UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

May 12, 2016

Commission File Number 1-14728

LATAM Airlines Group S.A.

(Translation of Registrant’s Name Into English)

Presidente Riesco 5711, 20th floor

Las Condes

Santiago, Chile

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x             Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016

CONTENTS

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

Contents of the notes to the interim consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.

Notes	Page
1 - General information	1
2 - Summary of significant accounting policies	4
2.1. Basis of Preparation	4
2.2. Basis of Consolidation	7
2.3. Foreign currency transactions	8
2.4. Property, plant and equipment	8
2.5. Intangible assets other than goodwill	9
2.6. Goodwill	10
2.7. Borrowing costs	10
2.8. Losses for impairment of non-financial assets	10
2.9. Financial assets	10
2.10. Derivative financial instruments and hedging activities	11
2.11. Inventories	12
2.12. Trade and other accounts receivable	13
2.13. Cash and cash equivalents	13
2.14. Capital	13
2.15. Trade and other accounts payables	13
2.16. Interest-bearing loans	13
2.17. Current and deferred taxes	14
2.18. Employee benefits	14
2.19. Provisions	15
2.20. Revenue recognition	15
2.21. Leases	16
2.22. Non-current assets (or disposal groups) classified as held for sale	16
2.23. Maintenance	16
2.24. Environmental costs	17
3 - Financial risk management	17
3.1. Financial risk factors	17
3.2. Capital risk management	31
3.3. Estimates of fair value	31
4 - Accounting estimates and judgments	35
5 - Segmental information	38
6 - Cash and cash equivalents	40
7 - Financial instruments	43
7.1. Financial instruments by category	43
7.2. Financial instruments by currency	45
8 - Trade, other accounts receivable and non-current accounts receivable	46
9 - Accounts receivable from/payable to related entities	49
10 - Inventories	50
11 - Other financial assets	51
12 - Other non-financial assets	52
13 - Investments in subsidiaries	53
14 - Intangible assets other than goodwill	56

15 - Goodwill	57
16 - Property, plant and equipment	59
17 - Current and deferred tax	65
18 - Other financial liabilities	71
19 - Trade and other accounts payables	79
20 - Other provisions	81
21 - Other non-financial liabilities	84
22 - Employee benefits	85
23 - Accounts payable, non-current	87
24 - Equity	87
25 - Revenue	92
26 - Costs and expenses by nature	92
27 - Other income, by function	94
28 - Foreign currency and exchange rate differences	94
29 - Earnings per share	103
30 - Contingencies	104
31 - Commitments	111
32 - Transactions with related parties	116
33 - Share based payments	117
34 - The environment	121
35 - Events subsequent to the date of the financial statements	122

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS
		As of		As of
		March 31,		December 31,
	Note	2016		2015
		ThUS$		ThUS$
		Unaudited
Current assets
Cash and cash equivalents	6 - 7		768,000		753,497
Other financial assets	7 - 11		604,751		651,348
Other non-financial assets	12		275,583		330,016
Trade and other accounts receivable	7 - 8		815,150		796,974
Accounts receivable from related entities	7 - 9		228		183
Inventories	10		229,522		224,908
Tax assets	17		66,850		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			2,760,084		2,820,941
Non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners			2,007		1,960
Total current assets			2,762,091		2,822,901
Non-current assets
Other financial assets	7 - 11		103,073		89,458
Other non-financial assets	12		309,759		235,463
Accounts receivable	7 - 8		7,014		10,715
Intangible assets other than goodwill	14		1,443,519		1,321,425
Goodwill	15		2,493,114		2,280,575
Property, plant and equipment	16		11,116,714		10,938,657
Tax assets	17		25,629		25,629
Deferred tax assets	17		370,934		376,595
Total non-current assets			15,869,756		15,278,517
Total assets			18,631,847		18,101,418

The accompanying Notes 1 to 35 form an integral part of these consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

LIABILITIES AND EQUITY
		As of			As of
		March 31,			December 31,
LIABILITIES	Note	2016			2015
		ThUS$			ThUS$
		Unaudited
Current liabilities
Other financial liabilities	7 - 18		1,641,563			1,644,235
Trade and other accounts payables	7 - 19		1,452,837			1,483,957
Accounts payable to related entities	7 - 9		472			447
Other provisions	20		2,400			2,922
Tax liabilities	17		25,799			19,378
Other non-financial liabilities	21		2,468,489			2,490,033
Total current liabilities			5,591,560			5,640,972
Non-current liabilities
Other financial liabilities	7 - 18		7,687,404			7,532,385
Accounts payable	7 - 23		410,418			417,050
Other provisions	20		464,114			424,497
Deferred tax liabilities	17		857,139			811,565
Employee benefits	22		71,465			65,271
Other non-financial liabilities	21		273,017			272,130
Total non-current liabilities			9,763,557			9,522,898
Total liabilities			15,355,117			15,163,870
EQUITY
Share capital	24		2,545,705			2,545,705
Retained earnings	24		389,241			317,950
Treasury Shares	24		(178	)		(178	)
Other reserves			256,380			(6,942	)
Parent's ownership interest			3,191,148			2,856,535
Non-controlling interest	13		85,582			81,013
Total equity			3,276,730			2,937,548
Total liabilities and equity			18,631,847			18,101,418

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF INCOME BY FUNCTION

		For the period ended
		March 31,
	Note	2016			2015
		ThUS$			ThUS$
		Unaudited
Revenue	25		2,234,257			2,693,849
Cost of sales			(1,661,474	)		(2,037,285	)
Gross margin			572,783			656,564
Other income	27		93,360			97,293
Distribution costs			(175,707	)		(220,623	)
Administrative expenses			(181,831	)		(250,004	)
Other expenses			(89,524	)		(56,326	)
Other gains/(losses)			3,565			6,214
Income from operation activities			222,646			233,118
Financial income			10,864			18,490
Financial costs	26		(103,049	)		(95,333	)
Foreign exchange gains/(losses)	28		67,898			(204,577	)
Result of indexation units			-			474
Income (loss) before taxes			198,359			(47,828	)
Income (loss) tax expense / benefit	17		(82,327	)		23,553
NET INCOME (LOSS) FOR THE PERIOD			116,032			(24,275	)
Income (loss) attributable to owners of the parent			102,208			(39,947	)
Income (loss) attributable to non-controlling interest	13		13,824			15,672
Net income (loss) for the year			116,032			(24,275	)
EARNINGS PER SHARE
Basic earnings (losses) per share (US$)	29		0.18735			(0.07322	)
Diluted earnings (losses) per share (US$)	29		0.18735			(0.07322	)

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		For the period ended
		March 31,
	Note	2016			2015
		ThUS$			ThUS$
		Unaudited
NET INCOME (LOSS)			116,032			(24,275	)
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	24		(1,573	)		-
Total other comprehensive income that will not be reclassified to income before taxes			(1,573	)		-
Components of other comprehensive income that will be reclassified to income before taxes
Currency translation differences
Gains (losses) on currency translation, before tax	28		244,976			(726,740	)
Other comprehensive income, before taxes, currency translation differences			244,976			(726,740	)
Cash flow hedges
Gains (losses) on cash flow hedges before taxes	18		27,974			83,263
Other comprehensive income (losses), before taxes, cash flow hedges			27,974			83,263
Total other comprehensive income that will be reclassified to income before taxes			272,950			(643,477	)
Other components of other comprehensive income (loss), before taxes			271,377			(643,477	)
Income tax relating to other comprehensive income that will not be reclassified to income
Income tax relating to new measurements on defined benefit plans	17		413			-
Accumulate income tax relating to other comprehensive income that will not be reclassified to income			413			-
Income tax relating to other comprehensive income that will be reclassified to income
Income tax related to cash flow hedges in other comprehensive income			(7,711	)		(21,366	)
Income taxes related to components of other comprehensive income that will be reclassified to income			(7,711	)		(21,366	)
Total Other comprehensive income			264,079			(664,843	)
Total comprehensive income (loss)			380,111			(689,118	)
Comprehensive income (loss) attributable to owners of the parent			364,361			(687,176	)
Comprehensive income (loss) attributable to non-controlling interests			15,750			(1,942	)
TOTAL COMPREHENSIVE INCOME (LOSS)			380,111			(689,118	)

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
							Change in other reserves
													Actuarial gains or
							Currency			Cash flow			losses on defined			Shares based		Other		Total						Parent's			Non-
		Share		Treasury			translation			hedging			benefit plans			payments		sundry		other			Retained			ownership			controlling			Total
	Note	capital		shares			reserve			reserve			reserve			reserve		reserve		reserve			earnings			interest			interest			equity
		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)	24		-		-			-			-			-			-		-		-			102,208			102,208			13,824			116,032
Other comprehensive income			-		-			243,384			19,929			(1,160	)		-				262,153			-			262,153			1,926			264,079
Total comprehensive income			-		-			243,384			19,929			(1,160	)		-		-		262,153			102,208			364,361			15,750			380,111
Transactions with shareholders
Dividens	28		-		-			-			-			-			-		-		-			(30,662	)		(30,662	)		-			(30,662	)
Increase (decrease) through transfers and other changes, equity	24-33		-		-			-			-			-			829		340		1,169			(255	)		914			(11,181	)		(10,267	)
Total transactions with shareholders			-		-			-			-			-			829		340		1,169			(30,917	)		(29,748	)		(11,181	)		(40,929	)
Closing balance as of March 31, 2016 (Unaudited)			2,545,705		(178	)		(2,332,657	)		(70,581	)		(11,877	)		36,476		2,635,019		256,380			389,241			3,191,148			85,582			3,276,730

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Attributable to owners of the parent
							Change in other reserves
							Currency			Cash flow			Shares based		Other		Total						Parent's			Non-
		Share		Treasury			translation			hedging			payments		sundry		other			Retained			ownership			controlling			Total
	Note	capital		shares			reserve			reserve			reserve		reserve		reserve			earnings			interest			interest			equity
		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)	24		-		-			-			-			-		-		-			(39,947	)		(39,947	)		15,672			(24,275	)
Other comprehensive income			-		-			(709,950	)		62,721			-		-		(647,229	)		-			(647,229	)		(17,614	)		(664,843	)
Total comprehensive income			-		-			(709,950	)		62,721			-		-		(647,229	)		(39,947	)		(687,176	)		(1,942	)		(689,118	)
Transactions with shareholders
Increase (decrease) through transfers and other changes, equity	24-33		-		-			-			-			2,128		1,928		4,056			528			4,584			(9,403	)		(4,819	)
Total transactions with shareholders			-		-			-			-			2,128		1,928		4,056			528			4,584			(9,403	)		(4,819	)
Closing balance as of March 31, 2015 (Unaudited)			2,545,705		(178	)		(1,903,821	)		(88,619	)		31,770		2,637,676		677,006			496,771			3,719,304			90,454			3,809,758

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS DIRECT – METHOD

		For the periods ended
		March 31,
	Note	2016			2015
		ThUS$			ThUS$
		Unaudited
Cash flows from operating activities
Cash collection from operating activities
Proceeds from sales of goods and services			2,388,275			2,961,149
Other cash receipts from operating activities			12,603			23,622
Payments for operating activities
Payments to suppliers for goods and services			(1,665,245	)		(1,778,734	)
Payments to and on behalf of employees			(581,052	)		(638,808	)
Other payments for operating activities			(44,508	)		(73,264	)
Interest received			9,420			5,975
Income taxes refunded (paid)			(12,016	)		(13,586	)
Other cash inflows (outflows)	6		(32,346	)		(123,659	)
Net cash flows from operating activities			75,131			362,695
Cash flows used in investing activities
Other cash receipts from sales of equity or debt instruments of other entities			755,473			143,825
Other payments to acquire equity or debt instruments of other entities			(664,564	)		(26,241	)
Amounts raised from sale of property, plant and equipment			12,406			5,254
Purchases of property, plant and equipment			(290,082	)		(297,008	)
Amounts raised from sale of intangible assets			-			17
Purchases of intangible assets			(13,180	)		(2,402	)
Other cash inflows (outflows)	6		(3,423	)		3,800
Net cash flow from (used in) investing activities			(203,370	)		(172,755	)
Cash flows from (used in) financing activities
Amounts raised from long-term loans			607,590			129,299
Amounts raised from short-term loans			120,000			14,990
Loans repayments			(405,779	)		(164,563	)
Payments of finance lease liabilities			(90,268	)		(76,312	)
Dividends paid			(13,875	)		(9,419	)
Interest paid			(73,255	)		(75,100	)
Other cash inflows (outflows)	6		(82,859	)		41,311
Net cash flows from (used in) financing activities			61,554			(139,794	)
Net increase (decrease) in cash and cash equivalents before effect of exchanges rate change			(66,685	)		50,146
Effects of variation in the exchange rate on cash and cash equivalents			81,188			(80,382	)
Net increase (decrease) in cash and cash equivalents			14,503			(30,236	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	6		753,497			989,396
CASH AND CASH EQUIVALENTS AT END OF PERIOD	6		768,000			959,160

The accompanying Notes 1 to 35 form an integral part of these interim consolidated financial statements.

LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2016 (UNAUDITED)

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”) and in Brazil BM & FBOVESPA S.A. – Stock Exchange, Mercadorias e Futuros, in the form of Brazilian Depositary Receipts (“BDRs”).

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, and the Federal Republic of Brazil and the Comissão de Valores Mobiliarios (“CVM”) of that country, as it pertains to the issuance of BDRs.

On February 2, 2016, LATAM received the approval by 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.

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, 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 Puerto Claro Dos Limitada, Inversiones La Espasa Dos y Cía. Ltda., Inversiones Puerto Claro Dos y Cía. Limitada and Inversiones Mineras del Cantábrico S.A. owns 25.00% 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 March 31, 2016, the Company had a total of 1,531 registered shareholders. At that date approximately 4.52 % of the Company’s share capital was in the form of ADRs and approximately 0.44% in the form of BDRs.

For the period ended March 31, 2016, the Company had an average of 51,417 employees, ending this period with a total of 49,888 employees, spread over 9,139 Administrative employees, 5,906 in Maintenance, 16,616 in Operations, 9,293 in Cabin Crew, 4,025 in Controls Crew, and 4,909 in Sales.

The main subsidiaries included in these consolidated financial statements are as follows:

a) Participation rate

				As March 31, 2016						As December 31, 2015
		Country	Functional
Tax No .	Company	of origin	Currency	Direct		Indirect		Total		Direct		Indirect		Total
				%		%		%		%		%		%
96.518.860-6	Lantours Division Servicios Terrestres S.A. and Subsidary	Chile	US$		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
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
Foreign	Lan Perú S.A.	Peru	US$		49.0000		21.0000		70.0000		49.0000		21.0000		70.0000
Foreign	Lan Chile Investments Limited and Subsidiary	Cayman Insland	US$		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
Foreign	Connecta Corporation	U.S.A.	US$		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
96.951.280-7	Trans porte Aéreo S.A.	Chile	US$		0.0000		100.0000		100.0000		0.0000		100.0000		100.0000
Foreign	Aircraft International Leasing Limited	U.S.A.	US$		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
Foreign	Laser Cargo S.R.L.	Argentina	ARS		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
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
96.575.810-0	Inversiones Lan S.A. and Subsidiaries	Chile	US$		99.7100		0.2900		100.0000		99.7100		0.2900		100.0000
59.068.920-3	Technical Trainning LATAM S.A.	Chile	CLP		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

(*) As of March 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 in TAM. Additionally LATAM Airlines owns 226 voting shares, equivalent as of 19,42% of total of voting shares. Additionally on March 29, 2016, LATAM Airlines Group S.A. has changed 675 series B shares by 675 series A shares, according to the provisional measure No. 714 of the Brazilian government.

Thus LATAM Airlines Group S.A. is owns 901 shares with voting rights of Holdco I S.A., equivalent to 49% of total shares with voting rights of that company.

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b) Statement of financial position

		Statement of financial position														Net Income
																For the periods ended
		As of March 31, 2015							As of December 31, 2015							December 31,
																2016			2015
Tax No.	Company	Assets		Liabilities		Equity			Assets		Liabilities		Equity			Gain/(loss)
		ThUS $		ThUS $		ThUS $			ThUS $		ThUS $		ThUS $			ThUS $			ThUS $
96.518.860-6	Lantours Division Servicios Terrestres S.A.and Subsidary		3,244		2,242		1,002			5,613		5,522		91			911			737
96.763.900-1	Inmobiliaria Aeronáutica S.A.		39,112		14,292		24,820			39,302		14,832		24,470			350			798
96.969.680-0	Lan Pax Group S.A.and Subsidiaries(*)		451,259		963,377		(503,987	)		519,588		1,049,232		(521,907	)		14,613			9,677
Foreign	Lan Perú S.A.		286,827		260,349		26,478			255,691		240,938		14,753			131,117			15,058
Foreign	Lan Chile Investments Limited and Subsidiary(*)		2,015		13		2,002			2,015		13		2,002			-			-
93.383.000-4	Lan Cargo S.A.		464,454		211,489		252,965			483,033		217,037		265,966			(13,053	)		(12,563	)
Foreign	Connecta Corporation		34,408		33,606		802			37,070		38,298		(1,228	)		2,030			1,345
Foreign	Prime Airport Services Inc.and Subsidary		7,222		11,991		(4,769	)		6,683		11,180		(4,497	)		(272	)		129
96.951.280-7	Transporte Aéreo S.A.		332,592		116,287		216,305			331,117		122,666		208,451			7,779			(1,129	)
Foreign	Aircraft International Leasing Limited		-		4		(4	)		-		4		(4	)		-			(4	)
96.631.520-2	Fast Air Almacenesde Carga S.A.		8,616		3,648		4,968			8,985		4,641		4,344			314			458
Foreign	Laser Cargo S.R.L.		23		58		(35	)		27		39		(12	)		-			(71	)
Foreign	Lan Cargo Overseas Limited and Subsidiaries(*)		66,777		43,578		19,593			62,406		43,759		15,563			4,032			7,060
96.969.690-8	Lan Cargo Inversiones S.A.and Subsidary:		52,396		62,828		(9,526	)		54,179		68,220		(12,601	)		3,069			8,765
96.575.810-0	Inversiones Lan S.A.and Subsidiaries(*)		18,268		15,188		3,047			16,512		14,676		1,828			1,202			874
59.068.920-3	Technical Trainning LATAM S.A.		1,662		143		1,519			1,527		266		1,261			180			(213	)
Foreign	TAMS.A.and Subsidiaries(*)(**)		4,892,799		4,342,867		475,545			4,711,316		4,199,223		437,953			20,620			(14,978	)

(*) 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.

Changes in the scope of consolidation between January 1, 2015 and March 31, 2016, are detailed below:

(1) Incorporation or acquisition of companies

- On March 2016, Inversiones LAN S.A., subsidiary of LATAM Airlines Group S.A., acquired 1,119 shares of Aerovías de Integración Regional Aires S.A. a non-controlling shareholder, equivalent to 0.0215%, consequently, the indirect participation of LATAM Airlines Group S.A. increases to 99.12066%

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- 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 October 2015, Rampas Airport Services S.A., subsidiary of Lan Pax Group S.A. increases its capital and paid in the amount of MUS $ 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%.

(2) Dissolution of companies

- In July 2015, the Company Ladeco Cargo S.A. subsidiary of Lan Cargo S.A. was dissolved.

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 interim consolidated financial statements of LATAM Airlines Group S.A. for the period ended March 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).

As October 17, 2014 the Chilean Superintendency of Securities and Insurance (SVS) issued Office Circular No. 956, introduced the restatement of assets and liabilities by deferred income taxes that occur as a direct effect of the First- Category Tax rate increase introduced by Law No. 20,780 (Tax reform) was held in equity and not as indicates the International Accounting Standards 12 (AS 12), and changed the framework for preparation and presentation of financial information adopted as of that date.

As referred on paragraph 4A of IFRS 1, The Company has decided apply IFRS retrospective, according to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, as if it had never stopped applying those IFRS.

