Integrated Report 2018 INTEGRATED REPORT 2018
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Integrated Report 2018 INTEGRATED REPORT 2018 102 ABOUT THE INTEGRATED REPORT 03 PRESENTATION ECONOMIC DIMENSION ENVIRONMENTAL DIMENSION 103 Report and materiality 05 HIGHLIGHTS 56 OUR BUSINESS 75 ENVIRONMENT 105 GRI content index 08 MESSAGE FROM THE CEO 57 Industrial context 76 Policy and systems 111 Global compact 10 WHO WE ARE 58 Financial results 78 Straight to the point: Climate change 112 Independent Auditors’ Report 11 Profile and strategy 60 Stock information 79 Operational ecoefficiency 113 Glossary 14 Value generation model 61 Risk management 114 APPENDICES 16 Timeline 63 Investment plan SUMMARY 19 Modern fleet 64 SUPPLIERS 21 Operations 65 Knowing the chain SOCIAL DIMENSION 27 Awards and acknowledgements 68 Straight to the point: 167 FINANCIAL INFORMATION 86 EMPLOYEES Aligned principles 28 CORPORATE GOVERNANCE 168 Financial statements 2018 87 Straight to the point: 69 CUSTOMERS 29 Principles, practices, and policies Connected to the business 255 Affiliates and subsidiaries 70 At the heart of the strategy 31 Decision-making spheres 88 Multicultural team 293 Analysis of the financial 72 Straight to the point: statements 36 Ownership structure 90 Leadership and commitment Technology and autonomy 301 SWORN STATEMENT 41 Financial policy 92 Straight to the point: 73 Managing satisfaction Employee safety 302 CREDITS Click on the 40 SUSTAINABILITY buttons and 93 SECURITY browse the PDF. 46 Long-term vision 94 Straight to the point: Safety first 54 Link to the SDGs 95 Commitment of each one and of all 97 SOCIETY Throughout the release, LATAM Airlines Group, LATAM, and Group are used as synonyms to 98 Straight to the point: indicate the whole of the operation. When the data refers to a specific company—such as Commitment to the region LATAM Cargo—or affiliate, this information is specified for the reader. 99 Corporate citizenship in practice 2 INTEGRATED REPORT 2018 READING THE REPORT and prepares its financial statements in Brazilian There are six large blocks of information: reals. LATAM’s audited consolidated financial statements include the results of these affiliates > Block 1 focuses on the institutional informa- translated into U.S. dollars. International Finan- tion: who the company is, where it operates, what cial Reporting Standards (IFRS) as issued by the its decision-making process is like, and how it International Accounting Standards Board (IASB), MENU integrates sustainability in its management day- require assets and liabilities to be translated at PRESENTATION PRESENTATION to-day; period-end exchange rates, while revenue and HIGHLIGHTS expense accounts are translated at the exchange MESSAGE FROM THE CEO > Blocks 2, 3, and 4 cover the performance rate of each transaction date, although a monthly WHO WE ARE achieved throughout the year in the economic, rate may also be used if exchange rates do not environmental, and social dimensions. The orga- vary widely. CORPORATE GOVERNANCE nization follows the focus adopted by the Dow SUSTAINABILITY Jones Sustainability Index (DJSI); ECONOMIC DIMENSION OUR BUSINESS > Block 5 includes technical data on the re- SUPPLIERS port—methodology used, external auditor’s CUSTOMERS letter—a glossary of acronyms, and the Appendi- ces section, with complementary information for ENVIRONMENTAL DIMENSION his Integrated Report is yet another mile- readers who wish to gain a deeper understanding ENVIRONMENT T stone in LATAM’s path of constant evolution of specific topics; in its accountability to society. This edition covers SOCIAL DIMENSION the period from January 1 to December 31, 2018. > Block 6 deals with the Group’s financial EMPLOYEES It is based on the principles of integrated report- reports. LATAM Airlines Group and most of its SECURITY ing from the International Integrated Reporting affiliates maintain their accounting records and SOCIETY Council (IIRC) and on the guidelines of the Global prepare their financial statements in U.S. dollars ABOUT THE INTEGRATED REPORT Reporting Initiative (GRI) to offer a coherent (USD). However, some of its affiliates maintain APPENDICES representation of the relationships between the their accounting records and prepare their finan- financial and non-financial information of the cial statements in Chilean pesos, Argentinean FINANCIAL INFORMATION various dimensions of LATAM’s business and its pesos, Colombian pesos, or Brazilian reals. In par- SWORN STATEMENT relations with the various stakeholders. ticular, TAM S.A. maintains its accounting records CREDITS 3 INTEGRATED REPORT 2018 challenges; and 2018 Achievements, a compila- lines Peru, LATAM Airlines Argentina, LATAM Airlines tion of the most recent actions and their results; Colombia, LATAM Airlines Ecuador, and LATAM Air- lines