safety Management under a single organization (Corporate) that is responsible for the definition of processes and procedures for LATAM Safety Management and for the
oversight of the affiliates that apply and implement those processes and procedures.

All LATAM affiliates have safety management system
(SMS) documentation that provides clear definitions of the functions and responsibilities regarding operational safety for all persons involved, from the top to the bottom of the operational structure in the airline.



34



---

##### Table of Contents

All systems are IOSA certified and have a Senior Safety Manager who is responsible for each
system implementation and for setting standardized procedures for measuring the quality and safety of services provided by companies or professional contractors that affect the operational safety of LATAM.

Emergency Response Management Corporate

The emergency response management team is responsible for the administration of the Emergency Response Plan (ERP). It has been
developed for the effective management of different kinds of emergencies (aircraft accidents, natural disasters, strikes and pandemics) with the purpose of mitigating the impacts of emergencies on passengers and their relatives, as well as on our
operations. The ERP includes, among others, Emergency Process and Procedures, Emergency Control Centers, a Relatives & Passengers Assistance Team, a Notification Team, Aircraft Recovery, and a Go Team which is a special team
that can be dispatched in the case of an emergency and assume responsibility for emergency management.

Security Management Corporate

The Company ensures the highest levels of security for all of its passengers, employees, aircraft, equipment and facilities against any threats
or unlawful action.

Corporate Security policies and a Security Management System (SeMS) have been implemented to detect any
vulnerabilities in our security operations and to prevent acts of unlawful interference. Through the use of audits, inspections and risk analysis, we are able to establish the different security protocols required in our international and domestic
operations. The results of the SeMS are evaluated, analyzed and assigned a risk level (high, medium or low) by LATAM Corporate Security Managers, who are in turn responsible for determining security protocols. In addition, Corporate Security
Management oversees all of the security processes and procedures through the execution of annual audits.

Furthermore, every LATAM
affiliate has to abide by a Security Program approved by the relevant local authority. These Security Programs provide clear definitions of the security functions required for every operation.

Fuel Supplies

Fuel costs comprise one of
the single largest categories of our operating expenses. Over the last years, our fuel consumption and operating expenses have increased due to the significant growth in our operations. However, in 2016 due to the significant drop in the
international price of crude oil, LATAM saw a drop in its jet fuel costs. In 2016, total fuel costs represented 23.0% of our total operating expenses. Our average into-wing price for 2016 (fuel price plus taxes and transportation costs, including
hedge) was US$1.70 per gallon, representing a decrease of 22.2% from the 2015 into-wing average fuel price. We can neither control nor accurately predict the volatility of fuel prices. Despite the foregoing, we believe it is possible to partially
offset the price volatility risk through our hedging and fuel surcharge programs, in place in both our passenger and cargo business. For more information, see Item 11. Quantitative and Qualitative Disclosures About Market RiskRisk of
Fluctuations in Jet Fuel Prices.

The following table details our consolidated fuel consumption and operating expenses, after
related hedging gains and losses (which exclude fuel costs related to charter operations because fuel expenses are covered by the entity that charters the flight) during the last three years.



|                                                             |  |                            |             |   |      |  |             |      |  |  |             |  
|------------------------------------------------------------ |  | -------------------------- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | -
|                                                             |  | Year ended December 31,(1) |            
|                                                             |  | 2016                       |             |   | 2015 |  |             | 2014 | 
|Fuel consumption (thousands of gallons)                      |  |                            | 1,185,508.8 |   |      |  | 1,221,096.9 |      |  |  | 1,219,882.7 |  
|ASK equivalents (millions)                                   |  |                            | 205,537.5   |   |      |  | 208,722.5   |      |  |  | 206,197.9   |  
|Fuel gallons consumed per 1,000 ASK equivalents              |  |                            | 5.77        |   |      |  | 5.85        |      |  |  | 5.92        |  
|Total fuel costs (US$ thousands)                             |  |                            | 2,056,643   |   |      |  | 2,651,067   |      |  |  | 4,167,030   |  
|Cost per gallon (US$)                                        |  |                            | 1.70        |   |      |  | 2.19        |      |  |  | 3.42        |  
|Total fuel costs as a percentage of total operating expenses |  |                            | 23.0        | % |      |  | 27.6        | %    |  |  | 34.8        | %



|(1) | See Item 5. Operating and Financial Review and ProspectsA. Operating ResultsLATAM Airlines Group Financial Results Discussion: Year ended
December 31, 2016 compared to year ended December 31, 2015. Total fuel costs (US$ thousands) include Hedging gains/losses.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our fuel supply arrangements vary by airport and are distributed among 34 providers, but are mainly concentrated in Brazil (42%), Chile (15%),
the United States (11%) and Peru (11%). During 2016, we re-negotiated our fuel supply contracts in all North American, major European, and certain South American airports.

Regarding our operations in the United States, we changed our strategy related to the term of our agreements. While previously we relied only
on short term agreements, in 2016 we established medium term agreements, securing our supply in a complex market.



35



---

##### Table of Contents

As part of a comprehensive energy efficiency initiative, LATAM Airlines Group worked with a team
of stakeholders to generate a streamlined fuel efficiency program (the LATAM Fuel Efficiency Program), which encompassess a wide range of different innovations and technologies for fuel efficiency:



| |  | Investments in more modern and efficient aircraft, such as the Boeing 787, Airbus A350 and the Airbus A320neo. The main fleet has been fitted with winglets and sharklets, allowing an estimated 4% fuel consumption
reduction.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Weight reduction measures, such as minimizing unnecessary onboard water, using ultra-light service carts, optimizing fuel according to destination, improving the distribution of weight to have an optimal center of
gravity and the improvement of freight factor (the combination of passenger and cargo services).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Standardized operational procedures for approach and landing, as well as for minimizing the use of the auxiliary power unit when aircraft is on the ground.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Periodically programmed engine washes, which allow more efficient combustion of fuel and reduce emissions in airport areas.
| | - | ---------------------------------------------------------------------------------------------------------------------------

As a direct result of this program, LATAM Airlines Group has been recognized since 2014 by the Dow Jones Sustainability Index as one of the
worlds leading companies in eco-efficiency. The magnitude of this program has allowed the Company to improve its environmental performance and to enhance environmental awareness both within the Company
and externally.

Ground Facilities and Services

Our main operations are based at the Comodoro Arturo Merino Benítez International Airport in Santiago, Chile, where we operate hangars,
aircraft parking and other airport service facilities pursuant to concessions granted by the DGAC. We also maintain a customs warehouse at the Comodoro Arturo Merino Benítez International Airport, additional customs warehouses in Chile
(Iquique, Antofagasta and Punta Arenas) and Argentina (Aeroparque) and operate cargo warehouses at the Miami International Airport to service our cargo customers. Our facilities at Miami International Airport include corporate offices for our cargo
and passenger operations and temperature-controlled and freezer space for imports and exports. We also operate from various other airports in Chile and abroad.

We also operate significant ground facilities and services at LATAM Airlines Brazils headquarters located at Congonhas International
Airport in São Paulo, Brazil. In 2013, LATAM Airlines Brazil inaugurated two new facilities for ground handling equipment maintenance and repair (at São Paulos Guarulhos Airport with 9,000 m2 and at Rio de Janeiros
Galeão Airport with 4,000 m2).

We incur certain airport usage fees and other charges for services performed by the various
airports where we operate, such as air traffic control charges, take-off and landing fees, aircraft parking fees and fees payable in connection with the use of passenger waiting rooms and check-in counter space.

Ancillary Airline Activities

In addition to our airline operations, we generate revenues from a variety of other activities, including aircraft leases (including subleases,
dry-leases, wet-leases and capacity sales to certain alliance partners) and charter flights, tours, duty-free in-flight sales,
maintenance services for third parties, handling, storage and customs services, handling and activities and revenues of Multiplus and the sale of certain LATAM Pass kilometers to third parties. In 2016, LATAM generated other revenues of
US$538.7 million from ancillary activities.

Insurance

We maintain insurance policies as required by law and in accordance with the terms of all aircraft financing and leasing agreements for
aircraft that LATAM and its affiliates own, are responsible for or operate. The scope of these policies includes all risk coverage for aircraft hulls, including war risks and third-party legal liability for passengers, cargo, baggage and injuries to
third parties on the ground. We also maintain insurance in respect of the assets against the risk of theft, fire, flood, electrical damage and similar events for equipment and buildings we own or for which we are responsible, including airport areas
where we have operations. Similarly, we have contracted for vehicle insurance against the risk of robbery, theft, fire and civil liability against third parties for all vehicles we own or for which we are responsible. Our current policies, which are
in force through April 1, 2017 and are renewed annually, follow the best practices adopted by the international civil aviation industry.





36



---

##### Table of Contents

We have negotiated common terms for Hull All Risk, Aviation Legal Liabilities and Spares
coverage, together with IAG Group (the parent of British Airways, Iberia and their affiliates and franchises), which allows us to obtain premium reductions and coverage improvements.

Information Technology

Passenger Service Systems

As part of our agenda of transformation of the customer experience at LATAM, we have redefined our travel experience model and will
continue to redesign our passenger service systems with the aim of providing a unified experience to our customers. Since the 2012 combination of LAN and TAM, a series of projects have been implemented to communicate the unification of the companies
to our customers. Intense efforts have been made to standardize processes such as passenger recognition, attention at contact centers, sales offices and airports, in-flight services, e-commerce and loyalty programs. However, many of these efforts are partial pending full unification of the two companies processes and systems, which is still ongoing.

In 2014, we redefined our travel experience model based on the needs of our target customer, reinforcing six key elements: transparency of
information, early solutions, passenger choice, digital simplicity, end-to-end rapidity, and care for our customer. In order to implement this model, during 2016 we
continued the work of previous years, adopting several measures for the unification of our processes and systems:



| |  | We incorporated innovative products with functional features into our mobile platform for passenger service crews. Our new self service platform allows the cabin crew to be connected and updated with all relevant human
resources and flight information.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Airports: we implemented a unique solution for self service in kiosks, with self service bag tag functionality.
| | - | ---------------------------------------------------------------------------------------------------------------



| |  | Contingency: we continue improving our mobile platform for agents to manage contingency processes, adding features to manage basic services to our passengers in contingencies and compensation in case of disruption. We
also implemented a passenger notification tool to manage both commercial and operational schedule changes.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Contact Center: we developed new front-ends to simplify the interaction of our agents with passengers, with more intelligent recognition and more functionality to provide faster, more uniform and personalized attention.
We implemented a world class solution to manage all customer service cases in a unified manner, solving problems faster and with fewer interactions. We also implemented an automatic tool to automate the calculation of refunds and reduced the time
required to process refunds.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loyalty and customers: we continued to unify our systems to support our loyalty program with a world-class solution. We continued the implementation of a campaign management tool to centralize and control all the
interactions with marketing campaigns with our customers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Digital Channels: We continue increasing the functionality available to digital channels.
| | - | -----------------------------------------------------------------------------------------

From the integration perspective, we continue working to reach a simplified and consistent technological platform. For example, we implemented
a unified Revenue Accounting System for the passenger business, and we have improved our airport management, loyalty program, contact center, customer database, and marketing tools applications. We continue to work with SABRE to unify the Passenger
Service Platform in an effort to obtain operational and financial synergies, as set forth below.

During 2017, we expect to continue
developing solutions aimed at improving our customers experience.

LATAM PSS Migration and Digital Platform

Prior to the 2012 combination, LAN and TAM used different passenger service platform (PSP) solutions, TAM used Amadeus and LAN used
SABRE. LATAM has since decided to unify the Passenger Service Platform in an effort to obtain operational and financial synergies. As a result, the PSS Migration Program began in 2014.

After running a Request for Proposal (RFP) process with both providers (SABRE and Amadeus) in May 2015, LATAM signed a 10-year contract with SABRE. Since June 2015, LATAM and SABRE have jointly started the execution of PSS Migration, which should be fully implemented by 2018.



37



---

##### Table of Contents

Maintenance

In 2013, LATAM Airlines Brazil began a Maintenix implementation project which was completed in the first quarter of 2016. This project included
standardization of all of our networks maintenance processes, permitting optimization of stocks of components and seeking to take advantage of synergies in the maintenance process, while maintaining operational safety as the key pillar.

Disaster Recovery Plan

As of December
2016, LATAM has two data centers in Chile and one in Brazil. Design and configuration of two data centers and a Disaster Recovery Plan for LATAM was completed in 2015 and implementation and testing was done during 2016.

Regulation

Below is a brief reference to
the material effects of aeronautical and other regulations in force in the relevant jurisdictions in which we operate.

We are subject to
the jurisdiction of various regulatory and enforcement agencies in each of the countries where we operate. We believe we have obtained and maintain the necessary authority, including authorizations and operative certificates where required, which
are subject to ongoing compliance with statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

The countries where we carry out most of our operations are contracting states and permanent members of the ICAO, an agency of the United
Nations established in 1947 to assist in the planning and development of international air transportation. The ICAO establishes technical standards for the international aviation industry. In the absence of an applicable local regulation concerning
safety or maintenance, the countries where we operate have incorporated by reference the majority of the ICAOs technical standards. We believe that we are in material compliance with all such relevant technical standards.

Environmental and Noise Regulation.There are no material environmental regulations or controls imposed upon airlines, applicable to aircraft, or that
otherwise affect us, except for environmental laws and regulations of general applicability.

In Argentina, Brazil, Colombia, Ecuador,
Peru and the United States, aircraft should comply with certain noise restrictions. We believe our aircraft substantially complies with all such restrictions. Chilean authorities are planning to pass a noise-related regulation governing aircraft
that fly to and within Chile, observing a standard known as Stage 3 requirements. Our fleet already complies with such standards, so we do not believe that enactment of the proposed standards would impose a material burden on us.

In 2016, the ICAO adopted a resolution creating the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), providing a
framework for a global market-based measure to stabilize CO2 emissions in international civil aviation (i.e., civil aviation flights that depart in one country and arrive in a different country). With the adoption of this framework, the aviation
industry became the first industry to achieve an agreement with respect to its CO2 emissions. The scheme, which defines a unified standard to regulate CO2 emissions in international flights, will be implemented in various phases by ICAO member
states starting in 2020.



38



---

##### Table of Contents

Safety and Security. Our operations are subject to the jurisdiction of various agencies in
each of the countries where we operate, which set standards and requirements for the operation of aircraft and its maintenance.

In the
United States, the Aviation and Transporation Security Act requires, among other things, the implementation of certain security measures by airlines and airports, such as the requirement that all passenger bags be screened for explosives. Funding
for airline and airport security required under the Aviation Security Act is provided in part by a US$5.60 per segment passenger security fee, subject to a US$11.20 per roundtrip cap; however, airlines are responsible for costs in excess of this
fee. Implementation of the requirements of the Aviation Security Act has resulted in increased costs for airlines and their passengers. Since the events of September 11, 2001, Congress has mandated, and the TSA has implemented, numerous
security procedures and requirements that have imposed and will continue to impose burdens on airlines, passengers and shippers.

Below
are some specific aeronautical regulations related to route rights and pricing policy in the countries where we operate.

Chile

Aeronautical Regulation

Both the
Dirección Nacional de Aeronáutica Civil (DGAC) and the Junta de Aeronáutica Civil (JAC) oversee and regulate the Chilean aviation industry. The DGAC reports directly to the Chilean Air Force and is
responsible for supervising compliance with Chilean laws and regulations relating to air navigation. The JAC is the Chilean civil aviation authority. Primarily on the basis of Decree Law No. 2,564, which regulates commercial aviation, the JAC
establishes the main commercial policies for the aviation industry in Chile and regulates the assignment of international routes and the compliance with certain insurance requirements, while the DGAC regulates flight operations, including personnel,
aircraft and security standards, air traffic control and airport management. We have obtained and maintain the necessary authority from the Chilean government to conduct flight operations, including authorization certificates from the JAC and
technical operative certificates from the DGAC, the continuation of which is subject to the ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be
adopted in the future.

Chile is a contracting state, as well as a permanent member, of the ICAO. Chilean authorities have incorporated
ICAOs technical standards for the international aviation industry into Chilean laws and regulations. In the absence of an applicable Chilean regulation concerning safety or maintenance, the DGAC has incorporated by reference the majority of
the ICAOs technical standards. We believe that we are in material compliance with all such relevant technical standards.

Route
Rights

Domestic Routes.Chilean airlines are not required to obtain permits in order to carry passengers or cargo on any
domestic routes, but only to comply with the technical and insurance requirements established respectively by the DGAC and the JAC. There are no regulatory barriers that would prevent a foreign airline from creating a Chilean subsidiary and entering
the Chilean domestic market using that subsidiary. On January 18, 2012 the Secretary of Transportation and the Secretary of Economics of Chile announced a unilateral opening of the Chilean domestic skies. This was confirmed on November 2013,
and has been in force since that date.

International Routes.As an airline providing services on international routes, LATAM is
also subject to a variety of bilateral civil air transportation agreements that provide for the exchange of air traffic rights between Chile and various other countries. There can be no assurance that existing bilateral agreements between Chile and
foreign governments will continue, and a modification, suspension or revocation of one or more bilateral treaties could have a material adverse effect on our operations and financial results.

International route rights, as well as the corresponding landing rights, are derived from a variety of air transportation agreements
negotiated between Chile and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its domestic airlines to operate scheduled services to certain
destinations of the former and, in certain cases, to further connect to third-country destinations. In Chile, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. If there is
more than one applicant for a route frequency, the JAC awards it through a public auction for a period of five years. The JAC grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an
airline fails to operate a route for a period of six months or more, the JAC may terminate its rights to that route. International route frequencies are freely transferable. In the past, we have generally paid only nominal amounts for international
route frequencies obtained in uncontested auctions.

Airfare Pricing Policy.Chilean airlines are permitted to establish their own
domestic and international fares without government regulation. For more information, see Antitrust Regulation below. In 1997, the Antitrust Commission approved and imposed a specific self-regulatory fare plan for our domestic
operations in Chile consistent with the Antitrust Commissions directive to maintain a competitive environment. According to this plan, we must file notice with the JAC of any increase or decrease in standard fares on



39



---

##### Table of Contents

routes deemed non-competitive by the JAC and any decrease in fares on competitive routes at least 20 days in advance. We must file
notice with the JAC of any increase in fares on competitive routes at least 10 days in advance. In addition, the Chilean authorities now require that we justify any modification that we make to our fares on
non-competitive routes. We must also ensure that our average yields on a non-competitive route are not higher than those on competitive routes of similar distance.

Argentina

Aeronautical Regulation

Both the Administración Nacional de Aviación Civil (ANAC) and the Ministry of Transport oversee
and regulate the Argentinean aviation industry. ANAC regulates flight operations, including personnel, aircraft and security standards, air traffic control and airport management, and reports directly to the Ministry of Transport. ANAC also is
responsible for supervising compliance with Argentinean laws and regulations relating to air navigation. The Ministry of Transport regulates the assignment of international routes and matters related to tariff regulation policies. We have
obtained and maintain the necessary authorizations from the Argentinean government to conduct flight operations, including authorization certificates and technical operative certificates from ANAC, the continuation of which is subject to the ongoing
compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future.

Argentina is a contracting state and a permanent member of the ICAO, an agency of the United Nations established in 1947 to assist in the
planning and development of international air transport. The ICAO establishes technical standards for the international aviation industry, which Argentinean authorities have incorporated into Argentinean laws and regulations. In the absence of
applicable Argentinean regulation concerning safety or maintenance, the ANAC has incorporated by reference the majority of the ICAOs technical standards. We believe that we are in material compliance with all such relevant technical standards.

Route Rights

Domestic Routes. In Argentina, airlines are required to obtain permits in connection with carrying passengers or cargo on any domestic
routes, and to comply with the technical requirements established by the local authority. There are no regulatory barriers preventing a foreign airline from creating an Argentine subsidiary and entering the Argentine domestic market using that
subsidiary. However, ownership of such subsidiary by the foreign airline may not be direct, but through a subsidiary formed in Argentina, which in turn may be directly or indirectly owned by the foreign company. However, such subsidiary should
operate Argentine-registered aircraft and employ Argentine aeronautical personnel.

International Routes. As an airline providing
services on international routes, LATAM Argentina is also subject to a variety of bilateral civil air transport agreements that provide for the exchange of air traffic rights between Argentina and various other countries. There can be no assurance
that existing bilateral agreements between Argentina and foreign governments will continue. Furthermore, a modification, suspension or revocation of one or more bilateral treaties could have a material adverse effect on our operations and financial
results.

International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements
negotiated between Argentina and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its domestic airlines to operate scheduled services to certain
destinations of the former and, in certain cases, to further connect to third-country destinations. In Argentina, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. ANAC
grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an airline fails to operate a route for a period of six months or more, the ANAC may terminate its rights to that route.

Airfare Pricing Policy. Argentine airlines are permitted to establish their own international fares without government regulation, as
long as they do not abuse any dominant market position they may enjoy. However, there are government-fixed minimum prices for domestic flights. Government-fixed maximum prices were in place until February 3, 2016, when the government eliminated
the controls that limited maximum prices, while retaining the minimum prices.

Peru

Aeronautical Regulation

The Peruvian DGAC (PDGAC) oversees and regulates the Peruvian aviation industry. The PDGAC reports directly to the Ministry of
Transportation and Communications and is responsible for supervising compliance with Peruvian laws and regulations relating to air navigation. In addition, the PDGAC regulates the assignment of national and international routes, and the compliance
with certain insurance requirements, and it regulates flight operations, including personnel, aircraft and security standards, air traffic control and airport management. We have obtained and maintain the necessary authorizations from the Peruvian
government to conduct flight operations, including authorization and technical operative certificates, the continuation of which is subject to the ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry,
including any rules and regulations that may be adopted in the future.



40



---

##### Table of Contents

Peru is a contracting state and a permanent member of the ICAO. The ICAO establishes technical
standards for the international aviation industry, which Peruvian authorities have incorporated into Peruvian laws and regulations. In the absence of an applicable Peruvian regulation concerning safety or maintenance, the PDGAC has incorporated by
reference the majority of the ICAOs technical standards. We believe that we are in material compliance with all relevant technical standards.

Route Rights

Domestic
Routes.Peruvian airlines are required to obtain permits in connection with carrying passengers or cargo on any domestic routes and to comply with the technical requirements established by the PDGAC.
Non-Peruvian airlines are not permitted to provide domestic air service between destinations in Peru.

International Routes.As an airline providing services on international routes, LATAM Peru is also subject to a variety of bilateral
civil air transport agreements that provide for the exchange of air traffic rights between Peru and various other countries. There can be no assurance that existing bilateral agreements between Peru and foreign governments will continue, and a
modification, suspension or revocation of one or more bilateral treaties could have a material adverse effect on our operations and financial results.

International route rights, as well as the corresponding landing rights, are derived from a variety of air transport agreements negotiated
between Peru and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its domestic airlines to operate scheduled services to certain destinations of
the former and, in certain cases, to further connect to third-country destinations. In Peru, when additional route frequencies to and from foreign cities become available, any eligible airline may apply to obtain them. If there is more than one
applicant for a route frequency, the PDGAC awards it through a public auction for a period of four years. The PDGAC grants route frequencies subject to the condition that the recipient airline operate them on a permanent basis. If an airline fails
to operate a route for a period of 90 days or more, the PDGAC may terminate its rights to that route, although that has never happened in practice.

Ecuador

Aeronautical Regulation

There are two institutions that control commercial aviation on behalf of the State: (i) The National Civil Aviation Board
(CNAC), which directs aviation policy; and (ii) the General Civil Aviation Bureau (EDGAC), which is a technical regulatory and control agency. The CNAC issues operating permits and grants operating concessions to
national and international airlines. It also issues opinions on bilateral and multilateral air transportation treaties, allocates routes and traffic rights, and approves joint operating agreements such as wet leases and shared codes.

Fundamentally, the EDGAC is responsible for:



| |  |  | ensuring that the national standards and technical regulations and international ICAO standards and regulations are observed;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | keeping records on insurance, airworthiness and licenses of Ecuadorian civil aircraft;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | maintaining the National Aircraft Registry;
| | - |  | -------------------------------------------



| |  |  | issuing licenses to crews;
| | - |  | --------------------------



| |  |  | controlling air traffic control inside domestic air space;
| | - |  | ----------------------------------------------------------



| |  |  | approving shared codes; and
| | - |  | ---------------------------



| |  |  | modifying operations permits.
| | - |  | -----------------------------

The EDGAC also must comply with the standards and recommended
methods of ICAO since Ecuador is a signatory of the 1944 Chicago Convention.

Route Rights

Domestic Routes.Airlines must obtain authorization from CNAC (an operating permit or concession) to provide air transportation. For
domestic operations, only companies incorporated in Ecuador can operate locally, and only Ecuadorian-licensed aircraft and dry leases are authorized to operate domestically.



41



---

##### Table of Contents

International Routes.Permits for international operations are based on air transportation
treaties signed by Ecuador or, otherwise, the principle of reciprocity is applied. All airlines doing business in Latin America that are incorporated in countries that are members of the Comunidad Andina de Naciones (the Andean Community, or
CAN) obtain their traffic rights on the basis of decisions currently in force under that regime, in particular decision N°582 of 2004, which guarantee free access to markets, with no type of restriction except technical
considerations.

Airfare Pricing Policy.On October 13, 2011, The Statutory Law of Regulation and Control of the Market Power
was passed with a purpose to avoid, prevent, correct, eliminate and sanction the abuse of economic operators with market power, as well as to sanction restrictive, disloyal and agreements involving collusive practices. This Law creates a new public
entity as the maximum authority of application and establishes the procedures of investigation and the applicable sanctions, which are severe. Rates are not regulated and are subject only to registration. In general, bilateral treaties regarding air
transportation provide for airfares to be regulated by the regulation of the country of origin.

Brazil

Aeronautical Regulation

The Brazilian aviation industry is regulated and overseen by the ANAC. The ANAC reports directly to the Civil Aviation Secretary, which is
subordinated by the Federal Executive Power of this country. Primarily on the basis of Law No. 11.182/2005, ANAC was created to regulate commercial aviation, air navigation, the assignment of domestic and international routes, compliance with
certain insurance requirements, flight operations, including personnel, aircraft and security standards, air traffic control, in this case sharing its activities and responsibilities with the Departamento de Controle do Espaço
Aéreo (Department of Airspace Control) (DECEA),which is a public secretary also subordinated to the Brazilian Defense Ministry, and airport management, in this last case sharing responsibilities with the Empresa Brasileira
de Infra-Estrutura Aeroportuária (the Brazilian Airport Infrastructure Company, or INFRAERO), a public company that was created by Law No. 5862/72, and is responsible for administrating, operating and exploring Brazilian
airports industrially and commercially (with the exception of Guarulhos International Airport, Viracopos International Airport and Brasilia International Airport, which were privatized in 2012 and are administrated by concession agreement).

We have obtained and maintain the necessary authority from the Brazilian government to conduct flight operations, including authorization and
technical operative certificates from ANAC, the continuation of which is subject to ongoing compliance with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the
future.

ANAC is the Brazilian civil aviation authority and it is responsible for supervising compliance with Brazilian laws and
regulations relating to air navigation. Brazil is a contracting state and a permanent member of the ICAO. The ICAO establishes technical standards for the international aviation industry, which Brazilian authorities, represented by the Brazilian
Defense Ministry, have incorporated into Brazilian laws and regulations. In the absence of an applicable Brazilian regulation concerning safety or maintenance, ANAC has incorporated by reference the majority of the ICAOs technical standards.

Route Rights

Domestic Routes. Brazilian airlines are not required to obtain permits in connection with domestic passenger or cargo transportation,
but only to comply with the technical requirements established by ANAC. Based on the Brazilian Aeronautical Code (CBA) established by Law No. 7.565/86, non-Brazilian airlines are not permitted
to provide domestic air service between destinations in Brazil. The same law prevents a foreign airline from creating a Brazilian subsidiary and entering the Brazilian domestic market using that subsidiary.

International Routes. Brazilian and non-Brazilian airlines providing services on international
routes are also subject to a variety of bilateral civil air transport agreements that provide for the exchange of air traffic rights between Brazil and various other countries. International route rights, as well as the corresponding landing rights,
are derived from a variety of air transport agreements negotiated between Brazil and foreign governments. Under such agreements, the government of one country grants the government of another country the right to designate one or more of its
domestic airlines to operate scheduled services to certain destinations of the former and, in certain cases, to further connect to third-country destinations. In Brazil, when additional route frequencies to and from foreign cities become available,
any eligible airline may apply to obtain them. If there is more than one applicant for a route frequency ANAC must carry out a public bid and award it to the elected airline. ANAC grants route frequencies subject to the condition that the recipient
airline operate them on a permanent basis. If an airline fails to operate a route for a period of six months or more, ANAC may terminate its rights to that route. ANAC may also terminate its right if the recipient airline does not operate at least
80% of the frequency given for that specific route.



42



---

##### Table of Contents

Airfare Pricing Policy. Brazilian and non-Brazilian airlines are
permitted to establish their own international and domestic fares, in this last case only for Brazilian airlines, without government regulation, as long as they do not abuse any dominant market position they may enjoy. Airlines may file complaints
before the Antitrust Court with respect to monopolistic or other pricing practices by other airlines that violate Brazils antitrust laws.

Colombia

Aeronautical Regulation

The governmental entity in charge of regulating, directing and supervising civil aviation in Colombia is the Aeronáutica Civil
(AC), a technical agency ascribed to the Ministry of Transportation. The AC is the aeronautical authority for the entire domestic territory, in charge of regulating and supervising the Colombian air space. The AC may interpret, apply and
complement all civil aviation and air transportation regulation to ensure compliance with the Colombian Aeronautical Regulations (RAC). The AC also grants the necessary permits for air transportation.

Route Rights

The AC
grants operation permits to domestic and foreign carriers that intend to operate in, from and to Colombia. In the case of Colombian airlines, in order to obtain the operational permit the company must comply with the RAC and fulfill legal, economic
and technical requirements, to later be subject to public hearings where the public convenience and necessity of the service is considered. The same process must be followed to add national or international routes, whose concession is subject to the
bilateral instruments entered into by Colombia. Routes cannot be transferred under any circumstance and there is no limit to foreign investment in domestic airlines.

Airfare Pricing Policy.Since July 2007, as stated in resolution 3299 of the Aeronautical Civil entity, bottom level airfares for both
international and domestic transportation were eliminated. Under resolution 904 issued in February 2012, the Aeronautical Civil authority ceased to impose the obligation of charging a fuel surcharge for both domestic and international transportation
of passengers and cargo. As of April 1, 2012, air carriers may now freely decide whether or not to charge a fuel surcharge. In the case that a fuel surcharge charged, it must be part of the fare, but shall be informed separately on the tickets,
advertising or other methods of marketing used by the company.

In the same line, as of April 1, 2012 there is no longer any
restriction on maximum fares published by the airlines or with respect to the obligations for air carriers to report to the Aeronautical civil authority the fares and conditions the day after being published.

Administrative fares are not subject to any changes, and its charge is mandatory for the transport of passengers under Aeronautical Civil
Regulations. Differential administrative fares apply to ticket sales made through internet channels.

Antitrust Regulation

The Chilean antitrust authority, which we refer to as the Antitrust Court (previously the Antitrust Commission), oversees antitrust matters,
which are governed by Decree Law No. 211 of 1973, as amended, or the Antitrust Law. The Antitrust Law prohibits any entity from preventing, restricting or distorting competition in any market or any part of any market. The Antitrust Law also
prohibits any business or businesses that have a dominant position in any market or a substantial part of any market from abusing that dominant position. An aggrieved person may sue for damages arising from a breach of Antitrust Law and/or file a
complaint with the Antitrust Court requesting an order to enjoin the violation of the Antitrust Law. The Antitrust Court has the authority to impose a variety of sanctions for violations of the Antitrust Law, including termination of contracts
contrary to the Antitrust Law, dissolution of a company and imposition of fines and daily penalties on businesses. Courts may award damages and other remedies (such as an injunction) in appropriate circumstances. As described above under
Route RightsAirfare Pricing Policy, in October 1997, the Antitrust Court approved a specific self-regulatory fare plan for us consistent with the Antitrust Courts directive to maintain a competitive environment within
the domestic market.

Since October 1997, LATAM and LATAM Chile follow a self-regulatory plan, which was modified and approved by the
Tribunal de la Libre Competencia (the Competition Court) in July 2005, and further in September 2011. In February 2010, the Fiscalía Nacional Economica (the National Economic Prosecutors Office) finalized the investigation initiated in
2007 regarding our compliance with this self-regulatory plan and no further observations were made.



43



---

##### Table of Contents

As a condition to the combination between LAN and TAM in June 2012, the antitrust authorities in
Chile and in Brazil each imposed certain mitigation measures as part of their approval of the combination . Furthermore, the association was submitted to the antitrust authorities in Germany, Italy and Spain. All these jurisdictions granted
unconditional clearances for this transaction. The association was filed with the Argentinean antitrust authorities, which approval is still pending. For more information regarding these mitigation measures please see below:

Chile

On
September 21, 2011, the TDLC issued a decision (the Decision) with respect to the consultation procedure initiated on January 28, 2011 in connection with the proposed combination between LAN and TAM. The TDLC, in the Decision,
approved the proposed combination between LAN and TAM, subject to 14 conditions, as generally described below:



| | 1. | exchange of certain slots in the Guarulhos Airport at Sao Paulo, Brazil;
| | -- | ------------------------------------------------------------------------



| | 2. | extension of the frequent flyer program to airlines operating or willing to operate the Santiago-Sao Paulo, Santiago-Río de Janeiro,
Santiago-Montevideo and Santiago-Asunción routes during the five-year period from the effective time of the combination;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | execution of interline agreements with airlines operating the Santiago-Sao Paulo, Santiago-Río de Janeiro and
Santiago-Asunción routes;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------



| | 4. | certain capacity and other transitory restrictions applicable to the Santiago-São Paulo route;
| | -- | ----------------------------------------------------------------------------------------------



| | 5. | certain amendments to LANs self-regulatory fare plan approved by the TDLC with respect to LANs domestic passenger business;
| | -- | -----------------------------------------------------------------------------------------------------------------------------



| | 6. | the obligation of LATAM to renounce to one global airline alliance within 24 months from the date in which the combination becomes effective, except in the case that the TDLC approves otherwise, or to elect not to
participate in any global airline alliance;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | certain restrictions on code-sharing agreements outside the global airline alliance to which LATAM belongs for routes with origin or destination in Chile or that connect to North America and Europe, or with Avianca/TACA
or Gol for international routes in South America, including the obligation to consult with, and obtain approval from, the TDLC prior to its execution of certain of those codeshare agreements;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | the abandonment of four air traffic frequencies with fifth freedom rights between Chile and Perú and limitations on acquiring in excess of 75%, as applicable, of the air traffic frequencies in that route and the
period that certain air traffic frequencies may be granted by the Chilean air transport authorities to LATAM;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | issuance of a statement by LATAM supporting the unilateral opening of the Chilean domestic skies (cabotage) and abstention from any actions that would prevent such opening;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10. | promotion by LATAM of the growth and normal operation of the Guarulhos (Brazil) and Arturo Merino Benítez (Chile) airports, to facilitate access thereto to other airlines;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 11. | certain restrictions regarding incentives to travel agencies;
| | --- | -------------------------------------------------------------



| | 12. | to maintain temporarily 12 round trip flights per week between Chile and the United States and at least seven round trip non-stop flights per week between Chile and Europe;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 13. | certain transitory restrictions on increasing fares in the Santiago-Sao Paulo and Santiago-Río de Janeiro routes for the passenger
business and for the Chile-Brazil routes for the cargo business; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 14. | engaging an independent consultant, expert in airline operations, which for 36 months, and in coordination with the FNE, will monitor and audit compliance with the conditions imposed by the Decision.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



44



---

##### Table of Contents

On or about June 2015, the FNE initiated a legal claim against LATAM before the TDLC alleging
that LATAM was not complying with certain mitigation conditions related to the code share agreements with airlines outside LATAMs global alliance as referenced above. Although LATAM opposed this allegation and responded the claim accordingly,
a settlement agreement was reached between the FNE and LATAM. The Settlement Agreement approved by the TDLC on December 22, 2015 terminated the legal proceeding initiated by the FNE and did not establish any violation of the TDLC resolutions or
any applicable antitrust regulations by LATAM. The Agreement did establish the obligation of LATAM to amend/terminate certain code share agreements and contract an independent third party consultant, which would act as an advisor to the FNE to
monitor the compliance by LATAM of the Seventh Condition and the Agreement.

Brazil

The Brazilian Council for Economic Defense  CADE approved the LAN/TAM merger by unanimous decision during the hearing session of
December 14, 2011, subject to the following conditions: (1) the new combined group (LATAM) should leave one of the two global alliances to which it was part (Star Alliance or oneworld); and (2) the new combined group (LATAM)
should offer to swap two pairs of slots in Guarulhos International Airport, to be used by an occasional third party interested in offering direct non-stop flights between São Paulo and Santiago, Chile.
These impositions are in line with the mitigation measures adopted by the TDLC, in Chile.

C. ORGANIZATIONAL STRUCTURE

LATAM operates through seven main airlines: LATAM Airlines Group S.A., incorporated in Chile; Transporte Aéreo S.A. (LATAM
Airlines Chile), a Chilean subsidiary; LAN Peru S.A. (LATAM Airlines Peru), a Peruvian subsidiary, Aerolane, Líneas Aéreas Nacionales del Ecuador S.A. (LATAM Airlines Ecuador), and Ecuadorian subsidiary,
LAN Argentina S.A. (LATAM Airlines Argentina, previously Aero 2000 S.A.), an Argentinian subsidiary, Aerovías de Integración Regional, Aires S.A. (LATAM Airlines Colombia), a Colombian subsidiary; TAM Linhas
Aereas S.A. (LATAM Airlines Brazil) incorporated in Brazil; and Transportes Aéreos del Mercosur S.A. (LATAM Airlines Paraguay), a Paraguayan subsidiary.

As of January 31, 2017 we held a 100% stake in Transporte Aéreo S.A. through direct and indirect interests, a 70% stake in LAN
Peru through direct and indirect interests, a 55.00% stake of the voting shares of LAN Ecuador and a 100% of the non-voting shares of Holdco Ecuador S.A., who has 45.00% of the voting shares of LAN Ecuador, a
95% indirect stake in LAN Argentina, a 99.19% indirect stake in LAN Colombia and a 100.00% stake of the non-voting shares of TAM, and 48.99% of the voting shares and 100% ofthe
non-voting of Holdco I S.A., who has 100.00% of the voting shares of TAM. Following changes in Brazilian law, which now permit foreign persons to own up to 49% of the voting capital of Brazilian airlines, on
April 20, 2016, we increased our ownership of the voting shares of Holdco I S.A. to 48.99%. For a description of the 2012 combination with TAM, including TAMs operating structure, see Item 4. Information on the CompanyA.
History and Development of the CompanyCombination of LAN and TAM.

Our cargo operations are carried out by our affiliates
under the new brand LATAM Cargo. Our cargo operations are complemented by the operations of certain related companies, such as Aero Transportes Mas de Carga S.A. de C.V. (MasAir) in Mexico, Aerolinhas Brasileiras S.A. (ABSA)
in Brazil and Linea Aérea Carguera de Colombia S.A. (LANCO) in Colombia. As of January 31, 2016, we indirectly held 100% of the non-voting shares and 24.99% of the voting shares of
MasAir, 100% of the non-voting shares and 20% of the voting shares of ABSA, and a 90% stake in LANCO through direct and indirect participations. TAM S.A. has 100% of the
non-voting shares and 100% of the voting shares of ABSA. Following the combination between LAN and TAM, we have coordinated the operations of ABSA and TAM Cargo in Brazil. In the cargo business, we market
ourselves primarily under the LATAM Cargo brand internationally.

D. PROPERTY, PLANT AND EQUIPMENT

Chile

Headquarters

Our main facilities are located on approximately five acres of land that we own near the Comodoro Arturo Merino Benítez International
Airport. The complex includes approximately 150,695 square feet of office space, 32,292 square feet of conference space and training facilities, 9,688 square feet of dining facilities and mock-up cabins used
for crew instruction.

In addition, we occupy 17,715 square feet for our executive offices in a more central location of Santiago, Chile.
This space includes five floors owned by LATAM in one building and 16 leased floors in an adjacent building. We also own one additional floor of 11,840 square feet at the Arrau Building in Santiago, Chile.



45



---

##### Table of Contents

Maintenance Base

Our 877,258 square foot maintenance base is located on a site that we own inside Comodoro Arturo Merino Benítez International Airport.
This facility contains our aircraft hangar, warehouses, workshops and offices, as well as a 559,720 square feet aircraft parking area capable of accommodating up to seventeen short-haul aircraft. We have a 53,820 square foot office building plus a
10,000 square foot office and workshop space. We also lease from the DGAC 193,750 square feet of space inside the Comodoro Arturo Merino Benítez International Airport for operational and service purposes. Our lease has a duration of 14 years.

Other Facilities

We own sixteen
acres of land and a building on the west side of the Comodoro Arturo Merino Benítez International Airport that houses a flight-training center. This facility features three full-flight simulators for Boeing 767, Airbus A320 and Boeing 737
aircraft.

Fast Air Almacenes de Carga S.A. (Fast Air), one of our affiliates that operates import customs warehouses,
utilizes an import warehouse and office building at the Comodoro Arturo Merino Benítez International Airport. This 172,000 square foot building was developed in conjunction with two other operators. We have leased these facilities since 2004
and we will continue to operate there until March 2017. During April 2017, we will transfer our operations to a 5,600 m2 warehouses located at Comodoro Arturo Merino Benítez International Airport.

Brazil

Headquarters

LATAM Airlines Brazils main facilities are located in São Paulo, in hangars within the Congonhas Airport and nearby. At Congonhas
Airport, LATAM Airlines Brazil leases office facilities in converted hangars belonging to INFRAERO (the Local Airport Administrator). These facilities comprise 60,380 m2.

The LATAM Service Academy is located at Rua Atica, about 2.5 km from Congonhas Airport. This property, which LATAM Airlines Brazil owns, is
used for human resources selection, medical services, training, mock-ups and offices- The Service Academy comprises 15,342 m2 of land area and 9,032 m2 of building area.

We also lease office space for corporate purposes in the city of São Paulo, where we operate 1,500 workstations distributed in 11
floors.

Base Maintenance

At Hangars
II and V in Congonhas Airport, which TAM leases from INFRAERO, LATAM Airlines Brazil has 21,727 m2 of offices and hangars with about 1,300 workstations. This site also houses the aircraft maintenance, procurement, aeronautical materials
logistics and retrofitting departments.

Headquarters of the Presidency

Completed in 2013, the Headquarters of the Presidency has an area of 5,066 m2, space for 641 workstations. The headquarters is located at
the Tower Bridge Building in the Brooklin region of São Paulo.

Other Facilities

In São Paulo, LATAM Airlines Brazil has other facilities, including: Uniform Building, used for storage and delivery of uniforms; a Call
Center Building with 3,199 m2, distributed over 5 floors (plus a ground floor and a basement) that currently holds about 400 workstations and support rooms (meetings / training / dining room / coordination) of the operations of Call Center
Reservations, Talk to People and LATAM Cargo Brazil back office.

In Guarulhos, LATAM has a total area of approximately 12,894 m2 distributed within the Passenger Terminal, including areas such as Check-in, Ticket Sales, Check Out, Operations Areas, VIP Lounges, Aircraft Maintenance, GSE,
Cargo Terminal, Distribution Centers, etc. The Cargo Terminal has 164 m2 of office and 8,534 m2 of open area. Our Distribution Centre Supplies
area occupies 3,030 m2.



46



---

##### Table of Contents

New Facilities

TAM completed several infrastructure projects in Brazil during 2016. The main highlights are:

1. New Cargo Warehouses in Fortaleza and Rio de Janeiro: total of 3,500 m2.

2. Terminal transfers in São Paulo- Viracopos and Goiânia: total of 250 m2.

3. Relocation of office areas in Rio de Janeiro and São José do Rio Preto: total of 650 m2.

4. Improvement of Hangar 3 at Congonhas: 4,060 m2.

Other locations

We occupy a 36.3 acre
site at the Miami International Airport that has been leased to us under a concession agreement by the Miami Dade Aviation Department. Our facilities include a 44,650 square feet corporate building, a 380,000 square feet cargo warehouse (including
an 116,670 square meter cooling area) and a 783,000 square feet aircraft-parking platform. These facilities were constructed and are now leased to us under a long-term contract by Aero Term, a division of Real Term Global. The rent we pay annually
for all facilities totals US$9.6 million.

In June 2016 we received the final occupancy permit for a new hangar at the Miami
International Airport. The property has a 50,785 square feet aircraft maintenance space, sufficient to house a Boeing B777 aircraft, in addition to a 32,440 square feet area designated for office space.

In addition, LATAM holds leases to airport concessions, administrative and sale offices, hangars and maintenance areas in Argentina, Colombia,
Ecuador, and Peru.



|ITEM 4A | UNRESOLVED STAFF COMMENTS
|------- | -------------------------

None.



|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------

A. Operating Results

You should read the following discussion of our financial condition and results of operations together with our audited consolidated financial
statements and the accompanying notes beginning on page F-1 of this annual report.

The summary
consolidated annual financial information as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014, has been prepared in accordance with IFRS and has been derived from our audited consolidated annual
financial statements included in this annual report.

Overview

We derive our revenues primarily from transporting passengers on our passenger aircraft, as well as from transporting cargo in the belly of our
passenger aircraft and in our dedicated freighter aircraft. In 2016, 82.7% of our total revenues (including for this purpose other income from operating activities) came from passenger revenues and 11.7% came from our cargo business. The remaining
5.7% was classified as other operating income, which consists primarily of revenues generated from our coalition and loyalty program Multiplus, tour operator services, aircraft leasing, customs and warehouseing services, third-party maintenance,
duty free sales and other miscellaneous income.

Our operating environment in 2016 was marked by a generally weak macroeconomic
environment in Latin America, including slower GDP growth or GDP contraction. In Brazil specifically, where GDP declined by 3.5% in 2016, the macroeconomic environment was marked by political corruption issues leading to a marked decrease in
business and consumer confidence levels. LATAM Airlines Group successfully managed capacity throughout its markets in order to address this challenging environment, and continued to rationalize capacity in line with demand conditions on both
domestic and international operations in the Brazilian market.

Passenger Operations

In general, our passenger revenues are driven by international and country-specific political and economic conditions, competitive activity,
and the attractiveness of the destinations that we serve. Passenger revenues are also affected by our capacity, traffic, load factors, yield and unit revenue. Our capacity is measured in terms of available seat kilometers, or ASKs, which represents
the sum, across our network, of the number of seats we make available for sale on each flight, multiplied by the kilometers flown by the respective flight. We measure traffic in RPKs, as the sum, across our network, of the number of passengers on
each flight multiplied by the number of kilometers flown by the respective flight. Load factors represent RPKs (traffic) as a percentage of ASKs (capacity), or the percentage of our capacity that is actually used by paying customers. Last, we use
yield, revenue from passenger operations divided by RPKs, to measure the average amount that one passenger pays to fly one kilometer and unit revenue, or revenue per ASK, to measure the effect of capacity on revenues. See Item 3. Key
InformationA. Selected Financial Data.



47



---

##### Table of Contents

Passenger demand over the past years has been affected as a result of weaker economic
environments in some Latin American countries, reflected in slower GDP growth trends and depreciated currencies, and increases in competition from operators to South America and within the region.

During 2016, domestic operations of our affiliate carriers based in the Spanish speaking countries (SSC, which includes Chile,
Peru, Argentina, Colombia and Ecuador) continued to show growth in terms of traffic and remained profitable, in spite of the economic slowdown in some countries. Our SSC business in 2016 grew at a higher pace than in 2015; we increased capacity (as
measured in ASKs) by 8.0% as compared to 2015, in line with our 8.0% growth in passenger traffic (as measured in RPKs), maintaining our load factors at 80.9%. However, yields in the SSC domestic markets continue to be under pressure, due largely to
the decline of fuel prices, the depreciation of local currencies, (mainly the Argentinian Peso and the Colombian Peso, which depreciated by 59.2% and 11.0% respectively, during 2016), and increased competition in certain markets. The combination of
these factors resulted in a 16.5% decline in revenue per ASK in US dollars as compared to 2015.

In our domestic operations in Brazil, we
continued to adjust capacity in response to a weak demand environment. LATAM Airlines Brazil reduced capacity (as measured by ASKs) by 11.5%, while passenger traffic (as measured in RPKs) decreased by 10.7%, allowing for an improvement of 0.8
percentage points in load factors, which reached a healthy 82.3%. LATAM Airlines Brazil ended the year with an increase of 6.3% in our revenues per ASK in Brazilian Reais as compared to 2015. Moreover, during the fourth quarter of 2016, revenues per
ASK (RASK) increased by 34.8% as compared to the same quarter of 2015, driven by a 14.8% increase in RASK in BRL as well as by the 14.3% average appreciation of the Brazilian Real.

In our international operations, we increased our passenger capacity by adding new destinations and strengthening the use of our regional
hubs, consistent with the Companys focus on network improvements. Brazilian international demand was also adversely affected by the weak macroeconomic conditions in the country. For this reason, LATAM Airlines Brazil reduced its capacity on
routes with weaker demand, specifically between Brazil and the US, with a significant recovery in unit revenues as compared to 2015, especially in the second half of the year. On the other hand, the other affiliates added capacity on healthy routes,
primarily from the Spanish Speaking Countries to destinations in the US and Europe. As a result, capacity in those markets (as measured by ASKs) increased by 5.6%, while traffic (as measured in RPKs) increased 7.4%, resulting in an improvement of
1.4 percentage points in load factors, which reached 86.2%, while the revenue per ASK (RASK) declined 9.9% in US dollars. A portion of the RASK decline is related to lower fuel prices and devaluation of local currencies during 2016 as compared to
2015.

Although 2016 was a challenging year, with weakening regional economies and recession in Brazil, devalued local currencies and high
inflation rates in certain countries, LATAM continues to be the best positioned airline group in Latin America to respond to these challenging conditions, as we continue to improve our margins, generate cash flow and deleverage our balance sheet,
showing the resilience of our business model. Our management has been proactive in addressing these economic challenges. We continue to pursue initiatives to further reduce costs, and we also successfully restructured our fleet commitments to adapt
fleet deliveries to the current demand environment in the region, reaching historically low levels of fleet commitments for 2017.

Cargo Operations

Our cargo operations depend on exports from South America to North America and Europe, and imports from North America and Europe to
South America, where Brazil is the main import market. Cargo markets are affected by economic conditions, foreign exchange rates, changes in international trade, the health of particular industries and competition and fuel prices (which we usually
pass on to our customers through a cargo fuel surcharge). Cargo revenues are affected by our capacity, traffic, load factors and yield. Our capacity is measured in terms of available ton kilometers, or ATKs, which represents the number of tons
available across our network for the transportation of cargo on each flight, multiplied by the kilometers flown by the respective flights. We measure traffic in revenue ton kilometers, or RTKs, as the amount of cargo loads (measured in tons) on each
flight multiplied by the number of kilometers flown by the respective flights. Load factors represent RTKs (traffic) as a percentage of ATKs (capacity), or the percentage of our cargo capacity that is actually used to transport cargo for our
customers.

Finally, we use cargo yield, or revenue from cargo operations divided by RTKs, to measure the average amount that our
customers pay to transport one ton of cargo one kilometer.

During 2016, cargo traffic decreased 8.7%, reflecting a challenging scenario
in Latin American cargo markets mainly due to a strong decline in Brazilian imports affected by recessionary conditions and currency devaluation. However, Latin American exports remain at healthy levels, notwithstanding lower production in the
salmon industry in Chile. Revenues per ATK declined by 8.5% as fares continued to be pressured by the competitive landscape and low fuel prices. The Company continued its rational and disciplined approach toward freighter capacity utilization, while
focused on maximizing the belly utilization of our passenger fleet. Consistent with this approach, we are currently sub-leasing three of our 767-300Fs and one of our 777-200Fs to a third party operating in a different market.Our cargo capacity decreased by 5.3% in 2016, resulting in a load factor of 51.7%.



48



---

##### Table of Contents

Cost Structure

LATAM Airlines Groups costs are largely driven by the size of our operations, fuel prices, fleet costs and exchange rates. Our operating
expenses are calculated in accordance with IFRS and comprise the sum of the line items cost of sales plus distribution costs plus administrative expenses plus other operating expenses, as shown on our
consolidated statement of comprehensive income. These operating expenses include wages and benefits, fuel, depreciation and amortization, commissions to agents, aircraft rentals, other rental and landing fees, passenger services, aircraft
maintenance and other operating expenses. The following is a discussion of the drivers of the most important costs.

As an airline, we are
subject to fluctuations in costs that are outside of our control, particularly fuel prices. At the end of 2015, fuel prices were relatively low, principally due to an aggregate excess supply from exporter countries (mainly OPEC members and Russia),
which offset the lower production by shale oil companies in the U.S. In 2016, fuel prices followed the same trend largely due to the agreement reached by Iran and the largest economies regarding Irans nuclear program, ending the penalties
imposed on that countrys oil exports. However, the concerns and speculations regarding the actual implementation of this agreement put pressure on fuel prices toward the end of 2016. LATAM Airlines Group has a hedging policy to protect medium
term liquidity risk from fuel price increases, while participating of benefits from fuel price reduction. Cost of fuel is also affected by the amount of gallons we consume, which depends on the size of our operation, the efficiency of our fleet and
the impact of our efficiency programs.

Personnel expenses are another significant component of our overall costs. Because a significant
portion of our labor costs is denominated in Chilean pesos and in Brazilian reais, appreciation of these currencies against the dollar as well as increases in local inflation rates can result in increased costs in dollar terms and can negatively
affect our results. Depreciation of local currencies results in decreases in costs in dollars. Other important drivers of personnel expenses are average headcount and average wages.

Commissions paid to travel and cargo agents are also a significant cost to the Company. We compete with other airlines over the amount of
commission we pay per sale, particularly in connection with special programs and marketing efforts, and to maintain competitive incentives with travel agents.

Fleet related expenses, namely aircraft rentals and depreciation, are another significant cost, and mainly depend on the number and type of
aircraft that are owned and that are under operating leases. These costs are largely fixed and can be reduced on a per unit basis by achieving higher aircraft utilization rates.

Results of Operations

LATAM Airlines Group Financial
Results Discussion: Year ended December 31, 2016 compared to year ended December 31, 2015.

The following table sets forth certain income
statement data for LATAM Airlines Group, for the year ended December 31, 2016, and December 31, 2015. For certain operating data for these periods, see Item 3. Key InformationA. Selected Financial Data.



|                                                                     |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |        |   
|-------------------------------------------------------------------- |  | --------------------------------------------------------- | -------- | - | ------------------------------------------ |  | -------- | ---- |  |  | ----- | -- |  | ----------------- | ----- | -- |  |  | ------ | --
|                                                                     |  | Year Ended December 31,                                   |         
|                                                                     |  | 2016                                                      |          |   | 2015                                       |  |          | 2016 |  |  | 2015  |    |  | 2016/2015% change |      
|                                                                     |  | (in US$ millions, except pershare and capital stock data) |          |   | As a percentage of totaloperating revenues |  |         
|Consolidated Results of Income by Function                           |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |        |   
|Operating revenues                                                   |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |        |   
|Passenger                                                            |  |                                                           | 7,877.7  |   |                                            |  | 8,410.6  |      |  |  | 87.6  | %  |  |                   | 86.4  | %  |  |  | (6.3   | %)
|Cargo                                                                |  |                                                           | 1,110.6  |   |                                            |  | 1,329.4  |      |  |  | 12.4  | %  |  |                   | 13.6  | %  |  |  | (16.5  | %)
|                                                                     |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |        |   
|Total operating revenues                                             |  |                                                           | 8,988.3  |   |                                            |  | 9,740.0  |      |  |  | 100.0 | %  |  |                   | 100.0 | %  |  |  | (7.7   | %)
|                                                                     |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |        |   
|Cost of sales                                                        |  |                                                           | (6,967.0 | ) |                                            |  | (7,636.7 | )    |  |  | (77.5 | %) |  |                   | (78.4 | %) |  |  | (8.8   | %)
|Gross margin                                                         |  |                                                           | 2,021.3  |   |                                            |  | 2,103.3  |      |  |  | 22.5  | %  |  |                   | 21.6  | %  |  |  | (3.9   | %)
|Other operating income                                               |  |                                                           | 538.7    |   |                                            |  | 385.8    |      |  |  | 6.0   | %  |  |                   | 4.0   | %  |  |  | 39.6   | % 
|Distribution costs                                                   |  |                                                           | (747.4   | ) |                                            |  | (783.3   | )    |  |  | (8.3  | %) |  |                   | (8.0  | %) |  |  | (4.6   | %)
|Administrative expenses                                              |  |                                                           | (873.0   | ) |                                            |  | (878.0   | )    |  |  | (9.7  | %) |  |                   | (9.0  | %) |  |  | (0.6   | %)
|Other operating expenses                                             |  |                                                           | (373.7   | ) |                                            |  | (324.0   | )    |  |  | (4.2  | %) |  |                   | (3.3  | %) |  |  | 15.4   | % 
|Financial income                                                     |  |                                                           | 74.9     |   |                                            |  | 75.1     |      |  |  | 0.8   | %  |  |                   | 0.8   | %  |  |  | (0.3   | %)
|Financial costs                                                      |  |                                                           | (416.3   | ) |                                            |  | (413.4   | )    |  |  | (4.6  | %) |  |                   | (4.2  | %) |  |  | 0.7    | % 
|Share of profit of investments accounted for using the equity method |  |                                                           | 0.0      |   |                                            |  | 0.0      |      |  |  | 0.0   | %  |  |                   | 0.0   | %  |  |  | 0.0    | % 
|Foreign exchange gains/(losses)                                      |  |                                                           | 121.7    |   |                                            |  | (467.9   | )    |  |  | 1.4   | %  |  |                   | (4.8  | %) |  |  | (126.0 | %)



49



---

##### Table of Contents

|                                                                                 |  |                                                           |         |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|-------------------------------------------------------------------------------- |  | --------------------------------------------------------- | ------- | - | ------------------------------------------ |  | -------- | ---- |  |  | ---- | -- |  | ----------------- | ---- | -- |  |  | ------ | --
|                                                                                 |  | Year Ended December 31,                                   |        
|                                                                                 |  | 2016                                                      |         |   | 2015                                       |  |          | 2016 |  |  | 2015 |    |  | 2016/2015% change |     
|                                                                                 |  | (in US$ millions, except pershare and capital stock data) |         |   | As a percentage of totaloperating revenues |  |         
|Result of indexation units                                                       |  |                                                           | 0.3     |   |                                            |  | 0.6      |      |  |  | 0.0  | %  |  |                   | 0.0  | %  |  |  | (50.0  | %)
|Other gains/(losses)                                                             |  |                                                           | (72.6   | ) |                                            |  | (55.3    | )    |  |  | (0.8 | %) |  |                   | (0.6 | %) |  |  | 31.3   | % 
|                                                                                 |  |                                                           |         |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Income (loss) before income taxes                                                |  |                                                           | 273.9   |   |                                            |  | (357.1   | )    |  |  | 3.1  | %  |  |                   | (3.5 | %) |  |  | (17.7  | %)
|Income (loss) tax expense                                                        |  |                                                           | (163.2  | ) |                                            |  | 178.4    |      |  |  | (1.8 | %) |  |                   | 1.8  | %  |  |  | (16.2  | %)
|                                                                                 |  |                                                           |         |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Net income (loss) for the period                                                 |  |                                                           | 110.7   |   |                                            |  | (178.7   | )    |  |  | 1.3  | %  |  |                   | (1.7 | %) |  |  | (38.1  | %)
|                                                                                 |  |                                                           |         |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Income (loss) for the period attributable to the parent companys equity holders |  |                                                           | 69.2    |   |                                            |  | (219.3   | )    |  |  | 0.8  | %  |  |                   | (2.3 | %) |  |  | (131.6 | %)
|Income (loss) for the period attributable to
non-controlling interests           |  |                                                           | 41.5    |   |                                            |  | 40.5     |      |  |  | 0.5  | %  |  |                   | 0.4  | %  |  |  | 2.2    | % 
|Net income (loss) for the period                                                 |  |                                                           | 110.7   |   |                                            |  | (178.7   | )    |  |  | 1.3  | %  |  |                   | (1.7 | %) |  |  | (38.1  | %)
|                                                                                 |  |                                                           |         |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Earnings per share                                                               |  |                                                           |         |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Basic earnings per share (US$)                                                   |  |                                                           | 0.12665 |   |                                            |  | (0.40193 | )    |  |  | n.a. |    |  |                   | n.a. |    |  |  | (131.5 | %)
|Diluted earnings per share (US$)                                                 |  |                                                           | 0.12665 |   |                                            |  | (0.40193 | )    |  |  | n.a. |    |  |                   | n.a. |    |  |  | (131.5 | %)



|* | The abbreviation n.a. means not available.
|- | --------------------------------------------

Net Income

Net income for the year ended December 31, 2016 equaled US$110.7 million, representing an improvement of US$289.4 million from a
net loss of US$178.7 million in 2015. Net income attributable to the parent companys shareholders was US$69.2 million in 2016, compared with a net loss of US$219.3 million in 2015. Results were positively impacted by a foreign
exchange gain of US$ 121.7 million, compared to a net foreign exchange loss of US$467.9 million in 2015.

Operating Revenues

Our total operating revenues decreased by 7.7% to US$8,988.3 million in the year ended December 31, 2016 compared to revenues of
US$9,740.0 million in 2015. The 2016 decrease in operating revenues was attributable to a 6.3% decrease in passenger revenues, and a 16.5% decrease in cargo revenues. Passenger and cargo revenues accounted for 87.6% and 12.4% of total operating
revenues in 2016, respectively.

Our consolidated passenger revenues decreased by 6.3% to US$7,877.7 million in 2016 from
US$8,410.6 million in 2015, as a result of a decrease of 6.9% in our unit revenues (RASK). Our capacity increased by 0.6%. The increase in capacity was a result of an 8.0% increase in our domestic Spanish-speaking countries
operations and a 5.6% increase in our international operations, partially offset by a decrease of 11.5% in capacity in our domestic Brazil operations. Decreases in RASK reflect a decrease of 8.1% in consolidated yields, resulting from the slowdown
in economic activity in the region, the depreciation of local currencies, a more competitive environment, and the pass-through of the savings in fuel costs to customers.

Cargo revenues decreased by 16.5%, to US$1,110.6 million in 2016 from US$1,329.4 million in 2015, as a result of a decrease of 5.3%
in capacity (ATK) and a decrease of 11.7% in unit revenues (RATK). Capacity decreased in our cargo operations mainly as a result of a reduced freighter operation. Decreases in RATK reflect the still challenging cargo scenario in South
America and in particular the weakness of the imports into the region, mainly to Brazil from North America and Europe, which has affected our cargo yields, which decreased by 8.5% in 2016 as compared to 2015.

Cost of Sales

Cost of sales decreased by
8.8% to US$6,967.0 million for the year ended December 31, 2016 (from US$7,636.7 million in 2015), mainly due to lower fuel expenses during the year and the positive impact of the depreciation of local currencies as well as our
ongoing cost reduction program. As a percentage of total operating revenues, cost of sales decreased from 78.4% in 2015 to 77.5% in 2016.



50



---

##### Table of Contents

The table below presents cost of sales information for the fiscal year ended December 31,
2016 and 2015.



|                              |  |                                               |          |   |                                             |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|----------------------------- |  | --------------------------------------------- | -------- | - | ------------------------------------------- |  | -------- | ---- |  |  | ----- | -- |  | ----------------- | ----- | -- |  |  | ----- | --
|                              |  | Year Ended December 31,                       |         
|                              |  | 2016                                          |          |   | 2015                                        |  |          | 2016 |  |  | 2015  |    |  | 2016/2015% change |      
|                              |  | (in US$ millions, except
as otherwise stated) |          |   | As a percentage of total
operating revenues |  |          |      | 
|Revenues                      |  |                                               | 8,988.3  |   |                                             |  | 9,740.0  |      |  |  | 100.0 | %  |  |                   | 100.0 | %  |  |  | (7.8  | %)
|Cost of sales                 |  |                                               | (6,967.0 | ) |                                             |  | (7,636.7 | )    |  |  | (77.5 | %) |  |                   | (78.4 | %) |  |  | (8.8  | %)
|                              |  |                                               |          |   |                                             |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|Aircraft Fuel                 |  |                                               | (2,056.6 | ) |                                             |  | (2,651.1 | )    |  |  | (22.9 | %) |  |                   | (27.2 | %) |  |  | (22.4 | %)
|Wages and Benefits            |  |                                               | (1,479.5 | ) |                                             |  | (1,553.8 | )    |  |  | (16.5 | %) |  |                   | (16.0 | %) |  |  | (4.8  | %)
|Other Rental and Landing Fees |  |                                               | (1,077.4 | ) |                                             |  | (1,109.8 | )    |  |  | (12.0 | %) |  |                   | (11.4 | %) |  |  | (2.9  | %)
|Depreciation and Amortization |  |                                               | (960.3   | ) |                                             |  | (934.4   | )    |  |  | (10.7 | %) |  |                   | (9.6  | %) |  |  | 2.8   | % 
|Aircraft Rentals              |  |                                               | (569.0   | ) |                                             |  | (525.1   | )    |  |  | (6.3  | %) |  |                   | (5.4  | %) |  |  | 8.3   | % 
|Aircraft Maintenance          |  |                                               | (366.2   | ) |                                             |  | (437.2   | )    |  |  | (4.1  | %) |  |                   | (4.5  | %) |  |  | (16.3 | %)
|Passenger Services            |  |                                               | (286.6   | ) |                                             |  | (295.4   | )    |  |  | (3.2  | %) |  |                   | (3.0  | %) |  |  | (3.0  | %)
|Other Costs of Sales          |  |                                               | (171.4   | ) |                                             |  | (129.9   | )    |  |  | (2.8  | %) |  |                   | (1.3  | %) |  |  | 49.8  | % 

The decrease in our cost of sales was driven by lower aircraft fuel expenses, which decreased by 22.4% to
US$2,056.6 million in 2016 as a result of a 16.6% decrease in the full year average fuel price (excluding hedge). LATAM recognized a net loss of US$48.0 million in fuel hedging in 2016, compared to a fuel hedge loss of
US$239.4 million in 2015. In 2016, the Company also recognized a US$40.3 million hedge loss related to foreign currency contracts, which were recognized in the fuel cost line compared to a US$19.2 gain million in 2015.

Depreciation and amortization increased by US$25.9 million, amounting to US$960.3 million, which represents an increase of 2.8% due
to the increase in the number of owned aircraft, partially offset by the positive impact of the 4.5% depreciation of the Brazilian real.

Other rental and landing fees decreased by 2.9% to US$1,077.4 million in 2016 from U$1,109.8 million in 2015, mainly due to a
decline in the rental of passenger and cargo capacity from third parties as well as lower handling costs.

Aircraft maintenance expenses
decreased by 16.3%, from US$437.2 million in 2015 to US$366.2 million in 2016, mainly due to cost efficiencies related with the renewal of our fleet and lower maintenance expenses related to the redelivery of aircraft.

Aircraft rentals increased by 8.3% to US$569.0 million in 2016 from US$525.1 million in 2015 as a result of the incorporation of
larger and more modern aircraft under operating leases (i.e. Boeing 787s and Airbus A350s), whereas returned aircraft have mainly been older models (i.e. Airbus A319s and A330s).

Passenger service expenses decreased by 3.0%, to US$286.6 million in 2016 compared to US$295.4 million in 2015, due mainly to a
decrease of 1.3% in the number of passengers transported, as well as the decrease in on board services expenses, offset in part by an increase in passenger compensation.

As a result of the above, gross margin(defined as operating revenue minus cost of sales)decreasedby 3.9% from
US$2,103.3 million in 2015 to US$2,021.3 million in 2016.

Other Consolidated Results

Other operating income increased in 2016 by 39.6%, from US$385.8 million in 2015 to US$538.7 million in 2016, mainly due to a
US$80.1 million gains derived from aircraft sales and leaseback transaction (resulting in an operating lease) as well as a US$41.8 million increase in revenues from freighter aircraft leases and sales of fixed assets.

Distribution costs decreased by 4.6% from US$783.3 million in 2015 to US$747.4 million in 2016, mainly as a result of lower
commissions to agents (which decreased by 11.1%, from US$302.8 million to US$269.3 million), in both the passenger and cargo businesses, representing a greater percentage decline than the 7.7% decline in passenger and cargo revenues.

Administrative expenses decreased by 0.6% from US$878.0 million in 2015 to US$873.0 million in 2016, mainly due to a decrease of
4.8% in wages and benefits (as a result of a 6.2% decline in average headcount), as well as the positive impact of the depreciation of certain local currencies on wages denominated in those currencies.



51



---

##### Table of Contents

Other operating expenses increased by 15.4% from US$324.0 million in 2015 to
US$373.7 million in 2016, driven by higher costs associated with fleet sales and redeliveries, and due to lower cost in 2015 as a result of negotiations with third parties relating to our passenger service system.

Financial income was essentially unchanged US$74.9 million in the year ended December 31, 2016 compared with US$75.1 million in
2015).

Financial costs increased by 0.7% to US$416.3 million in 2016 from US$413.4 million in 2015, mainly due to base
interest rate increases on floating rate debt.

Exchange rate differences increased to a gain of US$121.7 million in 2016 from a loss
of US$467.9 million in 2015, mainly resulting from the 16.5% appreciation of the Brazilian real between December 31, 2015 and December 31, 2016.

Income tax expense for 2016 amounted to US$163.2 million, as compared to an income tax benefit of US$178.4 million in 2015. This
variation is explained mainly by improved pre-tax results in 2016 (US$273.9 million gain) compared with 2015 (US$357.1 million loss) resulting in increased income tax charges of US$196 million;
the non-recognition of deferred taxes related to tax losses in Brazil from the fourth quarter of 2015 (non-recognition of US$90.4 million in 2016 vs
US$16.9 million in 2015); the reversal in 2016 of tax provisions in Brazil in the amount of US$61.2 million in 2015; and other items of US$10 million. For more information, see Note 18 to our audited consolidated financial statements.

Out of Period Adjustments

The
Company recorded out of period adjustments resulting in an aggregate net decrease of US$18.2 million to Net income (loss) for the period for the year ended December 31, 2016. These adjustments include a loss of
US$39.5 million resulting from an account reconciliation process initiated after TAM S.A. and its subsidiaries completed the implementation of the SAP system. A further US$11.0 million decrease reflects adjustments related to foreign
exchange differences, also relating to the Companys subsidiaries in Brazil. The balance of US$32.3 million includes mainly the adjustment of unclaimed fees for expired tickets for the Company and its affiliates outside Brazil. Management
of TAM S.A. has concluded that the out of period adjustments that have been identified are material to the 2015 financial statements of TAM S.A., which should therefore require a restatement of TAMs financial statements. However, LATAM has
evaluated the impact of all out of period adjustments, both individually and in the aggregate, and concluded that due to their relative size and to qualitative factors they are not material to the annual consolidated financial statements of LATAM
for the year ended December 31, 2016, or to any previously reported consolidated financial statements, therefore no restatement or revision is necessary.

LATAM Airlines Group Financial Results Discussion: Year ended December 31, 2015 compared to year ended December 31, 2014.

The following table sets forth certain income statement data for LATAM Airlines Group, for the year ended December 31, 2015, and December 31, 2014.
For certain operating data for these periods, see Item 3. Key InformationA. Selected Financial Data.



|                                           |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|------------------------------------------ |  | --------------------------------------------------------- | -------- | - | ------------------------------------------ |  | -------- | ---- |  |  | ----- | -- |  | ----------------- | ----- | -- |  |  | ----- | --
|                                           |  | Year Ended December 31,                                   |         
|                                           |  | 2015                                                      |          |   | 2014                                       |  |          | 2015 |  |  | 2014  |    |  | 2015/2014% change |      
|                                           |  | (in US$ millions, except pershare and capital stock data) |          |   | As a percentage of totaloperating revenues |  |         
|Consolidated Results of Income by Function |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|Operating revenues                         |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|Passenger                                  |  |                                                           | 8,410.6  |   |                                            |  | 10,380.1 |      |  |  | 86.4  | %  |  |                   | 85.8  | %  |  |  | (19.0 | %)
|Cargo                                      |  |                                                           | 1,329.4  |   |                                            |  | 1,713.4  |      |  |  | 13.6  | %  |  |                   | 14.2  | %  |  |  | (22.4 | %)
|                                           |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|Total operating revenues                   |  |                                                           | 9,740.0  |   |                                            |  | 12,093.5 |      |  |  | 100.0 | %  |  |                   | 100.0 | %  |  |  | (19.5 | %)
|                                           |  |                                                           |          |   |                                            |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|Cost of sales                              |  |                                                           | (7,636.7 | ) |                                            |  | (9,624.5 | )    |  |  | (78.4 | %) |  |                   | (79.6 | %) |  |  | (20.7 | %)
|Gross margin                               |  |                                                           | 2,103.3  |   |                                            |  | 2,469.0  |      |  |  | 21.6  | %  |  |                   | 20.4  | %  |  |  | (14.8 | %)
|Other operating income                     |  |                                                           | 385.8    |   |                                            |  | 377.6    |      |  |  | 4.0   | %  |  |                   | 3.1   | %  |  |  | 2.2   | % 
|Distribution costs                         |  |                                                           | (783.3   | ) |                                            |  | (957.1   | )    |  |  | (8.0  | %) |  |                   | (7.9  | %) |  |  | (18.2 | %)
|Administrative expenses                    |  |                                                           | (878.0   | ) |                                            |  | (980.7   | )    |  |  | (9.0  | %) |  |                   | (8.1  | %) |  |  | (10.5 | %)
|Other operating expenses                   |  |                                                           | (324.0   | ) |                                            |  | (401.0   | )    |  |  | (3.3  | %) |  |                   | (3.3  | %) |  |  | (19.2 | %)
|Financial income                           |  |                                                           | 75.1     |   |                                            |  | 90.5     |      |  |  | 0.8   | %  |  |                   | 0.7   | %  |  |  | (17.0 | %)
|Financial costs                            |  |                                                           | (413.4   | ) |                                            |  | (430.0   | )    |  |  | (4.2  | %) |  |                   | (3.6  | %) |  |  | (3.9  | %)



52



---

##### Table of Contents

|                                                                                 |  |                                                           |          |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|-------------------------------------------------------------------------------- |  | --------------------------------------------------------- | -------- | - | ------------------------------------------ |  | -------- | ---- |  |  | ---- | -- |  | ----------------- | ---- | -- |  |  | ------ | --
|                                                                                 |  | Year Ended December 31,                                   |         
|                                                                                 |  | 2015                                                      |          |   | 2014                                       |  |          | 2015 |  |  | 2014 |    |  | 2015/2014% change |     
|                                                                                 |  | (in US$ millions, except pershare and capital stock data) |          |   | As a percentage of totaloperating revenues |  |         
|Share of profit of investments accounted for using the equity method             |  |                                                           | 0.0      |   |                                            |  | (6.5     | )    |  |  | 0.0  | %  |  |                   | (0.1 | %) |  |  | 100.0  | % 
|Foreign exchange gains/(losses)                                                  |  |                                                           | (467.9   | ) |                                            |  | (130.2   | )    |  |  | (4.8 | %) |  |                   | (1.1 | %) |  |  | 259.4  | % 
|Result of indexation units                                                       |  |                                                           | 0.6      |   |                                            |  | 0.1      |      |  |  | 0.0  | %  |  |                   | 0.0  | %  |  |  | 500.0  | % 
|Other gains/(losses)                                                             |  |                                                           | (55.3    | ) |                                            |  | 33.5     |      |  |  | (0.5 | %) |  |                   | 0.3  | %  |  |  | (265.0 | %)
|                                                                                 |  |                                                           |          |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Income (loss) before income taxes                                                |  |                                                           | (357.1   | ) |                                            |  | 65.2     |      |  |  | (3.4 | %) |  |                   | 0.4  | %  |  |  | (647.6 | %)
|Income (loss) tax expense                                                        |  |                                                           | 178.4    |   |                                            |  | (292.4   | )    |  |  | 1.8  | %  |  |                   | (2.4 | %) |  |  | 39.0   | % 
|                                                                                 |  |                                                           |          |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Net income (loss) for the period                                                 |  |                                                           | (178.7   | ) |                                            |  | (227.2   | )    |  |  | (1.6 | %) |  |                   | (2.0 | %) |  |  | (21.3  | %)
|                                                                                 |  |                                                           |          |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Income (loss) for the period attributable to the parent companys equity holders |  |                                                           | (219.3   | ) |                                            |  | (260.0   | )    |  |  | (2.2 | %) |  |                   | (2.2 | %) |  |  | (15.7  | %)
|Income (loss) for the period attributable to
non-controlling interests           |  |                                                           | 40.5     |   |                                            |  | 32.8     |      |  |  | 0.4  | %  |  |                   | 0.3  | %  |  |  | 23.5   | % 
|Net income (loss) for the period                                                 |  |                                                           | (178.7   | ) |                                            |  | (227.2   | )    |  |  | (1.8 | %) |  |                   | (1.9 | %) |  |  | (161.0 | %)
|                                                                                 |  |                                                           |          |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Earnings per share                                                               |  |                                                           |          |   |                                            |  |          |      |  |  |      |    |  |                   |      |    |  |  |        |   
|Basic earnings per share (US$)                                                   |  |                                                           | (0.40193 | ) |                                            |  | (0.47656 | )    |  |  | n.a. |    |  |                   | n.a. |    |  |  | (15.7  | %)
|Diluted earnings per share (US$)                                                 |  |                                                           | (0.40193 | ) |                                            |  | (0.47656 | )    |  |  | n.a. |    |  |                   | n.a. |    |  |  | (15.7  | %)



|* | The abbreviation n.a. means not available.
|- | --------------------------------------------

Net Income / Loss

Net loss for the year ended December 31, 2015 equaled US$ 178.7 million, representing an improvement of US$ 48.5 million from a
net loss of US$227.2 million in 2014. Net loss attributable to the parent companys shareholders improved to US$ 219.3 million in 2015 from US$260.0 million in 2014. Results for 2015 include an US$ 80 million provision recognized
during the fourth quarter of the year for aircraft redelivery costs associated with the 2016 phase-out of the Airbus A330 (for more information, see Financial Statements Note 27 (e)  Restructuring
Costs). Results were also impacted by a foreign exchange loss of US$ 467.9 million, (mainly resulting from the 49.0% depreciation of the Brazilian real between December 31, 2014 and December 31, 2015, and a US$41.0 million charge
related to the adjustment in the exchange rate of cash held in Venezuela), as compared to a foreign exchange loss of US$130.2 million in 2014.

Operating Revenues

Our total operating
revenues decreased by 19.5% to US$ 9,740.0 million for the year ended December 31, 2015, compared to revenues of US$ 12,093.5 million in 2014. The 2015 decrease in operating revenues was attributable to a 19.0% decrease in passenger
revenues, and a 22.4% decrease in cargo revenues. Passenger and cargo revenues accounted for 86.4% and 13.6% of total operating revenues (defined as revenues from passenger and cargo operations, plus other operating income) in 2015, respectively.

Our consolidated passenger revenues decreased by 19.0% to US$8,410.6 million in 2015 from US$10,380.1 million in 2014, largely
as a result of a decrease of 21.4% in our unit revenues (RASK). Our capacity increased by 3.1%. The increase in capacity was a result of a 6.4% increase in our international operations and a 4.8% increase in our domestic Spanish-Speaking Countries
operations, and was partially offset by a decrease of 2.5% in capacity in our domestic Brazil operations. Decreases in RASK reflect a decrease of 21.1% in consolidated yields, resulting from the slowdown in economic activity in the region and
depreciation of local currencies, mainly in Brazil.

Cargo revenues decreased by 22.4%, to US$1,329.4 million in 2015 from
US$1,713.4 million in 2014, as a result of a decrease of 1.9% in capacity (ATK) and a decrease of 20.9% in unit revenues (RATK). Capacity decreased in our cargo operations mainly as a result of a reduced freighter operation and the sub-lease of two additional aircraft to another company. Decreases in RATK reflect the still challenging cargo scenario in South America and in particular the weakness of the imports into the region, mainly to
Brazil, which have affected our cargo yields. During 2015, cargo yields decreased by 11.8% as compared to 2014.



53



---

##### Table of Contents

Cost of Sales

Cost of sales decreased by 20.7% to US$7,636.7 million in the year ended December 31, 2015 from US$9,624.5 million in 2014,
mainly due to lower fuel expenses in the year. As a percentage of total operating revenues, cost of sales decreased from 79.6% in 2014 to 78.4% in 2015.

The table below presents cost of sales information for the fiscal year ended December 31, 2015 and 2014.



|                              |  |                                               |          |   |                                             |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|----------------------------- |  | --------------------------------------------- | -------- | - | ------------------------------------------- |  | -------- | ---- |  |  | ----- | -- |  | ----------------- | ----- | -- |  |  | ----- | --
|                              |  | Year Ended December 31,                       |         
|                              |  | 2015                                          |          |   | 2014                                        |  |          | 2015 |  |  | 2014  |    |  | 2015/2014% change |      
|                              |  | (in US$ millions, except
as otherwise stated) |          |   | As a percentage of total
operating revenues |  |          |      | 
|Revenues                      |  |                                               | 9,740.0  |   |                                             |  | 12,093.5 |      |  |  | 100.0 | %  |  |                   | 100.0 | %  |  |  | (19.5 | %)
|Cost of sales                 |  |                                               | (7,636.7 | ) |                                             |  | (9,624.5 | )    |  |  | (78.4 | %) |  |                   | (79.6 | %) |  |  | (20.7 | %)
|                              |  |                                               |          |   |                                             |  |          |      |  |  |       |    |  |                   |       |    |  |  |       |   
|Aircraft Fuel                 |  |                                               | (2,651.1 | ) |                                             |  | (4,167.0 | )    |  |  | (27.2 | %) |  |                   | (34.5 | %) |  |  | (36.4 | %)
|Wages and Benefits            |  |                                               | (1,553.8 | ) |                                             |  | (1,751.3 | )    |  |  | (16.0 | %) |  |                   | (14.5 | %) |  |  | (11.3 | %)
|Other Rental and Landing Fees |  |                                               | (1,109.8 | ) |                                             |  | (1,327.2 | )    |  |  | (11.4 | %) |  |                   | (11.0 | %) |  |  | (16.4 | %)
|Depreciation and Amortization |  |                                               | (934.4   | ) |                                             |  | (991.3   | )    |  |  | (9.6  | %) |  |                   | (8.2  | %) |  |  | (5.7  | %)
|Aircraft Rentals              |  |                                               | (525.1   | ) |                                             |  | (521.4   | )    |  |  | (5.4  | %) |  |                   | (4.3  | %) |  |  | 0.7   | % 
|Aircraft Maintenance          |  |                                               | (437.2   | ) |                                             |  | (452.7   | )    |  |  | (4.5  | %) |  |                   | (3.7  | %) |  |  | (3.4  | %)
|Passenger Services            |  |                                               | (295.4   | ) |                                             |  | (300.3   | )    |  |  | (3.0  | %) |  |                   | (2.5  | %) |  |  | (1.6  | %)
|Other Costs of Sales          |  |                                               | (129.9   | ) |                                             |  | (113.3   | )    |  |  | (1.3  | %) |  |                   | (0.9  | %) |  |  | 14.6  | % 

The decrease in cost of sales was driven by largely lower aircraft fuel expenses, which decreased by 36.4% to
US$2,651.1 million in 2015 as a result of a 40.2% decrease in the full year average fuel price (excluding hedge losses). LATAM recognized a net loss of US$239.4 million in fuel hedging in 2015, compared to a fuel hedge loss of
US$108.8 million in 2014. In 2015 the Company also recognized a US$19.2 million hedge gain related to foreign currency contracts, which were recognized in the fuel cost line.

Depreciation and amortization decreased by US$56.9 million, amounting to US$934.4 million, which represents a decrease of 5.7%
(despite the increase in modern owned aircraft in our fleet), mainly as a result of the phase-out of leased aircraft with the consequent decrease in maintenance depreciation and the positive impact of the
depreciation of the Brazilian real in the year as compared to 2014.

Other rental and landing fees decreased by 16.4% to
US$1,109.8 million in 2015 from U$1,327.2 million in 2014, mainly resulting from lower aeronautical rates (in dollars) as a result of the depreciation of local currencies.

Aircraft maintenance expenses decreased by 3.4%, from US$452.7 million in 2014 to US$437.2 million in 2015, mainly as a result of
fleet renewal initiatives and reduced operations.

Aircraft rentals increased by 0.7% to US$525.1 million in 2015 from
US$521.4 million in 2014 despite fewer leased aircraft, as a result of the incorporation of larger and more modern aircraft under operating leases (i.e. Boeing 787s), whereas returned aircraft were mainly been older and smaller models (i.e.
Airbus A319, Dash8 Q400 aircraft).

Passenger service expenses decreased by 1.6%, to US$295.4 million in 2015 compared to
US$300.3 million in 2014, despite a flat the number of passengers transported, mainly due a decrease in passenger compensations and the positive effect of the depreciation of the Brazilian real on supplier costs.

As a result of the above, gross margin(defined as operating revenue minus cost of sales)decreasedby 14.8% from
US$2,469.0 million in 2014 to US$2,103.3 million in 2015.

Other Consolidated Results

Other operating income increased in 2015 by 2.2%, from US$377.6 million in 2014 to US$385.8 million in 2015, mainly due to an
increase of US$15.4 million in revenue from aircraft leased to third parties.



54



---

##### Table of Contents

Distribution costs decreased by 18.2% from US$957.1 million in 2014 to US$783.3 million
in 2015, mainly as a result of lower commissions to agents (which decreased by 17.2% from US$365.5 million to US$302.8 million), related to lower revenues, lower sales fulfillments in some countries and depreciation of local currencies.

Administrative expenses decreased by 10.5% from US$980.7 million in 2014 to US$878.0 million in 2015, mainly due to a decrease of
11.3% in wages and benefits resulting from a 5.0% decline in average headcount and the positive impact of the depreciation of the Brazilian real and Chilean peso on wages denominated in those currencies.

Other operating expenses decreased by 19.2% from US$401.0 million in 2014 to US$324.0 million in 2015, mainly due to lower tax
contingencies in 2015 as well as the reversal of certain tax contingencies established during 2014.

Financial income decreased to
US$75.1 million in the year ended December 31, 2015 from US$90.5 million in 2014, mainly due to an increase in interest rates in Brazil and due to the depreciation of the local currency affecting the investments the Company held in
Brazil and Argentina.

Financial costs (from non-financial activities) decreased by 3.9% to
US$413.4 million in 2015 from US$430.0 million in 2014, mainly due to the recognition of US$23 million in breakage costs related to the sale and leaseback of four of our Boeing 777 aircraft during the first quarter of 2014.

Exchange rate differences worsened, from a loss of US$130.2 million in 2014 to a loss of US$467.9 million in 2015, mainly resulting
from the 49.0% depreciation of the Brazilian real between December 31, 2014 and December 31, 2015.

We obtained an income tax
benefit for 2015 of US$178.4 million, compared to an income tax expense of US$292.4 million in 2014. This variation is partially explained by an accounting charge of US$150.2 million in 2014 due to modifications made to the Chilean
Tax System, consisting in a gradual increase of corporate income tax from 20% in 2014 to 27% by 2018. For more information, see Critical Accounting PoliciesDeferred Taxes below and Note 17 to our audited consolidated
financial statements.

U.S. Dollar Presentation and Price-Level Adjustments

General

Foreign currency transactions

(a) Presentation and functional currencies

The items included in the financial statements of LATAM are valued using the currency of the main economic environment in which each entity
operates (the functional currency). The functional currency of LATAM is the U.S. dollar, which is also the currency of presentation of the audited consolidated financial statements of LATAM and its affiliates.

(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.

(c) Group entities

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



| | (i) | The assets and liabilities of each consolidated statement of financial position are translated at the closing exchange rate on the date of the consolidated statement of financial position;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | The revenues and expenses of each results account are translated at monthly average rates; and
| | ---- | ----------------------------------------------------------------------------------------------



| | (iii) | All the resulting exchange differences are shown as a separate component in net equity.
| | ----- | ---------------------------------------------------------------------------------------

For
consolidation purposes, exchange differences arising from the translation of a net investment in foreign entities (or in local entities with a functional currency different to that of the parent), and of loans and other foreign currency instruments
designated as hedges for such investments, are recorded within net equity. When the investment is sold, these exchange differences are shown in the consolidated statement of income as part of the loss or gain on the sale.



55



---

##### Table of Contents

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 period-end exchange rate.

Effects of Exchange Rate Fluctuations

Our functional currency is the U.S. dollar in terms of the pricing of our products, composition of our balance sheet and effects on our results
of operations. Most of our revenues (58% in 2016) are in U.S. dollars or in prices pegged to the U.S. dollar and a substantial portion of our expenses (56% in 2016) is denominated in dollars or pegged to the U.S. dollar, particularly fuel costs,
landing and over-flight fees, aircraft rentals, insurance and aircraft components and supplies.

A substantial majority of our liabilities
are denominated in U.S. dollars (70.6% as of December 31, 2016), including bank loans, certain air traffic liabilities, and certain amounts payable to our suppliers. As of December 31, 2016, 61.8% of our assets were denominated in U.S.
dollars, principally aircraft, cash and cash equivalents, accounts receivable and other fixed assets. Substantially all of our commitments, including operating lease and purchase commitments for aircraft, are denominated in U.S. dollars.

Balance sheet imbalance denominated in currencies other than the functional currency of each specific entity creates a foreign exchange rate
exposure that impacts our foreign exchange losses and gains due to exchange rate fluctuations. We recorded net foreign exchange losses of US$467.9 million in 2015 and net foreign exchange gains US$121.7 million gain in 2016, which are set
forth in our consolidated statement of income under Foreign Exchange gains/(losses). For more information, see Notes 2.3 and 29 to our audited consolidated financial statements.

Critical Accounting Policies

The Company
has used estimates to value and record certain assets, liabilities, revenue, expenditure, and commitments. These estimates principally relate to:

(a) Evaluation of possible losses through impairment of goodwill and intangible assets with an indefinite useful life.

As of December 31, 2016 goodwill amounted to US$2,710.4 million (US$2,280.6 million as of December 31, 2015), while
intangible assets with an indefinite useful life comprised airport slots of US$978.8 million (US$817.0 million as of December 31, 2015), loyalty program assets of US$326.3 million (US$272.3 million as of December 31,
2015) and trade marksof US$53.0 million at December 31, 2015.

At least
once per year the Company verifies whether goodwill and intangible assets with an indefinite useful life have suffered any losses through impairment. For the purposes of this evaluation, the Company has identified two cash-generating units (CGUs):
Air transport and Multiplus loyalty and coalition program. The book value of goodwill assigned to each CGU as of December 31, 2016, amounted to US$2,176.7 million and US$533.7 million (US$1,835.1 million
and US$445.5 million as of December 31, 2015), which included intangible assets with undefined useful life.



|                |  |                   |       |  |                                             |  |       |              |  |  |              |  |  |  |       | 
|--------------- |  | ----------------- | ----- |  | ------------------------------------------- |  | ----- | ------------ |  |  | ------------ |  |  |  | ----- | 
|                |  | Air Transport
CGU |       |  | Coalition and loyalty
Program Multiplus CGU | 
|                |  | As of             |       |  | As of                                       |  |       | As of        |  |  | As of        | 
|                |  | December 31,      |       |  | December 31,                                |  |       | December 31, |  |  | December 31, | 
|                |  | 2016              |       |  | 2015                                        |  |       | 2016         |  |  | 2015         | 
|                |  | (in US$ million)  |      
|Airport Slots   |  |                   | 978.8 |  |                                             |  | 817.0 |              |  |  |             |  |  |  |      | 
|Trade marks(1)  |  |                   |       |  |                                             |  | 53.0  |              |  |  |             |  |  |  |      | 
|Loyalty program |  |                   |      |  |                                             |  |      |              |  |  | 326.3        |  |  |  | 272.3 | 



|(1) | At December 31, 2016, the Company has changed the estimated useful life of the brands from an indefinite useful life to a five-year period (see Note 15 to our audited consolidated financial statements).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The recoverable value of these cash-generating units (CGUs) has been determined based on calculations of their value in use. The principal
assumptions used by the management include: growth rate, exchange rate, discount rate, fuel prices, and other economic assumptions. The estimation of these assumptions requires significant judgment by management, as these variables feature inherent
uncertainty; however, the assumptions used are consistent with Companys internal planning. Therefore, management evaluates and updates these estimates on an annual basis, in light of conditions that affect these variables. The principal
assumptions used, as well as the corresponding sensitivity analyses, are shown in Note 16 to our audited consolidated financial statements.



56



---

##### Table of Contents

(b) Useful life, residual value, and impairment of property, plant, and equipment

The depreciation of assets is calculated based on a straight-line model, except for certain technical components depreciated on cycles and hours flown. Useful
lives are reviewed on an annual basis according with the Companys future economic benefits associated with them.

Changes in circumstances such as:
technological advances, business model, planned use of assets or capital strategy may render the useful life different to the lifespan estimated. When it is determined that the useful life of property, plant, and equipment must be reduced, as may
occur in line with changes in planned usage of assets, the difference between the net book value and estimated recoverable value is depreciated, in accordance with the revised remaining useful life.

Residual values are estimated in accordance with the market value that these assets will have at the end of their useful life. The assets residual
values and useful lives are reviewed, and adjusted if appropriate, once a year. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable
amount (see Note 2.8 to our audited consolidated financial statements).

(c) Recoverability of deferred tax assets

Deferred taxes are calculated in accordance with the liability method, applied over temporary differences that arise between the fiscal base of assets and
liabilities, and their book value. Deferred tax assets for tax losses are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable. The Company makes tax and financial projections to
evaluate the realization of our deferred tax asset over the course of time. Additionally, these projections are tested to be consistent with those used to measure other long term assets. As of December 31, 2016 the company recognized deferred
tax assets amounting to US$384.6 million (US$376.6 million at December 31, 2015), and had ceased to recognize deferred tax assets for tax losses amounting to US$115.8 million (US$15.5 million at December 31, 2015) (see
Note 18 to our audited consolidated financial statements).

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

The Company treats advance sales of tickets as deferred revenue. Revenue from ticket sales is recognized in the income statement when the service is provided
or when tickets expires unused, reducing corresponding deferred revenue. The Company evaluates on a monthly basis the probability that tickets will expire unused, based on the history of ticket utilization. Changes in this probability would have an
impact on our revenue in the year in which the change occurs and in future years. As of December 31, 2016, deferred revenue associated with air tickets sold amounted to US$1,535.2 million (US$1,223.9 million as of December 31,
2015). As of December 31, 2016, we estimate that a hypothetical change of one percentage point in passenger behavior regarding to ticket usage, (that is, if during the 6 months after a sale the probability of utilization were 89% rather than
90%), would have a revenue impact of up to US$20.0 million.

(e) Valuation of loyalty points and kilometers issued to loyalty program members,
pending usage.

As of December 31, 2016 and 2015, the Company operated the following loyalty programs: LATAM Pass, LATAM Fidelidade, and Multiplus,
with the objective of enhancing customer loyalty by offering points or kilometers (see Note 22 to our audited consolidated financial statements).

When
kilometers and points are redeemed for products and services other than the services provided by the Company, revenue is recognized immediately; when they are redeemed for air tickets issued by LATAM Airlines Group S.A. and affiliates, revenue is
deferred until the transport service is provided or the corresponding tickets expire.

Deferred revenue from loyalty programs at the closing date
corresponds to the valuation of unutilized points and kilometers issued to loyalty program members, adjusted for redemption probability.

According to IFRIC-13, the value of kilometers and points that the Company estimates are not likely to be redeemed (breakage), is recognized proportionally during the period in which the remaining kilometers or
points are expected to be redeemed. The Company uses statistical models to estimate the breakage, based on historical redemption patterns. Changes in breakage would have a significant impact on our revenue in the year in which the change occurs and
in future years.



57



---

##### Table of Contents

As of December 31, 2016, deferred revenue associated with the LATAM Pass loyalty program amounted to
US$896.2 million (US$973.3 million at December 31, 2015). As of December 31, 2016 a hypothetical change of 1% in the probability of usage would result in an impact of approximately US$30.6 million (US$30.0 million as of
December 31, 2015). Deferred revenue associated with the LATAM Fidelidade and Multiplus loyalty programs amounted to US$392.1 million (US$452.3 million as of December 31, 2015). As of December 31, 2016 a hypothetical change
of 2% in the probability of usage in these programs would result in an impact of approximately US$14.6 million (US$11.7 million as of December 31, 2015).

The fair value of kilometers is determined by the Company based on its best estimate of the price at which they have been sold in the past. As of
December 31, 2016 a hypothetical change of 1% in the fair value of unused kilometers would result in an impact of approximately US$8.4 million (US$8.8 million as of December 31, 2015).

(f) Required provisions and their valuation as necessary

Known
contingencies are recognized when the Company has an effective legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably
estimated. The Company applies professional judgment, experience, and knowledge to use available information to determine these values, in light of the specific characteristics of known risks. This process facilitates the early assessment and
valuation of potential risks in individual cases or in the development of contingencies.

(g) Investment in subsidiary (TAM)

Management has applied its judgment in determining that LATAM Airlines Group S.A. controls TAM S.A. and its affiliates, for accounting purposes, and has
therefore consolidated the financial statements of TAM S.A. and its affiliates.

The grounds for this decision are that LATAM issued ordinary shares in
exchange for the majority of circulating ordinary and preferential shares in TAM, entitling LATAM to substantially all economic benefits generated by TAM, and thus exposing it to substantially all risks relating to the operations of TAM. This
exchange aligns the economic interests of LATAM and all of its shareholders, including the controlling shareholders of TAM, thus insuring that the shareholders and directors of TAM shall have no incentive to exercise their rights in a manner that
would be beneficial to TAM but detrimental to LATAM. Furthermore, all significant actions necessary for the operation of the airlines require affirmative votes by the controlling shareholders of both LATAM and TAM.

Since the integration of LAN and TAM, the most critical airline operations in Brazil have been managed by the CEO of TAM while global activities have been
managed by the CEO of LATAM, who is in charge of the operation of the LATAM Group as a whole and reports to the LATAM Board. The CEO of TAM functionally reports to the CEO of LATAM.

The CEO of LATAM also evaluates the performance of LATAM Group executives including the CEO of TAM and, together with the LATAM Board, determines
compensation. Although Brazilian law currently imposes restrictions on the percentages of voting rights that may be held by foreign investors, LATAM believes that the economic basis of these agreements meets the requirements of accounting standards
in force, and that the consolidation of the operations of LAN and LATAM is appropriate.

These estimates were made based on the best information available
relating to the matters analyzed. In any case, it is possible that events that may take place in the future could lead to their modification in future reporting periods, which would be made in a prospective manner.

Recently Issued Accounting Pronouncements



|                                                                                   |  |                                                                      |  |                                                         |  |                
|---------------------------------------------------------------------------------- |  | -------------------------------------------------------------------- |  | ------------------------------------------------------- |  | ---------------
|(a) Accounting pronouncements with implementation effective from
January 1, 2016:  |  | Date of issue                                                        |  | MandatoryApplication:Annual periodsbeginning on
orafter
|                                                                                   |  |                                                                      | 
|(i) Standards and amendments                                                       |  |                                                                      |  |                                                         |  |                
|                                                                                   |  |                                                                      | 
|Amendment to IFRS 11: Joint arrangements.                                          |  | Accounting for acquisitions of interests in joint operations         |  | May 2014                                                |  | January 1, 2016
|                                                                                   |  |                                                                      | 
|Amendment to IAS 16: Property, plant and equipment, and IAS 38: Intangible assets. |  | Clarification of acceptable methods of depreciation and amortization |  | May 2014                                                |  | January 1, 2016



58



---

##### Table of Contents

|                                                                                                                                                                      |  |                                                                                                          |  |                 |  |                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------- |  | --------------- |  | ---------------
|                                                                                                                                                                      |  |                                                                                                          | 
|Amendment to IAS 27: Separate financial statements.                                                                                                                   |  | Equity Method in Separate Financial Statements                                                           |  | August 2014     |  | January 1, 2016
|                                                                                                                                                                      |  |                                                                                                          | 
|Amendment IAS 1: Presentation of Financial Statements.                                                                                                                |  | Disclosure initiative                                                                                    |  | December 2014   |  | January 1, 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. |  | Investment Entities: Applying the consolidation exception                                                |  | December 2014   |  | January 1, 2016
|                                                                                                                                                                      |  |                                                                                                         
|Improvements to International Financial Reporting Standards (2012-2014 cycle):                                                                                        |  | September 2014                                                                                           |  | January 1, 2016
|                                                                                                                                                                      |  |                                                                                                          | 
|IFRS 5 Non-current assets held for sale and discontinued operations.                                                                                                  |  | Changes in methods of disposal.                                                                          |  |                 |  |                
|                                                                                                                                                                      |  |                                                                                                          | 
|IFRS 7 Financial instruments: Disclosures.                                                                                                                            |  | Servicing contracts. Applicability of the amendments to IFRS 7 to condensed interim financial statements |  |                 |  |                
|                                                                                                                                                                      |  |                                                                                                          | 
|IAS 19 Employee benefits.                                                                                                                                             |  | Discount rate: regional market issue.                                                                    |  |                 |  |                
|                                                                                                                                                                      |  |                                                                                                          | 
|IAS 34 Interim financial reporting.                                                                                                                                   |  | Disclosure of information elsewhere in the interim financial report.                                   |  |                 |  |                

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, 2016 andfor which early adoption has not been effected : |  | Date of issue                                                                         |  | MandatoryApplication:Annual periodsbeginning on
orafter
|                                                                                                                                                    |  |                                                                                       | 
|(i) Standards and amendments                                                                                                                        |  |                                                                                       |  |                                                         |  |                 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IAS 7: Statement of Cash Flows.                                                                                                        |  | Disclosure initiative                                                                 |  | January 2016                                            |  | January 1, 2017 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IAS 12: Income Taxes.                                                                                                                  |  | Recognition of Deferred Tax Assets for Unrealised Losses                              |  | January 2016                                            |  | January 1, 2017 
|                                                                                                                                                    |  |                                                                                       | 
|IFRS 9: Financial instruments.                                                                                                                      |  | Disclosure initiative                                                                 |  | December 2009                                           |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IFRS 9: Financial instruments.                                                                                                         |  | Novation of derivatives and continuation of hedge accounting                          |  | November 2013                                           |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|IFRS 15: Revenue from contracts with customers (1).                                                                                                 |  | Implementation                                                                        |  | May 2014                                                |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IFRS 15: Revenue from contracts with customers.                                                                                        |  | Clarifications                                                                        |  | April 2016                                              |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IFRS 2: Share-based payments                                                                                                           |  | classification and measurement of share☐based payment transactions                    |  | June 2016                                               |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IFRS 4: Insurance contracts.                                                                                                           |  | Pendiente Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts       |  | September 2016                                          |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IFRS 40: Investment property                                                                                                           |  | Transfers of investment property                                                      |  | December 2016                                           |  | January 1, 2018 
|                                                                                                                                                    |  |                                                                                       | 
|IFRS 16: Leases (2).                                                                                                                                |  | Disclosure initiative                                                                 |  | January 2016                                            |  | January 1, 2019 
|                                                                                                                                                    |  |                                                                                       | 
|Amendment to IFRS 10: Consolidated financial statements and IAS 28 Investments in associates and joint ventures.                                    |  | Sale or contribution of assets between an Investor and its associate or joint venture |  | September 2014                                          |  | To be determined



59



---

##### Table of Contents

|                                                                                                                                                    |  |                                                           |  |                                                         |  |                
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------- |  | ------------------------------------------------------- |  | ---------------
|(b) Accounting pronouncements not yet in force for financial years
beginning on January 1, 2016 andfor which early adoption has not been effected : |  | Date of issue                                             |  | MandatoryApplication:Annual periodsbeginning on
orafter
|                                                                                                                                                    |  |                                                           | 
|(ii) Improvements                                                                                                                                   |  |                                                           |  |                                                         |  |                
|                                                                                                                                                    |  |                                                          
|Improvements to International Financial Reporting Standards (2012-2014 cycle):                                                                      |  | December 2016                                             |  |                                                        
|                                                                                                                                                    |  |                                                           | 
|IFRS 1: First-time adoption of international financial reporting standards.                                                                         |  | Deletion of short-term exemptions for first-time adopters |  |                                                         |  | January 1, 2018
|                                                                                                                                                    |  |                                                           | 
|IFRS 12 Disclosure of interests in other entities.                                                                                                  |  | Clarification of the scope of the Standard                |  |                                                         |  | January 1, 2017
|                                                                                                                                                    |  |                                                           | 
|IAS 28 investments in associates and joint ventures.                                                                                                |  | Measuring an associate or joint venture at fair value     |  |                                                         |  | January 1, 2018
|                                                                                                                                                    |  |                                                           | 
|(iii) Interpretations                                                                                                                               |  |                                                           |  |                                                         |  |                
|                                                                                                                                                    |  |                                                           | 
|IFRIC 22: Foreign currency transactions and advance consideration                                                                                   |  | Disclosure initiative                                     |  | December 2016                                           |  | January 1, 2018



|(1) | 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, except for IFRS 15 and IFRS 16.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IFRS 15  Revenue
from Contracts with Customers supersedes the standard for revenue recognition currently used by the Company, i.e. IAS 18 Revenue and IFRIC 13 Customer Loyalty Programmes. The core principle of IFRS 15 is that an entity recognizes revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 supersedes the following standards and
interpretations: IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers; and
SIC-31 RevenueBarter Transactions Involving Advertising Services.

We are currently
evaluating how the adoption of the revenue recognition standard will impact our Consolidated Financial Statements. Interpretations are on-going and could have a significant impact on our implementation. We
currently believe the adoption will not have a significant impact on passenger and cargo revenue recognition. However, the impact on revenue and liability for our frequent flyer program is still being analyzed.

|(2) | IFRS 16  Leases adds important changes in the accounting for lessees by introducing a similar treatment to financial leases for all operating leases with a term of more than 12 months. This means, in
general terms, that an asset should be recognized for the right to use the underlying leased assets and a liability representing its present value of payments associated with the agreement. Monthly lease payments will be replaced by asset
depreciation and a financial cost on the income statement.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We are currently evaluating how the adoption of the leases
recognition standard will impact our Consolidated Financial Statements. Interpretations are on-going and could have a material impact on our implementation. Currently, we expect that the adoption of the new
lease standard will have a material impact on our consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain
leases currently accounted for as operating leases.

LATAM Airlines Group S.A. and affiliates are still assessing these standards to determine the effect
on their Financial Statements, covenants and other financial indicators.

IFRS/Non-IFRS Reconciliation

We use Cost per ASK-equivalent and Cost per
ASK-equivalent excluding fuel price variations in analyzing operating expenses on a per unit basis. ASKs (available seat kilometers) measures the number of seats of capacity available for the
transportation of passengers multiplied by the kilometers flown. ASK-equivalent includes capacity for both passenger and cargo equivalent tons multiplied by the kilometers flown. The figure is
obtained by adding passenger ASKs and the quotient of cargo ATKs (available ton kilometers) divided by 0.095. To obtain our unit costs, which are used by our management in the analysis of our results, we divide our total costs by our
total ASK-equivalents. Total costs are calculated by starting with operating expenses as defined under IFRS and making certain adjustments for interest costs and other revenues. The cost component
is further adjusted to obtain costs per ASK-equivalents excluding fuel price variations, in order to remove the impact of changes in fuel prices for the year. Cost per ASK-equivalent and Cost per ASK-equivalent excluding fuel price variations do not have a standardized meaning, and as such may not be comparable to similarly
titled measures provided by other companies. These metrics should not be considered in isolation or as a substitute for operating expenses or as indicators of performance or cash flows or as a measure of liquidity.



60



---

##### Table of Contents

The table below reconciles our operating expenses (as defined by IFRS) for 2016, 2015 and 2014 to
costs used in the calculation of Cost per ASK-equivalent and Cost per ASK-equivalent excluding fuel price variations for such periods.



|                                                                      |  |      |           |  |      |  |           |      |  |  |            | 
|--------------------------------------------------------------------- |  | ---- | --------- |  | ---- |  | --------- | ---- |  |  | ---------- | 
|                                                                      |  | 2016 |           |  | 2015 |  |           | 2014 | 
|Cost per ASK-equivalent                                               |  |      |           |  |      |  |           |      |  |  |            | 
|Operating expenses (US$ thousands)                                    |  |      | 8,959,185 |  |      |  | 9,611,907 |      |  |  | 11,957,780 | 
|+ Interest expense (US$ thousands)                                    |  |      | 416,336   |  |      |  | 413,357   |      |  |  | 430,034    | 
| Interest income (US$ thousands)                                     |  |      | 74,949    |  |      |  | 75,080    |      |  |  | 90,500     | 
|Divided by systems ASK-equivalents
(million)                         |  |      | 205,537.5 |  |      |  | 208,722.5 |      |  |  | 206,197.9  | 
|= Cost per ASK equivalent (US$ cents)                                 |  |      | 4.52      |  |      |  | 4.77      |      |  |  | 5.96       | 
|Cost per ASK-equivalent excluding fuel price
variations               |  |      |           |  |      |  |           |      |  |  |            | 
|Operating expenses (US$ thousands)                                    |  |      | 8.959,185 |  |      |  | 9,611,907 |      |  |  | 11,957,780 | 
|+ Interest expense (US$ thousands)                                    |  |      | 416,336   |  |      |  | 413,357   |      |  |  | 430,034    | 
| Interest income (US$ thousands)                                     |  |      | 74,949    |  |      |  | 75,080    |      |  |  | 90,500     | 
| Aircraft fuel (US$ thousands)                                       |  |      | 2,056,643 |  |      |  | 2,651,067 |      |  |  | 4,167,030  | 
|Divided by systems ASK equivalents (millions)                        |  |      | 205,537.5 |  |      |  | 208,722.5 |      |  |  | 206,197.9  | 
|= Cost per ASK-equivalent excluding fuel price variations
(US$ cents) |  |      | 3.52      |  |      |  | 3.50      |      |  |  | 3.94       | 

Other Operating Measures

LATAM uses revenues per ASK or ATK, as applicable, in analyzing revenues on a per unit basis. To obtain unit revenues, we divide our passenger
revenues by our total ASKs and our cargo revenues by our total ATKs. We use our revenues as defined under IFRS for purposes of the calculation of this metric. Revenues per ASK or ATK, as the case may be, do not have a standardized meaning, and as
such may not be comparable to similarly titled measures provided by other companies. This metric is not an IFRS measure of performance or liquidity. It should not be considered in isolation or as a substitute for revenues or as indicators of
performance or cash flows as a measure of liquidity.

The table below shows the calculation of our revenues per ASK or ATK, as applicable, in each of the
periods indicated.



|                                   |  |      |            |  |      |  |            |      |  |  |            | 
|---------------------------------- |  | ---- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                   |  | 2016 |            |  | 2015 |  |            | 2014 | 
|Passenger Revenues (US$ million)   |  |      | 7,877.72   |  |      |  | 8,410.61   |      |  |  | 10,380.12  | 
|ASK (million)                      |  |      | 134,967.69 |  |      |  | 134,167.14 |      |  |  | 130,200.94 | 
|Passenger Revenues/ASK (US$ cents) |  |      | 5.84       |  |      |  | 6.27       |      |  |  | 7.97       | 
|Cargo Revenues (US$ million)       |  |      | 1,110.63   |  |      |  | 1,329.43   |      |  |  | 1,713.38   | 
|ATK (million)                      |  |      | 6,704.13   |  |      |  | 7,082.76   |      |  |  | 7,219.71   | 
|Cargo Revenues/ATK (US$ cents)     |  |      | 16.57      |  |      |  | 18.77      |      |  |  | 23.73      | 

Seasonality

Our operating revenues are substantially dependent on overall passenger and cargo traffic volume, which is subject to seasonal and other
changes in traffic patterns. Our passenger revenues are generally higher in the first and fourth quarters of each year, during the southern hemispheres spring and summer. In the Brazilian passenger air transportation market, there is generally
higher demand for air transportation services in the second half of the year, making the second quarter the weakest for the Company. However, seasonality is partially mitigated by LATAMs having higher-than-market average concentration of
business travel (which is less sensitive to seasonality). Additionally, the expansion of the Company into other countries with different seasonal patterns has also moderated the overall seasonality of the passenger business.



61



---

##### Table of Contents

B. Liquidity and Capital Resources

LATAMs cash and cash equivalents totaled US$949.3 million as of December 31, 2016, US$753.5 million as of
December 31, 2015 and US$989.4 million as of December 31, 2014. Additionally, the Company had short term marketable securities totaling US$537.0 million as of December 31, 2016, US$606.4 million as of December 31,
2015 and US$544.4 million as of December 31, 2014. In the aggregate, LATAMs cash and cash equivalents and marketable securities totaled US$1,486.3 million as of December 31, 2016, US$1,361.1 million as of
December 31, 2015 and US$1,533.8 million as of December 31, 2014.

The US$126.4 million increase in our cash and cash
equivalents and marketable securities from 2015 to 2016 is the result of a reduction in the cash flow from operation that was offest bya US$560 million inflow from pre-delivery payments during 2016 and
the subscription by Qatar Airways of a capital increase of US$608.5 million into LATAM.

The US$173.9 million decrease in our
cash and cash equivalents and marketable securities from 2014 to 2015 is the result of positive cash flows from operations of US$1,715.5 million used to pay financial obligations and investment commitments, and to initiatives including
LATAMs liability management of its TAM notes together with the financing of its arriving fleet through the issuance of Enhanced Equipment Trust Certificates (EETC). In June 2015, LATAM executed a liability management transaction in
which the Company redeemed US$300.0 million senior unsecured notes issued by TAMs subsidiary, Tam Capital 2 Inc. and issued LATAMs inaugural US$500.0 million senior unsecured notes. Additionally in June 2015, LATAM issued
Enhanced EquipmentTrust Certificates (EETC) for an aggregate face amount of approximately US$1,020.8 million to finance 17 new aircraft deliveries. LATAM recognized the EETCs as debt upon delivery of each Aircraft. At
December 31, 2015 the escrow of proceeds from the issuance of the EETC amounted US$345.1 corresponding to five aircraft received during 2016 and one to be received in 2016.

Cash position and liquidity

The
following table provides a summary of our cash flows from operating activities, investing activities and financing activities for the years ended December 31, 2016, 2015 and 2014 and our total cash position as of December 31, 2016, 2015
and 2014.



|                                                                       |  |                   |        |   |      |  |          |      |  |  |          |  
|---------------------------------------------------------------------- |  | ----------------- | ------ | - | ---- |  | -------- | ---- |  |  | -------- | -
|                                                                       |  | 2016              |        |   | 2015 |  |          | 2014 | 
|                                                                       |  | (in US$ millions) |       
|Net cash flows from operating activities                               |  |                   | 992.1  |   |      |  | 1,715.5  |      |  |  | 1,331.4  |  
|Net cash flow from (used in) investing activities                      |  |                   | (443.0 | ) |      |  | (1,739.1 | )    |  |  | (899.1   | )
|Net cash flows from (used in) financing activities                     |  |                   | (396.3 | ) |      |  | (128.4   | )    |  |  | (1,320.2 | )
|Effects of variation in the exchange rate on cash and cash equivalents |  |                   | 43.0   |   |      |  | (83.9    | )    |  |  | (107.6   | )
|Cash and cash equivalents at the beginning of the year                 |  |                   | 753.5  |   |      |  | 989.4    |      |  |  | 1,984.9  |  
|Cash and cash equivalents at the end of the year                       |  |                   | 949.3  |   |      |  | 753.5    |      |  |  | 989.4    |  

In addition to cash and marketable securities LATAM has access to short term credit lines. As of
December 31, 2016, LATAM had working capital uncommitted credit facilities for a total amount of US$1,193.0 million, of which US$830.0 million was drawn as of December 31, 2016, and committed credit lines in the form of a
revolving credit facility (RCF) for an amount of US$325.0 million, of which $0 was drawn. The Companys plan is to maintain the RCF undrawn, in line with maintaining adequate levels of liquidity considering the current volatile
market conditions. The RCF is secured by spare parts, engines, and aircraft.