Whereas detailed in the previous paragraph does not modify any of the accounts set forth in the Statements of Financial Position as of March 31, 2016 and 2015, as neither as of December 31, 2015 and 2014, as expressed in paragraph 40A IAS 1 " Presentation of Financial Statements”, incorporate adjusted opening balance as January 1, 2015 is not necessary (third column).

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The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments.

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. These interim consolidated financial statements have been prepared under IAS 34.

In order to facilitate the comparison, there have been some minor reclassifications to the consolidated financial statements corresponding to the previous year.

(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 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
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
(ii)        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.

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(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
IFRS 15: Revenue from contracts with customers (1).	May 2014	01/01/2018
Amendment to IFRS 9: Financial instruments.	November 2013	01/01/2018
IFRS 16: Leases (2).	January 2016	01/01/2019
Amendment to IFRS 10: Consolidated financial statements and IAS 28 Investments in associates and joint ventures.	September 2014	To be determined

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, which are still under evaluation.

(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.

(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.

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.

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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).

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.

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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.

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.

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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) Brands, Airport slots and Loyalty program

Brands, Airport slots and 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

Brand – Air transport CGU

(See Note 15)

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.

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.

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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.

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.

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.

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(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.

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.

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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.

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.

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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.

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.

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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.

(b) Share-based compensation

The compensation plans implemented by the granting of options for the subscription and payment of shares are shown in the consolidated financial statements in accordance with IFRS 2: Share based payments, showing the effect of the fair value of the options granted as a charge to remuneration on a straight-line basis between the date of granting such options and the date on which these become vested.

(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.

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(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.

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.

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(b) Interest income

Interest income is booked using the effective interest rate method.

(c) 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.

2.22. Non-current assets or disposal groups classified as held for sale

Non-current assets (or disposal groups) classified as assets held for sale are shown 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.

16

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.

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.

17

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 March 31, 2016, the Company recognized losses of US$ 28.8 million on fuel derivative. During the same period of 2015, the Company recognized losses of US$ 104.7 million for the same reason.

At March 31, 2016, the market value of its fuel positions amounted to US$ 21.3 million (negative). 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  March 31, 2016 (*) (Unaudited)	Maturities
	Q216			Q316			Q416			Total
Percentage of the hedge of expected consumption value		57	%		27	%		11	%		31	%

(*) 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.

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 2016.

18

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 March, 2016 and the end of December, 2015.

		Positions as of March 31, 2016		Positions as of December 31, 2015
Benchmark price		effect on equity		effect on equity
(US$ per barrel)		(millions of US$)		(millions of US$)
		(Unaudited)
	+5		+4.93		+5.41
	-5		-6.23		-2.78

Given the fuel hedge structure during the first quarter of 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$ 25.2 million in the cost of total fuel consumption for the same period. For the first quarter of 2016, a vertical rise by 5 dollars in the JET benchmark price (the monthly daily average) would have meant an impact of approximately US$ 30.7 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 Euro (EUR), Pound Sterling (GBP), Australian Dollar (AUD), Colombian Peso (COP) and Chilean Peso (CLP).

In lower concentrations the Company is therefore exposed to fluctuations in others currencies, such as: Argentine Peso, Paraguayan Guaraní, Mexican Peso, Peruvian Sol and New Zealand Dollar.

Mitigation:

The Company mitigates currency risk exposures by contracting derivative instruments or through natural hedges or execution of internal operations.

19

FX Hedging Results:

With the aim of reducing exposure to exchange rate risk on operating cash flows in 2015 and 2016, and secure the operating margin, LATAM and TAM conduct hedging through FX derivatives.

At March 31, 2016, the market value of its FX positions amounted to US$ 18.6 million (negative). At end of December 2015 the market value was of US$ 8.0 million (positive).

During the period ended at March 31, 2016 the Company recognized gains of US$ 1.1 million on hedging FX. During the same period of 2015 the Company recognized gains of US$ 7.5 million on hedging FX.

At end of March 2016, the Company has contracted FX derivatives for US$ 326 million to BRL, US$ 159 million to EUR, US$ 60 million to GBP, US$ 21 million to AUD, US$ 51 million to COP and US$ 45 million to CLP. 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. For AUD, COP and CLP there were no current positions.

Sensitivity analysis:

A depreciation of exchange rate R$/ US$, US$/EUR, US$/GBP, US$/AUD, COP$/US$ and CLP$/US$ 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 last quarter of 2016:

Appreciation (depreciation)*			Effect at March 31, 2016		Effect at December 31, 2015
of  R$//EUR/GBP/AUD/CLP/COP			Millions of US$		Millions of US$
			(Unaudited)
	-10	%		-24.33		-21.28
	+10	%		+25.51		+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 conducted transactions for to reduce the net US$ liabilities held by TAM S.A.

20

The following table shows the variation of financial performance to appreciate or depreciate 10% exchange rate R$/US$:

Appreciation (depreciation)*			Effect at March 31, 2016		Effect at December 31, 2015
of R$/US$			Millions of US$		Millions of US$
			(Unaudited)
	-10	%		+113.2		+67.6
	+10	%		-113.2		-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 18).

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)			Effect at March 31, 2016		Effect at December 31, 2015
of R$/US$			Millions of US$		Millions of US$
			(Unaudited)
	-10	%		+323.89		+296.41
	+10	%		-265.00		-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").

21

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 71% (71% at December 31, 2015) of the debt is fixed to fluctuations in interest rate.

Rate Hedging Results:

At March 31, 2016, the market value of the positions of interest rate derivatives amounted to US$ 34.5 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.

Increase (decrease)	Positions as of March 31, 2016		Positions as of December 31, 2015
futures curve	effect on profit or loss before tax		effect on profit or loss before tax
in libor 3 months	(millions of US$)		(millions of US$)
	(Unaudited)
+100 basis points		-26.7		-26.7
-100 basis points		+26.7		+26.7

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)	Positions as of March 31, 2016		Positions as of December 31, 2015
futures curve	effect on equity		effect on equity
in libor 3 months	(millions of US$)		(millions of US$)
	(Unaudited)
+100 basis points		+7.28		+8.71
-100 basis points		-7.54		-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.

22

(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.

23

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 March 31, 2016 is US$1,340 million, 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 March 31, 2016, LATAM has working capital credit lines with multiple banks.

24

Class of liability for the analysis of liquidity risk ordered by date of maturity as of March 31, 2016 (Unaudited)

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2 Chile.

						More than		More than		More than
				Up to		90 days		one to		three to		More than
		Creditor		90		to one		three		five		five				Nominal			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		Total		value		Amortization	rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%
Loans to exporters
97.032.000-8	BBVA	Chile	US$		100,336		-		-		-		-		100,336		100,000	At Expiration		1.33		1.33
97.036.000-K	SANTANDER	Chile	US$		100,440		-		-		-		-		100,440		100,000	At Expiration		1.80		1.80
97.030.000-7	ESTADO	Chile	US$		58,061		-		-		-		-		58,061		57,357	At Expiration		4.91		4.91
97.004.000-5	BANCO DECHILE	Chile	US$		50,060		-		-		-		-		50,060		50,000	At Expiration		1.44		1.44
97.003.000-K	BANCO DOBRASIL	Chile	US$		-		71,969		-		-		-		71,969		70,000	At Expiration		2.82		2.82
97.951.000-4	HSBC	Chile	US$		12,023		-		-		-		-		12,023		12,000	At Expiration		0.75		0.75
Bank loans
97.023.000-9	CORP BANCA	Chile	UF		20,997		61,752		105,115		32,782		-		220,646		206,647	Quarterly		4.16		4.16
0-E	BLADEX	U.S.A.	US$		3,632		6,070		30,526		15,514		-		55,742		50,000	Semiannual		4.58		4.58
0-E	DVB BANK SE	U.S.A.	US$		265		370		95,949		-		-		96,584		95,784	Quarterly		1.69		1.69
97.036.000-K	SANTANDER	Chile	US$		675		-		179,835		-		-		180,510		179,835	Quarterly		2.53		2.53
Obligations with the public
0-E	BANK OF NEW YORK	U.S.A.	US$		18,125		18,125		72,500		554,375		-		663,125		500,000	At Expiration		7.77		7.25
Guaranteed obligations
0-E	CREDIT AGRICOLE	France	US$		35,603		97,607		231,868		51,085		9,137		425,300		409,578	Quarterly		1.93		1.77
0-E	BNP PARIBAS	U.S.A.	US$		10,183		30,799		84,012		84,532		139,354		348,880		311,234	Quarterly		2.45		2.41
0-E	WELLS FARGO	U.S.A.	US$		35,762		107,373		286,823		287,569		518,938		1,236,465		1,149,856	Quarterly		2.25		1.64
0-E	WILMINGTON TRUST COMPANY	U.S.A.	US$		29,018		78,207		192,034		189,791		746,129		1,235,179		948,685	Quarterly		4.25		4.25
0-E	CITIBANK	U.S.A.	US$		19,823		59,737		161,174		164,022		246,121		650,877		599,960	Quarterly		2.49		1.74
97.036.000-K	SANTANDER	Chile	US$		5,716		17,233		46,491		47,310		44,344		161,094		154,436	Quarterly		1.57		1.03
0-E	BTMU	U.S.A.	US$		3,073		9,272		25,075		25,609		36,900		99,929		94,241	Quarterly		1.92		1.32
0-E	APPLE BANK	U.S.A.	US$		1,511		4,559		12,349		12,630		18,609		49,658		46,810	Quarterly		2.02		1.42
0-E	US BANK	U.S.A.	US$		18,629		55,758		147,837		146,546		285,357		654,127		576,555	Quarterly		3.99		2.81
0-E	DEUTSCHE BANK	U.S.A.	US$		6,053		18,184		37,613		31,241		59,742		152,833		131,930	Quarterly		3.62		3.62
0-E	NATIXIS	France	US$		14,188		42,992		117,343		99,815		239,472		513,810		457,979	Quarterly		2.22		2.19
0-E	HSBC	U.S.A.	US$		1,632		4,912		13,190		13,322		23,655		56,711		52,211	Quarterly		2.58		1.77
0-E	PK AirFinance	U.S.A.	US$		2,201		6,738		19,153		21,068		15,358		64,518		60,633	Monthly		2.14		2.14
0-E	KFW IP EX-BANK	Germany	US$		2,448		7,438		19,430		14,909		1,113		45,338		42,883	Quarterly		2.27		2.27
Other guaranteed obligations
0-E	CITIBANK	U.S.A.	US$		2,151		6,453		292,207		-		-		300,811		275,000	At Expiration		3.13		3.13
0-E	DVB Bank SE	U.S.A.	US$		8,247		16,486		-		-		-		24,733		24,438	Quarterly		2.32		2.32
Financial leases
0-E	ING	U.S.A.	US$		9,240		22,714		39,663		24,209		-		95,826		86,890	Quarterly		5.26		4.68
0-E	CREDIT AGRICOLE	France	US$		1,738		5,305		5,447		-		-		12,490		12,289	Quarterly		1.59		1.59
0-E	CITIBANK	U.S.A.	US$		6,083		18,250		48,667		32,513		-		105,513		92,696	Quarterly		6.40		5.67
0-E	PEFCO	U.S.A.	US$		17,560		52,672		104,147		17,440		-		191,819		177,669	Quarterly		5.37		4.77
0-E	BNP PARIBAS	U.S.A.	US$		11,443		34,484		80,053		26,674		-		152,654		143,150	Quarterly		4.14		3.70
0-E	WELLS FARGO	U.S.A.	US$		5,590		16,770		44,649		44,551		18,560		130,120		117,109	Quarterly		3.98		3.54
0-E	DVB BANK S E	U.S.A.	US$		4,759		14,283		9,528		-		-		28,570		28,000	Quarterly		2.09		2.09
0-E	BANC OF AMERICA	U.S.A.	US$		1,752		363		-		-		-		2,115		2,096	Monthly		1.41		1.41
Other loans
0-E	BOEING	U.S.A.	US$		336		-		75,993		-		-		76,329		75,993	At Expiration		1.79		1.79
0-E	CITIBANK (*)	U.S.A.	US$		25,620		78,032		207,093		181,044		-		491,789		430,639	Quarterly		6.00		6.00
Hedging derivatives
-	OTROS	-	US$		9,891		24,126		25,829		1,084		-		60,930		56,804	-		-		-
	Total				654,864		989,033		2,811,593		2,119,635		2,402,789		8,977,914		7,981,387

(*) Securitized bond with the future flows from the sales with credit card in United States and Canada.

25

Class of liability for the analysis of liquidity risk ordered by date of maturity as of March 31, 2015 (Unaudited)

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.

						More than		More than		More than
				Up to		90 days		one to		three to		More than
		Creditor		90		to one		three		five		five				Nominal			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		Total		value		Amortization	rate		rate
				ThUS $		ThUS $		ThUS $		ThUS $		ThUS $		ThUS $		ThUS $			%		%
Bank loans
0-E	NEDERLANDS CHE
	CREDIETVERZEKERING MAATS CHAPPIJ	Holanda	US$		181		493		1,315		1,314		547		3,850		3,237	Monthly		6.01		6.01
Obligation with the public
0-E	BANK OF NEW YORK	U.S.A.	US$		32,951		34,853		401,075		89,878		521,959		1,080,716		800,000	At Expiration		8.17		8.00
Financial leases
0-E	AFS INVESTMENT IX LLC	U.S.A.	US$		2,761		7,699		20,525		16,242		-		47,227		41,533	Monthly		1.25		1.25
0-E	AIRBUS FINANCIAL	U.S.A.	US$		2,003		5,844		15,792		13,740		-		37,379		35,503	Monthly		1.43		1.43
0-E	DVB BANK SE	U.S.A.	US$		122		360		164		-		-		646		637	Monthly		1.64		1.64
0-E	GENERAL ELECTRIC CAPITAL CORPORATION	U.S.A.	US$		3,840		11,469		5,221		-		-		20,530		20,107	Monthly		1.25		1.25
0-E	KFW IP EX-BANK	Alemania	US$		606		1,775		1,552		-		-		3,933		3,859	Monthly/ Quarterly		1.72		1.72
0-E	NATIXIS	Francia	US$		2,691		9,027		22,776		23,154		67,228		124,876		112,516	Quarterly/ Semiannual		3.85		3.85
0-E	P K AIRFINANCE US, INC.	U.S.A.	US$		1,437		20,592		-		-		-		22,029		21,769	Monthly		1.75		1.75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		505		1,352		3,111		14,216		-		19,184		17,986	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		11,973		31,909		85,799		203,865		-		333,546		304,338	Quarterly		3.63		3.55
0-E	BANCO IBM S.A	Brazil	BRL		301		954		1,023		-		-		2,278		1,658	Monthly		14.14		14.14
0-E	HP FINANCIAL SERVICE	Brazil	BRL		206		618		-		-		-		824		783	Monthly		10.02		10.02
0-E	SOCIÉTÉ GÉNÉRALE	Francia	BRL		117		372		559		-		-		1,048		757	Monthly		14.14		14.14
	Total				59,694		127,317		558,912		362,409		589,734		1,698,066		1,364,683

26

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.

						More than		More than		More than
				Up to		90 days		one to		three to		More than
		Creditor		90		to one		three		five		five				Nominal				Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		Total		value		Amortization		rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$				%		%
Trade and other accounts payables
-	OTHERS	VARIOS	US$		389,224		9,304		-		-		-		398,528		398,528		-		-		-
			CLP		27,234		52		-		-		-		27,286		27,286		-		-		-
			BRL		276,161		4		-		-		-		276,165		276,165		-		-		-
			Others currencies		276,071		965		-		-		-		277,036		277,036		-		-		-
Accounts payable to related parties currents
65.216.000-K	COMUNIDAD MUJER	Chile	CLP		8		-		-		-		-		8		8		-		-		-
78.591.370-1	BETHIA S.A.Y FILIALES	Chile	CLP		3		-		-		-		-		3		3		-		-		-
79.773.440-3	Transportes San Felipe S.A.	Chile	CLP		56										56		56		-		-		-
78.997.060-2	Viajes Falabella Ltda.	Chile	CLP		353										353		353		-		-		-
0-E	Consultoría Administrativa Profesional	Mexico	MXN		53		-		-		-		-		53		53		-		-		-
0-E	INVERSORA AERONÁUTICA ARGENTINA	Argentina	US$		-		-		-		-		-		-		-		-		-		-
	Total				969,163		10,325		-		-		-		979,488		979,488
	Total consolidated				1,683,721		1,126,675		3,370,505		2,482,044		2,992,523		11,655,468		10,325,558

27

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. 89.862.2 00-2 Chile.

						More than		More than		More than
				Up to		90 days		one to		three to		More than
		Creditor		90		to one		three		five		five				Nominal			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		Total		value		Amortization	rate		rate
				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 DE CHILE	Chile	US$		50,059		-		-		-		-		50,059		50,000	At Expiration		1.42		1.42
97.003.000-K	BANCO DO BRASIL	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	BANCO BLADEX	U.S.A.	US$		-		9,702		30,526		15,514		-		55,742		50,000	Semiannual		4.58		4.58
0-E	DVB BANK SE	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 OF NEWYORK	U.S.A.	US$		-		36,250		72,500		554,375		-		663,125		500,000	At Expiration		7.77		7.25
Guaranteed obligations
0-E	CREDIT AGRICOLE	Francia	US$		31,813		92,167		210,541		55,381		12,677		402,579		389,027	Quarterly		1.83		1.66
0-E	BNP PARIBAS	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	WELLS FARGO	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	WILMINGTON TRUST	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	APPLE BANK	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	DEUTSCHE BANK	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	PK Air Finance	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 BANK SE	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	CREDIT AGRICOLE	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	BNP PARIBAS	U.S.A.	US$		11,368		34,292		86,206		31,782		-		163,648		153,107	Quarterly		4.08		3.64
0-E	WELLS FARGO	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	DVB BANK SE	U.S.A.	US$		4,732		14,225		14,269		-		-		33,226		32,567	Quarterly		2.06		2.06
0-E	BANC OF AMERICA	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.

28

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.

						More than		More than		More than
				Up to		90 days		one to		three to		More than
		Creditor		90		to one		three		five		five				Nominal			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		Total		value		Amortization	rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%
Bank loans
0-E	NEDERLANDSCHE
	CREDIETVERZEKERING MAATSCHAPPIJ	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 IX LLC	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		1.64		1.64
0-E	GENERAL ELECTRIC CAPITAL 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 AIRFINANCE US, INC.	U.S.A.	US$		1,428		21,992		-		-		-		23,420		23,045	Monthly		1.75		1.75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		520		1,386		3,198		14,567		-		19,671		18,368	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN 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 FINANCIAL SERVICE	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

29

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.

						More than		More than		More than
				Up to		90 days		one to		three to		More than
		Creditor		90		to one		three		five		five				Nominal				Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		Total		value		Amortization		rate		rate
				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 consolidado				1,709,040		1,119,312		3,229,298		2,491,831		2,910,146		11,459,627		10,231,771

30

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 March 31, 2016, the Company had provided US$ 52.6 million in guarantees for Cash and cash equivalent and stand-by letters of credit. The rise 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 March 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 Ba2 rating with stable outlook by Moody’s.

3.3. Estimates of fair value.

At March 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.

31

2. Financial Investments:

This category includes the following instruments:

- Investments in short-term Mutual Funds (cash equivalent),

- Private investment funds.

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.

