FOR IMMEDIATE RELEASE | Exhibit 99.2 |
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· | Despite the global crisis that affected the airline industry in 2009, LAN reported net income of US$231.1 million for full year 2009, proving the strength of the Company’s business model and LAN’s resiliency to external shocks. Net income declined 31.3% compared to full year 2008. |
· | For the full year 2009 LAN’s operating margin reached 11.9%, a decrease of 2.6 points compared to the 14.5% operating margin achieved in 2008. Operating income amounted to US$435.7 million in 2009, a 29.7% decrease compared to operating income of US$619.8 million in 2008. Operating income for 2009 includes a US$128.7 million loss related to fuel hedging. |
· | LAN’s fourth quarter 2009 results reflect a strong recovery in both cargo and passenger operations. During the period, LAN reported net income of US$109.8 million, a 17.6% increase compared to net income of US$93.3 million reported in the fourth quarter 2008. |
· | Operating income reached US$190.3 million in the fourth quarter 2009, a 10.9% decrease compared to US$213.7 million in the fourth quarter 2008. Operating margin reached 17.8% compared to 19.2% in the same period of 2008. |
· | Total revenues for the fourth quarter 2009 reached US$1,070.7 million compared to US$1,114.9 million in the fourth quarter 2008 due to a 1.6% decrease in passenger revenues and a 10.7% decrease in cargo revenues. The 4.0% decline in consolidated revenues was partially offset by a 2.3% decrease in operating expenses, driven mainly by lower fuel costs. Passenger and cargo revenues accounted for 71% and 26% of total revenues, respectively, during the fourth quarter 2009. |
· | In December 2009, LAN ordered 30 new Airbus A320 family aircraft destined for the Company’s regional and domestic passenger operations (including domestic operations of its affiliates), to be delivered between 2011 and 2016. In addition to this purchase, LAN’s strategic fleet renewal plan involves the sale of five Airbus A318 aircraft in 2011. Continuing with the expansion and renewal of its fleet, during the fourth quarter 2009, LAN received two new Boeing 767-300 passenger aircraft. |
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 |
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· | During the quarter, LAN signed an agreement with Sabre, one of the global airline industry’s major operational systems solutions providers, to upgrade and incorporate the most advanced technology in the Company’s reservations and distribution system, itinerary optimization and operations planning. The implementation process for the new systems platforms includes an adjustment and migration period of two to three years. |
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LAN continues to maintain a solid financial position, with ample liquidity and a solid financial structure, as reflected by the Company’s BBB Investment Grade international credit rating (Fitch). LAN is one of the few airlines in the world with an Investment Grade rating. At the end of the quarter, LAN reported US$792 million in cash and cash equivalents representing 21.7% of revenues for the last twelve months. Additionally, the Company has no short term debt, while its long-term debt is mainly related to aircraft financing and has 12 to 15-year repayment profiles with competitive interest rates. The Company has limited exposure to foreign exchange rate fluctuations as approximately 83% of revenues are U.S. dollar denominated.
The following is a calculation of LAN’s EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rentals), which the Company considers useful indicators of operating performance.
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Agreement with Sabre
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Consolidated Fourth Quarter 2009 Results
· | 1.6% decrease in passenger revenues to US$757.1 million, |
· | 10.7% decrease in cargo revenues to US$282.2 million, and a |
· | 5.5% increase in other revenues to US$31.5 million. |
· | Wages and benefits increased 21.0%, driven mainly by the impact of the appreciation of domestic currencies in Latin America, coupled with an increase in average headcount during the quarter. |
· | Fuel costs decreased 13.0%, mainly driven by a 10.9% decrease in prices, partially offset by a 4.7% increase in consumption. In addition, the Company recognized a US$3.8 million fuel hedge loss, compared to a US$24.5 million fuel hedge loss in the fourth quarter of 2008. |
· | Commissions to agents decreased 19.9% due to a 4.2% decrease in traffic revenues (passenger and cargo), coupled with a 0.8 point reduction in average commissions. This reduction was related mainly to lower commissions in the passenger business as a result of a higher penetration of Internet sales, as well as a higher percentage of passengers traveling in Economy Class. |
· | Depreciation and amortization increased 9.9%, mainly due to the incorporation of two new Boeing 767 aircraft and three Airbus A319 aircraft. |
