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SeminarskiTRANSCRIPT
American University
Sarajevo
Corporate Finance
LATAM AIRLINES GROUP
Avdo Halilovic
Corporate Governance
About company
Name: LATAM Airlines Group S.A.
Address: Pdte. Riesco 5711, 20th floorLas Condes Santiago, ChileE-mail:investor.relations@lan.comWebsite: www.latamairlinesgroup.net
www. Lan.com
www.tam.com.brTrading Name: LATAM Airlines Group S.A.
Type: Public
Stock symbol: LFLFiscal years ends: 31 DecemberTraded in Santiago and on New York Stock Exchange, in form of ADRs, and Sao Paulo Stock Exchange, in the form of BDRsLATAM Airlines Group is part of Dow Jones Sustainability World IndexBusiness summary LATAM Airlines Group S.A., together with its subsidiaries, provides passenger and cargo air transportation services in South America. It provides domestic and international passenger transport services to approximately 135 destinations in 22 countries and cargo services to approximately 144 destinations in 26 countries; and other services, such as ground handling, courier, logistics, and maintenance. As of December 31, 2014, the company operated a fleet of 327 aircraft, including 313 passenger aircraft and 13 cargo aircraft. The company was formerly known as LAN Airlines S.A. and changed its name to LATAM Airlines Group S.A. in June 2012. LATAM Airlines Group S.A. was founded in 1929 and is headquartered in Santiago, Chile.
Company historyIn 1929, founded by Comandante Arturo Merino Benitez, started Linea Aerea Nacional de Chile (LAN). Then in 1946 LAN had its first international flight from Santiago to Buenos AiresIn 1956 stat of LAN services to Lima, and then in 1958 services to Miami, U.S.TAM-Taxi Aereo Marilia was created by five charter flight pilots. 1970 LAN connected with the Europe, and started firs flights on a new continent
TAM has founded Transportes Aereos Regionais by Captain Rolim Adolfo Amaro in 1975.In 1976 Launch of TAM services in Brazilian cities, especially Mato Grosso and Sao Paulo.
1983 constitution of Linea Aerea Nacional Chile Limitada, through CORFO.
LAN becomes a joint stock company in 1985, and in 1986 acquisition by TAM of Lapsa airline from the Paraguayan government and creation of TAM Mercosur; start of Sao Paulo. The Chilean government sells a 51% stake to local investors and Scandinavian Airlines System (SAS) in 1989. New name from Brasil Cenral renamed TAM Transportes Aereos Meridonais in 1990. Privatization of LAN completed with the acquisition of a 98,7% stake by its current controllers and other shareholders in 1994. Acquisition by TAM of Lapsa airline from the Paraguayan government and creation of TAM Mercosur; start of Sao Paulo in 1996. LAN lists on the New York Stock Exchange in 1997, becoming the first Latin American airline to trade ADRs onthis important market.; In 1998 TAM has got a first AIRBUS A330, and started its first international flight from Sao Paulo to Miami. TAM start services to Europe through a code sharing agreement with Air France to Paris Charles de Gaulle, in 1999. In 2000 LAN joined the Oneworld. In 2002 LAN Alliance with Qantas and Lufthansa Cargo. In 2007 started new Low cost model in domestic markets, capital increase of US$320 milion, purchase orders from 32 Boeing 787 Dreamliners.In 2010 TAM officially joins Star Alliance. 2011 LAN and TAM sign binding agreements related to the business combination of the two airlines.2012 LATAM Airlines Group is born as a result of the business combination between LAN and TAM.
Their capital increases for US$940,5 Millions in 2013, and in 2014. TAM joins oneworld alliance, which becomes LATAM Airlines Group global alliance/LATAM launches its 2015-2018 strategic plan.
Ownership Structure of the company
Informations from March 31st, 2015.
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. As of December 31, 2014, the Company had a total of 1,622 registered shareholders. At that date approximately 7.69 % of the Companys share capital was in the form of ADRs and approximately 0.53% in the form of BDRs. For the period ended December 31, 2014, the Company had an average of 53,300 employees, ending this period with a total of 53,072 employees, spread over 10,077 Administrative employees, 6,986 in Maintenance, 17,517 in Operations, 9,237 in Cabin Crew, 4,009 in Controls Crew, and 5,246 in Sales.