32

The following table shows the classification of financial instruments at fair value, depending on the level of information used in the assessment:

	As of March 31, 2016								As of December 31, 2015
			Fair value measurements using values								Fair value measurements using values
			considered as								considered as
	Fair value		Level I		Level II		Level III		Fair value		Level I		Level II		Level III
	ThUS $		ThUS $		ThUS $		ThUS $		ThUS $		ThUS $		ThUS $		ThUS $
	Unaudited
Assets
Cash and cash equivalents		30,373		30,373		-		-		26,600		26,600		-		-
Short-term mutual funds		30,373		30,373		-		-		26,600		26,600		-		-
Other financial assets, current		576,128		572,249		3,879		-		624,200		607,622		16,578		-
Fair value of fuel derivatives		2,760		-		2,760		-		6,293		-		6,293		-
Fair value of foreign currency derivatives		956		-		956		-		9,888		-		9,888		-
Interest accrued since the last payment date of Cross Currency Swap		163				163		-		397				397		-
Private investment funds		493,983		493,983		-		-		448,810		448,810		-		-
Certificate of deposit CDB		-		-		-		-		-		-		-		-
Domestic and foreign bonds		78,266		78,266		-		-		158,812		158,812		-		-
Other investments		-		-		-		-		-		-		-		-
Liabilities
Other financial liabilities, current		87,567				87,567		-		134,089				134,089		-
Fair value of interest rate derivatives		21,382		-		21,382		-		33,518		-		33,518		-
Fair value of fuel derivatives		40,879		-		40,879		-		39,818				39,818		-
Fair value of foreign currency derivatives		21,343		-		21,343		-		56,424		-		56,424		-
Interest accrued since the last payment date of Currency Swap		3,963				3,963		-		4,329				4,329		-
Interest rate derivatives not recognized as a hedge		-		-		-		-		-				-		-
Other financial liabilities, non current		14,070		-		14,070		-		16,128		-		16,128		-
Fair value of interest rate derivatives		14,070		-		14,070		-		16,128		-		16,128		-

33

Additionally, at March 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 March 31, 2016				As of December 31, 2015
	Book		Fair		Book		Fair
	value		value		value		value
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited
Cash and cash equivalents		737,627		737,627		726,897		726,897
Cash on hand		23,322		23,322		10,656		10,656
Bank balance		204,278		204,278		302,696		302,696
Overnight		130,220		130,220		267,764		267,764
Time deposits		379,807		379,807		145,781		145,781
Other financial assets, current		28,623		28,623		27,148		27,148
Other financial assets		28,623		28,623		27,148		27,148
Trade and other accounts receivable current		815,150		815,150		796,974		796,974
Accounts receivable from related entities		228		228		183		183
Other financial assets, non current		103,073		103,073		89,458		89,458
Accounts receivable		7,014		7,014		10,715		10,715
Other financial liabilities, current (*)		1,553,996		1,865,918		1,510,146		1,873,552
Trade and other accounts payables		1,452,837		1,452,837		1,483,957		1,483,957
Accounts payable to related entities		472		472		447		447
Other financial liabilities, non current (*)		7,673,334		7,550,409		7,516,257		7,382,221
Accounts payable, non-current		410,418		410,418		417,050		417,050

(*) Fair value Level II

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. In the case of Other financial assets, the valuation was performed according to market prices at period end.

34

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 March 31, 2016 goodwill amounted to ThUS$ 2,493,114 (ThUS$ 2,280,575 at December 31, 2015), while intangible assets with an indefinite useful life comprised airport slots for ThUS$ 896,392 (ThUS$ 816,987 at December 31, 2015), and Trademarks and Loyalty Program for ThUS$ 356,908 (ThUS$ 325,293 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 March 31, 2016, amounted to ThUS$ 2,004,328 and ThUS$ 488,786 (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 of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited
Airport Slots		896.392		816.987		-		-
Trade marks		58.130		52.981		-		-
Loyalty program		-		-		298.778		272.312

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 administrative judgment, 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 15.

(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.

35

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 March 31, 2016 the company recognized deferred tax assets amounting to ThUS$ 370,934 (ThUS$ 376,595 at December 31, 2015), and had ceased to recognize deferred tax assets for tax losses amounting to ThUS$ 34,633 (ThUS$ 15,513 at December 31, 2015) (Note 17).

(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 March 31, 2016, deferred revenue associated with air tickets sold amounted to ThUS$ 1,184,064 (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 6 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 6 to 7 months, which, as of March 31, 2016, would have an impact of up to ThUS$ 25,000.

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

As of March 31, 2016 and December 31, 2015, the Company operated the following loyalty programs: LANPASS, TAM Fidelidade and Multiplus, with the objective of enhancing customer loyalty by offering points or kilometers (see Note 21).

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.

36

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 March 31, 2016, deferred revenue associated with the LANPASS loyalty program amounted to ThUS$ 923,006 (ThUS$ 973,264 at December 31, 2015). As of March 31, 2016 a hypothetical change of 1% in the probability of usage would result in an impact of approximately ThUS$ 30,000 and ThUS$24.233 at the same period of 2015. Meanwhile, deferred revenue associated with the TAM Fidelidade and Multiplus loyalty programs amounted to ThUS$ 389,464 (ThUS$ 452,264 at December 31, 2015). As of March 31, 2016 a hypothetical change of 2% in the probability of usage would result in an impact of approximately ThUS$ 3,646 and ThUS$ 2,881 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 March 31, 2016 a hypothetical change of 1% in the fair value of the unused kilometers would result in an impact of approximately ThUS$ 9,000 and ThUS$ 8,900 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.

(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.

37

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 LanPass and TAM 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 14.7 million of members, along with being a regulated entity with a separately business and not directly related to air transport.

38

(a) For the periods ended

							Coalition and
	Air						loyalty program
	transportation						Multiplus						Eliminations						Consolidated
	At March 31,						At March 31,						At March 31,						At March 31,
	2016			2015			2016			2015			2016			2015			2016			2015
	ThUS $			ThUS $			ThUS $			ThUS $			ThUS $			ThUS $			ThUS $			ThUS $
	Unaudited
Income from ordinary activities from external customers(*)		2,138,925			2,561,740			95,332			132,109			-			-			2,234,257			2,693,849
LAN passenger		1,084,909			1,128,658			-			-			-			-			1,084,909			1,128,658
TAM passenger		778,049			1,082,760			95,332			132,109			-			-			873,381			1,214,869
Freight		275,967			350,322			-			-			-			-			275,967			350,322
Income from ordinary activities from transactions with other operating segments		95,332			132,109			17,593			14,426			(112,925	)		(146,535	)		-			-
Other operating income		59,309			50,624			34,051			46,669			-			-			93,360			97,293
Interest income		213			9,279			11,547			12,798			(896	)		(3,587	)		10,864			18,490
Interest expense		(103,945	)		(98,920	)		-			-			896			3,587			(103,049	)		(95,333	)
Total net interest expense		(103,732	)		(89,641	)		11,547			12,798			-			-			(92,185	)		(76,843	)
Depreciation and amortization		(237,200	)		(233,538	)		(2,251	)		(3,910	)		-			-			(239,451	)		(237,448	)
Material non-cash items other than depreciation and amortization		53,159			(214,252	)		(367	)		86			-			-			52,792			(214,166	)
Disposal of fixed assets and inventory losses		(7,013	)		(6,879	)		-			-			-			-			(7,013	)		(6,879	)
Doubtful accounts		(8,128	)		(3,177	)		35			(7	)		-			-			(8,093	)		(3,184	)
Exchange differences		68,277			(204,670	)		(379	)		93			-			-			67,898			(204,577	)
Result of indexation units		23			474			(23	)		-			-			-			-			474
Income (loss) atributable to owners of the parents		70,169			(73,359	)		32,039			33,412			-			-			102,208			(39,947	)
Expenses for income tax		(66,427	)		40,640			(15,900	)		(17,087	)		-			-			(82,327	)		23,553
Segment profit/(loss)		83,993			(57,687	)		32,039			33,412			-			-			116,032			(24,275	)
Assets of segment		17,355,487			17,953,630			1,390,839			1,054,936			(114,479	)		(118,886	)		18,631,847			18,889,680
Amount of non-current asset additions		506,254			172,829			-			-			-			-			506,254			172,829
Property, plant and equipment		491,953			166,397			-			-			-			-			491,953			166,397
Intangibles other than goodwill		14,301			6,432			-			-			-			-			14,301			6,432
Segment liabilities		14,752,850			14,635,848			636,770			444,345			(34,503	)		(271	)		15,355,117			15,079,922
Purchase of non-monetary assets of segment		303,262			299,410			-			-			-			-			303,262			299,410

(*) The Company does not have any interest revenue that should be recognized as income from ordinary activities by interest.

39

The Company’s revenues by geographic area are as follows:

	For the period ended
	At March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Peru		151,542		163,314
Argentina		274,650		253,250
U.S.A.		245,175		277,513
Europe		186,688		195,355
Colombia		78,961		96,323
Brazil		657,419		1,039,517
Ecuador		51,812		61,463
Chile		419,934		425,536
Asia Pacific and rest of Latin America		168,076		181,578
Income from ordinary activities		2,234,257		2,693,849
Other operating income		93,360		97,293

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 of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Cash on hand		23,322		10,656
Bank balances		204,278		302,696
Overnight		130,220		267,764
Total Cash		357,820		581,116
Cash equivalents
Time deposits		379,807		145,781
Mutual funds		30,373		26,600
Total cash equivalents		410,180		172,381
Total cash and cash equivalents		768,000		753,497

40

Cash and cash equivalents are denominated in the following currencies:

	As of		As of
Currency	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Argentine peso		18,412		18,733
Brazilian real		58,163		106,219
Chilean peso (*)		22,410		17,978
Colombian peso		7,026		14,601
Euro		13,633		10,663
US Dollar		640,189		564,214
Strong bolivar (**)		1,775		2,986
Other currencies		6,392		18,103
Total		768,000		753,497

(*) At March 31, 2016 and at December 31, 2015, the Company not maintains currency derivative contracts (forward)), for conversion into dollars of investments in pesos.

(**) At March 31, 2016, the Company has decided reflect an exchange rate loss of ThUS$ 40,968 consequence change in the SICAD rate of Venezuela (13.5 VEF/US$) at the DICOM rate equivalent to 198.70 VEF/US$. As of March 31, 2016, the DICOM rate equivalent to 272.91 VEF/US$, which represented assets that are held by the Company equivalent to ThUS$ 1,775 (ThUS$ 2,986 at December 31, 2015)

The Company has done significant non-cash transactions mainly with financial leases, which are detailed in Note 16 letter (d), additional information in numeral (iv) Financial leases.

41

Other inflows (outflows) of cash:

	For the periods ended
	March 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Currency hedge		5,516			(3,748	)
Vale vista refounds		4,091			-
Tax paid on bank transaction		115			-
Fuel derivatives premiums		(856	)		(3,745	)
Bank commissions, taxes paid and other		(1,887	)		(421	)
Hedging margin guarantees		(4,978	)		69,658
Guarantees		(6,977	)		(54,174	)
Fuel hedge		(27,370	)		(131,229	)
Total Other inflows (outflows) Operation flow		(32,346	)		(123,659	)
Certificate of bank deposits		-			3,800
Tax paid on bank transaction		(3,423	)		-
Total Other inflows (outflows) Investment flow		(3,423	)		3,800
Credit card loan manager		-			2,814
Finance charge by transfer of the rights		-			1,548
Guarantees bonds emission		(7,489	)		(10,048	)
Aircraft Financing advances		(75,370	)		46,997
Total Other inflows (outflows) Financing flow		(82,859	)		41,311

42

NOTE 7 - FINANCIAL INSTRUMENTS

7.1. Financial instruments by category

As of March 31, 2016 (Unaudited)

							Initial designation
	Loans				Held		as fair value
	and		Hedge		for		through
Assets	receivables		derivatives		trading		profit and loss		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		737,627		-		-		30,373		768,000
Other financial assets, current (*)		28,623		3,879		78,266		493,983		604,751
Trade and others accounts receivable, current		815,150		-		-		-		815,150
Accounts receivable from related entities, current		228		-		-		-		228
Other financial assets, non current (*)		102,428		-		645		-		103,073
Accounts receivable, non current		7,014		-		-		-		7,014
Total		1,691,070		3,879		78,911		524,356		2,298,216

	Other		Held
	financial		Hedge
Liabilities	liabilities		derivatives		Total
	ThUS$		ThUS$		ThUS$
Other liabilities, current		1,553,996		87,567		1,641,563
Trade and others accounts payable, current		1,452,837		-		1,452,837
Accounts payable to related entities, current		472		-		472
Other financial liabilities, non-current		7,673,334		14,070		7,687,404
Accounts payable, non-current		410,418		-		410,418
Total		11,091,057		101,637		11,192,694

(*)           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.

43

As of December 31, 2015

							Initial designation
	Loans				Held		as fair value
	and		Hedge		for		through
Assets	receivables		derivatives		trading		profit and loss		Total
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Cash and cash equivalents		726,897		-		-		26,600		753,497
Other financial assets, current (*)		27,148		16,578		158,812		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		1,650,737		16,578		159,450		475,410		2,302,175

	Other		Held
	financial		Hedge
Liabilities	liabilities		derivatives		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.

44

7.2. Financial instruments by currency

a) Assets

	As of			As of
	March 31,			December 31,
	2016			2015
	ThUS$			ThUS$
Cash and cash equivalents		768,000			753,497
Argentine peso		18,412			18,733
Brazilian real		58,163			106,219
Chilean peso		22,410			17,978
Colombian peso		7,026			14,601
Euro		13,633			10,663
US Dollar		640,189			564,214
Strong bolivar		1,775			2,986
Other currencies		6,392			18,103
Other financial assets (current and non-current)		707,824			740,806
Argentine peso		77,892			157,281
Brazilian real		496,581			449,934
Chilean peso		624			640
Colombian peso		454			1,670
Euro		3,236			615
US Dollar		126,878			128,620
Strong bolivar		1			22
Other currencies		2,158			2,024
Trade and other accounts receivable, current		815,150			796,974
Argentine peso		63,926			71,438
Brazilian real		338,995			191,037
Chilean peso		30,033			57,755
Colombian peso		5,818			13,208
Euro		21,947			53,200
US Dollar		280,032			320,959
Strong bolivar		603			7,225
Other currencies(*)		73,796			82,152
Accounts receivable, non-current		7,014			10,715
Brazilian real		572			521
Chilean peso		6,227			5,041
US Dollar		62			5,000
Other currencies(*)		153			153
Accounts receivable from related entities, current		228			183
Brazilian real		4			-
Chilean peso		249			183
US Dollar		(25	)		-
Total assets		2,298,216			2,302,175
Argentine peso		160,230			247,452
Brazilian real		894,315			747,711
Chilean peso		59,543			81,597
Colombian peso		13,298			29,479
Euro		38,816			64,478
US Dollar		1,047,136			1,018,793
Strong bolivar		2,379			10,233
Other currencies		82,499			102,432

(*)        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.

45

NOTE 8 - TRADE AND OTHER ACCOUNTS RECEIVABLE CURRENT, AND NON-CURRENT ACCOUNTS RECEIVABLE

	As of			As of
	March 31,			December 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Trade accounts receivable		704,749			685,733
Other accounts receivable		177,622			182,028
Total trade and other accounts receivable		882,371			867,761
Less: Allowance for impairment loss		(60,207	)		(60,072	)
Total net trade and accounts receivable		822,164			807,689
Less: non-current portion   accounts receivable		(7,014	)		(10,715	)
Trade and other accounts receivable, current		815,150			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 of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Fully performing		606,111		577,902
Matured accounts receivable, but not impaired
Expired from 1 to 90 days		25,150		28,717
Expired from 91 to 180 days		9,599		10,995
More than 180 days overdue (*)		3,682		8,047
Total matured accounts receivable, but not impaired		38,431		47,759
Matured accounts receivable and impaired
Judicial, pre-judicial collection and protested documents		27,064		24,304
Debtor under pre-judicial collection process and portfolio sensitization		33,143		35,768
Total matured accounts receivable and impaired		60,207		60,072
Total		704,749		685,733

(*) Value of this segment corresponds primarily to accounts receivable that were evaluated in their ability to recover, therefore not requiring a provision.

46

Currency balances that make up the Trade and other accounts receivable and non-current accounts receivable:

	As of		As of
	March 31,		December 31,
Currency	2016		2015
	ThUS$		ThUS$
Argentine Peso		63,926		71,438
Brazilian Real		339,567		191,558
Chilean Peso		36,260		62,796
Colombian peso		5,818		13,208
Euro		21,947		53,200
US Dollar		280,094		325,959
Strong bolivar		603		7,225
Other currency (*)		73,949		82,305
Total		822,164		807,689
(*)    Other currencies
Australian Dollar		22,195		26,185
Chinese Yuan		6,253		4,282
Danish Krone		197		164
Pound Sterling		4,519		7,228
Indian Rupee		2,259		3,070
Japanese Yen		7,050		4,343
Norwegian Kroner		80		221
Swiss Franc		1,178		1,919
Korean Won		5,148		4,462
New Taiwanese Dollar		759		3,690
Other currencies		24,311		26,741
Total		73,949		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	%

47

Movement in the allowance for impairment loss of Trade and other accounts receivables:

	Opening					(Increase)			Closing
	balance			Write-offs		Decrease			balance
Periods	ThUS$			ThUS$		ThUS$			ThUS$
From January 1 to March 31, 2015 (Unaudited)		(71,042	)		225		5,234			(65,583	)
From April 1 to December 31, 2015		(65,583	)		9,895		(4,384	)		(60,072	)
From January 1 to March 31, 2016 (Unaudited)		(60,072	)		10,908		(11,043	)		(60,207	)

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 March 31, 2016

As of December 31, 2015

Gross exposure

Gross

Exposure net

Gross exposure

Gross

Exposure net

according to

impaired

of risk

according to

Impaired

of risk

balance

exposure

concentrations

balance

exposure

concentrations

ThUS$

ThUS$

ThUS$

ThUS$

ThUS$

ThUS$

Unaudited

Trade accounts receivable

704,749

(60,207

)

644,542

685,733

(60,072

)

625,661

Other accounts receivable

177,622

-

177,622

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.

48

NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES

(a) Accounts Receivable

					As of		As of
			Country		March 31,		December 31,
Tax No.	Related party	Relationship	of origin	Currency	2016		2016
					ThUS$		ThUS$
					Unaudited
78.591.370-1	Bethia S.A. and Subsidiaries	Related director	Chile	CLP		215		167
87.752.000-5	Granja Marina T ornagaleones S.A.	Common shareholder	Chile	CLP		9		14
Foreign	TAM Aviação Executiva e Taxi Aéreo S.A.	Related director	Brazil	BRL		4		2
	Total current assets					228		183

(b) Accounts payable

					As of		As of
			Country		March 31,		December 31,
Tax No.	Related party	Relationship	of origin	Currency	2016		2015
					ThUS$		ThUS$
					Unaudited
Foreign	Consultoría Administrativa Profesional S.A. de C.V.	Associate	Mexico	MXN		53		342
65.216.000-K	Viajes Falabella Ltda.	Related director	Chile	CLP		353		68
Foreign	Inversora Aeronaútica Argentina	Related director	Argentina	US$		-		22
65.216.000-K	Comunidad Mujer	Related director	Chile	CLP		8		10
79.773.440-3	Transportes San Felipe S.A.	Related director	Chile	CLP		56		-
78.591.370-1	Bethia S.A. and Subsidiaries	Related director	Chile	CLP		2		5
	Total current liabilities					472		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.

49

NOTE 10 -INVENTORIES

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Technical stock		194,607		192,930
Non-technical stock		34,915		31,978
Total production suppliers		229,522		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 that as of March 31, 2016 amounts to ThUS$ 17,461 (ThUS$ 15,892 at December 31, 2015). The resulting amounts do not exceed the respective net realizable values.

As of March 31, 2016, the Company recorded ThUS$ 38,268 (ThUS$ 39,685 at March 31, 2015) within the income statement, mainly due to in-flight consumption and maintenance, which forms part of Cost of sales.

50

NOTE 11 - OTHER FINANCIAL ASSETS

The composition of Other financial assets is as follows:

	Current Assets				Non-current assets				Total Assets
	As of		As of		As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
(a) Other financial assets
Private investment funds		493,983		448,810		-		-		493,983		448,810
Deposits in guarantee (aircraft)		11,919		16,532		62,808		58,483		74,727		75,015
Guarantees for margins of derivatives		7,817		4,456		-		-		7,817		4,456
Other investments		-		-		645		638		645		638
Domestic and foreign bonds		78,266		158,812		-		-		78,266		158,812
Other guarantees given		8,887		6,160		39,620		30,337		48,507		36,497
Subtotal of other financial assets		600,872		634,770		103,073		89,458		703,945		724,228
(b) Hedging assets
Interest accrued since the last payment date of Cross currency swap		163		397		-		-		163		397
Fair value of foreign currency derivatives (*)		956		9,888		-		-		956		9,888
Fair value of fuel price derivatives		2,760		6,293		-		-		2,760		6,293
Subtotal of hedging assets		3,879		16,578		-		-		3,879		16,578
Total Other Financial Assets		604,751		651,348		103,073		89,458		707,824		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 presented in Note 18.