· | Other rental and landing fees decreased 4.3%, mainly due to the impact of lower variable aircraft rentals (ACMI) in the cargo business. |
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· | Passenger service expenses increased 20.5% driven by 13.1% increase in the number of passengers transported during the quarter. |
· | Aircraft rentals increased 40.7%, mainly driven by an increase in the average rental cost of leased aircraft due to the receipt of two leased B777 freighters during the second quarter 2009. |
· | Maintenance expenses increased 10.4% due to a larger fleet and the escalation in certain maintenance contracts. |
· | Other operating expenses decreased 13.4% due to lower advertising and marketing expenses and lower sales costs. |
· | Interest income decreased from US$4.6 million in fourth quarter of 2008 to US$4.3 million in fourth quarter of 2009, mainly due to lower interest rates, partially offset by a higher cash balance. |
· | Interest expense decreased 5.4% as higher debt related to fleet financing was offset by a lower average interest rate. |
· | Under Other income (expense), the Company recorded a US$25.1 million loss, which includes a US$28.0 million one-time charge related to the impact of the devaluation of the Venezuelan currency (bolivar) on LAN’s operations in that country. In the fourth quarter 2008, LAN recorded a US$62.8 million loss, which includes a US$59.0 million provision related to the U.S. Department of Justice’s global investigation of the cargo business. |
· | 7.0% decrease in passenger revenues to US$2,623.6 million, |
· | 32.1% decrease in cargo revenues to US$895.6 million, and a |
· | 4.6% decrease in other revenues to US$136.4 million. |
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Cargo revenues decreased 32.1% during 2009 driven by a 24.8% decrease in yields, coupled with a 9.7% decrease in traffic. Cargo traffic this year was impacted by the global economic slowdown, a very weak seed export season, as well as by the decline in salmon exports from Chile as a result of the ISA virus. Capacity decreased 6.0% during 2009. As a consequence, load factors decreased from 71.2% to 68.4%. Revenues per ATK decreased 27.8% compared to 2008.
· | Wages and benefits increased 4.5%, driven mainly by the increase in average headcount during 2009, offset in part by the depreciation of local currencies versus the US dollar on average during 2009 compared to 2008. |
· | Fuel costs decreased 30.9%, mainly driven by a 42.6% decrease in prices, partially offset by a 1.6% increase in consumption. In addition, the Company recognized a US$128.7 million fuel hedge loss, compared to a US$ 35.4 million fuel hedge gain in 2008. |
· | Commissions to agents decreased 24.4% due to a 15.0% decrease in traffic revenues (passenger and cargo), coupled with a 0.5 point reduction in average commissions. This reduction was related mainly to lower commissions in the passenger business as a result of a higher penetration of Internet sales, as well as a higher percentage of passengers traveling in Economy Class. |
· | Depreciation and amortization increased 18.0%, mainly due to the incorporation of two new Boeing 767 aircraft and three Airbus A319 aircraft. |
· | Other rental and landing fees decreased 9.8%, mainly due to the impact of lower variable aircraft rentals (ACMI) in the cargo business. |
· | Passenger service expenses increased 8.8%, mainly driven by the 16.3% increase in the number of passengers transported during the period. This was partly offset by a decrease in on- board service costs due to a renegotiation of contracts with third party suppliers, as well as logistical efficiencies in the on-board service process. |
· | Aircraft rentals increased 18.7%, mainly due to an increase in the average rental cost due to the arrival of two leased Boeing 777 freighters in the second quarter 2009. |
· | Maintenance expenses increased 14.3% due to a larger fleet and the escalation in maintenance contracts. |
· | Other operating expenses decreased 5.9% due to lower sales costs, as well as lower costs related to onboard sales, employee travel expenses and lower general expenses. |
· | Interest income decreased 1.6% to US$18.2 million as a higher cash balance during 2009 was largely offset by lower interest rates. |
· | Interest expense increased 22.0% due to higher average long-term debt related to fleet financing. |
· | Under Other income (expense), the Company recorded a US$23.2 million loss, which includes a US$28.0 million one-time charge related to the impact of the devaluation of the Venezuelan currency (bolivar) on LAN’s operations in that country. In 2008, LAN recorded a US$109.4 million loss, which includes a US$109.0 million provision related to the U.S. Department of Justice’s global investigation of the cargo business. |
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FOR IMMEDIATE RELEASE | Exhibit 99.2 |
FOR IMMEDIATE RELEASE | Exhibit 99.2 |
FOR IMMEDIATE RELEASE | Exhibit 99.2 |
FOR IMMEDIATE RELEASE | Exhibit 99.2 |