Net cash flows from operating activities

Cash from operations is derived primarily from providing air passenger and cargo transportation to customers. Operating cash outflows are
primarily related to expenses of airline operations, including fuel consumption. Net cash inflows from operating activities in 2016 decreased US$723.3 million, or 42.2%, from US$1,715.5 million, mainly due to changes in working capital.

The main impacts on working capital were the reduction in prepayments of credit card receivables in Brazil in the amount of US$255.4 and
the US$ 108.0 million related to the non-payment in 2015 of the performance bonuses of 2014. Other impacts include the appreciation of the Brazilian Real contingencies, and contingencies reflected the
payment of a guarantee to continue certain legal proceedings at the tax courts in Brazil.

Net cash inflows from operating activities in
2015 increased US$384.1 million, or 28.8%, from US$1,331.4 million, mainly driven by a significant reduction in operating costs due to lower fuel prices, as well as by the Companys ongoing cost savings initiatives. Net cash from
operations was negatively affected by fuel hedging, hedging margin guarantees and other guarantees by US$ 184.6 million (for more information see to Note 6  Cash and Cash Equivalents of our audited consolidated financial statements).



62



---

##### Table of Contents

Net cash flow used in investing activities

Net cash used in investing activities in 2016 decreased US$1,296.1 million from US$1,739.1 million in 2015 to US$443.0 million
in 2016, due to a reduction in purchases of property, plant and equipment. This reduction resulted mainly from a US$559.5 million inflow from pre delivery payments during 2016, as opposed to an outflow of US$128.4 million during 2015. In
addition, during 2016, there was a net inflow of US$263.0 million from sale and purchase of debt instruments of other entities, in constrast to an outflow of US$184.7 million during 2015.

Net cash used in investing activities in 2015 increased US$840.0 million from US$899.1 million in 2014 to US$1,739.1 million in
2015, due primarily to a one-time impact related to the sale and leaseback of four B777 aircraft recognized during 2014 as an asset sale of US$510.5 million. Capital expenditures for aircraft increased
US$127.0 million in 2015 compared to 2014, including costs to acquire eight narrow body aircraft and four wide body aircraft, compared to nine narrow body aircraft and three wide body aircraft in 2014.

Net cash flows used in financing activities

In 2016, net cash used in financing activities totaled US$396.3 million, an increase of US$267.9 million from the
US$128.4 million in cash generated by financing activities in 2015. The variation resulted primarily from a significant increase in loan repayments from US$1,263.8 million to US$2,121.1 million, which was compensated by the capital
increase of US$608.5 million subscribed and paid during 2016.

In 2015, net cash used in financing activities totaled
US$128.4 million, a decrease of US$1,191.8 million from the US$1,320.2 million in cash used in financing activities in 2014. This reduction reflects the conclusion of the liability restructuring and reduction plan executed during the
same period in 2014, whereby the Company reduced its financial obligations by approximately US$ 1,049.0 million.

Sources of financing

Long term

We
typically finance our fleet with long-term loans covering between 80% and 100% of the net purchase price. We also finance our aircraft under sale and leaseback arrangements in order to add flexibility to our fleet. For more information regarding
fleet financing, please refer to certain information below and to F. Long Term IndebtednessTabular Disclosure of Contractual Obligations.

From time to time in the past, we have considered, and may consider in the future, other forms of financing including securitization of ticket
receivables or the securitization of fleet and engines or the issuance of additional debt or equity securities.

Short term

We have generally been able to arrange for short-term loans with local Chilean and international banks when we have needed to finance working
capital expenditures or increase our liquidity. As of December 31, 2016, we maintained US$ 1,518 million in short-term credit lines with both local and foreign banks, including US$325 million of committed credit lines of which $0 was
drawn as of December 31, 2016.

We have diversified our sources of short term financing to include the following: PAE
(Prestamos a Exportadores), which are foreign currency short term loans granted to exporting parties in Chile mainly to finance working capital; Credit card advances, a financial alternative where the bank advances to the Company
a percentage of the cash inflows related to the credit card sales on installments.

Capital expenditures

Our capital expenditures are related to the acquisition of aircraft, aircraft-related equipment, IT equipment, support infrastructure and the
funding of pre-delivery deposits. LATAMs capital expenditures totaled US$694.4 million in 2016, US$1,569.7 million in 2015 and US$1,440.4 million in 2014, and purchases of intangible
assets totaled US$88.6 million in 2016, US$52.5 million in 2015 and US$55.8 million in 2014. See Sources of financing above.



63



---

##### Table of Contents

The following chart sets forth the Companys estimated capital expenditures for 2017, 2018
and 2019 calendar years:



|                       |  |                   |     |  |                                                               |  |     |      |  |  |       |   |  |  |       |  
|---------------------- |  | ----------------- | --- |  | ------------------------------------------------------------- |  | --- | ---- |  |  | ----- | - |  |  | ----- | -
|                       |  |                   |     |  | Estimated capitalexpenditures by year,as of December 31, 2016 | 
|                       |  | 2017              |     |  | 2018                                                          |  |     | 2019 |  |  | 2020  |  
|                       |  | (in US$ millions) |    
|Fleet Commitments (1)  |  |                   | 469 |  |                                                               |  | 555 |      |  |  | 1,589 |   |  |  | 1,503 |  
|PDPs(2)                |  |                   | 135 |  |                                                               |  | 269 |      |  |  | (41   | ) |  |  | (18   | )
|Other expenditures (3) |  |                   | 524 |  |                                                               |  | 504 |      |  |  | 530   |   |  |  | 531   |  
|                       |  |                   |     |  |                                                               |  |     |      |  |  |       |   |  |  |       |  



|(1) | The amount of Fleet Commitments presented includes all the commited deliveries with estimates regarding (i) changes in scheduled delivery dates; (ii) conversion of certain aircraft types and
(iii) aircraft of which we do not expect to take delivery, regardless of the financiation the aircraft will have upon arrival, thus representing the sum of aircraft capex and future sale and leasebacks.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents pre-delivery payments made by LATAM, or inflows received by LATAM after the delivery of the aircraft is made.
|--- | ------------------------------------------------------------------------------------------------------------------------

|(3) | Other Expenditures include expenditures on spare engines and parts, maintenance of on balance fleet, projects and others, plus purchases of intangible assets.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

C. Research and Development, Patents and Licenses, etc.

LATAM has registered the trademarks LATAM, LATAM Airlines Chile, LATAM Airlines Peru, LATAM Airlines
Argentina and LATAM Airlines Ecuador with the trademark office in Chile, Peru, Argentina and Ecuador, respectively. We license certain brands, logos and trade dress under the alliance agreement with oneworld® related to LATAMs alliance. As long as LATAM is a member of oneworld®, it will have the right to continue to use current
logos on its aircraft.

TAM holds or has filed registration applications for 216 trademarks before the Instituto Nacional da Propriedade
Industrial (INPI), the body with jurisdiction for registering trademarks and patents in Brazil, and 100 trademarks before the bodies with jurisdiction for registering trademarks in other countries in which TAM operates. Currently, TAM is
aware of one opposition filed by a third party challenging one of these applications.

D. Trend Information

For 2017, LATAM expects total passenger ASK growth to be between 0% and 2%. International passenger ASK growth for full year 2017 is expected
to be between 0% and 2%. LATAM Airlines Brazils domestic passenger ASKs in the Brazilian market are expected to decrease between 2% and 0%. ASKs in Spanish-speaking countries are expected to increase by approximately 4% to 6%.

Regarding cargo operations, LATAM expects cargo ATKs to decrease between 12% and 10% for full year 2017, driven by the withdrawals of two of
four Boeing 777s-200F, which are currently classified as held for sale, and, two Boeing 767-300F, during 2017.



64



---

##### Table of Contents

In a context of increasing competitive pressures from different players across the region,
including low cost operators, it is our goal to continue to increase the efficiency of our operations, allowing us to provide the best and most convenient options for our customers with the distinctive customer experience LATAM passengers expect. In
this context, LATAM has undertaken an important project to introduce a new travel model for domestic operations in the six domestic markets where we operate in South America, in order to address the changing dynamics of customers and the industry.
The main objective of this project is to increase our competitiveness and ensure the sustainability of our domestic operations business model in the long term. For more information on this new travel model, see Item 4. Information on the
CompanyB. Business OverviewPassenger OperationsBusiness Model for Domestic Operations.

Over the last year, we
have implemented significant changes with the objective of transforming LATAM into a simpler, leaner and more efficient group. We have made these changes amidst a challenging and volatile macroeconomic scenario in the region. At the same time, the
Company continues to strengthen its network, taking advantage of specific opportunities for profitable growth in LATAMs South American Spanish-speaking markets (SSC, which include Chile, Peru, Argentina, Colombia and Ecuador). During 2016, we
inaugurated new routes connecting our Lima hub with secondary cities (mainly in Argentina), as well as launched a new flight from Lima to Washington, DC. In addition, in October 2016 we launched the route between São Paulo and Johannesburg,
becoming the first airline in Latin America to connect our region with a country in the African continent. We have also announced the launch of our longest non-stop flight (between Santiago, Chile and
Melbourne, Australia), starting in October 2017.

During 2016, we also announced joint business agreements with American Airlines and
British Airways and Iberia, subject to regulatory approval in different countries, which will allow our passengers access to a wider network, more flight options with better connection times, more competitive fares to destinations not served by
LATAM, increased potential for developing new routes and adding more direct flights to new destinations, as well as to destinations already served by LATAM, among other initiatives.

In response to the macroeconomic slowdown in South America and the resulting deceleration in growth of demand for air travel, we are currently
working on rightsizing our fleet, targeting a decrease of US$2.0 to US$3.0 billion in our expected fleet assets for 2018 through postponements, cancellations, redeliveries and asset sales. During 2016, the Company achieved a total asset
reduction of US$ 2.2 billion and expects to continue with further adjustments for the upcoming years.

Regarding fuel, we will
continue to use fuel hedging programs and fuel surcharge mechanisms in both our passenger and cargo businesses to help minimize the impact of short-term movements in crude oil prices. LATAM has hedged approximately 33%, 45% and 19% of its estimated
fuel consumption for the first, second and third quarters of 2017 respectively.

E. Off-Balance Sheet
Arrangements

As of December 31, 2016 the Company had 102 aircraft (of which 19 are obligations of TAM and 83 are obligations of
LATAM) and 10 aircraft engines under operating leases. These operating leases provide us with flexibility to adjust our fleet to any demand volatility that may affect the airline industry and therefore we consider such arrangements to be of great
value to our strategy and financial performance. The total future lease payments related to our operating leases as of December 31, 2016 was US$ 3,255 million, for all remaining periods through maturity (the latest of which expires in
2028). See F. Long Term IndebtednessTabular Disclosure of Contractual Obligations.

Under the aforementioned
operating leases, LATAM is responsible for all maintenance, insurance and other costs associated with operating these aircraft. The Company has not made any residual value or similar guarantees to our lessors. There are certain guarantees and
indemnities to other unrelated parties that are not reflected on the Companys balance sheet, but we believe that these will not have a significant impact on our results of operations or financial condition.

LATAM operates 12 aircraft under tax leasing structures. These methods involve the creation of special purpose entities that acquire aircraft
with bank and third-party financing. Under IFRS, these aircraft are shown in the consolidated statement of financial position as part of Property, plant and equipment and the corresponding debt is shown as a liability. Of LATAMs
total tax leases, nine TAM tax leases are classified as operating leases for accounting purposes as of December 31, 2016.

As of
December 31, 2016, we are not aware of any event, lawsuit, commitment, trend or uncertainty that may result in, or is reasonably likely to result in, the termination of the operating leases. See Note 33 to our audited consolidated financial
statements for a more detailed discussion of these commitments.

F. Long Term Indebtedness

Long Term Indebtedness

Secured Debt

Aircraft Debt



| | 1. | ECA/EX-IM: Bank guaranteed bonds like Export-Import Bank of the United States (EX-IM Bank) and Export Credit Agency
(ECA) guaranteed loan debt, as of December 31, 2016, was US$ 3,269 million. In general, ECA ans EX IM financing have a 12-year repayment profiles.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



65



---

##### Table of Contents

| | 2. | Enhanced Equipment Trust Certificates (EETC): In June 2015, LATAM issued the first EETC in Latin America for an aggregate face amount of approximately US$ 1,021 million to finance 17 new aircraft
deliveries composed by 11 Airbus A321-200, 2 Airbus A350-900 and 4 Boeing 787-9, with delivery dates from July 2015 through
March 2016. The offering is comprised of Class A Certificates maturing in November 2027 and Class B Certificates maturing in November 2023. The annual interest rate for Class A and B Certificates are 4.20% and 4.50%,
respectively. As of December 31, 2016, the EETC debt was US$ 962 million.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Bank Commercial Loans: As of December 31, 2016, bank commercial loans debt was US$ 1,697 million.
| | -- | -------------------------------------------------------------------------------------------------



| | 4. | Tax Leases: LATAM has secured debt with tax leases through Japanese Leases with a call option (JOLCO) and Spanish Leases (SOL) structures. As of December 31, 2016, tax leases were US$
108 million.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non Aircraft Debt



| | 1. | 2013-1 Series Note: Regarding non-aircraft debt, LATAM issued a securitized bond for an amount of US$ 450 million in November 2013
with a seven year term and a two year interest-only period (the 2013-1 Series Note). This bond is backed by future flows of credit card sales of LATAM Airlines in the United States and Canada. The
coupon is 6.0% fixed with quarterly payments. As of December 31, 2016, the 2013-1 Series Note was US$ 368 million.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Bank Commercial Loans: As of December 31, 2016, bank commercial loans debt was US$ 52 million.
| | -- | ----------------------------------------------------------------------------------------------

Others



| | 1. | Pre-Delivery Payments (PDP) financing: As of December 31, 2016, PDP financing outstanding amount was US$ 214 million.
| | -- | -----------------------------------------------------------------------------------------------------------------------



| | 2. | Revolving Credit Facility (RCF): In March 2016, LATAM structured a Revolving Credit Facility secured by aircraft, engines, spare parts and supplies for a total amount available of US$ 325 million. The
facility was disbursed for an initial amount of US$ 275 million increasing up to US$ 325 million by November, 2016. On December 2016, the facility was prepaid and remains fully available to be drawn.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Multiplus Shares Backed Loan (Margin Loan): In September 2016, TAM S.A. structured a financing amounting to US$ 200 million with the guarantee of approximately 18% ownership of the shares of Multiplus
S.A., percentage subject to adjustment depending on the value of the stock as collateral. As of December 31, 2016, the Multiplus Shares Backed Loan outstanding amount was US$ 200 million.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Unsecured Debt



| | 1. | LATAM 2020 Notes: On June 9, 2015 LATAM Airlines Group S.A. issued and placed on the international market an unsecured long-term bond in the amount of US$ 500 million maturing 2020, at interest rate of 7.25%
per year. As of December 31, 2016, the LATAM 2020 Notes outstanding amount was US$ 492 million.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | TAM Capital 2017 Notes: As of December 31, 2016, TAM has a senior note outstanding US$ 300 million due in 2017, with a fixed interest rate of 7.375% payable semi-annually, issued by TAM Capital Inc. and
guaranteed on a senior unsecured basis by TAM S.A. and TAM Linhas Aereas. These notes are listed on the Euro MTF market of the Luxembourg Stock Exchange. On December 18, 2007, TAM completed an exchange offer pursuant to which 99.2% of the
holders exchanged these notes for new notes that are registered under the Securities Act and otherwise have identical terms. As of December 31, 2016, the TAM Capital 2017 Notes outstanding amount was US$ 304 million.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | TAM Capital 2021 Notes: As of December 31, 2016, TAM has a senior note outstanding US$ 500 million due in 2021, with a fixed interest rate of 8.375% payable semi-annually, issued by TAM Capital 3 Inc. and
guaranteed on a senior unsecured basis by TAM S.A. and TAM Linhas Aereas. As of December 31, 2016, the TAM Capital 2021 Notes outstanding amount was US$ 513 million.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | Commercial Bank Loans: As of December 31, 2016, unsecured Bank Commercial loans debt was US$ 426 million.
| | -- | ---------------------------------------------------------------------------------------------------------



66



---

##### Table of Contents

As of December 31, 2016, the average interest rate of our debt was 4.01%. Out of the total
debt, 63.1% accrues interest at a fixed rate (either through a stated fixed interest rate or through the use of interest rate swap agreements) or is subject to interest rate caps.

As of December 31, 2016, LATAM had US$ 1,773 million in current debt liabilities. Of this amount, US$ 228 million consisted of
short-term debt, which represents 13% of our total current debt liabilities.

Various EX-IM Bank
loans signed by LATAM for the financing of Boeing 767, 767 freighter, 777 freighter and 787 aircraft contain financial covenants and other restrictions, including restrictions in shareholder composition and disposal of assets. As of
December 31, 2016, we also had purchase obligations totaling US$ 7.0 billion, with deliveries between 2017 and 2022, as set forth below:



| |  | Airbus A320-Family, passenger aircraft deliveries: 54
| | - | -----------------------------------------------------



| |  | Wide-body passenger aircraft deliveries (which include the Airbus A350 900XWB, the Airbus A350 1000XWB, the Boeing 787-8, and the Boeing
787-9): 28
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

Tabular Disclosure of Contractual Obligations

The following table sets forth our material expected obligations and commitments as of December 31, 2016:



|                              |  |                                                 |        |  |                 |     |       |           |  |     |           |  |  |                  |       |  |  |     |       | 
|----------------------------- |  | ----------------------------------------------- | ------ |  | --------------- | --- | ----- | --------- |  | --- | --------- |  |  | ---------------- | ----- |  |  | --- | ----- | 
|                              |  | Payments due by period, as of December 31, 2016 |       
|(US$ in millions)             |  | Total(2)                                        |        |  | Less than 1year |     |       | 1-3 years |  |     | 3-5 years |  |  | More than5 years |      
|Financial debt obligations(1) |  | US$                                             | 8,714  |  |                 | US$ | 1,773 |           |  | US$ | 2,241     |  |  | US$              | 2,544 |  |  | US$ | 2,156 | 
|Operating lease obligations   |  | US$                                             | 3,255  |  |                 | US$ | 533   |           |  | US$ | 838       |  |  | US$              | 621   |  |  | US$ | 1,263 | 
|Fleet Commitments(3)          |  | US$                                             | 6,966  |  |                 | US$ | 469   |           |  | US$ | 2,144     |  |  | US$              | 4,002 |  |  | US$ | 351   | 
|TOTAL                         |  | US$                                             | 18,935 |  |                 | US$ | 2,775 |           |  | US$ | 5,223     |  |  | US$              | 7,167 |  |  | US$ | 3,770 | 



|(1) | Financial debt obligations reflect principal payments on outstanding debt obligations, including aircraft debt, senior notes issued by LAN and TAM, long-term and short-term bank loans and PDP financing.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The amount presented reflects LATAMs estimates regarding (i) changes in scheduled delivery dates; (ii) conversion of certain aircraft types and (iii) aircraft of which we do not expect to take
delivery. For the amounts of material obligations and commitments as of December 31, 2016, please see Note 16 to our audited consolidated financial statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Fleet commitments represent the capex equivalent of purchasing all fleet arrivals.
|--- | ----------------------------------------------------------------------------------

2016 Fleet
Acquisitions

During 2016, LATAM completed the acquisition of the following wide body aircraft:



| |  | One Boeing 787-9 passenger aircraft, financed through an operating lease.
| | - | -------------------------------------------------------------------------



| |  | Three Boeing 787-9 and two Airbus 350-900 passenger aircraft, financed through sale and leaseback transactions.
| | - | ---------------------------------------------------------------------------------------------------------------



| |  | One Boeing 787-9 and one Airbus 350-900 passenger aircraft, financed through the EETC facility.
| | - | -----------------------------------------------------------------------------------------------



| |  | Three Airbus 350-900 passenger aircraft, financed through commercial loans.
| | - | ---------------------------------------------------------------------------

The Boeing 787-9 aircraft financed through an operating lease has a 12 year term and monthly payments.
The four Boeing 787-9 and two Airbus 350-900 aircraft financed through sale and leaseback transactions have lease terms of 12 years. These leases are denominated in U.S.
dollars and have monthly payments. Aircraft financed through EETC are under the terms described above. The three Airbus 350-900 financed through commercial loans have a Senior and Junior tranche, which have
terms of 12 and 7 years, respectively.



67



---

##### Table of Contents

During 2016, LATAM completed the acquisition of the following narrow body aircraft:



| |  | Seven A321 231 and one A320neo passenger aircraft, financed through sale and leaseback transactions.
| | - | ----------------------------------------------------------------------------------------------------



| |  | Four A321 231 passenger aircraft, financed through the EETC facility.
| | - | ---------------------------------------------------------------------



| |  | One A320neo passenger aircraft, financed through commercial loans.
| | - | ------------------------------------------------------------------

Narrow body aircraft
financed through sale and leaseback transactions have lease terms of 12 years. These leases are denominated in U.S. dollars and have monthly payments. Aircraft financed through EETC are under the terms described above. The A320neo passenger aircraft
financed through commercial loans has a Senior and Junior tranche, which have terms of 12 and 7 years, respectively.

The ECA-guaranteed loans have an advance rate equal to 80% of the net purchase price of the aircraft for a 12-year period, with the remaining 20% of the aircraft being financed by
the Companys available cash flows.

2015 Fleet Acquisitions

During 2015, LATAM completed the acquisition of the following wide body aircraft:



| |  | Four Boeing 7879 passenger aircraft, financed through operating leases.
| | - | -----------------------------------------------------------------------



| |  | Three Boeing 7879 and 1 Airbus 350-900 passenger aircraft, financed through the EETC facility.
| | - | ----------------------------------------------------------------------------------------------

The four Boeing 787-9 aircraft financed through operating lease transactions have lease terms of 12
years. These leases are denominated in U.S. dollars and have monthly payments. Aircraft financed through EETC are under the terms described above.

During 2015, LATAM completed the acquisition of the following narrow body aircraft:



| |  | One A321 231 passenger aircraft, financed through a commercial loan.
| | - | --------------------------------------------------------------------



| |  | Seven A321 231 passenger aircraft, financed through sale and leaseback transactions.
| | - | ------------------------------------------------------------------------------------



| |  | Seven A321 231 passenger aircraft, financed through the EETC facility.
| | - | ----------------------------------------------------------------------

The aircraft financed
under commercial financing is part of the 2014 facility under a 12-year floating rate amortizing loan. Narrow body aircraft financed through sale and leaseback transactions have lease terms of 12 years. These
leases are denominated in U.S. dollars and have monthly payments. Finally, aircraft financed through EETC are under the terms described above.

The ECA-guaranteed loans have an advance rate equal to 80% of the net purchase price of the aircraft
for a 12-year period, with the remaining 20% of the aircraft being financed by the Companys available cash flows.



|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------

A. Directors and Senior Management

The LATAM Airlines Group board of directors consists of nine directors who are elected every two years for
two-year terms at annual regular shareholders meetings or, if necessary, at an extraordinary shareholders meeting, and may be re-elected. The board of
directors may appoint replacements to fill any vacancies that occur during periods between elections. Scheduled meetings of the board of directors are held once a month and extraordinary board of directors meetings are called when summoned by
the chairman of the board of directors. Extraordinary meetings can be summoned by the chairman, or when requested by one or more directors if the need for such meeting is previously approved by the chairman, unless the meeting is requested by a
majority of the directors, in which case the meeting must be held without the previous approval of the chairman.



68



---

##### Table of Contents

The current board of directors was elected at the ordinary shareholders meeting held on April 28,
2015. Its term expires in April 2017. On June 7, 2016, Mr. Ricardo J. Caballero resigned as a member of the board of directors, which elected on January 24th, 2017 Mr. Giles
Agutter in his place.

The following are LATAM Airlines Groups directors:



|                          |  |                           
|------------------------- |  | --------------------------
|Directors                 |  | Position                  
|Mauricio Rolim Amaro(1)   |  | Director / Chairman       
|Henri Philippe Reichstul  |  | Director                  
|Juan José Cueto Plaza(2)  |  | Director                  
|Ramón Eblen Kadis(3)      |  | Director                  
|Georges de Bourguignon    |  | Director                  
|Giles Agutter             |  | Director                  
|Carlos Heller Solari(4)   |  | Director                  
|Gerardo Jofré Miranda     |  | Director                  
|Francisco Luzón López     |  | Director                  
|                          | 
|Senior Management         |  | Position                  
|Enrique Cueto Plaza(2)    |  | CEO LATAM                 
|Ignacio Cueto Plaza(2)    |  | CEO LAN                   
|Ramiro Alfonsín           |  | CFO LATAM                 
|Armando Valdivieso Montes |  | Senior VP Commercial LATAM
|Claudia Sender            |  | President TAM             
|Emilio del Real Sota      |  | Senior VP Human Resources 
|Juan Carlos Mencio        |  | Senior VP Legal           



|(1) | Mr. Mauricio Rolim Amaro is a member of the Amaro Group, which is defined in Item 7 as a Major Shareholder
|--- | --------------------------------------------------------------------------------------------------------------

|(2) | Messrs. Ignacio, Juan José and Enrique Cueto Plaza are brothers. All three are members of the Cueto Group, which is defined in Item 7 as a Major Shareholder, and are the LATAM Controlling
Shareholders.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Ramón Eblen Kadis is a member of the Eblen Group, which is defined in Item 7 as a Major Shareholder.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | Mr. Carlos Heller Solari is a member of the Bethia Group, which is defined in Item 7 as a Major Shareholder.
|--- | ----------------------------------------------------------------------------------------------------------------

Biographical Information

Set forth below
are brief biographical descriptions of LATAM Airlines Groups directors and senior management. All of LATAMs directors were elected or reelected, as the case may be, in April 28, 2015 for a
two-year term, which expires in April 2017, with the exception of Mr. Giles Agutter who was elected by the Board of Directors to fill the vacancy left by Mr. Ricardo J. Caballero due to his
resignation.

Directors

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 2015 and has served as Chairman since September 2012. 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 Aviação Executiva e Taxi Aéreo S.A. As of January 31, 2017, according to shareholder registration data in Chile, Mr. Amaro shared in
the beneficial ownership of 18,342,913 common shares of LATAM Airlines Group (3.02% of LATAM Airlines Groups outstanding shares), held directly by TEP Chile S.A. and 35,292,908 common shares of LATAM Airlines Group (5.82% of LATAM Airlines
Groups outstanding shares), held indirectly by TEP Chile. For more information see Item 7. Controlling Shareholders and Related Party Transactions.



69



---

##### Table of Contents

Mr.Henri Philippe Reichstul, joined LATAMs board of directors in
April 2014. 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 his roles as Administrative Board
member of TAM and LATAM Group, he is also a member of the Board of Directors of Repsol YPF, Peugeot Citroen, AES Brasil, 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.

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 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.,
Inversiones del Buen Retiro S.A., Costa Verde Aeronáutica S.A., Sinergia Inmobiliaria S.A., Valle Escondido S.A., Fundación Colunga and Universidad San Sebastián. 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). As of January 31, 2017, Mr. Cueto shared in the
beneficial ownership of 171,430,090 common shares of LATAM Airlines Group (28.27% of LATAM Airlines Groups outstanding shares) held by the Cueto Group. For more information see Item 7. Controlling Shareholders and Related Party
Transactions.

Mr.Georges de Bourguignon, 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 2015. Mr. de Bourguignon has been a partner and executive director of Asset Chile S.A., a Chilean investment bank, since 1993. He is currently member of the
board of directors K+S Chile S.A. andEmbotelladora Andina S.A. In the past he has served on several other boards of public and private companies, as well as of boards of non profit organizations. Between 1990 and 1993, 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. As of January 31,
2017, Mr. de Bourguignon indirectly held 3,153 common shares of LATAM Airlines Group (0.0005%) of LATAM Airlines Group outstanding shares).

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 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). As of January 31, 2017, The Eblen Group had the beneficial ownership of 35,945,199 common shares of LATAM Airlines Group (5.93% of LATAM Airlines Groups outstanding
shares). For more information see Item 7. Controlling Shareholders and Related Party Transactions.

Mr.Giles Agutter is the owner and Chief Executive Officer of Southern Sky Ltd, an airline consultant company
specializing in airline strategy, fleet planning, aircraft acquisition and aircraft financing. Mr. Agutter has had vast experience in advising airlines, including Qatar Airways, on significant Merger and Acquisition projects within the airline
industry. Mr Agutter has a degree in Aerospace Engineering from Manchester University and he currently resides in England.

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 2015. Mr. Heller has vast experience in retail, communications, transport and agriculture industries. Mr. Heller is president of Bethia S.A.
(Bethia) (parent company of Axxion S.A. and Inversiones HS SpA). He is also President of the Boards of Falabella Retail S.A., Red Televisiva Megavision S.A., Club Hípico de Santiago S.A., Sotraser S.A., Blue Express S.A., Aero
Andina S.A. and Azul Azul S.A. concessionaire of the Corporación de Fútbol Profesional de la Universidad de Chile. He is also a member of the Board of Directors of S.A.C.I Falabella, Viña Indómita S.A.,
Viña Santa Alicia S.A. and Viña Dos Andes S.A. On January 31, 2017, Mr. Heller indirectly held 33,367,357 ordinary shares of LATAM Airlines Group through Axxion S.A. and Inversiones HS Spa (5.50% of the shares of LATAM
Airlines Group).

Mr.Gerardo Jofré Miranda, joined LATAM Airlines Board of directors on May 2010
and was reelected to the board of directors of LATAM in April 2015. Mr. Jofré is member of the board of directors of Codelco, Enel Chile and member of the Real Estate Investment Council of Santander Real Estate Funds. From 2010 to 2014
he served as president of the board of directors of Codelco. 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. As of January 31, 2017, Mr. Jofré held
106,843 common shares of LATAM Airlines Group (0.017% of LATAM Airlines Groups outstanding shares).

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 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



70



---

##### Table of Contents

currently a member of the board of La Haya Real Estate and served as Independent Director at Willis Group between June 2013 and January 2016. 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 S.A. 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

Mr.Enrique Cueto Plaza, is LATAM Airlines Groups Chief Executive Officer (CEO) and has been in
this position since the combination between LAN and TAM in June 2012. From 1983 to 1993, Mr. Cueto was Chief Executive Officer of Fast Air, a Chilean Cargo airline. From 1993 to 1994, Mr Cueto was a member of the board of LAN Airlines.
Thereafter, Mr. Cueto held the position of CEO of LAN until June 2012. Mr. Cueto has in-depth knowledge of passenger and cargo airline management, both in commercial and operational aspects, gained
during his 30 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 Endeavor foundation, an organization dedicated to the promotion of entrepreneurship in Chile, and president of the Latin American and Caribbean Air Transport Association (ALTA). Mr. Cueto is the
brother of Messrs. 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). As of January 31, 2017,
Mr. Cueto jointly shared in the beneficial ownership of 171,430,090 common shares of LATAM Airlines Group (28.27% of LATAM Airlines Groups outstanding shares) held by the Cueto Group. For more information see Item 7. Controlling
Shareholders and Related Party Transactions.

Mr.Ignacio Cueto Plaza, is LANs CEO. His career in
the airline industry extends over 30 years. In 1985, Mr. Cueto assumed the position of Vice President of Sales at Fast Air Carrier, the biggest national cargo company of that time. In 1985, Mr. Cueto assumed as Service Manager and
Commercial Manager for the Miami sales office. Mr. Cueto later served on the board of directors of Ladeco (from 1994 to 1997) and LAN (from 1995 to 1997). 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 combination with TAM in 2012. Mr. Cueto also led the establishment of the different affiliates that the Company has in South
America, as well as the implementation of key alliances with other airlines. 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). As of January 31, 2017, Mr. Cueto shared in the beneficial ownership of 171,430,090 common shares of LATAM (28.27% of LATAMs outstanding shares) held by the Cueto Group. For more
information see Item 7. Controlling Shareholders and Related Party Transactions. Mr. Cueto is expected to leave the Companys senior management team in mid-April 2017 and is applying to
become a member of LATAMs board of directors.

Mr.Armando Valdivieso Montes,is Senior Commercial
Vice President of LATAM since 2015. After the combination between LAN and TAM in 2012, Mr. Valdivieso served as General Manager of LAN, and from 2006 until 2012 he served as the General Manager-Passenger. Between 1997 and 2005 he served as
Chief Executive Officer-Cargo Business of LAN. From 1995 to 1997, Mr. Valdivieso was President of Fast Air, and from 1991 to 1994, Mr. Valdivieso served as Vice President, North America of Fast Air Miami. Mr. Valdivieso is a civil
engineer and obtained an AMP (Advance Managements Program) from Harvard Business School. Mr. Valdivieso will leave the Company during August 2017 as was announced by the Company on March 16, 2017. As of January 31, 2016,
Mr. Valdivieso owned 95,859 common shares of LATAM (0.016% of LATAM Airlines Groups outstanding shares).

Mrs.Claudia Sender Ramirez, has served as TAM Airlines President 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 combination 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. Prior to joining LATAM Airlines, 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s degree in Chemical Engineering
from the Polytechnic School at the University of São Paulo (USP) and a MBA from Harvard Business School.



71



---

##### Table of Contents

Mr.Juan Carlos Mencio, is Senior Vice President of Legal Affairs and
Compliance for LATAM Airlines Group since September 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.

Mr.Ramiro
Alfonsín, is LATAMs Chief Financial Officer (CFO), a position he holds since July 2016. Over the past 16 years, before joining LATAM, he worked for Endesa, a leading utility company, in Spain, Italy and Chile, having
served as Deputy Chief Executive Officer and Chief Financial Officer for their Latin American operations. Before joining the utility sector, he worked for 5 years in Corporate and Investment Banking in large European banks. Mr. Alfonsín
holds a degree in business administration from Pontificia Universidad Católica de Argentina.

Mr.Emilio del
Real Sota, is LATAMs HR Executive Vice-President, a position he assumed (with LAN) in August 2005. 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. Mr. del Real has a Psychology degree from
Universidad Gabriela Mistral.

During 2017, the Company will implement a new organizational structure focused on four basic areas
Clients, Revenue, Operations and Fleet, and Finance which will be the pillars of the Companys business strategy and will report directly to the CEO LATAM. The new structure will be simpler, more efficient and more functional, and
will enable the Company to face an increasingly competitive environment. With this reorganization that will focus on functions instead of business units, the Company expects to optimize its internal synergies and strengthen its structure.



72



---

##### Table of Contents

The Clients area will be initially led by Claudia Sender. This area will focus on providing the
client with a complete experience. The Revenues area, focused on maximizing revenues for the Company, will be initially led by Roberto Alvo Milosawlewitsch, who will be LATAMs Chief Commercial Officer. The Operations and Fleet area will be
initially led by Hernan Pasman, who will be responsible for the Operations and Fleet Vice-presidency. The Finance area will preserve its existing organization and structure, and will be led by Ramiro Alfonsín, the current Chief Financial
Officer of the Company

B. Compensation

In 2016, the Company paid its principal executives (considering the levels of Vice Presidents, General Managers, Senior Director and Directors
as defined above) a total of US$40,194,453. After the incentives for performance paid during 2015, the Company paid its principal executives total gross remunerations of US$55,174,744.

Under Chilean law, LATAM Airlines Group must disclose in its annual report details of all compensation paid to its directors during the
relevant fiscal year, including any amounts that they received from LATAM Airlines Group for functions or employment other than serving as a member of the board of directors, including amounts received as per diem stipends, bonuses and, generally,
all other payments. Additionally, pursuant to regulations of the Superintendencia de Valores y Seguros de Chile (SVS), the Chilean securities regulator, the annual report must also include the total compensation and severance payments
received by managers and principal executives, and the terms of and the manner in which board members and executive officers participated in any stock option plans.

LATAM Airlines Groups directors are paid 50 UF per meeting (100 UF for the chairman of the board) and 40 UF for assistance to the
subcommittee of Directors meetings. LATAM Airlines Group also provides certain benefits to its directors and executive officers, such as free and discounted airline tickets and health insurance. We do not have contracts with any of our directors to
provide benefits upon termination of employment.

As set forth in further detail in the following table, in 2016 the members of our board
of directors currently in office received fees and salaries in the aggregate amount of US$282,364.



|                           |  |               |         | 
|-------------------------- |  | ------------- | ------- | 
|Board Members              |  | Fees (US$)(1) |        
|Mauricio Rolim Amaro       |  |               | 27,021  | 
|Henri Philippe Reichstul   |  |               | 23,798  | 
|Ricardo J. Caballero       |  |               | 9,188   | 
|Juan José Cueto Plaza      |  |               | 32,950  | 
|Ramon Eblen Kadis          |  |               | 57,123  | 
|Georges de Bourguignon     |  |               | 57,115  | 
|Carlos Heller Solari       |  |               | 15,576  | 
|Juan Gerardo Jofre Miranda |  |               | 57,123  | 
|Francisco Luzón López(     |  |               | 2,470   | 
|Total                      |  |               | 282,364 | 
|                           |  |               |         | 



|(1) | Includes fees paid to members of the board of directors committee, as described below.
|--- | ---------------------------------------------------------------------------------------

All of the
above-mentioned directors were elected to the LATAM board of directors in April 2015.

As required by Chilean law, LATAM Airlines Group
makes obligatory contributions to the privatized pension fund system on behalf of its senior managers and executives, but it does not maintain any separate program to provide pension, retirement or similar benefits to these or any other employees.

C. Board Practices

Our board of directors is currently comprised of nine members. The terms of each of our current directors will expire in April 2017. See
Directors and Senior Management above.



73



---

##### Table of Contents

Committees

Board of Directors Committee and Audit Committee

Pursuant to Chilean Corporation Law, LATAM Airlines Group must have a board of directors committee composed of no less than three board
members. LATAM Airlines Group has established a three-person committee of its board of directors, which, among other duties, is responsible for:



| |  | examining the reports of LATAM Airlines Groups external auditors, the balance sheets and other financial statements submitted by LATAM Airlines Groups administrators to the shareholders, and issuing an
opinion with respect thereto prior to their presentation to the shareholders for their approval;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | proposing external auditors and rating agencies to the board of directors;
| | - | --------------------------------------------------------------------------



| |  | evaluating and proposing external auditors and rating agencies;
| | - | ---------------------------------------------------------------



| |  | reviewing internal control reports pertaining to related-party transactions;
| | - | ----------------------------------------------------------------------------



| |  | examining and reporting on all related-party transactions; and
| | - | --------------------------------------------------------------



| |  | reviewing the pay scale of LATAM Airlines Groups senior management.
| | - | --------------------------------------------------------------------

Under Chilean
Corporation Law we are required, to the extent possible, to appoint a majority of independent directors to the Board of Directors Committee. A director is considered independent when he or she can be elected regardless of the voting of the
controlling shareholders. See Item 16. ReservedG. Corporate Governance.

Pursuant to U.S. regulations, we are required
to have an audit committee of at least three board members, which complies with the independence requirements set forth in Rule 10A-3 under the Exchange Act. Given the similarity in the functions that must be
performed by our Board of Directors Committee and the audit committee, our Board of Directors Committee serves as our Audit Committee for purposes of Rule 10A-3 under the Exchange Act.

As of December 31, 2016, all of the members of our Board of Directors Committee, which also serves as our Audit Committee, were
independent under Rule 10A-3 of the Exchange Act. As of December 31, 2016, the committee members were Mr. Gerardo Jofré Miranda, Mr. Ramón Eblen Kadis and Mr. Georges de
Bourguignon. We pay each member of the committee 67 UFs per monthly assistance to meetings.

Other LATAM Board Committees

LATAMs board of directors also has established four other committees to review, discuss and make recommendations to our board of
directors. These include a Strategy Committee, a Leadership Committee, a Finance Committee and a Brand, Product and Frequent Flyer Program Committee. The Strategy Committee focuses on the corporate strategy, current strategic issues and the
three-year plans and budgets for the main business units and functional areas and high-level competitive strategy reviews. The Leadership Committee focuses on, among other things, group culture, high-level organizational structure, appointment of
the LATAM CEO and his or her other reports, corporate compensation philosophy, compensation structures and levels for the LATAM CEO and other key executives, succession or contingency planning for the LATAM CEO and performance assessment of the
LATAM CEO. The Finance Committee is responsible for financial policies and strategy, capital structure, monitoring policy compliance, tax optimization strategy and the quality and reliability of financial information. Finally, the Brand and Frequent
Flyer Program Committee is responsible for brand strategies and brand building initiatives for the corporate and main business unit brands, the main characteristics of products and services for each of the main business units, frequent flyer program
strategy and key program features and regular audit of brand performance.

On June, 2014 LATAMs board of directors established a
Risk Committee to oversee the creation, implementation and management of a risk matrix for the Company.

Corporate Governance Practices

On March 31, 2014 LATAM Airlines Group filed for the first time the Companys Corporate Practices Report prepared according to
General Rule N° 341, current N°385 of the Securities and Insurance Commission issued November 29, 2012. The reporting obligation stipulated in this rule is for practices in place as of December 31st of each year and the report must be
presented no later than March 31st of the following year.

The report provided each year to the Commission must cover the following subjects:



| |  | how the Board works;
| | - | --------------------



| |  | the relationship between the company, shareholders and the public in general;
| | - | -----------------------------------------------------------------------------



| |  | how senior officers are replaced and compensated; and
| | - | -----------------------------------------------------



| |  | the definition, implementation and supervision of internal control and risk management policies and procedures inside the company.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



74



---

##### Table of Contents

D. Employees

The following table sets forth the number of employees in various positions at the Company.



|                            |  |                    |        |  |      |  |        |      |  |  |        | 
|--------------------------- |  | ------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|Employees ending the period |  | As of December 31, |       
|                            |  | 2016(1)            |        |  | 2015 |  |        | 2014 | 
|Administrative              |  |                    | 8,010  |  |      |  | 9,118  |      |  |  | 10,077 | 
|Sales                       |  |                    | 4,235  |  |      |  | 5,022  |      |  |  | 5,246  | 
|Maintenance                 |  |                    | 4,895  |  |      |  | 5,990  |      |  |  | 6,986  | 
|Operations                  |  |                    | 15,924 |  |      |  | 16,878 |      |  |  | 17,517 | 
|Cabin crew                  |  |                    | 8,970  |  |      |  | 9,383  |      |  |  | 9,237  | 
|Cockpit crew                |  |                    | 3,882  |  |      |  | 4,022  |      |  |  | 4,009  | 
|                            |  |                    |        |  |      |  |        |      |  |  |        | 
|Total                       |  |                    | 45,916 |  |      |  | 50,413 |      |  |  | 53,072 | 
|                            |  |                    |        |  |      |  |        |      |  |  |        | 



|(1) | At December 31, 2016, approximately 51% of our employees worked in Brazil, 25% in Chile, 21% in other Latin American countries and 3% in the rest of the world.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Our salary structure is comprised of: (a) fixed payments (base salary and other fixed payments such as legal gratifications, local bonus,
company seniority and others, depending on each countrys law and market practice); (b) short term incentives (associated with corporate, area and individual performance), applicable to our ground staff; (c) long term incentives
(applicable to our senior executives (Senior Directors and above)).

According to the local law requirements, we make pension and social
security contributions on behalf of our employees. Additionally, for our air staff and specialized professionals such as mechanics, we have fixed and variable payments, subject to the local collective agreements.

Regarding benefits, we usually provide life insurance and medical insurance, complementary of the coverage provided by the legal system. We
also grant other benefits, according to local market practice (meal, transportation, maternal and paternal leave, etc.). Additionally, we have a global staff travel program, which grants free and discounted tickets to our permanent employees.

Long Term Incentive Compensation Program

1. Compensation plan 2011

On
December 21, 2016, the subscription and payment period of the 4,800,000 shares corresponding to the compensation plan approved at the Extraordinary Shareholders Meeting held on December 21, 2011 (the 2011 Compensation Plan),
expired. Of the total shares allocated to the 2011 Compensation Plan, only 10,282 shares were subscribed and paid and were placed on the market in January 2014. At the expiration date, the 2011 Compensation Plan had a balance of 4,789,718
unsubscribed and unpaid shares, which was deducted from the authorized capital of the Company.

2. Compensation plan 2013

At the Extraordinary Shareholders Meeting held on June 11, 2013, the Companys shareholders approved a capital increase and the
allocation of 1,500,000 shares to compensation plans for employees of the Company pursuant to Article 24 of the Chilean Corporations Law. The Company has not defined a date for implementation of this compensation plan yet.

3. Compensation plan 2016-2018

The Company implemented a long-term retention plan for executives, with an end date of December 2018 and a vesting period between October 2018
and March 2019. The plan contemplates an extraordinary bonus to be paid in cash, whose calculation formula based on the variation of the value of the Companys shares over a certain period of time.

For more information, please see note 34 Note to our consolidated financial statements.

Labor Relations

We believe we generally
maintain good relations with our employees and the unions, and expect to continue to enjoy good relations with our employees and the unions in the future. We also believe that we have built a solid base among our employees that



75



---

##### Table of Contents

will support and facilitate our growth plans. We can provide no assurance, however, that our employee compensation arrangements may not be subject to change or modification after the expiration
of the contracts currently in effect, or that we will not be subject to labor-related disruptions due to strikes, stoppages or walk-outs.

Chile

As a general labor
relations policy in Chile, we negotiate labor contracts with unions in anticipation of their scheduled expirations. As a non-negotiable clause, all collective bargaining agreements are signed for the maximum
legal term, namely, four years. During 2016, we renegotiated our collective bargaining agreements with the following unions: Transporte Aéreo (LATAM Airlines Chile) Pilots Union, LATAM maintenance union, LATAM airport union, Transporte
Aéreo maintenance union and LATAM Cargo administrative union.All these collective agreements will be in force for the maximum legal term.

LATAM Cargo pilots union, in the context of a ruled negotiation, rejected the Companys last offer, and the negotiation ended by in
a unilateral extension of the collective agreements validity for 18 months. Thus, a new negotiation process should take place during the first quarter of 2018.

Ecuador



| |  | LATAM:Three employee associations were formed in 2012: of pilots, other general but composed mostly by maintenance employees and other general but composed mostly by employees
of airports/administration. In November 2015 the Company signed a voluntary agreement with the association of pilots, in force until July 2019.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additionally, in 2011 a union previously exclusive to cabin crew became general. This group maintains relations with the Company, but does not
have the right to enter into or negotiate collective bargaining agreements under Ecuadorian law because less than 50% of our employees eligible for membership are members of this union.



| |  | ANDES:In 2013 two unions of ground handling employees were formed in Andes. These groups maintain relations with the Company, but do not have the right to enter into or negotiate collective bargaining
agreements under Ecuadorian law, because less than 50% of our employees eligible for membership are members of each union. Additionally, in 2015 one employees association was formed in Andes. This group also has no right to enter negotiate
collective bargaining agreements under Ecuadorian law, because less than 50% of our employees eligible for membership are members of the association.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Argentina

In Argentina,
75.9% percent of LATAM employees are affiliated in at least in one of nine unions.

In November 2016 we started to negotiate the annual
adjustment for inflation with the seven unions. In January 2017, we reached an agreement with the unions.

In 2016 we succeeded in
implementing the Companys planned changes to reduce operational labor and overhead costs, without significant protests or union intervention.

Colombia

In Colombia we
have 4 different unions. The company held negotiations with them, as follows: (i) with the Technicians Union (ACMA), in 2014, and it will be in force until June of 2018, (ii) With the Cabin Crew Union (ACAV), in 2014, and it will be in
force until December of 2018, (iii) with the Industrial Union of Aviation Workers (SINTRATAC), held in June of 2016 and it will be in force until May of 2018, and (iv) in October 2016, an arbitration court ruled that the
negotiation with the Pilots Union (ACDAC) will be in force until November 2017.

Peru

LATAM Airlines Peru will begin negotiations with the pilots union during the second quarter of 2016. Negotiations are expected to
conclude with a collective agreement in June 2017.In 2017, negotiations will begin with the cabin crews union and the aircraft technicians union. In Peru we have in total six unions representing workers from different areas:
pilots, cabin crew, aircraft technicians, flight dispatchers and airport workers. Our current collective agreements have a term of four years.

Brazil

Under Brazilian
law, the term of collective bargaining agreements is limited to two years. TAMs collective bargaining agreements are valid for one year (for the economic clauses) and for two years (for social clauses). TAM has historically negotiated



76



---

##### Table of Contents

collective bargaining agreements with ten unions in Brazilone crew flight union, which represents pilots, copilots and flight attendants, and nine ground staff unions. In December 2016, TAM
renegotiated collective bargaining agreements with all the unions, which included a wage increase of 7.4%, in line with the inflation rate of the last 12 mounths. For ground staff workers with salaries up to ten thousand dollars, the increase was R$
739.00.

E. Share Ownership

As of
December 31, 2016, the members of our Board of Directors and our executive officers as a group owned 47.7% of our shares. See Item 7. Controlling Shareholders and Related Party Transactions.

For a description of stock options granted to our executive officers, see EmployeesLong Term Incentive Compensation
Program.



|ITEM 7. | CONTROLLING SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------------

A. Major Shareholders

Mr. Ignacio Cueto Plaza (the CEO of LAN), Mr. Enrique Cueto Plaza (the CEO LATAM) and certain other Cueto family members and entities controlled by
them, comprise the Cueto Group. As of January 31, 2017 the Cueto Group beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act) 28.27% of LATAM Airlines Groups common shares.
The Cueto Group is entitled to elect three of the nine members of our board of directors and is in a position to direct the management of the Company. In connection with our combination with TAM, members of the Cueto Group (which we also refer to
collectively as the LATAM Controlling Shareholders) entered into a shareholders agreement with the Amaro Family, acting through TEP Chile, and TEP Chile entered into shareholders agreements with LATAM and TAM. See
Shareholders Agreements.

Following our combination with TAM, the Amaro Group is also a major shareholder of LATAM Airlines Group.
Through their 100% ownership of TEP Chile and majority ownership of the voting shares of Holdco I, which in turn owns 100% of the common shares of TAM,the Amaro Group, are controlling shareholders of TAM. This is the case even though LATAM is
entitled to substantially all the economic rights arising from the operations of TAM by virtue of LATAMs ownership of 100% of Holdco I and TAM non-voting shares. Members of the Amaro Group include
our chairman, Mauricio Rolim Amaro and our former director Maria Claudia Amaro. As of January 31, 2017, the Amaro Group owned 3.02%(2) of LATAM Airlines Groups common shares. The terms
of the shareholders agreement among the Amaro Group, LATAM and the LATAM Controlling Shareholders require the LATAM Controlling Shareholders and the Amaro Group to vote to elect individuals nominated to our board of directors in accordance
with the direct and indirect shareholder interests in LATAM. See Shareholders Agreements.

In addition to the Cueto Group and the
Amaro Group, three other groups or entities are major shareholders of LATAM. As of January 31, 2017, the Eblen Group, which includes our director Ramón Eblen Cádiz, owned 5.93% of our common shares; the Bethia Group, which
includes our director Carlos Heller Solari, owned 5.50% of our common shares; and Qatar Airways Investments (UK) Ltd., whose nominee Giles Agutter became one of our directors effective January 24, 2017, owned 10.03%(4)of our outstanding common shares.

The table below sets forth additional information regarding the
beneficial ownership of our common shares, as of January 31, 2017, by our controlling shareholders, other major shareholders or shareholder groups, and minority shareholders.



|                                                |  |                                                   |             |  |                                             |  |       |  
|----------------------------------------------- |  | ------------------------------------------------- | ----------- |  | ------------------------------------------- |  | ----- | -
|                                                |  | Beneficial ownership(as of January 31, 2017)      |            
|                                                |  | Number of sharesof common stockbeneficially owned |             |  | Percentage ofcommon stockbeneficially owned | 
|Shareholder                                     |  |                                                   |             |  |                                             |  |       |  
|Cueto Group(1)                                  |  |                                                   | 171,430,090 |  |                                             |  | 28.27 | %
|Costa Verde Aeronautica S.A(2) (3)              |  |                                                   | 90,427,620  |  |                                             |  | 14.91 | %
|Inversiones Costa Verde Aeronautica Tres SpA    |  |                                                   | 35,300,000  |  |                                             |  | 5.82  | %
|Inversiones Nueva Costa Verde Aeronautica Ltda. |  |                                                   | 23,578,077  |  |                                             |  | 3.89  | %
|Costa Verde Aeronautica SpA                     |  |                                                   | 12,000,000  |  |                                             |  | 1.98  | %
|Others                                          |  |                                                   | 10,124,393  |  |                                             |  | 1.67  | %
|Qatar Airways(4)                                |  |                                                   | 60,837,452  |  |                                             |  | 10.03 | %



77



---

##### Table of Contents

|                                     |  |                                                   |             |  |                                             |  |        |  
|------------------------------------ |  | ------------------------------------------------- | ----------- |  | ------------------------------------------- |  | ------ | -
|                                     |  | Beneficial ownership(as of January 31, 2017)      |            
|                                     |  | Number of sharesof common stockbeneficially owned |             |  | Percentage ofcommon stockbeneficially owned | 
|Qatar Airways Investments (UK) Ltda. |  |                                                   | 60,837,452  |  |                                             |  | 10.03  | %
|Eblen Group.                         |  |                                                   | 35,945,199  |  |                                             |  | 5.93   | %
|Inversiones Andes SpA.               |  |                                                   | 17,146,529  |  |                                             |  | 2.83   | %
|Inversiones Andes II SpA             |  |                                                   | 8,000,000   |  |                                             |  | 1.32   | %
|Inversiones PIA SpA.                 |  |                                                   | 5,403,804   |  |                                             |  | 0.89   | %
|Comercial las Vertientes SpA         |  |                                                   | 5,394,866   |  |                                             |  | 0.89   | %
|Bethia Group.                        |  |                                                   | 33,367,357  |  |                                             |  | 5.50   | %
|Axxion S.A.                          |  |                                                   | 18,473,333  |  |                                             |  | 3.05   | %
|Inversiones HS SpA.                  |  |                                                   | 14,894,024  |  |                                             |  | 2.45   | %
|Amaro Group (2)(3)                   |  |                                                   | 18,342,913  |  |                                             |  | 3.02   | %
|TEP Chile S.A.                       |  |                                                   | 18,342,913  |  |                                             |  | 3.02   | %
|All other minority shareholders      |  |                                                   | 288,484,682 |  |                                             |  | 47.24  | %
|Total                                |  |                                                   | 606,407,693 |  |                                             |  | 100.00 | %



|(1) | The ownership figures for the Cueto Group in this table exclude shares held directly by TEP Chile S.A. which are subject to the shareholders agreements
described below.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Members of the Amaro Group also hold a 21.88% interest in Costa Verde Aeronáutica S.A.
|--- | --------------------------------------------------------------------------------------

|(3) | The ownership figures for the Amaro Group in this table exclude shares held by the Cueto Group which are subject to the shareholders agreements described below.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Qatar owns 9.999999918% of the total issued shares of LATAM.
|--- | ------------------------------------------------------------

As of January 31, 2017,
4.55% of our capital stock was held in the form of ADSs. Chilean pension funds held 19.41% of our capital stock and other minority investors held 23.28% in the form of common shares. It is not practicable for us to determine the number of ADSs or
common shares beneficially owned in the United States. As of January 31, 2017, we had 1,585 record holders of our common shares. It is not practicable for us to determine the portion of shares held in Chile or the number of record holders in
Chile. All of our shareholders have identical voting rights.

Shareholders Agreements

As described above under Item 4. Information on the CompanyA. History and Development of the CompanyCombination of LAN and
TAM, following the combination of LAN and TAM in June 2012, TAM S.A. continues to exist as a subsidiary of Holdco I and a subsidiary of LATAM, and LAN Airlines S.A. has been redesignated as LATAM Airlines Group S.A.

Prior to the consummation of the combination, LATAM Airlines Group and the LATAM Controlling Shareholders entered into several
shareholders agreements with TAM, the Amaro Group (acting through TEP Chile) and Holdco I, establishing agreements and restrictions relating to corporate governance in an attempt to balance LATAM Airlines Groups interests, as the owner
of substantially all of the economic rights in TAM, and those of the Amaro Group, as the continuing controlling shareholders of TAM under Brazilian law, by prohibiting the taking of certain specified material corporate actions and decisions without
prior supermajority approval of the shareholders and/or the board of directors of Holdco I or TAM. These shareholders agreements also set forth the parties agreement regarding the governance and management of the LATAM Airlines Group
following the consummation of the combination of LAN and TAM.

Governance and Management of LATAM Airlines Group

We refer to the shareholders agreement among the LATAM Controlling Shareholders and the Amaro Group (acting through TEP Chile), which
sets forth the parties agreement concerning the governance, management and operation of the LATAM Airlines Group, and voting and transfer of their respective LATAM Airlines Group common shares and TEP Chiles voting shares of Holdco I,



78



---

##### Table of Contents

as the control group shareholders agreement. We refer to the shareholders agreement between LATAM Airlines Group S.A. and TEP Chile, which sets forth agreements concerning
the governance, management and operation of the LATAM Airlines Group, as the LATAM Airlines Group-TEP shareholders agreement. The control group shareholders agreement and the LATAM
Airlines Group-TEP shareholders agreement set forth the parties agreement on the governance and management of the LATAM Airlines Group following the effective time.

This section describes the key provisions of the control group shareholders agreement and the LATAM Airlines Group-TEP shareholders agreement. The description of the LATAM Airlines Group-TEP shareholders agreement summarized below and elsewhere in this annual report on
Form 20-F is qualified in its entirety by reference to the full text of such shareholders agreement, which has been filed as exhibit to this annual report on Form
20-F.

Composition of the LATAM Airlines Group Board

Mr. Maurício Rolim Amaro was reelected to the LATAM Airlines Group board of directors in April 2014 and April 2015. If
Mr. Amaro vacates this position for any reason before April 2017, TEP Chile has the right to select a replacement to complete his term. Thereafter, LATAM Airlines Groups board of directors will appoint any of its members as the chairman
of LATAM Airlines Groups board of directors, from time to time, in accordance with the LATAM Airlines Groups by-laws. Mrs. Maria Cláudia Oliveira Amaro was elected to the LATAM Airlines
Group board of directors in June 2012, and resigned this position in September 2014. Also in September 2014, pursuant to Chilean law, Mr. Henri Philippe Reichstul was appointed by the board to fill her seat until the next general shareholders
meeting. Mr. Reichstul was re-elected to the board in April 2015.

Management of the
LATAM Airlines Group

Mr. Enrique Cueto Plaza has served as CEO of LATAM (CEO LATAM) since June 2012. The CEO LATAM is
the highest ranked officer of the LATAM Airlines Group and reports directly to the LATAM board of directors. The CEO LATAM is charged with the general supervision, direction and control of the business of the LATAM Airlines Group and certain other
responsibilities set forth in the LATAM Airlines Group-TEP shareholders agreement. After any departure of the current CEO LATAM, our board of directors will select his or her successor after receiving
the recommendation of the Leadership Committee.

Mr. Ignacio Cueto Plaza has served as CEO of LAN (CEO LAN) since June
2012. The CEO LAN reports directly to the CEO LATAM and has general supervision, direction and control of the passenger and cargo operations of the LATAM Airlines Group, excluding those conducted by Holdco I, TAM and its affiliates, and the
international passenger business of the LATAM Airlines Group. The CEO LAN, together with Mrs. Claudia Sender, the current CEO of TAM (CEO TAM), are responsible for recommending a candidate to the CEO LATAM to serve as the head of
the international passenger business of the LATAM Airlines Group (including both long haul and regional operations), who shall report jointly to the CEO LAN and the CEO TAM. The key executives of the LATAM Airlines Group (other than the CEO LATAM
and those in the TAM Group) will be appointed by, and will report, directly or indirectly, to the CEO LATAM. Mr. Cueto will leave the Companys senior management team in mid-April 2017 and is
applying to become a member of LATAMs board of directors.

The head office of the LATAM Airlines Group continues to be located in
Santiago, Chile.

Governance and Management of Holdco I and TAM

We refer to the shareholders agreement between us, Holdco I and TEP Chile, which sets forth our agreement concerning the governance,
management and operation of Holdco I, and voting and transfer of voting shares of Holdco I, as the Holdco I shareholders agreement and to the shareholders agreement between us, Holdco I, TAM and TEP Chile, which sets forth
our agreement concerning the governance, management and operation of TAM and its subsidiaries following the effective time, as the TAM shareholders agreement. The Holdco I shareholders agreement and the TAM shareholders
agreement set forth the parties agreement on the governance and management of Holdco I, TAM and its subsidiaries (collectively, the TAM Group) following the combination of LAN and TAM.

This section describes the key provisions of the Holdco I shareholders agreement and the TAM shareholders agreement. The
description of the Holdco I shareholders agreement and the TAM shareholders agreement summarized below and elsewhere in this annual report on Form 20-F are qualified in their entirety by reference
to the full text of the aforementioned shareholders agreements, which have been filed as exhibits to this annual report on Form 20-F.

Composition of the Holdco I and TAM Boards

The Holdco I shareholders agreement and TAM shareholders agreement generally provide for identical boards of directors and the same
chief executive officer at Holdco I and TAM, with LATAM appointing two directors and TEP Chile appointing four directors (including the chairman of the board of directors).



79



---

##### Table of Contents

The control group shareholders agreement provides that the persons elected by or on behalf
of the LATAM Controlling Shareholders or the Amaro Group to our board of directors must also serve on the boards of directors of both Holdco I and TAM.

Management of Holdco I and TAM

The day-to-day business and affairs of Holdco I will be managed
by the TAM Group CEO under the oversight of the board of directors of Holdco I. The day-to-day business and affairs of TAM will be managed by the TAM Diretoria under the
oversight of the board of directors of TAM. The TAM Diretoria will be comprised of the TAM Group CEO, the TAM CFO, the TAM COO and the TAM CCO, currently the CEO of TAM, will be the initial CEO of Holdco I and TAM, or the TAM Group CEO
and any successor CEO will be selected by LATAM from three candidates proposed by TEP Chile. The TAM Group CEO will have general supervision, direction and control of the business and operations of the TAM Group (other than the international
passenger business of the LATAM Airlines Group) and will carry out all orders and resolutions of the board of directors of TAM. The initial chief financial officer of TAM, or the TAM CFO, has been jointly selected by LATAM and TEP Chile
and any successor CFO will be selected by TEP Chile from three candidates proposed by LATAM. The chief operating officer of TAM, or the TAM COO, and chief commercial officer of TAM, or the TAM CCO, will be jointly selected
and recommended to the TAM board of directors by the TAM Group CEO and TAM CFO and approved by the TAM board of directors. These shareholders agreements also regulate the composition of the boards of directors of subsidiaries of TAM.

Following the combination, TAM continues to be headquartered in São Paulo, Brazil.

Supermajority Actions

Certain actions by
Holdco I or TAM require supermajority approval by the board of directors or the shareholders of Holdco I or TAM which effectively require the approval of both LATAM and TEP Chile before the specified actions can be taken. Actions that require
supermajority approval of the Holdco I board of directors or the TAM board of directors include, as applicable:



| |  | to approve the annual budget and business plan and the multi-year business (which we refer to collectively as the approved plans), as well as any amendments to these plans;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to take or agree to take any action which causes, or will reasonably cause, individually, or in the aggregate, any capital, operating or other expense of any TAM Company and its subsidiaries to be greater than
(i) the lesser of 1% of revenue or 10% of profit under the approved plans, with respect to actions affecting the profit and loss statement, or (ii) the lesser of 2% of assets or 10% of cash and cash equivalents (as defined by IFRS) as set
forth in the approved plan then in effect, with respect to actions affecting the cash flow statement;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to create, dispose of or admit new shareholders to any subsidiary of the relevant company, except to the extent expressly contemplated in the approved plans;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve the acquisition, disposal, modification or encumbrance by any TAM company of any asset greater than $15 million or of any equity securities or securities convertible into equity securities of any TAM
Company or other company, except to the extent expressly contemplated in the approved plans;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve any investment in assets not related to the corporate purpose of any TAM company, except to the extent expressly contemplated in the approved plans;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to enter into any agreement in an amount greater than $15 million, except to the extent expressly contemplated in the approved plans;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| |  | to enter into any agreement related to profit sharing, joint ventures, business collaborations, alliance memberships, code sharing arrangements, except as approved by the business plans and budget then in effect, except
to the extent expressly contemplated in the approved plans;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to terminate, modify or waive any rights or claims of a relevant company or its subsidiaries under any arrangement in any amount greater than $15 million, except to the extent expressly contemplated in the approved
plans;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to commence, participate in, compromise or settle any material action with respect to any litigation or proceeding in an amount greater than $15 million, relating to the relevant company, except to the extent
expressly permitted in the approved plans;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve the execution, amendment, termination or ratification of agreements with related parties, except to the extent expressly contemplated in the approved plans;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve any financial statements, amendments, or any accounting, dividend or tax policy of the relevant company;
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | to approve the grant of any security interest or guarantee to secure obligations of third parties;
| | - | --------------------------------------------------------------------------------------------------



80



---

##### Table of Contents

| |  | to appoint executives other than the Holdco I CEO or the TAM Diretoria or to re-elect the then current TAM CEO or TAM CFO; and
| | - | ------------------------------------------------------------------------------------------------------------------------------



| |  | to approve any vote to be cast by the relevant company or its subsidiaries in its capacity as a shareholder.
| | - | ------------------------------------------------------------------------------------------------------------

Actions requiring supermajority shareholder approval include:



| |  | to approve any amendments to the by-laws of any relevant company or its subsdiaries in respect to the following matters: (i) corporate purpose; (ii) corporate capital;
(iii) the rights inherent to each class of shares and its shareholders; (iv) the attributions of shareholder regular meetings or limitations to attributions of the board of directors; (v) changes in the number of directors or
officers; (vi) the term; (vii) the change in the corporate headquarters of a relevant company; (viii) the composition, attributions and liabilities of management of any relevant company; and (ix) dividends and other
distributions;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve the dissolution, liquidation, or winding up of a relevant company;
| | - | -----------------------------------------------------------------------------



| |  | to approve the transformation, merger, spin-up or any kind of corporate re-organization of a relevant company;
| | - | --------------------------------------------------------------------------------------------------------------



| |  | to pay or distribute dividends or any other kind of distribution to the shareholders;
| | - | -------------------------------------------------------------------------------------



| |  | to approve the issuance, redemption or amortization of any debt securities, equity securities or convertible securities;
| | - | ------------------------------------------------------------------------------------------------------------------------



| |  | to approve a plan or the disposal by sale, encumbrance or otherwise of 50% or more of the assets, as determined by the balance sheet of the previous year, of Holdco I;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve the disposal by sale, encumbrance of otherwise of 50% or more of the assets of a subsidiary of Holdco I representing at least 20% of Holdco I or to approve the sale, encumbrance or disposition of equity
securities such that Holdco I loses control;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve the grant of any security interest or guarantee to secure obligations in excess of 50% of the assets of the relevant company; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



| |  | to approve the execution, amendment, termination or ratification of acts or agreement with related parties but only if applicable law requires approval of such matters.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Voting Agreements, Transfers and Other Arrangements

Voting Agreements

The
LATAM Controlling Shareholders and TEP Chile have agreed in the control group shareholders agreement to vote their respective LATAM Airlines Group common shares as follows:



| |  | the parties agree to vote their LATAM Airlines Group common shares to assist the other parties in removing and replacing the directors such other parties elected to the LATAM Airlines Group board of directors;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the parties agree to consult with one another and use their good faith efforts to reach an agreement on all actions (other than actions requiring supermajority approval under Chilean law) to be taken by the LATAM board
of directors or the LATAM shareholders, and if unable to reach such agreement, to follow the proposal made by our board of directors;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the parties agree to maintain the size of the LATAM Airlines Group board of directors at a total of nine directors and to maintain the quorum required for action by the LATAM Airlines Group board of directors at a
majority of the total number of directors of the LATAM Airlines Group board of directors; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | if, after good faith efforts to reach an agreement with respect to any action that requires supermajority approval under Chilean law and a mediation period, the parties do not reach such an agreement, then TEP Chile has
agreed to vote its shares on such supermajority matter as directed by the LATAM Airlines Group controlling shareholders, which we refer to as a directed vote.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The parties to the Holdco I shareholders agreement and TAM shareholders agreement have agreed to vote their voting shares of Holdco I and
shares of TAM so as to give effect to the agreements with respect to representation on the TAM board of directors discussed above.

Transfer Restrictions

Pursuant to the control group shareholders agreement, the LATAM Controlling Shareholders and TEP Chile are subject to certain
restrictions on sales, transfers and pledges of the LATAM Airlines Group common shares and (in the case of TEP Chile only) the voting shares of Holdco I beneficially owned by them. Except for a limited amount of LATAM Airlines Group common shares,
neither the LATAM Airlines Group controlling shareholders nor TEP Chile were permitted to sell any of their LATAM Airlines Group common shares, and TEP Chile was not permitted to sell its voting shares of Holdco I, until June 2015. Since then, sales
of



81



---

##### Table of Contents

LATAM Airlines Group common shares by either party are permitted, subject to (i) certain limitations on the volume and frequency of such sales and (ii) in the case of TEP Chile only,
TEP Chile satisfying certain minimum ownership requirements. On or after December 31, 2021, TEP Chile may sell all of its LATAM Airlines Group common shares and voting shares of Holdco I as a block, subject to (x) approval of the
transferee by the LATAM board of directors, (y) the condition that the sale not have an adverse effect and (z) a right of first offer in favor of the LATAM Airlines Group controlling shareholders, which we refer to collectively as
block sale provisions. An adverse effect is defined in the control group shareholders agreement to mean a material adverse effect on our and Holdco Is ability to own or receive the full benefits of ownership of TAM and
its subsidiaries or the ability of TAM and its subsidiaries to operate their airline businesses worldwide. The LATAM Airlines Group controlling shareholders have agreed to transfer any voting shares of Holdco I acquired pursuant to such right of
first offer to LATAM for the same consideration paid for such shares.

In addition, TEP Chile may sell all LATAM Airlines Group common
shares and voting shares of Holdco I beneficially owned by it as a block, subject to satisfaction of the block sale provisions, after December 21, 2021 if a release event (as described below) occurs or if TEP Chile is required to make two or
more directed votes during any 24-month period at two meetings (consecutive or not) of the shareholders of LATAM Airlines Group held at least 12 months apart and LATAM Airlines Group has not yet fully
exercised its conversion option described below. A release event will occur if (i) a capital increase of LATAM Airlines Group occurs, (ii) TEP Chile does not fully exercise the preemptive rights granted to it under applicable
law in Chile with respect to such capital increase in respect of all of its restricted LATAM Airlines Group common shares, and (iii) after such capital increase is completed, the individual designated by TEP Chile for election to the board of
directors of LATAM Airlines Group with the assistance of the LATAM Airlines Group controlling shareholders is not elected to the board of directors of LATAM Airlines Group.

In addition, after December 31, 2021 and after the occurrence of the full ownership trigger date (as described below under the
Conversion Option section), TEP Chile may sell all or any portion of its LATAM Airlines Group common shares, subject to (x) a right of first offer in favor of the LATAM Airlines Group controlling shareholders and (y) the
restrictions on sales of LATAM Airlines Group common shares more than once in a 12-month period.

The control group shareholders agreement provides certain exceptions to these restrictions on transfer for certain pledges of LATAM Airlines
Group common shares made by the parties and for transfers to affiliates, in each case under certain limited circumstances.

In addition,
TEP Chile agreed in the Holdco I shareholders agreement not to vote its voting shares of Holdco I, or to take any other action, in support of any transfer by Holdco I of any equity securities or convertible securities issued by it or by any of TAM
or its subsidiaries without our prior written consent.

Restriction on transfer of TAM shares

LATAM agreed in the Holdco I shareholders agreement not to sell or transfer any shares of TAM stock to any person (other than our
affiliates) at any time when TEP Chile owns any voting shares of Holdco I. However, LATAM will have the right to effect such a sale or transfer if, at the same time as such sale or transfer, LATAM (or its assignee) acquires all the voting shares of
Holdco I beneficially owned by TEP Chile for an amount equal to TEP Chiles then current tax basis in such shares and any costs TEP Chile is required to incur to effect such sale or transfer. TEP Chile has irrevocably granted us the assignable
right to purchase all of the voting shares of Holdco I beneficially owned by TEP Chile in connection with any such sale.

Conversion
Option

Pursuant to the control group shareholders agreement and the Holdco I shareholders agreement, we have the
unilateral right to convert our shares of non-voting stock of Holdco I into shares of voting stock of Holdco I to the maximum extent allowed under law and to increase our representation on the TAM and Holdco I
boards of directors if and when permitted in accordance with foreign ownership control laws in Brazil and other applicable laws if the conversion would not have an adverse effect (as defined above under the  Transfer
Restrictions section).

On or after December 31, 2021, and after we have fully converted all of our shares of non-voting stock of Holdco I into shares of voting stock of Holdco I as permitted by Brazilian law and other applicable laws, we will have the right to purchase all of the voting shares of Holdco I held by the
controlling shareholders of TAM for an amount equal to their then current tax basis in such shares and any costs incurred by them to effect such sale, which amount we refer to as the sale consideration. If we do not timely exercise our
right to purchase these shares or if, after December 31, 2021, we have the right under applicable law in Brazil and other applicable law to fully convert all the shares of non-voting stock of Holdco I
beneficially owned by us into shares of voting stock of Holdco I and such conversion would not have an adverse effect but we have not fully exercised such right within a specified period, then the controlling shareholders of TAM will have the right
to put their shares of voting stock of Holdco I to us for an amount equal to the sale consideration.



82



---

##### Table of Contents

Acquisitions of TAM Stock

The parties have agreed that all acquisitions of TAM common shares by LATAM Airlines Group, Holdco I, TAM or any of their respective
subsidiaries from and after the effective time of the combination will be made by Holdco I.

B. Related Party Transactions

General

We have engaged in a variety of
transactions with our affiliates, including entities owned or controlled by certain of our controlling shareholders. In the ordinary course of our business we render to and receive from related companies services of various types, including aircraft
leases, aircraft interchanges, freight transportation and reservation services. Such transactions, none of which is individually material, are summarized in Note 35 to our audited consolidated financial statements for the fiscal year ended
December 31, 2016.

On August 2, 2016, the Board of Directors recently approved the Policy on Control of Related-Party
Transactions of LATAM Airlines Group S.A. and its subsidiaries, which states:



| |  | Related-party means, among others, subsidiaries, affiliates, natural persons or legal entities with control of 10% or more of the Companys voting stock, vice presidents, directors or senior executives as well as
their respective spouses, relatives, and companies in which said persons are either direct or indirect owners of 10% or more of the Companys voting stock, or in which they have held a position over the last 18 months.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Related-Party Transactions can only be executed if said transactions are in LATAMs interest and adjust to price, terms and conditions prevalent in the market for similar transactions with other third parties at
the time of its approval.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Any and all negotiations, acts, contracts or operations in which a company of the LATAM Group and a party related to such company serve as the participants will be subject to the Policy.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------

A. Consolidated Financial Statements and Other Financial Information

See Item 3. Key InformationA. Selected Financial Data, Item 18. Financial Statements and pages F-1 through F-149.

Legal and Arbitration Proceedings

We are involved in routine litigation and other proceedings relating to the ordinary course of our business. The following is a description of
all the material legal and arbitration proceedings.

In February 2006 the European Commission (EC), the Department of Justice
of the United States (DOJ), the Canadian Competition Bureau (CCB), and Conselho Administrativo de Defesa Econômica (CADE), among others, initiated a global investigation of a large number of international
cargo airlines (among them LAN Cargo) for possible price fixing of cargo fuel surcharges and other fees in the European and United States air cargo markets. As previously announced, LAN Cargo reached plea agreements with the DOJ and the CCB, which
included the payment of fines, in relation to such investigation. On November 9, 2010, the EC imposed fines on 11 air carriers for a total amount of 799.4 million (equivalent to approximately US$1.1 billion). The fine imposed against
LAN Cargo and its parent company, LAN, totaled 8.2 million (equivalent to approximately US$10.9 million). LAN provisioned US$25 million during the fourth quarter of 2007 for such fines, and maintained this provision until the fine
was imposed in 2010. In 2010, LAN recorded a US$14.1 million gain (pre-tax) from the reversal of a portion of this provision. This was the lowest fine applied by the EC, which includes a significant
reduction due to LANs cooperation with the Commission during the course of the investigation. In accordance with European Union law, on January 24, 2011 this administrative decision was appealed by LAN Cargo and LAN to the General Court
in Luxembourg. Any judgment by the General Court may also be appealed to the Court of Justice of the European Union. The European Court of Justice overtuned the Commissions decision on December 16, 2015. On May 20 2016 the EC
confirmed that they have decided not to appeal the case and to issue a new decision with the aim of correcting the faults identified in the judgement by the European Court of Justice. On 17 March 2017, the EC
re-adopted its decision and imposed on LAN Cargo and its parent company, LATAM, a fine in the same amount, 8.2 million, as the original fine.



83



---

##### Table of Contents

On September 3, 2013, CADE published its decision to impose a fine of US$51.0 million
against ABSA, after an investigation, commenced in 2008, against several cargo airlines and airlines officers over allegations of anticompetitive practices regarding fuel surcharges in the air cargo business. CADE also imposed fines upon a former
Director and two former employees in the amounts of US$1.0 million and US$510,000 respectively. On December 5, 2013 ABSA filed its application for Administrative Reconsideration before CADE. On December 19, 2014, CADE issued a new
decision which reduced the fine against ABSA to US$15,382,082 (based on an exchange rate of US$ 1 = R$ 3.2591). CADE also reduced the fines against ABSAs Director and employees to US$251,616 and US$125,800, respectively (also based on an
exchange rate of US$ 1 = R$ 3.2591). ABSA has initiated a judicial appeal against the Union Federal seeking an additional reduction of the fine amount. In the light of said pending judicial appeal, we cannot predict the ultimate outcome of this
matter at this time.

The investigations by the DOJ, CCB and the EC prompted the filing of civil actions and claims by freight forwarding
and shipping companies against many airlines, including LAN Cargo and LATAM Airlines Group. LAN Cargo and ABSA reached a settlement agreement with the class action plaintiffs / non-class action claimants in
the United States on August 6, 2012, and in Canada on August 20, 2013.

Civil actions have also been initiated against many
airlines, including LAN Cargo and LATAM Airlines Group, in various European countries (Great Britain, Norway, Holland and Germany). The activity and progress of said civil actions is limited, in that they are now directly contingent upon the
decision of the EC to issue a new decision correcting the faults identified in the judgement. We cannot predict the ultimate outcome of these cases at this time.

Agreements with the DOJ and the SEC. In 2011, authorities in Chile and the United States initiated investigations relating to certain
payments by LATAM Airlines Group S.A. (formerly LAN Airlines S.A.) to a consultant who assisted in the resolution of labor issues in Argentina in 2006-2007. The Company voluntarily reported this situation to the Securities and Exchange Commission
(SEC) and the Justice Department of the United States (DOJ) and actively cooperated in those investigations. On February 4, 2016, Ignacio Cueto, the CEO of LAN, consented to entry of a cease-and-desist order by the SEC relating to the payments described above. Mr. Cueto agreed to pay a US$75,000 penalty to the SEC, to remain in compliance with LATAMs compliance structure and
internal accounting controls and to comply with the SECs books and records requirements. In July 2016, after multiple and prolonged exchanges of opinions and conversations with the DOJ and the SEC, LATAM also reached definitive agreements with
both authorities.

In the case of the DOJ, the agreement took the form of a Deferred Prosecution Agreement (DPA), pursuant to
which the DOJ will dismiss the charges after the expiration of a three-year period if LATAM complies with all terms of the DPA. Pursuant to the DPA, LATAM has admitted that the accounting for the payments made to the consultant in Argentina was
incorrect and that, at the time that such payments were made (2006-2007), it lacked adequate internal controls. LATAM has also accepted an independent consultant, for 27 months, whose function will be to monitor, evaluate, and report to the DOJ on
the effectiveness of LATAMs compliance program. LATAM also committed to reporting to the DOJ on the effectiveness of the aforementioned compliance program for 9 months after the work of the independent consultant is finished. Lastly, LATAM
also agreed to pay a fine of US$12,750,000 to the DOJ.

The settlement with the SEC included the issuance by the SEC of a cease-and-desist order, which is an administrative order closing the investigation whereby LATAM has accepted certain obligations and statements of fact. The order also refers
to the obligations related to the monitorship agreed under the DPA with the DOJ. LATAM also agreed to pay an amount of US$6,700,000 plus interest to the SEC. As of December 31, 2016, a balance of US$ 4,718,894 was payable to the SEC. .

Legal proceedings involving TAM

TAM Linhas Aéreas is party to one action filed by relatives of victims of an accident that occurred in October 1996 involving one of its
Fokker 100 aircraft which crashed during departure, in addition to 22 actions filed by residents of the region where the accident occurred, who are claiming pain and suffering, and a class action related to this crash. Any damages resulting from the
aforementioned legal claims are covered by the civil liability guarantee provided for in TAMs insurance policy with Itaú Unibanco Seguros S.A. We believe that the cap of US$400 million in that insurance policy is sufficient to
cover any potential penalties and judicial or extrajudicial agreements arising as a result of this matter.

Insurance coverage has been
sufficient to cover the liabilities arising from an accident that occurred in July 2007 involving an Airbus A320 aircraft from TAM Linhas Aereas. Settlements have been made directly between the insurance company and the victims families. As of
December 31, 2013, approximately 196 settlements have occurred and others are under negotiation between the insurance company and victims families. Management believes that the insurance coverage is adequate and that TAM will not incur
any expenses that were not contemplated by the scope of the insurance policy that would result in TAMs obligation to pay damages.



84



---

##### Table of Contents

TAM Linhas Aereas filed an ordinary action with a request for injunctive relief for non-payment of the Airline Workers Fund, a tax charged monthly at the rate of 2.5% of an airlines total payroll. Currently, judgment is pending on an appeal that TAM lodged challenging the initial decision
(which was ruled in favor of the Brazilian National Institute of Social Security (INSS)). In 2004 and 2011, the INSS issued an assessment notice tolling the Statute of Limitations of the social security credit as a result of TAM Linhas
Aereas non-payment of the Airline Workers Fund. The administrative proceedings have been suspended until completion of the judicial process. The approximate adjusted value of this proceeding as of
December 31, 2012 was US$43.3 million. In the opinion of our legal advisors, the chance of losing in this proceeding is possible. Assuming payment of this tax is required by law, we have established a provision in the amount of US$43.3 million
pending the final outcome of the matter.

TAM Linhas Aereas is a plaintiff in an action filed against the Brazilian government in 1993
seeking damages for the break-up of an air transportation concession agreement that resulted in the freezing of TAMs prices from 1988 to September 1993 in order to maintain operations with the prices set
by the Brazilian government during that period. The process is currently being heard before the Federal Regional Court and judgment is pending an appeal by TAM requesting clarification of the initial decision. The estimated value of the action is
R$245 million, based on a calculation made by an expert witness of the court. This sum is subject to delinquent interest since September 1993 and inflation adjustment since November 1994. Based on the opinion of TAMs legal advisors, and
recent rulings handed down by the Brazilian Supreme Court of Justice in favor of airlines in similar cases (specifically, actions filed by Transbrasil and Varig), we believe that TAMs likelihood of success is probable. We have not recognized
these credits in our financial statements and will only do so if and when the aforementioned decision is final.

TAM Linhas Aereas filed
an ordinary claim, with a request for early judgment, in relation to a dispute concerning the legality of charging the Adicional das Tarifas Aeroportuárias (Additional Airport Tariffs, or ATAERO), which are charged at
a rate of 50% on the value of tariffs and airport tariffs. The total amount involved, adjusted for inflation, as of December 31, 2012 totaled R$1,696 million.

In addition, one administrative proceeding had been filed against TAM Linhas Aéreas concerning the alleged failure to pay an
Industrialized Products Tax (IPI) and Import Tax (II) due on imported aircraft. In response, we filed the appropriate challenges on the basis that no federal tax should be payable on the imported aircraft because it is
leased aircraft. The total amount involved in this administrative proceeding is 2.794 million. Since February 2016 the administrative proceeding awaits a decision. In the opinion of our legal advisors, the chance of losing in this
proceeding is possible.

For additional Legal Proceedings relating to the ordinary course of our business, please see Note 30 
Contingencies  to our audited consolidated financial statements.

Dividend Policy

In accordance with the Chilean Corporation Law, LATAM must distribute cash dividends equal to at least 30% of its annual consolidated net
income calculated in accordance with IFRS subject to the terms of Oficio Circular No. 856 issued on October 17, 2014 by the Chilean Superintendency of Securities and Insurance. If there is no net income in a given year, LATAM can
elect but is not legally obligated to distribute dividends out of retained earnings. The board of directors may declare interim dividends out of profits earned during such interim period. Pursuant to LATAMs
by-laws, the annual cash dividend is approved by the shareholders at the annual ordinary shareholders meeting held between February 1 and April 30 of the year following the year with respect to
which the dividend is proposed. All outstanding common shares are entitled to share equally in all dividends declared by LATAM, unless the shares have not been fully paid by the shareholder after being subscribed.

Holders of ADSs will be entitled to receive dividends on the underlying common shares to the same extent as holders of common shares. Holders
of ADRs on the applicable record dates will be entitled to receive dividends paid on the common shares represented by the ADSs evidenced by such ADRs. Dividends payable to holders of ADSs will be paid by us to the depositary in Chilean pesos and
remitted by the depositary to such holders net of foreign currency conversion fees and expenses of the depositary and will be subject to Chilean withholding tax currently imposed at a rate of 35% (subject to credits in certain cases as described
under Item 10. Additional Information E. TaxationCash Dividends and Other Distributions). Owners of the ADSs will not be charged any dividend remittance fee by the depositary with respect to cash dividends.

Chilean law requires that holders of shares of Chilean companies that are not residents of Chile register as foreign investors under one of
the foreign investment regimes established by Chilean law in order to have dividends, sale proceeds or other amounts with respect to their shares remitted outside Chile through the Formal Exchange Market (Mercado Cambiario Formal). Under our
Foreign Investment Contract, the depositary, on behalf of ADS holders, will be granted access to the Formal Exchange Market to convert cash dividends from pesos to U.S. dollars and to pay such U.S. dollars to ADS holders outside Chile.

B. Significant Changes

None.



85



---

##### Table of Contents

|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------

A. Offer and Listing Details

The principal trading market for our common shares is the SSE. The common shares have been listed on the SSE under the symbol LAN
since 1989, and the ADSs have been listed on the NYSE under the symbol LFL since November 7, 1997. The common shares also trade on the Bolsa de Valores de Valparaíso and the Bolsa Electrónica de Chile. The outstanding
ADSs are identified by the CUSIP number 501723100. The following table sets forth, for the periods indicated, the high and low closing sale prices on the SSE for the common shares and the high and low closing prices on the NYSE for the common shares
represented by ADSs. The information set forth in the table below reflects actual historical amounts and has not been restated in constant Chilean pesos.



|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|----------- | --- | -------------------- | -------- | ---- | ----------- |  | -------- | ---------- |  | ---- | ----- |  | --- |  | ----- | ---- |  |  | ----- | --- |  |  | ----- | 
|Period      |     | Ch$ per Common Share |          |      | US$ per ADS |  |          | R$ per BDR | 
|            | Low |                      |          | High |             |  | Low      |            |  | High |       |  | Low |  |       | High | 
|2012(1)     |     |                      | 10,481.4 |      |             |  | 14,230.5 |            |  |      | 21.89 |  |     |  | 29.11 |      |  |  | 44.86 |     |  |  | 52.79 | 
|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|2013        |     |                      | 5,967.3  |      |             |  | 11,755.4 |            |  |      | 11.62 |  |     |  | 24.84 |      |  |  | 26.53 |     |  |  | 49.00 | 
|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|2014        |     |                      | 6,533.3  |      |             |  | 8,791.6  |            |  |      | 10.60 |  |     |  | 16.36 |      |  |  | 25.00 |     |  |  | 38.00 | 
|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|2015        |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|Quarters:   |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|First       |     |                      | 5,123.7  |      |             |  | 7,198.3  |            |  |      | 8.06  |  |     |  | 11.82 |      |  |  | 26.35 |     |  |  | 29.50 | 
|Second      |     |                      | 4,521.3  |      |             |  | 6,163.4  |            |  |      | 6.88  |  |     |  | 10.02 |      |  |  | 21.41 |     |  |  | 29.05 | 
|Third       |     |                      | 3,320.8  |      |             |  | 4,596.5  |            |  |      | 4.64  |  |     |  | 7.11  |      |  |  | 17.50 |     |  |  | 21.69 | 
|Fourth      |     |                      | 3,270.2  |      |             |  | 4,150.5  |            |  |      | 4.70  |  |     |  | 6.07  |      |  |  | 18.06 |     |  |  | 24.00 | 
|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|Annual:     |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|Annual 2015 |     |                      | 3,270.2  |      |             |  | 7,198.3  |            |  |      | 4.64  |  |     |  | 11.82 |      |  |  | 17.50 |     |  |  | 29.50 | 
|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|2016        |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|Quarters:   |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|First       |     |                      | 3,276.4  |      |             |  | 4,730.5  |            |  |      | 4.49  |  |     |  | 7.00  |      |  |  | 19.80 |     |  |  | 23.00 | 
|Second      |     |                      | 4,163.5  |      |             |  | 4,893.4  |            |  |      | 5.86  |  |     |  | 7.40  |      |  |  | 20.00 | (2) |  |  | 22.68 | 
|Third       |     |                      | 4,350.6  |      |             |  | 5,855.8  |            |  |      | 6.53  |  |     |  | 8.96  |      |  |  |      |     |  |  |      | 
|Fourth      |     |                      | 5,341.6  |      |             |  | 6,460.4  |            |  |      | 8.18  |  |     |  | 9.86  |      |  |  |      |     |  |  |      | 
|            |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |     |  |  |       | 
|Months:     |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|September   |     |                      | 5,243.1  |      |             |  | 5,499.6  |            |  |      | 7.66  |  |     |  | 8.38  |      |  |  |      |     |  |  |      | 
|October     |     |                      | 5,341.6  |      |             |  | 6,460.4  |            |  |      | 8.22  |  |     |  | 9.86  |      |  |  |      |     |  |  |      | 
|November    |     |                      | 5,827.4  |      |             |  | 6,393.9  |            |  |      | 8.59  |  |     |  | 9.80  |      |  |  |      |     |  |  |      | 
|December    |     |                      | 5,549.8  |      |             |  | 6,091.8  |            |  |      | 8.18  |  |     |  | 9.40  |      |  |  |      |     |  |  |      | 
|Annual:     |     |                      |          |      |             |  |          |            |  |      |       |  |     |  |       |      |  |  |       |    
|Annual 2016 |     |                      | 3,276.4  |      |             |  | 6,460.4  |            |  |      | 4.49  |  |     |  | 9.86  |      |  |  | 19.80 |     |  |  | 23.00 | 



86



---

##### Table of Contents

|         |     |                      |         |      |             |  |         |           |  |      |      |  |     |  |       |      |  |  |   |  |  |  |   | 
|-------- | --- | -------------------- | ------- | ---- | ----------- |  | ------- | --------- |  | ---- | ---- |  | --- |  | ----- | ---- |  |  | - |  |  |  | - | 
|Period   |     | Ch$ per Common Share |         |      | US$ per ADS |  |         | R$ perBDR | 
|         | Low |                      |         | High |             |  | Low     |           |  | High |      |  | Low |  |       | High | 
|2017     |     |                      |         |      |             |  |         |           |  |      |      |  |     |  |       |      |  |  |   |  |  |  |   | 
|Months:  |     |                      |         |      |             |  |         |           |  |      |      |  |     |  |       |      |  |  |   | 
|January  |     |                      | 5,574,1 |      |             |  | 6,166.0 |           |  |      | 8.18 |  |     |  | 9.45  |      |  |  |  |  |  |  |  | 
|February |     |                      | 5,931.8 |      |             |  | 6,663.2 |           |  |      | 9.19 |  |     |  | 10.45 |      |  |  |  |  |  |  |  | 

Source: Santiago Stock Exchange, the New York Stock Exchange and the Bovespa

|(1) | From June 22, 2012, following the combination of LAN and TAM, the trading stock continues to be listed as LFL on the NYSE and as LAN on the SSE, but reflects the value of the combined
operating entity, LATAM Airlines Group.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Last trade prior the discontinuation of Brazilian LATAM depositary receipts-BDRS level III was on April 29, 2016.
|--- | -----------------------------------------------------------------------------------------------------------------

As of December 31, 2016, a total of 606,407,693 million common shares were outstanding, including common shares represented by ADSs.

B. Plan of Distribution

Not
applicable.

C. Markets

Trading

Chile

The Chilean stock market, which is
regulated by the SVS under Law 18,045 of October 22, 1981, as amended, which we refer to as the Securities Market Law, is one of the most developed among emerging markets, reflecting the particular economic history and development of Chile. The
Chilean governments policy of privatizing state-owned companies, implemented during the 1980s, led to an expansion of private ownership of shares, resulting in an increase in the importance of stock markets. Privatization extended to the
social security system, which was converted into a privately managed pension fund system. These pension funds have been allowed, subject to certain limitations, to invest in stocks and are currently major investors in the stock market. Some market
participants, including pension fund administrators, are highly regulated with respect to investment and remuneration criteria, but the general market is less regulated than the U.S. market with respect to disclosure requirements and information
usage.

The SSE is Chiles principal exchange and accounts for approximately 86.87% of securities traded in Chile. Approximately
12.91% of equity trading is conducted on the Chilean Electronic Stock Exchange, an electronic trading market created by banks and non-member brokerage houses. The remaining equity trading is conducted on the
Valparaíso Stock Exchange.

Equities, closed-end funds, fixed-income securities, short-term
and money market securities, gold and U.S. dollars are traded on the SSE. In 1991, the SSE initiated a futures market with two instruments: U.S. dollar futures and Selective Shares Price Index, or IPSA, futures. Securities are traded primarily
through an open voice auction system; a firm offers system or daily auctions. Trading through the open voice system occurs on each business day from 9:30 a.m. to 4:30 p.m. The SSE has an electronic system of trade, called Telepregón
HT, which operates continuously for stocks trading in high volumes from 9:30 a.m. to 4:00 p.m. (or 5:00 p.m., depending on the period of the year). The Chilean Electronic Stock Exchange operates continuously from 9:30 a.m. to 4:30 p.m. (or 5:30
p.m., depending on the period of the year) on each business day. In February 2000, the SSE Off-Shore Market began operations. In the Off-Shore Market, publicly offered
foreign securities are traded and quoted in U.S. dollars.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.



87



---

##### Table of Contents

|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------

This Item reflects legal amendments
effected by Chilean Law No. 20,382 on Corporate Governance, which was enacted on October 13, 2009, and came into effect on October 20, 2009, and Chilean Law No. 20,552, which modernized and encouraged competition in the financial
system, was enacted on November 6, 2011 and came into effect on December 17, 2011.

A. Share Capital

Not applicable.

B. Memorandum and Articles
of Association

Set forth below is information concerning our share capital and a brief summary of certain significant provisions of
our by-laws and Chilean law. This description contains all material information concerning the common shares but does not purport to be complete and is qualified in its entirety by reference to our by-laws, the Chilean Corporation Law and the Securities Market Law, each referred to below. For additional information regarding the common shares, reference is made to our
by-laws, a copy of which is included as Exhibit 1.1 to this annual report on Form 20-F.

Organization and Register

LATAM Airlines
Group is a publicly held stock corporation (sociedad anónima abierta) incorporated under the laws of Chile. LATAM Airlines Group was incorporated by a public deed dated December 30, 1983, an abstract of which was published in the
Chilean Official Gazette (Diario Oficial de la República de Chile) No. 31.759 on December 31, 1983, and registered on page 20,341, No. 11,248 of the Chilean Real Estate and Commercial Registrar (Registro de Comercio
del Conservador de Bienes Raices de Santiago) for the year 1983. Our corporate purpose, as stated in our by-laws, is to provide a broad range of transportation and related services, as more fully set forth
in Article Four thereof.

General

Shareholders rights in a Chilean company are generally governed by the companys by-laws and
the Chilean Corporation Law. Article 22 of the Chilean Corporation Law states that the purchaser of shares of a company implicitly accepts its by-laws and any prior agreements adopted at shareholders
meetings. Additionally, the Chilean Corporation Law regulates the government and operation of corporations (sociedades anónimas, or S.A.) and provides for certain shareholder rights. Article 137 of the Chilean Corporation
Law provides that the provisions of the Chilean Corporation Law take precedence over any contrary provision in a corporations by-laws. The Chilean Corporation Law and our
by-laws also provide that all disputes arising among shareholders in their capacity as such or between us or our administrators and the shareholders may either be submitted to arbitration in Chile or to the
courts of Chile at the election of the plaintiff initiating the action. Despite the foregoing, a recent legal amendment has forbidden certain individuals (directors, senior managers, administrators and main executives of the corporation, and any
shareholder that directly or indirectly holds shares whose book or market value exceed 5,000 UF at the moment of filing of the action) from submitting such action before the ordinary courts, thus obligating them to proceed with arbitration in all
situations. Finally, Decree-Law No. 3,500 on Pension Fund Administrators, which allows pension funds to invest in the stock of qualified corporations, indirectly affects corporate governance and
prescribes certain rights of shareholders. The Chilean Corporation Law sets forth the rules and requirements under which a corporation is deemed to be publicly held. Article 2 of the Chilean Corporation Law defines publicly held
corporations as corporations that register their shares with the Registro de Valores (Securities Registry) of the SVS, either voluntarily or pursuant to a legal obligation. In addition, Article 5 of the Chilean Securities Market Law indicates
which corporations shares must be registered with the Securities Registry:



| |  | one with 500 or more shareholders; and
| | - | --------------------------------------



| |  | one in which 100 or more shareholders own at least 10% of the subscribed capital (excluding any direct or indirect individual holdings exceeding 10%).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------

The framework of the Chilean securities market is regulated by the SVS under the Securities Market Law and the Chilean Corporation Law, which
imposes certain disclosure requirements, restricts insider trading, prohibits price manipulation and protects minority investors. In particular, the Securities Market Law establishes requirements for public offerings, stock exchanges and brokers and
outlines disclosure requirements for corporations that issue publicly offered securities.

Ownership Restrictions

Under Articles 12 and 20 of the Securities Market Law and General Rule 269 issued by the SVS in 2009, certain information regarding
transactions in shares of publicly held corporations must be reported to the SVS and the Chilean stock exchanges on which the shares are listed. Since the ADRs are deemed to represent the shares underlying the ADSs, transactions in ADRs will be
subject to those reporting requirements. Among other matters, the beneficial owners of ADSs that directly or indirectly hold 10% or more of the subscribed capital of LATAM Airlines Group, or that reach or exceed such percentage through an
acquisition, are required to report to the SVS and the Chilean stock exchanges, the day following the event:



88



---

##### Table of Contents

| |  | any acquisition or sale of shares; and
| | - | --------------------------------------



| |  | any acquisition or sale of contracts or securities the price or performance of which depends on the price variation of the LATAM Airlines Groups shares.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

These obligations are extended (i) to certain individuals (immediate family, next of kin and others) if the ADS holder is a natural
person; (ii) to any entity controlled by the holder, if the ADS is a legal entity; and (iii) to groups, if a holder has any joint action agreement with other holders and the group reaches or exceeds the cited threshold.

In addition, majority shareholders must state in their report whether their purpose is to acquire control of the company or if they are making
a financial investment.

Under Article 54 of the Securities Market Law and under SVS regulations, persons or entities that intend to
acquire control, whether directly or indirectly, of a publicly traded company, must follow certain notice requirements, regardless of the acquisition vehicle or procedure or whether the acquisition will be made through direct subscriptions or
private transactions. In the first place, the potential acquiror must send a written communication to the target corporation, any companies controlling or controlled by the target corporation, the SVS and the Chilean stock exchanges on which the
targets securities are listed, stating, among other things, the person or entity purchasing or selling and the price and conditions of any negotiations. Subsequently, the potential acquiror must also inform the public of its planned
acquisition by means of a publication in two Chilean newspapers with national distribution and by uploading such notice to the acquirors website, if available. Both requirements shall be met at least ten business days prior to the date on
which the acquisition transaction is to close, and in any event, as soon as negotiations regarding the change of control have been formalized or when confidential information or documents concerning the target are delivered to the potential
acquiror. The notices must state, among other things, the person or entity purchasing or selling and the price and conditions of any negotiations.

In addition to the foregoing, Article 54A of the Securities Market Law requires that within two business days of the completion of the
transactions pursuant to which a person has acquired control of a publicly traded company, a notice shall be published in the same newspapers in which the notice referred to above was published and notices shall be sent to the same persons mentioned
in the preceding paragraphs.

Consequently, a beneficial owner of ADSs intending to acquire control of LATAM Airlines Group will be
subject to the foregoing reporting requirements.

The provisions of the aforementioned articles do not apply whenever the acquisition is
being made through a tender or exchange offer.

Title XXV of the Securities Market Law on tender offers and SVS regulations provide that
the following transactions shall be carried out through a tender offer:



| |  | an offer which allows the taking control of a publicly traded company, unless the shares are being sold by a controlling shareholder of such company at a price in cash which is not substantially higher than the market
price and the shares of such company are actively traded on a stock exchange;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | an offer for all the outstanding shares of a publicly traded company upon acquiring two-thirds or more of its voting shares (this offer must be made at a price not lower than the
price at which appraisal rights may be exercised, that is, book value if the shares of the company are not actively traded or, if the shares of the company are actively traded, the weighted average price at which the stock has been traded during the
60 stock-exchange-business-day period between the 30th and the 90th
stock-exchange-business-days-preceding immediately preceding the acquisition); and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | an offer for a controlling percentage of the shares of a publicly traded company if the acquiror intends to take control of the company (whether publicly traded or privately held) controlling such publicly traded
company, to the extent that the latter represents 75.0% or more of the consolidated net assets of the former.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Article 200
of the Securities Market Law prohibits any shareholder that has taken control of a publicly traded company from acquiring, for a period of 12 months from the date of the transaction that granted it control of the publicly traded company, a number of
shares equal to or higher than 3.0% of the outstanding issued shares of the target without making a tender offer at a price per share not lower than the price paid at the time of taking control. Should the acquisition from the other shareholders of
the company be made on the floor of a stock exchange and on a pro rata basis, the controlling shareholder may purchase a higher percentage of shares, if so permitted by the regulations of the stock exchange.

Title XV of the Securities Market Law sets forth the basis for determining what constitutes a controlling power, a direct holding and a
related party.



89



---

##### Table of Contents

Capitalization

Under Chilean law, the shareholders of a company, acting at an extraordinary shareholders meeting, have the power to authorize an
increase in the companys share capital. When an investor subscribes issued shares, the shares are registered in that investors name even without payment, and the investor is treated as a shareholder for all purposes except with regard to
receipt of dividends and return of capital, provided that the shareholders may, by amending the by-laws, also grant the right to receive dividends of distribution of capital despite not having paid for the
subscribed shares. The investor becomes eligible to receive dividends once it has paid for the shares, or, if it has paid for only a portion of such shares, it is entitled to receive a corresponding pro rata portion of the dividends declared with
respect to such shares, unless the companys by-laws provide otherwise. If an investor does not pay for shares for which it has subscribed on or prior to the date agreed upon for payment, the company is
entitled under Chilean law to auction the shares on the appropriate stock exchange, and it has a cause of action against the investor to recover the difference between the subscription price and the price received for the sale of those shares at
auction. However, until such shares are sold at auction, the investor continues to exercise all the rights of a shareholder (except the right to receive dividends and return of capital, as noted above). Regarding shares issued but not paid for
within the period determined by the extraordinary shareholders meeting for their payment (which period cannot exceed three years from the date of such shareholders meeting), until January 1, 2010 they were canceled and no longer
available for issuance by us. As of January 1, 2010, the board of directors of LATAM Airlines Group has a legal obligation to initiate the necessary legal actions to collect the unpaid amounts, unless the shareholders meeting which
authorized the capital increase allowed the board to abstain from taking such action by a vote of two thirds of the issued shares, in which case the former rule still applies. Once the foregoing legal actions are exhausted, the board of directors
shall propose to the shareholders meeting the appropriate capital adjustment measures, to be decided by simple majority. Fully paid shares are not subject to further calls or assessments or to liabilities of LATAM Airlines Group.

As of February, 28, 2017, our share capital consisted of 608,374,525 common shares of which 606,407,693 are subscribed and fully paid shares
and 1,966,832 shares are pending of subscription and payment. The unsubscribed shares include (i) 1,500,000 shares allocated to stock option compensation plans and (ii) 466,832 that remain unsubscribed following our most recent capital increase. The
current share capital amount reflects the expiration of stock options, covering 4,789,718 shares that had been granted under employee compensation plans. Upon the expiration of the stock options on December 21, 2016, the Companys capital
stock was reduced to 608,374,525 shares.

Chilean law recognizes the right of corporations to issue common and preferred shares. To date,
we have issued and are authorized by our shareholders to issue only common shares. Each share of stock is entitled to one vote. Pursuant to one employee compensation plan approved by extraordinary shareholders meeting held on June 11,
2013, the issuance of the shares for this compensation plan has been authorized but has not been made effective, as such issuance is subject to the exercising of rights granted to certain employees that expire on November 15, 2017.

Preemptive Rights and Increases in Share Capital

The Chilean Corporation Law requires Chilean companies to offer existing shareholders the right to purchase a sufficient number of shares to
maintain their existing percentage of ownership in a company whenever that company issues new shares for cash, except for up to 10% of the capital increase which may be designated to employee compensation pursuant to article 24 of the Corporation
Law. Under this requirement, any preemptive rights will be offered by us to the depositary as the registered owner of the common shares underlying the ADSs, but holders of ADSs and shareholders located in the United States will not be allowed to
exercise preemptive rights with respect to new issuances of shares by us unless a registration statement under the Securities Act is effective with respect to those common shares or an exemption from the registration requirements thereunder is
available.

We intend to evaluate at the time of any preemptive rights offering the costs and potential liabilities associated with the
preparation and filing of a registration statement with the SEC, as well as the indirect benefits of enabling the exercise by the holders of ADSs and shareholders located in the United States of preemptive rights and any other factors we consider
appropriate at the time. No assurances can be given that any registration statement would be filed. If preemptive rights are not made available to ADS holders, the depositary may sell those holders preemptive rights and distribute the proceeds
thereof if a secondary market for such rights exists and a premium can be recognized over the cost of such sale. In the event that the depositary does not sell such rights at a premium over the cost of any such sale, all or certain holders of ADRs
may receive no value for the preemptive rights. The inability of holders of ADSs to exercise preemptive rights in respect of common shares underlying their ADSs could result in a change in their percentage ownership of common shares following a
preemptive rights offering.

Under Chilean law, preemptive rights are freely exercisable, transferable or waived by shareholders during a 30-day period commencing upon publication of the official notice announcing the start of the preemptive rights period in the newspaper designated by the shareholders meeting. The preemptive right of the
shareholders is the pro rata amount of the shares registered in their name in the shareholders registry of LATAM Airlines Group as of the fifth business day prior to the date of publication of the notice announcing the start of the preemptive
rights period. During such 30-day period (except for shares as to which preemptive rights have been waived), Chilean companies are not permitted to offer any newly issued common shares for sale to third
parties. For that 30-day



90



---

##### Table of Contents

period and an additional 30-day period, Chilean publicly held corporations are not permitted to offer any unsubscribed common shares for sale to third
parties on terms that are more favorable to the purchaser than those offered to shareholders. At the end of such additional 30-day period, Chilean publicly held corporations are authorized to sell non-subscribed shares to third parties on any terms, provided they are sold on a Chilean stock exchange.

Directors

Our by-laws provide for a board of nine directors. Compensation to be paid to directors must
be approved by vote at the annual shareholders meeting. We hold elections for all positions on the board of directors every two years. Under our by-laws, directors are elected by cumulative voting. Each
shareholder has one vote per share and may cast all of his or her votes in favor of one nominee or may apportion his or her votes among any number of nominees. These voting provisions currently ensure that a shareholder owning more than 10% of our
outstanding shares is able to elect at least one representative to our board of directors.

Under the Chilean Corporation Law,
transactions of a publicly-traded company with a related party must be conducted on an arms-length basis and must satisfy certain approval and disclosure requirements which are different from
the ones that apply to a privately-held company. The conditions apply to the publicly-traded company and to all of its subsidiaries .

These transactions include any negotiation, act, contract or operation in which the publicly-traded company intervenes together with either
(i) parties which are legally deemed related pursuant to article 100 of the Chilean Securities Market Law, (ii) a director, senior manager, administrator, main executive or liquidator of the company, either on their own behalf or on behalf
of a third party, including those individuals spouses or close relatives, (iii) companies in which the foregoing individuals own at least 10% (directly or indirectly), or in which they serve as directors, senior managers, administrators
or main executives, (iv) parties indicated as such in the publicly-traded companys by-laws, or identified by the directors committee or (v) those who have served as directors, senior
managers, administrators, main executives or liquidators of the counterparty in the last 18 months and are now serving in one of those positions at the publicly-traded company.

Corporations may enter into transactions with related parties if (i) the transaction is in the interest of the corporation, (ii) the
transaction is made on an arms-length basis at market conditions, (iii) the individuals involved in the transactions report them immediately to the board, (iv) the transaction is approved after
a reasoned explanation by the majority of the board, excluding those directors or liquidators that are involved in the transaction (who shall, nonetheless, render an opinion on the matter if required by the board), (v) the decisions of the
board are disclosed at the next shareholders meeting, and (vi) in case the majority of the board is disqualified to vote, the majority of the non-involved directors have approved the transaction, or
two thirds of the voting shares have approved the transaction).

If, as noted in clause (vi) of the preceding paragraph, the
transaction is to be approved by the shareholders meeting, the following additional rules apply: (i) the board shall appoint an independent appraiser that shall report to the shareholders on the transaction, (ii) the directors
committee or the non-involved directors may appoint a second independent appraiser, (iii) the appraisers reports shall be made available for 15 days, (iv) the receipt and availability of the
reports shall be disclosed as a material fact and (iv) directors shall render an opinion on the transaction within five business days after receiving the reports.

Transactions which do not meet the foregoing requirements are valid and enforceable, but neither the corporation nor its shareholders shall
have a cause of action to sue the infringing party for reimbursement on behalf of the corporation, for a total of the benefits reported to the interested party, in addition to indemnification for the damages caused. In such proceedings, the
defendant shall prove that the transaction met the legal requirements.

The Chilean Corporation Law sets forth a number of exceptions to
the foregoing rules. In the following situations, transactions with related parties may be carried out without complying with the foregoing rules: (i) if a transaction does not involve a substantial amount (if it does not exceed 1.0% of the net
worth of the company and does not exceed the equivalent of 2,000 UF or approximately US$96,554 as of the date of this annual report on Form 20-F) unless such a transaction exceeds 20,000 UF (for this
calculation all similar transactions carried out within a consecutive 12-month period between the same parties or for the same subject matter, shall be deemed as a single transaction), (ii) transactions
which according to the policies determined by the board of directors, are deemed to be within the ordinary course of business (the determination of such policies shall be disclosed as a material fact and made available to shareholders), and
(iii) if the counterparty is an entity in which the publicly-traded company has, directly or indirectly, at least a 95.0% ownership. As per the exemption indicated in (ii) above, on December 29, 2009, the Board of Directors of LATAM
Airlines Group established policies setting forth the transactions that fall within the ordinary course of business. That determination was publicly disclosed on the same day and is currently available on LATAM Airlines Groups website under
the Corporate Governance section.

Shareholders Meetings and Voting Rights

The Chilean Corporation Law requires that an ordinary annual meeting of shareholders be held within the first four months of each year after
being called by the board of directors (generally they are held in April, but in any case following the preparation of our



91



---

##### Table of Contents

financial statements, including the report of our auditors, for the previous fiscal year). LATAM Airlines Groups by-laws further provide that the
ordinary annual meeting of shareholders must take place between February 1 and April 30. The shareholders at the ordinary annual meeting approve the annual financial statements, including the report of our auditors, the annual report, the
dividend policy and the final dividend on the prior years profits, elect the board of directors (in our case, every two years or earlier if a vacancy occurs) and approve any other matter that does not require an extraordinary
shareholders meeting. The most recent extraordinary meeting of our shareholders was held on August 18, 2016, and the most recent ordinary annual meeting of our shareholders was held on April 26, 2016.

Extraordinary shareholders meetings may be called by the board of directors, if deemed appropriate, and ordinary or extraordinary
shareholders meetings must be called by the board of directors when requested by shareholders representing at least 10.0% of the issued voting shares or by the SVS. In addition, as from January 1, 2010 there are two new rules in this
regard: (i) the SVS may directly call for an extraordinary shareholders meeting in case of a publicly-traded company, and (ii) any kind of shareholders meeting may be self-convened and take place if all voting shares attend,
regardless of the fulfillment of the notice and other type of procedural requirements.

Notice to convene the ordinary annual meeting or
an extraordinary meeting is given by means of three notices which must be published in a newspaper of our corporate domicile (currently Santiago, Chile) designated by the shareholders at their annual meeting and, if the shareholders fail to make
such designation, the notice must be published in the Chilean Official Gazette pursuant to legal requirements. The first notice must be published not less than 15 days and not more than 20 days in advance of the scheduled meeting. Notice also must
be mailed not less than 15 days in advance of the meeting to each shareholder and to the SVS and the Chilean stock exchanges. Currently, we publish our official notices in the newspaper La Tercera(available online at www.latercera.com).

The quorum for a shareholders meeting is established by the presence, in person or by proxy, of shareholders representing a majority of
our issued common shares. If that quorum is not reached, the meeting can be reconvened within 45 days, and at the second meeting the shareholders present are deemed to constitute a quorum regardless of the percentage of the common shares that they
represent.

Only shareholders registered with us on the fifth business day prior to the date of a meeting are entitled to attend and vote
their shares. A shareholder may appoint another individual (who need not be a shareholder) as his or her proxy to attend and vote on his or her behalf. Proxies addressed to us that do not designate a person to exercise the proxy are taken into
account in order to determine if there is a sufficient quorum to hold the meeting, but the shares represented thereby are not entitled to vote at the meeting. The proxies must fulfill the requirements set forth by the Chilean Corporation Law and its
regulatory norms. Every shareholder entitled to attend and vote at a shareholders meeting has one vote for every share subscribed.

The following matters can only be considered at an extraordinary shareholders meeting:



| |  | our dissolution;
| | - | ----------------



| |  | a merger, transformation, division or other change in our corporate form or the amendment of our by-laws;
| | - | ---------------------------------------------------------------------------------------------------------



| |  | the issuance of bonds or debentures convertible into shares;
| | - | ------------------------------------------------------------



| |  | the conveyance of 50% or more of our assets (whether or not it includes our liabilities);
| | - | -----------------------------------------------------------------------------------------



| |  | the adoption or amendment of any business plan which contemplates the conveyance of assets in excess of the foregoing percentage;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| |  | the conveyance of 50% or more of the assets of a subsidiary, if the latter represents at least 20% of our assets;
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | the conveyance of shares of a subsidiary which entails the transfer of control;
| | - | -------------------------------------------------------------------------------



| |  | granting of a security interest or a personal guarantee in each case to secure the obligations of third parties, unless to secure or guarantee the obligations of a subsidiary, in which case only the approval of the
board of directors will suffice; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | other matters that require shareholder approval according to Chilean law or the by-laws.
| | - | ----------------------------------------------------------------------------------------

The matters referred to in the first seven items listed above may only be approved at a meeting held before a notary public, who shall certify
that the minutes are a true record of the events and resolutions of the meeting.