51

NOTE 12 - OTHER NON-FINANCIAL ASSETS

The composition of Other non-financial assets is as follows:

	Current assets				Non-current assets				Total Assets
	As of		As of		As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
(a) Advance payments
Aircraft leases		32,101		33,305		20,006		22,569		52,107		55,874
Aircraft insurance and other		5,831		12,408		-		-		5,831		12,408
Others		15,145		16,256		31,969		33,781		47,114		50,037
Subtotal advance payments		53,077		61,969		51,975		56,350		105,052		118,319
(b) Other assets
Aircraft maintenance reserve(*)		47,154		99,112		126,721		64,366		173,875		163,478
Sales tax		171,145		158,134		45,586		45,061		216,731		203,195
Other taxes		3,519		4,295		-		-		3,519		4,295
Contributions to Société Internationale de Télécommunications Aéronautiques (“SITA”)		450		505		547		547		997		1,052
Judicial deposits		-		-		83,429		67,980		83,429		67,980
Others		238		6,001		1,501		1,159		1,739		7,160
Subtotal other assets		222,506		268,047		257,784		179,113		480,290		447,160
Total Other Non - Financial Assets		275,583		330,016		309,759		235,463		585,342		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 (5 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 March 31, 2016, LATAM had ThUS$ 173,875 in maintenance reserves (ThUS$ 163,478 at December 31, 2015), corresponding to 9 aircraft out of a total fleet of 335 (9 aircraft out of a total fleet of 331 at December 31, 2015). All of the Company’s aircraft leases containing provisions for maintenance reserves will expire fully by 2023.

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)

52

NOTE 13 - 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
			As of		As of
	Country of	Functional	March 31,		December 31,
Name of significant subsidiary	incorporation	currency	2016		2015
			%		%
			Unaudited
Lan Perú S.A.	Peru	US$		69.97858		69.97858
Lan Cargo S.A.	Chile	US$		99.89804		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		99.12066		99.01646
TAM S.A.	Brazil	BRL		99.99938		99.99938

The consolidated subsidiaries do not have significant restrictions for transferring funds to controller.

53

Summary financial information of significant subsidiaries

													Results for the period
	Statement of financial position as of March 31, 2016												ended March 31, 2016
	Total		Current		Non-current		Total		Current		Non-current				Net
Name of significant subsidiary	Assets		Assets		Assets		Liabilities		Liabilities		Liabilities		Revenue		Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited												Unaudited
Lan Perú S.A.		286,827		264,007		22,820		260,349		259,155		1,194		239,976		13,117
Lan Cargo S.A.		464,454		143,698		320,756		211,489		148,586		62,903		61,340		(13,053	)
Lan Argentina S.A.		170,514		159,777		10,737		130,674		128,483		2,191		108,408		18,065
Transporte Aéreo S.A.		332,592		45,007		287,585		116,287		44,610		71,677		77,490		7,779
Aerolane Líneas Aéreas Nacionales del Ecuador S.A.		90,397		45,016		45,381		79,922		74,733		5,189		53,974		627
Aerovías de Integración Regional, AIRES S.A.		121,098		51,023		70,075		66,356		55,932		10,424		63,463		(2,894	)
TAM S.A. (*)		4,892,799		1,386,099		3,506,700		4,342,867		2,083,599		2,259,268		959,333		20,620

													Results for the period
	Statement of financial position as of December 31, 2015												ended March 31, 2015
	Total		Current		Non-current		Total		Current		Non-current				Net
Name of significant subsidiary	Assets		Assets		Assets		Liabilities		Liabilities		Liabilities		Revenue		Income
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
													Unaudited
Lan Perú S.A.		255,691		232,547		23,144		240,938		239,521		1,417		277,969		15,058
Lan Cargo S.A.		483,033		159,294		323,739		217,037		147,423		69,614		65,860		(12,563	)
Lan Argentina S.A.		195,756		180,558		15,198		170,384		168,126		2,258		126,391		13,728
Transporte Aéreo S.A.		331,117		41,756		289,361		122,666		44,495		78,171		91,458		(1,129	)
Aerolane Líneas Aéreas Nacionales del Ecuador S.A.		126,001		80,641		45,360		116,153		111,245		4,908		62,308		5,513
Aerovías de Integración Regional, AIRES S.A.		130,039		62,937		67,102		75,003		64,829		10,174		75,124		(9,244	)
TAM S.A. (*)		4,711,316		1,350,377		3,360,939		4,199,223		1,963,400		2,235,823		1,332,408		(14,978	)

(*) Corresond to consolidated information of TAM S.A. and Subsidiaries.

54

(b) Non-controlling interest

			As of		As of		As of			As of
Equity		Country	March 31,		December 31,		March 31,			December 31,
	Tax No.	of origin	2016		2015		2016			2015
			%		%		ThUS$			ThUS$
			Unaudited				Unaudited
Lan Perú S.A	0-E	Peru		30.00000		30.00000		7,943			4,426
Lan Cargo S.A. and Subsidiaries	93.383.000-4	Chile		0.10605		0.10605		644			974
Promotora Aérea Latinoamericana S.A. and Subsidiaries	0-E	Mexico		51.00000		51.00000		3,606			3,084
Inversora Cordillera S.A. and Subsidiaries	0-E	Argentina		4.22000		4.22000		(1,213	)		(1,386	)
Lan Argentina S.A.	0-E	Argentina		0.13440		1.00000		107			29
Americonsult de Guatemala S.A.	0-E	Guatemala		1.00000		1.00000		6			5
Americonsult Costa Rica S.A.	0-E	Costa Rica		1.00000		1.00000		11			12
Linea Aérea Carguera de Colombiana S.A.	0-E	Colombia		10.00000		10.00000		(450	)		(811	)
Aerolíneas Regionales de Integración Aires S.A.	0-E	Colombia		0.87934		0.98307		542			540
Transportes Aereos del Mercosur S.A.	0-E	Paraguay		5.02000		5.02000		1,444			1,256
Multiplus S.A.	0-E	Brazil		27.26000		27.26000		72,942			72,884
Total								85,582			81,013

			As of		As of		For the period ended
Incomes		Country	March 31,		December 31,		March 31,
	T ax No.	of origin	2016		2015		2016			2015
			%		%		ThUS$			ThUS$
			Unaudited
Lan Perú S.A	0-E	Peru		30.00000		30.00000		3,935			4,517
Lan Cargo S.A. and Subsidiaries	93.383.000-4	Chile		0.10605		0.10605		4			6
Promotora Aerea Latinoamericana S.A. and Subsidiaries	0-E	Mexico		51.00000		51.00000		522			1,058
Inversora Cordillera S.A. and Subsidiaries	0-E	Argentina		4.22000		4.22000		90			67
Lan Argentina S.A.	0-E	Argentina		0.13440		1.00000		19			14
Americonsult de Guatemala S.A.	0-E	Guatemala		1.00000		1.00000		-			(1	)
Americonsult Costa Rica S.A.	0-E	Costa Rica		1.00000		1.00000		-			1
Linea Aérea Carguera de Colombiana S.A.	0-E	Colombia		10.00000		10.00000		361			1,029
Aerolíneas Regionales de Integración Aires S.A.	0-E	Colombia		0.87934		0.98307		(28	)		(91	)
T ransportes Aereos del Mercosur S.A.	0-E	Paraguay		5.02000		5.02000		188			(36	)
Multiplus S.A.	0-E	Brazil		27.26000		27.26000		8,733			9,108
Total								13,824			15,672

55

NOTE 14 - INTANGIBLE ASSETS OTHER THAN GOODWILL

The details of intangible assets are as follows:

	Classes of intangible assets (net)				Classes of intangible assets (gross)
	As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited
Airport slots		896,392		816,987		896,392		816,987
Loyalty program		298,778		272,312		298,778		272,312
Computer software		120,968		104,258		350,313		324,043
Developing software		69,251		74,887		69,251		74,887
Trademarks		58,130		52,981		58,130		52,981
Other assets		-		-		808		808
Total		1,443,519		1,321,425		1,673,672		1,542,018

Movement in Intangible assets other than goodwill:

	Computer									Trademarks
	software			Developing			Airport			and loyalty
	Net			software			slots(*)			program (*)			Total
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$
Opening balance as of January 1,2015		126,797			74,050			1,201,028			478,204			1,880,079
Additions		608			5,824			-			-			6,432
Withdrawals		(945	)		-			-			-			(945	)
Transfer software		3,302			(3,328	)		-			-			(26	)
Foreing exchange		(9,082	)		(8,305	)		(206,586	)		(82,255	)		(306,228	)
Amortization		(11,336	)		-			-			-			(11,336	)
Closing balance as of March 31, 2015 (Unaudited)		109,344			68,241			994,442			395,949			1,567,976
Opening balance as of April 1, 2015		109,344			68,241			994,442			395,949			1,567,976
Additions		4,346			42,446			-			-			46,792
Withdrawals		(3,667	)		(162	)		-			(1	)		(3,830	)
Transfer software		25,424			(27,098	)		-			-			(1,674	)
Foreing exchange		(5,789	)		(8,540	)		(177,455	)		(70,655	)		(262,439	)
Amortization		(25,400	)		-			-			-			(25,400	)
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		4,810			9,491			-			-			14,301
Withdrawals		(722	)		(18	)		-			-			(740	)
Transfer software		19,350			(18,596	)		-			-			754
Foreing exchange		2,832			3,487			79,405			31,615			117,339
Amortization		(9,560	)		-			-			-			(9,560	)
Closing balance as of March 31, 2016 (Unaudited)		120,968			69,251			896,392			356,908			1,443,519

The amortization of the period is shown in the consolidated statement of income in administrative expenses. The accumulated amortization of computer programs as of March 31, 2016 amounts to ThUS$ 229,345 (ThUS$ 219,785 at December 31, 2015).

(*) See Note 2.5

56

NOTE 15 – GOODWILL

The Goodwill amount at March 31, 2016 is ThUS$ 2,493,114 (ThUS$ 2,280,575 at December 31, 2015). Movement of Goodwill, separated by CGU:

				Coalition
				and loyalty
	Air			program
	Transport			Multiplus			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2015		2,658,503			654,898			3,313,401
Increase (decrease) due to exchange rate differences		(438,590	)		(112,648	)		(551,238	)
Closing balance as of March 31, 2015 (Unaudited)		2,219,913			542,250			2,762,163
Opening balance as of April 1, 2015		2,219,913			542,250			2,762,163
Increase (decrease) due to exchange rate differences		(384,825	)		(96,763	)		(481,588	)
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		169,240			43,299			212,539
Closing balance as of March 31, 2016 (Unaudited)		2,004,328			488,786			2,493,114

The Company has two cash- generating units (CGUs), confirming the existence of two cash- generating units: “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, before 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. Base on growth expectation and long-term investment cycles, usually in the industry, these calculations use a pre-tax cash flow projections or ten years.

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.

57

As of December 31, 2015 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)	%	1.5 and 2.5	4.7 and 6.4
Exchange rate (1)	R$/US$	4.15 and 5.21	4.15 and 5.21
Discount rate based on the weighted average cost of capital (WACC)	%	10.5 and 11.5	-
Discount rate based on cost of equity (CoE)	%	-	19.0 and 23.0
Fuel Price from futures price curves commodities markets	US$/barril	60-70	-

(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. The sensitivity analysis included the individual impact of changes in estimates critical in determining the recoverable amounts, namely:

					Decrease
	Increase		Increase		M inimum
	M aximum		M aximum		terminal
	WACC		CoE		growth rate
	%		%		%
Air transportation CGU		11.5		-		1.5
Coalition and loyalty program Multiplus CGU		-		23.0		4.4

In none of the previous cases impairment in the cash- generating unit was presented.

At March 31, 2016, have not been identified new impairment indications that requiring impairment test.

58

NOTE 16 - 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
	March 31,		December 31,		March 31,			December 31,			March 31,		December 31,
	2016		2015		2016			2015			2016		2015
	ThUS$		ThUS$		ThUS$			ThUS$			ThUS$		ThUS$
	Unaudited				Unaudited						Unaudited
Construction in progress (*)		947,055		1,142,812		-			-			947,055		1,142,812
Land		47,734		45,313		-			-			47,734		45,313
Buildings		134,733		131,816		(41,661	)		(40,325	)		93,072		91,491
Plant and equipment		9,633,564		9,683,764		(1,924,308	)		(2,392,463	)		7,709,256		7,291,301
Own aircraft		9,032,978		9,118,396		(1,726,538	)		(2,198,682	)		7,306,440		6,919,714
Other (**)		600,586		565,368		(197,770	)		(193,781	)		402,816		371,587
Machinery		39,594		36,569		(23,745	)		(21,220	)		15,849		15,349
Information technology equipment		161,019		154,093		(118,119	)		(110,204	)		42,900		43,889
Fixed installations and accessories		188,003		179,026		(97,029	)		(90,068	)		90,974		88,958
Motor vehicles		104,015		99,997		(68,178	)		(64,047	)		35,837		35,950
Leasehold improvements		129,226		124,307		(74,394	)		(70,219	)		54,832		54,088
Other property, plants and equipment		3,258,785		3,279,902		(1,179,580	)		(1,150,396	)		2,079,205		2,129,506
Financial leasing aircraft		3,112,928		3,151,405		(1,147,797	)		(1,120,682	)		1,965,131		2,030,723
Other		145,857		128,497		(31,783	)		(29,714	)		114,074		98,783
Total		14,643,728		14,877,599		(3,527,014	)		(3,938,942	)		11,116,714		10,938,657

(*) It includes pre-delivery payments to aircraft manufacturers for ThUS$ 871,951 (ThUS$ 1,016,007 as of December 31, 2015)

(**) Mainly considers rotable and tools.

59

(a) The 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, 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		9,142			-			-			112,683			1,165			557			17			9,445			33,388			166,397
Disposals		-			-			-			(5,187	)		-			-			-			-			-			(5,187	)
Retirements		-			-			-			(2,889	)		(45	)		(1	)		-			-			(1,790	)		(4,725	)
Depreciation expenses		-			-			(941	)		(132,222	)		(4,129	)		(4,083	)		(73	)		(4,199	)		(43,991	)		(189,638	)
Foreing exchange		(45	)		(6,073	)		(16,130	)		(93,311	)		(2,938	)		(457	)		(366	)		-			(109,916	)		(229,236	)
Other increases (decreases)		125,268			(1,066	)		(58,188	)		(12,934	)		(459	)		60,083			-			(1,226	)		15,643			127,121
Changes, total		134,365			(7,139	)		(75,259	)		(133,860	)		(6,406	)		56,099			(422	)		4,020			(106,666	)		(135,268	)
Closing balance as of March 31, 2015 (Unaudited)		1,071,644			50,849			91,747			6,820,229			44,603			99,882			1,543			60,543			2,396,768			10,637,808
Opening balance as of April 1, 2015		1,071,644			50,849			91,747			6,820,229			44,603			99,882			1,543			60,543			2,396,768			10,637,808
Additions		30,569			-			439			1,191,516			14,157			1,135			263			3,743			30,838			1,272,660
Disposals		-			-			(500	)		(71,488	)(1)		(27	)		-			(8	)		-			(11	)		(72,034	)
Retirements		(1,262	)		-			(956	)		(35,351	)		(59	)		(475	)		(4	)		-			(7,112	)		(45,219	)
Depreciation expenses		-			-			(6,220	)		(389,466	)		(12,067	)		(7,566	)		(305	)		(9,774	)		(130,483	)		(555,881	)
Foreing exchange		(887	)		(5,713	)		(2,118	)		(36,622	)		(3,188	)		(12,812	)		(272	)		(1,659	)		(142,793	)		(206,064	)
Other increases (decreases)		42,748			177			9,099			(137,743	)		470			8,794			308			1,235			(17,701	)		(92,613	)
Changes, total		71,168			(5,536	)		(256	)		520,846			(714	)		(10,924	)		(18	)		(6,455	)		(267,262	)		300,849
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		4,036			-			-			482,337			1,433			29			1			2,512			1,605			491,953
Disposals		-			-			-			(9,856	)(2)		-			-			-			-			-			(9,856	)
Retirements		(93	)		-			-			(18,256	)		(1	)		-			-			-			(45	)		(18,395	)
Depreciation expenses		-			-			(634	)		(136,086	)		(3,934	)		(3,341	)		(72	)		(3,213	)		(38,884	)		(186,164	)
Foreing exchange		2,481			2,421			1,173			23,384			1,506			4,587			213			1,318			51,960			89,043
Other increases (decreases)		(202,181	)		-			1,042			76,677			7			741			-			127			(64,937	)		(188,524	)
Changes, total		(195,757	)		2,421			1,581			418,200			(989	)		2,016			142			744			(50,301	)		178,057
Closing balance as of March 31, 2016 (Unaudited)		947,055			47,734			93,072			7,759,275			42,900			90,974			1,667			54,832			2,079,205			11,116,714

(1) 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.

(2) During the first quarter of 2016 one Airbus A330 aircraft were sold.

60

(b) Composition of the fleet:

			Aircraft included
			in the Company’s Property,						Operating				Total
			plant and equipment						leases				fleet
			As of			As of			As of		As of		As of			As of
			March 31,			December 31,			March 31,		December 31,		March 31,			December 31,
Aircraft	Model		2016			2015			2016		2015		2016			2015
			Unaudited						Unaudited				Unaudited
Boeing 767		300ER		34			34			4		4		38			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		2		4	(2)		4
Boeing 787		800		6			6			4		4		10			10
Boeing 787		900		4			3			6		4		10			7
Airbus A319		100		38			38			12		12		50			50
Airbus A320		200		95			95			58		59		153			154
Airbus A321		200		28			26			10		10		38			36
Airbus A330		200		7			8			2		2		9			10
Airbus A350		900		2			1			-		-		2			1
Total				228			225			107		106		335			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
		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	20
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	20

(*) Except for certain technical components, which are depreciated 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.

The depreciation charged to income in the period, which is included in the consolidated statement of income, amounts to ThUS$ 186,164 (ThUS$ 189,638 at December 31, 2015). Depreciation charges for the year are recognized in Cost of sales and administrative expenses in the consolidated statement of income.

61

(d) Additional information regarding Property, plant and equipment:

(i) Property, plant and equipment pledged as guarantee:

In the period ended March 31, 2016, direct guarantees by two Airbus A321-200 aircraft, one Boeing 787-9 aircraft and one Airbus A350-941aircraft were added.

Description of Property, plant and equipment pledged as guarantee:

			As of				As of
			March 31,				December 31,
			2016				2015
Creditor of	As sets		Existing		Book		Existing		Book
guarantee	committed	Fleet	Debt		Value		Debt		Value
			ThUS$		ThUS$		ThUS$		ThUS$
			Unaudited
Wilmington Trust Company	Aircraft and engines	Airbus A321 / A350		550,684		693,609		374,619		478,667
		Boeing 767		883,607		1,205,673		907,356		1,220,541
		Boeing 777 / 787		798,363		933,963		712,059		834,567
Banco Santander S.A.	Aircraft and engines	Airbus A319		56,570		94,032		58,527		95,387
		Airbus A320		509,383		741,717		524,682		749,192
		Airbus A321		35,471		44,917		36,334		45,380
BNP Paribas	Aircraft and engines	Airbus A319		149,766		228,607		154,828		229,798
		Airbus A320		141,228		189,869		145,506		192,957
Credit Agricole	Aircraft and engines	Airbus A319		34,472		80,108		37,755		84,129
		Airbus A320		104,594		208,667		115,339		214,726
		Airbus A321		48,125		96,151		50,591		97,257
JP Morgan	Aircraft and engines	Boeing 777		209,654		260,697		215,265		263,366
Wells Fargo	Aircraft and engines	Airbus A320		272,770		343,520		279,478		348,271
Bank of Utah	Aircraft and engines	Airbus A320		235,170		307,735		240,094		312,573
Natixis	Aircraft and engines	Airbus A320		53,667		86,247		56,223		81,355
		Airbus A321		404,313		533,920		413,201		542,594
Citibank N.A.	Aircraft and engines	Airbus A320		123,202		171,062		127,135		172,918
		Airbus A321		47,840		72,215		49,464		73,122
HSBC	Aircraft and engines	Airbus A320		52,209		63,671		53,583		64,241
KfW IPEX-Bank	Aircraft and engines	Airbus A320		12,939		16,669		13,593		16,838
PK AirFinance US, Inc.	Aircraft and engines	Airbus A320		60,632		48,104		62,514		48,691
Total direct guarantee				4,784,659		6,421,153		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 March 31, 2016 amounted to ThUS$ 1,245,356 (ThUS$ 1,311,088 at December 31, 2015). The book value of assets with indirect guarantees as of March 31, 2016 amounts to ThUS$ 1,959,973 (ThUS$ 2,001,605 as of December 31, 2015).

