LATAM secures $505.2M in green loans to modernise its fleet
What's the deal? LATAM Airlines Group has raised $505.2 million in sustainability-linked debt to fund fleet modernisation and decarbonisation. The package centres on a $410.8 million loan with a 12-year maturity, provided by BNP Paribas, CommerzbankDealroom has a profile for this one. Try Dealroom →, Crédit Industriel et CommercialDealroom has a profile for this one. Try Dealroom →, and Germany's state-owned development bank KfW.
How it works: Under sustainability-linked loans, interest rates track the borrower's performance against carbon and fuel-efficiency targets. Hit the goals, and borrowing costs fall; miss them, and premiums rise.
What's the endgame? LATAM is swapping older planes for fuel-efficient models such as the Airbus A320neo and BoeingDealroom has a profile for this one. Try Dealroom → 787 Dreamliner. The 12-year loan term is designed to match the decades-long lifecycle of the new aircraft. The carrier aims to reach carbon neutrality by 2050.
Why now? The remaining balance beyond the primary loan comprises credit facilities for operational flexibility, letting LATAM keep flying while it invests in Sustainable Aviation Fuel (SAF) capacity. KfW's role stands out, as the institution frequently backs climate-focused projects worldwide.
What could go wrong? Aviation is among the hardest sectors to decarbonise, given the energy density required for long-haul flight. SAF is seen as the most viable mid-term fix, but scaling production remains a global challenge.
The signal: By tying its debt to environmental performance, LATAM is putting a financial price on its climate targets. It is a growing playbook for major carriers courting ESG-focused lenders and investors.
Read more: World Today Journal
Image credit: Thomas Naas Photography
