LAN Airlines Reports Net Income of $88.3 Million for the First Quarter of 2010

LAN Airlines S.A. announced its consolidated financial results for the first quarter ended March 31, 2010. LAN 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.

LAN reported net income of $88.3 million for the first quarter 2010, an increase of 35.8 percent compared to the first quarter 2009, reflecting a strong recovery in both the cargo and passenger businesses.

Operating income reached $142.9 million in the first quarter 2010, a 21.0 percent increase compared to $118.1 million in the first quarter 2009. Operating margin reached 13.8 percent, an increase of 0.4 points compared to 13.4 percent in the same period of 2009. Operating income in the first quarter 2009 included a $57.9 million realized fuel hedging loss, while the realized fuel hedging loss for the first quarter 2010 reached $2.6 million.

Total revenues for the first quarter 2010 reached $1,034.9 million compared to $882.2 million in the first quarter 2009 due to a 13.7 percent increase in passenger revenues and a 35.3 percent increase in cargo revenues. Passenger and cargo revenues accounted for 72 percent and 26 percent of total revenues, respectively, during the first quarter 2010.

The strong recovery in demand experienced during the first months of 2010 was partially offset by the negative impact on LAN’s operations of the earthquake that struck Chile on February 27, 2010. The earthquake caused damage to the terminal building at the Santiago International Airport, affecting all air travel in and out of the country.

LAN estimates the net impact of decreased passenger operations due to the earthquake at approximately $25 million during the first quarter 2010. Cargo operations were not materially affected by the earthquake, nor were the passenger operations of LAN or its subsidiaries in Peru, Ecuador and Argentina.

Considering current market conditions, the Company maintains its expectations for 2010 with passenger ASK growth of approximately 10 percent in 2010. Growth in the passenger business during 2010 is expected to be mainly driven by international and regional markets. LAN Cargo currently expects approximately 16 percent-18 percent growth in cargo capacity for 2010, mainly driven by higher utilization of the freighter fleet, especially the two Boeing 777-200 freighters received in the first half of 2009.