62

(ii) Commitments and others

Fully depreciated assets and commitments for future purchases are as follows:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Gross book value of fully depreciated property, plant and equipment still in use		98,134		129,766
Commitments for the acquisition of aircraft (*)		19,300,000		19,800,000
(*) Acording to the manufacturer’s price list.

Purchase commitment of aircraft

	Year of delivery
Manufacturer	2016		2017		2018		2019		2020		2021		Total
Airbus S.A.S.		20		22		24		12		14		13		105
A320-NEO		2		18		16		8		8		-		52
A321		13		-		-		-		-		-		13
A321-NEO		-		-		6		-		4		5		15
A350-1000		-		-		-		2		2		8		12
A350-900		5		4		2		2		-		-		13
The Boeing Company		2		1		4		6		-		-		13
B777		-		-		-		2		-		-		2
B787-8		-		-		4		4		-		-		8
B787-9		2		1		-		-		-		-		3
Total		22		23		28		18		14		13		118

On September 2015 the change of 6 Airbus A350-900 aircraft for 6 Airbus A350-1000 aircraft was signed. Additionally, on November 2015 the change of 6 Airbus A350-900 aircraft to 6 Airbus A350-1000 aircraft was signed.

As of March 31, 2016, as a result of the different aircraft purchase agreements signed with Airbus S.A.S., 80 aircraft Airbus A320 family, with deliveries between 2016 and 2021, and 25 Airbus aircraft A350 family with delivery dates starting from 2016 remain to be received.

The approximate amount is ThUS$ 16,200,000, according to the manufacturer’s price list. Additionally, the Company has valid purchase options for 4 Airbus A350 aircraft.

In April 2015 the change of 8 Boeing 787-8 aircraft for 8 Boeing 787-8 aircraft was signed.

As of March 31, 2016, and as a result of different aircraft purchase contracts signed with The Boeing Company, a total of 11 787 Dreamliner aircraft, with delivery dates between 2016 and 2019, and 2 Boeing 777 with delivery expected for 2019 remain to be received.

The approximate amount, according to the manufacturer's price list, is ThUS$ 3,100,000.

(iii) Capitalized interest costs with respect to Property, plant and equipment.

63

		For the periods ended
		March 31,
		2016		2015
		Unaudited
Average rate of capitalization of capitalized interest costs	%		3.13		2.77
Costs of capitalized interest	ThUS$		3,560		6,192

(iv) Financial leases

The detail of the main financial leases is as follows:

			As of		As of
			March 31,		December 31,
Lessor	Aircraft	Model	2016		2015
			Unaudited
Agonandra Statutory Trust	Airbus A320	200		-		2
Amendoeira Leasing Trust	Airbus A319	100		1		-
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 Trust	Boeing 767	300F		2		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
Figueira Leasing LLC	Airbus A320	200		1		-
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		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
Jacarandá Leasing Limited	Airbus A320	200		1		-
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 LTD (Showa)	Airbus A320	200		1		1
TMF Interlease Aviation B.V.	Airbus A330	200		-		1
TMF Interlease Aviation II B.V.	Airbus A319	100		4		5
TMF Interlease Aviation II B.V.	Airbus A320	200		-		2
Tricahue Leasing LLC	Boeing 767	300ER		3		3
Wacapou LeasingS.A	Airbus A320	200		1		1
Total				61		66

64

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 aircraft, perform maintenance on the aircraft 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 March 31, 2016 the Company had sixty one aircraft (sixty six aircraft as of December 31, 2015).

As of March 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 four Airbus A320-200 and one Airbus A330-200 aircraft.

The book value of assets under financial leases as of March 31, 2016 amounts to ThUS$ 1,965,131 (ThUS$ 2,030,723 at December 31, 2015).

The minimum payments under financial leases are as follows:

	As of March 31, 2016 (Unaudited)							As of December 31, 2015
	Gross					Present		Gross					Present
	Value		Interest			Value		Value		Interest			Value
	ThUS$		ThUS$			ThUS$		ThUS$		ThUS$			ThUS$
No later than one year		343,710		(44,059	)		299,651		360,862		(47,492	)		313,370
Between one and five years		928,372		(66,857	)		861,515		1,003,237		(75,363	)		927,874
Over five years		85,788		(960	)		84,828		95,050		(1,406	)		93,644
Total		1,357,870		(111,876	)		1,245,994		1,459,149		(124,261	)		1,334,888

NOTE 17 - CURRENT AND DEFERRED TAXES

In the period ended March 31, 2016, the income tax provision was calculated at the rate of 24% for the business year 2016, in accordance with the recently enacted 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 Category Tax which will reach 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.

As LATAM Airlines Group S.A. is a public company, by default it must choose the "Partially Integrated Taxation System", unless a future Extraordinary Meeting of Shareholders of the Company agrees, by a minimum of 2/3 of the votes, to choose the "Attributed Income Taxation System". This decision must be taken at the latest in the last quarter of 2016.

65

On February 8, 2016, an amendment to the abovementioned Law was issued (as Law 20,899) stating, as its main amendments, that Companies such Latam Airlines Group S.A. had to mandatorily choose the "Partially Integrated Taxation System"(*) and could not elect to use the other system.

Deferred tax assets and liabilities are offset if there is a legal right to offset assets and liabilities for income taxes relating to the same entity and tax authority.

(*) The Partially Integrated Taxation System is one of the tax regimes approved through the Tax Reform previously mentioned, which is based on the taxation by the perception of profits and the Attributed Income Taxation System is based on the taxation by 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
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Provisional monthly payments (advances)		42,103		43,935		-		-		42,103		43,935
Other recoverable credits		24,747		20,080		25,629		25,629		50,376		45,709
Total current tax assets		66,850		64,015		25,629		25,629		92,479		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
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Income tax provision		25,712		19,001		-		-		25,712		19,001
Additional tax provision		87		377		-		-		87		377
Total current tax liabilities		25,799		19,378		-		-		25,799		19,378

66

(b) Deferred taxes

The balances of deferred tax are the following:

	Assets						Liabilities
	As of			As of			As of			As of
Concept	March 31,			December 31,			March 31,			December 31,
	2016			2015			2016			2015
	ThUS$			ThUS$			ThUS$			ThUS$
	Unaudited						Unaudited
Depreciation		(45,072	)		(14,243	)		1,127,225			1,103,017
Leased assets		(87,036	)		(25,299	)		219,753			137,741
Amortization		(5,607	)		(5,748	)		69,022			92,313
Provisions		257,562			210,992			(88,386	)		(70,028	)
Revaluation of financial instruments		-			709			(11,397	)		(7,575	)
Tax losses		253,798			212,067			(874,009	)		(797,715	)
Revaluation property, plant and equipment		-			-			-			(4,081	)
Intangibles		-			-			399,756			355,952
Others		(2,711	)		(1,883	)		15,175			1,941
Total		370,934			376,595			857,139			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 March 31, 2015 (Unaudited)

	Opening			Recognized in			Recognized in			Exchange					Ending
	balance			consolidated			comprehensive			rate					balance
	Assets/(liabilities)			income			income			variation			Others		Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
Depreciation		(871,640	)		(50,807	)		-			4,594			-		(917,853	)
Leased assets		(185,775	)		12,519			-			4,197			-		(169,059	)
Amortization		(160,100	)		4,919			-			2,478			-		(152,703	)
Provisions		351,077			(17,635	)		-			(68,216	)		-		265,226
Revaluation of financial instruments		12,806			22,482			(21,366	)		(1,710	)		-		12,212
Tax losses(*)		722,749			83,524			-			(17,947	)		-		788,326
Revaluation propety, plant and equipment		5,999			6,885			-			(7,916	)		-		4,968
Intangibles		(523,275	)		-			-			90,007			-		(433,268	)
Others		3,588			(8,341	)		-			1,521			1,384		(1,848	)
Total		(644,571	)		53,546			(21,366	)		7,008			1,384		(603,999	)

67

(b) From April 1 to December 31, 2015

	Opening			Recognized in			Recognized in		Exchange						Ending
	balance			consolidated			comprehensive		rate						balance
	Assets/(liabilities)			income			income		variation			Others			Asset (liability)
	ThUS$			ThUS$			ThUS$		ThUS$			ThUS$			ThUS$
Depreciation		(917,853	)		(217,084	)		-		3,946			-			(1,130,991	)
Leased assets		(169,059	)		(85,849	)		-		3,606			-			(251,302	)
Amortization		(152,703	)		79,411			-		2,128			-			(71,164	)
Provisions		265,226			167,997			3,911		(58,597	)		-			378,537
Revaluation of financial instruments		12,212			(2,722	)		263		(1,469	)		-			8,284
Tax losses(*)		788,326			236,873			-		(15,417	)		-			1,009,782
Revaluation propety, plant and equipment		4,968			5,914			-		(6,801	)		-			4,081
Intangibles		(433,268	)		(8,362	)		-		77,316			-			(364,314	)
Others		(1,848	)		41,180			-		(48,986	)		(8,229	)		(17,883	)
Total		(603,999	)		217,358			4,174		(44,274	)		(8,229	)		(434,970	)

(c) From January 1 to March 31, 2016 (Unaudited)

	Opening			Recognized in			Recognized in			Exchange					Ending
	balance			consolidated			comprehensive			rate					balance
	Assets/(liabilities)			income			income			variation			Others		Asset (liability)
	ThUS$			ThUS$			ThUS$			ThUS$			ThUS$		ThUS$
Depreciation		(1,130,991	)		(39,540	)		-			(1,766	)		-		(1,172,297	)
Leased assets		(251,302	)		(53,874	)		-			(1,613	)		-		(306,789	)
Amortization		(71,164	)		(2,513	)		-			(952	)		-		(74,629	)
Provisions		378,537			(59,222	)		413			26,220			-		345,948
Revaluation of financial instruments		8,284			10,167			(7,711	)		657			-		11,397
Tax losses (*)		1,009,782			111,127			-			6,898			-		1,127,807
Revaluation propety, plant and equipment		4,081			(7,124	)		-			3,043			-		-
Intangibles		(364,314	)		(846	)		-			(34,596	)		-		(399,756	)
Others		(17,883	)		(13,891	)		-			12,250			1,638		(17,886	)
Total		(434,970	)		(55,716	)		(7,298	)		10,141			1,638		(486,205	)

Deferred tax assets not recognized:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Tax losses		34,633		15,513
Total Deferred tax assets not recognized		34,633		15,513

Deferred tax assets on tax loss carry-forwards, are recognized to the extent that it is likely to provide relevant tax benefit through future taxable profits. At March 31, 2016, the Company has not recognized deferred tax assets of ThUS$ 34,633 (ThUS$ 15,513 at December 31, 2015) according with a loss of ThUS$ 101,862 (ThUS$ 45,628 at December 31, 2015) to offset against future years tax benefits.

68

Deferred tax expense and current income taxes:

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Current tax expense
Current tax expense		24,490		29,794
Adjustment to previous period’s current tax		2,121		199
Total current tax expense, net		26,611		29,993
Deferred tax expense
Deferred expense for taxes related to the creation and reversal of temporary differences		55,716		(53,546	)
Total deferred tax expense, net		55,716		(53,546	)
Income tax expense		82,327		(23,553	)

Composition of income tax expense (income):

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Current tax expense, net, foreign		25,687		28,689
Current tax expense, net, Chile		924		1,304
Total current tax expense, net		26,611		29,993
Deferred tax expense, net, foreign		48,739		(33,218	)
Deferred tax expense, net, Chile		6,977		(20,328	)
Deferred tax expense, net, total		55,716		(53,546	)
Income tax expense		82,327		(23,553	)

Profit before tax by the legal tax rate in Chile (24% and 22.5% at March 31, 2016 and 2015, respectively)

69

	For the period ended						For the period ended
	March 31,						March 31,
	2016			2015			2016			2015
	ThUS$			ThUS$			%			%
	Unaudited						Unaudited
Tax expense using the legal rate(*)		44,288			(14,288	)		24.00			22.50
Tax effect of rates in other jurisdictions		14,774			1,039			8.01			(1.64	)
Tax effect of non-taxable operating revenues		(20,214	)		(30,197	)		(10.95	)		47.55
Tax effect of disallowable expenses		41,266			17,977			22.36			(28.31	)
Other increases (decreases) in legal tax charge		2,213			1,916			1.20			(3.02	)
Total adjustments to tax expense using the legal rate		38,039			(9,265	)		20.62			14.58
Tax expense using the effective rate		82,327			(23,553	)		44.62			37.08

(*) 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 March 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 ended
	March 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Aggregate deferred taxation of components of other comprehensive income		(7,298	)		(21,366	)
Aggregate deferred taxation related to items charged to net equity		(449	)		(713	)

(*) Correspond to the tax by tax rate increases Law No. 20,780, tax reform, published in the Official Journal of the Republic of Chile on September 29, 2014.

70

NOTE 18 - OTHER FINANCIAL LIABILITIES

The composition of Other financial liabilities is as follows:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
Current
(a) Interest bearing loans		1,553,996		1,510,146
(b) Hedge derivatives		87,567		134,089
Total current		1,641,563		1,644,235
Non-current
(a) Interest bearing loans		7,673,334		7,516,257
(b) Hedge derivatives		14,070		16,128
Total non-current		7,687,404		7,532,385

(a) Interest bearing loans

Obligations with credit institutions and debt instruments:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Current
Loans to exporters		390,289		387,409
Bank loans		85,436		80,188
Guaranteed obligations		628,625		591,148
Other guaranteed obligations		24,502		32,513
Subtotal bank loans		1,128,852		1,091,258
Obligation with the public		37,763		10,999
Financial leases		303,531		324,859
Other loans		83,850		83,030
Total current		1,553,996		1,510,146
Non-current
Bank loans		450,177		564,128
Guaranteed obligations		4,311,706		4,122,995
Other guaranteed obligations (1)		275,000		-
Subtotal bank loans		5,036,883		4,687,123
Obligation with the public (2)		1,297,537		1,294,882
Financial leases		917,277		1,015,779
Other loans		421,637		518,473
Total non-current		7,673,334		7,516,257
Total obligations with financial institutions		9,227,330		9,026,403

71

(1) On March 29, 2016, LATAM Airlines Group S.A. He performed the closing of a new financing - Revolving Credit Facility (RCF). The credit line will be guaranteed by TAM Linhas Aereas S.A. and Transporte Aereo S.A.

The total amount committed and disbursed to March 30, 2016 was for a total of MUS $ 275,000. The financing term is 3 years.

The company will pay a coupon (a) plus a fee (b) based on the amount utilization rotated quarterly. The amount available but not willing, it will pay a quarterly commitment fee (c).

a. Interests: L3M + 200 bps annual

b. Utilization fee: If the rotated amount is less than 33% will be to increase 10bps; in case to be between 33% and 66% should be of score a 25bps; and if more than 66% it should adding 50bps

c. Commitment Fee: 0.625% per annum

The line is secured with collateral asset basis; such collateral is composed of: aircraft, engines and spare parts

This funding requires must compliance with liquidity ratio and certain ratios of collateral.

(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.

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 of		As of
	March 31,		December 31,
	2016		2015
Currency	ThUS$		ThUS$
	Unaudited
Brazilian real		3,198		3,387
Chilean peso (U.F.)		263,583		210,423
US Dollar		8,960,549		8,812,593
Total		9,227,330		9,026,403

72

Interest - bearing loans due in installments to March 31, 2016 (Unaudited)

Debtor: LATAM Airlines Group S.A. and Subsidiaries, Tax No. 89.862.200-2, Chile.

