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HIGHLIGHTS
-- LAN reported net income of US$52.1 million for the third quarter 2009. This represented a 37.3% decrease compared to net income of US$83.0 million in the third quarter 2008. Excluding non-operating extraordinary items recognized in the third quarter 2008, net income decreased 58.3%.
-- In the third quarter 2009, consolidated revenues declined 19.1%, driven mainly by lower yields in both the cargo and passenger businesses. This was partially offset by a 14.3% decline in operating expenses, driven mainly by lower fuel costs.
-- Operating income reached US$92.4 million in the third quarter 2009, a 46.1% decrease compared to US$171.3 million in the third quarter 2008. Operating margin reached 10.1%, compared to 15.1% in the same period of 2008.
-- Third quarter 2009 results continued to be impacted by fuel hedging losses, although to a much lesser extent than in previous quarters. The fuel hedging loss during the quarter amounted to US$14.4 million compared to a fuel hedging gain of US$29.2 million in the third quarter 2008. Excluding the impact of fuel hedging, LAN's operating margin reached 11.6% in the third quarter 2009 compared to 12.5% in the third quarter 2008.
-- During the quarter LAN undertook several initiatives to increase the value of its frequent flyer program, LANPASS, which currently has 3.1 million members worldwide. These initiatives included the launch of a new Flexible Award Exchange Program, as well as the launch of a LANPASS Visa card in Ecuador and co-branding campaigns in Argentina, Uruguay and Chile.
-- During the quarter, LAN completed important financing initiatives with the objective of ensuring the Company's long-term growth plans. LAN finalized securing long-term financing for three Boeing 767 aircraft to be delivered between 2009 and 2010. This financing is expected to be supported by the US EX-IM Bank. Furthermore, LAN is in the final stage of securing financing for three spare engines, to be supported also by the US EX-IM Bank. In addition, the Company arranged bank financing for Pre Delivery Payments (PDP's) related to 15 Airbus A320 family aircraft to be delivered between 2010 and 2011. These financing initiatives include attractive interest rates that are in line with LAN's average cost of debt. LAN's solid financial position and ample liquidity continue to be reflected in the Company's BBB Investment Grade international credit rating (Fitch).
-- In line with LAN's continued commitment to expand its route network and improve connectivity for passengers traveling within the region, LAN Peru continued to strengthen its regional operations based at its hub in Lima. With this objective, LAN Peru launched new regional routes from Lima to Cali, Colombia; Punta Cana, Dominican Republic; Cordoba, Argentina; and Cancun, via Mexico City.
About LAN
LAN Airlines is one of the leading passenger and cargo airlines in Latin America. The company and its affiliates serve over 65 destinations around the world through an extensive network that offers full connectivity within Latin America, while also linking the region with North America, Europe and the South Pacific, as well as 63 additional international destinations through its various alliances. LAN Airlines and its affiliates have a leading position in their respective domestic markets of Chile and Peru as well as an important presence in the Argentinean domestic market and have begun operations in the domestic market of Ecuador.
Currently, LAN Airlines and its affiliates operate one of the most modern fleets in the world, with 83 passenger aircraft, and its cargo subsidiary, LAN CARGO and its respective cargo affiliates, have a fleet of 11 freighters. The company recently completed its short haul fleet renovation process by acquiring new aircraft from the Airbus A320 family, enabling LAN to improve its efficiency and to significantly reduce its CO2 emissions. The fleet renovation is part of the company's commitment to the protection of the environment.
LAN is one of the few Investment Grade airlines in the world (BBB). The company's world-class quality standards enabled its membership in oneworld(TM), the global alliance that encompasses the best airlines in the world. For more information please visit http://www.lan.com or http://www.oneworldalliance.com.
Note on Forward-Looking Statements
This report contains forward-looking statements. Such statements may include words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other similar expressions. Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors and uncertainties include in particular those described in the documents we have filed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update any of them, whether in light of new information, future events or otherwise.
CONTACTS IN CHILE CONTACTS IN NEW YORK
Investor Relations Maria Barona/Pete Majeski
gisela.escobar@lan.com lan@i-advize.com
rodrigo.petric@lan.com i-advize Corporate Communications, Inc.
bernardita.sepulveda@lan.com Tel: (212) 406-3690
Tel: (56-2) 565-8785
SOURCE LAN Airlines S.A.
http://www.lan.com
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