- LAN reported net income of US$320.2 million for full year 2011. Results in 2011 were driven by solid demand, strong yields and high load factors in both passenger and cargo operations. Nevertheless, net income decreased 23.7% compared to the US$419.7 million reported in full year 2010, mainly due to the impact of the startup of LAN’s operations in Colombia and the volcanic ash cloud that disrupted air traffic throughout the region, as well as higher fuel prices, a portion of which was not recovered via the fuel surcharge mechanism.
- For full year 2011, operating income reached US$539.7 million, a 13.4% decrease compared to the US$622.9 million in full year 2010. Operating margin reached 9.4% a decrease of 4.3 points compared to 13.8% in 2010.
- For fourth quarter 2011, LAN reported net income of US$112.5 million, a decrease of 31.6% compared to the US$164.6 million reported in fourth quarter 2010. Results in the fourth quarter 2011 reflected costs related to the startup of LAN’s operations in Colombia and the ongoing effects of the volcanic ash cloud on domestic operations in Chile and Argentina, as well as the 28.8% increase in fuel prices, a portion of which was not recovered via the fuel surcharge mechanism. Nevertheless, LAN continued to show solid traffic growth and yield increases in both passenger and cargo operations.
- Operating income reached US$169.5 million in fourth quarter 2011, a 19.6% decrease compared to US$210.7 million in fourth quarter 2010. Operating margin reached 11.0% compared to 16.2% in fourth quarter 2010.
- Total revenues in fourth quarter 2011 reached US$1,535.3 million compared to US$1,302.5 million in fourth quarter 2010 due to a 20.8% increase in passenger revenues and a 15.8% increase in cargo revenues. Revenue increases continue to reflect solid demand trends in both passenger and cargo operations. Passenger and cargo revenues accounted for 69.9% and 27.9% of total revenues, respectively, in fourth quarter 2011.
- In December 2011, the Company launched the LAN brand in Colombia, a significant step in the successful turnaround of the Colombian domestic passenger operations undertaken in 2011. In fourth quarter 2011, LAN recognized a US$21 million operating loss from its Colombian passenger operations. This loss includes significant costs related to the rebranding process, migration of LAN Colombia to LAN’s IT systems, marketing initiatives aimed at integrating Colombia into LAN’s regional network, and one-time maintenance costs.
- In line with the Company’s expansion, the Company received 1 Airbus A319, 5 Airbus A320 and 2 Boeing 767-300 passenger aircraft in fourth quarter 2011.
- During fourth quarter 2011, LAN and TAM S.A. (“TAM”) continued to advance on the merger transaction to create LATAM Airlines Group S.A. (“LATAM Group”). The companies have obtained all required anti-trust and shareholder approvals and are currently in the process of registering the transaction with the relevant securities authorities. LAN will launch the exchange offer promptly after all required registrations with securities authorities are complete and the Supreme Court of Chile has resolved LAN’s pending appeal regarding the carve-outs imposed by the TDLC ( Tribunal de Defensa de la Libre Competencia, Chile’s antitrust authority). The Company expects this will occur before the end of first quarter 2012.
- In January 2012, LAN and TAM announced a revised estimate of expected synergies to be achieved through the merger of the two airlines. LAN and TAM estimated that the combined synergies arising from the proposed combination could increase LATAM Group’s annual operating income over time to between US$600 million and US$700 million, before depreciation and taxes, beginning four years after completion of the transaction. This represents a 50% to 75% increase over the initial synergy estimate of US$400 million per year, announced in August 2010.
Currently, LAN Airlines and its affiliates operate 135 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.