				Nominal values												Accounting values
						More than		More than		More than								More than		More than		More than
				Up to		90 days		one to		three to		More than		Total		Up to		90 days		one to		three to		More than		Total
		Creditor		90		to one		three		five		five		nominal		90		to one		three		five		five		accounting			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		value		days		year		years		years		years		value		Amortization	rate		rate
				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		100,244		-		-		-		-		100,244	At Expiration		1.33		1.33
97.036.000-K	SANTANDER	Chile	US$		100,000		-		-		-		-		100,000		100,092		-		-		-		-		100,092	At Expiration		1.80		1.80
97.030.000-7	ESTADO	Chile	US$		57,357		-		-		-		-		57,357		57,663		-		-		-		-		57,663	At Expiration		4.91		4.91
97.004.000-5	CHILE	Chile	US$		50,000		-		-		-		-		50,000		50,000		-		-		-		-		50,000	At Expiration		1.44		1.44
97,003,000-K	BANCO DO BRASIL	Chile	US$		70,000		-		-		-		-		70,000		70,274		-		-		-		-		70,274	At Expiration		2.82		2.82
97.951.000-4	HSBC	Chile	US$		12,000		-		-		-		-		12,000		12,016		-		-		-		-		12,016	At Expiration		0.75		0.75
Bank loans
97.023.000-9	CORP BANCA	Chile	UF		18,828		56,485		99,503		31,831		-		206,647		19,637		56,485		95,156		34,642		-		205,920	Quarterly		4.16		4.16
0-E	BLADEX	U.S.A.	US$		2,500		5,000		27,500		15,000		-		50,000		3,245		5,000		27,125		14,875		-		50,245	Semiannual		4.58		4.58
0-E	DVB BANK SE	U.S.A.	US$		-		-		95,784		-		-		95,784		20		-		95,784		-		-		95,804	Quarterly		1.69		1.69
97.036.000-K	SANTANDER	Chile	US$		-		-		179,835		-		-		179,835		555		-		179,835		-		-		180,390	Quarterly		2.53		2.53
Obligations with the public
0-E	BANK OF YORK	U.S.A.	US$		-		-		-		500,000		-		500,000		12,184		-		-		487,033		-		499,217	At Expiration		7.77		7.25
Guaranteed obligations
0-E	CREDIT AGRICOLE	France	US$		33,150		92,639		225,081		49,773		8,935		409,578		33,943		92,639		223,742		49,773		8,935		409,032	Quarterly		1.93		1.77
0-E	BNP PARIBAS	U.S.A.	US$		8,261		25,275		71,526		75,452		130,720		311,234		9,412		25,275		71,103		75,362		130,720		311,872	Quarterly		2.45		2.41
0-E	WELLS FARGO	U.S.A.	US$		31,032		93,927		256,672		265,948		502,277		1,149,856		35,046		93,927		229,700		253,830		492,745		1,105,248	Quarterly		2.25		1.64
0-E	WILMINGTON TRUST	U.S.A.	US$		19,386		49,124		121,787		130,291		628,097		948,685		25,117		49,124		117,414		127,909		623,344		942,908	Quarterly		4.25		4.25
0-E	CITIBANK	U.S.A.	US$		17,157		52,130		144,101		151,774		234,798		599,960		18,707		52,130		134,944		147,536		230,441		583,758	Quarterly		2.49		1.74
97.036.000-K	SANTANDER	Chile	US$		5,264		15,945		43,781		45,655		43,791		154,436		5,559		15,945		41,751		44,899		43,534		151,688	Quarterly		1.57		1.03
0-E	BTMU	U.S.A.	US$		2,732		8,305		22,947		24,166		36,091		94,241		2,924		8,305		21,533		23,570		35,757		92,089	Quarterly		1.92		1.32
0-E	APPLE BANK	U.S.A.	US$		1,343		4,077		11,290		11,907		18,193		46,810		1,508		4,077		10,587		11,609		18,021		45,802	Quarterly		2.02		1.42
0-E	US BANK	U.S.A.	US$		14,566		44,198		121,613		127,272		268,906		576,555		17,248		44,198		103,828		119,065		261,828		546,167	Quarterly		3.99		2.81
0-E	DEUTS CHE BANK	U.S.A.	US$		4,838		14,820		30,556		26,113		55,603		131,930		5,435		14,820		30,556		26,113		55,603		132,527	Quarterly		3.62		3.62
0-E	NATIXIS	France	US$		11,848		36,354		97,024		81,188		231,565		457,979		12,508		36,354		97,024		81,188		231,565		458,639	Quarterly		2.22		2.19
0-E	HSBC	U.S.A.	US$		1,388		4,201		11,605		12,188		22,829		52,211		1,530		4,201		11,605		12,188		22,829		52,353	Quarterly		2.58		1.77
0-E	PKAIRFINANCE	U.S.A.	US$		1,915		5,949		17,474		20,091		15,204		60,633		1,972		5,949		17,474		20,091		15,204		60,690	Mensual		2.14		2.14
0-E	KFW IP EX-BANK	Germany	US$		2,204		6,776		18,254		14,546		1,103		42,883		2,233		6,776		18,254		14,546		1,103		42,912	Quarterly		2.27		2.27
-	SWAP Aviones llegados	-	US$		478		1,285		2,312		571		-		4,646		478		1,285		2,312		571		-		4,646	Quarterly		-		-
Other guaranteed obligations
0-E	CITIBANK	U.S.A.	US$		-		-		275,000		-		-		275,000		48		-		275,000		-		-		275,048	Quarterly		3.13		3.13
0-E	DVB BANK SE	U.S.A.	US$		8,100		16,338		-		-		-		24,438		8,116		16,338		-		-		-		24,454	Quarterly		2.32		2.32
Financial leases
0-E	ING	U.S.A.	US$		8,212		20,069		35,466		23,143		-		86,890		8,942		20,069		34,722		23,032		-		86,765	Quarterly		5.26		4.68
0-E	CREDIT AGRICOLE	France	US$		1,689		5,197		5,403		-		-		12,289		1,727		5,197		5,403		-		-		12,327	Quarterly		1.59		1.59
0-E	CITIBANK	U.S.A.	US$		4,750		14,653		42,326		30,967		-		92,696		5,532		14,653		41,359		30,819		-		92,363	Quarterly		6.40		5.67
0-E	PEFCO	U.S.A.	US$		15,454		47,383		97,911		16,921		-		177,669		16,639		47,383		96,473		16,859		-		177,354	Quarterly		5.37		4.77
0-E	BNP PARIBAS	U.S.A.	US$		10,102		31,077		75,843		26,128		-		143,150		10,629		31,077		74,597		26,024		-		142,327	Quarterly		4.14		3.70
0-E	WELLS FARGO	U.S.A.	US$		4,555		13,907		38,858		41,588		18,201		117,109		4,940		13,907		37,638		41,215		18,156		115,856	Quarterly		3.98		3.54
0-E	DVB BANK S E	U.S.A.	US$		4,599		13,954		9,447		-		-		28,000		4,649		13,954		9,447		-		-		28,050	Quarterly		2.09		2.09
0-E	BANC OF AMERICA	U.S.A.	US$		1,736		360		-		-		-		2,096		1,738		360		-		-		-		2,098	Mensual		1.41		1.41
Other loans
0-E	BOEING	U.S.A.	US$		-		-		75,993		-		-		75,993		1,897		-		75,993		-		-		77,890	At Expiration		1.79		1.79
0-E	CITIBANK (*)	U.S.A.	US$		19,452		61,353		176,791		173,043		-		430,639		20,600		61,353		173,148		172,496		-		427,597	Quarterly		6.00		6.00
	Total				644,896		740,781		2,431,683		1,895,556		2,216,313		7,929,229		685,007		740,781		2,353,507		1,855,245		2,189,785		7,824,325

(*) Securitized bond with the future flows from the sales with credit card in United States and Canada.

73

Interest-bearing loans due in installments to March 31, 2016 (Unaudited)

Debtor: TAM S.A. and Subsidiaries, Tax No. 02.012.862/0001-60, Brazil.

				Nominal values												Accounting values
						More than		More than		More than								More than		More than		More than
				Up to		90 days		one to		Three to		More than		Total		Up to		90 days		one to		three to		More than		Total
		Creditor		90		to one		Three		five		five		nominal		90		to one		three		Five		five		accounting			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		value		days		year		years		years		years		value		Amortization	rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%
Bank loans
0-E	NEDERLANDS CHE
	CREDIETVERZEKERING MAATSCHAPPIJ	Holand	US$		117		361		1,046		1,179		534		3,237		133		361		1,047		1,179		534		3,254	Monthly		6.01		6.01
Obligation with the public
0-E	THE BANK OF NEW YORK	U.S.A.	US$		-		-		300,000		-		500,000		800,000		23,746		1,833		304,837		4,760		500,907		836,083	At Expiration		8.17		8.00
Financial leases
0-E	AFS INVESTMENT IX LLC	U.S.A.	US$		2,000		6,171		17,789		15,573		-		41,533		2,195		6,171		17,789		15,573		-		41,728	Monthly		1.25		1.25
0-E	AIRBUS FINANCIAL	U.S.A.	US$		1,754		5,347		14,901		13,501		-		35,503		1,819		5,347		14,901		13,501		-		35,568	Monthly		1.43		1.43
0-E	DVB BANK SE	U.S.A.	US$		118		355		164		-		-		637		119		355		164		-		-		638	Monthly		1.64		1.64
0-E	GENERAL ELECTRIC CAPITAL CORPORATION	U.S.A.	US$		3,683		11,226		5,198		-		-		20,107		3,726		11,226		5,198		-		-		20,150	Monthly		1.25		1.25
0-E	KFW IPEX-BANK	Germany	US$		579		1,737		1,543		-		-		3,859		586		1,737		1,544		-		-		3,867	Monthly/Quarterly		1.72		1.72
0-E	NATIXIS	France	US$		1,383		6,680		17,727		20,099		66,627		112,516		1,856		6,680		17,727		20,099		66,627		112,989	Quarterly/Semiannual		3.85		3.85
0-E	PK AIRFINANCE US, INC.	U.S.A.	US$		1,294		20,475		-		-		-		21,769		1,331		20,475		-		-		-		21,806	Monthly		1.75		1.75
0-E	WACAPOU LEASING S.A.	Luxemburg	US$		375		1,078		2,563		13,970		-		17,986		408		1,078		2,563		13,970		-		18,019	Quarterly		2.00		2.00
0-E	SOCIÉTÉ GÉNÉRALE MILAN BRANCH	Italy	US$		8,225		25,325		72,187		198,601		-		304,338		9,591		25,325		72,187		198,602		-		305,705	Quarterly		3.63		3.55
0-E	BANCO IBM S.A	Brazil	BRL		238		714		706		-		-		1,658		238		714		706		-		-		1,658	Monthly		14.14		14.14
0-E	HP FINANCIAL SERVICE	Brazil	BRL		189		594		-		-		-		783		189		594		-		-		-		783	Monthly		10.02		10.02
0-E	SOCIETE GENERALE	Francia	BRL		94		281		382		-		-		757		94		281		382		-		-		757	Monthly		14.14		14.14
	Total				20,049		80,344		434,206		262,923		567,161		1,364,683		46,031		82,177		439,045		267,684		568,068		1,403,005
	Total consolidated				664,945		821,125		2,865,889		2,158,479		2,783,474		9,293,912		731,038		822,958		2,792,552		2,122,929		2,757,853		9,227,330

74

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
						More than		More than		More than								More than		More than		More than
				Up to		90 days		one to		three to		More than		Total		Up to		90 days		one to		three to		More than		Total
		Creditor		90		to one		three		five		five		nominal		90		to one		three		five		five		accounting			Effective		Nominal
Tax No .	Creditor	country	Currency	days		year		years		years		years		value		days		year		years		years		years		value		Amortization	rate		rate
				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	At Expiration		1.00		1.00
97.036.000-K	SANTANDER	Chile	US$		100,000		-		-		-		-		100,000		100,067		-		-		-		-		100,067	At Expiration		1.44		1.44
97.030.000-7	ESTADO	Chile	US$		55,000		-		-		-		-		55,000		55,088		-		-		-		-		55,088	At Expiration		1.05		1.05
97.004.000-5	CHILE	Chile	US$		50,000		-		-		-		-		50,000		50,006		-		-		-		-		50,006	At Expiration		1.42		1.42
97,003,000-K	BANCO DO BRAS IL	Chile	US$		70,000		-		-		-		-		70,000		70,051		-		-		-		-		70,051	At Expiration		1.18		1.18
97.951.000-4	HSBC	Chile	US$		12,000		-		-		-		-		12,000		12,014		-		-		-		-		12,014	At Expiration		0.66		0.66
Bank loans
97.023.000-9	CORP BANCA	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 S E	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	At Expiration		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	DEUTS CHE 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	KFWIPEX-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 Avionesllegados	-	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 P ARIBAS	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	At Expiration		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.

75

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
						More than		More than		More than								More than		More than		More than
				Up to		90 days		one to		three to		More than		Total		Up to		90 days		one to		three to		More than		Total
		Creditor		90		to one		three		five		five		nominal		90		to one		three		five		five		accounting			Effective		Nominal
Tax No.	Creditor	country	Currency	days		year		years		years		years		value		days		year		years		years		years		value		Amortization	rate		rate
				ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$			%		%
Préstamos bancarios
0-E	NEDERLANDS CHE
	CREDIETVERZEKERING MAATS CHAPPIJ	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
Obligaciones conel público
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	At Expiration		8.17		8.00
Arrendamientos financieros
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 IP EX-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 FINANCEUS, INC.	U.S.A.	US$		1,276		21,769		-		-		-		23,045		1,316		21,769		-		-		-		23,085	Monthly		1.75		1.75
0-E	WACAP OULEASING 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 consolidado				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

76

(b) Hedge derivatives

									Total hedge
	Current liabilities				Non-current liabilities				derivatives
	As of		As of		As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
Accrued interest from the last date of interest rate swap		3,963		4,329		-		-		3,963		4,329
Fair value of interest rate derivatives		21,382		33,518		14,070		16,128		35,452		49,646
Fair value of fuel derivatives		21,343		56,424		-		-		21,343		56,424
Fair value of foreign currency derivatives:		40,879		39,818		-		-		40,879		39,818
Total hedge derivatives		87,567		134,089		14,070		16,128		101,637		150,217

The foreign currency derivatives exchanges are FX forward and cross currency swap.

Hedging operation

The fair values of assets/ (liabilities), by type of derivative, of the contracts held as hedging instruments are presented below:

	As of			As of
	March 31,			December 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Cross currency swaps (CCS) (1)		(24,383	)		(49,311	)
Interest rate swaps (2)		(36,434	)		(44,085	)
Fuel collars (3)		2,760			6,293
Fuel swap (4)		(21,343	)		(56,424	)
Currency forward US$/GBP$ (5)		762			7,432
Currency options US$/EUR$ (5)		(3,301	)		1,438
Currency options R$/US$ (5)		(13,981	)		933
Currency options CLP$/US$ (5)		(592	)		85
Currency options COP$/US$ (5)		(818	)		-
Currency options AUD$/US$ (5)		(428	)		-

(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 dollar-UF 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 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.

(5) Covers the foreign exchange risk exposure of operating cash flows caused mainly by fluctuations in the exchange rate US$/GBP, US$/EUR, R$/US$, CLP$/US$, COP$/US$ and AUD$/US$. These contracts are recorded as cash flow hedges.

77

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 9 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 UF, 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
	March 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Debit (credit) recognized in comprehensive income during the period		27,974			83,263
Debit (credit) transferred from net equity to income during the period		(37,421	)		(113,462	)

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NOTE 19 - TRADE AND OTHER ACCOUNTS PAYABLES

The composition of Trade and other accounts payables is as follows:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Current
(a) Trade and other accounts payables		979,015		1,025,574
(b) Accrued liabilities at the reporting date		473,822		458,383
Total trade and other accounts payables		1,452,837		1,483,957

(a) Trade and other accounts payable:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Trade creditors		734,498		758,783
Leasing obligation		15,553		18,784
Other accounts payable		228,964		248,007
Total		979,015		1,025,574

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The details of Trade and other accounts payables are as follows:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Boarding Fee		165,389		175,900
Aircraft Fuel		127,053		148,612
Handling and ground handling		87,209		88,629
Other personnel expenses		77,446		72,591
Suppliers' technical purchases		75,251		52,160
Airport charges and overflight		73,541		94,139
Professional services and advisory		63,317		63,302
Land services		61,342		80,387
Marketing		39,973		45,997
Services on board		37,457		32,993
Maintenance		32,064		18,573
Leases, maintenance and IT services		29,269		25,558
Crew		24,678		23,834
Achievement of goals		18,272		15,386
Aircraft and engines leasing		15,553		19,146
Distribution system		9,591		17,531
Aviation insurance		7,080		7,655
Communications		4,128		6,731
Others		30,402		36,450
Total trade and other accounts payables		979,015		1,025,574

(b) Liabilities accrued:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Aircraft and engine maintenance		268,720		246,454
Accrued personnel expenses		122,492		108,058
Accounts payable to personnel (*)		64,028		81,368
Others accrued liabilities		18,582		22,503
Total accrued liabilities		473,822		458,383

(*) Profits and bonds participation (Note 22 letter b)

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NOTE 20 - OTHER PROVISIONS

Other provisions:

	Current liabilities				Non-current liabilities				Total Liabilities
	As of		As of		As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Provision for contingencies (1)
Tax contingencies		1,298		1,297		380,892		350,418		382,190		351,715
Civil contingencies		955		1,476		44,299		37,555		45,254		39,031
Labor contingencies		147		149		17,377		15,648		17,524		15,797
Other		-		-		12,191		11,910		12,191		11,910
Provision for European
Commision investigation (2)		-		-		9,355		8,966		9,355		8,966
Total other provisions (3)		2,400		2,922		464,114		424,497		466,514		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.

(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 March 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.

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Movement of provisions:

				European
	Legal			Commission
	claims			Investigation(*)			Total
	ThUS$			ThUS$			ThUS$
Opening balance as of January 1, 2015		705,552			9,999			715,551
Increase in provisions		7,527			-			7,527
Provision used		(1,040	)		-			(1,040	)
Difference by subsidiaries conversion		(118,486	)		-			(118,486	)
Reversal of provision		(7,736	)		-			(7,736	)
Exchange difference		(317	)		(1,174	)		(1,491	)
Closing balance as of March 31, 2015 (Unaudited)		585,500			8,825			594,325
Opening balance as of April 1, 2015		585,500			8,825			594,325
Increase in provisions		47,148			-			47,148
Provision used		(18,482	)		-			(18,482	)
Difference by subsidiaries conversion		(101,780	)		-			(101,780	)
Reversal of provision		(93,004	)		-			(93,004	)
Exchange difference		(929	)		141			(788	)
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		26,103			-			26,103
Provision used		(4,916	)		-			(4,916	)
Difference by subsidiaries conversion		38,949			-			38,949
Reversal of provision		(21,555	)		-			(21,555	)
Exchange difference		125			389			514
Closing balance as of March 31, 2016 (Unaudited)		457,159			9,355			466,514

Accumulated balance includes the judicial deposit in guarantee, related to the “Fundo Aeroviário” (FA), in the amount of US$ 67 million, done in order to suspend the enforceability of the tax credit. The company is discussing over the Tribunal the constitutionality of the requirement made by FA in a legal suit. Initially it was covered by the effects of a provisional remedy, meaning that, the company was not obligated to collect the tax while there was not a judicial decision in this regard. However, the decision taken by a judge in the first instance was publicized in an unfavorable way, revoking the provisional remedy relief. As the legal suit is still in progress (TAM appealed from this first decision), the company needed to do the deposit judicial in guarantee to suspend the enforceability of such tax credit; deposit classified in this category deducting the existing provision. Finally, if the final decision is favorable to the company, the deposit already made is going to come back 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 March 31, 2016 is disclosed in Note 30, at case No. 2001.51.01.012530-0.

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(*) European Commission Provision:

(a) 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 begun in 2006 regarding possible unfair competition on the air cargo market. This was a joint investigation done by the European and U.S.A. authorities. The start of the investigation was disclosed through an Essential Matter report dated December 27, 2007. The U.S.A. portion of 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, as disclosed in an Essential Matter report notice on January 21, 2009.

(b) A Essential Matter report dated November 9, 2010, reported that the General Direction of Competition had issued its decision on this case (the "decision"), under which 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., Air Canada, Air France, KLM, British Airways, Cargolux, Cathay Pacific, Japan Airlines, Qantas Airways, S.A.S. and Singapore Airlines.

(c) 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.This is a minor fine in comparison to the original decision, as there was a significant reduction in fine because LATAM Airlines Group S.A. cooperated during the investigation.

(d) 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 the Court European resolved the appeal and annulled the European Commission. The procedural stage at March 31, 2016 is disclosed in Note 30, in (ii) lawsuits received by Latam Airlines Group S.A. and Subsidiaries in European Commission Court.

83

NOTE 21 - OTHER NON-FINANCIAL LIABILITIES

	Current liabilities				Non- current liabilities				Total Liabilities
	As of		As of		As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Deferred revenues (*)		2,344,295		2,423,703		273,017		272,130		2,617,312		2,695,833
Sales tax		7,398		10,379		-		-		7,398		10,379
Retentions		42,563		33,125		-		-		42,563		33,125
Others taxes		9,457		11,211		-		-		9,457		11,211
Dividends		35,181		3,980		-		-		35,181		3,980
Other sundry liabilities		29,595		7,635		-		-		29,595		7,635
Total other non-financial liabilities		2,468,489		2,490,033		273,017		272,130		2,741,506		2,762,163

(*) Note 2.20.

The balance comprises, mainly, deferred income by services not yet rendered and programs such as: LANPASS, TAM Fidelidade y Multiplus:

LANPASS 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 LANPASS 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 TAM 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.

84

NOTE 22 - EMPLOYEE BENEFITS

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Retirements payments		46,745		42,117
Resignation payments		9,569		8,858
Other obligations		15,151		14,296
Total liability for employee benefits		71,465		65,271

(a) The movement in retirements and resignation payments and other obligations:

			Increase (decrease)						Actuarial
	Opening		current service			Benefits			(gains)		Currency			Closing
	balance		provision			paid			losses		translation			balance
	ThUS$		ThUS$			ThUS$			ThUS$		ThUS$			ThUS$
From January 1 to
March 31, 2015 (Unaudited)		74,102		7,713			(1,227	)		-		-			80,588
From April 1 to
December 31, 2015		80,588		(21,322	)		(2,597	)		14,631		(6,029	)		65,271
From January 1 to
March 31, 2016 (Unaudited)		65,271		5,604			(972	)		1,562		-			71,465

The principal assumptions used in the calculation to the provision in Chile are presented below:

	As of
	March 31,
Assumptions	2016			2015
Discount rate		4.62	%		4.64	%
Expected rate of salary increase		4.50	%		4.50	%
Rate of turnover		6.16	%		6.16	%
Mortality rate		RV-2009			RV-2009
Inflation rate		2.93	%		3.09	%
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.