The by-laws
establish that resolutions are passed at shareholders meetings by the affirmative vote of an absolute majority of those voting shares present or represented at the meeting. However, under the Chilean Corporation Law, the vote of a two-thirds majority of the outstanding voting shares is required to approve any of the following actions:



| |  | a change in our corporate form, division or merger with another entity;
| | - | -----------------------------------------------------------------------



| |  | amendment to our term of existence, if any;
| | - | -------------------------------------------



92



---

##### Table of Contents

| |  | our early dissolution;
| | - | ----------------------



| |  | change in our corporate domicile;
| | - | ---------------------------------



| |  | decrease of our capital stock;
| | - | ------------------------------



| |  | approval of contributions and the assessment thereof whenever consisting of assets other than money;
| | - | ----------------------------------------------------------------------------------------------------



| |  | any modification of the authority reserved for the shareholders meetings or limitations on the powers of the board of directors;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| |  | decrease in the number of members of the board of directors;
| | - | ------------------------------------------------------------



| |  | the conveyance of 50% or more of our assets (whether or not it includes our liabilities);
| | - | -----------------------------------------------------------------------------------------



| |  | the adoption or amendment of any business plan which contemplates the conveyance of assets in excess of the foregoing percentage;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| |  | the conveyance of 50% or more of the assets of a subsidiary, if the latter represents at least 20% of our assets;
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | the conveyance of shares of a subsidiary which entails the transfer of control;
| | - | -------------------------------------------------------------------------------



| |  | the form that dividends are paid in;
| | - | ------------------------------------



| |  | granting a security interest or a personal guarantee in each case to secure obligations of third parties that exceeds 50% of our assets, unless to secure or guarantee the obligations of a subsidiary, in which case only
approval of the board of directors will suffice;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the acquisition of our own shares, when, and on the terms and conditions, permitted by law;
| | - | -------------------------------------------------------------------------------------------



| |  | all other matters provided for in the by-laws;
| | - | ----------------------------------------------



| |  | the correction of any formal defect in our incorporation or any amendment to our by-laws that refers to any of the matters indicated in the first 13 items listed above;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the institution of the right of the controlling shareholder who has purchased at least 95% of the shares to purchase shares of the outstanding minority shareholders pursuant to the procedure set forth in article 71 bis
of the Corporation Law; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the approval or ratification of transactions with related parties, as per article 147 of the Corporation Law (described above).
| | - | -------------------------------------------------------------------------------------------------------------------------------

Amendments to the by-laws that have the effect of establishing, modifying or eliminating any special
rights pertaining to any series of shares require the consenting vote of holders of two-thirds of the shares of the affected series. As noted above, LATAM Airlines Group does not have special series of shares.

In general, Chilean law does not require a publicly held corporation to provide the level and type of information that the U.S.
securities laws require a reporting company to provide to its shareholders in connection with a solicitation of proxies. However, shareholders are entitled to examine the books of the company and its subsidiaries within the 15-day period before a scheduled meeting. No later than the first notice summoning an ordinary shareholders meeting, the board of directors of a publicly held corporation is required to send to every
shareholder notice by regular mail, a notice containing a reference to the issues that will be discussed, together with instructions to obtain all the appropriate documentation regarding those issues, and publish such notice on its website. The
board is also required to make available to the shareholders the annual report and the financial statements of the company, and to publish such information in the companys webpage at least 10 days in advance of the scheduled shareholders
meeting. In addition to these requirements, we regularly have provided, and currently intend to continue to provide, together with the notice of shareholders meeting, a proposal for the final annual dividend for shareholder approval. See
Dividend and Liquidation Rights below.

The Chilean Corporation Law provides that, whenever shareholders representing
10% or more of the issued voting shares so request, a Chilean companys annual report must include such shareholders comments and proposal in relation to the companys affairs, together with the comments and proposals set forth by
the directors committee. Similarly, the Chilean Corporation Law provides that whenever the board of directors of a publicly held corporation convenes an ordinary meeting of the shareholders and solicits proxies for that meeting, or distributes
information supporting its decisions or other similar material, it is obligated to include as an annex to its annual report any pertinent comments and proposals that may have been made by shareholders owning 10% or more of the companys voting
shares who have requested that such comments and proposals be included, together with the comments and proposals set forth by the directors committee.

Dividend and Liquidation Rights

In
accordance with the Chilean Corporation Law, LATAM Airlines Group must distribute an annual cash dividend equal to at least 30% of its annual net income calculated in accordance with IFRS, unless otherwise decided by a unanimous vote of the holders



93



---

##### Table of Contents

of all issued shares, and unless and except to the extent it has accumulated losses. If there is no net income in a given year, LATAM Airlines Group can elect but is not legally obligated to
distribute dividends out of retained earnings. All outstanding common shares are entitled to share equally in all dividends declared by LATAM Airlines Group, unless the shares have not been fully paid by the shareholder after being subscribed.

For all dividend distributions agreed by the board of directors in excess of the mandatory minimum of 30% noted in the preceding paragraph,
LATAM Airlines Group may grant an option to its shareholders to receive those dividends in cash, or in shares issued by either LATAM Airlines Group or other corporations. Shareholders who do not expressly elect to receive a dividend other than in
cash are legally presumed to have decided to receive the dividend in cash. A U.S. holder of ADSs may, in the absence of an effective registration statement under the Securities Act or an available exemption from the registration requirement
thereunder, effectively is required to receive a dividend in cash. See Preemptive Rights and Increases in Share Capital above.

Dividends that are declared but not paid within the appropriate time period set forth in the Chilean Corporation Law (as to minimum dividends,
30 days after declaration; as to additional dividends, the date set for payment at the time of declaration) are adjusted to reflect the change in the value of the UF. The UF is a daily indexed, Chilean peso-denominated accounting unit designed to
discount the effect of Chilean inflation and it is based on the previous months inflation rate as officially determined. Such dividends also accrue interest at the then-prevailing rate for UF-denominated
deposits during such period. The right to receive a dividend lapses if it is not claimed within five years from the date such dividend is payable. After that period, the amount not claimed is given to a
non-profit organization, the Cuerpos de Bomberos de Chile(the National Corporation of Firefighters).

In the event of LATAM Airlines Groups liquidation, the holders of fully paid common shares would participate pro rata in the
distribution of assets remaining after payment of all creditors. Holders of shares not fully paid will participate in such distribution in proportion to the amount paid.

Approval of Financial Statements

The
board of directors is required to submit our consolidated financial statements to the shareholders for their approval at the annual ordinary shareholders meeting. If the shareholders reject the financial statements, the board of directors must
submit new financial statements not later than 60 days from the date of that meeting. If the shareholders reject the new financial statements, the entire board of directors is deemed removed from office and a new board is to be elected at the same
meeting. Directors who approved such financial statements are disqualified for re-election for the ensuing period.

Right of Dissenting Shareholders to Tender Their Shares

The Chilean Corporation Law provides that, upon the adoption at an extraordinary meeting of shareholders of any of the resolutions or if any of
the situations enumerated below takes place, dissenting or affected shareholders acquire the right to withdraw and to compel the company to repurchase their shares, subject to the fulfillment of certain terms and conditions. However, such right
shall be suspended if we are a debtor in a bankruptcy liquidation proceeding, or if we are subject to a reorganization agreement approved in accordance with Chilean law No. 20,720, unless such agreement allows the right to withdraw, or unless
it is terminated by the issuance of a liquidation resolution.Such holders of ADRs would need to perfect the withdrawal of the common shares on or before the fifth business day prior to the date of the meeting.

Dissenting shareholders are defined as those who attend a shareholders meeting and vote against a resolution which results
in the withdrawal right, or, if absent at such a meeting, those who state in writing to the company their opposition to such resolution within the following 30 days. Dissenting shareholders must perfect their withdrawal rights by tendering their
stock to the company within thirty days after adoption of the resolution.

The price paid to a dissenting shareholder of a publicly held
corporation is the weighted average of the sales prices for the shares as reported on the Chilean stock exchanges on which the shares are quoted during the 60 stock-exchange-business-day period elapsed between
the 30th and the 90th stock-exchange-business-days-preceding the event giving rise to the withdrawal right. If, because of the volume,
frequency, number and diversity of the buyers and sellers, the SVS determines that the shares are not shares actively traded on a stock exchange (acciones de transacción bursátil), the price paid to the dissenting shareholder is
the book value. Book value for this purpose equals paid capital plus reserves and profits, less losses, divided by the total number of subscribed shares (whether entirely or partially paid). For the purpose of making this calculation, the last
annual balance sheet is used and adjusted to reflect inflation up to the date of the shareholders meeting that gave rise to the withdrawal right.

The resolutions and situations that result in a shareholders right to withdraw are the following:



| |  | the transformation of the company into  the merger of the company with or into another company;
| | - | ------------------------------------------------------------------------------------------------



| |  | the conveyance of 50% or more of the assets of the company, whether or not such sale includes the companys liabilities;
| | - | ------------------------------------------------------------------------------------------------------------------------



94



---

##### Table of Contents

| |  | the adoption or amendment of any business plan which contemplates the conveyance of assets in excess of the foregoing percentage;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| |  | the conveyance of 50% or more of the assets of a subsidiary, if the latter represents at least 20% of our assets;
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | the conveyance of shares of a subsidiary which entails the transfer of control;
| | - | -------------------------------------------------------------------------------



| |  | the creation of preferential rights for a class of shares or an extension, amendment or reduction to those already existing, in which case the right to withdraw only accrues to the dissenting shareholders of the class
or classes of shares adversely affected;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the correction of any formal defect in the incorporation of the company or any amendment to the companys by-laws that grants the right to withdraw;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the granting of security interests or personal guarantees to secure or guarantee third parties obligations exceeding 50% of the companys assets, except with regard to subsidiaries;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | resolutions of the shareholders meeting approving the decision to make private a public corporation in case the requirements set forth in General cease to be met;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | if a publicly-traded company ceases to be obligated to register its shares in the Securities Registry of the SVS, and an extraordinary shareholders meeting agrees to
de-register the shares and finalize its disclosure obligations mandated by the Corporation Law;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | if the controlling shareholder of a publicly-traded company reaches over 95% of the shares (in such case, the right must be exercised within 30 days of the date in which the threshold is reached, circumstance that must
be communicated by means of a publication); and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | such other causes as may be established by the companys by-laws (no such additional resolutions currently are specified in our
by-laws).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

In addition, shareholders of publicly held corporations have the right to
withdraw if a person acquires two-thirds or more of the outstanding shares of such corporation with the right to vote (except as a result of other shareholders not having subscribed and paid a capital
increase) and does not make a tender offer for the remaining shares within 30 days after acquisition.

Under article 69 bis of the Chilean
Corporation Law, the right to withdraw also is granted to shareholders (other than pension funds that administer private pension plans under the national pension law), under certain terms and conditions, if a company were to become controlled by the
Chilean government, directly or through any of its agencies, and if two independent rating agencies downgrade the rating of its stock from first class because of certain actions specified in Article 69 bis undertaken by the company or the Chilean
government that affect negatively and substantially the earnings of the company. Shareholders must perfect their withdrawal rights by tendering their shares to the company within 30 days of the date of the publication of the new rating by two
independent rating agencies. If the withdrawal right is exercised by a shareholder invoking Article 69 bis, the price paid to the dissenting shareholder shall be the weighted average of the sales price for the shares as reported on the stock
exchanges on which the companys shares are quoted for the six-month period preceding the publication of the new rating by two independent rating agencies. If, as previously described, the SVS determines
that the shares are not actively traded on a stock exchange, the price shall be the book value calculated as described above.

There is no
legal precedent as to whether a shareholder that has voted both for and against a proposal (such as the depositary) may exercise withdrawal rights with respect to the shares voted against the proposal. As such, there is doubt as to whether holders
of ADRs who have not surrendered their ADRs and withdrawn common shares on or before the fifth business day prior to the shareholder meeting will be able to exercise withdrawal rights either directly or through the depositary with respect to the
shares represented by ADRs. Under the provisions of the deposit agreement the depositary will not exercise these withdrawal rights.

The
circumstance indicated above regarding ownership in excess of 95% by the controlling shareholder creates not only a withdrawal right for the remaining minority shareholders, but as of January 1, 2010, it also creates a squeeze out
right by the controlling shareholder with respect to those same shareholders (granting a call option by means of which the controlling shareholder may buy-out the existing ownership participations pursuant to
the provisions of article 71 bis of the Corporation Law).

Registration and Transfers

The Depósito Central de Valores (DCV) acts as LATAM Airlines Groups registration agent. In the case of jointly
owned common shares, an attorney-in-fact must be appointed to represent the joint owners in dealings with us.



95



---

##### Table of Contents

C. Material Contracts

Boeing

Boeing 767-300 Fleet

On May 9, 1997, we entered into the Aircraft General Terms Agreement with The
Boeing Company (AGTA), applicable to all Boeing aircraft contracted for purchase from The Boeing Company.

On January 30,
1998, we entered into Purchase Agreement No. 2126 with The Boeing Company (Purchase Agreement No. 2126) to acquire two Boeing 767-300 passenger aircraft.

On November 11, 2004, we entered into supplemental agreement No. 16 to the Purchase Agreement No. 2126 to acquire one
additional Boeing 767-300 freighter aircraft and three Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was
US$140,000,000.

On April 28, 2005, we entered into supplemental agreement No. 20 to the Purchase Agreement No. 2126 to
acquire two additional Boeing 767-300 freighter aircraft and one Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was
US$300,000,000.

On July 20, 2005, we entered into supplemental agreement No. 21 to the Purchase Agreement No. 2126 to
acquire three Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$410,000,000.

On March 31, 2006, we entered into supplemental agreement No. 22 to the Purchase Agreement No. 2126 to acquire three Boeing 767-300 aircraft. Furthermore, we converted two Boeing 767-300 freighter aircraft to two Boeing 767-300 passenger aircraft. The
estimated gross value (at list prices) of these aircraft was US$430,000,000.

On December 14, 2006, we entered into supplemental
agreement No. 23 to the Purchase Agreement No. 2126 to acquire three additional Boeing 767-300 passenger aircraft. The estimated gross value (at list prices) of these aircraft was US$460,000,000.

On November 10, 2008, we entered into supplemental agreement No. 24 to the Purchase Agreement No. 2126 to acquire four
additional Boeing 767-300 passenger aircraft and two purchase rights for Boeing 767-300 aircraft. Two of these aircraft were delivered in 2011, while the other two
aircraft had a scheduled delivery date in 2012. The estimated gross value (at list prices) of these aircraft was US$636 million.

On
March 22, 2010, we entered into supplemental agreement No. 28 to the Purchase Agreement No. 2126, whereby we agreed to accelerate the delivery of ten 787-8 aircraft, substitute four aircraft
from 787-916 to 787-816 and substitute three 767-316ER to 767-316F freighter aircraft.
Moreover, on November 10, 2010, we entered into supplemental agreement No. 29 to the Purchase Agreement No. 2126, whereby we agreed to accelerate the delivery of three Aircraft and substitute those three aircraft from 767-316F to 767-316ER.

On February 15, 2011, we entered
into supplemental agreement No. 30 to the Purchase Agreement No. 2126 to acquire three additional Boeing 767-300 passenger aircraft. Delivery was scheduled to take place in 2012. The estimated gross
value (at list prices) of these aircraft was US$510 million.

On May 10, 2011, we entered into supplemental agreement
No. 31 to the Purchase Agreement No. 2126 to acquire five additional Boeing 767-300 passenger aircraft and four purchase rights for Boeing 767-300 passenger
aircraft. Delivery was scheduled to take place in 2012. The estimated gross value (at list prices) of these aircraft was US$870 million.

On December 22, 2011 we entered into supplemental agreement No. 32 to the Purchase Agreement No. 2126 to exercise two purchase
options for two additional Boeing 767-300 passenger aircraft, while the remaining purchase options were deleted. Delivery was scheduled to take place in 2012. The estimated gross value (at list prices) of
these aircraft was US$340 million.

Boeing 787-8/9 Fleet

On October 29, 2007, we entered into Purchase Agreement No. 3256 with the Boeing Company (Purchase Agreement
No. 3256) to acquire 18 Boeing 787-8 aircraft and eight Boeing 787-9 aircraft to be delivered between 2012 and 2016. This purchase agreement provides us with
the option of purchasing 15 additional aircraft to be delivered in 2017 and 2018. The estimated gross value (at list prices) of the Boeing aircraft for which we had firm commitments to take delivery under this contract is US$3.2 billion.

On March 22, 2010, we entered into supplemental agreement No. 1 to the Purchase Agreement No. 3256 to advance the scheduled
delivery date of ten Boeing 787-8 aircraft and substitute four Boeing 787-9 aircraft into four Boeing 787-8 aircraft.



96



---

##### Table of Contents

On July 8, 2010, we entered into supplemental agreement No. 2 to the Purchase Agreement
No. 3256 to advance the scheduled delivery date of two Boeing 787-8 aircraft.

On
August 24, 2012, we entered into supplemental agreement No. 3 to the Purchase Agreement No. 3256 to replace two Boeing 787-8 aircraft with two Boeing
787-8 aircraft with a later delivery.

On September 16, 2013, we entered into a delay
settlement agreement with respect to Purchase Agreement No. 3256, whereby we agreed to update delivery dates, settle consequences of the currently known delays and convert several future deliveries of
B787-8 aircraft to B787-9 aircraft. This delay settlement agreement was amended on April 22, 2015 to update delivery dates of certain aircraft.

On April 22, 2015, we entered into Supplemental Agreement No. 4 to Purchase Agreement No. 3256 to reschedule the delivery dates
of four Boeing 787-8 aircraft and replace four Boeing 787-8 aircraft with four Boeing 787-9 aircraft.

On July 3, 2015, we entered into Supplemental Agreement No. 5 to Purchase Agreement No. 3256 to reschedule the delivery date of
one Boeing 787-8 aircraft.

On May 27, 2016, we entered into Supplemental Agreement
No. 6 to Purchase Agreement No. 3256 to (i) convert four Model 787-816 Aircraft to four Model 787-916 Aircraft, and (ii) defer of two Model 787-916 Aircraft from 1Q 2018 and 2Q 2018 to 3Q 2018 and 4Q 2018 respectively.

On December 20,
2016, we entered into Supplemental Agreement No. 7 to Purchase Agreement No. 3256 to reschedule the delivery of four Model 787-916 Aircraft and document the actual delivery months for two Model 787-916 Aircraft in 2019.

Boeing 777 Freighter Fleet

On July 3, 2007, we entered into Purchase Agreement No. 3194 with the Boeing Company (Purchase Agreement No. 3194)
to acquire two Boeing 777 freighter aircraft with schedule deliveries dates in 2011 and 2012. The estimated gross value (at list prices) of the Boeing aircraft for which we had firm commitments to take delivery under this contract was
US$545 million.

On March 22, 2010, we entered into letter agreement 6-1162-KSW-6454R2 to the Purchase Agreement No. 3194 to transfer two purchase rights from Purchase Agreement No. 2126 to Purchase Agreement No. 3194.

On November 2, 2010, we entered into supplemental agreement No. 2 to the Purchase Agreement No. 3194, to exercise one of
the two options for a Boeing 777 freighter aircraft with scheduled delivery date in 2012. The estimated gross value (at list prices) of this aircraft was US$280 million.

On September 22, 2011, we entered into supplemental agreement No. 3 to the Purchase Agreement No. 3194 to advance the scheduled
delivery date of one firm Boeing 777 freighter aircraft during 2012.

On August 9, 2012, we entered into supplemental agreement
No. 4 to the Purchase Agreement No. 3194 to reflect the configuration of the aircraft covered under such Purchase Agreement.

Airbus A320-Family Fleet

On March 20, 1998, we entered into the Second A320-Family Purchase Agreement with Airbus S.A.S. (Second A320-Family Purchase
Agreement) to acquire five Airbus A320-Family Aircraft.

On November 14, 2003, we entered into amendment No. 1 to the
Second A320-Family Purchase Agreement to exercise three purchase rights for Airbus 319 aircraft, among other things.

On October 4,
2005, we entered into amendment No. 2 to the Second A320-Family Purchase Agreement to acquire 25 additional Airbus 320 family aircraft and 15 purchase rights for Airbus A320-Family aircraft.

On March 6, 2007, we entered into amendment No. 3 to the Second A320-Family Purchase Agreement to exercise 15 purchase rights for 15
Airbus A320-Family Aircraft.

On December 23, 2009, we entered into amendment No. 5 to the Second A320-Family Purchase Agreement
to acquire 30 additional Airbus A320-Family Aircraft. The estimated gross value (at list prices) of these aircraft was US$2.0 billion.

According to clause 12.2 of the Second A320-Family Purchase Agreement, applicable to all subsequent amendments, in case of a failure, as
defined in such agreement, a service life policy for a period of 12 years after delivery of any given aircraft shall apply.



97



---

##### Table of Contents

On May 10, 2010, we entered into amendment No. 6 to the Second A320-Family Purchase
Agreement to convert the aircraft type of three aircraft and advance the scheduled delivery date of 13 aircraft.

On May 19, 2010, we
entered into amendment No. 7 to the Second A320-Family Purchase Agreement to advance the scheduled delivery date of three aircraft.

On September 23, 2010, we entered into amendment No. 8 to the Second A320-Family Purchase Agreement to convert the aircraft type of
one aircraft and advance the scheduled delivery date of four aircraft.

On December 21, 2010, we entered into amendment No. 9 to
the Second A320-Family Purchase Agreement to acquire 50 additional Airbus A320-Family Aircraft. The estimated gross value (at list prices) of these aircraft was US$2,600,000,000.

On June 10, 2011, we entered into amendment No. 10 to the Second A320-Family Purchase Agreement to convert the aircraft type of
three aircraft, to select sharklets for some aircraft and to notify delivery dates for some aircraft.

On November 3, 2011, we
entered into amendment No. 11 to the Second A320-Family Purchase Agreement to convert the aircraft type of three aircraft and defer the scheduled delivery date of four aircraft.

On November 19, 2012, we entered into amendment No. 12 to the Second A320-Family Purchase Agreement to convert the aircraft type of
three aircraft, identify certain Aircraft as Sharklet Installed Aircraft and others as Sharklet Capable Aircraft, as those are defined in such Purchase Agreement, and notify the scheduled delivery month for certain aircraft.

On August 19, 2013, we entered into amendment No. 13 to the Second A320-Family Purchase Agreement to convert several A320 aircraft
to A321 aircraft and to postpone the scheduled delivery dates of several aircraft.

On 31 March, 2014, we entered into amendment
No. 14 to the Second A320 Family Purchase Agreement covering the rescheduling of the scheduled delivery date of one Aircraft.

On
May 16, 2014, we entered into amendment No. 15 to the Second A320 Family Purchase Agreement covering the rescheduling of the scheduled delivery month of certain Aircraft.

On July 15, 2014, we entered into amendment No. 16 to the Second A320 Family Purchase Agreement covering cancellation and
substitution of certain Aircraft.

On October 30, 2014, we entered into a novation agreement covering the novation of the original
TAM A320/A330 Family Purchase Agreement from TAM to LATAM.

On December 11, 2014, we entered into amendment No. 17 to the Second
A320 Family Purchase Agreement covering the substitution of certain Aircraft.

Between April and August 2011, we entered into Buyback
Agreements No. 3001, 3030, 3062, 3214 and 3216 with Airbus Financial Services for the sale of five A318 aircraft for approximately US$107 million.

Between August 2012 and January 2013, we entered into Buyback Agreements No. 3371, 3390, 3438, 3469 and 3509 with Airbus Financial
Services for the sale of five A318 aircraft for approximately US$102 million.

Airbus A320 NEO-Family Fleet

On June 22, 2011, we entered into A320 NEO Purchase Agreement
(A320 NEO Purchase Agreement) to acquire 20 Airbus 320 NEO family aircraft with scheduled delivery dates in 2017 and 2018. The estimated gross value (at list prices) of these aircraft is US$1.7 billion.

On February 27, 2014, we entered into amendment No. 1 to the A320 NEO Purchase Agreement covering the advancement of the date by
which LATAM selects the propulsion systems.

On July 15, 2014, we entered into amendment No. 2 to the A320 NEO Purchase
Agreement covering the order of incremental A320 NEO Aircraft.

On December 11, 2014, we entered into amendment No. 3 to the
A320 NEO Purchase Agreement covering the order of incremental A320 NEO Aircraft and A321 NEO Aircraft.

On April 15, 2016, we entered
into amendment No. 4 to the A320 NEO Purchase Agreement covering the reschedule of the delivery of eight Original NEO Aircraft and the conversion of four Original NEO Aircraft into A321 NEO Aircraft.



98



---

##### Table of Contents

On April 15, 2016, we entered into amendment No. 5 to the A320 NEO Purchase Agreement
to reflect the changes in the technical specifications of the aircraft to be received under this agreement.

On August 8, 2016, we
entered into amendment No. 6 to the A320 NEO Purchase Agreement covering the cancellation of the delivery of four A320 NEO Aircraft.

Aercap Holdings N.V.

On
May 28, 2013, we entered into a framework deed with Aercap Holdings N.V. for the sale and leaseback of several A330-200 aircraft already in fleet and several new aircraft to be received from the
manufacturer including A350-900, B787-8 and B787-9 aircraft. The estimated gross value (at list prices) of these aircraft is
US$3.0 billion.

Aircastle Holding Corporation Limited

On February 21, 2014, we entered into a framework deed with Aircastle Holding Corporation Limited for the lease of four B777-300ER already
in fleet. The four aircraft were manufactured in 2012 and the estimated market value (at list prices) of these aircraft is US$580 million. The average term of the leases is 60 months.

GE Commercial Aviation

On April 30, 2007, we also entered into an Aircraft Lease Common Terms Agreement with GE Commercial Aviation Services Limited and two
Aircraft Lease Agreements with Wells Fargo Bank Northwest N.A., as owner trustee, for the lease of two Boeing B777-200LRF aircraft. These aircraft were delivered in 2009 and the leases shall remain in place for a term of 96 months.

GE Engine Services LLC

On June 12, 2014, we (and TAM Linhas Aereas S.A.) entered into engine services agreement with GE Engine Services, LLC and GE Celma Ltda.
for the provision of maintenance services of CF6-80C2B6F engines (which powers our B767 fleet) during 200 shop visits or 10 years, whichever occurs first.

On July 28, 2009, TAM Linhas Aereas S.A. entered into an engine services agreement with GE Engine Services, Inc. for the provision of
maintenance services of GE90-115BL engines, which power 10 B777 passenger fleet and 4 spare engines, for a period of 12 years per engine.

Société AIR FRANCE

On February 22, 2010, we entered into an engine services agreement with Société AIR FRANCE for the provision of maintenance
services for GE90-110BL engines, which power 2 B777 freighter fleet and 1 spare engine, for a period of eight years per engine.

CFM
International

On December 17, 2010, we entered into General Terms Agreement No. CFM-1-2377460475 (the GTA) and Letter Agreement No. 1 to GTA with CFM International, Inc. (CFM) for the sale and support by CFM of CFM56-5B
engines to power 70 A320 family aircraft and up to 14 CFM56-5B spare engines. On the same date, we entered into a Rate Per Flight Hour Engine Shop Maintenance Services Agreement with CFM for the provision by
CFM of maintenance services for the above-mentioned installed and spare engines.

On December 31, 2014, we entered Letter Agreement
No. 2 to GTA with CFM International, Inc. (CFM) for the sale and support by CFM of CFM56-5B engines to power 20 A320 family aircraft and one spare engine.

On March 15, 2006, TAM Linhas Aereas S.A. entered into an engine services agreement with GE Celma Ltda. for the provision of maintenance
services for CFM56-5B engines, which power 47 A320 Fam passenger fleet and 6 spare engines, for a period of 15 years per engine.

PW1100G-JM Engine Maintenance Agreement

In February 2014, we entered into an engine support and maintenance agreement with United Technologies Internation Corporation,
Pratt & Whitney Division (PW) for the sale, support and maintenance by PW of PW1100G-JM engines to power 42 A320NEO family aircraft and nine spare engines. It is also a rate per engine
flight hour contract agreement, which includes cost control mechanisms for LATAM.



99



---

##### Table of Contents

Rolls-Royce PLC & Rolls-Royce TotalCare Services Limited

On September 30, 2009, we entered into General Terms Agreement No. DEG5307 (the GTA) with Rolls-Royce PLC for the sale and
support by Rolls-Royce of Trent 1000 engines to power 32 B787 family aircraft and up to 10 Trent 1000 spare engines. On the same date, we entered into a Rate Per Flight Hour Engine Shop Maintenance Services Agreement with Rolls-Royce TotalCare
Services Limited for the provision by Rolls-Royce of maintenance services for the above-mentioned installed and spare engines, for a period of 15 years per engine.

On January 11, 2011, TAM Linhas Aereas S.A. entered into General Terms Agreement No. DEG5292 (the GTA) with Rolls-Royce PLC
for the sale and support by Rolls-Royce of Trent XWB engines to power 27 A350XWB family aircraft and up to 7 Trent XWB spare engines. On the same date, we entered into a Rate Per Flight Hour Engine Shop Maintenance Services Agreement with
Rolls-Royce TotalCare Services Limited for the provision by Rolls-Royce of maintenance services for the above-mentioned installed and spare engines, for a period of 12 years per engine. Subsequently, on July 31, 2015, the aforementioned
agreements were novated, so that LATAM Airlines Group S.A. replaces TAM Linhas Aereas S.A. in both agreements.

International Aero
Engines AG

On October 12, 2006, we entered into an engine services agreement with IAE International Aero Engines AG for the
provision of maintenance services of V2500-A5 engines, which power 53 A320 Fam passenger fleet and 9 spare engines, for a period of 12 years per engine.

On October 21, 2010, TAM Linhas Aereas S.A. entered into an engine services agreement with IAE International Aero Engines AG for the
provision of maintenance services of V2500-A5 engines, which power 26 A320 Fam passenger fleet and 7 spare engines, for a period of 12 years per engine.

CFM International

On
June 29, 2016, we entered into a Rate Per Flight Hour Agreement for Engine Shop Maintenance Services with CFM International, Inc., covering the maintenance, repair and overhaul of certain CFM56-5B
engines.

PAAL Gemini Company Limited  PAAL Aquila Company Limited

During 2016, we entered into operating lease agreements with PAAL Gemini Company Limited and PAAL Aquila Company Limited, for the sale and
lease back of four Airbus A321 received in our fleet in 2016. The term of each of the leases is 10 years and the estimated market value (at list prices) of these aircraft is US$200 million.

Jackson Square

During
2016, we entered into operating lease agreements with JSA Aircraft 7126, LLC, JSA Aircraft 7128, LLC, JSA Aircraft 7239, LLC and JSA Aircraft 7298, LLC, for the sale and lease back of three Airbus A321 and one Airbus A320 Neo received in our fleet
in 2016. The term of each of the leases is 10 years and the estimated market value (at list prices) of these aircraft is US$200 million.

SABRE Contract

In
November 2009, we entered into a master agreement with SABRE Inc., pursuant to which LATAM was granted with access and use of certain reservation systems and other SABRE software solutions. This agreement will remain in force for five years or until
the expiration of all Work Orders to the agreement. In addition, on May 4, 2015, we entered into a Master Services License Agreement with SABRE Inc. Pursuant to this agreement SABRE Inc., will grant LATAM access and use of certain reservation
systems. This agreement will enter into force after the expiration of Work Order No. 1 to the agreement entered in November 2009 by LATAM and SABRE Inc. and will be effective for an initial period of 10 years.

In addition, LATAM has distribution agreements in place with SABRE as well as with other distribution providers.

TAM Material Contracts

A320/A330 Family Purchase Agreements

In November 2006, TAM entered into a purchase agreement with Airbus S.A.S. for the purchase of 31 A320-Family Aircraft and six A330-200 aircraft, with deliveries between 2007 and 2010.

In January 2008, TAM entered into a new
purchase agreement for 20 A320-Family Aircraft and four A330-200 aircraft, with deliveries between 2007 and 2014.



100



---

##### Table of Contents

In July 2010, TAM entered a purchase agreement for 20 A320-Family Aircraft with deliveries
between 2014 and 2015.

In October 2011, TAM entered into a new purchase agreement for 10 A320-Family Aircraft with deliveries between
2016 and 2017, plus 22 A320 NEO Family Aircraft with deliveries between 2016 and 2018, plus 10 options rights for A320 NEO Family Aircraft.

In January 2012, TAM entered into Amendment No. 12 to the A320/A330 Purchase Agreement to reschedule the delivery dates of certain
aircraft.

In November 2012, TAM entered into Amendment No. 13 to the A320/A330 Purchase Agreement to convert the aircraft type of
A320 family aircraft.

In December 2012, TAM entered into Amendment No. 14 to the A320/A330 Purchase Agreement to convert the
aircraft type of an A320 family aircraft and reschedule the delivery date of such aircraft.

In February 2013, TAM entered into Amendment
No. 15 to the A320/A330 Purchase Agreement to make some changes to the scheduled delivery month of certain A320 Family Aircraft.

In
February 2013, TAM entered into Amendment No. 16 to the A320/A330 Purchase Agreement to make a change to the aircraft type of certain A320 Family Aircraft, to the scheduled delivery month/quarter of certain A320 Family Aircraft and to make
certain changes to the dates by which TAM will select the propulsion systems and NEO propulsion systems for certain Aircraft.

In August
2013, TAM entered into Amendment No. 17 to the A320/A330 Purchase Agreement to make a change to the scheduled delivery month of a certain A320 Family Aircraft and to make the selection of the propulsion systems and NEO propulsion systems for
certain Aircraft.

In December 2014, TAM entered into Amendment No. 19 to the A320/A330 Purchase Agreement to reschedule and
substitute certain A321 Aircraft.

In June 2015, TAM entered into Amendment No. 20 to the A320/A330 Purchase Agreement to make a
change to the schedule delivery month of one A321 Aircraft.

In December 2015, TAM entered into Amendment No. 21 to the A320/A330
Purchase Agreement to make a change to the schedule delivery month of two A320 NEO Aircraft.

On April 15, 2016, we entered into
amendment No. 22 to the A320/A330 Purchase Agreement covering the rescheduling of the delivery of one A321 Aircraft.

On
April 15, 2016, we entered into amendment No. 23 to the A320/A330 Purchase Agreement to reflect the changes in the technical specifications of the aircraft to be received under this agreement.

On August 8, 2016, we entered into amendment No. 24 to the A320/A330 Purchase Agreement to cancel the delivery of eight A320 NEO
Aircraft.

A350 Family Purchase Agreement

In January 2008, TAM entered into a purchase agreement with Airbus S.A.S. for the purchase of 22 A350 aircraft plus 10 options rights for A350
aircraft.

In July 2010, TAM entered into amendment No. 1 to the A350 purchase agreement to exercise its option of five A350 XWB
options.

In July 2014, TAM entered into amendment No. 2 to the A350 purchase agreement to reschedule the delivery of certain
A350-900XWB and to amend certain provisions to reflect the latest aircraft specification.

In July 2014, TAM, LATAM and Airbus entered
into a novation agreement novating the A350 purchase agreement from TAM to LATAM.

In October 2014, we entered into amendment No. 3
to the A350 purchase agreement to reschedule the scheduled delivery month of a certain A350-900XWB aircraft.

In September 2015, we
entered into amendment No. 4 to the A350 purchase agreement to modifiy certain terms and conditions of such agreement and to convert a number of A350-900 XWB Aircraft into A350-1000 XWB Aircraft.



101



---

##### Table of Contents

In November 2015, we entered into amendment No. 5 to the A350 purchase agreement to convert
a number of A350-900 XWB aircraft into six A350-1000 XWB aircraft and to reschedule the delivery of certain A350-900 XWB.

On February 3, 2016, we entered into amendment No. 6 to the A350 purchase agreement to reschedule the delivery of two A350900
XWB Aircraft.

On August 8, 2016, we entered into amendment No. 7 to the A350 purchase agreement to change aircraft type, from
two A350-900 XWB Aircraft to two A3501000 XWB Aircraft.

On September 9, 2016, we
entered into amendment No. 8 to the A350 purchase agreement to reschedule the delivery of two A350900 XWB Aircraft.

Boeing
777 Purchase Agreement

In February 2007, TAM entered into a purchase agreement with Boeing for the purchase of four Boeing 777-32WER aircraft.

In August 2007, TAM entered into supplemental agreement No. 1 to the 777
Purchase Agreement to exercise four option aircraft and to define certain aircraft configuration.

In March 2008, TAM entered into
supplemental agreement No. 2 to the 777 Purchase Agreement to document its agreement on the descriptions and pricing of some options and master changes related to certain aircraft.

In December 2008, TAM entered into supplemental agreement No. 3 to the 777 Purchase Agreement for the purchase of two incremental 777
aircraft.

In July 2010, TAM entered into supplemental agreement No. 5 to the 777 Purchase Agreement to reschedule the delivery of
certain aircraft.

In February 2011, TAM entered into supplemental agreement No. 6 to the 777 Purchase Agreement for the purchase of
two incremental 777 aircraft.

In May 2014, TAM entered into supplemental agreement No. 7 to the 777 purchase agreement to substitute
two 777-300ER Aircraft originally scheduled for delivery in 2014 for two 777-F aircraft for scheduled delivery in 2017.

In April 2015, TAM entered into supplemental agreement No. 8 to the 777 purchase agreement to reschedule the delivery of certain
aircraft.

CFM56-5B Engine Maintenance Contract

In March 2006, TAM entered into a services agreement with GE Celma, a Brazilian subsidiary of General Electric Engine Services division, for
the maintenance by GE Celma of CFM56-5B engines to power 25 A320 family aircraft and four spare engines.

In March 2007 TAM entered into the Amendment 1 to the above-mentioned services agreement with GE Celma, extending the maintenance services to
the engines powering additional 16 A320 family aircraft and two spare engines.

V2500-A5 Engine
Maintenance Agreement

In 2000, TAM entered into an engine maintenance contract with MTU
Motoren-und Turbinen-Union München GmbH, or MTU, pursuant to which MTU agreed to provide certain maintenance, refurbishment, repair and modification services with respect to approximately 105 TAY650-15 aircraft engines. This contract is complemented by a novation and amendment agreement between us and Rolls-Royce Brazil Ltda. pursuant to which Rolls-Royce Brazil Ltda. replaced MTU as contract
counterparty. This agreement terminates on June 30, 2015.

PW4168 Engine Maintenance Agreement

In June 2007, TAM Linhas Aéreas S.A. entered into a purchase and support agreement engine sale, support and maintenance services
agreement with Pratt & Whitney covering 20 engines contained in TAMs A330-200 fleet six aircraft plus two spares. It is also a rate per engine flight hour contract agreement, which includes cost
control mechanisms for TAM. Amendment 3 July 2010 10 aircraft 4 spares.



102



---

##### Table of Contents

SABRE Contract

In October 2003, TAM entered into a general services agreement with SABRE Travel International Limited, pursuant to which TAM was granted a
license (relating to the provision of maintenance services) for electronic reservation technology and database backup. The term of the agreement was tacitly and automatically extended to cover all Work Orders currently in force under the agreement
and will expire at the same time with the expiration of the last Work Order. In addition, TAM has distribution agreements in place with SABRE as well as with other distribution providers.

In adittion, on May 4, 2015, we entered into a Master Services License Agreement with SABRE Inc. Pursuant to this agreement SABRE Inc.,
will grant TAM access and use of certain reservation systems. This agreement will enter into force after the expiration of that Work Order No. 1 to the November 2009 agreement between LATAM and SABRE Inc., and will be effective for an initial
period of 10 years.

Amadeus Contract

In July 2009, TAM entered into a general services agreement with Amadeus IT Group S.A., pursuant to which TAM was granted a license (relating
to the provision of maintenance services) for electronic reservation technology and database backup. The term of this agreement was ten years, unless terminated early by either party. On March 1, 2016, as part of LATAMs plan to unify the
Passenger Service Platform and migrate to a single service provider, TAM sent Amadeus an early termination notice to be effective during 2017. In addition, TAM has distribution agreements in place with Amadeus as well as with other distribution
providers.

D. Exchange Controls

Foreign
Investment and Exchange Controls in Chile

The Central Bank of Chile is responsible, among other things, for monetary policies and
exchange controls in Chile. Equity investments, including investments in shares of stock by persons who are non-Chilean residents, have been generally subject in the past to various exchange control
regulations restricting the repatriation of their investments and the earnings thereon.

Article 47 of the Central Bank Act and former
Chapter XXVI of the Central Bank Foreign Exchange Regulations regulated the foreign exchange aspects of the issuance of ADSs by a Chilean company until April 2001. According to former Chapter XXVI, the Central Bank of Chile and the depositary had to
enter into an agreement in order to gain access to the formal exchange market. The issuers of the shares underlying the ADSs and the custodian could also be parties to these agreements.

On April 16, 2001, the Central Bank of Chile agreed that, effective April 19, 2001:



| |  | prior foreign exchange restrictions would be eliminated; and
| | - | ------------------------------------------------------------



| |  | a new Compendium of Foreign Exchange Regulations (Compendio de Normas de Cambios Internacionales) would be applied.
| | - | -------------------------------------------------------------------------------------------------------------------

The main objective of these amendments, as declared by the Central Bank of Chile, is to facilitate movement of capital in and out of Chile and
to encourage foreign investment.

In connection with the change in policy, the Central Bank of Chile eliminated the following
restrictions:



| |  | a reserve requirement with the Central Bank of Chile for a period of one year (this mandatory reserve was imposed on foreign loans and funds brought into Chile to purchase shares other than those acquired in the
establishment of a new company or in the capital increase of the issuing company; the reserve requirement was gradually decreased from 30% of the proposed investment to 0%);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the requirement of prior approval by the Central Bank of Chile for certain operations;
| | - | --------------------------------------------------------------------------------------



| |  | mandatory return of foreign currency to Chile; and
| | - | --------------------------------------------------



| |  | mandatory conversion of foreign currency into Chilean pesos.
| | - | ------------------------------------------------------------



| | Under | the new regulations, only the following limitations apply to these operations:
| | ----- | ------------------------------------------------------------------------------



| |  | the Central Bank of Chile must be provided with information related to certain operations; and
| | - | ----------------------------------------------------------------------------------------------



| |  | certain operations must be conducted with the Formal Exchange Market.
| | - | ---------------------------------------------------------------------

The Central Bank of
Chile also eliminated Chapter XXVI of the Compendium of Foreign Exchange Regulations, which regulated the establishment of an ADR facility by a Chilean company. Pursuant to the new rules, it is no longer necessary to seek the Central Bank of
Chiles prior approval in order to establish an ADR facility or to enter into a foreign investment contract with the



103



---

##### Table of Contents

Central Bank of Chile. The establishment of an ADR facility is now regarded as an ordinary foreign investment, and simply requires that the Central Bank of Chile be informed of the transaction
pursuant to Chapter XIV of the amended Compendium of Foreign Exchange Regulations and that the foreign currency transactions related thereby be conducted through the Formal Exchange Market.

However, all contracts executed under the provisions of former Chapter XXVI (including the foreign investment contract among LATAM Airlines
Group, the Central Bank of Chile and the ADS depositary, or the Foreign Investment Contract), remained in full force and effect and continued to be governed by the provisions, and continued to be subject to the restrictions, set forth in
former Chapter XXVI at the time of its abrogation. Our Foreign Investment Contract guaranteed ADS investors access to the Formal Exchange Market to convert amounts from Chilean pesos into U.S. dollars and repatriate amounts received with respect to
deposited common shares or common shares withdrawn from deposit or surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying common shares and any rights arising from them).

On May 10, 2007, the Board of the Central Bank of Chile resolved to interpret the regulations regarding the former Chapter XXVI in
connection with the access granted to the Formal Exchange Market. These regulations allowed entities that carry out capital increases by means of the issuance of cash shares before August 31, 2007 to apply the aforementioned regulation to their
capital increases, but only once and only if those shares can be fully subscribed and paid by August 31, 2008, among other conditions. Consequently, capital increases carried out after August 31, 2007 will have no guaranteed access to the
Formal Exchange Market.

On October 17, 2012, the Central Bank of Chile, the depositary and LATAM Airlines Group entered into a
termination agreement in respect of LATAMs existing foreign investment contract. ADR holders were notified about this termination in accordance with Section 16 of the Deposit Agreement. Upon termination of the foreign investment contract,
holders of ADSs and the depositary no longer have guaranteed access to the Formal Exchange Market. Currently, the ADS facility is governed by Chapter XIV of the Compendium on Regulations applicable to Credits, Deposits, Investments and Capital
Contributions from Abroad. According to Chapter XIV, the establishment or maintenance of an ADS facility is regarded as an ordinary foreign investment, and it is not necessary to seek the Central Bank of Chiles prior approval in order to
establish an ADS facility. The establishment or maintenance of an ADS facility only requires that the Central Bank of Chile be informed of the transaction, and that the foreign currency transactions related thereby be conducted through the Formal
Exchange Market.

Investment in Our Shares and ADRs after the business combination with TAM

As a result of the combination with TAM, investments made in shares of our common stock are subject to the following requirements:



| |  | any foreign investor acquiring shares of our common stock who brought funds into Chile for that purpose must bring those funds through an entity participating in the Formal Exchange Market;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | any foreign investor acquiring shares of our common stock to be converted into ADSs or deposited into an ADR program who brought funds into Chile for that purpose must bring those funds through an entity participating
in the Formal Exchange Market;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | in both cases, the entity of the Formal Exchange Market through which the funds are brought into Chile must report such investment to the Central Bank of Chile;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | all remittances of funds from Chile to the foreign investor upon the sale of the acquired shares of our common stock or from dividends or other distributions made in connection therewith must be made through the Formal
Exchange Market;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | all remittances of funds from Chile to the foreign investor upon the sale of shares underlying ADSs or from dividends or other distributions made in connection therewith must be made through the Formal Exchange Market;
and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | all remittances of funds made to the foreign investor must be reported to the Central Bank of Chile by the intervening entity of the Formal Exchange Market.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------

When funds are brought into Chile for a purpose other than to acquire shares to convert them into ADSs or deposit them into an ADR program and
subsequently such funds are used to acquire shares to be converted into ADSs or deposited into an ADR program such investment must be reported to the Central Bank of Chile by the custodian within 10 days following the end of each month within which
the custodian is obligated to deliver periodic reports to the Central Bank of Chile.

When funds to acquire shares of our common stock or
to acquire shares to convert them into ADSs or deposit them into an ADR program are received by us abroad (i.e., outside of Chile), such investment must be reported to the Central Bank of Chile directly by the foreign investor or by an entity
participating in the Formal Exchange Market within ten days following the end of the month in which the investment was made.

All payments
in foreign currency in connection with our shares of common stock or ADSs made from Chile through the Formal Exchange Market must be reported to the Central Bank of Chile by the entity participating in the transaction. In the event there



104



---

##### Table of Contents

are payments made outside of Chile, the foreign investor must provide the relevant information to the Central Bank of Chile directly or through an entity of the Formal Exchange Market within the
first ten calendar days of the month following the date on which the payment was made.

There can be no assurance that additional Chilean
restrictions applicable to the holders of ADSs, the disposition of shares of our common shares underlying ADSs or the conversion or repatriation of the proceeds from such disposition will not be imposed in the future, nor can we assess the duration
or impact of such restriction if imposed.

This summary does not purport to be complete and is qualified by reference to Chapter XIV of
the Central Bank of Chiles Foreign Exchange Regulations, a copy of which is available in Spanish and English versions at the Central Banks website at www.bcentral.cl.

Voting Rights

Holders of our ADSs, which
represent common shares, may instruct the depositary to vote the shares underlying their ADRs. If we ask holders for instructions, the depositary will notify such holders of the upcoming vote and arrange to deliver our voting materials to such
holders. The materials will describe the matters to be voted on and explain how holders may instruct the depositary to vote the shares or other deposited securities underlying their ADSs as they direct by a specified date. For instructions to be
valid, the depositary must receive them on or before the date specified as Vote Cut-Off Date. The depositary will try, as far as practical, subject to Chilean law and the provisions of our by-laws, to vote or to have its agents vote the shares or other deposited securities as holders instruct. Otherwise, holders will not be able to exercise their right to vote unless they withdraw the shares. However,
holders may not know about the meeting far enough in advance to withdraw the shares. We will use our best efforts to request that the depositary notify holders of upcoming votes and ask for their instructions.

If the depositary does not receive voting instructions from a holder by the specified date, it will consider such holder to have authorized
and directed it to give a discretionary proxy to a person designated by our board of directors to vote the number of deposited securities represented by such holders ADSs. The depositary will give a discretionary proxy in those circumstances
to vote on all questions to be voted upon unless we notify the depositary that:



| |  | we do not wish to receive a discretionary proxy;
| | - | ------------------------------------------------



| |  | we think there is substantial shareholder opposition to the particular question; or
| | - | -----------------------------------------------------------------------------------



| |  | we think the particular question would have an adverse impact on our shareholders.
| | - | ----------------------------------------------------------------------------------

The
depositary will only vote or attempt to vote as such holder instructs or as described above.

We cannot assure holders that they receive
the voting materials in time to ensure that they can instruct the depositary to vote their shares. This means that holders may not be able to exercise their right to vote and there may be nothing they can do if their shares are not voted as they
requested.

Exchange Rates

Prior to
1989, Chilean law permitted the purchase and sale of foreign exchange only in those cases explicitly authorized by the Central Bank of Chile. The Central Bank Act liberalized the rules that govern the ability to buy and sell foreign currency. The
Central Bank Act empowers the Central Bank of Chile to determine that certain purchases and sales of foreign currency specified by law must be carried out exclusively in the Formal Exchange Market, which is made up of the banks and other entities
authorized by the Central Bank of Chile. All payments and distributions with respect to the ADSs must be conducted exclusively in the Formal Exchange Market.

For purposes of the operation of the Formal Exchange Market, the Central Bank of Chile sets a reference exchange rate (dólar
acuerdo). The Central Bank of Chile resets the reference exchange rate monthly, taking internal and external inflation into account, and adjusts the reference exchange rate daily to reflect variations in parities between the Chilean peso, the
U.S. dollar, the Japanese yen and the European euro.

The observed exchange rate (dólar observado) is the average exchange
rate at which transactions were actually carried out in the Formal Exchange Market on a particular day, as certified by the Central Bank of Chile on the next banking day.

Prior to September 3, 1999, the Central Bank of Chile was authorized to buy or sell dollars in the Formal Exchange Market to maintain the
observed exchange rate within a specified range above or below the reference exchange rate. On September 3, 1999, the Central Bank of Chile eliminated the exchange band. As a result, the Central Bank of Chile may buy and sell foreign exchange
in the Formal Exchange Market in order to maintain the observed exchange rate at a level the Central Bank of Chile determines.



105



---

##### Table of Contents

Purchases and sales of foreign exchange may be effected outside the Formal Exchange Market
through the Informal Exchange Market (Mercado Cambiario Informal) established by the Central Bank in 1990. There are no limits on the extent to which the rate of exchange in the Informal Exchange Market can fluctuate above or below the
observed exchange rate.

Although our results of operations have not been significantly affected by fluctuations in the exchange rates
between the peso and the U.S. dollar because our functional currency is the U.S. dollar, we are exposed to foreign exchange losses and gains due to exchange rate fluctuations. Even though the majority of our revenues are denominated in or pegged to
the U.S. dollar, the Chilean governments economic policies affecting foreign exchange and future fluctuations in the value of the peso against the U.S. dollar could adversely affect our results of operations and an investors return on an
investment in ADSs.

E. Taxation

Chilean Tax

The following discussion relates to Chilean income tax laws presently in force, including Ruling No. 324 of January 29, 1990
of the Chilean Internal Revenue Service (Chilean IRS) and other applicable regulations and rulings, all of which are subject to change. The discussion summarizes the principal Chilean income tax consequences of an investment in the ADSs
or common shares by a person who is neither domiciled in, nor a resident of, Chile or by a legal entity that is incorporated abroad not organized under the laws of Chile and does not have a branch or a permanent establishment located in Chile (such
an individual or entity is referred to herein as a Foreign Holder). For purposes of Chilean tax law, an individual holder is a resident of Chile if such person has resided in Chile for more than six consecutive months in one calendar year or for a
total of six months in two consecutive tax years. In addition, an individual is considered domiciled in Chile in case he or she resides in Chile with the actual or presumptive intent of staying in the country. The discussion is not intended as tax
advice to any particular investor, which can be rendered only in light of that investors particular tax situation.

Under Chilean
law, provisions contained in statutes such as tax rates applicable to foreign investors, the computation of taxable income for Chilean purposes and the manner in which Chilean taxes are imposed and collected may only be amended by another statute.
In addition, the Chilean tax authorities enact rulings and regulations of either general or specific application and interpret the provisions of Chilean tax law. Chilean tax may not be assessed retroactively against taxpayers who act in good faith
relying on such rulings, regulations and interpretations, but Chilean tax authorities may change these rulings, regulations and interpretations prospectively. On February 4, 2010, representatives of the governments of the United States and
Chile signed an income tax treaty. The treaty will have to be approved by the U.S. Senate before it may become effective.

Law
No. 20,780, enacted on September 29, 2014, in conjunction with Law No. 20,899, enacted on February 8, 2016 (both, the Tax Reform Act) introduced a comprehensive modification to the Chilean income tax system. The Tax
Reform Act introduced changes to the corporate tax rate, mandating a gradual increase of the rate from 20% to 25% or 27% in certain cases, the rules regarding minimum capitalization, and the taxation of Chilean investments abroad (the
controlled-foreign-corporation rules), and introduced two new alternative general income tax regimes for Chilean taxpayers (Fully Integrated Regime and Partially Integrated Regime), among others. The new rules are set to come into effect gradually,
with the implementation process having commenced on October 1, 2014 and set to be completed by January 1, 2018. The Fully Integrated Regime and the Partially Integrated Regime apply as from January 1, 2017. The mandatory regime for
entities organized as stock corporations like Latam Airlines Group S.A. is the Partially Integrated System. The Corporate Income Tax rate for companies under this regime is 27% from 2018 onward. A transition rate of 25.5% applies in 2017.

Cash Dividends and Other Distributions

Under the new Partially Integrated Regime, cash dividends we pay with respect to the ADSs or common shares held by a Foreign Holder will be
subject to a 35% Chilean withholding tax, which we withhold and pay over to the Chilean tax authorities and which we refer to as the Withholding Tax. A credit against the Withholding Tax is available based on the corporate income tax rate of the
year of distribution and provided a sufficient balance of accumulated corporate income tax credits is available. These credits correspond to corporate income tax we actually paid on the accumulated income (referred to herein as the First Category
Tax or FCIT). However, this credit does not reduce the Withholding Tax on a one-for-one basis because it also increases the base on which the Withholding Tax is imposed.
If we register net income but taxable losses, no credit against the Withholding Tax may be available. In addition, if we distribute less than all of our distributable income, the credit for First Category Tax we pay is proportionately reduced.

The Partially Integrated Regime reduces the amount of First Category Tax creditable against the Withholding Tax for certain



106



---

##### Table of Contents

Foreign Holders. As a general rule, only 65% of the First Category Income Tax credit will actually offset the Withholding Tax. 35% of the credit must be added back to the Withholding Tax amount
to be paid into the Treasury (referred to herein as First Category Tax Credit Restitution). However, if a tax treaty is in place between Chile and the country of domicile of a Foreign Holder and such Foreign Holder is entitled to treaty benefits in
relation to the income, the full First Category Tax credit will continue to be available to offset against the Withholding Tax.

Under a
transitory provision in force until December 31, 2019, the full 27% First Category Tax will also be creditable against the 35% Withholding Tax if the recipient of a dividend distribution is a shareholder resident in a country with which Chile
has a tax treaty signed before January 1st, 2017, although such treaty is not yet in force.

In general, the example below illustrates the
effective Withholding Tax burden on a cash dividend received by a Foreign Holder assuming a Withholding Tax rate of 35%, a First Category Tax rate of 27% and a distribution of 30% of the consolidated net income of the Company after payment of the
First Category Tax:



|                                       |  |                                |        |   |                                    |  |        |  
|-------------------------------------- |  | ------------------------------ | ------ | - | ---------------------------------- |  | ------ | -
|                                       |  | Foreign Holderin TreatyCountry |        |   | Foreign Holderin Non Treatycountry | 
|The Companys taxable income           |  |                                | 100.00 |   |                                    |  | 100.00 |  
|First Category Tax (27% of Ch$100)(*)  |  |                                | (27.00 | ) |                                    |  | (27.00 | )
|Net distributable income               |  |                                | 73.00  |   |                                    |  | 73.00  |  
|Dividend distributed (*)               |  |                                | 21.90  |   |                                    |  | 21.90  |  
|First category increase                |  |                                | 8.10   |   |                                    |  | 8.10   |  
|Amount subject to Withholding Tax (**) |  |                                | 30.00  |   |                                    |  | 30.00  |  
|Withholding Tax                        |  |                                | (10.50 | ) |                                    |  | (10.50 | )
|Credit for First Category Tax          |  |                                | 8.10   |   |                                    |  | 8.10   |  
|Add back 35% of the First Category Tax |  |                                | N/A    |   |                                    |  | (2.84  | )
|Net tax withheld                       |  |                                | (2.40  | ) |                                    |  | (5.24  | )
|Net dividend received                  |  |                                | 19.5   |   |                                    |  | 16.66  |  
|Effective dividend withholding rate    |  |                                | 11     | % |                                    |  | 24     | %



|(*) | Special considerations apply to a distribution in 2017
|--- | ------------------------------------------------------

|(**) | 30% of net distributable income.
|---- | --------------------------------

|(**) | The dividend of Ch$21.90 grossed up with the First Category Tax credit of Ch$8.10.
|---- | ----------------------------------------------------------------------------------



107



---

##### Table of Contents

The effective rate of Withholding Tax to be imposed on dividends we pay will depend on the First
Category Tax rate applicable in the year of distribution and on the balance of First Category Income Tax credits accumulated by the company. The First Category Tax rate will be 27% for 2018 and following years. Special considerations apply to a
distribution in 2017. These considerations are set out in a separate paragraph further below. The First Category Income Tax credits generated under the new tax regime, i.e. as of 2017, will be allocated first. Once the balance of First Category Tax
credits generated as of 2017 are exhausted, the First Category Tax credits accumulated until December 31, 2016 will be used. In that event the First Category Tax credit available against the Withholding Tax will not correspond to the First
Category Tax rate of the year of distribution but to the average rate of First Category Tax credits accumulated until December 31, 2016. This average rate will be determined by dividing the aggregate First Category Tax Credits accumulated until
December 31, 2016 by the aggregate retained taxable profits accumulated at the same date. The First Category Tax credits accumulated until December 31, 2016 are not subject to the First Category Tax Credit Restitution irrespective of
whether a tax treaty is in place with the country of the Foreign Holder or not.

The First Category Tax credits accumulated until
December 31, 2016 correspond to the First Category Tax we actually paid on the income generated in a given year. For earnings generated from 1991 until 2001, the First Category Tax rate was 15%. The rate was 16.0% in 2002, 16.5% in 2003, 17%
from 2004 until 2010, 20% from 2011 until 2013, 21% in 2014, 22.5% in 2015 and 24% in 2016.

In the event that the accumulated First
Category Tax credits are not sufficient to cover any particular dividend, we will generally withhold tax from the dividend at the full 35% rate.

Dividend distributions made in property would be subject to the same Chilean tax rules as cash dividends based on the fair market value of
such property. Stock dividends and the distribution of preemptive rights are not subject to Chilean taxation.

Special Considerations for distributions
in 2017

The First Category Tax rate for 2017 is 25.5%. However, in 2017 the First Category Tax credit available against the
Withholding Tax will not correspond to the First Category Tax rate of the year but to the average rate of First Category Tax credits accumulated until December 31, 2016. This average rate will be determined by dividing the aggregate First
Category Tax Credits accumulated until December 31, 2016 by the aggregate retained taxable profits accumulated at the same date. These credits are not subject to the First Category Tax Credit Restitution, irrespective of whether a tax treaty is
in place with the country of the Foreign Holder or not.

Capital Gains

Gain from the sale or other disposition by a Foreign Holder of ADRs evidencing ADSs outside Chile will not be subject to Chilean taxation. The
deposit and withdrawal of common shares in exchange for ADRs will not be subject to any Chilean taxes.

Gain recognized on a sale or
disposition of common shares by a Foreign Holder (as distinguished from sales or exchanges of ADRs evidencing ADSs representing such common shares) may be subject to a 35% Withholding Tax. Moreover, a gain not exceeding 10 Annual Tax Units (US$8,278
as of December 31, 2016) recognized by a Foreign Holder without taxable presence in Chile in a sale to a non-related buyer will not be taxable.

The gain on the sale of shares of common stock by a Foreign Holder is subject to a withholding of 35% of the gain. If the gain subject to
taxation cannot be determined, the Foreign Holder is subject to a provisional withholding of 10% of the total (sale price) amount, without any deduction, when the amounts are paid to, credited to, accounted for, put at the disposal of, or
corresponding to, the Foreign Holder.The Foreign Holder would be entitled to request a tax refund for any amounts withheld in excess of the taxes actually due in April of the following year upon filing its corresponding tax return. Gain recognized
in the transfer of common shares that have a high presence in the stock exchange, however, is not subject to capital gains tax in Chile, provided that the common shares are transferred in a local stock exchange or within the process of a public
tender of common shares governed by the Securities Market Law.

The common shares must have been acquired either in a local stock
exchange, within the process of a public tender of common shares governed by the Securities Market Law, in an initial public offer of common shares resulting from the formation of a corporation or a capital increase of the same, or in an exchange of
convertible bonds.



108



---

##### Table of Contents

Please note that, Chiles IRS Ruling No. 1,480 (issued on August 22, 2014) confirmed that capital
gains stemming from the sale of shares with high stock market presence acquired through the exchange of American Depositary Receipts (ADRs) for shares is not subject to capital gains tax in Chile. Such exemption is applicable provided that the ADRs
comply with the requirements established by the Chilean Superintendence for Securities and Insurance (SVS) for the public offering of securities in Chile (i.e. if the ADRs are registered in the Foreign Securities Registry of the SVS, or their
registration has been exempted by the SVS under a cooperation agreement signed with regulators of foreign markets), and the underlying shares have been registered in the Securities Registry of the SVS and on a Chilean Stock exchange. Shares are
considered to have a high presence in the stock exchange when they:



| | are registered in the Securities Registry;
|- | ------------------------------------------



| | are registered in a Chilean Stock exchange; and
|- | -----------------------------------------------



| | meet at least one of the following requirements:
|- | ------------------------------------------------



| | i. | have an adjusted presence equal to or above 25%;
| | -- | ------------------------------------------------



| | ii. | have a Market Maker.
| | --- | --------------------

To calculate the adjusted presence of a particular share, the
aforementioned regulation first requires a determination of the number of days in which the operations regarding the stock exceeded, in Chilean pesos, the equivalent of 1,000 UF (US$39,356 as of December 31, 2016) within the previous 180
business days of the stock market. That number must then be divided by 180, multiplied by 100, and expressed in a percentage value. This tax regime does not apply if the transaction involves an amount of shares that would allow the acquirer to take
control of the publicly traded corporation, in which case the ordinary tax regime referred to in the previous paragraph will apply, unless the transfer is part of a tender offer governed by the Securities Market Law or the transfer is done on a
Chilean stock exchange, without substantially exceeding the market price.

To meet the Market Maker requirement the issuer of
the shares must execute a written contract with a stock broker incorporated in Chile that fulfills some additional requirements.

A
capital gains tax exemption for foreign institutional investors such as mutual funds and pension funds was repealed as from May 1, 2014 by Law 20,712. However, the law includes a grandfathering provision for shares acquired before
May 1, 2014. This provision establishes an exemption on the capital gain obtained in the sale of shares that are publicly traded and have a high presence in a stock exchange when the sale is made by a foreign institutional investor, provided
that the sale is made in a local stock exchange or in a public tender in accordance with the provisions of the Securities Market Law, or in the redemption of fund quotas, and the shares were acquired before May 1, 2014.

Pursuant to the regulations of the grandfathering rule, to qualify as a foreign institutional investor an entity must be formed outside of
Chile, not have a domicile in Chile, and must be at least one of the following:



| |  | a fund registered with a regulatory authority of a EU or OECD country, or other country duly authorized by the SVS;
| | - | -------------------------------------------------------------------------------------------------------------------



| |  | a pension fund that is formed exclusively by natural persons that receive pensions out of an accumulated capital in the fund, regulated by an authority of the countries mentioned above;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | an insurance company regulated by the competent regulatory authority of the insurance business, as appropriate, which must be part of IAIS, International Association of Insurance Supervisors, or ASSAL,
Asociación de Supervisores de Seguros de América Latina;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a foreign State or a division with political autonomy recognized by Chile, whether they invest through its government, central bank, issuing bank or corresponding monetary authority. Moreover, the investment can be made
through investment authorities, investment agencies, investment corporations or other entities, provided that its purpose is to provide financial resources for the exclusive benefit of the foreign State or territorial division, and provided that the
vehicle is not used also for investments or resources other than those of the sovereign fund;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | endowment funds duly registered in a EU or OECD country, or other country duly authorized by the SVS.
| | - | -----------------------------------------------------------------------------------------------------



109



---

##### Table of Contents

The foreign institutional investor must not directly or indirectly participate in the control of
the corporations issuing the shares it invests in, nor possess or participate directly or indirectly in 10% or more of the capital or the profits of such corporations.

Another requirement for the exemption is that the foreign institutional investor must execute a written contract with a bank or a stock broker
incorporated in Chile. In this contract, the bank or stock broker must undertake to execute purchase and sale orders, verify the applicability of the tax exemption or tax withholding and inform the Chilean IRS of the investors it works with and the
transactions it performs. Finally, the foreign institutional investor must register with the Chilean IRS by means of a sworn statement issued by such bank or stock broker.

The tax basis of common shares received in exchange for ADRs will be the acquisition value of the common shares on the date of exchange duly
adjusted for local inflation. The valuation procedure set forth in the deposit agreement, which values common shares which are being exchanged at the highest price at which they trade on the SSE on the date of the exchange, will determine the
acquisition value for this purpose. Consequently, the surrender of ADRs for common shares and the immediate sale of the common shares for the value established under the Deposit Agreement will not generate a capital gain subject to taxation in
Chile, provided that the sale of the common shares is made on the same date on which the exchange of ADRs for common shares is recorded, or if the price of the common shares at the exchange date, as determined above, is higher than the price at
which the common shares are sold.

The exercise of preemptive rights relating to the common shares will not be subject to Chilean
taxation. Any gain obtained by a Foreign Holder without taxable presence in Chile on the sale of preemptive rights relating to the common shares will be subject to Withholding Tax (the former being creditable against the latter).

Other Chilean Taxes

There are no Chilean
inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of ADSs by a Foreign Holder, but such taxes generally will apply to the transfer at death or by gift of the common shares by a Foreign Holder. There are no
Chilean stamp, issue, registration or similar taxes or duties payable by Foreign Holders of ADSs or common shares.

Withholding Tax Certificates

Upon request, we will provide to Foreign Holders appropriate documentation evidencing the payment of the Withholding Tax (net of the
applicable First Category Tax credit).

United States Federal Income Tax Considerations

This section describes the material United States federal income tax consequences to a U.S. holder (as defined below) of owning common shares
or ADSs. It applies to you only if you hold your common shares or ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:



110



---

##### Table of Contents

| | a dealer in securities,
|- | -----------------------



| | a trader in securities that elects to use a mark-to-market method of accounting for securities holdings,
|- | --------------------------------------------------------------------------------------------------------



| | a tax-exempt organization,
|- | --------------------------



| | a life insurance company,
|- | -------------------------



| | a person liable for alternative minimum tax,
|- | --------------------------------------------



| | a person that actually or constructively owns 10% or more of our voting stock,
|- | ------------------------------------------------------------------------------



| | a person that holds common shares or ADSs as part of a straddle or a hedging or conversion transaction,
|- | -------------------------------------------------------------------------------------------------------



| | a person that purchases or sells common shares or ADSs as part of a wash sale for tax purposes, or
|- | --------------------------------------------------------------------------------------------------



| | a U.S. holder (as defined below) whose functional currency is not the U.S. dollar.
|- | ----------------------------------------------------------------------------------

This
section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a
retroactive basis. There is currently no comprehensive income tax treaty in effect between the United States and the Republic of Chile. In addition, this section is based in part upon the representations of the Depositary and the assumption that
each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.

If a partnership holds
the common shares or ADSs, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the common shares or ADSs should
consult its tax advisor with regard to the United States federal income tax treatment of an investment in the common shares or ADSs.

You are a U.S.
holder if you are a beneficial owner of common shares or ADSs and you are:



| | a citizen or resident of the United States,
|- | -------------------------------------------



| | a domestic corporation,
|- | -----------------------



| | an estate whose income is subject to United States federal income tax regardless of its source, or
|- | --------------------------------------------------------------------------------------------------



| | a trust if a United States court can exercise primary supervision over the trusts administration and one or more United States persons are authorized to control all substantial decisions of the trust.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

You should consult your own tax advisor regarding the United States federal, state and local and the Chilean and other tax consequences
of owning and disposing of common shares and ADSs in your particular circumstances.

ADSs

In general, and taking into account the earlier assumptions, for United States federal income tax purposes, if you hold ADRs evidencing ADSs,
you will be treated as the owner of the common shares represented by those ADRs. Exchanges of common shares for ADRs, and ADRs for common shares, generally will not be subject to United States federal income tax.



111



---

##### Table of Contents

Taxation of Dividends

Under the United States federal income tax laws, and subject to the passive foreign investment company (PFIC) rules discussed
below, if you are a U.S. holder, the gross amount of any dividend we pay out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) is subject to United States federal income taxation.

If you are a noncorporate U.S. holder, dividends paid on the ADSs or common shares that constitute qualified dividend income will be taxable
to you at the preferential rates applicable to long-term capital gains if you hold the ADSs or common shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends paid on the ADSs or common shares will be treated as qualified dividend income if:



| | the ADSs or common shares are readily tradable on an established securities market in the United States; and
|- | ------------------------------------------------------------------------------------------------------------



| | we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a PFIC.
|- | ------------------------------------------------------------------------------------------------------------------------------------------

We believe that our common shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes. See
PFIC Rules below. The ADSs are listed on the New York Stock Exchange, and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Accordingly, we expect that
dividends we pay with respect to the ADSs will be qualified dividend income. Because our common shares are not expected to be listed on any United States securities market, it is unclear whether dividends we pay with respect to the common shares
will also be qualified dividend income. If dividends we pay with respect to our common shares are not qualified dividend income, then the U.S. dollar amount of such dividends received by a U.S. holder (including dividends received by a noncorporate
U.S. holder) will be subject to taxation at ordinary income tax rates.

You must include any Chilean tax withheld from the dividend
payment in this gross amount even though you do not in fact receive it. The dividend is taxable to you when you, in the case of common shares, or the Depositary, in the case of ADSs, receive the dividend, actually or constructively. The dividend
will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your
income as a U.S. holder will be the U.S. dollar value of the Chilean pesos payments made, determined at the spot Chilean pesos/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is
in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be
treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent
of your basis in the common shares or ADSs and thereafter as capital gain. However, we do not expect to calculate earnings and profits in accordance with United States federal income tax principles. Accordingly, you should expect to generally treat
distributions we make as dividends.

Subject to generally applicable limitations and conditions under the Internal Revenue Code, Chilean
Withholding Tax withheld and paid over to the Chilean tax authorities (after taking into account the credit for the First Category Tax, when it is available) will be creditable or deductible against your United States federal income tax liability.
Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. To the extent a refund of the tax withheld is available to you under Chilean law, as is the case if the
amount of Chilean Withholding Tax initially withheld from a dividend is determined to be excessive as described above under TaxationChilean TaxCash Dividends and Other Distributions, the amount of tax withheld that is
refundable will not be eligible for credit against your United States federal income tax liability.

Dividends will generally be income
from sources outside the United States and will, depending on your circumstances, be either passive or general income for purposes of computing the foreign tax credit allowable to you.

Taxation of Capital Gains

Subject to the
PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your common shares or ADSs, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the U.S.
dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your common shares or ADSs. Capital gain of a noncorporate U.S. holder is generally taxed at preferential rates where the property is held for more than
one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.



112



---

##### Table of Contents

Consequently, you may not be able to use the foreign tax credit arising from any Chilean tax imposed on the disposition of common shares or ADSs unless such credit can be applied against tax due
on other income treated as derived from foreign sources in the appropriate limitation category.

Medicare Tax

A U.S. holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is
subject to a 3.8% tax on the lesser of (1) the U.S. holders net investment income (or undistributed net investment income in the case of an estate or trust) for the relevant taxable year and (2) the excess of
the U.S. holders modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals is between $125,000 and $250,000, depending on the individuals circumstances). A holders net investment
income generally includes its dividend income and its net gains from the disposition of shares or ADSs, unless such dividend income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business
that consists of certain passive or trading activities). If you are a U.S. holder that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect
of your investment in the shares or ADSs.

PFIC Rules

We believe that common shares and ADSs should not be treated as stock of a PFIC for United States federal income tax purposes, but this
conclusion is a factual determination that is made annually and thus may be subject to change. If we were to be treated as a PFIC, gain realized on the sale or other disposition of your common shares or ADSs would in general not be treated as
capital gain. Instead, if you are a U.S. holder, unless you elect to be taxed annually on a mark-to-market basis with respect to your common shares or ADSs, or you elect
to be taxed annually on the earnings of the PFIC attributable to your shares or ADSs as a qualified electing fund, you would be treated as if you had realized such gain and certain excess distributions ratably over your
holding period for the common shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. With certain
exceptions, your common shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your common shares or ADSs. Dividends that you receive from us will not be eligible for the special tax rates
applicable to qualified dividend income if we are treated as a PFIC with respect to you either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

F. Dividends and Paying Agents

Not
applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the information requirements of the Exchange Act, as amended. In accordance with these requirements, we file
reports, including annual reports on Form 20-F and other information with the SEC. These materials, including this annual report and the exhibits hereto, may be inspected and copied at the SECs public
reference rooms in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
In addition, some of our SEC filings, including those filed on and after February 19, 2002, are also available to the public through the SECs website at www.sec.gov.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For
example, we are not required to prepare and issue quarterly reports. However, we furnish our shareholders with annual reports containing financial statements audited by our independent auditors and make available to our shareholders quarterly
reports containing unaudited financial data for the first three quarters of each fiscal year. We file such quarterly reports with the SEC within two months of each quarter of our fiscal year, and we file annual reports on Form 20-F within the time period required by the SEC, which is currently six months from December 31, the end of our fiscal year.

I. Subsidiary Information

Not
applicable.



113



---

##### Table of Contents

|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

General

Given the nature of its business, LATAM is exposed mainly to three types of market risk:



| |  | Fuel price fluctuations;
| | - | ------------------------



| |  | Foreign exchange fluctuations; and
| | - | ----------------------------------



| |  | Interest rate fluctuations.
| | - | ---------------------------

Management assesses the level of our exposure to these risks
periodically to determine the extent to which we should hedge against them and the most effective mechanisms to implement the hedge. LATAM purchases derivative instruments in foreign markets to offset market risk exposure, typically utilizing a mix
of financial and commodity derivatives. LATAM does not enter into or hold derivative contracts for trading purposes.

Risk of Fluctuations in Fuel
Prices

Jet fuel price fluctuations are largely dependent on supply and demand for crude oil, OPEC decisions, refinery capacities,
stock levels of crude oil and geopolitical factors.

LATAM fuel consumption for 2016 was 1,185.5 million gallons and the consumption
forecast for 2017 is 1,179.6 million gallons. To manage its exposure to the cost of fuel, LATAM has a hedging program based on an approved policy. This policy aims to hedge approximately 20-60% of our
aggregate fuel consumption, using commodity derivatives for the expected fuel consumption in the short term 3-6 months, where the pass-through of cost changes is limited.

Jet Fuel is not the only underlying asset that LATAM may use for hedging purposes. It may also consider derivative instruments in other
underlying commodity assets such as crude oil (BRENT), West Texas intermediate (WTI) or heating oil (HO).

To keep the Company
competitive, a portion of the fuel consumption is not hedged, as a drop in fuel prices positively affects the Company through a reduction in costs.

We may be exposed to fuel hedging transaction losses if our counterparties default. To manage this credit risk, we select counterparties based
on their credit ratings and monitor our relative market position on a daily basis. We generally are not required to post collateral and do not require our counterparties to post collateral in respect of positions under our fuel hedging transactions.
For more information see Item 3. Key Information D. Risk FactorsRisks Related to Our Operations and the Airline IndustryOur operations are subject to fluctuations in the supply and cost of jet fuel, which could adversely
impact our business.

During 2016, 2015 and 2014 we entered into a mix of swaps and option contracts on BRENT, WTI and JET FUEL
54 USGC with investment grade banks and other financial entities for notional fuel purchases (non-delivery forward). Details of the fuel hedging program are shown below:



|                                              |  |                                           |       |   |           |  |        |           |  |  |        |  
|--------------------------------------------- |  | ----------------------------------------- | ----- | - | --------- |  | ------ | --------- |  |  | ------ | -
|                                              |  | LATAM Fuel HedgingYear ended December 31, |      
|                                              |  | 2016LATAM                                 |       |   | 2015LATAM |  |        | 2014LATAM | 
|Gallons Purchased (million)                   |  |                                           | 781.2 |   |           |  | 544.7  |           |  |  | 684.3  |  
|% Total Annual Fuel Consumption               |  |                                           | 66.7  | % |           |  | 43.6   | %         |  |  | 55.6   | %
|Combined Result of Hedges (in million of US$) |  |                                           | (48.0 | ) |           |  | (239.4 | )         |  |  | (108.7 | )

As of December 31, 2016, the fair value of our outstanding fuel related derivative contracts was
estimated to be US$ 8.1 million (positive).

Gains and losses on the hedging contracts outlined above are recognized as a cost of
sales in the income statement when the fuel subject to the hedge is consumed. Premiums paid related to fuel derivative contracts are recorded as prepaid expenses (current assets) and recorded as an expense at the time the contract expires.

Under IFRS, the fair value of the hedging derivatives is booked as a non-current asset or liability if
the remaining maturity of the item is hedged for more than 12 months, and as a current asset or liability if the remaining term of the item is hedged for less than 12 months. The fair value of the derivative contracts is deferred within an equity
reserve account. Please see Note 2.10 to our audited consolidated financial statements. As the current positions do not represent changes in cash flows but a variation in the exposure to the market value, the Companys current hedge positions
have no impact on income; they are booked as cash flow hedge contracts, so a variation in fuel prices has an impact on the Companys net equity.



114



---

##### Table of Contents

The following table shows the sensitivity analysis of our hedging contracts to reasonable changes
in fuel prices and their effect on equity. The term used for the projection was June 30, 2017, the last maturity date of our current fuel hedge contracts. 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 December 2016, 2015 and 2014.



|                             |  |                                                                            |      |  |           |  |      |           |  |  |       | 
|---------------------------- |  | -------------------------------------------------------------------------- | ---- |  | --------- |  | ---- | --------- |  |  | ----- | 
|                             |  | LATAM fuel price sensitivity (effect on equity)Position as of December 31, |     
|                             |  | 2016LATAM                                                                  |      |  | 2015LATAM |  |      | 2014LATAM | 
|                             |  | (millions of US$ per barrel)                                               |     
|BRENT or JET benchmark price |  |                                                                            |      | 
|+5                           |  |                                                                            | +3.1 |  |           |  | +5.4 |           |  |  | +24.9 | 
|5                           |  |                                                                            | -4.8 |  |           |  | 2.8 |           |  |  | 25.1 | 

During the periods presented, the Company has not recorded amounts for ineffectiveness in the consolidated
income statement pursuant to IFRS principles for recognizing and measuring financial instruments.

Given the fuel hedge structure as of
December 31, 2016, which reflects only a partial hedge of our expected fuel consumption, a vertical fall by US$5 in the BRENT and JET benchmark price (the monthly daily average) for each month would have meant savings of approximately US$
116.3 million in the cost of the Companys total fuel consumption. A vertical increase by US$5 in the JET and BRENT benchmark price (the monthly daily average) for each month would have meant an additional cost of approximately US$
114.5 million of the Companys total fuel consumption.

Risk of Variation in Foreign Exchange Rates

The functional currency of the LATAM holding company is the U.S. dollar. Because LATAM conducts its business in local currencies in several
countries, it faces the risk of variations in multiple foreign currency exchange rates. Depreciation of these currencies against the U.S. dollar could have adverse effects both transactional and translational, because part of our revenues and
expenses are denominated in those currencies.

At the same time, LATAMs affiliates are exposed to foreign exchange risk, which could
in turn impact the consolidated results of the Company.

The greatest exposure to future cash flows is mainly presented by the subsidiary
TAM S.A. and volatility in the R$/US$ exchange rate. TAM S.A.s earnings are generated largely in R$. We actively manage the R$/US$ exchange rate risk by entering into FX derivative contracts and carrying out internal operations for obtaining
natural hedging. Additionally, LATAM manages its economic exposures of future flows revenues on Great Britain Pound (GBP), by entering into FX derivative contracts.

In lower concentration, the company also faces foreign exchange risk relating to additional currencies such as: Euro, Chilean Peso, Australian
Dollars, Argentinean Peso, Paraguayan Guaraní, Mexican Peso, Peruvian Nuevo Sol, Colombian Peso and New Zealand Dollars.

As of
December 31, 2016, the fair value of our FX derivative contracts was estimated to be US$ 1.1 million (negative).

Because
changes in the values of existing FX derivative positions do not represent changes in cash flows, but a variation in the exposure of market value, the outstanding hedging positions do not impact results (they are registered as cash flow hedges under
IFRS, therefore, a change in the foreign exchange rate has an impact on the equity of the Company).

The following table shows the
sensitivity of the fair value of financial instruments as a result of reasonable changes in the exchange rates of British Pounds and Brazilian reais. The term projection is defined until the end of the last hedging contract in force:



|                                                                                |  |                                    |      | 
|------------------------------------------------------------------------------- |  | ---------------------------------- | ---- | 
|LATAM foreign exchange sensitivity Derivatives
Position as of December 31, 2016 | 
|Appreciation(depreciation) of US$                                               |  | Effect on equity
(Millions of US$) |     
|+10%                                                                            |  |                                    | +3.4 | 
|-10%                                                                            |  |                                    | -1.0 | 



115



---

##### Table of Contents

As of December 31, 2016, the Company has FX derivatives of US$60 million (notional) for
FX BRL and US$10 million (notional) for FX GBP.

Balance sheet exposure of LATAM to the Brazilian Real is related to the functional
currency of TAM and its balance sheet currency mismatch, as TAM has a net US$ liability position. When the balance sheet denominated in U.S. dollars is translated to Brazilian Real, the financial results of TAM may fluctuate and therefore could
impact LATAMs financial results.

The exposure to the Brazilian real on TAMs balance sheet has been reduced from over
US$4.0 billion since the combination in June 2012 to around US$1.2 billion as of December 31, 2016. The Company continues working to mitigate this exposure through the execution of the fleet transfer from TAM to LATAM and payment of
TAMs debt denominated in USD.

The following table shows the sensitivity of TAMs financial results to changes in the R$/US$
exchange rate:



|                                      |  |                                                                                    |        |  |       |  |       |       |  |  |       | 
|------------------------------------- |  | ---------------------------------------------------------------------------------- | ------ |  | ----- |  | ----- | ----- |  |  | ----- | 
|                                      |  | TAM exchange rate sensitivityPosition effect on pre-tax
earningsas of December 31, |       
|                                      |  | 2016                                                                               |        |  | 2015  |  |       | 2014  | 
|                                      |  | LATAM                                                                              |        |  | LATAM |  |       | LATAM | 
|                                      |  | (millions of US$)                                                                  |       
|Appreciation (depreciation) of R$/US$ |  |                                                                                    |        |  |       |  |       |       |  |  |       | 
|10%                                  |  |                                                                                    | +119.2 |  |       |  | +67.6 |       |  |  | +69.8 | 
|+10%                                  |  |                                                                                    | -119.2 |  |       |  | 67.6 |       |  |  | 69.8 | 

Our foreign currency exchange exposure as of December 31, 2016 was as follows:



|                                           |  |                                          |            |  |           |  |      |                   |  |  |           |  |  |                  |      |   |           |  |         |                     |  |  |           |   |  |           |         |  |  |  |     |   |  |  |            | 
|------------------------------------------ |  | ---------------------------------------- | ---------- |  | --------- |  | ---- | ----------------- |  |  | --------- |  |  | ---------------- | ---- | - | --------- |  | ------- | ------------------- |  |  | --------- | - |  | --------- | ------- |  |  |  | --- | - |  |  | ---------- | 
|                                           |  | LATAM foreign currency exchange exposure |           
|                                           |  | U.S.DollarsMUS$                          |            |  | % oftotal |  |      | BrazilianrealMUS$ |  |  | % oftotal |  |  | ChileanpesosMUS$ |      |   | % oftotal |  |         | OthercurrenciesMUS$ |  |  | % oftotal |   |  | TotalMUS$ |        
|Current assets                             |  |                                          | 1,727,743  |  |           |  | 47.6 | %                 |  |  | 1,438,613 |  |  |                  | 39,7 | % |           |  | 155,611 |                     |  |  | 4,3       | % |  |           | 304,808 |  |  |  | 8.4 | % |  |  | 3,626,775  | 
|Other assets                               |  |                                          | 10,140,422 |  |           |  | 65.1 | %                 |  |  | 5,285,025 |  |  |                  | 33,9 | % |           |  | 11,475  |                     |  |  | 0,1       | % |  |           | 134,497 |  |  |  | 0.9 | % |  |  | 15,571,419 | 
|Total assets                               |  |                                          | 11,868,165 |  |           |  | 61.8 | %                 |  |  | 6,723,638 |  |  |                  | 35,0 | % |           |  | 167,086 |                     |  |  | 0,9       | % |  |           | 439,305 |  |  |  | 2.3 | % |  |  | 19,198,194 | 
|Current liabilities                        |  |                                          | 3,582,543  |  |           |  | 57.6 | %                 |  |  | 2,121,915 |  |  |                  | 34,1 | % |           |  | 257,405 |                     |  |  | 4,1       | % |  |           | 260,328 |  |  |  | 4.2 | % |  |  | 6,222,191  | 
|Long-term liabilities                      |  |                                          | 11,400,803 |  |           |  | 75.9 | %                 |  |  | 2,919,683 |  |  |                  | 19,4 | % |           |  | 413,118 |                     |  |  | 2,8       | % |  |           | 279,286 |  |  |  | 1.9 | % |  |  | 15,012,890 | 
|                                           |  |                                          |            |  |           |  |      |                   |  |  |           |  |  |                  |      |   |           |  |         |                     |  |  |           |   |  |           |         |  |  |  |     |   |  |  |            | 
|Total liabilities and shareholders equity |  |                                          | 14,983,346 |  |           |  | 70.6 | %                 |  |  | 5,041,598 |  |  |                  | 23,7 | % |           |  | 670,523 |                     |  |  | 3,2       | % |  |           | 539,614 |  |  |  | 2,5 | % |  |  | 21,235,081 | 
|                                           |  |                                          |            |  |           |  |      |                   |  |  |           |  |  |                  |      |   |           |  |         |                     |  |  |           |   |  |           |         |  |  |  |     |   |  |  |            | 

For more information on Market Risk, see Note 3 Financial Risk Management to our audited
consolidated financial statements.

Risk of Fluctuations in Interest Rates

As of December 31, 2016, LATAM had US$ 8,710 million in outstanding interest bearing loans. LATAM uses interest rate derivatives to
reduce the impact of an increase of interest rates. 63.1% of LATAM outstanding debt as of December 31, 2016 was effectively at a fixed rate, either as fixed rate loans or variable rate loans hedged using a floating to fixed rate derivative
instrument.

LATAMs interest bearing loans can be classified by: variable interest rate debt, fixed interest rate debt and interest
rate hedged debt. LATAMs variable interest rate debt amounts to US$ 3,216 million, from which 84.2% is assigned to aircraft financing and 15.8% to non-aircraft financing. The fixed interest rate
debt amounts are US$ 5,494 million of which 62.6% is assigned to aircraft financing and 37.4% to non-aircraft financing. The interest rate hedged debt amounts to US$ 406 million of which 100% is
assigned to interest rate swaps.

Under IFRS, the positive fair value of these interest rate swaps is reflected in the balance sheet as
hedging assets and the negative fair value of these agreements is reflected as hedging liabilities. As of December 31, 2016, the fair value of all the interest rate swaps was US$ 17.2 million (negative).

The use of the aforementioned hedging instruments, combined with fixed interest rate financing for our aircraft financing, has enabled the
Company to have predictable interest rate costs, reducing the cash volatility.



116



---

##### Table of Contents

As of December 31 2016, the average interest rate of our entire outstanding interest-bearing
long-term debt rate was 4.0%.

The following table summarizes our principal payment obligations on all of our interest-bearing debt as of
December 31, 2016 and the related average interest rate for such debt. The average interest rate has been calculated based on the prevailing interest rate on December 31, 2016 for each loan.



|                             |  |                                                                        |     |   |      |  |       |      |  |  |       |  |  |      |       |  |      |  |       |                    |  |  |       |  |  |  |       | 
|---------------------------- |  | ---------------------------------------------------------------------- | --- | - | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  | ---- |  | ----- | ------------------ |  |  | ----- |  |  |  | ----- | 
|                             |  | LATAMs principal payment obligations by year of expected 
maturity(1) |    
|                             |  | Averageinterest rate(2)                                                |     |   | 2017 |  |       | 2018 |  |  | 2019  |  |  | 2020 |       |  | 2021 |  |       | 2022 andthereafter | 
|                             |  | (millions of US$)                                                      |    
|Interest-bearing liabilities |  |                                                                        | 4.0 | % |      |  | 1,771 |      |  |  | 1,119 |  |  |      | 1,120 |  |      |  | 1,440 |                    |  |  | 1,105 |  |  |  | 2,156 | 



|(1) | At cost.
|--- | --------

|(2) | Average interest rate means the average prevailing interest rate on our debt on December 31, 2016 after giving effect to hedging arrangements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

The following table shows the sensitivity of changes in our long-term interest bearing liabilities and capital leases that are not hedged
against interest-rate variations. These changes are considered reasonably possible based on current market conditions.



|                             |  |                                                                                           |       |  |           |  |       |           |  |  |       | 
|---------------------------- |  | ----------------------------------------------------------------------------------------- | ----- |  | --------- |  | ----- | --------- |  |  | ----- | 
|                             |  | LATAMs interest rate sensitivity(effect on pre-tax 
earnings)Position as of December 31, |      
|                             |  | 2016LATAM                                                                                 |       |  | 2015LATAM |  |       | 2014LATAM | 
|                             |  | (millions of US$)                                                                         |      
|Increase (decrease) in LIBOR |  |                                                                                           |       |  |           |  |       |           |  |  |       | 
|+100 basis points            |  |                                                                                           | -32.2 |  |           |  | -26.7 |           |  |  | 27.5 | 
|100 basis points            |  |                                                                                           | +32.2 |  |           |  | +26.7 |           |  |  | +27.5 | 

Changes in market conditions produce a change in the valuation of current financial instruments hedging
against fluctuations in interest rates, causing an effect on the Companys equity (because they are booked as cash-flow hedges). These changes are considered reasonably possible based on current market conditions. The calculations were made by
increasing (decreasing) 100 basis points of the three-month Libor futures curve.



|                                         |  |                                                                                |      |  |           |  |      |           |  |  |       | 
|---------------------------------------- |  | ------------------------------------------------------------------------------ | ---- |  | --------- |  | ---- | --------- |  |  | ----- | 
|                                         |  | LATAMs interest rate sensitivity(effect on equity)Position as of December 31, |     
|                                         |  | 2016LATAM                                                                      |      |  | 2015LATAM |  |      | 2014LATAM | 
|                                         |  | (millions of US$)                                                              |     
|Increase (decrease) in three month LIBOR |  |                                                                                |      |  |           |  |      |          
|Future rates                             |  |                                                                                |      |  |           |  |      |          
|+100 basis points                        |  |                                                                                | +3,9 |  |           |  | +8.7 |           |  |  | +15.3 | 
|100 basis points                        |  |                                                                                | -4,0 |  |           |  | +9.0 |           |  |  | 16.0 | 

During the periods presented, the Company has not recorded amounts for ineffectiveness in the consolidated
income statement pursuant to IFRS.

There are market-related limitations in the method used for the sensitivity analysis. These
limitations derive from the fact that the levels indicated by the futures curves may not be necessarily met and may change in each period.



117



---

##### Table of Contents

|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American
Depositary Shares

In the United States, our common shares trade in the form of ADS. Since August 2007, each ADS represents one common
share, issued by The Bank of New York Mellon, as Depositary pursuant to a Deposit Agreement. ADSs commenced trading on the NYSE in 1997. In October 2011, our Depositary bank changed from The Bank of New York Mellon to JP Morgan Chase Bank, N.A.
(JP Morgan).

Fees and Charges for ADR Holders

The Bank of New York Mellon, and since October 2011 JP Morgan, as depositary, collects its fees for delivery and surrender of ADSs directly
from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by
selling a portion of the distributable property to pay the fees. The depositary may also collect its annual fee for depositary services by deductions from cash distributions, by directly billing investors or by charging the book-entry system
accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.



|                                                                                                                                                   |  |                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Persons depositing or withdrawing shares must pay:                                                                                                 |  | For:                                                                                                                                                                                                                        
|US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)                                                                                            |  |        Issuance of ADSs, including issuances resulting from
a distribution of shares or rights or other property 
       Cancellation of ADSs for the purpose of withdrawal, including if the
deposit agreement terminates
|                                                                                                                                                   | 
|US$$0.05 (or less) per ADS                                                                                                                         |  |        Any cash distribution to ADS registered
holders                                                                                                                                                                     
|                                                                                                                                                   | 
|A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs |  |        Distribution of securities distributed to holders
of deposited securities which are distributed by the depositary to ADS registered holders                                                                         
|                                                                                                                                                   | 
|US$$0.051 (or less) per ADSs per calendar year                                                                                                     |  |        Depositary services                                                                                                                                                                                                 
|                                                                                                                                                   | 
|Registration or transfer fees                                                                                                                      |  |        Transfer and registration of shares on the
depositarys share register to or from the name of the depositary or its agent when investors deposit or withdraw shares                                                 
|                                                                                                                                                   | 
|Expenses of the depositary                                                                                                                         |  |        Cable, telex and facsimile transmissions

       Conversion of foreign currencies into U.S.
dollars                                                                                                                



|1 | Withdrawing Deposited Securities; there are no such fees in respect of the Shares as of the date of the Deposit Agreement), and (iv) expenses of the Depositary in connection with the conversion of foreign currency
into U.S. dollars (which are paid out of such foreign currency). Such charges may at any time and from time to time be changed by agreement between the Company and the Depositary.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



118



---

##### Table of Contents

|                                                                                                                                                                                     |  |                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------
|Persons depositing or withdrawing shares must pay:                                                                                                                                   |  | For:                
|Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or share underlying an ADS, such as stock transfer taxes, stamp duty or withholding taxes |  |        As necessary
|                                                                                                                                                                                     | 
|Any charges incurred by the depositary or its agents for servicing the deposited securities                                                                                          |  |        As necessary

Fees and Direct and Indirect Payments Made by the Depositary to the Foreign Issuer

Past Fees and Payments

During 2016, the
Company received from the depositary US$443,339.9 for continuing annual stock exchange listing fees, standard out-of-pocket maintenance costs for the ADRs (consisting of
the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and
telephone calls), payments related to applicable performance indicators relating to the ADR facility, underwriting fees and legal fees.

Future Fees
and Payments

JP Morgan, as the depositary bank, has agreed to reimburse the Company for certain of our reasonable expenses related to
our ADS program and incurred by us in connection with the program. The reimbursements include direct payments (legal and accounting fees incurred in connection with preparation of Form 20-F and ongoing SEC
compliance and listing requirements, listing fees, investor relations expenses, advertising and public relations expenses and fees payable to service providers for the distribution of hard copy materials to beneficial ADR holders in the Depositary
Trust Company, such as information related to shareholders meetings and related voting instruction cards); and indirect payments (third-party expenses paid directly and fees waived).

PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

None.



|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------

None.



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Controls and Procedures

Management carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of the Companys disclosure controls and procedures as of December 31, 2016. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon such evaluation,
management, with the participation of the chief executive officer and chief financial officer concluded that the disclosure controls and procedures, as of December 31, 2016, were effective in providing reasonable assurance that information
required to be disclosed by us in the reports we file or submit under the Exchange Act, as amended, is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and
communicated to our management including our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure.

Managements annual report on internal control over financial reporting

The management of the Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as amended.



119



---

##### Table of Contents

The Companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companys internal control over financial
reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could
have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of
compliance with the policies or procedures may deteriorate. LATAM Airlines Group S.A.s management, including the Chief Executive Officer and the Chief Financial Officer, has assessed the effectiveness of the Companys internal control
over financial reporting as of December 31, 2016 based on the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
and, based on such criteria, LATAM Airlines Group S.A.s management has concluded that, as of December 31, 2016 , the Companys internal control over financial reporting is effective. The companys internal control over financial
reporting effectiveness as of December 31, 2016 has been audited by PricewaterhouseCoopers Consultores Auditores SpA, an independent registered public accounting firm, as stated in their report included herein.

(a) Attestation report of the registered public accounting firm. See page F-150 of our audited
consolidated financial statements.



| | - | (b) Changes in internal control over financial reporting.There have been no changes in our internal control over financial reporting during 2016 that materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 16. | RESERVED
|-------- | --------

A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has designated Georges de Bourguignon as an audit committee financial expert within the meaning of this
Item 16. A. Mr. de Bourguignon is independent within the meaning of Rule 10A-3 under the Exchange Act. See Item 6. Directors, Senior Management and Employees A. Directors and Senior
Management.

B. CODE OF ETHICS

We have adopted a code of ethics and conduct, as defined in Item 16B of Form 20-F under the
Exchange Act. Our code of ethics applies to our senior management, including our Chief Executive Officer, our Chief Financial Officer and our Chief Accounting Officer, as well as to other employees. Our code is freely available online at our
website, www.latam.com, under the heading Corporate Governance on the Investor Relations page. In addition, upon written request, by regular mail, to the following address: LATAM Airlines Group S.A., Investor Relations Department,
attention: Investor Relations, Av. Presidente Riesco 5711, Piso 20, Comuna Las Condes, Santiago, Chile, or by e-mail at Investor.Relations@latam.com we will provide any person with a copy of it without
charge. If we amend the provisions of our code of ethics that apply to our senior management or to other persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website.

C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit
and Non-Audit Fees

The following table sets forth the fees paid to our independent registered
public accounting firm, PricewaterhouseCoopers, during the fiscal years ended December 31, 2016 and 2015:



|                   |  |                    |       |  |      |  |       | 
|------------------ |  | ------------------ | ----- |  | ---- |  | ----- | 
|                   |  | 2016               |       |  | 2015 | 
|                   |  | USD (in thousands) |      
|Audit fees         |  |                    | 1,734 |  |      |  | 1,910 | 
|Audit-related fees |  |                    | 21    |  |      |  | 7     | 
|Tax fees           |  |                    |      |  |      |  | 6     | 
|All Other fees     |  |                    | 40    |  |      |  | 11    | 
|                   |  |                    |       |  |      |  |       | 
|Total fees         |  |                    | 1,795 |  |      |  | 1,934 | 
|                   |  |                    |       |  |      |  |       | 



120



---

##### Table of Contents

Audit-related fees in the above table are the aggregate fees billed by PricewaterhouseCoopers for assurance and
related services that are reasonably related to the performance of the audit or review of our financial statements or that are traditionally performed by the external auditor, including due diligence and other audit related services. Fees in 2016
correspond to review over sustentability report and attestation services related with revenues in Argentina. Fees in 2015 correspond to attestation services related with revenues in Argentina.

Other fees in the above table are fees billed by PricewaterhouseCoopers as of December 31, 2016 and correspond primarily for review of requirements
necessary for building construction authorization and 0survey salary in Peru. Fees in 2015 correspond to a survey salary and salary special studies in Peru and Chile.

Board of Directors Committee Pre-Approval Policies and Procedures

Since January 2004, LATAM has complied with SEC regulations regarding the type of additional services our independent auditors are authorized
to offer to us. In addition, our Board of Directors Committee (which serves as our Audit Committee) has decided to automatically authorize any such accepted services for an amount of up to 10% of the fees charged by the auditing firm, and for
an amount of up to 50% when adding all such services provided by the auditing firm in the aggregate. If the amount of any services is larger than these thresholds, approval by the Board of Directors Committee will be required.

D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

E. PURCHASES OF EQUITY SECURITIES BY
THE ISSUER AND AFFILIATED PURCHASERS

None.

F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT

None.

G. CORPORATE GOVERNANCE

New York Stock Exchange Corporate Governance Comparison

Pursuant to Section 303A.11 of the Listed Company Manual of the NYSE, we are required to provide a summary of the significant ways in
which our corporate governance practices differ from those required for U.S. companies under the NYSE listing standards. We are a Chilean corporation with shares listed on the SSE, the Chilean Electronic Exchange and the Valparaiso Stock Exchange
and our ADSs listed on the NYSE. Our corporate governance practices are governed by our bylaws, the Chilean Corporation Law and the Securities Market Law.

The table below discloses the significant differences between our corporate governance practices and the NYSE standards.



|                                                                                    |  |                                                                                                                                                                                                                            
|----------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE Standards                                                                      |  | Our Corporate Governance Practice                                                                                                                                                                                          
|                                                                                    | 
|Director Independence. Majority of board of directors must be independent. §303A.01 |  | Under Chilean law, we are not required to have a majority of independent directors on our board.                                                                                                                           
|                                                                                    | 
|                                                                                    |  | Our board of directors committee (all of whom are members of our board of directors) is composed of three directors, two of whom must be independent if we have a sufficient number of independent directors on our
board.
|                                                                                    | 
|                                                                                    |  | The definition of independence applicable to us pursuant to the Chilean Corporation Law differs in certain respects from the definition applicable to U.S. issuers under the NYSE rules.                                   
|                                                                                    | 
|                                                                                    |  | Pursuant to Law No. 20,382 on Corporate Governance, which came into effect on January 1, 2010, we are also required to have at least one independent
director.                                                             



121



---

##### Table of Contents

|                                                                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE Standards                                                                                                                                                                                                                                                |  | Our Corporate Governance Practice                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                              | 
|                                                                                                                                                                                                                                                              |  | Starting on January 1, 2010, directors are deemed to be independent if they have not fallen within any of the following categories during the 18 months prior to their election: (i) had a relevant relationship, interest or
dependence on us, our affiliates, controlling shareholders, main executives, or had served any of the foregoing in a senior position; (ii) had a close family relationship with any of the individuals indicated in (i); (iii) had served in a non-profit organization which received significant funds from the individuals indicated in (i); (iv) had been a partner or shareholder (with a direct or indirect participation in excess of 10%) in, or had a senior
position at a company which has rendered significant services to, the individuals indicated in (i); (v) had been a partner or shareholder (with a direct or indirect participation in excess of 10%) in, or had a senior position at, our main
competitors, suppliers or clients. In addition, the election of such an independent director is subject to a procedure set forth by the cited Corporation Law.
|                                                                                                                                                                                                                                                              | 
|Executive Sessions. Non-management directors must meet regularly in executive sessions without management. Independent directors should meet alone in an executive session at
least once a year. §303A.03                                                     |  | There is no similar requirement under our bylaws or under applicable Chilean law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                              | 
|Audit committee. Audit committee satisfying the independence and other requirements of Rule 10A-3 under the Exchange Act, as amended, and the more stringent requirements under
the NYSE standards is required. §§303A.06, 303A.07                            |  | We are in compliance with Rule 10A-3. We are not required to satisfy the NYSE independence and other audit committee standards that are not prescribed by Rule
10A-3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                              | 
|Nominating/corporate governance committee. Nominating/corporate governance committee of independent directors is required. The committee must have a charter specifying the purpose, duties and evaluation procedures
of the committee. §303A.04              |  | We are not required to have, and do not have, a nominating/corporate governance committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                              | 
|Compensation committee. Compensation committee of independent directors is required, which must approve executive officer compensation. The committee must have a charter specifying the purpose, duties and evaluation
procedures of the committee. §303A.05 |  | We are not required to have a compensation committee. Pursuant to the Chilean Corporation Law, our board of directors committee must approve our senior managements and employees compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                              | 
|Equity compensation plans. Equity compensation plans require shareholder approval, subject to limited exemptions.                                                                                                                                             |  | Under the Chilean Corporation Law, equity compensation plans require shareholder approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                              | 
|Code of Ethics. Corporate governance guidelines and a code of business conduct and ethics is required, with disclosure of any waiver for directors or executive officers. §303A.10                                                                            |  | We have adopted a code of ethics and conduct applicable to our senior management, including our chief executive officer, our chief financial officer and our chief accounting officer, as well as to other employees. Our code is freely
available online at our website, www.latamairlinesgroup.net, under the heading Corporate Governance in the Investor Relations informational page. In addition, upon written request, by regular mail to LATAM Airlines Group S.A., Investor
Relations Department, attention: Investor Relations, Av. Presidente Riesco 5711, 20th floor, Comuna Las Condes, Santiago, Chile or by e-mail at
Investor.Relations@latam.com, we will provide any person with a copy of our code of ethics without charge. We are required by Item 16B of Form 20-F to disclose any waivers granted to our chief executive
officer, chief financial officer, principal accounting officer and persons performing similar functions.                                                                                                                                                      

The disclosure of the significant ways in which our corporate governance practices differ from those required for U.S.
companies under the NYSE listing standards is also posted on our website and can be accessed at www.latamairlinesgroup.net



122



---

##### Table of Contents

H. Mine Safety Disclosure

Not applicable.



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

See Item 18. Financial Statements.



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

See our consolidated Financial Statements beginning on page F-1. The following is an index of the financial statements.



|ITEM 19. | EXHIBITS
|-------- | --------

Documents filed as exhibits to this annual report:



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|1.1*        |  | Amended By-laws of LATAM Airlines Group S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|2.1         |  | Second Amended and Restated Deposit Agreement, dated as of October 28, 2011, between the Company and JPMorgan Chase Bank, N.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984), filed on November 15, 2011).                                                                                                                                                                                                                          
|            | 
|2.3         |  | Indenture, dated as of April 25, 2007, among TAM Capital Inc., Tam S.A., TAM Linhas Aéreas S.A., The Bank of New York and The Bank of New York (Luxembourg) S.A., incorporated herein by reference from our second pre-effective amendment to our Registration Statement on Form F-4, File No. 333-131938.                                                                                                                                                                               
|            | 
|2.4         |  | Indenture, dated as of October 29, 2009, among TAM Capital 2 Inc., TAM S.A., TAM Linhas Aéreas S.A., The Bank of New York Mellon and The Bank of New York Mellon (Luxembourg) S.A., incorporated herein by reference from
our Annual Report for the fiscal year ended December 31, 2009 on Form 20-F, filed June 30, 2010, File No. 333-131938.                                                                                                                                          
|            | 
|2.5         |  | Indenture, dated as of June 3, 2011, between TAM Capital 3 Inc., TAM S.A., TAM Linhas Aéreas S.A., The Bank of New York Mellon and The Bank of New York Mellon (Luxembourg) S.A., incorporated by reference to our annual
report on Form 20-F (File No. 001-14728) filed on April 29, 2016.                                                                                                                                                                                              
|            | 
|2.6         |  | Indenture, dated as of November 7, 2013, between Guanay Finance Limited and Citibank N.A., incorporated by reference to our annual report on Form 20-F (File
No. 001-14728) filed on April 29, 2016.                                                                                                                                                                                                                                                                                     
|            | 
|2.7         |  | Form of Indenture and Security Agreement between Parina Leasing Limited, Cuclillo Leasing Limited, Rayador Leasing Limited or Canastero Leasing Limited and Wilmington Trust Company (including Annex A), incorporated by reference to
our annual report on Form 20-F (File No. 001-14728) filed on April 29, 2016.                                                                                                                                                                      
|            | 
|2.8         |  | Indenture, dated as of June 9, 2015, between LATAM Airlines Group S.A. and The Bank of New York Mellon, incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 29, 2016.                                                                                                                                                                                                                                                                        
|            | 
|2.9         |  | We hereby agree to furnish to the SEC, upon its request, copies of any instruments defining the rights of holders of our long-term debt (or any long-term debt of our subsidiaries for which we are required to filed consolidated or
unconsolidated financial statements), where such indebtedness does not exceed 10% of our total consolidated assets.                                                                                                                                
|            | 
|4.1         |  | Second A320-Family Purchase Agreement, dated March 20, 1998, between the Company and Airbus Industry relating to Airbus A320-Family Aircraft (incorporated by reference to our annual report on Form
20-F (File No. 001-14728), filed on June 24, 2001, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                       
|            | 
|4.1.1       |  | Amendment No. 1, dated as of November 14, 2003, and Amendment No. 2, dated as of October 4, 2005, to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the
Company and Airbus S.A.S. (as successor to Airbus Industry) (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on
June 30, 2006, and portions of which have been omitted pursuant to a request for confidential treatment).



