LAN Airlines S.A. (NYSE: LFL), one of Latin America’s leading passenger and cargo airlines, announced today its consolidated financial results for second quarter ended June 30, 2011. “LAN” or “the Company” makes reference to the consolidated entity, which includes passenger and cargo airlines in Latin America. All figures were prepared in accordance with International Financial Reporting Standards (IFRS) and are expressed in U.S. Dollars. HIGHLIGHTS
- LAN reported net income of US$15.9 million in second quarter 2011, a decrease of 73.7% compared to the US$60.6 million reported in second quarter 2010. Results this quarter were significantly impacted by one- time non-operating effects, as well as operational impacts including higher fuel prices, the presence of volcanic ash on certain routes and the start-up of LAN’s operations in Colombia.
- Operating income reached US$55.8 million in second quarter 2011, a 50.5% decrease compared to US$112.6 million in second quarter 2010. Operating margin reached 4.2% compared to 10.9% in second quarter 2010.
- Operating results were impacted by higher fuel prices, which increased 46.3% compared to second quarter 2010, generating US$142.9 million in increased fuel costs.
- At an operational level, the Company was also impacted by the consolidation of US$11 million in losses generated by the turnaround process of LAN’s Colombian operations, and US$18 million in losses resulting from the presence of volcanic ash, which affected air traffic in the region during June.
- Total revenues in second quarter 2011 reached US$1,331.5 million compared to US$1,033.6 million in second quarter 2010 due to a 31.8% increase in passenger revenues and a 26.3% increase in cargo revenues. Revenue increases reflect continued strong demand in both the passenger and cargo businesses, despite a seasonally low quarter. Passenger and cargo revenues accounted for 67.4% and 30.5% of total revenues, respectively, during second quarter 2011.
- At a non- operational level, LAN’s result was impacted by the settlement agreement totaling US$66 million related to the civil class action in the cargo business, partially offset by the US$45 million gain from the sale of Blue Express, both of which were one-time effects.
- In line with the Company’s expansion, the Company received 1 Airbus A320 passenger aircraft during second quarter 2011. On June 22, 2011, LAN announced the signing of an agreement to purchase 20 modern, eco-efficient A320neo Airbus A320 family aircraft to be delivered between 2017 and 2018.
- On May 26, 2011, a public hearing took place as scheduled by the TDLC in which interested parties provided their opinion regarding the business combination between LAN and TAM. The TDLC’s resolution is expected in August.
Currently, LAN Airlines and its affiliates operate 125 passenger aircraft while LAN Cargo and its respective affiliates have a fleet of 14 dedicated freighters. The Company has one of the youngest fleets in the world which has meant greater efficiency and a significant reduction in CO2 emissions, reflecting its strong 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™, an alliance of leading global airlines of which LAN has been a member for 10 years. For more information please visit www.lan.com or 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 update publicly any of them, whether in light of new information, future events or otherwise. This press release relates to a proposed business combination between Lan Airlines S.A. (“LAN”) and TAM S.A. (“TAM”), which will become the subject of a registration statement and prospectus to be filed with the SEC by LAN and a new entity to be formed in connection with the combination. This press release is not a substitute for the registration statement, prospectus and offering materials that LAN and the new entity will file with the SEC or any other documents that they may file with the SEC or send to shareholders in connection with the proposed combination. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, PROSPECTUS, EXCHANGE OFFER DOCUMENTS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION. All such documents, if filed, would be available free of charge at the SEC’s website ( www.sec.gov) or by directing a request to LAN Investor Relations, at 56-2-565-8785 or by e-mail at email@example.com, or to TAM Investor Relations, at 55-11-5582-9715 or by e-mail at firstname.lastname@example.org.