85

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
	March 31,			December 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Discount rate
Change in the accrued liability an closing for increase in 100 p.b.		(5,321	)		(4,669	)
Change in the accrued liability an closing for decrease of 100 p.b.		6,093			5,345
Rate of wage growth
Change in the accrued liability an closing for increase in 100 p.b.		6,052			5,309
Change in the accrued liability an closing for decrease of 100 p.b.		(5,210	)		(4,725	)

(b) The liability for short-term:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Profit-sharing and bonuses (*)		64,028		81,368

(*) Accounts payables to employees (Note 19 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
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Salaries and wages		360,213		450,402
Short-term employee benefits		72,066		50,883
Termination benefits		13,255		22,919
Other personnel expenses		43,181		51,485
Total		488,715		575,689

86

NOTE 23 - ACCOUNTS PAYABLE, NON-CURRENT

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Aircraft and engine maintenance		364,515		371,419
Fleet financing (JOL)		35,388		35,042
Provision for vacations and bonuses		10,290		10,365
Other sundry liabilities		225		224
Total accounts payable, non-current		410,418		417,050

NOTE 24 - 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 Capital of the Company is managed and composed in the following form:

The capital of the Company at March 31, 2016 amounts to ThUS$ 2,545,705 divided into 545,547,819 common stock of a same series (ThUS$ 2,545,705, divided into 545,547,819 shares as of December 31, 2015), 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.

(b) Subscribed and paid 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 at March 31, 2015		-
Authorized shares as of December 31, 2015		551,847,819
Autorized shares as of January 1, 2016		551,847,819
No movement of autorized shares at March 31, 2016		-
Authorized shares as of March 31, 2016 (Unaudited)		551,847,819

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Movement fully paid shares

				Movement
				value		Cost of issuance
				of shares		and placement			Paid- in
	N° of			(1)		of shares (2)			Capital
	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 at December 31, 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
No movement of paid shares at March 31, 2016		-			-		-			-
Paid shares as of March 31, 2016 (Unaudited)		545,547,819	(3)		2,552,066		(6,361	)		2,545,705

(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 March 31, 2016, the difference between authorized shares and fully paid shares are 6,300,000 shares allocated to compensation plans for executives of LATAM Airlines Group S.A. and subsidiaries (see Note 33(a)).

(c) Treasury stock

At March 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.

At the Extraordinary Shareholder´s Meeting held on June 11, 2013, the company relinquished all right to 7,972 stocks of its portfolio, this date the Company does not maintain treasury stock.

(d) Reserve of share- based payments

Movement of Reserves of share- based payments:

			Stock
	Opening		option		Deferred			Closing
Periods	balance		plan		tax			balance
	ThUS$		ThUS$		ThUS$			ThUS$
From January 1 to March 31, 2015 (Unaudited)		29,642		2,841		(713	)		31,770
From April 1 to December 31, 2015		31,770		6,083		(2,206	)		35,647
From January 1 to March 31, 2016 (Unaudited)		35,647		1,233		(404	)		36,476

These reserves are related to the “Share-based payments” explained in Note 33.

(e) Other sundry reserves

88

Movement of Other sundry reserves:

	Opening		Legal			Closing
Periods	balance		reserves			balance
	ThUS$		ThUS$			ThUS$
From January 1 to March 31, 2015 (Unaudited)		2,635,748		1,928			2,637,676
From April 1 to December 31, 2015		2,637,676		(2,997	)		2,634,679
From January 1 to March 31, 2016 (Unaudited)		2,634,679		340			2,635,019

Balance of Other sundry reserves comprises the following:

	As of			As of
	March 31,			December 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Higher value for TAM S.A. share exchange (1)		2,665,692			2,665,692
Reserve for the adjustment to the value of fixed assets (2)		2,620			2,620
Transactions with non-controlling interest (3)		(25,895	)		(25,891	)
Cost of issuance and placement of shares		(5,264	)		(5,264	)
Others		(2,134	)		(2,478	)
Total		2,635,019			2,634,679

(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, 2015, 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$ (4), 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).

89

(f) Reserves with effect in other comprehensive income.

Movement of Reserves with effect in other comprehensive income:

							Actuarial gain
	Currency			Cash flow			or loss on defined
	translation			hedging			benefit plans
	reserve			reserve			reserve			Total
	ThUS $			ThUS $			ThUS $			ThUS $
Opening balance as of January 1, 2015		(1,193,871	)		(151,340	)		-			(1,345,211	)
Derivatives valuation gains (losses)		-			84,500			-			84,500
Deferred tax		-			(21,779	)		-			(21,779	)
Difference by subsidiaries conversion		(709,950	)		-			-			(709,950	)
Closing balance as of March 31, 2015 (Unaudited)		(1,903,821	)		(88,619	)		-			(1,992,440	)
Opening balance as of April 1, 2015		(1,903,821	)		(88,619	)		-			(1,992,440	)
Derivatives valuation gains (losses)		-			(1,770	)		-			(1,770	)
Deferred tax		-			(121	)		-			(121	)
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		(672,220	)		-			-			(672,220	)
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)		-			27,468			-			27,468
Deferred tax		-			(7,539	)		-			(7,539	)
Actuarial reserves by employee benefit plans		-			-			(1,573	)		(1,573	)
Deferred tax actuarial IAS by employee benefit plans		-			-			413			413
Difference by subsidiaries conversion		243,384			-			-			243,384
Closing balance as of March 31, 2016 (Unaudited)		(2,332,657	)		(70,581	)		(11,877	)		(2,415,115	)

(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.

90

(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.

(f.3) Actuarial gain or loss on defined benefit plans reserve

These originate from the actuarial calculation Company has developed from December 31, 2015, the effect of a negative reserve amounting to ThUS$ 11,877 net of deferred taxes.

(g) Retained earnings

Movement of Retained earnings:

			Result						Other
	Opening		for the						increase			Closing
Periods	balance		period			Dividens			(decreases)			balance
	ThUS$		ThUS$			ThUS$			ThUS$			ThUS$
From January 1 to March 31, 2015 (Unaudited)		536,190		(39,947	)		-			528			496,771
From April 1 to December 31, 2015		496,771		(179,327	)		-			506			317,950
From January 1 to March 31, 2016 (Unaudited)		317,950		102,208			(30,662	)		(255	)		389,241

(h) Dividends per share

	Minimum mandatory		Final dividend
	dividend		dividend
Description of dividend	2016		2015
Date of dividend		03-31-2016		12-31-2012
Amount of the dividend (ThUS$)		30,662		-
Number of shares among which the dividend is distributed		545,547,819		545,547,819
Dividend per share (US$)		0.0562		-

91

NOTE 25 - REVENUE

The detail of revenues is as follows:

	For the periods ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Passengers LAN		1,084,909		1,128,658
Passengers TAM		873,381		1,214,869
Cargo		275,967		350,322
Total		2,234,257		2,693,849

NOTE 26 - COSTS AND EXPENSES BY NATURE

(a) Costs and operating expenses

The main operating costs and administrative expenses are detailed below:

	For the periods ended
	M arch 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Aircraft fuel		461,433		744,064
Other rentals and landing fees		261,051		285,905
Aircraft rentals		133,603		128,899
Aircraft maintenance		94,796		113,974
Comissions		66,629		82,563
Passenger services		77,452		77,762
Other operating expenses		285,406		317,934
Total		1,380,370		1,751,101

92

(b) Depreciation and amortization

Depreciation and amortization are detailed below:

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Depreciation (*)		229,891		226,468
Amortization		9,560		10,980
Total		239,451		237,448

(*) 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 March 31, 2016 is ThUS$ 88,815 and ThUS$ 86,565 for the same period of 2015.

(c) Personnel expenses

The costs for personnel expenses are disclosed in Note 22 liability for employee benefits.

(d) Financial costs

The detail of financial costs is as follows:

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Bank loan interest		84,204		81,082
Financial leases		9,493		12,078
Other financial instruments		9,352		2,173
Total		103,049		95,333

Costs and expenses by nature presented in this note plus the Employee expenses disclosed in Note 22, 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.

93

NOTE 27 - OTHER INCOME, BY FUNCTION

Other income by function is as follows:

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Tours		23,962		21,899
Aircraft leasing		15,408		9,348
Customs and warehousing		5,216		5,417
Duty free		2,393		4,129
Maintenance		2,121		2,068
Other miscellaneous income		44,260		54,432
Total		93,360		97,293

NOTE 28 - 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.

(a) Foreign currency

The foreign currency detail of balances of monetary items in current and non-current assets is as follows:

94

	As of		As of
Current assets	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Cash and cash equivalents		162,499		182,089
Argentine peso		6,907		11,611
Brazilian real		5,782		8,810
Chilean peso		21,790		17,739
Colombian peso		1,200		1,829
Euro		13,633		10,663
U.S. dollar		106,016		112,422
Strong bolivar		1,775		2,986
Other currency		5,396		16,029
Other financial assets, current		68,411		124,042
Argentine peso		52,500		108,592
Brazilian real		2,362		1,263
Chilean peso		542		563
Colombian peso		119		1,167
Euro		1		1
U.S. dollar		12,577		12,128
Strong bolivar		1		22
Other currency		309		306

95

	As of		As of
Current assets	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Other non - financial assets, current		130,516		126,130
Argentine peso		13,819		14,719
Brazilian real		14,707		15,387
Chilean peso		18,738		10,265
Colombian peso		765		486
Euro		2,502		1,983
U.S. dollar		56,693		61,577
Strong bolivar		8		-
Other currency		23,284		21,713
Trade and other accounts receivable, current		216,192		247,229
Argentine peso		27,116		30,563
Brazilian real		43,361		11,136
Chilean peso		28,077		55,169
Colombian peso		462		1,195
Euro		21,947		53,200
U.S. dollar		21,088		6,743
Strong bolivar		603		7,225
Other currency		73,538		81,998
Accounts receivable from related entities, current		249		183
Chilean peso		249		183
Tax current assets		25,193		22,717
Argentine peso		2,564		2,371
Brazilian real		2,263		5
Chilean peso		3,832		3,615
Colombian peso		1,684		1,275
Euro		74		14
U.S. dollar		85		1,394
Other currency		14,691		14,043
Total current assets		603,060		702,390
Argentine peso		102,906		167,856
Brazilian real		68,475		36,601
Chilean peso		73,228		87,534
Colombian peso		4,230		5,952
Euro		38,157		65,861
U.S. Dollar		196,459		194,264
Strong bolivar		2,387		10,233
Other currency		117,218		134,089

96

	As of		As of
Non-current assets	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
Other financial assets, non-current		25,202		20,767
Argentine peso		20		22
Brazilian real		1,823		1,478
Chilean peso		82		77
Colombian peso		169		162
Euro		3,235		614
U.S. dollar		18,024		16,696
Other currency		1,849		1,718
Other non - financial assets, non-current		48,209		60,215
Argentine peso		151		169
Brazilian real		5,046		4,454
U.S. dollar		37,893		50,108
Other currency		5,119		5,484
Accounts receivable, non-current		6,442		9,404
Chilean peso		6,227		4,251
U.S. dollar		62		5,000
Other currency		153		153
Deferred tax assets		5,299		2,632
Colombian peso		398		336
U.S. dollar		2,606		-
Other currency		2,295		2,296
Total non-current assets		85,152		93,018
Argentine peso		171		191
Brazilian real		6,869		5,932
Chilean peso		6,309		4,328
Colombian peso		567		498
Euro		3,235		614
U.S. dollar		58,585		71,804
Other currency		9,416		9,651

97

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
	As of		As of		As of		As of
Current liabilities	March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited
Other financial liabilities, current		101,293		94,199		194,735		141,992
Chilean peso		55,783		54,655		114,147		52,892
U.S. dollar		45,510		39,544		80,588		89,100
Trade and other accounts
payables, current		608,311		575,967		18,931		19,261
Argentine peso		14,430		20,772		701		2,072
Brazilian real		40,842		37,572		4		16
Chilean peso		11,371		40,219		11,131		10,951
Colombian peso		20,730		5,271		267		155
Euro		10,781		5,275		386		618
U.S. dollar		347,601		310,565		57		839
Strong bolivar		892		2,627		-		-
Other currency		161,664		153,666		6,385		4,610
Accounts payable to related entities, current		656		447		-		-
Chilean peso		603		83		-		-
U.S. dollar		-		22		-		-
Other currency		53		342		-		-
Other provisions, current		-		-		451		460
Chilean peso		-		-		27		24
Other currency		-		-		424		436
Tax liabilities, current		1,484		36		10,850		9,037
Argentine peso		1,484		-		10,850		9,036
Chilean peso		-		-		-		-
U.S. dollar		-		27		-		-
Other currency		-		9		-		1

98

	Up to 90 days					91 days to 1 year
	As of		As of			As of		As of
Current liabilities	March 31,		December 31,			March 31,		December 31,
	2016		2015			2016		2015
	ThUS$		ThUS$			ThUS$		ThUS$
	Unaudited					Unaudited
Other non-financial liabilities, current		63,673		40,431			-		1
Argentine peso		11,879		(2,387	)		-		-
Brazilian real		2,280		4,292			-		5
Chilean peso		29,367		32,228			-		-
Colombian peso		734		145			-		-
Euro		11,649		2,706			-		-
U.S. dollar		1,227		(3,233	)		-		(5	)
Strong bolivar		93		2,490			-		-
Other currency		6,444		4,190			-		1
Total current liabilities		775,417		711,080			224,967		170,751
Argentine peso		27,793		18,385			11,551		11,108
Brazilian real		43,122		41,864			4		21
Chilean peso		97,124		127,185			125,305		63,867
Colombian peso		21,464		5,416			267		155
Euro		22,430		7,981			386		618
U.S. dollar		394,338		346,925			80,645		89,934
Strong bolivar		985		5,117			-		-
Other currency		168,161		158,207			6,809		5,048

99

	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
Non-current liabilities	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2016		2015		2016		2015		2016		2015
	ThUS$		ThUS$		ThUS$		ThUS$		ThUS$		ThUS$
	Unaudited				Unaudited				Unaudited
Other financial liabilities, non-current		533,112		561,217		302,327		328,480		568,068		571,804
Chilean peso		95,156		104,385		34,642		34,635		-		-
U.S. dollar		437,956		456,832		267,685		293,845		568,068		571,804
Accounts payable, non-current		238,730		239,029		-		168		-		8
Chilean peso		8,362		8,058		-		168		-		8
U.S. dollar		228,975		229,005		-		-		-		-
Other currency		1,393		1,966		-		-		-		-
Other provisions, non-current		30,700		27,712		-		-		-		68
Argentine peso		761		797		-		-		-		-
Brazillian real		13,529		11,009		-		-		-		-
Chilean peso		38		-		-		-		-		-
Colombian peso		209		198		-		-		-		-
Euro		9,355		8,966		-		-		-		-
U.S. dollar		6,808		6,742		-		-		-		68
Provisions for employees benefits, non-current		62,027		56,306		-		-		-		-
Chilean peso		62,027		56,306		-		-		-		-
Total non-current liabilities		864,569		884,264		302,327		328,648		568,068		571,880
Argentine peso		761		797		-		-		-		-
Brazilian real		13,529		11,009		-		-		-		-
Chilean peso		165,583		168,749		34,642		34,803		-		8
Colombian peso		209		198		-		-		-		-
Euro		9,355		8,966		-		-		-		-
U.S. dollar		673,739		692,579		267,685		293,845		568,068		571,872
Other currency		1,393		1,966		-		-		-		-

100

	As of			As of
General summary of foreign currency:	March 31,			December 31,
	2016			2015
	ThUS$			ThUS$
	Unaudited
Total assets		688,212			795,408
Argentine peso		103,077			168,047
Brazilian real		75,344			42,533
Chilean peso		79,537			91,862
Colombian peso		4,797			6,450
Euro		41,392			66,475
U.S. dollar		255,044			266,068
Strong bolivar		2,387			10,233
Other currency		126,634			143,740
Total liabilities		2,735,348			2,666,623
Argentine peso		40,105			30,290
Brazilian real		56,655			52,894
Chilean peso		422,654			394,612
Colombian peso		21,940			5,769
Euro		32,171			17,565
U.S. dollar		1,984,475			1,995,155
Strong bolivar		2,378			5,117
Other currency		174,970			165,221
Net position
Argentine peso		62,972			137,757
Brazilian real		18,689			(10,361	)
Chilean peso		(343,117	)		(302,750	)
Colombian peso		(17,143	)		681
Euro		9,221			48,910
U.S. dollar		(1,729,431	)		(1,729,087	)
Strong bolivar		9			5,116
Other currency		(48,336	)		(21,481	)

101

(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 March 31, 2016 and 2015, generated a debit of ThUS$ 67,898 and a charge ThUS$ 204,577, respectively.

Exchange differences recognized in equity as reserves for currency translation differences for the period ended March 31, 2016 and 2015, represented a debit of ThUS$ 244,976 and a charge ThUS$ 726,740, respectively.

The following shows the current exchange rates for the U.S. dollar, on the dates indicated:

	As of		As of
	March 31,		December 31,
	2016		2015
	Unaudited		Unaudited
Argentine peso		14.67		12.97
Brazilian real		3.58		3.98
Chilean peso		669.80		710.16
Colombian peso		3,000.67		3,183.00
Euro		0.88		0.92
Strong bolivar		272.91		198.70
Australian dollar		1.31		1.37
Boliviano		6.86		6.85
Mexican peso		17.30		17.34
New Zealand dollar		1.45		1.46
Peruvian Sol		3.32		3.41
Uruguayan peso		31.70		29.88

102

NOTE 29 - EARNINGS / (LOSS) PER SHARE

	For the period ended
	March 31,
Basic earnings / (loss) per share	2016		2015
	Unaudited
Earnings / (loss) attributable to owners of the parent (ThUS$)		102,208		(39,947	)
Weighted average number of shares, basic		545,547,819		545,547,819
Basic earnings / (loss) per share (US$)		0.18735		(0.07322	)

	For the period ended
	March 31,
Diluted earnings / (loss) per share	2016		2015
	Unaudited
Earnings / (loss) attributable to owners of the parent (ThUS$)		102,208		(39,947	)
Weighted average number of shares, basic		545,547,819		545,547,819
Weighted average number of shares, diluted		545,547,819		545,547,819
Diluted earnings / (loss) per share (US$)		0.18735		(0.07322	)

In the calculation of diluted earnings per share have not been considered the compensation plan disclosed in Note 33 (a.1), because the average market price is lower than the price of options.