123



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|4.1.2       |  | Amendment No. 3, dated as of March 6, 2007, to the Second A320-Family Purchase Agreement, dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our
amended annual report on Form 20-F (File No. 001-14728), filed on June 30, 2006, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                                              
|            | 
|4.1.3       |  | Amendment No. 5, dated as of December 23, 2009, to the Second A320-Family Purchase Agreement, dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to
our amended annual report on Form 20-F (File No. 001-14728), filed on June 29, 2010, and portions of which have been omitted pursuant to a request for
confidential treatment).                                                                                                                                                                          
|            | 
|4.1.4       |  | Amendments No. 6, 7, 8 and 9 (dated as of May 10, 2010, May 19, 2010, September 23, 2010 and December 21, 2010, respectively), to the Second A320-Family Purchase Agreement dated as of
March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our amended annual report on Form 20-F (File
No. 001-14728), filed on May 5, 2011, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                              
|            | 
|4.1.5       |  | Amendments No. 10 and 11 (dated as of June 10, 2011 and November 8, 2011, respectively), to the Second A320-Family Purchase Agreement, dated as of March 20, 1998, as amended and restated, between the Company and
Airbus S.A.S. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012 and portions of which have been omitted
pursuant to a request for confidential treatment).                                                                                                                                          
|            | 
|4.1.6       |  | Amendment No. 12 (dated as of November 19, 2012), to the Second A320-Family Purchase Agreement, dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to
our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                                               
|            | 
|4.1.7       |  | Amendment No. 13 (dated as of August 19, 2013), to the Second A320-Family Purchase Agreement dated as of March 20, 1998, as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our
annual report on Form 20-F (File No. 001-14728), filed on April 30, 2014, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                                                  
|            | 
|4.1.8       |  | Amendments No. 14, 15, 16 and 17 (dated as of March 31, 2014, May 16, 2014, July 15, 2015 and December 11, 2014, respectively), to the Second A320-Family Purchase Agreement dated as of March 20, 1998,
as amended and restated, between the Company and Airbus S.A.S. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on
April 1, 2015 and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                     
|            | 
|4.1.9       |  | Novation Agreement (dated as of October 30, 2014) between TAM Linhas Aereas S.A., LATAM Airlines Group S.A. and Airbus S.A.S., relating to the A320 Family/A330 purchase agreement dated November 14, 2006, as amended and
restated, between Airbus S.A.S. and TAM Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1,
2015 and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                       
|            | 
|4.2         |  | Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company as amended and supplemented, relating to Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on December 21, 2004, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                                   
|            | 
|4.2.1       |  | Supplemental Agreements No. 16, 19, 20, 21 and 22 (dated as of November 11, 2004, January 21, March 10, April 1, April 28, and July 20, 2005, and March 31, 2006, respectively) to the Purchase
Agreement No. 2126, dated January 30, 1998, between the Company and The Boeing Company, relating to Model 767-316ER, Model 767-38EF, and Model 767-316F Aircraft (incorporated by reference to our amended annual report filed on Form 20-F (File No. 001-14728) filed on
May 7, 2007 and portions of which have been omitted pursuant to a request for confidential treatment).
|            | 
|4.2.2       |  | Supplemental Agreement No. 23, dated as of March 6, 2007, to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company (incorporated by reference to our amended
annual report on Form 20-F (File No. 001-14728), filed on April 23, 2007, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                                                           
|            | 
|4.2.3       |  | Supplemental Agreement No. 24, dated as of November 10, 2008, to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing Company. Portions of this document have been
omitted pursuant to a request for confidential treatment (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on
June 25, 2009, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                          



124



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|4.2.4       |  | Supplemental Agreements No. 28 and 29 (dated as of March 22, 2010 and November 10, 2010, respectively), to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the Company and The Boeing
Company. Portions of these documents have been omitted pursuant to a request for confidential treatment (incorporated by reference to our amended annual report on Form 20-F (File
No. 001-14728), filed on May 5, 2011, and portions of which have been omitted pursuant to a request for confidential treatment).
|            | 
|4.2.5       |  | Supplemental Agreements No. 30, 31 and 32 (dated as of February 15, 2011, May 10, 2011 and December 22, 2011, respectively), to the Purchase Agreement No. 2126, dated as of January 30, 1998, between the
Company and The Boeing Company (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which
have been omitted pursuant to a request for confidential treatment).                                                                                 
|            | 
|4.3         |  | Aircraft Lease Common Terms Agreement between GE Commercial Aviation Services Limited and LAN Cargo S.A., dated as of April 30, 2007, and Aircraft Lease Agreements between Wells Fargo Bank Northwest N.A., as owner trustee, and
LAN Cargo S.A., dated as of April 30, 2007 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on May 7,
2007, and portions of which have been omitted pursuant to a request for confidential treatment).                                       
|            | 
|4.4         |  | Purchase Agreement No. 3194 between the Company and The Boeing Company relating to Boeing Model 777-Freighter aircraft, dated as of July 3, 2007, (incorporated by reference to our
amended annual report on Form 20-F (File No. 001-14728), filed on June 25, 2008, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                                 
|            | 
|4.4.1       |  | Supplemental Agreement No. 2, dated as of November 2, 2010, to the Purchase Agreement No. 3194 between the Company and The Boeing Company, dated as of July 3, 2007 (incorporated by reference to our amended annual
report on Form 20-F (File No. 001-14728), filed on May 5, 2011, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                 
|            | 
|4.4.2       |  | Supplemental Agreement No. 3, dated as of September 24, 2011, to the Purchase Agreement No. 3194 between the Company and The Boeing Company, dated as of July 3, 2007 (incorporated by reference to our annual
report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                                     
|            | 
|4.4.3       |  | Supplemental Agreement No. 4, dated as of August 9, 2012, to the Purchase Agreement No. 3194 between the Company and The Boeing Company, dated as of July 3, 2007 (incorporated by reference to our annual report on
Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                                        
|            | 
|4.5         |  | Purchase Agreement No. 3256 between the Company and The Boeing Company relating to Boeing Model 787-8 and 787-9 aircraft, dated as of
October 29, 2007, (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on June 25, 2008, and portions of which
have been omitted pursuant to a request for confidential treatment).                                                                                                                                                           
|            | 
|4.5.1       |  | Supplemental Agreements No. 1 and 2, (dated March 22, 2010 and July 8, 2010, respectively) to the Purchase Agreement No. 3256, dated October 29, 2007, as amended, between the Company and The Boeing Company
(incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on May 5, 2011, and portions of which have been omitted
pursuant to a request for confidential treatment).                                                                                                       
|            | 
|4.5.2       |  | Supplemental Agreement No. 3, dated as of August 24, 2012, to the Purchase Agreement No. 3256, as amended, between the Company and The Boeing Company, dated as of October 29, 2007 (incorporated by reference to
our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                                                                                                      
|            | 
|4.5.3       |  | Delay Settlement Agreement, dated as of September 16, 2013, to the Purchase Agreement No. 3256, as amended, between the Company and The Boeing Company, dated as of October 29, 2007 (incorporated by reference to our
annual report on Form 20-F (File No. 001-14728) filed on April 30, 2014 and portions of which have been omitted pursuant to a request for confidential
treatment)..                                                                                                                                      



125



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            | 
|4.5.4       |  | Supplemental Agreements No. 4 and 5 (dated as of April 22, 2015 and July 3, 2015, respectively) to the Purchase Agreement No. 3256, as amended, between the Company and The Boeing Company, dated as of
October 29, 2007 (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 29, 2016 and portions of which have been
omitted pursuant to a request for confidential treatment).                                                                    
|            | 
|4.5.5*      |  | Supplemental Agreements No. 6 and 7 (dated as of May 27, 2016 and December 20, 2016, respectively) to the Purchase Agreement No. 3256, as amended, between the Company and The Boeing Company, dated as of
October 29, 2007. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.                                                                       
|            | 
|4.6         |  | General Terms Agreement No. CFM-1-2377460475 and Letter Agreement No. 1 to General Terms Agreement No. CFM-1-2377460475 between the Company and CFM International, Inc., both dated December 17, 2010 (incorporated by reference to our amended annual report on Form 20-F
(File No. 001-14728), filed on May 5, 2011, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                
|            | 
|4.7         |  | Rate Per Flight Hour Engine Shop Maintenance Services Agreement between the Company and CFM International, Inc., dated December 17, 2010 (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on May 5, 2011, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                             
|            | 
|4.8         |  | Implementation Agreement, dated as of January 18, 2011, among the Company, Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A., TAM S.A., TAM Empreedimentos e Participações
S.A. and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (incorporated by reference to our amended annual report on Form 20-F
(File No. 001-14728), filed on May 5, 2011).                                                              
|            | 
|4.8.1       |  | Extension Letter to the Implementation Agreement and Exchange Offer Agreement, dated January 12, 2012, among the Company, Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A., TAM S.A., TAM
Empreedimentos e Participações S.A. and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (incorporated by reference to our amended registration statement on
Form F-4 (File No. 333-177984), filed on November 15, 2011).
|            | 
|4.9         |  | Exchange Offer Agreement, dated as of January 18, 2011, among LAN Airlines S.A., Costa Verde Aeronáutica S.A., Inversiones Mineras del Cantábrico S.A., TAM S.A., TAM Empreedimentos e
Participações S.A. and Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Oliveira Amaro and João Francisco Amaro (incorporated by reference to our amended annual report on Form 20-F (File No. 001-14728), filed on May 5, 2011).                                                        
|            | 
|4.10        |  | Shareholders Agreement, dated as of January 25, 2012, between the Company and TEP Chile S.A. (incorporated by reference to our amended registration statement on Form F-4 (File No. 333-177984), filed on November 15, 2011).                                                                                                                                                                                                                                                                    
|            | 
|4.11        |  | Shareholders Agreement, dated as of January 25, 2012, among the Company, TEP Chile S.A. and Holdco I S.A. (incorporated by reference to our amended registration statement on Form F-4
(File No. 333-177984), filed on November 15, 2011).                                                                                                                                                                                                                                                       
|            | 
|4.12        |  | Shareholders Agreement, dated as of January 25, 2012, among the Company, TEP Chile S.A., Holdco I S.A. and TAM S.A. (incorporated by reference to our amended registration statement on Form
F-4 (File No. 333-177984) filed on November 15, 2011).                                                                                                                                                                                                                                              
|            | 
|4.13        |  | Letter Agreement No. 12 (GTA No. 6-9576), dated July 11, 2011, between the Company and the General Electric Company (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012 and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                                                         
|            | 
|4.14        |  | A320 NEO Purchase Agreement, dated as of June 22, 2011, between the Company and Airbus S.A.S. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                                                                              
|            | 
|4.14.1      |  | Amendments No. 1, 2 and 3 (dated as of February 27, 2013, July 15, 2014 and December 11, 2014, respectively), to the A320 NEO Purchase Agreement dated as of June 22, 2011, between the Company and Airbus S.A.
(incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1, 2015 and portions of which have been omitted pursuant to a
request for confidential treatment).                                                                              



126



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|4.14.2      |  | Letter Agreement No. 1 (dated as of July 15, 2014) to Amendment No. 2 (dated as of July 15, 2014) to the A320 NEO Purchase Agreement dated as of June 22, 2011, between the Company and Airbus S.A.
(incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1, 2015 and portions of which have been omitted pursuant to a
request for confidential treatment).         
|            | 
|4.14.3*     |  | Amendment No. 4, 5 and 6 (dated as of April 15, 2016, April 15, 2016, and August 8, 2016, respectively), to the A320 NEO Purchase Agreement dated as of June 22, 2011, between the Company and Airbus S.A..
Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.       
|            | 
|4.15        |  | Buyback Agreement No. 3001 relating to One (1) Airbus A318-100 Aircraft MSN 3001, dated as of April 14, 2011, between the Company and Airbus Financial Services (incorporated by
reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for
confidential treatment).                                           
|            | 
|4.16        |  | Buyback Agreement No. 3030 relating to One (1) Airbus A318-100 Aircraft MSN 3003, dated as of August 10, 2011, between the Company and Airbus Financial Services (incorporated by
reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for
confidential treatment).                                          
|            | 
|4.17        |  | Buyback Agreement No. 3062, to One (1) Airbus A318-100 Aircraft MSN 3062, dated as of May 13, 2011, between the Company and Airbus Financial Services (incorporated by reference
to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                     
|            | 
|4.18        |  | Buyback Agreement No. 3214, to One (1) Airbus A318-100 Aircraft MSN 3214, dated as of June 9, 2011, between the Company and Airbus Financial Services (incorporated by reference
to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                     
|            | 
|4.19        |  | Buyback Agreement No. 3216, to One (1) Airbus A318-100 Aircraft MSN 3216, dated as of July 13, 2011, between the Company and Airbus Financial Services (incorporated by reference
to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for confidential
treatment).                                                    
|            | 
|4.20        |  | Aircraft General Terms Agreement Number AGTA-LAN, dated May 9, 1997, between the Company and The Boeing Company (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 2, 2012, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                           
|            | 
|4.21        |  | Buyback Agreement No. 3371, dated as of July 25, 2012, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment (incorporated by
reference to our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for
confidential treatment).   
|            | 
|4.22        |  | Buyback Agreement No. 3390, dated as of October 26, 2012, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment (incorporated by
reference to our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for
confidential treatment).
|            | 
|4.23        |  | Buyback Agreement No. 3438, dated as of December 5, 2012, between the Company and Airbus Financial Services. Portions of this document have been omitted pursuant to a request for confidential treatment (incorporated by
reference to our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for
confidential treatment).
|            | 
|4.24        |  | Buyback Agreement No. 3469, dated as of January 4, 2013, between the Company and Airbus Financial Services (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                               



127



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|4.25        |  | Buyback Agreement No. 3509, dated as of February 20, 2013, between the Company and Airbus Financial Services (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                                                                   
|            | 
|4.26        |  | A320 Family Purchase Agreement, dated March 19, 1998, between Airbus S.A.S. (formerly known as Airbus Industrie GIE) and TAM Linhas Aéreas S.A. (formerly known as TAM Transportes Aéreas Meridionais S.A. and as
successor in interest in TAM-Transportes Aéreas Regionais S.A.), incorporated herein by reference from our sixth pre-effective amendment to our Registration
Statement on Form F-1, filed March 2, 2006, File No. 333-131938.                                                       
|            | 
|4.26.1      |  | Amendments No. 12, 13 and 14 (dated as of January 27, 2012 and November 30, 2012 and December 14, 2012, respectively), to the Second A320-Family Purchase Agreement, dated as of March 20, 1998, as amended and
restated, between the Company and Airbus S.A.S. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728), filed on April 30, 2013, and
portions of which have been omitted pursuant to a request for confidential treatment).                                
|            | 
|4.27        |  | A350 Family Purchase Agreement, dated December 20, 2005, between Airbus S.A.S. and TAM Linhas Aéreas S.A., incorporated herein by reference from our sixth pre-effective amendment
to our Registration Statement on Form F-1, filed March 2, 2006, File No. 333-131938.                                                                                                                                                                                                                               
|            | 
|4.27.1      |  | A350 Family Purchase Agreement, dated December 20, 2005, as amended and restated on January 21, 2008, between Airbus S.A.S. and TAM Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1, 2015 and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                            
|            | 
|4.27.2      |  | Amendments No. 1, 2 and 3 (dated July 28, 2010, July 15, 2014 and October 30, 2014, respectively) to the A350 Purchase Agreement, dated December 20, 2005, as amended and restated on January 21, 2008,
between Airbus S.A.S. and TAM Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1, 2015 and
portions of which have been omitted pursuant to a request for confidential treatment).                                          
|            | 
|4.27.3      |  | Novation Agreement (dated as of July 21, 2014) between TAM Linhas Aereas S.A., LATAM Airlines Group S.A. and Airbus S.A.S., relating to the A350 Family Purchase Agreement, dated December 20, 2005, as amended and restated
on January 21, 2008, between Airbus S.A.S. and TAM Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed
on April 1, 2015 and portions of which have been omitted pursuant to a request for confidential treatment).
|            | 
|4.27.4      |  | Amendments No. 4 and 5 (dated September 15, 2015 and November 19, 2015, respectively) to the A350 Purchase Agreement, dated December 20, 2005, as amended and restated on January 21, 2008, between Airbus
S.A.S. and TAM Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 29, 2016 and portions of
which have been omitted pursuant to a request for confidential treatment).                                                     
|            | 
|4.27.5*     |  | Amendments No. 6, 7 and 8 (dated February 3, 2016, August 8, 2016, and September 9, 2016, respectively) to the A350 Purchase Agreement, dated December 20, 2005, as amended and restated on January 21,
2008, between Airbus S.A.S. and TAM Linhas Aereas S.A.. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange
Commission.                                         
|            | 
|4.29        |  | V2500 Maintenance Agreement, dated September 14, 2000, between TAM Transportes Aéreos Regionais S.A. (incorporated by TAM Linhas Aéreas S.A.) and MTU Maintenance Hannover GmbH (MTU), incorporated herein by
reference from our sixth pre-effective amendment to our Registration Statement on Form F-1, filed March 2, 2006, File
No. 333-131938.                                                                                                                                                   
|            | 
|4.30        |  | PW1100G-JM Engine Support and Maintenance Agreement, dated February 26, 2014, between LATAM Airlines Group S.A. and Pratt & Whitney Division. Portions of this document have been
omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.                                                                                                                                                             
|            | 
|4.31        |  | Framework Deed, dated May 28, 2013, between LATAM Airlines Group S.A. and Aercap Holdings N.V. Portions of this document have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed
separately with the Securities and Exchange Commission.                                                                                                                                                                                                            
|            | 
|4.32        |  | A320 Family/A330 Purchase Agreement (dated as of November 14, 2006) between Airbus S.A.S. and TAM  Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F
(File No. 001-14728) filed on April 1, 2015 and portions of which have been omitted pursuant to a request for confidential treatment).                                                                                                                                                                            



128



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            | 
|4.32.1      |  | Amendments No. 15, 16, 17, 18, and 19 (dated as of February 18, 2013, February 27, 2013, August 19, 2013, July 15, 2014 and December 11, 2014, respectively) to the A320 Family/A330 Purchase Agreement
(dated as of November 14, 2006) between Airbus S.A.S. and TAM  Linhas Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File
No. 001-14728) filed on April 1, 2015 and portions of which have been omitted pursuant to a request for confidential treatment).
|            | 
|4.32.2      |  | Amendments No. 20 and 21 (dated as of June 3, 2015 and December 21, 2015, respectively) to the A320 Family/A330 Purchase Agreement (dated as of November 14, 2006) between Airbus S.A.S. and TAM  Linhas
Aereas S.A. (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1, 2015 and portions of which have been omitted
pursuant to a request for confidential treatment).                                                                     
|            | 
|4.32.3*     |  | Amendments No. 22, 23 and 24 (dated as of April 15, 2016, April 15, 2016, and August 8, 2016, respectively) to the A320 Family/A330 Purchase Agreement (dated as of November 14, 2006) between Airbus S.A.S.
and TAM  Linhas Aereas S.A.. Portions of these documents have been omitted pursuant to a request for confidential treatment. Such omitted portions have been filed separately with the Securities and Exchange Commission.                                                      
|            | 
|4.33        |  | Supplemental Agreement No. 7 (dated as of May 2014) to the Boeing 777-32WER Purchase Agreement (dated as of February 2007) between TAM  Linhas Aereas S.A. and The Boeing Company
(incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 1, 2015 and portions of which have been omitted pursuant to a
request for confidential treatment).                                                                                                        
|            | 
|4.33.1      |  | Supplemental Agreement No. 8, dated as of April 22, 2015, to the Boeing 777-32WER Purchase Agreement (dated as of February 2007) between TAM Linhas Aéreas and The Boeing
Company (incorporated by reference to our annual report on Form 20-F (File No. 001-14728) filed on April 29, 2016 and portions of which have been omitted
pursuant to a request for confidential treatment).                                                                                                        
|            | 
|8.1*        |  | List of subsidiaries of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|12.1*       |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|12.2*       |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|13.1*       |  | Certifications of Chief Financial Officer and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                              



|* | Filed herewith
|- | --------------



129



---

##### Table of Contents

LOGO

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2016

CONTENTS

Consolidated Statement of Financial Position

Consolidated Statement of Income by Function

Consolidated
Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash FlowsDirect Method

Notes to
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                    



F-1



---

##### Table of Contents

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



|                                                                          |  |  |      | 
|------------------------------------------------------------------------- |  |  | ---- | 
|Notes                                                                     |  |  | Page | 
|1 - General information                                                   |  |  | F-12 | 
|2 - Summary of significant accounting policies                            |  |  | F-17 | 
|2.1. Basis of Preparation                                                 |  |  | F-17 | 
|2.2. Basis of Consolidation                                               |  |  | F-21 | 
|2.3. Foreign currency transactions                                        |  |  | F-22 | 
|2.4. Property, plant and equipment                                        |  |  | F-23 | 
|2.5. Intangible assets other than goodwill                                |  |  | F-23 | 
|2.6. Goodwill                                                             |  |  | F-24 | 
|2.7. Borrowing costs                                                      |  |  | F-24 | 
|2.8. Losses for impairment of non-financial assets                        |  |  | F-24 | 
|2.9. Financial assets                                                     |  |  | F-25 | 
|2.10. Derivative financial instruments and hedging activities             |  |  | F-26 | 
|2.11. Inventories                                                         |  |  | F-27 | 
|2.12. Trade and other accounts receivable                                 |  |  | F-27 | 
|2.13. Cash and cash equivalents                                           |  |  | F-27 | 
|2.14. Capital                                                             |  |  | F-27 | 
|2.15. Trade and other accounts payables                                   |  |  | F-28 | 
|2.16. Interest-bearing loans                                              |  |  | F-28 | 
|2.17. Current and deferred taxes                                          |  |  | F-28 | 
|2.18. Employee benefits                                                   |  |  | F-28 | 
|2.19. Provisions                                                          |  |  | F-29 | 
|2.20. Revenue recognition                                                 |  |  | F-29 | 
|2.21. Leases                                                              |  |  | F-30 | 
|2.22. Non-current assets (or disposal groups) classified as held for
sale |  |  | F-31 | 
|2.23. Maintenance                                                         |  |  | F-31 | 
|2.24. Environmental costs                                                 |  |  | F-31 | 
|3 - Financial risk management                                             |  |  | F-31 | 
|3.1. Financial risk factors                                               |  |  | F-31 | 
|3.2. Capital risk management                                              |  |  | F-45 | 
|3.3. Estimates of fair value                                              |  |  | F-45 | 
|4 - Accounting estimates and judgments                                    |  |  | F-48 | 
|5 - Segmental information                                                 |  |  | F-51 | 
|6 - Cash and cash equivalents                                             |  |  | F-53 | 
|7 - Financial instruments                                                 |  |  | F-55 | 
|7.1. Financial instruments by category                                    |  |  | F-55 | 
|7.2. Financial instruments by currency                                    |  |  | F-57 | 
|8 - Trade, other accounts receivable and non-current accounts receivable  |  |  | F-58 | 
|9 - Accounts receivable from/payable to related entities                  |  |  | F-61 | 
|10 - Inventories                                                          |  |  | F-62 | 
|11 - Other financial assets                                               |  |  | F-63 | 
|12 - Other non-financial assets                                           |  |  | F-64 | 
|13 - Non-current assets and disposal group classified as held for sale    |  |  | F-65 | 
|14 - Investments in subsidiaries                                          |  |  | F-66 | 



F-2



---

##### Table of Contents

|                                                               |  |  |       | 
|-------------------------------------------------------------- |  |  | ----- | 
|15 - Intangible assets other than goodwill                     |  |  | F-70  | 
|16 - Goodwill                                                  |  |  | F-71  | 
|17 - Property, plant and equipment                             |  |  | F-73  | 
|18 - Current and deferred tax                                  |  |  | F-79  | 
|19 - Other financial liabilities                               |  |  | F-85  | 
|20 - Trade and other accounts payables                         |  |  | F-92  | 
|21 - Other provisions                                          |  |  | F-94  | 
|22 - Other non-financial liabilities                           |  |  | F-97  | 
|23 - Employee benefits                                         |  |  | F-98  | 
|24 - Accounts payable, non-current                             |  |  | F-100 | 
|25 - Equity                                                    |  |  | F-100 | 
|26 - Revenue                                                   |  |  | F-107 | 
|27 - Costs and expenses by nature                              |  |  | F-107 | 
|28 - Other income, by function                                 |  |  | F-109 | 
|29 - Foreign currency and exchange rate differences            |  |  | F-109 | 
|30 - Earnings per share                                        |  |  | F-118 | 
|31 - Contingencies                                             |  |  | F-119 | 
|32 - Commitments                                               |  |  | F-127 | 
|33 - Transactions with related parties                         |  |  | F-132 | 
|34 - Share based payments                                      |  |  | F-133 | 
|35 - Statement of cash flows                                   |  |  | F-137 | 
|36 - The environment                                           |  |  | F-138 | 
|37 - Events subsequent to the date of the financial statements |  |  | F-139 | 
|38 - Consolidation schedule                                    |  |  | F-139 | 



F-3



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS



|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- |  | --------------------- |  | ---------- | --------------------- |  |  | ---------- | 
|                                                                                                                                          |  | Note |       |  | As ofDecember 31,2016 |  |            | As ofDecember 31,2015 | 
|                                                                                                                                          |  |      |       |  | ThUS$                 |  |            | ThUS$                 | 
|Current assets                                                                                                                            |  |      |       |  |                       |  |            |                       |  |  |            | 
|Cash and cash equivalents                                                                                                                 |  |      | 6 -7  |  |                       |  | 949,327    |                       |  |  | 753,497    | 
|Other financial assets                                                                                                                    |  |      | 7 -11 |  |                       |  | 712,828    |                       |  |  | 651,348    | 
|Other non-financial assets                                                                                                                |  |      | 12    |  |                       |  | 212,242    |                       |  |  | 330,016    | 
|Trade and other accounts receivable                                                                                                       |  |      | 7 - 8 |  |                       |  | 1,107,889  |                       |  |  | 796,974    | 
|Accounts receivable from related entities                                                                                                 |  |      | 7 - 9 |  |                       |  | 554        |                       |  |  | 183        | 
|Inventories                                                                                                                               |  |      | 10    |  |                       |  | 241,363    |                       |  |  | 224,908    | 
|Tax assets                                                                                                                                |  |      | 18    |  |                       |  | 65,377     |                       |  |  | 64,015     | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|Total current assets other than non-current assets (or disposal groups) classified as held for
sale or as held for distribution to owners |  |      |       |  |                       |  | 3,289,580  |                       |  |  | 2,820,941  | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|Non-current assets (or disposal groups) classified as held for sale or as held for distribution to
owners                                 |  |      | 13    |  |                       |  | 337,195    |                       |  |  | 1,960      | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|Total current assets                                                                                                                      |  |      |       |  |                       |  | 3,626,775  |                       |  |  | 2,822,901  | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|Non-current assets                                                                                                                        |  |      |       |  |                       |  |            |                       |  |  |            | 
|Other financial assets                                                                                                                    |  |      | 7 -11 |  |                       |  | 102,125    |                       |  |  | 89,458     | 
|Other non-financial assets                                                                                                                |  |      | 12    |  |                       |  | 237,344    |                       |  |  | 235,463    | 
|Accounts receivable                                                                                                                       |  |      | 7 - 8 |  |                       |  | 8,254      |                       |  |  | 10,715     | 
|Intangible assets other than goodwill                                                                                                     |  |      | 15    |  |                       |  | 1,610,313  |                       |  |  | 1,321,425  | 
|Goodwill                                                                                                                                  |  |      | 16    |  |                       |  | 2,710,382  |                       |  |  | 2,280,575  | 
|Property, plant and equipment                                                                                                             |  |      | 17    |  |                       |  | 10,498,149 |                       |  |  | 10,938,657 | 
|Tax assets                                                                                                                                |  |      | 18    |  |                       |  | 20,272     |                       |  |  | 25,629     | 
|Deferred tax assets                                                                                                                       |  |      | 18    |  |                       |  | 384,580    |                       |  |  | 376,595    | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|Total non-current assets                                                                                                                  |  |      |       |  |                       |  | 15,571,419 |                       |  |  | 15,278,517 | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 
|Total assets                                                                                                                              |  |      |       |  |                       |  | 19,198,194 |                       |  |  | 18,101,418 | 
|                                                                                                                                          |  |      |       |  |                       |  |            |                       |  |  |            | 

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-4



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

LIABILITIES AND EQUITY



|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|------------------------------------------------------------------- |  | ---- | ------ |  | --------------------- |  | ---------- | --------------------- |  |  | ---------- | -
|                                                                    |  | Note |        |  | As ofDecember 31,2016 |  |            | As ofDecember 31,2015 | 
|                                                                    |  |      |        |  | ThUS$                 |  |            | ThUS$                 | 
|LIABILITIES                                                         |  |      |        |  |                       |  |            |                       |  |  |            |  
|Current liabilities                                                 |  |      |        |  |                       |  |            |                       |  |  |            |  
|Other financial liabilities                                         |  |      | 7 - 19 |  |                       |  | 1,839,528  |                       |  |  | 1,644,235  |  
|Trade and other accounts payables                                   |  |      | 7 - 20 |  |                       |  | 1,593,068  |                       |  |  | 1,483,957  |  
|Accounts payable to related entities                                |  |      | 7 - 9  |  |                       |  | 269        |                       |  |  | 447        |  
|Other provisions                                                    |  |      | 21     |  |                       |  | 2,643      |                       |  |  | 2,922      |  
|Tax liabilities                                                     |  |      | 18     |  |                       |  | 14,286     |                       |  |  | 19,378     |  
|Other non-financial liabilities                                     |  |      | 22     |  |                       |  | 2,762,245  |                       |  |  | 2,490,033  |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|                                                                    |  |      |        |  |                       |  | 6,212,039  |                       |  |  | 5,640,972  |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Liabilities included in disposal groups classified as held for sale |  |      |        |  |                       |  | 10,152     |                       |  |  |           |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Total current liabilities                                           |  |      |        |  |                       |  | 6,222,191  |                       |  |  | 5,640,972  |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Non-current liabilities                                             |  |      |        |  |                       |  |            |                       |  |  |            |  
|Other financial liabilities                                         |  |      | 7 - 19 |  |                       |  | 6,796,952  |                       |  |  | 7,532,385  |  
|Accounts payable                                                    |  |      | 7 - 24 |  |                       |  | 359,391    |                       |  |  | 417,050    |  
|Other provisions                                                    |  |      | 21     |  |                       |  | 422,494    |                       |  |  | 424,497    |  
|Deferred tax liabilities                                            |  |      | 18     |  |                       |  | 915,759    |                       |  |  | 811,565    |  
|Employee benefits                                                   |  |      | 23     |  |                       |  | 82,322     |                       |  |  | 65,271     |  
|Other non-financial liabilities                                     |  |      | 22     |  |                       |  | 213,781    |                       |  |  | 272,130    |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Total non-current liabilities                                       |  |      |        |  |                       |  | 8,790,699  |                       |  |  | 9,522,898  |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Total liabilities                                                   |  |      |        |  |                       |  | 15,012,890 |                       |  |  | 15,163,870 |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|EQUITY                                                              |  |      |        |  |                       |  |            |                       |  |  |            |  
|Share capital                                                       |  |      | 25     |  |                       |  | 3,149,564  |                       |  |  | 2,545,705  |  
|Retained earnings                                                   |  |      | 25     |  |                       |  | 366,404    |                       |  |  | 317,950    |  
|Treasury Shares                                                     |  |      | 25     |  |                       |  | (178       | )                     |  |  | (178       | )
|Other reserves                                                      |  |      |        |  |                       |  | 580,870    |                       |  |  | (6,942     | )
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Parents ownership interest                                         |  |      |        |  |                       |  | 4,096,660  |                       |  |  | 2,856,535  |  
|Non-controlling interest                                            |  |      | 14     |  |                       |  | 88,644     |                       |  |  | 81,013     |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Total equity                                                        |  |      |        |  |                       |  | 4,185,304  |                       |  |  | 2,937,548  |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  
|Total liabilities and equity                                        |  |      |        |  |                       |  | 19,198,194 |                       |  |  | 18,101,418 |  
|                                                                    |  |      |        |  |                       |  |            |                       |  |  |            |  

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-5



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME BY FUNCTION



|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|-------------------------------------------------------------------- |  | ---- | -- |  | --------------------------------- |  | ---------- | ----- |  |  | ---------- | - |  |  | ---------- | -
|                                                                     |  |      |    |  | For the period ended
December 31, | 
|                                                                     |  | Note |    |  | 2016                              |  |            | 2015  |  |  | 2014       |  
|                                                                     |  |      |    |  | ThUS$                             |  |            | ThUS$ |  |  | ThUS$      |  
|Revenue                                                              |  |      | 26 |  |                                   |  | 8,988,340  |       |  |  | 9,740,045  |   |  |  | 12,093,501 |  
|Cost of sales                                                        |  |      |    |  |                                   |  | (6,967,037 | )     |  |  | (7,636,709 | ) |  |  | (9,624,501 | )
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Gross margin                                                         |  |      |    |  |                                   |  | 2,021,303  |       |  |  | 2,103,336  |   |  |  | 2,469,000  |  
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Other income                                                         |  |      | 28 |  |                                   |  | 538,748    |       |  |  | 385,781    |   |  |  | 377,645    |  
|Distribution costs                                                   |  |      |    |  |                                   |  | (747,426   | )     |  |  | (783,304   | ) |  |  | (957,072   | )
|Administrative expenses                                              |  |      |    |  |                                   |  | (872,954   | )     |  |  | (878,006   | ) |  |  | (980,660   | )
|Other expenses                                                       |  |      |    |  |                                   |  | (373,738   | )     |  |  | (323,987   | ) |  |  | (401,021   | )
|Other gains/(losses)                                                 |  |      |    |  |                                   |  | (72,634    | )     |  |  | (55,280    | ) |  |  | 33,524     |  
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Income from operation activities                                     |  |      |    |  |                                   |  | 493,299    |       |  |  | 448,540    |   |  |  | 541,416    |  
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Financial income                                                     |  |      |    |  |                                   |  | 74,949     |       |  |  | 75,080     |   |  |  | 90,500     |  
|Financial costs                                                      |  |      | 27 |  |                                   |  | (416,336   | )     |  |  | (413,357   | ) |  |  | (430,034   | )
|Share of profit of investments accounted for using the equity method |  |      |    |  |                                   |  |           |       |  |  | 37         |   |  |  | (6,455     | )
|Foreign exchange gains/(losses)                                      |  |      | 29 |  |                                   |  | 121,651    |       |  |  | (467,896   | ) |  |  | (130,201   | )
|Result of indexation units                                           |  |      |    |  |                                   |  | 311        |       |  |  | 481        |   |  |  | 7          |  
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Income (loss) before taxes                                           |  |      |    |  |                                   |  | 273,874    |       |  |  | (357,115   | ) |  |  | 65,233     |  
|Income (loss) tax expense / benefit                                  |  |      | 18 |  |                                   |  | (163,204   | )     |  |  | 178,383    |   |  |  | (292,404   | )
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|NET INCOME (LOSS) FOR THE PERIOD                                     |  |      |    |  |                                   |  | 110,670    |       |  |  | (178,732   | ) |  |  | (227,171   | )
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Income (loss) attributable to owners of the parent                   |  |      |    |  |                                   |  | 69,220     |       |  |  | (219,274   | ) |  |  | (259,985   | )
|Income (loss) attributable to non-controlling interest               |  |      | 14 |  |                                   |  | 41,450     |       |  |  | 40,542     |   |  |  | 32,814     |  
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Net income (loss) for the year                                       |  |      |    |  |                                   |  | 110,670    |       |  |  | (178,732   | ) |  |  | (227,171   | )
|                                                                     |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|EARNINGS PER SHARE                                                   |  |      |    |  |                                   |  |            |       |  |  |            |   |  |  |            |  
|Basic earnings (losses) per share (US$)                              |  |      | 30 |  |                                   |  | 0.12665    |       |  |  | (0.40193   | ) |  |  | (0.47656   | )
|Diluted earnings (losses) per share (US$)                            |  |      | 30 |  |                                   |  | 0.12665    |       |  |  | (0.40193   | ) |  |  | (0.47656   | )

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-6



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|----------------------------------------------------------------------------------------------------- |  | ---- | -- |  | --------------------------------- |  | ------- | ----- |  |  | ---------- | - |  |  | -------- | -
|                                                                                                      |  |      |    |  | For the period ended
December 31, | 
|                                                                                                      |  | Note |    |  | 2016                              |  |         | 2015  |  |  | 2014       |  
|                                                                                                      |  |      |    |  | ThUS$                             |  |         | ThUS$ |  |  | ThUS$      |  
|NET INCOME (LOSS)                                                                                     |  |      |    |  |                                   |  | 110,670 |       |  |  | (178,732   | ) |  |  | (227,171 | )
|Components of other comprehensive income that will not be reclassified to income before
taxes         |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Other comprehensive income, before taxes, gains (losses) by new measurements on defined benefit
plans |  |      | 25 |  |                                   |  | (3,105  | )     |  |  | (14,631    | ) |  |  |         |  
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Total other comprehensive income that will not be reclassified to income before taxes                 |  |      |    |  |                                   |  | (3,105  | )     |  |  | (14,631    | ) |  |  |         |  
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Components of other comprehensive income that will be reclassified to income before taxes             |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Currency translation differences                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Gains (losses) on currency translation, before tax                                                    |  |      | 29 |  |                                   |  | 494,362 |       |  |  | (1,409,439 | ) |  |  | (650,439 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Other comprehensive income, before taxes, currency translation differences                            |  |      |    |  |                                   |  | 494,362 |       |  |  | (1,409,439 | ) |  |  | (650,439 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Cash flow hedges                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Gains (losses) on cash flow hedges before taxes                                                       |  |      | 19 |  |                                   |  | 127,390 |       |  |  | 80,387     |   |  |  | (163,993 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Other comprehensive income (losses), before taxes, cash flow hedges                                   |  |      |    |  |                                   |  | 127,390 |       |  |  | 80,387     |   |  |  | (163,993 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Total other comprehensive income that will be reclassified to income before taxes                     |  |      |    |  |                                   |  | 621,752 |       |  |  | (1,329,052 | ) |  |  | (814,432 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Other components of other comprehensive income (loss), before taxes                                   |  |      |    |  |                                   |  | 618,647 |       |  |  | (1,343,683 | ) |  |  | (814,432 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Income tax relating to other comprehensive income that will not be reclassified to income             |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Income tax relating to new measurements on defined benefit plans                                      |  |      | 18 |  |                                   |  | 921     |       |  |  | 3,911      |   |  |  |         |  
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Accumulate income tax relating to other comprehensive income that will not be reclassified to
income  |  |      |    |  |                                   |  | 921     |       |  |  | 3,911      |   |  |  |         |  
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Income tax relating to other comprehensive income that will be reclassified to income                 |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Income tax related to cash flow hedges in other comprehensive income                                  |  |      |    |  |                                   |  | (34,695 | )     |  |  | (21,103    | ) |  |  | 47,979   |  
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Income taxes related to components of other comprehensive income that will be reclassified to
income  |  |      |    |  |                                   |  | (34,695 | )     |  |  | (21,103    | ) |  |  | 47,979   |  
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Total Other comprehensive income                                                                      |  |      |    |  |                                   |  | 584,873 |       |  |  | (1,360,875 | ) |  |  | (766,453 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Total comprehensive income (loss)                                                                     |  |      |    |  |                                   |  | 695,543 |       |  |  | (1,539,607 | ) |  |  | (993,624 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|Comprehensive income (loss) attributable to owners of the parent                                      |  |      |    |  |                                   |  | 648,539 |       |  |  | (1,551,331 | ) |  |  | (980,697 | )
|Comprehensive income (loss) attributable to non-controlling interests                                 |  |      |    |  |                                   |  | 47,004  |       |  |  | 11,724     |   |  |  | (12,927  | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  
|TOTAL COMPREHENSIVE INCOME (LOSS)                                                                     |  |      |    |  |                                   |  | 695,543 |       |  |  | (1,539,607 | ) |  |  | (993,624 | )
|                                                                                                      |  |      |    |  |                                   |  |         |       |  |  |            |   |  |  |          |  

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-7



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



|                                                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  
|------------------------------------------------------------------------ |  | ---- | ----- |  | ------------------------------------ |  | --------- | -------------- |  |  | -------------------------- | - |  | ----------------------- | ---------- | - | ------------------------------------------------------- |  | ------- | -------------------------- |  |  | ------------------ | - |  | ----------------- | ------ |  | ---------------- |  | --------- | ------------------------- |  |  | ----------------------- | - |  | ----------- | ------- | - |  |  | --------- | - |  |  | ------- | - |  |  | --------- | -
|                                                                         |  |      |       |  | Attributable to owners of the parent |  |           |                |  |  |                            |  
|                                                                         |  |      |       |  |                                      |  |           |                |  |  | Change in other reserves   |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |  
|                                                                         |  | Note |       |  | Sharecapital                         |  |           | Treasuryshares |  |  | Currencytranslationreserve |   |  | Cash flowhedgingreserve |            |   | Actuarial gains orlosses on definedbenefit plansreserve |  |         | Sharesbasedpaymentsreserve |  |  | Othersundryreserve |   |  | Totalotherreserve |        |  | Retainedearnings |  |           | Parentsownershipinterest |  |  | Non-controllinginterest |   |  | Totalequity |        
|                                                                         |  |      |       |  | ThUS$                                |  |           | ThUS$          |  |  | ThUS$                      |   |  | ThUS$                   |            |   | ThUS$                                                   |  |         | ThUS$                      |  |  | ThUS$              |   |  | ThUS$             |        |  | ThUS$            |  |           | ThUS$                     |  |  | ThUS$                   |   |  | ThUS$       |        
|Equity as of January 1, 2016                                             |  |      |       |  |                                      |  | 2,545,705 |                |  |  | (178                       | ) |  |                         | (2,576,041 | ) |                                                         |  | (90,510 | )                          |  |  | (10,717            | ) |  |                   | 35,647 |  |                  |  | 2,634,679 |                           |  |  | (6,942                  | ) |  |             | 317,950 |   |  |  | 2,856,535 |   |  |  | 81,013  |   |  |  | 2,937,548 |  
|Total increase (decrease ) in equity Comprehensive income Gain (losses ) |  |      | 25    |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                                                         |  |        |                            |  |  |                   |   |  |                   |       |  |                  |  |          |                           |  |  |                        |   |  |             | 69,220  |   |  |  | 69,220    |   |  |  | 41,450  |   |  |  | 110,670   |  
|Other comprehensive income                                               |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         | 489,486    |   |                                                         |  | 92,016  |                            |  |  | (2,183             | ) |  |                   |       |  |                  |  |           |                           |  |  | 579,319                 |   |  |             |        |   |  |  | 579,319   |   |  |  | 5,554   |   |  |  | 584,873   |  
|                                                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  
|Total comprehensive income                                               |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         | 489,486    |   |                                                         |  | 92,016  |                            |  |  | (2,183             | ) |  |                   |       |  |                  |  |          |                           |  |  | 579,319                 |   |  |             | 69,220  |   |  |  | 648,539   |   |  |  | 47,004  |   |  |  | 695,543   |  
|                                                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  
|Transactions with shareholders                                           |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  
|Equity issue                                                             |  |      | 25-34 |  |                                      |  | 608,496   |                |  |  |                           |   |  |                         |           |   |                                                         |  |        |                            |  |  |                   |   |  |                   |       |  |                  |  |          |                           |  |  |                        |   |  |             |        |   |  |  | 608,496   |   |  |  |        |   |  |  | 608,496   |  
|Dividends                                                                |  |      | 25    |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                                                         |  |        |                            |  |  |                   |   |  |                   |       |  |                  |  |          |                           |  |  |                        |   |  |             | (20,766 | ) |  |  | (20,766   | ) |  |  |        |   |  |  | (20,766   | )
|Increase (decrease ) through transfers and other changes , equity        |  |      | 25-34 |  |                                      |  | (4,637    | )              |  |  |                           |   |  |                         |           |   |                                                         |  |        |                            |  |  |                   |   |  |                   | 2,891  |  |                  |  | 5,602     |                           |  |  | 8,493                   |   |  |             |        |   |  |  | 3,856     |   |  |  | (39,373 | ) |  |  | (35,517   | )
|                                                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  
|Total transactions with shareholders                                     |  |      |       |  |                                      |  | 603,859   |                |  |  |                           |   |  |                         |           |   |                                                         |  |        |                            |  |  |                   |   |  |                   | 2,891  |  |                  |  | 5,602     |                           |  |  | 8,493                   |   |  |             | (20,766 | ) |  |  | 591,586   |   |  |  | (39,373 | ) |  |  | 552,213   |  
|                                                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  
|Closing balance as of December 31, 2016                                  |  |      |       |  |                                      |  | 3,149,564 |                |  |  | (178                       | ) |  |                         | (2,086,555 | ) |                                                         |  | 1,506   |                            |  |  | (12,900            | ) |  |                   | 38,538 |  |                  |  | 2,640,281 |                           |  |  | 580,870                 |   |  |             | 366,404 |   |  |  | 4,096,660 |   |  |  | 88,644  |   |  |  | 4,185,304 |  
|                                                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |         |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |         |   |  |  |           |   |  |  |         |   |  |  |           |  

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-8



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  
|---------------------------------------------------------------------- |  | ---- | ----- |  | ------------------------------------ |  | --------- | -------------- |  |  | -------------------------- | - |  | ----------------------- | ---------- | - | ------------------------------------------------------- |  | -------- | -------------------------- |  |  | ------------------ | - |  | ----------------- | ------ |  | ---------------- |  | --------- | ------------------------- |  |  | ----------------------- | - |  | ----------- | -------- | - |  |  | ---------- | - |  |  | ------- | - |  |  | ---------- | -
|                                                                       |  |      |       |  | Attributable to owners of the parent |  |           |                |  |  |                            |  
|                                                                       |  |      |       |  |                                      |  |           |                |  |  | Change in other reserves   |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |  
|                                                                       |  | Note |       |  | Sharecapital                         |  |           | Treasuryshares |  |  | Currencytranslationreserve |   |  | Cash flowhedgingreserve |            |   | Actuarial gains orlosses on definedbenefit plansreserve |  |          | Sharesbasedpaymentsreserve |  |  | Othersundryreserve |   |  | Totalotherreserve |        |  | Retainedearnings |  |           | Parentsownershipinterest |  |  | Non-controllinginterest |   |  | Totalequity |         
|                                                                       |  |      |       |  | ThUS$                                |  |           | 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) |  |      | 25    |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                                                         |  |         |                            |  |  |                   |   |  |                   |       |  |                  |  |          |                           |  |  |                        |   |  |             | (219.274 | ) |  |  | (219.274   | ) |  |  | 40.542  |   |  |  | (178.732   | )
|Other comprehensive income                                             |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         | (1.382.170 | ) |                                                         |  | 60.830   |                            |  |  | (10.717            | ) |  |                   |       |  |                  |  |           |                           |  |  | (1.332.057              | ) |  |             |         |   |  |  | (1.332.057 | ) |  |  | (28.818 | ) |  |  | (1.360.875 | )
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  
|Total comprehensive income                                             |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         | (1.382.170 | ) |                                                         |  | 60.830   |                            |  |  | (10.717            | ) |  |                   |       |  |                  |  |          |                           |  |  | (1.332.057              | ) |  |             | (219.274 | ) |  |  | (1.551.331 | ) |  |  | 11.724  |   |  |  | (1.539.607 | )
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  
|Transactions with shareholders                                         |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  
|Increase (decrease) through transfers and other changes , equity       |  |      | 25-34 |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                                                         |  |         |                            |  |  |                   |   |  |                   | 6.005  |  |                  |  | (1.069    | )                         |  |  | 4.936                   |   |  |             | 1.034    |   |  |  | 5.970      |   |  |  | (32.510 | ) |  |  | (26.540    | )
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  
|Total transactions with shareholders                                   |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                                                         |  |         |                            |  |  |                   |   |  |                   | 6.005  |  |                  |  | (1.069    | )                         |  |  | 4.936                   |   |  |             | 1.034    |   |  |  | 5.970      |   |  |  | (32.510 | ) |  |  | (26.540    | )
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  
|Closing balance as of December 31, 2015                                |  |      |       |  |                                      |  | 2.545.705 |                |  |  | (178                       | ) |  |                         | (2.576.041 | ) |                                                         |  | (90.510  | )                          |  |  | (10.717            | ) |  |                   | 35.647 |  |                  |  | 2.634.679 |                           |  |  | (6.942                  | ) |  |             | 317.950  |   |  |  | 2.856.535  |   |  |  | 81.013  |   |  |  | 2.937.548  |  
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                                                         |  |          |                            |  |  |                    |   |  |                   |        |  |                  |  |           |                           |  |  |                         |   |  |             |          |   |  |  |            |   |  |  |         |   |  |  |            |  

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-9



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                             |  |          |                    |  |  |                   |  |  |                  |           |   |                           |  |           |                         |  |  |             |   |  |  |           |   |  |  |         |   |  |  |           |  
|---------------------------------------------------------------------- |  | ---- | ----- |  | ------------------------------------ |  | --------- | -------------- |  |  | -------------------------- | - |  | ----------------------- | ---------- | - | --------------------------- |  | -------- | ------------------ |  |  | ----------------- |  |  | ---------------- | --------- | - | ------------------------- |  | --------- | ----------------------- |  |  | ----------- | - |  |  | --------- | - |  |  | ------- | - |  |  | --------- | -
|                                                                       |  |      |       |  | Attributable to owners of the parent |  |           |                |  |  |                            |  
|                                                                       |  |      |       |  |                                      |  |           |                |  |  | Change in other reserves   |   |  |                         |            |   |                             |  |          |                    |  |  |                   | 
|                                                                       |  | Note |       |  | Sharecapital                         |  |           | Treasuryshares |  |  | Currencytranslationreserve |   |  | Cash flowhedgingreserve |            |   | Shares basedpaymentsreserve |  |          | Othersundryreserve |  |  | Totalotherreserve |  |  | Retainedearnings |           |   | Parentsownershipinterest |  |           | Non-controllinginterest |  |  | Totalequity |  
|                                                                       |  |      |       |  | 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) |  |      | 25    |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                             |  |         |                    |  |  |                  |  |  |                  |          |   |                           |  |          |                         |  |  | (259,985    | ) |  |  | (259,985  | ) |  |  | 32,814  |   |  |  | (227,171  | )
|Other comprehensive income                                             |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         | (603,880   | ) |                             |  | (116,832 | )                  |  |  |                  |  |  |                  |          |   |                           |  | (720,712  | )                       |  |  |            |   |  |  | (720,712  | ) |  |  | (45,741 | ) |  |  | (766,453  | )
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                             |  |          |                    |  |  |                   |  |  |                  |           |   |                           |  |           |                         |  |  |             |   |  |  |           |   |  |  |         |   |  |  |           |  
|Total comprehensive income                                             |  |      |       |  |                                      |  |          |                |  |  |                           |   |  |                         | (603,880   | ) |                             |  | (116,832 | )                  |  |  |                  |  |  |                  |          |   |                           |  | (720,712  | )                       |  |  | (259,985    | ) |  |  | (980,697  | ) |  |  | (12,927 | ) |  |  | (993,624  | )
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                             |  |          |                    |  |  |                   |  |  |                  |           |   |                           |  |           |                         |  |  |             |   |  |  |           |   |  |  |         |   |  |  |           |  
|Transactions with shareholders Equity issuance                         |  |      | 25-34 |  |                                      |  | 156,321   |                |  |  |                           |   |  |                         |           |   |                             |  |         |                    |  |  |                  |  |  |                  |          |   |                           |  |          |                         |  |  |            |   |  |  | 156,321   |   |  |  |        |   |  |  | 156,321   |  
|Increase (decrease) through transfers and other changes, equity        |  |      | 25-34 |  |                                      |  |          |                |  |  |                           |   |  |                         |           |   |                             |  |         |                    |  |  | 8,631             |  |  |                  | (22,052   | ) |                           |  | (13,421   | )                       |  |  | 872         |   |  |  | (12,549   | ) |  |  | 27,088  |   |  |  | 14,539    |  
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                             |  |          |                    |  |  |                   |  |  |                  |           |   |                           |  |           |                         |  |  |             |   |  |  |           |   |  |  |         |   |  |  |           |  
|Total transactions with shareholders                                   |  |      |       |  |                                      |  | 156,321   |                |  |  |                           |   |  |                         |           |   |                             |  |         |                    |  |  | 8,631             |  |  |                  | (22,052   | ) |                           |  | (13,421   | )                       |  |  | 872         |   |  |  | 143,772   |   |  |  | 27,088  |   |  |  | 170,860   |  
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                             |  |          |                    |  |  |                   |  |  |                  |           |   |                           |  |           |                         |  |  |             |   |  |  |           |   |  |  |         |   |  |  |           |  
|Closing balance as of December 31, 2014                                |  |      |       |  |                                      |  | 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 |  
|                                                                       |  |      |       |  |                                      |  |           |                |  |  |                            |   |  |                         |            |   |                             |  |          |                    |  |  |                   |  |  |                  |           |   |                           |  |           |                         |  |  |             |   |  |  |           |   |  |  |         |   |  |  |           |  

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-10



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS DIRECT  METHOD



|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|------------------------------------------------------------------------------------------- |  | ---- |  | ---------------------------------- | ---------- | - | ----- |  | ---------- | ----- |  |  | ---------- | -
|                                                                                            |  |      |  | For the periods ended
December 31, |           
|                                                                                            |  | Note |  | 2016                               |            |   | 2015  |  |            | 2014  | 
|                                                                                            |  |      |  | ThUS$                              |            |   | ThUS$ |  |            | ThUS$ | 
|Cash flows from operating activities                                                        |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Cash collection from operating activities                                                   |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Proceeds from sales of goods and services                                                   |  |      |  |                                    | 9,918,589  |   |       |  | 11,372,397 |       |  |  | 13,367,838 |  
|Other cash receipts from operating activities                                               |  |      |  |                                    | 70,359     |   |       |  | 88,237     |       |  |  | 96,931     |  
|Payments for operating activities                                                           |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Payments to suppliers for goods and services                                                |  |      |  |                                    | (6,756,121 | ) |       |  | (7,029,582 | )     |  |  | (8,823,007 | )
|Payments to and on behalf of employees                                                      |  |      |  |                                    | (1,820,279 | ) |       |  | (2,165,184 | )     |  |  | (2,433,652 | )
|Other payments for operating activities                                                     |  |      |  |                                    | (162,839   | ) |       |  | (351,177   | )     |  |  | (528,214   | )
|Interest received                                                                           |  |      |  |                                    | 11,242     |   |       |  | 43,374     |       |  |  | 11,589     |  
|Income taxes refunded (paid)                                                                |  |      |  |                                    | (59,556    | ) |       |  | (57,963    | )     |  |  | (108,389   | )
|Other cash inflows (outflows)                                                               |  | 35   |  |                                    | (209,269   | ) |       |  | (184,627   | )     |  |  | (251,657   | )
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Net cash flows from operating activities                                                    |  |      |  |                                    | 992,126    |   |       |  | 1,715,475  |       |  |  | 1,331,439  |  
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Cash flows used in investing activities                                                     |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Cash flows used to obtain control of subsidiaries or other businesses                       |  |      |  |                                    |           |   |       |  |           |       |  |  | 518        |  
|Other cash receipts from sales of equity or debt instruments of other entities              |  |      |  |                                    | 2,969,731  |   |       |  | 519,460    |       |  |  | 524,370    |  
|Other payments to acquire equity or debt instruments of other entities                      |  |      |  |                                    | (2,706,733 | ) |       |  | (704,115   | )     |  |  | (474,656   | )
|Amounts raised from sale of property, plant and equipment                                   |  |      |  |                                    | 76,084     |   |       |  | 57,117     |       |  |  | 564,266    |  
|Purchases of property, plant and equipment                                                  |  |      |  |                                    | (694,370   | ) |       |  | (1,569,749 | )     |  |  | (1,440,445 | )
|Amounts raised from sale of intangible assets                                               |  |      |  |                                    | 1          |   |       |  | 91         |       |  |  |           |  
|Purchases of intangible assets                                                              |  |      |  |                                    | (88,587    | ) |       |  | (52,449    | )     |  |  | (55,759    | )
|Other cash inflows (outflows)                                                               |  | 35   |  |                                    | 843        |   |       |  | 10,576     |       |  |  | (17,399    | )
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Net cash flow from (used in) investing activities                                           |  |      |  |                                    | (443,031   | ) |       |  | (1,739,069 | )     |  |  | (899,105   | )
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Cash flows from (used in) financing activities                                              |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Amounts raised from issuance of shares                                                      |  |      |  |                                    | 608,496    |   |       |  |           |       |  |  | 156,321    |  
|Payments to acquire or redeem the shares of the entity                                      |  |      |  |                                    |           |   |       |  |           |       |  |  | 4,661      |  
|Amounts raised from long-term loans                                                         |  |      |  |                                    | 1,820,016  |   |       |  | 1,791,484  |       |  |  | 1,042,820  |  
|Amounts raised from short-term loans                                                        |  |      |  |                                    | 279,593    |   |       |  | 205,000    |       |  |  | 603,151    |  
|Loans repayments                                                                            |  |      |  |                                    | (2,121,130 | ) |       |  | (1,263,793 | )     |  |  | (2,315,120 | )
|Payments of finance lease liabilities                                                       |  |      |  |                                    | (314,580   | ) |       |  | (342,614   | )     |  |  | (394,131   | )
|Dividends paid                                                                              |  | 35   |  |                                    | (41,223    | ) |       |  | (35,032    | )     |  |  | (35,362    | )
|Interest paid                                                                               |  |      |  |                                    | (398,288   | ) |       |  | (383,648   | )     |  |  | (368,789   | )
|Other cash inflows (outflows)                                                               |  | 35   |  |                                    | (229,163   | ) |       |  | (99,757    | )     |  |  | (13,777    | )
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Net cash flows from (used in) financing activities                                          |  |      |  |                                    | (396,279   | ) |       |  | (128,360   | )     |  |  | (1,320,226 | )
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Net increase (decrease) in cash and cash equivalents before effect of exchanges rate
change |  |      |  |                                    | 152,816    |   |       |  | (151,954   | )     |  |  | (887,892   | )
|Effects of variation in the exchange rate on cash and cash equivalents                      |  |      |  |                                    | 43,014     |   |       |  | (83,945    | )     |  |  | (107,615   | )
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|Net increase (decrease) in cash and cash equivalents                                        |  |      |  |                                    | 195,830    |   |       |  | (235,899   | )     |  |  | (995,507   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                            |  | 35   |  |                                    | 753,497    |   |       |  | 989,396    |       |  |  | 1,984,903  |  
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                  |  | 6    |  |                                    | 949,327    |   |       |  | 753,497    |       |  |  | 989,396    |  
|                                                                                            |  |      |  |                                    |            |   |       |  |            |       |  |  |            |  

The accompanying Notes 1 to 38 form an integral part of these consolidated financial statements.



F-11



---

##### Table of Contents

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2016

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).

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.

On July 18, 2016, LATAM received the approval by Comissão de Valores Mobiliários (CVM) for a discontinuation of
Brazilian LATAM depositary receipts-BDRS level III (BDRs), supported by common shares of the Company and, consequently, our registration of the foreign issuer. On May 24, 2016, the Company reported as an Essential Fact the maturity
date May 23, 2016 deadline for holders of BDRs to express their option to keep the shares and the blockade by BM&FBOVESPA with the same date of the respective balances of shares of the holders of BDRs who chose to adhere to the procedure
for sale of shares through the procedure called Sale Facility and assigned for this purpose a theoretical value of sales in the Santiago Stock Exchange. On June 9, 2016, the Company reported that BTG Pactual Chile S.A. Stockbrokers (BTG
Pactual Chile), a chilean institution contracted by the Company, made the sale on the Santiago Stock Exchange of the shares of the respective holders who adhered to Sale Facility procedure.

As of December 31, 2015, the Companys subscribed and paid capital was represented by 545,558,101 commons shares, without par value. On
August 18, 2016, the Company held an extraordinary shareholders meeting in which it was approved to increase the capital by issuing 61,316,424 shares of payment, all of them commons shares, without par value. As of December 31, 2016,
60,849,592 shares, equivalent to this increase, had been placed, so at that date the number of shares subscribed and paid by the Company amounted to 606,407,693 shares.



F-12



---

##### Table of Contents

At December 31, 2016, the Companys capital stock is represented by 608,374,525 shares, all common
shares, without par value, which is divided into: (a) the 606,407,693 subscribed and paid shares mentioned above; And (b) 1,966,832 shares pending of subscription and payment, of which: (i) 1,500,000 shares are allocated to
compensation stock option plan; And (ii) 466,832 correspond to the balance of shares pending of placement of the last capital increase.

It should be
noted that the Companys capital stock was expressed in 613,164,243 shares, all ordinary shares, without nominal value. However, on December 21, 2016, the deadline for the subscription and payment of 4,789,718 shares that were also
destined to compensation plans for the workers expired, so the Companys capital stock was fully reduced to the already mentioned 608.374.525 shares.

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, Costa Verde Aeronáutica Tres 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, Inversiones La Espasa Dos y Cía. Ltda. and Inversiones Mineras del Cantábrico
S.A. owns 28.27% 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 December 31, 2016, the Company had a total of 1,566 registered shareholders. At that date
approximately 4.69 % of the Companys share capital was in the form of ADRs.

For the period ended December 31, 2016, the Company had an
average of 48,336 employees, ending this period with a total of 45,916 employees, spread over 8,010 Administrative employees, 4,895 in Maintenance, 15,924 in Operations, 8,970 in Cabin Crew, 3,882 in Controls Crew, and 4,235 in Sales.



F-13



---

##### Table of Contents

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



|a) | Participation rate
|-- | ------------------



|             |  |                                              |  |               |  |            |  |                      |         |  |                      |  |          |                      |  |  |          |  |  |          |         |  |       |  |          |        |  |  |          |  |  |       |         |  |  |  |          |  |  |  |          | 
|------------ |  | -------------------------------------------- |  | ------------- |  | ---------- |  | -------------------- | ------- |  | -------------------- |  | -------- | -------------------- |  |  | -------- |  |  | -------- | ------- |  | ----- |  | -------- | ------ |  |  | -------- |  |  | ----- | ------- |  |  |  | -------- |  |  |  | -------- | 
|             |  |                                              |  |               |  |            |  | As December 31, 2016 |         |  | As December 31, 2015 |  |          | As December 31, 2014 | 
|             |  |                                              |  | Country       |  | Functional |  |                      |         |  |                      |  |          |                      |  |  |          |  |  |          |         |  |       |  |          |        |  |  |          |  |  |       |        
|Tax No.      |  | Company                                      |  | of origin     |  | Currency   |  | Direct               |         |  | Indirect             |  |          | Total                |  |  | Direct   |  |  | Indirect |         |  | Total |  |          | Direct |  |  | Indirect |  |  | Total |        
|             |  |                                              |  |               |  |            |  | %                    |         |  | %                    |  |          | %                    |  |  | %        |  |  | %        |         |  | %     |  |          | %      |  |  | %        |  |  | %     |        
|96.518.860-6 |  | Latam Travel Chile S.A. and Subsidary (*)    |  | Chile         |  | US$        |  |                      | 99.9900 |  |                      |  | 0.0100   |                      |  |  | 100.0000 |  |  |          | 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 |  |  |       | 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 |  |  |       | 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  |  |  |       | 49.0000 |  |  |  | 21.0000  |  |  |  | 70.0000  | 
|Foreign      |  | Lan Chile Investments Limited and Subsidiary |  | CaymanInsland |  | US$        |  |                      | 0.0000  |  |                      |  | 0.0000   |                      |  |  | 0.0000   |  |  |          | 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  |  |  |       | 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 |  |  |       | 0.0000  |  |  |  | 100.0000 |  |  |  | 100.0000 | 
|Foreign      |  | Prime Airport Services Inc. and Subsidary    |  | U.S.A.        |  | US$        |  |                      | 0.0000  |  |                      |  | 100.0000 |                      |  |  | 100.0000 |  |  |          | 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 |  |  |       | 0.0000  |  |  |  | 100.0000 |  |  |  | 100.0000 | 
|Foreign      |  | Aircraft International Leasing Limited       |  | U.S.A.        |  | US$        |  |                      | 0.0000  |  |                      |  | 0.0000   |                      |  |  | 0.0000   |  |  |          | 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 |  |  |       | 0.0000  |  |  |  | 100.0000 |  |  |  | 100.0000 | 
|96.631.410-9 |  | Ladeco Cargo S.A.                            |  | Chile         |  | CLP        |  |                      | 0.0000  |  |                      |  | 0.0000   |                      |  |  | 0.0000   |  |  |          | 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 |  |  |       | 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 |  |  |       | 0.0000  |  |  |  | 100.0000 |  |  |  | 100.0000 | 
|96.969.690-8 |  | Lan Cargo Inversiones S.A. and Subsidary     |  | Chile         |  | US$        |  |                      | 0.0000  |  |                      |  | 100.0000 |                      |  |  | 100.0000 |  |  |          | 0.0000  |  |       |  | 100.0000 |        |  |  | 100.0000 |  |  |       | 0.0000  |  |  |  | 100.0000 |  |  |  | 100.0000 | 
|96.575.810-0 |  | Inversiones Lan S.A. and Subsidiaries        |  | Chile         |  | US$        |  |                      | 99.7100 |  |                      |  | 0.2900   |                      |  |  | 100.0000 |  |  |          | 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 |  |  |       | 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 |  |  |       | 63.0901 |  |  |  | 36.9099  |  |  |  | 100.0000 | 



|(*) | Lantours Division de Servicios Terrestres S.A. changes its name to Latam Travel Chile S.A.
|--- | ------------------------------------------------------------------------------------------

|(**) | As of December 31, 2016, indirect ownership participation on TAM S.A and subsidiaries is from Holdco I S.A., LATAM is entitled to 99,9983% of the economic rights and 49% of the rights politicians product of
provisional measure No. 714 of the Brazilian government that allows foreign capital to have up to 49% of the property.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Thus, since April 2016, LATAM Airlines Group S.A. owns 901 voting shares of Holdco I S.A., equivalent to 49% of the total shares with voting
rights of said company and TEP Chile S.A. owns 938 voting shares of Holdco I S.A., equivalent to 51% of the total voting shares of that company.



F-14



---

##### Table of Contents

|b) | Statement of financial position
|-- | -------------------------------



|             |  |                                                   |  |                                 |           |  |                         |  |           |                         |  |  |              |   |  |             |           |  |        |  |           |        |  |  |             |   |  |        |           |  |                       |  |           |             |  |  |          |   |  |  |         |   |  |  |          |   |  |  |          |  
|------------ |  | ------------------------------------------------- |  | ------------------------------- | --------- |  | ----------------------- |  | --------- | ----------------------- |  |  | ------------ | - |  | ----------- | --------- |  | ------ |  | --------- | ------ |  |  | ----------- | - |  | ------ | --------- |  | --------------------- |  | --------- | ----------- |  |  | -------- | - |  |  | ------- | - |  |  | -------- | - |  |  | -------- | -
|             |  |                                                   |  | Statement of financial position |           |  | Net Income              | 
|             |  |                                                   |  |                                 |           |  |                         |  |           |                         |  |  |              |   |  |             |           |  |        |  |           |        |  |  |             |   |  |        |           |  | For the periods ended | 
|             |  |                                                   |  | As of December 31, 2016         |           |  | As of December 31, 2015 |  |           | As of December 31, 2014 |  |  | December 31, |  
|             |  |                                                   |  |                                 |           |  |                         |  |           |                         |  |  | 2016         |   |  | 2015        |           |  | 2014   | 
|Tax No .     |  | Company                                           |  | Assets                          |           |  | Liabilities             |  |           | Equity                  |  |  | Assets       |   |  | Liabilities |           |  | Equity |  |           | Assets |  |  | Liabilities |   |  | Equity |           |  |                       |  |           | Gain/(loss) |  |  |          |  
|             |  |                                                   |  | ThUS$                           |           |  | ThUS$                   |  |           | ThUS$                   |  |  | ThUS$        |   |  | ThUS$       |           |  | ThUS$  |  |           | ThUS$  |  |  | ThUS$       |   |  | ThUS$  |           |  | ThUS$                 |  |           | ThUS$       |  |  | ThUS$    |  
|96.518.860-6 |  | Latam Travel Chile S.A. and Subsidary (*)         |  |                                 | 5,468     |  |                         |  | 2,727     |                         |  |  | 2,741        |   |  |             | 5,613     |  |        |  | 5,522     |        |  |  | 91          |   |  |        | 3,229     |  |                       |  | 2,289     |             |  |  | 940      |   |  |  | 2,650   |   |  |  | 2,341    |   |  |  | 2,078    |  
|96.763.900-1 |  | Inmobiliaria Aeronáutica S.A.                     |  |                                 | 36,756    |  |                         |  | 8,843     |                         |  |  | 27,913       |   |  |             | 39,302    |  |        |  | 14,832    |        |  |  | 24,470      |   |  |        | 39,920    |  |                       |  | 16,854    |             |  |  | 23,066   |   |  |  | 3,443   |   |  |  | 1,404    |   |  |  | (717     | )
|96.969.680-0 |  | Lan Pax Group S.A. and Subsidiaries (**)          |  |                                 | 475,763   |  |                         |  | 1,045,761 |                         |  |  | (561,472     | ) |  |             | 519,663   |  |        |  | 1,049,232 |        |  |  | (521,907    | ) |  |        | 640,020   |  |                       |  | 1,065,157 |             |  |  | (426,016 | ) |  |  | (36,331 | ) |  |  | (35,187  | ) |  |  | (114,511 | )
|Foreign      |  | Lan Perú S.A.                                     |  |                                 | 306,111   |  |                         |  | 294,912   |                         |  |  | 11,199       |   |  |             | 255,691   |  |        |  | 240,938   |        |  |  | 14,753      |   |  |        | 239,470   |  |                       |  | 228,395   |             |  |  | 11,075   |   |  |  | (2,164  | ) |  |  | 5,068    |   |  |  | 1,058    |  
|Foreign      |  | Lan Chile Investments Limited and Subsidiary (**) |  |                                 |          |  |                         |  |          |                         |  |  |             |   |  |             | 2,015     |  |        |  | 13        |        |  |  | 2,002       |   |  |        | 2,015     |  |                       |  |          |             |  |  | 2,015    |   |  |  | 23      |   |  |  | (13      | ) |  |  | 2,844    |  
|93.383.000-4 |  | Lan Cargo S.A.                                    |  |                                 | 480,908   |  |                         |  | 239,728   |                         |  |  | 241,180      |   |  |             | 483,033   |  |        |  | 217,037   |        |  |  | 265,966     |   |  |        | 575,979   |  |                       |  | 234,772   |             |  |  | 341,207  |   |  |  | (24,813 | ) |  |  | (74,408  | ) |  |  | (17,905  | )
|Foreign      |  | Connecta Corporation                              |  |                                 | 31,981    |  |                         |  | 23,525    |                         |  |  | 8,456        |   |  |             | 37,070    |  |        |  | 38,298    |        |  |  | (1,228      | ) |  |        | 27,431    |  |                       |  | 28,853    |             |  |  | (1,422   | ) |  |  | 9,684   |   |  |  | 194      |   |  |  | 740      |  
|Foreign      |  | Prime Airport Services Inc . and Subsidary (**)   |  |                                 | 7,385     |  |                         |  | 11,294    |                         |  |  | (3,909       | ) |  |             | 6,683     |  |        |  | 11,180    |        |  |  | (4,497      | ) |  |        | 18,120    |  |                       |  | 22,897    |             |  |  | (4,777   | ) |  |  | 588     |   |  |  | 279      |   |  |  | 107      |  
|96.951.280-7 |  | Transporte Aéreo S.A.                             |  |                                 | 340,940   |  |                         |  | 124,805   |                         |  |  | 216,135      |   |  |             | 331,117   |  |        |  | 122,666   |        |  |  | 208,451     |   |  |        | 367,570   |  |                       |  | 147,278   |             |  |  | 220,292  |   |  |  | 8,206   |   |  |  | 5,878    |   |  |  | (19,001  | )
|Foreign      |  | Aircraft International Leasing Limited            |  |                                 |          |  |                         |  |          |                         |  |  |             |   |  |             |          |  |        |  | 4         |        |  |  | (4          | ) |  |        |          |  |                       |  |          |             |  |  |         |   |  |  | 9       |   |  |  | (4       | ) |  |  | 2,805    |  
|96.631.520-2 |  | Fast Air Almacenes de Carga S.A.                  |  |                                 | 10,023    |  |                         |  | 3,645     |                         |  |  | 6,378        |   |  |             | 8,985     |  |        |  | 4,641     |        |  |  | 4,344       |   |  |        | 9,601     |  |                       |  | 3,912     |             |  |  | 5,689    |   |  |  | 1,717   |   |  |  | 1,811    |   |  |  | 893      |  
|Foreign      |  | Laser Cargo S.R.L.                                |  |                                 | 21        |  |                         |  | 32        |                         |  |  | (11          | ) |  |             | 27        |  |        |  | 39        |        |  |  | (12         | ) |  |        | 41        |  |                       |  | 138       |             |  |  | (97      | ) |  |  | (1      | ) |  |  | 69       |   |  |  | 12       |  
|Foreign      |  | Lan Cargo Overseas Limited and Subsidiaries (**)  |  |                                 | 54,092    |  |                         |  | 35,178    |                         |  |  | 15,737       |   |  |             | 62,406    |  |        |  | 43,759    |        |  |  | 15,563      |   |  |        | 60,634    |  |                       |  | 46,686    |             |  |  | 12,218   |   |  |  | 176     |   |  |  | 3,344    |   |  |  | (84,603  | )
|96.969.690-8 |  | Lan Cargo Inversiones S.A. and Subsidary (**)     |  |                                 | 80,644    |  |                         |  | 95,747    |                         |  |  | (13,506      | ) |  |             | 54,179    |  |        |  | 68,220    |        |  |  | (12,601     | ) |  |        | 45,589    |  |                       |  | 59,768    |             |  |  | (12,711  | ) |  |  | (910    | ) |  |  | 113      |   |  |  | (4,276   | )
|96.575.810-0 |  | Inversiones Lan S.A. and Subsidiaries (**)        |  |                                 | 10,971    |  |                         |  | 6,452     |                         |  |  | 4,452        |   |  |             | 16,512    |  |        |  | 14,676    |        |  |  | 1,828       |   |  |        | 16,035    |  |                       |  | 14,746    |             |  |  | 1,272    |   |  |  | 2,549   |   |  |  | 2,772    |   |  |  | (4,473   | )
|59.068.920-3 |  | Technical Trainning LATAM S.A.                    |  |                                 | 1,745     |  |                         |  | 284       |                         |  |  | 1,461        |   |  |             | 1,527     |  |        |  | 266       |        |  |  | 1,261       |   |  |        | 1,660     |  |                       |  | 263       |             |  |  | 1,397    |   |  |  | 73      |   |  |  | (72      | ) |  |  |         |  
|Foreign      |  | TAM S.A. and Subsidiaries (**)                    |  |                                 | 5,287,286 |  |                         |  | 4,710,308 |                         |  |  | 495,562      |   |  |             | 4,969,553 |  |        |  | 4,199,223 |        |  |  | 423,190     |   |  |        | 6,817,698 |  |                       |  | 5,809,529 |             |  |  | 912,634  |   |  |  | 2,107   |   |  |  | (183,581 | ) |  |  | 171,655  |  



|(*) | Lantours Division de Servicios Terrestres S.A. changes its name to Latam Travel Chile S.A.
|--- | ------------------------------------------------------------------------------------------

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

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; 4. Private investment
funds and 5. Avoceta Leasing Limited created to finance the pre-delivery payments on aircraft. These companies have been consolidated as required by IFRS 10.

All the entities controlled have been included in the consolidation.



F-15



---

##### Table of Contents

Changes in the scope of consolidation between January 1, 2015 and December 31, 2016, are detailed
below:



|(1) | Incorporation or acquisition of companies
|--- | -----------------------------------------



| |  |  | On October 2015, Rampas Airport Services S.A., subsidiary of Lan Pax Group S.A. increases its capital and paid in the amount of ThUS$ 6,000 by issuing new shares, changing the property of the company as follows: Lan Pax
Group S.A. increased its share to 99.99738%, Inversiones Lan S.A. decreased its stake to 0.00002% and Aerolane Líneas Aéreas Nacionales del Ecuador S.A. acquires stake for 0.0026%.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On January 2016 it was registered at the Public Registry of Commerce, the Increase in Share Capital and statutory modification for the purpose of creating a new class of shares of Lan Argentina S.A., subsidiary of Lan
Pax Group S.A., for a total of 90,000,000 Class C shares registered non-endorsable and non-voting. Lan Pax Group S.A. participated in this capital increase, changing its ownership to 4.87%, consequently, the indirect participation of
LATAM Airlines Group S.A. increases to 95.85660%
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On April 1, 2016, Multiplus Corretora de Seguros Ltda. was created, the ownership of which corresponds to 99.99% of Multiplus S.A. direct subsidiary of TAM S.A.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During period 2016 , Inversiones LAN S.A., subsidiary of LATAM Airlines Group S.A., acquired 4,767 shares of Aerovías de Integración Regional Aires S.A. a non-controlling shareholder, equivalent to
0.0914%, consequently, the indirect participation of LATAM Airlines Group S.A. increases to 99.19061%
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Dissolution of companies
|--- | ------------------------



| |  |  | In July 2015, the Company Ladeco Cargo S.A., subsidiary of Lan Cargo S.A., was dissolved.
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | During the period 2016, Lan Chile Investments Limited, subsidiary of LATAM Airlines S.A.; and Aircraft International Leasing Limited, subsidiary of Lan Cargo S.A., were dissolved.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-16



---

##### Table of Contents

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. for the period ended
December 31, 2016, have been prepared 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).

Law No. 20,780 issued on September 29, 2014, introduced
modifications to the income tax system in Chile and other tax matters. On October 17, 2014 the Chilean Superintendence of Securities and Insurance (the SVS) issued Circular No. 856, which established that the effects of the
change in the income tax rates on deferred tax assets and liabilities must be recognized directly within Retained earnings instead of the income statement as required by IAS 12. In order to comply with IAS 12, the financial statements
for the period ended December 31, 2014 are different from those presented to the SVS as the modifications introduced by Law No. 20,780 and Circular No. 856 have been recognized within the income statement. A reconciliation of such
differences in presented as follows:

As of December 31, 2014



|                                      |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|------------------------------------- |  | ---------------------------------------- | -------- | - | ---------------------------------------- |  | -------- | ---------- |  |  | -------- | -
|                                      |  | Consolidated FinancialStatements for SEC |          |   | Consolidated FinancialStatements for SVS |  |          | Difference | 
|                                      |  | ThUS$                                    |          |   | ThUS$                                    |  |          | ThUS$      | 
|Total Equity                          |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Parents ownership                    |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Retained earnings                     |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Net Income (Loss) for the period      |  |                                          | (259,985 | ) |                                          |  | (109,790 | )          |  |  | (150,195 | )
|Retained earnings for the last period |  |                                          | 796,175  |   |                                          |  | 645,980  |            |  |  | 150,195  |  
|                                      |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Total Retained earnings               |  |                                          | 536,190  |   |                                          |  | 536,190  |            |  |  |         |  
|                                      |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Non-controlling                       |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Retained earnings                     |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Net Income (Loss) for the period      |  |                                          | 32,814   |   |                                          |  | 32,829   |            |  |  | (15      | )
|Retained earnings for the last period |  |                                          | 17,099   |   |                                          |  | 17,084   |            |  |  | 15       |  
|                                      |  |                                          |          |   |                                          |  |          |            |  |  |          |  
|Total Retained earnings               |  |                                          | 49,913   |   |                                          |  | 49,913   |            |  |  |         |  
|                                      |  |                                          |          |   |                                          |  |          |            |  |  |          |  

As from the year 2016, the differences between the financial statements presented to the Chilean regulator and those prepared
to comply with IAS 12 no longer exist so no adjustment is necessary.

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



F-17



---

##### Table of Contents

The preparation of the consolidated financial statements in accordance with IFRS 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.

During 2016 the Company recorded out of period adjustments resulting in an aggregate
net decrease of US$ 18.2 million to Net income (loss) for the period for the year ended December 31, 2016. These adjustments include US$ 39.5 million (loss) resulting from an account reconciliation process initiated after
the Companys afiliate TAM S.A. and its subsidiaries completed the implementation of the SAP system. A further US$ 11.0 million (loss) reflect adjustments related to foreign exchange differences, also relating to the Companys
subsidiaries in Brazil. The balance of US$ 32.3 million (gain) includes principally the adjustment of unclaimed fees for expired tickets for the Company and its affiliates outside Brazil. Management of TAM S.A. has concluded that the out of
period adjustments that have been identified are material to the 2015 financial statements of TAM S.A., which should therefore require a restatement in Brazil. However, Management of LATAM has evaluated the impact of all out of period adjustments,
both individually and in the aggregate, and concluded that due to their relative size and to qualitative factors they are not material to the annual consolidated financial statements for 2016 of Latam Airlines Group S.A. or to any previously
reported consolidated financial statements, therefore no restatement or revision is necessary.



|(a) | Accounting pronouncements with implementation effective from January 1, 2016:
|--- | -----------------------------------------------------------------------------



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



F-18



---

##### Table of Contents

|                                                                                                                                                                                                                                                                 |  |                |  |                                                            
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | -----------------------------------------------------------
|                                                                                                                                                                                                                                                                 |  |               
|(ii)    Standards and amendments                                                                                                                                                                                                                                 |  | Date of issue  |  | Mandatory
Application: Annual periods
beginning on or after
|                                                                                                                                                                                                                                                                 |  |               
|(iii)  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 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, 2016 and which has not been effected early adoption
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



|                                                             |  |                |  |                                                            
|------------------------------------------------------------ |  | -------------- |  | -----------------------------------------------------------
|(i)     Standards and amendments                             |  | Date of issue  |  | Mandatory
Application: Annual periods
beginning on or after
|                                                             |  |               
|Amendment to IAS 7: Statement of Cash Flows.                 |  | January 2016   |  | 01/01/2017                                                 
|                                                             |  |               
|Amendment to IAS 12: Income Taxes.                           |  | January 2016   |  | 01/01/2017                                                 
|                                                             |  |               
|IFRS 9: Financial instruments.                               |  | December 2009  |  | 01/01/2018                                                 
|                                                             |  |               
|Amendment to IFRS 9: Financial instruments.                  |  | November 2013  |  | 01/01/2018                                                 
|                                                             |  |               
|IFRS 15: Revenue from contracts with customers (1).          |  | May 2014       |  | 01/01/2018                                                 
|                                                             |  |               
|Amendment to IFRS 15: Revenue from contracts with customers. |  | April 2016     |  | 01/01/2018                                                 
|                                                             |  |               
|Amendment to IFRS 2: Share-based payments                    |  | June 2016      |  | 01/01/2018                                                 
|                                                             |  |               
|Amendment to IFRS 4: Insurance contracts.                    |  | September 2016 |  | 01/01/2018                                                 
|                                                             |  |               
|Amendment to IAS 40: Investment property                     |  | December 2016  |  | 01/01/2018                                                 
|                                                             |  |               
|IFRS 16: Leases (2).                                         |  | January 2016   |  | 01/01/2019                                                 



F-19



---

##### Table of Contents

|                                                                                                                                                                                                                                                                      |  |                |  |                                                                              
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | -----------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                      |  |               
|(i)     Standards and amendments                                                                                                                                                                                                                                      |  | Date of issue  |  | Mandatory
Application: Annual periods
beginning on or after                  
|                                                                                                                                                                                                                                                                      |  |               
|Amendment to IFRS 10: Consolidated financial statements and IAS 28 Investments in associates and joint ventures.                                                                                                                                                      |  | September 2014 |  | To be determined                                                             
|                                                                                                                                                                                                                                                                      |  |               
|(ii)    Improvements                                                                                                                                                                                                                                                  |  |                |  |                                                                              
|                                                                                                                                                                                                                                                                      |  |               
|Improvements to International Financial Reporting Standards. (cycle 2012-2014) IFRS 1: First-time adoption of international financial reporting standards; IFRS 12 Disclosure of interests in other entities and IAS 28 investments in
associates and joint ventures. |  | December 2016  |  | 01/01/2017
(improvements IFRS 12)
01/01/2018 (improvements
IFRS 1 and IAS 28)
|                                                                                                                                                                                                                                                                      |  |               
|(iii)  Interpretations                                                                                                                                                                                                                                                |  |                |  |                                                                              
|                                                                                                                                                                                                                                                                      |  |               
|IFRIC 22: Foreign currency transactions and advance consideration                                                                                                                                                                                                     |  | December 2016  |  | 01/01/2018                                                                   

The Companys management believes that the adoption of the standards, amendments and interpretations described above but
not yet effective would not have a significant impact on the Companys consolidated financial statements in the year of their first application, except for IFRS 15 and IFRS 16:



|(1) | IFRS 15 Revenue from Contracts with Customers supersedes actual standard for revenue recognition that actually uses the Company, as IAS 18 Revenue and IFRIC 13 Customer Loyalty Programmes. The core principle of IFRS 15
is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standards
supersedes IFRS 15 supersedes, IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers; and SIC-31 RevenueBarter
Transactions Involving Advertising Services.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We are currently evaluating how the adoption of the revenue recognition
standard will impact our Consolidated Financial Statements. Interpretations are on-going and could have a significant impact on our implementation. We currently believe the adoption will not have a significant impact on passenger and cargo revenue
recognition. However, the impact in revenue and liability for frequent flyer program are still being analyzed.



F-20



---

##### Table of Contents

|(2) | The IFRS 16 Leases add important changes in the accounting for lessees by introducing a similar treatment to financial leases for all operating leases with a term of more than 12 months. This mean, in general terms,
that an asset should be recognized for the right to use the underlying leased assets and a liability representing its present value of payments associate to the agreement. Monthly leases payments will be replace by the asset depreciation and a
financial cost in the income statement.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We are currently evaluating how the adoption of the leases recognition standard will
impact our Consolidated Financial Statements. Interpretations are on-going and could have a material impact on our implementation. Currently, we expect that the adoption of the new lease standard will have a material impact on our consolidated
balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases.

LATAM Airlines Group S.A. and subsidiaries are still assessing these standard to determinate the effect on their Financial Statements, covenants and other
financial indicators.



|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.

Balances, transactions 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).



F-21



---

##### Table of Contents

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.
|----- | ---------------------------------------------------------------------------------------------------------------------



F-22



---

##### Table of Contents

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) | Airport slots and Loyalty program
|--- | ---------------------------------

Airport slots and the 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

(See Note 16)

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.



F-23



---

##### Table of Contents

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.



|(c) | Brands
|--- | ------

The Brands were acquired in the business combination with TAM S.A. And Subsidiaries and recognized at
fair value under IFRS. During the year 2016, the estimated useful life of the brands change from an indefinite useful life to a five-year period, the period in which the value of the brands will be amortized (See Note 15).



|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 or each time that there is evidence of
impairment. 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.



F-24



---

##### Table of Contents

|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.



F-25



---

##### Table of Contents

|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
|--- | ------------------------------------------------------------------------------------------------------------------------------------



|(c) | Derivatives that do not qualify for hedge accounting.
|--- | -----------------------------------------------------

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.



F-26



---

##### Table of Contents

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.



F-27



---

##### Table of Contents

|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.

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.



F-28



---

##### Table of Contents

|(b) | Share-based compensation
|--- | ------------------------

The compensation plans implemented based on the shares of the Company are recognized
in the consolidated financial statements in accordance with IFRS 2: Share-based payments, for plans based on the granting of options, the effect of fair value is recorded in equity with a charge to remuneration in a linear manner between the date of
grant of said options and the date on which they become irrevocable, for the plans considered as cash settled award the fair value, updated as of the closing date of each reporting period, is recorded as a liability with charge to remuneration.



|(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.



F-29



---

##### Table of Contents

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) | 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.



F-30



---

##### Table of Contents

|2.22. | Non-current assets or disposal groups classified as held for sale
|----- | -----------------------------------------------------------------

Non-current assets (or disposal groups) are
classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at 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, there is comparison between the
reserves that have been paid and required return conditions, and compensation between the parties are made 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.



F-31



---

##### Table of Contents

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 period ended at December 31, 2016, the Company recognized losses of US$ 48.0 million on fuel derivative. During the same period of 2015,
the Company recognized losses of US$ 239.4 million for the same reason.

At December 31, 2016, the market value of its fuel positions amounted
to US$ 8.1 million (positive). At December 31, 2015, this market value was US$ 56.4 million (negative).

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



|                                                      |  |            |    |   |      |  |    |       |  |  |    |  
|----------------------------------------------------- |  | ---------- | -- | - | ---- |  | -- | ----- |  |  | -- | -
|Positions as of December 31, 2016 (*)                 |  | Maturities |   
|                                                      |  | Q117       |    |   | Q217 |  |    | Total | 
|Percentage of the hedge of expected consumption value |  |            | 21 | % |      |  | 16 | %     |  |  | 18 | %
|                                                      |  |            |    |   |      |  |    |       |  |  |    |  



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



|                                                      |  |            |    |   |      |  |    |      |  |  |      |   |  |       |    |   |  |  |    |  
|----------------------------------------------------- |  | ---------- | -- | - | ---- |  | -- | ---- |  |  | ---- | - |  | ----- | -- | - |  |  | -- | -
|Positions as of December 31, 2015 (*)                 |  | Maturities |   
|                                                      |  | Q116       |    |   | Q216 |  |    | Q316 |  |  | Q416 |   |  | Total |   
|Percentage of the hedge of expected consumption value |  |            | 63 | % |      |  | 27 | %    |  |  | 27   | % |  |       | 11 | % |  |  | 32 | %
|                                                      |  |            |    |   |      |  |    |      |  |  |      |   |  |       |    |   |  |  |    |  



|(*) | 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.



F-32



---

##### Table of Contents

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 last quarter of 2017.

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 2016 and the end of December, 2015.



|                                 |  |                                                                     |  |                                                                    
|-------------------------------- |  | ------------------------------------------------------------------- |  | -------------------------------------------------------------------
|Benchmark price
(US$ per barrel) |  | Positions as of December 31, 2016effect on equity
(millions of US$) |  | Positions as of December 31, 2015effect on equity
(millions of US$)
|+5                               |  | +3.12                                                               |  | +5.41                                                              
|-5                               |  | -4.78                                                               |  | -2.78                                                              

Given the fuel hedge structure during the year 2016, which considers a hedge-free portion, a vertical fall by 5 dollars in the
JET benchmark price (the monthly daily average), would have meant an impact of approximately US$ 116.3 million in the cost of total fuel consumption for the same period. For the year 2016, a vertical rise by 5 dollars in the JET benchmark price
(the monthly daily average) would have meant an impact of approximately US$ 114.5 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 Pound Sterling (GBP).

In lower concentrations the Company is therefore exposed to fluctuations in others currencies, such as: Euro, Australian Dollar, Colombian Peso, Chilean Peso,
Argentine Peso, Paraguayan Guaraní, Mexican Peso, Peruvian Sol and New Zealand Dollar.



F-33



---

##### Table of Contents

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 2016 and 2017, and secure the operating margin, LATAM and TAM conduct hedging through FX derivatives.

At
December 31, 2016, the market value of its FX positions amounted to US$ 1.1 million (negative). At end of December 2015 the market value was of US$ 8.0 million (positive).

During the period ended at December 31, 2016 the Company recognized losses of US$ 40.3 million on hedging FX. During the same period of 2015 the
Company recognized gains of US$ 19.0 million on hedging FX.

At end of December 2016, the Company has contracted FX derivatives for US$
60 million to BRL and US$ 10 million to GBP. At end of December 2015, the Company had contracted FX for US$ 270 million to BRL, US$ 30 million to EUR and US$ 15 million to GBP.

Sensitivity analysis:

A depreciation of exchange rate
R$/ US$ 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 2017:



|                                        |  |                                            |  |                                           
|--------------------------------------- |  | ------------------------------------------ |  | ------------------------------------------
|Appreciation (depreciation)*
of R$ /GBP |  | Effect at December 31, 2016Millions of
US$ |  | Effect at December 31, 2015Millions of
US$
|-10%                                    |  | -1.02                                      |  | -21.28                                    
|+10%                                    |  | +3.44                                      |  | +16.71                                    

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 contracted hedging derivatives has conducted transactions for to reduce the net US$ liabilities held by TAM S.A.



F-34



---

##### Table of Contents

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 December 31, 2016
Millons of US$ |  | Effect at December 31, 2015
Millons of US$
|-10%                                   |  | +119.2                                     |  | +67.6                                     
|+10%                                   |  | -119.2                                     |  | -67.6                                     

(*) Appreciation (depreciation) of US$ regard to the covered currencies.

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 19).

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 December 31, 2016Millions of
US$ |  | Effect at December 31, 2015Millions of
US$
|-10%                                  |  | +351.04                                    |  | +296.41                                   
|+10%                                  |  | -287.22                                    |  | -242.52                                   



|(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).



F-35



---

##### Table of Contents

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 63% (71% at
December 31, 2015) of the debt is fixed to fluctuations in interest rate.

Rate Hedging Results:

At December 31, 2016, the market value of the positions of interest rate derivatives amounted to US$ 17.2 million (negative). At end of December 2015
this market value was US$ 39.8 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 each date.



|                                                    |  |                                                                                       |  |                                                                                      
|--------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------
|Increase (decrease)
futures curve in libor 3
months |  | Positions as of December 31, 2016effect on profit or loss before tax(millions of US$) |  | Positions as of December 31, 2015effect on profit or loss before tax(millions of US$)
|+100 basis points                                   |  | -32.16                                                                                |  | -26.70                                                                               
|-100 basis points                                   |  | +32.16                                                                                |  | +26.70                                                                               

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 December 31, 2016effect on equity(millions of US$) |  | Positions as of December 31, 2015effect on equity(millions of US$)
|+100 basis points                                   |  | +3.93                                                              |  | +8.71                                                             
|-100 basis points                                   |  | -4.03                                                              |  | -9.02                                                             

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.



F-36



---

##### Table of Contents

|(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.

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 in Brazil with travel agents).

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.



F-37



---

##### Table of Contents

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 December 31, 2016 is US$
1,486 million (US$ 1,360 million at December 31, 2015), 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 December 31, 2016, LATAM has working capital credit lines with
multiple banks and additionally has a US$ 325 million undrawn committed credit line (US$ 130 million at December 31, 2015).



F-38



---

##### Table of Contents

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2016

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



|                             |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|---------------------------- |  | ----------------------- |  | --------------- | ------- |  | -------- |  | ---- | ----------- |  |  | ------------------------- |  |  | ------------------------ | ------- |  | ------------------------- |  | --------- | ----------------- |  |  | --------- |  |  | ------------ | --------- |  | ------------ |  | --------- | ------------- |  |  | ----------- |  |  |  | ------------- |  |  |  | ---- |  |  |  | ---- | 
|Tax No.                      |  | Creditor                |  | Creditorcountry |         |  | Currency |  |      | Up to90days |  |  | Morethan90 daysto oneyear |  |  | Morethanone tothreeyears |         |  | Morethanthree tofiveyears |  |           | Morethanfiveyears |  |  | Total     |  |  | Nominalvalue |           |  | Amortization |  |           | Effectiverate |  |  | Nominalrate | 
|                             |  |                         |  |                 |         |  |          |  |      | ThUS $      |  |  | ThUS $                    |  |  | ThUS $                   |         |  | ThUS $                    |  |           | ThUS $            |  |  | ThUS $    |  |  | ThUS $       |           |  |              |  |           | %             |  |  | %           | 
|Loans to exporters           |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|97.032.000-8                 |  | BBVA                    |  |                 | Chile   |  |          |  | US $ |             |  |  | 75,212                    |  |  |                          |        |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 75,212    |               |  |  | 75,000      |  |  |  | At Expiration |  |  |  | 1.85 |  |  |  | 1.85 | 
|97.032.000-8                 |  | BBVA                    |  |                 | Chile   |  |          |  | UF   |             |  |  |                          |  |  |                          | 52,675  |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 52,675    |               |  |  | 50,381      |  |  |  | At Expiration |  |  |  | 5.23 |  |  |  | 4.43 | 
|97.036.000-K                 |  | SANTANDER               |  |                 | Chile   |  |          |  | US $ |             |  |  | 30,193                    |  |  |                          |        |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 30,193    |               |  |  | 30,000      |  |  |  | At Expiration |  |  |  | 2.39 |  |  |  | 2.39 | 
|97.030.000-7                 |  | ESTADO                  |  |                 | Chile   |  |          |  | US $ |             |  |  | 40,191                    |  |  |                          |        |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 40,191    |               |  |  | 40,000      |  |  |  | At Expiration |  |  |  | 1.91 |  |  |  | 1.91 | 
|97.003.000-K                 |  | BANCODOBRASIL           |  |                 | Chile   |  |          |  | US $ |             |  |  | 72,151                    |  |  |                          |        |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 72,151    |               |  |  | 70,000      |  |  |  | At Expiration |  |  |  | 3.08 |  |  |  | 3.08 | 
|97.951.000-4                 |  | HSBC                    |  |                 | Chile   |  |          |  | US $ |             |  |  | 12,054                    |  |  |                          |        |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 12,054    |               |  |  | 12,000      |  |  |  | At Expiration |  |  |  | 1.79 |  |  |  | 1.79 | 
|Obligations with the public  |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|97.023.000-9                 |  | CORPBANCA               |  |                 | Chile   |  |          |  | UF   |             |  |  | 20,808                    |  |  |                          | 61,112  |  |                           |  | 63,188    |                   |  |  | 16,529    |  |  |              |          |  |              |  | 161,637   |               |  |  | 153,355     |  |  |  | Quarterly     |  |  |  | 4.06 |  |  |  | 4.06 | 
|0-E                          |  | BLADEX                  |  |                 | U.S.A.  |  |          |  | US $ |             |  |  |                          |  |  |                          | 14,579  |  |                           |  | 31,949    |                   |  |  |          |  |  |              |          |  |              |  | 46,528    |               |  |  | 42,500      |  |  |  | Semiannual    |  |  |  | 5.14 |  |  |  | 5.14 | 
|0-E                          |  | DVB BANK SE             |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 145                       |  |  |                          | 199     |  |                           |  | 28,911    |                   |  |  |          |  |  |              |          |  |              |  | 29,255    |               |  |  | 28,911      |  |  |  | Quarterly     |  |  |  | 1.86 |  |  |  | 1.86 | 
|97.036.000-K                 |  | SANTANDER               |  |                 | Chile   |  |          |  | US $ |             |  |  | 1,497                     |  |  |                          | 4,308   |  |                           |  | 160,556   |                   |  |  |          |  |  |              |          |  |              |  | 166,361   |               |  |  | 158,194     |  |  |  | Quarterly     |  |  |  | 3.55 |  |  |  | 3.55 | 
|Obligations with the public  |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|0-E                          |  | BANK OF NEWYORK         |  |                 | U.S.A.  |  |          |  | US $ |             |  |  |                          |  |  |                          | 36,250  |  |                           |  | 72,500    |                   |  |  | 518,125   |  |  |              |          |  |              |  | 626,875   |               |  |  | 500,000     |  |  |  | At Expiration |  |  |  | 7.77 |  |  |  | 7.25 | 
|Guaranteed obligations       |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|0-E                          |  | CREDIT AGRICOLE         |  |                 | France  |  |          |  | US $ |             |  |  | 11,728                    |  |  |                          | 30,916  |  |                           |  | 65,008    |                   |  |  | 33,062    |  |  |              | 3,760     |  |              |  | 144,474   |               |  |  | 138,417     |  |  |  | Quarterly     |  |  |  | 2.21 |  |  |  | 1.81 | 
|0-E                          |  | BNP PARIBAS             |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 13,805                    |  |  |                          | 56,324  |  |                           |  | 142,178   |                   |  |  | 141,965   |  |  |              | 376,894   |  |              |  | 731,166   |               |  |  | 628,118     |  |  |  | Quarterly     |  |  |  | 2.97 |  |  |  | 2.96 | 
|0-E                          |  | WELLS FARGO             |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 35,896                    |  |  |                          | 107,830 |  |                           |  | 287,878   |                   |  |  | 288,338   |  |  |              | 411,076   |  |              |  | 1,131,018 |               |  |  | 1,056,345   |  |  |  | Quarterly     |  |  |  | 2.37 |  |  |  | 1.68 | 
|0-E                          |  | WILMINGTON TRUSTCOMPANY |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 25,833                    |  |  |                          | 79,043  |  |                           |  | 206,952   |                   |  |  | 200,674   |  |  |              | 733,080   |  |              |  | 1,245,582 |               |  |  | 967,336     |  |  |  | Quarterly     |  |  |  | 4.25 |  |  |  | 4.25 | 
|0-E                          |  | CITIBANK                |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 20,224                    |  |  |                          | 61,020  |  |                           |  | 164,077   |                   |  |  | 166,165   |  |  |              | 184,053   |  |              |  | 595,539   |               |  |  | 548,168     |  |  |  | Quarterly     |  |  |  | 2.72 |  |  |  | 1.96 | 
|97.036.000-K                 |  | SANTANDER               |  |                 | Chile   |  |          |  | US $ |             |  |  | 5,857                     |  |  |                          | 17,697  |  |                           |  | 47,519    |                   |  |  | 48,024    |  |  |              | 26,448    |  |              |  | 145,545   |               |  |  | 138,574     |  |  |  | Quarterly     |  |  |  | 1.98 |  |  |  | 1.44 | 
|0-E                          |  | BTMU                    |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 3,163                     |  |  |                          | 9,568   |  |                           |  | 25,752    |                   |  |  | 26,117    |  |  |              | 27,270    |  |              |  | 91,870    |               |  |  | 85,990      |  |  |  | Quarterly     |  |  |  | 2.31 |  |  |  | 1.72 | 
|0-E                          |  | APPLE BANK              |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 1,551                     |  |  |                          | 4,712   |  |                           |  | 12,693    |                   |  |  | 12,891    |  |  |              | 13,857    |  |              |  | 45,704    |               |  |  | 42,754      |  |  |  | Quarterly     |  |  |  | 2.29 |  |  |  | 1.69 | 
|0-E                          |  | US BANK                 |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 18,563                    |  |  |                          | 55,592  |  |                           |  | 147,357   |                   |  |  | 146,045   |  |  |              | 230,747   |  |              |  | 598,304   |               |  |  | 532,608     |  |  |  | Quarterly     |  |  |  | 3.99 |  |  |  | 2.81 | 
|0-E                          |  | DEUTSCHE BANK           |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 6,147                     |  |  |                          | 18,599  |  |                           |  | 31,640    |                   |  |  | 31,833    |  |  |              | 48,197    |  |              |  | 136,416   |               |  |  | 117,263     |  |  |  | Quarterly     |  |  |  | 3.86 |  |  |  | 3.86 | 
|0-E                          |  | NATIXIS                 |  |                 | France  |  |          |  | US $ |             |  |  | 14,779                    |  |  |                          | 44,826  |  |                           |  | 116,809   |                   |  |  | 96,087    |  |  |              | 206,036   |  |              |  | 478,537   |               |  |  | 422,851     |  |  |  | Quarterly     |  |  |  | 2.60 |  |  |  | 2.57 | 
|0-E                          |  | PK AirFinance           |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 2,265                     |  |  |                          | 6,980   |  |                           |  | 19,836    |                   |  |  | 25,610    |  |  |              | 3,153     |  |              |  | 57,844    |               |  |  | 54,787      |  |  |  | Monthly       |  |  |  | 2.40 |  |  |  | 2.40 | 
|0-E                          |  | KFWIP EX-BANK           |  |                 | Germany |  |          |  | US $ |             |  |  | 2,503                     |  |  |                          | 7,587   |  |                           |  | 18,772    |                   |  |  | 9,178     |  |  |              |          |  |              |  | 38,040    |               |  |  | 36,191      |  |  |  | Quarterly     |  |  |  | 2.55 |  |  |  | 2.55 | 
|0-E                          |  | AIRBUS FINANCIAL        |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 1,982                     |  |  |                          | 5,972   |  |                           |  | 16,056    |                   |  |  | 7,766     |  |  |              |          |  |              |  | 31,776    |               |  |  | 30,199      |  |  |  | Monthly       |  |  |  | 2.49 |  |  |  | 2.49 | 
|0-E                          |  | INVESTEC                |  |                 | England |  |          |  | US $ |             |  |  | 1,880                     |  |  |                          | 10,703  |  |                           |  | 25,369    |                   |  |  | 25,569    |  |  |              | 23,880    |  |              |  | 87,401    |               |  |  | 72,202      |  |  |  | Semiannual    |  |  |  | 5.67 |  |  |  | 5.67 | 
|Other guaranteed obligations |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|0-E                          |  | CREDITAGRICOLE          |  |                 | France  |  |          |  | US $ |             |  |  | 1,501                     |  |  |                          | 4,892   |  |                           |  | 268,922   |                   |  |  |          |  |  |              |          |  |              |  | 275,315   |               |  |  | 256,860     |  |  |  | At Expiration |  |  |  | 2.85 |  |  |  | 2.85 | 
|Financial leases             |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|0-E                          |  | ING                     |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 5,889                     |  |  |                          | 17,671  |  |                           |  | 34,067    |                   |  |  | 12,134    |  |  |              |          |  |              |  | 69,761    |               |  |  | 63,698      |  |  |  | Quarterly     |  |  |  | 5.62 |  |  |  | 4.96 | 
|0-E                          |  | CREDITAGRICOLE          |  |                 | France  |  |          |  | US $ |             |  |  | 1,788                     |  |  |                          | 5,457   |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 7,245     |               |  |  | 7,157       |  |  |  | Quarterly     |  |  |  | 1.85 |  |  |  | 1.85 | 
|0-E                          |  | CITIBANK                |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 6,083                     |  |  |                          | 18,250  |  |                           |  | 48,667    |                   |  |  | 14,262    |  |  |              |          |  |              |  | 87,262    |               |  |  | 78,249      |  |  |  | Quarterly     |  |  |  | 6.40 |  |  |  | 5.67 | 
|0-E                          |  | PEFCO                   |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 17,558                    |  |  |                          | 50,593  |  |                           |  | 67,095    |                   |  |  | 3,899     |  |  |              |          |  |              |  | 139,145   |               |  |  | 130,811     |  |  |  | Quarterly     |  |  |  | 5.39 |  |  |  | 4.79 | 
|0-E                          |  | BNP PARIBAS             |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 13,744                    |  |  |                          | 41,508  |  |                           |  | 79,165    |                   |  |  | 22,474    |  |  |              |          |  |              |  | 156,891   |               |  |  | 149,119     |  |  |  | Quarterly     |  |  |  | 3.69 |  |  |  | 3.26 | 
|0-E                          |  | WELLS FARGO             |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 5,591                     |  |  |                          | 16,751  |  |                           |  | 44,615    |                   |  |  | 44,514    |  |  |              | 1,880     |  |              |  | 113,351   |               |  |  | 103,326     |  |  |  | Quarterly     |  |  |  | 3.98 |  |  |  | 3.54 | 
|0-E                          |  | DVB BANK S E            |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 4,773                     |  |  |                          | 9,541   |  |                           |  |          |                   |  |  |          |  |  |              |          |  |              |  | 14,314    |               |  |  | 14,127      |  |  |  | Quarterly     |  |  |  | 2.57 |  |  |  | 2.57 | 
|0-E                          |  | RRP F ENGINE            |  |                 | England |  |          |  | US $ |             |  |  |                          |  |  |                          |        |  |                           |  | 8,248     |                   |  |  | 8,248     |  |  |              | 12,716    |  |              |  | 29,212    |               |  |  | 25,274      |  |  |  | Monthly       |  |  |  | 2.35 |  |  |  | 2.35 | 
|Other loans                  |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|0-E                          |  | BOEING                  |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 163                       |  |  |                          | 320     |  |                           |  | 26,214    |                   |  |  |          |  |  |              |          |  |              |  | 26,697    |               |  |  | 26,214      |  |  |  | At Expiration |  |  |  | 2.35 |  |  |  | 2.35 | 
|0-E                          |  | CITIBANK (*)            |  |                 | U.S.A.  |  |          |  | US $ |             |  |  | 25,802                    |  |  |                          | 77,795  |  |                           |  | 207,001   |                   |  |  | 103,341   |  |  |              |          |  |              |  | 413,939   |               |  |  | 370,389     |  |  |  | Quarterly     |  |  |  | 6.00 |  |  |  | 6.00 | 
|Hedging derivatives          |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|-                            |  | OTHERS                  |  |                 |        |  |          |  | US $ |             |  |  | 7,364                     |  |  |                          | 15,479  |  |                           |  | 7,846     |                   |  |  |          |  |  |              |          |  |              |  | 30,689    |               |  |  |            |  |  |  |              |  |  |  |     |  |  |  |     | 
|                             |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 
|                             |  | Total                   |  |                 |         |  |          |  |      |             |  |  | 508,683                   |  |  |                          | 944,749 |  |                           |  | 2,476,840 |                   |  |  | 2,002,850 |  |  |              | 2,303,047 |  |              |  | 8,236,169 |               |  |  | 7,257,368   |  |  |  |               |  |  |  |      |  |  |  |      | 
|                             |  |                         |  |                 |         |  |          |  |      |             |  |  |                           |  |  |                          |         |  |                           |  |           |                   |  |  |           |  |  |              |           |  |              |  |           |               |  |  |             |  |  |  |               |  |  |  |      |  |  |  |      | 



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



F-39



---

##### Table of Contents

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2016

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



|                           |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|-------------------------- |  | -------- | ------------------------------- |  | --------------- |  | --------- | -------- |  |  | ----------- |  |  | -------------------------- | ------ |  | ------------------------- |  | ------- | -------------------------- |  |  | ------------------ |  |  | ----- | ------- |  | ------------ |  | ------ | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | -------------------- |  |  |  | ----- |  |  |  | ----- | 
|Tax No.                    |  | Creditor |                                 |  | Creditorcountry |  |           | Currency |  |  | Up to90days |  |  | More than90 daysto oneyear |        |  | More thanone tothreeyears |  |         | More thanthree tofiveyears |  |  | More thanfiveyears |  |  | Total |         |  | Nominalvalue |  |        | Amortization |  |  | Effectiverate |  |  | Nominalrate |          
|                           |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            | ThUS$  |  |                           |  | ThUS$   |                            |  |  | ThUS$              |  |  |       | ThUS$   |  |              |  | ThUS$  |              |  |  | ThUS$         |  |  |             | ThUS$     |  |  |  |                      |  |  |  | %     |  |  |  | %     | 
|Bank loans                 |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  | 
|0-E                        |  |          | NEDERLANDSCHE                   |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  |          | CREDIETVERZEKERINGMAATS CHAPPIJ |  |                 |  | Holland   |          |  |  | US $        |  |  |                            | 179    |  |                           |  | 493     |                            |  |  | 1,315              |  |  |       | 1,314   |  |              |  | 54     |              |  |  | 3,355         |  |  |             | 2,882     |  |  |  | Monthly              |  |  |  | 6.01  |  |  |  | 6.01  | 
|0-E                        |  |          | CITIBANK                        |  |                 |  | U.S .A.   |          |  |  | US $        |  |  |                            | 1,528  |  |                           |  | 203,150 |                            |  |  |                   |  |  |       |        |  |              |  |       |              |  |  | 204,678       |  |  |             | 200,000   |  |  |  | At Expiration        |  |  |  | 3.39  |  |  |  | 3.14  | 
|Obligation with the public |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  | 
|0-E                        |  |          | THE BANK OFNEWYORK              |  |                 |  | U.S .A.   |          |  |  | US $        |  |  |                            |       |  |                           |  | 352,938 |                            |  |  | 83,750             |  |  |       | 562,813 |  |              |  |       |              |  |  | 999,501       |  |  |             | 800,000   |  |  |  | At Expiration        |  |  |  | 8.17  |  |  |  | 8.00  | 
|Financial leases           |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  | 
|0-E                        |  |          | AFS INVESTMENT IXLLC            |  |                 |  | U.S.A.    |          |  |  | US $        |  |  |                            | 2,733  |  |                           |  | 7,698   |                            |  |  | 20,522             |  |  |       | 8,548   |  |              |  |       |              |  |  | 39,501        |  |  |             | 35,448    |  |  |  | Monthly              |  |  |  | 1.25  |  |  |  | 1.25  | 
|0-E                        |  |          | DVB BANK SE                     |  |                 |  | U.S .A.   |          |  |  | US $        |  |  |                            | 120    |  |                           |  | 165     |                            |  |  |                   |  |  |       |        |  |              |  |       |              |  |  | 285           |  |  |             | 282       |  |  |  | Monthly              |  |  |  | 2.50  |  |  |  | 2.50  | 
|0-E                        |  |          | GENERALELECTRICCAPITAL          |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  |          | CORPORATION                     |  |                 |  | U.S .A.   |          |  |  | US $        |  |  |                            | 3,852  |  |                           |  | 5,098   |                            |  |  |                   |  |  |       |        |  |              |  |       |              |  |  | 8,950         |  |  |             | 8,846     |  |  |  | Monthly              |  |  |  | 2.30  |  |  |  | 2.30  | 
|0-E                        |  |          | KFWIP EX-BANK                   |  |                 |  | Germany   |          |  |  | US $        |  |  |                            | 592    |  |                           |  | 1,552   |                            |  |  |                   |  |  |       |        |  |              |  |       |              |  |  | 2,144         |  |  |             | 2,123     |  |  |  | Monthly/Quarterly    |  |  |  | 2.80  |  |  |  | 2.80  | 
|0-E                        |  |          | NATIXIS                         |  |                 |  | France    |          |  |  | US $        |  |  |                            | 4,290  |  |                           |  | 7,837   |                            |  |  | 22,834             |  |  |       | 40,968  |  |              |  | 41,834 |              |  |  | 117,763       |  |  |             | 107,443   |  |  |  | Quarterly/Semiannual |  |  |  | 4.90  |  |  |  | 4.90  | 
|0-E                        |  |          | WACAPOULEASINGS.A.              |  |                 |  | Luxemburg |          |  |  | US $        |  |  |                            | 833    |  |                           |  | 2,385   |                            |  |  | 6,457              |  |  |       | 6,542   |  |              |  |       |              |  |  | 16,217        |  |  |             | 14,754    |  |  |  | Quarterly            |  |  |  | 3.00  |  |  |  | 3.00  | 
|0-E                        |  |          | SOCIÉTÉGÉNÉRALEMILAN BRANCH     |  |                 |  | Italy     |          |  |  | US $        |  |  |                            | 11,875 |  |                           |  | 32,116  |                            |  |  | 85,995             |  |  |       | 171,553 |  |              |  |       |              |  |  | 301,539       |  |  |             | 279,335   |  |  |  | Quarterly            |  |  |  | 4.18  |  |  |  | 4.11  | 
|0-E                        |  |          | BANCO IBMS .A                   |  |                 |  | Brazil    |          |  |  | BRL         |  |  |                            | 380    |  |                           |  | 1,161   |                            |  |  | 35                 |  |  |       |        |  |              |  |       |              |  |  | 1,576         |  |  |             | 1,031     |  |  |  | Monthly              |  |  |  | 13.63 |  |  |  | 13.63 | 
|0-E                        |  |          | HP FINANCIALSERVICE             |  |                 |  | Brazil    |          |  |  | BRL         |  |  |                            | 225    |  |                           |  |        |                            |  |  |                   |  |  |       |        |  |              |  |       |              |  |  | 225           |  |  |             | 222       |  |  |  | Monthly              |  |  |  | 10.02 |  |  |  | 10.02 | 
|0-E                        |  |          | SOCIÉTÉGÉNÉRALE                 |  |                 |  | France    |          |  |  | BRL         |  |  |                            | 146    |  |                           |  | 465     |                            |  |  | 176                |  |  |       |        |  |              |  |       |              |  |  | 787           |  |  |             | 519       |  |  |  | Monthly              |  |  |  | 13.63 |  |  |  | 13.63 | 
|                           |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  |          | Total                           |  |                 |  |           |          |  |  |             |  |  |                            | 26,753 |  |                           |  | 615,058 |                            |  |  | 221,084            |  |  |       | 791,738 |  |              |  | 41,888 |              |  |  | 1,696,521     |  |  |             | 1,452,885 |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  |          |                                 |  |                 |  |           |          |  |  |             |  |  |                            |        |  |                           |  |         |                            |  |  |                    |  |  |       |         |  |              |  |        |              |  |  |               |  |  |             |           |  |  |  |                      |  |  |  |       |  |  |  |       | 



F-40



---

##### Table of Contents

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2016

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



|                                             |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            |           |  |                          |  |           |                           |  |  |                   |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |   |  |  |  |   |  |  |  |   | 
|-------------------------------------------- |  | -------- | ------------------------------------------------ |  | --------------- |  | --------- | -------- |  |  | ---------------- |  |  | -------------------------- | --------- |  | ------------------------ |  | --------- | ------------------------- |  |  | ----------------- |  |  | ----- | --------- |  | ------------ |  | --------- | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | - |  |  |  | - |  |  |  | - | 
|Tax No .                                     |  | Creditor |                                                  |  | Creditorcountry |  |           | Currency |  |  | Up to90days      |  |  | More than90 daysto oneyear |           |  | Morethanone tothreeyears |  |           | Morethan threetofiveyears |  |  | Morethanfiveyears |  |  | Total |           |  | Nominalvalue |  |           | Amortization |  |  | Effectiverate |  |  | Nominalrate |          
|                                             |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            | ThUS$     |  |                          |  | ThUS$     |                           |  |  | ThUS$             |  |  |       | ThUS$     |  |              |  | ThUS$     |              |  |  | ThUS$         |  |  |             | ThUS$     |  |  |  |   |  |  |  | % |  |  |  | % | 
|Trade and other accounts payables            |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            |           |  |                          |  |           |                           |  |  |                   |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  | 
|                                            |  |          | OTHERS                                           |  |                 |  | OTHERS    |          |  |  | US$              |  |  |                            | 549,897   |  |                          |  | 21,215    |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 571,112       |  |  |             | 571,112   |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |          |                                                  |  |                 |  |           |          |  |  | CLP              |  |  |                            | 48,842    |  |                          |  | (30       | )                         |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 48,812        |  |  |             | 48,812    |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |          |                                                  |  |                 |  |           |          |  |  | BRL              |  |  |                            | 346 ,037  |  |                          |  | 27        |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 346,064       |  |  |             | 346,064   |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |          |                                                  |  |                 |  |           |          |  |  | Other currencies |  |  |                            | 140 ,471  |  |                          |  | 11,467    |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 151,938       |  |  |             | 151,938   |  |  |  |  |  |  |  |  |  |  |  |  | 
|Accounts payable to related parties currents |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            |           |  |                          |  |           |                           |  |  |                   |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  | 
|0-E                                          |  |          | ConsultoríaAdministrativaProfesionalS.A. de C.V. |  |                 |  | Mexico    |          |  |  | MXN              |  |  |                            | 170       |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 170           |  |  |             | 170       |  |  |  |  |  |  |  |  |  |  |  |  | 
|78.997.060-2                                 |  |          | Viajes FalabellaLtda.                            |  |                 |  | Chile     |          |  |  | CLP              |  |  |                            | 46        |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 46            |  |  |             | 46        |  |  |  |  |  |  |  |  |  |  |  |  | 
|0 -E                                         |  |          | TAM AviaçãoExecutiva eTaxi AéreoS.A.             |  |                 |  | Brazil    |          |  |  | BRL              |  |  |                            | 28        |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 28            |  |  |             | 28        |  |  |  |  |  |  |  |  |  |  |  |  | 
|65.216.000K                                  |  |          | ComunidadMujer                                   |  |                 |  | Chile     |          |  |  | CLP              |  |  |                            | 13        |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 13            |  |  |             | 13        |  |  |  |  |  |  |  |  |  |  |  |  | 
|78.591.3701                                  |  |          | Bethia S.A. yFiliales                            |  |                 |  | Chile     |          |  |  | CLP              |  |  |                            | 6         |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 6             |  |  |             | 6         |  |  |  |  |  |  |  |  |  |  |  |  | 
|79.773.4403                                  |  |          | Trans portes SanFelipe S:A.                      |  |                 |  | Chile     |          |  |  | CLP              |  |  |                            | 4         |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 4             |  |  |             | 4         |  |  |  |  |  |  |  |  |  |  |  |  | 
|0 -E                                         |  |          | InversoraAeronáuticaArgentina                    |  |                 |  | Argentina |          |  |  | US$              |  |  |                            | 2         |  |                          |  |          |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 2             |  |  |             | 2         |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            |           |  |                          |  |           |                           |  |  |                   |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  |          | Total                                            |  |                 |  |           |          |  |  |                  |  |  |                            | 1,085,516 |  |                          |  | 32,679    |                           |  |  |                  |  |  |       |          |  |              |  |          |              |  |  | 1,118,195     |  |  |             | 1,118,195 |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            |           |  |                          |  |           |                           |  |  |                   |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  |          | Total consolidated                               |  |                 |  |           |          |  |  |                  |  |  |                            | 1,620,952 |  |                          |  | 1,592,486 |                           |  |  | 2,697,924         |  |  |       | 2,794,588 |  |              |  | 2,344,935 |              |  |  | 11,050,885    |  |  |             | 9,828,448 |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  |          |                                                  |  |                 |  |           |          |  |  |                  |  |  |                            |           |  |                          |  |           |                           |  |  |                   |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |   |  |  |  |   |  |  |  |   | 



F-41



---

##### Table of Contents

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2015

Debtor: LATAM Airlines Group S.A. and Subsidiaries , Tax No . 89 .862.200 -2 Chile.