The current Board of Directors was elected in the Ordinary Shareholders Meeting held on April 28, 2015, in accordance with the Companys By-Laws, and will hold office for a period of two years.
Chairman Mauricio Rolim Amaro
Director Henri Philippe Reichstul
Director Juan Jose Cueto Plaza
Director Georges de Bourguignon
Director Ramon Eblen Kadis
Director Ricardo J. Caballero
Director Carlos Heller Solari
Director Gerardo Jofre Miranda
Director Francisco Luzon Lopez
Board Committees
Pursuant to Chilean Corporation Law, as amended by Law No. 19705, LATAM Airlines Group must have a board of directors' committee composed of no less than three board members. LATAM Airlines Group has established a three-person committee of its board of directors, which, among other duties, is responsible for: Examining the reports of LATAM Airlines Group external auditors, balance sheets and other financial statements submitted by LATAM Airlines Group administrators to the shareholders. Proposing external auditors and rating agencies to the board of directors
Evaluating and proposing external auditors and rating agencies.
Reviewing internal control reports pertaining to related party transactions.
Examining and reporting on all related-party transactions
Reviewing the pay scale of LATAM Airlines Group senior Management
LATAMs board of directors has also established extra four committees to review, discuss and make recommendations to board of directors. This include a Strategy Commitee, a Leadership Committee, Finance Committee and a Brand, Product and Frequent Flyer program committee.
Locking at the Forbes list, the LATAM Airlines group is globally on the #1.387 place, with the market capital of $4.8 Bilion. If we look at their sales then they are on the #816 place, and by the assets on #1.078 place.Stockholder AnalysisAccording to the finance.yahoo.com LFL has 545,56 M shares outstanding. There is no information how many shares is held by insiders and how many by institutions (%). Major holders table:
Breakdown
% of Shares Held by All Insider and 5% Owners:
NaN
% of Shares Held by Institutional & Mutual Fund Owners:
NaN
% of Float Held by Institutional & Mutual Fund Owners:
NaN
Number of Institutions Holding Shares:
Holder
Shares
Reported
No Major Direct Holder info Available for LFL
Top Institutional Holders
Holder
Shares
% Out
Value*
Reported
Manning & Napier Advisors LLC
6,797,000
1.25
54,783,820
Mar 31, 2015
Baillie Gifford and Company
3,285,895
0.60
39,365,022
Dec 31, 2014
Dimensional Fund Advisors LP
3,244,187
0.59
38,865,360
Dec 31, 2014
Global Thematic Partners, Llc
3,208,292
0.59
25,858,833
Mar 31, 2015
Credit Suisse/
2,902,770
0.53
23,396,326
Mar 31, 2015
Emerging Global Advisors, LLC
2,095,065
0.38
25,098,878
Dec 31, 2014
TIAA-CREF Investment Management, LLC
1,194,775
0.22
9,629,886
Mar 31, 2015
State Street Corporation
1,170,433
0.21
14,021,787
Dec 31, 2014
Goldman Sachs Group, Inc.
1,145,025
0.21
13,717,399
Dec 31, 2014
Wells Fargo & Company
1,023,331
0.19
12,259,505
Dec 31, 2014
Top Mutual Fund Holders
Holder
Shares
% Out
Value*
Reported
EGShares Dow Jones Emerging Markets Consumer Titans Index Fd
2,261,347
0.41
18,226,456
Mar 31, 2015
Manning & Napier World Opportunities Series Fund
2,131,567
0.39
17,180,430
Mar 31, 2015
Manning & Napier Overseas Series Fund
1,090,861
0.20
8,792,339
Mar 31, 2015
College Retirement Equities Fund-Growth Account
968,475
0.18
11,602,330
Dec 31, 2014
DFA Emerging Markets Core Equity Portfolio
839,537
0.15
8,705,998
Jan 31, 2015
Wells Fargo Advantage Small Cap Value Fd
753,000
0.14
7,959,210
Feb 28, 2015
DFA Investment Dimensions-DFA Emerging Mkts Value
712,427
0.13
7,387,867
Jan 31, 2015
iShares Latin America 40 ETF
627,704
0.12
5,059,294
Mar 31, 2015
DFA Emerging Markets Series
429,797
0.08
4,456,994
Jan 31, 2015
Vanguard International Stock Index-Emerging Markets Stk
335,113
0.06
3,475,121
Jan 31, 2015
From the tables we coul