LATAM Airlines Secures $505 Million USD to Finance 11 Aircraft, Tying $400 Million USD to Emissions

Interest-rate incentives tie $400 million USD to CO2 intensity

LATAM Airlines Group (NYSE: LTM; Santiago Stock Exchange: LTM) has closed a loan of approximately $505 million USD to finance 11 new aircraft, $400 million USD of which is sustainability-linked, with an interest rate that can improve as the group cuts the carbon intensity of its operations. The company announced the financing in a statement issued from Bogotá on August 25, 2026, and described the sustainability-linked portion as the largest transaction of its kind the group has completed.

The aircraft, scheduled for delivery in the second half of 2026, are one Airbus (Euronext Paris: AIR; Frankfurt Stock Exchange: AIR; Spanish stock exchanges: AIR) A320neo, four Airbus A321neo and six Embraer (NYSE: EMBJ; B3: EMBJ3) E195-E2 jets. The long-term loan is led by BNP Paribas (Euronext Paris: BNP). LATAM said the deal gives it access to competitive long-term funding at a time of market volatility and high fuel costs.

Under the loan’s terms, LATAM can obtain better financing conditions as it reduces its emissions intensity, the amount of CO2 it emits per unit transported. The company said the incentives are aligned with its targets of cutting emissions intensity 6% by 2030 compared with 2019 and reaching net-zero emissions by 2050. Andrés del Valle, LATAM’s corporate finance director, said the structure allows the group, for the first time, to finance the addition of Embraer aircraft through this type of loan.

“This transaction combines three elements that are relevant to LATAM’s financial strategy: it diversifies our sources of financing, supports the renewal and growth of our fleet, and links part of its terms to our sustainability performance.”

— Andrés del Valle, corporate finance director, LATAM Airlines Group

A Repeat Lender and a Second Sustainability-Linked Deal

The transaction is LATAM’s second sustainability-linked financing. In December 2024, the group closed a $300 million USD revolving credit facility secured by engines, which it described as the first sustainability-linked loan by a South American airline. BNP Paribas also took part in that deal, alongside Crédit Agricole Corporate and Investment Bank, and its pricing adjustments were tied to LATAM’s tons of CO2 emitted per revenue ton-kilometer.

The Embraer Order Behind the Deal

LATAM ordered the E195-E2 from Embraer in September 2025, signing for 24 firm aircraft plus 50 purchase options. The firm portion is valued at approximately $2.1 billion USD at list prices, according to Embraer. The manufacturer said deliveries would start in the second half of 2026, initially for LATAM Airlines Brasil, with the jets potentially going to other LATAM affiliates later. LATAM said the E195-E2 will join Brazil’s domestic network in the coming months, and its first Airbus A321XLR is scheduled to debut in 2027.

The financing is part of a fleet renewal that LATAM expects to take it past 410 aircraft by the end of 2026. The group added 13 new-generation aircraft in the first half of the year and expects 28 more before year-end, for more than 40 additions in 2026. Toward 2030, LATAM projects adding up to 130 more aircraft, which would make more than half of its fleet new-generation models. Citing the manufacturers, LATAM said those models emit 20% to 25% less CO2 than earlier generations.

LATAM, whose American depositary shares returned to the New York Stock Exchange in 2024, operates domestic airlines in five Latin American markets: Brazil, Chile, Colombia, Ecuador and Peru. It also flies international routes within Latin America and to Europe, the US, Oceania, Africa and the Caribbean.

Headline photo: A rendering of an Embraer E195-E2 in LATAM livery over Santiago, Chile. (Rendering courtesy Embraer)