LATAM Airlines Group has signed its first “Sustainability-Linked Loan” for a total of US$300 million, becoming the only South American airline to carry out a financial operation of this type focused on sustainability goals.
The agreement with Credit Agricole Corporate & Investment Banking and BNP Paribas corresponds to a revolving credit line that allows LATAM to access additional long-term financing under special interest rate conditions, as long as it meets a series of sustainability-related goals.
Favorable Context and Financial Results
This new banking commitment is acquired in a favorable context for LATAM. After its return to the New York Stock Exchange with the symbolic “Ring the Bell,” it reported a net profit of US$301 million in the third quarter of the year. In this way, it accumulated US$705 million in net profits between January and September 2024.
Andrés del Valle, Director of Corporate Finance at LATAM Airlines Group, highlighted the importance of this milestone: “This is our first financial product associated with sustainability and we see it as a first step to explore other similar instruments in the future, such as sustainability-linked bonds.”
Refinancing and Sustainability Goals
The loan is a refinancing of an existing engine financing (Spare Engine Facility or SEF), which has been part of LATAM’s capital structure for the past decade. This refinancing allowed for a significant reduction in the interest rate, optimization of the line’s collateral, and an extension of its duration into the future.
The transaction includes sustainability-linked provisions, where LATAM can receive price adjustments based on its performance regarding the intensity of carbon emissions from operations, measured as tons of CO2 emissions per revenue ton-kilometer (RTK).
Commitment to Sustainability
This inaugural transaction for sustainable financing supports the company’s strategy, especially the group’s goal of achieving net zero emissions by 2050. Del Valle emphasized: “This milestone reinforces LATAM’s commitment to being a more sustainable group, through strategies and actions focused on climate change, circular economy, and shared value”.
Have you checked out our YouTube channel? Subscribe now!