|                             |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  |  |  |      | 
|---------------------------- |  | -------- | --------------- |  | --------------- |  | ------- | -------- |  |  | ----------- |  |  | ------------------------- | ------- |  | ------------------------ |  | ------- | ------------------------- |  |  | ------------------ |  |  | ----- | --------- |  | ------------ |  | --------- | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | ------------- |  |  |  | ---- |  |  |  | ---- | 
|Tax No .                     |  | Creditor |                 |  | Creditorcountry |  |         | Currency |  |  | Up to90days |  |  | Morethan90 daysto oneyear |         |  | Morethan onetothreeyears |  |         | Morethan threetofiveyears |  |  | Morethan fiveyears |  |  | Total |           |  | Nominalvalue |  |           | Amortization |  |  | Effectiverate |  |  | Nominalrate |          
|                             |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           | ThUS$   |  |                          |  | ThUS$   |                           |  |  | ThUS$              |  |  |       | ThUS$     |  |              |  | ThUS$     |              |  |  | ThUS$         |  |  |             | ThUS$     |  |  |  |               |  |  |  | %    |  |  |  | %    | 
|Loans to exporters           |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  | 
|97.032.000-8                 |  |          | BBVA            |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 100,253 |  |                          |  |        |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 100,253       |  |  |             | 100,000   |  |  |  | At Expiration |  |  |  | 1.00 |  |  |  | 1.00 | 
|97.036.000-K                 |  |          | SANTANDER       |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 100,363 |  |                          |  |        |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 100,363       |  |  |             | 100,000   |  |  |  | At Expiration |  |  |  | 1.44 |  |  |  | 1.44 | 
|97.030.000-7                 |  |          | ESTADO          |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 55,172  |  |                          |  |        |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 55,172        |  |  |             | 55,000    |  |  |  | At Expiration |  |  |  | 1.05 |  |  |  | 1.05 | 
|97.004.000-5                 |  |          | BANCO DECHILE   |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 50,059  |  |                          |  |        |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 50,059        |  |  |             | 50,000    |  |  |  | At Expiration |  |  |  | 1.42 |  |  |  | 1.42 | 
|97.003.000-K                 |  |          | BANCO DOBRASIL  |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 70,133  |  |                          |  |        |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 70,133        |  |  |             | 70,000    |  |  |  | At Expiration |  |  |  | 1.18 |  |  |  | 1.18 | 
|97.951.000-4                 |  |          | HSBC            |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 12,020  |  |                          |  |        |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 12,020        |  |  |             | 12,000    |  |  |  | At Expiration |  |  |  | 0.66 |  |  |  | 0.66 | 
|Bank loans                   |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  |  |  |      | 
|97.023.000-9                 |  |          | CORPBANCA       |  |                 |  | Chile   |          |  |  | UF          |  |  |                           | 19,873  |  |                          |  | 58,407  |                           |  |  | 112,252            |  |  |       | 35,953    |  |              |  |          |              |  |  | 226,485       |  |  |             | 211,135   |  |  |  | Quarterly     |  |  |  | 4.18 |  |  |  | 4.18 | 
|0 -E                         |  |          | BANCOBLADEX     |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           |        |  |                          |  | 9,702   |                           |  |  | 30,526             |  |  |       | 15,514    |  |              |  |          |              |  |  | 55,742        |  |  |             | 50,000    |  |  |  | Semiannual    |  |  |  | 4.58 |  |  |  | 4.58 | 
|0 -E                         |  |          | DVBBANKSE       |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 146     |  |                          |  | 430     |                           |  |  | 154,061            |  |  |       |          |  |              |  |          |              |  |  | 154,637       |  |  |             | 153,514   |  |  |  | Quarterly     |  |  |  | 1.67 |  |  |  | 1.67 | 
|97.036.000-K                 |  |          | SANTANDER       |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 1,053   |  |                          |  |        |                           |  |  | 226,712            |  |  |       |          |  |              |  |          |              |  |  | 227,765       |  |  |             | 226,712   |  |  |  | Quarterly     |  |  |  | 2.24 |  |  |  | 2.24 | 
|Obligations with the public  |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  | 
|0 -E                         |  |          | BANK OFNEWYORK  |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           |        |  |                          |  | 36,250  |                           |  |  | 72,500             |  |  |       | 554,375   |  |              |  |          |              |  |  | 663,125       |  |  |             | 500,000   |  |  |  | At Expiration |  |  |  | 7.77 |  |  |  | 7.25 | 
|Guaranteed obligations       |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  | 
|0 -E                         |  |          | CREDITAGRICOLE  |  |                 |  | Francia |          |  |  | US$         |  |  |                           | 31,813  |  |                          |  | 92,167  |                           |  |  | 210,541            |  |  |       | 55,381    |  |              |  | 12,677    |              |  |  | 402,579       |  |  |             | 389,027   |  |  |  | Quarterly     |  |  |  | 1.83 |  |  |  | 1.66 | 
|0 -E                         |  |          | BNPPARIBAS      |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 9,899   |  |                          |  | 29,975  |                           |  |  | 82,094             |  |  |       | 83,427    |  |              |  | 148,904   |              |  |  | 354,299       |  |  |             | 319,397   |  |  |  | Quarterly     |  |  |  | 2.29 |  |  |  | 2.22 | 
|0 -E                         |  |          | WELLSFARGO      |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 35,636  |  |                          |  | 106,990 |                           |  |  | 285,967            |  |  |       | 286,959   |  |              |  | 554,616   |              |  |  | 1,270,168     |  |  |             | 1,180,751 |  |  |  | Quarterly     |  |  |  | 2.27 |  |  |  | 1.57 | 
|0 -E                         |  |          | WILMINGTONTRUST |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 6,110   |  |                          |  | 69,232  |                           |  |  | 135,334            |  |  |       | 133,363   |  |              |  | 539,019   |              |  |  | 883,058       |  |  |             | 675,696   |  |  |  | Quarterly     |  |  |  | 4.25 |  |  |  | 4.25 | 
|0 -E                         |  |          | CITIBANK        |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 19,478  |  |                          |  | 58,741  |                           |  |  | 158,957            |  |  |       | 162,459   |  |              |  | 266,273   |              |  |  | 665,908       |  |  |             | 617,002   |  |  |  | Quarterly     |  |  |  | 2.40 |  |  |  | 1.64 | 
|97.036.000-K                 |  |          | SANTANDER       |  |                 |  | Chile   |          |  |  | US$         |  |  |                           | 5,585   |  |                          |  | 16,848  |                           |  |  | 45,653             |  |  |       | 46,740    |  |              |  | 50,124    |              |  |  | 164,950       |  |  |             | 159,669   |  |  |  | Quarterly     |  |  |  | 1.47 |  |  |  | 0.93 | 
|0 -E                         |  |          | BTMU            |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 2,992   |  |                          |  | 9,035   |                           |  |  | 24,541             |  |  |       | 25,214    |  |              |  | 39,930    |              |  |  | 101,712       |  |  |             | 96,954    |  |  |  | Quarterly     |  |  |  | 1.82 |  |  |  | 1.22 | 
|0 -E                         |  |          | APPLEBANK       |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 1,471   |  |                          |  | 4,445   |                           |  |  | 12,079             |  |  |       | 12,431    |  |              |  | 20,099    |              |  |  | 50,525        |  |  |             | 48,142    |  |  |  | Quarterly     |  |  |  | 1.72 |  |  |  | 1.12 | 
|0 -E                         |  |          | US BANK         |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 18,643  |  |                          |  | 55,824  |                           |  |  | 147,994            |  |  |       | 146,709   |  |              |  | 303,600   |              |  |  | 672,770       |  |  |             | 591,039   |  |  |  | Quarterly     |  |  |  | 3.99 |  |  |  | 2.81 | 
|0 -E                         |  |          | DEUTSCHEBANK    |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 5,923   |  |                          |  | 17,881  |                           |  |  | 39,185             |  |  |       | 30,729    |  |              |  | 63,268    |              |  |  | 156,986       |  |  |             | 136,698   |  |  |  | Quarterly     |  |  |  | 3.40 |  |  |  | 3.40 | 
|0 -E                         |  |          | NATIXIS         |  |                 |  | France  |          |  |  | US$         |  |  |                           | 13,740  |  |                          |  | 41,730  |                           |  |  | 115,026            |  |  |       | 100,617   |  |              |  | 249,194   |              |  |  | 520,307       |  |  |             | 469,423   |  |  |  | Quarterly     |  |  |  | 2.08 |  |  |  | 2.05 | 
|0 -E                         |  |          | HSBC            |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 1,590   |  |                          |  | 4,790   |                           |  |  | 12,908             |  |  |       | 13,112    |  |              |  | 25,175    |              |  |  | 57,575        |  |  |             | 53,583    |  |  |  | Quarterly     |  |  |  | 2.40 |  |  |  | 1.59 | 
|0 -E                         |  |          | PKAirFinance    |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 2,172   |  |                          |  | 6,675   |                           |  |  | 18,928             |  |  |       | 20,812    |  |              |  | 18,104    |              |  |  | 66,691        |  |  |             | 62,514    |  |  |  | Monthly       |  |  |  | 2.04 |  |  |  | 2.04 | 
|0 -E                         |  |          | KFW IPEX-BANK   |  |                 |  | Germany |          |  |  | US$         |  |  |                           | 728     |  |                          |  | 2,232   |                           |  |  | 5,684              |  |  |       | 4,131     |  |              |  | 1,658     |              |  |  | 14,433        |  |  |             | 13,593    |  |  |  | Quarterly     |  |  |  | 2.45 |  |  |  | 2.45 | 
|Other guaranteed obligations |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  | 
|0 -E                         |  |          | DVB BANKSE      |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 8,225   |  |                          |  | 24,695  |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 32,920        |  |  |             | 32,492    |  |  |  | Quarterly     |  |  |  | 2.32 |  |  |  | 2.32 | 
|Financial leases             |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  | 
|0 -E                         |  |          | ING             |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 9,214   |  |                          |  | 26,054  |                           |  |  | 41,527             |  |  |       | 28,234    |  |              |  |          |              |  |  | 105,029       |  |  |             | 94,998    |  |  |  | Quarterly     |  |  |  | 5.13 |  |  |  | 4.57 | 
|0 -E                         |  |          | CREDITAGRICOLE  |  |                 |  | France  |          |  |  | US$         |  |  |                           | 1,711   |  |                          |  | 5,236   |                           |  |  | 7,216              |  |  |       |          |  |              |  |          |              |  |  | 14,163        |  |  |             | 13,955    |  |  |  | Quarterly     |  |  |  | 1.28 |  |  |  | 1.28 | 
|0 -E                         |  |          | CITIBANK        |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 6,083   |  |                          |  | 18,250  |                           |  |  | 48,667             |  |  |       | 38,596    |  |              |  |          |              |  |  | 111,596       |  |  |             | 97,383    |  |  |  | Quarterly     |  |  |  | 6.40 |  |  |  | 5.67 | 
|0 -E                         |  |          | PEFCO           |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 17,556  |  |                          |  | 52,674  |                           |  |  | 115,934            |  |  |       | 23,211    |  |              |  |          |              |  |  | 209,375       |  |  |             | 192,914   |  |  |  | Quarterly     |  |  |  | 5.37 |  |  |  | 4.77 | 
|0 -E                         |  |          | BNPPARIBAS      |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 11,368  |  |                          |  | 34,292  |                           |  |  | 86,206             |  |  |       | 31,782    |  |              |  |          |              |  |  | 163,648       |  |  |             | 153,107   |  |  |  | Quarterly     |  |  |  | 4.08 |  |  |  | 3.64 | 
|0 -E                         |  |          | WELLSFARGO      |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 5,594   |  |                          |  | 16,768  |                           |  |  | 44,663             |  |  |       | 44,565    |  |              |  | 24,125    |              |  |  | 135,715       |  |  |             | 121,628   |  |  |  | Quarterly     |  |  |  | 3.98 |  |  |  | 3.54 | 
|0 -E                         |  |          | DVBBANKSE       |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 4,732   |  |                          |  | 14,225  |                           |  |  | 14,269             |  |  |       |          |  |              |  |          |              |  |  | 33,226        |  |  |             | 32,567    |  |  |  | Quarterly     |  |  |  | 2.06 |  |  |  | 2.06 | 
|0 -E                         |  |          | BANC OFAMERICA  |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 703     |  |                          |  | 2,756   |                           |  |  |                   |  |  |       |          |  |              |  |          |              |  |  | 3,459         |  |  |             | 2,770     |  |  |  | Monthly       |  |  |  | 1.41 |  |  |  | 1.41 | 
|Other loans                  |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  |  |  |      | 
|0 -E                         |  |          | BOEING          |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 655     |  |                          |  | 533     |                           |  |  | 151,362            |  |  |       |          |  |              |  |          |              |  |  | 152,550       |  |  |             | 151,362   |  |  |  | At Expiration |  |  |  | 1.80 |  |  |  | 1.80 | 
|0 -E                         |  |          | CITIBANK(*)     |  |                 |  | U.S.A.  |          |  |  | US$         |  |  |                           | 25,820  |  |                          |  | 77,850  |                           |  |  | 207,190            |  |  |       | 206,749   |  |              |  |          |              |  |  | 517,609       |  |  |             | 450,000   |  |  |  | Quarterly     |  |  |  | 6.00 |  |  |  | 6.00 | 
|Hedging
derivatives          |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  |  |  |      | 
|                            |  |          | OTROS           |  |                 |  | -       |          |  |  | US$         |  |  |                           | 12,232  |  |                          |  | 33,061  |                           |  |  | 40,986             |  |  |       | 3,688     |  |              |  | 16        |              |  |  | 89,983        |  |  |             | 85,653    |  |  |  | -             |  |  |  |     |  |  |  |     | 
|                             |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  |  |  |      | 
|                             |  |          | Total           |  |                 |  |         |          |  |  |             |  |  |                           | 668,745 |  |                          |  | 927,748 |                           |  |  | 2,648,962          |  |  |       | 2,104,751 |  |              |  | 2,316,782 |              |  |  | 8,666,988     |  |  |             | 7,770,678 |  |  |  |               |  |  |  |      |  |  |  |      | 
|                             |  |          |                 |  |                 |  |         |          |  |  |             |  |  |                           |         |  |                          |  |         |                           |  |  |                    |  |  |       |           |  |              |  |           |              |  |  |               |  |  |             |           |  |  |  |               |  |  |  |      |  |  |  |      | 



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



F-42



---

##### Table of Contents

Class of liability for the analysis of liquidity risk ordered by date of maturity as of

December 31, 2015 Debtor: TAM S.A. and Subsidiaries , Tax No . 02.012.862/0001-60, Brazil.



|                           |  |          |                                             |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 
|-------------------------- |  | -------- | ------------------------------------------- |  | --------------- |  | --------- | -------- |  |  | ----------- |  |  | ------------------------- | ------ |  | ------------------------ |  | ------- | ------------------------- |  |  | ----------------- |  |  | ----- | ------- |  | ------------ |  | ------- | ------------ |  | ------------- | --------- |  | ----------- |  | --------- |  |  | -------------------- |  |  | ----- |  |  |  | ----- | 
|Tax No .                   |  | Creditor |                                             |  | Creditorcountry |  |           | Currency |  |  | Up to90days |  |  | Morethan 90days tooneyear |        |  | Morethanone tothreeyears |  |         | Morethanthree tofiveyears |  |  | Morethanfiveyears |  |  | Total |         |  | Nominalvalue |  |         | Amortization |  | Effectiverate |           |  | Nominalrate | 
|                           |  |          |                                             |  |                 |  |           |          |  |  | ThUS$       |  |  | ThUS$                     |        |  | ThUS$                    |  |         | ThUS$                     |  |  | ThUS$             |  |  | ThUS$ |         |  | ThUS$        |  |         |              |  | %             |           |  | %           | 
|Bank loans                 |  |          |                                             |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 
|0-E                        |  |          | NEDERLANDSCHECREDIETVERZEKERINGMAATSCHAPPIJ |  |                 |  | Holland   |          |  |  | US$         |  |  |                           | 181    |  |                          |  | 493     |                           |  |  | 1,315             |  |  |       | 1,314   |  |              |  | 712     |              |  |               | 4,015     |  |             |  | 3,353     |  |  | Monthly              |  |  | 6.01  |  |  |  | 6.01  | 
|Obligation with the public |  |          |                                             |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 
|0-E                        |  |          | BANK OF NEW YORK                            |  |                 |  | U.S.A.    |          |  |  | US$         |  |  |                           | 440    |  |                          |  | 65,321  |                           |  |  | 397,785           |  |  |       | 86,590  |  |              |  | 521,727 |              |  |               | 1,071,863 |  |             |  | 800,000   |  |  | At Expiration        |  |  | 8.17  |  |  |  | 8.00  | 
|Financial leases           |  |          |                                             |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 
|0-E                        |  |          | AFS INVESTMENT IXLLC                        |  |                 |  | U.S.A.    |          |  |  | US$         |  |  |                           | 2,771  |  |                          |  | 7,700   |                           |  |  | 20,527            |  |  |       | 18,808  |  |              |  |        |              |  |               | 49,806    |  |             |  | 43,505    |  |  | Monthly              |  |  | 1.25  |  |  |  | 1.25  | 
|0-E                        |  |          | AIRBUS FINANCIAL                            |  |                 |  | U.S.A.    |          |  |  | US$         |  |  |                           | 3,715  |  |                          |  | 11,054  |                           |  |  | 21,830            |  |  |       | 15,730  |  |              |  |        |              |  |               | 52,329    |  |             |  | 49,995    |  |  | Monthly              |  |  | 1.43  |  |  |  | 1.43  | 
|0-E                        |  |          | CREDIT AGRICOLE-CIB                         |  |                 |  | France    |          |  |  | US$         |  |  |                           | 4,542  |  |                          |  |        |                           |  |  |                  |  |  |       |        |  |              |  |        |              |  |               | 4,542     |  |             |  | 4,500     |  |  | Quarterly/Semiannual |  |  | 3.25  |  |  |  | 3.25  | 
|0-E                        |  |          | DVB BANK SE                                 |  |                 |  | U.S.A.    |          |  |  | US$         |  |  |                           | 123    |  |                          |  | 361     |                           |  |  | 284               |  |  |       |        |  |              |  |        |              |  |               | 768       |  |             |  | 755       |  |  | Monthly              |  |  | 1.6 4 |  |  |  | 1.6 4 | 
|0-E                        |  |          | GENERAL ELECTRICCAPITAL                     |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 
|                           |  |          | CORPORATION                                 |  |                 |  | U.S.A.    |          |  |  | US$         |  |  |                           | 3,834  |  |                          |  | 11,437  |                           |  |  | 9,050             |  |  |       |        |  |              |  |        |              |  |               | 24,321    |  |             |  | 23,761    |  |  | Monthly              |  |  | 1.25  |  |  |  | 1.25  | 
|0-E                        |  |          | KFW IPEX-BANK                               |  |                 |  | Germany   |          |  |  | US$         |  |  |                           | 3,345  |  |                          |  | 6,879   |                           |  |  | 15,973            |  |  |       | 12,429  |  |              |  |        |              |  |               | 38,626    |  |             |  | 36,899    |  |  | Monthly/Quarterly    |  |  | 1.72  |  |  |  | 1.72  | 
|0-E                        |  |          | NATIXIS                                     |  |                 |  | France    |          |  |  | US$         |  |  |                           | 4,338  |  |                          |  | 7,812   |                           |  |  | 22,635            |  |  |       | 23,030  |  |              |  | 70,925  |              |  |               | 128,740   |  |             |  | 115,020   |  |  | Quarterly/Semiannual |  |  | 3.85  |  |  |  | 3.85  | 
|0-E                        |  |          | PK AIR FINANCE US,INC.                      |  |                 |  | U.S.A.    |          |  |  | US$         |  |  |                           | 1,428  |  |                          |  | 21,992  |                           |  |  |                  |  |  |       |        |  |              |  |        |              |  |               | 23,420    |  |             |  | 23,045    |  |  | Monthly              |  |  | 1.75  |  |  |  | 1.75  | 
|0-E                        |  |          | WACAPOU LEASINGS.A.                         |  |                 |  | Luxemburg |          |  |  | US$         |  |  |                           | 520    |  |                          |  | 1,386   |                           |  |  | 3,198             |  |  |       | 14,567  |  |              |  |        |              |  |               | 19,671    |  |             |  | 18,368    |  |  | Quarterly            |  |  | 2.00  |  |  |  | 2.00  | 
|0-E                        |  |          | SOCIÉTÉ GÉNÉRALEMILAN BRANCH                |  |                 |  | Italy     |          |  |  | US$         |  |  |                           | 11,993 |  |                          |  | 31,874  |                           |  |  | 85,695            |  |  |       | 214,612 |  |              |  |        |              |  |               | 344,174   |  |             |  | 312,486   |  |  | Quarterly            |  |  | 3.63  |  |  |  | 3.55  | 
|0-E                        |  |          | BANCO IBM S.A                               |  |                 |  | Brazil    |          |  |  | BRL         |  |  |                           | 267    |  |                          |  | 846     |                           |  |  | 1,230             |  |  |       |        |  |              |  |        |              |  |               | 2,343     |  |             |  | 1,728     |  |  | Monthly              |  |  | 14.14 |  |  |  | 14.14 | 
|0-E                        |  |          | HP FINANCIALSERVICE                         |  |                 |  | Brazil    |          |  |  | BRL         |  |  |                           | 188    |  |                          |  | 564     |                           |  |  | 188               |  |  |       |        |  |              |  |        |              |  |               | 940       |  |             |  | 882       |  |  | Monthly              |  |  | 10.02 |  |  |  | 10.02 | 
|0-E                        |  |          | SOCIÉTÉ GÉNÉRALE                            |  |                 |  | France    |          |  |  | BRL         |  |  |                           | 104    |  |                          |  | 330     |                           |  |  | 626               |  |  |       |        |  |              |  |        |              |  |               | 1,060     |  |             |  | 775       |  |  | Monthly              |  |  | 14.14 |  |  |  | 14.14 | 
|                           |  |          |                                             |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 
|                           |  |          | Total                                       |  |                 |  |           |          |  |  |             |  |  |                           | 37,789 |  |                          |  | 168,049 |                           |  |  | 580,336           |  |  |       | 387,080 |  |              |  | 593,364 |              |  |               | 1,766,618 |  |             |  | 1,435,072 |  |  |                      |  |  |       |  |  |  |       | 
|                           |  |          |                                             |  |                 |  |           |          |  |  |             |  |  |                           |        |  |                          |  |         |                           |  |  |                   |  |  |       |         |  |              |  |         |              |  |               |           |  |             |  |           |  |  |                      |  |  |       |  |  |  |       | 



F-43



---

##### Table of Contents

Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2015

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



|                                             |  |                                        |  |                 |           |  |          |  |                   |              |  |  |                            |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  |            |               |  |  |             |  |  |  |   |  |  |  |   |  |  |  |   | 
|-------------------------------------------- |  | -------------------------------------- |  | --------------- | --------- |  | -------- |  | ----------------- | ------------ |  |  | -------------------------- |  |  | ------------------------- | --------- |  | ------------------------- |  | --------- | ------------------ |  |  | --------- |  |  | ------------ | --------- |  | ------------ |  | ---------- | ------------- |  |  | ----------- |  |  |  | - |  |  |  | - |  |  |  | - | 
|Tax No.                                      |  | Creditor                               |  | Creditorcountry |           |  | Currency |  |                   | Up to 90days |  |  | Morethan 90days toone year |  |  | Morethan oneto threeyears |           |  | Morethanthree tofiveyears |  |           | Morethan fiveyears |  |  | Total     |  |  | Nominalvalue |           |  | Amortization |  |            | Effectiverate |  |  | Nominalrate | 
|                                             |  |                                        |  |                 |           |  |          |  |                   |              |  |  | ThUS$                      |  |  |                           | ThUS$     |  |                           |  | ThUS$     |                    |  |  | ThUS$     |  |  |              | ThUS$     |  |              |  | ThUS$      |               |  |  | ThUS$       |  |  |  |   |  |  |  | % |  |  |  | % | 
|Trade and other accounts payables            |  |                                        |  |                 |           |  |          |  |                   |              |  |  |                            |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  |            |               |  |  |             |  |  |  |   |  |  |  |  
|                                            |  | OTHERS                                 |  |                 | OTHERS    |  |          |  | US$               |              |  |  | 442,320                    |  |  |                           | 14,369    |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 456,689    |               |  |  | 456,689     |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |                                        |  |                 |           |  |          |  | CLP               |              |  |  | 39,823                     |  |  |                           | 114       |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 39,937     |               |  |  | 39,937      |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |                                        |  |                 |           |  |          |  | BRL               |              |  |  | 301,569                    |  |  |                           | 16        |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 301,585    |               |  |  | 301,585     |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |                                        |  |                 |           |  |          |  | Others currencies |              |  |  | 218,347                    |  |  |                           | 9,016     |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 227,363    |               |  |  | 227,363     |  |  |  |  |  |  |  |  |  |  |  |  | 
|Accounts payable to related parties currents |  |                                        |  |                 |           |  |          |  |                   |              |  |  |                            |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  |            |               |  |  |             |  |  |  |   |  |  |  |  
|65.216.000-K                                 |  | COMUNIDAD MUJER                        |  |                 | Chile     |  |          |  | CLP               |              |  |  | 10                         |  |  |                           |          |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 10         |               |  |  | 10          |  |  |  |  |  |  |  |  |  |  |  |  | 
|78.591.370-1                                 |  | BETHIA S.A. Y FILIALES                 |  |                 | Chile     |  |          |  | CLP               |              |  |  | 5                          |  |  |                           |          |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 5          |               |  |  | 5           |  |  |  |  |  |  |  |  |  |  |  |  | 
|78.997.060-2                                 |  | Viajes Falabella Ltd a.                |  |                 | Chile     |  |          |  | CLP               |              |  |  | 68                         |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  | 68         |               |  |  | 68          |  |  |  |  |  |  |  |  |  |  |  |  | 
|0-E                                          |  | Consultoría Administrativa Profesional |  |                 | Mexico    |  |          |  | MXN               |              |  |  | 342                        |  |  |                           |          |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 342        |               |  |  | 342         |  |  |  |  |  |  |  |  |  |  |  |  | 
|0-E                                          |  | INVERSORA AERONÁUTICA ARGENTINA        |  |                 | Argentina |  |          |  | US$               |              |  |  | 22                         |  |  |                           |          |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 22         |               |  |  | 22          |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                             |  |                                        |  |                 |           |  |          |  |                   |              |  |  |                            |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  |            |               |  |  |             |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  | Total                                  |  |                 |           |  |          |  |                   |              |  |  | 1,002,506                  |  |  |                           | 23,515    |  |                           |  |          |                    |  |  |          |  |  |              |          |  |              |  | 1,026,021  |               |  |  | 1,026,021   |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  |                                        |  |                 |           |  |          |  |                   |              |  |  |                            |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  |            |               |  |  |             |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  | Total consolidated                     |  |                 |           |  |          |  |                   |              |  |  | 1,709,040                  |  |  |                           | 1,119,312 |  |                           |  | 3,229,298 |                    |  |  | 2,491,831 |  |  |              | 2,910,146 |  |              |  | 11,459,627 |               |  |  | 10,231,771  |  |  |  |   |  |  |  |   |  |  |  |   | 
|                                             |  |                                        |  |                 |           |  |          |  |                   |              |  |  |                            |  |  |                           |           |  |                           |  |           |                    |  |  |           |  |  |              |           |  |              |  |            |               |  |  |             |  |  |  |   |  |  |  |   |  |  |  |   | 



F-44



---

##### Table of Contents

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 2015, the Company provided US$ 49.6 million in derivative margin guarantees, for cash and stand-by letters of credit. At December 31,
2016, the Company had provided US$ 30.2 million in guarantees for Cash and cash equivalent and stand-by letters of credit. The decrease 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 December 31, 2016 the Company has an international long term credit rating of BB- with negative outlook by Standard & Poors, a B+ rating with negative outlook
by Fitch Ratings and a B1 rating with stable outlook by Moodys.



|3.3. | Estimates of fair value.
|---- | ------------------------

At December 31, 2016, 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),
| | - |  | ---------------------------------------------------------



| |  |  | Private investment funds.
| | - |  | -------------------------



F-45



---

##### Table of Contents

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 December 31, 2016 |         |  | As of December 31, 2015                           | 
|                                                                    |  |                         |         |  | Fair value measurements usingvalues considered as |  |         |          |  |  | Fair value measurements usingconsidered as | 
|                                                                    |  | Fair value              |         |  | Level I                                           |  |         | Level II |  |  | Level III                                  |  |  | Fair  |   |  | Level I |  |         | Level II |  |  | Level III | 
|                                                                    |  | ThUS$                   |         |  | ThUS$                                             |  |         | ThUS$    |  |  | ThUS$                                      |  |  | ThUS$ |   |  | ThUS$   |  |         | ThUS$    |  |  | ThUS$     | 
|Assets                                                              |  |                         |         |  |                                                   |  |         |          |  |  |                                            |  |  |       |   |  |         |  |         |          |  |  |           |  |  |  |         |  |  |  |   | 
|Cash and cash equivalents                                           |  |                         | 15,522  |  |                                                   |  | 15,522  |          |  |  |                                           |  |  |       |  |  |         |  | 26,600  |          |  |  | 26,600    |  |  |  |        |  |  |  |  | 
|Short-term mutual funds                                             |  |                         | 15,522  |  |                                                   |  | 15,522  |          |  |  |                                           |  |  |       |  |  |         |  | 26,600  |          |  |  | 26,600    |  |  |  |        |  |  |  |  | 
|Other financial assets, current                                     |  |                         | 548,402 |  |                                                   |  | 536,991 |          |  |  | 11,411                                     |  |  |       |  |  |         |  | 622,963 |          |  |  | 606,385   |  |  |  | 16,578  |  |  |  |  | 
|Fair value of fuel derivatives                                      |  |                         | 10,088  |  |                                                   |  |        |          |  |  | 10,088                                     |  |  |       |  |  |         |  | 6,293   |          |  |  |          |  |  |  | 6,293   |  |  |  |  | 
|Fair value of foreign currency derivatives                          |  |                         | 1,259   |  |                                                   |  |        |          |  |  | 1,259                                      |  |  |       |  |  |         |  | 9,888   |          |  |  |          |  |  |  | 9,888   |  |  |  |  | 
|Interest accrued since the last payment date of Cross Currency Swap |  |                         | 64      |  |                                                   |  |        |          |  |  | 64                                         |  |  |       |  |  |         |  | 397     |          |  |  |          |  |  |  | 397     |  |  |  |  | 
|Private investment funds                                            |  |                         | 536,991 |  |                                                   |  | 536,991 |          |  |  |                                           |  |  |       |  |  |         |  | 448,810 |          |  |  | 448,810   |  |  |  |        |  |  |  |  | 
|Domestic and foreign bonds                                          |  |                         |        |  |                                                   |  |        |          |  |  |                                           |  |  |       |  |  |         |  | 157,575 |          |  |  | 157,575   |  |  |  |        |  |  |  |  | 
|Liabilities                                                         |  |                         |         |  |                                                   |  |         |          |  |  |                                            |  |  |       |   |  |         |  |         |          |  |  |           |  |  |  |         |  |  |  |   | 
|Other financial liabilities , current                               |  |                         | 24,881  |  |                                                   |  |        |          |  |  | 24,881                                     |  |  |       |  |  |         |  | 134,089 |          |  |  |          |  |  |  | 134,089 |  |  |  |  | 
|Fair value of interest rate derivatives                             |  |                         | 9,579   |  |                                                   |  |        |          |  |  | 9,579                                      |  |  |       |  |  |         |  | 33,518  |          |  |  |          |  |  |  | 33,518  |  |  |  |  | 
|Fair value of fuel derivatives                                      |  |                         |        |  |                                                   |  |        |          |  |  |                                           |  |  |       |  |  |         |  | 39,818  |          |  |  |           |  |  |  | 39,818  |  |  |  |   | 
|Fair value of foreign currency derivatives                          |  |                         | 13,155  |  |                                                   |  |        |          |  |  | 13,155                                     |  |  |       |  |  |         |  | 56,424  |          |  |  |          |  |  |  | 56,424  |  |  |  |  | 
|Interest accrued since the last payment date of Currency Swap       |  |                         | 2,147   |  |                                                   |  |        |          |  |  | 2,147                                      |  |  |       |  |  |         |  | 4,329   |          |  |  |          |  |  |  | 4,329   |  |  |  |  | 
|Interest rate derivatives not recognized as a hedge                 |  |                         |        |  |                                                   |  |        |          |  |  |                                           |  |  |       |  |  |         |  |        |          |  |  |           |  |  |  |        |  |  |  |   | 
|Other financial liabilities, non current                            |  |                         | 6,679   |  |                                                   |  |        |          |  |  | 6,679                                      |  |  |       |  |  |         |  | 16,128  |          |  |  |          |  |  |  | 16,128  |  |  |  |  | 
|Fair value of interest rate derivatives                             |  |                         | 6,679   |  |                                                   |  |        |          |  |  | 6,679                                      |  |  |       |  |  |         |  | 16,128  |          |  |  |          |  |  |  | 16,128  |  |  |  |  | 



F-46



---

##### Table of Contents

Additionally, at December 31, 2016, 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 December 31, 2016 |           |  | As of December 31, 2015 | 
|                                            |  | Bookvalue               |           |  | Fairvalue               |  |           | Bookvalue |  |  | Fairvalue | 
|                                            |  | ThUS$                   |           |  | ThUS$                   |  |           | ThUS$     |  |  | ThUS$     | 
|Cash and cash equivalents                   |  |                         | 933,805   |  |                         |  | 933,805   |           |  |  | 726,897   |  |  |  | 726,897   | 
|Cash on hand                                |  |                         | 8,630     |  |                         |  | 8,630     |           |  |  | 10,656    |  |  |  | 10,656    | 
|Bank balance                                |  |                         | 255,746   |  |                         |  | 255,746   |           |  |  | 255,421   |  |  |  | 255,421   | 
|Overnight                                   |  |                         | 295,060   |  |                         |  | 295,060   |           |  |  | 267,764   |  |  |  | 267,764   | 
|Time deposits                               |  |                         | 374,369   |  |                         |  | 374,369   |           |  |  | 193,056   |  |  |  | 193,056   | 
|Other financial assets, current             |  |                         | 164,426   |  |                         |  | 164,426   |           |  |  | 28,385    |  |  |  | 28,385    | 
|Other financial assets                      |  |                         | 164,426   |  |                         |  | 164,426   |           |  |  | 28,385    |  |  |  | 28,385    | 
|Trade and other accounts receivable current |  |                         | 1,107,889 |  |                         |  | 1,107,889 |           |  |  | 796,974   |  |  |  | 796,974   | 
|Accounts receivable from related entities   |  |                         | 554       |  |                         |  | 554       |           |  |  | 183       |  |  |  | 183       | 
|Other financial assets, non current         |  |                         | 102,125   |  |                         |  | 102,125   |           |  |  | 89,458    |  |  |  | 89,458    | 
|Accounts receivable                         |  |                         | 8,254     |  |                         |  | 8,254     |           |  |  | 10,715    |  |  |  | 10,715    | 
|Other financial liabilities, current        |  |                         | 1,814,647 |  |                         |  | 2,022,290 |           |  |  | 1,510,146 |  |  |  | 1,873,552 | 
|Trade and other accounts payables           |  |                         | 1,593,068 |  |                         |  | 1,593,068 |           |  |  | 1,483,957 |  |  |  | 1,483,957 | 
|Accounts payable to related entities        |  |                         | 269       |  |                         |  | 269       |           |  |  | 447       |  |  |  | 447       | 
|Other financial liabilities, non current    |  |                         | 6,790,273 |  |                         |  | 6,970,375 |           |  |  | 7,516,257 |  |  |  | 7,382,221 | 
|Accounts payable, non-current               |  |                         | 359,391   |  |                         |  | 359,391   |           |  |  | 417,050   |  |  |  | 417,050   | 

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 (Level II). In the case of Other financial assets, the valuation was performed according to market prices at period end.



F-47



---

##### Table of Contents

NOTE 4ACCOUNTING ESTIMATES AND JUDGMENTS

The Company has used estimates to value and record certain assets, liabilities, revenue, expenditure, and commitments. Basically, these estimates relate to:



|(a) | Evaluation of possible losses through impairment of goodwill and intangible assets with an indefinite useful life.
|--- | ------------------------------------------------------------------------------------------------------------------

As of December 31, 2016 goodwill amounted to ThUS$ 2,710,382 (ThUS$ 2,280,575 at December 31, 2015), while intangible assets with an indefinite
useful life comprised airport slots for ThUS$ 978,849 (ThUS$ 816,987 at December 31, 2015), Loyalty Program for ThUS$ 326,262 (ThUS$ 272,312 at December 31, 2015) and Trademarks (*) for ThUS$ 52.981 at December 31, 2015.

At least once per year the Company verifies whether goodwill and intangible assets with an indefinite useful life have suffered any losses through impairment.
For the purposes of this evaluation, the Company has identified two cash-generating units (CGUs): Air transport and Multiplus loyalty and coalition program. The book value of goodwill assigned to each CGU as of
December 31, 2016, amounted to ThUS$ 2,176,634 and ThUS$ 533,748 (ThUS$ 1,835,088 and ThUS$ 445,487 at December 31, 2015), which included intangible assets with undefined useful life:



|                |  |                       |         |  |                                             |  |         |                       |  |  |                       |  |  |  |         | 
|--------------- |  | --------------------- | ------- |  | ------------------------------------------- |  | ------- | --------------------- |  |  | --------------------- |  |  |  | ------- | 
|                |  | Air Transport
CGU     |         |  | Coalition and loyalty
Program Multiplus CGU | 
|                |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015                       |  |         | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 | 
|                |  | ThUS$                 |         |  | ThUS$                                       |  |         | ThUS$                 |  |  | ThUS$                 | 
|Airport Slots   |  |                       | 978,849 |  |                                             |  | 816,987 |                       |  |  |                      |  |  |  |        | 
|Trade marks (*) |  |                       |        |  |                                             |  | 52,981  |                       |  |  |                      |  |  |  |        | 
|Loyalty program |  |                       |        |  |                                             |  |        |                       |  |  | 326,262               |  |  |  | 272,312 | 



|(*) | At December 31, 2016, the Company has changed the estimated useful life of the brands from an indefinite useful life to a five-year period (See Note 15).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

The recoverable value of these cash-generating units (CGUs) has been determined based on calculations of their value in use. The principal assumptions used by
the management include: growth rate, exchange rate, discount rate, fuel prices, and other economic assumptions. The estimation of these assumptions requires significant judgment by the management, as these variables feature inherent uncertainty;
however, the assumptions used are consistent with Companys internal planning. Therefore, management evaluates and updates the estimates on an annual basis, in light of conditions that affect these variables. The mainly assumptions used as well
as, the corresponding sensitivity analyses are showed in Note 16.



F-48



---

##### Table of Contents

|(b) | Useful life, residual value, and impairment of property, plant, and equipment
|--- | -----------------------------------------------------------------------------

The depreciation of assets is
calculated based on the linear model, except for certain technical components depreciated on cycles and hours flown. These useful lives are reviewed on an annual basis according with the Companys future economic benefits associated with them.

Changes in circumstances such as: technological advances, business model, planned use of assets or capital strategy may render the useful life different
to the lifespan estimated. When it is determined that the useful life of property, plant, and equipment must be reduced, as may occur in line with changes in planned usage of assets, the difference between the net book value and estimated
recoverable value is depreciated, in accordance with the revised remaining useful life.

Residual values are estimated in accordance with the market value
that these assets will have at the end of their useful life. The assets residual values and useful lives are reviewed, and adjusted if appropriate, once a year. An assets carrying amount is written down immediately to its recoverable
amount if the assets carrying amount is greater than its estimated recoverable amount (note 2.8).



|(c) | Recoverability of deferred tax assets
|--- | -------------------------------------

Deferred taxes are calculated in accordance with the liability method,
applied over temporary differences that arise between the fiscal based of assets and liabilities, and their book value. Deferred tax assets for tax losses are recognized to the extent that the realization of the related tax benefit through future
taxable profits is probable. The Company makes tax and financial projections to evaluate the realization of deferred tax asset over the course of time. Additionally, these projections are ensured to be consistent with those used to measure other
long term assets. As of December 31, 2016 the company recognized deferred tax assets amounting to ThUS$ 384,580 (ThUS$ 376,595 at December 31, 2015), and had ceased to recognize deferred tax assets for tax losses amounting to ThUS$ 115,801
(ThUS$ 15,513 at December 31, 2015) (Note 18).



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

The Company advance sales of tickets as deferred revenue. Revenue
from ticket sales is recognized in the income statement when the service is provided or when the tickets expires unused, reducing the corresponding deferred revenue. The Company evaluates monthly the probability that tickets expiry unused, based on
the history of used tickets. Changes in the exchange probability would have an impact our revenue in the year in which the change occurs and in future years. As of December 31, 2016, deferred revenue associated with air tickets sold amounted to
ThUS$ 1,535,229 (ThUS$ 1,223,886 as of December 31, 2015). An hypothetical change of 1% in passenger behavior regarding to the ticket usage,that is, if during the next six months after sells probability of used were 89% rather than 90%,
as we consider, it would lead to a change in the expiry period from six to seven months, which, as of December 31, 2016, would have an impact of up to ThUS$ 20,000.



F-49



---

##### Table of Contents

|(e) | Valuation of loyalty points and kilometers granted to loyalty program members, pending usage.
|--- | ---------------------------------------------------------------------------------------------

As of
December 31, 2016 and December 31, 2015, the Company operated the following loyalty programs: LATAM Pass, LATAM Fidelidade and Multiplus, with the objective of enhancing customer loyalty by offering points or kilometers (see Note 22).

When kilometers and points are redeemed for products and services other than the services provided by the Company, revenue is recognized immediately; when
they are redeemed for air tickets on airlines from to LATAM Airlines Group S.A. and subsidiaries, revenue is deferred until the transport service is provided or the corresponding tickets expired.

Deferred revenue from loyalty programs at the closing date corresponds to the valuation of points and kilometers granted to loyalty program members, pending
of use, and the probability to be redeemed.

According to IFRIC-13, kilometers and points value that the Company estimate are not likely to be redeemed
(breakage), they recognize the associated value proportionally during the period in which the remaining kilometers or points are expected to be redeemed. The Company uses statistical models to estimate the breakage, based on historical
redemption patterns Changes in the breakage would have a significant impact on our revenue in the year in which the change occurs and in future years.

As
of December 31, 2016, deferred revenue associated with the LATAM Pass loyalty program amounted to ThUS$ 896,190 (ThUS$ 973,264 at December 31, 2015). As of December 31, 2016 a hypothetical change of 1% in the probability of usage
would result in an impact of approximately ThUS$ 30,632 and ThUS$ 30,000 at the same period of 2015. Meanwhile, deferred revenue associated with the LATAM Fidelidade and Multiplus loyalty programs amounted to ThUS$ 392,107 (ThUS$ 452,264 at
December 31, 2015). As of December 31, 2016 a hypothetical change of 2% in the probability of usage would result in an impact of approximately ThUS$ 14,639 and ThUS$ 11,755 at the same period of 2015.

The fair value of kilometers is determined by the Company based in its best estimate of the price at which they have been sold in the past. As of
December 31, 2016 a hypothetical change of 1% in the fair value of the unused kilometers would result in an impact of approximately ThUS$ 8,400 and ThUS$ 8,800 at the same period of 2015.



|(f) | Provisions needs, and their valuation when required
|--- | ---------------------------------------------------

Known contingencies are recognized when: the Company has a
present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. The Company applies professional judgment,
experience, and knowledge to use available information to determine these values, in light of the specific characteristics of known risks. This process facilitates the early assessment and valuation of potential risks in individual cases or in the
development of contingent eventualities.



F-50



---

##### Table of Contents

|(g) | Investment in subsidiary (TAM)
|--- | ------------------------------

The management has applied its judgment in determining that LATAM Airlines
Group S.A. controls TAM S.A. and Subsidiaries, for accounting purposes, and has therefore consolidated the financial statements.

The grounds for this
decision are that LATAM issued ordinary shares in exchange for the majority of circulating ordinary and preferential shares in TAM, except for those TAM shareholders who did not accept the exchange, which were subject to a squeeze out, entitling
LATAM to substantially all economic benefits generated by the LATAM Group, and thus exposing it to substantially all risks relating to the operations of TAM. This exchange aligns the economic interests of LATAM and all of its shareholders, including
the controlling shareholders of TAM, thus insuring that the shareholders and directors of TAM shall have no incentive to exercise their rights in a manner that would be beneficial to TAM but detrimental to LATAM. Furthermore, all significant actions
necessary of the operation of the airlines require votes in favor by the controlling shareholders of both LATAM and TAM.

Since the integration of LAN and
TAM operations, the most critical airline operations in Brazil have been managed by the CEO of TAM while global activities have been managed by the CEO of LATAM, who is in charge of the operation of the LATAM Group as a whole and reports to the
LATAM Board.

The CEO of LATAM also evaluates the performance of LATAM Group executives and, together with the LATAM Board, determines compensation.
Although Brazilian law currently imposes restrictions on the percentages of voting rights that may be held by foreign investors, LATAM believes that the economic basis of these agreements meets the requirements of accounting standards in force, and
that the consolidation of the operations of LAN and LATAM is appropriate.

These estimates were made based on the best information available relating to
the matters analyzed.

In any case, it is possible that events that may take place in the future could lead to their modification in future reporting
periods, which would be made in a prospective manner.

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 LATAM Pass and LATAM
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 16.5 million of members, along with being a regulated entity with a
separately business and not directly related to air transport.



F-51



---

##### Table of Contents

For the periods ended



|                                                                                |  |                                    |            |   |                                                         |  |            |                              |  |  |                             |   |  |        |           |   |        |  |           |        |  |  |           |   |  |        |          |   |        |  |          |        |  |  |          |   |  |  |            |   |  |  |            |   |  |  |            |  
|------------------------------------------------------------------------------- |  | ---------------------------------- | ---------- | - | ------------------------------------------------------- |  | ---------- | ---------------------------- |  |  | --------------------------- | - |  | ------ | --------- | - | ------ |  | --------- | ------ |  |  | --------- | - |  | ------ | -------- | - | ------ |  | -------- | ------ |  |  | -------- | - |  |  | ---------- | - |  |  | ---------- | - |  |  | ---------- | -
|                                                                                |  | Air
transportation At December
31, |            |   | Coalition and
loyalty program Multiplus
At December 31, |  |            | Eliminations
At December 31, |  |  | ConsolidatedAt December 31, |  
|                                                                                |  | 2016                               |            |   | 2015                                                    |  |            | 2014                         |  |  | 2016                        |   |  | 2015   |           |   | 2014   |  |           | 2016   |  |  | 2015      |   |  | 2014   |          |   | 2016   |  |          | 2015   |  |  | 2014     |  
|                                                                                |  | ThUS $                             |            |   | ThUS $                                                  |  |            | ThUS $                       |  |  | ThUS $                      |   |  | ThUS $ |           |   | ThUS $ |  |           | ThUS $ |  |  | ThUS $    |   |  | ThUS $ |          |   | ThUS $ |  |          | ThUS $ |  |  | ThUS $   |  
|Income from ordinary activities from external customers (*)                     |  |                                    | 8,587,772  |   |                                                         |  | 9,278,041  |                              |  |  | 11,587,224                  |   |  |        | 400,568   |   |        |  | 462,004   |        |  |  | 506,277   |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 8,988,340  |   |  |  | 9,740,045  |   |  |  | 12,093,501 |  
|LAN passenger                                                                   |  |                                    | 4,104,348  |   |                                                         |  | 4,241,918  |                              |  |  | 4,464,761                   |   |  |        |          |   |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 4,104,348  |   |  |  | 4,241,918  |   |  |  | 4,464,761  |  
|TAM passenger                                                                   |  |                                    | 3,372,799  |   |                                                         |  | 3,706,692  |                              |  |  | 5,409,084                   |   |  |        | 400,568   |   |        |  | 462,004   |        |  |  | 506,277   |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 3,773,367  |   |  |  | 4,168,696  |   |  |  | 5,915,361  |  
|Freight                                                                         |  |                                    | 1,110,625  |   |                                                         |  | 1,329,431  |                              |  |  | 1,713,379                   |   |  |        |          |   |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 1,110,625  |   |  |  | 1,329,431  |   |  |  | 1,713,379  |  
|Income from ordinary activities from transactions with other operating segments |  |                                    | 400,568    |   |                                                         |  | 462,004    |                              |  |  | 506,277                     |   |  |        | 65,969    |   |        |  | 67,826    |        |  |  | 106,030   |   |  |        | (466,537 | ) |        |  | (529,830 | )      |  |  | (612,307 | ) |  |  |           |   |  |  |           |   |  |  |           |  
|Other operating income                                                          |  |                                    | 364,551    |   |                                                         |  | 230,823    |                              |  |  | 217,390                     |   |  |        | 174,197   |   |        |  | 154,958   |        |  |  | 160,255   |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 538,748    |   |  |  | 385,781    |   |  |  | 377,645    |  
|Interest income                                                                 |  |                                    | 27,287     |   |                                                         |  | 21,818     |                              |  |  | 32,390                      |   |  |        | 58,380    |   |        |  | 63,647    |        |  |  | 58,110    |   |  |        | (10,718  | ) |        |  | (10,385  | )      |  |  |         |   |  |  | 74,949     |   |  |  | 75,080     |   |  |  | 90,500     |  
|Interest expense                                                                |  |                                    | (427,054   | ) |                                                         |  | (423,742   | )                            |  |  | (430,030                    | ) |  |        |          |   |        |  |          |        |  |  | (4        | ) |  |        | 10,718   |   |        |  | 10,385   |        |  |  |         |   |  |  | (416,336   | ) |  |  | (413,357   | ) |  |  | (430,034   | )
|Total net interest expense                                                      |  |                                    | (399,767   | ) |                                                         |  | (401,924   | )                            |  |  | (397,640                    | ) |  |        | 58,380    |   |        |  | 63,647    |        |  |  | 58,106    |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | (341,387   | ) |  |  | (338,277   | ) |  |  | (339,534   | )
|Depreciation and amortization                                                   |  |                                    | (952,285   | ) |                                                         |  | (923,311   | )                            |  |  | (983,847                    | ) |  |        | (8,043    | ) |        |  | (11,095   | )      |  |  | (7,417    | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  | (960,328   | ) |  |  | (934,406   | ) |  |  | (991,264   | )
|Material non-cash items other than depreciation and amortization                |  |                                    | 10,069     |   |                                                         |  | (507,921   | )                            |  |  | (168,573                    | ) |  |        | (991      | ) |        |  | 1,893     |        |  |  | (2,350    | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 9,078      |   |  |  | (506,028   | ) |  |  | (170,923   | )
|Disposal of fixed assets and inventory losses                                   |  |                                    | (82,734    | ) |                                                         |  | (20,932    | )                            |  |  | (28,756                     | ) |  |        |          |   |        |  |          |        |  |  | (814      | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  | (82,734    | ) |  |  | (20,932    | ) |  |  | (29,570    | )
|Doubtful accounts                                                               |  |                                    | (29,674    | ) |                                                         |  | (18,292    | )                            |  |  | (9,637                      | ) |  |        | (476      | ) |        |  | 611       |        |  |  | (1,522    | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  | (30,150    | ) |  |  | (17,681    | ) |  |  | (11,159    | )
|Exchange differences                                                            |  |                                    | 122,129    |   |                                                         |  | (469,178   | )                            |  |  | (130,187                    | ) |  |        | (478      | ) |        |  | 1,282     |        |  |  | (14       | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 121,651    |   |  |  | (467,896   | ) |  |  | (130,201   | )
|Result of indexation units                                                      |  |                                    | 348        |   |                                                         |  | 481        |                              |  |  | 7                           |   |  |        | (37       | ) |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 311        |   |  |  | 481        |   |  |  | 7          |  
|Income (loss) atributable to owners of the parents                              |  |                                    | (83,653    | ) |                                                         |  | (356,039   | )                            |  |  | (404,346                    | ) |  |        | 152,873   |   |        |  | 136,765   |        |  |  | 144,361   |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 69,220     |   |  |  | (219,274   | ) |  |  | (259,985   | )
|Participation of the entity in the income of associates                         |  |                                    |           |   |                                                         |  | 37         |                              |  |  | (2,175                      | ) |  |        |          |   |        |  |          |        |  |  | (4,280    | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  |           |   |  |  | 37         |   |  |  | (6,455     | )
|Expenses for income tax                                                         |  |                                    | (92,476    | ) |                                                         |  | 249,090    |                              |  |  | (218,503                    | ) |  |        | (70,728   | ) |        |  | (70,707   | )      |  |  | (73,901   | ) |  |        |         |   |        |  |         |        |  |  |         |   |  |  | (163,204   | ) |  |  | 178,383    |   |  |  | (292,404   | )
|Segment profit/(loss)                                                           |  |                                    | (42,203    | ) |                                                         |  | (315,497   | )                            |  |  | (332,287                    | ) |  |        | 152,873   |   |        |  | 136,765   |        |  |  | 105,116   |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 110,670    |   |  |  | (178,732   | ) |  |  | (227,171   | )
|Assets of segment                                                               |  |                                    | 17,805,749 |   |                                                         |  | 16,924,200 |                              |  |  | 18,759,848                  |   |  |        | 1,400,432 |   |        |  | 1,182,111 |        |  |  | 1,773,584 |   |  |        | (7,987   | ) |        |  | (4,893   | )      |  |  | (49,002  | ) |  |  | 19,198,194 |   |  |  | 18,101,418 |   |  |  | 20,484,430 |  
|Amount of non-current asset additions                                           |  |                                    | 1,481,090  |   |                                                         |  | 1,492,281  |                              |  |  | 1,522,298                   |   |  |        |          |   |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 1,481,090  |   |  |  | 1,492,281  |   |  |  | 1,522,298  |  
|Property, plant and equipment                                                   |  |                                    | 1,390,730  |   |                                                         |  | 1,439,057  |                              |  |  | 1,444,402                   |   |  |        |          |   |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 1,390,730  |   |  |  | 1,439,057  |   |  |  | 1,444,402  |  
|Intangibles other than goodwill                                                 |  |                                    | 90,360     |   |                                                         |  | 53,224     |                              |  |  | 77,896                      |   |  |        |          |   |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 90,360     |   |  |  | 53,224     |   |  |  | 77,896     |  
|Segment liabilities                                                             |  |                                    | 14,469,505 |   |                                                         |  | 14,700,072 |                              |  |  | 15,293,668                  |   |  |        | 572,065   |   |        |  | 490,076   |        |  |  | 723,438   |   |  |        | (28,680  | ) |        |  | (26,278  | )      |  |  | (36,371  | ) |  |  | 15,012,890 |   |  |  | 15,163,870 |   |  |  | 15,980,735 |  
|Purchase of non-monetary assets of segment                                      |  |                                    | 782,957    |   |                                                         |  | 1,622,198  |                              |  |  | 1,496,204                   |   |  |        |          |   |        |  |          |        |  |  |          |   |  |        |         |   |        |  |         |        |  |  |         |   |  |  | 782,957    |   |  |  | 1,622,198  |   |  |  | 1,496,204  |  



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



F-52



---

##### Table of Contents

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



|                                       |  |                                      |           |  |       |  |           |       |  |  |            | 
|-------------------------------------- |  | ------------------------------------ | --------- |  | ----- |  | --------- | ----- |  |  | ---------- | 
|                                       |  | For the period ended
At December 31, |          
|                                       |  | 2016                                 |           |  | 2015  |  |           | 2014  | 
|                                       |  | ThUS$                                |           |  | ThUS$ |  |           | ThUS$ | 
|Peru                                   |  |                                      | 627,215   |  |       |  | 681,340   |       |  |  | 660,057    | 
|Argentina                              |  |                                      | 1,030,973 |  |       |  | 979,324   |       |  |  | 813,472    | 
|U.S.A.                                 |  |                                      | 933,130   |  |       |  | 1,025,475 |       |  |  | 1,224,264  | 
|Europe                                 |  |                                      | 714,436   |  |       |  | 723,062   |       |  |  | 935,893    | 
|Colombia                               |  |                                      | 343,001   |  |       |  | 353,007   |       |  |  | 391,678    | 
|Brazil                                 |  |                                      | 2,974,234 |  |       |  | 3,464,297 |       |  |  | 5,361,594  | 
|Ecuador                                |  |                                      | 198,171   |  |       |  | 238,500   |       |  |  | 248,585    | 
|Chili                                  |  |                                      | 1,512,570 |  |       |  | 1,575,519 |       |  |  | 1,589,202  | 
|Asia Pacific and rest of Latin America |  |                                      | 654,610   |  |       |  | 699,521   |       |  |  | 868,756    | 
|                                       |  |                                      |           |  |       |  |           |       |  |  |            | 
|Income from ordinary activities        |  |                                      | 8,988,340 |  |       |  | 9,740,045 |       |  |  | 12,093,501 | 
|                                       |  |                                      |           |  |       |  |           |       |  |  |            | 
|Other operating income                 |  |                                      | 538,748   |  |       |  | 385,781   |       |  |  | 377,645    | 
|                                       |  |                                      |           |  |       |  |           |       |  |  |            | 

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 ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                                |  | ThUS$                 |         |  | ThUS$                 | 
|Cash on hand                    |  |                       | 8,630   |  |                       |  | 10,656  | 
|Bank balances                   |  |                       | 255,746 |  |                       |  | 255,421 | 
|Overnight                       |  |                       | 295,060 |  |                       |  | 267,764 | 
|                                |  |                       |         |  |                       |  |         | 
|Total Cash                      |  |                       | 559,436 |  |                       |  | 533,841 | 
|                                |  |                       |         |  |                       |  |         | 
|Cash equivalents                |  |                       |         |  |                       |  |         | 
|Time deposits                   |  |                       | 374,369 |  |                       |  | 193,056 | 
|Mutual funds                    |  |                       | 15,522  |  |                       |  | 26,600  | 
|                                |  |                       |         |  |                       |  |         | 
|Total cash equivalents          |  |                       | 389,891 |  |                       |  | 219,656 | 
|                                |  |                       |         |  |                       |  |         | 
|Total cash and cash equivalents |  |                       | 949,327 |  |                       |  | 753,497 | 
|                                |  |                       |         |  |                       |  |         | 



F-53



---

##### Table of Contents

Cash and cash equivalents are denominated in the following currencies:



|                   |  |                       |         |  |                       |  |         | 
|------------------ |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|Currency           |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                   |  | ThUS$                 |         |  | ThUS$                 | 
|Argentine peso     |  |                       | 7,871   |  |                       |  | 18,733  | 
|Brazilian real     |  |                       | 97,401  |  |                       |  | 106,219 | 
|Chilean peso       |  |                       | 30,758  |  |                       |  | 17,978  | 
|Colombian peso     |  |                       | 4,336   |  |                       |  | 14,601  | 
|Euro               |  |                       | 1,695   |  |                       |  | 10,663  | 
|US Dollar          |  |                       | 780,124 |  |                       |  | 564,214 | 
|Strong bolivar (*) |  |                       | 61      |  |                       |  | 2,986   | 
|Other currencies   |  |                       | 27,081  |  |                       |  | 18,103  | 
|                   |  |                       |         |  |                       |  |         | 
|Total              |  |                       | 949,327 |  |                       |  | 753,497 | 
|                   |  |                       |         |  |                       |  |         | 



|(*) | At December 31, 2015, the Company reflected an exchange rate loss of ThUS$ 40,968 consequence change in the SICAD rate of Venezuela (13.5 VEF/US$) at the SIMADI rate equivalent to 198.70 VEF/US$.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2016, the DICOM rate, which replaces SIMADI (February 2016), and to this date is 673.76 VEF/US$, Applied to cash and cash equivalents
in VEF, represented a balance of ThUS$ 61 (ThUS$ 2,986 at December 31, 2015)



F-54



---

##### Table of Contents

NOTE 7 - FINANCIAL INSTRUMENTS



|7.1. | Financial instruments by category
|---- | ---------------------------------

As of December 31, 2016



|                                                   |  |                     |           |  |                  |  |        |                |  |  |                                                        |  |  |       |         |  |  |  |           | 
|-------------------------------------------------- |  | ------------------- | --------- |  | ---------------- |  | ------ | -------------- |  |  | ------------------------------------------------------ |  |  | ----- | ------- |  |  |  | --------- | 
|Assets                                             |  | Loansandreceivables |           |  | Hedgederivatives |  |        | Heldfortrading |  |  | Initial designationas fair valuethroughprofit and loss |  |  | Total |        
|                                                   |  | ThUS$               |           |  | ThUS$            |  |        | ThUS$          |  |  | ThUS$                                                  |  |  | ThUS$ |        
|Cash and cash equivalents                          |  |                     | 933,805   |  |                  |  |       |                |  |  |                                                       |  |  |       | 15,522  |  |  |  | 949,327   | 
|Other financial assets, current (*)                |  |                     | 164,426   |  |                  |  | 11,411 |                |  |  |                                                       |  |  |       | 536,991 |  |  |  | 712,828   | 
|Trade and others accounts receivable, current      |  |                     | 1,107,889 |  |                  |  |       |                |  |  |                                                       |  |  |       |        |  |  |  | 1,107,889 | 
|Accounts receivable from related entities, current |  |                     | 554       |  |                  |  |       |                |  |  |                                                       |  |  |       |        |  |  |  | 554       | 
|Other financial assets, non current (*)            |  |                     | 101,603   |  |                  |  |       |                |  |  | 522                                                    |  |  |       |        |  |  |  | 102,125   | 
|Accounts receivable, non current                   |  |                     | 8,254     |  |                  |  |       |                |  |  |                                                       |  |  |       |        |  |  |  | 8,254     | 
|                                                   |  |                     |           |  |                  |  |        |                |  |  |                                                        |  |  |       |         |  |  |  |           | 
|Total                                              |  |                     | 2,316,531 |  |                  |  | 11,411 |                |  |  | 522                                                    |  |  |       | 552,513 |  |  |  | 2,880,977 | 
|                                                   |  |                     |           |  |                  |  |        |                |  |  |                                                        |  |  |       |         |  |  |  |           | 



|                                              |  |                           |            |  |                      |  |        |       |  |  |            | 
|--------------------------------------------- |  | ------------------------- | ---------- |  | -------------------- |  | ------ | ----- |  |  | ---------- | 
|Liabilities                                   |  | Otherfinancialliabilities |            |  | HeldHedgederivatives |  |        | Total | 
|                                              |  | ThUS$                     |            |  | ThUS$                |  |        | ThUS$ | 
|Other liabilities, current                    |  |                           | 1,814,647  |  |                      |  | 24,881 |       |  |  | 1,839,528  | 
|Trade and others accounts payable, current    |  |                           | 1,593,068  |  |                      |  |       |       |  |  | 1,593,068  | 
|Accounts payable to related entities, current |  |                           | 269        |  |                      |  |       |       |  |  | 269        | 
|Other financial liabilities, non-current      |  |                           | 6,790,273  |  |                      |  | 6,679  |       |  |  | 6,796,952  | 
|Accounts payable, non-current                 |  |                           | 359,391    |  |                      |  |       |       |  |  | 359,391    | 
|                                              |  |                           |            |  |                      |  |        |       |  |  |            | 
|Total                                         |  |                           | 10,557,648 |  |                      |  | 31,560 |       |  |  | 10,589,208 | 
|                                              |  |                           |            |  |                      |  |        |       |  |  |            | 



|(*) | 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.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-55



---

##### Table of Contents

As of December 31, 2015



|                                                   |  |                     |           |  |                  |  |        |                |  |  |                                                     |  |  |       |         |  |  |  |           | 
|-------------------------------------------------- |  | ------------------- | --------- |  | ---------------- |  | ------ | -------------- |  |  | --------------------------------------------------- |  |  | ----- | ------- |  |  |  | --------- | 
|Assets                                             |  | Loansandreceivables |           |  | Hedgederivatives |  |        | Heldfortrading |  |  | Initialdesignationasfair valuethroughprofit andloss |  |  | Total |        
|                                                   |  | ThUS$               |           |  | ThUS$            |  |        | ThUS$          |  |  | ThUS$                                               |  |  | ThUS$ |        
|Cash and cash equivalents                          |  |                     | 726,897   |  |                  |  |       |                |  |  |                                                    |  |  |       | 26,600  |  |  |  | 753,497   | 
|Other financial assets, current (*)                |  |                     | 28,385    |  |                  |  | 16,578 |                |  |  | 157,575                                             |  |  |       | 448,810 |  |  |  | 651,348   | 
|Trade and others accounts receivable, current      |  |                     | 796,974   |  |                  |  |       |                |  |  |                                                    |  |  |       |        |  |  |  | 796,974   | 
|Accounts receivable from related entities, current |  |                     | 183       |  |                  |  |       |                |  |  |                                                    |  |  |       |        |  |  |  | 183       | 
|Other financial assets, non current (*)            |  |                     | 88,820    |  |                  |  |       |                |  |  | 638                                                 |  |  |       |        |  |  |  | 89,458    | 
|Accounts receivable, non current                   |  |                     | 10,715    |  |                  |  |       |                |  |  |                                                    |  |  |       |        |  |  |  | 10,715    | 
|                                                   |  |                     |           |  |                  |  |        |                |  |  |                                                     |  |  |       |         |  |  |  |           | 
|Total                                              |  |                     | 1,651,974 |  |                  |  | 16,578 |                |  |  | 158,213                                             |  |  |       | 475,410 |  |  |  | 2,302,175 | 
|                                                   |  |                     |           |  |                  |  |        |                |  |  |                                                     |  |  |       |         |  |  |  |           | 



|                                              |  |                           |            |  |                      |  |         |       |  |  |            | 
|--------------------------------------------- |  | ------------------------- | ---------- |  | -------------------- |  | ------- | ----- |  |  | ---------- | 
|Liabilities                                   |  | Otherfinancialliabilities |            |  | HeldHedgederivatives |  |         | Total | 
|                                              |  | ThUS$                     |            |  | ThUS$                |  |         | ThUS$ | 
|Other liabilities, current                    |  |                           | 1,510,146  |  |                      |  | 134,089 |       |  |  | 1,644,235  | 
|Trade and others accounts payable, current    |  |                           | 1,483,957  |  |                      |  |        |       |  |  | 1,483,957  | 
|Accounts payable to related entities, current |  |                           | 447        |  |                      |  |        |       |  |  | 447        | 
|Other financial liabilities, non-current      |  |                           | 7,516,257  |  |                      |  | 16,128  |       |  |  | 7,532,385  | 
|Accounts payable, non-current                 |  |                           | 417,050    |  |                      |  |        |       |  |  | 417,050    | 
|                                              |  |                           |            |  |                      |  |         |       |  |  |            | 
|Total                                         |  |                           | 10,927,857 |  |                      |  | 150,217 |       |  |  | 11,078,074 | 
|                                              |  |                           |            |  |                      |  |         |       |  |  |            | 



|(*) | 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.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-56



---

##### Table of Contents

|7.2. | Financial instruments by currency
|---- | ---------------------------------



|                                                   |  |                       |           |  |                       |  |           | 
|-------------------------------------------------- |  | --------------------- | --------- |  | --------------------- |  | --------- | 
|a)      Assets                                     |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                                                   |  | ThUS $                |           |  | ThUS $                | 
|Cash and cash equivalents                          |  |                       | 949,327   |  |                       |  | 753,497   | 
|Argentine peso                                     |  |                       | 7,871     |  |                       |  | 18,733    | 
|Brazilian real                                     |  |                       | 97,401    |  |                       |  | 106,219   | 
|Chilean peso                                       |  |                       | 30,758    |  |                       |  | 17,978    | 
|Colombian peso                                     |  |                       | 4,336     |  |                       |  | 14,601    | 
|Euro                                               |  |                       | 1,695     |  |                       |  | 10,663    | 
|US Dollar                                          |  |                       | 780,124   |  |                       |  | 564,214   | 
|Strong bolivar                                     |  |                       | 61        |  |                       |  | 2,986     | 
|Other currencies                                   |  |                       | 27,081    |  |                       |  | 18,103    | 
|Other financial assets (current and non-current)   |  |                       | 814,953   |  |                       |  | 740,806   | 
|Argentine peso                                     |  |                       | 337       |  |                       |  | 157,281   | 
|Brazilian real                                     |  |                       | 686,501   |  |                       |  | 449,934   | 
|Chilean peso                                       |  |                       | 668       |  |                       |  | 640       | 
|Colombian peso                                     |  |                       | 1,023     |  |                       |  | 1,670     | 
|Euro                                               |  |                       | 6,966     |  |                       |  | 614       | 
|US Dollar                                          |  |                       | 117,346   |  |                       |  | 128,620   | 
|Strong bolivar                                     |  |                       | 76        |  |                       |  | 22        | 
|Other currencies                                   |  |                       | 2,036     |  |                       |  | 2,025     | 
|Trade and other accounts receivable, current       |  |                       | 1,107,889 |  |                       |  | 796,974   | 
|Argentine peso                                     |  |                       | 82,770    |  |                       |  | 71,438    | 
|Brazilian real                                     |  |                       | 551,260   |  |                       |  | 191,037   | 
|Chilean peso                                       |  |                       | 92,791    |  |                       |  | 57,755    | 
|Colombian peso                                     |  |                       | 16,454    |  |                       |  | 13,208    | 
|Euro                                               |  |                       | 21,923    |  |                       |  | 30,006    | 
|US Dollar                                          |  |                       | 312,394   |  |                       |  | 344,153   | 
|Strong bolivar                                     |  |                       | 43        |  |                       |  | 7,225     | 
|Other currencies (*)                               |  |                       | 30,254    |  |                       |  | 82,152    | 
|Accounts receivable, non-current                   |  |                       | 8,254     |  |                       |  | 10,715    | 
|Brazilian real                                     |  |                       | 4         |  |                       |  | 521       | 
|Chilean peso                                       |  |                       | 8,250     |  |                       |  | 5,041     | 
|US Dollar                                          |  |                       |          |  |                       |  | 5,000     | 
|Other currencies (*)                               |  |                       |          |  |                       |  | 153       | 
|Accounts receivable from related entities, current |  |                       | 554       |  |                       |  | 183       | 
|Brazilian real                                     |  |                       |          |  |                       |  | 2         | 
|Chilean peso                                       |  |                       | 554       |  |                       |  | 181       | 
|Total assets                                       |  |                       | 2,880,977 |  |                       |  | 2,302,175 | 
|Argentine peso                                     |  |                       | 90,978    |  |                       |  | 247,452   | 
|Brazilian real                                     |  |                       | 1,335,166 |  |                       |  | 747,713   | 
|Chilean peso                                       |  |                       | 133,021   |  |                       |  | 81,595    | 
|Colombian peso                                     |  |                       | 21,813    |  |                       |  | 29,479    | 
|Euro                                               |  |                       | 30,584    |  |                       |  | 41,283    | 
|US Dollar                                          |  |                       | 1,209,864 |  |                       |  | 1,041,987 | 
|Strong bolivar                                     |  |                       | 180       |  |                       |  | 10,233    | 
|Other currencies                                   |  |                       | 59,371    |  |                       |  | 102,433   | 



|(*) | 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.



F-57



---

##### Table of Contents

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



|                                                |  |                       |           |   |                       |  |         |  
|----------------------------------------------- |  | --------------------- | --------- | - | --------------------- |  | ------- | -
|                                                |  | As ofDecember 31,2016 |           |   | As ofDecember 31,2015 | 
|                                                |  | ThUS$                 |           |   | ThUS$                 | 
|Trade accounts receivable                       |  |                       | 1,022,933 |   |                       |  | 685,733 |  
|Other accounts receivable                       |  |                       | 170,264   |   |                       |  | 182,028 |  
|                                                |  |                       |           |   |                       |  |         |  
|Total trade and other accounts receivable       |  |                       | 1,193,197 |   |                       |  | 867,761 |  
|Less: Allowance for impairment loss             |  |                       | (77,054   | ) |                       |  | (60,072 | )
|                                                |  |                       |           |   |                       |  |         |  
|Total net trade and accounts receivable         |  |                       | 1,116,143 |   |                       |  | 807,689 |  
|Less: non-current portion  accounts receivable |  |                       | (8,254    | ) |                       |  | (10,715 | )
|                                                |  |                       |           |   |                       |  |         |  
|Trade and other accounts receivable, current    |  |                       | 1,107,889 |   |                       |  | 796,974 |  
|                                                |  |                       |           |   |                       |  |         |  

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 ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                                                                         |  | ThUS$                 |           |  | ThUS$                 | 
|Fully performing                                                         |  |                       | 896,040   |  |                       |  | 577,902 | 
|Matured accounts receivable, but not impaired                            |  |                       |           |  |                       |  |         | 
|Expired from 1 to 90 days                                                |  |                       | 38,969    |  |                       |  | 28,717  | 
|Expired from 91 to 180 days                                              |  |                       | 9,303     |  |                       |  | 10,995  | 
|More than 180 days overdue (*)                                           |  |                       | 1,567     |  |                       |  | 8,047   | 
|                                                                         |  |                       |           |  |                       |  |         | 
|Total matured accounts receivable, but not impaired                      |  |                       | 49,839    |  |                       |  | 47,759  | 
|                                                                         |  |                       |           |  |                       |  |         | 
|Matured accounts receivable and impaired                                 |  |                       |           |  |                       |  |         | 
|Judicial, pre-judicial collection and protested documents                |  |                       | 34,909    |  |                       |  | 24,304  | 
|Debtor under pre-judicial collection process and portfolio sensitization |  |                       | 42,145    |  |                       |  | 35,768  | 
|                                                                         |  |                       |           |  |                       |  |         | 
|Total matured accounts receivable and impaired                           |  |                       | 77,054    |  |                       |  | 60,072  | 
|                                                                         |  |                       |           |  |                       |  |         | 
|Total                                                                    |  |                       | 1,022,933 |  |                       |  | 685,733 | 
|                                                                         |  |                       |           |  |                       |  |         | 



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



F-58



---

##### Table of Contents

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



|                     |  |                       |           |  |                       |  |         | 
|-------------------- |  | --------------------- | --------- |  | --------------------- |  | ------- | 
|Currency             |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                     |  | ThUS$                 |           |  | ThUS$                 | 
|Argentine Peso       |  |                       | 82,770    |  |                       |  | 71,438  | 
|Brazilian Real       |  |                       | 551,264   |  |                       |  | 191,558 | 
|Chilean Peso         |  |                       | 101,041   |  |                       |  | 62,796  | 
|Colombian peso       |  |                       | 16,454    |  |                       |  | 13,208  | 
|Euro                 |  |                       | 21,923    |  |                       |  | 30,006  | 
|US Dollar            |  |                       | 312,394   |  |                       |  | 349,153 | 
|Strong bolivar       |  |                       | 43        |  |                       |  | 7,225   | 
|Other currency (*)   |  |                       | 30,254    |  |                       |  | 82,305  | 
|                     |  |                       |           |  |                       |  |         | 
|Total                |  |                       | 1,116,143 |  |                       |  | 807,689 | 
|                     |  |                       |           |  |                       |  |         | 
|                     |  |                      
|(*) Other currencies |  |                       |           |  |                       |  |         | 
|Australian Dollar    |  |                       | 5,487     |  |                       |  | 26,185  | 
|Chinese Yuan         |  |                       | 271       |  |                       |  | 4,282   | 
|Danish Krone         |  |                       | 151       |  |                       |  | 164     | 
|Pound Sterling       |  |                       | 3,904     |  |                       |  | 7,228   | 
|Indian Rupee         |  |                       | 303       |  |                       |  | 3,070   | 
|Japanese Yen         |  |                       | 2,601     |  |                       |  | 4,343   | 
|Norwegian Kroner     |  |                       | 184       |  |                       |  | 221     | 
|Swiss Franc          |  |                       | 1,512     |  |                       |  | 1,919   | 
|Korean Won           |  |                       | 4,241     |  |                       |  | 4,462   | 
|New Taiwanese Dollar |  |                       | 662       |  |                       |  | 3,690   | 
|Other currencies     |  |                       | 10,938    |  |                       |  | 26,741  | 
|                     |  |                       |           |  |                       |  |         | 
|Total                |  |                       | 30,254    |  |                       |  | 82,305  | 
|                     |  |                       |           |  |                       |  |         | 

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  | %



F-59



---

##### Table of Contents

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



|                                    |  |                     |         |   |                 |  |        |                         |  |  |                     |   |  |  |         |  
|----------------------------------- |  | ------------------- | ------- | - | --------------- |  | ------ | ----------------------- |  |  | ------------------- | - |  |  | ------- | -
|Periods                             |  | OpeningbalanceThUS$ |         |   | Write-offsThUS$ |  |        | (Increase)DecreaseThUS$ |  |  | ClosingbalanceThUS$ |  
|From January 1 to December 31, 2014 |  |                     | (70,602 | ) |                 |  | 6,864  |                         |  |  | (7,304              | ) |  |  | (71,042 | )
|From January 1 to December 31, 2015 |  |                     | (71,042 | ) |                 |  | 10,120 |                         |  |  | 850                 |   |  |  | (60,072 | )
|From January 1 to December 31, 2016 |  |                     | (60,072 | ) |                 |  | 20,910 |                         |  |  | (37,892             | ) |  |  | (77,054 | )

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 December 31, 2016           |           |  | As of December 31, 2015 | 
|                          |  | Gross exposureaccording tobalance |           |  | Grossimpairedexposure   |  |         | Exposure netof riskconcentrations |  |  | Gross exposureaccording tobalance |  |  | GrossImpairedexposure |         |  | Exposure netof riskconcentrations | 
|                          |  | ThUS$                             |           |  | ThUS$                   |  |         | ThUS$                             |  |  | ThUS$                             |  |  | ThUS$                 |         |  | ThUS$                             | 
|Trade accounts receivable |  |                                   | 1,022,933 |  |                         |  | (77,054 | )                                 |  |  | 945,879                           |  |  |                       | 685,733 |  |                                   |  | (60,072 | ) |  |  | 625,661 | 
|Other accounts receivable |  |                                   | 170,264   |  |                         |  |        |                                   |  |  | 170,264                           |  |  |                       | 182,028 |  |                                   |  |        |   |  |  | 182,028 | 

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.



F-60



---

##### Table of Contents

NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES



|(a) | Accounts Receivable
|--- | -------------------



|             |  |                                         |  |                    |  |                  |  |          |  |                       |     |  |                       |  |     | 
|------------ |  | --------------------------------------- |  | ------------------ |  | ---------------- |  | -------- |  | --------------------- | --- |  | --------------------- |  | --- | 
|Tax No.      |  | Related party                           |  | Relationship       |  | Country oforigin |  | Currency |  | As ofDecember 31,2016 |     |  | As ofDecember 31,2016 | 
|             |  |                                         |  |                    |  |                  |  |          |  | ThUS$                 |     |  | ThUS$                 | 
|78.591.370-1 |  | Bethia S.A. and Subsidiaries            |  | Related director   |  | Chile            |  | CLP      |  |                       | 538 |  |                       |  | 167 | 
|87.752.000-5 |  | Granja Marina Tornagaleones S.A.        |  | Common shareholder |  | Chile            |  | CLP      |  |                       | 14  |  |                       |  | 14  | 
|96.810.370-9 |  | Inversiones Costa Verde Ltda. y CPA.    |  | Controller         |  | Chile            |  | CLP      |  |                       | 2   |  |                       |  |    | 
|Foreign      |  | TAM Aviação Executiva e Taxi Aéreo S.A. |  | Related director   |  | Brazil           |  | BRL      |  |                       |    |  |                       |  | 2   | 
|             |  |                                         |  |                    |  |                  |  |          |  |                       |     |  |                       |  |     | 
|             |  | Total current assets                    |  |                    |  |                  |  |          |  |                       | 554 |  |                       |  | 183 | 
|             |  |                                         |  |                    |  |                  |  |          |  |                       |     |  |                       |  |     | 



|(b) | Accounts payable
|--- | ----------------



|             |  |                                                     |  |                  |  |                  |  |          |  |                       |     |  |                       |  |     | 
|------------ |  | --------------------------------------------------- |  | ---------------- |  | ---------------- |  | -------- |  | --------------------- | --- |  | --------------------- |  | --- | 
|Tax No.      |  | Related party                                       |  | Relationship     |  | Countryof origin |  | Currency |  | As ofDecember 31,2016 |     |  | As ofDecember 31,2015 | 
|             |  |                                                     |  |                  |  |                  |  |          |  | ThUS$                 |     |  | ThUS$                 | 
|Foreign      |  | Consultoría Administrativa Profesional S.A. de C.V. |  | Associate        |  | Mexico           |  | MXN      |  |                       | 170 |  |                       |  | 342 | 
|65.216.000-K |  | Viajes Falabella Ltda.                              |  | Related director |  | Chile            |  | CLP      |  |                       | 46  |  |                       |  | 68  | 
|79.773.440-3 |  | TAM Aviação Executiva e Taxi Aéreo S.A.             |  | Related director |  | Brazil           |  | BRL      |  |                       | 28  |  |                       |  |    | 
|65.216.000-K |  | Comunidad Mujer                                     |  | Related director |  | Chile            |  | CLP      |  |                       | 13  |  |                       |  | 10  | 
|78.591.370-1 |  | Bethia S.A. and Subsidiaries                        |  | Related director |  | Chile            |  | CLP      |  |                       | 6   |  |                       |  | 5   | 
|79.773.440-3 |  | Transportes San Felipe S.A                          |  | Common property  |  | Chile            |  | CLP      |  |                       | 4   |  |                       |  |    | 
|Foreign      |  | Inversora Aeronaútica Argentina                     |  | Related director |  | Argentina        |  | US$      |  |                       | 2   |  |                       |  | 22  | 
|             |  |                                                     |  |                  |  |                  |  |          |  |                       |     |  |                       |  |     | 
|             |  | Total current liabilities                           |  |                  |  |                  |  |          |  |                       | 269 |  |                       |  | 447 | 
|             |  |                                                     |  |                  |  |                  |  |          |  |                       |     |  |                       |  |     | 

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.



F-61



---

##### Table of Contents

NOTE 10 - INVENTORIES

The composition of Inventories is as follows:



|                    |  |                       |         |  |                       |  |         | 
|------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                    |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                    |  | ThUS$                 |         |  | ThUS$                 | 
|Technical stock     |  |                       | 191,864 |  |                       |  | 192,930 | 
|Non-technical stock |  |                       | 49,499  |  |                       |  | 31,978  | 
|                    |  |                       |         |  |                       |  |         | 
|Total               |  |                       | 241,363 |  |                       |  | 224,908 | 
|                    |  |                       |         |  |                       |  |         | 

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, as per the following detail:



|                                               |  |                       |        |  |                       |  |        | 
|---------------------------------------------- |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|                                               |  | As ofDecember 31,2016 |        |  | As ofDecember 31,2015 | 
|                                               |  | ThUS$                 |        |  | ThUS$                 | 
|Provision for obsolescence Technical stock     |  |                       | 31,647 |  |                       |  | 13,303 | 
|Provision for obsolescence Non-technical stock |  |                       | 3,429  |  |                       |  | 2,589  | 
|                                               |  |                       |        |  |                       |  |        | 
|Total                                          |  |                       | 35,076 |  |                       |  | 15,892 | 
|                                               |  |                       |        |  |                       |  |        | 

The resulting amounts do not exceed the respective net realizable values.

As of December 31, 2016, the Company recorded ThUS$ 167,365 (ThUS$ 160,030 at December 31, 2015) within the income statement, mainly due to
in-flight consumption and maintenance, which forms part of Cost of sales.



F-62



---

##### Table of Contents

NOTE 11 - OTHER FINANCIAL ASSETS

The composition of Other financial assets is as follows:



|                                                                    |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|------------------------------------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | --------------------- |  |  | --------------------- |  |  | --------------------- | ------ |  | --------------------- |  | ------- |  |  |  | ------- | 
|                                                                    |  | Current Assets        |         |  | Non-current assets    |  |         | Total Assets          | 
|                                                                    |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 |  |         | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 |  |  | As ofDecember 31,2016 |        |  | As ofDecember 31,2015 | 
|                                                                    |  | ThUS$                 |         |  | ThUS$                 |  |         | ThUS$                 |  |  | ThUS$                 |  |  | ThUS$                 |        |  | ThUS$                 | 
|(a ) Other financial assets                                         |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|Private investment funds                                            |  |                       | 536,991 |  |                       |  | 448,810 |                       |  |  |                      |  |  |                       |       |  |                       |  | 536,991 |  |  |  | 448,810 | 
|Deposits in guarantee (aircraft)                                    |  |                       | 16,819  |  |                       |  | 16,532  |                       |  |  | 56,846                |  |  |                       | 58,483 |  |                       |  | 73,665  |  |  |  | 75,015  | 
|Guarantees for margins of derivatives                               |  |                       | 939     |  |                       |  | 4,456   |                       |  |  |                      |  |  |                       |       |  |                       |  | 939     |  |  |  | 4,456   | 
|Other investments                                                   |  |                       |        |  |                       |  |        |                       |  |  | 522                   |  |  |                       | 638    |  |                       |  | 522     |  |  |  | 638     | 
|Domestic and foreign bonds                                          |  |                       |        |  |                       |  | 157,575 |                       |  |  |                      |  |  |                       |       |  |                       |  |        |  |  |  | 157,575 | 
|Other guarantees given                                              |  |                       | 140,733 |  |                       |  | 6,160   |                       |  |  | 44,757                |  |  |                       | 30,337 |  |                       |  | 185,490 |  |  |  | 36,497  | 
|Other                                                               |  |                       | 5,935   |  |                       |  | 1,237   |                       |  |  |                      |  |  |                       |       |  |                       |  | 5,935   |  |  |  | 1,237   | 
|                                                                    |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|Subtotal of other financial assets                                  |  |                       | 701,417 |  |                       |  | 634,770 |                       |  |  | 102,125               |  |  |                       | 89,458 |  |                       |  | 803,542 |  |  |  | 724,228 | 
|                                                                    |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|(b) Hedging assets                                                  |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|Interest accrued since the last payment date of Cross currency swap |  |                       | 64      |  |                       |  | 397     |                       |  |  |                      |  |  |                       |       |  |                       |  | 64      |  |  |  | 397     | 
|Fair value of foreign currency derivatives (*)                      |  |                       | 1,259   |  |                       |  | 9,888   |                       |  |  |                      |  |  |                       |       |  |                       |  | 1,259   |  |  |  | 9,888   | 
|Fair value of fuel price derivatives                                |  |                       | 10,088  |  |                       |  | 6,293   |                       |  |  |                      |  |  |                       |       |  |                       |  | 10,088  |  |  |  | 6,293   | 
|                                                                    |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|Subtotal of hedging assets                                          |  |                       | 11,411  |  |                       |  | 16,578  |                       |  |  |                      |  |  |                       |       |  |                       |  | 11,411  |  |  |  | 16,578  | 
|                                                                    |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 
|Total Other Financial Assets                                        |  |                       | 712,828 |  |                       |  | 651,348 |                       |  |  | 102,125               |  |  |                       | 89,458 |  |                       |  | 814,953 |  |  |  | 740,806 | 
|                                                                    |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |        |  |                       |  |         |  |  |  |         | 



|(*) | 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 described in Note 19.



F-63



---

##### Table of Contents

NOTE 12 - OTHER NON-FINANCIAL ASSETS

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



|                                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|------------------------------------------------------------------------------------ |  | --------------------- | ------- |  | --------------------- |  | ------- | --------------------- |  |  | --------------------- |  |  | --------------------- | ------- |  | --------------------- |  | ------- |  |  |  | ------- | 
|                                                                                     |  | Current Assets        |         |  | Non-current assets    |  |         | Total Assets          | 
|                                                                                     |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 |  |         | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 |  |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                                                                                     |  | ThUS $                |         |  | ThUS $                |  |         | ThUS $                |  |  | ThUS $                |  |  | ThUS $                |         |  | ThUS $                | 
|(a ) Advance payments                                                                |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|Aircraft leases                                                                      |  |                       | 37,560  |  |                       |  | 33,305  |                       |  |  | 14,065                |  |  |                       | 22,569  |  |                       |  | 51,625  |  |  |  | 55,874  | 
|Aircraft insurance and other                                                         |  |                       | 14,717  |  |                       |  | 12,408  |                       |  |  |                      |  |  |                       |        |  |                       |  | 14,717  |  |  |  | 12,408  | 
|Others                                                                               |  |                       | 4,521   |  |                       |  | 16,256  |                       |  |  | 1,573                 |  |  |                       | 33,781  |  |                       |  | 6,094   |  |  |  | 50,037  | 
|                                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|Subtotal advance payments                                                            |  |                       | 56,798  |  |                       |  | 61,969  |                       |  |  | 15,638                |  |  |                       | 56,350  |  |                       |  | 72,436  |  |  |  | 118,319 | 
|                                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|(b) Other assets                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|Aircraft maintenance reserve (*)                                                     |  |                       | 51,576  |  |                       |  | 99,112  |                       |  |  | 90,175                |  |  |                       | 64,366  |  |                       |  | 141,751 |  |  |  | 163,478 | 
|Sales tax                                                                            |  |                       | 102,351 |  |                       |  | 158,134 |                       |  |  | 40,232                |  |  |                       | 45,061  |  |                       |  | 142,583 |  |  |  | 203,195 | 
|Other taxes                                                                          |  |                       | 500     |  |                       |  | 4,295   |                       |  |  |                      |  |  |                       |        |  |                       |  | 500     |  |  |  | 4,295   | 
|Contributions to Société Internationale de Télécommunications
Aéronautiques (SITA) |  |                       | 406     |  |                       |  | 505     |                       |  |  | 591                   |  |  |                       | 547     |  |                       |  | 997     |  |  |  | 1,052   | 
|Judicial deposits                                                                    |  |                       |        |  |                       |  |        |                       |  |  | 90,604                |  |  |                       | 67,980  |  |                       |  | 90,604  |  |  |  | 67,980  | 
|Others                                                                               |  |                       | 611     |  |                       |  | 6,001   |                       |  |  | 104                   |  |  |                       | 1,159   |  |                       |  | 715     |  |  |  | 7,160   | 
|                                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|Subtotal other assets                                                                |  |                       | 155,444 |  |                       |  | 268,047 |                       |  |  | 221,706               |  |  |                       | 179,113 |  |                       |  | 377,150 |  |  |  | 447,160 | 
|                                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 
|Total Other Non - Financial Assets                                                   |  |                       | 212,242 |  |                       |  | 330,016 |                       |  |  | 237,344               |  |  |                       | 235,463 |  |                       |  | 449,586 |  |  |  | 565,479 | 
|                                                                                     |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |                       |         |  |                       |  |         |  |  |  |         | 



|(*) | 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 (five 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 December 31, 2016, LATAM had ThUS$ 141,751 in maintenance reserves (ThUS$
163,478 at December 31, 2015), corresponding to two aircraft with contracts that establish periodic payments and whose expiration date is in 2017 and 21 aircraft that maintains remaining balances, which will be liquidated in the next
maintenance or return.

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)



F-64



---

##### Table of Contents

NOTE 13 - NON-CURRENT ASSETS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE

Non-current assets and in disposal groups held for sale at December 31, 2016 and December 31, 2015 are detailed below:



|                     |  |                       |         |  |                       |  |       | 
|-------------------- |  | --------------------- | ------- |  | --------------------- |  | ----- | 
|                     |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                     |  | ThUS$                 |         |  | ThUS$                 | 
|Current assets       |  |                       |         |  |                       |  |       | 
|Aircraft             |  |                       | 281,158 |  |                       |  | 263   | 
|Engines and rotables |  |                       | 29,083  |  |                       |  | 1,697 | 
|Other assets         |  |                       | 26,954  |  |                       |  |      | 
|                     |  |                       |         |  |                       |  |       | 
|Total                |  |                       | 337,195 |  |                       |  | 1,960 | 
|                     |  |                       |         |  |                       |  |       | 
|Current liabilities  |  |                       |         |  |                       |  |       | 
|Other liabilities    |  |                       | 10,152  |  |                       |  |      | 
|                     |  |                       |         |  |                       |  |       | 
|Total                |  |                       | 10,152  |  |                       |  |      | 
|                     |  |                       |         |  |                       |  |       | 

The balances are presented at the lower of book value and fair value less cost to sell. The fair value of these assets were
determined based on quoted prices in active markets for similar assets or liabilities. This is a level II measurement as per the fair value hierarchy set out in note 3.3 (2). There were no transfers between levels for recurring fair value
measurements during the year.



|(a) | Assets reclassified from Property, plant and equipment to Non-current assets or groups of assets for disposal classified as held for sale
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

In the period ended December 31, 2016, two Airbus A319 aircraft, two Airbus A320 aircraft, six Airbus A330 aircraft, two Boeing 777 aircraft, eight A330
spare engines, A330 rotables and two buildings were reclassified from Property, plant and equipment to Non-current assets or groups of assets for disposal classified as held for sale.

During the period ended December 31, 2016, two Airbus A319 aircraft, one Airbus A320 aircraft and two Airbus A330 aircraft were sold. Additionally an
A330 spare engine and D200 rotables were sold.

As a result, an adjustment of US $ 55 million was recorded to write down these assets to their net



F-65



---

##### Table of Contents

The detail of fleet classified as non-current assets or groups of assets for disposal classified as held for sale
is the following:



|                     |  |                       |   |     |                       |  |   | 
|-------------------- |  | --------------------- | - | --- | --------------------- |  | - | 
|Aircraft             |  | As ofDecember 31,2016 |   |     | As ofDecember 31,2015 | 
|Boeing 777 Freighter |  |                       | 2 | (*) |                       |  |  | 
|Airbus A330-200      |  |                       | 4 |     |                       |  |  | 
|Airbus A320-200      |  |                       | 1 |     |                       |  |  | 
|ATR42-300            |  |                       | 1 |     |                       |  | 1 | 
|                     |  |                       |   |     |                       |  |   | 
|Total                |  |                       | 8 |     |                       |  | 1 | 
|                     |  |                       |   |     |                       |  |   | 



|(*) | One aircraft leased to DHL.
|--- | ---------------------------

NOTE 14 - 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 ofincorporation |  | Functionalcurrency |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                                                   |  |                         |  |                    |  | %                     |           |  | %                     | 
|Lan Perú S.A.                                      |  | Peru                    |  | US$                |  |                       | 70.00000  |  |                       |  | 70.00000  | 
|Lan Cargo S.A.                                     |  | Chile                   |  | US$                |  |                       | 99.89803  |  |                       |  | 99.89803  | 
|Lan Argentina S.A.                                 |  | Argentina               |  | ARS                |  |                       | 95.85660  |  |                       |  | 94.99055  | 
|Transporte Aéreo S.A.                              |  | Chile                   |  | US$                |  |                       | 99.89804  |  |                       |  | 99.89804  | 
|Aerolane Líneas Aéreas Nacionales del Ecuador S.A. |  | Ecuador                 |  | US$                |  |                       | 100.00000 |  |                       |  | 100.00000 | 
|Aerovías de Integración Regional, AIRES S.A.       |  | Colombia                |  | COP                |  |                       | 99.19056  |  |                       |  | 99.01646  | 
|TAM S.A.                                           |  | Brazil                  |  | BRL                |  |                       | 99.99938  |  |                       |  | 99.99938  | 

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



F-66



---

##### Table of Contents

Summary financial information of significant subsidiaries



|                                                   |  |                                                         |           |  |                                               |  |           |                   |  |  |                  |  |  |                    |           |  |                        |  |           |         |  |  |           |  |  |  |           |  |  |  |         |  
|-------------------------------------------------- |  | ------------------------------------------------------- | --------- |  | --------------------------------------------- |  | --------- | ----------------- |  |  | ---------------- |  |  | ------------------ | --------- |  | ---------------------- |  | --------- | ------- |  |  | --------- |  |  |  | --------- |  |  |  | ------- | -
|                                                   |  | Statement of financial position as of December 31, 2016 |           |  | Results for the periodended December 31, 2016 | 
|Name of significant subsidiary                     |  | TotalAssets                                             |           |  | CurrentAssets                                 |  |           | Non-currentAssets |  |  | TotalLiabilities |  |  | CurrentLiabilities |           |  | Non-currentLiabilities |  |           | Revenue |  |  | NetIncome | 
|                                                   |  | ThUS$                                                   |           |  | ThUS$                                         |  |           | ThUS$             |  |  | ThUS$            |  |  | ThUS$              |           |  | ThUS$                  |  |           | ThUS$   |  |  | ThUS$     | 
|Lan Perú S.A.                                      |  |                                                         | 306,111   |  |                                               |  | 283,691   |                   |  |  | 22,420           |  |  |                    | 294,912   |  |                        |  | 293,602   |         |  |  | 1,310     |  |  |  | 967,787   |  |  |  | (2,164  | )
|Lan Cargo S.A.                                     |  |                                                         | 480,908   |  |                                               |  | 144,309   |                   |  |  | 336,599          |  |  |                    | 239,728   |  |                        |  | 211,395   |         |  |  | 28,333    |  |  |  | 266,296   |  |  |  | (24,813 | )
|Lan Argentina S.A.                                 |  |                                                         | 216,331   |  |                                               |  | 194,306   |                   |  |  | 22,025           |  |  |                    | 200,172   |  |                        |  | 197,330   |         |  |  | 2,842     |  |  |  | 371,896   |  |  |  | (29,572 | )
|Transporte Aéreo S.A.                              |  |                                                         | 340,940   |  |                                               |  | 36,986    |                   |  |  | 303,954          |  |  |                    | 124,805   |  |                        |  | 59,668    |         |  |  | 65,137    |  |  |  | 297,247   |  |  |  | 8,206   |  
|Aerolane Líneas Aéreas Nacionales del Ecuador S.A. |  |                                                         | 89,667    |  |                                               |  | 56,064    |                   |  |  | 33,603           |  |  |                    | 81,101    |  |                        |  | 75,985    |         |  |  | 5,116     |  |  |  | 219,676   |  |  |  | (1,281  | )
|Aerovías de Integración Regional, AIRES S.A.       |  |                                                         | 129,734   |  |                                               |  | 55,132    |                   |  |  | 74,602           |  |  |                    | 85,288    |  |                        |  | 74,160    |         |  |  | 11,128    |  |  |  | 277,503   |  |  |  | (13,675 | )
|TAM S.A. (*)                                       |  |                                                         | 5,287,286 |  |                                               |  | 1,794,189 |                   |  |  | 3,493,097        |  |  |                    | 4,710,308 |  |                        |  | 2,837,620 |         |  |  | 1,872,688 |  |  |  | 4,145,951 |  |  |  | 2,107   |  



|                                                   |  |                                                         |           |  |                                               |  |           |                   |  |  |                  |  |  |                    |           |  |                        |  |           |         |  |  |           |  |  |  |           |  |  |  |          |  
|-------------------------------------------------- |  | ------------------------------------------------------- | --------- |  | --------------------------------------------- |  | --------- | ----------------- |  |  | ---------------- |  |  | ------------------ | --------- |  | ---------------------- |  | --------- | ------- |  |  | --------- |  |  |  | --------- |  |  |  | -------- | -
|                                                   |  | Statement of financial position as of December 31, 2015 |           |  | Results for the periodended December 31, 2015 | 
|Name of significant subsidiary                     |  | TotalAssets                                             |           |  | CurrentAssets                                 |  |           | Non-currentAssets |  |  | TotalLiabilities |  |  | CurrentLiabilities |           |  | Non-currentLiabilities |  |           | Revenue |  |  | NetIncome | 
|                                                   |  | ThUS$                                                   |           |  | ThUS$                                         |  |           | ThUS$             |  |  | ThUS$            |  |  | ThUS$              |           |  | ThUS$                  |  |           | ThUS$   |  |  | ThUS$     | 
|Lan Perú S.A.                                      |  |                                                         | 255,691   |  |                                               |  | 232,547   |                   |  |  | 23,144           |  |  |                    | 240,938   |  |                        |  | 239,521   |         |  |  | 1,417     |  |  |  | 1,078,992 |  |  |  | 5,068    |  
|Lan Cargo S.A.                                     |  |                                                         | 483,033   |  |                                               |  | 159,294   |                   |  |  | 323,739          |  |  |                    | 217,037   |  |                        |  | 147,423   |         |  |  | 69,614    |  |  |  | 278,117   |  |  |  | (74,408  | )
|Lan Argentina S.A.                                 |  |                                                         | 195,756   |  |                                               |  | 180,558   |                   |  |  | 15,198           |  |  |                    | 170,384   |  |                        |  | 168,126   |         |  |  | 2,258     |  |  |  | 443,317   |  |  |  | 9,432    |  
|Transporte Aéreo S.A.                              |  |                                                         | 331,117   |  |                                               |  | 41,756    |                   |  |  | 289,361          |  |  |                    | 122,666   |  |                        |  | 44,495    |         |  |  | 78,171    |  |  |  | 324,464   |  |  |  | 5,878    |  
|Aerolane Líneas Aéreas Nacionales del Ecuador S.A. |  |                                                         | 126,001   |  |                                               |  | 80,641    |                   |  |  | 45,360           |  |  |                    | 116,153   |  |                        |  | 111,245   |         |  |  | 4,908     |  |  |  | 246,402   |  |  |  | (1,278   | )
|Aerovías de Integración Regional, AIRES S.A.       |  |                                                         | 130,039   |  |                                               |  | 62,937    |                   |  |  | 67,102           |  |  |                    | 75,003    |  |                        |  | 64,829    |         |  |  | 10,174    |  |  |  | 291,354   |  |  |  | (34,079  | )
|TAM S.A. (*)                                       |  |                                                         | 4,711,316 |  |                                               |  | 1,350,377 |                   |  |  | 3,360,939        |  |  |                    | 4,199,223 |  |                        |  | 1,963,400 |         |  |  | 2,235,823 |  |  |  | 4,597,611 |  |  |  | (183,812 | )



F-67



---

##### Table of Contents

Summary financial information of significant subsidiaries



|                                                   |  |                                                         |           |  |                                               |  |           |                   |  |  |                  |  |  |                    |           |  |                        |  |           |         |  |  |           |  |  |  |           |  |  |  |         |  
|-------------------------------------------------- |  | ------------------------------------------------------- | --------- |  | --------------------------------------------- |  | --------- | ----------------- |  |  | ---------------- |  |  | ------------------ | --------- |  | ---------------------- |  | --------- | ------- |  |  | --------- |  |  |  | --------- |  |  |  | ------- | -
|                                                   |  | Statement of financial position as of December 31, 2014 |           |  | Results for the periodended December 31, 2014 | 
|Name of significant subsidiary                     |  | TotalAssets                                             |           |  | CurrentAssets                                 |  |           | Non-currentAssets |  |  | TotalLiabilities |  |  | CurrentLiabilities |           |  | Non-currentLiabilities |  |           | Revenue |  |  | NetIncome | 
|                                                   |  | ThUS$                                                   |           |  | ThUS$                                         |  |           | ThUS$             |  |  | ThUS$            |  |  | ThUS$              |           |  | ThUS$                  |  |           | ThUS$   |  |  | ThUS$     | 
|Lan Perú S.A.                                      |  |                                                         | 239,470   |  |                                               |  | 214,245   |                   |  |  | 25,225           |  |  |                    | 228,395   |  |                        |  | 226,784   |         |  |  | 1,611     |  |  |  | 1,134,289 |  |  |  | 1,058   |  
|Lan Cargo S.A.                                     |  |                                                         | 575,979   |  |                                               |  | 250,174   |                   |  |  | 325,805          |  |  |                    | 234,772   |  |                        |  | 119,111   |         |  |  | 115,661   |  |  |  | 267,578   |  |  |  | (17,905 | )
|Lan Argentina S.A.                                 |  |                                                         | 233,142   |  |                                               |  | 206,503   |                   |  |  | 26,639           |  |  |                    | 201,168   |  |                        |  | 198,593   |         |  |  | 2,575     |  |  |  | 439,929   |  |  |  | (17,864 | )
|Transporte Aéreo S.A.                              |  |                                                         | 367,570   |  |                                               |  | 80,090    |                   |  |  | 287,480          |  |  |                    | 147,278   |  |                        |  | 59,805    |         |  |  | 87,473    |  |  |  | 364,580   |  |  |  | (19,001 | )
|Aerolane Líneas Aéreas Nacionales del Ecuador S.A. |  |                                                         | 126,472   |  |                                               |  | 78,306    |                   |  |  | 48,166           |  |  |                    | 116,040   |  |                        |  | 111,718   |         |  |  | 4,322     |  |  |  | 256,925   |  |  |  | (20,193 | )
|Aerovías de Integración Regional, AIRES S.A.       |  |                                                         | 131,324   |  |                                               |  | 38,751    |                   |  |  | 92,573           |  |  |                    | 61,736    |  |                        |  | 49,577    |         |  |  | 12,159    |  |  |  | 392,433   |  |  |  | (81,033 | )
|TAM S.A. (*)                                       |  |                                                         | 6,817,698 |  |                                               |  | 1,921,316 |                   |  |  | 4,896,382        |  |  |                    | 5,809,529 |  |                        |  | 2,279,110 |         |  |  | 3,530,419 |  |  |  | 6,628,432 |  |  |  | 171,655 |  



|(*) | Corresond to consolidated information of TAM S.A. and Subsidiaries.
|--- | -------------------------------------------------------------------



F-68



---

##### Table of Contents

|(b) | Non-controlling interest
|--- | ------------------------



|                                                      |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |                       |   |  |  |        |  
|----------------------------------------------------- |  | -------------- |  | ---------------- |  | --------------------- | -------- |  | --------------------- |  | -------- | --------------------- |  |  | --------------------- | - |  |  | ------ | -
|Equity                                                |  | Tax No .       |  | Countryof origin |  | As ofDecember 31,2016 |          |  | As ofDecember 31,2015 |  |          | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 |  
|                                                      |  |                |  |                  |  | %                     |          |  | %                     |  |          | ThUS$                 |  |  | ThUS$                 |  
|Lan Perú S.A                                          |  | 0 - E          |  | Peru             |  |                       | 30.00000 |  |                       |  | 30.00000 |                       |  |  | 3,360                 |   |  |  | 4,426  |  
|Lan Cargo S.A. and Subsidiaries                       |  | 93.383.000 - 4 |  | Chile            |  |                       | 0.10196  |  |                       |  | 0.10605  |                       |  |  | 957                   |   |  |  | 974    |  
|Promotora Aérea Latinoamericana S.A. and Subsidiaries |  | 0 - E          |  | Mexico           |  |                       | 51.00000 |  |                       |  | 51.00000 |                       |  |  | 3,162                 |   |  |  | 3,084  |  
|Inversora Cordillera S.A. and Subsidiaries            |  | 0 - E          |  | Argentina        |  |                       | 0 .70422 |  |                       |  | 0.70422  |                       |  |  | 515                   |   |  |  | (1,386 | )
|Lan Argentina S.A.                                    |  | 0 - E          |  | Argentina        |  |                       | 0 .13440 |  |                       |  | 1.00000  |                       |  |  | (311                  | ) |  |  | 29     |  
|Americonsult de Guatemala S.A.                        |  | 0 - E          |  | Guatemala        |  |                       | 1.00000  |  |                       |  | 1.00000  |                       |  |  | 1                     |   |  |  | 5      |  
|Americonsult Costa Rica S.A.                          |  | 0 - E          |  | Costa Rica       |  |                       | 1.00000  |  |                       |  | 1.00000  |                       |  |  | 12                    |   |  |  | 12     |  
|Linea Aérea Carguera de Colombiana S.A.               |  | 0 - E          |  | Colombia         |  |                       | 10.00000 |  |                       |  | 10.00000 |                       |  |  | (905                  | ) |  |  | (811   | )
|Aerolíneas Regionales de Integración Aires S.A.       |  | 0 - E          |  | Colombia         |  |                       | 0.80944  |  |                       |  | 0.98307  |                       |  |  | 436                   |   |  |  | 540    |  
|Transportes Aereos del Mercosur S.A.                  |  | 0 - E          |  | Paraguay         |  |                       | 5.02000  |  |                       |  | 5.02000  |                       |  |  | 1,104                 |   |  |  | 1,256  |  
|Multiplus S.A.                                        |  | 0 - E          |  | Brazil           |  |                       | 27.26000 |  |                       |  | 27.26000 |                       |  |  | 80,313                |   |  |  | 72,884 |  
|                                                      |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |                       |   |  |  |        |  
|Total                                                 |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  | 88,644                |   |  |  | 81,013 |  
|                                                      |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |                       |   |  |  |        |  



|                                                      |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |          |  |  |                                      |        |   |       |  |        |   |  |  |        |  
|----------------------------------------------------- |  | -------------- |  | ---------------- |  | --------------------- | -------- |  | --------------------- |  | -------- | --------------------- |  |  | -------- |  |  | ------------------------------------ | ------ | - | ----- |  | ------ | - |  |  | ------ | -
|Incomes                                               |  | Tax No.        |  | Countryof origin |  | As ofDecember 31,2016 |          |  | As ofDecember 31,2015 |  |          | As ofDecember 31,2014 |  |  | 2016     |  |  | For the period endedDecember 31,2015 |        |   | 2014  | 
|                                                      |  |                |  |                  |  | %                     |          |  | %                     |  |          | %                     |  |  | ThUS$    |  |  | ThUS$                                |        |   | ThUS$ | 
|Lan Perú S.A                                          |  | 0 - E          |  | Peru             |  |                       | 30.00000 |  |                       |  | 30.00000 |                       |  |  | 30.00000 |  |  |                                      | (649   | ) |       |  | 1,521  |   |  |  | 317    |  
|Lan Cargo S.A. and Subsidiaries                       |  | 93.383.000 - 4 |  | Chile            |  |                       | 0 .10196 |  |                       |  | 0 .10605 |                       |  |  | 0 .10605 |  |  |                                      | (7     | ) |       |  | (69    | ) |  |  | (125   | )
|Inversiones Lan S.A. and Subsidiaries                 |  | 96.575.810 - 0 |  | Chile            |  |                       | 0 .00000 |  |                       |  | 0 .00000 |                       |  |  | 0 .29000 |  |  |                                      |       |   |       |  |       |   |  |  | (14    | )
|Promotora Aerea Latinoamericana S.A. and Subsidiaries |  | 0 - E          |  | Mexico           |  |                       | 51.00000 |  |                       |  | 51.00000 |                       |  |  | 51.00000 |  |  |                                      | 96     |   |       |  | 1,349  |   |  |  | 396    |  
|Aerolane, Lineas Aéreas Nacionales del Ecuador S.A.   |  | 0 - E          |  | Ecuador          |  |                       | 0 .00000 |  |                       |  | 0 .00000 |                       |  |  | 0 .00000 |  |  |                                      |       |   |       |  |       |   |  |  | (5,671 | )
|Invers ora Cordillera S.A. and Subsidiaries           |  | 0 - E          |  | Argentina        |  |                       | 0 .70422 |  |                       |  | 0 .70422 |                       |  |  | 4 .22000 |  |  |                                      | 364    |   |       |  | 281    |   |  |  | 270    |  
|Lan Argentina S.A.                                    |  | 0 - E          |  | Argentina        |  |                       | 0 .13440 |  |                       |  | 1.00000  |                       |  |  | 1.00000  |  |  |                                      | 77     |   |       |  | 61     |   |  |  | 58     |  
|Americonsult de Guatemala S.A.                        |  | 0 - E          |  | Guatemala        |  |                       | 1.00000  |  |                       |  | 1.00000  |                       |  |  | 1.00000  |  |  |                                      | (4     | ) |       |  | 1      |   |  |  | 4      |  
|Americonsult Costa Rica S.A.                          |  | 0 - E          |  | Costa Rica       |  |                       | 1.00000  |  |                       |  | 1.00000  |                       |  |  | 1.00000  |  |  |                                      |       |   |       |  | 5      |   |  |  | 6      |  
|Linea Aérea Carguera de Colombiana S.A.               |  | 0 - E          |  | Colombia         |  |                       | 10.00000 |  |                       |  | 10.00000 |                       |  |  | 10.00000 |  |  |                                      | (106   | ) |       |  | 14     |   |  |  | (495   | )
|Aerolíneas Regionales de Integración Aires S.A.       |  | 0 - E          |  | Colombia         |  |                       | 0 .80944 |  |                       |  | 0 .98307 |                       |  |  | 0 .98307 |  |  |                                      | (140   | ) |       |  | (335   | ) |  |  | (797   | )
|Transportes Aereos del Mercosur S.A.                  |  | 0 - E          |  | Paraguay         |  |                       | 5 .02000 |  |                       |  | 5 .02000 |                       |  |  | 5 .02000 |  |  |                                      | 146    |   |       |  | 431    |   |  |  | (389   | )
|Multiplus S.A.                                        |  | 0 - E          |  | Brazil           |  |                       | 27.26000 |  |                       |  | 27.26000 |                       |  |  | 27.26000 |  |  |                                      | 41,673 |   |       |  | 37,283 |   |  |  | 39,254 |  
|                                                      |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |          |  |  |                                      |        |   |       |  |        |   |  |  |        |  
|Total                                                 |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |          |  |  |                                      | 41,450 |   |       |  | 40,542 |   |  |  | 32,814 |  
|                                                      |  |                |  |                  |  |                       |          |  |                       |  |          |                       |  |  |          |  |  |                                      |        |   |       |  |        |   |  |  |        |  



F-69



---

##### Table of Contents

NOTE 15 - INTANGIBLE ASSETS OTHER THAN GOODWILL

The details of intangible assets are as follows:



|                    |  |                              |           |  |                              |  |           |              |  |  |              |  |  |  |           | 
|------------------- |  | ---------------------------- | --------- |  | ---------------------------- |  | --------- | ------------ |  |  | ------------ |  |  |  | --------- | 
|                    |  | Classes of intangible assets |           |  | Classes of intangible assets | 
|                    |  | (net)                        |           |  | (gross )                     | 
|                    |  | As of                        |           |  | As of                        |  |           | As of        |  |  | As of        | 
|                    |  | December 31,                 |           |  | December 31,                 |  |           | December 31, |  |  | December 31, | 
|                    |  | 2016                         |           |  | 2015                         |  |           | 2016         |  |  | 2015         | 
|                    |  | ThUS $                       |           |  | ThUS $                       |  |           | ThUS $       |  |  | ThUS $       | 
|Airports lots       |  |                              | 978,849   |  |                              |  | 816,987   |              |  |  | 978,849      |  |  |  | 816,987   | 
|Loyalty program     |  |                              | 326,262   |  |                              |  | 272,312   |              |  |  | 326,262      |  |  |  | 272,312   | 
|Computer software   |  |                              | 157,016   |  |                              |  | 104,258   |              |  |  | 419,652      |  |  |  | 324,043   | 
|Developing software |  |                              | 91,053    |  |                              |  | 74,887    |              |  |  | 91,053       |  |  |  | 74,887    | 
|Trademarks (1)      |  |                              | 57,133    |  |                              |  | 52,981    |              |  |  | 63,730       |  |  |  | 52,981    | 
|Other assets        |  |                              |          |  |                              |  |          |              |  |  | 808          |  |  |  | 808       | 
|                    |  |                              |           |  |                              |  |           |              |  |  |              |  |  |  |           | 
|Total               |  |                              | 1,610,313 |  |                              |  | 1,321,425 |              |  |  | 1,880,354    |  |  |  | 1,542,018 | 
|                    |  |                              |           |  |                              |  |           |              |  |  |              |  |  |  |           | 

Movement in Intangible assets other than goodwill:



|                                        |  |          |         |   |            |  |         |           |  |  |                 |   |  |        |          |   |        |  |     |   |  |  |           |  
|--------------------------------------- |  | -------- | ------- | - | ---------- |  | ------- | --------- |  |  | --------------- | - |  | ------ | -------- | - | ------ |  | --- | - |  |  | --------- | -
|                                        |  | Computer |         |   |            |  |         |           |  |  | Trademarks      |   |  | Other  |          |   |        | 
|                                        |  | software |         |   | Developing |  |         | Airport   |  |  | and loyalty     |   |  | assets |          |   |        | 
|                                        |  | Net      |         |   | software   |  |         | slots (2) |  |  | program (1) (2) |   |  | 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                               |  |          | 16,902  |   |            |  | 60,994  |           |  |  |                |   |  |        |         |   |        |  |    |   |  |  | 77,896    |  
|Withdrawals                             |  |          | (1,365  | ) |            |  | (3,576  | )         |  |  |                |   |  |        |         |   |        |  |    |   |  |  | (4,941    | )
|Transfer software                       |  |          | 22,351  |   |            |  | (24,539 | )         |  |  |                |   |  |        |         |   |        |  |    |   |  |  | (2,188    | )
|Foreing exchange                        |  |          | (6,763  | ) |            |  | (4,904  | )         |  |  | (160,779        | ) |  |        | (64,017  | ) |        |  |    |   |  |  | (236,463  | )
|Amortization                            |  |          | (47,452 | ) |            |  |        |           |  |  |                |   |  |        |         |   |        |  | (81 | ) |  |  | (47,533   | )
|                                        |  |          |         |   |            |  |         |           |  |  |                 |   |  |        |          |   |        |  |     |   |  |  |           |  
|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                               |  |          | 4,954   |   |            |  | 48,270  |           |  |  |                |   |  |        |         |   |        |  |    |   |  |  | 53,224    |  
|Withdrawals                             |  |          | (4,612  | ) |            |  | (162    | )         |  |  |                |   |  |        | (1       | ) |        |  |    |   |  |  | (4,775    | )
|Transfer software                       |  |          | 28,726  |   |            |  | (30,426 | )         |  |  |                |   |  |        |         |   |        |  |    |   |  |  | (1,700    | )
|Foreing exchange                        |  |          | (14,871 | ) |            |  | (16,845 | )         |  |  | (384,041        | ) |  |        | (152,910 | ) |        |  |    |   |  |  | (568,667  | )
|Amortization                            |  |          | (36,736 | ) |            |  |        |           |  |  |                |   |  |        |         |   |        |  |    |   |  |  | (36,736   | )
|                                        |  |          |         |   |            |  |         |           |  |  |                 |   |  |        |          |   |        |  |     |   |  |  |           |  
|Closing balance as of December 31, 2015 |  |          | 104,258 |   |            |  | 74,887  |           |  |  | 816,987         |   |  |        | 325,293  |   |        |  |    |   |  |  | 1,321,425 |  
|                                        |  |          |         |   |            |  |         |           |  |  |                 |   |  |        |          |   |        |  |     |   |  |  |           |  
|Opening balance as of January 1, 2016   |  |          | 104,258 |   |            |  | 74,887  |           |  |  | 816,987         |   |  |        | 325,293  |   |        |  |    |   |  |  | 1,321,425 |  
|Additions                               |  |          | 6,688   |   |            |  | 83,672  |           |  |  |                |   |  |        |         |   |        |  |    |   |  |  | 90,360    |  
|Withdrawals                             |  |          | (736    | ) |            |  | (191    | )         |  |  |                |   |  |        |         |   |        |  |    |   |  |  | (927      | )
|Transfer software                       |  |          | 85,029  |   |            |  | (74,376 | )         |  |  |                |   |  |        |         |   |        |  |    |   |  |  | 10,653    |  
|Foreing exchange                        |  |          | 5,689   |   |            |  | 7,061   |           |  |  | 161,862         |   |  |        | 64,447   |   |        |  |    |   |  |  | 239,059   |  
|Amortization                            |  |          | (43,912 | ) |            |  |        |           |  |  |                |   |  |        | (6,345   | ) |        |  |    |   |  |  | (50,257   | )
|                                        |  |          |         |   |            |  |         |           |  |  |                 |   |  |        |          |   |        |  |     |   |  |  |           |  
|Closing balance as of December 31, 2016 |  |          | 157,016 |   |            |  | 91,053  |           |  |  | 978,849         |   |  |        | 383,395  |   |        |  |    |   |  |  | 1,610,313 |  
|                                        |  |          |         |   |            |  |         |           |  |  |                 |   |  |        |          |   |        |  |     |   |  |  |           |  



|(1) | After the extensive integration work following the combination between LAN and TAM, during which there has been solid progress in the homologation of the optimization processes of its air connections, in addition to the
restructuring and modernization of the fleet of aircraft, the Company has resolved adopt a unique name and identity, and announce that the brand of the group will be LATAM, which would unite all companies under a single image.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-70



---

##### Table of Contents

Given the above, we have proceeded to review the brands useful life, concluding that these should
go from an indefinite to defined useful life. The estimated new useful life is 5 years, equivalent to the period for finishing all the image changes necessary.



|(2) | See Note 2.5
|--- | ------------

The amortization of the period is shown in the consolidated statement of income in administrative
expenses. The accumulated amortization of computer programs as of December 31, 2016 amounts to ThUS$ 270,041 (ThUS$ 220,593 at December 31, 2015).

