LAN Airlines S.A. (NYSE: LFL), one of Latin America’s leading passenger and cargo airlines, announced today its consolidated financial results for third quarter ended September 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$94.5 million in third quarter 2011, a decrease of 11.0% compared to the US$106.2 million reported in third quarter 2010. Results this quarter were driven by solid traffic growth, reflected in strong yields and load factors in both the passenger and cargo businesses. This was partially offset by the continued impact of the startup of LAN’s operations in Colombia as well as, at a non-operating level, exchange rate differences resulting from the depreciation of local currencies.
- Total revenues in third quarter 2011 reached US$1,486.5 million compared to US$1,152.3 million in third quarter 2010 due to a 32.6% increase in passenger revenues and a 22.5% increase in cargo revenues. Revenue increases reflected the continued strong demand in both the passenger and cargo businesses. Passenger and cargo revenues accounted for 71.3% and 26.6% of total revenues, respectively, during third quarter 2011.
- Operating income reached US$161.2 million in third quarter 2011, a 2.9% increase compared to US$156.6 million in third quarter 2010. Operating margin reached 10.8% compared to 13.6% in third quarter 2010.
- During the quarter, LAN was able to offset a 42.8% increase in fuel prices through effective fuel surcharge mechanisms and strong passenger and cargo demand, reflected in solid yield growth and load factor increases.
- LAN continued to advance with the turnaround of its Colombian operations. During the third quarter, the Company incurred in costs associated with the launch of the LAN brand in Colombia, scheduled for December 2011. This included painting all aircraft with LAN livery, migrating AIRES to LAN’s IT systems and designing marketing initiatives aimed at integrating Colombia into LAN’s regional network.
- In line with the Company’s expansion, the Company received 4 Airbus A320 and 1 Boeing 767-300 passenger aircraft during third quarter 2011.
- LAN and TAM obtained the approvals from Chile’s antitrust court (TDLC) and Spain’s antitrust authority to continue with the merger transaction. No further antitrust approvals are required in Europe. LAN and TAM appealed before the Supreme Court of Chile, objecting three of the mitigation measures imposed by the TDLC, which the companies deem to be unconstitutional and disproportionately severe. The companies believe that the appeal process will not delay LAN and TAM’s plans to bring the transaction into effect. The companies believe the transaction can be concluded towards the end of the first quarter 2012.
LAN and TAM obtained the approvals from Chile’s antitrust court (TDLC) and Spain’s antitrust authority to continue with the merger transaction. No further antitrust approvals are required in Europe. LAN and TAM appealed before the Supreme Court of Chile, objecting three of the mitigation measures imposed by the TDLC, which the companies deem to be unconstitutional and disproportionately severe. The companies believe that the appeal process will not delay LAN and TAM’s plans to bring the transaction into effect. The companies believe the transaction can be concluded towards the end of the first quarter 2012.OUTLOOK Considering current market conditions, the Company expects passenger ASK growth of between 14% and 16% in 2011 and between 12% and 14% for 2012, mainly driven by the net delivery of 15 passenger aircraft. LAN Cargo’s expected cargo ATK growth in 2011 is between 12% and 14%, mainly driven by the delivery of 3 Boeing 767-300F freighters between November 2010 and January 2011. For 2012, LAN Cargo expects between 7% and 9% growth in capacity, mainly driven by the delivery of 2 Boeing 777F freighters during the third quarter. FOR A FULL VERSION OF THIS RELEASE, PLEASE VISIT WWW.LAN.COM About LAN LAN Airlines is one of the leading passenger and cargo airlines in Latin America. The Company and its affiliates serve over 70 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 70 additional international destinations through its various code share agreements. 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 and Ecuadorian domestic markets. Furthermore, in November 2010, LAN acquired Colombian airline AIRES.
Currently, LAN Airlines and its affiliates operate 127 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.