Brazil. historical series of the main in- dicators; there is one for each performance chap- > References to “LAN” are to LAN Airlines S.A., cur- ter in the economic, social, and environmental rently known as LATAM Airlines Group S.A., and its dimensions. consolidated affiliates, in connection with circum- stances and facts occurring prior to the completion CONVENTIONS ADOPTED date of the combination between LAN Airlines S.A. MENU > In this Integrated Report, various references are and TAM S.A. PRESENTATION made to “LATAM”. Unless the context otherwise > In this Integrated Report, unless the context oth- HIGHLIGHTS requires, references to “LATAM Airlines Group” are erwise requires, references to “TAM” are to TAM S.A., MESSAGE FROM THE CEO to LATAM Airlines Group S.A., the unconsolidated and its consolidated affiliates, including TAM Linhas WHO WE ARE operating entity, and references to “LATAM,” “the Aereas S.A. (“TLA”), which does business under the SECTIONS Group”, “Society”, “we,” “us” or the “Company” are name “LATAM Airlines Brazil”, Multiplus S.A. (“Multi- CORPORATE GOVERNANCE The Appendices section was one of the editorial to LATAM Airlines Group S.A. and its consolidated plus”), Fidelidade Viagens e Turismo Limited (“TAM SUSTAINABILITY resources adopted to counter the apparent con- affiliates: Transporte Aéreo S.A. (“LATAM Airlines Viagens”) and Transportes Aéreos Del Mercosur S.A. ECONOMIC DIMENSION tradiction between the commitment with con- Chile”), LAN Perú S.A. (“LATAM Airlines Peru”), (“TAM Mercosur”). OUR BUSINESS ciseness and the need for a greater coverage of Aerolane, Líneas Aéreas Nacionales del Ecuador > Throughout the text, the GRI indicators are in- SUPPLIERS the information to meet the needs of different S.A. (“LATAM Airlines Ecuador”), LAN Argentina S.A. cluded in brackets. This content may also be found CUSTOMERS stakeholders. External links were also provided for (“LATAM Airlines Argentina,” previously Aero 2000 through the GRI Content Summary, located in the additional relevant information. S.A.), Aerovías de Integración Regional, Aires S.A. block at the end of the report. ENVIRONMENTAL DIMENSION (“LATAM Airlines Colombia”), TAM S.A. (“TAM” or ENVIRONMENT Three specific sections contribute to this edition’s “LATAM Airlines Brazil”), LAN Cargo S.A. (“LATAM If you have any suggestions, comments, or ques- objectivity: Cargo”) and its two regional affiliates: Linea Aerea tions regarding the report, please email investor- SOCIAL DIMENSION Carguera de Colombia S.A. (“LANCO”) in Colombia [email protected] or sostenibilidad@LATAM. EMPLOYEES Highlights: found at the beginning of the Report, and Aerolinhas Brasileiras S.A. (“ABSA”) in Brazil. com. [102-53] SECURITY with the most relevant events and numbers; In November 2018, LATAM Airlines Group sold its SOCIETY stake in its Mexican cargo affiliate Aero Trans- ABOUT THE INTEGRATED REPORT fact sheets on a range portes Mas de Carga S.A. de C.V. (“MasAir”). Enjoy your reading! APPENDICES of key subjects. These are organized into three Other references to “LATAM”, as the context parts: Context and positioning, where the rele- may require, are to the LATAM brand, which was FINANCIAL INFORMATION vance of that topic for LATAM, the aviation sector, launched in 2016 and brings together, under one SWORN STATEMENT or society is reported; Topic management, with a internationally recognized name, all the affiliate focus on the Group, including opportunities and brands, such as LATAM Airlines Chile, LATAM Air- CREDITS 4 INTEGRATED REPORT 2018 CUSTOMER FOCUS US$400 million will be invested in Highlights 2018 transforming the cabins of over two thirds of the fleet. Chosen as the most punctual NETWORK airline group in the Mega Airlines1 category. MENU LATAM connects people and destinations on all five continents. PRESENTATION Fourth largest loyalty HIGHLIGHTS program in the world, with MESSAGE FROM THE CEO over 30 million members. WHO WE ARE 1 Source: OAG (Official Airline Guide). Considering the 20 largest air- CORPORATE GOVERNANCE lines in the world in number of flights per year. On-time performance: 85.6% (delays of up to 15 minutes). SUSTAINABILITY ECONOMIC DIMENSION MORE AUTONOMY AND COMFORT OUR BUSINESS > New functions in the LATAM app. SUPPLIERS > Use of biometrics to speed up the boarding CUSTOMERS process. ENVIRONMENTAL DIMENSION > Over one thousand self-check-in kiosks at ENVIRONMENT the airports. > Entertainment: LATAM Play platform SOCIAL DIMENSION PASSENGERS available for smartphones, tablets, or laptops. EMPLOYEES > 143 destinations CARGO SECURITY > 26 countries > 150 destinations SECURITY SOCIETY > 148 shared codes > 29 countries 75% lower rate of accidents on ABOUT THE INTEGRATED REPORT > 68.8 million passengers transported > 921 thousand tons transported land than the sector average. APPENDICES