NOTE 16 - GOODWILL

The Goodwill
amount at December 31, 2016 is ThUS$ 2,710,382 (ThUS$ 2,280,575 at December 31, 2015 and ThUS$ 3,313,401 at December 31, 2014). Movement of Goodwill separated by CGU it includes the following:

Movement of Goodwill, separated by CGU:



|                                                     |  |           |           |   |             |  |          |       |  |  |            |  
|---------------------------------------------------- |  | --------- | --------- | - | ----------- |  | -------- | ----- |  |  | ---------- | -
|                                                     |  |           |           |   | Coalition   |  |          |       | 
|                                                     |  |           |           |   | and loyalty |  |          |       | 
|                                                     |  | Air       |           |   | program     |  |          |       | 
|                                                     |  | Transport |           |   | 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 |  |           | (360,371  | ) |             |  | (87,670  | )     |  |  | (448,041   | )
|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 |  |           | (823,415  | ) |             |  | (209,411 | )     |  |  | (1,032,826 | )
|                                                     |  |           |           |   |             |  |          |       |  |  |            |  
|Closing balance as of December 31, 2015              |  |           | 1,835,088 |   |             |  | 445,487  |       |  |  | 2,280,575  |  
|                                                     |  |           |           |   |             |  |          |       |  |  |            |  
|Opening balance as of January 1, 2016                |  |           | 1,835,088 |   |             |  | 445,487  |       |  |  | 2,280,575  |  
|Increase (decrease) due to exchange rate differences |  |           | 341,813   |   |             |  | 88,261   |       |  |  | 430,074    |  
|Others                                               |  |           | (267      | ) |             |  |         |       |  |  | (267       | )
|                                                     |  |           |           |   |             |  |          |       |  |  |            |  
|Closing balance as of December 31, 2016              |  |           | 2,176,634 |   |             |  | 533,748  |       |  |  | 2,710,382  |  
|                                                     |  |           |           |   |             |  |          |       |  |  |            |  

The Company has two cash- generating units (CGUs), Air transportation and, Coalition and loyalty program
Multiplus. The CGU Air transport considers the transport of passengers and cargo, 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, while the CGU Coalition and loyalty program Multiplus works with an integrated network associated companies in Brazil.

The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of expected cash
flows, 5 years after tax, which are based on the budget approved by the Board. Cash flows beyond the budget period are extrapolated using the estimated growth rates, which do not exceed the average rates of long-term growth.



F-71



---

##### Table of Contents

Management establish rates for annual growth, discount, inflation and exchange for each cash generating, as well
as fuel prices, based on their key assumptions. The annual growth rate is based on past performance and managements expectations over market developments in each country where it operates. The discount rates used are in American Dollars for
the CGU Air transportation and Brazilian Reals for CGU Program coalition loyalty Multiplus, both of them before tax and reflect specific risks related to each country where the Company operates. Inflation and exchange rates
are based on available data for each country and the information provided by the Central Bank of each country, and the fuel price is determined based on estimated production levels, competitive environment market in which they operate and its
business strategy.

As of December 31, 2016 the recoverable values were determined using the following assumptions presented below:



|                                                                   |  |            |  |                    |  |                          
|------------------------------------------------------------------ |  | ---------- |  | ------------------ |  | -------------------------
|                                                                   |  |            |  | Air transportation |  | Coalition and loyalty    
|                                                                   |  |            |  | CGU                |  | program Multiplus CGU (2)
|Annual growth rate (Terminal)                                      |  | %          |  | 1.0 - 2.0          |  | 4.0 - 5.0                
|Exchange rate (1)                                                  |  | R$/US$     |  | 3.9 - 4.4          |  | 3.9 - 4.4                
|Discount rate based on the weighted average cost of capital (WACC) |  | %          |  | 8.27 - 9.27        |  |                         
|Discount rate based on cost of equity (Ke)                         |  | %          |  |                   |  | 12.3 - 13.3              
|Fuel Price from futures price curves commodities markets           |  | US$/barril |  | 61 - 76            |  |                         



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

|(2) | The flow, as well as annual growth rte and discount, are denominated in real.
|--- | -----------------------------------------------------------------------------

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.

CGUs are sensitive to rates for annual growth, discount and exchanges rates. The sensitivity analysis included the individual impact of
changes in estimates critical in determining the recoverable amounts, namely:



|                                            |  |          |      |  |          |  |      |             |  |  |     | 
|------------------------------------------- |  | -------- | ---- |  | -------- |  | ---- | ----------- |  |  | --- | 
|                                            |  |          |      |  |          |  |      | Decrease    | 
|                                            |  | Increase |      |  | Increase |  |      | Minimum     | 
|                                            |  | Maximum  |      |  | Maximum  |  |      | terminal    | 
|                                            |  | WACC     |      |  | Ke       |  |      | growth rate | 
|                                            |  | %        |      |  | %        |  |      | %           | 
|Air transportation CGU                      |  |          | 9.27 |  |          |  |     |             |  |  | 1.0 | 
|Coalition and loyalty program Multiplus CGU |  |          |     |  |          |  | 13.3 |             |  |  | 4.0 | 

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



F-72



---

##### Table of Contents

NOTE 17 - 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            |            |  | As of                   |  |            | As of          |  |  | As of        |   |  | As of        |            |   | As of        | 
|                                     |  | December 31,     |            |  | December 31,            |  |            | December 31,   |  |  | December 31, |   |  | December 31, |            |   | December 31, | 
|                                     |  | 2016             |            |  | 2015                    |  |            | 2016           |  |  | 2015         |   |  | 2016         |            |   | 2015         | 
|                                     |  | ThUS$            |            |  | ThUS$                   |  |            | ThUS$          |  |  | ThUS$        |   |  | ThUS$        |            |   | ThUS$        | 
|Construction in progress (*)         |  |                  | 470,065    |  |                         |  | 1,142,812  |                |  |  |             |   |  |              |           |   |              |  | 470,065    |  |  |  | 1,142,812  | 
|Land                                 |  |                  | 50,148     |  |                         |  | 45,313     |                |  |  |             |   |  |              |           |   |              |  | 50,148     |  |  |  | 45,313     | 
|Buildings                            |  |                  | 190,771    |  |                         |  | 131,816    |                |  |  | (60,552      | ) |  |              | (40,325    | ) |              |  | 130,219    |  |  |  | 91,491     | 
|Plant and equipment                  |  |                  | 10,099,587 |  |                         |  | 9,683,764  |                |  |  | (2,350,045   | ) |  |              | (2,392,463 | ) |              |  | 7,749,542  |  |  |  | 7,291,301  | 
|Own aircraft                         |  |                  | 9,436,684  |  |                         |  | 9,118,396  |                |  |  | (2,123,025   | ) |  |              | (2,198,682 | ) |              |  | 7,313,659  |  |  |  | 6,919,714  | 
|Other (**)                           |  |                  | 662,903    |  |                         |  | 565,368    |                |  |  | (227,020     | ) |  |              | (193,781   | ) |              |  | 435,883    |  |  |  | 371,587    | 
|Machinery                            |  |                  | 39,246     |  |                         |  | 36,569     |                |  |  | (26,821      | ) |  |              | (21,220    | ) |              |  | 12,425     |  |  |  | 15,349     | 
|Information technology equipment     |  |                  | 163,695    |  |                         |  | 154,093    |                |  |  | (123,981     | ) |  |              | (110,204   | ) |              |  | 39,714     |  |  |  | 43,889     | 
|Fixed installations and accessories  |  |                  | 178,363    |  |                         |  | 179,026    |                |  |  | (94,451      | ) |  |              | (90,068    | ) |              |  | 83,912     |  |  |  | 88,958     | 
|Motor vehicles                       |  |                  | 96,808     |  |                         |  | 99,997     |                |  |  | (67,855      | ) |  |              | (64,047    | ) |              |  | 28,953     |  |  |  | 35,950     | 
|Leasehold improvements               |  |                  | 192,100    |  |                         |  | 124,307    |                |  |  | (87,559      | ) |  |              | (70,219    | ) |              |  | 104,541    |  |  |  | 54,088     | 
|Other property, plants and equipment |  |                  | 3,005,981  |  |                         |  | 3,279,902  |                |  |  | (1,177,351   | ) |  |              | (1,150,396 | ) |              |  | 1,828,630  |  |  |  | 2,129,506  | 
|Financial leasing aircraft           |  |                  | 2,905,556  |  |                         |  | 3,151,405  |                |  |  | (1,152,190   | ) |  |              | (1,120,682 | ) |              |  | 1,753,366  |  |  |  | 2,030,723  | 
|Other                                |  |                  | 100,425    |  |                         |  | 128,497    |                |  |  | (25,161      | ) |  |              | (29,714    | ) |              |  | 75,264     |  |  |  | 98,783     | 
|                                     |  |                  |            |  |                         |  |            |                |  |  |              |   |  |              |            |   |              |  |            |  |  |  |            | 
|Total                                |  |                  | 14,486,764 |  |                         |  | 14,877,599 |                |  |  | (3,988,615   | ) |  |              | (3,938,942 | ) |              |  | 10,498,149 |  |  |  | 10,938,657 | 
|                                     |  |                  |            |  |                         |  |            |                |  |  |              |   |  |              |            |   |              |  |            |  |  |  |            | 



|(*) | It includes pre-delivery payments to aircraft manufacturers for ThUS$ 434,250 (ThUS$ 1,016,007 as of December 31, 2015)
|--- | -----------------------------------------------------------------------------------------------------------------------

|(**) | Mainly considers rotable and tools.
|---- | -----------------------------------



F-73



---

##### Table of Contents

|(a) | Movement in the different categories of Property, plant and equipment:
|--- | ----------------------------------------------------------------------



|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|--------------------------------------- |  | ------------ | --------- | - | ------ |  | ------- | --------- |  |  | --------- | - |  | ----------- | --------- | ---- | ------------- |  | ------- | -------- |  |  | ------------ | - |  | --------- | ------ | - | --------- |  | ------- | - |  |  | --------- | - |  |  | ---------- | -
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  | Other     |        |   |           | 
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  | Information |           |      | Fixed         |  |         |          |  |  |              |   |  | property, |        |   | Property, | 
|                                        |  |              |           |   |        |  |         |           |  |  | Plant and |   |  | technology  |           |      | installations |  |         | Motor    |  |  | Leasehold    |   |  | plant and |        |   | Plant and | 
|                                        |  | Construction |           |   |        |  |         | Buildings |  |  | equipment |   |  | equipment   |           |      | & accessories |  |         | vehicles |  |  | improvements |   |  | equipment |        |   | equipment | 
|                                        |  | in progress  |           |   | Land   |  |         | net       |  |  | net       |   |  | net         |           |      | net           |  |         | net      |  |  | net          |   |  | net       |        |   | 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                               |  |              | 29,980    |   |        |  | 3,440   |           |  |  | 16,636    |   |  |             | 1,214,282 |      |               |  | 22,239  |          |  |  | 2,190        |   |  |           | 1,586  |   |           |  |        |   |  |  | 154,049   |   |  |  | 1,444,402  |  
|Disposals                               |  |              |          |   |        |  |        |           |  |  |          |   |  |             | (660,129  | )(1) |               |  | (57     | )        |  |  |             |   |  |           | (4     | ) |           |  |        |   |  |  | (328      | ) |  |  | (660,518   | )
|Retirements                             |  |              | (705      | ) |        |  |        |           |  |  | (403      | ) |  |             | (39,463   | )    |               |  | (205    | )        |  |  | (230         | ) |  |           | (53    | ) |           |  | (50     | ) |  |  | (34,282   | ) |  |  | (75,391    | )
|Depreciation expenses                   |  |              |          |   |        |  |        |           |  |  | (13,980   | ) |  |             | (431,967  | )    |               |  | (16,889 | )        |  |  | (8,899       | ) |  |           | (1,041 | ) |           |  | (19,127 | ) |  |  | (286,033  | ) |  |  | (777,936   | )
|Foreing exchange                        |  |              | 733       |   |        |  | (4,804  | )         |  |  | (12,341   | ) |  |             | (59,957   | )    |               |  | (3,595  | )        |  |  | (1,509       | ) |  |           | 330    |   |           |  |        |   |  |  | (110,727  | ) |  |  | (191,870   | )
|Other increases (decreases)             |  |              | 48,621    |   |        |  |        |           |  |  | 5,309     |   |  |             | 124,205   |      |               |  | 3,297   |          |  |  | 1,639        |   |  |           | (597   | ) |           |  | 58,931  |   |  |  | (189,802  | ) |  |  | 51,603     |  
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Changes, total                          |  |              | 78,629    |   |        |  | (1,364  | )         |  |  | (4,779    | ) |  |             | 146,971   |      |               |  | 4,790   |          |  |  | (6,809       | ) |  |           | 221    |   |           |  | 39,754  |   |  |  | (467,123  | ) |  |  | (209,710   | )
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|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                               |  |              | 39,711    |   |        |  |        |           |  |  | 439       |   |  |             | 1,304,199 |      |               |  | 15,322  |          |  |  | 1,692        |   |  |           | 280    |   |           |  | 13,188  |   |  |  | 64,226    |   |  |  | 1,439,057  |  
|Disposals                               |  |              |          |   |        |  |        |           |  |  | (500      | ) |  |             | (76,675   | )(2) |               |  | (27     | )        |  |  |             |   |  |           | (8     | ) |           |  |        |   |  |  | (11       | ) |  |  | (77,221    | )
|Retirements                             |  |              | (1,262    | ) |        |  |        |           |  |  | (956      | ) |  |             | (38,240   | )    |               |  | (104    | )        |  |  | (476         | ) |  |           | (4     | ) |           |  |        |   |  |  | (8,902    | ) |  |  | (49,944    | )
|Depreciation expenses                   |  |              |          |   |        |  |        |           |  |  | (7,161    | ) |  |             | (521,688  | )    |               |  | (16,196 | )        |  |  | (11,649      | ) |  |           | (378   | ) |           |  | (13,973 | ) |  |  | (174,474  | ) |  |  | (745,519   | )
|Foreing exchange                        |  |              | (932      | ) |        |  | (11,786 | )         |  |  | (18,248   | ) |  |             | (129,933  | )    |               |  | (6,126  | )        |  |  | (13,269      | ) |  |           | (638   | ) |           |  | (1,659  | ) |  |  | (252,709  | ) |  |  | (435,300   | )
|Other increases (decreases)             |  |              | 168,016   |   |        |  | (889    | )         |  |  | (49,089   | ) |  |             | (150,677  | )    |               |  | 11      |          |  |  | 68,877       |   |  |           | 308    |   |           |  | 9       |   |  |  | (2,058    | ) |  |  | 34,508     |  
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Changes, total                          |  |              | 205,533   |   |        |  | (12,675 | )         |  |  | (75,515   | ) |  |             | 386,986   |      |               |  | (7,120  | )        |  |  | 45,175       |   |  |           | (440   | ) |           |  | (2,435  | ) |  |  | (373,928  | ) |  |  | 165,581    |  
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Closing balance as of December 31, 2015 |  |              | 1,142,812 |   |        |  | 45,313  |           |  |  | 91,491    |   |  |             | 7,341,075 |      |               |  | 43,889  |          |  |  | 88,958       |   |  |           | 1,525  |   |           |  | 54,088  |   |  |  | 2,129,506 |   |  |  | 10,938,657 |  
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Opening balance as of January 1, 2016   |  |              | 1,142,812 |   |        |  | 45,313  |           |  |  | 91,491    |   |  |             | 7,341,075 |      |               |  | 43,889  |          |  |  | 88,958       |   |  |           | 1,525  |   |           |  | 54,088  |   |  |  | 2,129,506 |   |  |  | 10,938,657 |  
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Additions                               |  |              | 14,481    |   |        |  |        |           |  |  | 272       |   |  |             | 1,301,093 |      |               |  | 7,392   |          |  |  | 292          |   |  |           | 6      |   |           |  | 54,181  |   |  |  | 13,013    |   |  |  | 1,390,730  |  
|Disposals                               |  |              |          |   |        |  |        |           |  |  |          |   |  |             | (16,918   | )(3) |               |  | (59     | )        |  |  |             |   |  |           | (32    | ) |           |  |        |   |  |  | (2,972    | ) |  |  | (19,981    | )
|Retirements                             |  |              | (284      | ) |        |  |        |           |  |  | (68       | ) |  |             | (39,816   | )    |               |  | (55     | )        |  |  | (1,258       | ) |  |           |       |   |           |  |        |   |  |  | (2,604    | ) |  |  | (44,085    | )
|Depreciation expenses                   |  |              |          |   |        |  |        |           |  |  | (6,234    | ) |  |             | (562,131  | )    |               |  | (14,909 | )        |  |  | (13,664      | ) |  |           | (293   | ) |           |  | (23,283 | ) |  |  | (124,038  | ) |  |  | (744,552   | )
|Foreing exchange                        |  |              | 5,081     |   |        |  | 4,835   |           |  |  | 2,538     |   |  |             | 51,770    |      |               |  | 2,924   |          |  |  | 9,384        |   |  |           | 223    |   |           |  | 2,849   |   |  |  | 93,383    |   |  |  | 172,987    |  
|Other increases (decreases)             |  |              | (692,025  | ) |        |  |        |           |  |  | 42,220    |   |  |             | (285,198  | )(4) |               |  | 532     |          |  |  | 200          |   |  |           | (384   | ) |           |  | 16,706  |   |  |  | (277,658  | ) |  |  | (1,195,607 | )
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Changes, total                          |  |              | (672,747  | ) |        |  | 4,835   |           |  |  | 38,728    |   |  |             | 448,800   |      |               |  | (4,175  | )        |  |  | (5,046       | ) |  |           | (480   | ) |           |  | 50,453  |   |  |  | (300,876  | ) |  |  | (440,508   | )
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  
|Closing balance as of December 31, 2016 |  |              | 470,065   |   |        |  | 50,148  |           |  |  | 130,219   |   |  |             | 7,789,875 |      |               |  | 39,714  |          |  |  | 83,912       |   |  |           | 1,045  |   |           |  | 104,541 |   |  |  | 1,828,630 |   |  |  | 10,498,149 |  
|                                        |  |              |           |   |        |  |         |           |  |  |           |   |  |             |           |      |               |  |         |          |  |  |              |   |  |           |        |   |           |  |         |   |  |  |           |   |  |  |            |  



|(1) | During the first half of 2014 four Boeing 777- 300ER were sold and subsequently leased.
|--- | ---------------------------------------------------------------------------------------

|(2) | During the first half of 2015 three Airbus A340 aircraft were sold.
|--- | -------------------------------------------------------------------

| | During the second half of 2015 seven Dash-200 aircraft were sold.
| | -----------------------------------------------------------------

| | During the second half of 2015 two Airbus A319 aircraft were sold.
| | ------------------------------------------------------------------

|(3) | During the first half of 2016 two Airbus A330 aircraft were sold.
|--- | -----------------------------------------------------------------

|(4) | During 2016 two Airbus A319 aircraft, two Airbus A320 aircraft, six Airbus A330 and two Boeing 777 aircraft were reclassified to non-current assets and disposal group classified as held for sale (See Note 13).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-74



---

##### Table of Contents

|(b) | Composition of the fleet:
|--- | -------------------------



|            |  |       |           |  |                     |  |     |              |  |  |              |     |  |              |     |  |              |  |     |              |  |  |     |     |  |  |     |    
|----------- |  | ----- | --------- |  | ------------------- |  | --- | ------------ |  |  | ------------ | --- |  | ------------ | --- |  | ------------ |  | --- | ------------ |  |  | --- | --- |  |  | --- | ---
|            |  |       |           |  | Aircraft included   |  |     |              |  |  |              |     |  |              |     |  |              | 
|            |  |       |           |  | in Property,        |  |     | Operating    |  |  | Total        |    
|            |  |       |           |  | plant and equipment |  |     | leases       |  |  | fleet        |    
|            |  |       |           |  | As of               |  |     | As of        |  |  | As of        |     |  | As of        |     |  | As of        |  |     | As of        | 
|            |  |       |           |  | December 31,        |  |     | December 31, |  |  | December 31, |     |  | December 31, |     |  | December 31, |  |     | December 31, | 
|Aircraft    |  | Model |           |  | 2016                |  |     | 2015         |  |  | 2016         |     |  | 2015         |     |  | 2016         |  |     | 2015         | 
|Boeing 767  |  |       | 300ER     |  |                     |  | 34  |              |  |  | 34           |     |  |              | 3   |  |              |  | 4   |              |  |  | 37  |     |  |  | 38  |    
|Boeing 767  |  |       | 300F      |  |                     |  | 8   | (1)          |  |  | 8            | (1) |  |              | 3   |  |              |  | 3   |              |  |  | 11  | (1) |  |  | 11  | (1)
|Boeing 777  |  |       | 300ER     |  |                     |  | 4   |              |  |  | 4            |     |  |              | 6   |  |              |  | 6   |              |  |  | 10  |     |  |  | 10  |    
|Boeing 777  |  |       | Freighter |  |                     |  |    |              |  |  | 2            | (2) |  |              | 2   |  |              |  | 2   |              |  |  | 2   |     |  |  | 4   | (2)
|Boeing 787  |  |       | 800       |  |                     |  | 6   |              |  |  | 6            |     |  |              | 4   |  |              |  | 4   |              |  |  | 10  |     |  |  | 10  |    
|Boeing 787  |  |       | 900       |  |                     |  | 4   |              |  |  | 3            |     |  |              | 8   |  |              |  | 4   |              |  |  | 12  |     |  |  | 7   |    
|Airbus A319 |  |       | 100       |  |                     |  | 36  |              |  |  | 38           |     |  |              | 12  |  |              |  | 12  |              |  |  | 48  |     |  |  | 50  |    
|Airbus A320 |  |       | 200       |  |                     |  | 93  |              |  |  | 95           |     |  |              | 53  |  |              |  | 59  |              |  |  | 146 |     |  |  | 154 |    
|Airbus A320 |  |       | NEO       |  |                     |  | 1   |              |  |  |             |     |  |              | 1   |  |              |  |    |              |  |  | 2   |     |  |  |    |    
|Airbus A321 |  |       | 200       |  |                     |  | 30  |              |  |  | 26           |     |  |              | 17  |  |              |  | 10  |              |  |  | 47  |     |  |  | 36  |    
|Airbus A330 |  |       | 200       |  |                     |  |    |              |  |  | 8            |     |  |              |    |  |              |  | 2   |              |  |  |    |     |  |  | 10  |    
|Airbus A350 |  |       | 900       |  |                     |  | 5   |              |  |  | 1            |     |  |              | 2   |  |              |  |    |              |  |  | 7   |     |  |  | 1   |    
|            |  |       |           |  |                     |  |     |              |  |  |              |     |  |              |     |  |              |  |     |              |  |  |     |     |  |  |     |    
|Total       |  |       |           |  |                     |  | 221 |              |  |  | 225          |     |  |              | 111 |  |              |  | 106 |              |  |  | 332 |     |  |  | 331 |    
|            |  |       |           |  |                     |  |     |              |  |  |              |     |  |              |     |  |              |  |     |              |  |  |     |     |  |  |     |    



|(1) | Three aircraft leased to FEDEX
|--- | ------------------------------

|(2) | One aircraft leased to DHL
|--- | --------------------------



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



|                                    |  |                                                                                                      |  |                     |    |  |         |  |    | 
|----------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ------------------- | -- |  | ------- |  | -- | 
|                                    |  | Method                                                                                               |  | Useful life (years) |   
|                                    |  |                                                                                                      |  | 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  |  |         |  | 23 | 
|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 |  |         |  | 23 | 



|(*) | Except for the Boeing 767 300ER and Boeing 767 300F fleets which consider a lower residual value due to the extension of their useful life to 22 and 23 years respectively. Additionally certain technical components,
which are depreciated based 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.
|---- | ------------------------------------------------------------------------------------------------



F-75



---

##### Table of Contents

The depreciation charged to income in the period, which is included in the consolidated statement of income,
amounts to ThUS$ 744,552 (ThUS$ 745,519 at December 31, 2015). 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 December 31, 2016, direct
guarantees by five Airbus A319-100 aircraft, two Airbus A320-200 aircraft, one Airbus A320 NEO aircraft, four Airbus A321-200 aircraft, four Airbus A350-900 aircraft and one Boeing 787-9 aircraft were added.

Description of Property, plant and equipment pledged as guarantee:



|                          |  |                      |  |                  |  |              |           |  |              |  |           |          |  |  |           |  |  |  |           | 
|------------------------- |  | -------------------- |  | ---------------- |  | ------------ | --------- |  | ------------ |  | --------- | -------- |  |  | --------- |  |  |  | --------- | 
|                          |  |                      |  |                  |  | As of        |           |  | As of        | 
|                          |  |                      |  |                  |  | December 31, |           |  | December 31, | 
|                          |  |                      |  |                  |  | 2016         |           |  | 2015         | 
|Creditor of               |  | Assets               |  |                  |  | Existing     |           |  | Book         |  |           | Existing |  |  | Book      | 
|guarantee                 |  | committed            |  | Fleet            |  | Debt         |           |  | Value        |  |           | Debt     |  |  | Value     | 
|                          |  |                      |  |                  |  | ThUS $       |           |  | ThUS $       |  |           | ThUS $   |  |  | ThUS $    | 
|Wilmington                |  | Aircraft and engines |  | Airbus A321/A350 |  |              | 596,224   |  |              |  | 722,979   |          |  |  | 374,619   |  |  |  | 478,667   | 
|Trust Company             |  |                      |  | Boeing 767       |  |              | 811,723   |  |              |  | 1,164,364 |          |  |  | 907,356   |  |  |  | 1,220,541 | 
|                          |  |                      |  | Boeing 787       |  |              | 739,031   |  |              |  | 899,445   |          |  |  | 712,059   |  |  |  | 834,567   | 
|Banco Santander S.A.      |  | Aircraft and engines |  | Airbus A319      |  |              | 50,671    |  |              |  | 91,889    |          |  |  | 58,527    |  |  |  | 95,387    | 
|                          |  |                      |  | Airbus A320      |  |              | 462,950   |  |              |  | 709,788   |          |  |  | 524,682   |  |  |  | 749,192   | 
|                          |  |                      |  | Airbus A321      |  |              | 32,853    |  |              |  | 44,227    |          |  |  | 36,334    |  |  |  | 45,380    | 
|BNP Paribas               |  | Aircraft and engines |  | Airbus A319      |  |              | 134,346   |  |              |  | 228,384   |          |  |  | 154,828   |  |  |  | 229,798   | 
|                          |  |                      |  | Airbus A320      |  |              | 128,173   |  |              |  | 181,838   |          |  |  | 145,506   |  |  |  | 192,957   | 
|Credit Agricole           |  | Aircraft and engines |  | Airbus A319      |  |              | 26,014    |  |              |  | 37,389    |          |  |  | 37,755    |  |  |  | 84,129    | 
|                          |  |                      |  | Airbus A320      |  |              | 71,794    |  |              |  | 144,157   |          |  |  | 115,339   |  |  |  | 214,726   | 
|                          |  |                      |  | Airbus A321      |  |              | 40,609    |  |              |  | 93,110    |          |  |  | 50,591    |  |  |  | 97,257    | 
|JP Morgan                 |  | Aircraft and engines |  | Boeing 777       |  |              |          |  |              |  |          |          |  |  | 215,265   |  |  |  | 263,366   | 
|Wells Fargo               |  | Aircraft and engines |  | Airbus A320      |  |              | 252,428   |  |              |  | 333,419   |          |  |  | 279,478   |  |  |  | 348,271   | 
|Bank of Utah              |  | Aircraft and engines |  | Airbus A320/A350 |  |              | 670,826   |  |              |  | 709,280   |          |  |  | 240,094   |  |  |  | 312,573   | 
|Natixis                   |  | Aircraft and engines |  | Airbus A320      |  |              | 45,748    |  |              |  | 66,738    |          |  |  | 56,223    |  |  |  | 81,355    | 
|                          |  |                      |  | Airbus A321      |  |              | 377,104   |  |              |  | 514,625   |          |  |  | 413,201   |  |  |  | 542,594   | 
|Citibank N.A.             |  | Aircraft and engines |  | Airbus A320      |  |              | 111,243   |  |              |  | 166,370   |          |  |  | 127,135   |  |  |  | 172,918   | 
|                          |  |                      |  | Airbus A321      |  |              | 42,867    |  |              |  | 70,166    |          |  |  | 49,464    |  |  |  | 73,122    | 
|HSBC                      |  | Aircraft and engines |  | Airbus A320      |  |              |          |  |              |  |          |          |  |  | 53,583    |  |  |  | 64,241    | 
|KfW IP EX-Bank            |  | Aircraft and engines |  | Airbus A319      |  |              | 7,494     |  |              |  | 6,360     |          |  |  |          |  |  |  |          | 
|                          |  |                      |  | Airbus A320      |  |              | 28,696    |  |              |  | 36,066    |          |  |  | 13,593    |  |  |  | 16,838    | 
|Airbus Financial Services |  | Aircraft and engines |  | Airbus A319      |  |              | 30,199    |  |              |  | 33,823    |          |  |  |          |  |  |  |          | 
|PK AirFinance US, Inc.    |  | Aircraft and engines |  | Airbus A320      |  |              | 54,786    |  |              |  | 46,341    |          |  |  | 62,514    |  |  |  | 48,691    | 
|Banco BBVA                |  | Land and buildings   |  |                  |  |              | 50,381    |  |              |  | 69,498    |          |  |  |          |  |  |  |          | 
|                          |  |                      |  |                  |  |              |           |  |              |  |           |          |  |  |           |  |  |  |           | 
|Total direct guarantee    |  |                      |  |                  |  |              | 4,766,160 |  |              |  | 6,370,256 |          |  |  | 4,628,146 |  |  |  | 6,166,570 | 
|                          |  |                      |  |                  |  |              |           |  |              |  |           |          |  |  |           |  |  |  |           | 

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
December 31, 2016 amounted to ThUS$ 913,494 (ThUS$ 1,311,088 at December 31, 2015). The book value of assets with indirect guarantees as of December 31, 2016 amounts to ThUS$ 1,740,815 (ThUS$ 2,001,605 as of December 31, 2015).



F-76



---

##### Table of Contents

|(ii) | Commitments and others
|---- | ----------------------

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



|                                                                                 |  |              |            |  |              |  |            | 
|-------------------------------------------------------------------------------- |  | ------------ | ---------- |  | ------------ |  | ---------- | 
|                                                                                 |  | As of        |            |  | As of        | 
|                                                                                 |  | December 31, |            |  | December 31, | 
|                                                                                 |  | 2016         |            |  | 2015         | 
|                                                                                 |  | ThUS$        |            |  | ThUS$        | 
|Gross book value of fully depreciated property, plant and equipment still in use |  |              | 116,386    |  |              |  | 129,766    | 
|Commitments for the acquisition of aircraft (*)                                  |  |              | 15,100,000 |  |              |  | 19,800,000 | 

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

Purchase commitment of aircraft



|                   |  |                  |   |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |       |  |  |   |  |  |  |    | 
|------------------ |  | ---------------- | - |  | ---- |  | -- | ---- |  |  | ---- |  |  | ---- | -- |  | ---- |  | -- | ----- |  |  | - |  |  |  | -- | 
|                   |  | Year of delivery |   |  |      | 
|Manufacturer       |  | 2017             |   |  | 2018 |  |    | 2019 |  |  | 2020 |  |  | 2021 |    |  | 2022 |  |    | Total | 
|Airbus S.A.S.      |  |                  | 5 |  |      |  | 16 |      |  |  | 14   |  |  |      | 16 |  |      |  | 21 |       |  |  | 2 |  |  |  | 74 | 
|                   |  |                  |   |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |       |  |  |   |  |  |  |    | 
|A320-NEO           |  |                  | 5 |  |      |  | 5  |      |  |  | 8    |  |  |      | 8  |  |      |  | 8  |       |  |  |  |  |  |  | 34 | 
|A321               |  |                  |  |  |      |  | 1  |      |  |  |     |  |  |      |   |  |      |  |   |       |  |  |  |  |  |  | 1  | 
|A321-NEO           |  |                  |  |  |      |  | 6  |      |  |  | 2    |  |  |      | 6  |  |      |  | 5  |       |  |  |  |  |  |  | 19 | 
|A350-1000          |  |                  |  |  |      |  |   |      |  |  | 2    |  |  |      | 2  |  |      |  | 8  |       |  |  | 2 |  |  |  | 14 | 
|A350-900           |  |                  |   |  |      |  | 4  |      |  |  | 2    |  |  |      |   |  |      |  |   |       |  |  |  |  |  |  | 6  | 
|                   |  |                  |   |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |       |  |  |   |  |  |  |    | 
|The Boeing Company |  |                  | 1 |  |      |  |   |      |  |  | 6    |  |  |      | 2  |  |      |  | 2  |       |  |  |  |  |  |  | 11 | 
|                   |  |                  |   |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |       |  |  |   |  |  |  |    | 
|Boeing 777         |  |                  |  |  |      |  |   |      |  |  | 2    |  |  |      |   |  |      |  |   |       |  |  |  |  |  |  | 2  | 
|Boeing 787-9       |  |                  | 1 |  |      |  |   |      |  |  | 4    |  |  |      | 2  |  |      |  | 2  |       |  |  |  |  |  |  | 9  | 
|                   |  |                  |   |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |       |  |  |   |  |  |  |    | 
|Total              |  |                  | 6 |  |      |  | 16 |      |  |  | 20   |  |  |      | 18 |  |      |  | 23 |       |  |  | 2 |  |  |  | 85 | 
|                   |  |                  |   |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |       |  |  |   |  |  |  |    | 

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

In September 2015 the change of six Airbus A350-900 aircraft for six Airbus A350-1000 aircraft was signed. Additionally, in November 2015 the change of six
Airbus A350-900 aircraft to six Airbus A350-1000 aircraft was signed. In April 2016 the change of four Airbus A320 NEO aircraft to four Airbus A321 NEO aircraft was signed. In August 2016 a cancellation of 12 Airbus A320 NEO aircraft and the change
of two Airbus A350-900 to two Airbus A350-1000 were signed.

As of December 31, 2016, as a result of the different aircraft purchase agreements
signed with Airbus S.A.S., 54 aircraft Airbus A320 family, with deliveries between 2017 and 2021, and 20 Airbus aircraft A350 family with deliveries between 2017 and 2022 remain to be received.

The approximate amount is ThUS$ 12,400,000, according to the manufacturers price list. Additionally, the Company has valid purchase options for 4 Airbus
A350 aircraft.

In May 2016 the change of four Boeing 787-8 aircraft for four Boeing 787-9 aircraft was signed.

As of December 31, 2016, and as a result of different aircraft purchase contracts signed with The Boeing Company, a total of nine Boeing 787 Dreamliner
aircraft, with delivery dates between 2017 and 2021, and two Boeing 777 with delivery expected for 2019 remain to be received.



F-77



---

##### Table of Contents

The approximate amount, according to the manufacturers price list, is ThUS$ 2,700,000.



|(iii) | Capitalized interest costs with respect to Property, plant and equipment.
|----- | -------------------------------------------------------------------------



|                                                             |  |       |  |      |      |   |                       |  |        |      |  |  |        | 
|------------------------------------------------------------ |  | ----- |  | ---- | ---- | - | --------------------- |  | ------ | ---- |  |  | ------ | 
|                                                             |  |       |  |      |      |   | For the periods ended |  |        |      | 
|                                                             |  |       |  |      |      |   | December 31,          |  |        |      | 
|                                                             |  |       |  | 2016 |      |   | 2015                  |  |        | 2014 | 
|Average rate of capitalization of capitalized interest costs |  | %     |  |      | 3.54 |   |                       |  | 2.79   |      |  |  | 2.84   | 
|Costs of capitalized interest                                |  | ThUS$ |  |      | (696 | ) |                       |  | 22,551 |      |  |  | 18,426 | 



|(iv) | Financial leases
|---- | ----------------

The detail of the main financial leases is as follows:



|                                                          |  |          |             |  |       |  |       |              |  |  |              |  |  |  |    | 
|--------------------------------------------------------- |  | -------- | ----------- |  | ----- |  | ----- | ------------ |  |  | ------------ |  |  |  | -- | 
|                                                          |  |          |             |  |       |  |       | As of        |  |  | As of        | 
|                                                          |  |          |             |  |       |  |       | December 31, |  |  | December 31, | 
|Lessor                                                    |  | Aircraft |             |  | Model |  |       | 2016         |  |  | 2015         | 
|Agonandra Statutory Trust                                 |  |          | Airbus A320 |  |       |  | 200   |              |  |  |             |  |  |  | 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 T rust                                   |  |          | Boeing 767  |  |       |  | 300F  |              |  |  |             |  |  |  | 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  | 
|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  | 
|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            |  |  |  | 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 LT D (Showa)                                   |  |          | Airbus A320 |  |       |  | 200   |              |  |  | 1            |  |  |  | 1  | 
|TMF Interlease Aviation B.V.                              |  |          | Airbus A330 |  |       |  | 200   |              |  |  |             |  |  |  | 1  | 
|TMF Interlease Aviation II B.V.                           |  |          | Airbus A319 |  |       |  | 100   |              |  |  |             |  |  |  | 5  | 
|TMF Interlease Aviation II B.V.                           |  |          | Airbus A320 |  |       |  | 200   |              |  |  |             |  |  |  | 2  | 
|Tricahue Leasing LLC                                      |  |          | Boeing 767  |  |       |  | 300ER |              |  |  | 3            |  |  |  | 3  | 
|Wacapou Leasing S.A                                       |  |          | Airbus A320 |  |       |  | 200   |              |  |  | 1            |  |  |  | 1  | 
|                                                          |  |          |             |  |       |  |       |              |  |  |              |  |  |  |    | 
|Total                                                     |  |          |             |  |       |  |       |              |  |  | 50           |  |  |  | 66 | 
|                                                          |  |          |             |  |       |  |       |              |  |  |              |  |  |  |    | 



F-78



---

##### Table of Contents

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 aircrafts, perform maintenance on the aircrafts 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 December 31, 2016 the Company had fifty aircrafts (sixty six aircraft as of December 31, 2015).

As of December 31, 2016, as a result of the transfer plan fleet of TAM Linhas Aéreas S.A. to LATAM Airlines Group S.A., the Company declined its
number of aircraft leasing in five Airbus A319-100, eight Airbus A320-200 and one Airbus A330-200 aircraft.

The book value of assets under financial
leases as of December 31, 2016 amounts to ThUS$ 1,753,366 (ThUS$ 2,030,723 at December 31, 2015).

The minimum payments under financial
leases are as follows:



|                           |  |                         |           |  |                         |  |         |                         |  |  |         |  |  |          |           |  |         |  |          |       |  |  |           |  |  |         |           |  |  |  |          |   |  |  |           | 
|-------------------------- |  | ----------------------- | --------- |  | ----------------------- |  | ------- | ----------------------- |  |  | ------- |  |  | -------- | --------- |  | ------- |  | -------- | ----- |  |  | --------- |  |  | ------- | --------- |  |  |  | -------- | - |  |  | --------- | 
|                           |  | As of December 31, 2016 |           |  | As of December 31, 2015 |  |         | As of December 31, 2014 | 
|                           |  | Gross                   |           |  |                         |  |         | Present                 |  |  | Gross   |  |  |          |           |  | Present |  |          | Gross |  |  |           |  |  | Present |          
|                           |  | Value                   |           |  | Interest                |  |         | Value                   |  |  | Value   |  |  | Interest |           |  | Value   |  |          | Value |  |  | Interest  |  |  | Value   |          
|                           |  | ThUS$                   |           |  | ThUS$                   |  |         | ThUS$                   |  |  | ThUS$   |  |  | ThUS$    |           |  | ThUS$   |  |          | ThUS$ |  |  | ThUS$     |  |  | ThUS$   |          
|No later than one year     |  |                         | 285,168   |  |                         |  | (32,365 | )                       |  |  | 252,803 |  |  |          | 360,862   |  |         |  | (47,492  | )     |  |  | 313,370   |  |  |         | 403,840   |  |  |  | (48,197  | ) |  |  | 355,643   | 
|Between one and five years |  |                         | 704,822   |  |                         |  | (43,146 | )                       |  |  | 661,676 |  |  |          | 1,003,237 |  |         |  | (75,363  | )     |  |  | 927,874   |  |  |         | 1,121,190 |  |  |  | (97,909  | ) |  |  | 1,023,281 | 
|Over five years            |  |                         | 43,713    |  |                         |  | (120    | )                       |  |  | 43,593  |  |  |          | 95,050    |  |         |  | (1,406   | )     |  |  | 93,644    |  |  |         | 261,877   |  |  |  | (6,409   | ) |  |  | 255,468   | 
|                           |  |                         |           |  |                         |  |         |                         |  |  |         |  |  |          |           |  |         |  |          |       |  |  |           |  |  |         |           |  |  |  |          |   |  |  |           | 
|Total                      |  |                         | 1,033,703 |  |                         |  | (75,631 | )                       |  |  | 958,072 |  |  |          | 1,459,149 |  |         |  | (124,261 | )     |  |  | 1,334,888 |  |  |         | 1,786,907 |  |  |  | (152,515 | ) |  |  | 1,634,392 | 
|                           |  |                         |           |  |                         |  |         |                         |  |  |         |  |  |          |           |  |         |  |          |       |  |  |           |  |  |         |           |  |  |  |          |   |  |  |           | 

NOTE 18 - CURRENT AND DEFERRED TAXES

In the period ended December 31, 2016, the income tax provision was calculated for such period, applying the rate of 24% for the business year 2016, in
accordance with the 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 Tax Category reaching 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.

According with the Law reference above, since LATAM Airlines Group S.A. is a public company, by default should apply the
Partially Integrated Taxation System(*), unless in a Company ́s Extraordinary Meeting of Shareholders agrees, by a minimum of 2/3 of the votes, to use the Attributed Income Taxation System(*). The deadline for making
that decision was the last quarter of 2016.

On February 8, 2016, an amendment to the above mentioned Law was issued (Law 20,899), which simplify the
system for paying taxes, between the mainly changes, it is now mandatorily, for public companies, such as Latam Airlines Group S.A. choosing the Partially Integrated Taxation System(*), without any option to elect the Attributed
Income Taxation System, as describe above.



F-79



---

##### Table of Contents

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 on income for the business year 2014. The total effect on income 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.

Assets and deferred tax liabilities are offset if there is a legal right to offset the assets and liabilities, always correspond to the same entity and tax
authority.

(*)The Partially Integrated Taxation System final income taxation is applied upon effective dividend disbursements or profit
withdrawals, and under the Attributed Income Taxation System by using 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          |        |  | As of              |  |        | As of        |  |  | As of        |  |  | As of        |        |  | As of        | 
|                                        |  | December 31,   |        |  | December 31,       |  |        | December 31, |  |  | December 31, |  |  | December 31, |        |  | December 31, | 
|                                        |  | 2016           |        |  | 2015               |  |        | 2016         |  |  | 2015         |  |  | 2016         |        |  | 2015         | 
|                                        |  | ThUS$          |        |  | ThUS$              |  |        | ThUS$        |  |  | ThUS$        |  |  | ThUS$        |        |  | ThUS$        | 
|Provisional monthly payments (advances) |  |                | 43,821 |  |                    |  | 43,935 |              |  |  |             |  |  |              |       |  |              |  | 43,821 |  |  |  | 43,935 | 
|Other recoverable credits               |  |                | 21,556 |  |                    |  | 20,080 |              |  |  | 20,272       |  |  |              | 25,629 |  |              |  | 41,828 |  |  |  | 45,709 | 
|                                        |  |                |        |  |                    |  |        |              |  |  |              |  |  |              |        |  |              |  |        |  |  |  |        | 
|Total assets by current tax             |  |                | 65,377 |  |                    |  | 64,015 |              |  |  | 20,272       |  |  |              | 25,629 |  |              |  | 85,649 |  |  |  | 89,644 | 
|                                        |  |                |        |  |                    |  |        |              |  |  |              |  |  |              |        |  |              |  |        |  |  |  |        | 

(a.2)     The composition of the current tax liabilities are as follows:



|                                 |  |                     |        |  |                         |  |        |                   |  |  |              |  |  |              |   |  |              |  |        |  |  |  |        | 
|-------------------------------- |  | ------------------- | ------ |  | ----------------------- |  | ------ | ----------------- |  |  | ------------ |  |  | ------------ | - |  | ------------ |  | ------ |  |  |  | ------ | 
|                                 |  | Current liabilities |        |  | Non-current liabilities |  |        | Total liabilities | 
|                                 |  | As of               |        |  | As of                   |  |        | As of             |  |  | As of        |  |  | As of        |   |  | As of        | 
|                                 |  | December 31,        |        |  | December 31,            |  |        | December 31,      |  |  | December 31, |  |  | December 31, |   |  | December 31, | 
|                                 |  | 2016                |        |  | 2015                    |  |        | 2016              |  |  | 2015         |  |  | 2016         |   |  | 2015         | 
|                                 |  | ThUS$               |        |  | ThUS$                   |  |        | ThUS$             |  |  | ThUS$        |  |  | ThUS$        |   |  | ThUS$        | 
|Income tax provision             |  |                     | 9,632  |  |                         |  | 19,001 |                   |  |  |             |  |  |              |  |  |              |  | 9,632  |  |  |  | 19,001 | 
|Additional tax provision         |  |                     | 4,654  |  |                         |  | 377    |                   |  |  |             |  |  |              |  |  |              |  | 4,654  |  |  |  | 377    | 
|                                 |  |                     |        |  |                         |  |        |                   |  |  |              |  |  |              |   |  |              |  |        |  |  |  |        | 
|Total liabilities by current tax |  |                     | 14,286 |  |                         |  | 19,378 |                   |  |  |             |  |  |              |  |  |              |  | 14,286 |  |  |  | 19,378 | 
|                                 |  |                     |        |  |                         |  |        |                   |  |  |              |  |  |              |   |  |              |  |        |  |  |  |        | 



F-80



---

##### Table of Contents

|(b) | Deferred taxes
|--- | --------------

The balances of deferred tax are the following:



|                                     |  |                       |         |   |                       |  |         |                       |  |  |                       |   |  |  |           |  
|------------------------------------ |  | --------------------- | ------- | - | --------------------- |  | ------- | --------------------- |  |  | --------------------- | - |  |  | --------- | -
|                                     |  | Assets                |         |   | Liabilities           | 
|Concept                              |  | As ofDecember 31,2016 |         |   | As ofDecember 31,2015 |  |         | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 |  
|                                     |  | ThUS$                 |         |   | ThUS$                 |  |         | ThUS$                 |  |  | ThUS$                 |  
|Depreciation                         |  |                       | 11,735  |   |                       |  | (14,243 | )                     |  |  | 1,387,760             |   |  |  | 1,116,748 |  
|Leased assets                        |  |                       | (35,922 | ) |                       |  | (25,299 | )                     |  |  | 203,836               |   |  |  | 226,003   |  
|Amortization                         |  |                       | (15,820 | ) |                       |  | (5,748  | )                     |  |  | 61,660                |   |  |  | 65,416    |  
|Provisions                           |  |                       | 222,253 |   |                       |  | 210,992 |                       |  |  | (59,096               | ) |  |  | (167,545  | )
|Revaluation of financial instruments |  |                       |        |   |                       |  | 709     |                       |  |  | (3,223                | ) |  |  | (7,575    | )
|Tax losses                           |  |                       | 202,536 |   |                       |  | 212,067 |                       |  |  | (1,126,200            | ) |  |  | (797,715  | )
|Intangibles                          |  |                       |        |   |                       |  |        |                       |  |  | 430,705               |   |  |  | 364,314   |  
|Others                               |  |                       | (202    | ) |                       |  | (1,883  | )                     |  |  | 20,317                |   |  |  | 11,919    |  
|                                     |  |                       |         |   |                       |  |         |                       |  |  |                       |   |  |  |           |  
|Total                                |  |                       | 384,580 |   |                       |  | 376,595 |                       |  |  | 915,759               |   |  |  | 811,565   |  
|                                     |  |                       |         |   |                       |  |         |                       |  |  |                       |   |  |  |           |  

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 December 31, 2014



|                                     |  |                                    |          |   |                                 |  |         |                                  |  |  |                       |  |  |                              |         |   |        |  |          |                                |  |  |          |   |  |  |          |  
|------------------------------------ |  | ---------------------------------- | -------- | - | ------------------------------- |  | ------- | -------------------------------- |  |  | --------------------- |  |  | ---------------------------- | ------- | - | ------ |  | -------- | ------------------------------ |  |  | -------- | - |  |  | -------- | -
|                                     |  | OpeningbalanceAssets/(liabilities) |          |   | Recognized inconsolidatedincome |  |         | Recognized incomprehensiveincome |  |  | Exchangeratevariation |  |  | Effect fromchange intax rate |         |   | Others |  |          | EndingbalanceAsset (liability) | 
|                                     |  | ThUS$                              |          |   | ThUS$                           |  |         | ThUS$                            |  |  | ThUS$                 |  |  | ThUS$                        |         |   | ThUS$  |  |          | ThUS$                          | 
|Depreciation                         |  |                                    | (574.997 | ) |                                 |  | (74.623 | )                                |  |  |                      |  |  |                              | 3.575   |   |        |  | (225.595 | )                              |  |  |         |   |  |  | (871.640 | )
|Leased assets                        |  |                                    | (193.762 | ) |                                 |  | 47.749  |                                  |  |  |                      |  |  |                              | 3.267   |   |        |  | (43.029  | )                              |  |  |         |   |  |  | (185.775 | )
|Amortization                         |  |                                    | (124.357 | ) |                                 |  | (21.621 | )                                |  |  |                      |  |  |                              | 1.928   |   |        |  | (16.050  | )                              |  |  |         |   |  |  | (160.100 | )
|Provisions                           |  |                                    | 525.241  |   |                                 |  | (99.262 | )                                |  |  |                      |  |  |                              | (53.090 | ) |        |  | (21.812  | )                              |  |  |         |   |  |  | 351.077  |  
|Revaluation of financial instruments |  |                                    | 16.070   |   |                                 |  | (53.675 | )                                |  |  | 47.979                |  |  |                              | (1.331  | ) |        |  | 3.763    |                                |  |  |         |   |  |  | 12.806   |  
|Tax losses (*)                       |  |                                    | 551.528  |   |                                 |  | 147.798 |                                  |  |  |                      |  |  |                              | (13.968 | ) |        |  | 163.596  |                                |  |  | (126.205 | ) |  |  | 722.749  |  
|Intangibles                          |  |                                    | (593.325 | ) |                                 |  |        |                                  |  |  |                      |  |  |                              | 70.050  |   |        |  |         |                                |  |  |         |   |  |  | (523.275 | )
|Others                               |  |                                    | 29.336   |   |                                 |  | 7.071   |                                  |  |  |                      |  |  |                              | (32.361 | ) |        |  | (6.039   | )                              |  |  | 11.580   |   |  |  | 9.587    |  
|                                     |  |                                    |          |   |                                 |  |         |                                  |  |  |                       |  |  |                              |         |   |        |  |          |                                |  |  |          |   |  |  |          |  
|Total                                |  |                                    | (364.266 | ) |                                 |  | (46.563 | )                                |  |  | 47.979                |  |  |                              | (21.930 | ) |        |  | (145.166 | )                              |  |  | (114.625 | ) |  |  | (644.571 | )
|                                     |  |                                    |          |   |                                 |  |         |                                  |  |  |                       |  |  |                              |         |   |        |  |          |                                |  |  |          |   |  |  |          |  



F-81



---

##### Table of Contents

|(b) | From January 1 to December 31, 2015
|--- | -----------------------------------



|                                     |  |                                    |          |   |                                 |  |          |                                  |  |  |                       |   |  |        |          |   |                                |  |        |   |  |  |            |  
|------------------------------------ |  | ---------------------------------- | -------- | - | ------------------------------- |  | -------- | -------------------------------- |  |  | --------------------- | - |  | ------ | -------- | - | ------------------------------ |  | ------ | - |  |  | ---------- | -
|                                     |  | OpeningbalanceAssets/(liabilities) |          |   | Recognized inconsolidatedincome |  |          | Recognized incomprehensiveincome |  |  | Exchangeratevariation |   |  | Others |          |   | EndingbalanceAsset (liability) | 
|                                     |  | ThUS$                              |          |   | ThUS$                           |  |          | ThUS$                            |  |  | ThUS$                 |   |  | ThUS$  |          |   | ThUS$                          | 
|Depreciation                         |  |                                    | (871,640 | ) |                                 |  | (267,891 | )                                |  |  |                      |   |  |        | 8,540    |   |                                |  |       |   |  |  | (1,130,991 | )
|Leased assets                        |  |                                    | (185,775 | ) |                                 |  | (73,330  | )                                |  |  |                      |   |  |        | 7,803    |   |                                |  |       |   |  |  | (251,302   | )
|Amortization                         |  |                                    | (160,100 | ) |                                 |  | 84,330   |                                  |  |  |                      |   |  |        | 4,606    |   |                                |  |       |   |  |  | (71,164    | )
|Provisions                           |  |                                    | 351,077  |   |                                 |  | 150,362  |                                  |  |  | 3,911                 |   |  |        | (126,813 | ) |                                |  |       |   |  |  | 378,537    |  
|Revaluation of financial instruments |  |                                    | 12,806   |   |                                 |  | 19,760   |                                  |  |  | (21,103               | ) |  |        | (3,179   | ) |                                |  |       |   |  |  | 8,284      |  
|Tax losses (*)                       |  |                                    | 722,749  |   |                                 |  | 320,397  |                                  |  |  |                      |   |  |        | (33,364  | ) |                                |  |       |   |  |  | 1,009,782  |  
|Intangibles                          |  |                                    | (523,275 | ) |                                 |  | (8,362   | )                                |  |  |                      |   |  |        | 167,323  |   |                                |  |       |   |  |  | (364,314   | )
|Others                               |  |                                    | 9,587    |   |                                 |  | 45,638   |                                  |  |  |                      |   |  |        | (62,182  | ) |                                |  | (6,845 | ) |  |  | (13,802    | )
|                                     |  |                                    |          |   |                                 |  |          |                                  |  |  |                       |   |  |        |          |   |                                |  |        |   |  |  |            |  
|Total                                |  |                                    | (644,571 | ) |                                 |  | 270,904  |                                  |  |  | (17,192               | ) |  |        | (37,266  | ) |                                |  | (6,845 | ) |  |  | (434,970   | )
|                                     |  |                                    |          |   |                                 |  |          |                                  |  |  |                       |   |  |        |          |   |                                |  |        |   |  |  |            |  



|(c) | From January 1 to December 31, 2016
|--- | -----------------------------------



|                                     |  |                                    |            |   |                                 |  |          |                                  |  |  |                       |   |  |        |         |   |                                |  |        |   |  |  |            |  
|------------------------------------ |  | ---------------------------------- | ---------- | - | ------------------------------- |  | -------- | -------------------------------- |  |  | --------------------- | - |  | ------ | ------- | - | ------------------------------ |  | ------ | - |  |  | ---------- | -
|                                     |  | OpeningbalanceAssets/(liabilities) |            |   | Recognized inconsolidatedincome |  |          | Recognized incomprehensiveincome |  |  | Exchangeratevariation |   |  | Others |         |   | EndingbalanceAsset (liability) | 
|                                     |  | ThUS$                              |            |   | ThUS$                           |  |          | ThUS$                            |  |  | ThUS$                 |   |  | ThUS$  |         |   | ThUS$                          | 
|Depreciation                         |  |                                    | (1,130,991 | ) |                                 |  | (241,435 | )                                |  |  |                      |   |  |        | (3,599  | ) |                                |  |       |   |  |  | (1,376,025 | )
|Leased assets                        |  |                                    | (251,302   | ) |                                 |  | 14,833   |                                  |  |  |                      |   |  |        | (3,289  | ) |                                |  |       |   |  |  | (239,758   | )
|Amortization                         |  |                                    | (71,164    | ) |                                 |  | (4,375   | )                                |  |  |                      |   |  |        | (1,941  | ) |                                |  |       |   |  |  | (77,480    | )
|Provisions                           |  |                                    | 378,537    |   |                                 |  | (149,969 | )                                |  |  | 921                   |   |  |        | 53,448  |   |                                |  | (1,568 | ) |  |  | 281,369    |  
|Revaluation of financial instruments |  |                                    | 8,284      |   |                                 |  | 28,294   |                                  |  |  | (34,695               | ) |  |        | 1,340   |   |                                |  |       |   |  |  | 3,223      |  
|Tax losses (*)                       |  |                                    | 1,009,782  |   |                                 |  | 304,892  |                                  |  |  |                      |   |  |        | 14,062  |   |                                |  |       |   |  |  | 1,328,736  |  
|Intangibles                          |  |                                    | (364,314   | ) |                                 |  | 4,131    |                                  |  |  |                      |   |  |        | (70,522 | ) |                                |  |       |   |  |  | (430,705   | )
|Others                               |  |                                    | (13,802    | ) |                                 |  | (30,185  | )                                |  |  |                      |   |  |        | 22,234  |   |                                |  | 1,214  |   |  |  | (20,539    | )
|                                     |  |                                    |            |   |                                 |  |          |                                  |  |  |                       |   |  |        |         |   |                                |  |        |   |  |  |            |  
|Total                                |  |                                    | (434,970   | ) |                                 |  | (73,814  | )                                |  |  | (33,774               | ) |  |        | 11,733  |   |                                |  | (354   | ) |  |  | (531,179   | )
|                                     |  |                                    |            |   |                                 |  |          |                                  |  |  |                       |   |  |        |         |   |                                |  |        |   |  |  |            |  

Deferred tax assets not recognized:



|                                         |  |                       |         |  |                       |  |        | 
|---------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------ | 
|                                         |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                                         |  | ThUS$                 |         |  | ThUS$                 | 
|Tax losses                               |  |                       | 115,801 |  |                       |  | 15,513 | 
|                                         |  |                       |         |  |                       |  |        | 
|Total Deferred tax assets not recognized |  |                       | 115,801 |  |                       |  | 15,513 | 
|                                         |  |                       |         |  |                       |  |        | 

Deferred tax assets on tax loss, are recognized to the extent that it is likely probable the realization of future tax benefit
By the above at December 31, 2016, the Company has not recognized deferred tax assets of ThUS$ 115,801 (ThUS$ 15,513 at December 31, 2015) according with a loss of ThUS$ 340,591 (ThUS$ 45,628 at December 31, 2015).



F-82



---

##### Table of Contents

Deferred tax expense and current income taxes:



|                                                                                             |  |                                  |         |  |       |  |          |       |  |  |         |  
|-------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- |  | ----- |  | -------- | ----- |  |  | ------- | -
|                                                                                             |  | For the period endedDecember 31, |        
|                                                                                             |  | 2016                             |         |  | 2015  |  |          | 2014  | 
|                                                                                             |  | ThUS$                            |         |  | ThUS$ |  |          | ThUS$ | 
|Current tax expense                                                                          |  |                                  |         |  |       |  |          |       |  |  |         |  
|Current tax expense                                                                          |  |                                  | 87,307  |  |       |  | 92,916   |       |  |  | 97,782  |  
|Adjustment to previous periods current tax                                                  |  |                                  | 2,083   |  |       |  | (395     | )     |  |  | (2,151  | )
|                                                                                             |  |                                  |         |  |       |  |          |       |  |  |         |  
|Total current tax expense, net                                                               |  |                                  | 89,390  |  |       |  | 92,521   |       |  |  | 95,631  |  
|                                                                                             |  |                                  |         |  |       |  |          |       |  |  |         |  
|Deferred tax expense                                                                         |  |                                  |         |  |       |  |          |       |  |  |         |  
|Deferred expense for taxes related to the creation and reversal of temporary differences     |  |                                  | 73,814  |  |       |  | (270,904 | )     |  |  | 196,676 |  
|Reduction (increase) in value of deferred tax assets during the evaluation of its
usefulness |  |                                  |        |  |       |  |         |       |  |  | 97      |  
|                                                                                             |  |                                  |         |  |       |  |          |       |  |  |         |  
|Total deferred tax expense, net                                                              |  |                                  | 73,814  |  |       |  | (270,904 | )     |  |  | 196,773 |  
|                                                                                             |  |                                  |         |  |       |  |          |       |  |  |         |  
|Income tax expense                                                                           |  |                                  | 163,204 |  |       |  | (178,383 | )     |  |  | 292,404 |  
|                                                                                             |  |                                  |         |  |       |  |          |       |  |  |         |  

Composition of income tax expense (income):



|                                   |  |                                  |         |   |       |  |          |       |  |  |         | 
|---------------------------------- |  | -------------------------------- | ------- | - | ----- |  | -------- | ----- |  |  | ------- | 
|                                   |  | For the period endedDecember 31, |        
|                                   |  | 2016                             |         |   | 2015  |  |          | 2014  | 
|                                   |  | ThUS$                            |         |   | ThUS$ |  |          | ThUS$ | 
|Current tax expense, net, foreign  |  |                                  | 80,600  |   |       |  | 89,460   |       |  |  | 92,272  | 
|Current tax expense, net, Chile    |  |                                  | 8,790   |   |       |  | 3,061    |       |  |  | 3,359   | 
|                                   |  |                                  |         |   |       |  |          |       |  |  |         | 
|Total current tax expense, net     |  |                                  | 89,390  |   |       |  | 92,521   |       |  |  | 95,631  | 
|                                   |  |                                  |         |   |       |  |          |       |  |  |         | 
|Deferred tax expense, net, foreign |  |                                  | 119,175 |   |       |  | (280,445 | )     |  |  | 168,049 | 
|Deferred tax expense, net, Chile   |  |                                  | (45,361 | ) |       |  | 9,541    |       |  |  | 28,724  | 
|                                   |  |                                  |         |   |       |  |          |       |  |  |         | 
|Deferred tax expense, net, total   |  |                                  | 73,814  |   |       |  | (270,904 | )     |  |  | 196,773 | 
|                                   |  |                                  |         |   |       |  |          |       |  |  |         | 
|Income tax expense                 |  |                                  | 163,204 |   |       |  | (178,383 | )     |  |  | 292,404 | 
|                                   |  |                                  |         |   |       |  |          |       |  |  |         | 



F-83



---

##### Table of Contents

Profit before tax by the legal tax rate in Chile (24% and 22.5% at December 31, 2016 and 2015, respectively)



|                                                      |  |                                   |         |   |                                  |  |          |       |  |  |         |   |  |      |        |   |      |  |       |   |  |  |         |  
|----------------------------------------------------- |  | --------------------------------- | ------- | - | -------------------------------- |  | -------- | ----- |  |  | ------- | - |  | ---- | ------ | - | ---- |  | ----- | - |  |  | ------- | -
|                                                      |  | For the period ended
December 31, |         |   | For the period endedDecember 31, | 
|                                                      |  | 2016                              |         |   | 2015                             |  |          | 2014  |  |  | 2016    |   |  | 2015 |        |   | 2014 | 
|                                                      |  | ThUS$                             |         |   | ThUS$                            |  |          | ThUS$ |  |  | %       |   |  | %    |        |   | %    | 
|Tax expense using the legal rate (*)                  |  |                                   | 65,449  |   |                                  |  | (89,472  | )     |  |  | 6,805   |   |  |      | 24.00  |   |      |  | 22.50 |   |  |  | 21.00   |  
|                                                      |  |                                   |         |   |                                  |  |          |       |  |  |         |   |  |      |        |   |      |  |       |   |  |  |         |  
|Tax effect by change in tax rate (*)                  |  |                                   |        |   |                                  |  |         |       |  |  | 150,210 |   |  |      |       |   |      |  |      |   |  |  | 463.55  |  
|Tax effect of rates in other jurisdictions            |  |                                   | 16,333  |   |                                  |  | (21,803  | )     |  |  | 112,563 |   |  |      | 5.99   |   |      |  | 5.48  |   |  |  | 347.37  |  
|Tax effect of non-taxable operating revenues          |  |                                   | (62,419 | ) |                                  |  | (106,381 | )     |  |  | (60,960 | ) |  |      | (22.89 | ) |      |  | 26.75 |   |  |  | (188.12 | )
|Tax effect of disallowable expenses                   |  |                                   | 132,469 |   |                                  |  | 38,677   |       |  |  | 88,643  |   |  |      | 48.58  |   |      |  | (9.73 | ) |  |  | 273.55  |  
|Other increases (decreases) in legal tax charge       |  |                                   | 11,372  |   |                                  |  | 596      |       |  |  | (4,857  | ) |  |      | 4.17   |   |      |  | (0.15 | ) |  |  | (14.99  | )
|                                                      |  |                                   |         |   |                                  |  |          |       |  |  |         |   |  |      |        |   |      |  |       |   |  |  |         |  
|Total adjustments to tax expense using the legal rate |  |                                   | 97,755  |   |                                  |  | (88,911  | )     |  |  | 285,599 |   |  |      | 35.85  |   |      |  | 22.35 |   |  |  | 881.36  |  
|                                                      |  |                                   |         |   |                                  |  |          |       |  |  |         |   |  |      |        |   |      |  |       |   |  |  |         |  
|Tax expense using the effective rate                  |  |                                   | 163,204 |   |                                  |  | (178,383 | )     |  |  | 292,404 |   |  |      | 59.85  |   |      |  | 44.85 |   |  |  | 902.36  |  
|                                                      |  |                                   |         |   |                                  |  |          |       |  |  |         |   |  |      |        |   |      |  |       |   |  |  |         |  



|(*) | 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, 2016 the Company presents the reconciliation of income tax expense and legal tax rate considering the rate increase.

Deferred taxes related to items charged to net equity:



|                                                                        |  |                                  |         |   |       |  |         |  
|----------------------------------------------------------------------- |  | -------------------------------- | ------- | - | ----- |  | ------- | -
|                                                                        |  | For the period endedDecember 31, |        
|                                                                        |  | 2016                             |         |   | 2015  | 
|                                                                        |  | ThUS$                            |         |   | ThUS$ | 
|Aggregate deferred taxation of components of other comprehensive income |  |                                  | (33,774 | ) |       |  | (17,192 | )
|Aggregate deferred taxation related to items charged to net equity      |  |                                  | (807    | ) |       |  | (992    | )



F-84



---

##### Table of Contents

NOTE 19 - OTHER FINANCIAL LIABILITIES

The composition of Other financial liabilities is as follows:



|                           |  |                       |           |  |                       |  |           | 
|-------------------------- |  | --------------------- | --------- |  | --------------------- |  | --------- | 
|                           |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                           |  | ThUS$                 |           |  | ThUS$                 | 
|Current                    |  |                       |           |  |                       |  |           | 
|(a) Interest bearing loans |  |                       | 1,814,647 |  |                       |  | 1,510,146 | 
|(b) Hedge derivatives      |  |                       | 24,881    |  |                       |  | 134,089   | 
|                           |  |                       |           |  |                       |  |           | 
|Total current              |  |                       | 1,839,528 |  |                       |  | 1,644,235 | 
|                           |  |                       |           |  |                       |  |           | 
|Non-current                |  |                       |           |  |                       |  |           | 
|(a) Interest bearing loans |  |                       | 6,790,273 |  |                       |  | 7,516,257 | 
|(b) Hedge derivatives      |  |                       | 6,679     |  |                       |  | 16,128    | 
|                           |  |                       |           |  |                       |  |           | 
|Total non-current          |  |                       | 6,796,952 |  |                       |  | 7,532,385 | 
|                           |  |                       |           |  |                       |  |           | 



|(a) | Interest bearing loans
|--- | ----------------------

Obligations with credit institutions and debt instruments:



|                                              |  |                       |           |  |                       |  |           | 
|--------------------------------------------- |  | --------------------- | --------- |  | --------------------- |  | --------- | 
|                                              |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                                              |  | ThUS$                 |           |  | ThUS$                 | 
|Current                                       |  |                       |           |  |                       |  |           | 
|Loans to exporters                            |  |                       | 278,164   |  |                       |  | 387,409   | 
|Bank loans (1)                                |  |                       | 290,810   |  |                       |  | 80,188    | 
|Guaranteed obligations                        |  |                       | 578,014   |  |                       |  | 591,148   | 
|Other guaranteed obligations                  |  |                       | 1,908     |  |                       |  | 32,513    | 
|                                              |  |                       |           |  |                       |  |           | 
|Subtotal bank loans                           |  |                       | 1,148,896 |  |                       |  | 1,091,258 | 
|Obligation with the public                    |  |                       | 312,043   |  |                       |  | 10,999    | 
|Financial leases                              |  |                       | 268,040   |  |                       |  | 324,859   | 
|Other loans                                   |  |                       | 85,668    |  |                       |  | 83,030    | 
|                                              |  |                       |           |  |                       |  |           | 
|Total current                                 |  |                       | 1,814,647 |  |                       |  | 1,510,146 | 
|                                              |  |                       |           |  |                       |  |           | 
|Non-current                                   |  |                       |           |  |                       |  |           | 
|Bank loans                                    |  |                       | 294,477   |  |                       |  | 564,128   | 
|Guaranteed obligations                        |  |                       | 4,180,538 |  |                       |  | 4,122,995 | 
|Other guaranteed obligations                  |  |                       | 254,512   |  |                       |  |          | 
|                                              |  |                       |           |  |                       |  |           | 
|Subtotal bank loans                           |  |                       | 4,729,527 |  |                       |  | 4,687,123 | 
|Obligation with the public (2)                |  |                       | 997,302   |  |                       |  | 1,294,882 | 
|Financial leases                              |  |                       | 754,321   |  |                       |  | 1,015,779 | 
|Other loans                                   |  |                       | 309,123   |  |                       |  | 518,473   | 
|                                              |  |                       |           |  |                       |  |           | 
|Total non-current                             |  |                       | 6,790,273 |  |                       |  | 7,516,257 | 
|                                              |  |                       |           |  |                       |  |           | 
|Total obligations with financial institutions |  |                       | 8,604,920 |  |                       |  | 9,026,403 | 
|                                              |  |                       |           |  |                       |  |           | 



|(1) | On September 29, 2016 TAM Linhas Aéreas S.A. obtained financing for US $ 200 million, guaranteed with 18% of the shares of Multiplus S.A., percentage adjustable depending on the shares price.
Additionally, TAM obtained a Cross Currency Swap for the same amount and period, in order to convert the commitment currency from US$ to BRL.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | 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, interest rate of 7.25% per annum.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-85



---

##### Table of Contents

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 ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|Currency            |  | ThUS$                 |           |  | ThUS$                 | 
|Brazilian real      |  |                       | 1,253     |  |                       |  | 3,387     | 
|Chilean peso (U.F.) |  |                       | 203,194   |  |                       |  | 210,423   | 
|US Dollar           |  |                       | 8,400,473 |  |                       |  | 8,812,593 | 
|                    |  |                       |           |  |                       |  |           | 
|Total               |  |                       | 8,604,920 |  |                       |  | 9,026,403 | 
|                    |  |                       |           |  |                       |  |           | 



F-86



---

##### Table of Contents

Interest-bearing loans due in installments to December 31, 2016

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



|                             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  |  |      | 
|---------------------------- |  | --------------------- |  | --------------- | ------- |  | -------- |  | --- | -------------- |  |  | ------------------------- |  |  | ------------------------- | ------- |  | -------------------------- |  | --------- | ------------------ |  |  | ----------------- |  |  | ------------ | --------- |  | ------------------------- |  | --------- | ------------------------- |  |  | -------------------------- |  |  | ------------------ | ------- |  | -------------------- |  | --------- | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | --------- |  |  |  | ------------ |  |  |  | ---- |  |  |  | ---- | 
|                             |  |                       |  |                 |         |  |          |  |     | Nominal values |  |  | Accounting values         |  |  |                           |         |  |                            |  |           |                    | 
|Tax No.                      |  | Creditor              |  | Creditorcountry |         |  | Currency |  |     | Up to90 days   |  |  | Morethan90 daysto oneyear |  |  | Morethan oneto threeyears |         |  | Morethan threeto fiveyears |  |           | Morethan fiveyears |  |  | Totalnominalvalue |  |  | Up to90 days |           |  | Morethan90 daysto oneyear |  |           | Morethan oneto threeyears |  |  | Morethan threeto fiveyears |  |  | Morethan fiveyears |         |  | Totalaccountingvalue |  |           | Amortization |  |  | EffectiveRate |  |  | Nominalrate |          
|                             |  |                       |  |                 |         |  |          |  |     | ThUS$          |  |  | ThUS$                     |  |  | ThUS$                     |         |  | ThUS$                      |  |           | ThUS$              |  |  | ThUS$             |  |  | ThUS$        |           |  | ThUS$                     |  |           | ThUS$                     |  |  | ThUS$                      |  |  | ThUS$              |         |  | ThUS$                |  |           |              |  |  | %             |  |  | %           |          
|Loans to exporters           |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|97.032.000-8                 |  | BBVA                  |  |                 | Chile   |  |          |  | US$ |                |  |  | 75,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 75,000    |                           |  |  | 75,234                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 75,234    |  |  |  | AtExpiration |  |  |  | 1.85 |  |  |  | 1.85 | 
|97.032.000-8                 |  | BBVA                  |  |                 | Chile   |  |          |  | UF  |                |  |  |                          |  |  |                           | 50,381  |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 50,381    |                           |  |  |                           |  |  |                    | 50,324  |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 50,324    |  |  |  | AtExpiration |  |  |  | 5.23 |  |  |  | 4.43 | 
|97.036.000-K                 |  | SANTANDER             |  |                 | Chile   |  |          |  | US$ |                |  |  | 30,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 30,000    |                           |  |  | 30,183                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 30,183    |  |  |  | AtExpiration |  |  |  | 2.39 |  |  |  | 2.39 | 
|97.030.000-7                 |  | ESTADO                |  |                 | Chile   |  |          |  | US$ |                |  |  | 40,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 40,000    |                           |  |  | 40,098                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 40,098    |  |  |  | AtExpiration |  |  |  | 1.91 |  |  |  | 1.91 | 
|97.003.000-K                 |  | BANCO DO BRASIL       |  |                 | Chile   |  |          |  | US$ |                |  |  | 70,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 70,000    |                           |  |  | 70,323                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 70,323    |  |  |  | AtExpiration |  |  |  | 3.08 |  |  |  | 3.08 | 
|97.951.000-4                 |  | HSBC                  |  |                 | Chile   |  |          |  | US$ |                |  |  | 12,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 12,000    |                           |  |  | 12,002                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 12,002    |  |  |  | AtExpiration |  |  |  | 1.79 |  |  |  | 1.79 | 
|Bank loans                   |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|97.023.000-9                 |  | CORP BANCA            |  |                 | Chile   |  |          |  | UF  |                |  |  | 19,229                    |  |  |                           | 57,686  |  |                            |  | 60,186    |                    |  |  | 16,254            |  |  |              |          |  |                           |  | 153,355   |                           |  |  | 19,819                     |  |  |                    | 57,686  |  |                      |  | 59,176    |              |  |  | 16,189        |  |  |             |          |  |  |  | 152,870   |  |  |  | Quarterly    |  |  |  | 4.06 |  |  |  | 4.06 | 
|0-E                          |  | BLADEX                |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           | 12,500  |  |                            |  | 30,000    |                    |  |  |                  |  |  |              |          |  |                           |  | 42,500    |                           |  |  |                           |  |  |                    | 12,667  |  |                      |  | 29,625    |              |  |  |              |  |  |             |          |  |  |  | 42,292    |  |  |  | Semiannual   |  |  |  | 5.14 |  |  |  | 5.14 | 
|0-E                          |  | DVB BANK SE           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 28,911    |                    |  |  |                  |  |  |              |          |  |                           |  | 28,911    |                           |  |  | 3                          |  |  |                    |        |  |                      |  | 28,911    |              |  |  |              |  |  |             |          |  |  |  | 28,914    |  |  |  | Quarterly    |  |  |  | 1.86 |  |  |  | 1.86 | 
|97.036.000-K                 |  | SANTANDER             |  |                 | Chile   |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 158,194   |                    |  |  |                  |  |  |              |          |  |                           |  | 158,194   |                           |  |  | 542                        |  |  |                    |        |  |                      |  | 158,194   |              |  |  |              |  |  |             |          |  |  |  | 158,736   |  |  |  | Quarterly    |  |  |  | 3.55 |  |  |  | 3.55 | 
|Obligations with the public  |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | BANK OF NEWYORK       |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  |          |                    |  |  | 500,000           |  |  |              |          |  |                           |  | 500,000   |                           |  |  | 2,291                      |  |  |                    |        |  |                      |  |          |              |  |  | 489,885       |  |  |             |          |  |  |  | 492,176   |  |  |  | AtExpiration |  |  |  | 7.77 |  |  |  | 7.25 | 
|Guaranteed obligations       |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | CREDIT AGRICOLE       |  |                 | France  |  |          |  | US$ |                |  |  | 11,073                    |  |  |                           | 29,252  |  |                            |  | 62,209    |                    |  |  | 32,172            |  |  |              | 3,711     |  |                           |  | 138,417   |                           |  |  | 11,454                     |  |  |                    | 29,252  |  |                      |  | 60,781    |              |  |  | 31,221        |  |  |             | 3,631     |  |  |  | 136,339   |  |  |  | Quarterly    |  |  |  | 2.21 |  |  |  | 1.81 | 
|0-E                          |  | BNP PARIBAS           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 10,496                    |  |  |                           | 42,401  |  |                            |  | 111,962   |                    |  |  | 118,181           |  |  |              | 345,078   |  |                           |  | 628,118   |                           |  |  | 12,792                     |  |  |                    | 43,023  |  |                      |  | 108,271   |              |  |  | 116,067       |  |  |             | 341,481   |  |  |  | 621,634   |  |  |  | Quarterly    |  |  |  | 2.97 |  |  |  | 2.96 | 
|0-E                          |  | WELLS FARGO           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 31,448                    |  |  |                           | 95,186  |  |                            |  | 260,112   |                    |  |  | 269,512           |  |  |              | 400,087   |  |                           |  | 1,056,345 |                           |  |  | 35,211                     |  |  |                    | 95,186  |  |                      |  | 233,012   |              |  |  | 257,387       |  |  |             | 391,253   |  |  |  | 1,012,049 |  |  |  | Quarterly    |  |  |  | 2.37 |  |  |  | 1.68 | 
|0-E                          |  | WILMINGTON TRUST      |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 15,554                    |  |  |                           | 49,236  |  |                            |  | 135,254   |                    |  |  | 140,848           |  |  |              | 626,444   |  |                           |  | 967,336   |                           |  |  | 20,997                     |  |  |                    | 49,236  |  |                      |  | 130,792   |              |  |  | 138,455       |  |  |             | 622,153   |  |  |  | 961,633   |  |  |  | Quarterly    |  |  |  | 4.25 |  |  |  | 4.25 | 
|0-E                          |  | CITIBANK              |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 17,495                    |  |  |                           | 53,162  |  |                            |  | 146,932   |                    |  |  | 154,774           |  |  |              | 175,805   |  |                           |  | 548,168   |                           |  |  | 19,059                     |  |  |                    | 53,162  |  |                      |  | 138,257   |              |  |  | 150,891       |  |  |             | 172,087   |  |  |  | 533,456   |  |  |  | Quarterly    |  |  |  | 2.72 |  |  |  | 1.96 | 
|97.036.000-K                 |  | SANTANDER             |  |                 | Chile   |  |          |  | US$ |                |  |  | 5,347                     |  |  |                           | 16,204  |  |                            |  | 44,472    |                    |  |  | 46,386            |  |  |              | 26,165    |  |                           |  | 138,574   |                           |  |  | 5,680                      |  |  |                    | 16,204  |  |                      |  | 42,707    |              |  |  | 45,815        |  |  |             | 26,063    |  |  |  | 136,469   |  |  |  | Quarterly    |  |  |  | 1.98 |  |  |  | 1.44 | 
|0-E                          |  | BTMU                  |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 2,787                     |  |  |                           | 8,470   |  |                            |  | 23,393    |                    |  |  | 24,635            |  |  |              | 26,705    |  |                           |  | 85,990    |                           |  |  | 3,001                      |  |  |                    | 8,470   |  |                      |  | 22,132    |              |  |  | 24,149        |  |  |             | 26,519    |  |  |  | 84,271    |  |  |  | Quarterly    |  |  |  | 2.31 |  |  |  | 1.72 | 
|0-E                          |  | APPLE BANK            |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 1,364                     |  |  |                           | 4,167   |  |                            |  | 11,516    |                    |  |  | 12,146            |  |  |              | 13,561    |  |                           |  | 42,754    |                           |  |  | 1,538                      |  |  |                    | 4,166   |  |                      |  | 10,889    |              |  |  | 11,902        |  |  |             | 13,464    |  |  |  | 41,959    |  |  |  | Quarterly    |  |  |  | 2.29 |  |  |  | 1.69 | 
|0-E                          |  | US BANK               |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 14,817                    |  |  |                           | 44,958  |  |                            |  | 123,705   |                    |  |  | 129,462           |  |  |              | 219,666   |  |                           |  | 532,608   |                           |  |  | 17,298                     |  |  |                    | 44,958  |  |                      |  | 104,709   |              |  |  | 120,509       |  |  |             | 211,895   |  |  |  | 499,369   |  |  |  | Quarterly    |  |  |  | 3.99 |  |  |  | 2.81 | 
|0-E                          |  | DEUTSCHE BANK         |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,992                     |  |  |                           | 15,365  |  |                            |  | 24,725    |                    |  |  | 26,984            |  |  |              | 45,197    |  |                           |  | 117,263   |                           |  |  | 5,570                      |  |  |                    | 15,365  |  |                      |  | 24,023    |              |  |  | 26,515        |  |  |             | 44,522    |  |  |  | 115,995   |  |  |  | Quarterly    |  |  |  | 3.86 |  |  |  | 3.86 | 
|0-E                          |  | NATIXIS               |  |                 | France  |  |          |  | US$ |                |  |  | 12,289                    |  |  |                           | 37,388  |  |                            |  | 98,873    |                    |  |  | 82,066            |  |  |              | 192,235   |  |                           |  | 422,851   |                           |  |  | 13,038                     |  |  |                    | 37,388  |  |                      |  | 97,469    |              |  |  | 81,130        |  |  |             | 190,048   |  |  |  | 419,073   |  |  |  | Quarterly    |  |  |  | 2.60 |  |  |  | 2.57 | 
|0-E                          |  | PK AIRFINANCE         |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 2,018                     |  |  |                           | 6,268   |  |                            |  | 18,413    |                    |  |  | 24,944            |  |  |              | 3,144     |  |                           |  | 54,787    |                           |  |  | 2,071                      |  |  |                    | 6,269   |  |                      |  | 18,412    |              |  |  | 24,944        |  |  |             | 3,144     |  |  |  | 54,840    |  |  |  | Monthly      |  |  |  | 2.40 |  |  |  | 2.40 | 
|0-E                          |  | KFW IPEX-BANK         |  |                 | Germany |  |          |  | US$ |                |  |  | 2,288                     |  |  |                           | 7,015   |  |                            |  | 17,869    |                    |  |  | 9,019             |  |  |              |          |  |                           |  | 36,191    |                           |  |  | 2,319                      |  |  |                    | 7,015   |  |                      |  | 17,869    |              |  |  | 9,019         |  |  |             |          |  |  |  | 36,222    |  |  |  | Quarterly    |  |  |  | 2.55 |  |  |  | 2.55 | 
|0-E                          |  | AIRBUS FINANCIAL      |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 1,797                     |  |  |                           | 5,476   |  |                            |  | 15,262    |                    |  |  | 7,664             |  |  |              |          |  |                           |  | 30,199    |                           |  |  | 1,841                      |  |  |                    | 5,477   |  |                      |  | 15,261    |              |  |  | 7,664         |  |  |             |          |  |  |  | 30,243    |  |  |  | Monthly      |  |  |  | 2.49 |  |  |  | 2.49 | 
|0-E                          |  | INVESTEC              |  |                 | England |  |          |  | US$ |                |  |  | 1,298                     |  |  |                           | 7,526   |  |                            |  | 19,290    |                    |  |  | 21,667            |  |  |              | 22,421    |  |                           |  | 72,202    |                           |  |  | 1,771                      |  |  |                    | 7,733   |  |                      |  | 18,533    |              |  |  | 21,368        |  |  |             | 22,309    |  |  |  | 71,714    |  |  |  | Semiannual   |  |  |  | 5.67 |  |  |  | 5.67 | 
|                            |  | SWAP Aviones llegados |  |                 |        |  |          |  | US$ |                |  |  | 403                       |  |  |                           | 1,067   |  |                            |  | 1,658     |                    |  |  | 158               |  |  |              |          |  |                           |  | 3,286     |                           |  |  | 403                        |  |  |                    | 1,067   |  |                      |  | 1,658     |              |  |  | 158           |  |  |             |          |  |  |  | 3,286     |  |  |  | Quarterly    |  |  |  |     |  |  |  |     | 
|Other guaranteed obligations |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |     
|0-E                          |  | CREDIT AGRICOLE       |  |                 | France  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 256,860   |                    |  |  |                  |  |  |              |          |  |                           |  | 256,860   |                           |  |  | 1,908                      |  |  |                    |        |  |                      |  | 254,512   |              |  |  |              |  |  |             |          |  |  |  | 256,420   |  |  |  | Quarterly    |  |  |  | 2.85 |  |  |  | 2.85 | 
|Financial leases             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | ING                   |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 5,089                     |  |  |                           | 15,653  |  |                            |  | 31,151    |                    |  |  | 11,805            |  |  |              |          |  |                           |  | 63,698    |                           |  |  | 5,641                      |  |  |                    | 15,652  |  |                      |  | 30,577    |              |  |  | 11,771        |  |  |             |          |  |  |  | 63,641    |  |  |  | Quarterly    |  |  |  | 5.62 |  |  |  | 4.96 | 
|0-E                          |  | CREDIT AGRICOLE       |  |                 | France  |  |          |  | US$ |                |  |  | 1,754                     |  |  |                           | 5,403   |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 7,157     |                           |  |  | 1,780                      |  |  |                    | 5,403   |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 7,183     |  |  |  | Quarterly    |  |  |  | 1.85 |  |  |  | 1.85 | 
|0-E                          |  | CITIBANK              |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,956                     |  |  |                           | 15,312  |  |                            |  | 44,177    |                    |  |  | 13,804            |  |  |              |          |  |                           |  | 78,249    |                           |  |  | 5,622                      |  |  |                    | 15,312  |  |                      |  | 43,413    |              |  |  | 13,762        |  |  |             |          |  |  |  | 78,109    |  |  |  | Quarterly    |  |  |  | 6.40 |  |  |  | 5.67 | 
|0-E                          |  | PEFCO                 |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 15,979                    |  |  |                           | 47,048  |  |                            |  | 63,957    |                    |  |  | 3,827             |  |  |              |          |  |                           |  | 130,811   |                           |  |  | 16,852                     |  |  |                    | 47,048  |  |                      |  | 63,072    |              |  |  | 3,819         |  |  |             |          |  |  |  | 130,791   |  |  |  | Quarterly    |  |  |  | 5.39 |  |  |  | 4.79 | 
|0-E                          |  | BNP PARIBAS           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 12,520                    |  |  |                           | 38,494  |  |                            |  | 75,958    |                    |  |  | 22,147            |  |  |              |          |  |                           |  | 149,119   |                           |  |  | 13,122                     |  |  |                    | 38,494  |  |                      |  | 74,776    |              |  |  | 22,079        |  |  |             |          |  |  |  | 148,471   |  |  |  | Quarterly    |  |  |  | 3.69 |  |  |  | 3.26 | 
|0-E                          |  | WELLS FARGO           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,678                     |  |  |                           | 14,261  |  |                            |  | 39,862    |                    |  |  | 42,663            |  |  |              | 1,862     |  |                           |  | 103,326   |                           |  |  | 5,018                      |  |  |                    | 14,260  |  |                      |  | 38,834    |              |  |  | 42,430        |  |  |             | 1,861     |  |  |  | 102,403   |  |  |  | Quarterly    |  |  |  | 3.98 |  |  |  | 3.54 | 
|0-E                          |  | DVB BANK SE           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,680                     |  |  |                           | 9,447   |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 14,127    |                           |  |  | 4,713                      |  |  |                    | 9,448   |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 14,161    |  |  |  | Quarterly    |  |  |  | 2.57 |  |  |  | 2.57 | 
|0-E                          |  | RRP ENGINE            |  |                 | England |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 6,402     |                    |  |  | 6,955             |  |  |              | 11,917    |  |                           |  | 25,274    |                           |  |  |                           |  |  |                    |        |  |                      |  | 6,402     |              |  |  | 6,955         |  |  |             | 11,917    |  |  |  | 25,274    |  |  |  | Monthly      |  |  |  | 2.35 |  |  |  | 2.35 | 
|Other loans                  |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | BOEING                |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 26,214    |                    |  |  |                  |  |  |              |          |  |                           |  | 26,214    |                           |  |  | 185                        |  |  |                    |        |  |                      |  | 26,214    |              |  |  |              |  |  |             |          |  |  |  | 26,399    |  |  |  | AtExpiration |  |  |  | 2.35 |  |  |  | 2.35 | 
|0-E                          |  | CITIBANK (*)          |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 20,555                    |  |  |                           | 63,942  |  |                            |  | 184,866   |                    |  |  | 101,026           |  |  |              |          |  |                           |  | 370,389   |                           |  |  | 21,541                     |  |  |                    | 63,942  |  |                      |  | 182,043   |              |  |  | 100,866       |  |  |             |          |  |  |  | 368,392   |  |  |  | Quarterly    |  |  |  | 6.00 |  |  |  | 6.00 | 
|                             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  |  |      | 
|                             |  | Total                 |  |                 |         |  |          |  |     |                |  |  | 451,906                   |  |  |                           | 753,268 |  |                            |  | 2,122,383 |                    |  |  | 1,819,099         |  |  |              | 2,113,998 |  |                           |  | 7,260,654 |                           |  |  | 480,920                    |  |  |                    | 754,207 |  |                      |  | 2,040,524 |              |  |  | 1,774,950     |  |  |             | 2,082,347 |  |  |  | 7,132,948 |  |  |  |              |  |  |  |      |  |  |  |      | 
|                             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  |  |      | 



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



F-87



---

##### Table of Contents

Interest-bearing loans due in installments to December 31, 2016

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



|                           |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|-------------------------- |  | ------------------------------------ |  | --------------- | --------- |  | -------- |  | --- | ------------ |  |  | ------------------------- |  |  | ------------------------- | --------- |  | -------------------------- |  | --------- | ------------------ |  |  | ----------------- |  |  | ------------ | --------- |  | ------------------------- |  | --------- | ------------------------- |  |  | -------------------------- | - |  | ------------------ | --------- |  | -------------------- |  | --------- | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | --------- |  |  |  | -------------------- |  |  |  | ----- |  |  |  | ----- | 
|                           |  |                                      |  |                 |           |  |          |  |     |              |  |  | Nominal values            |  |  |                           |           |  | Accounting values          |  |           |                    |  |  |                   |  |  |              |          
|TaxNo.                     |  | Creditor                             |  | Creditorcountry |           |  | Currency |  |     | Up to90 days |  |  | Morethan90 daysto oneyear |  |  | Morethan oneto threeyears |           |  | Morethan threeto fiveyears |  |           | Morethan fiveyears |  |  | Totalnominalvalue |  |  | Up to90 days |           |  | Morethan90 daysto oneyear |  |           | Morethan oneto threeyears |  |  | Morethan threeto fiveyears |   |  | Morethan fiveyears |           |  | Totalaccountingvalue |  |           | Amortization |  |  | Effectiverate |  |  | Nominalrate |          
|                           |  |                                      |  |                 |           |  |          |  |     | ThUS$        |  |  | ThUS$                     |  |  | ThUS$                     |           |  | ThUS$                      |  |           | ThUS$              |  |  | ThUS$             |  |  | ThUS$        |           |  | ThUS$                     |  |           | ThUS$                     |  |  | ThUS$                      |   |  | ThUS$              |           |  | ThUS$                |  |           |              |  |  | %             |  |  | %           |          
|Bank loans                 |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  | 
|0-E                        |  | NEDERLANDSCHE                        |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  | CREDIETVERZEKERING MAATS CHAPPIJ     |  |                 | Holland   |  |          |  | US$ |              |  |  | 122                       |  |  |                           | 378       |  |                            |  | 1,094     |                    |  |  | 1,234             |  |  |              | 54        |  |                           |  | 2,882     |                           |  |  | 137                        |   |  |                    | 378       |  |                      |  | 1,094     |              |  |  | 1,233         |  |  |             | 55        |  |  |  | 2,897     |  |  |  | Monthly              |  |  |  | 6.01  |  |  |  | 6.01  | 
|0-E                        |  | CITIBANK                             |  |                 | U.S.A     |  |          |  | US$ |              |  |  |                          |  |  |                           | 200,000   |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 200,000   |                           |  |  | (151                       | ) |  |                    | 199,729   |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 199,578   |  |  |  | AtExpiration         |  |  |  | 3.39  |  |  |  | 3.14  | 
|Obligation with the public |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  | 
|0-E                        |  | THE BANK OF NEW YORK                 |  |                 | U.S.A     |  |          |  | US$ |              |  |  |                          |  |  |                           | 300,000   |  |                            |  |          |                    |  |  | 500,000           |  |  |              |          |  |                           |  | 800,000   |                           |  |  | 8,173                      |   |  |                    | 301,579   |  |                      |  | 4,119     |              |  |  | 503,298       |  |  |             |          |  |  |  | 817,169   |  |  |  | AtExpiration         |  |  |  | 8.17  |  |  |  | 8.00  | 
|Financial leases           |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  | 
|0-E                        |  | AFS INVESTMENT IX LLC                |  |                 | U.S.A     |  |          |  | US$ |              |  |  | 2,086                     |  |  |                           | 6,437     |  |                            |  | 18,556    |                    |  |  | 8,369             |  |  |              |          |  |                           |  | 35,448    |                           |  |  | 2,253                      |   |  |                    | 6,437     |  |                      |  | 18,556    |              |  |  | 8,369         |  |  |             |          |  |  |  | 35,615    |  |  |  | Monthly              |  |  |  | 1.25  |  |  |  | 1.25  | 
|0-E                        |  | DVB BANK SE                          |  |                 | U.S.A     |  |          |  | US$ |              |  |  | 118                       |  |  |                           | 164       |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 282       |                           |  |  | 119                        |   |  |                    | 164       |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 283       |  |  |  | Monthly              |  |  |  | 2.50  |  |  |  | 2.50  | 
|0-E                        |  | GENERAL ELECTRIC CAPITAL CORPORATION |  |                 | U.S.A     |  |          |  | US$ |              |  |  | 3,771                     |  |  |                           | 5,075     |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 8,846     |                           |  |  | 3,794                      |   |  |                    | 5,075     |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 8,869     |  |  |  | Monthly              |  |  |  | 2.30  |  |  |  | 2.30  | 
|0-E                        |  | KFW IPEX-BANK                        |  |                 | Germany   |  |          |  | US$ |              |  |  | 579                       |  |  |                           | 1,544     |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 2,123     |                           |  |  | 583                        |   |  |                    | 1,544     |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 2,127     |  |  |  | Monthly/Quarterly    |  |  |  | 2.80  |  |  |  | 2.80  | 
|0-E                        |  | NATIXIS                              |  |                 | France    |  |          |  | US$ |              |  |  | 2,675                     |  |  |                           | 5,732     |  |                            |  | 18,485    |                    |  |  | 38,820            |  |  |              | 41,731    |  |                           |  | 107,443   |                           |  |  | 3,533                      |   |  |                    | 5,732     |  |                      |  | 18,485    |              |  |  | 38,820        |  |  |             | 41,731    |  |  |  | 108,301   |  |  |  | Quarterly/Semiannual |  |  |  | 4.90  |  |  |  | 4.90  | 
|0-E                        |  | WACAPOU LEASING S.A.                 |  |                 | Luxemburg |  |          |  | US$ |              |  |  | 668                       |  |  |                           | 2,038     |  |                            |  | 5,768     |                    |  |  | 6,280             |  |  |              |          |  |                           |  | 14,754    |                           |  |  | 709                        |   |  |                    | 2,038     |  |                      |  | 5,768     |              |  |  | 6,280         |  |  |             |          |  |  |  | 14,795    |  |  |  | Quarterly            |  |  |  | 3.00  |  |  |  | 3.00  | 
|0-E                        |  | SOCIÉTÉ GÉNÉRALE MILAN BRANCH        |  |                 | Italy     |  |          |  | US$ |              |  |  | 8,547                     |  |  |                           | 26,275    |  |                            |  | 74,783    |                    |  |  | 169,730           |  |  |              |          |  |                           |  | 279,335   |                           |  |  | 9,779                      |   |  |                    | 26,275    |  |                      |  | 74,783    |              |  |  | 169,730       |  |  |             |          |  |  |  | 280,567   |  |  |  | Quarterly            |  |  |  | 4.18  |  |  |  | 4.11  | 
|0-E                        |  | BANCO IBM S.A                        |  |                 | Brazil    |  |          |  | BRL |              |  |  | 260                       |  |  |                           | 749       |  |                            |  | 22        |                    |  |  |                  |  |  |              |          |  |                           |  | 1,031     |                           |  |  | 260                        |   |  |                    | 749       |  |                      |  | 21        |              |  |  |              |  |  |             |          |  |  |  | 1,030     |  |  |  | Monthly              |  |  |  | 13.63 |  |  |  | 13.63 | 
|0-E                        |  | HP FINANCIAL SERVICE                 |  |                 | Brazil    |  |          |  | BRL |              |  |  | 222                       |  |  |                           |          |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 222       |                           |  |  | 222                        |   |  |                    |          |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 222       |  |  |  | Monthly              |  |  |  | 10.02 |  |  |  | 10.02 | 
|0-E                        |  | SOCIETE GENERALE                     |  |                 | France    |  |          |  | BRL |              |  |  | 102                       |  |  |                           | 307       |  |                            |  | 110       |                    |  |  |                  |  |  |              |          |  |                           |  | 519       |                           |  |  | 102                        |   |  |                    | 307       |  |                      |  | 110       |              |  |  |              |  |  |             |          |  |  |  | 519       |  |  |  | Monthly              |  |  |  | 13.63 |  |  |  | 13.63 | 
|                           |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  | Total                                |  |                 |           |  |          |  |     |              |  |  | 19,150                    |  |  |                           | 548,699   |  |                            |  | 118,818   |                    |  |  | 724,433           |  |  |              | 41,785    |  |                           |  | 1,452,885 |                           |  |  | 29,513                     |   |  |                    | 550,007   |  |                      |  | 122,936   |              |  |  | 727,730       |  |  |             | 41,786    |  |  |  | 1,471,972 |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  | Total consolidated                   |  |                 |           |  |          |  |     |              |  |  | 471,056                   |  |  |                           | 1,301,967 |  |                            |  | 2,241,201 |                    |  |  | 2,543,532         |  |  |              | 2,155,783 |  |                           |  | 8,713,539 |                           |  |  | 510,433                    |   |  |                    | 1,304,214 |  |                      |  | 2,163,460 |              |  |  | 2,502,680     |  |  |             | 2,124,133 |  |  |  | 8,604,920 |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                           |  |                                      |  |                 |           |  |          |  |     |              |  |  |                           |  |  |                           |           |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |   |  |                    |           |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 



F-88



---

##### Table of Contents

Interest-bearing loans due in installments to December 31, 2015

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



|                             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  |  |      | 
|---------------------------- |  | --------------------- |  | --------------- | ------- |  | -------- |  | --- | -------------- |  |  | ------------------------- |  |  | ------------------------- | ------- |  | -------------------------- |  | --------- | ------------------ |  |  | ----------------- |  |  | ------------ | --------- |  | ------------------------- |  | --------- | ------------------------- |  |  | -------------------------- |  |  | ------------------ | ------- |  | -------------------- |  | --------- | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | --------- |  |  |  | ------------ |  |  |  | ---- |  |  |  | ---- | 
|                             |  |                       |  |                 |         |  |          |  |     | Nominal values |  |  | Accounting values         |  |  |                           |         |  |                            |  |           |                    | 
|Tax No.                      |  | Creditor              |  | Creditorcountry |         |  | Currency |  |     | Up to90 days   |  |  | Morethan90 daysto oneyear |  |  | Morethan oneto threeyears |         |  | Morethan threeto fiveyears |  |           | Morethan fiveyears |  |  | Totalnominalvalue |  |  | Up to90 days |           |  | Morethan90 daysto oneyear |  |           | Morethan oneto threeyears |  |  | Morethan threeto fiveyears |  |  | Morethan fiveyears |         |  | Totalaccountingvalue |  |           | Amortization |  |  | Effectiverate |  |  | Nominalrate |          
|                             |  |                       |  |                 |         |  |          |  |     | 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   |                           |  |  | 100,183                    |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 100,183   |  |  |  | AtExpiration |  |  |  | 1.00 |  |  |  | 1.00 | 
|97.036.000-K                 |  | SANTANDER             |  |                 | Chile   |  |          |  | US$ |                |  |  | 100,000                   |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 100,000   |                           |  |  | 100,067                    |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 100,067   |  |  |  | AtExpiration |  |  |  | 1.44 |  |  |  | 1.44 | 
|97.030.000-7                 |  | ESTADO                |  |                 | Chile   |  |          |  | US$ |                |  |  | 55,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 55,000    |                           |  |  | 55,088                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 55,088    |  |  |  | AtExpiration |  |  |  | 1.05 |  |  |  | 1.05 | 
|97.004.000-5                 |  | CHILE                 |  |                 | Chile   |  |          |  | US$ |                |  |  | 50,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 50,000    |                           |  |  | 50,006                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 50,006    |  |  |  | AtExpiration |  |  |  | 1.42 |  |  |  | 1.42 | 
|97,003,000-K                 |  | BANCO DO BRASIL       |  |                 | Chile   |  |          |  | US$ |                |  |  | 70,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 70,000    |                           |  |  | 70,051                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 70,051    |  |  |  | AtExpiration |  |  |  | 1.18 |  |  |  | 1.18 | 
|97.951.000-4                 |  | HSBC                  |  |                 | Chile   |  |          |  | US$ |                |  |  | 12,000                    |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 12,000    |                           |  |  | 12,014                     |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 12,014    |  |  |  | AtExpiration |  |  |  | 0.66 |  |  |  | 0.66 | 
|Bank loans                   |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|97.023.000-9                 |  | CORPBANCA             |  |                 | Chile   |  |          |  | UF  |                |  |  | 17,631                    |  |  |                           | 52,893  |  |                            |  | 105,837   |                    |  |  | 34,774            |  |  |              |          |  |                           |  | 211,135   |                           |  |  | 18,510                     |  |  |                    | 52,892  |  |                      |  | 104,385   |              |  |  | 34,635        |  |  |             |          |  |  |  | 210,422   |  |  |  | Quarterly    |  |  |  | 4.18 |  |  |  | 4.18 | 
|0-E                          |  | BLADEX                |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           | 7,500   |  |                            |  | 27,500    |                    |  |  | 15,000            |  |  |              |          |  |                           |  | 50,000    |                           |  |  | 134                        |  |  |                    | 7,500   |  |                      |  | 27,125    |              |  |  | 14,875        |  |  |             |          |  |  |  | 49,634    |  |  |  | Semiannual   |  |  |  | 4.58 |  |  |  | 4.58 | 
|0-E                          |  | DVB BANK SE           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 153,514   |                    |  |  |                  |  |  |              |          |  |                           |  | 153,514   |                           |  |  | 14                         |  |  |                    |        |  |                      |  | 153,514   |              |  |  |              |  |  |             |          |  |  |  | 153,528   |  |  |  | Quarterly    |  |  |  | 1.67 |  |  |  | 1.67 | 
|97.036.000-K                 |  | SANTANDER             |  |                 | Chile   |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 226,712   |                    |  |  |                  |  |  |              |          |  |                           |  | 226,712   |                           |  |  | 650                        |  |  |                    |        |  |                      |  | 226,712   |              |  |  |              |  |  |             |          |  |  |  | 227,362   |  |  |  | Quarterly    |  |  |  | 2.24 |  |  |  | 2.24 | 
|Obligations with the public  |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | BANK OF YORK          |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  |          |                    |  |  | 500,000           |  |  |              |          |  |                           |  | 500,000   |                           |  |  | 2,383                      |  |  |                    |        |  |                      |  |          |              |  |  | 486,962       |  |  |             |          |  |  |  | 489,345   |  |  |  | AtExpiration |  |  |  | 7.77 |  |  |  | 7.25 | 
|Guaranteed obligations       |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | CREDIT AGRICOLE       |  |                 | France  |  |          |  | US$ |                |  |  | 29,633                    |  |  |                           | 88,188  |  |                            |  | 204,722   |                    |  |  | 54,074            |  |  |              | 12,410    |  |                           |  | 389,027   |                           |  |  | 30,447                     |  |  |                    | 88,189  |  |                      |  | 203,286   |              |  |  | 54,074        |  |  |             | 12,410    |  |  |  | 388,406   |  |  |  | Quarterly    |  |  |  | 1.83 |  |  |  | 1.66 | 
|0-E                          |  | BNP PARIBAS           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 8,162                     |  |  |                           | 25,012  |  |                            |  | 70,785    |                    |  |  | 75,028            |  |  |              | 140,410   |  |                           |  | 319,397   |                           |  |  | 9,243                      |  |  |                    | 25,012  |  |                      |  | 70,335    |              |  |  | 74,917        |  |  |             | 140,407   |  |  |  | 319,914   |  |  |  | Quarterly    |  |  |  | 2.29 |  |  |  | 2.22 | 
|0-E                          |  | WELLS FARGO           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 30,895                    |  |  |                           | 93,511  |  |                            |  | 255,536   |                    |  |  | 264,770           |  |  |              | 536,039   |  |                           |  | 1,180,751 |                           |  |  | 34,933                     |  |  |                    | 93,511  |  |                      |  | 227,704   |              |  |  | 252,054       |  |  |             | 525,257   |  |  |  | 1,133,459 |  |  |  | Quarterly    |  |  |  | 2.27 |  |  |  | 1.57 | 
|0-E                          |  | WILMINGTON TRUST      |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           | 48,264  |  |                            |  | 85,183    |                    |  |  | 90,694            |  |  |              | 451,555   |  |                           |  | 675,696   |                           |  |  | 5,691                      |  |  |                    | 48,263  |  |                      |  | 81,867    |              |  |  | 88,977        |  |  |             | 448,016   |  |  |  | 672,814   |  |  |  | Quarterly    |  |  |  | 4.25 |  |  |  | 4.25 | 
|0-E                          |  | CITIBANK              |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 17,042                    |  |  |                           | 51,792  |  |                            |  | 143,168   |                    |  |  | 150,792           |  |  |              | 254,208   |  |                           |  | 617,002   |                           |  |  | 18,545                     |  |  |                    | 51,792  |  |                      |  | 133,740   |              |  |  | 146,362       |  |  |             | 249,406   |  |  |  | 599,845   |  |  |  | Quarterly    |  |  |  | 2.40 |  |  |  | 1.64 | 
|97.036.000-K                 |  | SANTANDER             |  |                 | Chile   |  |          |  | US$ |                |  |  | 5,233                     |  |  |                           | 15,862  |  |                            |  | 43,552    |                    |  |  | 45,416            |  |  |              | 49,606    |  |                           |  | 159,669   |                           |  |  | 5,514                      |  |  |                    | 15,862  |  |                      |  | 41,434    |              |  |  | 44,599        |  |  |             | 49,281    |  |  |  | 156,690   |  |  |  | Quarterly    |  |  |  | 1.47 |  |  |  | 0.93 | 
|0-E                          |  | BTMU                  |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 2,714                     |  |  |                           | 8,250   |  |                            |  | 22,801    |                    |  |  | 24,007            |  |  |              | 39,182    |  |                           |  | 96,954    |                           |  |  | 2,897                      |  |  |                    | 8,250   |  |                      |  | 21,336    |              |  |  | 23,376        |  |  |             | 38,789    |  |  |  | 94,648    |  |  |  | Quarterly    |  |  |  | 1.82 |  |  |  | 1.22 | 
|0-E                          |  | APPLE BANK            |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 1,333                     |  |  |                           | 4,055   |  |                            |  | 11,211    |                    |  |  | 11,828            |  |  |              | 19,715    |  |                           |  | 48,142    |                           |  |  | 1,478                      |  |  |                    | 4,056   |  |                      |  | 10,483    |              |  |  | 11,513        |  |  |             | 19,515    |  |  |  | 47,045    |  |  |  | Quarterly    |  |  |  | 1.72 |  |  |  | 1.12 | 
|0-E                          |  | US BANK               |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 14,483                    |  |  |                           | 43,948  |  |                            |  | 120,924   |                    |  |  | 126,550           |  |  |              | 285,134   |  |                           |  | 591,039   |                           |  |  | 17,232                     |  |  |                    | 43,948  |  |                      |  | 102,607   |              |  |  | 117,968       |  |  |             | 277,195   |  |  |  | 558,950   |  |  |  | Quarterly    |  |  |  | 3.99 |  |  |  | 2.81 | 
|0-E                          |  | DEUTSCHE BANK         |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,767                     |  |  |                           | 14,667  |  |                            |  | 32,449    |                    |  |  | 25,826            |  |  |              | 58,989    |  |                           |  | 136,698   |                           |  |  | 5,342                      |  |  |                    | 14,666  |  |                      |  | 32,448    |              |  |  | 25,826        |  |  |             | 58,989    |  |  |  | 137,271   |  |  |  | Quarterly    |  |  |  | 3.40 |  |  |  | 3.40 | 
|0-E                          |  | NATIXIS               |  |                 | France  |  |          |  | US$ |                |  |  | 11,698                    |  |  |                           | 35,914  |  |                            |  | 97,434    |                    |  |  | 83,289            |  |  |              | 241,088   |  |                           |  | 469,423   |                           |  |  | 12,351                     |  |  |                    | 35,914  |  |                      |  | 97,434    |              |  |  | 83,289        |  |  |             | 241,088   |  |  |  | 470,076   |  |  |  | Quarterly    |  |  |  | 2.08 |  |  |  | 2.05 | 
|0-E                          |  | HSBC                  |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 1,374                     |  |  |                           | 4,180   |  |                            |  | 11,533    |                    |  |  | 12,112            |  |  |              | 24,384    |  |                           |  | 53,583    |                           |  |  | 1,504                      |  |  |                    | 4,180   |  |                      |  | 11,533    |              |  |  | 12,112        |  |  |             | 24,384    |  |  |  | 53,713    |  |  |  | Quarterly    |  |  |  | 2.40 |  |  |  | 1.59 | 
|0-E                          |  | PK AIRFINANCE         |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 1,882                     |  |  |                           | 5,846   |  |                            |  | 17,171    |                    |  |  | 19,744            |  |  |              | 17,871    |  |                           |  | 62,514    |                           |  |  | 1,937                      |  |  |                    | 5,846   |  |                      |  | 17,171    |              |  |  | 19,744        |  |  |             | 17,871    |  |  |  | 62,569    |  |  |  | Monthly      |  |  |  | 2.04 |  |  |  | 2.04 | 
|0-E                          |  | KFW IP EX-BANK        |  |                 | Germany |  |          |  | US$ |                |  |  | 653                       |  |  |                           | 2,028   |  |                            |  | 5,314     |                    |  |  | 3,958             |  |  |              | 1,640     |  |                           |  | 13,593    |                           |  |  | 655                        |  |  |                    | 2,028   |  |                      |  | 5,314     |              |  |  | 3,958         |  |  |             | 1,640     |  |  |  | 13,595    |  |  |  | Quarterly    |  |  |  | 2.45 |  |  |  | 2.45 | 
|                            |  | SWAP Aviones llegados |  |                 |        |  |          |  | US$ |                |  |  | 502                       |  |  |                           | 1,360   |  |                            |  | 2,521     |                    |  |  | 765               |  |  |              |          |  |                           |  | 5,148     |                           |  |  | 502                        |  |  |                    | 1,360   |  |                      |  | 2,521     |              |  |  | 765           |  |  |             |          |  |  |  | 5,148     |  |  |  | Quarterly    |  |  |  |     |  |  |  |     | 
|Other guaranteed obligations |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |     
|0-E                          |  | DVB BANK SE           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 8,054                     |  |  |                           | 24,438  |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 32,492    |                           |  |  | 8,075                      |  |  |                    | 24,438  |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 32,513    |  |  |  | Quarterly    |  |  |  | 2.32 |  |  |  | 2.32 | 
|Financial leases             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | ING                   |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 8,108                     |  |  |                           | 23,191  |  |                            |  | 36,868    |                    |  |  | 26,831            |  |  |              |          |  |                           |  | 94,998    |                           |  |  | 8,894                      |  |  |                    | 23,191  |  |                      |  | 36,066    |              |  |  | 26,682        |  |  |             |          |  |  |  | 94,833    |  |  |  | Quarterly    |  |  |  | 5.13 |  |  |  | 4.57 | 
|0-E                          |  | CREDIT AGRICOLE       |  |                 | France  |  |          |  | US$ |                |  |  | 1,666                     |  |  |                           | 5,131   |  |                            |  | 7,158     |                    |  |  |                  |  |  |              |          |  |                           |  | 13,955    |                           |  |  | 1,700                      |  |  |                    | 5,131   |  |                      |  | 7,158     |              |  |  |              |  |  |             |          |  |  |  | 13,989    |  |  |  | Quarterly    |  |  |  | 1.28 |  |  |  | 1.28 | 
|0-E                          |  | CITIBANK              |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,687                     |  |  |                           | 14,447  |  |                            |  | 41,726    |                    |  |  | 36,523            |  |  |              |          |  |                           |  | 97,383    |                           |  |  | 5,509                      |  |  |                    | 14,447  |  |                      |  | 40,684    |              |  |  | 36,330        |  |  |             |          |  |  |  | 96,970    |  |  |  | Quarterly    |  |  |  | 6.40 |  |  |  | 5.67 | 
|0-E                          |  | PEFCO                 |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 15,246                    |  |  |                           | 46,858  |  |                            |  | 108,403   |                    |  |  | 22,407            |  |  |              |          |  |                           |  | 192,914   |                           |  |  | 16,536                     |  |  |                    | 46,858  |  |                      |  | 106,757   |              |  |  | 22,324        |  |  |             |          |  |  |  | 192,475   |  |  |  | Quarterly    |  |  |  | 5.37 |  |  |  | 4.77 | 
|0-E                          |  | BNP PARIBAS           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 9,956                     |  |  |                           | 30,678  |  |                            |  | 81,373    |                    |  |  | 31,100            |  |  |              |          |  |                           |  | 153,107   |                           |  |  | 10,494                     |  |  |                    | 30,678  |  |                      |  | 79,983    |              |  |  | 30,958        |  |  |             |          |  |  |  | 152,113   |  |  |  | Quarterly    |  |  |  | 4.08 |  |  |  | 3.64 | 
|0-E                          |  | WELLS FARGO           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,519                     |  |  |                           | 13,784  |  |                            |  | 38,531    |                    |  |  | 41,238            |  |  |              | 23,556    |  |                           |  | 121,628   |                           |  |  | 4,919                      |  |  |                    | 13,784  |  |                      |  | 37,247    |              |  |  | 40,819        |  |  |             | 23,486    |  |  |  | 120,255   |  |  |  | Quarterly    |  |  |  | 3.98 |  |  |  | 3.54 | 
|0-E                          |  | DVB BANK SE           |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 4,567                     |  |  |                           | 13,873  |  |                            |  | 14,127    |                    |  |  |                  |  |  |              |          |  |                           |  | 32,567    |                           |  |  | 4,625                      |  |  |                    | 13,873  |  |                      |  | 14,127    |              |  |  |              |  |  |             |          |  |  |  | 32,625    |  |  |  | Quarterly    |  |  |  | 2.06 |  |  |  | 2.06 | 
|0-E                          |  | BANC OF AMERICA       |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 674                       |  |  |                           | 2,096   |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 2,770     |                           |  |  | 676                        |  |  |                    | 2,096   |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 2,772     |  |  |  | Monthly      |  |  |  | 1.41 |  |  |  | 1.41 | 
|Other loans                  |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  | 
|0-E                          |  | BOEING                |  |                 | U.S.A.  |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 151,362   |                    |  |  |                  |  |  |              |          |  |                           |  | 151,362   |                           |  |  | 2,294                      |  |  |                    |        |  |                      |  | 151,363   |              |  |  |              |  |  |             |          |  |  |  | 153,657   |  |  |  | AtExpiration |  |  |  | 1.80 |  |  |  | 1.80 | 
|0-E                          |  | CITIBANK (*)          |  |                 | U.S.A.  |  |          |  | US$ |                |  |  | 19,361                    |  |  |                           | 60,251  |  |                            |  | 174,178   |                    |  |  | 196,210           |  |  |              |          |  |                           |  | 450,000   |                           |  |  | 20,485                     |  |  |                    | 60,251  |  |                      |  | 174,178   |              |  |  | 192,932       |  |  |             |          |  |  |  | 447,846   |  |  |  | Quarterly    |  |  |  | 6.00 |  |  |  | 6.00 | 
|                             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  |  |      | 
|                             |  | Total                 |  |                 |         |  |          |  |     |                |  |  | 611,840                   |  |  |                           | 738,017 |  |                            |  | 2,291,593 |                    |  |  | 1,892,936         |  |  |              | 2,155,787 |  |                           |  | 7,690,173 |                           |  |  | 641,578                    |  |  |                    | 738,016 |  |                      |  | 2,218,512 |              |  |  | 1,846,051     |  |  |             | 2,127,734 |  |  |  | 7,571,891 |  |  |  |              |  |  |  |      |  |  |  |      | 
|                             |  |                       |  |                 |         |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |              |  |  |  |      |  |  |  |      | 