103

NOTE 30 – CONTINGENCIES

Lawsuits

(i) Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
Atlantic Aviation Investments LLC (AAI).	Supreme Court of the State of New York County of 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. Variglog is in the process of judicial recovery in Brazil and has asked Switzerland to recognize the judgment that declared the state of judicial recovery and subsequent bankruptcy. Conversations have begun with the representatives in the Variglog liquidation process to work towards a settlement regarding the funds in Switzerland.	17,100 Plus interests and costs
Lan Argentina S.A.	National Administrative Court.	36337/13	ORSNA Resolution No. 123 which directs Lan Argentina to vacate the hangar located in the Airport named Aeroparque Metropolitano Jorge Newberry, Argentina.	The 2nd Room of the Federal Appellate Court confirmed another extension of the precautionary measure that will expire March 16, 2016.  ORSNA did not file an extraordinary remedy, so the measure is in effect through that date.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.	-0-

104

(ii) Lawsuits received by LATAM Airlines Group S.A. and Subsidiaries

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
LATAM Airlines Group S.A. y Lan Cargo S.A.	European Commission.	-	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 Lan 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 MUS$ 9,355. 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 revocation, but it may issue a new decision correcting the faults specified in the Decision. It can do so within 5 years.	9,355

105

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
Lan Cargo S.A. y LATAM Airlines Group S.A.	In the High Court of Justice Chancery División (England) Ovre Romerike District Court (Norway)  y Directie Juridische Zaken Afdeling Ceveil Recht (Netherlands) , Cologne Regional Court (Landgerich Köln Germany).	-	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.	Federal Justice.	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: MUS$9,559; (ii) Norberto Jochmann: MUS$184; (iii) Hernan Merino: MUS$ 92; (iv) Felipe Meyer :MUS$ 92. 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.	9,559
Aerolinhas Brasileiras S.A.	Federal Justice.	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.	10,201

106

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
Tam Linhas Aéreas S.A.	Department of Federal Revenue of Brazil	19515.721155/2014-15	Alleged irregularities in the SAT payments for the periods 01/2009 to 12/2009, 01/2010 to 12/2010 and 01/2011 to 12/2012.	We filed a voluntary remedy on which a judgment is pending since June 30, 2015.	23,274
Tam Linhas Aéreas S.A.	Court of the Second Region.	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 MMU$67 The disclosure prohibition motions entered by the parties against the ruling that overturned the decision did not suffice. The lawsuit was returned by the Brazilian Department of Justice (MPF) on November 23, 2015.We filed a petition on February 26, 2016 requesting that the expert opinions be monitored and the case proceedings were submitted to the Ministry of Finance.	82,854
Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil.	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.	20,353
Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil.	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.  We are awaiting a judgment.	39,690

107

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
Aerovías de Integración Regional, AIRES S.A.	United States  Court of Appeals for the Eleventh Circuit, 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.	Through proceedings dated June 5, 2014, the First Civil Overflow Court Room became aware of the process in Colombia and sent a copy of prior pleas submitted to the plaintiffs by the defendant. In December 2015, the 1st Civil Court in the Provisional Circuit was designated the 45th Permanent Civil Court in the Circuit and the proceedings were presented to the Judge’s chambers on December 7, 2015.The Federal Court ruled on March 26th, 2014 and approved the request from LAN AIRLINES COLOMBIA to suspend the process in the U.S. as the demand in Colombia is underway. Additionally, the U.S. judge closed the case administratively. the Federal Court of Appeals, confirmed the end of the case in the U.S. on April 1st, 2015. On October 13, 2015, Regional One petitioned that the Court reopen the case. Lan Colombia Airlines presented its arguments against this petition and a decision by the Court is pending.	12,443
Tam Linhas Aéreas S.A.	Internal Revenue Service of Brazil	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 judgment is pending in the case before the Curitiba/PR Tax Court since December 9, 2015.	49,421
Tam Viagens S.A.	Department of Finance to the municipality of 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. A first-instance administrative decision is now pending.	82,074

108

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
Tam Linhas Aéreas S.A.	Labor Court of São 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.	14,680
TAM S.A.	Conselho Administrativo de Recursos Fiscais.	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)	95,627
Tam Linhas Aereas S.A.	1° Civil Court of Comarca of 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.MUS$4,302 in cash was deposited in guarantee.	10,492
Aerolinhas Brasileiras S.A.	Labor Court of Campinas.	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.	Trial in initial stage and in negotiation process with the Union.	17,161
Aerolinhas Brasileiras S.A.	Labor Court of Manaus.	0002037-67.2013.5.11.0016	Lawsuit   filed    by   the     Union   of Manaus  Aeroviarios   requiring assignment   of   hazard    to   ground   workers (AEROVIARIOS).	Process in the initial phase. The value is in the calculation stage by the external auditor.	-0-

109

Company	Court	Case Number	Origin	Stage of trial	Amounts Committed (*)
					MUS$
Aerolane, Líneas Aéreas Nacionales del Ecuador S.A.	Internal Revenue Service.	17502-2012-0082	Certificate of 2006 Income Tax, items where CEDT is disregarded. They are requesting certification of branch expenses, ARC fees for which no income tax withholding was made by the payer, etc. These proceedings began in 2012.	A decision was rendered on the appeal for a review and payment was made to avoid interest accrual.  This payment was also contested before the Court.  An accounting analysis was made on October 18, 2015 before the Court with experts on behalf of SRI and the Company.  The expert opinions were issued.  We are awaiting a final decision by the Court.	12,592
TAM Linhas Aéreas S.A.	São Carlos Labor Court.	0010476-12.2015.5.15.0008	Action filed by the union seeking additional hazard pay for maintenance (MRO) employees (São Carlos).	The case is just now beginning and calculations are being prepared.	-0-
TAM Linhas Aéreas S.A.	Sao Paulo Labor Court, 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 action is in its initial phase.	14,414
TAM Linhas Aéreas S.A.	Internal Revenue Service of Brazil	19515.720476/2015-83	Legal administrative proceeding due to alleged irregularities related to the TAM SAT payments.	Pending decision since 09/11/2016	47,999

- In order to deal with any financial obligations arising from legal proceedings in effect at March 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 20.

- Governmental Investigations. The investigation by the authorities of Chile and the United States of America continues, related to payments carried out by LATAM Airlines Group S.A. (before called LAN Airlines S.A.) in 2006-2007, to a consultant that advised it in the resolution of labor matters in Argentina. Mr. Ignacio Cueto has reached an agreement with the Securities and Exchange Commission (“SEC”), which includes the consent to pay a penalty in the amount of US$75,000 and to a cease-and-desist order concerning the books and records and internal control provisions of the U.S. Securities Exchange Act of 1934.The Company, on its part, continues cooperating with the respective authorities in the aforementioned investigation and its lawyers have held conversations and exchanged opinions with the respective authorities on the ways that this matter can potentially be resolved. Presently the Company cannot predict the results in the matter; nor estimate or range the potential losses or risks that may eventually come resulting from the way in which this matter is finally resolved.

- 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 87 of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

110

NOTE 31 - COMMITMENTS

(a.1) 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.

At March 31, 2016, the Company is in compliance with all indicators detailed above.

(a.2) Fleet financing commitments to receive

On May 29, 2015, The Company has issued and placed debt securities denominated Enhanced Equipment Trust Certificates ("EETC") for an aggregate amount of US $ 1,020,823,000 (the "Certificates") in accordance with the following:

• The Certificates were issued and placed in the international market under Rule 144-A and Regulation S of the securities laws of the United States of America by pass-through trusts ("Trusts").

• This offer consists of class A Certificates that will have an interest rate of 4.2% per annum, with an estimated distribution date of November 15, 2027, while the Class B Certificates will have an interest rate of 4.5% per annum, with an estimated distribution date of November 15, 2023.

• Trusts will use the proceeds of the placement, which will initially remain in escrow with a first class bank, to acquire "Equipment Notes" to be issued by four separate special purpose entities, each of which is wholly owned by LATAM (each an "Issuer").

• Each Issuer will use the proceeds from the sale of the Equipment Notes and the initial payment under each Lease (as such term is defined below) to finance the acquisition of eleven new Airbus A321-200, two Airbus A350-900s and four Boeing 787 -9, whose deliveries are scheduled between July 2015 and March 2016 (the "Aircrafts").

• Each of the Issuers will lease the acquired Aircrats to LATAM according to a finance lease ("Lease"), who may in turn sublease the Aircraft under operating sub-lease agreements.

• Based on the above, LATAM will recognise these Equipment Notes as debt upon delivery of each Aircraft.

111

• The Certificates have not been registered under the United Stated Securities Act of 1933 or under applicable securities laws in any other jurisdiction. Consequently, the Certificates have been offered and sold to persons reasonably believed to qualify as institutional investors in accordance with Rule 144-A under the Securities Act of the United States, and other non-residents of the United States in transactions outside the United States under Regulation S of the normative body.

At March 31, 2016 the escrow of EETC is ThUS$ 72,138 corresponding to 2 aircraft by receive.

(b) Commitments under operating leases as lessee

Details of the main operating leases are as follows:

		As of		As of
		March 31,		December 31,
Lessor	Aircraft	2016		2015
		Unaudited
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 T ritón 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		3		3
GFL Aircraft Leasing Netherlands B.V.	Airbus A320		1		1
International Lease Finance Corporation	Boeing 767		1		1
JSA Aircraft 38484, LLC	Boeing 787		1		1
Macquarie Aerospace Finance 5125-2 Trust	Airbus A320		1		-
Macquarie Aerospace Finance 5178 Limited	Airbus A320		1		-
Magix Airlease Limited	Airbus A320		2		2

112

		As of		As of
		March 31,		December 31,
Lessor	Aircraft	2016		2015
		Unaudited
MASL Sweden (1) AB	Airbus A320		-		1
MASL Sweden (2) AB	Airbus A320		-		1
MASL Sweden (7) AB	Airbus A320		-		1
MASL Sweden (8) AB	Airbus A320		1		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		2		2
SASOF II (J) Aviation Ireland Limited	Airbus A319		1		1
Shenton Aircraft Leasing Limited	Airbus A320		1		1
SKY HIGH V LEASING COMPANY LIMIT ED	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		7		7
SMBC Aviation Capital Limited	Airbus A321		2		2
Sunflower Aircraft Leasing Limited	Airbus A320		2		2
T C-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		10		7
Wells Fargo Bank Northwest National Association	Airbus A330		2		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		9		7
Wilmington T rust Company	Airbus A319		1		1
Total			107		106

The rentals are shown in results for the period for which they are incurred.

The minimum future lease payments not yet payable are the following:

	As of		As of
	March 31,		December 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
No later than one year		522,135		513,748
Between one and five years		1,317,994		1,281,454
Over five years		981,111		858,095
Total		2,821,240		2,653,297

113

The minimum lease payments charged to income are the following:

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Minimum operating lease payments		133,603		128,899
Total		133,603		128,899

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.

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.

At March 31, 2016 the Company has existing letters of credit related to operating leasing as follows:

			Value		Release
Creditor Guarantee	Debtor	Type	ThUS$		date
GE Capital Aviation Services Limited	Lan Cargo S.A.	Two letter of credit		7,530	Aug 17, 2016
GE Capital Aviation Services Limited	LAT AM Airlines Group S.A.	Nine letter of credit		37,178	Sep 14, 2016
International Lease Finance Corp	LAT AM Airlines Group S.A.	Four letter of credit		1,700	Oct 12, 2016
ORIX Aviation System Limited	LAT AM Airlines Group S.A.	One letter of credit		3,255	Aug 31, 2016
SMBC Aviation Capital Ltd.	LAT AM Airlines Group S.A.	Two letter of credit		11,133	Aug 14, 2016
Engine Lease Finance Corporation	LAT AM Airlines Group S.A.	One letter of credit		4,750	Sep 8, 2016
Banc of America	LAT AM Airlines Group S.A.	Three letter of credit		1,044	Sep 6, 2016
Wells Fargo Bank	LAT AM Airlines Group S.A.	Nine letter of credit		15,160	Jun 16, 2016
Wells Fargo Bank	T am Linhas Aéreas S.A.	One letter of credit		5,500	Jul 14, 2016
CIT Aerospace International	T am Linhas Aéreas S.A.	Three letter of credit		12,375	Oct 6, 2016
RBS Aerospace Limited	T am Linhas Aéreas S.A.	One letter of credit		12,357	Oct 2, 2016
				111,982

114

(c) Other commitments

At March 31, 2016 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows:

			Value		Release
Creditor Guarantee	Debtor	Type	ThUS $		date
Aena Aeropuertos S .A.	LATAM Airlines Group S.A.	Four letter of credit		2,165	Nov 14, 2016
American Alternative Insurance Corporation	LATAM Airlines Group S.A.	One letter of credit		3,490	Apr 5, 2016
Deutsche Bank A.G.	LATAM Airlines Group S.A.	Three letter of credit		50,000	Jun 1, 2016
Dirección Generalde Aeronáutica Civil	LATAM Airlines Group S.A.	Sixty six letter of credit		16,860	Apr 30, 2016
Empresa Públicade Hidrocarburosdel Ecuador EP Petroecuador	LATAM Airlines Group S.A.	One letter of credit		5,500	Jun 17, 2016
Metropolitan Dade County	LATAM Airlines Group S.A.	Ten letter of credit		2,521	Apr 2, 2016
The Royal Bank of Scotland plc	LATAM Airlines Group S.A.	One letter of credit		5,000	May 20, 2016
Was hington International Insurance	LATAM Airlines Group S.A.	Four letter of credit		1,510	Apr 5, 2016
8ª Vara Federalda Subseção de Campinas S P	Tam Linhas Aéreas S.A.	One insurance policies guarantee		11,808	May 19, 2020
Conselho Administrativode Conselhos Federais	Tam Linhas Aéreas S.A.	One insurance policies guarantee		6,139	Oct 20, 2021
Fundaçãode Proteãode Defesado Consumidor Procon	Tam Linhas Aéreas S.A.	Three insurance policies guarantee		4,233	May 16, 2016
Juizoda 6ª Varade Execuções Fiscais Federalde Campo Grande /MS	Tam Linhas Aéreas S.A.	One insurance policies guarantee		10,063	Jan 4, 2018
União Federal Vara Comarcade S P	Tam Linhas Aéreas S.A.	Two insurance policies guarantee		17,910	Feb 22, 2021
União Federal Vara Comarcade DF	Tam Linhas Aéreas S.A.	Two insurance policies guarantee		2,469	Nov 9, 2020
				139,668

115

NOTE 32 - TRANSACTIONS WITH RELATED PARTIES

(a) Details of transactions with related parties as follows:

Transaction amount

Nature of

Nature of

with related parties

relationship with

Country

related parties

As of March 31,

T ax No.

Related party

related parties

of origin

transactions

Currency

2016

2015

ThUS$

ThUS$

Unaudited

96.810.370-9

Inversiones Costa Verde Ltda. y & CPA.

Related director

Chile

Tickets sales

CLP

1

-

Services received

CLP

(1

)

-

65.216.000-K

Comunidad Mujer

Related director

Chile

Tickets sales

CLP

3

-

78.591.370-1

Bethia S.A and subsidiaries

Related director

Chile

Load transport services

CLP

(650

)

(199

)

Revenue from services

CLP

631

515

Commitments made on behalf of the entity

CLP

-

4

Other services received

CLP

(3

)

-

79.773.440-3

Transportes San Felipe S.A.

Related director

Chile

Shuttle services received passenger

CLP

(56

)

(48

)

87.752.000-5

Granja Marina Tornagaleones S.A.

Common shareholder

Chile

Revenue from services

CLP

23

-

Services provided

CLP

(29

)

-

65.216.000-K

Viajes Falabella Ltda.

Related director

Chile

Sales commissions incurred

CLP

(394

)

(64

)

Foreign

Inversora Aeronáutica Argentina

Related director

Argentina

Revenue from services

ARS

-

2

Leases as lessee

US$

(67

)

(45

)

Foreign

Consultoría Administrativa Profesional S.A. de C.V.

Associate

Mexico

Professional counseling services received

MXN

527

-

116

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.

	For the period ended
	March 31,
	2016		2015
	ThUS$		ThUS$
	Unaudited
Remuneration		4,644		4,474
Management fees		66		164
Non-monetary benefits		131		191
Short-term benefits		10,607		4,848
Share-based payments		1,494		2,640
Total		16,942		12,317

NOTE 33 - SHARE-BASED PAYMENTS

(a) Compensation plan for increase of capital in LATAM Airlines Group S.A.

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

At a Special Shareholders Meeting held on December 21, 2011, the Company’s shareholders approved, among other matters, an increase of capital of which 4,800,000 shares were allocated to compensation plans for employees of the Company and its subsidiaries, pursuant to Article 24 of the Companies Law. In this compensation plan no member of the controlling group would be benefited.

The granting of options for the subscription and payment of shares has been formalized through conclusion of contracts of options to subscribe for shares, according to the proportions shown in the following schedule of accrual and is related to the permanence condition of the executive as employee of the Company at these dates for the exercise of the options:

117

Percentage			Period
	30	%	From December 21, 2014 and until December 21, 2016.
	30	%	From December 21, 2015 and until December 21, 2016.
	40	%	From June 21, 2016 and until December 21, 2016.

	Number
	of share
	options
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
No movement as of March 31, 2016		-
Share options in agreements of share- based payments,as of March 31, 2016 (Unaudited)		4,518,000

These options have been valued and recorded at fair value at the grant date, determined by the "Black-Scholes-Merton”. The effect on income to March 2016 corresponds to ThUS$ 1,494 (ThUS$ 2,640 at December 31, 2015).

The input data of option pricing model used for share options granted are as follows:

	Weighted average		Exercise		Expected			Life of	Dividends			Risk-free
	share price		price		volatility			option	expected			interest
As of March 31, 2015 (Unaudited)	US$	15,47	US$	18,29		34.74	%	3.6 years		0	%		0.00696
As of March 31, 2016 (Unaudited)	US$	15,47	US$	18,29		34.74	%	3.6 years		0	%		0.00696

(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. The granting of options for the subscription and payment of shares has been formalized through conclusion of contracts of options to subscribe for shares, according to the proportions shown in the following schedule of accrual and is related to the permanence condition of the executive at these dates for the exercise of the options:

118

Percentage			Period
	100	%	From November 15, 2017 and until June 11, 2018.

(b) Subsidiaries compensation plans

(b.1) Stock Options

TAM Linhas Aereas S.A. and Multiplus S.A., both subsidiaries of TAM S.A., have outstanding stock options at March 31, 2016, which amounted to 96,675 shares and 518,507 shares, respectively (at December 31, 2015, the distribution of outstanding stock options amounted to 518,507 for Multiplus S.A. and 96,675 shares TAM Linhas Aéreas S.A.).

TAM Linhas Aéreas S.A.

Description	4th Grant
Date	05-28-2010		Total
Outstanding option number As March 31, 2015 (Unaudited)		96,675		96,675
Outstanding option number As March 31, 2016 (Unaudited)		96,675		96,675

Multiplus S.A.

							4nd Extraordinary
Description	1st Grant		3rd Grant		4th Grant		Grant
Date	10-04-2010		03-21-2012		04-03-2013		11-20-2013		Total
Outstanding option number As March 31, 2015 (Unaudited)		3,796		115,298		269,241		205,575		593,910
Outstanding option number As March 31, 2016 (Unaudited)		-		102,621		255,995		159,891		518,507

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.

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The acquisition of the share's rights, in both companies is as follows:

	Number of shares				Number of shares
	Accrued options				Non accrued options
	As of		As of		As of		As of
	March 31,		December 31,		March 31,		December 31,
Company	2016		2015		2016		2015
	Unaudited				Unaudited
TAM Linhas Aéreas S.A.		-		-		96,675		96,675
Multiplus S.A.		-		-		518,507		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 March 31, 2016 (at December 31, 2015 not exist value recorded in liabilities and in incomes).

(b.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 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.

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	Number
	shares in
	circulation
As of January 1, 2015		91.103
No movement at March 31, 2015		-
As of March 31, 2015 (Unaudited)		91.103
As of April 1, 2015		91.103
Granted		119.731
Not acquired due to breach of employment retention conditions		(34.924	)
As of December 31, 2015		175.910
As of January 1, 2016		175.910
Granted		138.282
Not acquired due to breach of employment retention conditions		(42.944	)
As of March 31, 2016 (Unaudited)		271.248

NOTE 34 - 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 and worked 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.

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Thus, during 2016, we have worked in the following initiatives:

- Advance in the implementation of an Environmental Management System for main operations, with an emphasis on Santiago and Miami. Achieving certification Environmental Management System ISO 14001 at its facility in Miami.

- Certification of stage 2, the most advanced IATA Environmental Assestment (IEnvA), 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.

- Measurement and external verification of the Corporate Carbon Footprint.

It is highlighted that in the 2015 LATAM Airlines Group S.A. maintained its selection in the index Dow Jones Sustainability in the global category, being the only two airlines that belong to this select group.

NOTE 35 – EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS

On April 29, 2016, Moody’s modified the international rating long term of LATAM Airlines Group S.A. from Ba2 with stable outlook to B1 with stable outlook.

On April 5, 2016, the Board of Directors of LATAM approved the cancellation of the BDRs program (“Cancellation”), with the subsequent termination of its existing foreign issuer registration on the CVM. The cancellation will take place through the sale of the underlying common stocks to the BDRs in the Santiago Stock Exchange. The BDRs holders that don’t want to sell the Shares may remain as shareholders of LATAM in Chile, acknowledging that each BDR represents one Share. This was reported to the Chilean Superintendency of Securities and Insurance through an essential fact sent on the same date.

LATAM Airlines Group S.A. and Subsidiaries’ consolidated financial statements as at March 31, 2016, have been approved by the Board of Director’s in an extraordinary meeting held on May 11, 2016.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 12, 2016	LATAM AIRLINES GROUP S.A.
	By:	/s/ Enrique Cueto
	Name:	Enrique Cueto
	Title:	Latam Airlines Group CEO