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LATAM Secures US$ 505 Million for Fleet Expansion and Integrates Its Largest Sustainability-Linked Financing

Dergam Mousa

LATAM Airlines Group has closed a structured financing deal for approximately US$ 505 million, aimed at adding 11 next-generation aircraft to its commercial fleet, with deliveries projected for the second half of 2026.

The transaction features a long-term loan facility led by financial institution BNP Paribas and stands out for incorporating a US$ 400 million sustainability-linked financing tranche. This represents the largest operation of its kind carried out by the airline group to date.

Fleet Structure and Capital Diversification

The financing package will cover the delivery of three narrowbody aircraft families:

This transaction marks a strategic milestone for the company, as it represents the first financing structure of this type applied directly to its Embraer fleet. The move allows LATAM to bolster liquidity and secure competitive capital terms in an operating environment shaped by financial market volatility and sustained pressure on aviation fuel costs.

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“This operation combines three key elements of LATAM’s financial strategy: it diversifies our funding sources, supports our fleet renewal and growth, and links part of its terms to our sustainability performance. Furthermore, it allows us to finance the addition of Embraer aircraft through this structure for the first time, maintaining our access to competitive long-term terms in international markets,” explained Andrés del Valle, Vice President of Corporate Finance at LATAM Airlines Group.

Financial Mechanism and Sustainability Incentives

The credit facility features an interest rate adjustment scheme tied to the airline’s environmental performance. Under this mechanism, as the group reduces its emission intensity—measured as carbon dioxide output per passenger-kilometer or cargo unit—it will receive margin discounts on the loan.

These key performance indicators align directly with the group’s corporate sustainability targets:

This transaction represents the second sustainable financing instrument executed by LATAM. In December 2024, the carrier signed its first Sustainability-Linked Loan, a US$ 300 million revolving credit facility backed by spare engines.

Fleet Outlook: 2026 and the Path to 2030

The agreement underpins the accelerated fleet renewal plan budgeted for 2026. After integrating 13 next-generation aircraft during the first half of the year, the airline expects to take delivery of 28 additional units before year-end, exceeding an annual integration rate of 40 aircraft.

With these deliveries, LATAM projects ending 2026 with an active fleet exceeding 410 aircraft.

Key Operational Milestones

With these additions, more than 50% of LATAM’s total fleet will consist of latest-technology aircraft by the end of the decade. According to OEM data, these models deliver a 20% to 25% reduction in fuel burn and CO₂ emissions compared to previous-generation aircraft.

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