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





F-89



---

##### Table of Contents

Interest-bearing loans due in installments to December 31, 2015

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



|                            |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|--------------------------- |  | ------------------------------------ |  | --------------- | --------- |  | -------- |  | --- | -------------- |  |  | ------------------------- |  |  | ------------------------- | ------- |  | -------------------------- |  | --------- | ------------------ |  |  | ----------------- |  |  | ------------ | --------- |  | ------------------------- |  | --------- | ------------------------- |  |  | -------------------------- |  |  | ------------------ | ------- |  | -------------------- |  | --------- | ------------ |  |  | ------------- |  |  | ----------- | --------- |  |  |  | --------- |  |  |  | -------------------- |  |  |  | ----- |  |  |  | ----- | 
|                            |  |                                      |  |                 |           |  |          |  |     | Nominal values |  |  | Accounting values         |  |  |                           |         |  |                            |  |           |                    | 
|Tax No.                     |  | Creditor                             |  | Creditorcountry |           |  | Currency |  |     | Up to90 days   |  |  | Morethan90 daysto oneyear |  |  | Morethan oneto threeyears |         |  | Morethan threeto fiveyears |  |           | Morethan fiveyears |  |  | Totalnominalvalue |  |  | Up to90 days |           |  | Morethan90 daysto oneyear |  |           | Morethan oneto threeyears |  |  | Morethan threeto fiveyears |  |  | Morethan fiveyears |         |  | Totalaccountingvalue |  |           | Amortization |  |  | Effectiverate |  |  | Nominalrate |          
|                            |  |                                      |  |                 |           |  |          |  |     | ThUS$          |  |  | ThUS$                     |  |  | ThUS$                     |         |  | ThUS$                      |  |           | ThUS$              |  |  | ThUS$             |  |  | ThUS$        |           |  | ThUS$                     |  |           | ThUS$                     |  |  | ThUS$                      |  |  | ThUS$              |         |  | ThUS$                |  |           |              |  |  | %             |  |  | %           |          
|Bank loans                  |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  | 
|0-E                         |  | NEDER LANDS CHE                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                            |  | CREDIETVER ZEKER ING MAATSCHAPPIJ    |  |                 | Holland   |  |          |  | US$ |                |  |  | 115                       |  |  |                           | 356     |  |                            |  | 1,031     |                    |  |  | 1,162             |  |  |              | 689       |  |                           |  | 3,353     |                           |  |  | 132                        |  |  |                    | 356     |  |                      |  | 1,031     |              |  |  | 1,162         |  |  |             | 689       |  |  |  | 3,370     |  |  |  | Monthly              |  |  |  | 6.01  |  |  |  | 6.01  | 
|Obligations with the public |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |      
|0-E                         |  | THE BANK OF NEW YORK                 |  |                 | U.S.A.    |  |          |  | US$ |                |  |  |                          |  |  |                           |        |  |                            |  | 300,000   |                    |  |  |                  |  |  |              | 500,000   |  |                           |  | 800,000   |                           |  |  | 7,506                      |  |  |                    | 1,110   |  |                      |  | 301,722   |              |  |  | 5,171         |  |  |             | 501,027   |  |  |  | 816,536   |  |  |  | AtExpiration         |  |  |  | 8.17  |  |  |  | 8.00  | 
|Financial leases            |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  | 
|0-E                         |  | AFS INVESTMENT IX LLC                |  |                 | U.S.A.    |  |          |  | US$ |                |  |  | 1,972                     |  |  |                           | 6,085   |  |                            |  | 17,540    |                    |  |  | 17,908            |  |  |              |          |  |                           |  | 43,505    |                           |  |  | 2,176                      |  |  |                    | 6,085   |  |                      |  | 17,540    |              |  |  | 17,908        |  |  |             |          |  |  |  | 43,709    |  |  |  | Monthly              |  |  |  | 1.25  |  |  |  | 1.25  | 
|0-E                         |  | AIRBUS FINANCIAL                     |  |                 | U.S.A.    |  |          |  | US$ |                |  |  | 3,370                     |  |  |                           | 10,397  |  |                            |  | 20,812    |                    |  |  | 15,416            |  |  |              |          |  |                           |  | 49,995    |                           |  |  | 3,461                      |  |  |                    | 10,396  |  |                      |  | 20,813    |              |  |  | 15,416        |  |  |             |          |  |  |  | 50,086    |  |  |  | Monthly              |  |  |  | 1.43  |  |  |  | 1.43  | 
|0-E                         |  | CREDIT AGRICOLE-CIB                  |  |                 | U.S.A.    |  |          |  | US$ |                |  |  | 4,500                     |  |  |                           |        |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 4,500     |                           |  |  | 4,528                      |  |  |                    |        |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 4,528     |  |  |  | Quarterly            |  |  |  | 3.25  |  |  |  | 3.25  | 
|0-E                         |  | DVB BANK SE                          |  |                 | U.S.A.    |  |          |  | US$ |                |  |  | 118                       |  |  |                           | 355     |  |                            |  | 282       |                    |  |  |                  |  |  |              |          |  |                           |  | 755       |                           |  |  | 120                        |  |  |                    | 355     |  |                      |  | 282       |              |  |  |              |  |  |             |          |  |  |  | 757       |  |  |  | Monthly              |  |  |  | 1.64  |  |  |  | 1.64  | 
|0-E                         |  | GENERAL ELECTRIC CAPITAL CORPORATION |  |                 | U.S.A.    |  |          |  | US$ |                |  |  | 3,654                     |  |  |                           | 11,137  |  |                            |  | 8,970     |                    |  |  |                  |  |  |              |          |  |                           |  | 23,761    |                           |  |  | 3,697                      |  |  |                    | 11,137  |  |                      |  | 8,970     |              |  |  |              |  |  |             |          |  |  |  | 23,804    |  |  |  | Monthly              |  |  |  | 1.25  |  |  |  | 1.25  | 
|0-E                         |  | KFW IPEX-BANK                        |  |                 | Germany   |  |          |  | US$ |                |  |  | 3,097                     |  |  |                           | 6,401   |  |                            |  | 15,186    |                    |  |  | 12,215            |  |  |              |          |  |                           |  | 36,899    |                           |  |  | 3,163                      |  |  |                    | 6,401   |  |                      |  | 15,186    |              |  |  | 12,215        |  |  |             |          |  |  |  | 36,965    |  |  |  | Monthly/Quarterly    |  |  |  | 1.72  |  |  |  | 1.72  | 
|0-E                         |  | NATIXIS                              |  |                 | France    |  |          |  | US$ |                |  |  | 2,505                     |  |  |                           | 5,387   |  |                            |  | 17,359    |                    |  |  | 19,682            |  |  |              | 70,087    |  |                           |  | 115,020   |                           |  |  | 3,476                      |  |  |                    | 5,387   |  |                      |  | 17,360    |              |  |  | 19,682        |  |  |             | 70,088    |  |  |  | 115,993   |  |  |  | Quarterly/Semiannual |  |  |  | 3.85  |  |  |  | 3.85  | 
|0-E                         |  | PK AIR FINANCE US, INC.              |  |                 | U.S.A.    |  |          |  | US$ |                |  |  | 1,276                     |  |  |                           | 21,769  |  |                            |  |          |                    |  |  |                  |  |  |              |          |  |                           |  | 23,045    |                           |  |  | 1,316                      |  |  |                    | 21,769  |  |                      |  |          |              |  |  |              |  |  |             |          |  |  |  | 23,085    |  |  |  | Monthly              |  |  |  | 1.75  |  |  |  | 1.75  | 
|0-E                         |  | WACAPOU LEASING S.A.                 |  |                 | Luxemburg |  |          |  | US$ |                |  |  | 383                       |  |  |                           | 1,101   |  |                            |  | 2,617     |                    |  |  | 14,267            |  |  |              |          |  |                           |  | 18,368    |                           |  |  | 418                        |  |  |                    | 1,101   |  |                      |  | 2,617     |              |  |  | 14,267        |  |  |             |          |  |  |  | 18,403    |  |  |  | Quarterly            |  |  |  | 2.00  |  |  |  | 2.00  | 
|0-E                         |  | SOCIÉTÉ GÉNÉRALE MILAN BRANCH        |  |                 | Italy     |  |          |  | US$ |                |  |  | 8,148                     |  |  |                           | 25,003  |  |                            |  | 71,311    |                    |  |  | 208,024           |  |  |              |          |  |                           |  | 312,486   |                           |  |  | 9,552                      |  |  |                    | 25,003  |  |                      |  | 71,311    |              |  |  | 208,024       |  |  |             |          |  |  |  | 313,890   |  |  |  | Quarterly            |  |  |  | 3.63  |  |  |  | 3.55  | 
|0-E                         |  | BANCO IBM S.A                        |  |                 | Brazil    |  |          |  | BRL |                |  |  | 217                       |  |  |                           | 651     |  |                            |  | 860       |                    |  |  |                  |  |  |              |          |  |                           |  | 1,728     |                           |  |  | 217                        |  |  |                    | 651     |  |                      |  | 860       |              |  |  |              |  |  |             |          |  |  |  | 1,728     |  |  |  | Monthly              |  |  |  | 14.14 |  |  |  | 14.14 | 
|0-E                         |  | HP FINANCIAL SERVICE                 |  |                 | Brazil    |  |          |  | BRL |                |  |  | 168                       |  |  |                           | 529     |  |                            |  | 185       |                    |  |  |                  |  |  |              |          |  |                           |  | 882       |                           |  |  | 169                        |  |  |                    | 529     |  |                      |  | 185       |              |  |  |              |  |  |             |          |  |  |  | 883       |  |  |  | Monthly              |  |  |  | 10.02 |  |  |  | 10.02 | 
|0-E                         |  | SOCIETE GENERALE                     |  |                 | France    |  |          |  | BRL |                |  |  | 85                        |  |  |                           | 256     |  |                            |  | 434       |                    |  |  |                  |  |  |              |          |  |                           |  | 775       |                           |  |  | 85                         |  |  |                    | 256     |  |                      |  | 434       |              |  |  |              |  |  |             |          |  |  |  | 775       |  |  |  | Monthly              |  |  |  | 14.14 |  |  |  | 14.14 | 
|                            |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                            |  | Total                                |  |                 |           |  |          |  |     |                |  |  | 29,608                    |  |  |                           | 89,427  |  |                            |  | 456,587   |                    |  |  | 288,674           |  |  |              | 570,776   |  |                           |  | 1,435,072 |                           |  |  | 40,016                     |  |  |                    | 90,536  |  |                      |  | 458,311   |              |  |  | 293,845       |  |  |             | 571,804   |  |  |  | 1,454,512 |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                            |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                            |  | Total consolidated                   |  |                 |           |  |          |  |     |                |  |  | 641,448                   |  |  |                           | 827,444 |  |                            |  | 2,748,180 |                    |  |  | 2,181,610         |  |  |              | 2,726,563 |  |                           |  | 9,125,245 |                           |  |  | 681,594                    |  |  |                    | 828,552 |  |                      |  | 2,676,823 |              |  |  | 2,139,896     |  |  |             | 2,699,538 |  |  |  | 9,026,403 |  |  |  |                      |  |  |  |       |  |  |  |       | 
|                            |  |                                      |  |                 |           |  |          |  |     |                |  |  |                           |  |  |                           |         |  |                            |  |           |                    |  |  |                   |  |  |              |           |  |                           |  |           |                           |  |  |                            |  |  |                    |         |  |                      |  |           |              |  |  |               |  |  |             |           |  |  |  |           |  |  |  |                      |  |  |  |       |  |  |  |       | 



F-90



---

##### Table of Contents

|(b) | Hedge derivatives
|--- | -----------------



|                                                          |  |                       |        |  |                         |  |         |                         |  |  |                       |  |  |                       |        |  |                       |  |        |  |  |  |         | 
|--------------------------------------------------------- |  | --------------------- | ------ |  | ----------------------- |  | ------- | ----------------------- |  |  | --------------------- |  |  | --------------------- | ------ |  | --------------------- |  | ------ |  |  |  | ------- | 
|                                                          |  | Current liabilities   |        |  | Non-current liabilities |  |         | Total hedge derivatives | 
|                                                          |  | As ofDecember 31,2016 |        |  | As ofDecember 31,2015   |  |         | As ofDecember 31,2016   |  |  | As ofDecember 31,2015 |  |  | As ofDecember 31,2016 |        |  | As ofDecember 31,2015 | 
|                                                          |  | ThUS$                 |        |  | ThUS$                   |  |         | ThUS$                   |  |  | ThUS$                 |  |  | ThUS$                 |        |  | ThUS$                 | 
|Accrued interest from the last date of interest rate swap |  |                       | 2,148  |  |                         |  | 4,329   |                         |  |  |                      |  |  |                       |       |  |                       |  | 2,148  |  |  |  | 4,329   | 
|Fair value of interest rate derivatives                   |  |                       | 9,578  |  |                         |  | 33,518  |                         |  |  | 6,679                 |  |  |                       | 16,128 |  |                       |  | 16,257 |  |  |  | 49,646  | 
|Fair value of fuel derivatives                            |  |                       |       |  |                         |  | 56,424  |                         |  |  |                      |  |  |                       |       |  |                       |  |       |  |  |  | 56,424  | 
|Fair value of foreign currency derivative                 |  |                       | 13,155 |  |                         |  | 39,818  |                         |  |  |                      |  |  |                       |       |  |                       |  | 13,155 |  |  |  | 39,818  | 
|                                                          |  |                       |        |  |                         |  |         |                         |  |  |                       |  |  |                       |        |  |                       |  |        |  |  |  |         | 
|Total hedge derivatives                                   |  |                       | 24,881 |  |                         |  | 134,089 |                         |  |  | 6,679                 |  |  |                       | 16,128 |  |                       |  | 31,560 |  |  |  | 150,217 | 
|                                                          |  |                       |        |  |                         |  |         |                         |  |  |                       |  |  |                       |        |  |                       |  |        |  |  |  |         | 

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

Hedging operation

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



|                                      |  |              |         |   |              |  |         |  
|------------------------------------- |  | ------------ | ------- | - | ------------ |  | ------- | -
|                                      |  | As of        |         |   | As of        | 
|                                      |  | December 31, |         |   | December 31, | 
|                                      |  | 2016         |         |   | 2015         | 
|                                      |  | ThUS$        |         |   | ThUS$        | 
|Cross currency swaps (CCS) (1)        |  |              | (12,286 | ) |              |  | (49,311 | )
|Interest rate swaps (2)               |  |              | (16,926 | ) |              |  | (44,085 | )
|Fuel options (3)                      |  |              | 10,088  |   |              |  | (50,131 | )
|Currency forwardoptions US$/GBP$ (4) |  |              | 618     |   |              |  | 7,432   |  
|Currency forwardoptions US$/EUR$ (4) |  |              | 109     |   |              |  | 1,438   |  
|Currency options R$/US$ (4)           |  |              | (1,752  | ) |              |  | 933     |  
|Currency options CLP/US$ (4)          |  |              |        |   |              |  | 85      |  



|(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 US$/UF and US$/BRL 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 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Covers the foreign exchange risk exposure of operating cash flows caused mainly by fluctuations in the exchange rate R$/US$ and US$/GBP. These contracts are recorded as cash flow hedges.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-91



---

##### Table of Contents

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 six 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 US$/UF and US$/BRL, 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 period ended |         
|                                                                       |  | December 31,         |         
|                                                                       |  | 2016                 |          |   | 2015  |  |          | 2014  | 
|                                                                       |  | ThUS$                |          |   | ThUS$ |  |          | ThUS$ | 
|Debit (credit) recognized in comprehensive income during the period    |  |                      | 127,390  |   |       |  | 80,387   |       |  |  | (163,993 | )
|Debit (credit) transferred from net equity to income during the period |  |                      | (113,403 | ) |       |  | (151,244 | )     |  |  | (151,520 | )

NOTE 20 - TRADE AND OTHER ACCOUNTS PAYABLES

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



|                                              |  |              |           |  |              |  |           | 
|--------------------------------------------- |  | ------------ | --------- |  | ------------ |  | --------- | 
|                                              |  | As of        |           |  | As of        | 
|                                              |  | December 31, |           |  | December 31, | 
|                                              |  | 2016         |           |  | 2015         | 
|                                              |  | ThUS$        |           |  | ThUS$        | 
|Current                                       |  |              |           |  |              |  |           | 
|(a) Trade and other accounts payables         |  |              | 1,117,926 |  |              |  | 1,025,574 | 
|(b) Accrued liabilities at the reporting date |  |              | 475,142   |  |              |  | 458,383   | 
|                                              |  |              |           |  |              |  |           | 
|Total trade and other accounts payables       |  |              | 1,593,068 |  |              |  | 1,483,957 | 
|                                              |  |              |           |  |              |  |           | 



F-92



---

##### Table of Contents

|(a) | Trade and other accounts payable:
|--- | ---------------------------------



|                       |  |              |           |  |              |  |           | 
|---------------------- |  | ------------ | --------- |  | ------------ |  | --------- | 
|                       |  | As of        |           |  | As of        | 
|                       |  | December 31, |           |  | December 31, | 
|                       |  | 2016         |           |  | 2015         | 
|                       |  | ThUS$        |           |  | ThUS$        | 
|Trade creditors        |  |              | 868,833   |  |              |  | 758,783   | 
|Leasing obligation     |  |              | 10,446    |  |              |  | 18,784    | 
|Other accounts payable |  |              | 238,647   |  |              |  | 248,007   | 
|                       |  |              |           |  |              |  |           | 
|Total                  |  |              | 1,117,926 |  |              |  | 1,025,574 | 
|                       |  |              |           |  |              |  |           | 

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



|                                        |  |              |           |  |              |  |           | 
|--------------------------------------- |  | ------------ | --------- |  | ------------ |  | --------- | 
|                                        |  | As of        |           |  | As of        | 
|                                        |  | December 31, |           |  | December 31, | 
|                                        |  | 2016         |           |  | 2015         | 
|                                        |  | ThUS$        |           |  | ThUS$        | 
|Aircraft Fuel                           |  |              | 188,276   |  |              |  | 148,612   | 
|Boarding Fee                            |  |              | 149,880   |  |              |  | 175,900   | 
|Airport charges and overflight          |  |              | 90,327    |  |              |  | 94,139    | 
|Handling and ground handling            |  |              | 87,406    |  |              |  | 88,629    | 
|Other personnel expenses                |  |              | 81,632    |  |              |  | 72,591    | 
|Professional services and advisory      |  |              | 79,270    |  |              |  | 63,302    | 
|Land services                           |  |              | 74,260    |  |              |  | 80,387    | 
|Marketing                               |  |              | 61,053    |  |              |  | 45,997    | 
|Services on board                       |  |              | 44,589    |  |              |  | 32,993    | 
|Leases, maintenance and IT services     |  |              | 44,287    |  |              |  | 25,558    | 
|Suppliers technical purchases          |  |              | 40,305    |  |              |  | 52,160    | 
|Crew                                    |  |              | 29,074    |  |              |  | 23,834    | 
|Maintenance                             |  |              | 25,962    |  |              |  | 18,573    | 
|Achievement of goals                    |  |              | 17,801    |  |              |  | 15,386    | 
|Distribution system                     |  |              | 15,710    |  |              |  | 17,531    | 
|Airlines                                |  |              | 13,264    |  |              |  | 3,890     | 
|Aircraft and engines leasing            |  |              | 10,446    |  |              |  | 19,146    | 
|Aviation insurance                      |  |              | 7,694     |  |              |  | 7,655     | 
|Communications                          |  |              | 7,500     |  |              |  | 6,731     | 
|SEC agreement (*)                       |  |              | 4,719     |  |              |  |          | 
|Others                                  |  |              | 44,471    |  |              |  | 32,560    | 
|                                        |  |              |           |  |              |  |           | 
|Total trade and other accounts payables |  |              | 1,117,926 |  |              |  | 1,025,574 | 
|                                        |  |              |           |  |              |  |           | 



|(*) | Provision made for payments of fines, on July 25, 2016 LATAM reached agreements with the U.S. Department of Justice (DOJ) U.S. and the Securities and Exchange Commission (SEC) both
authorities of the United States of America, in force as of this date, regarding the investigation on payments by LAN Airlines S.A. made in 2006-2007 to a consultant who advised on the resolution of labor matters in Argentina. The amount to the SEC
agreement is ThUS$ 6,744 plus interests of ThUS$ 2,694.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2016, the balance payable to the SEC is ThUS $ 4,719.



F-93



---

##### Table of Contents

|(b) | Liabilities accrued:
|--- | --------------------



|                                  |  |              |         |  |              |  |         | 
|--------------------------------- |  | ------------ | ------- |  | ------------ |  | ------- | 
|                                  |  | As of        |         |  | As of        | 
|                                  |  | December 31, |         |  | December 31, | 
|                                  |  | 2016         |         |  | 2015         | 
|                                  |  | ThUS$        |         |  | ThUS$        | 
|Aircraft and engine maintenance   |  |              | 244,949 |  |              |  | 246,454 | 
|Accrued personnel expenses        |  |              | 113,785 |  |              |  | 108,058 | 
|Accounts payable to personnel (*) |  |              | 89,523  |  |              |  | 81,368  | 
|Others accrued liabilities        |  |              | 26,885  |  |              |  | 22,503  | 
|                                  |  |              |         |  |              |  |         | 
|Total accrued liabilities         |  |              | 475,142 |  |              |  | 458,383 | 
|                                  |  |              |         |  |              |  |         | 



|(*) | Profits and bonds participation (Note 23 letter b)
|--- | --------------------------------------------------

NOTE 21 - OTHER PROVISIONS

Other provisions:



|                                |  |                     |       |  |                         |  |       |                   |  |  |              |  |  |              |         |  |              |  |         |  |  |  |         | 
|------------------------------- |  | ------------------- | ----- |  | ----------------------- |  | ----- | ----------------- |  |  | ------------ |  |  | ------------ | ------- |  | ------------ |  | ------- |  |  |  | ------- | 
|                                |  | Current liabilities |       |  | Non-current liabilities |  |       | Total Liabilities | 
|                                |  | As of               |       |  | As of                   |  |       | As of             |  |  | As of        |  |  | As of        |         |  | As of        | 
|                                |  | December 31,        |       |  | December 31,            |  |       | December 31,      |  |  | December 31, |  |  | December 31, |         |  | December 31, | 
|                                |  | 2016                |       |  | 2015                    |  |       | 2016              |  |  | 2015         |  |  | 2016         |         |  | 2015         | 
|                                |  | ThUS$               |       |  | ThUS$                   |  |       | ThUS$             |  |  | ThUS$        |  |  | ThUS$        |         |  | ThUS$        | 
|Provision for contingencies (1) |  |                     |       |  |                         |  |       |                   |  |  |              |  |  |              |         |  |              |  |         |  |  |  |         | 
|Tax contingencies               |  |                     | 1,425 |  |                         |  | 1,297 |                   |  |  | 313,064      |  |  |              | 350,418 |  |              |  | 314,489 |  |  |  | 351,715 | 
|Civil contingencies             |  |                     | 993   |  |                         |  | 1,476 |                   |  |  | 56,413       |  |  |              | 37,555  |  |              |  | 57,406  |  |  |  | 39,031  | 
|Labor contingencies             |  |                     | 225   |  |                         |  | 149   |                   |  |  | 29,307       |  |  |              | 15,648  |  |              |  | 29,532  |  |  |  | 15,797  | 
|Other                           |  |                     |      |  |                         |  |      |                   |  |  | 15,046       |  |  |              | 11,910  |  |              |  | 15,046  |  |  |  | 11,910  | 
|Provision for European          |  |                     |       |  |                         |  |       |                   |  |  |              |  |  |              |         |  |              |  |         |  |  |  |         | 
|Commision investigation (2)     |  |                     |      |  |                         |  |      |                   |  |  | 8,664        |  |  |              | 8,966   |  |              |  | 8,664   |  |  |  | 8,966   | 
|                                |  |                     |       |  |                         |  |       |                   |  |  |              |  |  |              |         |  |              |  |         |  |  |  |         | 
|Total other provisions (3)      |  |                     | 2,643 |  |                         |  | 2,922 |                   |  |  | 422,494      |  |  |              | 424,497 |  |              |  | 425,137 |  |  |  | 427,419 | 
|                                |  |                     |       |  |                         |  |       |                   |  |  |              |  |  |              |         |  |              |  |         |  |  |  |         | 



|(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.



F-94



---

##### Table of Contents

|(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 December 31, 2016, and at December 31, 2015, 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:



|                                        |  |            |           |   |                   |  |        |       |  |  |           |  
|--------------------------------------- |  | ---------- | --------- | - | ----------------- |  | ------ | ----- |  |  | --------- | -
|                                        |  |            |           |   | European          |  |        |       | 
|                                        |  | Legal      |           |   | Commission        |  |        |       | 
|                                        |  | claims (1) |           |   | Investigation (2) |  |        | Total | 
|                                        |  | ThUS$      |           |   | ThUS$             |  |        | ThUS$ | 
|Opening balance as of January 1, 2014   |  |            | 1,138,754 |   |                   |  | 11,349 |       |  |  | 1,150,103 |  
|Increase in provisions                  |  |            | 42,792    |   |                   |  |       |       |  |  | 42,792    |  
|Provision used                          |  |            | (27,597   | ) |                   |  |       |       |  |  | (27,597   | )
|Difference by subsidiaries conversion   |  |            | (132,092  | ) |                   |  |       |       |  |  | (132,092  | )
|Reversal of provision                   |  |            | (315,288  | ) |                   |  |       |       |  |  | (315,288  | )
|Exchange difference                     |  |            | (1,017    | ) |                   |  | (1,350 | )     |  |  | (2,367    | )
|                                        |  |            |           |   |                   |  |        |       |  |  |           |  
|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                  |  |            | 54,675    |   |                   |  |       |       |  |  | 54,675    |  
|Provision used                          |  |            | (19,522   | ) |                   |  |       |       |  |  | (19,522   | )
|Difference by subsidiaries conversion   |  |            | (220,266  | ) |                   |  |       |       |  |  | (220,266  | )
|Reversal of provision                   |  |            | (100,740  | ) |                   |  |       |       |  |  | (100,740  | )
|Exchange difference                     |  |            | (1,246    | ) |                   |  | (1,033 | )     |  |  | (2,279    | )
|                                        |  |            |           |   |                   |  |        |       |  |  |           |  
|Closing balance as of December 31, 2015 |  |            | 418,453   |   |                   |  | 8,966  |       |  |  | 427,419   |  
|                                        |  |            |           |   |                   |  |        |       |  |  |           |  
|Opening balance as of January 1, 2016   |  |            | 418,453   |   |                   |  | 8,966  |       |  |  | 427,419   |  
|Increase in provisions                  |  |            | 141,797   |   |                   |  |       |       |  |  | 141,797   |  
|Provision used                          |  |            | (21,997   | ) |                   |  |       |       |  |  | (21,997   | )
|Difference by subsidiaries conversion   |  |            | 79,396    |   |                   |  |       |       |  |  | 79,396    |  
|Reversal of provision                   |  |            | (201,425  | ) |                   |  |       |       |  |  | (201,425  | )
|Exchange difference                     |  |            | 249       |   |                   |  | (302   | )     |  |  | (53       | )
|                                        |  |            |           |   |                   |  |        |       |  |  |           |  
|Closing balance as of December 31, 2016 |  |            | 416,473   |   |                   |  | 8,664  |       |  |  | 425,137   |  
|                                        |  |            |           |   |                   |  |        |       |  |  |           |  



|(1) | The accumulated balance includes US$ 115 million as judicial deposit granted as guarantee, related to the
Fundo Aeroviário (FA). This deposit was made with the purpose of suspending the application of the tax credit. The company is discussing over the Tribunal the constitutionality about the requirement made by FA in a legal action.
Initially it was covered by the effects of a precautionary measure, meaning that, the company was not the obligation to
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-95



---

##### Table of Contents

| | collect the tax as long as there no judicial decision in this regard. However, the decision taken by a judge in the first instance was publicized in an unfavorable published, reversing the
precautionary measure. As the legal claim is still in progress (TAM appealed this first decision), the company needed to make the judicial deposit for the suspension of the enforceability of the tax credit; it deposit was classified in this category
deducting the existing provision for that purpose. Finally, if the final decision is favorable to the company, the deposit already made will return 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 December 31, 2016 is disclosed in Note 31 in the case role N° 2001.51.01.012530-0.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | European Commission Provision:
|--- | ------------------------------

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 began in December 2007 regarding possible unfair competition on the
air cargo market. This was a joint investigation done by the European and U.S.A. authorities. 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. The General Direction of Competition 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 you can find LATAM A irlines Group S.A. and Lan Cargo S.A. 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. 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. On December 16, 2015 The European Commission does not appeal the sentence, but can issue a new decision correcting the failures specified in the Judgment and it has a period of 5 years which is
fulfilled in 2021 the Court European resolved the appeal and annulled the European Commission. The procedural stage at December 31, 2016 is disclosed in Note 31, in (ii) lawsuits received by Latam Airlines Group S.A. and Subsidiaries.



F-96



---

##### Table of Contents

NOTE 22 - OTHER NON-FINANCIAL LIABILITIES



|                                      |  |                     |           |  |                         |  |           |                   |  |  |              |  |  |              |         |  |              |  |           |  |  |  |           | 
|------------------------------------- |  | ------------------- | --------- |  | ----------------------- |  | --------- | ----------------- |  |  | ------------ |  |  | ------------ | ------- |  | ------------ |  | --------- |  |  |  | --------- | 
|                                      |  | Current liabilities |           |  | Non-current liabilities |  |           | Total Liabilities | 
|                                      |  | As of               |           |  | As of                   |  |           | As of             |  |  | As of        |  |  | As of        |         |  | As of        | 
|                                      |  | December 31,        |           |  | December 31,            |  |           | December 31,      |  |  | December 31, |  |  | December 31, |         |  | December 31, | 
|                                      |  | 2016                |           |  | 2015                    |  |           | 2016              |  |  | 2015         |  |  | 2016         |         |  | 2015         | 
|                                      |  | ThUS$               |           |  | ThUS$                   |  |           | ThUS$             |  |  | ThUS$        |  |  | ThUS$        |         |  | ThUS$        | 
|Deferred revenues (*)                 |  |                     | 2,655,086 |  |                         |  | 2,423,703 |                   |  |  | 213,781      |  |  |              | 272,130 |  |              |  | 2,868,867 |  |  |  | 2,695,833 | 
|Sales tax                             |  |                     | 19,402    |  |                         |  | 10,379    |                   |  |  |             |  |  |              |        |  |              |  | 19,402    |  |  |  | 10,379    | 
|Retentions                            |  |                     | 45,542    |  |                         |  | 33,125    |                   |  |  |             |  |  |              |        |  |              |  | 45,542    |  |  |  | 33,125    | 
|Others taxes                          |  |                     | 7,465     |  |                         |  | 11,211    |                   |  |  |             |  |  |              |        |  |              |  | 7,465     |  |  |  | 11,211    | 
|Dividends                             |  |                     | 25,518    |  |                         |  | 3,980     |                   |  |  |             |  |  |              |        |  |              |  | 25,518    |  |  |  | 3,980     | 
|Other sundry liabilities              |  |                     | 9,232     |  |                         |  | 7,635     |                   |  |  |             |  |  |              |        |  |              |  | 9,232     |  |  |  | 7,635     | 
|                                      |  |                     |           |  |                         |  |           |                   |  |  |              |  |  |              |         |  |              |  |           |  |  |  |           | 
|Total other non-financial liabilities |  |                     | 2,762,245 |  |                         |  | 2,490,033 |                   |  |  | 213,781      |  |  |              | 272,130 |  |              |  | 2,976,026 |  |  |  | 2,762,163 | 
|                                      |  |                     |           |  |                         |  |           |                   |  |  |              |  |  |              |         |  |              |  |           |  |  |  |           | 



|(*) | Note 2.20.
|--- | ----------

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

LATAM Pass 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 LATAM Pass 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 LATAM 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, aiming to operate activities of accumulation 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.



F-97



---

##### Table of Contents

NOTE 23 - EMPLOYEE BENEFITS



|                                      |  |              |        |  |              |  |        | 
|------------------------------------- |  | ------------ | ------ |  | ------------ |  | ------ | 
|                                      |  | As of        |        |  | As of        | 
|                                      |  | December 31, |        |  | December 31, | 
|                                      |  | 2016         |        |  | 2015         | 
|                                      |  | ThUS$        |        |  | ThUS$        | 
|Retirements payments                  |  |              | 49,680 |  |              |  | 42,117 | 
|Resignation payments                  |  |              | 10,097 |  |              |  | 8,858  | 
|Other obligations                     |  |              | 22,545 |  |              |  | 14,296 | 
|                                      |  |              |        |  |              |  |        | 
|Total liability for employee benefits |  |              | 82,322 |  |              |  | 65,271 | 
|                                      |  |              |        |  |              |  |        | 



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



|                                    |  |         |        |  |                     |  |         |          |  |  |          |   |  |           |        |  |             |  |        |         |  |  |        |   |  |  |        | 
|----------------------------------- |  | ------- | ------ |  | ------------------- |  | ------- | -------- |  |  | -------- | - |  | --------- | ------ |  | ----------- |  | ------ | ------- |  |  | ------ | - |  |  | ------ | 
|                                    |  |         |        |  | Increase (decrease) |  |         |          |  |  |          |   |  | Actuarial |        |  |             |  |        |         | 
|                                    |  | Opening |        |  | current service     |  |         | Benefits |  |  | Change   |   |  | (gains)   |        |  | Currency    |  |        | Closing | 
|                                    |  | balance |        |  | provision           |  |         | paid     |  |  | of model |   |  | losses    |        |  | translation |  |        | balance | 
|                                    |  | ThUS$   |        |  | ThUS$               |  |         | ThUS$    |  |  | ThUS$    |   |  | ThUS$     |        |  | ThUS$       |  |        | ThUS$   | 
|From January 1 to December 31, 2014 |  |         | 45,666 |  |                     |  | 1,507   |          |  |  | (2,466   | ) |  |           | 29,395 |  |             |  |       |         |  |  |       |   |  |  | 74,102 | 
|From January 1 to December 31, 2015 |  |         | 74,102 |  |                     |  | (13,609 | )        |  |  | (3,824   | ) |  |           |       |  |             |  | 14,631 |         |  |  | (6,029 | ) |  |  | 65,271 | 
|From January 1 to December 31, 2016 |  |         | 65,271 |  |                     |  | 19,900  |          |  |  | (4,536   | ) |  |           |       |  |             |  | 1,687  |         |  |  |       |   |  |  | 82,322 | 

The principal assumptions used in the calculation to the provision in Chile are presented below:



|                                 |  |              |         |   |      |  |         |  
|-------------------------------- |  | ------------ | ------- | - | ---- |  | ------- | -
|                                 |  | As of        |        
|                                 |  | December 31, |        
|Assumptions                      |  | 2016         |         |   | 2015 | 
|Discount rate                    |  |              | 4.54    | % |      |  | 4.84    | %
|Expected rate of salary increase |  |              | 4.50    | % |      |  | 4.50    | %
|Rate of turnover                 |  |              | 6.16    | % |      |  | 6.16    | %
|Mortality rate                   |  |              | RV-2009 |   |      |  | RV-2009 |  
|Inflation rate                   |  |              | 2.86    | % |      |  | 2.92    | %
|Retirement age of women          |  |              | 60      |   |      |  | 60      |  
|Retirement age of men            |  |              | 65      |   |      |  | 65      |  

The discount rate is determined by reference to free risk 20 years Central Bank of Chile BCP bond. Mortality table RV 
2009, established by Chilean Superintendency of Securities and Insurance and inflation rate performance curve of Central Bank of Chile instruments long term BCU and BCP.



F-98



---

##### Table of Contents

The obligation is determined based on the actuarial value of the accrued cost of the benefit and it is
sensibility to main actuarial assumptions used for the calculation. The Following is a sensitivity analysis based on increased (decreased) on the discount rate, increased wages, rotation and inflation:



|                                                                    |  |                         |        |   |              |  |        |  
|------------------------------------------------------------------- |  | ----------------------- | ------ | - | ------------ |  | ------ | -
|                                                                    |  | Effect on the liability |       
|                                                                    |  | As of                   |        |   | As of        | 
|                                                                    |  | December 31,            |        |   | December 31, | 
|                                                                    |  | 2016                    |        |   | 2015         | 
|                                                                    |  | ThUS$                   |        |   | ThUS$        | 
|Discount rate                                                       |  |                         |        |   |              |  |        |  
|Change in the accrued liability an closing for increase in 100 p.b. |  |                         | (5,665 | ) |              |  | (4,669 | )
|Change in the accrued liability an closing for decrease of 100 p.b. |  |                         | 5,952  |   |              |  | 5,345  |  
|                                                                    |  |                        
|Rate of wage growth                                                 |  |                         |        |   |              |  |        |  
|Change in the accrued liability an closing for increase in 100 p.b. |  |                         | 6,334  |   |              |  | 5,309  |  
|Change in the accrued liability an closing for decrease of 100 p.b. |  |                         | (5,644 | ) |              |  | (4,725 | )



|(b) | The liability for short-term:
|--- | -----------------------------



|                               |  |              |        |  |              |  |        | 
|------------------------------ |  | ------------ | ------ |  | ------------ |  | ------ | 
|                               |  | As of        |        |  | As of        | 
|                               |  | December 31, |        |  | December 31, | 
|                               |  | 2016         |        |  | 2015         | 
|                               |  | ThUS$        |        |  | ThUS$        | 
|Profit-sharing and bonuses (*) |  |              | 89,523 |  |              |  | 81,368 | 
|                               |  |              |        |  |              |  |        | 



|(*) | Accounts payables to employees (Note 20 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 periods ended |          
|                             |  | December 31,          |          
|                             |  | 2016                  |           |  | 2015  |  |           | 2014  | 
|                             |  | ThUS$                 |           |  | ThUS$ |  |           | ThUS$ | 
|Salaries and wages           |  |                       | 1,549,402 |  |       |  | 1,631,320 |       |  |  | 1,656,565 | 
|Short-term employee benefits |  |                       | 132,436   |  |       |  | 171,366   |       |  |  | 361,328   | 
|Termination benefits         |  |                       | 79,062    |  |       |  | 51,684    |       |  |  | 84,179    | 
|Other personnel expenses     |  |                       | 190,233   |  |       |  | 218,435   |       |  |  | 248,030   | 
|                             |  |                       |           |  |       |  |           |       |  |  |           | 
|Total                        |  |                       | 1,951,133 |  |       |  | 2,072,805 |       |  |  | 2,350,102 | 
|                             |  |                       |           |  |       |  |           |       |  |  |           | 



F-99



---

##### Table of Contents

NOTE 24 - ACCOUNTS PAYABLE, NON-CURRENT



|                                    |  |              |         |  |              |  |         | 
|----------------------------------- |  | ------------ | ------- |  | ------------ |  | ------- | 
|                                    |  | As of        |         |  | As of        | 
|                                    |  | December 31, |         |  | December 31, | 
|                                    |  | 2016         |         |  | 2015         | 
|                                    |  | ThUS$        |         |  | ThUS$        | 
|Aircraft and engine maintenance     |  |              | 347,085 |  |              |  | 371,419 | 
|Fleet financing (JOL)               |  |              |        |  |              |  | 35,042  | 
|Provision for vacations and bonuses |  |              | 12,080  |  |              |  | 10,365  | 
|Other sundry liabilities            |  |              | 226     |  |              |  | 224     | 
|                                    |  |              |         |  |              |  |         | 
|Total accounts payable, non-current |  |              | 359,391 |  |              |  | 417,050 | 
|                                    |  |              |         |  |              |  |         | 

NOTE 25 - 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 paid capital of the Company at December 31, 2016 amounts to ThUS$ 3,149,564 (*) divided into 606,407,693 common stock of a same series (ThUS$
2,545,705, divided into 545,547,819 shares as of December 31, 2015), a single series nominative, ordinary character with 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.

(*) Include a deduction for issuance costs ThUS$ 4,793 and adjustment by 10,282 placement shares for ThUS$ 156.



|(b) | Subscribed and paid shares
|--- | --------------------------

As of December 31, 2015, the Companys subscribed and paid-in capital was
represented by 545,558,101 shares, all common shares, without par value.

On August 18, 2016, the Company held an extraordinary meeting of
shareholders in which it was approved to increase the capital by issuing 61,316,424 shares of payment, all ordinary shares, without par value. As of December 31, 2016, 60,849,592 shares had been placed against this increase, according to the
following breakdown: (a) 30,499,685 shares subscribed and paid at the end of the preferred subscription period, which expired on, December 2016, raising the equivalent of US$ 304,996,850; And (b) 30,349,907 additional shares subscribed on
December 28, 2016, earning the equivalent of US$ 303,499,070.

As a result of the last placement, as of December 31, 2016, the number Company
shares subscribed and paid amounts to 606,407,693.



F-100



---

##### Table of Contents

At December 31, 2016, the Companys capital stock is represented by 608,374,525 shares, all common
shares, without no par value, which is divided into: (a) the 606,407,693 subscribed and paid shares mentioned above; And (b) 1,966,832 shares pending subscription and payment, of which: (i) 1,500,000 shares are allocated to
compensation stock option plans; And (ii) 466,832 correspond to the balance of shares pending placement of the last capital increase.

It should be
noted that during the year the Companys capital stock was expressed in 613,164,243 shares, all ordinary shares, without nominal value, that is, 551,847,819 shares already authorized at the beginning of the year and 61,316,424 shares authorized
in the last Capital increase dated August 18, 2016. However, on December 21, 2016, the deadline for the subscription and payment of 4,789,718 shares that were destined to compensation plans for workers expired, so that the Companys
capital stock was reduced to 608,374,525 shares.

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



|                                                                                                                                  |  |         |             |  
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------- | ----------- | -
|Movement of authorized shares                                                                                                     |  | Nro. Of |            
|                                                                                                                                  |  | shares  |            
|Autorized shares as of January 1, 2015                                                                                            |  |         | 551,847,819 |  
|No movement of autorized shares during 2015                                                                                       |  |         |            |  
|                                                                                                                                  |  |         |             |  
|Authorized shares as of December 31, 2015                                                                                         |  |         | 551,847,819 |  
|                                                                                                                                  |  |         |             |  
|Autorized shares as of January 1, 2016                                                                                            |  |         | 551,847,819 |  
|Increase capital approved at Extraordinary Shareholders meeting dated August 18,
2016                                             |  |         | 61,316,424  |  
|Full capital decrease due to maturity of the subscription and payment period of the compensation
plan 2011, December 21, 2016 (*) |  |         | (4,789,718  | )
|                                                                                                                                  |  |         |             |  
|Authorized shares as of December 31, 2016                                                                                         |  |         | 608,374,525 |  
|                                                                                                                                  |  |         |             |  



|(*) | See Note 34 (a.1)
|--- | -----------------



F-101



---

##### Table of Contents

Movement fully paid shares



|                                                                     |  |        |             |     |               |               |           |                  |         |  |         |   |  |  |           |  
|-------------------------------------------------------------------- |  | ------ | ----------- | --- | ------------- | ------------- | --------- | ---------------- | ------- |  | ------- | - |  |  | --------- | -
|                                                                     |  |        |             |     | Movement      |               |           | Cost of issuance |         |  |         |  
|                                                                     |  |        | value       |     |               | and placement |           |                  | Paid-in | 
|                                                                     |  | N° of  |             |     | of shares (1) |               |           | of shares (2)    |         |  | Capital |  
|increase (decrease) through transfers and other changes              |  | shares |             |     | ThUS$         |               |           | ThUS$            |         |  | ThUS$   |  
|Paid shares as of January 1, 2015                                    |  |        | 545,547,819 |     |               |               | 2,552,066 |                  |         |  | (6,361  | ) |  |  | 2,545,705 |  
|No movement of paid shares during 2015                               |  |        |            |     |               |               |          |                  |         |  |        |   |  |  |          |  
|                                                                     |  |        |             |     |               |               |           |                  |         |  |         |   |  |  |           |  
|Paid shares as of December 31, 2015                                  |  |        | 545,547,819 |     |               |               | 2,552,066 |                  |         |  | (6,361  | ) |  |  | 2,545,705 |  
|                                                                     |  |        |             |     |               |               |           |                  |         |  |         |   |  |  |           |  
|Paid shares as of January 1, 2016                                    |  |        | 545,547,819 |     |               |               | 2,552,066 |                  |         |  | (6,361  | ) |  |  | 2,545,705 |  
|Placement capital increase                                           |  |        |             |     |               |               |           |                  |         |  |         |   |  |  |           |  
|Approved at Extraordinary Shareholders meeting dated August 18, 2016 |  |        | 60,849,592  |     |               |               | 608,496   |                  |         |  |        |   |  |  | 608,496   |  
|Capital reserve                                                      |  |        |            |     |               |               |          |                  |         |  | (4,793  | ) |  |  | (4,793    | )
|Increase (decrease) by transfers and other changes (4)               |  |        | 10,282      |     |               |               | 156       |                  |         |  |        |   |  |  | 156       |  
|                                                                     |  |        |             |     |               |               |           |                  |         |  |         |   |  |  |           |  
|Paid shares as of December 31, 2016                                  |  |        | 606,407,693 | (3) |               |               | 3,160,718 |                  |         |  | (11,154 | ) |  |  | 3,149,564 |  
|                                                                     |  |        |             |     |               |               |           |                  |         |  |         |   |  |  |           |  



|(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 December 31, 2016, the difference between authorized shares and fully paid shares are 1,966,832 shares, of which 1,500,000 correspond to compensation plans for executives of LATAM Airlines Group S.A. and
subsidiaries (see Note 34(a.1)) and 466,832 correspond to the shares issued and unsubscribed from the capital increase approved at the Extraordinary Shareholders Meeting held on August 18, 2016.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | In January 2014, these 10,282 shares were placed and charged to the Compensation plan 2011 (See Note 34 (a.1))
|--- | --------------------------------------------------------------------------------------------------------------



|(c) | Treasury stock
|--- | --------------

At December 31, 2016, 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 which held in its portfolio.



F-102



---

##### Table of Contents

|(d) | Reserve of share-based payments
|--- | -------------------------------

Movement of Reserves of share-based payments:



|                                    |  |         |        |  |        |  |        |          |  |  |                         |   |  |               |        |   |         |  |       |  |  |  |        | 
|----------------------------------- |  | ------- | ------ |  | ------ |  | ------ | -------- |  |  | ----------------------- | - |  | ------------- | ------ | - | ------- |  | ----- |  |  |  | ------ | 
|                                    |  |         |        |  |        |  |        |          |  |  | Deferred tax            |   |  |               |        |   |         | 
|                                    |  |         |        |  | Stock  |  |        |          |  |  | by tax effect           |   |  |               |        |   |         | 
|                                    |  | Opening |        |  | option |  |        | Deferred |  |  | of change in legal rate |   |  | Net movement  |        |   | Closing | 
|Periods                             |  | balance |        |  | plan   |  |        | tax      |  |  | (Tax reform) (*)        |   |  | of the period |        |   | balance | 
|                                    |  | ThUS$   |        |  | ThUS$  |  |        | ThUS$    |  |  | ThUS$                   |   |  | ThUS$         |        |   | ThUS$   | 
|From January 1 to December 31, 2014 |  |         | 21,011 |  |        |  | 14,728 |          |  |  | (3,389                  | ) |  |               | (2,708 | ) |         |  | 8,631 |  |  |  | 29,642 | 
|From January 1 to December 31, 2015 |  |         | 29,642 |  |        |  | 8,924  |          |  |  | (2,919                  | ) |  |               |       |   |         |  | 6,005 |  |  |  | 35,647 | 
|From January 1 to December 31, 2016 |  |         | 35,647 |  |        |  | 3,698  |          |  |  | (807                    | ) |  |               |       |   |         |  | 2,891 |  |  |  | 38,538 | 



|(*) | 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 34.



|(e) | Other sundry reserves
|--- | ---------------------

Movement of Other sundry reserves:



|                                    |  |         |           |  |                 |  |         |          |  |  |         |   |  |  |           | 
|----------------------------------- |  | ------- | --------- |  | --------------- |  | ------- | -------- |  |  | ------- | - |  |  | --------- | 
|                                    |  |         |           |  | Transactions    |  |         |          |  |  |         |  
|                                    |  |         |           |  | with            |  |         |          |  |  |         |  
|                                    |  | Opening |           |  | non-controlling |  |         | Legal    |  |  | Closing |  
|Periods                             |  | balance |           |  | interest        |  |         | reserves |  |  | balance |  
|                                    |  | ThUS$   |           |  | ThUS$           |  |         | ThUS$    |  |  | ThUS$   |  
|From January 1 to December 31, 2014 |  |         | 2,657,800 |  |                 |  | (21,526 | )        |  |  | (526    | ) |  |  | 2,635,748 | 
|From January 1 to December 31, 2015 |  |         | 2,635,748 |  |                 |  |        |          |  |  | (1,069  | ) |  |  | 2,634,679 | 
|From January 1 to December 31, 2016 |  |         | 2,634,679 |  |                 |  |        |          |  |  | 5,602   |   |  |  | 2,640,281 | 



F-103



---

##### Table of Contents

Balance of Other sundry reserves comprises the following:



|                                                            |  |              |           |   |              |  |           |              |  |  |           |  
|----------------------------------------------------------- |  | ------------ | --------- | - | ------------ |  | --------- | ------------ |  |  | --------- | -
|                                                            |  | As of        |           |   | As of        |  |           | As of        | 
|                                                            |  | December 31, |           |   | December 31, |  |           | December 31, | 
|                                                            |  | 2016         |           |   | 2015         |  |           | 2014         | 
|                                                            |  | ThUS$        |           |   | ThUS$        |  |           | ThUS$        | 
|Higher value for TAM S.A. share exchange (1)                |  |              | 2,665,692 |   |              |  | 2,665,692 |              |  |  | 2,665,692 |  
|Reserve for the adjustment to the value of fixed assets (2) |  |              | 2,620     |   |              |  | 2,620     |              |  |  | 2,620     |  
|Transactions with non-controlling interest (3)              |  |              | (25,911   | ) |              |  | (25,891   | )            |  |  | (25,891   | )
|Cost of issuance and placement of shares                    |  |              | 9         |   |              |  | (4,793    | )            |  |  | (5,264    | )
|Others                                                      |  |              | (2,129    | ) |              |  | (2,949    | )            |  |  | (1,409    | )
|                                                            |  |              |           |   |              |  |           |              |  |  |           |  
|Total                                                       |  |              | 2,640,281 |   |              |  | 2,634,679 |              |  |  | 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 December 31, 2016, correspond to the loss generated by the participation of Lan Pax Group S.A. and Inversiones Lan S.A. in the acquisition of shares of Aerovías de Integración Regional
Aires of ThUS$ (3,480) and ThUS$ (20), respectively; 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-104



---

##### Table of Contents

|(f) | Reserves with effect in other comprehensive income.
|--- | ---------------------------------------------------

Movement of Reserves with effect in other comprehensive
income:



|                                                                    |  |                            |            |   |                         |  |          |                                                      |  |  |         |   |  |  |            |  
|------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ----------------------- |  | -------- | ---------------------------------------------------- |  |  | ------- | - |  |  | ---------- | -
|                                                                    |  | Currencytranslationreserve |            |   | Cash flowhedgingreserve |  |          | Actuarial gainor loss on definedbenefit plansreserve |  |  | Total   |  
|                                                                    |  | ThUS$                      |            |   | ThUS$                   |  |          | ThUS$                                                |  |  | ThUS$   |  
|Opening balance as of January 1, 2014                               |  |                            | (589,991   | ) |                         |  | (34,508  | )                                                    |  |  |        |   |  |  | (624,499   | )
|Derivatives valuation gains (losses)                                |  |                            |           |   |                         |  | (165,231 | )                                                    |  |  |        |   |  |  | (165,231   | )
|Deferred tax                                                        |  |                            |           |   |                         |  | 40,647   |                                                      |  |  |        |   |  |  | 40,647     |  
|Tax effect on deferred tax by change legal tax rate (Tax reform)(*) |  |                            |           |   |                         |  | 7,752    |                                                      |  |  |        |   |  |  | 7,752      |  
|Difference by subsidiaries conversion                               |  |                            | (603,880   | ) |                         |  |         |                                                      |  |  |        |   |  |  | (603,880   | )
|                                                                    |  |                            |            |   |                         |  |          |                                                      |  |  |         |   |  |  |            |  
|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)                                |  |                            |           |   |                         |  | 82,730   |                                                      |  |  |        |   |  |  | 82,730     |  
|Deferred tax                                                        |  |                            |           |   |                         |  | (21,900  | )                                                    |  |  |        |   |  |  | (21,900    | )
|Actuarial reserves by employee benefit plans                        |  |                            |           |   |                         |  |         |                                                      |  |  | (14,627 | ) |  |  | (14,627    | )
|Deferred tax actuarial IAS by employee benefit plans                |  |                            |           |   |                         |  |         |                                                      |  |  | 3,910   |   |  |  | 3,910      |  
|Difference by subsidiaries conversion                               |  |                            | (1,382,170 | ) |                         |  |         |                                                      |  |  |        |   |  |  | (1,382,170 | )
|                                                                    |  |                            |            |   |                         |  |          |                                                      |  |  |         |   |  |  |            |  
|Closing balance as of December 31, 2015                             |  |                            | (2,576,041 | ) |                         |  | (90,510  | )                                                    |  |  | (10,717 | ) |  |  | (2,677,268 | )
|                                                                    |  |                            |            |   |                         |  |          |                                                      |  |  |         |   |  |  |            |  
|Opening balance as of January 1, 2016                               |  |                            | (2,576,041 | ) |                         |  | (90,510  | )                                                    |  |  | (10,717 | ) |  |  | (2,677,268 | )
|Derivatives valuation gains (losses)                                |  |                            |           |   |                         |  | 126,360  |                                                      |  |  |        |   |  |  | 126,360    |  
|Deferred tax                                                        |  |                            |           |   |                         |  | (34,344  | )                                                    |  |  |        |   |  |  | (34,344    | )
|Actuarial reserves by employee benefit plans                        |  |                            |           |   |                         |  |         |                                                      |  |  | (3,104  | ) |  |  | (3,104     | )
|Deferred tax actuarial IAS by employee benefit plans                |  |                            |           |   |                         |  |         |                                                      |  |  | 921     |   |  |  | 921        |  
|Difference by subsidiaries conversion                               |  |                            | 489,486    |   |                         |  |         |                                                      |  |  |        |   |  |  | 489,486    |  
|                                                                    |  |                            |            |   |                         |  |          |                                                      |  |  |         |   |  |  |            |  
|Closing balance as of December 31, 2016                             |  |                            | (2,086,555 | ) |                         |  | 1,506    |                                                      |  |  | (12,900 | ) |  |  | (2,097,949 | )
|                                                                    |  |                            |            |   |                         |  |          |                                                      |  |  |         |   |  |  |            |  



|(*) | 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-105



---

##### Table of Contents

|(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                             |  | Openingbalance |         |  | Resultfor theperiod |  |          | Dividends |  |  | Otherincrease(decreases) |   |  | Closingbalance |      
|                                    |  | ThUS$          |         |  | ThUS$               |  |          | ThUS$     |  |  | ThUS$                    |   |  | ThUS$          |      
|From January 1 to December 31, 2014 |  |                | 795,303 |  |                     |  | (259,985 | )         |  |  |                         |   |  |                | 872   |  |  |  | 536,190 | 
|From January 1 to December 31, 2015 |  |                | 536,190 |  |                     |  | (219,274 | )         |  |  |                         |   |  |                | 1,034 |  |  |  | 317,950 | 
|From January 1 to December 31, 2016 |  |                | 317,950 |  |                     |  | 69,220   |           |  |  | (20,766                  | ) |  |                |      |  |  |  | 366,404 | 



|(h) | Dividends per share
|--- | -------------------



|                                                         |  |                               |             |  |                            |  |             | 
|-------------------------------------------------------- |  | ----------------------------- | ----------- |  | -------------------------- |  | ----------- | 
|Description of dividend                                  |  | Minimum mandatorydividend2016 |             |  | Final dividenddividend2015 | 
|Date of dividend                                         |  |                               | 12-31-2016  |  |                            |  | 12-31-2015  | 
|Amount of the dividend (ThUS$)                           |  |                               | 20,766      |  |                            |  |            | 
|Number of shares among which the dividend is distributed |  |                               | 606,407,693 |  |                            |  | 545,547,819 | 
|Dividend per share (US$)                                 |  |                               | 0.0342      |  |                            |  |            | 

As of December 31, 2016 and 2015, the Company has not been paid dividends.



F-106



---

##### Table of Contents

NOTE 26 - REVENUE

The detail of revenues is as follows:



|               |  |       |           |  |                                       |  |           |       |  |  |            | 
|-------------- |  | ----- | --------- |  | ------------------------------------- |  | --------- | ----- |  |  | ---------- | 
|               |  | 2016  |           |  | For the periods endedDecember 31,2015 |  |           | 2014  | 
|               |  | ThUS$ |           |  | ThUS$                                 |  |           | ThUS$ | 
|Passengers LAN |  |       | 4,104,348 |  |                                       |  | 4,241,918 |       |  |  | 4,464,761  | 
|Passengers TAM |  |       | 3,773,367 |  |                                       |  | 4,168,696 |       |  |  | 5,915,361  | 
|Cargo          |  |       | 1,110,625 |  |                                       |  | 1,329,431 |       |  |  | 1,713,379  | 
|               |  |       |           |  |                                       |  |           |       |  |  |            | 
|Total          |  |       | 8,988,340 |  |                                       |  | 9,740,045 |       |  |  | 12,093,501 | 
|               |  |       |           |  |                                       |  |           |       |  |  |            | 

NOTE 27 - COSTS AND EXPENSES BY NATURE



|(a) | Costs and operating expenses
|--- | ----------------------------

The main operating costs and administrative expenses are detailed below:



|                               |  |       |           |  |                                       |  |           |       |  |  |           | 
|------------------------------ |  | ----- | --------- |  | ------------------------------------- |  | --------- | ----- |  |  | --------- | 
|                               |  | 2016  |           |  | For the periods endedDecember 31,2015 |  |           | 2014  | 
|                               |  | ThUS$ |           |  | ThUS$                                 |  |           | ThUS$ | 
|Aircraft fuel                  |  |       | 2,056,643 |  |                                       |  | 2,651,067 |       |  |  | 4,167,030 | 
|Other rentals and landing fees |  |       | 1,077,407 |  |                                       |  | 1,109,826 |       |  |  | 1,327,238 | 
|Aircraft rentals               |  |       | 568,979   |  |                                       |  | 525,134   |       |  |  | 521,384   | 
|Aircraft maintenance           |  |       | 366,153   |  |                                       |  | 437,235   |       |  |  | 452,731   | 
|Comissions                     |  |       | 269,296   |  |                                       |  | 302,774   |       |  |  | 365,508   | 
|Passenger services             |  |       | 286,621   |  |                                       |  | 295,439   |       |  |  | 300,325   | 
|Other operating expenses       |  |       | 1,424,595 |  |                                       |  | 1,293,320 |       |  |  | 1,487,672 | 
|                               |  |       |           |  |                                       |  |           |       |  |  |           | 
|Total                          |  |       | 6,049,694 |  |                                       |  | 6,614,795 |       |  |  | 8,621,888 | 
|                               |  |       |           |  |                                       |  |           |       |  |  |           | 



F-107



---

##### Table of Contents

|(b) | Depreciation and amortization
|--- | -----------------------------

Depreciation and amortization are detailed below:



|                 |  |       |         |  |                                      |  |         |       |  |  |         | 
|---------------- |  | ----- | ------- |  | ------------------------------------ |  | ------- | ----- |  |  | ------- | 
|                 |  | 2016  |         |  | For the period endedDecember 31,2015 |  |         | 2014  | 
|                 |  | ThUS$ |         |  | ThUS$                                |  |         | ThUS$ | 
|Depreciation (*) |  |       | 910,071 |  |                                      |  | 897,670 |       |  |  | 943,731 | 
|Amortization     |  |       | 50,257  |  |                                      |  | 36,736  |       |  |  | 47,533  | 
|                 |  |       |         |  |                                      |  |         |       |  |  |         | 
|Total            |  |       | 960,328 |  |                                      |  | 934,406 |       |  |  | 991,264 | 
|                 |  |       |         |  |                                      |  |         |       |  |  |         | 



|(*) | 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 December 31,
2016 is ThUS$ 345,651 and ThUS$ 345,192 for the same period of 2015.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | Personnel expenses
|--- | ------------------

The costs for personnel expenses are disclosed in Note 23 liability for employee benefits.



|(d) | Financial costs
|--- | ---------------

The detail of financial costs is as follows:



|                            |  |       |         |  |                                      |  |         |       |  |  |         | 
|--------------------------- |  | ----- | ------- |  | ------------------------------------ |  | ------- | ----- |  |  | ------- | 
|                            |  | 2016  |         |  | For the period endedDecember 31,2015 |  |         | 2014  | 
|                            |  | ThUS$ |         |  | ThUS$                                |  |         | ThUS$ | 
|Bank loan interest          |  |       | 352,405 |  |                                      |  | 331,511 |       |  |  | 330,298 | 
|Financial leases            |  |       | 32,573  |  |                                      |  | 42,855  |       |  |  | 72,242  | 
|Other financial instruments |  |       | 31,358  |  |                                      |  | 38,991  |       |  |  | 27,494  | 
|                            |  |       |         |  |                                      |  |         |       |  |  |         | 
|Total                       |  |       | 416,336 |  |                                      |  | 413,357 |       |  |  | 430,034 | 
|                            |  |       |         |  |                                      |  |         |       |  |  |         | 

Costs and expenses by nature presented in this note plus the Employee expenses disclosed in Note 23, 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, in December 2015 the company
recognized a negative impact on results of US$ 80 million before tax associated with the output of the rest of the A330 fleet, including engines and technical materials is recognized. These expenses are recognized at Other Gain and
Loses of the Consolidated Statement of Income by Function.



F-108



---

##### Table of Contents

NOTE 28OTHER INCOME, BY FUNCTION

Other income by function is as follows:



|                                        |  |       |         |  |                                      |  |         |       |  |  |         | 
|--------------------------------------- |  | ----- | ------- |  | ------------------------------------ |  | ------- | ----- |  |  | ------- | 
|                                        |  | 2016  |         |  | For the period endedDecember 31,2015 |  |         | 2014  | 
|                                        |  | ThUS$ |         |  | ThUS$                                |  |         | ThUS$ | 
|Coalition and loyalty program Multiplus |  |       | 174,197 |  |                                      |  | 154,958 |       |  |  | 160,255 | 
|Tours                                   |  |       | 133,575 |  |                                      |  | 113,225 |       |  |  | 109,788 | 
|Aircraft leasing                        |  |       | 65,011  |  |                                      |  | 46,547  |       |  |  | 31,104  | 
|Customs and warehousing                 |  |       | 24,548  |  |                                      |  | 25,457  |       |  |  | 22,368  | 
|Maintenance                             |  |       | 17,090  |  |                                      |  | 11,669  |       |  |  | 15,421  | 
|Duty free                               |  |       | 11,141  |  |                                      |  | 16,408  |       |  |  | 18,076  | 
|Other miscellaneous income              |  |       | 113,186 |  |                                      |  | 17,517  |       |  |  | 20,633  | 
|                                        |  |       |         |  |                                      |  |         |       |  |  |         | 
|Total                                   |  |       | 538,748 |  |                                      |  | 385,781 |       |  |  | 377,645 | 
|                                        |  |       |         |  |                                      |  |         |       |  |  |         | 

NOTE 29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 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.



F-109



---

##### Table of Contents

|(a) | Foreign currency
|--- | ----------------

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



|                                |  |                       |         |  |                       |  |         | 
|------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|Current assets                  |  | As
ofDecember 31,2016 |         |  | As
ofDecember 31,2015 | 
|                                |  | ThUS$                 |         |  | ThUS$                 | 
|Cash and cash equivalents       |  |                       | 201,416 |  |                       |  | 182,089 | 
|Argentine peso                  |  |                       | 4,438   |  |                       |  | 11,611  | 
|Brazilian real                  |  |                       | 9,705   |  |                       |  | 8,810   | 
|Chilean peso                    |  |                       | 30,221  |  |                       |  | 17,739  | 
|Colombian peso                  |  |                       | 1,137   |  |                       |  | 1,829   | 
|Euro                            |  |                       | 1,695   |  |                       |  | 10,663  | 
|U.S. dollar                     |  |                       | 128,694 |  |                       |  | 112,422 | 
|Strong bolivar                  |  |                       | 61      |  |                       |  | 2,986   | 
|Other currency                  |  |                       | 25,465  |  |                       |  | 16,029  | 
|Other financial assets, current |  |                       | 14,573  |  |                       |  | 124,042 | 
|Argentine peso                  |  |                       | 12      |  |                       |  | 108,592 | 
|Brazilian real                  |  |                       | 734     |  |                       |  | 1,263   | 
|Chilean peso                    |  |                       | 585     |  |                       |  | 563     | 
|Colombian peso                  |  |                       |        |  |                       |  | 1,167   | 
|U.S. dollar                     |  |                       | 12,879  |  |                       |  | 12,128  | 
|Strong bolivar                  |  |                       | 76      |  |                       |  | 22      | 
|Other currency                  |  |                       | 287     |  |                       |  | 307     | 



F-110



---

##### Table of Contents

|                                                   |  |                       |         |  |                       |  |         | 
|-------------------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|Current assets                                     |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 | 
|                                                   |  | ThUS$                 |         |  | ThUS$                 | 
|Other nonfinancial assets, current                |  |                       | 107,789 |  |                       |  | 126,130 | 
|Argentine peso                                     |  |                       | 16,086  |  |                       |  | 14,719  | 
|Brazilian real                                     |  |                       | 20,158  |  |                       |  | 15,387  | 
|Chilean peso                                       |  |                       | 1,619   |  |                       |  | 10,265  | 
|Colombian peso                                     |  |                       | 713     |  |                       |  | 486     | 
|Euro                                               |  |                       | 1,563   |  |                       |  | 1,983   | 
|U.S. dollar                                        |  |                       | 50,157  |  |                       |  | 61,577  | 
|Strong bolivar                                     |  |                       | 3       |  |                       |  |        | 
|Other currency                                     |  |                       | 17,490  |  |                       |  | 21,713  | 
|Trade and other accounts receivable, current       |  |                       | 251,204 |  |                       |  | 247,229 | 
|Argentine peso                                     |  |                       | 54,356  |  |                       |  | 30,563  | 
|Brazilian real                                     |  |                       | 30,675  |  |                       |  | 11,136  | 
|Chilean peso                                       |  |                       | 90,482  |  |                       |  | 55,169  | 
|Colombian peso                                     |  |                       | 9,720   |  |                       |  | 1,195   | 
|Euro                                               |  |                       | 21,923  |  |                       |  | 30,006  | 
|U.S. dollar                                        |  |                       | 14,086  |  |                       |  | 29,937  | 
|Strong bolivar                                     |  |                       | 43      |  |                       |  | 7,225   | 
|Other currency                                     |  |                       | 29,919  |  |                       |  | 81,998  | 
|Accounts receivable from related entities, current |  |                       | 554     |  |                       |  | 181     | 
|Chilean peso                                       |  |                       | 554     |  |                       |  | 181     | 
|Tax current assets                                 |  |                       | 28,198  |  |                       |  | 22,717  | 
|Argentine peso                                     |  |                       | 1,798   |  |                       |  | 2,371   | 
|Brazilian real                                     |  |                       | 2,462   |  |                       |  | 5       | 
|Chilean peso                                       |  |                       | 6,333   |  |                       |  | 3,615   | 
|Colombian peso                                     |  |                       | 1,418   |  |                       |  | 1,275   | 
|Euro                                               |  |                       | 273     |  |                       |  | 14      | 
|U.S. dollar                                        |  |                       | 177     |  |                       |  | 1,394   | 
|Peruvian sol                                       |  |                       | 14,387  |  |                       |  | 12,572  | 
|Other currency                                     |  |                       | 1,350   |  |                       |  | 1,471   | 
|Total current assets                               |  |                       | 603,734 |  |                       |  | 702,388 | 
|Argentine peso                                     |  |                       | 76,690  |  |                       |  | 167,856 | 
|Brazilian real                                     |  |                       | 63,734  |  |                       |  | 36,601  | 
|Chilean peso                                       |  |                       | 129,794 |  |                       |  | 87,532  | 
|Colombian peso                                     |  |                       | 12,988  |  |                       |  | 5,952   | 
|Euro                                               |  |                       | 25,454  |  |                       |  | 42,666  | 
|U.S. Dollar                                        |  |                       | 205,993 |  |                       |  | 217,458 | 
|Strong bolivar                                     |  |                       | 183     |  |                       |  | 10,233  | 
|Other currency                                     |  |                       | 88,898  |  |                       |  | 134,090 | 



F-111



---

##### Table of Contents

|                                        |  |                       |        |  |                       |  |        | 
|--------------------------------------- |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|Non-current assets                      |  | As ofDecember 31,2016 |        |  | As ofDecember 31,2015 | 
|                                        |  | ThUS$                 |        |  | ThUS$                 | 
|Other financial assets, non-current     |  |                       | 26,772 |  |                       |  | 20,767 | 
|Argentine peso                          |  |                       |       |  |                       |  | 22     | 
|Brazilian real                          |  |                       | 2,769  |  |                       |  | 1,478  | 
|Chilean peso                            |  |                       | 83     |  |                       |  | 77     | 
|Colombian peso                          |  |                       | 285    |  |                       |  | 162    | 
|Euro                                    |  |                       | 6,966  |  |                       |  | 614    | 
|U.S. dollar                             |  |                       | 14,920 |  |                       |  | 16,696 | 
|Other currency                          |  |                       | 1,749  |  |                       |  | 1,718  | 
|Other nonfinancial assets, non-current |  |                       | 19,069 |  |                       |  | 60,215 | 
|Argentine peso                          |  |                       | 142    |  |                       |  | 169    | 
|Brazilian real                          |  |                       | 6,029  |  |                       |  | 4,454  | 
|U.S. dollar                             |  |                       | 8,309  |  |                       |  | 50,108 | 
|Other currency                          |  |                       | 4,589  |  |                       |  | 5,484  | 
|Accounts receivable, non-current        |  |                       | 7,356  |  |                       |  | 9,404  | 
|Chilean peso                            |  |                       | 7,356  |  |                       |  | 4,251  | 
|U.S. dollar                             |  |                       |       |  |                       |  | 5,000  | 
|Other currency                          |  |                       |       |  |                       |  | 153    | 
|Deferred tax assets                     |  |                       | 2,110  |  |                       |  | 2,632  | 
|Colombian peso                          |  |                       | 117    |  |                       |  | 336    | 
|Other currency                          |  |                       | 1,993  |  |                       |  | 2,296  | 
|Total non-current assets                |  |                       | 55,307 |  |                       |  | 93,018 | 
|Argentine peso                          |  |                       | 142    |  |                       |  | 191    | 
|Brazilian real                          |  |                       | 8,798  |  |                       |  | 5,932  | 
|Chilean peso                            |  |                       | 7,439  |  |                       |  | 4,328  | 
|Colombian peso                          |  |                       | 402    |  |                       |  | 498    | 
|Euro                                    |  |                       | 6,966  |  |                       |  | 614    | 
|U.S. dollar                             |  |                       | 23,229 |  |                       |  | 71,804 | 
|Other currency                          |  |                       | 8,331  |  |                       |  | 9,651  | 



F-112



---

##### Table of Contents

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 ofDecember 31,2016 |         |   | As ofDecember 31,2015 |  |         | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 |    
|                                              |  | ThUS$                 |         |   | ThUS$                 |  |         | ThUS$                 |  |  | ThUS$                 |    
|Other financial liabilities, current          |  |                       | 287,175 |   |                       |  | 94,199  |                       |  |  | 455,086               |     |  |  | 141,992 | 
|Chilean peso                                  |  |                       | 55,962  |   |                       |  | 54,655  |                       |  |  | 108,010               |     |  |  | 52,892  | 
|U.S. dollar                                   |  |                       | 231,213 |   |                       |  | 39,544  |                       |  |  | 347,076               | (*) |  |  | 89,100  | 
|Trade and other accounts payables, current    |  |                       | 585,149 |   |                       |  | 482,402 |                       |  |  | 16,097                |     |  |  | 14,981  | 
|Argentine peso                                |  |                       | 20,838  |   |                       |  | 20,772  |                       |  |  | 907                   |     |  |  | 2,072   | 
|Brazilian real                                |  |                       | 40,740  |   |                       |  | 37,572  |                       |  |  | 27                    |     |  |  | 16      | 
|Chilean peso                                  |  |                       | 60,701  |   |                       |  | 40,219  |                       |  |  | 12,255                |     |  |  | 10,951  | 
|Colombian peso                                |  |                       | 9,049   |   |                       |  | 5,271   |                       |  |  | 578                   |     |  |  | 155     | 
|Euro                                          |  |                       | 23,445  |   |                       |  | 5,275   |                       |  |  | 5                     |     |  |  | 618     | 
|U.S. dollar                                   |  |                       | 374,431 |   |                       |  | 310,565 |                       |  |  | 962                   |     |  |  | 839     | 
|Strong bolivar                                |  |                       | 761     |   |                       |  | 2,627   |                       |  |  |                      |     |  |  |        | 
|Peruvian sol                                  |  |                       | 33,701  |   |                       |  | 28,293  |                       |  |  | 1,093                 |     |  |  | 87      | 
|Mexican peso                                  |  |                       | 1,535   |   |                       |  | 15,248  |                       |  |  |                      |     |  |  | 225     | 
|Pound sterling                                |  |                       | 1,769   |   |                       |  | 7,819   |                       |  |  | 246                   |     |  |  |        | 
|Uruguayan peso                                |  |                       | 6,899   |   |                       |  | 6,005   |                       |  |  |                      |     |  |  |        | 
|Other currency                                |  |                       | 11,280  |   |                       |  | 2,736   |                       |  |  | 24                    |     |  |  | 18      | 
|Accounts payable to related entities, current |  |                       | 220     |   |                       |  | 447     |                       |  |  |                      |     |  |  |        | 
|Chilean peso                                  |  |                       | 23      |   |                       |  | 83      |                       |  |  |                      |     |  |  |        | 
|U.S. dollar                                   |  |                       | 8       |   |                       |  | 22      |                       |  |  |                      |     |  |  |        | 
|Other currency                                |  |                       | 189     |   |                       |  | 342     |                       |  |  |                      |     |  |  |        | 
|Other provisions, current                     |  |                       |        |   |                       |  |        |                       |  |  | 511                   |     |  |  | 457     | 
|Chilean peso                                  |  |                       |        |   |                       |  |        |                       |  |  | 28                    |     |  |  | 21      | 
|Other currency                                |  |                       |        |   |                       |  |        |                       |  |  | 483                   |     |  |  | 436     | 
|Tax liabilities, current                      |  |                       | (145    | ) |                       |  | 36      |                       |  |  | 2,442                 |     |  |  | 9,037   | 
|Argentine peso                                |  |                       |        |   |                       |  |        |                       |  |  | 2,501                 |     |  |  | 9,036   | 
|Brazilian real                                |  |                       | (3      | ) |                       |  |        |                       |  |  |                      |     |  |  |        | 
|Chilean peso                                  |  |                       |        |   |                       |  |        |                       |  |  | (25                   | )   |  |  |        | 
|U.S. dollar                                   |  |                       |        |   |                       |  | 27      |                       |  |  |                      |     |  |  |        | 
|Other currency                                |  |                       | (142    | ) |                       |  | 9       |                       |  |  | (34                   | )   |  |  | 1       | 



F-113



---

##### Table of Contents

|                                         |  |                       |         |  |                       |  |         |                       |  |  |                       |  |  |  |         | 
|---------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | --------------------- |  |  | --------------------- |  |  |  | ------- | 
|                                         |  | Up to 90 days         |         |  | 91 days to 1 year     | 
|Current liabilities                      |  | As ofDecember 31,2016 |         |  | As ofDecember 31,2015 |  |         | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 | 
|                                         |  | ThUS$                 |         |  | ThUS$                 |  |         | ThUS$                 |  |  | ThUS$                 | 
|Other non-financial liabilities, current |  |                       | 33,439  |  |                       |  | 40,432  |                       |  |  |                      |  |  |  |        | 
|Argentine peso                           |  |                       | 13,463  |  |                       |  | (2,387  | )                     |  |  |                      |  |  |  |        | 
|Brazilian real                           |  |                       | 430     |  |                       |  | 4,297   |                       |  |  |                      |  |  |  |        | 
|Chilean peso                             |  |                       | 14,999  |  |                       |  | 32,228  |                       |  |  |                      |  |  |  |        | 
|Colombian peso                           |  |                       | 578     |  |                       |  | 145     |                       |  |  |                      |  |  |  |        | 
|Euro                                     |  |                       | 168     |  |                       |  | 2,706   |                       |  |  |                      |  |  |  |        | 
|U.S. dollar                              |  |                       | 684     |  |                       |  | (3,238  | )                     |  |  |                      |  |  |  |        | 
|Strong bolivar                           |  |                       | 2       |  |                       |  | 2,490   |                       |  |  |                      |  |  |  |        | 
|Other currency                           |  |                       | 3,115   |  |                       |  | 4,191   |                       |  |  |                      |  |  |  |        | 
|Total current liabilities                |  |                       | 905,838 |  |                       |  | 617,516 |                       |  |  | 474,136               |  |  |  | 166,467 | 
|Argentine peso                           |  |                       | 34,301  |  |                       |  | 18,385  |                       |  |  | 3,408                 |  |  |  | 11,108  | 
|Brazilian real                           |  |                       | 41,167  |  |                       |  | 41,869  |                       |  |  | 27                    |  |  |  | 16      | 
|Chilean peso                             |  |                       | 131,685 |  |                       |  | 127,185 |                       |  |  | 120,268               |  |  |  | 63,864  | 
|Colombian peso                           |  |                       | 9,627   |  |                       |  | 5,416   |                       |  |  | 578                   |  |  |  | 155     | 
|Euro                                     |  |                       | 23,613  |  |                       |  | 7,981   |                       |  |  | 5                     |  |  |  | 618     | 
|U.S. dollar                              |  |                       | 606,336 |  |                       |  | 346,920 |                       |  |  | 348,038               |  |  |  | 89,939  | 
|Strong bolivar                           |  |                       | 763     |  |                       |  | 5,117   |                       |  |  |                      |  |  |  |        | 
|Other currency                           |  |                       | 58,346  |  |                       |  | 64,643  |                       |  |  | 1,812                 |  |  |  | 767     | 



|(*) | See Note 19.a (2)
|--- | -----------------



F-114



---

##### Table of Contents

|                                               |  |                        |         |  |                        |  |         |                   |  |  |              |  |  |              |         |  |              |  |        |  |  |  |         | 
|---------------------------------------------- |  | ---------------------- | ------- |  | ---------------------- |  | ------- | ----------------- |  |  | ------------ |  |  | ------------ | ------- |  | ------------ |  | ------ |  |  |  | ------- | 
|                                               |  | More than 1 to 3 years |         |  | More than 3 to 5 years |  |         | More than 5 years | 
|                                               |  | As of                  |         |  | As of                  |  |         | As of             |  |  | As of        |  |  | As of        |         |  | As of        | 
|                                               |  | December 31,           |         |  | December 31,           |  |         | December 31,      |  |  | December 31, |  |  | December 31, |         |  | December 31, | 
|Non-current liabilities                        |  | 2016                   |         |  | 2015                   |  |         | 2016              |  |  | 2015         |  |  | 2016         |         |  | 2015         | 
|                                               |  | ThUS$                  |         |  | ThUS$                  |  |         | ThUS$             |  |  | ThUS$        |  |  | ThUS$        |         |  | ThUS$        | 
|Other financial liabilities, non-current       |  |                        | 178,793 |  |                        |  | 561,217 |                   |  |  | 747,218      |  |  |              | 328,480 |  |              |  | 41,785 |  |  |  | 571,804 | 
|Chilean peso                                   |  |                        | 59,177  |  |                        |  | 104,385 |                   |  |  | 16,189       |  |  |              | 34,635  |  |              |  |       |  |  |  |        | 
|U.S. dollar                                    |  |                        | 119,616 |  |                        |  | 456,832 |                   |  |  | 731,029      |  |  |              | 293,845 |  |              |  | 41,785 |  |  |  | 571,804 | 
|Accounts payable, non-current                  |  |                        | 195,333 |  |                        |  | 239,029 |                   |  |  | 268          |  |  |              | 168     |  |              |  | 28     |  |  |  | 8       | 
|Chilean peso                                   |  |                        | 10,178  |  |                        |  | 8,058   |                   |  |  | 268          |  |  |              | 168     |  |              |  | 28     |  |  |  | 8       | 
|U.S. dollar                                    |  |                        | 183,904 |  |                        |  | 229,005 |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Other currency                                 |  |                        | 1,251   |  |                        |  | 1,966   |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Other provisions, non-current                  |  |                        | 39,513  |  |                        |  | 27,780  |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Argentine peso                                 |  |                        | 635     |  |                        |  | 797     |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Brazillian real                                |  |                        | 23,541  |  |                        |  | 11,009  |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Chilean peso                                   |  |                        | 38      |  |                        |  |        |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Colombian peso                                 |  |                        | 569     |  |                        |  | 198     |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Euro                                           |  |                        | 8,664   |  |                        |  | 8,966   |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|U.S. dollar                                    |  |                        | 6,066   |  |                        |  | 6,810   |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Provisions for employees benefits, non-current |  |                        | 68,774  |  |                        |  | 56,306  |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Brazilian real                                 |  |                        | 28      |  |                        |  |        |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Chilean peso                                   |  |                        | 68,380  |  |                        |  | 56,306  |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|U.S. dollar                                    |  |                        | 366     |  |                        |  |        |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Other non-financial liabilities, non-current   |  |                        | 3       |  |                        |  |        |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Colombian peso                                 |  |                        | 3       |  |                        |  |        |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Total non-current liabilities                  |  |                        | 482,416 |  |                        |  | 884,332 |                   |  |  | 747,486      |  |  |              | 328,648 |  |              |  | 41,813 |  |  |  | 571,812 | 
|Argentine peso                                 |  |                        | 635     |  |                        |  | 797     |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Brazilian real                                 |  |                        | 23,569  |  |                        |  | 11,009  |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Chilean peso                                   |  |                        | 137,773 |  |                        |  | 168,749 |                   |  |  | 16,457       |  |  |              | 34,803  |  |              |  | 28     |  |  |  | 8       | 
|Colombian peso                                 |  |                        | 572     |  |                        |  | 198     |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|Euro                                           |  |                        | 8,664   |  |                        |  | 8,966   |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 
|U.S. dollar                                    |  |                        | 309,952 |  |                        |  | 692,647 |                   |  |  | 731,029      |  |  |              | 293,845 |  |              |  | 41,785 |  |  |  | 571,804 | 
|Other currency                                 |  |                        | 1,251   |  |                        |  | 1,966   |                   |  |  |             |  |  |              |        |  |              |  |       |  |  |  |        | 



F-115



---

##### Table of Contents

|                                     |  |              |            |   |              |  |            |  
|------------------------------------ |  | ------------ | ---------- | - | ------------ |  | ---------- | -
|                                     |  | As of        |            |   | As of        | 
|                                     |  | December 31, |            |   | December 31, | 
|General summary of foreign currency: |  | 2016         |            |   | 2015         | 
|                                     |  | ThUS$        |            |   | ThUS$        | 
|Total assets                         |  |              | 659,041    |   |              |  | 795,406    |  
|Argentine peso                       |  |              | 76,832     |   |              |  | 168,047    |  
|Brazilian real                       |  |              | 72,532     |   |              |  | 42,533     |  
|Chilean peso                         |  |              | 137,233    |   |              |  | 91,860     |  
|Colombian peso                       |  |              | 13,390     |   |              |  | 6,450      |  
|Euro                                 |  |              | 32,420     |   |              |  | 43,280     |  
|U.S. dollar                          |  |              | 229,222    |   |              |  | 289,262    |  
|Strong bolivar                       |  |              | 183        |   |              |  | 10,233     |  
|Other currency                       |  |              | 97,229     |   |              |  | 143,741    |  
|Total liabilities                    |  |              | 2,651,689  |   |              |  | 2,568,775  |  
|Argentine peso                       |  |              | 38,344     |   |              |  | 30,290     |  
|Brazilian real                       |  |              | 64,763     |   |              |  | 52,894     |  
|Chilean peso                         |  |              | 406,211    |   |              |  | 394,609    |  
|Colombian peso                       |  |              | 10,777     |   |              |  | 5,769      |  
|Euro                                 |  |              | 32,282     |   |              |  | 17,565     |  
|U.S. dollar                          |  |              | 2,037,140  |   |              |  | 1,995,155  |  
|Strong bolivar                       |  |              | 763        |   |              |  | 5,117      |  
|Other currency                       |  |              | 61,409     |   |              |  | 67,376     |  
|Net position                         |  |              |            |   |              |  |            |  
|Argentine peso                       |  |              | 38,488     |   |              |  | 137,757    |  
|Brazilian real                       |  |              | 7,769      |   |              |  | (10,361    | )
|Chilean peso                         |  |              | (268,978   | ) |              |  | (302,749   | )
|Colombian peso                       |  |              | 2,613      |   |              |  | 681        |  
|Euro                                 |  |              | 138        |   |              |  | 25,715     |  
|U.S. dollar                          |  |              | (1,807,918 | ) |              |  | (1,705,893 | )
|Strong bolivar                       |  |              | (580       | ) |              |  | 5,116      |  
|Other currency                       |  |              | 35,820     |   |              |  | 76,365     |  



F-116



---

##### Table of Contents

|(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 December 31, 2016 and 2015, generated a debit of ThUS$ 121,651 and a charge ThUS$ 467,896, respectively.

Exchange differences recognized in equity as reserves for currency translation differences for the period ended December 31, 2016 and 2015, represented a
debit of ThUS$ 494,362 and a charge ThUS$ 1,409,439, respectively.

The following shows the current exchange rates for the U.S. dollar, on the dates
indicated:



|                   |  |                    |          |  |      |  |          |      |  |  |          | 
|------------------ |  | ------------------ | -------- |  | ---- |  | -------- | ---- |  |  | -------- | 
|                   |  | As of December 31, |         
|                   |  | 2016               |          |  | 2015 |  |          | 2014 | 
|Argentine peso     |  |                    | 15.84    |  |      |  | 12.97    |      |  |  | 8.55     | 
|Brazilian real     |  |                    | 3.25     |  |      |  | 3.98     |      |  |  | 2.66     | 
|Chilean peso       |  |                    | 669.47   |  |      |  | 710.16   |      |  |  | 606.75   | 
|Colombian peso     |  |                    | 3,000.25 |  |      |  | 3,183.00 |      |  |  | 2,389.50 | 
|Euro               |  |                    | 0.95     |  |      |  | 0.92     |      |  |  | 0.82     | 
|Strong bolivar     |  |                    | 673.76   |  |      |  | 198.70   |      |  |  | 12.00    | 
|Australian dollar  |  |                    | 1.38     |  |      |  | 1.37     |      |  |  | 1.22     | 
|Boliviano          |  |                    | 6.86     |  |      |  | 6.85     |      |  |  | 6.86     | 
|Mexican peso       |  |                    | 20.63    |  |      |  | 17.34    |      |  |  | 14.74    | 
|New Zealand dollar |  |                    | 1.44     |  |      |  | 1.46     |      |  |  | 1.28     | 
|Peruvian Sol       |  |                    | 3.35     |  |      |  | 3.41     |      |  |  | 2.99     | 
|Uruguayan peso     |  |                    | 29.28    |  |      |  | 29.88    |      |  |  | 24.25    | 



F-117



---

##### Table of Contents

NOTE 30EARNINGS / (LOSS) PER SHARE



|                                                               |  |                      |             |  |              |  |             |      |  |  |             |  
|-------------------------------------------------------------- |  | -------------------- | ----------- |  | ------------ |  | ----------- | ---- |  |  | ----------- | -
|                                                               |  | For the period ended |            
|                                                               |  |                      |             |  | December 31, |  |             |      | 
|Basic earnings / (loss) per share                              |  | 2016                 |             |  | 2015         |  |             | 2014 | 
|Earnings / (loss) attributable to owners of the parent (ThUS$) |  |                      | 69,220      |  |              |  | (219,274    | )    |  |  | (259,985    | )
|Weighted average number of shares, basic                       |  |                      | 546,559,599 |  |              |  | 545,547,819 |      |  |  | 545,547,819 |  
|Basic earnings / (loss) per share (US$)                        |  |                      | 0.12665     |  |              |  | (0.40193    | )    |  |  | (0.47656    | )
|                                                               | 
|                                                               |  | For the period ended |            
|                                                               |  |                      |             |  | December 31, |  |             |      | 
|Diluted earnings / (loss) per share                            |  | 2016                 |             |  | 2015         |  |             | 2014 | 
|Earnings / (loss) attributable to owners of the parent (ThUS$) |  |                      | 69,220      |  |              |  | (219,274    | )    |  |  | (259,985    | )
|Weighted average number of shares, basic                       |  |                      | 546,559,599 |  |              |  | 545,547,819 |      |  |  | 545,547,819 |  
|                                                               |  |                      |             |  |              |  |             |      |  |  |             |  
|Weighted average number of shares, diluted                     |  |                      | 546,559,599 |  |              |  | 545,547,819 |      |  |  | 545,547,819 |  
|                                                               |  |                      |             |  |              |  |             |      |  |  |             |  
|Diluted earnings / (loss) per share (US$)                      |  |                      | 0.12665     |  |              |  | (0.40193    | )    |  |  | (0.47656    | )

In the calculation of diluted earnings per share have not been considered the compensation plan disclosed in Note 34 (a.1),
because the average market price is lower than the price of options.



F-118



---

##### Table of Contents

NOTE 31  CONTINGENCIES



| | I. | Lawsuits
| | -- | --------



|1) | Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries
|-- | ------------------------------------------------------------



|                                         |  |                                                        |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                             
|---------------------------------------- |  | ------------------------------------------------------ |  | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------
|Company                                  |  | Court                                                  |  | Case Number |  | Origin                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Stage of trial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | AmountsCommitted(*)ThUS$    
|Atlantic Aviation Investments LLC
(AAI). |  | SupremeCourt of theState of NewYork Countyof 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 29th ,
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. In Brazil a Settlement
Agreement was signed and it is awaiting for approval from the Bankruptcy Court of that country and Variglog has asked Switzerland to recognize the judgment that declared the state of judicial recovery and subsequent bankruptcy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | 17,100Plusinterests
andcosts
|                                         |  |                                                        |  |             | 
|Lan Argentina S.A.                       |  | NationalAdministrativeCourt.                           |  | 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 February 25, 2016, Lan Argentina S.A. and ORSNA informed the Court of their decision to put an end to the lawsuit and guarantee use of the
hangar by Lan. The parties agreed to maintain the precautionary measure in effect allowing Lan to use the hangar indefinitely until the parties reach a final agreement. The court agreed, so the precautionary measure was extended indefinitely.
Resolution 112/2016 of the National Airport Regulatory Agency (ORSNA) was published on December 30, 2016, which terminated the hangar dispute. This latest resolution repealed the previous resolution, 123/16, that ordered vacation of the LAN hangar
at AEP.  Consequently, the legal structure created by the ORSNA through the 2012
Resolution was left without any effect in 2016. Apart from the matter now having been resolved both materially and judicially, this resolution puts a definitive end to the hangar dispute. |  | -0-                         



F-119



---

##### Table of Contents

|2) | Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries
|-- | ---------------------------------------------------------------



|                                           |  |                     |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                     
|------------------------------------------ |  | ------------------- |  | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------
|Company                                    |  | Court               |  | Case Number |  | Origin                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Stage of trial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | AmountsCommitted (*)
|                                           |  |                     |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | ThUS$               
|LATAM Airlines Group S.A. y Lan Cargo S.A. |  | EuropeanCommission. |  |            |  | Investigation of alleged infringements to free competition of cargo airlines, especially fuel surcharge. On December 26th , 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 April 14th, 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 LATAM in only one of those four routes; and the
ruling section (which mentions one single conjoint infraction).  On November 9th, 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 THUS$ 8,664. (8.220.000
Euros)  This fine is being appealed by Lan Cargo S.A. and LATAM Airlines Group S.A. On
December 16, 2015, the European Court of Justice revoked the Commissions decision because of discrepancies. The European Commission did not appeal the resolution, but rather confirmed, on May 20, 2016, that it will issue a new decision curing
the rulings specified in the Decision. It has a period of 5 years to do this, or until 2021. |  | 8,664               



F-120



---

##### Table of Contents

|                                           |  |                                                                                                                                                                                              |  |                           |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                      |        | 
|------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | 
|Company                                    |  | Court                                                                                                                                                                                        |  | Case Number               |  | Origin                                                                                                                                                                                                                                                                                                                                                                                 |  | Stage of trial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | AmountsCommitted (*) |       
|                                           |  |                                                                                                                                                                                              |  |                           |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | ThUS$                |       
|Lan Cargo S.A. y LATAM Airlines Group S.A. |  | In the HighCourt ofJusticeChanceryDivisión(England)OvreRomerikeDistrictCourt(Norway) yDirectieJuridischeZakenAfdelingCeveil Recht(Netherlands),
CologneRegionalCourt(LandgerichKölnGermany). |  |                          |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                      | -0-    | 
|                                           |  |                                                                                                                                                                                              |  |                           | 
|Aerolinhas Brasileiras S.A.                |  | FederalJustice.                                                                                                                                                                              |  | 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: ThUS$10,438; (ii) Norberto Jochmann: ThUS$201;
(iii) Hernan Merino: ThUS$ 102; (iv) Felipe Meyer :ThUS$ 102. 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. |  |                      | 10,438 | 
|                                           |  |                                                                                                                                                                                              |  |                           | 
|Aerolinhas Brasileiras S.A.                |  | FederalJustice.                                                                                                                                                                              |  | 0001872-58.2014.4.03.6105 |  | An annulment action with a motion for preliminary injunction, was filed on 28/02/2014, in order to cancel tax debts of PIS, CONFINS, IPI and II, connected with the administrative process 10831.005704/2006.43.                                                                                                                                                                       |  | We have been waiting since August 21, 2015 for a statement by Serasa on TAMs letter of indemnity and a statement by the Union. The statement was authenticated on January 29, 2016. A petition on evidence and replications were
filed on June 20, 2016.                                                                                                                                                                                                                                                                                                               |  |                      | 11,140 | 



F-121



---

##### Table of Contents

|                       |  |                                      |  |                                                                                      |  |                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                           |         | 
|---------------------- |  | ------------------------------------ |  | ------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | 
|Company                |  | Court                                |  | Case Number                                                                          |  | Origin                                                                                                                                                                   |  | Stage of trial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | AmountsCommitted (*)ThUS$ |        
|                       |  |                                      |  |                                                                                      |  |                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                           |        
|Tam Linhas Aéreas S.A. |  | Department ofFederalRevenue ofBrazil |  | 19515.722556/2012-21                                                                 |  | Alleged irregularities in the SAT payments for the periods 01/2009 to 13/2009.                                                                                           |  | A judgment by the Administrative Council of Tax Appeals (CARF) has been pending since February 27, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                           | 2,151   | 
|                       |  |                                      |  |                                                                                      | 
|Tam Linhas Aéreas S.A. |  | Department ofFederalRevenue ofBrazil |  | 19515.721155/2014-15                                                                 |  | Alleged irregularities in the SAT payments for the periods 01/2010 to 13/2010.                                                                                           |  | A decision was rendered in favor of Tam Linhas Aéreas S.A. on August 22, 2016. The Attorney General has said it will not appeal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                           | 25,515  | 
|                       |  |                                      |  |                                                                                      | 
|Tam Linhas Aéreas S.A. |  | Department ofFederalRevenue ofBrazil |  | 19515.720476/2015-83                                                                 |  | Alleged irregularities in the SAT payments for the periods 01/2011 to 12/2012                                                                                            |  | A judgment by CARF is pending since April 12, 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                           | 52,414  | 
|                       |  |                                      |  |                                                                                      | 
|Tam Linhas Aéreas S.A. |  | Court of theSecondRegion.            |  | 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 on the appeal filed by the company.
 In order to suspend chargeability of Tax Credit a Guaranty Deposit to the Court was
delivered for MUS$115.  The court decision requesting that the Expert make all
clarifications requested by the parties in a period of 30 days was published on March 29, 2016. The plaintiffs submitted a petition on June 21, 2016 requesting acceptance of the opinion of their consultant and an urgent ruling on the dispute.
No amount additional to the deposit that has already been made is required if this case is lost. |  |                           | 115,265 | 
|                       |  |                                      |  |                                                                                      | 
|Tam Linhas Aéreas S.A. |  | AdministrativeCouncil ofTax Appeals  |  | 19.515.002963/2009-12,19515.722555/2012-86,19515.721154/2014-71,19515.720475/2015-39 |  | Collection of contributions to the Aviation Fund for the periods from 01/2004 to 12/2004, from 12/2006 to 12/2008, from 01/2009 to 12/2010, and from 01/2011 to 10/2012. |  | A judgment is pending by CARF since February 5, 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                           | 65,788  | 



F-122



---

##### Table of Contents

|                                             |  |                                                                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                      |        | 
|-------------------------------------------- |  | ---------------------------------------------------------------- |  | -------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | 
|Company                                      |  | Court                                                            |  | Case Number          |  | Origin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Stage of trial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | AmountsCommitted (*) |       
|                                             |  |                                                                  |  |                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | ThUS$                |       
|Tam Linhas Aéreas S.A.                       |  | InternalRevenueServiceofBrazil.                                  |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                      | 22,225 | 
|                                             |  |                                                                  |  |                      | 
|Tam Linhas Aéreas S.A.                       |  | InternalRevenueServiceofBrazil.                                  |  | 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. The case was assigned to the 1st Ordinary Group of Brazils Administrative
Council of Tax Appeals (CARF) on June 8, 2015. TAMs appeal was included in the CARF session held August 25, 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                      | 43,341 | 
|                                             |  |                                                                  |  |                      | 
|Aerovías de Integración Regional, AIRES S.A. |  | UnitedStatesCourt ofAppealsfor theEleventhCircuit,Florida,U.S.A. |  | 2013-20319 CA 01     |  | The July 30th , 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 20th , 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. |  | This case is being heard by the 45th Civil Court of the Bogota Circuit. In an interim decree issued August 16, 2016, the hearing under
article 101 was set for February 2, 2017, this hearing was postponed at request of the parties and the Judge must resolve on a new date. When a reconciliation will be attempted, facts of the case will be set, the parties will conduct depositions and
evidence will be decreed.  The Federal Court of the State of Florida decided on March
26, 2016 to approve Lan Colombia Airliness request to suspend the proceedings in the USA until the claim under way in Colombia is decided. The U.S. Court judge also closed the case administratively. The Federal Court of Appeal ratified the
case closing in the U.S.A. on April 1, 2015. On October 1, 2015, Regional One petitioned that the U.S. court reopen the case. Lan Colombia Airlines presented its arguments and the Court sustained them on August 23, 2016, ratifying the closing of the
case in the United States, so it continues to be closed. |  |                      | 12,443 | 



F-123



---

##### Table of Contents

|                       |  |                                                      |  |                                                                        |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |                      |         | 
|---------------------- |  | ---------------------------------------------------- |  | ---------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | 
|Company                |  | Court                                                |  | Case Number                                                            |  | Origin                                                                                                                                                                                                                                                         |  | Stage of trial                                                                                                                                                                                                                                                                                                                                                                                            |  | AmountsCommitted (*) |        
|                       |  |                                                      |  |                                                                        |  |                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  | ThUS$                |        
|Tam Linhas Aéreas S.A. |  | InternalRevenueService ofBrazil                      |  | 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. A first-instance ruling was rendered on June 1, 2016 that was partially favorable. The separate fine was revoked. A voluntary appeal was filed on June 30, 2016, which is
pending a decision by CARF.                                                                                                                                      |  |                      | 53,967  | 
|                       |  |                                                      |  |                                                                        | 
|Tam Viagens S.A.       |  | Department ofFinance to themunicipalityof São Paulo. |  | 67.168.795 /67.168.833 /67.168.884 /67.168.906 /67.168.914 /67.168.965 |  | A claim was filed alleging infraction and seeking a fine because of a deficient basis for calculation of the service tax (ISS) because the company supposedly made incorrect deductions.                                                                       |  | We received notice of the petition on December 22, 2015. The objection was filed on January 19, 2016. The company was notified on November 23, 2016 of the decision that partially sustained the interim infringement ruling. An
ordinary appeal was filed on December 19, 2016 before the Municipal Tax Council of Sao Paulo and a judgment is pending.                                                  |  |                      | 89,624  | 
|                       |  |                                                      |  |                                                                        | 
|Tam Linhas Aéreas S.A. |  | Labor Court ofSão 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. The company won in the first instance, but an appeal by the Union is expected.                                                                                                                                                                                                                             |  |                      | 16,211  | 
|                       |  |                                                      |  |                                                                        | 
|TAM S.A.               |  | ConselhoAdministrativode RecursosFiscais.            |  | 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
(CARF) The case will be put into the system again for re-assignment for hearing and reporting because of the departure of Eduardo de Andrade, a CARF council member. |  |                      | 104,423 | 



F-124



---

##### Table of Contents

|                            |  |                                     |  |                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                |  |                      |        | 
|--------------------------- |  | ----------------------------------- |  | --------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | 
|Company                     |  | Court                               |  | Case Number                 |  | Origin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Stage of trial                                                                                                                                                                                 |  | AmountsCommitted (*) |       
|                            |  |                                     |  |                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                |  | ThUS$                |       
|Tam Linhas Aereas S.A.      |  | 1° CivilCourt ofComarcaof Bauru/SP. |  | 0049304-37.2009.8.26.0071/1 |  | 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. ThUS$4.770 in cash was deposited in guarantee. A procedural agreement was made for 23 million reals (ThUS$7,057) on September 23, 2016. |  |                      | 7,057  | 
|                            |  |                                     |  |                             | 
|Aerolinhas Brasileiras S.A. |  | LaborCourt ofCampinas.              |  | 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.                                                                                                                                                                                                                                                                                                                                                                |  | An agreement for ThUS$2,732 was reached with the Union on August 2, 2016. Payment is now being made.                                                                                           |  |                      | 16.365 | 
|                            |  |                                     |  |                             | 
|TAM Linhas Aéreas S.A.      |  | Sao PauloLaborCourt,Sao Paulo       |  | 0000009-45.2016.5.02.090    |  | The Ministry of Labor filed an action seeking that the company adapt the ergonomics and comfort of seats.                                                                                                                                                                                                                                                                                                                                                                                                |  | The case will be closed next month because the Ministry of Labor withdrew its complaint.                                                                                                       |  |                      | 15,917 | 



|- | In order to deal with any financial obligations arising from legal proceedings in effect at December 31, 2016, 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 21.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|- | The Company has not disclosed the individual probability of success for each contingency in order to not negatively affect its outcome.
|- | ---------------------------------------------------------------------------------------------------------------------------------------



|(*) | The Company has reported the amounts involved only for the lawsuits for which a reliable estimation can be made of the financial impacts and of the possibility of any recovery, pursuant to Paragraph 86 of IAS 37
Provisions, Contingent Liabilities and Contingent Assets.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-125



---

##### Table of Contents

|II. | Governmental Investigations.
|--- | ----------------------------



| | 1) | On July 25, 2016, LATAM reached agreements with the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) regarding the investigation of
payments for US$1,150,000 by Lan Airlines S.A. in 2006-2007 to a consultant advising it in the resolution of labor matters in Argentina.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The purpose of the investigation was to determine whether these payments violated the U.S. Foreign Corrupt Practices Act (FCPA)
that: (i) forbids bribery of foreign government authorities in order to obtain a commercial advantage; and (ii) requires the companies that must abide by the FCPA to keep appropriate accounting records and implant an adequate internal
control system. The FCPA is applicable to LATAM because of its ADR program in effect on the U.S. securities market.

After an exhaustive
investigation, the DOJ and SEC concluded that there was no violation of the bribery provisions of the FCPA, which is consistent with the results of LATAMs internal investigation. However, the DOJ and SEC consider that LAN accounted for these
payments incorrectly and, consequently, infringed the part of the FCPA requiring companies to keep accurate accounting records. These authorities also consider that LANs internal controls in 2006-2007 were weak, so LAN would have also violated
the provisions in the FCPA requiring it to maintain an adequate internal control system.

The agreements signed, included the following:

(a) The agreement with the DOJ involves: (i) entering into a Deferred Prosecution Agreement (DPA), which is a public
contract under which the DOJ files public charges alleging an infringement of the FCPA accounting regulations. LATAM is not obligated to answer these charges, the DOJ will not pursue them for a period of 3 years, and the DOJ will dismiss the charges
after expiration of that 3-year period provided LATAM complies with all terms of the DPA. In exchange, LATAM admitted events described in the DOJ charges for infringement to the FCPA rules on accounting records and agreed to pay the negotiated fine
explained below and abide by other terms stipulated in the agreement; (ii) clauses in which LATAM admits that the payments to the consultant in Argentina were incorrectly accounted for and that at the time those payments were made (2006-2007),
it did not have adequate internal controls in place; (iii) LATAMs agreement to have an outside consultant monitor, evaluate and report to the DOJ on the effectiveness of LATAMs compliance program for a period of 27 months; and
LATAMs agreement to continue evaluating and reporting directly to the DOJ on the effectiveness of its compliance program for a period of 9 months after the consultants work concludes; and (iv) paying a fine estimated to total
approximately ThUS$ 12,750.

(b) The agreement with the SEC involves: (i) accepting a Cease and Desist Order, which is an
administrative resolution of the SEC closing the investigation, in which LATAM will accept certain obligations and statements of fact that are described in the document; (ii) accepting the same obligations regarding the consultant mentioned
above; and (iii) paying the sum of ThUS$ 6,744, plus interest of ThUS$ 2,694.



F-126



---

##### Table of Contents

As at December 31, 2016, a balance of ThUS$ 4,719 was payable to the SEC, as reported in
Note 20Trade payables and other payables.



| | 2) | LATAM Airlines Ecuador was given notice on August 26, 2016 of an investigation of LATAM Airlines Ecuador and two other airlines begun, at its own initiative, by one of the Investigative Departments of the Ecuadoran
Market Power Control Commission, limited to alleged signs of conscious parallelism in relation to specific fares on one domestic route in Ecuador from August 2012 to February 2013. The Investigative Department had 180 days (due February 21,
2017) extendable for another 180 days, to resolve on whether to close the investigation or file charges against two or more of the parties involved, only event in which a process will be opened. On February 21, 2017, the period of 180 days was
extended for another 180 days requesting additional information. LATAM Airlines Ecuador is cooperating with the authority and has hired a law firm and an economist expert in the subject to advise the company during this process.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | LATAM received two Information Requests from the Central-North Metropolitan Region Prosecutors Office, one on October 25, 2016 and the other on November 11, 2016, requesting information relating to the
investigation of payments made by Lan Airlines S.A. to a consultant advising it on the solution to labor matters in Argentina in the years 2006-2007. The information requested in both Requests has been provided.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 32 - COMMITMENTS



|(a) | 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.

On March 30,
2016, LATAM structured a Revolving Credit Facility granted by with aircraft, engines, spare parts and supplies for a total amount available of US$ 325 million, this line includes restrictions minimum liquidity level as the consolidated company
and individual level as for companies LATAM Airlines Group S.A. and TAM Linhas Aereas S.A.

At December 31, 2016, the Company is in compliance with
all indicators detailed above.



F-127



---

##### Table of Contents

|(b) | Commitments under operating leases as lessee
|--- | --------------------------------------------

Details of the main operating leases are as follows:



|                                            |  |             |  |                       |   |  |                       |  |   | 
|------------------------------------------- |  | ----------- |  | --------------------- | - |  | --------------------- |  | - | 
|Lessor                                      |  | Aircraft    |  | As ofDecember 31,2016 |   |  | As ofDecember 31,2015 | 
|Aircraft 76B-26329 Inc.                     |  | Boeing 767  |  |                       | 1 |  |                       |  | 1 | 
|Aircraft 76B-27615 Inc.                     |  | Boeing 767  |  |                       | 1 |  |                       |  | 1 | 
|Aircraft 76B-28206 Inc.                     |  | Boeing 767  |  |                       | 1 |  |                       |  | 1 | 
|Aviación 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 | 
|AWAS 5125 Trust                             |  | Airbus A320 |  |                       |  |  |                       |  | 1 | 
|AWAS 5178 Limited                           |  | Airbus A320 |  |                       |  |  |                       |  | 1 | 
|AWAS 5234 Trust                             |  | Airbus A320 |  |                       | 1 |  |                       |  | 1 | 
|Baker & Spice Aviation Limited              |  | Airbus A320 |  |                       | 1 |  |                       |  | 1 | 
|Bank of America                             |  | Airbus A321 |  |                       | 2 |  |                       |  | 3 | 
|CIT Aerospace International                 |  | Airbus A320 |  |                       | 2 |  |                       |  | 2 | 
|ECAF I 1215 DAC                             |  | Airbus A320 |  |                       | 1 |  |                       |  | 1 | 
|ECAF I 2838 DAC                             |  | Airbus A320 |  |                       | 1 |  |                       |  | 1 | 
|ECAF I 40589 DAC                            |  | Boeing 777  |  |                       | 1 |  |                       |  | 1 | 
|Eden Irish Aircr Leasing MSN 1459           |  | Airbus A320 |  |                       | 1 |  |                       |  | 1 | 
|GECAS Sverige Aircraft Leasing Worldwide AB |  | Airbus A320 |  |                       | 1 |  |                       |  | 3 | 
|GFL Aircraft Leasing Netherlands B.V.       |  | Airbus A320 |  |                       | 1 |  |                       |  | 1 | 
|IC Airlease One Limited                     |  | Airbus A321 |  |                       | 1 |  |                       |  |  | 
|International Lease Finance Corporation     |  | Boeing 767  |  |                       |  |  |                       |  | 1 | 
|JSA Aircraft 38484, LLC                     |  | Boeing 787  |  |                       | 1 |  |                       |  | 1 | 
|JSA Aircraft 7126, LLC                      |  | Airbus A320 |  |                       | 1 |  |                       |  |  | 
|JSA Aircraft 7128, LLC                      |  | Airbus A321 |  |                       | 1 |  |                       |  |  | 
|JSA Aircraft 7239, LLC                      |  | Airbus A321 |  |                       | 1 |  |                       |  |  | 
|JSA Aircraft 7298, LLC                      |  | Airbus A321 |  |                       | 1 |  |                       |  |  | 
|Macquarie Aerospace Finance 5125-2 Trust    |  | Airbus A320 |  |                       | 1 |  |                       |  |  | 
|Macquarie Aerospace Finance 5178 Limited    |  | Airbus A320 |  |                       | 1 |  |                       |  |  | 
|Magix Airlease Limited                      |  | Airbus A320 |  |                       | 1 |  |                       |  | 2 | 
|MASL Sweden (1) AB                          |  | Airbus A320 |  |                       |  |  |                       |  | 1 | 
|MASL Sweden (2) AB                          |  | Airbus A320 |  |                       |  |  |                       |  | 1 | 



F-128



---

##### Table of Contents

|                                                |  |          |             |  |                       |  |     |                       |  |  |     | 
|----------------------------------------------- |  | -------- | ----------- |  | --------------------- |  | --- | --------------------- |  |  | --- | 
|Lessor                                          |  | Aircraft |             |  | As ofDecember 31,2016 |  |     | As ofDecember 31,2015 | 
|MASL Sweden (7) AB                              |  |          | Airbus A320 |  |                       |  |    |                       |  |  | 1   | 
|MASL Sweden (8) AB                              |  |          | Airbus A320 |  |                       |  | 1   |                       |  |  | 1   | 
|Merlin Aviation Leasing (Ireland) 18 Limited    |  |          | Airbus A320 |  |                       |  | 1   |                       |  |  |    | 
|NBB Cuckoo Co., Ltd                             |  |          | Airbus A321 |  |                       |  | 1   |                       |  |  | 1   | 
|NBB Grosbeak Co., Ltd                           |  |          | Airbus A321 |  |                       |  | 1   |                       |  |  | 1   | 
|NBB Redstart Co. Ltd                            |  |          | Airbus A321 |  |                       |  | 1   |                       |  |  |    | 
|NBB-6658 Lease Partnership                      |  |          | Airbus A321 |  |                       |  | 1   |                       |  |  | 1   | 
|NBB-6670 Lease Partnership                      |  |          | Airbus A321 |  |                       |  | 1   |                       |  |  | 1   | 
|Orix Aviation Systems Limited                   |  |          | Airbus A320 |  |                       |  | 5   |                       |  |  | 2   | 
|PAAL Aquila Company Limited                     |  |          | Airbus A321 |  |                       |  | 2   |                       |  |  |    | 
|PAAL Gemini Company Limited                     |  |          | Airbus A321 |  |                       |  | 1   |                       |  |  |    | 
|SASOF II (J) Aviation Ireland Limited           |  |          | Airbus A319 |  |                       |  | 1   |                       |  |  | 1   | 
|Shenton Aircraft Leasing Limited                |  |          | Airbus A320 |  |                       |  | 1   |                       |  |  | 1   | 
|SKY HIGH V LEASING COMPANY LIMITED              |  |          | Airbus A320 |  |                       |  |    |                       |  |  | 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 |  |                       |  | 6   |                       |  |  | 7   | 
|SMBC Aviation Capital Limited                   |  |          | Airbus A321 |  |                       |  | 2   |                       |  |  | 2   | 
|Sunflower Aircraft Leasing Limited              |  |          | Airbus A320 |  |                       |  |    |                       |  |  | 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 |  |                       |  | 7   |                       |  |  | 7   | 
|Wells Fargo Bank Northwest National Association |  |          | Airbus A330 |  |                       |  |    |                       |  |  | 2   | 
|Wells Fargo Bank Northwest National Association |  |          | Boeing 767  |  |                       |  | 3   |                       |  |  | 3   | 
|Wells Fargo Bank Northwest National Association |  |          | Boeing 777  |  |                       |  | 6   |                       |  |  | 6   | 
|Wells Fargo Bank Northwest National Association |  |          | Boeing 787  |  |                       |  | 11  |                       |  |  | 7   | 
|Wells Fargo Bank Northwest National Association |  |          | Airbus A350 |  |                       |  | 2   |                       |  |  |    | 
|Wilmington Trust Company                        |  |          | Airbus A319 |  |                       |  | 1   |                       |  |  | 1   | 
|                                                |  |          |             |  |                       |  |     |                       |  |  |     | 
|Total                                           |  |          |             |  |                       |  | 111 |                       |  |  | 106 | 
|                                                |  |          |             |  |                       |  |     |                       |  |  |     | 

The rentals are shown in results for the period for which they are incurred.



