LATAM Airlines Secures US$300 Million Sustainability-Linked Loan

LATAM Airlines Group, the largest airline in Latin America, has secured a US$300 million sustainability-linked loan from Crédit Agricole Corporate & Investment Banking and BNP Paribas. This revolving credit facility represents a pioneering move for the aviation sector in South America, tying financing terms to sustainability performance.  

The loan, which functions like a credit card for accessing additional long-term financing, includes provisions for price adjustments based on LATAM’s ability to meet specific environmental targets. These goals include reducing the airline’s carbon emissions intensity by 2028. Meeting these targets will lower the interest rates LATAM pays on the loan.  

“This is our first financial product associated with sustainability, and we see it as a first step to continue exploring other similar instruments in the future, such as sustainability-linked bonds. This milestone not only reinforces the commitment to being a more sustainable group, hand in hand with the strategy and actions focused on climate change, circular economy, and shared value, but also allows LATAM to be a pioneer in promoting sustainability-related finance in the aviation sector in the region,” said Andrés del Valle, Vice President of Corporate Finance, LATAM Airlines Group. 

This deal aligns with LATAM’s broader sustainability strategy, which includes achieving net-zero carbon emissions by 2050.  The sustainability-linked loan adds to a series of financial milestones for LATAM in 2024. The company reported US$301 million in net earnings during the third quarter, bringing its year-to-date profit to US$705 million as of September. LATAM also returned to the New York Stock Exchange earlier this year and issued US$1.4 billion in bonds in the international market in September—its first such issuance since emerging from Chapter 11 bankruptcy in 2022.  

LATAM’s recovery reflects a steady post-pandemic rebound, bolstered by operational efficiency and a growing focus on environmental initiatives. “This inaugural financing supports LATAM’s long-term vision of sustainability while also solidifying its financial strategy with improved terms for creditors,” said del Valle.