F-129



---

##### Table of Contents

The minimum future lease payments not yet payable are the following:



|                           |  |                       |           |  |                       |  |           | 
|-------------------------- |  | --------------------- | --------- |  | --------------------- |  | --------- | 
|                           |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2015 | 
|                           |  | ThUS$                 |           |  | ThUS$                 | 
|No later than one year     |  |                       | 533,319   |  |                       |  | 513,748   | 
|Between one and five years |  |                       | 1,459,362 |  |                       |  | 1,281,454 | 
|Over five years            |  |                       | 1,262,509 |  |                       |  | 858,095   | 
|                           |  |                       |           |  |                       |  |           | 
|Total                      |  |                       | 3,255,190 |  |                       |  | 2,653,297 | 
|                           |  |                       |           |  |                       |  |           | 

The minimum lease payments charged to income are the following:



|                                 |  |                                  |         |  |       |  |         |       |  |  |         | 
|-------------------------------- |  | -------------------------------- | ------- |  | ----- |  | ------- | ----- |  |  | ------- | 
|                                 |  | For the period endedDecember 31, |        
|                                 |  | 2016                             |         |  | 2015  |  |         | 2014  | 
|                                 |  | ThUS$                            |         |  | ThUS$ |  |         | ThUS$ | 
|Minimum operating lease payments |  |                                  | 568,979 |  |       |  | 525,134 |       |  |  | 521,384 | 
|                                 |  |                                  |         |  |       |  |         |       |  |  |         | 
|Total                            |  |                                  | 568,979 |  |       |  | 525,134 |       |  |  | 521,384 | 
|                                 |  |                                  |         |  |       |  |         |       |  |  |         | 

In 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. In 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. In 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. In the fourth quarter of
2015, one Airbus A330-200 aircraft was returned.

In the first quarter of 2016, two Boeing 787-9 aircraft were leased for a period of twelve years each.
On the other hand and one Airbus A320-200 aircraft was returned. In the second quarter of 2016, three Airbus A321-200 aircraft were leased for a period of ten years each and two Boeing 787-9 aircraft were leased for a period of twelve years each. On
the other hand, one Airbus A320-200 aircraft and one Boeing 767-300ER aircraft were returned. In the third quarter of 2016, three Airbus A321-200 aircraft and one Airbus A320- NEO aircraft were leased for a period of ten years each, and one Airbus
A350-900 aircraft was leased for a period of twelve years. On the other hand and one Airbus A320-200 aircraft was returned. In the fourth quarter of 2016, one Airbus A350-900 aircraft was leased for a period of twelve years and one Airbus A321-200
aircraft was leased for a period of ten years. On the other hand, three Airbus A320-200 aircraft and two Airbus A330-200 aircraft were returned.

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.



F-130



---

##### Table of Contents

At December 31, 2016 the Company has existing letters of credit related to operating leasing as follows:



|                                     |  |                            |  |                        |  |            |         |  |              |  |              | 
|------------------------------------ |  | -------------------------- |  | ---------------------- |  | ---------- | ------- |  | ------------ |  | ------------ | 
|Creditor Guarantee                   |  | Debtor                     |  | Type                   |  | ValueThUS$ |         |  | Release date | 
|GE Capital Aviation Services Limited |  | Lan Cargo S.A.             |  | Two letter of credit   |  |            | 7,530   |  |              |  | Sep 17, 2017 | 
|Wells Fargo Bank North N.A.          |  | Lan Cargo S.A.             |  | One letter of credit   |  |            | 5,000   |  |              |  | May 25, 2017 | 
|Bank of America                      |  | LAT AM Airlines Group S.A. |  | Three letter of credit |  |            | 1,044   |  |              |  | Jul 2, 2017  | 
|Engine Lease Finance Corporation     |  | LAT AM Airlines Group S.A. |  | One letter of credit   |  |            | 4,750   |  |              |  | Oct 8, 2017  | 
|GE Capital Aviation Services Ltd.    |  | LAT AM Airlines Group S.A. |  | Eight letter of credit |  |            | 34,665  |  |              |  | Feb 7, 2017  | 
|International Lease Finance Corp     |  | LAT AM Airlines Group S.A. |  | Three letter of credit |  |            | 1,450   |  |              |  | Feb 4, 2017  | 
|ORIX Aviation Systems Limited        |  | LAT AM Airlines Group S.A. |  | One letter of credit   |  |            | 3,255   |  |              |  | Aug 31, 2017 | 
|SMBC Aviation Capital Ltd.           |  | LAT AM Airlines Group S.A. |  | Two letter of credit   |  |            | 13,569  |  |              |  | Aug 14, 2017 | 
|Wells Fargo Bank                     |  | LAT AM Airlines Group S.A. |  | Nine letter of credit  |  |            | 15,160  |  |              |  | Feb 8, 2017  | 
|CIT Aerospace International          |  | Tam Linhas Aéreas S.A.     |  | One letter of credit   |  |            | 6,000   |  |              |  | Oct 25, 2017 | 
|RBS Aerospace Limited                |  | Tam Linhas Aéreas S.A.     |  | One letter of credit   |  |            | 13,096  |  |              |  | Jan 29, 2017 | 
|Wells Fargo Bank North N.A.          |  | Tam Linhas Aéreas S.A.     |  | One letter of credit   |  |            | 5,500   |  |              |  | Jul 14, 2017 | 
|                                     |  |                            |  |                        |  |            |         |  |              |  |              | 
|                                     |  |                            |  |                        |  |            | 111,019 |  |              |  |              | 
|                                     |  |                            |  |                        |  |            |         |  |              |  |              | 



|(c) | Other commitments
|--- | -----------------

At December 31, 2016 the Company has existing letters of credit, certificates of
deposits and warranty insurance policies as follows:



|                                                                    |  |                                          |  |                                  |  |             |         |  |              |  |              | 
|------------------------------------------------------------------- |  | ---------------------------------------- |  | -------------------------------- |  | ----------- | ------- |  | ------------ |  | ------------ | 
|Creditor Guarantee                                                  |  | Debtor                                   |  | Type                             |  | ValueThUS $ |         |  | Release date | 
|Servicio Nacional de Aduana del Ecuador                             |  | Líneas Aéreas Nacionales delEcuador S.A. |  | Four letter of credit            |  |             | 1,705   |  |              |  | Aug 5, 2017  | 
|Corporación Peruana de Aeropuertos y Aviación Comercial             |  | Lan Perú S.A.                            |  | Six letter of credit             |  |             | 3,813   |  |              |  | Jan 31, 2017 | 
|Lima Airport Partners S.R.L.                                        |  | Lan Perú S.A.                            |  | Twenty two letter of credit      |  |             | 3,805   |  |              |  | Mar 3, 2017  | 
|Superintendencia Nacional de Aduanas y de Administración Tributaria |  | Lan Perú S.A.                            |  | Four letter of credit            |  |             | 33,500  |  |              |  | Mar 20, 2017 | 
|Aena Aeropuertos S.A.                                               |  | LATAM Airlines Group S.A.                |  | Four letter of credit            |  |             | 2,014   |  |              |  | Nov 15, 2017 | 
|American Alternative Insurance Corporation                          |  | LATAM Airlines Group S.A.                |  | Six letter of credit             |  |             | 3,490   |  |              |  | Apr 5, 2017  | 
|Deutsche Bank A.G.                                                  |  | LATAM Airlines Group S.A.                |  | One letter of credit             |  |             | 30,000  |  |              |  | Mar 31, 2017 | 
|Dirección General de Aeronáutic a Civil                             |  | LATAM Airlines Group S.A.                |  | Fifty two letter of credit       |  |             | 18,477  |  |              |  | Jan 31, 2017 | 
|Empresa Pública de Hidrocarburos del Ecuador EP Petroecuador        |  | LATAM Airlines Group S.A.                |  | One letter of credit             |  |             | 5,500   |  |              |  | Jun 17, 2017 | 
|JP Morgan Chase                                                     |  | LATAM Airlines Group S.A.                |  | One letter of credit             |  |             | 10,000  |  |              |  | Jun 17, 2017 | 
|Metropolitan Da de County                                           |  | LATAM Airlines Group S.A.                |  | Ten letter of credit             |  |             | 2,553   |  |              |  | Mar 13, 2017 | 
|The Royal Bank of Scotland plc                                      |  | LATAM Airlines Group S.A.                |  | One letter of credit             |  |             | 5,000   |  |              |  | May 20, 2017 | 
|4a Vara Mista de Bayeux                                             |  | Tam Linhas Aéreas S.A.                   |  | One insurance policies guarantee |  |             | 1,060   |  |              |  | Mar 25, 2021 | 
|6a Vara Federal da Subseção                                         |  | Tam Linhas Aéreas S.A.                   |  | Two insurance policies guarantee |  |             | 24,969  |  |              |  | Jan 4, 2018  | 
|8a Vara Federal da Subseção de Campinas SP                          |  | Tam Linhas Aéreas S.A.                   |  | One insurance policies guarantee |  |             | 12,894  |  |              |  | May 19, 2020 | 
|Conselho Administrativo de Conselhos Federais                       |  | Tam Linhas Aéreas S.A.                   |  | One insurance policies guarantee |  |             | 6,704   |  |              |  | Oct 20, 2021 | 
|Fundação de Proteão de Defesa do Consumidor Procon                  |  | Tam Linhas Aéreas S.A.                   |  | Two insurance policies guarantee |  |             | 3,276   |  |              |  | Jan 21, 2021 | 
|Uniã o Federal Vara Comarc a de DF                                  |  | Tam Linhas Aéreas S.A.                   |  | Two insurance policies guarantee |  |             | 2,696   |  |              |  | Nov 9, 2020  | 
|Uniã o Federal Vara Comarc a de SP                                  |  | Tam Linhas Aéreas S.A.                   |  | One insurance policies guarantee |  |             | 19,557  |  |              |  | Feb 22, 2021 | 
|                                                                    |  |                                          |  |                                  |  |             |         |  |              |  |              | 
|                                                                    |  |                                          |  |                                  |  |             | 191,013 |  |              |  |              | 
|                                                                    |  |                                          |  |                                  |  |             |         |  |              |  |              | 



F-131



---

##### Table of Contents

NOTE 33TRANSACTIONS WITH RELATED PARTIES



|(a) | Details of transactions with related parties as follows:
|--- | --------------------------------------------------------



|             |  |                                                     |  |                            |  |           |  |                                                           |  |          |  |                                                          |        |   |       |  |        |       |  |  |      |  
|------------ |  | --------------------------------------------------- |  | -------------------------- |  | --------- |  | --------------------------------------------------------- |  | -------- |  | -------------------------------------------------------- | ------ | - | ----- |  | ------ | ----- |  |  | ---- | -
|             |  |                                                     |  | Nature ofrelationship with |  | Country   |  | Nature ofrelated parties                                  |  |          |  | Transaction amountwith related partiesAs of December 31, |       
|Tax No.      |  | Related party                                       |  | related parties            |  | of origin |  | transactions                                              |  | Currency |  | 2016                                                     |        |   | 2015  |  |        | 2014  | 
|             |  |                                                     |  |                            |  |           |  |                                                           |  |          |  | ThUS$                                                    |        |   | ThUS$ |  |        | ThUS$ | 
|96.810.370-9 |  | Inversiones Costa Verde Ltda. yCPA.                 |  | Related director           |  | Chile     |  | Tickets sales                                             |  | CLP      |  |                                                          | 6      |   |       |  | 15     |       |  |  | 31   |  
|96.847.880-K |  | Technical Training Latam S.A.                       |  | Associate (*)              |  | Chile     |  | Leases as lessor                                          |  | CLP      |  |                                                          |       |   |       |  |       |       |  |  | 209  |  
|             |  |                                                     |  |                            |  |           |  | Training services received                                |  | CLP      |  |                                                          |       |   |       |  |       |       |  |  | (785 | )
|             |  |                                                     |  |                            |  |           |  | Training services received                                |  | US $     |  |                                                          |       |   |       |  |       |       |  |  | (743 | )
|65.216.000-K |  | Comunidad Mujer                                     |  | Related director           |  | Chile     |  | Services provided for advertising                         |  | CLP      |  |                                                          | (12    | ) |       |  | (10    | )     |  |  | (11  | )
|             |  |                                                     |  |                            |  |           |  | Tickets sales                                             |  | CLP      |  |                                                          | 9      |   |       |  | 2      |       |  |  | 9    |  
|78.591.370-1 |  | Bethia S.A and subsidiaries                         |  | Related director           |  | Chile     |  | Services received of cargo transport                      |  | CLP      |  |                                                          | (394   | ) |       |  | (259   | )     |  |  | (646 | )
|             |  |                                                     |  |                            |  |           |  | Services received from National and International Courier |  | CLP      |  |                                                          | (285   | ) |       |  | (227   | )     |  |  | (496 | )
|             |  |                                                     |  |                            |  |           |  | Services provided of cargo transport                      |  | CLP      |  |                                                          | 192    |   |       |  | 30     |       |  |  |     |  
|             |  |                                                     |  |                            |  |           |  | Other services received                                   |  | CLP      |  |                                                          |       |   |       |  |       |       |  |  | (10  | )
|65.216.000-K |  | Viajes Falabella Ltda.                              |  | Related director           |  | Chile     |  | Sales commissions                                         |  | CLP      |  |                                                          | (727   | ) |       |  | (50    | )     |  |  |     |  
|79.773.440-3 |  | Transportes San Felipe S.A                          |  | Related director           |  | Chile     |  | Services received of transfer of passengers               |  | CLP      |  |                                                          | (84    | ) |       |  | (127   | )     |  |  | (70  | )
|             |  |                                                     |  |                            |  |           |  | Tickets sales                                             |  | CLP      |  |                                                          | 3      |   |       |  | 7      |       |  |  | 26   |  
|87.752.000-5 |  | Granja Marina Tornagaleones S.A.                    |  | Common shareholder         |  | Chile     |  | Tickets sales                                             |  | CLP      |  |                                                          | 76     |   |       |  | 117    |       |  |  | 155  |  
|Foreign      |  | Consultoría Administrativa Profesional S.A. de C.V. |  | Associate                  |  | Mexico    |  | Professional counseling services received                 |  | MXN      |  |                                                          | (2,563 | ) |       |  | (1,191 | )     |  |  |     |  
|Foreign      |  | Inversora Aeronáutica Argentina                     |  | Related director           |  | Argentina |  | Leases as lessor                                          |  | ARS      |  |                                                          | (264   | ) |       |  | (269   | )     |  |  | (334 | )
|             |  |                                                     |  |                            |  |           |  | Revenue billboard advertising maintaining                 |  | US $     |  |                                                          |       |   |       |  | 1      |       |  |  | 12   |  
|Foreign      |  | TAM Aviação Executiva e Taxi Aéreo S/A              |  | Related director           |  | Brazil    |  | Services provided by sale of tickets                      |  | BRL      |  |                                                          | 2      |   |       |  | 2      |       |  |  |     |  
|             |  |                                                     |  |                            |  |           |  | Services provided of cargo transport                      |  | BRL      |  |                                                          | (122   | ) |       |  | (63    | )     |  |  | (12  | )
|             |  |                                                     |  |                            |  |           |  | Services received at airports                             |  | BRL      |  |                                                          | 7      |   |       |  | 5      |       |  |  |     |  
|Foreign      |  | Prismah Fidelidade S.A.                             |  | Joint Venture              |  | Brazil    |  | Professional counseling servies received                  |  | BRL      |  |                                                          |       |   |       |  |       |       |  |  | (119 | )
|Foreign      |  | Made In Everywhere                                  |  |                            |  |           |  |                                                           |  |          |  |                                                          |        |   |       |  |        |       |  |  |      |  
|             |  | Repr. Com. Distr. Ltda.                             |  | Related director           |  | Brazil    |  | Services received of transport                            |  | BRL      |  |                                                          |       |   |       |  |       |       |  |  | (2   | )



|(*) | Subsidiary from October, 2014
|--- | -----------------------------



F-132



---

##### Table of Contents

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.



|(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 (Senior).



|                      |  |       |        |  |                                      |  |        |       |  |  |        | 
|--------------------- |  | ----- | ------ |  | ------------------------------------ |  | ------ | ----- |  |  | ------ | 
|                      |  | 2016  |        |  | For the period endedDecember 31,2015 |  |        | 2014  | 
|                      |  | ThUS$ |        |  | ThUS$                                |  |        | ThUS$ | 
|Remuneration          |  |       | 16,514 |  |                                      |  | 17,185 |       |  |  | 19,507 | 
|Management fees       |  |       | 556    |  |                                      |  | 547    |       |  |  | 1,213  | 
|Non-monetary benefits |  |       | 778    |  |                                      |  | 864    |       |  |  | 990    | 
|Short-term benefits   |  |       | 23,459 |  |                                      |  | 19,814 |       |  |  |       | 
|Share-based payments  |  |       | 8,085  |  |                                      |  | 10,811 |       |  |  | 16,086 | 
|                      |  |       |        |  |                                      |  |        |       |  |  |        | 
|Total                 |  |       | 49,392 |  |                                      |  | 49,221 |       |  |  | 37,796 | 
|                      |  |       |        |  |                                      |  |        |       |  |  |        | 

NOTE 34SHARE-BASED PAYMENTS



|(a) | Compensation plan for increase of capital
|--- | -----------------------------------------

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
|----- | ----------------------

On December 21, 2016, the subscription and payment period of the 4,800,000 shares
corresponding to the compensation plan approved at the Extraordinary Shareholders Meeting held on December 21, 2011, expired.



F-133



---

##### Table of Contents

Of the total shares allocated to the 2011 Compensation Plan, only 10,282 shares were subscribed and paid, having
been placed on the market in January 2014. In view of the above, at the expiration date, the 2011 Compensation Plan had a balance of 4,789,718 shares pending of subscription and payment, which was deducted from the authorized capital of the Company.



|                                                                              |  |                       |            |  
|----------------------------------------------------------------------------- |  | --------------------- | ---------- | -
|                                                                              |  | Number ofshareoptions |           
|Share options in agreements of share-based payments, as of January 1, 2015    |  |                       | 4,202,000  |  
|Share options granted                                                         |  |                       | 406,000    |  
|Share options cancelled                                                       |  |                       | (90,000    | )
|                                                                              |  |                       |            |  
|Share options in agreements of share-based payments, as of December 31, 2015  |  |                       | 4,518,000  |  
|                                                                              |  |                       |            |  
|Share options in agreements of share-based payments, as of January 1, 2016    |  |                       | 4,518,000  |  
|Executives resign options (*)                                                 |  |                       | (4,172,000 | )
|Share options expired                                                         |  |                       | (346,000   | )
|                                                                              |  |                       |            |  
|Share options in agreements of share- based payments, as of December 31, 2016 |  |                       |           |  
|                                                                              |  |                       |            |  

These options was valued and recorded at fair value at the grant date, determined by the Black-Scholes-Merton. The
effect on income to December 2016 corresponds to ThUS$ 2,989 (ThUS$ 10,811 at December 31, 2015).



|(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.



|(b) | Compensation plan 2016-2018
|--- | ---------------------------

The Company implemented a retention plan long-term for executives, which lasts
until December 2018, with a vesting period between October 2018 and March 2019, which consists of an extraordinary bonus whose calculation formula is based on the variation the value to experience the action of LATAM Airlines Group S.A. for a period
of time.

This benefit is recognized in accordance with the provisions of IFRS 2 Share-based Payments and has been considered as cash settled
award and therefore recorded at fair value as a liability, which is updated to the closing date of each financial statement with effect on profit or loss.



|                                          |  |                   |           | 
|----------------------------------------- |  | ----------------- | --------- | 
|                                          |  | Unit basesgranted |          
|Units bases, balance at December 31, 2016 |  |                   | 4,719,720 | 
|                                          |  |                   |           | 



F-134



---

##### Table of Contents

The fair value has been determined on the basis of the best estimate of the future value of the Company share
multiplied by the number of units granted bases.

At December 31, 2016, the carrying amount of ThUS$ 4,442, is classified under Administrative
expenses in the Consolidated Statement of Income by Function.



|(c) | Subsidiaries compensation plans
|--- | -------------------------------



|(c.1) | Stock Options
|----- | -------------

TAM Linhas Aereas S.A. and Multiplus S.A., both subsidiaries of TAM S.A., have outstanding
stock options at December 31, 2016, which amounted to 96,675 shares and 394,698 shares, respectively (at December 31, 2015, the distribution of outstanding stock options amounted to 394,698 for Multiplus S.A. and 96,675 shares TAM Linhas
Aéreas S.A.).



|                                               |  |            |        |  |        |  |        | 
|---------------------------------------------- |  | ---------- | ------ |  | ------ |  | ------ | 
|T AM Linhas Aéreas S.A.                        |  |            |        |  |        | 
|                                               |  | 4th Grant  |        |  |        | 
|Description                                    |  | 05-28-2010 |        |  | T otal | 
|Outstanding option number as December 31, 2015 |  |            | 96,675 |  |        |  | 96,675 | 
|Outstanding option number as December 31, 2016 |  |            | 96,675 |  |        |  | 96,675 | 



|                                               |  |            |         |  |            |  |         |                        |  |  |         |  |  |  |         | 
|---------------------------------------------- |  | ---------- | ------- |  | ---------- |  | ------- | ---------------------- |  |  | ------- |  |  |  | ------- | 
|Multiplus S.A.                                 |  |            |         |  |            |  |         |                        |  |  |         | 
|                                               |  | 3rd Grant  |         |  | 4th Grant  |  |         | 4nd ExtraordinaryGrant |  |  |         | 
|Description                                    |  | 03-21-2012 |         |  | 04-03-2013 |  |         | 11-20-2013             |  |  | Total   | 
|Outstanding option number as December 31, 2015 |  |            | 102,621 |  |            |  | 255,995 |                        |  |  | 159,891 |  |  |  | 518,507 | 
|Outstanding option number as December 31, 2016 |  |            | 84,249  |  |            |  | 173,399 |                        |  |  | 137,050 |  |  |  | 394,698 | 

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.



F-135



---

##### Table of Contents

The acquisition of the shares rights, in both companies is as follows:



|                       |  |                                 |   |  |                                     |  |   |                       |  |  |                       |  |  |  |         | 
|---------------------- |  | ------------------------------- | - |  | ----------------------------------- |  | - | --------------------- |  |  | --------------------- |  |  |  | ------- | 
|                       |  | Number of sharesAccrued options |   |  | Number of sharesNon accrued options | 
|Company                |  | As ofDecember 31,2016           |   |  | As ofDecember 31,2015               |  |   | As ofDecember 31,2016 |  |  | As ofDecember 31,2015 | 
|TAM Linhas Aéreas S.A. |  |                                 |  |  |                                     |  |  |                       |  |  | 96,675                |  |  |  | 96,675  | 
|Multiplus S.A.         |  |                                 |  |  |                                     |  |  |                       |  |  | 394,698               |  |  |  | 518,507 | 

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-Merton method, where the cases were updated with information LATAM Airlines Group S.A. There is
no value recorded in liabilities and in income at December 31, 2016 (at December 31, 2015 not exist value recorded in liabilities and in incomes).



|(c.2) | Payments based on restricted stock
|----- | ----------------------------------

In May of 2014 the Management Council of Multiplus S.A. approved a plan to
grant restricted stock, a total of 91,103 ordinary, registered book entry securities with no face value, issued by the Company to beneficiaries.

The
quantity of restricted stock units was calculated based on employees expected remunerations divided by the average price of shares in Multiplus S.A. traded on the BM&F Bovespa exchange in the month prior to issue, April of 2014. This
benefits plan will only grant beneficiaries the right to the restricted stock when the following conditions have been met:

a. Compliance with the
performance goal defined by this Council of Administration as return on Capital Invested.

b. The Beneficiary must remain as an administrator or employee
of the Company for the period running from the date of issue to the following dates described, in order to obtain rights over the following fractions: (i) 1/3 (one third) after the 2nd year from the issue date; (ii) 1/3 (one third) after
the 3rd year from the issue date; (iii) 1/3 (one third) after the 4th year from the issue date.

Number shares in circulation



|                                    |  |                |         |  |         |  |         |           |  |  |                                                             |   |  |                |         |   |  |  |         | 
|----------------------------------- |  | -------------- | ------- |  | ------- |  | ------- | --------- |  |  | ----------------------------------------------------------- | - |  | -------------- | ------- | - |  |  | ------- | 
|                                    |  | Openingbalance |         |  | Granted |  |         | Exercised |  |  | Not acquired due tobreach of employmentretention conditions |   |  | Closingbalance |        
|From January 1 to December 31, 2015 |  |                | 91,103  |  |         |  | 119,731 |           |  |  |                                                            |   |  |                | (34,924 | ) |  |  | 175,910 | 
|From January 1 to December 31, 2016 |  |                | 175,910 |  |         |  | 138,282 |           |  |  | (15,811                                                     | ) |  |                | (60,525 | ) |  |  | 237,856 | 



F-136



---

##### Table of Contents

NOTE 35STATEMENT OF CASH FLOWS

(a) The Company has done significant non-cash transactions mainly with financial leases, which are detailed in Note 17 letter (d), additional information in
numeral (iv) Financial leases.



|(b) | Other inflows (outflows) of cash:
|--- | ---------------------------------



|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  
|---------------------------------------------- |  | ---------------------------------- | -------- | - | ----- |  | -------- | ----- |  |  | -------- | -
|                                               |  | For the periods ended
December 31, |         
|                                               |  | 2016                               |          |   | 2015  |  |          | 2014  | 
|                                               |  | ThUS$                              |          |   | ThUS$ |  |          | ThUS$ | 
|Hedging margin guarantees                      |  |                                    | 1,184    |   |       |  | 87,842   |       |  |  | (64,334  | )
|Change reservation systems                     |  |                                    |         |   |       |  | 11,000   |       |  |  |         |  
|Bank commissions, taxes paid and other         |  |                                    | (769     | ) |       |  | (5,137   | )     |  |  | (47,724  | )
|SEC agreement                                  |  |                                    | (4,719   | ) |       |  |         |       |  |  |         |  
|Fuel derivatives premiums                      |  |                                    | (6,840   | ) |       |  | (20,932  | )     |  |  | (7,075   | )
|Tax paid on bank transaction                   |  |                                    | (10,668  | ) |       |  | (7,176   | )     |  |  |         |  
|DOJ fine                                       |  |                                    | (12,750  | ) |       |  |         |       |  |  |         |  
|Court deposits                                 |  |                                    | (33,635  | ) |       |  | (6,314   | )     |  |  |         |  
|Currency hedge                                 |  |                                    | (39,534  | ) |       |  | 1,802    |       |  |  | (1,153   | )
|Fuel hedge                                     |  |                                    | (50,029  | ) |       |  | (243,587 | )     |  |  | (45,365  | )
|Guarantees                                     |  |                                    | (51,559  | ) |       |  | (2,125   | )     |  |  | (86,006  | )
|Others                                         |  |                                    | 50       |   |       |  |         |       |  |  |         |  
|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  
|Total Other inflows (outflows) Operation flow  |  |                                    | (209,269 | ) |       |  | (184,627 | )     |  |  | (251,657 | )
|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  
|Recovery loans convertible into shares         |  |                                    | 8,896    |   |       |  | 20,000   |       |  |  |         |  
|Certificate of bank deposits                   |  |                                    |         |   |       |  | 3,497    |       |  |  | (17,399  | )
|Tax paid on bank transaction                   |  |                                    | (3,716   | ) |       |  | (12,921  | )     |  |  |         |  
|Others                                         |  |                                    | (4,337   | ) |       |  |         |       |  |  |         |  
|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  
|Total Other inflows (outflows) Investment flow |  |                                    | 843      |   |       |  | 10,576   |       |  |  | (17,399  | )
|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  
|Credit card loan manager                       |  |                                    |         |   |       |  | 3,227    |       |  |  | 23,864   |  
|Early redemption of bonds TAM 2020             |  |                                    |         |   |       |  | (15,328  | )     |  |  |         |  
|Guarantees bonds emission                      |  |                                    |         |   |       |  | (26,111  | )     |  |  |         |  
|Settlement of derivative contracts             |  |                                    | (29,828  | ) |       |  | (35,891  | )     |  |  | (42,962  | )
|Loan guarantee                                 |  |                                    | (74,186  | ) |       |  |         |       |  |  |         |  
|Aircraft Financing advances                    |  |                                    | (125,149 | ) |       |  | (28,144  | )     |  |  | 8,669    |  
|Others                                         |  |                                    |         |   |       |  | 2,490    |       |  |  | (3,348   | )
|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  
|Total Other inflows (outflows) Financing flow  |  |                                    | (229,163 | ) |       |  | (99,757  | )     |  |  | (13,777  | )
|                                               |  |                                    |          |   |       |  |          |       |  |  |          |  



|(c) | Dividends:
|--- | ----------



|                         |  |                                    |         |   |       |  |         |       |  |  |         |  
|------------------------ |  | ---------------------------------- | ------- | - | ----- |  | ------- | ----- |  |  | ------- | -
|                         |  | For the periods ended
December 31, |        
|                         |  | 2016                               |         |   | 2015  |  |         | 2014  | 
|                         |  | ThUS$                              |         |   | ThUS$ |  |         | ThUS$ | 
|Multiplus S.A            |  |                                    | (40,823 | ) |       |  | (34,632 | )     |  |  | (34,962 | )
|Lan Perú S.A             |  |                                    | (400    | ) |       |  | (400    | )     |  |  | (400    | )
|                         |  |                                    |         |   |       |  |         |       |  |  |         |  
|Total dividends paid (*) |  |                                    | (41,223 | ) |       |  | (35,032 | )     |  |  | (35,362 | )
|                         |  |                                    |         |   |       |  |         |       |  |  |         |  



|(*) | Dividends paid to minority shareholders
|--- | ---------------------------------------



F-137



---

##### Table of Contents

NOTE 36 - 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 under the following pillars:



|i. | Carbon Footprint
|-- | ----------------

|ii. | Eco-Efficiency
|--- | --------------

|iii. | Sustainable Alternative Energy
|---- | ------------------------------

|iv. | Standards and Certifications
|--- | ----------------------------

For 2016, were established the following topics:



|1. | Advance in the implementation of an Environmental Management System;
|-- | --------------------------------------------------------------------

|2. | Manage the Carbon Footprint of our emissions by ground operations;
|-- | ------------------------------------------------------------------

|3. | Corporate Risk Management;
|-- | --------------------------

|4. | Corporate strategy to meet the global target of aviation to have a carbon neutral growth by 2020.
|-- | -------------------------------------------------------------------------------------------------

Thus,
during 2016, we have worked in the following initiatives:



| |  |  | Advance in the implementation of an Environmental Management System for main operations of the Company, with an emphasis on Santiago. It is highlighted that the company during 2016 has recertified a certified management
system, under ISO 14.001 at its facility in Miami.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Certification of stage 2 of IATA Environmental Assestment (IEnvA), the most advanced of this certification, 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Answer to the Dow Jones Sustainability Index 2016 questionnaire, which the company responds annually.
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Measurement and external verification of the Corporate Carbon Footprint.
| | - |  | ------------------------------------------------------------------------

It is highlighted that in the 2016
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.



F-138



---

##### Table of Contents

NOTE 37 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS

On January 18, 2017, the Company was notified of a civil suit filed by Inversiones Ranco Tres S.A., represented by Mr. Jorge Enrique Said Yarur
against LATAM Airlines Group S.A., for supposed non-compliance of contractual obligations from the social contract of the Company, as well as the directors Ramón Eblen Kadiz, Jorge Awad Mehech, Juan Jose Cueto Plaza and main executives of the
Company, Enrique Cueto Plaza and Ignacio Cueto Plaza, for the supposed noncompliance of their duties as directors and main executives of the Company. LATAM has hired specialist lawyers to answer the lawsuit. On March 10, 2017, the Court
rejected the dilatory exceptions presented by LATAM.

On March 8th, 2017, LATAM received a third Requirement of Information from the Central-North
Metropolitan Region Prosecutors Office requesting information relating to the investigation of payments made by Lan Airlines S.A. to a consultant advising it on the solution to labor matters in Argentina in the years 2006-2007.

Subsequent at December 31, 2016 until the date of issuance of these financial statements, there is no knowledge of financial facts or otherwise, that
could significantly affect the balances or interpretation thereof.

LATAM Airlines Group S.A. and Subsidiaries consolidated financial statements as
at December 31, 2016, have been approved by the Board of Directors in an extraordinary meeting held on March 
15, 2017.

NOTE 38 - CONSOLIDATION SCHEDULE

In accordance with SEC rule SX 3-10 the Company is presenting consolidation schedules as Senior Notes issued by TAM Capital (issuer), a 100% subsidiary of TAM
S.A., in 2007 are fully and unconditionally guaranteed by TAM S.A (guarantor) and by TAM Linhas Aéreas (guarantor) which is also a 100% subsidiary of TAM S.A.. The consolidation schedules separately present the financial information for LATAM
Airlines Group S.A. (parent company), TAM S.A. (guarantor), TAM Linhas Aéreas S.A. (guarantor) and other consolidated subsidiaries of LATAM Airlines Group S.A. (non-guarantors).



F-139



---

##### Table of Contents

|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|--------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- |  | --------------------- |  | ------- | ------------------------------ |  |  | -------------------------------- |  |  | --------------------- | --------- |  | ------------------------ |  | --------- | --------------------- |  |  | ---------- | - |  |  | ---------- | 
|                                                                                                    |  | LATAM S.A.(parent company) |            |  | TAM S.A.(guarantor)   |  |         | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |  |  | Other(non-guarantor)  |           |  | Consolidatingadjustments |  |           | Consolidated          | 
|                                                                                                    |  | As ofDecember 31,2016      |            |  | As ofDecember 31,2016 |  |         | As ofDecember 31,2016          |  |  | As ofDecember 31,2016            |  |  | As ofDecember 31,2016 |           |  | As ofDecember 31,2016    |  |           | As ofDecember 31,2016 | 
|                                                                                                    |  | ThUS$                      |            |  | ThUS$                 |  |         | ThUS$                          |  |  | ThUS$                            |  |  | ThUS$                 |           |  | ThUS$                    |  |           | ThUS$                 | 
|Assets                                                                                              |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Current assets                                                                                      |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Cash and cash equivalents                                                                           |  |                            | 585,754    |  |                       |  | 11,170  |                                |  |  | 2                                |  |  |                       | 104,676   |  |                          |  | 247,725   |                       |  |  |           |   |  |  | 949,327    | 
|Other financial assets                                                                              |  |                            | 9,770      |  |                       |  | 17,626  |                                |  |  |                                 |  |  |                       | 227,141   |  |                          |  | 751,960   |                       |  |  | (293,669   | ) |  |  | 712,828    | 
|Other non-financial assets                                                                          |  |                            | 67,456     |  |                       |  | 65      |                                |  |  |                                 |  |  |                       | 83,701    |  |                          |  | 60,051    |                       |  |  | 969        |   |  |  | 212,242    | 
|Trade and other accounts receivable                                                                 |  |                            | 385,969    |  |                       |  | 4,612   |                                |  |  |                                 |  |  |                       | 420,788   |  |                          |  | 301,283   |                       |  |  | (4,763     | ) |  |  | 1,107,889  | 
|Accounts receivable from related entities                                                           |  |                            | 531,372    |  |                       |  | 1,284   |                                |  |  |                                 |  |  |                       | 183,751   |  |                          |  | 607,980   |                       |  |  | (1,323,833 | ) |  |  | 554        | 
|Inventories                                                                                         |  |                            | 115,963    |  |                       |  |        |                                |  |  |                                 |  |  |                       | 121,062   |  |                          |  | 4,339     |                       |  |  | (1         | ) |  |  | 241,363    | 
|Tax assets                                                                                          |  |                            | 15,581     |  |                       |  | 5,918   |                                |  |  |                                 |  |  |                       | 4,776     |  |                          |  | 39,103    |                       |  |  | (1         | ) |  |  | 65,377     | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total current assets other than non-current assets (or disposal groups) classified as held for
sale |  |                            | 1,711,865  |  |                       |  | 40,675  |                                |  |  | 2                                |  |  |                       | 1,145,895 |  |                          |  | 2,012,441 |                       |  |  | (1,621,298 | ) |  |  | 3,289,580  | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Non-current assets and disposal groups held for sale                                                |  |                            | 261,798    |  |                       |  |        |                                |  |  |                                 |  |  |                       | 33,140    |  |                          |  | 31,673    |                       |  |  | 10,584     |   |  |  | 337,195    | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total current assets                                                                                |  |                            | 1,973,663  |  |                       |  | 40,675  |                                |  |  | 2                                |  |  |                       | 1,179,035 |  |                          |  | 2,044,114 |                       |  |  | (1,610,714 | ) |  |  | 3,626,775  | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Non-current assets                                                                                  |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Other financial assets                                                                              |  |                            | 81,785     |  |                       |  | 476,175 |                                |  |  |                                 |  |  |                       | 332,647   |  |                          |  | 2,001     |                       |  |  | (790,483   | ) |  |  | 102,125    | 
|Other non-financial assets                                                                          |  |                            | 120,467    |  |                       |  | 53      |                                |  |  |                                 |  |  |                       | 198,059   |  |                          |  | 24,903    |                       |  |  | (106,138   | ) |  |  | 237,344    | 
|Accounts receivable                                                                                 |  |                            | 5,111      |  |                       |  |        |                                |  |  |                                 |  |  |                       | 4         |  |                          |  | 3,139     |                       |  |  |           |   |  |  | 8,254      | 
|Accounts receivable from related parties                                                            |  |                            | 507,234    |  |                       |  |        |                                |  |  | 408,628                          |  |  |                       | 64,311    |  |                          |  | 859,387   |                       |  |  | (1,839,560 | ) |  |  |           | 
|Equity accounted investments                                                                        |  |                            | 1,112,426  |  |                       |  | 14,143  |                                |  |  |                                 |  |  |                       |          |  |                          |  | 375,774   |                       |  |  | (1,502,343 | ) |  |  |           | 
|Intangible assets other than goodwill                                                               |  |                            | 143,009    |  |                       |  | 38,332  |                                |  |  |                                 |  |  |                       | 1,063,917 |  |                          |  | 365,054   |                       |  |  | 1          |   |  |  | 1,610,313  | 
|Goodwill                                                                                            |  |                            | 2,621,493  |  |                       |  |        |                                |  |  |                                 |  |  |                       |          |  |                          |  | 86,013    |                       |  |  | 2,876      |   |  |  | 2,710,382  | 
|Property, plant and equipment                                                                       |  |                            | 8,807,343  |  |                       |  | 19      |                                |  |  |                                 |  |  |                       | 795,031   |  |                          |  | 615,260   |                       |  |  | 280,496    |   |  |  | 10,498,149 | 
|Current tax assets, long term portion                                                               |  |                            |           |  |                       |  |        |                                |  |  |                                 |  |  |                       |          |  |                          |  | 20,272    |                       |  |  |           |   |  |  | 20,272     | 
|Deferred tax assets                                                                                 |  |                            |           |  |                       |  | 17,731  |                                |  |  |                                 |  |  |                       | 331,119   |  |                          |  | 90,149    |                       |  |  | (54,419    | ) |  |  | 384,580    | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total non-current assets                                                                            |  |                            | 13,398,868 |  |                       |  | 546,453 |                                |  |  | 408,628                          |  |  |                       | 2,785,088 |  |                          |  | 2,441,952 |                       |  |  | (4,009,570 | ) |  |  | 15,571,419 | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total assets                                                                                        |  |                            | 15,372,531 |  |                       |  | 587,128 |                                |  |  | 408,630                          |  |  |                       | 3,964,123 |  |                          |  | 4,486,066 |                       |  |  | (5,620,284 | ) |  |  | 19,198,194 | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 



F-140



---

##### Table of Contents

|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|----------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | --------------------- |  | ---------- | ------------------------------ |  |  | -------------------------------- | - |  | --------------------- | ---------- | - | ------------------------ |  | --------- | --------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                                                                    |  | LATAM S.A.(parent company) |            |   | TAM S.A.(guarantor)   |  |            | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)  |            |   | Consolidatingadjustments |  |           | Consolidated          | 
|                                                                                    |  | As ofDecember 31,2016      |            |   | As ofDecember 31,2016 |  |            | As ofDecember 31,2016          |  |  | As ofDecember 31,2016            |   |  | As ofDecember 31,2016 |            |   | As ofDecember 31,2016    |  |           | As ofDecember 31,2016 | 
|                                                                                    |  | ThUS$                      |            |   | ThUS$                 |  |            | ThUS$                          |  |  | ThUS$                            |   |  | ThUS$                 |            |   | ThUS$                    |  |           | ThUS$                 | 
|Liabilities and shareholders equity                                                |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Current liabilities                                                                 |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Other financial liabilities                                                         |  |                            | 1,212,181  |   |                       |  |           |                                |  |  | 303,831                          |   |  |                       | 285,600    |   |                          |  | 37,815    |                       |  |  | 101        |   |  |  | 1,839,528  |  
|Trade and other accounts payable                                                    |  |                            | 391,925    |   |                       |  | 147        |                                |  |  |                                 |   |  |                       | 697,865    |   |                          |  | 518,960   |                       |  |  | (15,829    | ) |  |  | 1,593,068  |  
|Accounts payable to related parties                                                 |  |                            | 247,258    |   |                       |  | 44         |                                |  |  |                                 |   |  |                       | 424,444    |   |                          |  | 631,183   |                       |  |  | (1,302,660 | ) |  |  | 269        |  
|Other provisions                                                                    |  |                            | 31         |   |                       |  |           |                                |  |  |                                 |   |  |                       |           |   |                          |  | 2,612     |                       |  |  |           |   |  |  | 2,643      |  
|Tax liabilities                                                                     |  |                            | 8,343      |   |                       |  |           |                                |  |  |                                 |   |  |                       |           |   |                          |  | 5,943     |                       |  |  |           |   |  |  | 14,286     |  
|Other non-financial liabilities                                                     |  |                            | 1,502,973  |   |                       |  | 423        |                                |  |  |                                 |   |  |                       | 690,345    |   |                          |  | 568,567   |                       |  |  | (63        | ) |  |  | 2,762,245  |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Total current liabilities                                                           |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|other than non-current liabilities (or disposal groups) classified as held for sale |  |                            | 3,362,711  |   |                       |  | 614        |                                |  |  | 303,831                          |   |  |                       | 2,098,254  |   |                          |  | 1,765,080 |                       |  |  | (1,318,451 | ) |  |  | 6,212,039  |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Non-current liabilities and disposal groups held for sale                           |  |                            |           |   |                       |  |           |                                |  |  |                                 |   |  |                       |           |   |                          |  | 24,792    |                       |  |  | (14,640    | ) |  |  | 10,152     |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Total current liabilities                                                           |  |                            | 3,362,711  |   |                       |  | 614        |                                |  |  | 303,831                          |   |  |                       | 2,098,254  |   |                          |  | 1,789,872 |                       |  |  | (1,333,091 | ) |  |  | 6,222,191  |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Non-current liabilities                                                             |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Other financial liabilities                                                         |  |                            | 5,706,157  |   |                       |  |           |                                |  |  |                                 |   |  |                       | 394,790    |   |                          |  | 701,838   |                       |  |  | (5,833     | ) |  |  | 6,796,952  |  
|Accounts payable                                                                    |  |                            | 171,467    |   |                       |  |           |                                |  |  |                                 |   |  |                       | 183,904    |   |                          |  | 4,019     |                       |  |  | 1          |   |  |  | 359,391    |  
|Accounts payable to related parties                                                 |  |                            | 769,260    |   |                       |  | 30,142     |                                |  |  | 107,957                          |   |  |                       | 308,984    |   |                          |  | 638,321   |                       |  |  | (1,854,664 | ) |  |  |           |  
|Provision for losses on investments                                                 |  |                            | 547,335    |   |                       |  |           |                                |  |  |                                 |   |  |                       |           |   |                          |  | 9,914     |                       |  |  | (557,249   | ) |  |  |           |  
|Other provisions                                                                    |  |                            | 17,298     |   |                       |  |           |                                |  |  |                                 |   |  |                       | 479,219    |   |                          |  | 30,915    |                       |  |  | (104,938   | ) |  |  | 422,494    |  
|Deferred tax liabilities                                                            |  |                            | 475,850    |   |                       |  |           |                                |  |  |                                 |   |  |                       | 246,443    |   |                          |  | 171,449   |                       |  |  | 22,017     |   |  |  | 915,759    |  
|Employee benefits                                                                   |  |                            | 48,794     |   |                       |  |           |                                |  |  |                                 |   |  |                       | 1,046      |   |                          |  | 32,483    |                       |  |  | (1         | ) |  |  | 82,322     |  
|Other non-financial liabilities                                                     |  |                            | 177,000    |   |                       |  |           |                                |  |  |                                 |   |  |                       | 36,781     |   |                          |  |          |                       |  |  |           |   |  |  | 213,781    |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Total non-current liabilities                                                       |  |                            | 7,913,161  |   |                       |  | 30,142     |                                |  |  | 107,957                          |   |  |                       | 1,651,167  |   |                          |  | 1,588,939 |                       |  |  | (2,500,667 | ) |  |  | 8,790,699  |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Total liabilities                                                                   |  |                            | 11,275,872 |   |                       |  | 30,756     |                                |  |  | 411,788                          |   |  |                       | 3,749,421  |   |                          |  | 3,378,811 |                       |  |  | (3,833,758 | ) |  |  | 15,012,890 |  
|Equity                                                                              |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Share capital                                                                       |  |                            | 3,149,564  |   |                       |  | 1,545,189  |                                |  |  | 133,139                          |   |  |                       | 1,839,233  |   |                          |  | 1,179,356 |                       |  |  | (4,696,917 | ) |  |  | 3,149,564  |  
|Retained earnings                                                                   |  |                            | 366,404    |   |                       |  | (1,354,337 | )                              |  |  | (136,297                         | ) |  |                       | (1,434,402 | ) |                          |  | (388,780  | )                     |  |  | 3,313,816  |   |  |  | 366,404    |  
|Share premium                                                                       |  |                            |           |   |                       |  | 22,996     |                                |  |  |                                 |   |  |                       |           |   |                          |  | 501,197   |                       |  |  | (524,193   | ) |  |  |           |  
|Treasury shares                                                                     |  |                            | (178       | ) |                       |  |           |                                |  |  |                                 |   |  |                       |           |   |                          |  |          |                       |  |  |           |   |  |  | (178       | )
|Other reserves                                                                      |  |                            | 580,870    |   |                       |  | 342,524    |                                |  |  |                                 |   |  |                       | (190,131   | ) |                          |  | (184,518  | )                     |  |  | 32,125     |   |  |  | 580,870    |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Parents ownership interest                                                         |  |                            | 4,096,660  |   |                       |  | 556,372    |                                |  |  | (3,158                           | ) |  |                       | 214,700    |   |                          |  | 1,107,255 |                       |  |  | (1,875,169 | ) |  |  | 4,096,660  |  
|Non-controlling interest                                                            |  |                            |           |   |                       |  |           |                                |  |  |                                 |   |  |                       |           |   |                          |  |          |                       |  |  | 88,644     |   |  |  | 88,644     |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Total non-current liabilities                                                       |  |                            | 4,096,660  |   |                       |  | 556,372    |                                |  |  | (3,158                           | ) |  |                       | 214,700    |   |                          |  | 1,107,255 |                       |  |  | (1,786,525 | ) |  |  | 4,185,304  |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  
|Total liabilities                                                                   |  |                            | 15,372,532 |   |                       |  | 587,128    |                                |  |  | 408,630                          |   |  |                       | 3,964,121  |   |                          |  | 4,486,066 |                       |  |  | (5,620,283 | ) |  |  | 19,198,194 |  
|                                                                                    |  |                            |            |   |                       |  |            |                                |  |  |                                  |   |  |                       |            |   |                          |  |           |                       |  |  |            |   |  |  |            |  



F-141



---

##### Table of Contents

|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|--------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- |  | --------------------- |  | ------- | ------------------------------ |  |  | -------------------------------- |  |  | --------------------- | --------- |  | ------------------------ |  | --------- | --------------------- |  |  | ---------- | - |  |  | ---------- | 
|                                                                                                    |  | LATAM S.A.(parent company) |            |  | TAM S.A.(guarantor)   |  |         | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |  |  | Other(non-guarantor)  |           |  | Consolidatingadjustments |  |           | Consolidated          | 
|                                                                                                    |  | As ofDecember 31,2015      |            |  | As ofDecember 31,2015 |  |         | As ofDecember 31,2015          |  |  | As ofDecember 31,2015            |  |  | As ofDecember 31,2015 |           |  | As ofDecember 31,2015    |  |           | As ofDecember 31,2015 | 
|                                                                                                    |  | ThUS$                      |            |  | ThUS$                 |  |         | ThUS$                          |  |  | ThUS$                            |  |  | ThUS$                 |           |  | ThUS$                    |  |           | ThUS$                 | 
|Assets                                                                                              |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Current assets                                                                                      |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Cash and cash equivalents                                                                           |  |                            | 301.109    |  |                       |  | 859     |                                |  |  | 67                               |  |  |                       | 142.439   |  |                          |  | 309.023   |                       |  |  |           |   |  |  | 753.497    | 
|Other financial assets                                                                              |  |                            | 108.263    |  |                       |  | 416     |                                |  |  |                                 |  |  |                       | 105.439   |  |                          |  | 581.773   |                       |  |  | (144.543   | ) |  |  | 651.348    | 
|Other non-financial assets                                                                          |  |                            | 123.332    |  |                       |  | 718     |                                |  |  |                                 |  |  |                       | 150.204   |  |                          |  | 55.501    |                       |  |  | 261        |   |  |  | 330.016    | 
|Trade and other accounts receivable                                                                 |  |                            | 367.322    |  |                       |  | 3.897   |                                |  |  |                                 |  |  |                       | 151.458   |  |                          |  | 274.301   |                       |  |  | (4         | ) |  |  | 796.974    | 
|Accounts receivable from related entities                                                           |  |                            | 451.061    |  |                       |  | 1.072   |                                |  |  | 82.218                           |  |  |                       | 533.629   |  |                          |  | 1.049.892 |                       |  |  | (2.117.689 | ) |  |  | 183        | 
|Inventories                                                                                         |  |                            | 146.241    |  |                       |  |        |                                |  |  |                                 |  |  |                       | 75.238    |  |                          |  | 3.429     |                       |  |  |           |   |  |  | 224.908    | 
|Tax assets                                                                                          |  |                            | 15.711     |  |                       |  | 5.824   |                                |  |  |                                 |  |  |                       | 11.264    |  |                          |  | 31.216    |                       |  |  |           |   |  |  | 64.015     | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total current assets other than non-current assets (or disposal groups) classified as held for
sale |  |                            | 1.513.039  |  |                       |  | 12.786  |                                |  |  | 82.285                           |  |  |                       | 1.169.671 |  |                          |  | 2.305.135 |                       |  |  | (2.261.975 | ) |  |  | 2.820.941  | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Non-current assets and disposal groups held for sale                                                |  |                            | 609        |  |                       |  |        |                                |  |  |                                 |  |  |                       | 277       |  |                          |  | 1.074     |                       |  |  |           |   |  |  | 1.960      | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total current assets                                                                                |  |                            | 1.513.648  |  |                       |  | 12.786  |                                |  |  | 82.285                           |  |  |                       | 1.169.948 |  |                          |  | 2.306.209 |                       |  |  | (2.261.975 | ) |  |  | 2.822.901  | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Non-current assets                                                                                  |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Other financial assets                                                                              |  |                            | 71.776     |  |                       |  | 425.952 |                                |  |  |                                 |  |  |                       | 221.155   |  |                          |  | 1.620     |                       |  |  | (631.045   | ) |  |  | 89.458     | 
|Other non-financial assets                                                                          |  |                            | 84.249     |  |                       |  | 730     |                                |  |  |                                 |  |  |                       | 114.080   |  |                          |  | 33.107    |                       |  |  | 3.297      |   |  |  | 235.463    | 
|Accounts receivable                                                                                 |  |                            | 2.105      |  |                       |  |        |                                |  |  |                                 |  |  |                       | 5.521     |  |                          |  | 3.089     |                       |  |  |           |   |  |  | 10.715     | 
|Accounts receivable from related parties                                                            |  |                            | 506.672    |  |                       |  |        |                                |  |  | 304.535                          |  |  |                       | 1         |  |                          |  | 1.007.074 |                       |  |  | (1.818.282 | ) |  |  |           | 
|Equity accounted investments                                                                        |  |                            | 1.065.985  |  |                       |  | 11.804  |                                |  |  |                                 |  |  |                       |          |  |                          |  | 392.937   |                       |  |  | (1.470.726 | ) |  |  |           | 
|Intangible assets other than goodwill                                                               |  |                            | 101.212    |  |                       |  | 31.993  |                                |  |  |                                 |  |  |                       | 879.356   |  |                          |  | 308.862   |                       |  |  | 2          |   |  |  | 1.321.425  | 
|Goodwill                                                                                            |  |                            | 2.194.449  |  |                       |  |        |                                |  |  |                                 |  |  |                       |          |  |                          |  | 83.250    |                       |  |  | 2.876      |   |  |  | 2.280.575  | 
|Property, plant and equipment                                                                       |  |                            | 8.917.026  |  |                       |  | 19      |                                |  |  |                                 |  |  |                       | 881.138   |  |                          |  | 836.100   |                       |  |  | 304.374    |   |  |  | 10.938.657 | 
|Current tax assets, long term portion                                                               |  |                            |           |  |                       |  |        |                                |  |  |                                 |  |  |                       |          |  |                          |  | 25.629    |                       |  |  |           |   |  |  | 25.629     | 
|Deferred tax assets                                                                                 |  |                            |           |  |                       |  | 15.747  |                                |  |  |                                 |  |  |                       | 311.059   |  |                          |  | 82.901    |                       |  |  | (33.112    | ) |  |  | 376.595    | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total non-current assets                                                                            |  |                            | 12.943.474 |  |                       |  | 486.245 |                                |  |  | 304.535                          |  |  |                       | 2.412.310 |  |                          |  | 2.774.569 |                       |  |  | (3.642.616 | ) |  |  | 15.278.517 | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 
|Total assets                                                                                        |  |                            | 14.457.122 |  |                       |  | 499.031 |                                |  |  | 386.820                          |  |  |                       | 3.582.258 |  |                          |  | 5.080.778 |                       |  |  | (5.904.591 | ) |  |  | 18.101.418 | 
|                                                                                                    |  |                            |            |  |                       |  |         |                                |  |  |                                  |  |  |                       |           |  |                          |  |           |                       |  |  |            |   |  |  |            | 



F-142



---

##### Table of Contents

|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|------------------------------------ |  | ---------------------------- | ---------- | - | --------------------------- |  | ---------- | ------------------------------ |  |  | -------------------------------- | - |  | ---------------------------- | ---------- | - | --------------------------- |  | --------- | --------------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                     |  | LATAM S.A.(parent company)   |            |   | TAM S.A.(guarantor)         |  |            | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)         |            |   | Consolidatingadjustments    |  |           | Consolidated                | 
|                                     |  | As of
December 31,2015
ThUS$ |            |   | As ofDecember 31,2015
ThUS$ |  |            | As of
December 31,2015
ThUS$   |  |  | As ofDecember 31,2015
ThUS$      |   |  | As of
December 31,2015
ThUS$ |            |   | As ofDecember 31,2015
ThUS$ |  |           | As ofDecember 31,2015
ThUS$ | 
|Liabilities and shareholders equity |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Current liabilities                  |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Other financial liabilities          |  |                              | 1.459.629  |   |                             |  |           |                                |  |  | 3.318                            |   |  |                              | 124.778    |   |                             |  | 56.415    |                             |  |  | 95         |   |  |  | 1.644.235  |  
|Trade and other accounts payable     |  |                              | 398.351    |   |                             |  | 722        |                                |  |  |                                 |   |  |                              | 624.410    |   |                             |  | 452.436   |                             |  |  | 8.038      |   |  |  | 1.483.957  |  
|Accounts payable to related parties  |  |                              | 328.618    |   |                             |  | 804        |                                |  |  | 75.437                           |   |  |                              | 786.235    |   |                             |  | 951.720   |                             |  |  | (2.142.367 | ) |  |  | 447        |  
|Other provisions                     |  |                              | 29         |   |                             |  |           |                                |  |  |                                 |   |  |                              | 10.776     |   |                             |  | 2.894     |                             |  |  | (10.777    | ) |  |  | 2.922      |  
|Tax liabilities                      |  |                              | 12.755     |   |                             |  |           |                                |  |  |                                 |   |  |                              |           |   |                             |  | 6.623     |                             |  |  |           |   |  |  | 19.378     |  
|Other non-financial liabilities      |  |                              | 1.404.126  |   |                             |  | 558        |                                |  |  |                                 |   |  |                              | 588.839    |   |                             |  | 496.542   |                             |  |  | (32        | ) |  |  | 2.490.033  |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Total current liabilities            |  |                              | 3.603.508  |   |                             |  | 2.084      |                                |  |  | 78.755                           |   |  |                              | 2.135.038  |   |                             |  | 1.966.630 |                             |  |  | (2.145.043 | ) |  |  | 5.640.972  |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Non-current liabilities              |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Other financial liabilities          |  |                              | 5.785.018  |   |                             |  |           |                                |  |  | 299.775                          |   |  |                              | 527.207    |   |                             |  | 927.846   |                             |  |  | (7.461     | ) |  |  | 7.532.385  |  
|Accounts payable                     |  |                              | 129.759    |   |                             |  |           |                                |  |  |                                 |   |  |                              | 229.006    |   |                             |  | 58.285    |                             |  |  |           |   |  |  | 417.050    |  
|Accounts payable to related parties  |  |                              | 797.109    |   |                             |  | 24.395     |                                |  |  |                                 |   |  |                              |           |   |                             |  | 972.543   |                             |  |  | (1.794.047 | ) |  |  |           |  
|Provision for losses on investments  |  |                              | 518.975    |   |                             |  |           |                                |  |  |                                 |   |  |                              |           |   |                             |  | 19.343    |                             |  |  | (538.318   | ) |  |  |           |  
|Other provisions                     |  |                              | 13.768     |   |                             |  | 73         |                                |  |  |                                 |   |  |                              | 389.120    |   |                             |  | 21.535    |                             |  |  | 1          |   |  |  | 424.497    |  
|Deferred tax liabilities             |  |                              | 478.596    |   |                             |  |           |                                |  |  |                                 |   |  |                              | 151.950    |   |                             |  | 153.957   |                             |  |  | 27.062     |   |  |  | 811.565    |  
|Employee benefits                    |  |                              | 37.854     |   |                             |  |           |                                |  |  |                                 |   |  |                              |           |   |                             |  | 27.417    |                             |  |  |           |   |  |  | 65.271     |  
|Other non-financial liabilities      |  |                              | 236.000    |   |                             |  |           |                                |  |  |                                 |   |  |                              | 36.130     |   |                             |  |          |                             |  |  |           |   |  |  | 272.130    |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Total non-current liabilities        |  |                              | 7.997.079  |   |                             |  | 24.468     |                                |  |  | 299.775                          |   |  |                              | 1.333.413  |   |                             |  | 2.180.926 |                             |  |  | (2.312.763 | ) |  |  | 9.522.898  |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Total liabilities                    |  |                              | 11.600.587 |   |                             |  | 26.552     |                                |  |  | 378.530                          |   |  |                              | 3.468.451  |   |                             |  | 4.147.556 |                             |  |  | (4.457.806 | ) |  |  | 15.163.870 |  
|Equity                               |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Share capital                        |  |                              | 2.545.705  |   |                             |  | 1.289.676  |                                |  |  | 111.123                          |   |  |                              | 1.371.505  |   |                             |  | 728.944   |                             |  |  | (3.501.248 | ) |  |  | 2.545.705  |  
|Retained earnings                    |  |                              | 317.950    |   |                             |  | (1.126.588 | )                              |  |  | (102.833                         | ) |  |                              | (1.191.909 | ) |                             |  | (219.031  | )                           |  |  | 2.640.361  |   |  |  | 317.950    |  
|Share premium                        |  |                              |           |   |                             |  | 19.194     |                                |  |  |                                 |   |  |                              |           |   |                             |  | 501.209   |                             |  |  | (520.403   | ) |  |  |           |  
|Treasury shares                      |  |                              | (178       | ) |                             |  |           |                                |  |  |                                 |   |  |                              |           |   |                             |  |          |                             |  |  |           |   |  |  | (178       | )
|Other reserves                       |  |                              | (6.942     | ) |                             |  | 290.197    |                                |  |  |                                 |   |  |                              | (65.641    | ) |                             |  | (81.070   | )                           |  |  | (143.486   | ) |  |  | (6.942     | )
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Parents ownership interest          |  |                              | 2.856.535  |   |                             |  | 472.479    |                                |  |  | 8.290                            |   |  |                              | 113.955    |   |                             |  | 930.052   |                             |  |  | (1.524.776 | ) |  |  | 2.856.535  |  
|Non-controlling interest             |  |                              |           |   |                             |  |           |                                |  |  |                                 |   |  |                              |           |   |                             |  |          |                             |  |  | 81.013     |   |  |  | 81.013     |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Total non-current liabilities        |  |                              | 2.856.535  |   |                             |  | 472.479    |                                |  |  | 8.290                            |   |  |                              | 113.955    |   |                             |  | 930.052   |                             |  |  | (1.443.763 | ) |  |  | 2.937.548  |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  
|Total liabilities                    |  |                              | 14.457.122 |   |                             |  | 499.031    |                                |  |  | 386.820                          |   |  |                              | 3.582.406  |   |                             |  | 5.077.608 |                             |  |  | (5.901.569 | ) |  |  | 18.101.418 |  
|                                     |  |                              |            |   |                             |  |            |                                |  |  |                                  |   |  |                              |            |   |                             |  |           |                             |  |  |            |   |  |  |            |  



F-143



---

##### Table of Contents

|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|---------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | --------------------------- |  | ------ | ------------------------------ |  |  | -------------------------------- | - |  | ---------------------------- | ---------- | - | --------------------------- |  | ---------- | --------------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                                                       |  | LATAM S.A.(parent company)   |            |   | TAM S.A.(guarantor)         |  |        | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)         |            |   | Consolidatingadjustments    |  |            | Consolidated                | 
|                                                                       |  | As of
December 31,2016 ThUS$ |            |   | As ofDecember 31,2016
ThUS$ |  |        | As of
December 31,2016
ThUS$   |  |  | As ofDecember 31,2016
ThUS$      |   |  | As of
December 31,2016
ThUS$ |            |   | As ofDecember31, 2016
ThUS$ |  |            | As ofDecember 31,2016
ThUS$ | 
|Revenue                                                                |  |                              | 2,723,927  |   |                             |  |       |                                |  |  |                                 |   |  |                              | 3,842,983  |   |                             |  | 2,838,907  |                             |  |  | (417,477   | ) |  |  | 8,988,340  |  
|Cost of sales                                                          |  |                              | (2,715,888 | ) |                             |  |       |                                |  |  |                                 |   |  |                              | (3,389,650 | ) |                             |  | (2,566,040 | )                           |  |  | 1,704,541  |   |  |  | (6,967,037 | )
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Gross margin                                                           |  |                              | 8,039      |   |                             |  |       |                                |  |  |                                 |   |  |                              | 453,333    |   |                             |  | 272,867    |                             |  |  | 1,287,064  |   |  |  | 2,021,303  |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Other income                                                           |  |                              | 1,302,707  |   |                             |  |       |                                |  |  |                                 |   |  |                              | 113,116    |   |                             |  | 1,018,836  |                             |  |  | (1,895,911 | ) |  |  | 538,748    |  
|Distribution costs                                                     |  |                              | (262,038   | ) |                             |  |       |                                |  |  |                                 |   |  |                              | (264,886   | ) |                             |  | (329,094   | )                           |  |  | 108,592    |   |  |  | (747,426   | )
|Administrative expenses                                                |  |                              | (345,552   | ) |                             |  | (534   | )                              |  |  |                                 |   |  |                              | (344,929   | ) |                             |  | (687,878   | )                           |  |  | 505,939    |   |  |  | (872,954   | )
|Other expenses                                                         |  |                              | (199,791   | ) |                             |  | (1,354 | )                              |  |  | (20                              | ) |  |                              | (59,965    | ) |                             |  | (118,470   | )                           |  |  | 5,862      |   |  |  | (373,738   | )
|Other gains/(losses)                                                   |  |                              | (49,532    | ) |                             |  | 790    |                                |  |  |                                 |   |  |                              | (4,993     | ) |                             |  | (5,999     | )                           |  |  | (12,900    | ) |  |  | (72,634    | )
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Gains (losses) from operating activities                               |  |                              | 453,833    |   |                             |  | (1,098 | )                              |  |  | (20                              | ) |  |                              | (108,324   | ) |                             |  | 150,262    |                             |  |  | (1,354     | ) |  |  | 493,299    |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Financial income                                                       |  |                              | (5,043     | ) |                             |  | (104   | )                              |  |  | 13,976                           |   |  |                              | 21,272     |   |                             |  | 103,491    |                             |  |  | (58,643    | ) |  |  | 74,949     |  
|Financial costs                                                        |  |                              | (336,386   | ) |                             |  | (4     | )                              |  |  | (25,643                          | ) |  |                              | (52,168    | ) |                             |  | (58,505    | )                           |  |  | 56,370     |   |  |  | (416,336   | )
|Revenue and losses from associated companies                           |  |                              | (38,438    | ) |                             |  | 7,052  |                                |  |  |                                 |   |  |                              | (80,810    | ) |                             |  |           |                             |  |  | 112,196    |   |  |  |           |  
|Exchange differences                                                   |  |                              | (37,365    | ) |                             |  |       |                                |  |  | (12                              | ) |  |                              | 223,109    |   |                             |  | (67,769    | )                           |  |  | 3,688      |   |  |  | 121,651    |  
|Resut for readjustable units                                           |  |                              | 272        |   |                             |  |       |                                |  |  |                                 |   |  |                              |           |   |                             |  | 39         |                             |  |  |           |   |  |  | 311        |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Income / (loss) before taxes                                           |  |                              | 36,873     |   |                             |  | 5,846  |                                |  |  | (11,699                          | ) |  |                              | 3,079      |   |                             |  | 127,518    |                             |  |  | 112,257    |   |  |  | 273,874    |  
|Income tax expense / benefit                                           |  |                              | 32,347     |   |                             |  | (3,739 | )                              |  |  |                                 |   |  |                              | (101,551   | ) |                             |  | (73,605    | )                           |  |  | (16,656    | ) |  |  | (163,204   | )
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|NET INCOME / (LOSS) FOR THE YEAR                                       |  |                              | 69,220     |   |                             |  | 2,107  |                                |  |  | (11,699                          | ) |  |                              | (98,472    | ) |                             |  | 53,913     |                             |  |  | 95,601     |   |  |  | 110,670    |  
|Income / (loss) attributable to owners of the parent                   |  |                              | 69,220     |   |                             |  | 2,107  |                                |  |  | (11,699                          | ) |  |                              | (98,472    | ) |                             |  | 53,913     |                             |  |  | 54,151     |   |  |  | 69,220     |  
|Income / (loss) attributable to non-controlling                        |  |                              |           |   |                             |  |       |                                |  |  |                                 |   |  |                              |           |   |                             |  |           |                             |  |  | 41,450     |   |  |  | 41,450     |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|NET INCOME / (LOSS)                                                    |  |                              | 69,220     |   |                             |  | 2,107  |                                |  |  | (11,699                          | ) |  |                              | (98,472    | ) |                             |  | 53,913     |                             |  |  | 95,601     |   |  |  | 110,670    |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Total comprehensive income / (loss)                                    |  |                              | 648,539    |   |                             |  | 195    |                                |  |  | (13,199                          | ) |  |                              | (90,953    | ) |                             |  | 147,049    |                             |  |  | 3,912      |   |  |  | 695,543    |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Comprehensive income / (loss) attributable to owners of the parent     |  |                              | 648,539    |   |                             |  | 195    |                                |  |  | (13,199                          | ) |  |                              | (90,953    | ) |                             |  | 123,583    |                             |  |  | (19,626    | ) |  |  | 648,539    |  
|Comprehensive income / (loss) attributable to non-controlling interest |  |                              |            |   |                             |  |       |                                |  |  |                                 |   |  |                              |           |   |                             |  | 23,466     |                             |  |  | 23,538     |   |  |  | 47,004     |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Total comprehensive income / (loss)                                    |  |                              | 648,539    |   |                             |  | 195    |                                |  |  | (13,199                          | ) |  |                              | (90,953    | ) |                             |  | 147,049    |                             |  |  | 3,912      |   |  |  | 695,543    |  
|                                                                       |  |                              |            |   |                             |  |        |                                |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  



F-144



---

##### Table of Contents

|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|---------------------------------------------------------------------- |  | --------------------------- | ---------- | - | --------------------------- |  | -------- | ------------------------------ |  |  | -------------------------------- | - |  | --------------------------- | ---------- | - | --------------------------- |  | ---------- | --------------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                                                       |  | LATAM S.A.(parent company)  |            |   | TAM S.A.(guarantor)         |  |          | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)        |            |   | Consolidatingadjustments    |  |            | Consolidated                | 
|                                                                       |  | As ofDecember 31,2015
ThUS$ |            |   | As ofDecember 31,2015
ThUS$ |  |          | As ofDecember 31,2015
ThUS$    |  |  | As ofDecember 31,2015
ThUS$      |   |  | As ofDecember 31,2015
ThUS$ |            |   | As ofDecember31, 2015
ThUS$ |  |            | As ofDecember 31,2015
ThUS$ | 
|Revenue                                                                |  |                             | 2.759.969  |   |                             |  |         |                                |  |  |                                 |   |  |                             | 4.224.290  |   |                             |  | 3.228.372  |                             |  |  | (472.586   | ) |  |  | 9.740.045  |  
|Cost of sales                                                          |  |                             | (2.670.774 | ) |                             |  |         |                                |  |  |                                 |   |  |                             | (3.745.752 | ) |                             |  | (2.928.504 | )                           |  |  | 1.708.321  |   |  |  | (7.636.709 | )
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Gross margin                                                           |  |                             | 89.195     |   |                             |  |         |                                |  |  |                                 |   |  |                             | 478.538    |   |                             |  | 299.868    |                             |  |  | 1.235.735  |   |  |  | 2.103.336  |  
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Other income                                                           |  |                             | 1.132.663  |   |                             |  |         |                                |  |  |                                 |   |  |                             | 181.922    |   |                             |  | 1.017.029  |                             |  |  | (1.945.833 | ) |  |  | 385.781    |  
|Distribution costs                                                     |  |                             | (287.089   | ) |                             |  |         |                                |  |  |                                 |   |  |                             | (303.936   | ) |                             |  | (346.840   | )                           |  |  | 154.561    |   |  |  | (783.304   | )
|Administrative expenses                                                |  |                             | (325.567   | ) |                             |  | (1.257   | )                              |  |  |                                 |   |  |                             | (337.064   | ) |                             |  | (784.628   | )                           |  |  | 570.510    |   |  |  | (878.006   | )
|Other expenses                                                         |  |                             | (189.244   | ) |                             |  | (951     | )                              |  |  | (4                               | ) |  |                             | (24.325    | ) |                             |  | (118.091   | )                           |  |  | 8.628      |   |  |  | (323.987   | )
|Other gains/(losses)                                                   |  |                             | (81.244    | ) |                             |  | 161      |                                |  |  |                                 |   |  |                             | (33.019    | ) |                             |  | 45.423     |                             |  |  | 13.399     |   |  |  | (55.280    | )
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Gains (losses) from operating activities                               |  |                             | 338.714    |   |                             |  | (2.047   | )                              |  |  | (4                               | ) |  |                             | (37.884    | ) |                             |  | 112.761    |                             |  |  | 37.000     |   |  |  | 448.540    |  
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Financial income                                                       |  |                             | 9.222      |   |                             |  | 1.472    |                                |  |  | 14.986                           |   |  |                             | 58.670     |   |                             |  | 65.700     |                             |  |  | (74.970    | ) |  |  | 75.080     |  
|Financial costs                                                        |  |                             | (296.205   | ) |                             |  |         |                                |  |  | (25.264                          | ) |  |                             | (62.918    | ) |                             |  | (111.450   | )                           |  |  | 82.480     |   |  |  | (413.357   | )
|Revenue and losses from associated companies                           |  |                             | (217.530   | ) |                             |  | (165.774 | )                              |  |  |                                 |   |  |                             | 32.134     |   |                             |  |           |                             |  |  | 351.207    |   |  |  | 37         |  
|Exchange differences                                                   |  |                             | (40.151    | ) |                             |  | (10      | )                              |  |  | 4.680                            |   |  |                             | (472.122   | ) |                             |  | 49.177     |                             |  |  | (9.470     | ) |  |  | (467.896   | )
|Resut for readjustable units                                           |  |                             | 23         |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | 457        |                             |  |  | 1          |   |  |  | 481        |  
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Income / (loss) before taxes                                           |  |                             | (205.927   | ) |                             |  | (166.359 | )                              |  |  | (5.602                           | ) |  |                             | (482.120   | ) |                             |  | 116.645    |                             |  |  | 386.248    |   |  |  | (357.115   | )
|Income tax expense / benefit                                           |  |                             | (13.347    | ) |                             |  | (2.790   | )                              |  |  |                                 |   |  |                             | 200.507    |   |                             |  | (37.385    | )                           |  |  | 31.398     |   |  |  | 178.383    |  
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|NET INCOME / (LOSS) FOR THE YEAR                                       |  |                             | (219.274   | ) |                             |  | (169.149 | )                              |  |  | (5.602                           | ) |  |                             | (281.613   | ) |                             |  | 79.260     |                             |  |  | 417.646    |   |  |  | (178.732   | )
|Income / (loss) attributable to owners of the parent                   |  |                             | (219.274   | ) |                             |  | (169.149 | )                              |  |  | (5.602                           | ) |  |                             | (281.613   | ) |                             |  | 79.260     |                             |  |  | 377.104    |   |  |  | (219.274   | )
|Income / (loss) attributable to non-controlling                        |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  |           |                             |  |  | 40.542     |   |  |  | 40.542     |  
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|NET INCOME / (LOSS)                                                    |  |                             | (219.274   | ) |                             |  | (169.149 | )                              |  |  | (5.602                           | ) |  |                             | (281.613   | ) |                             |  | 79.260     |                             |  |  | 417.646    |   |  |  | (178.732   | )
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Total comprehensive income / (loss)                                    |  |                             | (1.551.330 | ) |                             |  | (168.932 | )                              |  |  | (4.162                           | ) |  |                             | (302.015   | ) |                             |  | (57.568    | )                           |  |  | 544.400    |   |  |  | (1.539.607 | )
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Comprehensive income / (loss) attributable to owners of the parent     |  |                             | (1.551.330 | ) |                             |  | (168.932 | )                              |  |  | (4.162                           | ) |  |                             | (302.015   | ) |                             |  | (92.830    | )                           |  |  | 567.938    |   |  |  | (1.551.331 | )
|Comprehensive income / (loss) attributable to non-controlling interest |  |                             |            |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | 35.262     |                             |  |  | (23.538    | ) |  |  | 11.724     |  
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Total comprehensive income / (loss)                                    |  |                             | (1.551.330 | ) |                             |  | (168.932 | )                              |  |  | (4.162                           | ) |  |                             | (302.015   | ) |                             |  | (57.568    | )                           |  |  | 544.400    |   |  |  | (1.539.607 | )
|                                                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  



F-145



---

##### Table of Contents

|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|---------------------------------------------------------------------- |  | --------------------------- | ---------- | - | --------------------------- |  | ------- | ------------------------------ |  |  | -------------------------------- | - |  | --------------------------- | ---------- | - | --------------------------- |  | ---------- | --------------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                                                       |  | LATAM S.A.(parent company)  |            |   | TAM S.A.(guarantor)         |  |         | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)        |            |   | Consolidatingadjustments    |  |            | Consolidated                | 
|                                                                       |  | As ofDecember 31,2014
ThUS$ |            |   | As ofDecember 31,2014
ThUS$ |  |         | As ofDecember 31,2014
ThUS$    |  |  | As ofDecember 31,2014
ThUS$      |   |  | As ofDecember 31,2014
ThUS$ |            |   | As ofDecember31, 2014
ThUS$ |  |            | As ofDecember 31,2014
ThUS$ | 
|Revenue                                                                |  |                             | 3.055.416  |   |                             |  |        |                                |  |  |                                 |   |  |                             | 6.391.949  |   |                             |  | 3.564.135  |                             |  |  | (917.999   | ) |  |  | 12.093.501 |  
|Cost of sales                                                          |  |                             | (3.075.475 | ) |                             |  | (408    | )                              |  |  |                                 |   |  |                             | (5.202.839 | ) |                             |  | (3.450.252 | )                           |  |  | 2.104.473  |   |  |  | (9.624.501 | )
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Gross margin                                                           |  |                             | (20.059    | ) |                             |  | (408    | )                              |  |  |                                 |   |  |                             | 1.189.110  |   |                             |  | 113.883    |                             |  |  | 1.186.474  |   |  |  | 2.469.000  |  
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Other income                                                           |  |                             | 1.014.024  |   |                             |  |        |                                |  |  |                                 |   |  |                             | 20.891     |   |                             |  | 1.253.142  |                             |  |  | (1.910.412 | ) |  |  | 377.645    |  
|Distribution costs                                                     |  |                             | (318.825   | ) |                             |  |        |                                |  |  |                                 |   |  |                             | (397.445   | ) |                             |  | (365.581   | )                           |  |  | 124.779    |   |  |  | (957.072   | )
|Administrative expenses                                                |  |                             | (350.817   | ) |                             |  | (3.423  | )                              |  |  |                                 |   |  |                             | (452.014   | ) |                             |  | (850.026   | )                           |  |  | 675.620    |   |  |  | (980.660   | )
|Other expenses                                                         |  |                             | (197.055   | ) |                             |  | (1.126  | )                              |  |  | (9                               | ) |  |                             | (110.890   | ) |                             |  | (122.798   | )                           |  |  | 30.857     |   |  |  | (401.021   | )
|Other gains/(losses)                                                   |  |                             | (71.175    | ) |                             |  | (170    | )                              |  |  |                                 |   |  |                             | 24.828     |   |                             |  | (122.589   | )                           |  |  | 202.630    |   |  |  | 33.524     |  
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Gains (losses) from operating activities                               |  |                             | 56.093     |   |                             |  | (5.127  | )                              |  |  | (9                               | ) |  |                             | 274.480    |   |                             |  | (93.969    | )                           |  |  | 309.948    |   |  |  | 541.416    |  
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Financial income                                                       |  |                             | 6.353      |   |                             |  | (732    | )                              |  |  | 13.789                           |   |  |                             | 46.414     |   |                             |  | 134.249    |                             |  |  | (109.573   | ) |  |  | 90.500     |  
|Financial costs                                                        |  |                             | (297.138   | ) |                             |  | (581    | )                              |  |  | (25.083                          | ) |  |                             | (156.890   | ) |                             |  | (106.994   | )                           |  |  | 156.652    |   |  |  | (430.034   | )
|Equity accounted investments                                           |  |                             | 86.715     |   |                             |  | 179.647 |                                |  |  |                                 |   |  |                             | (7.530     | ) |                             |  | (4.280     | )                           |  |  | (261.007   | ) |  |  | (6.455     | )
|Exchange differences                                                   |  |                             | (88.909    | ) |                             |  | 339     |                                |  |  | 2.198                            |   |  |                             | (81.447    | ) |                             |  | 35.754     |                             |  |  | 1.864      |   |  |  | (130.201   | )
|Resut for readjustable units                                           |  |                             |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                             |  | 7          |                             |  |  |           |   |  |  | 7          |  
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Income / (loss) before taxes                                           |  |                             | (236.886   | ) |                             |  | 173.546 |                                |  |  | (9.105                           | ) |  |                             | 75.027     |   |                             |  | (35.233    | )                           |  |  | 97.884     |   |  |  | 65.233     |  
|Income tax expense / benefit                                           |  |                             | (23.099    | ) |                             |  | 1.140   |                                |  |  |                                 |   |  |                             | (33.461    | ) |                             |  | (105.194   | )                           |  |  | (131.790   | ) |  |  | (292.404   | )
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|NET INCOME / (LOSS) FOR THE YEAR                                       |  |                             | (259.985   | ) |                             |  | 174.686 |                                |  |  | (9.105                           | ) |  |                             | 41.566     |   |                             |  | (140.427   | )                           |  |  | (33.906    | ) |  |  | (227.171   | )
|Income / (loss) attributable to owners of the parent                   |  |                             | (259.985   | ) |                             |  | 174.686 |                                |  |  | (9.105                           | ) |  |                             | 41.566     |   |                             |  | (140.427   | )                           |  |  | (66.720    | ) |  |  | (259.985   | )
|Income / (loss) attributable to non-controlling                        |  |                             |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                             |  |           |                             |  |  | 32.814     |   |  |  | 32.814     |  
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|NET INCOME / (LOSS)                                                    |  |                             | (259.985   | ) |                             |  | 174.686 |                                |  |  | (9.105                           | ) |  |                             | 41.566     |   |                             |  | (140.427   | )                           |  |  | (33.906    | ) |  |  | (227.171   | )
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Total comprehensive income / (loss)                                    |  |                             | (980.697   | ) |                             |  | 93.514  |                                |  |  | (9.105                           | ) |  |                             | 101.097    |   |                             |  | (269.379   | )                           |  |  | 70.947     |   |  |  | (993.623   | )
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Comprehensive income / (loss) attributable to owners of the parent     |  |                             | (980.697   | ) |                             |  | 93.514  |                                |  |  | (9.105                           | ) |  |                             | 101.097    |   |                             |  | (269.379   | )                           |  |  | 83.874     |   |  |  | (980.696   | )
|Comprehensive income / (loss) attributable to non-controlling interest |  |                             |            |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                             |  |           |                             |  |  | (12.927    | ) |  |  | (12.927    | )
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Total comprehensive income / (loss)                                    |  |                             | (980.697   | ) |                             |  | 93.514  |                                |  |  | (9.105                           | ) |  |                             | 101.097    |   |                             |  | (269.379   | )                           |  |  | 70.947     |   |  |  | (993.623   | )
|                                                                       |  |                             |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  



F-146



---

##### Table of Contents

|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|------------------------------------------------------------------------------------ |  | --------------------------------------- | ---------- | - | --------------------------- |  | ------- | ------------------------------ |  |  | -------------------------------- | - |  | --------------------------- | ---------- | - | ---------------------------- |  | ---------- | --------------------------- |  |  | ----------- | - |  |  | ---------- | -
|                                                                                     |  | LATAM S.A.(parent companyand guarantor) |            |   | TAM S.A.(guarantor)         |  |         | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)        |            |   | Consolidatingadjustments     |  |            | Consolidated                | 
|                                                                                     |  | As ofDecember 31,2016
ThUS$             |            |   | As ofDecember 31,2016
ThUS$ |  |         | As of
December 31, 2016
ThUS$  |  |  | As ofDecember 31,
2016 ThUS$     |   |  | As ofDecember 31,2016
ThUS$ |            |   | As ofDecember 31,
2016 ThUS$ |  |            | As ofDecember 31,
2016ThUS$ | 
|Cash flows from operating activities                                                 |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Receipts from sales of goods and services                                            |  |                                         | 10,286,552 |   |                             |  | (518    | )                              |  |  | 21,433                           |   |  |                             | 3,923,956  |   |                              |  | 10,504,664 |                             |  |  | (14,817,498 | ) |  |  | 9,918,589  |  
|Other receipts from operating activities                                             |  |                                         | 68,543     |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | 1,816      |                             |  |  |            |   |  |  | 70,359     |  
|Payments to suppliers for the supply of goods and services                           |  |                                         | (8,780,152 | ) |                             |  | (2,457  | )                              |  |  | (3,072                           | ) |  |                             | (3,421,614 | ) |                              |  | (9,446,856 | )                           |  |  | 14,898,030  |   |  |  | (6,756,121 | )
|Payments to and on behalf of employees                                               |  |                                         | (426,969   | ) |                             |  | (3,914  | )                              |  |  |                                 |   |  |                             | (794,100   | ) |                              |  | (595,296   | )                           |  |  |            |   |  |  | (1,820,279 | )
|Other payments for operating activities                                              |  |                                         | (40,689    | ) |                             |  |        |                                |  |  |                                 |   |  |                             | 40,738     |   |                              |  | (150,246   | )                           |  |  | (12,642     | ) |  |  | (162,839   | )
|Interest received                                                                    |  |                                         | 3,037      |   |                             |  |        |                                |  |  | 2,674                            |   |  |                             | (13,117    | ) |                              |  | 54,597     |                             |  |  | (35,949     | ) |  |  | 11,242     |  
|Income taxes refunded (paid)                                                         |  |                                         | 973        |   |                             |  | (1,023  | )                              |  |  |                                 |   |  |                             | 1,454      |   |                              |  | (60,960    | )                           |  |  |            |   |  |  | (59,556    | )
|Other inflows (outflows) of cash                                                     |  |                                         | (106,911   | ) |                             |  | (947    | )                              |  |  | (1                               | ) |  |                             | (168,159   | ) |                              |  | 58,826     |                             |  |  | 7,923       |   |  |  | (209,269   | )
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Net cash flows from operating activities                                             |  |                                         | 1,004,384  |   |                             |  | (8,859  | )                              |  |  | 21,034                           |   |  |                             | (430,842   | ) |                              |  | 366,545    |                             |  |  | 39,864      |   |  |  | 992,126    |  
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Cash flows from (used in) investing activities                                       |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Other cash receipts from sales of equity or debt instruments of other entities       |  |                                         | 69,466     |   |                             |  | 81,610  |                                |  |  |                                 |   |  |                             | 1,996,724  |   |                              |  | 821,931    |                             |  |  |            |   |  |  | 2,969,731  |  
|Other payments to acquire equity or debt instruments of other entities               |  |                                         |           |   |                             |  | (97,586 | )                              |  |  |                                 |   |  |                             | (1,933,835 | ) |                              |  | (675,312   | )                           |  |  |            |   |  |  | (2,706,733 | )
|Loans to related parties                                                             |  |                                         |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | (9,844     | )                           |  |  | 9,844       |   |  |  |           |  
|Proceeds from sale of property, plant and equipment                                  |  |                                         | 94,247     |   |                             |  |        |                                |  |  |                                 |   |  |                             | 12,161     |   |                              |  | (2,774     | )                           |  |  | (27,550     | ) |  |  | 76,084     |  
|Purchases of property, plant and equipment                                           |  |                                         | (764,342   | ) |                             |  |        |                                |  |  |                                 |   |  |                             | (86,752    | ) |                              |  | 162,816    |                             |  |  | (6,092      | ) |  |  | (694,370   | )
|Amounts raised from sale of intangible assets                                        |  |                                         |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | 1          |                             |  |  |            |   |  |  | 1          |  
|Purchases of intangible assets                                                       |  |                                         | (62,531    | ) |                             |  |        |                                |  |  |                                 |   |  |                             | (19,554    | ) |                              |  | (6,502     | )                           |  |  |            |   |  |  | (88,587    | )
|Proceeds from related parties                                                        |  |                                         |           |   |                             |  |        |                                |  |  | 6,107                            |   |  |                             |           |   |                              |  | 48,361     |                             |  |  | (54,468     | ) |  |  |           |  
|Dividends received                                                                   |  |                                         |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | 1,517      |                             |  |  | (1,517      | ) |  |  |           |  
|Other inflows (outflows ) of cash                                                    |  |                                         |           |   |                             |  | (36     | )                              |  |  |                                 |   |  |                             | (3,626     | ) |                              |  | (53        | )                           |  |  | 4,558       |   |  |  | 843        |  
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Net cash flows from investing activities                                             |  |                                         | (663,160   | ) |                             |  | (16,012 | )                              |  |  | 6,107                            |   |  |                             | (34,882    | ) |                              |  | 340,141    |                             |  |  | (75,225     | ) |  |  | (443,031   | )
|Cash flows from (used in) financing activities                                       |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Proceeds from issue of shares                                                        |  |                                         | 6 08,496   |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | 28,628     |                             |  |  | (28,628     | ) |  |  | 608,496    |  
|Proceeds from term loans                                                             |  |                                         | 1,381,792  |   |                             |  |        |                                |  |  |                                 |   |  |                             | 199,322    |   |                              |  | 238,902    |                             |  |  |            |   |  |  | 1,820,016  |  
|Proceeds from short term loans                                                       |  |                                         | 279,593    |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  |           |                             |  |  |            |   |  |  | 279,593    |  
|Loans from related parties                                                           |  |                                         |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | 9,844      |                             |  |  | (9,844      | ) |  |  |           |  
|Repayment of loans                                                                   |  |                                         | (1,682,589 | ) |                             |  |        |                                |  |  |                                 |   |  |                             | (474       | ) |                              |  | (438,059   | )                           |  |  | (8          | ) |  |  | (2,121,130 | )
|Payments of finance lease liabilities                                                |  |                                         | (151,219   | ) |                             |  |        |                                |  |  |                                 |   |  |                             | (79,162    | ) |                              |  | (33,907    | )                           |  |  | (50,292     | ) |  |  | (314,580   | )
|Repayment of loans to related parties                                                |  |                                         | (40,586    | ) |                             |  |        |                                |  |  | (6,107                           | ) |  |                             |           |   |                              |  | (7,626     | )                           |  |  | 54,319      |   |  |  |           |  
|Dividends Paid                                                                       |  |                                         |           |   |                             |  |        |                                |  |  |                                 |   |  |                             |           |   |                              |  | (45,030    | )                           |  |  | 3,807       |   |  |  | (41,223    | )
|Interest paid                                                                        |  |                                         | (304,423   | ) |                             |  |        |                                |  |  | (22,295                          | ) |  |                             | (44,669    | ) |                              |  | (64,589    | )                           |  |  | 37,688      |   |  |  | (398,288   | )
|Other inflows (outflows ) of cash                                                    |  |                                         | (149,814   | ) |                             |  | 59      |                                |  |  |                                 |   |  |                             | (6,264     | ) |                              |  | (70,017    | )                           |  |  | (3,127      | ) |  |  | (229,163   | )
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Net cash flows from (used in) financing activities                                   |  |                                         | (58,750    | ) |                             |  | 59      |                                |  |  | (28,402                          | ) |  |                             | 68,753     |   |                              |  | (381,854   | )                           |  |  | 3,915       |   |  |  | (396,279   | )
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Net increase (decrease) in, cash and cash aquivalents before effect of exchange rate |  |                                         | 282,474    |   |                             |  | (24,812 | )                              |  |  | (1,261                           | ) |  |                             | (396,971   | ) |                              |  | 324,832    |                             |  |  | (31,446     | ) |  |  | 152,816    |  
|Effects of variation in the exchange rate on cash and cash equivalents               |  |                                         |           |   |                             |  | 35,123  |                                |  |  | 1,196                            |   |  |                             | 359,209    |   |                              |  | (352,514   | )                           |  |  |            |   |  |  | 43,014     |  
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|Net increase (decrease) in cash and cash equivalents                                 |  |                                         | 282,474    |   |                             |  | 10,311  |                                |  |  | (65                              | ) |  |                             | (37,762    | ) |                              |  | (27,682    | )                           |  |  | (31,446     | ) |  |  | 195,830    |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     |  |                                         | 301,109    |   |                             |  | 859     |                                |  |  | 67                               |   |  |                             | 142,439    |   |                              |  | 309,023    |                             |  |  |            |   |  |  | 753,497    |  
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           |  |                                         | 583,583    |   |                             |  | 11,170  |                                |  |  | 2                                |   |  |                             | 104 ,677   |   |                              |  | 281,341    |                             |  |  | (31,446     | ) |  |  | 949,327    |  
|                                                                                     |  |                                         |            |   |                             |  |         |                                |  |  |                                  |   |  |                             |            |   |                              |  |            |                             |  |  |             |   |  |  |            |  



F-147



---

##### Table of Contents

|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|---------------------------------------------------------------------------------------- |  | ------------------------------------- | ---------- | - | --------------------------- |  | -------- | ----------------------------- |  |  | -------------------------------- | - |  | ---------------------------- | ---------- | - | --------------------------- |  | ---------- | --------------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                                                                         |  | LATAM S.A.(parentcompanyandguarantor) |            |   | TAM S.A.(guarantor)         |  |          | TAM Capital(subsidiaryissuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)         |            |   | Consolidatingadjustments    |  |            | Consolidated                | 
|                                                                                         |  | As ofDecember 31,2015
ThUS$           |            |   | As ofDecember 31,2015
ThUS$ |  |          | As ofDecember 31,2015
ThUS$   |  |  | As ofDecember 31,2015
ThUS$      |   |  | As ofDecember 31,
2015 ThUS$ |            |   | As ofDecember 31,2015
ThUS$ |  |            | As ofDecember 31,2015
ThUS$ | 
|Cash flows from operating activities                                                     |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Receipts from sales of goods and services                                                |  |                                       | 5,506,889  |   |                             |  | (17,705  | )                             |  |  |                                 |   |  |                              | 5,442,905  |   |                             |  | 5,041,794  |                             |  |  | (4,601,486 | ) |  |  | 11,372,397 |  
|Other receipts from operating activities                                                 |  |                                       | 73,596     |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | 14,641     |                             |  |  |           |   |  |  | 88,237     |  
|Payments to suppliers for the supply of goods and services                               |  |                                       | (3,936,180 | ) |                             |  | (392     | )                             |  |  | (22,537                          | ) |  |                              | (3,853,193 | ) |                             |  | (3,869,722 | )                           |  |  | 4,652,442  |   |  |  | (7,029,582 | )
|Payments to and on behalf of employees                                                   |  |                                       | (389,722   | ) |                             |  | (883     | )                             |  |  |                                 |   |  |                              | (922,865   | ) |                             |  | (851,714   | )                           |  |  |           |   |  |  | (2,165,184 | )
|Other payments for operating activities                                                  |  |                                       | (209,137   | ) |                             |  | (70      | )                             |  |  |                                 |   |  |                              | 9,241      |   |                             |  | (151,211   | )                           |  |  |           |   |  |  | (351,177   | )
|Interest received                                                                        |  |                                       | 10,076     |   |                             |  | 1,647    |                               |  |  | 14,986                           |   |  |                              | 17,311     |   |                             |  | 80,425     |                             |  |  | (81,071    | ) |  |  | 43,374     |  
|Income taxes refunded (paid)                                                             |  |                                       | 1,838      |   |                             |  | 3,902    |                               |  |  |                                 |   |  |                              | (255,152   | ) |                             |  | 191,449    |                             |  |  |           |   |  |  | (57,963    | )
|Other inflows (outflows) of cash                                                         |  |                                       | (153,925   | ) |                             |  | (25,176  | )                             |  |  | (4                               | ) |  |                              | (48,194    | ) |                             |  | 30,876     |                             |  |  | 11,796     |   |  |  | (184,627   | )
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net cash flows from operating activities                                                 |  |                                       | 903,435    |   |                             |  | (38,677  | )                             |  |  | (7,555                           | ) |  |                              | 390,053    |   |                             |  | 486,538    |                             |  |  | (18,319    | ) |  |  | 1,715,475  |  
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Cash flows from (used in) investing activities                                           |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Cash flows used to obtain control of subsidiaries or other businesses                    |  |                                       |           |   |                             |  | 432,360  |                               |  |  |                                 |   |  |                              |           |   |                             |  | (432,360   | )                           |  |  |           |   |  |  |           |  
|Other cash receipts from sales of equity or debt instruments of other entities           |  |                                       | 42,266     |   |                             |  | 1,535    |                               |  |  |                                 |   |  |                              | 30 ,992    |   |                             |  | 444,667    |                             |  |  |           |   |  |  | 519,460    |  
|Other payments to acquire equity or debt instruments of other entities                   |  |                                       | (108,464   | ) |                             |  |         |                               |  |  |                                 |   |  |                              | (81,332    | ) |                             |  | (514,319   | )                           |  |  |           |   |  |  | (704,115   | )
|Other proceeds selling the shares of profit of investments accounted for using the equit |  |                                       |           |   |                             |  | (295,111 | )                             |  |  |                                 |   |  |                              |           |   |                             |  | 295,111    |                             |  |  |           |   |  |  |           |  
|Loans to related parties                                                                 |  |                                       | (63,326    | ) |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | (26,461    | )                           |  |  | 89,787     |   |  |  |           |  
|Proceeds from sale of property, plant and equipment                                      |  |                                       | 20,617     |   |                             |  |         |                               |  |  |                                 |   |  |                              | 58,700     |   |                             |  | (22,200    | )                           |  |  |           |   |  |  | 57,117     |  
|Purchases of property, plant and equipment                                               |  |                                       | (1,195,216 | ) |                             |  |         |                               |  |  |                                 |   |  |                              | (194,464   | ) |                             |  | 10,943     |                             |  |  | (191,012   | ) |  |  | (1,569,749 | )
|Amounts raised from sale of intangible assets                                            |  |                                       |           |   |                             |  | 29,444   |                               |  |  |                                 |   |  |                              |           |   |                             |  | (29,353    | )                           |  |  |           |   |  |  | 91         |  
|Purchases of intangible assets                                                           |  |                                       | (27,463    | ) |                             |  |         |                               |  |  |                                 |   |  |                              | (11,869    | ) |                             |  | (9,846     | )                           |  |  | (3,271     | ) |  |  | (52,449    | )
|Proceeds from related parties                                                            |  |                                       |           |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | 59,551     |                             |  |  | (59,551    | ) |  |  |           |  
|Dividends received                                                                       |  |                                       | 4,889      |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | 4,211      |                             |  |  | (9,100     | ) |  |  |           |  
|Other inflows (outflows) of cash                                                         |  |                                       |           |   |                             |  |         |                               |  |  |                                 |   |  |                              | 3,497      |   |                             |  | 7,079      |                             |  |  |           |   |  |  | 10,576     |  
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net cash flows from investing activities                                                 |  |                                       | (1,326,697 | ) |                             |  | 168,228  |                               |  |  |                                 |   |  |                              | (194,476   | ) |                             |  | (212,977   | )                           |  |  | (173,147   | ) |  |  | (1,739,069 | )
|Cash flows from (used in) financing activities                                           |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Proceeds from issue of shares                                                            |  |                                       |           |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | 89,761     |                             |  |  | (89,761    | ) |  |  |           |  
|Payments to acquire or redeem the entitys shares                                        |  |                                       |           |   |                             |  |         |                               |  |  |                                 |   |  |                              | 66         |   |                             |  | (319       | )                           |  |  | 253        |   |  |  |           |  
|Proceeds from term loans                                                                 |  |                                       | 1,487,939  |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | 150,031    |                             |  |  | 153,514    |   |  |  | 1,791,484  |  
|Proceeds from short term loans                                                           |  |                                       | 205,000    |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  |           |                             |  |  |           |   |  |  | 205,000    |  
|Loans from related parties                                                               |  |                                       | 28,932     |   |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | 393,460    |                             |  |  | (422,392   | ) |  |  |           |  
|Repayment of loans                                                                       |  |                                       | (707,307   | ) |                             |  |         |                               |  |  |                                 |   |  |                              | (440       | ) |                             |  | (556,046   | )                           |  |  |           |   |  |  | (1,263,793 | )
|Payments of finance lease liabilities                                                    |  |                                       | (169,700   | ) |                             |  |         |                               |  |  |                                 |   |  |                              | (128,075   | ) |                             |  | (33,024    | )                           |  |  | (11,815    | ) |  |  | (342,614   | )
|Repayment of loans to related parties                                                    |  |                                       | (337,693   | ) |                             |  |         |                               |  |  |                                 |   |  |                              |           |   |                             |  | (49,809    | )                           |  |  | 387,502    |   |  |  |           |  
|Dividends Paid                                                                           |  |                                       | (9         | ) |                             |  |         |                               |  |  |                                 |   |  |                              | 82,204     |   |                             |  | (125,181   | )                           |  |  | 7,954      |   |  |  | (35,032    | )
|Interest paid                                                                            |  |                                       | (277,233   | ) |                             |  |         |                               |  |  |                                 |   |  |                              | (53,156    | ) |                             |  | (151,124   | )                           |  |  | 97,865     |   |  |  | (383,648   | )
|Other inflows (outflows) of cash                                                         |  |                                       | (95,541    | ) |                             |  |         |                               |  |  |                                 |   |  |                              | 8,250      |   |                             |  | 7,369      |                             |  |  | (19,835    | ) |  |  | (99,757    | )
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net cash flows from (used in) financing activities                                       |  |                                       | 134,388    |   |                             |  |         |                               |  |  |                                 |   |  |                              | (91,151    | ) |                             |  | (274,882   | )                           |  |  | 103,285    |   |  |  | (128,360   | )
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net increase (decrease) in, cash and cash aquivalents before effect of exchange rate     |  |                                       | (288,874   | ) |                             |  | 129,551  |                               |  |  | (7,555                           | ) |  |                              | 104,426    |   |                             |  | (1,321     | )                           |  |  | (88,181    | ) |  |  | (151,954   | )
|Effects of variation in the exchange rate on cash and cash equivalents                   |  |                                       | (38,384    | ) |                             |  | (128,735 | )                             |  |  | 7,225                            |   |  |                              | (7,056     | ) |                             |  | 83,005     |                             |  |  |           |   |  |  | (83,945    | )
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                                       | (327,258   | ) |                             |  | 816      |                               |  |  | (330                             | ) |  |                              | 97,370     |   |                             |  | 81,684     |                             |  |  | (88,181    | ) |  |  | (235,899   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                         |  |                                       | 628,367    |   |                             |  | 43       |                               |  |  | 397                              |   |  |                              | 44,326     |   |                             |  | 316,263    |                             |  |  |           |   |  |  | 989,396    |  
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                               |  |                                       | 301,109    |   |                             |  | 859      |                               |  |  | 67                               |   |  |                              | 141,696    |   |                             |  | 397,947    |                             |  |  | (88,181    | ) |  |  | 753,497    |  
|                                                                                         |  |                                       |            |   |                             |  |          |                               |  |  |                                  |   |  |                              |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  



F-148



---

##### Table of Contents

|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|------------------------------------------------------------------------------------ |  | --------------------------- | ---------- | - | --------------------------- |  | -------- | ------------------------------ |  |  | -------------------------------- | - |  | --------------------------- | ---------- | - | --------------------------- |  | ---------- | --------------------------- |  |  | ---------- | - |  |  | ---------- | -
|                                                                                     |  | LATAM S.A.(parent company)  |            |   | TAM S.A.(guarantor)         |  |          | TAM Capital(subsidiary issuer) |  |  | TAM LinhasAéreas S.A.(guarantor) |   |  | Other(non-guarantor)        |            |   | Consolidatingadjustments    |  |            | Consolidated                | 
|                                                                                     |  | As ofDecember 31,2014
ThUS$ |            |   | As ofDecember 31,2014
ThUS$ |  |          | As ofDecember 31,2014
ThUS$    |  |  | As ofDecember 31,2014
ThUS$      |   |  | As ofDecember 31,2014
ThUS$ |            |   | As ofDecember 31,2014
ThUS$ |  |            | As ofDecember 31,2014
ThUS$ | 
|Cash flows from operating activities                                                 |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Receipts from sales of goods and services                                            |  |                             | 5,959,058  |   |                             |  | (45,594  | )                              |  |  |                                 |   |  |                             | 6,147,010  |   |                             |  | 6,256,083  |                             |  |  | (4,948,719 | ) |  |  | 13,367,838 |  
|Other receipts from operating activities                                             |  |                             | 89,995     |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | 7,063      |                             |  |  | (127       | ) |  |  | 96,931     |  
|Payments to suppliers for the supply of goods and services                           |  |                             | (4,221,845 | ) |                             |  | (3,328   | )                              |  |  |                                 |   |  |                             | (4,715,944 | ) |                             |  | (5,348,418 | )                           |  |  | 5,466,528  |   |  |  | (8,823,007 | )
|Payments to and on behalf of employees                                               |  |                             | (461,680   | ) |                             |  | (2,857   | )                              |  |  |                                 |   |  |                             | (1,225,709 | ) |                             |  | (703,860   | )                           |  |  | (39,546    | ) |  |  | (2,433,652 | )
|Other payments for operating activities                                              |  |                             | (150,833   | ) |                             |  |         |                                |  |  |                                 |   |  |                             | 6,791      |   |                             |  | (48,934    | )                           |  |  | (335,238   | ) |  |  | (528,214   | )
|Interest received                                                                    |  |                             | 8,980      |   |                             |  |         |                                |  |  | 13,789                           |   |  |                             |           |   |                             |  | 27,785     |                             |  |  | (38,965    | ) |  |  | 11,589     |  
|Income taxes refunded (paid)                                                         |  |                             | (6,909     | ) |                             |  | (5,058   | )                              |  |  |                                 |   |  |                             | 614        |   |                             |  | (84,254    | )                           |  |  | (12,782    | ) |  |  | (108,389   | )
|Other inflows (outflows) of cash                                                     |  |                             | (126,540   | ) |                             |  | 4,327    |                                |  |  | (9                               | ) |  |                             | 15,146     |   |                             |  | (5,507     | )                           |  |  | (139,074   | ) |  |  | (251,657   | )
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net cash flows from operating activities                                             |  |                             | 1,090,226  |   |                             |  | (52,510  | )                              |  |  | 13,780                           |   |  |                             | 227,908    |   |                             |  | 99,958     |                             |  |  | (47,923    | ) |  |  | 1,331,439  |  
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Cash flows from (used in) investing activities                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Cash flows from losing control of subsidiaries or other businesses                   |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | 3,024      |                             |  |  | (3,024     | ) |  |  |           |  
|Cash flows used to obtain control of subsidiaries or other businesses                |  |                             | (250,350   | ) |                             |  | (118,120 | )                              |  |  |                                 |   |  |                             | 33,782     |   |                             |  | (154,930   | )                           |  |  | 490,136    |   |  |  | 518        |  
|Other cash receipts from sales of equity or debt instruments of other entities       |  |                             |           |   |                             |  | 228      |                                |  |  |                                 |   |  |                             | 80,405     |   |                             |  | 342,908    |                             |  |  | 100,829    |   |  |  | 524,370    |  
|Other payments to acquire equity or debt instruments of other entities               |  |                             | (36,477    | ) |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | (138,920   | )                           |  |  | (299,259   | ) |  |  | (474,656   | )
|Loans to related parties                                                             |  |                             | (126,630   | ) |                             |  |         |                                |  |  | 12,948                           |   |  |                             |           |   |                             |  | (55,146    | )                           |  |  | 168,828    |   |  |  |           |  
|Proceeds from sale of property, plant and equipment                                  |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             | 186,015    |   |                             |  | 562,272    |                             |  |  | (184,021   | ) |  |  | 564,266    |  
|Purchases of property, plant and equipment                                           |  |                             | (1,269,024 | ) |                             |  |         |                                |  |  |                                 |   |  |                             | (255,636   | ) |                             |  | (224,816   | )                           |  |  | 309,031    |   |  |  | (1,440,445 | )
|Amounts raised from sale of intangible assets                                        |  |                             |           |   |                             |  | 8,224    |                                |  |  |                                 |   |  |                             |           |   |                             |  |           |                             |  |  | (8,224     | ) |  |  |           |  
|Purchases of intangible assets                                                       |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             | (30,933    | ) |                             |  | (23,831    | )                           |  |  | (995       | ) |  |  | (55,759    | )
|Other cash receipts from related parties                                             |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             | (75,082    | ) |                             |  | 22,380     |                             |  |  | 52,702     |   |  |  |           |  
|Dividends received                                                                   |  |                             | 9,685      |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | 752        |                             |  |  | (10,437    | ) |  |  |           |  
|Other inflows (outflows) of cash                                                     |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             | (397       | ) |                             |  | (15,527    | )                           |  |  | (1,475     | ) |  |  | (17,399    | )
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net cash flows from investing activities                                             |  |                             | (1,672,796 | ) |                             |  | (109,668 | )                              |  |  | 12,948                           |   |  |                             | (61,846    | ) |                             |  | 318,166    |                             |  |  | 614,091    |   |  |  | (899,105   | )
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Cash flows from (used in) financing activities                                       |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Proceeds from issue of shares                                                        |  |                             | 156,321    |   |                             |  | 219,110  |                                |  |  |                                 |   |  |                             | 262,702    |   |                             |  | 156,402    |                             |  |  | (638,214   | ) |  |  | 156,321    |  
|Payments to acquire or redeem the entitys shares                                    |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  |           |                             |  |  | 4,661      |   |  |  | 4,661      |  
|Proceeds from long term loans                                                        |  |                             | 706,661    |   |                             |  | 4,162    |                                |  |  |                                 |   |  |                             | 89,598     |   |                             |  | 336,159    |                             |  |  | (93,760    | ) |  |  | 1,042,820  |  
|Proceeds from short term loans                                                       |  |                             | 597,000    |   |                             |  |         |                                |  |  |                                 |   |  |                             | 84,944     |   |                             |  | 6,151      |                             |  |  | (84,944    | ) |  |  | 603,151    |  
|Loans from related parties                                                           |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | 169,746    |                             |  |  | (169,746   | ) |  |  |           |  
|Repayment of loans                                                                   |  |                             | (1,147,651 | ) |                             |  |         |                                |  |  |                                 |   |  |                             | (419,887   | ) |                             |  | (706,576   | )                           |  |  | (41,006    | ) |  |  | (2,315,120 | )
|Payments of finance lease liabilities                                                |  |                             | (131,484   | ) |                             |  |         |                                |  |  |                                 |   |  |                             | (181,779   | ) |                             |  | (56,262    | )                           |  |  | (24,606    | ) |  |  | (394,131   | )
|Repayment of loans to related parties                                                |  |                             | (9,310     | ) |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | (3,483     | )                           |  |  | 12,793     |   |  |  |           |  
|Dividends Paid                                                                       |  |                             |           |   |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  | (13,983    | )                           |  |  | (21,379    | ) |  |  | (35,362    | )
|Interest paid                                                                        |  |                             | (246,598   | ) |                             |  | (581     | )                              |  |  | (24,479                          | ) |  |                             | (49,536    | ) |                             |  | (168,938   | )                           |  |  | 121,343    |   |  |  | (368,789   | )
|Other inflows (outflows) of cash                                                     |  |                             | (37,641    | ) |                             |  |         |                                |  |  |                                 |   |  |                             |           |   |                             |  |           |                             |  |  | 23,864     |   |  |  | (13,777    | )
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net cash flows from (used in) financing activities                                   |  |                             | (112,702   | ) |                             |  | 222,691  |                                |  |  | (24,479                          | ) |  |                             | (213,958   | ) |                             |  | (280,784   | )                           |  |  | (910,994   | ) |  |  | (1,320,226 | )
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net increase (decrease) in, cash and cash aquivalents before effect of exchange rate |  |                             | (695,272   | ) |                             |  | 60,513   |                                |  |  | 2,249                            |   |  |                             | (47,896    | ) |                             |  | 137,340    |                             |  |  | (344,826   | ) |  |  | (887,892   | )
|Effects of variation in the exchange rate on cash and cash equivalents               |  |                             | (45,080    | ) |                             |  | (60,573  | )                              |  |  | (1,941                           | ) |  |                             | (29,882    | ) |                             |  | (173,817   | )                           |  |  | 203,678    |   |  |  | (107,615   | )
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|Net increase (decrease) in cash and cash equivalents                                 |  |                             | (740,352   | ) |                             |  | (60      | )                              |  |  | 308                              |   |  |                             | (77,778    | ) |                             |  | (36,477    | )                           |  |  | (141,148   | ) |  |  | (995,507   | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     |  |                             | 1,368,719  |   |                             |  | 103      |                                |  |  | 89                               |   |  |                             | 122,104    |   |                             |  | 325,718    |                             |  |  | 168,170    |   |  |  | 1,984,903  |  
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           |  |                             | 628,367    |   |                             |  | 43       |                                |  |  | 397                              |   |  |                             | 44,326     |   |                             |  | 289,241    |                             |  |  | 27,022     |   |  |  | 989,396    |  
|                                                                                     |  |                             |            |   |                             |  |          |                                |  |  |                                  |   |  |                             |            |   |                             |  |            |                             |  |  |            |   |  |  |            |  



F-149



---

##### Table of Contents

LOGO

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Latam Airlines Group
S.A.

In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of income, comprehensive
income, changes in equity and cash flows present fairly, in all material respects, the financial position of Latam Airlines Group S.A. and its subsidiaries at December 31, 2016 and 2015, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Companys management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in Managements Annual Report on Internal Control over Financial Reporting appearing under Item 15 of Latam Airlines Group S.A.s Annual Report on Form 20-F. Our
responsibility is to express opinions on these financial statements and on the Companys internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control
over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A companys internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
the companys assets that could have a material effect on the financial statements.



|                                                                        |  | 
|----------------------------------------------------------------------- |  | 
|                                                                        |  | 
|PwC Chile, Av. Andrés Bello 2711 - piso 5, Las Condes - Santiago, Chile |  | 
|RUT: 81.513.400-1 | Teléfono: (56 2) 22940 0000 | www.pwc.cl            |  | 



F-150



---

##### Table of Contents

LOGO



Latam Airlines Group S.A.

2



Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.



LOGO

Santiago, Chile

March 29, 2017



F-151



---

##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this annual report on its behalf.



|                     |  |  |  |                           |  |                      
|-------------------- |  |  |  | ------------------------- |  | ---------------------
|Date: March 29, 2017 |  |  |  | LATAM Airlines Group S.A.
|                     |  |  | 
|                     |  |  |  | By:                       |  | LOGO                 
|                     |  |  |  |                           |  |                      
|                     |  |  |  | Name:                     |  | Ramiro Alfonsin Balza
|                     |  |  |  | Title:                    |  | CFO LATAM